Dow instantly -500 points, 10 year treasury up to 3.5%.
What where the estimates?
We missed
Yeah I can’t access most of the sites with the numbers but it’s looking like estimates were around 8.0 or 8.1 so not much of a miss. It’s probably more about the underlying data by sectors or whatever. Anyway, feels like an over-reaction to me but WTF do I know…
I think there were a decent amount of people expecting a good surprise. Who cares, it’s all a fk scam
Well nevertheless, I’m sure my diversified craptos are holding up strong today…
I would assume so since they are a hedge against inflation
I think it’s more important to look at the month-over-month number than the year-over-year number. We effectively knew the year-over-year number because we knew what 11 months of that were already. What we didn’t know was whether prices peaked last month or whether they’re still rising. Turns out they’re surprisingly still rising.
The core inflation still rising is the issue. Rates probably need to go higher for longer than the market has been pricing in. Wouldnt be shocked if we need to get to 7% or higher to really tame inflation or run rates at 5% or so for a couple of years. Market has been pricing in policy turning looser, or at least peaking, in 1H '23 and high rates for a relatively short period.
Wouldnt be shocked if the Fed goes 100 in September now. Given the Fed has all but said they are gonna squeeze until job market rolls over/we go into recession (and politics aside, obviously on that front just chill and live with inflation thorough November), I would rather just go aggressive and rip this band aid off fast than have multiple lost years.
Man if rates go like 200 bps higher you’re going to see a lot of pain, starting with a straight up crash in CRE and private equity.
PE wont crash right away. They have loose debt documents and lots of ways to generate liquidity at the expense of existing lenders.
I am getting very worried about real estate.
Markets are pricing in lock 75 bps next meeting and some chance of 100 bps. Then its 50% 75/50% 50 for November and 25% 50/75% 25 for December. So thats most of the way to 200 bps higher already.
At perm rates in the 7% - 8% range basically nothing in CRE is going to get refinanced.
The house across the street from me hit the market at 8 AM today and it looks like they have had a walkthrough every 15 minutes so far. The same house sold less than a year ago and these walkthroughs went every 15 minutes for a solid 3 or 4 days, so I’m interested to see if the same happens here or not.
Thats still like 450-500 bps from here. Hope we dont have to go that high, but we’ll see. Perm rates there and PE is fucked too, they just are going to have some time to ride it out.
Was it a flipper who bought and renovated or someone who bought it to live there, moved in, and sold it less than a year later? The latter seems like about as bad of a personal finance move as one can make unless the person got an unexpected huge job offer across the country or something.
Yes, a totally unexpected relocation for work. I assume it is worth it for them to take the hit, but the homeowner didn’t get into any specific details with me.
These are two asset classes that probably should crash. CRE development and investment when everyone in the world below management level never wants to go to the office again kind of makes no sense. And private equity has always kind of been a scam, their whole value proposition is to argue that public equity is subject to way too many rules and regulations to protect investors, so investors should prefer private equity where there are no rules protecting them. jlawok.gif.