Inflation

[over9k]

Something something higher for longer something something WHEN ARE MARKETS GOING TO GET IT

 

[IFocus]

The market can stay irrational longer than you can stay solvent

 

[divs4ever]

The market can stay irrational longer than you can stay solvent

as we are now seeing in living colour

 

[frugal.rock]

Something something higher for longer something something WHEN ARE MARKETS GOING TO GET IT

Can you explain it to me like I'm 10 years old?
Explainers help me keep up with current trends.
Getting old and losing track.

 

[divs4ever]

Can you explain it to me like I'm 10 years old?
Explainers help me keep up with current trends.
Getting old and losing track.

i am just losing faith in data and narratives

 

[over9k]

Can you explain it to me like I'm 10 years old?
Explainers help me keep up with current trends.
Getting old and losing track.

There's deep/long term structural stuff driving inflation that is not going to go away with a few interest rate pumps. Despite about 50 repricings of when the first cuts will begin, markets still haven't figured this out yet.

 

[frugal.rock]

Thanks for reminding this old duffer.

You've probably said what these "deep/long term structural stuff driving inflation" items are, but, can you remind me again?

Had mused (from the technical data side) that cuts were going to be few and far between for as far as the eye can see, due to RBA Bullock stance and immigration.

Fancy expecting unemployment levels to go up!
Everyone is still just as hungry, and we all (nearly) need to work more to pay through the nose for all the price gouging going on.

Have enough trouble trying to keep up with AUS data, let alone US crap.

 

[divs4ever]

Have enough trouble trying to keep up with AUS data, let alone US crap.

i just know several streams of data smell like crap ( not ever the sweet aroma of bull crap either )

all i do is watch the HFTs react and see if an opportunity is created ( for me )

 

[Smurf1976]

Can you explain it to me like I'm 10 years old?
Explainers help me keep up with current trends.
Getting old and losing track.

There seems to be a widespread perception that interest rates are about to drop and "get back to normal".

The financial media says it, the mainstream media says it in the context of housing, it seems to be an almost universally held belief that present interest rates are some sort of aberration, even going as far as to suggest that central banks are under some sort of obligation or imperative to get interest rates back to "normal" ASAP, with "normal" meaning close to zero.

I'm not buying it.

My view is that the aberration was the 2010's, an essentially unprecedented time when shortages, of anything, basically didn't exist.

Go back to last century and physically getting hold of things, consumer goods, was always at least somewhat problematic. Any random shopping trip with a long list and it was a given you'd come back without something. Likewise tickets to events and so on - we only need go back to the late 00's and we still had people camping out overnight to buy physical tickets to festivals and concerts. Etc.

~2008 through to the start of the pandemic all that changed and there was basically nothing that wasn't immediately available if you were willing to pay. Any manufactured item you want could be bought, usually rapidly. Meanwhile pretty much every band and singer still living did at least one tour, even "unthinkable" events actually happened in the entertainment space, and so on. All up, an incredible time to be alive with unprecedented abundance of practically everything.

Today though that's changed. We've shortages of everything and they're entrenched in my view. Materials, manufactured goods, skilled labour and so on are all scarce and that's pushing prices up big time. Inflation's back and it's here to stay.

That being so, my view is a huge shock lies in wait since at some point reality's going to sink in that interest rates aren't going back to zero and it's "higher for longer". When that day comes, that's when things get "interesting".

Relating to that we're starting to see real supply reductions in some parts of the economy. The performing arts most notably, with event after event being cancelled it pretty much is in free fall at this point. It'll stabilise at some much lower level of activity that enables remaining events to charge enough to be financially viable - I'm told that costs have risen 30 - 40% in the past year alone and that's what's behind the crisis. Raising ticket prices alone doesn't work, it kills demand, so the only option is heavy rationalisation to fewer events at higher prices.

Just my opinion, not to be taken as financial advice etc.

 

[Smurf1976]

Relating to that we're starting to see real supply reductions in some parts of the economy. The performing arts most notably

Housing construction is another example of that. Very obvious shortages of housing but at the same time we're seeing builders going broke, construction activity diminishing, etc.

Energy infrastructure's another with much the same story. A clear need but nowhere near enough happening as has been discussed in other threads.

That's what happens when the cost of building things or the cost of putting on shows or whatever goes through the roof beyond what can realistically be passed on to consumers. The end result is supply comes down to some diminished level that enough people are willing to pay to make it viable.

 

[divs4ever]

There seems to be a widespread perception that interest rates are about to drop and "get back to normal".

'normal' used to be 5% when i was growing up ( and i don't mean mortgage rates

my mortgage on vacant land in 1975 was 17.5%

so good luck with normal where there is extravagant debt all over the place

 

[over9k]

You've probably said what these "deep/long term structural stuff driving inflation" items are, but, can you remind me again?

Deglobalisation/geopolitical instability (which are linked) and baby bust/population collapse are the big two.

 

[over9k]

There seems to be a widespread perception that interest rates are about to drop and "get back to normal".

I'd just like to point out that the post-gfc interest rate levels that an entire generation of millennials (not that you're a millennial) consider to be "normal" interest rates are, historically speaking, anything but normal.

"Normal" would be about twice their current level.

 

[over9k]

Raising ticket prices alone doesn't work

High price elasticity in superior goods (non-essentials/luxuries) is indicative of a lack of disposable income.

 

[over9k]

Super funds are starting to get it now too

(this is the australiansuper head honcho just FYI)

 

[divs4ever]

better them than me

i have a hard enough time getting my head around 'accounting standards ' in Australia

 

[wayneL]

'accounting standards '

Is this an oxymoron??

It certainly seems to be a fluid concept depending on the size of the business and its connections.

 

[divs4ever]

Is this an oxymoron??

It certainly seems to be a fluid concept depending on the size of the business and its connections.

and here i was thinking i was imaging things

 

[IFocus]

High price elasticity in superior goods (non-essentials/luxuries) is indicative of a lack of disposable income.

Governments debt levels?

 

[IFocus]

'normal' used to be 5% when i was growing up ( and i don't mean mortgage rates

Long term average used to be 7% but with long term market distortions the current levels IMHO are still way below where they will end up.