muscleman
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Posts posted by muscleman
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On 5/12/2022 at 10:29 AM, Xerxes said:
i had no idea there was QT in 2008. Did you mean 2018 ?
It was done secretly without announcements, from early to mid 2008, just when the market needs liquidity the most, which makes total sense LOL.
https://fred.stlouisfed.org/series/TREAST
This time around, the scale they plan to do is FAR bigger than in 2008.
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I am seeing signs that Bonds are bottoming here, though I am not fully convinced yet.
Historically when QE stops, yields go down and stocks go down. I am not sure this time though. 90 bn per month QT is the largest scale QT ever. Last time they did this was in 2008 from Jan to June. 300 Bn QT from 2008 Jan to June was sufficient to crash the market.
Right now we are just seeing the tip of the iceberg because QT hasn't even started at the warm up level of 47 bn per month.
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Everyone knows the rate hike will be 0.5 instead of 0.75%, which is nothing interesting. I was looking for whether he is adjusting the amount of QT, and it wasn't clear to me. I know previously he said the fed would do 90 bn per month QT.
Does the following bullets say that the FED intends to do 30+17.5 bn QT per month?
https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504a1.htm
- Roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in the calendar month of June that exceeds a monthly cap of $30 billion. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
- Reinvest into agency mortgage-backed securities (MBS) the amount of principal payments from the Federal Reserve's holdings of agency debt and agency MBS received in the calendar month of June that exceeds a monthly cap of $17.5 billion.
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1 hour ago, Gregmal said:
Obviously. He doesnt want to deal with unstable dictators. Thats what the media told me.
Just took a slight moment to do a narrative shift on Iran!
The media has become a propoganda machine for Brandon. Whatever he did has to be justified.
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6 hours ago, Gregmal said:
Lol sounds about right. Xi playing chess while Brandon begs. Yup.
And when Brendon finally decides to ban Russia oil imports into the US, he turns to Iran to buy oil..... What a brilliant leader.
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16 hours ago, Spekulatius said:
China will try to benefit from this, buy some cheap oil/LNG from the Russian etc. but I think they will stay as far away from trouble as they can. This is not their fight and when have you ever seen them helping another country when they had no direct interest or benefit?
They are also seeing the response from the west and draw their own conclusions. Besides this, every Chinese company that does business with Russia has to weigh the cost benefit of doing business there or doing business with the west. That will be looked at case by case and I think it is possible that companies like state owned business do some bartering with Russians, because they have got nothing to lose. Most others will be quite careful, they have seen what happened to Huawei.
This is not correct. China is OVERPAYING Russia for the oil, wheat etc, according to a few recent announcements. The goal seems to explicitly put oil onto the fire. I think they believe this puts China in a superior position when the US sanction is not helpful without China's collaboration. The strategy is definitely working, and Biden is reportedly begging president Xi to help. I think China wants to use this strategy to get some good concession from the US.
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Some anecdotal evidence, I think the company earnings are at the peak for the next two years. For those value fishers, I think you will step into a value trap when you look at last year's earning.
I recently changed job, and got a much higher total compensation. I see lots and lots of coworkers preparing to change jobs to get bigger pay. Inflation is pressing them to do so too. Every week, there are key employees leaving in various teams. Companies are forced to pay much more to get new employees to replace the ones leaving.
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19 hours ago, Xerxes said:
I personally felt a great panic in the bottom of March 2020. Perhaps compounded by the unknown nature of the virus or near decapitation of my industry.
Haven’t felt anything like it since.
but i imagine if I was in Ukraine in 2022 and was an investor in the local stock exchange I would feel that 2020 like panic.
being an ocean apart helps.
Folks here are buying back Sberbank. I reckon that folks here are having an “easier time” to make a rational case to buy it (even with its foreign holding risk) than a local Russian buying it off the Moscow exchange (without the foreign holding risk)
buying a bank is extremely tricky, not to mention a bank in Russia, where equity financing is viewed as free capital.
March 2020 is quite different from now. In March 2020 we have Fed lowering rates and doing QE on a historical scale. Right now we have FED wrapping up QE, inflation, and raising rates. I think the 12 year bull market has ended in November 2021. We are in a period when equity returns will be very low for multiple years.
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7 hours ago, NewbieD said:
To me it seems likely that China will attack Taiwan in the next couple of years.
What would be some ways to implement a trade on this? Unfortunately my broker has nothing on e.g. TSMC or any of their bigger stocks.
Are there any US companies that would be badly hurt if this happens?
I don't think so. Russia's attack on Ukrain is like another WWII level of war, nothing close to the gulf war. Chinese army is not as good as Russia so it will be another WWII level. This kind of level is not going to hurt Taiwan.
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On 2/22/2022 at 12:11 PM, Gregmal said:
Haha yea I saw the notification on my phone that you quoted me and the question was purely market related so I didn’t notice the thread. But anyway. Answer is the same. If you pay attention to individual stocks it was an obvious top. Scams, fads, spac, COVID beneficiaries, ARKs, meme stock, basically all the darling stuff. On top of all the people who got crushed shorting or who wanted to short but were too chicken shit scared harping on about “you can’t short this market”…That’s where it peaked. Most of those stocks probably never seeing those levels again. I ve never really used or followed the indexes as any sort of reliable indicator of anything. Who cares where they trade? Especially now where they’re all the same shit. If you’re waiting for them to go down some magic % as an indicator to buy…..individual stocks! That’s a poor indicator.
I do care about the index because the contrast of still high index vs tanking individual stocks along is a pretty solid topping condition. Just like what happened in 2000.
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On 2/22/2022 at 3:41 AM, gary17 said:
It's difficult to be smart during this time i think. my thinking is during periods of inflation, we want to own assets but stock market would under perform, which suggests perhaps holding cash is better-- which is counter to what one should do in an inflationary period.
I disagree that holding cash is better right now. Holding cash is only better when the fed reacts aggressively. Right now they are just chickens. They are no Paul Volckers who are willing to jack up rates to 20% to engineer a recession to cool down inflation. Therefore the only thing that would happen is that another bubble is quickly brewing while the stock bubble is bursting. There is too much cash around earning 0 interest and the cash holders are not going to tolerate this for too long.
If I had to guess, I think commodities and housing is where the hot money will be going.
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3 hours ago, gary17 said:
it's very difficult to look at macros and i've done well in the past ignoring-
but this time it does feel like all the headwinds are here, inflation / fed raising rates / conflict with Russia, etc. China property market is in the back drop - could be a perfect storm for stock to do poorly for a while. my 2 cents.
inflation / fed raising rates have been pretty obvious since 6 months ago. It takes a while to build the top before the quick descent starts. We are in April 2000. Still two more years of bearish market
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10 hours ago, boilermaker75 said:
"Buy when there's blood in the streets, even if the blood is your own," Baron Rothschild.
I do think timing matters. "Buy when there is blood" is still far from now. This is more like April 2000. 2 years from the bottom.
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1 hour ago, Gregmal said:
Inflation is only a problem if you don’t have assets. Keep it comin, I say.
Hard assets + good debt is the best inflation protection.
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53 minutes ago, Dinar said:
What do you have to lose? Evaluate the pros and cons. The only downside that I can see is as follows: to lend securities, your securities must be in a margin account. Thus, they are commingled with the other securities including the firm's securities. If Schwab goes bankrupt, then you may not get all of your money back if you exceed SIPC + insurance limits.
I think there is a centralized clearing system that also backs lending out shares so if a broker fails, that clearing system will jointly pay up for it.
Even if you don't lend out your shares, if Schwab goes chp11, you still may not get all your money back if you exceed SIPC+insurance limits.
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22 hours ago, SharperDingaan said:
Most payments are going to be done with CBDC, not BTC. Minimal value to the BTC rails.
Difficult to recognize if you live in NA, but very obvious if you live in a China, or Asia. Digital Currency Electronic Payment (Digital Yuan) has trialed in major centers for quite some time, and is scheduled for rollout at the Beijing Olympics. Question is why is it that a China can do this, yet the US cannot?
This is retail CBDC. Wholesale CBDC replaces payment rails, and when on steroids - it replaces reserve currency.
Change is here, and the writing is on the wall for both sh1te coin and stable coin being used for payment.
SD
There is a currency called USDT, issued by a startup called Circle. It is essentially the digital dollar.
They are going IPO in Q1 this year. You may want to follow that.
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6 hours ago, bluedevil said:
I was thinking today about Prem Watsa's comment on the 3Q 2020 earnings call.
Since then, Root insurance is down 90%, while Fairfax has almost doubled.
Zoom has lost 62%, and Exxon has doubled.
I hope this continues, versus the "confidence termites" taking out every one!
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Let me just tell you, I've been in the business for 45 years. And I have rarely seen a time period where there's such a divergence from growth-oriented stocks like technology and value-oriented stocks.
So, I gave you a few examples in our own portfolio. But let me just give you one that I just came across today. I just looked it up. I looked at it again. Zoom, which we all use Zoom Technology, Zoom video. It's got a market cap of $139 billion.
At the end of July, for the first six months, it had a revenue base of approximately $1 billion and a net profit of $200 million. $139 billion that by the way, is about the same size as Exxon. So, we have this situation him where if you're growth oriented and it's growing significantly. And that you have market capitalizations that we haven't seen.
And it can only be justified for a short period of time in the stock market. In the insurance business, and I don't follow this too much. And just know that insurance was a few days ago. Root went public, company called Root $7 billion.
It's got $500 million of the premium. And it's $7 billion market cap is almost as big as Fairfax, which has $20 billion of approximately $20 billion of premium. Like exceptional divergence. And I've seen this over long periods of time. And it reminds me really of the late 60s and the early 70s when you had the Nifty 50.
This is a repeat of the 2000 dot com bubble top. First we get a rotation of tech stocks down value stocks up. Then all stocks go down together. The bottom will be in 2 years later.
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Didn't Bruce Berkowitz say, the fed is an excellent hedge fund?
I would be curious on inflation adjusted numbers. For nominal values, this chart is not nearly as impressive as Venezuela's stock market.
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3 minutes ago, KJP said:
That would be quite a run. What is your view on the trajectory of (i) rent/cap rates on these assets, (ii) real estate financing rates over the same three-year time period, and (iii) wages?
I assume your view is that rates stay where they are and cap rates continue to compress. If they did not, would there be sufficient wage growth to pay for the implied rise in rents?
Looking at historical caps from 2009-now, cap rates have been steadily decreasing. In the Seattle area, 4-4.5% cap is the new norm. It makes no sense to me because banks are lending at 4%, so there is really no room for cash flow. But yikes.... Those big Canadian pension funds are coming here because cap rates are 2% in Toronto, and in their eyes, it is so freaking cheap here.
Regarding mortgage rates.. If you check history, every time QE stopped, rates DECLINED. This is counter intuitive but every time QE ends, the stock market crashes, and traders fly to safety and bought bonds. So my view is not rates staying where they are, but rates stay or go lower.
Right now my base case is the repeat of the 1970s. Check rates and housing prices going from 1976-1980. Rate went from 6% to 13% while housing price doubled. I think that will repeat this time. My bull case is declining rate and even bigger price hikes.
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1 hour ago, RiskAdjReturn said:
when you analyze the real estate investments in terms of "down payments" (ie the equity "check"), is the financing non-recourse or recourse? on recourse financing, such as one's personal resi, really best to think of in terms of total value (not the home equity). if you are making bets with non-recourse financing, that's fantastic and kudos to you
non-recourse.
A broker just told me that a very large Canadian pension fund is aggressively buying all kinds of real estate in the US that they can touch. He just sold them a piece of 4 acre land for 1.7M and they plan to build a self storage on it.
I think after all the central banks printed like hell in the last 18 months, and with interest rate still insanely low, we will see a massive price hike in real assets. The stock market will repeat the 2000 top and when it crashes, there will be even more money competing for a return in the real assets.
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Up about 18% in the stocks account. Up about 60% regarding my real estate down payments. I've been aggressively moving money out of stock account to buy real estate since Biden got elected as I believe we are getting a repeat of the 1970s when the stock market would go flat and real estate would go through the roof, so I wanted to go all in on real estate but did not find that many bargains.
I don't have any stocks right now and I maintain the view of the repeat of a dot com bubble top. When it crashes, I think even more money will flow to RE.
Moving forward I expect housing market in the US to go up by 20% a year for the next 3 years. If this happens, my real estate down payments would go up by 80% a year for the next 3 years while collecting a small amount of cash flow.
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With this administration throwing trillions around every year, cheap 30 yr fixed non-recourse mortgage with just 25% down, there is no doubt that the best investment idea for 2022-2024 at least is to buy rental houses. I don't think 99.9% stock pickers could beat an average real estate investor in 2022-2024.
You need to understand your submarket though.
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On 12/24/2021 at 2:06 PM, thepupil said:
You’ll have to get a quote from a mtg banker. I suspect smaller loans would be 4ish% and big ones below 4%
Got it. Thank you! I guess that's probably the case here. I am not a big player.
What mtg banker do you recommend?
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20 hours ago, thepupil said:
Ginnie Mae we’ll do a 40 yr amortization construction loan that converts to permanent, tough to get, but I used to fund them (as well as 80-90%LTV 30-35 yr permanent loans on big buildings… like $50mm loans)…also do senior housing and nursing homes homeslook up 223f and 223a7 221d4 loans ginnie Mae hud
https://www.mandtrealtycapital.com/FHA/HUD_Multifamily/fha_multifamily.html
I talked to a CBRE lender who does Fannie and Freddie commercial and he said they do 30 yr fixed but the rate is like 4.5%. The 10 year fixed loan, 30 yr amortization loan has the rate of 3.75. It must be paid back or refinanced after 10 years.
Are you saying that Ginnie Mae can do 40 yr fixed for 3.5%?
Have We Hit The Top?
in General Discussion
Posted
One of my neighbors accepted an offer to be a staff engineer in Coinbase. The offer was 200k base salary+450k stocks per year.
Two months later the Coinbase stock went from 190 to 58 so his expected pay check shrunk a lot. The stocks will be given to him at 12 months on the job. By that time, I think the stock will likely be 20 a share, so his big pay bump will likely go from expected 650k a year to 240k.