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-   -   Is inflation looming? (https://www.airlinepilotforums.com/money-talk/134100-inflation-looming.html)

Excargodog 06-12-2021 10:43 AM

Is inflation looming?
 
Deutschbank seems to think so.


https://assets.realclear.com/files/2..._inflation.pdf

An excerpt:


Rising oil prices could compound any consumer-driven inflation. Indeed the price of oil has haunted the Fed before. A series of oil shocks contributed to the ratcheting up of inflation during the 1970s, but the Burns Fed chose to focus more on the CPI excluding oil. Then it excluded surging food prices and the idea of “core” inflation took shape. Subsequently, more and more items were excluded. Eventually, however, the Fed recognised that all the supposed transitory sources of inflation had spread everywhere and double-digit inflation had leaked into the “core”.
Is the Fed making the same mistake again by justifying its extremely patient approach on the basis of transitory inflation? That question is being asked just as it risks being caught in today’s political mood and supporting the administration rather than leaning against the macroeconomic implications of its actions.
Human biases are also feeding the “transitory” narrative. Just one example regards inflation expectations. These have proven near impossible for economists to model. Hence, the profession will overweight the bottom-up micro components – they are easier to predict. Furthermore, model-based analyses find it difficult to predict the turn in inflation if prompted by a paradigm shift that raises expectations.
With a few years of very low inflation expectations behind us, we are ill-prepared for a dramatic shift. That is especially the case as many asset prices today rely on the monetary policy support of low rates and abundant liquidity that has been a hallmark of the post-2008 world.

Already, many sources of rising prices are filtering through into the US economy. Even if they are transitory on paper, they may feed into expectations just as they did in the 1970s. The risk then, is that even if they are only embedded for a few months they may be difficult to contain, especially with stimulus so high.

SonicFlyer 06-12-2021 11:05 AM

LOL inflation isn't looming, it's already here, and has been for a long time.

The real question is whether or not the most recent barrage of money printing will result in hyperinflation, or if it will stay below hyper levels.

Excargodog 06-13-2021 06:35 AM

https://i.ibb.co/L14TV1y/8-E922538-A...-FDCDDD175.jpg

rickair7777 06-13-2021 10:32 AM

It will probably settle back down as people go back to work. If not inflation itself will probably cool the economy some. Hopefully it won't all spiral down the toilet... we need the economy to grow it's way out of the covid deficit, plus whatever the current regime tacks on.

Is the fed still doing pay-to-stay (at home)? It's hard to find low skill workers right now.

AirBear 06-13-2021 03:02 PM

A lot of the economy is still out of whack. We had 5% rate of inflation from May 2020 to May 2021. A full one-third of that was used car prices. They're up almost 30%. My 2 yr old 2019 Santa Fe Ultimate trim with 14K miles is now worth just 10% less than what we paid for it brand new. New cars are in critically short supply, some manufacturers are down to 2 weeks supply of certain types. Most are selling for MSRP or higher if you can find what you're looking for.

If you have a used car you don't need now is a great time to sell it, but don't buy a new car unless you have to.

Excargodog 06-14-2021 04:57 PM

https://i.ibb.co/4SHJJK7/B5-DEAB3-C-...6-E9239495.jpg

Sitting on a half TRILLION dollars waiting to buy bonds, mortgages, etc., when the coupon/interest rate goes up…among other things.
Cash is king early in an inflation cycle.

RI830 07-02-2021 07:08 PM

Jimmy Carter is laughing all the way to the history books!
He has given up his top spot just before he dies.

Excargodog 07-11-2021 06:00 AM

https://i.ibb.co/9cKzxHP/1-E245704-8...-DA2818555.jpg



Soaring rental rates, inflation in U.S. have staying power

by ALEX TANZI BLOOMBERG NEWS (WPNS) | Today at 1:00 a.m.
0
Follow
https://wehco.media.clients.ellingto...1d859a8f88077dNew homes seen in an aerial photograph above the Pacific Highlands Ranch master planned community in San Diego, Calif., in 2020. MUST CREDIT: Bloomberg photo by Bing GuanThe cost of renting a home is soaring in cities nationwide, squeezing the finances of low-income households and threatening the consensus that pandemic inflation will soon fade away.

The median national rent climbed 9.2% in the first half of 2021, according to Apartment List. While part of the increase reflects a bounce-back in prices that dropped earlier in the pandemic, the real-estate firm reports rents are now higher than if they had stayed on their pre-covid trackAnd they're still rising at a rapid clip -- just at the time of year when the largest number of lease renewals fall due, locking millions of tenants into bigger monthly bills. Surveys by the New York Fed and Fannie Mae suggest renters are braced for further increases of 7%-10% in the coming year.

Higher rents are the kind of price increase that's hard to reverse -- unlike many of the ones that have accompanied the economy's reopening, from lumber to used cars. That means a sustained run-up in rents could represent a bigger challenge to the Federal Reserve's view -- shared by most investors -- that the current spike in inflation will prove transitory.

"It's a stickier trend that I think we're seeing in other components right now," said Sarah House, an economist at Wells Fargo & Co. "When you're signing a lease, on average, it's probably for a year or so."

Another effect of rental inflation is to widen inequalities in the housing market that play into wider gaps in income and wealth. The pandemic recovery has been labeled "K-shaped" by some analysts because its benefits skewed toward the rich.

House prices jumped the most in more than 30 years in the 12 months through April.

The 15% gain in the benchmark Case-Shiller index over that period "would translate into a wealth gain of $45,000 for a typical homeowner," said Lawrence Yun, chief economist at the National Association of Realtors. Many of those owners also refinanced mortgages at historically low interest rates during the pandemic -- trimming their monthly payments even as the value of their equity surged.

There were about 9 million refinance deals in the U.S. last year, according to research firm CoreLogic, and they produced an average saving of about $180 a month for the borrower -- locked in for as long as 30 years. Meanwhile renters -- whose typical income is about half that of homeowners, according to pre-pandemic research by Zillow Group Inc. -- are seeing their housing bills rise.

Many also face the threat of eviction when a federal moratorium expires at the end of July.

June and July are the months when the largest number of leases come up for renewal. A typical renter signing a new contract this summer will be paying almost $100 a month more, according to the Apartment List data

https://www.nwaonline.com/news/2021/...-have-staying/

Excargodog 07-13-2021 05:28 AM

https://i.ibb.co/W69FvwR/736-AE2-C4-...4215116-D1.jpg

tnkrdrvr 07-17-2021 12:18 PM


Originally Posted by Excargodog (Post 3262687)

At this rate we are all effectively getting a pay cut this year.

HwkrPlt 07-17-2021 12:35 PM

My fidelity advisor said there was some inflation coming, but not enough to worry about. According to him, we're still on the upwards slope of the economic bell curve. The down is in 5-7 years. YMMV.

SonicFlyer 07-17-2021 08:36 PM


Originally Posted by HwkrPlt (Post 3264974)
My fidelity advisor said there was some inflation coming, but not enough to worry about.

You should fire him immediately.

HwkrPlt 07-18-2021 01:56 AM


Originally Posted by SonicFlyer (Post 3265192)
You should fire him immediately.

So you're saying you can predict the future better?

SonicFlyer 07-18-2021 05:59 AM


Originally Posted by HwkrPlt (Post 3265219)
So you're saying you can predict the future better?

It's not a prediction, it's a fact. Inflation is already here, and if you're not preparing/prepared for you it will absolutely damage any wealth you have. Anyone who claims otherwise is severely ignorant of reality (or lying).



https://levels.io/content/images/202...0.12.48-PM.png

TransWorld 07-18-2021 09:03 AM

My investment management firm says this is temporary and will smooth back down to modest rates as capacity opens back up.

You can see it in the economic leading indicator charts. Inflation and unemployment are lagging indicators. It is like accounting tells you about the health of an airline after the quarter or year has passed. Advanced ticket sales, passenger loads, and ticket prices are leading or concurrent indicators. When they translate to accounting results later, many people are very surprised.

My investment management firm is more accurate and does better than most investment managers over its 40 year history.

Excargodog 08-12-2021 01:32 PM

https://i.ibb.co/qmpDkZz/6-E173-C85-...3-D35-A8-C.jpg

https://www.marketwatch.com/story/la...ex-11628707133

Excargodog 08-12-2021 01:34 PM


Originally Posted by TransWorld (Post 3265382)
.

My investment management firm is more accurate and does better than most investment managers over its 40 year history.

That just means it’s overdue for a regression to the mean.

TransWorld 08-12-2021 04:09 PM


Originally Posted by Excargodog (Post 3278472)
That just means it’s overdue for a regression to the mean.

This is one of the most common glib beliefs that has been proven wrong. Over decades it is true, but over the next shorter period of time, a person who takes action using this statement can suffer from the “Great Humiliator” of the markets proving them wrong.

It is part of the reason the average investor, managing their portfolio, underperform the markets. They take the wrong actions at the wrong time.

Excargodog 08-13-2021 07:35 AM


Originally Posted by TransWorld (Post 3278547)
This is one of the most common glib beliefs that has been proven wrong. Over decades it is true, but over the next shorter period of time, a person who takes action using this statement can suffer from the “Great Humiliator” of the markets proving them wrong.

It is part of the reason the average investor, managing their portfolio, underperform the markets. They take the wrong actions at the wrong time.

The common glib belief that has been repeatedly proven wrong is that certain funds or financial advisors can reliably beat the market. The issue is one of ascertainment bias. You start with a thousand funds (or financial advisors) and those that do poorly simply lose out in the market to those who do better and fold. The bottom half of the bell-shaped curve simply gets culled. And culled repeatedly. It certainly doesn’t need to have anything to do with superior ability. Substitute 1000 people rolling dice repeatedly for stock picking and you’ll get the same result. Hence the “past performance is no guarantee of future results” disclaimer.

But on a related note…

https://i.ibb.co/y67SR8D/18-F8-FA89-...01-C0-B6-D.jpg

TransWorld 08-13-2021 08:31 AM


Originally Posted by Excargodog (Post 3278807)
The common glib belief that has been repeatedly proven wrong is that certain funds or financial advisors can reliably beat the market. The issue is one of ascertainment bias. You start with a thousand funds (or financial advisors) and those that do poorly simply lose out in the market to those who do better and fold. The bottom half of the bell-shaped curve simply gets culled. And culled repeatedly. It certainly doesn’t need to have anything to do with superior ability. Substitute 1000 people rolling dice repeatedly for stock picking and you’ll get the same result. Hence the “past performance is no guarantee of future results” disclaimer.

But on a related note…

https://i.ibb.co/y67SR8D/18-F8-FA89-...01-C0-B6-D.jpg

That is not the case with my financial management firm. They consistently rank in the top 1 or 2% of rate of returns over most years and averaged over a long period of time. They have a track record decades long.

Most financial investment firms do worse than the market averages. They are one of the few who do better. It is not just selling the losers to make the portfolio look better. It is not flash in the pan with one year good and the next year bad. It is not smoke and mirrors. They actually have a better rate of return, consistently.

Excargodog 08-13-2021 08:48 AM


Originally Posted by TransWorld (Post 3278837)
That is not the case with my financial management firm. They consistently rank in the top 1 or 2% of rate of returns over most years and averaged over a long period of time. They have a track record decades long.

Most financial investment firms do worse than the market averages. They are one of the few who do better. It is not just selling the losers to make the portfolio look better. It is not flash in the pan with one year good and the next year bad. It is not smoke and mirrors. They actually have a better rate of return, consistently.

Yep. And anyone in the right side of the bell shaped curve STAYS in the right side of the bell shaped curve…right up until they don’t. You can do it with coin flips. If you do enough of them, the win-loss distribution of a binomial approximates a Gaussian distribution

https://i.ibb.co/0csq85M/7-D9-DCFB9-...E28-EEDE46.jpg


a certain small percentage will - by random chance - give you 40 ‘heads’ in a row, even with an honest coin.

That has no bearing whatsoever on the results of the next toss, although over time the central limit theorem implies that the expectation (50-50) is pretty much where you will end up with enough flips.

TransWorld 08-13-2021 10:13 AM


Originally Posted by Excargodog (Post 3278846)
Yep. And anyone in the right side of the bell shaped curve STAYS in the right side of the bell shaped curve…right up until they don’t. You can do it with coin flips. If you do enough of them, the win-loss distribution of a binomial approximates a Gaussian distribution

https://i.ibb.co/0csq85M/7-D9-DCFB9-...E28-EEDE46.jpg


a certain small percentage will - by random chance - give you 40 ‘heads’ in a row, even with an honest coin.

That has no bearing whatsoever on the results of the next toss, although over time the central limit theorem implies that the expectation (50-50) is pretty much where you will end up with enough flips.

You are entitled to your opinion. What you do not consider is a team that sees the horizon and understands it differently and more correctly than the average coin flip. Most investment managers do not. Only a few percent do. They have proven that in over 40 years. It is not just a bunch of lucky coin flips.

As an example, March-April 2020 the S&P 500 dropped 34.5%. It was a rapid, sudden drop due to COVID-19 panic. Most investment people use the rule 10 - 20% being a correction and anything more is a bear market. They then called for investing in Value stocks, which lead after a bear market. In a bear market, Value stocks get unusually beaten up. So, in the recovery of a new bull market they lead the rise in stocks.

But, there were no excesses which classically are root causes of bear markets. Bear markets (with only The Great Depression in history as an exception) do a slow rolling drop at the top. Corrections are sudden and rapid. They correctly called this a correction, not a bear. Recovery was at a rate typically seen in a correction, much more rapid than a bear.

They said this was a continuation of a late stage bull market. Late stage bull markets have Large Growth stocks lead the market (think Apple, Alphabet (Google), Amazon). They did not shift my portfolio from Growth to Value. The first few months, Value did predominate, because many investment managers loaded up. Then the Value rally fizzled. By later in the year and this year Growth has outperformed. This proved there understanding was correct, and most investment firms had called it wrong. My portfolio beat the market averages and most other investment managers over the entire year of 2020 and are beating them in 2021. (My portfolio is the total number of dollars I have them invest. It is not what stock is hot in their portfolio, trading away under forming stocks at the end of the quarter - often referred to as ‘window dressing’.)

I could go through a number of other examples. They are correct in their predictions 70% of the time. They have enough counter investments so if they are wrong, my portfolio does not get beaten down too badly. But, taken as a whole, they outperform the markets and most other investment managers. Facts and their explanations (which one can look back on to check their accuracy) show this to have a high accuracy.

Excargodog 08-13-2021 10:58 AM

I won’t deny that there are some people who shouldn’t be in the market at all or who without someone to steady them will jump on the biggest bubble just before it bursts or dump a sound investment just before it rebounds. But that’s an emotional response. And some financial advisors will have lucky guesses and beat the market in the short term. But the overwhelming majority of financial advisors will not beat the S&P 500.

https://i.ibb.co/7CjFw7M/1-C694634-3...CAE482-D69.jpg

https://i.ibb.co/b29w5Bv/A27-A9-CFE-...-E6-BF0748.jpg

And if you look at your financial advisors paperwork, they will ALWAYS tell you that past results are no guarantee of future results. That disclaimer is there for a reason.

But it’s your money…

TransWorld 08-13-2021 03:15 PM

I took a graduate level statistics course and got an A. So I understand random coin flips with an unweighted coin. I understand a bit about investment management, as I took a graduate course in it and got an A. I have been reading the WSJ for more than 40 years.

I can read and understand financial information, I just do not want to take the time (nor do I have the temperament) to manage my own investments. The firm I am with has hundreds of professionals in their research department. They do more work than I have hours in the day.

You are entitled to your opinion. My information I have shared here is not to convince you. It is to share insight for others to improve their understanding.

There are no risk free decisions to decide to put your money. That is why the federal law requires every investment manager to put that disclaimer in. There is a risk in loss of your money in stocks, in bonds, in mutual funds. There is a high probability of gains.

There is an almost certainty of loss doing what my grandmother did, putting cash under her unmentionables in her chest of draws. It is called inflation.

I have spoken factual information. Most investment managers do not beat the market averages. There are a few percent that really truly do, over the long haul. Theirs is not random coin flips and chance. Theirs is based on profound research and insights. That is rare. When you find them, take advantage of them. Be cautious there are plenty of “slick used car salesmen” out there. Sort through those to find the few that actually do better than an index fund, over the long haul.

PerfInit 08-14-2021 08:09 AM

Notice that consumer products are now shrinking in size/quantity to offset the inflation.
Compare rolls of TP from a year ago (420 sheets) to now only 380 sheets...
For real! They think we are stupid...

ZippyNH 08-14-2021 08:21 AM


Originally Posted by PerfInit (Post 3279369)
Notice that consumer products are now shrinking in size/quantity to offset the inflation.
Compare rolls of TP from a year ago (420 sheets) to now only 380 sheets...
For real! They think we are stupid...

It's pure marketing...
They will introduce"bigger" later....
Happens every few decades...it's just a cycle....
you get old enough, you can sit back and watch.
Maybe for some might not realize it...but think MOST do...
More to do with supply chain...it's easier to update a size than do price increases...from a marketing perspective, it's "easier to swallow" as people see the basket in of goods not change in price to take home even if they get less.
You print money....things are going too go up in cost!!
Just like increases in minimum wage....
Nothing is free....now more $$$ chasing the same amount of goods/service.

TransWorld 08-14-2021 08:42 AM


Originally Posted by PerfInit (Post 3279369)
Notice that consumer products are now shrinking in size/quantity to offset the inflation.
Compare rolls of TP from a year ago (420 sheets) to now only 380 sheets...
For real! They think we are stupid...

Its for all those halfa**ed political people out there. They do not need as much.

Excargodog 10-02-2021 10:30 AM

And green politics is ALSO driving inflation:

https://asiatimes.com/2021/10/green-...stock-markets/

https://i.ibb.co/4KVhMVq/CF2-B6-C05-...-A1-BB8-FB.jpg



https://i.ibb.co/R6tPBVJ/8-D19-D38-C...DDB399-FB1.jpg




There has been an increase in energy demand due to an unseasonably hot summer and the reopening of airline flights and other forms of transportation, but the spectacular increase in energy prices is the result of constraint on demand.

Virtually the whole of the world’s political elite has signed on to the carbon neutrality agenda, including the government of China, which appears to believe that support for carbon neutrality (which China has pledged by 2060) will mitigate hostility to China in the West.

But the energy market suggests that the hard reality of supply constraints will overwhelm the Green agenda before it gets started.

The energy price shock adds to the inflationary pressures that continue to build in Western economies. Supply constraints in the United States have spilled over to the services sector, as the Philadelphia Federal Reserve’s survey of nonmanufacturing companies indicates

Excargodog 10-09-2021 12:35 PM

https://i.ibb.co/XXNG2tz/36226-BD4-3...D959-A3235.jpg

https://www.msn.com/en-us/money/markets/an-energy-crisis-is-gripping-the-world-with-potentially-grave-consequences/ar-AAPjcIE


An excerpt:


When the coronavirus pandemic first swept the world in early 2020, gas reserves were abundant and the price was at rock bottom. But production of both gas and oil was sharply curtailed as economies shattered, and reserves were eaten up by the unusually cold weather in Europe last winter.

The energy crisis first emerged in China, the world’s manufacturer, as global demand for its products suddenly and unexpectedly shot upward this year. Coal stocks were low, and an unofficial Chinese ban on Australian lignite meant they couldn’t quickly be replenished. Power companies turned to the spot market for liquefied natural gas (LNG) instead, and its price soared.

In Asia, the spot price, measured in a million British thermal units, went from less than $5 in September 2020 to more than $56 this October.

As a result curbs on power consumption have been implemented across two-thirds of China, disrupting factory production and daily life.

Some factories have shut down altogether. China’s power cuts will further disrupt international supply chains already stretched by the pandemic. Factories have had to reduce production at a time when they are usually ramping up for the December holiday season.

In Guangdong, China’s most populous province, authorities have banned the use of elevators in office buildings for the third floor and below, encouraged residents to use natural light as much as possible, and asked for air conditioners to be adjusted to higher temperatures. Beijing and Shanghai canceled annual light shows during the Golden Week holiday that spanned the first week of October.
https://www.reuters.com/business/ene...ch-2021-10-08/


"As other energy prices like natural gas and coal keep pushing higher, upside risks to the oil market have started to build," said Bank of America's Christopher Kuplent.

The price run-up has been spurred by soaring European gas prices, which have encouraged a switch to oil for power generation.

Benchmark European gas prices at the Dutch TTF hub on Friday stood at a crude oil equivalent of about $200 a barrel, based on the relative value of the same quantity of energy from each source, according to Reuters calculations based on Eikon data.

"An acceleration in gas-to-oil switching could boost crude oil demand used to generate power this coming northern hemisphere winter," an ANZ commodities analyst said in a note.


galaxy flyer 10-10-2021 07:39 AM

The 1970s return, this time as farce.

Excargodog 10-10-2021 08:07 AM

https://i.ibb.co/T0np9n0/275-F9-EAB-...C1-EAFBCED.jpg

Excargodog 10-11-2021 10:13 AM

Return of the…
 
…bond market vigilantes.


https://thehill.com/opinion/finance/...ket-vigilantes

An excerpt:


With growing signs that rising inflation is anything but transitory, as the Federal Reserve keeps assuring us, there are ominous signs that the bond market vigilantes might once again be saddling up. Indeed, over the last couple of months, 10-year U.S. Treasury bond yields have risen sharply to 1.6 percent, or to more than double their level last year. The continuation of the bond market sell-off could pose a serious challenge to the U.S. economic recovery by triggering the bursting of today’s “everything” asset price and credit market bubble.

The latest run-up in long-term bond yields suggest that the markets are not nearly as sanguine as is the Fed about the inflation outlook. Whereas the Fed believes that inflation will soon return to its 2 percent inflation target and that there will be no need to raise interest rates until 2023 to keep inflation in check, the markets seem to be fretting that the Fed could soon fall behind the inflation curve.

In seeming to be concerned about the inflation outlook, the markets seem to have in mind the many troubling tell-tale signs of future inflation. It is not only that world food prices have increased by over 30 percent. Or that ahead of the Northern Hemisphere winter natural gas prices are skyrocketing and international oil prices have more than doubled over the past year to around $80 a barrel. It is also that a policy-induced rapid increase in domestic aggregate demand is running into global supply chain problems and domestic labor shortages that could last longer than U.S. economic policymakers expect.
https://i.ibb.co/Fgg7sYq/30053-F68-4...842-C66-FA.jpg

Excargodog 10-12-2021 12:40 PM

https://i.ibb.co/F8Nmpth/E0484-C36-8...-F10-D75-A.jpg

Excargodog 10-13-2021 06:19 AM


Social Security COLA largest in decades as inflation jumps


By RICARDO ALONSO-ZALDIVAR and CHRISTOPHER RUGABERan hour ago
https://storage.googleapis.com/afs-p...86c10/400.jpegWASHINGTON (AP) — Millions of retirees on Social Security will get a 5.9% boost in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a burst in inflation as the economy struggles to shake off the drag of the coronavirus pandemic.

from USA Today.

Excargodog 10-13-2021 02:54 PM

https://apnews.com/article/business-...b2d2e25dff1983
an excerpt:


NEW YORK (AP) — Get ready to pay sharply higher bills for heating this winter, along with seemingly everything else.

With prices surging worldwide for heating oil, natural gas and other fuels, the U.S. government said Wednesday it expects households to see their heating bills jump as much as 54% compared to last winter.

Nearly half the homes in the U.S. use natural gas for heat, and they could pay an average $746 this winter, 30% more than a year ago. Those in the Midwest could get particularly pinched, with bills up an estimated 49%, and this could be the most expensive winter for natural-gas heated homes since 2008-2009.

The second-most used heating source for homes is electricity, making up 41% of the country, and those households could see a more modest 6% increase to $1,268. Homes using heating oil, which make up 4% of the country, could see a 43% increase — more than $500 — to $1,734. The sharpest increases are likely for homes that use propane, which account for 5% of U.S. households.

Excargodog 10-15-2021 06:55 AM

https://i.ibb.co/H2Jj7M6/58-B6-D6-D8...-D8083-F47.jpg


I think we may get to see for ourselves what airline business models can best handle stagflation.

Excargodog 10-15-2021 12:59 PM

https://i.ibb.co/brn39LB/254201-A3-F...917-C8-FC6.jpg

Excargodog 10-18-2021 08:07 AM

https://i.ibb.co/YbhGMJV/BD7-ECF74-D...ACB1-D7-F8.jpg

galaxy flyer 10-18-2021 01:54 PM

For two generations, inflation has been relatively low and controlled. Not zero, but okay. Wait til the politicians forget the past, as they have, and we see inflation at 7%-10%, interest rates above 12%, mortgage rates at 12%, housing prices stuck because few can qualify for mortgages, government interest costs north of $1.5 trillion (today it’s at $500 billion), every bond auction a nail-biting exercise for Treasury. Then, we’ll see the effects of these insane policies.

Excargodog 10-18-2021 08:10 PM


Originally Posted by galaxy flyer (Post 3311083)
For two generations, inflation has been relatively low and controlled. Not zero, but okay. Wait til the politicians forget the past, as they have, and we see inflation at 7%-10%, interest rates above 12%, mortgage rates at 12%, housing prices stuck because few can qualify for mortgages, government interest costs north of $1.5 trillion (today it’s at $500 billion), every bond auction a nail-biting exercise for Treasury. Then, we’ll see the effects of these insane policies.

More to the point for the airlines, several airlines have big tranches of bond issuances coming due in the next year to two. These bonds were originally sold at reasonably low coupon (~3_4%). But the airlines haven’t made the sort f profits due to COVID that would allow them to pay off these bonds at maturity which means they’ll have to be paid off by issuing new bonds based upon the same (aircraft) collateral. Except the aircraft themselves are no longer new and not worth as much as collateral and the bond coupon rates (and hence the debt service) will be considerably higher.

https://i.ibb.co/cwpkrLT/C1-B9700-E-...E2-B6-C165.jpghttps:/


https://i.ibb.co/pvZK3nC/67-EFD5-B6-...AEE5-B0143.jpghttps:

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