Inflation

[Smurf1976]

inflation is actually really bad for nearly all of us

Agreed. Some gain but not that many.

That said, for any given rate of inflation a change in the response to it can produce a gain. Eg raising or lowering interest rates comes with various threats and opportunities.

For my actively traded account, my system's been telling me not to buy anything for quite a while now meanwhile the selling process remains as normal. End result is I'm sitting on enough cash that the interest is worthwhile. Whether that call turns out to b right or not only time will tell but in the meantime the bank's paying me interest, albeit at a rate lower than the rate of inflation.

 

[over9k]

Good piece on nvidia

 

[Value Collector]

Agreed. Some gain but not that many.

That said, for any given rate of inflation a change in the response to it can produce a gain. Eg raising or lowering interest rates comes with various threats and opportunities.

For my actively traded account, my system's been telling me not to buy anything for quite a while now meanwhile the selling process remains as normal. End result is I'm sitting on enough cash that the interest is worthwhile. Whether that call turns out to b right or not only time will tell but in the meantime the bank's paying me interest, albeit at a rate lower than the rate of inflation.

Yep, I think the only people that might benefit from inflation are people that signed up for 15 year fixed home loans at low rates (they do that in the USA) where their capital gain is going to be tax free, and inflation shrinks the real size of the loan.

But yeah apart from special situations like that inflation is negative for almost everyone, but it does range from being devastating for those with fixed dollar investments, to a slight inconvenience to those that own assets that increase in value over time with inflation.

 

[waterbottle]

Good piece on nvidia

Just tell me when & what to short dammit

 

[over9k]

Just tell me when & what to short dammit

The market can stay irrational longer than you can stay solvent

 

[over9k]

Serious post, I'm thinking about grabbing some FNGU/SOXL. This rally is begging belief but perception's reality so whatever, I'll get on the train.

It'll go quadruply so if they actually pause at the next meeting too.

 

[waterbottle]

Serious post, I'm thinking about grabbing some FNGU/SOXL. This rally is begging belief but perception's reality so whatever, I'll get on the train.

It'll go quadruply so if they actually pause at the next meeting too.

That would have to be priced in already. Might go ultra degenerate and buy some SQQQ calls once they pause.

 

[over9k]

That would have to be priced in already. Might go ultra degenerate and buy some SQQQ calls once they pause.

Yeah i'm thinking rotate after too. As soon as the news gets slow/they start talking about what will happen "at the upcoming fed meeting" or words to that effect then it's time to bail.

 

[waterbottle]

OPEC+ cutting another 1 million barrels... This time extending it to 2024.

Saudi pledges big oil cuts in July as OPEC+ extends deal into 2024

The group, which faces flagging oil prices and a looming supply glut, pumps around 40% of the world's crude.

www.reuters.com

In response, OPEC insiders have said the West's money-printing over the last decade has driven inflation and forced oil-producing nations to act to maintain the value of their main export.

Let's see what happens to crude. Some commentators believe that the crude price is getting battered because of an upcoming recession.... Not sure how long this will keep any falls at bay....

Last time we had the Fed pausing in 2006, crude went onto hit new record highs. According to reuters, OPEC decided to cut production by 1.2mil barrels (4.2% of output) in Nov 2006, and then by 0.5mil (1.9%) in Feb 2007 for a total output of 25.8mbpd. Oil then went on to hit a new high, beginning its climb in Jan 2007. US Fed then started cutting in Sep 2007, and they entered recession in Dec 2007. Oil peaked in Jun 2008.

Now this time around:

In addition to extending the existing OPEC+ cuts of 3.66 million bpd, the group also agreed on Sunday to reduce overall production targets from January 2024 by a further 1.4 million bpd versus current targets to a combined of 40.46 million bpd.

Cheeky. Correct me if I'm wrong, but that's a total 5 mbpd output cut, going into Jan 2024 i.e. an 11% drop?!

I'd be interested to hear thoughts on what effect this would have. Sounds like inflation is going to ramp up again if this continues?

 

[waterbottle]

 

[waterbottle]

What in the absolute heck is going on?

Monthly inflation according to the Melbourne institute is 0.9%. Consensus was 0.2%!!!!

Have I misinterpreted something? Is this normal noise? Or did we stuff up our approach to inflation?

 

[mullokintyre]

What in the absolute heck is going on?

Monthly inflation according to the Melbourne institute is 0.9%. Consensus was 0.2%!!!!

Have I misinterpreted something? Is this normal noise? Or did we stuff up our approach to inflation?

I would suggest that the model that the ABS uses for calculating monthly inflation is different to the one they use for calculating the quarterly inflation.
According to the Melbourne Institute, the MI uses the "same methodology" for calculating monthly inflation that the ABS uses for calculating quarterly inflation.
So based on that theory, one might expect that the quarterly inflation that comes out after the end of the June quarter may be somewhat higher than consensus.
But then not everyone has a high opinion of either models, expert economists, or consensus views.
Mick

 

[houtman]

I would suggest that the model that the ABS uses for calculating monthly inflation is different to the one they use for calculating the quarterly inflation.

Alan Kohler mentioned this bizarre situation in a podcast, apparently the ABS doesn't have enough $ to give the monthly figure the same inputs as the qtly, so we wait.

 

[over9k]

What in the absolute heck is going on?

Monthly inflation according to the Melbourne institute is 0.9%. Consensus was 0.2%!!!!

Have I misinterpreted something? Is this normal noise? Or did we stuff up our approach to inflation?

Might be comparing to the month(s) when the fuel excise was cut.

 

[mullokintyre]

Alan Kohler mentioned this bizarre situation in a podcast, apparently the ABS doesn't have enough $ to give the monthly figure the same inputs as the qtly, so we wait.

They could just outsource it to the Melbourne Institute.
Mick

 

[divs4ever]

Yep, I think the only people that might benefit from inflation are people that signed up for 15 year fixed home loans at low rates (they do that in the USA) where their capital gain is going to be tax free, and inflation shrinks the real size of the loan.

But yeah apart from special situations like that inflation is negative for almost everyone, but it does range from being devastating for those with fixed dollar investments, to a slight inconvenience to those that own assets that increase in value over time with inflation.

i wouldn't bet on those capital gains being tax-free in say 10 years time , i have already seen attempts to tax unrealized capital gains i think it is only a matter of time for a fiscally desperate ( government ) , imho .

the other question might be what if the lender of the 15 ( or 30 ) year loan goes bankrupt , will repayment terms change under a new lender on the mortgage

but at best those with long-term fixed rate loans at low rates would be looking pretty

 

[Value Collector]

i wouldn't bet on those capital gains being tax-free in say 10 years time , i have already seen attempts to tax unrealized capital gains i think it is only a matter of time for a fiscally desperate ( government ) , imho .

the other question might be what if the lender of the 15 ( or 30 ) year loan goes bankrupt , will repayment terms change under a new lender on the mortgage

but at best those with long-term fixed rate loans at low rates would be looking pretty

I think it would be political suicide of any Australian government to try and bring in capital gains tax on “The Family Home”

 

[mullokintyre]

I think it would be political suicide of any Australian government to try and bring in capital gains tax on “The Family Home”

They said the same thing about GST.
Lazarus with a triple bypass.
Mick

 

[divs4ever]

I think it would be political suicide of any Australian government to try and bring in capital gains tax on “The Family Home”

i agree , but are the ALP ( or LNP ) suicidal ??

desperate people do desperate things

remember these folk follow the leads from the US and EU ( and some other non-government think-tanks )

 

[divs4ever]

They said the same thing about GST.
Lazarus with a triple bypass.
Mick

yes i remember that , but history has scrubbed out how many ways lil Johnny stabbed Australians in the back ( now days i still have a little bit of respect for Paul Keating rather than lil Johnny )