Will inflation affect your hunts?

[WYelker]

Santelli always has good analysis.......

"First it was transitory, then ‘inflation is good.’ Then we went to corporate greed, now we're at Putin."

The quote is spot on... The sad part, there is nothing being done to fix it, only things that will make it worse... For example passing spending bills in the middle of the night...

 

[BigHornRam]

The quote is spot on... The sad part, there is nothing being done to fix it, only things that will make it worse... For example passing spending bills in the middle of the night...

Wise up. Foolishly spending money we don't have is " not inflationary".

WATCH: Pelosi claims government spending is ‘reducing the national debt’ and ‘not inflationary’

“The government spending is doing the exact reverse, reducing the national debt. It is not inflationary,” Pelosi said.

thepostmillennial.com

"She noted that the legislation would not increase inflation, noting that "17 Nobel laureates in economics" have backed this claim.
"It is non-inflationary because of the way it is written," said Pelosi."

 

[SAJ-99]

I understand that it will be different. I just don’t put faith in a balance sheet. From the time I put one together and what actually happens could vary 20-40% up or down. Now I know people that do t have inventories of grain or livestock is different. But a good balance sheet and a bad one can be only a few % off.

By Balance sheet, I mean the assets are greater than liabilities and income remains steady. Most consumers are in good shape. Unemployment is low, housing prices (the largest asset for most) are up and debt is low. It can change in an instant and we can be in a recession. But housing is alway the very last thing to be sold. If you see a nationwide "correction" in housing prices then you will have other things to worry about.

 

[Stocker]

By Balance sheet, I mean the assets are greater than liabilities and income remains steady. Most consumers are in good shape. Unemployment is low, housing prices (the largest asset for most) are up and debt is low. It can change in an instant and we can be in a recession. But housing is alway the very last thing to be sold. If you see a nationwide "correction" in housing prices then you will have other things to worry about.

I understand your point. I guess mine is that everything looks good until it doesn’t.

I don’t think there is a subprime bubble. I think it’s a cash flow/inflation bubble.

Let’s say a couple buys a house and their current cash flow shows they can make their mortgage, other payments and expenses with a 10% margin. Then with inflation of other essential expenses that drops to 0. Sure other things get cut first. But the people providing the other “things” need housing too. So it’ll start slow. Once the housing market cools and interest rates rise that continues to beat the housing market. People with variable rate mortgages and balloon payments may even start to be underwater. That’s where the problem lies. It “shouldn’t” happen overnight unless people keep using unrealistic projections like they did in 08.

The housing market today is different than 40 years ago too. People aren’t buying a house with a 20 year mortgage and living there until they die. They are buying, moving, buying at a much higher frequency. Plus all the amateur “flippers” out there that have taken a 2nd mortgage after watching too much HGTV. I’m not sure if you’re a banker or not, and I’m not trying to bash them. They are the most “reactive” group of people I’ve ever been around. They wait until it’s too late, then wait a little more to see if it gets better then panic when it doesn’t.

I hope I’m wrong and probably am. That’s just what I see from the doom and gloom perspective.

 

[mdcrossbow]

Get a partner help with the gas other then that suck it up ! Cheaper than your Starbucks lol

 

[Irishman]

Fracking changed the economic dynamics of energy. Over a decade ago a strong case was made that any increase in oil prices was at worst a wash and probably a small net positive to the US economy in total because we were producing so much hydrocarbons and thereby employing so many people. That really hasn't changed. All an increase in prices does is changes the allocation. Money that would have discretionary income spend on dinning out going to the movies or a new pair of jeans is now spent on fuel. To the total GDP of the US, it doesn't matter because it all gets counted.

Housing is complicated and there are a lot of factors that affect it. This market is WAY different than 2008, but we tend to anchor on the past negative events pretty hard. The consumer has a much stronger balance sheet now than then. Then banks were loaning money to anyone with a pulse, now lending standards are much tighter. In fact, today banks would like to make more loans but no one is asking for them. Housing prices are sticky because of the same anchoring bias. If we think our house is worth $500k, then we anchor on that number and won't sell for less- until we have too. Any "bursting" or "correction" of whatever bubble people think exists will only happen when people are forced to sell for a price below their expected value. It could certainly happen, but the cause would be completely different. History almost never repeats, but it does rhyme.

In my opinion it's housing cycles that drive the economy. A lot of people are employed in the construction business, and suppliers of the construction business. Eventually those that can afford a home (and some that cannot) have one. Then prices drop, selling drops, building slows, people become unemployed, payments aren't being made, things like cars aren't being bought, the economy tanks. The current up cycle seems to defy gravity, but eventually it will come to an end. People talk about gas prices slowing things, but lumber prices quadrupled and housing kept going strong. It's when housing runs out of steam that the real hurt comes. Anyway, that's how I see things, but maybe I'm biased as I was in the lumber business too long.

 

[Irishman]

Higher gas prices will effect me. Hopefully, for the better. The last several years I've kept jumping from place to place during hunting season, burning up gas, driving all over. I keep saying that I just need to camp for longer periods in one place like I used to. Well that's what I'll do this year.
I have a friend who drives from Cape Cod to Western Montana every year. He hauls a huge 5th wheel with all sorts of equipment, and things like a full size freezer. I've always questioned his logic for doing this. I can't imagine how much he spends on gas/diesel to hunt. Maybe he will rethink what he's doing this year.

 

[Addicting]

My budget took a hit, 1300 for emergency cat surgery! Kids cat ate a pile of hair ties. Sewer pump went out and basement started to back up on the floor. Truck EGR went out. So my AZ hunt planning started 3500 in the hole. Never mind the couple hundred gallons of $5.35 diesel I will have to buy on the trip. Can’t win this week…

 

[Nick87]

My budget took a hit, 1300 for emergency cat surgery! Kids cat ate a pile of hair ties. Sewer pump went out and basement started to back up on the floor. Truck EGR went out. So my AZ hunt planning started 3500 in the hole. Never mind the couple hundred gallons of $5.35 diesel I will have to buy on the trip. Can’t win this week…

For half price I'll drive to Michigan and take care of the cat, just throwing it out there.

 

[Addicting]

For half price I'll drive to Michigan and take care of the cat, just throwing it out there.

Wish I could, kids…didn’t have a choice.

 

[SAJ-99]

In my opinion it's housing cycles that drive the economy. A lot of people are employed in the construction business, and suppliers of the construction business. Eventually those that can afford a home (and some that cannot) have one. Then prices drop, selling drops, building slows, people become unemployed, payments aren't being made, things like cars aren't being bought, the economy tanks. The current up cycle seems to defy gravity, but eventually it will come to an end. People talk about gas prices slowing things, but lumber prices quadrupled and housing kept going strong. It's when housing runs out of steam that the real hurt comes. Anyway, that's how I see things, but maybe I'm biased as I was in the lumber business too long.

Housing is a significant portion of the economy. Latest estimate shows 15-20%. Not sure it is enough to say it "drives" the economy, but I get your point. The US has a very diversified economy. It takes a big change in sentiment for both business owners and consumers to throw it into recession. Higher oil prices or housing prices are simply not enough. If interest rates go up and the economy slows (with housing) then you could argue if it was inflation or interest rates, but it is a chicken v. egg argument.

 

[Nick87]

Wish I could, kids…didn’t have a choice.

I hear ya.

 

[SAJ-99]

I understand your point. I guess mine is that everything looks good until it doesn’t.

I don’t think there is a subprime bubble. I think it’s a cash flow/inflation bubble.

Let’s say a couple buys a house and their current cash flow shows they can make their mortgage, other payments and expenses with a 10% margin. Then with inflation of other essential expenses that drops to 0. Sure other things get cut first. But the people providing the other “things” need housing too. So it’ll start slow. Once the housing market cools and interest rates rise that continues to beat the housing market. People with variable rate mortgages and balloon payments may even start to be underwater. That’s where the problem lies. It “shouldn’t” happen overnight unless people keep using unrealistic projections like they did in 08.

The housing market today is different than 40 years ago too. People aren’t buying a house with a 20 year mortgage and living there until they die. They are buying, moving, buying at a much higher frequency. Plus all the amateur “flippers” out there that have taken a 2nd mortgage after watching too much HGTV. I’m not sure if you’re a banker or not, and I’m not trying to bash them. They are the most “reactive” group of people I’ve ever been around. They wait until it’s too late, then wait a little more to see if it gets better then panic when it doesn’t.

I hope I’m wrong and probably am. That’s just what I see from the doom and gloom perspective.

Lots of things going on with this post. First, your example couple would be in a tight spot, but should be able to manage. With unemployment where it is and the strength of the economy, they can ask for a raise (and this is exactly what we see happening- called a wage-rice spiral). Again, I look at the numbers and your couple doesn't look representative of consumers as a group. We can argue about whether "average" is a good metric for consumers, but that is not for this thread.

None of the expectations were unrealistic in 08. It was a 3-standard deviation event. Yes, shouldn't happen 99% of the time, but that 1% will kick you in the groin.

Housing market is way different than 40yrs ago, and even more different than 60 years ago. People used to put down 50% and have a 5yr mortgage with a balloon payment. At the time of the payment they had to refi or lose the house- see the 1930's. Congress sold the "American Dream" to everyone, now you can get a 30yr fixed mtg with 10% down. This increased cost of a home dramatically over the last 40yrs.

Flippers still exist, i'm sure. But this isn't 2006. they measure that stuff and the number prove that.

Bankers are reactive? Ok, I guess. People in general are reactive. Not sure why the apparent attack on bankers like they are the cause of the problem. They would rather every loan go to maturity while they collect a paycheck. Any sort of panic is just work for them.

I agree with your conclusion - Everything is good until it isn't. But worrying about the good ending and finding a potential cause around every turn has shown to be a money losing exercise.

 

[mtmuley]

I'm 5 miles as the crow flies from my elk spot. Longer to drive by a little. mtmuley

 

[jtm307]

I’m applying for more tags. I anticipate higher meat prices.

 

[jtm307]

I wouldn’t be surprised if fuel prices tanked by the end of the year. Parabolic spikes often are followed by precipitous declines.

 

[Pucky Freak]

Not sure why the apparent attack on bankers like they are the cause of the problem. They would rather every loan go to maturity while they collect a paycheck.

??? Seems like they want you to refinance constantly. Interest covers costs. Origination fee is instant payday for them.

 

[Nick87]

We don't buy any meat from the store, besides maybe shrimp or stuff like that. But I was in the store yesterday and took a peek $9 for ground beef that's gonna put a hurt on somebody.

 

[SAJ-99]

??? Seems like they want you to refinance constantly. Interest covers costs. Origination fee is instant payday for them.

Should shut off with rates up 1.50% in 60days, right? If you haven’t refi’ed by now it is too late.

 

[shrapnel]

I wouldn’t be surprised if fuel prices tanked by the end of the year. Parabolic spikes often are followed by precipitous declines.

I’m counting on this.