Get started

Economy

Inflection Point Alert: Tracking Housing Affordability Through tThe CUSR0000SEHC/M2 ratio serves as a unique lens to evaluate the dynamics between housing costs and the broader monetary environment. This ratio compares the Consumer Price Index for Owners Equivalent Rent of Residences (CUSR0000SEHC) to the M2 Money Supply, providing insights into housing affordability relative to the amount of money in circulation. Key Observations: Declining Ratio Pre-December 2021 - Prior to December 2021, the ratio was on a downward trajectory, suggesting that housing costs were not rising as quickly as the money supply. This could have been indicative of increased housing affordability or a result of loose monetary policy. Inflection Point in December 2021 - A notable change occurs in December 2021, where the ratio starts to rise. This inflection point signals a potential shift in housing affordability, indicating that housing costs may be rising faster than the money supply. Policy and Market Dynamics - The inflection point could be attributed to various factors such as changes in economic or monetary policy, or shifts in market demand and supply for housing. Implications: Economic Policy - Policymakers and investors should pay close attention to this trend as it could have broader implications for economic policy, including interest rates and housing market regulations. Investment Decisions - For traders and investors, this could serve as a leading indicator for sectors sensitive to housing costs and interest rates. Public Awareness - For the general public, understanding this ratio can offer insights into the future trajectory of housing affordability, a key component of the cost of living. Conclusion: The CUSR0000SEHC/M2 ratio offers a nuanced view of the interplay between housing costs and monetary conditions. The recent inflection point warrants further investigation and could be a harbinger of less affordable housing or changes in economic conditions. As such, it serves as a valuable tool for policymakers, investors, and the general public alike.
FRED:CUSR0000SEHC
by StellarTrader2
A yield neutral play against curve inversion The idea is a position that profits from any difference between the 20yr bond ETF ( NASDAQ:TLT ) and NASDAQ:IEF , the 10yr Note ETF. The potential opportunity lies in their identical share price, a rare event. Yield on the 20yr has never been lower than the yield on the 10yr (since 1989). The top chart shows the difference in price . Always above 0. It implies that TLT's share price has always been higher than IEF's (middle chart, excluding 6mo in 2011). Bottom chart is TLT-IEF. Almost always >= zero. This week the price difference was ~zero. A position that profits from any gap between TLT and IEF is a high probability trade. Actionable trade details will depend on the assets used and may include: ETF's NASDAQ:TLT and NASDAQ:IEF TLT calls and IEF puts 20yr treasury bonds (in place of TLT Futures ZB and ZN or their micro-equivalents
FRED:DGS20
by gb50k
INFLATION BUBBLE AT CROSSROAD INFLATION VS DEFLATION Based on the last 120 year of DATA the inflation cycle had peaked . The mistake some will have that it is the beginning of ASSET DEFLATION CYCLE . SEE THE 1921 TIME TO WHICH I STATE we are in based on the 89 2010 4 and 2 year cycles and time spirals which called for a top in sp in sept and late dec 2021 which would see a major new BEAR market in all assets classes to which the panic cycle due oct 4th to th 20th focus on the 10th with targets of 3511/3490 . this is the FIRST leg of the deflationary CRASH cycle NOT the END .
ECONOMICS:USIRYY
by wavetimer
1
China Is The Next JapanIn the 1980's, Japan was the ascendant global power. Year after year, Japan's GDP grew, and it seemed like a foregone conclusion that the country would flip the USA in terms of economic output and political standing (as you can see from the chart above). What happened next? Utter stagnation. Demographic issues and a popping asset bubble led to issues that continue to this day, and the economy has never really been able to get off the ground in the last 30 years: Today, the parallels with China are clear. China is the new ascendant power. However; The country faces a credit crisis, an asset bubble, and demographic shifts that could lead to a massive period of stagnation for the world's second largest economy. Will China fall behind? Combined with other weakening economic data, it seems likely that the Chinese dream is over. Here's the problem; China is an autocracy. People have put up with a lack of freedoms due to the increasing quality of life. What happens if that stops? Thankfully, nobody knows what the future holds. That said, political instability seems likely. As housing continues to worsen, we're worried about exposure to China from a big picture perspective: Individually, the best ways to play this seem like puts on FXI, the largest concentrated Chinese mega cap bet. If the economy stagnates, we expect mega-caps will be hit accordingly: Long puts on big companies like BABA and JD also seem like reasonable trades over the next few years as multiples come in. Cheers! Looking for more high-probability trade ideas? Follow us below. ⬇️⬇️
ECONOMICS:USGDP
by PropNotes
1
Interest rates and bear markets. We all know that rising interest rates mean falling stock prices. It's been repeated endlessly over the last year with people getting up in arms about the stupidity of the market to be rallying with interest rate hikes. To elaborate on this, here's the massive interest rate bubble of the 1970s. From 1975 - 1981 US interest rates would go up a whopping 500%! Here's what SPX did during those years. It doubled! It appears people forecasting a prolonged bear market due to "Higher for longer" did not do their backtesting. This has not historically created a bear market in US stocks - they went up 100% last time rates went up 500%. This is not a bull or bear analysis. I just wanted to let you know. Because the internet told me this was impossible - and clearly it's not. It's not even a good analysis point.
ECONOMICS:USINTR
by holeyprofit
6
30-Year Fixed Rate Mortgage Moving Higher 9% (1M)30-Year Fixed Rate Mortgage Monthly Well I guess I'm glad my mother-in-law's basement isn't a total dungeon.. What's sunlight? I'm familiar with grass because that's eye level when I'm looking out our window. Big brother JP, the head of the Fed, says rates aren't going anywhere any time soon, and we've all heard the fear mongering of 8% mortgages coming. Why would anyone want a house when you can load up on lumber and build a tiny home on your in-laws side lot? Life hack; build one in your parents backyard and you have a vacation home. Well lets all hold hands because the mongerers might be on to something. Chart / RSI / Momentum Rates previously pierced an important level of resistance (Red Solid) back in October and topped out just north of seven percent. Fast forward ten months and we're back retesting the same level, but this time we have a golden cross (Highlighted); a first on this chart. The RSI has also broken back above 70 level, indicating the strength of the trend to continue, and invalidating the previous bearish divergence (Teal Solid). After breaking past a previous level of significant resistance, Momentum has broken past it's previous peak (Teal Dotted) and continued it's trend higher; another indication of a strong trend. What Seems Legit? 30-Year rates crackin' nine percent because everything is signaling us higher. Chart Key Red Solid = Important Level of Resistance / Support Teal Solid = Divergences Teal Dotted = Momentum Level of Resistance Green Box = Resistance / Target Area Highlighter = Golden Cross / RSI 70 Level Break High
FRED:MORTGAGE30USLong
by Seems_Legit_Research
1
long duration treasury bondsThe federal funds rate has never gone up this high and this steep before in history. the worse the conditions become apparent the faster they cut rates. with delayed effects of high funds rate just now showing themselves and markets/ credit contracting. Bonds are due for a guaranteed high rise that can be exited as soon as funds rate hits back to zero. I know nothing is guaranteed, but i feel this is the easiest risk adjusted return of the decade. tmf is 3x leveraged etf.
FRED:FEDFUNDS
by DiscoBlue
1
Monetary Policy: Fed Funds & UnemploymentThe unemployment rate and the federal funds effective rate are two important economic indicators that provide insights into the health of an economy, but they represent different aspects of economic activity. Unemployment Rate: The unemployment rate is a measure of the percentage of the labor force that is unemployed and actively seeking employment. It is a key indicator of the overall health of the labor market and can provide insights into the level of economic activity. A low unemployment rate is generally considered a positive sign, as it suggests that a larger portion of the labor force is employed and contributing to economic growth. On the other hand, a high unemployment rate can indicate economic distress and underutilization of human resources. Federal Funds Effective Rate: The federal funds effective rate, often referred to as the "federal funds rate," is the interest rate at which depository institutions (such as banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. It is a key tool used by the central bank (in the United States, the Federal Reserve) to influence and control the country's monetary policy. The Federal Reserve sets a target range for the federal funds rate, and it is adjusted as a means to control inflation, stabilize the economy, and influence borrowing and spending by businesses and consumers. Relationship Between the Two: While the unemployment rate and the federal funds effective rate are not directly linked, they can influence each other indirectly through broader economic dynamics: Monetary Policy Influence: The Federal Reserve uses changes in the federal funds rate to impact borrowing costs and, subsequently, economic activity. When the economy is sluggish and unemployment is high, the Fed might lower the federal funds rate to encourage borrowing and spending, which can help stimulate economic growth and job creation. Conversely, if the economy is overheating and inflation is a concern, the Fed might raise the federal funds rate to cool down economic activity and prevent excessive inflation. Economic Conditions: Changes in the federal funds rate can affect overall economic conditions. Lowering the rate can potentially lead to increased borrowing, investment, and spending, which could contribute to job creation and, in turn, reduce the unemployment rate. Conversely, raising the rate can lead to reduced borrowing and spending, potentially impacting job creation and leading to changes in the unemployment rate. In summary, the unemployment rate and the federal funds effective rate are distinct indicators that provide information about different aspects of the economy. While they are not directly correlated, they both play roles in shaping and reflecting the overall economic environment.
FRED:FEDFUNDS
by ZAR_Republic
MACRO MONDAY 7 - CHINA DEFLATIONMacro Monday (7) - Advance Release China Inflation Rate – $CNIRRY China entered into deflationary territory in July 2023 and this is being shared by many with an extremely negative outlook for markets. I believe this chart outlines a very different perspective that leans more neutral than cautionary whilst also providing a more usable framework in the event of a recession scenario playing out. 🔴The last 3 global recessions commenced during China's peak inflationary periods, not during deflationary periods. This is the first clear indication from the chart (red circles). 🔵The last 3 periods of deflation in China signaled the forming of a market bottom in 2000 (over 14 months), thee market bottom in 2008 and resulted in positive S&P500 price action in 2020 (blue areas). Two out of three times China Deflation has been immediately positive for markets. ⚠️The most contentious period of deflation can be assigned to the 2000 Dot Com crash. The commencement of this 14 month period of deflation from October 2001 did not immediately mark the bottom. Instead the S&P500 made a further c.35% decline to gradually form its bottom over those 14 months ending in December 2002. If this was to repeat we could be looking at Sept 2024 as a possible market bottom and a 35% decline would be $2.9k for the S&P....👀 This scenario is worthy of consideration especially factoring in the comparisons of the 2023 AI boom to the 2000 internet boom. As we enter a new technological epoch with the likes of Augmented Reality, Cryptocurrencies and AI, are we getting ahead of ourselves again? Do these technologies need a little more time to mature much like the internet? Are we overextended like we were in 2000? Its hard to answer no to any of these questions but against the backdrop of record levels of QE and Fiscal Deficit we have to keep an open mind as we froth in record levels of liquidity. What is useful about this chart is that if a 2000 Dot Com crash scenario was to play out from hereon, we could use China’s move back into inflationary territory (above 0% line) as a possible confirmation of a market bottom/reversal as was the case in Dec 2002. What day is it? 🤣🤣🤣 I released this early brief Macro Monday as I seen this topic repeatedly in my feed today and wanted to share the perspective as soon as possible. There is a strong possibility of a 2nd alternative Macro Monday Chart on Monday 14th. Hope to see you there! As always I hope the chart offers perspective and utility PUKA
ECONOMICS:CNIRYY
by PukaCharts
$CNIRYY - Deflationary CPI- While ECONOMICS:USIRYY numbers remain inflationary, having the latest increase to 3.2% on August 10th, on the other side of the World from the second Global Superpower, ECONOMICS:CNIRYY came Deflationary at negative 0.3% on 9'th of August, just a day prior to numbers of ECONOMICS:USIRYY . Note that The Head of Federal Reserve, our pal Jerome Powell, stated that Feds do not see Inflation ECONOMICS:USIRYY coming down to their norm target of 2% CPI by 2025. Jerome still believes on a 'Soft Landing'.. How about another Joke, Powell !?
ECONOMICS:CNIRYY
by Mr_J__fx