Someone, Somewhere, Had Lost A Lot Of Money
A report from CNBC. “‘I think it’s painful. I think it’s ugly,’ Matthew Graham, chief operating officer at Mortgage News Daily, said on CNBC. ‘I don’t think anybody in my community of mortgage originators would disagree that in many ways, this is worse than the great financial crisis in terms of volume and activity.'”
From Florida Today. “Ah, September. The start of fall when things begin to cool — like the Brevard housing market. ‘Things are slow,’ said Greg Zimmerman with One Sotheby’s International. Zimmerman said that the days of ‘Oh my neighbor listed their house and sold it in two days’ are pretty much gone. ‘There is movement,’ he said. ‘We’re selling one or two a week. The inventory is building up and all the signs are there that we’re getting to a normal level of sales.’ September saw a 35% increase in the number of homes available on the market to a 2.7-month supply.”
The Arizona Republic. “Several of metro Phoenix’s most affordable neighborhoods posted the biggest drops in home sales during the third quarter. Most of Maryvale, parts of west and south Phoenix, southeast Mesa, southwest Chandler and El Mirage saw sales drop by 35% or more during the three months ending Sept. 30 compared to a year ago, according to the Arizona Regional Multiple Listing Service. Prices also fell during this year’s third quarter in most of the neighborhoods with big drops in the number of sales. ‘Interest rates are taking more of a toll on some Phoenix-area neighborhoods than others,’ said Tina Tamboer, senior housing analyst with The Cromford Report.”
“As compared to a year ago, about 90 Valley ZIP codes saw median home prices fall during the three months that ended in September. Almost 50 areas posted higher median prices, according to ARMLS. The Carefree ZIP 85377, which led the Valley with an almost 33% drop in its median price. The median sales price there in the third quarter was down to $797,523.”
The Park Record in Utah. “Leigh Ann Gray was supposed to be living in a townhome with her family by now. At least she thought she would when she signed a new construction real estate contract for a deed-restricted home with the Discovery Ridge subdivision back in April 2020. Little did she know at the time, but construction wouldn’t commence until March 2022, and even then there would be more delays. It remains little more than a foundation, and though the developer says construction is now underway, Leigh is skeptical of any predicted completion dates she hears. She’s skeptical construction will be resumed at all. Yet, according to developer Michael Milner, the numerous delays and extensions were not due to ill intent, but to necessity. ‘COVID came in,’ he said. ‘It had repercussions well beyond just the period of the pandemic.'”
“The development agreement he had entered with Summit County before building Discovery Ridge required that he had to complete a ratio of 1.5 to 1 market rate houses to affordable by certain snapshots, and though projects were built to meet the required number, Gray’s building — Building 2 — was pushed to the side. It specifically was going to cost the company a loss it couldn’t afford at the time, according to Milner. He predicted that Building 2 is going to cost the development a significant loss for each of the project’s five units. ‘I feel badly for the people. They’ve been under contract for a long time,’ he said. ‘We’re sorry for the delays, but literally they’re getting a $900,000 townhome for about $350,000.'”
The Bakersfield Californian. “Bakersfield home prices slid along with demand as the off-season kicked in last month, reinforcing what a leading observer of local housing conditions saw as greater balance in the market. ‘The trend toward a balanced market is reflected in the price decline,’ appraiser Gary Crabtree wrote in his closely watched monthly market report. ‘The relatively high interest rates and inflation continue to price the entry level buyer out of the market.’ Crabtree observed that Bakersfield properties that have been kept in good condition continue to receive multiple offers. But he noted that homes with deferred maintenance ‘are staying on the market for extended exposure times, leading to canceled or expired listings.'”
“President Jennifer Branchini of the California Association of Realtors noted in a press release that the state’s single-family home market is less competitive and so there are more opportunities for people who want to buy and can still qualify at the higher interest rates. ‘More sellers are making concessions as homes are taking longer to sell, fewer homes are selling above asking price, and there are more homes to choose from,’ she stated.”
CBS 8 in California. “If you’re frustrated by ADU’s popping up where you are around San Diego, you have a chance to help shape the city’s ADU policy. People CBS 8 spoke with who live in the College East Area are actually looking to move out because of how ADUs have changed their neighborhood. You may have heard of the term Granny Flat, but neighbors here say these ADUs popping up are more like apartment buildings. Dave Nicolai, who lives in the area, is unhappy with the state of the neighborhood for years. ‘I’ve been frustrated for 2 years. Developers are gaming the system,’ he said.”
“CBS 8 recently saw a NextDoor post Nicolai made about a property off Saranac and 70th Street. It now has 4 units on it. One of the units has 6 college students living in it. One of them told CBS 8 they pay $6,900 a month for a 2,500 square foot place. The trash bins were overflowing when CBS 8 was at the address. ‘This is like a disease,’ Nicolai said. ‘It’s one, then another. Somebody else sells because they don’t want to live next to a dump like this. It’s easier to nose into a single family neighborhood than it is for developers to build where they should, which is transit corridors.'”
The American Statesman in Texas. “Struggling Austin real estate developer StoryBuilt may have used funds it raised for certain projects and funneled the money toward other projects. That’s according to a report from court-appointed receiver Stapleton Group, which said in a filing that StoryBuilt did not follow ‘typical accounting practices.’ StoryBuilt, one of Austin’s most active urban developers, agreed to enter a voluntary receivership in July as it said it was addressing deep financial issues. On Oct. 9, StoryBuilt said it was putting 28 commercial and residential properties up for sale. The properties owned by StoryBuilt and its joint venture partners span 17 projects in Austin, five in Seattle, three in Dallas and three in Denver.”
The Dallas Morning News. “North Texas apartment leasing remained strong in the most recent quarter. But even substantial leasing volume wasn’t enough to keep up with the thousands of new units opening in Dallas-Fort Worth. ‘What we’re seeing in D-FW’s apartment market right now mirrors what’s happening in most of the country,’ said Jay Parsons, chief economist at Richardson-based RealPage. “’There’s a lot of demand for apartments, but even more supply of new apartments.’ During the third quarter, net apartment leasing in North Texas totaled 7,247 units — the best of any U.S. market. But that fell short of the 8,170 apartments completed in the same period, according to RealPage. More than 25,000 new rental units are expected to hit the D-FW market this year.”
“With higher construction financing costs and softening rents, builders in D-FW and nationwide are cutting back. Even so, more than 72,000 apartments remain under construction in North Texas. The current building peak is what Parsons sees as ‘a generational high akin to the 1970s and not something we will see again for decades.'”
Bisnow New York. “CIM Group and Australian pension fund QSuper appear on the verge of handing over the keys to a Midtown Manhattan office building where WeWork is the largest tenant. The investors took out a $399M single-asset, single-borrower CMBS loan in 2021 to refinance the 25-story, 740K SF office building at 1440 Broadway. The loan has been transferred to a special servicer, which wrote in commentary this month that the ‘borrower will be deeding the property back to the Lender,’ according to the Morningstar Credit database. CIM acquired the office tower on the corner of Broadway and 41st Street with QSuper in 2017.”
“CIM Group is far from the only office landlord to look at handing the keys back. RXR defaulted on a loan at 61 Broadway earlier this year and last month entered into a deed-in-lieu-of-foreclosure agreement with its lender. Blackstone handed back the keys at 1740 Broadway last year. ‘If you want to put new money in, you need to reset the deck to do so,’ RXR CEO Scott Rechler told the Financial Times in February. ‘And if we can’t, we may have to hand back the keys.'”
The Globe and Mail. “The One, a luxury condo development in Toronto co-owned by real-estate developer Sam Mizrahi and road paving magnate Jenny Coco, is in receivership after its senior lender asked an Ontario judge to put a third party in control of the project. Under development since 2015 at the corner of Yonge and Bloor streets, The One was marketed as Canada’s tallest condo building, with 85 storeys of condos, hotel and retail. However, the project is years behind schedule, owes $1.6-billion to its lenders and faces a growing number of lawsuits. Existing litigation includes a dispute between Mr. Mizrahi and Ms. Coco, who each own 50 per cent of The One.”
“In its receivership application, KEB Hana Bank, a commercial bank based in South Korea, said The One’s senior lenders were not prepared to advance more money without the appointment of an outside group to manage the project and oversee its development. At the moment, the interest accrued on KEB’s debt alone amounts to $166-million annually. KEB said the senior lenders ‘have gone to great lengths to accommodate the borrower … nonetheless, the project has been materially delayed, is significantly over budget and has been fraught with difficulties.’ KEB argued that a receiver would bring ‘much-needed stability to the project.’ As of Oct. 4, 2023, ‘concrete columns and walls had only been poured up to the 40th floor.'”
“As of the end of August, 346 condos, or 83 per cent of available units, had been sold. It is unknown what will happen to the condos that have been purchased. While the receiver will carry on with The One’s development, selling the remaining units could be challenging. ‘The world has changed for our industry,’ said Scott McLellan, the chief operating officer of Plazacorp, a major condo developer in Toronto. Residential building costs are up 55 per cent since the start of the COVID-19 pandemic, and mortgage rates have more than doubled over the same period. The One is also entangled in a number of lawsuits.”
Daily Mail Australia. “A luxury Melbourne building company has gone into liquidation informing its customers by a letter. PFK Melbourne has been appointed as the liquidator after Dome Building was unable to negotiate payment terms with a former director and shareholder. The South Melbourne company had suffered major losses and directors Andrew Crellin and Jeremy Brockman called the situation ‘heartbreaking’, the Herald Sun reported. ‘You may or may not be aware of a situation last year with a former director and shareholder leaving the Dome business,’ the letter said. ‘As a result, Dome has annual payment obligations to this former director.’ Dome had recently expanded to working in the ritzy NSW north coast town of Byron Bay, but now all work has stopped.”
The China Project. “Country Garden’s former office branch was in Wing On Centre, a faded mall on Nathan Road, the main transportation artery running down the Kowloon Peninsula. On October 10, the 9th floor office’s interior was in the process of being demolished. A contractor was blaring mandopop as he wielded a sledgehammer among the bare cinder block walls and gutted ceilings. ‘I just got here,’ he said. ‘I don’t know when they moved out.’ A major factor in the economic pall hanging over mainland China is the bursting of a property bubble. With some limited interruptions, over the past twenty years there has been a widespread belief that property prices ‘only go up.’ As with all economic impossibilities, it was only a matter of time before this assumption was proven wrong.”
“An analyst from Mainland China who wished to remain anonymous told The China Project that smaller cities saw a property ‘bull cycle’ from 2015–-2020, which ended when the government set strict limits on the amount of debt property developers could take on (‘the three red lines policy’). The analyst’s relatively small hometown was one of many places that saw rapid urbanization and speculative homebuying over this period. However, the analyst said that lower tier city home prices have already declined 40% from their peak in 2019.”
“Back in Hong Kong, as The China Project left the former office of Country Garden the doorman spoke up. ‘They moved out a week or two ago,’ he said with a smile. ‘They’re having some problems. Weren’t you here yesterday?’ I told him I was not. ‘Someone just like you came by.’ ‘What, a foreigner?’ ‘Yeah. Someone just like you was here yesterday trying to talk to them.’ I thanked the man and walked out onto Nathan Road. Cars zoomed by, the sky was gray, and I reflected that someone, somewhere, had lost a lot of money.”
From Reuters. “Hiroshi Watanabe, Japan’s former top currency diplomat, recalls how Chinese policymakers eagerly studied ways to avert a Japan-style burst of an asset bubble that led to prolonged deflation and economic stagnation – until around 2015. ‘Then they stopped. In the past seven to eight years, they seem to be ignoring everything they learned,’ said Watanabe, who retains close ties with incumbent policymakers. ‘Under the Xi administration, China probably shifted its attention away from economics,’ he told Reuters. Now, China may be paying the price. Inflation is stalling and its deepening real estate crisis was identified as among the biggest risks to global growth during the International Monetary Fund and World Bank meeting being held in Marrakech Oct. 9-15.”
This Post Has 113 Comments
Comments are closed.
‘Prices also fell during this year’s third quarter in most of the neighborhoods with big drops in the number of sales. ‘Interest rates are taking more of a toll on some Phoenix-area neighborhoods than others’
Tina:
via GIPHY
You will own nothing.
Website called WTF Happened In 1971?
Lots of charts and graphs, the first few of which are:
Growth in productivity and hourly compensation since 1948
Income gains widely shared in early postwar decades — but not since then
Income growth, from 1917 to 2012
Shares of gross domestic income (subtitled Relentless 50-year decline in wages’ share of the economy’s total income)
Income concentration at the top has risen sharply since the 1970s
And from a chart titled 1971 Cost Of Living:
New House $25,200
Average Income $10,622
New Car $3,560
Average Rent $150
https://wtfhappenedin1971.com/
Louis Rossmanm makes a great point today
When EV makers go bankrupt, what happens to the car? and everything is hooked up to the “cloud”
https://www.youtube.com/watch?v=l27_75pDvd4
The car doesn’t go anywhere, but its utility and value depends on someone buying the EV maker’s assets and providing the service previously provided by the EV maker. Otherwise, the owner is deservedly screwed.
‘‘I feel badly for the people. They’ve been under contract for a long time,’ he said. ‘We’re sorry for the delays, but literally they’re getting a $900,000 townhome for about $350,000’
That’s the spirit Mike, keep those a$$ poundings coming!
‘said in a filing that StoryBuilt did not follow ‘typical accounting practices’
Somebody is going to jail.
‘As of the end of August, 346 condos, or 83 per cent of available units, had been sold. It is unknown what will happen to the condos that have been purchased’
Probably all schlonged. You guys are going to be looking up at that 40 story’s of eyesore for many years.
‘While the receiver will carry on with The One’s development, selling the remaining units could be challenging. ‘The world has changed for our industry’
Sux to be you Scott. How’s that fer red hotness?
New homeowners won’t see a profit for over a decade
https://www.axios.com/2023/10/22/us-home-sales-profit-years
Get comfy, homeowners: It can take up to 13.5 years to break even on your purchase, per Zillow data exclusively shared with Axios.
Why it matters: You’ll have to stay in your house for more than a decade before you can sell and make a profit.
Context: Historically, experts have said you need to stay in your home at least five years to break even. But with mortgage rates inching toward 8%, new homeowners will need to stay put longer to avoid going underwater.
“But with mortgage rates inching toward 8%, new homeowners will need to stay put longer to avoid going underwater.”
That doesn’t make sense. Did they mean ‘to avoid selling when their mortgage is underwater’? Obviously hanging on to a home for a longer period of time cannot avoid an interim period of underwaterness.
to avoid going underwater
A drowning appears inevitable.
Of course the presumption that you can hang on until you are no longer underwater won’t work out for everyone, either. Some times life circumstances intervene, and you have to move when in an underwater situation.
yep, you better stay in those houses for at least 10 years, cause that’s what the local municipalities are banking on to finance the ever higher wages & fleet of brand new shiny company/govt vehicles.
every year.
(cause, cause, well, the WATER dept. has new cars, so we here in the _________ dept deserve new ones!)
howyagonnagetitbythetaxpayers?!
Why, just send out a glossy 4 page insert w/monthly bill, crying about how decrepit the current buildings/infrastructure are.
but hide the wage increases & brand new shiny vehicles in the new bonds passed by vote or decree.
funny how, during the 17yrs as a homemoaner, I’ve never, EVER had any govt agency, muni, school district, etc be honest in submitting rate increases that publicly included a wage hike. never.
* that would be a third rail subject, guaranteed to incite outrage.
or they use weasel words like “Rate Adjustment” to soften the impact of a “Rate Increase”, ’cause when’s the last time you ever got a DECREASE from a “Rate Adjustment” ?
Also can’t help but notice the current & retired govt workers/military on my street have ALL made out like bandits, while the non-unionized private sector employees not so much. keyword: Disability
I attribute the current high govt wages to the late 1990’s tech boom which resulted in said govt. workers leaving in droves for tech, and the remaining govt supervisors were hysterically shrieking about
“LOSING WORKERS DUE TO LOW PAY!”
OMG THE SKY IS FALLING?!
WHAT WILL WE DOOOOO !??”
Well, what they did was quickly pass pay increases, to retain those “valuable” workers doncha know, that substantally & AUTOMATICALLY increased each year.
ka_CHING!
OK, have I missed offending anyone? the days still young. now GET OFF MY LAWN !
but meanwhile none of that boring old infrastructure stuff actallly gets replaced/renewed/updated. out of sight out of mind.
Oh look our water plant that has an operating life of 30 years is now 50 years old and we need to pass a bond increase (i.e. raise taxes) to buy another one because we never put any money away for it.
My city wanted to pass a tax increase to fund a 50 million dollar “water park” in a city of 15,000 people that can’t even keep the city pool open from memorial day to labor day. Meanwhile the water/sewer/storm lines are 80 to 100 years old……………………
Yeah, we’re doomed
Are tax loss benefits really sufficient to make up for massive investing losses?
Financial Times
Exchange traded funds
Ark finds silver lining in massive ETF losses: years of tax benefits
Cathie Wood pitches upside of disappointing returns of flagship investment fund
Ark Investment Management’s chief executive Cathie Wood
Cathie Wood’s flagship investment product is down more than 25% over the past three months
Will Schmitt in New York
43 minutes ago
Cathie Wood’s Ark Investment Management has a new pitch to investors who might be concerned by the asset manager’s huge losses owing to rising interest rates — think of the tax write-offs.
Wood’s flagship investment product — the $6.3bn ARK Innovation exchange traded fund, known as ARKK — is down more than 25 per cent over the past three months, according to Morningstar.
After an exceptional 2020 and despite being up about 17 per cent since January 1, ARKK has generated an annualised three-year return of -28 per cent. That is largely owing to a catastrophic 2022, when it plunged about 67 per cent.
Because Ark’s strategies have lost so much money since the US Federal Reserve started raising rates in March 2022, the company is telling investors that they are unlikely to incur taxes on capital gains distributions via ARKK and Wood’s other actively managed ETFs for at least the next two years.
“This means that current and future shareholders of ARK ETFs can remain invested in disruptive innovation in a compounded fashion, without being taxed, for potentially two more years or longer,” said an Ark research note by director of financial reporting and fund accounting Rob Kamentsev.
…
That’s the spirit. Lose a $1 to gain .$15 or .$20.
That’s what the investing dreams are made of.
Just think about the potential to avoid taxes for two or more years, and you can feel happy about all the money you lost buying dumb tech stock investments at the market top.
Financial Times
Opinion The Long View
A mountain of worry for investors
Rising interest rates rather than geopolitics dominate market worries
Katie Martin
Interest rates are likely to resemble Table Mountain, higher for longer, according to some analysts, but the mystery is the behaviour of Treasuries
Katie Martin October 20 2023
…
The real curiosity … is in Treasuries, which have been sinking in price at a spectacular pace, shoving up yields in the process. Anyone with a passing interest in markets will be aware that yields, a cousin of benchmark interest rates, have been heading higher for more than a year, but they are reaching eye-popping levels now and have stretched further over the past week. At close to 5 per cent, 10-year Treasury yields are at their highest point since 2007.
…
The Bank of England’s chief economist Huw Pill … said interest rates were likely to resemble Table Mountain — high but flat at that high level. This is a nice visual metaphor for the higher-for-longer formulation that investors are struggling to learn to live with.
As he pointed out, the alternative tactic follows the shape of the Matterhorn — an altogether pointier mountain. In this framework, rates push higher but central banks quickly pull them lower again. This route is proving popular in emerging markets and deep down, big investors have been hoping the US and other major economies will do it too, despite constant warnings from policymakers that they will not relent until inflation is properly under control.
…
Fed chair warns of further interest rate hikes
Benzinga
Volatility notably returned to the markets this week as investors navigated the escalating conflict between Israel and Hamas, remarks from Federal Reserve Chair Jerome Powell and mixed earning reports from leading U.S. corporations.
Powell warns of further hikes
During an event organized by the Economic Club of New York, Powell emphasized the need for a “careful” approach by the Federal Reserve that considers economic data. He also hinted that if the economy’s strength and inflation resurgence continue to surprise, further interest rate hikes may be on the horizon. It was a week marked by significant volatility in Treasuries, with yields reaching 5% on 10-year bonds. Rising bond yields pressured major indices, with only the energy and consumer staples sectors remaining unscathed.
…
https://www.freep.com/story/money/business/2023/10/21/fed-chair-warns-of-further-interest-rate-hikes/71226312007/
REUTERS NOW
Why Country Garden’s woes aren’t confined to China
Posted October 22, 2023
Ailing Chinese property developer Country Garden has global markets on edge over whether it is set to default, but the giant firm’s problems are also felt by ordinary folk a long way from China, as the tale of one Australian suburb shows. Julian Satterthwaite reports.
…
https://www.reuters.com/video/watch/idscqz?now=true
‘The buildings don’t go away … but the owners do’: Warren Buffett and Charlie Munger warn that a storm is brewing in the US real estate market — here’s where they’ll seek refuge
Vishesh Raisinghani
Sat, October 21, 2023 at 4:00 AM PDT·3 min read
…
https://finance.yahoo.com/news/buildings-don-t-away-owners-110000979.html
‘Instead of focusing on commercial real estate, Berkshire Hathaway is more actively involved in residential property development, having added stakes in several homebuilders in recent months. The portfolio now includes sizable positions in D.R. Horton (DHI), Lennar (LEN), and NVR (NVR). A potential boom in homebuilding could benefit them all.’
Unca Warren is a bag holder.
“‘I think it’s painful. I think it’s ugly,’ Matthew Graham, chief operating officer at Mortgage News Daily, said on CNBC.
Au contraire, Matt. Seeing speculative excesses purged from the system as true price discovery stalks the Fed’s asset bubbles is a thing of terrible beauty.
‘I don’t think anybody in my community of mortgage originators would disagree that in many ways, this is worse than the great financial crisis in terms of volume and activity.’”
Wut? But peerless prognosticator Yellen the Felon said three weeks ago that she’s “very optimistic” about the outlook for the economy.
https://www.reuters.com/markets/us/us-treasurys-yellen-says-she-is-very-optimistic-about-outlook-us-economy-2023-10-03/
Remember when Paulson was vomiting the same nonsense all the way up to ‘08?
Some Paulson quotes:
“It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.” 7/20/2008
“I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.” 8/10/2008
‘COVID came in,’ he said. ‘It had repercussions well beyond just the period of the pandemic.’”
Remember when we treated viruses with hot soup, vitamin C, and plenty of rest, instead of Communism?
Destroy the economy because of a minor respiratory illness with a 0.00000000000001% infection fatality rate?
Sounds like a World Economic Forum success story.
Globalists gonna globe.
Never forget & never forgive their millions of accomplices & accessories who went along with this charade.
Darwin at work today
A man was run over while allegedly trying to steal a catalytic converter. The driver of the car said she was woken up by the sound of the saw then backed the car up, killing the man.
https://www.youtube.com/watch?v=ya8qCoxu8cA
Five catalytic converters are stolen every day from the official Denver airport parking lots.
One of my libtard neighbors had her catalytic converter stolen from her new Lexus hybrid a couple of years ago. The replacement cost was over $4K, and it took more than 3 weeks to get the catalytic converter she needed (this was during the scamdemic-era supply chain disruptions). In her extreme rage she said some very illiberal things about the non-Amish perp (caught on home security camera video, but this is one of the property crimes that almost never results in an arrest). Her “woke” ideology remains intact – let’s just leave it at that.
When asked what they will do to staunch the theft of vehicles and catalytic converters from their very pricey parking lots, Denver airport management (many are AA hires) just shrug, with a “what do you want us to do?” attitude. It’s much safer (and cheaper) to park your car at an off property private lot, and there are more than a few.
Did I mention that the Great Hall remodeling project at the airport has been utterly mismanaged and is years behind schedule? Or that maintenance has gone to Hades in a handbasket, with broken escalators, elevators, etc. being commonplace? One time my flight couldn’t leave because the jetway broke.
and that airport is only 30 years old. (unlike most which are 50 to 60 years old)
that airport is only 30 years old
The only thing wrong with the “Great Hall” was that the TSA lines could get too long. That was the only problem that needed to be solved. Everything else was a waste of money.
Federal income taxes.
The Hill — The tyranny of the GOP isolationist minority (10/22/2023):
“The recent fate of appropriations bills for Ukraine serves as an ominous reminder of the tyranny of the minority in the United States. More and more, a small group of Republican politicians who believe compromise and bipartisanship are the dirtiest of dirty words is thwarting the will of the majority — and undermining our democracy.
Nonetheless, with former President Trump leading the way, an isolationist faction of the Republican party in the House has doubled down on its “just say no” strategy. In July, Trump maintained that if elected again he would instantly bring the conflict to an end: “I would tell Zelensky, no more. You got to make a deal. I would tell Putin, if you don’t make a deal, we’re going to give him a lot … I will have the deal done in one day. One day.” When Vladimir Putin praised this statement, Trump replied, “Well, I like that he said that. Because that means what I’m saying is right.”
Rep. Marjorie Taylor Greene parroted Trump’s assertion that giving aid to Ukraine while a border wall on the U.S.-Mexico border was unfunded “puts America last.” Rep. Jim Jordan agreed with the can’t-walk-and-chew-gum proposition that the “most pressing issue in Americans’ minds is not Ukraine. It is the border situation and crime on the streets.”
https://thehill.com/opinion/international/4268543-the-tyranny-of-the-gop-isolationist-minority/
See also:
https://www.antiwar.com/
and undermining our democracy
Code for “undermining our Communism”.
Given for how long the stopped clock recession warnings have been wrong already, is it safe to ignore them?
A recession will hit next year, hammering stock prices and home values, Wall Street veteran predicts
Theron Mohamed Oct 22, 2023, 6:35 AM ET
A trader at the CME.
The US economy will slump into recession next year, hitting stocks and house prices, Harley Bassman says. Scott Olson/Getty Images
– The US economy will capitulate and enter a recession next year, Harley Bassman says.
– The Wall Street veteran expects stocks and house prices to fall once unemployment and mortgage defaults rise.
– Bassman once ignored a warning from “The Big Short” star Steve Eisman about the mid-2000s bubble.
…
https://www.businessinsider.com/us-economy-outlook-recession-stock-market-house-prices-bassman-inflation-2023-10
Don’t Look Now, but a Top Recession-Predicting Indicator Is Making a Historic Move
By Sean Williams – Oct 22, 2023 at 5:06AM
KEY POINTS
– A rare decline in commercial bank credit points to tighter lending standards.
– Additionally, a meaningful drop in M2 money supply bodes poorly for the U.S. economy and Wall Street.
– However, history has shown that notable drops in the Dow Jones, S&P 500, and Nasdaq Composite are blessings in disguise for opportunistic long-term investors.
For only the third time in 50 years, an all-important economic datapoint is meaningfully declining — and it’s not good news for stocks.
Over multiple decades, investors would struggle to find a more consistent creator of wealth than Wall Street. But trying to predict directional moves in the Dow Jones Industrial Average (DJI -0.86%), S&P 500 (GSPC -1.26%), and Nasdaq Composite (IXIC -1.53%) over shorter spans is a guessing game.
Truth be told, there is no such thing as an economic indicator or predictive tool that can gauge, with 100% accuracy, which direction stocks will move next. There are, however, select data points that have strongly correlated with moves in the Dow Jones, S&P 500, and Nasdaq Composite. One such recession-predicting indicator is making a historic move right now, and it points to a very clear outcome for stocks.
This has happened only three times in 50 years
Among the multitude of economic data points to comb through, it’s commercial bank credit that stands out as the potential tell-all for the U.S. economy and Wall Street.
Commercial bank credit is a figure reported weekly by the Board of Governors of the Federal Reserve. It encompasses securities held by U.S. commercial banks, such as mortgage-backed securities, as well as various loans and leases, such as residential and commercial real estate loans, along with consumer loans (e.g., credit cards and auto loans).
…
https://www.fool.com/investing/2023/10/22/top-recession-predicting-indicator-historic-move/
Interesting comparison: Compare a period including 2007-2009 to the post-2020 period.
https://fred.stlouisfed.org/series/TOTBKCR
It would seem to indicate that we are one year into the current recession, at twice the altitude.
A $2T budget deficit can kick a lot of cans.
one year into the current recession3Q2022 GDP shenanigans.
We May Be In A Crash, And Here’s Why
Oct. 22, 2023 10:21 AM
Michael A. Gayed, CFA
Investing Group Leader
Summary
– Majority of stocks are underperforming, consistent with a stock market crash.
– Treasuries experienced a disturbing crash, indicating a credit event and potential stock market collapse.
– I predict a short squeeze in Treasuries and warn of a possible stock market crash.
…
https://seekingalpha.com/article/4642469-we-may-be-in-crash
‘I cashed in my retirement account to buy our home’: My husband left me and our two kids and won’t pay the mortgage. What now?
By Quentin Fottrell
Oct. 19, 2023
https://www.marketwatch.com/story/i-cashed-in-my-retirement-account-to-buy-our-home-my-husband-left-me-and-our-two-kids-and-wont-pay-the-mortgage-what-now-a1189071
At a point when US home prices seem poised to follow stock and bond prices into the CR8R, would you rather be house rich and cash poor or cash rich and house poor?
Oct 21, 2023 – Economy & Business
Gen Xers’ wealth is locked up in their homes
Brianna Crane
Illustration of a safe with a roof like a house.
Illustration: Brendan Lynch/Axios
Roughly seven in 10 Gen Xers own their homes, but accessing that equity isn’t easy.
Why it matters: Many Gen Xers are house-rich but cash-poor.
The big picture: Nearly half of Gen Xers say they feel behind on retirement savings, according to a Bankrate study.
Roughly two-thirds of Gen Xers say they’re uncomfortable with their level of emergency savings, and 22% have no emergency savings at all, per the study.
The intrigue: U.S. homeowners are sitting on $31.7 trillion of home equity, but unlocking that cash could unleash fees like higher mortgage rates.
What’s happening: People are only doing cash-out refinances when they have to, according to Urban Institute housing expert Laurie Goodman.
These folks typically have lower credit scores and have exhausted other cash resources like savings, she says.
Of the people who refinanced in the first half of 2023, nine in 10 were cash-out, per Freddie Mac.
Consolidating debt is one major reason people are tapping into their home equity, Loan Pronto CEO Roger Moore tells Axios.
Borrowers are also opting to expand or renovate their current home instead of moving, he says.
Be smart: People with a 700+ credit score can use HELOCs or HELOANs to keep their primary mortgage rate and access additional cash/credit.
…
https://www.axios.com/2023/10/21/housing-equity-refinance-us
And the beauty of a HELOC is you can borrow to 100% of you homes value, immediately putting you upside down. Cash out first mortgages are usually limited to 80% LTV. Who needs that? You want that last 20% of equity to ensure your totally screwed. Translation? HELOC’s and cash out second mortgages are one of the quickest ways to foreclose in a flat market, let alone one that’s crashing.
What’s the rate on HELOCs these days? Wouldn’t it work better to borrow at 0% and earn frequent flier miles on a credit card you pay off in full every month?
8%+, baby!
https://www.businessinsider.com/personal-finance/current-heloc-rates
what the heck is wrong with people? If you are short of cash and have “exhausted other options like savings and credit cards” you don’t do a cash out refi or a HELCO. You wake up to the fact that you are broke, but luckily you still have an asset you can sell RIGHT NOW and have cash.
Price it well (i.e. low), get that albatross from around your neck and be debt free.
But no they’d rather go bust completely.
They are irrationally afraid of letting go of the shanty, the fear being that they will never be able to buy another one.
Justice is coming for the scamdemic-era crimes against public health.
https://twitter.com/stkirsch/status/1715916687453925832
“100% safe and effective”
Congrats to the hardy remnant who survived Biden’s promised “Winter of disease and death.”
Give it up, RINO scum traitor.
https://www.politico.com/news/magazine/2023/10/21/mike-pence-sad-presidential-campaign-00122589
The elbow bump with Pelosi did that boy in.
From Politico:
We once had a Pizza Ranch here in my little burg, There was a shooting there (incredibly rare here) and within a year, IIRC, they closed it.
Pizza Ranch
Really?!
Federal income taxes.
US budget deficit balloons to $1.7 trillion — largest outside COVID era (10/20/2023):
“The US government on Friday posted a $1.695 trillion budget deficit in fiscal 2023, a 23% jump from the prior year as revenues fell and outlays for Social Security, Medicare and record-high interest costs on the federal debt rose.
The Treasury Department said the deficit was the largest since a COVID-fueled $2.78 trillion gap in 2021.
The fiscal 2023 deficit would have been $321 billion larger, but was reduced by this amount because the Supreme Court struck down Biden’s student loan forgiveness program as unconstitutional.
The US deficit peaked in fiscal 2020 at $3.13 trillion as the sharpest downturn since the 1930s severely constrained tax revenues while spending on unemployment benefits, direct payments to consumers and aid to businesses peaked.”
https://nypost.com/2023/10/20/us-budget-deficit-balloons-to-1-7-trillion-largest-outside-covid-era/
Destroy the economy over a minor respiratory illness with a 0.00000000000001% infection fatality rate?
Sounds like a World Economic Forum success story.
The fiscal 2023 deficit would have been
The Treasury also transferred over $300B of expenses to the 2024 fiscal year.
Safe to assume some brown envelopes got passed to the right officials.
https://www.dailymail.co.uk/news/article-12658281/Couple-Phoenix-property-restraining-order-party.html
hmmmmmmmmmm so removing the “justice” system from ways of obtaining justice on a legal and common basis is now the way.
Well that just might not end like the PTB expect it to.
There are other ways of stopping the house next door from being a party house……………..
Well that just might not end like the PTB expect it to.
If there is a breakout of vibrant exuberance (gun shots) I’m sure the PTB will just shrug.
I always lean on the advice from a placard my grandma hung in her kitchen:
A closely watched pot never boils over.
Forbes
Money
Markets
Stock Market Crash Ahead
John S. Tobey
Contributor
Oct 21, 2023,05:45pm EDT
Red arrow zig-zags, then heads down
Graph depicting stock market breakdown and selloff
There’s no ducking it now. The widespread, serious negatives have reached a critical level. There are no cures available except a major reset of investor beliefs, rationale and expectations.
Importantly, this reset is not of the “typical” overoptimistic, fad-driven, easy-money booms. Instead, it is the return to traditional capital market operations that had been skewed by the Federal Reserve since 2008 — 15 years! Never has there been such an extended period and enormous, anti-capital market actions.
…
https://www.forbes.com/sites/johntobey/2023/10/21/stock-market-crash-ahead/?sh=3053469238ba
Yahoo
Yahoo Finance
Stocks tumble amid bond market pummeling: Stock market news today
Karen Friar and Hamza Shaban
Fri, October 20, 2023 at 1:20 PM PDT·1 min read
In this article:
US stocks ended Friday’s trading session in the red, as the benchmark 10-year Treasury yield hovered just below 5% in the wake of comments by Federal Reserve Chair Jerome Powell.
The Dow Jones Industrial Average (DJI) fell 0.9% or 270 points, while the S&P 500 (GSPC) shed 1.3%. The tech-heavy Nasdaq Composite (IXIC) dropped about 1.5%. All three major indexes posted weekly losses.
Stocks lost ground after Powell signaled the Fed is committed to its “higher for longer” rates stance, which spurred gains in Treasury yields. The benchmark 10-year yield (^TNX) rose briefly to 5% late on Thursday, a closely watched level not seen since July 2007.
“The underlying message is ‘don’t be looking for a bailout from the Fed anytime soon,’” Greg Whiteley, a portfolio manager at DoubleLine, told Reuters. “That gives people the go-ahead to take rates above 5%.”
…
https://finance.yahoo.com/news/stocks-tumble-amid-bond-market-pummeling-stock-market-news-today-200534655.html
Markets
‘Buckle up’: A notorious market bear who called the 2000 and 2008 crashes warns stocks remain near their highest valuation levels in history — and that the market is ripe for steep and abrupt losses
William Edwards
Oct 21, 2023, 2:00 AM PDT
Traders on the floor of the New York Stock Exchange work frantically as panic selling swept Wall Street in this Oct. 19, 1987 file photo.
AP/Peter Morgan
By many measures, S&P 500 valuations were high at the start of 2023. And yet, the index has performed impressively year-to-date, up 10.7% and climbing as high as 20%.
Near-term gains like this often cause investors to lose the bigger picture, says John Hussman, the president of the Hussman Investment Trust who called the 2000 and 2008 stock-market crashes. High valuations, despite their little influence on short-term returns, often mean devastating outcomes for investors over a longer period.
…
https://www.businessinsider.com/stock-market-crash-bubble-valuations-recession-sp500-prediction-hussman-grantham-2023-10
Stock Market Crash Alert: Powell Just Sent Shockwaves Through the Market
Investors may need to brace for further rate increases in the near future
3d ago · By Samuel O’Brient, InvestorPlace Financial News Writer
– Federal Reserve Chair Jerome Powell recently hinted that more interest rate hikes could be coming.
– The Fed Chair admitted that inflation isn’t easing quickly enough.
– This could lead to further rate increases if conditions don’t shift soon.
Are interest rates going to keep increasing? According to Federal Reserve Chair Jerome Powell, the answer may be yes. In a recent speech before the Economic Club of New York, Powell discussed several important matters pertaining to the economy. One thing he made clear is that inflation isn’t easing quickly enough.
While Powell noted that progress on slowing inflation has been steady, he also hinted that further interest rate hikes are possible if the economy remains hot or a tight labor market stops easing. That suggests a stock market crash could be in the cards.
As a result, the Dow Jones Industrial Average, the Nasdaq Composite and the S&P 500 have all slipped today. While the news from Powell hasn’t been all bad, it is likely to generate more uncertainty as investors consider how to proceed amid complicated economic times. This is troubling for investors because, if there’s one thing Wall Street hates, it’s uncertainty.
Is the Next Stock Market Crash Coming?
The likelihood of another stock market crash is currently one of the most hotly debated topics among economists and investors. Investment firm Smead Capital Management recently informed investors that it believes the current economy is approaching a scenario similar to the “Tulip Mania” of 1636.
…
https://investorplace.com/2023/10/stock-market-crash-alert-powell-just-sent-shockwaves-through-the-market/
While the news from Powell hasn’t been all bad
I trust you realize that Powell is lying with every breath. We’re in a credit default event.
Not sure I understand your point.
Are you saying the US doesn’t plan to keep making payments on its outstanding debt?
Once that happens we will be well beyond a credit default event. For now it will be “limited” to:
Car loans
Credit cards
Mortgages
Business loans (including bond defaults)
Student loans
etc.
No. I meant that credit defaults are rising, forcing interest rates up. I’m not sure Powell controls the universe.
Gotcha! In theory, at least, when credit quality deteriorates, lenders compensate by adding a credit default risk premium to the interest rates they charge. When the deterioration is economy wide, so are the interest rate increases to cover the risk that increasing numbers of customers will stiff the lender.
This can also show up as a gap between rates on loans perceived to be at higher risk of default (e.g. home mortgages ~8%) versus lower perceived risk (Treasurys ~5%).
DOW 30 -0.86%
S&P 500 -1.26%
NASDAQ 100 -1.50%
Legendary investor Jeremy Grantham warns the S&P is likely to crash by 30% — and could nosedive 50% if ‘a couple of wheels’ fall off
Theron Mohamed
Oct 6, 2023, 3:53 AM PDT
Jeremy Grantham.
Alison Yin/AP Images for DivestInvest
– The S&P 500 will most likely plunge by 30% and could even be cut in half, Jeremy Grantham says.
– The bubble expert said there would probably be a recession next year and house prices would slump.
– Grantham also dismissed bitcoin as an “elaborate scam.”
…
https://markets.businessinsider.com/news/stocks/grantham-spx-stock-market-outlook-crash-house-prices-recession-bitcoin-2023-10
A closely watched pot never boils over.
Addendum: except in Francis Soyer’s kitchen, where it happens at least 3X weekly.
Like a recession.
China’s Plan for 3,500 New Cities to House Half the World’s Population – Now Mostly Ghost Towns
China Observer
45 minutes ago
Situated 15 kilometers south of the urban district of Baodi in Tianjin, amidst wheat fields and forests, stands a cluster of European-style structures. Hidden beneath the verdant canopy, this villa complex, known as the “largest villa area in Asia,” is called the Jing-Jin City. However, since its opening more than a decade ago, its occupancy rate has remained extremely low. The place has earned its nickname as the “largest ghost villa in Asia.” So, what could be the reason for such a massive empty city located between Beijing and Tianjin, two mega-cities?
https://www.youtube.com/watch?v=oMaVyMxMFl0
17 minutes.
“China’s Plan for 3,500 New Cities to House Half the World’s Population – Now Mostly Ghost Towns”
Was human reproduction part of the plan?
China’s fertility rate dropped to record low in 2022, estimates show
Figure fell from 1.15 in 2021 to 1.09, the lowest of any country with a population over 100 million
Amy Hawkins
Wed 16 Aug 2023 09.53 EDT
Last modified on Wed 16 Aug 2023 21.30 EDT
China’s fertility rate dropped to an estimated record low of 1.09 in 2022, the lowest of any country with a population over 100 million, according to government data.
Demographers from the China Population and Development Research Centre, a Chinese government research institution, released data indicating that last year’s fertility rate fell to 1.09 from 1.15 in 2021, below Japan’s rate for the same time period and only slightly higher than South Korea’s, which was estimated to be 0.8.
…
https://www.theguardian.com/world/2023/aug/16/china-fertility-rate-dropped-to-record-low-in-2022-estimates-show
Waiting on the Argentina presidential election results. Look at the images and language that globalist scum media The Guardian uses to depict and describe Javier Milei:
https://archive.ph/WRWgZ
No article excerpt needed, it’s exactly what you would expect from globalist scum media. Revving up the chainsaw up here in the Northern Hemisphere in a show of solidarity.
The only good communist is a dead communist ☠️
I don’t know if Argentina can handle yet another fiscally irresponsible regime with debt defaults and hyperinflation. I guess that’s what WEF wants for all of us.
IIRC, Argentina is joining the BRICS+ alliance. I’m sure the WEF wants to stop that dead in its tracks.
Quite a read about the Biden family.
‘Breaking Biden’ Author—Meet Jim Biden: Nightclub Owner, International Business Mogul, Joe’s Bagman
ALEXANDER MARLOW
22 Oct 2023
https://www.breitbart.com/politics/2023/10/22/breaking-biden-author-meet-jim-biden-nightclub-owner-international-business-mogul-joes-bagman/
Is that the brother with the nude selfie?
It’s hard keeping up the overt depravity of the Biden family. Imagine what we don’t see.
RINO McConnell Defends Biden’s $100 Billion Ukraine-Israel Aid Proposal: ‘I View It As All Interconnected’
by Jamie White
October 22nd 2023, 11:32 am
McConnell was asked Sunday on CBS’s “Face The Nation” whether it was possible to pass more aid for Ukraine without aiding Israel given some Republicans no longer support sending more aid to Ukraine.
“I just think that’s a mistake,” McConnell responded. “I mean, I know there are some Republicans in the Senate, and maybe more in the House, saying Ukraine is somehow different. I view it as all interconnected.”
https://www.infowars.com/posts/rino-mcconnell-defends-bidens-100-billion-ukraine-israel-aid-proposal-i-view-it-as-all-interconnected/
“Don’t Go To College”: Bill Maher Compares Universities To “North Korean Re-Education Camp”
BY TYLER DURDEN
SUNDAY, OCT 22, 2023 – 12:50 PM
Bill Maher just told young Americans to skip college because it “just makes you stupid,” and that elite schools are similar to “a North Korean re-education camp,” that are racist towards Asians and don’t teach accurate history.
The fact that college presidents, who usually love to speak out about anything, couldn’t find their voice to condemn the worst attack [on Jews] since the Holocaust says a lot about who really controls colleges, and why, if ignorance is a disease, Harvard Yard is the Wuhan wet market.”
https://www.zerohedge.com/political/dont-go-college-bill-maher-compares-universities-north-korean-re-education-camp
John Mellencamp – Human Wheels.
https://www.youtube.com/watch?v=BWhZ1GI9UyM
How does it possibly pencil out for real estate investors to HODL thousands of vacant residential investment properties in cities where prices are plunging towards the bottom of a ginormous CR8R?
DOES NOT COMPUTE.
https://m.youtube.com/watch?v=ZBAijg5Betw
FINANCE HOUSING
San Francisco could get 90% of its homeless off the streets with the country’s fiercest housing speculation tax, but landlords are already fighting it tooth and nail
The city by the bay has tens of thousands of vacant units and roughly 8,000 homeless, but will its vacant home tax have any effect?
BY IRINA IVANOVA
October 21, 2023 5:00 AM EDT
Homeless people seen in the Tenderloin district of San Francisco in California, United States on September 24, 2022.
Tayfun Coskun/Anadolu Agency via Getty Images
Most cities have homeless problems and lots of vacant housing units, but everything is magnified in San Francisco. Last year, there were 7,700 people living in shelters or on the street in the city by the bay, according to city figures. Meanwhile, there were more than 60,000 vacant units at the end of 2021, according to a policy analysis from last fall, although that figure included newly built apartments and those awaiting sale. Enter the vacant home tax.
This week, San Francisco formalized a voter-approved law, also known as Proposition M, to crack down on owners of multifamily units that let them sit vacant. The law, which goes into effect in January, could push as many as 7,000 units on the market, according to city estimates—that would be literally 90% of the city’s homeless getting housed, based on the above data. Problem solved?
This could be a big deal for a city of less than a million that has become the face of modern fears of a 1970s-style “doom loop” given its endemic homelessness, ever-present cost-of-living crisis, and famously dysfunctional housing market. But real-estate interests are already fighting the law in state court, claiming their right to not rent their property is enshrined in the Constitution.
“The primary purpose of the law is to fill empty homes,” supervisor Dean Preston, the law’s chief backer, told Fortune Friday. “Holding housing off the market for a long time, when there are people who need housing, is bad for our city,” he said. “Our hope is that [the tax] is enough to change the decision making of the real-estate speculator or the owner of the property.”
Sometimes, developers have a strategy of buying buildings, removing longtime tenants, and then reselling at a profit, Preston said. More recently, some new constructions have failed to sell units amid a market slump, creating “zombie buildings,” the San Francisco Chronicle reported last month.
“We have a situation where we have thousands of people living on the streets homeless, and tens of thousands of units being held off the market,” Preston told Fortune. “We have buildings in my district that have been empty for years.”
…
https://fortune.com/2023/10/21/san-francisco-homeless-crisis-vacant-real-estate-tax-landlords-property-rights/
Look out below!
https://twitter.com/KobeissiLetter/status/1716130010098983289
Seems like there are some missing cities from that list. How far has San Francisco CR8Red by now, for example?
‘More sellers are making concessions as homes are taking longer to sell, fewer homes are selling above asking price, and there are more homes to choose from’
via GIPHY
Gosh, if tapped-out debt donkeys can’t afford to make their car payments, how will they cover their rent or mortgages?
https://www.msn.com/en-us/money/personalfinance/americans-are-overdue-with-their-car-payments-at-highest-rate-in-nearly-30-years/ar-AA1iCKVW
‘With higher construction financing costs and softening rents, builders in D-FW and nationwide are cutting back. Even so, more than 72,000 apartments remain under construction in North Texas. The current building peak is what Parsons sees as ‘a generational high akin to the 1970s and not something we will see again for decades’
The last few years of easy money just kept this dead duck flying longer and making things worse Jerry.
‘If you want to put new money in, you need to reset the deck to do so,’ RXR CEO Scott Rechler told the Financial Times in February. ‘And if we can’t, we may have to hand back the keys’
That’s the spirit, you tell em Scott!
‘Chinese policymakers eagerly studied ways to avert a Japan-style burst of an asset bubble that led to prolonged deflation and economic stagnation – until around 2015. ‘Then they stopped. In the past seven to eight years, they seem to be ignoring everything they learned,’ said Watanabe, who retains close ties with incumbent policymakers. ‘Under the Xi administration, China probably shifted its attention away from economics’
Xitler went full commie about three years ago Hiroshi. Even before that they were organ harvesting of political opponents, slave labor camps of minorities, etc. They make what becomes fentanyl, it’s undisputed yet not spoken about much. That communist thugs have sunk to this level would only surprise a person with no historical knowledge.
0:32 🙂
Joe Piscopo doing Sinatra, singing Rolling Stones song “Under My Thumb”
https://youtu.be/nMl9qMIBaDY?si=DoszbWMKbEXEak8m
McCarthy agreed to release this footage.. HE LIED.. This is one of the reasons he is gone. They want you to forget..
https://www.bitchute.com/video/2ButHJRY1whF/
2:13.
Didn’t Liz Cheney show that clip in the made for TV show trial. Oh I’m sorry I guess not, that must have hit the cutting room floor just like the part of Trump’s speech that said… “I know that everyone here will soon be marching over to the Capitol building to peacefully and patriotically make your voices heard”.
Ice T — Escape From The Killing Fields:
https://www.youtube.com/watch?v=07bVj2YnOqk
Cypress Hill — Real Estate:
https://www.youtube.com/watch?v=jZBT3EvlPwk
Ice Cube — What They Hittin’ Foe?
https://www.youtube.com/watch?v=2860arthmBM
That’s heavy material for a white guy to process.
Does it seem like markets have finally stabilized?
Financial Times
Today’s top headlines:
– US 10-year Treasury yields hit 5 per cent for the first time since 2007
– Asia stocks dip alongside oil and gold over interest rate and war concern
– China index hits lowest level since 2019 despite efforts to boost market
Updated 4 minutes ago
US 10-year Treasury yields hit 5 per cent for the first time since 2007
Mary McDougall and George Steer in London
The yield on benchmark 10-Treasuries rose above 5 per cent for the first time since 2007, extending a multi-week rout in bonds as investors bet that the Federal Reserve will keep interest rates at current high levels for longer.
Line chart of 10-year US Treasury yield, % showing 10-year yields highest since 2007
The 10-year yield rose 0.078 percentage points to 5 per cent, reflecting falling prices, as strong US jobs numbers, retail sales figures and higher than expected inflation in September have helped push yields higher.
The move comes ahead of the US September Chicago Fed national activity index which will be published later on Monday.
…
Financial Times
Chinese equities
China’s stock market drops to pre-pandemic low
Slow growth, property sector woes and geopolitical tensions continue to weigh on shares
A woman walks in front of the Shanghai Stock Exchange building
Worsening relations between the US and China have put asset managers under pressure from Washington over investments in some Chinese companies listed in Shanghai and Shenzhen
Hudson Lockett and Cheng Leng in Hong Kong 3 hours ago
Chinese shares fell to the lowest level since before the Covid-19 pandemic, as Beijing’s latest efforts to prop up the country’s stock market failed to stem a sell-off driven by slowing economic growth, a liquidity crisis in the property sector and geopolitical tensions.
The CSI 300 index of large and liquid Shanghai- and Shenzhen-listed stocks fell as much as 1.3 per cent on Monday to about 3,463, marking the equity benchmark’s lowest level since 2019. The gauge has fallen about 15 per cent so far this year, in dollar terms.
Chinese equities outperformed global markets early in the pandemic and staged a rally at the start of this year on hopes of a rebound from disruptive zero-Covid policies.
However, a subsequent slowdown in growth and high-profile defaults on dollar debt by Chinese developers have prompted investors to dump China stocks, while a string of support measures launched since July by top officials — to “invigorate capital markets and land policies to boost investor confidence”, according to the politburo — have failed to halt the sell-off.
Global funds have also been unsettled by worsening relations between the US and China, with asset managers coming under pressure from Washington over investments in some Chinese companies listed in Shanghai and Shenzhen.
“Global investors need two floors before they get back into China — they need a floor for the geopolitics and a floor for the Chinese economy,” said an Asia-based senior capital markets banker at one Wall Street investment bank. “Only then they can start pricing things up.”
…
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall;
All the king’s horses and all the king’s men
Couldn’t put Humpty together again.
Keynesians are at a a loss to comprehend the eventual collapse that follows year upon year of hyper economic stimulus.
Those empty buildings won’t unbuild themselves. But the Keynesian ditch digging principle suggests stimulating employment by hiring demolition crews to tear them down again. It’s insanely wasteful of societal and natural resources, but at least it will help reduce unemployment.
Financial Times
Chinese business & finance
How China’s property crisis has unfolded, from Evergrande to Country Garden
Thousands of unfinished homes and a swath of debt restructurings show the turmoil among developers
Thomas Hale, Cheng Leng, Andy Lin and Hudson Lockett in Hong Kong yesterday
China’s biggest private sector developer, Country Garden, appears to be heading for default after failing to make a payment on an offshore bond — another critical moment in the slow reckoning taking place in the country’s vast property sector.
Two years ago it was the default of another developer, Evergrande, that encapsulated concern over the scale of problems in Chinese property. Evergrande had racked up $340bn of liabilities and become the world’s most indebted property developer.
Country Garden was long thought more stable but its problems now show both the deterioration in the sector — with sales drying up and thousands of stalled developments across China — and the difficulties for Beijing in getting to grips with a long crisis that has shaken the world’s second-largest economy.
“China is struggling to strike a balance on its property policy over the past two years — they have been caught between providing too much stimulus or not enough,” said Larry Hu, chief China economist at Macquarie. “They have been muddling through — but the measures they have taken so far have been not enough to ease the developer-related credit risk perceived by homebuyers.”
…
“China is struggling to strike a balance on its property policy over the past two years — they have been caught between providing too much stimulus or not enough.”
It’s all about tweaking that stimulus to the right degree. Ignore those empty cities full of recently constructed buildings that will never be used…