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If You Have Inventory, You’re Cutting Deals

A report from the Sacramento Bee in California. “As concerns of another economic downturn in the style of the housing market crash of 2007 or even the Great Depression nearly 90 years prior continue to swirl in the midst of the coronavirus pandemic, speculation is endless and fears are mounting. The Sacramento Bee spoke with several economists to get a better sense of the severity and longevity of the current crisis, which has resulted in mass layoffs, store closures and bankruptcies.”

“Chris Thornberg, a Southern California economic consultant, argued that the recession caused by the coronavirus is fundamentally different than previous downturns due to the fact that it was not caused by a faltering economy or struggling market, which may mean a relatively quick return to pre-pandemic conditions. ‘This is not the same kind of unemployment you saw during the Great Recession,’ he said. ‘This is not a financial bubble.'”

The Orange County Register in California. “It’s awfully hard to cheer when new-home sales in the six-county region fell 11.5% as the coronavirus crimped the economy. DQNews reported builders completed sales for 1,226 new residences last month, the slowest April since 2012. But note what happened in the resale market: Only 12,600 existing homes and condos sold — down 33% in a year. It added up to the worst April for Southern California homebuying in DQNews records dating to 1988. Worse than the mid-1990s housing slump. Worse than the bubble-bursting Great Recession days.”

“The battle to thwart the coronavirus has hammered most of the economy, costing California more than one-fifth of its jobs. That kind of business disruption has meant at least 1-in-14 mortgage borrowers nationwide have some sought house-payment forbearance. The folks peddling new homes also seem willing to discount. Research from Meyers shows roughly two-third of builders are promoting ‘concessions’ — offers to help with closing costs, interest rates or upgrades. And quietly, maybe you’ll find a few cutting prices at slower-selling projects.”

“‘There’s no deep discounting. But behind closed doors, you might probably see some incentives, 2% or 3%,’ says Leonard Miller, CEO of Orange County-based builder New Home Co. ‘If you have inventory, you’re cutting deals.'”

From Jonathan Miller in Forbes. “As I read through available housing stats during this COVID-19 era to get a general sense of where the overall market is going, it is notable how difficult that task has become. Everything we look at seems to require an asterisk. “The April 29th release by NAR is the most current version available as of this moment, and it reflects the market data of March that includes ‘meeting of the minds’ data from February. This PHSI release represents a two-month lag, and the following chart using non-seasonal YOY% change patterns is pretty terrifying. And that’s just the data through March.”

“There are specific periods, especially in quickly deteriorating markets, when large swaths of contracts don’t close. In New York City’s situation where I am based, closing attorneys tell me that written contracts lag the ‘meeting of the minds’ by a month or more right now. Buyers are trying to cut better terms, and sellers are trying to keep the deal together.”

The Real Deal on New York. “The U.K.’s billionaire Reuben brothers have snapped up another Manhattan real estate bargain. The investors bought a $100 million piece of a construction loan SL Green Realty made to the developers of a Gramercy Square condominium development, sources told The Real Deal. The purchase price was a discount of somewhere between 96 and 97 cents on the dollar, according to a source.”

The Record Eagle in Michigan. “The Traverse City residential scene remained a seller’s market this spring, with potential buyers anxious to scoop up houses as soon as they could sign the papers. But one segment of the local real estate market may feel the effects of the pandemic shut-down far longer than most: short-term rentals. ‘I’m kind of freaking out,’ said Anne Leonardi, who rents out a single property near Traverse City through Airbnb.”

“She began renting a house last year, and had a great summer in 2019. The future looked bright, and she borrowed money for project not related to the rental — but is counting on rental income to pay back the loan. The pandemic has her worried. ‘I do not have any full weeks booked,’ said Leonardi. ‘I have nothing in June, three three-day weekends in July. And then August I have three weekends. I’m down about $15,000’ compared to last summer.”

“‘We have some that are still scheduled for July at this point,’ said Katie Marks. ‘About one third of our income comes from Airbnb. Our Airbnb is actually on the same property that we live on. We took over my parents’ house because they couldn’t afford it anymore. To keep our other house on the property we rent it out in the summertime. That pays for our mortgage and our taxes on that house. I’m just really hoping that we will be able to start renting in July, because if we can’t, we can’t pay for the house for the rest of year.'”

“‘I think you’re going to see some people that bought them as an investment, maybe so they could hold them until retirement or whatever, that are going to find themselves — not only not seeing the kind of income that they were planning for coming in this season — but, you know, the taxes aren’t going down. Most of those properties are non-homestead. So it’s a burden for them to hang onto because of the tax situation,’ said Traverse Area Association of Realtors Chief Executive Officer Kim Pontius.”

The Tahoe Daily Tribune. “With millions unemployed across the United States, both California and Nevada issued statewide eviction moratoriums at the end of March regardless of tenants’ ability to pay rent. But as the future remains murky amid the novel coronavirus pandemic, both renters and landlords are concerned about what will become of the overdue rent.”

“Across the state line in South Lake Tahoe, the status of unpaid rent is causing confusion and concern for renters and landlords alike. Martina Simon and her husband own 15 studio apartments in the city, and with California’s eviction moratorium in place, it’s been ‘stressful and frustrating.’ ‘We feel like we are truly the one entity and small business — because we are not a huge company with hundreds of rentals and deep pockets — that provides a service that currently the people of California have been told they don’t have to pay for: the roof over your head and your utilities,’ explained Simon.”

“‘We have a tenant who was supposed to provide documentation showing that he lost his job, but he hasn’t done that. He hasn’t given us anything; he just hasn’t paid,’ said Simon, who is currently working 70 hours a week cooking meals at a local school and working at a grocery store to make sure her family is secure while her husband manages the rentals. ‘We have other renters who have received unemployment and stimulus checks, but are already saying to us, ‘we don’t know about rent next month…’ added Simon.”

From Realtor.com. “After whiffing last year, Boston Red Sox legend David ‘Big Papi’ Ortiz is making another attempt to sell his massive home in Weston, Mass. It’s now available for $5.5 million—an almost 13% price cut from last year’s asking price of $6.3 million.”

The Tampa Bay Times in Florida. “New April home sales numbers released Thursday show that the pandemic has dramatically stunted the housing market — though some parts of the market more than others. In Tampa Bay, that trend was largely replicated, according to official numbers released by Florida Realtors. Hillsborough County saw an 18 percent drop in single-family home sales in April compared to 2019. Pinellas tumbled 27 percent.”

“But the new numbers also show that these drops were not distributed equally. They were fueled mostly by plummeting sales of the most affordable single-family homes — less than $250,000 — while more expensive properties still were sometimes sold at rates that were actually higher compared to last year in Hillsborough and Pasco counties.”

“Michael Bindman, a real estate broker and owner of the firm NextHome Gulf to Bay, said Pinellas’ issues likely center around the fact that April is peak season for out-of-town tourists from up north to come down to the beaches and also scoop up second homes. ‘They’ll buy and they’ll be closing before they go back up north which tends to be end of April and May,’ he said. ‘That’s a huge part of the market … that didn’t happen this year.'”

“He also pointed out how the pandemic has made lenders much more conservative, making them hesitant to grant so-called ‘jumbo loans’ to buyers looking to purchase million-dollar houses.”

“Lou Brown, a broker that specializes in lower-to-moderate priced homes in Pinellas, said he’s concerned that if prices continue to go up in the months to come, the market will leave some people forever unable to purchase homes. The pandemic has revealed just how many people were already living paycheck-to-paycheck.”

This Post Has 153 Comments
  1. ‘The purchase price was a discount of somewhere between 96 and 97 cents on the dollar’

    DONG!

  2. ‘the new numbers also show that these drops were not distributed equally. They were fueled mostly by plummeting sales of the most affordable single-family homes — less than $250,000 — while more expensive properties still were sometimes sold at rates that were actually higher’

    UHS, what does this do to the median?

    ‘The pandemic has revealed just how many people were already living paycheck-to-paycheck’

    This is probably the most stunning thing the CCP virus exposed. So just how strong was the shack market all along? How were these people getting loans if they were already living paycheck to paycheck?

    1. And if these persons living paycheck to paycheck had any money squirreled away that is now gone. I doubt many will be able to stash any money away in the near/long term. So when the next downturn comes they will be in more dire straights

    2. ‘The pandemic has revealed just how many people were already living paycheck-to-paycheck’

      Very unscientific, but I have noticed a lot more ‘stuff’ on my local craigslist.

      Could be that folks are just cleaning out their garages, or (more likely) trying to raise cash.

        1. “…I use FB marketplace too, seems to get more responses and all very local…”

          Thanks for tip, didn’t know about FB marketplace.

          Another nifty site is nextdoor.com

          They publish a neighborhood list of items to sell about once a week. Lots of stuff is free. (mostly bulky, heavy items).

          Authors comment:

          It is just beyond amazing all the junk that people buy and then sell or giveaway. No wonder so many people are so damn broke.

      1. > Could be that folks are just cleaning out their garages, or (more likely) trying to raise cash.

        A bit of both I’m sure – with more time being spent at home, even if working remotely, people are more aware of the stuff they’re not using and need to get rid of.

    3. There’s no getting around the grim reality that 90%+ of all mortgages since 2009 are in fact subprime.

      the borrowers couldn’t afford to double their shelter cost then any more than they can afford it now.

      1. Check this out:

        ‘Even now, some millennials are taking advantage of lowered interest rates and motivated sellers — even if they are technically out of work. “A lot of it was just budget,” said Stephanie Nusbaum, 30, who recently purchased her first home with her husband in Asheville, North Carolina. Nusbaum and her husband have been furloughed from their jobs, meaning they maintain their health insurance and the promise of eventually going back to work, though they do not have an income now.’

        ‘But they said that between their savings, a stimulus check from the government of $1,200 per person, and unemployment benefits, they are confident that buying was the right decision for them. “Our mortgage payment is actually less than our rent payment that we were making,” Nusbaum said, noting that their parents helped them with their down payment.’

        https://www.voanews.com/student-union/projected-us-real-estate-slump-may-help-young-home-buyers

        That’s right, no job, no down payment and they got a loan in pricey Asheville.

        1. That’s the thing – until this nonsense stops, there’s an unlimited number of idiots signing up for debt.

          1. +1 Bank of Mom and Dad. Boomers passing on the wealth. Meanwhile, GenX is getting… well I don’t know. We seem to be left to our own devices.

          2. Meanwhile, GenX is getting… well I don’t know. We seem to be left to our own devices.

            Otherwise we’d just get confused.

        2. That’s right, no job, no down payment and they got a loan in pricey Asheville.

          I wouldn’t buy a pair of socks if I didn’t have a job.

          But it’s like I said in another post: a lot of people who can’t come up with $500 for an emergency drive a better car than you do.

        3. Unbelievable!!!
          I hope like he11 we didn’t make the loan!
          I doubt we would as we were verifying employment the day before closing, but…..
          As Ben mentioned Asheville is very expensive and has Lots of 2nd homes and AirBNBs.

  3. ‘There’s no deep discounting. But behind closed doors, you might probably see some incentives, 2% or 3%…If you have inventory, you’re cutting deals’

    And since it’s behind closed doors, it could be 10-20%, right Leonard? And those buyers from February are fooked.

  4. ‘provides a service that currently the people of California have been told they don’t have to pay for: the roof over your head’

    These guvnahs are going to regret this free sh$t thing.

    1. “the people of California have been told they don’t have to pay for: the roof over your head and your utilities,’ explained Simon.”

      Much like the Robo-signing fiasco, once you’ve told a Beat they can live for free you’re probably going to need a 4WD vehicle and a chain to drag them out of the nest.

      1. Much like the Robo-signing fiasco, once you’ve told a Beat they can live for free you’re probably going to need a 4WD vehicle and a chain to drag them out of the nest.

        Yes, partly because housing is still so overpriced. So any chance to live free is the biggest incentive that exists for a Beat. If you could move on for half price or less a lot more people would do it.

  5. ‘the recession caused by the coronavirus is fundamentally different than previous downturns due to the fact that it was not caused by a faltering economy or struggling market, which may mean a relatively quick return to pre-pandemic conditions. ‘This is not the same kind of unemployment you saw during the Great Recession’

    You’re right, the unemployment is worse and getting worser.

    ‘This is not a financial bubble’

    Eat yer crowz Thornberg.

  6. ‘Doctors at John Muir Medical Center in Walnut Creek say they have seen more deaths by suicide during this quarantine period than deaths from the COVID-19 virus. The head of the trauma in the department believes mental health is suffering so much, it is time to end the shelter-in-place order.’

    “Personally I think it’s time,” said Dr. Mike deBoisblanc. “I think, originally, this (the shelter-in-place order) was put in place to flatten the curve and to make sure hospitals have the resources to take care of COVID patients.We have the current resources to do that and our other community health is suffering.”

    ‘The numbers are unprecedented, he said. “We’ve never seen numbers like this, in such a short period of time,” he said. “I mean we’ve seen a year’s worth of suicide attempts in the last four weeks.”

    https://abc7news.com/suicide-covid-19-coronavirus-rates-during-pandemic-death-by/6201962/

    1. From the SB article:

      ‘A rally at the Capitol drew 2,000 demonstrators Saturday, who continued to protest Newsom’s stay-at-home orders. At least one among them, a Roseville cosmetologist, set up an impromptu barbershop and offered haircuts to fellow protesters.’

      ‘Most hair and nail salons, which by nature involve close-quarters contact, remain closed for business across the state.’

      “We’re going to do haircuts for donations, basically try to show that being in the cosmetology industry … is one of the most sanitary industries in the state,” La Donna Christensen said. “Why do they close down the salons, but we can go to Home Depot, Walmart, Target? It’s ridiculous.”

      ‘Although California has made steps toward slowly reopening key sectors of the economy, some argued that the process is too slow and comes at too high a cost. Thinh Nguyen, a manicurist whose North Highlands nail salon has been closed by Newsom’s policies, demanded action.’

      “We’ve got to reopen everything now,” Nguyen said. “Whatever he says is all lies, this governor.”

      ‘Why do they close down the salons, but we can go to Home Depot, Walmart, Target?’

      When I go to these places people are shopping in families. If there was any real danger they wouldn’t drag their kids along. What a farce.

      1. New York City will turn into shell of former self after coronavirus crisis

        ‘Imagine New York City five years from now with streets full of abandoned storefronts, closed eateries, and empty buildings. The cumulative effects of the coronavirus may be more overwhelming than the other challenges New York City has had to face during the past two generations, including the aftermath of 9/ 11. It is likely that the pandemic will simply accelerate the trend in the sharp decline of its population and livelihoods.’

        ‘New York City was already losing population before the outbreak due to economic factors and quality of life issues. Around 40,000 residents left between 2017 and 2018 alone. The coronavirus has fueled the population outflow. About 420,000 residents have fled New York City in the last few months. Even worse for its economy, the majority of those who left amid the pandemic are wealthy workers. Many of them went to low tax havens in the south, such as Texas, Florida, Georgia, and North Carolina.’

        ‘Eventually, it will not only be the 1 percent who leave. The unemployment rate in New York City has risen above 14 percent. Residents without a job or reduced hours will no longer have the income to keep paying sky high rents for tiny living quarters.’

        https://thehill.com/opinion/technology/499393-new-york-city-will-turn-into-shell-of-former-self-after-coronavirus-crisis

        1. New Yorkers moving to the South? If it actually happens in large numbers its going to greatly change things. First North Carolina, then Texas, and Georgia are going to flip blue.

      2. If there was any real danger they wouldn’t drag their kids along. Not true for some parents. Next door neighbor when very young was taken to the scene of 2 trains colliding near her house. She still remembers the smell of burnt human flesh and the sight of charred corpses. Never underestimate human stupidity, it is always reliable.

        1. “Never underestimate human stupidity, it is always reliable.”

          And, oh, so enormously profitable.

          😁

        1. This isn’t 1918, not even close. Again, why don’t we wear masks in flu season? Show me where in the constitution that the mayor of pallokaville can deny everybody (except grocery store workers, another curious aspect) of their rights?

          And what happened to the bring out yer dead cart? That guy disappeared completely.

          As soon as the states and cities started to run out of money, they opened up. Tells you all you need to know.

          1. As soon as the states and cities started to run out of money, they opened up.

            The sensible ones. Some are staying shut and are screaming for a bail out.

          2. You can’t get any more locked down than a nursing home, and that’s where lot of deaths have occurred. It didn’t help that some guvnahs sent infected people into nursing homes. Oh well, we killed a few thousands because we didn’t want to discriminate!

            ‘The directive was meant to protect those infected with coronavirus from discrimination, a state official said.’

            https://www.wsj.com/articles/new-york-sent-recovering-coronavirus-patients-to-nursing-homes-it-was-a-fatal-error-11589470773

          3. ‘New York’s revenues are already $13.3 billion, or about 14%, below projections. The state is delaying payments and could cut outlays to school districts and municipalities if a federal aid package isn’t approved. One 49-year-old tech entrepreneur told The Wall Street Journal he and his family have moved permanently to their second home in the Hudson Valley from Manhattan. The restaurants, office meetings, opera and theater performances that previously bound him and his family to the city have disappeared, he said, and probably won’t return anytime soon.’

            ‘For tax purposes, he says, he and his peers are aware that if their children still attend school in the city, it is hard to argue the family has left. The man is considering pulling his children from the city’s elite private schools and is looking at public and private schools in the suburbs. He estimates that if he can persuade the city he is no longer a resident he will save more than $100,000 a year in city taxes alone.’

            https://www.wsj.com/articles/new-york-faces-coronavirus-tax-revenue-hit-11590411600?mod=hp_listc_pos2

            ‘restaurants, office meetings, opera and theater performances that previously bound him and his family to the city have disappeared, he said, and probably won’t return anytime soon’

            A bail-out isn’t going to reverse this. You shot yourself in the fook guvnah.

          4. ‘Kirby Knackstedt, owner of Grantfork Meats in Highland, said his processing plant is booked through January. He’s also started offering a $120 meat bundle with five pounds each of ground beef, pork chops, pork sausage, bacon and pork steaks, as well as seven pounds of cut-up chicken fryers. “We’re not having a whole lot of issues getting product in, and we’re keeping our shelves stocked pretty full,” he said. “There’s no shortage. I think it’s all political myself.”

            https://www.thetelegraph.com/news/article/8216-There-8217-s-no-shortage-8217-15287405.php

            I was at the chain market the other day and the meat section was overflowing. Hoarding potatoes and onions was a sign people had lost their minds.

          5. “Some are staying shut and are screaming for a bail out.”

            And they will get a bail out.

          6. “I was at the chain market the other day and the meat section was overflowing.”

            I went shopping this morning at Walmart, and the poultry selection was sparse while red meat was plentiful. Scarcity remains for cleaning supplies, paper products, and frozen meals, but otherwise no complaints.

          7. An example of irrational behavior: the same store recently got fresh garlic for the first time in weeks. Yet the big bottles of minced garlic were always there. It’s the same product and lasts longer in the fridge. Makes no sense!

          8. You can’t get any more locked down than a nursing home,

            Except that you have doctors and orderlies going in and out. It only takes one asymptomatic infected person to get inside, and then the walls become a liability instead of an advantage. Ask any castle under siege.

          9. Again, why don’t we wear masks in flu season?

            And again, this is a good question, considering it is common in certain other parts of the world. The same places that seem to have fared relatively well during this pandemic.

      3. One of my sons and I got our hair cut over the weekend while visiting family in Utah. We were required by county ordinance to where masks at all times while in the shop, and had our temperature taken before they would cut our hair.

        The precautions seemed a bit over the top, but at least we left the place with haircuts.

        1. at least we left the place with haircuts. Last month I gave myself a buzz cut in my backyard once I figured out barbers would be unavailable for the duration of the emergency. My brother in the Boston area shaved his head bald when he saw some of his wealthier customers doing the same. Says he looks like the Dalai Lama now. I’m still waiting for the pics.

          1. Last month I gave myself a buzz cut in my backyard once I figured out barbers would be unavailable for the duration of the emergency

            Same. In fact, just gave myself a second one yesterday.

          2. Time for my second self cut too. Not a buzz, my head is too funny.

            The barber shop will open next week, but I expect there will be long waits for a while. It’s a no-appointment kind of place.

      4. “We’ve got to reopen everything now,” Nguyen said. “Whatever he says is all lies, this governor.”

        Nguyen cracks the code.

  7. Rio Linda, CA Housing Prices Crater 24% YOY As Double Digit Prices Declines And Plunging Rental Rates Ravage Sacramento County

    https://www.movoto.com/rio-linda-ca/market-trends/

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

    1. And yet, in the Roseville-Rocklin area, the prices seem to be even HIGHER. I am seeing houses on the market now (and some even have gone to “pending” state) vs. those that were sold < 1yr ago, and noticed that, if anything, the prices are even higher now!

      Truly perplexing.

      1. Maybe they are tacking on another year’s worth of carry costs to what they “need” to get out whole.

        1. Yeah. My landlord is trying to sell some of this properties. They’ve been for sale for over a year with hardly a nibble. He just renewed the listing and increased his price 30K.

        1. Unfortunately, that is not the case! I have even seen a few where the status is “Price Increased; Pending”. Which means the prices are being bid upward…

          Not sure how long this will last. But S&P 500 crossed 3000 today for the first time in nearly 3 months… So who knows? 🙁

          1. There are a lot of stupid people in SacTown who couldn’t make it in the bay area. You dont have to be one of them but it sounds like you’re running with the herd. Scared. You know when you’re fearful your prefrontal cortex cant function, right?

  8. I read that Hertz has a fleet of 500,000 cars, and I expect that most of them will be dumped as part of the BK reorg. This of course means that other rental companies also have an ocean of cars that they would have slowly rolled over during happier times, and they too will probably be seeking BK protection soon, meaning their fleets will also be culled.

    How many used cars will suddenly be dumped on the resale market? 1 million? 2 million?

    I remember the impact on the market cash for clunkers had, and it only removed 700,000 cars, most of which where old and not worth much. Now imagine 1 to 2 million late model cars, many low mileage, being dumped on the market.

    Or will something weird happen, like the Fed or FedGov buying them up and scrapping them? At this point nothing would surprise me.

    1. All governments, even the broke ones, bail-out, prop-up, or subsidize the sales of their automobile industries. From the dealers to the auto assembly plants to the parts suppliers there are simply too many people employed for politicians to do nothing.

      1. “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
        ― Ronald Reagan

      2. there are simply too many people employed for politicians to do nothing

        Which is why I fear that millions of nearly new cars could end up being scrapped.

    2. It seems like “American business” is nothing but a huge scam.

      What do the ceo’s do?
      The only job ceo has these days is managing the debt anyway. How dumb can they be if they can’t even manage debt when the rates are so low?

      1. The only job ceo has these days is lining his own pockets by milking his company dry and leaving the dying husk for someone else to dispose of.

    3. Most of these rental car fleets are leased, not owned. It was Hertz’s inability to make its lease payments that forced it into BK. The better, newer cars will stay where they are and the older stuff will likely get shifted to the wholesale market, but over time.

      I’d pay closer attention to GMAC and FMC performance over the next few quarters. That’s where the lease financing comes from to some degree. I expect that they’ll get some “help” from the FED this fall.

      1. the older stuff will likely get shifted to the wholesale market, but over time

        So the leasing companies will just sit on the cars, hoping that demand will eventually pick up? These are the same guys who don’t want to take back cars at the end of a consumer lease.

        We’ll see how this turns out.

        1. “…So the leasing companies will just sit on the cars, hoping that demand will eventually pick up? These are the same guys who don’t want to take back cars at the end of a consumer lease…”

          “…We’ll see how this turns out….”

          Not very well, me thinks.

          A sitting/unused car deteriorates much faster than one that is actively used.

          These cars will be dumped faster than leftovers at a fish market.

          Keep your cash dry.

          A double tsunami of autos and real estate are just on the horizon.

          1. A sitting/unused car deteriorates much faster than one that is actively used.

            Not to mention that they depreciate like bricks. It crosses my mind that if one leasing company breaks ranks that there will be an avalanche. Of course, if there is a bailout hat won’t happen and all those surplus cars could meet a premature end at a junk yard.

    1. Democrats and their globalist string-pullers have an implacable hatred and fear towards churches that preach the Christian gospel and promote morality, virtue, and traditional values. The churches that serve as pulpit prostitutes for pushing the globalist narrative (the majority) and registering voters for the DNC never need worry about a raid by police. Ditto for the Christian Right kneelers and squealers for the neocons.

  9. “Remember, April is just one month. Closed sales represent buying decisions largely made before “pandemic” and “social distancing” were part of everyday thought. ”

    I would wait to see the May, and even the June and July numbers before inferring anything.

    1. That expensive and useless hospital saw no patients while the governor ordered sick COVID-19 patients into nursing homes to finish out the residents not otherwise affected.

    1. “$21 Million Brooklyn Field Hospital Shutters After Seeing No Coronavirus Patients”

      Please disregard this headline and continue running in circles flapping your arms and screaming while wearing your mask as you keep your social distance from your newly unemployed “shelter-in-place” ordered neighbors.

    2. Which raises a legit question: why are case counts going down? I know it’s tempting to think this was all overblown, but those case counts were zooming upward in March and early April. Why did they level off? Was it only social distancing? If so, then re-opening will bring the cases back within a couple weeks.

      Or maybe we are going to get a summer break? Given the example of the serious ourbreaks in meat-packing plants, we can infer that this virus seems to like chilly humidity. And now that the chilly humid spring has finally broken, the virus may be less contagious. Plus I’m expecting a boost from the Vitamin D in the sunlight. So, opening up may not be as dangerous as previously thought.

      But beware the second wave…

      1. “Which raises a legit question: why are case counts going down?”

        Virus tend to die off sooner or later

        “But beware the second wave…”

        Yawn

        1. Yawn

          I’m hoping you’re right. In other parts of the world the virus is gaining momentum.

      2. re-opening will bring the cases back

        An epidemic has a bell curve, and then it’s over. The restrictions on social contact were only intended to stretch out the curve, never to eliminate everyone having exposure eventually. For the hospitals, remember?

        New case count falling while number of tests still rising. The talking heads do not translate this into a collapsing case rate.

        Nor do they consider that the supposed infection rate is lower than the known false result character of the test. This makes the whole testing thing useless and irrelevant.

        What will be telling in retrospect is the total mortality rate. The CDC hasn’t reported total mortality since early April (week 19). The numbers to that point didn’t show any significant increase, and the supposed epidemic peak death in NY was April 1. Why would they suspend/delay their reporting? Too busy with other things? They have no problem barraging us with Covid case counts/deaths every day.

        One clear mistake the country made was believing people with computer models that predicted millions and millions of pandemic deaths. Our next big opportunity is believing Because Second Wave.

        1. “An epidemic has a bell curve, and then it’s over.”

          Early Herd Immunity against COVID-19: A Dangerous Misconception
          David Dowdy, Department of Epidemiology, Johns Hopkins Bloomberg School of Public Health
          Gypsyamber D’Souza, Department of Epidemiology, Johns Hopkins Bloomberg School of Public Health

          We have listened with concern to voices erroneously suggesting that herd immunity may “soon slow the spread” of COVID-19. For example, Rush Limbaugh recently claimed that “herd immunity has occurred in California.” As infectious disease epidemiologists, we wish to state clearly that herd immunity against COVID-19 will not be achieved at a population level in 2020, barring a public health catastrophe.

          Although more than 2.5 million confirmed cases of COVID-19 have been reported worldwide, studies suggest that (as of early April 2020) no more than 2-4% of any country’s population has been infected with SARS-CoV-2 (the coronavirus that causes COVID-19). Even in hotspots like New York City that have been hit hardest by the pandemic, initial studies suggest that perhaps 15-21% of people have been exposed so far. In getting to that level of exposure, more than 17,500 of the 8.4 million people in New York City (about 1 in every 500 New Yorkers) have died, with the overall death rate in the city suggesting deaths may be undercounted and mortality may be even higher.

          Some have entertained the idea of “controlled voluntary infection,” akin to the “chickenpox parties” of the 1980s. However, COVID-19 is 100 times more lethal than the chickenpox. For example, on the Diamond Princess cruise ship, the mortality rate among those infected with SARS-CoV-2 was 1%. Someone who goes to a “coronavirus party” to get infected would not only be substantially increasing their own chance of dying in the next month, they would also be putting their families and friends at risk. COVID-19 is now the leading cause of death in the United States, killing almost 2,000 Americans every day. Chickenpox never killed more than 150 Americans in a year.

          To reach herd immunity for COVID-19, likely 70% or more of the population would need to be immune. Without a vaccine, over 200 million Americans would have to get infected before we reach this threshold. Put another way, even if the current pace of the COVID-19 pandemic continues in the United States – with over 25,000 confirmed cases a day – it will be well into 2021 before we reach herd immunity. If current daily death rates continue, over half a million Americans would be dead from COVID-19 by that time.

          1. killing almost 2,000 Americans every day

            I hope you’re as wrong as that 2,000 number.

            “Underreported” is laughable. People in NYC bury their dead out back without telling anyone?

            I never in my life heard of “Herd Immunity” applied to humans, before this Panic.

          2. Studies (as of early April 2020) won’t be worth anything by April 2021. They’re basically imaginary due to the limited and inaccurate data currently available.

        2. One clear mistake the country made was believing people with computer models

          Seems these computer models were about as reliable as the ones used to predict catastrophic climate change. We’re still waiting for climate change events that were supposed to have happened years ago.

          1. I never in my life heard of “Herd Immunity” applied to humans, before this Panic. I heard it mentioned many times in medical school. I lost relatives in a smallpox outbreak in northern Michigan in Nov. 1881.

          2. It took a couple of years to develop herd immunity to the 1918 flu, and it may take much longer with COVID-19, given the successful use of social distancing measures to slow the spread.

      3. “but those case counts were zooming upward in March and early April.”

        New York City posts sharp spike in coronavirus deaths after untested victims added

        Doina Chiacu, Maria Caspani
        APRIL 14, 2020

        WASHINGTON/NEW YORK (Reuters) – New York City, the hardest hit U.S. city in the coronavirus pandemic, revised its official COVID-19 death toll sharply higher to more than 10,000 on Tuesday, to include victims presumed to have perished from the lung disease but never tested.

        https://www.reuters.com/article/us-health-coronavirus-usa/new-york-city-posts-sharp-spike-in-coronavirus-deaths-after-untested-victims-added-idUSKCN21W20G

        1. Our current imaginary and inaccurate data now willinclude victims presumed to have perished

      4. “Plus I’m expecting a boost from the Vitamin D in the sunlight.”

        Got plenty of Vitamin D this afternoon swimming in my BILs backyard pool at a family gathering. Hopefully none of us have asymptomatic cases…especially the medical professionals in the group.

        1. Vit D: My sister neglected caring for her self for over 5 years as her dementia got worse. One of the few things she did was take 50000 U Vit D3 a day for an unknown period of time. She got her Vit D blood level tested in early February. It was at the high limit of normal, and her doctor told her to take no more Vit D3 supplements. She’s been locked down in assisted living for almost 3 months now, and so far only a worker there has been positive for Covid-19, in a state where 70% of all COVID-19 deaths have occurred in nursing home and assisted living patients. FWIW

          1. Good luck with your sister’s situation. My parents are basically in the same boat…full lockdown since March, only a couple of COVID-19 deaths in their retirement community so far.

      5. So, opening up may not be as dangerous as previously thought.

        But beware the second wave…

        Those are my thoughts. Southern hemisphere seems to be getting hammered right now. Maybe it’s our turn again in another six months. But we should be at herd immunity after that and they can take their expensive drugs and scare tactics and stuff them.

        1. “But we should be at herd immunity after that…”

          What would bring that about? (See John Hopkins University article posted above for another viewpoint…)

        2. we should be at herd immunity after that People keep saying “herd immunity” without understanding the implications. Without effective treatment &/or prevention, herd immunity is attained by letting a disease run its course, infecting as many people as possible, killing as many as the medical system can’t save, until the supply of uninfected / virus naive people runs out. The area under the flattened curve – is about the same as under a nonflattened curve — unless decent treatment or prevention is discovered.

        3. “Southern hemisphere seems to be getting hammered right now.”

          It’s Fall right now, Winter starts in June, IIRC.

          1. In the northern parts of South America, there isn’t much difference between the four seasons.

      6. Herd immunity?

        I sure hope we get a break over the summer, so I can stock up on everything I need just in case there is a resurgence when the temperature starts dropping. Of course, it would be better if this thing just fades away altogether! 🙂

        1. I’ve got my canned food stash. Once this whole situation passes, I plan on donating it all to the food bank. I don’t really like canned food, it was just for emergency purposes.

          1. it was just for emergency

            The would be sheep herders had the time of their lives sending us into our pantries and under our beds. Do you expect them just to say that was fun and go do something productive?

  10. The mandatory mask/mouth merkin is a tool to put the final knife in the back of independent merchants.

    The chain operators will enforce the mouth merkin charade until all the independent operators are laying on the ground dead.

  11. Are you missing out on the Wall Street rally today…even though Wall Street is closed!?

    1. Got Powell bux?

      The Stock Market Is Closed for Memorial Day. The Dow Is Rallying Anyway.
      By Ben Levisohn
      May 25, 2020 11:12 am ET
      Dry Tortugas National Park is accessible only by boat or seaplane.
      Rob O’Neal/Florida Keys News Bureau

      The U.S. stock market is closed for Memorial Day. That hasn’t stopped the Dow Jones Industrial Average from rallying strongly.

      How is that possible? While the markets in the U.S. are closed, it’s business as usual for others. That means index futures are trading, and we can extrapolate from them where the actual indexes would be.

      Dow futures have gained 262 points, implying a 276.45 points, or 1.1% rise for the blue-chip benchmark if it were trading, while S&P 500 futures have gained 33.10 points, implying a 1.2% rise for the index. Nasdaq Composite futures point to a 1.2% gain for the tech-heavy benchmark, while the Russell 2000 would be up 1.6%.

      Finding a reason for the market’s gain is another story. There’s strength in both Japan, where the Nikkei 225 has gained 1.7%, and in Germany, where the DAX is up 2.5% after Germany’s Ifo business sentiment index came in stronger than expected due to a strong increase in future expectations.

      Otherwise, it is grasping for straws. NatAlliance Securities’ Andrew Brenner, for instance, offered up five reasons for the rally, including: the aforementioned German sentiment index; the fact that Chinese and Hong Kong stocks have stopped tumbling; a Bloomberg article about there being no alternative to stocks; the reopening of cities and countries world-wide, including Tokyo; and Face the Nation’s segment with Eric Rosengren, who said that the Federal Reserve would be ready to start helping small businesses this week. “So take your pick,” Brenner says. “Equities are at the highs.”

      At that rate, it could even be because I wrote a decidedly bearish Trader column in this weekend’s issue of Barron’s. At this rate, that’s not looking so good.

  12. “the people of California have been told they don’t have to pay for: the roof over your head and your utilities,’ explained Simon.”

    I will be marketing my new product “Beat – Be – Gone” to California Landlords.

    https://youtu.be/lJysIbhYzF0

  13. “‘This is not the same kind of unemployment you saw during the Great Recession,’ he said. ‘This is not a financial bubble.’”

    Strawman alert!

    If you can’t spot a collapsing bubble underway right before your very eyes, then you probably should avoid commenting in the MSM.

  14. Beware of the coming corona collapse.

    3 years from now corona will be long forgotten. Approximately 50% of white collar workforce telecommute, but they are not your neighbors. They are in Pune.

    You think they will pay you more than 100K to goof around the office and complain to the mgmt? Think again…most will be in for a huge surprise.

      1. 80/20 rule applies to employees as well.

        Great news for 80% is that mgmt doesn’t know who the 20% are.

      2. Small potatoes compared to the number of govt workers – fed, state, county. I’ve seen it as a contractor – most .gov clowns do maybe 1-2 hours of work a day. That’s why they hire contractors – to do the work they should be doing themselves but are too lazy/stupid.

        1. Small potatoes compared to the number of govt workers

          Haha. I don’t think so, bud. It’s in all sectors.

        2. That’s why they hire contractors – to do the work they should be doing themselves but are too lazy/stupid.

          Indeed. I know a woman at the USDA who has the lofty title of “Branch Chief” in IT. She has never written a line of code nor setup anything in her life. She once told me that they have contractors to do that.

          An acquaintance quit his private sector job to work at the Department of the Interior. He came back in less than a year, said he was utterly disgusted with the .gov job, that was impossible to get anything done.

  15. ‘This is not the same kind of unemployment you saw during the Great Recession,’ he said. ‘This is not a financial bubble.’”

    This tool just lost all credibility.

  16. “It’s awfully hard to cheer when new-home sales in the six-county region fell 11.5% as the coronavirus crimped the economy.

    Au contraire. From my lawn chair I’m cheering the bursting of the Everything Bubble and the financial wipeout of the fools and greedy speculators who bought into it.

  17. The purchase price was a discount of somewhere between 96 and 97 cents on the dollar, according to a source.”

    True price discovery rides a pale white horse into Gramercy Square.

  18. The future looked bright, and she borrowed money for project not related to the rental — but is counting on rental income to pay back the loan.

    Counted our chickens before they hatched, did we?

  19. “Lou Brown, a broker that specializes in lower-to-moderate priced homes in Pinellas, said he’s concerned that if prices continue to go up in the months to come, the market will leave some people forever unable to purchase homes. The pandemic has revealed just how many people were already living paycheck-to-paycheck.”

    Kinda begs the question: how did people living paycheck to paycheck manage to line up financing on a shack?

  20. I hope everyone is having a good memorial day. I’m still waiting for summer to show up out here near Seattle…

    The people saying mental health is becoming more of an issue are on to something.

    I had a co-worker from ~30 years ago who I was pretty good friends with, and last caught up with in 2007, reach out to me via linkedin a few days ago. He’s a ~decade older than me at 63, and when he replied back to my reply saying ‘sure, what’s new with you?’, I learned he was laid-off out of the blue last month after 11 years at a job and realized that he probably fighting severe depression.

    I’ll spare the details to just say I spent a few hours talking with him yesterday and I was right – found out he was divorced 6 years ago and has 2 kids the same ages as mine and realized he so much of his identity tied up in that and his work and no one really he could safely talk about personal stuff with. We ended the call with him doing a lot better -a few action items identified, and validation for just being a normal human when the world around you is looking for you to be fearless, emotionless, reliable, constant, etc.

    I’d encourage everyone here to take the time to listen to people in their lives and help them feel that’s ok and their mental health in general. A lot of people have to go around all day with a facade up to everyone, paying for this, providing leadership for that, having to put everyone else ahead of themselves and so on while they’re scared they have no idea what they are doing or how they are going to do it.

    Peace out, and pass the BBQ…

    1. a few action items identified, and validation for just being a normal human sometimes all we can do is that, short of parting with our net worth for the long and evergrowing line of people in financial distress.

    2. I pulled the eject handle at 62 with two kids in college!

      But I planned ahead as things had been deteriorating with severe budget cuts and toxic feminism metastasizing through our management ranks. As a parting-gift, I dropped an OIG bombshell on them, which resulted in several upper echelon folks asked to depart following an ethics panel review. I know it really hurt at a personal level too because these self-appointed LGBTQ moral paragons like to live well and drive fancy cars…all on credit. 🙂

  21. Big Short in U.S. Stocks Needs Watching, Says One Market Veteran
    Adam Haigh
    Bloomberg
    May 24, 2020, 11:31 PM MDT

    (Bloomberg) — A large bearish position in U.S. equities that’s been amassed by trend-following funds may prove vital to the next move for stocks, according to a strategist who’s been analyzing markets since the early 1990s.

    The S&P 500 Index is now trading within 50 points of its 200-day moving average, a metric that’s proved important when breached in the past for changes in positioning by commodity-trading advisers, known as CTAs, according to an analysis from James McCormick at NatWest Markets Plc.

    The firm’s signal, which tries to forecast changes in flows by replicating what a generic trend-following strategy would do, is near its most bearish level and positioning is at its biggest net short since 2016, he wrote in the report.

  22. ‘This is not a financial bubble.’

    LOL. It is nothing if not a financial bubble. Unlike the previous bubble, which was stock+housing, this is a stock+housing+bond (including Treasury, corporate bond and junk bond)+art+vintage_car+ bubble.

    It is a bubble in literally EVERYTHING – except precious metals.

    1. FWIW. I recall that “collector car” prices crashed last time as well. But prices did get out of hand this time around. I’ve seen early 60’s Chevrolets advertised for $50K, which I think is absurd.

      1. A big part of our culture is now dedicating to “re-enacting” a different time. I first heard it talked about as our army wanting to be WWII re-enactors rather than fighting the current war. Kind of made sense to me as a guy who had to play a LOT of Glenn Miller while I was in the army band. But then I realized everything in our car and music collector world fits that. The car guys are still trying to re-enact the 60s. And so are the guitar/amp guys. Apparently everyone sees that as a much better time to be alive. Everyone except the SJWs.

        1. The car guys are still trying to re-enact the 60s.

          Re-enact is a good word choice. From what I’ve read, a lot of those 60’s cars get a lot of upgrades when restored: 600 HP fuel injected engines, modern transmissions. updated suspensions and steering, 4 wheel disc brakes, etc.

        2. Apparently everyone sees that as a much better time to be alive.

          Well, there was a draft and a nasty war in SE Asia.

          But as they say in Spanish: Todo tiempo pasado fue mejor.

      2. Collector Cars, excluding the rarest strata of high end items, tend to be the cars that old guys, who now have money, lusted after in their youth.

        As time goes by, the old guys move on, and newer generations take their place. There’s been a softening of demand for things like a 1966 Mustang, replaced by rising demand for a 1995 Supra Turbo.

        1. Since I came of age in the late 70’s, the “cool cars” back then were a bunch slow dogs. I suppose that a resto-modded ’78 Trans Am (say with a “crate” 500 HP engine and transmission) could be cool and fast. but thanks to Burt Reynolds they are rather popular and pricey.

          But there’s no way a ’78 Mustang II will ever be cool.

        2. There’s been a softening of demand for things like a 1966 Mustang, replaced by rising demand for a 1995 Supra Turbo.

          True. But so far I’ve consistently been surprised by how strong the 60 muscle demand has remained. I honestly thought everybody who wanted one had one a long time ago. If/when demand finally dies maybe I’ll be dead too, but if not it will be amazing to see. I just went to a cruise night in Folsom last Friday night and a guy had a beautiful early Chevy II with a nice hipo 400 small block setup with everything set up for the drag strip. A few years ago it would have been one of the fastest cars on the street, but now it’s just a nostalgia piece unless he adds forced induction or nitrous. The new stuff is too fast now.

          1. “The new stuff is too fast now.”

            The new stuff is engineered from the ground up, go faster, run cooler and stop better.

          2. Was talking with a friend the other day and this came up – back circa 1980 the differences between something like a Ford Fairlane and a Mercedes 300 sedan were huge and numerous.

            Everything has since improved in so many areas, from performance specs to build quality, as well as options and configurations offered, that the gap between ‘average’ and ‘high end’ has shrunk greatly – Just look at all the new safety features you can get in a $30k compact SUV, or how we have plethora of 4-cylinder engines putting out 250-300 HP

          3. circa 1980 the differences between something like a Ford Fairlane and a Mercedes 300 sedan were huge and numerous

            Sure. Today so many of the features are tech based and if you just create a list of features they look very similar now. I also think that part of the narrowing of the gap is that the Germans now make entry level models that aren’t much better than the average economy brand model. But actually drive a generic compact GM SUV and drive an X3M that costs 2-3x and you’ll definitely notice the difference. As you should.

          4. But actually drive a generic compact GM SUV and drive an X3M that costs 2-3x and you’ll definitely notice the difference. As you should.

            Totally agree – GM is the cheapest of all the US manufacturers, in part due to all their pension overhead. Think more about the competition from Japan and South Korea against the Germans (throw in the occasional Swede as well).

            Growing up in the 70s near Detroit, I heard all too much about how sloppy the assembly lines were. Since then, lots of things like gap tolerances and weld quality have improved drastically for all – mostly thanks to robots. And CAD systems like Catia were a revolution in design.

            Quality differences along those kinds of lines has greatly diminished, but there’s nothing that can be done about the bean counters choosing to use the cheapest possible materials or less reliable/durable components because they cost less.

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