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Lyn Alden Profile picture
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9 Dec, 4 tweets, 1 min read
Rent inflation is stabilizing for now after a big 2021 surge:
apartmentlist.com/research/natio…
Back in 2020 when a lot of folks were expecting ongoing disinflation, that was actually the bottom and a big inflationary surge was forming.

In late 2021 or early 2022 when a lot of folks are expecting permanent high inflation, that may be a local top for a period.
Inflation in the 1940s and 1970s was cyclical as well.

US job market, European energy, and global supply chains are still inflationary. US fiscal cliff is disinflationary.

Unclear what China will do for the lead up to their late-2022 national congress. Probably reflationary.
To be clear, the November CPI numbers (reported tomorrow) are still going to be hot with likely new year-over-year cycle highs (housing and used cars both up a lot, for example).

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More from @LynAldenContact

Lyn Alden Profile picture
2 Dec
A lot of evidence shows that our lifestyles of looking at papers, screens, and phones indoors all day contributes to widespread deterioration in eyesight.

Now imagine if we work from home more, drive less, and wear VR goggles for hours a day...
And then of course we had the inverse correlation between technology and depression. Hunter gathers have rather rough lives but what we think of as depression is nearly nonexistent among them. They have plenty of exercise, decent diet, and frequent flow state.
Modern society requires that we make increasingly conscious choices to go outside, get exercise, and look into the distance, so that we can get the benefits of technology without the physical and mental deterioration that often comes with it.
Read 7 tweets
Lyn Alden Profile picture
23 Nov
Blue line is 10-year Treasury yields. Orange line is the annualized inflation-adjusted "real" rate of return if you bought a 10-year Treasury note that year and held it until maturity.

Bonds got killed on a real basis in all three inflationary decades (1910s, 1940s, 1970s).
If you compound -4% annual inflation-adjusted returns over a decade, you lose a third of your purchasing power on consumer goods by the end of the period.

And during that period, you probably lose more than that in terms of your purchasing power of prime capital goods.
So the bond market is "smart money" in that it does a good job of grasping tactical acceleration/deceleration moves, but isn't smart enough to avoid 30-40% losses of purchasing power over the course of a decade on three separate occasions.

So we get big disconnects sometimes:
Read 6 tweets
Lyn Alden Profile picture
11 Nov
All of my equity research over the past 4-5 years can basically summarized with Anakin here.
Most of the other asset classes (besides a few like bitcoin) have been even less attractive than expensive stocks, so the stocks just kept going up. That valuation expansion will end eventually, maybe in 2022 or who knows.

For lack of good money, everyone monetized other assets.
So I've been overweight equities, trying to avoid the silly ones, and letting it all run. Now eventually, everyone will be so piled into equities that it'll stop working. Individual stocks and sectors will become more separated.
Read 4 tweets
Lyn Alden Profile picture
10 Nov
The inflation report came in hot this morning at 6.2%
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┻┳| •.•) it looks a lot like the 1940s
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This is the widest gap on record between the Fed's short term interest rate setting, and year-over-year CPI, including the 1970s.

(We would have to go back to the 1940s to find a similar situation.)
Read 4 tweets
Lyn Alden Profile picture
24 Oct
In terms of the structural US trade deficit, it's often said that the US exports paper to get real goods. We give the rest of the world dollars, and they give us commodities, consumer goods, etc. Image
However, that's not the full picture. The foreign sector then takes those dollars and buys US financial assets (stocks, bonds, real estate), and thus owns a greater and greater share of our productive hard assets. Image
In other words, what the US is primarily doing, is selling our appreciating financial assets for depreciating consumer assets.

It's not a great trade in the long run.
Read 4 tweets
Lyn Alden Profile picture
23 Oct
The TGA chart is so wild to look at.

It's currently down to around $80 billion until they get a debt ceiling resolution. The target level they wanted it at by now is $750B.
Once the debt ceiling is resolved (December?), the Treasury targets a $750-$800 billion cash balance (will they revise that?), meaning they have to issue a lot more bonds than they're spending for, at a time when the Fed is maybe reducing their rate of asset purchases.
I'm looking back through my Feb 2021 thread, with the update being that it's all pushed back half a year due to the debt ceiling (Treasury had to draw TGA down ~$800B more than they wanted).

So, instead of being a 2H 2021 thing, it's a 1H 2022 thing.
Read 6 tweets

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