Tuesday, February 24, 2015

On account of my shitty attitude.

Listen, interest rates were kissing 4% today. That should pretty much kill all the refi's, and put  a pretty good dent in new and existing home sales. I suspect the rise in rates is due more to other countries dumping our bonds, but I have to admit I'm not sure how that flows through the system. We all know a rocking housing market is not causing this. Sales everywhere are down. Prices are still up though. Even the rental market is extremely locked up. Even if renters wanted to move - where would they go?

We will get to see the result of rising interest rates without the Fed having to do anything. It should be a good fun time I'm sure.

The other thing pissing me off today is all this talk that we are on the cusp of inflation because Walmart is giving their employees raises. Seriously? I don't understand how people can believe this shit. You're telling me that low/no skilled labor is going to cause wage inflation? It would be the first time I've ever seen that.

I will go on record to say we will fight deflationary pressure for the rest of President Money Bags time in office. There are a million reasons I think this way that I don't want to go into now. But it nothing convinces you - take a look at the oil build at Cushing OK for 2015. That is going to take a long time to unwind. I read storage there was around 80% full so I had to go Googling. That is a scary moonshot chart.

When you look at the chart it doesn't seem as alarming as it is because it says Cushing can hold 60,000 barrels. But most articles I read say this place can only store around 46,000 commercial barrels. Which makes us very close to full right now at 46,261 barrels. If not overflowing. Just as a side note - Cushing held 19,645 million barrels on 10/2/2014. In four months storage has gone up more than 100%. It's really a staggering chart. All of these shutdowns and strikes are just theater.

Now what happens when oil prices resume their plunge? All those Walmart employees with raises but very few skills will get laid off and that wage inflation will disappear in a puff of dust.

Google it.


  1. I don't know gas was looking mighty expensive today. Since hauling arcade games leaves us perpetually short fuel, I'd be happy to see them stay down for a long long time. I don't think they will, but would be happy to be wrong. I still think we see mortgages hit 4.5 by june and 5.5 a year later. It will hurt the number of home sales but the prices will still be supported because the wealth that has been created in real estate and stocks over the last five years brings in more investors. Higher costs to borrow wont deter investors who are hungry for yield. The biggest beneficiaries of crowd investing hasn't been the weird tech companies, its been apartment complexes from people pooling their funds to get to double digit yields. If the sec blesses crowdfunding and it goes mainstream you'll see a massive injection into the real estate economy. DF

  2. That is a really interesting comment. It's the first I've heard of that, but it doesn't surprise me. How does that work? I mean, why wouldn't they just buy a REIT? I haven't seen too many apartment complexes go up. Lotsa condo complexes.

    I hope I get out before that. Crowd funding isn't always the smartest money on the block. And I can't imagine the legal issues you would have with a crowd funded house, etc. That is going to distort the market in all manner of unusual ways.

    What a difference a few years makes. This conversation would have never happened 5 years ago when the world was still collapsing. The mantra then was you were a sucker for owning real estate. Now people are pooling their money?

    P.S. CES had pinball machines there this year. Soldier on.