The Miscellaneous Thread

This is also nowhere near the bottom.









SPY could very realistically plummet to 3200's fairly rapidly. Fed is currently playing catch-the-mouse with inflation by rate hiking. Can't funnel more monopoly money into circulation the way it has over the last two years. Definitely worth looking into your 401K/superannuation pronto. Hedge a good portion of it in cash if that's doable. Cash is king in environments like this one. At least if you're in the US. 

If you're not, please believe me when I tell you that the current collapse of the GBP and the Euro is very likely being created by the US. This is because the powers that be do not want mass-exiting of the greenback, hedging in rival currencies and the ensuing currency devaluation with the potential to create a switching of the world reserve.

I'm sorry Eurofolks, but the harsh reality of the sitch is that the ****tier your currencies get, the more desirable--and therefore the more valuable-- the greenback gets. 

What causes your currencies to become devalued are things like surging domestic energy prices, low productivity and low business confidence.Such things lead to speculative fear, lower PPP, that drives downward pressure on them and makes people want to trade them in for something safer--that is, the greenback. But this will only happen if the greenback is regarded as safe.It doesn't have to be perfect--it just has to be more stable than everything else. As I said a few days ago, the prettiest pig in the show.

If you wanted to ensure these things happened, the best way to do it would be to--oh, I don't know--fund a proxy war between an eastern European state and Europe's biggest energy supplier, forcing artificially elevated energy costs, supply chain disruptions, lower output and lower business confidence in pretty much the entire EU. At that point, you could be just about certain the hegemony of your native currency would be secure.

But I'm sure Uncle Sam is far too virtuous to engage in such diabolical behaviour...right? I'm sure that the US had nothing to do with the destruction of the Nord Stream pipelines either.

The current recession that supposedly doesn't exist, yet the US finds itself in, is going to worsen. A big driver of this is how badly the risk-free rate is being affected by the bond market getting its face eaten due to the velocity of change in the rate--which is happening at unprecedented levels. The whole point of bonds is that they're stable, conservative and low-yield instruments that are 'good bets' for a return on the investment. If such instruments are failing, it's no bueno. Lenders (banks) will become increasingly gun shy to hand out money for loans, especially with interest rates soaring. You see, the inflation that the US is experiencing actually has nothing to do with the war in Ukraine and this began long before that conflict started--way back in 2007, but that's a story for another day. 

What's causing that is supply-side failure and tanking domestic US production. The long and short of it is, lockdowns and the general covid supply chain Wuhan lung aids hullabaloo has not been recovered from as expected. Many, many businesses went bust, and a strange (but in hindsight a somewhat predictable) sociological effect has emerged which has resulted in people thinking 'Holy ****--the state will fund me not to work as much or as hard. And even if it doesn't, I don't want to work as much anyway because I'm never going to be able to afford a house, and I've been converting the currency of my lifetime into dollars at a really ****** exchange rate, so **** it--I'm downsizing my life'. I have also observed this in Australia. We have comparable (I would argue worse) inflation here than in the US. A primary difference between Australia and the US is that here down under, the price of food is extremely high. You guys have no idea how good you have it in the states--at least, in this regard.

The flow-on effect of all this is that there's generally just people doing and making stuff, so there's less stuff to buy, and more money is needed to buy what's left, which means that the cost of stuff is going up. This is measured by CPI (Consumer price index). Basically, this calculates the price increase on a basket of common goods over time. Core CPI measures price increases, with food and energy prices excluded. Both are extremely elevated right now. Keep in mind, CPI reporting lags behind by about a quarter--or more accurately, three months. Both are actually significantly worse than what is being reported, and irrespective of a few dead cat bounces and minor rallies here and there, they will get worse, and yes, you will pay more. For everything.

This next point is very important if you're in the US, so please pay attention:

You may have noticed that the price of gas has gone down a little recently. This is only happening because the current political administration has been draining strategic oil reserves--which is the kind of 'rainy day fund' of oil. They are doing this because you're in an election cycle, plain and simple, and they're attempting to appear competent. The second that's over, expect gas prices to shoot through the moon again, because they'll have duped you and there's nothing you can do about it for another two years. Be prepared for that.

Some advice:

A) Don't sell necessary assets. The first thing that happens in an entrenched recession characterised by an inflationary or deflationary cycle is that asset prices increase. Don't sell what you need. You'll be eating your seed corn.

B) Avoid credit as much as possible. Right now in the US public credit debt has reached record highs. There is probably another credit crisis coming. Don't become insolvent. Trim where you can, do not get on the hook for debt of any kind. The time has come to live within your means, exclusively.

C) Do not buy into the market. The VIX (volatility index, which is sometimes called the 'fear index' and measures speculative uncertainty in the market) is extremely elevated right now and unless you're an experienced trader you will probably get wrecked. We are in a protracted bear market that favours short trades and derivative/contract-for-difference stuff that is extremely risky even in stable times. It's not for you.

* Edited at 09.27.2022, 7:33 PM ET *

@Check how bad it is depends on how young you are, really. Things will correct.

The stockmarket is like the tides. You just don't want to be standing in the mudflats naked if you're about ready to retire.

@el222 TLDR: Bad times coming fast, be careful with money.

wt.

* Edited at 09.27.2022, 9:08 PM ET *

Just a reminder that Hippie is a Floridian and doesn't have anywhere to stay right now.