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Discussion in 'Business, Investing & Finance' started by ChiefGator, Mar 24, 2020.
Mostly, I go about my day. But every once in a while, I'm like WTAF is happening?!
Same here. The problem I have trying to gauge the economic fallout is that our business usually has about a 2 month's surplus of loans that are waiting to close due to volume of the last 4 to 5 years. Right now were busy as usual and scheduling 2 to 3 weeks out, all of our processing racks are stuffed full, surveys are still taking 2 weeks because the Surveyors are still slammed and were still 2 weeks behind in title searches, (which might kinda be my fault for screwing around on this site too much). In other words I may as well be worlds away from empty theme parks, airports and hotels....for now!!! Question is will I run out of rope before I see the ugly truth...
Not my quote and I have to be honest. I have not heard of this CEO or the company but I give you his quote: “It’s frankly frustrating and ridiculous that we do not have a solution in place,” said Jay Bray, CEO of the nation’s largest nonbank mortgage servicer, Mr. Cooper. “There is going to be complete chaos.”
Everyone would be better off if we made a firm decision on this sooner than later and stick to it...
Throwing this out there without showing evidence of hardship was an outrageous move, outrageous,” said David Stevens, who headed the Federal Housing Administration during the subprime mortgage crisis and is a former CEO of the Mortgage Bankers Association. “The administration made a huge mistake bringing moral hazard in and thrust extraordinary risk into the private sector that could collapse the mortgage market.” Stevens said borrowers should have been required to show at least some proof of hardship, which they had to do during subprime mortgage bailout. Moral hazard aside, he, too, contended a liquidity facility for servicers is essential. “This is a crisis so easily correctable,” he said. “The GSEs [Fannie Mae and Freddie Mac] for years have always assured the servicing community that in the event of a major credit event, they’ll be there to make sure they provide the liquidity. From what we are hearing, and we can’t verify it, the FHFA director instructed the GSEs not to set up a liquidity or advance facility.”
Now I hear the NYT is whining that public transit is in dire straights since few are using it. Their solution as usual is to get the feds to pay up. Hopefully not happening!!
I posted this in the Sports Forum as well. So, if all the Countries will be suing China for the Virus in the Trillions. How would affect all the debit that China currently holds over the world and especially the US? Is this why all the Countries are shutting down? (besides the obvious threat)
And now farmers are allowing crops to rot in the fields and throwing out milk in large quantities. More costs of shutting down the economy, and how many of the owners will be broke. One thing I would insist on is a very rapid way to develop and test vaccines, surely with all the advances we have it should not take over a year to develop and test a vaccine when serious effects are happening. I would like say three months, this is not the last pandemic we will be seeing.
For those interested, the link is actually Walmart Told to Halt In-Store Sales of Non-Essentials in Vermont Dated April 1 I'm quoting and replying as I'd seen a similar article from a friend just days before Coronavirus: Easter egg crackdown over essential status 'wrong' Dated March 30 It doesn't make sense to me. If you allow customers in for essentials, they are taking the same risks they would had they only been shopping for non-essentials.
These stories.... are a problem... 'IT'S GOING TO BE DEVASTATING': One Of The Country's Largest Pork Processing Facilities Is Closing - Breaking911 Coronavirus curdles dairy supply chain, forcing Florida farmers to dump excess milk
@Detroitgator looking more and more like Nostradamus: The Great Lockdown The global economy has almost certainly entered a recession. The International Monetary Fund in a new outlook said the world economy is expected to contract by 3% in 2020 as the coronavirus pandemic causes nations around the world to close down, Josh Zumbrun reports. “It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,” said Gita Gopinath, the IMF’s chief economist. “The great lockdown, as one might call it, is projected to shrink global growth dramatically.” Newsletter: ‘Worst Recession Since the Great Depression’ Big banks predicting a very bad recession: JPMorgan, Wells Fargo Profits Tumble as Banks Brace for a Recession Might be time to go safe with money...
Here's my short update to my original... not much has changed, that's it. That said, here's some notes:The world ECONOMY is fukked. It's a zombie, period. We haven't even begun to feel the effects yet.The MARKET is not the ECONOMY, and I'm actually bullish on market near term because, well, ya can't fight the Fed on that part. If they are going to pump trillions in, it'll go up for now. Even today being down was not bad (coulda been a lot worse) and probably very bullish as another $2.5 Trillion starts tomorrow. I use the S&P for my reads (they are all correlated) and I'll stay bullish as long as it's above 2500. If we push up and close in the 2900-3000 range, that floor moves up to 2700. If we move below 2700, and especially 2500, I'll flip everything I just said.Everything I said about the criticality of oil price still holds. Trump lied to us 10 days ago saying he brokered a deal and we've been lied to daily ever since... there is NO deal and oil continues to fall. Something has to give though because the global ability to store oil will hit capacity in a couple of weeks. Then all those people go on unemployment too, and there is zero demand globally for oil and that ain't gonna come roaring back no matter what anyone says.Everything I said about bond yields still holds. The fight is to keep the 10 yr up, it's critical to everything.An economist that no one ever talks about (and douchebag Keynes misquoted) is one of my favorites and probably the true beginning of the Austrian School: Richard Catillon. Super interesting guy and he wrote a super interesting book. I think he was also the first to ever really recognize "bubbles." One of the things he basically said was this, and I use it to look at TODAY, cuz nothing is different, and this is definitely paraphrased from something I remember: "When the King mints money, those CLOSEST to the King BENEFIT the most, and those FURTHEST from the King are HURT the most." Note what I put in all caps, and let's apply it to TODAY, and by TODAY, I mean Wednesday, April 15th, because the King is printing TRILLIONS:Closest to the King (Fed) - Wall Street: will receive another $2.5T starting tomorrow. No strings attached.Next level - Corporations with corporate debt: Headline today example - Airlines agree on "bail out" package that includes direct government ownership of said airlines. This will extend to all major industries before this is over. As I sad before, the Fed will own EVERYTHING. And not just here in the US, but globally as well. This is called Economic Facism fellas, socialism with a capitalist face. Nit pick with words all ya want, don't care. Strings attached, but not fukked.Next level - Small business. Had to jump through hoops to get loans with strings attached. Money ran out, even though Trump and Mnuchin promised everyone on TV that it would not. Headline today - New funding being held up by Dems. Neither party gives a fuk about small business. Small business is a thorn in the side of big corporations and politicians, they get in the way and gum up their control/dominance. Hell, Nancy posted a video in front of her $25,000 freezer full of ice cream congratulating Dems on blocking money for small businesses. And again, R's are no better really. The plan is to kill small business, and they are. Strings attached, and fukked.Next level - some citizens get a couple of grand... one time... for now... It's a big FU, but Coach and Darryl feel good. For Coach, that's fine as long as his fixed govt income remains unchanged. For Darryl, we'll see how it works out. But for now, "LOOK! Shiny object!" Too stupid to know they are fukked and forever slaves, but with a few shiny things thrown in along the way.So, to sum up:Economy fukked. We have to print trillions more just to float us through the next couple of weeks (or whenever we open up), then we'll have to print trillions more to get things going again.Stock market bullish (for now), because, well, Fed.Keep watching bonds and oil.Disclosures:I own a bunch of small business, foreign and domestic. One foreign one (Shawarma shop in Dubai) is taking a hit, but I do that business out of the goodness of my heart for the person I have running it and the ones that work there, not to make money. Beach condo isn't renting, but not losing money. All others fine. No loans (even the kind that can be forgiven) taken.My family qualifies for no shiny object checks. I'm fine with that, don't need it, but "means testing" is just another way to kill small business/entrepreneur class.The investment decisions I've made with my money put me in a position where no matter what happens here, really good or really bad, I will likely gain either way. There are people with far more money than I (but who still don't have "FU money") that will likely be committing suicide as their businesses go bust and their payments on their $2M house and multiple $60K+ cars come due and cannot be paid. I live in the house I bought when I was $400K in debt and chose to live differently.I am playing the market a little right now, but we are talking about an amount that is probably 2.5% of my total assets. I am still in the "powder dry" mode even with short term bullish outlook on markets. My "dry powder" is about 25% of total assets. I plan on cleaning up carnage in the next 12-18 months, probably mostly in real estate.I hope this works out for everyone, and I mean that. I wish no ill will on anyone. I don't judge how others have chosen to live their lives or the decisions they have made.... I just get really pissed off when they talk endlessly about what they are entitled to... and what my fair share should be to pay for it.It's Survivor night! Glad Adam got voted out last week, who knows what will happen tonight!EDIT: @Bammer ...cuz i never see you in here!
Good write up @Detroitgator . I think the most important thing you said was: the MARKET is not the ECONOMY. so true. Often times the market sizzles while the economy slogs and vice versa. I wish Prez Tweeter understood that. I voted for the a$$ clown yet he can't figure that one out Only took 4 years for him to understand that ZERO interest rates and 20 dollar oil are both a bad sign. Good to see a reference to the Austrian School of Economics. I am not familiar with the gentleman you cited, but I have followed Peter Schiff for a very long time and my guess is their views mirror each other as he is from that lineage.
This is a good quick read on Cantillon: Richard Cantillon As for Trump, agreed... and for a Wharton guy, everything he's saying about oil on a daily basis shows zero grasp of the most basic parts of "supply vs demand"...
@Detroitgator too long, still read. You and I have different ideas about “short update”.
The "short update" was the first sentence, it ended with "that's it"... the rest was "notes."
JFC @Detroitgator I knew you were old but not that old, . Were you friends with this guy Just kidding. That was a good read and I stand corrected. This gentleman basically founded the Austrian School so Schiff was merely a peon student 3 centuries later.
I used to follow Schiff, up until about 2015. I didn't stop because I disagreed with him in any big way, I just didn't need him anymore and I got tired of worrying about the timing of things and of underestimating the Fed's ability to keep things going. My foundation was set, so I just put everything on autopilot and focused on other things, namely my kids and business, in that order.
But I thought the idea was to get rid of these entities or privatize them. I believe that our system of financing such is broken with way too much risk being held by the government, and too little by those that actually make the loans, or purchase them. If you can't afford the risk, you should not be in the game.
Yes that was the plan to spin Fannie and Freddie out of the government rule and on their own again, so to speak. But for years they have not been able to come to an agreement on how to do it. so now as you mentioned, the GOV owns so much and now they are going to own even more by having to back stop the mortgage lenders/servicers. And with the FED now buying Corp. debt, Muni debt, Junk debt, all the Gov. entities are just going to get bigger. Next up will be buying US common stocks. Our government has decreed that there is no risks in taking risks. If you lose we will be there, pick you up, give you back what you lost and then some.
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