Love the whole discourse as laid out by you above. Especially appreciate the CS ISM levels 1-pager. I am going to save that one for future reference.
RE: European energy crisis, there seems to be more upside risk at this point. Short term pain for European countries perhaps through end Winter. However if we get a spark of good news on the Ukraine war front, this could bring energy commodity prices crashing.
I agree that at this point, the news cannot get worse. We are already seeing some steps taken to alleviate the problem. This is the type of catalyst that doesn't become positive, but the non-negative, which happens at some point, can propel assets higher. Let's se3 what Germany and France decide to do
The article was going so well. I was thinking, boy I agree with much of this. Then all of a sudden it came, the reference to a "Lehman moment" and suddenly I needed to reach for Diazepram. My takeaway is the market is extremely dangerous--does their need to be a cathartic moment? Should one wait for the Sept seasonal to play out? Or given sentiment and positioning, there is a pop coming. In the end I am going for the later, but honestly it seems hard to argue with the HOPE theory of ISM 40 and a much larger bear market and in the back of mind I keep thinking about the difference between volatility and uncertainty and think the latter is probably psyhco, and am not ruling out an 85% decline in stocks as the cult of equity is first challenged, and then the whole passive bubble gets unwound. Is this most probable, definitely not, but you think about it when energy gets weaponized and we go in the Zoltan multi-polar world, extreme political polilarization, robots taking jobs, and climate change , blah, blah, blah....
Fair point about the 'Lehman moment' for European energy. That is clearly hyperbolic. However, there is stress in that situation that requires ot at least will get some element of govt intervention which is usually not a positive
Its a very good point and something we certainly saw in the years post GFC. It is especially the case in cities like NYC, Chicago, San Fran where people may be working but know they want the flexibility to leave for a new job and get out of a high tax regime. This changed somewhat in a work from home world where the same transient workers could do their job from anywhere. I think one of the things weighing on housing is the lack of clarity on whether employees have to go back into the office or need to find a new job if they do not want to. On the flip side of all of this is the secular uptrend in household formation which is slow-moving and predictable and suggests any downturn in housing is cyclical and short-lived .
Waller from St Louis has an interesting theory about the 4 year cohort most likely to buy a house 30-34, being the largest 4yr demographic and in comparision to previous eras the share of this cohort that actually owns a house is all time low. Add to this that it will be hard to really assess longer term impact on WFH and btw its not 2008 in terms of leverage, limiting downside as consumers are much less leveraged and banks are super safe, although thier share of mortgage financing has dramatically decline, so we probably need more clarity on the shadow banking lenders who have taken up the slack who btw are loosely regulated, being outside the purview of the Fed
Love the whole discourse as laid out by you above. Especially appreciate the CS ISM levels 1-pager. I am going to save that one for future reference.
RE: European energy crisis, there seems to be more upside risk at this point. Short term pain for European countries perhaps through end Winter. However if we get a spark of good news on the Ukraine war front, this could bring energy commodity prices crashing.
I agree that at this point, the news cannot get worse. We are already seeing some steps taken to alleviate the problem. This is the type of catalyst that doesn't become positive, but the non-negative, which happens at some point, can propel assets higher. Let's se3 what Germany and France decide to do
The article was going so well. I was thinking, boy I agree with much of this. Then all of a sudden it came, the reference to a "Lehman moment" and suddenly I needed to reach for Diazepram. My takeaway is the market is extremely dangerous--does their need to be a cathartic moment? Should one wait for the Sept seasonal to play out? Or given sentiment and positioning, there is a pop coming. In the end I am going for the later, but honestly it seems hard to argue with the HOPE theory of ISM 40 and a much larger bear market and in the back of mind I keep thinking about the difference between volatility and uncertainty and think the latter is probably psyhco, and am not ruling out an 85% decline in stocks as the cult of equity is first challenged, and then the whole passive bubble gets unwound. Is this most probable, definitely not, but you think about it when energy gets weaponized and we go in the Zoltan multi-polar world, extreme political polilarization, robots taking jobs, and climate change , blah, blah, blah....
Fair point about the 'Lehman moment' for European energy. That is clearly hyperbolic. However, there is stress in that situation that requires ot at least will get some element of govt intervention which is usually not a positive
How much of the housing malaise can we write off to a transient workforce that prefers renting over owning?
Its a very good point and something we certainly saw in the years post GFC. It is especially the case in cities like NYC, Chicago, San Fran where people may be working but know they want the flexibility to leave for a new job and get out of a high tax regime. This changed somewhat in a work from home world where the same transient workers could do their job from anywhere. I think one of the things weighing on housing is the lack of clarity on whether employees have to go back into the office or need to find a new job if they do not want to. On the flip side of all of this is the secular uptrend in household formation which is slow-moving and predictable and suggests any downturn in housing is cyclical and short-lived .
Waller from St Louis has an interesting theory about the 4 year cohort most likely to buy a house 30-34, being the largest 4yr demographic and in comparision to previous eras the share of this cohort that actually owns a house is all time low. Add to this that it will be hard to really assess longer term impact on WFH and btw its not 2008 in terms of leverage, limiting downside as consumers are much less leveraged and banks are super safe, although thier share of mortgage financing has dramatically decline, so we probably need more clarity on the shadow banking lenders who have taken up the slack who btw are loosely regulated, being outside the purview of the Fed
I agree. If jobs hold up and mortgage rates stabilize, we may have already seen the lows on housing.