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The Gravy Train Has Now Come To A Shuddering Halt

It’s Friday desk clearing time for this blogger. “In the last 10 years, the average home price has doubled in the KC metro area, from roughly $140,000 to more than $350,000. It took six weeks, and $60,000 more than they initially budgeted – but Sarah Hogan and Joey Tangeman bought a home in Olathe. And they count themselves lucky. They say they never changed their standards, just their budget. ‘We had to swallow the fact that we’re going to be paying more than we wanted to every month,’ said Hogan, ‘but it meant we’d actually be able to afford a house and get a house.’ CEO of ReeceNichols Mike Frazier said, ‘you’re going to have to overbid on properties,’ the way Hogan and Tangeman did. ‘You’re going to have to look at your budget and decide what can I truly afford, and know that housing prices aren’t going down.’ ‘Prices aren’t coming down anytime soon – if ever,’ said new homeowner Tangeman.”

“‘There was a point where selling real estate in San Francisco was almost like being in one of those quiz game booths where cash is swirling around, and you just have to grab it,’ said Cynthia Cummins, Principle Realtor at Kindred SF Homes. ‘That’s not happening now.’ Mindy Palmer, an agent with Berkshire Hathaway HomeServices in Missoula, Montana, said the stream of buyers flowing into Missoula from out-of-state has not stopped. Even so, Palmer said Missoula’s real estate market has slowed considerably. ‘A number of agents are catching their collective breath,’ she said. With less competition for properties, Palmer said buyers are giving sellers more pushback on practices that became common in the frenzied market of the pandemic years, such as waiving home inspecting. ‘The buyers have really had a tough the past few years, and frankly, they’re not going to take it anymore,’ she said.”

“Dallas-Fort Worth is among the 40% of U.S. metro areas that saw a drop in home prices at midyear. Median home sales prices in D-FW in the second quarter were down 4.5% from a year earlier, according to the National Association of Realtors. Nationwide, home prices declined by 2.4% during the same period. ‘Home sales were down due to higher mortgage rates and limited inventory,’ said in the report. ‘Interestingly, price declines occurred in some of the fastest job-creating markets,’ said Realtors chief economist Lawrence Yun. ‘Prices in these areas are trying to land on better fundamentals after several years of skyrocketing increases.’ The biggest second-quarter home price declines were recorded in Austin (-19.1% year-over-year), San Francisco (-11.3%), Salt Lake City (-9.6%) and Las Vegas (-7.4%). Looking at major Texas metro areas, prices fell by 2.5% from midyear 2022 in Houston with a median sales price of $348,300. In San Antonio, prices fell by 4.4% to a median of $334,100.”

“After three summers of a pandemic-bloated crush of demand that filled up Shore homes, created new investors, and pumped up rental and sale rates, things this summer are quite different. Unheard of in past summers, weeks are going unrented, and rental prices are dropping. Maryellen Sheehan, who owns five Shore houses in Ocean City and manages others, says the market has definitely softened this summer. One owner of a home she helps manage dropped a prime week’s price of a five-bedroom place with ocean views from $10,000 to $5,000 in order to get it booked. ‘They typically start with a small reduction,’ Sheehan said, ‘but as the week gets closer, it’s better to get something than nothing.’ She agrees that some owners overpriced their Shore homes, especially recent buyers saddled with big mortgages.”

“In Ventnor and Margate, owner Rebecca Lerman, who owns and manages 13 properties, says there’s ‘a lot more vacancies, and a lot more inventory, no question about it.’ ‘I do think the prices are going to stabilize and go down,’ she said. ‘I have seen people who have vacancies, and they’re like giving it away.'”

“Soaring apartment rents in New York have allowed the city’s market-rate multifamily owners to escape much of the real estate gloom of the last year, but prices only paint part of the picture. The spotlight has begun to shift toward the debt secured by multifamily, the biggest asset class in the country. Last month, Morningstar released a report pointing to an ‘$8B tsunami’ of multifamily commercial mortgage-backed securities that are coming due in the second half of 2023 — creating what it calls a ‘red October.’ It is a ‘hydrogen-bomb scenario’ for multifamily landlords, Peter Sotoloff, a former managing partner at Mack Real Estate Credit Strategies and former head of U.S. originations at Blackstone, told The Wall Street Journal. Trepp Senior Managing Director Manus Clancy said the ‘epicenter of concern’ are those who bought value-add properties with floating rate debt at the peak of the market in 2021 and the first half of 2022. Largely in places like Arizona, South Carolina and North Carolina, those buyers are now being buffeted by high interest rates, operating costs driven up by inflation and a leveling-off in rents.”

“The unsavory cocktail has threatened the business of multifamily syndicators, who bought properties aggressively at their peak and put short-term debt on them, hoping to flip for a profit. The luxury condo market has seen a sharp slowdown; just last week, Apollo Commercial Real Estate Finance wrote off a piece of the debt it has on the luxury supertall at 111 West 57th St. due to slow sales at the building, chalking up an $82M loss. Cracks are also showing in the rent-stabilized market. Flagstar, a subsidiary of New York Community Bank — the largest lender to rent-stabilized landlords in the city — filed to foreclose on eight rent-stabilized properties, The Real Deal reported last week. ‘On the rent control side, nobody wants that product anymore,’ Clancy said. ‘You’re seeing people saying, ‘We’re kind of giving these properties away.'”

“BMO economist Robert Kavcic describes why it makes no sense to buy an income property in the current environment. ‘Investors are almost completely absent from the Canadian housing market, especially in Toronto (maybe not so in Calgary). No surprise there, because the economics just don’t make any sense right now. Consider that a new income property investor would be deeply cash-flow negative with 20% down at current prices and mortgage rates. While this was the case to a lesser extent before the tightening cycle as well, it was mitigated by the fact that ultra-low rates allowed a building of equity below the surface. Now, investors are largely cash-flow negative even on the interest portion of their payments. Unless, prices are rising at a brisk pace, which they are not (let alone falling), the case for investment doesn’t exist at this time. And there’s another thing: Investors can pick up better yield in dividend stocks/gov’t bonds, with better tax treatment/no risk, instant liquidity, and no trouble with the Landlord and Tenant Board.'”

“Alarm bells are ringing in the new build sales sector after figures have been released by a major house builder. Mortgage industry figures and housing market commentators say the Bellway figures, on top of the end of Help To Buy, have badly damaged new build sales. Simon Jones, chief of investing comparison platform Investing Reviews, says: ‘Private reservation rates being down so sharply says all you need to know about the state of demand for property right now: it’s on its knees. The end of Help to Buy has been a hammer blow.’ Graham Cox of the Self Employed Mortgage Hub adds: ‘Rising build costs and the increased use of buyer incentives have reduced Bellway’s margins, adding to their woes. The problem is, for many first-time buyers, new builds are completely unaffordable, and the gravy train for house builders has now come to a shuddering halt.'”

“Former Qantas boss Geoff Dixon has taken a small loss following his recent apartment offering on the Darling Point peninsula. The merry-go-round ended with a $205,000 loss in his $5.8m sale on Eastbourne Rd. It had been offered with a guide of between $6m and $6.5m after Dixon and his wife Dawn paid $6,005,000 in April 2021, just 15 days into its marketing. The three-bedroom, two-bathroom apartment has been sold to former Australian trade commissioners Roger and Julie Bayliss.”

“Property resale gains have dropped to the lowest level since 2015, reflecting an overall downturn in the housing market. The latest CoreLogic NZ Pain & Gain report indicates the proportion of properties being resold for more than the original purchase price – a gross profit or ‘gain’ – fell to 93 percent in the second quarter of the year from 94 percent in the first three months of this year. CoreLogic NZ chief property economist Kelvin Davidson said the drop was widespread across owner classifications, property types and geography. ‘What this report shows is the frequency of those gains has declined further, or in other words there’s been a rise in the proportion of resellers seeing ‘pain’ – especially if they’ve only owned the property for a short period of time,’ he said. ‘Anybody who bought a year or two ago and has sold more recently has seen market conditions change significantly.'”

“Davidson said the greatest pain had been felt in Auckland, where 11 percent of property resales were below the original purchase price, followed by Hamilton, Dunedin and Christchurch. The median resale loss in the second quarter of this year was $95,000 for Auckland, $82,500 for Wellington and about $50,000 apiece for Hamilton, Christchurch, and Dunedin. Davidson said apartment pain was also on the rise.”

“He anticipated continued increases in the number of properties sold at a nominal loss until the market hits bottom. ‘A further increase in the share of property resales being made for a loss seems likely in the next few quarters, even as property values themselves stop falling,’ Davidson said.”

“Country Garden Holdings Co., formerly China’s largest developer by sales, has become a Hong Kong penny stock amid increasing scrutiny of its operations and mounting liquidity concerns. The stock tumbled as much as 14% Friday before paring loss to finish the session at HK$0.98, the lowest ever. It has plunged about 70% from a January peak, the worst performer on the Hang Seng Index in that span. That’s shrunk its market value to just $3.5 billion from an all-time high of around $50 billion in 2018.”

“Country Garden’s fall from grace underscores how a persistent slump in property prices is weighing on some of China’s strongest private builders. Once considered relatively immune to the credit crunch, the Foshan-based developer has become a proxy for financial contagion in an industry that accounts for about a quarter of the country’s gross domestic product. Worries about a debt crisis have increased after Country Garden’s dollar bondholders said they’ve yet to receive coupon payments effectively due Monday. That puts the firm on course for its first public default if it doesn’t make the payments within a 30-day grace period.”

“The profit warning is likely ‘the prelude to an ultimate credit event,’ and the company ‘might already be in preparation for debt restructuring,” JPMorgan Chase & Co. analysts including Karl Chan wrote in a note. ‘Up until now, we still see no signs of further government support or bail-out.'”

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This Post Has 112 Comments

  1. Had a big storm come in last night, lost my internet. Had to fall on the back up and it went down. Finally made it through.

    2. If you could harness the energy generated by the revolving door between the CDC & Big Pharma, you would have the ultimate fail-safe power source.

  2. ‘Now, investors are largely cash-flow negative even on the interest portion of their payments’

    Oh dear…

  3. Speaking of Chinese real estate debt restructuring…how did restacking the deck chairs work out for the passengers on the Titanic?

    1. Financial Times
      Chinese economy
      China sends finance experts to tackle regions’ debts
      Beijing raises pressure on provinces to deal with bloated balance sheets as economy stumbles
      President Xi Jinping, right, and Premier Li Qiang at China’s rubber-stamp congress in March. The working groups will report to Li on efforts to curb regional debt
      Cheng Leng and Qianer Liu in Hong Kong and Sun Yu in Beijing yesterday

      Beijing is making one of its biggest top-down efforts in years to tackle the debts racked up by local governments in a sign of authorities’ mounting concern over the risk to financial stability as the Chinese economy falters.

      China’s State Council, the country’s cabinet, is sending teams of officials to more than 10 of the financially weakest provinces to scrutinise their books — including the liabilities of opaque off-balance sheet entities — and find ways to cut their debts.
      …
      “Debt swap programmes won’t resolve the root problem as highly leveraged local governments may still have trouble paying off their debt going forward,” the person close to the finance ministry said. “Much slower future economic growth will undermine fiscal revenue, which is a major source of debt repayment.”

      “It’s a typical chicken and egg issue,” said Ivan Chung, managing director of Moody’s Investors Services. “Without growth, how can you generate more resources to repay the debt?”

      The state council, the People’s Bank of China, the Ministry of Finance and the China Securities Regulatory Commission did not reply to requests for comment.

    2. Financial Times
      Country Garden Holdings Co Ltd
      Country Garden crisis brings new pain to China’s property sector
      Turmoil at country’s largest private developer comes as Beijing struggles to revive economy
      Country Garden is confronting what it calls ‘the biggest difficulties’ in its history
      Thomas Hale in Shanghai and Andy Lin in Hong Kong yesterday

      When the state-backed Postal Savings Bank of China unveiled a Rmb50bn ($7bn) credit line to Country Garden in November, it appeared China’s biggest private homebuilder would survive a sector-wide liquidity crisis.

      Nine months later, it is dangerously short of cash. The company expects to have lost Rmb45bn-Rmb55bn in the first half of the year and is confronting what it calls “the biggest difficulties” in its history.

      Country Garden this week confirmed it had missed payments of $22.5mn on two of its international bonds, sending shockwaves through the country’s struggling real estate industry. Its share price fell to a record low on Friday, hitting the fortune of chair Yang Huiyan, formerly Asia’s richest woman.
      …

      1. “The stock tumbled as much as 14% Friday before paring loss to finish the session at HK$0.98, the lowest ever. It has plunged about 70% from a January peak, the worst performer on the Hang Seng Index in that span. That’s shrunk its market value to just $3.5 billion from an all-time high of around $50 billion in 2018.”

        If my early morning mental math is correct, the last statement translates into a market value loss of 93% in nominal dollar terms since 2018, which by the way was a period of high inflation.

        That’s a lot of CR8R. In fact, it’s more of a black hole than a CR8R.

        https://en.m.wikipedia.org/wiki/Black_hole

      2. Financial Times
        Opinion Lex
        Country Garden: $7.6bn loss at ‘safe haven’ reflects spreading contagion
        Investors should stay out of Chinese property stocks and bonds
        A person walks past a construction site of residential buildings by Chinese developer Country Garden, in Beijing, China
        A Beijing construction site of residential buildings by Chinese developer Country Garden. The strain on the company is occurring despite frantic official efforts to stem contagion
        2 hours ago

        When China’s largest developer says it is struggling to see “dawn light”, it is not just the Chinese who should feel worried. Country Garden, the country’s biggest developer by 2022 sales, warned on Friday that its first-half loss could reach $7.6bn. Earlier this week it confirmed it had missed interest payments on two bonds.

        For two decades, China’s highly-leveraged property sector has defied predictions of an implosion. The problems of Country Garden, previously seen as among the safest large developers, show that implosion is gathering pace.

        The shares hit a historic low on Friday at HK$0.98, down 64 per cent this year. One of Country Garden’s dollar bonds, due in January, has fallen below 9 cents on the dollar this week, according to Bloomberg data. Moody’s has downgraded the business to Caa1, deep into junk territory.
        …

    3. Financial Times
      3 hours ago
      China’s bank lending plummets in further sign of economic woe
      Ryan McMorrow in Beijing, Cheng Leng and Andy Lin in Hong Kong

      New lending by Chinese banks fell sharply in July to levels not seen since November 2009, underscoring faltering growth in the world’s second-largest economy.

      Banks extended just Rmb345.9bn ($47.8bn) of new loans in July, down from Rmb3tr handed out in June. Analysts polled by Reuters had expected Rmb800bn. The data adds to a series of bleak economic readings.

      Household borrowings contracted by Rmb200.7bn during the month, pointing to further declines in outstanding mortgages. Property owners have rushed to pay off their mortgages early, instead of spending on shopping or other consumption.

      Other data this month showed China’s economy had fallen into deflation and exports were contracting sharply.

      1. “Banks extended just Rmb345.9bn ($47.8bn) of new loans in July, down from Rmb3tr handed out in June.”

        I’m trying to understand the math behind that opaque notation.

        New bank loans in June = Rmb3tr =
        Rmb3000bn

        New bank loans in July = Rmb345.9bn

        One month percentage contraction in new Chinese bank lending =
        1 – 345.9 / 3000 = 88.5%.

        Is that alot, over one month?

        1. “88.5%”

          To put a point on it, has any large country’s entire banking sustem reduced lending by a comparable amount over one month’s time in the entire history of modern banking?

          It seems like the ripple effects may not be contained to China…just like the coof wasn’t contained.

    4. Financial Times
      Markets Briefing Markets
      European and Asian stocks slip as China slowdown fears grow
      Wall Street expected to open flat after overnight rally fades
      A montage of a globe and a falling chart
      Markets declined as investors continued to digest data earlier in the week that showed China’s exports fell by the most since the beginning of the Covid-19 pandemic
      Daria Mosolova in London 59 minutes ago

      European and Asian stocks fell on Friday as traders closed out a week marred by geopolitical tensions between China and the US, and softer economic data that dented valuations in Asia’s largest economy.

      The region-wide Stoxx Europe 600 fell 0.8 per cent, extending early-morning losses as consumer goods stocks led declines. France’s Cac 40 lost 0.8 per cent and Germany’s Dax declined 0.5 per cent.

      Asian markets were also lower as investors continued to digest data earlier in the week that showed China’s exports fell by the most since the beginning of the Covid-19 pandemic, amplifying concerns about the country’s economic growth.
      …

          1. A brand new $115K vehicle which you are forced to ditch on a road trip.

            Cue the Critical Drinker’s maniacal laugh.

    3. But Bala was quickly hit with the reality of owning and operating an EV soon after the purchase. The vehicle compelled him to install two charges – one at work and one at home – for $10,000. To accommodate the charger, he had to upgrade his home’s electric panel for $6,000.

      In all, Bala spent more than $130,000 – plus tax.

      1. But he was saving the planet. I mean, if you overlook the damage to Gaia from all those open-pit lithium mines.

        1. Not to mention that it takes more coal & oil to build and operate an EV than it does to build and operate a gas guzzler.

          1. EV’s are a status symbol and virtue signal. Personally, If I had one I’d be worried that it would spontaneously catch fire in the garage and burn down the house.

      2. EV’s are toys for rich people. I suppose I could spend $35K on a Nissan Leaf for driving around town on errands, but my paid for ICE car does that just fine.

    4. Imagine you are on a road trip and your EV breaks down in the middle of nowhere. It will likely need to be towed hundreds of miles to a shop that might be able to fix it.

    5. Bala told FOX Business he believes the government needs to do more to “provide consumers with the right information.”

      A typical sheep who wants gub’mint to spoon-feed him information on the “correct” (Narrative-compliant) choices. F*ck him. A minimal due diligence would’ve told him EVs aren’t ready for prime time.

    1. LIVE UPDATES
      Updated Fri, Aug 11 2023 9:02 AM EDT

      S&P 500 futures slide after wholesale inflation report is higher than expected: Live updates
      Alex Harring
      Hakyung Kim
      Traders on the floor of the New York Stock Exchange.
      Getty Images

      S&P 500 futures retreated Friday morning after the latest inflation report due this week came in hotter than anticipated.

      Futures tied to the broad index slipped 0.4%, while Nasdaq 100 futures dropped 0.7%. Dow Jones Industrial Average futures shed 93 points, or 0.3%.

      July’s producer price index rose 0.3% from the previous month. Economists polled by Dow Jones expected the report, which gauges the prices wholesalers pay for raw goods, to increase 0.2% month over month.
      …
      https://www.cnbc.com/2023/08/10/stock-market-today-live-updates.html

    2. The Daily Hodl
      JPMorgan Owes $3,000,000,000 To US Government After Banking Crisis Drains Emergency Fund: Report
      Alex Richardson
      August 10, 2023

      America’s biggest banks are preparing to pay billions of dollars to the Federal Deposit Insurance Corporation to replenish an insurance fund that’s propping up the system.

      JPMorgan, Wells Fargo, Bank of America, Goldman Sachs, Morgan Stanley, PNC Financial Services Group and Citigroup will collectively pay $8.2 billion to restore the emergency fund, reports Reuters.
      …
      https://dailyhodl.com/2023/08/10/jpmorgan-owes-3000000000-to-us-government-after-banking-crisis-drains-emergency-fund-report/

    3. Financial Times
      Markets Briefing Markets
      US stocks fall after economic data points to lingering inflation
      Asian and European stocks lower on China economic growth fears
      A montage of a globe and a falling chart
      Markets declined as investors continued to digest data earlier in the week that showed China’s exports fell by the most since the beginning of the Covid-19 pandemic
      Daria Mosolova in London 4 hours ago

      Global stocks fell on Friday, as fresh data on US producer price inflation came in above market expectations, heightening investors’ concerns that the world’s largest economy could keep rates higher for longer.

      Wall Street’s benchmark S&P 500 lost 0.5 per cent, while the tech-focused Nasdaq Composite gave up 0.7 per cent at the New York opening bell.

      The moves came after fresh data in the US showed that annual producer inflation accelerated to 0.8 per cent in July, from 0.2 per cent in the previous month. The reading was marginally above the 0.7 per cent forecast of economists polled by Reuters.
      …

    4. Financial Times
      Markets Briefing Markets
      US stocks dip and bond yields rise after stronger-than-forecast inflation data
      Oil prices rally for sixth straight week as global demand rises and supply cuts persist
      A montage of a globe and a falling chart
      Data this week showed overall price pressures in the US have eased over the past year following an aggressive central bank tightening campaign
      US stocks dip and bond yields rise after stronger-than-forecast inflation data on whatsapp
      Kate Duguid and Harriet Clarfelt in New York, Myles McCormick in Houston and Daria Mosolova in London 7 hours ago

      US stocks slipped on Friday after producer price inflation data came in above market expectations, heightening investors’ concerns that the world’s largest economy could keep rates higher for longer.

      Wall Street’s benchmark S&P 500 closed 0.1 per cent lower while the tech-focused Nasdaq Composite fell 0.7 per cent.

      Friday marked the second consecutive week of losses for both indices. It was the first time the Nasdaq has had back-to-back weekly declines since December, and the first time for the S&P 500 since May. The biggest weekly drop in 11 months for chipmaker Nvidia, which is one of the top-weighted stocks in the S&P 500 and Nasdaq, did little to help the indices’ fortunes. Nvidia shares fell 9.5 per cent over the five trading days.

      The broader market’s moves came after data in the US showed that annual producer inflation accelerated to 0.8 per cent in July from 0.2 per cent in the previous month. The reading was marginally above the 0.7 per cent forecast of economists polled by Reuters.

      The dollar gained 0.3 per cent against a basket of six peer currencies following the data release, hitting its highest level in more than a month.

      “The increase in wholesale prices serves as a reminder that the data-dependent Fed isn’t ready to declare victory on its campaign to quell inflation,” said Quincy Krosby, chief global strategist for LPL Financial, a US broker-dealer.
      …

  6. “Investors can pick up better yield in dividend stocks/gov’t bonds, with better tax treatment/no risk, instant liquidity, and no trouble with the Landlord and Tenant Board.’”

    What idiot with cash would want to invest in real estate right now?

    1. “Keep your mind engaged through work, social and entertainment activities.”

      Hear hear!

  8. One of the nine 2023 VW Golf R hot hatches I’ve been watching has sold. It was a new one, at Puyallup VW south of Seattle. They were asking nearly $10k over MSRP too!

    1. A dealer in Denver (Emich) has three of them.

      Cars dealers in general seem unconcerned about swelling inventory as they continue to charge MSRP or even higher. Either they are crazy or they know something they aren’t sharing.

        1. Are they expecting another supply chain production stop? Rebates are also few and tiny. It seems that not even the automakers are concerned.

          Meanwhile, the local Ford dealer is storing excess inventory off site at its former location (they moved to a Taj Mahal about 5-6 years ago).

          1. Cutting prices would lead to a domino effect that their banker might not like. The dealer’s floor plan LOC will tighten up or get pulled

  9. The shack of the day award:
    225K for a 60 year old block house in a flood zone. Hurricane Ivan pulverized that area in 2004 with a massive storm surge. Hurricane Sally brought another storm surge in 2020. After hurricane Ivan, there were large commercial boats way out in the woods and lodged up in trees. This house had 8 feet or more of flood water, muck, and storm debris. Nichols Seafood, a popular local seafood restaurant and marina, and located at the end of the street, was completed destroyed from the storm surge.

    https://www.zillow.com/homedetails/3575-Robinson-Point-Rd-Milton-FL-32583/47895304_zpid/

    Price history
    Date Event Price
    8/10/2023 Listed $225,000
    9/10/2019 Sold $15,000
    2/20/2002 Sold $49,400

    1. Note: I actually like older block houses. Although this house needs updates and repairs, I would be interested in making a much lower offer of 70K-80K if it wasn’t in a flood zone.

  10. Marketwatch: The average American homeowner has nearly $200,000 in home equity.

    1. Home equity is not realized unless you sell your house. So, if you borrow against it you have to pay it back with interest.
    2. There is no law that declares you are obligated to borrow against your home equity.
    3. Your home equity is fake and is about to deflate like a leaking balloon.

    https://www.marketwatch.com/story/the-average-american-homeowner-has-nearly-200-000-in-home-equity-thanks-to-rising-house-prices-90e03a51?mod=personal-finance

    1. “Marketwatch: The average American homeowner has nearly $200,000 in home equity.”

      Fixed it!

      1. “Marketwatch: The average American homeowner has nearly $200,000 in ‘rapidly vanishing’ home equity.”

        Trying again.

        It may be high time for me to learn some HTML.

        1. Yep – “rapidly vanishing” are the key words. Unfortunately, many debt donkeys will think they have an ATM in their living room and go buy another boat, luxury car, RV, swimming pool, or vacation.

  11. Am I alone in thinking that sites like MarketWatch are a huge part of the problem? Just a scan of their article titles reveals that it’s just pure deception.

    2. Right. The article seems to imply “hey you have all this extra cash just doing nothing, so go spend it – you deserve it”.

  12. From today’s Dumver Post:

    Metro Denver’s inflation rate is coming down, but not as quickly as it is in other major cities or in the country as a whole, with stubborn housing and energy costs

    With stubborn housing and energy costs? I thought those were supposed to be a feature, not a bug.

    1. Cheapest gas near me is $3.49. Most expensive recent meal out was $12.28 for a medium combo at Culver’s. Haven’t been to a bar since late last year.

      Other than buying some new tools I spend almost nothing besides grocery store food and housing.

      1. I paid $5 for marine gas but I only used 3 gal this past week.

        I haven’t gone to a restaurant in recent memory nor gone to a bar. I’ve got some friends on the beach but we all bring a cooler of beer.

        I’ve been done spending anything significant for housing for a decade.

  13. Via ZH: How Did Vivek Ramaswamy Get Rich?

    In a nutshell:
    1. Ramaswamy’s parent company (Roivant) spent $5 million (a tiny amount, by biotech standards) buying the rights to a drug candidate for Alzheimer’s disease from GSK, plc (the former GlaxoSmithKline) that had failed four out of four clinical trials, and formed a subsidiary company around it called Axovant.
    2. Ramaswamy’s mother (a physician) took one of the failed clinical trials and reinterpreted it, by eliminating patients who didn’t stay with the trial (because of side effects, the drug not working, or whatever), claiming there was some statistical benefit to the drug.
    3. Ramaswamy brought Axovant public, raising $362 million in its IPO, for a drug Paffrath claims Ramaswamy knew would fail its stage three clinical trial.
    4. The drug failed, and Axovant (now called Sio Gene Therapies) is down 99.75% from its IPO.

    1. Ramaswamy is good at sound bites, but he has some skeletons in his closet. I don’t think he has any real chance of winning the nomination, but he could be jockeying for a possible cabinet post.

          1. I left it on Peter Navarro’s Substack to pass on to “The Boss” as he calls DJT and through another channel that could get to him.

      1. Responded

        It was an ad hominem attack by a surrogate rather than addressing the substance.

  14. A reader sent these in:

    The average monthly payment for a new car in the US hit a record $736 last month. The increase over the last 3 years: 28%.

    https://twitter.com/charliebilello/status/1688670663253336064

    The cost of both buying and renting a house in America has skyrocketed since 2020. Buying a house now costs $2,700/month on average, up an alarming ~86% in 3 years. Renting a house now costs $1,850/month on average, also up ~25% in 3 years.

    https://twitter.com/KobeissiLetter/status/1689458293691867136

    ‘The SLOOS boasts a perfect record—tightening of credit standards has only been this broad ahead of (or during) recessions. The tightening, along with the negative trend in demand, is not only broad across banks, but across loan types.’

    https://twitter.com/jessefelder/status/1688957452652359683

    “Worse than 2008” comes to mind.

    https://twitter.com/FinanceLancelot/status/1689331207484416000

    Bloomberg this morning: “China is in deflation but there’s no evidence it’s affecting the U.S. as GDP & employment numbers are so strong”

    https://twitter.com/FinanceLancelot/status/1689255723337670656

    Let’s see what St. John Maynard Keynes said about inflation (i.e., a higher cost of living):

    https://twitter.com/RudyHavenstein/status/1340002623416455173

    The Fed has purchased $45+ Billion US treasuries in the past 3 days alone. Fed apologists insist it’s not QE because real QT runoff or God forbid sales would actually reduce your cost of living after 2.5 years of rampant inflation. Still not enough for stonks or fiscal insanity!

    https://twitter.com/OccupytheFeds/status/1689324483427934221

    SEC Form 4: $CBRE Coldwell Banker Board Chair Brandon B Boze sold nearly half of his ownership for $274,720,000

    https://twitter.com/DonMiami3/status/1689466830283255808

    Reality is all that previous excessive money printing has goosed up prices far above the long term core trend.
    And only a hard landing would even have a shot at bringing it back to trend, otherwise the future is clear: Permanent higher prices and cost of living with wages not having kept up.
    And the poor and middle class will end up paying for the Fed’s original policy error for many years to come while the top 1% again gets all the asset gain benefits.
    But nobody talks about this for the Fed never faces consequences for its mistakes. You are.
    Instead they would get celebrated for a soft landing and Powell would get his ‘Hero’ glossy magazine cover as Bernanke did.
    But yea, a hard landing would also again hurt the poor and middle class the most.
    That’s the system we have & that’s why the middle class keeps shrinking decade after decade.
    I don’t have the answer, I can just observe reality.

    https://twitter.com/NorthmanTrader/status/1689624685552504832

    Cheap cars are officially extinct. Only 1 model in the US transacted below $20,000 in July: The Mitsubishi Mirage. Hyundai Venue, Kia Rio, Nissan Versa and Toyota Corolla, all transacted well over $20,000. What a time to be alive.

    https://twitter.com/GuyDealership/status/1689709237998346240

    “It was made to sound like you would be booked all the time, and you could make 5, 10 grand a month,” she says. But the most she’s ever gotten has been $3,500 a month and sometimes as little as $1,000.”
    But, they are going to hold out a little longer ⏰

    https://twitter.com/m3_melody/status/1689617282845286400

    “We’re hearing from Fannie Mae, we’re hearing from others that US households are taking out home equity lines of credit at a greater pace. My goodness, that’s a 9% borrowing rate.”

    https://twitter.com/DiMartinoBooth/status/1689630172297736192

    1. The average monthly payment for a new car in the US hit a record $736 last month.

      Think of all the luxuries you can indulge in if you don’t have a car payment.

      1. Meanwhile …

        US inflation has had a snowballing effect on family budgets.

        The typical American household spent $709 more in July than they did two years ago to buy the same goods and services, according to Moody’s Analytics.

        So the new car payment is $700 but families have $700 less to spend.

        And I know, as some post here, everyone is buying a new car, especially luxury brands. But just because someone buys a new car, doesn’t mean they can afford it. Those huge car loan delinquency rates will bear witness to that.

      2. Until you need a car because some uninsured unlicensed illegal t bones your car and it’s a total loss. Then you’re shopping around for a 2018 Nissan versa fir $16,999 with 40,000 miles on it. It’s an awful time to buy a car.

        1. I was just looking around here in the L.A. area and you can get a Toyota RAV4 or Honda Civic for $27-30k. And they have cars available on the lots. There are even a lot of Mazda Miatas out there. I was thinking of picking up a new car so I have a spare.

    3. Cheap cars are officially extinct. Only 1 model in the US transacted below $20,000 in July

      This could be a golden opportunity for the ChiCom brands. You can get Chinese cars in Mexico, they are somewhat cheaper (10-15% less) than the global brands.

      1. I will note that base models sold in Mexico are more spartan than the base models sold in the US.

  15. Will crypto be granted instant too-big-to-fail status, once the SEC caves in to Wall Street demands to authorize ETFs?

    1. Financial Times
      Sam Bankman-Fried jailed after US judge revokes bail
      FTX founder accused by prosecutors of witness tampering while awaiting trial
      Sam Bankman-Fried arrives at federal court in Manhattan on Friday for the hearing
      Mark Vandevelde in New York an hour ago

      Sam Bankman-Fried has been taken into custody after a federal judge found that the FTX founder probably attempted to tamper with witnesses on two occasions while awaiting trial on fraud charges stemming from the collapse of the cryptocurrency exchange.

      Prosecutors had asked Judge Lewis Kaplan to revoke Bankman-Fried’s bail after The New York Times published extracts from the private diaries of Caroline Ellison, a former Bankman-Fried lieutenant who has pleaded guilty to criminal charges and is co-operating with prosecutors.

      Bankman-Fried was subsequently identified by prosecutors as the source of the material. The diary materials were “something that someone who is in a relationship would be unlikely to share with anybody, still less The New York Times, except . . . to frighten” its author, Kaplan said.
      …

  16. BUSINESS
    ‘Huge scam’ in rural Kansas town fells fourth U.S. bank in 2023
    BY: SAM BAILEY – AUGUST 11, 2023 10:10 AM
    – David Herndon, the Kansas bank commissioner, appears Wednesday before the House Financial Institutions and Rural Development Committee
    – Kansas bank commissioner David Herndon, seen here before a legislative committee in January 2022, says Heartland Tri-State Bank closed because of a “huge scam,” and while he doesn’t know details, no other banks were effected.
    (Sherman Smith/Kansas Reflector)

    TOPEKA — Heartland Tri-State Bank of Elkhart on July 28 became the fourth U.S. bank to fail in 2023 and the second Kansas bank to fail in three years.

    David Herndon, Kansas banking commissioner, closed the southwest Kansas bank after it became insolvent because it was “apparently the victim of a huge scam,” he said. Herndon said he doesn’t know what the scam was, but he said other banks in the state were not affected.

    “Kansas banks are strong and healthy,” he said. “They are well-capitalized, have strong reserves, are profitable and maintain record levels of loan reserves.”
    …

    1. +1

      My greatest hope for this conflict is that the Russians take Zelensky and his skank wife alive.

      They can do what they want with them, because it’s “not my concern.”

  18. “There was a point where selling real estate in San Francisco was almost like being in one of those quiz game booths where cash is swirling around, and you just have to grab it,’ said Cynthia Cummins, Principle Realtor at Kindred SF Homes.”

    One has to know that they’re chumming for the suckers with these flashy tactics. So when is SF Mayor London Breed going to admit her policy failures have ruined real estate values, both commercial and residential, and step down?

  19. Tucker Carlson’s interview with Former Capital Police Chief Steven Sund is wild. Check it out!

  20. Disgraced FTX founder Sam Bankman-Fried has had his $250 million bail revoked after he leaked ex-girlfriend Caroline Ellison’s love letters to the New York Times.

    US District Court Judge Lewis Kaplan said in court on Friday that there is ‘probable cause to believe that the defendant has attempted to tamper with witnesses at least twice’.

    https://www.dailymail.co.uk/news/article-12397893/Disgraced-FTX-founder-Sam-Bankman-Fried-set-jailed-ahead-trial-prosecutors-asked-judge-revoke-250-million-bail-trying-harass-witness.html

  21. FWIW: Today’s appointment of Weiss as Special Counsel means the DOJ can dismiss the Delaware case where the judge is questioning Hunter’s sweetheart deal so Weiss can bring the case in DC or CA before a more favorable judge.

    1. “David Weiss can’t be trusted and this is just a new way to whitewash the Biden family’s corruption,” Jordan spokesman Russell Dye said in a statement. “Weiss has already signed off on a sweetheart plea deal that was so awful and unfair that a federal judge rejected it.”

      Poverty, graft and corruption foisted upon you by democrats.

  23. ‘The buyers have really had a tough the past few years, and frankly, they’re not going to take it anymore’

    That’s the spirit Mindy!

  24. ‘They typically start with a small reduction,’ Sheehan said, ‘but as the week gets closer, it’s better to get something than nothing’

    What’s yer cap rates looking like Maryellen?

    ‘She agrees that some owners overpriced their Shore homes, especially recent buyers saddled with big mortgages’

    via GIPHY

  27. ‘They say they never changed their standards, just their budget. ‘We had to swallow the fact that we’re going to be paying more than we wanted to every month, but it meant we’d actually be able to afford a house and get a house’

  28. Tens of Trillions in Assets Vanished: The End of China’s Real Estate Economy Is Here!
    China Observer
    Premiered 4 hours ago
    As shown in these financial statements, as of December 31st, 2022, Evergrande’s total debt exceeded 2.4 trillion yuan, which is around 340 billion USD. This suggests that during the past two years, throughout its asset restructuring period, Evergrande set a record for the highest loss ever incurred by a Chinese enterprise, far exceeding the total losses of all other real estate companies during the same period. And Evergrande’s massive debt is just the tip of the iceberg for China’s real estate industry.

    https://www.youtube.com/watch?v=n3GxbNlt75Y

    16:41. Mortgage slaves segment starts 3:47 to 6:12. Lots of little feet stamping throughout, return my money etc.

    1. I can’t help thinking of the resemblance of China’s real estate situation to the final days of FTX…

      1. The U.S. might have to loan China money so they can attack Taiwan so we can sell them our weapon systems so we can buy their semiconductors. 🙂

  29. Mozart Concerto no. 23 in A major k. 488 / Elisey Mysin / Makhachkala
    Elisey Mysin
    Premiered Oct 29, 2021

    Symphony Orchestra of the Dagestan State Opera and Ballet Theater
    Conductor: Valery Khlebnikov, People’s Artist of Russia, People’s Artist of the Republic of Dagestan and the Chechen Republic Valery Khlebnikov
    Soloist: Elisey Mysin
    🎹 Pupil of the Central Music School at the Moscow State Tchaikovsky Conservatory
    🎹 Teacher: Honored Artist of Russia, Professor of the Moscow State Conservatory. P.I. Tchaikovsky N.V. Trull.
    Teacher of the Central Music School at the Moscow State Conservatory. P.I. Tchaikovsky Tsvetkov D.S.

    00:00 Introduction
    00:37 Mozart Concerto no.23 in A major k.488 1part
    11:44 Mozart Concerto no.23 in A major k.488 2part
    18:30 Mozart Concerto no.23 in A major k.488 3part

    https://www.youtube.com/watch?v=KeTNrIgU2k8

    28 minutes.

  30. ABC Newsman Pretends Democrats Never Denied Elections
    The Jimmy Dore Show
    Aug 11, 2023
    If there’s one thing that Democrats really can’t stand about Donald Trump (OK, there’s lots of things), it’s that he just won’t shut up about how the 2020 election was stolen from him. Democrats would never do such a thing, would they? Well, except for all the countless Democrats who wouldn’t shut up about how the 2016 election was stolen from Hillary Clinton.

    Jimmy and Americans’ Comedian Kurt Metzger review some of the ridiculous claims of election meddling Democrats floated about 2016.

    https://www.youtube.com/watch?v=K5iP9kzcjJ4

    8:10.

  31. “Complete and total shock.” Neighbors speak about the Provo man killed by the FBI

    by: Megan Pickett
    Posted: Aug 9, 2023 / 10:30 PM MDT

    PROVO, Utah (ABC4) — On Wednesday morning, Provo resident Craig Robertson was shot and killed by the FBI after allegedly threatening to kill President Biden. ABC4 spoke with his neighbors to get a closer look at how neighbors and friends perceived him.

    Robertson was described by neighbors as an older church-going man. He was reportedly in his late 70s, and barely mobile. According to neighbors, Robertson used a hand-carved walking stick just to get out of a chair and move around.

    Another neighbor, Travis Lee Clark, said Robertson was the financial clerk in their ward for the Church of Jesus Christ of Latter-day Saints for nearly a decade. Clark said at the time he was the executive secretary so he knew him pretty well.

    “It’s absolutely unbelievable, it’s a complete and total shock. I can’t believe it happened.”

    “He was not anyone that anybody would ever look at or regard as a threat in any way,” Clark said.

    “He was very political, very pro-second amendment, he loved his guns and he loved woodworking as a hobby, but I never saw anything that indicated that he might be violent,” Clark said. “He could be kind of [a] curmudgeonly old guy […] but [a] very lovable big teddy bear of a guy.”

    Clark said he believes Robertson may have just let himself get carried away on social media.

    “I can’t imagine that he could either physically or mentally act on any of that at all. So I think it’s just a tragedy like this, an abject tragedy that got out of hand,” Clark said.

    Around 6:15 a.m., FBI agents attempted to serve an arrest and search warrant at his Provo residence when the raid led to the shooting and killing of Robertson.

    https://www.abc4.com/news/central-utah/neighbors-speak-about-the-provo-man-killed-by-the-fbi/

    1. They didn’t want to wait to take him down on the way to the grocery store; they wanted to make an example of him, Waco style.

  33. Forbes
    Money
    Investing
    Another Rare Macroeconomic Bird Sighted? The Dreaded Bear Steepener
    Bob Haber
    Contributor
    I identify the pure investment merit of assets with a macro lens.
    Aug 11, 2023,10:39am EDT
    Getty Images
    (Photo by Eva + Helmut Pum/McPhoto

    In my last missive (The Stock Market Loves Bidenomics (So Far) (forbes.com)), we pointed out a rare policy called “fiscal dominance”. Now we may have spotted another rare bird. Let’s start with a yield curve primer: The yield curve maps out interest rates (we care in this case about US Government) all the way from 3 months to 30 years. Usually, as in 90% of the time, shorter rates are lower than longer interest rates (by about 1% or more). Bond gurus call this a steep yield curve. Makes sense because a bond holder should be compensated to hold for a longer term. Occasionally, like now and since 2022, short interest rates are higher than long ones; this we call an inverted curve. Simplistically, there are two ways a yield curve can steepen: short-term interest rates go down faster than long-term rates or long-term rates go up faster than short-term rates. The latter journey is the “bear steepener”.
    …
    https://www.forbes.com/sites/bobhaber/2023/08/11/another-rare-macroeconomic-bird-sighted-the-dreaded-bear-steepener/?sh=1834ffcc2a1f

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