Is a market crash coming? Or massive hyper-inflation?

[biggeemac]

So, is there a safe place to store a bunch of cash?

I'm building a house with cash for my wife and I.....using the proceeds from our government backed business. I'm also nearly a million dollars in debt. I actually look at debt as a potential safe haven if bad things happen. Maybe I'll be wrong, but we will have a house that is free and clear, with land, plus plenty of debt in the form of mortgages, and maybe some other diversification. Mortgage/private lenders could be the big losers in a dollar-death scenario. I have two private loans and two bank loans currently. Again, I might be wrong, but at this point......my bet has been placed.

 

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[socaldude]

Anything that’s basically an input/output in economic productivity will survive a hyper inflationary event. Hard assets, land, businesses etc. The monetary wealth will be destroyed but the economic infrastructure will still be there.

It’s also helpful to make the distinction that there are basically two types of inflation. One where prices are driven by pricing dynamics and the other where currency is devalued due to money printing.

 

[Kevin88660]

Well. In my opinion big crash unlikely.

2008 and 2020 covid were once a ten years event.

2015 correction was triggered by Fed signaling rate hike. That was the time when the economic outlook was still fairly okay.

We just had a March major correction that is much needed to balance out with the Jan and Feb euphoria.

Downside risk at this point is pretty low. At worst a choppy market ahead.

 

[biophase]

IMO, that's a big contributor (as well as low interest rates) but not the driving factor.

Labor and material costs are through the roof. I'm trying to build a custom home in Sedona (all while trying to buy RE out-of-state - what a shitshow) and the price to build have gone up nearly 400,000 since we started the project. My floor plan hasn't changed in those 10 months. So to your point, not only is the supply short in existing inventory, but supply is short all through the material supply chain, including the labor.



Yikes.

But the Federal Reserve disagrees with you!
As does all those articles on CNBC!

Why do you believe the data that's right in front of your eyes? Don't you know thinking for yourself is dangerous?

Just because a 2X4 from Home Depot now costs $6.94 when it cost $2.84 just a few years ago doesn't mean inflation is 244%. LOL, according to gangsters in Jackson Hole, it's only 1.5%.

I just made a bet on real estate in Vegas. I bought a custom home new construction which will be done in March 2022. The way I saw it was that I basically bought an option on a home. It was a damn expensive option so I probably won’t be backing out unless the housing market drops by a lot.

But I’m worried if the builder can build it at my contracted price. Unlike MJ, my price can’t be raised by then so I’m hoping they don’t take short cuts. Hope they bought a lot of wood futures!

 

[FlyingDutchman]

What book would you recommend by Ray Dalio?

This 2-part writing of his is a nice introduction: The Changing World Order

He became quite active on Linkedin over the past months and launched a new app 'Principles in Action'.

 

[ElleMg]

Could this be the plan of the “Great Reset?”

Royally f*ck up the global economy with loads of debt and sugar high stimulus, then pull the plug with no parachute?

The UK and Canadian PMs on the same day saying it is lockdowns rather than vaccinations 'saving lives', leaves the door open for more lockdowns, and 'free' money, in the future. If they shut everything down and continue giving out money AFTER everyone's been offered a vaccine I'm going to be convinced it's part of the Great Reset plan

 

[JunkBoxJoey_JBJ]

Just finished watching The Big Short...

 

[Timmy C]

Yeah no, since most of them are not investors, the real reason real estate is going up is from a couple of factors that all spell disaster:
1. Cheap debt. Unsophisticated homebuyers see low interest rates and get in bidding wars for houses that aren't worth what they are paying for them.
2. Stimulus checks, PPP loans, big spending, and other forms of inflation: all of that money finds a home somewhere, and when it's done trading hands, it finds the home in assets (real estate, stocks, bonds, commodities, etc)

Both are bad for the economy. At least, for average people who will probably all get burned hard - and for businesspeople later, when we get blamed for it all even though it was mostly government policy.

Property won't crash in Australia.

People have said this for 10 plus years.

Governments have basically made it illegal for property to crash.

They will do anything and everything to prevent that from happening.

 

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[Guest-5ty5s4]

Do you see anything out of the ordinary, today specifically?

From what I have seen today fits nicely into a current rise and fall cycle.
When you look at the 6 months NASDAQ Composite chart it still looks like there are short but strong declines within an overall upward trend. Anything in particular that you think could be different?

Reverse Repo Rate is also well within the "new normal parameters".
I'm not saying this new normal is not unsettling btw.

Ahhh ... now I know, Barron's to the rescue:

Stocks Are Down Because Monday Is a Lousy Day for the Market​

Thanks Barron's. Got it!

You really can't believe any media source on stuff like that.

Still, that was a good laugh (the Barron's thing).

 

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[MoneyDoc]

@socaldude

He always has good insight!

 

[Timmy C]

That just makes it crash all the harder once or twice a generation.

Time will tell, but there are similar parallels between the Irish property bubble 2000-2007 and the Australian property bubble right now.

You can argue that this will continue to increase in price as more stimulus and currency devaluation continues worldwide.

 

[Matt33]

Interesting how most in this thread largely ignore gold as a solution

 

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[Guest-5ty5s4]

Pray do tell me kind Sir where this boat you speak of may be located?

Beats me, but it's probably got some AR-15s too!

 

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[Matt33]

Lol. Basic condo? 3br 2ba. Guess what, in a past time that was considered a normal sized home.

Id look up your salary adjusted vs inflation and compare it to the year 2000 and then compare the year 2000 home prices. I think you’d find it’s close to the same.

People don’t deserve to live wherever they want. I want to live at the beach, but a top 1% income can’t even afford that now. Does that mean I should be able to?

And let’s not forget that your post said any city outside of NY and SF. Now you are talking about a place close to the ocean with decent weather all year around.

Don't forget that the official inflation numbers are much lower than the real inflation numbers

 

[Matt33]

Do you think inflation is location dependent? Like if lumber prices are up, they are up in the entire USA? Or can there be inflation in Cali and no inflation in Kansas for lumber? Just curious because McDonald’s value meal prices have gone up everywhere since 2000, but real estate prices have not.

I think each market is different, whether it's a local real estate market or a lumber market. But I think across the board the US dollar inflation is the same.. perhaps? I can't see why it wouldn't be.

Either way I know the number 3% is a joke. It's one way to tax us more than we think. We made a big "gain" in dollar value, but in reality little value was added. They just printed money. Now we get to pay tax on a gain that largely doesn't exist.

 

[Guest-5ty5s4]

www.thestreet.com/.amp/jim-cramer/jim-cramer-kee-cash-september-federal-reserve

Cramer says to buy every dip in September. A month that is not so good seasonally.

We should start a Short Cramer ETF. LOL

We‘ll see how things pan out.

I wonder how much of this is advice to make money vs. telling the masses what to do in order to prop up the house of cards.

 

[MJ DeMarco]

And a few months before that the Fed was saying inflation was “transitory” which I knew was absolutely laughable.

 

[MJ DeMarco]

Mortgage rates at 16 years high. Mortgage apps drop by 37%.

That will cool everything off!

Easy money is no longer easy.

Mortgage rates climb to their highest level in 16 years

Mortgage rates have more than doubled this year and now top 7% by some measures, lending data shows.

www.cbsnews.com

 

[JunkBoxJoey_JBJ]

We've been talking about a market crash around here for years.

Yep.

NOTABLE! - The Coming Recession (2019-2020?)

MODERATOR NOTE: THESE POSTS WERE EXTRACTED FROM A CONVERSATION ABOUT "BUYING A HOME." BECAUSE THEY DICUSS THE POTENTIAL FOR A RECESSION, THEY WERE COPIED AND EXTRACTED INTO A NEW THREAD. Why? Real estate indicators don't make it seem we're necessarily at a top, but in most recessions, real...

www.thefastlaneforum.com

Believe the thread was actually renamed from "The...2018-2019..." to the 2019-2020 it was carrying on so long.

 

[Deleted78083]

Technically we've already had a market crash in early 2020 because of Covid.

Question is, is a "market crash" a crash only if a 2-5 year recession/depression follows?

Or is a crash a crash when it recovers mere months later?

Because right now we're talking apples to oranges.

So the question is:

Had not the FED saved the stock market with degenerate printing, where would it stand as we speak?

 

[socaldude]

I admit it’s kinda irritating to see these high asset prices but the Fed did promise inflation so we are getting it. Although they are kind of dishonest about how much inflation. Those inflation indexes are kind of easy to “tweak”.

What was different this time around from 2008 was the actual central bank response. They pretend they don’t pay attention to the stock market but everything is intertwined in the financial markets. So they kind of resort to indirect and legal manipulation/intervention. Like getting help from other central banks or giving money to Blackrock.

One thing I’ve notice is; why is Powell always so nervous when he speaks. I mean public speaking is not easy but It makes me think he is scared of something.

 

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[Guest-5ty5s4]

Looks like the a lot of the nearly $2,000,000,000,000 in "stimulus" money recently printed is going exactly where everyone thought it would go... into the stock market.

But yea, inflation is under control as the house I considered buying last year went from $2.5M to $4.5M in less than 12 months while that cool new Ford truck is six figures, as is your Corvette. Oh and my favorite bread (the one not filled with chemicals and preservatives) is close to $7 a loaf. I paid $6+ for a single 2x4 at Home Depot last week (lumber). Inflation? NAWWWWWWWWWWWW....

How do you know the Fed Reserve bankers are lying? Their mouths are moving.

What can we do about this? I'm afraid these problems are a lot bigger than people even realize.
Something needs to change.

 

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[OverByte]

Looks like the a lot of the nearly $2,000,000,000,000 in "stimulus" money recently printed is going exactly where everyone thought it would go... into the stock market.

Obviously the market is inflating but I’m trying to understand the mechanics behind it. I find it hard to believe that average Americans who have been unemployed are using stimulus money to purchase stocks. Is this growth being driven by institutional investors taking advantage of low interest rates to borrow cash and purchase assets? Businesses looking for alternatives to holding cash? Or is it the case that stimulus is driving increased consumption which is ultimately driving up stocks indirectly? All of the above? Something entirely different?

 

[socaldude]

“We print money digitally” Were gonna have to do a reverse stock split on US notes. LOL. “Where does it come from?”LMAO. Gets me every time.

View: https://m.youtube.com/watch?v=ff6SDsaS7rI

 

[Guest-5ty5s4]

Our government has created an epically massive bubble, and they can bankrupt everyone with a snap of their fingers by raising interest rates.

 

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[Timmy C]

Could this be the plan of the “Great Reset?”

Royally f*ck up the global economy with loads of debt and sugar high stimulus, then pull the plug with no parachute?

Some people are speculating that to be the case.

Who knows.

 

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[Marigold]

Hi All,

Recently I have been doing a lot of reading around historic market crashes, current state of affairs across a myriad of industries and economics in general.

I am interested in discussing with my fellow Fastlaners their views on the state of the economy both nationally and globally and their future predictions of what they see unfolding. I am writing from the perspective of someone based from the UK.

My research to date has highlighted the following:

1. It is clear that we have been in a bull market for a prolonged period of time since around 2009 onwards that has only seen a temporary dip when the Corona Virus pandemic struck.
2. Interest rates for borrowing such as mortgages are still at an all time low. This is unprecedented, if there was to be a shift in variables it could drastically effect the vast amount of peoples ability to pay on their current loans and default.
3. The amount of relief provided in the UK and that is still on going through schemes such as Furlough has seen our national debt at an all time high only rivalled since debt levels from WW2. Additionally, I believe that I read that the US has printed 22% of all the US dollars in circulation in 2020 alone...
4. The valuation of certain company's such as Tesla are outrageous. Don't get me wrong, Elon is doing amazing things and has interesting projects and technology's in the pipeline but no company's PE Ratio should be 1,232. So in essence the PE Ratio is currently trading at $1,232 per $1 of earning... High right?
5. Crypto currency's in general a plethora of the coins are still seeing rises linked to a bull market even though some of the technology's behind them are not leading the charge such as Doge Coin.
6. The property market. In the UK I work for a property developers and it is clear at the moment that the market is beginning to slow. This was artificially stimulated throughout 2021 during the pandemic when the government provided Stamp Duty and Land Tax (SDLT) relief on property purchases up to the value of £500k. For any readers from outside of the UK this can save an individual up to £15k if they were to move or purchase a property. Now that this relief is coming to a close it has resulted in a slow in demand in the market.

These are just a few of my observations but I would be interested to hear other peoples thoughts on this.

In my opinion something has to give at some point... It can't be good times forever. The pandemic's effects I don't believe have still not truly been felt as there should be a spoke in unemployment rates once the Furlough Scheme comes to a close, in the UK anyway. 2022 I think will prove to be an interesting year.

Just my 2 cents.

Best,

S

Thanks for this. I'm in the UK too and I'm wondering if I should pull out the markets before furlough ends. I'm erring on the side that I should. I've started buying physical gold and silver but then I'm a conspiracy theorist at heart All in for the zombie apocalypse!

 

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[biggeemac]

Yep, my builder had to have the floor joists re-engineered on my house because lvl's are unavailable. Something about the glues needed to manufacture the lvl's being unavailable.

 

[Kid]

The Ameridollar...
The Eurodollar
The Asiadollar

3 currencies, 1 world order and a fresh start with no sovereign debt, but plenty of consumer debt to keep the scam alive. Sounds pretty cool eh? The Uniform Currency and Stabilization Act of 2022 will be chocked full of all kind of goodies!! Kinda like how "The Affordable Care Act" turned my health insurance payment into the equivalent of a mortgage.

Of course I'm speculating wildly as the dramatic writer in me is coming out, but nothing surprises me any longer, now I just have fun speculating on what ridiculousness they'll do next.

Don't forget Russiadollar!!

Seeing how things are going between NATO and Russia over Ukraine , they would probably try to do something on their own and gather post soviet states.

But seriously, there's already IMF, ECB and (just checked it ) South East Asian Central Bank (SEACEN).

So we probably only wait for young new generation who would go:
"Bankers? Fed? As long as i can Venmo my pals, I don't care that there's only one currency in the world"

 

[peddletothemetal]

What are members current opinions on how the next recession will go down?

The thing that stands out to me is that after a global pandemic, there doesn't appear to be any noticeable economic difference at least from where I'm standing. There was a bit of panick and layoffs, but people found new jobs, and the stockmarket etc is now where it was before the pandemic hit. It's like we haven't felt was we should have felt. It just doesn't add up.

People had been saying for a while that the recession was due, 2020 or 2021, but we haven't really felt one.

The only conclusion I can come to is that it's been postponed (by a torrent of money printing and government spending), but that when it finally hits, all that "pent up recession" (that's been going since 2008 or even 2000) is going to be released and it's going to be absolutely brutal. The "big one".

So what are members opinions of how and when this will likely go down? Or possible triggers or "bells" to watch out for.

Also what defensive measures do you think would be best?

The problem I'm having around developing defenses is that when crashes happen, they tend to be (basically by definition) heavily deflationary. During 2008 for instance, gold dropped along with everything else, as people liquidate to cash simply because it's the unit of account (they need it to meet their payables). Gold subsequently had a bull run, but the fact was still that cash & bonds & USD were still the go-to assets when the crash hit. That's the default pattern.

This time I'm not sure how it will play out. Everyone knows that if it hits, them and other countries will hit the already smoking printing presses hard, and spend like crazy. They'll print 10x if needed. But that will just appear 10x as absurd: it would just be impossible for people to believe cash & bonds aren't doomed after that.

Currently I'm in a mix of cash (mostly) and gold as a result, but I'm not sure what else to diversify into. The only thing I've been able to think of so far is consumer staples and basic utilities, as they appear very solid (people don't go without food & electricity in 1st world country recessions). But the charts still indicate that when recessions hit these stocks still take a big hit along with everything else. This indicates the best course is: stay in cash until "blood on streets" and then exit it all.

My cash exit idea would then be into: gold & silver, staples & utilities etc, and country indexes with low history of recession postponing and good economic and government fundamentals.

My one concern with this is that I'm wrong about a pending crash and we're already in some kind of stagflation, where the loose money is going to somehow cloak the crashes because they won't appear in dollar terms during runaway inflation. If this is the case I should exit the cash now rather than wait.

The one indicator I have that the hold cash decision is correct it that it's what all the big guys are doing, Buffet, the big tech companies etc, who are all holding massive cash. This seems to indicate they're all waiting for a crash.