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You Price Things To Market And The Market Goes Against You…And You Sort Of Look Like A Schmuck

It’s Friday desk clearing time for this blogger. “There are some very real discussions going on amongst real estate industry professionals on social media platforms and at ongoing conferences about what effect the virus may have on the industry. With the potential for summer vacation plans being canceled, owners of Airbnb, VRBO and other short term rental platforms facing cancellations could be in a quandary. Much of the income derived to pay off debt on investment property comes during the summer, and if those plans do not manifest into actual stays, what happens to the mortgage payment?”

“Redfin says the first effects of COVID-19 are starting to ripple through the market. ‘I think that’s just reality starting to set in and it’s setting in very quickly, especially for people here in the Seattle area, of how bad this could potentially get,’ says chief economist Daryl Fairweather. ‘We’ve heard stories from some buyers who are looking at their stock portfolios and getting skittish about committing to buying a home.'”

“Cheap money can’t always save housing. The Federal Reserve, in a surprise move on Tuesday, March 3, cut the central bank’s key interest rates it controls by a half-percentage point. It was the first emergency action, and the largest cut, since the financial crisis of a decade ago. For example, West Coast port traffic, a key measure of trade, has is cut by one-fourth. Don’t forget tourism. This major California industry is also suffering from canceled conventions, diminished business travel and consumer fears about international trips.”

“Q. So you’re saying housing’s doomed? A. No. Just that cheap money can’t cure all ills. Housing relies on consumer confidence. That’s often tied to employment prospects. Up until the coronavirus outbreak, things look great for workers. Yes, the full economic impact of coronavirus is a huge unknown. But the Fed’s dramatic action certainly confirms there are serious business risks out there. Uncertainly, especially when it comes to betting your life savings on real estate, is not a good thing.”

“Whether you are buying, selling or building a home in Palm Beach County, coronavirus concerns will impact the housing market, according to real estate experts. The owner of Echo Fine Properties, Jeff Lichtenstein, told dozens of his agents not to panic. Lichtenstein says there’s an undersupply of inventory in Palm Beach County. If you’re looking to sell, you may see a little bit of a price reduction.”

“Author Ann Brashares and her husband have sold their Upper East Side townhouse for $11 million, public records show. The couple first showed interest in selling in April 2018, when broker Jed Garfield listed the property for $18.95 million. After two months he dropped the price by $2 million, and the property was ultimately pulled off the market in May 2019. ‘Did that seem like the right number? Yeah, of course, it did,’ said Garfield. ‘If you look at all the things that were on the market at that time, the arithmetic works.'”

“But, with hindsight, he admitted it was ‘wrong price, wrong time.’ ‘You talk to any good broker, you make mistakes. You price things to market and the market goes against you…and you sort of look like a schmuck,’ he said. In 2019, the average price chop for homes priced $4 million or more was 10 percent, according to Olshan Realty. Average days on the market for those properties hit a four-year high of 496.”

“India’s banking regulator seized control of a struggling commercial bank. The Reserve Bank of India, the nation’s central bank, said Thursday evening that it had superseded the board of directors of Yes Bank Ltd., prompted by a ‘serious deterioration’ in the bank’s financial position. Worried customers—joined by TV crews—milled around outside a branch in New Delhi, unable to withdraw at the teller windows or from the ATM at the door. ‘I feel cheated,’ said Amit Kapoor, on the news he will be allowed to withdraw no more than 50,000 rupees in the next month. ‘I deposited the earnings of my entire life in this bank.'”

“India’s lenders have become increasingly burdened by nonperforming loans in recent years, following a credit boom—dominated by state banks before the global financial crisis in 2008, then continued by private-sector banks and nonbank lenders in its aftermath.”

“Developers are holding off from launching new residential projects in Hong Kong amid a property slump in the Asian financial hub that has been exacerbated by the coronavirus outbreak, according to JLL. Sales data for January show the downturn already in full force, with buyers spending only HK$7.5 billion ($960 million) on new flats during the first month of the Western calendar year – just a quarter of the HK$28.4 billion developers reaped from sales during the during the same period last year.”

“‘Given the dour market outlook and abundant supply, developers may have to lower listed prices when the bulk of stock comes online for sale in the second half of this year,’ said Nelson Wong, JLL’s head of research for Greater China and Hong Kong. Analysts have commented that the likelihood of more homeowners falling into negative equity is increasing, carrying with it the potential to trigger further property sales and push down values still further.”

“Land values in several Queensland mining towns have taken a tumble. The biggest declines were seen in the north west city of Mount Isa, which has fallen by 44 per cent since 2016 and Thangool in central Queensland, which has gone down 49 per cent since 2017. ‘We’re hoping that it doesn’t drop anymore,’ said Mount Isa-based real estate agent John Tully. ‘We’re a transient town, and if they don’t watch it we’ll end up with a complete rental town which can bring troubles, so that’s something that government has to start looking at.'”

“It is true that many Malaysians cannot afford decent housing. However, encouraging foreigners to access the Malaysian property market will only further limit our ability to own homes. The Australian housing market had proven this. Chinese buyers — with their higher purchasing power — had increased the prices of real estate in Australia, making them beyond the reach of ordinary Australians.”

“This glut of high-end property is the fault of the developers themselves. They decided to cater to a market that does not exist, ignoring the needs of the Malaysian masses. Now they are saddled with unsold properties. The developers should try to woo the Malaysian upper crust to buy these properties. Alternatively, they can bring the price down to a level that’s more affordable for Malaysians. If the developers refuse, they can keep the properties and risk further devaluation.”

“No one knows how bad the coronavirus epidemic will get. We’ve been here before: The OPEC-driven spikes in the price of oil in the 1970s were another instance of a supply shock. What constrains output in these situations is not a lack of demand, but of supply. Which means attempts to remedy them by traditional demand stimulus, fiscal or monetary, are not just useless – they make things worse. Boost demand, when the problem is really a shortfall in supply, and all you do is drive up prices; think of the housing market as a micro-example.”

“Which doesn’t mean authorities won’t try. We’ve been here before, too. In response to the oil shock, governments ran deficits and central banks ran the printing presses. The result: what became known as ‘stagflation.’ But that was long ago and memories are short. It’s entirely possible the authorities could make the same mistake again.”

“Indeed, they may already have. As it is, the world is awash in debt, public and private, made cheap by oceans of central bank liquidity – the legacy of the financial crisis. Another equation that seemed to have broken down in recent years had to do with how much debt it was safe to carry. Although debt loads had reached astronomic levels, relative to income, there was no need to worry, it seemed, so long as interest rates remained at their historic lows. And what could possibly cause rates to rise?”

“As the cost of servicing the debt climbs, the debt compounds – and interest rates rise again, this time in response to the increased risk of default. We’ve seen that before, too. It’s not impossible we could see it again. If so, a great many chickens are going to come home to roost. But things are, as they say, about to get real. In an economic crisis – on top of a public-health crisis – politics is likely to revert to form. There will be little public patience for any party or leader who does not focus on practical proposals for relieving the crises. Politics may again become a serious business, for serious people.”

“If only it did not take a crisis for this to happen. What’s that line of Brecht’s? ‘Unhappy the land that has no heroes. Unhappier still the land that has need of heroes.'”

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This Post Has 192 Comments

  1. ‘Analysts have commented that the likelihood of more homeowners falling into negative equity is increasing, carrying with it the potential to trigger further property sales and push down values still further’

    The most expensive residential real estate on the planet two years ago.

  2. ‘We’ve heard stories from some buyers who are looking at their stock portfolios and getting skittish about committing to buying a home.’

    If the REIC is hoping that buyers are going to fund home purchases out of their stock market HODLings, then I wish them the best of luck.

    Business
    Wall Street tumbles, global stocks slide as coronavirus drives week’s frenzy
    The Dow, S&P 500 and Nasdaq fall more than 3 percent as 10-year Treasury yields brush against new lows
    At Thursday’s close, U.S. stocks had declined a total of $3.67 trillion in value since the market’s high on Feb. 19, according to Howard Silverblatt of S&P Dow Jones Indices.
    (Johannes Eisele/Afp Via Getty Images)
    By Thomas Heath
    March 6, 2020 at 8:05 a.m. PST

    U.S. stocks entered another round of chaotic trading Friday to cap an already tumultuous week, with markets falling sharply on continuing coronavirus gloom and worrisome economic indicators.

    The Dow Jones industrial average was down nearly 400 points, or 1.5 percent in late-morning trading. The blue chip index had plunged more than 700 points, or roughly 3 percent, at the open, despite a strong jobs report Friday that exceeded analysts’ expectations. The Standard & Poor’s 500 and Nasdaq composite also cut their losses, and were trading down about 1.7 percent.

    Contributing to the sell-off was the alarming drop in the 10-year Treasury yield, which at its current price means bonds are paying less than 1 percent interest. The 10-year note is a crucial global financial measure that can be an indicator of future economic health, as well as a marker for mortgage rates and car loans. Investors are fleeing equities for the safety of the 10-year notes, which are viewed as a bulwark against financial mayhem.
    …

    1. Investors flee stocks and bonds, pile into cash, fund flow data show
      Published: March 6, 2020 at 10:30 a.m. ET
      By Andrea Riquier
      Haven assets win!

      As volatility has risen in financial markets this week, investors are piling into money market funds and pulling money out of stocks and bonds, both taxable and tax-free.

      The data in the chart above comes from Refinitiv Lipper, which also provides some more context that shows how investors are bracing for a worst-case scenario.

      Within the category of equity funds, an exchange-traded fund that contains utility stocks had some of the biggest inflows of the week. The Utilities Select Sector (SPDR XLU, -2.971%) picked up $1.3 billion.

      In contrast, the Financial Select Sector (SPDR ETF XLF, -3.913%) saw outflows of $1.4 billion, making it the second-biggest loser of the week. That’s likely because bond yields are so depressed: as investors flock to safe havens and respond to the Federal Reserve’s rate cut, it pushes prices higher and yields fall off a cliff.
      …

  3. CR8R

    Futures Movers
    Oil down sharply as Russia resists additional OPEC+ production cuts
    Published: March 6, 2020 at 10:51 a.m. ET
    By Myra P. Saefong and William Watts
    Brent risks drop below $40 a barrel if Russia refuses to sign on: analyst
    AFP/Getty Images

    Oil futures fell sharply Friday as Russia balked at a call by the Organization of the Petroleum Exporting Countries for additional production cuts and as investors again fled assets perceived as risky on worries over the economic impact of the global spread of COVID-19.

    West Texas Intermediate crude for April delivery (CLJ20, -8.148%) dropped $3.22, or 7%, to $42.68 a barrel on the New York Mercantile Exchange, with prices poised for the lowest front-month contract finish since Dec. 24, 2018, according to FactSet data.

    May Brent crude (BRNK20, -8.702%), the global crude benchmark, was down $3.24, or 6.4%, to $46.75 a barrel on ICE Futures Europe, after hitting the lowest intraday level for a most active contract since July 2017.
    …

      1. Anybody with market exposure should have hedged long ago. It’s like these builders crying about the price of steel. Wheat farmers knew how to option that situation many decades ago.

  4. ‘With the potential for summer vacation plans being canceled, owners of Airbnb, VRBO and other short term rental platforms facing cancellations could be in a quandary. Much of the income derived to pay off debt on investment property comes during the summer, and if those plans do not manifest into actual stays, what happens to the mortgage payment?’

    Better get some boxes.

    1. Most of these places are a failure. Unless you have some beachfront property in a vacation area, good luck. Nobody’s going to pay a premium for your mid-80’s 3/2 shack with particle board cabinets in a blue collar neighborhood in podunkville.

  5. ‘Housing relies on consumer confidence. That’s often tied to employment prospects. Up until the coronavirus outbreak, things look great for workers. Yes, the full economic impact of coronavirus is a huge unknown. But the Fed’s dramatic action certainly confirms there are serious business risks out there. Uncertainly, especially when it comes to betting your life savings on real estate, is not a good thing’

    I’ve been observing this costco thing. Loading up on toilet paper, water. I know people who have made costco moves in stocks – both directions. Most of these situations like Hong Kong were already in place before the virus.

    The writer in Orange County describes an “all your eggs in one basket” thing that existed before the virus too.

    1. “I’ve been observing this costco thing.”

      I was at Costco in Wenatchee, WA yesterday. They’re completely sold-out of disinfectant wipes, hand sanitizer, Kleenex and toilet paper.

          1. I still have most of my ammo from the 2008 first-D-after-Clinton getting elected thing.

            Sounds like we could have a fun HBB meetup in the desert!

        2. To be fair, Y2K was a legit threat. Many learn-to-code types spent long hours preventing what would have been a bad scenario.

          Yesterday Maryland reported its first cases. I’m going to the store this afternoon one last time to observe the frenzy. They’re already out of the usual med supplies, but food is still pretty strong.

  6. The Author Ann Brashares piece: “Ultimately it got sold and that’s all the matters — and they made money,” he said. “It’s no better or no worse. We’re all getting dragged around by the market.”

    It’s the credit cycle, not business cycle.

    “The five-bedroom carriage house at 167 East 69th Street was built in 1910. It measures 25-feet in width and spans 7,000 square feet spread over four stories, which also includes a chef’s kitchen and a 400-square-foot terrace.”

    Funny dimensions; expensive land means everything goes vertical.

  7. “Whether you are buying, selling or building a home in Palm Beach County, coronavirus concerns will impact the housing market, according to real estate experts. The owner of Echo Fine Properties, Jeff Lichtenstein, told dozens of his agents not to panic. Lichtenstein says there’s an undersupply of inventory in Palm Beach County. If you’re looking to sell, you may see a little bit of a price reduction.”

    Huh? Lack of supply leads to price reduction?

    DON’T PANIC BEN!!! PLEASE DON’T PANIC!!!! FOR THE LOVE OF GOD, PLEASE NO ONE PANIC!!!

  8. As soon a I saw this headline, I thought ‘I bet they put these things in their mouths’:

    ‘China resumes importing Sabah bird’s nests’

    Then I read the first line:

    ‘KOTA KINABALU: Bird’s nest traders from China have begun procuring the prized delicacy in bulk from Sabah producers following improvement in the novel coronavirus (Covid-19) outbreak in China and resumption of freight services.’

    https://www.theborneopost.com/2020/03/06/china-resumes-importing-sabah-birds-nests/

    Stop eatin’ weird sh!t you dumb-bells!

    1. “…prized delicacy…”

      Blech!

      Isn’t it a well-known fact that human viruses often start out as bird viruses?

    2. Made from edible bird nests, called the “Caviar of the East,” bird’s nest soup is extremely rare and extremely valuable. The main ingredient, the nest of the swiftlet bird, costs anywhere from $2,500 to $10,000 per kilogram, resulting in a single bowl of soup that will set you back anywhere from $30 to $100.

      https://allthatsinteresting.com/birds-nest-soup

    1. A gold-mine. There was one in the country outside of Flagstaff (not one of mine unfortunately) where they kept finding buried cars. It totaled 6 cars underground eventually, on top of the several above ground. The trash out totaled over $20,000.

      1. An email this morning:

        Foreclosure alert
        6:14 AM (3 hours ago)

        24 New Listings in COCONINO County, AZ

  10. Denver, CO Housing Prices Crater 17% YOY As On Broker Concedes, “Housing Is Becoming More Worthless With Each Passing Day”

    https://www.zillow.com/denver-co-80202/home-values/

    *Select price from dropdown menu on first chart

    As a noted economist said, “I can ask $50k for my run down 10 year old Chevy truck but where is the buyer at that price? So it is with all depreciating asset like houses and cars.”

    1. Coronavirus is here now.

      Two “confirmed” cases, and within Denver’s homeless population, hundreds of cases many of which may likely never be confirmed.

      “This sucker could go down” — George W. Bush

      1. I think the confirmed cases were in ski resort areas. But yeah, this has the potential to burn though downtown Denver like wildfire. I suppose after it’s over there won’t be as much poop to dodge on the 16th Street Mall.

        1. “in ski resort areas”

          Hotels, ski lodges, restaurants, shuttle buses, the airport, it’s gonna be everywhere in Colorado soon…

  11. Well, eye’m still hoping to attend Indian Well$ ATP tennis next week, reckon eye’ll try & stay upwind of everyone … or eye could skee.dattle to Death.Valley & watch it @ the Bar @ Furnace Creek.

    HEALTH AND SCIENCE

    Seattle Seahawks stadium employee tests positive for coronavirus, officials say

    CNBC |By William Feuer | PUBLISHED FRI, MAR 6 20209

    KEY POINT$:

    Seattle-area officials announced late Thursday an employee of a 72,000-seat stadium in the city tested positive for COVID-19.

    The stadium, CenturyLink Field, is home to the Seattle Seahawks, Seattle Sounders FC of Major League Soccer, and the Seattle Dragons of XFL.

    Local officials said the employee worked a game on Feb. 22, which 22,060 people attended, according to the Seattle Times.

    “Public Health has worked with the employee and the operator of the stadium, First and Goal, to evaluate potential exposures at the Feb. 22 Seattle Dragons game,” King County said in a release, “and public health officials have determined that the risk of infection to attendees was low.”

    Health officials are following up with a number of other employees of the stadium who might have been exposed to the virus, the county said. The county said upcoming events at the stadium will not be canceled.

    The employee has not returned to the stadium since Feb. 22, First and Goal spokesman Dave Pearson said in an emailed statement, and the patient did not show symptoms while at the stadium.

    “We are actively working with local and federal health agencies as well as league offices (NFL, MLS, XFL) on the latest recommendations and guidelines to ensure the safest environment possible for our guests and staff,” Pearson said, adding that the stadium is rolling out “heightened sanitation procedures.”

    The Seattle area has become the epicenter of the COVID-19 outbreak on the West Coast of the U.S. As of Thursday, the Washington state Department of Health reported 70 confirmed cases of coronavirus in Washington, and local officials confirmed 11 deaths across the state.

    As of Friday morning, there were at least 233 cases of COVID-19 in the U.S., according to Johns Hopkins University, and 14 deaths.

    1. ‘The county said upcoming events at the stadium will not be canceled’

      We gotta lot of beer and pretzels to sell!

    1. Is this what the Fed had in mind with their surprise half a point interim meeting rate cut?

      1. Yesterday I saw an ad for $99 flights to Hawaii one way.

        ‘Ever thought about taking a cruise? The time to book is now. Brand‑new itineraries and last‑minute sailings have just been added, and to fill their ships, the cruise lines are lowering their prices … drastically. What does that mean for you? Unprecedented savings on the cruise of your dreams! Accommodations, meals, entertainment … it’s all included for one super‑low price!’

        ‘Book now and sail soon, starting at just $146 ($49/night).’

        1. “one super‑low price!”

          Marketing. Notice they didn’t say “all at a great price!” Now you know when an ad says that, it means a great price for THEM.

        2. Thats quite a deal! Just checked and found plenty of round trips For just over $200. I haven’t heard of many cases of the cervesa Flu in hawaii yet but im sure that will change. I may have to take advantage of the deals and risk the .02-20% chance of getting infected

    2. Eye thinks the one @ the top.of.thee.chart$ is gonna get even bigger!

      eCONomy:

      Here’s where the job$ are — in one chart

      PUBLISHED FRI, MAR 6 202011 |UPDATED MOMENTS AGO
      CNBC |Thomas Franck

      The broad education and health $ervices indu$try showed the $trongest hiring numbers across the month. That gain, however, was almost entirely thanks to a surge in hiring among health-care providers and social assistance firms. Health care has for months reaffirmed its place as an employment juggernaut in the U.S. for the foreseeable future thanks to changing demographics and advances in medical technology.

      The health care and social assistance subsector (including child day care and family services) alone saw a net gain of 56,500 jobs. Ambulatory health-care services, hospitals, and nursing and residential care facilities helped account for more than 30,000 net job gains in February.

      https://www.cnbc.com/2020/03/06/heres-where-the-jobs-are-for-february-2019-in-one-chart.html

    3. It’s terrifying to contemplate this, but it almost seems like the Fed has lost its ability to control the markets!

      1. “lost its ability to control the markets!”

        Hopefully they didn’t lose their ability to recognize this. As a pundit said on the morning news in response to the Prez’s comments on the Fed, lowering interest rates further isn’t going to prod people to buy TVs and refrigerators, time to consider further tax cuts.

        1. ” … going to prod people to buy TV$ and refrigerator$”

          Nix, nix, nix … That would mean American$ purcha$ing thing$ made in China, imported from China … China Bad!, … Bad China!

          Do knot $upport the De$truction of Wal-Mart & Amazon!

        2. lowering interest rates further isn’t going to prod people to buy TVs and refrigerators

          I only every buy stuff like that when it’s absolutely necessary, like when the current fridge conks out. Interest rates play no role whatsoever.

          I suppose there are proles who will throw out a perfectly good TV to buy an even fancier one.

          3. I definitely don’t watch anything that’s broadcast. Did enjoy watching Netflix’s Night on Earth.

          4. Part of the equation for no rate cuts was that there is a supply problem, not a demand problem.

            To me, if this ends up being like a prolonged 9/11, where people are home for a month or 2, it will become a demand problem as well.

        3. Regular people don’t benefit from a Fed interest rate cut. I’m not even sure they’d benefit from a cut to credit card rates, since they’re probably already maxed out.

      2. P$haw! … Why eyes can hear the U$ printing.pre$$ humming along just fine, all the way over here on the We$t Coa$t!

        1. I suppose the urgency to get the MAX recertified has eased off a bit, as airlines are parking airplanes due to reduced demand.

    5. U.S. 30-Year Yield Craters Most Since 2009 as Liquidity Vanishes
      William Shaw, Emily Barrett and Elizabeth Stanton
      Bloomberg
      March 6, 2020, 8:51 AM PST

      (Bloomberg) — Treasury yields plummeted to record lows Friday as concern about the global economic and financial impact of the coronavirus spurred demand for havens, while questions swirled about liquidity in the world’s biggest debt market.

      U.S. securities rallied and long-bond rates notched their biggest intraday drop since 2009. At the short-end of the yield curve traders amped up bets on further central bank easing this month. Other refuge assets also advanced, with the yen climbing more than 1% to around 105 per dollar and bund yields diving to unprecedented negative levels. A stronger-than-expected U.S. jobs report failed to dent the pessimistic tone.

      “We expected the virus to have a big impact,” said Tony Farren at Mischler Financial Group. “But it has gone way beyond our wildest expectations. I thought last Friday was the blow-off top and then a few times this week before today, but now it’s beyond belief.”
      …

  13. The developers should try to woo the Malaysian upper crust to buy these properties. Alternatively, they can bring the price down to a level that’s more affordable for Malaysians. If the developers refuse, they can keep the properties and risk further devaluation.

    No, the Malaysian central bank should make it really easy to hold them forever with no losses and if that is too difficult then they should just buy them at full price. That’s the best way to handle this sort of thing and make sure nobody who matters loses any money.

  14. Woe$er & Woe$er … But eye keep telling me.self that Ra$h.Limbaugh$ scream$: “it’s just a cold!!!” … & Kelly.Annie says there are “Alternative.Fact$” & that a “Miracle!” is just moments away! … Decision$, Decision$.

    HEALTH AND SCIENCE

    Doctor who treated first US coronavirus patient says COVID-19 has been ‘circulating unchecked’ for weeks

    PUBLISHED FRI, MAR 6 2020 | UPDATED 29 MIN AGO
    CNBC | By Berkeley Lovelace Jr. & William Feuer

    Dr. Amy Compton-Phillips recalled the day the first U.S. patient infected with COVID-19, a 35-year-old man from Snohomish County in Washington state, had taken a “turn for the worse.”

    “He was day nine in his course and he actually started going downhill, started getting worse,” said Compton-Phillips, chief clinical officer of Providence St. Joseph Health, where the patient was treated.

    At first, the patient only had common cold-like symptoms, Compton-Phillips said. But very quickly he began to have shortness of breath and a cough, she said. His X-ray also showed viral pneumonia. He needed supplemental oxygen and had to be put on an experimental antiviral treatment.

    The patient has recovered and has been released from the hospital.
    … but epidemiologists and state officials say the actual number of COVID-19 patients in the U.S. is likely in the thousands, maybe even tens of thousands, since testing here has been limited by a lack of kits and stringent criteria set by the Centers for Disease Control and Prevention.

    Compton-Phillips said the doctors, nurses and other front-line workers watching the outbreak in real time are all saying “this is coming.”

    “It’s not if, it’s when. And we better get ready now,” she said.

    2. The youtube channel Peak Prosperity has been on top of this pandemic. PP found some data. Evidently they DNA tested the people in Washington. They found one patient with one DNA signature and then six weeks later they found a separate patient with a nearly identical DNA signature. So, the second patient wasn’t infected in a mutated form from new arrival from China or Italy. Instead, the second person caught through a chain of people from the first person over a period of six weeks. That’s how they knew.

      The cases in Maryland are the Italian strain, which is not comforting. I was at the store this afternoon. Still no panic buying. Yes, paper towels and alcohol were sold out, but no food panic, no masks. I think it’s because the Maryland cases are still from overseas visitors, not community spread. Give it a week and Maryland will look like Washington State.

      1. S.O. just got back from the store. Powdered milk all sold out. OJ (other than high-pulp…eew!).

        Turns out you go through more food WFH every day, so going to have to re-stock on perishables more often.

      2. They found one patient with one DNA signature

        One thing I do not see being discussed is the accuracy of the test. I do not think it is exact. The previous generation of test had published accuracy of 80% to 90%, with both false negatives and false positives, if I interpreted the articles correctly.

  15. T$k, T$k, the poor $audi’$, poor Ru$$ia, … $ad.

    (aqdanny.boy must be contemplatin’ the difference$ between “tailwind$” & “tail$pin$”)

    BUSINE$$ NEWS$ | MARCH 6, 2020 | UPDATED 16 MINUTES AGO

    OPEC’$ pact with Ru$$ia fall$ apart, $ending oil into tail$pin

    Reuters | By Rania El Gamal, Alex Lawler, Olesya Astakhova

    VIENNA (Reuters) – A three-year pact between OPEC and Russia ended in acrimony on Friday after Moscow refused to support deeper oil cuts to cope with the outbreak of coronavirus and OPEC responded by removing all limits on its own production.

    Oil prices plunged 10% as the development revived fears of a 2014 price crash, when Saudi Arabia and Russia fought for market share with U.S. shale oil producers, which have never participated in output limiting pacts.

    Brent has lost about a third of its value this year, tumbling towards $45 a barrel, its lowest since 2017, putting oil-dependent nations and many oil firms under heavy strain as the global economy reels due to the virus outbreak, which has dampened business activity and stopped people traveling.

    Saudi Energy Minister Prince Abdulaziz bin Salman told reporters when asked whether the kingdom had plans to increase production: “I will keep you wondering”.

    The failure of talks may have more far reaching implications as OPEC’s de facto leader Saudi Arabia and Russia have used oil talks to build a broader political partnership in the last few years after effectively supporting opposite sides in the Syrian war.

    “Russia’s refusal to support emergency supply cuts would effectively and fatally undermine OPEC+’s ability to play the role of oil price stabilizing swing producer,” said Bob McNally, founder of Rapidan Energy Group.

    “It will gravely rupture the budding Russian-Saudi financial and political rapprochement. The result will be higher oil price volatility and geopolitical volatility,” he said.

    1. That is fine.

      I’ll enjoy my summer cruise on the inland sea. Just one cabin on the whole cruise ship and just one other crew. At this point, I’ve practically stocked up on all the provisions already.

        1. gorgeous waterfalls!

          Indeed! All seen at the end of a foot trail. When I cruise I take the waterways from Seneca Lake to Lake Ontario and go from there.

  16. Italy, Spain, what’$ next France? …

    WORLD NEW$ | MARCH 6, 2020

    Coronavirus$ impact$ is overwhelming, Spain’$ hotel$ a$$ociation says

    MADRID (Reuters) – Hotel bookings have fallen by as much as 40% in some areas of Spain, the country’s hotel federation said and flagged an overwhelming impact for the eurozone’s fourth largest economy as anxiety about the coronavirus outbreak takes hold.

    Tourism accounts for 12% of Spain’s Gross Domestic Product and is especially important during next month’s Easter holiday period.

    Hotel bookings were around 20%-30% lower at the start of March compared to the same period a year ago and the drop is as steep as 40% in some areas, the country’s hotel federation said.

    “The impact is overwhelming,”

    Concerns over the impact of coronavirus on the sector has been exemplified by a hotel in Tenerife, under lockdown with hundreds of tourists inside since Feb. 25 after several cases of coronavirus were reported there.

    The Canary Islands, where Tenerife is located, is one of the hardest-hit tourists spots,

  17. Iran: Population seeking help in hospitals for coronavirus. “We estimate that 30 to 40% of Tehran’s population will be infected with COVID-19 by March 20,” says Dr. Massoud Mardani, member of Iran’s National Influenza Committee. Tehran population: 12 million.

    https://twitter.com/nerd_hawk/status/1235800486063685633?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1235800486063685633&ref_url=https%3A%2F%2Fwww.zerohedge.com%2Fgeopolitical%2F13th-death-confirmed-us-virus-spreads-every-country-europe-except-1-live-updates

    1. Yikes. If they storm hospitals like that, then 40% WILL be infected.

      Right now I see only two pieces of good news: no major clusters yet in hot countries, and the very low death rate in South Korea. South Korea is evidence that the more you test, the more very mild cases you find, which brings the death rate down dramatically. At least for the South Korean strain. So the summer may still help us. But Italy and Iran are the worrying ones — I still suspect a mutation in those countries.

      And China appears to be leveling off, but I don’t count that as good news. First, I don’t know whether to trust China’s numbers. But, more importantly, China is leveling off ONLY because of draconian quarantine measures. Few other countries have that kind of dictatorial power. Even Iran’s citizens are running amok.

      (On a side note, I wonder if Iran will shift from “Death to America” to “Death to China” chants.)

        1. “I’ll give you the numbers, you provide the data to support it.”

          I so loved working at the Moon and Stars.

  18. Chinese citizens angry at their government’s handling of the coronavirus outbreak have come up with some ingenious ways to express their outrage and circumvent the extreme censorship measures imposed by Beijing. Angry netizens are now relying on coded words and phrases to express their dissatisfaction.

    The most common example is “zf” which is the abbreviation for the Chinese word “government. To refer to the police, the letters “jc” are used, while “guobao” (meaning “national treasure”) or panda images are used to represent the domestic security bureau. Citizens talking about the Communist Party’s Publicity Department use “Ministry of Truth” from the George Orwell novel 1984, instead.

    However, the most prevalent phrase circulating online had Chinese censors flummuxed, until they realized it wasn’t a cover term at all, but rather a statement of fact: “Realtors are liars.”

  19. Got Ca$h? … Uh,oh!

    (Eye’m going all.inn on $1 coins & paper check$!)

    Economic$:

    Fed’$ Puts Quarantine on Repatriated Phy$ical Ca$h From A$ia

    Bloomberg | By Craig Torres | March 6, 2020

    The Federal Re$erve has impo$ed a minimum seven to 10 day quarantine on phy$ical U.$. currency it receives from A$ia before proce$$ing as a precautionary mea$ure, even though the coronavirus$ mainly $preads by human-to-human contact, according to a spokeswoman.

    The Fed maintains a contingency stock of currency to meet demand, and routinely processes notes and coins as part of its services to banks. There is currently $1.75 trillion of Federal Reserve notes in circulation.

    The Fed spokeswoman said the central bank is prepared to modify its approach further as the Centers for Disease Control or the State Department identify additional countries of risk.

    1. Could this happen here? Where are you savers storing your $$? The only thing that makes me nervous is losing all my savings from years of being frugal and living well below my means as I wait for this bubble to implode.

          2. Uncle Sam made those whole last crisis, but I don’t think they’re actually FDIC insured. I was kind of paranoid about that.

        2. The money is insured through the National Credit Union Share Insurance Fund – administered by the National Credit Union Administration.

    1. Helicopter Money, here we come!

      Perfect time to ‘feel the bern’ with some MMT.

  22. Are people betting for or against the PPT today?

    One thing for sure — the situation with this virus may be completely different Monday morning that it is right now.

  23. The PPT seems to be asleep at the wheel. And those algo traders are quite merciless when it comes to dumping stocks.

        1. Despite a mighty late effort, the porcine beauticians couldn’t quite fully pull it out of the fire.

          Market Extra
          Stock-market investors are dreading weekends as coronavirus spread accelerates
          Published: March 6, 2020 at 4:57 p.m. ET
          By Mark DeCambre
          The Dow just logged its longest Friday losing streak in 14 years
          It is Friday, I’m in…love? AFP/Getty Images

          TGIF? That is hardly the case for Wall Street investors who own stocks in the Dow Jones Industrial Average, which recorded a dubious distinction.

          Friday sessions have been marked by dread among investors lately because of the uncertain landscape that the coronavirus outbreak has created heading into weekends.

          Case in point, the 124-year-old blue-chip index (DJIA, -0.98%) closed lower Friday, marking its longest run of Friday losses, seven straight, since the string of eight straight Friday losses that ended July 2006, according to Dow Jones Market Data.
          …

  24. Asking the HBB Hive mind – for a friend (no, really) and it’s a serious one.

    I have a good friend who has been wanting to purchase a home in the greater Seattle area for a few years now.

    He recently left the evil empire of sociopaths for a senior position at Google, and so far so good. Better for him, he unloaded his entire TSLA position he had been building for the last 3+ years just before the ride got crazy. Has a wife and kid in middle school and has been renting since moving here a decade ago. They are serious about buying with the intent to live whatever they get through retirement / old age.

    Figure he’s got $600k in unallocated cash at the moment, and his salary at the big G to be in the 300s/yr as he goes through his initial stock offering for the first 4 years. He doesn’t want to spend more than low $1Ms. max. No debts at all, FICO over 800.

    I had a late-night brainstorming session with him about all this after he sold the TSLA but before the coronavirus nuttiness hit. Solidly sold on ‘taking his time’ and making sure he buying well.

    The question(s) for the HBB Hive mind – with the Coronvirus we’re getting even more rate cuts, and it seems sure to throw a huge wet blanking on the “spring selling season” since we are in the center of US ground zero.

    I’m thinking there has to be tactics to take advantage of the situation. It looks 30-yr fixed rates could go below 3% for best customers, and some sellers could really be panicking.

    I’m thinking of advising him to go ahead and shop for financing and having something lined up if it’s cheap enough, and then adopt a policy of making hard low-ball+I can close real quick offers on any place they might be serious about. As for downpayment, I’d say stop at 25% and hang on to the rest for reinvestment later.

    Ok, how could that be improved and/or what are the major holes in it?

    ‘They’re all overpriced shack’ comments won’t help much – he’s not driven by FOMO, has time and won’t be making offers anything that doesn’t look like a good deal upon further investigation. I’m just thinking while the current situation is playing out, he could push the deal(s) even more aggressively while sellers are dealing with fear.

    2. He recently left the evil empire of sociopaths for a senior position at Google

      That’s a confusing statement…but ok. Sorry I can’t help your real question.

      1. That might be my way of saying I’ve had a lot of dealing with said sociopaths recently.

        1. I can totally understand that. Just confused that you put Google in a different category.

          2. With me it’s personal. I’ve had to deal with them closely and extensively. It’s in their corporate DNA to try and screw over external partners as much as possible. I should leave it at that.

          3. I should add though, that my friend is really a good guy and the politics there caused by stack ranking and annual re-orgs (and more) had worn him down to the point of needing to be treated for depression. While the new company may not be any more virtuous a corporate entity, his new team and specific situation are much more sane and a lot less stressful.

          4. These are all scheduled for foreclosure in the next few weeks:

            https://www.zillow.com/homedetails/11742-36th-Ave-NE-Seattle-WA-98125/49103562_zpid/

            https://www.zillow.com/homedetails/2408-S-Irving-St-Seattle-WA-98144/48718687_zpid/

            https://www.zillow.com/homedetails/3718-E-Alder-St-Seattle-WA-98122/49147540_zpid/

            https://www.zillow.com/homedetails/924-27th-Ave-Seattle-WA-98122/48711591_zpid/

            https://www.zillow.com/homedetails/10628-Rainier-Ave-S-Seattle-WA-98178/48786946_zpid/

            https://www.zillow.com/homedetails/8616-45th-Ave-S-Seattle-WA-98118/48872077_zpid/

            https://www.zillow.com/homedetails/5916-18th-Ave-S-Seattle-WA-98108/48750696_zpid/

          5. Actually Ben, that’s a good idea – if he’s going to be looking, looking at upcoming foreclosures is good place to start and compare from.

          6. I can send you some resources. And I can tell you how the auctions work, here in Arizona at least. I would volunteer to come out and show you, as I intend to spread to as many markets as possible. But right now I’ve got to wash some clothes or something.

          7. While the new company may not be any more virtuous a corporate entity, his new team and specific situation are much more sane and a lot less stressful.

            OK, that makes sense.

          8. 10628 Rainier Ave S looks interesting. Built in 1928, French Provincial style, waterfront. No price though.

      2. Tesla I guess ? My Advice Don’t make big changes in uncertain times ?
        We get a recession and what company needs a bunch of over paid managers running around ? We’ve had a pretty good run these last 10 years…

        1. No not tesla. The maker of operating systems over in Redmond. He was there for too long being abused (what you get for trying to a good for job for customers instead of playing politics). My beef with them is .. complicated.

    3. it seems sure to throw a huge wet blanking on the “spring selling season” since we are in the center of US ground zero

      Lower inventory, fewer choices.

      “he could push the deal(s) even more aggressively while sellers are dealing with fear”

      Not a wise or ethical negotiation strategy. He could wind up buying from a seller looking for a bagholder.

      1. Possible. This is why I thought to have everyone chime in.

        My thinking is that buyer traffic will be way off while everyone is nervous. But I supposed it could just move to more online.

        1. Duress and contracts generally don’t mix well and he’s unlikely to get a big enough discount that the asset won’t still be bubblicious.

          1. Good point. He is motivated to find something in the next 18-months (school stability, etc), and I wonder how much lower rates in the next few months would offset prices declines over then next 1-2 years. Guess I should pull up excel…

        2. One shouldn’t go and bury themselves under a mountain of debt without sympathetic advisers.

          1. As I mentioned below – he and his wife have wanted get more control over their housing situation, and have a place to settle down into for the long haul, for a long time now. I can certainly relate having been in that exact same boat.

            I’ve done a good job of convincing him to aim much lower than what the bank tell him he can afford, and should he move on I can think of 3 places that would offer a comp package over 200-250k in a heartbeat – he’s well known with a great professional rep (which is why G recruited him in the first place), so he’s not fearful of that.

            Given that for many listings he can go in with over 50% down, and likely can pay it off well before 2030, I don’t think it’s the stupidest thing to consider.

            This group is a tough crowd 🙂 and that why I deliberately posted here. Makes a good sanity check.

          2. a good sanity check

            About that “depression” your friend experienced. The most expensive house I ever bought was the one that my Ex (whom I loved tremendously) was sure would finally make her happy…

          3. “…whom I loved tremendously…”

            And I’m betting, probably easy on the eyes too. They’re the absolute worst to put behind you as they always land on their feet, monkey branching with ease. Be thankful they didn’t have twitter in those days, or you’d be shamed in front of family and friends too!

          4. @BlueSkye – the depression was his, from being stuck in ever more abusive work situations, and it wasn’t just him -FTE life inside the house that Gates built has become basically a never ending game of palace intrigue and overthrow plots. Vendors and Contractors do the bulk of the actual work there (Mrs Spiffy was stationed out there as a V-dash for a while) whilst the turf-wars above them rage on. I’ve directly made tens of millions for them (I used to be a FTE there in a previous life) with my only reward a collection of knives pulled out from my back.

            It’s amazing how fast someone can recover once you remove them from a toxic environment.

          5. they always land on their feet

            I busted her out of the psych hospital and she ran for the hills. She did a face plant with family. I would guess they still hate me. Good looks don’t fix everything.

          6. “Good looks don’t fix everything.”

            Agreed, but it’s a check that nearly everyone accepts.

    4. his salary at the big G to be in the 300s/yr as he goes through his initial stock offering for the first 4 years

      So this is base plus equity? Best not count your chickens before they hatch.

        1. My ISOs and ESPP 10+ years ago were tied to share price. If the company didn’t perform or wasn’t bought, you didn’t make money.

        2. are tech RSUs tied to any events other than time?

          Generally speaking they simply vest over time. They can be awarded based on performance (normally as part of annual awards/bonus), or as part of the initial offer.

      1. this requires discipline

        A few days on the new job and the guy is going to go for a $1M loan. Discipline indeed.

        1. He’s been there over a year now, and becoming a homeowner has been a goal of theirs many years. That’s between him and his wife. He’s locked in a pretty good windfall and trying to make a life decision – we don’t usually get to pick the optimal time to make those.

          My question (spitballing, on his behalf) basically boils down to trying to determine if the impact of the coronavirus on rates, buyers, etc is going to make it more advantageous (for someone in his position) to move sooner or later, and why.

          1. to determine if the impact

            The housing market is very close to an all time historic massive manic high. Which is where you bought. Virus or any other little bump in the road can lead, and eventually will lead, to an historic correction. You’re trying to fine tune a disastrous move for a “friend”. Are you sure you want to be that guy?

            He’s got enough money to live on a sailboat in the tropics for decades, and he’d be signing on for 30 years of ball and chain in a cubicle farm (or corner office, I had one of those).

            I know, some of you guys have jobs that are so fun that walking the beach with the woman you love sounds like a total waste of one’s life. Oh, his job gave him depression. Google will be different.

            JMO. I’m sure he is very young and everything will be terrific.

            Disclaimer: I love walking on the beach with my girlfriend, and will never to back to debt or job.

          2. @BlueSky – it’s more like that he’s had been chomping at the bit because after years of slogging to get ahead and support a family, he’s finally in a position to do so. If anything, I’m trying to widen his eyes and slow them down some.

            I was up to 2am on a call with him a couple weeks ago, walking him through a bunch of scenarios and filling out his spreadsheet with more expense items to model – things like significantly different property tax rates on properties he browsed that were just a tiny distance apart, factoring in the SALT deduction limits, insurance, ongoing maintenance items, etc, and generally pointing him at more conservative and cheaper options.

            He’s got enough money to live on a sailboat in the tropics for decades, and he’d be signing on for 30 years of ball and chain in a cubicle farm (or corner office, I had one of those).

            I know, some of you guys have jobs that are so fun that walking the beach with the woman you love sounds like a total waste of one’s life. Oh, his job gave him depression. Google will be different.

            JMO. I’m sure he is very young and everything will be terrific.

            If only it were that simple – he’s not young (mid 40s) and he’s well aware that jobs aren’t fun-fun land and can go poof – he’s modeled some worst case scenarios for his current job, and part of why he is doing it is that he prioritizes his wife and child (We know them well, and she’s not exerting undo influence on this). They’ve been here over a decade, and due to multiple factors (family, etc) I do see them staying in the metro area for a long time.

            They want a couple reasonable things in a house which are most important to them, and as dumminj notes down below, it’s not so easy or cheap to obtain in this area as a renter.

            You’re trying to fine tune a disastrous move for a “friend”. Are you sure you want to be that guy?

            I’m trying to give him more information and understanding to work with. I can (and have) sit here and tell him “a correction is coming”, but when and how much? We’ve been trying to nail that down here for years.

    6. Rent.

      And wait for the Boomers to die off and be replaced (or not) by less affluent generations. Stocks could sell out ahead of time because of the virus, but real estate moves slower. Unless, of course, this virus is MUCH worse than expected.

      You might also wait to buy until after the earthquake.

      1. Wish I knew when the earthquake is going to hit.

        Still, good thought there – changes in the market due to this mess will lag just because of the time it takes.

      2. Rent.

        Renting a house around here, if you’re looking to buy in the above-stated price range, is a pain. I know — we’ve being doing that for the past 6 years, and currently are looking for our next rental. There are few options that are “nice” and well-maintained without foreign(absentee) landlords.

        I can totally understand wanting to buy. If we expected to stay in the area for more than a year or two, we’d be doing the same.

          1. Not sure yet, but somewhere oil-city like. Goal is to get off the hamster wheel and semi-retire. We’ll see how our savings hold up in this economic uncertainty

    8. Do *NOT* fall for the realtor line that he needs to buy before interest rates rise. It’s not as if interest rates are going to jump to 12% like it’s 1982. Interest rates are going to rise to, what, 4%? Whoop doe doo. Please find a mortgage calculator (bankrate has some good ones) and run a few dozen amortization charts to find out whether a 1-1.5% increase in interest rates is enough of a threat to drive him into a rush-buy. My guess is no.

      Instead, you should be looking at two other factors. First factor, the kid’s age. Don’t give in to the nesting instinct. Parents often think they need to “own” the house to give the kid a stable environment in his formative years. But, this kid is a pre-teen, and accustomed to renting. He doesn’t need a nest for the remaining 5-6 years. They could rent and still be fine. In the same vein, don’t believe your friend’s line that this is going to be their toe-tag house. Sure, almost everybody says that, and yet so many of them are moving less than five years later. After 5 years the couple will have an empty nest. Will they still want to stay in the house or even in the area? Nobody knows, not even them.

      Secondly, that salary. $300K salary is a *game-changer* kind of salary. The slow-and-steady model of 30 year mortgage doesn’t apply here. Instead, it’s the kind of salary where you should seriously consider early retirement. Also factor in the VERY REAL possibility that the $300K job will be short-lived. Your friend could very well burn out after a few years of high-power at Google. Or worse, be laid off. Age discrimination is a real thing in learn-to-code careers. Your friend can *NOT* base a 30-year mortgage on what may only be a 5-year job.

      So my advice to your buddy is to develop a 4-6 year plan, to get the kid out of high school. Buddy should seriously consider living frugal AF while he’s bringing in the dough. I figure, since he has no other car or CC debt, your buddy can earn $300K, pay $100K in tax, live on $100K, and pocket $100K. Invest the $600K cash. That $600K will make enough return to send the kid to college. So in 5-6 years, your friend will have paid-for college, $600K cash plus another ~$500K or so saved from salary. That’s over a million, which would be even more if the wife works. A million is maybe not enough to retire on, but enough that they can downsize to a less-stressful job, or at least not be tied to the expensive Seattle area.

      So should he buy a house? Maybe, but ONLY if he can live on $100K cash. If that means renting for $3000/month, that’s fine. If that means buying a shack and skimping on food and cars, that will work too. But stay in that budget. Your friend should base his decisions on the probability that that his job and his parenting will end at about the same time. Those are what’s driving this decision, not interest rates.

      1. Also factor in the VERY REAL possibility that the $300K job will be short-lived. Your friend could very well burn out after a few years of high-power at Google. Or worse, be laid off. Age discrimination is a real thing in learn-to-code careers.

        This!

      2. Instead, it’s the kind of salary where you should seriously consider early retirement. Also factor in the VERY REAL possibility that the $300K job will be short-lived.

        Just for reference, $300k total comp is middling Sr Engineer territory at the big tech firms in Seattle (FB, Google, Amazon, etc). It’s not high-power/exec-level pay.

        That doesn’t change the advice of “bank it while you got it”, but it’s not pay for a ridiculously high-stress, high-level, and rare role in the area.

        1. it’s not pay for a ridiculously high-stress, high-level, and rare role in the area

          Which makes the pay seem all the more bubblicious.

        2. I gotta get harsh here.

          Stop it. Just STOP IT.

          Let me repeat myself:

          $300K income is a GAME CHANGER income. Yes, I realize that “everyone makes $300K” around there. And “everyone lives in a million dollar house” around there. But that’s a trap. (It’s a traaap!) And both you and your friend are falling right into it.

          We’ve all been trained to live the American dream: a 30-year indentured servitude of of job, car, wife, kid, house at 3x income, college. At $50K a year, it’s almost possible a very basic level. At $100K, it’s possible at a comfortable middle-class level. At $300K, sure, you can do it on a luxury level. This is what your friend is thinking. But that trajectory is 30 YEARS. Does your friend have 30 years at $300K? And fundamentally, how is it different from the same paycheck-to-paycheck pattern as a $70K worker in flyover?

          I’ll say it again. $300K is a GAME CHANGER income. It frees you from that 30-year indentured servitude. Your friend has the option of completing the 30-year servitude in FIVE years. He has a head start: he has $600K and a kid already 2/3 grown up.
          And conveniently, his job might be gone in five years. Therefore, he should plan for his trajectory to be done in five years. And with that head start, he could maintain a middle-class lifestyle and still do it in 5 years.

          Your friend can buy or rent, doesn’t matter, as long as he can reach a goal of a million cash and ~$200K for college in the next 5 years. After that he can decide what to do.

          (And when you say it’s a stable low-stress job, I don’t believe you.)

          1. First off, I never said it’s a “stable low-stress job”. Being Senior level at G or FB or AMZN are stressful and expectations can be high, but it’s not like being an exec, as you portrayed it to be (“burn out after a few years of high-power at Google”).

            One can certainly save a lot of money making this kind of salary, but the costs to live in this area where these types of jobs are available is high. High housing/rent. High taxes ($300 + car tabs). etc.

          2. but the costs to live in this area where these types of jobs are available is high

            Chicken and egg. Which came first?

          4. Chicken and egg. Which came first?

            Unclear, but at this point they feed on each other. People come here for the jobs, which causes greater demand, which raises prices, which leads to people demanding/negotiating higher pay, etc…

      3. If that means renting for $3000/month

        You’re going to struggle to find a decent house for a family in the area at $3k a month, with a reasonable commute. There’s a balance to be had with enjoying your life with your family, vs living like a college student and eating ramen!

        1. $3k a month, with a reasonable commute. There’s a balance to be had

          With all due respect, that is what most families whole take home pay is, well close. That you top shelf guys are not looking over your shoulder is amazing.

          1. With all due respect, that is what most families whole take home pay is, well close

            That doesn’t invalidate my statement.

            Sure, by most measures that’s a lot of money. That doesn’t mean that housing in this area doesn’t cost that much, unless you want a 1hr+ commute each way, or to pay $15 in tolls each day to minimize time spent in traffic.

            If you want to grind, bank the money, and cash out early, by all means do it. You’ll make a significant compromise on your quality of life in the interim, IMO.

            If you’re making $30k a year, I don’t see why you’d live in Seattle/Bellevue area. You may get paid less, but your money will go a lot further elsewhere.

          2. “Sure, by most measures that’s a lot of money. That doesn’t mean that housing in this area doesn’t cost that much, unless you want a 1hr+ commute each way, or to pay $15 in tolls each day to minimize time spent in traffic.”

            Great follow-up! The housing situation is even more dire down in San Jose, CA.

          3. That doesn’t mean that housing in this area doesn’t cost that much

            I do understand. I did the East Coast equivalent.

          4. 1-hour commutes are common in the DC area. And most of those jobs top out at half the $300K.

            $15 in tolls each day is $3500/year. So if buddy-boy chooses the six-year plan, so to speak, he could shorten his commute for about ~$25K total (accounting for increasing tolls). That might be an acceptable cost if it buys quality time at home.

            For reference, the closing costs alone for his million-dollar shack would be at least $12K. And I can guarantee you that the moment he moves into a house, another $12K of stuff will break. So it’s a wash. There’s a lot to think about.

          5. So if buddy-boy chooses the six-year plan, so to speak, he could shorten his commute for about ~$25K total (accounting for increasing tolls).

            Don’t forget that’s post-tax, so that actually becomes $38k off the income number.

        2. If nothing else, this is a great discussion.

          One the one hand, you have the traditional American dream. That pattern was established after WWII by the 30-year mortgage and the 30-year union-ish career. On the other extreme, you have the idiot FIRE Millenials who think they could retire at age 38 on $600K, with brown-bag lunches, a tiny house, and the 4% rule.

          But there is a lot of stuff in between. This $300K friend can pretty much choose where in the range he wants to fall. And he should consider the ENTIRE range of options, not just the traditional path of least resistance.

      4. @Oxide – your points are well to consider. The interest thing is something to do the math on.

        I am even more curious about how sellers are going to react – I mean it is REALLY getting weird around here (Metro Seattle) – heck, I’ve probably been exposed (Was shopping at the Kirkland, WA Costco just days before it all blew up).

        It seems like the fabled ‘spring selling season’ could be a huge bust this year, but we haven’t quite gotten there yet to see. If so, how to take advantage of it?

        The issue with renting out here is the same one I found – rents get jacked up gast, and houses sold out from under people. It’s rough when you’re hoping to stay put 8+ years as a family renter of a SFH.

        They have been doing the frugal thing for years now…their current place is tiny and cheap, he drives an old tiny pickup (think Mazda B150), etc. If he waits much long he might as well never.

        As far as his job goes, drumminj has it right – he’s a high level IC, not a manager or exec, and he is VERY WELL known and respected in certain circles. If he’s out of a job, multiple companies will be extending offers as soon as they hear about it. I’d hire him myself at that level if I had the business need/situation. He’s at G because of one of his former bosses wanted him over there. He knows employment opportunities will slow down in time, but I’d say he still has some runway career-wise for now.

        And he’s not thinking 30-years – his timeline for paid off house is 6 years, with 10 at the max should things go sideways. A lot of discussion about keeping as much cash as possible to reinvest in the markets when it looks good to do so (and many discussion on what makes that).

        @drumminj said this: “There’s a balance to be had with enjoying your life with your family, vs living like a college student and eating ramen!” and that is a factor.

        1. “There’s a balance to be had with enjoying your life with your family, vs living like a college student and eating ramen!” and that is a factor.

          Exactly! The difference is taking out a loan for $1.5M.

          When we’ve been unhappy for a time, we believe we deserve things we can’t actually pay for.

          1. “When we’ve been unhappy for a time, we believe we deserve things we can’t actually pay for.”

            These are the times that call for a 20-oz dark micro brew beer!

        2. The issue with renting out here is the same one I found – rents get jacked up gast[sic], and houses sold out from under people. It’s rough when you’re hoping to stay put 8+ years as a family renter of a SFH.

          This is transplant talk, and viewing things through the lens of a bubble. I remember back in 2001, my gf’s father moved into a nicer view apartment in downtown Seattle for less rent than he was paying. They were slashing rents everywhere.

          Given the mass overbuilding, rents will be going down in the coming years.

    9. Seattle? Use FlyHomes as his agent. They give you cash. Its working for us, we get right of first refusal on every home we bid on, which we always turn down because conventional folks are nutty overpaying.

  25. The Financial Times
    Markets News
    Capital markets
    Investors stunned by blowout bond rally

    Fund managers rush for safety of government debt at quickest pace since crisis of 2008
    Corporate bonds
    Corporate debt markets fret over coronavirus effects

    Perceived risk of a wave of defaults rushes higher
    Markets Briefing
    Stocks tumble and government bonds hit highs on virus fears

    S&P 500 ends a wild trading week with a 0.6% gain after late afternoon rally
    2 hours ago

    Hedge funds
    Hedge fund Lansdowne stung by coronavirus hit to airline stocks

    Analysis Markets volatility
    Coronavirus mayhem reflects phenomenon of ‘shock-led’ markets

    Opec
    Oil plunges as Opec output cut talks with Russia collapse

    1. Don’t try this at home, folks! These boring government bond investments are for professionals, only.

      Market Extra
      Boring bonds turning into best investment of the year as Treasurys see returns north of 20%
      Published: March 6, 2020 at 4:23 p.m. ET
      By Sunny Oh
      The iShares 20+ Year Treasury Bond exchange-traded fund is up 24% year-to-date.

      It’s no surprise that bonds have outperformed the rest of the market as fear around the rapidly spreading COVID-19 epidemic sparked selling in stocks and other risk assets.

      But the sheer drop in yields have powered U.S. Treasurys with long maturities into one of the strongest-performing assets in this year so far, with more than nine months left until the end of 2020. Their hefty double-digit gains in value poses a sharp contrast to the widely held reputation of U.S. government paper as a low-risk, boring investment that usually offers annual returns in the low single-digits.

      The 10-year U.S. Treasury note yield (TMUBMUSD10Y, 0.767%) fell 21.5 basis points to 0.709% on Friday, around 1.20 percentage points below where they traded at the beginning of the year, Tradeweb data show. The 30-year bond yield (TMUBMUSD30Y, 1.287%) tumbled 44.2 basis points to 1.216%. As yields fall bond prices rise.
      …

  26. Heard on the radio that the port at Long Beach CA is running at 20-30% capacity . The person interviewed sounded panicked. Eventually everything will get back to normal but until then it may get dicey .

    1. Yeah, yesterday I posted a report saying shipping companies used to get $38,000 a day for a ship and now it’s $2400, which is half of what it costs to operate. So shipping is in a recession right now.

    2. Sounds like a lot of idle container ships. What happens to those? Do they get docked and temporarily mothballed? Do they stay out at sea with a skeleton crew?

      2. “Do they get docked and temporarily mothballed? Do they stay out at sea with a skeleton crew?”

        Every ship has to be somewhere. If it is cheaper to have a ship at anchor of the coast of somewhere than in a port then that is where the ship will end up.

        Currently off the coast of Seal Beach CA there are a dozen-or-so ships at anchor.

        1. Remember during the depression in 2008-2009, they were anchored all around Singapore.

    1. Biden: China

      I have a suspicion we’ll be hearing those two words in the same sentence quite a bit in the next months.

      1. China is determined not to lose the U.S. Presidential election to Russia again.

  28. Harbor Bluffs, FL Housing Prices Crater 14% As One Pinellas County Broker Shared, “If You Have A House On The Gulf Coast, Dump It For Whatever It Will Fetch And Do It Soon”

    https://www.zillow.com/harbor-bluffs-fl/home-values/

    *Select price from dropdown menu on first chart

    As a noted economist stated, “If you paid more than $500 for an acre of land, you got ripped off.

  29. Who would of thunk? Because of the coronavirus lobster prices in the US have become cheap.

    Coronavirus price drop: Lobster now selling at bargain prices
    https://www.usatoday.com/story/money/2020/03/06/coronavirus-lobster-price-drop-bargain/4977942002/

    (snip)

    “With the price of the seafood delicacy getting rocked by the COVID-19 outbreak, this luxury treat has been transformed into more of a bargain bite.

    “Lobsters that used to get shipped to Asia on charter flights for Chinese New Year celebrations have been grounded by the rise in coronavirus cases as droves of people fearful about the outbreak canceled restaurant reservations.

    “With the marooned lobsters pouring into North American markets, prices have sunk to the lowest level in four years, according to Bloomberg.”

  30. “Ultimately some pandemic responses will require opening borders, not closing them. At some point the expectation that any area will escape effects of COVID-19 must be abandoned: The disease must be seen as everyone’s problem.”

    https://archive.is/QbrAV (we don’t give clicks or advertising revenue to The Atlantic)

    1. Ultimately some pandemic responses will require opening borders

      This begs the question: Do you personally have some money to lose, or a life to lose (which is your own)?

    2. I read the article and I didn’t see anywhere that explained why borders should be opened. They just threw that in at the end probably because they have to. Sending a few masks or shipping vaccines to affected countries is not the same as open borders.

  32. Live updates: U.S. coronavirus death toll reaches 15; at least half of U.S. states confirm cases
    Across the U.S. and the globe, scientists are racing to develop a vaccine and a treatment to contain the novel coronavirus. (Luis Velarde/The Washington Post)
    By Adam Taylor,
    Rick Noack,
    Siobhán O’Grady,
    Alex Horton,
    Hannah Knowles,
    Michael Brice-Saddler and
    Reis Thebault
    March 6, 2020 at 7:32 p.m. PST

    The coronavirus death toll in the United States reached 15 on Friday after a Seattle-area hospital reported new fatalities. Several states reported their first cases, and 21 people on a cruise ship off the coast of California have tested positive for the virus.

    As more cases were identified, concerns also rose about who else could have been inadvertently exposed to the respiratory virus. In Maryland, health officials launched a search for other potentially infected people after three Montgomery County residents were found to have contracted the virus while traveling overseas.

    Worldwide, the number of cases has surpassed 100,000. In the United States, there are more than 300.
    …

  33. What a surprise!

    China’s coronavirus recovery is ‘all fake,’ whistleblowers and residents claim
    https://theweek.com/speedreads/900488/chinas-coronavirus-recovery-all-fake-whistleblowers-residents-claim

    (snip)

    “Beijing has spent much of the outbreak pushing districts to carry on business as usual, with some local governments subsidizing electricity costs and even installing mandatory productivity quotas. Zhejiang, a province east of the epicenter city of Wuhan, claimed as of Feb. 24 it had restored 98.6 percent of its pre-coronavirus work capacity.

    “But civil servants tell Caixan that businesses are actually faking these numbers. Beijing had started checking Zhejiang businesses’ electricity consumption levels, so district officials ordered the companies to start leaving their lights and machinery on all day to drive the numbers up, one civil servant said. Businesses have reportedly falsified staff attendance logs as well — they ‘would rather waste a small amount of money on power than irritate local officials,’ Caixan writes.”

    1. Oh, the *economic* recovery is fake. Not the recovery from the virus (although that might be fake too).

  34. The Wall Street Journal
    World
    Two Coronavirus Deaths in Florida as Global Infections Rise
    Countries across Asia and Europe report rising numbers of cases
    By Chun Han Wong
    Updated March 7, 2020 8:48 am ET

    HONG KONG—The coronavirus epidemic continued to escalate globally into the weekend, with Florida reporting the first two deaths on the U.S. East Coast and a number of countries across Asia experiencing their largest one-day jumps in new infections.
    …

  35. Are We Headed for Negative Yielding Treasuries?
    Robert Paulsen
    07 March 2020

    With European rates being underwater for so long, and U.S. treasury yields really plummeting now, some are wondering how much longer the U.S. can stay positive.

    Negative yields on bonds are a new phenomenon, and are completely counter-intuitive, as it should appear to be pretty odd indeed that people would lend money at a loss. A negatively yielding debt instrument involves exactly that, where you pay a certain price for a bond, and after collecting all of the interest payments it makes to you until maturity, you end up with less money than you started.

    At first glance, we might see this behavior as not being sane, but it’s not quite as crazy as it seems, even though it does have some elements that we might at least call a little crazy. The craziness comes from this tactic being used as a tool for monetary policy, where central banks set their rates in the negative, which ends up setting the rates of their bonds below zero, and then they use quantitative easing to buy a lot of these negative bonds to further drive down their yields.

    We read things like investors being willing to accept a negative yield in order to find a safe place to put their money, and this view can even come from people who we would hope have a better understanding of these things than this, as doing such a thing would surely qualify as insanity.

    A central bank at least is striving for what they at least believe to be overall benefits to the economy when they do such a thing, which is to beat down the flames of a recession risk from a money supply under pressure. Monetary policy seeks to accomplish a single goal, to increase or reduce a country’s money supply to either keep economic growth moving forward or to slow it down when this creates too much inflation.

    If money supply goes so low that central banks need to put rates below zero to try to stimulate it, they have a big decision to make, and it’s not simply automatic that they would choose to go below zero. Negative interest rates are no pleasure cruise, and are hated by savers since this affects the interest rates that they can get for putting their money in a bank as well as what they can achieve by investing in the negatively yielding bonds that result from this policy.
    …

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