Skip to main content

Macro Chat
Macro Chat
11127 members
211 questions
942 posts

This is exchange for discussing macroeconomics. Feel free to submit new topics to be featured within this exchange.

 

*Make sure you have joined the Macro Chat Exchange in order to be able to post/ ask a question or comment/ answer.*

 

 
 

 

Housing

What is going on with housing? Supply is extremely constrained, houses are sitting on the market for record low periods, and months to clear inventory is at all time lows, and units on the market for this time of year are at all time lows. Ok, so housing supply is limited... or is it?

Housing completions for 2020 were at multi year high- the September peak (annualized at 1.4 million units finished) is the highest reading since October 2007. Link

Total housing inventory in the US is at all time highs and on trend for the last 9 years despite the pandemic. Link

Rent in major cities rose ~2% in 2020, down from ~4% trend growth leading in. Link

Forward looking- new housing permits in January ‘21 hit a rate not seen since mid 2006 and were 23% higher than housing permits in Jan ‘20, and 44% higher than Jan ‘19. Link

So it does not appear that supply on its own is the issue here- the home vacancy rate is where I will start an explanation because its collapse is so dramatic. The vacancy rate was tied for an all time low at 1.4% in 2019- and it dropped to 1% in 2020, that is a 28% decline from an all time low to a new all time low. This is not explained by a large increase in households- in fact total households declined in the US during 2020 (slightly) and since we have expanding housing stock, and if... (More)

Fed Balance Sheet/Pair Trades/Gold

So I was just randomly scrolling through some charts and thinking when I came across this. 

The blue is long Industrials (XLI) / short financials (XLF). Both of those seem like they are a part of the whole reflation thesis. Financials are connected to interest rates and XLI is connected with manufacturing and commodity prices. But then I thought about how the whole FED balance sheet expansion is going to hurt financials. If that happens then they will be a great short in a pair trade. Then I overlayed the price of gold and it tracks it almost perfectly. I was really surprised at the pattern. 

I have been thinking about trades that will do well regardless of the reflation thesis breaking down or not. Perhaps this was one of them. But as you think about the whole expansion of the FED balance sheet and different trades, maybe overlay gold here and there to see if there is a similar pattern. 

Be curious and ask questions!

Would love any thoughts or feedback!

present day RCA

In 1926 RCA, Radio Corp of America, was a new tech that added to the fuel that created the blowoff top in 1929. The perpetual question is, what the new tech that is going to change the world, I know, but at this point I find the question particularly important as the correct answer isn't just a 4x as seen in TSLA over the past year.

Passive investment doesn't just create a brittle market where cracks are exacerbated. It also hardens the rails that the market on and makes it more immune to attack (achegos, potentally etc.)

The current environment of the stock market reminds me of a poker game when you have a bunch of newbs show up at the table. They fuck it all up. The randomness and ignorance that they play with makes the old rules of playing the best odds less reliable. For example: in a classic game of texas hold 'em you land 2 kings on the draw. The flop is unimpressive so you go all in. In a normal game everyone folds at this point and you win a small pot, but because you have newbs at the table some dude goes in with you. You show your hands. He has one ace and a smile and you have 2 kings. You get ready to start scraping the pot and he gets an ace on the river. You lose. The difference here is all the brokerage houses and pro's know the game, and newbs... (More)

Professor Richard Werner Interviews

There are a lot of outstanding videos at RV and there is not always time to watch them all. Still there is a lot outside RV walls and his one is fundamental. It is an interview from Danielle DiMartino Booth to with Professor Richard Werner, the author of the Princess of the yen. May Last year Richard Werner also gave a great interview to Hugh Hendry that can be found in Real Vision.

 

How Banks Work & Dictate the Economy — DiMartino Booth — Down the Middle with Richard Werner

https://www.youtube.com/watch?v=u8j51XZegsk

 

More Power to The Princes - Hugh Hendry with Professor Richard Werner

https://www.realvision.com/shows/the-interview/videos/more-power-to-the-princes