patrick.net

Oil's massive dump leaves little doubt to the deflation scenario, I suggest any optimism in a magic V shaped rebound be stomped and replaced with a reality check of the very real possibility of a very deep GLOBAL depression.

Oil's massive dump leaves little doubt to the deflation scenario

Not so sure. Too many governments subsidizing the out of work CV-19 folk. Very inflationary.

Cash is king in crisis Big fat USDs lol I bet most of that CV-19 money is going to stay cash, essentials and necessities not big houses and luxuries that actually inspire inflation, the things houses are made of and filled with. Inflation is dead on arrival DX (way) above 101.500 and SP500 1850/1500 are well w/i the cards.

I'm on the sidelines waiting to buy a few rentals. Housing prices are sticky though, this is gonna take a few years unless they start up soon. Although I hear Texas and South Carolina are opening up end of this month.

HeadSet says

Very inflationary.

Yes, we could eventually be in for a Weimar style hyperinflation minus the good music

Went to supermarket today, meat prices are about twice lower than a few weeks ago.

rd6B says

Went to supermarket today, meat prices are about twice lower than a few weeks ago.

There is meat in the store?
Was there toilet paper as well?

Booger says

There is meat in the store?
Was there toilet paper as well?

I don't know about the meat, but at H-E-B you could pretty well take your choice of toilet paper, same at Walmart certain times of the day. How quickly things change.

NDrLoR says

Booger says

There is meat in the store?
Was there toilet paper as well?

I don't know about the meat, but at H-E-B you could pretty well take your choice of toilet paper, same at Walmart certain times of the day. How quickly things change.

Just got a fuck load of meat. People freaked out and stocked up a couple weeks back and fucked up the supply. So we got a bunch of day before expiration meat and froze it a couple days ago. Prices were dirty cheap. We're legit good for 4 months without leaving the house. We're talking an 8 pack of chicken drums for $1. 1lbs of ground beef for a buck.

Hopefully the power doesn't go out for an extended period of time. It won't, but need to get a nat gas backup gen. Don't need a bunch of rotten meat around.

Booger says

There is meat in the store?
Was there toilet paper as well?

yeah, everything is there, and nothing really disappeared ever (they had TP all the time, even through panic of late March), as it is a barrio supermarket. Apparently Hispanics here listen only to news from Mexico, so they are unaware that they have to panic and buy 100 years worth of supplies.

HEYYOU says

What's this inflation/deflation you speak of when Rep & Dems pull $2,000,000,000,000 out of their asses,
"Too little ,too late."

All prices will go to $0.00, based on your money's value?

$0.00 try negative $38.25 per barrel. We need to print more pronto or Saudi Arabia will implode.

If you are looking to jump into the market of falling knives make sure you hold on tight to your willy or you will lose it just like you'll
lose all those valuable USDs leaving you totally lost and depressed, but on a high note you will be left with plenty of knives to cut your
own throat making a twin for your willy to play in the blood with ;)

Fri May 8
USD Non-Farm Employment Change; Forcast -21400k / Previous -701K forecasting a 3053% increase
in the wrong direction

USD Unemployment Rate: Forcast 16.0% / Previous 4.4% This forecast is on the light side
33 mil. claims not counting all the unforeseen we are already well N. of the 20% rate.

Bottom line the USD is going to take the faces off anyone playing the bull side of the equities, the whole world needs
USDs and nothing else will due, world governments and masses of companies to boot... IMHO the USD hasn't even started
it's journey to critical mass....

I apologize to all you ChiCom trolls and Kremlin supporters but I am not convinced China's digital currency will help much as far as weakening the reserve current (ie.., US dollar).

It all comes down to cost of living and standard of living over the next few months as the economy reopens.

It is about getting people back to work. Work means exchange of goods and services.

Without that, then there is very little economic activity or exchange per person (or per capita).

DOOM! DOOM! DOOM!

Sell all stocks, buy silver and YAMS! YAMS! YAMS! And .22LR if you can find an open gun store!

Fortunately I have 10lb of Vienna Philharmonic Gold Coins hidden inside the bust of Von Mises located in my Library.

If unemployment remains crazy-high, then all those newly poor are not going to be doing much to drive inflation.

But if printing and bailouts remain crazy-high, then we have floods of cash coming in, which will drive inflation.

Maybe the real question is who will get the bailouts. Just bankers or ordinary people? So far, it looks like most of the money has gone to bankers, not humans. The pissant checks sent to humans are not going to change much of anything.

So at the moment, it looks like deflation.

Patrick says

Maybe the real question is who will get the bailouts. Just bankers or ordinary people?

Yes Patrick that was the case mostly in 2009 - 2013. The bankers got all the money.

This time I think the bankers will get about 65% and the rest to ordinary people.

This will still create asset inflation (i.e., stocks, housing, etc.) like it did in 2009 but perhaps not as extreme with the stock buy backs, etc.

NoCoupForYou says

And .22LR if you can find an open gun store!

Our neighborhood friendly gun store is fully stocked, but they do limit purchases of ammunition.

Eh I don’t see this covid panic lasting past November. Either Biden wins and the news media stops scaring all the soccer moms to death or Trump wins and they move on to their next coup.

Either way, just hold on to your socks and make some money in 2021. It’s too late to bail out now.

Patrick says

But if printing and bailouts remain crazy-high, then we have floods of cash coming in, which will drive inflation

In assets mostly, just like the past 10 years. No wage inflation then for the most part core CPI will stay lowish or deflate in the short run.

Which ultimately will create a greater divide between rich and poor and the poor won't quite understand why.

As an aside: I'm seeing estimates for 200-300% more mortgage defaults than what we saw in the last downturn. It might not really get rolling for 12 months (depending on when forbearance ends)

Then again, perhaps a bill shows up that simply moves the mortgage payments to the end-of-the-loan. Which would totally fuck over mortgage servicers so I'm not thinking that will happen in a big way.

ad says

not as extreme with the stock buy backs, etc.

It will start again after a pause with little fanfare from the media.

ignoreme says

Eh I don’t see this covid panic lasting past November.

Hopefully... I think it'll be an issue for 2-3 years that will drown in some other 'news' as the herd immunity comes up. There will be no cure/vaccine. People will just adjust.

just_dregalicious says

In assets mostly, just like the past 10 years. No wage inflation then for the most part core CPI will stay lowish or deflate in the short run.

Yes, I was looking at wage growth versus rental price growth.

From what I saw, rents increased about 1% more than wages annually for the last 70 years.

ad says

From what I saw, rents increased about 1% more than wages annually for the last 70 years.

Interesting... I wish that was the case the past 20 so years living on the West coast. Then again, mine have gone up quite a bit over that time. I haven't owned property in a diverse enough set of locations to even give an anecdotal on that.

If I were not a frugal investor over that time I still would have been fukt vs. where I am now as many-a-friend in the SF bay area are with their large mortgages and shaky wages.

just_dregalicious says

SF bay area are with their large mortgages and shaky wages.

The mortgage can be paid off. Or maybe the Hipster Techie paid all cash from the stock perk, or the rich immigrant kid paid all cash from back home money. But, the property tax bill cannot be paid off. And as codified into Proposition 13, it's just about guaranteed to go up every year.

One who gets a house for cash (or goes into hock with a loan) for a median kind of home is looking at an annual tax bill of $12k or so. If they get a cheaper condo, a bit less for taxes but HOA fee instead.

That's $12k or so per year that cannot be saved for a rainy day fund. Cannot be invested for retirement. Cannot be saved for kids' college expense. Cannot be pissed away on glamorous vacations or Telsa cars.

Nor can all of that $12k be deducted from the AGI for federal income tax nowadays.

I disagree with the notion of an imminent global depression.

I don’t agree with the doom scenarios because the people I know didn’t stop consuming, except for trips on cruise ships and to Disneyland or Universal. They still go to restaurants but buy food to go.

Falling energy prices will not cause a depression.

Likewise, some people being taken out of the workforce permanently (dying) will slow consumption but people always find a way to spend their money.

The restaurant business which is slow today hires largely illegals who can now leave. So what?

This is not as big a deal as 13% interest rates and an Arab oil embargo which I’m able to remember.

clambo says

This is not as big a deal as 13% interest rates and an Arab oil embargo which I’m able to remember.

Excellent points, and I agree also.

I see a slowdown as far as the discretionary spending like cruise ships, resorts (Disney, MGM, etc), and movie theaters. From summer 2020 to summer 2021 I see these companies operating at 25% to 30% of pre-COVID-19 revenue and earnings levels.

I bought Carnival, Royal Caribbean, MGM, IMAX, etc. when they were down about 85%. I was going to hold them for at least 3 years while selling covered calls.

I sold (i.e., "wrote") covered calls for Carnival for a contract that expires January 2021. I make about 13% off of the call if the $25 strike price is not reached.

I wish I had the motivation to do financial moves like ad does, it’s interesting.

I’m still pissed at myself for believing the Buffet hype and holding on to the WFC stock I inherited in 2017, I’m underwater so deep I saw James Cameron the other day in his submersible.

For fun I sold some of it and bought Alibaba, John Deere, and Roku. They’re not underwater at least.

clambo says

I wish I had the motivation to do financial moves like ad does, it’s interesting.

By the way, Forbes has reported Georgia has seen about a 75% return to pre-COVID 19 levels for restaurants.

The DX is about to make it's tear to the upside you will be surprised at the damage an additional 3-4 pts make. Maybe a good landing for DX's next move to reach for the sky adding another 3-4 pts.... 108/109 then another 3-4 112-113...

Here is an interesting situation to observe this evening that being the AUD Employment Change and Unemployment Rate, which is reported once a month 9:30pm est. and hasn't been reported since much of the SHTF. https://www.forexfactory.com/calendar?day=may13.2020#closed The forecast is grim and depending could add much more rocket fuel to the USD and possibly XAU eventually, however knee jerk reaction could be AUD strength as the Aussies clutch their own dollars it should be evident very soon after the releases. The 1st in line currency trades that go with these econ reports is AUD/USD, EUR/AUD, GBP/AUD. EUR/GBP, with a weak AUD there is a XAU advantage unless USD rages and takes most all the $$$ flow with it. 1 trade I am very interested in is long USD/MXN I believe a ton of money can be harvested in that pair as emerging markets get brutalized and if you don't trade currency it could be similarly taken advantage of by buying ProShares Short MSCI Emerging Markets (EUM) with any selling tgt'g $26/$31 (20%-30%) gains. Don't forget tomorrow USD is reporting it's weekly Unemployment Claims 2500K poof 2.5mill more jobs up in smoke if we are lucky, sadly so far they have under bid the #s every time.