Inflation

[Dona Ferentes]

A few slides from a presentation. Markets have over the past year consistently underestimated inflation, and interest rates. From US data

 

[InsvestoBoy]

A few slides from a presentation. Markets have over the past year consistently underestimated inflation, and interest rates. From US data

View attachment 149721

As my favourite (and I suspect only correct) financial commentator Jeff Snider of https://eurodollar.university likes to say, nominal values in money markets (bonds, swaps, STIR, etc) shouldn't be taken literally. They aren't actually forecasts on the nominal value of the rate, no matter what the media says. But rather they model a probability distribution of possible outcomes.

The useful information is largely contained in viewing the level of rates through the lens of the slope of the curve.

In that sense, despite the first graph being created by its authors to imply the markets were wrong about inflation, one might argue that given the persistent inversion (despite rising levels) of the forward curve as far back as Jun '21, that curve was (as usual) quite prescient in relation to the subsequent collapse in meme stocks, growth/momentum vs value, many industrial commodities, lumber, inflation protected securities, REITs, many currencies (especially EM), Asian stocks, flattening/then inversion of the 2's10's and now the 3m's10's etc.

Imagine surveying this carnage and thinking the Jun '21 deeply inverted curve was "underestimating" anything...then look at that Oct '22 curve and ? what it's saying about the markets implied probability distribution for the future...

 

[divs4ever]

A few slides from a presentation. Markets have over the past year consistently underestimated inflation, and interest rates. From US data

View attachment 149721

they have been probably been listening to ( Ronnie James ) Dio when collating the data , my bet is the song was Dream On

 

[over9k]

As my favourite (and I suspect only correct) financial commentator Jeff Snider of https://eurodollar.university likes to say, nominal values in money markets (bonds, swaps, STIR, etc) shouldn't be taken literally. They aren't actually forecasts on the nominal value of the rate, no matter what the media says. But rather they model a probability distribution of possible outcomes.

The useful information is largely contained in viewing the level of rates through the lens of the slope of the curve.

In that sense, despite the first graph being created by its authors to imply the markets were wrong about inflation, one might argue that given the persistent inversion (despite rising levels) of the forward curve as far back as Jun '21, that curve was (as usual) quite prescient in relation to the subsequent collapse in meme stocks, growth/momentum vs value, many industrial commodities, lumber, inflation protected securities, REITs, many currencies (especially EM), Asian stocks, flattening/then inversion of the 2's10's and now the 3m's10's etc.

Imagine surveying this carnage and thinking the Jun '21 deeply inverted curve was "underestimating" anything...then look at that Oct '22 curve and ? what it's saying about the markets implied probability distribution for the future...

Important to note that the terminal rate pricing hasn't even broken trend yet, it's just off the peak. The only thing we've seen so far is a lower high.

 

[over9k]

Black friday looking to be abysmal this year after disposable income's taken the almighty hit that it has over the last year.

Sales numbers estimated to be about 1/3rd lower than last year. Ouch. Adobe analytics do a piece on this every year, I'll see if I can find it.

Edit:



Not looking good on the raw numbers and particularly not looking good once you factor in inflation.

Inflation adjusted numbers are negative/contractions.

 

[Knobby22]

Black friday looking to be abysmal this year after disposable income's taken the almighty hit that it has over the last year.

Sales numbers estimated to be about 1/3rd lower than last year. Ouch. Adobe analytics do a piece on this every year, I'll see if I can find it.

Edit:

View attachment 149749

Not looking good on the raw numbers and particularly not looking good once you factor in inflation.

Inflation adjusted numbers are negative/contractions.

What about us, Australia?
I had to go to a shopping centre today and I have never seen it so busy.

 

[divs4ever]

What about us, Australia?
I had to go to a shopping centre today and I have never seen it so busy.

but are they buying discretionary items or buying ( forward-buying ) essential items

this gets a little tricky to assess , 'essential' for me ( retired on a disability pension ' ) , is very different from a family with school-age children

personally i would be watchful on Australia consumer buying , and see if optimism reigns or Aussies are stocking up the bunker

 

[Smurf1976]

What about us, Australia?
I had to go to a shopping centre today and I have never seen it so busy.

People certainly seem to be spending.

Late last year a house near me sold. Nothing fancy, just a ~50 year old 3 bedroom house and it's a young couple who've bought it.

Since then there's been at least $25k worth of renovations done that I know of and none of which could be deemed essential. Nice to have but not essential.

Now I'm not judging to be clear, just observing that there seems to be money around. No way I could've afforded to spend like that at the same age.

 

[divs4ever]

People certainly seem to be spending.

Late last year a house near me sold. Nothing fancy, just a ~50 year old 3 bedroom house and it's a young couple who've bought it.

Since then there's been at least $25k worth of renovations done that I know of and none of which could be deemed essential. Nice to have but not essential.

Now I'm not judging to be clear, just observing that there seems to be money around. No way I could've afforded to spend like that at the same age.

depends on the couple's income and job stability , say two years living/renovating , rent out the house and on to the next/job/city/house ( keeping the house as investment/future development

you can still do it , if you are willing to take the risk ( and have a great tax accountant )

 

[over9k]

It was the black friday sales guys.

 

[divs4ever]

It was the black friday sales guys.

true

and over-stocked items after the lock-down disruptions

going to be some intriguing figures next half-year from the retail sector

but if they are disappointing , is it worth the gamble of buying cheap ??

 

[over9k]

true

and over-stocked items after the lock-down disruptions

going to be some intriguing figures next half-year from the retail sector

but if they are disappointing , is it worth the gamble of buying cheap ??

Depends what you're buying

 

[divs4ever]

i was thinking retail stocks , and retail-focused REITs and the half-yearlies disappoint

but a LOT of care will be needed even from traders ( say trend trading post-Xmas low turnover and selling into the Easter rally )

 

[over9k]

Well I just bought a new fridge and it was a hell of a buy for a measly thousand bucks so make of that what you will.

 

[waterbottle]

Markets crapping themselves over Xi?

 

[divs4ever]

MAYBE , but maybe someone is watching accumulated debt metrics , the bond market , and wondering how many more interest rate rises left in this cycle

would have preferred the market rose today so i could have got some BBOZ but it didn't so dropped my target price and reduced QBE instead ( just in case this slide gets a little attitude , and some extra cash is handy )

 

[over9k]

Another NRGU buy at 570. There's actually a lot of talk of the west sending vaccines china's way. Considering how shite the chinese vaccine is and how the lockdowns are wrecking their economy, something's going to give eventually and western vaccines might be it.

The only thing certain is that they *cannot* go on the way they are.

 

[farmerge]

Another NRGU buy at 570. There's actually a lot of talk of the west sending vaccines china's way. Considering how shite the chinese vaccine is and how the lockdowns are wrecking their economy, something's going to give eventually and western vaccines might be it.

The only thing certain is that they *cannot* go on the way they are.

Looking at the idiot Box's news tonight something in China is starting to give/break massively, or it appears to be, demonstrations demanding a return to normal. Shades of 1989 when it last happened with dire consequences for those involved and the population in general. this is going to be an interesting saga unfolding.

 

[over9k]

Looking at the idiot Box's news tonight something in China is starting to give/break massively, or it appears to be, demonstrations demanding a return to normal. Shades of 1989 when it last happened with dire consequences for those involved and the population in general. this is going to be an interesting saga unfolding.

The whole thing's a total storm in a teacup. Oil's on the climbout already. I bought about 2 mins into the session.

 

[qldfrog]

Looking at the idiot Box's news tonight something in China is starting to give/break massively, or it appears to be, demonstrations demanding a return to normal. Shades of 1989 when it last happened with dire consequences for those involved and the population in general. this is going to be an interesting saga unfolding.

Is it on purpose as suggested before to flush out tge "bad seeds" or a top rivalry vs Xi?
Chinese game