The daily view 3/30/2023: Home prices fall, UK inflation, GOP, and the Metaverse/META

From the WSJ, Home Prices Fell in February for First Time in 11 Years.

It’s waaayyy too early to celebrate. Since 2010, homes prices are way up nationally. Such as the Bay Area:

This WSJ story seems like data mining at its finest, and I don’t see how this is so newsworthy. Unless prices never fall at all, some down months or even down years are inevitable. The media re-runs this story every year by looking for intervals that appear to show a housing correction, no matter how tenuous or how data-mined it is.

Every few years it’s like this–prices fall, like in 2020 during Covid or in 2018, or whatever–and then commenters and pundits start to prematurely celebrate a supposed new regime of housing affordability, ignoring or losing sight all the earlier accumulated gains. And then prices come roaring back when least expected. It’s the same pattern over and over.

The long-term data shows that homes hold value during period of high inflation, like from the 70s-90s. It would be unexpected for prices to continue to fall in real or nominal terms (but at least they are not rising in real terms):

And from the UK, this was going viral: Food inflation rises to 18.2% as it hits highest rate in over 45 years.

And Americans think they have it bad?

This is just further evidence that whatever problems the US has, things consistently keep being worse elsewhere, whether it’s inflation (like in the UK or Germany, such as food and energy prices), unrest (like the protests in France), natural disasters (Turkey earthquake), etc. As much as both sides lament about the decline of freedoms and overreach of ‘the state’, in EL Salvador tens of thousands of men have been rounded up and arrested merely for having tattoos–due process be damned.

In India, authorities shut down all the internet in a town by decree. Just usual India things. Meanwhile in the US, 4 years later after Trump proposed the idea, Congress cannot decide to block a website which is a Chinese asset, that being TikTok. (I predict it will not be blocked.)

America continues to occupy a privileged position in the world of stability and prosperity despite always feeling on the precipice of civil war, unrest, or crisis–but that never quite gets there. What could have been a major banking crisis two weeks ago was averted by more coordination between policy makers, and of course, a lot of liquidity.

How long will it last? I don’t know, but I don’t want to bet against it either.

From Richard Hanania, Deepfakes Will Make the Establishment Stronger:

The 2022 election showed what happens when Republicans become too enthralled with the RRN base. Even if taking the position that 2020 was stolen doesn’t matter to most voters, the false narrative of election denial energized an unusually unappealing kind of politician. For example, the Republicans got crushed in Michigan, and turned around and made their mentally unstable failed secretary of state candidate the new chair of the state party. She manages to combine the off-putting aggressiveness usually associated with the Democratic urban base with extreme and unpopular conservative positions on abortion.

2022 election? I guess he means midterms. The midterms are sorta a coin toss. One would have assumed given Clinton’s trouncing of Dole in ’96 that the dems would have solid control of the House–wrong, the GOP had a 20 seat edge. The biggest predictor in regard to presidential elections is the economy. Nothing else even comes close. The only recent exceptions are 2016 and 2000 when the incumbent party lost despite a strong economy. I don’t see ‘fake news’ sites, deep fakes, or AI changing this.

From The Honest Broker: Is Facebook’s Metaverse Turning Into a Ghost Town?

This is why I only take investment advice from one person, myself. Who has a pretty good track record at that (I think Warren Buffett
is good too). You have to be really discriminating or dispassionate at this sort of stuff, because it’s very easy to get mislead by a persuasive-sounding argument or narrative. People think they can just pontificate about this stuff and be right. Nope.

Wall St. is the sort of business where someone can come up with the smartest sounding argument in the world, and then that person is completely wrong. (Remember Ackman’s disastrous bet against Herbalife, which after five years he finally exited in defeat?)

He writes:

A year-and-a-half after his corporate makeover, the situation at Meta is more dire than ever. Back in October 2021, Facebook shares were trading above $340, but now they are below $200—that’s a loss of around $300 billion in market value.

Yeah, but everything tanked. The QQQ was down something like 35% off its highs in 2022. META stock has more than doubled off its lows, and looks like it wants to make new highs within a few years. It’s only back to where it was a few years ago, above $200. I think as far as Wall Street is concerned, the Metaverse was a failed experiment or a distraction, but the main events are Instagram, Facebook, and the money-printing machine that is mobile advertising and CPC ads, which are still booming.

What about Meta share buybacks? Those can at most account for 10-15% of the recent share price appreciation. Based on my experience, I have never seen buybacks ever make a stock double…buybacks do not have that kind of power. Also, the last thing a struggling business is going to do is buyback stock. Instead it is going to save money. When you have as much experience as me, you can just easily point this stuff out.