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Investment Thread - For all your money needs

DeacsATS said:
Inflation has likely peaked.

However, it will likely hang around a lot longer (years) than most people expect.
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DeacInVermont said:
Rents are 1/3 of the Fed's Core CPI measure and very few people seem to be talking about how much rental rate increases are going to drive inflation going forward. There's still a lot of dislocation between real estate values and rents that has to be reconciled.
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The CPI yesterday was encouraging, but still pointed to the aforementioned rent problems.

I've seen some chatter about a large % of retail space being unable to meet rent obligations currently. Could be some serious pain this winter.
 
JuiceCrewAllStar said:
what does it mean for inflation to have peaked but hang around?

there is (almost) always some level of inflation in the current economic system -- are you saying that it will be higher than average for years on a month-over-month basis, but not as high as it has been in the past 6-12 months?
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Yes, that is pretty much what I am saying.

I'm saying that if the goal is 2% annual inflation (which is what the Fed has been using for years), then it will be a long time before we get there. In past cycles, I think it usually takes like 7+ years (on average, whatever that means)... I think current expectations are for it to just go away in the next couple of years. That feels like wishful thinking.

Wages aren't likely to keep up with that kind of inflation.
 
the thing about the rental increases is that it should be one of the areas with less inflation since it's less affected by the other inflationary items like supply chain issues, raw material shortages, interest rate increases, and increased labor costs, etc.

it's just pure literal rent-seeking behavior
 
JuiceCrewAllStar said:
the thing about the rental increases is that it should be one of the areas with less inflation since it's less affected by the other inflationary items like supply chain issues, raw material shortages, and increased labor costs

it's just pure literal rent-seeking behavior
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Also heavily influenced by interest rates and affordability of buying vs. renting.
 
i went back and edited my post to include interest rates because the vast majority of rental housing is not affected by increased interest rates

as for affordability of renting vs. buying, if I understand you correctly then that is exactly my point: the market is pushing rent up at incredible rates because of the demand side, not because the supply side has gotten much more expensive for landlords
 
myDeaconmyhand said:
This response reads as if you have -zero- real world familiarity with the section 8 voucher process and the availability of section 8 housing. I have direct familiarity with it, and I am here to help you out. There is an extreme national shortage of section 8 housing( 7 million!) https://nlihc.org/gap
The application process can take months to years(!) to process. Took my parents 7 months to be approved and find a rental unit in Winston Salem.

Section 8 housing standards are extremely poor and mismanaged, so that housing conditions are very often horrendous.

On top of all that, the income limitation rules on section 8, very similar to the ACA, make it so that their is a massive coverage gap between those eligible for Section 8 and those ineligible who can afford unsubsidized housing.
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There is also a massive discrepancy in quality across conditions within a market. From my experience there were a few desirable, well kept locations in Winston, but the vast majority were very run down. It's been a couple years since I helped friends through the process, but I recall it basically feeling like you won the lottery if your number came up and one of the openings was simultaneously in one of the "good" properties.

Another undiscussed problem is that the online system is very confusing for the end user, especially if that user is older and not as reliant on technology as we are. The reason I got involved in the first place is I had friends who weren't computer literate enough to navigate the online portal.
 
JuiceCrewAllStar said:
i went back and edited my post to include interest rates because the vast majority of rental housing is not affected by increased interest rates

as for affordability of renting vs. buying, if I understand you correctly then that is exactly my point: the market is pushing rent up at incredible rates because of the demand side, not because the supply side has gotten much more expensive for landlords
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Yeah, I agree with that... It is a demand-driven increase. But so is the majority of what we are seeing with inflation... The supply chain stuff (along with other things) just got the ball rolling / fueled the fire, imo.

Would disagree that interest rates don't impact rental housing, but if you're just talking about the direct impact I can't really argue against that. But you can also think of it in terms of the large Apartment REITs (Post Properties, Avalon Bay, etc)... They make decisions on rents and acquisitions based on rates. Other apartment owners make similar decisions, though perhaps on a smaller scale.
 
DeacsATS said:
Yeah, I agree with that... It is a demand-driven increase. But so is the majority of what we are seeing with inflation... The supply chain stuff (along with other things) just got the ball rolling / fueled the fire, imo.

Would disagree that interest rates don't impact rental housing, but if you're just talking about the direct impact I can't really argue against that. But you can also think of it in terms of the large Apartment REITs (Post Properties, Avalon Bay, etc)... They make decisions on rents and acquisitions based on rates. Other apartment owners make similar decisions, though perhaps on a smaller scale.
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yeah, i'll cop to not knowing what percentage of the rental market has underlying variable-rate debt
 
I like to post links to articles that agree with me...

From Barron's over the weekend:
Inflation Isn’t Going Anywhere. History Says It Could Take a Decade to Get Back to Normal.

The Fed and the markets alike anticipate inflation pressures abating significantly in 2023. However, history is not on their side, according to a paper from Rob Arnott, Research Affiliates founder and chairman, and Omid Shakernia, a partner at the firm who heads its multi-asset strategies.
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They find that when year-over-year inflation rises above 8%, as has happened with the CPI this year, it doesn’t recede quickly but tends to accelerate 70% of the time, based on data from 14 advanced economies dating back to January 1970. That doesn’t mean inflation necessarily will hit new highs in coming months. But, given the previous consensus that price pressures would be transitory, they write, “we dismiss that possibility at our peril.”

The real problem is that when inflation crosses the 8% threshold, it becomes more intransigent and requires more restrictive monetary policy for a longer period, Arnott and Shakernia contend. Given that U.S. inflation has run above 6% for the past year and over 8% for the seven months through September (before dipping to 7.8% in October), history indicates that the median time it will take before inflation eases below 3% is 10 years. That’s not a typo.

The exuberance with which stocks and bonds greeted the latest CPI reading indicates that they’re dismissing history. The Fed evidently is, too.
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So it turns out SBF had a backdoor into the FTX system and used it to transfer user funds to the Bahamian government last week.

This dude is going to rot in prison.
 
thatguy2016 said:
Understand this in part, but looking around I see the EU and UK both at at 9.9%, Australia 6.1%, South Korea 5.6%, Canada 7%

only outliers appear to be authoritarian states (Saudi Arabia and China), and Japan, which has had basically zero inflation for 25 years

not trying to play gotcha, earnestly asking - pressures outside the Fed's reasonable control would have given a spike in inflation (perhaps not to 8+%), yes?
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Japan seeing inflation, too.

 
DeacsATS said:
Japan seeing inflation, too.

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Yep. My original point, probably not articulated well, was that looking at raw inflation numbers, the only countries who were outliers - China, Saudi, Japan - had significant reasons for being outliers (authoritarian states or in Japan’s case, a 30-ish year record of no inflation, such that in Japan, 3% inflation rate is roughly as newsworthy as 6-7% in the US).
 
Liquid Karma said:
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I saw this earlier and had a crypto-bro friend explain the logic to me. Major amounts of crypto are often held in cold wallets, then investors keep certain amounts of crypto on exchanges like the stock market, and those exchanges have “hot wallets” for the crypto that is being mainly used as currency, where the hot wallets don’t charge fees per exchange. This news announcement is just saying that a few coins are being de-listed from the wallet app, because they are not being exchanged frequently enough, they are still listed on the exchange.
 
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