US Inflation - it could be worse

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wifeisafurd
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dajo9 said:

wifeisafurd said:

dajo9 said:

DiabloWags said:

Dajo said:

Recessions are bad for people. That's my motivation.


So is INFLATION.

It crushes the poor and middle class many of whom are renters and dont have the luxury of working from home and bear the brunt of high fuel prices.

So weird that all of those articles posted here on Robert Reich, never really showed any concern for inflafionary pressures.


Wage driven inflation like we've had, at least prior to Putins War, is far better for people than recession. The negativity is overhyped by the media. I've shown that via multiple posts on these boards. It's in the data.
This is a somewhat academic discussion, yes? With this rate hikes isn't clear that the sole (or at least primary) focus at this point is on containing inflation. The chances that the Fed's aggressive rate-hiking cycle causes adverse growth outcomes is rising, if not a certainty. Has not the open market committee said aggressive rate hikes will continue until there is clear evidence that slowing inflation is sustainable? That will happen when, well, when we are in a recession.

Equity markets were higher today, but are generally pricing in a good deal of recession already since profit reports have been good. There have only been three larger equity declines in the last 30 years: the COVID-19 pandemic, the Global Financial Crisis and the collapse of the Tech Bubble. This is not my expertise, but isn't the risk and return in the asset classes looking more attractive than in equity markets? You and Diablo do this for a living, you guys tell me. Europe will likely be challenged by energy supply shocks and a cost-of-living crisis. The Euro is dropping faster than a Steph Curry 3 pointer. Do we have to wait for the important people in Davos to meet and tell us at some symposium we are officially gong into stagflation? It seems obvious that is on the horizon.


I don't work in capital markets for a living.

What do you mean by "asset classes"?
commodities and assets that are physical and not equities or bonds.

sorry, I though you said you had an expertise in investments
dajo9
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wifeisafurd said:

dajo9 said:

wifeisafurd said:

dajo9 said:

DiabloWags said:

Dajo said:

Recessions are bad for people. That's my motivation.


So is INFLATION.

It crushes the poor and middle class many of whom are renters and dont have the luxury of working from home and bear the brunt of high fuel prices.

So weird that all of those articles posted here on Robert Reich, never really showed any concern for inflafionary pressures.


Wage driven inflation like we've had, at least prior to Putins War, is far better for people than recession. The negativity is overhyped by the media. I've shown that via multiple posts on these boards. It's in the data.
This is a somewhat academic discussion, yes? With this rate hikes isn't clear that the sole (or at least primary) focus at this point is on containing inflation. The chances that the Fed's aggressive rate-hiking cycle causes adverse growth outcomes is rising, if not a certainty. Has not the open market committee said aggressive rate hikes will continue until there is clear evidence that slowing inflation is sustainable? That will happen when, well, when we are in a recession.

Equity markets were higher today, but are generally pricing in a good deal of recession already since profit reports have been good. There have only been three larger equity declines in the last 30 years: the COVID-19 pandemic, the Global Financial Crisis and the collapse of the Tech Bubble. This is not my expertise, but isn't the risk and return in the asset classes looking more attractive than in equity markets? You and Diablo do this for a living, you guys tell me. Europe will likely be challenged by energy supply shocks and a cost-of-living crisis. The Euro is dropping faster than a Steph Curry 3 pointer. Do we have to wait for the important people in Davos to meet and tell us at some symposium we are officially gong into stagflation? It seems obvious that is on the horizon.


I don't work in capital markets for a living.

What do you mean by "asset classes"?
commodities and assets that are physical and not equities or bonds.

sorry, I though you said you had an expertise in investments



Commodities are very specific to the economics of that particular commodity. It's not something I really focus on or invest in.

I do believe the equity markets have farther down to go.

Working for a living in investing does not necessarily make you an expert. It does tend to make you a good trend follower though.
Unit2Sucks
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cbbass1 said:

dajo9 said:

A great way to lower real estate prices without destroying the economy would be to raise taxes on the rich.

I agree with you, generally, but I think it's much more productive to stop talking about "the rich" in vague terms, and talk about corporations vs individuals.

Over the last few decades, the contribution of the Corporate Earnings Tax to Federal tax revenue has gone from over 35% to single digits. Specifically, corporations that hire lobbyists have successfully transferred their tax burden to U.S. individuals.

But because we have a progressive tax code for the Individual Income Tax, high-income individuals actually bear a disproportionate share of our overall tax burden.

That said, I think the best way to lower real estate prices is to add a substantial surcharge on property taxes for residential properties that go unoccupied for extended periods of time. The unoccupied properties are getting to be a pretty high percentage of the housing stock.

The surcharge would generate enough revenue so that we could do what we should've done decades ago -- index the Property Tax Homeowner's Exemption to the CPI. In CA, when the $7000 homeowner's exemption was enacted, the average price of a home was in the $20,000 - $30,000 range, and it made a big difference in affordability. Today, the exemption should be $100,000 or more.


I quite like this type of idea but not sure that "unoccupied" is the right lens. If someone has a second home would that be unoccupied?

Perhaps it should be land owned by businesses unless the businesses are currently renting the properties out to residential tenants. Limiting prop 13 to persons has been discussed quite a lot. There was an attempt in 2020 with prop 15 but it was narrowly defeated. I don't think businesses need the same sort of protection as residential owners under prop 13 so would like to see some change there.
dajo9
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I think additional real estate taxes would be too difficult to manage with the exception of foreign ownership of vacant property.

If you want to keep the ultra wealthy from hogging up real estate then reduce the wealth of the ultra rich via wealth / income taxes and no more QE craziness.

Agreed on changing prop 13.
DiabloWags
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dajo9 said:


If you want to keep the ultra wealthy from hogging up real estate then reduce the wealth of the ultra rich via wealth / income taxes and no more QE craziness.

Agreed on changing prop 13.

Shocker.
DiabloWags
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The chart of Dr. Copper is rolling over and looks like it is about to take out the key support level at $4.00
Massive weakness in the USD today too.

I believe that Copper will be a key metric that the FED will be watching going forward.
One of several metrics for sure, but one of the key commodity components.
Crude oil, not so much.

U.S. Housing Starts plunged 14.4% to the lowest level since April 2021

Atlanta GDPNow GDP estimate at: 0.0

GDPNow - Federal Reserve Bank of Atlanta (atlantafed.org)





BearForce2
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Duh.
The difference between a right wing conspiracy and the truth is about 20 months.
wifeisafurd
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dajo9 said:

wifeisafurd said:

dajo9 said:

wifeisafurd said:

dajo9 said:

DiabloWags said:

Dajo said:

Recessions are bad for people. That's my motivation.


So is INFLATION.

It crushes the poor and middle class many of whom are renters and dont have the luxury of working from home and bear the brunt of high fuel prices.

So weird that all of those articles posted here on Robert Reich, never really showed any concern for inflafionary pressures.


Wage driven inflation like we've had, at least prior to Putins War, is far better for people than recession. The negativity is overhyped by the media. I've shown that via multiple posts on these boards. It's in the data.
This is a somewhat academic discussion, yes? With this rate hikes isn't clear that the sole (or at least primary) focus at this point is on containing inflation. The chances that the Fed's aggressive rate-hiking cycle causes adverse growth outcomes is rising, if not a certainty. Has not the open market committee said aggressive rate hikes will continue until there is clear evidence that slowing inflation is sustainable? That will happen when, well, when we are in a recession.

Equity markets were higher today, but are generally pricing in a good deal of recession already since profit reports have been good. There have only been three larger equity declines in the last 30 years: the COVID-19 pandemic, the Global Financial Crisis and the collapse of the Tech Bubble. This is not my expertise, but isn't the risk and return in the asset classes looking more attractive than in equity markets? You and Diablo do this for a living, you guys tell me. Europe will likely be challenged by energy supply shocks and a cost-of-living crisis. The Euro is dropping faster than a Steph Curry 3 pointer. Do we have to wait for the important people in Davos to meet and tell us at some symposium we are officially gong into stagflation? It seems obvious that is on the horizon.


I don't work in capital markets for a living.

What do you mean by "asset classes"?
commodities and assets that are physical and not equities or bonds.

sorry, I though you said you had an expertise in investments



Commodities are very specific to the economics of that particular commodity. It's not something I really focus on or invest in.

I do believe the equity markets have farther down to go.

Working for a living in investing does not necessarily make you an expert. It does tend to make you a good trend follower though.
I stared this. Agreed declines have further to go in equity and bond makets. In the context of the equity and real estate markets tanking, and bond allocations that were used to reduce volatility and now accelerating volatility, this might be the time to go to commodities and hard assets precisely because they have very specific economics.

As for you last paragraph, in a little while we are shopping for commercial property outside CA. The automatic liberal default for any economic trend is who can we tax?
dajo9
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wifeisafurd said:

dajo9 said:

wifeisafurd said:

dajo9 said:

wifeisafurd said:

dajo9 said:

DiabloWags said:

Dajo said:

Recessions are bad for people. That's my motivation.


So is INFLATION.

It crushes the poor and middle class many of whom are renters and dont have the luxury of working from home and bear the brunt of high fuel prices.

So weird that all of those articles posted here on Robert Reich, never really showed any concern for inflafionary pressures.


Wage driven inflation like we've had, at least prior to Putins War, is far better for people than recession. The negativity is overhyped by the media. I've shown that via multiple posts on these boards. It's in the data.
This is a somewhat academic discussion, yes? With this rate hikes isn't clear that the sole (or at least primary) focus at this point is on containing inflation. The chances that the Fed's aggressive rate-hiking cycle causes adverse growth outcomes is rising, if not a certainty. Has not the open market committee said aggressive rate hikes will continue until there is clear evidence that slowing inflation is sustainable? That will happen when, well, when we are in a recession.

Equity markets were higher today, but are generally pricing in a good deal of recession already since profit reports have been good. There have only been three larger equity declines in the last 30 years: the COVID-19 pandemic, the Global Financial Crisis and the collapse of the Tech Bubble. This is not my expertise, but isn't the risk and return in the asset classes looking more attractive than in equity markets? You and Diablo do this for a living, you guys tell me. Europe will likely be challenged by energy supply shocks and a cost-of-living crisis. The Euro is dropping faster than a Steph Curry 3 pointer. Do we have to wait for the important people in Davos to meet and tell us at some symposium we are officially gong into stagflation? It seems obvious that is on the horizon.


I don't work in capital markets for a living.

What do you mean by "asset classes"?
commodities and assets that are physical and not equities or bonds.

sorry, I though you said you had an expertise in investments



Commodities are very specific to the economics of that particular commodity. It's not something I really focus on or invest in.

I do believe the equity markets have farther down to go.

Working for a living in investing does not necessarily make you an expert. It does tend to make you a good trend follower though.
I stared this. Agreed declines have further to go in equity and bond makets. In the context of the equity and real estate markets tanking, and bond allocations that were used to reduce volatility and now accelerating volatility, this might be the time to go to commodities and hard assets precisely because they have very specific economics.

As for you last paragraph, in a little while we are shopping for commercial property outside CA. The automatic liberal default for any economic trend is who can we tax?
Treasury bonds were up today. If I had to invest in anything you mentioned today it would be Treasury bonds. In fact, I like Treasury bonds right now as an investment, though it's true I'm down since my recent purchase of Treasury bonds.

If you want more institutional investor purchases of residential property then definitely don't tax institutional investors.
NVBear78
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dajo9 said:

DiabloWags said:

Dajo said:

Recessions are bad for people. That's my motivation.


So is INFLATION.

It crushes the poor and middle class many of whom are renters and dont have the luxury of working from home and bear the brunt of high fuel prices.

So weird that all of those articles posted here on Robert Reich, never really showed any concern for inflafionary pressures.


Wage driven inflation like we've had, at least prior to Putins War, is far better for people than recession. The negativity is overhyped by the media. I've shown that via multiple posts on these boards. It's in the data.



Wait, do you truly think what we have been seeing is "wage driven" inflation? Please explain.

We have been suffering energy driven inflation starting before Putins invasion of Ukraine and continuing. Plus the impact of billions of dollars of additional stimulus at a time the economy did not need it.

Given that only 1% of the vehicles currently on the road this hammers the working class and middle class big time.

I would like to see US energy policies that encourage domestic production, the gas and oikd has to come from somewhere. Why not here and why not encourage increased supply, less regulatory burden and lower costs.

Research and development of alternative energy can of course continue but we are crushing the working class with current approach.


Edit: forgot to include this response to Bidens comments yesterday

https://www.theepochtimes.com/exxon-mobil-fires-back-at-biden-after-letter-warning-use-of-emergency-powers_4537760.html?utm_source=News&utm_campaign=breaking-2022-06-16-3&utm_medium=email&est=QMoltFMtB3d8Iy4XDrmThbmWKvJeHmyiDToqzZgVKcER6LwrBqTJ2PG%2FFHyLR9Jtkrit1LFK
wifeisafurd
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dajo9 said:

wifeisafurd said:

dajo9 said:

wifeisafurd said:

dajo9 said:

wifeisafurd said:

dajo9 said:

DiabloWags said:

Dajo said:

Recessions are bad for people. That's my motivation.


So is INFLATION.

It crushes the poor and middle class many of whom are renters and dont have the luxury of working from home and bear the brunt of high fuel prices.

So weird that all of those articles posted here on Robert Reich, never really showed any concern for inflafionary pressures.


Wage driven inflation like we've had, at least prior to Putins War, is far better for people than recession. The negativity is overhyped by the media. I've shown that via multiple posts on these boards. It's in the data.
This is a somewhat academic discussion, yes? With this rate hikes isn't clear that the sole (or at least primary) focus at this point is on containing inflation. The chances that the Fed's aggressive rate-hiking cycle causes adverse growth outcomes is rising, if not a certainty. Has not the open market committee said aggressive rate hikes will continue until there is clear evidence that slowing inflation is sustainable? That will happen when, well, when we are in a recession.

Equity markets were higher today, but are generally pricing in a good deal of recession already since profit reports have been good. There have only been three larger equity declines in the last 30 years: the COVID-19 pandemic, the Global Financial Crisis and the collapse of the Tech Bubble. This is not my expertise, but isn't the risk and return in the asset classes looking more attractive than in equity markets? You and Diablo do this for a living, you guys tell me. Europe will likely be challenged by energy supply shocks and a cost-of-living crisis. The Euro is dropping faster than a Steph Curry 3 pointer. Do we have to wait for the important people in Davos to meet and tell us at some symposium we are officially gong into stagflation? It seems obvious that is on the horizon.


I don't work in capital markets for a living.

What do you mean by "asset classes"?
commodities and assets that are physical and not equities or bonds.

sorry, I though you said you had an expertise in investments



Commodities are very specific to the economics of that particular commodity. It's not something I really focus on or invest in.

I do believe the equity markets have farther down to go.

Working for a living in investing does not necessarily make you an expert. It does tend to make you a good trend follower though.
I stared this. Agreed declines have further to go in equity and bond makets. In the context of the equity and real estate markets tanking, and bond allocations that were used to reduce volatility and now accelerating volatility, this might be the time to go to commodities and hard assets precisely because they have very specific economics.

As for you last paragraph, in a little while we are shopping for commercial property outside CA. The automatic liberal default for any economic trend is who can we tax?
Treasury bonds were up today. If I had to invest in anything you mentioned today it would be Treasury bonds. In fact, I like Treasury bonds right now as an investment, though it's true I'm down since my recent purchase of Treasury bonds.

If you want more institutional investor purchases of residential property then definitely don't tax institutional investors.
Buying and holding short term Treasuries (not bought as part of some bond or index fund) seems like a good strategy during a recession and rising interest rates, but again, this is not my area, so take that with a grain of salt. Pretty clear the residential market, which is tanking, will take care of more investor residential acquisitions, as the losses mount. It is humorous that the automatic response to everything always is who can we tax?
dajo9
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NVBear78 said:

dajo9 said:

DiabloWags said:

Dajo said:

Recessions are bad for people. That's my motivation.


So is INFLATION.

It crushes the poor and middle class many of whom are renters and dont have the luxury of working from home and bear the brunt of high fuel prices.

So weird that all of those articles posted here on Robert Reich, never really showed any concern for inflafionary pressures.


Wage driven inflation like we've had, at least prior to Putins War, is far better for people than recession. The negativity is overhyped by the media. I've shown that via multiple posts on these boards. It's in the data.



Wait, do you truly think what we have been seeing is "wage driven" inflation? Please explain.

We have been suffering energy driven inflation starting before Putins invasion of Ukraine and continuing. Plus the impact of billions of dollars of additional stimulus at a time the economy did not need it.

Given that only 1% of the vehicles currently on the road this hammers the working class and middle class big time.

I would like to see US energy policies that encourage domestic production, the gas and oikd has to come from somewhere. Why not here and why not encourage increased supply, less regulatory burden and lower costs.

Research and development of alternative energy can of course continue but we are crushing the working class with current approach.


Edit: forgot to include this response to Bidens comments yesterday

https://www.theepochtimes.com/exxon-mobil-fires-back-at-biden-after-letter-warning-use-of-emergency-powers_4537760.html?utm_source=News&utm_campaign=breaking-2022-06-16-3&utm_medium=email&est=QMoltFMtB3d8Iy4XDrmThbmWKvJeHmyiDToqzZgVKcER6LwrBqTJ2PG%2FFHyLR9Jtkrit1LFK
Personal incomes were up 7.5% in 2021
https://fred.stlouisfed.org/series/PI#0
cbbass1
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Unit2Sucks said:

cbbass1 said:

dajo9 said:

A great way to lower real estate prices without destroying the economy would be to raise taxes on the rich.

I agree with you, generally, but I think it's much more productive to stop talking about "the rich" in vague terms, and talk about corporations vs individuals.

Over the last few decades, the contribution of the Corporate Earnings Tax to Federal tax revenue has gone from over 35% to single digits. Specifically, corporations that hire lobbyists have successfully transferred their tax burden to U.S. individuals.

But because we have a progressive tax code for the Individual Income Tax, high-income individuals actually bear a disproportionate share of our overall tax burden.

That said, I think the best way to lower real estate prices is to add a substantial surcharge on property taxes for residential properties that go unoccupied for extended periods of time. The unoccupied properties are getting to be a pretty high percentage of the housing stock.

The surcharge would generate enough revenue so that we could do what we should've done decades ago -- index the Property Tax Homeowner's Exemption to the CPI. In CA, when the $7000 homeowner's exemption was enacted, the average price of a home was in the $20,000 - $30,000 range, and it made a big difference in affordability. Today, the exemption should be $100,000 or more.


I quite like this type of idea but not sure that "unoccupied" is the right lens. If someone has a second home would that be unoccupied?

Perhaps it should be land owned by businesses unless the businesses are currently renting the properties out to residential tenants. Limiting prop 13 to persons has been discussed quite a lot. There was an attempt in 2020 with prop 15 but it was narrowly defeated. I don't think businesses need the same sort of protection as residential owners under prop 13 so would like to see some change there.
If you have a 2nd home that you use for 6 weeks per year, it's occupied 6 weeks per year. It's not "unoccupied."

"Unoccupied" is not occupied, not a rental, no one living there, period.

Agree 100% that Prop 13 should apply to residential properties only. I was extremely disappointed that the ballot proposition failed. There were too many anti-tax zealots calling it a "new tax", when, in reality, it was closing a loophole. It would've created an opportunity to reduce property tax rates for residences.

wifeisafurd
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cbbass1 said:

Unit2Sucks said:

cbbass1 said:

dajo9 said:

A great way to lower real estate prices without destroying the economy would be to raise taxes on the rich.

I agree with you, generally, but I think it's much more productive to stop talking about "the rich" in vague terms, and talk about corporations vs individuals.

Over the last few decades, the contribution of the Corporate Earnings Tax to Federal tax revenue has gone from over 35% to single digits. Specifically, corporations that hire lobbyists have successfully transferred their tax burden to U.S. individuals.

But because we have a progressive tax code for the Individual Income Tax, high-income individuals actually bear a disproportionate share of our overall tax burden.

That said, I think the best way to lower real estate prices is to add a substantial surcharge on property taxes for residential properties that go unoccupied for extended periods of time. The unoccupied properties are getting to be a pretty high percentage of the housing stock.

The surcharge would generate enough revenue so that we could do what we should've done decades ago -- index the Property Tax Homeowner's Exemption to the CPI. In CA, when the $7000 homeowner's exemption was enacted, the average price of a home was in the $20,000 - $30,000 range, and it made a big difference in affordability. Today, the exemption should be $100,000 or more.


I quite like this type of idea but not sure that "unoccupied" is the right lens. If someone has a second home would that be unoccupied?

Perhaps it should be land owned by businesses unless the businesses are currently renting the properties out to residential tenants. Limiting prop 13 to persons has been discussed quite a lot. There was an attempt in 2020 with prop 15 but it was narrowly defeated. I don't think businesses need the same sort of protection as residential owners under prop 13 so would like to see some change there.
If you have a 2nd home that you use for 6 weeks per year, it's occupied 6 weeks per year. It's not "unoccupied."

"Unoccupied" is not occupied, not a rental, no one living there, period.

Agree 100% that Prop 13 should apply to residential properties only. I was extremely disappointed that the ballot proposition failed. There were too many anti-tax zealots calling it a "new tax", when, in reality, it was closing a loophole. It would've created an opportunity to reduce property tax rates for residences.


Also predicable, is the nonsense that somehow the ballot initiatives closed some type of loophole. Prop 13 in its original form was expressly intend to apply to all taxpayers other that utilities, due to runaway taxes by creating uniform rules that protect all property owners from uncertainty of increasing tax levels where property values were appreciating wildly, but at disproportional rates. Assessors were in the business of protecting some types of property, such as the used by favored businesses (such as those that produced sales tax) and residential owners that had more influence with artificially low valuations, while some homeowners and business could no longer afford to be at the same property.

The defeat of the ballot propositions reflected the understanding that regardless of whether businesses own or rent, the measure would make them pay higher property taxes, even if they can't afford in the rent context, since a landlord could find a better suited tenant leading for businesses, in turn, to higher prices for everything we buy, including groceries, gas, restaurant meals, prescriptions, day care and much more that impacts those residential homeowners that think they were somehow insulated for paying for the tax. The let's keep raising taxes crowd seems to forget that voters are not stupid.

Then there was the negative impact on jobs because the view is business would be unimpacted notwithstanding the huge initial impacts n properties with low Prop 13 basis, resulting in large tax increases for commercial and industrial properties that would drive businesses, particular smaller businesses out of business or to another states (there were exceptions for small business property that no one thought would apply in urban areas). When I was a young lawyer I was dealing with what was then considered a large law firm on a transaction that had office in the Embaracadaro. The Embarcadero was originally built in the late 1970s and when they sold for the first time in the late 1990s, it was one of the first commercial property portfolios to be sold for over $1 billion dollars. The law firm that had full floors at the Embarcadero received a new property tax bill, which was over $250,000 per partner. These costs actually caused the firm to go bankrupt, and killed the transaction we were working on. Think of this type of event happening on steroids if a split roll passed.


The ballot initiative also had some other biases. Based on the assessor's opinion of the property's "highest and best use" a subjective system that would allow assessors to set a higher value based on how a property could be used, rather than simply determining the value based on how it actually is used, which gets back to old days when favored businesses, which often included donors to campaigns, got tax valuation breaks. By requiring subjective assessments that would be performed by an army of inexperienced new government employees, the initiative would prompt a vast increase in the number of appeals that property owners would have to file to seek fair assessments. Most counties already have large backlogs of appeals already, and this would exacerbate the problem. Additionally, the initiative would make a drastic, anti-taxpayer change in the appeals process. Currently, when a property owner appeals the assessor's estimate of property value, the owner's estimate is deemed to be correct if the appeal is not decided within two years of being filed (see Revenue and Taxation Code Section 1604(c)). This initiative would remove the protection for property owners subject to the new reassessment provisions, and would put the burden on the owner to prove that the property was not properly valued by the assessor, just to give California an even more anti-business slant.


The even more amusing thing about the ballot proposition is it would have exempted all residential housing, including multi-family housing, which in a housing crises you would think it a good thing. But that includes unused housing as well, which seems counter to your desired result as it provides even more incentive for corporate ownership.


Interestingly, when considering the Legislative Analyst's Office indicated two components that suggested the benefit in tax revenues was not overstated other than for increased administration costs. First is that assessor foresaw that values of California business property would drop, which has all sorts of negative consequences including to the State's wealth and lending practices, but one is lower property taxes now based on valuations. The second, which many may think is a good thing due to California's over dependence on income taxes, decreased income tax revenue as a result of increased property tax expenses. Though strangely, because they way the tax system is structured under ballot propositions, this also meant more money would go to local governmental entities, and less would go to schools. There was a third in that the bill provided
an exemption up to $500,000 would be granted for business tangible personal property, which reduced tax revenues.

But the legislation would have caused a massive upheaval that would have unintended consequences not considering by the uninformed. Many loans or bonds secured by commercial property or on business owning commercial property even ancillary to their business, would be in default for breached covenants. Many contracts involving property would trigger huge payments under tax indemnification provisions. The CA real estate market would be in turmoil as tenants got their tax bills like that law firm, and the politicians that supported this measure would run afoul of the usual Chinese proverb be careful what you wish for.


The usual response to let's find a tax wherever and on whatever bothers us crowd is: why don't we raise your taxes instead, rather than it always being other people money? For example, let's put a surcharge on high salary tech and finance workers since they are driving up housing prices in the Bay Area?


BearForce2
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"Let's be absolutely clear about why prices are high right now: COVID and Vladimir Putin,"

- Joe Biden

"You have an administration where you have nonmonetary factors causing inflation and making them worse," "You have a Federal Reserve that is over $2 trillion overhanging the economy of excess money that they created last year. And so they're like doctors 300 years ago. How did they treat patients? They bled them. They thought that cured the patient. Well, it got rid of the pain and suffering because it got rid of the patient." -

- Steve Forbes
The difference between a right wing conspiracy and the truth is about 20 months.
MinotStateBeav
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LOL..
DiabloWags
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DiabloWags said:

The chart of Dr. Copper is rolling over and looks like it is about to take out the key support level at $4.00
Massive weakness in the USD today too.

I believe that Copper will be a key metric that the FED will be watching going forward.
One of several metrics for sure, but one of the key commodity components.
Crude oil, not so much.

U.S. Housing Starts plunged 14.4% to the lowest level since April 2021

Atlanta GDPNow GDP estimate at: 0.0

GDPNow - Federal Reserve Bank of Atlanta (atlantafed.org)







July Copper Futures collapsed this week.
Traded as low as $3.64

Dr. Copper is telling you that the 10 year yield is peaking.

dajo9
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DiabloWags said:

DiabloWags said:

The chart of Dr. Copper is rolling over and looks like it is about to take out the key support level at $4.00
Massive weakness in the USD today too.

I believe that Copper will be a key metric that the FED will be watching going forward.
One of several metrics for sure, but one of the key commodity components.
Crude oil, not so much.

U.S. Housing Starts plunged 14.4% to the lowest level since April 2021

Atlanta GDPNow GDP estimate at: 0.0

GDPNow - Federal Reserve Bank of Atlanta (atlantafed.org)







July Copper Futures collapsed this week.
Traded as low as $3.64

Dr. Copper is telling you that the 10 year yield is peaking.


why does that sound familiar?
DiabloWags
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dajo9 said:

DiabloWags said:

DiabloWags said:

The chart of Dr. Copper is rolling over and looks like it is about to take out the key support level at $4.00
Massive weakness in the USD today too.

I believe that Copper will be a key metric that the FED will be watching going forward.
One of several metrics for sure, but one of the key commodity components.
Crude oil, not so much.

U.S. Housing Starts plunged 14.4% to the lowest level since April 2021

Atlanta GDPNow GDP estimate at: 0.0

GDPNow - Federal Reserve Bank of Atlanta (atlantafed.org)







July Copper Futures collapsed this week.
Traded as low as $3.64

Dr. Copper is telling you that the 10 year yield is peaking.


why does that sound familiar?

Because I posted last week about the Copper chart about to "roll" over.
And that this would be a key indicator with clear intermarket relationships going forward.
Not crude oil.

DiabloWags
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Meanwhile, OPEC+ is getting close to running out of ammo.
This is the group that controls 40% of oil production and 60% of petroleum product production.

The zero bound is the zero bound.

Unit2Sucks
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Interesting analysis. It indicates that the stimulus may not really be what's driving inflation and that ratcheting up interest rates won't have a meaningful impact. Again, if true, it would seem that inflation might actually be transitory.

Unfortunately we may not find out until it's far too late because it doesn't seem like anything will stop the Fed from future hikes.
DiabloWags
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DiabloWags said:

The chart of Dr. Copper is rolling over and looks like it is about to take out the key support level at $4.00
Massive weakness in the USD today too.

I believe that Copper will be a key metric that the FED will be watching going forward.
One of several metrics for sure, but one of the key commodity components.
Crude oil, not so much.

U.S. Housing Starts plunged 14.4% to the lowest level since April 2021

Atlanta GDPNow GDP estimate at: 0.0

GDPNow - Federal Reserve Bank of Atlanta (atlantafed.org)







And just 3 weeks later, Dr. Copper trades as low as $3.40
Freeport (FCX) collapses 38%
Anyone short?


dajo9
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Unit2Sucks said:



Interesting analysis. It indicates that the stimulus may not really be what's driving inflation and that ratcheting up interest rates won't have a meaningful impact. Again, if true, it would seem that inflation might actually be transitory.

Unfortunately we may not find out until it's far too late because it doesn't seem like anything will stop the Fed from future hikes.

It's really hard for me to disaggregate supply and demand effects of inflation. The pandemic caused supply and demand to collapse. The government provided stimulus to rebound the demand side but the supply side stayed naturally down longer. How do you assign a cause to that scenario?

To me you can blame either demand or supply depending on your phrasing. We have a supply shortage because demand was stimulated when supply and demand were cut by the pandemic.
cbbass1
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dajo9 said:

Unit2Sucks said:



Interesting analysis. It indicates that the stimulus may not really be what's driving inflation and that ratcheting up interest rates won't have a meaningful impact. Again, if true, it would seem that inflation might actually be transitory.

Unfortunately we may not find out until it's far too late because it doesn't seem like anything will stop the Fed from future hikes.

It's really hard for me to disaggregate supply and demand effects of inflation. The pandemic caused supply and demand to collapse. The government provided stimulus to rebound the demand side but the supply side stayed naturally down longer. How do you assign a cause to that scenario?

To me you can blame either demand or supply depending on your phrasing. We have a supply shortage because demand was stimulated when supply and demand were cut by the pandemic.
The stimulus, when it was handed out, was to maintain aggregate demand -- to keep the entire economy from crashing.

The supply shortages have been slow to correct themselves because of monopolization and consolidation. In a competitive marketplace, when there's a supply shortage, companies can either raise prices, or invest in increasing production and supply. The company that's first to the market with greater supply will take sales & market share from the other competitors. So recovery from supply shortages is much faster in competitive marketplaces.

In a non-competitive marketplace, where there's collusion between the companies, there's no motivation to increase supply, because it's the limited supply that provides the rationale for the higher prices. The colluding companies will keep prices high, enjoy their increased margins, continue to cut/minimize expenses, and enjoy the gravy train for as long as it lasts.

This is why, as I've explained previously, corporate pricing power is a large component of U.S. inflation. It's because there's less competition in U.S. markets, due to little or no enforcement of the Sherman Anti-Trust Act.

In the U.S., the Fed's raising interest rates actually discourages investment in increasing production capacity and supply.

The focus on stimulus payments to workers during the Covid-19 shutdown days is idiotic. That money is already spent, and sitting on corporate balance sheets by now; it's unlikely that it's still in the hands of consumers who are living paycheck to paycheck.

Still, Powell & the Fed are committed to "demand reduction," lowering workers' wages, and reducing the power of workers in the job market.

With GDP contracting for two consecutive quarters, we're already in a recession.

Meanwhile, the increases in interest rates will do nothing to lower gasoline prices, and nothing to remedy supply shortages, and nothing to stop gouging by corporations with pricing power.
DiabloWags
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It's pretty hard to increase supply and expand production when you cant find workers to work.

For example, the SJ Animal Shelter cant find any full-time Veterinarians; not even at $150,000 a year plus a signing bonus.

Chevrolet had to idle two assembly lines last week that build the Silverado because they still cant source semiconductor chips.

On another note, its pretty ironic that in your Labor vs Capital narrative that you repeatedly promote here, you dont seem the least bit concerned about an inflation rate that is crushing the poor and middle class, and any nominal wage gains that they've experienced upon the re-opening of the economy.

In your mind, the FED shouldnt be tightening and the majority of inflation has been due to corporate America price-gouging. --- Never mind that M2 increased by over $6 Trillion and two fiscal stimulus packages pumped in $4 Trillion.

I remind everyone that the annual GDP of the World's 5th largest economy (California) is $3 Trillion.

Sorry, but we've had far too much money chasing too few goods. And household balance sheet data doesnt necessarily support your claim that all that stimulus money is gone.

DiabloWags
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Even with the stock market cratering in Q1, household balance sheets are ABOVE pre-Covid levels.

"Household balance sheets overall remained healthy through the first three months of the year - some $32.5 trillion above pre-pandemic levels - and looked likely to continue to support strength in consumer spending in the face of high inflation.

Of particular note, bank account balances rose, with checkable deposits and currency rising about $210 billion to $4.47 trillion, and time and savings deposits up about $90 billion to $11.28 trillion."

https://www.reuters.com/markets/wealth/us-household-wealth-declines-first-time-2-years-1st-quarter-2022-06-09/
Unit2Sucks
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cbbass1 said:

dajo9 said:

Unit2Sucks said:



Interesting analysis. It indicates that the stimulus may not really be what's driving inflation and that ratcheting up interest rates won't have a meaningful impact. Again, if true, it would seem that inflation might actually be transitory.

Unfortunately we may not find out until it's far too late because it doesn't seem like anything will stop the Fed from future hikes.

It's really hard for me to disaggregate supply and demand effects of inflation. The pandemic caused supply and demand to collapse. The government provided stimulus to rebound the demand side but the supply side stayed naturally down longer. How do you assign a cause to that scenario?

To me you can blame either demand or supply depending on your phrasing. We have a supply shortage because demand was stimulated when supply and demand were cut by the pandemic.

The supply shortages have been slow to correct themselves because of monopolization and consolidation. In a competitive marketplace, when there's a supply shortage, companies can either raise prices, or invest in increasing production and supply. The company that's first to the market with greater supply will take sales & market share from the other competitors. So recovery from supply shortages is much faster in competitive marketplaces.

In a non-competitive marketplace, where there's collusion between the companies, there's no motivation to increase supply, because it's the limited supply that provides the rationale for the higher prices. The colluding companies will keep prices high, enjoy their increased margins, continue to cut/minimize expenses, and enjoy the gravy train for as long as it lasts.

This is why, as I've explained previously, corporate pricing power is a large component of U.S. inflation. It's because there's less competition in U.S. markets, due to little or no enforcement of the Sherman Anti-Trust Act.
Feels like you haven't been paying attention to what's actually going on. China is going for zero covid and has shut down huge amounts of their industrial capacity which US supply chains rely on. There isn't a company out there that isn't trying to increase supply to meet demand.

You can't just make up things to conclude that we have a non-competitive marketplace for goods. If you want to argue there are certain markets with anti-competitive pricing (like with gasoline), that's fair. Some industries have barriers to entry, regulatory capture, etc. that makes a difference. But take the auto market for example - no car company is artificially limiting their sales. They are all capacity constrained. The dealers are the ones reaping windfall profits right now from 100% profit margin markups.

I don't disagree that interest rates may not be enough to remedy the supply chain shocks we are continuing to experience. We are in relatively uncharted waters right now.
DiabloWags
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Unit2Sucks said:



Feels like you haven't been paying attention to what's actually going on. China is going for zero covid and has shut down huge amounts of their industrial capacity which US supply chains rely on. There isn't a company out there that isn't trying to increase supply to meet demand.

You can't just make up things to conclude that we have a non-competitive marketplace for goods. If you want to argue there are certain markets with anti-competitive pricing (like with gasoline), that's fair. Some industries have barriers to entry, regulatory capture, etc. that makes a difference. But take the auto market for example - no car company is artificially limiting their sales. They are all capacity constrained. The dealers are the ones reaping windfall profits right now from 100% profit margin markups.

I don't disagree that interest rates may not be enough to remedy the supply chain shocks we are continuing to experience. We are in relatively uncharted waters right now.

What's going on in China should be obvious.
Can't believe someone would promote a narrative that totally ignores their lockdowns during April and May.

Economists forecast that their economy will likely expand at just over 4% for the full year. And that's only if they can grow around 5.5% for the second half. They will certainly be challenged to achieve that. Lots of economic indicators coming out this week for China; from GDP to retail sales to fiscal revenue and bank borrowing.

China's Bumper Data Week Will Set Tone for Economic Stimulus (yahoo.com)

Agreed about the auto companies.

There is no way in hell that they are artificially limiting sales.
Porsche cant source their wiring harnesses because they come from Ukraine.
GM cant build pick-up trucks because they cant source chips. This should be obvious.
I've been looking for a pick-up truck that has a standard 6.6 foot bed with some of the basic options
that I want. Been looking for months. The only thing in inventory are the short-beds. I've given up. It's impossible.

tequila4kapp
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Unit2Sucks
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tequila4kapp said:

concordtom said:

DiabloWags said:

going4roses said:

How does this affect the avg joe ?

Are you serious?


Lol.
Allow me to attempt.

The avg Joe doesn't understand what any political party stands for. Nor do they understand economic "jargon".

All he knows is that if the price of bread, milk and go up, it must be the fault of the current President.

The result is that he/she votes for the opposite party.
A current President always owns whatever transpires on their watch.
Everyone agrees with you.
dajo9
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Looking more like broad inflation in the economy peaked in March, however because of Russian aggression in Ukraine and the subsequent surge in gas prices, headline inflation will be up again in June causing headline CPI to be up again while core CPI will be down again. Gas is down from June so with that being negative in the July report, we'll probably see a big drop in headline inflation in July - finally getting on track with the broader economy. How much damage will the media and Fed do between now and then?

Meanwhile, the 10 year yield is beginning to develop a nice head-and-shoulders pattern.
DiabloWags
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The FED will be raising rates 75 basis points on July 27th.
dajo9
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DiabloWags said:

The FED will be raising rates 75 basis points on July 27th.



Lots of damage
DiabloWags
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GDPNow bouncing back a bit.
Retail sales + inventories, industrial production and capacity utilization, import-export prices all due out Friday.

https://www.atlantafed.org/cqer/research/gdpnow?panel=4
DiabloWags
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For those that are interested in listening to a Growth Fund manager who has been completely wrong and miscalculated INFLATION.

The ARK Invest webinar with Cathie Wood starts at 10:30am PST.

US: +1 646 931 3860 or +1 669 444 9171 or +1 669 900 6833 or +1 253 215 8782 or +1 301 715 8592 or +1 312 626 6799 or +1 346 248 7799 or +1 646 558 8656

Webinar ID: 917 9488 5771

Cathi is still looking for DEFLATION.

Cites M2 growth recently going "flat" after being +6%
5 year CDS have now doubled from 50 to 100.
2's/10's going inverted.
Gold flat YoY.
Copper down.
USD +14%

Ark Invest's Cathie Wood says the U.S. is already in a recession (cnbc.com)
 
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