Inflation

[sptrawler]

I agree the costs of ownership need to be weighed against the cost of renting, however most people do those sums incorrectly.

What I mean by this is that they take their total mortgage payment + the other costs (insurance, rates, maintenance etc) and compare that to the weekly rent.

In my opinion this is the wrong way to look at it.

1. Only the interest component of the mortgage payment is an expense, the principle payment is technically savings, eg principle payments are like a bank account you can access later, not a genuine cost.

2. Only part of the interest charge is a “real expense”, part of it is just an inflation offset, eg if you pay 4% interest, and the inflation rate is 3% you are really only spending 1% on interest and the other 3% is basically added back to the capital value of your home.

3, all the insurance, rates, maintenance etc are real costs, but when you add these to the small real after inflation interest rate, the weekly costs are small compared to renting.

This is why over the long term home owners end up way ahead, because their interest payments decline over the years as the loan shrinks, while the capital value increases with the principle payments accumulation, and the inflation offsets.

Where as the cost of renting never really decreases, and only goes up with inflation.

Agree 100%, I was more referring to the manner in which the property is purchased, rather than the actual benefit of home ownership, over renting.
Home ownership is probably the single most important thing a person can buy, as has been shown in most studies, but purchasing beyond your means or without thought as to how the purchase loan is structured can be a road to disaster also.
Many marriages have failed due to unrealistic investment choices, including the purchase of the PPR, which in turn can destroy wealth .

 

[qldfrog]

It is really the opposite in communism, on paper everybody is equal, in practice 1% own 99% they rob from the majority.

Not really.
You are right about the 1pc but they maintain power by scaregoating a minority usually the richer one..to add greeed to hate..
see nazi and jewish community,
to redirect the frustration of the majority.look at the "antivax" targeted campaign just a couple of months ago..society is ripe...
And Reset will happen

 

[waterbottle]

Hmmmm this is not looking good.
China reporting negative industrial output for past quarter because of covid-zero policy. Last time this happened was att he start of the pandemic....
Commentary from ING economists re: supply chains, unlikely to resolve in 2023.

Supply chain pressure to persist through 2022, leading to permanent changes in trade

Global supply chains remain under pressure. With the war in Ukraine and China’s zero Covid policy, delays and protracted supply shortages will cloud…

think.ing.com

 

[againsthegrain]

Not really.
You are right about the 1pc but they maintain power by scaregoating a minority usually the richer one..to add greeed to hate..
see nazi and jewish community,
to redirect the frustration of the majority.look at the "antivax" targeted campaign just a couple of months ago..society is ripe...
And Reset will happen

Basically nobody wants to do anything properly or work hard because they see it will get them nowhere anyway, they also see the ones in power fux every1 under them and sit on 500k wages... oh wait I think I seen this somewhere.. so who do you blame the parents who set the bad example or the kids who take it on?

 

[Value Collector]

Hmmmm this is not looking good.
China reporting negative industrial output for past quarter because of covid-zero policy. Last time this happened was att he start of the pandemic....
Commentary from ING economists re: supply chains, unlikely to resolve in 2023.
View attachment 141757

Supply chain pressure to persist through 2022, leading to permanent changes in trade

Global supply chains remain under pressure. With the war in Ukraine and China’s zero Covid policy, delays and protracted supply shortages will cloud…

think.ing.com

Yeah, but look at that V shaped recovery from the start of the pandemic, I don’t think any slow down in the short term affects the long term values of business.

Think of it like this, if you had a rental property and for some short term reason it was vacant and produced no rent for say 3 months, would you suddenly think it halved in value? Probably not.

So if people go crazy and start selling their property at half price because of a 3 month vacancy, I would say that’s the time to be buying, not trying to race them to sell yours.

 

[divs4ever]

Hmmmm this is not looking good.
China reporting negative industrial output for past quarter because of covid-zero policy. Last time this happened was att he start of the pandemic....
Commentary from ING economists re: supply chains, unlikely to resolve in 2023.
View attachment 141757

Supply chain pressure to persist through 2022, leading to permanent changes in trade

Global supply chains remain under pressure. With the war in Ukraine and China’s zero Covid policy, delays and protracted supply shortages will cloud…

think.ing.com

i disagree , i think China coming back to 'ONLY' 5% annual growth ( maximum ) is a good thing , it suggests the Chinese economy is maturing , and veering towards a more sustainable growth figure ( especially when many other economies are shrinking )

now the Capitalists want an ever-booming China because they realize the regime would eventually collapse leaving a power vacuum to plunder ( think Russia/Ukraine etc etc after the Soviet collapse )

now sure i am no fan of the Chinese regime , but we are now seeing kleptocrats elsewhere at their greedy worst ( in say Libya ) i would rather a stable China , than open slave-markets etc on a massive scale

 

[divs4ever]

Basically nobody wants to do anything properly or work hard because they see it will get them nowhere anyway, they also see the ones in power fux every1 under them and sit on 500k wages... oh wait I think I seen this somewhere.. so who do you blame the parents who set the bad example or the kids who take it on?

it pains me to agree with you here , but i do see the slightest glints of hope in the younger generations ( sometimes in despite of the parents , maybe it is a rebellion thing )

but that trend has been growing since the '80s , slowly and corrosively ( leaving some nice opportunities for me from time to time )

 

[againsthegrain]

it pains me to agree with you here , but i do see the slightest glints of hope in the younger generations ( sometimes in despite of the parents , maybe it is a rebellion thing )

but that trend has been growing since the '80s , slowly and corrosively ( leaving some nice opportunities for me from time to time )

The parent/kids thing was a analogy for the plebs adopting the same mentality as the rulers lol (thats not my job)

 

[over9k]

Lots of awful data out of china today, S&P futures are down nearly as much as NDX on the back of oil tumbling so energy looking like another tumble (topup) tonight:



Aramco meanwhile has just posted record profits. Only way to get exposure is through the saudi arabia etf KSA, the arabs have made a very deliberate point of (as much as they can) keeping the rest of the world's fingers of of their precious pie.

 

[over9k]

Still buying

 

[divs4ever]

The parent/kids thing was a analogy for the plebs adopting the same mentality as the rulers lol (thats not my job)

if have seen a few children rise above the expectations you would have with their upbringing , however time will tell if the criminal world entices them after hitting the glass-ceiling a couple of times

sometimes that applies to the plebs as well , you would be amazed on who gets red-pilled after a work-incident or two

 

[waterbottle]

The China factor expected to alleviate come June 1

China economy hit in April as zero-COVID slams brakes on growth

Widespread lockdowns dent consumer spending; vehicle sales plunge

asia.nikkei.com

 

[over9k]

Why then?

 

[waterbottle]

Why then?

That's just what the CCP plan is, presumably based on number of infections - https://asia.nikkei.com/Spotlight/Coronavirus/Shanghai-targets-June-1-return-from-COVID-lockdowns

Although residents have complained that re-opening plans have been delayed several times before....

 

[Mohammed Hazabig'un]

"Former Federal Reserve Chairman Ben Bernanke said the current Fed leaders were too slow to react to surging U.S. inflation and as a result face a period of stagflation, or a combination of stagnant growth and high inflation."

Bernanke Says Fed Too Slow on Inflation and Faces Stagflation By Bloomberg

Bernanke Says Fed Too Slow on Inflation and Faces Stagflation

m.au.investing.com

 

[over9k]

Trimmed my topup from the 25th here. 78% return in 3 weeks. Not too shabby. Obviously kept the main play from months back. Looking at some more related plays around fertiliser and wheat. Might be longer holds on those rather than dives in & out though.

 

[Craton]

From the 3rd May 2022 RBA minutes:

Domestic economic developments​

Turning to domestic economic conditions, members observed that price pressures were intensifying and there was upward pressure on wages. Activity and conditions in the labour market had been resilient in the face of global and domestic supply shocks, and strong underlying momentum was expected to be sustained over the course of the year.

The key domestic development since the previous meeting was that inflation had increased to its highest rate in many years. Headline inflation was 2.1 per cent in the March quarter and 5.1 per cent over the year. Fuel and new dwelling costs accounted for around half of the quarterly increase. Trimmed mean inflation had increased to 1.4 per cent in the quarter and 3.7 per cent in year-ended terms. This increase in underlying inflation was consistent with a broadening of inflationary pressures.

Information from the Bank's liaison program indicated that upstream price pressures were increasingly being passed on to final consumer prices of many goods, as supply chain pressures persisted and demand remained strong. Members noted it was possible that firms' price-setting behaviours were undergoing a change from the pre-pandemic period, with businesses becoming more confident that raising prices would not significantly reduce demand or erode their competitive position.

The forecasts for inflation had been revised materially higher compared with those presented three months earlier. Headline inflation was expected to peak at around 6 per cent in year-ended terms, and trimmed mean inflation at around 4¾ per cent, in the second half of the year. Headline inflation was expected to be boosted by large increases in the prices of fuel and new dwellings over the remainder of 2022, and to remain higher than underlying inflation for some time. As supply-side disruptions eased, both headline and underlying inflation were forecast to moderate to around the top of the 2 to 3 per cent target range by mid-2024. The underlying drivers of inflation were anticipated to evolve over the forecast period, with the effects of global supply-side disruptions and dwelling cost inflation easing while domestic labour costs picked up. These forecasts were based on an assumption of further increases in interest rates, in line with expectations derived from surveys of professional economists and financial market pricing.

 

[waterbottle]

Shanghai reports 0 cases of covid for the 3rd day in a row. Projections look like they're on track to open up in June given predicted case load. Social media reports of days pass note being given out with some workers returning to manufacturing district.


Will be hard to predict what effect this will have on inflation. Might bring price of oil back to what $120 but will also address supply issues of the EU oil fails then we could be looking at 2 of the major inflationary forces being thwarted.

 

[3 hound]

Shanghai reports 0 cases of covid for the 3rd day in a row. Projections look like they're on track to open up in June given predicted case load. Social media reports of days pass note being given out with some workers returning to manufacturing district.


Will be hard to predict what effect this will have on inflation. Might bring price of oil back to what $120 but will also address supply issues of the EU oil fails then we could be looking at 2 of the major inflationary forces being thwarted.

There were supply issues before the Chinese lock downs AND the war in Ukraine, does anyone even know anymore what is causing the supply problems.

 

[qldfrog]

Shanghai reports 0 cases of covid for the 3rd day in a row. Projections look like they're on track to open up in June given predicted case load. Social media reports of days pass note being given out with some workers returning to manufacturing district.


Will be hard to predict what effect this will have on inflation. Might bring price of oil back to what $120 but will also address supply issues of the EU oil fails then we could be looking at 2 of the major inflationary forces being thwarted.

I am lost.if China reopens, oil consumption will increase even more.
The lockdown is not affecting production of oil, and hardly refining.
What we have is the West deciding to boycott itself from a key producer: Russia blacklist
and the end result of now nearly a decade of pretending that fossil fuels are not required so no investment, exploration, licensing..
None related to Shanghai..
Oil issue will remain, and not so sure the inflation is really that linked to China covid at least here.
Food price explosion is oil/fertiliser based..
Transport is oil/ self inflicted regulation..and car part issues is the chip shortage..which after 2y, is clearly more an economic weapon from China than an actual production problem .but hey...who wants to open his her eyes...