The Values Of Housing Are In Free Fall, With Prices Fluctuating Crazily

1. ‘A lawyer representing major bondholders of Evergrande said the group supported the adjournment, because a restructuring plan could have a higher recovery rate for creditors than a liquidation scenario of less than 3%’

   via GIPHY

2. ‘Jonathan and Shalom in Seattle — who just swapped their $1,800 a month rent for a $4,150 mortgage payment. As a result, Jonathan says he’s started having near nightly panic attacks and the couple is fighting over whether to buy furniture’

   That’s some sound lending right there.

   1. At least it was cheaper than renting.

   2. People ae stupid, especially these people.

      1. ARE stupid.

   3. “…Jonathan says he’s started having near nightly panic attacks…”

      Cue permanent erectile disfunction.

      1. Unless getting schlonged is your thing.

         1. Several years ago a coworker bought a new $70k+ diesel pickup truck, and I walked past it daily in the parking lot. Among my thoughts were, “his kids aren’t going to college,” and “I couldn’t sleep at night if it was in my driveway.”

            1. My Alma mater now costs $68,600 per year with room and board. It was in the 20’s when I graduated a couple decades ago. $70k ain’t gonna stop his kids from going to college. DEI and $70k a year tuition will.

            2. “My Alma mater now costs $68,600 per year with room and board.”

               My son’s public University education is edging $25k/yr for two semesters. It’s almost a deal breaker, but the alternative appears worse. He’ll never be a happy laborer after observing my career and income.

            3. My son’s public University education is edging $25k/yr

               I remember when kids could mostly pay the tuition, room and board at state with the proceeds from a summer job., with mom n dad chipping in a few bucks,

               Honestly, unless pursuing a STEM degree, most kids are better off learning a skilled trade.

3. ‘Greg Salisbury said he’s selling his house and moving to Georgia by the end of November. ‘High cost of insurance, hurricanes, floods, sinkholes, high crime and illegal drugs. Just to name a few reasons. Also my insurance company, Farmers, is leaving the state. Made a bad mistake moving here’

   All these problems would go away Greg if you’d just stop eating. Florida loanowners: this place is a sh$thole! California loanowners: the weather is great even if it is a sh$thole!

4. ‘Due to an investigation into its flagship property unit, Evergrande was barred by mainland regulators from issuing new dollar bonds’

   I’m pretty sure no more gringos are buying yer junk paper now that it’s down to less than 3 centavos on the peso.

5. ‘Sometimes, it’s the only game in town, right? And if it’s focused with a particular purpose in mind, it can be a wonderful stopgap,’ Biderman said. ‘But when it’s used to maintain ownership of a house that you really can’t afford, where you’re cash flowing negative constantly, it’s just going to eat up your equity eventually. There is no ‘pro’ to that type of private lending because … if it’s just a way to not sell the house, it will become a way only to delay the selling of that house’

   Steve, these people are my winnahs!

6. “I was on the board of my kids’ school during COVID. I wanted a harsher lockdown policy. In retrospect: I was wrong. The damage to kids of keeping them out of school longer was greater than the risk. But here’s the bottom line: We were doing our best. But let’s give a little grace and forgiveness for the shit show that was COVID.”

   Funny how the people who created and promoted the shit show want forgiveness.

   https://twitter.com/EricAbbenante/status/1718153125125574695

   A video at the link.

   1. But let’s give a little grace and forgiveness for the shit show that was COVID.”

      Wrong. Justice is coming for the lockdown totalitarians.

      1. “let’s give a little grace and forgiveness”

         Let’s give them all nooses.

         The Day Of The Rope is coming ☠️

      2. Forgiveness for destroying billions of lives

   2. video

      🤮 Scott Galloway, Bill Maher and Andrew Cuomo 🖕

      1. Scott Galloway

         A WEF useful idiot.

         https://www.stern.nyu.edu/faculty/bio/scott-galloway:

         Professor Galloway was elected to the World Economic Forum’s “Global Leaders of Tomorrow,” which recognizes 100 individuals under the age of 40 “whose accomplishments have had impact on a global level.” Professor Galloway has served on the board of directors of Eddie Bauer (Nasdaq: EBHI), The New York Times Company (NYSE: NYT), Gateway Computer, and Berkeley’s Haas School of Business. He received a BA from UCLA and an MBA from UC Berkeley.

         1. A WEF useful idiot.

            That explains his TDS.

            1. They all need to have their skulls reshaped by a lead pipe

   3. One of the great mysteries of the pandemic is why so many countries followed China’s example. In the U.S. and the U.K. especially, lockdowns went from being regarded as something that only an authoritarian government would attempt to an example of “following the science.” But there was never any science behind lockdowns — not a single study had ever been undertaken to measure their efficacy in stopping a pandemic. When you got right down to it, lockdowns were little more than a giant experiment.

      https://nymag.com/intelligencer/article/covid-lockdowns-big-fail-joe-nocera-bethany-mclean-book-excerpt.html

      1. One of the great mysteries of the pandemic is why so many countries followed China’s example.

         It’s not a mystery. It’s the WEF.

         1. “It’s the WEF.”

            The only good globalist is a dead globalist ☠️

      2. They planned that well in advance. We’ve all seen their own videos of the ‘conference.’

         1. https://centerforhealthsecurity.org/our-work/tabletop-exercises/event-201-pandemic-tabletop-exercise

         2. A few months before the plandemic

7. Is Deep State DeSantis getting ready to throw in the towel?

   https://voz.us/the-florida-republican-assembly-demands-that-desantis-abandon-the-presidential-campaign-and-return-to-his-duties-with-the-state/?lang=en

   1. I think the smartest move would be for D to throw in the towel now, but make a deal with T to forgive and forget their feud and consider D for VP. D would get a foot in the door for the next Pres, and T would gain a sweetener for on-the-fence voters. Even if T chooses another name, or even loses, D would still have some street cred with the Magas for 2028.

      That said, I’m not whether T would take that deal. D is not much of a competitor. T doesn’t need D — or anyone for that matter — to drop out. I guess it’s a battle between T’s ego NOW vs. T’s interest in the country post 2028.

      1. D’s done. He’s a RINO that tried masquerading as MAGA. His backers have moved on.

         1. The Speaker battle last week outed some other RINOs to their MAGA constituents.

      2. I think that Donald will announce Nikki as VP in November and have double the events for the next year.

         1. He doesn’t need a RINO warmonger as his VP this round.

            1. No, but given his penchant for trusting the wrong people, I can see it happening. Prediction, not wish.

            2. I’d assign that prediction a very low probability.

8. “Flippers bought nearly half the number of metro Phoenix houses in September – 280 – than they did two years ago.

   Die, speculator scum.

9. According to Sethi, the couple followed a trend that traps many buyers: They bought based on real estate marketing and not what they can afford.”

   After Housing Bubble 2.0 bursts for real, millions of indescribably stupid people are going to be permanently inoculated against ever trusting REIC shills or the globalist scum media.

   1. Didn’t happen after 08. Not even 10 years after and they all fell for it again. OH look flippers, oh look rentals, oh look real estate only goes up. The short term memory is clearly the only one that counts.

10. “Dobrinsky suggests people buy the house and rent the rate. ‘If you can afford it, treat it like a band-aid and when the rates get lower you’ll be the first person I call to do a refinance and lower your payment”

    You’ll be in no position to offer that refi when you’re working for Walmart collecting carts in the parking lot next year.

11. Real Estate Sales Collapse?
    Angry Mortgage Podcast

    An hour ago
    Collapse is VERY unlikely but it’s looking bad for home sales in Ontario, possibly multi-decade BAD, BC Real Estate is cooling, most house markets in Canada are slowing down. What’s the reason? There are 3 Reasons:

    High Mortgage Rates
    High Mortgage Rates
    High Mortgage Rates

    https://www.youtube.com/watch?v=oAvvvAVlL_4

    5:39.

    1. High Mortgage Rates

       Rates that have returned to historical norms,

12. “‘The anticipated wobble’ in home prices is here and could last through the rest of 2023, said Ruff, who is with ARMLS’ Information Market. Based on pending sales, this month could be the slowest October for sales since 2007, according to Ruff.”

    I guess nobody in the REIC foresees a multiyear bust, like happened from 2O07-2012 or 1990-1996? This time is different, with just a short little wobble in prices.

    1. Just a gully.

13. More “zombie” companies whose business models were only viable in a world awash with central bank funny money are entering the Dead Pool.

    https://www.news.com.au/finance/money/investing/127-asxlisted-zombie-companies-on-brink-of-collapse-kpmg-research-warns/news-story/5b16194d274a316b76cd21eef44a6147

    1. Rivian and other EV makers come to mind. Only Tesla will survive since they had a 10+ year head start in a low rate environment where they could make mistakes and get away with it. Making cars isn’t the same as a starting up some app. Lots of expensive logistics, inventory, and COGS. Now with junk bonds at 10%, any error can be fatal.

       Rivian can’t even sell all of the EV’s they produce and their solution is to produce more to bring down COGS. The problem is they are losing $33,000 per vehicle sold. They produced 24K EV’s. They would need to produce 240K to get prices low enough to break even. Lucid is even worse at something like $200K loss per EV sold. On top of that, Tesla has been cutting prices to the bone due to slow sales. Rivian and Lucid would have to cut prices to compete, which would offset any COGS savings. Their only hope is to get a lifeline from the government, which would only delay BK

       1. You just said “they lose money on every vehicle but make it up with volume!”

       2. And once they go out of business, good luck getting parts for repairs. The digital dashboard just croaked? You can kiss that car goodbye.

14. What an odd thing to say.

    https://www.dailymail.co.uk/news/article-12687709/Unfortunate-moment-Kamala-Harris-says-Joe-Biden-alive-running-election-asked-80-year-old-contest-2024-White-House-run.html

    1. (From the link …)

       A September poll conducted by DailyMail.com found that Harris was viewed as the worst vice president in decades.

       Some 40 percent of respondents placed her ahead of Republicans Mike Pence and Dick Cheney as the worst recent holder of the office.

       When asked to pick a word to summarize the vice president, respondents picked ‘incompetent’ far ahead of complimentary words such as ‘smart’ and ‘strong.’

       And if that wasn’t clear enough, almost half of the 1,000 people surveyed said Biden should swap out his running mate for 2024 — including 27 percent of Democrats and a quarter of black respondents.

       The poll of 1,000 likely voters was conducted by J.L. Partners and carries a margin of error of 3.1 points.

       The results reflect Harris’ torrid time as vice president and the reservations of some senior Democrats who fear Biden’s advanced age means many voters will wonder whether his 58-year-old VP would have to take over during a second term.

       ‘In the eyes of voters, if there is anyone more incompetent than President Biden it is his VP,’ said James Johnson, co-founder of Republican polling firm JLP.

       ‘Frankly, this is one of the most brutal wordclouds we have ever run. From “incompetent” to “worthless,” the public have written off Kamala Harris and there looks to be little way for her to improve her standing with them.’

       It is not just Republicans who think that, he added.

       ‘Sentiments are the same amongst independents, and one in four black voters want Biden to choose someone else to be his running mate as do a majority of 18-29-year-olds.

       ‘Joe Biden’s re-election platform is already under serious strain with concerns about his age. Kamala Harris is pushing it to breaking point.’

       The results will make difficult reading for the Biden-Harris campaign.

       When voters were asked for words to describe Harris, the most common among all likely voters were ‘incompetent,’ and ‘idiot.’

       Although Republican hatred may have skewed the results, even people describing themselves as ‘independents’ offered little encouragement. Words such as ‘dumb,’ ‘joke,’ ‘unqualified’ and even ‘robot’ dominated over terms of approval such as ‘strong’ and ‘cool.’

       1. Will Kama Sutra go quietly into the night or will she scream “raysism?

    2. So it’s not quite at the “Weekend at Bernie’s” stage yet?

       How long until Joetato turns into Captain Pike?

       https://upload.wikimedia.org/wikipedia/en/f/f9/ST_TheMenagerie.jpg

15. “…Mike Derham, who owns a three-bedroom holiday home on Melbourne beach with his family, told Newsweek that the house now costs $11,000 per year to insure….”

    Note to Mike Derham.

    You have just come face to face with the real alligator in your backyard, holding costs.

16. Survey Found Most Americans Falling Behind On Emergency Savings

    https://www.zerohedge.com/personal-finance/survey-found-most-americans-falling-behind-emergency-savings

    The survey found that 60 percent of Americans are falling behind on their savings for emergencies, in which 38 percent said they are significantly behind…

    A large majority of Americans are falling behind on their savings, as 81 percent have not increased their emergency savings since the beginning of the year, according to a survey.

    The survey by Bankrate, released on Oct. 25, showed just 19 percent of American households increased their emergency savings, while 32 percent have less savings now compared with the beginning of 2023. Thirty percent of households have the same amount of savings, while 20 percent had no emergency savings at the start of the year and remain having none.

    In terms of age, older generations tend to have less emergency savings now than at the beginning of the year.

    According to the survey, households with income over $100,000 tend to have more savings now than at the beginning of the year.

    In addition, the survey found that 60 percent of Americans are falling behind on their savings for emergencies, in which 38 percent said they are significantly behind and 22 percent said they are slightly behind.

    Among those who said they were falling short on their savings, 13 percent said they would never be on track, while 22 percent said they were uncertain how long it would take.

    The poll also found inflation is the main impediment that prevents Americans from increasing their savings amid renewed concern over long-term price hikes. Fifty-seven percent of households who suffered no saving increase blamed inflation for their issue, while 38 percent cited too many expenses that hurt their saving funds.

    “Just 19 percent have increased their emergency savings balances since the beginning of the year. Rising prices and high household expenses have been the predominant impediments to boosting emergency savings,” said Bankrate chief financial analyst Greg McBride.

    The survey was conducted online with 2,496 adults from Sept. 20 to 22.

    The Federal Reserve Bank of New York revealed on Oct. 11 that Americans’ disposable income has fallen, and consumers are increasingly dipping into savings to prop up consumption.

    From the beginning of the pandemic in 2020 through the end of 2021, Americans’ excess savings grew to roughly $2.6 trillion, or 14 percent of annual disposable income, according to the New York Fed.

    Since then, U.S. excess savings have steadily fallen, dropping to 10 percent of disposable income—or $1.9 trillion—by the second quarter of 2023.

    Data for the first two months of the third quarter cited by the New York Fed show that consumers have generally maintained their propensity to spend, but as real disposable income has fallen, they’ve increasingly been drawing on their savings to continue shopping.

    Withdrawals From Retirement Savings on the Rise
    Amid persistent inflation, retirement savings also take a hit as more Americans make hardship withdrawals from their retirement funds to cover emergency needs.

    USA Today cited a report from Fidelity Investments, reporting that hardship withdrawals from 401(k) accounts have tripled from 2.1 percent in 2018 to 6.9 percent in 2023.

    Moreover, hardship withdrawals at Vanguard have doubled during the 2018-2022 period, increasing from a monthly rate of 2.1 transactions per 1,000 participants in 2018 to 4.3 in 2022.

    Nearly 50 percent of Americans say high prices are eroding their living standards—a record number that matched the all-time high set in July 2022, when the pace of inflation was a whisker away from breaking into the double digits.

    “After stabilizing earlier this year, concerns about inflation have grown again,” reads the latest University of Michigan Surveys of Consumers report, released on Oct. 13.

    (A chart is to be found here …)

    The survey shows that 49 percent of consumers polled in early October said high prices eroded their living standards. That’s up substantially from last month’s 39 percent and matches the all-time high notched in July 2022.

    Inflation, as measured by the Consumer Price Index (CPI), shot up at a furious pace through 2021 and narrowly missed breaking the 10 percent psychological barrier by mid-2022.

    The rising prices peaked at 9 percent in June 2022, a multi-decade high that later fell to 3.1 percent by June 2023. However, inflation in August and September jumped back up to 3.7 percent, bringing renewed concerns about inflation.

    What’s more, year-ahead inflation expectations have jumped, rising from 3.2 percent in September to 3.8 percent in early October, per the University of Michigan survey.

    Longer-term inflation expectations also rose to 3 percent this month from 2.8 percent last month.

17. Trump ballot disqualification trial to begin in Colorado

    By Jack Queen
    October 30, 2023 6:03 AM EDT

    Oct 30 (Reuters) – A trial begins on Monday in Colorado to determine whether former U.S. President Donald Trump is disqualified from the state’s ballot in the 2024 election over his purported role in a deadly attack on the U.S. Capitol aimed at keeping him in office.

    The one-week trial before a Denver judge could also be a test of whether Trump’s opponents elsewhere have a viable path to keep him off the ballot under a rarely-used, Civil War-era provision of the U.S. Constitution that bars people who have engaged in “insurrection or rebellion” from holding federal office.

    https://www.reuters.com/legal/trump-ballot-disqualification-trial-begin-colorado-2023-10-30/

    This song played after Trump finished speaking in Sioux City, Iowa, on Sunday, October 29.

    Sam and Dave – Hold on I’m coming

    https://youtu.be/AREppyQf5uw?si=bb-ymWyoQxlk7WAN

    1. If the Dems are worried about him winning Colorado, they really are in trouble. But I get it, they are trying to set a precedent.

    2. “Trump ballot disqualification trial to begin in Colorado”

       \\

       – Banana Republic:
       – Kangaroo courts, including jailing political opponents.
       – Stolen elections. No further comment needed.
       – Steady erosion of personal freedoms, privacy and rights, including property rights.
       – Corruption at all levels of guberment and institutions
       – Steadily shrinking middle class (bourgeoisie); steadily growing lower class/poors/debt-serfs and the growing power of the ruling classes.
       – MSM as the propaganda arm of the DNC

       \\

       https://twitter.com/Convertbond/status/1716263537100701962
       Lawrence McDonald @Convertbond

       There are only a few certainties in life.

       A) Death,
       B) Taxes and,
       C) Communists rigging elections…

       \\

       – Apparently the Left wants more DJT. This is how you get more DJT. Most on the Right will vote for him regardless of whether or not he ends up in jail on “Trumped-up” charges, which is not a non-zero possibility at this point.

       – We’re rapidly approaching the point where 2A rights will be exercised to keep 1A rights and the rest of the Constitution.
       – Congress is as useless as tits on a bull. Taxation without representation all over again.
       – Long Pb, Au, Ag

       “I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.” – Thomas Jefferson to James Madison, January 30, 1787

       “A government big enough to give you everything you want, is big enough to take away everything you have.” – Thomas Jefferson

       “When the people fear their government, there is tyranny; when the government fears the people, there is liberty.” – Thomas Jefferson
       

       What country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance. Let them take arms. — Thomas Jefferson

       “Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote.” – Benjamin Franklin said in 1759

       “A free people ought not only to be armed and disciplined, but they should have sufficient arms and ammunition to maintain a status of independence from any who might attempt to abuse them, which would include their own government.” – George Washington

    3. Let me fast-forward for you: Biased state judge in bench trial rules on constitutional/federal question against DJT as does state’s appellate court and state’s supreme court. Slow-walked appellate cases allow other states (e.g., MI, AZ) to follow suit. US Supreme Court overturns all cases.

       1. Lawyers: ⏲💰😃

          1. There are some things we can always count on.

18. ..”lets give a little grace and forgiveness.. ”
    Accountability is what is required in a sane World..
    This isn’t a religious matter in which the offenders get forgiven by their God for their sins when they repent.
    The statement that they did the best they could isn’t accountability either.
    Destroying millions of lives requires a special kind of going out of ones way to do the worse that could be done, not they did the best they could do.
    What would reasonable people do, what would sane people do, what would fiduciary people do, what would do no harm people do, what would humane people do.

    1. And now they are trying to gaslight the jab mandates, claiming that there never were any. I still have the email from HR that documents there was a government mandate, a mandate that stipulated that if I refused an experimental treatment that I would lose my job, a mandate that was ruled unconstitutional just a few weeks before I would have been dejobbed.

19. Daily Mail US
    @DailyMail

    CVS in Washington DC replaces stock with PHOTOGRAPHS of items as it battles with out-of-control crime and moves to shut 900 stores https://trib.al/WMddkJr

    https://x.com/DailyMail/status/1718306383383445935?s=20

20. Always be aware of your surroundings.

    Guy regrets sucker punching random strangers at Houston-area park

    2 days ago

    https://youtu.be/UF_aaf3BymU?si=l7MGXeIYmxVWC6OK

    1. The local news calling that a “prank” reminded me of this.

       https://youtu.be/ksb3KD6DfSI?si=VJomtGXqdWRXcnqt

       1. calling that a “prank”

          Black assailant and black news anchor.

          It’s not a “potential” crime. It’s undeniably battery and arguably a hate crime.

          1. It is assault. And possibly with intent to do great bodily injury.
             A forceful blow to the head with an inevitable fall to the cement can easily kill and has many times. This thug punk is a white hater which is exactly why his other victims were not described. It is also elder abuse.

             1. Had the races been reversed we would have heard an endless tirade about hate crimes and white supremacy. This thug will be let off with a slap on the wrist.

                This was in Houston. Moral of the story: don’t live in any big city.

             2. assault = attempted battery
                battery = completed assault

                Physical contact is the distinction.

          2. ** “Black assailant/Black news anchor(s)”

             I noticed the same right away.

             (wonder if his come-to-jesus moment was from granmama whupping his azz with a switch out back?
             THAT generation doesn’t play!)

       2. Another prank caught on video …

          https://www.youtube.com/watch?v=tq2hUTEV4t0

21. Bad loans are becoming a real problem for regional banks

    https://finance.yahoo.com/news/bad-loans-are-becoming-a-real-problem-for-regional-banks-114318203.html

    Office buildings in southern California. A healthcare operator in the Northeast. A bankrupt oil and gas company in the Atlanta suburbs.

    These were among the assets that became the source of lending problems for regional banks in the third quarter as corporate borrowers and commercial real estate began to show more signs of strain.

    In recent weeks many mid-sized financial institutions across the country reported that nonperforming loans, a measure that tracks borrowers that are behind on their payments, rose during the third quarter. They also disclosed mounting costs from unpaid debts written off as losses.

    Of 18 regional banks analyzed by Yahoo Finance with assets ranging from $50 billion to $250 billion, 15 reported jumps in nonperforming loans when compared to the same year-ago period. The average rise was 80% more than the third quarter of 2022, and up 8% when compared to the second quarter of this year.

    Charge-offs — a measure of unpaid debts written off as losses — also rose at 15 of the 18 banks compared with the same year-ago period.

    “Investors have been bracing for credit trends to weaken, but it was always theoretical, whereas now, we’re actually seeing it,” David Chiaverini, a regional and mid-sized bank analyst for Wedbush, told Yahoo Finance.

    “We could very well be at the beginning stage of a credit cycle,” he added.

    The KBW Nasdaq Bank Index (BKX) fell Friday by 2.3%, hitting a level last seen in September 2020, as worries mount about the future profitability of the industry if interest rates remain elevated for some time. Stocks of mid-sized regional banks have fallen more than giant institutions like JPMorgan Chase.

    But Scott Siefers, an analyst with Piper Sandler, said many of the loan problems that popped up at regional banks during the third quarter were “idiosyncratic” issues that some are referring to as “one-offs” or “two-offs” that can be chalked up to “a particular circumstance.”

    “Having said that, it feels like the further along we go, the more of these could go from one-off issues to just broader deterioration in credit,” said Siefers, adding that “we aren’t quite there yet.”

    Regional banks are particularly vulnerable to commercial real estate weaknesses because they hold a lot more exposure to those properties than their larger rivals.

    Many began ramping up their bets on commercial real estate in the aftermath of the 2008 financial crisis, which was triggered by a housing bust, and stuck with it even after the pandemic emptied out many city-center properties.

    Now a steep decline in property values and rising interest rates are making things even more challenging for borrowers as lots of debt comes due for repayment. There is a total of $331 billion in US commercial and multifamily mortgage debt set to mature in 2023, according to a second quarter report from the Mortgage Bankers Association.

    The issue is under scrutiny by regulators. “All of the bank regulators are working with banks that have, you know, concentrations of troubled real estate to work it out,” Federal Reserve Chairman Jerome Powell said earlier this month at the New York Economics Club.

    “Smaller banks have proportionately much larger exposure to real estate,” he added, and “there will be losses for sure.”

    One regional bank that highlighted some of its commercial real estate challenges in the third quarter was New York Community Bank (NYCB), which said its heap of souring loans grew to $642 million. That was up 64% from last quarter and eight times as large compared to the year-ago quarter.

    That surge, it said, came largely from two office-related loans, one in Syracuse, New York, and another in Manhattan.

    In Utah, Salt Lake City-based Zions (ZION) moved $64 million in loans this quarter to nonperforming status, the bulk of which came from two suburban office properties in southern California and a business loan the bank plans to sell in the fourth quarter.

    “Those were loans where the properties were being improved and then when the project got completed, they had problems leasing it,” Tim Coffey, a bank analyst with Janney, told Yahoo Finance. “That totally makes sense in this environment, but it is kind of unusual.”

    At M&T Bank (MTB), which is based in Buffalo, New York, it wrote off $96 million in bad loans tied largely to office buildings in Washington D.C., Boston, and Connecticut, as well as a large healthcare company operating in New York and Pennsylvania.

    Nonperforming loans tied to real estate can go into default or they can be resolved, said Stijn Van Nieuwerburgh, a real estate professor at Columbia Business School. But it can take “years before getting resolved,” he added.

    When real estate loans go bad, banks can sell a borrower’s property to get cash. Recovery can be more challenging with business loans since collateral can include intellectual property or cash flow in addition to real estate and equipment.

    One $219 million business loan shared by several regional banks turned into a problem in August when Alpharetta, Ga.-based Mountain Express Oil filed to liquidate its holdings in Chapter 7 bankruptcy court.

    The company supplies fuel to convenience stores and travel centers and leases real estate at many of those locations. Its lawyer said Mountain Express filed for bankruptcy because it was not able to work out new agreements with its major landlord after the company ran into liquidity problems.

    The bankruptcy of this oil and gas distributor rippled through a number of Southeastern banks — including First Horizon (FHN), Pinnacle (PNFP), Synovus (SNV), and Cadence Bank (CADE) — as well as Los Angeles-based Hope Bank.

    Pinnacle Bank took a $9.5 million charge-off on the loan, with CEO Harold Carpenter calling it as “a little bit of an anomaly.”

    Executives for both First Horizon and Hope Bank described their $72 million and $23 million charge-offs from the loss as “idiosyncratic.”

    “Along with other banks in the syndicate, we are in the process of evaluating and assessing all avenues of recovery,” Kevin Blair, CEO of Columbus, Ga.-based Synovus told analysts after disclosing a $23 million charge-off related to the loan.

    1. “This sucker could go down” — George W. Bush

22. US consumers keep spending despite high prices and their own gloomy outlook. Can it last?

    https://finance.yahoo.com/news/us-consumers-keep-spending-despite-004213629.html

    (Some snips from the article …)

    A flow of recent data from the U.S. government has made one thing strikingly clear: A surge in consumer spending is fueling strong growth, demonstrating a resilience that has confounded economists, Federal Reserve officials and even the sour sentiments that Americans themselves have expressed in opinion polls.

    Spending by consumers rose by a brisk 0.4% in September the government said Friday — even after adjusting for inflation and even as Americans face ever-higher borrowing costs.

    Economists caution that such vigorous spending isn’t likely to continue in the coming months. Many households have been pulling money from a shrinking pool of savings. Others have been turning increasingly to credit cards. And the additional savings that tens of millions of households amassed during the pandemic — from stimulus aid and reduced opportunities to travel, dine out and visit entertainment venues — are nearly depleted, economists say.

    Still, the truth is no one knows where things go from here, given the unusual nature of the post-pandemic economy. The “death of the consumer” and an ensuing recession have been forecast by most economists for at least a year. So far, not only is no recession in sight but consumers as a whole appear to be in robust health. Spending might cool in the coming months, yet it’s far from clear it will collapse.

    On Thursday, the government said the economy accelerated at a 4.9% annual rate in the July-September quarter, the fastest such rate since 2021, on the back of a jump in Americans’ spending. People spent on used cars and restaurant meals, airfares and hotel rooms. Much of it, even after adjusting for higher prices, was for discretionary items that suggested that many people feel confident in their finances and job security.

    The durability of that spending has caught the attention of Fed officials, who have signaled that they will keep their key interest rate unchanged when they meet this week. But they’ve also made clear that they are monitoring the economic data for any sign that inflation could reignite and require further rate hikes.

    “I have been consistently surprised at the resilience of consumer spending,” Christopher Waller, an influential member of the Fed’s board, said in a speech this month.

    In the meantime, businesses, especially those in the sprawling service sector, are benefiting from what still appears to be pent-up demand, likely driven by higher-income earners, after the restrictions of the pandemic. Last week, Royal Caribbean Group reported robust quarterly earnings. Travelers crowded their cruise ships and spent more even as the company raised prices.

    “The acceleration of consumer spending on experiences (has) propelled us towards another outstanding quarter,” said CEO Jason Liberty. “Looking ahead, we see accelerating demand.”

    So what’s behind the outsize gains, so far? Economists point to several drivers: Sturdy hiring and low unemployment, along with healthy finances for most households emerging from the pandemic. Wealthier households, in particular, have enjoyed substantial growth in home values and stock portfolios, which are likely juicing their spending.

    Steady hiring has sent the unemployment rate down to a near-five-decade low of 3.8% and lifted to a record high the proportion of women in their prime working years — ages 25 through 54 — who are employed. Measures of layoffs are near historical lows. More jobs mean more income, which generally means more spending.

    “We continue to believe that you shouldn’t bet against the consumer until actual job losses are on the horizon,” said Tim Duy, chief U.S. economist at SGH Macro Advisers.

    In the July-September quarter, Americans ramped up spending on durable goods — furniture, appliances, jewelry and luggage — that people typically cut back on if they’re worried about their jobs or the economy.

    With inflation slowing — it’s at a still-high 3.7%, down from a peak of 9.1% in June 2022 — average wages are starting to outpace price gains. By some measures, wage growth hasn’t yet fully offset the inflation surge that began in 2021. But since late last year, pay has risen faster than prices, likely fueling some spending.

    In many lower-paying industries, like hotels, restaurants and warehouses, companies have struggled to find and keep workers and have raised pay accordingly. Julia Pollak, chief economist at ZipRecruiter, calculates that for the lowest-paid 10% of workers, wages have jumped 25% since the first quarter of 2020, when the pandemic began. That’s well ahead of the 18% increase in prices over that time.

    And most households started 2023 in better shape than they were in before the pandemic erupted, according to a report from the Fed. The net worth of the median household — the midpoint between the richest and poorest — jumped 37% from 2019 through 2022 as home prices shot higher and the stock market rose. That was the biggest surge on records dating back more than 30 years.

    Most of the savings that Americans have accumulated in the past three years have flowed to the wealthiest households, who have splurged on travel and other experiences. Typically, economists say, the wealthiest one-fifth of Americans account for about two-fifths of all spending.

    The net worth of the richest one-tenth of households leaped by $28 trillion — or about one-third — from the first quarter of 2020 to the second quarter of 2023, according to the Fed. The poorer one-half of Americans gained a bigger percentage increase but in total dollars much less, from about $2 trillion to $3.6 trillion. (Those figures aren’t adjusted for inflation.)

    “When wealth is growing by the amount that it has been the past three years … I do think that it’s playing a larger role in this spending strength than maybe we thought it would,” said Sarah Wolfe, U.S. economist at Morgan Stanley.

    Aditya Bhave, senior economist at Bank of America, noted that the spending isn’t all driven by the affluent. Spending on the bank’s credit and debit cards by households with incomes below $50,000 has risen faster than spending by higher-earning clients.

    Some Americans, while keeping a close watch on their finances, still feel they have room to indulge themselves. Consider Valerie Zaffina, a 74-year-old retired teacher who was picking up a piece of jewelry last week at a Kohl’s store in Ramsey, New Jersey. She said she and her husband live on fixed incomes and are cautious spenders.

    But Zaffina has nevertheless decided on one big splurge — about $5,000 to decorate her rental apartment, including a $2,500 couch and a $600 rug. It’s her first major decorating project in 18 years.

    “I had kind of a frustrating year, and I wanted to do something for myself,” she said. “So, yeah, I’m redecorating. I’m in the throes of that, but I’m sticking to a budget.”

    Many analysts still warn of a new crop of headwinds facing consumers and the economy. Nearly 30 million student loan borrowers had to start paying their loans this month, for example. And government dysfunction in Washington could lead to a government shutdown next month.

    A report Friday showed that while inflation-adjusted income fell last month along with the savings rate, consumers still ramped up their spending. That trend, economists say, is unsustainable.

    Even so, those challenges may not prove as damaging as feared. Student loan payments, for example, jumped even before an Oct. 1 deadline for resuming them, Bhave noted. And few borrowers appear to have taken advantage of a 12-month grace period the Biden administration put in place, suggesting that most borrowers can afford to resume paying the money back — at least for now.

    And executives at Visa, which reported strong earnings and a surge of spending by their U.S. credit card customers overseas in the third quarter, have also downplayed the likely impact of student loan repayments.

    The company isn’t “factoring in any impacts” from loan repayments “because we’ve yet to see any meaningful impact,” said Visa’s chief financial officer, Christopher Suh. “Consumer spending across all segments from high to low has remained stable since March.”

    “There’s a lot of gloom and doom,” around the consumer, Bhave said. “And yet the data keep surprising to the upside.”

    1. “healthy finances for most households emerging from the pandemic”

       That’s a LIE.

    2. Spending by consumers rose by a brisk 0.4% in September the government said Friday — even after adjusting for inflation

       So, if they adjusted for real inflation (8%, not 4%) consumer spending would be labelled as “collapsing”.

       And this is why we are being fed bogus CPI numbers, even though government satiations allegedly have a reputation they care about.

       1. statisticians, I need to turn off auto correct 🙂

23. The issue is,
    Were crimes committed
    Were people injured
    Were constitutional protections violated
    Was Nuremberg Codes violated
    Was the public defrauded
    Was there conflict of interest
    Was there reckless disregard for doing no harm .
    Was there discrimination in application of public health policy
    Was a expierment conducted with reckless disregard to conquences
    Was bribery, fraud, extortion, threat and cover up and
    censorship used to force compliance.
    Were standing laws violated.
    Was countermeasures to bio weapon Covid a weapon of attack.

    These are not crimes that fall under grace and forgiveness, because we did the best we could.

    1. Why did China close off Wuhan yet left their international airport open to fly sick people all over the world?

       1. How better to distribute a bioweapon?

24. “Dobrinsky suggests people buy the house and rent the rate. ‘If you can afford it, treat it like a band-aid and when the rates get lower you’ll be the first person I call to do a refinance and lower your payment,’ Dobrinsky said.”

    The only problem with that strategy is that while rates may drop, once you lock in that purchase price and borrow the money to fund the purchase, you are locked into your principle until you pay off your loan.

    If you are in the camp that believes a recession is in the cards, it might make more sense to wait until it happens, and buy a place at a discount to current peak bubble prices, rather than lock in principle at the highest prices in history.

    1. If you are in the camp that believes a recession is in the cards, it might make more sense to wait until it happens, and buy a place at a discount to current peak bubble prices, rather than lock in principle at the highest prices in history.

       Add: parking your house money in $USFR.

25. “Hearing A Lot More ‘I Cannot Afford This'” – Sinking Dallas Fed Survey Signals “The Economy Is Slowing”

    https://www.zerohedge.com/personal-finance/hearing-lot-more-i-cannot-afford-sinking-dallas-fed-survey-signals-economy-slowing

    Perceptions of broader business conditions continued to worsen in October, according to The Dallas Fed Manufacturing Survey.

    The general business activity and company outlook indexes remained largely unchanged at -19.2 and -17.1, respectively.

    (A chart appears here …)

    This is the 18th straight month of negative readings for the headline sentiment signal.

    The outlook uncertainty index remained elevated but retreated from 27.0 to 20.2, but under the hood, the individual factors were almost all lower on the month…

    (Another chart …)

    New Orders are dumping again and the average workweek is declining…

    (Chart …)

    The one teeny tiny bright spot… prices paid (and received) dropped on the month.

    Respondents were almost perfectly, uniformly downbeat…

    Six months from now is actually quite scary. The economy is uncertain, and customers cannot predict with any certainty what they see. Political pressure and the wars are now forcing customers to reevaluate their business activities and reduce their outlook. It’s very uncertain.

    In a consumer business, we are hearing a lot more “I can’t afford this” than we ever have before.

    Business has slowed down significantly; we see no signs of improvement in business activity.

    Oh, how we long for the days of a stable market. We just lost another long-time customer to China where the pricing for the finished product was what we pay for the raw material. With the inflation we have being imposed on us here in the U.S., we won’t ever see those customers come back.

    With the unrest in the Middle East, there is now additional global uncertainty and about how it will impact the U.S. and overall global economy. There is limited optimism; we will see a very slow recovery in the first quarter depending on the global impacts of additional conflict.

    We are off by 20 percent this year so far. I don’t expect it to get better. Prices of goods are going up. Shipping is going up.

    Activity is definitely slowing down. We remain optimistic at this point for a turnaround, but cautiously.

    The economy is slowing.

    Our industry continues to be severely damaged by foreign countries dumping product into the U.S. and our territories. That, coupled with overall business being down, has caused a loss of jobs and capital dollars going back into our industry.

    We anticipate that business conditions will remain constant or decline over the next three to four months, based on the rate that we are receiving orders. Oil and gas orders have been weak all year, which is strange since oil prices have been high and are anticipated to continue to increase with the uncertainty in the world order.

    We are currently forecasting a 20 percent drop in 2024 versus 2023 (previously planned for a 13 percent drop), so the market forecast has worsened month over month.

    Reduction in government grants, cash flow issues with customers and the uncertainty created by the lack of border controls [are issues affecting our business].

    The lack of petroleum-based energy policy is troublesome.

    We are seeing a pronounced slowdown in owners going forward with new projects. There is too much uncertainty in the economy and globally.

    We are working our way to find a cyclical bottom. The overall economy is still the wild card, and it’s not helping. If things stay stable in the economy overall, customer inventories should have stopped draining, and our growth should resume sometime by mid next year.

    Overall customer projections are said to be up for 2024, but our forecasts don’t match and are down.

    1. China, Japan, & the Gulf Arabs are all dumping U.S. debt as our national descent into a corrupt banana republic has reached terminal velocity. What idiot “investor” is going to buy US debt that’s going to be inflated away by the Fed?

       https://www.reuters.com/markets/rates-bonds/us-treasury-seen-boosting-auction-sizes-budget-deficit-worsens-2023-10-29/

       1. I presume that the Fed Res is buying those bonds, and if they are that is increasing the supply of dollars.

          The alternative is to let Mr. Market decide what those binds are actually worth, which could result in Uncle Buck losing value vs. other fiats.

          I think either way we lose.

          1. supply of dollars

             Apparently, the Fed Res is paying big banks to keep money on their balance sheets.

    2. “Hearing A Lot More ‘I Cannot Afford This’” – Sinking Dallas Fed Survey Signals “The Economy Is Slowing”

       – The Fed is fighting the inflation that they caused and enabled via monetary stimulus and funding Congress’ fiscal stimulus via debt monetization. The Fed is the source of the boom and bust cycle.
       – Congress is spending like a drunken sailor, raising the national debt, driving interest rates up, and increasing borrowing costs for the taxpayers and businesses.
       – Bidenomics (high taxes, more regulations, and large guberment) is the opposite of what’s needed for a healthy, prosperous economy. Guberment is parasitic; it produces nothing. Guberment is a drain on the private sector economy; the larger the guberment, the smaller and weaker the Main St. economy.
       – QE is now QT, although QT at a MUCH slower rate than QE.
       – The Fed is no longer buying MBS, but not sure they’re actually selling MBS yet.
       – Banks are tightening credit.
       – Fed funds rate and general interest rates (the cost of money) are rising fast. This includes mortgage rates.
       – Free $ is over. ZIRP is over. 13 years of stimulus is over.
       – Instead of the guberment cheese and fraud of PPE loans and ERC, rent and mortgage moratoria, student loan deferrals, etc., credit is tightening, and loans are to be paid back.
       – MMT seems to no longer be working. It’s a complete mystery.
       – Many still whistling past the graveyard on CRE. Nothing to see here.
       – RRE bubble is bursting. AirBnB and other speculators leading the charge.
       – Consumer credit card debt is out the wazoo.
       – Consumer savings rate is low and falling.
       – Many are being squeezed by high DTI and inflation.
       – How is this not leading to a contraction in the consumer and businesses, and ultimately a recession?
       – If a general boom and asset price bubble were the result of easy $, then what happens when $ is no longer easy? A bust perhaps?
       – I fear that some may now have to actually work for a living. Oh the horrors!

       “There’s no such thing as a free lunch.” – Milton Friedman

       “Anyone who has been stealing must steal no longer, but must work, doing something useful with their own hands, that they may have something to share with those in need.” – Ephesians 4:28, NIV

    3. There’s a daft punk video from the 1990’s, One More Time, where everyone on this alien planet is party and having a good time, but an enemy space ship shows up in the shadows, and the guards weren’t paying attention so they missed it. The enemy speedily and secretly prepares to attack and runs toward the partiers. One of the guards looks at the screen at the end of the video and sees the enemy on the screen entering the compound. He runs to press the button to sound the alarm but by then it’s already too late. The partiers are the American Consumer, the guards are the entire financial industry and the enemy stealthily invading is a Great Depression. No one is paying attention to the calamity at our front door.

       But we here at the HBB are like Jeremiah the weeping prophet, for forthtelling for years now of the financial tsunami at our front door, about to destroy us, and the CEO of visa laughs and mocks at the wise men and women who predict that financial armegdddon is near.

26. JFC I’m so sick of every wanna-be real estate expert parroting “Date the rate”. “Date the rate.”
    how about STFU !?!?
    as grating as “Snapped Up”. and “Tumbled”.

    bah. more coffee.

    and GET OFF MY LAWN!

    1. My pimp hand involuntarily rises of its own volition every time some talentless REIC scribbler spews such drivel in print.

27. https://www.zillow.com/homedetails/3712-W-Gonzalez-St-Pensacola-FL-32505/44671123_zpid/

    Another property desperately seeking a greater fool. Last sold in July 2022 for 55K.

    1. They would have a hard time giving it away for free.

    2. A starter home!

28. I’m no economics major like AOC, but the economics of EVs make no sense to me.

    https://confoundedinterest.net/2023/10/30/the-crazy-world-of-bidenomics-actual-cost-of-charging-an-electric-vehicle-is-17-per-gallon-automakers-losing-36000-per-ev-sold-big-boondoggle-for-china/

29. This hasn’t aged well.

    https://twitter.com/FinanceLancelot/status/1718850659003330989

30. Hilton Head Island and Lake Havasu City experienced the greatest fall in volume at 83% and 87%, respectively, compared with respective gains of 45% and 79% from early 2019 to the start of this year

    https://www.yahoo.com/finance/news/second-home-sales-slide-pandemic-102121674.html

    1. I know a guy who bought a smallish summer home (and the lot across the street) on a no name lake in Michigan back in the early 2000’s for the price of a new Cadallic Escalade today. The house has since tripled in value since as every specuvestor in the Midwest buys up nearly every lake front listing to rent out several months a year. I have a relative who ‘rents’ out his summer home on Airbnb he bought in 2021. Many others have torn down the small lake cottages and replaced them with insane 4 and 5 bedroom homes that get used only a handful of times a year. It’s just gotten really crazy and the second home market has been unsustainable for a long, long time. I remember 20 years ago driving around eagle river, wi and seeing all of these new $600k log cabins being built everywhere thinking who is buying these? People were specuvesting back then just as they are now.

31. Looks intentional to me.

    VIDEO: Fans Wonder Whether Former NHL Player Killed by ‘Freak Accident’ or Intentional Assault with Skates

    WARNER TODD HUSTON
    30 Oct 2023

    The South Yorkshire Police are continuing their investigation into the death of U.S. hockey player Adam Johnson, who suffered a slice to the neck from the skate of an opponent.

    Johnson died from severe blood loss on Saturday after being struck in the neck by the skate blade of Matt Petgrave of the Sheffield Steelers in the UK’s Elite Ice Hockey League (EIHL). The league deemed it a “freak accident” after Johnson died at a local hospital.

    Collin Rugg
    @CollinRugg

    Police are investigating the death of hockey player Adam Johnson after he got slashed in the neck by opposing team member Matt Petgrave’s skate.

    Online social media users are split on whether the kick was intentional or an accident.

    It is currently not completely clear… Show more

    https://x.com/CollinRugg/status/1719036469627789681?s=20

32. “Japanese properties are a hot item for Chinese investors”

    I have trouble believing the Japanese are as blase about selling their country to China as we are.

33. Breaking News: Barrie Condo Market Plummets To All Time Sales Low
    Mark Turcotte2
    2 hours ago

    In this video, we’ll be discussing the alarming trend in the Barrie condo market, which has recently hit an all-time low for sales. Watch as we dive deep into this breaking news and uncover the factors behind the plummeting sales figures.

    https://www.youtube.com/watch?v=SFKnQovy27A

    8:45.

34. (A very long article …)

    WAR ON TRUTH

    https://www.theburningplatform.com/2023/10/29/war-on-truth/

    (A tantalizing snip …)

    Either way, we are most certainly living in an empire of lies, where the war on truth is relentless and never ending. As the quote from Bernays reveals, the war on truth has been consciously waged for at least a century, and probably for centuries, as the invisible government of men behind the curtain manipulate the minds of the masses with propaganda, lies, disinformation, and misinformation, in order to control and profit from the false narratives they spin. The UN, WHO, and WEF truly are the real “Axis of Evil” in our world today.

    They are the front organizations for a globalist cabal of billionaires, bankers, and their armies of psychopathic bureaucrats, corrupt politicians, media mouthpieces, satanic pedophiles, and blood thirsty generals intent on blowing up the world. All three diabolical organizations are focused on implementing their overlords’ Great Reset agenda of depopulation, central bank digital currencies, social credit scores for the plebs, 15 minute city gulags, living in 300 square foot pods, forced transition to an all EV society, confiscation of firearms to insure their control, making the peasants eat bugs while they dine on Filet Mignon and lobster, and convincing you you’re happy owning nothing while they own everything.

35. ‘Based on pending sales, this month could be the slowest October for sales since 2007’

    That was a tough time in Phoenix Tom. Of course the marginal markets are getting killed. We’ll read about it soon enough.

    1. There seem to be so many ‘worst since 2007’ comparisons in play. What could it all mean?

36. Are you letting the stock market shills distract you from the best bond market dip buying opportunity in over a decade?

    1. Bloomberg
       Newsletter
       Surveillance: Bonds Beat Stocks As Voya Eyes Best Value in 15 Years

       Barbara Reinhard at Voya Investment Management says bonds are offering value for all types of investors for the first time since the financial crisis

       Bonds are offering better value than they have in the past 15 years, according to Voya Investment Management’s Barbara ReinhardPhotographer: Nathan Howard/Bloomberg
       By Lisa Abramowicz
       October 30, 2023 at 8:53 AM PDT
       Bonds beat stocks: Voya sees top value

       In some ways, bonds and stocks are sending different messages. The bond market is arguably reflecting strong economic growth ahead, while stocks outside of Big Tech are conveying a greater degree of nervousness about future earnings and growth.

       While bonds are often thought of as more prescient than stocks, this time around may be the exact opposite. Perhaps stocks have it a bit more right about a slowdown than their balance-sheet brethren. And if that’s the case, longer-term Treasuries may be on the cusp of a rally, with yields heading lower as the debt reprises its role as a haven asset.

       That’s part of what’s underpinning Voya Investment Management’s Barbara Reinhard’s confidence in making debt investments right now.

       “We think that bonds are showing probably their best value in the better part of the past 15 years,” Reinhard said on Surveillance. “This is the first time really since the global financial crisis that we can say: Bonds are material value for all types of investors.”

       On the flip side, she said, stock investors aren’t feeling great about the world given the geopolitical overhang, fears of consumers running out of cash to spend and much tighter credit conditions.

       “We’re probably at that point in the cycle where stocks are in a bit more wait-and-see mode,” Reinhard said. “Right now you have sentiment that isn’t necessarily in your favor to own stocks.”

       The Russell 2000 is a prime pain point, closing at the lowest levels Friday since November 2020. The S&P 500 and Nasdaq both entered corrections last week. And still 10-year Treasury yields are hovering near their highest since 2007. RBC Capital Market’s Lori Calvasina noted that equities are seeing widespread pain across all sectors, with the main driver being confidence and sentiment more than even fundamentals.

       Of course, as we hashed out all morning, it’s unclear how much Treasury yields are reflecting enthusiasm around growth versus simple supply and demand dynamics. On Wednesday, we get the Treasury refunding announcement, which will give traders a sense of how much more debt the US needs to sell to finance its deficit. The most interesting part of the week may be the bond-market response to that release.
       …

    2. DOW FUTURES -0.10%
       S&P 500 FUTURES -0.28%
       NASDAQ 100 FUTURES -0.46%

       A disorderly shift in Japan’s monetary policy could spark bond-market contagion and increase risks of a ‘financial accident,’ Mohamed El-Erian says
       Filip De Mott
       Oct 30, 2023, 11:32 AM PDT
       Mohamed El-Erian
       REUTERS/Fred Prouser

       – Japan needs to be mindful of its yield curve control exit, Mohamed El-Erian wrote in Bloomberg.

       – A disorderly exit would create volatility in world markets, and add to risks of a “financial accident.”

       – But Japan needs to accelerate the phase-out, the top economist added.
       …
       https://markets.businessinsider.com/news/bonds/japan-yield-curve-control-treasury-bond-market-contagion-us-debt-2023-10

    3. Oct. 20, 2023
       How the Bond Market Is Screaming ‘Danger’ for the Economy
       Portrait of Jen Wieczner By Jen Wieczner, New York features writer who covers Wall Street, business, and crypto
       A grizzly outlook for the economy. Photo-Illustration: Intelligencer; Photos: Getty Images

       You don’t really need to know a lot about the economy or bond market to know that there’s one signal that investors live in fear of more than just about any other. It’s called the inverted yield curve — which just means a flippening of sorts in the relationship between long-term and short-term U.S. government bonds. Under normal conditions, the longer-term bonds – say, 10-year bonds – pay a higher rate of interest (aka yield) than shorter duration ones, like the two-year. When there’s an inversion, that relationship switches, so the 10-year temporarily pays a lower rate than the two-year. (The relationship of the yields on all Treasuries ranging from a one-month note to a 30-year bond constitutes the yield curve.) The phenomenon defies easy logic, but it has consistently predicted every recession for more than a half century.

       Unfortunately, this is all very relevant to the health of the economy today: The yield curve inverted nearly a year ago, and it remains inverted. While some recession watchers have recently begun to declare the coast clear — predicting also that the indicator will fail this time — others note that the shape of the curve has been changing lately, and they are more worried than ever. To make sense of this high-stakes puzzle, we went to the definitive expert on yield-curve inversions: Campbell Harvey, a finance professor at Duke University, who originally discovered the pattern in 1986. I spoke with Harvey about what the current inversion means, whether there’s any reason to think this time could be different — and how he nearly made a guest appearance in the Sam Bankman-Fried trial.

       Could I just ask you to explain the significance of an inverted yield curve, as if you were talking to your niece or nephew or your mother-in-law?

       So the yield curve is just the difference between a long-term interest rate and a short-term rate. Think of a ten-year treasury bond as a long term rate and a three-month treasury bill as a short-term rate. So in a normal yield curve, which we see almost all the time, the long rate are higher than the short rates. It makes sense because there’s some risk of locking your money up for a longer period of time. But on certain rare occasions, this gets upended, and you get the short rates much higher than the long rates — that’s unusual, and it’s called an inverted yield curve and suggests a problem in the economy. And over the past eight recessions, from the late 1960s to today, every time we got that upending of the bond market, where the long-term rate was lower than a short-term rate, a recession followed without any false signals — so eight out of eight. And so this is perhaps the most reliable indicator of what will happen in the economy.

       And does it usually happen because the Fed is raising rates?

       So the yield curve can invert in many different ways. And given that there are only eight examples, there’s not a lot you can learn from each one. But I will say that the current inversion is what I consider the most dangerous type of inversion, where both the short rate and the long rate go up, but the short rate goes up more than the long rate. Let me tell you why. When the yield curve inverts, that’s bad for banks because the bank business model is that they pay depositors a short-term rate and then they receive interest from their loans that are longer term. So as the yield curve inverts, this damages their profitability, where they’re paying out more and receiving like the same or less. So an inversion, no matter how it’s structured, hurts the banks’ profitability.

       But the particular type of inversion we’ve seen, where the long rates go up also, that damages not just profitability but the balance sheet. So the balance sheet of these banks has these longer-term obligations like these loans and mortgages or bonds, and they go down in value as these long rates go up. So this is exactly what happened with Silicon Valley Bank, where their government-bond portfolio had to be written down and that caused them to have negative equity and they went out of business. So this one is, like, not a good one.

       The yield curve has been inverted for a while, and at first you thought that it might be a false signal. How has your thinking evolved on that?

       Yeah, so the yield curve inverted in November 2022. On January 4, I wrote a LinkedIn post saying that this could be a false signal, and I had some credibility in saying that, given that it’s my model. But there was a very important caveat. I said, Yeah, I think we can dodge a recession, but it’s conditional on the Fed stopping their rate hikes. And that’s not what happened. I still believe that if the Fed had stopped their rate hikes in January, we could have avoided a recession. But given that the Fed has continued, all of this has really upended things.

       And I think that pushing the rates up as high as they have has been counterproductive. They give the inflation reason, but it’s a false narrative. I believe that the true rate of inflation right now is more like 1.5 percent. So you can’t use the inflation excuse. The Fed has gone too far. They’re very late realizing that they need to pause or reverse course. It’s technically called overshooting.

       There’s an interesting phenomenon with the yield-curve inversion now, which is that it’s starting to disinvert — which is to say, go back to a normal shape. In your model, what’s the significance of that?

       So the average lead time from an inversion to a recession, over the past four, is 13 months. So we’re not even at the average yet — it’s way too early to say that it’s a false signal. But more importantly, you look at the past four recessions, and before the recession begins, every single time, you see the uninversion happening or whatever the word is. The steepening occurs before the beginning of the recession. So this is exactly what you’d expect.

       Yes, “the bear steepening,” as people call it when the long end of the curve rises and the inversion ends. If that is happening now, when do you expect a recession?

       I expect first quarter or second quarter of next year. It’s going to be very interesting because the third-quarter GDP is going to be very impressive, and people will think, Oh, well, this must be a false signal. But that growth has been driven exclusively by consumers drawing down their savings, the COVID-era savings, and those savings will run out in the fourth quarter. Plus the resumption of the student-loan payments affects 40 million Americans, and it’s all being taken away from disposable income. So many forces are suggesting that the consumer is not going to be able to bail out the economy in 2024.

       So how worried are you? How bad do you think this time could be?

       This is very important: I hope that my model is wrong. I certainly hope that it is a false signal, though I don’t believe it is, and kind of the good scenario for me is a mild recession, something like we had in 2001 or 1990. And ’91.

       It’s important for people to remember that even though the 2020 recession was very short — because we had the pandemic and then we had all the aid — the yield-curve inversion predicted that too.

       Be careful here. And some people say, Well, surely, the yield curve didn’t predict COVID. But in real time, when it inverted in 2019, there was a lot of other data that suggested that there was going to be a recession in 2020. So we’ll never know. It’s got kind of an asterisk on it because of COVID, but again, we likely would have had a recession anyway.

       Does the severity of the inversion predict at all the severity of the recession?

       No. But there is a very tight relationship between the duration of an inversion and duration of recession. And it depends when we uninvert, but it indicates that the recession could last about nine months to a year. So that’s obviously longer than the COVID one but shorter than the global financial crisis.

       You haven’t had any false signals yet. But is there any reason to think this time is different?

       Every time is different. And there’s many differences this time around. One difference is the excess demand for labor. So that’s kind of unique, and that I think is important because I think it will dull the blow. That excess demand has been decreasing, and it could go the other way very quickly. But nevertheless, I think that that is something that is different.

       You mentioned that the yield-curve inversion hurts banks, and already we’ve seen some of the small-to-midsize banks fail. Do you think some of the big banks are at risk?

       Given the further increases by the Fed, the banks are not in as good shape as they were, like, a year ago. This has really been punishing for the banks and frustrating because the Fed has taken the banks into a scenario that is far beyond the adverse scenario they get for their stress test. It’s a little bit unfair. So I think the financial system is at risk right now. Here’s something interesting that I’m frustrated the media has not picked up on: You know, you can get like 5.2 percent or something like that in a money-market fund? Most people don’t do that. They’ve got a savings account, and the average savings rate across all banks in the US is about 0.5%. So that is kind of dramatic — you can get in a money-market fund ten times what you’re getting from your bank. But that’s not the whole story. The too-big-to-fail banks are only paying like .01% to .05% on savings. That gap between what they’re paying on savings and what you could reasonably get from another vehicle, that to me is a red flag. And that suggests to me that the financial system is far more at risk than people think.
       …
       https://nymag.com/intelligencer/2023/10/how-the-bond-market-is-screaming-danger-for-the-economy.html

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