Rolling US Economy Into The Shitbin Thread

just feels like this has a Lehman Bros in 2007 flavor to it, idk. Monitoring.

― longtime caller, first time listener (man alive), Wednesday, 10 March 2021 06:54 (one year ago) link

The second biggest position in the Greenhill-backed Credit Suisse funds is a "smart window" company called View that's also a SoftBank company (surprise!). It just went public a couple days ago via a SPAC.

― longtime caller, first time listener (man alive), Wednesday, 10 March 2021 07:00 (one year ago) link

Course that was before the Archegos thing also blew up

(smart window company not really significant, just for context that it was CS-related)

this thread has been calling the next financial crisis as just around the corner for over a decade. one day it will be right

it’s here

wanna put some money on it?

Can I pay in Damian Hirst NFTs?

pay me in broken clocks ;)

Do you think the fed is slowing things down too much? That seems like the proximate danger at this point (along with whatever the fuck the uk does to the bond market)

As LA goes, the rest of the country follows.

The LA trucking market is a leading indicator of activity across the rest of the US, providing a 2+ week advanced look at the rest of the market. Vols out of LA have now dipped below 19 levels (note: this is “peak” season). pic.twitter.com/gAUV2e6cLU

— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) October 11, 2022

Housing market seizing up because no one can afford to buy, and no one in their right mind would sell, also seems bad.

my stepmom was telling me that when she & her first husband bought their first house (late 60's?), the interest rates were like 15-18% for everybody

Of course, houses were $50K, but interest is interest

When my parents bought the house I largely grew up in, in 1980, interest rates were well into the double digits. Maybe 18%.

15% interest hurts a lot less if the loan is 2x your annual salary rather than 20x.

The housing market today is the worst of both worlds - high prices and high rates, and the high rates are not going to rapidly bring prices down, it's just going to crush inventory. If you're locked in at a low rate and you sell, you have to buy at a high price and high rate. There aren't a bunch of resetting ARMs to trigger a price crash like there were in 2008. The only way housing costs truly come down is if there are job losses, which also benefits no one. I don't really get what the fed thinks it's doing, tbh.

When you're a hammer, everything looks like a nail.

this is in a British context but explains why mortgage interest rates now are about the same as the much higher mortgage interest rates back in the 90s, in terms of affordability

or what caek said

🧵RISING INTEREST RATES ARE A BIGGER DEAL THAN YOU MIGHT THINK🧵
This is important (hence the caps).
I’m a bit worried people are being WAY too complacent about rising interest rates.
They assume that because they’re so low now vs the 1990s, this’ll be a walk in the park.
NO.

— Ed Conway (@EdConwaySky) September 22, 2022

I don't really get what the fed thinks it's doing, tbh.

Congress has been unwilling to employ tax and fiscal policy in a sensible manner for approximately half a century. This leaves monetary policy struggling to do things that monetary policy does very poorly.

The only way housing costs truly come down is if there are job losses, which also benefits no one. I don't really get what the fed thinks it's doing, tbh.

― longtime caller, first time listener (man alive), Tuesday, October 11, 2022 7:56 PM (yesterday) bookmarkflaglink

the fed isn't trying to get house prices down, it's trying to get inflation down. houses aren't in cpi

house prices are never going down imo

weren't you arguing a month or two ago that low interest rates were what's driving inequality?

Congress has been unwilling to employ tax and fiscal policy in a sensible manner for approximately half a century. This leaves monetary policy struggling to do things that monetary policy does very poorly.

― more difficult than I look (Aimless), Tuesday, October 11, 2022 11:28 PM (yesterday) bookmarkflaglink

what tax and fiscal policy do you have in mind? most inflation right now is from fuel prices and past fiscal policy. other than miraculously getting sudden abundant cheap energy or austerity, there isn't that much to be done tbh

most inflation right now is from fuel prices and past fiscal policy

Those past failures are what I was referencing. I wasn't suggesting that half a century of crappy tax policy could be miraculously fixed this month after five decades of mismanagement, rather that monetary policy used as a standalone tool is a very inadequate tool to fix a badly regulated national economy and at times like these it shows.

U.S. economy grows 2.6% in third quarter, reversing a six-month slump

\_(ツ)_/¯

shh people are trying to speak a recession into existence

Perfect case study of how “Everyone feels like a genius in a bull market” pic.twitter.com/MNCVwr8hRZ

— Nick Maggiulli (@dollarsanddata) December 28, 2022

he seems nice

this thread has been calling the next financial crisis as just around the corner for over a decade. one day it will be right

― flopson, Tuesday, October 11, 2022 1:47 PM (two months ago) bookmarkflaglink

it’s here

― Tracer Hand, Tuesday, October 11, 2022 3:05 PM (two months ago) bookmarkflaglink

two months pass...

Maybe we're a lobster who only slowly realizes he's in a shitbin.

yeah i mean we’re not doing so bad, exxonmobil and chevron will make an estimated 100bn in profit between them for instance

This ghoul

Larry Summers reclining on a tropical island and instructing the proles that "there's going to need to be increases in unemployment to contain inflation" ☠️pic.twitter.com/t1ONYePsUZ

— David Adler (@davidrkadler) January 6, 2023

everyone keeps saying this but it seems like inflation is easing and employment is still high, the big tech layoffs can be considered basically fake

Yeah, at the service-sector level at least the problem around here continues to be that nobody can get enough workers. I think Larry et al partly have this Biblical vengeance notion that somehow somebody has to suffer for the pandemic-era profligacy. (Somebody who isn't them or anyone they know, obv.)

the big tech layoffs are tiny relative to the economy. it's maybe 100k total, and most of those people have or will find new work quickly.

Hang on, I've just calculated the unemployment rate to extra decimal places, and December's rate of 3.468% is a new 50 YEAR LOW, the lowest rate since 1969.

— Justin Wolfers (@JustinWolfers) January 6, 2023

the big tech layoffs are tiny relative to the economy. it's maybe 100k total, and most of those people have or will find new work quickly.

― 𝔠𝔞𝔢𝔨 (caek), Friday, January 6, 2023 2:13 PM (one minute ago)

as user lagoon pointed out it's not in a tech company's nature to shrink, these are PR layoffs

yup, otm. also this guy puts it well

Amazon joining Salesforce today in laying off staff. Every single tech company has the air cover for layoffs

Even if they’re not “needed” it’s a free pass to restructure and clear out bottom performers

Expect layoffs to accelerate

— Bucco Capital (@buccocapital) January 4, 2023

It's kind of like growth companies issuing stock in 2020-2021 - if you don't do a re-org/lay-off in 2023, investors are going to think you're stupid. You don't want to be stupid, do you?

— Bucco Capital (@buccocapital) January 6, 2023

my roth IRA, not big by any means anyway, lost more than 15% of its value this year lol

New coin coming.

I asked @rohangrey & @NathanTankus — 2 of the leading theorists behind the “Mint the $1 Trillion Coin” idea — about some of the concerns I’d been hearing from those close to the White House about their plan Their responses, shared w/ permission, are worth reading pic.twitter.com/7HijRiohXp

— Jeff Stein (@JStein_WaPo) January 20, 2023

More importantly, where are you going to find someone to break a trillion dollar coin on laundry day?

the economy will boom from all the heist movies made about stealing the coin

Starting today’s econChat with Walmart talk https://www.youtube.com/watch?v=Xrd3_JGR60s

Two Snoop Dogg snippets from Milken today. I was sitting up front, and the whole thing was bananas.

First, Snoop Dogg on streaming media pricing: "If you can get a billion streams, why can't you get a million dollars? Who the f**k run the streaming industry? Are you in here?" pic.twitter.com/e6czGzDS84

— Paul Kedrosky (@pkedrosky) May 4, 2023

i.. don't understand how that's bananas

So, big freakout in online finance nerd land over bond yields and the danger of long-term high interest rates. I don't understand all the factors but I guess could lead to Fed easing off on inflation OR continuing to push at it and drive interest rates higher? Both potentially bad?

inflation's basically over, annualized month-over-month core pce was under 2% in august

Well that's about the best inflation print ever. Core PCE has a monthly value below 2 percent annualized (the Fed's target) for the first time since the lockdowns.

But under the hood it's even better - it's all in the right directions. Let's dive in. /1 pic.twitter.com/PXkUMzRKsw

— Mike Konczal (@mtkonczal) September 29, 2023

the fed's now signalling that they're trying to achieve a soft landing by keeping rates high for longer rather than pushing them up. i think we'll only see rates go up significantly again if inflation spikes

the fed only really controls short-term rates, long term rates are determined by the market. the fed can still influence these indirectly through expectations, so forward guidance that the fed funds rate still say high for long increases long term rates. but that all works through beliefs and expectations. the weird thing going on right now is that long term rates aren't high because the market believes inflation will be persistent (breakeven rates are stable around 2-2.5%). this implies the market things the long term real rate (the "natural rate") is increasing

and it's not just the market, fomc projections reveal there's a contingent (still a small minority) at the fed who also think the natural rate is increasing. they're the higher purple bar in this figure:

https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fb53022e7-3a60-4247-b2da-550842552cca_2886x1843.png

there's long been a consensus that the natural rate is low for structural reasons (aging global population, slowing population growth, falling working-age population, low productivity growth), so if it does turn out to be higher that would be a big change. but it's not clear why, since all the structural factors pushing down rates are still there. it would be very consequential for fiscal policy if it were true though

Thanks! That helps me conceptualize it. Of course I think part of what's going on on Twitter is right-wing economists pumping up fear in concert with the doomsday debt caucus that wants to shut down the government to force massive spending cuts.

inflation's basically over, annualized month-over-month core pce was under 2% in august

i know it's not your wheelhouse, but how "over" do you think it is as a politically salient issue?

What I've seen over time is that politically speaking, core inflation is not a salient political issue. Voters eat and drive cars every single day. Those expenses drive voter perceptions of inflation and core inflation specifically excludes those.

The GOP is clearly going to keep talking about INFLATION from now til next November regardless of what the actual inflation rate is, because to most people it just registers as "Stuff costs a lot more," which will remain true relative to a few years ago even if year-over-year inflation goes to zero.

But what they really want and have been banking on is a recession they can hang around Biden's neck. They have gotten frustrated waiting for it, so now they're trying to conjure it out of the bond market. I also think it's a significant part of the flirtation with shutting down the government or defaulting on debt, sufficient to tip an uncertain economy into a downturn.

i know it's not your wheelhouse, but how "over" do you think it is as a politically salient issue?

― 𝔠𝔞𝔢𝔨 (caek), Wednesday, October 4, 2023 12:10 PM (ten hours ago) bookmarkflaglink

current rate of inflation: not salient at all

cumulative price level increase over the last 2 years: most salient issue of all

importance of pcies/inflation may be decreasing. share in pew polls listing "High Cost of Living/Inflation" as the most important problem has decreased from 12% to 9% in the last 6 months. but the share answering "economy in general" is up over the same period https://news.gallup.com/poll/1675/most-important-problem.aspx

imo when people answer the question in that poll, they're mostly thinking about the price level. americans think about prices in levels. in large part due to living through 4 decades of stable inflation. in like argentina people have adapted mental accounting models that can help them perceive the difference between 15% and 12% and 8% inflation. they have little heuristics to help them do calculations involving future prices. whereas americans are just like A Big Mac Costs Five Bucks

it's not just money illusion though; real wage growth was negative from about jan 2021 to summer 2022. that just pissed a lot of people off and even though it's been back to positive now and real income levels are back to pre-2020 trends that memory will still sting

the other thing that could become politically salient soon is rising mortgage rates. again people just got used to low rates and higher rates will create some winners some losers but it'll be a bit more salient for the the losers who will be extra pissed. econometrically this analysis makes my eyes bleed but that doesn't mean its conclusion is wrong:

Since it's Sunday and I'm bored, I figured I would finally, definitively answer the question of "why do people think the economic is bad (and is that the case?)". This is because it is easy to answer, and the answer is funny and will make many people mad. https://t.co/T7CkRUzNBp

— Quantian (@quantian1) August 7, 2023

But what they really want and have been banking on is a recession they can hang around Biden's neck. They have gotten frustrated waiting for it, so now they're trying to conjure it out of the bond market.

i think the degree of irrationality on the part of bond market participants this assumes (namely, that their beliefs on the future path of interest rates can be swayed by republicans in congress) is implausible

What I've seen over time is that politically speaking, core inflation is not a salient political issue. Voters eat and drive cars every single day. Those expenses drive voter perceptions of inflation and core inflation specifically excludes those.

gasoline is 4% of income, food is 6%. you can argue that because they're bought more frequently the prices are more salient, but the fact is that core is 90% of income