opihiman2

Well, we finally got some direction from opec+, that's a plus. However: 1) Will they actually cut? That's the problem with these cartels. No one trusts each other to cut. 2) Will it matter? No. They could shut down entire production and the demand destruction from Covid is still something like 85% of the market. 3) Oil prices are just bouncing. I think we see a retest of the lows as economic #'s are coming in. Finally, if there's anything that should be learned from all of this is that there is a TON of oil out there. In retrospect, peak oil was the dumbest idea floated. There is so much oil, and with new extraction technologies, I think we will see enough oil to last centuries at this point. Especially with the start to electrify autos. Deep Basin Capital has said that there will be a large cap on oil prices going forward. I think so too. It will be a multi decade bear market in oil prices where prices bounce around a range. That is of course we have something insanely ridiculous like a oil tariff wall around North America.

The US, Canada, and Mexico make up roughly 24% of global oil consumption. The EU is another 15%. Net the two regions together, and they are largely self-sufficient in the supply of oil/gas. Most folks expect the emergence of a tariff wall around these regions within the next few months. Most likely a NA tariff first at around USD 62 WTI. EU to join later at a pegged Brent-WTI spread. We end up with a cartel of supply (Opec+), plus a cartel of demand (The West). Game changer. We live in interesting times. SD This is about the dumbest thing I've ever heard, and it even pisses me off in many ways. I don't think there's going to be a tariff on oil, but who knows. Trump has done so much asinine shit it wouldn't surprise me. What a way to tax Americans even more. Fucking retarded.

Really? What brewery? I love craft beer.

I'm not sure about China, but I wonder how this will affect the Canadian housing bubble. China has already had strict capital controls since a year or so ago. If that was partly fueling the Vancouver / Toronto housing market, that's definitely gonna be gone now. As an aside, I just thought of something that could be the impetus for these tight lending standards by private investors. It's almost comical when you think about the side effects of some of these policies coming down from D.C. If you allow forbearance on mortgages for up to a year, why the hell would you want to lend money out for mortgages then as an investor? You don't even have to prove hardship from Covid 19 to stop mortgage payments. If I were investing in mortgage related securities, I would definitely not loan money to high risk groups. And, if you believe prices are coming down, I would also be wary of lower risk groups. People who were upside down their homes in post GFC were just letting the banks foreclose on the house and claiming bankruptcy on it. Finally, I'm seeing house price reductions start to ramp up. Just saw another one relist 5% down. I followed a couple listings price history, and incidentally, these houses sold at a peak during 2007. Was resold for a huge loss in 2012. Now, they're being re-listed higher than the peak in 2007. Haha, wow. Can't wait to see how low these prices get in a year or two. We'll see.

I believe this: https://www.rigzone.com/news/april_to_be_one_of_toughest_months_in_oil_history-01-apr-2020-161597-article/?utm_source=SOCIAL&utm_medium=REDDIT&utm_campaign=ANDREAS Even if Russia and SA cut production massively, oil is going to be oversupplied by the coronavirus. Estimates are something like by 85% due to demand drop. Also, we're seeing the beginnings of the bankruptcies: https://www.marketwatch.com/story/whiting-petroleum-files-for-bankruptcy-has-enough-liquidity-to-keep-operating-its-business-2020-04-01 Physical crude is already below $10. It's just a matter of time before WTI / Brent prices reflect reality. Damn, never thought I would ever see single digit crude again in my lifetime. Saw it during the Gulf War, and now this. Holy shit. Life is nuts.

Oh, I'm not saying that the banks shouldn't offer flexibility, particularly for landlords and SFH owners who have a decent chunk of equity in their properties -- defer the payments and term them out, and everything will be happy on the other side. That's in the bank's interest and it's in the property owners' interest. My question is what is the bank planning to tell shareholders? If you have a commercial client who doesn't make a payment without first discussing it, what is a bank supposed to do? You throw him on the arrears list! And then what is the bank supposed to do? You are supposed to increase the provision for that particular loan. And if you get a client who can't make a payment, but at least phones you up to ask for a deferment, what are you supposed to do? Well, the bank can definitely make the deferment and term them out, but then what is it supposed to do? If there are enough cases like that, the bank is supposed to increase its provision for that portfolio of debt because it knows full well that a client requesting a deferment is indicative of a higher risk of ultimately defaulting. So, are you comfortable if a bank extends an automatic 3 month deferment to all of its commercial clients and then uses that as a reason to not take a large provision increase next quarter? It's just a little white-lie to shareholders if it's ultimately in their interest right? SJ What banks tell their shareholders is a whole different topic. That's why I decided not to own any banks after the GFC. I worked at one during 08/09 and no one knows what the heck is in the "black box". It truly is a black box back then. I generally don't like owning stuff where you have to constantly decide "is it time for me to get out? because if there's a recession, I'll get slammed." This pretty much applies to all cyclicals, banks, auto, etc. I own some RE that are cyclical. But that's my area of expertise. Very much true. Some friends in the industry said they are not allowed to invest in banks. I asked why? They said it's the CIO's preference. Banks are a black box. I don't know why people even on here are always loving BAC and WFC. Especially now that rates are 0% again, margins are going to get compressed.

Central Coast CA.

It's happening. I'm seeing a bunch of homes on Redfin fall out of escrow / contingency and back on the market. Also 2% reductions in price are starting to happen.

Yes, the SALT deduction changes definitely impacts RE values in high tax states - NY, NJ, CT and MA. NY probably the worst. LOL. That's likely a reason a friend lost a bid on a house against 5 cash offers two weeks ago. Not. My cousin is not backing away from 900k house in SF Bay Area suburbs. It will be her primary residence. She is not worry about a downturn and said she will buy more as investments if she see "deals." RE investors better have DEEP pocket and good relationships with their banks. I've been hearing from people about investors and flippers about to get caught with their shorts down in a big way soon.

Figured this might be good for a new topic, but it relates to the U.S. housing thread. IMF just confirmed global recession. So, the data I've seen usually shows that if the U.S. is in a recession and the globe is ok, the recession is typically short and shallow. However, if the globe is also in a recession, then typically the recession is going to be LONG and DEEP. I feel like 3rd quarter recovery estimates are optimistic at this point. If we see a prolonged recession, housing is going to take a deep dive by end of the year. By next year, I wouldn't be surprised to see housing go down by up to 30% given housing prices are about 30% above their inflation adjusted growth rates in the U.S. It's pretty much back to 06/07 levels.

Yep, also Zillow those mother fuckers are done flipping houses. I've heard many house flippers were back into the market, and they are now getting caught swimming naked.

Just heard through the grapevine from some people in the industry that lending standards are getting SUPER tight. The jumbo loan market is going bye bye. Warehouse banks will not be doing those. FHA loans are going bye bye too. Warehouse banks are pulling out of this market, and I heard now most retail banks are also pulling out of FHA's. Many tighter restrictions on reserves -- might need up to 6 months of reserves on gifted down pays, tighter restrictions for self employment, really tight restrictions on retirement accounts. DTI is getting tighter on FHA's, and if you can even get a jumbo, getting tighter on that too. FICO score minimums are going up too. There's a ton of new stuff coming down from private investors, but it should be coming out soon. Basically, no one has learned a damn thing since 2008. And the Fed blew up a HUGE equity bubble (with all the corporate debt funding buy backs) AND housing bubble again. I did not know this, but I've heard from a lot of people in RE that you had people making 40k/year with multiple leases on cars outbidding house prices by 20% or more. I've even heard from closing agents that they've had people take out three loans just to make it to the closing costs. It's insane. But, it explains the insane housing prices I'm seeing again in my neck of the woods. Median homes are now priced anywhere from 10 to 15x median local household incomes. It's back to 2008, I think. Fun fun times. Can't wait to see the carnage.

Also, Canadian crude is now cheaper than a fucking pint of beer. Why the fuck would you go long on Canadian oil? I wouldn't start making bets on energy / oil until we see some kind of direction from OPEC+. Anything else is just pure gambling at this point. I would advise any newbies on here to read the insanely STUPID Sandridge Energy and CHK threads on this forum. You pretty much could have bypassed the idiocy with one simple question: If these companies can't make money near $100 oil, how the hell are they going to make money at $50 and less? It was a stupidly long discussion and a big waste of time. Even Goldman was calling for $200 oil back then. Fucking retarded.

I would avoid it. Anything in hydrocarbon exploration and drilling is going to get fucked.

I haven't heard about Kupperman in a LONG time. I thought Praetorian Capital was doing pretty bad with that whole weird real estate thesis in Mongolia. Like, what the hell were they thinking? But, this sounds like a pretty good idea: https://moiglobal.com/crisis20-harris-kupperman/?utm_source=rss&utm_medium=rss&utm_campaign=crisis20-harris-kupperman I haven't looked at bulk shippers since the BDI blew up many years ago and people lost their shirts on companies like DRYS. But, thoughts on this? VLCC companies might be getting some huge tailwinds soon.

Worst flu season in 4 decades was 80k deaths. That's with everyone behaving normally. This is going to get to 80k deaths with 75% of the country hiding inside and wearing face masks to the grocery store. BTW, if the Stanford guy is Ioannadis then the article you read was misleading. It's also dangerous, because .. yeah .. you'd think someone with 5 different Stanford degrees would observe basic things like: If the hospitals are full to the brim the case fatality rate goes up! Time is of the essence with something like this and you need public health experts to be giving advice that's ... better. Yeah, you right. Man, i just spent the last hour reading the New York Times, and I'm back to thinking this is going to be the Great Depression 2.

I really can't make up my mind whether this pandemic is just an overblown viral infection like a bad seasonal flu, or way worse. I've been reading so much conflicting opinions from various experts like Nobel laureates, and doctors at Stanford saying this is just super overblown. Regardless, it has caused a huge supply / demand shock to the economy. Like, way worse than anything we've ever seen. And, I wonder how it bounces back. Like, if everyone decides alright, this is stupid, let's open up the economy again. How long do you guys think we go back to normal? I'm waffling on my opinion like waffle house waffles on their waffles.

Well also because it's much more deadly than the regular flu. I just saw the world death rate on this, and it's incredible at around 4.5%.

https://thehill.com/blogs/blog-briefing-room/news/489379-waffle-house-shutters-365-locations FEMA uses the so-called Waffle House Index to gauge the severity of a natural disaster. This is a first for 365 locations to close down.

I vacillate back and forth a lot on how long this will truly be a problem. But, I just read this the other day: https://www.marketwatch.com/story/nobel-prize-winner-shares-some-good-news-about-the-coronavirus-pandemic-2020-03-23 I sometimes wonder if this will all be over by the summer.

Holy shit, and to add to all of this, Roubini was right about the political parties bickering and passing stimulus much later: https://www.cnbc.com/2020/03/22/coronavirus-stimulus-congress-struggles-to-reach-a-deal.html This whole week is going to be a blood bath!

It all started with Alan Greenspan, the asshole. He pretty much set the tone for Federal Reserve to backstop the market. Now they've been blowing bubbles and busts for the past 30+ years, the assholes. I used to think people who were saying End the Fed were nuts. But, now, I think when they start talking about buying assets like equities and all sort of other shit, thereby eliminating price discovery, I actually don't think it's a bad idea. God damn Bernanke couldn't even see a housing bubble in 2006. If you asked any Joe Schmo on the side of the street if they thought housing was over valued, the resounding answer was yes. These buttholes live in ivory towers. Greenspan started all this mess. Bernanke put the final nail in the coffin with his stupid doctrine. We're gonna need the Great Depression 2 to finally really stir up the populism and maybe get some head on spikes.

Damn, I think I might have been too optimistic on oil, and I'm now backing out of going long oil under $20. This damn thing is heading under $10.

https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q If this pans out, this will be worse than the Great Depression. I'm calling it now, equities are going to tank past 60%. We're looking at Great Depression levels of fuckery. And this all started in 2008. Those assholes should have fucked the economy back then. But we all know they kicked the can way down the road, and the blowup will be 10x more severe. It's not even the corona virus. It's a financial crisis due to the greatest asset bubbles of ALL time: equities, housing, corporate debt, risk premium (or lack there of). It's time to pay the pied piper. And it's a big gay bear ready to fuck the bull in the ass.

For sure. Again, even at double digit interest rates, a Treasury bet was NOT a no brainer thing like I constantly hear on these inane investing forums. You have to remember that inflationary rates were even HIGHER than Treasury yields. No one back then could have predicted inflation rates to be where they are today. But, from here on out, I use Treasuries as a big hedge. I side stepped the financial crisis by going into cash in 2007. But, I kick myself in the ass by not learning about the Treasury trade. I would have been up 30+% by going to Treasuries vs money markets.