“Five percent is more or less the average of investment-grade rates since the time of Alexander Hamilton. The problem is the structures that 10 years of ultra-easy money brought about. People blame it on the normalization of rates. The previous bout of abnormal rates is the problem.”
I suppose the most bearish thing I saw this week was this:
"You don't really see any sign of a recession here," Yellen told Bloomberg. "What we have looks like a soft landing with very good outcomes for the U.S. economy, so I think there's a lot to be pleased about."
Then again…
I think the challenge for all of us imagining next year is to not lose our head when all of this blows up, when all this illiquidity in non-banks and stupid things asset allocators have done, as tempting as is to join the throng, and we can imagine already and say, “The world’s ending, tin food and this, that and the other.” Actually, the smart thing to do is to say, “Actually, I know that asset. It’s a great asset. It’s just held by a very weak hand.” That’s going to be the challenge. But look, I’m imagining 2024.
- James Aitken with Grant Williams and Bill Fleckenstein
(One of my few investing talents is I don’t panic.)
Anyway, Yellen’s the same person who said in June 2017 that the Fed’s balance sheet normalization would “be like watching paint dry, that this will just be something that runs quietly in the background.”
“Would I say there will never, ever be another financial crisis?” Yellen said at a question-and-answer event in London.
“You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be,” she said.
It’s insulting to the American people that Janet Yellen has constantly risen to an ever higher position of dangerous incompetence.
“The gap between our elites and our policymaking people
and the rest of society is immense and growing.”
GDP per capita, as we've seen, is a weaker series than GDP. What does it suggest about recession risk? The next chart shows the YoY change in real GDP per capita since 1960. We've again highlighted recessions. The blue show the YoY real GDP for the quarter before the recession began, and the dotted line gives us a sense of how the current level compares to recession starts since 1960. The average rate at the start of the recessions shown is 1.47%. The current real YoY GDP per capita is 2.44%, which is at or below two of the nine recessions shown.
…recent evidence strongly indicates that intense speculation by individual real estate investors also significantly magnified the boom and worsened the bust.
Good thing “intense speculation by individual real estate investors” didn’t happen this time.
Anyone interested in an “inactive Meth lab,” with “meth contamination,” and “Access Denied by County”?
“House prices are set by the marginal buyer.”
- something I heard
"The outcome is no different here from the previous housing bubble. Either incomes are going to catch up to match home prices or home prices will need to adjust lower."
- Dr. Housing Bubble (who was around for the last rodeo)
Pending Home Sales Remain Low Despite September Growth
Over this time frame, the US population has grown by 18.2%. For a better look at the underlying trend, here is an overlay with the nominal index and the population-adjusted variant. The focus is pending home sales growth since 2001. The above chart shows the percent off turn-of-the-century values. The index for the most recent month is currently 45% below its all-time high from August 2020. The population-adjusted index is 50% off its high from July 2005.
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