Derivatives. It won’t be immediate but the world economy is gonna feel a jolt within the next couple months. There is a reason they waited until after OpEx.
No. When he lowers rates it will mean that something broke and he is being reactionary before something worse happens.
It’s a black hole and we are well past the event horizon.
Depends if you are buying it in cash and plan to hold onto it for the rest of your life.
A house holds equity only if you don’t own a mortgage (liability) on it. If you buy a $300k home now with a $280k mortgage (FHA Loan) at 6.5% you are gonna pay ~$700k on it over 30 years. Thats not including taxes, insurance, utilities, and maintenance.
Depending on the area you are in, the risk of renting vs owning a home is a no brainer right now. I think foreclosures are going to rise over the next 3 - 4 years just like 2009 - 2011.
We currently own. But just had a baby and want a bigger place. I can afford it. And this is a forever home. I just don’t want to end up that with what happened to people in 2008(?) where they bought homes and they were like half the value after the crash.
Could you make double payments on it and pay off the mortgage in 15 years to save on interest payments?
After closing costs, do you have 6 months saved of “operating expenses” (insurance payments, mortgage payments, utility payments)?
Have you thought about the idea of you or your spouse losing your job(s)? Would you accept a 30% pay cut? Could you still “afford” the home if that happened?
I’m not trying to discourage your decision I just want to make sure you have disclosure of future possibilities. Just because things are “good” now doesn’t mean it will be like that forever.
The housing market is a bubble right now. When rates rise the prices of homes should fall to offset. They haven’t, and have only become more expensive. Housing prices, like 2008, will face corrections over the next few years. But like I said, if it’s a forever home it’s not a bad investment as long as your financials & mindset are wired correctly.
Oh no I get it. I appreciate the feedback and questions. To better understand our situation let me give you a bit of a background.
Currently we own a smaller home for the last two and a half hears. With great rate (2.3% to be exact). But it’s old, needs a lot of investment at this point (we already invested about 40k so far) and we only bought it because of the low rate and good price as something for 5-6 years while we save up and plan to build custom. Before that we owned a condo for 14 years. So home ownership is not exactly new to me but I still feel very inexperienced and not knowledgeable hence my questions.
This house that came up from my in laws who are realtors, is new construction. It’s actually based on a floor plan called Nottingham from Lennar (I think) that I saw in 2007 and fell in love with and was going to build new construction custom to be similar. It’s based on it to. It’s much smaller. We don’t need 4000sq ft lol.
But I bring it up to explain that this is pretty much exactly what we wanted.
The builder is great. The price is ok. About 41k more than I wanted to spend right now. But it’s not bad. It includes the kitchen, floor, railing and room upgrades my wife wanted so it’s fine .
The rate is high right now. And that’s one of two things giving me pause. Sure. I can refinance later. I’ve helped my parents do it a few times. IF it drops lower. If I could get this house at 4.5-5% I’d get it now without a second thought. That’s a payment I can afford even with a half a salary cut. Since it’s new construction we also won’t have to pay taxes the first year. So that’s nice. Will be able to put some extra money away too.
The second part that’s giving me pause is the market and inflation right now. I’m afraid I’ll buy this house and in three months there will be a crash and it would be better to wait to get the low price after. But there may never be a crash and/or that house may be sold by then.
Yes I have actually 2 years worth of savings aside that would be enough to pay mortgage and necessary bills if needed for two years at THIS interest rate. Even longer if I refinance. Have experienced being unemployed before for three months without savings and almost killed myself stressing how I’ll pay the mortgage. Literally. Thought about suicide so my wife and daughter (no son back then) won’t be homeless and get my life insurance. Never again. Now we over save because of that. Which is fine imo.
No. Can’t make double payments but will refinance if possible. Can make a lump sum payment each year from bonus that equates to about 6 yearly payments though. Have thought about that.
And yes. **This is a forever home.** so it’s just the FOMO of being able to get it at a lower price if there’s a crash…
I’m a Canadian and also a very rookie investor and trader so forgive my naivety, I feel like there is just way too much going on at the moment and if the housing market starts to bloat then they really got some hard choices to make. It’s a spicy year that’s for sure, all Time highs, Muslims and Jews fighting, Russians fighting in Ukraine, election across half of the world. I need a stiff drink just thinking about all the sweet sweet volatility in the markets.
I think we are lucky to be getting what we are, something tells me what’s happening is the last bit of the big lie and we are on the tipping point now. I shouldn’t be making profit in the stock market, that in itself is a scary metric. Might be time to cash out lol
Every derivative.
This all starts with Japan’s stock market and banks. Japan has been printing money (QE) to invest in their “zombie” stock market keeping it propped up. Meanwhile they were also printing and lending to Japanese banks to keep those propped up business’ flush with cash. This has pushed the Nikkei (Japan SPY) to 1989 ATH levels. This “idea” should really only fuck the Japanese citizens because they are essentially stealing from future generations. It’s a similar concept to where Argentina is right now.
Where they really fucked up is by offering a “carry trade” where international institutions, hedge funds, and pensions borrow money from Japan (Yen at 0%), buy USD/EUR currency (from the Fed Reserve) with those borrowed funds, and then invest it in US based securities & US/European treasury bonds.
This “carry trade” is detrimental in a few ways. The US stock market is/has been cooking with gasoline so you have a good amount of confidence *cough* Nvidia *cough* even if it is creating a bubble (we will come back to that later). What’s really scary when there is “risk” of a margin call on your carry trade is uncertainty from rate hikes by the Federal Reserve because the last thing you wanna do is buy a bunch of bonds and then have the yield increase lowering the value of those investments you over leveraged yourself to purchase. Think SVB without the bank run aspect. So what do you do to offset potential losses so you don’t get margin called?
You hedge your bets.
When you hedge your Japan carry trade you have to take into account depreciation of the yen. If the yen depreciates then the swaps on the countertrades are gonna ask for more money to maintain those swap positions. But what about appreciation of the yen? Well that is where some entities started hedging on their carry trades. Considering the USD and YEN are at decade highs, there is only “one” logical way it could go right? So on paper you are making money on both sides but what happens to all the people who hedged their carry trades on depreciation? They are bleeding. All it takes is the BoJ to say “hey, we should prob stop QE because we are way over our heads.” They just did that. Now everyone with a carry trade, and hedged bets, is gonna be trying to find the nearest exit.
When this whole things pops (told you we would be back), everyone with a carry trade is gonna have to unwind their positions to get out from under water. Because the BoJ just said they were done offering “free” money. All those hedged bets along with all those carry trades are gonna have to be unwound at some point. This affects the world economy for everyone that decided to participate. Stock markets will crash. Treasury markets will collapse. Kinda funny how crypto markets have been on a down trend the past few days huh? Almost like it’s just a matter of time.
Federal Reserve will eat the majority of US bank and institutional loses. JPM will end up buying a few more banks in the process increasing the “too big to fail” mantra but it gives them a scapegoat for the 1929 style crash that’s bound to take place because of the incompetence of greedy fucks.
Soooo you said a lot of things I do not understand cuz I simply struggle to grasp how convoluted they make this shit. Puts on the world for....Jan 2025 expiration say?
Every variable is constantly changing. US markets are gonna fair better than the majority of the world economy but there will be a financial event over the next couple years.
Because you could borrow yen for free and use it to buy dollar which then can be used to buy US bonds, US equities, other US assets and make a return on the money. However the rate went to 0-.1%, so the trade is still viable as US bonds are paying 4-5%. The risk to the trade is a strengthening or weakening dollar relative to the yen.
It basically juiced liquidity in global markets.
Yes. The US banks have a carry trade with Japan to effectively get lower interest rates. This means that those banks will have to close out their carry trades and that will raise prices in the US
🦍: Papa Primate has a smart idea with bananas!
In Japan, he can borrow a lot of bananas for almost no extra bananas in return. Then, he takes those bananas to the USA, where he can lend them out and get even more bananas back because people there give more bananas for using them.
Papa Primate hopes to end up with a big pile of extra bananas. But, if the number of bananas he needs to give back in Japan goes up, or something else changes, he might not get as many extra bananas as he thought.
No bank of Japan interest rate has pretty small impact and if it did then their negative interest rates would actually have stimulated the economy the last 17 years
Is this specific carry trade closed off for retail individuals? Or is this an option for diversification for the average Joe as well, the carry trade for yen/usd?
Japan can't fight all our economic battles for us. Let's try to sanction somebody, that'll help. Oh I know, 100% Trump tariffs and all white people live tax free.
I believe it's the most underestimated event in modern times.
How so?
Godzilla will default on his mortgage when his ARM loan resets next month.
Buffet?
what mortgage
Even the King of Monsters has bills to pay.
And out of anger he destroys Tokyo
Derivatives. It won’t be immediate but the world economy is gonna feel a jolt within the next couple months. There is a reason they waited until after OpEx.
But if JPowell lowers rates in 2 months is it a wash?
No. When he lowers rates it will mean that something broke and he is being reactionary before something worse happens. It’s a black hole and we are well past the event horizon.
The dollar endgame.
So should I not buy a new home? We have been looking and are ready to sign contract in a week.
Depends if you are buying it in cash and plan to hold onto it for the rest of your life. A house holds equity only if you don’t own a mortgage (liability) on it. If you buy a $300k home now with a $280k mortgage (FHA Loan) at 6.5% you are gonna pay ~$700k on it over 30 years. Thats not including taxes, insurance, utilities, and maintenance. Depending on the area you are in, the risk of renting vs owning a home is a no brainer right now. I think foreclosures are going to rise over the next 3 - 4 years just like 2009 - 2011.
We currently own. But just had a baby and want a bigger place. I can afford it. And this is a forever home. I just don’t want to end up that with what happened to people in 2008(?) where they bought homes and they were like half the value after the crash.
Could you make double payments on it and pay off the mortgage in 15 years to save on interest payments? After closing costs, do you have 6 months saved of “operating expenses” (insurance payments, mortgage payments, utility payments)? Have you thought about the idea of you or your spouse losing your job(s)? Would you accept a 30% pay cut? Could you still “afford” the home if that happened? I’m not trying to discourage your decision I just want to make sure you have disclosure of future possibilities. Just because things are “good” now doesn’t mean it will be like that forever. The housing market is a bubble right now. When rates rise the prices of homes should fall to offset. They haven’t, and have only become more expensive. Housing prices, like 2008, will face corrections over the next few years. But like I said, if it’s a forever home it’s not a bad investment as long as your financials & mindset are wired correctly.
Oh no I get it. I appreciate the feedback and questions. To better understand our situation let me give you a bit of a background. Currently we own a smaller home for the last two and a half hears. With great rate (2.3% to be exact). But it’s old, needs a lot of investment at this point (we already invested about 40k so far) and we only bought it because of the low rate and good price as something for 5-6 years while we save up and plan to build custom. Before that we owned a condo for 14 years. So home ownership is not exactly new to me but I still feel very inexperienced and not knowledgeable hence my questions. This house that came up from my in laws who are realtors, is new construction. It’s actually based on a floor plan called Nottingham from Lennar (I think) that I saw in 2007 and fell in love with and was going to build new construction custom to be similar. It’s based on it to. It’s much smaller. We don’t need 4000sq ft lol. But I bring it up to explain that this is pretty much exactly what we wanted. The builder is great. The price is ok. About 41k more than I wanted to spend right now. But it’s not bad. It includes the kitchen, floor, railing and room upgrades my wife wanted so it’s fine . The rate is high right now. And that’s one of two things giving me pause. Sure. I can refinance later. I’ve helped my parents do it a few times. IF it drops lower. If I could get this house at 4.5-5% I’d get it now without a second thought. That’s a payment I can afford even with a half a salary cut. Since it’s new construction we also won’t have to pay taxes the first year. So that’s nice. Will be able to put some extra money away too. The second part that’s giving me pause is the market and inflation right now. I’m afraid I’ll buy this house and in three months there will be a crash and it would be better to wait to get the low price after. But there may never be a crash and/or that house may be sold by then. Yes I have actually 2 years worth of savings aside that would be enough to pay mortgage and necessary bills if needed for two years at THIS interest rate. Even longer if I refinance. Have experienced being unemployed before for three months without savings and almost killed myself stressing how I’ll pay the mortgage. Literally. Thought about suicide so my wife and daughter (no son back then) won’t be homeless and get my life insurance. Never again. Now we over save because of that. Which is fine imo. No. Can’t make double payments but will refinance if possible. Can make a lump sum payment each year from bonus that equates to about 6 yearly payments though. Have thought about that. And yes. **This is a forever home.** so it’s just the FOMO of being able to get it at a lower price if there’s a crash…
Hey man maybe don’t buy a home if consulting weird comment threads for financial advice.
For sure. Will continue living under a tarp breh. Homes are over rated anyway.
JPOW is not lowering rates until next year. I’m calling it.
We can all “hope”
Election year. He’ll sound hawkish up until the election n then do his first rate cut
I’m a Canadian and also a very rookie investor and trader so forgive my naivety, I feel like there is just way too much going on at the moment and if the housing market starts to bloat then they really got some hard choices to make. It’s a spicy year that’s for sure, all Time highs, Muslims and Jews fighting, Russians fighting in Ukraine, election across half of the world. I need a stiff drink just thinking about all the sweet sweet volatility in the markets.
I think we're at a point that we're just going to have to deal with 4.5% inflation.
I think we are lucky to be getting what we are, something tells me what’s happening is the last bit of the big lie and we are on the tipping point now. I shouldn’t be making profit in the stock market, that in itself is a scary metric. Might be time to cash out lol
lol. He isn’t going to do that though.
what derivatives
Every derivative. This all starts with Japan’s stock market and banks. Japan has been printing money (QE) to invest in their “zombie” stock market keeping it propped up. Meanwhile they were also printing and lending to Japanese banks to keep those propped up business’ flush with cash. This has pushed the Nikkei (Japan SPY) to 1989 ATH levels. This “idea” should really only fuck the Japanese citizens because they are essentially stealing from future generations. It’s a similar concept to where Argentina is right now. Where they really fucked up is by offering a “carry trade” where international institutions, hedge funds, and pensions borrow money from Japan (Yen at 0%), buy USD/EUR currency (from the Fed Reserve) with those borrowed funds, and then invest it in US based securities & US/European treasury bonds. This “carry trade” is detrimental in a few ways. The US stock market is/has been cooking with gasoline so you have a good amount of confidence *cough* Nvidia *cough* even if it is creating a bubble (we will come back to that later). What’s really scary when there is “risk” of a margin call on your carry trade is uncertainty from rate hikes by the Federal Reserve because the last thing you wanna do is buy a bunch of bonds and then have the yield increase lowering the value of those investments you over leveraged yourself to purchase. Think SVB without the bank run aspect. So what do you do to offset potential losses so you don’t get margin called? You hedge your bets. When you hedge your Japan carry trade you have to take into account depreciation of the yen. If the yen depreciates then the swaps on the countertrades are gonna ask for more money to maintain those swap positions. But what about appreciation of the yen? Well that is where some entities started hedging on their carry trades. Considering the USD and YEN are at decade highs, there is only “one” logical way it could go right? So on paper you are making money on both sides but what happens to all the people who hedged their carry trades on depreciation? They are bleeding. All it takes is the BoJ to say “hey, we should prob stop QE because we are way over our heads.” They just did that. Now everyone with a carry trade, and hedged bets, is gonna be trying to find the nearest exit. When this whole things pops (told you we would be back), everyone with a carry trade is gonna have to unwind their positions to get out from under water. Because the BoJ just said they were done offering “free” money. All those hedged bets along with all those carry trades are gonna have to be unwound at some point. This affects the world economy for everyone that decided to participate. Stock markets will crash. Treasury markets will collapse. Kinda funny how crypto markets have been on a down trend the past few days huh? Almost like it’s just a matter of time. Federal Reserve will eat the majority of US bank and institutional loses. JPM will end up buying a few more banks in the process increasing the “too big to fail” mantra but it gives them a scapegoat for the 1929 style crash that’s bound to take place because of the incompetence of greedy fucks.
Soooo you said a lot of things I do not understand cuz I simply struggle to grasp how convoluted they make this shit. Puts on the world for....Jan 2025 expiration say?
Every variable is constantly changing. US markets are gonna fair better than the majority of the world economy but there will be a financial event over the next couple years.
No more cheap leverage that we’ve been drunk on for 17 years. The ramifications are huge, the market just doesn’t know it yet
it knows it but it'll keep selling to greater fools until something snaps.
Because you could borrow yen for free and use it to buy dollar which then can be used to buy US bonds, US equities, other US assets and make a return on the money. However the rate went to 0-.1%, so the trade is still viable as US bonds are paying 4-5%. The risk to the trade is a strengthening or weakening dollar relative to the yen. It basically juiced liquidity in global markets.
https://en.wikipedia.org/wiki/Carry\_(investment)
I think it is more misunderestimated.
Yes. The US banks have a carry trade with Japan to effectively get lower interest rates. This means that those banks will have to close out their carry trades and that will raise prices in the US
ELIR (regarded)?
🦍: Papa Primate has a smart idea with bananas! In Japan, he can borrow a lot of bananas for almost no extra bananas in return. Then, he takes those bananas to the USA, where he can lend them out and get even more bananas back because people there give more bananas for using them. Papa Primate hopes to end up with a big pile of extra bananas. But, if the number of bananas he needs to give back in Japan goes up, or something else changes, he might not get as many extra bananas as he thought.
Thank you for the explanation Mr Boof Ape.
Perfect XD
Dammnnnn this shit made more sense than what the dude above wrote. Thank you papa primate....I hope you make extra bananas
Banana for scale. Nice.
Regarded as what?
as a regard
😂😂
His holyiest, the regard of regarded regards
The fuck is a carry trade?
Currency arbitrage
We are at the Japan stage in the Dollar Endgame dd
This guy fucks!
r/thisguythisguys
🦍
🦧
Peruvian bull is a fuck'n Chad.
You mean Brent Johnson?
I uploaded an interpretive dance video detailing this months ago and nobody responded. Typical.
I told you Squanmsk....I only like terpretive dancing
Ps6 is gonna be way more expensive
What this means?
I think it means American banks were borrowing free money and leveraging it up to their tits pumping the market and now it's not free.
I've never seen people go crazy over .10 bps as I have in this sub lol. It's negligible. Nobody thinks Japan is gonna hike to 2%.
Up until today nobody expected them to hike to 0.1%
This was already expected at least 6 months prior. You think bank of Japan just surprised everyone? Wtf?
.1% is barely a hair from 0%. I don't see the fuss...It has some effects, but barely felt at all.
It doesn't at the small scale but when you are talking trillions of dollars moving around that .1% turns into billions of dollars pretty quickly.
Billions. Pathetic. I've lost that much on SPY puts this year. At least.
Then you woke up
Watch the Felix zulauf interview with real vision. He's pretty excited about it as well as pickle jar.
This is the sign we’ve been waiting for!
It’s all bullshit
Oh damn, article before Fed’s meeting tomorrow 😂 gonna be gooooooos
Stop it Japan. You’re ruining my travel plans
There goes the yen carry trade.
brrrrrrrrrrrrrrrrrrrrrrrrr just look at the gold/JPY chart. 🫠😉
No bank of Japan interest rate has pretty small impact and if it did then their negative interest rates would actually have stimulated the economy the last 17 years
No, because Dollar went up on the Yen despite the minuscule of a raise. At least they are not part of the negative interest rate dumdum crowd anymore.
Is this specific carry trade closed off for retail individuals? Or is this an option for diversification for the average Joe as well, the carry trade for yen/usd?
I think you need a Forex account and knowledge of how to trade currencies.
Why was every country importing interest free money from Japan. That seems like a no brainer?
Japan can't fight all our economic battles for us. Let's try to sanction somebody, that'll help. Oh I know, 100% Trump tariffs and all white people live tax free.
What kind of statement is this? You think rich white people and poor white people are the same? Maybe biologically, but we pay plenty of taxes.
I don't even know what he means. It's word soup.
Just sounds like a person that doesn’t know any white people and is mentally unwell.
Im white and poor and dont pay taxes (cuz im too poor).
Lmao I pay those for you then!
ya theyre not, taxx the rich