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We’re Building A Valuation Bubble

A report from the Palm Beach Post in Florida. “The economy is firing on all cylinders now, but executives and economists expect a slowdown in 2019 and 2020. The big question: When will the next recession hit? Many economists see a cooling but no contraction on the horizon, while a few predict a recession in 2020. Michael Neal, chief executive of Kast Construction of West Palm Beach, said his company’s revenue soared from $30 million in 2011 to $550 million in 2017. While Neal doesn’t anticipate a crash, he does expect economic growth to plateau over the next year.”

“‘I’m not going to scale my company up going into 2020. I’m going to plan for a slowing,’ Neal said. ‘A lot of other CEOs are probably thinking the same thing – let’s batten down the hatches, and let’s not hire a bunch of people thinking growth is going to continue at the same rate.'”

“One of the pessimists is Mark Boud, chief economist at Metrostudy, a housing research firm. He expects the U.S. economy to enter a mild recession in 2020. The latest expansion has been marked by rising real estate prices but comparatively cautious construction.”

“‘Last time, we had a valuation bubble and a supply bubble,’ Boud says. ‘We’re building a valuation bubble, but we have nothing close to a supply bubble.'”

“Yun disputed the notion that, after a decade of growth, it’s simply time for a downturn. ‘If economists are making the reasoning that we are in a 10-year economic expansion and therefore we are due for one, I think that’s a wrong way,’ Yun said. ‘There’s always a trigger as to why there’s a recession.'”

From WDRB in Kentucky. “An alarming number of homeowners and renters in Louisville in danger of ending up on the street, according to the 2018 State of Metropolitan Housing Report released at the Louisville Urban League on Wednesday.”

“The report examines nine housing indicators that are tracked to assess annual progress on fair housing and affordable housing opportunities in the 13-county Louisville metropolitan area, which includes five counties in southern Indiana.”

“The findings in the report showed a disturbing trend continues: hundreds of Louisville families face foreclosure and eviction every day.”

“‘Foreclosures are on the rise,’ said Cathy Hinko, executive director of the Metropolitan Housing Coalition. ‘Eviction court daily has, I’m sure, hundreds of evictions.'”

“And according to the report, there is a disturbing trend taking place in zip codes 40211, 40212 and 40216. ‘Those zip codes also have a large or higher concentration of black and African-American families,’ said Dr. Lauren Heberle, professor of sociology at the University of Louisville.”

“Heberle said the trend involves foreclosure sales. ‘Those are also zip codes where folks struggle to keep pace with any kind of economic improvement that the region experiences,’ she said.”

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This Post Has 42 Comments

  1. ‘Last time, we had a valuation bubble and a supply bubble,’ Boud says. ‘We’re building a valuation bubble, but we have nothing close to a supply bubble’

    Jeebus.

    2. Yun said. ‘There’s alway$ a trigger as to why there’s a rece$$ion.’”

      Eda.cate u$ Czar Yun, trigger$? … certainly hou$ehold debt$ & exceedingly low hou$e$ price$ combined with non-ex$i$tant ri$ing intere$t rates have “no.effect.what’$ $o.ever!”

      Eye’m all ear$ …

  2. ‘there is a disturbing trend taking place in zip codes 40211, 40212 and 40216. ‘Those zip codes also have a large or higher concentration of black and African-American families’

    If the system eases lending standards, defaults will rise. There isn’t any way around it. For how many years have they been easing in every way imaginable?

    May 25, 2018

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

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

    http://thehousingbubbleblog.com/?p=10443

    1. Someone needs to investigate in those zips and look for predatory lending practices. Saw these things in our local areas back in early 2000’s when values were rising. Specifically, a home improvement company was going around solitating projects and providing financing. They were subsequently foreclosing or having deeds signed over, largely from minority clients in modest neighborhoods with modest houses which were appreciating.

      It was real sinister stuff.

      1. It wasn’t sinister it was just looking for the next “mark”. People that had no clue how to use the internet , or had any critical thinking skills. And got so wrapped up into thinking it was a no-brainer to buy a house with no money down. So they gladly signed their life away. I dont think race had anything to do with it, but their stupidity level did.

    2. The photos from that article were classic, especially the buxom woman wearing the t-shirt asking “got mortgage?”

    3. Evertime Christian sells a loan, an angel gets its wing’s ripped off… and set on fire… and tossed down a flight of stairs.

  4. “The findings in the report showed a disturbing trend continues: hundreds of Louisville families face foreclosure and eviction every day.”

    Through no fault of their own, The Narrative tells me, so as a taxpayer I have a sacred obligation to put a roof over their head, financed, of course, through the same banks whose lobbyists write all legislation concerning the financial sector.

  6. Billionaire investor Steve Cohen sees a bear market heading our way
    By Shawn Langlois
    Published: Nov 14, 2018 2:38 p.m. ET
    ‘We’re definitely late cycle’
    Steve Cohen.

    All good things must come to an end. And in case you’ve forgotten — which would be understandable, given the historic longevity of this bull run — that also applies to the stock market.

    Steve Cohen, the billionaire hedge-fund investor, is the latest high-profile Wall Street player to remind us the boom times have a shelf life.
    …

    1. $pam, M&M’$ & Taba$co can handle any bear i$$ues one might encounter. Google Mad Monie$ this.day

    1. Taxi Debt$ didn’t seem to have the $ame effect on these untouchable$ NYC kingpin$:

      This recently disbarred Ru$$ian immigrant, who in 2013 elicited an angry tirade from former Mayor Michael Bloomberg (“I’m going to destroy your fucking industry”), is now cooperating with federal prosecutors in the case against Michael Cohen, President Donald Trump’$ personal lawyer, as The New York Times reported yesterday. Freidman managed cab$ for Cohen—the embattled attorney had at least 34 medallion$ to his name—and agreed to talk to investigators as part of a deal to downgrade state charges that he $kipped out on $5 million$ owed to the government, which could have sent him to prison for 25 years.

      The ‘Taxi King’ Cooperating in the Michael Cohen Case Pleaded for a Government Bailout
      “We want big poppa paying attention to us,” Gene Freidman once told Reason. “I want the government…protecting me.”
      Jim Epstein|May. 23, 2018

    2. Taxi Debt$ didn’t seem to have the $ame effect on these untouchable$ NYC kingpin$:

      This recently disbarred Ru$$ian immigrant, who in 2013 elicited an angry tirade from former Mayor Michael Bloomberg (“I’m going to destroy your fucking industry”), is now cooperating with federal prosecutors in the case against Michael Cohen, President Donald Trump’$ personal lawyer, as The New York Times reported yesterday. Freidman managed cab$ for Cohen—the embattled attorney had at least 34 medallion$ to his name—and agreed to talk to investigators as part of a deal to downgrade state charges that he $kipped out on $5 million$ owed to the government, which could have sent him to prison for 25 years.

      The ‘Taxi King’ Cooperating in the Michael Cohen Case Pleaded for a Government Bailout
      “We want big poppa paying attention to us,” Gene Freidman once told Reason. “I want the government…protecting me.”
      Jim Epstein|May. 23, 2018

    3. Taxi Debt$ didn’t seem to have the $ame effect on these untouchable$ NYC kingpin$:

      This recently disbarred Ru$$ian immigrant, who in 2013 elicited an angry tirade from former Mayor Michael Bloomberg (“I’m going to destroy your fucking industry”), is now cooperating with federal prosecutors in the case against Michael Cohen, President Donald Trump’$ personal lawyer, as The New York Times reported yesterday. Freidman managed cab$ for Cohen—the embattled attorney had at least 34 medallion$ to his name—and agreed to talk to investigators as part of a deal to downgrade state charges that he $kipped out on $5 million$ owed to the government, which could have sent him to prison for 25 years.

      The ‘Taxi King’ Cooperating in the Michael Cohen Case Pleaded for a Government Bailout
      “We want big poppa paying attention to us,” Gene Freidman once told Reason. “I want the government…protecting me.”
      Jim Epstein|May. 23, 2018

    4. “A taxi medallion, also known as a CPNC, is a transferable permit in the United States allowing a taxi driver to operate. A number of major cities in the US use these in their taxi licensing systems, including New York, Boston, Chicago, Philadelphia, and San Francisco.” —Wikipedia

    5. Taxi Debt$ didn’t seem to have the $ame effect on these untouchable$ NYC kingpin$:

      This recently disbarred Ru$$ian immigrant, who in 2013 elicited an angry tirade from former Mayor Michael Bloomberg (“I’m going to destroy your fucking industry”), is now cooperating with federal prosecutors in the case against Michael Cohen, President Donald Trump’$ personal lawyer, as The New York Times reported yesterday. Freidman managed cab$ for Cohen—the embattled attorney had at least 34 medallion$ to his name—and agreed to talk to investigators as part of a deal to downgrade state charges that he $kipped out on $5 million$ owed to the government, which could have sent him to prison for 25 years.

      The ‘Taxi King’ Cooperating in the Michael Cohen Case Pleaded for a Government Bailout
      “We want big poppa paying attention to us,” Gene Freidman once told Reason. “I want the government…protecting me.”
      Jim Epstein|May. 23, 2018

    6. I’m no fan of Uber and Lyft, but the taxi is going the way of the buggy whip unless they adapt. Their fares are outrageous. To be sitting at a light and have the fare increase makes no sense. They need to adjust their pricing.

      1. To be sitting at a light and have the fare increase makes no sense.

        Do you not pay an hourly rate for other services? Doesn’t seem unreasonable to me to pay the person driving me for their time — they dont control the lights

        2. You will be able to enjoy the option for waiting at a stop light so long as traditional cabs are available. You also are free to tip your Lyft cab driver extra for time spent waiting at lights.

      2. Where I live, it’s not the fares, it’s the service. A couple of times, I’ve called a cab to take me to the airport, well in advance of my flight, and ended up having to drive myself at the last instant, because no cab ever arrived, despite repeated promises from the dispatcher than one was en route. I don’t have that problem with Uber.

    7. Taxi Debt$ didn’t seem to have the $ame effect on these untouchable$ NYC kingpin$:

      This recently disbarred Ru$$ian immigrant, who in 2013 elicited an angry tirade from former Mayor Michael Bloomberg (“I’m going to destroy your fucking industry”), is now cooperating with federal prosecutors in the case against Michael Cohen, President Donald Trump’$ personal lawyer, as The New York Times reported yesterday. Freidman managed cab$ for Cohen—the embattled attorney had at least 34 medallion$ to his name—and agreed to talk to investigators as part of a deal to downgrade state charges that he $kipped out on $5 million$ owed to the government, which could have sent him to prison for 25 years.

      The ‘Taxi King’ Cooperating in the Michael Cohen Case Pleaded for a Government Bailout
      “We want big poppa paying attention to us,” Gene Freidman once told Reason. “I want the government…protecting me.”
      Jim Epstein|May. 23, 2018

  8. “The big question: When will the next recession hit?”
    ___________________________________/

    I’ve got a big question of my own, and it is, why are economists being asked that question? It once was said that economists have a virtually unblemished record in failing to predict recessions.

  10. No, please, not the freakin’ death cross. Not again!

    Death cross forms in small-cap index for the first time in about 2 ½ years
    By Mark DeCambre
    Published: Nov 14, 2018 1:04 p.m. ET
    Russell 2000 saw its first death cross since 2016

    A bearish pattern materialized in a closely followed gauge of small-capitalization stocks on Wednesday.

    The small-cap Russell 2000 index (RUT, -0.81%) saw its short-term 50-day moving average fall beneath its long-term 200-day moving average, a formation in an asset that many chart watchers believe marks the point that a short-term decline morphs into a longer-term downtrend (see chart attached).
    …

  11. Credit Markets
    Treasurys Rise as Stocks Lose Steam
    The yield on the benchmark 10-year U.S. Treasury slips to 3.12%
    By Akane Otani
    Updated Nov. 14, 2018 3:55 p.m. ET

    U.S. government bond prices rose Wednesday as stocks came under fresh selling pressure, driving up demand for the relative safety of sovereign debt.

    The yield on the benchmark 10-year U.S. Treasury note settled at 3.120%, down from 3.145% Tuesday as it fell for the third consecutive session.
    …
    To Read the Full Story
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