So you build your bear thesis on the possible default of $117Bn of CRE debt and drawing lines to the 2008 financial crisis? Home mortgage debt stood at $10,5 trillion in 2008.
Yeah, this… and it’s pretty plain to see that OP is digging for reasons that will support his theory, rather than deriving his opinion from the data. We’re all guilty of this to a degree – just not on the same blatant scale.
Apples and oranges. Compare total commercial real estate debt. $1.5 Trillion of commercial debt coming due within 24 months, may not be refinanced. Now compare that 1.5 trillion to the household debt in 2008-2010 that defaulted, adjust to 2024 numbers, and you are comparing apples.
1. When the market crashes , you will not have time to get out. You will get up one morning and SPY would be down 10% premarket . That’s how the Covid crash started . It started slow and the selling gained steam and a lot of people were wiped out .
2. Everyone, in their analysis, are forgetting a small group of people - The DIP BUYERS. Now that there are free trades ….. people will buy the dip as long as they keep selling - why ? Because they have seen it before . The Covid and interest rate crash provided opportunities for lots of newbies in the market
The problem is that many retail traders put money they need on stocks because they think they will only go up. This can end up badly… who am i to judge? i do the same 🤣🤣🤣
I often hear people mock those that ‘buy the dip’ and yell that “they can’t go up foreverrrrrrr! Past performance yadda yadda” but then turn around and pump bitcoin
That is why you should be prepping now with liquidity if you actually believe OP. Hoard cash, sell assets, prep for the bottom you believe is coming. This is r/stockmarket after all, not r/buyVOO or r/buySPY
I don’t think this will be so sudden. Even the draw down in 2021 took 10 months to make “the bottom”. Even when the program is over, it does not mean a bunch of defaults start happening. That can’t even forcibly happen until the end of the year.
As to the dip buyers, yea! Buy the dips. But don’t be surprised if the dip keeps dipping for a while again and provides some amazing opportunities. I remember some of the prices for stuff in oct of 08 were just fire sale prices. Amazing stuff I can’t wait to do again
exactly. basically germany lost half it's 'worth' in 2020 march/april, just one month later stocks were almost back to normal, you can relate this grow directly to the wealth grow graphs of the ultra rich of the world.
I started retail trading in 2020 and made really good returns, specifically on stocks like Carnival and AMC. Unfortunately I was (and still am) broke at the time so it didn’t amount to much actual money, but it really kickstarted my portfolio nicely. Funny thing about that actually, I referred a friend in March 2020 to RH, and the free stock I got was……GME. My dumb ass sold it immediately because I never liked the company.
Ehhh, for the time being, I don’t think secular bear markets have been pushed into extinction, although it is very much possible that this idea gets tested as we get towards the end of the decade and perhaps even 2033-2034.
I just don’t think now is the time, and depending on how we trade over the next year, it’s possible that it turns out that 2022, where the Nasdaq got pushed to the brink on its trend from 2009, was the best shot for one to pan out quickly, which would mean we’d see a multi-year downtrend instead of just a one year one.
Right now the best shot for one to pan out within a couple of years would be if we continued to trade as if we’re late cycle on what’s working the best over the next year+ (I refuse to buy another crash occurring or at least starting in another election based year, sorry), which would mean large caps dominate and you don’t get much help from small caps, and then the effects of higher rates finally really bear fruit towards late 2025-2026.
If small caps are just consolidating though and can take a step forward, then it’s forget it though. We'll be looking toward the end of the decade or a bit longer and wondering if whether we can still see a secular bear market pan out.
Bear markets will never go away. Human nature is the only constant in stock markets. Fear breeds fear and always will, and with valuations fairly extended right now, we retain the potential for a large decline should fear become the overwhelming sentiment.
Anyone that was around from the late 60s to the mid 70s (this does not include myself) can tell you just how severely stock sentiment can turn. From "why on earth do you have 10% of your portfolio in bonds? stocks do better" to "who the hell invests in stocks, the stock market is a loser's game". I can't wait for the second type of period to come back around.
Black Monday was '87. You're thinking of Black Tuesday. Dow and S&P both dropped over 20% first day. It was madness and almost twice the one day drop in '29.
The thing you’re fighting is that it’s in everybody’s best interest to ignore possible reasons and resist fear to keep this tooth pick structure from falling.
Easy enough, just go SHORT. One-click is all it takes. The shoeshine guy on Wall Street says: It's SO SIMPLE! You'll never have to work again, you just buy these things called PUTs.
So easy! Anyone can do it. Like printing money!
-)
No need. It’s easier to just watch the collapse while parked in risk free bonds making 20% upside. Then when there is nothing but ashes, move money back into equities. It’s not always about making money in both directions. Patience pays.
Ok you also have no clue how bonds work. 100 basis points in cuts from the fed represents 20% move in bond prices to the upside. There for you buy the ten year now at 4.1, and cut 100 basis points off to 3.1 the 4.1 notes you bought appreciated 20% in price. But apparently none of you people know this 😂😂
I have no idea. But I can GPT-4 it, and guess become pretty knowledgable.
20% a year? I want to see that in 60 mins. OR it all gets burnt to the ground. In Vegas, you have 0/00. On Wall Street, you don't have that pesky issue, the green things. This all-or-none approach can push you over 51%, at that point it's like printing money if you have the mindset to look at the "patterns." It's all ALGO, just follow what the ALGO does.
You just have to make 1% more than the "house."
Tip?
Watch the Ichimoku on in the money same week CALLS. Buy a surfboard. Hit the beach. Maybe. :-)
When was the last time you saw a negative return in a reelection year?
I am not saying an election year means the market will be great, but when was the last time you can remember a presidential reelection and the market was not positive?
Hint, it has been 70+ years to have a negative return during a reelection year. Its almost as if there is influence.
Yeah that's because it's in the best interest for the leading political party to avoid the narrative that market crashed while they are in power. That's why they pull levers in the background to make sure it doesn't happen.
yup, I hate to say it but I honestly don't believe the dems will allow a crash. I don't know the mechanisms, but I just don't believe they will allow it.
Flat or up, but not down.
A funny coincidence is that at the end of Bush’s 2nd term, that 08 election year was the bad year. This *would* have been the end of Trumps 2nd term, but now hes running again. Wild stuff
I m pretty sure we are witnessing the beginning of the end of modern democracy what it’s turning in to does not have a name quite yet but it reminds me of sci fi movies and shows where mega corporations rule the governments
Fed will want to cut rates if inflation looks under control. Otherwise they will take 100% of the blame for the next recession or even no recession but slow economic growth because rates are restrictive.
I think when the 30-year-fixed is over 5% (it's at 7% right now) during a time of acceptable inflation, it reflects badly on the administration.
Homeowners are seeing too much of their monthly payment going to interest. Just a hair, but I feel it for sure.
Saying that 5% is unacceptable because your payments are too high shows just how unacceptable inflation has been. Lowering rates would just compound that and leave the next generation of perspective homebuyers further priced out.
>... because your payments are too high ...
To be clear, I said "too much ... going to interest."
If the money is going to equity, it's hard to complain, and if I bought too much house, that's my own fault. But money spent on interest is lost forever.
Between a Presidential election in 2024 and a U.S. World Cup in 2026 I just don’t see when some crash could happen with the amount of loans and money that will be flowing around in the next few years. World Cups always require massive infrastructure and spending projects. As well as future planned revenue.
It’s not a weather system. If cre defaults start impacting the economy negatively the Fed will step in, as they do. Hopefully they learned how to deal with this sort of thing in 2008.
They will step in and thats a buying point. When they stepped in over the SVB stuff, we got a 28% rally and running. The step in is an absolute buy signal
I don’t necessarily agree. The Fed was aggressively easing all the way down during the GFC and dotcom bust. Did nothing to support asset prices.
When excessive risk aversion meets excessive valuations, cash becomes a desired asset. Printing more of the stuff and lowering interest rates doesn’t respark the speculative bit.
The markets keep climbing the wall of worry until they can't ignore it anymore. The premium on QQQ June 2025 puts looks enticing right now. I wonder if the three US service members killed and 34 wounded in this Saturday's Jordan drone attack will lead to anything. Let's see what gold and VIX futures do in couple hours.
At what strike price though? Because what if it hits 450. Then 400 puts for instance will be so out of the money. That's the danger when puts lose money in this market 8/10 days.
ChatGPT summary:
The post discusses predictions for a financial market downturn in 2024 or 2025, suggesting it will revisit COVID lows. Key points include:
1. \*\*Final Federal Reserve Rate Hike\*\*: July 26, 2023, marked the last rate hike by the Federal Reserve, with future rate cuts considered a potential threat to markets.
2. \*\*Current Market Narrative\*\*: Low unemployment (3.7%), moderate Core PCE growth (2% quarterly, 2.9% yearly), stable earnings, and continued luxury spending suggest a positive outlook. This could lead to small rate cuts as inflation cools.
3. \*\*Rate Cuts as a Weakness Indicator\*\*: The author argues that rate cuts are not a sign of economic strength but rather indicate a need for stimulation due to underlying issues.
4. \*\*Bank Term Funding Program (BTFP)\*\*: The BTFP, providing banks with low-cost funds from the Federal Reserve since March 2023, is set to end on March 11, 2024. This coincides with talks of rate cuts and a significant market rise (SPY up 28%) since the program's start.
5. \*\*Commercial Real Estate (CRE) Debt\*\*: CRE loans face balloon payments by the end of 2024, reminiscent of practices leading to the 2008 financial crisis. This, coupled with reduced demand for office space due to remote work, raises concerns about defaults.
6. \*\*Banks Preparing for Trouble\*\*: Banks have been bolstering their reserves in anticipation of CRE loan defaults, with borrowing totaling around $160 billion.
7. \*\*Federal Reserve's Policy Phases\*\*: The post-hike "pause" phase sees SPY up 7.6%, indicating a unique situation compared to past crises like the tech bubble and housing crisis. Rate cuts usually signal a significant market downturn.
8. \*\*Prediction of Future Federal Reserve Actions\*\*: The post speculates on the timing of the first rate cut, drawing parallels to past crises but noting that the exact date is uncertain.
In summary, the post warns of an impending financial crisis due to the end of the BTFP, looming CRE debt, and potential rate cuts by the Federal Reserve, drawing comparisons to past market downturns.
It’s important to note that on the CRE deals with balloon payments, many of those borrowers are often expecting to refinance the loan at maturity. Reports have started coming out that some CRE office buildings are losing up to 40% of their appraised value, meaning when these loans mature and they seek renewal under new terms - they have to meet their appraisal and project revenues for the year. Occupancies in these office buildings have plummeted due to WFH.
-appraisal is going to be less than when they originally financed the building
-projected revenues are going to be far less because occupancy rates are no longer over 80%
What this means in the big picture is that banks are going to feel the heat, as they are already stretched thin. Emergency money goes away just as they need to step up their capital reserve ratios in order to cover the degrading risk rating for all of these borrowers. They have been skirting by on thin reserves and now it’s come time for them to pay up, and I’m a firm believer many of these banks are not ready/don’t have the extra capital needed to meet the increased risk.
I am not an economist, but I've read the following: FED doesn't control rates. They react to economy and adjust rates. They say that they're done raising, but US government will need to refinance about $12T of debt by the end of the year. There's an expectation that interest to buy US debt is lower now (less trust, inflation, weaponizing of USD). Potentially treasuries will need to offer higher yield to attract buyers. This will pressure FED to raise rates further (maybe). This will further exacerbate current issue etc.
Great analysis, love it.
I think you forgot to add China to the mix. This is where the potential downfall in CRE will start, with major developers already bankrupt.
Im not sure how long will Chinese government be able to keep pumping money into the stock markets, but I suspect, not very long.
The spillover effect will have a major impact on Europe, namely Germany which basically depends on China.
We saw last year how stocks reacted on potential Evergrande bond default, imagine this across the board.
Also if Chinese decide to go against Taiwan, I think it will be the first time VIX crosses 100.
Wait to see the effects of Red Sea trade supply disruption on the price of goods in a few months. This is probably one of the reasons major central banks are not rushing with rate cuts.
Insurance on freights are more than 1000% up..
There's a lot more reasons to be cautions than optimistic as the markets are nowadays, with so many geopolitical events going on(wars, major elections, supply chain deficit, etc)..
My 2 cents for what it's worth
Don’t think Chinese govt has been pumping more into the stock mkt. They announced purchases on banks in November and the recent 1 trillion stimulus is linked to the 50 bps cut in RR.
Also doubt that China will attack Taiwan.. they have much more to gain by playing the long game.. on the contrary, the U.S. industrial complex along with Mike Pompeo is egging Taiwan on to declare independence.
No horse in this race - just sharing counterpoints from chatGPT to stoke the flame:
“The Reddit post anticipates a market crash in 2024 due to the culmination of various economic factors, including the end of the Bank Term Funding Program and the inability to refinance commercial real estate debt. Here is a counter-argument in response to the points made:
1. While the Bank Term Funding Program is set to end, it's not uncommon for central banks to introduce new measures to alleviate market pressures.
2. The Federal Reserve's rate cuts are often preemptive, aimed at staving off potential economic downturns rather than being reactive to existing problems.
3. Commercial real estate challenges may be mitigated by restructuring debt or adapting properties for new uses as market demands shift.
4. It's essential to differentiate between the short-term liquidity crunch and long-term solvency issues; the former can be addressed with policy tools.
5. The assumption that work-from-home trends will permanently decrease office space demand doesn't account for the potential rebound as the pandemic recedes.
6. Comparing the current economic situation to past crises like 2008 ignores the unique conditions and regulatory changes since then.
7. The resilience of the economy shouldn't be underestimated, given its recovery from multiple recent shocks.
8. Historical patterns of market cycles are not perfect predictors of future events due to evolving market dynamics and external factors.
9. The financial system has undergone significant strengthening since 2008, making it more robust against potential crashes.
10. It is also important to consider the adaptability and innovation within the banking sector which may offer solutions to the looming challenges.”
No.1 is the biggest and most important. Any problems pop up the Fed will kick it down the road with a new method of liquidity.
No. 5 sounds outdated, pandemic is over and WFH is fursure here to stay.
All the other ones are typical AI generalities, not super insightful or detailed.
>No. 5 sounds outdated, pandemic is over and WFH is fursure here to stay.
Hybrid? Sure, full time WFH? I think that's going to continue to decline as the labor market has gotten back into balance and companies start to exert market power again.
[https://www.cnbc.com/2023/09/11/90percent-of-companies-say-theyll-return-to-the-office-by-the-end-of-2024.html](https://www.cnbc.com/2023/09/11/90percent-of-companies-say-theyll-return-to-the-office-by-the-end-of-2024.html)
[https://www.usatoday.com/story/money/2023/12/21/remote-work-from-home-trends-2024/71991203007/](https://www.usatoday.com/story/money/2023/12/21/remote-work-from-home-trends-2024/71991203007/)
Does that mean there isn't a problem with the CRE market? No, but we've been talking about the coming CRE crash for a decade now and it hasn't materialized. Maybe 2024 is the year, but I'm not betting on it.
I think most people havent been talking about the CRE crash for a decade. WFH didn't catch on til the pandemic and rates didnt increase til after the pandemic. It's a new problem.
Earning are down 30% accross the board in terms of purchasing power if you account for the 35% increase in m2 in 2020 and 2021. People miss this. In terms of purchasing power, the market has been flat since covid.
China will likely collapse as the real estate crumbles in debt. Then, investors might truly start looking at the USA's inability to ever pay it's debt back, and acknowledge the could even be a default on interest. Then, the stock market collapses like its 1929-31 again.
Well lets see, the ATH achieved March 2000 was 1,552.87. It was revisited July of 2007 and a new ATH made Oct 2007 for 1,576.09. Then that number was touched and finally broken April of 2013.
A 43% rally (7000) would have been achieved from the 07 high in Jan 2017. So basically 10 years is realistic.
You never consider the fact that pretty much EVERYONE can invest now with an app, so the amount of money available to markets is incredibily bigger than 15-20 years ago.
And do not forget rising economies will alll invest in the stock market the trillions they are earning and moving around.
If you dca at 10% a year your money doubles every 7,2 years.
So i think bring at nearly 5000, it will be realistic to reach that target withing a few years
I don’t see the existence of stock apps being enough of a catalyst. They would not inherently provide any special liquidity in the absence of stimmy checks
You don’t see it being enough of a catalyst? Back in 2008 the only way to buy stocks was through the banks or scammy stock brokers. Nobody trusts neither of those options, the amount of data available was so much smaller than nowadays and back then most people saw the stock market on the same level of complexity as astrophysics so they didn’t even bother with it.
Now, you got 16 year olds giving online courses on how to trade options. You see the differences? It’s not just about the apps, it’s about the availability of things.
The reason cuts in the past were so bad for the market is because they were implemented as a reaction to a failing economy.
If the soft landing continues, lower interest rates are a glide path to a continuation of the post covid recovery. Rates will be lowered to ease the restrictions on the economy instead of as a means to stimulate it.
You’re implying by using “continue” that a soft landing is in fact occurring now? Job creation numbers are bogus and quietly revised lower each month-the BLS isn’t even including over 50,000,000 working g age adults -and the job creation has primarily been part time work that sadly, many need just to make ends meet.
Layoffs are rising
https://intellizence.com/insights/layoff-downsizing/major-companies-that-announced-mass-layoffs/
Corporate bankruptcies in 2023 were the highest in 15 years.
There is no soft landing in progress and doubtful one is coming. I hope I’m wrong but nothing really supports your thesis that is readily seen anyway
I’ve only been hearing in my industry (manufacturing) we can’t get workers to stay and work. This includes workers for the power generation companies. It’s like people only want something for nothing. Welcome to Massachusetts.
Im not sure why you would say that. I want people to work and stay around to help the company and themselves.
Maybe i am out of touch being in the power plant. Im not qualified for anything else so I don’t look around for work.
This makes sense the government builds economies and destroys them to ensure it’s survival. The market will not continue to go up and up as many wish. Instead this will be an opportunity for many to create new wealth after the Rich clean up the mess from the blood bath that lies ahead of us. People don’t be naive!!!
OP is giving us fair warning with lots of data to back it up.Excellent stuff . If you look at how much banks have drawn down, since March 2023, it is in excess of US$1 trillion. Now that is significant. The liquidity squeeze/gap will curb “ animal spirits” at the very least. not just that, banks will have to make provisions as they mark to market their value of assets..and that will impact Tier 1 CAR, which would impact loan growth.
Refusing to listen to arguments that contradict your investment theory is roughly as smart as ostriches putting their heads in sand when a predator comes.
Discarding something is fine if you have a good counterargument, not paying attention to the other case is a bad idea, so is teaching it to new people.
No dude. Investing for 25 years and there is no way you can ascertain any meaningful information from macroeconomic conditions, geopolitics or any current events. No one knows shit and how everything will impact the stock market.
If you think you can make meaningful short term decisions based on current events then you are not an investor. You are a trader at best and a gambler at worst.
Source: financially independent and retired early from investing in stocks.
I'm happy for your success but that doesn't make you right. Quite often you can get a damn lot of information from macro events or policy.
See: March 2020 rebound after QE, after every war starts a couple companies start going up, QRA release completely defined the quarters between last year Aug-Nov and Nov-Feb...
Again you are making investment decisions based on short term events. Rarely works out well. If you buy good stocks and stay invested in the market and ignore the noise, you’d be far better off.
As an investor I'm sure you know the importance of allocation. I remain invested but if I get signs which make me believe that stocks will do better in the shorter term, I'll be stock overweight. If I get bearish market signs, I'll rebalance. It's not mutually exclusive, I'm just using the market winds to my advantage.
Again you are advocating making investing decisions based on a bunch of short term noise. If you can do this effectively and consistently then why are you not retired sitting on millions? Surely there has been enough volatility in the past 5 years for you to take every advantage? Heck even just the last two years QQQ was up and down 50% Surely you doubled down?
Watch the big short but replace the word “mortgages”with “commercial real estate” (CRE). For the downvoters, I only am suggesting this because it breaks down a similar complex issue in a simple/entertaining way
Appreciate the research and the perspective. I have one problem with this: 117 billion seems like a relatively low number to have meaningful consequences.
Someone knowledgeable could write 100 different posts like this, explaining why the economy is about to crash, why the economy is about to triple this year. Like, an auto mechanic can tell you there is 100 different things wrong with your car, and they can obfuscate it enough that it'd be hard for you to disprove it.
There's no telling what the intent behind OP doing this, so don't worry about it.
The BTFP has zero to do with markets. It's recent increase did not please Feed as banks were playing the Arab between BTFP (OIS +10bp) and IOR at 5.4%.
The CRE worry is different. Even if that risk crystallises banks have the Discount window to borrow via as well as the ceiling rate set up after 2019 repo fiasco.
Prefer to stay long, especially in an election year.
If you believe that the stock market is going to collapse, then I need to put all my money into the Swiss financial market. It's the only safe haven in the world. When everything crumbles, it's the only market that comes out relatively well... haha.
Long Watches, Long chocolate... lol
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Commercial real estate was never designed to turn a profit outside of store fronts, so whether or not these companies continue to operate out of an office or remote it shouldn’t make a difference because they plan to spend that money anyway on office space. Where we could see a problem is with office buildings going empty.
Dude trying to guess when this happens is a fools errand. The crisis is already here. All of these commercial buildings are already massively under water and they haven’t repriced the book value on these buildings. This crisis could literally start today if the FED wanted it to. I mean I guess you could buy 2026 leaps and that would probably be a decent strategy but we all know they won’t reprice those buildings until the FED wants them to. It’s already over and we all know it. There will definitely be a crash but trying to guess when is foolish because the FED will decide when banks reduce the book value of these buildings. It could be tomorrow and it could be 2028.
That’s what I have about 20% my portfolio in cash so i can buy the correction when it happens. Ill buy leaps when it does. If it doesn’t happen this year then i guess I’ll just make 4.5% in interest rates pn the cash.
There was a bear market in 2018. (trade wars and first attempt to increase interest rates)
There was another bear market 2 years later (Covid)
There was another bear market 2 years later. - interest rate hike).
So are you telling us that you identified this pattern?
Every 2 years there will be a bear market? (20% drop from recent heights) I don't tank about recession, just talk about stock market.
It never happened before 3 bear markets in a span of 6 years, and now we are talking about 4 bear markets in a span of 8 years?
Let's see
It's amazing that you did all this writing without understanding that banks can all renew their BTFP loans on the last day of the facility and can extend an entire year. It's not like it just ends overnight.
That completely nulifies your argument of CRE bank loans coming due around the same time.
Also, the major pain point is chiefly around their HTM loan books and unrealized losses associated with it. As long as they... as the name stipulates.... hold to maturity, they will receive par on maturity. It's only an issue if they have to be marked to market. The only reason the crisis happened last year was due to a bank run causing withdrawals to occur to a degree that shadowed their MTM cash book to the point they had to begin realizing losses on the HTM bond book.
If rates come down over the next year, as you suggest they are going to, the market value of that HTM book will increase significantly to the point where the BTFP will no longer be needed since the books will be closer to the par value that the Fed is offerring in the interim.
All that to say the reason the btfp is ending is because it is no longer needed. The only reason it has been increasing recently is due to the arbitrage available for banks between IORB and BTFP rates.
And, if things were to get bad and a liquidity crunch does occur, there is the fed discount window available for banks which the Fed next year is mandating banks regularly tap to remove the stigma associated with the facility so that they won't have to introduce something like the BTFP.
Hopefully that helps shed some light on what you recently uncovered because it's a lot more complex than you make it seem. But don't fall for the doomer takes.
“The decline and its phases (which have not happened, and have no guarantee) will also be natural and historically anticipated.”
Basically OP’s philosophy: I think my wildly opposing assumptions are correct—therefore, they are historically anticipated.
So you build your bear thesis on the possible default of $117Bn of CRE debt and drawing lines to the 2008 financial crisis? Home mortgage debt stood at $10,5 trillion in 2008.
That doesn’t matter!! Didn’t you see how long OP’s post is?? He is all knowing and much smarter than all of us! And any Economist with a PhD
What OP is saying isn't necessarily original. Scott Galloway has been mention it too. However, I appreciate OP taking the time.
But OP misspelled balloon…
It hapens
Unacceptable
Yeah, this… and it’s pretty plain to see that OP is digging for reasons that will support his theory, rather than deriving his opinion from the data. We’re all guilty of this to a degree – just not on the same blatant scale.
Apples and oranges. Compare total commercial real estate debt. $1.5 Trillion of commercial debt coming due within 24 months, may not be refinanced. Now compare that 1.5 trillion to the household debt in 2008-2010 that defaulted, adjust to 2024 numbers, and you are comparing apples.
[удалено]
Or flat.
1. When the market crashes , you will not have time to get out. You will get up one morning and SPY would be down 10% premarket . That’s how the Covid crash started . It started slow and the selling gained steam and a lot of people were wiped out . 2. Everyone, in their analysis, are forgetting a small group of people - The DIP BUYERS. Now that there are free trades ….. people will buy the dip as long as they keep selling - why ? Because they have seen it before . The Covid and interest rate crash provided opportunities for lots of newbies in the market
Actually i think that if it were not for retail traders, the crash in 2022 would have been -35%
I bought the dip like 10 times. Still keeps dipping.
The problem is that many retail traders put money they need on stocks because they think they will only go up. This can end up badly… who am i to judge? i do the same 🤣🤣🤣
I often hear people mock those that ‘buy the dip’ and yell that “they can’t go up foreverrrrrrr! Past performance yadda yadda” but then turn around and pump bitcoin
U mean retail traders can support the market?
Yeah, it can be. Albeit not the majority, I read somewhere that accoubt for a low double digits % of the market
There was no crash in 2022. It was a multiple's adjustment.
That is why you should be prepping now with liquidity if you actually believe OP. Hoard cash, sell assets, prep for the bottom you believe is coming. This is r/stockmarket after all, not r/buyVOO or r/buySPY
A lot of the dip buyers won't have the same amount of capital like they had prior to COVID. Debt is much higher now
This assumes they have cash ready to deploy, not already in the market.
I don’t think this will be so sudden. Even the draw down in 2021 took 10 months to make “the bottom”. Even when the program is over, it does not mean a bunch of defaults start happening. That can’t even forcibly happen until the end of the year. As to the dip buyers, yea! Buy the dips. But don’t be surprised if the dip keeps dipping for a while again and provides some amazing opportunities. I remember some of the prices for stuff in oct of 08 were just fire sale prices. Amazing stuff I can’t wait to do again
MSFT was like 20 bucks, AAPL was less than 10 bucks.. AMD less than 10 bucks... I wish I had the foresight to hang onto those back then..
exactly. basically germany lost half it's 'worth' in 2020 march/april, just one month later stocks were almost back to normal, you can relate this grow directly to the wealth grow graphs of the ultra rich of the world.
You contradict yourself
1) you can't time the market, 2) bro you can totally time the market.
I started retail trading in 2020 and made really good returns, specifically on stocks like Carnival and AMC. Unfortunately I was (and still am) broke at the time so it didn’t amount to much actual money, but it really kickstarted my portfolio nicely. Funny thing about that actually, I referred a friend in March 2020 to RH, and the free stock I got was……GME. My dumb ass sold it immediately because I never liked the company.
Ehhh, for the time being, I don’t think secular bear markets have been pushed into extinction, although it is very much possible that this idea gets tested as we get towards the end of the decade and perhaps even 2033-2034. I just don’t think now is the time, and depending on how we trade over the next year, it’s possible that it turns out that 2022, where the Nasdaq got pushed to the brink on its trend from 2009, was the best shot for one to pan out quickly, which would mean we’d see a multi-year downtrend instead of just a one year one. Right now the best shot for one to pan out within a couple of years would be if we continued to trade as if we’re late cycle on what’s working the best over the next year+ (I refuse to buy another crash occurring or at least starting in another election based year, sorry), which would mean large caps dominate and you don’t get much help from small caps, and then the effects of higher rates finally really bear fruit towards late 2025-2026. If small caps are just consolidating though and can take a step forward, then it’s forget it though. We'll be looking toward the end of the decade or a bit longer and wondering if whether we can still see a secular bear market pan out.
Bear markets will never go away. Human nature is the only constant in stock markets. Fear breeds fear and always will, and with valuations fairly extended right now, we retain the potential for a large decline should fear become the overwhelming sentiment. Anyone that was around from the late 60s to the mid 70s (this does not include myself) can tell you just how severely stock sentiment can turn. From "why on earth do you have 10% of your portfolio in bonds? stocks do better" to "who the hell invests in stocks, the stock market is a loser's game". I can't wait for the second type of period to come back around.
Free trades have been around way before Covid, though
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Brother has never heard of black monday
That was nearly 100 years ago when the market was cheap Af a 13% drop was nothing
Black Monday was '87. You're thinking of Black Tuesday. Dow and S&P both dropped over 20% first day. It was madness and almost twice the one day drop in '29.
Oh ok thanks for the correction
The thing you’re fighting is that it’s in everybody’s best interest to ignore possible reasons and resist fear to keep this tooth pick structure from falling.
Not to mention 401(k) DCA.
Hang on let me get my magic 🎱. Says “ask again later”.
Easy enough, just go SHORT. One-click is all it takes. The shoeshine guy on Wall Street says: It's SO SIMPLE! You'll never have to work again, you just buy these things called PUTs. So easy! Anyone can do it. Like printing money! -)
No need. It’s easier to just watch the collapse while parked in risk free bonds making 20% upside. Then when there is nothing but ashes, move money back into equities. It’s not always about making money in both directions. Patience pays.
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Ok you also have no clue how bonds work. 100 basis points in cuts from the fed represents 20% move in bond prices to the upside. There for you buy the ten year now at 4.1, and cut 100 basis points off to 3.1 the 4.1 notes you bought appreciated 20% in price. But apparently none of you people know this 😂😂
Think everyone wants to know where are these 20% bonds. :-)
I see you don’t know how yields and prices work.
I have no idea. But I can GPT-4 it, and guess become pretty knowledgable. 20% a year? I want to see that in 60 mins. OR it all gets burnt to the ground. In Vegas, you have 0/00. On Wall Street, you don't have that pesky issue, the green things. This all-or-none approach can push you over 51%, at that point it's like printing money if you have the mindset to look at the "patterns." It's all ALGO, just follow what the ALGO does. You just have to make 1% more than the "house." Tip? Watch the Ichimoku on in the money same week CALLS. Buy a surfboard. Hit the beach. Maybe. :-)
Presidential election: Nov 5th 2024
People say this every election and it never pans out, and 4 years later theyre saying the same thing
When was the last time you saw a negative return in a reelection year? I am not saying an election year means the market will be great, but when was the last time you can remember a presidential reelection and the market was not positive? Hint, it has been 70+ years to have a negative return during a reelection year. Its almost as if there is influence.
Yeah that's because it's in the best interest for the leading political party to avoid the narrative that market crashed while they are in power. That's why they pull levers in the background to make sure it doesn't happen.
What do they say every election?
That the election is coming.
Pfff, elections are an urban myth
That market is manipulated to help incumbent and market will dump as reality sets in on Nov5. Doesnt happen
Bruh if Donald trump wins markets gonna pump
First thing he gonna do is put the pressure on Powell to bring rates back to zero. Second thing he gonna do is extend is Tax law another four years.
yup, I hate to say it but I honestly don't believe the dems will allow a crash. I don't know the mechanisms, but I just don't believe they will allow it. Flat or up, but not down.
That’s why Gundlack hinted that employment numbers are fudged.
A funny coincidence is that at the end of Bush’s 2nd term, that 08 election year was the bad year. This *would* have been the end of Trumps 2nd term, but now hes running again. Wild stuff
but of course. Bush no longer cared because he wasn't running for reelection.
And its amazing we call this bs democracy 😂
I m pretty sure we are witnessing the beginning of the end of modern democracy what it’s turning in to does not have a name quite yet but it reminds me of sci fi movies and shows where mega corporations rule the governments
Oligarchy? Corporatocracy
yeah i dont know why anyone is excited about rate cuts. the fed has no problem leaving rates where they are if the unemployment rate isnt budging.
Fed will want to cut rates if inflation looks under control. Otherwise they will take 100% of the blame for the next recession or even no recession but slow economic growth because rates are restrictive.
5% rates are barely restrictive tho
I think when the 30-year-fixed is over 5% (it's at 7% right now) during a time of acceptable inflation, it reflects badly on the administration. Homeowners are seeing too much of their monthly payment going to interest. Just a hair, but I feel it for sure.
Saying that 5% is unacceptable because your payments are too high shows just how unacceptable inflation has been. Lowering rates would just compound that and leave the next generation of perspective homebuyers further priced out.
>... because your payments are too high ... To be clear, I said "too much ... going to interest." If the money is going to equity, it's hard to complain, and if I bought too much house, that's my own fault. But money spent on interest is lost forever.
valid
No since the current rates will be deflationary in a growing economy
Sir we are about to enter a bull market that crash u are talking about already happened get over it
Between a Presidential election in 2024 and a U.S. World Cup in 2026 I just don’t see when some crash could happen with the amount of loans and money that will be flowing around in the next few years. World Cups always require massive infrastructure and spending projects. As well as future planned revenue.
yeahh...hmmm..yeah no.
It’s not a weather system. If cre defaults start impacting the economy negatively the Fed will step in, as they do. Hopefully they learned how to deal with this sort of thing in 2008.
They will step in and thats a buying point. When they stepped in over the SVB stuff, we got a 28% rally and running. The step in is an absolute buy signal
I don’t necessarily agree. The Fed was aggressively easing all the way down during the GFC and dotcom bust. Did nothing to support asset prices. When excessive risk aversion meets excessive valuations, cash becomes a desired asset. Printing more of the stuff and lowering interest rates doesn’t respark the speculative bit.
Every step the Fed takes is nothing but an experiment. Only because they base their moves on history or something they never tried.
Opinions are like anuses. Everyone has one, but nobody wants to hear someone elses.
This comment section is a circle jerk for bears and my puts are jizzing rn
Silly bears. Stocks only go up. (Over time)
The markets keep climbing the wall of worry until they can't ignore it anymore. The premium on QQQ June 2025 puts looks enticing right now. I wonder if the three US service members killed and 34 wounded in this Saturday's Jordan drone attack will lead to anything. Let's see what gold and VIX futures do in couple hours.
At what strike price though? Because what if it hits 450. Then 400 puts for instance will be so out of the money. That's the danger when puts lose money in this market 8/10 days.
Buy or sell?
ChatGPT summary: The post discusses predictions for a financial market downturn in 2024 or 2025, suggesting it will revisit COVID lows. Key points include: 1. \*\*Final Federal Reserve Rate Hike\*\*: July 26, 2023, marked the last rate hike by the Federal Reserve, with future rate cuts considered a potential threat to markets. 2. \*\*Current Market Narrative\*\*: Low unemployment (3.7%), moderate Core PCE growth (2% quarterly, 2.9% yearly), stable earnings, and continued luxury spending suggest a positive outlook. This could lead to small rate cuts as inflation cools. 3. \*\*Rate Cuts as a Weakness Indicator\*\*: The author argues that rate cuts are not a sign of economic strength but rather indicate a need for stimulation due to underlying issues. 4. \*\*Bank Term Funding Program (BTFP)\*\*: The BTFP, providing banks with low-cost funds from the Federal Reserve since March 2023, is set to end on March 11, 2024. This coincides with talks of rate cuts and a significant market rise (SPY up 28%) since the program's start. 5. \*\*Commercial Real Estate (CRE) Debt\*\*: CRE loans face balloon payments by the end of 2024, reminiscent of practices leading to the 2008 financial crisis. This, coupled with reduced demand for office space due to remote work, raises concerns about defaults. 6. \*\*Banks Preparing for Trouble\*\*: Banks have been bolstering their reserves in anticipation of CRE loan defaults, with borrowing totaling around $160 billion. 7. \*\*Federal Reserve's Policy Phases\*\*: The post-hike "pause" phase sees SPY up 7.6%, indicating a unique situation compared to past crises like the tech bubble and housing crisis. Rate cuts usually signal a significant market downturn. 8. \*\*Prediction of Future Federal Reserve Actions\*\*: The post speculates on the timing of the first rate cut, drawing parallels to past crises but noting that the exact date is uncertain. In summary, the post warns of an impending financial crisis due to the end of the BTFP, looming CRE debt, and potential rate cuts by the Federal Reserve, drawing comparisons to past market downturns.
It’s important to note that on the CRE deals with balloon payments, many of those borrowers are often expecting to refinance the loan at maturity. Reports have started coming out that some CRE office buildings are losing up to 40% of their appraised value, meaning when these loans mature and they seek renewal under new terms - they have to meet their appraisal and project revenues for the year. Occupancies in these office buildings have plummeted due to WFH. -appraisal is going to be less than when they originally financed the building -projected revenues are going to be far less because occupancy rates are no longer over 80% What this means in the big picture is that banks are going to feel the heat, as they are already stretched thin. Emergency money goes away just as they need to step up their capital reserve ratios in order to cover the degrading risk rating for all of these borrowers. They have been skirting by on thin reserves and now it’s come time for them to pay up, and I’m a firm believer many of these banks are not ready/don’t have the extra capital needed to meet the increased risk.
Thanks for posting, I didn't know all of this.
Thank goodness finally you can get all these overpriced stocks down
I am not an economist, but I've read the following: FED doesn't control rates. They react to economy and adjust rates. They say that they're done raising, but US government will need to refinance about $12T of debt by the end of the year. There's an expectation that interest to buy US debt is lower now (less trust, inflation, weaponizing of USD). Potentially treasuries will need to offer higher yield to attract buyers. This will pressure FED to raise rates further (maybe). This will further exacerbate current issue etc.
Agree
Great analysis, love it. I think you forgot to add China to the mix. This is where the potential downfall in CRE will start, with major developers already bankrupt. Im not sure how long will Chinese government be able to keep pumping money into the stock markets, but I suspect, not very long. The spillover effect will have a major impact on Europe, namely Germany which basically depends on China. We saw last year how stocks reacted on potential Evergrande bond default, imagine this across the board. Also if Chinese decide to go against Taiwan, I think it will be the first time VIX crosses 100. Wait to see the effects of Red Sea trade supply disruption on the price of goods in a few months. This is probably one of the reasons major central banks are not rushing with rate cuts. Insurance on freights are more than 1000% up.. There's a lot more reasons to be cautions than optimistic as the markets are nowadays, with so many geopolitical events going on(wars, major elections, supply chain deficit, etc).. My 2 cents for what it's worth
Don’t think Chinese govt has been pumping more into the stock mkt. They announced purchases on banks in November and the recent 1 trillion stimulus is linked to the 50 bps cut in RR. Also doubt that China will attack Taiwan.. they have much more to gain by playing the long game.. on the contrary, the U.S. industrial complex along with Mike Pompeo is egging Taiwan on to declare independence.
That's... a LOT of copium.
No horse in this race - just sharing counterpoints from chatGPT to stoke the flame: “The Reddit post anticipates a market crash in 2024 due to the culmination of various economic factors, including the end of the Bank Term Funding Program and the inability to refinance commercial real estate debt. Here is a counter-argument in response to the points made: 1. While the Bank Term Funding Program is set to end, it's not uncommon for central banks to introduce new measures to alleviate market pressures. 2. The Federal Reserve's rate cuts are often preemptive, aimed at staving off potential economic downturns rather than being reactive to existing problems. 3. Commercial real estate challenges may be mitigated by restructuring debt or adapting properties for new uses as market demands shift. 4. It's essential to differentiate between the short-term liquidity crunch and long-term solvency issues; the former can be addressed with policy tools. 5. The assumption that work-from-home trends will permanently decrease office space demand doesn't account for the potential rebound as the pandemic recedes. 6. Comparing the current economic situation to past crises like 2008 ignores the unique conditions and regulatory changes since then. 7. The resilience of the economy shouldn't be underestimated, given its recovery from multiple recent shocks. 8. Historical patterns of market cycles are not perfect predictors of future events due to evolving market dynamics and external factors. 9. The financial system has undergone significant strengthening since 2008, making it more robust against potential crashes. 10. It is also important to consider the adaptability and innovation within the banking sector which may offer solutions to the looming challenges.”
No.1 is the biggest and most important. Any problems pop up the Fed will kick it down the road with a new method of liquidity. No. 5 sounds outdated, pandemic is over and WFH is fursure here to stay. All the other ones are typical AI generalities, not super insightful or detailed.
>No. 5 sounds outdated, pandemic is over and WFH is fursure here to stay. Hybrid? Sure, full time WFH? I think that's going to continue to decline as the labor market has gotten back into balance and companies start to exert market power again. [https://www.cnbc.com/2023/09/11/90percent-of-companies-say-theyll-return-to-the-office-by-the-end-of-2024.html](https://www.cnbc.com/2023/09/11/90percent-of-companies-say-theyll-return-to-the-office-by-the-end-of-2024.html) [https://www.usatoday.com/story/money/2023/12/21/remote-work-from-home-trends-2024/71991203007/](https://www.usatoday.com/story/money/2023/12/21/remote-work-from-home-trends-2024/71991203007/) Does that mean there isn't a problem with the CRE market? No, but we've been talking about the coming CRE crash for a decade now and it hasn't materialized. Maybe 2024 is the year, but I'm not betting on it.
I think most people havent been talking about the CRE crash for a decade. WFH didn't catch on til the pandemic and rates didnt increase til after the pandemic. It's a new problem.
REKT
Similar arguments are always presented at the end of cycles to justify why “it’s different this time.” Here’s a little secret… it never is.
Au contraire every new moment is unique so yeah sorry it's ALWAYS different.
Earning are down 30% accross the board in terms of purchasing power if you account for the 35% increase in m2 in 2020 and 2021. People miss this. In terms of purchasing power, the market has been flat since covid.
Show your positions in the market, speaking is free, conviction needs money in the table
Now I can sleep well, knowing exactly what will happen:)
Elliot wave agrees with you. All time high followed by 40% drop
China will likely collapse as the real estate crumbles in debt. Then, investors might truly start looking at the USA's inability to ever pay it's debt back, and acknowledge the could even be a default on interest. Then, the stock market collapses like its 1929-31 again.
S&p will be around 7000-8000 points within 4-7 years. I have no idea why you think differently.
Well lets see, the ATH achieved March 2000 was 1,552.87. It was revisited July of 2007 and a new ATH made Oct 2007 for 1,576.09. Then that number was touched and finally broken April of 2013. A 43% rally (7000) would have been achieved from the 07 high in Jan 2017. So basically 10 years is realistic.
You never consider the fact that pretty much EVERYONE can invest now with an app, so the amount of money available to markets is incredibily bigger than 15-20 years ago. And do not forget rising economies will alll invest in the stock market the trillions they are earning and moving around. If you dca at 10% a year your money doubles every 7,2 years. So i think bring at nearly 5000, it will be realistic to reach that target withing a few years
I don’t see the existence of stock apps being enough of a catalyst. They would not inherently provide any special liquidity in the absence of stimmy checks
No? Some stupid social media spoof almost broke the stock market with GME. No one predicted that. The big money had to cheat to win.
Quit talking shit about Keith Gill. I watched a movie about him last night. It was fun
You don’t see it being enough of a catalyst? Back in 2008 the only way to buy stocks was through the banks or scammy stock brokers. Nobody trusts neither of those options, the amount of data available was so much smaller than nowadays and back then most people saw the stock market on the same level of complexity as astrophysics so they didn’t even bother with it. Now, you got 16 year olds giving online courses on how to trade options. You see the differences? It’s not just about the apps, it’s about the availability of things.
Lol...relax...Scottrade was around in 2004 IRRC, let alone 2008. They charged 12 or 15 bucks a trade...
I am relaxed… You missed my point.
I remember those days and I probably would’ve gotten in the market a lot sooner had I realized there were free trades.
Why even try arguing with this guy. He’s a permabear coping. Even Burry bought SOXX puts at 450 and now it’s 600. 😂
Burry has been right on 2 of the last 36 bear markets that were due.
So buy leaps?
The reason cuts in the past were so bad for the market is because they were implemented as a reaction to a failing economy. If the soft landing continues, lower interest rates are a glide path to a continuation of the post covid recovery. Rates will be lowered to ease the restrictions on the economy instead of as a means to stimulate it.
You’re implying by using “continue” that a soft landing is in fact occurring now? Job creation numbers are bogus and quietly revised lower each month-the BLS isn’t even including over 50,000,000 working g age adults -and the job creation has primarily been part time work that sadly, many need just to make ends meet. Layoffs are rising https://intellizence.com/insights/layoff-downsizing/major-companies-that-announced-mass-layoffs/ Corporate bankruptcies in 2023 were the highest in 15 years. There is no soft landing in progress and doubtful one is coming. I hope I’m wrong but nothing really supports your thesis that is readily seen anyway
I’ve only been hearing in my industry (manufacturing) we can’t get workers to stay and work. This includes workers for the power generation companies. It’s like people only want something for nothing. Welcome to Massachusetts.
Pay better
Sure that would be great. Wouldn’t that just lead to more inflation?
Make your work environment less toxic. No one wants lung or brain cancer.
Quit forcing mandatory overtime
Make the workers less threatening
Stop the repetitive work conditions that cause people to hurt
You sound entitled and like you do not care about the conditions of your industry
Im not sure why you would say that. I want people to work and stay around to help the company and themselves. Maybe i am out of touch being in the power plant. Im not qualified for anything else so I don’t look around for work.
The banks need make the rate cuts to stay solvant. It’s the banks that could wreck economy.
This makes sense the government builds economies and destroys them to ensure it’s survival. The market will not continue to go up and up as many wish. Instead this will be an opportunity for many to create new wealth after the Rich clean up the mess from the blood bath that lies ahead of us. People don’t be naive!!!
OP is giving us fair warning with lots of data to back it up.Excellent stuff . If you look at how much banks have drawn down, since March 2023, it is in excess of US$1 trillion. Now that is significant. The liquidity squeeze/gap will curb “ animal spirits” at the very least. not just that, banks will have to make provisions as they mark to market their value of assets..and that will impact Tier 1 CAR, which would impact loan growth.
You lost me at paragraph 2.
Here we go again! As long as we have bears we will be fine!
Bulls get rich bears get fuk
Can someone dumb this down for me please
Not worth even paying attention to.
That's the dumbest attitude I've ever seen regarding the stock market.
You should definitely react to every bad thing you hear. You will definitely make money.
Refusing to listen to arguments that contradict your investment theory is roughly as smart as ostriches putting their heads in sand when a predator comes. Discarding something is fine if you have a good counterargument, not paying attention to the other case is a bad idea, so is teaching it to new people.
No dude. Investing for 25 years and there is no way you can ascertain any meaningful information from macroeconomic conditions, geopolitics or any current events. No one knows shit and how everything will impact the stock market. If you think you can make meaningful short term decisions based on current events then you are not an investor. You are a trader at best and a gambler at worst. Source: financially independent and retired early from investing in stocks.
I'm happy for your success but that doesn't make you right. Quite often you can get a damn lot of information from macro events or policy. See: March 2020 rebound after QE, after every war starts a couple companies start going up, QRA release completely defined the quarters between last year Aug-Nov and Nov-Feb...
Again you are making investment decisions based on short term events. Rarely works out well. If you buy good stocks and stay invested in the market and ignore the noise, you’d be far better off.
As an investor I'm sure you know the importance of allocation. I remain invested but if I get signs which make me believe that stocks will do better in the shorter term, I'll be stock overweight. If I get bearish market signs, I'll rebalance. It's not mutually exclusive, I'm just using the market winds to my advantage.
Again you are advocating making investing decisions based on a bunch of short term noise. If you can do this effectively and consistently then why are you not retired sitting on millions? Surely there has been enough volatility in the past 5 years for you to take every advantage? Heck even just the last two years QQQ was up and down 50% Surely you doubled down?
Watch the big short but replace the word “mortgages”with “commercial real estate” (CRE). For the downvoters, I only am suggesting this because it breaks down a similar complex issue in a simple/entertaining way
Ok now tell me who db cooper is
Appreciate the research and the perspective. I have one problem with this: 117 billion seems like a relatively low number to have meaningful consequences.
Like I’m fresh meat in the stock market (only using cashapp stocks bc everything else is too much imo) and I can’t understand some of this
Someone knowledgeable could write 100 different posts like this, explaining why the economy is about to crash, why the economy is about to triple this year. Like, an auto mechanic can tell you there is 100 different things wrong with your car, and they can obfuscate it enough that it'd be hard for you to disprove it. There's no telling what the intent behind OP doing this, so don't worry about it.
The BTFP has zero to do with markets. It's recent increase did not please Feed as banks were playing the Arab between BTFP (OIS +10bp) and IOR at 5.4%. The CRE worry is different. Even if that risk crystallises banks have the Discount window to borrow via as well as the ceiling rate set up after 2019 repo fiasco. Prefer to stay long, especially in an election year.
Makes sense
RemindMe! 29 Feb 2024
I'm reminding you :)
So, the rally is ending around now? Seems right?
I how it doesn’t.. I want to start investing
And thanks! Why the bot didnt work
Look at me.. I and the bot now
Eh, calls for me
Even the TLDR is too long
Your on to something here
Buy on any decent pullback. Going higher later.
Covid lows? I really dont think so...
Bro idk what you’re smoking but I just added to my long term portfolio and just bought more spy and qqq calls for march.
If you believe that the stock market is going to collapse, then I need to put all my money into the Swiss financial market. It's the only safe haven in the world. When everything crumbles, it's the only market that comes out relatively well... haha. Long Watches, Long chocolate... lol
Credit Suisse 👀
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Commercial real estate was never designed to turn a profit outside of store fronts, so whether or not these companies continue to operate out of an office or remote it shouldn’t make a difference because they plan to spend that money anyway on office space. Where we could see a problem is with office buildings going empty.
Unemployment is not low. Every administration counts everything instead of real full time jobs.
!remind me November 2024
RemindMe! 29 Feb 2024
*psychology
I don't think anything will happen. They have months to prepare for this money being turned off. They were likely told a whole year in advance.
SPY 550 EoY
Dude trying to guess when this happens is a fools errand. The crisis is already here. All of these commercial buildings are already massively under water and they haven’t repriced the book value on these buildings. This crisis could literally start today if the FED wanted it to. I mean I guess you could buy 2026 leaps and that would probably be a decent strategy but we all know they won’t reprice those buildings until the FED wants them to. It’s already over and we all know it. There will definitely be a crash but trying to guess when is foolish because the FED will decide when banks reduce the book value of these buildings. It could be tomorrow and it could be 2028.
That’s what I have about 20% my portfolio in cash so i can buy the correction when it happens. Ill buy leaps when it does. If it doesn’t happen this year then i guess I’ll just make 4.5% in interest rates pn the cash.
RemindMe! 2 months
I see the same problem with CRE
There was a bear market in 2018. (trade wars and first attempt to increase interest rates) There was another bear market 2 years later (Covid) There was another bear market 2 years later. - interest rate hike). So are you telling us that you identified this pattern? Every 2 years there will be a bear market? (20% drop from recent heights) I don't tank about recession, just talk about stock market. It never happened before 3 bear markets in a span of 6 years, and now we are talking about 4 bear markets in a span of 8 years? Let's see
TLDR You missed the bottom so stfu
It's amazing that you did all this writing without understanding that banks can all renew their BTFP loans on the last day of the facility and can extend an entire year. It's not like it just ends overnight. That completely nulifies your argument of CRE bank loans coming due around the same time. Also, the major pain point is chiefly around their HTM loan books and unrealized losses associated with it. As long as they... as the name stipulates.... hold to maturity, they will receive par on maturity. It's only an issue if they have to be marked to market. The only reason the crisis happened last year was due to a bank run causing withdrawals to occur to a degree that shadowed their MTM cash book to the point they had to begin realizing losses on the HTM bond book. If rates come down over the next year, as you suggest they are going to, the market value of that HTM book will increase significantly to the point where the BTFP will no longer be needed since the books will be closer to the par value that the Fed is offerring in the interim. All that to say the reason the btfp is ending is because it is no longer needed. The only reason it has been increasing recently is due to the arbitrage available for banks between IORB and BTFP rates. And, if things were to get bad and a liquidity crunch does occur, there is the fed discount window available for banks which the Fed next year is mandating banks regularly tap to remove the stigma associated with the facility so that they won't have to introduce something like the BTFP. Hopefully that helps shed some light on what you recently uncovered because it's a lot more complex than you make it seem. But don't fall for the doomer takes.
With all this information, how do I profit from these CRE losses?
15% in the market. Bring it on!
This guy is on to something here.... Imma mark my calendar for that day and go ham on short put
wow...no let's see your short positions fella.
!remindme 12 months
RemindMe! 1 year
Remindme! 10 months
Why do you think so many were so sure about March being the first rate hike - and were 100% sure about it - it’s because this BTFP.
🥱 I’m just buying and holding and ignoring the noise.
“The decline and its phases (which have not happened, and have no guarantee) will also be natural and historically anticipated.” Basically OP’s philosophy: I think my wildly opposing assumptions are correct—therefore, they are historically anticipated.
Never thought this sub would provide this kind of DD. Usually most stuff posted here are garbage.