— Greg S. (@GS_CapSF) October 20, 2017
ICYMI: Equity crowd: Yay! More all-time highs!!
Fixed inc crowd: I’m scared! The 2s/10s curve is at post-crisis lows!!
— Driehaus (@DriehausCapital) October 21, 2017
— zerohedge (@zerohedge) October 19, 2017
During Yellen's tenure as Fed Chair, the yield curve has flattened the entire time. Some dove! Could the bottom be her stepping down? pic.twitter.com/HtMFc9wG37
— Kevin Muir (@kevinmuir) October 20, 2017
Investors Push Into a Resurging Market: House Flipping
House flipping, which declined after the financial crisis in 2008, is on the rise again, thanks to low interest rates and rising home prices. And with the renewed interest come investors looking for a high return.
But that real estate strategy — in which a home is bought, renovated and resold quickly — requires fast access to money, and developers are willing to pay higher interest rates for it. The loans are backed by the property and are short, typically running for a year or less. And the funds that finance them offer reliable returns of about 8 percent, for those who can meet minimum investments, generally $100,000.
The finance industry around house flipping has been active for decades, and it has been ticking up lately. Last year, 5.7 percent of all home sales were flips, the highest level since 2006, according to Attom Data Solutions, a national property database. The trend, popularized on TV series like “Flip or Flop” on HGTV and “Flipping Out” on Bravo, is attracting the interest of Wall Street: Last week, Goldman Sachs bought Genesis Capital, a leading lender to house flippers.
UBS Global Real Estate Bubble Index
Ben Bernanke fears that should another sharp recession occur the Fed won’t be able to contain it.
Ben Bernanke is worried — and perhaps we should be, too.
As chairman of the Federal Reserve from 2006 to 2014, it was Bernanke, along with others, who prevented the worst recession since World War II from becoming the Great Depression 2.0. Now he fears that, should another sharp recession occur, the Fed won’t be able to contain it.
Traditionally, the Fed has sought to influence the economy by changing short-term interest rates. If a recession looms, the Fed cuts the “fed funds” rate to stimulate demand. If the danger is inflation, the Fed raises the rate to relieve wage and price pressures. Changes in the fed funds rate are assumed to nudge rates on mortgages, corporate bonds and Treasury securities in the same direction.
But there’s a practical limit to this approach: Once the Fed has cut the rate to zero, it can’t do much more. If the recession is deep, it may outlast the Fed’s therapy. To many economists, failure portends dire consequences: deflation (falling prices). Too little demand chases too much supply.
— zerohedge (@zerohedge) October 22, 2017
China consumer loans surge nearly 30% as debt worries resurface
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- Justin Trudeau, under oath: “I did not call people who were unvaccinated [bad] names.”
- US tightening to date continues to ripple through money and credit in an orderly sequence. Bank lending – the next shoe to drop. Michael Burry is now positioned for a crash. Expect a collapse of “everything” within the next four months?
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- The FTX story just gets wilder.