Black Monday [Archive] - Page 65

Daytr

02-09-2023, 05:26 PM

Can't be luck if it's a deliberate decision? Pretty sure the blokes at the pokies make a deliberate decision to use the slot machine and will occasionally win a bit of cash.

Just like gambling, timing markets like you did will occasionally pay off. Doesn't mean the wins are statistically significant though, so you don't have the ability to time markets consistently. However if you did I'm sure you'd be one of the richest people in the world quite quickly

Its nothing like gambling, well as much as picking stocks to invest in is like gambling. Decisions are based on data, on charts on policy etc.

I can understand why it's not for most people, but it's what professional traders do for a living. They pick the markets, not always successfully but on average and with good risk management it is very lucrative and that is why they get paid the big bucks.

If you are disciplined it's actually hard to get it very wrong.
Like in my trading & investing portfolios I have lightened up considerably in the last 6 weeks or so and even gone short US indices up until last week.
But even if I had got that wrong and just sat on cash, if markets kept going higher, which they didn't, I have just lost opportunity or perhaps a small loss if I was short as I would have stopped out.

More often than not I ride an index higher until the chart or data is telling me its maxing out & I will take my win, sit back for however long it takes to correct within the chart pattern then go long again. Or I'll halve my position and reset in full lower.

But if there is a fundamental shift which we saw 6 weeks ago I will flip & go short.
At the moment after picking up a long at just over 34000 in the Dow, I closed out this morning.
I tend to to ride Fridays long or cover shorts early, as Fridays generally see traders covering short positions prior to the weekend.

We are now what I would say is nowhere land, right in the middle so I will be cautious and trade small until I see a better opportunity.

causecelebre

02-09-2023, 06:29 PM

I haven't missed out on anything. My main portfolio is internationally based, primarily US & Australia.

My KS has the option of domestic or international equities. As it's my retirement I choose to keep it relatively conservative compared to my trading portfolio and I prefer not to have an FX exposure for my retirement portfolio, I have enough of that in my trading portfolio.

So for the umpteenth time my comparison is TD vs the NZX50 which has been a good move in the last six months. There are always other things you can invest in or better opportunities in hindsight but the point is moot as they are not within my investment criteria for my retirement savings.

Kernel Wealth offer a NZD hedged 100 Global fund. There are probably others. I have wondered what a good mix of dollar hedged and non-hedged would be or even if being fully hedged (or non-hedged) is a better option

alokdhir

02-09-2023, 06:41 PM

More money is lost looking for good stocks than is made in finding them …old saying

Thats why they also say " Let the winners ride " ...

Once u find a good stock keep it ...Like KFL found MFT in 2004 and they still have it ...it may seem half of their gains may have come from it ...

ValueNZ

02-09-2023, 07:42 PM

Its nothing like gambling, well as much as picking stocks to invest in is like gambling. Decisions are based on data, on charts on policy etc.

I can understand why it's not for most people, but it's what professional traders do for a living. They pick the markets, not always successfully but on average and with good risk management it is very lucrative and that is why they get paid the big bucks.

If you are disciplined it's actually hard to get it very wrong.
Like in my trading & investing portfolios I have lightened up considerably in the last 6 weeks or so and even gone short US indices up until last week.
But even if I had got that wrong and just sat on cash, if markets kept going higher, which they didn't, I have just lost opportunity or perhaps a small loss if I was short as I would have stopped out.

More often than not I ride an index higher until the chart or data is telling me its maxing out & I will take my win, sit back for however long it takes to correct within the chart pattern then go long again. Or I'll halve my position and reset in full lower.

But if there is a fundamental shift which we saw 6 weeks ago I will flip & go short.
At the moment after picking up a long at just over 34000 in the Dow, I closed out this morning.
I tend to to ride Fridays long or cover shorts early, as Fridays generally see traders covering short positions prior to the weekend.

We are now what I would say is nowhere land, right in the middle so I will be cautious and trade small until I see a better opportunity.
The goal of any active investor or trader is to earn a return that beats what can be earnt passively ie owning the SP500. The problem is that there are practically no traders that can consistently beat the sp500 over a long period of time say 10-20 years. Often traders can make great returns over a short period through speculation, which I would attribute to luck and it is why I make the gambling comparison. No gambler comes out ahead given enough time like the trader.

ValueNZ

02-09-2023, 07:47 PM

More often than not I ride an index higher until the chart or data is telling me its maxing out & I will take my win, sit back for however long it takes to correct within the chart pattern then go long again. Or I'll halve my position and reset in full lower.
If your data telling you the index is "maxing out" had some statistical significance, why wouldn't it be priced into the market?

EDIT: I'm no believer in EMH but something so simple as pattern recognition should be able to be done by a computer, with it's order filled 100x faster than any human could, thus removing any competitive advantage you could have

Daytr

02-09-2023, 08:01 PM

The goal of any active investor or trader is to earn a return that beats what can be earnt passively ie owning the SP500. The problem is that there are practically no traders that can consistently beat the sp500 over a long period of time say 10-20 years. Often traders can make great returns over a short period through speculation, which I would attribute to luck and it is why I make the gambling comparison. No gambler comes out ahead given enough time like the trader.

That is absolutely incorrect re beating the index.
Prop traders do virtually year in year out otherwise they wouldn't have a job.
And as I don't just trade equities, but FX & Commodities amoung other things the measure is quite irrelevant.

You have never worked on a trading floor so it's probably best not to speculate on what they can & can't do or achieve. There are many types of traders. Some specialise trading one product like US Treasuries, equities, Crypto, or could the European Repo market, FX, Credit, Commodities etc. Some are are long only traders, others trade long & short and some trade across a range of products as I do. Some traders specialize in a particular financial instrument, be a spot trader, forward trader, arbitrage or option trader and again some will do all of the above.

I knew some traders at some banks that earned $20M bonuses back in the day and there is the private equity & hedge fund traders who generally get very large performance bonuses and matching an index would not be considered performing. You might not lose your job initially bit if that's all you could return year in year out then it's likely you would get sacked.

What I think most of you guys are getting mixed up with is fund managers in the equities world, that is not proprietary trading.

Daytr

02-09-2023, 08:14 PM

If your data telling you the index is "maxing out" had some statistical significance, why wouldn't it be priced into the market?

EDIT: I'm no believer in EMH but something so simple as pattern recognition should be able to be done by a computer, with it's order filled 100x faster than any human could, thus removing any competitive advantage you could have

I'm not trading for a few pips here and there as you are correct you cannot beat the algorithms at that game. But most prop traders and tge algorithms trade technically almost ignoring fundamentals and this where they can come unstuck. AI will be interesting in this area as it will be able to feed a lot more information into the algorithms at lightning speed, but it doesn't mean you can't follow similar patterns. I do wonder if this will create more volatility or less in the future.

Well the indices did fall about six weeks ago, down quite sharply & now have bounced back some of that in the last week which has worked out very nicely.

My contention is that the impact of the China economy is yet to be priced in fully. Global interest rates will also continue to be a drag on the global economy for some time yet. As I have said on multiple occasions, I'm not saying I'm right, and I'm not suggesting anyone else follow suit, but its my current view and as I am now reasonably cashed up I can take advantage of which ever way the markets go after making a nice profit out of the recent volatility.

Personally I would like to see the US indices go back to the highs and I will be assessing all the way whether or not to re-establish a short position.

ValueNZ

02-09-2023, 08:49 PM

That is absolutely incorrect re beating the index.
Prop traders do virtually year in year out otherwise they wouldn't have a job.
And as I don't just trade equities, but FX & Commodities amoung other things the measure is quite irrelevant.

You have never worked on a trading floor so it's probably best not to speculate on what they can & can't do or achieve. There are many types of traders. Some specialise trading one product like US Treasuries, equities, Crypto, or could the European Repo market, FX, Credit, Commodities etc. Some are are long only traders, others trade long & short and some trade across a range of products as I do. Some traders specialize in a particular financial instrument, be a spot trader, forward trader, arbitrage or option trader and again some will do all of the above.

I knew some traders at some banks that earned $20M bonuses back in the day and theses the private equity & hedge fund traders.

What I think most of you guys are getting mixed up with is fund managers in the equities world, that is not proprietary trading.
What is the goal of a trader then? Beating the index is the minimum since you can literally sit back and do nothing and you're very likely to earn a return similar to its historical average return. If you aren't beating the index, there's no point in trading or actively investing.

Azz

02-09-2023, 09:08 PM

People should do what suits themselves not what the likes of Azz thinks you should do.
Do what Azz does & you might end up like Azz. 😅

I did the whole stare at a screen thing when I first got out of banking but I learnt it's not my cup of tea and I didn't trade better for it, probably worse. Stops & take profits are tools to be used so I use them.
This way I have a great life with time to run a business and still plenty of down time during the day to have fun.
If there is a very big announcement due I may set an alarm for it, but that's pretty rare.

Yeh you're a real pro! Stuffed your KiwiSaver by moving it to a cash fund while six months of super-bull went by in the US markets.

And to top it off, you, the "international day trader", sleep through the US trading day!!!!!!

I don't think anyone on this website should listen to a word you say.

Daytr

02-09-2023, 09:14 PM

What is the goal of a trader then? Beating the index is the minimum since you can literally sit back and do nothing and you're very likely to earn a return similar to its historical average return. If you aren't beating the index, there's no point in trading or actively investing.

You really need to slow down & read what I wrote. Different traders will have different goals. Some is to cover risk, some is to take risk.
The goal of a prop trader is to make as much money as possible from wherever you can.
You really need to understand most markets outside equities don't have an index so that's why the measure is irrelevant if you trading across different markets.

Return on capital is typically the measure & most would aim to at least make 50% per year by turning over that capital by trading in and out, many to achieve a good bonus would want to achieve a 100% return and others on a good year might make multiples of that.

kiora

02-09-2023, 09:18 PM

That is absolutely incorrect re beating the index.
Prop traders do virtually year in year out otherwise they wouldn't have a job.
And as I don't just trade equities, but FX & Commodities amoung other things the measure is quite irrelevant.

You have never worked on a trading floor so it's probably best not to speculate on what they can & can't do or achieve. There are many types of traders. Some specialise trading one product like US Treasuries, equities, Crypto, or could the European Repo market, FX, Credit, Commodities etc. Some are are long only traders, others trade long & short and some trade across a range of products as I do. Some traders specialize in a particular financial instrument, be a spot trader, forward trader, arbitrage or option trader and again some will do all of the above.

I knew some traders at some banks that earned $20M bonuses back in the day and there is the private equity & hedge fund traders who generally get very large performance bonuses and matching an index would not be considered performing. You might not lose your job initially bit if that's all you could return year in year out then it's likely you would get sacked.

What I think most of you guys are getting mixed up with is fund managers in the equities world, that is not proprietary trading.

For every winner there is a looser?
So who /what are the loosers?

Sole traders?

Jesse Livermore was a trader too and what did he say & do?
What happened to him?
https://jesse-livermore.com/beating-the-market.html

Daytr

02-09-2023, 09:28 PM

For every winner there is a looser?
So who /what are the losers?

Sole traders?

Technically you are correct, but for many its just lost opportunity rather than an outright loss. Quite a bit of trading in banks comes from client activity. In my case a miner might have needed to hedge a 100k ounces of gold out over five years to lock in a forward price against their production & to protect the debt they had etc. So the miner is locking in a price they are happy with and can make money at, but the bank trader may choose to take that 100k toz on their book or maybe part of it and ride it for a while. They may win or lose on that trade.
Or the trader can just go to the market of course to start a position.

In a deal where someone sells something to someone else they can both make money. If the buyer had bought lower they would make more, if the seller sells higher they would make more.

There was one major instance though where we knew that another bank was on the other side of our gold arbitrage position & the arbitrage just kept widening and the position growing until we held an 80 ton gold arb position & the other bank had most of the other losing side. The arb had blown out by several hundred percent & the exchange had to shut down trading call everybody in and forced all positions to be closed out. We banked about $100M and I think they lost more than half of that. Their entire desk was sacked and their business shut down. I had arrange an order for 40 tons of physical gold to be airfreighted to Tokyo to satisfy half our position. Crazy stuff!

But in most cases you don't know who is on the otherside as it' would be through an exchange or it could be against multiple players.

And the Livermore guy is a good example of why I don't stare at a screen all day, as I agree it's not good for your mental health. SailorRob & his 12 screens. Just ludicrous & quite likely fed into his vitriol.

Daytr

03-09-2023, 07:47 AM

NZ Vehicle sales down 33% year on year.
https://i.stuff.co.nz/motoring/132865126/ford-ranger-tops-nz-car-charts-amid-rough-august

moka

03-09-2023, 08:05 AM

I was at a broker presentation 6 months ago and they had analyzed markets during terms of Labour & National Governments and the NZ market had out performed under Labour Governments historically.
There were gasps from the grey heads in the room who couldn't believe what they had just heard.Not just in NZ, but also in the US the economy has performed better under Democrats.

According to multiple sources, including economists from Princeton University and a New York Times analysis, the US economy has historically performed better under Democratic presidents than Republican presidents. The GDP growth rate has been higher under Democrats, with an average of 4.3% compared to 2.5% for Republicans 1.

The New York Times analysis found that since 1933, the economy has grown at an annual average rate of 4.6% under Democratic presidents and 2.4% under Republicans 3.

The reasons for this difference are not fully clear, but some suggest that Democrats have been more willing to heed economic and historical lessons about what policies actually strengthen the economy, while Republicans have often clung to theories that they want to believe 3.

https://en.wikipedia.org/wiki/U.S._economic_performance_under_Democratic_and_Rep ublican_presidents 1
https://www.nytimes.com/2021/02/02/opinion/sunday/democrats-economy.html 3

winner69

03-09-2023, 09:04 AM

Hope SailorRob OK today seeing his hero/idol Buffett died overnight

justakiwi

03-09-2023, 09:15 AM

It was a hoax.

Hope SailorRob OK today seeing his hero/idol Buffett died overnight

Daytr

03-09-2023, 09:17 AM

Jimmy Buffet, not Warren Buffet!

I was about to say, I hadn't seen anything.

Meanwhile it seems Buffet has also been cashing up selling net $8Bln of stock I'm Q2 and that's after selling $13Bln in the 1st quarter.

https://finance.yahoo.com/news/warren-buffett-sells-8-billion-190940745.html

moka

03-09-2023, 09:25 AM

Yeh you're a real pro! Stuffed your KiwiSaver by moving it to a cash fund while six months of super-bull went by in the US markets.

And to top it off, you, the "international day trader", sleep through the US trading day!!!!!!

I don't think anyone on this website should listen to a word you say.I think people should read Daytr posts carefully and learn from them. I am not saying people should “listen” to him i.e. follow his advice. He has found a style of investing and trading that works for him. As he says his approach is not for everyone. It would not work for me.

I think that the quality of posts on this thread has improved over the last couple of days and I thank Daytr for sharing his knowledge and his own personal experience of what works for him, and I also thank the others who have made informative posts.

Leemsip

03-09-2023, 09:36 AM

Those vehicle sales figures are very recessiony. Starting to get some legs now. Employment is the last shoe to drop, so might have to wait to Xmas for this to come off?

Question is only how deep and how long the recession. Hopefully get some good opportunities in 24 to load up on the best companies

Daytr

03-09-2023, 09:40 AM

I think people should read Daytr posts carefully and learn from them. I am not saying people should “listen” to him i.e. follow his advice. He has found a style of investing and trading that works for him. As he says his approach is not for everyone. It would not work for me.

I think that the quality of posts on this thread has improved over the last couple of days and I thank Daytr for sharing his knowledge and his own personal experience of what works for him, and I also thank the others who have made informative posts.

Thanks Moka, you flatter me.
Just one correction, none of what I am saying is not advice & I'm not recommending it to anyone and I certainly wont always get it right

They are just my views and actions and everyone has their own style & risk appetite etc that suits them and there is nothing wrong with that.

I certainly agree that it's much better to share ideas and views without piling in on each other and perhaps we can all benefit.

moka

03-09-2023, 09:56 AM

"Toxic Combo" Of Recent Events To De-Stabilize Markets? | Luke Gromen – Macro Analyst
https://www.youtube.com/watch?v=KJre24DhRR4 (https://www.youtube.com/watch?v=KJre24DhRR4)

25:22 (https://www.youtube.com/watch?v=KJre24DhRR4&t=1522s) Why long bonds are a bad idea?

People saying the FED's going to be forced to pivot and that's why we're piling into the long bonds because we want to ride the reduction in yields once the FED starts buying.

The problem is oil is $85 and U.S Shale is rolling over. U.S Shale has been 90% of global production for the last 10 years. Energy inflation will explode higher if they pivot. Because you're going to be stimulating the economy by cutting rates into declining oil supplies.

What long bonds do you want to own if I told you oil is going to be $120 under that scenario and the answer is probably none.

Because if you look at five year US inflation break evens against oil prices it's like perfect correlation and oil is going up.
Powell and the White House SPR releases have broken U.S Shale.
We have under invested in capex in this space for a long time even if demand just stays flat for the next decade we are already going to have pretty big shortages of oil and a lot of other key resources because of decisions made 5, 10, 15, years ago not to invest.

So it's it's just going to compound. This is why it's so destabilizing is if you look at U.S oil prices relative to five-year Bond break-evens you know near in inflation break-evens they're like one-to-one they're very tightly correlated, so if oil goes up bonds are going down.

We had some control over that while we had a shale industry but Powell and Biden they just put a bullet in the Shale industry's ability to grow production for the next two three years.
So guess who's in charge of oil now for the next two to three years – Putin.
What enabled the Shale revolution to happen was three things - steerable lateral technology that really allowed productivity to rise, it was expensive oil which was a function of cheap money, and it was cheap money. Some geological issues here as well, they just aren't as productive which means your break-even costs go up.

If they just stop drilling U.S oil shale is going to fall by 20 to 30 percent annually after a bit of a lag.
The thing that the people on the bond side aren't getting is that the worst recessions in history going back 70 years saw global oil demand fall by 4% in 1980, by 8% in 2020 when we shut the economy.
There's no long-term Bond you want to own if if I said oil is going to be $150 a year

winner69

03-09-2023, 10:05 AM

NZ Vehicle sales down 33% year on year.
https://i.stuff.co.nz/motoring/132865126/ford-ranger-tops-nz-car-charts-amid-rough-august

Was a big spike up August last year so not as bad as it sounds

Annual sales still about 113,000 …been in 113k/115k level for last 12 months

Bad that all those big beasts are top sellers eh

Daytr

03-09-2023, 10:17 AM

Was a big spike up August last year so not as bad as it sounds

Annual sales still about 113,000 …been in 113k/115k level for last 12 months

Bad that all those big beasts are top sellers eh

Yes and after further reading I see June was a huge month due to the changes in the CCD so July was a bit of a hangover.

iceman

03-09-2023, 10:22 AM

Moka (post 16022) do you see the relevance to NZ on a tiny scale, with successive Governments banning extraction of just about all our resources ?

ValueNZ

03-09-2023, 10:28 AM

I think people should read Daytr posts carefully and learn from them. I am not saying people should “listen” to him i.e. follow his advice. He has found a style of investing and trading that works for him. As he says his approach is not for everyone. It would not work for me.

I think that the quality of posts on this thread has improved over the last couple of days and I thank Daytr for sharing his knowledge and his own personal experience of what works for him, and I also thank the others who have made informative posts.
Summary of what Daytr believes from his recent posts:
- It's not fair to compare the long term returns of a trader to the SP500
- 50%-100% p.a returns are manageable by traders over the long term
- Timing the market by jumping in and out of cash is a viable strategy
- If a deliberate decision is made that means no luck is involved
- Information can be gained from chart patterns that won't already be priced into the market

Seriously people how can you not see what is wrong with these claims.

bull....

03-09-2023, 10:36 AM

Valuegrowth

03-09-2023, 10:46 AM

https://www.macrobusiness.com.au/2023/09/reserve-bank-smashes-consumer-spending/

"Hence the greatest spending weakness is for what we call durable goods. These are things which last a long period of time.

This next graph shows the durables binge most easily as the orange line representing the annual average rate of growth. Note the 2021 surge and the latest result of -16% which matches GFC weakness.

Speaking of the GFC, there is a factor which was in play back then which has also been in play now – falling house prices. Some people allow their spending to be influenced by their paper wealth and higher asset prices mean they will spend more. This would have accentuated the pandemic binge.

But there is an offset from people offshore coming here to engage in their revenge travel. In the year to June spending on Food and Beverage Services jumped by 14% – almost the exact opposite of the change in spending on durable goods discussed above.

Those tough times include a soaring cost of living – high inflation – which is another reason why retail spending levels are falling.

Older people who have already lived through similar periods of high interest rates and other negative shocks have probably paid off their mortgages and are receiving some benefit from rising interest rates.

The current mortgaged generation will be in this position in 20-30 years time and a lot sooner for many."

Daytr

03-09-2023, 10:50 AM

Summary of what Daytr believes from his recent posts:
- It's not fair to compare the long term returns of a trader to the SP500
- 50%-100% p.a returns are manageable by traders over the long term
- Timing the market by jumping in and out of cash is a viable strategy
- If a deliberate decision is made that means no luck is involved
- Information can be gained from chart patterns that won't already be priced into the market

Seriously people how can you not see what is wrong with these claims.

ValueNZ I know you are just starting out so I go easy on you but age doesn't mean you should jump to poor conclusions as you have on several occasions or take things out of context.

I will answer your 5 points above in order.

1) I didn't say it's not fair I said it's not relevant as the S&P 500 is just one asset class. Most prop traders trade multiple asset classes.

2) Those returns are expected of prop traders within institutions. Question it all you like but you just don't understand it. I worked on four different trading floors around the world over 20 years and these returns are conservative and common place.

3) Yes for some it is, for most it's not & again you obviously don't understand what a prop trader does otherwise you wouldn't question this.

4) Everyone can get lucky some of the time. But if you make a decision & that decision works out, no that's not luck, that's a good decision.

5) You are misquoting me. The information I referred to mentioned data. I.e macro economic data which quite often isn't reflected in a chart or sometimes stocks or other markets are slow to react or don't react enough etc.

You really need to change your attitude. Happy for you to ask questions, but you make some very poor assumptions & also paraphrase out of context. I am happy to be challenged on anything but at least be accurate.
You are basically suggesting I am making things up. Get some real world experience before perhaps thinking you know what happens in an industry you have never worked in.

Valuegrowth

03-09-2023, 11:00 AM

https://focustaiwan.tw/business/202309010005#:~:text=At%20the%20top%20of%20the,A%2 D%22%20grade%20in%202023.

World's best central bankers

On the Global Finance 2023 report card, the other central bankers who earned a grade "A" are: Brazil's Roberto Campos Neto, Israel's Amir Yaron, Mauritius's Harvesh Kumar Seegolam, New Zealand's Adrian Orr, Paraguay's Jose Cantero Sienra, Peru's Julio Velarde and Uruguay's Diego Laba, according to the 2023 report.

At the top of the class, three central bankers -- India's Shri Shaktikanta Das, Switzerland's Thomas J. Jordan and Vietnam's Nguyen Thi Hong -- received an "A+" grade this year, the report showed.

According to Global Finance, 10 central bankers earned an "A-" grade in 2023. They are Colombia's Leonardo Villar, Dominican Republic's Hector Valdez Albizu, Iceland's Asgeir Jonsson, Indonesia's Perry Warjiyo, Mexico's Victoria Rodriguez Ceja, Morocco's Abdellatif Jouahri, Norway's Ida Wolden Bache, South Africa's Lesetja Kganyago, South Korea's Rhee Changyong and Sri Lanka's Nandalal Weerasinghe.

Daytr

03-09-2023, 11:06 AM

yep im tending to side with azz and sailor rob in my believe about this dude is actually for real about being a trader.

i asked him if he was a trader and he said yes , in another post to someone else he said after he left the bank he found it was not for him staring at a screen all day trading :scared: duhhh thats what traders do even at banks

Oh Gawd Bull, I just shake my head.
Yep I made all of this up. 🤣
Why on earth would I do that.

Quite correct though what I said re the staring at screens trading from home.

When you are on a trading floor you are surrounded by the buzz and you have people to talk to. It's a stimulating environment. You are in the city & go for lunch or a beer after work.

It's very different to doing it from home. As it's far more insular & quiet.
And as platforms & tech has improved there is less reason to stare at a screen. In fact I have found if I am needing to watch a position closely and can't not keep checking it, its usually a sign to me I've got it wrong or perhaps the position is too big.
And by not being tied to a screen I can do other things that I enjoy like running my business, or go fishing or for a walk or bike ride. I always have my phone so I can intermittently check in.

What I find really strange is that many of you obviously don't use the technology available to you. You don't need heaps of screens like I used to 10 -20 years ago at the bank. You don't need to watch it constantly, if you are disciplined and if you use the technology available.

Now I have been patient & wasted enough of my time explaining my past or trading methods to people who really just don't get it.
Just ignore what I say if it's not for you.

ValueNZ

03-09-2023, 11:33 AM

ValueNZ I know you are just starting out so I go easy on you but age doesn't mean you should jump to poor conclusions as you have on several occasions or take things out of context. Don't go easy. My age is irrelevant I just mentioned it in an earlier post because I didn't want Joshuatree taking what I said as fact since I know younger people can be quite ideologically driven, leaving it up to him to decide what he believed in my post.

I will answer your 5 points above in order.

1) I didn't say it's not fair I said it's not relevant as the S&P 500 is just one asset class. Most prop traders trade multiple asset classes.
It's totally relevant since if you are a trader and unable to beat the SP500 over the long term then theres zero point of trading. I would suggest most traders (also investors) fit into this category. The fact that proprietary traders trade multiple asset classes is totally irrelevant, it's all about the opportunity cost associated with not being invested into the index. If you're making 5% p.a trading soybean futures, the opportunity cost is the difference between what you would make in the index vs trading.

2) Those returns are expected of prop traders within institutions. Question it all you like but you just don't understand it. I worked on four different trading floors around the world over 20 years and these returns are conservative and common place.
I understand it perfectly well. If you were able to make 100% returns consistently without risk of total loss of capital you'd be richer than Elon Musk in 18 years starting from a million 1,000,000*2^18= 262 BILLION. Why would anyone in their right mind work for an institution if they could make 100% returns. Seriously.

3) Yes for some it is, for most it's not & again you obviously don't understand what a prop trader does otherwise you wouldn't question this.
IMO short term direction of prices in markets are practically impossible to predict. We'll just have to disagree

4) Everyone can get lucky some of the time. But if you make a decision & that decision works out, no that's not luck, that's a good decision.
I made the decision to put my paycheck on black it worked out. That was a good decision!

5) You are misquoting me. The information I referred to mentioned data. I.e macro economic data which quite often isn't reflected in a chart or sometimes stocks or other markets are slow to react or don't react enough etc.

More often than not I ride an index higher until the chart or data is telling me its maxing out & I will take my win, sit back for however long it takes to correct within the chart pattern then go long again. Or I'll halve my position and reset in full lower.

You really need to change your attitude. Happy for you to ask questions, but you make some very poor assumptions & also paraphrase out of context. I am happy to be challenged on anything but at least be accurate.
You are basically suggesting I am making things up. Get some real world experience before perhaps thinking you know what happens in an industry you have never worked in. Behavioural economics alongside basic math is good enough for me to know that anyone who can make those sorts of returns you claim would NEVER work at an institution.

minimum message length.

Azz

03-09-2023, 12:42 PM

What I find really strange is that many of you obviously don't use the technology available to you. You don't need heaps of screens like I used to 10 -20 years ago at the bank. You don't need to watch it constantly, if you are disciplined and if you use the technology available.

What I find really strange is that you are electing to sleep during the high-liquidity hours for the most important markets in the world. That doesn't sound very "international day tradery" to me.

Valuegrowth

03-09-2023, 01:50 PM

Very interesting. Now they are expecting recession in 2024. That means stocks are going to go up with wall of worry.

https://fortune.com/2023/09/01/recession-2024-likely-corporate-debt-strategist-warns/

"Expect the full effects of the central bank’s monetary policy tightening — and a downturn — to materialize next year following a wave of corporate debt refinancing over the next six months.
Higher debt-servicing costs tend to reduce the firepower companies have to invest and pay workers, other things being equal. Rich stock valuations and tight credit spreads are a sign that the coming downturn is not yet fully priced into markets.

“Borrowers are not feeling the full pressure of the interest rate because they are sitting on locked rates, which is not a permanent phenomenon,” he said. “A company which financed itself at 2, 3, 4% is going to be financing at 10, 11, 12% now. That’s a huge shock.”

bull....

03-09-2023, 01:58 PM

Oh Gawd Bull, I just shake my head.
Yep I made all of this up. 🤣
Why on earth would I do that.

Quite correct though what I said re the staring at screens trading from home.

When you are on a trading floor you are surrounded by the buzz and you have people to talk to. It's a stimulating environment. You are in the city & go for lunch or a beer after work.

It's very different to doing it from home. As it's far more insular & quiet.
And as platforms & tech has improved there is less reason to stare at a screen. In fact I have found if I am needing to watch a position closely and can't not keep checking it, its usually a sign to me I've got it wrong or perhaps the position is too big.
And by not being tied to a screen I can do other things that I enjoy like running my business, or go fishing or for a walk or bike ride. I always have my phone so I can intermittently check in.

What I find really strange is that many of you obviously don't use the technology available to you. You don't need heaps of screens like I used to 10 -20 years ago at the bank. You don't need to watch it constantly, if you are disciplined and if you use the technology available.

Now I have been patient & wasted enough of my time explaining my past or trading methods to people who really just don't get it.
Just ignore what I say if it's not for you.

funny i trade for a living , probably as long as you have worked for the bank and there is no way in hell i would use just a cell ph to trade from let alone not trade the most liquid markets in the world where the opportunities present themselves more regularly.
as for saying short term trading is easy. traders make 50% - 100% easy ... what planet are you on. its the most stressful type of trading there is and it is far from easy. hence the very small % of people that can actually do it consistantly over time.

you should tell me what your track record is , what markets this was acheived on and then you might get my respect. unlike sailor rob we dont need to have a bet just tell us all online your track record and let everyone be the judge if they believe it or not. simple

Joshuatree

03-09-2023, 04:00 PM

Value NZ
"Don't go easy. My age is irrelevant I just mentioned it in an earlier post because I didn't want Joshuatree taking what I said as fact since I know younger people can be quite ideologically driven, leaving it up to him to decide what he believed in my post"

Thanks for sharing,good luck with your journey👍
.Age wise I'm 4 x yours fwiw.
Unlike your two stocks I hold re 61 mainly aus then NZ,about 8 are trading stocks.Holding alot of cash ATM earning re 5.8% on call,house buying money.

causecelebre

03-09-2023, 04:30 PM

Daytr

03-09-2023, 05:44 PM

minimum message length.

You are right those outcomes you have concluded are ludicrous, so instead of making poor assumptions maybe re think your assumptions & conclusions & see why you are arriving at ludicrous outcomes which I have never suggested.

Yep making a decision on red or black is luck. 50:50 luck. When you buy a stock do you just rely on luck? Or do you take into account data from the company or the market they are in?
So trading markets is the same but on a more macro level.

moka

03-09-2023, 05:49 PM

Moka (post 16022) do you see the relevance to NZ on a tiny scale, with successive Governments banning extraction of just about all our resources ?Good question Iceman. It is above my paygrade but I won’t let a mere detail like that deter me from expressing my opinion. I think it is irrelevant because NZ does not have resources like US or Australia. If there was a new huge discovery of oil or gold etc then I’m sure there the question would be up for discussion again. And for me the important question would be how does NZ and the NZ public benefit, and not just shareholders of some huge international mining company. I suppose high energy prices down the track could cause the government to reconsider.

moka

03-09-2023, 05:54 PM

"Toxic Combo" Of Recent Events To De-Stabilize Markets? | Luke Gromen – Macro Analyst
https://www.youtube.com/watch?v=KJre24DhRR4
(https://www.youtube.com/watch?v=KJre24DhRR4)
33:00 (https://www.youtube.com/watch?v=KJre24DhRR4&t=1980s) The lag effects of a recession.

The stimulus that came from the Treasury and the deficit spending this year that stimulus wasn't really on the radar in 2022.
It pushed out the recession that everybody thought was going to come.

We saw that in April 2020 oil prices went negative. That kind of thing can happen, but it's not sustainable for a number of reasons.

On the bond side people aren't paying enough attention to the U.S net International Investment position. So let's say they're successful in getting oil prices down, let's say they fight inflation, they get the dollar up, well the dollar going up is going to force foreigners around the world to sell dollar assets to get dollars to service dollar denominated debt.

Foreigners own seven and a half trillion in U.S Treasuries and we know the U.S treasury needs to place just short of 1.9 trillion in the second half of this year alone.

Who's a buyer for that amount of paper? Not the banks anymore, they and the FED were the buyers for the last 2 – 3 years. Banks are out, FED is out.
We're going to have to find the rate with our buyers but that'll make bonds go down.

It's literally happening on people's screens and they just refuse to believe it, because it's never happened this way before, because they're ignoring the net International Investment position.

Up to 2008 the U.S net International Investment position was never more than negative 10 to 12 percent of GDP.

In 1989 when Japan blew up U.S net International Investment position was negative two percent of GDP and U.S debt to GDP was 50 percent.

Now U.S debt to GDP is 120% and the net International Investment position is negative 65% of GDP.
Foreigners own 18 trillion dollars, net not gross, net of assets they can sell if the dollar gets too strong.

Daytr

03-09-2023, 05:55 PM

funny i trade for a living , probably as long as you have worked for the bank and there is no way in hell i would use just a cell ph to trade from let alone not trade the most liquid markets in the world where the opportunities present themselves more regularly.
as for saying short term trading is easy. traders make 50% - 100% easy ... what planet are you on. its the most stressful type of trading there is and it is far from easy. hence the very small % of people that can actually do it consistantly over time.

you should tell me what your track record is , what markets this was acheived on and then you might get my respect. unlike sailor rob we dont need to have a bet just tell us all online your track record and let everyone be the judge if they believe it or not. simple

Good for you. Trade how you like & I will do the same. And I never said it was easy, the traders I am referring to are typically at the top of their game. I have lived with trading stress most of my adult life and it's never particularly bothered me although yep at times in the past their were very stressful points in time, but again that's why they are paid the big bucks.

I have three distinct portfolios.
1) my super both here & in Australia which is managed & the only interference I have is switching between asset classes from time to time as I have mentioned.

2) then I have my equities portfolio which is more an investment strategy, medium to longer term holds. Could be months, could be longer.

3) Then I have my cross asset trading portfolio which I could be in & out of a position in a day, a few days or maybe longer, depending on the type of asset and how it performs.

I don't just use my phone, but mostly as I can get everything I need on my phone, it's just a bit smaller to try & read at times.

You keep doing what works for you & I will do the same.

Daytr

03-09-2023, 06:21 PM

What I find really strange is that you are electing to sleep during the high-liquidity hours for the most important markets in the world. That doesn't sound very "international day tradery" to me.

I really don't care what it sounds like to you
I choose to have a balanced life & love it.

Daytr

03-09-2023, 06:24 PM

Daytr didn’t say he was a day trader? Maybe is missed that but many traders are not intraday and don’t need to stare at a terminal all day. I know one very exceptional FX trader who earns low right figures and he only watch’s the action 10 minutes before the close. Others like Guy Spier may not look at price for months.

Yep that end of session trading can be quite lucrative and I do a bit of that, but I know a couple of people who only do that as well very successfully.

Azz

03-09-2023, 06:57 PM

Behavioural economics alongside basic math is good enough for me to know that anyone who can make those sorts of returns you claim would NEVER work at an institution.

I've got a feeling that Daytr lives in an institution, likely a compulsory stay of some sort.

Azz

03-09-2023, 07:08 PM

You are right those outcomes you have concluded are ludicrous, so instead of making poor assumptions maybe re think your assumptions & conclusions & see why you are arriving at ludicrous outcomes which I have never suggested.

Yep making a decision on red or black is luck. 50:50 luck.

It's not 50/50, you've missed the zero (or zero + double-zero) off the wheel. You're even giving crappy advice on roulette.

Daytr

03-09-2023, 07:46 PM

It's not 50/50, you've missed the zero (or zero + double-zero) off the wheel. You're even giving crappy advice on roulette.

You are the only playing roulette, not a game for me.

justakiwi

03-09-2023, 07:54 PM

Not ok buddy.

I've got a feeling that Daytr lives in an institution, likely a compulsory stay of some sort.

Muse

03-09-2023, 08:13 PM

Need a pair of gumboots to wade through all the s**t on this thread if one could be bothered.

Fortunecookie

03-09-2023, 08:17 PM

Need a pair of gumboots to wade through all the s**t on this thread if one could be bothered.

It's waist high, I recommend waders haha.

Baa_Baa

03-09-2023, 08:31 PM

Need a pair of gumboots to wade through all the s**t on this thread if one could be bothered.

You can't ignore a thread, but you can ignore any number of the posters on it. It's very calming, to eliminate the noise and the drivel of which there is plenty of here. You'll probably find that the posters you ignore are also not contributing anything useful to the main threads that you do follow.

Daytr

03-09-2023, 09:26 PM

Need a pair of gumboots to wade through all the s**t on this thread if one could be bothered.

Totally agree, let's get back to talking about markets rather than the fixation on one person's approach to trading.

Any thoughts Fiordland Moose?

moka

03-09-2023, 10:06 PM

"Toxic Combo" Of Recent Events To De-Stabilize Markets? | Luke Gromen – Macro Analyst
https://www.youtube.com/watch?v=KJre24DhRR4
36:42 (https://www.youtube.com/watch?v=KJre24DhRR4&t=2202s) The Dollar Milkshake Theory.

Brent Johnson has the dollar milkshake theory, which says if there is a global recession, if there are hard times a lot of countries are in even worse shape than us and when people get scared you have the euro dollar dynamics that that are pushing capital towards the U.S.
In times of panic capital runs to safety.

Could panicked capital around the rest of the world flow in rather than net selling our Treasuries?

When I say the net International Investment position of the U.S has gone from negative 10 in 2008 to negative 70 you know two years ago that's the capital flowing here. It's all here now, it's all here.

Where our views disagree is yes others are more in trouble. What are they going to do? They need dollars yes They're going to sell their dollar assets.

Yes, some capital will flow here but there is no capital to flow here. It's already here and they need dollars. They don't need Apple, they don't need Treasuries, they need dollars and so they will sell Apple, Treasuries, real estate etc get those dollars.

And you can see this unwinding in the other direction.
You can see it in the net International Investment position since December 2021 it's gone from negative 70 to negative 65.
So just unwinding five points of net International Investment position as a percent of GDP.
Look what it's done to the Treasury market. We had the worst year in the Treasury market, we had the worst bond market in 150 years.

40:06 This chart shows you when the market began discounting the US going into fiscal dominance which is the U.S can't pay its debt without the FED printing the money.

Bond vigilantes - it's when the bond market kind of wakes up and says hey you I don't really believe what you policymakers are selling me and I'm going to start taking yields higher because I want to be compensated for the greater risk that I see in the system.

When you run 200 billion dollars, you're a sovereign wealth fund and the United States starts raising rates like that and you do the math, and you go they can't afford those rates without printing the money.
You buy stocks and you sell bonds just like that chart shows because stocks will hedge your inflation and bonds will get killed on a real basis. that's what that chart is telling me.

Azz

03-09-2023, 10:36 PM

Not ok buddy.

What's not ok is the false claims being made, such as this:

I have also been trading US markets outside of that and done very well in recent times being short US indices, but switch to long in the last week or so.

Daytr has "done very well in recent times being short US indices, but switch to long in the last week or so"....? I call bullsh*t on that. How has he done it? The S&P and the Nasdaq have been on absolute tears, a massive bull market, for a good year now.

Muse

03-09-2023, 10:50 PM

Totally agree, let's get back to talking about markets rather than the fixation on one person's approach to trading.

Any thoughts Fiordland Moose?

My only thought is that while there is a lot to be said for robust debate once it is clear everyone's point has been well and truly made it's time to move on. Endless back and forth, bickering, snipping, trolling, etc. is totally pointless and dilutes the value of a discussion forum. People have a lot to offer but sometimes it's like we get it - we don't need 10x posts a day from the same person on the same subject. Buffett is good, free float is good, ETF's are great, geographic diversification is good, a small clutch of people don't think daytr was a once a trader...fine, good, great and discuss...but my god do people sit glued to their computer or phone hitting refresh all day so they can make their next childish retort? It's worse than a daycare where at least the teachers can tell the children to separate. Witnessing it makes me embarrassed that I bother to contribute.

Azz

03-09-2023, 10:51 PM

Totally agree, let's get back to talking about markets rather than the fixation on one person's approach to trading.

An approach to trading by Daytr that chooses a cash fund over an obvious, massive, and lengthy US bull market, and yet he somehow "did very well" being short the same indices over that time as well, whilst he manages to "day trade" while being asleep when the markets are open. It's either incompetence, or untruths, or both; take your pick.

Azz

03-09-2023, 10:59 PM

My only thought is that while there is a lot to be said for robust debate once it is clear everyone's point has been well and truly made it's time to move on. Endless back and forth, bickering, snipping, trolling, etc. is totally pointless and dilutes the value of a discussion forum. People have a lot to offer but sometimes it's like we get it - we don't need 10x posts a day from the same person on the same subject. Buffett is good, free float is good, ETF's are great, geographic diversification is good, a small clutch of people don't think daytr was a once a trader...fine, good, great and discuss...but my god do people sit glued to their computer or phone hitting refresh all day so they can make their next childish retort? It's worse than a daycare where at least the teachers can tell the children to separate. Witnessing it makes me embarrassed that I bother to contribute.

You've got the wrong end of the stick. Nothing Daytr says stacks up, his claims are extremely suspect.

Muse

03-09-2023, 11:03 PM

You've got the wrong end of the stick. Nothing Daytr says stacks up, his claims are extremely suspect.

I haven't followed the debate and I don't give 4/5ths of FA either way. You've made your point. IF Daytr is what you say he is, you aren't coming off any better by your obsessive fixation with him.

Azz

03-09-2023, 11:08 PM

I haven't followed the debate and I don't give 4/5ths of FA either way. You've made your point. IF Daytr is what you say he is, you aren't coming off any better by your obsessive fixation with him.

It's interesting that on an investment chat site you don't care about suspect claims but you get upset about the person calling out the obvious BS. You've got it round the wrong way.

Azz

03-09-2023, 11:14 PM

You can't ignore a thread, but you can ignore any number of the posters on it. It's very calming, to eliminate the noise and the drivel of which there is plenty of here. You'll probably find that the posters you ignore are also not contributing anything useful to the main threads that you do follow.

Do you follow the Nvidia thread?

Muse

03-09-2023, 11:22 PM

It's interesting that on an investment chat site you don't care about suspect claims but you get upset about the person calling out the obvious BS. You've got it round the wrong way.

I've got no issue with you or anyone else calling their perceived calls of BS. It's a healthy part of the debate if it is truly held and many of us do it (including myself). You've gotten your point across. You've given your reasons why. You also did so many weeks ago. There is no doubt from anyone who reads this thread as to where you stand.

so what point is there spending your days, your nights, your weekends, sending off rapid fire posts on the same subject ad nauseam?

Azz

03-09-2023, 11:30 PM

I've got no issue with you or anyone else calling their perceived calls of BS. It's a healthy part of the debate if it is truly held and many of us do it (including myself). You've gotten your point across. You've given your reasons why. You also did so many weeks ago. There is no doubt from anyone who reads this thread as to where you stand.

so what point is there spending your days, your nights, your weekends, sending off rapid fire posts on the same subject ad nauseam?

So let me get this straight: the BS by Daytr can continue; but I have to stop calling it out. Correct?

Muse

03-09-2023, 11:37 PM

So let me get this straight: the BS by Daytr can continue; but I have to stop calling it out. Correct?

I've said my piece. Nothing further to add.

Azz

03-09-2023, 11:43 PM

I've said my piece. Nothing further to add.

You've overwhelmingly shown your bias.

Muse

03-09-2023, 11:57 PM

You've overwhelmingly shown your bias.

No, I haven't...I just displayed a view on the repetition on your posts & fixation on one individual poster.

For completeness sake, I don't think it should matter what anyone has done (or claimed to have done) in a previous (or current professional) life. An idea or an argument is a discrete idea existing on its own and needs to stand up on its own merits. A fantastic thought from someone with no professional background is surely more valuable than an ill thought out proposition from someone with a (real or claimed) professional background. Merits, not background, matter. A sound idea needs to be able to stand on its own two feet without the crutch of injecting someone's background. On that, you have no argument from me.

So while that was previously supposed to be it from me, now it is.

iceman

04-09-2023, 04:37 AM

bull....

04-09-2023, 08:00 AM

Good for you. Trade how you like & I will do the same. And I never said it was easy, the traders I am referring to are typically at the top of their game. I have lived with trading stress most of my adult life and it's never particularly bothered me although yep at times in the past their were very stressful points in time, but again that's why they are paid the big bucks.

I have three distinct portfolios.
1) my super both here & in Australia which is managed & the only interference I have is switching between asset classes from time to time as I have mentioned.

2) then I have my equities portfolio which is more an investment strategy, medium to longer term holds. Could be months, could be longer.

3) Then I have my cross asset trading portfolio which I could be in & out of a position in a day, a few days or maybe longer, depending on the type of asset and how it performs.

I don't just use my phone, but mostly as I can get everything I need on my phone, it's just a bit smaller to try & read at times.

You keep doing what works for you & I will do the same.

cheers for sharing
well i agree with you on the fact that everyone should trade how it suits them and yes there are all sorts of traders and that the key is finding what works for you successfully. by the way.
i do use my ph Too , but only for monitoring positions never for implementing anything.

shame you dont want to share your track record from your bank days.

Daytr

04-09-2023, 08:30 AM

cheers for sharing
well i agree with you on the fact that everyone should trade how it suits them and yes there are all sorts of traders and that the key is finding what works for you successfully. by the way.
i do use my ph Too , but only for monitoring positions never for implementing anything.

shame you dont want to share your track record from your bank days.

The only track record I monitored when I was trading for the bank was what was the size of the bonus based on P&L not percentages.
So I would have no idea what the numbers you are looking for were 10 + years ago and I'm certainly not sharing what I was paid.

Have a good one.

Daytr

04-09-2023, 08:34 AM

My only thought is that while there is a lot to be said for robust debate once it is clear everyone's point has been well and truly made it's time to move on. Endless back and forth, bickering, snipping, trolling, etc. is totally pointless and dilutes the value of a discussion forum. People have a lot to offer but sometimes it's like we get it - we don't need 10x posts a day from the same person on the same subject. Buffett is good, free float is good, ETF's are great, geographic diversification is good, a small clutch of people don't think daytr was a once a trader...fine, good, great and discuss...but my god do people sit glued to their computer or phone hitting refresh all day so they can make their next childish retort? It's worse than a daycare where at least the teachers can tell the children to separate. Witnessing it makes me embarrassed that I bother to contribute.

Well said and noted.
I removed Azz from my ignore list which was a mistake, I try not to make the same mistake twice. One of my weaknesses is enjoying winding people up a little too much. Not necessarily a good trait.

Azz

04-09-2023, 10:31 AM

fixation on one individual poster.

I've only discovered one poster here obviously misrepresenting what they say they're doing. Someone who allegedly day trades the US indices and sleeps through the market-day liquidity? And told people here that he had a great success being in cash in his KiwiSaver during months of massive gains in the US. And apparently he shorted this bull market too! I wouldn't trust a word Daytr says. And some people are upset with me for questioning, discovering, and publicizing these things, and have asked me to be quiet - and those people don't appear to have any regard at all for the obvious problem here: trying to silence questioning and at the same time allowing the subject to get off scot-free.

Azz

04-09-2023, 02:35 PM

You are the only playing roulette, not a game for me.

What does that mean? How am I "playing roulette"? Alongside your false claims of trading genius, including the amazing ability to day-trade markets WHILE ASLEEP, you just say completely random crap. I wasn't suggesting you're playing roulette; and I'm not playing it either. You posted false odds for red or black, and I corrected you.

Daytr

04-09-2023, 02:46 PM

moka

05-09-2023, 06:19 AM

I keep posting these comments because Gromen is a macro analyst. As he says most people are in silos, they only see part of the picture e.g. the sharemarket, or the bond market etc. He highlights just some of the factors at play in a very complex system, i.e. China, Japan, Russia, oil prices, how the Fed raising rates impacts shale oil. His predictions may not be right because at any time any of the big players can change direction and policies.

"Toxic Combo" Of Recent Events To De-Stabilize Markets? | Luke Gromen – Macro Analyst
https://www.youtube.com/watch?v=KJre24DhRR4

43:18 (https://www.youtube.com/watch?v=KJre24DhRR4&t=2598s) Will the fed win the inflation war?

So do I think the FED will be successful in getting inflation back to two? No.
I think there's a reason why Jason Berman who was Obama's chairman of the Council of economic advisors said the FED should increase their inflation target to three.
And Paul Krugman saying hey it's a good idea to just go to three.
In March told us they can't go to two unless they're willing to stand aside and let the banking system come unhinged and let the treasury market really dysfunction.

Do you think that we are in a secularly higher era of inflation looking at the next decade plus than what Americans have been accustomed to for the past couple decades?
Absolutely like yes, the 40-year run of China's economic miracles is over.

I think the Fed will probably go higher raising rates which will ultimately discredit them.
The reason I think that is I think they're losing control on oil. I think is going to go 85 90 100.
With that with you can start seeing inflation pick back up and the US has no ability to control it.

Finding and exploring drilling for oil is risky and capital intensive.
There's a high cost of capital so if you're an oil producer why go through all that hassle when you can just take your cash and put it in treasuries.
Except if they all start doing that oil production is going to fall at 20% 30%.
China oil imports are rising double digits, and they're the biggest oil importer in the world.
The FED is encouraging shale to not drill and we're the biggest marginal producer.

It is not well understood that the U.S - there was a gambit, raise rates, strengthen the dollar, cap oil with the SPR and hope Russia breaks before U.S. And yes, Russia is hurting but Russia's not breaking.
Shale rolling over is very inflationary, deficits are inflationary. cheap stuff from China, deglobalism - everything is on one side of it.

Shale wells deplete asymptotically unlike conventional wells which deplete on a bell curve. So conventional oil wells have a much longer life span.
With shale you have to keep drilling more and more to keep production where it is because your early wells are just asymptotically running out of supply. When we compromise production it falls off much faster in the shale field.

moka

05-09-2023, 06:26 AM

Ricky-bobby

05-09-2023, 07:48 AM

Azz

05-09-2023, 08:21 AM

To control inflation u have to control the root cause

The root cause was (is) the bastardization of money - ie, government "printed" large amounts out of thin air, then gave it to the banks to create more "printed" money by way of fractional lending, who then handed it out to the public at near-zero interest rates. This had been going on for a while, but really got into gear when a large dollop of covid hysteria was added to the mix.

percy

05-09-2023, 08:26 AM

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/jhMSGQrYtgy3D8w1k97638Ww/7RFr0uvdCZug0vCFdObxyA

moka

05-09-2023, 08:42 AM

What about labour costs?… I see labour is the biggest problem for us fighting inflation. Stop lifting min / RSE wages and this will help settle down costs. In the wine industry our labour costs have nearly increased 20% (since last year) and it will be 50-60% of our operating expense. To control inflation u have to control the root cause and labour is a big one. Seeing fert coming down as farmers stop putting it on globally, this will lessen supply and potentially keep costs up…Workers are just reacting to the cost of living. Rents have been going up for years, and now food, electricity, petrol etc. They are just trying to maintain their standard of living. And they are consumers which is 60% of GDP, so keep wages down and GDP will go down. It is a vicious spiral. Workers are expected to pay the price when they have not been the ones who have benefitted from the wealth effect over the last 40 years. Workers are also the actual producers but the profits go to capital.

Daytr

05-09-2023, 08:46 AM

"Toxic Combo" Of Recent Events To De-Stabilize Markets? | Luke Gromen – Macro Analyst
https://www.youtube.com/watch?v=KJre24DhRR4
People in Silos

51:14 Discussions I have with people on Twitter etc that want to buy bonds, they say well the US is the biggest oil producer in the world and that's the extent of the discussion.
No, you don't understand the geology.
Again it's that siloing, the oil guys are saying there's a problem coming here, and the bond guys are like no deflation's coming.

The fed's probably the most guilty of this anybody else, but they look at the economy or certain elements as closed systems and they don't look at the other systems that they depend on to work.

So why is Luke spending so much time talking about oil industry? Well because without energy you cannot power an economy.
For a long, long time dollars equal energy. Treasuries equal energy and we are seeing in real time the disconnection between the dollar and energy and treasuries and energy.
You're seeing people circumvent that.
When China says we just signed a 27-year LNG deal with the UAE or with Qatar and then they sign a second one.
The way the world worked from 1971 at least up until recently was China sells crap to the U.S. U.S sends dollars. China takes the dollars they buy Treasuries and they hold those treasuries for a rainy day when they need to buy LNG.
Now what are they doing they're going straight to the source and going here you take the dollars and you promise us we will rebuy a 27-year supply of LNG.
Because we would rather own a 27-year supply of LNG in the ground than we would the equivalent amount of treasuries.

They're telling you what's happening. People just refuse to see it.
Well who buys those treasuries? The rates go up until we figure out who's going to buy them right and we hope that clearing rate doesn't bankrupt the US government. Receipts are below true interest expense.

Yeah he's a good watch and he backs up his thesis well. He's definitely right about the geology or the nature of shale oil.

So my take on what he is say is that the FED will need to pivot on interest rates & QE earlier than their current targets allow which will drive share prices higher, bonds smashed.

The problem is that it then becomes near impossible to raise rates as the debt burden is too high. Unless the fed allows failures & the US government doesn't get their books in order by either reducing spending or raising taxes he is right it's just kicking the can down the road to an unsustainable level which in terms of US Government debt they are probably already there.

My question is, do stocks get driven to ridiculous levels, the FED is out of ammunition & we see the almighty crash that their bailouts has built up over the last 15 years.

moka

05-09-2023, 08:46 AM

https://www.youtube.com/watch?v=1gMPZJ7kwr4
Recession Is Inevitable. So Own These Assets | Luke Gromen

Is the Japanification of the US inevitable at this point?

Yeah but it is going to feel like the argentinaification.

Japan are culturally largely homogeneous which makes the politics of what has happened to Japan much easier to weather.
Japan runs a current account surplus and Japan has a net International Investment position of 60% give or take of GDP to the positive, which means they have savings equal to sixty percent of GDP offshore.
So, Japan can run deflation. They’ve got this net International Investment position piggy bank. They could sell three percent of that per year and finance their deficits for 20 years.

Let's look at the United States, twin deficits, net negative net International Investment position.
In Japan deflation means they're getting positive real rates of return. They can do it for 30 years, as we've seen U.S can't do that for more than three months, six months. We've already seen why because tax receipts fall and unlike Japan we don't have a piggy bank offshore to repatriate.
The piggy bank is the Fed printing the money because foreigners have the assets here.

So, what's going to happen, we can have deflation for that long and then the banks have a problem or foreigners repatriate their assets. We have deflation the dollar goes up and foreigners starts selling the 18 trillion they have.

Rates go up they go up and up until they hit a rate where the US government can't afford it. Because the dollar is so strong foreigners are pulling their assets home to finance their dollar debt.
Powell he prints the difference.

moka

05-09-2023, 09:11 AM

https://www.youtube.com/watch?v=1gMPZJ7kwr4
Recession Is Inevitable. So Own These Assets | Luke Gromen

5:56 (https://www.youtube.com/watch?v=1gMPZJ7kwr4&t=356s) Does the argentinaification of the economy include social uprising?

We've got a huge part of the populace that is hanging by their financial fingernails here. We've had this policies to date have rewarded the already wealthy, and if we get into an argentina-like scenario where the purchasing power of the currency really starts tanking hard. Presumably the people who own financial assets as long as those financial assets are inflating in price commensurate with the purchasing power decline in the dollar they're going to be okay.

That's the wealthy, how does the average guy not get screwed.

I put a video on this channel about a week ago about the Rich men north of Richmond about the plight of the working class. I think we're already beginning to see signs of fracture in the social fabric.

Does the argentineification of the economy does that also include some sort of social uprising or upheaval here as the masses get to a point where they just can't get by anymore?

When you do dumb things for a long time on borrowed money sooner or later a reckoning comes and the reckoning's here and the trigger again in my view is away once oil rolls over that's the destabilizing thing. They can paper over a lot of stuff. They can't paper over six dollars a gallon at the corner at the corner gas station.

We want to stop inflation we have to slash fiscal. So, there's only three things you can cut, treasury spending, you got to cut rates which is inflationary okay so we can rule that out, or you need to cut entitlements and defence by 40 to 60 percent immediately permanently right which no politician will do.

If you did that the reverberation of that would collapse the banks. It would collapse the treasury market, would collapse global asset markets.

Let's say you want to stop the inflation. You got to get eight percent deficit of GDP back to two. All right you got to cut six points of GDP tomorrow permanently. Because unemployment's at three and a half we're at like peak of the cycle so you got to cut six points of GDP.
The great financial crisis GDP on a four-year basis fell four.
Covid was an eight percent decline in GDP if I remember.
If you're gonna cut it six forever you're done.

That's the thing that people don't get. You can't, there's no out they're done. You can't cut six points of GDP, the system collapses and do you want to stand aside let the banks fail etc.

Swala

05-09-2023, 09:25 AM

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/jhMSGQrYtgy3D8w1k97638Ww/7RFr0uvdCZug0vCFdObxyA

Good, commonsense article. Thanks for posting Percy.

justakiwi

05-09-2023, 09:33 AM

Excellent article Percy. Thanks for sharing.

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/jhMSGQrYtgy3D8w1k97638Ww/7RFr0uvdCZug0vCFdObxyA

moka

05-09-2023, 09:35 AM

https://www.youtube.com/watch?v=1gMPZJ7kwr4
Recession Is Inevitable. So Own These Assets | Luke Gromen

We need an economic or an energy productivity miracle.
Is there some sort of technology here that can be commercialized rapidly? Something that drives a productivity increase. There are other productivity increases, they're not pleasant. But if the baby boom generation passes on over the next five years and passes all their 65 trillion in wealth to their kids so that we get rid of the entitlement basically over a span of three to five years.
While the kids boom economic growth because it's like a lottery ticket when the wealth shows up in their inbox. That's a productivity miracle. There are ways out of this, but they're extremely unlikely.

Then your choice is inflation or collapse. You can't cut six points on the deficit without collapsing.

I frequently get asked what would you need to see that would make you change your view. That would be one of them. If you told me you know the Boomer population has gone from 70 million to 10 million over the next five years and their assets have passed down to their kids I'm gonna be wrong, the economy is gonna be booming because it's gonna flow to 40 year old people who are in like peak spending years.

You have to be objective as an analyst regardless, you can't be emotional about the inputs. People ask me what are the inputs that could make me wrong. That's an input that would make me wrong.

14:55 (https://www.youtube.com/watch?v=1gMPZJ7kwr4&t=895s) The importance of oil and real estate.

Jim Puplava said back when oil was up to 149 dollars a barrel, I think oil is the new fed funds rate.
It's really the thing that is going to dictate economic growth going forward and it's out of control of the FED. You can't print more oil as you've said many times in this discussion right and so it seems going forward the oil price is going to be much more important than whatever the FED decides to do because that's the real world which drives controls economic growth.

A commentator in the late 1990s said it's not well understood, but embedded in the price of every asset is a full and growing supply of cheap and cheaper oil.

What's the value of your house in an outer suburb California with no public transport.
It has one value at $1 gasoline and at $15 gasoline the value of your house 60 mile outside of LA is a lot lower. Now that predates work from home Zoom etc.
That cost of energy is embedded in everything.

moka

05-09-2023, 09:44 AM

https://www.youtube.com/watch?v=1gMPZJ7kwr4
Recession Is Inevitable. So Own These Assets | Luke Gromen

We talked a little bit earlier about the lag effect and how the recession's been pushed off. As you look out rest of this year into 2024 people are saying forget soft landing we're going to have no landing and we've avoided a recession. Are they going to be proven right or wrong in your opinion?

Wrong in my opinion.
Why you do you think recession's inevitable?

I think oil is going to get a lot higher and I think sooner or later commercial real estate is going to have to be dealt.
How big of a time bomb do you expect commercial real estate to be? It has the potential to be really, really big but for me it's just another metric where it's a switch. Does the FED want to let the banking system collapse or does the FED want to sacrifice the value of the dollar in inflation and the FED has particularly in the last several instances, the Spring banking strains, March 2020’s off the run treasury market crash, and the repo rate spike in 2019 in September, the FED has shown no ability or no willingness to stand aside and they've become increasingly proactive.

So, I think I look at the commercial real estate side as you're going to get one big crack and then that's going to force the FED to do something that's how I'm thinking of it and that makes it really tough to trade right and I don't know what that crack looks like. You've already had some gating but you get some sort of very headline commercial real estate entity say look we can't refinance however many billions here's the keys.

I live in Cleveland so people think don't worry this will turn around maybe but that's what they were saying in Cleveland in 1985.
Commercial real estate could be one very big additional shoe to drop. I still kind of put that into the lag effect category. I agree because these guys are coming up to refinance and they're just like oh my God my cost of debts like more than twice is what it was a year and a half ago. And by the way the banks are saying we need an extra 10 million dollars of equity, or 100 million dollars of equity.

Those guys don't have the equity. They're commercial developers most of these guys are running 10 times, 5 times levered.
I had friends you know they bought a place down in Florida I guess a year ago and their broker had told them the broker had not done a deal with a mortgage on it like eight months or something like it was just all cash all the time.

iceman

05-09-2023, 10:10 AM

Good, commonsense article. Thanks for posting Percy.

Agree. A great article

moka

05-09-2023, 11:27 AM

https://www.youtube.com/watch?v=1gMPZJ7kwr4
Recession Is Inevitable. So Own These Assets | Luke Gromen

22:04 (https://www.youtube.com/watch?v=1gMPZJ7kwr4&t=1324s) The extent to which the housing market will crash.

Are you concerned about the extent to which housing could resolve downwards. Are we going to be seeing people losing all their equity or do you think it's going to be more mild than that?

No I think it's gonna be a lot more mild than that because I take a look at where the exposure is and to be clear I don't think housing will resolve downward because I think the government's going to break way sooner.
Let's look across the big pools of capital who has fixed rates and who doesn't. Consumers have fixed rates, corporates have turned their debt out quite a bit, U.S government hasn't turned it out and the banks.
I'm making over two points between my mortgage and my money market, but that means there's a bank somewhere bleeding two points and practically speaking since it's a mortgage it's effectively the government bleeding and the government's just printing it right

So I don't think the housing market will result down because I think the US government is going to force the FED into printing money to finance the government well before the housing market breaks on the downside, because homeowners are locked in at fixed rates, because of the installed base of assets that the Boomers and the silent generation have to help smooth over for their kids in particular.

I personally am overweight cash, I'm overweight short-term treasuries, I am also overweight gold, I'm overweight Bitcoin, I'm overweight U.S electrical infrastructure equities, I own some energy, I own oil and some oil related equities. we're still bullish on electrical vehicle related metals and own a little silver.
So, it's sort of this barbell strategy because I think it's really critical to understand what's happening people say it's different this time and they say you should never say it's different this time but it actually is on some levels different this time by the by the scale and order of magnitude.

And if someone tells you they know exactly how things are going to go over the next 12 months, run in the other direction because I'm as you know as deep in all this.

Could we get a deflationary crash? Sure. Do I think it will last very long? It better not and that's why I want that cash in those short-term treasuries because I want to have some liquidity. I want to have some optionality.

moka

05-09-2023, 11:30 AM

https://www.youtube.com/watch?v=1gMPZJ7kwr4
Recession Is Inevitable. So Own These Assets | Luke Gromen

I have zero conviction in any sort of a very short term how it could play out.
I have extremely high conviction on how ultimately play out which is the Fed's gonna have to print the money to advance the government and it's going to be very inflationary for a sustained period of time. It will probably be explicit yield curve control in the United States and bondholders who have won no matter what for 40 straight years are going to lose no matter what on a real basis for probably 10 years.

People forget that the average real rate on bonds was negative from 1900 until 1981, and then it was positive, then it was massively negative 2022. It's negative again so I think for me long duration and in particular Western Sovereign bonds I had I don't know why you'd be involved.

What would change my mind if the US came out and said we're going to cut 40% - 60% entitlements and Defence tomorrow permanently.. Sorry Boomers you got enough money move on.
Why take 4.3% on 10 years when you can get five on short-term. Makes no sense.
I think gold is a derivative energy play because again it takes energy to get out of the ground.

If we're in Peak oil, as I think we are as the evidence increasingly suggests we are Treasuries can no longer be the primary Reserve asset and so the question is what's the next primary Reserve asset and all other candidates out there with the exception of gold either cannot be or do not want. So, the pound can't have it, the Yen can't have it, Euro and Yuan do not want the exorbitant privilege that turns into an exorbitant burden and you're left with gold and you can see Central Banks buying gold and they've been doing so for nine years.

Fortunecookie

05-09-2023, 11:33 AM

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/jhMSGQrYtgy3D8w1k97638Ww/7RFr0uvdCZug0vCFdObxyA

Great article. Thanks for sharing Percy.

moka

05-09-2023, 11:37 AM

Last post on Luke Gromen macro analysis

https://www.youtube.com/watch?v=1gMPZJ7kwr4
Recession Is Inevitable. So Own These Assets | Luke Gromen

29:04 (https://www.youtube.com/watch?v=1gMPZJ7kwr4&t=1744s) Thoughts on a new BRICS currency priced in gold.

I don't think they're going to launch any sort of separate currency. I think what they're ultimately going to do is agree that gold buys more commodities in their block than it does in London and New York and then they'll just stand back and let free markets do the rest which is to say if Russia China and Iran all agree and announce gold buys 60 barrels of oil in the Brix Block in Shanghai and Moscow and it's only 30 barrels an ounce in the heavily paper Western markets, in the UK and in New York every hedge fund on the planet is going to say okay I'm going to short 30 barrels of oil in London or York. I'm going to take the cash proceeds I'm going to buy an ounce of gold, take the ounce of gold to the brics block, I'm gonna get 60 barrels of oil from the Russians and the Iranians and anyone else participating I will then sell 30 barrels cover my short. Risk-free arbitrage what could possibly go wrong.

And of course what can possibly go wrong is New York and London get cleaned out of gold inventories remarkably fast to clear Force Majeure and the brics will have just used their oil to devalue the dollar against gold by half and that's some version of that do I think that's coming. This week probably not. Do I think that's where the world is heading. Why do I think that? Because in 08 when Russia started buying gold for the reserves that gold bought eight barrels of oil, ten barrels of oil, now it's 30. That number has gone up and I think it will continue to go up over time.

Azz

05-09-2023, 11:37 AM

"Recession Is Inevitable. So Own These Assets | Luke Gromen
I think gold is a derivative energy play because again it takes energy to get out of the ground."

As is Bitcoin.

Daytr

05-09-2023, 12:03 PM

https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/jhMSGQrYtgy3D8w1k97638Ww/7RFr0uvdCZug0vCFdObxyA

Every day billions are being added to pension & investment funds to buy equities so naturally and incrementally demand grows as does the capitalisation of the market.

Interesting they used the Australian stock market in their example. If they had used the US market it would have been a very different story.

If you bought stocks in the US in 1929 prior to the crash it took over 30 years to recover your capital other than one brief spike. That's mostly not including dividends of course.
Even in the last 100 years or so the US market is only about 6 or 7 fold again not including dividends.

Most of the growth of course has been in the last 20 years in a time when Governments have allowed debts to grow exponentially and bailed out the banking sector on multiple occasions.

But you can't deny the underlying premise of the article, in that overall and most of the time it makes sense to be positive towards markets... until it isn't. 😅

Valuegrowth

05-09-2023, 12:10 PM

In recessions industrial metals usually hit hard.

bull....

05-09-2023, 03:35 PM

anyway nz50 started off the mth where it left last mth :scared:
just going down as usual along with the nz dollar

and the powers that will be ( both i must say ) have no plan on how to move nz forward only thing they appear to know is how to keep writing cheque's with non existant income to pay it

Rawz

05-09-2023, 08:52 PM

People need to be prepared for a big rally from 16th Oct through to Christmas. Don’t miss the boat

alokdhir

06-09-2023, 07:58 AM

bull....

06-09-2023, 11:37 AM

alokdhir

06-09-2023, 12:10 PM

which country do you think NZ could end up like?

Many come to mind where politics of appeasement has kept the country down ...mainly because masses there are unable to see the difference between short term gains vs long term prosperity ...India comes to mind where even a liquor bottle can buy votes of full family ...lol .

I reckon NZ electorate to be learned enough to see thru non implementable promises and they ignore freebies vs long term economically sound policies .

National following Labour in offering freebies which country cant afford is wrong way forward ...

I have great respect for the collective intelligence of NZ electorate...hopefully they will see thru these tactics and will make the right choice

Recaster

06-09-2023, 02:52 PM

which country do you think NZ could end up like?

Argentina.

Rawz

06-09-2023, 03:21 PM

NZ middle class know who to vote for.

ACT

workingdad

06-09-2023, 03:24 PM

Many come to mind where politics of appeasement has kept the country down ...mainly because masses there are unable to see the difference between short term gains vs long term prosperity ...India comes to mind where even a liquor bottle can buy votes of full family ...lol .

I reckon NZ electorate to be learned enough to see thru non implementable promises and they ignore freebies vs long term economically sound policies .

National following Labour in offering freebies which country cant afford is wrong way forward ...

I have great respect for the collective intelligence of NZ electorate...hopefully they will see thru these tactics and will make the right choice

Problem is there isn’t much choice…. They are all far from ideal

alokdhir

06-09-2023, 03:38 PM

Problem is there isn’t much choice…. They are all far from ideal

Problem is not the politicians changing ....as Politicians are known to change to publics tunes ...It's the masses behaviour which look for shortcuts to individual prosperity at the cost of the country / fellow citizens .

Example being freebie politics of Green Party ...they are trying to emulate Chairman Mao type promises to catch votes ....today is free dental care offer funded by wealth tax ...but no mention of total lack of infrastructure in healthcare to comply with existing entitlements of people ...no mention of how to find or retain dentists to provide free services to all etc etc .

Why these political parties need to resort to such promises to get votes ? Mainly because they think now they can ...thats the biggest worry ...exploiting the people to further their own cause . This kind of politics dont let country prosper ...they only take it backwards ...Divide and rule doctrine works wonders but will create Frankenstein which will be hard to control latter ...just like no attention to Gangs earlier has led current uncontrollable problems from them .

Rawz

06-09-2023, 03:58 PM

This is why democracy is a bit dumb. But the best of all the dumb systems

alokdhir

06-09-2023, 04:02 PM

This is why democracy is a bit dumb. But the best of all the dumb systems

Democracy is dumb for dumb electorates ...but great for learned and alert electorates ....NZ is very fair and ethical electorate but politicians are enticing vulnerable people at their difficult times to further their own cause . Hopefully we wont fall for these tactics :)

Relaxed

06-09-2023, 04:16 PM

Problem is not the politicians changing .....

Although I did read a quote recently (from ages ago)....

"Politicians are like nappies.
They should be changed regularly... and for the same reason"

on a more serious note. This quote seems fair

"No one will really understand politics until they understand that politicians are not trying to solve our problems.
They are trying to solve their own problems — of which getting elected and re-elected are number one and number two.
Whatever is number three is far behind". — Thomas Sowell (http://townhall.com/columnists/ThomasSowell/2009/11/24/solving_whose_problem)

moka

06-09-2023, 04:17 PM

https://www.nzherald.co.nz/business/richard-prebble-reward-hard-work-not-freeloading/2QVIHB4T6BFUHAWEZZL24TO72Y/

What politics of appeasement can do to the nation's economy !!

NZ politics and promises learning tricks from third world countries ....maybe we will end up with them in the long run if common sense does not prevailThe Herald article says the International Monetary Fund predicts that next year the New Zealand economy will have the second-lowest growth.

So where is growth going to come from?

Four broad economic and balance sheet scenarios to 2030 are possible according to McKinsey.

Return To Past Era - like the US post GFC crisis, late 2000s – 2010s - pick your poison
Higher For Longer - like US post oil shock 1970s - pick your poison
Balance Sheet Reset – like Japan post real estate bubble – 1990s - worst
Productivity Accelerator – like US post WW11 late 1940s – 1950s. - best

https://www.mckinsey.com/mgi/overview/the-future-of-wealth-and-growth-hangs-in-the-balance#at-a-glance
(https://www.mckinsey.com/mgi/overview/the-future-of-wealth-and-growth-hangs-in-the-balance#at-a-glance)
The past two decades have generated $160 trillion in paper wealth but sluggish growth and rising inequality. What comes next?

Asset price inflation over the past two decades has created about $160 trillion in “paper wealth.” Economic growth was sluggish, inequality rose, and every $1.00 in investment generated $1.90 in debt.

We model four economic scenarios—return to past era, higher for longer, balance sheet reset, and productivity acceleration—to understand what the future might hold for the world’s balance sheet.

Three of the potential scenarios are far from ideal—two are “pick your poison” and the third a double dose. Volatility may prove temporary and balance sheet expansion may resume as savings bid up the price of existing assets once again rather than flowing to productive investments. Or high inflation and interest rates could persist, resembling the US economy after the 1970s oil shock. The worst case would look more like Japan after its real estate and equity bubble burst in the 1990s, with drawn-out deleveraging and a sharp contraction in asset prices. For instance, US equities and real estate values might drop by more than 30 percent between now and 2030.

By far the most desirable outcome is to accelerate productivity so that economic growth catches up with the balance sheet. Only this scenario combines strong growth in income, wealth, and balance sheet health.

moka

06-09-2023, 04:39 PM

(https://www.mckinsey.com/mgi/overview/the-future-of-wealth-and-growth-hangs-in-the-balance#at-a-glance)By far the most desirable outcome is to accelerate productivity so that economic growth catches up with the balance sheet. Only this scenario combines strong growth in income, wealth, and balance sheet health. · Productivity Accelerator – like US post WW11 late 1940s – 1950s.

Interesting that they give the example of after WW11, so lots of rebuilding after the war e.g. Japan and Germany financed by the US government - the Marshall plan.

And lots of domestic spending with the GI Bill of Rights which provided returning servicemen with funds for education, government backing on loans, unemployment allowances, and job-finding assistance. It also provided returning soldiers with 52 weeks of unemployment insurance, money for post-secondary education and job training, and government-backed, low-cost mortgages and loans to start a business or farm.
The GI Bill helped millions of veterans readjust to civilian life, and by 1956, the education-and-training portion had disbursed $14.5 billion to veterans.

So, the productivity boost came from the aftermath of a war and it was driven by government spending.

alokdhir

07-09-2023, 07:52 AM

https://www.nzherald.co.nz/business/economist-warns-taxpayers-may-need-to-fork-out-to-secure-buyers-of-govt-debt/UMETH3IJDRFU5MBT3VUR6IYJA4/

Real reason for rates rising now maybe lack of buyers of Govt debt all over the world .

When households are advised " Austerity " but Govts keep borrowing at super high rates then how it plays out ...

All know when Govt ready to fork out 5.5% on their current borrowing without batting an eyelid ...who actually is paying those rates ...all this mounting interest burden at current rates as no Govt in the world has reduced borrowing ...which should be natural response to higher rates ...should lead to bigger problems down the road ...or they are just waiting for Central Banks to start printing again in 2 years ...till then keep going at taxpayers's expense ...why need bother to control Govt expenses

justakiwi

07-09-2023, 09:13 AM

SPC

07-09-2023, 09:19 AM

Well democracy can be chaotic and sub optimal but that is the price of personal freedom.
Another model is China or Russia et al.....no thanks.

alokdhir

07-09-2023, 09:30 AM

Problem is not with the democracy or the politicians ...they have not changed ...Worry is with the changing masses attitude and general lowering of morals and ethics ....blame it on social media / covid and what not ...but it's becoming more and more difficult for people to be simple NICE ...they use to be just 10 years back ...now everything seems fair in going for so called personal economic prosperity or comforts ....instant gratification and rewards are the only motivators .

Politicians have sensed that and they are addressing to new normal in kind by making appealing promises .

PS : We get leaders we deserve ...we need to be better to have better leaders not other way round ...imo

mike2020

07-09-2023, 09:38 AM

Those fringe parties should be banned. Seeing Brian on a billboard leads me to despair for humanity. I mean somewhere out there are real people who think that it's actually worth the gas and time to go and place that vote AND think it makes a difference. It's like Evel Knievel attempting to jump the cook straight on an E scooter. I mean save us all the expense.

justakiwi

07-09-2023, 09:52 AM

I almost added that to my post, but chickened out ;)

Those fringe parties should be banned. Seeing Brian on a billboard leads me to despair for humanity. I mean somewhere out there are real people who think that it's actually worth the gas and time to go and place that vote AND think it makes a difference. It's like Evel Knievel attempting to jump the cook straight on an E scooter. I mean save us all the expense.

Poet

07-09-2023, 10:56 AM

· Productivity Accelerator – like US post WW11 late 1940s – 1950s.

Interesting that they give the example of after WW11, so lots of rebuilding after the war e.g. Japan and Germany financed by the US government - the Marshall plan.

And lots of domestic spending with the GI Bill of Rights which provided returning servicemen with funds for education, government backing on loans, unemployment allowances, and job-finding assistance. It also provided returning soldiers with 52 weeks of unemployment insurance, money for post-secondary education and job training, and government-backed, low-cost mortgages and loans to start a business or farm.
The GI Bill helped millions of veterans readjust to civilian life, and by 1956, the education-and-training portion had disbursed $14.5 billion to veterans.

So, the productivity boost came from the aftermath of a war and it was driven by government spending.

You might argue that the Marshall Plan money was an important driver of economic growth post WWII and I wouldn't dispute that it was certainly a factor. It is interesting to note though the little known fact that the UK received more than twice as much funding under the Marshall Plan as Germany did ($3.4B UK compared with $1.4B Germany) and to note what each of those countries managed to achieve with that funding. Germany by-and-large built capital assets to drive economic prosperity, the UK created a pervasive welfare state. which was the right decision could form the basis of many arguments, but it is undoubtable which of the economies is stronger and more resilient now.

bull....

07-09-2023, 04:37 PM

china getting ready to ban iphones ? , instructed govt depts to not bring them to work

mike2020

07-09-2023, 06:18 PM

china getting ready to ban iphones ? , instructed govt depts to not bring them to work

That will cause havoc, the Chinese say no phone no life.

dln

07-09-2023, 06:46 PM

I agree. As others have said, this election will come down to people voting for the best of a bad bunch, simply to ensure a change of government. Which is not how it is supposed to work. Something needs to change with NZ politics. I have no idea what or how, but we can't go on with this rinse and repeat system. Every time a party wins an election and goes about changing everything the previous government did - it costs the country money. It is inefficient from an economics point of view, and achieves little.

Labour will lose this election, but I can guarantee you, at some point the people will become disillusioned with the Nat/Act coalition, and Labour will find themselves back in the driver's seat. This is how it has always been, and it will always be this way. Maybe we need to encourage new blood into politics, to ensure we have an upcoming pool of political candidates who actually have vision, the ability to think outside the square, and the balls to do things differently. The current fringe parties are a total waste of time (and probably money) - none of them are grounded in reality. They are nothing more than a distraction.

At the risk of getting slaughtered, maybe it is even time to consider a completely different system. A federal government - with separate governance for North and South Islands? Similar to how Australia does it.

The problem is the adversarial mindset of the (effectively) two party system that is a hangover from the FPP system, where each side automatically opposes anything from the "other side", regardless of it's merits.
Hopefully as MMP matures, we'll get a more diverse range of parties, collaborating on different policies.
It seems that the two major parties are both bleeding support into other 'minor' parties, opening up (potentially) more coalition options.
For example, if the greens could decouple their environmental policies from their socialist agenda, there would be much more opportunity to enact some good environmental policy is n conjunction with any of the other parties - collaborative rather than adversarial .
I'd also like to see the 5% threshold lowered a bit, a level of 1 seat equivalent would be good.

SPC

07-09-2023, 07:27 PM

It's not a case of the Greens needing to decouple their socialist policies from their environmental policies to make them palatable to a wider audience, that will never happen. It's up to other parties to embrace environmental principles within their own. And supporters and funders have to hound them to change. Then the Greens would presumably loose a chunk of their appeal.
Of course the Greens believe only they can legitimately hold the environmental franchise. Other parties are free to offer similar or better policies if the wish, it's up to them. And it's time they did.
And one seat parties are a waste of time, they get nothing done and waste parliamentary and taxpayer resources.

dln

07-09-2023, 07:55 PM

And one seat parties are a waste of time, they get nothing done and waste parliamentary and taxpayer resources.

David Seymour would disagree with you

Baa_Baa

07-09-2023, 08:05 PM

David Seymour would disagree with you

This might be better on the political threads, but that's a strange comment considering ACT have 10 seats in parliament and are on track for 17 seats in the next parliament based on current polling.

What did you mean by your comment that Seymour would disagree that "one seat parties are a waste of time"? Are you referring to times past maybe?

ronaldson

07-09-2023, 09:40 PM

This might be better on the political threads, but that's a strange comment considering ACT have 10 seats in parliament and are on track for 17 seats in the next parliament based on current polling.

What did you mean by your comment that Seymour would disagree that "one seat parties are a waste of time"? Are you referring to times past maybe?

Of course he is. And apart from raising ACT from one seat to (currently) ten he caused the End of Life Choice Act to pass.

Peter Dunne was a very effective one seat wonder too!

Daytr

08-09-2023, 08:30 AM

Azz

08-09-2023, 01:50 PM

Climate Change [...] should not be a left / right issue.

That's right, it shouldn't be, and it won't be when it's put into the trashcan of history.

justakiwi

08-09-2023, 02:05 PM

We also need it to be doable, practical and sensible. As I have said before, we need a party that will work towards finding a balanced solution. We can and should, do our bit, but we do need to accept that what we do is always going to have a very minimal impact on the global situation. That doesn't mean we should do nothing, but it does mean we need to use common sense, and do what we can without creating unrealistic expectations that seriously, and negatively impacts our lives, and livelihoods or our economy.

Well said. Climate Change & the environment should not be a left / right issue. We need at least something like the Teals I'm Australia.

Panda-NZ-

08-09-2023, 02:08 PM

It's not only climate change but rivers, species loss, microplastics, pest vs native species/plants that are a concern.

Azz

08-09-2023, 02:14 PM

It's not only climate change but rivers, species loss, microplastics, pest vs native species/plants that are a concern.

None of that matters at all these days. The environmental movement has been completely taken over by the "climate change climate change climate change climate change" religion. The number one environmental concern in the world today is habitat loss (which is NOT caused by "climate change"), and it's totally drowned-out by climate change climate change climate change climate change climate change climate change climate change climate change climate change.............

Panda-NZ-

08-09-2023, 02:14 PM

I'm all for using scientific approaches to help the environment too (but neither should we expect a miracle, and it needs investment).

Some of these greenies would be against 1080, using viruses to make pests infertile, genetic engineering etc and expect us to do totally impractical approaches instead.

moka

08-09-2023, 08:46 PM

https://www.youtube.com/watch?v=NEIIwbEzRGU
Bad News For Bears? Market Technicals Are Very Bullish | Sven Henrich

Sven Henrich “Purely technically speaking I have a hard time making a bear case at this juncture.”

In the US the lag effects haven’t hit as dramatically as one would have thought by now, although we are still in the window of 12 – 18 months.
Maybe there is a runway for the markets to do the unexpected which is to scream higher. A runway that gives markets potentially 6 months to a year and a half, who knows before the Fed breaks. Have to look at it in terms of runway, and markets like to run, until they don’t.

16.00 The S&P seasonality chart which is absolutely mindboggling in terms of everything which is going on.
23:00 We have moved into a low volatility regime.

27:00 Over the last six years we have seen seven what I would call stupid rallies = rallies that go on and on. The Covid crash - the biggest crash since 1987 and it’s over in a heartbeat. Holding a long term short is simply not there. You have to be reactive to the signals and what is happening on policy.

30:00 In the last 82 years there have been 22 yearly red candles. Since WW11 we have been in this insane bull market. Only 2 periods when the S&P showed two or more years down in a row – the 1970s and the tech bubble crash. Covid, the biggest crash since 1987, and it was never a down year, just dipped below its EMA and held its support.
The GFC which was massive was just one down year, 2008, that’s it.

This is my Bears are idiots chart. The odds of getting consecutive down years is just really low, because markets just go up 75% -80% of the time if you look at these stats. And since the age of intervention they really make sure we never drop below the five year mark, and if they do we get saved.

33:00 The Peter Lynch saying - there has been more money lost by people staying out of the market or placing short bets in preparation of the next market crash than were actually lost in the next market crash.

Last year from a bear perspective was absolutely fantastic, and June, August, October lows it said buy. More money was made on the long side, than short.

38:30 Typically when you see an oversold reading like that you see a vix spike, and we didn’t see that. Weird that a six percent pullback resulted in such dramatic oversold readings. One chart may explain why = the asset manager index. That’s a classic sentiment gauge on how rallies unfold. This is what these big stupid rallies do, they force asset managers to pile in, the FOMO. They are still not fully positioned, so if everyone is expecting a big September October correction, but it’s not happening then they are forced back in. Everyone who has been on the sidelines has to jump back in to chase the performance.

54:00 China got hammered hard in the last couple of years, but also under a lot of pressure to make things better and the Hang Seng looks like a potential inverse head and shoulders.

The FED have an awe inspiring amount of ammunition to cut rates and stimulate again.

Azz

09-09-2023, 09:10 AM

https://www.youtube.com/watch?v=NEIIwbEzRGU
Bad News For Bears? Market Technicals Are Very Bullish | Sven Henrich

Thanks for posting that!

Valuegrowth

09-09-2023, 12:30 PM

https://www.quantifiedstrategies.com/best-performing-stock-markets-in-the-world/

"Since 1900, some countries’ stock markets have performed well. The top ten best performing stock markets in the world since 1900 include the following countries: Australia, the United States, South Africa, New Zealand, Denmark, Sweden, Canada, Finland, Switzerland, and the Netherlands. We will briefly discuss the top five markets in this post."

Valuegrowth

09-09-2023, 08:35 PM

The longest bull market doesn’t end easily. Similarly, once bear set, it also won’t end easily. It’s not possible for anybody to predict the market.

https://www.youtube.com/watch?v=NEIIwbEzRGU (https://www.youtube.com/watch?v=NEIIwbEzRGU)
Bad News For Bears? Market Technicals Are Very Bullish | Sven Henrich

Sven Henrich “Purely technically speaking I have a hard time making a bear case at this juncture.”

In the US the lag effects haven’t hit as dramatically as one would have thought by now, although we are still in the window of 12 – 18 months.
Maybe there is a runway for the markets to do the unexpected which is to scream higher. A runway that gives markets potentially 6 months to a year and a half, who knows before the Fed breaks. Have to look at it in terms of runway, and markets like to run, until they don’t.

16.00 The S&P seasonality chart which is absolutely mindboggling in terms of everything which is going on.
23:00 We have moved into a low volatility regime.

27:00 Over the last six years we have seen seven what I would call stupid rallies = rallies that go on and on. The Covid crash - the biggest crash since 1987 and it’s over in a heartbeat. Holding a long term short is simply not there. You have to be reactive to the signals and what is happening on policy.

30:00 In the last 82 years there have been 22 yearly red candles. Since WW11 we have been in this insane bull market. Only 2 periods when the S&P showed two or more years down in a row – the 1970s and the tech bubble crash. Covid, the biggest crash since 1987, and it was never a down year, just dipped below its EMA and held its support.
The GFC which was massive was just one down year, 2008, that’s it.

This is my Bears are idiots chart. The odds of getting consecutive down years is just really low, because markets just go up 75% -80% of the time if you look at these stats. And since the age of intervention they really make sure we never drop below the five year mark, and if they do we get saved.

33:00 The Peter Lynch saying - there has been more money lost by people staying out of the market or placing short bets in preparation of the next market crash than were actually lost in the next market crash.

Last year from a bear perspective was absolutely fantastic, and June, August, October lows it said buy. More money was made on the long side, than short.

38:30 Typically when you see an oversold reading like that you see a vix spike, and we didn’t see that. Weird that a six percent pullback resulted in such dramatic oversold readings. One chart may explain why = the asset manager index. That’s a classic sentiment gauge on how rallies unfold. This is what these big stupid rallies do, they force asset managers to pile in, the FOMO. They are still not fully positioned, so if everyone is expecting a big September October correction, but it’s not happening then they are forced back in. Everyone who has been on the sidelines has to jump back in to chase the performance.

54:00 China got hammered hard in the last couple of years, but also under a lot of pressure to make things better and the Hang Seng looks like a potential inverse head and shoulders.

The FED have an awe inspiring amount of ammunition to cut rates and stimulate again.

Panda-NZ-

10-09-2023, 03:08 PM

Japan still has 0% interest rates.

Trading NZD for JPY looks like an interesting opportunity to buy and hold ..

bull....

11-09-2023, 08:55 AM

The longest bull market doesn’t end easily. Similarly, once bear set, it also won’t end easily. It’s not possible for anybody to predict the market.

if you cannot predict the market then how do some investors acheive double digit portfolio increases yr on yr .... luck ?

bull....

11-09-2023, 02:32 PM

nz share market getting savaged again today. wait till tomorrows fiscal update :scared:

winner69

11-09-2023, 02:34 PM

nz share market getting savaged again today. wait till tomorrows fiscal update :scared:

Fiscal update will be OK ….Robbo will say in the context of global events we’ve done very well.

No worries

bull....

11-09-2023, 02:36 PM

Fiscal update will be OK ….Robbo will say in the context of global events we’ve done very well.

No worries

lol over a sausage roll with his boss most likely

winner69

11-09-2023, 02:39 PM

lol over a sausage roll with his boss most likely

Not really govts fault if things bad …company tax payments much lower than expected ….companies should have pulled finger out and made bigger profits eh

Ggcc

11-09-2023, 02:44 PM

Not really govts fault if things bad …company tax payments much lower than expected ….companies should have pulled finger out and made bigger profits eh
Aren’t we in a time where some businesses are making too much money and getting ripped on tv for doing so? I’m confused lol

bull....

11-09-2023, 02:46 PM

Not really govts fault if things bad …company tax payments much lower than expected ….companies should have pulled finger out and made bigger profits eh

even bigger profits with the right govt policies ... sadly govt's for numerous terms have failed in this regards. esp on policies for infrastructure

winner69

11-09-2023, 02:55 PM

Aren’t we in a time where some businesses are making too much money and getting ripped on tv for doing so? I’m confused lol

Maybe a case of not making as much excessive profits as Treasury though lol

Joshuatree

11-09-2023, 03:35 PM

if you cannot predict the market then how do some investors acheive double digit portfolio increases yr on yr .... luck ?
They are value investors , ignore the macro and analyse a balance sheet so well that when a s/p drops below their intrinsic value and a margin of safety they buy. Things like cycles,moats are also considered.When the s/p reaches full value it's sold.

bull....

11-09-2023, 04:24 PM

They are value investors , ignore the macro and analyse a balance sheet so well that when a s/p drops below their intrinsic value and a margin of safety they buy. Things like cycles,moats are also considered.When the s/p reaches full value it's sold.

yep but still predicting the future these value investors

ValueNZ

11-09-2023, 09:15 PM

yep but still predicting the future these value investors
With a sufficient margin of safety of course bull.

bull....

12-09-2023, 08:32 AM

Bjauck

12-09-2023, 10:05 AM

National win 'could be good for financial markets'

She said, looking at the New Zealand market’s performance since 1957, on average there had been positive capital returns of 1.5% in the three months after a National-led government won an election.

When Labour won, capital returns in the following three months averaged -3.3%.

“If a National-Act Government wins, if they’re able to implement their changes – they are business-friendly parties. The expectation would be that markets would benefit and be happy

If we get another Labour-Green Government, I would probably think things go from bad to worse.

https://www.stuff.co.nz/business/money/300968477/national-win-could-be-good-for-financial-markets

This time around they are keeping Labour’s higher income tax rate and cutting tax deductibility of commercial depreciation. So not so business friendly if you earn income from your business. More friendly to residential real estate investors whose returns are substantially from capital gains though via the bright line period reduction. They want to make residential housing even more expensive and suck up even more of bank lending?

I don’t know if any party has plans to increase the top 28% pie tax.

Panda-NZ-

12-09-2023, 10:17 AM

Snoopy

12-09-2023, 10:53 AM

The PIE threshold's haven't changed so a full time worker on minimum wage is close to being taxed at 28%.

Though I don't expect National to do anything about it they have a mixed record of encouraging domestic savings.

The above comment on PIE tax thresholds is not true. You can elect to have your PIE tax threshold for PIE income at a lower rate that 28%, if you are in a lower income bracket. Furthermore if you are charged PIE tax at 28% yet your overall tax rate is much lower, you can now recover any difference in excess tax deducted by filling out an IR3 tax return.

SNOOPY

ronaldson

12-09-2023, 10:53 AM

Bjauck

12-09-2023, 11:26 AM

I think it is inevitable that the PIE threshold, other than for companies, will be raised to at least 30% and plausibly to 33% given that those for whom the marginal rate is less have merely to submit a Tax Return at year end to recover any overpayment.

Assuming the Trust rate is raised to 39% (where income is undistributed) from 1 April 2023 rather than the former 33% it is untenable that the discrepancy with the PIE rate is widened to that extent, and we all know revenue must be raised from somewhere and this is clearly the least unfair method of doing so. Some adjustment to the tax brackets would help offset the impact. But if wealth/capital gains taxes are off the table then this change is the principal way to remove some of the perceived inequities.

I think the trust tax rate is due to increase to 39% from 1/4/2024.

There is quite a discrepancy now between the top pie rate of 28% and the top IT rate of 39%. However, If the top PIR is increased then why would high income earners bother with something like KiwiSaver, when stamp duty free and tax free gains are still available from investing in leveraged real estate.

Not introducing a CGT while increasing IT tax rates is the sure fire way of entrenching inequity in favour of (mostly) older and wealthier people.

bull....

12-09-2023, 11:36 AM

a lot of equity pie funds already pay a capital gains tax , FIF
national have left open the door in there comments for a discussion on CGT by not ruling out any new tax if they become govt

winner69

12-09-2023, 12:18 PM

Good news

The S&P 500 could triple to 14,000 by 2034 as secular bull market cycle takes hold, per RBC:

Snoopy

12-09-2023, 12:50 PM

a lot of equity pie funds already pay a capital gains tax , FIF

FIF is actually a wealth tax not a capital gains tax, The only reason that capital gains comes into the FIF picture is that the 'capital gains' are the trigger. If you don't make the capital gains on paper, then you don't pay the wealth tax (for that year anyway, if you are an individual).

SNOOPY

winner69

12-09-2023, 01:23 PM

PREFU not too bad ……best bit no more recessions …..for a while

bull....

12-09-2023, 01:42 PM

market doesnt like it down again :scared: guess the market see's thru the BS

Valuegrowth

12-09-2023, 08:33 PM

https://nz.news.yahoo.com/warren-buffetts-favorite-indicator-signals-stocks-are-significantly-overvalued-190343158.html

"The stock market is significantly overvalued according to the Buffett Indicator," researchers at GuruFocus (https://www.gurufocus.com/stock-market-valuations.php) said. "Based on the historical ratio of total market cap over GDP (currently at 170.2%), it is likely to return 1% a year from this level of valuation, including dividends."

Valuegrowth

13-09-2023, 07:30 AM

Oil prices are climbing. It will be difficult task for controlling inflation when energy prices still remain high. On top of that high asset prices specially for housing is also a concern.

alokdhir

13-09-2023, 10:09 AM

No Guru has commented or opined about Great Stock Sale going on ...On the contrary they are busy scaring people further .

Doesn't Buffet says " Be Greedy when others are scared " ....No one thinks it will work out AGAIN like that in the future

I have not read any positive post ...only negative posts as if this is the first time NZX is looking to go to ZERO with no come back chances ...:p

Toddy

13-09-2023, 12:31 PM

bull....

13-09-2023, 12:58 PM

NZ stocks down again today :scared::scared:

dabsman

13-09-2023, 01:59 PM

NZ stocks down again today :scared::scared:

Its saying something when HMY is holding up my portfolio!

thegreatestben

13-09-2023, 03:30 PM

Its saying something when HMY is holding up my portfolio!

Haha! I was thinking the exact same!

troyvdh

13-09-2023, 03:52 PM

Dear Toddy..hello...Ive never heard of you before.
I suspect you are probably right....and I thank you for your post.
However...(Im over 65) I have to admit I have been selling mainly in the recent past.

Toddy

13-09-2023, 04:04 PM

I've been around for a while but was absent from the markets while the kids were young.

I actually started the Ift thread 20 odd years ago. If only I had stuck to my guns on that one.

Paint it Black

13-09-2023, 05:05 PM

I've been around for a while but was absent from the markets while the kids were young.

I actually started the Ift thread 20 odd years ago. If only I had stuck to my guns on that one.

Indeed! IFT and maybe the Energy stocks are the only ones I have any faith in currently holding up. FPH and AIA predictable losses are weighing heavily on the popular ETF's now.

Valuegrowth

13-09-2023, 07:50 PM

My preferred choices are debt free or companies with manageable debt levels and free cash flows. Of course, they should be strong balance sheets.
I've emptied my bank accounts buying up stocks in the last 6 months.

There are plenty of Companies out there with manageable debt levels and free cash flows.

And the Nzd will be soft for an extended period through this cycle.

It's definitely time to feel positive if you are a buyer.

Valuegrowth

13-09-2023, 07:56 PM

After years of experince I found to get mulibagger returns one has to keep any stock with a strong balance sheet at least for 10 to 20 years and beyond.
I've been around for a while but was absent from the markets while the kids were young.

I actually started the Ift thread 20 odd years ago. If only I had stuck to my guns on that one.

JBmurc

13-09-2023, 09:38 PM

Oil prices are climbing. It will be difficult task for controlling inflation when energy prices still remain high. On top of that high asset prices specially for housing is also a concern.

And in NZ's case a weak NZD to the USD that oil is priced in ..I'm been saying for some time early 2024 we will see $4 premium petrol across much of our nation.. crushing the consumer even more along with pretty much all kiwi home loans will be or close to paying the higher interest rates ...energy costs effects pretty much everything ..

bull....

14-09-2023, 03:29 AM

August core inflation, excluding food and energy, rose 0.3%, hotter than expected
https://www.cnbc.com/2023/09/13/cpi-inflation-report-august-2023-.html

moka

14-09-2023, 11:32 AM

Stephanie Pomboy: Count On a Lot Of Pain Before The Fed Pivots
(https://www.youtube.com/watch?v=txxhj_Ao1Ro)https://www.youtube.com/watch?v=txxhj_Ao1Ro

This market feels like it's rallying on hope and very little of actual fundamentals.

6:21 As relates to the Bank of Japan you know it's no secret that Japan has been the marginal source of financing for global carry trades for more than a decade. At this point so we have built up this kind of institutional culture around being able to always access cheap financing and Yen and then take that free money essentially and speculate in anything you want all over the world whether it's Indonesian real estate or junk bonds here in the U.S or Nvidia etc.

7:02 And what the Bank of Japan is doing right now is creating so much uncertainty around the ability to continue to source that cheap financing that I think that's going to have a major impact on global liquidity that the markets aren't really acknowledging just yet.
And uncertainty is the enemy of liquidity so I think that's a factor that people need to pay attention to.

I've done a lot of charts overlaying the relationship between gasoline prices and sentiment and it's very hard to tell those two lines apart.

17:09 We'll have to get a lot of pain before that Fed pivot and the markets don't seem to be anticipating the pain before the pivot. They're just anticipating the pivot.

17:56 The Fed has hiked much more than the market expected and the market has had to readjust its expectations every time. Even as the market has had to change its expectations it's still been able to power financial asset prices higher in in the wake of that which obviously doesn't make total sense.

But if you look back at history we see very clearly that when the Fed is hiking into what very well may be a recession, when it is forced to pivot by the economy starting to struggle, financial asset prices continue to go down for a couple of quarters.

So the market still has this expectation that oh well the Fed's going to pivot rates and then it's going to be happy days all over again.

18:47 The Fed might not actually initially pivot by cutting interest rates it may go back to stimulating the economy through QE.

moka

14-09-2023, 11:39 AM

Stephanie Pomboy: Count On a Lot Of Pain Before The Fed Pivots
https://www.youtube.com/watch?v=txxhj_Ao1Ro

20:52 I've been deep in spreadsheets on the corporate bankruptcy thing. When did they really start to pick up in 2007-8-9? They started to pick up big time in September of 2007 which is exactly when the FED first cut interest rates. So that's when you started to see the pain. And it stands to reason, it's the pain that causes the pivot.

21:48 There's a lag effect from when the Fed starts trying to stimulate the economy. You don't see that benefit for a good while people are licking their wounds. It takes a long time for people to get over the scars that they build up.

22:07 Nothing is more brutal than leverage in reverse. It's one thing to lose money, but to lose money on leverage is a really, really painful experience. And we saw that with the household sector after the housing bubble bust. They refused to even borrow on their credit cards for a long long time after. They were so chastened by that experience.

22:51 When the FED cuts rates and it seems to have no response it is because they're trying to pump money into a system that just doesn't want it. They don't want to borrow, they don't want to expand. They want to hunker down and work through the emotional and financial distress of what they just lived through.

24:30 My heart is more in the deflation camp because in that experience of 2008/9, people forget we had five and a half percent CPI in July of 08. A year later it was minus 2.1 percent so a real hit to the financial markets can have a massively disinflationary impact on goods and services in the economy.

There is going to be a lot more pain than the markets are currently anticipating

Nearly 200 companies have filed for bankruptcy so far this year.

39:27 I saw an estimate of how many people are employed at zombie corporations. Those companies employ 2.2 million people.

46:36 As a result of the decade plus of effectively zero percent interest rates people had to go to the farthest corners of risk to get any kind of return. So, you had everyone Venture Capital, Private Equity to the pension funds trying to find anything that would offer a return better than two percent risk-free 10-year treasury paper.
In the process of trying to find candidates that could provide that yield they obviously scraped deeper and deeper into the bottom of the barrel and the result of that is that you had a tremendous number of borrowers who never otherwise in a normal environment would have been able to get credit, and not only access to credit but were lavished with it at very low interest rates.

moka

14-09-2023, 11:45 AM

Stephanie Pomboy: Count On a Lot Of Pain Before The Fed Pivots
https://www.youtube.com/watch?v=txxhj_Ao1Ro

41:43 Risk on moment - a lot of junk rated borrowers have come in and seized this as an opportunity to roll their paper.
It's interesting that you've got this kind of dichotomy where it's junk borrowers who are taking advantage of this opening in the market right now and investment grade borrowers are standing back, saying I don't know if I want to jump in here.

The junk borrowers are locking in rates that are double what they were paying prior before the FED started raising rates junk yields were four percent they're 8.65 today.
Investment grade borrowers have seen also a doubling of their borrowing costs but they're standing aside.

47:42 SVB was basically the bank for all these zombie companies that were funded by all the Private Equity, VC firms in that area. And these are companies as we learned that really didn't have viable business models. They weren't earning money and the way they were able to survive was just by borrowing and they just loaded up on debt upon debt and it didn't matter because the debt was so cheap that if they ever needed more money they could get more money from a pension fund or whoever.

48:31. At the end of the day you know everyone talks about the SVB run on deposits, but what happened was their customer base were these zombie companies and they were burning through cash and that's what was draining the deposits and it forced SVB to actually liquidate the assets they were holding against it, the Treasury and agency securities that were being pushed underwater by the Federal Reserve rate hike.

At the end of the day I maintain that SVB was a corporate credit story not a banking crisis story at its heart. It was an issue related to the solvency of its corporate clientele and it was the first shot across the well of this major corporate credit bust that I think we're now in the early innings of.

The Fed forced people to go further out on the risk curve when interest rates were so low.

50:21 SVB and many other banks, most regional banks had been victim of this which is they had to go out on the risk curve as well even in safe risk assets like Treasuries. Now they're finding that their portfolios are underwater and so they needed the rescue of the bank term funding program

51:06 What we've learned I think over the last 30 years basically since Alan Greenspan started this whole cycle is that the solution to excess borrowing is not cheaper credit and more debt. Now we're just going around and around and the FED has us ping-ponging from one asset bubble to another hoping that the last group that blew up will take the bait again.

52:17 China doesn't seem to be in any position to ride to the rescue this time.
The Chinese real estate market is the largest asset in the world.

Although I would not underestimate the Chinese government's determination to prevent their economy from having a real significant downturn because it's life or death for their policy makers so they've got a vested interest in making sure that the people don't get uppity and that may require an enormous amount of money, but it's money that won't be coming into our markets. It will instead be staying at home to support their local population and make sure that they aren't rioting in the streets.

Azz

14-09-2023, 12:51 PM

Daytr

14-09-2023, 01:38 PM

I've emptied my bank accounts buying up stocks in the last 6 months.

There are plenty of Companies out there with manageable debt levels and free cash flows.

And the Nzd will be soft for an extended period through this cycle.

It's definitely time to feel positive if you are a buyer.

Hi Toddy, NZ stocks or international?
The NZX might have a little bit further to go, but with the election now only a month away it may see a bounce soon.

Valuegrowth

14-09-2023, 09:13 PM

Rise in oil prices will hit many industries. Heavy industries, Airlines, retail-good sector, transportation, semi-conductor industries and construction industries are some of the industries that going to get pain. High asset prices will lead to high wage inflation. Industry actions will become new normal worldwide. I also have heard Energy prices account for the lion’s share of inflation in most advanced European economies.

And in NZ's case a weak NZD to the USD that oil is priced in ..I'm been saying for some time early 2024 we will see $4 premium petrol across much of our nation.. crushing the consumer even more along with pretty much all kiwi home loans will be or close to paying the higher interest rates ...energy costs effects pretty much everything ..

alokdhir

15-09-2023, 08:02 AM

https://www.nzherald.co.nz/business/stock-takes-nz-market-into-negative-territory-what-will-it-take-to-bounce-out/VCQ2USXEOJEA5NHAWS2XXBYZUY/

Guru Lister making a case for better times ahead for NZX ....but then many will say it's his job to entice people into markets .

Valuegrowth

15-09-2023, 06:46 PM

https://edition.cnn.com/2023/09/14/economy/oil-prices-top-90-dollars-for-first-time-in-2023/index.html

winner69

17-09-2023, 02:25 PM

Saw this ….. The mother of all short squeezes in Treasuries is coming.

Sounds bad

Valuegrowth

17-09-2023, 02:48 PM

Two schools of thoughts on the housing market.
https://www.youtube.com/watch?v=hj7cUJik8Nc

The first school

Valuegrowth

17-09-2023, 02:50 PM

The second school. In which school are you? Apreciate your great analysis.
https://www.youtube.com/watch?v=KqkVcajZ6xg

Valuegrowth

17-09-2023, 03:02 PM

Another analysis in the second school of thoughts.
https://www.youtube.com/watch?v=uiNPGlfGGck

Daytr

18-09-2023, 07:40 AM

Leemsip

18-09-2023, 10:09 AM

Could be an interesting day for the NZX.
Looking for sub 11,000 before I consider switching my Super back from cash. Last time I did this I picked it up around 10,850 from memory.
As the FED says, data dependent...

Yeah mine is in cash too.... Lot left to play out in NZ.... wont switch before next year..

Bjauck

18-09-2023, 11:38 AM

Yeah mine is in cash too.... Lot left to play out in NZ.... wont switch before next year..
NX50 capital index is still down 10% from pre Covid (Jan 2020).

Yet house price index is up about 23% over the same period, despite 3yr mortgage interest rates going from about 4.9% to 6.6%. What a disconnection!

mike2020

18-09-2023, 01:52 PM

An even better question, why a disconnection? I thought the stock market was supposed to front run housing? Less fomo on the share market?

winner69

18-09-2023, 03:12 PM

BREAKING: Taiwan says it has detected 103 Chinese military aircraft around the island

Bloody heck

causecelebre

18-09-2023, 03:12 PM

Yeah mine is in cash too.... Lot left to play out in NZ.... wont switch before next year..

My "super" has been divesting from NZ inc for some time now towards the end of Covid in NZ but not into cash, rather international and mostly US equities using a risk parity strategy using leveraged ETF's. It has worked well this year and that has been compounded by the buying opportunities in '22

Daytr

18-09-2023, 03:32 PM

An even better question, why a disconnection? I thought the stock market was supposed to front run housing? Less fomo on the share market?

Immigration tap being turned back on is probably the biggest reason I can think of. Supply & demand basically as we still have a shortage of housing

Bjauck

18-09-2023, 04:08 PM

BREAKING: Taiwan says it has detected 103 Chinese military aircraft around the island

Bloody heck
Russia is reclaiming what it regards as its recalcitrant province, whilst China nods in the background. When will China get around to its disputed Taiwan province….

causecelebre

18-09-2023, 05:53 PM

BREAKING: Taiwan says it has detected 103 Chinese military aircraft around the island

Bloody heck

I just can't see it more than sabre rattling at this point. China is not in a position to go to war with the US. As soon as 'merica onshore all the chip manufacturing all bets are off. The rich Taiwanese families can see the writing on the wall and are leaving.

Valuegrowth

18-09-2023, 07:22 PM

Uncertain world.
https://www.youtube.com/watch?v=4qbg1iuySNA

Paint it Black

19-09-2023, 11:26 AM

Uncertain world.
https://www.youtube.com/watch?v=4qbg1iuySNA

Very interesting I thought.

moka

19-09-2023, 03:57 PM

https://www.youtube.com/watch?v=YbpNQDRo6jc
(https://www.youtube.com/watch?v=YbpNQDRo6jc)
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

I think it's very clear to me that the recession has been delayed. It's been held in abeyance but it's absolutely not been cancelled. The soft landing narrative is a complete myth. Let's just go through some of the reasons why I believe the recession was delayed some of the most popular ones and then I'll get to the to the real one or the most salient reason.
Why I think the recession was delayed. In 2023 we had massive deficit spending. What happens when you run massive deficits you destroy your economy, you get higher taxes, higher interest rates, higher inflation and you destroy productivity. so that's one reason why it's delayed.

Number two consumers and businesses locked up a tremendous amount of debt at low interest rates that is true but there's a day of reckoning coming in 2024 and 2025.

So what do I think is the real reason why didn't the recession happen? In March we had these four banks fail. Because we had the bank term funding program which was a bailout of the entire US Financial system. That is what turned the market around. The economy and the market were going off the rails in March. Stock market started to plunge, you had spreads widen out, high yield was blowing out, financial conditions were tightening, and then the FED came in and monetized, they printed $400 billion dollar of base money supply in two weeks and that was 50% of the entire Fed's balance sheet from 1913 all the way through the end of 2008. That is why we have a recession delayed.

The FED balance sheet I think it's 8.3 trillion right now, so that was only 800 billion at the start of a global financial crisis in 2008. It has gone up more than 10 times in 15 years or so.
The last time interest rates were in this territory it was right at the turn of the millennium, where we had one sixth the amount of total public debt that we have out there.

The system, following the great financial crisis got very habituated, many would say addicted to Zirp zero or extremely low interest rates. And now we've had this massively aggressive hiking campaign and tightening campaign. Tightening maybe hasn't been as aggressive as the hiking, but the Fed's not done yet.

There's a lag effect to all this that will definitely be felt and be felt harder than in periods past because the debt is so much bigger now. But the markets don't seem to care and a lot of people aren't that worried about it.
Monetary tightening works with about a year lag, maybe 16 months about a year lag but if you go back a year from today the FED funds rate a one year from today two was three %, two and a half percent. Right now we're at five and a quarter, five and a half. But a year ago it was only two and a half percent so we have a long way to go before we start to see the real teeth and the bite from these monetary hikes.

moka

19-09-2023, 04:03 PM

https://www.youtube.com/watch?v=YbpNQDRo6jc
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

8:55 What I see is a corporate debt, I call it a maturity wall going to hit in 2024 and 2025. There's $1.8 trillion dollar worth of corporate debt that needs to be refinanced between now and the end of 2025 and the rates on that debt are going to be between four and 5.5% higher than they were when they locked it in several years ago. The cost of your debt is going to be at least 2x, probably more than that.

When you have 10% of companies out there as zombies. In other words they have to borrow money to pay interest on debt that's what is a definition of a zombie. They don't have the cash flow from operations to pay interest on debt.
There's about 11 million people employed in the US in these junk rated high yield corporate debt businesses.

There's going to be a massive reckoning in the housing market but nobody cared for years because they've been packaged into these pooled mortgages. As you know housing prices have never gone down in the United States ever in the history of ever so what can go wrong.
You take a real crappy mortgage and put it in a pool of other okay mortgages and the lowest tier tranche might go bad but that doesn't mean anything else is going to go bad. But we saw the domino effect what happens you know this is a story has played out over and over again. What gets you in trouble is overleveraged economies. The United States is a very overleveraged economy.

But who owns all this debt, who owns the mortgage backed securities, the commercial mortgage backed securities, the junk debt that's yielding nothing well it's banks, it's the shadow banking system, it's the Silicon Valley Banks and the First Republics of the world. These are the banks that are loaded with this with this garbage and their prices tanked and yields skyrocketed for this debt and they ended up sending to the FED through their Bank term funding program all of that debt at par for a year.

Now the bank term funding program (BTFP) is like a hybrid of the discount window. Normally a discount window is open for about three months. You give your distressed debt mostly Treasuries. It's how it was intended in 1913. That's the only thing the Fed was allowed to buy. You give your underwater Treasuries, your assets to the discount window the Federal Reserve, they give you a loan with a haircut for three months. The BTFP is a loan for a year at par value but what happens when we get to March 2024.

17:06 Powell has to make a be very big decision. Am I gonna permanently monetize this debt and take it off the bank's balance sheets like QE would do because you're gonna hand a bank or a shadow Bank their Treasuries and mortgage backed securities that are a fraction of the cost, even what they were when they took them off their hands, and then the banks owe the FED par value, full value for these assets that's gonna be a huge problem.

So we are waiting with bated breath for Powell to decide what he's going to do with the bank term funding program. Is he going to roll it over, allow them to roll over this debt endlessly and then it becomes QE.
My trading decisions will change greatly based upon what he does about his decision it's a big decision.
Mr Powell what are you going to do with the bank term funding program that's keeping all these Banks afloat and alive.

troyvdh

19-09-2023, 04:13 PM

Thanks moka.

moka

19-09-2023, 04:17 PM

https://www.youtube.com/watch?v=YbpNQDRo6jc
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

19:32 Banks have assets that are yielding them 3% and the depositors are saying I want five and a half because that's what I can get in a zero to three-month Treasury. And the bank is saying I'm sorry Mr depositor I can't give you that because my bank would be upside down. And the depositors are taking those deposits out of the bank and going into money market funds and buying Treasuries. So, the bank liquidity problem is getting worse not better, we have mortgage backed securities, there's commercial mortgage backed securities that are way underwater in the shadow banking system and in the primary dealers, what are they gonna do there, they haven't realized these losses yet.

Shadow bank players are any big hedge fund, big insurance companies, pension funds. So, they're institutions that take deposits and make loans sort of, but they're not backed at all by any government facility, no FDIC Insurance nothing like that. They don't have access to the primary window, the primary dealer window. So, there's a ton of institutions out there from pensions to college endowments, to hedge funds to massive investing institutions that buy these packaged mortgages.

23:35 By 2040 interest expense and entitlements will be 100% of all government revenue so you know we have a big problem here. but you don't hear about this pension plan or that insurance company or that hedge fund that's loaded up with leverage on commercial mortgage backed securities whose the rates have gone through the roof, the prices are way down on these on these bonds and the vacancy rates have soared. Are they still getting the same income stream from these from these mortgages I don't think so.

25:12 It's just inevitable math that at some point as long as they stay at these levels there going to be some pretty big breakages in the system.
One of the reasons why deficit spending is so high this year is because the cost of servicing the national debt goes up in lock step with these interest rates.

Several weeks ago the chief Economist for Zillow came out and he said that he has this wonderful new invention called a 1% mortgage. It's not quite as bad as the ninja loans that we had but it's close 1% and the credit score to qualify for a 1% mortgage was 620, 620 which by the way makes them a subprime borrower.

27:05 I think these are signs of desperation where you're just trying to do whatever you can to keep the ship moving forward and above water and I do not envy some of these players in the real estate space that I think are looking around and just experiencing in real time what we're talking about they're just trying to do whatever they can.

28:13 The yield curve has been inverted for 14 months and it's been upside down. Now I think the last time I looked was like 70 basis points it was as high as 100 basis points inverted but I want to just explain that this is a sign, it's not just a coincident indicator, every time the yield curve inverts we have a recession or 99% of the time since 1945.
It helps cause a recession because it puts banks under a lot of pressure because their assets aren't earning what it takes for them to get their income, which is their deposits where they get their income from.

28:59 So the net percentage of banks tightening lending standards is now 50.8%, that is a 82.3% change percentage points change from where it was in March of 2021 till today.
29:47 So, the pressure on the banking system is enormous that's why we see M2 money supply contracting from its very high level now to contraction. Its growth was phenomenal like 40% in the period of time between 20 and 22 when we saw the FED monetized $4.5 trillion dollar of the 6 trillion dollar worth of helicopter money deployed the government.

moka

19-09-2023, 04:36 PM

https://www.youtube.com/watch?v=YbpNQDRo6jc
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

31:29 By 2040 we're going to have no money left over to run the government other than Social Security, Medicare, Medicaid and interest on expense. That assumes that there is no recession between now and 2040.
34:06 One concern is that the FED will be forced to pivot before it gets inflation fully under control and the bond market is going to say you know what Fed I don't have any faith in you anymore, that you're ever going to be able to contain inflation and you're probably going to have to resort to these measures that caused us to have these massive deficits as far as the eye can see and they therefore I want higher yields on the longer end of the curve to compensate me for that increased risk.

China and Japan are the biggest holders of Treasuries, their reserves are parked in Treasuries their currencies are floundering. They are selling off their holdings of Treasuries to support their currencies, also Japan is selling treasuries because they're relaxing yield curve control.
Japanese government debt is I think 1.4 quadrillion yen in debt so they are in worse condition than the United States and their inflation rate, if you look at the food inflation it's 8%, so why in the world would anybody lock up a Japanese Government Bond JGB going out 10 years. So, the only buyer is the BOJ the government.

39:33 So when the FED engages in quantitative tightening what are they doing instead of rolling over their Treasuries they allow them to expire. Treasury says we have a bond coming due. The Treasury says I have no money, so they go out to the private market and they sell a bond and then they get that money and they pay back the Fed and the FED destroys that money.

40:41 Janet Yellen just recently announced that the Treasury is going to be issuing something 1.9 trillion worth of US Treasury bonds over this remaining part of this year.
The real estate mortgage is frozen.
45:49 People said my house went up so much in price and I'm going to refinance my mortgage and take money out and my payments going to stay the same.
46:20 How much income is generated from the transactions of real estate, from lawyers and brokers selling a house, and then carpenters and contractors. It's a massive contributor to the economy right massive.
2022 There are planned layoffs that haven't happened yet so that's why I said it's recession delayed it's held in abeyance.

moka

19-09-2023, 04:43 PM

.
https://www.youtube.com/watch?v=YbpNQDRo6jc
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

49:13 I think we can put to bed the myth that the FED is there to protect the lower and middle classes of this country and that's why it's so good to have programs like yours on because people like me can expound about the fact that they are destroying this country. You can't have a viable nation without a vibrant middle class, it just doesn't work.
We had according to official figures a 9% inflation rate a little over a year ago and that means that the purchasing power of the US dollar gets destroyed in half every eight years and those are official figures which we know are much rosier than the reality.

49:57 We know for a fact that home prices went up 43% in the last two years. So, we know rents have gone up commensurate with that so in reality you're talking about 40% and that means the purchasing power of the dollar gets cut in half about every two years according to rule of 72.

50:31 The Federal Reserve is destroying the very people they purport to care most about which is the lower and middle classes. I mean why do you continually tell us how you know the unemployment rate of this class and that class and that ethnic group. You don't care about that, you care about keeping banks in business and if you just look what they did in the middle of March of this year. Who did that really help the most and why did they do it? Because they're in business to bailout banks, not the American people. They are destroying this country, they destroyed productivity and they destroying the purchasing power of our currency.

51:20 Their job is to support the banking system right and no huge surprise because the FED is a confederation of banks. I mean it's taking care of its own to a certain extent but it is in the business of rescuing and enriching them, and all of the individuals who benefit from the output of the banking system which is a relatively small cadre of people and their wealth has just gargantuan increased over the past couple of decades at the expense of the bottom 99% They are just sacrificing the future prosperity of everybody but this top echelon.

America is supposed to be a meritocracy and failure is part of that process. Some people fail, leveraged people, leveraged entities, leveraged institutions, leveraged individuals they have to be allowed to fail for the system to work, but this this system of government that we have now does not believe in a meritocracy.

53:29 It's basically a very small ruling elite that live exceptionally well and they live in all these gated communities because the rest of the country is impoverished and they're afraid.

54:15 This is something that has persisted under administrations on the left, on the right, it is just part of the power structure that we have right now.
Donald Trump increased the debt of this nation far above where it needed to be to bail us out from covid and then Joe Biden took the baton and sprinted from there.

I think Trump made a lot of mistakes, did a lot of things right. He made some very big mistakes. One of the big mistakes he made was constantly pestering Jerome Powell, listen we want negative nominal interest rates he actually pushed the FED to try to go that route because Europe has got negative nominal rates I want those too.
When he was campaigning Trump was out there saying the FED is blowing a bubble by keeping interest rates too low. And then when he's in the president's seat it's okay hey I want lower interest rates. So, I just wanted to point out the differential in his positions.
Well, I know it's a shock to reveal in this program first that there is hypocrisy in politics.

56:02 When you look at DC, we're creating an aristocracy in this country and it's because of the Treasury and because of the Federal Reserve and the politicians.

moka

19-09-2023, 04:55 PM

https://www.youtube.com/watch?v=YbpNQDRo6jc
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

Consumer spending obviously gets increasingly compromised. We're still a 70% GDP consumer spending driven economy.
56:56 This corporate earnings recession that we thought was going to happen earlier this year, that is going to then cause corporations to start laying off people as part of their cost cutting measures. That is probably likely going to accelerate, create for some period of time a vicious cycle of diminished consumer spending that may cause the breakage in the system.

57:58 The fact that the banks have stopped lending and the real estate market's in a depression as far as transactions are concerned. I didn't say depression prices yet, I said transactions that should lead to a fall in asset prices in general, it should lead to a fall in consumption, it should lead to a fall in the stock market, it should lead to a fall in home prices.

58:23 But when you have 20 to 25% of homes, single family homes in this country owned by investors and Wall Street. I put myself in the mindset of Blackstone and I say okay so the zombie companies start laying off people and when the corporate debt gets reset in 24 and people are paying a much higher interest rate, corporations start laying off people, unemployment rate rises, my income stream from these rental starts to dry up, home prices start to roll over a little bit and I'm sitting on a 43% gain in my home that investment speculative property that I purchased a few years ago I'm gonna sell it. I think there's a huge shadow inventory that can come and hit the market once we start to seeing that dynamic I just laid out play out.

1:00:05 I really have a strong aversion to the dramatic increase in institutional ownership of single family homes in this country. I just I don't think there is any real societal good that comes out of institutional ownership of homes that otherwise a resident, a citizen of this country should be buying to live in.

These corporations live in zero of these house houses, to them it's just business. And if you get into a position where you're starting to lose cash flow you can say we're going to shutter that division or we're going to get out of that market right and bang you know hundreds of units maybe thousands of units in certain metropolitan areas could suddenly flood the market right. It just creates this much greater market instability that I think any of the regulators national or local who have been happy to get all the transaction revenue from this have thought of.

1:01:33 Blackstone wouldn't be taking out all of these mortgages and buying tracts of single family homes across the southern tier of this country 25% just think of about that, that's unprecedented and unbelievable. They wouldn't be able to do it, they wouldn't be incentivized to do it if money wasn't free. We have provided a mal incentive, we have provided a perverse incentive for this behavior to happen. We're just we're creating the incentive for it to happen but it doesn't serve our national benefit.

Right now it is the most unaffordable time to buy a home in the US. You've got the combination of high prices that haven't corrected materially yet and high mortgages, which is why we're beginning to see so many fewer transactions. Real estate sales, it's all cash and a lot of that's been the corporate buyer.

One of the really unfair parts about this institutional ownership why I think in many ways it's kind of immoral is because it's not a level playing field. These guys have much deeper pockets to begin with, but they can borrow at much cheaper rates than the average consumer can so it's just not a fair fight. And these guys just come in with their ability to borrow at ridiculously low rates relative to consumers and their big investor deep pockets and say great I'll just take that thing in cash. So that the consumer as the aspiring resident always gets the short end of the stick.
You have a massive unfair advantage if you're an institution, or you have the backing of generational family wealth.

1:07:32 You remember the old company stores of a century ago where people lived in a town that was basically owned by a company and they were basically perpetual serfs to the person that they worked for because they owned everything and you basically had to rent everything in the town, we are becoming a company nation.

jonu

19-09-2023, 05:19 PM

Valuegrowth

19-09-2023, 08:52 PM

For now much expected recesssion has been postponed, not cancelled. Once we see recession or hard landing asset inflation should come down. Inflaton and Cost of doing business also should come down. Cycle has to repeat. This time is no different.
.
https://www.youtube.com/watch?v=YbpNQDRo6jc
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

49:13 I think we can put to bed the myth that the FED is there to protect the lower and middle classes of this country and that's why it's so good to have programs like yours on because people like me can expound about the fact that they are destroying this country. You can't have a viable nation without a vibrant middle class, it just doesn't work.
We had according to official figures a 9% inflation rate a little over a year ago and that means that the purchasing power of the US dollar gets destroyed in half every eight years and those are official figures which we know are much rosier than the reality.

49:57 We know for a fact that home prices went up 43% in the last two years. So, we know rents have gone up commensurate with that so in reality you're talking about 40% and that means the purchasing power of the dollar gets cut in half about every two years according to rule of 72.

50:31 The Federal Reserve is destroying the very people they purport to care most about which is the lower and middle classes. I mean why do you continually tell us how you know the unemployment rate of this class and that class and that ethnic group. You don't care about that, you care about keeping banks in business and if you just look what they did in the middle of March of this year. Who did that really help the most and why did they do it? Because they're in business to bailout banks, not the American people. They are destroying this country, they destroyed productivity and they destroying the purchasing power of our currency.

51:20 Their job is to support the banking system right and no huge surprise because the FED is a confederation of banks. I mean it's taking care of its own to a certain extent but it is in the business of rescuing and enriching them, and all of the individuals who benefit from the output of the banking system which is a relatively small cadre of people and their wealth has just gargantuan increased over the past couple of decades at the expense of the bottom 99% They are just sacrificing the future prosperity of everybody but this top echelon.

America is supposed to be a meritocracy and failure is part of that process. Some people fail, leveraged people, leveraged entities, leveraged institutions, leveraged individuals they have to be allowed to fail for the system to work, but this this system of government that we have now does not believe in a meritocracy.

53:29 It's basically a very small ruling elite that live exceptionally well and they live in all these gated communities because the rest of the country is impoverished and they're afraid.

54:15 This is something that has persisted under administrations on the left, on the right, it is just part of the power structure that we have right now.
Donald Trump increased the debt of this nation far above where it needed to be to bail us out from covid and then Joe Biden took the baton and sprinted from there.

I think Trump made a lot of mistakes, did a lot of things right. He made some very big mistakes. One of the big mistakes he made was constantly pestering Jerome Powell, listen we want negative nominal interest rates he actually pushed the FED to try to go that route because Europe has got negative nominal rates I want those too.
When he was campaigning Trump was out there saying the FED is blowing a bubble by keeping interest rates too low. And then when he's in the president's seat it's okay hey I want lower interest rates. So, I just wanted to point out the differential in his positions.
Well, I know it's a shock to reveal in this program first that there is hypocrisy in politics.

56:02 When you look at DC, we're creating an aristocracy in this country and it's because of the Treasury and because of the Federal Reserve and the politicians.

moka

19-09-2023, 09:13 PM

"1:07:32 You remember the old company stores of a century ago where people lived in a town that was basically owned by a company and they were basically perpetual serfs to the person that they worked for because they owned everything and you basically had to rent everything in the town, we are becoming a company nation."

Nail meets head. And Blackrock along with the WEF are in the thick of it.We are living in an era of increasing rentier capitalism which describes the economic practice of gaining large profits without contributing to society. A rentier is someone who earns income from capital without working. This is generally done through ownership of assets that generate yield, such as rental properties, shares in dividend paying companies, or bonds that pay interest.
One common source of value for economic rent is from natural resources (including land, oil, water, forests, air space, minerals, etc).

Baa_Baa

19-09-2023, 09:18 PM

We are living in an era of increasing rentier capitalism which describes the economic practice of gaining large profits without contributing to society. A rentier is someone who earns income from capital without working. This is generally done through ownership of assets that generate yield, such as rental properties, shares in dividend paying companies, or bonds that pay interest.
One common source of value for economic rent is from natural resources (including land, oil, water, forests, air space, minerals, etc).

I don't think any one of us knows whether what you are saying is your opinion, in your words, or some copy and paste unattributed opinion of someone else. Maybe think about that, it might lend to, or perhaps reduce, the gravitas of what you have to say.

moka

19-09-2023, 09:25 PM

https://www.youtube.com/watch?v=YbpNQDRo6jc
Michael Pento: A 'Hard Landing' Recession Is Coming & It Won't Take Long To Arrive

57:58 The fact that the banks have stopped lending ......
57:58 The fact that the banks have stopped lending is having an impact on small US businesses. They normally borrow from banks and now they are unable to obtain finance so some are forced to sell their businesses at depressed prices. These businesses are being bought by those with wealth/cash, so as the recession bites more businesses will be transferred from the middle class to the wealthy/corporates.

SPC

19-09-2023, 09:43 PM

NZ economy is more tied to Australia rather than US. Mortgage rates are beginning to fall over the ditch and for them inflation has peaked. What's happening in Aus will find it's way here. I've spent a lot of time in America and it's a very perculier place in numerous ways. Essays of economic doom appear every day. Their legal framework allows for events and outcomes unique to them. In many respects they are their own worst enemy.

bull....

20-09-2023, 05:43 AM

Petrol prices expected to rise to $3.50 per litre by Christmas
https://www.newshub.co.nz/home/money/2023/09/petrol-prices-expected-to-rise-to-3-50-per-litre-by-christmas.html

so inflation not coming down anytime soon therefore NZX going down as rates stay high for longer :scared:

bull....

20-09-2023, 06:24 AM

Ggcc

20-09-2023, 07:18 AM

FMA KiwiSaver report: Cost-of-living crisis sees retirement savings put on back burner

An increasing number of people are forgoing their retirement savings to meet soaring living costs.
The amount people withdrew from their KiwiSaver accounts due to “financial hardship” rose by 37 per cent in the year to March, compared with the previous year.

https://www.nzherald.co.nz/business/fma-kiwisaver-report-cost-of-living-crisis-sees-retirement-savings-put-on-back-burner/7A6O3OSBLRAVFE473B2HO7GWF4/

probably selling nzx shares to pay for the groceries too. be interesting to know sharesie's data around selling vrs buying by there clients
I find it interesting that KiwiSaver seems to not follow up or spend the money for the people on what they say they need it on. I know a family that lost everything in the cyclone and one of the family members got money out of their KiwiSaver for a PlayStation amongst other things, because he lost it. Then started a go fund me page for baby clothes???

bull....

21-09-2023, 07:23 AM

I find it interesting that KiwiSaver seems to not follow up or spend the money for the people on what they say they need it on. I know a family that lost everything in the cyclone and one of the family members got money out of their KiwiSaver for a PlayStation amongst other things, because he lost it. Then started a go fund me page for baby clothes???

playstation was probably for mental health

bull....

21-09-2023, 07:25 AM

Fed declines to hike, but points to rates staying higher for longer
https://www.cnbc.com/2023/09/20/fed-rate-decision-september-2023-.html

NZ gdp data later on probably confirm NZ in stagflationary environment , the next govt need to go on a infrastructure spending boom to save us all

Ggcc

21-09-2023, 07:47 AM

playstation was probably for mental health
Maybe, but that is just ridiculous in my eyes.

Azz

21-09-2023, 07:50 AM

Panda-NZ-

21-09-2023, 08:07 AM

There is hope. Sunak in the UK is "postponing" various insane "net zero" policies. The climate madness is what will drive humanity into the stone age if it is not stopped. All of it predicated on a total lie, a lie literally in one sentence: that human-emitted CO2 is warming the globe. Tens of thousands of crazy policies enacted or to be enacted, billions and billions of dollars wasted, completely ludicrous decision-making because of ONE SENTENCE, and that one sentence is a lie. (The UK has a legally-binding target of reaching net zero emissions by 2050 - but the cracks are showing and it can be gotten rid of completely via the ballot box.)

It's so much better of course to be reliant on russian gas, petrol from saudi arabia and coal from who knows where, rather than having local green energy.

I'm actually a fan of nuclear unless it's not cost effective (there are some questions to be had there). Though, in europe you have France who can build the reactors efficiently and/or supply energy directly to the UK.

Azz

21-09-2023, 08:14 AM

It's so much better of course to be reliant on russian gas, petrol from saudi arabia and coal from who knows where, rather than having local green energy.

I'm actually a fan of nuclear unless it's not cost effective (there are some questions to be had there). Though, in europe you have France who can build the reactors efficiently and/or supply energy directly to the UK.

I agree with a good portion of that (your sentiment); but the problem with [non-nuclear] "green" energy is it doesn't really work (the lights go out very quickly) and a lot of it is extremely damaging to the environment - for example, offshore wind farms destroy the seabed and massacre seabirds.

moka

21-09-2023, 10:35 AM

I don't think any one of us knows whether what you are saying is your opinion, in your words, or some copy and paste unattributed opinion of someone else. Maybe think about that, it might lend to, or perhaps reduce, the gravitas of what you have to say. Most of the time I prefer to let the ideas or opinions be decided on their own merits rather than be validated by some expert or authority. Ideas can be dismissed if they come from the wrong sources eg certain media sources or so-called conspiracy theorists or Marx.
While the term "Marxism" is widely used to describe the system of thought created by Marx, it is not a term that Marx or Engels approved of or used to describe Marx’s views.

Marx is dismissed by some for his Communist Manifesto, but that was only a pamphlet, and his real expertise was in capitalism. He studied the history of capitalism and wrote Capital (Das Kapital): a three-volume work which is a detailed critique of capitalism. He wrote about the weaknesses and failings of capitalism which include alienation, exploitation, inequality, crisis and monopoly. All of those seem to be ongoing problems in the world today. Critics of Marx focus on what he got wrong, but I think we should focus on where he is right.

winner69

21-09-2023, 01:33 PM

Economy still pretty strong …..media will be disappointed there was no recession lol

Strong employment numbers still

Nice chart from ANZ putting current state of economy in historical context

Rawz

21-09-2023, 01:43 PM

JBmurc

21-09-2023, 01:45 PM

Economy still pretty strong …..media will be disappointed there was no recession lol

Strong employment numbers still

Nice chart from ANZ putting current state of economy in historical context

More rate rises are needed then get those RES floating rates above 10% lowest Fixed term 8% etc ... consumers must suffer .. more job losses ... much higher fuel costs should bankrupt more businesses drive downwards spending...higher unemployment a must...

If we do want 2-3% inflation

winner69

21-09-2023, 01:49 PM

wonder what the inflation adjusted per capita looks like :ohmy:

Won’t show it rawz …just highlights how totally unproductive we are as a country …..not working too hard while living beyond our means

bull....

21-09-2023, 02:03 PM

Fed doing the right thing by keeping rates unchanged, says DoubeLine's Jeffrey Gundlach

https://www.youtube.com/watch?v=U7n4v3HHdZ8

causecelebre

21-09-2023, 03:07 PM

Azz

21-09-2023, 03:14 PM

Not sure why central banks can't change the inflation target or at least use scientific measurement. Roger Douglas pulling 2% out of his butt is hardly scientific and has become gospel for central banks around the world

There is some thought to it: the 50% increase between 2% a year and 3% a year is massive; the 100% increase between 2% a year and 4% a year even more so. Apply these over five-, ten-year timespans and 2% makes much more sense than anything higher!

Aaron

21-09-2023, 03:16 PM

There is some thought to it: the 50% increase between 2% a year and 3% a year is massive; the 100% increase between 2% a year and 4% a year even more so. Apply these over five-, ten-year timespans and 2% makes much more sense than anything higher!

What about 0% + or - 1% in other words price stability. Why is that not better than 2 or 3%?

Azz

21-09-2023, 03:19 PM

What about 0% + or - 1% in other words price stability. Why is that not better than 2 or 3%?

Good question.

Panda-NZ-

21-09-2023, 04:03 PM

Even the tolerance level makes a big difference ie EU and US have the same target but the former treats it as a maximum limit.

So the EU has higher unemployment and lower growth than is otherwise necessary, but lower inflation.

Panda-NZ-

21-09-2023, 04:07 PM

Without the gas situation I don't think there would be an inflation problem in Europe (at all).

There isn't one in Japan.

Rawz

21-09-2023, 08:08 PM

What about 0% + or - 1% in other words price stability. Why is that not better than 2 or 3%?
A small amount of inflation encourages spending and general economic activity.

bull....

22-09-2023, 06:39 AM

looks like diesel prices are going to go thru the roof

Russia Temporarily Bans Diesel Exports

Despite this being only a temporary ban, the impact is significant as Russia remains a key diesel exporter to global markets,” said Alan Gelder, vice president of refining, chemicals and oil markets at consultancy Wood Mackenzie Ltd. “The global refining system will struggle to replace those lost Russian volumes at a time when global diesel inventories are already at low levels.”

https://www.bloomberg.com/news/articles/2023-09-21/russia-temporarily-limits-diesel-and-gasoline-exports

wall st getting savaged again , US 10 yr bonds at highs this cycle likely to flow to NZ these rises in rates and diesel :scared: and sticky inflation

Daytr

22-09-2023, 07:17 AM

wonder what the inflation adjusted per capita looks like :ohmy:

Even worse would be the immigration & inflation adjusted number. Even in the good times in the last 15 years NZs growth can largely be attributed to the impact of immigration.

Daytr

22-09-2023, 07:25 AM

What about 0% + or - 1% in other words price stability. Why is that not better than 2 or 3%?

The main reason for not targeting deflation is casflow in relation to debt and profits.
Debt is secured against a certain face value or cashflow generation off that value.
If the value depreciates then either margins need to rise to maintain the same level of cashflow, or debt servicing as well as dividend payments etc will need to reduce.

Aaron

22-09-2023, 08:53 AM

A small amount of inflation encourages spending and general economic activity.

I have heard the theory.

Are there any studies done, actually confirming this theory to be correct?

If we have price stability or actual deflation people will stop spending as they will wait for prices to get cheaper? This would not seem true for rent, food, transport and just about anything the average person needs to get by on a day to day basis. Maybe for big items cars appliances etc. Most people I talk to like it when things get cheaper or more affordable.

Basically asset owners have had a govt guarantee that at least 2% of their debt gets removed by an inflation tax every year while the nominal value of their assets are increased each year. Have wages kept up with inflation? (not with house price inflation that is for sure) Has wealth inequality increased or decreased? Is NZ currently better or worse or just the same.

https://www.inequality.org.nz/understand/great-divergence-1982-2018-tmm/

This site probably has a bias but if the data is correct then 1982 things kicked off. I wonder if inflation targeting has been part of the problem (if you see rising wealth inequality as a problem)

Aaron

22-09-2023, 09:06 AM

The main reason for not targeting deflation is casflow in relation to debt and profits.
Debt is secured against a certain face value or cashflow generation off that value.
If the value depreciates then either margins need to rise to maintain the same level of cashflow, or debt servicing as well as dividend payments etc will need to reduce.

Wouldn't the natural state for an open competitive economy be deflation as companies become more efficient and competitive.

So inflation targeting is encouraging the financialization of the economy or increasing debt and bringing demand forward?

That would seem to ring true as the amount of debt as a percentage of GDP seems to be rising faster since 1990.

https://www.imf.org/external/datamapper/PVD_LS@GDD/SWE

Aaron

22-09-2023, 09:24 AM

I had better get off the thread as this is not relevant to the thread.

But talking of Black Monday, it should be a black friday at least, S&P500 down 1.64% overnight probably due to something Jerome Powell said I suppose. been a few bad days in a row, interesting to see if it extends to Monday.

I hope Toddy left a little in his bank account in case things get cheaper.

Daytr

22-09-2023, 09:31 AM

Wouldn't the natural state for an open competitive economy be deflation as companies become more efficient and competitive.

So inflation targeting is encouraging the financialization of the economy or increasing debt and bringing demand forward?

That would seem to ring true as the amount of debt as a percentage of GDP seems to be rising faster since 1990.

https://www.imf.org/external/datamapper/PVD_LS@GDD/SWE

You just described the tech industry in your first paragraph. Take the mobile phone which started off just as a phone. If you bought just a mobile phone now rather than the latest smart phone you could probably spend $25 rather than $1800 for the latest IPhone. So even though tech generally becomes cheaper over time it also improves and offers more so you continue generally to pay more.

Panda-NZ-

22-09-2023, 09:46 AM

Yeah iphones are hugely popular despite offering less terms of in hardware.

Though, costs could be really low if you allow people to repair their devices or even make them modular so you can update the camera, battery or cpu individually at an electronics shop, rather than buying a whole new phone every two years. Though that's not the sort of free market we live in.

Aaron

22-09-2023, 09:49 AM

You just described the tech industry in your first paragraph. Take the mobile phone which started off just as a phone. If you bought just a mobile phone now rather than the latest smart phone you could probably spend $25 rather than $1800 for the latest IPhone. So even though tech generally becomes cheaper over time it also improves and offers more so you continue generally to pay more.

So that is why I need a new apple iphone every year or two.

But you agree inflation targeting just encourages more debt and the financialization of the economy?

Sorry Black Monday thread, I can't help myself, end of the week and I feel more like pointless arguing rather than being a productive member of society.

Easier to moan about being poor, rather than doing something about it.

Toddy

22-09-2023, 09:50 AM

Too right. I'm back online and will be buying again today once my funds have cleared in the broker account.

Toddy

22-09-2023, 10:14 AM

Daytr

22-09-2023, 10:18 AM

So that is why I need a new apple iphone every year or two.

But you agree inflation targeting just encourages more debt and the financialization of the economy?

Sorry Black Monday thread, I can't help myself, end of the week and I feel more like pointless arguing rather than being a productive member of society.

Easier to moan about being poor, rather than doing something about it.

Naturally with inflation debt rises as things cost more, more debt is required. But wealth generated by debt far outweighs the cost

If Government assets were valued against their debts we wouldn't have any concerns about current debt levels. It's just lots of Government assets such as National Parks aren't really revenue earners and will never be sold.

Daytr

22-09-2023, 10:28 AM

See the USD formed the 'golden cross' overnight.

It's time to buckle in and enjoy the ride.

This means a million different opportunities and a million new risks.

From a NZ investors point of view then long exposure to the Usd maybe a wise strateg.

Not so good for imported inflation and filling the car up.

Would be good to get some thoughts from the experts on here.

I bought both DOW & Nasaq futures on the close as there is quite a key chart level at that point. So pretty key support, but if broken the next support line looks around 1.5% lower

Relaxed

22-09-2023, 10:32 AM

I have heard the theory.

Has wealth inequality increased or decreased? Is NZ currently better or worse or just the same.

I would suggest that wealth inequality has increased but at the same time most (but not all) of NZ is actually better off.

on better off, take investing. So many things are cheaper, or more readily available.
I can invest on the US markets for USD 1 minimum per trade (ASB is $USD 90 per trade)
using data gained for free from numerous sources.
This is easily the best it has ever been

on wealth inequality, I often wonder what the measurement is.
at the extremes it is ridiculous. (Elon Musk compared to a NZ beneficiary).
but in the middle it gets more murky (absolute dollars amounts compared to percentage difference compared to the mathematics of percentage growth)

one thought that was given to me recently is that China had almost universal wealth equality 20 or 30 years ago. almost everyone was extremely poor.
they have now embraced capitalism to a large degree and wealth equality has been completely destroyed.
However, the average person (and many of the poor) are actually economically better off than the previous model.

Daytr

22-09-2023, 10:35 AM

I would suggest that wealth inequality has increased but at the same time most (but not all) of NZ is actually better off.

on better off, take investing. So many things are cheaper, or more readily available.
I can invest on the US markets for USD 1 minimum per trade (ASB is $USD 90 per trade)
using data gained for free from numerous sources.
This is easily the best it has ever been

on wealth inequality, I often wonder what the measurement is.
at the extremes it is ridiculous. (Elon Musk compared to a NZ beneficiary).
but in the middle it gets more murky (absolute dollars amounts compared to percentage difference compared to the mathematics of percentage growth)

one thought that was given to me recently is that China had almost universal wealth equality 20 or 30 years ago. almost everyone was extremely poor.
they have now embraced capitalism to a large degree and wealth equality has been completely destroyed.
However, the average person (and many of the poor) are actually economically better off than the previous model.

In regards NZ outside of housing I think you are right and this again comes back to immigration being a key driver of not only economic growth but also inequality.

Aaron

22-09-2023, 11:27 AM

Naturally with inflation debt rises as things cost more, more debt is required. But wealth generated by debt far outweighs the cost

If Government assets were valued against their debts we wouldn't have any concerns about current debt levels. It's just lots of Government assets such as National Parks aren't really revenue earners and will never be sold.

Interesting claim I just googled marginal utility of debt and most people agree with you to a point. I just wonder what point it becomes a burden. Obviously at 0% or negative rates, "never" is the answer so I guess we load up and wait for the central banks to cut.

https://seekingalpha.com/article/136058-the-declining-usefulness-of-debt

Relaxed, your right about China's wealth growing. Exporting all the western world's manufacturing jobs to where the cheapest labour is, has helped China immensely. This suppression of wages and cheap goods imported from China has helped keep inflation down in NZ for many years while asset prices have been able to inflate without affecting CPI inflation. Too bad about manufacturing in NZ though. Looks like the only thing there is no competition for is capital as central banks can provide an unlimited amount it just depends if you can get access to it or not.

The price of capital is centrally controlled as well, which must upset the capitalists.

Daytr

22-09-2023, 11:59 AM

Relaxed

22-09-2023, 01:33 PM

In regards NZ outside of housing I think you are right and this again comes back to immigration being a key driver of not only economic growth but also inequality.

You are correct regarding housing which is local and can't be outsourced to a 'cheaper' country.

one question, if the country is wealthier overall (including those near the bottom) is inequality actually a bad thing?

but that assumes the wealth of the country is growing per capita and not just in absolute numbers (ie your point about immigration being a key driver of our economic growth)

troyvdh

22-09-2023, 01:48 PM

Day after day....down down....I have always understood that the SM predicts economic enviornment by what 6-12 months...And with petrol heading towards 3.50 .....I suppose as Warren says "when there is blood in the streets...".
It would be interesting to see how Superfunds with a kiwi bias are doing.

Daytr

22-09-2023, 02:28 PM

You are correct regarding housing which is local and can't be outsourced to a 'cheaper' country.

one question, if the country is wealthier overall (including those near the bottom) is inequality actually a bad thing?

but that assumes the wealth of the country is growing per capita and not just in absolute numbers (ie your point about immigration being a key driver of our economic growth)

It probably depends how you measure wealth & I would argue in the last 15 years the ones at the bottom are worse off. Less home ownership, can't afford rent despite the massive increase in the minimum wage. Working families struggling to put food on the table or petrol in the car. It's no coincidence that crime has soared in a time of a cost of living crisis.

NZ really lost its way imo under Key in regards how the economy was driven and particularly as Immigration numbers soared and yet we didn't invest in housing or to a great extent infrastructure.

What we were doing is letting Kiwi talent move overseas & replacing it with cheaper immigrants and the same thing is happening still.

Aaron

22-09-2023, 02:32 PM

[QUOTE=Aaron;1022388]Interesting claim I just googled marginal utility of debt and most people agree with you to a point. I just wonder what point it becomes a burden. Obviously at 0% or negative rates, "never" is the answer so I guess we load up and wait for the central banks to cut.[QUOTE]

Perhaps ask Japan as they have been struggling with excessive Government debt for decades. The US is also now running into this problem where debt servicing costs something like $1Trln per year. So they really need to lower interest rates but they can't due to inflation. It's a very real conundrum and this is why the FED were so aggressive in increasing rates as a bit like NZ they wanted to snash inflation quickly. Unfortunately it hasn't quite worked out like that and in the US rates are blunder tool than here as many people have locked in interest rates out 10 years etc.

Interesting you suggest lowering interest rates rather than cutting spending and debt. If it really is a ponzi scheme then paying off debt will crash the system.

Japan is interesting 1989 stock market crash due to monetary tightening. Land around the emperors palace worth more than all of California (sounds like current Akld house prices).

https://tradingeconomics.com/japan/interest-rate#:~:text=Yield%20Curve%20Control-,The%20Bank%20of%20Japan%20(BoJ)%20kept%20its%20ke y%20short%2D,the%20sustainability%20of%20stimulus% 20policy.

I guess proof that you just need to take interest rates negative and keep them there and print lots and lots of money. The JCB owns 43% of the govt debt and a large chunk of the Japanese stock market via etf purchases. Still the third biggest economy so maybe no problems re debt and money printing. Sad if you bought into the stock market in 1989 though as you are still underwater (I think) despite the efforts of the JCB.

If there has been no downside to this policy then maybe we should be trying to catch Japan as we have already adopted money printing and low rates as the way forward we are just probably not doing enough. Adrian has asked the banks to prepare for negative rates. Are we at 1989 Japan or later years as this will affect my decision to follow Toddy all in on shares. Especially after a couple of rough days on the bourse. No worries as long as you can wait 34 years to break even.

Daytr

22-09-2023, 02:45 PM

[QUOTE=Daytr;1022398][QUOTE=Aaron;1022388]Interesting claim I just googled marginal utility of debt and most people agree with you to a point. I just wonder what point it becomes a burden. Obviously at 0% or negative rates, "never" is the answer so I guess we load up and wait for the central banks to cut.

Interesting you suggest lowering interest rates rather than cutting spending and debt. If it really is a ponzi scheme then paying off debt will crash the system.

Japan is interesting 1989 stock market crash due to monetary tightening. Land around the emperors palace worth more than all of California (sounds like current Akld house prices).

https://tradingeconomics.com/japan/interest-rate#:~:text=Yield%20Curve%20Control-,The%20Bank%20of%20Japan%20(BoJ)%20kept%20its%20ke y%20short%2D,the%20sustainability%20of%20stimulus% 20policy.

I guess proof that you just need to take interest rates negative and keep them there and print lots and lots of money. The JCB owns 43% of the govt debt and a large chunk of the Japanese stock market via etf purchases. Still the third biggest economy so maybe no problems re debt and money printing. Sad if you bought into the stock market in 1989 though as you are still underwater (I think) despite the efforts of the JCB.

If there has been no downside to this policy then maybe we should be trying to catch Japan as we have already adopted money printing and low rates as the way forward we are just probably not doing enough. Adrian has asked the banks to prepare for negative rates. Are we at 1989 Japan or later years as this will affect my decision to follow Toddy all in on shares. Especially after a couple of rough days on the bourse. No worries as long as you can wait 34 years to break even.

The only reason I don't suggest cutting spending to create surpluses is that I don't think the likes of the US, a quite extreme capitalist system is capable of that. Hopefully NZ is.
But again once your debt gets to a certain level the cost of servicing makes it prohibitive to create a surplus unless you have ultra low interest rates.

Aaron

22-09-2023, 02:55 PM

[QUOTE=Aaron;1022429][QUOTE=Daytr;1022398]

The only reason I don't suggest cutting spending to create surpluses is that I don't think the likes of the US, a quite extreme capitalist system is capable of that. Hopefully NZ is.
But again once your debt gets to a certain level the cost of servicing makes it prohibitive to create a surplus unless you have ultra low interest rates.

Beyond my understanding, although it seems counterintuitive that a capitalist system would price capital at 0% or less than zero.

Good to know there is a point with debt where you just give up and go hard and hope growth (inflation) will solve everything. Makes being a politician a lot easier by the sounds of it. Makes investing easy as well definitely pointless trying to save money for a rainy day, hopefully Toddy has left something for me.

Relaxed

22-09-2023, 03:01 PM

It probably depends how you measure wealth & I would argue in the last 15 years the ones at the bottom are worse off. Less home ownership, can't afford rent despite the massive increase in the minimum wage. Working families struggling to put food on the table or petrol in the car. It's no coincidence that crime has soared in a time of a cost of living crisis.

NZ really lost its way imo under Key in regards how the economy was driven and particularly as Immigration numbers soared and yet we didn't invest in housing or to a great extent infrastructure.

What we were doing is letting Kiwi talent move overseas & replacing it with cheaper immigrants and the same thing is happening still.

I largely agree with what you're saying, but I still have questions (that can't really be answered unfortunately)

for instance

It probably depends how you measure wealth & I would argue in the last 15 years the ones at the bottom are worse off. Less home ownership, can't afford rent despite the massive increase in the minimum wage. Working families struggling to put food on the table or petrol in the car.

I am / have been on the board of some charitable trusts and we find that there is both genuine need and poor spending decisions. so the question is, how do we judge which is which when at an economy level they look they same?

NZ really lost its way imo under Key in regards how the economy was driven and particularly as Immigration numbers soared and yet we didn't invest in housing or to a great extent infrastructure.

I agree, the 'trickle down' did not work well for many and necessary infrastructure was not built. However, I was fortunate to be working for companies that did reward their staff, this made that period a very good time for the people I worked with.
it also partially comes down to my earlier point, what are people doing with their money? and again there will be genuine need, and others who spend poorly and then look for government help.
I spent that period (and earlier) saving as much as I could and so managed to ride the share market boom that ran from the early 2000's for ages with only a few interruptions.
Again how do we make policy when they look the same at an economy level?

What we were doing is letting Kiwi talent move overseas & replacing it with cheaper immigrants and the same thing is happening still.

True, but I also know of two immigrant doctors working in construction because they can't get registered here.
I don't know the detail of why, and that is going to be important, but they were still doctors. No question, just a comment that not all immigrants are of lesser talent