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We’re Recovering From A Market That Was Going Mad

A report from the Buffalo News in New York. “When Brett Barrett’s husband got a surgical residency in Buffalo, the couple left Chicago for the Colvin Estates neighborhood of North Buffalo. They closed in May on their new $369,000 Marrano home and moved in about a month later, confident they wouldn’t have to do a lot of work on it. But as happy as they are with their three-bedroom home, they are dismayed that Marrano hasn’t completed the exterior of the 1,800-square-foot house, including the paint job.”

“Barrett said he understands that the rainy spring and early summer were a factor in the initial delays. But he and his neighbors are concerned about safety, and they can’t understand why the work hasn’t been completed yet, since the weather has turned drier since July. ‘It’s just been hard for people, and while we understood the weather, what’s the excuse now?’ he asked.”

From The Denver Channel in Colorado. “Construction continues at a fast pace at Harvest Junction, a new housing development in Longmont. The Hamilton’s moved into their home about three weeks ago, but it was only a few days ago they found out they’re living next to the future site of a gravel mine.”

“‘We know that there are mining and fracking, and you see it, but we didn’t expect it to be this close to housing,’ Sarah Hamilton said. ‘I do have some remorse.'”

The Dallas Morning News in Texas. “Sales of high-density housing in Dallas-Fort Worth have sagged this year and purchases of condos and townhouses around the state are down, too. Condo sales in the D-FW area by real estate agents were down 10.5% in the year ending in June compared with the previous 12 months, according to a new report by the Texas Realtors association. And D-FW townhouse purchases fell by 7.2% in the same period, according to the Realtors.”

“‘Although condominium and townhome sales experienced slight decreases across the major Texas markets, the increase in inventory statewide is a strong indicator of developer demand to build upwards in not only urban areas but some suburban areas as well,’ Dr. James Gaines, chief economist for the Real Estate Center at Texas A&M University, said in the report.”

From The Oregonian. “July brought some zip to a Portland area housing market that had been in the doldrums relative to the past few years, but the rally might prove short-lived. Accepted offers dropped compared with the year prior, suggesting August’s numbers for closed sales might disappoint.”

“The year’s slowdown, said Matthew Gardner, chief economist for Windermere Real Estate, is part of a gradual return to a more normal market after a few frenetic years where home prices climbed by double-digit percentages annually — far in excess of wage growth. ‘We’re recovering from a market that was going mad,’ Gardner said. ‘We kind of got used to that being the new normal, but it’s not normal. A lot of buyers have never seen a normal market.'”

The Monterey Herald in California. “Even with interest rates remaining low, sales of existing single-family homes in June dropped 18.1% in Monterey County compared to last year. Monterey County’s drop in home sales is second only to San Francisco’s at 21%.”

“‘It’s a buyers’ market,” said Scott Dick, government affairs director with the Monterey County Association of Realtors. ‘Buyers are taking more time to watch prices which may explain some of the slowdown and ellers are learning to aggressively price their homes if they want them to sell faster.'”

“‘Our office is focused on the luxury home markets of Carmel, Pebble Beach and the surrounding area so specific to those markets, currency control is one factor that has influenced foreign purchases in our area but it’s not specific to the Chinese. As a result, the luxury market is not as competitive but remains strong with interest shifting more to U.S. buyers who are taking advantage of the opportunity,’ said Braden Sterling, managing director of The Agency in Carmel.”

The Tampa Bay Times in Florida. “The Tampa Bay area has a higher percentage of ‘zombies’ — vacant houses in foreclosure — than the nation as a whole. Pinellas leads the bay area with nearly 9 percent of its foreclosures classified as zombies, followed by Pasco at 7.2 percent, Hillsborough at 3.8 percent and Hernando at 1.9 percent. For the bay area overall, the zombie rate is lmost 6 percent compared to 3.2 percent nationally, according to ATTOM Data Solutions.”

“‘A handful of areas still face notable problems with homes abandoned by owners after they get hit with foreclosure claims,’ said Todd Teta, ATTOM’s chief product officer.”

From Multi-Housing News. “Although we have been seeing signs over the past couple of years of a slowdown in construction starts for multifamily projects in hot coastal markets, over the past six months this trend has noticeably escalated to the point where a growing number of developers just can’t make a project work financially.”

“As a recent example, I have done a dozen or so construction loans over the years with a very experienced and successful multifamily developer. This developer had to make the decision to walk away from a fully designed and entitled, 200-unit Los Angeles area project. Now, they are trying the sell the parcel, but new prospective buyer/developers can’t make it work for their purposes either. It is an unfortunate situation that is a problem for a growing number of developers.”

“Ultimately, land prices will need to come down in the coastal markets in order for projects to pencil favorably for developers again. Land sellers will have to lower their expectations on asking prices in order for a transaction to occur. In the meantime, developers looking to survive will seek out locations where they are confident of projected returns.”

From Sparefoot. “The Austin, TX, offices of the parent company of Great Value Storage LLC, one of the largest self-storage owners and operators in the U.S., were raided Aug. 14 by agents with the FBI and U.S. Treasury Department, according to media reports. The Austin Business Journal and Austin TV station KXAN reported the downtown Austin headquarters of the parent company, commercial real estate investment firm World Class Capital Group LLC, were searched. According to the Austin American-Statesman, agents with the Treasury Department also were spotted at the company’s headquarters. In addition, FBI agents visited the recently vacated Austin headquarters of World Class Capital, the media outlets reported.”

“Great Value Storage, founded in 2008, is a wholly owned subsidiary of World Class Capital, which entrepreneur Nate Paul launched in 2007. World Class Capital invests in and develops various types of commercial real estate, including self-storage facilities, office buildings, retail centers and student housing projects.”

“Paul, who’s 32 years old, controls a $1 billion real estate portfolio in 17 states, according to his biography on the website of the All American Speakers Bureau. A 2017 article published by Forbes.com indicated Paul’s organization owned assets worth $1.2 billion and estimated his net worth at $800 million.”

“During its 11 years in business, the Great Value Storage brand has expanded rapidly via development and acquisition activity. In February, for instance, news surfaced that World Class Capital had secured a $29.6 million construction loan for development of a roughly 188,600-square-foot storage facility on a 2.4-acre site in Los Angeles. The facility is supposed to feature 2,036 storage units and 53 covered parking spaces. World Class Capital purportedly has developed or plans to develop more than 1 million square feet of storage space in the Los Angeles market.”

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This Post Has 105 Comments

  1. One would think a billion dollar company getting raided by the FBI would generate a bit more media attention. Oh well.

    Eeee-bola Monterey, Pebble Beach and Carmel!

    2. “Paul, who’s 32 years old”

      Which means he was 19 when he launched the company in 2008. $800M in assets and $1.2 billion in debt? Who loans this kind of money to a 19 year old? And why didn’t he lose his shirt in the Great Recession in 2009? I dunno, he’s either Einstein brilliant or a front for somebody. Or he’s not really 32.

      1. “Paul’s organization owned assets worth $1.2 billion and estimated his net worth at $800 million.”

        That seems to imply (roughly) that he went $400 million dollars in debt to purchase his properties and made $800 million on post-crash appreciation. So net worth is $1.2 billion – $400 million = $800 million.

        1. So net worth is

          If he has a positive net worth, it was extracted from the cash burning business and now he will throw that lifeless shell overboard.

  2. ‘The Tampa Bay area has a higher percentage of ‘zombies’ — vacant houses in foreclosure — than the nation as a whole. Pinellas leads the bay area with nearly 9 percent of its foreclosures classified as zombies, followed by Pasco at 7.2 percent, Hillsborough at 3.8 percent and Hernando at 1.9 percent. For the bay area overall, the zombie rate is almost 6 percent compared to 3.2 percent nationally’

    Zombie shacks are a statistic. Shadow inventory is a conspiracy theory.

  3. ‘Barrett said he understands that the rainy spring and early summer were a factor in the initial delays. But he and his neighbors are concerned about safety, and they can’t understand why the work hasn’t been completed yet, since the weather has turned drier since July. ‘It’s just been hard for people, and while we understood the weather, what’s the excuse now?’

    The shack builder says he can’t paint in the winter. Oh, it’s almost the end of summer.

      1. “Looks like Marrano is top’n both of ’em!”

        Back in High School friend of mine in his best Pirate’s voice used to say this using the name Betty.

        Bend over Barrett, here comes ole one eye.

  4. ‘I have done a dozen or so construction loans over the years with a very experienced and successful multifamily developer. This developer had to make the decision to walk away from a fully designed and entitled, 200-unit Los Angeles area project. Now, they are trying the sell the parcel, but new prospective buyer/developers can’t make it work for their purposes either. It is an unfortunate situation that is a problem for a growing number of developers’

    Walk away?

    1. The bubble is in the land. It always is. Now nothing pencils out. Nothing. Land prices need to fall by 90%.

  6. ‘In the meantime, developers looking to survive will seek out locations where they are confident of projected returns’

    Yip yip yip yip yip yip yip yip
    Sha na na na, sha na na na na
    Sha na na na, sha na na na na
    Sha na na na, sha na na na na
    Sha na na na, sha na na na na
    Yip yip yip yip yip yip yip yip
    Mum mum mum mum mum mum
    Get a job, sha na na na, sha na na na na

    Ev’ry morning about this time
    She get me out of my bed
    A-crying, get a job
    After breakfast ev’ry nay
    She throws the want ads right my way
    And never fails to say
    Get a job, sha na na na, sha na na na na

  7. “…a few frenetic years where home prices climbed by double-digit percentages annually — far in excess of wage growth.”

    Why are they bringing wages up now? We heard nothing about wages the past 7 years while house prices were skyrocketing.

  8. I was banned from Marketwatch because I responded to an opinion piece which was calling Trump a “racist.” All I said was that the writer clearly didn’t understand the definition of racism and should look it up. I never violated any of their terms of service, but BANNED.

    2. I have never seen such a misuse of the concept of words like what is going on today. It’s really scary that this is going on. Who in the hell is behind all this and for what purpose?

      1. Yeah, a year ago it was “all about supply and demand”. And loans are rock solid.

        So how do people keep qualifying for loans when prices gallop past incomes for a decade?

        An opinion I’ve come to hold is generally the REIC are greedy liars that would sell their grandmothers for one more months commissions. Look at this ATTOM outfit. It used to be a foreclosure data service. Now it downplays any instance of default increases. To have 9% of a market (red hot no less) in stalled foreclosures deserves law enforcement scrutiny.

        1. There is no rule of law anymore. The entire market is rigged. When they decided to put a floor under housing, they pulled every single lever. If you simply eliminate foreclosures you don’t have those distressed sales messing with prices, so that’s what they did.

          I’m convinced that the artificial supply constraints are what have contributed to sky high rental prices. That in conjunction with mass flipping and speculation has removed a shocking number of houses from inventory and rental stock.

          2. When they decided to put a floor under housing, they pulled every single lever.

            Every lever we knew about so far. We could still do negative interest mortgages for those who deserve them.

            Speaking of which, it occurs to me that this whole negative rate bonds thing is just more of the same. Nobody actually plans to hold them to maturity any more than speculators plan to hold houses and apartments forever. They are just picking up nickels in front of steam rollers and looking for a greater fool. Call me a country bumpkin but these things always catch me by surprise. I’m just not a sophisticated investor I guess.

        2. “So how do people keep qualifying for loans when prices gallop past incomes for a decade?”

          Prices galloping past incomes means equity gains is outpacing wages. Or was outpacing wages. Whatever.

          The miracle of equity creation being a direct result of price increases mean wages no longer matter. The only thing that matters are the price increases.

          Loan money to a low wage earner? Do it! If you don’t do it then the lender down the street will do it AND he will be the one to collect the fee.

          Do you, as a lender, enjoy starvation? Yes? Then keep your scruples and continue to say “No” to the vast multitudes of ignorant pukes who come to you wanting to borrow money (money that belongs to somebody else).

          Or, toss your scruples into the wind like everybody else and lend whatever to whomever and sit back as these ignorant pukes send to you each and every month huge chunks of their measly paychecks.

          1. “Oh”, you say, “So what if things go South?”

            Bahahahahahahahaha … What the F*ck do I care if things go South. IT’S NOT MY MONEY!

            Plus I can always – ALWAYS! – depend on Congress bailing me out.

          2. Mr.banker, curious, do you actually hand a the pen to yer $ignatories? … seems like a lot of “work” if so.

      2. The far left Socialist-Commies. It’s been a strategy going on since WW2 if not before where they seek to continue to import voters that will support socialist-communism as well as continue to drive down labor costs, leaving the hard working-fighting to defend American families that haver been here for generations with the tab. Those they import mostly come for free benefits or have bought “seats” from wealthy families of other countries. The Elites from Mexico have this all organized and orchestrated where they believe that much of the southern border in CA belongs to them and they orgnze to push more and more of their poor into this country where they sign up for and remain on welfare for life – plenty of stats that support this. They organic into big families, all signed up for the multiple benefits (finally trump is doing something about this where all the benefits get counted and factored in) where they send a big portion of those checks – much due to fraud – back to Mexico and their government is co counting on it as they do not have to pay/care for their poor when they can get the US working stiffs to do it for them. Then these immigrants are outbreeding the founding culture and will continue to vote for socialist-communists for many generations. I grew up in a town that was 40% hispanic/60% white from the 60’s and most hispanics were better off than the whites as they eventually surpassed them in real areas where they had huge families, got all kinds of benefits such as low interest loans, free rides to local and Ivy League universities that our working class whites could never afford, even with a 4.0 and scholarships…on and on and on. Now the town has flipped, 60% hispanic, 40% white – whites are still poor. Hispanics are thriving.

        1. I live in eastern Washington on the Columbia Basin Project, which is a huge agriculture area. The Latinos do all of the hard labor jobs here. A small number of whites are managers while a larger number are either obese on welfare, or drug addicts by day and thieves at night.

          1. “which is a huge agriculture area.” + “a small number of whites are managers while a larger number are either obese on welfare, or drug addicts by day and thieves at night.”

            Well, these Wanker.Bankers must bee on the same page as our resident Mr.banker, heck, it ain’t there monie$ anywho, ha! Ha!

            U.S. Midwe$t banker$ see farm loan repayment problem$ hit 20-year high: Chicago Fed
            P.J. Huffstutter| Reuters | 8/15/19

            CHICAGO (Reuters) – Midwest banker$ reported that the percentage of farm loan$ their customer$ are having problems repaying hit a 20-year high in the second quarter this year, according to a survey released on Thursday by the Federal Reserve Bank of Chicago.

            Farm income$ also dropped for the period, as record floods deva$tated a wide $wath of the Farm Belt and the trade war between the United States and China entered a $econd year.

            “The portion of the District’s agricultural loan portfolio reported as having ‘major’ or ‘severe’ repayment problems (6.2%) had not been higher in the second quarter of a year since 1999,” the report said.

            That drop in farm incomes also weighed on farmland values, which were down 2% for the quarter after being adjusted for inflation, according to the survey of 157 bankers across the 7th Federal Reserve District. The district encompasses Iowa, parts of northern Illinois and Indiana, southern Wisconsin and the lower peninsula of Michigan

        2. “Then these immigrants are outbreeding the founding culture …”

          Oh, the native injun’s & Mexicans are try to usurp the native white skins from Europe in Compton, CA … Interestin’ view of events ya have there “Moscow Lars” …

        3. ” …continue to import voters”

          Yeah, in Capital D.C. there’s a Vietnam War Memorial, did knot see any “Lars” but eye did take a tracing of the name “Sanchez” from Mexico, knot a MS13 member, nor a rapist from what eye know. Reckon, eye might bee thee victim of faux “fake.news” right Lars?

        4. ‘whites are still poor. Hispanics are thriving.’

          The whites must’ve missed the memo about the bootstrap thing.

          Let me ask you, if the imported illegals are lazy freeloaders, why does ICE always raid workplaces?

          3. ” Now the town has flipped, 60% hispanic, 40% white ”

            Farewell Jack.in.the.Box, … hello Del Taco, … worser, & worser.

        5. Yeah, well maybe hard work pays off. You see when you come from hard background with many barriers, as soon as you get an opportunity, you take it, and make it count.

          Don’t be Jealous, just work hard.

          2. Sadly, hard work doesn’t guarantee success anymore in our rigged, rentier economy.

            It never did. But you’re right that the further we stray from real capitalism the worse the odds get. But few like real capitalism for themselves, they just like it for everyone else. They want to be like a Chinese leader and reap the benefits of other’s capitalism while remaining safely insulated from the difficulties and anxiety of it.

      3. I have never seen such a misuse of the concept of words like what is going on today.

        “Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it.”

        George Orwell, “1984”

    3. I get banned from FB a lot ….. they hate it when you apply content of character to POC, as long as you toe the party line of the evil white privilege, racism and supremacy, no one will flag you.

    4. Facebook
      Twitter
      Google
      Reddit
      Discus comments on any corporate media article

      You will be censored or banned for any deviation from #TheNarrative.

      When the Democrat Party talks about “uniting the country” what they really mean is totalitarianism obedience to Uniparty, and that anyone who rejects that will be “un-personned” a la Orwell’s 1984.

      The modern world in USA becomes less enjoyable every passing day, I’d rather spend time in nature or at home reading books than be out and about participating in #ClownWorld…

      1. I have to agree. I’m to the point where I can barely watch the news on either side. Instead, I watch older TV shows (like The Wire) and paleo-archeology documentaries.

  10. What a bunch of crap. I am referring to the quote about builders willing to put up new inventory even in the face of slowing market. This guy apparently does not realize that land purchase, permitting and other approvals on condo and townhouse developments would have been applied for and made prior to the recent market shifts. Gestation period from concept to finished product is a long period, the market has changed in the interim. That is what has occurred.
    The other example of the California project which was cancelled and the land put back for sale is likely more recent. This is all typical late phase stuff where the losers are those who got started too late in the cycle. Ala 2006-7. The show has begun.

  11. In other news down the California coastline in the small community of Cambria, Ca the CCSD declared a Water Code 350 emergency in November 2001, which is still in effect. CCSD is not issuing any new water or wastewater connections.

    This poor guy is ONLY #199 on the wait list with his empty and equally useless lot. Not even worth $10 IMHO.
    https://www.realtor.com/realestateandhomes-detail/Marlborough-Ln_Cambria_CA_93428_M12635-66273?view=qv

    03/05/2019 Listed $149,000
    12/21/1999 Sold $140,000 —
    10/31/1988 Sold $34,500

    1. “…Cambria, Ca the CCSD…”

      IIRC, their reservoir’s dam is seismically unstable, so they are no longer able to fill their reservoir to full capacity. Hence, the water shortage.

    2. Do you reckon any dogs have $hit on that property in the last 32 years? Imagine the flies issue during bbq season.

      New Cambria “dog.park” all breeds welcome!

    1. “Even with water what can I po$$ibly be worth?”

      Does the valuation$/comp$ @ Hear$t ca$tle help?

  15. “Ultimately, land prices will need to come down in the coastal markets in order for projects to pencil favorably for developers again. Land sellers will have to lower their expectations on asking prices in order for a transaction to occur. In the meantime, developers looking to survive will seek out locations where they are confident of projected returns.”

    But but but shortage? IPO? weather? vacation?

  16. ‘It’s just been hard for people, and while we understood the weather, what’s the excuse now?’ he asked.”

    There is no excuse, Dr. Barrett. But you are not without recourse. Stamp your little feet!

  17. “‘We know that there are mining and fracking, and you see it, but we didn’t expect it to be this close to housing,’ Sarah Hamilton said. ‘I do have some remorse.’”

    If I discovered mining or fracking going on next to my rental, or find myself with neighbors from hell, I’d just give notice and move someplace else. Kinda nice to have that freedom.

    1. nice to have that freedom.

      Sounds like a living hell for most people. No 30 years of mortgage security? You have to make decisions?

    2. Yep possible. There is always some back breaking straw that triggers the first wave. Trading algos then come around with sell signals. Retail investors come in a bit later. Will be selling my larger positions but waiting for Trump-Xi resolution which should bump things up a bit before big collapse. Already well invested in gold, silver and uranium equities.

  19. Madoff whistleblower accusing GE of an Enron-like fraud
    CNBC
    Jesse Pound
    15 August 2019

    “My team has spent the past 7 months analyzing GE’s accounting and we believe the $38 Billion in fraud we’ve come across is merely the tip of the iceberg,” Markopolos says in the report.”

    “One area of Markopolos’ case focuses on GE’s long-term care insurance unit, for which the company had to boost reserves by $15 billion last year. By examining the filings of GE’s counterparties in this business, he alleges that GE is hiding massive losses that will only increase as policyholders grow older.”

    “When you benchmark GE to a responsible insurance carrier using going concern accounting such as Prudential (PRU), GE needs $18.5 Billion in additional reserves in order to be able to pay claims. We compare GE’s LTC policies to Prudential and Unum, two insurers with similar pre-mid-2000′s vintage LTC policies, but whose policies have much lower risk characteristics than GE’s. Prudential’s 2018 loss ratio on similar policies was 185% and they’re reserving $113,455 per policy while GE’s loss ratios are several times higher and they’re only reserving $79,000 per policy. Just to match Prudential’s level of reserves would require an immediate $9.5 Billion increase in reserves.””

    https://www.cnbc.com/2019/08/15/ge-shares-drop-after-madoff-whistleblower-harry-markopolos-raises-red-flags-on-its-accounting.html

  20. Providing long-term health care is tremendously expensive in the US. GE bet wrongly on this and it will destroy what is left of the company if they don’t get bailed out.

    1. “GE bet wrongly on this and it will destroy what is left of the company if they don’t get bailed out.”

      Well, Iffin’ yer quite certain of the$e per$onal conviction$, you can make a TON of monie$, $tarting early in the a.m. … Born Free, Bee Free, follow you’re in$tinct$!

      1. Maybe so, but there are lots of ways that shorts can go wrong. I’ve never been inclined to short a company.

        1. ” …but there are lots of ways that short$ can go wrong”

          Ye$, ye$ there is …

          GE @ : OPEN

          Last Updated: Aug 16, 2019 at 10:27 a.m. EDT
          Real time quote:

          $8.54 0.525 6.55% Business/Consumer Services 2.05%

    1. Almost feels like the conspiracy theory types are right…but instead of being avoided, they are being trolled. Imagine if the X files was about the aliens trolling Mulder and Sculley to their faces? 🙂

  22. I somehow missed this item in the U.S. MSM:

    fastFT
    US industrial production unexpectedly slips in July
    Report shows weaker manufacturing and mining output
    Brendan Greeley in Washington 12 hours ago

    US industrial production unexpectedly shrank last month, according to data released on Thursday, underlining how factories are struggling with economic uncertainty and the backdrop of a trade war between the US and China.

    The data, a measure of manufacturing and mining activity that has sometimes been touted by President Donald Trump, fell 0.2 percent in July from June, well below the survey estimates for a 0.1 percent gain.

    Manufacturing, the index’s single biggest component, fell 0.4 per cent, following an upwardly revised 0.6 per cent gain the previous month. The manufacturing index is down 0.5 per cent year on year.
    …

  23. Eye somehow missed this item in the EU M$M.

    Busine$$
    Deut$che Bank’$ Fresh Low Under$cores European Banking’$ Decline

    Bloomberg | By Jan-Patrick Barnert and Nicholas Comfort | August 15, 2019,

    Bank stocks in region have barely budged since the 2008 crisis

    Several lenders hit new lows as interest rates set to go lower

    But while there’s plenty of blame to go around the German lender’s boardroom for its past performance, the former investment banking giant is hardly alone in Europe in this latest rout. From Spain’s Bankia SA and Banco de Sabadell SA to Italy’s UniCredit SpA, lenders across Europe are trading at or near their historic lows. Commerzbank AG hit a new one, showing the depth of the challenge for CEO Martin Zielke in his fourth year leading the embattled German lender.

    Their woe$ underscore the impact of the recent rever$al in expectation$ for interest rate$, which threaten to prolong European lenders’ lo$t decade indefinitely. More than 10 years after markets bottomed in the financial crisis, bank shares in the region have barely budged while their U.S. peers saw their shares soar almost seven-fold.

      1. Maybe there’s a lot of beautiful real estate soon to be revealed once the vast ice sheet that covers the country finishes melting.

        2. “Maybe there’s a lot of beautiful real e$tate soon to be revealed …”

          Why wait fer that to happen? … Ea$ier to send a very large “love.letter” to North Korea & pick out a $ea.$hore location!

      2. speaking of oil, i remember some neighbors who went to Nam, told me when all the vets are too old and dead they will miraculously find an elephant oil filed in the Mekong delta.

  25. How are your investments faring in the negative yield era? I might be missing something, but it appears that the alternative to safe negative yielding bonds is to try your luck in risky investments with a high probability of massive financial losses.

    1. It’s not too late to purchase a risk-free, federally guaranteed stream of semiannual coupons paid in fixed future dollar amounts, with a slightly positive nominal yield.

      The Financial Times
      Markets Briefing Equities
      Treasuries on track for best month since 2015 amid investor gloom
      S&P Ratings says it is on ‘high alert’ over US economy as recession odds increase
      Philip Georgiadis in London and Daniel Shane in Hong Kong 33 minutes ago

      US Treasuries are on track for their biggest monthly rally in more than four years as bond markets have sounded a recession warning, with rating agency S&P warning investors it is on “high alert” for the US economy.

      Stocks and government bonds steadied on Friday after a volatile week of trading driven by a cocktail of mounting and connected risks centred on the impact of the US-China trade dispute on global growth.

      A new report from S&P said the risk of a US recession in the next 12 months has increased to 35-35 [ sic ] per cent, up from the 25-30 per cent previously.
      …

    2. What happened to the chorus of worriers over China dumping their U.S. Treasury HODLings?

      The Financial Times
      Markets
      US bond funds swell as investors seek safety
      Inflow of $11.5bn in the past week is the fifth-largest on record
      Bond ETFs accounted for $5.5bn of the week’s $11.5bn inflow, reflecting how investors have become comfortable using these kinds of funds for trading the fixed-income market
      Richard Henderson in New York yesterday

      Investors have flocked to US bond funds at the fastest clip in two months as volatile trading and a deteriorating growth outlook nudge investors into safer assets.

      Fixed-income mutual funds and exchange traded funds added $11.5bn for the week ended Wednesday, the biggest weekly figure since early June and the fifth-largest on record, according to data from EPFR Global. US bond funds now hold $2.8tn, $200bn more than at the start of the year.

      Safe government debt like US Treasury bonds have lured investors away from riskier investments like equities and high-yield bonds as they become uneasy that the long global economic expansion is set to turn.
      …

    3. “I might be mi$$ing $omething”

      That might knot bee such a $urprise, iffin’s one is focu$ed on a myopic pov to beginning$, that result, in predi$posed ending$.

    4. The Financial Times
      Negative interest rates
      Negative yields force investors to plunge into riskier debt
      Feeble returns from safer bonds steer funds into longer, shakier instruments
      Negative yields no longer fanciful
      Robin Wigglesworth yesterday
      …
      “You look around the world and wonder what you can buy with yield these days,” said Iain Stealey, a fund manager at JPMorgan Asset Management. “It’s a very challenging environment.”

      Two decades ago, well over half of the global bond market boasted yields of at least 5 per cent, according to ICE Data Indices. The post-crisis splurge of central bank bond buying and rate cuts lowered this to under 16 per cent a decade ago, but investors could still find plenty of higher yielding debt. Today, a mere 3 per cent of the global bond market yields more than 5 per cent — the lowest share on record.
      …

      1. 360° = full circle

        ” ..try your luck in ri$ky inve$tments with a high probability of ma$$ive financial lo$$es.

        =

        “Examining the home price boom and its effect on owner$, lender$, regulator$, realtor$ and the economy as a whole.”

        1. Buying a house in the U.S. as the economy is nearing the end of the boom phase of the business cycle is a good example of an investment with a high probability of a large financial loss. Low interest rates increase the incentive for making this kind of foolish financial error.

          1. “Low intere$t rate$ increa$e the incentive for making this kind of fooli$h financial error.”

            Do any of these folks hold argument$ oppo$ed to your POV?:

            dtRumpsis
            Navarro
            Ro$$
            Ha$$ett
            Mnuchin
            $helton
            Kudlow

          2. I frankly don’t know or care. I’m an independent thinker who doesn’t base his views on groupthinkers’ thinking.

          3. “Low interest rates increase the incentive for making this kind of foolish financial error.”

            +1 Anything for the commission.

          4. Their “action$” speak louder then their thought$ …

            bulling action$ have consequence$ …

    5. Former Fed chairs to Mr Market: “This time is different.”

      The Financial Times
      Capital markets
      What is the US yield curve and why has it spooked investors?
      Measure could be best indicator investors have of a coming recession
      Joe Rennison, Robin Wigglesworth and Tommy Stubbington yesterday

      What if there was a way to know when the next recession was close? What if there was a market measure that could clearly communicate economic trouble ahead, without fail?

      Well, there isn’t. But some analysts and investors say there is something that gets close — the US yield curve.
      …
      What does it tell us?

      The different yields demanded by bond investors say a lot about what they think about how the US economy is doing today and where it is heading.

      If there is a big difference between short- and long-term Treasury yields — that is, if there is a steep upward curve — then it suggests that investors expect inflation and interest rates to rise markedly in the future. The curve can be particularly steep as the US economy is pulling out of a recession.

      But as that difference declines — as the curve flattens, as it is doing now — it indicates that investors expect slower inflation and more tepid economic growth in the future.
      …
      Although an inverted yield curve has preceded almost every economic recession in the US since the second world war, there has been one occasion when it occurred and a recession did not occur — in the mid-1960s.

      Some analysts and investors say that an inverted yield curve can be a self-fulfilling prophecy, exacerbating an economic slowdown and helping push the economy into a recession. It is especially acute for the banking industry which, simplistically, makes some of its money by lending over a long period at higher rates than it pays out on short-term deposits. An inverted yield curve constrains this model and could constrain lending, hurting economic growth.

      But it is a matter of debate. Plenty of others say there is no causal relationship between an inverted yield curve and a recession. It is just an indicator.

      Some analysts and Federal Reserve officials, as well as the US central bank’s former chairman Ben Bernanke, have also argued that the world is much different now to when the yield curve inverted before the last financial crisis and, as such, the indicator may not be as reliable.

      The trouble is Fed policymakers — and Mr Bernanke — said that before previous recessions, too.

      1. Check out DR. Richard Santor with Rick Santelli:

        Happy “42” birth.anniver$ary to the 30 year T-bond

        New Libor replacement launche$ today!

  26. Rece$$ions always follow wi$dom … or … Is it: fall$ cometh before pride?

    $erious dementia encap$ulated in this po$t!

    1. Would it not be.. Sorry – knot bee that wisdom follows recessions as everybody knew we were in a recession when hindsight is employed at some point down the road?

      1. ” …as everybody knew we were in a rece$$ion”

        Nix,nix,nix … We aim$ to bee a “I$olationi$t nation”

        U$ Dollar @ $98.70 & headin” higher! …

  27. Buy what central bankers support.

    Central banks ‘racing to the bottom’ means one thing, says Mark Mobius: that the stock market will do ‘very well’
    By Jeremy Olshan and Mark DeCambre
    Published: Aug 15, 2019 4:18 p.m. ET
    Look for stocks that have some yield, says the emerging-markets investing pioneer
    Bloomberg
    Mark Mobius.

    Global central bankers are in interest-rate-cutting mode of late, as policy makers attempt to avert or at least mitigate a global recession.

    However, that dynamic promises to be one in which the stock market can prosper, with investments that offer dividends attracting investors, said Mark Mobius, the octogenarian investment manager who co-founded Mobius Capital Partners last year after a three-decade run at Franklin Templeton Investments.

    “Globally this is a really amazing situation,” Mobius told MarketWatch in a Thursday phone interview, explaining:

    ‘Everyone seems to be racing to the bottom. Which is actually going to result in the market doing very well.’

    “Interest rates [being] where they are,” he continued, “stocks begin to look much more attractive.”

    Mobius is a pioneer in emerging-markets investments and has previously told MarketWatch’s William Watts that clashes between the U.S. and China over trade policy were casting a cloud over global economic growth.

    Support from central bankers, however, may provide the stimulus needed for stocks to remain buoyant — at least in the near term, Mobius said.
    …

  30. Former Colorado governor Hickenlooper ended his long-shot presidential bid. The 2020 Democrat contenders are starting to drop like people with dirt on the Clintons.

  32. With interest rates falling like crazy what should someone who is trying to get income from
    CDs going to do?

    I am thinking of putting some money from the matured CDs into TLT/TLH and possibly selling covered calls. At least until the 10 yr yield goes to zero. Will have to think of what to do after that.

    Any other ideas?

      1. That’s a good bet if interest rates are “going to zero”, as you suggest. You might check the math…

  34. 😀
    Trump To Buy Greenland, Install Shiplap, Hardwood Floors, Flip For Profit – August 16th, 2019
    babylonbee.com/news/trump-to-buy-greenland-install-shiplap-hardwood-floors-flip-for-profit
    Democrats, however, are opposed, as they are usually against all of Trump’s awesome schemes, like his tax cuts and his Robot Force — a fighting force made entirely of robots. “I don’t know if I trust the market to not collapse soon,” Speaker of the House Nancy Pelosi said. “Plus, with the sheer volume of hardwood floors he’s talking, we’d basically have to deforest all of Brazil.”

    Trump is undaunted, though, and was last seen at his local credit union applying for a loan pre-approval so he’ll be ready to buy Greenland from “Norway or Finland or whatever.”

    1. Hilarious. But I do like his thinking. If they wanted to be part of the USA it could be a good idea long term. “Trump’s Folly”. Besides, we need to contain the threat from Canada.

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