Bonfire1996 said:

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FrioAg 00 said:

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I'm building and adding to my future retirement property in the country - sort of a 10 year process

6 to 12 months ago I thought the reported inflation numbers and supply chain challenges were being underreported nationally. It got to the point you couldn't get a price in advance at allC because they adjusted up daily. And at any prices there were components you couldn't get for 6 months. I think the inflation data was lagging reality.

I will say - the lead time issues are largely gone. And while prices will never go back down, they do seem to have stabilized. So similarly to before, I think the national data is understating the trends and is also delayed.

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Construction materials have absolutely leveled off. A severe slowdown in starts will further flatline prices.

What's scary is that flatline, coupled with reduced retail demand, may produce some reduced inflation figures for June and July, just in time for food prices to go ape in September when this years crop, with this years fertilizer, labor, and shipping pricing hits.

Bear market rally through Summer as Biden team touts reduced inflation? Then food prices and shortages absolutely crush the optimism.

I'm in.

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Agreed, the layoff announcements trickling out now across many industries is just beginning and I expect more during conference calls when earnings begin in earnest next month. The housing market is probably the largest driver of the market because so many other industries it effects. The inflation numbers will come down, which the market will cheer, but your friends, family and neighbors will suffer the most due to losing their jobs and food prices continue to increase. IMO, this will increase their reliance on credit cards that will continue to raise rates that are already at confiscatory levels, that will lead to more defaults. Regardless of party, headlines are meaningless when pocketbook issues dominate the conversation at the dinner table. I feel for the people that will suffer and it didn't have to be this way.

Why is Powell speaking? Thought he's pretty quiet till FOMC?

Was listening to some interesting commentary this weekend with Peter A****er. He writes about what he calls Socionomics.

Anyway, he thinks the "bubble" to pop this time isn't giving a bunch of hookers and prostitutes a bunch of homes, but this time the major risk to burst the bubble is more a function of leverage. There has been such cheap money floating around with a combination of fiscal and monetary policy that many banks are heavily leveraged. He quoted something about the leverage of JPM, and it was astonishing. I don't wanna butcher the numbers but it was quite an interesting take.

anyway, life's been too busy to trade at all and I've missed being regular here the last couple weeks. Good to be busy surgically but definitely eats my free time. Trying to just eyeball a couple charts every day.

Be good!

So far so good. Will we hit 40 on UPRO this week?

I'm taking tomorrow off (mostly) to trade in the morning and watch the Ags with a college roommate in the PM. I hope we get some fireworks again tomorrow early.

Recession Fears Take Front Burner...Equities Oil Lower...Bull Steepen...Powell

There is somewhat of a reversal of the risk on nature of yesterday... The talk yesterday was how inflation was going to subside... Today the focus is clearly on a recession...Citi upped their odds of a recession to 50%, while Former Fed Governor Dudley continues to pen his "Recession is inevitable" thoughts... S+P futures started marginally lower from the 90 point gain yesterday to accelerate downward through Asian time to bottom at 4 am, down about 75 points... Now down about 50... Treasuries caught a bid, as did EGBS, and have clearly bull steepened with 2/10 now at 10 and 5/30, which had gotten to minus 15, now positive 1...Oil got clobbered about 5% and we now see WTI down 4.5% so far this morning...108 had been support, but we sliced through that pretty easily... Biden is to announce a three month elimination of the Federal gas tax of 18 cents and a 24 cent elimination of diesel in a speech today at 2 PM... Our contacts in DC say that Biden does not have the votes to push that through...

All Eyes are on Powell today who testifies in front of the Senate... The smart money says he will continue his uber Hawkishness towards inflation... But the bond market does not quite believe him, given the steepening today... The economy is slowing down faster than the Fed anticipates, housing being a clear example... But Powell has a green light from DC, both the President and the Congress, to attack inflation... That will change as unemployment starts to soar and the Jolts jobs disappears... The Powell testimony starts at 9.30, but the text comes out at 8.30... We doubt he changes his recent tact... We still challenge the Fed with their idea that 2% inflation is the right number... Given all the assumptions of the world seems to be changing, why is this number locked in stone?... He should be more variable.

New issue corporates broke their 7 day losing streak yesterday coming with 3 issuers of 7.3 billion dollars . Books were 3.3 times oversubscribed and offerings tightened 25 basis from IPT. IG spreads are back over 100 this morning while CDX HY is 11 wider at 575... We still see wider spreads coming as recession talk increases.

Housing/Mortgages....MBA applications index rose 4.2% in the latest week but refis continue to fall and are down over 77% YOY... Lennar announced cuts of their housing prices... And the WSJ has an article on the upcoming US Housing Bust... Bloomberg has a similar article about global housing... Mortgage spreads are out to 138 basis... More than double where they started the year... Our Mortgage team has been pounding the table on the value of mortgages as an asset class... Take a look.

Rates...hard to be bullish when the war in on the path towards higher rates, but recession fears will undercut the Fed...and you might see some push-back on Powell for higher rates if employment is going to soar... We have resistance on 10 years at 3.20... If you break through that the next level is closer to 3.01... For 2 years 3% is the next level... 5 years closer to 3.25... It does Powell no good to push up rates if treasuries are not going to follow... But inflation numbers are slowing up... Used truck prices are headed south with 2019 to 2020 down 10-15% in the latest month,

Expect some volatility today, but the unfettered path of Powell to raising rates may have a speed governor on it...

How I felt scalping a TSLA trend day yesterday

Very insightful journaling session pic.twitter.com/vrbhn3MvmN

— Retail Capital ⚔️ (@itsonlymoney12) June 21, 2022

I'm more convinced than ever that we have a Summer rally as inflation statistics start to show significant slowing.

But the damage is done and we begin to see significant layoffs in September and then we resume the bear market through Christmas at least. I'm likely going all cash Aug 31.

Bonfire1996 said:

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I'm more convinced than ever that we have a Summer rally as inflation statistics start to show significant slowing.

But the damage is done and we begin to see significant layoffs in September and then we resume the bear market through Christmas at least. I'm likely going all cash Aug 31.

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Bears hibernate during the winter.

Elizabeth Warren shouldn't be allowed to ask Powell questions

Triple_Bagger said:

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Elizabeth Warren shouldn't be allowed to ask Powell questions

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How do you say "shut up" in Irish/fake Indian?

Ancedotal, but I run a company that sells retail gas cards - to companies that have fleets of vehicles. This is across 30-40K vehicles… they have not slowed down on total of gallons purchased to signal demand destruction.

Compared to this time last month everything is up 4% on total gallons used.

Wonder if vacations are getting canceled or rearranged for less travel and if that is enough to cause "demand destruction" compared to all of the commercial and government fuel used?

Bonfire1996 said:

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Premium said:

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Why is oil down 15% in one week? Is the war over, did someone increase supply, or is demand way lower than thought??

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Demand destruction began three weeks ago.

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Disagree. And, if FJB gets the gas tax holiday, just say thank you for making the S&D issue worse by encouraging more demand in a tight supply scenario.

The lack of opening of new wells (new drilling) and refining capacity that cannot keep up say otherwise with regard to demand destruction.. Now, of course, momma might have to idle the minivan and skip a few soccer games, but that does not change the oil and refined products S&D. Just another buying opportunity for the likes of CVX, XOM, or your favorite O&G.

https://www.marketwatch.com/story/india-tells-oil-companies-to-load-up-on-discounted-russian-crude-11655828605?mod=home-page Black market crude anyone? Still,...has no impact on the S&D. If we can get a loaf of bread to $6 and a gallon of milk to $9-$11 and gas $10, maybe we see demand destruction of a different type.

Until then,....as Sonny & Cher once sang - The Beat Goes On