-
Having trouble using the site?
Contact support
Stock Market
- Thread starter pmclaine
- Start date
Yep, the FED has painted itself into a corner. Running low on fuel as it circles the airport waiting for a soft landing miracle.
A year from now when credit card interest is at 50% you will hear "the pip squeak"....
The current highest credit card interest rate is 36% on the First PREMIER® Bank Mastercard Credit Card. The next highest credit card interest rate seems to be 35.99%, charged by the Total Visa® Card and the Milestone® Mastercard®.Jul 27, 2023
Highest Credit Card Interest Rates - 2023 & All-Time
wallethub.com
The panic is starting to surface at the high flying companies... People who started these "darling companies" are firing the top people and returning to be the "Captain of the Ship".... Their timing could not be worse... Who would want to captain a ship heading into the "Perfect Storm"????
_________________
www.cnbc.com
_________________
Flexport fires CFO, HR chief departs weeks after sudden ouster of Dave Clark as CEO
After firing CEO Dave Clark earlier this month, Flexport has removed its finance chief, and its head of human resources has resigned
Yep, the FED has painted itself into a corner. Running low on fuel as it circles the airport waiting for a soft landing miracle.
A year from now when credit card interest is at 50% you will hear "the pip squeak"....
The current highest credit card interest rate is 36% on the First PREMIER® Bank Mastercard Credit Card. The next highest credit card interest rate seems to be 35.99%, charged by the Total Visa® Card and the Milestone® Mastercard®.Jul 27, 2023
Highest Credit Card Interest Rates - 2023 & All-Time
The Fed itself is not in a corner - there's lot of runway available to raise rates, and plenty of credit extended over the past 15 years which, when called in, will absorb a lot of cash from the economy. Those are big powerful levers.
The folks in a corner are those who have finance models which collapse at anything resembling normal interest rates. Lots of industries are massively screwed with a federal funds rate in the 7-8% range. That includes the housing market, large swaths of the stock market, consumer goods including automobiles, and the federal government.
So the question is - will the Fed collapse the house of cards that it's allowed to be built in the past 15 years? If so, then cool - we'll go back to working out the issues that should have been addressed head-on in 2009. If not, we'll just let the bubbles continue to build as inflation wages its war against the lower classes.
Jerome Powell and the FED Reserve are "politicized". I remember the day's of Paul Volcker very well. Seems I was making 15% interest on some of my short term CD's.
Jerome Powell, as has been pointed out many times, has no formal education in economics.
In 1972, Powell graduated from Georgetown Preparatory School, a Jesuit university-preparatory school. He received a Bachelor of Arts in politics from Princeton University in 1975, where his senior thesis was titled "South Africa: Forces for Change".
Here we are going into an election year. Connect the dots.
What you call "inflation", I call loss of purchasing power of the USD. That is cutting across all classes of people. Those making the 6 figure income are losing just as much purchasing power as those making $50k / year. In all honesty those with the most stand to lose way more than those living a middle class income. The blue collar worker is going to just tighten up, do without and get by. Watch the number of CEO's, board member's, top level managers scramble when they get the pink slip. They are way farther under water than the blue collar worker. The panic of that group is starting to show. Been a long time since a deep recession and there is a generation that bet on the gravy train running forever.
The house of cards will fall and the bubbles will burst.... I've reminded some old acquaintances that said "The FED can not raise interest rates because then they could not service the debt". Interesting that no politician is concerned with "servicing the debt".
Jerome made that decision himself. He can grow some balls at any time - pretty sure he doesn't need this job.
You'll need to expand upon this statement, because I don't think there's much daylight between those terms.
The difference at the moment is that those earning 6 figures typically have stock market investments and equity in real estate, and thus their on-paper net worth has appreciated more rapidly than their grocery bill. The people who are focused on such things are easy to identify here and elsewhere because they want the current state of affairs to continue.
There is a huge difference between someone making $250k/yr and being modestly affected by paying 20% more for their next pickup truck, and someone making $35k/yr who can no longer afford a 15-year-old used car or the insurance required to operate it. I'm fortunate to be on the "correct" side of that line but can see the plight of the other very clearly because I encounter them every day.
We agree, there is not much daylight between terms. Could have to do with our individual perspectives.
I relate the meaning of inflation back to the first time it was used.... For many years, the word inflation was not a statement about prices but a condition of paper money, a specific description of a monetary policy.
On the Origin and Evolution of the Word Inflation | 44 | Handbook of M
This chapter discusses the origin and uses of the word inflation and argues that its definition was a casualty in the theoretical battle over the connection
Will this continue ... or... will it look like two lines on a graph chart that will merge ?
I think you’ll see a merging of the income level’s financial straights based off of poor money management.
There are those who live well on $50-$100k, minimal debt, robust savings, and robust retirement accounts.
There are those who make $250k+ a year who are living paycheck to paycheck with all of their nice things financed to the gills. Probably bought their McMansions on an ARM too.
It’s weird right now.
The ones are worry about are those on fixed incomes like pensions, SS, etc. They thought they were well off a decade ago, but now are looking at where they can cut corners. That’s pretty fucked up.
That is a good explanation. I'm in the bottom group. but, we have lived through times like this and for the most part, are better situated than those financed to the gills.
There are some groups that are just "stuck". Many people put their lives on hold as the pandemic started. Many in their late 20's now have been working and saving for a home and to start a family. I know them personally. Life is moving them on and they now are married and renting. There are no financial windfalls in their situation so working the same old job with no COLA has them pigeonholed.
Witnessed many moving here to Montana and building their dream home / log home. Those that relocated just prior to the pandemic have had to continue to re-finance the construction loan and finally got the home complete and are rolling over into a mortgage that is at a much higher rate than when they broke ground.
Anyone moving here over the past 3 years with hopes to work full time has found lower wages and fewer perks than the job they left in the mega city.
Housing has not kept up with demand. Same old scenario. Developer knocks down one house in the city and builds 3 shoe boxes on that one lot. People that came here for the wide open spaces are packed tighter than the suburbs they left behind. The smaller cattle operators are getting older and paying more for hay and leased pasture.
I agree, it is weird right now. I'm not seeing a concrete plan from the FED Reserve. Seems they take a lot of "let's wait and see" positions as Americans savings dwindle and their credit card balances get larger.
Interest rate payments are now one of the fastest growing spending categories in the federal budget, due to this issue. It's already here. Interest costs for the feds grew 35 percent in 2022, and are projected to grow by another 35 percent this year.
I think the disconnect occurs when the comfortable assume their investment valuation is more secure than the poor’s $1500 Corolla. It’s all bullshit numbers in a computer. Without that, where is your warm place to sleep and food to feed the family? The day that question is forced to be answered will rock a lot of lives.
That is a Great question that needs to be asked now.....
Today's article:
"I would be cautious. I think we are feeling pretty good because of all the monetary and fiscal stimulus," he told the outlet. "But it may be a little more of a sugar high. We have to deal with all these serious issues over time, and your deficits can’t continue forever."
JPMorgan's Jamie Dimon says interest rates 'may go up more,' says he hopes for soft landing
JPMorgan Chase CEO Jamie Dimon recently weighed in on the path US interest rates could take in the future, saying they "may go up more," according to The Times of India.
www.foxbusiness.com
I’m seeing more and more construction companies introduce mortgage arms.
“Choose a beautiful new Toll Brothers quick move-in home now and qualify for a special 5.49% (5.55% APR)† 30-year fixed interest rate offer through Toll Brothers Mortgage Company.”
“Choose a beautiful new Toll Brothers quick move-in home now and qualify for a special 5.49% (5.55% APR)† 30-year fixed interest rate offer through Toll Brothers Mortgage Company.”
That’s kinda old news.
Realtors / loan officers have been pushing that for the past 6 months or year.
They are also offering free refinancing for 5 years.
I just buy boring index funds. I am buying them now. I buy when the market is up. I buy when the market is down. I just stick to my plan no matter what is happening. Doing so has served me well.
I’m about 60% invested with 40% in SGOV. If we see TLT go to $85 or lower, chances are I’ll start allocating into that over SGOV.
You are just rearranging the deck chairs on the Titanic.
You will make more as a trader than an investor during the next year.
A year from now, take those trading profits and invest them.
Yeah, idk. Holding long term treasuries at a discount into a cutting cycle seems to be a pretty good move.
How old were you in 1986 ?
All of this is starting to smell like the beginning of the Savings and Loan Crash (1986 - 1995 +/-) which came about after the 1973 Oil Embargo.
History will repeat, only this time it will be worse.
You are making the assumption that they are borrowing short term funds to provide these mortgages.
But to the point of RE pricing not really weakening, this is partial why. I have signed up for home builders news letters and there are significant discounts to rates, homes, and closing cost. They could just lower the final home price to reflect the current rate market but they have an incentive to keep housing cost high.
When the house of cards collapses... What will they do with all of those houses ?
Basically the builders are going down the same road the S&L's went down.
After the S&L crash the government enacted laws to keep that from happening again. Resolution Trust Corporation was formed and sold off 'packages" of 100's of homes.
There are no laws on the books to keep the builders from doing the same thing.
But, in all fairness to a young man like you.... There will be a shit load of money made when the roof caves in. Blackrock is licking their lips as this comes about.
Nobody talks about the major tax change that preceded the S&L failures.
S&L Crisis: Who's to Blame? 1986 Tax Reform Act Genesis of Today's Financial Problems
EDITOR'S NOTE: William B. Michaels, a vice president of Merrill Lynch in Tulsa, has been a stockbroker for more than 30 years. He previously worked for PaineWebber, Bache & Co. and Standard Oil of In…
www.oklahoman.com
Obviously, not enough.... But that was not the mindset at that time..
It was somewhat a different world at that time. The storm clouds were forming (just like now) but were being ignored or buried by other events.
LOL.... Resolution Trust Corp... I had personal friends working for the RTC and heard a lot of the inside shenanigans that went on.Nobody talks about the major tax change that preceded the S&L failures.
S&L Crisis: Who's to Blame? 1986 Tax Reform Act Genesis of Today's Financial Problems
EDITOR'S NOTE: William B. Michaels, a vice president of Merrill Lynch in Tulsa, has been a stockbroker for more than 30 years. He previously worked for PaineWebber, Bache & Co. and Standard Oil of In…www.oklahoman.com
Big Investment bankers were politically strong armed to buy a "package of homes".
Just one of many examples of the disappearance of the high fliers:
At the time of its bankruptcy, it owned office properties across North America in such markets as Toronto, Dallas, and Oakland, in addition to shopping mall properties through its wholly owned subsidiary Trilea Centres which included Unicity Mall in Winnipeg, Yorkdale Shopping Centre in North York, and Scarborough Town Centre.As well as Levittown in Pennsylvania, the great American fleamarket.
en.wikipedia.org
At the time of its bankruptcy, it owned office properties across North America in such markets as Toronto, Dallas, and Oakland, in addition to shopping mall properties through its wholly owned subsidiary Trilea Centres which included Unicity Mall in Winnipeg, Yorkdale Shopping Centre in North York, and Scarborough Town Centre.As well as Levittown in Pennsylvania, the great American fleamarket.
Bramalea (company) - Wikipedia
Move it to a right to work stateA prudent move by Ford.
_______________
Ford Motor Company has announced it is halting construction works at a planned $3.5-billion EV battery factory in Michigan until it is confident the plant can be run competitively.
Ford’s announcement comes amid a strike by the United Auto Workers (UAW) union and concerns in Congress over the alliance of one of Detroit’s Big Three with the biggest Chinese and global battery maker, Contemporary Amperex Technology Co., Limited (CATL).
In February this year, Ford said it had picked Marshall, Michigan, to invest $3.5 billion to build the country’s first automaker-backed lithium-iron-phosphate (LFP) battery plant.
Under the arrangement, Ford’s wholly-owned subsidiary would manufacture the battery cells using LFP battery cell knowledge and services provided by CATL, Ford said at the time.
Ford Halts Construction At $3.5-Billion EV Battery Plant In Michigan | OilPrice.com
Ford has announced it will halt construction works at a planned EV battery factory in Michigan until it is confident the plant can be run competitively.oilprice.com
Always sound advice but I believe better returns are out there. I’m not talking unicorn types.
If you strip the top 7 performers out of the s&p what does it look like.
I’m just curious with what is coming down the pipe in the next year if there is a better option out there.
Something like sgov is done thing I’m looking at as a possibility. I’m about 20% in that now.
35% in oil. I have held that position for awhile.
But you don't strip them out when you buy the index.
That's kind of the point.
Nor do you have to pick them and be right each year. They are going to be in there.
Active investors do not reliably and consistently beat index fund investors. Oh, sure, maybe one or two years, but year in and year out, no, it does not happen.
I can look backwards and think, Oh, I should have just bought Apple and held on . . . but you don't get to invest using a Time Machine, and AOL did not continue to do so well.
If you can consistently beat index funds, you should run an active mutual fund - because folks would beat down your door to invest. You would be a very rich and well known man in short order.
I think if you are honest you will realize that you do not, year in and year out, beat the index funds.
Why Active Management in Investing Doesn't Work
There is overwhelming evidence showing that active management does not work. So when interviewing potential advisers, here is the first question you need to ask.
www.whitecoatinvestor.com
Depends on what your time frame is..
Copper will be in demand, always. When / if we live long enough to "come out on the other side" holding anything related to copper will pay off.
Not a lot of publicity like the meme stocks.
At that point, it sucks to be everyone. Trust me, when the debt-laden middle class are getting evicted after defaulting on their upside-down home, the local waitress down the street who's working three jobs just to make rent isn't suddenly better-off in any absolute sense. But I think I get what you're getting at - some have further to fall and those in the upper-middle class have much further downside potential. From what I can see, not everyone in the 'burbs has internalized the lessons of the last crash, and so some remedial education is likely on the event calendar.
I'd much rather see a riding tide that lifts all boats, but that's almost incomprehensible in the current monetary and fiscal environment. So I want the next best thing - pop the bubbles and suffer for a decade or two in hopes that my kids and their peers have a fair chance.
Last edited:
Copper can/will bounce around a lot, but I feel pretty dang comfortable stating that it will never go to zero in my lifetime.
I have some of my own theories but I will ask a simple question.But you don't strip them out when you buy the index.
That's kind of the point.
Nor do you have to pick them and be right each year. They are going to be in there.
Active investors do not reliably and consistently beat index fund investors. Oh, sure, maybe one or two years, but year in and year out, no, it does not happen.
I can look backwards and think, Oh, I should have just bought Apple and held on . . . but you don't get to invest using a Time Machine, and AOL did not continue to do so well.
If you can consistently beat index funds, you should run an active mutual fund - because folks would beat down your door to invest. You would be a very rich and well known man in short order.
I think if you are honest you will realize that you do not, year in and year out, beat the index funds.
Why Active Management in Investing Doesn't Work
There is overwhelming evidence showing that active management does not work. So when interviewing potential advisers, here is the first question you need to ask.
Over the past several years, in general, the markets have done well.
What drives an index fund to make it attractive ?
David Rosenberg (a legendary perma-bear) stated frequently during/after the '08 crash - "sometimes it's not about return on capital, but rather return of capital".
I'm going to borrow that line.
I'm seeing it start to play out, as we speak.
I don't have much so there will be little to lose around my homestead. My plan is to just maintain.
Staying healthy is my priority. If I can't live long enough to come out on the other side then what's the use ?
Ray Dalio says the U.S. is going to have a debt crisis
The billionaire investor's comments come as U.S. debt levels surpassed $33 trillion for the first time in September.
www.cnbc.com
Ray Dalio is saying what everyone already knows.
Imagine how pissed the people will be when the US defaults and all they got was a few years' reprieve from reality on the value of their homes and retirement accounts.
Going to be quite a show to watch the FED Reserve "forgive the debt" or the Commander in Chief pull a new scheme out of thin air.Ray Dalio says the U.S. is going to have a debt crisis
The billionaire investor's comments come as U.S. debt levels surpassed $33 trillion for the first time in September.
Ray Dalio is saying what everyone already knows.
Imagine how pissed the people will be when the US defaults and all they got was a few years' reprieve from reality on the value of their homes and retirement accounts.
I'm sure they are hoping for a diversion like a Nuke war.....
Watching the CEO's of the largest corporations resigning and heading for their retreats.
No one said that the Fourth Turning would be boring.
I am not sure I understand your question, but I will answer it the best I can.
I save a certain percentage of my income. Indeed, if you want to know how soon until you will be financially independent, there is only one number you need to know, What Percentage of Your Income Are You Saving?
The Shockingly Simple Math Behind Early Retirement
This is the blog post that shows you how to be wealthy enough to retire in ten years. Here at Mr. Money Mustache, we talk about all sorts of fancy stuff like investment fundamentals, lifestyle chan…
www.mrmoneymustache.com
That percentage, invested in index funds, means financial independence at a certain point in the future.
Now, there is a temptation to think, "I am smart. I can beat the index." To which I reply, years from now, do the math, and you will find that over time you cannot beat the index. Your shortcut to be less disciplined and and save less will end up biting you in the ass.
I used to be very active. I remember a year when I had over a 100% return, for the year. I remember for a brief time thinking this market stuff was easy, or I was a genius, or . . . well, you get the idea. When I also lost 75% in a year simple math tells you that even a 100% return will not make up for the loss.
Most folks never sit down to figure out what their real returns are.
There is a lot of research out there about active trading, and it all points to one thing, nobody beats the market averages for very long. The few that beat it right now will not be the same few who beat it in 2025. There is no way to consistently pick winners and losers for a 20-30 year timeline of investing.
But the good news is that you do not have to.
Market returns will get you to financial independence. It is just a matter of how much you save each year and how long you save. If you want to shorten the time, then increase the savings. Read the shockingly simple math and make your own choice.
So what is attractive to me is that I can buy index funds with very low to almost zero transaction costs, get the market returns for that index (including the high fliers - I resisted buying Apple - yes, the temptation to be active is always there- by looking at my index fund holdings and realizing Apple was the top company held as a percentage of the index), and, even with markets going up and down, my plan will get me where I need to be.
No, it is not exciting enough to have my own Tic Toc page, "Buy Index Funds With A High Percentage Of Your Income!" - but it works. None of those folks talking about their successes will ever share their failures with you, nor will they share enough information for you to figure out how they have actually done over the last 20 years, like the real math, not their selective memories of a few good investments.
And the reality is that if we taught all Americans to save and invest from the time that they are young, just about everybody would be millionaires by middle age. Instead, we teach them to take out loans to by trucks, student loans to go to college, credit cards, a mortgage on a house that is too big (1950 average house size was 1100 sq ft) and never get ahead. Because all of these payments are going to banks, they feel like they cannot save, and so they look for shortcuts (commodities like copper, bitcoin, active trading, and so on).
Just look at the Shockingly Simple Math, decide how many years, set the percentage to invest automatically, and put it in an inexpensive index fund like VTSAX (0.04% expense ratio). Then keep at it.
Americans bitch about "the rich" getting tax breaks while not taking advantage of tax free money in 401(k) and IRA and HSA. The reality is that any family of $100,000 in income or less should not be paying any income taxes - just take advantage of the tax shelters that are already available.
So, boring. I get it. But I have a six figure income and paid only $308 in federal income taxes last year. I also can pinpoint just about what year I will be wealthy enough to not need to work just to eat and keep a roof over my head and live.
