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Everybody Is All Worried That There Is A Shift

A weekend topic starting with Market Watch. “The Federal Reserve is currently reviewing its monetary-policy strategy, tools and communications practices, to determine how best to achieve its congressional mandate of maximum employment and stable prices. The raw material is money. Sometimes it chases goods and services. At other times, it chases assets.”

“Former Fed Chairman Alan Greenspan used to say that central bankers were ill-equipped to identify asset bubbles: to hold a finger to the wind and determine that, say, residential real estate prices were over-valued or that tech stocks were trading at inflated levels relative to expected earnings.”

“‘To favor leaning against the credit cycle is not at all the same thing as advocating ‘targeting’ asset prices,’ said William White, former chief economist at the Bank for International Settlements. Rising asset prices are ‘a symptom, an imbalance, arising from easy credit conditions.'”

“‘What happens is that, over time, debt imbalances associated with an expansion and the increasing use of monetary policy to lean against the downturn build up,’ White said. ‘We end up with a cumulative mountain of debt. The impulse for credit creation, for more debt, comes out of easy oney in the downturn, which is not matched by a symmetrical raising of interest rates in the upturn.'”

The Wall Street Journal. “Chief Executive Officer Rich Barton said the home-flipping business is clearly resonating with consumers. Co-president of Zillow Offers Jeremy Wacksman said the Homes business is ‘drowning in demand.’ The seller interest is so strong, he said, that the company is only buying 3% to 5% of homes offered to it by sellers.”

“Still, Zillow isn’t making money on the business yet. Zillow’s Homes segment lost $45.2 million in the first quarter.”

The Salt Lake Tribune in Utah. “Utah’s home prices are on a multiyear climb and well-heeled buyers, at least, are still snapping up houses. You would think these would be heady days for the state’s homebuilders. But Clark Ivory is unsettled.”

“Unless conditions change, Ivory also sees trouble looming for the state’s economy and for his homebuilding business, which his family has run since 1983. Michael Parker, senior economist for Ivory Homes, called the price hikes ‘the antithesis of what we’re trying to accomplish, but we’re stuck.’ The housing market’s persistent rise, he said, is not sustainable.”

“‘Pricing has got to level,’ Ivory added. ‘If we don’t change, we’re going to be struggling.'”

The Waco Tribune in Texas. “McLennan County’s preliminary appraisal values show a slower but steady increase in property values. ‘I think it is leveling off,’ said Frances Pool, senior real estate specialist at Keller Williams Realty. ‘Everybody is all worried that there is a shift in the real estate market, but the shift they are talking about is only 3%. It is really just a natural correction. I think we have seen that our sellers are wiser because they price their houses properly and they sell quickly and they usually get about 96% of the asking price if they are priced correctly. And correctly means what the market shows it will bear.'”

“Pool said she understands why people are lining up to appeal their appraisals at MCAD. She said some houses are selling at below appraised value, including one Pool is listing for $529,000 that MCAD appraised at $625,000.”

From Yahoo Entertainment on California. “Real Housewives of Orange County‘ star Gretchen Rossi is in danger of losing her O.C. home to foreclosure, with the reality star accused of falling behind on her payments by nearly $26,000. According to court documents obtained by The Blast, Quality Loan Service Corporation is putting Rossi on notice of default, letting her know if she doesn’t pay up quickly, they will foreclose on her home and sell it at auction.”

“Quality Loan notes they have not set an auction date but say a date will be set 90 days from the notice. They accuse Rossi of being behind $25,894.91 on her Costa Mesa condo mortgage. She took out the $538,000 mortgage on the property back in 2005.”

From CNBC. “Angelo Mozilo, for many, was one of the enduring faces of the financial crisis. Too enduring, in fact, for his taste. Looking back more than a decade later, the former head of Countrywide Financial, whose sprawling subprime loan business symbolized the financial recklessness of the real estate bubble, said he’s become a convenient scapegoat without justification.”

“‘Everybody blames the subprime. To me, it’s nonsense,’ he said this week. ‘If you take the totality of the subprime assets, the value of the subprime business that existed at the time … it was a puddle in an ocean. But it’s an easy target for the politicians and media to attack, to rile people up about. But it was not the cause at all.'”

“‘Real estate values became very, very inflated; asset values throughout the financial industry became very, very inflated; and a bubble was created, and it didn’t take much to penetrate that bubble,’ he added.”

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This Post Has 93 Comments

  1. ‘‘If you take the totality of the subprime assets, the value of the subprime business that existed at the time … it was a puddle in an ocean. But it’s an easy target for the politicians and media to attack’

    More than that it was a diversion from the prices themselves. The REIC constructed this myth. There was nothing wrong with prices going up forever, they say. It was the loans. Eliminate the loans and it’s to the moon Alice!

    It took them a couple of years to come up with that. Now they’ve rewritten history, in the medias eye anyway. But the truth is prime loans were over 95% of the defaults. And the only tru pattern ever identified with foreclosures was when the loan was made, meaning at the highest prevailing prices at the time.

    And now most US loans are subprime.

    1. Exactly. The problem is the price, not the loan. The Prime borrowers strategically defaulted en masse, once prices reversed.

      1. The Prime borrowers didn’t strategically default. They failed to make payments, just like their subprime neighbors. The FICO allowed the Primes to buy at 7-8x income with next-to-nothing down. The toxic I/O ARM loan allowed them to afford the payment … for a couple years. After the rates reset and principle kicked in, the Primes were sunk. Even if you make $100K and pay off a $25K car, you can’t afford the fully-amortized PITI on a $700K house.

        Stupid banks. Even when I bought in early 2012, the banks STILL thought I could afford 4.5x income. Thanks to HBB, I knew enough enough to limit myself to 3x income, but most people wouldn’t.

        2. “…but most people wouldn’t.”

          They were the bids you competed with, willing to put themselves at risk of future financial problems for the opportunity to buy a larger, more expensive house than prudent underwriting would have allowed, and helping to reflate the bubble.

        3. The Prime borrowers didn’t strategically default.

          When they bought the house across the street and then “failed” to make any additional payments on the first underwater house, we’ve been calling that “strategic default”.

    2. Crazy high prices make subprime underwriting standards* the only option to keep the dance party going. And a prevalence of subprime loans enables and exacerbates mania prices.

      * I am referring here to loans made at a high debt-to-income and/or loan-to-value ratio, which increases the future risk of default, rather than the government’s wonky definition of subprime which Oxide always brings up. A borrower’s credit history may not matter much to future default risk if they presently take on too much debt, or have littleskin in the game due to a low downpayment loan.

      1. “‘Real estate values became very, very inflated; asset values throughout the financial industry became very, very inflated; and a bubble was created, and it didn’t take much to penetrate that bubble,’ he added.”

        The traditional definition of subprime is meaningless within the context of a mania.

      2. I don’t see how you separate the loans from the pricing. I guarantee you if you had loans based on a realistic assessment of ability to pay and eliminated non-recourse mortgages, you would have far more stable, realistic home prices.

        1. What is a “bad” loan? One that doesn’t get paid back. If that’s the case, the vast majority of bad loans last decade were prime. They were so bad that until a little over a year ago, they still made up the bulk or defaults. But now 2014 and later lead the pack. There simply weren’t enough subprime loans to have taken down the US housing market back then. Now with all the FHA shenanigans and illegal immigrant loans, etc, we’ll just have to find out.

          1. A bad loan is a loan that a lender would not make if the lender was bearing the entire risk of default.

        2. Exactly my point. Handing out loans like candy so people can buy homes at high multiples of their incomes, incurring a high risk of future default, seems like a bad plan. What’s in it for Uncle Sam to want to encourage such shenanigans?

          1. “What’s in it for Uncle Sam to want to encourage such shenanigans?”

            Uncle Sam is like a senior citizen on benzodiazepines, and Wall Street is guilty of elder financial abuse.

          2. What’s in it for Uncle Sam to want to encourage such shenanigans?

            Maybe it’s bad for Uncle Sam but good for the individuals charged with taking care of him?

  2. ‘She said some houses are selling at below appraised value, including one Pool is listing for $529,000 that MCAD appraised at $625,000’

    Behold central bankers, the end is nigh, when a shack in Waco is priced at 500K.

  3. ‘Unless conditions change, Ivory also sees trouble looming for the state’s economy and for his homebuilding business…‘the antithesis of what we’re trying to accomplish, but we’re stuck.’ The housing market’s persistent rise, he said, is not sustainable’

    ‘Pricing has got to level,’ Ivory added. ‘If we don’t change, we’re going to be struggling’

    This means they are already struggling.

  4. ‘Former Fed Chairman Alan Greenspan used to say that central bankers were ill-equipped to identify asset bubbles’

    I’ll go along with that. But why are they always telling us there aren’t bubbles? And I have to ask, what good are they at all?

    2. The Wall Street-Federal Reserve Looting Syndicate’s engineered boom/bust cycles are the most efficacious means for transferring the wealth and assets of the proles to the Fed’s oligarch patrons. So of course Greenspan and his fellow Keynesian fraudsters at the Fed will always claim not to see any bubbles, or warn retail investors when the Wall Street pump & dump is getting set up for another Great Muppet Reaping.

  5. Regarding a discussion on the previous thread:

    ‘Many will also be unaware that before Comey was installed by the Obama Administration as FBI Director, he was on the board of Director at HSBC Bank – a bank implicated in international money laundering, including the laundering of billions on behalf of international drugs and narcotics trafficking cartels.’

    ‘Forbes also points out where Comey was also at the key choke-point during the case involving dodgy auditor KPMG which followed on by the HSBC criminal case:

    “If Comey, and his boss Attorney General Alberto Gonzalez, had made a different decision about KPMG back in 2005, KPMG would not have been around to miss all the illegal acts HSBC and Standard Chartered were committing on its watch.”

    “Bloomberg reported in 2007 that back in June of 2005, Comey was the man thrust into the position of deciding whether KPMG would live or die for its criminal tax shelter violations.”

    ‘So according to the establishment narrative, Comey is the who will “keep an eye on the banks” and “help stamp out corruption,” while the opposite seems to be happening. Has Comey been put in place to stop corruption, or to enable it? His record certainly warrants some study on this point.’

    ‘Good qualification to be FBI Director? Not really…It seems that our beloved FBI Director is or until very recently was a director and board member of HSBC, which is tightly connected to the Clinton Foundation.’

    http://www.hsbc.com/news-and-insight/2013/former-us-deputy-attorney-general-joins-hsbc-board

    “Mr. Comey’s appointment will be for an initial three-year term which, subject to re-election by shareholders, will expire at the conclusion of the 2016 Annual General Meeting.”

    https://www.theguardian.com/us-news/2015/feb/10/hillary-clinton-foundation-donors-hsbc-swiss-bank

    “Clinton foundation received up to $81m from clients of controversial HSBC bank”

    https://www.clintonfoundation.org/search/node/HSBC

    ‘It’s like a revolving door of money and special projects that the bank and the CF are involved in.’

    ‘This is the same HSBC that was accused of laundering drug cartel money, was heavily involved in the LIBOR scandal, and who knows what else, and all the while our esteemed FBI Director James “she didn’t intend it” Comey was part of the senior leadership.’

    https://geopolitics.co/2017/03/21/fbi-dir-james-comey-board-member-of-hsbc-clinton-foundation-drug-cartel-launderer/

    1. It’s 100% corruption from the top down. I don’t know if it was always like this, but the US is likely finished. I don’t think you can root out such systemic corruption.

    3. Comey is a dead man walking and he knows it. He’ll die in club gitmo with his buddies Clapper, Brennan and the rest – if they dont self terminate before. The table is being set, mark my words.

      2. More likely they’ll “tee-off” together at a cozy “club-fed” like the Federal Correctional Institution in Lompoc, California situated near the coast where it is usually sunny and the air is fresh.

        1. March 17, 2018

          ‘Recently fired FBI Deputy Director Andrew McCabe said if he faces criminal prosecution, he’s going to take down everyone else involved in FBI and DoJ wrongdoing related to the Hillary Clinton email probe with him, according to reporter Sarah Carter.’

          “McCabe is worried. And one thing that I did hear is that McCabe has said over and over again, ‘If I go down, I’m taking everybody else with me,’” Carter said on “The Ingraham Angle” on Friday.’

          https://www.infowars.com/report-mccabe-says-if-i-go-down-im-taking-everybody-else-with-me/

          2. That’s how weasels like him roll. And you have to be a weasel to get into those sorts of crimes to begin with.

          4. he’s going to take down everyone else involved in FBI and DoJ wrongdoing

            Would this make me afraid to take him down, or all the more resolved?

          5. Ben, this is from late March. Are there any updates after that?
            I’m not optimistic that any of this is going to come to light.

          6. “I’m not optimistic that any of this is going to come to light.”

            You might be right.

            Real News: Rapper Kayne West and his makeup mogul wife Kim Kardsahian welcomed their fourth child via surrogate on Friday.

  8. The New Cities for New Grads: Salt Lake City, Pittsburgh and Baltimore
    Vanessa Fuhrmans
    WSJ
    5/10/2019

    “Sure, Silicon Valley, New York and follow-on tech hubs such as Austin and Denver count as some of the hottest job markets in the country. They are also among the most expensive, and affordable rents are often far from the action.”

    Salt Lake City | Silicon Slopes

    “Daunted by the high costs of established tech hubs, more tech companies are flocking to a belt of Rocky Mountain cities, from Provo, Utah, in the south, to Boise, Idaho, in the north. In that stretch, Salt Lake City, where adults under 35 make up a quarter of the population, may offer the best of all worlds for tech-savvy grads.”

    “With big employers such as Adobe Systems, Overstock.com and Symantec, the area already has a high share of tech jobs per capita, and local tech-job postings on the jobsite Indeed.com climbed 12% last year.”

    “Yet the Utah capital is relatively affordable—for now. A recent Cushman & Wakefield report found residents spend about 32% of their income on housing, compared with 40% in Denver and 78% in San Francisco. At least 10 ski resorts are within an hour’s drive, including Park City and Robert Redford’s Sundance, and the city sports a thriving microbrew scene.”

  9. From the Salt Lake Tribune article:

    “Clark Ivory bought and took over Ivory Homes from his father, Ellis, in 2000 and is widely credited with seeing the U.S. real estate crash and Great Recession coming as early as 2005.”

    “He warned at the time that speculative homebuying threatened the nation’s economy while in his early days as director of the Salt Lake City branch of the Federal Reserve Bank of San Francisco. The family company even began requiring buyers to sign pacts not to resell their homes for at least a year.”

    “Ivory said he now views the housing affordability crisis in Utah and nationally with similar alarm — not least for its potential impact on the company’s nearly $500 million in yearly sales.”

    There are some good comments on this article. I think Clark Ivory is right here about the need to build affordable and denser housing and he has good intuition. He gets reamed though in the comment section as having paid lip service only to affordable housing while continuing to pay terrible wages (probably true) and employ illegal labor (likely true). But many of the constituents in that area (and I run that area often) simply don’t want the increased urbanization that the Gardner institute is saying is necessary. They fight against townhomes, condos, and row houses. They want everything to be quaint houses like what exists in The Avenues.

    I love the Sugarhouse area and was awed by what I saw a few weeks ago. I love the mixed use and walkable city. Probably the most attractive part of the state I have seen. It is truly a gorgeous place to live, if you can afford it. I like it more than Park City now.

    One astute comment pointed out that until zoning requirements are relaxed to allow for smaller houses on a lot, it will be hard to build affordable housing.

    1. It is a great area. I remember for years a huge hole where buildings had been knocked down just before the bubble crashed and it stayed there for quite a while, until the economy recovered.

      1. A friend of mine just returned to a trip to SLC. He reported that the homeless/addict population is swiftly catching up to San Fran and Portland.

        1. We probably would catch up if it weren’t for the cold weather that clears things out a bit.

    1. I do not think that it is a coincidence that bitcoin and its irk came back to life a few weeks before the trade talks. Politically connected Chinese would have known that China was going to renege on its previous agreements. They would also know contrary to the globalist propaganda, Chinese companies cannot simply keep their prices the same when the items are facing a 25% tariff. To stay competitive they have to lower their prices and thus their profit margins to compete with countries like Vietnam and Indonesia. Thus, Trump is right that most of these tariffs are being indirectly paid by China, However, it is also true that many of these companies cannot lower their prices enough so they just have to reduce sales. When Chinese cannot make money at home, they try to set up manufacturing overseas in places like Vietnam. That takes capital and the Chinese government is trying to prevent capital from leaving China. So the Chinese start to buy up bitcoin internally and then send it overseas evading the government but driving up the value, temporarily, of bitcoin. Of course, as soon as the cash is needed overseas, the bitcoin will be sold and the price will drop.

      1. “…most of these tariffs are being indirectly paid by China…”

        Saying something over and over again only makes it true in an attorney’s parallel universe. The economic reality is more complex, and involves a degree of shared pain between Chinese producers and U.S. consumers. The characteristics of supply and demand for any particular tradeable commodity determine how the pain is distributed.

      2. When Chinese cannot make money at home,

        You should be ashamed of yourself even saying those words!

        The China miracle is based on borrowed money. When international investors and speculators cannot make money in China…

        1. Yes. Almost 40 years of large trade surpluses and it’s all debt. Add up all those surpluses and it it multiple trillions of dollars probably around ten trillion. You should be ashamed of yourself for denying the reality that the US trade deficit fueled China’s growth

          1. denying the reality

            It’s as if you don’t even know the guy that posted for years with your name!

  11. Assuming Zillow is telling the truth (yeah, I know), has anyone looked into the reasons why they are apparently “drowning in demand” of people trying to quickly sell homes?

    1. That was an interesting quote. And despite cherry picking 3-5% of the shacks, they still lose money hand over fist.

    2. “Co-president of Zillow Offers Jeremy Wacksman said the Homes business is ‘drowning in demand.’ The seller interest is so strong, he said, that the company is only buying 3% to 5% of homes offered to it by sellers.”

      Yeah, they cherry-picked the homes they could buy at the lowest price with the highest potential for profit and still lost money. The other 95% are people looking to scalp Zillow. They’re not going to break through that wall of greed when it comes to sellers, especially at the apex of the market.

      Once price declines are underway in earnest, they may be able to beat sellers up on price a little bit more, but the price declines will eat up that bid/ask spread and they will lose even more money. Flipping houses in a declining market is almost always financial suicide. Only major fixers with structural problems that can be purchased for pennies on the dollar might pencil out, and that will never be Zillow’s forte.

      1. The only workable business model I can see them having is low balling homeowners in financial distress, in the midst of a healthy economy that they can substantially mark up the property in (especially if the property needs contractor attention to get it staged properly for resale). Essentially a real estate pawn shop.

        Where is the value add otherwise, versus just selling through a broker/agent?

      2. Only major fixers with structural problems that can be purchased for pennies on the dollar might pencil out, and that will never be Zillow’s forte.

        See also “The Market for Lemons” as to why some of the homes in the best condition will not make it to the market and the real lemons will be available for sale.

          1. Price reflects condition.

            And none of you can afford the good stuff so that’s why we only make the lemons available.

          2. Neither is affordable. That’s why renting is the obvious solution to the problem.

            Why buy it when you can rent it for half the monthly cost?

            Buy later after prices crater for 70% less.

  13. I wonder how fast/slow the crash will take? 6 months to the bottom or 2 years? Asking for a friend…

    1. At least five years if your friend is in California. (1996 – 1991 = 5, 2012 – 2007 = 5, etc., and those are conservative estimates for the durations of previous busts…)

      1. I think it will happen quicker. Perhaps the end of it could be 5+ years but I do since at least the higher end will crater much faster. We have all these variables that could burst our economy although while trump is in office, I don’t see them likely to happen.

        2. I don’t about San Diego. A < 1000 sq ft shoe box flip just sold down the street from me for 20k over ask. It was ridiculously overpriced to start with. I was sure it would languish on the market but sold relative quickly. Earlier in the year, it looked like doom was imminent. These cycles can take painfully long to play out. As was once quipped, the market can remain irrational longer than you can remain solvent. Wide spread year over year price SoCal declines look certain by mid summer. After that, much will depend on shenanigans of the central planners

    2. 6 months to the bottom or 2 years?

      Your friend is going to get his head handed to him.

    3. I think 5 years to see substantially lower prices across the board seems like a reasonable time frame. Right now we’re at peak pricing in most markets. It takes a long time to go down.

      1. The fact that the last two major housing busts played out over 5+ years seems relevant. The wild card regards at what point the Fed, with Congressional approval, deems the depressed patient ready for a renewed round of housing market quantitative easing. Nobody could’ve seen it coming at the point when they interrupted the last housing market correction towards affordability.

  14. San Francisco is a very dirty city.

    I stayed here last night by the Powell Street BART station, this is between the Tenderloin and Union Square.

    There is a persistant aroma of urine, feces, and whatever they use to clean the sidewalks with all around here. Everything I had previously read about sh*t on the sidewalks is true, and it is disgusting. I have never seen conditions like this in another American city.

    2. When visiting SF it is good to check the Openthebooks poop map. Something I just spotted was they have made it to treasure island. So disgusting and it’s only getting worse. My hometown is headed that direction too but we have yet to find ourselves on the poop map. What surprises me the most is the FBs that spend fortunes to buy into the crap (literally) housing market where they walk out there front doors and step into the junkies feces and then have to walk around him as he is laying there with a needle hanging out his arm. Seattle is dying documentary part 2 the sf version coming soon

      1. Lol. I was expecting the scenery on that video to switch to shots of human waste and junkies and some death metal…

    1. More pre foreclosures popping up in my area. It’s a mix of 2005 and 2013 issued loans. It appears 20% of them are attempting a short sale.

      The increase in these pre foreclosures is probably about 300-500% from 2017.

  17. Are you ready for the zombie, er I mean, retail apocalypse?

    Pocket Worthy
    Stories to fuel your mind.
    After the Retail Apocalypse, Prepare for the Property Tax Meltdown
    Big-box retailers nationwide are slashing their property taxes through a legal loophole known as “dark store theory.” For the towns that rely on that revenue, this could be a disaster.
    From CityLab
    by Laura Bliss
    Screen Shot 2019-05-08 at 4.34.12 PM.png
    Dark stores rising: As big-box retailers shutter, many companies have found a way to turn vacant properties into lower taxes on open stores nearby. Madison McVeigh/CityLab

    WEST BEND, WI—Kraig Sadownikow doesn’t look like an anti-corporate crusader. The mayor of West Bend, Wisconsin, stickers his pickup with a “Don’t Tread on Me” snake on the back window, a GOP elephant on the hitch, and the stars-and-stripes logo of his construction company across the bumper.
    …

    1. Could be a rough patch ahead for The Street…

      The Financial Times
      US-China trade dispute
      US-China trade tensions rattle renminbi and equities
      Trump economic adviser seeks to ease global fears as Chinese currency suffers biggest drop since August
      A Chinese flag at a shipyard in Jiangyin. Larry Kudlow, an economic adviser to Donald Trump, conceded that US tariffs on Chinese goods would hurt both sides
      James Politi and Aime Williams in Washington, Christian Shepherd in Hong Kong and Tom Mitchell in Beijing 46 minutes ago

      China’s renminbi suffered its worst one-day drop since August last year and global equity markets fell, even as US president Donald Trump’s top economic adviser sought to contain the fallout from the escalation of trade tensions with Beijing.
      …
      Washington was expected on Monday to release details of a further $300bn of Chinese imports that it wanted to hit with 25 per cent tariffs if there was no progress in the negotiations with Beijing, after already moving to raise levies on an earlier list of $200bn of Chinese goods from 10 per cent to 25 per cent on Friday.
      …
      The worsening tariff dispute hit markets on Monday, with the renminbi’s offshore exchange rate falling as much as 0.9 per cent to Rmb6.9402 per dollar.

      Equity markets across the Asia-Pacific region fell heavily, with China’s CSI 300 index of major companies listed in Shenzhen and Shanghai dropping 1.7 per cent. Futures trading indicated that Wall Street was set to open more than 1 per cent lower. European bourses also fell, but by narrower margins, with the region-wide Stoxx 600 index down 0.5 per cent.
      …

      1. Wall Street stock market futures on the major exchanges are all projecting losses today approaching 2%. I see nothing here the Plunge Protection Team can’t contain, though.

        1. I see nothing here the Plunge Protection Team can’t contain, though.

          They need to team up with the Fed. Then there’s nothing they can’t contain.

    2. Almost time for investors to take ‘major defensive action,’ fund manager warns
      By Shawn Langlois
      Published: May 13, 2019 6:25 a.m. ET
      Critical information for the U.S. trading day
      Disney/Everett
      Investors might want to think about taking cover.

      All this trade-war business is making for some serious market jitters.
      …
      And it’s starting to look ugly again.

      Yet, despite some pretty wicked pullbacks over the past few sessions, volatility is still historically (VIX, +24.50%) low and sentiment indicators are showing that investors remain unfazed. For the Wall Street pros who tend to look through a contrarian lens, there’s more red ink to be spilled.

      “The indicators in past weeks have been warning that the stock market would remain highly volatile because investors, who historically are wrong, were overly optimistic,” writes Brad Lamensdorf, the man behind the AdvisorShares Ranger Equity Bear. “Sure enough, confirming the market’s vulnerability, Trump’s China tariffs triggered this past week’s retreat.”

      So is this an opportune time to buy? Lamensdorf answer: Nope. And he pointed to this chart as to why the weakness could linger:

      The bottom chart shows the difference between bullish (55%) and bearish (18%) sentiment among market newsletters. When bullish gets up to 60%, Lamensorf warns in our call of the day, it’s time for “major defensive action” with your portfolio.

      In other words, everybody’s getting a bit too optimistic out there — although, one look at the futures market, and that could be changing.
      …

    3. It seems like the U.S. stock and housing markets are aligning for a protracted, correlated dip. Are you ready for a wild ride this summer?

    4. Got Nash reversion?

      China announces tariffs as high as 25% on $60 billion of U.S. items
      By Steve Goldstein
      Published: May 13, 2019 8:34 a.m. ET

      Citing the U.S. imposition of 25% tariffs on $200 billion worth of Chinese goods, China on Monday announced it will impose tariffs as high as 25% on $60 billion of U.S. goods. That new tariff rate will be effective on June 1, the Chinese government said in a statement.
      …

    1. the Fed will have no choice

      Are you sure the Fed can’t just quietly buy those Treasuries and you’d never notice a thing, other than the price of bitcoin going to the moon?

      1. “Are you sure the Fed can’t just quietly buy those Treasuries…”

        That’s exactly what would happen…an off balance sheet maneuver.

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