A data snapshot; How stocks and real estate performed under inflationary conditions

Given the ongoing growth in corporate profits as the economy consolidates around these firms, and the rise in rents, stocks and real estate can prove resilient in a rising inflationary environment

I just want to forward this chart to the reader to keep the current set of circumstances in perspective. While the world is overindebted, inflation effectively wipes out chunks of the real debt burden on an ongoing basis. This system works as long as interest rates can remain subdued.

Although we do not yet have the answers to what the future brings, we know where to focus our analysis. The world can be burning down, but if real yields can remain low, the world will function.

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21 thoughts on “A data snapshot; How stocks and real estate performed under inflationary conditions

    1. The stock markets are looking pretty sick lately. I think we are in a bear market at least in the short term.

      1. The markets turned around overnight to bascially unchanged. Let’s see what happens. Looks like the 4250 level was tested and held.

  1. The spoos e-mini’s bounced right off the first support level of 4,250. That was the overnight low. Let’s see if it holds for now.

  2. People are going to be jumping off bridges in mass soon.

    Aubrey McClendon CEO of shale energy company Chesapeake rammed his car into a median when he found out the shale scam was up and he was going to jail for bid rigging.

    The future for many will be suicide by jumping off of buildings, eating a bullet, taking jim jones juice vaccines, etc.

  3. Hey Chris. I wanted to share my experience. This could be a fluke or not mean much, but I thought I would share. I am still looking, and my husband is waiting until summer until we finally buy. There is nothing I can do to change his mind.

    I have been keeping track of all the Chicago suburbs for months now. Once the interest rates went to 4% like a week or two ago, the amount of houses on the market substantially increased. The prices have decreased a little. I know the Midwest is not the hottest market, but we were (and still) have a serious shortage in the Chicago suburbs. Many of the Chicago suburbs have 0 murders a year, so it’s not like Chicago.

    The time houses are on the market seems to have increased by a few days more also. I am noticing, on Redfin, the houses aren’t getting as many saves as they used to. Things are still short, but there was a very noticeable difference. About a week ago, there was a flood of properties that were contingent that came back on the market. This is still happening, but not as many as happened in one day.

    I cannot confirm this, but there is a realtor in this group I frequent. He says he works in the Tampa Bay area and that Central Florida is seeing a large increase of inventory too.

    This is a quote from him:

    “There were 967 new listings in the Mid Florida MLS yesterday, yes, in one day lol

    Ocala and other outlying cities have a TON of new homes piling up.

    350k was the starting point for existing decent homes in Clearwater over the summer, but now just saw a few sub 300k listings and a 3/2 pool home for 325k. Drove by and it’s a nice area and solid home.”

    Here is another comment from him:

    Here’s some MLS numbers below. Seeing lots of price reductions on existing homes, new homes are in outlying areas, as Tampa Bay is pretty built out. Lakeland, Ocala, Sarasota, new homes literally EVERYWHERE, where there were cattle pastures a couple years ago

    Mid FL MLS , last 7 days(copy n paste direct from MLS):

    New Listing (3161)

    Price Increase (674)

    Price Decrease (837)

    Back On Market (897)

    Sold (3940)

    Expired (77)

    1. My husband’s mom is a realtor. I wonder if she would give him access to her MLS. I guess it won’t hurt to try. You think you can see better stats there regarding what is going on?

    2. Thanks for this. I will take a look and to what you’re saying. Intuitively speaking, it makes sense and a lot of people that were on the fence are now looking to get out.

      I’m going to look for anecdotal evidence. So far around here, I see no slow down and home prices have already been bid up in the past couple weeks for the spring season.

    3. I noticed in my little neck of the woods in Quebec, a rise in listings – it’s only February. Too cold for the spring rush.

    4. I have been in central Florida for a year and closely following the res housing market here. I have just noticed home price reductions in the last few weeks (for the first time) and some slight rent moderation as well. Maybe just a pause and correction in this long term uptrend? Or maybe pricing weakness finally showing up as we must be closer to exhaustion after 11-12 years straight up. This must be one of if not the longest bull real estate markets in the history of the country.

  4. CASH IS KING, NO MATTER THE MARKET

    https://www.rismedia.com/2022/02/21/zavvie-all-cash-offers-ribbon-easyknock/

    For those who wish to buy an investment property, a cash offer will always be superior. A seller will often view an investor who needs to hook up with financing as an inferior offer. Most properties that I would recommend to investors need work, and will have a tougher time finding buyers. If an investor can swoop in with cash, it is a much easier transaction.

    I understand that coming up with cash can be a difficult one, but the goal of the investors is to come up with as big a down payment as possible, if not outright cash. In order to make a cash transaction we would have to get the cash beforehand, and that means financing existing properties and using retirement accounts, etc. In the past 10 years, I have never financed the purchase of an investment property, my purchases were always cash. I did cash outs on existing properties beforehand and when I had the cash in my checking account, I went looking for a property.

    The properties I bought were in really rough shape or in foreclosure with occupants. In some states, the foreclosures process could last for several years if the mortgagors can not be located. By the time it’s up for cash only auction, the mortgage was probably not paid in at least three to four years, and the loan was turned back over from the bank to HUD with the taxpayer making the lending institution whole.

    1. Maybe you already know this, but I recently learned some banks are letting buyers make cash offers. I am in a real estate group and some buyers there are using it.

    2. I don’t mean to spam your comments, Chris, but I cannot edit my old ones. This is what the person said about some cash buyers:

      “You can pay a higher interest rate and or a fee to have a broker make you look like a cash offer. Basically, they stick your name on their proof of funds, and buy the house in cash with a really quick close. Then they turn around and sell it to you with a traditional mortgage. It’s not terribly difficult to obtain and the process is just like getting approved for a regular mortgage.”

      When people on the West Coast are bidding 30-100k over asking price, I am sure they don’t mind paying a higher interest rate or fee. It’s nuts on the West Coast.

  5. A reader asked if I changed my mind on stocks.

    No, I have not. The chart and market action have all to do with short term action based on the day-to-day. The charts point to downside, just like when Bitcoin looked perilous on the chart a few months ago. I recognized it and warned the reader after BTC lost the short-term sma. Bitcoin could go to infinity, but the chart said it was heading also where in the meantime.

    The Dow could be heading to 40,000 eventually, but its chart and that of the spoos and NASDAQ 100 futures paint another shorter term setup. The short term charts are hard to deny, and have little to do with the exogenous factors of Russia, etc., And much more to do with the current state of inflation and the confusion the Fed is generating. The Fed is acting like a slow-witted drunk uncle at a birthday party, and the MSM is trying to have us look at the birthday cake.

    1. Hi Timothy, I don’t know. It’s built on WordPress, so there must be something available. I am not very good with this stuff. If I find out I will let you know.

      Thanks for your support.

  6. The aids clotshot is gonna kill millions of Americans. Blackrock will buy up the houses. That’s not a market, it’s a hostile takeover. They can rent them out to the barbarians coming over the gates. Print the money and buy everything real before the paper becomes worthless. The Nose runs this freakshow, has been for a long, long time. Only White Americans, if they have the balls, can stop the schlomotrain, the new world order…otherwise we’ll all be slaves, or dead.

  7. Maybe this is data snapshot is an answer to the question on the front page:
    “Have you ever wondered why our financial system always seems so close to collapse, but is always somehow held together?”

    The SOS is in control and they know what is going to happen. We do not!

    The first week in March brings many earning reports. I’m guessing decent results for most, yet lacking with forward guidance.

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