Responding To The Shock Of The Cost Of Money
A weekend topic starting with Reason. “In 2010 Thomas Hoenig, then the president of the Federal Reserve Bank of Kansas City and a member of the central bank’s Federal Open Market Committee, thought he was seeing history repeat itself. In the early 1980s, when he was a vice president at the Kansas City Fed overseeing bank examiners, he had a front-row seat to a boom and bust in land and oil asset values, which gutted the Midwest’s economy. That painful experience stemmed largely from the Fed’s loose money policy in the 1970s, followed by that policy’s sudden reversal. Hundreds of banks had loans that depended on soaring asset prices, and hundreds of banks failed. Hoenig was responsible for helping decide which banks would live and which would die. He saw ‘lives were destroyed in this environment’ and ‘people lost everything.'”
“Remembering that experience a few decades later, Hoenig did something the collegial structure of the Federal Open Market Committee was designed to discourage: He dissented. He began voting against the Fed’s ongoing policy of quantitative easing (Q.E.), because he foresaw another ultimately unsupportable rise in asset values along with increasingly risky behavior by privileged market players awash in easy money.”
“The Fed’s allegedly crisis-ameliorating methods were complex, but the essential animating idea was simple: Create more money. From 2008 to 2011, the central bank conjured up as much new money as had entered the U.S. economy in the previous century, a 96,000 percent increase. From 2007 to 2017, the Fed nearly quintupled its balance sheet. In The Lords of Easy Money, business reporter Christopher Leonard relies on Hoenig’s heretical perspective as a narrative spine for his detailed reporting on the Fed’s thought and action before, during, and after the 2008 financial crisis.”
“In March 2020, Leonard relates, Jerome Powell’s Fed did ‘virtually everything that Ben Bernanke’s had done in 2008 and 2009, but this time did it in one weekend, rather than over several months.’ The Fed ‘pushed as much money into the banking system in forty-eight hours as it had done in the span of a month during earlier rounds of QE.’ The Fed began ensuring that ever-wider swaths of assets would not suffer any downturn in nominal value on its watch.”
Patch California. “A global drop in home prices has hit Silicon Valley particularly hard. San Mateo County homes lost a third of their value in 2022 in year that saw prices for single-family homes fall precipitously throughout Silicon Valley, according to newly released data from the California Association of Realtors. San Mateo County’s single-family median homes lost $750,000 in value last year, plunging from an all-time high of $2,250,000 in April to $1,500,000 in December.”
The Dallas Morning News. “‘What’s happening in Dallas-Fort Worth is unprecedented,’ said Texas economist Mark Dotzour. ‘It’s really a boomtown.’ Despite what he described as blunders with government spending and actions by the Federal Reserve, Dotzour predicts continued growth in Texas and a return to commercial property investment in the state. ‘I’m bullish on Texas and I’m bullish on commercial real estate,’ Dotzour said. ‘It appears that buyers are just putting their pencil down for a while.'”
“Dotzour said the current slowdown in commercial property investment will allow repricing of real estate to reflect the higher borrowing costs. Commercial brokers say that bid prices on some properties have fallen by between 15% and 20% from previous peaks. ‘Prices dropped overnight and the sellers are slow to respond,’ he said. ‘It’s not because there is less demand for real estate — it’s responding to the shock of the cost of money.'”
The Real Deal. “Glenn Kelman has at least one regret from a tumultuous 2022: keeping his company’s iBuyer going as long as he did. ‘I probably should have closed the iBuying business earlier,’ Kelman said. ‘It shouldn’t have taken a housing market correction to realize how capital-intensive and risky that was.’ Redfin’s exit from the business placed it alongside Zillow, which shuttered iBuying one year earlier. The shift in the housing market throughout 2022 ramped up scrutiny over other players like Offerpad and Opendoor, the company that pioneered the model and said in November it lost $928 million in the third quarter.”
From Bloomberg. “Job cuts at Amazon and Microsoft are the latest blow for the Seattle region in the US state of Washington, which is still struggling to recover from the pandemic-era destruction of the commuter economy that, as in many cities, is the lifeblood of America’s second-largest tech hub. Now a growing glut of empty office space in the city centre suggests things are likely to get worse before they get better.”
“‘This downturn in tech is going to be devastating for Washington, and the long-term effects will be quite profound,’ said Jeff Schulman, a marketing professor at the University of Washington. ‘Tech companies have fuelled so much growth and change that when they tap on the brakes and go in reverse, it puts everything else in peril.'”
“Amazon’s Seattle campus is a quieter place these days, with echoes of a similarly afflicted San Francisco in California. Pavements and restaurants are empty. The first Amazon Go, a cashier-less store that opened in 2018 with lines stretching up the block, is now resorting to tired convenience-store marketing tactics, including 79-cent sodas and $1 coffee Mondays.”
From Geek Wire. “As his city tries to emerge from the pandemic, Seattle Mayor Bruce Harrell is thinking about how to revitalize downtown amid long-term changes in work habits that pull people away from the urban core. Harrell highlighted endeavors to reduce blight, such as programs to pay for window repair and efforts to bring businesses into vacant storefronts and unused areas. ‘Plywood is my enemy,’ he said. Public safety and addressing homelessness are also priorities. ‘Every major city seems to be grappling with the issue of a subclass of poverty when we’ve also created a subclass of wealth,’ he added.”
“‘We have to be bold enough and creative enough to realize that the nine-to-five downtown is no longer going to take place,’ said Harrell. Positive change, he said, ‘starts by saying that the good old days are gone.'”
From Mises.org. “In 2011, the Federal Reserve invented new accounting methods for itself so that it could never legally go bankrupt. It was all academic at the time. But in 2023, the Fed really is insolvent, although its fake post-2011 account doesn’t show this. Nevertheless, the reality is that the Fed’s assets are losing value at the same time that the Fed is paying out more in interest than it is making in interest income. This became clear last week, when the Fed released a new report showing that its interest payments on bank reserves skyrocketed in 2022.”
“For the year overall, the Fed still managed to achieve a positive net income, thanks to positive inflows in the first half of the year. But since September, the Fed began recording what’s called a deferred asset, which tallies up the Fed’s loss; the deferred asset stood at $18.8 billion at the end of the year. The ‘deferred asset’ phrase basically means ‘losing money’ in Fedspeak: the Fed is supposed to make remittances to the US Treasury out of its surplus, but when it has no surplus, the Fed “defers” its payments. We can see how these remittances plummeted into negative territory beginning in September.”
“A sizable part of the reason that the Fed has become insolvent in recent months (and almost certainly will be in 2023 overall) stems from the fact that since 2008, the Fed has bought up trillions of dollars in Treasury debt and mortgage-backed securities (MBSs). The Fed has done this to prop up the prices of real estate and government bonds (i.e., to subsidize Wall Street, banks, and the real estate industry.)”
“Yet it bought these fixed-rate assets when interest rates were very low, and most of those assets have a maturity of over a year. That means that even as interest rates have risen in the past year, the Fed’s income from these assets has not risen sizably. Yet the Fed is also paying banks interest on reserves and reverse repos. That interest rate is not fixed and changes rapidly. So although total reserves at the Fed have fallen by 25 percent in recent months, that won’t bring interest payments down to 2021 levels because interest rates have increased 4,300 percent, from 0.1 percent to 4.4 percent. Another complicating factor driving the Fed deeper into the red is the fact that its portfolio is also losing value.”
“For a normal financial institution, this situation leads to bankruptcy. But the Fed will bail itself out by printing money. In the end, that means price inflation, either in assets like stocks and real estate or in consumer goods like eggs and auto parts. Ordinary people will see their cost of living go up and their real wages fall, and they’ll get poorer. It’s all a great scam for the parasitical class. For the productive classes? Not so much.”
‘Commercial brokers say that bid prices on some properties have fallen by between 15% and 20% from previous peaks. ‘Prices dropped overnight and the sellers are slow to respond,’ he said. ‘It’s not because there is less demand for real estate — it’s responding to the shock of the cost of money’
Yer interest rates haven’t gone up much Mark, historically. That’s what the REIC says a billion times a day. So 20% goes poof ‘overnight’? How do those 5% cap rates look now?
‘I’m bullish on Texas and I’m bullish on commercial real estate,’ Dotzour said. ‘It appears that buyers are just putting their pencil down for a while.’”
“Dotzour said the current slowdown in commercial property investment will allow repricing of real estate to reflect the higher borrowing costs.”
He’s bullish on CRE even though it’s currently crashing. Smart guy.
𝗟𝗮𝗸𝗲 𝗪𝗼𝗿𝘁𝗵, 𝗙𝗟 𝗛𝗼𝘂𝘀𝗶𝗻𝗴 𝗣𝗿𝗶𝗰𝗲𝘀 𝗖𝗿𝗮𝘁𝗲𝗿 𝟮𝟮% 𝗬𝗢𝗬 𝗢𝗻 𝗦𝘂𝗿𝗴𝗶𝗻𝗴 𝗠𝗼𝗿𝘁𝗴𝗮𝗴𝗲 𝗗𝗲𝗳𝗮𝘂𝗹𝘁𝘀
𝘈𝘴 𝘰𝘯𝘦 𝘍𝘭𝘰𝘳𝘪𝘥𝘢 𝘣𝘳𝘰𝘬𝘦𝘳 𝘫𝘰𝘬𝘦𝘥, “𝘔𝘰𝘳𝘵𝘨𝘢𝘨𝘦 𝘢𝘯𝘥 𝘢𝘱𝘱𝘳𝘢𝘪𝘴𝘢𝘭 𝘧𝘳𝘢𝘶𝘥 𝘮𝘢𝘬𝘦𝘴 𝘵𝘩𝘦 𝘸𝘰𝘳𝘭𝘥 𝘨𝘰 𝘳𝘰𝘶𝘯𝘥.”
‘In March 2020, Leonard relates, Jerome Powell’s Fed did ‘virtually everything that Ben Bernanke’s had done in 2008 and 2009, but this time did it in one weekend’
QE is illegal. Like so many things we don’t have a system for the rule of law.
‘even as interest rates have risen in the past year, the Fed’s income from these assets has not risen sizably. Yet the Fed is also paying banks interest on reserves and reverse repos. That interest rate is not fixed and changes rapidly. So although total reserves at the Fed have fallen by 25 percent in recent months, that won’t bring interest payments down to 2021 levels because interest rates have increased 4,300 percent, from 0.1 percent to 4.4 percent. Another complicating factor driving the Fed deeper into the red is the fact that its portfolio is also losing value’
Sounds like Jerry is the biggest bag holder EVAH! And the only way out is more inflation? You a$$ hats really screwed up this time.
The 99 percent’s only defense against the counterfeiters and racketeers at the Fed and their deranged money printing is to trade our debauched, created-out-of-thin-air Yellen Bux for REAL money: physical gold & silver.
‘It shouldn’t have taken a housing market correction to realize how capital-intensive and risky that was’
Here’s the funny thing Glen: you were losing yuuge money quarter after quarter, like all the other steaming piles, before rates went up. I suspect drugs had a hand in in.
‘The first Amazon Go, a cashier-less store that opened in 2018 with lines stretching up the block, is now resorting to tired convenience-store marketing tactics, including 79-cent sodas and $1 coffee Mondays’
Who needs employees? Who needs customers? I’m sure the software steering all those self driving flying taxis will need a cup of ‘baldy joe’!
Just send over the android customers. Problem solved!
Never going to catch me shopping at Spyware Central.
Have no desire to give my hard-earned money to “woke” globalist companies that hate me and my kind.
‘Harrell highlighted endeavors to reduce blight, such as programs to pay for window repair and efforts to bring businesses into vacant storefronts and unused areas. ‘Plywood is my enemy,’ he said. Public safety and addressing homelessness are also priorities. ‘Every major city seems to be grappling with the issue of a subclass of poverty when we’ve also created a subclass of wealth’
Why do you have plywood instead of glass Bruce? Can’t bring yerself to mention that?
‘We have to be bold enough and creative enough to realize that the nine-to-five downtown is no longer going to take place’… Positive change, he said, ‘starts by saying that the good old days are gone’
Tearing things down is easy: we’ve seen that pretty clearly. Good luck collecting taxes and keeping yer lamp posts from falling due to bum urine.
I was in downtown Seattle about two years ago on a Saturday or Sunday morning, can’t recall which. I am not kidding, every restaurant I drove by had literally 50-100 people outside waiting to get in, or in a queue to get to a cashier to get something to go. I have never seen anything like it.
The better restaurants around the suburbs of San Jose, CA are like this, even for breakfast. And sky high prices don’t appear to be stopping anyone.
When you have a sizeable portion of the population making 200-300K or more, that would not be surprising.
When half of all restaurants have been shut down, the remaining restaurants are service double the potential customer base. When half of the employees no longer want to work, suddenly you have 25% of the original head count serving the same sized customer base. They are badly failing as a result. Long lines, poor food, poor overall experience.
Re-post from the last thread, including additional parts 2, 3, and 4.
When you buy a house, your property taxes are paying to promote this in the public schools (warning — graphic content):
When you buy a house, your property taxes are paying to promote this in the public schools.
When you buy a house, your property taxes are paying to promote this in the public schools.
When you buy a house, your property taxes are paying to promote this in the public schools.
Repeating that so it sinks in. This is actual reality. This is what your property taxes are paying to promote. This is what Merrick Garland supports. This is what Dr. Richard Levine supports.
Because under Marxism, children are property of the state.
She nails it.
Doubt she comes home to a cuck.
The New York Post (which you need be reminded is a Murdoch owned, controlled opposition publication, along with Fox News and the UK Daily Mail) has reluctantly picked up the story.
Gay couple charged with molesting their adopted sons also pimped them out to pedophile ring, report claims (1/20/2023):
“A gay couple from Georgia charged with molesting their two adopted sons and using them to record child porn also allegedly pimped them out to members of a local pedophile ring, according to a disturbing new report.
A months-long investigation by Townhall revealed that William Dale Zulock, 33, and Zachary Jacoby Zulock, 35, allegedly used social media to prostitute their two elementary-aged sons.
William Zulock, a government worker, and Zachary Zulock, a banker, were indicted in August 2022 on charges of incest, aggravated sodomy, aggravated child molestation, felony sexual exploitation of children and felony prostitution of a minor.”
Yoel Roth, the former head of Trust And Safety at Twitter, wrote a PhD dissertation at the University of Pennsylvania in which he advocated for underage boys to access the sex hookup act Grindr.
Yoel Roth is supposedly “in hiding” somewhere in the Bay Area, but rumors of his various “safe house” locations have been circulating on 4chan. Two months ago, Yoel Roth had the FBI, DHS, and CIA all on speed dial, but Real Journalists like the New York Times and the Washington Post would rather pretend he never existed.
Your property taxes are paying to promote this in the public schools. Attorney General Merrick Brian Garland (a rather curious name for someone whose grandparents dropped their real name at Ellis Island a century ago) supports this, all of this.
Your property taxes are paying to promote this in the public schools.
Your property taxes are paying to promote this in the public schools.
Your property taxes are paying to promote this in the public schools.
The #Noticing will continue…
Yoel Roth and Zulock….sounds like quality Irish names.
It’s amazing how few of these officials have security details. Many even walk their dogs in your neighborhood. At night. Alone.
I’ve been thinking about this:
A viral video of a British satirist dismantling the woke culture and global warming hysteria has garnered more than five million views. Konstantin Kisin delivered the blistering speech at a recent Oxford Union debate, where he addressed the young audience with surgical scorn. He warned listeners that the woke culture many embrace will only worsen the world’s problems, particularly the issue most important to the college-age generation, climate change.
Noting that Britain is responsible for about 2% of the world’s annual carbon emissions, Kisin suggested that it makes no difference what he and his countrymen do. The future of the climate, he said, is “going to be decided in Asia and Latin America by poor people, who couldn’t give a s*** about saving the planet.”
The world’s wealthy countries cannot expect nations mired in wrenching poverty to sacrifice their dreams of prosperity, much less their children’s lives, for environmentalism, he said. Kisin recounted how Chinese President Xi Jinping’s family was destroyed by China’s cultural revolution when he was a boy, and how the current leader “clawed [his] way up the bloody and greasy pole of Chinese politics to be the undisputed supreme leader of the very communist party that destroyed [his] family.” Jinping, Kisin said, knows that he must deliver prosperity to his 1.4 billion people above all else.
Kisin closed out the speech with a dramatic appeal for the young generation to reject wokeness. “The only thing that wokeness has to offer … is to brainwash bright young minds like yours to believe that you are victims, to believe that you have no agency, to believe that what you must do to improve the world is to complain, is to protest, is to throw soup on paintings.”
“The way to improve the world is to work, is to create, it is to build,” he said. “And the problem with woke culture is that it has trained too many young minds like yours to forget about that.”
What strikes me about this is a guy I’ve never heard of destroyed what is supposedly the driving force of globalist scum, in just a few minutes. I’ve said for years, nobody is really doing one gotdam thing about reducing pollution. Take the so called Paris treaty. Close all the coal plants in the US, open over 300 new ones in India and China – the worst polluters in human history.
Another interesting reaction is to the New Zealand Adolf quitting. Holy of holy’s, you mean she’s not popular? Wa happened to we’re all in this together comrade? They think we can’t remember. Like when you closed hospitals to people about to die? So nurses could do instagram dances? Thousands of people needlessly died from that alone. We’ll never forget.
How about cancel rent? Stopping landlords from collecting rents or evicting deadbeats? Remember all the commie sh$t that sprang up out of nowhere just as we were all made prisoners in our shacks? Firing people who refused an experimental death injection that has people dropping like flies all around the world? Remember when you said no going back to normal Jerry? We do.
“They think we can’t remember”
And more importantly, we remember all of the NAMES.
Everyone who participated in this medical genocide has a NAME, and in the era of modern technology, there is no way they can erase the evidence of their participation. This isn’t 1945, they can’t flee to South America and live undisturbed under a fake name for decades.
The Atlantic published a piece recently calling for a “pandemic amnesty” which will never be granted. And if justice can not be achieved through the present legal system, other options will be needed.
It’s a medical genocide.
They’re all guilty of medical genocide.
Close all the coal plants in the US, open over 300 new ones in India and China – the worst polluters in human history.
And plastics. No one in the west mentions that of the top 10 rivers dumping plastic into the oceans, none are in the west. But of course, we must ban plastic bags to save the ocean. Family members really believe that if the U.S. stopped polluting the world’s pollution problems would disappear. crazy
From what I’ve read we’ve dumped enough “disposable” masks in the ocean to more than make up for any plastic bottles that we don’t dump, and they take hundreds of years to decompose.
I don’t see how that is possible from here. Who is “we”?
They don’t say who “we” is putting all this trash in the Pacific Ocean. I’m going to guess it’s not New Yorkers.
“They don’t say who “we” is putting all this trash in the Pacific Ocean.”
You think it’s different in the Atlantic Ocean? Ok.
it’s different in the Atlantic Ocean?
The video showed the Pacific. Is there one of those plastic gyres in the Atlantic? I don’t know. I will say this though; I spend months at a time on the great lakes and the St. Lawrence river, actually out on the water and beaches. I was out there during the pandemic too. I only saw a few discarded masks. I believe almost all of our trash goes to the landfill. Just my take.
Just for laughs…Sometimes the beach on Lake Ontario is littered with plastic tampon tubes. We guess the ladies flush them down the toilet. Now, that’s a problem!
Plastic. A pet peeve for me with the Woke environazis. My generation used cardboard milk cartons, egg containers, and Bic Mac boxes. Now everything is wrapped in something made out of oil based product. And they don’t even realize it.
Sadly, leftists worship Gavin Newsom and believe that what he imposes on California will change the world, because “California leads the way”. Leads the way to the poorhouse this time, but they are going to follow him no matter how crazy his ideas become. And they will all vote for him for president because he’s done such an amazing job in California. So amazing in fact that thousands of companies and millions of citizens are leaving and being replaced by the third world.
We live in Robert Heinlein’s “Crazy Years”.
It does seem like only a matter of time before indoor plumbing stops working.
leftists worship Gavin Newsom
If this guy was a 350 pound slob, he wouldn’t even exist. Women are voting for him based upon his looks.
Looks? He reminds me of that anchorman in “Die Hard” who didn’t know where Helsinki was.
100% correct, I saw a clip of The View and the crazy one said she would vote for him because “he is easy on the eyes, and he has done a good job in California.” I’m not sure which reason is more pathetic.
the crazy one
That doesn’t narrow it down.
Newsom is a tool of Public Unions in CA which vote themselves generous retirement benefits and then move to Prescott AZ.
All this other stuff is Bread and circus , the homeless which nothing is done about, the get rid of natural gas , the don’t build damns, its just all stupid stuff this tool brays on about while the real power pulls his strings.
May 11, 2016.
‘From 2008 to 2011, the central bank conjured up as much new money as had entered the U.S. economy in the previous century, a 96,000 percent increase. From 2007 to 2017, the Fed nearly quintupled its balance sheet’
‘Today we got an official confirmation of just how truly profound the central banker delusion of grandeur, and sheer insanity, is courtesy of ECB Governing Council member Vitas Vasiliauskas, who told Bloomberg in an interview that the ECB can stillconjure up policy surprises – read inflation – if needed to combat economic shocks and push prices higher. While this was merely the usual jawboning by an ECB member, we bolded the word “conjure” for a reason. It will become clear why soon enough.’
‘The 42-year-old Vasiliauskas, who was appointed to a second term on April 7, declined to comment on specific policy options the ECB will take, but refuted the notion that the central bank wouldn’t be able to react to shocks such as a sudden worsening in the international economy. “Such conversations, such speculations are taking place before every meeting,” he said. “We still have a lot of tools and we can make surprises for the market. I don’t see for the moment any need for a new rabbit because we should implement what was agreed, what was announced.”
‘The ECB central banker then proceeded to get aroused by liquidity injections: ‘The Lithuanian governor singled out a second round of targeted long-term loans to banks as the most powerful addition to the ECB’s palette. The so-called TLTRO-II potentially offers to pay lenders to take central bank cash, the idea being that they pass it on to companies and households as loans. The first operation is scheduled for June 24.
“This measure, personally for me, is very sexy,” Vasiliauskas said. “It can make direct impact on the real economy.”
“Markets say the ECB is done, their box is empty,” Vasiliauskas, who heads Lithuania’s central bank. “But we are magic people. Each time we take something and give to the markets — a rabbit out of the hat.“
People like this guy should be executed.
“But we are magic people. Each time we take something and give to the markets — a rabbit out of the hat.“
How did Heinlein know that system insanity would become the norm?
Anthropologists have confirmed that the first realtor was a caveman named Caw, who sold the same cave to multiple buyers, unbeknownst to each other. Evolutionary biologists surmise that friendly crows then attempted to warn humans when Caw was skulking into their settlements, leading to their signature call.
Globalists gonna globe.
If we budge on the First or Second Amendments, that is our future. A few years ago I thought/assumed the UK had freedom of speech. Amazing what you can be arrested for over there, just praying in your head in the wrong public area is enough. Crazy.
I recall there is a place in Hyde Park, known as Speakers Corner, in London where people have traditionally been allowed to speak their mind, the implication being that elsewhere in London you can be arrested for saying the same thing.
When I tell the British relatives about our bill of rights, they roll their eyes. Some people just don’t get it.
Did you see that WEF creature telling some panelist from the USA that “very soon you will have hate speech crime laws”? As soon as they try to pass anything like that I’m going full Jordan Peterson x Andrew Tate.
Europe is a cuck continent.
It’s illegal to even discuss the rape epidemic from North African and Middle Eastern invaders, because Europeans are cucks.
Did you see that WEF creature telling some panelist from the USA that “very soon you will have hate speech crime laws”?
What SCEPTRE wants, SCEPTRE gets. And there is no 007.
“Europe is a cuck continent.”
Yup, two world wars finished-off their men.
A reader sent these in:
The Fed’s balance sheet hit its lowest level since October 2021 this week, down $476 billion from its peak in April 2022. Some perspective on how much the balance sheet expanded in 2020-21: it’s still $4.3 trillion higher than where it was at the start of 2020.
Interesting fact: New York’s population is the same as it was 20 years ago while Florida’s population has increased by 6 million.
States with largest population declines (2021-2022)…
1) New York: -180k
2) California: -114k
3) Illinois: -104k
States with largest population growth (2021-2022)…
1) Texas: +471k
2) Florida: +417k
3) North Carolina: +133k
US Building Permits hit a 31-month low in December, down 30% year-over-year. Tends to be a leading indicator for the economy, recessionary signals continue to build.
It’s Thursday and we already know the chart of the week: An overbought market and Fed members vowing to raise rates above 5%. It’s a moral hazard death spiral: Gamblers front-run bailout, SO the Fed raises their target rate. While the Nasdaq backtests last support:
‘The tech industry in 2022 increased its announced job cuts by 649%, with the total of 97,171 amounting to the highest since the dot-com crash more than 20 years ago. This year doesn’t look any better.’
It no longer makes sense for mom & pop to leverage their home equity to buy investment properties. Veteran mortgage broker @ronmortgageguy explains why. 👇
The wealthiest generation paid 10% interest, most owned a home, & had upward mobility. Now real interest rates are negative, bonds pay nothing, & 2 generations have shelter instability because the homes they’re supposed to be living in are now bond replacements. Rate cut anyone?
Society is now entirely structured so you spend. If too many people save, central banks encourage you to stop. They reduce interest paid, expand the monetary supply, & debase your holdings until you’re forced to buy, borrow, speculate, or you just lose it.
“if a billion people stop eating meat” … 🚨 When the Davos crowd gives up their private jets, then we can take them more seriously on “stop eating meat”. Ignore these clowns.
Danielle DiMartino Booth
Umpteenth reason Fed “must” pivot. Global Real Estate Market Faces $175 Billion Debt Spiral
“The slump in world’s biggest asset class has spread from housing market to CRE threatening to unleash waves of credit turmoil across the economy.”
So much for all those google engineers taking their California wages and buying places in zoom towns
I haven’t seen a 2×4 under $3 in a very long time. Spotted at my local Lowe’s today. The price of one 2×4 spiked to eight dollars at one point over the past couple of years.
Financing costs are about to surge as we hit a massive maturity wall for many corporate bonds
“Landlords will no longer be allowed to evict tenants in any rental property, including single-family homes, unless there was unpaid rent, documented lease violations, owner move-ins or other specific reasons.” By @latimes
This is preliminary data through today, but it speaks to the year-end discounting that took place. Denton County home prices down $75,000 (15%) from the spring bubble peak. Other counties faring a bit better so far, but we’ll see where the month ends up.
Saw 2 properties both selling for under what they were asking in 2019. Seriously, can’t wait for this house of cards to fall. #GetOutWhileYouCan #Vanre
Oh god. It’s happening
Largest % of speculators in history
Most homes under construction in history
Worst demographics in history
DTI 20% above historic norms
Buckle up buttercup
BREAKING: Twitter has around 1,300 employees today, per CNBC, from 7,500 in November.
FED’s going to have to double QT, if it has a hope of stopping inflation from reigniting. Markets are showing that already. UST yields softening since Oct. Equites priced for growth and companies still posting job openings. Oil up 10% in last 10 days, gasoline up 30% since Dec.
Gov Waller did a good interview with CNBC with comments suggesting that QT will continue for some time: 1) QT slows when RRP + reserves around 10% GDP (~3 years at current pace). 2) open to QT while cutting rates (35:38).
show me in the lease where it says we can’t have a mechanical bull
Conversely, if you’re a housing speculator, how many months of NET rent would you need to collect to make up for a $40,000 loss? Prepared to potentially lose 20, 30, 50%?
“We are going through an asset price recession and not an economic recession…The level of the risk-free rate is resetting higher than where it was before the pandemic,” with a wide range of consequences for corporate America and financial markets: Apollo’s Torsten Slok
National Mortgage News
“It’s just not clear that the Federal Home Loan Bank Board has that kind of systemic view of what’s going on in the financial ecosystem,” said David Zaring, @Wharton
In many interviews you were blaming the Fed for creating this bubble in real estate(agree), but why should they pivot to protect it? As a millennial earning a decent living and constantly priced out of the market f- it, no pivot, burn the insane valuations back to reality.
US Existing Home Sales decrease – largest ever annual decline🔥🔥🔥
The Trader Joe’s book is the most savage business book I’ve read. Paraphrasing: “Our customers were over-educated and underpaid professionals” “We cater to the newly educated masses. They may lose part (or all) of their income but they will retain their new tastes”
Well, gasoline and copper are telling us a different story about the direction of inflation.
This market is front-running a Fed pause / rate cuts just like the market did in the August rally, from what the Fed has been saying if they do stick to their guns, going to be a nasty unwind
lmao. 🤣 🇨🇦 finally has a vacant home solution that works. Someone broke into a foreign-owned vacant home, staged it, and sold it for nearly $1 million.
The Kobeissi Letter
December data just showed that existing home sales fell 18% in 2022. This is the first time in history that home sales have declined for 11 straight months. The average mortgage rate rose from 3.1% to 7.1%. Higher interest rates are bringing the economy to a screeching halt.
if a billion people stop eating meat
I had a delicious USDA Prime striploin for dinner last night.
Al Gore flying to Davos (for a pointless speech that proved he is mentally unhinged) = 5,000,000 steaks. Screw them all.
Danielle DiMartino Booth
Umpteenth reason Fed “must” pivot.
This woman has been relegated to the crackpot heap. No doubt she’s shilling at this point and needs a pivot for her own personal gain.
If the FED actually pivoted right now, and cut rates, inflation would probably be over 10% by late spring. There is still so much liquidity in the system that asset prices would explode higher. Ultimately, it would end in the demise of the central bank itself due to such reckless behavior.
Weekend link dump. Some of these sources are better than others, but wouldn’t it be better for you to READ THEM ALL and decide for yourself which are the best sources for content you are looking for?
If you are using Facebook or Google as “news” sources please know that you are being kept on a plantation.
You can leave the plantation, if you want to.
The scamdemic has exposed the criminal medical establishment for who and what they are.
Covid vaccines are poison.
The Fed ‘pushed as much money into the banking system in forty-eight hours as it had done in the span of a month during earlier rounds of QE.’
We will not have sound money, honest markets, or a future for our children as long as this criminal private banking cartel controls our money issuance.
San Mateo County’s single-family median homes lost $750,000 in value last year, plunging from an all-time high of $2,250,000 in April to $1,500,000 in December.”
Is that a lot?
If these Silly Con valley layoffs accelerate that median is going down a whole lot more.
Imagine what’s going to happen to places like Bend, OR, where these clowns were running up prices.
Joe Biden’s America.
Note that because this is the Daily Mail, the article does not mention the open borders or Mexican drug cartels as reasons for why fentanyl is flooding this country, nor does it mention that Philadelphia District Attorney Larry Krasner was purchased and installed by George Soros. Sharing for the 1:45 video clip and image gallery.
EXCLUSIVE: Inside America’s Zombieland: Philadelphia’s Kensington neighborhood looks like a scene from the WALKING DEAD as grim photos show ‘tranq’ addicts shooting up in broad daylight on sidewalks (1/20/2023):
“Addicts are shooting up in broad daylight, hunched over in a stupor or passed out on the streets. Many have raw, gaping wounds in desperate need of medical attention. And there are needles, syringes and garbage littered across the sidewalks.
‘I’ve never seen human beings remain in these kinds of conditions,’ said Sarah Laurel, who runs outreach organization Savage Sisters.
Here, photographs obtained by Dailymail.com lay bare the shocking scale of devastation in the inner city area – described by The Philadelphia Inquirer as ‘the poorest neighborhood in America’s poorest big city’ – which is being ravaged by the newly popular and dangerous drug.”
This is Democrat Party.
Go Eagles! /sarc
Joe Biden’s America.
Colorado Sun — Methamphetamine contamination found in third public library in Colorado (1/18/2023):
“The Bemis Public Library in Littleton closed Wednesday after test results indicated there was methamphetamine contamination in several bathrooms.
A city statement, released after business hours on Wednesday, did not say how long the library will be closed.
Recent findings of methamphetamine contamination at libraries in Englewood and Boulder as well as the Englewood Civic Center led the City of Littleton to perform testing out of “out of an abundance of caution,” according to the statement from the city.
The test findings indicated contamination in the main floor women’s and men’s bathroom exhaust fans and in the lower-level family bathroom, according to the city’s statement. The library is closed for professional decontamination of these areas and further testing throughout the building.”
This is Democrat Party.
CBS — Whistleblower: RTD train operators exposed to meth, fentanyl on daily basis (1/12/2023):
“A whistleblower who doesn’t want to be identified says RTD train operators are being exposed to methamphetamine and fentanyl use on a daily basis.
“I can just tell they are fed up because they can’t get any help,” they said. “Upon reporting that they’re told to air out their train and let them know if they can’t continue”
The whistleblower says they have heard of trains being abandoned because the operator was affected by secondhand meth exposure.
“I’m aware of a train operator having to abandon their train,” they said.
This is Democrat Party.
A few years ago I applied for a couple of jobs in downtown Dumver. In both cases 99% of the staff were under 30, so I knew I had a snowball’s chance in hell of getting an offer. When I asked about parking, they all cheerfully told me they rode the bus, with the junkies and tweakers. And that it was awesome.
Public libraries are public hangouts for junkies and pervs. I stopped visiting the library here in my little burg years ago for that reason. I wouldn’t be surprised if it too is contaminated but the management has not ordered a test because they know a nearly certain positive would force a shutdown and an expensive decontamination, not to mention that many patrons would never return.
In TABOR restricted Colorado, there is little support from local governments to fund libraries, and employees at the local library have told me for years that they worry about funding being yanked. A meth contamination could be the excuse to shut it for good.
even though i’ve had library cards for decades there is not much need for them today unless they become community centers with guest speakers, which i still go to, I have found some rare cd’s to borrow and copy and a lot of the time I’ll offer to buy them for $5-10 each and its a donation plus they charge $4 each now for 1 cd postge on ebay……..so we both win
The RTD D Line light rail stop is directly next to the Englewood Library and Civic Center. There is also the Englewood Trolley circulator bus that runs from there east on Englewood Parkway to Broadway where the number 0 RTD bus line runs north / south.
This is where alot of the junkies and tweakers come from. King Soopers on Broadway is a hotspot for shoplifting, and the circulator bus stop is a location of frequent bumfights, overdoses, and other random mayhem that brings in the police and EMT.
It doesn’t compare anywhere near to the depravity of Downtown Dumver, but this neighborhood wasn’t like this three years ago. The state legislature decriminalizing fentanyl in 2019, and the CCP Flu plandemic lit the fuse on the explosion of homeless and tweakers and junkies migrating south from Dumver into Arapahoe County.
Addicts are shooting up in broad daylight, hunched over in a stupor or passed out on the streets. Many have raw, gaping wounds in desperate need of medical attention. And there are needles, syringes and garbage littered across the sidewalks.
This is the “fundamental transformation” that King Obama promised you.
‘I’m bullish on Texas and I’m bullish on commercial real estate,’ Dotzour said. ‘It appears that buyers are just putting their pencil down for a while.’”
Texas could potentially be the first state to secede as the globalist uniparty in Le Cesspool Grande turns the former America into a grotesque caricature of what it used to stand for.
“Texas could potentially be the first state to secede”
No chance. Texas will be a safe “demoratic” state in 10 yrs.
I’ve heard that for a few decades. The Rio Grande Valley is turning. Unpossible but true.
WHAT IS THE FED?
The Federal Reserve, “the Fed”, is the central bank of the United States of America that was created in 1913 by Congress. It is a banking cartel that has a government-granted monopoly on the creation of money and credit. The Fed literally loans “money” (Federal Reserve Notes) into existence. Federal Reserve Notes are paper promises backed by nothing of intrinsic value and they are only functioning as money because the government forces them on the public through legal tender laws. Federal Reserve Notes are referred to as dollars but are not. The definition of a dollar is a weight of silver (371 grains). To put it simply, the Fed is a group of banks running a national criminal counterfeiting racket with the protection of the government.
“The universe delivered the justice we weren’t given in court, but a much harsher punishment than he’d have been dealt in a court of law,” she said.
This is what Venice CA is really like. Multi-million dollar homes but you risk your life when you step outside of your home. I grew up there and the place historically was a lower middle class area that was crawling with gangs and lowlifes. And Palmdale where this kid was executed is even worse. The Antelope Valley is filled with parolees, sex offenders and worse.
This is the REAL L.A.
I visited Venice for the first time in the late 1980s. It seemed gritty and dangerous back then.
I used to ride my bike down the bike path in Venice in the seventies. It was run down and not yet a place for cool people. But it was not a safe place and certainly the housing prices reflected that. The problem with LA is that an area might not look dangerous, but looks are deceiving. Even today I wouldn’t get caught out in Venice at night. Nowadays it really is a dump with all the homeless. In fact the entire West L.A. area is just overflowing with homeless encampments.
Real justice would if the “murderer” was a family member of the victims who executed the perp.
Joe Biden’s America.
Atlanta Journal Constitution — Details trickle out after deadly encounter at Atlanta training center site (1/19/2023):
“Details surrounding the deadly encounter near the planned site of Atlanta’s public safety center continued to trickle out Thursday, as a wounded state trooper recovered and left-wing activists both mourned a fallen comrade and questioned the official account of events.
At least seven other people, meanwhile, were arrested and charged with domestic terrorism in connection with Wednesday’s law enforcement operation in the southern DeKalb County woods.
Activists tied to the “Defend the Forest” movement identified the person killed by law enforcement — after allegedly firing at troopers first — as Manuel Teran, aka “Tortuguita.” Online posts described Teran as a “beloved member of the community” who split time between Atlanta and Florida.
All of the suspects were listed as being from out of state: three from Pennsylvania and others from Maine, Maryland, New York and Ohio.”
From out of state? Because George Soros paid for their travel expenses to get there. Also note that the article does not once mention the word Antifa.
This is Democrat Party.
As the number of “sudden deaths” mounts, even the dullest of the sheeple are going to start noticing.
100% safe and effective.
The Great Biden/Pelosi/Schumer Powell (4 Horsemen) Inflation Tax In One Chart (Personal Savings DOWN -64.8%, Consumer Credit UP, Real Weekly Earnings Growth NEGATIVE For 21 Straight Weeks)
More wealth destruction as the used-car bubble bursts.
“Fed ‘pushed as much money into the banking system in forty-eight hours as it had done in the span of a month during earlier rounds of QE.’ The Fed began ensuring that ever-wider swaths of assets would not suffer any downturn in nominal value on its watch.”
Where does the story go from here? Is the Fed still ensuring ever-wider swaths of assets will always go up in price?
Were recession worries overblown?
The Financial Times
The Big Read
Things are looking up for the global economy
The consensus view at the World Economic Forum in Davos: the outlook isn’t as bad as it once seemed
Ursula von der Leyen, Liu He, Christine Lagarde and Kristalina Georgieva at Davos
Chris Giles in Davos yesterday
Sometimes, optimism can be infectious.
The cheery mood in financial markets, where global stock markets have risen about 4 per cent in the first three weeks of the year, spread this week to the rarefied atmosphere of the World Economic Forum in Davos.
The annual gathering of business, economic and political elites in the Swiss Alps divides opinions. But it is an ideal place to take the global temperature on economic sentiment — and the consensus view seemed to be that conditions had bottomed out and were becoming more positive.
Many had expected 2023 would bring a lasting hangover from Russia’s war in Ukraine, continued Chinese economic weakness and the devastating effects of high energy and food prices on living standards across the world.
Instead, delegates came to the mountains to cheer three new developments that improve the outlook.
The Financial Times
Charts that Matter
Euro regains ground against dollar as global economic outlook improves
Falling gas prices and easing fears of a deep, continent-wide recession in 2023 have brightened prospects for Europe
Up about 13 per cent over the past three and a half months, the euro’s rise to its current level close to $1.08 has been aided by a broader retreat for the dollar
George Steer 6 hours ago
The euro has bounced back since falling below parity with the US dollar last September, aided by cooling energy prices, receding fears of a deep recession later this year and an increasingly hawkish European Central Bank.
Up about 13 per cent over the past three and a half months, the euro’s rise to its current level close to $1.08 has been aided by a broader retreat for the dollar, which is down roughly a tenth against a basket of six peers since touching a 20-year high in September.
The US Federal Reserve last year lifted its main policy rate by 4.25 percentage points, the largest one-year increase in four decades. The growing interest-rate gap with other economies lured investors to the US, boosting the dollar, just as soaring energy prices exacerbated by the war in Ukraine threatened economic turmoil in Europe, denting the euro’s allure.
Both trends have reversed somewhat since then, however. “For several years, there was almost no alternative to the dollar,” said Andreas Koenig, head of global FX at Amundi.“ Now, capital is flowing back home again” to economies outside the US as other attractive options emerge, he added. Foreign money has poured into China since it reversed strict zero-Covid policies late last year, for example, in a move that has also encouraged leading economists to upgrade their global growth forecasts. The dollar tends to strengthen in times of macroeconomic stress.
Europe’s prospects have improved, too. Helped by warmer weather, European natural gas prices have tumbled since late August to levels last recorded before Russia’s invasion of Ukraine, easing fears of a deep, continent-wide recession in 2023.
Line chart of $ per € showing The euro bounces back from below parity with the dollar
At the same time, cooling headline inflation across the Atlantic meant the Fed was able to slow the pace at which it raised rates, with December’s 0.5 percentage-point increase breaking a run of four consecutive 0.75 percentage-point moves. Despite caution expressed by numerous central bank officials, markets expect the Fed to begin cutting rates in the second half of the year.
Lower rates would “remove a big advantage for the dollar”, said MUFG currency analyst Lee Hardman, who expects the ECB to raise rates to 3.25 per cent from 2 per cent by the middle of the year.
“The Fed last year was leading the way with larger hikes relative to other central banks, but now, for the first time, the European Central Bank is ‘out-hawking’ the Fed.”
all based on smoke and mirrors economics.
The Financial Times
Financial job losses
Banks prepare for deepest job cuts since the financial crisis
Firings expected to be ‘super brutal’, with Credit Suisse, Goldman Sachs and Morgan Stanley already laying off staff
Owen Walker in London and Katie Martin in Davos 4 hours ago
Banks are gearing up for the biggest round of job cuts since the global financial crisis, as executives come under pressure to slash costs following a collapse in investment banking revenues.
The lay-offs — which are expected to be in the tens of thousands across the sector — reverse the mass hirings banks made over the past few years and the reluctance to fire staff during the Covid-19 pandemic.
“The job cuts that are coming are going to be super brutal,” said Lee Thacker, owner of financial services headhunting firm Silvermine Partners. “It’s a reset because they over-hired over the past two to three years.”
The stock market is about to be flipped upside down as inflation rebounds ahead of an upcoming recession, Bank of America says
Fri, January 20, 2023 at 7:52 AM PST·3 min read
Trader at NYSE
A trader works at the New York Stock Exchange NYSE in New York, the United States, on March 9, 2022. Michael Nagle/Xinhua via Getty
– The stock market is about to be flipped upside down as inflation rebounds ahead of an upcoming recession, according to Bank of America.
– BofA said the reopening of China’s economy and ongoing conflict between Russia and Ukraine will lead to higher commodity prices.
– That means secular trends that dominated the market over the past decade are going to be reversed.
A rebound in inflation and an upcoming recession are going to flip the stock market upside down, according to Bank of America.
In a Friday note, the bank acknowledged that over the past three months, inflation has fallen to an annualized rate of about 0%. But that’s going to change due to a persistently tight labor market, which is seeing no relief as immigration trends in America remain subdued relative to previous years, according to the note.
BofA said another factor that will push up inflation is a renewed spike in commodity prices as the reopening of China’s economy will spark a wave of demand for oil. That, combined with supply issues stemming from the ongoing conflict between Russia and Ukraine, will put renewed pressure on oil prices, which dropped nearly 40% from their 2022 peak.
The expected spike in inflation will come at a time when central banks around the world are backing off from their tight monetary policy of raising interest rates. Some could even be on the verge of cutting interest rates, based on market expectations.
“Central banks quietly accepting higher structural inflation, wittingly or unwittingly,” BofA’s Michael Hartnett said.
Tech Layoffs Shock Young Workers. The Older People? Not So Much.
Fri, January 20, 2023 at 11:16 AM PST·8 min read
Kelly Chang was among the 700 people who lost their jobs in recent layoffs at the ride-hailing company Lyft.
(Ariana Drehsler/The New York Times)
SAN FRANCISCO — When Lyft laid off 13% of its workers in November, Kelly Chang was shocked to find herself among the 700 people who lost their jobs at the San Francisco company.
“It seemed like tech companies had so much opportunity,” said Chang, 26. “If you got a job, you made it. It was a sustainable path.”
Brian Pulliam, on the other hand, brushed off the news that crypto exchange Coinbase was eliminating his job. Ever since the 48-year-old engineer was laid off from his first job at the video game company Atari in 2003, he said that he has asked himself once a year, “If I were laid off, what would I do?”
The contrast between Chang’s and Pulliam’s reactions to their respective professional letdowns speaks to a generational divide that is becoming clearer as the tech industry, which expanded rapidly through the pandemic, swings toward mass layoffs.
Microsoft said this week it planned to cut 10,000 jobs, or roughly 5% of its workforce. And Friday morning, Google’s parent company Alphabet said it planned to cut 12,000 jobs, or about 6% of its worker total. Their cuts follow big layoffs at other tech companies such as Meta, Amazon and Salesforce.
It was a sustainable path.
Stupid and myopic.
Atari was more of a “Tech” company than Lyft, Microsoft or Google. What exactly is Microsoft inventing or making these days that is “tech”. “Tech” used to be reserved for companies like Texas Instruments, TRW or IBM. I’m still using Microsoft Office 2007 and Windows 7 Pro 64 bit.
what people seem not to be able to comprehend is that these 5% , 10 000, 7% etc., is just the tip of the iceberg. As soon as these are over, they’ll announce the next wave. Also, when they announce 10 000, it’s just a way of saying. They can let go thousands more among those 10 000. It would be bad style to announce 20 000. But if you say it’s just a little adjustment, but eventually let go twice as many within the same period, things may slip unnoticed. it’s jut a strategy, and coverup.
Plus if the herd is spooked, many will leave on their own, thus no severance costs.
Plus if the herd is spooked, many will leave on their own, thus no severance costs.
And yeah, I am sure some people are looking for a new position and many more are looking over their shoulder
looking for a new position
Sometimes, it is necessary to look for a new career.
Schwab’s 3 Ways to Prepare for a Likely Recession
Fri, January 20, 2023 at 9:40 AM PST·5 min read
On Wednesday Microsoft announced plans to lay off 10,000 workers. This is the latest in a series of large layoffs over the past several months that have made headlines, mostly concentrated in the technology and information sector of the economy.
It adds to the growing concerns among many financial analysts that 2023 will bring a recession. That certainly wouldn’t come out of nowhere. For more than a year, the Federal Reserve has been trying to cool inflation by reducing demand in the economy at large, generally through a series of very aggressive hikes to its core interest rate. And this has worked to a significant degree. Inflation has slowed, with the month-over-month rate falling to just 1.2% by December.
Headed into the new year, nobody entirely knows what to expect. Traditional wisdom suggests that a recession is imminent, and the market has begun pricing for that. At time of writing 10-year Treasury bonds had a yield almost 1.3 points below 12-month assets, a phenomenon known as the “inverted yield curve” which typically precedes a recession. Yet the labor market remains strong, the quit rate is high, and the consumer confidence index grew noticeably in December, suggesting that Americans’ personal finances are in good shape.
As Schwab wrote recently, the data is unclear but enough of the signals are worrying. Despite the good news, there are enough danger signs ahead that investors would be wise to start planning for volatility at the least, an outright recession at the worst.
The question is how to do so. What, exactly, should investors do to prepare for a recession? In the face of the current market, Schwab recommends taking three steps.
For more guidance on how to navigate this uncertain period, consider matching with a vetted financial advisor for free.
Equities: Invest For Fundamentals
Investors who buy stocks need to be particularly careful. The stock market tends to take heavy losses during a downturn, which would be a double helping of trouble after a very difficult year in 2022.
In the event of a recession, profits and revenue for many companies will shrink. That will hurt capital returns and yields alike, making stocks a difficult asset class for investors. To cope with this, Schwab recommends, “investors who actively choose stocks should look for companies that have maintained – and still expect – strong profit margins.”
As a rule of thumb, this means picking companies with strong revenue and proven histories rather than experimental companies or those which expect to grow into profitability over time. In particular, many information technology companies such as app-based services have long operated without turning a profit. Their pitch, essentially, is that they’re continuing to invest and grow, and will eventually turn that growth into strong profits over time.
This may be a good speculative strategy during periods of growth, but it may not be a wise investment during a potential bear market.
Bonds: Invest For Duration and Credit
Two issues may become important for bond investors in a recession.
First, if the economy slows, some companies may have trouble paying their bills. While bonds are generally a safe asset class overall, the creditworthiness of the borrower still matters. For that reason, Schwab recommends that investors should look for higher-credit bonds as a way of hedging against the risk that comes with a slowing economy.
Second, again if a recession occurs and inflation continues to cool off, the Federal Reserve is likely to halt its policy of rate hikes. It may even reduce interest rates again. “[W]e continue to favor adding duration in bond portfolios at times when yields rise,” writes Schwab’s team. By adding duration you can increase the price sensitivity of your bond investments, putting you in a good position to capitalize on the stronger returns that tend to accompany falling interest rates.
This is particularly true during a period of lower inflation, since locking in long-term yields can also produce a good long-term income investment.
Growth: Consider Emerging Market Stocks
One area where Schwab is generally bullish is in emerging markets.
This sector fell considerably over 2022, and was particularly effected by global events such as ongoing COVID-19 disruptions and the war in Ukraine. However with China beginning to emerge from its lockdowns and worldwide supply chains normalizing, global stocks are looking like a better bet than they were before. As Schwab noted, while the S&P 500 “was little changed” in the last few months of 2022, emerging market stocks rose 20% over that same period.
For that reason, Schwab recommends that investors seeking growth should look at emerging market stocks for 2023. This is a sector that it believes will likely perform well, even in the face of a potential recession.
You can read the full market analysis at Schwab’s site here, along with why its experts feel that the economy’s warning signs currently outweigh its strengths.
With a potential recession on the horizon, investors are beginning to focus on defensive portfolio strategy. In their latest market analysis, Schwab has three recommendations for how you can begin to reallocate assets in case those warnings prove true.
A few thoughts:
1) There is a wide divergence of MSM opinion on whether a recession is coming. Someone is a lion.
2) Anecdotal evidence of layoff announcements coupled with official statistics on retail sales and industrial production don’t bode well for the soft landing crowd.
3) It may be difficult to find a major selloff in asset prices in the historical record as long and deep as last year’s that was not accompanied by s recession.
4) The inverted yield curve is a historically reliable leading indicator of recession that is hard to dismiss.
Another dimension of recession worry: Rising oil prices…
Oil rises, posts second week of gains on China demand outlook
Published Fri, Jan 20 2023 2:04 AM EST
Updated Fri, Jan 20 2023 3:41 PM EST
The silhouette of an oil pump is seen at sunset.
Pramote Polyamate | Getty Images
Oil rose by about $1 a barrel on Friday and posted second straight weekly gain, spurred largely by brightening economic prospects for China and resulting expectations of a boost to fuel demand in the world’s second-biggest economy.
The lifting of Covid-19 restrictions in China is set to increase global demand to a record high this year, the International Energy Agency (IEA) said on Wednesday, a day after OPEC also forecast a Chinese demand rebound in 2023.
U.S. crude gained $1.03, or more than 1%, to settle at $87.64 a barrel.
“Many traders believe it is highly likely that we are going to see higher demand coming from China as it continues to dismantle its COVID policies,” said Naeem Aslam, analyst at broker Avatrade.
For the week, the U.S. benchmark gained more than 1%.
Oil was also supported by hopes that the U.S. central bank will soon downshift to smaller rises in interest rates and by hopes for the U.S. economic outlook.
A Reuters poll predicted that the U.S. Federal Reserve will end its tightening cycle after increases of 25 basis points at each of its next two policy meetings and is then likely to hold rates steady for at least the rest of the year.
The chances of a “soft landing” for the U.S. economy appear to be growing, Federal Reserve Vice Chair Lael Brainard said on Thursday. The Fed’s next rate-setting meeting is over Jan. 31 to Feb. 1.
Rising Oil Prices and Economic Turmoil: Must They Always Go Hand in Hand?
January 01, 2001
By Kevin L. Kliesen
After falling sharply during the Asian financial crisis in late 1998, market prices of crude oil and other energy products climbed in November 2000 to their highest levels since the Gulf War. The oil price shock, as economists have coined it, occurred as monetary policy-makers acted to keep the economy from overheating. This combination of events has raised a few red flags in certain quarters, since nearly all post-World War II recessions were preceded by higher oil prices and a restrictive monetary policy. Unlike other oil price shocks since the 1970s, however, the current run-up in energy prices has not yet raised the alarm one might have expected. Indeed, while the pace of U.S. economic activity appeared to slip noticeably during the fourth quarter of 2000, most forecasters continue to project solid growth and moderate inflation for the next two years. Is the U.S. economy better positioned today to withstand the body blows of sharply higher oil prices than it was in the past?
Fear & Greed Index
Oil price shocks cause recessions. Will this one do the same?
By Paul R. La Monica, CNN Business
Updated 12:58 PM EST, Thu March 3, 2022
New York CNN Business —
Crude oil prices briefly surged to their highest levels since 2008 Thursday morning before pulling back a bit. Still, at about $110 a barrel, there are growing concerns that skyrocketing energy prices could lead to a severe economic pullback in the United States and around the globe.
After all, soaring oil prices were one of the main reasons for recessions in the mid-1970s, early 1980s and early 1990s. Oil prices rose sharply before the Great Recession too; however, that downturn was more due to the subprime mortgage bubble bursting and the ensuing Global Financial Crisis.
Although supply shock concerns triggered by Russia’s invasion of Ukraine continue to rattle the global oil markets, some experts push back at the notion that rapidly rising oil prices will cause an economic slowdown.
With more consumers driving electric cars, oil and gas prices may have to surge even further — and stay at elevated levels for a long time — before consumers really start to feel economic pain and begin changing spending habits.
“Oil may have to get to $120 or even $130 a barrel for people to really notice,” said Dec Mullarkey, managing director of investment strategy and asset allocation at SLC Management. “Consumers still have a lot of savings and the employment situation is good. So there is a strong base.”
“Oil may have to get to $120 or even $130 a barrel for people to really notice,” said Dec Mullarkey
An unfortunate but entirely appropriate name.
Economy & Policy
The Signs of a Soft Landing Are Coming Into View
By Joseph E. Gagnon
Nov. 16, 2022 4:00 am ET
A rise in unemployment to a level below 5% would be the mildest recession in postwar U.S. history, writes Joseph E. Gagnon.
About the author: Joseph E. Gagnon is a senior fellow at the Peterson Institute for International Economics and a former Federal Reserve official.
The coming recession may be the most widely predicted recession in U.S. history. In the past, forecasters often did not realize we were in a recession until several months after it started. But professional forecasters surveyed in October projected an increase in the unemployment rate of 0.6 percentage point in 2023, to 4.3% from 3.7% this year. That suggests a recession is likely according to a rule promoted by economist Claudia Sahm, who found that increases in the unemployment rate of at least 0.5 percentage point almost always signal recessions.
A rise in unemployment to a level below 5% would be the mildest recession in postwar U.S. history. Can the Fed achieve what is essentially a soft landing? And will it be enough to cool off high inflation?
The historic record is problematic for Mr. Gagnon and others predicting a soft landing with unemployment increasing by less than 2% over the next several years, to remain below 5%. Try to find the recessions since WWII in this chart (gray bars) where unemployment rose off a low base by less than 2% over subsequent years and remained below 5%. Good luck!
Top economist Mohamed El-Erian sees inflation getting ‘sticky’ at 4%—and a growing chorus sees the dawn of a new world in investing
Sat, January 21, 2023 at 3:00 AM PST·6 min read
Giulio Napolitano/Bloomberg via Getty Images
After raging to multiple four-decade highs in 2022, inflation has fallen steadily over the past six months. But now, an increasing number of economists and business leaders are worried that the trend won’t last. “I think inflation is going to get sticky in midyear at around 4%,” Mohamed El-Erian, the president of Queens’ College at the University of Cambridge, told Bloomberg on Friday.
The economist has been warning about the possibility of persistent inflation since August of last year, but he’s not alone anymore. Christian Ulbrich, CEO of JLL, a real estate and investment management firm, told the Financial Times this week that at the World Economic Forum in Davos, Switzerland, it was a common view among his executive peers that 4% inflation is the new 2% inflation.
Ulbrich believes that there are “a lot of fundamental trends”—including the decoupling of the U.S. and Chinese economies and the move toward green energy—which could even keep inflation “persistently around 5%.” You may think that’s a small difference, but two to three percentage points is a big deal when it comes to inflation.
At 4% inflation, your dollar loses half its purchasing power every 18 years…half the halving time under the Fed’s target rate of 2% inflation.
With real price increases running about twice the manipulated CPI, what is that, nine years?
Cracks in Stock Rally Pried Open by Ominous Bond Signal
Katie Greifeld and Vildana Hajric
Sat, January 21, 2023 at 5:40 AM PST·4 min read
(Bloomberg) — A rousing Friday rally salvaged the week for tech investors but couldn’t undo damage done to the broader market by increasingly dour signals on the economy, many of them originating from bonds.
The 2023 surge in the S&P 500, spurred by speculation inflation is cooling, started showing cracks in the four-day week as focus shifted to prospects of an economic contraction. Anxiety that the Federal Reserve’s campaign of rate hikes has gone too far loom ever larger in the Treasury market, whose three-month trouncing of riskier assets reflects stiffening bets on a slowdown.
‘It’s not just fixed-income’s dour economic signal. Despite rallying to start the year, government bonds continue to represent legitimate competition to stocks in terms of valuation. A rough comparison of yields suggests the recovery in Treasury prices has room to run when viewed next to a still-expensive equity market.
None of that was enough to prevent Friday’s tech-led rebound, the biggest gain of the year for the Nasdaq Composite Index. The S&P 500 still suffered its first weekly decline of 2023, held back by losses on Wednesday and Thursday after reports on retail sales, producer prices and business equipment rekindled concern about the future of the economy.
“We believe that the S&P in particular is trading at valuations that are not appropriate with what we’re likely to see from earnings,” David Spika, president and chief investment officer of GuideStone Capital Management, said in an interview. “Bonds are still expensive, but relative to stocks, they’re much more attractively valued.”
The $32 billion iShares 20+ Year Treasury Bond exchange-traded fund (ticker TLT) has climbed 6.7% in 2023 as investors seek safety in long-dated government securities, versus a 3.5% rise for the $365 billion SPDR S&P 500 ETF Trust (SPY). That sets TLT up for a third straight month of outperformance relative to SPY, the longest winning streak since 2020.
The long-dated bond ETF just logged a 50-day advance that topped 12.5% — something that in the past has occurred only when a recession is close at hand or fears over one are high, according to Nicholas Colas, co-founder of DataTrek Research. Over the past two decades, such a surge has happened in 2008-9 and also in 2020 when downturns were around the corner; it happened from 2010-2012, in 2015 and in 2019 when investors fretted over one, he found.
“Seeing +20-years rally by this amount is therefore not a fool-proof recession indicator, but it does say markets are concerned about an economic contraction,” he wrote in a note.’
The S&P 500 fell 0.7% in the four days, paring its gain this year to 3.5%.
Even after 2022’s historical selloff, the so-called Fed model — which plots the S&P 500’s earnings yield against the yield on 10-year Treasuries — shows that bonds are still inexpensive compared to equities, at least by recent history. Relative to its price, the S&P 500 “pays out” roughly 5.2% in earnings, versus roughly 3.5% on the benchmark US bond. That’s close to the slimmest advantage for stocks in the past decade.
“Yields can come down quite a bit further despite the fact that they’ve come down quite a bit over the last couple of days, and it is an environment in which bonds are cheap again,” JPMorgan Asset Management global market strategist Meera Pandit said on Bloomberg Television. “The attractiveness of bonds going into the rest of 2023 has surged.”
Those early returns have revived the decades-old 60/40 investing approach after the twin selloffs in stocks and bonds last year produced the worst annual loss for the strategy since 2008’s financial crisis. Portfolios divided between 60% stocks and 40% bonds are enjoying their best start to a year since 1987, according to a Bloomberg Index.
The debt market’s dominance so far stacked against still-expensive equities has some portfolio managers advocating for a twist on the classic strategy: switch the components around and put most of the assets into bonds.
“The bond market is demonstrably cheap to the stock market,” DoubleLine Capital’s Jeffrey Gundlach said on a recent webcast hosted by his company. “I recommend not a 60/40 portfolio, but more like a 40/60 portfolio, or even a 60/25/15 portfolio — bonds, stocks and then other things in the 15%.”
–With assistance from Lu Wang.
(A prior version of this story corrected the bond allocation in the last paragraph.)
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People who punched some cops on January 6th are “terrorists”. Antifa shoots at cops, one of them is killed, and they were “assassinated in cold blood” for merely “protesting”. I knew the Guardian was woke trash but seriously that is the most misleading headline I’ve ever seen:
They’re not “protestors” they are communist domestic terrorists.
It’s okay to kill communists.
Really, it’s okay.
The Brits have trouble understanding that Americans will shoot back.
I love explaining Castle Doctrine especially Colorado’s “Make My Day Law” to them. They think I’m making it up. The law over there is that you are supposed to retreat from a home invader. That you would be allowed to shoot to kill an intruder blows their minds.
I wonder if white suburban libtards experience any cognitive dissonance as their minority “comrades” in the Democrat-Bolshevk party become more open in expressing their anti-white hatred.
Pfizer should compensate the vaccine injured says Cardiologist
‘The fines should be so large that pharmaceutical companies risk going bankrupt and senior executives should go to jail if they knew their medical intervention was going to cause harm’
5 minutes. I didn’t know they were talking about this on Fox.
The current WEF/Davos meeting reveals the insanity of this Cult, as well as their tactics.
Their biggest concern is how to stop free speech, that they call disinformation. They recommend that the big Mega Corporations boycott advertising dollars to any platform that doesn’t endorse the Cults narratives. .
De-funding has been one of the biggest weapons of this corruption by this Cult that
wants to rule the world.
The medical system has been taken over by bribery, extortion and threat of job loss, if it doesn’t push poison and cover up mass genocide by Big Pharmacy.
The corruption of Science , regulatory agencies, health agencies, world governments, news agencies by this group of insane masterminds plotting the enslavement and slaughter of the humans is evident.
They plan on going after the unvaxxed , tracking them , ,because 194 Countries agreed to give the corrupt WHO the power to take all rights when the next pandemic
They had to rig the election to get the Biden Puppet in to advance the agenda of the WEF, WHO and the CCP , Big Pharmacy etc. Biden did what the enemies of the USA wanted.
Chicken shit poison pushing fraudsters that are upset that their narratives are breaking down . People are noticing death, injury, destruction, mayhem , insanity, lack of justice, and attack on their own children.
Bidens attack on more than half the Country of Citizens as being enemy of the State insurrectionists is pure madness .We have seen these tactics used before by evil dictorships by Hitler, Stalin, Mao, the whole bunch.
The current enemy has a objective that is probably more evil than the historical list of evil doers from the past. The mass genocide and enslavement of most the globe. They now think they have the technology to pull off this epic attack and blatant crimes against humanity.
So, just listen to the wackos at Davos talk about them controlling the future and saving the planet from these carbon consuming humans and animals that they want to enslave or kill or alter, all forced by these psychopathic homicidal freaks.
Seriously, it disturbing how evil these masterminds of the future of mankind are.
“BREAKING: Twitter has around 1,300 employees today, per CNBC, from 7,500 in November.”
Anyone remember when it was doomed to fail within 48 hours because all those indispensable people quit at the prospect of having to actually produce something in return for those six-figure salaries?
Graveyards are full of indispensable people.
doomed to fail within 48 hours
48 weeks or months is more realistic. First payment on $13B debt due soon and revenue down 40% YOY.
https://twitter.com/joshua_t_white/status/1616555756236546048 (Assistant Professor of Finance, Vanderbilt University, Owen Graduate School of Management and Former SEC economist):
CNBC’s @lorakolodny reporting that Twitter is down to 1300 employees. Headcount was 8500 last year. Musk has done all the asset restructuring possible for a company in the zone of insolvency.
Next stop is forbearance/private workouts of debt.
Music sub-thread for a Saturday, first song dedicated to everyone who ever advocated for vaccine mandates and vaccine passports.
Van Halen — Hang ’em High:
Motley Crue — Merry-Go-Round:
Another LA band, this one much lesser known.
The Germs — Media Blitz:
Guns N’ Roses — One In A Million:
Guns N’ Roses — Used To Love Her:
what about all those flooded cars in Cai?
Flood-damaged cars can typically be purchased at a 40% to 70% discount on Kelley Blue Book valuations, Drury said.
Soul Coughing — Screenwriter’s Blues:
Queens Of The Stone Age — You Think I Ain’t Worth A Dollar, But I Feel Like A Millionaire:
Local H — California Songs:
Jane’s Addiction — Been Caught Stealing 12″ Remix:
In summary, Musk revealed on Twitter that he took two jabs and two boosters…. Musk had a severe reaction to second booster and he thought he was going to die. He also revealed that a young healthy family member got the heart condition after he got jabbed.
, Also, heard on some podcast that some billionaires are pissed out there that they took the jabs and weren’t warned of the dangers .
Safe and effective f fraud is going to . bring out some blown back of epic scale.
some billionaires are pissed out there that they took the jabs and weren’t warned of the dangers
Neither was the general public. Guess they’re not quite as indispensable as they think.
Some people are specialer than others.
Some people are specialer than others.
How do you get in an argument with a flight attendant?
You sit on a plane, put your seat belt on and sit there. What is there to argue about?
“What is there to argue about?”
Where’s muh reparations?
𝗧𝘆𝗹𝗲𝗿, 𝗧𝗫 𝗛𝗼𝘂𝘀𝗶𝗻𝗴 𝗣𝗿𝗶𝗰𝗲𝘀 𝗖𝗿𝗮𝘁𝗲𝗿 𝟯𝟮% 𝗬𝗢𝗬 𝗔𝘀 𝗕𝗿𝗼𝗸𝗲𝗿 𝗕𝗶𝘁𝘁𝗲𝗿 𝗕𝗼𝗿𝗿𝗼𝘄𝗲𝗿𝘀 𝗕𝗮𝗶𝗹 𝗢𝗻 𝗛𝗼𝘂𝘀𝗶𝗻𝗴 𝗔𝗰𝗿𝗼𝘀𝘀 𝗧𝗵𝗲 𝗨𝗦
As one national broker explained, “Sellers are broke…. and brain damaged.”
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