No way, with the 6 month wait for most stuff the gouging will go on. With luxury items it's supply and demand . It will be a while before used prices will come down. New price increases are here to stay.
Fed rate increase = lower hifi prices?
Will the recent rate hike meant to slow down the economy result in lower hifi prices? Seems everything shot up during Covid. Will we now see some relief?
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It seems to me that it is a Buyer’s Market right now...(For Audio) IMO . Nobody has extra money to spend on Audio, because of Inflation. It costs a lot more for the essentials like Gas, Groceries ,your electricity & gas bill. See below for amount of price increase:
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When people can't afford to pay their mortgage, car payments etc. due to inflation and higher interest rates, one of the first things to go is the HIFI system. Manufacturers and dealers will dump products through grey market dealers enabling them to maintain the facade of charging full retail while not honouring warranties. I acquired most of my high ticket items during previous market crashes. |
My property taxes have never gone "down"....always go up....someone already said it, seldom to prices come back down once they have gone up....unless it's on sale, which is rare in the hi-end segment. In fact, it is uncommon to even receive a discount on most hi-end stuff, I tried, the answer is usually, no discount. |
How do you come up with these ideas? If the rates go UP, the Mfgs,& the home buyer pay more for borrowing $$$. That means mfg price increase and home buyer & renter payments go up
These rates are VERY LOW. IE Gas prices are very near doubled. That’s close to 100% NOT the 41% posted. Diesel fuel hit an all time high this past week. It is $5.29 here where its cheaper than a lot of places. this effects EVERY product because most everything is shipped at some point via Truck which uses diesel. Used cars were up 35%. I do most of the grocery shopping and can assure you that 10% is NOT ACCURATE for food. Hamburger was 3.50 LB Now it is $4.50-$5. That is 30-35%. coffee which was $6 is now $8.50. Thats about 45%. And consider this. the Cost of living index does NOT INCLUDE food, gas & housing. The market dropped bu over 1000 points yesterday. And as we speak the DC politicians spending $33 Billion more of OUR $$$, Not on us though Google Klaus Schwab, The World Economic forum, The great reset. I suspect what is coming will make 2008 look like a walk in the park. So buckle up folks. We have very few friends in DC. A D or R means nothing They have sold US out As @nonoise has said
And why not? We do nothing to stop them |
@deludedaudiophile Not sure I agree the prices come down, but for sure we get a lot more for the money? |
Housing may or may not have peaked, it may or may not be dropping...housing may be taking a breather due to lack of supply fatigue. If someone is fortunate to have no debt and own their home, then you have an inflation hedge. Relative buying power for your housing remains in tact.
Regarding the rest of economic handwringing, if you have a properly balanced portfolio of assets and actively rebalance periodically then the churn isn't unwelcome. I love the comment about the market dropping yesterday without the same level of zeal for the day prior. The stock market performance for the week isn't a big deal. Audiophiles have predicted 50 of the last 5 recessions. |
I posted this under another thread but 8 years ago my integrated cost $2500. The one I have now is much better, does more things, and only cost me $2700. Prices are not really going up for what you can get as long as you know what to look for and have reasonable expectations. Whatever happened to being a smart shopper? All the best, |
Hope you are well Bill!
Demand isn't down, supplies are at historic lows. If you remove "stale" housing inventory from the equation (think a teardown priced at new construction per sq ft, there are some truly stupid listings out there) then the ratio between the number of potential buyers and potential sellers is nauseating in the event you are looking for housing. Another challenge...conforming loan amounts have failed to keep pace with housing prices. I'm not saying housing prices won't fall but there is enough pent up demand from groups with large savings that it won't be anything like 2008...home equity is also at historic highs.
Its the same old adage though right? Its a recession if your neighbor is struggling...if you are the neighbor in question, its a depression. |
How do you come up with these ideas? If the rates go UP, the Mfgs,& the home buyer pay more for borrowing $$$. That means mfg price increase and home buyer & renter payments go up
These rates are VERY LOW. IE Gas prices are very near doubled. That’s close to 100% NOT the 41% posted. Diesel fuel hit an all time high this past week. It is $5.29 here where its cheaper than a lot of places. this effects EVERY product because most everything is shipped at some point via Truck which uses diesel. Used cars were up 35%. I do most of the grocery shopping and can assure you that 10% is NOT ACCURATE for food. Hamburger was 3.50 LB Now it is $4.50-$5. That is 30-35%. coffee which was $6 is now $8.50. Thats about 45%. And consider this. the Cost of living index does NOT INCLUDE food, gas & housing. The market dropped bu over 1000 points yesterday. And as we speak the DC politicians spending $33 Billion more of OUR $$$, Not on us though Google Klaus Schwab, The World Economic forum, The great reset. I suspect what is coming will make 2008 look like a walk in the park. So buckle up folks. We have very few friends in DC. A D or R means nothing They have sold US out As @nonoise has said
And why not? We do nothing to stop them
We had local elections here in the UK yesterday and for the first time in ages I couldn’t bring myself to vote for any of the parties. The Convid Plandemic, and particularly the crippling Lockdowns, has dealt a huge blow to many economies and now someone must all pay for it. Guess who? Many many people will suffer, but not all.
Our Lords and masters, the global lending banks.
Come to think of it, perhaps I should have at least made my feelings felt at the ballot box by scribbling Klaus Schwab across it? I’m afraid it’s time to buckle our belts my friends. There might be some serious turbulence ahead and don’t forget your thermals for next winter! Now does anyone know whether you can use MDF as firewood...?
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Okay, I’m no electrical engineer and have no expertise in equipment design, but I have spent my career in finance as a market strategist and money manager so take this for what it’s worth. In normal times you’d think raising rates leading to a slower economy, decreased demand, and possibly a recession then yes, eventually audio prices might come down somewhat. But, these are not normal times. Inflation is not being caused by demand but by a lack of supply due to covid shutdowns, China limiting its shipments, etc. Raising rates will do nothing to fix this because demand is not causing the problem. In a few months inflation numbers will have easier comparisons versus last year, which by itself will bring inflation numbers down, and as covid (hopefully) continues to wain and supply channels and factories get back up to speed that will alleviate the supply problem, so between these two factors we could see inflation come WAY down over the next six months or so. That’s my take anyway. So, bottom line and to answer your question directly, despite rates rising they are still extremely low by historical standards and the underlying economy is strong with historically low unemployment, so a 50bp hike here or their and the 10-year at 3.1% it’s unlikely the economy — and hence demand — will be affected to any significant degree and thus there’s no incentive or need for audio companies to lower their prices. And my bet is once inflation numbers come down for the reasons mentioned above the Fed will feel less pressure to raise further and long yields will moderate and possibly even come back down. Good question though. |
You forgot price gouging because they can hide it in the inflation :-) No I am not making that up, it was a researched report. Inflation is much higher in the western economies that printed money during Covid as opposed to Asian economies who did far less of this. Can you comment on that? I would be interested in your thoughts. |
Rates were low pre-covid because inflation was running less than 2%, and as one of the Fed’s two mandates is price stability, which generally means an inflation target of 2% they were justified, given their mandate, to keeping rates low and adding to their balance sheet. Remember, they were also guarding against the very real risk of disinflation, which is a very unhealthy situation as well. And much of Europe was fighting negative interest rates so obviously they needed to throw the kitchen sink at the problem even more than we did. Can’t speak to Japan and China, but Japan’s economy and stock market have gone nowhere in 30 years and China, well, who the hell knows what goes on there. Would you wanna live in either place? It’s possible they aren’t experiencing shortages of the things they manufacture and normally export around the world and with exports being curtailed we’ve got shortages and thus higher prices in those products. I’ll just say this, if we were “printing money” unnecessarily pre-covid our inflation rate would’ve been a helluva lot higher than 1.5%. I don’t know what report you’re referring to and there are certainly companies that have been raising prices despite not experiencing rising input costs (3M, Hostess, etc.) but I’d argue audio companies are not one of those as their input costs (semiconductors, etc.) have certainly increased significantly and are justified if they feel they need to raise prices to cover their significantly increased manufacturing costs.
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@soix well said |
@deludedaudiophile I tend to agree with you. Two examples. Here in Canada, Loblaws is the country's largest grocery chain. Similar to Safeway. Food prices have gone up and they blame increased input costs. Fair enough. Last week they released thier quarterly results. Record profits. Best quarter in the past decade. Then today I'm in Costco. Looking at a trimmed Beef Tenderloin (just looking). $64 per kilo or $29 per pound. About 50% higher than last year. Our beef producers are struggling to feed thier herds. Very difficult to reconcile these things. Now food is something I have to buy, but audio equipment is a discretionary item. So manufacturers and retails will charge whatever the market is willing to pay. |
You are right in that I didn't mention the big gains in the market the day before the 1k+ point drop in the market. On wed it rose 932 and Thursday dropped 1063, still a loss of 131. In fact the market has dropped nearly 10% in the last year. One of the problems is that the market is highly inflated and so 100 points seems like a little. and it is. But we are still that 10%% down in the year. So its like death by a thousand cuts. A cut here and there is no problem and goes unseen. maybe that's why we aren't even paying any attention to a 10% drop. But I assure you the savvy investors know this market is over inflated and is being propped up. When the bubble bursts, who will get hurt? same as 08...the working people. Big corp was too big to fail and got bailed out. Then as @deludedaudiophile has pointed out, the exorbitant printing of $$$ How many Trillions have we printed? As mentioned, the Asian economies didn't do as much. Its well known that China would love to have the reserve currency. If/When that happens, the US is BROKE.Its actually broke now but we can print $$$. But how long will the world keep trading in the US dollar? Saudi Arabia and Germany are both buying Russian oil now and paying with Rubles. Meanwhile we are again importing oil where we were energy independent. So they can't buy from the US anymore. So that's one export we don't have. Then there is the new record setting trade deficit of $109.8 BILLION in April. These are just things from memory. Nonetheless, I'd love to know why you believe we have a "strong economy" when we have no mfg base as we did in the 80's recession and are a lot deeper in debt than either recession? |
@artemus_5 the only thing I’m absolutely certain of is you haven’t extensively studied macro economics or finance. That’s ok and no offense intended. The money supply will be contracting by $20-30 billion in May, $50ish billion each month thereafter. You seem to imply that markets should only go up…do you hold everything in contempt when your assets grow by 15% in year A if they decline in year B? So, if you hate big corporations and big banks, I hope you dont own any mutual funds…because you too are a stockholder of those very entities you seem to despise.
The markets were functionally flat this week. You had time to convert to 100% cash on Thursday, had you chossen to do so. You would have outperformed the S&P 500 for the week. Long term investors with a balanced portfolio with a strategy dont think that way… |
Well we know it is not you @ghdprentice , that or you are just a lot less informed than you think you are. I am not suggesting that audio companies are, but their suppliers are in some cases. We track our suppliers underlying costs with great detail. Why? Because when you know their underlying costs and can put that in front of them and explain, like all commodities surges, it will not last forever, and we will remember, it helps in bargaining. Japan is a beautiful place. I would live there. Surprising amount of open space considering the number of people in a small space. China, communism is not for me. South Korea is quite nice too. I am sort of partial to Taiwan though. @soix I have the impressing during Covid that most western countries were "printing money" in excess of what was necessary and/or at least without sufficient oversight for need. Pure Keynesian economics I thought was out of favor? QTM would explain at least some part of the inflation. Unfortunately with the stock run, though that already had wealth (likely many here) did okay, while those who did not fell further behind even though they were the ones most in need of additional money supply.
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The fact that the world economy didnt come to a screeching halt in mid-2020 is clear evidence that the monetary policy worked. Its time to unwind it in as orderly fashion as is possible. Now, are the past 24 months in the economy and financial markets a surprise? If they are a surprise to you then please take some time to explore the topic more deeply. If its not a surprise and you didnt position yourself financially…why not?
I’m pretty conservative so a major part of my portfolio was hedged in March of 2020. I got to unwind the positions in an orderly fashion and the hedges went through the roof(see what happened to the VIX in March 2020). You reinvest when markets are down and repeat. If you dont have a financial advisor, get one. Most who dont have one may be under the mistaken impression they dont have enough investable assets. Keep looking until you find one, it can be financially life altering.
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+1 I love Japan, just like mainland China… lots of space to enjoy living… I have lived there for over a couple years.. I’m not that keen on Taiwan… too many mopeds, too many earthquakes. Singapore nice and clean. I spend lots of time in contract manufacturers, component manufacturers all over Asia. I have a masters degree in finance. Not sure of your point. |
Well I’m pretty market savvy and I don’t know that at all. What bubble? What valuation metrics are you using to back up these silly statements?
The Fed was trying to achieve their inflation target and avoid us sliding into disinflation and/or deflation. Take a look at Europe with their negative interest rates — would you prefer paying someone to hold your money rather than earning a return?
It’s well known I want a Ferrari, doesn’t mean it’s ever gonna happen.
The annual GDP growth as of 3/22 is 3.4%. I’d call that pretty strong. Dude, you need to stop getting your economic news from Fox News and figure out what’s really going on. Sheesh.
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The stock market passed 30K in November, breaking the record. Right now it's at 32,899.37. So it's gone down a little bit.😱 Don't get your panties in a bunch as we're still doing pretty good by all standards, unless you want to cherry pick stuff to discredit some faction or group. Also, look at bond market forecasts. Everyone from investors to public predictions say it's gonna be rough for maybe a year but from 2-5 years out, it's gonna be just fine, thank you. The sky is not falling. That, and thanks @soix for your sane perspective. And, you too @ghasley . All the best, |
The sky could fall tomorrow (or Monday), we really don't know. Russia could make a move that signal a foreseeable war end or escalation. China could decide it does not need the US. The Chinese domestic market at some point will be much much bigger than the US, and Europe and the US both want to be the top dog, so cooperation is not as good as it could be. If the interest rate is negative or 2%, if inflation is running a 6-7%, I am still paying someone to hold my money in either case. Similarly 3.4% sounds strong, but in a 6-7% inflation scenario, that is stagflation. @ghdprentice my point was someone made a comment about living in Japan (or Asia in general where inflation was lower). My comment was there are lots of places in Asia live and be happy, China not being one of those places though. Back to the market, 30K in Nov, 32.9 in now, 6 months at 7%+ inflation is a 3.5% devaluation. Not much, considering a war is going on. My concern with valuations is where the near term growth is going to come from to support the forward predicted valuations. Longer term it may be there as India modernizes and drives global growth, but otherwise, there is not the driver that China has been of world consumption coming online.
It is evidence that an aspect of the fiscal policy worked. That does not mean the fiscal policy was ideal or even close to ideal. Just the fact that we had a massive asset valuation increase during a global pandemic should give you pause. Literally no value was being created, but assets grew i value. Throw your economic theories and monetary policy aside for a while. That is fundamentally flawed, and anything that fundamentally flawed will eventually crash. |
I said that it is a "Buyers’ Market" for audio because when people who own audio equipment are having trouble making ends meet due to inflation and need money, I do not consider the Fed "borrowing rate increase" to have much effect on used audio, which is what I was talking about in my previous response. Sorry , I did not really specify that prior. People can and do sell that "non-essential" Audio Equipment. During these times you will usually find more audio stuff for sale. When there is more of it out there for sale, the supply goes up. The seller has more competition. Less people are buying because they are strapped for cash, so demand is down. It is harder to make a sale, therefore prices go down. This makes it a "Buyers Market"...Doesn’t it ??? It is a good time to buy audio equipment at lower prices. seller need to Move their product to get cash. Am I wrong ? I am especially talking about used audio equipment
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Yeah except 7% inflation is a temporary situation caused by covid. And you’re confusing terms. 3.4% nominal growth IS strong, its real GDP growth that’s weak, but that’s a different concept entirely and doesn’t change the fact that nominal GDP growth is strong. In a few months the CPI comps to last year alone are gonna dramatically reduce inflation, and as supply channels gradually open inflation will fall even further and we’ll still have an economy growing at above 3%. And BTW, this is NOT stagflation — it’s economic growth accompanied by temporarily high inflation. Stagflation is persistent high inflation with high unemployment and stagnant demand , and that is not even close to what we have here. Just sayin’. |
“J. P. Morgan tells the story of how he would get his shoes shined every Wednesday at the same shop around the corner from his office. One day the shoe shine attendant asked him if he and his friends could buy some stock through Morgan’s brokerage. The three friends had about $40—a lot of money in 1929. Morgan politely refused, hurried back to his office, and ordered that his company was not to have a single share of stock on its books by the end of the day. Morgan simply asked, “If the shoe shine boys are buying stocks, who else is left?” Of course, the 1929 stock market crash was only a few days away, and Morgan looked like a genius. He was not a genius; he noted that the order flow was likely running out on the buy side. It wasn’t his army of analysts that showed him that. It was a public investor.”
Two other great quotes: “Remember, my son, that any man who is a bear on the future of this country will go broke.” and my favorite; “Nothing so undermines your financial judgement as the sight of your neighbor getting rich.”
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In light of all the things I have mentioned, you have addressed NONE of them, instead putting forth theoretical rhetoric. We live in a real world. in this real world, the gas has either doubled in price or it has not. Hamburger has risen 35-40% or it has not. Coffee, 40% or not. Klaus Schwab and WEF has an agenda are either real or not. Saudi Arabia is either buying Russian oil with Rubles or not. China has either sworn to overtake us or not. Communists have sworn to bury us or not. And these things effect economic outcomes. Yet all I see from you is bluster & arrogance. No answers to my questions. just theory. Yet, when theory collides with reality , REALITY WINS There is a heirarchy of lies that goes Lies Damned Lies Statistics. You can make them say whatever you want. And I know you are willing to do so.That said, I also have learned to not waste my time on leftists who think themselves superior. They can never win the debate on the merits of their ideas nor can they teach anything because of their arrogance. Nor will they answer any of the tough truths of life. I’d rather not trade insults and instead have a rational conversation.but I guess its not possible as long as I don’t line up with the left’s ideas. You just have to agree with them or they go nuts and cancel you if they can Here’s what the GAO says. I’m sure you will find justification for your position no matter who says you are wrong because in your mind that cannot be.
GAO warns of ‘unsustainable fiscal future,’ debt reaching over 200% GDP And here is the actual GAO report |
Kinda smacks of a paranoid style, doesn't it? |
Wow! Let’s get a few things straight shall we? I am a "rightist" extolling the virtues of capitalism...I did not sign up to educate you. Of all the things you say are "up" are you saying that they were at their historically proper price and have now broken through the top of a reasonable pricing model? Gas? Coffee? Are you a self appointed soothsayer of supply/demand/cost to produce/risk analysis?
Were you picketing and lighting your hair on fire when the cost to produce hamburger was BELOW its "fair value"? Probably not. Gasoline and Oil? Probably not. Were you futzing around late spring of 2020 when the price of a barrel of oil went negative? Of course not.
There have been imbalances in markets since the beginning of time. I’m certain the ancients who owned water stops along the Silk Road or the largest buggy whip maker of 200 years ago each lamented loudly that it was someone else’s fault and that life was unfair when circumstances changed. People hate change, those who resist real change suffer the most. I would wager there are people with houseboats on what is left of Lake Powell crying about the value of their boat slip has tanked!
If you had a minor clue about economics, you wouldn’t have assumed that anyone who happens to disagree with your ill informed opinion on certain subjects must be of the opposite political persuasion. I don’t disagree with your analysis because you and I might be on opposite side of a political topic, I disagree with your analysis because it isn’t based on fact or knowledge.
The effects of inflation on the disadvantaged can be a shock because they either don’t have the resources or ability to maneuver. I get it, if your resources are finite then yes, you have to consume less hamburger in order to survive. Real wages have been pretty flat for a couple of generations. That is changing....some may say wage inflation is terrible, others may say it it just catching up to the historical trends.
At the end of the day, I couldn’t care less whether you like or don’t like the concept of capital flows and free enterprise. You are more than welcome to fight the windmills. Oh, and to address the topic of the thread...if a 50 basis point move in the Fed funds rate triggers the need to sell your audio gear at a fire sale, you probably shouldn’t have made the purchase to begin with. I have been under the assumption that the typical Audiogon participant could afford to participate in a not-so-inexpensive hobby. I feel empathy for the individual who through the hard knocks of life find themselves disadvantaged. I feel no empathy for the person who levered up their credit cards in spite of the obvious circumstance that they couldn’t afford the purchase.
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