LogFAQs > #968521339

I might be more pessimist now than I was a few weeks ago.

Looking at august CPI data, pretty much everything increased except for energy. Energy was down about 5% for july and august, mainly driven by gasoline which was down 10% in august and 7 % in july.

Opec cutting production means gas prices are going to go up. (They cut the quota by 2mil but several countries weren't meeting quota to begin with, so the ACTUAL production cut is about 900k-1.1mil, somewhere in that range). And with the high demand in europe, that number is going to shoot up. We're going to see the highest gas prices ever this winter IMO.

And yes house prices are coming down but not nearly as fast as people think. House prices take months to go down and are still not at equilibrium.

The fundamental problem though is that wages are way up and unemployment is down. As long as that happens, demand will stay high, people will keep spending. Goldman Sachs says households have about 2 trillion still in excess savings just from the lockdowns, which is equivalent to 10% of GDP.

I still think the general public is too optimistic. Market will have ups and downs but like I've said many times, all we've seen so far is the market pricing in rate hikes. We haven't seen the actual effect of rate hikes. Businesses will start to trim fat to prepare for whats ahead. Winter is coming in '23.

Only in the rosiest of worlds will a mild rise in unemployment suffice to slow down price rises substantially. The worst of the fight to tame inflation is yet to come. - Economist Magazine