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The Slowdown Seen Across The World

It’s Friday desk clearing time for this blogger. “Home prices slipped in some of the costliest U.S. markets in the second quarter. Prices slid 5.3% in the San Jose region. Prices slipped 1.9% in the San Francisco area and 1.2% in urban Honolulu. ‘Housing unaffordability will hinder sales irrespective of the local job market conditions,’ said Lawrence Yun, chief economist of the Realtors group. ‘This is evident in the very expensive markets as home prices are either topping off or slightly falling.'”

“In the Los Angeles-Orange County metro area, total permits — an indication of future construction — fell by 25%, according to data from the U.S. Census Bureau. Single-family permits dropped 18.5% in the region, while those for multifamily projects such as apartment buildings — a category in which activity tends to be more volatile — fell 28.6%. ‘We are going in exactly the wrong direction,’ said Christopher Thornberg, founding partner of Beacon Economics.”

“Over the last year, they said, the potential profit on many new projects has shrunk to the point at which it doesn’t make sense for builders or their financiers to take the risk. ‘No one is interested in doing loans to lose money,’ said Scott Laurie, chief executive of Olson Co., which builds single-family and town homes throughout Southern California. Laurie said land sellers also have gotten a bit ‘more realistic’ with their pricing, which could help more builders like him break ground. But it’s still hard to find places to build the $400,000-to-$650,000 homes the firm specializes in.”

“Though the numbers are great, we are seeing some change in greater Nashville. ‘To be honest its slowed down a bit this year compared to years past, it was a rat race, multiple offers, things selling 20-30-40 thousand above list price,’ said. ‘I think that has to do with more competition, more homes, more inventory.’ He added that suburban areas are finally starting to catch up to demand and it’s making it a market for buyers where sellers are now willing to negotiate terms.”

“Daniel Satizabal, born and raised in Miami, is paying off his student loans and soon looking to buy a home instead of renting one. But since his friend tried to make an offer on a home in Tampa and was outbid by a foreign investor, Satizabal has been feeling discouraged. He sees new developments popping up across the state but wonders how many of them are even being occupied by full-time residents. ‘It makes you question who they are building these [condos] for?’ Satizabal, 29, asked. ‘There’s such a disparity between the value of these places and the median income of people working in these cities.'”

“Satizabal asked: How many vacant homes are in Florida, and what is the extent of this problem? As it happens, there are quite a few. Using data recorded by the U.S. Census Bureau, LendingTree found earlier this year that 17.09% of Miami’s 2 million households were vacant. Vacancies include housing that is for seasonal use, for sale, for rent or unoccupied. The March 2019 study found that the top three U.S. cities with the highest vacancy rates were all in Florida: Miami had the highest percentage, followed by Orlando (16%) and Tampa (15.3%).”

“Buffalo, NY is seeing the greatest spike in foreclosure filings—they jumped 33% over the previous year. Buffalo was followed by Orlando, FL, where foreclosure filings were up 32%; Jacksonville, FL, at 18%; Miami, at 7%; and Tampa, FL, at 5%.”

“In Melfort, as with most places in the northeast, it is a buyers market. Just south, Humboldt is also in a buyers market right now. ‘When you price your house right, or get it in that price range where the buyers are willing to pay, then stuff happens,’ broker Dan Torwalt told northeastNOW. ‘And I think it’s been a little bit of a learning curve for the market, especially the sellers to understand that the glory days of four, five, six, seven years ago aren’t there, and I don’t know if they’ll come back again to that for a while unless something big happens in this area.'”

“RICS said an index of prices returned to clear negative territory. Weakness was felt most in London, East Anglia and the South-east, where values are expected to continue declining over the next year – despite a falling pound making it cheaper for foreigners to buy UK assets. ‘Some support may be provided by an easing in the cost of money which could feed through into lower mortgage finance costs, but this may be insufficient to provide a spur to lift activity given the clouds hanging over the economy,’ said RICS’ chief economist Simon Rubinsohn.”

“Property prices have crashed in some of Cape Town’s priciest suburbs as demand evaporates. In a statement on Wednesday, estate agent Seeff’s MD for the Atlantic seaboard and city bowl, Ross Levin, said recent sales had been concluded at ‘anything between 20% and 50% below the asking prices.’ He added: ‘The market is already down by 40% since 2016/17, and despite the expected uptick following the election, the reality has been a further decline of 15% in value generated during the first half of this year. High-end sales remain especially slow.’ Rentals have also plummeted, said Seeff’s rentals manager for the Atlantic seaboard, Natalie Muller.”

“Singapore remained in the world’s top ten most expensive market for prime residential property, even as prices here fell 1.1 percent during the first half of 2019, revealed a Savills report. This comes as the ‘slowdown seen across the world’s leading prime city housing markets during the second half of 2018 continued into 2019,’ noted Savills.”

“Billion Development and Project Management on Tuesday released the first batch of flats at its Tsuen Wan project at discounts of up to 10 per cent to rates prevailing in the district, in the first sign that two months of unrest in Hong Kong is having an impact on property prices.The smallest flat is priced at HK$3.81 million or HK$17,558 per sq ft. ‘The price of the newly released flats is lower than some of the second-hand flats nearby, like Chelsea Court and Vision City,’ said Sammy Po Siu-ming, chief executive of Midland Realty’s residential division. ‘There haven’t been any new flats released for less than HK$4 million in Tsuen Wan in recent years.'”

“Sales volumes remain 30 per cent below the June average for the past three years in what is already a seasonally-weak period, according to analysis by Morgan Stanley. ‘If clearance rates can be sustained in a lifting auction volume environment than we may see a stronger housing recovery – although this looks unlikely at this stage,’ its analysis warns. ‘Melbourne remains a buyers’ market,’ says Perron King, HTW Melbourne director. ‘Buyers are not as rushed as they once were and now have time to consider options.'”

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This Post Has 159 Comments

  1. Ok everybody, we hope to have at least have temporarily stopped the problems from last night so please let me know if you see anything odd. If it’s still acting up I’ll have to close the comments again. Sorry for the inconvenience.

  2. ‘Prices slid 5.3% in the San Jose region. Prices slipped 1.9% in the San Francisco area and 1.2% in urban Honolulu…‘We are going in exactly the wrong direction,’ said Christopher Thornberg, founding partner of Beacon Economics’

    Eat yer crowz Thornberg.

    1. “Permits have fallen nationally too, by 6% in the first half of the year. Thornberg, of Beacon Economics, said the decline is worse in California because the market has slowed the most on the most expensive homes, which fill much of coastal California.”

      We’ve been saying this for years…while the REIC shills touts “Location, Location, Location”. At the end of the bubble, the high-end goes down the most (most constructions are at the high-end luxury as builders paid too much for LAND)! Then the trickle down effects destroy the rest of the market.

      “He said it’s extremely difficult to build moderately priced housing in California, given high costs, tight environmental laws and neighborhood pushback that delays projects and drives up cost. He and other economists contend the main reason a 1,640-square-foot, 1920s-era house in Silver Lake sells for nearly $1.5 million is that for decades too few homes were built relative to population and job growth.”

      DING DONG!!!

      “Laurie said land sellers also have gotten a bit ‘more realistic’ with their pricing, which could help more builders like him break ground. But it’s still hard to find places to build the $400,000-to-$650,000 homes the firm specializes in.”

      But shortage???

    2. ‘We are going in exactly the wrong direction,’

      Cuz California real estate always goes up?

      1. “Cuz California real estate always goes up?”

        Click your heels together three times with your eyes closed!

      2. In econ 101, when you plot supply and demand, one would see that shack supply is pulling back because there aren’t buyers at the prevailing prices. As the land sellers “get realistic”, lower prices for new shacks should result. Unfortunately for recent buyers, they go underwater, default, and the series of events continues. Thornberg knows this. He just can’t admit he was wrong.

        1. Spot on Ben…Thats what’s happening or going to happen…I already see it…There are entitled land deals everywhere for sale…

  4. ‘The smallest flat is priced at HK$3.81 million or HK$17,558 per sq ft. ‘The price of the newly released flats is lower than some of the second-hand flats nearby, like Chelsea Court and Vision City…There haven’t been any new flats released for less than HK$4 million in Tsuen Wan in recent years’

    Another guys says ten years. Just like that the whole city is full of FB’s.

    1. Just for perspective a HK dollar is worth around 13 cents. Those sq foot prices are stunning

    1. “Yun warns that this acceleration will likely lead to a greater slowdown in home sales.”

      Which, in turn will cause the prices of the homes to…? C’mon, Larry, it’s not that difficult.

    1. Tom Lee, thank you for your wonderful pump and dump call.

      I read your article and I have no idea what you are talking about, but it sure does look impressive. All sorts of fancy charts and what not. You sure fooled an old cowboy like me.

      Obviously, you must view yourself as a lot smarter than your readers.

      Tom Lee, if you really do have clairvoyant powers, then why would share with the rest of the world?

      1. Fed will cut again, and again….QE4 next. Of course the market is going up. Fed is no longer just the lender of last resort, but the buyer.

        BoJ owns 100% of bonds, and now 40% of ETFs….this is the new norm. We’re next…

        2. BoJ owns 100% of bonds,

          They sure own a lot, but it looks like it is about 50%, not 100%:

          https://www.japanmacroadvisors.com/page/category/economic-indicators/financial-markets/jgbs-held-by-boj/

          now 40% of ETFs

          Actually, the most recent figure I could find says higher:

          “The BOJ now owns 77.5 percent of Japan’s ETF market, having bought nearly 23 trillion yen of the product since 2013, a senior central bank official told the same parliament session.”

          https://www.reuters.com/article/us-japan-economy-boj/kuroda-defends-japan-central-banks-etf-buying-sees-no-near-term-exit-idUSKBN1O602Q

          As for the % of stocks the BOJ owns (a much larger set than just ETFs), it is about 5% of the total market. But the BOJ is a “top shareholder” in about 50% of listed Japanese companies.

          https://www.ft.com/content/a5d8074e-86ce-11e9-97ea-05ac2431f453

      1. Uh oh. That was from me, Carl Morris. I see my name and email were autofilled with RR’s info. I’ll try to replace it with mine this time.

          1. OK, I see that now that I changed it back it stays at what it is supposed to be. I think that’s the only critical thing for this problem.

          2. FWIW, the textbox was (pre) populated with user info rather than opening blank upon first use. After editing the user info fields with your own it correctly retains the updated info for the next use.

          3. That’s the puzzler. The web guys are “unable to replicate” and probably at the bars by now.

            BTW, there is no reason to use your real email in the log in. The only thing I use it for is to keep people from posing as one of you. Meaning I can glance at it and see if it’s consistent.

  8. I think that is the total number possessed by Nadler, Schiff, and Schumer. I may be estimating on the high side.

  9. I used to live in this San Diego neighborhood as a starving student ~25 years ago and liked it – quiet, working class. I like the craftsman style too but cant imagine dumping that many yellenbux on a nearly 100 year old place that doesnt have much in the way of space, yard or views.

    https://www.youtube.com/watch?v=ahwBrlCaxtk

    1. “…quiet, working class…”

      “…just closed for $1,140,000…”

      Somehow I don’t think that’s a working class neighborhood anymore.

    2. Quiet, working class for $1.19 million?

      Are surgeons considered working class in San Diego?

      How Much Can a Heart Surgeon Earn?
      by Jayne Thompson; Updated June 27, 2018

      While general surgeons earn a median $208,000 annually in 2018, heart surgeons pull in $353,627. The median is the wage in the middle, that is half of all surgeons earn below this amount, half earn more.

      https://work.chron.com/much-can-heart-surgeon-earn-29488.html

        1. I drywalled a heart surgeon’s new home on the water in North Palm Beach back in 1990. Nice shack, probably 2 – 3 million back then (probably 10 million today}.

          Anyway pretty nice guy, talked to him near the end of the job and he told me he made really good money but what allowed him to keep it was his malpractice insurance was next to nothing, He was a specialist and by the time anyone got to him he was their last resort. If he saved them he was a hero and if they didn’t make it there was nothing anyone could have done.

        2. If bypass surgery is your gig then Mississippi is probably where the cotton is the tallest.

          I’m sure there is a lot of need. What about money to pay? Does the govt pay top dollar for all of them?

  11. Rest assured, it’s a GREAT time to buy! Here is an excerpt from an email I received today from a national bank lender:

    “Home sales cooling off
    Meanwhile, housing sales are slowing. The number shows a 5.1% increase over the past twelve months. A year ago, home prices were rising at a 7.4% rate.

    Bottom line: This is a great time to buy!
    Low mortgage rates and a more balanced housing market are helping with affordability, so if you’ve been waiting to buy a house, now may be a great time to act. Let’s talk!”

    Clearly, now is a great time to buy (just like last year, and the year before, and basically every year).

  13. According to the Realtors it is never a bad time to help the seller pay a 6 percent commission

  14. The Fed has put the pedal to the metal and is dropping gasoline on a tanker fire. They’re all-in. The everything bubble is alive and roaring, and they are hell-bent on growing the inferno.

    1. It’s the end stage of the train wreck, I can’t see how there are any more rabbits to pull out of the hat. The apparent lack of fear would imply there is a plan, though. I doubt it’s good for us but I bet it’s good for them.

      1. My prediction is that they will buy stocks like the ECB and Japan at some point. The stock prices will still go down but the Fed stepping in will put a floor in the market – where I dont know. The economy is part of the full spectrum warfare that is being conducted between nations and will not be allowed to go much below what the powers that be deem is an acceptable level.

        Also, seems the migration out of LA is gaining steam. Who is buying a place in Silver Lake for 1M+? That used to be a very gritty area and remains that way today from what I’ve read. I dont need to get my dog a gmo-free soy-based mineral bath and gender-neutral haircut so I have no reason to venture to that part of the planet.

        1. “The stock prices will still go down but the Fed stepping in will put a floor in the market – where I dont know.”

          They let the wheels fall off for about seven months (September 2008 through March 2009) before stepping up bigly with quantitative easing to buoy the stock market. One problem they face this time is that they are starting with rates already very low, and peremptorily falling very quickly. The risk of sending Treasury yields negative with further Fed-funded rounds of QE seems quite significant. And at that point, the global economy would have the lowest risk premiums in history, if not already.

          Which brings to mind something a former Fed chair once said:

          History has not dealt kindly with the aftermath of protracted periods of low risk premiums.

          — Alan Greenspan

          1. “…peremptorily…”

            Is that a legitimate word? Hehe, I’m actually impressed with your vast vocabulary.

    2. “I’ll be voting for Hillary Clinton, with the hope that she can bring Americans together to do the things necessary to strengthen our economy, our environment, and our place in the world.” —Henry Paulson

          1. “Green = all about money”

            Mining = all about benevolence to citizens

            EPA dropped salmon protection after Trump met with Alaska governor

            By Scott Bronstein, Curt Devine, Drew Griffin and Ashley Hackett, CNN, Fri August 9, 2019

            In 2014, the project was halted because an EPA study found that it would cause “complete loss of fish habitat due to elimination, dewatering, and fragmentation of streams, wetlands, and other aquatic resources” in some areas of Bristol Bay. The agency invoked a rarely used provision of the Clean Water Act that works like a veto, effectively banning mining on the site.
            Some current and former EPA officials say the decision to remove the Clean Water Act restriction ignores scientific evidence. The decision follows a series of regulatory rollbacks and political appointments within the Trump administration’s EPA that have been criticized by former EPA administrators as favoring industry interests over the environment.

        2. Tucker and Dale vs. Evil was brilliant. It takes the usual Hollywood script of evil homicidal hillbillies stalking urbanites who venture into their backwoods and hollows, and turns it around. I don’t like horror movies and almost never watch them, but this was a gem.

          https://www.youtube.com/watch?v=l1t8OZn_uhE

  18. “The March 2019 study found that the top three U.S. cities with the highest vacancy rates were all in Florida: Miami had the highest percentage, followed by Orlando (16%) and Tampa (15.3%).”

    Seems like lotsa HODLers of vacant homes are HODLing out for higher future prices, rather than currently cutting ask prices to levels the market will bear.

    Here’s to hoping that they get crushed by rising interest rates.

    1. R u negative Treasury yield curious?

      Banking and Financial News
      August 9, 2019 / 12:22 PM / Updated 11 hours ago
      Market weighs risk of negative U.S. Treasury yields
      Richard Leong

      Aug 9 (Reuters) – Traders and analysts are considering whether U.S. bond yields would fall below zero as a record amount around the world sank into negative territory this week.

      The question has become a talking point, and less hypothetical, this week as the U.S. 30-year Treasury bond yield reached the brink of breaking to record lows.

      Negative yields have become a mainstay in Europe and Japan, abetted by their central banks’ negative-rate policy.
      …
      “It is no longer absurd to think that the nominal yield on U.S. Treasury securities could go negative,” Joachim Fels, PIMCO’s global economic adviser, wrote on Wednesday in a blog post.

      On Friday, the 10-year yield on U.S. Treasury notes was 1.73% compared with -0.568% on German Bunds and -0.218% on Japanese government securities .

      Interest rates on U.S. Treasury bills went negative in 2015. That happened because of expectations the Federal Reserve was sticking to its near-zero rate policy into the following year due to global economic worries.
      …

      1. so the more the government borrows, the lower the deficit for the year. Sounds like ,the globalists have not run out of tricks. Is it sustainable? No, but these people live by the slogan that in the long run we will all be dead. They just want to enjoy their rich and famous lifestyles for a few more decades. Rome not only was not built in a day, it did not die in a day. The precious metals were taken out of its coins a little but little. The Founding Fathers understood history and drafted the constitution accordingly. However, contrary to their will we created a federal reserve and pulled this country off the gold standard and those two events endanger not only our prosperity but democracy itself.

    2. Markets
      How Low Can Bond Yields Go? A Lot Lower
      There are five primary reasons why market rates are likely to set record lows sooner rather than later.
      By Komal Sri-Kumar
      August 9, 2019, 2:00 AM PDT
      There’s a bull market in bonds.
      Photographer: Drew Angerer/Getty Images North America

      U.S. Treasuries, the global benchmark in financial markets, have enjoyed an impressive rally as investors sought a haven from turmoil in riskier assets. The gains have pushed yields on 10-year notes to 1.70% this week, far lower than the more than 3% that economists at the start of the year expected them to be by now. And the move toward even lower yields isn’t likely to be over yet.

      Market participants should brace for 1% yields before too long for five reasons. Two of the determinants are domestic: expectations for real, or inflation-adjusted,economic growth and inflationary expectations. The other three arise from outside the U.S.
      …

    3. Many apologees for my inability to contain my endless fascination with the central bank induced yield-suck vortex.

      1. ‘A Yield-Suck Vortex’ Has Taken Over the Global Bond Market
        Liz Capo McCormick
        Bloomberg
        August 8, 2019, 5:00 AM PDT

        (Bloomberg) — In today’s bond market, it seems as if no price is too high.

        And no yield, as a result, is too low. Roughly $15 trillion of debt globally have sub-zero yields, yet investor demand shows no sign of abating. In Austria, government bonds due next century now sell for almost twice their face value. In the U.S., the 30-year bond rally is pushing yields toward modern-day lows. And Pimco has declared it’s no longer “absurd” to think about negative yields reaching the Treasury market too.

        All year long, investors have been piling into haven assets on worries about trade and the global economy. Yet even after Wednesday’s respite, the sheer magnitude of the rally in recent days, especially in bonds with longer maturities, has been nothing short of breathtaking. It began on July 31, after the Federal Reserve disappointed traders looking for more signs of monetary easing. Then, it accelerated last week after President Donald Trump escalated his trade war with China, which sent stocks worldwide into a swoon.

        While you might argue the bond market has become unhinged, investors seem to have made up their minds: U.S.-China trade tensions are pushing the world economy toward a recession, and central bankers need to act fast.

        “Everyone is trying to rush for the exits at the same time, so there’s a yield-suck vortex that is happening,” particularly in longer-term sovereign debt, said Chirag Mirani, the head of U.S. rates strategy at UBS.

        It’s not hard to see why the longest-maturity government bonds have led the advance this year. In a world of ultra-low rates, they offer the highest returns from a safe asset. And with little inflation to eat into returns and the global economy growing weaker by the day, it’s a no-brainer — even if yields are minuscule on an absolute basis.

        That, in effect, has made what was once unimaginable in the bond market, commonplace. This year alone, Austria’s government bonds due in 2117 have returned almost 70%, data compiled by Bloomberg show. They now trade at 191 euros, well above their face value of 100 euros, and yield just 0.77%. Meanwhile, yields on every single issue in Germany’s government bond market, from one month to 30 years, have fallen into negative territory.

        Demand for 30-year U.S. Treasuries have been so strong that yields fell as low as 2.1216% on Wednesday, just shy of the lowest level since the Treasury began regular sales in 1977. What’s more, its yield briefly slipped below the fed funds effective rate, the interest rate that the Federal Reserve targets when it conducts monetary policy.
        …
        Even strategists who have regularly called for lower yields have rushed to cut their outlooks. This week, HSBC’s Steven Major slashed his year-end German bund forecast to -0.8% from -0.2% and U.S. 10-year yield to 1.5% from 2.1%.

        “The already epic global bond bubble continues to inflate,” said Peter Boockvar, chief investment officer at Bleakley Financial. “It’s really scary to watch.”
        …

        2. It is always more important to see what the rich are doing as what they are saying or their controlled media is saying. The spread between Brent crude and WTI is closing fast. Part of it is less drilling in the US due to sweet spot exhaustion I have talked about that for years. However, the new development and I think the more important driver is now China and the countries connected to it by trade really are collapsing. The oil markets are telling us that the US economy is expected to hold up much better than the world’s economy thus US oil demand will too. Demand growth outside the US is expected to be greatly diminished. Just the opposite of what we have seen for a number of years. The chart is not current until today but we have moved from Brent being $13 over WTI to around $4 yesterday in the last few months, the chart is not quite that current:

          https://ycharts.com/indicators/brent_wti_spread

  20. Testing… Have not been well enough to post but for a moment the last several days. Replied to (ByHousing Wizard, Redpilled Redhead, BlueSkye, Carl Morris) on the divorce thread, but that’s back on page 2 now (In a Softer Market)

    I am noticing some more weirdness in my neighborhood – homes that zillow said went pending or off market weeks ago STILL have the for sale signs out front. These are below median price homes. The general sense of market cooling here locally is increasing fast.

    I probably have a rough week ahead due to needing to stop some of the meds I’ve been on post surgery, and not likely to be up to being online much.

    Thought question for everyone who is looking at the feds, markets, etc: If you guys had a couple hundred grand extra at the end of this year, would you invest it, or sit on cash for a while? How scary and overpriced do things for someone who hasn’t ridden the markets up, but can get in now?

    1. would you invest it, or sit on cash for a while?

      Maybe look at an all-weather portfolio (I’m a fan of Harry Browne’s permanent portfolio) or a conservative, income-producing fund (Vanguard Wellesley)?

      Something like the PP has a big chunk of cash in it, but also exposure to other assets which are likely uncorrelated. Rather than try to guess where we go from here, it’s a way of placing several bets and avoiding being 100% wrong.

      1. (note that I tend to be more conservative overall so have found this approach helpful, and it got me out of all-cash and some exposure to stocks and bonds the last 5 years)

        1. Drumminj,
          I’ve seeing a problem with the Joshua Tree Extension right now. I read all, even click “mark all as read” but returning to the home page, it still shows 1 unread no matter what I do – Is this related to the other recent problems with comments?

          2. it still shows 1 unread no matter what I do – Is this related to the other recent problems with comments?

            This has always been an issue. My belief is that the count on the main page includes comments awaiting moderation, which don’t show up in the actual list of comments.

            To get the “new” count I just look at the total listed on the main page and subtract out the read comments, which it then makes sense any sitting in the moderation queue would count as “new”….

          3. it still shows 1 unread no matter what I do
            You have to go all the way to the bottom of the page, then it greys out. Make sure you don’t drag the cursor straight up, go to the left and click HBB title. I’m not sure if that’s the most efficient way, but I’ve fallen into the habit of doing like that and it works.

          4. I’ve read all comments and then gone back to the main page and see a “1 new comment”, immediately opened the comments again and see “0”. Refreshing the comments page brings the new comment up.

          5. Refreshing the comments page brings the new comment up.

            +1. That drove me crazy for a long time but it turned out to be that the plugin knew there was a new comment but the browser would load from cache instead of downloading the latest (sometimes even for days if it was the last comment ever made for that post). If I refresh the page and force the browser to reload then I can see it.

      2. “income-producing fund”

        It might be worth considering how the income production might adjust if the economy goes into a recession over the next few years. The bond market increasingly is signaling that we are headed that direction.

        1. The Financial Times
          US interest rates
          US yield curve sends strongest recession warning since 2007
          Bond market indicator worsens as questions swirl about Federal Reserve’s next move
          © AFP
          Colby Smith in New York and Brendan Greeley in Washington August 7, 2019

          A widely watched bond market indicator sent its strongest recession warning in more than a decade on Wednesday, as the global growth outlook dimmed and questions swirled about the Federal Reserve’s commitment to cut interest rates in light of rising US-China trade tensions.

          The yield on three-month US Treasury traded as much as 41.23 basis points above that on the benchmark 10-year government bond — the widest gap since March 2007. Such an inversion of the yield curve — in which short-term yields are higher than longer-term ones — has preceded every recession of the last half century.
          …

        2. fastFT US Treasury Bonds
          30-year Treasury auction results suggest investors remain on edge
          Pan Kwan Yuk in New York August 8, 2019

          A sale of long-dated Treasury bonds was met with better than expected demand on Thursday after the notes were sold at a yield higher than the prevailing rate, suggesting that investors remain wary over the long term growth outlook for the US economy.

          Investors submitted bids for 2.24 times the $19bn of 30-year notes offered by the Treasury on Wednesday. This takes the so-called bid-to-cover ratio – a gauge of demand – for that maturity back up from the 2.13 reported in the previous auction in July, when it fell to an eight-month low.

          The bonds were sold at a yield of 2.335 per cent — a three-year low. However that is largely a reflection of the ferocious global bond rally that has sent the yield on the 30-year note tumbling towards record lows this week.
          …

        3. The Financial Times
          Opinion Markets Insight
          Pricey bond proxies make safety trade more dangerous
          Sought-after real estate and utilities stocks are still prone to dips during a crisis
          Richard Henderson
          Actions by Trump and Powell helped trigger a bloodbath for US blue-chip stocks © Reuters
          Richard Henderson in New York August 7, 2019

          Prudence comes at a cost. That is one lesson equity investors should keep in mind this August, a month sorely lacking the tranquility typical of this period.

          Monday’s bloodbath was the worst day of the year for US blue-chip stocks — investors ended the day 3 per cent poorer. The drawdown extended the previous week’s selling, when the two central drivers that have consistently moved markets failed, almost in unison, across a bruising 24 hours. Jay Powell, the Federal Reserve chair, dashed hopes of a prolonged easing cycle and President Donald Trump deepened the trade fracas.

          Investors scuttled to safer corners of the market. Real estate and utilities weathered the downturn as investors, fearing further tumult, favoured these so-called bond proxies as armour for their equity portfolios.

          Utility stocks are an interesting case study. They are classic alternatives to cyclical stocks, such as banks, whose performance is tethered to economic growth, making them vulnerable to recessions. Dull, slow-moving electricity and water companies churn out dividends from safe, commanding market positions.

          NextEra Energy, the largest utility in the S&P 500 basket of blue-chips, has outperformed the broader index by 20 per cent over the past 12 months. As a group, utilities have gained more than 11 per cent over the same period, outpacing the wider S&P 500 by roughly the same margin after Monday dipped the benchmark briefly into negative territory.

          Outperforming the broader index makes defensive stocks expensive, and increases the risk that yield-hungry investors could miss out on a bounce in cyclical and growth stocks. Investors simply may be paying too much to play it safe.

          Whether that is the case is a question that should be considered given the overpowering trend since the financial crisis for stocks to rebound to new records despite a series of rocky patches. Even after Monday’s pain, US stocks have gained more than 14 per cent in the year to date, retracing the worst December since 1931 and shaking off a quick bout of conniptions in May.

          The question of whether investors are paying too much for defensive stocks was posed in a research note from Andrew Lapthorne, head of quantitative equity research for Société Générale.

          Cyclical stocks such as banks fall sharply in recessions. During the financial crisis, profits from these types of companies tumbled 60 per cent or more. Investors rightly bet consumers would forgo a new television or holiday but would still eat and wash.

          Yet this thesis is not as strong as many may hope. Profits for defensive stocks also did poorly through the 2008 crisis, dropping up to 40 per cent. This evidence dents the appeal of these bellwether safety stocks at a time when they are priced at a premium to cyclicals.

          “Investors are then paying twice the price for bond proxies than the more economically exposed cyclical assets,” Mr Lapthorne warned. “However, the mistake they may be making is believing these companies are immune from the economic cycle. This is not the case.”
          …

      3. MGSpiffy, I hope your recovery is going well. I went to surgery last week to correct a deviated septum. Recovery has been painful, but 11 days on I can breath so much better even though there is still a ton of swelling. Can’t wait until doc says I can return to running.

        Not to be construed as advice, I have an interesting anecdote about the future. We just sold one of the companies in our portfolio (family office) for about $5M with some future equity in new venture. The NOI was good and the industry was in real estate. I’ll just leave it at that. The purchaser was a young Jewish guy from a wealth family back east. In discussions about the economic climate, he confided that his view was that there was very little “safe” places to park money. His risk mitigation strategy was to go deep and to become an operator of a profitable company. Of course running a company is highly risky historically, but you know how the adage goes, “past performance is not necessarily an indicator of future results.” What the future looks like is anyone’s guess. The orthodox answer (and a good one I think) would be drumminj’s suggestion of a well-diversified, low-cost mutual fund.

        1. Of course running a company is highly risky historically, but you know how the adage goes, “past performance is not necessarily an indicator of future results.”

          The best part of running your own company, “You get to count the money, first.”

          1. The best part of running your own company, “You get to count the money, first.”

            And take all the risks.

            I’ve got an interesting side project that may go somewhere. Former employers and other industry people who I’ve trusted enough to share have expressed serious interest in and need for. I’m at the point where I’m needing to seek IP / Patent protection.

            It’s a total crap shoot, and will demand effort above and beyond, but that what it usually takes to get the rewards beyond being paid for your time.

        2. OneAgainstMany, good luck with the recovery there. That as surgery I would benefit from as well. They told me +50% airflow on one side and +250% airflow on the other. Why the heck do our bodies have all these defects in the first place?

          You might guess that I have more than a passing interest in the anwser to that hypothetical question. Since I hypothetically outed myself already, one might hypothetically see a AAA release on the hypothetically premier digital platform in the next 60 days days, and buy it, not realizing it that 4% of every purchases hypothetically goes straight into the pockets of one of the posters here until a cap is reached, leaving hypothetically a half mil after taxes.

          There just no safe place for late to the party cash right now. There’s been so much cash juiced into the markets and pockets of the well connected and elite, who have scoured high and low looking for safe havens and returns, all of which are now potentially exposed for an ass-whooping if we enter a major downturn again.

          2. Done that once before with Merrill Lynch and a similar amount managed. The result(s) made me super cynical. One thing those guys wont do is be willing to entertain the idea of a slowdown/recession coming.

          3. Nice work MGSpiffy, very impressive. If that chunk of change comes through, I wonder if it makes sense to pay down any housing debt? The return on that will be higher than anything you can find on a risk-free asset (govt. bonds).

          4. Merrill Lynch

            Yeah, some of the big guys act like they’re giving you a personalized portfolio when they’re not. I was lucky to inherit a good advisor and his successor. We talk tech, biotech, antitrust law, economic indicators on a fairly regular basis. He’s with a division of Raymond James. His division is not in your area, but Raymond James appears to be.

          5. OneAgainstMany,

            I’ve pondered that question a bit. As it is, we’re ok and cash flow going forward is ok, even despite my taking 2-3 months off to have the surgery and having to find a new gig. Between Mrs. Spiffy and whatever gig I land next, we’re paying all the bills and the mortgage, not adding any other debt and saving some.

            We’ve got maybe $90-100k in cash between us not counting retirement plans (We don’t have any joint accounts), so there’s a buffer for job loss/job search and the 3.5% mortgage will get paid. I probably want/need to put $20-50k into the house for a couple major things (drainage work, rebuild deck with composites) to shore things up for the next 20+ years (nothing that has to be done this year, but in the next 3-5).

            The big, scary thing is catching up for retirement. In 10 years, it will probably be very, very difficult for me to land senior tech gigs as I’ll be past 60. It’s one of the main reasons why I’m swinging for the fences how. I’d like to have the house paid off by then, because then I could literally srcape by on just my social sec (about max). My divorce is what set me back financially multiple decades. From 2008 to 2016, I had a negative net worth as I struggled with the alimony, child support and huge debt that it saddled me with. That leaves a scar on ones psyche.

            Now I look at “what if” I actually had money to invest back in 2012 ish – it would have rode things up big time compared to paying off a mortgage. But I really do think (yes, Alanis) that we’re plateauing before a significant stagnation (at best) or recession (at worst) – that the recent run up didn’t come for free.

            I’m ‘eyes wide open’ right now for input from all sorts of sources. As I told a couple times before, Ben’s blog saved my ass back in 2007, and I appreciate being able to aggregate all the views and experiences of the people here as part of all that I’m immersing myself in an attempt to make educated, and diversified choices. And I’ll own them.

            I mentioned that I had a “private wealth advisor” at Merrill lynch back in the early 2000s. I had about 500K at one point under management. Even having a great advisor who came up from the streets as opposed the much of them who got the job just because they had rich connections, I found there are literally limits and biases as to the information they are given to work with … i.e. if bad news is coming and it will impact the firm, the advisors not only don’t get to see it, but they are given counter-advice to justify and convince them to people from bolting away due to the storms coming.

          6. good financial advisor

            You’ve mentioned colleagues who’ve done well in tech. Perhaps ask them for a referral.

          7. Redpilled Redhead

            I have considered that. I kind of fall into a gap zone in terms of amount.

            The friend I feel I could most safely ask that question of right now is probably somewhere in the $250-600M net worth zone and I don’t know the people he deals with would have any interest in a small fry like me.

            The guys who are landing gigs with major stock grants at google, facebook, etc – those guys are mostly coming from the same ‘in the dark/didn’t have a need’ zone, so I’m not sure they’ve been able to make smart choices.

            I know a couple that have done well, but don’t seem to realize that timing & luck have played a big part. i.e. guy lands a gig at amazon.com in 2012 and a) survives the politics and b) doesn’t spent his stock grants and they ridden the market up. These guys I know tend to have a rather high opinion of themselves and think their current net worth and success is due to how awesome they are. So you can see why don’t want to buy into their world views.

          8. small fry like me

            Who doesn’t like making more money?! Your royalties are nothing to sneeze at. 🙂

          9. Did I actually say the ‘R’ word? 😉 But yeah, they’ve gotten me through some times already. very few people get them.

          10. Spiffy, I was looking for something similar when the company I worked for IPOed several years back. I went to my estate planning attorney for references of financial advisors.

            Met with a few, including Robinswood financial on Carillon point. In the end, I struggled to trust someone else to manage my money for the same reasons you cite.

            I’ve ended up just managing funds myself along the lines of what I recommend above. I’ve found I’m happy with the results and the strategy aligns with my temperament, view of the world, etc, and I sleep well at night.

            I’m happy to forward on the references I got (back in 2013, so not sure all are still practicing/around) if you want to ping me via the email attached to the Joshua Tree.

          11. then I could literally srcape by on just my social sec (about max). My divorce is what set me back

            Smiling back from the other side of that.

            Two things. Make the retirement budget/plan early and start living it. This took me several years. I started by looking at every expense as a 20 year expense. If you have an expense that is $100/month, that is a $24,000 item. If you wouldn’t pay $24,000 today to keep that, you know what to do.

            As for investing, I split things up and invested not so much for return on investment but for return of investment. Did I mention “no debt”?

            Having an expensive and mortgaged house bought at bubble highs might prove to be quite the drag on retirement preparation. But I am repeating myself.

          12. @Redpilled Redhead – good for you that you have someone who actually engages you and doesn’t treat you like an idiot.

            @drumminj – I feel like I’m going to wind up taking a similar path as you did. I just don’t see paying the fees they want providing enough additional value over what I am likely to do on my own. There’s a ton of resources online now that didn’t exist 20+ years ago.

            At this moment, I still need to wait and see how things playout. Nothing is guaranteed until the funds are in my hand.

            @BlueSkye

            Smiling back from the other side of that.

            That better be from retirement and not my ex’s side of things 😉

            I think I’m already well on that path. We’re past the point in our lives of acquiring ‘things’. We’ve got all we need and more. Now it’s about maximizing the time we have, and the quality of life we get with that so as to minimize regrets in the future. If anything we’re slowly but steadily downsizing ‘stuff’ and ‘Swedish death cleaning’ so as to free more time and mental energy.

            “no debt”? Outside of the house itself, neither I nor Mrs Spiffy have taken on any new debt in years, and intend never to. As our kids are starring to launch themselves into the world, we’ll be clear of that phase in a few more years.

            I’ve stated many times that we desire to keep this place as ‘final’ and grow old in it and that hasn’t changed. Once paid off, operating costs are quite reasonable – cheaper than the houses I had in Texas nearly 20 years ago. The things we are going to doing to it are being done with an eye to longevity and low maintence – the next roof will be metal, the deck will be redone with composites, etc.

            One thing I didn’t mention that maybe makes my situation less stressful is Mrs Spiffy (#2) – She’s more than a decade younger than me and her career has blossomed nicely. She is in some in demand fields and getting comped well – making senior engineer salary for the area while keeping a good life balance and turning down lots of places like amazon, salesforce, expedia, etc, because she doesn’t want to burn herself out. She’s also doing a lot of the cloud engineering on my side project. If I retire in a decade or so, she sould be able to carry us financially on her own with out too much stress, but I’d rather she didn’t have to.

    2. How scary and overpriced do things for someone who hasn’t ridden the markets up, but can get in now?

      How do you feel about volatility? I expect plenty of it in the next year.

      1. How do you feel about volatility? I expect plenty of it in the next year.

        We’re on the same page. As things swing one way, there will be unexpected efforts from the govt/fed/etc to stop it. Nothing is going to be allowed to play out straightforwardly and there’s going to be a lot of coiled-up tension in the system.

    3. Don’t let them kick you off the painkillers so abruptly without protest – they should let you taper. It’s true that you can acclimate to them quickly and have problems not only with pain but with sleep for a while, but I don’t think you’ll be robbing any pharmacies or begging at an ER to get more. I was on them for months, but that was a little less than three years ago. Maybe they stretched it because I had both done.

      1. Don’t let them kick you off the painkillers so abruptly without protest – they should let you taper.

        Respectfully, I disagree with this. Get off of opioids as fast as possible and turn the extras in at a pharmacy or police office that collects them. It’s the safe thing to do. You should fear opioids like the plague. I’ve seen too many people become unintentionally addicted and who are in denial. You never know your propensity to addiction until you are in its throes.

        1. Tarara Boomdea, OneAgainstMany,

          I’m actually the one deciding to taper off the opioids ahead of the schedule my doctors are calling for.

          I made a tracking sheet in excel, and printed out a stack of them (2 days per sheet), on which I have tracked every. single. pill. I have taken since arriving home and when I took it down to the nearest 10 minutes or so.

          In terms of the oxy, I had already tapered down to ~1/3rd of what I was taking the first week, and was seeing more pain variance. (i.e. the trendline was clearly down, but I was then seeing spikes when the pain got really bad, and it made sense not to try and ‘chase the pain’).

          It was the other side effects – feeling pukey, some flu-like symptoms, memory issues, etc, that brought me to stand up and say “what the ***k is going on?” the other day. Literally sort of a movie scene awakening moment.

          Internet research on symptoms and dangers is all over the place without any clear consensus, so I’m following my gut instincts to ramp things down muck quicker and white knuckle it for a while. And it’s not just the oxy that is in question. The hospitals instructions were to take 2x 500mg Tylenol with each oxy – like 4000mg a day – and frankly that is way too much – I don’t need to beat up my liver and I can see in my records that I’ve cut that down already. And as far as the symptoms I’m self-diagnosing, there’s all the other stuff I’m taking to wonder about as well, from the prescription anti-inflamatories to the stool softener, etc, as some of those may also be culprits.

          In addition to all that, based on the data I was recording I was seeing a clear benefit in the 8 or so hours after I took gabapentin, so after talking it over the doc at the follow up earlier this week (got to admit he was impressed with my stacks of data), we worked out a plan to move it to every 12 hours for 2 weeks, then taper that off.

          As for the opioids, I have felt zero desire or cravings for them, nor do the other, non-pain symptoms go away after taking them. In any event, based on what I can find out, they are suspect number one. I’ve already cut the dosage in half (literally) and am at about 1/6th original level. With help from my charts, I’m now increasing the spacing out between each one every 3 days for the next 9 days, at which point they are history.

          Believe me, the pain is still there, and all the medical personal say that it is in the normal range and will continue, but I think I can glide this situation with dumping all this stuff into my body in to a soft landing. Already today, having cut the levels in half, I think I feeling better. today was the last day for the Rx Anti-Inflam, and I’m cutting back most of the OTC stuff as well.

          1. Good for you MGSpiffy. I had 30 Percocet and used 17 for the first few days after surgery. Switched strictly to Tylenol. I always stay well under 4000 mg in 24/hour period (usually 2800 mg) because of liver concerns like you mention.

            Dropped the rest of the Percocet off at the safe box at Walgreens yesterday. A close family member of mine was a thriving dentist with a great practice in CA who got hooked on pain meds after back surgery. He no longer practices and he has, in my opinion, opioid-induced hyperalgesia (patient becomes more sensitive to pain because of opioid treatment).

            I’ll never forget one of my patients who had severe delirium after abdominal surgery. He was totally off the wall and it was clear that the opioids were a contributing factor. He had pretty sharp withdrawals, but once the hospitalist identified the factors, we switched meds and he normalized pretty quickly.

          3. gabapentin

            I experienced more cognitive impairment on gabapentin than OxyContin. Weaning off the gabapentin was also not fun.

          4. ed more cognitive impairment on gabapentin than OxyContin. Weaning off the gabapentin was also not fun.

            One of the reasons I’m keeping such detailed logs. Also why the plan worked out with the doctore is for short rise, then a nice taper down to zero.

            It’s clearly doing something good for the damage in my upper leg where the nerve stent was put in, and that has become more of a problem than the incisions as they have healed. But obviously, if anything goes off the rails, I’m pulling the plug on things.

          6. nerve stent

            Cringe!

            I should have made a video of when I took it out after the medicine delivery ball had drained. It was all taped up around the entry point and I though it was maybe a quarter or half inch into me. Should have seen my surprise as I pulled a good 8 to 10 inches of it out of my leg.

          8. Holy sh!t

            I think those were my exact words. Maybe it was only 6-8 inches, I don’t know. I nearly fainted.

        2. You never know your propensity to addiction until you are in its throes.
          True, but luckily I didn’t. They were very tasty through.

          2. You never know your propensity to addiction until you are in its throes.
            True, but luckily I didn’t. They were very tasty through.

            Honestly, it’s too late for me guys (and gals). I’m a lost, addicted, cause. Seattle Chocolates mint and toffee chocolate bars and Tillamook Salted Caramel Gelato. Don’t ever touch them. They’ll runi your life. Crack and meth only wish they were that powerful.

            (Oddly enough, I’ve lost nearly 20 pounds since the surgery)

      1. “allegedly committed suicide”

        Real journalists will ensure that this story vanishes from the Narrative within a week.

        That is who real journalists are, that is what real journalists do.

        2. Real journalists will ensure that this story vanishes from the Narrative within a week.

          I don’t think they can do that on their own. This is too big. I shudder to think of how big the shooting event(s) will have to be to make it go away.

          1. I don’t think they can do that on their own. This is too big. I shudder to think of how big the shooting event(s) will have to be to make it go away.

            I don’t know if “they” would risk that. At this point the narrative seems to be ‘the guards were overworked and didn’t check in AND there just happened to be zero cameras watching him’ .. and they’re going to things go with that. We’ve seen it time and time before when there is no known concrete proof to the contrary that the flimsiest of explanations are let stand… and pretty much *everyone* has made up their mind, with 99%+ calling BS. The question for the masses currently is “Is this worth voicing my true beliefs” vs ‘just let it go. It doesn’t effect me, and I couldn’t change anything anyway’.

            A couple times in my life, I come across momentary glimpses into the world of the 0.0001% and it’s like an alternate universe in Star Trek. The alleged shenanigans on his island are more than believable. The motive in this case is clear, but the suspects number too many, and too much else might get shaken out into the light.

      3. When I said this guy was going to die in jail a while back, the usual Stockholm-Syndrome people insisted that “no, rich people always get off, waaah!”

        1. “When I said this guy was going to die in jail a while back, the usual Stockholm-Syndrome people insisted that “no, rich people always get off, waaah!”

          Because this guy died in jail rich people ARE going to get off.

          2. No, but I do have a clock, and the time on the clock is set to see just how long it will take the the spin doctors to “manage” this story.

          4. Ben Jones this news broke less than an hour ago.

            Real journalists will be working overtime this weekend to script the Narrative.

            Real journalists do not care about any of the underage girls who were assaulted or raped.

            “The media is the enemy of the American people”

            Trump was right…

          5. “Were you saying he wouldn’t die in jail too?”

            No, I was a guy willing to bet big money that he would die in jail.

      4. taking his secrets to the grave

        Authorities would/should have contemplated the likelihood of his death and planned accordingly so that his secrets didn’t go to the grave.

        2. “Authorities”. Bahahahahaha … such a word. A synonym for “lackeys”, lackeys for the rich and powerful.

          2. Does anyone here on the message board remember how Paula Jones and Juanita Broaddrick were treated by the MSM after their accusations against Bill Clinton?

          6. Don’t limit your thinking.

            Globalists, headed by Rothschild bankers. I get your shtick, Mr. Banker. 😉

          2. “Yeah, and remember they got a safe full of photos and videos when they raided it.’

            Obviously photoshopped and/or actors and doubles were portraying the parts of participants and, if this evidence happens to survive the mysterious fire that will break out in the evidence locker, the chain of evidence is sure to be proven to have been broken and thus un-admissible.

            And then there’s the cover of something called “National Defense” that could be used whereby the evidence and records are sealed for decades.

      2. What does “apparent suicide” mean?

        No investigation or further thought of this guy or his high level connections is henceforth necessary?

    3. From Wikipedia, imagine what he could have given prosecutors:
      William Blaine Richardson III (born November 15, 1947) is an American politician, author, and diplomat who served as the 30th governor of New Mexico from 2003 to 2011. He was U.S. Ambassador to the United Nations and Energy Secretary in the Clinton administration and has also served as a U.S. Congressman, chairman of the 2004 Democratic National Convention, and chairman of the Democratic Governors Association.
      In December 2008, he was nominated for the cabinet-level position of Secretary of Commerce in the first Obama administration,[1] but withdrew a month later as he was investigated for possible improper business dealings in New Mexico.[2][3][4] Although the investigation was later dropped, it was seen to have damaged Richardson’s career, as his second and final term as New Mexico governor concluded.[5]

  25. If he was a nobody after his last “attempt” he would have been placed on suicide watch, anything which could have possibly supported a suicide attempt would have been taken away. He would have been under watch 24/7. However, one of the highest profile inmates in the history of the country is allowed to commit suicide? Even if it was really a suicide and not flat out murder it was done with help, even if the help was only a deliberate omission of the proper suicide prevention measures. Do not threaten the Clintons or you will have the life expectancy of a fruit fly.

    1. We talked for years about the ginormous farmland bubble. It’s hard to believe that it’s finally ending.

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