A Sudden And Precipitous, Unprecedented Drop In Net Income In A Lot Of The Property Types
A report from Bisnow. “The commercial real estate market is in limbo, with developers waiting to see if opportunities for low-interest rate refinancing and acquisitions bubble to the surface. But, the timeline for finding these opportunities in the post-COVID-19 landscape remains murky at best, especially as valuations are difficult to pin down. It’s likely to stay this way until the timeline for curtailing the impact of the coronavirus becomes more apparent, giving appraisers the data needed to make true property valuations, National Valuation Consultants Senior Managing Director Chuck Dannis and Dreien Opportunity Partners CEO Sam Ware said.”
“‘Appraisers are just going to have to wait,’ Dannis said. ‘They are going to have to look for other things than just sales [as part of their valuations], which appraisers normally do. I think it’s pretty naive to think that values are not changing as we speak.'”
“‘What I think we are going to see this time is just a sudden and precipitous, unprecedented drop in net income in a lot of the property types — hospitality, student housing, senior housing and the restaurant business,’ Dannis said. ‘This time I think we are going to have income shock … and so if, we don’t even change the rates, property values are going to come down.'”
The Greater Baton Rouge Business Report in Louisiana. “With the Legislature on indefinite hiatus, LSU classes being taught online through the summer, travel restricted throughout the country, and spring festivals canceled, local property owners who rely on the student and short-term rental markets as a source of income are taking a massive hit from the coronavirus crisis. ‘I can tell you about a flattening curve,’ says Steve Myers, who owns about 60 rental units with more than 250 tenants in the LSU, Garden District and Southdowns areas. ‘It’s the rental market. It’s dead.'”
“Investors with short-term rental properties like those offered on Airbnb are also suffering. ‘Airbnb has been obliterated, just like the hotel market,’ says Tommy Talley, who has an ownership stake in nine units he leases on Airbnb. ‘Everything has been canceled.'”
“For now, Myers is waiting to see what happens, trying to work with his tenants individually to determine their circumstances and crossing his fingers that LSU reopens this fall. ‘It isn’t going to be pretty if LSU doesn’t reopen,’ he says. ‘I can tell you what my recourse is going to be: bankruptcy court. You can’t go six or eight months with no income.'”
The Philadelphia Inquirer in Pennsylvania. “The coronavirus appears to be driving down rents at the Philadelphia area’s biggest apartment buildings, especially new ones, as the pandemic begins restricting the shopping — and threatening the livelihoods — of potential home-hunters. The health crisis coincides with a massive increase in new inventory in the region. Last year, developers brought to market 4,771 new apartments in buildings with more than five units. That’s down from the previous two years, but still more than any year before those since at least 1982, the earliest date for which CoStar data were available.”
“Landlords are now left to compete with one another to fill these vast blocks of empty space in their newly opened properties, said Adrian Ponsen, CoStar’s analytics director for Philadelphia. ‘If you have had your eye on a newly built apartment building in your neighborhood, the next few months will be an excellent time to call and negotiate a lease,’ Ponsen said. ‘Landlords will be offering the most competitive rents they can.'”
“Another real-estate data firm, Delta Associates, listed five Philadelphia apartment buildings as less than half-leased as of the end of 2019 in its most recent quarterly report on the city’s rental market. Those projects are the 198-unit first phase of Dwell on Second Street, at Second and Thompson Streets north of Northern Liberties, which was 93 percent vacant; the 216-unit View at Old City at Fourth and Race Streets, which was 63 percent vacant; and the Irvine, on 52nd Street south of Baltimore Avenue, and Crane Chinatown, at 10th and Vine Streets, which were both nearly 60 percent vacant.”
“Elsewhere in metro Philadelphia, but outside the city itself, CoStar tallied 18 new apartment projects, comprising 4,242 units, 54 percent of which remained empty. Even before the seriousness of the pandemic became apparent, commercial real estate firm JLL noted in a research report that vacancy rates in newly built suburban apartment buildings were twice as high as those in older ones, with thousands of new units on the way.”
“‘The question is whether absorption can keep pace after such a significant jump in supply,’ JLL’s analysts wrote in the report.”
“But even if landlords have found ways to remotely market their properties, they may still struggle to get potential tenants excited about the fancy gyms, outdoor grilling stations, dog runs, and other accoutrements that once served as a major enticement, CoStar’s Ponsen said. Developers invested heavily in such features, which now sit empty due to measures aimed at stemming the spread of the coronavirus. ‘How interested are you in moving into a building with a heightened amenity set when you’re not necessarily going to be able to use the gym or the game room over the next few months?’ Ponsen said.”
The Midland Reporter Telegram in Texas. “The impact of the oil downturn on apartment rents in Midland-Odessa continued in March, according to a report from RentCafe. The online guide to the nation’s apartment industry reported that the average rent in Midland dropped 11.7 percent year over year during the month of March. In Odessa, the average rent dropped 10.4 percent. ‘The decrease is accelerating compared to February as well,’ RentCafe noted.”
From Multi-Housing News. “The student housing sector has been shaken amid uncertainty over the exact length and scope of the coronavirus outbreak, with operators and investors bracing for the possibility of revenue losses at properties across the country. However, some in the industry are confident the niche that many call ‘recession-proof’ will feel very minor impacts. The other big worry for those in the industry is construction timelines. Some cities around the country have put a halt to all non-essential construction for safety measures, potentially leaving current projects under construction, like student housing properties, in limbo.”
“‘Once the school year starts, if you haven’t leased your beds, you’re very unlikely to do so,’ said Matthew Berger, vice president of tax & student housing at the National Multifamily Housing Council. ‘If your property isn’t ready to lease by start of the school year due to construction delays, you could lose a whole year of rent.'”
The Evanston Round-Table in Illinois. “The lack of affordable housing for both low- and middle-income seniors in Evanston is a serious problem, Margaret Gergen, a member of the Age Friendly Evanston Task Force Housing Committee, told the aldermen at a City Council meeting held shortly before the COVID-19 crises became a reality. For low- and middle-income seniors, there is a shortage of affordable housing for independent-living, and there are no affordable assisted-living units at all.”
“The Sawgrass Study also indicates that the number of market-rate assisted-living units that are already in Evanston or that are proposed may be enough, and that the City ‘could be overbuilt’ for market-rate units. ‘Evanston has no affordable assisted living units in Evanston. None,’ said Ms. Gergen. ‘Seniors who need affordable assisted-living really have no options in Evanston.'”
From CNBC. “Retailers are worried about paying rent because of the damage from the coronavirus pandemic. And that has mall owners increasingly worried about meeting their own obligations. Mall of America- and American Dream-owner Triple Five Group has said it is concerned about some of its tenants not paying rent, which is going to hinder its ability to make mortgage payments. Some retailers are asking to cut rents to a smaller percentage, or delay payment to a later date.”
“In turn, landlords are arguing they still have their own bills to pay, too. U.S. mall owner Taubman, for example, sent a letter to its tenants on March 25 saying it has obligations to meet — such as paying lenders on mortgages and paying for utilities. ‘The rental income that we receive from tenants is essential in order to meet these obligations,’ Taubman said.”
“Triple Five Group is running into a similar situation, American Dream co-CEO Don Ghermezian told CNBC in an interview. ‘The difficulty we are going though now … if tenants don’t want to pay rent, my response is: I have got to pay a mortgage. I borrowed money. I have got to pay back my lenders.’ If there is not more assistance to come from the federal government on this front, ‘many malls will be headed into default because they won’t be able to make mortgage payments going forward,’ he said.”
The Wall Street Journal. “When the coronavirus started spreading in the U.S., office owners with long-term, stable leases hoped their buildings would become a haven for skittish investors. But nearly a month into the pandemic, the opposite has happened. Investors are dumping shares of major office real-estate investment trusts. Sales of skyscrapers are unraveling, and office tenants across the country are negotiating to lower their rent bills.”
“Office owners also tend to have more debt, in part because banks have been willing to lend more against assets they deemed safe. Having a lot of debt is ‘scary on the downside and limits their ability to be offensive when the economy turns around,’ said Daniel Ismail, a senior analyst at Green Street Advisors.”
“The office selloff indicates that trouble in commercial real estate is spreading beyond hotels and retail properties and now threatens much of the $16 trillion U.S. commercial real-estate market and the $4.5 trillion in mortgage debt secured by it. The value of commercial mortgage-backed securities has plummeted and new lending has mostly ground to a halt. Some lenders that hold commercial mortgages and mortgage-backed securities are facing margin calls from their banks.”
“Co-working companies and similar businesses, which accounted for 6.5% of new leases in the U.S. in the first half of 2019 according to brokerage CBRE Group, have mostly stopped signing new deals and some are fighting for financial survival. Michael Silver, chairman of the occupier services firm Vestian, said 75% to 80% of the companies he works with are approaching their landlords about rent relief. One of Mr. Silver’s clients looking for rent relief is a major law firm with offices across the U.S., another is a financial-services firm, he said. The motivation: saving money ahead of what could be a long economic downturn.”
“‘It’s not that they’re in financial trouble. It’s that they’re trying to be prudent about developing a new playbook for a new economy,’ Mr. Silver said. ‘It’s just a new era where the tenant will have the leverage.'”
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As you can see, CRE is fooked.
What’s weird with some CRE is that the owners just take their ball and go home, leaving it vacant for decades. I know of many such old buildings. They used to be anchor stores like K-Mart, Sears, Woolworths, etc. Once they closed, nothing ever came back. But the owners pay the taxes every year. Those are some incredibly deep pockets.
There was a standalone restaurant building here in my little burg that stood empty and basically rotted away for 20+ years, until it was bulldozed and replaced with a KFC about 3 years ago.
My neighbor works (primarily) in CRE, and last fall left his old firm (for good reasons) of 10 years to join a different CRE firm. A week ago, I sent him an email asking how they were holding up , because they had not replied anywhere in a long ‘homeowners association member check in’ email thread. (There are just 7 homes in our association – we formed it to deal with city on legal matters – so we all know each other rather well).
In the email I mentioned the craziness in the RE sectors as a reason for checking in.
I finally got a reply back yesterday, and I’m quoting verbatim…
“My CRE world has been hectic to say the least, and I had a lot of deals crumble over the last 30 days… not pretty. Everyone is scared frozen at this point, and there are some sectors that are getting hammered. ”
And he’s the kind of guy who ALWAYS has the positive face on….
So much sad here. It’s really sad for people with debt.
So much sad here. It’s really sad for people with debt.
Aren’t we supposed to be a completely heartless bunch, laughing from our rented fortresses?
Would have been more of a laugh if it all played out organically. shutdown of our economy due to a flu is devastating world wide and provides excuses as to why the everything bubble is popping but of course stawk and RE are still being bailed out. Thats our economy, stawk and RE…
‘The office selloff indicates that trouble in commercial real estate is spreading beyond hotels and retail properties and now threatens much of the $16 trillion U.S. commercial real-estate market and the $4.5 trillion in mortgage debt secured by it. The value of commercial mortgage-backed securities has plummeted and new lending has mostly ground to a halt. Some lenders that hold commercial mortgages and mortgage-backed securities are facing margin calls from their banks’
Is that a lot?
The FED just increased their balance sheet by over $4 TRILLION in a few weeks time. I guess a TRILLION ain’t what it used to be. It still seems like a lot to me, though.
“Most recently, the Fed eased a capital rule for large banks to encourage lending and unveiled a new facility to allow central banks and other international entities to swap their Treasury holdings for dollars.”
Is this like a pawn shop for Treasury HODLings?
The Financial Times
Coronavirus business update 30 days complimentary
Federal Reserve
Fed officials identified US outlook as ‘profoundly uncertain’
Policymakers unleashed a vast array of tools to limit economic damage as coronavirus spreads
Officials at the Fed are grappling with little clarity on when economic conditions might improve
© REUTERS
James Politi in Washington and Colby Smith in New York 3 hours ago
Federal Reserve officials feared a sharp decline in economic and market conditions last month as they began injecting a heavy dose of monetary stimulus to limit the fallout from the coronavirus pandemic.
According to minutes of emergency meetings of the Federal Open Market Committee in March, US central bankers “viewed the near term US economic outlook as having deteriorated sharply in recent weeks and as having become profoundly uncertain”.
Officials at the Fed were also grappling with little clarity on when economic conditions might improve.
“The timing of the resumption of growth in the US economy depended on the containment measures put in place, as well as the success of those measures, and on the responses of other policies, including fiscal policy,” Fed officials said, according to the minutes.
The minutes released on Wednesday came from two emergency meetings of the FOMC held on March 3 and 15, during which the US central bank took action to shield the US economy from the fallout of the coronavirus pandemic.
The Fed lowered interest rates close to zero, launched a sharp expansion of its balance sheet by buying up US Treasury debt and mortgage-backed securities, and set up swap lines with other big central banks.
Since March 15, it has gone even further, ramping up its crisis response well beyond its scope in the 2008 financial crisis, including the announcement of a series of facilities aimed at shoring up the markets for commercial paper, municipal debt and corporate bonds. The central bank also authorised itself to buy an unlimited quantity of US Treasuries and agency mortgage-backed securities.
The Fed’s actions reflected a brutal change of outlook compared with earlier in 2020. In late January, the FOMC had gathered amid expectations of steady growth in the US economy, holding its main interest rate in a range of 1.5 per cent to 1.75 per cent.
Despite the disease’s appearance and proliferation in the city of Wuhan, China, in previous weeks, it was only just starting to register as a threat to the global economic picture. Fed officials had agreed that it “warranted close watching” at the time, according to the minutes from the late-January meeting.
Just a month and a half later, market turmoil had become vivid worry at the US central bank, including conditions of “high volatility and illiquidity” in markets for US Treasuries and government-supported mortgage-backed securities.
“Participants expressed concern about the disruptions to the functioning of these markets, especially in view of their status as cornerstones for the operation of the US and global financial systems and for the transmission of monetary policy”, the minutes said.
Treasuries sold off following the release of the minutes, with the yield on the benchmark 10-year note rising roughly 0.06 percentage points to 0.77 per cent. The more policy-sensitive two-year note yield edged higher to 0.26 per cent. Yields rise when prices fall. The S&P 500 extended earlier gains, rising more than 3 per cent.
Investors have welcomed the Fed’s wide-ranging steps, noting the actions have helped immensely to address strains that emerged across financial markets.
“The Fed has done a phenomenal job in terms of being as transparent as possible and as open as possible to continue down the path of providing support,” said Nick Maroutsos, co-head of global bonds at Janus Henderson. “They are providing a backstop and helping those who need it, but ultimately they are leaving the door open for more stimulus.”
Still, some warn there are limits to what policymakers can do.
“There will be some collateral damage,” said Padhraic Garvey, regional head of research at ING, pointing specifically to the corporate sector, which has been hard hit by government-mandated closures and orders for citizens to stay home.
“There is residual credit risk out there that I’m fearful of, and I do feel like the next phase of this is trying to assess what the default rate will be for the corporate sector,” he said. “You have to assume a default rate that is probably double digits.”
Jay Powell, the Fed chairman, is expected to deliver remarks on Thursday morning, which could offer further clues to the US central bank’s thinking. The next FOMC meeting is set for the end of April.
During the March meetings, officials fretted that their heavy-handed action might be interpreted as an overly pessimistic signal for the economy, or entrench expectations of negative interest rates, which the Fed has so far resisted. But Fed officials stressed they still had room for additional policy action with interest rates close to zero.
“In particular, new forward guidance or balance sheet measures could be introduced,” the minutes said.
Most recently, the Fed eased a capital rule for large banks to encourage lending and unveiled a new facility to allow central banks and other international entities to swap their Treasury holdings for dollars. The move is aimed at easing a global shortage of the US currency that had already prompted it to lower the cost of borrowing dollars globally through existing swap lines.
Since the outbreak of the coronavirus in the US, the Fed has been pushing banks to offer more credit to the economy, on the grounds that they are in a much better position than during the 2008 financial crisis and can play a key role in propping up many companies. But according to the minutes, some Fed officials said the banks should be “discouraged from repurchasing shares from, or paying dividends to, their equity holders”.
It was the debate around how the crisis might unfold that was among the most heated.
Some Fed officials stressed that the shock would be temporary in nature, the financial system was solid compared with a decade ago, and central bank action would offer strong support. Yet on the other hand some US central bankers were concerned that the situation might even be worse than assumed.
“Participants prominently cited the possibility of the virus outbreak becoming more widespread than expected. Such an event could lead to more wide-ranging temporary shutdowns, with adverse implications for the production of goods and services and for aggregate demand,” the minutes said.
Coronavirus: investing is now about survivors, not winners
…
Is this like a pawn shop for Treasury HODLings?
One key difference: pawn shops make money on the bid-ask spread. The fed, in contrast, seems bent on paying above market in order to subsidize large financial institutions at taxpayer expense.
Hey Prime, good to see you! Hope you’re doing well.
“…I guess a TRILLION ain’t what it used to be…”
Next batter on deck, one QUADRILLION+.
Next growth industry: Gona’ need desktop calculators that are 18 inches wide to handle all the zeros.
Or do what the Mexicans did: lop off three zeros and call them “New Dollars”
https://en.wikipedia.org/wiki/Zimbabwean_dollar#/media/File:Zimbabwe_$100_trillion_2009_Obverse.jpg
The 100 trillion Zimbabwean dollar banknote (1E14 dollars), equal to 1E27 pre-2006 dollars.
– Similar occurrence in Weimar Republic, Germany, 1921-1923.
– I’m sure “it’s different this time.”
Zimbabwean
We could go back to real money. What a concept!
“…real money…”
What does that even mean?
It’s explained in our Charter, the Constitution.
“The value of commercial mortgage-backed securities has plummeted and new lending has mostly ground to a halt.”
So should I move from cash to the Vanguard REIT Index fund?
The problem is the same one I had in 2008. I get the feeling that even if values have in reality plummeted, the values at which a regular person can invest will not reflect that. They are looking for someone to take their losses for them.
I can tell you that commercial property has been valued based on leases in most of the country. As if the property itself, and the land it sits on, was worth little or nothing. Property might have to be re-invented starting at a lower price point. I’m down for that. But the parasites of the past still hope to suck more out of the future. That’s the problem.
For the most part, REITs are publicly traded stocks and they react to changes in the economic rapidly. Privately held real estate, on the other hand, are not marked to market on a daily basis.
Take a look at the YTD chart of VNQ, the Vanguard Real Estate ETF. You’ll see it took a sharp drop in March. The publicly traded issues already took a hit.
Some lenders that hold commercial mortgages and mortgage-backed securities are facing margin calls from their banks.
A business model of lending borrowed money. What could go wrong?
Worse than that, borrowing short term to lend long term.
Worse than that, borrowing short term to lend long term.
That hurts my head just thinking about it. Let me guess – they’re also paying more interest on the short term loan than the long term one? The FED has turned this economy into a sham.
than collecting on the long term one?
“Qua$i.Capitali$m” … metamorpho$i$ … into $ocialist.capitali$m … $ad.
“That hurts my head just thinking about it.”
Sounds like TUMS to me.
Isn’t that SOP for banks?
Borrowing short to lend long
Wasn’t that what helped blow up the banks in the 80s?
Worse than that, borrowing short term to lend long term.
That used to be a classic formula for a liquidity-squeeze failure… But no more: you just wait for the Fed to create a SPV that buys up whatever your long-term cr@p is. Liquidity problem solved!
‘Another real-estate data firm, Delta Associates, listed five Philadelphia apartment buildings as less than half-leased as of the end of 2019 in its most recent quarterly report on the city’s rental market. Those projects are the 198-unit first phase of Dwell on Second Street, at Second and Thompson Streets north of Northern Liberties, which was 93 percent vacant; the 216-unit View at Old City at Fourth and Race Streets, which was 63 percent vacant; and the Irvine, on 52nd Street south of Baltimore Avenue, and Crane Chinatown, at 10th and Vine Streets, which were both nearly 60 percent vacant’
‘Elsewhere in metro Philadelphia, but outside the city itself, CoStar tallied 18 new apartment projects, comprising 4,242 units, 54 percent of which remained empty’
Ring ring!
Hello?
Ms. Pennypincher?
Speaking!!
This is Dan Gladhander with Pennsylvania Teachers Retirement , pensions department. You might want to sit down.
//**
1: the 198-unit first phase of Dwell on Second Street, which was 93 percent vacant
2: the 216-unit View at Old City, which was 63 percent vacant;
3: the Irvine and Crane Chinatown, which were both nearly 60 percent vacant;
4-18: CoStar tallied 18 new apartment projects, comprising 4,242 units, 54 percent of which remained empty;
**//
x = 1;
do
{
printf(“Ouch! Thank you, sir, may I have another?”);
x=x+1; //**where x = index number above;
}
until vacancy rate < 5%;
‘The student housing sector has been shaken amid uncertainty over the exact length and scope of the coronavirus outbreak, with operators and investors bracing for the possibility of revenue losses at properties across the country. However, some in the industry are confident the niche that many call ‘recession-proof’ will feel very minor impacts’
‘It isn’t going to be pretty if LSU doesn’t reopen,’ he says. ‘I can tell you what my recourse is going to be: bankruptcy court. You can’t go six or eight months with no income’
US Bankruptcy Courts are gonna be lit.
You can’t go six or eight months with no income
Actually you can. But yeah…in a bubble everybody thought you were a bad businessman if you hung onto that cash instead of putting it to work with yet another leveraged purchase. I assume you listened to “everybody” on that? How’s that working out for you?
“…in a bubble everybody thought you were a bad businessman if you hung onto that cash…”
But, but Living below your means and saving money is just so 1950’s
Predictions for Irvine? Will the CCP members throw in the towel and sell their million dollar condos?
“…Will the CCP members throw in the towel and sell their million dollar condos?..”
To who and for how much?
Things are looking a bit shaky in LA-LA-LA-LA land. (aka South OC)
Not a lot of happy faces out there when I do my morning walk.
Looks like cratering pretty soon! I can’t wait for those Airbnb fawcks to get a J.O.B.
I like that sha-na-na yip-yip-get-a-job thing Ben posts.
A newer version….
https://www.youtube.com/watch?v=LH-i8IvYIcg
Glendale, CA Housing Prices Crater 17% YOY As One LA Broker Conceded, “We Ripped Off A Whole Bunch Of People”
https://www.zillow.com/glendale-ca-91205/home-values/
*Select price from dropdown menu on first chart
As a noted economist said so eloquently, “A house is a rapidly depreciating asset that empties your wallet every day you own it. Rent a house for half the monthly cost of buying it.”
https://www.nytimes.com/2020/04/01/technology/virus-start-ups-pummeled-layoffs-unwinding.html
“Mr. Chen’s four-year-old company, which had raised $27 million in funding, has slashed its prices; a house that rented for $700 a night now goes for $100, for instance. And it has switched its focus from vacation travelers to those displaced by the virus, like stranded college students, people seeking a separate work space or medical workers isolating themselves from family.”
Unless there are gold toilets and free hookers in the steam room, a house should never rent for $700 per night! Ever LOL
That isn’t a gold toilet. That’s a tuba.
LOL too funny
“‘Once the school year starts, if you haven’t leased your beds, you’re very unlikely to do so,’ said Matthew Berger, vice president of tax & student housing at the National Multifamily Housing Council. ‘If your property isn’t ready to lease by start of the school year due to construction delays, you could lose a whole year of rent.’”
Time to section 8 those out!
“‘…Once the school year starts, if you haven’t leased your beds, you’re very unlikely to do so,’ said Matthew Berger…”
See Matthew Berger, all those advanced placement math courses are really starting to pay off..
NARscum wheeled out LyingLarry this afternoon. He promised “housing prices won’t fall because there won’t be any foreclosures”🤣 and “demand will fall 50% or more”.
Lying lying realtors
Let’s say they eliminate foreclosures, and nobody has to make a payment, for hypothetical purposes. Still, a boatload of Airbnb speculators just lost 100% of their income. That’s gonna leave a mark!
Yip yip yip yip mum mum mum mum get a job
Lost 100 percent of income
Good point
Going to have get a job!
The Financial Times
Oil & Gas industry
Opec has ‘disappeared’, says oil veteran Andrew Gould
Ex-Schlumberger boss doubts that a deal to cut supply can be effective, or even agreed
Andrew Gould: ‘The oil and gas industry would do better to put behind them this whole message about how they’ve lifted billions of people out of poverty’
© Financial Times
Anjli Raval, Senior Energy Correspondent 11 hours ago
Global oil producers are scrambling to secure a supply cuts deal to counter an unprecedented drop in demand triggered by the coronavirus pandemic. But for oil industry veteran Andrew Gould it is a fruitless endeavour.
“I don’t think a deal between Opec and other producers like Russia makes any difference because of the severity of the drop in demand,” the 73-year-old executive said. “Opec, as the so-called central bank of oil, has disappeared.”
Mr Gould’s comments come just weeks after he stepped down from the board of Saudi Aramco, the state energy giant of Saudi Arabia, which is Opec’s largest producer. Speaking from lockdown in Florida, he said the chances of a historic agreement between Saudi Arabia, Russia and the US — the top three producers — were slim.
“Could the three unite? I’m sceptical,” he said.
Yet individually they are unable to exert influence over the market either, he added, pointing to US president Donald Trump, Saudi Arabia’s crown prince Mohammed bin Salman and Russia’s president Vladimir Putin. “No matter how much of a strongman you are, in front of a pandemic your power is limited,” he said, characteristically blunt.
“You have to go back to the Great Depression to find a time when the market behaved as freely as it does now,” he said, referring to a plunge in demand — down as much as a third in April — coinciding with a Saudi-led pump-at-will production strategy over the past month.
…
What else do the Saudis and OPEC have besides oil? It seems to me that they might see economic pain like they never have before. Not only did the price of their only product crater, so did the demand. Can’t imagine the size hole that just blew in their budget.
And they have a debt problem.
x7 + $audi $uper.tanker$ over.floweth … headin’$ (diverted) , as we blog, to the Gulf.Port$
Poor mB$, poor $audi’$, poor Putain, poor Ru$$ia, poor OPEC+ … Help$ them Trumpy, they adore$ you!
If that’s true then RUS won with a TKO in the first round. Whodathunk?
One of our “sports” as kids was to pinch our skin around a mosquito’s sucker after it landed and stuck it in for a drink. If you do it right the poor little dear can’t pull it back out and can’t stop sucking blood. Eventually they go “pop”. Well, not really, but they do die.
Of course, with the skeeters in the upper mid-west you don’t dare do that too often as you’d get light-headed from the blood loss 😉
Will cratering housing prices be considered co-morbidity or collateral damage in the historical narrative?
You all understand that CovidScam provides cover for falling housing prices to dramatically lower and more affordable levels right? As you know, housing prices were cratering long before CovidScam.
Covid 19 does provide a convenient scapegoat for a colossal debt bubble that was in the process of collapsing. The widespread shutdowns are serving as a controlled demolition that will be apparent soon enough.
That’s the idea.
Lots of folks are scratching their heads over the U.S. stock market rally on the back of a never-ending stream of gloomy economic reports from the MSM.
Here’s a theory: Wall Street traders are relieved that they won’t be feelin’ the Bern, come November.
Another theory: Mr market is already beginning to price in a drop in the future value of the dollar.
I think most currencies will be debased during the pandemic.
One more theory: a bull trap has formed, leading gullible retail investors to believe the coast is clear and smarter money to exit positions and go to cash.
The Financial Times
Coronavirus business update 30 days complimentary
Live
Coronavirus latest: European airport traffic drops 97%
The region’s airports handled more than 5m passengers on March 1, but that number had reduced to just 174,000 by March 31, a fall of 97.1 per cent compared to the same day in 2019.
Tell us about what’s happening around you. Are jobs being cut in your company? Sent tips and stories to coronavirus@ft.com
Singapore fights third wave of coronavirus infections
Emma Boyde, Alice Woodhouse, George Russell 12 minutes ago
World
Confirmed
1,508,507
Deaths
87,470
Updated at 23:45 08/04/2020 BST
Alice Woodhouse 12 minutes ago
Death rate as a share of confirmed cases:
87,470/1,508,507 = 5.8%
The number is increasing, and likely to continue doing so as some unresolved cases in the denominator will be added to the numerator (in case of fatal outcomes).
As I said, we don’t know the numerator of the denominator.
We are hoping that a large number of people got it and recovered. That would bring the death rate down.
But it is also true that many people are dying of coronavirus and not being counted. No one is testing corpses.
‘No one is testing corpses’
I’m starting to think you are just dense.
I’m not sure how all those “known unknowns” about who had it and either died or recovered without ever being observed will matter at the end of this. Maybe some smart statistician will figure out how to do a postmortem on the raw data to get a better estimate of the actual population level counts of cases and deaths. And the unknown number of people who recovered and now have antibodies will affect the remaining duration of the outbreak.
All of this aside, in the official data, which still reflects a lot of unresolved (recently tested) cases, we see a death rate approaching 6%. And given that we are out past a million cases, I don’t see how that number will change that drastically. It seems like the 2002-2003 SARS outbreak death rate was ultimately revised up to over 14% of observed cases, after being badly underestimated during the course of the outbreak.
Given that the global rate is a weighted average of constituent countries’ rates, many individual countries have death rates in line with the overall rate.
For a : “📢🎤 it’s just a common.cold folks!”
The runny.nose kid gubbers.👾 sure requires a lot of special medical per$onnel & device$ & clothing$ equipment … 😷
Used to be popsicles & children’s aspirin.
We won’t know the actual net effect for at least a year — i.e. after the virus has run its course. At that time only a simple calculation is required — just subtract expected deaths from actual deaths.
If we don’t do much more widespread testing we may never know the actual death rate. However, the number of actual deaths that can be attributed to the virus will be an easy calculation.
just subtract expected deaths from actual deaths.
Ironically, the overall death rate is dropping suggesting the epidemic actually saves lives. We’ll have plenty of statistics, but we may never know much.
PPT hard at work:
https://66.media.tumblr.com/3bfbe1e8ad89b00f1187237917dc0163/bcb48e2121a7e913-90/s250x400/cfbb1274ba0d6eeaee92b4d1923bce58cc9637d7.gif
That’s amazing. How did you capture that footage?
I know, the artist’s rendition is uncanny… great job to whoever made it… 🙂
Tank$
(The dude is “Al Green.i$.$pent” ugly! & the crank handle need$ to be on thee rever$e $ide, improves $peed & le$$ $caped knuckle$!)
That’s amazing.
Thought the fed was slow as a 50s black-n-white dinosaur?
https://finance.yahoo.com/news/vivera-pharmaceuticals-chief-medical-officer-224226989.html
Hope it works. We need something along these lines to escape from society-wide house arrest.
Tell me about it!!!
It’s tough on parents, even with grown up kids in the household, but much harder if they are still of school age or younger.
I got a message from our regional center social worker earlier today reaching out. They’ve got to know this is majorly disruptive and stressful for families relying on outside services. Parents aren’t special education teachers, ABA, speech and occupational therapists all rolled into one and teleconferencing platforms aren’t necessary an option. I also feel bad for the small businesses and their employees providing these services. The stay-at-home order is hurting them bigly.
Just did some distant (6′) socializing with a friend who is a PUSD teacher.
She was gloating a bit about the many expressions of parental surprise over how challenging life is without the benefit of public school teachers to take custody of children during work hours.
I have no doubt GenEd teachers are underappreciated. I make sure my son’s teachers, service providers and administrators know that I respect, appreciate and support them.
Just did some distant (6′) socializing with a friend
This made me laugh because of a study I was reading the other day where they said it easily travels 25′, rendering the 6′ thing almost useless.
“how challenging life is without the benefit of public $chool teacher$ to take cu$tody of children during work hour$”
Oh, the “evil” “non.prophet$” public school$
Oh, the “evil” non.profit$ po$tal $ervice.
Oh, the “evil” FBI
Oh, the “evil” BLM
$ad. … “deep.$tate” $ad.
“evil” BLM
Bureau of Land Management, right?
The Financial Times
Emma Boyde 32 minutes ago
News you might have missed
US pharmacists are now allowed to order and administer coronavirus tests, as the federal government tries to expand access to diagnostic testing. It was not clear how the samples collected at local pharmacies would be processed to deliver a result.
Germany has carried out more than 1.3m coronavirus tests since the pandemic started, and is now conducting more than than 56,000 every day.
…
“I have no doubt GenEd teachers are underappreciated“
I make it a priority to show my gratitude to my kids teachers often either with words, financially contributing, or offering my time to help in anyway i can. Dealing with 30ish kids daily is no joke, i can barely handle 2.
Dealing with 30ish kids daily is no joke
I know! My son’s GenEd class has 35 kids. The teacher posts pictures and videos to Seesaw so parents get an occasional glimpse.
From reading /Teachers the whole thing is a joke but a godsend to teachers, esp in Title 1 schools.
The teachers pretend to teach online but most the students don’t even pretend to learn.
H/T Aaron Layman – Twitter:
https://www.cnbc.com/2020/04/01/chief-regulator-says-mortgage-bailout-is-on-the-honor-system.html
Real Estate
Chief regulator says mortgage bailout is ‘on the honor system’, pleads with borrowers to be honest
Published Wed, Apr 1 20202:03 PM EDT
Diana Olick
“While the mortgage market was much healthier going into this crisis than it was going into the subprime mortgage crisis [cough!, cough!], there is still one very vulnerable area: FHA loans. These are low down payment loans to borrowers with lower credit scores, and they are insured by the federal government.“
“The truth is that subprime really didn’t as much go away as it went into FHA, so you have a lot of FHA borrowers who I think are vulnerable. The real question is the duration of this,” Calabria said.
– FHFA Director Mark Calabria, no less. How is this better than Mel Watt?
– Supposedly had oversight for FNMA, FMCC, FHA. Never mind that FNMA, FMCC are also full of subprime…
– Good Lord! The fox was guarding the hen house! Who knew?
– Don’t worry though, ’cause John and Jane Q. Taxpayer are the backstop. This is fine!
You must not pay much attention. It was Watt & co who turned FHA into what it is. The current director has been warning about FHA and with the administration, trying to roll it back. If you followed the AEI conferences (they’re free, all it takes is signing up) you would know that since Watt was run off, all of the GSE’s have been pushed to tighten various aspects of their risk layering. Which I suspect touched off the housing ebola phenomenon since 2018. Now Calabria is fighting the swamp who want Fannie and Freddie to bail-out the non-banks. See previous post.
OK, thanks for that perspective! Yes, just saw last post WSJ article on this. So Calabria is trying to undo the Mel Watt structure. Gordian knot situation to me. Yes, the GSEs have been reversing, but I thought only recently (2020). I don’t think we’re there yet.
“Now Calabria is fighting the swamp who want Fannie and Freddie to bail-out the non-banks.”
Is there enough bailout money to bail out anyone who whines loudly enough?
There’s not. We find ourselves in the midst of a Sherlock Holmes thriller. (Pardon the reference to my rediscovery of Basil Rathbone’s series in lock-down, currently mid-way in Dressed To Kill). Swamp/REIC is hiding behind the term servicer. However these servicers were in fact the FHA lenders too. REIC wants to use this cover to extract moneys from Fannie/Freddie for non-banks who snorted the FHA cocaine. WTF does Fannie/Freddie have to do with FHA? Anyway, Fannie/Freddie are broke – thanks Obama era draining of their every penny of profit to treasury, also reversed by current FHFA. Cue Diane to put out weekend youtube “The Mortgage Industry On Verge Of Collapse” or something. FHFA guy goes to WSJ to point out they are full of shite. Don’t miss the exciting conclusion.
“Is there enough bailout money to bail out anyone who whines loudly enough?”
Ye$ or no is a $ufficient an$wer.
? … Does the approval$ of any bailout$ legi$lation fund$ 📝require the $ignature 🖍of thee.🍊.jesus?
Another reason to vote for Trump and not Creepy Joe.
You bring up a good point. Biden, the Clintons, and Obama are birds of a feather when it comes to the philosophy of serving pitchers full of government-guaranteed subprime loans to anyone who can fog a mirror, followed by personal bailouts and unlimited Save Our Homes protection against eviction for anyone struggling to pay the monthly.
Does that collection of $ins = thee current$ $6 Trillion$ + “UNLIMITED” + $4.86 Trillion$ fer foriegn “Nation$.Building”
Yer the math.guy dear Professor, you can ballpark the e$timate$.
Unlimited QE is too-big-to-tally.
“Unlimited QE is too-big-to-tally”
Gander$ a wild gue$$!
Like in Apollo 13, where yer life depend$ on a good gue$$.
$10-$12 trillion, plus whatever in addition to that is deemed necessary for instantaneous recovery once the outbreak ends? (Totally wild guess, to be sure!)
Relying on “thee.evil” NA$A $cientists & figures of a staff mathematicians calculation verifications to get you safely back to yer Earthly terra.firma paradise must be fraught with anxiety & distrust, being that theys might bees a gubermint “deep.state” employee & all.
Ground controllers in Houston faced a formidable task. Completely new procedures had to be written and tested in the simulator before being passed up to the crew. The navigation problem had to be solved; essentially how, when and in what attitude to burn the LM descent engine to provide a quick return home.
One of the big questions was, “How to get back safely to Earth?” The LM navigation system wasn’t designed to help in this situation. Before the explosion at 30 hours, 40 minutes, Apollo 13 had made the normal midcourse correction, which would take it out of a free-return-to-Earth trajectory and put it on a lunar landing course. Now the task was to get back on a free-return course. The ground computed a 35-second burn and fired it five hours after the explosion. As they approached the moon, another burn was computed; this time a long five-minute burn to speed up the return home. It took place two hours after rounding the far side of the moon.
The command module navigational platform alignment was transferred to the LM, but verifying alignment was difficult. Ordinarily the alignment procedure uses an onboard sextant device, called the Alignment Optical Telescope, or AOT, to find a suitable navigation star. Then with the help of an onboard computer, it verifies the guidance platform’s alignment. However, due to the explosion, a swarm of debris from the ruptured service module made it impossible to sight real stars. An alternate procedure was developed to use the sun as an alignment star. Lovell rotated the spacecraft to the attitude Houston had requested and when he looked through the AOT, the sun was just where it was expected. The alignment with the sun proved to be less than 1/2 a degree off. The ground and crew then knew they could do the five-minute P.C. + 2 burn with assurance, cutting the total time of their voyage to about 142 hours. At 73 hours, 46 minutes into the mission, the air-to-ground transcript describes the event:
Lovell: OK. We got it. I think we got it. What diameter was it?
Haise: Yes. It’s coming back in. Just a second.
Lovell: Yes, yaw’s coming back in. Just about it.
Haise: Yaw is in….
Lovell: What have you got?
Haise: Upper-right corner of the sun….
Lovell: We’ve got it! If we raised our voices, I submit it was justified.
It can be found @ nasa(dot)Gov
Apollo 13
📣🎙: “it’s the common.cold folks!” 👾 … Ra$h.limpbaugh$
We’ve sounded the alarm for years. Fraud is ubiquitous at Fannie and Freddie.
Did anyone think the words of a wise man who stated, “every closing is a crime scene” was a joke?
https://www.ocregister.com/2020/04/08/almost-a-third-of-tenants-fail-to-pay-april-rent-on-time-after-coronavirus-outbreak/
31% not paying rent? How much are they losing now? Profits? What profits?????
Just wait until May’s rent is due.
My husband’s words in the last hour.
What percentage haven’t been paying their mortgage on time? It’s double digits for certain.
How many pension funds and retirement accounts are chock full of mortgage backed securities?
At least the *PERS can ask their respective states to just raise taxes to made good on their pension promises. 🙂
Got TABOR?
Hey Nineteen
https://www.youtube.com/watch?v=cvg5mbM6FGs
Nice!
Sure looks good!
Mmm mmm mmm
Skate a little lower, now
The Cuervo Gold
The fine Colombian
Make tonight a wonderful thing
(Say it again)
An old French tune (by Georges Brassens) | Pomplamoose ft. John Schroeder
https://www.youtube.com/watch?v=kTP246fnKAI
Claudio Arrau Beethoven “Moonlight Sonata”
https://www.youtube.com/watch?v=W0UrRWyIZ74
I was trying to recall if I ever had the chance to hear Arrau perform live. Maybe in the late 1980s, as he passed in 1991. His bio is quite remarkable, especially given that his formal training ended when he was age 15.
I don’t know what she was singing but I liked the way she sung it. 🙂
For people who don’t have an underwater alligator gobbling up all of their discretionary savings, is cash or stoxx the better bet in the face of Unlimited Quantitative Easing?
Key Words
Billionaire Mark Cuban explains how stock-market bears feel about bulls: ‘I don’t think they are really factoring in what they are going to see on the other side’ of coronavirus
Published: April 8, 2020 at 9:58 p.m. ET
By Mark DeCambre
‘I haven’t bought anything in two weeks’: Dallas Mavericks owner Mark Cuban
Mark Cuban founded MicroSolutions and Broadcast.com before buying the NBA franchise in Dallas.
‘I don’t think they are really factoring in what they are going to see on the other side.’
— Mark Cuban
That is Dallas Mavericks owner and billionaire Mark Cuban, explaining his skepticism about the market’s recent bullish tint, despite the COVID-19 pandemic.
What will the economy look like? How will businesses restart? How many workers will be rehired? What impact will the worst pandemic in 100 years have on the American psyche?
Those were some of the many questions swirling in the entrepreneur’s mind during a CNBC interview Wednesday afternoon as he considered the landscape of the economy and market once the deadly virus subsides.
“Long term, I’m hopeful; short term, I’m uncertain,” he told the business channel.
The disease, which was first identified in Wuhan, China, in December and has infected nearly 1.5 million people worldwide, has forced the shutdown of personal and business activity, including the NBA, in an attempt to curb the spread of the contagion.
Cuban’s comments came as S&P 500 index (SPX, +3.40%) technically entered a bull market, having now risen 20% from the recent low put in on March 23.
The “Shark Tank” star said that a positive tone in the market may be a case of “buy the rumor” and “sell on the news” as “reality sets in.” Cuban said that people are natural optimists, and he’s hopeful too, but added that this doesn’t mean he’s buying into this current rally. He suspects there will be another leg lower at some point, he said.
For his part, Cuban is biding his time in cash and accumulating more when he can.
“I haven’t bought anything in two weeks,” he said. “I was in a lot of cash, and I’m trying to get more cash,” he told the network.
…
“…the possibility that the so-called coronavirus curve is flattening and the virus is spreading more slowly…”
Many apologies for persistently questioning the collective wisdom of the bovine herd. But doesn’t curve flattening come with the cost of a longer outbreak duration and more time spent in a cryogenic state of economic activity?
The Financial Times
Alice Woodhouse
36 minutes ago
Asia stocks lose momentum as investors interpret coronavirus figures
Thomas Hale in Hong Kong
A rally in equities lost some of its steam in Asia as traders weighed up the latest signs of a slowdown in the spread of coronavirus against its catastrophic impact on business and economic activity globally.
Japan’s Topix stock index dropped 1.6 per cent, putting a three-day run of consecutive gains under threat. China’s CSI 300 of Shanghai- and Shenzhen-listed shares edged 0.3 per cent higher.
Elsewhere in Asian trading, momentum continued to support prices in Sydney, where the S&P/ASX 200 added 2.4 per cent, and South Korea, where the Kopsi rose 1.2 per cent.
Mixed signals in Asian trading reflected the challenge of interpreting the latest data around the pandemic, market participants said.
Investors this week have cautiously embraced the possibility that the so-called coronavirus curve is flattening and the virus is spreading more slowly, boosting global stock prices.
…
Goldman: Buy dips early and often, before the economy reopening comes into plain view!
Here’s what Goldman Sachs is telling wealthy clients to do in this market
Published: April 8, 2020 at 2:46 p.m. ET
By Shawn Langlois
Goldman says it’s time to buy. Getty
President Donald Trump told reporters at the White House coronavirus press briefing on Monday that he sees “a tremendous light at the end of the tunnel” amid the pandemic.
Clearly, Silvia Ardagna, managing director in the investment strategy group within Goldman Sachs (GS, +6.59%) private Wealth Management, agrees with him.
‘We see light at the end of the tunnel because we believe that sooner or later the medical community will make breakthroughs, and because the fiscal and monetary response around the world, especially in the U.S., where we’re overweight stocks, has been pretty aggressive and forceful.
That’s the bullish view Ardagna shared with Bloomberg News in an interview Wednesday.
“Right now is a good time to get back into markets and take advantage of the decline in equity markets to position for the rebound,” Ardagna added.
Her comments follow the advice of Goldman’s investment strategy group from mid-March, which advised clients to gradually add risk assets after the big pullbacks.
“When valuations are so low, when there’s been pretty sharp drawdowns in equity markets, on a 12- to 18-month horizon, the probability of getting a positive return is pretty high,” she said.
…
(Totally wild guess, to be sure!)
& who$e Political President/👑 “nom.de.plume” will$ ye bee attachin’ to tho$e
Trillion$ Dollar$ fiqure$?
(Fer some folks eye recognize it’$ a “hairball$” kinda admi$$ion)
Seems like thee negotiations are off on the wrong foot.
The Financial Times
Oil & Gas industry
Russia rejects US suggestion on oil cuts
Move comes ahead of G20 meeting to discuss production on Friday
The RN-Tuapsinsky oil refinery in Tuapse, Russia
Russia has said it will only agree to a deal to cut global oil production if the US also accepts mandated curbs on its production
© Andrey Rudakov/Bloomberg
Henry Foy in Moscow and David Sheppard in London 15 hours ago
Russia has rejected suggestions that a market-driven fall in oil production from US shale producers could count towards the country’s share of a potential global crude reduction deal, dampening hopes of a significant agreement this week.
Russia, Saudi Arabia and other major oil producers including the US are set to hold meetings on Thursday and Friday in an attempt to hash out a deal to cut global oil production, after a dramatic fall in demand because of the coronavirus pandemic caused prices to drop by around 50 per cent.
But Moscow has said it would only agree to a deal if the US also accepts mandated curbs on its production, and on Wednesday dismissed an idea that a natural reduction of unprofitable shale production because of the lower oil price could account for the country’s share of cuts.
“These are completely different reductions. You compare the general reduction in demand with reductions for stabilising world markets. It’s like comparing length and breadth,” said Dmitry Peskov, spokesman for president Vladimir Putin.
The rejection is a sign that the Kremlin is demanding more cuts from US oil producers than President Donald Trump has suggested would be possible.
Traders banking on a deal this week have helped drive Brent crude, the global benchmark, around 40 per cent higher since it hit an 18-year low last month. It is still more than 50 per cent lower than at the start of the year.
Opec members and allies such as Russia will meet on Thursday and a G20 meeting of energy ministers will take place on Friday. A key part of the G20 plan is for countries with private sector-run industries to offer already-announced cuts to capital expenditure as their contribution, according to people familiar with the matter.
…
Fuel Demand Is Cratering Like Never Before
Published: April 8, 2020 at 4:59 p.m. ET
By Matthew C. Klein
The coronavirus depression continues to break records for energy consumption—and some segments of the market have further to fall.
For the week ended April 3, American consumers used an average of 5.06 million barrels of finished motor gasoline each day, while airplanes used an average of 755,000 barrels per day of jet fuel, according to the U.S. Energy Information Administration’s latest weekly estimate of demand for petroleum-based fuels. These figures are down about 50% from comparable periods in recent years.
…
At the current burn rate, my tank of fuel will last a whole year.
“$ufferin’ succotash”!
BREAKING|Apr 8, 2020
Ray Dalio: ‘We’re Heading Into A Great Depre$$ion”
Alexandra Sternlicht Forbes Staff
Crucial quote: “This is not a rece$$ion; this is a breakdown. You’re seeing the same thing that happened in the 1930$.”
“We’re not going to go back the way it was,” said Bridgewater Associates founder Ray Dalio in the virtual TED talk. “We’re going to re$tructure our economy and re$tructure our financial $ystem” over the next couple of years in order to recover.
Key Background:
The coronaviru$ has hit the economy with cata$trophic result$: with 10+ million Americans filing for unemployment in the last two weeks of March alone, incredible volatility in the stock market, and all businesses deemed non-essential shuttered with 97% of Americans under stay-at-home orders. The difference between the coronavirus crisis and other economic crises is that this one is caused by a public health emergency, making it an economic and societal problem without a history-tried solution.
“This is a huge, unprecedented, devastating.
🎈🎈🎈🎈🎈🎈🎈🎈🎈👾📌
Uh…is this the same dude who says that the dollar is going to Zimbabwefy any day now?
Depression and dollar Zimbabwefication don’t jibe.
Ju$t got$ to roll$ with it dear Professor! 🎲🎰🎲
“It’s not that they’re in financial trouble. It’s that they’re trying to be prudent about developing a new playbook for a new economy.”
Not in financial trouble, you say?
Hmm…what to say here, what to say? Oh, I know, instead of looking for a bailout so you can take advantage of the upcoming carnage, how about pay your damn rent?!
With green shoots of recovery sprouting and the bluebird of happiness heralding the arrival of spring, stock markets the world over have nowhere but up to go from here.
The Financial Times
FTfm Exchange traded funds
Investors pull €22bn from European ETFs in worst month for funds
BlackRock, DWS and UBS among managers with the biggest outflows in March
The bear market conditions together with the heavy outflows set stormy outlook for ETFs
© Bloomberg
Chris Flood 3 hours ago
Europe’s rapidly expanding exchange traded fund industry suffered its worst month on record in March as stock markets across the region fell sharply in response to the economic disruption caused by the coronavirus pandemic.
Investors pulled €21.9bn from ETFs listed in Europe in March, the largest monthly withdrawal on record, according to Morningstar, the data provider.
“We haven’t seen outflows like these even in the darkest days of the global financial crisis of 2008 or during the height of the eurozone debt crisis,” said Jose Garcia-Zarate, associate director, passive strategies research at Morningstar.
Outflows in March from European listed ETFs were more than double the previous record of €8.3bn set in August 2019 when concerns about the impact of rising trade tensions between the US and China prompted investors to reduce their exposures to stock markets.
Europe’s ETF industry has enjoyed consistent growth over the past two decades with only temporary interruptions to its expansion. But the combination of heavy withdrawals in March along with the onset of bear market conditions raises questions about the future growth trajectory for ETFs in Europe after the industry’s assets sank 13 per cent to €781m last month.
“The scale of the drop in assets is quite staggering. This is quite a change from the start of 2020 when we all were placing bets on when ETFs in Europe would hit the €1tn mark,” said Mr Garcia-Zarate.
BlackRock, the world’s largest asset manager and the dominant player in Europe’s ETF industry, registered outflows of €6.6bn in March. UBS, the fifth-largest player, had even larger outflows of €7.3bn, while DWS, the asset manager owned by Deutsche Bank, suffered outflows of about €4.8bn.
…
$ynchronized.Global.$lowing is a $ocial.Media Digital.Di$informational myth!
Economic Report
Consumer sentiment sinks to 9-year low as coronavirus slams economy
Published: April 9, 2020 at 10:48 a.m. ET
By Jeffry Bartash
Consumer sentiment index tumbles to 71 in April from 89.1
…
Don’t look now, but the U.s. case count is approaching 1/3 of total global confirmed cases. And daily U.S. deaths are nearing the 2000 mark: Over twice the 2002-2003 SARS outbreak worldwide total dying in the U.S. alone each day.
Rates of occurrence matter!
Also, FYI, 88,000/1.5 million = 5.9%.
Live Updates
Coronavirus live updates: Cases top 1.5 million globally
By Ben Westcott, Julia Hollingsworth and Adam Renton, CNN
Updated 0728 GMT (1528 HKT) April 9, 2020
What you need to know
– The numbers: The novel coronavirus has infected more than 1.5 million people and killed over 88,000 worldwide, according to Johns Hopkins University.
– US cases top 432,000: America’s death toll stands at more than 14,800 after the country recorded 1,922 deaths on Wednesday — the most in a single day.
…
I’m hearing more talk that the virus has been in California for months before the lockdown possibly giving the state a partial immunity. Also the NY strain is related to the virus out of Europe not China. CA and WA strain is out of China. VDH has a podcast he mentions this virus being in CA for many months even before China went full Coscto.
virus out of Europe not China
There’s also talk that the Europe infection is from China too. This planet of ours sure seems circular.
🎶 It’s a small, small world! 🎶
Joking aside, it sounds like there a different traceable strains.
VDH
Victor Davis Hansen?
Listening now: https://podcasts.apple.com/us/podcast/episode-10-the-eeyore-syndrome/id1497835168?i=1000470816585
VDH makes a point that the COVID-19 data is so incomplete that it’s not just worthless but counterproductive.
“…worthless…
counterproductive…”
Got hyperbole?
counterproductive
Ridiculous! It keeps lots of folks busy.
Heard a doctor say that if you get a flat tire in the hospital parking lot it is diagnosed as COVID.
Hospitalizations for COVID-19 Drop Sharply in New York
April 9, 2020 Updated: April 9, 2020
‘New York saw a net increase of just 200 hospitalized COVID-19 patients, officials announced Thursday, another day of figures suggesting the state has reached its peak in the pandemic. “The hospitalization rate does suggest that’s it’s coming down,” New York Gov. Andrew Cuomo told reporters in Albany.’
‘Only 84 patients were admitted to intensive care units in the last 24 hours, the lower number seen since the middle of last month. If New York did reach the peak of hospitalizations and new cases, the plateau is significantly lower than nearly every model predicted. One projection officials were aware of, from Columbia University, said New York City alone could need 136,000 hospital beds on the most serious day while other models estimated as many as 110,000 beds would be required across the state.’
‘Instead, New York has about 18,000 patients in hospital beds and saw the lowest daily increase of hospitalizations since March 18. The number of ventilators needed—once projected to be as high as 40,000—has also reached nowhere near the upper estimate. Cuomo’s office has not answered multiple queries about how many ventilators the state now needs’
https://www.theepochtimes.com/hospitalizations-for-covid-19-drop-sharply-in-new-york_3305376.html
nowhere near the upper estimate
Interesting discussion by VDH on the strategic upside of prognosticators being always pessimistic.
counterproductive…”
Got hyperbole?
Shuttering our economy isn’t counterproductive?
https://www.freep.com/story/money/personal-finance/susan-tompor/2020/04/09/coronavirus-mortgage-refinance-rate-unemployment/5078629002/
“For people who are unemployed, it’s going to be more difficult to qualify for a mortgage at this time,” said Bill Banfield, executive vice president of capital markets for Detroit-based Quicken Loans.
“The ability to repay debt is based on the person’s income.”
I don’t know about you, but I don’t think I want to live in a world where it’s easy for unemployed people to buy houses.
“The ability to repay debt is based on the person’s income.”
Hehe…that’s so draconian; the humanity!
I don’t know about you, but I don’t think I want to live in a world where it’s easy for unemployed people to buy houses.
That’s one way to make sure the employed continue to pay top dollar for their housing. Which has to happen one way or another or the whole system falls apart.
Austin Business Journal
Experts fear what’s ahead for Austin apartment market
Because of a glut of apartments delivered in 2019 — about 11,200 units — management companies in Austin were already offering more concessions to renters, …
1 day ago
Wa happened to my shortage Austin? And haven’t we been told to build more to bring prices down? What’s to fear?
“Haven’t we been told to build more to bring prices down?”
We can hope.
Here is an interesting tidbit from the anti-landlord revisions to NYC rent regulations passed by the NY State legislature last year. It concerns “preferential rent.”
Obviously, regulated rents are far below market rents in prime areas of Manhattan, and some gentrifying areas elsewhere. But that isn’t the case universally, where the combination of new buildings hitting the market and a recession are likely to bring market rates down. Regulated units are in older buildings.
In the deep early 1990s recession outer borough landlords were required to offer rents below the regulated rent would allow, called “preferential rent” here. They caught up to the regulated rent later. The new law says if preferential rent is given, future increases are from that lower level. So if landlords cut rents to fill units, they are left with lower rents than the law would otherwise have allowed in perpetuity.
San Diego, CA Housing Prices Crater 17% YOY As Southern California Chokes On Decades Of Subprime Mortgage Lending
https://www.zillow.com/san-diego-ca-92109/home-values/
*Select price from dropdown menu on first chart
As a noted economist said, “I can $50k for my run down Chevy truck but where is the buyer at that price? So it is with all depreciating assets like houses and cars.”
A tsunami of liquidity has flooded Wall Street today in the face of bad new unemployment data. Must tell Lil Sis to cash in on her dips buying stock market gains before the tsunami tied washes back out to sea.
Treasury yields pare decline after Fed stimulus offsets disappointing jobless claims data
Published: April 9, 2020 at 8:43 a.m. ET
By Sunny Oh
…
Another 6.6 million Americans filed for unemployment benefits last week
By Anneken Tappe and Annalyn Kurtz, CNN Business
Updated 10:30 AM ET, Thu April 9, 2020
People queue to receive the printed Unemployment Benefits application in the parking lot of Kennedy Library in Hialeah, Florida, USA, 07 April 2020. Hundreds of residents lined up hours before locations were scheduled to open Tuesday across Hialeah, to submit paper applications for unemployment benefits as the state attempts to address problems with its website amid the increased number of applicants during the widespread of the SARS-CoV-2 coronavirus which causes the Covid-19 disease. (Photo by Cristibal Herrera/EPA-EFE/Shutte/Shutterstock)
New York (CNN Business) Another 6.6 million people filed for unemployment benefits last week, according to the US Department of Labor, as American workers continue to suffer from devastating job losses, furloughs and reduced hours during the coronavirus pandemic.
It was the second largest number of initial unemployment claims in history, since the Department of Labor started tracking the data in 1967.
Altogether, about 16.8 million American workers, making up about 11% of the US labor force, have filed initial claims for jobless benefits in just the prior three weeks alone. About 7.5 million workers filed for their second week of benefits or more last week.
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6-Week Backlog For Unemployment Claims As 302,000 File In CT
https://patch.com/connecticut/milford/6-week-backlog-unemployment-claims-302-000-file-ct
Gold is 📈
U$ Dollar📈
FA$ Is just a hop, $kip & jump from it$ Feb 2020 $106.86 📈
“Go dog, go!”
“Where i$ you going dog?”
“To a dog party!” 🎉🎉
They just put high yield bonds on the COVID-19 ventilator. Does this effectively make every bond rating Aaa? And can the life support ever henceforth be removed?
The Financial Times
Federal Reserve
Fed to provide extra $2.3tn in loans
Central bank moves to support high-yield debt market and help stricken municipalities
© AP
James Politi in Washington and Colby Smith in New York an hour ago
Jay Powell said the Federal Reserve would use its powers “forcefully, proactively and aggressively” until the economy recovers from the coronavirus shock, as the US central bank moved to offer an extra $2.3tn in credit and support the market for high-yield corporate debt.
In remarks by webcast to the Brookings Institution on Thursday, the Fed chairman said the emergency measures being rolled out in recent weeks were necessary given the “very unusual circumstances” of severe economic and financial dislocations, but would be rolled back once the crisis eased.
“We are deploying these once lending powers to an unprecedented extent, enabled in large part by the financial backing of Congress and the Treasury. We will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery,” Mr Powell said.
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The Financial Times
Markets Briefing Markets
Fed action jolts equity and credit markets
Global stocks trade higher and junk bond fund soars on expanded central bank role
Japanese stocks fell on Thursday following three days of gains
© AFP via Getty Images
Philip Georgiadis in London, Thomas Hale in Hong Kong and Eric Platt and Matthew Rocco in New York 11 minutes ago
Global stocks climbed and credit markets rallied after the Federal Reserve unleashed new stimulus to prop up the economy in the face of another surge in US unemployment claims.
The measures by the US central bank, which said it would provide an additional $2.3tn in loans to shore up the economy during the coronavirus pandemic, included a hotly anticipated move to back the $1.2tn junk bond market where lower-rated companies secure funding.
The largest high-yield bond exchange traded fund — known by its ticker HYG — soared 7 per cent at the market open in New York, putting it on pace for its biggest one-day gain since the financial crisis. A barometer of higher quality investment-grade corporate bonds, the ETF called LQD, rose 3 per cent.
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Did you miss the chance to buy the dip?
The Financial Times
US equities
US executives rush in record numbers to ‘buy the dip’
As the stock market plummeted last month, managers of big companies saw value
Richard Henderson in Melbourne 5 hours ago
Executives at big US companies bought their own stock in record numbers last month, capitalising on a sharp drop in equity prices and injecting optimism into a market rally that has since gathered momentum.
Insider buying from chief executives, chief financial officers and board directors at big US public companies hit $1.1bn in March, the biggest total since October 2013, according to data provider Smart Insider. The purchases came from 994 executives, a record in data running back to 1990.
Insider buying is closely tracked by investors to gauge the levels of confidence in boardrooms, and helps explain a near 23 per cent gain in US stocks since March 23 that has partially reversed the rapid decline that began in February.
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Bernanke rejects Great Depression comparisons as he says GDP could slump by 30%
Published: April 8, 2020 at 8:40 a.m. ET
By Steve Goldstein
Ben S. Bernanke, former chairman of the U.S. Federal Reserve. Bloomberg News/Landov
Ben Bernanke, the former chairman of the Federal Reserve, is a scholar of the Great Depression, a background he put to use during the global financial crisis when he invented many of the emergency lending programs the central bank is now reusing.
But he thinks the Great Depression is a bad comparison to make to the current economic nosedive caused by the shutdowns in reaction to the coronavirus pandemic.
“People have made comparisons to the Great Depression. It’s not a very good comparison. The Depression was 12 years long,” he said at a presentation on Tuesday sponsored by the Brookings Institution, where he is a fellow-in-residence.
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12 years long
OK! 1 month down and counting.
And Gold is going up
Ben, I think you might like this presser clip. Keep your eye on Barr’s face.
https://twitter.com/stclairashley/status/1247931290395062274