Recession - 2022 / 2023 / 2024

LuckyDuck · Mar 1, 2024

Hobo Hilton said:
I will address the '"always be buying' strategy with regards to retirement accounts." With a foot note below.

I had both IRA's and SEP-IRA's for the self employed. When they were first implemented the programs were great. When the politicians started to notice how much money was being stored in IRA's the elected officials / Congress changed the rules.... More than one time over a few years. Soon they had gutted the benefits of the IRA's. Those that bailed paid severe penalties. All of this is from my memory of the situation.

When America was being settled, the US Government made many "treaties" with the Indians. The Indians now say the treaties were always good for the Government. When the treaty was no longer good for the Government... The Government broke the treaty. Nothing has changed. Careful putting your money where the Government can track it and change the rules. JMHO

1974

Background on IRAs Deductible IRAs were first introduced in the United States in 1974 as a tax- preferred savings vehicle for those without pensions. From 1982-1986, all working taxpayers up to age 70.5 were eligible for tax-deductible contributions to an IRA.

Now this is a good discussion sir! I had to google it myself but that's 100% correct- the traditional IRA came about in 1974. Apparently Roth IRA's didn't become a thing until 1998. These of course are tax efficient mechanisms and don't answer the mail on what to invest in but I'm actually glad I chimed into the discussion because I honestly had no idea that the IRA tax code went back that far myself.

-LD

LuckyDuck · Mar 1, 2024

NoDopes said:
US is deficit spending at around 10% of GDP!
They are pumping it up.
Buffet actually called it last summer.

Not trying to call you out by any means sir- but I heard that all through... say 2012-2016 and I personally kept my money set aside in government bonds because I believed that narrative and I missed out on 4 years of some incredible returns. I'm all in with the market now and have adopted the 'always be buying mantra' but to each their own.

-LD

Hobo Hilton · Mar 1, 2024

LuckyDuck said:
Not trying to call you out by any means sir- but I heard that all through... say 2012-2016 and I personally kept my money set aside in government bonds because I believed that narrative and I missed out on 4 years of some incredible returns. I'm all in with the market now and have adopted the 'always be buying mantra' but to each their own.

-LD

You can't look back to 2012 ! ! ! That falls under the "woulda, coulda, shoulda" heading. Stop beating yourself up. Take the lesson and move forward.

Here are a few examples from my past:
I bought a few 1 ounce gold Eagles back in the 80's for $400 +/- each. Shoulda bought more.
I had a margin account with a boat load of Costco (COST) stock at $60 back in 2005. It dipped in 2008, I unloaded. Shoulda held on. Today at $749
I was working with a bunch of Intel people when Bitcoin first came on the scene. somewhere around $25 each. I passed... Today $62,203.. Shoulda

Life

Huskydriver · Mar 1, 2024

Hobo Hilton said:
My hope is when 2023 rolls in all of you guy's can say - Look, Hobo was wrong.
Let's watch it unfold.

Edit title for BFC

2024 has rolled in and I'm killing it doing the opposite of everything you say keep the stonks coming hobo

LuckyDuck · Mar 1, 2024

Hobo Hilton said:
You can't look back to 2012 ! ! ! That falls under the "woulda, coulda, shoulda" heading. Stop beating yourself up. Take the lesson and move forward.

Here are a few examples from my past:
I bought a few 1 ounce gold Eagles back in the 80's for $400 +/- each. Shoulda bought more.
I had a margin account with a boat load of Costco (COST) stock at $60 back in 2005. It dipped in 2008, I unloaded. Shoulda held on. Today at $749
I was working with a bunch of Intel people when Bitcoin first came on the scene. somewhere around $25 each. I passed... Today $62,203.. Shoulda

Life

Well- in 2012 particularly- If I remember right that was the Obama Administration (not trying to get political by any means) and at that time they were practicing something... quantitive easing or something along those lines & if I remember correctly (not stating this as a fact but just saying how I remember things) that administration placed some sort of stock market rescue crew in place where the federal government swooped in to keep things from crashing. Maybe my memory is wrong- don't mind being called out with facts if that's the case but I remember thinking at that timeframe that the Stockmarket was built on fantasy and kept my investments in bonds and missed out on significant gains while waiting for the house of cards to crash.

Again- not meant as a challenge just sharing my memory from that timeframe is all.

-LD

Hobo Hilton · Mar 1, 2024

NoDopes said:
US is deficit spending at around 10% of GDP!
They are pumping it up.
Buffet actually called it last summer.

For the life of me, I can't see why all of the foreign investors are not paying attention to this.
They must have some really good hedges in place.
When that bubble burst things will be chaotic.

“In the midst of chaos, there is also opportunity”

― Sun-Tzu,

NoDopes · Mar 1, 2024

I get your sentiment, but I don't think it's the same. Look at deficit vs interest rates.
Note, right now, we are at $3T deficit rate.. same as peak COVID insanity. Now consider Biden's puppet master just let in 8-9M new welfare criminal illegal aliens and we are funding them to levels we've never funding any working American.

Hobo Hilton · Mar 1, 2024

LuckyDuck said:
Well- in 2012 particularly- If I remember right that was the Obama Administration (not trying to get political by any means) and at that time they were practicing something... quantitive easing or something along those lines & if I remember correctly (not stating this as a fact but just saying how I remember things) that administration placed some sort of stock market rescue crew in place where the federal government swooped in to keep things from crashing. Maybe my memory is wrong- don't mind being called out with facts if that's the case but I remember thinking at that timeframe that the Stockmarket was built on fantasy and kept my investments in bonds and missed out on significant gains while waiting for the house of cards to crash.

Again- not meant as a challenge just sharing my memory from that timeframe is all.

-LD

That was Ben Bernanke and his "Helicopter Money"...
You bring out a great reference in time.
This administration tried the same thing due to the pandemic. Unfortunately the Big Banks knew the deal and mopped up all the money.
None reached the man on Main Street.
Now we deal with the deficit.

LuckyDuck · Mar 1, 2024

Don't suppose there's anyone here that can break things down "barney style" about 'CZGZF' and why it keeps staying flat? I'd imagine it's because the EURO market is different but I'm frankly baffled that this stock hasn't changed even within a penny. I'm ok by playing ignorant but would love to be smarter and hear why that's the case.

-LD

Hobo Hilton · Mar 1, 2024

LuckyDuck said:
Don't suppose there's anyone here that can break things down "barney style" about 'CZGZF' and why it keeps staying flat? I'd imagine it's because the EURO market is different but I'm frankly baffled that this stock hasn't changed even within a penny. I'm ok by playing ignorant but would love to be smarter and hear why that's the case.

-LD

Pay close attention to the volume.

Hobo Hilton · Mar 2, 2024

Some opinions from people "In the Trade".

Credit Bubble Bulletin

- Chronicling History's Greatest Financial Bubble

creditbubblebulletin.blogspot.com

lariat · Mar 2, 2024

LuckyDuck said:
Don't suppose there's anyone here that can break things down "barney style" about 'CZGZF' and why it keeps staying flat? I'd imagine it's because the EURO market is different but I'm frankly baffled that this stock hasn't changed even within a penny. I'm ok by playing ignorant but would love to be smarter and hear why that's the case.

-LD

there is a stock market thread. Go there and ask the question. The stock traders play over there. This thread is more macro related. The economy and the stock market are different things.

LuckyDuck · Mar 2, 2024

lariat said:
there is a stock market thread. Go there and ask the question. The stock traders play over there. This thread is more macro related. The economy and the stock market are different things.

Fair point. Wasn't trying to be disruptive to this discussion by any means.

-LD

LuckyDuck · Mar 2, 2024

https://www.cnn.com/2024/03/02/economy/american-dream-cost-of-living-housing-childcare/index.html

Hopefully this is better suited to this thread being on more the macro angle. Long story short- there's problems with purchasing power (no surprise). I know, I know- CNN and if anyone cares to check out the article be forewarned that they couldn't help themselves but to include a same-sex couple parenting a child in the story. Aside from that nonsense, figured that this would fit in with this discussion.

-LD

Hobo Hilton · Mar 2, 2024

LuckyDuck said:
https://www.cnn.com/2024/03/02/economy/american-dream-cost-of-living-housing-childcare/index.html

Hopefully this is better suited to this thread being on more the macro angle. Long story short- there's problems with purchasing power (no surprise). I know, I know- CNN and if anyone cares to check out the article be forewarned that they couldn't help themselves but to include a same-sex couple parenting a child in the story. Aside from that nonsense, figured that this would fit in with this discussion.

-LD

I don't "kill the messenger".
Read that story and I think they did a fairly good job of taking a cross section of America to show case.
I have several friends who worked the same, low paying job for 25 years at one company. Raised children, helped others, lost all of their retirement during the "Great Recession". Had health issues and still working for the same company as they turn 70 years old.

They can not afford rent on a one bedroom apartment. They raised their children right and now, their kids are buying houses for their parents to stay in. Luckily the kids bought those houses 4 - 5 years ago and they have turned into good investments.... Basically they have put a roof over their parents head... Nothing fancy but, it's the security of knowing a 70 year old parent, still working part time will not end up on the street.

They all learned to adapt.

LuckyDuck · Mar 2, 2024

Hobo Hilton said:
I don't "kill the messenger".
Read that story and I think they did a fairly good job of taking a cross section of America to show case.
I have several friends who worked the same, low paying job for 25 years at one company. Raised children, helped others, lost all of their retirement during the "Great Recession". Had health issues and still working for the same company as they turn 70 years old.

They can not afford rent on a one bedroom apartment. They raised their children right and now, their kids are buying houses for their parents to stay in. Luckily the kids bought those houses 4 - 5 years ago and they have turned into good investments.... Basically they have put a roof over their parents head... Nothing fancy but, it's the security of knowing a 70 year old parent, still working part time will not end up on the street.

They all learned to adapt.

Just one example sir, but one I'd hope you'd consider worth your time with me sharing. I understand recessions, I separated from the military in 2009 at the height of the 'Great Recession' while being told the whole time that I was a fool and would be stoploss'd or called back almost immediately and I was flushing my military career down the proverbial toilet. And both of those scenarios came awfully close to occurring. Then during the 2012-2016 timeframe, I had secured another job that offered a 401(k) and was absolutely terrified of investing in the stock market with the QE going on then. I know the previous comment/suggestion aptly suggested that this thread is more focused on macro issues so I'll try to stay on that topic if you give me a little bit of leeway. I'd believe during that 2012-2016 timeframe that in my experience we were in "part II" of the Great Recession but the QE made incredible gains for Wall Street during that time. I also know that Wall Street isn't 'Main Street' for the context of this conversation.

But now we're living in an entire world of credit- I still can remember there being an uproar on when grocery stores started to accept credit cards as payment and that was just within the... what past 15-20 years right? Now I can't even buy a $20 5-pack of white T-Shirts from Hanes without being asked to participate in some sort of 'buy now- pay later' program. I shutter to think how many Americans use that option but that's where we're at I suppose.

-LD

Hobo Hilton · Mar 2, 2024

LuckyDuck said:
Just one example sir, but one I'd hope you'd consider worth your time with me sharing. I understand recessions, I separated from the military in 2009 at the height of the 'Great Recession' while being told the whole time that I was a fool and would be stoploss'd or called back almost immediately and I was flushing my military career down the proverbial toilet. And both of those scenarios came awfully close to occurring. Then during the 2012-2016 timeframe, I had secured another job that offered a 401(k) and was absolutely terrified of investing in the stock market with the QE going on then. I know the previous comment/suggestion aptly suggested that this thread is more focused on macro issues so I'll try to stay on that topic if you give me a little bit of leeway. I'd believe during that 2012-2016 timeframe that in my experience we were in "part II" of the Great Recession but the QE made incredible gains for Wall Street during that time. I also know that Wall Street isn't 'Main Street' for the context of this conversation.

But now we're living in an entire world of credit- I still can remember there being an uproar on when grocery stores started to accept credit cards as payment and that was just within the... what past 15-20 years right? Now I can't even buy a $20 5-pack of white T-Shirts from Hanes without being asked to participate in some sort of 'buy now- pay later' program. I shutter to think how many Americans use that option but that's where we're at I suppose.

-LD

I'd like for the other guys / lurkers to chime in....
A couple of thoughts... 1) Stay out of debt. 2) Never keep all of your eggs in one basket. If the common denominator of your eggs is United States Dollars (USD's) then get 10% of your "currency" in something the Government can't track. Gold, silver, ammo, collectables, etc.
They ALL want your information. Give as little as possible.

IronSkillet · Mar 3, 2024

Hobo Hilton said:
Janet Yellen is taking her "Political Puppet Show" on the road. Who will believe her ?

The Biden administration is dispatching U.S. Treasury Secretary Janet Yellen to Chicago and Milwaukee this week as part of a stepped-up domestic travel schedule to sell Americans on the benefits of President Joe Biden’s economic policies.
Yellen will make the case in remarks to the Economic Club of Chicago on Thursday that the pandemic recovery was faster, fairer and more transformative than previous economic recoveries, the Treasury said late on Sunday.

Yellen to step up campaign touting Biden's economic record

The Biden administration is dispatching U.S. Treasury Secretary Janet Yellen to sell Americans on the benefits of President Joe Biden's economic policies.

www.cnbc.com

Jip4012 · Mar 3, 2024

Hobo Hilton said:
I'd like for the other guys / lurkers to chime in....
A couple of thoughts... 1) Stay out of debt. 2) Never keep all of your eggs in one basket. If the common denominator of your eggs is United States Dollars (USD's) then get 10% of your "currency" in something the Government can't track. Gold, silver, ammo, collectables, etc.
They ALL want your information. Give as little as possible.

it sucks that you're punished for saving, losing anywhere from 15-20% value every year. At least now you can find high yield savings accounts and CD's at 5%, but you're still losing more than that.

jrhtx · Mar 3, 2024

Jip4012 said:
it sucks that you're punished for saving, losing anywhere from 15-20% value every year. At least now you can find high yield savings accounts and CD's at 5%, but you're still losing more than that.

Be very, very carful chasing the highest rates for savings/CD's at banks. Banks are facing serious issues with collateralized loan obligations. JPM, Citi Group, Wells Fargo are the top 3 holders. BOA is also very high on the list.
You will say, so, I have FDIC insurance. If it ends up being a series of major bank failures, well, everyone won't get paid. But will it matter? The market will probably crash too if a series of major banks fail. Then it will be beans and bullets.

Did you also know that the brokerage companies loan you "cash" to banks? Fidelity pays 4.9% for cash in your brokerage account. They loan that money to banks at a higher interest rate. What banks do they loan to? BOA, JPM, etc...

Watch where you have your cash.

Jip4012 · Mar 3, 2024

Thanks for the warning, similar risk for CDs?

Ison · Mar 3, 2024

This is an interesting theory.

lariat · Mar 3, 2024

Jip4012 said:
Thanks for the warning, similar risk for CDs?

Same risk. The banks have zero reserve requirement, which means they can lend all deposits out. Can is they key word. Some are very conservative, many aren’t. But this includes Pension funds that invest irresponsibly, credit unions, etc. whatever you deposit in deserves investigation.

The base issue is that banks create money through loans. But it is really nothing more than multiplying debt. There is more debt in the world than there is cash. This means there isn’t enough cash in the world to come anywhere near paying off all the world’s debt obligations. That model works until it doesn’t.

atepointer · Mar 3, 2024

jrhtx said:
Be very, very carful chasing the highest rates for savings/CD's at banks. Banks are facing serious issues with collateralized loan obligations. JPM, Citi Group, Wells Fargo are the top 3 holders. BOA is also very high on the list.
You will say, so, I have FDIC insurance. If it ends up being a series of major bank failures, well, everyone won't get paid. But will it matter? The market will probably crash too if a series of major banks fail. Then it will be beans and bullets.

Did you also know that the brokerage companies loan you "cash" to banks? Fidelity pays 4.9% for cash in your brokerage account. They loan that money to banks at a higher interest rate. What banks do they loan to? BOA, JPM, etc...

Watch where you have your cash.

Just wondering if you can expound beyond 'serious issues' with a link/story/earnings etc please as I've not seen a blip on an earnings/10k yet. It's easy to hear CLO and think it's a CDO....a lot of PTSD from 2008 and assumptions are made they are the same as GFC packaged debt. CLO funds and CDO funds are not the same. It's like comparing a steak to a donut quite honestly. AAA rated commercial paper vs sub prime home/car/boat loans.

These CLO funds are AAA rated with first liens on assets and senior to any other debt the company may have. They are structured way less complex than the GFC garbage etc CDO square deals that were resecuriized and repackaged numerous times. These are senior tranches receive priority over mezzanine and equity tranches(another way these are hugely different than the 2008 CDOs). Plus they have 'OC' or overcollateralization thresholds and excess spread requirements which provide a backstop for cash shortfalls. These AAA flavored CLO funds the $700b+ big banks own are flat out cash machines so not sure where you are coming up with 'serious issues'.

I agree watch where you have your cash so on the flip side regional and local banks are where I wouldn't have a dime. The CRE debt needing to be refinanced this year is just under $1t. 60% of that is held by regionals who have no other business units like capital markets and wealth management levers to offset any bad CRE underwriting. I'm patiently waiting for Valley Bank to show us Q1 write downs they have such an egregious overweight position in CRE it's nuts ~ 170% over what regulators say is healthy. Maybe their underwriting department is just A+ and they have 40-50 range LTV, but if they don't and credit losses are booked look out below for another regional bank depth charge. Distressed CRE from regionals is going to be picked up by the big banks on the cheap the next couple of years....something on the order of close to $3t needs to be refinanced b/f EOY'26. Won't be surprised if NYCB is next to go into receivership.

NoDopes · Mar 3, 2024

Didn't credit Suisse investors believe they were priority investors with first rights to assets?
Until they got fucked over in the buyout?

atepointer · Mar 3, 2024

NoDopes said:
Didn't credit Suisse investors believe they were priority investors with first rights to assets?
Until they got fucked over in the buyout?

Those were AT1 'coco' convertible bonds way down the capital stack deeply subordinated. If the people who bought them who were surprised should have read the prospectus b/c it's in there......extremely high risk note when in a known shit run bank that should have been taken out back and put down 20 years ago anyway. If they 'believed' it then that's on them b/c anyone buying a coco bond should know what they are getting into. They can be great investments if you look under the hood first. It's not a senior secured note by any stretch.

Jip4012 · Mar 3, 2024

lariat said:
Same risk. The banks have zero reserve requirement, which means they can lend all deposits out. Can is they key word. Some are very conservative, many aren’t. But this includes Pension funds that invest irresponsibly, credit unions, etc. whatever you deposit in deserves investigation.

The base issue is that banks create money through loans. But it is really nothing more than multiplying debt. There is more debt in the world than there is cash. This means there isn’t enough cash in the world to come anywhere near paying off all the world’s debt obligations. That model works until it doesn’t.

gotta love the fractional reserve system

D̷e̷v̷i̷l̷D̷o̷c̷A̷Z̷ · Mar 3, 2024

Jip4012 said:
gotta love the fractional reserve system

Never been a better time to be a poor.

Buy more ammo.

Jip4012 · Mar 3, 2024

They’re definitely incentivizing poverty.

Hobo Hilton · Mar 3, 2024

jrhtx said:
Be very, very carful chasing the highest rates for savings/CD's at banks. Banks are facing serious issues with collateralized loan obligations. JPM, Citi Group, Wells Fargo are the top 3 holders. BOA is also very high on the list.
You will say, so, I have FDIC insurance. If it ends up being a series of major bank failures, well, everyone won't get paid. But will it matter? The market will probably crash too if a series of major banks fail. Then it will be beans and bullets.

Did you also know that the brokerage companies loan you "cash" to banks? Fidelity pays 4.9% for cash in your brokerage account. They loan that money to banks at a higher interest rate. What banks do they loan to? BOA, JPM, etc...

Watch where you have your cash.

JMHO..... You do not need to be holding (hoarding) cash. Sure, enough to cover your budget for 6 months is prudent. Any more than that should be safely tucked away in physical junk silver, bullion, bars, etc.

lariat · Mar 4, 2024

Macro problem. Again it goes back to debt, regardless of the reason for it (and there is more than one).

jrhtx · Mar 4, 2024

atepointer said:
Just wondering if you can expound beyond 'serious issues' with a link/story/earnings etc please as I've not seen a blip on an earnings/10k yet. It's easy to hear CLO and think it's a CDO....a lot of PTSD from 2008 and assumptions are made they are the same as GFC packaged debt. CLO funds and CDO funds are not the same. It's like comparing a steak to a donut quite honestly. AAA rated commercial paper vs sub prime home/car/boat loans.

These CLO funds are AAA rated with first liens on assets and senior to any other debt the company may have. They are structured way less complex than the GFC garbage etc CDO square deals that were resecuriized and repackaged numerous times. These are senior tranches receive priority over mezzanine and equity tranches(another way these are hugely different than the 2008 CDOs). Plus they have 'OC' or overcollateralization thresholds and excess spread requirements which provide a backstop for cash shortfalls. These AAA flavored CLO funds the $700b+ big banks own are flat out cash machines so not sure where you are coming up with 'serious issues'.

I agree watch where you have your cash so on the flip side regional and local banks are where I wouldn't have a dime. The CRE debt needing to be refinanced this year is just under $1t. 60% of that is held by regionals who have no other business units like capital markets and wealth management levers to offset any bad CRE underwriting. I'm patiently waiting for Valley Bank to show us Q1 write downs they have such an egregious overweight position in CRE it's nuts ~ 170% over what regulators say is healthy. Maybe their underwriting department is just A+ and they have 40-50 range LTV, but if they don't and credit losses are booked look out below for another regional bank depth charge. Distressed CRE from regionals is going to be picked up by the big banks on the cheap the next couple of years....something on the order of close to $3t needs to be refinanced b/f EOY'26. Won't be surprised if NYCB is next to go into receivership.

I follow a thread on Seeking Alpha who has written 5+ articles on banking issues over the last 2(?) years.
Also on this link

Safer Banking Research Articles - SaferBankingResearch

SaferBankingResearch is a premiere source for stock market technical analysis.

www.saferbankingresearch.com

lariat · Mar 5, 2024

CRE is a huge risk right now. I’m not sure any of it is safe. At least not until they mark it down to value, which everyone is trying to avoid. With so many CRE loans maturing this year and refinancing will have to occur with the new higher rates while vacancies are rising this is a regional bank fiasco.

atepointer · Mar 5, 2024

jrhtx said:
View attachment 8364893
I follow a thread on Seeking Alpha who has written 5+ articles on banking issues over the last 2(?) years.
Also on this link

Safer Banking Research Articles - SaferBankingResearch

SaferBankingResearch is a premiere source for stock market technical analysis.

www.saferbankingresearch.com

Oh Avi Gilburt he has an EWT following too on SA. Glad to see another SA reader they are a wealth of information, but it requires vetting. I trialed Avi's service about 5 years ago, but saw no value in it as I'm not a day trader. Thanks for sharing the link appreciate it.

My take is he has given just enough info to put doubt in a readers mind *if* banks have overweight CRE exposure packaged into a CLO. Further a reader could walk away from that article and chart and assume 100% of these banks CLO loan portfolios are made up of CRE loans. There is no question for the equity tranche portion of CLO loan books there will be more defaults this year with rates where they are, but how much? The article takes the scary media headline of CRE loans and casts doubt on CLOs which hold tiny portions of their portfolios in the sector. CLOs have hundreds of loans crossing all sectors so they diversify broadly it's not as if CLO = CRE.

The tough part for doomerbears is they have been dead wrong again for 2023 on CLO equity tranche defaults. Consensus was 3% default rate and it ended up being 1.5% vs the long term historical average of 2.7%. So for 2023 the default rate was still 44% lower than historical averages. That's not quite how his linked chart speaks does it? Further the equity tranche isn't where JPM and BAC are focused it's on AAA rated senior tranches.

JPMorgan and Citigroup Are Ramping Up Their Investment in CLOs

The biggest US banks are stepping back into the $1.3 trillion market for collateralized loan obligations after nearly two years of shying away from investing in the securities.

news.bloomberglaw.com

Thanks for sharing link....the more info the better.

atepointer · Mar 5, 2024

lariat said:
CRE is a huge risk right now. I’m not sure any of it is safe. At least not until they mark it down to value, which everyone is trying to avoid. With so many CRE loans maturing this year and refinancing will have to occur with the new higher rates while vacancies are rising this is a regional bank fiasco.

Single tenant office space is ugly, but there will be bargains galore when the dust settles. Valley Bank is big enough with enough exposure to CRE it could be the one that if they have issues, panic ensues would get me interested. Still not enough sell off in the industrial space for me beyond GNL. They just cut their common div, sold a few properties for a tidy profit and are using the proceeds to pay down debt and free up capital for new rental properties that poor managers have to offload on the cheap. The common div now has a massive cushion to the preferred dividend. I love to see common cuts they offer me nothing but expense as a fixed income investor and GNL-D under par after a great quarterly report was a welcomed sight. I do appreciate reactionary panic sellers reacting to headlines b/f reading b/t the lines though.

jrhtx · Mar 5, 2024

atepointer said:
Oh Avi Gilburt he has an EWT following too on SA. Glad to see another SA reader they are a wealth of information, but it requires vetting. I trialed Avi's service about 5 years ago, but saw no value in it as I'm not a day trader. Thanks for sharing the link appreciate it.

My take is he has given just enough info to put doubt in a readers mind *if* banks have overweight CRE exposure packaged into a CLO. Further a reader could walk away from that article and chart and assume 100% of these banks CLO loan portfolios are made up of CRE loans. There is no question for the equity tranche portion of CLO loan books there will be more defaults this year with rates where they are, but how much? The article takes the scary media headline of CRE loans and casts doubt on CLOs which hold tiny portions of their portfolios in the sector. CLOs have hundreds of loans crossing all sectors so they diversify broadly it's not as if CLO = CRE.

The tough part for doomerbears is they have been dead wrong again for 2023 on CLO equity tranche defaults. Consensus was 3% default rate and it ended up being 1.5% vs the long term historical average of 2.7%. So for 2023 the default rate was still 44% lower than historical averages. That's not quite how his linked chart speaks does it? Further the equity tranche isn't where JPM and BAC are focused it's on AAA rated senior tranches.

JPMorgan and Citigroup Are Ramping Up Their Investment in CLOs

The biggest US banks are stepping back into the $1.3 trillion market for collateralized loan obligations after nearly two years of shying away from investing in the securities.

news.bloomberglaw.com

Thanks for sharing link....the more info the better.

I can't read you link, it's behind a paywall. The more information we have on banks the better. I would rather be safe than sorry at this point in my life. There is no way Yellen will bail out all depositors in a Texas bank like they did in California. Red vs Blue!!! I "think" he was correct in his warnings on NYCB. He was public in his discussions that he got his parents out of NYCB before their latest issues. Is it over for NYCB? Don't know. Correct me here, but 2 of the largest bank failures in history was 2023?

Dramatic collapses made 2023 the biggest year ever for bank failures

The five banks that went under in 2023 had nearly $550 billion of assets, the largest total in a single year. Here's a look back at how they unraveled.

www.americanbanker.com

I am new to the Avi Gilburt show and not a day trader, don't have (want to have) time for that. I'm retired and would rather be at the ranch working with no phone or internet but am following to see if his predictions on market direction materialize.

Hobo Hilton · Mar 5, 2024

Trending

atepointer · Mar 5, 2024

jrhtx said:
I can't read you link, it's behind a paywall. The more information we have on banks the better. I would rather be safe than sorry at this point in my life. There is no way Yellen will bail out all depositors in a Texas bank like they did in California. Red vs Blue!!! I "think" he was correct in his warnings on NYCB. He was public in his discussions that he got his parents out of NYCB before their latest issues. Is it over for NYCB? Don't know. Correct me here, but 2 of the largest bank failures in history was 2023?

Dramatic collapses made 2023 the biggest year ever for bank failures

The five banks that went under in 2023 had nearly $550 billion of assets, the largest total in a single year. Here's a look back at how they unraveled.

www.americanbanker.com

I am new to the Avi Gilburt show and not a day trader, don't have (want to have) time for that. I'm retired and would rather be at the ranch working with no phone or internet but am following to see if his predictions on market direction materialize.

no question the regional bank debacle is far from over. I agree daytrading is not my speed either I am a fixed income investor. I always heard about Elliot wave theory and I joined his service just to try and understand it but it was absolutely pointless for an income investor so I exited stage left. bailing out Silicon Valley Bank was a travesty if there were ever a bank that should not have been bailed out it was them. They cater almost exclusively to clientele who need massive amounts of cash on very short notice but they had almost all of their money tied up in the long end of the curve and got destroyed by rising rates. Just idiotic Management

lariat · Mar 5, 2024

The main thrust of all the risk that is under the covers right now has to do with refinancing the existing loans. There will be concessions made and attempted to be made to keep those assets either performing or at least on the books at loan value until sold. The real need is to not have a lot of these loans go under at once.

The lesson we learn yet again is that low interest rates produce businesses that can be viable until their rates rise or the economy turns down and decreases demand. We have these items in effect currently. Low interest rates produce malinvestment. The thing we have seen is a lot of real estate speculation from commercial to residential, and it is going to bite a lot of people in the ass, most definitely financial players.

The real risk is that these banks and properties get owned by larger banks that can then call the shots regarding property usage and values, essentially winding up with an oligarchy of sorts. And this starts to get into the problem of only having property owners vote.

A lot of zombie companies are going to have to dissolve before this is over. In my estimation what we will see before it is all over is even more rising prices of food and other necessities while other nonessential items decrease in value due to lack of demand from lower and middle income families that are tapped out on credit but need to provide for their families. At least that is the trend that is underway. That leaves only one solution: print money while lowering interest rates. IOW, inflation again.

Hobo Hilton · Mar 5, 2024

lariat said:
The main thrust of all the risk that is under the covers right now has to do with refinancing the existing loans. There will be concessions made and attempted to be made to keep those assets either performing or at least on the books at loan value until sold. The real need is to not have a lot of these loans go under at once.

The lesson we learn yet again is that low interest rates produce businesses that can be viable until their rates rise or the economy turns down and decreases demand. We have these items in effect currently. Low interest rates produce malinvestment. The thing we have seen is a lot of real estate speculation from commercial to residential, and it is going to bite a lot of people in the ass, most definitely financial players.

The real risk is that these banks and properties get owned by larger banks that can then call the shots regarding property usage and values, essentially winding up with an oligarchy of sorts. And this starts to get into the problem of only having property owners vote.

A lot of zombie companies are going to have to dissolve before this is over. In my estimation what we will see before it is all over is even more rising prices of food and other necessities while other nonessential items decrease in value due to lack of demand from lower and middle income families that are tapped out on credit but need to provide for their families. At least that is the trend that is underway. That leaves only one solution: print money while lowering interest rates. IOW, inflation again.

I agree.

The financial arena is entering uncharted waters. Never, in the history of the world, have these conditions come together, all at one time.
Everywhere I turn, even here on SH, there are people (Investment Managers) predicting the future. Anyone with the capability to accurately predict the future is not publicizing their abilities. They are cashing in on them.
A concern is how few are controlling the money of so many.

atepointer · Mar 5, 2024

@jrhtx As a footnote to your bank/CLO watch these are two of the biggest CLO equity tranche funds in existence you may want to keep an eye on: Eagle Point Credit and Oxford Lane Capital. Their share prices have obviously been hammered b/c of rising rates, but they are making so much money they are paying supplemental extra dividends on top of a healthy double digit yield. Absolute cash machines and these are the highest risk bottom of the capital stack CLO equity position, not AAA rated first lien senior like JPM or BAC owns. ECC and OXLC. If either of those 2 get into trouble that will be interesting to follow, but their management has been stellar so far deploying capital.

CLO debt is not in any kind of distress and neither is CLO equity, but if it's going to get into trouble the equity level investments will be a canary.

I cut and paste like a dufus on phone will get that paywall article cut and paste when I get home.

Hobo Hilton · Mar 6, 2024

The longer this airplane circles the airport, waiting for a soft landing, the harder it becomes on the American people.
Not quoting any government figures.

DXY has been declining for the past 4 weeks. 103.319
WTI Oil is increasing $80.62
Gold is at $2,146 / ounce
30 year fixed mortgage at 7.50%

WTI Crude •	80.62	+2.47	+3.16%
Brent Crude •	83.99	+1.95	+2.38%

Bigfatcock · Mar 6, 2024

My 24k jewelry purchases were well timed.

Hopefully oil breaks $100 per barrel this summer so I can get a good short position, but I suspect not due to election year.

Hobo Hilton · Mar 6, 2024

We have arrived at "The New Norm"...

"Will there be some announcement at some point that we've had a soft landing?...Some official statement that would give people some comfort?," Representative Al Green, a Texas Democrat, asked Powell while also noting a campaign-year climate in which claims the economy was sliding into recession competed against data showing a low jobless rate, falling inflation, and steady growth.
"I don't think by us, no," Powell said. "We are just going to keep our heads down and do our jobs and try to deliver what the public is expecting from us. We wouldn't be declaring victory like that."

https://www.reuters.com/markets/us/feds-powell-dont-expect-soft-landing-victory-lap-2024-03-06/

jrhtx · Mar 7, 2024

Good data points from Zero Hedge

These Are The 5 Charts The FDIC Does Not Want You Paying Attention To | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

lariat · Mar 7, 2024

jrhtx said:
Good data points from Zero Hedge

These Are The 5 Charts The FDIC Does Not Want You Paying Attention To | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

This is exactly what I have been alluding to on here. The economy at a macro level is not in a good spot. Beyond the delinquencies this doesn't even get into what the consumer is experiencing. I stopped giving the data because no one is listening, its just some griping about they can't get ahead and others not understanding what has happened and nobody wants to see where we are in the economic cycle. Only the financially nimble will profit from what's coming. Everyone else needs to be getting out of debt ASAP and planning accordingly. But what do I know, I have only seen four of these in my life, and this one is the biggest one yet.

The cardboard box index is telling us a correction is in progress, among many other things.

Hobo Hilton · Mar 7, 2024

lariat said:
This is exactly what I have been alluding to on here. The economy at a macro level is not in a good spot. Beyond the delinquencies this doesn't even get into what the consumer is experiencing. I stopped giving the data because no one is listening, its just some griping about they can't get ahead and others not understanding what has happened and nobody wants to see where we are in the economic cycle. Only the financially nimble will profit from what's coming. Everyone else needs to be getting out of debt ASAP and planning accordingly. But what do I know, I have only seen four of these in my life, and this one is the biggest one yet.

The cardboard box index is telling us a correction is in progress, among many other things.

I agree with you. I too have seen these before through the eyes of a blue collar working man, supporting a family. I made major adjustments in order to keep my head above water. I'm making those adjustments now. I am only purchasing my "needs". My safety net is no debt and an excellent FICO number. Holding a bunch of cash today is a losing proposition.

What is different now is the "Elephant in the Room" that no one is talking about..... The National Debt.

Hobo Hilton · Mar 14, 2024

Forty years ago the shift of employment from agriculture to goods-producing industries and finally to services was becoming concerning.
So, here we are in 2024 and America is in a full swing service economy. Agriculture and goods producing have been moved to other countries.

Much of the current discussion has focused on the po-
tential negative consequences of the continuing shift of em-
ployment to services, ignoring the fact that, in the past,
such growth has been closely associated with economic
progress and the rise in per capita GNP . This association has
been so strong that the growth of the services sector often
has been considered an indicator of the stage of economic
development, and the relative importance of the three major
sectors has been used to demarcate different stages of that
development . Since the work of Allen Fisher and Colin
Clark in the 1930's, it generally has been assumed that
economic development results in a shift of employment from
agriculture to goods-producing industries and finally to ser-
vices .`

https://www.bls.gov/opub/mlr/1984/04/art2full.pdf

Hobo Hilton · Mar 14, 2024

LONDON, March 14 (Reuters) - Europe's private credit funds are increasingly borrowing from banks to boost their performance, fuelling concerns about the wider risks posed by this interconnectedness.
A record 80% of new European private credit funds borrowed from banks via 'subscription lines' in 2023, funding that allows them to lend before tapping their investors for cash, MSCI Private Capital Solutions research shared with Reuters shows.
Subscription lines are used by some credit funds to enhance returns, a separate MSCI study found. MSCI studied pools that were set up recently because funds are most likely to use subscription lines when they start operating.

https://www.reuters.com/business/finance/private-credit-ties-banks-deepen-europe-default-risk-rises-2024-03-14/

Hobo Hilton · Mar 14, 2024

LOL... Yellen can not avoid noticing the "Elephant in the room"...

EXCLUSIVE: Treasury Secretary Janet Yellen said Wednesday that inflation could face a bumpy return to normal after back-to-back reports showed that price pressures within the U.S. economy rebounded at the start of the year.
In a sit-down interview with FOX Business' Edward Lawrence, Yellen pushed back against stagflation concerns and maintained that progress on inflation has not stalled.
"I wouldn't expect this to be a smooth path month to month, but the trend is clearly favorable," she said. "That said, President Biden's top priority is addressing the issue of high costs that concerns so many Americans."

Janet Yellen warns inflation decline might not be 'smooth'

Treasury Secretary Janet Yellen said during an exclusive FOX Business interview that inflation's return to normal could be bumpy from month to month.

www.foxbusiness.com

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