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Values Have Fallen So Much Even Selling Won’t Bail Them Out

A weekend topic starting with Everything Lubbock in Texas. “Mortgage rates are at a 14-year high, which could delay first-time home buyers, the Lubbock Association of Realtors said. ‘What has had an effect on [the housing] market is rising interest rates. In the spring, we were in the 3’s. Right now, we’re breaking into the 7’s. So, what that has done is make homes a lot less attractive to investors,’ said LAR President Rich Eberhardt.”

“Last spring, Lubbock realtors saw 10-15 offers on homes within 48 hours or less. ‘We’re not seeing that anymore. So, that’s good news for buyers. You have a much better chance at getting in something,’ Eberhardt said.”

WKSU in Ohio. “Hammock Investments LLC is part of a wave of property investors, including a contingent based out of state. On paper, Hammock Investments is based in Sheridan, Wyoming, at a corporate office that serves as a mailing address for other companies. But one contact for Hammock, and two other people connected to the company in public records, live in Southern California. A Southern California native, Aaron Berryman, whose name appears on Hammock’s business registration, now works as a broker for real estate, mortgages, investments and financial services, according to a biography on the website of his investment firm.”

“‘Because of the home prices in California, it’s very difficult to get a positive return on your investment on rental properties out here. The return on investment, or what they call the capitalization rate, is just too low out here for it to justify,’ he said. ‘In Ohio, obviously, prices are much cheaper, the cost of entry is cheaper and return on investment is much higher When we bought the properties, we only had access to a handful of them for inspection,’ he said. ‘The balance of them, because of COVID, and because of the nature of the transaction, we did not inspect. We didn’t know what we were inheriting…We ended up, actually, inheriting some pretty bad properties.'”

“Shirley Woodson moved into her house in the West Boulevard neighborhood about three years ago, she said. ‘They told me once they fixed this property up, of course, the rent would go up,’ she said. ‘And I told them paying rent is not a problem, it’s just your property is a piece of sh–, and I’m not paying rent for anything that’s like this.'”

The Arizona Republic. “A shooting in Scottsdale at a short-term rental earlier this month has residents and elected officials doubling down on their opposition to Airbnb-style vacation rentals. Scottsdale Mayor David Ortega called the shooting ‘a tragic illustration of the problems that vacation rental homes are bringing to our neighborhoods,’ adding that ‘the sense of safety in this neighborhood is shattered.’ Kate Bauer, co-founder of the Arizona Neighborhood Alliance, said constructing more housing won’t solve Arizona’s housing shortage until the short-term rental market is under control. ‘If you don’t fix this problem, you’re never going to fix the housing problem,’ Bauer said. ‘You can’t keep building what will essentially be investments for people and not homes for people.'”

The Steamboat Pilot in Colorado. “Jill Limberg, managing broker at Steamboat Sotheby’s International Realty, described a real estate climate in which properties listed in the areas where short-term rentals are restricted or not allowed aren’t receiving as many offers as the ones where short-term rentals are allowed without restrictions. ‘The properties that are in the section of the overlay map that don’t allow nightly rentals that don’t have the potential to be grandfathered in, those properties are sitting on the market,’ Limberg said. ‘Because they’re sitting on the market, we’re starting to see some price reductions with those properties.'”

“After the influx of buyers who come to Steamboat during the pandemic, Limberg explained, it became routine to receive floods of offers within 24-48 hours of listing a property. ‘There was really no rhyme or reason to why people were pricing their houses where they were,’ Limberg said. ‘They were totally taking advantage of the market because they could, and there were enough cash buyers in the market. When somebody pays cash, it doesn’t matter if that house appraises or not because they’re paying cash. They don’t need to have an appraisal.’ But Limberg says those days seem to be in the rearview mirror as properties are receiving fewer offers and buyers have more leverage.”

Bay Area Newsgroup in California. “A Santa Clara County housing agency has sold an office building at a choice north San Jose site — at a loss from what it paid just two years ago. At one point, the Santa Clara County Housing Authority had intended to establish its headquarters in the office building, located at 3553 N. First St. in San Jose at a key location next to the light rail tracks. In 2020, the Housing Authority paid $37.35 million for the office building, a staff memo issued around the time of the purchase by the agency disclosed. On Sept. 28, the Housing Authority sold the building for $24.5 million, documents filed with the Santa Clara County Recorder’s Office show.”

“That represents a 34.4% decline in the building’s value over the approximately 21 months that the housing agency owned the building.”

The Los Angeles Times. “The California Public Employees’ Retirement System, or CalPERS, the nation’s largest state pension fund, experienced a 6.1% investment loss in the fiscal year that ended June 30. It was the first annual loss since the Great Recession for the fund that provides pension benefits to employees of the state and nearly 2,900 counties, cities, special districts and other public employers. Assets fell to $440 billion after topping $500 billion last year. The California State Teachers’ Retirement System, or CalSTRS, the nation’s largest teachers’ pension plan, lost 1.3% last fiscal year, its first decline too in more than a decade. And things may not get better anytime soon.”

“In California, the cumulative assets of 18 of the largest pension funds are expected to drop this year from $1.37 trillion to $1.09 trillion, lowering the funding ratio from 86.8% to 79.6%. A pension fund’s ideal target is full funding, or a 100% ratio, which the plans last reached cumulatively in 2007 just before the financial crisis.Indeed, the financial crisis proved to be a pivotal event for the state’s pension systems, some of which had bestowed lavish benefits to employees due to the run-up in tech stocks in the 1990s. The good times didn’t last.”

“First came the tech bust and then the bottom fell out of the market during the housing and financial crises, causing big losses.”

The Globe and Mail in Canada. “Rocketing interest rates, a spiralling cost of living, larger-than-ever mortgages and rising unemployment are a bad combination for creditors. It’s largely why consumer insolvencies are surging. About 100,000 more consumers missed a credit payment last quarter, compared with a year ago, reports Equifax. And the total number of consumer insolvencies in August jumped 27.6 per cent over the same month a year ago. Add plunging home values to the mix and you’ve got a recipe for mortgage defaults.”

“We’re already seeing a small minority of homebuyers underwater on their mortgages – owing more to their lender than their home is worth. That boosts the probability of default materially. For negative-equity homeowners who can no longer make their mortgage payments and have tried all other options – it often leaves a fundamental question: File for bankruptcy or file a consumer proposal?”

“In the real estate heydays – which were about seven months ago – it was common to see income property investors borrowing against their rental properties to buy more rental properties. It was leverage upon leverage – which is fine if you’re well qualified and know what you’re doing. In the months to come, we’re going to hear more about such folks. Namely, we’ll hear anecdotes about how their rental income didn’t cover their expenses, forcing them to sell their properties. Unfortunately, home values will have fallen so much – in some markets – that even selling won’t bail them out.”

The Telegraph in the UK. “Property sales are collapsing as mortgage market chaos makes home moves impossible for hundreds of thousands of buyers. Purchasers are pulling out of transactions and sellers are accepting price cuts as experts warn that the number of sales collapsing will surge in response to rocketing rates. Jenny Batchelor, 28, accepted an offer on her one-­bedroom flat in Surrey in August. On Tuesday the deal disintegrated. Her buyer pulled out because of the mortgage market turmoil.”

“‘They were an elderly couple, they were retired, and they wanted a buy-to-let to supplement their income. But then they said they were no longer proceeding. Their solicitor said it was because of the mortgage market chaos. All of my equity is stuck in that flat. My entire life is on hold,’ Ms Batchelor said.”

From Slate. “This year and last year might as well be in different decades. Nationally, the monthly mortgage payment on the median-price U.S. home has doubled in just two-and-a-half years. The other component is that sellers are locked in. Many sellers are also buyers, moving from one home to the next, and will be comparing available mortgage rates unfavorably with what they’re paying now, and available prices unfavorably with what they paid five years ago. They may choose to postpone a move for as long as they can.”

“About two in three outstanding mortgages have an interest rate below 4 percent; one in four are below three. Homeowners with such low mortgage interest rates are in ‘golden handcuffs’ Odeta Kushi, chief economist at First American Financial Corp., told the Wall Street Journal. ‘Congrats to my starter home on its promotion to my death home,’ observes one Slate colleague.”

From Bloomberg. “Credit markets are starting to buckle under pressure from soaring yields and fund outflows, leaving strategists fearing a rupture as the economy slows. Banks this week had to pull a $4 billion leveraged buyout financing, while investors pushed back on a risky bankruptcy exit deal and buyers of repacked loans went on strike. But the pain was not confined to junk — investment-grade debt funds saw one of the biggest cash withdrawals ever and spreads flared to the widest since 2020, following the worst third quarter returns since 2008.”

“And the pain is spreading to all corners of credit, including structured products. Collateralized loan obligation prices are dropping as Wall Street banks retreat from buying the securities, pressured by regulators. That will likely dent issuance of CLOs, the biggest buyers of leveraged loans. The average price for the floating-rate loans dropped to about 92 cents on the dollar and investors don’t see calm returning to markets anytime soon. A key spread on mortgage-backed securities meanwhile hit a two-year high after the Fed stepped back from the market.”

From Reuters. “In the month since Federal Reserve Chair Jerome Powell laid down a hard line on inflation, stocks have suffered double-digit losses, chasms have opened in global currency markets, and yields on the safest U.S. government debt have surged to their highest levels since the dark days of the financial crisis nearly a decade and a half ago. U.S. central bank officials have been clear, however, just as Powell was in his remarks at the Jackson Hole economic conference in Wyoming and following the central bank’s policy meeting last week: There’s no rescue coming.”

“Fed officials have never accepted the argument that their interest rate or other policy decisions are meant to support financial markets beyond ensuring that those markets retain enough public confidence to function, as they did with liquidity and other backstops during the COVID-19 pandemic. Far from encouraging any thought that they will ease up, the same officials that once advocated for rates to stay ‘lower for longer’ to encourage employment, now preach ‘higher for longer’ to fix inflation.”

Related Posts

Realtors, Stay In Your Lane

https://www.youtube.com/watch?v=pFmEheQYRnU https://www.youtube.com/watch?v=7p-r0TUVR9s https://www.youtube.com/watch?v=HUzFSSBIYsM https://www.youtube.com/watch?v=X_NqbGSQwH8

This Post Has 137 Comments

  1. ‘We didn’t know what we were inheriting…We ended up, actually, inheriting some pretty bad properties’

    You bought these dilapidated shacks Aaron. How do those 5% cap rates look now?

    BTW, if yer basement is flooded, that mattress on the floor isn’t going to help.

  2. ‘Last spring, Lubbock realtors saw 10-15 offers on homes within 48 hours or less’

    This was going on in every sh$thole. But Jerry and the boys couldn’t see?

    ‘Collateralized loan obligation prices are dropping as Wall Street banks retreat from buying the securities, pressured by regulators. That will likely dent issuance of CLOs, the biggest buyers of leveraged loans. The average price for the floating-rate loans dropped to about 92 cents on the dollar’

    Wa? But senator running deer said this was illegal? And even if it does blow up, the crooks will all go to jail, right?

    1. Collateralized loan obligation prices are dropping as Wall Street banks retreat from buying the securities, pressured by regulators.

      Wut? Our captured, worthless regulators are now pretending to do their jobs?

    2. Wa? But senator running deer said this was illegal? And even if it does blow up, the crooks will all go to jail, right?

      The DoJ and FBI will get right on that, just as soon as they finish hunting down the last of those J6 insurrectionists, school board terrorists, and anti-abortion activists.

  3. ‘There was really no rhyme or reason to why people were pricing their houses where they were,’ Limberg said. ‘They were totally taking advantage of the market because they could, and there were enough cash buyers in the market. When somebody pays cash, it doesn’t matter if that house appraises or not because they’re paying cash. They don’t need to have an appraisal’

    And the comps? Sound lending!

    I’ve shown before that all cash are still borrowing, just in a round about way.

    ‘In the real estate heydays – which were about seven months ago – it was common to see income property investors borrowing against their rental properties to buy more rental properties. It was leverage upon leverage’

  5. ‘Congrats to my starter home on its promotion to my death home,’ observes one Slate colleague

    Interesting point she was making – when do 30 yr mortgage rates get below 4% again. Probably at least 4 years if the central banks dont start interfering too soon. So many folks will be stuck in their houses for a few years – there goes the home sales volumes and the setup buyers

      1. The question is: once inflation is tamed, what will the Fed do? Will they leave interest rates where they should be, or will they rig them again?

        1. inflation? tamed????????/

          Hopium

          The government has to cut back and energy has to get cheap again and productivity has to improve (dramatically). The regime is in the way of all of those things

          ain’t a gonna happen.

          Banana republic indeed.

          1. If they don’t intend on taming it, why raise interest rates? Why didn’t they just let the good times continue rolling?

            I will concede that they might very well lack the intestinal fortitude to raise rates sufficiently. They could hit a ceiling and say “no more” even if inflation continues to rage.

          3. Hyperinflation?

            If the multi trillion dollar deficits don’t stop, we will get that anyway.

            Larry Kudlow keeps saying that the cavalry is coming this November, but I am not so sure.

          4. Larry Kudlow

            I prefer Peter Navarro. He’s largely responsible for DJT’s economic policies and warned about our current situation the day Biden was sworn in.

          5. “Larry Kudlow keeps saying that the cavalry is coming this November, but I am not so sure.”

            Kudlow is thinking about the holidays. The fed will quietly buy a whack of non-performing revolving debt from the retail banks in exchange for a shot of credit to see the plebs through Thanksgiving and Christmas. Then it’s back to being stretched on the rack.

          6. Definitely productivity has to improve. I’m no fan of Rush Limbaugh, but he was right about too many moochers and not enough producers.

  6. Ben, I fear we may very well be looking at a scenario where shack values have fallen so much that even offloading their alligators won’t help the FBs. This is perhaps a topic you should explore in the HBB.

  7. “Last spring, Lubbock realtors saw 10-15 offers on homes within 48 hours or less. ‘We’re not seeing that anymore. So, that’s good news for buyers. You have a much better chance at getting in something,’ Eberhardt said.”

    Thanks for the “advice,” Realtor Boy, but I do believe Ima gonna sit tight in my lawn chair as local Sheriffs’ deputies start delivering notices to the “winners” of those bidding wars to box up their sh*t and GTFO.

  8. “Hammock Investments LLC is part of a wave of property investors, including a contingent based out of state.

    Corporations and LLCs should be banned from investing in residential real estate. Die, speculator scum.

  9. Scottsdale Mayor David Ortega called the shooting ‘a tragic illustration of the problems that vacation rental homes are bringing to our neighborhoods,’ adding that ‘the sense of safety in this neighborhood is shattered.’

    Nobody will come right out an say it, but STRs bring vibrancy and its associated pestilence into middle class neighborhoods. While this may be a win for the globalists and their Democrat-Bolshevik minions, neighborhoods shouldn’t have to deal with this crap. Houses are for living in, not serving as hotels or vibrancy venues.

  10. “when do 30 yr mortgage rates get below 4% again.”

    Why would the Fed resume buying down rates and subsidizing lending after doing it for 40 years?

    Here’s Big Fat Bastards Daily Admonishment for Debt Donkeys….. If all you self-entitled degenerates didn’t expect $5 back from every $1 you contributed to Social Insecurity, there wouldn’t be any double digit lending rates on the horizon for the next 20 years.

  11. ‘If you don’t fix this problem [STRs], you’re never going to fix the housing problem,’ Bauer said. ‘You can’t keep building what will essentially be investments for people and not homes for people.’”

    Die, speculator scum.

  12. The California State Teachers’ Retirement System, or CalSTRS, the nation’s largest teachers’ pension plan, lost 1.3% last fiscal year, its first decline too in more than a decade. And things may not get better anytime soon.”

    Nothing is going to make me happier than to see the Comrades of Proven Worth (D) who presided over the destruction of America’s public education system and turned our schools into globalist indoctrination mills, get to retirement age to learn their pension funds are insolvent.

    1. learn their pension funds are insolvent

      With a few exceptions, most gooberment employee pensions already are insolvent and have been for years.

  13. Every day, the globalists and their Democrat-Bolshevik Quislings drop the mask a bit more on their pathological anti-white hatred and desire to systematically marginalize and disenfranchise heritage Americans, while taxing them into oblivion to fund their “redistribution of the wealth.”

    Kamala is slammed for causing ‘undue panic’ to survivors of Hurricane Ian after saying the Biden administration will focus on ‘giving resources based on equity’ to ‘communities of color’ – as Ron De Santis’ spokesperson accuses her of ‘lying’

    https://www.dailymail.co.uk/news/article-11269047/Kamala-says-Biden-administrations-hurricane-relief-focus-communities-color.html

    Vice President Kamala Harris was slammed by Florida Governor Ron DeSantis’ rapid response director Christina Pushaw after the former senator made racially charged comments regarding the release of federal relief funds following Hurricane Ian.

    Speaking at the Democratic National Committee’s Women’s Leadership Forum on Friday, Harris said that it was people of color and lower-income communities who are ‘most impacted by these extreme [weather] conditions.’

  15. Nigel, don’t waste your time trying to rally Aussie cucks who like our own “Conservative, Inc.” Establishment GOP cucks are globalist salad-tossers. The “better, stronger political leaders” will emerge from the rubble after Australia’s globalist Quisling regime has “led” the formerly sovereign country to ruin.

    ‘Get better, stronger political leaders’: Farage’s rallying call to Australian conservatives

    https://www.news.com.au/national/politics/tony-abbott-says-moral-bullies-cant-force-australians-to-support-republic-voice/news-story/eeb91d31c974dba2ee80af6dce793479

    Firebrand British political figure Nigel Farage has issued a rallying cry to Australian conservatives to be part of “huge, convulsive change” across the political world.

    3. “Kingsman, a travel blogger based in Portland, Oregon”

      Isn’t that supposed to be a side gig?

        1. I started watching a Mexican video blogger cover lesser known destinations in Mexico. She does a decent job of it, but she spends a lot of screen time flashing her thong bikini butt at the screen. I guess that’s one way to get views, which == $$ on youtube. I suppose this is the route for the gals who are too shy to bare even more on other websites.

    1. We have an Amazon Fresh facility that’s been built out for quite some time but hasn’t opened.

  18. “Property sales are collapsing as mortgage market chaos makes home moves impossible for hundreds of thousands of buyers. Purchasers are pulling out of transactions and sellers are accepting price cuts as experts warn that the number of sales collapsing will surge in response to rocketing rates.

    14 years of Keynesian monetary fraud and globalist Quisling governance coming home to roost. Got popcorn?

    1. way more than 14 years.

      Just the last 14 years have been so utterly over the top that everybody couldn’t fail to notice.

  20. A reader sent these in:

    Below are the top 20 largest peak to trough drawdowns for the S&P 500 going back to 1961. Never, IN HISTORY, in an EXTREME drawdown for stocks, have Treasuries, THE risk-off asset, GONE DOWN MORE THAN STOCKS.

    https://twitter.com/leadlagreport/status/1574884450311217184

    The Powell backlash is growing

    https://twitter.com/biancoresearch/status/1575805656359206912

    The collapse in Credit Suisse’s share price is of great concern. From $14.90 in Feb 2021, to $3.90 currently, markets are saying it’s insolvent and probably bust.

    https://twitter.com/MacleodFinance/status/1575776619897053184

    This is one of the most unreal charts I have ever posted! #Inflation in the #Netherlands, my home country, has spiked to a surreal 17.1%.

    https://twitter.com/jsblokland/status/1575755246076399616

    Liz Ann Sonders

    Unbelievable decline in shipping rates … cost to send 40-ft container from Shanghai to Los Angeles has fallen by 74% from peak and is back to August 2020 levels.

    https://twitter.com/LizAnnSonders/status/1575781189427892225

    Richard Christopher Whalen

    “Angel Oak Mortgage Inc., the publicly traded non-QM mortgage REIT, late Friday disclosed it had received a two-week extension on a financing facility it has with Barclays Bank. The new termination date is Oct. 14.” @IMFpubs

    https://twitter.com/rcwhalen/status/1575980115724754945

    With another month at a close, time for the latest instalment of New Zealand vs Australian housing prices at this point in their respective rate rise cycles.

    All Aussie markets except Perth and Adelaide are performing worse than Wellington, which is now down 20% from its peak.

    https://twitter.com/AvidCommentator/status/1575660337827057664

  21. Ian totally missed us ,in upstate SC …….we only got a few very light showers , a bit of wind, the sun is shining now….whew, I need to quit taking the talking heads on our local stations so serious….

    1. So Cindy McCain says they all knew what Jeffrey Epstein was doing and still thinks he actually killed himself in prison?

      If that’s the case, she knew what he was doing but she didn’t know who was doing it with him.

      1. They all knew what Epstein was doing, but let him keep doing it. Because he & his Mossad handlers had video that pervs in high places had to make sure never saw the light of day.

        The prosecution rests.

  23. I was talking to some idiot equity locust from Connecticut who was very proud that her retirement was a home on Sanibel Island, Florida. She said she was waiting to see if she could get a boat over to see if she still has a home.

    Sorry, dumba$$, but your crap is gone.

    1. Sorry for the double comments. I don’t have internet back yet and I was having issues with posting.

      1. The federal goverment is probably the only entity willing to insure homes on a barrier reef in a known hurricane zone.

        1. The federal goverment is probably the only entity willing to insure homes on a barrier reef in a known hurricane zone.
          If I recall correctly the maximum amount covered by the US Gov was $250K, dwelling only. ( land not hurt so not insured)

          1. Karl Denninger posted on this 2 days ago. Barrier islands are NOT covered by federal flood insurance you have to buy private and it’s very expensive (duh, guaranteed to be total loss every 20 years or so)

            and yeah the federal flood insurance is like 250k content, 250k max structure. So million dollar home you’ve lost at least half.

            https://market-ticker.org/akcs-www?post=247070

            him commenting in the comments: ” FEMA-underwritten flood insurance is limited to $250k structure, $250k contents. If you get surged and are not there to immediately remediate, or if you get it up to the ceiling so it doesn’t matter anyway, anything on the water is going to be WILDLY exceeded by that in terms of damage and you get to eat the rest.

            You CAN buy private-market coverage but it is RIDICULOUSLY expensive and thus almost-nobody does, except in places where you CANNOT get FEMA at all and want a mortgage, in which case you have no choice. Barrier islands (beyond the coastal control line, basically) are one of those.”

  24. Some idiot equity locust told me her retirement plan was a home on Sanibel Island.

    I’ve lived in Florida my whole life. I refuse to ever live on the coast.

    Anyway, her shack is probably gone. She should have thought about that choice before she made it. Meanwhile, the dumb lady is telling me she wants a boat over to the island to check on her property. The Causeway was destroyed. She’s telling me the National Guard needs to help her check her second home? I hate people.

    2. So many bad decisions in that area but I can see why they took the risk, it was a slice of paradise before Ian. That said, it takes a special kind of person to build mansion on a sandbar.

      The new channel that Ian drilled thru the causeway is quite impressive. A lot of stuff is about to go on sale in Southwest Florida.

      For a glimpse of their future, there are some good drone videos of Mexico Beach FL a year or so after Hurricane Michael on Youtube. Lots of emptiness.

      1. My husband and I honeymooned on Sanibel Island. It was gorgeous. At the same time, I remember telling my husband that everything was surrounded by water and no way in heck would I want to live there. There’s even an estuary that goes into the island. No thanks.

  25. Posted this late yesterday.

    Tragedy: 20-Year-Old Med Student Dies from Heart Attack ONE DAY After Covid Vaccine

    by Adan Salazar
    September 30th 2022

    Connie Werth Lewis
    on Tuesday

    I can’t say for sure that there is a link, but our beautiful 20 year old healthy daughter, Regan Lewis had a Covid shot yesterday so she could participate in her clinicals. Today, she went into cardiac arrest and has been flown to Kearney. She is on a ventilator and is fighting for her life. PLEASE PLEASE PRAY FOR HER!

    “Today, she went into cardiac arrest and has been flown to Kearney. She is on a ventilator and is fighting for her life. PLEASE PLEASE PRAY FOR HER!”

    In subsequent updates, Connie later revealed her daughter “coded,” meaning her heart rate flatlined, and she passed away shortly thereafter.

    https://www.infowars.com/posts/tragedy-20-year-old-med-student-dies-from-heart-attack-one-day-after-covid-vaccine/

      1. Exactly.

        On a related topic, I met my new primary care provider (not with Banner). He told me it’s become really hard to remain independent and that something like 95%+ of local doctors now work either for Banner or UCHealth. Kaiser also has a presence in the state.

    1. President Joe Biden: The 2022 60 Minutes Interview
      60-minutes

      BY SCOTT PELLEY
      SEPTEMBER 18, 2022 / 7:43 PM / CBS NEWS

      Scott Pelley: Mr. President, you are the oldest president ever.

      President Joe Biden: Pretty good shape, huh?

      Scott Pelley: Which leads to my next question. You are more aware of this than anyone. Some people ask whether you are fit for the job. And when you hear that, I wonder what you think.

      President Joe Biden: Watch me. And ma– honest to God, that’s all I think. Watch me.

  29. Consider yourselves warned….

    Anti-Globalism Is Going Mainstream – Which Means Engineered Disaster Is About To Strike

    https://alt-market.us/anti-globalism-is-going-mainstream-which-means-engineered-disaster-is-about-to-strike/

    I have noted in the past that criminals tend to brag about their criminality when they believe there’s nothing anyone can do about it. Frankly, in their narcissism many of them can’t help but revel in the moment and let everyone know how “superior” they are to the rest of us. We witnessed many moments like this from elitists within globalists institutions the past couple of years at the height of the pandemic pandemonium.

    There were people like the globalist academics at MIT proclaiming that we were “never going back to normal” and that we were going to have to accept the loss of many of our freedoms for the rest of our lives in order to combat the spread of covid. There were people like Klaus Schwab declaring the beginning of the “Great Reset” and the launch of what the Davos crowd calls the “4th Industrial Revolution.” There have also been MANY political leaders like Joe Biden that strut around on the media stage accusing ideological opponents (conservatives mostly) of being “enemies of democracy.”

    If their vision of “democracy” is medical tyranny and the forced expansion of cultural Marxism, or if their idea of democracy is government cooperation with corporate monopoly and the erasure of our country’s founding principles, then yes, I suppose I am indeed an enemy of “democracy.”

      1. global famine

        They’ve demonstrated that an actual famine isn’t necessary. “News” of a famine is enough to get everyone playing Simon Says.

        1. True, but a real one, where the globalists control the food supply and get to decide who eats and who doesn’t would give them incredible power.

          1. a real one

            My point was that it doesn’t have to be a “real” famine, just announce one and take control. Besides, if the government takes control of the food supply, guaranteed it will look like a famine.

          2. I hear you. The Scamdemic was a great example: The masses bought the lie that it was the black death.

            The sudden manic desire to eradicate chemical fertilizers (to save the world, of course) makes me think that the famine will be at least somewhat real, though there could also be a hype factor as well.

  30. How are broke-ass Muricans going to fund your retirement by buying your insanely overpriced shacks, Boomer Greedheads?

    Unrelenting inflation is taking a toll, leaving more Americans living paycheck to paycheck

    https://www.cnbc.com/2022/09/30/stubborn-inflation-forces-more-americans-to-live-paycheck-to-paycheck-.html

    Almost everyone has felt the sting of rising prices.

    As of August, 60% of Americans were living paycheck to paycheck, according to a recent LendingClub report — a number that hasn’t budged much since inflation hit 40-year highs. A year ago, the number of adults who felt stretched too thin was closer to 55%.

    Even high-income earners are feeling the strain, the report found. Of those earning more than six figures, 45% reported living paycheck to paycheck, a jump from the previous year’s 38%.

    1. Unrelenting inflation is taking a toll, leaving more Americans living paycheck to paycheck

      Yet all the speculators are waiting with baited breath for a FED pivot, as if stocks take precedence over the entire economy of broke asz people. There is no pivot coming when inflation is out of control.

  31. Creepy Orwellian Meta is rapidly losing customers. Who knew that surveilling and spying on your customers, pimping out their data to your corporate and government “partners,” censoring what they’re allowed to see, suppressing truth-tellers, pushing globalist narratives/agendas, snitching on dissidents to the FBI, and bankrolling your Democrat-Bolshevik puppets to the tune of $400 million, would ever alienate your customer base?

    Mark Zuckerberg tells Meta workers that he will freeze hiring and warns company will ‘steadily reduce headcount growth’ during the next year

    https://www.dailymail.co.uk/news/article-11268851/Mark-Zuckerberg-tells-workers-Meta-freeze-hiring-steadily-reduce-headcount-growth.html

    Facebook owner Meta has announced a freeze on hiring new staff amid plans to cut costs by at least 10 per cent in the coming months.

    Mark Zuckerberg, who founded the social media giant, said the group would ‘further restructure’ due to its struggling advertising business.

    Meta, which also owns WhatsApp and Instagram, has lost nearly 60 per cent of its value in the past year.

  32. We didn’t know what we were inheriting…We ended up, actually, inheriting some pretty bad properties.

    OMG, the stupidity, it burns.

    They bought unreventable teardowns in Ohio, thinking that the cap rate would be positive!

  33. The HBB remembers 2021 here in the U.S. and how they tried to implement this tyranny here.

    New York Times — In China, Living Not ‘With Covid,’ but With ‘Zero Covid’ (10/1/2022):

    “As the rest of the world sheds more restrictions by the day, China’s rules are becoming more entrenched, along with the patterns of pandemic life under a government insistent on eliminating cases. People schedule lunch breaks around completing mandatory tests. They restructure commutes to minimize the number of health checkpoints along the way.

    A sense of possible disaster always lurks, driven by the experiences of Shanghai and other cities, where sudden lockdowns have left residents without food or medicine. A friend bought a second freezer so she could stock up on groceries.

    Yet the policies have been in place for so long, and with so little sign of easing, that navigating them feels — if not normal — at least routine. I know which testing site near my home returns results the quickest, and which grocer doesn’t check whether you’ve logged your visit for future contact tracing.

    The disruptive becomes typical; the once-unimaginable, reality. The pandemic has imposed new rituals around the world, but in China, the extremes make that process more unsettling.

    The most obviously jarring aspects, for me, were technological. China under “zero Covid” is a web of digital codes. At the entrance to every public space — restaurants, apartment complexes, even public restrooms — is a printed-out QR code that people must scan with their phones to log their visit. Everyone also has a personal health code, which uses test results and location history to assign a color. Green is good. Yellow or red, and you may be sent to quarantine.”

    https://archive.ph/O6Izp

    These people will never be free. And Western Europe, Canada, Australia are not that far from this.

    1. And Western Europe, Canada, Australia are not that far from this.

      Hence the incipient “bring back the masks” BS. There is no way that is a grass roots movement.

  34. What happens if ordinary people decide they’ve had enough of state-sponsored vibrancy?

    Moment the people fight back: Mobile phone theft suspect is stopped in his tracks by HUGE rugby tackle from passer-by before middle-aged woman steps in to apply chokehold to stop him getting away

    https://www.dailymail.co.uk/news/article-11269777/Mobile-phone-theft-suspect-stopped-HUGE-rugby-tackle-woman-steps-apply-chokehold.html

    This is the brave moment a mobile phone theft suspect is stopped in his tracks by a huge rugby tackle from a passer-by before a woman applies a chokehold to stop him getting away.

    Footage shared on social media shows the unidentified individual sprinting along St Thomas Street near Borough Market in London on Thursday at 3.17pm.

    3. That may look bad, but imagine the millions writhing in pain should Trump get reelected in two years.

  36. Everyone who doesn’t have to worry about inflation being too high blames Powell for being overly aggressive.
    But none of the complainers has any suggestions for how to bring down inflation without normalizing interest rates.

    My thought: Powell is stuck between a rock and a hard place.

    1. HOME ECONOMY
      The Fed has the world in its hands — and its aggressive moves are creating global economic chaos that could come back and hurt the US
      Ben Winck and George Glover Oct 1, 2022, 8:40 AM
      Jerome Powell Federal Reserve Chair
      Fed chair Jerome Powell has spoken out in favor of aggressive interest rate hikes to bring inflation under control. Kevin Dietsch/Getty Images

      The Federal Reserve’s aggressive rate hikes have the world’s central banks scrambling to keep up.

      A strong dollar puts others in a lose-lose: fight inflation and slow growth, or allow prices to continue surging.
      Countries are largely choosing the former, and widespread slowing could worsen the US’s own slump.
      …
      https://news.yahoo.com/fed-world-hands-aggressive-moves-124000091.html

    2. any suggestions for how to bring down inflation

      This is why it’s important to understand what inflation is. It’s not the price of broccoli.

      Stop creating money! Let stupid loans default & etc.

  37. Now that we have survived three tough quarters of CR8Ring asset prices, is it finally safe to buy the dip?

    1. Mad Money
      Charts suggest it’s ‘way too early’ to expect the stock market to rebound, Jim Cramer says
      Published Fri, Sep 30 20226:33 PM EDT
      Updated Fri, Sep 30 2022 7:17 PM EDT
      Krystal Hur
      Key Points
      – CNBC’s Jim Cramer on Friday warned investors that the stock market is unlikely to recover anytime soon.
      – “The charts, as interpreted by Mark Sebastian … suggest that this market’s got more downside and it’s way too early to go really bullish,” he said.
      …
      https://www.cnbc.com/2022/09/30/cramer-charts-suggest-its-way-too-early-for-the-market-to-rebound.html

    2. Business
      A bad year for Wall Street gets even worse, as stock markets finish September down
      October 1, 20225:00 AM ET
      Heard on Weekend Edition Saturday
      David Gura
      Twitter
      Instagram
      3-Minute Listen
      Traders work on the floor of the New York Stock Exchange (NYSE) on September 23, 2022 in New York City.
      Spencer Platt/Getty Images

      September is usually a bad month for investors, with the S&P 500 falling on average by about 1%, according to Howard Silverblatt, a senior analyst with S&P Dow Jones Indices.

      But this September, it fell by more than 9%.

      That makes this the worst September since 2002, when it fell by 11%.

      It’s another bleak milestone in a year where the stock market has seemingly gone from bad to worse and hurt almost every investor, from those making contributions to their 401(k) accounts to portfolio managers overseeing hundreds of billions of dollars. With so much turbulence over the last quarter, month and even week, the chances that the stock market will end 2022 on a high note have nearly evaporated.

      By the end of September, all three major indexes were solidly in bear market territory, meaning they have fallen more than 20% each from their highs.

      The S&P has also had the worst year-to-date performance in 20 years. The tech-heavy Nasdaq is down more than 30% already this year. The Dow, which fell 9% this month, has erased any gains it made in the last two years, falling back where it was in November 2020.
      …
      https://www.npr.org/2022/10/01/1126224811/a-bad-year-for-wall-street-gets-even-worse-as-stock-markets-finish-september-dow

    3. “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”

      — Mark Twain, Pudd’nhead Wilson

    4. The Financial Times
      Markets Briefing US equities
      US stocks record longest run of quarterly declines since 2008 crisis
      Recent volatility in UK markets has added to broader concerns about rate rises from global central banks
      Traders at the New York Stock Exchange
      The blue-chip S&P 500 index declined 5.3% in the third quarter that ended on Friday
      Jaren Kerr in Toronto, Kate Duguid in New York, and Joshua Oliver in London yesterday

      US stocks have notched their longest streak of quarterly losses since the market collapse of 2008, weighed down by central banks’ determination to tame inflation through higher interest rates.

      The blue-chip S&P 500 index dropped 1.5 per cent on Friday, bringing the loss over the quarter between June to September to 5.3 per cent. The S&P has now declined for three quarters in a row, the most since the prolonged bear market that accompanied the global financial crisis.

      The tech-heavy Nasdaq Composite also fell 1.5 per cent on Friday, reaching the index’s worst closing level since July 2020 to end the quarter down 4.1 per cent.

      The sell-off in US assets this week persisted after the Bank of England intervened to calm turbulence in the UK government debt market.

      The year has been rough for equities, as central banks including the US Federal Reserve have signalled they will stay the course on raising interest rates, reducing support for economic growth, in an effort to contain inflation. Lael Brainard, vice-chair, on Friday morning re-emphasised this view, acknowledging that although the Fed was conscious of market ructions, it remained committed to tighter monetary policy.

      Peter Tchir, head of macro strategy at Academy Securities, said investors are coming to terms with the Fed’s dedication to cooling inflation, even if equities are battered in the process.

      “Today, I think the market is realising that the economy is potentially slowing quickly, but that the Fed might do nothing to stop that. With the volatility in gilts and liquidity in all markets in the US deteriorating, more investors are getting nervous about the potential for a fast, large pullback in stock and bond prices,” Tchir said.
      …

    5. What Investors Learned When Everything Went Down at Once
      By Dan Caplinger – Updated Sep 30, 2022 at 6:41PM
      Key Points
      – The stock market lost ground on the last day of September.
      – Many major asset classes have seen big losses in the past month, quarter, and nine months.
      – Long-term investors have seen similar downturns happen before.
      – Should you invest $1,000 in Bitcoin right now?

      The third quarter extended losses for most financial markets.

      The stock market ended the third quarter with losses, which seemed appropriate given the downbeat year that Wall Street has had in 2022.

      Daily losses for the Dow Jones Industrial Average (^DJI -1.71%), S&P 500 (^GSPC -1.51%), and Nasdaq Composite (^IXIC -1.51%) were 1.5% or more. These added to steep declines for September, and another pullback for the quarter as a whole

      Ordinarily, investors who have diversified portfolios can expect at least some of their holdings to rise in value in order to offset losses in the stock market. However, 2022 has been notable in that just about every asset class has seen big drops. That’s left very few safe havens for investors to use, and it’s made many people second-guess their longer-term investing strategies.

      U.S. stocks add to the suffering

      Friday’s declines pushed the S&P 500 to its lowest level of the year, down 9.3% for the month of September and 5.3% for the third quarter. Year to date, the broad-based large-cap index has fallen almost 25%.
      …
      https://www.fool.com/investing/2022/09/30/what-investors-learned-when-everything-went-down-a/

    6. Updated Fri, Sep 30 2022 5:59 PM EDT
      Dow tumbles 500 points on Friday to end September down nearly 9%
      Sarah Min
      Alex Harring

      Stocks fell in choppy trading Friday as Wall Street closed out a terrible week, month and quarter that brought the S&P 500 to a new 2022 low.

      The Dow Jones Industrial Average closed below 29,000 for the first time since November 2020. The index fell 500.10 points, or 1.71%, to 28,725.51. The Nasdaq Composite was 1.51% lower, ending the day at 10,575.62.

      Meanwhile, the S&P 500 was down 1.51% on Friday, falling to 3,585.62. The index closed out its worst month since March 2020.

      Friday marked the last day of the month and the third quarter. For September, the Dow tumbled 8.8%, while the S&P 500 fell 9.3%. The Nasdaq lost 10.5%.
      CNBC

      “It’s been a tough, tough environment for equities and fixed income both, something that we had expected given our views around the Fed keeping interest rates higher for longer and markets are starting to come around to that view,” said Zachary Hill, head of portfolio management at Horizon Investments.

      “In the near term, we are likely to have continued market volatility with a downward bias as we head into earnings season,” Hill said.

      An inflation report closely watched by the Federal Reserve released Friday showed that prices continued to increase at a rapid pace.
      …
      https://www.cnbc.com/2022/09/29/stock-futures-are-flat-following-thursdays-broad-sell-off.html

    7. Bloomberg: Business News Daily
      Before you change the world. Bloomberg.
      Markets
      BofA Strategists See Wall Street Rout Forcing Asset Sales
      – NYSE Composite Index breaks multiple technical support levels
      – BofA strategists stay tactically bearish until Fed intervenes
      By Michael Msika
      September 30, 2022 at 3:58 AM PDT
      Updated on September 30, 2022 at 6:51 AM PDT

      Spiraling losses on Wall Street are now snowballing into forced asset liquidation, according to Bank of America Corp. strategists.

      The NYSE Composite Index, which includes US stocks, depositary receipts and real estate investment trusts, has broken multiple technical support levels including its 200-week moving average, the 14,000 mark, as well as 2018 and 2020 highs. Now accumulated losses could be forcing funds to sell more assets to raise cash, accelerating the selloff, according to Bank of America.

      Stocks are falling again Friday, with the S&P 500 heading toward its third straight quarter of losses for the first time since 2009 and the Nasdaq 100 Stock Index for the first time in 20 years. Investors are bracing for more pain. Stocks have been tumbling amid concerns the Federal Reserve will hurl the economy into a recession while tightening policy, weighing on earnings in the process.

      “Markets stop panicking when central banks start panicking,” Hartnett said, adding that he expects the S&P 500 to drop to 3,333, forcing a “policy panic” possibly around the G20 meeting in November. He predicts an equity rally after that, but says the US market won’t touch a “big low” until the first quarter of next year, when a recession and a credit shock will lead to a peak in yields, dollar and the Fed’s hawkishness.

      BofA strategists said to “bite” into the S&P 500 at the 3,300 level — about a 9% decline from the latest close, “nibble” at 3,600 and “gorge” at 3,000. Hartnett and his team added that a drop of 20% below 200-day moving average has been a good entry point back into stocks in the past 100 years.

      — With assistance by Breanna Bradham
      …
      https://www.bloomberg.com/news/articles/2022-09-30/bofa-strategists-see-wall-street-rout-forcing-asset-liquidation

    8. Bloomberg: Business News Daily
      Before you change the world.
      Markets
      S&P 500 Heads for Grim Quarterly Milestone Last Seen in Early 2009
      – S&P 500 down 3.6% in 3Q, heading for third straight decline
      – Upcoming earnings season, hawkish central banks remain risks
      By Jan-Patrick Barnert
      September 29, 2022 at 4:20 AM PDTUpdated on September 29, 2022 at 8:12 AM PDT

      There’s yet another ominous sign for markets — the S&P 500 Index is headed for its third straight quarter of losses for the first time since 2008-09, when global markets were roiled by a financial crisis.

      Though there isn’t necessarily a full-blown crisis yet, the big reversal in gains from the summer months has prompted financial market gurus at Morgan Stanley to Blackrock to flag one coming. Back in 2009, the global financial crisis saw the S&P 500 fall for six consecutive quarters, erasing 48% of its value.
      …
      https://www.bloomberg.com/news/articles/2022-09-29/in-more-bad-signs-s-p-500-risks-a-rare-quarterly-drop-milestone

  38. It was only central bank funny money, but still….

    Housing market slump has cost homeowners in Auckland more than $140,000

    https://www.nzherald.co.nz/nz/housing-market-slump-has-cost-homeowners-in-auckland-more-than-140000/W6VBEMPDMCFZ2R5FHVCAPHXTHQ/

    The housing market slump has cost homeowners in Auckland more than $140,000, the latest OneRoof-Valocity house value report shows.

    The average property value in the city tumbled 9.8 per cent since hitting a peak of $1.56 million at the start of the year.

    Homeowners in 57 Auckland suburbs have seen the value of their property drop more than $200,000 as rising interest rates and worsening inflation cause buyers to retreat from the market.

    The suburb that took the biggest hit was Okura, a lifestyle suburb on Auckland’s northern fringe. Its average property value has fallen $426,000 since market peak.

  39. Got a vaccine for that, Bill?

    Bill Gates Warns ‘Civil War’ Is Coming, Will ‘Bring It All to an End’

    https://slaynews.com/news/bill-gates-civil-war-coming-bring-it-all-to-an-end/

    Billionaire Bill Gates is warning that America is heading for “civil war” and fears that “political polarization” could “bring it all to an end.”

    Gates made the prediction during a recent keynote conversation at this year’s Forbes 400 Summit on Philanthropy.

    The Microsoft co-founder revealed that he plans to end Bill & Melinda Gates Foundation in 25 years.

  40. So watching the RE ads in my little valley, a foreclosure has popped up. First one in many months. The zestimate is like 280k (and neighbor homes are similar) but the “price” to bid is 144k. (which makes me think that’s what the bank is owed. Also says all offers evaluated at 7 days after hitting MLS. (which would make it an auction…………..).

    Anyway if you only owe 144 and value is above 250k why wouldn’t you sell it before the bank took over? I mean in a year this isn’t going to be possible but it is now. Makes little sense. MPAI i guess.

    1. Anyway if you only owe 144 and value is above 250k why wouldn’t you sell it before the bank took over?

      Well, that is a Zestimate, after all.

      1. well yes, but the neighborhood seems to have gone upper 200’s

        so 144 is way lower. They certainly could have gotten out instead of being foreclosed on (not by next year I suppose). Esp considering it takes months for a foreclosure to get thru the bank and such.

    2. This is an important consideration for the true bargain hunter and it helps to develop a wide perspective on these issues. There are many reasons that this will occur. During the bull phase, especially near the top, the problems tend to be swept under the rug so it appears that there are no problems and everyone is acting rationally. This is not the case, however. During this last bubble we had a long moratorium that caused any general distress to be ignored. Most of it didn’t go away though. Deaths with no reliable family or estrangement is one big reason this can happen. Another big one is injury. For instance, the previous owner of my home had a tree fall on him while he was driving down the road. He wound up in traction and was unable to keep things going. He survived and moved on but the home became abandoned and the bank eventually had to foreclose. Life routinely throws curve balls, economic and otherwise. What is interesting is that the foreclosures will actually begin to pile up once the market has turned significantly. Suddenly the tide will be out and there will be empty homes all around you. Many of them will have been empty for quite some time. This is just the tip of the iceberg.

  41. ” CalPERS, the nation’s largest state pension fund, experienced a 6.1% investment loss in the fiscal year that ended June 30. Assets fell to $440 billion after topping $500 billion last year.”

    Now I know math is hard, but 500 to 440 is a 12% loss, not 6

    2. Good catch! I noticed that as well.

      I suppose flows of money in and out of the fund could affect the return calculation, but probably not enough to move the needle very far from a 12% negative return.

  44. Biden Thanks Coast Guard Rescue Swimmer He’s Kicking Out over Vaccine Mandate

    KRISTINA WONG
    1 Oct 2022

    The White House publicized the call in a press release and Biden himself bragged about calling him.

    “I told him how proud of him I was and thanked him for all the work he and his Coasties are doing to save lives,” Biden said of his call to Aviation Survival Technician Second Class Zach Loesch.

    The White House press release said he thanked Loesch and Lieutenant Commander Christopher Hooper “for the heroic work that they and their Coast Guard colleagues have performed during search and rescue operations in response to Hurricane Ian.”

    Despite Biden thanking Loesch for saving people’s lives, Loesch is due to be kicked out from the Coast Guard in 30-60 days due to Biden’s own mandate that all members of the United States Armed Forces be fully vaccinated, Loesch told Breitbart News on Saturday.

    https://www.breitbart.com/

  45. Fed officials have never accepted the argument that their interest rate or other policy decisions are meant to support financial markets

    via GIPHY

  47. Hurricane Ian: Coast Guard releases video of incredible rescues

    Sep 30, 2022

    1,203,423 views

    Coast Guard crews have been rescuing people stranded in communities in Florida devastated by Hurricane Ian. An aircrew on an MH-65 Dolphin helicopter from Air Station Miami spent much of Thursday pulling residents and their pets from flooded neighborhoods on Sanibel Island. Petty Officer 2nd Class Tyler Kilbane captured remarkable video from a camera mounted on his helmet.

    https://youtu.be/hMmoOWuqHi4

    1. The Financial Times
      Charts that Matter
      Emerging market investing
      Outflows from emerging market bond funds reach $70bn in 2022
      Investors head for exit as rising rates in big economies and strong dollar hit sentiment
      Russia’s war in Ukraine derailed an improvement in the outlook for EM assets earlier this year
      Jonathan Wheatley 3 hours ago

      Investors have withdrawn a record $70bn from emerging market bond funds this year, in a sign that soaring interest rates in advanced economies and the strong dollar are heaping pressure on developing countries.

      Investors took $4.2bn out of EM bond funds in the past week alone, according to an analysis by JPMorgan of data from EPFR Global, a fund flow monitor — bringing the annual outflows to the highest level since the US bank began recording the data in 2005.

      The investor flight underscores how emerging markets are facing mounting risks from surging interest rates in developed markets, which make the typically high yields on EM debt look less attractive. Powerful gains in the greenback also make it more expensive for EM countries to service dollar denominated debt and increase the cost of importing commodities, which are often priced in the US currency.

      JPMorgan in September raised its forecast for EM bond outflows in 2022 to $80bn, having previously forecast $55bn.

      Milo Gunasinghe, emerging market strategist at JPMorgan, described the outflows as relentless, with just seven weeks of net inflows in the year to date. They have also been broad, with investors pulling money from funds holding both local and foreign currency bonds.
      …

    2. The Financial Times
      Opinion The Long View
      Kwasi Kwarteng crashes the bond market love-in
      UK chancellor showed how the path towards higher interest rates will be fraught with danger
      Katie Martin
      Chancellor Kwasi Kwarteng’s tax-cutting, debt-fuelled ‘mini’ Budget lit a fire under the UK government bond market
      Katie Martin September 30 2022

      Just over a week ago, many international bond investors had barely heard of Kwasi Kwarteng. But the brand new UK chancellor has crashed into a rekindling romance between asset managers and debt markets all around the world in impressive style.

      In the process, Kwarteng has demonstrated how the path for central banks towards higher interest rates and lighter support for bond markets will be fraught with danger.

      Before the meltdown in UK markets over the past week or so, investors were rapidly falling for the charms of an asset class that had been unusually cruel to them all year.

      “Bonds are back,” proclaimed Amundi’s chief investment officer Vincent Mortier at a presentation in mid-September. “I’m convinced that bonds are back.” Debt had delivered a horrible blow to investors’ portfolios up to that point in 2022, as they were eaten up first by inflation and then by an aggressive response from central banks.

      That most traditional model of investment portfolios — 60 per cent in equities and 40 per cent in (typically) boring old bonds — had failed. Data crunched by Charlie Bilello, at Compound Capital Advisors, show that a theoretical portfolio built along those lines comprising the S&P 500 and 10-year Treasuries had lost 16 per cent by September 19, a huge hit this year as both sides of the mix — stocks and bonds — fell. You have to go all the way back to 1937 to find anything that bad.

      But that 60/40 split was starting to look attractive again after a long period “in the freezer”, said Mortier, as bond yields had finally risen high enough to draw in those looking for some value or a safe place to hide in the event of another economic or geopolitical shock.

      This view has been taking hold elsewhere. Speaking on the eve of Kwarteng’s “mini” Budget, Jim Leaviss, chief investment officer for public fixed income at M&G Investments, noted rather presciently that you have to be “careful what you wish for” and that the UK market had some special challenges. Still, broadly, “we have moved on from a very very boring place to be as a bond investor over the past several years”, he said. “Now pretty much all areas of fixed income offer incredible value.”

      Well, if bonds offered value then, they offer a lot more now. Kwarteng’s tax-cutting, debt-fuelled “mini” Budget lit a fire under the UK government bond market, sending yields racing higher at a pace that no practising fund manager had ever seen before, and leaving pension schemes facing demands for tens or even hundreds of millions of pounds in cash to keep their hedging strategies intact. How would they meet those demands? By selling gilts, of course, sending the yields higher still. It was like an Escher painting from hell.
      …

    3. Federal Reserve
      What the Bank of England’s Emergency Move Means—and Doesn’t—for the Fed
      By Lisa Beilfuss
      Updated Sept. 29, 2022 8:28 am ET / Original Sept. 29, 2022 1:00 am ET
      The Bank of England is purchasing government bonds to stabilize its bond market after the government announced large tax cuts.
      Daniel Leal/ AFP/ Getty Images

      The Bank of England’s emergency move to buy U.K. government bonds begs the question: Is the resumption of quantitative easing in the U.K. idiosyncratic, or does it foreshadow a U.S. Federal Reserve that is close to backing down from its inflation fight?

      On Wednesday the BoE said it would purchase the country’s long-dated government bonds “on whatever scale is necessary” to stabilize its bond market after the U.K. government announced large tax cuts last week despite double-digit inflation. Strategists say the central bank’s move implies that at least one large entity, such as a pension fund or a financial institution, was on the verge of failure amid a disorderly Gilt market.
      …
      https://www.barrons.com/articles/bank-of-england-federal-reserve-rate-hikes-51664403126

    4. Markets
      CNBC TV
      Watchlist
      Finance
      ‘The Fed is breaking things’ – Here’s what has Wall Street on edge as risks rise around the world
      Published Sat, Oct 1 2022 8:23 AM EDT
      Updated Sat, Oct 1 2022 9:54 AM EDT
      Hugh Son
      Key Points
      – Markets entered a perilous new phase in the past week, one in which statistically unusual moves across asset classes are becoming commonplace.
      – Surging volatility in what are supposed to be among the safest fixed income instruments in the world could disrupt the financial system’s plumbing, according to Mark Connors, former Credit Suisse global head of risk advisory.
      – That could force the Fed to prop up the Treasury market, he said. Doing so will likely force the Fed to put a halt to its quantitative tightening program ahead of schedule.
      – The other worry is that the whipsawing markets will expose the weak hands among asset managers, hedge funds and other players who may have been overleveraged or took on unwise risks. Margin calls and forced liquidations could further roil markets.

      Jerome Powell, chairman of the US Federal Reserve, during a Fed Listens event in Washington, D.C., US, on Friday, Sept. 23, 2022.
      Al Drago | Bloomberg | Getty Images

      As the Federal Reserve ramps up efforts to tame inflation, sending the dollar surging and bonds and stocks into a tailspin, concern is rising that the central bank’s campaign will have unintended and potentially dire consequences.

      Markets entered a perilous new phase in the past week, one in which statistically unusual moves across asset classes are becoming commonplace. The stock selloff gets most of the headlines, but it is in the gyrations and interplay of the far bigger global markets for currencies and bonds where trouble is brewing, according to Wall Street veterans.

      After being criticized for being slow to recognize inflation, the Fed has embarked on its most aggressive series of rate hikes since the 1980s. From near-zero in March, the Fed has pushed its benchmark rate to a target of at least 3%. At the same time, the plan to unwind its $8.8 trillion balance sheet in a process called “quantitative tightening,” or QT — allowing proceeds from securities the Fed has on its books to roll off each month instead of being reinvested — has removed the largest buyer of Treasurys and mortgage securities from the marketplace.

      “The Fed is breaking things,” said Benjamin Dunn, a former hedge fund chief risk officer who now runs consultancy Alpha Theory Advisors. “There’s really nothing historical you can point to for what’s going on in markets today; we are seeing multiple standard deviation moves in things like the Swedish krona, in Treasurys, in oil, in silver, like every other day. These aren’t healthy moves.”

      Dollar’s warning

      For now, it is the once-in-a-generation rise in the dollar that has captivated market observers. Global investors are flocking to higher-yielding U.S. assets thanks to the Fed’s actions, and the dollar has gained in strength while rival currencies wilt, pushing the ICE Dollar Index to the best year since its inception in 1985.

      “Such U.S. dollar strength has historically led to some kind of financial or economic crisis,” Morgan Stanley chief equity strategist Michael Wilson said Monday in a note. Past peaks in the dollar have coincided with the the Mexican debt crisis of the early 1990s, the U.S. tech stock bubble of the late 90s, the housing mania that preceded the 2008 financial crisis and the 2012 sovereign debt crisis, according to the investment bank.

      The dollar is helping to destabilize overseas economies because it increases inflationary pressures outside the U.S., Barclays global head of FX and emerging markets strategy Themistoklis Fiotakis said Thursday in a note.

      The “Fed is now in overdrive and this is supercharging the dollar in a way which, to us at least, was hard to envisage” earlier, he wrote. “Markets may be underestimating the inflationary effect of a rising dollar on the rest of the world.”

      It is against that strong dollar backdrop that the Bank of England was forced to prop up the market for its sovereign debt on Wednesday. Investors had been dumping U.K. assets in force starting last week after the government unveiled plans to stimulate its economy, moves that run counter to fighting inflation.

      The U.K. episode, which made the Bank of England the buyer of last resort for its own debt, could be just the first intervention a central bank is forced to take in coming months.
      …
      https://www.cnbc.com/2022/10/01/the-fed-is-breaking-things-heres-what-has-wall-street-on-edge-as-risks-rise-around-the-world.html

      1. “The other worry is that the whipsawing markets will expose the weak hands among asset managers, hedge funds and other players who may have been overleveraged or took on unwise risks. Margin calls and forced liquidations could further roil markets.”

        Shouldn’t people who gamble recklessly occasionally face the negative consequences of unwise risk taking? Or is the central bankers’ job to perpetually reward unwise risk taking with too-big-to-fail bailout measures?

  49. Strategies
    Bonds May Be Having Their Worst Year Yet
    This has been the most devastating time for bonds since at least 1926, and maybe in centuries. But, our columnist writes, much of the damage is already behind us.
    By Jeff Sommer
    Jeff Sommer is the author of Strategies, a weekly column on markets, finance and the economy.
    Sept. 30, 2022

    It is a horrible time for stocks, which have spent the year in a bear market. But guess what? When you look at the historical record, bonds are worse.

    This year is the most devastating period for bonds since at least 1926, the numbers show. And, in the estimation of one bond maven, 2022 is shaping up to be the worst year for bonds since reliable record-keeping began in the late 18th century.
    …
    https://www.nytimes.com/2022/09/30/business/bonds-market.html

    1. Nobody seems to connect the dots. The “devastation” was baked in when the massive mountain of debt was created.

  50. Dumb question of the day: Is another round of Fed bailouts coming soon? It seems like lots of Wall Street commentators assume that bailouts are inevitable, once the pain level becomes unbearable.

    1. History shows time and time again that inflation is the only politically correct answer. If Jerome wont do it, someone else will.

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