Author Topic: Predictions and thoughts on the Biden Presidency  (Read 30145 times)

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #350 on: November 24, 2021, 06:50:10 PM »
Grant,

don't have tons of time for Ornery right now - (holidays with family + my book on disease is approaching completition),

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Note these are for new cars, not older cars, which with a lessening in new cars should probably also see some demand pickup.  But it's all rather superficial.

The shortage of new cars has driven drastic increase in used car prices, but there is also a 'used car drought'

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“The continued chip shortage on the new-car side and the ‘perfect drought’ in supply on the used-car side are the main reasons for this,” he said in a report that was posted online Sept. 28.

Wholesale used-vehicle prices in August averaged $14,712 — up 3.2% compared to July, and up 9.0% vs. August 2020. To provide some perspective, prices were up 30.8% compared with pre-Covid/August 2019.

By a perfect drought in used-vehicle supply, Kontos refers to a relative scarcity of off-lease returns, repossessions, and customer trade-ins — three leading sources of inventory for the wholesale auction industry.

https://www.forbes.com/sites/jimhenry/2021/09/29/used-car-auction-prices-head-higher-again-computer-chip-shortage-shares-the-blame/

https://www.hotcars.com/heres-how-the-global-chip-shortage-has-benefited-the-used-car-market/

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He confirms what you wrote earlier about the prices of lumber, but still doesn't answer the question about how demand jumped in 2020.  There is some talk about running to Home Depot for do it yourself projects and millennials hitting homebuying years, but that doesn't explain where all the money come from while sawmills thought there was going to be a housing crash.

People weren't spending near as much of their income on going to bars, going out to restaurants, on coffee and donuts, on commuting, etc. They suddenly had significant disposable income that was previously allocated on entertainment and work related expenses.

LetterRip

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Re: Predictions and thoughts on the Biden Presidency
« Reply #351 on: November 24, 2021, 07:19:50 PM »
So lets see what Rattnar says,

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The prices of many commodities are surging — copper and lumber because of a jump in home building. Global steel demand has pushed up iron ore prices. Even tin, heavily used in electronics, has soared as suppliers rush to meet consumer demand for new gadgets.

We already covered lumber.

Copper - there is an artificial shortage that was caused by shipping disruption,

https://www.eatmy.news/2021/07/the-artificial-shortage-of-copper.html

Also severe underinvestment, limiting supply of copper and there is some increased demand for 'green initiatives'

https://www.cnbc.com/2021/06/17/copper-prices-rise-amid-green-sustainable-initiatives.html

Iron ore had a brief surge based on speculation on China demand (some thought China would significantly exceed prior year production, but without there being an increased supply of ore - thus speculators bid up the price expecting a shortage) and is rapidly returning to normal.

https://markets.businessinsider.com/commodities/iron-ore-price

Tin,

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amid tight supplies and strong demand for the metal in the environmental and sustainability landscape, particularly in photovoltaic installations, electric vehicles, and electronics. China, the top producer, closed a land port with the biggest importer Myanmar on the back of surging COVID cases. Meanwhile, inventories at both LME exchange and ShFe hovered near multi-year lows. .

https://tradingeconomics.com/commodity/tin

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Over the medium term, growing demand from the electronics industry and increasing housing construction activities in emerging economies of Asia-Pacific are driving the growth of the tin market.
Miniaturization of electronic products and the availability of substitutes like aluminum and tin-free steel for the production of metallic products like containers, etc., are hindering the market's growth.
New cheap tin-aluminum alloy in lithium-ion batteries, shifting focus toward the recycling of tin, and recovery in secondary refined tin output are likely to create opportunities for the market in the coming years.
The Asia-Pacific region is expected to dominate the market and is also likely to witness the highest CAGR during the forecast period.

https://www.mordorintelligence.com/industry-reports/tin-market

So - basically nothing at all to do with Biden or US stimulus.

Grant

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Re: Predictions and thoughts on the Biden Presidency
« Reply #352 on: November 24, 2021, 07:20:13 PM »
Grant,
don't have tons of time for Ornery right now - (holidays with family + my book on disease is approaching completition),

LOL.  You're under no obligation.  Good for you.  Have a healthy life away from arguing with strangers on the internet.  I should be leaving for home tomorrow if the helicopter gets fixed.  I will do my regular disappearing act because I too have better things to do at home.  I may be back in two weeks.  I may be back in two months.  I may never be back at all.  Have a good Thanksgiving. 

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So - basically nothing at all to do with Biden or US stimulus.

You keep bringing knives to a gunfight.  You're bringing articles on single commodities that are talking about supply chain problems but you are not bringing any articles from economists about the economy or about government spending.  They are out there.  Though Krugman is going to be the easiest to grab and he's not well received. 
« Last Edit: November 24, 2021, 07:22:58 PM by Grant »

TheDrake

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Re: Predictions and thoughts on the Biden Presidency
« Reply #353 on: November 25, 2021, 12:12:32 AM »
None of those economists seem to have hard data.

This paper did.

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Across the board, we found almost no effect of government spending on inflation. For example, in our benchmark specification, we found that a 10 percent increase in government spending led to an 8 basis point decline in inflation. Moreover, the effect is not statistically different from zero.

Does our finding, by itself, imply that countercyclical government spending is ineffective at boosting output? Not necessarily. Our paper simply demonstrates that the inflation channel of government spending is not an empirically important way that this spending might affect the economy.

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In a debate from nearly 50 years ago, economist Milton Friedman characterized the then-current state of economists' understanding about fiscal policies' effect on inflation: "Surely, I think the time has come to utter the usual poker challenge to those who maintain that fiscal effects are important for inflation and the price level. It seems to me that it is time they put up and give us some evidence to support the repeated assertions to that effect."3

Until recently, Friedman's quote has remained pretty accurate. Why have economists had little to say empirically about the effect of government spending on inflation? I studied this question in a recently published paper co-authored with Rong Li of Renmin University of China.4

There are two high hurdles to answering this question that only a few papers have been able to overcome:

Finding episodes in which one can be confident that the central bank is not working to offset the potentially inflationary effects of fiscal policy

Experiencing exogenous changes in government spending over time to construct so-called natural experiments to assess the spending's effect on inflation