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You Can’t Have Too Much Sugar And Not Expect A Crash

A weekend topic starting with US News and World Report. “What takes place in investors’ minds when they buy assets, hold on to stocks, trim their positions and make other decisions with their capital? Behavioral finance explores some of the common patterns and biases that shape investors’ actions and, ultimately, their portfolios. These are some of the biases that drive investor behavior: Anchoring bias. Herd mentality. FOMO (fear of missing out). Confirmation bias. Familiarity bias. Loss aversion. Overconfidence. FOMO, otherwise known as the fear of missing out, is an investing bias that branches into other areas of our lives. It’s one of the most powerful forces that can lead to substantial losses and ties in with herd mentality. While FOMO and herd mentality are similar, Michael Barbera, a consumer psychologist on the faculty of the University of North Carolina, says scarcity is the driving force behind FOMO.”

“‘In behavioral finance, the fear of missing out is categorized as scarcity,’ he says. ‘Scarcity refers to a cognitive bias that influences decision-making by placing an exaggerated emphasis on the limited availability of a resource rather than its actual intrinsic value. This bias can lead individuals to perceive items or opportunities as more valuable simply because they are scarce or rare, regardless of their true worth.'”

NBC Bay Area in California. “There’s some major shifts in the market showing just how much more you’ll have to pay in order to own a home in the Bay Area. Numbers from realtor.com show the median rent in the San Francisco metro area, which includes parts of the North Bay, is about $2,100 and the typical mortgage payment is about $5,900. In the South Bay, the median rent is about $3,400 and the typical mortgage payment is $6,600.”

The Orange County Register. “A typical California homebuyer’s mortgage payment is up 127% – yes, more than double – since the pandemic transformed the housing market. The typical California buyer would get a $4,717 payment, assuming 20% down, on the median-priced $843,340 single-family home at this week’s 7.63% average rate for a 30-year loan. Back in February 2020, just before coronavirus struck, rates were 3.47%. So a house payment on that month’s $579,770 median price was $2,075. Yes, that 45% price hike is a huge jump in less than four years, but it’s a modest slice of the 127% surge in this house-payment benchmark. In December 2000, when mortgage rates were last at current levels, California’s median sales price was $248,000 – then the fourth-highest on record. That means prices have increased 240% (nearly triple) over 23 years. Incomes meanwhile are up only 96% in the same period – not even double.”

“Rates near quarter-century highs are quite a pandemic-era switch. Initially, the Fed backstopped a coronavirus-chilled economy with cheap money. Mortgage rates hit a historic low of 2.65% in January 2021 and stayed below 4% until the spring of 2022. So who can afford to buy? Well, look at it this way: California sales activity is so depressed it’s running near lows not seen since 2007, the bubble-busting days just before the Great Recession’s financial meltdown.”

The Coast Report in California. “The Economics and Future Outlooks Club at Orange Coast College attended the 29th Annual Economic Forecast Conference at Disneyland Hotel on Oct.19. Anil K. Puri, director of the Woods Center for Economic Analysis and Forecasting for CSUF, discussed the role of inflation and unemployment rates in terms of Orange County’s economic status compared to other cities in California. According to Puri, unemployment rates in Orange County are going down, and despite job growth slowing down, the market is comparatively still above the historical average. ‘Home values have recovered but affordability is at a record low… it’s worse than the 2005-2008 housing boom/bust by 20%,’ Puri said.”

The Wall Street Journal. “David Siegel went to work for an affiliate of Guaranteed Rate in 2021 and got a signing bonus of more than $100,000. Interest rates were super low, and mortgage bankers were raking in cash. Now that business has dried up, the mortgage company wants its money back. He said it fired him one month shy of the date when it could no longer ask for the bonus back, then demanded the money. Guaranteed Rate and its affiliates are also telling hundreds of other former employees that they have to return their signing bonuses, people familiar with the matter said. ‘It seems like they realize they aren’t making money in their mortgage business, so the way to get income is to claw back the payments,’ said Siegel, who is based in New Jersey.”

“The mortgage industry is notoriously boom or bust, but this bust is especially bad—and it’s only getting started. Unlike previous housing downturns, there’s no obvious way out. If the economy keeps chugging along, then the Federal Reserve will continue to keep rates high—which would in turn keep the housing market in the dumps. If the economy sinks, the Fed may loosen rates—but a recession wouldn’t do the housing market much good either. Many mortgage companies are growing desperate. They are laying off workers, merging with other lenders or exiting the business altogether.”

“Just a few years ago, the mortgage industry was in the middle of another extreme: a record boom. The pandemic ushered in low interest rates that prompted millions of homeowners to refinance and others to buy bigger homes. Lenders wrote trillions of dollars worth of loans and added staff at a rapid clip, often paying up to do so. But when the Fed started hiking rates last year, the industry quickly swung from feast to famine.”

“The mortgage market used to be Steve Walsh’s cash cow, but now it’s squeezing him on both sides. Business at his Scottsdale, Ariz., mortgage brokerage, Scout Mortgage, is down about 90%, he said, and head count has fallen to seven from a high of about 25 at the end of 2020. To save money, Walsh wants to downsize. But he has been unable to sell his 7,700-square-foot house at the $3 million he is seeking. ‘We got the rug-pull of our lives, everyone did,’ he said. ‘Rates are not supposed to be here.'”

The Globe and Mail in Canada. “As the Toronto-area housing market heads into the final weeks of 2023, real estate agents are wondering if indecisive buyers will be able to overcome their inertia in November. Patrick Rocca, broker with Bosley Real Estate, says sales have been so tepid amid rising inventory in September and October that he’s advising homeowners in some cases to at least consider delaying their listing until buyers perk up. ‘If you don’t have to sell, maybe you should wait until spring.’ In the current environment, Mr. Rocca says showings are down in every segment of the market as buyers fret about interest rates and the economic outlook. ‘It’s a tough, tough market,’ he says. ‘Buyers are scared. I think they’re waiting for stability.'”

“Mr. Rocca adds that prices have softened in the Greater Toronto Area. When aspiring buyers see that trend, they wait to see if they will drop further. Transactions are still taking place, he says, but days on the market are longer and prices are soft. Meanwhile, inventory has been building since national listings hit a 20-year low in the spring. ‘There’s a lot more product and we’re not seeing many more sales.’ Houses are sitting for lengthy stretches when sellers are holding out for lofty prices. ‘They’re stretching for prices that were there in April, May, maybe last year.'”

“Mr. Rocca is not seeing a lot of homeowners selling because of financial stress but he has heard from some in the industry that those numbers are rising. Often homeowners list because they are moving up or downsizing to another property and it’s essential they sell their existing home. ‘The people who need to sell – and there are many – they’ve got to be realistic,’ he says. He points to the example of one homeowner who recently told him he was hoping to fetch $1-million more than Mr. Rocca figured the property would sell for. For such owners, he believes waiting until the spring for the possibility of a bounce back is the better option. ‘If you’re not going to be realistic, why bother?'”

From News.com.au. “The number of business insolvencies surged to its highest level since 2015 in the three months to September 30, with construction industry collapses leading the way. The data, from the Australian Securities and Investments Commission (ASIC) shows that 2486 businesses hit the wall during the last quarter. It’s the largest number of insolvencies reported in a single quarter since the December 2015 quarter, when 2499 businesses collapsed. Of the collapses in the September quarter, 783 of them – or 31 per cent – were in the construction industry. For the same quarter in 2022, 605 construction firms failed, while the September quarter of 2021 booked just 238 construction failures.”

“Liquidator Nicholas Crouch, from insolvency firm Crouch Amirbeaggi, told news.com.au that he was ‘not surprised’ that insolvencies in the construction sector had leapt over the past two years. He said the hundreds of billions in Covid-19 stimulus pumped into the economy by the Australian government helped prop up struggling business and resulted in long delays between an insolvent event and liquidators being called in, as business owners tried to hang on. During Covid, the government relaxed the threshold for creditors to issue statutory demands for payment and the time frames for businesses to respond to statutory demands for payment. Directors were also released from any personal liability for trading while insolvent during that time, and insolvencies fell dramatically.”

“Mr Crouch described the size of the pandemic stimulus as ‘bad economic management’ and said that the government ‘got it wrong.’ He said that the higher interest rate environment meant it was unlikely that the pain was over for the building sector. ‘Construction is getting totally hammered by interest rates,’ he told news.com.au. Mr Crouch added that when the relaxed rules and added stimulus during Covid combined with ‘historic low interest rates that were out of kilter with the real level of economic distress’ the uptick in insolvencies was inevitable. ‘You can’t have zero per cent interest rates and not expect consequences. You can’t have too much sugar and not expect a crash.'”

From Scoop. “Today I read this article (David Seymour calls for sweeping changes to make the Reserve Bank more accountable, NZ Herald, 26 October) showing David Seymore’s wish to double-down on New Zealand’s financial model. The Ponzi financial model operates much more broadly than the fraudulent Ponzi schemes associated the likes of players Bernie Madoff and Charles Ponzi. In particular, the model can and does operate without the fraudulent deception of these renowned schemers. And it can operate on a global scale.”

“Ponzi finance takes place when ‘investors’ (people wishing to make money from unspent money) advance saved funds to ‘players’ (understood by ‘investors’ as ‘intermediaries’ such as banks or funds managers). Ponzi players then use the funds for their own gratification (gambling or consumption) rather than reinvesting those funds into a venture which would be expected to yield a profit. Instead of servicing the ‘investors’ with genuine earnings, Ponzi players service existing ‘investors’ by borrowing from new ‘investors’. A Ponzi player ‘borrows from Peter to pay Paul’, rather than paying Paul out of income earned. Peter and Paul are example ‘investors’. (In a fraudulent scheme, one could say ‘rob’ instead of ‘borrow’; although even in fraudulent schemes ‘investors’ only actually lose when the scheme unravels.)”

“(Note that ‘investor’ is one of the most ambiguous words in the English language. In correct economic language, a saver is not an investor; but a true financial intermediary – such as a legitimate bank – is an investor. An investor is a spender, or a direct financer of spending; a purchaser or manufacturer of new assets. A true investor is neither a saver nor a consumer nor a purchaser of existing real or financial assets. Essentially, an investor operates a productive business or acts in a businesslike way, sinking capital and awaiting an eventual return in the form of profit or interest. Investment is ‘giving up something real to create greater future value’. Investment is not the purchase of existing assets in the hope that those assets can be sold in the future at a higher price; such speculative behaviour is gambling, though not all gambling is imprudent. Genuine investment may be called productive gambling, whereas speculative ‘investment’ is unproductive gambling.)”

“Non-fraudulent Ponzi finance takes place when there is no overt deception. ‘Players’ and ‘investors’ are open about their activities, though there may be degrees of naivete or self-deception on the part of either. While the Ponzi financial model was not fully operable in New Zealand until 1993, it was established in 1985 with the deregulation of the financial sector and the adoption of a monetary policy which ensured that interest rates would be high enough to attract Peter’s and Paul’s money.”

“Should New Zealand Incorporated shift to another financial model? Yes, because ultimately two wrongs do not make a right. And because this model underpins the increasingly grotesque inequality we see in Aotearoa New Zealand. And because the two extranational Ponzi games which we are familiar with from the late 2000s, that played by Iceland’s banks and that played by the Southern Eurozone (including Ireland who got away with it; see Economic Growth, Ireland compared to Australasia, Evening Report, 12 Oct 2023), both crashed and burned soon enough.”

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This Post Has 116 Comments

  1. ‘The mortgage market used to be Steve Walsh’s cash cow, but now it’s squeezing him on both sides. Business at his Scottsdale, Ariz., mortgage brokerage, Scout Mortgage, is down about 90%, he said, and head count has fallen to seven from a high of about 25 at the end of 2020. To save money, Walsh wants to downsize. But he has been unable to sell his 7,700-square-foot house at the $3 million he is seeking. ‘We got the rug-pull of our lives, everyone did,’ he said. ‘Rates are not supposed to be here’

    Jerry broke it off in yer a$$ Steve.

    1. Typical. If this idiot had never upsized in the first place and saved his money during the good times he’d be able to ride out the bust on a beach in Bali. Now he’s gonna be living in his parents garage.

    2. ‘Rates are not supposed to be here.’

      Wrong again Steve. Look at the historical mean. Unless your comment is referring to where we were 2 years ago.

        1. The government tortured CPI is averaging 4%. Shadow Stats calculates the same by the 1980 method and comes up with 8%. Going out on a limb, I’d say interest rates are very low still.

          2. Shadow Stats calculates the same by the 1980 method and comes up with 8%.

            Hence the cost of living crisis.

          3. We’re in for a decade of high inflation and there’s nothing the government or Fed can do about it. These are long term economic forces that can take a decade to change. Look back to the 1970’s.

          5. Grocery prices seemed to have jumped just in the last two weeks it seems. The only “deals” I got today were the 2 fer 1ones on the really expensive specialty food that no one bought at full price. The $10 pasta sauce was 2 fer 1one as was the frozen chicken kebabs. Everything else was just plain expensive. $6 for a 12oz Bag of chips? No way! Cars are still expensive and there’s no deals. Housing prices are still high and not falling at least in my Chicago suburb. Gas is $4 a gallon and my real estate taxes just jumped $2,800!!!!! Yeah inflation is definitely there whatever numbers the government is faking is complete bs

  2. ‘He said the hundreds of billions in Covid-19 stimulus pumped into the economy by the Australian government helped prop up struggling business and resulted in long delays between an insolvent event and liquidators being called in, as business owners tried to hang on. During Covid, the government relaxed the threshold for creditors to issue statutory demands for payment and the time frames for businesses to respond to statutory demands for payment. Directors were also released from any personal liability for trading while insolvent during that time, and insolvencies fell dramatically’

    ‘Mr Crouch described the size of the pandemic stimulus as ‘bad economic management’ and said that the government ‘got it wrong.’ He said that the higher interest rate environment meant it was unlikely that the pain was over for the building sector. ‘Construction is getting totally hammered by interest rates,’ he told news.com.au. Mr Crouch added that when the relaxed rules and added stimulus during Covid combined with ‘historic low interest rates that were out of kilter with the real level of economic distress’ the uptick in insolvencies was inevitable. ‘You can’t have zero per cent interest rates and not expect consequences. You can’t have too much sugar and not expect a crash’

    No one could have predicted that a minor respiratory illness could do all that.

    1. “No one could have predicted that a minor respiratory illness could do all that.”

      Corrected version: “No one could have predicted that a GOVERNMENT MANDATED RESPONSE to a minor respiratory illness could do all that.”

      There, more better.

  3. “Scarcity refers to a cognitive bias that influences decision-making by placing an exaggerated emphasis on the limited availability of a resource rather than its actual intrinsic value”

    How’s that intrinsic value working out for all you winnahs now? LOLZ

  4. FOMO, otherwise known as the fear of missing out, is an investing bias that branches into other areas of our lives. It’s one of the most powerful forces that can lead to substantial losses and ties in with herd mentality.

    Fear of Getting Schlonged (FOGS) will be a far more powerful force as the implosion of Housing Bubble 2.0 accelerates & FB tales of woe fill the MSM.

  5. Now that business has dried up, the mortgage company wants its money back.

    Color that money gone.

    1. Mortgage brokering is the most “easy come, easy go” industry other than home painters who drink away their earnings in between new jobs.

  6. For such owners, he believes waiting until the spring for the possibility of a bounce back is the better option. ‘If you’re not going to be realistic, why bother?’”

    And expecting a Spring Miracle Revival is realistic? I’m going to feel pure schadenfreude as the FBs who trusted such “advice” from UHSs get financially destroyed.

    1. So sellers were holding off until later this year for lower rates and now they’re supposed to wait until Spring? By Spring, things will be even uglier from what I’m hearing.

      1. Crooked Hillary would’ve immediately ordered the jack-booted thugs to draw up a plan for national gun confiscation. That would’ve been the catalyst for the next American Revolution. Gun owners know what their fate will be if the Democrat-Bolsheviks ever disarm them.

        1. I was thinking more along the lines of a nuclear exchange. That said, PedoJoe might get us there anyway.

          2. I recall Dem think tank white papers stating that the US could successfully invade and defeat Russia. More than one think tank, if I recall correctly. They really believed that we could just march into Moscow. Imagine how that would have ended.

          3. Hillary was completely incompetent. She may have F’d things up but there’s only so much damage she could have done ie Bengazi. But these people in office now behind Biden are competent and they’re are purposely destroying the existing order. Hillary couldn’t have ever facilitated 10 million illegals. But biden’s commies are organizing their midnight flights into red states.

  8. Seeing a lot of new listings recently that disclose that the seller is a real estate agent. I’d bet that these are the same realtors, as in the piece above, that are telling there potential clients to wait to list until Spring while they try to dump all their investment properties in the market first. If you think these guys are looking out for your interests first then you deserve what’s coming. And it’s obvious the rats are jumping off the burning ship.

  11. Selling World War III as a jobs program.

    Russia Today — Western arms makers see revenues booming on Ukraine conflict (10/28/2023):

    “The largest Western military and defense corporations have seen revenues spike due to orders linked to the Ukraine conflict, third-quarter earnings released this week revealed. The surge in revenues is attributed to the sharp increase in military spending by Western countries in order to supply weapons to Ukraine and rearm their own militaries.

    US-based Lockheed Martin, General Dynamics, and RTX (formerly known as Raytheon Technologies Corp) all reported better than expected results over the past week, and guided that they expect still higher revenues in the upcoming quarters.

    Defense contractors also expect a boost in orders due to the recent escalation of hostilities in Gaza, which already sent their stocks surging this week.

    Russian officials have repeatedly condemned the supply of Western weapons to Kiev, noting that it only exacerbates the conflict while doing little to deter Russia from achieving its military objectives. Moscow has described the conflict as a US-led proxy war against Russia in which Ukrainians are used as “cannon fodder.”

    The continued military aid to Ukraine has also been growing increasingly unpopular with the populaces of Western countries. Numerous polls over the past months have shown rapidly shrinking public support for spending money on arming Ukraine instead of confronting domestic challenges such as inflation and the cost-of-living crisis.”

    https://www.rt.com/business/586035-western-arms-makers-revenues-ukraine-gaza/

    Nobody outside the Beltway supports Ukraine. Nobody.

    1. Related article.

      Mike Johnson didn’t win the Speaker’s gavel, the Military Industrial Complex and AIPAC did:

      “Representative Mike Johnson vowed to support the wars in Ukraine and Israel in an interview after becoming House Speaker. The Congressman told Sean Hannity that China, Russia, and Iran make up an “axis of evil” that poses a huge threat to the US.

      As well as supporting future aid for Ukraine, the Speaker is willing to send American soldiers to the Middle East in defense of Israel. “Watching it very closely, one thing that House Republicans are resolved on is that we must stand with our most important Ally in the Middle East, and that’s Israel.” He added, “I hope that it doesn’t come to boots on the ground.”

      https://news.antiwar.com/2023/10/27/new-house-speaker-russia-china-and-iran-are-new-axis-of-evil/

      Onward Christian Soldiers.

      1. the Military Industrial Complex and AIPAC

        Politico: Johnson assumes speakership with few ties to K Street

        “K STREET SCRAMBLES TO FIGURE OUT MIKE JOHNSON: Mike Johnson has won the House speaker’s gavel with an unusual calling card: Up until a few days ago, K Street was largely unaware of the man. Lobbyists are scrambling to read up on the four-term Louisiana Republican, who comes to the role of House GOP leader without the sprawling network of downtown alumni — or fundraising operations — of his predecessors in the role.”

        1. Johnson may not have been deeply in bed with the MIC lobbyists prior to becoming Speaker, but he won’t retain the gavel for long if he doesn’t bend the knee.

          War pigs gonna pig.

    2. Being that some automotive parts are becoming unobtanium, I wonder if the procurement of new weapons will be hitting similar supply chain issues.

        1. From what I have heard, we can’t even keep up supplying Ukraine with old school artillery shells and that supplies are low and domestic production is slow.

  13. Biden asks ‘who the hell’ needs a high-capacity assault weapon after Maine shooting (10/28/2023):

    “President Biden questioned the need for high-capacity magazines for assault weapons on Friday, amid calls for new gun control legislation after a mass shooting in Maine.

    “Who the hell needs an assault weapon that can hold, in some cases, up to 100 rounds?” Biden said at a campaign reception Friday evening.

    https://thehill.com/homenews/administration/4280952-biden-high-capacity-assault-weapons-maine-shooting/

    Who the hell does?

    An armed citizenry capable of resistance to and overthrow of tyrannical government, that’s who.

    2. Let’s say 16 million Americans own an AR-15 (and that doesn’t count those who don’t but own an AK-47 like quite a few I know and the government confiscates all of them to save less people that are killed in this country each year with a hammer, that still leaves the 15 or 20 nuts a year who commit these crimes.

      So now you have disarmed 16 million law abiding citizens who are now subject to being attacked by countless criminals who are no longer afraid to commit crimes against them and you still have the 15 or 20 nuts who if they can’t get their hand on a now illegal high capacity mag weapon (which is doubtful) will just run over 20 school kids with a car or start a fire and block a door or build a bomb and blow it up or any other lunatic thing one of these loons could come up with to kill people.

      They have stripped 16 million people of their rights and you still have the 15 or 20 nuts. (or at least the ones who weren’t part of a made for tv national assault rifle tragedy)

      They would be better off stopping the Fentanyl coming across the open border that kills one hundred thousand Americans each year or stop selling booze to save the thirty thousand killed by drunk drivers each year.

      But I guess none of that would leave the population of the U.S. powerless to do anything about a tyrannical government would it.

      Jake Fogleman
      March 29, 2023

      “Taken together, the polls find that 6 percent of Americans own an AR-15, about 1 in 20,” Post reporter Emily Guskin wrote. “The data suggests that with a U.S. population of 260.8 million adults, about 16 million Americans own an AR-15.”

      https://thereload.com/poll-one-in-twenty-americans-own-an-ar-15/

      Hammers are used to kill more people than ‘assault weapons’ each year

      by Christopher Tremoglie, Commentary Writer
      April 05, 2023 04:49 PM

      Consider the FBI’s data on homicides in the country. From 2015-2019, according to FBI homicide statistics, an average of 315 people were killed annually by rifles. Some subset of those might be considered assault weapons. In comparison, hammers — a tool traditionally used for home improvement — were used in an average of 446 homicides per year.

      https://www.washingtonexaminer.com/opinion/hammers-used-to-kill-more-people-than-assault-weapons

      1. “Taken together, the polls find that 6 percent of Americans own an AR-15, about 1 in 20,” Post reporter Emily Guskin wrote.

        The vast majority of AR-15 owners aren’t about to tell pollsters from the globalist scum media that they own these dastardly “weapons of war.”

        1. “The vast majority of AR-15 owners aren’t about to tell pollsters from the globalist scum media that they own these dastardly “weapons of war.”

          ai would agree and think even the numbers below are low.

          Report: Over 24.4 Million AR-15s, AK-47s in Civilian Hands

          Stephen Gutowski
          July 20, 2022

          AR-15s are becoming even more popular.

          More than 4.5 million ARs. AKs, and similar rifles were bought by American civilians since the last time their circulation was estimated, according to a new report. The National Shooting Sports Foundation (NSSF), the gun industry’s trade group, found there are now at least 24,446,000 of the guns in civilian hands. It said 2.7 million were produced or imported in 2020 alone–the most for any year on record.

          https://thereload.com/report-over-24-4-million-ar-15s-ak-47s-in-civilian-hands/

          1. They don’t really want your gun. They know you’re never going to shoot anyone with it and that you’ll never give it up. They really want to criminalize the owning of the gun, so they can lock you up, put a felony on your record, ruin your life, destroy your career, lose your livelihood. Democrat states have been emptying the prisons since st Floyd’s overdose. They’ve been making space, for you, deplorable. My state IL just banned at-15s. They tried to make it effective immediately with no grandfather
            Clause. They asked the bills sponser (D-Highland Park) why he was going to turn millions of law abiding citizens into felons overnight by making their legally purchase, guns suddenly illegal, and he said that he didn’t want to think about that all he wanted to think about and talk about was making decisions of Illinois more safe. He really said this. Because the point of gun control isn’t to take your gun. The point is to make you a felon and put you in jail.

      2. They would be better off stopping the Fentanyl coming across the open border that kills one hundred thousand Americans each year

        That’s a feature, not a bug.

    2. Posted this late yesterday, sorry about full article it’s from Epoch Times and links won’t work without paying.

      EV Skeptic Toyota Chairman Says People Are ‘Finally’ Waking Up to Reality of Electric Vehicles

      The chairman of Toyota said that falling demand for electric vehicles is a sign people are waking up to the reality that EVs are overhyped and have drawbacks

      By Tom Ozimek
      10/26/2023

      Toyota’s chairman and former CEO, Akio Toyoda, told reporters at an auto show in Japan this week that waning demand for electric vehicles (EV) is a sign that people are waking up to the reality that EVs aren’t the silver bullet against the supposed ills of carbon emissions they’re often made out to be.

      “People are finally seeing reality” about EV technology, Mr. Toyoda told reporters ahead of the Japan Mobility Show in Tokyo this week, speaking in his capacity as the head of the Japan Automobile Manufacturers Association, the organizer of the event.
      Mr. Toyoda, a long-time skeptic of a full-steam-ahead adoption of EVs, stepped down from his role as CEO of Toyota this year amid criticism that he wasn’t serious enough about pushing the company into a quick adoption of battery-powered cars.

      Asked by reporters at the auto show on his thoughts about falling EV demand, Mr. Toyoda’s response implied that he feels vindicated in his reluctance.

      “There are many ways to climb the mountain that is achieving carbon neutrality,” he said while suggesting that consumers are finally waking up from a dreamscape pushed by climate change alarmists that puts EVs on a pedestal and overhypes their benefits while downplaying their drawbacks.

      His remarks came as demand growth for EVs in various markets has slowed, leading some companies to dial back their electrification plans.

      1. His remarks came as demand growth for EVs in various markets has slowed, leading some companies to dial back their electrification plans.

        So they ran out of suckers willing to pay $60K+ for a deathtrap that takes forever to recharge.

        1. The real suckers are the ones who paid 90k yesteryear for the same car today’s suckers are paying 60k for. Go ahead and color me evil, but that makes me chuckle.

    3. Also live in a $4000/month rental home owned by a Wall Street behemoth, with 5% annual rent increases until kingdom come…

      1. Yahoo News
        The Conversation
        I studied 1 million home sales in metro Atlanta and found that Black families are being squeezed out of homeownership by corporate investors
        Brian Y. An, Georgia Institute of Technology
        Sat, October 28, 2023 at 7:09 AM PDT·4 min read
        Corporate investors own nearly one-third of all single-family rental properties in Atlanta.
        Kruck20/iStock via Getty Images

        In the years since the Great Recession, when housing prices dramatically fell, Wall Street investors have been buying large numbers of single-family homes to use as rentals. As of 2022, big investment firms owned nearly 600,000 such properties nationwide.

        Critics say this practice drives up home prices and worsens the housing shortage, making it harder for families to afford to buy.
        …
        https://news.yahoo.com/studied-1-million-home-sales-123245360.html

        1. and found that Black families are being squeezed out of homeownership by corporate investors

          So, if they are bidding against White families the corporate investors will gallantly step aside ?

        2. That imbalance will correct itself. You can’t squeeze blood out of a turnip. I expect a massive inventory dump going onto the market in places like Atlanta very soon. In any given area, the higher the investor ownership, the sharper the price declines will be.

      2. Bisnow – (almost) never boring
        MacKenzie Capital Announces Tender Offer To BREIT Investors At 38% Discount
        National
        Capital Markets
        October 25, 2023 Dees Stribling, Bisnow National

        MacKenzie Capital Management is offering shareholders of Blackstone Real Estate Income Trust $9.27 per share, which the company says represents a 38% discount to BREIT’s estimated net asset value of $14.88 per share.
        …
        https://www.bisnow.com/national/news/capital-markets/mackenzie-capital-offers-breit-investors-cash-now-but-at-38-discount-to-nav-121317

  16. From News.com.au. “Mr Crouch added that when the relaxed rules and added stimulus during Covid combined with ‘historic low interest rates that were out of kilter with the real level of economic distress’ the uptick in insolvencies was inevitable. ‘You can’t have zero per cent interest rates and not expect consequences. You can’t have too much sugar and not expect a crash.’”

    – Sugar high, and then the sugar crash. This could be doughnuts or heroin. Same with stimulus $. Virtually free $ and unproductive debt have consequences. The Central Banks know what they’re doing. They’re not innocent bystanders to all of this.

    \\

    “The Wall Street Journal. “The mortgage industry is notoriously boom or bust, but this bust is especially bad—and it’s only getting started. Unlike previous housing downturns, there’s no obvious way out. If the economy keeps chugging along, then the Federal Reserve will continue to keep rates high—which would in turn keep the housing market in the dumps. If the economy sinks, the Fed may loosen rates—but a recession wouldn’t do the housing market much good either.”

    – The Fed: Damned if you do and Damned if you don’t. Massive ($Ts) interventions in virtually all asset classes and markets. I’m sure this is fine.

    – Central banks are a deadly plague and a global economic pandemic in their own right. People apparently have very short memories. It was not that long ago that we had the previous disasterous asset bubbles of 2000 (Dot Com bubble) and 2008-9 (Housing Bubble 1.0 / GFC). I guess that wasn’t enough. Now we have both of these combined in The Everything Bubble. It’s different this time though…

    – Enjoyed the (global) boom? Now enjoy the (global) bust.

    “The greatest advances of civilization, whether in architecture or painting, in science and literature, in industry or agriculture, have never come from centralized government.” – Milton Friedman

    “The enduring lesson of the 20th century is that socialism is a failure, and free markets are a success. But the politicians keep advocating just a little more socialism.” – Milton Friedman

    “The statesman who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” – Adam Smith, The Wealth Of Nations, Book IV, Chapter II, p. 456, para. 10.

    “Every individual… neither intends to promote the public interest, nor knows how much he is promoting it… he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.” – Adam Smith, The Wealth Of Nations, Book IV, Chapter II, p. 456, para. 9.

    “You can ignore reality, but you can’t ignore the consequences of reality.”  – Ayn Rand

    “Sooner or later everyone sits down to a banquet of consequences.” – Robert Louis Stevenson

    1. “Anchoring bias. Herd mentality. FOMO (fear of missing out). Confirmation bias. Familiarity bias. Loss aversion. Overconfidence. FOMO, otherwise known as the fear of missing out, is an investing bias that branches into other areas of our lives. It’s one of the most powerful forces that can lead to substantial losses and ties in with herd mentality.”

      Did they forget to include FOLYS?

    2. Dumb question of the day:

      Since the Fed’s rate hikes are on pause, how come longterm rates are still increasing and stocks are still a CR8Ring?

    3. MarketWatch
      Stocks to struggle for traction as markets play ‘game of chicken’ with Fed on higher-for-longer interest rates
      Provided by Dow Jones
      Oct 27, 2023 1:15 PM PDT
      By Vivien Lou Chen

      There’s a widening gulf in expectations between financial markets and the Federal Reserve centered on traders’ doubts that the central bank will be able to stick with its higher-for-longer theme on interest rates. Data over the past two days points to a U.S. economy with plenty of momentum left, with third-quarter U.S. economic growth and the monthly headline PCE inflation for September each coming in higher than expected. Nonetheless, fed funds futures traders stuck with a 78.6% likelihood of no Fed action by December. Moreover, those traders also boosted the chances of a rate cut by May, to 41.3% as of Friday. Meanwhile, Treasury yields finished little changed to slightly lower on the day, with the policy-sensitive 2-year rate falling to a two-week low of 5.01%.

      It’s not uncommon to have a divergence of expectations between the market and the Fed, with traders continuing to rely on a much-talked-about U.S. recession to cool inflation. Only this time around, it’s occurring against the backdrop of a war in the Middle East, which is raising the risk of an oil shock, and with evidence growing that inflation is taking its time to get back to the Fed’s 2% inflation target.

      There really is a dislocation and gap between what the market is telling us and what the Fed is telling us,” said Adam Turnquist, chief technical strategist for Charlotte, N.C.-based LPL Financial. “Those two will eventually converge, but until then there will be more volatility and a game of chicken going on.”Via phone on Friday, Turnquist said “the market was expecting that, at this time of the year, we would be talking about when the Fed is cutting rates. But the Fed has been steadfast and hasn’t changed its tone much at all. If I think about why policy makers would cut rates, they would be cutting rates because of a recession or if they are more or less claiming victory on inflation” — neither of which has happened yet.Indeed, one forecast from within the central bank — the Atlanta Fed’s GDP Now estimate — pointed to a 2.3% growth rate for the fourth quarter as of Friday.

      In addition, the Fed’s favorite inflation gauge, known as PCE price index, showed a greater-than-expected 0.4% monthly gain in the headline inflation rate for September and a 0.3% gain in the narrower monthly core gauge, the latter of which “is certainly cause for concern,” said Will Compernolle, a macro strategist for FHN Financial in New York. Monthly increases of 0.2% in core inflation are what’s needed “to sustain the Fed’s longer-run target of 2% year-on-year inflation.”
      …
      See: The Fed’s Mission Isn’t Done. Its Hawkishness Will Keep Surprising Investors.
      …
      Read: The market is almost always wrong about what the Fed will do next, Wall Street economist warns”

    4. Would this be a good time to ignore your financial adviser’s subgestion to stay fully invested in the stock market at all times and go to cash instead?

      1. Investor’s Business Daily
        Stock Market Today
        Dow Jones Futures: Apple, Fed Loom For Market Correction; Microsoft
        ED CARSON 02:10 PM ET 10/28/2023

        Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Apple (AAPL), the Federal Reserve and the October jobs report will headline another busy week of news.

        The stock market correction intensified this past week, with the major indexes all falling to multimonth lows amid mixed earnings. The Nasdaq eked out a gain Friday, fueled by Amazon.com. But it was generally another weak session.

        Investors should be very cautious, largely holding cash.
        …

      2. DOW 30 -1.12%
        S&P 500 -0.48%
        NASDAQ 100 +0.50%

        3 reasons why Wall Street giants say investors should pay attention to Treasurys as yields soar
        Jennifer Sor
        Oct 28, 2023, 10:36 AM PDT
        trader nyse pray
        Getty Images / Bryan R. Smith

        – Bonds are looking more attractive than stocks for the first time in years.

        – The 10-year Treasury yield topped 5% for the first time since 2007 this week.

        – There are three reasons why it could be a good time to plow cash into ultra-safe Treasurys.

        For the first time in years, bonds are looking attractive relative to stocks as yields soar on ultra-low-risk US government debt.

        The yield on the 10-year Treasury topped 5% for the first time since 2007 this week, and the plunge in bond prices represents one of the worst market crashes of all time, according to Bank of America.

        But experts say that yields at 5% should look attractive to investors with cash on the sidelines, especially when considering the long-standing reputation of Treasurys as an extremely low-risk investment.

        Here are three reasons why now could be a good time for investors to jump into the Treasury bond market, according to some of Wall Street’s top investing experts.
        …
        https://markets.businessinsider.com/news/bonds/bond-market-outlook-treasury-yields-stock-investing-strategy-interest-rates-2023-10

    5. Now that a few big players have started snapping up Treasurys, is it already time to pile back into stocks?

      Or would it make more sense to avoid stocks until they finish pricing in higher for longer rates?

      1. FAST MONEY
        Suze Orman: ‘Big mistake if you park your money forever in bonds’
        PUBLISHED SAT, OCT 28 2023 11:00 AM EDT
        Meredith Mutter

        Suze Orman has a warning for investors relying too heavily on bonds.

        The personal finance expert believes the draw of high interest rates and an aversion to risk taking are preventing too many people from taking a “lifetime opportunity” in the stock market.

        “Some of these stocks — how do you pass them up? I mean, you have to go into them. Now, do you go into them with everything that you have? No. Do you dollar-cost average into them, and take advantage of [down] days? … Yes,” the “Women & Money” podcast host told CNBC’s “Fast Money” this week. “You’ll be making a big mistake if you park your money forever in bonds.”

        Orman, who is also co-founder of emergency fintech company SecureSave, notes long-term investors should have the stomach for the stock market’s twists and turns.
        …
        https://www.cnbc.com/2023/10/28/suze-orman-big-mistake-if-you-park-your-money-forever-in-bonds.html

      2. Apparently some commentators don’t believe in equilibrium adjustment to much higher, newly positive real interest rates.

        1. Yahoo Finance
          Business Insider
          The S&P 500 will rocket 18% by year-end as the economy stays strong and the Fed ends interest rate hikes, Oppenheimer investment chief says
          Jennifer Sor
          October 27, 2023, 4:24 pm

          The S&P 500 could soar another 18% by year-end, according to Oppenheimer.

          That’s because the economy is strong and the Fed is likely to end its rate hike cycle.

          While 5% Treasury yields have sparked concern among investors, that’s normal compared to previous eras.

          The S&P 500 is due for a monster rally by the end of the year, as the Federal Reserve looks poised to dial back its war on inflation, according to Oppenheimer’s chief investment strategist John Stoltzfus.

          In an interview with CNBC on Thursday, Stoltzfus reiterated his S&P 500 price target of 4,900 by the end of the year. That points to the benchmark index skyrocketing 18% in just over two months, a forecast that’s predicated on the Fed likely ending its rate hike cycle.

          “You’ve got to remember that when we raised that target, we were expecting that the Fed would continue be vigilant against inflation but would remain sensitive to the effects of its policy on the economy. And it has remained so,” he said.
          …
          https://finance.yahoo.com/news/p-500-rocket-18-end-232429942.html

    1. This divisive rhetoric is tearing our country apart.

      All is proceeding according to the plan.

      Meanwhile, the tribe is stunned that its former allies are turning on them. They likely figured they would be in charge after the country collapses. Turns out, their Golem has other ideas.

      Those college students who had to lock themselves in their school library to escape an anti-semitic mob, wanna bet they’ll all pull the D lever next November?

  21. How do you prefer to lose money?

    – Staying invested in cash while watching higher-for-longer inflation erode its value?

    – Buying falling knife stocks or real estate?

    – Gambling on crypto Ponzi assets?

    – Watching the value of your Treasurys CR8R as higher for longer inflation translates into ever-rising yields?

    Decisions, decisions…

  22. “Instead of servicing the ‘investors’ with genuine earnings, Ponzi players service existing ‘investors’ by borrowing from new ‘investors’. A Ponzi player ‘borrows from Peter to pay Paul’, rather than paying Paul out of income earned. Peter and Paul are example ‘investors’. (In a fraudulent scheme, one could say ‘rob’ instead of ‘borrow’; although even in fraudulent schemes ‘investors’ only actually lose when the scheme unravels.)”

    What’s the difference between that and cryptocurrency investing?

    2. “Biden invokes WAR POWERS”

      War Powers Act
      United States [1973]

      https://www.britannica.com/place/United-States

      War Powers Act, law passed by the U.S. Congress on November 7, 1973, over the veto of Pres. Richard Nixon. The joint measure was called the War Powers Resolution, though the title of the Senate-approved bill, War Powers Act, became widely used.

      The act sought to restrain the president’s ability to commit U.S. forces overseas by requiring the executive branch to consult with and report to Congress before involving U.S. forces in foreign hostilities. Widely considered a measure for preventing “future Vietnams,” it was nonetheless generally resisted or ignored by subsequent presidents, many of whom regarded it as an unconstitutional usurpation of their executive authority. Since the passage of this joint resolution, presidents have tended to take actions that have been “consistent with” rather than “pursuant to” the provisions of the act—in some cases, seeking congressional approval for military action without invoking the law itself. Members of Congress have complained that they have not been given timely notification of or sufficient details regarding some military engagements. Some legislators have gone to court (unsuccessfully) to seek adjudication of what they believe to have been violations of the act. Increasingly, presidents have identified resolutions taken by the United Nations or the North Atlantic Treaty Organization as justification for military intervention.

      1. Biden invokes WAR POWERS

        Seems an oddly misleading headline. He didn’t “invoke” anything. He informed congress of activity long after it was broadcast in the news.

  24. ‘Mr. Rocca adds that prices have softened in the Greater Toronto Area. When aspiring buyers see that trend, they wait to see if they will drop further’

    Usually when prices got down demand goes up Pat.

  25. ‘The number of business insolvencies surged to its highest level since 2015 in the three months to September 30, with construction industry collapses leading the way’

    The housing bubble in Australia has been punctured repeatedly over the years.

    ‘The Ponzi financial model operates much more broadly than the fraudulent Ponzi schemes associated the likes of players Bernie Madoff and Charles Ponzi. In particular, the model can and does operate without the fraudulent deception of these renowned schemers. And it can operate on a global scale’

    This piece is really good but long.

    1. Fox News
      ‘I want my house back’: Washington homeowner lives in van while deadbeat tenant lists house on Airbnb
      Seattle landlord lives out of van as battle to evict tenant who owes $33,000 drags on
      By Hannah Ray Lambert Fox News
      Published October 27, 2023 5:30am EDT

      A Seattle homeowner living out of a van while his deadbeat tenant listed his house on Airbnb will have to wait at least four more months for an eviction hearing due to a severe court backlog.

      “I feel like I’m just constantly getting robbed, like every day,” Jason Roth told Fox News. “This is my worst nightmare.”

      Roth barely considers himself a landlord. He bought his house in Seattle’s Rainier Valley neighborhood in 2016 and fixed it up while renting rooms to friends.

      “It was always affordable rooms available,” he said, adding that even during the pandemic, his tenants often paid him early. “It was always a positive experience.”

      That changed this year. Roth, who works as an aircraft mechanic’s apprentice, said he started renting out the entire house to make extra money for pilot school. He and his dog Wally moved into a small apartment.

      But the tenant, who signed a lease in March, now owes about $33,400 in back rent, plus utilities and late fees, Roth estimates.

      With mortgage payments and utility bills piling up, Roth said he had to cut costs and move out of his apartment and into his van, all while his tenant listed the home’s basement living space on Airbnb for nearly $150 a night using a city-approved rental license.

      “So, not only is he not paying me, but he’s generating an income through the basement Airbnb unit, and meanwhile, I’m having to pay the utilities for that unit,” Roth told KIRO 7 News in September.

      A city spokesperson later told KIRO the short-term license was invalid “because it was obtained using inaccurate information about ownership of the property.” Airbnb eventually removed the listing.
      …
      https://www.foxnews.com/us/want-house-back-washington-homeowner-lives-van-deadbeat-tenant-lists-house-airbnb

  27. More Americans face ‘persistent debt’ as interest rates and fees rise, report shows.

    https://finance.yahoo.com/news/more-americans-face-persistent-debt-as-interest-rates-and-fees-rise-report-shows-114424148.html

    American cardholders paid a record $130 billion in interest and fees in 2022, according to a new government report.

    The study released Tuesday by the Consumer Financial Protection Bureau (CFPB) was part of the government watchdog’s biennial report to Congress. The breakdown: Credit card companies charged consumers more than $105 billion in interest and some $25 billion in fees last year. Overall, it was the “highest amount” recorded in the CFPB’s data history.

    The CFPB report comes at a time when outstanding credit card debt has surpassed a record $1 trillion — and pressure from the Federal Reserve’s fight on inflation has continued to push interest rates higher.

    For many Americans, the combination of rising debt and interest rates has been hard to manage.

    “Credit card debt is more expensive than years past,” Rohit Chopra, CFPB director, said in a statement. “It’s clear that Americans need more ways to switch cards to ones with lower rates.”

    As interest rates and fees increased in 2022, more Americans had a harder time paying down their credit card debts.

    According to the report, the average cardholder carried $5,288 in total credit card debt at the end of 2022, up 24% from 2021 lows and marking a return to late 2019 levels. Cardholders with prime credit scores between 660 and 719 shouldered the highest debt, with average balances reaching $9,135 at the end of 2022.

    Among major credit card issuers, 82% of total debt was revolving — meaning that consumers were carrying a balance into the next month in 2022. Only 18% of consumers surveyed said they were able to pay off their full balances by their due date, the CFPB noted.

    In 2020, by contrast, only 51.3% of consumers carried a balance into the next month, and 48% of respondents said were able to pay balances in full by the due date.

    “Pandemic relief programs in 2020 and 2021 enabled some card holders to pay down credit card balances, but the number of people facing persistent debt could climb if interest rates remain elevated,” the CFPB said in a statement.

    And interest rates rose quite a bit during 2022, due to the Fed’s moves to curb inflation.

    The average APR on private cards — used for select vendors, similar to retail cards — was 27.7% by the end of 2022, an increase of more than 2 percentage points from the year prior, according to the CFPB. Meanwhile, interest rates on general-purpose cards — used across wide networks such as Visa and Mastercard — jumped from 18.8% in mid-2020 to 22.7% in 2022.

    Between March and December 2022, the prime rate most commercial banks use to set cardholders’ APRs had risen by 4 percentage points.

    “All in all, the data show more cardholders are being charged late fees, falling behind on payments, and facing higher costs on growing debt,” CFPB researchers noted.

    A greater share of Americans slipped into more than 180 days’ delinquency as they faced higher fees and interest, the CFPB found, and those with the lowest credit scores at times weren’t able to pay anything at all.

    Nearly 10% of credit card users found themselves in “persistent debt,” the CFPB said in the release, meaning they were charged more in interest and fees each year than what they paid toward their principal.

    One of the hurdles consumers faced were higher minimum payments.

    The minimum payment for revolving accounts increased to $102 for general purposes cards, up from $95 the year prior. Meanwhile, folks with private-label cards faced a minimum payment of $69, up from $66 in 2021.

    Those most vulnerable to falling behind on payments and facing higher minimum payments were borrowers with deep subprime credit scores (below 580), or those with prime scores (between 660 and 719), the CFPB found.

    For instance, for private-label cards, the average minimum payment due for consumers with a credit score under 580 was $43 higher than those who had a credit score of 660. Folks in the deep prime scoring category also paid $54 more than consumers with credit scores above 720.

    CFPB researchers noted it was “a pattern that could become increasingly difficult for some consumers to escape.”

    To reduce consumers’ financial burden, the CFPB has also been taking aim to reduce junk fees and promote a fairer marketplace.

    Earlier this year, the government watchdog proposed a rule to reign in excessive credit card late fees, which they say companies “exploited” as they hiked fees with inflation. The measure is part of the CFPB’s campaign to eliminate or reduce junk fees.

    Companies currently charge up to $41 for each missed payment. Under the proposed rule, late fees would be lowered to $8 and the automatic annual inflation adjustment would be eliminated. The proposed rule would also ban late fees above 25% of the consumer’s required payment.

    The CFPB also proposed another rule this month to allow consumers to change banks with more ease, in hopes to encourage a competitive marketplace and help folks transfer their transaction data without hurdles.

    “Over a decade ago, Congress banned excessive credit card late fees, but companies have exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee,” Chopra said in a statement. “[The] proposed rule seeks to save families billions of dollars and ensure the credit card market is fair and competitive.”

    1. I can’t see anyone throwing good money after bad to rebuild the place, which I think will take years. That said, it’s a two and a half hour drive from Mexico City and despite all the crime problems was still the #1 coastal vacation destination for Mexicans, so who knows?

  30. Maher Admits ‘There Is a Deep State’ of Bureaucratic ‘Tyrants’ Who Ignore The People

    October 28th 2023, 11:13 am

    Near the end of his Friday show, Maher used a straw man fallacy to diminish conservative’s concerns of the weaponized intelligence agencies, instead saying the real deep state is comprised of legions of bureaucrats within the federal government.

    “It’s time to admit that here in America, there really is such a thing as the deep state, but it’s not the one MAGA nation is freaked out about. The FBI is not a bunch of closet radicals, it’s a bunch of guys who iron their underwear,” Maher said.

    “Washington is a city full of big, stone buildings full of bureaucrats, but they’re not plotting against real Americans. They’re issuing passports, cutting Social Security checks, running the Census, updating maps, buying bullets for Ukraine, inspecting dog food, ordering blue plastic gloves for the TSA, and measuring the methane in cow farts.”

    “But there is a deep state, which is the bureaucratic class that justifies its existence by making up new rules…it’s the vast network of regulators, administrators, inspectors, contract reviewers, project managers, fee [assessors], special commissioners, zoning officers, and consultants whose jobs seem to be to make sure nothing ever happens and then charge you for it. The people who answer the phone, permit office, how may I hinder you?” Maher continued.

    “15% of workers in America work for the government, that’s 24 million people, with one shared vision: to fine you if your mailbox is too big. They say a conservative is a liberal who just got mugged, but it could also be a liberal who just got cockblocked trying to remodel a porch…or got a parking ticket because their car was facing out instead of in,” he added.

    Of course, conservatives are well aware that the deep state is not just a cabal of weaponized intelligence agencies, but also the massive federal bureaucracy former Trump adviser Steve Bannon refers to as the “Administrative State.”

    https://www.infowars.com/posts/maher-admits-there-is-a-deep-state-of-bureaucratic-tyrants-who-ignore-the-people/

    1. Retirement
      401(k)
      What the Stock Market Selloff Means for Your 401(k)
      By: Mallika Mitra, expert in Investing, Personal Finance, and Investing Editor at Money
      Published: May 23, 2022 8 min read
      Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.
      stock Exchange Screen
      Shutterstock

      Ideally, you’re not checking your 401(k) balance every few hours. But if you’re alarmed by how your retirement savings are faring in today’s stock market, you’re not alone. You might even be wondering if it’s time to change your investing strategy.

      Financial markets have suffered a major selloff in recent weeks. The S&P 500 — a benchmark commonly used to measure the overall stock market — is down around 19% for the year and dipped into a bear market territory(down 20% from its previous record) during trading on Friday. Meanwhile, the Dow Jones Industrial Average is down 15% for the year, and the tech-heavy Nasdaq Composite has fallen 28% in 2022 as investors take in the Federal Reserve’s interest rate hikes and continued geopolitical tensions.

      Despite the volatility we’ve seen so far this year, retirement savers aren’t slowing down their 401(k) contributions. In fact, the percentage of a worker’s salary being contributed to a 401(k), including both employer and employee contributions, reached a new high of 14% in the first quarter of 2022, according to a recent report from Fidelity Investments. Financial experts tend to recommend trying to get that number to 15%, so seeing the savings rate inch up is a good thing.

      Even though watching your 401(k) balance bounce up and down in a volatile market can be scary, acting impulsively on that fear could hurt you in the long run.

      “You want to be sure that you’re not making any changes to your allocation that could potentially backfire on you,” says Mike Shamrell, vice president of thought leadership at Fidelity Investments.
      …
      https://money.com/stock-market-selloff-401k/

    1. Financial Times
      Chinese economy
      Plunging foreign direct investment piles pressure on China’s economy
      Financial Times analysis shows FDI tumbled 34% in September after recording double-digit falls every month since May
      Chinese flag and renminbi
      Analysts said the data suggested that foreign companies were moving capital out of China
      Thomas Hale in Shanghai, Ryan McMorrow in San Francisco and Andy Lin in Hong Kong October 28 2023

      Foreign direct investment into China is falling across multiple measures, adding to pressure on Beijing and local governments as they seek to counter an economic slowdown.

      Financial Times calculations based on Chinese commerce ministry data compiled by Wind show that FDI fell 34 per cent to Rmb72.8bn ($10bn) year on year in September, the biggest decline since monthly figures became available in 2014.

      The weakness in FDI has been part of a steady march of disappointing economic readings since China lifted pandemic restrictions at the start of the year. While FDI leapt 15 per cent in January on the previous year, it has recorded double-digit percentage declines every month since May.

      In renminbi terms, year-to-date inflows under China’s commerce ministry data remain just 8 per cent short of last year’s record pace.

      But the country’s balance of payments data also reveals a deteriorating picture of foreign investment. Direct investment liabilities, a gauge of foreign capital flowing into the country, were $6.7bn in the second quarter, based on a September readjustment of earlier figures, the lowest of any quarter since 2000 and down from $21bn in the first three months of the year.

      Recent falls contrast with the boom in foreign investment that China enjoyed during the pandemic even as the country was almost sealed off to the outside world. FDI reached an annual record of $189bn in 2022, according to commerce ministry data.

      The most recent commerce ministry data of FDI is only available in renminbi, after the government stopped releasing dollar-denominated monthly FDI figures in August. It also stopped publishing youth unemployment figures in July.

      Brad Setser, a senior fellow at the Council on Foreign Relations, said the data suggested that “foreign companies are no longer reinvesting back in China”. Instead, he added, “they are getting [their] profits out of the country as fast as they can”.
      …

  33. Is it safe to say that if you can afford to live in San Diego, you can afford to live anywhere?

    1. San Diego ranks as most expensive US city with LA and Santa Barbara in the top five
      Anthony Robledo
      USA TODAY

      A new report may show a new reason why California is called the Golden State.

      San Diego was ranked the most expensive city in the nation to live in by U.S. News and World Report’s 2023-2024 list followed by Los Angeles.

      The city landed that title through multiple metrics including its inflation rate and the cost of gas. The report also considered living costs from annual housing costs, median gross rent and high fees associated with homeownership.

      The report said home prices exceed the national median sale price and added that many in San Diego’s downtown area must pay homeowners association fees to maintain living in housing complexes.

      “Living in San Diego is not particularly affordable,” the report reads. “San Diegans are willing to pay these elevated prices, though, often referring to the cost-of-living differences as the ‘sunshine tax,’ or the price of enjoying a year-round temperate climate.”

      Los Angeles was ranked the second most expensive city, followed by Honolulu and Miami. California actually made up seven of the top ten spots in the report and around half of the top 25. New York City, the most populated U.S. town, earned the 11th spot.

      According to the report, the cities at the top of the list require the most amount of wealth in order to live comfortably.
      …
      https://www.usatoday.com/story/news/nation/2023/10/27/report-ranks-san-diego-most-expensive-us-city-see-full-list/71351851007/

    1. Yahoo
      Bloomberg
      Worst October for Stocks in Five Years Has Investors Exiting Market
      Denitsa Tsekova and Elena Popina
      Fri, October 27, 2023 at 1:09 PM PDT·4 min read
      Worst October for Stocks in Five Years Has Investors Exiting Market

      (Bloomberg) — The VIX is at 20, stocks are on the brink of their worst October in five years, and every other day the bond market throws a fit.

      For equity bulls conditioned to dive in at any sign of weakness, it’s getting to be too much. Across investor categories, they’re pulling money out and hardening a posture that is by some measures the most defensive in over a year.

      Surveys of professional managers show big-money allocators have cut their equities to levels last seen at the depths of the 2022 bear market. Hedge funds just pushed up single-stock shorts for an 11th straight week. Models of investor positioning show everyone from mutual funds to systematic quants reducing equity exposure well below long-term averages.

      Among trading sins, few are as unanimously pilloried as market timing, but that doesn’t keep it from happening in times of stress. Whether the latest exodus is the precursor to a rebound or a protracted period of pain is the big question heading into November.

      “It’s troubling that a market setback as internally deep as the current one hasn’t resulted in more improvement” in sentiment, said Doug Ramsey, chief investment officer at the Leuthold Group. “The ‘wall of worry’ accompanying much of the 2023 market action has morphed into a ‘slope of hope.”’
      …
      https://finance.yahoo.com/news/worst-october-stocks-five-years-200937766.html

      1. Bulls should read this, digest it, and weep:

        “With yields much higher than they were six months ago, the stock market is going to have to fall to valuation levels that are more in line with historical levels,” said Matt Maley, chief market strategist at Miller Tabak & Co. “The most important issue is the very large divergence that has developed between the bond market and the stock market.”

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