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Baddog posted:I remember having a discussion with someone about 18 months ago where "8% mortgages would break everything!" was discussed. But we're almost there now, and attitudes have all been adjusted. Almost there for marginal rates, but the average mortgage rate paid is still very very low: 
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Aug 28, 2023 18:40
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The average rate paid, so inclusive of everyone who got a mortgage previously? That's the tralingest of trailing indicators I've ever seen, congrats.
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Aug 28, 2023 19:02
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My point was its difficult for "8% mortgages" to break everything when so few people are paying that much.
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Aug 28, 2023 19:13
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They can break everything if "everything" is the current housing market, in which any new buyer has to borrow at current rates. That a lot of homeowners are paying 3% is sort of the point, they can't sell and rebuy in the same market and maybe not even in a cheaper market if the higher rate eats up whatever the difference would be in pricing, so supply of homes for sale dries up too. New starts could also go down due to very high borrowing rates and any anxiety about the market next year. If "everything" is the entire US economy? Then yeah, no, I don't think a slowdown in housing starts and contraction of the housing market necessarily forces a recession. Unemployment is the most important driver of recession and as long as unemployment seems to be staying very low I'm predicting no recession.
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Aug 28, 2023 19:35
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drk posted:My point was its difficult for "8% mortgages" to break everything when so few people are paying that much. Well, we're specifically talking about home buyers, not necessarily home-owners. Folks who got their 2.5% locked in for the remaining 28 years of their mortgage on the house that they plan to stay in until it is paid off are indeed feeling pretty good about life. But people who want to either buy in or trade up to a bigger home are certainly facing the fact that they're gonna pay a lot more for their mortgage. That said, I think that will have more of an effect on people who currently have low-interest mortgages and decide to stay put in houses they might be outgrowing. I don't think it will stop people who are currently renting and looking to buy their first home. The real issue is how much the people unable/unwilling to trade up will disrupt the market. Normally your first-time buyers are buying their homes from the people who are trading up. New construction tends to cater to the higher ends of the market for exactly this reason. Housing starts are flatter than you might expect, given how hot the real estate markets remain...  So are we going to see a shift over the next few years where there are more low-end units built to cater to people ready to buy their first home but finding a lack of "starter homes" on the market? That's the kind of change that would take years for developers to implement, so they would probably need to see that the market is going to stay this hot and that interest rates are going to stay this high.
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Aug 28, 2023 19:40
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I think it's important to note that housing starts are not only sensitive to predictions about the upcoming market conditions for new home sales, but also just a capital-intensive business to begin with. Even if a developer can pre-sell some homes with deposits, they still need a big whack of cash to purchase a hunk of land, prepare it, install infrastructure, and then build a hundred homes on it. They borrow that money and as rates rise, they're borrowing at higher rates. As wages rise, they're paying higher wages in a labor-intensive business as well. They have to predict significantly high profit margins to make the whole thing worth while and they have to find the money. A lack of supply into a growing population puts pressure on both home prices and rents, which can drive future inflation, which drives higher rates from the fed...
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Aug 28, 2023 19:46
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LanceHunter posted:
Just anecdotally, I believe a lot of in-flight stuff gets shifted significantly just by downgrading trim and some materials. Houses from 600-800K become 400-600 pretty quickly. And I thought this new development north of me was going to be sort of medium-end, but they appear to now be throwing down 4 unit townhomes. Ton of apartment buildings going up as well (backed up by this chart), which aren't getting reflected in the housing starts. https://fred.stlouisfed.org/series/ETOTALUSQ176N Complicated picture.
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Aug 28, 2023 19:56
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LanceHunter posted:
My prediction is that in the next decade or so we're going to see a mini-construction boom in housing renovations. People who have to move to a whole new region are going to bite the bullet and get a higher mortgage because presumably their new job in NY pays enough to make abandoning their 2.5% mortgage in TX worthwhile, but people who normally would have bought a new, bigger house in the same zip code as their family gets larger aren't going to want to do that. If you've got a 2020 2.5% mortgage on a 2br/1bath 1500sqft house that you bought as a couple of pandemic DINKs, it might make more sense in 2030 to get a HELOC and build an addition to it when kid #2 gets old enough that they really need their own room rather than take on an entire new mortgage at 8% or whatever.
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Aug 28, 2023 21:34
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Yeah to quote my distant high school buddy who has two kids approaching middle school age quote:we may be putting in a pool next year. we were hoping to move but I ain't giving up my 3.25 interest rate. we had our agent run some numbers. to get a house at the size and amenities we want, at current rates... we'd be looking at 2000 more a month... and that's before insurance and taxes
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Aug 28, 2023 21:43
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and california has statewide law that you can do an ADU in your SFH, overriding local restrictions, so there's already a huge boom of ADU upgrades here.
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Aug 29, 2023 00:23
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Cyrano4747 posted:My prediction is that in the next decade or so we're going to see a mini-construction boom in housing renovations. People who have to move to a whole new region are going to bite the bullet and get a higher mortgage because presumably their new job in NY pays enough to make abandoning their 2.5% mortgage in TX worthwhile, but people who normally would have bought a new, bigger house in the same zip code as their family gets larger aren't going to want to do that. I think we’re also going to see a lot of environmental/sustainability-based renovations, ramping up solar on private homes, things like that on an individual level, and (hopefully) bigger renovations to be cleaner for commercial and industrial as well. The news reports coming one year after the IRA are showing it’s spurred a lot of investment, but I don’t think the story is ending with EV battery and charger factories only.
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Aug 29, 2023 03:13
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In previous rate spikes, you didn’t have private equity around to catch the knife when housing prices fell. That’s changed, meaning rates have to stay at 8% for a while before sentiment begins to turn. Housing should be down in value, but with enough “long-term” thinking investors, we won’t see the expected drop.
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Aug 29, 2023 21:20
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street doc posted:In previous rate spikes, you didn’t have private equity around to catch the knife when housing prices fell. That’s changed, meaning rates have to stay at 8% for a while before sentiment begins to turn. Housing should be down in value, but with enough “long-term” thinking investors, we won’t see the expected drop. There hasn’t been a rate spike since the 80s, and PE is not locking in SFHs when the Fed says we’re almost a quarter point away from the peak. The main reason housing isn’t down in value is because most potential sellers can’t afford to move.
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Aug 29, 2023 21:51
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hypnophant posted:The main reason housing isn’t down in value is because most potential sellers can’t afford to move. Looking forward to refinancing my 6.25% mortgage when the Fed loses that Mexican standoff and lowers rates to 4.99 for exactly one quarter*  *in like, 18 months; definitely not any time soon
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Aug 29, 2023 22:07
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Hadlock posted:Looking forward to refinancing my 6.25% mortgage when the Fed loses that Mexican standoff and lowers rates to 4.99 for exactly one quarter* Gotta admit, it's pretty nice to not get refinance spam all the time from banks now. 
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Aug 29, 2023 22:18
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I'm a bit confused by some statistics I found. The total amounts of money held in saving accounts in the Unitesd States is supposedly about 800 billion, whereas in Belgium this same statistic is 330 billion dollar. So despite the USA having a way higher average wealth per capita (almost double), the average Belgium has 10 times more money on their saving accounts than the average American. Is there an easy explanation for that or am I reading my sources* wrong? Most likely explanation I can think of is that the USA wealth is much more concentrated, combined with the idea that the amount of money rich people keep on saving accounts is very limited. Or is there another explanation? Perhaps it's also something cultural. Reason why I encountered that statistic is by reading about the most recent government bond the Belgium government issued. It's incredibly successful already, mostly because the government promotes it by saying "we lowered the tax rate on this 1 year bond to punish the banks for not increasing their interest rate!". This got the banks to start complaining about the bond being unfair competition, and I can't imagine a better way to get a population to buy a financial instrument than that. *) Sources: https://www.forbes.com/advisor/banking/savings/american-savings-statistics/#:~:text=Key%20Facts,personal%20income)%20was%204.1%25. https://www.brusselstimes.com/367911/over-e300-billion-stashed-away-in-belgians-savings-accounts https://edition.cnn.com/2023/06/08/...20data%20shows.
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Aug 30, 2023 00:10
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Savings accounts are M1 while bonds are M2, the second article talks specifically about bonds whereas the first article talks about interest rates in savings accounts which are M1. So let's clarify what you're talking about General consensus is that you want a 6 month emergency fund. Once you get beyond 12-18 month emergency fund you're kind of kneecapping yourself, money in savings accounts and bonds are typically very low yield and you're better off picking something like an index fund.
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Aug 30, 2023 00:22
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The wealth concentration and savings pattern is also part of it. It’s not like tons of poor Americans are holding bonds and not savings or HYSAs.
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Aug 30, 2023 00:38
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Walh Hara posted:I'm a bit confused by some statistics I found. The total amounts of money held in saving accounts in the Unitesd States is supposedly about 800 billion, whereas in Belgium this same statistic is 330 billion dollar. So despite the USA having a way higher average wealth per capita (almost double), the average Belgium has 10 times more money on their saving accounts than the average American. Is there an easy explanation for that or am I reading my sources* wrong? I think the Forbes number is the personal savings rate per year - i.e. Americans saved 800b in 2022. Whereas the Belgium number is the total wealth sitting in savings accounts. E.g https://fred.stlouisfed.org/series/PSAVE#:~:text=(a)%20Personal%20Saving%2C%20Billions,Change%2C%20Billions%20of%20Dollars this is an annualized rate It's hard to figure out what the belgian sources say because they are all flemmy esquilax fucked around with this message at 00:48 on Aug 30, 2023 |
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Aug 30, 2023 00:39
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I'd be curious about the extent to which Belgium's postal banking system might play a role. What percentage of the population is unbanked compared to the US at ~4.5%? The unbanked probably wouldn't be contributing a particularly sizeable chunk as they skew toward the impoverished, but just having accessible banking options in early Iife probably contributes to a higher per capita savings rate?
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Aug 30, 2023 00:48
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esquilax posted:I think the Forbes number is the personal savings rate per year - i.e. Americans saved 800b in 2022. Whereas the Belgium number is the total wealth sitting in savings accounts. Aha, that must be it! I really should have realized this myself, thanks for helping. Walh Hara fucked around with this message at 00:56 on Aug 30, 2023 |
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Aug 30, 2023 00:50
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Walh Hara posted:I'm a bit confused by some statistics I found. The total amounts of money held in saving accounts in the Unitesd States is supposedly about 800 billion, whereas in Belgium this same statistic is 330 billion dollar. So despite the USA having a way higher average wealth per capita (almost double), the average Belgium has 10 times more money on their saving accounts than the average American. Is there an easy explanation for that or am I reading my sources* wrong? I don’t remember where I saw this statistic but the European financial system is much more reliant on just regular bank savings accounts. Americans tend to have better access to financial products like 401ks, even at lower income levels, than their European counterparts, and so keep less money in savings accounts at banks.
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Aug 30, 2023 03:55
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Did that stat include checking accounts? I bet a lot of people have theirs in checking instead of plain savings, if those are treated differently.
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Aug 30, 2023 04:06
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Checking and savings are both part of M1, as is cash
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Aug 30, 2023 06:05
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https://www.bloomberg.com/news/newsletters/2023-08-29/china-reaches-peak-gasoline-in-milestone-for-electric-vehicles quote:expecting gasoline demand in China to peak this year, two years earlier than its previous outlooks. Might also explain why China has been totally silent about building a new pipeline to Russia. By the time it would be finished, there would be zero demand I expect the rest of BRICS and similar economies to be 5-7 years behind China in electric adoption? Battery prices will have to come down more. Pretty interesting to see countries being energy independent in our lifetime due to solar and wind. What is everyone going to squabble over? Fresh water I guess There's a blurb about heavy diesel vehicles still hanging on for the interm
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Sep 5, 2023 10:15
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Hadlock posted:I expect the rest of BRICS and similar economies to be 5-7 years behind China in electric adoption? Battery prices will have to come down more. Pretty interesting to see countries being energy independent in our lifetime due to solar and wind. What is everyone going to squabble over? Fresh water I guess The others are more scattered, both in passenger cars and trucks. China has really pushed this forward with their incentives from 2017-22, and it’s almost past the point where they need the incentives to have commercial vehicles be price competitive (certainly TCO competitive) with diesel. Russia, no clue. India is trying to push into EVs but also has some protection around the industry and material sourcing. Brazil isn’t as organized but some cities are trying to push for bus/trucks. Again, though, Brazil has a very protected auto/truck industry as well. South Africa is a smaller market and trailing others, so you might see passenger cars there but trucks and buses will trail. The other nations that the BRICS included last month are all oil-rich but rich enough to pay for a transition if they desire. I’ve seen news of some pilot projects but nothing about huge transitions there yet.
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Sep 5, 2023 12:12
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Any time anyone says "BRICS will do X" it's wise to be skeptical. Even just taking the core It's worth remembering how BRIC(S) came about : A GS dude in 2001 identified the core four as fast growing economies that were likely to dominate the global economy by 2050. This was a bit of a Take at the time and was also designed (GS, remember) to spur various investments. Then, post hoc, the countries later decided that it was a good idea to coordinate further. I doubt you would see the level of (attempted) coordination among these countries had O'Neill's paper not made the cultural zeitgeist. Edit: "BRICS and similar economies" is meaningless - the differences between the five economies in the second BRIC(S) grouping are vast.
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Sep 5, 2023 13:30
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KYOON GRIFFEY JR posted:Any time anyone says "BRICS will do X" it's wise to be skeptical. Even just taking the core Sure, but I do think there's something to be said for the BRICS - however you want to name them - being an identifiable grouping of countries that are trying to operate outside what I'm going to just hand-wave as the Bretton Woods economic system. Much Bretton Woods is largely defined by the US economy and how people interact with it, the BRICS system is pretty dependent on China. I don't have a solid thesis on any of this, but to my eyes there's definitely a there, there. If you're a developing country that wants financial aid (whether to build roads or a corrupt prestige project for the leadership) there's an alternative now to sucking up to DC, the IMF, etc. Is it a good alternative? Probably depends on what your priorities are. In a lot of ways it's a return to the Cold War system where Moscow provided a plausible alternative source of economic aid as well.
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Sep 5, 2023 13:57
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I think that alternative exists separately from any of the BRICS institutions. China does far more development investment outside of BRICS institutions than within it. Exim, CDB and Silk Road all dwarf the New Development Bank. If Russia, India, Brazil, and RSA (lmao) all disappeared there would still be an equally financially credible alternative to the US-aligned economic order. Now, politically BRICS is probably useful to China in that it allows for top cover for development investment where you're not just a developing country giving concessions to China in return for investment, but the financials aren't functionally different as a result. And for the other countries it allows them to ride the coat-tails of the Chinese economic engine to a degree. But I question whether it's going to move policy in a meaningful way in each of the member countries. To give you a sense of how strong cooperation is across BRICS countries: one of the major goals is to set up a credible alternative to SWIFT for international banking. It's been so successful that four alternatives to SWIFT have been established, one by each of the economies that matter in the group.
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Sep 5, 2023 14:14
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KYOON GRIFFEY JR posted:But I question whether it's going to move policy in a meaningful way in each of the member countries. The more or less explicit position of at least Russia, China, and India - and many of the other prominent countries interested in BRICS+, and probably also many of the Western commentators who are getting excited about BRICS - is that international institutions should provide a forum for commercial/financial ties only, and have no business trying to influence member states' policies on economic development, let alone human rights, political freedom, transparency, etc. It's more plausible that whatever BRICS institutions arise will deliberately avoid any open structural influence on policy as it's exerted by the UNHRC, IMF, and other international institutions. Cyrano4747 posted:what I'm going to just hand-wave as the Bretton Woods economic system. Much Bretton Woods is largely defined by the US economy and how people interact with it I think better terms for this in the modern era are just "the UN" or "the system of global trade". The Bretton Woods system is entirely dead and the institutions it spawned are part of the UN now.
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Sep 5, 2023 17:42
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hypnophant posted:The more or less explicit position of at least Russia, China, and India - and many of the other prominent countries interested in BRICS+, and probably also many of the Western commentators who are getting excited about BRICS - is that international institutions should provide a forum for commercial/financial ties only, and have no business trying to influence member states' policies on economic development, let alone human rights, political freedom, transparency, etc. It's more plausible that whatever BRICS institutions arise will deliberately avoid any open structural influence on policy as it's exerted by the UNHRC, IMF, and other international institutions. Right, which is why I think things like this are silly: Hadlock posted:I expect the rest of BRICS and similar economies to be 5-7 years behind China in electric adoption? That's an internal policy matter for each of those countries and the economic and political conditions supporting EV adoption in each of those countries are very different, as harperdc summarized very well.
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Sep 5, 2023 17:51
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The government providing incentives to business is important for initial adoption, bootstrapping, etc; the conclusion I came to looking at that graph is that not only have we reached critical mass for industry to start building large optimized factories to support EV components, but it's causing fuel consumption growth to stagnate and actually reduce overall consumption. This was the big win everyone was looking for, a measurable decrease in fossil fuels This implies to me that EVs can stand on their own economically and businesses will choose them over ICE when and where they're cheaper, and will become economical to use over ICE vehicles in the near future for other countries as well
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Sep 5, 2023 20:12
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The Chinese government is still shoveling money at customer incentives for NEVs to the tune of 30,000rmb per car. Fossil fuel consumption decreasing does not inherently mean that EVs are cheaper than ICE vehicles without the incentives.
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Sep 5, 2023 20:17
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prc government knows that continued oil dependence means opec and the usa would have them by the balls. so even if it were 100% geopolitical reasons only they would do it
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Sep 5, 2023 20:29
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Hadlock posted:The government providing incentives to business is important for initial adoption, bootstrapping, etc; the conclusion I came to looking at that graph is that not only have we reached critical mass for industry to start building large optimized factories to support EV components, but it's causing fuel consumption growth to stagnate and actually reduce overall consumption. This was the big win everyone was looking for, a measurable decrease in fossil fuels This has already started in the US in the last few years + (literally), as a net oil exporter. Oil demand isn't going up anywhere in the USA, effectively. It's what makes me question why OPEC is constantly trying to support higher oil prices when negotiating with the US, etc. Ref: https://wolfstreet.com/2023/09/05/c...roduction-cuts/ notwithoutmyanus fucked around with this message at 13:03 on Sep 7, 2023 |
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Sep 7, 2023 13:01
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notwithoutmyanus posted:This has already started in the US in the last few years + (literally), as a net oil exporter. Oil demand isn't going up anywhere in the USA, effectively. It's what makes me question why OPEC is constantly trying to support higher oil prices when negotiating with the US, etc. Ref: https://wolfstreet.com/2023/09/05/c...roduction-cuts/ Oil and Gas nations or whatever you want to call them desperately need to diversify but in the meanwhile they absolutely have to get as much money as possible out of each drop until it's game over. Saudi Arabia's mega projects are good examples of why they need they cash otherwise it's going to fail or never complete. The SA energy minister Abdulaziz bin Salman if my memory serves me has done some great interviews on FT and Bloomberg on how they are trying to maximize their profits.
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Sep 7, 2023 14:02
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https://arstechnica.com/gadgets/2023/09/new-huawei-soc-features-processor-cores-designed-in-house/quote:Analysis of the main chip inside the Mate 60 Pro smartphone, which launched at the end of last month and immediately sold out, reveals that Huawei has joined the elite group of Big Tech companies capable of designing their own semiconductors. I've seen some sources imply this new chip shows Joe Biden's Sanctions Aren't Working, but to me it seems like this is the intended effect: Chinese companies have to switch to domestic chip production, at a lower level of performance and presumably higher economic cost. I don't think anyone expected the sanctions would totally prevent any new domestic chip development in China. Anyone have a different take? How big of a deal is this?
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Sep 20, 2023 15:11
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ASML dragged their god drat feet to sell as much 6nm equipment as possible to China. Now China can sell decent CPUs, they’ll have a very positive profit cycle to fuel future development.
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Sep 20, 2023 17:50
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China started in house production of the Allwinner A10 back in... 2010? First reference I can find online about it being commercially available is 2011. This was an ARM licensed single core design (very) roughly comparable to a first generation raspberry pi with 1080p@30fps output capable. Like early 2000s pentium 3 very very roughly. I like to think of it as the Chinese solution to "if we stopped trading externally, could we still build computers that would allow us to build progressively better computers?" Shortly after they started on the H series which was a quad core so it ramped up quickly. I think he A , D and H series CPU were mostly straight up copies though. I guess where I'm going with this is, China was going to design their own chip eventually. There's a bunch of both low power Arduino style (which are backwards compatible with the .... M3? ARM instruction set going back to the 1980s) and med-low desktop style RISC-V CPUs coming out of China now. It's kind of funny because Berkeley designed and released the RISC-V instruction set for free and will (more than 50%, guess) become the bedrock of Chinese cpu design That speculation aside, seems like China was going to catch up with the US and Taiwan within a decade, the highly specialized lithography machines coming out of Europe (Netherlands ?) are the lynchpin of the industry and we've stopped export to China so that will slow them down, but as far as competitors who are experts in reverse engineering tech is China I feel we bought 10 years by freezing CPU mfg technology exports but we've accelerated their need to develop the technology. My guess is China was reliant on some specific chip for their ICBM or radar technology and we decided to cut them off wholesale
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Sep 20, 2023 18:14
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The Fed has decided against raising rates again right now.
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Sep 20, 2023 19:07
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