Recent comments in /f/wallstreetbets

chefandy t1_jdjqc6m wrote

Reply to Volatility in mortgage rates will lead to further deterioration of the U.S. real estate sector in 2023 by exemplaryprophecy1

I bought my current house in June of 2020, which admittedly was a pretty risky time to buy (covid lockdowns, economic uncertainty, etc). Since then, my home has appreciated over 100k, while interest rates went from 3.25% to over 7%. I just used a mortgage calculator, If I bought my current home today, my principal payments would be more than double what I'm currently paying....

It's not hard to see this bubble is unsustainable...

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VisualMod t1_jdjq6g6 wrote

Reply to Can anyone provide an honest reason to be bullish right now? by [deleted]

>There are a few key variables that you're missing in your analysis. First, the Federal Reserve is not trying to fix the banking system with interest rate hikes – they are trying to slow down inflationary pressures by raising rates. Second, while banks may be seeing unrealized losses on their portfolios, this does not necessarily mean that they are insolvent or unable to support withdrawals. And finally, while markets may be "primed for a bull run," it's important to remember that past performance is no guarantee of future results. So there's no guarantee that just because markets have been doing well recently, they will continue to do so in the future.

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VisualMod t1_jdjq5p6 wrote

Reply to Can anyone provide an honest reason to be bullish right now? by [deleted]

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>TL;DR: I don't know why anyone would buy a market that is going to be immediately impacted by this.
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TSLA240c t1_jdjngne wrote

Reply to comment by nyse125 in Fed Balance Sheet by Mega-Lithium

It’s QE now because they are exchanging an illiquid asset for a liquid one. In a year if they repay it you can say it’s not QE.

I have no idea what you’re talking about QE always carries an interest rate with it, are you confused with government bailouts or the repo market?

Equities have been mixed but not down considering what a shit show of a week it’s been. It’s also possible this fresh liquidity will just blunt the effects of the rate increases.

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VisualMod t1_jdjl6gu wrote

Reply to All in FRC Roth IRA by sylphvanas

I do not recommend buying or selling any options on FRC. The market is currently overvalued and I believe it will correct itself in the near future.

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VisualMod t1_jdjl5w6 wrote

Reply to All in FRC Roth IRA by sylphvanas

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LegendsLiveForever t1_jdjkmw7 wrote

Reply to comment by Mega-Lithium in Fed Balance Sheet by Mega-Lithium

If, as some claim, the sale of new Treasury securities inhibited spending which kept prices from rising, then QE would have done the reverse, which it didn't. QE (QT) is just another bank buying (selling) gov securities.

In Japan, 0% rate policy for some 30 years along with massive 'money printing' QE, debt/gdp over 200%, minimal natural resources. Not without problems, but world class public infrastructure, universal healthcare, education, low unemployment, low inflation.

Source: https://ibb.co/12pw2Q0 https://ibb.co/Tt3qWdX

any bank can operate indefinitely with negative equity if the regulators allow it and continue to insure its deposits etc.)

https://ibb.co/tsgMS0L

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nyse125 t1_jdjeyyz wrote

Reply to comment by TSLA240c in Fed Balance Sheet by Mega-Lithium

A year is a long way away for the Fed not to be just like - yeah keep it, which is the most likely scenario what you'll see a year from now and maybe then you can cheer QE. So no, it is not QE now because their balance sheet in this case goes down a year from now as it stands, as I have said many times just now.

QE = Banks realize a hefty gain and keep their bonds forever

BTFP = Take a mild loss but protect your depositors as Fed will give temporary liquidity.

There would be no reason for equities and bonds to drop if this was literally QE. Those definitions for QE and BTFP are nuanced so unless you don't see it in action it doesn't paint the entire picture.

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TSLA240c t1_jdjdgnb wrote

Reply to comment by nyse125 in Fed Balance Sheet by Mega-Lithium

You’re literally describing QE.

> Quantitative easing (QE) is a monetary policy action where a central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity.

The central bank is buying bank securities to stimulate economic activity by ensuring liquidity keeps flowing.

What gives you any indication that in a year when the Fed asks for their $400b+ back the banks will be in any shape to repay?

The Fed hasn’t ever been able to string together 12 months of QT but surely this time it will be different.

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nyse125 t1_jdj8zb2 wrote

Reply to comment by TSLA240c in Fed Balance Sheet by Mega-Lithium

Wrong. BTFP is when banks give the fed their treasuries and receive money in return, BUT AGREE TO SWAP BACK IN ONE YEAR. It looks the same on balance sheets, but it’s wildly different, especially because this deal is structured as a loan and the banks PAY overnight plus 10 bp for the privilege.

If a bank takes out 100B in BTFP, 1 year from now they will need to pay the fed 100B, plus ~4.5B in interest on the loan, AND they forfeit the ~2.5B on the treasuries interest. From the perspective of the fed, their balance sheet INCREASES by 100B right away, and then DECREASES by $107B in one year.

Literally the only reason for banks to take this loan is to give cash to depositors who are making withdrawals. It costs the bank -7% annualized. They do this to avoid realizing a -40% loss by selling treasuries to raise cash to give depositors.

Contrast this with QE, where the fed buys the treasuries from the banks for twice what they paid for them, and banks realize a 50% gain overnight and get to keep it forever.

Wildly different.

You will also not get "up to date" information anywhere on the M2 money supply.

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