*Investors Blog*
- Thread starter Warstud
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There are winners and losers in every economic situation. There are more people working now than ever.
The debt to GDP ratio is an economic indicator. The question is how did we get here?
Inflation is a normal product of high employment; how much is acceptable is the question.
No its the base affect.
When the BLS gets data for the new month - they drop that month from a year ago and adds the data from this month, then gets a total. (yes I know, this is the proper way to do a running 12 month average).
So its correct, but its given outsize weight to what is actually happening.
My chart below is directly from the BLS - except they never publish 12+ months on the same press release. Propaganda much.
So this month, we had 0.3 for both headline and core inflation. We dropped 0.4 from April 2023 for both numbers, resulting in "slowing inflation) - yellow highlights below.
However look what happens next month. We only got a 0.1 in headline. So unless we get zero inflation next month, headline is flat or going up. We did have a 0.4 in core next month a year ago, so it could go down (Blue highlights)
Look what happens in the summer - 0.2 for both - pretty low. (pink highlights)
So my prediction is we get a mixed release next month, followed by an increase the two months following. If you look at the last few months of this year, inflation seems to be accelerating, not deaccelerating.
So while the math is correct, you really shouldn't put much faith in a single months release. If you even believe these numbers - I am a little skeptical myself - then you should be looking at trends not individual data points.
I was referring to the economy, not inflation. I certainly agree that 1 month CPI number, S&P, whatever is fluff. Trends and business cycles are far more relevant.
Regarding inflation, here's Forbes' take:
"The CPI reading is the latest indicator that inflation is trending in the right direction, and it could be a signal the Federal Reserve may finally pivot to interest rate cuts soon."
Of course there is more detail, beyond CPI, in the article.
Good news for WMT and I thank them, greatly 
GM continues its slow upward motion hope and prayers on that one.
GM continues its slow upward motion hope and prayers on that one.
Replying to myself to add to this post, the end of trading today. Just over 8% gain in GM in exactly 1 month since I bought it 4-16-24 and maybe hang in there/evaluate selling if it gets to 10% soon. GM is a company that likes to kick its shareholders in the head, though, really not their fault, they do well for an outgrown crazy company but Lucy still pulls that football away from Charlie Brown for decades now and I think they like to stick their own foot in their mouth at times too.Good news for WMT and I thank them, greatly
GM continues its slow upward motion hope and prayers on that one.
WMT is too much to try to figure right now as I loaded up more before the split. I have owned the other shares since it was around 32 I bought more when selling off WFC and TMUS (both still doing well) in-between... A bit upset I didnt hold WFC but cant look back, missed out on around another 15%
Dont take my post wrong, this is my spec account and its fun to watch on a good day, but has depressing days too *LOL* But been pretty good as I never lost realized money, just unrealized gains and that has been minimal.
Though with these two stocks, not exactly get rich quick stocks, I look at it more as safety investing in this "all in" way. Meaning my entire portfolio in this one account is these two stocks and except for WMT I trade the others fairly often, I might shed some WMT one day or year... or week .. to get it down to 50% where it used to be I think. I can switch out stocks on any given day but I dont do it often unless _____ ?
Just rambling on, as I wasnt aware WMT was reporting today, have no idea how I missed that. Been looking at EVs ... and a bit occupied but shelving the idea for now unless something drops in my lap
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The JCB is back at defending their currency in real time:
If at first you don't succeed
If at first you don't succeed
The criminals causing all the destruction won’t be alive in the next 10-15 years.
They don’t care.
There's always more where they came from. This has been going on for a looooong time. Trickle down baby!The criminals causing all the destruction won’t be alive in the next 10-15 years.
They don’t care.
We have never run deficits this high in peace time as a percentage of GDP. The Fed balance sheet was a whopping $9T. They have taken it down a bit and now there crying about it being too restrictive.
The wealth gap in America has never been this wide. We have essentially returned to imperialist Europe. Trickle down clearly doesn't work.
Spot on. It was always trickle up, and a pretty good trickle at that.
The wealth gap grows when we try "trickle up". Giving stuff to people is a complete fail.
The "War on Poverty" is in the top 10 of USA failures with Vietnam, COVID, etc
You guys are seeing this with odd skewed glasses. There will always be poor people. Giving stuff to healthy otherwise productive people, makes the problem worse. No I am not saying we shouldn't help the weak, the elderly, mothers, children............
The "War on Poverty" is in the top 10 of USA failures with Vietnam, COVID, etc
You guys are seeing this with odd skewed glasses. There will always be poor people. Giving stuff to healthy otherwise productive people, makes the problem worse. No I am not saying we shouldn't help the weak, the elderly, mothers, children............
Inflation is being propelled by deficits running 6 percent of GDP. Plus you have government spending in the low 20s as a percent of GDP - I don’t have the stomach to look at the latest figures - when historically it is high teens (17-18, as a percentage of GDP). That’s why you have inflation. That and a fed that stuck its head in the ground repeating “it’s transitory, it’s transitory.” Powell doesn’t want to be the next Arthur Burns so he will hold but in economic terms there are strong arguments for the Fed to go at least another half point higher, and zero arguments to cut. Plus the Fed doesn’t want more banks to fail like last spring. Want a fun and interesting read? Pull the annual reports for some of the large banks (and brokers like Schwab that have a bank) and look at the notes to the financial statements and compare ‘21 to ‘23 with respect to the reclassification of certain USTs from trading book to hold to maturity. Hold to maturity is a GAAP concept that allows these firms to avoid current marks to market on their bond inventory. If they had to take current marks, they would likely be insolvent from a balance sheet perspective, and the Fed keeps repo lending on these securities at par to prop up these banks. The Fed won’t raise again in part because it will likely create more stability issues for the banks. (How people who run a bank don’t understand that interest rate risk needs to be hedged is a discussion for another day.)
Now do I think we are in store for Great Depression 2? Not at all. But there are problems with the current trajectory and overall levels of our federal spending and resultant debt relative to GDP, and it will, at some point, manifest itself in a way that no one can foretell. The biggest thing in our favor is the Europeans are socialist and so while the Euro is stable there is little economic growth or dynamism there and that limits them to second fiddle. And no serious investor really trusts the transparency of the Chinese and the resulting stability there is questionable. For all our faults, we don’t hide them and they are plain to see. And thank the good Lord in Heaven that we still have people here, a slim majority, but a majority nonetheless, that understand that handing out free stuff to otherwise healthy people is pointless and wasteful. We have 60 years of the great society to thank for a lot of this nonsense. As an aside, as awful and morally wrong as segregation was, it did not break the black family. But you know what broke the black family, and has now spread to other groups as well? Welfare and giving out free stuff.
But back to investing, all of this is another reason to simply stay well diversified and keep costs low, as an inflation hedge, and keep taxes low for the same reason. Everything else is talking heads on tv trying to sound smarter than they are. Have a good day everyone.
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Most excellent post @RAVL Extremely great summary
The next part of that story is the treasury has to find $2T of new buyers every year to fund the deficit. The reverse repo is almost dry. Hard to see where that money is going to come from - foreign governments are net sellers of treasuries currently. The only two options I can see would be the fed monetizes it, or people exits stocks to buy bonds, which either requires something bad for stocks or higher yields on bonds.
I agree, crazy difficult time to be a investor.
The next part of that story is the treasury has to find $2T of new buyers every year to fund the deficit. The reverse repo is almost dry. Hard to see where that money is going to come from - foreign governments are net sellers of treasuries currently. The only two options I can see would be the fed monetizes it, or people exits stocks to buy bonds, which either requires something bad for stocks or higher yields on bonds.
I agree, crazy difficult time to be a investor.
Greenspan knew exactly what he was doing when he and Ronnie pushed this idea. It turns out that when you give more money to wealthy people, they just keep more money, and they don't share it with everyone else. The concentration of wealth and power, especially in free market capitalism, seems to be a fundamental flaw in capitalism. Those who have more will always use their power and influence to get more at the expense of those who have less. Not sure how we deal with this byproduct of our system without embracing being a mixed economy with eek...socialist programs.
Just finished a business law class and the textbook was 1,000 pages on all the wrongdoing done by businesses over the past 100 years. The "market" for the most part does not regulate bad business behavior, especially when so much money can be made by individuals in such a short period of time with no consequences, and the embrace of Friedman economics suggests the market and business leaders shouldn't even try to curb their behavior so long as profit is maximized.
My fear is the overall negative civil discourse we are experiencing in the US is a direct response to these systems, the wealth gap, and that the only way this resets is through civil unrest. I'm sure the Roman citizens thought Rome would go on forever...
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No one is advocating wealthfare. I would be happy with a free market.
When risk assets double in value in a handful of years because Powell Printed $7T out of thin air and the risk asset owners want to think it was their genius and people without risk assets didn't work hard enough, its laughable.
Problem is it wasn't just the pandemic - been going on for 30 years, which is why we have hundreds of trillions in debt and unfunded liabilities.
My dad grew up without electricity worked harder than anyone I know, was smart, and died reasonably poor. I suppose he didn't work hard enough either?
The best thing about BITOG is I get a inside peak at how the Boomer Generation thinks. Its useful knowledge to an investor since for the most part they own all the risk assets. The hubris explains a lot. The generation who most benefitted from all the debt are the ones that complain about it the most. There right, the debt will kill us, but the generation that created it will likely be long gone.
Using a skewed view has led you to an incorrect placement of blame. I think you can blame everyone who voted wrongly since the 1920's-30's to present. Not that it helps anything.
Not blaming - the hubris comment was in regards to their seemingly lack of care the younger middle class is being destroyed. For blame they had very few choices and no individual would have any influence anyway.
Just trying to understand it so I can profit from it.
But the issues of financialization began in the 1980's not 1920. Not that we didn't have other problems prior to that.
Not a bad way to think about things, take different angles.
"Boomer Generation" ................"the generation that created it" I read that as finger pointing. The usual. Many boomers are and were against overspending..........so I didn't quite get it, I suppose.
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