Investing

[Deleterious]

That makes me question the process in theory. Like you said, everyone knew it was bare minimum 75bps. So why the big downturn.

[Screwball]

6 hours ago, Deleterious said:

That makes me question the process in theory. Like you said, everyone knew it was bare minimum 75bps. So why the big downturn.

Interesting question, in a couple of ways. Some are using the dot plot numbers to explain the sell off, which is viewed as a commitment from the FOMC to continue the hikes. That is only one narrative from the vineyard of choices and usual suspects.

I think that makes sense if you believe in dot plot bullshit.

We won't know the results of these moves for months. All we can do is watch the numbers going forward. Rising interest rates will create pain, we just don't know how much, or where - yet.

As far as the market moves today, I might be crazy (I'm good with that), but I think it was Wall Street doing what Wall Street does.

Separate people and their money.  They are the smartest guys in the room. And they run the markets too.

What a fuckin gig!!!

 

Edited September 22, 2022 by Screwball

[Deleterious]

I brought this up a few months ago.  Housing prices will remain high if nobody wants to sell and get off of their insanely low interest rate.

After Years of Low Mortgage Rates, Home Sellers Are Scarce

Quote

Homeowners with low mortgage rates are balking at the prospect of selling their homes to borrow at much higher rates for their next homes, a development that could limit the supply of houses for sale for years to come.

Housing inventory has risen from record lows earlier this year as more homes sit on the market longer. But the number of newly listed homes in the four weeks ended Sept. 11 fell 19% year-over-year, according to real-estate brokerage Redfin Corp. That is an indication that sellers who don’t need to sell are staying on the sidelines, economists say.

 

[Screwball]

Some banks announced a 75bps raises to their prime rate today.  At least 3 of them but I can't remember which ones.  JP Morgan was one I think.

While checking our savings account rate, I see no change.

Such a fucking deal.

[gehringer_2]

26 minutes ago, Deleterious said:

I brought this up a few months ago.  Housing prices will remain high if nobody wants to sell and get off of their insanely low interest rate.

After Years of Low Mortgage Rates, Home Sellers Are Scarce

 

does anyone remember 'assumable' mortgages?

[John_Brian_K]

1 hour ago, gehringer_2 said:

does anyone remember 'assumable' mortgages?

When my wifes mother was alive, she was not good about making mortgage payments.  My wifes name was on the mortgage and it was affecting our abilities with credit so I started paying the mortgage for her, did this about 3-4 years then we went through the process to have the mortgage assumed, but was not approved for it.  It was basically taking my wifes name off and putting it in the mother in laws name only.  I am guessing this is the same thing?

[gehringer_2]

29 minutes ago, John_Brian_K said:

When my wifes mother was alive, she was not good about making mortgage payments.  My wifes name was on the mortgage and it was affecting our abilities with credit so I started paying the mortgage for her, did this about 3-4 years then we went through the process to have the mortgage assumed, but was not approved for it.  It was basically taking my wifes name off and putting it in the mother in laws name only.  I am guessing this is the same thing?

Sort of but to a different purpose.

Believe it or not, prior to about maybe 1970-something, you could by a house *with the mortgage* that was already on it.  IOW, come in with enough principle to pay off the current owner's equity and just *assume* his mortgage in place. It was quite common practice. The idea being that mortgages were so unitform, rates so constant and the terms all so similar, it wasn't worth anyone's time to originate a new loan exactly the same as the old loan.....

[CMRivdogs]

2 hours ago, gehringer_2 said:

does anyone remember 'assumable' mortgages?

I think my parents had one when they were house hunting in the late 60s. Or at least I knew they were looking for something similar concerning perceived credit issues. They figured buying might be a bit easier than trying to rent to a family with six kids.

I do know the mortgage for the house in 1968 was somewhere near $12,000 with the monthly payment around $125 a month. Cheaper than my apartments in the '70s

[Screwball]

The date you seek is 1971.

[oblong]

I guess I’m naive and fortunate because I don’t care about interest rates.  I carry no CC debt.  My mortgage is under 4. I’m not moving.   I don’t need my investments for another 13-14 years.  The only impact potentially is my car leases are up late next year but I have the sale price locked in if I want to buy and am fine doing that.  I also get employee pricing.   

[gehringer_2]

2 hours ago, Screwball said:

The date you seek is 1971.

sounds about right

[Deleterious]

18 hours ago, Screwball said:

Some banks announced a 75bps raises to their prime rate today.  At least 3 of them but I can't remember which ones.  JP Morgan was one I think.

While checking our savings account rate, I see no change.

Such a fucking deal.

My credit union offers super saver tiers.  The top rate requires a savings account balance of over $250,000 and it only pays 0.35%.

They do offer a type of account with zero minimum balance but require you to use their debit card 12 times a month.  That pays 2.96%.  

The saver has been eliminated in the past 30 years.

[CMRivdogs]

A quick google check shows there are still a few assumable loan programs out there. Primarily FHA or VA type loans. The down payment would probably have to be prohibitive these days, assuming the seller would want close to whatever equity they've put into the home.  

[Screwball]

4 hours ago, Deleterious said:

My credit union offers super saver tiers.  The top rate requires a savings account balance of over $250,000 and it only pays 0.35%.

They do offer a type of account with zero minimum balance but require you to use their debit card 12 times a month.  That pays 2.96%.  

The saver has been eliminated in the past 30 years.

I used to build a bond ladders using 1 month T-Bills.  They didn't pay much but over the course of a year I could get about 1.7 percent on a ladder by rotating 4 - $10,000 buys a week apart.  So you had 4 bills, with one maturing each week (which I would re-purchase).  This is slightly better than the return of .01 percent the bank was paying on money that just sat in the account.

Yields went so low it wasn't worth doing it, and at one time I think they even stopped issuing them.  You can do the same thing with a brokerage account.  Both setup through Treasury Direct (comes straight out of my bank account).

I checked today and they prices are back to where it is worth doing.  You will make about 20 bucks a month on 10 grand.  With 4 bills, that's 80 bucks a month, or 960 a year.  Not much, but free money on cash sitting in a bank.  You might not get quite that much as the rates fluctuate (bond auction), so the return might not be 2.4 as is the example I used.

You can also find some decent paying corporate bonds that mature in short periods of time, that are not junk rated, if one's goal is less risky investments and the ability to become liquid in a short period of time in case a better return presents itself.

Yes, the saver has been taken out to the yard, beaten, kicked, pissed on, and then ran over.

Edited September 23, 2022 by Screwball

[Screwball]

14 hours ago, gehringer_2 said:

sounds about right

Nixon, Bretton Woods, and the gold standard changed all this.  That was August 15, 1971.

And before anyone jumps my shit - I'm not saying anything good or bad about this - just noting the date.

[gehringer_2]

Market down across the board, 2% for the S&P, 3% for the Russell. Oil at $78. 

If late buyers don't emerge the loss for the week will be 5%.

[gehringer_2]

Just now, Screwball said:

Nixon, Bretton Woods, and the gold standard changed all this.  That was August 15, 1971.

And before anyone jumps my shit - I'm not saying anything good or bad about this - just noting the date.

the mortgage assumption thing just seems like concept from Mars when viewed today. I think it goes mostly to the way banking has changed from a business that makes it money on loans to one that makes as much of its money on fees and derivatization. Those mortgages were assumable because no-one thought about the loss of income from forgoing new origination fees, because banks didn't charge those fees - the money was in the income from the loan, so they just didn't care if the holder of the note changed  - and note this was an era when banks & S&Ls (another quaint anachronism) actually held mortgages - they didn't just originate them and pass them off to securities bundlers.

[Screwball]

I'm watching the 3636.87 level, which is the next support level.  Might not see it today.

[Screwball]

8 minutes ago, gehringer_2 said:

the mortgage assumption thing just seems like concept from Mars when viewed today. I think it goes mostly to the way banking has changed from a business that makes it money on loans to one that makes as much of its money on fees and derivatization. Those mortgages were assumable because no-one thought about the loss of income from forgoing new origination fees, because banks didn't charge those fees - the money was in the income from the loan, so they just didn't care if the holder of the note changed  - and note this was an era when banks & S&Ls (another quaint anachronism) actually held mortgages - they didn't just originate them and pass them off to securities bundlers.

Sounds about right - the financilization of any and everything under the sun, and the more money you create, the better (for them).

And when they blow the whole fucking world up we bail their criminal asses out.  That's a feature, not a bug.

Fuck banks.

 

[oblong]

In my hood gas prices snot up 40 cents overnight.  Two stations had been at 3.89 for weeks now.  This morning 4.29 

[gehringer_2]

1 hour ago, oblong said:

In my hood gas prices snot up 40 cents overnight.  Two stations had been at 3.89 for weeks now.  This morning 4.29 

I haven't  seen anything about in about 3 weeks on whether BP got the Whiting refinery in Chicago back fully on line - another screw up there would be something that could spike midwest prices. It's not because of crude prices - they are still falling.

[Screwball]

Anyone who watches the hurricane season, please chime in here. Is there a threat to the gulf that could effect the oil/gas shipping in and out?

 

[Deleterious]

Yep. Tropical storm Ian is south of Jamaica. It is gaining strength and tracking to the Florida side of the gulf.

[Screwball]

Let's have a little fun here. I admit up front I haven't done my homework on the potential disruption due to the hurricane - but is there a trade here (short term)?

For reference, the latest crude print.  Note the $78.04 low from Friday.

Come Monday we are going to go long oil because we think it might jump given the hurricane. The easiest way for the retail trader to do so is using an ETF.  In this case - USO.  Closed Friday at $65.32 with a low of $64.65.

So the plan in this paper trade is to buy some USO come Monday morning on open - depending on the current price of course.  We're going to spend $10,000.

The success of this trade will depend on the weather at the gulf coast.  If it is bad, probably a good trade. If not, you can get smoked. The trend for crude is down (see chart).

We are only looking for a few percent.  Maybe 4-5 percent over a couple of weeks.  I can see people making this trade so I'm curious how it might shake out.

 

[Deleterious]

I like stuff like that. I think if I was to ever actively trade I would trade the news more than anything.