A thread...

 

On 6/19/2022 at 11:31 AM, KJP said:

A thread...

 

 

This person is probably one of the most unhinged, out of touch people in finance.  She thinks *deflation* is on the horizon?

 

Anyway, her firm is ARK Invest...named for Noah's Ark.  She said she started her ETF because that's what the Holy Spirit told her to do.

 

 

Her flagship fund is down 59% in 2022 and down over 75% from its all-time high (set in February 2021).  She reiterated in December 2021 her expectation that her funds would return 40-50% annually over the next five years (an ROI unheard of in active management).

 

Long story short, don't take this person seriously.

"God likes my stocks the best. Oh and apocalypse in only 6-18 months"

Good jobs report today.

 

 

^ not recession but stagflation, which is almost worse. 

2 minutes ago, Brutus_buckeye said:

^ not recession but stagflation, which is almost worse. 

Not by definition. we are not in stagflation either. 

I think the biggest thing we're seeing right now is that the era of cheap stuff is over. It's going to be painful in the short term as we adjust to the new ideas of what goods and labor are worth, but good in the long term for a lot of reasons.

16 minutes ago, Brutus_buckeye said:

^ not recession but stagflation, which is almost worse. 

 

There is no stagnation.  There is just inflation.

 

As I said over on the Biden Presidency thread (though in fairness, I should have said it here the whole time since presidents only have indirect and attenuated influence on inflation), almost every other commonly-measured economic indicator besides inflation looks good, though I'm sure there are some less commonly measured indicators that would be ugly (e.g., metrics that would capture the supply shortages that are one significant contributor to the current inflationary environment).

 

4 minutes ago, taestell said:

I think the biggest thing we're seeing right now is that the era of cheap stuff is over. It's going to be painful in the short term as we adjust to the new ideas of what goods and labor are worth, but good in the long term for a lot of reasons.

 

I think the era of cheap stuff will come again, actually, though it will look different the next time it arrives--based more on heavily automated production and quite possibly shorter supply routes than on long supply routes from areas with abundant cheap labor.

5 minutes ago, taestell said:

I think the biggest thing we're seeing right now is that the era of cheap stuff is over. It's going to be painful in the short term as we adjust to the new ideas of what goods and labor are worth, but good in the long term for a lot of reasons.

 

An economy centered around experiences rather than goods like we saw in the 2010s is more tenuous than the goods-oriented one we saw from 1950-2000. Why? It's easier to find profitability with goods rather than experiences. In experiences, losses are considered part of the game and there is an enormous amount of margin-cutting in order to simply be allowed to keep doing it. That is considered unacceptable in goods and will result in the organization swiftly leaving the market.

4 minutes ago, GCrites80s said:

 

An economy centered around experiences rather than goods like we saw in the 2010s is more tenuous than the goods-oriented one we saw from 1950-2000. Why? It's easier to find profitability with goods rather than experiences. In experiences, losses are considered part of the game and there is an enormous amount of margin-cutting in order to simply be allowed to keep doing it. That is considered unacceptable in goods and will result in the organization swiftly leaving the market.

 

You mean escape rooms might die out!?!? Oh no... 

10 minutes ago, GCrites80s said:

 

An economy centered around experiences rather than goods like we saw in the 2010s is more tenuous than the goods-oriented one we saw from 1950-2000. Why? It's easier to find profitability with goods rather than experiences. In experiences, losses are considered part of the game and there is an enormous amount of margin-cutting in order to simply be allowed to keep doing it. That is considered unacceptable in goods and will result in the organization swiftly leaving the market.

 

I've heard this whole "experiences over goods" paradigm talked about before, and I always feel a nagging urge to push back on it.

 

I like the experience of biking on the Towpath Trail.  I particularly like the experience of biking on the Towpath Trail with my $450 Raleigh bike a lot more than the department-store Huffy that my parents got me at a yard sale when I was a kid.

 

The mom of one of my son's best friends at school is a huge Disney fan (even in her late 30s).  She has a group of girlfriends that buy the season pass to all four or however-many parks are down there in Orlando and they go for multiple weeks every year.  You'd clearly say they go for the experience, but the amount of goods they buy to prep for that experience is not exactly a light shopping trip.

 

The best man in my wedding is a diehard mountain climber who lives out on Whidbey Island north of Seattle.  I don't know what all his climbing gear cost, but let's just say he's not going up Mount Baker wearing just what he happened to wear to work that day.

 

Unless you're just a hoarder, the promise of experiences is what sells goods.

 

And don't even get me started on boat people and horse people.

11 minutes ago, GCrites80s said:

 

An economy centered around experiences rather than goods like we saw in the 2010s is more tenuous than the goods-oriented one we saw from 1950-2000. Why? It's easier to find profitability with goods rather than experiences. In experiences, losses are considered part of the game and there is an enormous amount of margin-cutting in order to simply be allowed to keep doing it. That is considered unacceptable in goods and will result in the organization swiftly leaving the market.

Goods are more stable, but profit margins are much more sticky too. There is only so much a company can earn on a good because the cost to make the good, including labor accounts for so much of the price. With Services, the profit margin potential is much greater because you do not have the same overhead in many cases that you do with manufacturing a good, and services are much harder to commoditize (not in all cases) than goods. To your point, goods are more predictable but when the economy changes, can often be hit much harder. Services may come and go, but they are much less static and much more malleable. 

 

Using the escape room example from earlier, As tastes change, the escape room business may crater quicker, but the owners of those services can reinvent themselves  much quicker with new concepts and better margins. Declines in goods are much easier to measure, which is part of the problem with the CPI and many of the other tools to measure the health of the economy today. Many of the items in the formula do not paint the most accurate picture of how the economy really is today because they are tied to many outdated data points that make up their formulas.

I'm not talking so much about experiences that require "gear". It's the gearless ones such as the aforementioned escape rooms, taprooms, restaurants, family fun centers or the minimal gear ones such as day hikes and running events.

 

Perhaps we could make a goods cost/time entertained ratio.

 

 

21 minutes ago, GCrites80s said:

I'm not talking so much about experiences that require "gear". It's the gearless ones such as the aforementioned escape rooms, taprooms, restaurants, family fun centers or the minimal gear ones such as day hikes and running events.

 

Perhaps we could make a goods cost/time entertained ratio.

 

 

metrics like the CPI should be updated to possibly account for some of these businesses. The one issue with measuring these items is that the CPI is supposed to measure essentials such as food/electric/etc. Items necessary to live. Much of these services, while a significant part of the economy are not necessary "vital" in the sense that most people would consider them vital, but at the same time, many would consider them significant and important enough to quality of life and in one sense "vital" to their own personal mental health.  

1 hour ago, Brutus_buckeye said:

^ not recession but stagflation, which is almost worse. 

 

Siri, show me someone using a word they don't understand.

It's funny that he used the phrase "almost worse" to imply it might actually be worse. But the words he said actually mean "not as bad" AKA "better".

17 minutes ago, ryanlammi said:

It's funny that he used the phrase "almost worse" to imply it might actually be worse. But the words he said actually mean "not as bad" AKA "better".

It is almost as bad as a recession. Would you rather have stagflation or a recession, they are both pretty painful. As to @Gramarye point, he is right, we are not at stagflation levels yet and more just in an inflationary economy. Good job growth and high employment may be a good thing from one point of view but is offset when earning power is diminished by inflationary pressure. 

 

Point being, let's not celebrate the awesomeness of the jobs report when in the grand scheme of things there are significant problems with the economy (as consumers are expressing in their consumer sentiment surveys). 

This is not a political thing. Too often, we are seeing the administration cherry picking a couple positive reports and pointing to how great things are when it is completely contrary to how the general public feels. 

Edited July 8, 20222 yr by Brutus_buckeye

2 hours ago, GCrites80s said:

I'm not talking so much about experiences that require "gear". It's the gearless ones such as the aforementioned escape rooms, taprooms, restaurants, family fun centers or the minimal gear ones such as day hikes and running events.

 

Perhaps we could make a goods cost/time entertained ratio.

 

Hah!  Fair point.  And I do see what you mean--we pay a fair amount every month for our Urban Air Trampoline Park membership (since you have to pay per kid, there is no family membership), and the only gear needed for that is a $3 pair of jump socks.  Otherwise it's just come-as-you-are.  Stan Hywet, the Akron Zoo, and the Akron Art Museum (and their analogues in other cities--museums, zoos, botanical gardens, etc.) would likewise qualify as gear-free or gear-lite "experience" expenditures.

 

Some of those have seen more inflation than others.  Concert tickets have gotten absolutely absurd.  Stan Hywet hasn't budged anywhere near as much.

1 hour ago, Brutus_buckeye said:

It is almost as bad as a recession. Would you rather have stagflation or a recession, they are both pretty painful. As to @Gramarye point, he is right, we are not at stagflation levels yet and more just in an inflationary economy. Good job growth and high employment may be a good thing from one point of view but is offset when earning power is diminished by inflationary pressure. 

 

Do you know what stagflation is? lol

 

1 hour ago, Brutus_buckeye said:

Point being, let's not celebrate the awesomeness of the jobs report when in the grand scheme of things there are significant problems with the economy (as consumers are expressing in their consumer sentiment surveys). 

This is not a political thing. Too often, we are seeing the administration cherry picking a couple positive reports and pointing to how great things are when it is completely contrary to how the general public feels. 

 

"Facts don't care about your feelings."

On 6/20/2022 at 1:06 PM, DarkandStormy said:

 

This person is probably one of the most unhinged, out of touch people in finance.  She thinks *deflation* is on the horizon?

 

 

And that's putting it mildly.   😁

9 minutes ago, DarkandStormy said:

 

Do you know what stagflation is? lol

 

 

"Facts don't care about your feelings."

You do not understand what that means. The fact is, certain areas of the economy are doing well. There is job growth, wage growth etc. The fact is that there is also record high inflation that erodes the benefits of those positives. People are less confident in spending and it creates struggles at home. You are seeing shortages (not a good thing) on the supply side. So while you may make trite comments about "facts not caring about feelings" that is not the case here. Factually, public perception matters. When people are not happy because of inflation, eventually it leads to a crash. There is currently too much cash chasing too few goods in the marketplace thus inflating the value of everything. That is creating a bubble that will eventually need to be deflated. Unfortunately, all you hear from the administration is that we need to put more cash in people's pockets through cutting the gas tax, or child tax rebates, etc. which is the completely wrong prescription to dealing with the inflation problem. 

15 minutes ago, Brutus_buckeye said:

You do not understand what that means. The fact is, certain areas of the economy are doing well. There is job growth, wage growth etc. The fact is that there is also record high inflation that erodes the benefits of those positives. People are less confident in spending and it creates struggles at home. You are seeing shortages (not a good thing) on the supply side. So while you may make trite comments about "facts not caring about feelings" that is not the case here. Factually, public perception matters. When people are not happy because of inflation, eventually it leads to a crash. There is currently too much cash chasing too few goods in the marketplace thus inflating the value of everything. That is creating a bubble that will eventually need to be deflated. Unfortunately, all you hear from the administration is that we need to put more cash in people's pockets through cutting the gas tax, or child tax rebates, etc. which is the completely wrong prescription to dealing with the inflation problem. 

OK. but it's still not stagflation though. It is just inflation. 

29 minutes ago, freefourur said:

OK. but it's still not stagflation though. It is just inflation. 

and I walked the stagflation comment back if you read through the posts. Regardless of inflation vs recession, neither are great 

This isn't stagflation, but it's not necessarily good either.

 

Not to be the rain cloud here, but the rosy current picture here in the U.S. doesn't mean we're out of the woods. It may just mean we're not in them yet. This is what the dollar to Euro chart looks like:

 

 

We're getting some benefit from the favorable exchange rates. As you can see from the chart, bad economic conditions since early 2021 are making people hoard dollars as a safer investment than the euro and other currencies (there are probably other commodity-related reasons for this too). It's good for us right now. Being the reserve currency pretty much means you get to legally rob the rest of the world. That works fine (and great for us) when there's enough money. But as financial hardship deepens across the world, it compounds international (but not domestic) inflation for dollar-traded commodities like oil. Many economists anticipate a cascade of bond defaults, particularly with developing countries. That eventually has to catch up to us as global demand for stuff we export declines.

 

Interest rates are also still not that high, and so we get to ignore the fact that our debt to GDP ratio is the highest it's ever been.

 

I'm not making predictions, just pointing out that in a global meltdown, this time around, we won't be the first domino to fall, and the first few dominoes falling may even look like a good thing for us.

Saw this on another forum and immediately thought of this thread (look at "Earth"):

 

The US and Canada are trying to make up for the loss of Ukrainian grain exports...

 

Grain shipments through the Great Lakes are up nearly 40% when compared to this time last year

 

Grain exports through the Great Lakes and St. Lawrence Seaway system are up nearly 40% compared to this time last year. Shipping officials say the rise is due to a number of factors.

 

https://radio.wcmu.org/local-regional-news/2022-07-04/grain-shipments-through-the-great-lakes-are-up-nearly-40-when-compared-to-this-time-last-year?_amp=true

Remember, someone always has it worse than you...

 

14 hours ago, KJP said:

Remember, someone always has it worse than you...

 

I'll say it again, the Euro is way down against the dollar.

 

Wanna know what's not way down against the dollar? The Swiss Franc. Now take a look at their inflation rate.

 

General economic rant for fast food especially. If you can't staff the place at lunch maybe you shouldn't be open after 10pm. I know you were spoiled by the flood of Millenials you got between 2000 and 2020 that you made come in at 3AM to serve the two people that showed up during that hour but now you have to value the fact that you can get people at all.

10 minutes ago, GCrites80s said:

General economic rant for fast food especially. If you can't staff the place at lunch maybe you shouldn't be open after 10pm. I know you were spoiled by the flood of Millenials you got between 2000 and 2020 that you made come in at 3AM to serve the two people that showed up during that hour but now you have to value the fact that you can get people at all.

Remember when everyone said that fast food workers shouldn't get raises because their jobs could be automated. 

 

 

Where's the automation? These places should operating a full capacity. 

24 minutes ago, freefourur said:

Remember when everyone said that fast food workers shouldn't get raises because their jobs could be automated. 

 

 

Where's the automation? These places should operating a full capacity. 

that is a misconception on automation. What it means is that instead of 30 people having jobs making minimum wage, you now have 10 making double minimum wage to run the machines. 

16 minutes ago, Brutus_buckeye said:

that is a misconception on automation. What it means is that instead of 30 people having jobs making minimum wage, you now have 10 making double minimum wage to run the machines. 

Okay, but why haven't they done it then?  

12 minutes ago, freefourur said:

Okay, but why haven't they done it then?  

Because there are plusses to having those employees when you pay them X but if you need to pay them Y it is no longer worth the cost of the employee. 

For example, it may cost McDonalds $100,000  per year to have 3 employees behind the counter at all times. They know that with those 3 employees they will generate $150,000 in revenue. If, at current rates, they replace 2 of those employees with a kiosk, they only pay $75,000 per year (because it cost money to run the kiosk and there are subscription fees) but they only generate $135,000 in revenue.  You can argue that McDonalds is still economically benefited by replacing the employees with the machines, but you cannot figure in the soft benefit of the employees (i.e. does it make the restaurant cleaner, other employees are safer, better overall customer service, etc.) which helps to even out the economic savings of replacing them with machines. 

So to a certain level, many companies would keep the employee around instead of replacing them with a machine, however, there come a point where the savings of a machine grossly outweighs the benefit of having a live employee.  When you double the wages of the minimum wage staff, the machines look much more palatable despite some of their limitations. 

Just now, Brutus_buckeye said:

Because there are plusses to having those employees when you pay them X but if you need to pay them Y it is no longer worth the cost of the employee. 

For example, it may cost McDonalds $100,000  per year to have 3 employees behind the counter at all times. They know that with those 3 employees they will generate $150,000 in revenue. If, at current rates, they replace 2 of those employees with a kiosk, they only pay $75,000 per year (because it cost money to run the kiosk and there are subscription fees) but they only generate $135,000 in revenue.  You can argue that McDonalds is still economically benefited by replacing the employees with the machines, but you cannot figure in the soft benefit of the employees (i.e. does it make the restaurant cleaner, other employees are safer, better overall customer service, etc.) which helps to even out the economic savings of replacing them with machines. 

So to a certain level, many companies would keep the employee around instead of replacing them with a machine, however, there come a point where the savings of a machine grossly outweighs the benefit of having a live employee.  When you double the wages of the minimum wage staff, the machines look much more palatable despite some of their limitations. 

But, they can't staff up their operations. They should automate and provide service to their customers. It seems the automation talk was nonsense all along. 

11 minutes ago, freefourur said:

But, they can't staff up their operations. They should automate and provide service to their customers. It seems the automation talk was nonsense all along. 

It is going on right now, it is incremental and you do not notice it as much but it is going on. It is not something where you flip a switch and one day all the employees are gone now replaced by machines. Furthermore, you have a supply shortage going on and labor shortage at the companies that make the machines. You still need the employees while you get the equipment in which could take 6-9 months in some cases. 

33 minutes ago, Brutus_buckeye said:

It is going on right now, it is incremental and you do not notice it as much but it is going on. It is not something where you flip a switch and one day all the employees are gone now replaced by machines. Furthermore, you have a supply shortage going on and labor shortage at the companies that make the machines. You still need the employees while you get the equipment in which could take 6-9 months in some cases. 

Staffing "shortages" have existed for about 2 years.  I call BS. 

3 minutes ago, freefourur said:

Staffing "shortages" have existed for about 2 years.  I call BS. 

Since Covid? Yes, they have. Factories quit manufacturing goods because they did not have the staff. Shipping ports were closed. The JIT economy was no longer able to function how it was designed.  You now have an inflationary environment where in order to get goods to market, companies are paying much higher wages for low skilled labor that was a lot cheaper 2 years prior, which really just pushes up inflation and the real wage benefit is marginal.   

This is what is going on now and the economy is transforming but you do not choose to notice. 

Do you see flowers blooming on a plant when you stare at it or do you suddenly wake up one day and see a flower in full bloom. Think of it like this. 

2 minutes ago, Brutus_buckeye said:

Since Covid? Yes, they have. Factories quit manufacturing goods because they did not have the staff. Shipping ports were closed. The JIT economy was no longer able to function how it was designed.  You now have an inflationary environment where in order to get goods to market, companies are paying much higher wages for low skilled labor that was a lot cheaper 2 years prior, which really just pushes up inflation and the real wage benefit is marginal.   

This is what is going on now and the economy is transforming but you do not choose to notice. 

Do you see flowers blooming on a plant when you stare at it or do you suddenly wake up one day and see a flower in full bloom. Think of it like this. 

I think you keep missing the point, that we are no where near able to automate restaurants to a degree that business stated. They just want to continue stealing the labor value of their employees and will use any threat to continue their plunder. 

7 minutes ago, freefourur said:

I think you keep missing the point, that we are no where near able to automate restaurants to a degree that business stated. They just want to continue stealing the labor value of their employees and will use any threat to continue their plunder. 

I get your point, I think you are ignoring a few things about the automation and that what you think was just posturing by companies to hold down wages is actually in-fact happening but you are not seeing it. 

 

your position is that over the last 2 years, everyone crying about low wages or labor shortages would just shift to automation. It is not that simple, plus you need people to actually run the machines. Fewer but you still need them. You do not just flip a switch and all McDonalds and Wendy's or other franchise locations decide to go virtual or remote.  Everything happens incrementally. you start by cutting one or two employees and introducing a machine. The machine may not even be fully utilized at first, but as it catches on, you cut a couple more employees. You may start at locations where wages are the highest, but regardless, you do it incrementally. 

 

Think of the internet. Pretty much most companies had large call centers up until 10-15 years ago. Now, many companies barely offer a phone number for customer service. Everything is done by an app and chatbox. Dont believe me? Try calling Google for customer support. 

 

Now you have a ton of call center people no longer with jobs. Same can be said for many bank tellers as banks go virtual now.  It is all happening incrementally, but it is happening. The switch has been flipped but you just have not seen it yet. 

 

 

 

 

Even if the robots "can" do it, if they're only as reliable as the shake machine it doesn't really matter

58 minutes ago, GCrites80s said:

Even if the robots "can" do it, if they're only as reliable as the shake machine it doesn't really matter

Who will the Karens yell at when the robots malfunction? 

 

 

Job numbers good = market falls/flat because investors worry the Fed is confident we can absorb even higher rates.

Job numbers good = market goes up because there is more economic confidence and spending ability.

 

No rhyme or reason to it. Good news is bad news, and vice versa.

 

 

Hopefully this will get more building projects moving...

 

 

On 8/5/2022 at 9:41 AM, KJP said:

 

 

 

Weren't there people here (and elsewhere online) who were trying to convince us we're in a period of stagflation just last month?

 

Famously, a hallmark of stagflation is a historically low unemployment.

 Where were these jobs added?  Why does nearly every business have "HELP WANTED" signs posted?

16 minutes ago, LibertyBlvd said:

 Where were these jobs added?  Why does nearly every business have "HELP WANTED" signs posted?

 

Because unemployment is historically low. We have an extremely tight labor market. Imagine the job growth we'd have with sane immigration policies.

The rich white guys will win on immigration and that means more of it, not less. They'll just trick the middle-class-and-under white guys that didn't go to college into thinking that we're being "tough" on immigration because they'll show agents with machine guns on the Texas border getting out of F-150s on Fox News. It doesn't matter who the President is.

 

The immigration "crisis" was actually far worse for white-collar jobs than blue-collar since most of this country has an almost unlimited amount of blue-collar jobs available of all types. It doesn't mean they pay well enough at the low end and they have crap working hours. So we actually need to have a "beyond unlimited" amount of blue-collar jobs to bring pay and working hours back in line instead of saying "Hey you can work during a weekday for $12 OR you can make $25 at 3AM!" Or if you work nights and weekends for only 10 years you can make night money during the day! Realistic is $20 during the day.

 

The old motivator of "You need this money to pay for your kids" doesn't work when jobs have terrible hours and people can't have kids because you don't meet potential mates when you work all those nights and weekends with a bunch of people the same sex as you.

https://finance.yahoo.com/news/july-inflation-data-cpi-august-10-123330998.html

 

Quote

Inflation eased slightly last month but held near its highest level in four decades even as gas prices fell and supply chains improved.

 

The Bureau of Labor Statistics' latest Consumer Price Index (CPI) reflected a year-over-year increase of 8.5% in July, down from the prior month's 40-year high of 9.1%. Consensus economists were expecting last month's reading to show an 8.7% increase, according to estimates compiled by Bloomberg.

 

On a monthly basis, the broadest measure of inflation was unchanged after rising 1.3% in June.

 

Inflation is over (for now).  No rise month-over-month.