Inflation

[frugal.rock]

Yeh, if they have a brass monkeys balls off winter, a 2 to 3 bagger by years end.
The 10 year thing is banking on the very recent carbon reduction laws.

 

[peter2]

Warning for non US residents: 10% with-holding tax on sales of BOIL.

I'm not trading BOIL and other nat gas ETFs at all due to this tax treatment.

 

[waterbottle]

View attachment 158181

Thanks OPEC

 

[over9k]

Warning for non US residents: 10% with-holding tax on sales of BOIL.

I'm not trading BOIL and other nat gas ETFs at all due to this tax treatment.

W-8 form dodges most of this stuff (or reduces its rate considerably). I forgot about mine last financial year and only realised after I got nailed 30% on an NRGU play.

Once you've filled it out you're refunded pretty quickly.

Also worth noting that like here in aus, the capital gains rate changes considerably depending on how long you've held the asset for. It's not the same rate change/formula but it's still a big difference.

 

[frugal.rock]

@over9k
You got any "double your money" plays at the moment?

NKLA ? ?

 

[frugal.rock]

RIDE could be worth a watch.
Perhaps Dutch ICE ?
Off topic really, should all be in the International banter thread... sorry Joe.

 

[over9k]

And the fed pauses!

Promises plenty more hikes to come though, at least two more by year's end, fixed income pumping in response, "super hawkish pause".

5.6% now being priced as the terminal rate, 2 year is currently at 4.76 after bumping 12 points on the news. BOIL the only play still in the green on the day, NRGU pummeled, even the previously thought resilient (A.I blah blah) tech plays are well into the red.

Cash still the overwhelming best place to be. Famous last words but it seems very hard to see how SOXL/FNGU/TQQQ are going to keep rising from here. The fed's all but promised to crush them at this point. They've basically gone on record as saying that they are going to keep pumping rates until they bite, i.e the more rises the economy can take the more they will give them. In other words, they are not going to give in on this. If the economy can end up taking 200 points (or whatever) more than they expected then 200 more they will give it.

Fed dot point very concentrated for the short term but an absolute shitshow for even 2024 let alone 2025. A tacit admission that uncertainty is huge/even the fed really has no idea what's coming down the pipeline.


I've been saying for quite some time that SNAFU is going to be the new normal for quite some time and markets continue to prove me righter by the day.

 

[over9k]

And now powell's conference speech/comments are whipsawing everything. GG.

 

[Smurf1976]

Another data point: RAA roadside service membership up exactly 10% year on year.

That's the SA equivalent of the RACV, NRMA etc.

 

[over9k]

 

[waterbottle]

View attachment 158191

Ooft.

Won't happen though. Something's got to break and then they'll rapidly cut

 

[Smurf1976]

Cash still the overwhelming best place to be. Famous last words but it seems very hard to see how SOXL/FNGU/TQQQ are going to keep rising from here. The fed's all but promised to crush them at this point. They've basically gone on record as saying that they are going to keep pumping rates until they bite, i.e the more rises the economy can take the more they will give them. In other words, they are not going to give in on this.

My interpretation is the Fed has just told everyone they've one last chance to sell before being smashed.

I could be wrong but that's my interpretation of it. Because:

Something's got to break and then they'll rapidly cut

I'll be surprised if the stock market isn't one of those things.

 

[waterbottle]

My interpretation is the Fed has just told everyone they've one last chance to sell before being smashed.

I could be wrong but that's my interpretation of it. Because:


I'll be surprised if the stock market isn't one of those things.

I don't think the stock market in particular is the target, although having said that, the stock market DOES represent the wider economy and what the Fed is fighting against - excess liquidity - so it's natural that it, along with other assets, would fall once credit tightens.

I think we should see what banks do with this info. Given much of the economy is reliant on credit, and the Fed has signalled that short term rates are going to go higher for longer (really until the end of 2024), some banks may have to review their profitability/ability to extend loans.
How many expected rates to remain this tight for this long?

The decision to pause is confusing. It's been done by Canada and Australia with negative effect (persistent inflation). The Fed argues that they need more time for data (the same argument used in Aus), but how can an additional 6 weeks make or break your decision for an additional 25bps? How can you KNOW the economy needs additional hikes, yet not act on it? Is there something else that we don't know?
The only thing I can think of is student loans coming back into play from July 1 (I think repayments won't be expected until September though). That's going to be a whole bunch of middle class workers losing income to another debt which will probably have some tightening effect on discretionary spending.

Still though, it's only another 25bps...

 

[waterbottle]

As for risk assets, crypto is not liking what the Fed had to say....

 

[mullokintyre]

Well from a Govt friendly media, an interesting article on a recent poll, which I tend to take with a grain of salt.
But it can sometimes point toward a narrative.

RBA boss should lose job after interest rate hikes, but Australians expect more to come: survey

The nation’s economic slowdown has slashed voter confidence in their personal fortunes amid an escalating political row over who is to blame for high inflation.

www.smh.com.au

From the article:
Australians are bracing for another interest rate hike and are holding the federal government responsible for the hit to their households, while 52 per cent believe Reserve Bank governor Phil Lowe should lose his job.

The nation’s economic slowdown has slashed voter confidence in their personal fortunes, with 64 per cent expecting their wages to fall in real terms, amid an escalating political row over who is to blame for high inflation.

An exclusive survey shows that 33 per cent of voters believe the Reserve Bank has the greatest responsibility for keeping inflation down, but that 44 per cent think it is primarily the task of the federal government.

Says more about the financial and economic accumen of the general public than anything else.
mick

 

[moXJO]

SOXL and BOIL but I'm doubting how much SOXL has left in it by the day.

This whole "recession means rate dumps means growth plays pump" rally has been absolutely ridiculous tbh.

I'm heavy in growth. But the bulk of the play is done.
BOIL a good play.

I'm wondering if this spatial computing is going to finally take off. Personally I think those dork helmets from Apple are stupid though.

 

[moXJO]

Ooft.

Won't happen though. Something's got to break and then they'll rapidly cut

Most likely this.
The Fed knows its easier to break and fix. Rather than let inflation run away and then try and fix.

 

[sptrawler]

Ooft.

Won't happen though. Something's got to break and then they'll rapidly cut

Most likely this.
The Fed knows its easier to break and fix. Rather than let inflation run away and then try and fix.

When it breaks, which it will IMO, I don't think there will be a rapid cut at all.
There is no way they want an out of control cyclical swing to happen, I think there will be an extended period of no rate movements until the economy finds its new equilibrium and then a gradual slow step down of a half a percent at best.
They want inflation, just not at 7%, that devalues the currency too quickly and makes doing business difficult.

 

[sptrawler]

Well another 76,000 new jobs have been added, or another 76,000 people have decided to go to work, I wonder which? ?
I guess it depends how you say it.

Economists tip more rate hikes as jobs numbers smash expectations

Unemployment surprisingly falls back to 3.6 per cent, as an estimated 75,900 jobs are added to the economy.

www.abc.net.au

From the article:
Official jobs data from the Australian Bureau of Statistics (ABS) estimates that nearly 76,000 jobs were added to the economy last month, sending unemployment down to 3.6 per cent.

The strong figures came as a shock to economists, who were typically expecting 15,000 jobs to be added last month and the unemployment rate to remain steady at 3.7 per cent.

The proportion of Australians aged 15 and over either in work or looking for it — known as the participation rate — also increased to a record high of 66.9 per cent.

The participation rate rose 0.2 percentage points for women, to 62.7 per cent, and remained at 71.2 per cent for men.

"A greater share of women in Australia are employed than ever before, with their employment to population ratio and participation rate both at record highs in May," Bjorn Jarvis from the ABS said.

 

[mullokintyre]

Well another 76,000 new jobs have been added, or another 76,000 people have decided to go to work, I wonder which? ?
I guess it depends how you say it.

Economists tip more rate hikes as jobs numbers smash expectations

Unemployment surprisingly falls back to 3.6 per cent, as an estimated 75,900 jobs are added to the economy.

www.abc.net.au

From the article:
Official jobs data from the Australian Bureau of Statistics (ABS) estimates that nearly 76,000 jobs were added to the economy last month, sending unemployment down to 3.6 per cent.

The strong figures came as a shock to economists, who were typically expecting 15,000 jobs to be added last month and the unemployment rate to remain steady at 3.7 per cent.

The proportion of Australians aged 15 and over either in work or looking for it — known as the participation rate — also increased to a record high of 66.9 per cent.

The participation rate rose 0.2 percentage points for women, to 62.7 per cent, and remained at 71.2 per cent for men.

"A greater share of women in Australia are employed than ever before, with their employment to population ratio and participation rate both at record highs in May," Bjorn Jarvis from the ABS said.

The really good thing is that the majority of the new jobs are full times jobs, not just part time jobs for people topping to pay their increased mortgage.
Hours worked per person fell, which suggests these were not mostly people moving from part time work to full time which was my first thought.
Maybe there is less overtime around now with more workers in the workforce.
Mick