From the Federal Reserve:
Beige Book – July 2022
Federal Reserve Bank of New York
Summary of Economic Activity
Economic growth in the Second District slowed to a crawl in the latest reporting period, as demand from households and businesses weakened amidst ongoing labor shortages, supply backlogs, and elevated Covid levels. Business optimism about the near-term outlook has also eroded further. Businesses continued to report widespread increases in selling prices, input prices, and wages, as well as ongoing difficulty obtaining necessary supplies. Despite severe labor shortages and high turnover, businesses have continued to add workers and plan to continue doing so in the second half of the year. Both manufacturing activity and consumer spending have been flat in recent weeks, while tourism activity has accelerated. There were pronounced signs of easing in the home sales market, whereas the rental market was increasingly robust. Commercial real estate markets were mixed but generally steady. Construction activity has picked up, with a good deal of multifamily residential development in progress. Finance-sector contacts reported some weakening in activity, while regional banks reported widespread declines in loan demand and refinancing activity, as well as tighter credit standards and steady delinquencies.
Labor Markets
Businesses continued to report widespread labor shortages, restraining both new hiring and retention, though one employment agency noted that workers have become more reluctant to change jobs. Particularly acute labor shortages were reported in technology and healthcare occupations. Still, a sizable proportion of businesses indicated that they continue to add staff—particularly in the wholesale trade and information sectors, as well as in transportation and professional & business services. One contact noted increasing job openings for call centers. Firms in all major industry sectors except finance plan to add staff in the second half of this year.
Businesses continued to note widespread wage increases and anticipated further increases in the months ahead. One employment agency noted that more employees are using counter-offers to raise their salaries in their current jobs. Wage gains have been most pronounced in the construction, transportation, and warehousing sectors.
Real Estate and Construction
Housing markets have been mixed since the last report, with the rental market continuing to strengthen but the sales market weakening noticeably. Both in New York City and across the metropolitan region, there has been a steady and pronounced decline in signed contracts in both May and June, going against normal seasonal trends. A leading local real estate authority attributed this drop-off in sales to a combination of low affordability, rising mortgage rates, and increased uncertainty. There has also been a rise in the inventory of available homes—though it is still quite low—but not a reduction in prices thus far. Real estate contacts in upstate New York continued to characterize the market as strong, though less so than in recent months—for instance, bidding wars still occur but with fewer bidders competing and some sellers have lowered their asking prices.
In contrast, residential rental markets have strengthened noticeably, with substantial escalation in rents, low vacancy rates, and brisk leasing activity. In New York City, rents rose sharply during the 2nd quarter, setting new records, and rental vacancy rates are at a 20-year low. Rents have also risen sharply in upstate New York. With rents rebounding to well above pre-pandemic levels in New York City and elsewhere, affordability has been a widespread and growing concern.
Commercial real estate markets have been mixed since the last report. Office markets across the District were steady to slightly weaker, with vacancy rates edging up in Manhattan and the Lower Hudson Valley but little changed elsewhere. Office rents were flat to up slightly and close to pre-pandemic levels, except in Manhattan. The industrial market has remained firm, with vacancy rates leveling off but rents continuing to rise briskly. The market for retail space has remained sluggish.
Construction activity has been mixed but picked up somewhat overall. Nonresidential construction starts have remained exceptionally low, whereas multifamily residential construction starts have increased across most of the District, with the notable exception of Manhattan—though even there a sizable volume of construction is still in progress.
Good Morning NJ
First
Oh for fuck’s sake, now we’re blaming millennials for inflation?
From CNBC:
Millennials are to blame for sky-high inflation, strategist says
“See, what everyone is not including in the conversation is what really causes inflation, which is too many people with too much money chasing too few goods,” Bill Smead, chief investment officer at Smead Capital Management, told CNBC’s “Squawk Box Europe” on Thursday.
Smead explained that in the U.S. there are an estimated 92 million millennials, primarily in the 27 to 42-year-old age bracket. “The last time we saw what we call ‘wolverine inflation’ — which is inflation that is hard for policymakers to stop — was when 75 million baby boomers had replaced 44 million silent generation people in the 1970s.”
“So we have in the United States a whole lot of people, (aged) 27 to 42, who postponed homebuying, car buying, for about seven years later than most generations,” he said.
“But in the past two years they’ve all entered the party together, and this is just the beginning of a 10 to 12 year time period where there’s about 50% more people that are wanting these things than there were in the prior group.”
“So the Fed can tighten credit, but it won’t reduce the number of people wanting these necessities in comparison to the prior group,” Smead said.
Clearer-yeah right…
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Young Voters Are Fed Up With Their (Much) Older Leaders
“How are you going to accurately lead your country if your mind is still stuck 50, 60 or 70 years ago?” Ms. Chadwick, a customer service representative in Rialto, Calif., said of the many septuagenarian leaders at the helm of her party. “It’s not the same, and people aren’t the same, and your old ideas aren’t going to work as well anymore.”
https://www.nytimes.com/2022/07/14/us/politics/youth-voters-midterms-polling.html
Grim: Boomers blaming the Millenials cant make this stuff up.
Phoenix: Those young people should be grateful, that the old boomers like Biden, Pelosi, Mc Connell and all the rest have dedicated their lives to the young people. Young people through their recklessness and demand for the good life are now responsible for inflation, not the Boomers. These old people are in DC, because the young people are incompetent and need the Boomers to fix their messes. I can’t believe how ungrateful they are.
Musk family needs their own reality TV show.
“There has also been a rise in the inventory of available homes—though it is still quite low—but not a reduction in prices thus far.”
Isn’t that what my realtor said?
My vacant multi goes up on the MLS on Monday. Not sure of sale price yet, but that doesn’t matter anyway. All that’s left to do is patch the asphalt where the oil tank was removed. Saw a neighbor stripping the old asphalt out of their driveway and asked the contractor to bring a little extra asphalt when he lays it down there. My original estimate of $3,300 was crazy. This guy will do it for $600 on Wednesday. Open house will be next weekend. The big question is, will it be bought as an investment property or will it be gutted and turned into a single family. I think option two wins.
Retail sales number increasing. FED hasn’t slowed shit. Nonetheless, they will keep going with .75 until the shit hits the fan in the Fall. Then they’ll probably due the whole point when it’s not necessary to.
Hey, I know we have some amateur meteorologists here…looking for recommendations for reliable LT weather data, 10 days+ out…really just temperatures and precip chances.
Any recommendations? TYIA.
Good luck on the multi, Lib.
It’ll be bittersweet, lol.
Lib – re: retail spending increasing? Takes a while for the banks to take away the credit punch bowl, just look at the JPM news… I don’t think Jamie Dimon wants to get swept away in the economic hurricane but he many have little choice. Monetary policy takes months to act. For retail we are talking about supply chain and the banks lending less to business and consumers and well there is a long, long lag between when the Fed moves and when that trickles through the economy down to retail.
Consumer credit is a crazy 16 Trillion now with 4.5 Trillion of that debt being non-housing debt revolving and non revolving credit etc all time highs..
https://www.newyorkfed.org/microeconomics/hhdc
The real losers in the immediate term are people trying to buy a home right now, they need to make the biggest financial decision of their lives and the Fed just kneecapped them and added about 800 dollars a month additional cost to a mortgage from seven months ago. Those poor millennials etc, once the Fed stopped buying NEW housing bonds from Fannie, Freddie etc and only roll over the old debt the prices spiked for loans. That will continue for the foreseeable future as the Fed tries to wean the housing market of zero cost money that Bernanke started 13 years ago in January 2009.
Chart says it all for housing..
https://fred.stlouisfed.org/series/WSHOMCB
Left, I use this for precip
https://www.tropicaltidbits.com/analysis/models/
What does a 51 year old man say to his 76 year old dad when he finds out he will have a new sister or brother? Is that an Attaboy moment?
https://nypost.com/2022/07/14/elon-musks-dad-76-confirms-secret-child-with-stepdaughter/
Juice: And the savings rate has been declining every month this year.
Weather looks good for next week anyway. I am headed down to Lavallette for a few beach days with family. I won’t be paying $30 for a plain pizza at the beach for sure. Just made the Poolish last night and will make lots of dough with it for some fresh pizza. Will be making the sauce tonight with some Cento Organic tomatoes…
Cheap and easy….like me after a few drinks…
Gasoline consumption is down. I am surprised about the data, based on the anecdotal evidence of traffic everywhere I go. I had been thinking that it would take maybe, maybe $10/gallon for driving to realistically be affected. Simply, I thought US gasoline demand was less elastic than it actually is.
https://wolfstreet.com/2022/07/14/large-scale-gasoline-demand-destruction-hits-sky-high-prices-in-peak-driving-season-gasoline-consumption-drops-to-july-1999-level/
Going to be a late night for sleepy Joe, it was just wheels up for Biden in Israel, and it’s nearly 5 PM in Saudi Arabia….
Schedule tonight..for the oil and weapons talks..
The President arrives in Jeddah, Saudi Arabia (5:30 PM Local)
King Abdulaziz International Airport, Jeddah, Saudi ArabiaOpen to Pre-Credentialed Media 11:15 AM ET
The President participates in a bilateral meeting with King Salman bin Abdulaziz al Saud (6:15 PM Local) Alsalam Royal Palace, Jeddah, Saudi Arabia 11:45 AM ET
Official Schedule
The President and his team participate in a working session with Crown Prince Mohammed bin Salman and Saudi Ministers (6:45 PM Local)
It’s about time the Millennials shoulder some of the blame. Get off the phone, stop creating multiple genders and stop protesting useless ideology based on assumptions, hearsay and fake news.
If you were going to Europe in late 2022, do you buy paper Euros right now in the US? That is, do you think 1:1 Eur to USD stays at these levels or not? If so, do you buy paper currency in the US or is it better to exchange in Europe?
I have the Schwab free ATM’s debit card that I usually use during overseas travel.
Juice: Hopefully, he does not embarrass himself.
Trick,
Good site. The problem is, there is little accuracy ten days out. Even the temps can change dramatically over that period. I usually start trusting the models about 7 days out and feel they are pretty damn amazing 5 days and shorter. Our weather here, barring nor’easters, come on shore at the north Pacific Coastline about 5 days before they get here on average. Until the storm systems make it over the Sierra Nevada’s, it’s nearly impossible for forecast as that range either sucks them up or allows them through. The same phenomenon occurs over our little Appalachians with Summer thunderstorms that develop in the Midwest. Most of the time, they disappear over those foothills. If you see them strengthen, then they usually will be huge.
Quite honestly, weather.gov, which is the NOAA weather service, is still the best out there. Read the forecast discussion for possible storms that are not yet posted in the forecast or longer-term trends.
Juice, 3B, Leftwing,
I’m still seeing a rapid recovery after the recession. This inflation is making the USD boss. So as the FED is finally taking the correct steps (about 20 years overdue), even if they are baby steps. I think the recovery will be quite miraculous on more solid footing. And our treasuries will look even better than ever funding future debt to fuel our corporate lending. I’m not so sure they lower interest rates again so quickly after this. Or bonds, both corporate and gov’t will be desirable to the rest of the world without putting them on sale (increasing yield).
Ultimately, I’d love to see a black swan event trigger the final leg down in our markets. This Summer of waiting is killing me.
Juice, that Fed chart is incredibly telling. We haven’t even started selling long-held assets. Only stopped purchasing them at this point. What does the market look like when we sell them? Who the F knows, but it can’t be pretty.
Patience.
I never thought I would cheer Jamie Dimon in my lifetime.
“But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity … are very likely to have negative consequences on the global economy sometime down the road,”
Crushed,
Don’t sweat FOREX. You win some you lose some. You really can never predict which way things will go since currency is impacted mostly by unforeseen future geopolitical events. By the time you go, the UK might have quit the Euro.
Lib: Interesting opinion piece in Bloomberg entitled China giving off Lehman vibes. That could be your black swan event.
As for the Fed and reversing course, I don’t see it happening; too much risk of whipsaw, and back to the races on asset particularly real estate inflation. I would like to think the Fed has learned it’s lesson, but who knows.
The only time the FED learned it’s lesson was when Volcker was in the house. He set our economy on amazing standing and we haven’t seen (sustained) GDP growth rates since. The economy was so hot from his setup that it actually caused the tech bubble. People were flush with so much cash, they would throw it into companies with no profit, no business plan, and sometimes not even an existing product (DNA anyone)? Like yesterday’s SPACs. The FED has no choice this time. They will continue to underestimate the need. Trust me. Barring contagion from China (or something unforeseen) it will be .75. I can’t believe the ten year has stopped moving. Or perhaps it’s the simple strength of the dollar?
Story about the crypto gambling addicts.
For every story about someone who got rich and got out of a bubble just in time, there are a hundred stories like these people who get ruined that tend not to get told:
https://www.theguardian.com/technology/2022/jul/12/they-couldnt-even-scream-any-more-they-were-just-sobbing-the-amateur-investors-ruined-by-the-crypto-crash
Fist bump for the win.
Watch: #SaudiArabia’s Crown Prince Mohammed bin Salman receives #US President #JoeBiden upon his arrival at the Al Salam Royal Palace in Jeddah.
https://twitter.com/AlArabiya_Eng
It’s a happening. My realtor just suggested we wait until after labor day to sell. She said she thinks everyone is on vacation in the sub million category and a few of her other homes are just not getting nearly the number of offers like they used to. She thinks it’s people on vacation. Of course I said no way. Anyone else think the housing market is going to bounce back? That’s just cray, cray.
Heck, the interest rate could be another 1 to 1.5% higher by then.
Fun times.
“Fist bump for the win.”
I’m surprised he didn’t fall down or break his wrist!
It’s a mitzvah.
Juice Box says:
July 15, 2022 at 9:43 am
What does a 51 year old man say to his 76 year old dad when he finds out he will have a new sister or brother? Is that an Attaboy moment?
The most effective prescription for high gas prices is high gas prices.
says:
July 15, 2022 at 9:57 am
Gasoline consumption is down. I am surprised about the data, based on the anecdotal evidence of traffic everywhere I go. I had been thinking that it would take maybe, maybe $10/gallon for driving to realistically be affected. Simply, I thought US gasoline demand was less elastic than it actually is.
Fire this person immediately
Libturd says:
July 15, 2022 at 11:55 am
It’s a happening. My realtor just suggested we wait until after labor day to sell. She said she thinks everyone is on vacation in the sub million category and a few of her other homes are just not getting nearly the number of offers like they used to. She thinks it’s people on vacation. Of course I said no way. Anyone else think the housing market is going to bounce back? That’s just cray, cray.
Heck, the interest rate could be another 1 to 1.5% higher by then.
Fun times.
With Lib. Just pat yourself on the back for good fortune. I was in Paris in 2002 for $0.90+ to the EUR. In retrospect it is a good story, but nothing more.
crushednjmillenial says:
July 15, 2022 at 10:06 am
If you were going to Europe in late 2022, do you buy paper Euros right now in the US? That is, do you think 1:1 Eur to USD stays at these levels or not? If so, do you buy paper currency in the US or is it better to exchange in Europe?
I have the Schwab free ATM’s debit card that I usually use during overseas travel
Chi,
Exactly. We have worked together for an extremely long time. She did not dismiss my thoughts on the topic, and tried to make the excuse that they’ve been saying this pullback would happen for two years now so maybe it will bounce back. I told her that if I was her, I would prepare for things to get much, much worse. She gave it a “We’ll see.”
Lib: Your realtor is clueless.
Curve inversion. Recession signal. Just the signal, not a guarantee. But it looks pretty ominous to me.
Libturd says:
July 15, 2022 at 10:55 am
I can’t believe the ten year has stopped moving. Or perhaps it’s the simple strength of the dollar?
My money don’t jiggle jiggle – it folds.
Gas is $3.87 in my area.
I read in article that 5.3% of gas consumption in the US has been permanently destroyed. Article claimed 5% was caused by WFH and 0.3% was from new hybrids and electrics on the road. It claimed 19% reduction in gas used for commuting.
Libturd,
Ask yourself why you’re considering the advice of a house tour guide when you’re about 27 levels higher in the logic and IQ department.
Of course. She was a little taken back when I told her that the easy money in her field is over. Now she’s going to have to work for it. To which she said, she always has to work for it. I was just making a comment on how the 500 new realtors in Montclair in the last three years are all going to have to find something else to do.
Believe me. I wish there was an easier way for me to do this. She happens to be one of the much better ones, believe it or not.
Heck, she’s even staging.
Been saying this on this blog since 2013. Like I said, party didn’t even start in housing. Wait till 2024. I’ve absolutely killed it with my calls on this demographic group driving real estate. I laugh at the people who blamed the pandemic on the housing run…sure.
grim says:
July 15, 2022 at 7:33 am
Oh for fuck’s sake, now we’re blaming millennials for inflation?
From CNBC:
Millennials are to blame for sky-high inflation, strategist says
“See, what everyone is not including in the conversation is what really causes inflation, which is too many people with too much money chasing too few goods,” Bill Smead, chief investment officer at Smead Capital Management, told CNBC’s “Squawk Box Europe” on Thursday.
Smead explained that in the U.S. there are an estimated 92 million millennials, primarily in the 27 to 42-year-old age bracket. “The last time we saw what we call ‘wolverine inflation’ — which is inflation that is hard for policymakers to stop — was when 75 million baby boomers had replaced 44 million silent generation people in the 1970s.”
“So we have in the United States a whole lot of people, (aged) 27 to 42, who postponed homebuying, car buying, for about seven years later than most generations,” he said.
“But in the past two years they’ve all entered the party together, and this is just the beginning of a 10 to 12 year time period where there’s about 50% more people that are wanting these things than there were in the prior group.”
“So the Fed can tighten credit, but it won’t reduce the number of people wanting these necessities in comparison to the prior group,” Smead said.
Or the simpletons that blamed low rates for the housing run.
Same people blame Fed for inflation…clueless. As if the Fed wasn’t trying to create inflation unsuccessfully for 12 years. Only when the supply chain got shut down and lowered the amount of goods available did we actually see inflation.
Oil is up today. Fist bump, while genius for standing for nothing at all, much like joes entire career, accomplished nothing. Joe failed again.
House on my block, CG, 3 bdr, asking $599,000 went live last Thursday, open house Sat/Sun, under contract today with multiple offers.
Libturd,
Is she going to bake some cookies in your oven for the open house?
I’ve only sold one house ever, back in 2010. We moved our junk and half our furniture into our new house which we’d already bought, so it made it easy to stage nicely (a luxury most cannot afford I know). We priced it to sell not to sit, and the open house got a good bit of traffic (I think it was nice spring weather) and I think we got at least one offer at list price that weekend, and got it sold pretty quick without a lot of trouble. Some houses have mass appeal, and for those it’s probably better to set a reasonable price to get more people out to see it quickly, and then let those people bid it up. For a house with niche appeal to a more limited audience, maybe it’s better to price it higher and give it time for one of those few niche buyers to search it out.
If there’s still a shortage of available properties in the area, then I guess everyone who is a serious buyer will be noticing it within a week or two.
Fist bumps are ridiculous for heads of state who are getting tested daily. I’m sure Joe has some hand sanitizer he can discreetly use after shaking someone’s hand. Or maybe this was him thinking somehow a photo of him fist bumping a murderer won’t look as bad as one shaking his hand? Joe the bro.
He should have tried this handshake:
https://www.youtube.com/watch?v=BBeqgIQJ624
Or maybe realized that the CDC’s own data said that it’s a 1 in 10000 chance you get COVID from a surface and shake the damn person’s hand.
I was told open houses are more for the agent to get new clients and not to sell that specific house. Serious buyers search the web all the time and jump on new listings. We bought our 1st house the week before they had an open house scheduled. But that was back in 2000.
We are all rooting for you to kill it on this one.
Good luck with your home Lib.
Someone had mentioned Tesla caught on fire and car automatically locked driver inside.
Autoweek had an article and link for first responder training on dealing with electric and hybrid vehicles in crashes / on fire. Not sure after reading how eager I would be for either although that Ionic 6 is a good looking vehicle.
https://www.autoweek.com/news/a40512604/gm-ev-emergency-training-first-responders/
https://www.nfpa.org/Training-and-Events/By-topic/Alternative-Fuel-Vehicle-Safety-Training/Emergency-Response-Guides
How the hell are first responders going to know all the ins and outs of all these new vehicles?
Lib, 10:21a…
Yeah, agree, and I’m sticking to my strats….spent the better part of I don’t know how many quarters writing put premium…as I mentioned I’ve started pairing that with long calls selectively now…the MS trade I put on yesterday for a net credit (brokerage paid me to do it and I only had exposure at 70 or below) obviously printed big….the puts went worthless (ie, I kept all the credit they gave me) and the calls popped nicely with the share movement…not going to buy anyone a McLaren but these things add up as I do a few a week. ER season treats me well.
Vol is getting sucked out of this market…just exited the very last of my positions there…may very well go lower (these were Aug futes) but again the embedded gains were too big a position size to fuck with especially given all the unknowns that could come out of left field…my luck Air Force 1 would drop into the Atlantic on the way home and I would be the only rightie weeping lol as my vol shorts explode….in all seriousness as I’ve now been trading vol a LOT (so have a pretty good feel for it) the four point drawdown from 28-> 24 over the last two sessions is notable…especially as we are in earnings season (individual share vol always expands beforehand and 25% of the SPX reports this upcoming week) and also that now, what, five major banks are forecasting 100bp rather 75?
Sumpn’s up…vol should be going the other way, flat at least, and four points is big move from what is (now, not traditionally) not an unusually high base…
Agree with you on bond buying and mentioned a couple days ago there were three unknowns wormed in to my brain, most notably that i have always thought QT has the potential to be the bigger deal and no one is paying attention to it…
Anyway a nice black swan swoosh would make life easy, unfortunately those by definition are unlikely…I’m legging in for the longer term with quality companies with reasonable valuations at cost bases that protect me down 15% or so…all I can really do now, and pretty comfortable with it…Unfortunately like other opportunities these will dry up in this case as vol continues to get sucked out of individual names…then, need to find a new pretty girl to dance with….
I’m just happy for the sideways market. Like you, starting to build a collection of strong names at good values to juice future index ETF returns. Got about ten of them that I am further researching.
The fist bump was a way to avoid a row over whether Biden shook the hand of a homicidal despot. It was an out. He would have been pummeled for shaking his hand. They sent the carnival clown fauci out to sell it. Fauci is nothing but a political hack.
From my boy…and he is bearish. Said this market is f’ed up.
“Commercial hedgers added to their long S&P futures position buying another 6.5 billion now at 58 billion they are longer now than at Covid lows”
“This is the first time in my career I have an opposite position to that of commercial hedgers. Both stocks and bonds. I’ve taken off 70% of my short S&P position because the one factor that kept me so bearish was Cash buying the dip at new lows and they aren’t currently”
Supply chain is noise. An excuse. This is all the impact of printing press. Trust me. And as much as it hurts now. You can always refinance in the future. Getting a solid footing is the best thing America can do.
As for focusing on a handshake vs. a fist bump? If that is news, you need to go get some air before you do something stupid, like take over the Capitol Building. Thank god Biden is too feeble to golf.
Some interesting translation from Arabic twitter about today..
“We will not pump more oil even if you pray to God”
There is even one calling Biden names over the handshake quoting verses from the Koran.
Let’s all not forget. Bin Laden was a Saudi as were nearly all of the hijackers.
Handshake vs Fistbump?
It matters. It’s about respect, class, and honor.
Things all missing in modern society.
Lib: Of course the supply chain issue is BS. The economy a year after the pandemic was on par if not stronger than 2019. The Fed continued to double down with their reckless stimulus policies.
Fed Governor Walker said he is open to a 100bp increase at the July meeting.
striking how many “high risk” housing markets are located in the Sunshine State. Indeed, 8 of the 16 “high risk” housing markets call Florida home. Those “high risk” Florida markets include Cape Coral, Deltona, Jacksonville, Lakeland, Miami, North Port, Palm Bay, and Orlando.
“Most Florida markets face significant risk of oversupply of inventory,” Nik Shah, CEO of Home.LLC, tells Fortune.
As the pandemic housing boom took hold, homebuilders across zoning-friendly Florida ramped up production. However, elevated homebuilding levels now leaves the Sunshine State at a higher risk of “oversupply,” Shah says. If home sales continue to plummet, it could turn into a supply glut. That oversupply scenario, of course, is how markets like Miami, Las Vegas, and Phoenix got hammered so hard back in 2008.
It isn’t just Florida. Several bubbly housing markets across the Southeast, Mountain West, and Southwest could also see busts in 2023. That includes places like Phoenix and Boise where the pandemic housing boom was particularly boosted by Seattle and San Francisco techies who moved into town. There’s less of that now. Recession fears coupled with spiking mortgage rates have put cold water on those WFH moves. If markets like Phoenix and Boise are to stave off steep home price declines—something both Moody’s Analytics and John Burns Real Estate Consulting are predicting—local households will be required to pony up sums that could be beyond their financial means.
Ex,
Thanks for the share.
I’ve said that on this blog already. Even though no one listens to me. You have to be insane to buy in those markets that ran up from the rest of the country. It’s like going all in on crypto at the top. Not enough jobs to support all that housing that was built for mostly tech boys and boomers.
North jersey will be more than fine. Same with your southern cali location. Just nowhere to build but upwards. Too expensive to have that rapid growth of housing supply like these areas with endless new developments and land.
North jersey might be the safest real estate in america after NYC.
What’s telling…look how much they raised rates and what impact did it have on north jersey pricing? Almost nada. Doesn’t take a rocket scientist to figure this one out.
We’re in a kind of sweet spot here. Ventura Co. far enough from LA to be free from their woes. Close enough to visit….(30-40 mins drive) and without the insane prices. Though ours are inflated, it’s for good reason. Fantastic place to live.
re: “My realtor just suggested”
Hahahahhahahahahahah… This means it is fluking over already…
As mentioned a few times by me a $400,000 mortgage is now around $800 a more monthly nut that only gets worse when you head into the midrange pricing…
Fed could have raised rates but kept buying MBS but nope FU from both sides…
Gird your loins…
Pumps – who owns your mortgage? You think this shit has changed in nearly 13 years? Wake me up when trillions of private money starts pouring into crap shack mortgages.
Take a look and let us know..
https://www.mers-servicerid.org/sis/
Doom and gloom for Germany.
They’re having an energy crisis so what do they do? Close their last 3 nuclear power plants. Merkel was a big disaster for Germany.
https://www.dailymail.co.uk/debate/article-11019179/ROBERT-HARDMAN-lights-Germany-winter.html#article-11019179
Summary
No matter how extravagant monetary policy is, as long as it doesn’t produce a credit boom, it doesn’t increase the money supply and hence inflationary pressures except in asset prices.
Fiscal policy becomes very powerful at very low interest rates and can produce more useful economic outcomes than rising asset prices as the pandemic relief demonstrated.
However, the pandemic stimulus was a one-off and fiscal policy is already contractionary, so it’s not the main driver of the present inflationary climate.
Supply chain issues have been enduring and even worsened, and central banks are ill-equipped to deal with these, rising the risk they’ll overshoot with monetary tightening.
https://seekingalpha.com/article/4514286-fed-wasnt-responsible-inflation-but-likely-create-recession
I remember larry summers crying about runaway inflation for almost 13 years that never came. If the Fed created this inflation, why couldn’t they reach a pathetic target of 2% from 2008-2020 until a supply chain crash caused it? Please explain.
Prove to me that this inflation could exist without a crash in the supply chain…prove that and i will shut the f up.
I’m not some crypto die hard… but think this holds true… “I knew we were early, but if #Bitcoin is still this volatile after 13 years we are much much earlier than any of us realize.”
Im an ETH guy…But both will make a lot of money still at current prices.
HMB,
Or maybe Germany shouldn’t have sided with America when America isn’t capable of fulfilling its promises.
Phoenix,
Short term sacrifice for a better future is the way. Germans are doing it right. Putin does not get to dictate the future anymore. Mad max reference, but master blaster can go f’k himself. Anyone advocating to stay on their terms because of short-term pain is weak. Sacrifice for the future. Where oil doesn’t have you by the balls…it’s a fabulous investment long-term.
Only the weak, or the one’s profiting off of oil and coal want us to stay on it. Understand this. Sucks for them…the world is moving on.
No chit..
OPINION: “A repeat of the 1970s and the risk of a prolonged period of high inflation is overstated,” writes Cullen Roche, founder and chief investment officer of Discipline Funds. “I still expect inflation to moderate in the coming years, and in fact I think the risk of outright deflation is rising.”
https://www.marketwatch.com/story/the-real-worry-isnt-prolonged-inflation-its-deflation
“As for focusing on a handshake vs. a fist bump? If that is news, you need to go get some air before you do something stupid, like take over the Capitol Building.”
LOL, the whole “fist v. shake” was all policy wonks (Ivy League liberals) and leftists trying to micro-analyze their way out of the macro horror show of our President going over there on bended knee.
Forget the Capitol protestors, a typical West Chester or Buckhead suburban housewife and anyone to her right politically (70% of the population) already knows Biden is a weak, incompetent, lying hot mess.
Fist bump vs. a hand shake isn’t going to change that reality for them.
It’s your idiot side trying to justify this fool’s Presidency stirring this pot to divert from that larger issue.
Lib,
Never hold a house off the market for timing reasons. Houses priced right sell no matter what time of year. You are sitting with an empty house that should be producing income.
Old: That’s the situation my wife is in now with her Mothers house. Empty house, sitting and paying 10k in property taxes. Her siblings are morons, but that’s another story.
3B – they think the price will go up more? MY MIL and her siblings argued over a 10k price drop for weeks and the buyer almost walked. Tiny cape had not been updated too, people who bought it needed to git the place was all 1950s decor.
So really there are 2 questions to be answered regarding the Fed as grand pubbah of capitalism.
1- Are they the Uvalde Police Dept?
2- Are they hiding the bad quality mortgages from this speculation bubble in their opaque books? The reason I ask this question is because in RE bubble #1 of Greenspan Time aka as the S&L fiasco – the banksters learned “not to keep the horse doo mortgages in their books. In RE bubble 2 of Greenspan time, the banksters learned not to own any bonds that have horse doo mortgages. So it figures that the only place left to place horse doo mortgage this time around is with the Federal Reserve thru it’s QE purchase, as no one in their right mind is going to own those horse doo mortgages. And with the Fed’s record as opaque as those of the Catholic Church or Area 51 we might never know.
Have to say they do have a point……..
Saudi crown prince MBS told Biden the US made ‘mistakes’ too pointing to Iraq and Afghanistan when president shamed him for murder of Jamal Khashoggi
TheQuestions ThatNeed Answers
The youth will eat the debt. The answer will never be found.
“Knowing what drives the markets
“Most people in the market are looking for earnings and conventional measures.
It’s liquidity that moves markets.”
• Valuation only tells you how far the market can go once a catalyst enters the picture to change the market direction”
“Diversification can be a hedge for ignorance
“I think diversification & all the stuff they’re teaching at business school today is probably the most misguided concept everywhere.”
• If you really see it, put all your eggs in one basket & then watch the basket very carefully”
Quotes—Stanley Druckenmiller
“Despite multiple bankruptcies in the space, seemingly unlimited FUD, and a $50B top coin implosion, $ETH is up 43%+ off lows.
Likely just another bear market rally, but still good to remember the explosive upside that may be on the other side of all this.
Up nearly 30% in days.
this is what crypto always does. You don’t get 140% CAGR without volatility that most can’t handle”
Juice: They are incredibly clueless! The house is paid for, so they were like what’s the rush. We had to explain to them the carrying costs on the house, property taxes , and insurance, being just two. Can’t pay assisted living and carrying costs on house. And roll bd and round it goes. It’s a shit show! I have never seen the level of stupidity and arrogance. It’s amazing they have made it this far in life.
3b
It’s amazing how financially illiterate even educated people are.
More people producing less is not a good look. U.S. employers added 372,000 jobs last month at the same time economic output appeared to be shrinking. “To gauge the strength of the economy, pay attention to the output (goods and services), not just the input (jobs). When output is weak while input is strong, it means businesses’ costs are rising and profits are getting squeezed, which tends to lead to layoffs. Profits have been extremely high lately, providing a cushion. But productivity is on track for one of its worst 12-month performances in records going back to 1947. Look out below,” New York Times columnist Peter Coy writes.
Hold: They unfortunately are ignorant and arrogant, and have absolutely no understanding of anything financial, Medicare, social security, taxes, you name it. I think part of the problem is that they resent they don’t know anything, and then when the attorney confirms what was told to them, they get even angrier. If you are stupid, and I’ll or uninformed, do some about that, not take it out on people who have an understanding of these topics. It’s just unbelievable.
Workers going to chit…worst rate in records going back to 1947.
WFH increasing productivity? Numbers say bs.
Aw boy. WFH for many is a blessing.
I really need for you to try real hard to understand this.
Geographic flexibility is economic and socially a revolution that is vexing
to commercial real estate goons, but fear won’t make it go aaaway.
Fear: NAR says Commercial real estate prices continue to firm up, but the value of commercial real estate is still broadly down by 6% compared to one year ago.
Fear: In the wake of the current pandemic-induced economic recession, the Summer 2020 Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey shows uniform pessimism and a drop in sentiment for developers across all commercial real estate spaces in 2023. The biannual survey projects a three-year-ahead outlook for California’s commercial real estate industry and forecasts potential opportunities and challenges impacting the office, multi-family, retail, and industrial sectors.
Overall, survey panelists see office market demand decreasing due to work-from-home policies, industrial only moderately decreasing due to the shift to online shopping, retail continuing its downward spiral, and multi-family only moderately decreasing due to the continued shortage of housing across the state.
Pumps you haven’t lived until you’ve had an industry shift underneath your feet.
It’s humbling.
Ex,
All I am saying is that I heard it “drastically increased my productivity.” And what I knew all along, it didn’t.
What’s good for the worker, is not good for the business. I understand where you are coming from as a worker getting to stay home, but at the same time, it’s bad for business. Are you willing to derail the economy for the worker? Are you willing to take on those consequences?
Going to have companies having a hard time to grow and innovate….the cost will impact everyone’s life big time.
Ex, going to be driving through Ventura twice in August. Son is looking at UC SB. Probably driving through late Tuesday afternoon the 16th. Let me know if you want to grab a beer or dinner.
Lib : Sounds like a nice trip! Enjoy!
“This past week brought home the magnitude of the overlapping crises assailing the global economy, intensifying fears of recession, job losses, hunger and a plunge on stock markets.
At the root of this torment is a force so elemental that it has almost ceased to warrant mention — the pandemic. That force is far from spent, confronting policymakers with grave uncertainty. Their policy tools are better suited for more typical downturns, not a rare combination of diminishing economic growth and soaring prices.
Major economies including the United States and France reported their latest data on inflation, revealing that prices on a vast range of goods rose faster in June than anytime in four decades.”
“Most of the challenges tearing at the global economy were set in motion by the world’s reaction to the spread of Covid-19 and its attendant economic shock, even as they have been worsened by the latest upheaval — Russia’s disastrous attack on Ukraine, which has diminished the supply of food, fertilizer and energy.
“The pandemic itself disrupted not only the production and transportation of goods, which was the original front of inflation, but also how and where we work, how and where we educate our children, global migration patterns,” said Julia Coronado, an economist at the University of Texas at Austin, speaking this past week during a discussion convened by the Brookings Institution in Washington. “Pretty much everything in our lives has been disrupted by the pandemic, and then we layer on to that a war in Ukraine.”
It was the pandemic that prompted governments to impose lockdowns to limit its spread, hindering factories from China to Germany to Mexico. When people confined to home then ordered record volumes of goods — exercise equipment, kitchen appliances, electronics — that overwhelmed the capacity to make and ship them, yielding the Great Supply Chain Disruption.
The resulting scarcity of products pushed prices up. Companies in highly concentrated industries from meat production to shipping exploited their market dominance to rack up record profits.”
https://www.nytimes.com/2022/07/16/business/global-recession-risk.html
Wow, an article that gets it instead of falsely and naively blaming “fed money printing,” which it isn’t even capable of doing. Amazing. Hats off to the author for trying to educate.
Neither the Fed nor the European Central Bank has a lever to pull that forces action from Mr. Putin. Neither has a way to clear the backlog of container ships clogging ports from the United States to Europe to China.
“Everyone following the economic situation right now, including central banks, we do not have a clear answer on how to deal with this situation,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Norway. “You have a lot of things going on at the same time.”
7:11 sounds good! we should meet up at Neptune’s Nest. They filmed the original Point Break movie there. It ocean view on the PCH is worth seeing.
Sound’s like a plan. We’ll chat as we get closer.
Neptune’s Net, btw.
Tech effect. Doom and gloom is amplified with twitter and tic toc.
“Mark Zandi (Moody’s), who has been economist for >30 yrs, says he’s never seen so many people convinced that recession is imminent.
And while he believes US economy can still avoid downturn, sentiment is so poor that it poses its a sort of self-fulfilling recession prophecy.”
Lib – My wife is UCSB…. All I can say it’s magical there.. He may never come back to you wherever you may go….Enjoy the trip…. I LOVE Cali as I have said in times past we live here to be near cousins and kinship…for me however Cali is a magical place…..
3B . . . so, what is the alternative to selling the MIL’s house? I don’t understand what the other siblings want to do instead.
Do the siblings just want to hold it empty? Rent it out? Sell it later? Does one of them want to buy it out for himself?
Venezuela, Lebanon, Sri Lanka . . . which country is next to fall due to bad economic management or misguided ideology from its government?
Commodity prices being high hasn’t, surprisingly, caused as much upheaval around the world as I was expecting. From crying out loud, I thought that I heard a stat in the early days of the Ukraine War that 1 billion people in the Middle East, Africa and nearby areas are fed from Russian and Ukrainian grains. It’s been 5 months and we haven’t seen an Arab Spring-style wave of uprisings yet.
Crushed: It’s like living in the upside down world. Too much and too exhausting to go into detail here, now everyone is supposedly on board that it has to be sold, but that could change tomorrow. Additionally, missed peak pricing. You would not believe the level of stupidity and arrogance of the siblings.
Crushed: You can add Laos to the list of struggling countries. Meanwhile, Europe is struggling, and at the same time, membership talks for Albania and North Macedonia are moving ahead after opposition from Bulgaria. I don’t understand why the EU is expanding.
https://www.nj.com/opinion/2022/07/taxpayers-still-write-boat-checks-and-trenton-is-indifferent-to-the-swindle-editorial.html
Why wouldn’t you rent it out with nyc hitting record rents? You think it’s peak pricing while rents continue to go up? The price will eventually follow. If you need the cash now, then sell, but smart play is to collect passive income while waiting for higher price. Some people don’t like making money…no patience.
3b says:
July 17, 2022 at 10:16 am
Crushed: It’s like living in the upside down world. Too much and too exhausting to go into detail here, now everyone is supposedly on board that it has to be sold, but that could change tomorrow. Additionally, missed peak pricing. You would not believe the level of stupidity and arrogance of the siblings.
This year, Six Flags has nearly no attendance on weekdays. Rides have no waits. Half the time, they just let you stay on and go again as many times as you want. All the riff raff from last year is gone. It’s a much better family atmosphere and a good bang for the buck right now.
They better not cry about it afterwards. Making their own bed, and better sleep in it.
“Holland to Make Remote Work the Law. This May BackfireIf you argue your job can be done anywhere, why not at a substantially reduced rate by someone in Malaysia?”
Employees who worked at home during the pandemic shutdowns seem loath to come back to the office. At the same time, companies want people to come back. The Pew Research Foundation found that 61 percent of the people working from home were doing so by choice — not because there wasn’t an office to go to.
On the other hand, Microsoft found that 50 percent of companies want their employees to return to the office full-time. There’s a clear clash between what people want and what senior leadership wants.
https://www.inc.com/suzanne-lucas/holland-to-make-remote-work-law-this-may-backfire
“If you argue that you can do your job 100 percent remotely, then your boss just might believe you. And if your boss starts to believe you, your boss may begin to wonder why you’re receiving a high Dutch — or American — salary. If the job can indeed be done from anywhere, then why not Malaysia, India, or the Philippines?”
Pumpkin at 12:39 wrote “Why wouldn’t you rent it out with nyc hitting record rents?”
If 3B’s MIL’s house is a single-family detached house in North Jersey, it’s potential sales price versus potential rental income is a poor value. It can probably be sold for $500-600k (based on his remark that it needs more-or-less a gut reno), but it can rent for maybe $3k or 3.5k (depending on its current condition).
If they sell for $600k, they can buy a 2- or 3-family with a rent roll that is maybe $4-5k. In sum, I’ve rarely seen SFH that work as ok rentals in NYC metro. On the bright side, it is easier to shift responsibiltiy for a lot of maintenance and repairs onto the tenant with a SFH comapred to multis or apartment buildings.
Crushed: I would not say it needs a gut renovation, but the mechanics are getting old, roof, heating etc, There will come a point where they need to be addressed, and that costs money, which is needed for MIL s care. It’s a big house, and could easily be converted to a two family. It’s also on a double lot, which is a premium in NYC. The area is good too. We missed peak pricing, which the realtors already have said. It was probably worth 700k or more this time last year. Renting it is not an option for the reasons I previously listed; as well if the remnants don’t pay, NY is very tenant friendly. Plus day to day repairs that might arise. It’s simply not worth the hassle and very real risks involved.
“I’ve been watching Cathie Wood’s ETFs make higher highs & lows. They were one of the first to drop in 2021. Have they bottomed and reversed? I would say so for now. $ARKK $ARKG”
Who knows…but def 50/50 shot that May was the bottom for ark.
“The one thing that can derail everything is China.
They’re hanging by a thread.”