*Investors Blog*

[SC Maintenance]

https://www.sfgate.com/local/article/995-market-st-san-francisco-office-market-19420409.php


“ A steep price cut on a San Francisco building marks one of the starkest recent indicators of the city’s struggling office market. An empty 16-story building at 995 Market St. just sold for $6.5 million, a nearly 90% plunge from its 2016 price of $62 million. “

The excesses of the pandemic need to be dealt with via capital destruction. Looks like CRE will be one way (although its not enough). However CRE loans are typically long dated and interest only, so it will be a slow moving train wreck unless it triggers something else.

Seems like offices are now but apartment buildings, especially in these same cities, aren't far behind.

 

[Rmay635703]

https://www.depositaccounts.com/banks/health.aspx#texas

Not sure why the link has Texas but if you occasionally look at bank health there is an unprecedented number with really bad metrics, many in Texas and Gulf states oddly.

My credit union is near the top but we all know that can rapidly change if the bank made one large bad investment

 

[Pablo]

https://www.depositaccounts.com/banks/health.aspx#texas

Not sure why the link has Texas but if you occasionally look at bank health there is an unprecedented number with really bad metrics, many in Texas and Gulf states oddly.

My credit union is near the top but we all know that can rapidly change if the bank made one large bad investment

"Texas Ratio​

Developed at RBC Capital Markets, the Texas Ratio is a relatively straightforward and effective way to determine the overall credit troubles experienced by financial institutions. It is determined by comparing the total value of at risk loans to the total value of funds the bank has on hand to cover these loans. At risk loans are any loans that are more than 90 days past due and are not backed by the government. The amount of funds on hand consists of the loan loss allowance that the bank has set aside plus any equity capital.


For example, a bank with $65 million in at risk loans and $72 million in cash on hand to cover those loans would have a Texas Ratio of $65mm / $72mm, which is 90.3%. This figure is approaching the 100% threshold, which is considered very risky. You can also look at the trend in this Texas Ratio as an additional factor to tell if the bank's financial health is heading in the right direction."

Good link!

 

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USD/JPY spiked close to 160, then was driven down (twice). I presume the BoJ intervention has arrived.

 

[zzyzzx]

One of the banks on the first page went under over the weekend.

https://fortune.com/2024/04/26/philadelphia-bank-implodes-failure/

Regulators have closed Republic First Bank, a regional lender operating in Pennsylvania, New Jersey and New York.

 

[SC Maintenance]

One of the banks on the first page went under over the weekend.

https://fortune.com/2024/04/26/philadelphia-bank-implodes-failure/

Regulators have closed Republic First Bank, a regional lender operating in Pennsylvania, New Jersey and New York.

Here is one not behind a paywall. Will cost FDIC $667M it says. That may seem like chump change to the FDIC's deposit balance of $23B but this bank wasn't even close to a top 100 bank, and we have 4000 banks in the USA.

https://www.cbsnews.com/philadelphia/news/republic-bank-failure-fulton-bank-pa-nj-ny-fdic/

 

[Rmay635703]

Here is one not behind a paywall. Will cost FDIC $667M it says. That may seem like chump change to the FDIC's deposit balance of $23B but this bank wasn't even close to a top 100 bank, and we have 4000 banks in the USA.

https://www.cbsnews.com/philadelphia/news/republic-bank-failure-fulton-bank-pa-nj-ny-fdic/

Exact opposite of 2008, too small to care.
Death by a thousand cuts, the bottom 100’s financials all look pretty similar to this one (or worse). The odd part is that the Texas ratio is somewhat divorced from the current trend of deposit exodus which fails a bank with even a 10% Texas ratio.


For a different take, low demand in certain sectors means layoffs in many others



We’ve never had a large failure in one class of real estate without a recession and others also being affected

 

[Dave Hess]

^^^^
I like his videos but I wish they were only 15 minutes.

 

[Warstud]

Lost (as usual). Not even sure which of Dave's post you refer to? Powell legacy?

Rising long term rates signals expectation of longer term or structural inflation. Not the signal to cut short term rates. Although we both know short term rates don't matter for inflation all that much either way, at least not the small amount of bps were talking. Now if they were to go back to zero, thats different.

Is it a good time to buy Bonds ?

 

[SC Maintenance]

Is it a good time to buy Bonds ?

The smart money are the ones that trade bonds, meaning I am the wrong guy to ask

Even if it was a good time to buy bonds, which bonds you buy is even more important than timing - corporate / sovereign - duration, etc.

The smart guys that trade bonds like Chris Whalen seem to think the 10 year is going over 5% again. Too much supply / not enough demand with continuing inflation. Thats likely true up until the point the fed decides to buy again, then they will monetize them down to nothing again, just like 2008, just like 2020.

There is a 10 year auction mid next week that would be worth watching. They haven't announced volume on it yet.

 

[Dave Hess]

Dow jumps 500 points as Powell says the Fed’s next move is unlikely to be a hike:​

https://www.cnbc.com/2024/04/30/stock-market-today-live-updates.html

 

[Pablo]

Dow jumps 500 points as Powell says the Fed’s next move is unlikely to be a hike:​

https://www.cnbc.com/2024/04/30/stock-market-today-live-updates.html

No kidding.

 

[alarmguy]

But wait!!! Just months ago it was said that the market was looking for a cut and if I remember correctly, the market was getting bashed at the prospect that they would be none?
So now we could spin it around and rejoice that rates aren’t going to go up

Oops, wait, Dow dropped over 400 points from the 500 point peak

 

[Warstud]

I'm beginning to think there gonna wait until things get real bad before they start cutting interest rates .

 

[JHZR2]

Here is one not behind a paywall. Will cost FDIC $667M it says. That may seem like chump change to the FDIC's deposit balance of $23B but this bank wasn't even close to a top 100 bank, and we have 4000 banks in the USA.

https://www.cbsnews.com/philadelphia/news/republic-bank-failure-fulton-bank-pa-nj-ny-fdic/

That bank handles my wife’s paycheck. Glad it was covered yesterday.

 

[JHZR2]

Oops, wait, Dow dropped over 400 points from the 500 point peak

Yeah that was wild. I’m not a big timer, but I did get some equities out to a stable 4.75% return. I have a looong time horizon, but I do think things will go lower.

 

[SC Maintenance]

But wait!!! Just months ago it was said that the market was looking for a cut and if I remember correctly, the market was getting bashed at the prospect that they would be none?
So now we could spin it around and rejoice that rates aren’t going to go up

Oops, wait, Dow dropped over 400 points from the 500 point peak

The Dow is now a momentum trade.

 

[SC Maintenance]

I'm beginning to think there gonna wait until things get real bad before they start cutting interest rates .

Fed is in a real tight box. Inflation is accelerating. The treasury has too many bonds to sell. And the election is coming.

I anticipate an operation twist type move spun as a way to “fight inflation” which is garbage.

 

[JHZR2]

The excesses of the pandemic need to be dealt with via capital destruction. Looks like CRE will be one way (although its not enough). However CRE loans are typically long dated and interest only, so it will be a slow moving train wreck unless it triggers something else.

Seems like offices are now but apartment buildings, especially in these same cities, aren't far behind.

Residential is still booming anyplace I want to be/buy.

Can’t say SF is one of them.

 

[Warstud]

Futures Up BIGLEY this morning