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stevenkesslar

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Everything posted by stevenkesslar

  1. Is it a package deal? I mean, will Nicholas Galitzine fuck me? Or is that extra?
  2. Stock market today: US stocks rise as Fed holds rates steady, projects 3 cuts this year Inflation is now lower than its long term average, as I posted above. Interest rates appear to be headed in that direction. At least today, the stock market is on fire. Had a larger one day gain than any day since this rally started last October. If I had to bet, as I said above. I'd bet an Glenn Neely and S & P 5700 on the horizon. Where's the crisis?
  3. This will have to lower costs for the typical seller, it seems. The part I don't understand at all is how this will work for first time buyers. The realtor commissions have always been at least somewhat negotiable, anyway. And sellers can still pay the commission for the buyer's agent. They just can't say on MLS that they will pay the buyer's agent 2.5 % or 3 %, which seems to be the most common standard in California today. For a buyer who just sold an expensive home in LA or SF and wants to buy a home in Palm Springs for cash, having to pay for their own agent is not really going to be an issue. it's just part of the negotiation. For a first-time buyer, it doesn't seem likely, or even possible, that this makes buying a home more affordable. I've never bought with FHA or VA, because I don't like paying mortgage insurance. But I think for someone struggling to put together the money you need upfront, something like 3 to 5 % is in the ballpark of what can actually get you in a home. I'm not talking about down payment. I mean what you actually pay after you negotiate what the seller will pay - like part of the closing costs. If that's true, if we now say the buyer has to pay their realtor 2 to 3 % as well, that's a huge increase in how much money they have to have. I read about half a dozen articles about this to see if any addressed how this might work. This statement is what I found that seems the closest to what the new reality may be, which is basically one realtor's opinion of the likely outcome: What seems almost inevitable is that some marginal buyer who can barely afford to buy a home, period, isn't going to be able to afford a "limousine service" realtor. They are going to have to find a low cost agent. And in practice often a seller who will agree to pay whatever that buyer's agent gets paid. Otherwise the buyer just doesn't have the money it takes to buy. This is also really nothing new. A marginal buyer who needs FHA or VA to qualify and can barely scrape by is always going to be less desirable to a seller than someone with cash, or plenty of money to negotiate with. If you now add this to the mix, I don't see how having to pay a realtor commission helps that buyer. The idea of "concierge medicine" seems like how this could play out over time. Affluent buyers who have cash can afford to pay their agents, and might well want "limousine service". First time buyers who can barely scrape by are going to need whatever the Medicaid version of real estate agents is.
  4. Agreed about the gorilla. Although I would word it differently. I'd just say massive government deficits are the 800 pound gorilla. We have been here and done this before. The phrase "bond vigilante" is being resurrected from the 1990's. It's only a matter of time until some smart political operative cleverly updates Carville's line about how if he is reincarnated he wants to come back as the bond market. One way to interpret Carville's line is that these problems tend to solve themselves, in several ways. One, if we don't have inflation and we do have a booming stock market (spoiler alert: the stock market is booming) that creates capital gains tax revenues that can be used to reduce deficits. But that depends on something even more basic: that people agree that this is a problem that needs to be solved. The polls say most Americans agree that a soaring federal deficit is a problem that needs to be solved. We're polite gentleman here, so we don't talk about politics. But that's the point. Polite gentleman do polite and sensible things. Somehow, in the 1990's, polite and sensible gentleman did that. And ended up with a budget surplus even. Surely polite and sensible gentlemen can figure out how to do it today, SO AS NOT TO HAVE MORE INFLATION AND FUCK UP THE STOCK MARKET AND THINGS. I mean, it's not like the polite and sensible gentleman who were alive way back in the 1990's were that much smarter than we are, right? By the way, weren't at least a few us alive back in the 1990's? 🤔 As far as whether those two asset classes will not be "on fire" for much longer, do you know something I don't? I actually did think we'd have a correction by now, similar to the multi-month one that ended last October. My go-to guy on this stuff is Glenn Neely, who practices a form of voodoo I don't understand call Neowave Theory. For whatever reason, he has correctly called every major bull and bear market going back to the 80's, when he got started, quite accurately. He was saying until a few weeks ago that a correction would start in February. February 13th, to be precise, when the S &P dropped by more than any day since this current rally stated last November. Anyway, he has now recanted, and is saying the market clearly wants to drift higher. And may be poised for another rally to 5700 or more. It's all voodoo, so what do I know. But he tends to right. My nerdy nephew thinks the 15 year bull market will end soon. When I asked him why, he gave me three good answers: 1) Boomer retirements, 2) Job losses, 3) Tax changes in things like corporate buybacks that draw money out of the stock market. All three are great reasons that the stock market could flounder, in theory. None of them seem imminent now. If I had to choose, I'd go with Neely and S & P 5700. My best argument for why a bull market could end soon is a commercial real estate crisis that could ultimately trigger a banking crisis, like in 2008. In fact, Morgan Stanley predicted that commercial real estate values could drop 40 %, triggering a crisis just as bad as the 2008 GFC. That's the bad news. The good news is this. That prediction is now a year old. The stock market is higher, inflation is lower, and the recession we are all desperately looking for is still to be found. Jesus Fucking Christ! We are all polite and sensible. Can't we at least find this recession? How difficult can that be? If April 2023 - when Morgan Stanley said that - were like 2008, it would now be 2009. We would all know that we are in deep doo. Instead, we're in the money. Middle class net worths are higher than ever, and rising. This is not like 2008. What am I missing? Right or wrong, I've been buying stock in regional banks and REITS with high dividends. If Steven Mnuchin and Pals and Tim Geithner And Friends and other hedge funds think it makes sense, they may have a point. My guess is what is happening is some vacant office space is being sold for cheap to hedge funds or investors that will turn it into badly needed housing, at a profit. Is that a crisis, or an opportunity? A Record Number of Office Buildings Will Be Converted Into Apartments in 2024 Where's the crisis? If we are going to be polite and sensible gentleman, as we should be, we should all conspire to make shitloads in the stock market, pay our capital gains taxes, and force the assholes in Washington to spend it on deficit reduction, like in the 1990's. Is that really too much to ask, guys?
  5. I've read like half a dozen articles suggesting that the reason Tim And Friends and Steve and Friends are showing up is that the hedge fund folks smell a commercial real estate recovery. It makes sense. First, as incompetent as government can be, it's a good guess the two former Treasury Secretaries have some idea what they are doing. Second, inflation is down, and interest rates have likely peaked. Now the question is when do rates start to come down. Personally I think the doomsayers predicting we will have 500 regional bank closures are full of it. The more likely scenario is a coming commercial real estate recovery that our pals at the hedge funds want in on for cheap. I just dumped half the shares I bought in NYCB at $4 at a small profit and am just waiting to see if it goes up toward $5 before I dump the rest. I bought some shares in a few others regional banks that have dividends of 6- 7 %. And I will buy more when I close out NYCB completely. Steve and Friends cut the dividend at NYCB to a penny a quarter once they took control. It had already been cut from 17 cents a quarter to 5 cents a quarter. Steve and Friends get hundreds of thousands of shares at $2 a share. Which basically means they already have a 100 % profit. So it does seem like, "We get it all. And you get none." I think this one was a legal bank robbery. I'll follow it for the next couple months. The shareholders who owned $11 shares before the "crisis" have been posting on message boards about how Sandro DiNello, who rode the GFC foreclosure wave to fame and fortune like Steve and Friends, and who became the NYCB CEO a week or so before the "crisis" led to the vultures sweeping in, seemed to do everything he possibly could to create an environment of crisis. We'll see. They are NOT on the FDIC's problem bank list. And when asked at their presser what the delinquency rates are on these supposedly toxic NYC rent-stabilized multi-family loans, they said they are low. So it's not at all clear that the bank has real loan problems. We'll learn soon enough. The media has focused on the amount of assets held by Silicon Valley, First Republic, and Signature. Which is fair. But it still boils down to a few bank failures. As opposed to something like 500 bank failures during the GFC. The problems at the banks that went under a year ago had to do with interest rates, and also crypto. So if this were a similar crisis where things were cascading out of control, like foreclosures and bank failures did continuously from 2008 to 2012 or so,, I think we would know that by now. This is an indicator of recovery, not crisis, I think. Hedge funds bet on U.S. real estate rebound
  6. The S &P 500 is at all time highs. I'm making money hand over fist. Oh, and like everyone middle class, my net worth is way up. Here's what YCharts says: Higher prices suck, for sure. But wage growth has been exceeding inflation for about a year now. So do I think it's gonna screw up the economy and investing that wages are growing faster than inflation? No, I don't. Sorry. If we are talking about personal investing, rather than the unchanging dirge about inflation, here's something odd. I did think we were about to enter into a correction phase in the S & P. It has certainly been on a roll. One reason why, among several, is Glenn Neely, who I have mentioned before. It's all kind of voodoo Neowave theory. But on big calls, Neely has been correct most of the time. Like when the 2000 downturn started, and when the GFC started and the market plunged. In both times at the very beginning he said, "Get out!" So in February he was saying, and I quote, "upside progress should be minimal to non-existent for the rest of this quarter." He thought Feb. 12 was when the decline would start, since the S & P had the biggest one day drop since this rally started right after Halloween. I actually closed out about half my shares in SOXL, at something like a 150 % profit. Although the ones I bought last October and still have got up to about a 200 % profit. Anyhoo, funny thing. The market kept going up. SOXL exploded. Something about all this investment in chips and new factories that the US is leading the way on. How did that happen, anyway? So Neely was wrong, and he has now flipped. He's now saying the market seems to want to keep going up. Now he's saying "the S&P will not drop much (even if it wastes time) before beginning a new advancing phase." Rally on! I bought 1000 shares of SOXL back, hoping to enjoy the next ride up. Point is, while this unwavering dirge about inflation has been going on, the stock market has been on fire. And home prices are going up, too. Again, average middle class net worth is higher than it has ever been. Inflation, after it's huge jump from 3.09 % in January to 3.15 % in February, is still below the long term average. If this is how it works when things suck, can we make it so things suck all the time? 😉
  7. A lot less. $100? That's a little bit of an arbitrary number. But Boeing hit lows around there, plus or minus $20, in 2016, 2020, and 2022. Why not 2024? The more ridiculous thing, knowing very little other than what Fitz-gerald sounds right about, is their EPS is -$3.87 for 2023. Which is better than 2022. And 2021. And 2020. And there is no dividend. It seems like like one of those crazy AI stocks. Except Marvel, as an example, only has a loss of -$0.19 for 2023. And it is getting slammed today for not meeting expectations. And it is smothered in the sweet fragrance of AI. Not the stench of lawsuits, and airplane doors blowing off. This could definitely nosedive.
  8. No. That's the short answer . Now here's the diatribe. I find this fascinating. It's not a bad idea right now. If I go by the Yahoo conversations of regular small investors who own the stock, they think maybe in a week after the deal is closed and the psychodrama settles down it could be worth $5. Somebody who maybe knows what they are talking about says diluted book value is $6. Or maybe in a year the A Team soon to be in charge will get it to $10. Mnuchin and pals did this for a reason. But they got in for $2 a share. Which is a fire sale price. Part of my thinking is that what I could buy it for over the last weeks, which averages $3.87 a share, with a 20 cent a year dividend is 5 % a year. Not bad. Hold on to it for a few years, and maybe double what I bought it for. That's what Steve And Friends did on a big scale with Indymac/One West a decade ago. But there was a press conference at NYCB on the deal at 8 Am today. And they announced they are cutting the dividend to one cent a quarter. So it went from 17 cents a quarter to five cents in January, and now to one cent. How's that for deflation? I think what is even more clear today is that this mainly benefits hedge funds. It helps when you are a former Treasury Secretary, or Comptroller, of course. And that is a non-partisan investor statement. Mnuchin's hedge fund is one color, and has a lot of Saudi and Arab wealth in it. But there is this: Why private equity has been involved in every recent bank deal Turns out the PacWest acquisition last year was a $400 million deal for Warburg Pincus. Same as Steve paid. Warburg Pincus is run by Tim Geithner. Name sounds familiar. Anyone heard of him? Something about bailouts? These Treasury Secretaries sure get around. And make very powerful friends. 😉 I posted this in part because this is an absolutely fascinating investment story to me. These people are vultures. The Yahoo conversation board on this deal is a very fun read. Most people are small investors like me who just take it for what it is. Very savvy sharks who have "regulatory bullet proofing" superpowers (I loved that phrase) were allowed into the pool. And there are a slew of comments from people who have owned the stock for years. They feel like they were just eaten alive. And they were. Their share price is down like 75 % in one year, even after the "rescue." And their dividend went from 17 cents a quarter to a penny. Times are hard, I guess. But if you want evidence that this is a rigged insider game, this is a textbook example. Now that I understand how this played out, it does feel an organized bank robbery. Mnuchin approached the bank, whose Board Chair he has known for a long time, weeks or maybe months ago. The $2 fire sale price was finalized yesterday when the stock stopped trading. How convenient that someone leaked this to the WSJ. And their reporting just happened to create enough fear and panic to get the price down to just about what Steve And Friends obviously wanted to pay. Such swell guys! One long-time stock holder posted about how the bank management seems like they have been systematically trying to create as much fear and panic as possible. Okay. But why would anyone do that? 🙄 The other reason I posted this is that I think there is good news in all of this for small investors. If this rolling CRE loan/regional bank "crisis" is what is supposed to cause the recession that wipes out our stock market gains and our home equity, I think it is a dud. More likely, it is a narrative that can be used by hedge funds to manufacture or at least "enhance" a crisis that doesn't really exist. At least not yet. Anecdotally, one analyst asked the CEO of NYCB today what their actual loan delinquency rate on rent-stabilized multi-family mortgages is. That is what is supposedly causing the problem. He did not gibe a specific number, but said low. They said when you underwrite loans conservatively with 50 to 60 % loan to value ratios, the loans tend to perform. And are performing. Even when values go down, like they have in New York thanks to COVID and a 2019 pro-tenant law. Maybe that was all BS from a bank struggling to survive. But I don't think NYCB is on death's door. Apparently, neither do Steve And Friends. I think they are sharks in a feeding frenzy. And there is more of this to come, as both CNBC articles I posted suggest. And it's because the vultures and sharks think values are going up, not down. They want in, for cheap. The narrative about how festering CRE loans are going to infect more and more banks (this guy says it will take out 500 banks in the next few years) and take the stock market and economy down with it seems like it is mostly bullshit to me. Here's the Fed's long term chart on all delinquency rates on all business loans by all commercial banks. Granted, a very broad category. But delinquencies are lower than ever. Where's the crisis? Delinquency Rates for Commercial Properties Increased in Fourth-Quarter 2023 That's not great news for banks who make CRE loans. But if you call it a crisis, it looks like in most categories the crisis has passed. Or is mostly declining. It makes sense that in multi-family, there is no crisis. Higher inflation is caused in large part by higher rents. How does that hurt landlords of apartment buildings? The problem with hotels that were vacant during a pandemic is obvious. But they are not vacant today, if they survived. The office problem is getting worse. But it is not a crisis, it seems. And probably never will be. Like I said, I think this is mostly good news for small investors. If some CRE loans go bad, and it makes a regional bank vulnerable, just call Steve And Friends. Or Tim And Friends. They are there to help. They have money we don't have. And they are always looking for fire sales. Real, or manufactured. 😉
  9. There was an interesting bailout of New York Community Bank today. It has a quaint smallish sounding name. But it's the 35th largest bank in America, having merged with Flagstar and taken over some of the assets of failed Signature Bank in the last few years. Beyond being one bank in trouble, for CNBC and Fox Business, NYCB has come to represent the (maybe) looming national problem of distressed commercial real estate. And the distressed regional banks that hold much of the distressed CRE loans. If you told me we are going to have a recession in the next year or two, and I have to guess why, I would go with some CRE loan contagion as my explanation. Something like the subprime lending mess that caused the Great Recession. Except this time involving multi-family housing and office buildings. Instead of Ms. Middle America getting foreclosed on, or seeing half her home equity suddenly vaporized. Anyway, what happened today suggests that distressed CRE loans will not be causing a recession anytime soon. What they will most likely end up causing is a hugely profitable feeding frenzy for hedge funds and rich investors. Including former Treasury Secretaries, as it turns out. MARKETS NYCB shares rebound after troubled regional bank announces $1 billion capital raise On a personal level, I'll explain it this way. I was a very highly regarded hooker for many years. But I never would have guessed at some point I would jump in bed with Steve Mnuchin. Today I did. And I'm grateful. I woke up owning 8,000 shares of NYCB. All of which I bought in the last few weeks at what I thought were fire sale prices averaging about $4 a share. I'll go to bed owning 10,000 shares that cost about $3.80 a share and pay a 5 % dividend. And will likely go up a lot in the next few years. But at one point today I had a 40 % intraday loss. And I figured I was going to lose everything. Until Steve suddenly jumped in bed with me. Or something like that. What a guy! And it was a threeway, too. He even brought the former Comptroller in bed with him. Woo hoo! NYCB is a bit of an outlier. Because about half of its loans are in multi-family buildings, about half of which are rent-stabilized. So the combination of tight rent increase controls and high interest rates when landlords have to refi is not a good match. And it will cause rising delinquencies at the banks that own these loans as they have to be refinanced at higher rates in 2024 and 2025. That's what started the freefall for NYCB. It was worth over $10 in January. But only $1.70 at one point today before they stopped trading. There probably is going to be a lot more of this in the next few years. Especially with office buildings. I have a hard time seeing how landlords (I am one) are being screwed by a national affordable housing crisis. But I can see the problem with having to refi loans on multi-family buildings at high interest rates. Which won't go away anytime soon. The real problem, most analysts say, is the office buildings and commercial structures. Whether those office buildings or malls ever get back to the good old days is a good question. Like I said, if there is any recession risk out there, this is what I'd put at the top of the list. Some kind of financial contagion. Hedge funds bet on U.S. real estate rebound That article was written two days ago. What Team Mnuchin and his hedge fund buddies did today is proof of concept. I don't think what happens at hedge funds drives the needle on whether we have a recession or not. That said, the word "rebound" is appropriately placed in that headline. My guess is that hedge funds and various investors (even the old dudes like Warren Buffet) will step in and make killings on distressed CRE loans. They are raising the money to do so now. It may not be good news for some commercial real estate owners, or some regional banks But if you're not one of them, who cares? You can make a good argument that the macro effect for the rest of us is economic recovery. Not recession. Real estate rebounds don't usually cause recessions. One final point. For those of us who think investing is a rigged game, this is a great example. They stopped trading on NYCB when the shares had tanked about 40 % in a few hours. After the Wall Street Journal reported that NYCB was seeking a capital infusion. Meaning they were probably near death's door. Then about an hour later this long press release shows up. I have to imagine this deal was in the works for days or weeks. Steve And Friends get something like half a million shares of the bank they will revive at $2. The rest of us normal people can buy it $3.50, if we are willing to take the risk. If you owned it last year, you're fucked. For now at least. Woo hoo! Steve and Friends did this at Indymac a decade ago. They sold that bank for double what they bought it for, and went on to be Treasury Secretary and Comptroller. And now they are about to own half or so of the 35th largest bank in the US for $2 a share. But that's not a rigged game, is it? 🤔 I just want to know whether it was Steve, or a friend, who leaked the story to the Wall Street Journal. Which set up the final rollercoaster ride today. There are people on Yahoo message boards who still think the bank will fail. Somehow, when the former head of the OCC ends up running the bank the OCC regulates, that just seems rather unlikely. This is what makes America, and capitalism, what it is. Ya gotta love it.
  10. I thought this article by Fisher Investments was interesting, since so many of us are Boomers. Putting the ‘Boom’ in Boomer Retirements That deals more with a secular trend that will be with us for a while, as opposed to immediate recessionary pressures. That said, I think it is another reason the economy is holding up. These reports about how net worth went up by a third, on average, are talking about the Boomers. Net worth went up for Gen Z, too. But the actual number oi dollars that means is a fraction of what the Boomers got when their homes and stocks went up by a third. And, as this report says, they are spending it. Now. A lot of what I read suggests that if the economy depended on Gen Z and Millennials, we probably would be in a recession. They are the best educated generation ever. And their average incomes and potential show it. But they are getting the brunt of all the bad stuff right now. Rents are up. Food and gas prices are up. Daycare is up. Expanded child tax credits are gone. College loans are coming back. Typical of people just starting out, they have minimal net worth. Meanwhile, Boomers own homes with no mortgages or low fixed rate mortgages, and stocks portfolios, worth in the hundreds of thousands on average. Life is not unfair to Gen Z and Millennials. When I was their age, and starting to buy real estate, fixed rate mortgages cost more than today's vastly inflated rates. They will do fine, eventually. But we can thank Baby Boomers for keeping us out of a recession.
  11. Of recent movies that have been commented on extensively here, I think the interesting comparison is between RWRB and Saltburn. For me, Saltburn is a celebration of cynicism and excess which, like many others, I did not like. I loved RWRB for what I think both the book and film were meant to be: a sweet and positive LGBTQ fairy tale. And mind you, it's not a Gay fairy tale. The woman who wrote it wanted to be clear there's a B in LGBTQ. These PC queers are insufferable, aren't they? 🙄 But I know some people didn't like the movie because it was so PC. Perhaps being a possibly closeted homosexual (or sociopathic bisexual?) stalking a rich party boy is more interesting? Who knows. If I want The Talented Mr. Ripley, I can get a much better version of it. By watching The Talented Mr. Ripley. That said, there is no competition in one sense. Taylor and Nick were stingy. Yes, there was that dreamy look in Nick's eyes as he was penetrated. But only Jacob Elordi offered us an opportunity to lick his cum off the bathtub. That counts for something. Here's a third film to compare and contrast: All Of Us Strangers. Arguably, it is darker than Saltburn. But only in the sense that, unlike Saltburn, it evokes real emotions about the Gay experience that anyone the age of the director or older can immediately relate to. Like having to worry about bullies who dislike queer boys. Or, worse, being the queer young man dying of AIDS. Watching All Of Us Strangers, which is elegant and finely acted cinema in a way RWRB is not, helped me realize why I really did love RWRB. For the reasons I think the writer and director intended. It is a positive story about the power of love. And how we won, based on our willingness to fight for our love. You kind of get that from All Of Us Strangers. You can have a really interesting debate, which director Andrew Haigh also intended, about whether and how Andrew Scott won his love at the end of the movie. In RWRB, there was no question about who won who, and why. Like Heartstoppers, it's a wildly optimistic hug that now even The Gays acn win the love they truly want. Happily, these days the kind of open and committed queer love portrayed in RWRB actually seems like real life, not a fairy tale. And All Of Us Strangers feels like the true and real ghost story from the less fantastic LGBTQ past that will always haunt many of us. The Queer Kids Are All Right. And Now They’re Making Me Better. I'll end with that article. I hope the hyperlink works. It's a shared article someone posted on a different website. It mentions RWRB, All of Us Strangers, and a lot of other recent LGBTQ movies. I like the author's idea that one function of these movies is that they offer a sort of "emotional reparations" for the double doses of love and support a lot of us did not necessarily get growing up. Fellow Travelers certainly comes to mind, too, as a recent example of making wrongs right. At least in cinema. Of course, I understand why "reparations", even of an emotional sort, might not be a welcome idea among many.
  12. So here is a very interesting chart from the latest report of the Conference Board on the leading economic index. The LEI is supposed to help indicate when a recession is ahead of us. Bad news, and good news. Bad news is that, in oversimplified terms, whenever the blue line meets the red line on the way down, we know a recession is imminent. So since we are under the red line, we are either now - or about to be - in a recession. in theory. Good news: In fact, does anyone notice the problem? In 2001, 2008, and 2020, the simple idea worked. When the LEI hit that red line, we were already in a recession in two of the three examples. In the 9/11 recession, by the time the LEI bottomed its "V" at about -12 the recession had started. Yet this time, we hit that red line over a year ago, in 2022. Which is why we have heard so much about a recession coming. For over a year. And yet, where is it? Meanwhile, the LEI appears to have bottomed and is back on its way up. The chart above slightly understates the case for optimism. I could not cut and paste the Dec. 2023 image from the report. So that image above is from October 2023, which I found online and could cut and paste. The December chart shows the blue line kept rising at the end of 2023, and is now near the red line ON THE WAY UP. Meaning perhaps the danger has passed? Here is what the report itself says about a 2024 recession: So we are not out of the woods yet, according to the Conference Board. But we have heard this song before. And what they are talking about now - two quarters of slightly negative growth - is the shortest and shallowest of recessions imaginable. in theory. If it actually happens. What's interesting is that the strongest indicators for both optimism and pessimism are pretty subjective. The most bullish indicator is that the stock market is on a tear. The most pessimistic indicator is that public opinion about the economy is, and has been, so pessimistic. Yet it is clear that, right now, both the stock market and public opinion about the economy are going up - not down. So on both a leading indicator for optimism and a leading indicator for pessimism, the bulls seem to winning. I will mention again a key fact I cited above: when asked about their personal financial prospects in 2024, 2 in 3 Americans say they think they will be better off financially this year. That may be telling us something, too. I've been dissecting this with my stock geeky nephew, and we have two different theories. Both of which are plausible. He thinks it's all that COVID stimulus money and "forced savings" that is still not spent out. I think it's the fact that, as I have posted repeatedly, consumer debt as a percentage of disposal income is at a relative low, not a high. Whether you like the idea or not, consumers have a lot more credit they could take on to fuel an expanding recovery. Maybe the stock market knows this.
  13. I expected the same. Most posters have in fact said they are substantially better off. For the reasons you said. Add me to the club. Homes: way up. Stocks: way up. The silver lining on the COVID cloud for me is I learned the joy of gifting. My net worth was going up so much on paper that I decided to gift a condo to a friend. I bought it as a favor when he was about to be evicted a few years back. He was a tenant I didn't want, since he is also a close friend. So during COVID I said, "WTF?" Same with my inheritance from my parents, the last of whom died right before COVID. Gave it away to a sister, and nieces and nephews. COVID was good to me. And I was good to people I love. Why Americans feel pessimistic about their economic future I know the question was a personal one. But that article was particularly good in terms of spelling out why so many people feel so stressed. None of the key phrases surprise me. Rent: way up. Daycare: more expensive. Student loans: coming back. Expanded child tax credits: gone. For families with young kids who don't own homes and have student loans it is very understandable why they are stressed out. But they are not the ones posting here.
  14. I was curious. So I Googled his name and "Boeing" and came up with this post from Jan. 29 in which he lays out his concerns about Boeing. As you say, all his investment advice sounds spot on. Buy defense stocks GOL, one of Brazil's largest airlines, did just go bankrupt. They were actually doing okay in terms of operating costs, given the global recovery. But their problem was all the debt they got loaded up with during the pandemic. Boeing is somewhat in the same ballpark, according to FT. Fitz-Gerald sounds right in saying the pain probably is not over. One thing I did learn is that when I read the word "bankruptcy" in print, I should believe it. Some Brazilian financial newspaper leaked that GOL was considering filing for bankruptcy, which led to an immediate huge intraday drop. The company issued a statement saying they were in negotiations, blah blah blah, and nothing would happen in January. So the stock recovered to pretty much where it had been. During that brief recovery, I sold half my shares at a small profit. I figured I had a few weeks to sell the rest for a little more, if the recovery continued. Then they unexpectedly filed for bankruptcy on Jan. 25. They essentially admitted they lied about their timeline once the news leaked that bankruptcy was in fact imminent, to stay ahead of the curve. I'm kicking myself for not selling everything. But when I net out what I made in short term gains over several years riding that wave, I came out with only a small loss. I like what Fitz-Gerald says about defense stocks. I bought RTX late last year and am up about 12 % as of today. Every once in a while going back half a century Raytheon's value drops 30 to 50 %. In this recent case, like Boeing, mostly due to their own errors. And it is always a good time to buy, because they always recover. Unlike GOL, which was a failed exercise in market timing, that is one I bought for the reason Fitz-Gerald said. It is a long cycle investment with a decent dividend. Where he sounds particularly spot on is that all tech is not the same. And, mostly, the bigger the better: like AAPL and MSFT, which he mentions. It seems like this market is all tech, all the time. I got a big cash windfall when I sold a rental home last August. The shares of AAPL I bought then are up about 5 %. Not bad. The shares in FNGU and SOXL, which are 3x bullish ETFs, are both up about 75 %. It's all the big tech names, AAPL, MSFT, NVDA. What could possibly go wrong? If you bought Boeing when the S & P 500 peaked in 2000, you would have done just as well as buying it or the S & P. Both are up a little more than 3x their 2000 high. RTX is more like 5x its 2000 value. Microsoft, one of the big winners of the 2000 tech bubble, is now worth 7x its 2000 value. Apple comes in at about 140x its 2000 value. Again, it seems like all tech, all the time. That said, at some point the tech trip is going to get very bumpy. And when it goes bad it will feel like being on one of those Boeings when the doors blow out mid-flight. Happily, it's easier to parachute out of tech stocks than it is a Boeing jet. Meanwhile, enjoy the blue skies!
  15. Yes, that is correct. Consumers are spending less of their income on debt, not more. It's near a record low, not a record high, in terms of how it actually hits people in the pocketbook. That's not something that is going to cause a recession. An interesting expostulation to which I can not concur, unlike our sage and symmetrical analysis of federal indebtedness. Personally, I think the historically low levels of their income consumers are spending on debt is great. It does in fact indicate that incomes are going up, just like prices did. And it's helping drive the recovery from COVID. It's not driving a recession. That is the whole picture. But, hey. Don't take my word for it. Two-thirds of Americans think they’ll be better off financially in 2024: Survey Stock Indexes Post Record Highs on Robust Earnings and U.S. Labor Market Strength
  16. Two-thirds of Americans think they’ll be better off financially in 2024: Survey Does this indicate a recession, too? 🤔 It may be a coincidence. But that recent poll is by Fidelity, on investments, as opposed to some political pollster. The notion that one-third feel worse off still, but two thirds are optimistic about their personal finances in 2024, seems to adhere better to objective economic realities. And sorry to be a nagging bitch about one very important fact: Many here, including me, would argue that ANY consumer debt is corrosive. That said, it does keep the economy going. Right now we are at historically low debt levels as a percentage of disposable personal income. This offers evidence against an imminent recession, not for one. To connect this to my postulations above, this is very different from 2008. Back then we had the toxic combination of high consumer debt levels, and a mass extinction of $6 trillion in home equity. Which particularly nailed the middle class. Even for those who did not lose their home. We now live in pretty much the opposite environment. No wonder 2 in 3 feel optimistic.
  17. Any objective policy analysis has to commence with the verity of this statement. In fact, as recently as last December 6 in 10 Americans said they felt like we're in a recession. Such emotional proclamations are objectively inaccurate, to be sure. The economy is growing quit nicely. What to make of this vexing question? That's anyone's guess. My guess is that when you're pumping gas, you're not thinking about how much more your home value or retirement account are up. But beyond that, even if you are one of the 2 in 3 Americans who own a home, inflation probably did cut into your income in 2021 and 2022 pretty much no matter where you live in the US. Or on the planet Earth. 2023 and 2024 are a different story. Wages are now outpacing inflation. And have been for a year. Maybe that's just starting to register. As shitty as many people feel about the economy, 2 in 3 expect to be better off financially in 2024. Huh? That doesn't sounds like an imminent recession to me. It seems like at some point as income and net worth rise for Americans at all income levels optimism has to break through. Although I think this thread proves that, regardless of net worth or income, there is a segment of Americans, especially older ones, who exhibit a profound and soul-stirring allegiance to pessimism. And speaking of pessimism: Fed’s Powell: ‘Urgent’ for US to focus on debt sustainability Now admit it, guys. Our sage @augustus and I nailed it, didn't we? From our keypads to Jerome Powell's lips. Based on a complex statistical analysis, I would argue the chances of US federal debt causing a recession in 2024 are between "no chance whatsoever" and "absolutely fucking zero". The more interesting question is how long will the vast majority of Americans who realize this is toxic for economic growth and our investments allow leaders to kick this can down the road while we bicker? The answer to that is somewhere between "I don't have a clue" and "way the fuck longer than it should take, if we were acting like good investors." Powell is right that sooner is better than later. This thread and many more like it document the salutary effects of savings and investment. And the commitment of many posters here to basic financial apothegms. It would also be salutary if the 83 % of Americans (including 85 % of young Americans who will be saddled with massive debts and high interest rates) could cut the bickering and focus on getting our leaders to compromise and do something about the debt. That's certainly one way to avoid a recession. In addition to making common sense, it has worked in the past. Carville was and is right, again. The bond vigilantes are back:
  18. Interesting and complex topics. Here's a very thoughtful and granular policy analysis on housing finance and its potential impact on short term recession mitigation. It elucidates many complex policy points that naturally are of interest to investors in real estate and stocks, like me, trying to avoid potential profit degradation from recessionary policy outcomes. Will the housing market drive a recession anytime soon, like it did in 2008, when subprime lending had extremely detrimental policy impacts on a correlated group of macroeconomic variables? Here's a strong opinion Kennon states that I think impacts a textured policy analysis: If you read the data-driven line of reasoning Kennon refers to, he has a great point. In plain English, if you are old you are rich. And if you are young you are fucked. I'm guessing most people reading this are on the old side of the generation war. Kennon expostulates that it is a BAD policy choice that 2 in 3 Americans own their homes. Almost all with either no mortgage, or a low fixed rate mortgage with an average interest rate of 3.7 % . Really? If this is BAD policy, who needs GOOD policy? What's wrong with 2 in 3 Americans having affordable homeownership? Kennon, who is young, is protesting what he views as Fed-driven interest rate musical chairs that has left many young people who want to buy homes standing - for now. He's obviously right. I think what he is missing is that the policy also created a solid bedrock of home equity and wealth for 2 in 3 Americans. In other words, NOT just the rich. This either mitigates against a recession, or puts a floor on how low a recession can go. We know how awful things got during the Great Recession, when toxic mortgages resulted in millions being foreclosed on and an estimated $6 trillion in home equity vaporized. We are now living with the opposite policy choice. And it seems to be working out pretty well. Perhaps we could call it the difference between a Great Recession and a Recession Gone Missing. Kennon argues, with factual precision, that "housing prices could collapse and most people would still be above water." That is the exact opposite of the Great Recession. It's a bedrock of economic stability. The same postulation was shown to be true during the Great Depression, when home prices (albeit among a much smaller slice of Americans) dropped an average of 67 %. That is, after all, what made it a Depression. And a Great one. We have the opposite problem. Lucky us. I'm a fan of the idea of government-financed 3 % fixed rate mortgages for young Americans. Both to help them build wealth, and to put a further floor under how bad a future recession could be FOR ALL OF US. Granted, recessions are not all like 1929 or 2008, driven by imploding home values and a sudden mass extinction of middle class wealth. But the worst recessions are. So this is a long term anti-recessionary economic policy that offers many benefits. But also requires a nuanced policy debate. Kennon is right that such a de facto policy worked well for the old. And in and of itself it would not drive up the deficit. The opposite. It would generate a multitude of tax revenues, which are also anti-recessionary. Our sage @augustus offers an extremely cogent remonstrance against historically large federal deficits, which I passionately concur with. In plain English, massive deficits could fuck everything else up, badly. Not anytime soon. But by the time that bomb goes off, it will be too late. As Kennon argues, the malcontent young generations of today are paying the price in terms of high interest rates. While a separate thread would be required to granularly dissect and disaggregate the many variables driving high interest rates, certainly the massive federal deficits are part of the problem. Most Americans agree on this. They could drive a deep recession, or a Great Depression, somewhere down the line.
  19. It did. Ironically, they were also the biggest loser almost two years ago to the date. Glenn Neely, who has a habit of predicting big market moves in advance - starting with the 80/90's bull market - pontificated last Summer that we will have a one year rally that will lead the S & P to something like 5500. That was when the S & P was at about 4500. I think of wave theory as kind of voodoo. But so far his voodoo is at least half right. I'm betting on the fact that he will be mostly right before - wait for it - wait for it - wait for it - what goes up must come down. Speaking of which, here's what Neely predicted in January 2008: the S & P, at about 1400, was headed into a big bear market. And the most volatile version could quickly lead to some number in the 600's. The actual bottom was 667. So his voodoo has worked awfully well at calling big market moves before. I'm hoping he is right again. For now, I've been plowing money into FNGU and SOXL since last Summer. And they are both up over 50 %, thanks to META and its ilk.
  20. I get your point. If you go to the store and pay more for eggs, that is real. If your house is worth $50,000 more, that's not real. It's an extremely pessimistic way of looking at things. Here's an investment question. My stock nerdy nephew started buying SOXL at about $7 a share in Fall 2022, when it was beaten down to a low by the imminent recession mongers. He kept adding positions, and kind of risked the store on it. But only because it is an index fund with only solid profit makers like NVDA. And he was racking up huge paper gains. I think he went from about $200,000 or so invested to now over $1 million in value on paper. With most of it being an unrealized long term capital gain. I, by comparison, got in late at like $17 a share, and have only doubled the tens of thousands I put in. By your investment standard, both my nephew and I are poor. And bat shit crazy, to boot. First, it is only a paper gain. Second, if it is ever realized, we will have to pay lots of taxes. Therefore, we are shitty investors. Just like my roughly 30 % annual return on real estate value over about 25 years is total shit, by your standards. After all, I have to pay property taxes every year. And since I haven't sold, the homes may be worth nothing tomorrow. Is this the investment "logic" you are espousing? By the way, just to cheer up the gloom a bit ...... Stock prices and home prices may not be crashing. But egg prices have! Egg prices are crashing. Here’s why It's terrible! Obviously a recession is coming! 😉
  21. Consumer sentiment surges while inflation outlook dips, University of Michigan survey shows
  22. One interesting thing that DOES NOT happen in a whole slew of recent queer-ish cinema, most anchored in the past, is that the boy DOES NOT get the boy. At least, not legally. Saltburn is unclear about everything, and has no real point. Including about its homoeroticism. But you can make an argument that the unrequited lust and obsession a guy feels towards a guy is part of the problem. Who can't relate to wanting to be fucked by Jacob Elordi? Or at least lick up his cum from a bath tub? 🤔 We followed the same path with Fellow Travelers, Maestro, and My Policeman. Among others. It is mostly a grim picture of the emotional, social, and marital consequences of a guy having to get the girl. Because he can't have the boy he really wanted. If this is in fact a trend, it underscores a very important point. Something very big did happen. We won same sex marriage. Some of this may be that we can now look back at how many lives were ruined by discrimination and an intolerance for queer love.
  23. Like I said. There is data. If one chooses to drink it. The $50,000 average increase in net worth is an average. Meaning, for the vast majority of Americans, net worth increased. So, no, it is not a small percentage of the population. It is the vast majority. Stock ownership is in fact concentrated in the top 10 % of the population, as you argue. But my best friend, who is an escort, texted me his stock gain in 2023 - something like 25 % if I recall right. That's a five figure number, not millions. But it was meaningful to him. And he said it was a great Christmas present. My nephew is not rich. But once he hits the sell button on SOXL he and his wife can buy a home for cash if they want. The American Dream lives. Who knew? Oh, he'll also pay long term capital gains taxes. If we could all compromise, like we did in the 90s, that could help pay off the deficit. Which is a recessionary threat. And most Americans do see it that way. Meanwhile, 2 in 3 Americans own homes. Most with no mortgage or a low fixed rate mortgage. That is bedrock. Again, this helps explain why the recession has gone missing. You are correct that home values can go down. But so can inflation. It has. Meanwhile, real wages have gone up. You only want to focus on the bad news.
  24. Actually, no. There is data. Americans' net worth grew 37% after pandemic hit: Fed survey Real median net worth increased from $141,100 to $192,900 between 2019-2022 Auggie, it's horrible that the price of cereal has gone up. It's a wonder that people with $50,000 more in net worth aren't starving to death. How do they even get by? And worse, a recession is coming! Again, there is data. While its true that the average person with $50,000 more in net worth by 2022 and higher real wages in 2023 can barely afford a bowl of cereal, the fact that we made it past the global inflation and supply chain squeeze might explain why people are feeling better. Ya think? The US had lower inflation than most of the rest of the West. Even though inflation sucks. And our economy came out the strongest on the planet. Maybe that helps explain why this recession has gone missing for so long??? It does help explain why my stock nerd nephew's net worth went up hundreds of thousands of dollars........... in the last few days! He bought SOXL at about $7 a share in Fall 2022 and just kept buying more. Which speaks to why we might not have a recession. All that investment in tech and chips is paying off. The US is the global leader. I followed my nephew's lead, but own a lot less SOXL. So my net worth only went up tens of thousands in the last few days. It's horrible! A recession must be coming! That said, opinions do matter. 😉
  25. After a brief break to catch something to eat, we now return you to your regularly scheduled recession. Consumer sentiment surges while inflation outlook dips, University of Michigan survey show On a two-month basis, sentiment showed its largest increase since 1991, said Joanne Hsu, the survey’s director. Consumer sentiment has improved amid a drop in gasoline prices and solid stock market gains. This is horrible. Doesn't anybody realize a recession is coming?
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