4 ms·

One last flush before inflation disappears and tech booms, plausible deniability is still available. In six months, things will have recovered too much to allow

One last flush before inflation disappears and tech booms, plausible deniability is still available. In six months, things will have recovered too much to allow for the optics of big layoffs. Edit: for the doubters, the stock market is clearly pricing in inflation dropping, your current analysis doesnt take into account any data that hedge funds and investors are trading on

dpflan 3y ago
You're looking at FOMC and interest rates changes in 6-month will change the picture?
- oceanplexian 3y ago
  Inflation is trending down, the entire mandate of the Fed is to achieve maximum employment and keep prices stable. There's also some data coming out that a lot of the inflation wasn't real, and corporations were using it as a cover to price gouge.
  - oldpersonintx 3y ago
    contrary to what you read on CNBC, not every decision is based on inflation lots of tech companies just have too many employees it takes fewer people to maintain something than to build it...and arguably Netflix has saturated its markets
  - dpflan 3y ago
    Yes, aware of the flaunted price increases. So inflation going down means the companies balked and have to back down and drop prices? I guess they are keeping the prices as high as possible, but how does the FED influence the company's decision to lower prices (and hence inflation)? Is the incentive to not get sued?
    - ska 3y ago
      > So inflation going down means the companies balked and have to back down and drop prices? No, it means that the rate of price increases has slowed.
      - dpflan 3y ago
        OK: Inflation as the % increase of a price compared to a previous period, whereby lower inflation means lower % increase of a price compare to a previous period -- 0% meaning prices have stabilized when compared to a previous period? So we get stuck with high prices, the anecdotal comment in this thread seems to give some color to that idea. Some useful links from the Fed: - Inflation calculator: https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001&year2=202311 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001... - Recent CPI Summary: https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
        ska 3y ago
        > So we get stuck with high prices, Yes, historically this is how it works. High inflation leads to higher prices which then settle, an higher salaries etc. lag but roughly catch up. It's more useful to think of inflation as a rate of reduction of the value of money than as an increase in prices. Tools like the CPI baskets are attempts to find a measure of the "real" loss of value, but this is inherently flawed. Tools to affect it (e.g. federal rates, QE, etc.) are inherently ham-fisted and only indirectly coupled to the economic drivers of inflation, so also flawed. Companies take advantage of the variability to be more aggressive with price experiments, etc., etc. - so it's complicated. And so it goes.
        dpflan 3y ago
        It is multi-faceted, but maybe it seems not so complicated in that the decision to raise a price beyond a certain point is on the price-setter (right?) and that seems to be a driver of this situation, as you have stated -- using the adage (“profits are an opinion, cash is a fact."), seems like it's an arbitrary decision to make prices move up beyond a certain point...
  - sottol 3y ago
    You can kinda tell when at the grocery store. Anecdotally, a lot of "bulk-comfort" foods like potato chips, sodas, flavored waters, cereals, ... about doubled in price but now most of these items are almost permanently "buy 1 get 1 free" (sometimes but-1-get-3-free, the "old BOGO"). It's no longer a one-off reduction every couple weeks. Consumers must have reduced purchases but companies don't want to backtrack on the price, thus they're always on sale without actually bringing down the base price. I wonder if that affects inflation measurements as I don't know if the inflation basket is calculated based on individually marked prices or actual consumer spending.
Findeton 3y ago
More like 12 months. In 6 months perhaps we’ll be trying to get out of a recession.
cableshaft 3y ago
Interest rates probably need to go down a decent amount before that happens. It doesn't sound like the first cuts are likely to happen for at least another six months or so, if that. And even then it won't be a major rate cut.
hotpotamus 3y ago
I guess I'm nearly infinitely cynical, but I suspect that in six months, the execs will still prefer money over optics.
- dpflan 3y ago
  You are not cynical, it is the general trend, and you wish it weren't true.
sakopov 3y ago
IMHO, what I see from the latest CPI report is inflation becoming persistent and it looks like shelter prices are the reason. So I don't think rates will be cut in the near short-term and will likely remain unchanged. The good news is that apartment construction [1] and vacancies [2] are trending up, so this could give way to lower rents and CPI coming down to what the FED is expecting but I don't think this is happening in March but rather much later next year. So, I think we'll have more pain and layoffs in the tech market for the majority of next year... [1] https://fred.stlouisfed.org/series/UNDCON5MUSA https://fred.stlouisfed.org/series/UNDCON5MUSA [2] https://fred.stlouisfed.org/series/RRVRUSQ156N https://fred.stlouisfed.org/series/RRVRUSQ156N
- ldjkfkdsjnv 3y ago
  the stock market is clearly pricing in inflation dropping, your current analysis doesnt take into account any data that hedge funds and investors are trading on
- HDThoreaun 3y ago
  Inflation is sitting at 3.1%, it's already come down. You are right that housing inflation is still a big problem, but the overall number is in the acceptable range today. Powell just signaled 3 cuts next year being the current plan. https://www.nytimes.com/live/2023/12/13/business/fed-meeting-interest-rates https://www.nytimes.com/live/2023/12/13/business/fed-meeting...
nobodyandproud 3y ago
I hope you’re right, but prior busts and downturns lead to a populations that were unhireable once the economy picked back up.

dpflan 3y ago

You're looking at FOMC and interest rates changes in 6-month will change the picture?

oceanplexian 3y ago
Inflation is trending down, the entire mandate of the Fed is to achieve maximum employment and keep prices stable. There's also some data coming out that a lot of the inflation wasn't real, and corporations were using it as a cover to price gouge.
- oldpersonintx 3y ago
  contrary to what you read on CNBC, not every decision is based on inflation lots of tech companies just have too many employees it takes fewer people to maintain something than to build it...and arguably Netflix has saturated its markets
- dpflan 3y ago
  Yes, aware of the flaunted price increases. So inflation going down means the companies balked and have to back down and drop prices? I guess they are keeping the prices as high as possible, but how does the FED influence the company's decision to lower prices (and hence inflation)? Is the incentive to not get sued?
  - ska 3y ago
    > So inflation going down means the companies balked and have to back down and drop prices? No, it means that the rate of price increases has slowed.
    - dpflan 3y ago
      OK: Inflation as the % increase of a price compared to a previous period, whereby lower inflation means lower % increase of a price compare to a previous period -- 0% meaning prices have stabilized when compared to a previous period? So we get stuck with high prices, the anecdotal comment in this thread seems to give some color to that idea. Some useful links from the Fed: - Inflation calculator: https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001&year2=202311 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001... - Recent CPI Summary: https://www.bls.gov/news.release/cpi.nr0.htm https://www.bls.gov/news.release/cpi.nr0.htm
      - ska 3y ago
        > So we get stuck with high prices, Yes, historically this is how it works. High inflation leads to higher prices which then settle, an higher salaries etc. lag but roughly catch up. It's more useful to think of inflation as a rate of reduction of the value of money than as an increase in prices. Tools like the CPI baskets are attempts to find a measure of the "real" loss of value, but this is inherently flawed. Tools to affect it (e.g. federal rates, QE, etc.) are inherently ham-fisted and only indirectly coupled to the economic drivers of inflation, so also flawed. Companies take advantage of the variability to be more aggressive with price experiments, etc., etc. - so it's complicated. And so it goes.
        dpflan 3y ago
        It is multi-faceted, but maybe it seems not so complicated in that the decision to raise a price beyond a certain point is on the price-setter (right?) and that seems to be a driver of this situation, as you have stated -- using the adage (“profits are an opinion, cash is a fact."), seems like it's an arbitrary decision to make prices move up beyond a certain point...
- sottol 3y ago
  You can kinda tell when at the grocery store. Anecdotally, a lot of "bulk-comfort" foods like potato chips, sodas, flavored waters, cereals, ... about doubled in price but now most of these items are almost permanently "buy 1 get 1 free" (sometimes but-1-get-3-free, the "old BOGO"). It's no longer a one-off reduction every couple weeks. Consumers must have reduced purchases but companies don't want to backtrack on the price, thus they're always on sale without actually bringing down the base price. I wonder if that affects inflation measurements as I don't know if the inflation basket is calculated based on individually marked prices or actual consumer spending.

Findeton 3y ago

More like 12 months. In 6 months perhaps we’ll be trying to get out of a recession.

cableshaft 3y ago

Interest rates probably need to go down a decent amount before that happens. It doesn't sound like the first cuts are likely to happen for at least another six months or so, if that. And even then it won't be a major rate cut.

hotpotamus 3y ago

I guess I'm nearly infinitely cynical, but I suspect that in six months, the execs will still prefer money over optics.

dpflan 3y ago
You are not cynical, it is the general trend, and you wish it weren't true.

sakopov 3y ago

IMHO, what I see from the latest CPI report is inflation becoming persistent and it looks like shelter prices are the reason. So I don't think rates will be cut in the near short-term and will likely remain unchanged. The good news is that apartment construction [1] and vacancies [2] are trending up, so this could give way to lower rents and CPI coming down to what the FED is expecting but I don't think this is happening in March but rather much later next year. So, I think we'll have more pain and layoffs in the tech market for the majority of next year... [1] https://fred.stlouisfed.org/series/UNDCON5MUSA https://fred.stlouisfed.org/series/UNDCON5MUSA [2] https://fred.stlouisfed.org/series/RRVRUSQ156N https://fred.stlouisfed.org/series/RRVRUSQ156N

ldjkfkdsjnv 3y ago
the stock market is clearly pricing in inflation dropping, your current analysis doesnt take into account any data that hedge funds and investors are trading on
HDThoreaun 3y ago
Inflation is sitting at 3.1%, it's already come down. You are right that housing inflation is still a big problem, but the overall number is in the acceptable range today. Powell just signaled 3 cuts next year being the current plan. https://www.nytimes.com/live/2023/12/13/business/fed-meeting-interest-rates https://www.nytimes.com/live/2023/12/13/business/fed-meeting...

nobodyandproud 3y ago

I hope you’re right, but prior busts and downturns lead to a populations that were unhireable once the economy picked back up.