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A Chain Reaction Of Margin Calls, Mass Foreclosures, Evictions And, Potentially, Bank Failures

A report from Bloomberg. “A crisis in credit markets deepened over the weekend and into Monday as a cluster of funds that own mortgage bonds sought to sell billions in assets to meet investor redemptions, sparking pleas for government intervention. The sales included at least $1.25 billion of securities being listed by the AlphaCentric Income Opportunities Fund, according to people with knowledge of the sales. It sought buyers for a swath of bonds backed primarily by private-label mortgages as it sought to raise cash, said the people, who asked not to be identified discussing the private offerings. The fund plunged 17% on Friday, bringing its total decline for the week to 31%.”

“‘The coronavirus has resulted in severe market dislocations and liquidity issues for most segments of the bond market,’ AlphaCentric’s Jerry Szilagyi said in an emailed statement on Sunday. ‘The Fund is not immune to these dislocations’ and ‘like many other funds, is moving expeditiously to address the unprecedented market conditions.’ The best way to obtain favorable prices is to offer a wider range of securities for bid, Szilagyi said. He declined to discuss the amount of securities the fund put up for sale.”

“Funds that buy up bonds of all kinds — from debt of America’s largest corporations to securities backed by mortgages — have struggled with record investor withdrawals amid choppy trading conditions in fixed-income markets. The rush to unload mortgage-backed securities signals that a credit meltdown that began with corporate bonds is spreading to other corners of the market.”

“The AlphaCentric fund invests primarily in private-label mortgage-backed securities. Its top holdings at the end of 2019 included so-called legacy RMBS like subprime mortgage bonds issued before the 2008 financial crisis, as well as more recently-issued securities backed by home loans that had been modified.”

“Mortgage real estate investment trust AG Mortgage Investment Trust Inc. said in a statement Monday that it failed to meet some margin calls on Friday and doesn’t expect to be able to meet future margin calls with its current financing. The company said it was in discussions with its counterparties about forbearance agreements and will fulfill its missed margin calls on Monday.”

“‘We can most likely expect a continuation of price volatility across the bond market spectrum until the panic selling and market uncertainty subsides or government agencies intervene to support the broader fixed-income market,’ Szilagyi said in the AlphaCentric statement.”

“Real estate billionaire Tom Barrack said on Sunday that the U.S. commercial-mortgage market is on the brink of collapse and predicted a ‘domino effect’ of catastrophic economic consequences if banks and the government don’t take prompt action. The chief executive officer of Colony Capital Inc. warned in a white paper of a chain reaction of margin calls, mass foreclosures, evictions and, potentially, bank failures due to the pandemic.”

This Post Has 145 Comments
  1. A comment:

    ‘Borrow short and lend long with very high leverage: what could possibly go wrong?’

    1. I thought too-big-to-fail ended with the 2007-2009 financial crisis.

      Apparently the Fed has a different opinion.

  2. A press release from one of the REITs mentioned above:

    ‘AG Mortgage Investment Trust, Inc. (NYSE: MITT) (the “Company”) announced today that in recent weeks, due to the turmoil in the financial markets resulting from the global pandemic of the COVID-19 virus, the Company and its subsidiaries have received an unusually high number of margin calls from financing counterparties. Through Friday March 20, 2020, the Company timely met or is in the process of meeting all margin calls received. Although the Company’s satisfaction of certain margin calls received on Friday March 20, 2020 missed the wire deadline, on Friday evening the Company notified the affected counterparties that the Company will fulfill such margin call payments on Monday March 23, 2020.’

    ‘In addition, on Friday evening, March 20, 2020 the Company notified its financing counterparties that it does not expect to be in a position to fund the anticipated volume of future margin calls under its financing arrangements in the near term as a result of market disruptions created by the COVID-19 pandemic.’

    ‘The Company further announced that it is engaged in discussions with its financing counterparties with regard to entering into forbearance agreements pursuant to which each counterparty would agree to forbear from exercising its rights and remedies with respect to an event of default under the applicable financing arrangement for an agreed-upon period. The Company cannot predict whether its financing counterparties will enter into a forbearance agreement, the timing of any such agreement, or the terms thereof.’

    1. ‘Due to the turmoil in the financial markets resulting from the global pandemic of the COVID-19 virus.”

      Didn’t the repo market come unglued last year before the virus hit?

      They are trying to blame something other than too much debt, and too inflated asset values.

      1. Most convenient timing for a pandemic to place the blame on for a financial crisis that was already brewing, and to legitimize more multibillion dollar bailouts of systematically important firms…

  3. ‘The rush to unload mortgage-backed securities signals that a credit meltdown that began with corporate bonds is spreading to other corners of the market’

    Oh dear…

  4. Chapter 11 bankruptcy, too harsh for older and wealthier asset holders and the financial sector.

    Chapter 7 bankruptcy, too sweet a deal for irresponsible student loan borrowers.

  5. Company Profile

    245 Park Avenue
    26th Floor
    New York, NY 10167
    United States

    Sector: Real Estate
    Industry: REIT—Mortgage

    AG Mortgage Investment Trust, Inc., a real estate investment trust, focuses on investing in, acquiring, and managing a portfolio of residential mortgage-backed securities, other real estate-related securities, and financial assets in the United States. It operates through two segments, Securities and Loans, and Single-Family Rental Properties. The Securities and Loans segment invests in residential mortgage-backed securities; residential investments, including credit risk transfer securities, mortgage-backed securities collateralized by re-performing mortgage loans and/or non-performing mortgage loans, and new origination loans, as well as re-performing mortgage loans and/or non-performing mortgage loans; commercial investments, such as commercial mortgage-backed securities (CMBS), interest-only securities, and CMBS principal-only securities; and asset backed securities comprising investment grade and non-investment grade debt and equity tranches of securitizations collateralized by various asset classes. The Single-Family Rental Properties segment operates single-family rental properties, as well as provides property management services. Its portfolio includes 1,225 properties located in the Southeast United States. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was incorporated in 2011 and is based in New York, New York.

    Day’s Range 3.7500 – 11.9800
    52 Week Range 3.7500 – 26.7400

    If you look at the 1 month chart, the SHTF starting on March 12.

    1. I will say one thing. I looked at the balance sheet of these Mortgage REITs and saw a ticking time bomb with all this leverage and exotic financial instruments. The mREIT sector is one of the most insane sectors of financial corporations I have ever seen.

  6. I have seen locally here an argument regarding a big new soccer stadium being built. This is from the Taylor family of Enterprise car rental. Those on one side say its all paid for and other than a bit of a delay with this virus business its full speed ahead. Ground prepping is underway. The other side says this project is all but dead int he water. They say soccer stadium really? Why? I fall on the side of the project will be put off for a long time or it will never be built . I know many of you are not intimate the area and the project but what do you think? TY

    1. Many MLS teams have been able to procure their own stadiums, though they tend to be smaller and quite a bit less lavish than stadiums used in other major league sports. Personally, I don’t see why an expansion club couldn’t play in a local college field.

      1. The property taxes on this property are ridiculously low. I no longer have access to the MLS to see how incumbered it is. It supposedly had multiple offers, including a two week cash offer. They apparently all vaporized, hence the price reduction. The conflicted realtor neighbor sent me the update via text.

  7. From Twitter
    RealtorProblemz @RealtorProblemz
    I’ve seen more “Price Reduced” postings in Vegas RE Market in the past 48 hours than I have in a very long time. Market already shifting heavily, and this is BEFORE the full impact.

  8. Trump says we’re opening up the country very soon…”US was not built to be shutdown”…
    This was an overreaction to the pandemic, and now assets just got a multi-trillion dollar backstop (unlimited QE). We’ll be off to the races again in no time!

    1. I can only hope that there’s some inside info behind Trump’s bluster, but we are likely not so lucky. As I said earlier, our only hope is to get some mitigation treatment, to where we could simply allow everyone to get sick with less risk. Do that long enough to develop a vaccine. But even the mild cases appear to be brutal.

      1. By Tamar LapinMarch 22, 2020 | 11:47pm | Updated

        Rio Giardinieri, 52, told Los Angeles’ Fox 11 that he struggled with horrendous back pain, headaches, cough and fatigue for five days after catching COVID-19, possibly at a conference in New York.

        Doctors at the Memorial Regional Hospital in South Florida diagnosed him with the coronavirus and pneumonia and put him on oxygen in the ICU, he told the outlet.

        After more than a week, doctors told him there was nothing more they could do and, on Friday evening, Giardinieri said goodbye to his wife and three children.

        “I was at the point where I was barely able to speak and breathing was very challenging,” Giardinieri said. “I really thought my end was there.”

        Then a friend sent him a recent article about hydroxychloroquine, a prescription drug that’s been used to treat malaria for decades and auto-immune diseases like lupus.

        Overseas studies have found it to be promising as a treatment for COVID-19, though it hasn’t been approved by health officials.

        Trump last week said he was instructing the FDA to fast-track testing of hydroxychloroquine and a related drug, chloroquine, as treatment for COVID-19.

        Giardinieri said he contacted an infectious disease doctor about the drug.

        “He gave me all the reasons why I would probably not want to try it because there are no trials, there’s no testing, it was not something that was approved,” said Giardinieri.

        “And I said, ‘Look, I don’t know if I’m going to make it until the morning,’ because at that point I really thought I was coming to the end because I couldn’t breathe anymore,” Giardinieri continued.

        “He agreed and authorized the use of it and 30 minutes later the nurse gave it to me.”

        After about an hour after taking the pills, Giardinieri said, it felt like his heart was beating out of his chest and, about two hours later, he had another episode where he couldn’t breathe.

        He says he was given Benadryl and some other drugs and that when he woke up around 4:45 a.m., it was “like nothing ever happened.”

        He’s since had no fever or pain and can breathe again. Giardinieri said doctors believe the episodes he experienced were not a reaction to the medicine but his body fighting off the virus.

        Giardinieri, the vice president of a company that manufactures cooking equipment for high-end restaurants in Los Angeles, said he had three doses of the medicine Saturday and is hoping to be discharged from the hospital in five days.

        “To me, there was no doubt in mind that I wouldn’t make it until morning,” said Giardinieri. “So to me, the drug saved my life.”

        1. I’m glad it worked out, but “like nothing ever happened” sounds kinda suspect. If he was at death’s door, then my guess is he has permanent lung damage.

      2. But even the mild cases appear to be brutal. Uh, no. The mild cases lack symptoms and, in most parts of the world, are not even being tested. The number of no-symptom or minimal-symptom COVID-19 cases as a % of the total cases will probably not be known for many months. I anticipate that will be a big number. If, by “mild cases”, you mean those hospitalized for COVID-19, but who never require ventilator care, you are probably right.

        1. In the context of the article, they classified “mild” as meaning not going to the hospital.

          I have noticed several news articles showing young people who had the virus talking about how awful it was, while the very mild cases are understated or outright hidden. Either media is ramping the drama for clicks, OR someone is telling the media to post horror stories to encourage social distancing (or both).

          I still don’t know how long we as a world can quarantine like this. You can’t mothball industries or schools forever, or even the 18 months to a vaccine. At some point we’re either going to all wear masks all the time, or simply resign ourselves to getting it and have hydroxychloroquine at the ready for the worst. If this can’t be stopped, I’ll aim to build my immunity by contracting two very mild cases via contaminated surfaces (low initial viral load). That’s how it happened for me with chicken pox.

        2. And this is why places like Italy, where testing so far is insufficient to even estimate the infection rate, may need to maintain their quarantine measures for quite some time until they get a handle on the number of cases.

    2. His friend across The Pond has other ideas.

      The Financial Times
       Johnson forced to close Britain in bid to halt rapid virus spread
      All non-essential shops shut and police to enforce stay-at-home order
      Embargoed til 20.30 23/03/2020. London, United Kingdom. Boris Johnson Covid-19 23/03. The Prime Minister Boris Johnson addressing the Nation in the White Room at No10 Downing Street during the Coronavirus. Picture by Andrew Parsons / No 10 Downing Street
      Boris Johnson said that people will only be allowed to leave their homes to buy essentials such as food, for medical or care purposes or to take one form of exercise a day
      © Andrew Parsons/Downing Street
      George Parker, Sebastian Payne and Laura Hughes
      3 hours ago

      Boris Johnson brought down the shutters on Britain on Monday night, as he announced the closure of all “non-essential shops”, told people to stay at home and warned that the police would enforce tough new measures to stop the spread of coronavirus.

      After days of mounting pressure to take tougher action, Mr Johnson said in a televised address to the nation that people should stay in their home unless they had a good reason to leave and that the high street would be largely shut down.

      The new measures, which will initially last for three weeks, will bring Britain more closely into line with other European countries as Mr Johnson announced draconian restrictions to stop the rapid spread of the virus.

          1. Why are you attempting to disparage Fauci’s credentials by name calling and implying he likes a former leader (who no longer holds power) and that there is something wrong with that?

            Fauci has worked for many administrations and isn’t even calling our trump for his poor handling of the crisis – Which I wish he would. Maybe he gets along with a variety of people because he’s a diplomatic professional? He probably does enjoy working with leaders who comprehend and follow expert medical and scientist advice rather than deny it and do the opposite (like trump 3 years ago closing down the very office that told him we weren’t prepared for the likely threat of a pandemic and said we needed to prepare).

            Fauci is the most trustworthy adult in the room right now because he gently tells the truth even when it points out the lies and contradictions trump says about the virus. I’m surprised he’s lasted so long with such a high level of integrity. I can only imagine the pressure on him to be a mouth piece right now.

          2. I can only imagine the pressure on him to be a mouth piece right now.

            That is just your imagination as you say. Kudos to the President for working with people who disagree with him on some things despite unwarranted criticism from those with some “imagination”.

      1. Italy just peaked and will be coming down similar to China.
        If we stay closed for more than a month, there will be more heart attacks and suicides than Covid fatalities.

        1. Seems a bit early to call a peak.

          Italy reports 602 new coronavirus deaths: Live updates
          UK joins others in locking down, Italy death toll reaches 6,077 and WHO chief warns pandemic ‘accelerating’.
          by Kate Mayberry, Mersiha Gadzo & Joseph Stepansky
          4 hours ago

          Italy has reported 602 new deaths from the coronavirus on Monday, bringing the total to 6,077 with the tally of cases in the country, a major hotspot, rising to 63,928.

          1. I think they’re given some glimmer of hope by the number of new cases falling for a couple of days.

          2. I’m not optimistic about falling numbers of cases. As we know, all it takes is a half-dozen unsuspecting carriers to re-start the whole circus again. I think Wuhan is about to discover this for themselves.

            Pro-tip: We all need to keep 5-6 weeks of food, supplies, TP and masks (when you can get them) on hand, ALWAYS. Because it sounds like we could go on month-long local lockdowns, with no advance notice, for the next couple of years.

        2. “there will be more heart attacks and suicides than Covid fatalities.”

          And hopefully S&P500 < 1700.

          1. Real Vision on YouTube thinks that even if COVID peaks, the market will continue to slowly fall as the system deleverages.

          2. I believe that are, Bear.

            They are predicting deflation in the beginning, followed by hyperinflation later. There are dips and volatility for traders to play with, but they advise regular investors to keep their powder dry and not catch a falling knife.

            I got it all from this video (refinative is a subset of Real Vision):

        3. Sounds like Italy may need to do a lot more testing before they even know the status of their outbreak. No green shoots over there yet, except for perhaps in a Wall Street bovine imagination.

          World News
          March 24, 2020 / 3:36 AM / Updated 40 minutes ago
          Italian coronavirus cases likely ’10 times higher than reported’

          ROME (Reuters) – The number of cases of coronavirus in Italy is probably 10 times higher than the official tally of almost 64,000, the head of the agency that is collating the data said on Tuesday.

          Latest figures show 6,077 people have died from the infection in barely a month, making Italy the worst-affected country in the world, with close to double the number of fatalities in China, where the virus emerged last year.

          However, testing for the disease has often been limited to people seeking hospital care, meaning that thousands of cases have certainly gone undetected.

          1. The number of cases of coronavirus in Italy is probably 10 times higher than the official tally of almost 64,000

            That would actually be very good news. Even better if everyone already has been exposed. The fatality rate would then be quite low.

          2. I don’t get your logic. If the case count is much higher than estimated, then a longer quarantine may be needed to accomplish curve flattening. 640,000 out of 60,000,000 is a long way from “everyone has been exposed “.

        4. “…there will be more heart attacks and suicides than Covid fatalities”
          More $helter.$hack.inventorie$.to.$ell

          Plentie$.of monie$.to.lend$ to anxiou$.purchaser$! In fact, the loan$.liquiditie$ i$ now: “UNLIMITED”!

  9. Here come the housing market bailouts:

    Mortgage Industry Proposes Plan for One-Year Payment Deferrals

    Mortgage industry trade groups proposed a plan for helping borrowers unable to make their payments because of the coronavirus pandemic that includes deferrals of as long as a year.

    The groups, which include the American Bankers Association, the Mortgage Bankers Association and the Housing Policy Council, sent federal agencies a list of proposals aimed at homeowners affected by illness or quarantine that results in a loss of income.

    Mortgage servicers would provide an initial 90-day forbearance that could be extended to 12 months, according to a statement Monday from the Housing Policy Council.

      1. Don’t know about what will happen, but I’ve seen programs like this before (one or two months) and it accrued, extending the term of your loan.

          1. They used to have a tuna cannery in San Diego, but it closed a while ago. But they still have the bishop’s storehouse system, where out of work folks can get food in exchange for service. Not sure if nonmembers are eligible.

          2. Is it true the LDS have their own canneries and other food processing plants?

            Yeah, I even volunteered a day at one once. But many were mothballed in the last decade or so.

      2. Matter$.knot$ … x12+ month$ of$.payment$ beat$ a Full.Hou$e of required budget.expenditure$ hand$.down!

  10. From my mortgage company:
    Impacted by Coronavirus? We Are Here to Help.
    If you’ve been impacted financially by the Coronavirus, whether through illness or due to loss of income or employment, you may qualify for mortgage assistance options, such as a forbearance plan related to your monthly mortgage payment.
    Currently, Fannie Mae (FNMA), Freddie Mac (FHLMC), FHA, VA and USDA do NOT offer options to defer the amounts due.
    A forbearance is a temporary suspension of your monthly mortgage payment. During the forbearance period, your payments are suspended for a set period of time. However, if you are able to make partial payments, it will reduce the amount outstanding at the end of the forbearance period.
    Please note: At the end of the forbearance period, your suspended payments will be due.
    Additional options to assist you may include:
    Loan Modification:Permanently change the terms of your mortgage to bring it current.
    Repayment Plan:Breaks up the amount owed that accumulated during the forbearance period. The balance is added to future payments until the full amount is repaid.
    Examples of How a Forbearance Works
    1. John’s monthly mortgage payment is $1,000 and is due on March 1st. He opts in for a forbearance in March. As a result, the forbearance period will run from March through May. During this time his monthly mortgage payments are suspended. At the end of the forbearance period, John will owe a total of $4,000 on June 1st = $3,000 for the March through May payments, plus his June payment of $1,000.
    2. John’s monthly mortgage payment is $1,000 and is due April 1st. He opts in for a forbearance in March. As a result, the forbearance period will run from April through June. During this time his monthly mortgage payments are suspended. At the end of the forbearance period, John will owe a total of $4,000 on July 1st = $3,000 for the April through June payments, plus his July payment of $1,000.
    Also, negative credit reporting and late charges will not occur during the duration of the forbearance period. Toward the end of the forbearance period, we will work with you to determine eligibility for additional options should you need them.
    Options could include the following but there may be additional eligibility requirements and documentation required for you to provide prior to approval.
    1.Extension of the Forbearance Plan period
    2.Repayment Plan
    3.Loan Modification. There may be additional eligibility requirements and documentation required.

    1. This towering house of debt is resting on very long columns with too few lateral braces, and those columns are wobbling like a newborn deer trying to stand. And the pension funds are the ultimate bag holders.

    2. “Please note: At the end of the forbearance period, your suspended payments will be due.”

      🙄 Then why bother with a forebearance at all? The laid off workers won’t be able to pay the suspended payments at the end anymore than they could pay on regular schedule.

      (The ONLY scenario where this would help is a government shutdown where workers get their back pay in full in a lump sum. )

      1. “Then why bother with a forebearance at all?”

        A banker has a better chance to squeeze blood from a rock if said rock has current earnings.

      2. “Then why bother with forbearance at all?”

        I know, right? If you had that kind of cash laying around, you wouldn’t even be asking for it in the first place. The lender is just handing you a can to kick down the road here.

      3. “Then why bother with a forebearance at all?” For the same reason gubmint doesn’t want to publicize current unemployment statistics. Put this current “instant depression” behind the curtain & don’t look at it for a while. Lipstick on a dead pig.

  11. The Wall Street Journal
    U.S. airlines prepare plans to virtually shut down domestic service amid outbreak
    Published: March 23, 2020 at 10:02 p.m. ET
    By Andy Pasztor and
    Alison Sider
    Move could be voluntary or government-ordered

    1. The Financial Times
      Markets Briefing Equities
      Wall Street closes lower in spite of Fed ‘bazookas’
      Central bank pledge sparks US Treasuries rally but investors look to Congress for fiscal deal
      Stock market graph ID 30425089 © Seemitch | Close-up of a stock market graph on a high resolution LCD screen.
      © Seemitch | Dreamstime
      Jennifer Ablan and Colby Smith in New York, Tommy Stubbington and Adam Samson in London and Hudson Lockett in Hong Kong 7 hours ago

      A promise of unprecedented government and corporate bond buying from the Federal Reserve helped push down US borrowing costs on Monday, but equity markets ended in the red as investors anxiously awaited the second half of the US authorities’ response to the coronavirus crisis, namely a fiscal stimulus being wrangled on Capitol Hill.

      The US equity benchmark S&P 500 closed down almost 3 per cent in New York after a roller-coaster trading session, with a similar move in the Dow Jones Industrial Average.

      The sell-off came despite the US central bank unleashing its most forceful effort to date to contain the economic and financial fallout of the pandemic, including a pledge to buy US government bonds in unlimited amounts and provide a backstop to the US corporate bond market.

      “There has been mounting fear that we would see a repeat of the political dysfunction on display during the global financial crisis,” said Kristina Hooper, chief global market strategist at Invesco. “And, as with the global financial crisis, the Fed has stepped in, offering enough ‘bazookas’ to soothe markets for the moment.”

      Jeffrey Gundlach, chief executive of DoubleLine Capital, said: “Unlimited Quantitative Easing forever will have that effect, at least temporarily. Fed blinked in response to the chorus of panic over the weekend.”

    2. The Financial Times
      Markets volatility
      ‘Great liquidity crisis’ grips system as banks step back
      Traders blame volatility on measures put in place after the last financial collapse
      Joe Rennison and Philip Stafford in London, Colby Smith in New York and Robin Wigglesworth in Oslo
      10 hours ago

      Two weeks ago, traders at TwentyFour Asset Management came into the office after a weekend in which a global oil price war had erupted. The ensuing crash in crude made investors who were in the early stages of fretting about the coronavirus outbreak even more alarmed.

      The traders hoped to sell a “modest” holding of 30-year US government bonds — one of the safest, most easily traded financial assets in the world — and asked three of the banks specially tasked with supporting US government debt auctions for prices. Two refused to bid at all. “This was extraordinary, and unprecedented in our experience,” said Mark Holman, chief executive officer at the asset manager, in a note to clients.

      The incident reflects the intense strain at the heart of a financial system struggling to cope with an economic shock of huge, but uncertain proportions. The ease of buying and selling even the safest, most high-quality assets has deteriorated dramatically. JPMorgan has dubbed it the “Great Liquidity Crisis”, noting that it has piled extra volatility on to already fragile market conditions.

      “This is not a traditional liquidity situation,” said Peter Tchir, head of global macro strategy at Academy Securities. “We are in unprecedented territory.”

    3. Drama much?

      With an unlimited central bank markets backstop, I’m trying to grasp why these folks’ hair is ablaze.

      The Financial Times
      TPG Capital LP
      Markets need to brace for ‘full-on credit crisis’, warns Waxman
      Sixth Street Partners head says investors are too complacent about looming risks
      Robin Wigglesworth in Oslo, Norway 15 hours ago

      Investors underestimate how an “unprecedented revenue destruction” caused by coronavirus will damage even the biggest, highly rated companies, culminating in a “full-on credit and liquidity crisis”, according to the head of an US investment group.

      Alan Waxman, the head of Sixth Street Partners, the $34bn-in-assets credit arm of private equity giant TPG, sent a bleak letter late last week to investors arguing that despite the recent turmoil, markets were still complacent over the effects of the viral outbreak.

      “While this is a public health crisis first, there is a real and looming potential for it to spill over into a full-on credit and liquidity crisis,” Mr Waxman wrote in the letter, which was seen by the Financial Times. “There is a growing risk that the Covid-19 crisis may lead to a more systemic event catalysing a widespread downward spiral.”

    4. The Financial Times
      Life insurers braced for hit as bond market buckles
      Rising death toll is not biggest issue facing sector as coronavirus outbreak worsens
      A pedestrian, wearing a protective face mask, passes the offices of Assicurazioni Generali SpA in Milan, Italy, on Thursday, March 12, 2020. Italy all but put a halt to normal life, paring the economy down to just essential services in a desperate bid to stem the advance of the deadly coronavirus.
      Photographer: Alberto Bernasconi/Bloomberg
      Generali’s offices in Milan. The Italian insurer has earmarked some of its €100m coronavirus rescue fund to help struggling agents and advisers
      © Bloomberg
      Oliver Ralph in London and Robert Armstrong in New York
      10 hours ago

      Shares in some life insurance companies have more than halved over the past few weeks as fears grow that the sector faces a double hit from coronavirus.

      Life insurers are braced for higher payouts in the wake of the outbreak, but the bigger threat to their balance sheets, insurers and analysts say, are plunging markets and falling interest rates triggered by the pandemic.

      Insurers’ shares have fallen faster than the wider stock market. In Europe, Allianz, Axa and Legal & General are down by more than 40 per cent. In the US, Prudential Financial and MetLife have fallen by more than half, while Brighthouse has lost almost two-thirds of its value. Rating agency Fitch has downgraded its outlook on life insurers in the US, UK and continental Europe to negative.

      Life insurers hold a mixture of assets — mainly bonds — to fund the claims that they pay. The collapse of stock markets will hurt, although for most life insurers equity exposure is limited. Risks to corporate bonds are far more significant, especially because insurers, like many investors, have in recent years been forced to buy riskier bonds in the hunt for yield.

      “They’ve gone down the quality curve a bit to get returns,” said James Shuck, a European insurance analyst at Citigroup. He said the proportion of triple-B bonds — those rated at the lowest rung of investment grade — had gone up from under a third of the insurers’ corporate bond portfolios in 2012 to 43 per cent today.

    5. The Financial Times
      Opinion Markets Insight
      The Federal Reserve has gone well past the point of ‘QE infinity’
      New measures extend a post-Lehman crisis legacy of distorted risk premia in markets
      Michael Mackenzie
      Having failed to ease nerves over the past week with an expansion of its quantitative easing programme, the Fed has upped the ante to Buzz Lightyear level
      © FT montage; Bloomberg
      Michael Mackenzie 9 hours ago

      The vast and currently dysfunctional markets for US Treasuries, mortgages and corporate credit now have the ultimate buyer of last resort — the Federal Reserve.

      Ever since the big stock market crash of 1987, investors have grown to depend on the US central bank coming to the aid of financial markets when they hit the skids. Now the central bank is well and truly “all in”, announcing a slew of new initiatives on Monday designed to buy time for an enfeebled financial system. Until now, the Fed implied, the system has been in no shape to withstand an escalating pandemic that has the US economy facing the biggest hit to growth since the 1930s.

      Having failed to ease nerves over the past week with an expansion of its quantitative easing programme, the Fed has upped the ante to Buzz Lightyear territory. “QE infinity,” in the form of unlimited buying of Treasury debt and mortgage-backed securities, is just one aspect of the new approach.

      Another notable measure is the Fed’s entry into the universe of investment-grade credit, with the central bank launching a facility that will enable the purchase of corporate debt that has already been sold with a maturity of less than five years, and also of exchange traded funds that track the sector. Yet another facility will support new sales of bonds and loans from companies with investment-grade credit ratings. One way of looking at this is to note that the Fed has joined the Bank of Japan, the European Central Bank and the Bank of England in supporting credit markets. Viewed another way, it complicates any future exit strategy and extends a long post-Lehman crisis legacy of distorted risk premia in markets.

      But perhaps now is not the time to quibble over legacies, while the pandemic rages. The purchase of corporate debt by the Fed is designed to prevent a deeper and prolonged bust facing an economy that has been placed in suspended animation. A highly indebted US corporate sector, fuelled by Fed policy objectives since the last crisis, is being stripped of earnings growth and cash flows for an indeterminate period. This is led by companies operating in the travel, leisure, restaurant and retail sectors, and sets the stage for a deepening of the current macro economic shock.

      Credit risk premia have moved sharply wider in recent weeks, catching out many investors, while also preventing lower quality borrowers from refinancing their maturing debts in the form of commercial paper and corporate bonds. Losses for many fund managers are mounting, while exchange traded funds have become highly volatile and dysfunctional. In the US Treasuries market, meanwhile, when liquidity dries up, conditions for corporate credit become even more stressed, intensifying a fire-sale environment as investors rush for exits and seek to cash out at any price.

      An aggressive expansion of QE by the Fed has loomed large since the eruption of market turmoil just over a month ago. Some have long argued that unlimited quantitative easing was a likely final step, after the policy appeared to become a permanent feature of the Fed’s toolkit in the wake of the financial crisis.

      The policy of suppressing long-dated Treasury yields — and by extension, broader market volatility — was billed as a temporary measure when introduced in 2009. But it has pretty much become business as usual since then for the Fed and other leading central banks. Efforts by the Fed to raise interest rates by modest amounts, and to trim the balance sheet, were terminated after severe market turmoil erupted in late 2018, casting a lengthy shadow over business and consumer confidence. A financial system replete with debt was in no fit state to handle even a slight rise in Treasury yields back then.

      Now, an even more indebted corporate sector faces intense pressure…

    6. The Financial Times
      The Big Read
      Eurozone economy
      Coronavirus: can the ECB’s ‘bazooka’ avert a eurozone crisis?
      Much may depend on whether Germany is willing to bail out Italy
      © FT montage / EPA
      Ben Hall in London, Martin Arnold in Frankfurt and Sam Fleming in Brussels

      As the Italian death toll from the Covid-19 pandemic reached grim new heights last Sunday, Pope Francis broke strict quarantine rules to visit the church of San Marcello in central Rome. The pontiff went to pray for a miracle before a crucifix which the pious believe helped save the city from plague in 1522.

      Around him was a country in lockdown and a continental economy in freefall, as the virus spread across Europe, freezing factories, snarling borders, shuttering high streets and confining hundreds of millions of citizens to their homes. Workers, business leaders and investors were seeking deliverance not only from the almighty, but from EU policymakers, who they implored to stop the slump from turning into a lasting depression that could destroy the eurozone.
      Pope Francis prays at San Marcello al Corso church for the end of the coronavirus pandemic, in Rome, Italy March 15, 2020. Vatican Media/­Handout via REUTERS ATTENTION EDITORS – THIS IMAGE WAS PROVIDED BY A THIRD PARTY.
      © Vatican Media/Reuters

      For a moment last week, it looked like at least some of those prayers had been answered. The European Central Bank stunned global markets on Wednesday night with an audacious plan to expand its asset purchases by a vast €750bn over the next nine months. European bond markets immediately rallied as the scale of the ECB’s intervention became plain, reducing the financing costs of governments from Italy and Greece to Germany and France. “There are no limits to our commitment to the euro,” Christine Lagarde, the ECB president, wrote on Twitter after the plan was unveiled.

  12. Someone here in Las Vegas was just arrested for running around Sprouts trying to lick people.

      1. Why else would you lick strangers in grocery stores at this time? 🙂 It’s assault.

        Have a cousin years who was pricked with a needle years ago by some kid going around scaring people with possible AIDS infection and whatever else you can get from a dirty needle. Fortunately he was ok but It had to be frightening and was upsetting for the whole family. People do sick stuff sometimes.

      2. Watched a video clip on Reddit last night of someone wearing an N95 mask while grocery shopping, and someone else without a mask moved-in close and spit in their face.

      1. Lo Lo Lo Lo Lo-la?
        I hope they release the security tape. I can imagine the uproar 🤣

    1. “Someone here in Las Vegas was just arrested for running around Sprouts trying to lick people.”

      Lol – I love this blog. One minute I’m up to my ears reading about complex mortgage derivative collateralization, then I read this. Hilarious!

    2. So, we’ve gone from: “$!


      Intere$ting progre$$.

    3. I was out in town today. I parked in front of the Starbucks at Flamingo and Rainbow to use the Wi-Fi. I sat in the car and didn’t interact with anyone.

      But the amount of traffic at that intersection was amazing. Not much less than I would expect in the afternoon under normal conditions. Plenty of people out on foot, too. Seems like not many people are really staying home!

      1. I think we still have no cases in my NY county, but traffic is off dramatically. Notable was the complete absence of horses hooves on Sunday. I wonder if the Mennonites are live streaming like most other folks.

  13. I chatted this morning with a friend who has lived in California for over half a century. He commented that traffic right now is similar to how it was fifty years ago.

    1. True, but eye was running through oil.fields in Santa fe Springs, huffin’ & puffin’ the best leaded.gas in thee air one could be expo$ed too.

      Doubt it had any effects on my young tender lungs. Naw.

    2. I was raised in La Jolla 50 years ago. There was no traffic to speak of. Plenty of beach parking all the time. We rode dirt bikes all over the then undeveloped land by Mt Soledad. La Mesa was considered way out in the sticks, and our house cost $32k.

      1. Sounds idyllic. But now I often wonder how things would go if coronavirus had hit the world 50 years ago. 😱

  14. So many financial bazookas are firing off now in the coronawar. Try not to get caught in the crossfire!

    1. Googled around & found references to chloroquine phosphate at “$190.00 per KILO — USES: Chloroquine Phosphate is a replacement for both copper sulfate and quinine and it is superior to copper sulfate and all quinine salts. Chloroquine is used as a bacteriacide, an algaecide and as an antimalarial. It is superior in the fight against ICH, slimness of the skin and flukes and can be used as both a treatment and a preventative.”
      I can see where it might be useful to treat aquariums & swimming pools. I also checked CDC summaries. OH-chloroquin is being using in USA to treat COVID-19 experimentally since chloroquin is not as widely. One current complete course of treatment for one patient is 2.8 gm total. 1 kilogram of the stuff would be enough for 357 courses of treatment. It is beyond stupid to take a random quantity of chemicals used for whatever instead of a pharmaceutical chemical, but that is the same thing as kids smoking “dope” which they like to believe is pure cannabis but which could just as well be pure carfentanyl, same kind of thinking process is involved. Lord help us all.

    2. Is this the miracle cure

      No indication at all.

      Idiocy is never a miracle cure. I’d give odds they measured out a dose with a 1/4 cup scoop or a teaspoon. Industrial strength! My dad’s dose (quinine) for malaria was in the mg dosage.

  15. No, China’s economy hasn’t gotten better. The implications could be more serious than investors realize.
    Published: March 23, 2020 at 6:00 p.m. ET
    By Andrea Riquier
    ‘There’s going to be mixed signals sent to markets,’ says Leland Miller
    Is China back to work? If so, is that good or bad for the global economy?
    Getty Images

    Just how bad is the economic situation in China?

    In late February, MarketWatch interviewed Leland Miller, CEO of the China Beige Book, who warned that economic deterioration caused by the novel coronavirus was, as we put it, “worse than you think.” On Monday, Miller’s firm released a fresh report that confirms that earlier view.

    His takeaway now: for investors, the notion of “worse than you think” only tells part of the story.

    1. I head straight for
      Last Friday afternoon around 6 pm, temps 55 degrees, I went to my favorite school track for a walk, but turned around when I saw 30 or 40 young people walking in both directions, many violations of the 6 foot rule going on. I didn’t get out of my car & just went home for a walk around the neighborhood. Saturday night at 11 pm I went to the same track. T 29 with windchill of 20, no one else was there. I walked for 75 minutes and had the whole track to myself. No traffic seen on the street next to the track while I walked. I did need my Alaska parka to deal with the wind.

    2. Iron Mountain looked busy when I drove by on Sunday. I heard Cowles Mountain was also busy.

  16. Coronavirus
    Published 18 hours ago
    Last Update 17 hours ago
    US coronavirus cases surpass 35,000, now the third-highest infected nation in the world
    By Stephen Sorace | Fox News
    US now ranks number 3 for highest amount of coronavirus cases in the world

    The number of new coronavirus cases in the U.S. surpassed 35,000 on Monday, making it the nation with the third-highest number of infections in the world, behind only Italy and China.

    The death toll in the U.S. from the COVID-19 virus reached 471 — the sixth highest in the world.

    U.S. health officials have said coronavirus cases will rise as testing becomes more widely available.

    All 50 states have reported confirmed cases of coronavirus. New York has the largest number of cases at nearly 17,000, after seeing a 37.4 percent spike Monday.

    1. New York has the largest number of cases at nearly 17,000, after seeing a 37.4 percent spike Monday.

      Gov. Cuomo tells us they are testing 10,000 people a day in NY now.

  17. “The AlphaCentric fund invests primarily in private-label mortgage-backed securities. Its top holdings at the end of 2019 included so-called legacy RMBS like subprime mortgage bonds issued before the 2008 financial crisis, as well as more recently-issued securities backed by home loans that had been modified.”

    What a convenient time to offload shitty legacy subprime mortgages, just before the initiation of the Fed’s QE2Infinity all-purpose bailout!

    It reminds me of the crappy student rental home I shared with three roommates as an undergraduate. It caught fire and was condemned while we were the tenants, leaving us temporarily homeless. We all dropped out of school following that experience.

    I have always figured the owner torched the place to collect insurance money, though I have no proof.

  18. It seems like the Democrats aren’t that eager to agree to a bailout deal.

    Now that the Fed is pulling out all the stops, is a Congressional bailout even necessary?

    1. The Financial Times
      US politics & policy
      Senate Democrats block $2tn stimulus bill for second time
      Nancy Pelosi sets out alternative offer as Mitch McConnell calls for urgent action
      Senate Majority Leader Mitch McConnell, a Republican from Kentucky, speaks to members of the media outside of the Senate floor after a vote at the U.S. Capitol in Washington, D.C., U.S., on Monday, March 23, 2020. Senate Democrats again refused to advance Mitch McConnell’s $2 trillion stimulus plan Monday as the coronavirus continued spreading amid dire predictions of a deep economic recession. Photographer: Al Drago/Bloomberg
      Lauren Fedor and James Politi in Washington
      2 hours ago

      Democrats have for the second straight day blocked an almost $2tn economic stimulus package, insisting the legislation should include more stringent limits on how big businesses use coronavirus rescue funds.

      The move by Democrats, in a procedural vote in the Senate on Monday, came despite mounting concerns on Wall Street that Congress is moving too slowly to prop up companies that are shedding employees by the hundreds of thousands.

      The benchmark S&P 500 closed down 2.9 per cent in New York on Monday, with the Dow Jones Industrial Average 3 per cent lower. This was despite the most dramatic intervention in the markets yet by the Federal Reserve, which pledged to buy government bonds in unlimited amounts.

    2. Live updates: Asian markets rally as Trump blames Democrats for stimulus stalemate
      This photo taken on March 23, 2020 shows employees eating during lunch break at an auto plant of Dongfeng Honda in Wuhan in China’s central Hubei province.
      This photo taken on March 23, 2020 shows employees eating during lunch break at an auto plant of Dongfeng Honda in Wuhan in China’s central Hubei province. (Str/Afp Via Getty Images)
      By Miriam Berger and Teo Armus
      March 24, 2020 at 12:41 a.m. PDT

    3. Ever heard of the word: “$capegoat$”?

      FEDERAL Re$erve: Indemnifed!
      CONgre$$.critter$: $ucker$!

  19. The ‘mind-bending stat’ that puts this disastrous market in perspective
    Published: March 23, 2020 at 8:10 p.m. ET
    By Shawn Langlois
    The crowds on Wall Street, New York, after the stock exchange crashed. Gett

    Josh Brown, financial adviser at Ritholtz Wealth Management, told his staff Monday morning that every single prospective client will be asking “How did you do in 2020?” for perhaps the next decade.

    “It’s going to be the key risk aversion reference point on everyone’s mind, for a long time to come,” he wrote in a post on his popular “Reformed Broker” blog. “I know this because we got the 2008 question until well into the middle of the next decade.”

    So far this year, the answer for the typical retail investor has to be: “Well, pretty terrible.”

    Brown pointed to this Bank of America chart to show how the S&P 500 (SPX, -2.92%), reeling from the coronavirus pandemic, has dropped 30% from peak to trough faster than any other time in history. The next three fastest were all nasty pullbacks during the Great Depression era.

    Yes, just 22 days for this stock market to get cut by a third. As you can see, those pullbacks back in the Depression days, took 23, 24 and 31 days, respectively.

    As Bank of America said in the note, “This is not good company for 2020.”

  20. Largest Oil Glut In History Could Force Crude Prices Even Lower
    By Tsvetana Paraskova – Mar 16, 2020, 10:00 AM CDT

    The oil market is heading for the largest ever crude glut in the first half of 2020, which could be two to nearly four times bigger than the biggest surplus recorded so far, IHS Markit says, as quoted by Bloomberg.

    The glut in H1 2020 could reach between 800 million barrels and a staggering 1.3 billion barrels, more than two and up to nearly four times larger than the previous biggest glut of 360 million barrels in late 2015-early 2016, according to IHS Markit.

    The largest-ever glut is coming as oil demand is slumping due to the coronavirus pandemic and former allies Saudi Arabia and Russia promising to flood the market with oil as they are in an all-out price war for market share.

    1. Sounds like the U.S. should be able to top off its strategic reserve at fire sale prices.

      Good deal!

      1. Yeah, remember how we were all going to run out of it fifteen years ago? Sometimes the perpetual doom and gloom fails to materialize.

  21. Wait just one minute. The mortgage crisis was back in 2007-2009, right? This new crisis has nothing whatever to do with mortgages, and is strictly about the pernicious impacts of a dreaded disease, right?

    1. The Financial Times
      Mortgage investment funds become ‘epicentre’ of crisis
      Real estate investment trusts dump bonds to stay afloat as Fed seeks to calm investors
      Robert Armstrong in New York
      3 hours ago
      Real estate investment trusts that specialise in buying mortgage-backed securities are playing a prominent role in the current market turmoil, dumping their holdings in response to margin calls by their banks.

      The mortgage Reits entered the coronavirus crisis owning an estimated $500bn of bonds backed by property loans and have come under pressure because they use short-term borrowings to squeeze higher returns from their holdings.

      “The Reits are at the absolute epicentre of this crisis, given that their business requires leverage,” said Matthew Howlett, Reits analyst at Nomura.

      Shares in Annaly Capital and AGNC Investment, the two largest mortgage Reits, have been cut in half in recent weeks. A smaller peer, AG Mortgage, fell 38 per cent on Monday after saying “it does not expect to be in a position to fund the anticipated volume of future margin calls under its financing arrangements in the near term”.

      The mortgage Reits fund themselves by pledging bonds in return for cash in the short-term funding, or “repo”, markets, and have assets valued at as much as 10 times their common equity. The high leverage allows them to pay dividends well in excess of the yields on the bonds they buy. Because of their legal structure, the Reits are obliged to pay out substantially all of their earnings to shareholders.

      The falling value of their mortgage bonds, driven down by the rush for cash and worries about defaults as the coronavirus leaves homeowners unemployed, has pushed the Reits past their leverage limits, forcing them to sell bonds into an already weak market.

      “We expect there was a steady pattern of forced selling in recent weeks by Reits to try to manage leverage levels,” wrote UBS analyst Brock Vandervliet in a note to clients on Monday.

      1. Epicentre of the financial crisis, I guess. Remember this whole thing was gonna blow soon anyway, beer bug or no beer bug. I was guessing after the election, but beer bug pulled it forward.

        1. Pretending that this is just about the coronavirus and not about the Everything Bubble collapse is likely to result in any number of investors getting burned, due to severely underestimating the damage toll.

        2. In this case the timing is pretty critical if it determines whether globalists or populists control the US govt for the next 4 years.

    2. Real Estate
      Potential wave of mortgage delinquencies could bankrupt the payment system
      Published Mon, Mar 23 2020 12:36 PM EDT
      Updated Mon, Mar 23 2020
      5:28 PM EDT
      Diana Olick
      Key Points
      – The Mortgage Bankers Association estimates that if about a quarter of all borrowers request and are granted loan forbearance for six months or longer, demands on servicers could exceed $75 billion and could climb well above $100 billion.
      – That would easily bankrupt the mortgage finance system.
      – The MBA sent a letter late Sunday to Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin, asking for cash to support mortgage servicers.

  22. For the PM followers, yesterday Kitco had a great interview with a silver miner. He said that the PM mines have gone into pause mode, due to coronavirus lockdowns, low price, and cratering demand. PM mints are deliberately not minting more coins since the spot was so low. Instead, they are hodling their raw metal in the warehouses until the prices rise again. The only silver for sale is scrap. He also had observed a similar phenom in 2008, but far less severe of course.

    1. The Hidden Bailout.

      Who should be charged and liable for health care. The rich medical Cartel and big Pharma that collects about 4 trillion a year, which includes the Medical insurance Companies, should be liable

      The fact that these entities didn’t want to spend the money to be prepared is clear.

      The bail out that industry wants from the Feds right now is mind-blowing. .

      You could argue that it’s a big medical emergency so the taxpayers should supplement the industry that already takes so much of people’s income.

      One of the most overpriced industries wants bail outs.

      I say back charge them for this emergency, or lower Heath care insurance costs to the public to make up for this.
      The Health Care Industries is one of the biggest price fixing monopolies in the USA.

      I will get hammered for this post because everybody is being hoodwinked by this “save the seniors” ploy.

      Just like the fraud lending bail out of 2008, this one is similar in terms of greed being bailed out. With people dying here your not suppose to question anything.

      Oh people say that the cost of health Care is justified because big pharma pays for research on new pills. Who is paying for it now?

      I knew the day would come when the Health Care industry would have a crisis. For a long time now yearly there has been 20 to 90 k in deaths due to flu strains, mostly with the elderly dying.

      The Feds are going to do the bail outs, and Main Street will be ones that pay in one way or another.

      It all really goes back to greed in one way or another. When it comes to greed regarding life or death matters, it’s ever present.

  23. The Financial Times
    Eurozone economy
    Business activity crashes to record low in eurozone
    Survey of services and manufacturing sectors illustrates impact of coronavirus on economy
    Italian soldiers wearing protective masks work at a roadblock after Italy reinforced the lockdown measures to combat the coronavirus disease (COVID-19) in Catania, Italy March 21, 2020. REUTERS/Antonio Parrinello
    Italian soldiers wearing protective masks work at a roadblock after Italy reinforced the lockdown measures in Catania, Italy © Reuters
    Martin Arnold in Frankfurt and Valentina Romei in London
    3 hours ago

    Business activity has crashed to a record low in the eurozone according to a closely watched survey, as the coronavirus pandemic fuels a global economic crisis.

    The IHS Markit flash composite purchasing managers’ index for the eurozone plunged to 31.4 in March from 51.6 in the previous month — the lowest reading since the series began in the late 1990s, suggesting the bloc is heading for a deep recession as the drastic measures introduced to contain the spread of the pandemic in Europe start to bite. A reading below 50 indicates the majority of businesses reported a deterioration compared with the previous month.

    “Business activity across the eurozone collapsed in March to an extent far exceeding that seen even at the height of the global financial crisis,” said Chris Williamson, chief business economist at IHS Markit.


    “There is no doubt that China’s unconscionable decision to orchestrate an elaborate coverup of the wide-ranging and deadly implications of coronavirus led to the death of thousands of people, including hundreds of Americans and climbing,” Stefanik added. “This Resolution calls for China to provide compensation for the harm, loss, and destruction their arrogance brought upon the rest of the world. Simply put China must, and will, be held accountable.”

    1. I saw an article on Instapundit that uses cancelled cell phones in China as a proxy for deathsthere. If true, deaths could be in six figures.

        1. 3M must be furious that the Chinese basically took over their mask factory in Shanghai

          No one could have seen it coming. I mean, since when do Communists seize and expropriate foreign owned assets?

    2. “…China’s unconscionable decision to orchestrate an elaborate coverup…”

      This should [not] be a shocking revelation.

  25. The No. 1 asset class

    Gold (GC00, 5.371%) was the asset class that performed best, producing an 8.8% annualized return over the past 20 years.

    Are you surprised by stocks’ inferior return? You shouldn’t be, for two reasons.

    First, the past two decades are hardly the only 20-year period in which stocks lagged behind bonds. In fact, according to Edward McQuarrie, a professor emeritus at the Leavey School of Business at Santa Clara University, there have been several such periods in U.S. history. The reason few of us have been aware of this is that most historical databases extend back to only the mid-1920s. Prior to that, bonds performed far better relative to stocks.

    In fact, McQuarrie views the decades after World War II as the exception rather than the rule. During those decades stocks far outperformed bonds. If you focus on all other decades in U.S. history, stocks’ and bonds’ returns were largely similar.

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