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A Key Issue To Be Resolved Will Be Which Parties Take The Loss

It’s Friday desk clearing time for this blogger. “A West Village townhouse that was once home to film star Will Smith is on the market for $12.5 million. That’s quite a hit, considering the buyer paid $13.82 million for the stately manse at 13 Leroy St. in 2008.”

“The nation’s largest homebuilders are buying up undeveloped land at a frantic pace. All those land purchases could create an economic pinch for homebuilders that overextended themselves. ‘The biggest concern I have is the land grab,’ Ivy Zelman, CEO of housing research firm Zelman & Associates. ‘The majority of these homebuilders are going out and buying land and underwriting today’s record-high absorption and price growth. Those numbers are not sustainable, but builders are buying land as if they are.'”

“Interest rates are rising quickly, and that has some worried about the effect that movement will have on the U.S. real-estate market. ‘The knee-jerk reaction from many market participants and the media is that any increase in mortgage rates spells doom for the housing market,’ said Jonathan Woloshin, real-estate and lodging analyst for the Americas at UBS Financial Services.”

“Despite their popularity, eviction moratoriums have mainly served to kick the can down the road where borrowers are concerned, argued Will Lamey, managing director of workouts at 1st Service Solutions. ‘(Residents) are suffering, hence the borrowers are suffering, hence the lenders are suffering,’ he said. Barring a government bailout, a key issue to be resolved will be which parties take the loss. ‘My guess is that it’s going to be a combination of borrowers and lenders and investors,’ Lamey said.”

“Liz Dunn owns six buildings in Seattle. Dunn’s properties are made up of more than 20 small businesses and nearly 30 apartments. ‘They’re all behind in one way or another,’ she said. Dunn credited her local banks for the ability to afford the financial help for her renters. ‘They’re affording me the same grace,’ she explained. ‘For example, I’m getting help with not having to pay the principal on the loan, just making the interest payments.'”

“Many mom-and-pop housing providers have had to hire staff and expensive lawyers just to keep up with the ever-changing government regulations. A new survey from the Santa Clara County Association of Realtors shows that nearly half are ready to sell and get out of the business altogether. The survey shows that 70% of the owners have mortgages, property taxes and other expenses that must be paid even if they are not receiving rent or aid. Owners like Carlos Padilla have worked hard to find resources for tenants who can’t pay their rent and to protect his lifetime investment.”

“When asked about his tenants who lost their jobs, Padilla said that ‘they have filled out numerous forms from nonprofits and other non-government organizations with no results and no feedback.’ Owners are now questioning how much longer they can hold on to their investments with all the new levels of bureaucracy and moratoriums.”

“Daniela Mello rents out six units across Ottawa to fund her retirement. Currently, half of them sit empty. ‘I never had vacancies before,’ Mello said. Before the pandemic, Mello said her units rarely sat empty between tenants. Now, it’s been months without a tenant. ‘I’ve had to pull money out of my savings to keep the properties going,’ Mello said.”

“As a result, some landlords have been forced to drop rent prices. ‘There’s certainly apartments to be rented for less money than they could be rented a year ago, especially in the downtown core,’ John Dickie, president of the Canadian Federation of Apartment Associations said. Mello says she can’t afford to follow their lead. ‘I’m not a big landlord with lots of properties, so if I reduce a lot, that will have lasting impacts for me for the years to come,’ she said.”

“According to the Real Estate Institute of Australia, rent prices declined 1.3 per cent for the year. Some investment property landlords are also being squeezed as tenants decide to move out to take advantage of cheaper properties. Landlord Mark adheres to a rule that it is better to lower rent than to let a tenant go. ‘It’s better to keep someone in a property now, rather than waiting months without rent and hoping to get someone in at a higher price,’ he said.”

“In September, he cut the rent on one of his investment properties to ensure he secured a good tenant. He’s now negotiating the price with the tenant of another property for a longer-term deal. ‘With this property, there are similar apartments in the building offering lower rent. I’m trying to find a price that encourages my tenant to stay rather than moving .A few stubborn landlords haven’t reduced rents and have had empty apartments for months. Some money is better than none,’ he said.”

“When experiencing difficulties making mortgage payments, landlords should always contact their lender; most still have assistance packages available. If you are forced to cut the rent, Jo Natoli, from the Rental Specialists says ‘it is better to have 100 per cent of something than 100 per cent of nothing.'”

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This Post Has 122 Comments

  1. ‘on the market for $12.5 million. That’s quite a hit, considering the buyer paid $13.82 million for the stately manse at 13 Leroy St. in 2008’

    That’s a lot of bubble years gone poof.

    BTW, I got tons of crater but short on time as I have to hit the road. Check back this weekend and I’ll try to catch up to the smoldering housing bubbles.

    1. The crater is much deeper if you consider inflation. For instance, here are Consumer Price Index figures for all urban consumers:

      January 1, 2008 212.174
      January 1, 2021 262.231

      So the inflation-adjusted size of the crater is
      ( (212.174/262.231)*(12.5/13.82)-1)*100% = -26.8% drop in value from purchase to sale, before considering HODLing costs.

      1. I suppose one should also consider used home sales commissions and other sales transactions costs at both ends… (6%+?)

    1. This is a pearl clutching article.

      New York Times — Unmasked: When Identity Politics Turns Deadly (3/4/2021):

      “So what’s motivating the rush to unmask? It’s not economics. As I said, the costs of mask-wearing are trivial. And basic economics tells us that people should have incentives to take into account costs they impose on others; if potentially exposing those you meet to a deadly disease isn’t an “externality,” I don’t know what is.

      Furthermore, a resurgent pandemic would do more to damage growth and job creation, in Texas and elsewhere, than almost anything else I can think of.

      Of course, we know what’s actually going on here: politics. Refusing to wear a mask has become a badge of political identity, a barefaced declaration that you reject liberal values like civic responsibility and belief in science.”

      https://archive.is/bangp

      Trust the Science™

      1. This is a bedwetting article.

        CNBC — Dr. Scott Gottlieb: Easing state Covid restrictions but keeping mask mandates a good compromise (3/5/2021):

        “Dr. Scott Gottlieb told CNBC on Friday he believes governors are right to begin easing Covid restrictions on businesses as long as mask policies remain in place.

        “I think it’s the kind of thing we need to be doing around the country, is at least providing a map of where we’re heading if the situation continues to improve without taking our foot off the brake all at once,” said Gottlieb, who led the FDA in the Trump administration from 2017 to 2019. “Leaving the masks in place, having that be the last thing we lift, I think that’s prudent.”

        https://www.cnbc.com/2021/03/05/dr-scott-gottlieb-easing-covid-restrictions-but-keeping-masks-a-good-compromise.html

        Custer County, Colorado is now 100% open.

        Custer County is telling me that I am welcome to spend my money there. I’m driving down to Southern Colorado later today and will be generating sales tax revenue for a county that wants its residents to have jobs.

          1. Kroger (owner of King Soopers) will continue requiring bacteria laden face diapers while Albertson’s (owner of Safeway) will not. Guess where my money will be going?

            The loudspeaker in the local Soopers parking lot is really, really creepy.

        2. Fun fact: Scott Gottlieb joined Pfizer’s board of directors after leaving the Trump administration.

      2. The article presumes that
        1) Wearing masks is effective. But the statistics show that wearing masks does not significantly slow the spread, and the science shows that mask wearing can have potential side effects. So wearing masks is a political statement, too.
        2) That the government Wuhan coronavirus response (shutdowns, etc) did not impose significant costs on citizens.

        1. Costs are big.

          ‘What’s the Point?’ Young People’s Despair Deepens as Covid-19 Crisis Drags On
          Experts paint a grim picture of the struggle with lockdown isolation — a “mental health pandemic” that should be treated as seriously as containing the coronavirus.
          By Isabella Kwai and Elian Peltier
          Published Feb. 14, 2021
          Updated Feb. 16, 2021

          Life seemed promising last year to Philaé Lachaux, a 22-year-old business student in France who dreamed of striking out on her own in the live music industry. But the onset of the pandemic, leading to the loss of her part-time job as a waitress, sent her back to live at her family home.

          Now, struggling to envision a future after months of restrictions, Ms. Lachaux says that loneliness and despair seep in at night. “I look at the ceiling, I feel a lump in my throat,” she said. “I’ve never had so many suicidal thoughts.”

          “The pandemic feels like a big stop in our lives,” she added. “One that puts us so low that I wonder, ‘What’s the point?’”
          …

    2. This has always been the issue that proves the stupidity. It’s OK for a family of 6 to go to costco and wander around for hours loading up on sugar water and chips, but businesses have to close. There never were bring out yer dead carts. Hospitals were never overwhelmed. These lock downs are purposeful mass murder.

      1. Vote with your wallet.

        If a state, county, city chooses to impose unscientific medical tyranny, don’t give them your money.

        If a business chooses to impose unscientific medical tyranny even after the municipality it’s located in has lifted CCP Flu restrictions, don’t give them your money.

        We are the leaderless resistance.

    1. Ya know…. SnakeEyes has had this coming for a long time. Years of arrogance never goes unreciprocated.

      Dirty Curty would make a helluva mayor but the bar is pretty low considering The Dope from Park Slope is likely the worst mayor in NYC history with possibly the exception of Dinkins.

      1. Dinkins always had that “deer in the headlights” look. Stern once asked his wife if the mayor slept on a sponge since he was always sweating.

  4. ‘Mello said her units rarely sat empty between tenants. Now, it’s been months without a tenant. ‘I’ve had to pull money out of my savings to keep the properties going’

    Golly, I hope Daniela didn’t pay too much when things were roses.

    ‘Mello says she can’t afford to follow their lead. ‘I’m not a big landlord with lots of properties, so if I reduce a lot, that will have lasting impacts for me for the years to come’

    Yer already fooked with half empty. Cut yer loses.

    1. “Now, it’s been months without a tenant.”

      I wonder if if lowering the rent might work to attract one.

      But then I also wonder if it’s better for a landlord to leave the place empty, or to fill it when foreclosure moratoriums are in force.

    2. Why not sell one of the six properties and use the proceeds to pay the mortgage on the other 5? And then if she has to she can sell another one and repeat. Is she underwater on all of them? Sounds like a crappy retirement.

      2. “Why not sell one of the six properties and use the proceeds to pay the mortgage on the other 5?”

        How does that work if you are underwater on your mortages?

  5. ‘Owners like Carlos Padilla have worked hard to find resources for tenants who can’t pay their rent and to protect his lifetime investment…Owners are now questioning how much longer they can hold on to their investments’

    Dip into those savings bay aryans. And eat yer crowz Thornberg.

  6. ‘Barring a government bailout, a key issue to be resolved will be which parties take the loss. ‘My guess is that it’s going to be a combination of borrowers and lenders and investors’

    This is a credit event. And the guberment can’t even agree to send out $1000 checks. There ain’t enough free cheese to save a multi-trillion $ market that is way over priced. Check out the end of the Canada article with the puzzling about “when are things going back to normal” meaning people paying half their income in rents. That’s sustainable and desirable?

    1. “…paying half their income in rents…”

      Somehow the genius economists working for central banks can’t connect the dots between the magic of home equity wealth creation, which pays homeowners a third income that can fund vacations and luxury car purchases, and the masses of homeless people living out on the streets because they can’t find homes they can afford to rent.

      1. Every new house built in my neighborhood is asking at least $600,000. This is South Denver, this is not California.

        The amount of homeless, panhandlers, tweakers, junkies out on the streets are worse than I’ve ever seen in the decade plus I’ve been living here.

        1. The amount of homeless, panhandlers, tweakers, junkies out on the streets are worse than I’ve ever seen in the decade plus I’ve been living here.

          It’s also noticeable in my little burg. And crime is up, not up to Denver levels, but there is a lot of chatter on NextDoor about cars slowly driving up neighborhood streets during the wee hours of the night, likely looking for a garage door that got left open.

          And now the state legislature is preparing a “catch and release” bill, because reasons.

          1. What is so special about an open garage door? Just looking for stuff to swipe and sell for drugs?

          2. I suspect that quality tools are easy to hock. Sneak in at 2 AM, rummage quietly and take what you find. I’ve read of complaints about stuff like rolls of copper wiring being stolen. I wonder if they peek into the garage fridge? “What happened to all the steaks in the freezer?”

            When I lived in Clownifornia I had my lawnmower and edger stolen during daytime hours. You couldn’t even leave the garage door open during the day. The mower was falling apart so I was planning on getting a new one, but the electric edger was brand new.

          3. You couldn’t even leave the garage door open during the day

            My neighbor shut the garage door not realizing there was a bobcat inside. That was a hoot.

        2. “new house…asking at least $600,000”

          Sounds cheap. Here, they’re $750K – $900K. Also not California. Also full of riff-raff.

      2. Forget economist who work for central banks, how about politicians who are charged with serving and protecting the people? I haven’t a single one of them talking about the homelessness which is a direct result of housing speculation. Meanwhile, the homeless surge is absolutely staggering.

  7. ‘The majority of these homebuilders are going out and buying land and underwriting today’s record-high absorption and price growth. Those numbers are not sustainable, but builders are buying land as if they are.’

    Translation: Once post-QE deflation kicks in, these land grabbers are headed for a one-way trip to Carterton.

    1. The article talks about how the builders are like sharks. They have to keep swimming and eating to stay alive. Then they die.

    2. They’re going to appeal to the w@h crowd, aren’t they. Lavish home offices with insulation for sounds, smart-home features, community pools, schools nearby, the office is 90 minutes away but it’s only once per week, etc.

    3. This land grab has now been going on for 10 years straight. It’s ridiculously long in the tooth.

    4. My heart goes out to drumminj and others wanting to buy property despite the mania (prior thread). I’ve felt similar frustration myself, although I realize my worst decisions were made in anger.

      One thing that has helped me WRT to the land mania is to try and sort through the facts in a detached manner. I watch 3 counties in NC. As recently as the summer, I saw that not only was everything overpriced, but it was the poorest quality. Anything available was in the sticks, in a flood plain, no perc, or all of the above.

      ‘The majority of these homebuilders are going out and buying land’

      That is most certainly what they did since about 2016 or 2017. One thing that I’ve seen with land is that banks absolutely hate to make loans against it. But if you can come up with cash, there is land available in modest size chunks that has been held in families and divided over the years. That says to me that there were a lot of small speculators coughing up actual cash or hard money, unlike houses. I suspect that there were a lot of small time builders, would be developers, and others without particularly deep pockets. But the properties that had been available weren’t necessarily changing hands at peak prices.

      More recently, I’ve seen more properties come on the market, particularly in more desirable locations. My interpretation is that these are weak hands getting squeezed by many factors. Good properties have come on the market about 10 – 15% less than they have prior to COVID. Making a hedonic adjustment, I think that has to be a discount of more than 25%. Properties on the periphery are coming in with 25% discounts. Both are now selling briskly. My interpretation of that is that the buyers are fence sitters and people who are panicking over inflation. I’m no chartist, but I think this is the dead cat bounce after the peak. If that is true, then I think that the iceberg may have already been hit. I think a hard tanking stonk market will push it downhill faster than most imagine. I’m not trying to time it, just trying to observe it and test my hypothesis.

      I would love to hear more opinions, especially from people who have more experience with how a land bust evolves.

      1. Good properties have come on the market about 10 – 15% less than they have prior to COVID. Making a hedonic adjustment, I think that has to be a discount of more than 25%. Properties on the periphery are coming in with 25% discounts

        Not here, sadly, but the rest of what you say resonates.

        It’s clear that developers have been buying up land, and I’ve seen listings with people clearly flipping land (often netting 100k+ after a few months). Unfortunately it’s cheaper here than places folks are fleeing, and so I think there are more people who can pay cash for the land and then finance the build — of course that falls apart as the land gets more expensive.

        I think it’s harder to compare land than houses, but prices have been creeping up and land that sells at a discount to asking tends to be right up against a highway or something similar.

        Your idea of us about to head into deflation/taking market and such does scare/concern me, especially if rates continue up. I don’t relish the thought of buying with cash right on the cusp of that. Sadly, this market is irrational and hard to predict.

        That said, our offer was accepted today at 25% under asking (not a deal based on comps, but at least at a fair price looking back 6-12 months). So excuse me while I go freak out a bit and drink heavily 🙂

        2. Drumminj: There is most definitely more to life than money. In the long term, we’re all renters anyways. I hope that you can take the time to enjoy your new property each and every day.

          1. “In the long term, we’re all renters anyways.”

            “You never actually own a Patek Philippe. You merely look after it for the next generation.” —Memorable slogan 🙂

      2. I don’t know anything about property in NC, but I’m camping tonight on land in Southern Colorado that the owner bought 7.5 acres for $15K. I’m waiting to buy out the neighbor’s 4 acres once he finds other land to buy.

        This is off grid, there’s nothing here, but it’s a good location for installing solar. I have no plans to live here permanently anytime soon.

      3. “I would love to hear more opinions, especially from people who have more experience with how a land bust evolves.”

        Well, for one thing, it’s usually about six years to the bottom from the point when everyone knows that a crash is underway. Case in point: The early-1990s crash in California started circa 1990, and didn’t reach bottom until 1996 or 1997.

        1. Another case in point: 2007 through 2012 is the rough timing from the collapse of subprime (early 2007) through the trough of the housing market, when Ben Bernanke waged war on the crater with QE3.

      4. I would love to hear more opinions, especially from people who have more experience with how a land bust evolves.

        Land is much more speculative than houses, and subject to much more vicious declines. Banks don’t like to lend on land like they do houses, so the pool of buyers is smaller. In a bust, demand can dry up much worse than housing because no bank is even going to touch it at that point.

        Nobody wants a piece of dirt when there’s no more building. It becomes an anchor. 75% off in a bust isn’t unrealistic. In fact, some of those tumbleweed areas in the southwest will probably see land price declines of 90%+. Think I’m kidding? I’m not. it would be nothing to see a $100k piece of scrub drop to $10k.

        1. ‘Banks don’t like to lend on land like they do houses, so the pool of buyers is smaller. In a bust, demand can dry up much worse than housing because no bank is even going to touch it at that point.’

          This thinking very much mirrors my own. I’m looking to buy quality once the market goes ‘no bid.’ I heard a comment on ‘Fast and Loud’ : ‘You can buy a $20,000 hotrod for $10,000 if you brought cash.’ That’s the opportunity that I’m looking for. I don’t want to flip. I only want the option to build a house, not the obligation.

          Financially, I want a currency debasement hedge plus a modest return on the long term growth of the area, with tax advantages. I don’t want to pay too much for it, so I see the illiquidity as more of a feature. I don’t think I’m smart enough to time the actual bottom. I’m also looking to buy a few times. Maybe I’ll luck into it.

          Beyond the financial considerations, I find great joy in digging in the dirt in the warm sunshine. I had a chance to plant a modestly large garden that passersby took joy in as well. That brought me much happiness and satisfaction.

          1. Financially, I want a currency debasement hedge

            So basically you are waiting for a Deflation event to take a position against Inflation. We do live in an interesting time.

          2. ‘So basically you are waiting for a Deflation event to take a position against Inflation.’

            I forget who said it, but a quote that I think will prove to be prescient is ‘inflation in the things you need to survive, deflation in the things that you want.’ ATM, I’m straddling the two. I’m waiting for more information and an opportunity to act when the herd can’t or won’t. We do indeed live in interesting times.

        2. “I would love to hear more opinions…”

          I remember a syndicate that was established to invest only in un-completed developments, e.g., sewage lines, paved streets, wiring, etc., just was never finished with houses. They were planning to sit on these properties for 10-12 years, IIRC. Sounded interesting…but I’m little people.

  9. ‘The knee-jerk reaction from many market participants and the media is that any increase in mortgage rates spells doom for the housing market,’

    For years and even decades, we’ve watched housing prices and other risk assets increase endlessly higher on the back of ever lower and more artificially suppressed interest rates.

    Now that the economy has reached a natural equilibrium threshold and the bond market vigilantes are collectively saying “No mas”, the “real estate always goes up” people are freaking out at the suggestion that their gravy train may be doing a U-turn.

      1. I’m not sure if the Fed could do anything to keep a lid on rising long-term Treasury yields at this point, but I have a certain admiration for them to not stand in the way of market forces at this point.

        1. The Financial Times
          US economy
          US hiring roared back in February as Covid cases declined
          Creation of 379,000 jobs beats economist expectations and reignites sell-off in US Treasuries
          Many economists have recently upgraded their outlook for growth in 2021 on expectations of a swift vaccination rollout and the implementation of president Joe Biden’s $1.9tn stimulus plan
          James Politi in Washington and Colby Smith in New York
          2 hours ago

          The US economy created 379,000 jobs in February, pointing to a sharp rebound in the American labour market amid a rapid decline in coronavirus cases nationwide and reigniting a sell-off in US Treasuries.

          The increase in employment last month was more than double its pace in January, when the economy created 166,000 jobs after shedding 306,000 positions during the pandemic’s winter surge in December.

          The leisure and hospitality sector recorded an increase of 355,000 jobs, which accounted for the bulk of last month’s gains

          However, it still leaves the world’s largest economy 9.5m jobs short of its pre-pandemic levels. The US unemployment rate edged down to 6.2 per cent.

          A sell-off in US government debt accelerated after the jobs report was released on Friday. The yield on 10-year Treasury bond climbed 0.05 percentage points at one point to 1.62 per cent — its highest since February 2020 — extending losses that racked up on Thursday after Federal Reserve chairman Jay Powell failed to quell concerns about the rise in yields in recent weeks.
          …

          1. I see “NOW HIRING” signs everywhere, but they are not getting applicants. And yet the demented old Coup leader just extended the extra $400 enhanced UE bennies until August. On WHAT GROUNDS is it justified? It’s nonsense, and it’s over a quarter trillion dollars just to pay it. They are paying people $50,000 per year to sit home and get high and buy new cars and stiff the landlord.

          2. By the way, I have some insight into all of this. I know a woman who works in job placement. She told me the story of a young guy who went out and bought a brand new truck as well as a side by side AFTER getting laid off. The car dealer approved the loan based upon the UE bennies.

            A couple months later, the kid got a call from the employer to come back to work. He explained to this gal that if he went back to his job, he couldn’t afford his payments because the job was paying much less than his UE bennies. Under NO CIRCUMSTANCES should UE EVER pay more than what the job did. This is disgusting.

          3. “This is disgusting”

            It’s the Cloward-Piven strategy.

            “Cloward and Piven proposed to create a crisis in the current welfare system – by exploiting the gap between welfare law and practice – that would ultimately bring about its collapse and replace it with a system of guaranteed annual income. They hoped to accomplish this end by informing the poor of their rights to welfare assistance, encouraging them to apply for benefits and, in effect, overloading an already overburdened bureaucracy.”

            Newt Gingrich was right when he called Obama “the food stamp president.”

          6. if he went back to his job, he couldn’t afford his payments

            Good story but my son told me one that made me laugh. Local trucking company laid off some drivers last year and then called them back in. They didn’t want to. He said “Boys, if you don’t come back to work I’ll go out of business and lose everything. If you do that to me I’ll tell Unemployment you refused to work.”

            They all showed up the next morning.

          7. I reckon $400 from January to August is more like $14,000

            Let me be more clear for you. Here’s a link to the max unemployment by state. This does NOT include the extra $400 per week. You will notice that the weekly pay ranges anywhere from $235 in Mississippi to $823 in MA. So, the lowest paid are earning $635 per week, and the highest are earning $1,223 per week. The bottom of the barrel are getting $33,000 per year. People in MA are getting $63.5k.

            The average benefit per state is $483 per week for somebody without dependents. That means the average is $883 when you factor in the fed benefit. That’s $46,000 per year for doing nothing. Median personal income in the US is somewhere in the neighborhood of $35,000. This whole thing is a sham.

            https://www.savingtoinvest.com/maximum-weekly-unemployment-benefits-by-state/

          8. The Senate is still debating the add-on to unemployment.

            Current bill says: $400/wk until August 31.
            Tom Carper (D-DE) amd: $300/wk until the October 31.
            Rob Portman (R-OH) amd: $300/wk until July 18.
            Senate Dems: Ok Dems, shut up and vote for what we have.
            Joe Manchin (D-WV): Well, actually I like Portman’s amd better.

            Senate Dems: ARGGGHHHHHHHHHHHHH!

            Manchin is holding his ground. And Dems have to kowtow. They can’t lose a single Senator.

      2. The Financial Times
        Opinion The Long View
        Fears rise among bond investors as Buffett warns on outlook
        Improving economic forecasts raise expectations of higher interest rates
        Michael Mackenzie 6 hours ago

        “Bonds are not the place to be these days,” Warren Buffett, the Berkshire Hathaway chief told shareholders in his latest annual letter last month. Many in markets agree with the Sage of Omaha’s judgment — and for good reason.

        The clouds over the global and US economies are steadily thinning thanks to Covid-19 vaccines being distributed, while governments are intent on spending big in order to sustain a broad recovery in activity with a clear goal of restoring full employment.

        This week President Joe Biden indicated his administration planned to have enough coronavirus vaccine doses for every US adult by the end of May, setting the stage for more open economy when Memorial day barbecues are fired up.

        The improving macro backdrop presents bond investors with little choice other than to upgrade expectations for both growth and inflation and reduce their exposure to the risk of a pronounced rise in market interest rates this year. Despite their recent abrupt climb, 10-year benchmarks still remain at historically low levels, a point of vulnerability not lost on investors.

        “The fear level is high among financial advisers and portfolio managers with rates seen heading higher,” said Jason Bloom, head of fixed income and alternatives strategies for ETFs at Invesco.

        Already, broad baskets of US and global government debt have declined more than 3 per cent in value since the start of January. That may not sound like much of a decline. However, the main US Treasury index has escaped recording a negative year of performance since 2013 when the famed “taper tantrum” sparked a surge in 10-year interest rates that resulted in a total return of minus 2.75 per cent.
        …

          1. Looks like the market is recovering. Oracle is up 7%. Q3 announcement is coming up. I wonder if there was a pre announcement or a leak?

          3. The dips buyers decided today was the right time to add more stonks to their HODLings.

        2. After watching today’s action, I’m gonna agree with Gregory Mannarino. He thinks the Powell is experimenting [Science! 🥼🧪🔬] with a new Operation Twist. Let the 10-year rate rise, observe the stock market. Print a little more fiat so the 10-year rate falls, observe the stock market. And guess what. No such thing as fundamentals anymore. Powell is the market.

          1. That would help explain the mysterious sudden reversal in the NASDAQ correction that was taking shape, wouldn’t it?

          2. That would help explain the mysterious sudden reversal in the NASDAQ correction that was taking shape, wouldn’t it?

            Something was going on in the background that none of us know about. At the exact same time, everything went parabolic. EVERYTHING.

          3. What was going on in the background was that Bank of America came out with some statement confirming Powell’s yield curve control. In other words, Powell tried to find out what would happen if he allowed rates to act naturally. After two days, the answer was obvious: another taper tantrum. So it’s just confirmation that Powell has decided to print print print, and I guess BoA knew it. The minute BoA spilled the plot, everybody tried to buy equities in anticipation of even higher prices when the mo’ money shows up next week. I thought I saw an article on Marketwatch about it but I couldn’t find it again.

  10. What a difference a day makes. So, I reported yesterday how my friend who took the vaccine was trying to get me to do the right thing and take the jabs like he did. Than, I went to the bank and two minority guys got in my face about being 5 feet instead of 6 feet from them in the line.
    So, the following day I’m standing in a line sandwiched between a older Japanese guy and a white guy about 90 years old. We were all about two feet apart with no enforcers talking about 6 feet.
    So, just for the hell of it I threw out words like I think these masks are BS.
    Immediately the two men agreed with me and they both said words to the effect that it’s the Globalist just trying to take our freedom.
    So, my experience with the freaked out enforcers the day before verses the following day was like night and day. Another guy in line who was 70 in essence said his siblings were pressuring him to take the vaccine, but he wasn’t going to do it.
    So, it was refreshing to know that not all the people in brainwashed California were buying into the narratives.

      1. Yep. Hence the saying “Like taking candy from babies”.

        I love profiting off the products churned out by our dismal educational system. Such easy money.

    2. “The welfare of the people in particular has always been the alibi of tyrants, and it provides the further advantage of giving the servants of tyranny a good conscience.” — Albert Camus

    3. Most older people are on to the scam. I often see older men not wearing the diapers. They really give zero fridges.

      This is a good time to build your tribe since people are wearing their stupidity on their face.

      1. Well, in California at least you have to many enforcers around to go without wearing a mask.
        The group of older guys I was in line with just wear the masks so they don’t get attacked by the enforcers.
        Here were a bunch of so called high risk for Covid19 older guys, like myself, who were not fearful at all.
        The older Japanese guy was a retired Grocery Clerk Union guy , and the 90 year old was a retired airplane mechanic.

        1. I think gold’s problem is that Treasurys are starting to pay yields that look like they might do a decent job of keeping up with inflation.

  13. Informed consent and the Nuremburg Code are ignored these days. Pharmaceutical companies that have lied about their products and been fined billions of dollars are now asking you to take an experimental “vaccine.” How do we know they’re not lying now?!

    Memories of human experiments have faded. This upcoming documentary might cause quite a stir:

    Medical Racism: The New Apartheid
    From post-Civil War era and the Tuskegee Experiment to the present, explore the medical experimentation on Blacks in this unprecedented journey to unearth the truth.

    1. Redpilled, So, much thanks for your post on the vaccine and the real truths, I won’t say more.

  14. “A new survey from the Santa Clara County Association of Realtors shows that nearly half are ready to sell and get out of the business altogether. The survey shows that 70% of the owners have mortgages, property taxes and other expenses that must be paid even if they are not receiving rent or aid. Owners like Carlos Padilla have worked hard to find resources for tenants who can’t pay their rent and to protect his lifetime investment.”

    Don’t all sell at once!

    “As a result, some landlords have been forced to drop rent prices. ‘There’s certainly apartments to be rented for less money than they could be rented a year ago, especially in the downtown core,’ John Dickie, president of the Canadian Federation of Apartment Associations said. Mello says she can’t afford to follow their lead. ‘I’m not a big landlord with lots of properties, so if I reduce a lot, that will have lasting impacts for me for the years to come,’ she said.”

    Yer fooked. Yer overpaid too much for yer 6 investment retirement properties.

    1. Good!

      I was just texting someone that Denver is probably gonna have a mask mandate until 2023.

      1. My neighbor shut the garage door not realizing there was a bobcat inside. That was a hoot.

        Given the piles of feces left downtown, one might want to wear a mask.

  16. U.S. says John McAfee indicted over fraudulent cryptocurrency schemes

    “McAfee and his bodyguard Jimmy Gale Watson Jr were charged for a scheme to exploit McAfee’s large Twitter following by publicly touting cryptocurrency offerings and digital tokens that they later sold once prices rose on the promotions, according to the U.S. Department of Justice and the U.S. Commodity Futures Trading Commission.”

    How is this any different than what Elon Musk has done with Bitcon?

    https://www.yahoo.com/finance/news/u-says-john-mcafee-indicted-164633603.html

    1. From the article: “Authorities said McAfee held himself up as an expert on cybersecurity and cryptocurrency through his tweets, speeches and his role as a CEO of a publicly traded cryptocurrency company. They also accused him of telling followers he had no stake in the coins, even as he touted how they ‘will change the world.'”

      From that, it looks like he crossed the line from vague general opinions and personalized financial advice. Or used his official position to his advantage. Or outright lying about his stake in something. Maybe the HBB legal eagles have some insight?

      1. Elon Musk was Tweeting anti-Bitcon snippets way before he came out and shocked the world with his $1.5 billion purchase with Tesla shareholder money. When did he buy? How did that coincide with his anti-crypto rhetoric from the past? Seems he may have been trying to drive the price down and then buy low. He’s the world’s richest man, so he is getting a pass on a lot of nonsense. He should be in jail.

  17. Bitcoin could prevent society from functioning and is an ‘extreme form of libertarian anarchism,’ warns this fund manager
    Last Updated: March 5, 2021 at 1:13 p.m. ET
    First Published: March 5, 2021 at 10:13 a.m. ET
    By Rupert Steiner
    Tim Bond, partner and portfolio manager at Odey Asset Management, believes bitcoin could prevent society from functioning in an efficient and ethical manner

    https://www.marketwatch.com/story/bitcoin-could-prevent-society-from-functioning-and-is-an-extreme-form-of-libertarian-anarchism-warns-this-fund-manager-11614937228?mod=mw_latestnews

  19. Statement from President Donald J. Trump, March 5th 2021:

    “Our border is now totally out of control thanks to the disastrous leadership of Joe Biden. Our great Border Patrol and ICE agents have been disrespected, demeaned, and mocked by the Biden Administration. A mass incursion into the country by people who should not be here is happening on an hourly basis, getting worse by the minute. Many have criminal records, and many others have and are spreading covid. Interior enforcement has been shut down—criminals that were once promptly removed by our Administration are now being released back onto the street to commit heinous and violent crimes. ICE officers are desperate to remove these convicted criminals, but Biden won’t let them.

    The spiraling tsunami at the border is overwhelming local communities, depleting budgets, crowding hospitals, and taking jobs from legal American workers. When I left office, we had achieved the most secure border in our country’s history. Under Biden, it will soon be worse, more dangerous, and more out of control than ever before. He has violated his oath of office to uphold our Constitution and enforce our laws.

    There has never been a time on our southern border like what is happening now but more importantly, what is about to happen. Now that Biden has implemented nationwide Catch-and-Release, illegal immigrants from every corner of the Earth will descend upon our border and never be returned. You can never have a secure border unless people who cross illegally are promptly removed.

    I had a great relationship with Mexico, and its wonderful president, but all of that has been dissipated by the gross incompetence and radicalism of the people currently in charge. The Remain in Mexico Policy was incredible, but immediately abandoned by Biden, probably because it worked so well. Likewise, our Safe Third Agreements in Central America were extraordinarily successful, so Biden foolishly ditched them too. We stopped payment of the hundreds of millions of dollars paid to them and then developed an excellent relationship that made our country and their countries more secure. We put in place powerful rules and procedures to stop the smuggling and trafficking, but the Biden Administration has abandoned these proven strategies and instead given the smugglers and traffickers effective control of our border.

    Despite being delayed by years of litigation and politics by the democrats, the wall is almost finished and can be quickly completed. Doing so will save thousands of lives.

    The Biden Administration must act immediately to end the border nightmare that they have unleashed onto our Nation. Keep illegal immigration, crime, and the China Virus out of our country!”

          1. 😁 I stole it from somewhere else.
            There were more – Joe could throw his own surprise party, Joe could wrap his own Christmas presents, etc.

    2. Good friend of mine’s son is a Border Patrol Agent in Arizona. According to his son, it is exploding and the biggest problem is they don’t have enough counselors for the young girls who are being raped by the Coyotes before they let the group of illegals cross the border.

        1. It’s reported that girls are sent with Plan B knowing they’ll be raped during the journey.

    3. Biden Biden Biden. Not a single mention of “President.” Didn’t Biden snap at DeSantis when DeSantis refused to call him President?* Looks like Trump knows this.

      —————
      *it was the same conversation where DeSantis told Joe to eff himself. I’m sure I read that, but I don’t have a good source.

    1. “…as residents point to rampant shoplifting…”

      Musta been “National be polite to shoplifters day” as women at 1:12 in video opens door to shoplifter as he scooters away.

      People in SF as just so nice.

      Remember, ‘we are all in this together’

    2. Our state legislators want to pass a “catch and release” bill.

      Denver is going to become uninhabitable.

    1. The Financial Times
      US equities
      <b[High-priced tech stocks sink further into bear market territory
      Tesla and other companies backed by Ark Investments’ Cathie Wood have tumbled
      Tesla shares on Friday closed below $600 for the first time in more than three months, while Cathie Wood’s flagship Ark Innovation ETF is now down 25 per cent and in a bear market
      Michael Mackenzie and Eric Platt in New York
      8 hours ago

      Some of the hottest technology stocks and funds of recent months have fallen into bear market territory and investors are betting on more turmoil to come, as rising bond yields undermine the case for holding high-priced shares.

      A Friday afternoon stock market rally notably failed to include shares in Tesla and exchange traded funds run by Cathie Wood, the fund manager who has become one of the electric carmaker’s most vocal backers.

      Shares in Tesla fell 3.6 per cent on Friday to close below $600 for the first time in more than three months, although it had been down as much as 13 per cent at one point. The stock is down 32 per cent from its January peak, erasing $263bn in market value.
      …

    2. The Wall Street Journal
      The Intelligent Investor
      You Can Earn 6%, 8%, Even 12% on a Bitcoin ‘Savings Account’—Yeah, Right
      New trading platforms want to borrow your cryptocurrency, and are willing to pay a pretty crypto-penny for the privilege. Just don’t let anyone convince you it’s like putting your money in a bank.
      Illustration: Alex Nabaum
      By Jason Zweig
      Updated March 5, 2021
      12:06 pm ET

      Investing for income in today’s markets is like slogging across the Sahara looking for a cold drink.

      With bank savings accounts yielding around 0.04% annually, based on the national average, it would take more than a millennium for your money to double. No wonder so many investors are desperately searching for yield.

      Some are even going so far as to consider websites and apps that urge you to buy and lend out the world’s hottest asset: digital currencies like bitcoin and ether.

      Cryptocurrency trading platforms will pay you 6%, 8%, even 12% or more, on what some of them call “savings accounts.”

      From that name, you might think these are much the same as deposits at a conventional bank.

      They aren’t.

      To Read the Full Story
      Continue reading your article with a WSJ membership
      …

    1. It appears the Fed will stand back and stand by on longterm rates for now.

      The Financial Times
      Emerging market investing
      Emerging markets suffer first outflows since October on rate jump
      ‘Honeymoon’ period that followed first vaccine approvals in autumn comes to abrupt end
      Memories of the 2013 ‘taper tantrum’ have been revived this week, as Jay Powell of the Federal Reserve made no mention of taming long-term interest rates
      Jonathan Wheatley in London yesterday

      Fears over rising US interest rates have spilt into emerging markets, prompting investors to pull money from stocks and bonds in an abrupt end to what had been a months-long streak of inflows.

      A daily tracker of cross-border flows prepared by the Institute of International Finance shows that foreign investment turned negative in emerging market equities at the end of last week and in debt this week, resulting in total daily outflows for the first time since October.

      The turnround comes as a sharp rise in US borrowing costs, which has spread to many other large developed markets, has brought back fears of the 2013 “taper tantrum”, when the signal that the Federal Reserve was considering withdrawing its stimulus weighed heavily on emerging markets.

      “Flows have turned negative and that’s really a surprise, as we were still early on in the rebound from a cataclysmic 2020,” said Robin Brooks, the IIF’s chief economist. “The honeymoon that began after positive vaccine headlines in November is unfortunately over. We are in a repeat of the 2013 taper tantrum.”
      …

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