30 Comments
Oct 13, 2022·edited Oct 13, 2022Liked by Quoth the Raven

You know what I would love to do at work but can't, because they'd discipline or potentially fire me?

I would love to post, in our company-wide group chat, a screen shot of my company-managed 401K (YTD % decline) along with the caption, "this is the 'better' America that Biden is building."

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I do not think raising rates will have any impact on inflation.

1. Energy cost - Biden slowed down exploration and we have become energy dependent on others. That cost is only going to go up. Saudi's know they have us by the balls and with love to destroy America. Europe is getting smoked - we are next.

2. Food prices - in 2020 with the government handouts, min wage artificially doubled over night. This has a huge impact on food production costs. People are not going to go back to work for $8/hour anymore.

3. Housing shortage - we have been under building for years to keep up with housing replacement and population growth. Commodity prices are high, skilled labor is at a shortage and now with higher rates - less investment in housing will be developed.

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Oct 13, 2022Liked by Quoth the Raven

But hey, on the bright side for people that live in alternate reality, this is very easy to fix. All they have to do -- like with everything else -- is redefine CPI and/or its measurement. Easy peasy!

WinningCharlieSheen.jpg

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Oct 13, 2022·edited Oct 13, 2022Liked by Quoth the Raven

and this is why I have a paid subscription to QTR (also follow on Twitter)...great analysis!

I agree with one commentor that this is a supply inflation issue...destroying (literally) demand will not solve the supply issue...it will only exacerbate inflation further

I also believe that oil/gas prices are going to skyrocket after the mid-terms. Draining the SPR for political BS is not going to solve any long-term problems. Given this Admin has created a hostile environment with our own energy sector (as well as the rest of the world), I don't see how this can get better…

In short - buckle up, buttercups...

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Oct 13, 2022Liked by Quoth the Raven

This print is just the Amuse-bouche, we are going to see volatility prints that have never been seen before.

There is zero liquidity in the system now, the regulators did their finest post 2008 in ripping that from the mkt.

If you are short vol now, cover it otherwise you can kiss your rear goodbye.

This is the end of days, and what people are not prepared for is the speed that this will happen.

May the force be with you all and good luck.

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I wonder if/when the inflation mindset will really set in with the general public.

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Oct 13, 2022·edited Oct 13, 2022Liked by Quoth the Raven

Chickens were slow at coming home to roost but they're coming home. All of them. At once.

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Oct 13, 2022Liked by Quoth the Raven

The analysts and bull-case/short squeeze believers needed to close their spreadsheets and just walk to the grocery store to know what CPI would be. It would have told them everything. When the bull case was "well gasoline has come down so CPI will be less" they're forgetting it's only coming down during a HISTORIC SPR release. And once that is over, even if rent comes down (it won't when housing is unaffordable) we're going to have more majority price shocks and increases again. The Fed isn't going to pivot unless something significant in the US breaks, and surprisingly it's been very resilient so far. We've abandoned the rest of the world so they can fall apart as much as they want and we likely won't do a thing about it.

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I am really happy to have gone 95% cash last October when they started talking about raising interest rates. The same people (the Fed) who put is in this mess are now tasked with cleaning up the mess. It is going to end badly for everyone, unless you are a politician or federal employee able to trade on inside information.

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Oct 13, 2022Liked by Quoth the Raven

Down 1,000 today?

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I don't think inflation is out of control and these numbers numbers should have been expected. Why? CPI measures rent with a lag and still has a LONG way to go to catch up to market rents, which will put pressure on core CPI for some months. BUT if you look at the actual spot market rents they have decelerated SHARPLY in recent months. Apartment List recorded a NEGATIVE MoM number in September. So whilst the lagging CPI is suggesting one thing, the spot numbers on the ground are suggesting another, as Fed tightening means that for the first time in DECADES the money supply is no longer growing!

Headline inflation was also always going to remain high given it was cycling a low prior year comparable. I spoke more about this in my CPI preview yesterday, which is available in my Substack newsletter.

Though I do certainly agree that given these numbers, the stock market has a LOT further to fall. The Fed will continue to aggressively hike rates until the CPI prints turn lower, which given lagging rents are the single highest component of the CPI index, is going to take a significant length of time.

In the meanwhile, spot market rents and a major deceleration in durables prices suggest that the real economy is starting to get crushed by high inflation & no M2 growth.

In a nutshell this means that inflation will likely become a rear-view mirror over the next 12 months, BUT it will likely be replaced by something WORSE, as the Fed repeats its previous mistakes in reverse. After first artificially increasing M2 & causing high inflation, it is now artificially keeping a ceiling on M2 which is likely to cause a severe recession. Now is NOT the time to be in stocks, nor will a pivot mark that occasion, as it is only likely to come once something (i.e. perhaps the entire economy) breaks BADLY.

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This is the most incompetent and reactive leadership I have ever lived to see. They will continue to mess it all up. They've painted the US into a corner with their grandstanding and sanctioning. They even depict half the US populations as a terrorist threat. I bet they are wondering why their anti Inflation bill isn't working! Just give it time!!

Throw in the corruption and lies--printing hundreds of $B for Pfizer and defense contractors, infiltrating our mainstream media with deep state ghouls, leaning on big Tech to censor opposition. They will print money to bail out student loan borrowers while fighting inflation.

You can't be long anything in this environment.

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Median rent inflation in NYC is even higher than the numbers above...closer to 35-40% yoy, easily.

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“Empires fall from grace with alarming speed.” - Doug Casey

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Market reaction was...interesting to say the least

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founding

A little though exercise: Rent is priced at $/sq. ft. Both are units of measure. So, let's say instead of devaluing the dollar, we devalue the foot by one inch a year over six years. One month's rent will end up buying you 7 days by the time six years are up. That, there, is what 8-and-change percent inflation gets you...

Shit, might as well set up a tent on a ritzy street and call it an Occupy movement, right?

See here for the math: https://www.thomaspaines.blog/p/what-if-they-devalued-the-foot

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Interesting market reaction !

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Maybe the stock market is looking into the future and seeing inflationary money printing. In that environment, stocks may well do better than bonds or cash - especially if the Fed artificially suppresses interest rates. Example: FF rate = 5%, inflation = 10%, stocks = bull market when priced in depreciating USD.

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600 up perhaps because investors are thinking the Rs are going to tidal wave big time after this and Brandons mini-build back broke will be clawed back and heads begin to roll.. nancys head on a pike.. A vengence rally

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so why is the market up 600 at 1pm on 10/13/22? wtf? with more (endless?) interest hikes coming? the national debt will fast go uncontrolible, and we will all be crushed.. do people think a pivot is imminent?

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dow up 600 at 12:15, I can't understand the turnaround.

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only the problem is GDP/DEBT RATIO. That's why FED can't endure the PAIN. Bcuz the PAIN means DEFAULT OF US TREASURY.

Meanwhile, National debt now underway to sealing...

(Limit: 31.4T, Now: 31.1T)

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