A lot of people were mystified as to why Munchin would call the top largest banks and enquire as to their liquidity and other questions. Also, why did he choose to call on a Sunday nite and a holiday to add to the suspense, if he did not have a very good reason.
Do you suppose he was worried about the collasp in housing or real estate values. Did he ask how much collateral remained in the banks real estate loan portfolio. After all it was the housing market that lead to other things in the great credit crisis. If housing values are falling this means there will be a glut of new houses on the market. Obviously this will mean lay offs in the construction business. One can imagine the dominos falling, as workers fill for unemployment
Add to this many corp reporting lower profits in 2019
This makes the stk over valued to current profit ratios
Do you think this is any concern for the markets as the market senses a coming recession or even the fear of a recession
Certain people have been very vocal about bank and economic health but there comes a time when the underlining asset is not worth the loan principal.
When people stop buying this is usually the 1st sign of a coming recession, and large lay offs would certainly trigger consumer loss of confidence as the ripple effect moves through the economy
What do you think??
Two questions.
On what are you basing falling housing prices? Certainly not the assorted HPI reports. There has been a slight slowing in appreciation, largely due to interest rates, but the latest shows a fairly healthy rate of roughly 5% annually. It takes a decrease in home values to raise threats to liquidity, and there is nothing indicating the likelihood of that.
Corp profits may grow at a slower rate in 2019 than they have in 2018, that remains to be seen, but how will that affect stock price valuation? A slower growth, all other things being equal, will only decrease PE ratios.
We have had 7 prime rate increases in 2 years. Very aggressive. There were 2 in the previous 8 years. Couple that with the trade war and stocks are going to be wobbly. If the fed holds to 2 hikes or less in 19 and the trade war has a resolution, things will stabilize.
In rural America we're seeing the results of the Rump's trade war folly in reduced commodity prices and higher input costs so consequently we're seeing farm machinery repo's, a lot of high dollar farm equipment items advertised for sale by farmers and now there are a few farmland mortgage foreclosures coming up.
As agriculture goes...so goes the rest of America. We've seen this time and time again.
I like to think that I am boots on the ground in the housing market as we build houses and son in law builds commercial.
That said:
Housing is more related to jobs than even interest rates. 3.9% unemployment with more people coming into the job market.
As for interest rates the Bond market is pricing in a 50% chance of a cut in rates
JMHo
I agree. Problems in housing seem unlikely in the near term.
And that is what the industry said in 2007
Top end New York prices have fallen considerably
I don't live in N Y so all I can do is read what others say
Our nephew lives in Calgary
He is a school teacher
He says house prices have risen so much, if he did not buy a lot and build some yrs ago, no way could he afford to buy any kind of a decent house for a family of two kids and parents at today's price
Toronto has nothing, even a so called starter home for less than 1 million
Another nephew who is still single just bought a 400 sq ft condo for 500,000.00 CAD. Heck a motel room has more than 400 sq ft
My brother wants to sell his house and move into a condo where somebody else shovels snow, cuts grass etc.
His house is worth 500,000.00 in a small community. The available condos are selling for much more. No bargain there
How many McMansions do you see with the kids gone and two people rattling around 5,000 sq ft of empty space. Who will buy those houses at fair market value compared to 1 million for an old fixer up two bedroom for 1 million. The McMansion may well sell for slightly more than a two bedroom, leaving the couple with much left than they thought, as a nest age for retirement
Maybe it will be different this time, but I think I see problems coming just over the horizon that is not plainly in view. So much does not make sense. It's not the cost of the house, it's all the zoning and other stipulations that increase the cost of a house
Does anybody remember Stockton Calf where houses sold for 230,000 and that was such a bargain folks flocked in. A few yrs later there were traffic jams of people leaving stockton
Houses can't go down in value
That's what they said in 2007 and some say it is starting now
Time will tell, but something has rattled the stk market and nobody can say exactly what
I am just staring at the tea leaves looking for an answer
What I do know is I don't like looking at the sum total of our investment portfolio, and it gets slowly worse
I was told 2019 looked great and on into 2020
Bah Hum dog. I wish it were true
17000 here we come
I haven't seen any signs of massive fraud or abandoning of credit standards like in 2007. Back then, it was painfully obvious that everything about the real estate market was fake.
What we have now is a way too localized market. Hot cities have 7 figure starter homes, while a nice house in Maple Heights, OH, is under $100,000. People and money just keep getting more concentrated in the larger cities.With population growth slowing, and people per household no longer falling, smaller cities and towns start to empty. Nothing like a declining town with a shrinking tax base to encourage even more people to leave!
TL/DR : Unbalanced, but not set for another general crash.