Is the stock market going to tank?

[MultiVerse]

Right, in this case the Fed said, based on its forecasts, it wouldn't raise rates until 23' or 24'. So then the Fed becomes stuck in a trap of its own making where raising rates hurts credibility because it said it wouldn't while at the same time inflation forecasts and NGDP are already in excess of 5%.

[dunfree]

Is that chart based on any peer reviewed analysis in an economic journal? I'm not durrrr stimulus caused all the inflation, but it WAS a signifigant amount of cash and I personally know a lot of people that bought things they woudln't have. Including a buisness owner who bought a fucking house because of the PPP money.

Was it a significant amount of money globally? inflation is currently a global phenomena (with a few exceptions). So much of the us inflation “debate” seems to want to wish away the trans border origin and nature of it, focusing only on the twisted policy of domestic demand destruction aka pain for poor people.

[J. Barron DeJong]

Was it a significant amount of money globally? inflation is currently a global phenomena (with a few exceptions). So much of the us inflation “debate” seems to want to wish away the trans border origin and nature of it, focusing only on the twisted policy of domestic demand destruction aka pain for poor people.

Right. If you’re going to complain about the US situation, at least compare it to our peers:



https://home.treasury.gov/news/featu...tional-context

We have only slightly higher inflation, but we also have had more real economic growth. Seems like a good trade off as long as inflation doesn’t spiral, which it doesn’t appear to be doing.

[MultiVerse]

FWIW, it's not necessarily an either or. The Feds efforts in response to the crisis were beneficial while at the same time more modest rate hikes earlier might have prevented the need for more & bigger rate hikes later.

[Bunion 2020]

^^^ My impression as well, but during a global pandemic and when you turn off an economy I guess they didn't want to chance a global depression so they went big.

And when things didn't go as far south as feared they were a bit too paltry on the inflationary response. It isn't easy reacting to something one has never experienced before.

[RoooR]

Was it a significant amount of money globally? inflation is currently a global phenomena (with a few exceptions). So much of the us inflation “debate” seems to want to wish away the trans border origin and nature of it, focusing only on the twisted policy of domestic demand destruction aka pain for poor people.

I mean lots of countries did stimulus.

https://www.statista.com/statistics/...ges-share-gdp/

And many more than us. Japan did more and their inflation has been worse.

If we gave everybody $1M that would certainly be inflationary right? So it's really just an argument of degrees.

[J. Barron DeJong]

^^^ My impression as well, but during a global pandemic and when you turn off an economy I guess they didn't want to chance a global depression so they went big.

And when things didn't go as far south as feared they were a bit too paltry on the inflationary response. It isn't easy reacting to something one has never experienced before.

Exactly. In retrospect, they could have done better by raising rates a bit earlier. But given the uncertainty and market outlook they were working with, I’d say they did a pretty good job, and the results compared to other countries would support that.

Given uncertain forecasts, I’d rather they unexpectedly miss high and have a bit more inflation temporarily than miss low and have higher unemployment and lower economic output.

[J. Barron DeJong]

And many more than us. Japan did more and their inflation has been worse.

Not sure by what you mean by Japan’s inflation being worse, but they’re finally getting up to their 2% target.

Regarding stimulus, there’s also this:

A team of researchers looked at 166 countries and ranked their fiscal responses to the pandemic as a percentage of GDP. International comparisons can be challenging because in 2020 and 2021 not all countries measured spending in the same way. As one example, their analysis actually has Japan leading among the fiscal responses to the pandemic, with an estimated 55 percent of its GDP directed towards stimulus. However, this estimate includes spending not directly related to the pandemic, such as government efforts to reduce carbon emissions and certain loan guarantees that do not affect current spending.When removing this spending from the total, Japan’s fiscal stimulus drops to 16 percent of GDP, and the country falls out of the top 10 largest fiscal responses to the pandemic. Singapore leads the pack of industrialized countries with 29 percent of its GDP dedicated towards fiscal stimulus, with the U.S. not far behind with 27 percent of its GDP for this purpose. Only eight other countries spent more than 20 percent of their GDP on fiscal stimulus.”

https://taxfoundation.org/us-covid19-fiscal-response/

And you could argue that Japan has been trying to ‘stimulate’ their economy for decades, even when things have been good globally, so I’m not sure how good a comparison it is to the US.

[dunfree]

I mean lots of countries did stimulus.

https://www.statista.com/statistics/...ges-share-gdp/

And many more than us. Japan did more and their inflation has been worse.

If we gave everybody $1M that would certainly be inflationary right? So it's really just an argument of degrees.

As said, japan has had minimal inflation 2.5% yoy last month (high for post crash Japan, sure, but not high), despite huge spending of a far more “socialist” nature. Crude measures of spending without noting what & how it was spent do a disservice.

[sirbumpsalot]

For example, the war caused a massive jump in energy costs - do we expect the same percentage jump again next year, or do we think they level off? If they level off, no contribution to inflation going forward.

I disagree....the current administration said it in their campaign and repeated in in recent days...."WE WILL GET RID OF FOSSIL FUELS" So expect more of the same.

[Bunion 2020]

Not to get OT but, we must get off of Fossil Fuels.

By making the transition, the potential positives for our economy cannot be understated. Will there be some pain? Yes, no doubt, the billions in subsidies given to fossil fuel producers annually would ease a lot of it.

[yeahman]

Not to get OT but, we must get off of Fossil Fuels.

By making the transition, the potential positives for our economy cannot be understated. Will there be some pain? Yes, no doubt, the billions in subsidies given to fossil fuel producers annually would ease a lot of it.

We'll get mostly off fossil fuels in about 30-40 years. Maybe it will help slow humanity's contribution to the warming climate, but it won't stop the climate from warming.

And those subsidies are basically no different than subsidies to timber companies for logging. It benefits the country to have affordable energy and building supplies, so the government subsidizes those industries as needed, and it benefits all of us with lower prices (usually).

How come nobody ever mentions Trump's tariffs when talking about inflation? Didn't everybody warn him those tariffs would lead to inflation and higher costs for American consumers? Seems to me those tariffs came at exactly the wrong time, just before the pandemic fucked everything up.

[4matic]

10y has dropped at least 20bp from its oeak two days ago. If oil and gas come off a bit maybe back to 3%

[LeeLau]

After covering RDBX bought some long. Now playing a strangle to take advantage of vol. Short puts, short calls.

May be interesting to see if can leg back into XOM after my position got taken out. Mulling selling puts on it.

REV is trading up despite bk rumours. Needs more price spike to take a swing at it on the short side (balance sheet looks awful) but not interested just yet

[Bunion 2020]

RE: Tariffs, cause ending them would be used as a political club to beat whoever ends them. You know, China lovers and all that shit.

As for the subsidies, I agree that they represent a 3rd rail to try and reform. As long as they remain in place then I don't ever want to hear about the mythical Free Markets again.

[J. Barron DeJong]

I disagree....the current administration said it in their campaign and repeated in in recent days...."WE WILL GET RID OF FOSSIL FUELS" So expect more of the same.

Oil prices are set on a global market for the most part. Also, Biden has promised a shit ton of stuff, but not much is going to get through congress.

Reduced refining capacity in the US seems to be an issue, but I believe that reduction happened before Biden (?).

ETA: Oil futures point to prices going down, not up

https://www.cmegroup.com/markets/ene...de.quotes.html

Gasoline too


https://www.cmegroup.com/markets/ene...ne.quotes.html

[SumJongGuy]

I disagree....the current administration said it in their campaign and repeated in in recent days...."WE WILL GET RID OF FOSSIL FUELS" So expect more of the same.

Fun fact. Competing energy options should LOWER not raise the price of gas at the pumps.

[J. Barron DeJong]

Fun fact. Competing energy options should LOWER not raise the price of gas at the pumps.

Right. Green energy keeps getting cheaper, which should keep a lid on oil prices.

[Brock Landers]

How has energy/oil demand risen 1-1.2%pa for the last…30? Years (Gfc and covid excluded) despite renewables? Emerging economies are growing and using just as much if not more fossil fuels than we are offloading via renewables. It’ll take generations to get off fossil fuels.

Otherwise I agree w JBDeJong on basically everything. In retrospect…ya fed should’ve moved earlier. But we were still in a tenuous spot w openings and workforce participation.

All that said…buy bonds people. 10y and out.

[dunfree]

We'll get mostly off fossil fuels in about 30-40 years. Maybe it will help slow humanity's contribution to the warming climate, but it won't stop the climate from warming.

And those subsidies are basically no different than subsidies to timber companies for logging. It benefits the country to have affordable energy and building supplies, so the government subsidizes those industries as needed, and it benefits all of us with lower prices (usually).

How come nobody ever mentions Trump's tariffs when talking about inflation? Didn't everybody warn him those tariffs would lead to inflation and higher costs for American consumers? Seems to me those tariffs came at exactly the wrong time, just before the pandemic fucked everything up.

there are people who’ve mentioned tariffs - in particular softwood lumber tariffs. And that would make a small difference. Like with oil where one sides answer to gas prices is “because the industry has hurt feefees” theres not much interest in any fixing of the problem.

EIA has data for us refining capacity, you can see it peaked in April 2020 and dropped by 833 thousand barrels as of January 2021. Since then it’s dropped a further 199 thousand barrels a day as of March.

yeah, that sounds shrilly partisan, but that’s the reality of the us. Consumer sentiment is highly and shrilly partisan and retroactively so.

[yeahman]

All the U.S. refineries are ancient and NIMBYism prevents new ones from being built. It's a big problem.

Also not sure increased renewables will lead to lower oil prices. There will be less exploration and less production, meaning supply could decrease as much as demand.

[fastfred]

Is that chart based on any peer reviewed analysis in an economic journal? I'm not durrrr stimulus caused all the inflation, but it WAS a signifigant amount of cash and I personally know a lot of people that bought things they woudln't have. Including a buisness owner who bought a fucking house because of the PPP money.

this right here folks
the ppp money was in theory to be used to help support businesses and their employees
but guess what?
outside of the service slash retail industry everyone kept on kept on makeing money
and in the service retail those employees were given unemployment on steroids

so where did that money go?

lets see houses boats cars toys vans and shit that money did nothing useful
then boomers with deep pockets kinda said fuck we might die so maybe we need to spend some of this cash we are sitting on

and here we are

whose surprised?

[fastfred]

All the U.S. refineries are ancient and NIMBYism prevents new ones from being built. It's a big problem.

Also not sure increased renewables will lead to lower oil prices. There will be less exploration and less production, meaning supply could decrease as much as demand.

dude suncor has a refinery in north denver been there over a hundred years and now every fucking environmental nimby has loaded the poor people on their back screaming that they violate epa air quality standards weekly (the refinery does) and it needs to shut down immediately so all the new suburban houses built last year and all the poor people who live nearby can live in healthy envioroment

the idea that this refinery is shut down gives me chills

[Kevo]

Glad others pointed out the issues with the Moody's chart.

Inflation is NOT entirely on the supply side.

PPP loans were a massive stimulus to the economy that caused inflation. The fed buying assets including MBS, corporate bonds and stocks was a massive stimulus to the economy that caused inflation.

[dunfree]

I rest my case. It’s religion. The rich of TGR blame the other undeserving rich for inflation. Yup PPP caused global inflation. Not a single thing will change this view.