Loading ...confirming-The DAX is only up 54 pts. Assuming [and I’m not sure] the mkt IS bearish, the rebounds are short, sharp, scary [for the bears] and look like the real deal…so Sunday night could be interesting–If this mkt turns and ends up down, that would be quite bearish–a sharp blow to bullish confidence–and could set up a black Monday…unlikely but not impossible…the DOW just backed off 80 pts…lets see if that’s just a bear trap=this is interesting from Phillip Whalen-one of the savviest Wall st pros in the game==
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The real estate markets are over-extended, asset prices are silly and the only way forward for debt and equity valuations is lower.
The only credit being extended today in the short-term markets is with collateral. There is no longer any unsecured lending between banks and, especially, non-banks. As we noted in The Institutional Risk Analyst earlier this week, there are scores of nonbank lenders in mortgages, autos and consumer unsecured lending that are ready to go belly up. Half of the non-bank mortgage lenders in the US are in default on their bank credit lines. As in 2007, the model builders at the Fed in Washington have no idea nor do they care to hear outside opinions.
If you understand that the Fed’s previous “extraordinary” policy actions have the effect of understating LT interest rates by at least a percentage point, then you know why President Trump is howling like a wounded hound. Nobody understands the danger of leverage better than a real estate developer. When you see the dislocation and distress visible to those with eyes wide open in the non-bank residential and, especially, multifamily mortgage sectors, then you know why President Trump is rebuking the Federal Reserve.
Bottom line: We fully expect to see some business failures in the residential lending and multifamily development sectors over the next 12 months. The real estate markets are over-extended, asset prices are silly and the only way forward for debt and equity valuations is lower. More important, if the “real” rate for the 10-year bond is over 4%, then where should the Dow and S&P be tomorrow at the opening? By raising short-term interest rates instead of unwinding QE 2-3 and Operation Twist, the Fed is repeating the mistakes of 1928 and is creating the circumstances for a liquidity crisis.
https://www.zerohedge.com/news/2018-10-12/whalen-donald-trump-right-about-fed