House prices

Blowin's picture
Blowin started the topic in Friday, 9 Dec 2016 at 10:27am

House prices - going to go up , down or sideways ?

Opinions and anecdotal stories if you could.

Cheers

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bonza Friday, 22 Jul 2022 at 10:36am
donweather's picture
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donweather Friday, 22 Jul 2022 at 2:37pm
udo wrote:

https://www.sunshinecoastnews.com.au/2022/07/22/5-ann-street-dicky-beach...

Someone just paid $1.7m for a block of land that doesn't have ANY ocean views whatsover. Fcking ludicrous and they're gonna be in a world of hurt after they build their $600k McMansion and the arse end falls out of the market and they're left with high mortgage repayments and a significant loss in equity.

This would put their completed house and land at around $2.3m, some $400k over what the house down the road sold for at the peak, let alone what the market will pay come 12 mths+ time.

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garyg1412 Friday, 22 Jul 2022 at 3:07pm
donweather wrote:
udo wrote:

https://www.sunshinecoastnews.com.au/2022/07/22/5-ann-street-dicky-beach...

Someone just paid $1.7m for a block of land that doesn't have ANY ocean views whatsover. Fcking ludicrous and they're gonna be in a world of hurt after they build their $600k McMansion and the arse end falls out of the market and they're left with high mortgage repayments and a significant loss in equity.

This would put their completed house and land at around $2.3m, some $400k over what the house down the road sold for at the peak, let alone what the market will pay come 12 mths+ time.

Add another $100k on for the asbestos removal.

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Sprout Friday, 22 Jul 2022 at 3:08pm

They're retired, most likely loaded and couldn't give af less, probably die there but yeah I see your point.

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sypkan Sunday, 24 Jul 2022 at 5:49pm

looks its gonna be a long drawn out recession...

https://www.ft.com/content/afdc756d-a6da-4482-8d9b-d9c22fdc8968?segmentI...

I know there's not much choice, but the volcker tactic seems kind of impotent under the current conditions... will get there eventually... i guess... but geez, it seems our now multi tiered society will need to inflict a lot of pain to get there...

a lot of pain for some...

Im wondering if those in power will hold their nerve

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donweather Sunday, 24 Jul 2022 at 10:29pm
sypkan wrote:

looks its gonna be a long drawn out recession...

https://www.ft.com/content/afdc756d-a6da-4482-8d9b-d9c22fdc8968?segmentI...

I know there's not much choice, but the volcker tactic seems kind of impotent under the current conditions... will get there eventually... i guess... but geez, it seems our now multi tiered society will need to inflict a lot of pain to get there...

a lot of pain for some...

Im wondering if those in power will hold their nerve

paywall

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sypkan Monday, 25 Jul 2022 at 11:01am

geez its odd how these paywalls work... sometimes you're ushered in, sometimes its hostile door bitch...

a US article yes, but seems a similar situation in oz, ...plus US sneezes and colds and all that...

hard to believe US housing stock so under pressure... but same here... wonder how many multiple property owners they have?

and how much air bnb scourge?

"In Eric Farmelant’s nearly decade-long career as a real estate broker in Miami, he had never witnessed renters engage in bidding wars over rental properties until the coronavirus pandemic fuelled scorching demand for beachfront housing in Florida. He can no longer show four or five listings to clients because many of the properties are being rented sight unseen. “You’re seeing renters putting down a year’s worth of rent up front to get their offer accepted,” said Farmelant, who works for Ibis Realty Group. Rents, in turn, are up nearly 40 per cent since January 2021, according to Apartment List, indicative of a broader trend that has gripped the country.

For realtors, double-digit rent increases have been a boon for business. For the Federal Reserve, they serve as yet another hurdle in the central bank’s quest to get the worst inflation problem in decades under control. With little relief expected in the near term, economists warn elevated rents will act as an accelerant, maintaining upward pressure on inflation even as consumer price growth stalls for other categories. It makes the US central bank’s job of tackling soaring prices all the more difficult. “It’s going to be hard to say ‘we’ve got inflation under control’ if you still have shelter costs continuing to march higher,” said Sarah House, senior economist at Wells Fargo. She expects lofty rental inflation to persist until at least the end of the year, and despite some offsetting moderation in other goods and services, “that will complicate the task ahead for the Fed”.

Top officials pay close attention to housing-related inflation, given that it is such a significant component of overall inflation. By some estimates, shelter costs make up about a third of the consumer price index, which in June rose at an annual pace of 9.1 per cent, according to the Bureau of Labor Statistics, in what was the fastest such increase since November 1981. For the “core” measure, which strips out volatile items such as food and energy, it makes up over 40 per cent. Compared to the same time last year, rents rose 5.8 per cent after the biggest monthly jump since 1986 of 0.8 per cent. Owners’ equivalent rent, a measure of what homeowners believe their properties would rent for, rose 0.7 per cent. In all, shelter costs are up 5.6 per cent over the past 12 months, the most since 1991.

The larger-than-forecast acceleration has reset expectations about how quickly headline inflation can moderate this year and how much more monetary policy tightening may be forthcoming. The Fed has said it needs to see a clear deceleration in monthly inflation data before significantly slowing the pace at which it is raising interest rates. Forecasts for rent inflation hinge in large part on the trajectory of home prices, which surged during the pandemic as people reshuffled their lives in a new era of working from home, sought out less dense locales and took advantage of ultra-low mortgage rates. As more prospective buyers were priced out of the market, they turned to rental options. Now buyers are being priced out for a different reason. Home prices are beginning to moderate after hitting another record in June, according to data released by the National Association of Realtors on Wednesday. But the cost to finance that purchase through borrowing has skyrocketed as the Fed has jacked up interest rates. According to Realtor.com, the gap between monthly starter home ownership costs and rents has widened by roughly 25 percentage points, or nearly $500. In June alone, the NAR reported sales of previously owned homes were down 5.4 per cent, or 14 per cent from a year earlier. “People who have been priced out of the for-sale housing market are increasingly turning to the rental market and that also pushes up demand,” said Daryl Fairweather, chief economist at Redfin. Coupled with the fact that rental prices trail home price changes by about 18 months, Kathy Bostjancic, chief US economist at Oxford Economics, said rental inflation may not moderate until the second quarter of 2023.

Economists such as Ryan Wang at HSBC have revised higher their forecasts, pencilling in rental inflation on a year-over-year basis to top 7 per cent by early next year. “New leases are being contracted at much higher rent levels than before, and this is leading to increases in the overall universe of rents as measured in the CPI,” he said. Given the way BLS calculates the rent data, the broader inflation effects can also take time to show up in the official figures. Michael Pond, head of global inflation-linked research at Barclays, reckons the lag can be anywhere between six and nine months. In February, researchers at the Fed’s San Francisco branch estimated that current rental market trends would increase overall CPI inflation by an additional 1.1 percentage points in both 2022 and 2023, or 0.5 percentage points to the central bank’s preferred inflation gauge, the personal consumption expenditures index. So far, those predictions have held up.

What could help ease some of these pressures is increased housing supply, which the Biden administration is prioritising. But economists and housing experts say those efforts do little to alleviate the immediate problem. “We don’t have enough housing. Even if you’re building over half a million units,” said Danushka Nanayakkara-Skillington at the National Association of Home Builders. Soaring material costs for builders are also being passed down to tenants, she said.

Realtors and real estate investors are most wary of a recession, which economists predict next year, as the Fed follows through on its “unconditional” commitment to restoring price stability. For Tom Porcelli, an economist at RBC Capital Markets, housing is already likely “just at the beginning of a recession”. “We are in store for a period of stagnating economic growth because of the interest rate increases the Fed is doing,” added Redfin’s Fairweather. “That will drive down price growth for basically everything, including rent. But it will just take a while for that to trickle down.”'

https://www.ft.com/content/afdc756d-a6da-4482-8d9b-d9c22fdc8968?segmentI...

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nickca Monday, 25 Jul 2022 at 12:02pm

Article in todays Melbourne Paper suggests that Govt policy which gives more rights and “power” to renters may be inadvertently making things harder for tenants.Because it is driving landlords from the market, examples were the right to have pets, redecorate etc and the restrictions with regard to giving notice. The net outcome was less housing available to the marketplace.

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GuySmiley Monday, 25 Jul 2022 at 12:20pm
nickca wrote:

Article in todays Melbourne Paper suggests that Govt policy which gives more rights and “power” to renters may be inadvertently making things harder for tenants.Because it is driving landlords from the market, examples were the right to have pets, redecorate etc and the restrictions with regard to giving notice. The net outcome was less housing available to the marketplace.

It’s difficult to strike the right balance when the law assumes people of good faith will do the right thing but based on the last two years experience with the low life renters next door i favour fewer rights for tenants and their who gives a fuck landlords. Permanent owner occupier residents who have to put up with these scumbags should be the people with rights

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bonza Monday, 25 Jul 2022 at 12:43pm
nickca wrote:

Article in todays Melbourne Paper suggests that Govt policy which gives more rights and “power” to renters may be inadvertently making things harder for tenants.Because it is driving landlords from the market, examples were the right to have pets, redecorate etc and the restrictions with regard to giving notice. The net outcome was less housing available to the marketplace.

standard disinfo fluff piece for the property development / investor interest groups.

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AndyM Monday, 25 Jul 2022 at 12:44pm

Empathise with you GS, shit neighbours can turn things into a living hell.
And personally, I'd risk prosecution and make sure any potential tenant with a pet was excluded from consideration.

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Island Bay Monday, 25 Jul 2022 at 1:02pm

Welcome to NZ 2022:
https://www.nzherald.co.nz/nz/death-threats-and-abuse-whangarei-pensione...

PS, if you are not one of the 2% in NZ that speak Maori, Kainga Ora is Ministry of Housing.

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poo-man Monday, 25 Jul 2022 at 6:17pm
Island Bay wrote:

Welcome to NZ 2022:
https://www.nzherald.co.nz/nz/death-threats-and-abuse-whangarei-pensione...

PS, if you are not one of the 2% in NZ that speak Maori, Kainga Ora is Ministry of Housing.

Yep that stuff is absolutely appalling and the Kainga Ora people are doing nothing about it. Why should low lifes ever be allowed to stay in a place if they abuse the privilege?

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goofyfoot Monday, 25 Jul 2022 at 8:58pm

Where’s Jake the Muss when ya need him

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seeds Monday, 25 Jul 2022 at 9:30pm

I think Jake is the problem

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gsco Tuesday, 26 Jul 2022 at 6:59pm

Some interesting capital city house price graphs from Shane Oliver's twitter indicating that they are heavily impacted by lending standards and interest rates, and it seems that they've just had their worst monthly fall in at least 15 years.

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donweather Tuesday, 26 Jul 2022 at 9:52pm
gsco wrote:

Some interesting capital city house price graphs from Shane Oliver's twitter indicating that they are heavily impacted by lending standards and interest rates, and it seems that they've just had their worst monthly fall in at least 15 years.

Theres a lot more downside to come in 2023 and beyond.

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velocityjohnno Wednesday, 27 Jul 2022 at 5:04pm

Ah ya beat me to it: 6.1% inflation, at 1.35% or whatever we're a bit behind it...

Fed concludes tonight, and a Group Of People In A Room are about to determine the next move for the global economy...

I present: Inflation spectacular: what happens when shit goes wrong:

Eg Sri Lanka - terrible mismanagement/corruption/booming through an overload of cheap debt sees the country run out of money. Last I heard inflation has gone from 12% up to 55%.

Here's a link for that inflation figure

https://metro.co.uk/2022/07/08/sri-lanka-combats-55-inflation-with-inter...

Next up Turkey: when faced with inflation, you a) lower rates and sack the head of your central bank. In event a) does not work, repeat a).

https://www.abc.net.au/news/2022-07-27/turkeys-bold-interest-rates-exper...

Third, creator of more trillionaires than any other country, Zimbabwe. Their suffering began long ago, and here is a move as they claw their way out of a decade of destruction after their currency hyperinflated. Hopefully the start of a better future for the Zimbabweans.

https://www.abc.net.au/news/2022-07-25/zimbabwe-gold-coins-to-curb-infla...

And lastly, as I'm feeling didactic:

"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." - Ludwig von Mises

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Robwilliams Wednesday, 27 Jul 2022 at 9:15pm

Sad seeing Sri Lanka play out when you know the people deserve and want better. Exploited to ruin? Zim's a sad story of a country that never recovered it's soul from corruption from the top down. Mugabe ran his people into the ground through terror, neglect and offshore bank accounts and some help from outside influence. What was once the food bowl of Africa is a tyrants wreck. So many African countries have been fleeced by multinational companies that turn a blind eye to corruption to feather their nest. Sri Lanka is at a critical point in it's current history. Topple your tyrants.

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kaiser Wednesday, 27 Jul 2022 at 9:28pm

Now watch the fed go .75 higher and the s&p rally off it. We’re through the looking glass, there’s no doubt.

Buy on the rumour, buy more on the news

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velocityjohnno Saturday, 30 Jul 2022 at 4:21pm

Have a lookski at the yields charts on Aus 1 yr, 2yr, 3yr, 10yr on trading economics - notice anything??

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gsco Saturday, 30 Jul 2022 at 4:46pm

You mean yields appear to have peaked and have started to fall recently (and coincidentally the share market has been going up over the same period)?

Pretty sure I also noticed some inversion in various yield curves recently..

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freeride76 Saturday, 30 Jul 2022 at 7:07pm

Little drive around here confirmed all the houses that went to market last week had been sold during the week.

No slowdown here.

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AndyM Saturday, 30 Jul 2022 at 7:18pm

Neighbour's expecting somewhere around low 3's for his, dare say he'll go close.
Wet dream for the cashed up.

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velocityjohnno Saturday, 30 Jul 2022 at 7:43pm

Sort of. I thought I saw heads and shoulders.

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velocityjohnno Saturday, 30 Jul 2022 at 7:55pm

https://tradingeconomics.com/australia/calendar

the whole sidebar on the right is excellent, gives a good overview

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gsco Saturday, 30 Jul 2022 at 8:17pm

You're right, a classical head and shoulders in say the 2Y yield:

It could be considered to have just broken through the "neckline" and thus be very bearish for the yield (bullish for the bond price).

I should have known to look for a technical analysis pattern, knowing that you're into this stuff..!

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velocityjohnno Saturday, 30 Jul 2022 at 9:20pm

Yep you've got it. If you see lots of it at once, the predictive value of these can be quite high (let's make sure it completes properly here tho). I've got charts in old books with the same pattern forming and completing in stocks during the 1929 crash, we should remember that though human technology and society seem to change, human psychology not so much! Let's also remember whatever the bond yields fall, the RBA is still a long way short: an easy prediction would be for it all to meet 'somewhere in the middle'.

Edit: the other thing about these esoteric geek formations is you might see it today, but the effect of it will not be felt on the street for some months... must resist temptation to be yelling 'you're all doomed/saved!' into the crowds...

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Patrick Saturday, 30 Jul 2022 at 11:45pm
velocityjohnno wrote:

I've got charts in old books with the same pattern forming and completing in stocks during the 1929 crash, we should remember that though human technology and society seem to change, human psychology not so much!

Do you interpret the above chart as another crash about to happen then?

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donweather Monday, 1 Aug 2022 at 12:26pm

I’m no bond expert. Far from it. But I always thought low bond yields meant the stock market rallied and high bond yields the stock markets dumped.

So based on my simple assessment it that head and shoulders pattern comes off then yield will dump which means stock market should pump?

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gsco Monday, 1 Aug 2022 at 1:00pm

That seems to have been the case quite strongly since mid April this year:

Blue is ASX200 and green is Aus govt 10yr bond yields.

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burleigh Tuesday, 2 Aug 2022 at 2:32pm

Another rate rise just announced .5% that’s going to hurt a few

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velocityjohnno Tuesday, 2 Aug 2022 at 3:11pm

Hi Patrick I think Don and GSCO answered that one well, just note that the chart posted was bond yields, so inverse to the bond price. And bond markets are a different beast to stock markets if you meant 'crash' in those terms. So if the H&S tops complete, that's the bond yield topping for a period of time - means bond prices should go up. Question is, is the bond buying because of the recognition of inversions and people thinking recession will happen? Also we must recognise RBA is behind the steepening in the curves for now, so they may continue rising for a bit. Does that mean a crash?

Probably time to review predictions, a 10% fall in house prices (initially Syd/Melb, maybe on a delay the rest) - that seems on track to happen, for the cities at least. Dunno about around here, FR and Andy say Northern Rivers is still macking along. WA seems OK too from reports.

Predicted also 'dogs and cats living together' and we've seen those ladies peeling off the outer lettuce leaves and then taking them all - that's an obvious sign of the fraying of the edges of civilised society, so I can see evidence to support this and look keenly for more chaos. Also major event in the mud and celebrity no-shows at the after party...

Will I get to use the 'reject the recession' dancers again? I dunno, and saying that I really want to post them up when I see things at their nadir and begin to improve. But we've got to have an actual recession first! I don't know if this will happen, as much as I might want to see the cleansing of the system, writing off of bad debts, and recharging to faster growth rates coming out of one as new businesses form off a low cost base to do business. A 10% decrease in house prices after a 25-30% rise? That ain't a recession. A recession at historically low unemployment levels? Be keen to hear everyone's view.

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sypkan Tuesday, 2 Aug 2022 at 3:39pm

"A recession at historically low unemployment levels?"

you're starting to sound a little bit biden propagandaist there velocity...

that's not a recession!

'technical recession'?

the 'technical definition' of a recession has all of a sudden become very very rubbery...

amazing how political EVERYTHING has become... has economics also thrown objectivity out of the window as we swim in the post modernist maelstrom?

hate to out my boring life, but was watching bloomberg tv last night, there was a barage of commentators pretty much literally losing their shit because the fed had commented that there's signs that the recession that is not a recession is almost over...

was truly bizarre to see such dissent in their commentary

full aggresive

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channel-bottom Tuesday, 2 Aug 2022 at 3:54pm
velocityjohnno wrote:

Hi Patrick I think Don and GSCO answered that one well, just note that the chart posted was bond yields, so inverse to the bond price. And bond markets are a different beast to stock markets if you meant 'crash' in those terms. So if the H&S tops complete, that's the bond yield topping for a period of time - means bond prices should go up. Question is, is the bond buying because of the recognition of inversions and people thinking recession will happen? Also we must recognise RBA is behind the steepening in the curves for now, so they may continue rising for a bit. Does that mean a crash?

Probably time to review predictions, a 10% fall in house prices (initially Syd/Melb, maybe on a delay the rest) - that seems on track to happen, for the cities at least. Dunno about around here, FR and Andy say Northern Rivers is still macking along. WA seems OK too from reports.

Predicted also 'dogs and cats living together' and we've seen those ladies peeling off the outer lettuce leaves and then taking them all - that's an obvious sign of the fraying of the edges of civilised society, so I can see evidence to support this and look keenly for more chaos. Also major event in the mud and celebrity no-shows at the after party...

Will I get to use the 'reject the recession' dancers again? I dunno, and saying that I really want to post them up when I see things at their nadir and begin to improve. But we've got to have an actual recession first! I don't know if this will happen, as much as I might want to see the cleansing of the system, writing off of bad debts, and recharging to faster growth rates coming out of one as new businesses form off a low cost base to do business. A 10% decrease in house prices after a 25-30% rise? That ain't a recession. A recession at historically low unemployment levels? Be keen to hear everyone's view.

As usual, VJ, you're pretty accurate on this.

Example, Manly House Prices have increased 20.6% annually and 45.9% over 5 years. So what if they drop 10%, it's still 35.9% up over 5 years. Or 10% up on 2 years ago. Similar rises everywhere in Sydney.

The Reject the Recession Dancers is possibly the greatest video ever posted on Swellnet.

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AndyM Tuesday, 2 Aug 2022 at 3:58pm

I think the whole thing largely revolves around how you define a crash and also of course where you are.
Suffice to say that in Sydney prices would have to drop by over a quarter to be where they were only 18 months ago.
Easy come, easy go, but in the long term, especially considering the Australian population is expected to increase by 90% in the next 30 years, it seems that house prices will at least remain steady and should certainly increase in desirable areas (not at all saying that this is necessarily a good thing).

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velocityjohnno Tuesday, 2 Aug 2022 at 4:07pm

edit: reply to Sypkan

left is right and up is down
watch what they do, not what they say
the charts, they keep completing just as they always have

There is the incredible story of Homma the rice trader... From memory he spent 15 years analysing and creating the candles and understanding the patterns, then went and cornered the entire country's rice market. I read a beautiful piece on how he did it many years ago, but can't find that one easily on a search. The traderbros have discovered his legend in the meantime, and every two-bit traderbro blog will now have a piece on him, junking up the internet so I can't find the original, which described the 'how'.

Anyway a couple of links:

https://medium.com/@fncnewz/the-most-successful-price-action-trader-in-h...

notice he also set up an 'internet' of price information, lol

https://learnpriceaction.com/munehisa-homma/

please excuse the dudes placing their own slant on it at the end of their article...

gotta watch out for that msm TV sypkan
Ms has discovered 'how to make a sex room' on netflix

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velocityjohnno Tuesday, 2 Aug 2022 at 4:26pm

A further word on the Reject the Recession dancers Channels,

the most reputable link on YT has the dance dated May 18 2009... if we are to assume it aired at about the time it was posted...

A look at SPX (biggest index in the world) saw it complete the breach of a neckline of an inverse H&S in the week of 24/7/2009 (it's low was 666.79 in the week of 6/3/2009 for the conspiracy theorists...) - so - if the reject the recession dancers performed before this, they did so during the formation of this inverse head and shoulder pattern (at the breaking above the 30 week moving average on the right hand shoulder, to be precise)

so

the dancers actually did stop the recession in 2009.

Or that's one interpretation :)

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velocityjohnno Tuesday, 2 Aug 2022 at 4:47pm

"The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time."

https://www.abc.net.au/news/2022-08-02/reserve-bank-interest-rate-rise/1...

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velocityjohnno Tuesday, 2 Aug 2022 at 5:45pm

& found it, here is the original Homma rice story mentioned before, for those who are interested

https://www.forexalchemy.com/story-munehisa-homma-must-read-traders

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Patrick Tuesday, 2 Aug 2022 at 5:59pm

Thanks VJ & others.
Fyi ~ It seems to me the mullet trend has plateaued, perhaps even trending downwards. Just an observation, make of it what you will.

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kaiser Tuesday, 2 Aug 2022 at 8:32pm
velocityjohnno wrote:

A recession at historically low unemployment levels? Be keen to hear everyone's view.

Don’t forget the lag. Fed and RBA have clearly stated that inflation must go and will do whatever needed to curb. RBA already has catching up to do re rates. The genie will bring it on, and the unemployment rate may be the last to leave the station. Forward guidance is still super optimistic. I read a new term today - ‘hopium’ - who says economists aren’t funny?

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bonza Tuesday, 2 Aug 2022 at 9:37pm

the RBA also clearly said interest rates weren’t going to rise before 2024.
Most of the commentary that makes sense to me is that raising interest rates won’t do anything to help inflation as it’s supply driven. So why are the markets pushing for it and the RBA following? Real wages are declining not rising.. That statement from Lowe of reasoning was a crock of shit for raising the 1st time. I don’t get it. I don’t think they do either.
I think the only thing they understand is “fear and greed…not logical thought processes like most assumed”. As per Homa VJs link.

Now that the RBA and governments have facilitated their last big round of wealth transfer to the wealthy through the pandemic it’s almost like they now want those freshies with recently acquired mortgages who followed their advice to fail.

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sypkan Tuesday, 2 Aug 2022 at 10:16pm

"the RBA also clearly said interest rates weren’t going to rise before 2024.
Most of the commentary that makes sense to me is that raising interest rates won’t do anything to help inflation as it’s supply driven. So why are the markets pushing for it and the RBA following? Real wages are declining not rising.. That statement from Lowe of reasoning was a crock of shit for raising the 1st time. I don’t get it. I don’t think they do either."

I don't think they do either...

but, we are in totally unchartered waters... after 15 years of money printing - a stop gap measure that was unthinkable not that long ago - that went for 15 years!!

they are either deers in headlights...

or, unprecedented circumstaces and shameless self interest has clouded centuries of economic theory...

"...I think the only thing they understand is “fear and greed…not logical thought processes like most assumed”. As per Homa VJs link..."

yep

"...Now that the RBA and governments have facilitated their last big round of wealth transfer to the wealthy through the pandemic it’s almost like they now want those freshies with recently acquired mortgages who followed their advice to fail."

a form of pump and dump in the housing market?

a form of pump... and force the plebs to dump... then the blackrock's come in and clean up... completing the biggest wealth transfer ever!

on top of a couple of recently already undertaken biggest wealth transfers ever...

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monkeyboy Wednesday, 3 Aug 2022 at 1:56pm

Who remembers this argument - approximately 3 years ago and why we have to have low or negative interest rates

"Deflation discourages spending and investment because consumers, expecting prices to fall further, delay purchases, preferring instead to save and wait for even lower prices. Decreased spending, in turn, lowers company sales and profits, which eventually increases unemployment…"

Now this is the new argument expounding the virtues of inflation and why we have to increase interest rates:

"people spend less when things get more expensive, which encourages businesses to run down their inventories and cut back on capital expenditures, and, eventually, causes them to start firing their workers."

I'm struggling to see the difference but I'd prefer lower prices.

Lifted in part from here (2015):

https://www.ft.com/content/689de921-caaa-3659-829e-e36a0baf0c5b

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velocityjohnno Wednesday, 3 Aug 2022 at 7:57pm

Common theme is they are terrified you will spend less.

Related:

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bonza Wednesday, 3 Aug 2022 at 8:37pm

“Mr Fraser said…there was very little scientific literature around in 1993,”

“Stiglitz responded: “First let me say, where did that number 2 to 3 per cent come from? It was pulled out of the thin air. “

https://www.afr.com/policy/economy/how-a-nobel-laureate-got-australian-e...

Fuck I find this infuriating