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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding

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alanrs
elmatador
pak73
To: elmatador who wrote (10248)1/24/2023 1:15:33 PM
From: John Vosilla3 Recommendations  Read Replies (2) of 13084
 
Pure stupidity monetary and fiscal policy especially in the COVID era.

Looking at when yield curve inversion started around July 2022 (16 months prior to last recession)

the rate of the inversion unprecedented ever is projected at 1.38 after two more .25% raises
(4.83 Fed Funds / 3.48 10 yr treasury)

homebuilders topped second half of 2021 (last time May 2005 or 29 months before recession)

oil prices post Biden's 40% strategic petroleum reserve drawdown should be going back up to cycle highs this summer/fall

NASDAQ asset bubble bursting also shakeout from remote work, overstaffing with much more layoffs to come

if you take out the top market cap stocks apparently most public companies record debt to equity so even higher default risk in coming recession

commercial RE especially urban office and 2nd and 3rd tier retail vacancy levels not seen since RTC days (check VNO stock chart)

inability to fund option ARM type products low start teaser rates this cycle quickly took huge percentage of buyers out of the market

spread between so many locked in at 3% fixed versus trading up or to a different area at over 6% makes very low transaction volume for the foreseeable future perhaps 7-10 years likely with tons of job losses multiple industries tied heavily to housing activity

record new construction either recently CO'd or soon to be completed to flood the residential markets already seeing price drops 20% in some cases basically half the COVID bump already

did I mention the federal debt approaching $32T with interest rate reset adding hundreds of billion a year to interest this year with many ramifications

we had a recession 1990 oversupplied commercial RE and high all prices main drivers

we had a recession 2001 NASDAQ bubble burst

we had a near depression 2008 over leveraged overbuilt overvalued residential RE, high oil prices, banking crisis

this time is combination of all the above except banks for now in somewhat better shape than 1990 and 2008, rents very high, government involvement all incentivizes people to stay rather than lose the house to foreclosure.

playing out more and more like Biden 2021-24 = GWB 2005-08 ????? Will be interesting to see if recession hits late 2023 and it stock market indexes still go up most of this year like 2007???
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