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No One Wants To Be The Fool Catching Falling Knives

It’s Friday desk clearing time for this blogger. “When Neil Harris moved his family to Miami from Tennessee in 2020 during Covid, he signed a $29,500-a-month lease for a beachfront apartment that he said was ‘well worth it.’ In April, Harris rented a six-bedroom house in Miami’s Keystone Islands. While it was originally listed for $40,000 a month last year, he got the waterfront home with a dock for $27,500. ‘I’m saving $20,000 a month and I’ve got everything I want,’ he said. ‘Two years ago, people needed a roof over their head—you’d have 12 offers and everyone was just trying to find a place,’ said Miami real-estate agent Christopher Wands of Douglas Elliman. ‘Those days are kind of over.'”

“Meanwhile, Miami is bracing for a glut of inventory. Currently, there are about 70,300 luxury apartments in Miami with another 30,000 under construction, according to the Florida Apartment Association. By comparison, the total luxury inventory was about 53,440 in 2020. At the Missoni Baia condo tower in Edgewater, new units are listed daily for sale and rent, according to Compass agent Ivan Chorney, who is listing a two-bedroom apartment there. The unit came on the market for $15,000 a month in August and is now asking $14,000, he said. Though the unit has unobstructed views, he’s only gotten lowball offers. ‘My client doesn’t have leverage,’ he said. Chorney said the client recently decided to sell the unit, and plans to list it for $2.8 million.”

“It’s looking as if Austin — and Texas — won’t be getting its first Conrad Hotel, at least not for now. Last year, North American developer Intracorp announced plans to build a 65-story high-rise on a half block just west of the Austin Convention Center. The building, to be at East Second and Trinity streets, was to house the first Conrad hotel in Texas, along with luxury condominiums. Now there’s been a change. CBRE, the global commercial real estate services firm, is marketing the entire half block, or portions of it, for sale. ‘All options are on the table and we recognize the value of being flexible in today’s environment,’ Brad Stein, president of Intracorp Texas, told the Statesman.”

“At the end of a cul-de-sac in Los Angeles’s gated Hidden Hills neighborhood, Sylvester Stallone has sold his sprawling residence to Creedence Clearwater Revival co-founder John Fogerty. The ‘Fortunate Son’ in the deal would certainly appear to be Fogerty, 78, who paid $17.2 million for the mansion — $1 million less than the $18.15 million ‘Rocky’ star, 77, paid for the pad less than 2 years ago, in spring 2022 — and $5.3 million less than his $22.5 million asking price for it.”

“San Francisco apartment buildings now trade at 2014 prices, according to data from a Compass report on the market for buildings with five or more units. What agents are not seeing are the big institutional investors buyers who had bought nearly every building over 12 units in the city that came to the market in at least the last 10 years. They are largely absent from the marketplace as they contend with the impact of the rising cost of the debt on their existing portfolios. Veritas, for example, was once one of the city’s biggest apartment owners and a very active buyer. It has now defaulted on about a third of its San Francisco portfolio. Looking at Compass data through the third quarter of this year, seems like a glimpse back in time. Average gross rent multipliers are at 12, the lowest since 2011, which is also the last time cap rates were higher than today’s 5.7 percent. The average price per unit is $359,000, the lowest since 2014.”

“A new report says Toronto’s condo market could be headed for a slowdown amid high interest rates and a dearth of buyers. Overall, the volume of condo and townhouse sales in the GTA is down 12.8 per cent compared to the first eight months of last year, while the average sale price for condos and townhomes sits at $747,040, down 6.2 per cent from the same period last year. ‘Opportunities exist in the current environment as a growing number of assignments come to market,’ the report said. ‘Many of these buyers purchased condominiums during the pre-construction phase at a time when interest rates were at record lows. As the buildings near completion, many are unable to qualify at new interest rate levels, leaving them no choice but to sell their units.'”

“The UK is facing a ‘double whammy’ as higher-for-longer interest rates begin to bite. Look at a list of companies whose debt is trading at wide discounts to par and you can see just how widespread the suffering has become across the economy. Loans and bonds linked to the likes of the Canary Wharf financial center, travel agency Saga Plc and lender Metro Bank Holdings Plc, which has just announced a capital raise and a haircut for some bondholders, are trading at distressed levels. Private sector landlords are more vulnerable than their listed counterparts because they took on more leverage and, with prices falling, lenders may demand that they sell assets to recoup their loans. ‘Forced private sales could push property prices down further and increase pressure on the higher levered listed companies,’ said Sue Munden, a senior real estate analyst at Bloomberg Intelligence.”

“Hong Kong mortgage loans that exceed the property’s value are likely to reach their highest since 2005 next year if home prices keep falling, according to Bloomberg Intelligence. Rising interest rates are weighing on the city’s home market, with used property values falling 18% from their peak in 2021, according to data from Centaline Property Agency Ltd. Banks may struggle with losses and foreclosures stemming from a higher number of underwater mortgages, according to BI. Hong Kong has seen the number of foreclosed homes rise, with such properties for sale climbing to the most since 2009 in September. Banks have been struggling to offload them despite discounts.”

“China’s outlook is complicated by the rise of financial instruments that help investors manage risks in good times but accelerate downturns in bear markets, as the global financial crisis showed 15 years ago. A recent court decision in Shanghai on a case of asset-backed security fraud warns of potential dangers. Asset-backed securities were introduced in China in 2005 in a pilot scheme, which was suspended at the end of 2008 amid the financial meltdown worldwide. Viewing securitisation as an important source of alternative financing, Beijing resumed the scheme in 2012 after enacting more comprehensive regulation.”

“So why be concerned? In the last global financial crisis, asset-backed securities played an outsized role in quickening the cascade of troubles, in which the values of asset-backed securities collapsed within hours and investment banks imploded. Credit markets were devastated, shutting out even qualified homebuyers, whose frenzied purchases caused real estate prices to soar. The complexities of asset-backed securities made it difficult to assess losses, compounding the collapse of trust in financial markets. When it all crashed, the emperor had no clothes on.”

“In China’s first case of asset-backed security fraud, a Shanghai court recently held that the underlying assets of Meijite Dengdu Management Co and their cash flows had been grossly misstated. The court ordered the five defendants to pay Postal Savings Bank of China the principal sum and interest due on its 967 million yuan investment in Meijite. Whether this is a one-off case remains to be seen. Problems with asset-backed securities also jeopardise savings held with trust companies. When investors lose money, public trust and confidence disappears, slashing demand for securities, which in turn increases borrowing costs. The opaqueness of asset-backed securities can only compound investors’ fears. No one wants to be the fool catching falling knives.”

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This Post Has 98 Comments

  2. ‘All options are on the table and we recognize the value of being flexible in today’s environment’

    We can all see what yer doing here Brad. Yer gonna give it away.

  3. ‘paid $17.2 million for the mansion — $1 million less than the $18.15 million ‘Rocky’ star, 77, paid for the pad less than 2 years ago, in spring 2022’

    It was still cheaper than renting Rambo.

  5. ‘San Francisco apartment buildings now trade at 2014 prices, according to data from a Compass report on the market for buildings with five or more units. What agents are not seeing are the big institutional investors buyers who had bought nearly every building over 12 units in the city that came to the market in at least the last 10 years. They are largely absent from the marketplace as they contend with the impact of the rising cost of the debt on their existing portfolios’

    Wa happened to my dry powder?

    1. Pay attention to the last quoted paragraph.

      The Hill — More than 7 million people have received updated COVID vaccine (10/12/2023):

      “More than 7 million Americans have received the updated COVID-19 vaccine since it was approved one month ago, according to the Department of Health and Human Services (HHS).

      The Food and Drug Administration (FDA) signed off on the Pfizer and Moderna shots Sept. 11, and distribution was allowed to begin after the Centers for Disease Control and Prevention (CDC) recommended them Sept. 12.

      The updated shots were designed to target the XBB.1.5 variant, which was dominant when vaccine makers started formulating and testing a new version

      Like all the other COVID-19 vaccines, the updated version is not designed to prevent infection completely but is meant to reduce the severity of symptoms and curb the risk of “long COVID.”

      https://thehill.com/policy/healthcare/4252651-more-than-7-million-received-updated-covid-vaccine-hhs/

      Like all the other COVID-19 vaccines, the updated version is not designed to prevent infection.

      Like all the other COVID-19 vaccines, the updated version is not designed to prevent infection?

      Like ALL the other COVID-19 vaccines? All of them? Including the ones back in 2021? Including the ones you were threatened to get FIRED FROM YOUR JOB for not getting injected with?

      ALL of them?

        1. From the CDC’s website:

          Seasonal flu vaccines are designed to protect against infection and illness caused by the flu viruses that research indicates will be most common during the upcoming flu season.

        2. According to my Dr., the flu vaccine is expected to be about 30-40% effective against infection this year. Not a great number, I always thought 50% was the minimum threshold for a vaccine.

          1. The problem with the flu shot is that they have to anticipate which strain will hit. If they guess right the protection is good, if they guess wrong then not so much.

          2. Flu vaccine doesn’t work. What does work is vitamin D.

            I used to get the flu vaccine every year. I caught a bad case of the flu every year. I stopped around 2015. I started taking vitamin D, zinc, selenium, and magnesium during flu season. I haven’t caught the flu since.

  7. ‘Many of these buyers purchased condominiums during the pre-construction phase at a time when interest rates were at record lows. As the buildings near completion, many are unable to qualify at new interest rate levels, leaving them no choice but to sell their units’

    ‘Private sector landlords are more vulnerable than their listed counterparts because they took on more leverage and, with prices falling, lenders may demand that they sell assets to recoup their loans. ‘Forced private sales could push property prices down further and increase pressure on the higher levered listed companies’

    No choice? Forced sales? But these were my winnahs!

  9. Bankman-Fried was very concerned about his image, including his big hair, ex-girlfriend Ellison testifies
    Published Wed, Oct 11 2023 1:36 PM EDT
    Updated Wed, Oct 11 2023 5:51 PM EDT
    MacKenzie Sigalos
    Dawn Giel

    Key Points

    – Caroline Ellison continued her testimony in the criminal trial of Sam Bankman-Fried.

    – Ellison testified that Bankman-Fried wanted Alameda Research’s balance sheets to hide the customer money it had borrowed from FTX.

    – She also said she had a Google Doc that had a subcategory labeled “things Sam is freaking out about.” One item was “raising from MBS,” the Saudi crown prince.
    …
    https://www.cnbc.com/2023/10/11/caroline-ellison-said-sbf-considered-raising-from-mbs-to-repay-ftx.html

    2. a Google Doc that had a subcategory labeled “things Sam is freaking out about.”

      Beyond stupid!

      2. And having confidential material in a Google anything! The terms of service say that Google is allowed to peruse anything Theron.

  10. The unit came on the market for $15,000 a month in August and is now asking $14,000, he said. Though the unit has unobstructed views, he’s only gotten lowball offers.

    Those “lowball offers” are as good as it gets, greedheads. Nothing is more expensive than regret.

  11. Federal income taxes?

    Many of you are probably getting paid today. Where is your federal income tax money going? It’s not going to protect the borders of the United States.

    A link to Antiwar:

    https://www.antiwar.com/

    Keep paying those federal income taxes, slaves.

    1. “Secretary of State Antony Blinken declared in Tel Aviv on Thursday that “as long as America exists,” it will support Israel, a pledge that came amid a relentless Israeli bombardment of Gaza.

      “The message that I bring to Israel is this: You may be strong enough on your own to defend yourself – but as long as America exists, you will never, ever have to. We will always be there, by your side,” Blinken said alongside Israeli Prime Minister Benjamin Netanyahu.”

      https://news.antiwar.com/2023/10/12/blinken-as-long-as-america-exists-it-will-support-israel/

      Here’s an idea: let’s make America no longer exist.

      Break it up like Yugoslavia, and the parts of it that become the new Christian Nationalist Homeland will never give another penny to Israel or Ukraine.

      Re-establish gold and silver as currency, ban usury, enact a permanent moratorium on all immigration, that’s where to start.

      1. From what I have observed in the past, Protestant Fundamentalists are some of Israel’s biggest supporters.

          1. It’s more than that. They support Israel because they believe Israel’s rise will herald the second coming.

          2. The relationship is a little one way but they share a common religious past. The entire old Testament is Jewish history and beliefs. Jesus took the Jewish god and added several really complex layers to judism and most importantly said you don’t need to circumcise. Many Christians know more about Judaism from bible study classes than Jews know about Christian’s.

  12. Rising interest rates are weighing on the city’s home market, with used property values falling 18% from their peak in 2021, according to data from Centaline Property Agency Ltd.

    Is that a lot?

  13. Close to our small rural town in upstate SC ,a company out of Atlanta ,has taken up an abandoned Textile mill , and are making a “Chicken processing”, plant out of it….They’ve also taken over a local Trailer park, that has never done good, cleared out all the old trailers , and put in over a hundred ,of what I recognized at once, as FEMA Trailers , that look new , but must have got past their, “use by” dates with the government …I’d bet someone in the know got all these for next to nothing ….Think our Spanish population is fixing to spike way up, and that’s good in a way, to see people working again…..that want to work…..

  15. https://twitter.com/JoeConsorti/status/1712538261682532486
    Joe Consorti ⚡ @JoeConsorti

    Inflation may go down, but prices only go up.

    Don’t let this misnomer fool you.

    Propaganda is all they have left to distract you from their decades-long theft of your livelihood.

    Pass it on.

    [See chart]

    \\

    https://twitter.com/JoeBiden/status/1712522772935516390
    Joe Biden @JoeBiden · 20h
    This morning’s CPI report shows core inflation fell to its lowest level in two years. Overall inflation is down by 60% from its peak at a time when unemployment has remained below 4% for 20 months in a row.

    That’s Bidenomics in action.

    \\

    – FJB, the horse he rode in on, and the puppet masters behind the curtain pulling his strings.
    – Recall that falling inflation is disinflation, but it’s still inflation. Prices are still rising as your purchasing power is declining.
    – No one discusses the total price increases since the scamdemic. Just look at the prices of everything. They must think we’re stupid. For example, a used car that used to cost a few thousand $ is now $15-20k minimim. Still. Not to mention house prices, but that’s as obvious as the nose on your face. Inflation is theft.
    – Disinflation isn’t going to cut it. Need deflation, but then the Fed’s crony’s wouldn’t be stealing you blind if the cost of living and prices actually fell.
    – The transformation from Constitutional Republic to Banana Republic continues apace.
    – Glad I’m still holding my Au and Ag phyical + mining stocks today. Precious metals are highly manipulated “markets,” but they can’t print that.
    – End the Fed. Congress is as useless as tits on a bull.

    “Fiat money eventually always goes back to its intrinsic value – zero.” – Voltaire

    “When you destroy the money, you destroy the glue that holds society together.” – Tony Deden

    “The tendency of an inconvertible paper money is to create fictitious wealth, bubbles, which by their bursting, produce inconvenience.” – Lord Liverpool

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

    “I don’t believe we shall ever have good money again before we take it out the hands of governments.” – Friedrich Hayek

    “Inflation is a monetary phenomenon. It is made by or stopped by the central bank.” – Milton Friedman

    “The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.” – Ludwig von Mises

    “The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.” – Ernest Hemingway

    “In reality, there is no such thing as an inflation of prices, relative to gold. There is such a thing as a depreciated paper currency.” – Lysander Spooner

    1. It’s all a lie. They claimed that health insurance costs dropped by 37% YoY when the reality is it went up 12% YoY. That’s a 50% difference. Health insurance is 1% of the CPI calculation. That means the 3.7% inflation rate is really 4.2%. Still more than double the Fed’s target.

  16. Ikea Plans Worldwide Price Cuts After Warning: “Time To Buckle Up”

    https://www.zerohedge.com/markets/ikea-plans-worldwide-price-cuts-after-warning-time-buckle

    The world’s largest furniture retailer plans to cut the prices of sofas, beds, appliances, and much more across all locations as macroeconomic headwinds crush consumers.

    “We came into 2023 with higher prices than we wanted. We have lowered prices at the end of 2023 and into 2024. Supply costs started to come down for us,” CEO Jon Abrahamsson Ring of Inter Ikea Group, the worldwide franchiser for the retailer, said in an interview with the Financial Times.

    Jesper Brodin, CEO of IKEA Retail, added: “These are times to buckle up. It’s not going to be an easy ride in the next few years. What I see this year is due to interest rates being where they are our customers are challenged. So we have been taking down our prices, every market is investing in lower prices.”

    Ikea executives pointed out that sharp price hikes in recent years are now reversing, allowing them to begin cutting furniture prices. However, they admitted price cuts might not be able to stoke demand as recession risks worldwide were materializing.

    “In what ways does it stimulate consumption? Is it possible to generate growth through affordability? During the Lehman Brothers crisis [in 2008] it was possible in northern Europe, but not southern Europe,” said Brodin.

    FT noted Ikea has moved away from big-box stores to offering small shops in metro areas and offering more services such as delivery, assembly, and planning with customers.

    The timing of Ikea’s planned price cuts comes as the luxury market is deteriorating in the Western world. Rolex and diamond prices are cratering from post-Covid highs, Mercedes S-500s are experiencing slowing demand, and luxury conglomerate LVMH reported this week that demand for leather goods, perfumes, watches, and wine worldwide was sliding.

    1. “…Ikea Plans Worldwide Price Cuts After Warning…”

      There’s junk, landfill junk, and then there is Ikea

    2. Ikea Plans Worldwide Price Cuts After Warning: “Time To Buckle Up”

      Jesper Brodin, CEO of IKEA Retail, added: “These are times to buckle up. It’s not going to be an easy ride in the next few years. What I see this year is due to interest rates being where they are our customers are challenged. So we have been taking down our prices, every market is investing in lower prices.”

      \\

      – It’s no coincidence that even Dollar General stock is diving, excluding the short-term pop today. Peaked on 10/24/2022:

      https://finance.yahoo.com/quote/DG?p=DG&.tsrc=fin-srch

      – The consumer is being squeezed. The limit will be when credit card debt peaks. Then, no room to maneuver. The consumer is approx. 70% of economic activity in the U.S.

      – What happens next?

      – A re-steepening (bear steepening) of the YC is showing recession is on the way, and soon. This is as per the Fed’s plan to attempt to kill the inflation that they caused. Your job means nothing. You mean nothing. 🤡 🌏 + 💩 🎪

      – Enjoyed the boom? Now enjoy the bust. Despite what the Socialists say, there is no free lunch.

      – Maybe, just maybe we do get lower prices and deflation. After all QE is ultimately deflationary, once the QT kicks in. Respect the delay in the economy after rate hikes and general tightening of financial conditions start to take hold. We should be there soon, I think.

    3. Who buys Rolex and other luxury Swiss made watches with diamonds in them? Not Gen Z. I suspect that rich Asian kids (Chinese, Japanese) like the brand items as a status symbol.

  17. Mysterious rise in US Treasury yields perturbs markets

    https://news.yahoo.com/mysterious-rise-us-treasury-yields-015927764.html

    The surge in US treasury yields has sparked much anxiety among investors, in part because there is no easy explanation for the rise.

    On Friday, the yield on the 10-year US Treasury note climbed to 4.88 percent for the first time since 2007, while the 30-year offering reached 5.05 percent, also a 16-year peak.

    Both have edged back in recent days, due mainly to elevated geopolitical risk, analysts say, although yields remain high.

    The most oft-cited justification for the rise has been expectations that monetary policy will stay hawkish in response to the resilient US economy.

    “The Fed expectations have been shifting,” said John Canavan, analyst at Oxford Economics.

    “From the Fed’s perspective, we’re seeing stronger than expected economic growth, some increase in inflation and uncertainty, particularly as oil prices surge again.”

    While two-year US treasuries are considered the closest proxy to Fed interest rates, the market has been unsettled by the jump in yields of longer-run bonds of five, 10 or 30 years.

    “Something is happening in the bond market and nobody fully understands how you kind of break it down,” said Adam Button of ForexLive.

    Karl Haeling of LBBW pointed to increased bond issuance by the US Treasury Department, saying markets are increasingly worried that the US “fiscal situation is moving on a long-term unsustainably bad trajectory.”

    For Yardeni Research, “the bond market has changed recently and disconcertingly,” the consultancy said in a recent posting.

    Perplexing moves by US treasuries in response to economic news “suggest a shift in bond investors’ focus from what monetary policymakers may do, to rising alarm about what fiscal policymakers are doing.”

    “The worry is that the escalating federal budget deficit will create more supply of bonds than demand can meet, requiring higher yields to clear the market,” added Yardeni Research.

    But not everyone is on board with this perspective.

    “We can blame higher long-run yields on many things, but deficits are not one of them,” said Nick Colas of DataTrek Research.

    – Fewer buyers –

    Yet another factor in the market shift has been a slowing in demand.

    “Central banks are no longer buying bonds, they are selling them,” Neil Wilson, chief market analyst at Markets.com, said of the retreat.

    After multiple rounds of quantitative easing, the Fed has been in a belt-tightening mode, reducing the size of its balance sheet and not replacing bonds that reach maturity with new purchases.

    But Peter Boockvar, chief investment officer of Bleakley Financial Group, said that the US central bank may not be able to pull of “quantitative tightening,” noting that the Fed reversed course in 2019 following turbulence in markets.

    A “failure” by the Fed means “things cracking in the financial system well before the Fed’s balance sheet shrinks by much and we’re left with this perpetually large Fed presence in the markets.”

    The US central bank might be forced to resume quantitative easing “just to help absorb the massive amount of Treasury supply coming down the DC pike,” Boockvar said.

    “Someone else has to buy the debt and there is a lot more of it now,” Wilson said. “This can only result in lower prices, higher yields.”

    The group that has stepped back from US Treasury purchases includes China, which is managing a difficult economic recovery after Covid-19 lockdowns, and Japan, which has been buying domestic bonds to suppress yields, said Jose Torres of Interactive Brokers.

    “We’re going to have a debt crisis in this country,” Ray Dalio, head of the hedge fund Bridgewater Associates, warned in an interview on CNBC.

    “How fast it transpires, I think, is going to be a function of that supply-demand issue.”

    But not everyone is so gloomy.

    “As long as US Treasury securities are regarded as risk-free securities, there is always going to be demand for Treasuries,” said LPL Financial’s Lawrence Gillum. “And with Treasury yields at the highest levels in decades, we could see that demand increase as well.”

    The aging of global populations is another source of demand, said Oxford Economics’ Caravan.

    “There’s going to be an exceptional amount of global savings,” Caravan said. “And that global savings glut is going to continue to look for a home in US treasuries, which remain the safest and most liquid asset on the planet.”

  18. I keep reading housing related news stories quoting “real estate professionals” who claim this housing correction won’t be as severe as 2008 and the subsequent years. The common denominator in their explanation is that lending standards are much tighter now and therefore liar loans to speculators are no longer available. However, what about all the personal or business loans made by those with good credit (or good accountants)?

    A few examples come to mind:
    – Low interest loans to purchase a second home or investment properties

    – Home equity ATM loans to remodel your home, install a swimming pool, buy that new boat and luxury car

    – Home equity loans to start a new business due to lost jobs because of Covid restrictions

    – Business loans not for business expansion but for juicing the corporate stock price

    – Loans to buy and flip properties

    In my opinion, it all comes down to the borrowers ability to continue servicing the outstanding debt. Can this monstrous debt dragon continue to be serviced? It seems to me that America and the world doesn’t even know what a real economy is anymore. It’s all about riding the wave of artificial prosperity generated by easy money, financialization, and an army of greater fools seeking instant riches. However, the easy money wave has crested, now people have to earn a living the old-fashioned way.

    1. “In my opinion, it all comes down to the borrowers ability to continue servicing the outstanding debt. Can this monstrous debt dragon continue to be serviced?”

      \\

      +1

      \\

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      “The four most dangerous words in investing are: ‘this time it’s different.'” – Sir John Templeton

    2. If I wasn’t so lazy I’d research and post all the housing related news stories from around ‘05 thru ‘07. Same song last time as they’re singing this time, just a couple of tweaks to the lyrics. Just like last time, they ignore a mountain of evidence and data that says we’re screwed. But let them hold onto their “no liar loans” and “no inventory” lifesaver as they float over the waterfall.

  19. (Yeah right, what this country needs is to have a war with both Russia and China. People are indeed stupid.)

    US Must Be Ready for Simultaneous Wars With China, Russia, Report Says

    https://www.usnews.com/news/world/articles/2023-10-12/us-must-be-ready-for-simultaneous-wars-with-china-russia-report-says

    The United States must prepare for possible simultaneous wars with Russia and China by expanding its conventional forces, strengthening alliances and enhancing its nuclear weapons modernization program, a congressionally appointed bipartisan panel said on Thursday.

    The report from the Strategic Posture Commission comes amid tensions with China over Taiwan and other issues and worsening frictions with Russia over its invasion of Ukraine.

    A senior official involved in the report declined to say if the panel’s intelligence briefings showed any Chinese and Russian nuclear weapons cooperation.

    “We worry … there may be ultimate coordination between them in some way, which gets us to this two-war construct,” the official said on condition of anonymity.

    The findings would upend current U.S. national security strategy calling for winning one conflict while deterring another and require huge defense spending increases with uncertain congressional support.

    “We do recognize budget realities, but we also believe the nation must make these investments,” the Democratic chair, Madelyn Creedon, a former deputy head of the agency that oversees U.S. nuclear weapons, and the vice chair, Jon Kyl, a retired Republican senator, said in the report’s preface.

    Addressing a briefing held to release the report, Kyl said the president and Congress must “take the case to the American people” that higher defense spending is a small price to pay “to hopefully preclude” a possible nuclear war involving the United States, China and Russia.

    The report contrasts with U.S. President Joe Biden’s position that the current U.S. nuclear arsenal is sufficient to deter the combined forces of Russia and China.

    The arsenal’s makeup “still exceeds what is necessary to hold a sufficient number of adversary targets at risk so as to deter enemy nuclear attack,” the Arms Control Association advocacy group said in response to the report.

    “The United States and its allies must be ready to deter and defeat both adversaries simultaneously,” the Strategic Posture Commission said. “The U.S.-led international order and the values it upholds are at risk from the Chinese and Russian authoritarian regimes.”

    Congress in 2022 created the panel of six Democrats and six Republicans to assess long-term threats to the United States and recommend changes in U.S. conventional and nuclear forces.

    The panel accepted a Pentagon forecast that China’s rapid nuclear arsenal expansion likely will give it 1,500 nuclear warheads by 2035, confronting the United States with a second major nuclear-armed rival for the first time.

    The Chinese and Russian threats will become acute in the 2027-2035 timeframe so “decisions need to be made now in order for the nation to be prepared,” said the 145-page report.

    The report said the 30-year U.S. nuclear arms modernization program, which began in 2010 and was estimated in 2017 to cost around $400 billion by 2046, must be fully funded to upgrade all warheads, delivery systems and infrastructure on schedule.

    Other recommendations included deploying more tactical nuclear weapons in Asia and Europe, developing plans to deploy some or all reserve U.S. nuclear warheads, and production of more B-21 stealth bombers and new Columbia-class nuclear submarines beyond the numbers now planned.

    The panel also called for boosting the “size, type, and posture” of U.S. and allied conventional forces. If such measures are not taken, the United States “will likely” have to increase its reliance on nuclear weapons, the report said.

    1. The United States must prepare for possible simultaneous wars with Russia and China by expanding its conventional forces

      So that’s why the current crop of ads have deplorables white males in them.

        1. Then don’t go. I’ve told my nephews if there is a draft, don’t obey. Leave the country if you have to. This is not our government.

    1. Argentina paid almost half its population to not work during the minor respiratory illness outbreak. Gee, I wonder why they have inflation.

      1. People have money, so demand stays the same. Half the people aren’t working, so supply is cut in half. I try to explain to people, but they think it’s a conspiracy theory.

  21. “…When Neil Harris… ….signed a $29,500-a-month lease for a beachfront apartment that he said was ‘well worth it….”

    Riddle me this, Neil Harris: Just how hot are the chicks when you spend $29,500 a month? (Asking for a friend)

  23. (Note: I am selling shares in this astounding asteroid mining venture to any of you HBBers who are interested in getting fantastically wealthy.)

    NASA’s ‘Psyche’ Lifts Off (Via SpaceX) To Probe Colossal Untapped Value Of Asteroids

    (A snip from the article …)

    “It is suspected that the asteroid, roughly 280km at its widest point, is part or all of the iron-rich core of a ‘planetesimal’ – the building block of a rocky planet. Scientists hope Psyche can show us how Earth’s core and the cores of the other terrestrial planets came to be.

    “Aside from the great scientific value of metal-rich asteroids, they can also have colossal as-yet untapped economic value, too.

    “In the asteroid belt that lies between Mars and Jupiter, there is an almost unfathomable amount of resources waiting to be utilized. According to Wired and Valerio Pellegrini, the asteroid ‘Davida’, which has a diameter of 326 kilometers, has been identified as the most valuable asteroid in the belt, with a resource value estimated to be some 27 quintillion (26,990,000,000,000,000,000) U.S. dollars.”

      1. Might as well be on Alpha Proxima. How will they get the ore back to Earth in a cost effective manner?

  24. The Washington Post is the enemy of the American people.

    Washington Post — Another element of Trump’s ‘rigged election’ narrative collapses (10/13/2023):

    “What’s important to Donald Trump is that people think that he didn’t lose the 2020 election or, at the very least, that they think he only lost because someone cheated or broke the law or conspired against him or applied a curse or deployed a time machine or appealed to Odin or whatever someone might view as a remotely credible explanation for Joe Biden receiving more votes. The important thing is the belief, not the route to the belief, like the important thing is getting out of the house that’s on fire, not that you use the proper door.

    In the immediate aftermath of the election, Trump insisted that there was rampant fraud. Nefarious actors had submitted thousands or millions of ballots illegally through various mechanisms and/or the vote-counters had cheated and/or voting machines were hacked and manipulated. All of it or none of it and Trump really won, etc.

    But it very quickly became obvious both that this didn’t happen and that the people who were insisting it did were not people that you necessarily wanted to publicly pronounce your confidence in.”

    https://archive.ph/Cmac4

    I publicly pronounce ZERO confidence in anything the Washington Post reports, the 2020 election was stolen.

  25. Qualcomm is laying off roughly 1,258 workers from its offices in Santa Clara and San Diego.

    1. But in an August call with analysts, Chief Financial Officer Akash Palkhiwala warned that the company would be taking proactive measures to cut costs as the company faces shrinking revenue.

      Employees knew layoffs were coming.

      “Given our commitment to operating discipline, we will proactively implement additional cost actions,” Palkhiwala said on the August call. “Until we see sustained signs of improving fundamentals, our operating framework does not assume an immediate recovery.”

      I guess everyone has a mobile phone now.

      I once had a job offer to work there, a loooong time ago. I turned it down, as something felt wrong about the job, and it would have been a long commute as well. Compared to today the interview process was a breeze. Two people interviewed me: the hiring manager and some math genius. Two hours total, I had the offer within a couple of days. Now they expect you to walk blindfolded on a tightrope. while you carry an anvil

      1. I could write a book with all of the bizarre interviews I’ve had. Like, interviewing at a job fair at the Bonadventure Hotel in Los Angeles in a room with an unknown male and a desk at the foot of the bed such that the bed was behind me during the interview.

        2. I once interviewed with Electronic Data Systems, also held in a hotel room. It felt awkward. I also got an offer from them, but they were really weird.

    2. Yeahbut Apple is expanding its operations in North SD County and drawing in workers who will enter the $1+ million home ownership purchase demand pool.

      Or so have people iny circle who talk with local relitters told me…

      1. They may enter the demand pool but it’ll be the banks that determine at what level. Not only are realtors liars, most of them are really clueless. I suspect that’s actually a strength in their field.

      2. Rancho Bernardo has ocean views?!?!

        From: https: // www. apple. com / careers / us / work-at-apple / san-diego. html

        Campus and Culture
        This is Apple San Diego.

        Ocean views and espresso bars are only the beginning — this location has plans for extensive growth throughout the area.

  26. Russia Today — Top Zelensky aide blames West for counteroffensive slowdown (10/13/2023):

    “Ukraine’s Western backers are responsible for the slowdown in Kiev’s counteroffensive, a senior adviser to President Vladimir Zelensky, Mikhail Podoliak, has suggested, lamenting that weapons deliveries are taking too long. Earlier this week, Kirill Budanov, the head of Ukraine’s Main Intelligence Directorate, acknowledged that Kiev’s military had fallen behind schedule in its attempt to drive Russian forces away.

    In an interview with Ukraine’s Channel 24 on Thursday, Podoliak was asked whether he concurred with Budunov’s assessment. The official replied that Kiev’s counteroffensive is “six to nine months behind schedule.” He explained that “intensive” negotiations on arms deliveries, which began last fall, proved to be a long-drawn-out process, “with the partners afraid to acknowledge then that everything Ukraine needs should be provided as soon as possible.”

    https://www.rt.com/news/584808-ukraine-western-backers-weapons-counteroffensive/

    Russia is winning. God wills it ✝️

  27. THE WAR IS NOT MEANT TO BE WON

    https://www.theburningplatform.com/2023/10/13/the-war-is-not-meant-to-be-won-3/

    In case you haven’t noticed, your overlords want you to replace your virtue signaling “I Support Ukraine” message in your social media with their new “I Support Israel” messaging for their latest war. Driving home from work two days ago, I look up at an electronic billboard and see an enormous PRAY FOR ISRAEL message on I-476. They don’t waste time on the propaganda front.

    After wasting $160 billion on character actor Zelensky in their futile attempt to bleed out Russia and Putin, they are about to throw in the towel on that debacle and move on to their next debacle. Of course, they don’t consider it a debacle. Their arms dealers and their financiers on Wall Street have satiated their profit hunger at the pig trough of continuous war.

    How convenient that just as the Ukraine war is about to be lost, the most militarized country on earth, with the most glorified surveillance state mechanism in history, was suddenly surprised by a bunch of 3rd world Muslims, using pickup trucks, hang gliders, and improvised missiles. It almost seems like this entire episode was a coordinated theatrical production, with innocent civilians used as the cannon fodder to generate outrage and hate. The innocent die, while the creators of chaos profit.

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    “The war is not meant to be won, it is meant to be continuous. Hierarchical society is only possible on the basis of poverty and ignorance. In principle the war effort is always planned to keep society on the brink of starvation.” – George Orwell, 1984

    In case you haven’t noticed, your overlords want you to replace your virtue signaling “I Support Ukraine” message in your social media with their new “I Support Israel” messaging for their latest war. Driving home from work two days ago, I look up at an electronic billboard and see an enormous PRAY FOR ISRAEL message on I-476. They don’t waste time on the propaganda front.

    After wasting $160 billion on character actor Zelensky in their futile attempt to bleed out Russia and Putin, they are about to throw in the towel on that debacle and move on to their next debacle. Of course, they don’t consider it a debacle. Their arms dealers and their financiers on Wall Street have satiated their profit hunger at the pig trough of continuous war.

    How convenient that just as the Ukraine war is about to be lost, the most militarized country on earth, with the most glorified surveillance state mechanism in history, was suddenly surprised by a bunch of 3rd world Muslims, using pickup trucks, hang gliders, and improvised missiles. It almost seems like this entire episode was a coordinated theatrical production, with innocent civilians used as the cannon fodder to generate outrage and hate. The innocent die, while the creators of chaos profit.

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    No one will win this Israel vs. Hamas war, because no one is meant win this war. Biden is already doling out the 1st $8 billion to Israel, on top of the billions we already dole out to Israel, which they use to bribe U.S. politicians to give them even more money, contracts and influence over our country. No one will win the Syrian war. No one won the Libya civil war. They won’t allow a true end to the Ukraine war. Iraq and Afghanistan are just on the back burner, until they need to ignite those powder kegs again.

    War is a racket, always was a racket, and always will be a racket. The Deep State uses all their propaganda power, through control of the regime media, politicians on both sides of the aisle, social media conglomerates, and Wall Street to keep festering anger, discontent, outrage, and hate in order to keep the profits flowing into their coffers. The masses are manipulated into supporting the latest war through sophisticated techniques preying on their emotions and feelings, knowing they have been dumbed down by decades of government school indoctrination, disguised as education.

    So here we are, with our overlords generating the newest war. Next up will be another false flag to ignite outrage against Iran. Our military industrial complex and their spokesperson Lindsay Graham, can’t wait for that one. Just because these lords of war are greedy psychopaths, doesn’t mean they are intelligent or capable of seeing what happens when they go too far. Once the missiles start flying across the Middle East, the world will be forced to take sides, and then all hell will break loose. If we allow these war pigs to initiate their agenda, Armageddon is a distinctly possible outcome.

    1. I look up at an electronic billboard and see an enormous PRAY FOR ISRAEL message on I-476

      Probably sponsored by a Protestant Fundamentalist megachurch. While channel surfing I have noticed that some of their TV preachers are starting to dress like Rabbis, wearing prayer shawls, Israeli flags, etc.

    2. the most militarized country on earth, with the most glorified surveillance state mechanism in history, was suddenly surprised by a bunch of 3rd world Muslims, using pickup trucks, hang gliders, and improvised missiles

      Indeed. From the get go this has seemed very fishy. Now Israel is telling those who live in the northern half of Gaza to get out (about 1 million people). Are the B-52’s coming to carpet bomb it?

      1. telling those who live in the northern half of Gaza to get out

        In 24 hours with nowhere to go but the southern half of Gaza. Get real. It looks like Israel allowed the attack to happen so it could go on defense.

        1. For those who may have missed it:

          The Israel Attacks: Beyond the Obvious with Efrat Fenigson (1h43m6s)

          Efrat Fenigson is an independent Journalist, Podcaster, Israeli Citizen & Covid dissident. In the wake of the October 7th terrorist attacks on Israel, she has provided insight into the situation from inside Israel on X (Twitter). Bret and Efrat discuss the current state of affairs and the situation unfolding as we speak.

          Due to the timely nature of this episode, it is important to note that this was filmed at 8PM Israel time on October 10, 2023, and released several hours later.

          It is also of note that at the end of this recording, Efrat hears the sounds of rockets going off nearby. However there was also construction noise near Bret during the entire duration of the episode, not to be confused with sounds of war.

          Note: Hamas was founded in 1987, not 1967 as was inadvertently stated.

    3. DEVASTATING Compilation Of Media Lies About Ukraine
      The Jimmy Dore Show

      5 hours ago

      In recent testimony to the European Union Parliament, NATO Secretary-General Jens Stoltenberg made clear that it was America’s relentless push to enlarge NATO to Ukraine that was the real cause of the Ukraine War and why it continues today. Yet as a compilation video put together by Matt Orfalea reveals, countless western media figures, commentators and politicians — including Stoltenberg himself — were singing a very different tune at the outset of the war.

      https://www.youtube.com/watch?v=Sw0aZFYdGwo

      7 minutes.

  29. ‘Massive win’: Premiers jubilant after Supreme Court finds federal environmental impact assessment law unconstitutional

    Federal legislation on the environmental effects of major developments infringes on provincial powers, Canada’s top court rules
    Author of the article:
    Bob Weber • The Canadian Press
    Published Oct 13, 2023

    The Supreme Court of Canada ruled Friday against federal legislation on the environmental effects of major developments, with five out of seven judges finding most of it unconstitutional because it seeks to regulate activities within provincial jurisdiction.

    Alberta Premier Danielle Smith, whose province challenged the legislation, called it a “massive win” for provincial rights. She said it gives “exclusive provincial jurisdiction” to matters such as building new greenhouse gas-emitting natural gas power plants.

    “That’s our exclusive right, to be able to make decisions on being able to permit and approve those types of projects,” she said.

    “Where they went so wrong is they presumed to step into our jurisdiction to make decisions that fall completely, 100 per cent, within Alberta’s borders. They should stop trying to micromanage our affairs.”

    https://www.fortmcmurraytoday.com/news/local-news/massive-win-premiers-jubilant-after-supreme-court-finds-federal-environmental-impact-assessment-law-unconstitutional

  30. ‘Looking at Compass data through the third quarter of this year, seems like a glimpse back in time. Average gross rent multipliers are at 12, the lowest since 2011, which is also the last time cap rates were higher than today’s 5.7 percent. The average price per unit is $359,000, the lowest since 2014’

    Looks like these guys are saying, cap rate is under 6%, we made it, this is the bottom!

  31. You peasants are going to have to open the door and ante up for your newly hired IRS auditer so we can keep the tax dodger in chiefs family living the lifestyle they have become accustomed to.

    IRS Drops Hint on Massive Audit Efforts

    The tax gap has jumped by nearly $200 billion compared to previous measurements.

    By Naveen Athrappully
    10/12/2023
    Updated:
    10/13/2023

    While the IRS focuses on boosting its compliance rate and closing the tax gap, there are concerns that such efforts could affect smaller businesses and low and middle-income households.

    Last month, the agency announced that it was looking to fill more than 3,700 positions nationally to assist with “expanded enforcement work” focusing on complex partnerships, large corporations, and high-income earners.

    IRS commissioner Mr. Werfel said that the new employees at the agency would not target individuals and entities making less than $400,000 annually.

    https://www.theepochtimes.com/us/irs-announces-688-billion-tax-gap-in-2021-post-5509307

    1. Since most W-2 filers don’t itemize, what is there to audit? Unless there is under the table income that can be traced.

      1. “Since most W-2 filers don’t itemize, what is there to audit?”

        Maybe some of their lifestyles that exceed the amount of money they filed on their W-2s.

        I was talking to a wallpaper hanger a number of years ago who said he was only paying $50 a month or some such sh#t for health insurance (Obamacare) because he only made $17,000.00 the year before. Now I knew looking at his vehicle, the job he was working on and by where he told me he lived he had to be knocking down $70k and as I said this was a number of years ago I’m sure it would be more now.

        Point being I am reasonably sure an IRS audit would turn up something around $50k in cash that paper hanger was putting in his pocket evey year.

          1. Somehow I missed that.

            I apologize to you and myself because I don’t like to type that much. 🙂

  34. (There may be hope for us yet as reality finally raises its ugly head.)

    The Net Zero Ship Starting To Sink

    https://www.zerohedge.com/geopolitical/net-zero-ship-starting-sink

    Are we observing the early stages of worldwide resistance against the constraints of net zero policies?

    Investors are ditching renewable energy faster than any other funds on record.

    Reuters reports that renewable energy funds suffered a net outflow of $1.4 billion in the July to September 2023 quarter.

    LSEG Lipper data shows this to be the largest-ever quarterly outflow. There was also a 23 percent decline from the end of June of the total assets under management in the sector—now valued at $65.4 billion.

    The S&P Global Clean Energy Index (.SPGTCLEN), is also down by 30 percent this year with most of the decline occurring since July. This Index comprises major solar and wind power companies and other renewables-related businesses.

    Yet in contrast, the S&P 500 Energy Index (.SPNY), which is oil and gas-heavy, has increased slightly this year.

    It is not just investors who are exiting net zero. Politicians are also raising concerns.

    Australian Nationals Senator Matt Canavan said net zero has “absolutely carked it.”

    His position is that net zero is a “soundbite” and “totally insane.” It is unachievable because people will starve if it is enforced.

    “Almost everything we grow, we make, we do in our society relies on the use of fossil fuels,” he said.

    Patrick Moore, the co-founder of Greenpeace agrees.

    He told Tucker Carlson, “If we banned fossil fuels, agricultural production would collapse in a very short period of time. People will begin to starve … and half the population will die in a very short period of time.”

    Governments Across the World Bucking the Net Zero Trend
    Politicians around the world are also raising concerns.

    UK Prime Minister Rishi Sunak has delayed banning new petrol and diesel cars and residential gas heating until 2035. This has been previously delayed twice with deadlines moved from 2025 to 2030.

    He said, “We’re not going to save the planet by bankrupting the British people.”

    France’s President Macron has said that gas boilers will not be banned. He has also been shy about declaring a date for phasing out fossil fuels.

    The polls are showing that New Zealand’s government is heading for opposition in this weekend’s election.

    The taxing of livestock for methane emissions and transforming sheep and cattle farms into pine plantations has caused a revolt among rural voters.

    In the Netherlands, the Farmer-Citizen movement is the dominant party in the Dutch Senate and every provincial assembly.

    Germany is planning to resurrect its coal plants and some of Germany’s large corporations such as Volkswagen, Siemens, and BASF are leaving their homeland for better business climates after the increasing local cost of pushing for net zero.

    U.S. presidential candidate Robert F. Kennedy Jr. believes that real environmentalism is about protecting natural habitats, sustaining ecosystems, and reducing pollution and deforestation. It’s not about net zero, he said.

    Even Bill Gates now says that “no temperate country is going to become uninhabitable.”

    This is quite different from his earlier statement on Fox News two years ago when he said, “The migration that we saw out of Syria for their civil war, which was somewhat weather dependent, we’re going to have 10 times as much migration because the equatorial areas will become unliveable.”

    While Australia contributes just over one percent of global carbon dioxide emissions (a similar level to the UK), in 2022, China approved 106 gigawatts of new coal fired power capacity which gives it 243 gigawatts of coal-fired capacity under construction.

    That is the equivalent of 243 coal power plants with China now accounting for around 30 percent of global CO2 emissions.

    Meanwhile, in June, Swedish authorities abandoned its 100 percent renewable target to reach net zero by 2045, and Norway followed this announcement by approving investments exceeding over US$18 billion to develop 19 oil and gas fields.

    Even in the European Union, there is a shift of voters turning away from Green parties and towards those with an anti-EU sentiment.

    According to Politico, one reason is voter attitude towards climate transition policies.

    Back in Australia, geologist, Professor Ian Plimer has been vocal in his criticism of net zero.

    He told ADHTV that, “The fundamentals of science are you do not tamper with the original evidence. That has happened with our temperature record, where the past has been cooled and it makes it look as if we’re warming. That is fraud.”

    Senator Ralph Babet told the Australian Parliament that net zero is a “complete and utter scam, designed to shut down our nation, enrich predatory globalists, and the CCP.”

    There are still some who cling to the net zero mission, however.

    Former UK PM Theresa May wrote on X (formerly Twitter), “Net zero isn’t a cost to be minimised—it’s the growth opportunity of the century, worth 1 trillion pounds to British business by the end of the decade.”

    But investors aren’t buying it.

    While many renewable projects are being shelved or delayed such as wind projects in the UK, Netherlands, and Norway because of constraints such as skyrocketing costs, Rich Pontillo, Lead Advisory at Nasdaq IR Intelligence, told Reuters there could be another upcycle because of “massive” U.S. government subsidies.

    However, if there is a change of president in 2024, Pontillo may need to rethink this statement.

    1. Please don’t copy/paste ZH articles here. I get the sense that our kind blog host isn’t a fan of the site and many of us already read it.

    1. Financial Times
      Commodities
      Oil jumps above $90 on concerns over escalation in Israel-Hamas war
      Prices hit highest level since start of crisis, with traders on ‘tenterhooks’ according to the IEA
      A flame burns from a stack at an oil plant
      Supply could be hit if the US were to strictly enforce restrictions on Iranian oil exports
      Ian Johnston and George Steer in London yesterday

      The oil price rose to its highest level since the outbreak of the Israel-Hamas conflict, moving above $90 a barrel as concerns about a potential ground assault on Gaza added fresh tension to commodities markets.

      Brent crude, the global benchmark, added 5.7 per cent to settle at $90.89 a barrel on Friday, a price last reached before Hamas attacked Israel almost a week ago. The US marker West Texas Intermediate jumped 5.9 per cent to $87.69 a barrel.

      Both oil grades posted their highest daily percentage gains since April.

      Prices rose after Israel’s military warned more than 1mn people to leave Gaza City and its outskirts and relocate to the south of the enclave, with what the UN said was a 24-hour deadline.

      “We’re headed to $100 [a barrel] no matter what this quarter,” said Joe DeLaura, global energy strategist at Rabobank.

      “Prices could easily get a lot worse [higher] before we find some stabilisation,” said Ole Hansen, head of commodity strategy at Saxo Bank. He added that “no one in the right frame of mind would hold a short position [in oil] when Israel has just ordered 1mn people to leave [northern] Gaza. That threatens a massive escalation.”
      …

    2. Yahoo News
      AFP
      Mysterious rise in US Treasury yields perturbs markets
      Thomas URBAIN
      Thu, October 12, 2023 at 6:59 PM PDT·4 min read
      Yields on bonds issued by the US Treasury have hit multiyear peaks in recent days, unnerving investors (CHIP SOMODEVILLA)

      The surge in US treasury yields has sparked much anxiety among investors, in part because there is no easy explanation for the rise.

      On Friday, the yield on the 10-year US Treasury note climbed to 4.88 percent for the first time since 2007, while the 30-year offering reached 5.05 percent, also a 16-year peak.

      Both have edged back in recent days, due mainly to elevated geopolitical risk, analysts say, although yields remain high.

      The most oft-cited justification for the rise has been expectations that monetary policy will stay hawkish in response to the resilient US economy.

      “The Fed expectations have been shifting,” said John Canavan, analyst at Oxford Economics.

      “From the Fed’s perspective, we’re seeing stronger than expected economic growth, some increase in inflation and uncertainty, particularly as oil prices surge again.”

      While two-year US treasuries are considered the closest proxy to Fed interest rates, the market has been unsettled by the jump in yields of longer-run bonds of five, 10 or 30 years.
      …
      https://news.yahoo.com/mysterious-rise-us-treasury-yields-015927764.html

      1. “…in part because there is no easy explanation for the rise.”

        Kinda looks like rising long-term inflation expectations…

    3. Treasuries
      Why an ‘Un-Inverted’ Yield Curve Could Be More Chilling for the Stock Market
      By Nicholas Jasinski
      Updated Oct 09, 2023, 9:06 am EDT / Original Oct 09, 2023, 2:00 am EDT

      One of Wall Street’s favorite recession predictors—an inverted yield curve—is getting less inverted, but that isn’t all good news for investors. How the curve un-inverts matters, too.
      …
      https://www.barrons.com/articles/stock-market-treasury-yield-curve-inversion-f366e665

      1. Bloomberg
        The Fed Just Blinked. Now Is When The Real Damage Gets Done
        Lorie Logan, president and chief executive officer of the Federal Reserve Bank of Dallas, speaks during the National Association of Business Economics (NABE) economic policy conference in Dallas, Texas, US, on Monday, Oct. 9, 2023. Her words may have best framed how to think about the current Treasury bond market environment.
        Photographer: Nitashia Johnson/Bloomberg
        By Edward Harrison
        October 10, 2023 at 9:49 AM PDT

        Interest rates were on a tear until this week. Fed speakers were out in force. Among them, the Dallas Fed President showed us how to think about what that means. The takeaway: they’re almost ready to pivot. That’s what investors have waited for. And the tightening of financial conditions has been severe enough to start breaking things. How much breakage we end up getting when all is said and done is the big unknown.

        Higher yields have started the breakage

        As I write this, the pressure debtors feel on long-term loans has eased a little. A lot of the move was due to oversold conditions, which Fed officials have recognized. They’ve now thrown up the white flag and all but declared they’re done tightening.

        Still, since the previous march higher in borrowing costs had been global, you could already see some of the pressure coming back as UK and German government bond rates went higher ahead of the US trading day Tuesday. The bottom line: It seems like the push higher in yields may not be completely done yet.

        To give you a bit of perspective, for US government bonds, this is the biggest loss in value, by some measures, since the founding of the US (see here). So, naturally, beyond the pleas of “when does the pain end,” there are two questions everyone is now asking. The first goes to the collateral damage. When does something break, and what is it that breaks first? We can’t possibly have the most consequential rise in yields in decades without a crisis — or at least significant distress — can we?

        Last week I told you signs of softening in the US were already in plain sight. But that’s not the first place to look for more severe market damage. Emerging markets are some of the places to look already. But there will likely be more, including in the US.

        The second question goes to the unique nature of this rate cycle. The Federal Reserve and other central banks have been raising rates so rapidly that markets have been fighting tooth and nail to believe them. You can see that by how much long-term borrowing costs had dropped below short-term ones. It’s as if markets were telling the Fed, “yes, we know you want to move to a higher for longer interest-rate regime. We just don’t think you will pull it off. Something will break and you’ll start cutting rates.”

        But, of late, markets started begrudgingly accepting the Fed’s forward guidance — and long-term rates rose back toward shorter-term ones. This so-called bear steepening is not how recessions have typically ended. And so, what everyone in the bond world wants to know is whether this portends recession, and how to trade this unique phenomenon. I’ll try and answer that too.

        If you get these two answers right, you’ll go a long way toward preserving capital as this business cycle gets decided in the coming months.

        Let’s start with how Fed officials are actually talking about the situation, since they’re the one’s making interest-rate decisions.
        The Dallas Fed President tells how to think about things

        In a speech on Monday, Lorie Logan, who heads the Dallas Fed, broke down the rise in long-term Treasury yields into two buckets. She told us that rates could be going up because the economy was so strong that markets believed it warranted higher interest rates. And she said yields could also be rising simply because investors wanted a “term premium” to be compensated for bearing interest-rate risk over the life of a longer maturity bond. In her mind, those are two very distinct rationales that require different thinking from her and her colleagues about raising, holding or cutting the fed funds rate.

        If rates are going up simply because the economy is so good, that means this so-called bear steepening, where rates are rising — but more for longer-dated paper — is the exact opposite of bull steepening, which is what typically presages a recession. Logan said that “to the extent that strength in the economy is behind the increase in long-term interest rates,” Fed officials will have to tighten policy even further still. More rate hikes would be coming.

        On the other hand, she said that “if term premiums rise, they could do some of the work of cooling the economy for us, leaving less need for additional monetary policy tightening.” And that means the market is effectively doing the Fed’s work. The Fed would need to tighten less as a result. No more rate hikes are coming.

        You can read the whole write-up by my colleagues Steve Matthews and Katanga Johnson here. But the clear takeaway from markets since she spoke is that the Fed’s had enough. Because term premiums are indeed rising now and actually positive for the first time in a few years, it’s becoming more likely that the Fed’s tightening is done. The last time I looked at pricing in the swaps market this morning, the odds of another hike were down to around 30% or so. Last week, it was still a coin toss.

        Bear steepening is not bull steepening

        The essence of Logan’s view is that the things that have been driving rates higher across the curve recently — that bear steepening — are not the same things that confirm the market’s signal of a recession. Instead it’s a pure sign of tightening financial conditions. As my colleague Michael Mackenzie explained this morning, the recent bear steepening is “almost certain to further dampen the economy as it ripples through to mortgages, credit cards and business loans”

        That makes sense to me. The previous quarter’s growth was pretty robust. The Atlanta Fed’s GDPNow tracker currently estimates it could be nearly 5%. But almost every economist on Wall Street predicts a sharp falloff in growth as a result of rising interest rates feeding through to borrowing costs more broadly. Most are not predicting recession, just a slowing in the economy as financial conditions tighten.

        When a recession comes, the market reaction is quite different. What typically happens is that, after the Fed has raised rates enough, the yield curve inverts, so that longer-term yields are lower than shorter-term ones. That signals market belief that the Fed will have to unwind their cuts as the economy slows into a recession. We have certainly seen that this time around too. But this is merely a necessary but insufficient precondition for a market recession call.

        It’s when markets actually see the economic weakness that the recession call is made good. At that point the market predicts actual cuts in the coming months and we see 2-year yields plummeting to the level of longer-term yields. This steepening of the curve is called bull steepening because the lower yields mean higher bond prices and gains all around (at least for bonds). And we typically need to see the curve steepen back to flat, to where all of the inversion has been wrung out and the curve can re-assume its typical upward slope.

        In essence, bear steepening is bad and restrictive but bull steepening is really bad and a harbinger of a downturn.
        …
        https://www.bloomberg.com/news/newsletters/2023-10-10/the-fed-just-blinked-now-is-when-the-real-damage-gets-done

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