— Win Smart, CFA (@WinfieldSmart) August 18, 2023
Evergrande, one of China’s real estate giants, just filed Chapter 15 bankruptcy.
Meanwhile, China’s HY real estate index is down a massive 82% in just over 2 years.
This puts the index back down to 2008-levels.
All while China just “unexpectedly” cut interest rates.
Is China… pic.twitter.com/p3yuIqPmxL
— The Kobeissi Letter (@KobeissiLetter) August 18, 2023
It's lehman moment time again pic.twitter.com/H9ExClYj8H
— zerohedge (@zerohedge) August 18, 2023
Despite China’s economic troubles, Cramer says its market won’t collapse
In 2009 China sparked global reflation.
In 2023 China is about to spark global deflation… unless it goes BRRRR pic.twitter.com/QqS5VBf0HB— zerohedge (@zerohedge) August 18, 2023
Biden says China is a "ticking time bomb" a few days ago.
Congressional members are buying inverse ETFs betting against the stock market.
Someone knows something.
A credit event is coming.
— Michael A. Gayed, CFA (@leadlagreport) August 17, 2023
Real Estate and Stock Prices Are at Risk of Crashing as Deflation Could Soon Hit the US
Wermuth Asset Management warns of an impending risk of deflation in the US due to declining stock and real estate values. Despite recent inflation figures, the firm cites the vulnerability of the overpriced stock market and commercial real estate debt nearing $1.5 trillion in maturity. Economist Dieter Wermuth believes the focus should shift from inflation to deflation risks, especially with the S&P 500 being “dangerously overpriced” and potential troubles in the commercial real estate market. The firm anticipates central banks will recognize deflation as the primary concern by September.
Office Buildings Face Obsolescence as Banks and Investors Brace for Losses
Scott Rechler, CEO of RXR Realty, warned of significant losses for banks and investors as many office buildings become obsolete. While top-tier Class A buildings will prosper, lower-tier buildings face potential obsolescence. The US office vacancy rate recently hit an all-time high of 13.1%. Goldman Sachs and other banks are buying distressed properties, anticipating a drop in prices. With $1.5 trillion of debt in the commercial real estate sector nearing maturity and banks reducing lending, experts predict a possible commercial real estate crash, with office prices potentially dropping by 35% in the coming decades.
In just 30 years, the interest cost of the Fed is expected to triple and reach almost 7% of the US GDP
There’s only one word to describe such a rate of increase → unsustainable pic.twitter.com/c3UNGOFeQT
— Game of Trades (@GameofTrades_) August 17, 2023
BREAKING: The one-year default rate for US loan borrowers has soared to 4%, surpassing the 2.7% pace of delinquency for high-yield bonds, per Bloomberg.
It’s the first time in 30 years that the clip of loan defaults led junk bonds by such a margin.
— unusual_whales (@unusual_whales) August 17, 2023
Bonds are in a crash.
Stocks are next.
September.
— Michael A. Gayed, CFA (@leadlagreport) August 17, 2023
BITCOIN ABSOLUTELY COLLAPSES INTO THE $26,000s *** $BTC
— The_Real_Fly (@The_Real_Fly) August 17, 2023
— Financelot (@FinanceLancelot) August 18, 2023
Housing Bust 2: San Francisco House Prices Plunged -29% in 16 Months
San Francisco’s housing market is showing alarming signs of decline, with the median price of single-family homes plummeting by 8.5% in July compared to June, marking a 14.1% drop from last year. Since its peak in March 2022, prices have collapsed by a staggering 29%. This trend parallels the 2007 housing bust, though current indicators suggest an even sharper descent this time. The broader Bay Area also isn’t immune, experiencing a 5.2% drop in July, with a 16.3% plunge since April 2022.
US Leading Indicators Tumble for 16th Straight Month, the Longest Streak of Declines Since ‘Lehman’
The US LEI has seen its 16th consecutive decline, echoing the dire trends of the 2007-2008 Lehman crisis. Despite the CEI’s subtle stability, July’s significant LEI drop, spurred by weak orders and rising interest rates, portends a bleak economic horizon. The 7.5% year-on-year LEI descent is nearing its worst since 2008, excluding COVID anomalies. The Conference Board anticipates a recession between Q4 2023 and Q1 2024, dispelling hopes of a ‘soft landing’ for the US economy.
Time to watch “The Big Short” again
Does anyone remember what happens when we see a speculative mania with rampant fraud in the housing market? pic.twitter.com/NUkpghvDQY
— Darth Powell 🦈🇺🇲🇺🇦🇵🇱🇫🇮 (@GRomePow) August 17, 2023
Ladies and Gentlemen, prepare for landing
