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KYOON GRIFFEY JR posted:Economics Thread: You aren't the first macro genius to think about how to measure the economy Decent thread title contender
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Apr 9, 2024 17:05
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street doc posted:If I go from genetic engineer to Grubhub driver I’m still earning income. But in latter times before McJobs, full time employees were either employed or unemployed with little gray area. This is captured by average worker wages, not unemployment data. I have good news!  https://fred.stlouisfed.org/series/LES1252881600Q quote:I think the feedback loop for the Fed has stopped working altogether. This statement is not connected to the first two sentences you typed. The feedback loop for the Fed is about controlling inflation. Inflation is tracked by the CPI, not wages or employment. The Fed, explicitly, is willing to accept an increase in unemployment in order to slow down inflation: however, remarkably, the rapid increase in rates over the last two years has failed to produce a recession or a spike in unemployment. This suggests that what the Fed is doing is working, actually. What you want maybe is higher wages and lower unemployment, and that's cool, I want that too. But the Fed's mandate is not to pursue that goal, it's to pursue carefully controlled inflation first and foremost, under the economic theory that a low but positive rate of inflation tends to lead to a stable economy that works better for everyone. Job growth is part of that plan but it's supposed to be an effect of the stable low inflation, not a goal to the exclusion of inflationary concerns. In my opinion based on the data of the last two years, the feedback loop for the Fed is working spectacularly well. quote:Especially with AI on the horizon to gently caress the average worker, they should be cutting rates. The Fed cannot and absolutely should not anticipate some future theorized threat to the economy and cut rates in advance of it. Economists, famously, have predicted 9 out of the last 5 recessions. AI is a technology with a lot of promise and a significant potential to disrupt more than one industry, but it remains to be seen what actually happens, separate from the absurd levels of hype we're currently being blasted with. quote:Most of the inflation has been by predatory price fixing anyway, not worker inflation. quote:Currently there are zero CEOs serving time for collusion. Zero. quote:If you want lower inflation, maybe actually enforce some laws? Somehow nation-wide collusion on rental pricing isn’t actually illegal because ‘computers’. https://www.youtube.com/watch?v=oaDTiWaYfcM That said, I don't think fixing this poo poo will have any appreciable affect on inflation or jobs. There are numerous factors that affect rents, and this is just one of them, and even if rents overall go down, rent is only one of several important components of the CPI. quote:Get ready for an actual recession, AND more use of the phrase ‘jobless recovery’. Be specific. Tell us when exactly you expect the next recession and let's make a bet.
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Apr 9, 2024 19:34
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The US Fed does have a dual mandate of low inflation and full employment, but they do prioritize stable prices over employment for sure.
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Apr 9, 2024 20:14
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Leperflesh posted:The Fed cannot and absolutely should not anticipate some future theorized threat to the economy and cut rates in advance of it. Economists, famously, have predicted 9 out of the last 5 recessions. AI is a technology with a lot of promise and a significant potential to disrupt more than one industry, but it remains to be seen what actually happens, separate from the absurd levels of hype we're currently being blasted with. Monetary policy is one of the worst tools to react to (anticipated) technological and societal developments. I do wonder if we are seeing increased emphasis on the role of monetary policy as a tool because the entire regulatory environment is hosed and the legislative branch is dysfunctional. At least the Fed can actually take actions. (I am not advocating for them to do so)
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Apr 9, 2024 20:26
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I notice people screaming about the Fed when they're suffering, and that sorta makes sense because what the Fed does is actually pretty comprehensible: raising or lowering rates, which has a direct effect that people can see on their bank accounts and credit cards. Whereas the economic tomfoolery that comes out of congress is labyrinthine and obscure. The Fed chair says they're raising rates by a quarter and that means your borrowing costs just went up and that hurts right in the pocket. That the Fed has been over the last four years an incredibly successful agency that may have saved us from the recession that most every other big country is currently reeling from is just not a message that people want to hear when they want to be mad at someone.
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Apr 9, 2024 20:29
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KYOON GRIFFEY JR posted:Monetary policy is one of the worst tools to react to (anticipated) technological and societal developments. I do wonder if we are seeing increased emphasis on the role of monetary policy as a tool because the entire regulatory environment is hosed and the legislative branch is dysfunctional. At least the Fed can actually take actions. (I am not advocating for them to do so) Yes, it's 100% this. The fed has a couple of levers that aren't always the right solution but at least it's something, and importantly it's something that can be acted on without congress. This is part of a bad trend in all sorts of areas where things that should be done legislatively are being handled with existing tools that aren't quite suited to the task because the legislative process is completely hosed.
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Apr 9, 2024 20:35
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When people talk about massive job losses due to AI, I'm reminded of the scare pieces coming out in the mid-2010s about how self-driving cars were going to cause mass unemployment. Check out some of the bangers in this CNBC piece from 2017:quote:When autonomous vehicle saturation peaks, U.S. drivers could see job losses at a rate of 25,000 a month, or 300,000 a year, according to a report from Goldman Sachs Economics Research.
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Apr 9, 2024 22:21
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Hadlock posted:
FTFY
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Apr 9, 2024 22:22
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Going back to the telework discussion, a big part of it is the local commuting and housing market. If your commute is shorter and more comfortable but your house is smaller, coming to the office doesn't sound so bad compared to squeezing in new office into your living quarters. If you commute straight into rush hour gridlock hell in a car, but live in a relatively larger house, work from home is a no brainer. This is why there's already clear gaps in telework between the US and much of the EU. I'd happily come to the office every day if biking in to work was reasonable.
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Apr 10, 2024 00:33
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CPI number is out. Seems like folks aren't happy with it... NY Times (free link) posted:Inflation was quicker than expected in March, likely unwelcome news for the Fed. LanceHunter fucked around with this message at 13:55 on Apr 10, 2024 |
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Apr 10, 2024 13:38
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I know law of large numbers all that, but I always laugh every time a number that's a statistical sample and known to be noisy misses expectations by like 10 basis points and then the stock market is all "IT'S TIME FOR YOUR rear end WHOOPIN!"
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Apr 10, 2024 14:01
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Leperflesh posted:This statement is not connected to the first two sentences you typed. The feedback loop for the Fed is about controlling inflation. Inflation is tracked by the CPI, not wages or employment. The Fed, explicitly, is willing to accept an increase in unemployment in order to slow down inflation: however, remarkably, the rapid increase in rates over the last two years has failed to produce a recession or a spike in unemployment. This suggests that what the Fed is doing is working, actually. I see.
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Apr 10, 2024 14:25
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mrmcd posted:I know law of large numbers all that, but I always laugh every time a number that's a statistical sample and known to be noisy misses expectations by like 10 basis points and then the stock market is all "IT'S TIME FOR YOUR rear end WHOOPIN!" even slimmer margin than that. core cpi came in at 0.359% month-over-month. I think just 1 basis point lower and it gets rounded to 0.3 in all the headline reporting
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Apr 10, 2024 14:41
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mrmcd posted:I know law of large numbers all that, but I always laugh every time a number that's a statistical sample and known to be noisy misses expectations by like 10 basis points and then the stock market is all "IT'S TIME FOR YOUR rear end WHOOPIN!" Feels like we're in a weird spot market vibes-wise where although there's an expected outcome, the true marlet expectation is that inflation would actually beat expectations and allow the Fed to lower interest rates. There has been a lot of positive-side beating of expectations in inflation and in jobs numbers, which can lead to the beat becoming the priced-in expectation.
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Apr 10, 2024 14:48
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KYOON GRIFFEY JR posted:Feels like we're in a weird spot market vibes-wise where although there's an expected outcome, the true marlet expectation is that inflation would actually beat expectations and allow the Fed to lower interest rates. There has been a lot of positive-side beating of expectations in inflation and in jobs numbers, which can lead to the beat becoming the priced-in expectation. Yeah I'm coming around to the idea there won't be a rate cut this year and the market vibes still need to catch-up to that. There's no reason for the Fed to tap the gas on rates if we spend the whole year in a situation where unemployment and jobs are "good to great" while inflation is "tolerable but jittery and above target".
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Apr 10, 2024 14:58
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SKULL.GIF posted:I see. The Fed does legally have a dual mandate for price stability and maximum employment, though. That's an important difference between the Fed and other central banks, and the real economy implications can be huge - the Fed started QE almost immediately after the 2008 financial crisis, while the ECB spent years ineffectually mucking with negative rates and trying to force the greeks and italians to cut their balls off and didn't take effective action until 2013. The effect was that EU unemployment stayed much higher for longer than in the US. During the pandemic the ECB moved more or less in lockstep with the Fed and the difference in employment was much more muted. At the moment the Fed is focusing on inflation, but that's because unemployment has remained low, so the mandate has not been binding on that side.
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Apr 10, 2024 15:21
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Yeah, the market doesn't care that much about the inflation rate within error margins but it will absolutely care that the fed isn't getting the numbers it wants to lower rates. I feel like lots of sane rational people have been saying "Hey, I don't think it's a safe bet that rates are coming down this year" but the market is still going to throw its tantrum.
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Apr 10, 2024 15:22
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KYOON GRIFFEY JR posted:Feels like we're in a weird spot market vibes-wise where although there's an expected outcome, the true marlet expectation is that inflation would actually beat expectations and allow the Fed to lower interest rates. There has been a lot of positive-side beating of expectations in inflation and in jobs numbers, which can lead to the beat becoming the priced-in expectation. The market has been just waiting for rates to start going down for so long, some people have been dipping their toe into investments now to get better pricing before values go up again. Seems like there's just an absurd amount of wealth sitting on the sidelines that's more than happy to wait until rates start going down to begin investing, to get the maximum return Blackstone just yesterday announced they were taking a REIT with ~10,000 units private ahead of the market just ripping, citing uncertainty is helping keep prices down in the short term My company started dialing up investments in headcount last November, ahead of rates dropping. I don't think they're the only ones who want to be fully staffed when rates begin dropping Lockback posted:Yeah, the market doesn't care that much about the inflation rate within error margins but it will absolutely care that the fed isn't getting the numbers it wants to lower rates. My guess is my employer will start trimming head count starting in Q2 2025 if there are no rate cuts. It would not surprise me at all Hadlock fucked around with this message at 17:52 on Apr 10, 2024 |
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Apr 10, 2024 17:50
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Hadlock posted:My guess is my employer will start trimming head count starting in Q2 2025 if there are no rate cuts. It would not surprise me at all It's so weirdly unchartered. You're right there is a ton of money sitting there waiting, and if rates don't dip I have no idea whats going to happen to it. Are you really going to just park your money in a high yield when you see others making successful IPOs or the M&A market being healthy even if it's slow? How long do you hold the line waiting for lower rates vs just say "gently caress it, this is the new normal" I suspect it probably comes down to the tolerance PE has for being made fun of at cocktail parties for not making any big moves lately.
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Apr 10, 2024 18:50
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It's really weird how 10-15 years of ridiculously low rates have skewed peoples' perceptions of what is normal.
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Apr 10, 2024 19:01
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Lockback posted:... the tolerance PE has for being made fun of at cocktail parties for not making any big moves lately. hah! True, true, and funny. But isn't "needing to have some poo poo to brag about" unfortunately the crux of everything humans do? Feels like M&A has picked up considerably in the last few months. Private equity snatching companies up in particular.
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Apr 10, 2024 19:07
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TooMuchAbstraction posted:It's really weird how 10-15 years of ridiculously low rates have skewed peoples' perceptions of what is normal. Well going back to my point, it's like, invest now with ROI of 3%, or wait for borrowing rates to drop for 2 years and get an ROI of 12%. You're already wildly wealthy with no pressure to make a decision and your money is already parked, inflation is 3%, do you go with plan A or B Seems like the math says you can go 2-4 years before you should pull money off the sidelines and start investing it and not take any losses. Assuming rates go way back down again
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Apr 10, 2024 19:08
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Private equity seeks ROIs of 50% to 1000%, right? And takes absurd risks. Maybe I'm thinking more of VCs?
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Apr 10, 2024 19:11
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PE: Investopedia and CAIA says 10.48% ROI averaged over 2000-2020 vs 6.9% stocks VC it varies a lot from firm to firm Presumably the more money you have to invest, the more influence you have to guide the outcome. If you're investing $250mm you probably can influence the market more directly than the guy buying $15,000 worth of private SpaceX stock Hadlock fucked around with this message at 19:17 on Apr 10, 2024 |
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Apr 10, 2024 19:15
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Baddog posted:hah! There's been some articles in the Financial Times about. A. Private equity funds are sitting on something like combined $2 trillion dollars of buying power globally that they raised for cheap during the pandemic, but they can't find anything to buy for the returns they want. B. Private equity firms are also having problems getting new money invested because lots of them are unable to find anywhere to sell the companies they have bought and asset striped at the price they need to make a profit and return profits to investors. Only the funds with a good record of consistently paying out profits are getting new funding in. Which means we're in this absurd state where there's a bunch of money sitting around awaiting causes to invest in, but suddenly unable to find investments paying more than the fed treasury rate. It feels like a bubble that has to pop, or at least deflate, unless rates go back down to 1% or so.
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Apr 10, 2024 19:18
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Is it conceivable that the current FTC's more aggressive stance towards mergers, monopolies, etc. is actually having a chilling effect?
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Apr 10, 2024 19:20
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Leperflesh posted:Private equity seeks ROIs of 50% to 1000%, right? And takes absurd risks. Maybe I'm thinking more of VCs? You're almost thinking more like angel investment returns. Although I guess technically private equity encompasses VC and even angel investors. Blackstone buying up a big publicly traded apartment complex REIT at a 25% premium to what everyone else thought it was worth..... they aren't likely to get *massive* returns on that. But they must think they can manage it better, or squeeze people more. Or if they market it correctly, maybe the pieces might be worth more than the whole.... some large scale house flipping.
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Apr 10, 2024 19:24
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I feel like after two years of the tech industry and friends trashfire most of the layoff blood that's gonna be spilled because "money is no longer free" already has been. Maybe some slow demand effects on things like real estate and housing might cause a bit more blood. Otherwise I don't see why businesses that have been doing okay with a year of 5.3% EFFR is suddenly gonna fire everyone because it's not 4.5% in October.
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Apr 10, 2024 19:24
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Hadlock posted:Well going back to my point, it's like, invest now with ROI of 3%, or wait for borrowing rates to drop for 2 years and get an ROI of 12%. You're already wildly wealthy with no pressure to make a decision and your money is already parked, inflation is 3%, do you go with plan A or B 2-4 years seems like a long time during a healthy economic outlook. I feel like FOMO sets in well before that. But I don't lnow, maybe the money will feel a lot more conservative because this is kinda uncharted. Leperflesh posted:Private equity seeks ROIs of 50% to 1000%, right? And takes absurd risks. Maybe I'm thinking more of VCs? Yeah PE's like to hold companies for ~4-6 years and try to target more like 10-15% gains YoY. Of course they'd like more and sometimes swing for the fences but in most cases it's a lot more modest.
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Apr 10, 2024 19:35
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Leperflesh posted:Is it conceivable that the current FTC's more aggressive stance towards mergers, monopolies, etc. is actually having a chilling effect? Data I have seen has indicated this has been minimal but who knows. According to the Investment banks it's all about trying to guess what the market will look like in the near future and trying to navigate that uncertainty. There is also a lot of concern about Russia and Ukraine still too. I feel like the extra FTC scrutiny is one of those things that PE's feel won't apply to them or if they're big they feel like the can play bully ball.
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Apr 10, 2024 19:38
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Baddog posted:Blackstone buying up a big publicly traded apartment complex REIT at a 25% premium to what everyone else thought it was worth..... they aren't likely to get *massive* returns on that. But they must think they can manage it better, or squeeze people more. Or if they market it correctly, maybe the pieces might be worth more than the whole.... some large scale house flipping. I haven't looked that closely at it, but it sure looks like blackstones' end game is to be a majority MFH owner for the top X metro areas Controlling all the A class MFH near economically relevant cities seems like a total power move. Buy a REIT, keep all the good properties, sell off the marginal ones in the suburbs of st Louis or wherever, rinse, repeat I'd love to see a chart of MFH ownership by blackrock by year
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Apr 10, 2024 19:42
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Baddog posted:hah! see dxyz, a publically traded closed end fund with a basket of different hot private equity holdings. the last calculated nav was $54 million, current spot price puts the funds value at $700 million, which is somehow still way off the high earlier this week of $1.4 billion or nearly 26x the nav as calculated at the end of last quarter the ability to brag that you own stakes of the hot private firms apparently is worth quite the premium
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Apr 10, 2024 22:14
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LanceHunter posted:When people talk about massive job losses due to AI, I'm reminded of the scare pieces coming out in the mid-2010s about how self-driving cars were going to cause mass unemployment. Check out some of the bangers in this CNBC piece from 2017: Yep, and arguably self-driving cars are a much easier task than the generic "replace everyone who does non-physical labor" scare that "AI" (ChatGPT) has caused. In looking for some more recent news about autonomous trucking I was somewhat shocked to learn that there are no federal restrictions on autonomous driving, and only 10 states have any restrictions. So, in the vast majority of the US there are no rules at all on software driven cars. Granted, that doesn't eliminate liability issues. I am curious what the distance record is for Tesla FSD, which is apparently currently available to everyone for free even if they didn't purchase the feature. The fact you dont see poo poo online about driving LA->NY or something suggests it is so far off from being able to do that that even social media morons wont attempt it.
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Apr 11, 2024 02:19
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the fed might be in for a long, hot summer. that series is core cpi. orange is 0.3% MoM. red is 0.4%. today's report was 0.359%. even if the fed hits 0.3% every month the rest of the year, YoY core CPI will actually be UP from today come fall election season. yikes. fed desperately needs shelter and insurance cpi to come down, fast. shelter is somewhat predictably lagged... anyone know how to predict auto insurance cpi for the rest of the year?
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Apr 11, 2024 02:39
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pmchem posted:anyone know how to predict auto insurance cpi for the rest of the year? a (very) quick look suggests the increases in insurance cost was largely due to an increase in the cost of vehicles and repairs. the price on new and used vehicles actually came down this month, which is good. but, are we seeing the beginning of deflation in prices or are we just at a new normal? there was surprisingly little inflation in new car prices from from 1995-2020: 
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Apr 11, 2024 02:53
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I'm kind of doubtful housing is going to come down much Lending standards are... Too high? The only people who have bought a house in the last decade can financially weather most any medium storm, and they're not going to sell at a loss More units are starting to come on the market but it's still pretty dire, still near 40 year lows Plus that whole nationwide housing shortage. Fed can't fix that with high borrowing rates drk posted:the price on new and used vehicles actually came down this month, which is good. but, are we seeing the beginning of deflation in prices or are we just at a new normal? Something came up over the weekend and I was looking at the price of the cheapest Toyota and there was a Toyota Yaris for sale down the street from my house, two owners, no accidents, 120,000 miles for $4000 Two years ago that would have been an ~$8500 car
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Apr 11, 2024 03:08
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I should've been clearer, I meant deflation in car prices. I was recently also in the market for a car and noticed how low used prices had gotten. Dealership lots are pretty much full with new cars as well, which was not at all the case a couple years ago. I definitely don't expect overall deflation since right now we cant even seem to have sustained disinflation.
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Apr 11, 2024 03:31
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drk posted:Yep, and arguably self-driving cars are a much easier task than the generic "replace everyone who does non-physical labor" scare that "AI" (ChatGPT) has caused. 4 years ago I did a couple trips from colorado to ohio, and the tesla "enhanced" autopilot did pretty drat well. There was one state where they had the lines painted to take the offramp on every exit, which obviously broke it - unless I just put it over in the left lane. Otherwise it was nearly perfect, for what, several thousand miles if you count there and back again, twice. I definitely thought autonomous trucking was right around the corner, at least for the long haul stuff. All they have to do is drive from distribution center A to DC B, all on interstates. This new "Full" self driving beta sucks. The whole thing has somehow gone backwards. I dunno what the gently caress. Part of it is definitely taking out the radar and trying to just use cameras. But I think in trying to solve the edge cases, they've really hosed up the base case.
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Apr 11, 2024 04:44
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actually figuring out the performance of neural nets and transformers and poo poo is basically waving aspergillia and censers to the god of all machines and making burnt offerings to the omnissiah, so you can always expect some weird-rear end regressions to continuously happen throughout the domain
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Apr 11, 2024 05:00
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Baddog posted:4 years ago I did a couple trips from colorado to ohio, and the tesla "enhanced" autopilot did pretty drat well. There was one state where they had the lines painted to take the offramp on every exit, which obviously broke it - unless I just put it over in the left lane. Otherwise it was nearly perfect, for what, several thousand miles if you count there and back again, twice. I definitely thought autonomous trucking was right around the corner, at least for the long haul stuff. All they have to do is drive from distribution center A to DC B, all on interstates. This kind of anecdotal experience with “self driving” is irrelevant to the future of interstate trucking. Lane tracking is the easy part. All the crazy things you see in city driving happen on the interstates: giant obstructions, pedestrians, animals, and you name it. For your one trip of a few thousand miles none of that mattered because those events are rare on the interstates, but as soon as you have ten thousand trucks driving 30k miles a year, they become regular occurrences. In order to solve the interstate trucking self driving problem, you have to solve the city driving problem because that is where the weird edge cases happen often enough to be studied. The other option is to create fixed routes for trucks that are protected from these kinds of disturbances, group them, and lightly staff them to take care of the super rare edge cases, but that is just a train.
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Apr 11, 2024 16:22
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