Thursday, January 07, 2021

Everyone is ignoring the elephant in the room.


Update - I guess I just noticed the housing market did, in one year, what it took more than five years to do before the housing crisis. You can see for yourself in a bigger chart here. You have to hit the 25 yr chart button.

The stock market hit an all time high today. And yesterday. And maybe tomorrow.  I guess the market only goes up. Said in the most sarcastic way. So..... it's quite hard to put words to anything right now. I mean, Elon is our new richest man over Jeff Bezos who sends me LITERALLY anything I effing want. ANYTHING.

For some reason people believe that the economy is kinda okay when in reality we are floating on the biggest air pocket in history. No one seems concerned at all of this activity is predicated by a FIREHOSE of Fed liquidity.  Trump literally saved EVERYONE. Including prisoners. People are not even paying attention honestly. Stocks going up 100% in a year or 200%. Or more. This effing INSANE activity in houses in the above chart. I am the biggest housing bull on the face of the planet, and no one can deny this is a bubble. Yet interest rates are at an all time low. Riddle me that Batman.

People are so delusional they are actually talking about inflation again. Which makes me believe they learned nothing from the housing crisis. ALL of this money printing is going to go into DEBT service. People are FLOATING in debt. People seem to think that inflation is going to get dicey. IT's NOT.

Almost anything you need repaired is taking roughly six weeks. I had a window spontaneously crack, and it took me 6 weeks to get a repair. And it wasn't a big window. I bought an oven a month ago, and I still have no ETA. If you need ANYTHING, it's going to take at least a month. Hell... I was even at the mall, and another lady was wanting to try things on, and they have all of their dressing rooms closed. If you are not buying off the rack, you aren't buying. These things are causing a massive distortion. So, there might be inflation right now - but it's VERY transitory.

And finally, when Trump leaves....... that means the pumper in Chief leaves too. He was masterful in pumping up the market and enthusiasm. Even I thought the Trump bump would evaporate after a year in office, but it never did.

I believe this year is going to leave a mark like no other. And I've been through at least one solid ass woop'in.

I just thought I would give you this chart of when Trump tried to reduce the balance sheet. I was pretty happy at the first two arrows. but I believe he or the Fed made policy error and tried to reduce to quickly and then had to restart it to almost previous levels. Then came the pandemic.

So, no matter what the new Fed says they are going to do, they will not reduce the balance sheet ANY time soon. If ever.

George Bush definitely ruined capitalism.


  1. Happy New Year She Said,

    The salutation was without snark, I wish you and Mr S the best.

    The inflation is permanent per your own post: money supply, housing, capital markets and non availability of items at listed prices. While capital markets and housing could halve, the amount of money is still above clearing such that there will be inflation. US govt debt holders will insist on higher returns if the US govt is just printing to cover debt servicing. Banks will not loan to citizens as too risky and will hold govt debt only. Interest rate costs will rise on all debt. Most Americans do not remember inflation though there is plenty of historical data on it for review and examples off shore abound. Accept there is inflation and offer your contractors more money for timely service. As long as there is inflation, if you offer below actual market value (listed price), your purchase order will be kept on hold until the supplier has no other orders. Americans are accustomed to seeing / paying a listed price. Demonstrably, that is no longer operable. Think more like a third worlder now and you will do better.

    I am curious to know more your thoughts on housing. I cannot discern what will come or when.

    So the Trump bump lasted four years; will there be a Biden bump? Will it last.

    Also, do you think the new administration would be monetarily or fiscally contractionist?

    Sorry to be so verbose, these are interesting times and I seek your insight.

  2. You are very kind Jeff. I genuinely wish you a better year than last. good to see you.

    I'm not sure I have any answers on anything but I appreciate you thinking I do. Said very sincerely. If the world acted text book we'd all be rich right? But there is the way the market "should" work, and the way it does.

    In theory - either the banks start having real problems, or property owners do. Which I guess equates to the same thing. The banks having problems. As we learned from the housing crisis, the measures the government takes mostly only delays and prolongs the pain. When that hits? I have no idea. I've never had to make a claim for a tenant not paying rent, but I can only guess that landlord insurance and moratoriums have made it so the banks must be still getting paid somehow or else they would be screaming.

    Airbnb's obviously are the lowest hanging fruit so....

    As for Biden. I don't think he will have the same result as Trump. I'm not sure what it will look like yet other than ~so suckage~. But Trump had an uncanny way of making sure things got to his target.

    For instance, before Trump - 100 percent, I did not believe in sanctions. Countries always found a way to get around them. But with Trump, that target hit. The kind of which we may only understand in hindsight.

    "US govt debt holders will insist on higher returns if the US govt is just printing to cover debt servicing."

    That is what they said last time too. And it still might, but for now, all of the inflation pulse is cooked in. But it's a good discussion.