The World Economy Is Suddenly Running Low on Everything
bloomberg.com
bloomberg.com
EDIT more here : https://www.youtube.com/watch?v=cWQeSU6eYy4
Do you have a source for this? I've never heard of it.
I cannot find evidence to backup such claims, has anyone else heard of this or have an expample?
And like another user suggested, what's to prevent the government from passing a law that changes debt contracts?
In the USA it will be lobbyists.
Just buy older junker toyotas and chop-chop them at the dealer for parts :D
Now that everyone's noticing that manufacturing facilities are in unprecedented levels of demand, the stock market is going through the roof. Its a good time to be a lumber mill right now...
By the time its "obvious" to know what move it is to do, you're too late. Everyone else already hopped on the hot investments. You need to think about where the economy will go next year (or later than that), and correctly predict it to make the correct move today.
Speaking generally, you don't need to predict where the economy will go next year either. If the economy grows 10% but people decide they need to hold more cash, you are going to lose money. You need to move beyond the first-level (and sometimes it is perfectly legitimate to just observe...I remember people saying that shipping had run its course earlier this year...a lot of these stocks are up 100% YTD). You have to understand the fundamentals and how people interpret those fundamentals.
What you need to predict is "what opinions will change over the next year". Does lumber really deserve its ~300% increase? Or is that overestimating the shortage? Maybe Lumber's proper price is ~250% above the norm, so maybe shorting lumber futures is the best move.
Or maybe the lumber shortage will continue to get worse: maybe 400% above the norm is going to happen. I'm not a commodities trader, so I really can't speak the specifics (just talking general wishy-washing feelings here). But that's the rub: knowing whether to buy or sell before everyone else does it.
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If its "obvious" that lumber will remain highly priced over the next few years: does it make sense to buy up old lumber mills across the country and start spinning them up again? How many years will these old lumber mills have to run before they churn a profit? Or will higher labor costs cut back on said profits?
Its not easy to predict the future correctly.
Predicting the future is relatively straightforward. You just look at fundamentals, and for most commodities it is fairly easy to predict how demand/supply is going to change. Predicting the future and how people will react is not.
What are you talking about? commodities and forex is crawling with HFTs and hedge funds.
Also, just because there's a trend dosen't mean you can profit from it. Let's say soybean futures are cheaper in the fall (harvest time) than in the spring. Easy opportunity to make some money right? Just buy in the fall and sell 6 months later. Not so fast, soybeans aren't like stocks where you can hold on to them for $0. You have to take delivery of the soybeans in fall and find a place to store it. That probably eats up a fair chunk of your potential profits. Factor in the risk and your profits will be marginal.
You don't understand. The reason why price trends is because there is a persistent imbalance between supply and demand because of the presence of non-financial buyers who take liquidity at bad prices.
Your point about soybeans make no sense, contango exists and is why commodity houses often have huge trading arms that generate lots of profit (they can put on contango trades like storing oil offshore in a tanker for six months). The reason why these trades generate profit, again, is because of a persistent imbalance between demand and supply (this is also why oil traded at negative prices...although this is slightly more complex because it involved financial buyers running ETFs who got stung by roll risk due to their own incompetence).
But, either way, the point is that you can observe that demand and supply is out of balance now and buy, and make money because prices will continue to rise because supply can't be brought on quickly (a good example of this is copper: exploration has been poor for a decade plus, head grades continue to fall...there is no way to bring on supply for years).
It seems like it’s been a hidden inflation, where up until now, prices haven’t changed to reflect scarcity. In turn, that increases demand, which creates a resale/arbitrage market which reduces supply. As more people recognize that we’re in this weird era of everything being cheap but scarce, they buy more, adding to the scarcity.
Is there a hard landing resolution to this that we should be worried about?
- Governments that shut down significant parts of every major economy, for several months, to contain the virus (which imho was a good reason), with
- Trillions in stimulus
- And a record global middle class that's never been larger or wealthier than today and wants to consume more than ever
And this is the result.
The free market has its flaws, but this situation is perfectly suited for capitalism to work its magic.
The covid distributions were well known a couple months in.
The vulnerable actually needed more protection. Isolation, cleanse everything delivered from the outside.
The healthy cohorts should have continued as normal.
Of course, that's assuming the next pandemic isn't in 100 years when we forget everything we learned this time around.
Paradoxically, most of the big governments had plans in place for years, even decades, but they were not targeting the correct virus, and they had a hard time adapting to something unknown.
Next time, it will be different, and we should only be prepared to that.
How can we ethically get such a theory? Cancer. Tailor make a vaccine targetting the particular cancer cell a given patient has. If you give this as a hail-mary to those with a bad prognosis it becomes a win-win.
Larger population? Sure. Wealthier? Uh, no. By like no meaningful metric that I can think of.
https://fred.stlouisfed.org/series/PSAVERT
US middle class reacted to the pandemic by saving tons of money. At least, the ones who still kept their jobs (which was most people in fact. Yeah, Hotels / Hospitality / Restaurants / Airlines / Cruises did poorly, but that's still only one subset of the middle class).
Now that the US is leading the vaccinations in the world (at least, in the top 10 countries), and with more and more optimism coming about, people are looking to spend that money they saved.
Plus, on average, more literal money to spend, thanks to having nothing much to spend it on for the last year.
Yup.
> Computing, long distance travel, breadth and depth of entertainment choices, and disease
These have nothing to do with class, and I'm not even sure entertainment choices have gotten any better.
The middle class has been made wealthy by the government/Fed. The government is doling out cash at a furious pace.
Honestly, I have never seen the price mechanism function this badly in my investing career (10 years). And I studied economic history, and there are relatively few parallels to what the govt is doing now.
Whatever happens though, this isn't capitalism. Failure is the most important part of capitalism. The politics of today mean failure cannot occur.
Btw, to be specific, the stuff you are seeing in private equity (not just in the US but Europe) is just totally insane. Gambles that should have failed are returning 10x, money is being raised for non-productive purposes at 2% whilst you have consumers struggling for finance. The homeless situation in the US is intolerable. Some US cities are third-world, every bridge has people in tents underneath.
I can see why people think the system is working, it has made the already rich unimaginably richer...it isn't capitalism, it is an aristocracy. It is appalling that some people justify their theft by saying they deserve it (an unfortunate consequence of capitalism is that the winners feel justified).
https://www.nber.org/system/files/working_papers/w28304/w283...
I really would like to see a good numerical analysis of the costs and benefits of lockdown policies - I have yet to see one that's not seriously flawed.
https://usafacts.org/visualizations/coronavirus-covid-19-spr...
https://wallethub.com/edu/states-coronavirus-restrictions/73...
https://www.statista.com/statistics/1109011/coronavirus-covi...
https://www.usnews.com/news/best-states/articles/unemploymen...
https://carsey.unh.edu/COVID-19-Economic-Impact-By-State#:~:...).
Personally, I’m mainly thinking of Sweden and pre-post-Brexit-transition UK (because post-post-Brexit-transition is a confounding variable), vs New Zealand, the other (non-Swedish) Nordic counties, and China.
America — despite the economic and cultural hegemony and media coverage — is not actually that significant one way or the other in this particular event.
https://ourworldindata.org/explorers/coronavirus-data-explor...
Given the birth rate and the current population, that's roughly 0.2% of the population.
You are aware that a 1% mortality rate is very very very high, right? It's like having a fear of a laser-canon-toting space alien ship hovering above your house. Pretty rational.
No.
https://twitter.com/Samanticka/status/1393188103586816001?s=...
>> Think of a virus where 70% of kids are totally asymptomatic, less than 1% have severe symptoms, and less than 0.05% die. Phew that's no big deal for kids then! Don't worry about them!
>> Oops actually it's polio in the 1950s
Also, if as suggested by the wording these numbers are looking at the risk to kids then it's not a fair comparison anyways, as the 1% number (already hyperbolic) quoted for COVID is across both vulnerable and not-vulnerable populations.
I for one do not find myself needing to display compassion for numbers as I reserve my compassion for actual human beings. To mangle Douglas Adams, being overly concerned about IFRs is to me extremely odd as on the whole, it isn't the ~~small green pieces of paper~~ statistics that are getting sick.