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Loans That Looked Great Two Weeks Ago Don’t Look Great Today, They All Just Evaporated

Two reports from the Wall Street Journal. “Several investment funds focused on mortgage investments are examining assets sales, and at least one is struggling to meet margin calls from lenders. Over the weekend, hedge funds, insurance companies and private-equity firms examined AG Mortgage’s holdings, according to people close to the matter. The firm’s market capital, above $700 million before the coronavirus crisis, is down to $92 million. Two Harbors Investment Corp., which has about $1.2 billion in market cap, said last week that it was focused on raising liquidity and reducing leverage. It also delayed an announcement about its first-quarter dividend.”

“AlphaCentric, a fund company, said in a statement that its Income Opportunities Fund is looking to raise cash by selling assets, ‘as investors react to coronavirus fears by fleeing chaotic markets and seeking safe havens in cash.'”

“The market for issuing securities backed by commercial mortgages has frozen up, leaving some of the biggest names on Wall Street stuck with billions of dollars of loans that are rapidly deteriorating in value. The volume of new loans and demand for commercial mortgage securities in the secondary market have fallen sharply. The spread between the most highly rated securities and Treasury bonds widened to 3.29 percentage points late last week, from 0.86 percentage point at the end of January. That was the widest level since the 2008 global financial crisis, according to Trepp LLC.”

“Loans ‘that looked great two weeks ago don’t look great today,’ said Willie Walker, chief executive of Bethesda, Md.-based real-estate finance firm Walker & Dunlop Inc. ‘They all just evaporated.'”

From Bloomberg. “Invesco Mortgage Capital Inc., a real estate investment trust that invests in mortgage-backed securities, is no longer able to fund margin calls. The company said in a statement Tuesday it couldn’t meet calls received the previous day and probably won’t meet additional expected calls in the near term. It’s negotiating forbearance agreements with its financing counterparties, according to the statement. The news sent Invesco’s shares plummeting in early trading.”

“The coronavirus is wreaking havoc in the $16 trillion U.S. mortgage market, which is suffering its worst turmoil in more than a decade. Firms that invest in mortgage-backed securities face margin calls and sinking valuations, forcing them to solicit offers on billions in assets in emergency sales.”

The Coeur d’Alene Press in Idaho. “When Rich Dussell was asked to comment on the current condition of the local housing market, the Windermere Realtor gave an exhausted chuckle of surrender. ‘What housing market?’ he replied.”

The Tampa Bay Times in Florida. “‘We’re seeing purchasing money kind of hold off due to uncertainty,’ said David Singer, a Shumaker, Loop & Kendrick attorney in Tampa who works with home buyers who need zoning and variance approvals. ‘People are less likely to speed forward into a transaction even though there is supply on the market.’ In St. Petersburg, mortgage loan officer Jeff Crain likewise said ‘there’s definitely been some slowdown in the housing market.'”

“‘We’ve had a couple of contracts — not a lot, but a couple ― (where) clients decided not to move forward, really for no other reason than the uncertainty that’s going on,’ said Crain. ‘I’ve had some clients who have been pre-approved to purchase that have decided that they’re not going to look to buy at this time again due to the uncertainty with the economy and the market.'”

The American Statesman in Texas. “Amid the global coronavirus crisis, homebuilding is continuing in Central Texas, but at a significantly slower pace to observe social distancing and other public health policies, some builders say. ‘Obviously things are slowing down dramatically and it (homebuilding) may come to a screeching halt, but we don’t know,’ said Joe Fowler, president of the Home Builders Association of Greater Austin.”

From Click 2 Houston in Texas. “One of those selling is Scott Miller, who said, ‘Everyday that goes by, the more dust it collects.’ Miller told Channel 2 Investigates he recently put his investment property on the market. However, the coronavirus is already having an impact. ‘It’s been a little slow getting buyers out to walk the house and see if they’re interested in it,’ Miller said.”

The Downey Patriot in California. “‘Be mentally prepared for surprises.’ That’s the advice from Downey Realtor John Lacey, and it applies to the pandemic as well as to the economic upheaval looming ahead. Will there be great bargains to pick up for a song? ‘From a buyer’s point of view,’ said John, ‘certainly look to purchase if you have the financial means to weather an extended recovery. Also look for so- called bargains if they fit your portfolio.’ ‘From a seller’s point of view,’ John said, ‘be prepared for a slowdown in activity. Wait if you do not have to sell today. Be prepared for lower offers.'”

The Times of San Diego in California. “Social distancing may be good for public health these days, but it isn’t good for the California economy. ‘I don’t even want to think about the impact on the pension funds,’ said Brad Williams, a veteran budget analyst and partner at Capitol Matrix Consulting. ‘We know that pensions were underfunded going into this, and…once you get behind, it’s hard to claw back, so we really need a bounce back in markets to avoid pretty dire circumstances.'”

“The best-case scenario, said Chris Thornberg, founding partner of the consulting firm Beacon Economics, is that social distancing measures will have their desired effect and slow the spread of the virus. In that relatively rosy picture, there is a sharp, but short-term, decline in retail and restaurant spending. But soon the public health emergency abates and economic activity revs back up within a few months. It’s what some analysts call a ‘V-Shaped’ recession — down and then up again. ‘If we have sufficient panic now’ — meaning a coordinated pause of daily financial life — ‘it will be nothing more than a blip,’ he said. ‘For once in my life, I’m espousing panic.'”

“But there are less rosy scenarios. If hundreds of thousands of people are sickened, if prolonged periods of isolation are mandated, if individuals and companies are pushed into bankruptcy in the meantime — or all of the above — ‘then swaths of people get laid off and that’s when it feeds back on itself.'”

From Multi-Housing News. “From the earliest stages of the coronavirus pandemic, the senior housing industry has been perceived as particularly vulnerable. ‘The REIT stocks have been pummeled and the two major publicly-traded operators, their valuations have been severely impacted,’ said Senior Housing Global Advisors’ Principal Mel Gamzon, who has spent four decades in the industry. ‘We believe as an industry it’s a function of market hysteria out there. There’s no panic and we anticipate no panic,’ said Gamzon of the industry. ‘Who is panicking are investors in the publicly-traded companies in this industry.'”

From Bisnow. “Simon Property Group temporarily closed all its U.S. retail centers through March 29, the REIT announced Wednesday. Marriott’s U.S. and European occupancy levels have dropped to below 25% — a situation more dire than the quarter after the 9/11 terrorist attacks, Marriott International CEO Arne Sorenson said. ‘I can tell you hotel owners are right now having conversations with their lenders, and many owners are saying, ‘We’re going to default on interest. If you want to foreclose and kick us out and take the asset, it becomes your problem. Go for it,’ CenterSquare Investment Management Chief Investment Strategist Scott Crowe said.”

From Yahoo Finance. “The risk of mass bankruptcies across the U.S. continues to rise as more companies grapple with the fallout stemming from efforts to battle the spread of coronavirus cases, according to one leading bankruptcy professor. According to data watched by NYU Stern School of Business professor emeritus Ed Altman, bankruptcy and default potential for high-yield companies doubled from 5% to 10% in just a few weeks.”

“‘Today, our numbers are showing a likely default [rate] over the next 12 months of just under 10% that is a huge, unprecedented increase in such a short period of time,’ he told Yahoo Finance. ‘It does signal a crisis in the credit market whenever you get to that 10% level.'”

“Altman, who pioneered his eponymous ‘Altman Z-score’ as a standardized way of measuring any company bankruptcy’s risk nearly 50 years ago, says distress in the corporate debt market has now reached levels that haven’t been seen since the 2008 financial crisis. ”The distress ratio, which is the percentage of companies whose bonds are selling above 10% more than [comparable] Treasuries, has spiked to around 30%,’ he said. ‘That’s incredible. The only time it has ever been higher was in 2008 [in] December when it was around 80%.'”

“But perhaps even more alarming than a distress ratio sitting at highs not seen since the Great Recession, is the speed at which things in the high-yield bond market are unraveling. Altman says it took three months for spreads between high-yield bonds and comparable Treasuries to peak, whereas the same thing has happened now in a mere matter of weeks. ‘In all my years, I’ve never seen a spread or distress ratio change so quickly by so much,’ he said.”

“But as things get worse, Altman points out there is another danger looming in the form of inevitable credit rating downgrades, which could force some investors to shed their holdings if they aren’t allowed to invest in non-investment grade rated debt. ‘My analysis showed using the Z-score method that more than 30% of the BBB’s already look like non-investment grade companies and that the impact would be much greater than this 10%,’ he said. ‘If it was followed by a recession, there’s no question in my mind this would be the worst period for corporate default amounts that we’ve ever seen.'”

“A low interest rate environment had long fueled corporate borrowing. Since the financial crisis, corporations have issued about $1.8 trillion in new bonds globally each year, a rate that was about double issuances over the prior seven years. ‘In other words, there was great big debt balloon that peaked right at the beginning of this year — at probably more than 48% to 49% of GDP for non-financial corporate debt,’ Altman said. ‘We estimate today probably in the high-yield bond market something like $150 billion in corporate defaults, and that’s not even counting the loan market which has also grown dramatically.'”

This Post Has 188 Comments
  1. ‘The market for issuing securities backed by commercial mortgages has frozen up, leaving some of the biggest names on Wall Street stuck with billions of dollars of loans that are rapidly deteriorating in value’

    It’s all fun til somebody loses an eye.

    1. “I can tell you hotel owners are right now having conversations with their lenders, and many owners are saying, ‘We’re going to default on interest. If you want to foreclose and kick us out and take the asset, it becomes your problem. Go for it,’ CenterSquare Investment Management Chief Investment Strategist Scott Crowe said.”

      The only bailout that is needed. When things come back they see where they are, and renegotiate loans. Other businesses renegotiate rents, and those loans get worked out.

      Asset values were too high relative to incomes. When was it decided that powerless individuals could have their lives devastated and be branded as freeloaders for getting food stamps, but paper asset holders can never take a loss?

  2. ‘I can tell you hotel owners are right now having conversations with their lenders, and many owners are saying, ‘We’re going to default on interest. If you want to foreclose and kick us out and take the asset, it becomes your problem. Go for it’

    May 2017
    Which US hotel markets are on the bubble?

    ‘As the hotel industry continues on the path toward a downturn, it’s time to begin looking at warning signs for which markets are poised to experience a large drop.’

    ‘At a recent gathering, I was involved in a group conversation with hotel property investors who agreed that they have been “choking on the numbers” in certain U.S. hotel markets. Stated differently, their spreadsheet models explode once either acquisition prices or development costs are entered to evaluate hotel opportunities, especially in red-hot markets.’

    ‘They asked, “Should we pay such high prices now, given that the boom may turn into a bust?” As a college professor, I offered the standard response: “It depends, what do you think?” As a hotel market forecaster, I promised to think and write about hotel property market bubbles with regard to their questions, and likely those of others, about current pricing in local markets.’

    ‘Boom and bust experiences over the past few decades—with tech stock prices and housing prices, for example—have generated an avalanche of books and articles about short-term, extraordinary asset pricing volatility. A summary of these writings appears as follows.’

  3. ‘I don’t even want to think about the impact on the pension funds…We know that pensions were underfunded going into this’

    Wait til they find out the lux apartments they financed are empty.

    1. Not sure how it’s currently invested, but Colorado’s PERA state worker pension is only about 50% funded (one of the nation’s worst). If the current series of unfortunate events finally push it under there will be no state bailout, as Colorado voters, who are increasingly social liberals, remain tightwads when it comes to approving new taxes to pay for stuff (curse you TABOR!). Retired Colorado cops, fire fighters, teachers and other state workers might be in for a very unpleasant surprise.

      1. “With the markets destroying wealth so quickly, the two shocks we’re seeing globally — the coronavirus and the oil-price war — could morph into a financial crisis,” said Carmen Reinhart, a professor of economics and finance at Harvard’s Kennedy School of Government. “We will see higher default rates and business failures. It could be like the 1930s.”

          1. Well they certainly took their time unwinding extraordinary stimulus measures from the 2007-2009 financial crisis.

            Come to think of it, were they ever unwound?

      2. Aren’t public employee pensions in Colorado protected by the state constitution?

        I find it interesting that the state, county, and local officials ordering draconian business shutdowns don’t have to worry about their gold-plated pensions. Even if tax revenues go off a cliff. Meanwhile, how are 401K’s doing?

          1. Aren’t public employee pensions in Colorado protected by the state constitution?

            This is all I could find:

            From and after the effective date of this article, the basic minimum award payable to those persons qualified to receive an old age pension shall be one hundred dollars monthly

          2. For benefits which are only partially vested, any adverse change must be balanced by a corresponding change of a beneficial nature, a change that is actuarially necessary, or a change that strengthens or improves the pension plan.

            That sounds to me like the plan’s benefits could change (decrease) to keep it solvent.

            If the state constitution guaranteed full payouts, PERA wouldn’t be 50% funded. There have been zero tax increases to help PERA (thanks to TABOR). I have little doubt that if there was to be some Prop to increase taxes to prop up PERA that it would go down in flames.

        1. Teachers generally do have to work until 62++ in order to receive their full pensions. Many safety personnel do not, for obvious reasons. Teachers’ pensions are not lavish, but the safety pensions could be reduced, and retirement ages can be increased in some cases.

        2. The feds have a 401k plan, which you have to contribute to receive a shared contribution, social security for most people I knew before I retired had to wait until 67-yrs old to avoid a 30% reduction. However, the major impediment to early retirement was debt, which it seemed everyone carried. Hello, WTF?!

  4. Could we all agree to just collectively shut our eyes and sleep through this nightmare until it ends?

    1. The Financial Times
      Eurozone economy
      Business activity crashes to record low in US and Europe
      Services and manufacturing surveys illustrate impact of coronavirus on global 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
      © Reuters
      Martin Arnold in Frankfurt, Valentina Romei in London and Brendan Greeley in Washington an hour ago

      Business activity has crashed to record lows in the US and Europe, according to a closely watched survey, as the coronavirus pandemic fuels a global economic crisis, triggering steep declines in manufacturing and services.

      The IHS Markit flash composite purchasing managers’ index has dropped to its lowest reading since the series began in the 1990s in the US, the eurozone and the UK, data published on Tuesday showed.

      The US index fell from 49.6 in February to 40.5 in March, while in the eurozone the index slipped from 51.6 to 31.4, and in the UK it dropped from 53 to 37.1. A reading below 50 indicates the majority of businesses reported a deterioration compared with the previous month.

      The PMIs are the first widely watched measure of the economic impact of the coronavirus crisis to be published since the outbreak escalated across developed economies in late February.

      Torsten Slok, chief economist for Deutsche Bank Securities, said: “We already had a nightmare fear and we wake up and the nightmare is unfortunately real. These numbers are just telling you how incredibly severe and serious this is, for the US and for Europe.

    2. Could we all agree to just collectively shut our eyes and sleep through this nightmare until it ends?

      I’m fascinated by the spectacle of our supposedly robust and strong global economy tanking so quickly. You’d think a lot more people could now see what a fragile edifice of asset bubbles the eCONomy really was.

      In particular, I’m thinking back on all the claims about how the US economy was so great. Yet the gov’t was running a large deficit. Now that there’s some trouble, the gov’t will now run feel compelled to run an enormous deficit.

  5. The Financial Times
    Corporate bonds
    Corporate bonds still strained after unprecedented Fed move
    Debt still weakening despite signs that US central bank has succeeded in boosting confidence
    Joe Rennison in London
    2 hours ago

    Corporate bond prices have continued to drop despite drastic intervention from the Federal Reserve, as investors count the cost of a prolonged shutdown to the global economy while at the same time grappling with dysfunctional trading conditions.

    The additional yield on corporate bonds over Treasuries rose on Monday, reflecting continuing weakness in prices despite an unprecedented announcement from the Fed that it would begin buying higher-rated, investment-grade corporate bonds — a supportive measure that goes beyond even the response to the 2008 financial crisis.

    The spread on investment-grade bonds rose 0.15 percentage points to nearly 4 percentage points above Treasuries, according to an index run by Ice Data Services, extending two weeks of daily increases to corporate borrowing costs, which have risen to their highest level since 2009.

  6. Article about cell phone line cancellations in China:

    “The digitization level is very high in China. People can’t survive without a cell phone. Dealing with the government for pensions and social security, buying train tickets, shopping… no matter what people want to do, they are required to use cell phones.

    “The Chinese regime requires all Chinese use their cell phones to generate a health code. Only with a green health code are Chinese allowed to move in China now.

    “It’s impossible for a person to cancel his cell phone.”


    While explaining the scenario in China, Tang said,”At present, we don’t know the details of the data. If only 10 percent of the cell phone accounts were closed because the users died because of the CCP virus [Novel Coronavirus], the death toll would be two million.”

    1. “It’s impossible for a person to cancel his cell phone.”

      Really? Are they free? What if you went home for New Year and decided not to come back to the city?

      1. Cell phones in China are pay as you go. So once the balance hits 0 RMB you can not reload it. It’s exceptionally easy.

        With that said, all SIM cards are tied to your National ID Number as of a few years ago.

        1. That’s genuinely frightening. I worry that we are heading that way in the U.S. with the rollout of 5G. I fail to see why anyone would want an “internet of things” that can track our every move.

        2. Have a look at Cloud Identity and eSIM technologies, which [are] the here now and will be your children’s future.

    2. My direct contact with coworkers in china does not confirm any of this. No doubt that it was very bad but not to the extent this article implies.

    3. If only 10 percent of the cell phone accounts were closed because the users died…the death toll would be two million.”

      Unless my math or my reading comprehension is faulty, that implies there were only 20 million cell phones in China.

      The article claims cell phones are necessary for daily life. There are a lot more than 20 million adults in the country.

      1. Unless my math

        May I suggest that 2 million dead Chinese is the wild guess of 10% of the closed accounts, not the still open ones.

  7. investment funds focused on mortgage investments are examining assets sales, and at least one is struggling to meet margin calls from lenders

    investment funds = guys gambling with borrowed money

    1. Faulty lending bites another debt ridden owner.

      You know, when they use to practice good lending, people were just so much happier. It was like the parent saying ,”no, it’s for your own good.”

      These crazy ideas that you have a right to this or that has been one of the
      most destructive modern trends..

      People think they have the right to stuff, earned or not.

      People in general are getting stressed out by the rigged and corrupted systems that wrongfully has encouraged people to become debt slaves, or over consume.

      1. “..has encouraged people to become debt slaves, or over consume…”

        People buying things they don’t need, with money they don’t have, to impress people they don’t know.

        Yet everyone seems to act so surprised with that big roll of dried out rubber bands explodes in their faces.

      2. People buying things they don’t need, with money they don’t have, to impress people they don’t know.

        I wonder how many people, when they see me driving my 7 year old car that according to Kelly Blue Book is worth $5-6K, think I’m some poor loser.

    2. “investment funds = guys gambling with borrowed money”

      Deleveraging was also a big problem in the Great Crash of 1929.

  8. !I hope QuickenLoans doesn’t get a bailout, they granted these ridiculous loans and drove up housing prices, eat your losses. Maxine Waters can have a bite herself.

    Mortgage Firms Brace for Wave of Missed Payments as Coronavirus Slams Homeowners

    Quicken and Mr. Cooper are on the hook for principal and interest even if homeowners are in arrears

    By Andrew Ackerman
    March 23, 2020 10:44 pm ET
    WASHINGTON—Mortgage companies are bracing for a severe cash crunch when Americans who lose jobs and income because of the coronavirus pandemic stop making payments on their home loans.

    The companies, such as Quicken Loans Inc. and Mr. Cooper Group Inc., expect a wave of missed payments from borrowers as early as next month that will force them to come up with tens of billions of dollars on short notice.

    “It’s going to be a liquidity tsunami,” said Jay Bray, chief executive of Mr. Cooper, one of the biggest such companies, which process mortgage payments on behalf of investors.

    The mortgage firms are on the hook to continue paying principal and interest on the mortgages they service even if homeowners are in arrears. They are lobbying Congress and the Trump administration to establish a lending facility to help finance the billions of dollars of payments they will be obligated to make.

    Such a facility would ensure that millions of Americans could obtain “forbearance” agreements allowing them to miss some mortgage payments and make them up at a later date.

    “You can’t have that forbearance without a means to pay for it,” said Mike Calhoun, president of the Center for Responsible Lending.

    The facility has the backing of at least some of the top lawmakers who are helping to craft a massive federal stimulus package in response to the pandemic, including California Democrat Maxine Waters, who heads the House Financial Services Committee. Still, it was unclear if the measure would gain traction in the Senate.

    1. We knew this was coming years ago:

      May 25, 2018

      “In his corner of American finance, where hard selling meets hard luck, Angelo Christian is a star. Each time Christian sells a home loan, the company he works for, American Financial Network Inc., takes as much as 5 percent. Many of Christian’s customers have no savings, poor credit, or low income—sometimes all three. Some are like Joseph Taylor, a corrections officer who saw Christian’s roadside billboard touting zero-down mortgages. Taylor had recently filed for bankruptcy because of his $25,000 in credit card debt. But he just bought his first home for $120,000 with a zero-down loan from Christian’s company. Monthly debt payments now eat up half his take-home pay. ‘If he can help me, he can help anyone,’ Taylor says. ‘My credit history was just horrible.’”

      “Christian can do this kind of deal because he is, in effect, making the loan on behalf of the federal government through its most important affordable housing program. It’s a sweet deal: He gets his nearly risk-free commission. Taylor puts no money down. If things go south, the government ultimately bears the risk. Many borrowers ‘are living paycheck to paycheck and, if they lose their jobs, they go into default immediately,’ says John Burns, a housing consultant.”

      1. ‘If things go south’

        One thing I’ve learned as a landlord is, eventually things go south. I’m sure lenders are aware of this. Even the FHA has been warning about these non-banks outfits, and FHA is subprime central.

        1. Blah, blah, blah … “Thee.Orange.jesus” has a ca$t to all an “UNLIMITED” … Fea$t.of.Miracle$!

          (He who $uffer$.lea$t, $uffer$.be$t!)

      2. We knew this was coming years ago:

        No, Ben. No one could’ve seen this coming. Every pundit said so.

      3. Re could see this coming –

        Don’t forget Sanjiv Das’s Marketwatch editorial outlining exactly the risks and bailout strategy of the shadow banks:

        “Here is how the financing works: non-banks originate loans and then sell them to other entities such as Freddie Mac and Fannie Mae, which pay nonbanks an ongoing fee to service the loan. The lifetime value of this fee is an asset known as a mortgage servicing right or MSR. Non-banks use MSRs as collateral, so that they can borrow money from banks to use as working capital…. If the value of this collateral drops, it will also be difficult for the underperforming non-banks to obtain financing… these institutions are likely to be in a tough situation if liquidity dries up.”

        Bailout solutions:
        “2.FHLBs should adopt a special provision so that non-banks can access stable and countercyclical sources of funding when capital is difficult to obtain elsewhere.”

        “3.GSEs could provide direct loans to non-banks to help these firms meet their short-term commitments.”

    2. I was under the impression that Quicken Loans would immediately sell its new mortgages to Freddie and Fannie.

      1. The GSE’s guarantee the MBS (for the most part), they are sold on the market to outfits like the ones that are blowing up.

    3. “The mortgage firms are on the hook to continue paying principal and interest on the mortgages they service even if homeowners are in arrears.“

      Really long post, thinking out loud here –

      The above answers a question I asked a few months ago (12/30/19) about the sudden (pre-coronavirus) rise in foreclosures actually going to auction. Ben had noted that often the foreclosing party at the auctions he attended was the servicer. I asked, “Could this be evidence of a cash crunch at the shadow banks?”

      And as we know from a post on 1/29/19, “If homeowners default on their mortgages, these nonbanks are on the hook to continue advancing payments to investors, tax authorities and insurers until they are repaid by the government.”

      So I think this does explain why servicers were suddenly foreclosing starting around the end of 2019, whereas real banks and owners of the loans would prefer to let the foreclosure linger for years – the losses were mounting at servicers/shadow banks, before the virus.

      The losses may have been outpacing originations for a couple of years. Das says in the Marketwatch editorial that “Some 40% of non-banks didn’t turn a profit in 2018.” How can they not turn a profit selling loans to the GSEs? Perhaps by paying out more in servicing payouts on defaulted loans.

      And we know the non-banks’ funding comes from lines of credit. How long until the real banks pull the lines of credit, if they haven’t already? So now, as Das foreshadowed, the non-banks are lobbying for loans from the GSEs, to pay investors as part of their servicing contract, the payments of which are guaranteed by the GSEs. Yeash.

      Long way of saying: the non-banks are going down, the gov’t guarantees are worthless, and the real banks have probably been funding these servicing payouts for a couple of years, putting them right back on the same hook that the whole non-bank enterprise was supposed to protect them from. Just my opinion.

    1. All this gold talk, I’m surprised Bill hasn’t come back to talk about it even though he sees “school marms” behind every tree trying to question his tax status.

      1. I believe Bill was banned on Election Day. I think “school marm” Polly left on her own. AQ Dan comes and goes, possibly forced.

  9. “Several investment funds focused on mortgage investments are examining assets sales, and at least one is struggling to meet margin calls from lenders.

    It’s going to be a lot more than several as the Fed’s Everything Bubble implodes.

    1. Do you remember that web site that tracked the gradual collapse of the subprime mortgage lending industry beginning in 2007?

      I wonder if something like that might be out there this time around to document the inexorable collapse of the overleveraged subprime mortgage investment firms?

  10. “The market for issuing securities backed by commercial mortgages has frozen up, leaving some of the biggest names on Wall Street stuck with billions of dollars of loans that are rapidly deteriorating in value.

    Even before coronavirus reared its ugly head, the Fed was forced to start pumping tens of billions of Powell Bux a day into the repo markets because interbank lending had locked up – because the banks all know the collateral being offered to secure those loans was toxic waste crap. Of course said crap is being offloaded on the Fed at par, while the banks and corporations binge on new FedBux “stimulus.” What a racket.

  11. Firms that invest in mortgage-backed securities face margin calls and sinking valuations, forcing them to solicit offers on billions in assets in emergency sales.”

    Um, those “billions in assets” might be worth quite a bit less than “billions” at this point. What they’re actually worth is anyone’s guess, which is right where we were when Housing Bubble 1.0 blew up.

  12. “‘We’ve had a couple of contracts — not a lot, but a couple ― (where) clients decided not to move forward, really for no other reason than the uncertainty that’s going on,’ said Crain.

    That, and a desire to avoid the brutal schlonging that awaited any fool who buys into a bursting housing bubble.

  13. ‘I don’t even want to think about the impact on the pension funds,’ said Brad Williams, a veteran budget analyst and partner at Capitol Matrix Consulting.

    Poetic justice that Boomers who voted for crony capitalism and deeply corrupt Republicrat duopoly globalist minions who enabled the Wall Street-Federal Reserve Looting Syndicate’s unfettered looting of the 99% are now going to be bilked out of their pensions.

    1. This so-faux rally – algos reacting to the Fed’s QE-to-Infinity – is going to get crushed under the weight of the ongoing deleveraging and margin calls, with cascading defaults coming on like an avalanche.

      1. It’s a pretty ginormous debt cat bounce. Hopefully for the dips buyers, it won’t turn out to have merely been the cresting of a massive volatility wave which is soon to trough.

        1. Markets
          Stock futures slip following a historic rebound as massive stimulus deal nears
          Published Tue, Mar 24 2020 6:04 PM EDT
          Updated 7 min ago
          Yun Li

          Stock futures were lower in overnight trading, following Tuesday’s historic rally, as investors awaited an unprecedented stimulus package to combat the economic impact of the coronavirus.

          As of 8:52 p.m. ET, futures on the Dow Jones Industrial Average fell 117 points, pointing to a decline of around 94 points at the Wednesday open. S&P 500 futures and Nasdaq-100 futures also pointed to declines for the two indexes at the open on Wednesday.

      2. Have we just seen the tip of the iceberg…like when Bear Stearns blew up in March 2008, six months before everything else went “kablooey”?

        I would guess that there are more shoes soon to drop.

        March 24, 2020 02:05 PM updated 12 hours ago
        Two REITs can’t meet margin calls
        Aaron Elstein

        Real estate investment trust Invesco Mortgage Capital was unable to meet a margin call from lenders, the latest sign of distress in a commercial real estate world filled with rapidly emptying buildings.

        Margin calls take place when the collateral used to secure a loan drops in value and the bank demands more cash. If the borrower can’t meet the call, liquidation can be the next step.

        On Tuesday, Atlanta-based Invesco Mortgage said it had been unable to satisfy a margin call yesterday afternoon and would be unable to do so in the future due to the coronavirus outbreak.

        “The company cannot predict whether its financing counterparties will enter into a forbearance agreement,” said Invesco Mortgage, which invests in mortgages for offices, retailers and hotels.

        New York-based AG Mortgage Investment Trust was late settling a margin call last Friday and will be unable to meet future margin calls, the company disclosed yesterday.

        Earlier this week real estate investor Tom Barrack warned of a “domino effect” of margin calls and defaults roiling commercial real estate, as hotels and casinos close and office towers are vacated.

        The Federal Reserve has offered to soak up small-business loans, corporate and municipal bonds and other kinds of debt to help banks remain solvent. It hasn’t taken any steps, at least so far, to buy commercial mortgages or related securities. Doing so could be difficult politically, and not just because of President Donald Trump’s personal exposure to real estate.

        “If you rescue commercial real estate, that’s like handing money over directly to firms like Blackstone,” said a Wall Street analyst, referring to the giant private equity investment firm and real estate owner.

        REITs like Invesco Mortgage and AG are popular with individual investors who like their hefty dividends. When dividends at REITs are called into question, their shares tank. Invesco Mortgage’s stock lost more than half its value today.

    2. “Earning$” … Now & x_X month$ from Now.

      You too can find “UNLIMITED.Benefit$”

      iffin’$ you find$ a “patch” that i$ barren of $$$$$$$$$$$$$, plea$e let Hwy know,$ in advance.

  14. The Financial Times
    New York rushes to prepare for looming coronavirus ‘apex’
    Governor details critical shortfalls as cases surge in state at the epicentre of US outbreak
    A man wearing a face mask walks dogs on March 24, 2020 in New York City. – US lawmakers closed in on a deal Tuesday to help save the teetering economy by injecting nearly $2 trillion into pockets of struggling Americans, devastated businesses and hospitals struggling to contain the coronavirus pandemic. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images)
    All of New York has been put on ‘pause’ in hopes of slowing the spread of the coronavirus outbreak
    © AFP via Getty Images
    Joshua Chaffin in New York an hour ago

    The coronavirus outbreak is accelerating across New York in spite of dramatic curbs on daily life that were supposed to slow it, the state’s governor announced, as he warned the virus would hit harder and sooner than anticipated.

    A pandemic that had been rumbling like a freight train was now speeding “like a bullet train,” said Andrew Cuomo, New York’s governor, who detailed huge shortfalls in the state’s supply of hospital beds, ventilators and other vital equipment to deal with the crisis.

    “The rate of infection is going up. It is spiking. The apex is higher than we thought. And the apex is coming sooner than we thought,” Mr Cuomo said at a press briefing on Tuesday at a New York City convention centre that was being converted into an emergency hospital. New York, he said, had “exhausted every option.”

    1. Thankfully, most Americans who will be on lockdown have ample cash reserves to ride out the pandemic, thanks to Fed policies that rewarded savers by assuring them of interest rates higher than inflation, and monetary policies that discouraged speculation. In addition, wage growth since the 1970s ensured most American households had absorbed the civic virtues taught by our public education system, and had put away money for a rainy day, while avoiding going into debt for houses, cars, etc. that they couldn’t afford.

      Oh, wait….

      1. You’ve had plentie$ of time, to hedge.yer.lo$$e$.

        Pi$$in’ & cryin’ & moanin’ ’bout$ it$ now, i$ kinda a wa$te of yer vital energie$. (imhto)

    2. The rate of infection is going up.

      With this comes some good news. As of this morning NYC has 16,788 cases and 199 deaths. That makes the fatality rate around 0.01. YMMV.

      1. Tested cases. There could be many magnitudes of mild or asymptomatic illness not included which would make the fatality rate even lower.

    1. I have been thinking and thinking, “what is the middle game for this pandemic?” We know the beginning: lies, incompetence, and lockdowns. We know the end: a vaccine followed by billions of unemployed dancing in the streets of a Depression.

      But the middle game… are we going pause life for a year? Even if we had unlimited money and 2 years of food, mentally I don’t think we could do it, nor do I think the infrastructure can survive a mothballing like that. Are we going to let everybody loose and devil take the hindmost? How about locking down the olds with colds, let out the youngs with lungs, and take the small hit from the death rate? Ramp up masks and at least try to conduct normal business while flattening the curve? The last seems like the best of the bad ideas.

        1. Until the farmers and truckers and doctors and nurses and garbage collectors and plumbers won’t take dollars any more.

  15. 1) Up to a few weeks ago, there was tremendous leverage and moral hazard built into the system. The Fed Put and related backstops appeared to removed risk from the casino in the eyes of the gamblers.

    2) There were some paper profits for many, but a lot of that has now vaporized; gone to “money heaven” (RIP), but the debt and leverage still remains. Just think about how many times you’ve heard the phrase “margin calls” recently vs. just about anytime prior to.

    3) The Fed plan appears to be a repeat of its response to the GFC, only with about 1 order of magnitude larger amounts of printed $.

    4) Is it different this time?

    “We’re essentially continuing a system where profits are privatized and…losses socialized,” – Nouriel Roubini

    I can’t see any real changes, only in increased scope and magnitude of the bailouts. Fed gave itself authority to buy commercial paper, including ETFs. Next stop equities. Just remember that these aren’t markets anymore.

    5) Recall that the Fed, Government, and our crony-capitalist system has given us three (count them, three!) major financial dislocations in the first 20 years of this 21st century. The people in charge are still in charge. They only have one play book. The system was never purged of excesses. It’s not being purged now; only printing larger amounts of $ to attempt to paper over the issues for the third time. Does anyone else understand the root cause and what the solution that’s needed is? Apparently not yet anyway.

    6) Planned bailouts for Wall St.: Literally $T’s now (what’s a few more zeros when you have an electronic $ printing press) vs. planned bailouts for Main St.: $1K/person. Woohoo!

    7) Congress, Dodd-Frank, Senator Running Deer, and the CFPB all have your best interest in mind, so “no worries”. Hakuna matata.

    “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’ ”- Ronald Reagan – 40th president of US (1911 – 2004)  

    1. The central bankers are drunk on their own image and power. This is their “rock star” moment.

    2. 5) Recall that the Fed, Government, and our crony-capitali$t $ystem has given us three (count them, three!) major financial di$locations in the first 20 years of this 21$t century.

      How do you $pill China in x3 letter$?


    3. “The nine most terrifying words in the English language are, ”

      “There will be a “UNLIMITED” Miracle$ very $oon, promi$e!”
      By thee “Orange.jesus”, 45th 👑 of U$A

  16. It’s a most inconvenient time to be abroad.

    The Financial Times
    US and UK scramble to arrange flights for stranded citizens
    Thousands affected as many flights cancelled and airports closed because of coronavirus pandemic
    Mandatory Credit: Photo by JAVIER FUENTES/EPA-EFE/Shutterstock (10589470b)
    Thousand of tourists wait to board their flights to return to their home countries at the Cesar Manrique-Lanzarote Airport in Arrecife, Canary Islands, Spain, 20 March 2020. Spain faces the sixth day of national lockdown in an effort to slow down the spread of the ongoing pandemic of the COVID-19 disease caused by the SARS-CoV-2 coronavirus. According to the latest figures provided by the health ministry, there are at least 19,980 confirmed coronavirus infections throughout Spain, while 1,002 people have died so far in the Mediterranean country. Coronavirus in Spain, Arrecife – 20 Mar 2020
    The US state department is arranging 16 flights from around the globe to take 1,600 US citizens back in the next five days
    © Javier Fuentes/EPA-EFE/Shutterstock
    Laura Hughes and David Pilling in London and Katrina Manson in Washington
    2 hours ago

    British and US nationals travelling overseas are struggling to return home as airlines suspend flights and airports close with little notice in an attempt to slow the spread of the coronavirus pandemic.

    The UK Foreign Office (FCO) on Monday advised all British tourists to return to the UK, where commercial flights are available. However, travellers have warned flights are either not available, routed through airports expected to close, or in some cases priced at tens of thousands of pounds.

    Caroline Nokes, a former Cabinet minister, on Tuesday warned British nationals were facing a “dire” situation and in some cases “no routes home”. Government officials said repatriation flights would only be organised in “exceptional circumstances”.

  17. Tuesday, March 24, 2020

    A Utah man recently released from a halfway house early over concerns of a COVID-19 spread forcibly broke into a woman’s home and attempted to rob her at knifepoint, threatening to kill her if she didn’t cooperate, police said.

    According to the arrest affidavit, Joshua Haskell, 42, committed the alleged crime only days after being released from Utah State Prison, where he was incarcerated for violating parole. He had been sent to a halfway house as a part of the Parole Violation Program but “due to the current COVID-19 pandemic, he was suddenly released” on March 17, two days before the break-in.

    Haskell entered the home while the woman was sleeping, and she told police that she woke to the noise from him climbing the stairs. Before she could react, Haskell was in her room holding a knife “raised toward his head with the knife pointing down.”

    “The victim began screaming and yelling, at which point the male told her to be quiet or he was going to cut her head off,” according to the affidavit.

    Haskell then tied her up and demanded that she give him her car, cash, bank cards, and PIN numbers, allegedly threatening to return and kill her if she gave him the wrong numbers.

    The woman’s son, who was also in the house, heard her screams and called 911. When officers arrived, Haskell got into bed with the woman and ordered her to tell them that he was her “lover.” But when he adjusted the sheets, she “ran downstairs to officers in a panicked and horrified manner,” police wrote.

    Officers then arrested Haskell at gunpoint.

    After warnings from experts that COVID-19 could “wreak havoc” on the prisons in the United States, several states and counties have been implementing early release strategies to prevent the spread of the disease.

    Critics of the jailbreak have argued that releasing criminals back onto the streets during the pandemic will not make communities safer but will put the public more at risk — especially as law enforcement simultaneously loosens its grip.

    1. “Officers then arrested Haskell at gunpoint.”

      Whata bunch of police ❄ … different result would’ve resulted in Florida & Texas & Missouri & …

  18. Kudlow: $timulu$ = “$6+ Trillion$”

    aq.dannyboy’$ “depend$” ha$ quite a load in the pipeline$!

  19. Gov. Kate Brown Issues Order Directing Oregonians To ‘Stay Home’
    by Dirk VanderHart Follow OPB March 23, 2020 10:30 a.m. | Updated: March 24, 2020 7:02 a.m.

    Days after saying she wouldn’t order Oregonians largely to remain at home to slow the spread of the coronavirus, Gov. Kate Brown did just that Monday.

    Bowing to increasing pressure from health care workers and public officials, the governor issued an executive order directing Oregonians to stay home “to the maximum extent possible,” except for when carrying out essential tasks like getting groceries, refueling their vehicles, or obtaining health care.

    “I asked and urged Oregonians to stay home,” Brown said in a conference call with reporters, following a weekend where Oregonians mobbed the coast and other areas. “On Friday night, I frankly directed them to stay home. And now I am ordering them to stay home.”

    1. “following a weekend where Oregonians mobbed the coast”

      As I mentioned yesterday. Idjits think this is PTO.

  20. Dominoes gonna domino down.

    Gov. Inslee issues ‘stay at home’ proclamation for Washington state
    By MyNorthwest Staff
    March 24, 2020 at 6:56 am
    Gov. Inslee address Washington state residents on Monday, March 23, 2020. (TVW screengrab)

    Gov. Inslee has signed a statewide proclamation for all Washingtonians to stay at home for the next two weeks. This order is similar to what we’ve seen in California.

    Inslee was clear to point out that it’s not the same as a “shelter in place” order. You’re still allowed to go outside, to the grocery store, and to do other essential business.

    “The less time you spend out in public, the more lives we can save,” Inslee said.

        1. Nevada is still below 300 cases, yet we’ve had a statewide lockdown-like order in place for a week.

          1. Yeah, if things get bad I’ll need to make a quick run through Nevada. I promise not to touch anything but gas pump handles.

    1. “Inslee was clear to point out that it’s not the same as a “shelter in place” order. You’re still allowed to go outside, to the grocery store, and to do other essential business.”

      This is where it gets silly, IMO, and people are getting confused. Isn’t the same language – still allowed to go outside, to the grocery store, and to do other essential business – used independent of whether it’s shelter-in-place, lock down, etc?

  21. I’m in Boise and get notifications from Redfin all I can say is “Holy ‘Back on the Market’ Batman.”

  22. Thee.Ea$ter.bunny (sean.spicer?) Cometh!, … “door.knob.death.germ$” vanqui$hed.deadline$ has been proclaimed!

    eye’$ like$ that date, April 12th, that’$ a, eye’$ got a “gut” feeling$, ya that’$ the day it end$.

    Hark, thee.🍊.jesus $peaketh!

  23. Fox News Flash
    Published 6 hours ago
    Last Update 5 hours ago
    Trump on House Dems’ coronavirus relief bill: ‘No way I’m signing that deal’ with ‘Green New Deal stuff’
    By Joshua Nelson | Fox News
    President Trump provides insight to the coronavirus stimulus package saying he canceled the deal because of what Nancy Pelosi attempted to put in the package

    President Trump said Tuesday that he would not support an emergency coronavirus response bill pitched by House Democrats earlier this week.

    “Nancy Pelosi came and put a lot of things in the deal that had nothing to do with workers — that had to do with an agenda that they have been trying to get passed for 10 years,” Trump told Fox News in a special “Virtual Town Hall.”

    “I came in, I told Mike [Pence], I told a lot of people, ‘There is no way I am signing that deal,” the president added.

    Trump said Senate Minority Leader Chuck Schumer, D-N.Y., and Majority Leader Mitch McConnell, R-Ky., had almost reached an agreement on the response bill over the weekend before Democrats suddenly injected the “Green New Deal” into the mix.

    1. From the article:

      “The House Democratic proposal does not contain the “Green New Deal,” as Trump’s tweet suggested, but it does call for airlines that take federal aid to reduce their overall carbon emissions by 50 percent by 2050.

      The bill also contains provisions to eliminate debt held by the U.S. Postal Service, require same-day voter registration, pay off $10,000 in student debt per person, and force federal agencies to explain to Congress how they are increasing their usage of “minority banks.””

      I lived like a near-pauper to pay off my student loans. Where is my $10,000?

      1. “…but it does call for airlines that take federal aid to reduce their overall carbon emissions by 50 percent by 2050.”

        Sounds crazily Democratic. But thirty years is plenty of time to scrap this provision in case physical and economic reality don’t comply.

        1. reduce their overall carbon emissions by 50 percent by 2050

          And convenient too. By the time 2050 rolls around, many Dems currently serving in Congress will be either retired or dead.

          1. They have already achieved this in the past few weeks.

            Enacting a 100+% ticket tax could make it permanent.

            What is interesting is that we don’t have ultrabudget carriers like Ryanair or EasyJet in the US. Compared to what they charge, even US carriers like Frontier or Spirit are expensive, yet even with higher prices our skies were full. Maybe it will take a 300% tax.

    2. Coronavirus bumped Saint Greta out of the Narrative for now, but global warmism will not stop. Warmists gonna warm.

      1. They’re trying to keep a line in the water.

        Climate Change Push Fuels Split On Coronavirus Stimulus
        March 24, 2020 5:00 AM ET
        Jeff Brady
        Clean energy advocates say economic disruption over the Covid-19 pandemic threatens tens of thousands of jobs and billions of dollars of investment in wind and solar. Above, wind turbines in Warsaw, N.Y.
        Julie Jacobson/AP

        Clean energy and climate advocates say the huge stimulus bill Congress is negotiating should address not only the economy, but also climate change. But a split over that appears to have contributed to delays in passing the bill.

        “Democrats won’t let us fund hospitals or save small businesses unless they get to dust off the Green New Deal,” Senate Majority Leader Mitch McConnell said Monday.

        McConnell said Democrats were filibustering the $1 trillion-plus bill hoping to include policies such as extending tax credits for solar and wind energy.

        1. Moscow Mitch knows only repubican$ can bee tru$ted with “UNLIMITED” U$ taxpayer$ monie$. How much exactly is: “UNLIMITED” ?

  24. The Financial Times
    Chevron Corp
    Chevron announces spending cuts and halts buyback programme
    US oil group says capex will fall by $4bn, with Permian shale operations hardest hit
    FILE PHOTO: Chevron oil exploration drilling site near Midland, Texas, U.S. August 22, 2019. REUTERS/Jessica Lutz/File Photo
    Suspension of the $5bn annual share buybacks comes after Chevron had already completed $1.8bn worth of repurchases in the first quarter of the year © Reuters
    Derek Brower 7 hours ago

    US oil group Chevron is to make sweeping cuts to its spending plans for this year and will abandon its $5bn share-buyback programme, saying the move would protect its dividend in the face of collapsing oil prices and the coronavirus hit to global crude demand.

    Capex would fall by $4bn, or 20 per cent compared with last year, to $16bn, with half the cuts to fall in the Permian shale, the company said. On an annual run-rate basis, the cuts in upstream spending imposed now will equate to a 30 per cent drop compared with the budget announced in December 2019.

    Chevron said it would “continue to execute” plans to reduce operating costs by more than $1bn by the end of the year.

  25. Dumb question of the day:

    Do monies that companies borrowed and used to buy back their own shares have to be repaid?

    1. HomeStreet suspends $27M stock buyback plan during coronavirus crisis
      March 24, 2020 at 12:28 pm Updated March 24, 2020 at 2:03 pm
      By Seattle Times business staff
      HomeStreet Bank’s parent company has suspended plans to spend about $27 million on stock buybacks, following in the footsteps of the nation’s eight largest banks as lenders turn to cushioning their balance sheets and keeping cash on hand for borrowers during the coronavirus crisis.

    2. Telecom
      AT&T Gets 2 Downgrades After the Company Suspends Its Stock Buyback
      By Nicholas Jasinski
      March 23, 2020 1:54 pm ET
      AT&T stock is down 6% in Monday trading after two Wall Street analysts lowered their ratings on the telecom and media giant’s shares. On Friday, AT&T suspended its stock buyback program, citing a desire to maintain financial flexibility and invest in upgrading its network to 5G. The stock dropped almost 9% on Friday and is down 31% since Feb. 19, while the S&P 500 has lost 32%.

    3. Suddenly everyone thinks these highly-leveraged stock buybacks are a bad idea.

      Politicians Want Clampdown on Stock Buybacks. What That Means for Investors.
      By Andrew Bary
      Updated March 22, 2020 5:37 pm ET / Original March 22, 2020 4:29 pm ET

      After more than $2 trillion of stock buybacks among members in the S&P 500 index from 2017 through 2019, companies are starting to turn off repurchase programs to build cash.

      The moves reflect the effects of a sharply weakening economy as entire sectors essentially shut down in response to the pandemic. But it is also becoming politically perilous maintain those programs.

      1. I’ve been wondering if a lot of them have been hearing from constituents calling for there to be no stimulus to companies who participated in buybacks.

  26. Vegas 200 new listings in past two days. 36 new listings in last 36 hours. Still a problem with lack of inventory Diana?

    1. There are plenty of all-cash Chinese investors chomping at the bit to snap up San Diego listings as soon as they go on the market.

    2. I’m seeing over 200, At least from oceanside down to chula vista. Beer flu + economy tanking = housing ebola! Brown stained pants will be worn by many RE specuvestors in the coming days

      1. My wife and I took a walk around our neighborhood tonight, in observance of California Stay Home orders forbidding us from taking a walk in a park.

        We were surprised to see two For Sale signs out front out of maybe 200 homes we passed along the way. It seems like the worst time maybe ever in the history of real estate to try to sell.

        1. in observance of California Stay Home orders

          Took a long and pretty drive yesterday afternoon out Highland Valley Rd and back the 67. Built a campfire in our front yard after dinner and made s’mores. Kid was super happy and also had fun playing in the dark with a flashlight.

          1. That sounds beautiful. Did you get out of the car during your drive? We are staying close to home, which luckily is a beautiful area (circa Black Mountain).

          2. We stay in the car listening to a Frozen soundtrack. Everything out by Ramona Grasslands Preserve is so green right now with all the rain we’ve had. We love Hilltop Park in Penasquitos but parks are definitely no-go zones for the time being. We had to brush off the dilapidated play structure that came with our rental so our son could swing and get his necessary sensory input.

  27. Oh my…

    Nearly 20,000 students at five San Diego universities move out of campus housing due to coronavirus
    More than half of UC San Diego’s 14,000-plus residential students have moved out of campus housing due to coronavirus, and more will leave by March 29.
    (Gary Robbins / The San Diego Union-Tribune)
    The figure is expected to rise further this week.
    By Gary Robbins
    March 23, 2020
    11:49 AM

    San Diego County’s five major universities have quickly managed to move roughly 20,000 students out of campus housing to help minimize the spread of the coronavirus. And the number is expected to make a significant jump by the end of the week. Here’s a look at how the situation stood on Monday.

    UC San Diego announced late Monday that an unidentified student who has been living in campus housing has tested positive for the coronavirus.

    “The student resident has self-isolated while receiving care,” UCSD said in a campus alert. “We are working closely with San Diego County Public Health officials and are following their guidance on notification to individuals with recent close contact.”

    1. World News
      March 24, 2020 / 3:36 AM / Updated 9 hours ago
      Italian coronavirus deaths jump, dashing hopes that worst was over
      Crispian Balmer, Angelo Amante

      ROME (Reuters) – Fatalities in Italy from coronavirus have surged in the last 24 hours, the Civil Protection Agency said on Tuesday, dashing hopes the epidemic in the world’s worst hit country was easing after more encouraging numbers in the previous two days.

      The death toll rose by 743 on Tuesday, the second highest daily tally since the outbreak emerged in northern regions on Feb. 21, and up steeply from the 602 recorded on Monday.

      Italy has seen more fatalities than any other country, with latest figures showing that 6,820 people have died from the infection in barely a month.

      The total number of confirmed cases hit 69,176 on Tuesday, but with Italy testing only people with severe symptoms, the head of the Civil Protection Agency said the true number of infected people was probably 10 times higher.

      “A ratio of one certified case out of every 10 is credible,” Angelo Borrelli told La Repubblica newspaper, indicating he believed some 700,000 people could have been infected.

    1. The Financial Times
      Investment trusts
      More Reits warn they are unable to meet cash calls
      Invesco and MFA mortgage-backed funds suffer rapid decline in values
      Eric Platt and Robert Armstrong in New York and Robert Smith and Joe Rennison in London
      2 hours ago

      Upheaval in the US mortgage market ricocheted through the investment world on Tuesday, with two more real estate investment trusts warning that they could not meet margin calls from their lenders.

      Shares of some of the largest funds invested in the residential mortgage-backed securities market tumbled after two companies — Invesco Mortgage Capital and MFA Financial — said that they had been unable to meet cash calls from their lenders as the price of mortgage bonds slid.

      MFA lost an eye-watering 87 per cent of its value on Tuesday, with its shares closing at 36 cents, while Invesco Mortgage Capital declined almost 53 per cent to $2.52. AG Mortgage and New York Mortgage Trust, both of which said on Monday that they had notified their counterparties that they would be unable to fund future margin calls, have more than halved in value this week.

      The outbreak of the coronavirus has weighed heavily on companies across the US, with fears mounting that swaths of homeowners will be unable to make mortgage payments if there is a jump in job cuts and furloughs.

      “There is going to be unprecedented economic disruption from the measures taken to combat the pandemic, and that will . . . challenge the ability of some homeowners to service their debt,” said Michael Knott, the US head of Reit research at Green Street Advisors.

      While the Federal Reserve moved to shore up the residential mortgage market, agreeing to buy any of the securities guaranteed by Fannie Mae and Freddie Mac, it did not go so far as to backstop the entire asset class. Shares of real estate investment trusts heavily exposed to “non-agency” mortgages — assets the Fed has not agreed to buy — have been among the hardest hit by the sell-off.

  28. Markets
    We’re Looking at a System-Wide Margin Call
    The worst scramble for cash is happening in an opaque corner of the market that the Fed can’t control.
    By Shuli Ren
    March 23, 2020, 6:51 PM PDT
    Fear factor.
    Photographer: ANGELA WEISS/AFP

    The Federal Reserve ushered out a second wave of quantitative easing Monday. But the worst scramble for cash is happening in an opaque corner of the market, where Chairman Jerome Powell has little control. What we’re witnessing is a system-wide margin call.

    With the coronavirus outbreak intensifying, asset managers are getting squeezed by a record outflow from bond funds and billions more from stock funds. Even bigger withdrawals are probably happening in the over-the-counter world, where trades are conducted out of public eye, through broker-dealers. When traders get margin calls, they resort to selling their most liquid assets, usually stocks and U.S. Treasuries. This only deepens the slide.

  29. The Financial Times
    Opinion Markets Insight
    Oil industry faces biggest crisis in 100 years
    Producers are facing up to the crash in oil demand as coronavirus forces economies into hibernation
    David Sheppard
    FILE – In this Feb. 26, 1997 file photo, Khaled al-Otaiby, an official of the Saudi oil company Aramco, watches progress at a rig at the al-Howta oil field near Howta, Saudi Arabia. Saudi Arabia said on Thursday, Aug. 23, 2018 that it “remains committed” to an initial public offering of the state-run oil behemoth Saudi Aramco despite delays and growing speculation it may never be listed.
    (AP Photo/John Moore, File)
    The oil price crash has come at the worst time possible for an industry that was already out of favour with investors
    © AP
    David Sheppard
    19 hours ago

    It is no exaggeration to say the oil industry faces its gravest crisis of the past 100 years.

    As western economies go into hibernation, hoping to snuff out the first wave of coronavirus through lockdowns and isolation, the industry is facing up to the fact that fuel demand is going to fall faster than ever before.

    Already prices have roughly halved since the start of this month as airlines have been grounded and millions of commuters eschew the car for a short walk to a laptop on their kitchen table.

    For an industry long aware that a 1-2 per cent swing in the balance of supply and demand can be the difference between prices soaring or collapsing, the extent of the fall in consumption is hard to process.

    As Europe and North America hunker down, the latest estimates suggest 10 to 25 per cent of global consumption could vanish in the coming few months. In normal times the world consumes some 100m barrels a day.

    Such is the scale of the demand collapse that it risks overshadowing the price war between Saudi Arabia and Russia, who are flooding the market with unnecessary barrels after falling out over how to respond to the crisis. But there is little doubt their actions have exacerbated the crash and lengthened the timeline of recovery.

    The result is likely to be storage tanks being filled to the brim within months. Even supertankers at sea, called into action as emergency storage vessels, could be maxed out by the end of summer.

    Respite will come only once the most expensive oil production starts to shut down, or the weakest producers go bust.

    But oilfields cannot be turned off and on like the flick of a light switch. The cost and the risk of shutting down active production is more likely to lead to a war of attrition.

    Crude dipped below $25 a barrel last week, its lowest level since 2003, before regaining some ground to trade around $28 on Tuesday. Analysts are starting to predict the price could fall to the teens or even into single digits.

    1. Gas has been stubbornly staying above $2 in my little burg, though in nearby El Longmonto Sam’s has it for 1.66.

  30. Where’d all the money go?

    The Financial Times
    US & Canadian companies
    Dash for cash: companies draw $124bn from credit lines
    As traditional capital markets seize up, executives are turning to emergency funding
    The $10tn US corporate bond market is reserved for well-known and financially-sound companies such as Walt Disney, Coca-Cola and UPS
    © FT montage
    Eric Platt, Laura Noonan and James Fontanella-Khan in New York, Joe Rennison in London and Miles Kruppa in San Francisco 4 hours ago

    The shelves normally filled with paper goods at Albertsons supermarkets are now emptied by mid-morning as consumers across the US stockpile toilet rolls.

    It is not the sort of challenge that the Boise, Idaho-based retailer expected to face this year. Albertsons’ executives had been focused on a public listing that would see shares of the Cerberus-backed group trade on the New York Stock Exchange alongside blue-chip names such as American Express and Johnson & Johnson.

    They revealed their plans for an initial public offering on March 6, but less than a week later chief executive Vivek Sankaran and his team were calling on their bankers at Bank of America for an entirely different purpose.

    With the uncertainty triggered by the coronavirus crisis, Albertsons wanted cash, and lots of it. By March 18, it had tapped a credit line for $2bn. It could request even more in the days ahead.
    A graphic with no description

    During the past three weeks, more than 130 companies in Europe and the Americas have drawn at least $124.1bn from their lenders, according to an analysis of public disclosures by the Financial Times and people briefed on the activity. The true figure is likely to be much higher, since publicly traded companies are not required to report the drawdowns immediately and privately held groups often have no obligation to announce them at all.

    Back when the world was awash with liquidity, lenders would offer low-cost revolving credit facilities — akin to a credit card — as a perk to win other business. The banks believed that most would never be used in full; such was the stigma of large companies drawing them.

    But credit is now harder to come by. The $10tn US corporate bond market, where investors had eagerly lapped up debt offerings from even the shakiest companies, is now reserved for the most well-known and financially sound — the likes of Walt Disney, Coca-Cola and UPS. The short-term commercial paper market has also been frozen, requiring emergency surgery from the Federal Reserve.

    1. This might explain why the local Safeway (also owned Cerberus) can’t seem to restock its shelves, while King Soopers (Kroger) seems to have no problem

  31. Nouriel Roubini: could Covid-19 spark the greatest depression?
    After the 2008 crash, a forceful (though delayed) response pulled the global economy back from the abyss. We may not be so lucky this time
    By Nouriel Roubini
    March 24, 2020 6:14 pm GMT

    The shock to the global economy from Covid-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression.

    In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and GDP contracted at an annualised rate of 10% or more.

    But all of this took around three years to play out. In the current crisis, similarly dire macroeconomic and financial outcomes have materialised in three weeks.

    Earlier this month, it took just 15 days for the US stock market to plummet into bear territory (a 20% decline from its peak) – the fastest such decline ever.

    Now, markets are down 35%, credit markets have seized up, and credit spreads (like those for junk bonds) have spiked to 2008 levels. Even mainstream financial firms such as Goldman Sachs, JPMorgan and Morgan Stanley expect US GDP to fall by an annualised rate of 6% in the first quarter, and by 24% to 30% in the second. US Treasury Secretary Steve Mnuchin has warned that the unemployment rate could skyrocket to above 20% (twice the peak level during the GFC).

    In other words, every component of aggregate demand – consumption, capital spending, exports – is in unprecedented free fall. While most self-serving commentatorshave been anticipating a V-shaped downturn – with output falling sharply for one quarter and then rapidly recovering the next – it should now be clear that the Covid-19 crisis is something else entirely. The contraction that is now underway looks to be neither V- nor U- nor L-shaped (a sharp downturn followed by stagnation). Rather, it looks like an I: a vertical line representing financial markets and the real economy plummeting.

    1. V- nor U- nor L-shaped … I?

      There’$ no V in “UNLIMITED!”

      Kudlow: $timulu$ = “$6+ Trillion$”

  32. World’s Richest Have Lost Over $1 Trillion In Stock Market Crash
    By – Mar 23, 2020, 7:30 PM CDT
    Worlds Richest Stock Market Crash

    The old adage “the rich keep getting richer” no longer holds true. The rarefied world of the extravagantly wealthy has lately come under serious assault with the billionaires club seeing its fortunes rapidly shrink in the ongoing stock market rout. About ten days ago, South China Morning Post reported that the world’s 500 richest people had collectively lost $950 billion in the stock markets since the beginning of the year.

    The stock selloff has accelerated since then with the MSCI World Index–a market-cap-weighted stock market index of 1,644 stocks from companies across the globe–dropping another 320 points, or about 15 percent of its value. This implies losses by the billionaires have likely now crossed the $1 trillion mark.

    1. And no matter what happens to the rest of us, and no matter how unsustainable that prior level of wealth was relative to GDP, they are determined to have the government intervene in the market to get it back.

    2. The old adage “the rich keep getting richer” no longer holds true.

      Will they have to move back in with their first wife?

          1. In that case they don’t have to live with her either. Just pick from the mistresses one that’s easy to convince they still have money, it’s just temporarily unavailable. Hopefully she still has the place he bought her and the looks to go back to her old job where he met her…

  33. Collapsing real production capacity due to the COVID-19 response is not a good development.

    Shale Oil & Gas
    US shale bust wrecks hopes for energy independence
    Sun sets on dream of energy self-sufficiency as drillers slash capex after oil price collapse
    FILE – In this file photo taken July 7, 2010, an unidentified oilfield worker ties pipes to be raised on an oil rig as the sun sets in the Persian Gulf desert oil field of Sakhir, Bahrain. Exxon earned the majority of its income from exploration and production operations in foreign waters, particularly in Africa, Asia and the Middle East. Exxon’s results showed a jump in profits across its exploration and production, refining and chemicals businesses. (AP Photo/Hasan Jamali, file)
    The collapse in activity will cause widespread economic pain in oil-producing regions of the US, where extensive services sectors — from hospitality to fracking crews — have sprouted up during three years of brisk business © AP
    Derek Brower in London
    2 hours ago

    The shale revolution that made the US the world’s biggest oil and gas producer and offered the prospect of energy self-sufficiency has run out of steam, as drillers slash spending and production in response to the price war and coronavirus-led collapse of crude demand.

    US oil output, now a record high of 13m barrels a day, will begin falling steeply in the second half of this year and could drop 2.5m b/d by the end of 2021, analysts have calculated.

    Even a modest further oil price drop could cut US production back by almost 4m b/d, fully reversing three years of increases.

    “Shale growth helped to lead the US out of the Great Recession, but may fall victim to the Covid-19-fuelled recession,” said Jamie Webster, head of BCG’s Center for Energy Impact.

    The capex cuts have come thick and fast since the collapse of the Saudi-Russian oil pact on March 6 sparked a market rout that has more than halved the price of West Texas Intermediate, the US benchmark, to about $23 a barrel.

    Occidental, Apache, Diamondback Energy, Continental Resources, ConocoPhillips, Concho Resources, Pioneer Natural Resources, Parsley Energy and Cimarex are among the shale patch’s big producers to have collectively wiped billions from planned spending.

    On Tuesday supermajor Chevron joined them, saying it would reduce its capex in the Permian shale this year by $2bn. The number of its operating rigs in the region would soon drop by more than half and output by year-end would be a fifth lower than planned.

    1. I guess the good news for the Trump Administration is that the Saudi’s may damage alternative energy too, as part of keeping us ever more dependent on middle eastern energy. Since he slapped tariffs on solar panels, but won’t say boo about this.

  34. Whacky policy proposals that gain populist support are scary.

    Fox News Flash
    Published February 28
    Heritage Foundation researcher: Green New Deal ‘would devastate the economy,’ hit working families hardest
    By Julia Musto | Fox News
    Green New Deal could cost swing state households $75K in the first year

    Policy could drive U.S. economy into a steep depression; Heritage Foundation research fellow Joel Griffith weighs in.

    Democrats’ proposed Green New Deal (GND) could end up costing households much more than they bargained for, Heritage Foundation Research Fellow Joel Griffith said Friday.

    Appearing on “Fox & Friends First” Friday morning with host Heather Childers, Griffith said that the legislation’s hefty $93 trillion price tag over its first 10 years would devastate working families.

    “There’s really nothing audacious about it except for its absolute absurdity and that’s because this constitutes a federal power grab that would devastate the economy and it would hurt those working families the hardest,” he stated.

    According to Democratic politicians, the GND would end the use of fossil fuels and nuclear energy in a decade, upgrade all existing buildings to be carbon-neutral, eliminate greenhouse gas pollution from farms, and completely overhaul the U.S. transportation system.

    1. Eye’$ don’t think$ “feel.the.bern” is gonna get the needed 1,986 “$ociali$t.ticket$”.

  35. How can San Diego home sellers conduct open houses under the Stay Home order? Doesn’t foot traffic through houses potentially track in COVID-19?

    1. Coronavirus
      San Diego Real Estate Industry Still Going Amid Coronavirus Pandemic
      Brokers are still busy showing homes
      By Derek Togerson • Published March 19, 2020 • Updated on March 19, 2020 at 4:06 pm

      During a health crisis like the COVID-19 pandemic people usually try to stay out of unfamiliar places. That does not seem to be the case with the San Diego real estate industry.

      “Well surprisingly this has been one of my busiest weeks of the year,” said David Gullifer, a real estate broker for Prolific Real Estate. “There are people off work and when you look at houses it’s usually in small groups anyway, two or three people, so they feel comfortable going to look for homes.”

      Gullifer thinks people suddenly have the time they didn’t have before to get out and try to find a home.

      “There’s been more buyers than there are homes, so buyers are looking at this as an opportunity, maybe there’s not as much pressure on the market, that they can find a home they’re looking for,” said Gullifer.

    2. One would think. It certainly didn’t stop anyone involved with my friend’s move the last two days.

    3. real estate
      Industry Sees Greater Role Coming for Technology After Recovery
      Real estate agents and other businesses might latch onto and embrace tech like never before, post the novel coronavirus pandemic
      By Ray Huard – SDBJ Staff • Published 28 mins ago • Updated 28 mins ago
      Getty Images

      At least one La Jolla real estate broker is looking for some long-term benefits to come out of the emergency measures he and others are taking to get through the COVID-19 pandemic.

      Watch for real estate agents and other businesses to latch onto and embrace technology like never before after sampling it as they hunkered down, social distancing themselves and even self-quarantined, said Justin Brennan, team lead with Brennan Real Estate Group of Pacific Sotheby’s International Realty.
      24 mins ago

      “All kinds of things are going to be learned from this,” Brennan said. “It’s forcing people to communicate in a different way. You’re going to see a lot of this tele-stuff massively improve every industry. It will be pretty cool.”

      His firm and other real estate agencies already use tech tools such as virtual meeting and virtual home tours, but Brennan said they’re likely to become the norm.

      Brennan also is optimistic about the real estate industry’s ability to bounce back from any slowdown unless it lingers.

      On the buy side of things, I think the tables are going to turn where you’re going to end up having more supply than demand,” Brennan said.

    1. Markets
      Negative rates come to the US: 1-month and 3-month Treasury bill yields are now negative
      Published Wed, Mar 25 2020 11:03 AM EDT
      Updated Moments Ago
      Jeff Cox

      The coronavirus crisis has brought another first to U.S. financial markets — negative yields on government debt.

      Yields on both the one-month and three-month Treasury bills dipped below zero Wednesday, a week and a half after the Federal Reserve cuts its benchmark rate to near-zero and as investors have flocked to the safety of fixed income amid general market turmoil.

      The U.S. now joins large swaths of Europe and Japan that also have negative-yielding debt.

  36. Coeur d’Alene, ID Housing Prices Crater 16% YOY As Sellers Flood Market And Slash Prices Double Digits

    *Select price from dropdown menu on first chart

    As a noted economist said so eloquently, “liquidate whatever you’ve got to eliminate all debt and hold onto every dollar you’ve got…. You’re going to need every last one of them.”

  37. Social distancing is a challenge in The Big Apple.

    Local and federal authorities alarmed at an acceleration in the coronavirus’s spread in New York City
    Published: March 25, 2020 at 10:52 a.m. ET
    By Beckie Strum
    Population density — both in the city and within households — contributes to the challenge of reining in the pandemic in the five boroughs
    The Brooklyn Bridge, shown in a March 16 photograph, connects the U.S.’s two most densely populated counties. Associated Press

    New York City is barreling toward crisis at an alarming rate, with the rapid spread of the coronavirus on track to crush intensive-care units in as little as two weeks, Gov. Andrew Cuomo said on Tuesday.

    “We are not slowing it; it is accelerating on its own,” Cuomo said, adding that the number of COVID-19 infections is now doubling every three days.

    In New York City, whose urban density has helped made it the epicenter of the outbreak in the U.S., there were 14,776 confirmed cases and 131 deaths as of Tuesday. That’s more than six times as many cases as hard-hit Washington state and more than eight times the number of cases in all of California.

  38. Matching Social Security, paying workers comp, liability ins. 2 weeks vacation, bonus at Christmas are some things that employers of small businesses do that are overlooked by a lot of people.

    Another thing some people might not realize…

    Unemployment payments don’t get cr@pped out by some magic flying Government Unicorn.

    “Each claim assessed to an employer’s account can result in a tax rate increase in future years.”

    What Does an Unemployment Claim Cost an Employer?

    Many people mistakenly believe that unemployment insurance (UI) benefits come from a fund paid into by employees—like Social Security or Medicare. However, it’s employers who are financially responsible for unemployment benefits, and the costs are far higher than just the amount of a claim.

    The State Unemployment Tax Act (SUTA) tax is much more complex. Employers pay a certain tax rate (usually between 1% and 8%) on the taxable earnings of employees. In most states, that ranges from the first $10,000 to $15,000 an employee earns in a calendar year.

    The real cost of unemployment claims: increased tax rates.

    The cost of an individual UI claim depends on how much the employee made, how long they remain on unemployment, and the state’s maximum benefit amount. The average amount paid out on an unemployment claim is $4200, but can cost up to $12,000 or even more.

    State governments get the money to pay claims by debiting the employer’s UI account (in states that require an account balance) or by raising the employer’s UI taxes. A deduction in the account balance may also cause a rate increase, as the ratio between taxable payroll and the account balance changes. Each claim assessed to an employer’s account can result in a tax rate increase in future years.

    So the real story isn’t the cost of an individual claim (though it can be significant). It’s the higher tax rate that will have a long-term impact.

      1. will never come back from this

        Agreed. Even if they fire their entire staff, they have fixed costs that won’t go away, and far too many were barely hanging on to begin with.

    1. I just got this email from Crain’s New York Business:

      $2 trillion federal package won’t cover state’s budget shortfall

      1. The arrogant Spaghetti Bender himself brayed about it today. See here, bout half way through.

        Now if the asshole acted early instead of doing nothing about this corona thing, it would be a fraction of the problem that it currently is. He didn’t nothing while other states jumped on it.

        Make no mistake, when this is over Trumpy will make it known entirely.

        1. He is also misleading with his statements about NY “cases” soaring, IMO, by not mentioning at the same time that the number of tests is soaring (finally).

        2. I imagine N.Y. City is the very definition of American multiculturalism, and an ideal environment for COVID-19.

    2. bonus at Christmas

      In all my career I have never received a year end/Christmas bonus. And I really doubt that the dude who owns the local McDonald’s stores pays them either.

      1. “In all my career I have never received a year end/Christmas bonus.”

        I have given one to my guys for 28 years (first year I had no guys) some years I got nothing but they did,

        Before I went into business I worked for a dude who would throw extravagant Christmas parties, invite all his friends etc. but gave his employees nothing for a year end bonus.

        I went the other way.

        1. Once I worked for a giant company that gave us all gift certificates for a turkey.

          The best party I ever went to was thrown by a guy who worked for me. Cajun New Years. Shots were fired (all in good fun) at midnight.

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