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Entities Who Are Currently Attempting To Stave Off Their Creditors

A report from the LA Daily News in California. “Since 2000, U.S. inflation has averaged 2.2%, according to the Consumer Price Index, while rates on 30-year mortgages averaged 5%, according to Freddie Mac. So historically speaking, loans are usually priced 2.8 percentage points above these cost-of-living increases. Yet in October, U.S. inflation was 6.2% while this benchmark for mortgage rates — kept artificially low with Federal Reserve help — averaged 3.1%. That’s 3.1 points BELOW the inflation rate.”

The Marin Independent Journal inn California. “The median price for a detached home in Marin County was $1.67 million in October as the median continued to ease off its $1.8 million peak from the summer. Sue Pence, a listing agent for a $20 million sale in Tiburon in October, said the deal was noteworthy in that it included no foreign bidders. The seller was a bank that obtained the property through a foreclosure. The list price was $28 million. Pence said the buyers got ‘a really good deal, for what it is.'”

“‘I feel like the market is a bit confusing,’ said Yoko Kasai, a Marin-based agent for 16 years. ‘While it’s still wildly active — homes can still sell for hundreds of thousands over asking — I feel like the condo market has slowed a little bit. There just seems to be a little more inventory on the condo side as opposed to single-family homes. It feels like the trend is the prices are not going as high as they used to. But I feel like that’s an opportunity for buyers.'”

The North Bay Business Journal in California. “Napa County pricing was down 10.5% to $850,000, and sales increased 4.1%. Lake County homes sold for an average of 6.2% less at $345,000, while unit sales jumped 17.1%. ‘As the housing market moves from ‘frenzied’ to ‘less frenzied’ and price growth comes back to earth, fewer homes are selling above asking price and bidding wars are less prevalent, so more buyers who pushed pause earlier this year will be able to take advantage of still-cheap financing,’ said association President Otto Catrina, a Bay Area real estate broker.”

From Corridor News. “‘Although we’re seeing a slight decline in homes sold from the same period a year ago, it’s important to remember we’re comparing to 2020’s record-breaking numbers,’ said Marvin Jolly, chairman of Texas Realtors. Luis Torres, Ph.D., research economist with the Texas Real Estate Research Center at Texas A&M University, commented, ‘The housing frenzy due to the pandemic has possibly peaked. Home prices and homes sales are beginning to slow. In addition, months of inventory and home listings have reached a trough and are now increasing.'”

“Chairman Jolly concluded, ‘Our housing supply remains stretched, but we’re not seeing as many properties with a frenzy of offers above asking price like earlier in the year.'”

The Phoenix Business Journal in Arizona. “Tony and Sarena Miller were furious when they got a call from Zillow Offers on Nov. 18 canceling their home sale contract. The Millers were told their contract is being cancelled because it goes past January 2022. ‘Our original contract is through May 2022, since we are building a new home and contracted with Zillow to buy our current home,’ said Tony Miller, a disabled U.S. Air Force veteran. ‘When I challenged the reason, Zillow offered $10,000 if I sign a document before Nov. 30, otherwise, I get nothing but a cancelled contract.'”

“The Millers said their 1,580-square-foot home was under contract to sell to Zillow Offers for $418,872. But now that the market has been softening over the past few months, they’re worried they won’t get as much for their home, which they had planned to use that cash toward the purchase of a 2,800-square-foot home being built for them in Buckeye. ‘We expected them to uphold their end of the deal,’ Sarena Miller said. ‘We thought this was a done deal.'”

From Bisnow New York. “An affiliate of troubled Chinese investor HNA Group has defaulted on its mortgage at the former office building of Major League Baseball. PWM Property Management failed to make its November payment on a $500M CMBS loan at 245 Park Ave., which has been sent to a special servicer, according to commercial mortgage-backed securities firm Trepp. HNA paid $2.2B for the 1.8M SF Midtown office building, in 2017 and financed the transaction with $1.2B in CMBS debt.”

The Real Deal on Florida. “Minority investors in Michael Stern’s Miami Beach condo project filed a summons against his development entities, seeking $10 million. Limited liability companies linked to Ariel Ackerman’s Ackerman Development and Daniel Minkowitz’s Mink Development, investors in Stern’s waterfront luxury condo project at 1300 Monad Terrace in Miami Beach, filed the summons in New York State court. A complaint has not been filed.”

“The plaintiffs allege that Stern has a ‘pattern and practice of duping investors’ to back his projects ‘only for Stern to explode the project costs without authority, and siphon off the money, value, and publicity of the project for his own benefit through a variety of tactics in blatant violation of negotiated contractual and other legal rights,’ according to the summons.”

“In a statement to The Real Deal, Stern’s firm, JDS Development Group, denied the claims, calling them ‘baseless allegations asserted in what amounts to an unfortunate publicity stunt’ created by Minkowitz and Ackerman, ‘principals of a series of entities who are currently attempting to stave off their creditors.'”

From China Daily. “As the focus of residential property sector regulations has shifted from avoiding housing bubbles to both contain the rapid growth of home prices and guard against any substantial price drops, a growing number of Chinese cities have taken measures to stabilize home prices, and experts believe the property market will successfully avoid a hard landing.”

“At least 21 cities, ranging from northeastern Liaoning province’s Shenyang to southwestern Yunnan province’s Kunming, have introduced measures to prop up home prices from falling drastically, said China Business News. Amid such a backdrop of market stabilization, more homes are used as collateral in project construction payments by cash-strapped property developers to their construction companies.”

“These collateralized properties are usually priced lower than those offered by real estate developers. Taking ones recently available in Guangzhou, for example, such a collateralized property can be priced between 100,000 yuan and up to 1 million yuan-lower than regular ones. This is because construction companies holding collateralized properties are eager to sell the assets as quickly as possible to get cash, and the properties are usually situated in less ideal locations or on less preferred floors, said Lu Wenxi, a researcher with Centaline Shanghai.”

“‘Many real estate developers and construction companies are feeling more capital pressure amid the ongoing market adjustment, so more collateralized properties have recently appeared in the market,’ said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institution. Illegal promotion in the name of collateralized properties is forbidden by local governments. In October, a property project in Xuzhou, Jiangsu province, was requested to sell at normal prices, as the project promoted itself as collateralized properties with steep discounts.”

“‘Only by recognizing the vulnerability of the property sector are regulators quickly making fixes to maintain market stability. And real estate developers have ceased reckless expansion and instead are attaching importance to cash flow issues. Thus, we can expect the previously overheated real estate market to see a soft landing,’ Lu said.”

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This Post Has 165 Comments

  1. ‘in October, U.S. inflation was 6.2% while this benchmark for mortgage rates — kept artificially low with Federal Reserve help — averaged 3.1%. That’s 3.1 points BELOW the inflation rate’

    Losing serious money on every shack loan. Genius.

        1. We are at a fork in the road where the system will collapse in either inflation or deflation. So I think they are opting for inflation because it is the better option for their clients, the banks.

          Fire and Ice by Robert Frost

          Some say the world will end in fire,
          Some say in ice.
          From what I’ve tasted of desire
          I hold with those who favor fire.
          But if it had to perish twice,
          I think I know enough of hate
          To say that for destruction ice
          Is also great
          And would suffice.

          1. I’ll claim credit for introducing that poem to the HBB as a metaphor for the Fed’s inflation/deflation/stability conundrum, over a decade ago.

          2. I’ll claim credit for introducing that poem to the HBB as a metaphor for the Fed’s inflation/deflation/stability conundrum, over a decade ago.

            Uh, I remember reading it in high school in the 1980s.

    1. St. Greta is no longer a minor. Her slide into irrelevance has already begun. The globalists will be grooming her successor as her 15 minutes of fame is about used up.

      2. St. Greta was actually her father pretending to be her online. He was busted for it with screenshots proving the fraud. How pathetic. He put her in the crosshairs of the entire world for his own selfish agendas, opening her up to the scorn and ridicule of millions. She’ll probably end up suffering the same fate as child actors – an early drug death or some such.

        1. “She’ll probably end up suffering the same fate as child actors – an early drug death or some such.”

          Eh, she seems a willing accomplice to daddy’s trickery. In the long run it’s all just entertainment anyway, as countries are going to continue polluting to keep up with each other, with the occasional virtue signal headline.

  3. ‘a listing agent for a $20 million sale in Tiburon in October, said the deal was noteworthy in that it included no foreign bidders. The seller was a bank that obtained the property through a foreclosure’

    But, can always sell? Red hotness? Gold nuggets under the El Camino in the dirt driveway?

    1. notice how many times the agent in the article says “ I feel. “

      so yeah, buyers making perhaps THE most expensive financial decision in their lives, are expected to spend millions on someone’s “hunch”. on their “feeeeelings “.

      so does that enormous commission check, based on “feeeeelings” get refunded if the value drops soon !?

      my “feeeeeling” is HELL NO !

  4. ‘The Millers said their 1,580-square-foot home was under contract to sell to Zillow Offers for $418,872. But now that the market has been softening over the past few months, they’re worried they won’t get as much for their home, which they had planned to use that cash toward the purchase of a 2,800-square-foot home being built for them in Buckeye. ‘We expected them to uphold their end of the deal,’ Sarena Miller said. ‘We thought this was a done deal’

    Well you know what they say about assume Sarena. So yer next deal is scuttled, and that seller too.

    Straddling two shack loans at once – what could go wrong?

      2. Years ago I made an offer on a house in San Diego. The owners had moved out and bought another house while we were negotiating. We went back and forth and my limit I had set for the property was reached but the owners wouldn’t budge insisting on squeezing another 5k out of my offer. But I found another property that was a better deal and moved on.

        Then they were stuck with two houses one of which was empty. They ended up having to sell the house for 20k less than my original offer. That was back when 20k on an offer was a significant difference.

    2. Older couple disable vet buying a house DOUBLE the size they are selling….. bet it has stairs too…… we saw this in the last bust..

    3. they’re worried they won’t get as much for their home, which they had planned to use that cash toward the purchase of a 2,800-square-foot home being built for them
      I hope they called the builder and told them: “Guess what? We really don’t need those Gold plated Toilets after all.”

  5. ‘real estate developers have ceased reckless expansion and instead are attaching importance to cash flow issues. Thus, we can expect the previously overheated real estate market to see a soft landing’

    If you say so Lu. When is the next mass demolition scheduled?

    1. China is going to have a huge boom in demolition work over the next quarter century, to eliminate its ginormous herd of high rise apartment building white elephants. I wonder what the carbon footprint on all that demolition work will look like! (Don’t ask a central banker for an opinion about how much carbon emissions are generated by their wasteful stimulus policies…)

      1. Don’t Rely on Central Banks to Fight Climate Change
        By Jeff Cockrell
        October 18, 2021
        CBR – Climate Change

        In late August, five members of the US House of Representatives issued a statement urging President Joe Biden not to reappoint Jerome Powell, the chairman of the Federal Reserve, when his term expires in February 2022. The group, which included Alexandria Ocasio-Cortez (Democrat of New York), cited two concerns with Powell’s leadership: the Fed’s relaxation of banking regulations and its lack of action “to mitigate the risk climate change poses to our financial system.”
        …

        1. “…to mitigate the risk climate change poses to our financial system.”

          That idea seems like a steaming pile of Zillow. If I’ve missed the wisdom of AOC, could someone please enlighten me?

          1. The globalist scum media is the enemy of the people. One day we’re all gonna die from this, then that. Have you ever heard one boo from these clowns about China building entire empty cities for decades? This bony armed sandanista is a bartender. I don’t care if the globalist scum media elevates her. She’s just a commie, punk a$$ed loser. And she talks like an idiot too.

            Wake up any day, and these scum will have another phony “crisis”. Race race race, I’m so sick of that sh$t I could scream.

            Have you noticed we’re perpetually “recovering” now?

          2. ‘…we’re perpetually “recovering” now?’

            As long as we are still recovering, without having actually recovered, the Fed can continue to slow walk and talk stimulus removal, with the occasional pause to launch bubbly risk assets back up to the moon.

      2. Chinese neighbors like Burma should be nervous, as the massive ecological damage wreaked by such reckless overdevelopment is going to cause the CCP to turn its malevolent gaze to neighboring countries where the water & farmland aren’t as polluted or covered with blighted ghost cities and decrepit skybox developments.

  7. “Yet in October, U.S. inflation was 6.2% while this benchmark for mortgage rates — kept artificially low with Federal Reserve help — averaged 3.1%. That’s 3.1 points BELOW the inflation rate.”

    Here’s something I recall from an undergraduate course in Money and Banking that I took back in 1995. The real lending rate is given by the Fisher equation:

    Real Rate = Nominal Rate – Inflation Rate = 3.1% – 6.2% = -3.1%.

    That’s a LOT of housing market stimulus. Enough to potentially result in an insustainable bubble in housing prices, especially if the Fed is serious about reining inflation back towards its 2% target, AND unwinding COVID-19 Quantitative Easing measures used to suppress mortgage lending rates and squash the inflation risk premium in mortgage lending rates.

        1. Ahem…

          M1 (DISCONTINUED) (M1) | FRED | St. Louis Fed

          That’ll fix it. That’s “policy” anymore. We just won’t call it subprime! They aren’t foreclosures, they are now “plans.” I was reading this article on forbearances this morning. It kept saying plan over and over. I had to figure out that each defaulted shack loan is on a “plan,” so that’s what they call it.

    3. Check out the guy with the pink hair at 47 seconds.

      While almost no one was there, the globohomo rep was.

    4. We’re living in a globalist freakshow where sociopath narcissists feed their perverted fantasies. We need to clobber these people to death.

  11. Spending the weekend in Southern Colorado (it only got down to 40F degrees where I camped last night, and I have not seen a single BLM / Pantifa / other virtue signal yard sign anywhere down here.

    It’s so nice being able to leave Denver and go visit the United States of America.

    P.S. Kyle Rittenhouse is innocent, and Let’s Go Brandon!

  12. “I have always been available, and yet they chose to come to my home in this way: break down my door, terrorize my family, and put me in cuffs,” Bishop said.

    Mother Describes FBI Raiding Her Home For Speaking Out Against Election Fraud & Radical School Boards

    November 20, 2021

    A Colorado mother explained a harrowing account of the FBI raiding her home for speaking out against far-left officials on her local city council.

    Sherronna Bishop, founder of activist group America’s Mom, joined Steve Bannon’s War Room on Saturday to describe how a SWAT team rammed down her door and terrorized her children as they handcuffed her and dragged her away on Tuesday.

    “And I cannot help but think this was a major intimidation move because they did not do this with anyone else.”

    “You remember, the DOJ has said that parents who are out there being too vocal run the risk of being domestic terrorists,” Bishop noted. “And I just can’t help but think that, with all this brute force they brought to my home, it was more of a message than an actual crime [investigation].”

    Bishop, the former former campaign manager for Rep Lauren Boebert (R-Colo.), claimed she helped flip 9 local school boards conservative in recent special elections by helping to expose critical race theory and other liberal agendas in the classroom.

    This may explain the heavy-handed retaliation by Biden’s Justice Department against an activist mother.

    https://ussanews.com/mother-describes-fbi-raiding-her-home-for-speaking-out-against-election-fraud-radical-school-boards/

    HORROR! Biden Regime Sends FBI Jackboots to Break Down Door of School Board Activist

    The Gateway Pundit Published November 20, 2021 82,501 Views

    https://rumble.com/vpj5bx-horror-biden-regime-sends-fbi-jackboots-to-break-down-door-of-school-board-.html

    1. Just as they will never give the all clear regarding the pandemic, the left will never voluntarily relinquish power. And if you wrest it away from them, via the ballot box, they will come and punish you.

      So what’s next? Having the secret police kick your door in during the wee hours of the morning, and drag you away to a gulag, to never be seen again?

      1. “So what’s next? Having the secret police kick your door in during the wee hours of the morning, and drag you away to a gulag”

        Like Hunter Biden’s “business partners” I mean the Chinese government did to the tennis player?

        Peng Shuai: Missing Chinese tennis star appears in Beijing

        World Tennis Association says new videos and pictures of Peng Shuai are ‘insufficient’ and do not address its concerns about her safety.

        21 Nov 2021

        The former doubles world number one had not been seen or heard from publicly since she said on social media on November 2 that former vice-premier Zhang Gaoli had coerced her into sex, and they later had an on-off consensual relationship.

        Neither Zhang nor the Chinese government has commented on her allegation. Peng’s social media post was quickly deleted and the topic has been blocked from discussion on China’s heavily censored internet.

        World tennis bodies have expressed concern, with the Women’s Tennis Association (WTA) threatening to pull tournaments out of China. The United States and the United Kingdom have called for evidence of Peng’s whereabouts and safety.

        https://www.aljazeera.com/news/2021/11/21/peng-shuai-videos-photos-of-missing-chinese-star-posted-online

      2. “And how we burned in the camps later, thinking: What would things have been like if every Security operative, when he went out at night to make an arrest, had been uncertain whether he would return alive and had to say good-bye to his family? Or if, during periods of mass arrests, as for example in Leningrad, when they arrested a quarter of the entire city, people had not simply sat there in their lairs, paling with terror at every bang of the downstairs door and at every step on the staircase, but had understood they had nothing left to lose and had boldly set up in the downstairs hall an ambush of half a dozen people with axes, hammers, pokers, or whatever else was at hand?… The Organs would very quickly have suffered a shortage of officers and transport and, notwithstanding all of Stalin’s thirst, the cursed machine would have ground to a halt! If…if…We didn’t love freedom enough. And even more – we had no awareness of the real situation…. We purely and simply deserved everything that happened afterward.”

        ― Aleksandr I. Solzhenitsyn , The Gulag Archipelago 1918–1956

      3. When the “officers” serving these warrants start collecting lead in the brain pan, they will cease.

    2. Activist mom = domestic terrorist in the Orwellian lexicon of our globalist overlords & their Quislings.

        1. The Southern Poverty Law Center should rename itself the Defamation League, because that is what they are in bu$iness to do.

          Any article (Washington Post, honk, honk) with a quote / reference from the SPLC should be discarded as Fake News.

  13. “The median price for a detached home in Marin County was $1.67 million in October as the median continued to ease off its $1.8 million peak from the summer.”

    This ain’t so bad…just down $1.80 – $1.67 = $0.13. It’s just a few pennies…times $1,000,000.

    Ya gotta love preowned home sellers and the financial journalists who work for them.

  14. “Napa County pricing was down 10.5% to $850,000, and sales increased 4.1%.”

    That’s over one month. Seems like alot of sweet home equity wealth just went POOF.

  16. ‘Napa County pricing was down 10.5% to $850,000’

    It’s a good thing everybody put 20% down.

    Those numbers out of Kingman have me feeling sort of uneasy. Sure California is crater and should be used to it by now. And it’s unfortunate that Texas has the “gotta be expensive” disease. Yesterday I saw an article out of Tucson saying “we used to be affordable but shacks are expensive now.” OK, go back to that fresh hell Tucson.

    But maybe because I worked foreclosures for many years, seeing that come back to Kingman hits home. When I was first asked to secure foreclosures out there, it was late 2008. Jeebus the economy was tanked and getting worse by the day. I didn’t need to bring help. I could hire any number of unemployed guys for the day just by asking at the hardware store.

    And that 42% higher than 2005 price: the shack is 16 years older too.

    I think about what a recession or depression really is. Take a small town like Kingman. Shacks are getting sold and built. People gravitate to the boom. Boom goes away. What job do they take? It’s not like new industry springs up in Kingman every year. Unemployment spreads cuz people stop spending. Seeing it roll over these little towns won’t be fun.

    1. I was passing through some tiny west coast towns this past week. I was looking around thinking “how in the hell can these people afford $400k+ for a starter home?” The answer is “they can’t.” These towns’ economies support $50,000 houses.

  17. Any thoughts on what might cause the stock market’s current ginormous irrational exuberance wave crest to crash? Stimulus removal? Higher interest rates?
    Gravity?

    2. Hard to say. The FED has signaled that the stock market is all it cares about. Oh, and housing. They’re trying to maintain the most massive speculative bubble in history – an intentional act of theirs – by reckless money printing.

      1. Any thoughts on what might cause the stock market’s current ginormous irrational exuberance wave crest to crash?

        At this point it’ll have to be big news like lenders going under. Apparently Evergrande isn’t quite doing it, so once domestic NBLs like Rocket Mortgage and those start shuttering operations, I get the feeling the party will continue. Zillow foreshadowing?

    1. Activists take to the streets of Brooklyn NY

      While not as generous as last year, the Soros Scum appear to still be writing checks.

      1. “take to the streets”

        I’m still waiting for Denver Mayor Michael Hancock and Denver City Council to issue a statement condemning Burn Loot Murder / Pantifa for blocking roads, vandalizing vehicles, assaulting motorists, and attempted carjackings on Friday night.

        Oh wait, I forgot this is Denver.

        “They’re not sending their best”

    2. “Every city, every town?” The BLM-Antifa rent-a-mobs only make appearances in Democrat-malgoverned municipalities where law enforcement & the judiciary have been purged of the honest, capable, and competent who would uphold the law. If they tried to caper in staunchly conservative areas, unprotected by indulgent Soros-installed DAs, fellow Commies in City Hall, and “woke” Police Departments, they would quickly realize the error of their ways.

    3. I hope none of the BLM peops inadvertently burn down neighborhoods where people of color live. Not only would that be racis’, but the assiciated looting could drive away businesses, resulting in future lack of economic opportunity for the minorities who live there.

    4. A euphemism for a domestic terrorist gang. ‘Activist’. More left lexicon double standard thought control.

    1. It looks like the Fed blew their wad.

      Is there some way for them to put the inflation genie back in the bottle, or should we assume that M2 will continue heading straight up towards the moon from now until the end of time?

      1. FT Asset Management
        Financial services
        The ‘FOMO’ rally and the ‘everything bubble’
        A “fear of missing out” has gripped global markets, lifting everything from stocks to cryptocurrencies to record highs and forcing even staunch bears to throw in the towel
        © Michael Nagle/Bloomberg
        Harriet Agnew, Asset Management Editor
        November 14 2021
        Welcome back to FT Asset Management, our revamped newsletter on the movers and shakers behind a multitrillion-dollar global industry. This article is an on-site version of the newsletter. Sign up here to get the newsletter sent straight to your inbox every Monday.

        This bubble is in everything

        They never ring a bell at market tops, but there is a long history of high-profile bears throwing in the towel at inflection points. Just last year, AJO’s Ted Aronson called it quits almost exactly at the end of the worst run for value stocks in two centuries. Perma bear Russell Clark has now emerged as another victim of this remarkable cycle.

        Clark’s formative experience was day-trading technology stocks in the dotcom bubble; he eventually lost almost all of his money when it burst. That made the Australian even more contrarian by nature. He expressed this view at Horseman Capital Management, which became Russell Clark Investment Management, where he has spent much of the past decade net short on stocks, and most recently short technology stocks. Ouch.

        That has cost him dearly, as tech stocks have kept on climbing. Last week Clark finally called it a day, telling his dwindling group of investors that it was “time to step back, have a think about where we are going, and then come back when I can see an opportunity for my skill set”.

        His exit comes as financial markets seem to have tipped from euphoria into what some analysts call a “FOMO” rally or a “fear of missing out” boom, as my colleagues Robin Wigglesworth, Katie Martin and George Steer​ explore in this piece. Peter van Dooijeweert, head of Man Group’s solution unit, said investing had become akin to a video game — and not one of the better ones. “It feels like Candy Crush.”

        The options market is probably the best example of this current frothiness. This month a record $2.6tn worth of US stock options traded in a single day, according to Goldman Sachs. Some cynics have long joked that the equity market has become a derivative of the options market — but today that rings somewhat true. The nominal options trading volumes are running about 50 per cent higher than actual US equity trading. No wonder many investors are getting antsy.
        …

        1. “The ‘FOMO’ rally and the ‘everything bubble’
          A ‘fear of missing out’ has gripped global markets, lifting everything from stocks to cryptocurrencies to record highs and forcing even staunch bears to throw in the towel.”

          It seems to me that the two powerful emotions of fear and greed are usually opposites of one another and one of these emotions usually gives way to another HOWEVER in the case of FOMO these two emotions are paired up and combined.

          The “F” of FOMO represents fear but this fear is just another expression of greed; It is unleashed greed that drives the fear of FOMO.

          Either emotion by itself can overwhelm the possessed and is difficult to combat but with these two emotions coupled together resistance seems futile.

      2. It looks like the Fed blew their wad.

        These guys are high on their own supply. They were daytrading their policies beforehand, frontrunning the markets. They believe that, as the world reserve currency, they can print unlimited amounts of cash. They might go Weimar.

        1. They might go Weimar

          Credit expansion can’t create Weimar. Credit expansion always falls in on itself. Deficit spending by the government, on the other hand…

          2. Who would have thought that annual multitrillion dollar deficits would fuel inflation? Who could have seen it coming?

      3. History Suggests That Stocks Won’t Like Inflation
        Lance Roberts | Nov 05, 2021 05:38AM ET

        Several articles published lately suggest that stocks perform well in higher inflation environments. That may be the case when inflation rises due to more robust rates of sustainable economic growth. However, history suggests sharply rising inflation not only negatively impacts economic growth but triggers adverse market environments.
        …
        Not surprisingly, as shown below, spikes in inflation have been coincident with crisis events throughout history. From banking crisis to economic recessions, to devastating bear markets, inflation spikes triggered revulsions.

        The current spike in inflation is still minor relative to historical triggers but is worth watching closely. Earlier this year, the primary belief by the Federal Reserve was that inflation was “transient” and would quickly resolve itself. However, as Michael Lebowitz noted recently, that outlook is changing for the worse.

        “The Fed is starting to acknowledge this bout of inflation may last longer than a “transitory” period. Per Atlanta Fed President Raphael Bostic, ‘U.S. inflation is broadening, not transitory.’ His statement is the first recognition from a Fed member that higher inflation may no longer be transitory.”

        As he notes, the big problem, when it comes to the stock market, is “margin compression.”

        “In six of the seven inflationary periods, including both episodes in the 1970s, corporations experienced margin compression. The era of moderate inflation, following the 2008/09 recession, was the only period where margins improved.

        Profit margins are now at their highest levels since at least 1947. If inflation continues higher and margins decline, profits will suffer. If earnings decline due to declining margins and valuations fall to levels in line with prior periods of inflation, stocks could easily fall by 40-50%. Even more significant declines would not be abnormal.”

        The biggest problem is the Fed won’t be able to bail investors out.

        The Fed Will Be Trapped By Inflation

        Over the last decade, two primary supports significantly elevated asset prices; 1) share repurchases, as shown below, and 2) the Fed’s monetary policy.

        The problem for the Fed is inflation. In July 2020, we pinned our concerns about an inflationary surge:

        “The ‘unlimited QE’ bazooka is dependent on the Fed needing to monetize the deficit to support economic growth. However, if the goals of full employment and economic growth quickly come to fruition, the Fed will face an ‘inflationary surge.’”

        Inflation is Surging-CPI

        As we suggested then, should such an outcome occur, it will trap the Fed. The surge in inflation will limit the ability to continue “unlimited QE” without further exacerbating inflation. Furthermore, the Fed will have to hike rates, further tightening monetary policy, to counter inflation.

        “It will be increasingly hard for Powell to claim the economy needs to make ‘substantial further progress’ toward achieving maximum employment before the Fed starts talking about tapering. Powell has repeatedly said the Fed is awaiting substantial further progress in the economy before terminating its stimulus. Given the performance of the economy, it is reasonable to expect they will start to taper before the end of the year, and a few months later they will start to raise the federal funds rate.” – Ed Yardeni

        However, when they do that, asset prices fall, a recession starts, and the Fed gets trapped between fighting inflation and bailing out markets.

        It’s a no-win situation for the Fed.
        Conclusion

        The issue of rising borrowing costs spreads through the entire financial ecosystem like a virus. The rise and fall of stock prices have very little to do with the average American and their participation in the domestic economy. Interest rates are an entirely different matter.

        Since interest rates affect “payments,” increases in rates quickly negatively impact consumption, housing, and investment ultimately deters economic growth.

        Given the current demographic, debt, pension, and valuation headwinds, the future growth rates will be low over the next couple of decades. Even the Fed’s own “long-run” economic growth rates currently run below 2%.

        Notably, inflation driven by artificial infusions of capital, supply chain disruptions, and rising wages will eventually crush economic growth and corporate profit margins.

        Unfortunately, the Federal Reserve, and the Administration, will have to face hard choices to deal with the current “liquidity trap.” The only question is do you bail out the stock market, or fix what is broken in the economy?

        The problem for the Fed is they can’t do both.

        Written By: Lance Roberts

  20. Rittenhouse could of been killed that night easy by those monsters that the Media tries to portray as pillars of Society.
    Rittenhouse was lucky that there was so much footage and testimony that backed his self defense claim.
    President Biden is ” angry and troubled”, by the verdict. Hitting a wall by the 5th Circuit Court on OSHA enforcement of Biden Mandates must make him angry and troubled also.
    All who conspire to take down this Constitutional Republic, by Medical Tyranny, Fraud Media with censorship to silence dispute , are the Innsurrection to take over the US and other Countries.
    As long as Fraud Media gets to exercise this level of control over the Narrative, with censorship and cancelling and deplatforming and slander to dispute, the Public is defrauded as a weapon of Innsurrection, by Globalist Monopolies ,etc., that is in cahoots with captured and treasonous Government.
    They are the Innsurrection against US, not the Citizens who are under attack by them in every way.

    1. President Biden is ” angry and troubled”, by the verdict.

      The pedo brotherhood is mourning the loss of one of their own, Joseph Rosenbaum.

  21. “‘I feel like the market is a bit confusing,’ said Yoko Kasai, a Marin-based agent for 16 years.

    Your feelings are immaterial, Yoko. Your “confusion” is a function of having to engage in mental and verbal contortions to avoid telling your “clients” the ugly truth: we are in the incipient phase of a bursting housing bubble, and buying a shack now is setting yourself up for a financial Waterloo.

  22. “Tony and Sarena Miller were furious when they got a call from Zillow Offers on Nov. 18 canceling their home sale contract.

    Stamp your little feet! Stamp ’em, stamp ’em!

    1. canceling their home sale contract

      Next time, read that contract more carefully, and look for escape clauses.

  23. ‘We expected them to uphold their end of the deal,’ Sarena Miller said. ‘We thought this was a done deal.’”

    The key to happiness is to lower your expectations, Sarena. Fortune cookie wisdom has never steered me wrong.

  24. “The plaintiffs allege that Stern has a ‘pattern and practice of duping investors’ to back his projects ‘only for Stern to explode the project costs without authority, and siphon off the money, value, and publicity of the project for his own benefit through a variety of tactics in blatant violation of negotiated contractual and other legal rights,’ according to the summons.”

    Sounds like said plaintiffs failed to do even a cursory due diligence. Cuz housing only goes up, so such shenanigans could be overlooked – until the music stopped playing.

  25. From the Colorado Sun:

    Did Colorado’s COVID vaccine mandate for health care workers hurt hospital staffing? It’s complicated.

    “It’s complicated” == “yes”

    1. I can’t imagine working for a globalist media outlet where telling the plain truth is verboten and a career-ender.

          1. Any non-Narrative Compliant media content will get you labeled “far right.”
            Bill Mahar’s is now labeled as far right in some circles.

    2. No masks down here in Southern Colorado.

      CCP Flu circle jerks and virtue signalling are a Denver / Boulder thing.

      1. Phlebotomists are in short supply in my neck of the woods. They aren’t well paid, so I’m guessing when they were told “No jab, no job”, many resigned and looked for other work. I did have some blood drawn last month. I had to make an appointment and it was drawn by a nurse.

        And a lot of nurses, who are well paid, resigned rather than get jabbed.

        But “elected leaders” around the globe have their marching orders, and violent protests won’t make them back down, as we are seeing in Europe.

        Something I’m seeing “Real Journalists” doing: they are saying “The vaccines are amazing!” in their articles.

        1. ” The vaccines are amazing. ”

          What, the vaccines are amazing in being one of the worst con job weapons of mass destruction to kill, injure and keep a contrived Pandemic going.

          It is amazing that something so obviously not fit for human consumption, could be forced down the throats of Public , and more of the same failure expierment injections can be pushed and mandated like the boosters.
          It’s amazing how fear can dismantle critical thinking and be used as a weapon of mass psychosis.
          We should have a mass movement of Break a Vaccine Vile Day. , before they put it in your kid .

  26. “At least 21 cities, ranging from northeastern Liaoning province’s Shenyang to southwestern Yunnan province’s Kunming, have introduced measures to prop up home prices from falling drastically, said China Business News.

    Two things move markets: greed & fear. The greed phase is over and it ain’t coming back. Now the fear is setting in, and no commie central planner meddling is going to stop Humpty Dumpty from meeting his allotted fate.

  27. Thus, we can expect the previously overheated real estate market to see a soft landing,’ Lu said.”

    “Subprime is contained.” — Fed Chair Ben Bernanke, May 2007

  28. My hood is thick with refugees from Blue States. 🙁

    20 minutes south of my hood and down to Miami is thick with recent bus loads of Texas plated Greyhound future Biden voters. 🙁 🙁

      1. And even if every unvaxxed person protests, they will be told to go pound sand. And as we saw in Rotterdam, the police have no problem opening fire on an unarmed crowd of protestors.

  32. Remember this cringe White House Tweet about how we saved $.16 on our 4th of July BBQs? When your libtard relatives complain about the cost of a Thanksgiving dinner hitting 31-year highs, don’t be shy about reminding them WHY prices are soaring. #FJB

    https://twitter.com/whitehouse/status/1410709115333234691

    Planning a cookout this year? Ketchup on the news. According to the Farm Bureau, the cost of a 4th of July BBQ is down from last year. It’s a fact you must-hear(d). Hot dog, the Biden economic plan is working. And that’s something we can all relish.

  34. OMG, this is just a attempt to take away the FIRST AMENDMENT.
    The Tyrants will do anything they can to take the First Amendment , which might be the most important Amendment of them all.
    They are going after all the Amendments, Bill of Rights, Constitution, standing law, you name it.

    Of course, the One World Order Dictorship they plan gives no rights to Citizens because its just enslavement. THEY MUST BE STOPPED

  35. White House: Biden not ‘focused’ on ‘Let’s go Brandon’ chants

    https://www.washingtonexaminer.com/news/white-house/white-house-biden-not-focused-on-lets-go-brandon-chants

    White House press secretary Jen Psaki downplayed concerns regarding the “Let’s go Brandon” chant, contending political civility had improved since President Joe Biden’s inauguration.

    “I don’t think he spends much time focused on it or thinking about it,” Psaki told reporters Friday when asked about the slogan, a stand-in for “F*** Joe Biden.”

      1. Little Red Lyin’ Hood probably realizes by now she’s going to be tainted for life by her association with this shambolic administration.

    2. White House press secretary Jen Psaki downplayed concerns

      Who would believe a word this practiced liar says? She’s just a Clinton/Obama/Biden mouthpiece.

    3. “White House: Biden not ‘focused’ on ‘Let’s go Brandon’ chants”

      – Changed to: “White House: Biden not ‘focused’”

      – There. Fixed it for you!

      – First 79 yr. old President of the U.S.A. Not even a smidgen of senility…

      – I call ’em like I see ’em! 🙂

  37. This is never going to end. You know that, don’t you?

    Fauci vague on changing definition of ‘fully vaccinated’: ‘We might modify’

    https://www.foxnews.com/health/fauci-changing-definition-fully-vaccinated

    Dr. Anthony Fauci has cautioned that health officials may change the definition of “fully vaccinated” to include COVID-19 booster shots – if the data suggests it.

    The Centers for Disease Control (CDC) last week recommended that all adults aged 18 or older should receive a vaccine booster shot six months after their final shot of a completed vaccine regimen.

  38. From the Dumver Post:

    What roles should vaccination status, age play in decisions if Colorado has to ration health care?

    So, the state forces a “no jab, no job” mandate on healthcare workers, and now they talk about “rationing healthcare”.

    Is it me, or is this another manufactured crisis?

    1. Living in the urban / suburban Front Range of Colorado get worse and worser every day. The City / County of Dumver voted 79.55% for Pedo Joe, and a few days driving around this sh*thole will confirm the known truth of “vote like California, become California.”

  39. A report from the LA Daily News in California. “Since 2000, U.S. inflation has averaged 2.2%, according to the Consumer Price Index, while rates on 30-year mortgages averaged 5%, according to Freddie Mac. So historically speaking, loans are usually priced 2.8 percentage points above these cost-of-living increases. Yet in October, U.S. inflation was 6.2% while this benchmark for mortgage rates — kept artificially low with Federal Reserve help — averaged 3.1%. That’s 3.1 points BELOW the inflation rate.”

    – The U.S. economy is so far off the rails thanks to Fed (private banking cartel) monetary and Federal (government) fiscal policies that I can’t see an outcome that doesn’t involve something more than a dumpster fire. And not to mention, but I will, the last two bubbles didn’t end well either (i.e. dot com and housing 1.0). Of course, “this time is different.” There was no recovery from the GFC of 2008. We’re still “living the dream.”

    – The Fed is supposed to “taper” QE from $120B all the way down to $105B starting this month. All that means a little less gasoline on the fire. QE is still ongoing. There’s absolutely no talk of “tightening,” which would be actual rate increases. The arsonist in charge of the fire brigade.

    https://austrian-institute.org/en/blog/paper-money-tricksters-from-john-law-to-todays-central-banks/
    Paper Money Tricksters: From John Law to Today’s Central Banks
    by Beat Kappeler | 15. September 2021

    “Exactly 50 years ago—on August 15, 1971—U.S. President Richard Nixon abolished the exchange of dollars for gold in a short, televised speech. Ever since, central banks have been issuing unbacked, purely paper money, bound by no ties to currency-independent values. The real value of the dollar has also fallen to as little as 15% of what it was before this shift. There has been gross monetary trickery, promises have been broken, the modern age of money manipulation has begun.”

    “These recent monetary experiments follow to the letter the procedure of one of the greatest money tricks in history: the paper money experiment of John Law in France in 1716-1720.”

    “The Seduction of Cheap Money”

    “They do not realize that these recent monetary experiments follow to the letter the procedure of one of the biggest money tricks in history: the paper money experiment of John Law in France from 1716-1720. It is no coincidence that some of today’s monetary theorists call it “modern” and groundbreaking: a fact that is deeply disturbing.”

    – Executive summary: Since we’re essentially now using the playbook of John Law and the Mississippi Bubble, don’t expect vastly different outcomes.

    “The problem of the modern economy is not a failure of a knowledge of economics; it’s a failure of a knowledge of history.” – John Kenneth Galbraith

    “The speculative episode always ends not with a whimper but with a bang.” – John Kenneth Galbraith, A Short History of Financial Euphoria

    “History doesn’t repeat itself, but it does rhyme.” – Mark Twain

    “Nations are not ruined by one act of violence, but gradually and in an almost imperceptible manner by the depreciation of their circulating currency, through its excessive quantity.” – Nicolaus Copernicus

    1. “It is no coincidence that some of today’s monetary theorists call it “modern” and groundbreaking: a fact that is deeply disturbing.”

      Well, it IS different this time, after all.

  41. https://twitter.com/rcwhalen/status/1457796881673646091
    R. Christopher Whalen
    @rcwhalen
    Most Americans Cannot Afford a New Construction Home – MBA Newslink https://shar.es/aWla44 | Powell ought to just resign now. Waiting for the end of QE is really inadequate to compensate for the damage done to American consumers by the FOMC….
    12:47 PM · Nov 8, 2021·Twitter Web App

    https://newslink.mba.org/mba-newslinks/2021/november/mba-newslink-friday-nov-5-2021/most-americans-cannot-afford-a-new-construction-home/?utm_campaign=MBA%20NewsLink%20Friday%20Nov.%205%202021&utm_medium=email&utm_source=Eloqua
    MBA NewsLink Friday Nov. 5 2021
    Most Americans Cannot Afford a New Construction Home

    “Although more new homes are expected to come onto the market in 2022, wages have not kept up with home price growth, keeping new construction out of reach for many, especially first-time buyers who don’t have the benefit of equity from a home sale.”

    “Of the 50 largest metros in which new homes accounted for at least 8% of total home sales, Miami, Sacramento, Calif., and Las Vegas rank as the least affordable new construction markets. Based on household income, 80% of buyers in Miami and Sacramento would not qualify for a mortgage on a median-priced new home and 65% of buyers in Las Vegas are unable to afford a new home. It would take these buyers anywhere from 18 to 30 years to save for a 6% down payment.“

    “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” – Milton Friedman

    – The Fed: “Doing the most harm since 1913.”

    – The “wealth” effect. Genius.

    https://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html
    What the Fed did and why: supporting the recovery and sustaining price stability
    By Ben S. Bernanke
    Thursday, November 4, 2010

    “This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more [less] affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment [stonk buybacks]. And higher stock prices will boost consumer wealth [inequality] and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

    – [edits mine]

    https://www.youtube.com/watch?v=wTP2RUD_cL0
    Dire Straits – Money For Nothing
    103,089,628 views | Feb 23, 2010

  43. Yellen the Felon has trotted out the new globalist-Biden regime talking point: COVID-19 is “calling the shots” on inflation. Silly me, here I thought the Fed’s deranged money printing since 2008 might’ve been a factor. I see what you did there, Old Yellen: by making the pandemic the culprit for inflation, you’re not-so-subtly implying inflation will continue unless and until the sheeple move in lockstep to comply with the edicts of the CDC, Fauci, Big Pharma, Brandon, etc. Yeah, and here’s my middle finger salute, you lying mendacious hag.

    Yellen: The cause of U.S. inflation is the pandemic

    https://www.axios.com/yellen-pandemic-caused-us-inflation-ffe76eaf-0b73-470e-bd27-559873d4b20f.html

    Treasury Secretary Janet Yellen said in a CBS interview broadcast Sunday that COVID-19 “has been calling the shots for the economy and for inflation” in the U.S. and future stability depends on the outcome of the pandemic.

    1. The dollar is the outlier…the only one of those currencies with recent upwards movement in futures prices. It suggests the Fed has successfully used forward guidance to convince markets that it is serious about removing Quantitative Easing by next summer.

      This gives them the option to pull away the football just before Charlie Brown kicks it by pushing back the timeline, just in case a massive rally is needed to cheer up traders.

  45. – The anti-REIC narrative. Still, if the shoe fits…

    https://twitter.com/TihoBrkan/status/1460849378109833218
    Tiho Brkan | @TihoBrkan

    “There is no housing crisis — it’s a false narrative.“

    “Shortages are a temporary problem created by artificial monetary policy not witnessed in centuries.“

    “When the cheap money punch bowl is taken away, demand will collapse. “

    “Oversupply will remain — the mortal enemy of price.“

    10:56 PM · Nov 16, 2021·Twitter Web App

    1. Why didn’t the CNN reporter just say… We’ve learned a lot of things from this trial, we’ve learned everything we said about Kyle Rittenhouse and this case over the last year was a lie.

    2. Videos like this are why people should dump YouTube and use BitChute instead (Remember: YouTube is owned by Google).

      Globalists gonna globe.

  49. Some news from last night in California.

    NBC Bay Area — Looting at Nordstrom Store in Walnut Creek:

    https://www.nbcbayarea.com/news/local/looting-at-nordstrom-store-in-walnut-creek/2737681/

    3 arrested, firearm recovered from Walnut Creek Nordstrom store looting involving 80 people:

    https://abc7news.com/walnut-creek-nordstrom-looting-robbery-smash-and-grab-wc-broadway-plaza/11258815/

    80 people is that a lot?

    #Breaking About 25 cars just blocked the street and rushed into the Walnut Creek Nordstrom making off with goods before getting in cars snd speeding away. At least two people arrested at gunpoint:

    https://twitter.com/JodiHernandezTV/status/1462284757434175488

    This is Joe Biden’s America. This is Nancy Pelosi and Adam Schitt’s America. This is the Democrat Party.

      1. The driver was a vibrant who was just released from prison. Of course, what he did wasn’t racist at all, because vibrants can’t be racist.

    2. “About 25 cars just blocked the street and rushed into the Walnut Creek Nordstrom making off with goods before getting in cars snd speeding away. At least two people arrested at gunpoint.”

      I’m guessing the two people who were arrested at gunpoint were released within an hour without posting bail.

  51. In Waukesha, WI a SUV drove into a Christmas Parade, killing and injuring a bunch of people. Not a lot of information yet.

  54. Maybe this news will help bring cheer to burned Chinese real estate investors’ hearts?

    The Financial Times
    China
    Chinese hypersonic weapon fired missile over South China Sea
    Pentagon struggles to understand how Beijing mastered technology
    The Pentagon believes China launched the hypersonic glide vehicle on a Long March rocket, seen here at the Wenchang Space Center on China’s southern Hainan Island last year © AFP via Getty Images
    Demetri Sevastopulo in Washington yesterday

    China’s hypersonic weapon test in July included a technological advance that enabled it to fire a missile as it approached its target travelling at least five times the speed of sound — a capability no country has previously demonstrated.

    Pentagon scientists were caught off guard by the advance, which allowed the hypersonic glide vehicle, a manoeuvrable spacecraft that can carry a nuclear warhead, to fire a separate missile mid-flight in the atmosphere over the South China Sea, according to people familiar with the intelligence.

    Experts at Darpa, the Pentagon’s advanced research agency, remain unsure how China managed to fire countermeasures from a vehicle travelling at hypersonic speeds, said the people familiar with details of the demonstration.

    Military experts have been poring over data related to the test to understand how China mastered the technology. They are also debating the purpose of the projectile, which was fired by the hypersonic vehicle with no obvious target of its own, before plunging into the water.

    Some Pentagon experts believe the projectile was an air-to-air missile. Others think it was a countermeasure to destroy missile defence systems so that they could not shoot down the hypersonic weapon during wartime.

    Russia and the US have also pursued hypersonic weapons for years, but experts say the firing of countermeasures is the latest evidence that China’s efforts are significantly more advanced than either the Kremlin or the Pentagon.

    The White House declined to comment on the countermeasure, but said it remained concerned about the July 27 test, which was first reported by the Financial Times last month.

    “This development is concerning to us as it should be to all who seek peace and stability in the region and beyond,” said a spokesperson for the National Security Council. “This also builds on our concern about many military capabilities that the People’s Republic of China continues to pursue.”
    …

  55. Blue Checkmark Twitter (aka the Democrat Party) is defending the actions of the Waukesha hit and run driver.

    Globalists gonna globe.

  56. Is the EU a country, a trade block, or something else?

    How did they gain the power to lord over member nation citizens’ lives?

    1. The Financial Times
      Coronavirus pandemic
      European protests against Covid-19 curbs spread to Brussels
      Demonstrations turn violent as governments across EU prepare stricter curbs to contain pandemic
      Protesters in Brussels set objects on fire
      Protesters in Brussels started fires as European unrest over coronavirus curbs spread to the Belgian capital
      © Hatim Kaghat/BELGA/dpa
      Javier Espinoza and Valentina Pop in Brussels and Sam Jones in Zurich 2 hours ago

      Europe’s protests against Covid-19 curbs spread to Brussels on Sunday when tens of thousands of demonstrators marched through the city centre in protests that later turned violent.

      Protests also broke out in Austria, Italy, the Netherlands, Switzerland and Croatia over the weekend as European governments stepped up their efforts to curb a steep rise in infections that is putting pressure on healthcare systems across the continent and last week prompted the World Health Organization to express concern.

      In Brussels some 35,000 people took part in initially peaceful protests close to the EU headquarters. The demonstration later erupted into violence. Police deployed water cannon, tear gas and mounted officers in response to a group throwing projectiles.
      …

  58. The Financial Times
    Opinion Global Economy
    There is no easy escape from the global debt trap
    No matter what happens to near-term inflation and growth, the world is too indebted for rates to rise much higher
    Traders work at the New York Stock Exchange. As financial markets and total debts grow as a share of GDP, they become increasingly fragile
    © Getty Images
    Ruchir Sharma yesterday

    The writer, Morgan Stanley Investment Management’s chief global strategist, is author of ‘The Ten Rules of Successful Nations’
    …
    Evidence is mounting that inflation is not as “transitory” as central banks have been insisting. Attention is focused on headline inflation, which hit a three-decade record of more than 6 per cent in the US last month. But core inflation measures — which exclude volatile prices such as food and energy, and serve as a better indicator of long-term trends — have spiked worldwide and are currently above 4 per cent in the US. Wages face long-term upward pressure as well: there are now more than six job openings for every unemployed American, a two-decade high.

    Earlier this year, there was reason to hope that a rise in productivity might endure, restraining inflation in the long run, but it has faded. Surveys show people working from home are putting in longer hours to generate the same level of output.

    Global bond markets are starting to price in expectations that higher inflation and growth will force central banks to raise short-term rates, starting next year. In fact, surging short-term rates are putting the world’s government bond markets on track for their worst year of returns since 1949.

    Yet the yield on 10-year government bonds is now well below the rate of inflation in every developed country. The market is likely intuiting that, no matter what happens in the near term to inflation and growth, in the long term interest rates can’t move higher because the world is far too indebted.

    As financial markets and total debts grow as a share of GDP, they become increasingly fragile. Asset prices and the cost of servicing the debt grow more sensitive to rate rises, and now represent a double threat to the global economy. In past tightening cycles, major central banks typically increased rates by about 400 to 700 basis points.

    Now, much milder tightening could tip many countries into economic trouble. The number of countries in which total debt amounts to more than 300 per cent of GDP has risen over the past two decades from a half dozen to two dozen, including the US. An aggressive rate rise could also deflate elevated asset prices, which is usually deflationary for the economy as well. Those vulnerabilities would explain why the market appears so focused on the “policy error” scenario, in which central banks are forced to raise rates sharply, tripping the economy and eventually pushing rates back down.

    In effect, the world is stuck in a debt trap, which suggests that while the refusal of long-term rates to rise significantly is new and unexpected, it may also be entirely rational.

  59. I see reports that millions came out in Europe to protest vaccine mandates and passports.

    You would think this would be big news.

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