7 ms·

I'm not an economist or market prognosticator nor do I have anything to do in the financial sector besides my sagging 401k. But this is what "they" want right?

I'm not an economist or market prognosticator nor do I have anything to do in the financial sector besides my sagging 401k. But this is what "they" want right? A cooldown in the economy so that inflation abates. As people are losing their jobs in the tech sector and goods are more expensive, a new computer purchase seems like a luxury. This TSMC miss and Apple's sales plunge earlier is expected right? What's next? Cars? Homes?

BirAdam 4y ago
In an inflationary environment, prices exceed the ability of people to pay and dollar velocity falls which puts downward pressure on prices. At least that sometimes happens. Other times, governments, banks, megacorps and other institutions turn on the liquidity and people just start using a million of the local currency unit to buy bread. Which way things go today will depend upon whether or not the Federal Reserve and the US govt find a way for the govt to avoid a sovereign debt crisis.
ntkachov 4y ago
"They" being the Federal Reserve, who's mandate is to balance unemployment and inflation. So yes, Cars, homes and everything else in the Fed's basket of goods needs to stop going up by 6%/mo. The Fed is limited in their toolset, so in order to do that they can raise the federal funds rate basically causing any loans given to have a minimum APR (Why lend to Jack for 5%, when Uncle Sam will give you 6%). So if you're taking out a loan, your payments are going to be more expensive. Thats going to nuke lower return investments and make borrowing to grow your business harder.
- eganist 4y ago
  > The Fed is limited in their toolset, so in order to do that they can raise the federal funds rate basically causing any loans given to have a minimum APR The Fed is limited much the way a surgeon would be limited if they had to manage a tumor with a mallet. The solution here would've been targeted taxes to extract the excess liquidity that pooled up in the economy after all the loans and grants, but with a deadlocked legislature this was not going to happen. So, mallet it was.
  - kriskrunch 4y ago
    Why is the answer often to raise taxes? Wouldn't less government spending and a higher fed rate have been even better and more efficient? Inflation was already high when the last large spending package passed and succeeded in over stimulating the economy.
    - coryrc 4y ago
      Which party has voted for consequential spending cuts in the last two decades?
    - jandrese 4y ago
      Getting agreement on reducing spending is a much harder ask. What are you going to cut? The military? They're incredibly well connected, it's basically impossible. Social Security? Old people vote, it's political suicide. Social Safety Net programs? Already been cut to the bone. It's also questionable how much of inflation is due to supply shock versus how much is just corporate profit taking. Corporate profit margins have been incredibly healthy despite what is supposedly a supplier squeeze.
      - kriskrunch 4y ago
        You're right, it's way easier for the government to spend money it doesn't have. The end game on that path isn't pretty. But that's not my question or point, and maybe I didn't write my other post very well. The post I'm replying to suggests more taxes should have been used to suck up the excess liquidity. I'm suggesting that liquidity was caused by too many large spending packages and Fed rates that were too low in the first place... Hence, it might be inefficient. Of course I'm biased, as my spending power has gone down tremendously in the past 1.5 years. I blame the large increases in money supply and low Fed rate for causing a wild near-free money environment.
    - JustSomeNobody 4y ago
      > Why is the answer often to raise taxes? Because taxing isn't a way to fund the government, it's a way to shape behavior.
- amluto 4y ago
  > 6%/mo Come again? We’re at 6% year over year, which is not even close to 6%/mo.
  - devoutsalsa 4y ago
    To use startup lingo, it’s a 6% run rate.
  - bobbylarrybobby 4y ago
    I assume they meant 6% annualized each month, so 1.06^(1/12) - 1 = 0.4868%.
onlyrealcuzzo 4y ago
If home values drop, central banks usually swoop in to ensure housing remains unaffordable.
Convolutional 4y ago
Karl Marx said capitalists gain profit by expropriating the wealth a worker creates during surplus labor time. There is a conflict in the relation of production between the worker creating the wealth and the heir seeking to expropriate it. Feudal pre-capitalist society did not need unemployment, but capitalist society does, if there is no reserve army of labor ( https://en.m.wikipedia.org/wiki/Reserve_army_of_labour https://en.m.wikipedia.org/wiki/Reserve_army_of_labour ), the workers creating wealth have more leverage to keep more of the wealth they created. This is all happening because the rentier class is seeking to retain its rate of profit.
- okr 4y ago
  The times were never easier for the laptop class to get self employed and leaving the hamster wheel. (Besides,i noticed, that on HN, where a lot of people program machines to do the work for them, profiting from the productivity gains, have an affinity to quoting Marx. I do not know why that is.)
  - red-iron-pine 4y ago
    You're greatly overstating the pipeline in education, knowledge, attention, and effort that's required to get to that point. And to stay there. If it were easy there wouldn't be corporations.
    - JumpCrisscross 4y ago
      They never said it’s easy, just that it’s easier. That’s true.
  - nebulousthree 4y ago
    (It's almost as if it's because they're able to differentiate between a machine and a human being.)
- kriskrunch 4y ago
  Capitalist societies did more to improve the lives of everyone on Earth than Marxism ever did or ever could. Have you walked the streets of Havana? I have. Talk about oppressive... And depressing.
rajin444 4y ago
Ideally! It’s a great time for those with high amounts of wealth to buy up assets from those suffering from inflation. Cheaper stocks, people losing their homes due to unemployment, business going under, etc.
- mushbino 4y ago
  That's one of the reasons they do this. Largest companies get to consolidate further.
- deleted 4y ago
  [deleted]
- wil421 4y ago
  Are people really losing their homes? 2022 is still down from pre-pandemic levels. 2020 and 2021 are outliers because of eviction bans. https://www.attomdata.com/news/market-trends/foreclosures/attom-year-end-2022-u-s-foreclosure-market-report/ https://www.attomdata.com/news/market-trends/foreclosures/at...
AmVess 4y ago
Car sales are in the toilet. Cars are sitting on dealer lots because they are too expensive and now banks are pulling floorplans. Car dealerships finance their inventory through banks, and these are called floorplans, in case anyone was wondering what a floorplan is. Housing market in the last two states I lived in still see strong sales, but the transaction prices are down 10-11% from last fall. I don't know what Nvidia's sales figures are like, but I can't imagine they are very good. Here, a base model RTX is $515 with tax. Base model cards like this were less than $200 4 years ago. What used to be a mid-range performance card now costs $1200.
- bryanlarsen 4y ago
  Recently I came up with a list of 15 reasons why gasoline car sales are going to plummet in the next few years. I'm sure that I'll be wrong on a few of the fifteen, but even so it's hard to see anything but doom for anybody selling gasoline cars. Electric cars are only partially going to make up the difference, and that's only if you can make them at a profit in a time of rapidly falling prices and constrained material supply.... https://news.ycombinator.com/item?id=35371171 https://news.ycombinator.com/item?id=35371171
- CoastalCoder 4y ago
  Thanks for explaining what floorplans are. What does it mean for a bank to "pull" a floorplan?
  - AmVess 4y ago
    In this case, it means either stopping financing floorplans altogether or greatly curtailing how much they will finance.
  - _huayra_ 4y ago
    It just means they're not going to pay to float the cost of the car from the manufacturer. iirc the dealers "buy" the cars from the manufacturer, then resell them to the customers. In the interim, they must carry this floating debt while the unsold cars sit on the lot. This is often why you can cut great deals on cars they want to get out of their inventory: it's often better for them to take the principle hit instead of letting the car rack up more interest payments on the floorplan or take a sizable principle hit in a wholesale auction.
neom 4y ago
"Unfortunately" the jobs report in Canada came in strong, and, predictably, the US jobs report followed.... surprise surprise, just as strong. More pain ahead I suppose.
- mcphage 4y ago
  If that darned economy would just stop getting better, maybe the economy would finally get better.
  - phpisthebest 4y ago
    This is one of the big dangers I see in economics right now. Too many people believe that a "strong job market" equals a strong economy. Boiling all economics down to the unemployment numbers is very dangerous
kmlx 4y ago
> Apple's sales plunge the overall PC market declined 29% https://www.wsj.com/articles/pc-shipments-fall-29-led-by-drop-in-apple-devices-fc14deec https://www.wsj.com/articles/pc-shipments-fall-29-led-by-dro...
- red-iron-pine 4y ago
  Most people use their phones for day to day computing; that's the real "personal computer". Laptops for things like web browsing and word processing haven't really improved in a meaningful way. Like my laptop from 4 years ago does just as fine a job as this year's model when it comes to browsing HN, running spotify, and managing ssh sessions to a cloud VM. Outside of gaming and some network simulation stuff for grad-school I have no need of a high-powered PC, and my i5 from a few years back still handles that well enough. Frankly if I didn't need to for network sim and VMs I'd have ditched the PC for a basic laptop, and hit my gaming fix w/ a Switch or Playstation.
  - pradn 4y ago
    It's too bad the Samsung Dex-style computing never made it to Apple devices. Apple is loath to combine mouse and touch-based computing, though.
    - azinman2 4y ago
      The iPad Magic Keyboard is a trackpad on a touch based os.
pid-1 4y ago
> expected right? The market is currently pricing is that central banks will be pressured to stop increasing rates due political pressure and / or systemic risk triggers. Bears / short sellers are actually losing money.
JumpCrisscross 4y ago
> people are losing their jobs in the tech sector Want to point out that this continues to be limited to tech, with national unemployment continuing to tick down amidst job creation.
- phpisthebest 4y ago
  >> with national unemployment continuing to tick down amidst job creation. There is alot of problems with this metric. First and foremost as that we need to redefine what "unemployment" means, as there are alot of people unemployed that do not count in that metric and conversely some employed people that are counted as unemployed. The changing types of work (gig economy, etc) need to change how we count things. Further Decreases in high paying jobs while creating low paying jobs does not seem like it should be something to be celebrated or pointed to as a robust economic activity, in short not all jobs are created equal
  - JumpCrisscross 4y ago
    You’ve listed unquantified hypotheticals, all of which are refuted by the data. For example: > we need to redefine what "unemployment" means, as there are alot of people unemployed that do not count in that metric and conversely some employed people that are counted as unemployed We have a variety of statistics measuring each of these [1] as well as no single unemployment figure. They’re all not only good, but improving. > changing types of work (gig economy, etc) need to change how we count things Part time versus full time has always been measured. > Decreases in high paying jobs while creating low paying jobs Real median wages have risen over the last year, are flat to Q4 2019 and at an all-time high exempting Q4 2019 - 2021 [2]. The pain is concentrated in tech, and at big tech at that. [1] https://www.bls.gov/news.release/pdf/empsit.pdf https://www.bls.gov/news.release/pdf/empsit.pdf [2] https://fred.stlouisfed.org/series/LES1252881600Q# https://fred.stlouisfed.org/series/LES1252881600Q#
  - evancox100 4y ago
    Employment-population ratio is probably the one hardest to game, and it is not slowing down at all. https://fred.stlouisfed.org/series/LNS12300060 https://fred.stlouisfed.org/series/LNS12300060

BirAdam 4y ago

In an inflationary environment, prices exceed the ability of people to pay and dollar velocity falls which puts downward pressure on prices. At least that sometimes happens. Other times, governments, banks, megacorps and other institutions turn on the liquidity and people just start using a million of the local currency unit to buy bread. Which way things go today will depend upon whether or not the Federal Reserve and the US govt find a way for the govt to avoid a sovereign debt crisis.

ntkachov 4y ago

"They" being the Federal Reserve, who's mandate is to balance unemployment and inflation. So yes, Cars, homes and everything else in the Fed's basket of goods needs to stop going up by 6%/mo. The Fed is limited in their toolset, so in order to do that they can raise the federal funds rate basically causing any loans given to have a minimum APR (Why lend to Jack for 5%, when Uncle Sam will give you 6%). So if you're taking out a loan, your payments are going to be more expensive. Thats going to nuke lower return investments and make borrowing to grow your business harder.

eganist 4y ago
> The Fed is limited in their toolset, so in order to do that they can raise the federal funds rate basically causing any loans given to have a minimum APR The Fed is limited much the way a surgeon would be limited if they had to manage a tumor with a mallet. The solution here would've been targeted taxes to extract the excess liquidity that pooled up in the economy after all the loans and grants, but with a deadlocked legislature this was not going to happen. So, mallet it was.
- kriskrunch 4y ago
  Why is the answer often to raise taxes? Wouldn't less government spending and a higher fed rate have been even better and more efficient? Inflation was already high when the last large spending package passed and succeeded in over stimulating the economy.
  - coryrc 4y ago
    Which party has voted for consequential spending cuts in the last two decades?
  - jandrese 4y ago
    Getting agreement on reducing spending is a much harder ask. What are you going to cut? The military? They're incredibly well connected, it's basically impossible. Social Security? Old people vote, it's political suicide. Social Safety Net programs? Already been cut to the bone. It's also questionable how much of inflation is due to supply shock versus how much is just corporate profit taking. Corporate profit margins have been incredibly healthy despite what is supposedly a supplier squeeze.
    - kriskrunch 4y ago
      You're right, it's way easier for the government to spend money it doesn't have. The end game on that path isn't pretty. But that's not my question or point, and maybe I didn't write my other post very well. The post I'm replying to suggests more taxes should have been used to suck up the excess liquidity. I'm suggesting that liquidity was caused by too many large spending packages and Fed rates that were too low in the first place... Hence, it might be inefficient. Of course I'm biased, as my spending power has gone down tremendously in the past 1.5 years. I blame the large increases in money supply and low Fed rate for causing a wild near-free money environment.
  - JustSomeNobody 4y ago
    > Why is the answer often to raise taxes? Because taxing isn't a way to fund the government, it's a way to shape behavior.
amluto 4y ago
> 6%/mo Come again? We’re at 6% year over year, which is not even close to 6%/mo.
- devoutsalsa 4y ago
  To use startup lingo, it’s a 6% run rate.
- bobbylarrybobby 4y ago
  I assume they meant 6% annualized each month, so 1.06^(1/12) - 1 = 0.4868%.

onlyrealcuzzo 4y ago

If home values drop, central banks usually swoop in to ensure housing remains unaffordable.

Convolutional 4y ago

Karl Marx said capitalists gain profit by expropriating the wealth a worker creates during surplus labor time. There is a conflict in the relation of production between the worker creating the wealth and the heir seeking to expropriate it. Feudal pre-capitalist society did not need unemployment, but capitalist society does, if there is no reserve army of labor ( https://en.m.wikipedia.org/wiki/Reserve_army_of_labour https://en.m.wikipedia.org/wiki/Reserve_army_of_labour ), the workers creating wealth have more leverage to keep more of the wealth they created. This is all happening because the rentier class is seeking to retain its rate of profit.

okr 4y ago
The times were never easier for the laptop class to get self employed and leaving the hamster wheel. (Besides,i noticed, that on HN, where a lot of people program machines to do the work for them, profiting from the productivity gains, have an affinity to quoting Marx. I do not know why that is.)
- red-iron-pine 4y ago
  You're greatly overstating the pipeline in education, knowledge, attention, and effort that's required to get to that point. And to stay there. If it were easy there wouldn't be corporations.
  - JumpCrisscross 4y ago
    They never said it’s easy, just that it’s easier. That’s true.
- nebulousthree 4y ago
  (It's almost as if it's because they're able to differentiate between a machine and a human being.)
kriskrunch 4y ago
Capitalist societies did more to improve the lives of everyone on Earth than Marxism ever did or ever could. Have you walked the streets of Havana? I have. Talk about oppressive... And depressing.

rajin444 4y ago

Ideally! It’s a great time for those with high amounts of wealth to buy up assets from those suffering from inflation. Cheaper stocks, people losing their homes due to unemployment, business going under, etc.

mushbino 4y ago
That's one of the reasons they do this. Largest companies get to consolidate further.
deleted 4y ago
[deleted]
wil421 4y ago
Are people really losing their homes? 2022 is still down from pre-pandemic levels. 2020 and 2021 are outliers because of eviction bans. https://www.attomdata.com/news/market-trends/foreclosures/attom-year-end-2022-u-s-foreclosure-market-report/ https://www.attomdata.com/news/market-trends/foreclosures/at...

AmVess 4y ago

Car sales are in the toilet. Cars are sitting on dealer lots because they are too expensive and now banks are pulling floorplans. Car dealerships finance their inventory through banks, and these are called floorplans, in case anyone was wondering what a floorplan is. Housing market in the last two states I lived in still see strong sales, but the transaction prices are down 10-11% from last fall. I don't know what Nvidia's sales figures are like, but I can't imagine they are very good. Here, a base model RTX is $515 with tax. Base model cards like this were less than $200 4 years ago. What used to be a mid-range performance card now costs $1200.

bryanlarsen 4y ago
Recently I came up with a list of 15 reasons why gasoline car sales are going to plummet in the next few years. I'm sure that I'll be wrong on a few of the fifteen, but even so it's hard to see anything but doom for anybody selling gasoline cars. Electric cars are only partially going to make up the difference, and that's only if you can make them at a profit in a time of rapidly falling prices and constrained material supply.... https://news.ycombinator.com/item?id=35371171 https://news.ycombinator.com/item?id=35371171
CoastalCoder 4y ago
Thanks for explaining what floorplans are. What does it mean for a bank to "pull" a floorplan?
- AmVess 4y ago
  In this case, it means either stopping financing floorplans altogether or greatly curtailing how much they will finance.
- _huayra_ 4y ago
  It just means they're not going to pay to float the cost of the car from the manufacturer. iirc the dealers "buy" the cars from the manufacturer, then resell them to the customers. In the interim, they must carry this floating debt while the unsold cars sit on the lot. This is often why you can cut great deals on cars they want to get out of their inventory: it's often better for them to take the principle hit instead of letting the car rack up more interest payments on the floorplan or take a sizable principle hit in a wholesale auction.

neom 4y ago

"Unfortunately" the jobs report in Canada came in strong, and, predictably, the US jobs report followed.... surprise surprise, just as strong. More pain ahead I suppose.

mcphage 4y ago
If that darned economy would just stop getting better, maybe the economy would finally get better.
- phpisthebest 4y ago
  This is one of the big dangers I see in economics right now. Too many people believe that a "strong job market" equals a strong economy. Boiling all economics down to the unemployment numbers is very dangerous

kmlx 4y ago

> Apple's sales plunge the overall PC market declined 29% https://www.wsj.com/articles/pc-shipments-fall-29-led-by-drop-in-apple-devices-fc14deec https://www.wsj.com/articles/pc-shipments-fall-29-led-by-dro...

red-iron-pine 4y ago
Most people use their phones for day to day computing; that's the real "personal computer". Laptops for things like web browsing and word processing haven't really improved in a meaningful way. Like my laptop from 4 years ago does just as fine a job as this year's model when it comes to browsing HN, running spotify, and managing ssh sessions to a cloud VM. Outside of gaming and some network simulation stuff for grad-school I have no need of a high-powered PC, and my i5 from a few years back still handles that well enough. Frankly if I didn't need to for network sim and VMs I'd have ditched the PC for a basic laptop, and hit my gaming fix w/ a Switch or Playstation.
- pradn 4y ago
  It's too bad the Samsung Dex-style computing never made it to Apple devices. Apple is loath to combine mouse and touch-based computing, though.
  - azinman2 4y ago
    The iPad Magic Keyboard is a trackpad on a touch based os.

pid-1 4y ago

> expected right? The market is currently pricing is that central banks will be pressured to stop increasing rates due political pressure and / or systemic risk triggers. Bears / short sellers are actually losing money.

JumpCrisscross 4y ago

> people are losing their jobs in the tech sector Want to point out that this continues to be limited to tech, with national unemployment continuing to tick down amidst job creation.

phpisthebest 4y ago
>> with national unemployment continuing to tick down amidst job creation. There is alot of problems with this metric. First and foremost as that we need to redefine what "unemployment" means, as there are alot of people unemployed that do not count in that metric and conversely some employed people that are counted as unemployed. The changing types of work (gig economy, etc) need to change how we count things. Further Decreases in high paying jobs while creating low paying jobs does not seem like it should be something to be celebrated or pointed to as a robust economic activity, in short not all jobs are created equal
- JumpCrisscross 4y ago
  You’ve listed unquantified hypotheticals, all of which are refuted by the data. For example: > we need to redefine what "unemployment" means, as there are alot of people unemployed that do not count in that metric and conversely some employed people that are counted as unemployed We have a variety of statistics measuring each of these [1] as well as no single unemployment figure. They’re all not only good, but improving. > changing types of work (gig economy, etc) need to change how we count things Part time versus full time has always been measured. > Decreases in high paying jobs while creating low paying jobs Real median wages have risen over the last year, are flat to Q4 2019 and at an all-time high exempting Q4 2019 - 2021 [2]. The pain is concentrated in tech, and at big tech at that. [1] https://www.bls.gov/news.release/pdf/empsit.pdf https://www.bls.gov/news.release/pdf/empsit.pdf [2] https://fred.stlouisfed.org/series/LES1252881600Q# https://fred.stlouisfed.org/series/LES1252881600Q#
- evancox100 4y ago
  Employment-population ratio is probably the one hardest to game, and it is not slowing down at all. https://fred.stlouisfed.org/series/LNS12300060 https://fred.stlouisfed.org/series/LNS12300060