The Nation's Financial Condition

[Farfromgeneva]

Not a big deal but thought this was humorous



EDIT:

Congratulations American citizens….we broke a sacred number!

Still can’t believe morons are using the Dow as a reference point. Share price weighted 30 companies selected in a severely lagging fashion for its indices.

[Typical Lax Dad]

Not a big deal...but thought this was humorous.

Would this be considered disinformation as I don’t recall Dow 35k in 2013?

No..it is called “tripe”…..and Fauci said masks don’t work…with laughing emoji.

[youthathletics]

Not a big deal...but thought this was humorous.

Would this be considered disinformation as I don’t recall Dow 35k in 2013?

Not by year....during July of this year. https://www.cnbc.com/2021/07/18/stock-m ... -news.html

[Farfromgeneva]

It was quite amazing, after the US economy was shut down 9 months. Hell Biden is bragging about 60k jobs daily rolling through office doors and we dropped 900 points today. #Winning

DJIA closed down 725 and has clawed some of that back after hours but you knew that.



I hope it keeps tanking….that is a fact.

Not sure I totally believe that but understand your point to the problem of excesses. Suspect you, like myself, actually don’t root for the stock market at all.

[Farfromgeneva]

Not a big deal...but thought this was humorous.

Would this be considered disinformation as I don’t recall Dow 35k in 2013?

Not by year....during July of this year. https://www.cnbc.com/2021/07/18/stock-m ... -news.html

You’re showing me a stock market indices chart of a couple of days???

[youthathletics]

Not a big deal...but thought this was humorous.

Would this be considered disinformation as I don’t recall Dow 35k in 2013?

Not by year....during July of this year. https://www.cnbc.com/2021/07/18/stock-m ... -news.html

You’re showing me a stock market indices chart of a couple of days???

re-read in red

[Farfromgeneva]

I wonder what future archaeologists (if cockroaches go in for that sort of thing), will make of things like this.



Chalk figures?

First one presumably is paving for a cup de sac and spec home to be built. Second one like like he’s trying the holy grail of fellating himself but only making it to his belly button.

Having flown over the Nasca lines (garbage village-Nasca, not just dirty or whatever just lame) I can say no one will care in a 100 years.

[Farfromgeneva]

Not a big deal...but thought this was humorous.

Would this be considered disinformation as I don’t recall Dow 35k in 2013?

Not by year....during July of this year. https://www.cnbc.com/2021/07/18/stock-m ... -news.html

You’re showing me a stock market indices chart of a couple of days???

re-read in red

I read it just don’t get belly splitting laughter off of it. I’m sure it works for some of my relatives from Steuben Co but it’s just dumb. I would be curious to get a better look at said lady, she could be worth “investigating” more but that’s where my interest stops. In fact indices aren’t telling any story ever with any detail just a directional view of where folks are putting their money with their mouths. We of course also have this Delta variant picking up which could explain a few days reaction in a grossly overpriced market where the Fed is talking finally about reducing liquidity in the system.

Stuff like that almost never makes me laugh and I’ll joke about basically anything. Surprised because I thought you’d fall over for more substantial memes than that.

[Farfromgeneva]

Bundled Commercial Real-Estate Loans Climb to Sales Record
Investors show an appetite for higher-yielding debt and an expectation that business properties will rebound after Covid-19 shutdowns

The pandemic led some loan borrowers to delay renovations or skip interest payments, increasing default rates.
PHOTO: JEENAH MOON/BLOOMBERG NEWS
By Sebastian Pellejero
Aug. 3, 2021 5:30 am ET
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Sales of securities backed by riskier commercial real-estate loans have surged to a record, highlighting investors’ demand for higher-yielding debt and expectations for a recovery in business properties.

Commercial real-estate collateralized loan obligations are created by private real-estate investors. In these deals, lenders sell debt and equity to make short-term loans to borrowers that renovate business properties, particularly multifamily housing. Money from interest payments and principal from the pool of bridge loans goes to bondholders, while any residual cash goes to equity holders.

Bridge loans are typically made to properties in flux, such as empty or outdated apartment buildings, and the renovations they finance can fail to pay off as quickly as expected, leading to delayed repayments and defaults. As a result, CRE CLOs offer relatively high payouts at a time many investors continue to expect commercial properties to rebound further from the pandemic.

Firms including Benefit Street Partners and TPG Capital sold $24.5 billion of CRE CLOs this year through July 31, according to Trepp. That is already a full-year record for data going back to 2014, beating 2019’s previous $19 billion peak.

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This year’s record sales are a reversal from 2020, when shutdowns related to the Covid-19 pandemic caused some loan borrowers to delay renovations or skip interest payments, increasing default rates. Issuance of new commercial mortgage-backed securities fell to its lowest total since 2017, around $65 billion.

Sales of other floating-rate debt have also surged. Some analysts and investors say that strong U.S. economic growth and high inflation, which erodes the purchasing power of conventional bonds’ fixed payments, will prompt the Federal Reserve to increase rates sooner than expected. That is fueling record issuance of floating-rate corporate bonds and CLOs that buy low-rated corporate loans.

Sales of CRE CLOs have for the first time exceeded issuance of what investors call conduit commercial mortgage-backed securities, which are backed by a more diverse portfolio of bank loans, typically to properties with more-stable cash flows. That is notable because conduit commercial mortgage-backed securities make up the largest source of supply in the mortgage-bond market. This year’s conduit CMBS sales totaled $17.3 billion through July 31, according to Trepp.

“I can’t think of a period this far into the year where the CRE CLO market has had a lead over conduit, let alone one of this magnitude,” said Darren King, head of commercial mortgage-backed securities at Trepp.

The discrepancy between these two assets reflects the mixed recovery in U.S. commercial real estate, analysts said. CRE CLOs typically mature in three years, and about half of the loans are tied to multifamily housing. A housing boom has pushed home prices to records and investors such as Blackstone Group Inc. to bet billions on buying and renting homes.


By comparison, conduit CMBS sales are backed by fixed-rate loans with longer maturities to hotels, offices and retail. The pandemic has made investors more cautious toward longer-dated loans to such properties, said Simon Deery, co-head of structured products at Payden & Rygel Investment Management.

“That has pushed people away from conduit, and then makes the CRE CLO look more interesting,” he said.

Institutional investors, including insurance companies and pensions, have sought out high-yielding, investment-grade-rated debt with short maturities to match shifting liabilities and park cash.

The median extra yield, or spread, investors have demanded to hold triple-A-rated CRE CLO bonds sold this year was recently around 1.13 percentage points over the London interbank offered rate, or Libor. The three-year Treasury note traded Monday at roughly 0.32%.

CRE CLO debt isn’t without risk. About 2.5% of borrowers on more than $80 billion of underlying loans tracked by Kroll Bond Rating Agency Inc. have missed payments since June 2013. When including maturity extensions or other loan modifications, that rate rises to 7.8%.

Recent data suggests that broader CMBS impairment rates have improved with the economy in recent months. The Trepp CMBS delinquency rate fell for the 12th straight month to about 6.1% in June, the lowest level in over a year. Loans in special servicing dropped to about 8.2%, around pre-pandemic levels.

Some real-estate fund managers are taking advantage of low rates and demand for floating-rate debt to reduce reliance on bank credit, says Jade Rahmani, an analyst at Keefe, Bruyette & Woods Inc. That is because those credit lines tend to come with margin requirements, meaning banks can ask investors to put up extra cash when markets are volatile.

“In the CRE CLO space, there’s not that same margin-call feature,” he said.

CRE CLO managers typically keep some equity in their deals, pushing them to reduce debt costs and finish projects.

Mortgage lender Ladder Capital Corp. raised $650 million through its first managed CRE CLO sale earlier this year. Investor demand was so strong that the company increased the sale by $250 million, while the final interest rate fell below original expectations. Chief Executive Brian Harris said during the company’s July earnings call that other lenders are probably looking for new loans to bring more CRE CLO deals.

“I think a lot of the originators in the country are targeting assets for the CLO market,” he said.

Write to Sebastian Pellejero at [email protected]

[Brooklyn]

Employers added 943,000 jobs last month as recovery gains steam


https://www.msn.com/en-us/money/markets ... d=msedgntp


Republicans screw the economy, Democrats fix it up. Thank you Mr Biden.

[jhu72]

... pretty good month. Don't see nearly 1M very often.

[Farfromgeneva]

For anyone interested in the source info just tossing the site out the for more granularity

https://www.bls.gov/mobile/

For me hours, wages, participation rate and composition of gains and losses are the most important factors underlying the headline number.

[CU88]

A lot to see here, but it is more financial commentary than treason.

I think that Mitch went along with the Infrastructure to better be able to claim some credit for a booming econmy in 2024. They certainly missed the boat with the American Rescue Plan.

August 10, 2021
Heather Cox Richardson
Aug 11

The shocking revelations from former acting attorney general Jeffrey A. Rosen about former president Trump’s direct efforts to use the Department of Justice to overturn the 2020 election, along with the horrors of spiking Covid among the unvaccinated, drove out of the news cycle a revelatory piece of news.

Last Friday, the Bureau of Labor Statistics in the Department of Labor released the jobs report for August 2021. It was stronger than economists had predicted, and even stronger than the administration had hoped.

In July, employers added 943,000 jobs, and unemployment fell to 5.4%. Average hourly wages increased, as well. They are 4% higher than they were a year ago.

Harvard Professor Jason Furman, former chair of President Barack Obama’s Council of Economic Advisors, tweeted: “I have yet to find a blemish in this jobs report. I've never before seen such a wonderful set of economic data.” He noted the report showed “Job gains in most sectors... Big decline in unemployment rate, even bigger for Black & Hispanic/Latino… Red[uctio]n in long-term unemp[loyment]... Solid (nominal) wage gains.”

“Still a long way to go,” he wrote. “[W]e're about 7.5 million jobs short of where we should have been right now absent the pandemic. But we've made a lot of progress.”

Michael Gapen, chief U.S. economist at Barclays, told New York Times reporter Nelson D. Schwartz: “It’s an unambiguously positive report…. Labor market conditions are strong. Unemployment benefits, infection risks and child care constraints are not preventing robust hiring.”

The jobs report is an important political marker because it appears to validate the Democrats’ approach to the economy, the system the president calls the “Biden Plan.” That plan started in January, as soon as Biden took office, using the federal government to combat the coronavirus pandemic as aggressively as the administration could and, at the same time, using federal support to restart the economy.

In March 2021, the Democrats passed the American Rescue Plan, a $1.9 trillion economic stimulus package. In addition to strengthening healthcare systems to combat the coronavirus, it provides economic relief primarily to low- and middle-income Americans by extending unemployment benefits and the child tax credit; funding schools, housing, and local governments; providing help for small businesses; and so on.

Polls indicated that the measure was enormously popular. A Morning Consult poll from February showed that 3 out of 4 voters liked it, and local governments and state governors, including a number of Republicans, backed the bill.

But every single Republican lawmaker in the House of Representatives voted against the measure, saying it was too expensive and that it was unnecessary.

Since 1980, Republican lawmakers have opposed government intervention to stimulate the economy, insisting that private investment is more efficient. Rather than use the government as presidents of both parties from Franklin Delano Roosevelt through Jimmy Carter did to keep the playing field level and promote growth, modern-day Republicans have argued that the government should simply cut taxes in order to free up capital for wealthier Americans to invest. This, they said, would create enough growth to make up for lost tax revenues.

President Ronald Reagan began this trend with major tax cuts in 1981 and 1986. President George H.W. Bush promised not to raise taxes—remember “Read my lips: No new taxes”—but found he had to increase revenues to address the skyrocketing deficits the Reagan cuts created. When he did agree to higher taxes, his own party leaders turned against him. Then President George W. Bush cut taxes again in 2001 and 2003, despite the wars in Afghanistan and Iraq, and in 2017, Republicans under President Donald Trump cut taxes still further.

In 2017, Trump claimed the cut would be “rocket fuel for the economy.” Then–Treasury Secretary Steven Mnuchin echoed almost 40 years of Republican ideology when he said: "The tax plan will pay for itself with economic growth." And then–Senate Majority Leader Mitch McConnell said: "After eight straight years of slow growth and underperformance, America is ready to take off.” (In fact, while Trump’s tax cuts meant tax revenues dropped 31%, they yielded only 2.9% growth, the exact same as the economy enjoyed in 2015, before the cuts.)

Laws like the American Rescue Plan should, in the Republicans’ view, destroy the economy. But Friday’s booming jobs report, along with the reality that the Biden administration has created an average of 832,000 new jobs per month, knocks a serious hole in that argument.

It may be that the pendulum is swinging away from the Republican conviction that tax cuts and private investment are the only key to economic growth.

Today, the Senate passed a $1 trillion bipartisan infrastructure bill by a vote of 69 to 30. The bill repairs roads and bridges, invests in transit and railroads, replaces lead pipes, and provides broadband across the country, among other things. In the next ten years, it is expected to create nearly 3 million jobs.

Nineteen Republicans voted in favor of the bill. There were many reasons to do so. The measure is popular with voters, and Republicans were embarrassed by their unanimous opposition to the American Rescue Plan. Indicating a willingness to work with Democrats might also undercut the Republicans’ image as obstructionists and help to protect the filibuster (a factor I’m guessing was behind McConnell’s yes vote).

But that Republicans felt they needed to abandon their position and vote yes for any reason is a big deal. "For the Republicans who supported this bill, you showed a lot of courage,” Biden told them. “And I want to personally thank you for that."

The bill now goes to the House, which will take it up after the Senate passes a $3.5 trillion infrastructure measure through the reconciliation process, which Democrats can do with a simple majority and without Republican support. The larger package addresses climate change, child care, elder care, housing, and so on. Moody Analytics, which provides economic research and modeling, says that, if it is combined with the bipartisan bill, it will add close to 2 million jobs a year over the next ten years.

Yet, Republicans say it is a “reckless tax and spending spree.”

In contrast, Treasury Secretary Janet Yellen said: “My largest concern is not: What are the risks if we make these big investments? It is: What is the cost if we don’t?”

[Farfromgeneva]

For the record Janet Yellen has consistently been a monetary dove so we know her position is that inflation will never be an issue that supersedes other priorities of hers. One could argue her picking up the hose where bernanke left it off is why we have this perpetual state of easy money that’s turned into a Latin American negative feedback loop of sterilization.

My point is simply that if you believe that this jobs and wage growth is sustainable at all and real then you have to believe inflation and substantially higher interest rates are coming. Meanwhile the Fed has even acknowledged they’ve had to heavy a hand on the money tap and may start tightening sooner than they indicated in their meeting. Conversely markets drove the 10yr back down below 1.2% recently now back in the 1.30s but down 30-50bps from its highs not that long ago do people are putting their money in slower growth in the future in a meaningful way. Either way this isn’t an easy situation or smooth glide path we’re heading into either way so celebrating a report or two is a bit premature.

[Brooklyn]

... pretty good month. Don't see nearly 1M very often.

Just imagine how many more people (including retirees) would go back to work if multi billion dollar corporations like Burger King, McDonald's, KFC, and others paid a livable wage. The same job that pays $13 per hour in the USA pays $22 per hour in Europe. Pay the same wage and millions would readily go back to work. The 1M number would be doubled and duplicated every month. The economy would be sound, tax revenues would increase dramatically, and we would have mass consumption of the type we have not seen in many years.

[Farfromgeneva]

It’s all that simple. And then we could live in the shangri la know as europe all smiles and joy. Cost of living and other considerations aren’t relevant to how this would work at all? Just raises wages and it’ll all work out perfectly.

[Brooklyn]

Not Shangri-La but a reality. We have the examples of Europe, especially Scandinavia. By contrast we also have the failed USA example of minimal minimum wage laws. Bring up those wages and people will have far more money to spend thereby firing up the economy and generating multiple billions in tax revenues. Then, let's have states such as Florida and Texas impose some income taxes on wages so that they don't have to get bailed out by Washington, DC.

[Farfromgeneva]

Not Shangri-La but a reality. We have the examples of Europe, especially Scandinavia. By contrast we also have the failed USA example of minimal minimum wage laws. Bring up those wages and people will have far more money to spend thereby firing up the economy and generating multiple billions in tax revenues. Then, let's have states such as Florida and Texas impose some income taxes on wages so that they don't have to get bailed out by Washington, DC.

All Scandinavian cities have higher cost of living the data shows. I also lived in Denmark, while ago, but it’s so not comparable to the breadth and size of the US. Denmark has chosen to not even be fully in not participating in the EMU and related common currency. I just don’t ever like the European comps unless it’s basically Germany or France and even those are beat available and not anywhere near perfect comparables.

You’ve mixed and matched here because I agree on state income tax arbitrage being problematic as are corporate relocation incentives but you’ve combined two separate issues that you hadn’t previously.

On the primary topic I think you overestimate the NET multiplier effect (inclusive of crowded out spending) of government spending which would make this belief understandable but if it doesn’t materialize then what? If costs rose commensurate to, hopefully not further than, wages and the multiplier doesn’t play out just simply having higher wages would have a dilutive impact on those most likely to feel the burden of higher living expenses as the most basic needs create the regressive nature of it. (Ie inflation of basic goods and services like entry level housing is more impactful than yacht inflation to the folks you want to help).

[Brooklyn]

Higher cost of living but also higher quality of life along with health care and lower crime rates. If poorer folks in the lower classes were offered those as alternatives, all would gladly take it. In the long run all of society would be better off if it adopted that type of system.

[Farfromgeneva]

Higher cost of living but also higher quality of life along with health care and lower crime rates. If poorer folks in the lower classes were offered those as alternatives, all would gladly take it. In the long run all of society would be better off if it adopted that type of system.

I’m open to the possibility though also met many middle class danish folks that didn’t care for their system. And again I caution against believing a system for 6mm people is transferable to one pushing 400mm, more than 65x as large (ie Denmarks population, set aside geographic land mass, is 1.5% the size of the US). They also have a parliamentarian system-the PM was handing out rolls w butter in fall of 2000 to get citizens to vote for joining the common currency (and lost). Imagine a US President doing that for a referendum on monetary policy. I know you check a lot of stuff out but when you reference scandanavia have you spent enough time in any of those countries to have a two hour conversation about all things Scandinavian or European and immerse yourself of is this just based on what you’ve read? I ask because I hear many things attributed to Scandinavia that we should adopt and then hear complete misunderstanding of what those countries are (not to mention the vast oil wealth in Norway). Did you know that Finland had for a long time maybe still the highest per capita suicide rate in the world?