"People hate inflation. Hate it." - Jerome Powell
If you're having collateral problems I feel bad for you, son.
"Price stability is the responsibility of the Federal Reserve."
- Jerome Powell, September 20, 2023
People “hate” inflation, and yet we got this:
"I guess the inflation rates for next year and 2023 were also marked up...You’re looking at 2.2% and 2.1%...I don’t think that households are going to, you know, notice a couple of tenths of an overshoot."
- Jerome Powell, September 22, 2001 (just a little low)
Hey, maybe all my work over the past decade is starting to bear fruit:
After the Fed announcement Wednesday (unchanged), Jeff Gundlach came on and said the 10-year had “double-topped,” but it looks like maybe there’s more to it than that:
Note that rates now - including mortgage rates - are basically back to mid-2000’s levels. In effect, we’re finally normalizing 15 years after ‘the GFC’ (Great Depression II).
Note that option-adjusted high-yield spreads are still showing no fear.
Demetri Kofinas explains the root causes of where we are today:
I was also someone that saw dark clouds over the horizon in the way in which the Bush administration was prosecuting the case for the invasion of Iraq. It always seemed to me so obviously not relevant to the war on terror. The war on terror itself also felt like a construct for the concentration of power in the executive. I was terrified in fact, I remember at that time, of the country becoming dictatorial under the Bush administration, and in fact, that was the beginning, I think, of a lot of moves to a much less free world since in this country.
But what I feel like happened in 2003 to speak about populism and the sources of the discontent today is I think in 2003, we broke the international contract. We had an understanding of what America's role was in the world, and as the provider of security for this rules-based international liberal order, we did not legally invade Iraq that satisfied those conditions…
2008 is where we broke the social contract, in my view, and the way in which the 2008, the bailouts were handled, and the inequities that stemmed from the handling of that crisis. And I feel like those two events were seismic in terms of leading to the conditions that have gathered today and that have facilitated the election of Donald Trump and that have led to discontent in the country. And unfortunately, it seems that by and large, the establishment in this country has chosen not to deal with the underlying problem, and instead demonize Trump's supporters.
I'll be honest with you, man, look, I don't want to minimize what happened on January 6th…I just want to point out that my initial reaction when I saw Joe Biden take the podium to talk about this is the greatest assault on our democracy, I was like, excuse me? Excuse me. I don't think so. I actually don't think so. I think 2008 was a bigger assault on it. I think 2003 was a bigger assault on it, and I think that those things were more substantively damaging to this country than anything that happened on January 6th. And not to minimize that, all right? It's just a reflection of where power is and who has power in this country.
“Just switching gears to Ukraine. What’s the opportunity?”
“Just switching gears to Ukraine,” said Morgan Stanley analyst Kristine Liwag, during an investor town hall with the firm. “What’s the opportunity?”
Jay Malave, the chief financial officer for Lockheed Martin, noted that his company is supplying Javelin anti-tank missiles, HIMARS mobile artillery rockets, and PAC-3 air defense missiles, among other missiles and munitions for the war.
Lockheed Martin has “visibility” of orders that include “$10 billion of opportunity,” Malave said. The surging growth, including orders to replenish U.S. military stockpiles depleted by weapons transfers to Ukraine, he continued, means "demand is enduring between, frankly, now to the end of the decade.”
I don't see "Ukraine" - or any other foreign country - listed here among Americans' top concerns:
My chat with Michael Gayed (9/18/23)
VC Bigwig Bill Gurley on Regulatory Capture Good, short, funny overview. Via Dutch Rojas.
“Regulation is the friend of the incumbent.”
“A net loss for society.”
Favorability of Political Figures
“Almost a third of Americans earning $150,000 a year or more say they're living paycheck to paycheck.” According to the SSA, that’d put you in the top 5% of wage earners.
Property taxes for some properties in Cook County have doubled, with around 20,000 properties seeing a hike of 100% or more year-over-year.
Year-over-year % change in insurance premiums, by metro
Collateral Problems: “If you’re sub-40-years old, and have an auto loan, the delinquency rate - 90 days or more - is about 8%, and that’s at full employment. That number is insane.” - Mike Taylor
Mike talks a lot about businesses that are gaining or losing pricing power, and under-40 mega-discretionary consumption going down. I saw this comment which I think is a sign of that:
I have been tattooing full time for 10 years. For the first 5 I worked in a street shop building clientele and working walk ins. Then I had an opportunity and opened a small studio. I stayed steady. Covid hit and it went nuts for two years. Then it pulled back but I stayed booked about 5 weeks out at any given time. It has been perfect for the last year or so. Not too crazy, steady reliable work.
I hadnt had a "work day" that wasnt pre-booked in almost 4 years, outside of last minute reschedules or the occassional no show. The rest of september is booked, but in october, I have one app. This time last year october was booked. I feel like I am going crazy or something.
After years of being a steady working artist, I am back to dragging out the walk in sign? Is anyone else having issues like this? My work is better then when I was booked out 10-12 weeks, yet I have big gaps in my book now.
Idk I am very disconcerted and considering selling my studio and working for someone else again. Idk, I havent been this stressed in years about this work. What is happening?
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