Dow drops 653 pts in 1/2 day - Trump blames (of course) somebody else....

[Marion Morrison]

I know! It's hard to believe tRump could do worse!

But he has.

Only in the LaLa land that exists between your ears.

 

[Aldo Raine]

Sorry, bub, but it was Dubya who was worse, in case you've already forgotten the 2008 recession that was the worst since 1929.

Sad that you just blurt your feelings here instead of facts.

Worst economic crisis since the Great Depression? By a long shot.
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Facts are that W and O were the cream of the bottom of the outhouse.

And yet Rump easily slides below both, weird huh!

He hasnt reached those depths yet.

Yeah, he's gotta go up quite a bit.

No, O and W brought us endless wars, massive debt, failed foreign and domestic policies.

tRump's debt in a booming economy is part massive. All his foreign policies have been a failure, look at the massive success in NoKo. His domestic policies have benefited the top 1% and corps(where is that 10%tax cut promised the middle class) he finally has after 2 years started pulling us out of ridiculous wars. For that I applaud him.

 

[JoeB131]

O already left us with the hebegebes. It was a continuous lie with that worthless narcissist.

Did the scary black man scare you?

 

[Toro]

Real estate has me very concerned. It has completely vanished in some parts of the country, just dropped off the freakin' table, my area included. I had heard the same thing about capex, and that's another one. Wages still haven't increased enough. So even if many numbers still do look good overall, and they do, I think we've seen the best of this. If we head into a bear, that's going to start a chain reaction. The shit coming from DC is only making it shakier.

Would you like a sleeper issue? The shadow business loan area. The market is stuffed with companies offering business loans to anything that moves (sound familiar?) and the leverage is increasing. It reminds me of the days of 2006 and 2007 when home mortgage companies were offering those fucking insane 125% no doc loans. It's too easy. A lot of this money is coming from BDCs and (worse) non-traded BDCs (holy shit), and I don't like the way that smells at all.

Nothing is on fire right now. But I wouldn't make long term plans based on the status quo. We went to about 50% cash a month ago. I don't even trust bonds on either end right now.

Mac1958

When you say "business loans," are they competing against C&I bank loans from depository banks? Or do you mean the leveraged loan market? The BDCs are often in the leveraged loan market

We know the leveraged loan business well, and it is certainly demonstrating late cycle behavior. However, the banks don't own those any more. They are all in institutions that don't pose systematic risk. The only part of leverage in the leveraged loan business is in CLOs, which are mostly held by institutions such as insurance companies and pension funds.

 

[Marion Morrison]

Is it bad when you facepalm before even reading JoeB131's post?

It was justified.

 

[Crepitus]

And yet Rump easily slides below both, weird huh!

He hasnt reached those depths yet.

Yeah, he's gotta go up quite a bit.

No, O and W brought us endless wars, massive debt, failed foreign and domestic policies.

I know! It's hard to believe tRump could do worse!

But he has.

Lol, wrong again.

But I'm not.

And you know it.

 

[Mac1958]

Real estate has me very concerned. It has completely vanished in some parts of the country, just dropped off the freakin' table, my area included. I had heard the same thing about capex, and that's another one. Wages still haven't increased enough. So even if many numbers still do look good overall, and they do, I think we've seen the best of this. If we head into a bear, that's going to start a chain reaction. The shit coming from DC is only making it shakier.

Would you like a sleeper issue? The shadow business loan area. The market is stuffed with companies offering business loans to anything that moves (sound familiar?) and the leverage is increasing. It reminds me of the days of 2006 and 2007 when home mortgage companies were offering those fucking insane 125% no doc loans. It's too easy. A lot of this money is coming from BDCs and (worse) non-traded BDCs (holy shit), and I don't like the way that smells at all.

Nothing is on fire right now. But I wouldn't make long term plans based on the status quo. We went to about 50% cash a month ago. I don't even trust bonds on either end right now.

Mac1958

When you say "business loans," are they competing against C&I bank loans from depository banks? Or do you mean the leveraged loan market? The BDCs are often in the leveraged loan market

We know the leveraged loan business well, and it is certainly demonstrating late cycle behavior. However, the banks don't own those any more. They are all in institutions that don't pose systematic risk. The only part of leverage in the leveraged loan business is in CLOs, which are mostly held by institutions such as insurance companies and pension funds.

No, I don't think the BDCs pose a direct risk necessarily, but they're another data point. Add this one to that one and it scares people.

I'm talking about companies like (and I'm copying from our selling agreement page here) Cole/CIM, Franklin Square, Hines, ICON, North Star, etc. They loan primarily to mid-market private companies, some small companies, and they're multiplying like rabbits.

That's the part that worries me. As competition increases, these lenders are likely to drop their standards and go bottom-fishing. I just see a certain echo from the Meltdown there - not nearly as large by itself, but as I said, a data point.

By the way - 6% to 7% commissions on these things....
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[Clipper]

nobody at the top feels safe with a chronic liar in charge... it's finally giving them the heebeegeebees and they are running for their lives.... leaving us peons behind, holding all the losses.

Bwaaaaahhhaaaaaaaaaa…..Maybe peons like you, sorry ass poverty queens and queers, but right now with the market down, my dividend reinvestments are going to buy more stocks while the market is down.....I used to feel sorry for you poor mother fuckers, but after many years of watching you be self inflicted impoverished, by electing a faggot who gave FREE money to the Uber Liberal Wealthy elites, I realize that you cant change stupid people to think smart. You deserve the misery and poverty the liberals FORCE upon you..

Explain why Comrade Trump is launching into orbit over the market & as usual pointing fingers at everyone else. Why? Because he's a clueless Dotard flailing in his swamp.

 

[Mac1958]

Toro, by the way, what got me thinking about this shadow business loan thing was when I was doing some research on business loans in general (for a book and article). I set up an email specifically to request information on some of these lenders and I was buried in offers. I mean, a ton of them of every stripe. I'd look into the company and couldn't identify it. So either they're owned by someone I couldn't see, or they're just springing up, I'm not quite sure.

 

[edward37]

LOLOL

Moron...

Obama:

• DJIA: UP 149%
• NASDAQ: UP 265%
• S&P500: UP 167%

Trump:

• DJIA: UP 10%
• NASDAQ: UP 11%
• S&P500: UP 4%

Yeah, there was no place to go but up with Obama. Misleading post. Then again, you are the epitome of a dishonest hack, almost FakeyJakey level.

OK there was no place to go but up AND THEN Trump takes over pats himself on the back ,and takes credit Story of his life

 

[Hutch Starskey]

Duh Donald blaming the Fed Reserve and wants to deny:

1. HIS government shutdown
2. Erratic, out of nowhere Middle East policy change and
3. Firing of an admired and venerable former Marine General, Jim Mattis.

Biggest drop in the stock market since

He's the biggest fuck up to enter the White House since Harding.
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Dow Drops Below 22K, Stocks Trade Lower as Wall Street Can't Shake Steep Slide
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O was exponentially worse. Sorry bub, you're wrong again.

O was exponentially worse. Sorry bub, you're wrong again

Except for the fact that there was no lost year for investors during O's time in office, of course.

 

[Toro]

No, I don't think the BDCs pose a direct risk necessarily, but they're another data point. Add this one to that one and it scares people.

I'm talking about companies like (and I'm copying from our selling agreement page here) Cole/CIM, Franklin Square, Hines, ICON, North Star, etc. They loan primarily to mid-market private companies, some small companies, and they're multiplying like rabbits.

That's the part that worries me. As competition increases, these lenders are likely to drop their standards and go bottom-fishing. I just see a certain echo from the Meltdown there - not nearly as large by itself, but as I said, a data point.

By the way - 6% to 7% commissions on these things....
.

Those don't worry me a whole lot. They aren't systematic and leverage is limited to 1:1 IIRC. Compare that to CLOs which are leveraged 12:1. But CLOs don't pose a systematic risk to the economy because the equity sits on the books of non-bank institutions that aren't leveraged themselves.

There's been a lot of bad behavior in the credit markets because of extremely low interest rates, including an erosion in credit quality. Most of those loans have no covenants. That started 4-5 years ago and has been rampant for the past few years. That's typical late in the cycle. What will happen is that until companies actually start missing payments, the bondholders will be the ones who take the hit, which has already started as the SP/LSTA index has fallen to ~96.

What's been missing is that the credit markets have been fairly quiet, at least until recently. CDS has risen but spreads in the cash IG market have mostly been fairly calm. In high yield, spreads are moving out, but I think that's been driven mostly by the energy market as well as some stressed areas like retail. That doesn't mean it's not something to worry about. But in the last two bear markets, credit led well in advance of stocks. This time, it's stocks that are leading credit down.

Again, this is an offshoot of excessive monetary policy. Had the Fed not flooded the economy beyond reason with liquidity, this wouldn't be happening today. There was a global yield fetish as the central banks took away income. This created bad behavior, but it's not a systematic risk to the system. We are just resetting.

 

[Mac1958]

No, I don't think the BDCs pose a direct risk necessarily, but they're another data point. Add this one to that one and it scares people.

I'm talking about companies like (and I'm copying from our selling agreement page here) Cole/CIM, Franklin Square, Hines, ICON, North Star, etc. They loan primarily to mid-market private companies, some small companies, and they're multiplying like rabbits.

That's the part that worries me. As competition increases, these lenders are likely to drop their standards and go bottom-fishing. I just see a certain echo from the Meltdown there - not nearly as large by itself, but as I said, a data point.

By the way - 6% to 7% commissions on these things....
.

Those don't worry me a whole lot. They aren't systematic and leverage is limited to 1:1 IIRC. Compare that to CLOs which are leveraged 12:1. But CLOs don't pose a systematic risk to the economy because the equity sits on the books of non-bank institutions that aren't leveraged themselves.

There's been a lot of bad behavior in the credit markets because of extremely low interest rates, including an erosion in credit quality. Most of those loans have no covenants. That started 4-5 years ago and has been rampant for the past few years. That's typical late in the cycle. What will happen is that until companies actually start missing payments, the bondholders will be the ones who take the hit, which has already started as the SP/LSTA index has fallen to ~96.

What's been missing is that the credit markets have been fairly quiet, at least until recently. CDS has risen but spreads in the cash IG market have mostly been fairly calm. In high yield, spreads are moving out, but I think that's been driven mostly by the energy market as well as some stressed areas like retail. That doesn't mean it's not something to worry about. But in the last two bear markets, credit led well in advance of stocks. This time, it's stocks that are leading credit down.

Again, this is an offshoot of excessive monetary policy. Had the Fed not flooded the economy beyond reason with liquidity, this wouldn't be happening today. There was a global yield fetish as the central banks took away income. This created bad behavior, but it's not a systematic risk to the system. We are just resetting.

I've been wondering about the back end of the loan and loan companies I mentioned. I'm assuming that the loans are actually covered and not spun off into shit CDOs and the like. That would at least stop too much contagion if the shit hit the fan. And again, I agree that this stuff by itself is not systemic.

We backed out of high yield when we backed out of equities last month. We use funds and not individual bonds, so it wasn't worth it.

Interesting perspective, thanks.
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[Hutch Starskey]

When oil drops a buck a barrel the brokers got the excuse they were waiting for to fleece the suckers....same old game, BIG casino. BTW, the Fed chairman may as well admit he fucked the dog raising the Prime rate and blow his brains out....best economy ever and he's stepping on it's throat.

The best time to raise rates is during the "best economy ever", dope.

 

[Oldstyle]

O already left us with the hebegebes. It was a continuous lie with that worthless narcissist.

Did the scary black man scare you?

Let me translate that for those of you who don't know, JoeB!

What he's REALLY saying is 'I don't know a thing about economics and some people posting seem to...so I'll play the Race Card because that ALWAYS works! (eye roll)

 

[The Purge]

You turds still don't get this, and if you are bright enough to understand it...and still deny it....you fuckers are born Socialists!

 

[Hutch Starskey]

The markets are adjusting to what they see coming once Democrats control the House. The progress that we've made over the past two years is now endangered because you've got the people who don't care about jobs and the economy back in control of the purse strings. We've got Nancy Pelosi and Chuck Shumer calling the shots again and we all know how THAT works out!

As evidenced by all of the past lost years that resulted from previous Dem majorities.

 

[edward37]

The markets are adjusting to what they see coming once Democrats control the House. The progress that we've made over the past two years is now endangered because you've got the people who don't care about jobs and the economy back in control of the purse strings. We've got Nancy Pelosi and Chuck Shumer calling the shots again and we all know how THAT works out!

The progress over the past 2 years were made with sticks We needed progress made of bricks Trump gave a short term fix that looked good coming after a rising Obama economy Now the chickens come home to roost

 

[Hutch Starskey]

Duh Donald blaming the Fed Reserve and wants to deny:

1. HIS government shutdown
2. Erratic, out of nowhere Middle East policy change and
3. Firing of an admired and venerable former Marine General, Jim Mattis.

Biggest drop in the stock market since

He's the biggest fuck up to enter the White House since Harding.
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Dow Drops Below 22K, Stocks Trade Lower as Wall Street Can't Shake Steep Slide
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You are a left wing nut, and therefor stupid as hell. then why explain anything to you? I don't know except I have time and someone who thinks might read this.

The dive in the market is part correction and part due to the Fed and raising interest rates. Now, if you read this and believe it, congratulations, you are a little bit smarter that you were seconds ago. If you stick to your left wing stupidity and don't believe it well, I can't help you. Either way, bye.

When do you raise them then? When the market goes down?? The raise is protection if trumps economy goes to hell Then they can lower

Did you actually read my post?

Where did I say it was a bad thing? Raising the rates helps protect against inflation. It needs to be done. I don't get upset. I look at where my 401k was when 0bama the Idiot was in the WH and where it is now. I'm pretty happy about that.

There is no way that as an investor, you could possibly be happy with an entire lost year with no gains at all. Pure bullshit spin.

 

[Toro]

I've been wondering about the back end of the loan and loan companies I mentioned. I'm assuming that the loans are actually covered and not spun off into shit CDOs and the like. That would at least stop too much contagion if the shit hit the fan. And again, I agree that this stuff by itself is not systemic.

We backed out of high yield when we backed out of equities last month. We use funds and not individual bonds, so it wasn't worth it.

Interesting perspective, thanks.
.

The loans are housed to a large extent in structured products - CLOs - as well as BDCs and other non-bank institutions. But they aren't systematic to the financial system because they aren't sitting on the books of highly leveraged, regulated banking institutions.

Remember, during the GFC, the big, large banks were leveraged up to 30:1, and even higher if you included the off-balance sheet SIVs and such. The GSEs were leveraged 100:1. So when the housing bubble collapsed, it wiped out the equity of the banking system as total net equity in the banking system effectively went below zero. That froze everything, and the economy collapsed. Today, leverage in the banking system is 10-12:1, and equity is at the highest level in decades.

During the GFC, CLO equity was actually made whole, even though they were very volatile, which is pretty amazing when you think about it. That's because the income of the structures that waterfalled down to the equity exceeded the default and recovery rates of the underlying loans. That may not happen this time as I think recovery rates will be lower. But the equity of CLOs aren't held by banks. They are held by hedge funds, insurance companies, pensions, sovereign wealth funds, etc. Those pools of capital aren't systematic. If those groups sustain losses, it won't matter much to the rest of the system.

Where there could be real fireworks is in the ETF markets. There is a liquidity mismatch between the assets and liabilities, particularly in the bond ETFs. If the selling gets out of hand, you could see a run on ETFs where they freeze redemptions. That's not systematic like 08-09, but it could hurt confidence. Personally, I wouldn't mind because then we'd come in and start buying the bonds at 80-85 cents on the dollar!

The real systematic risk is overseas, particularly in China, which has an unbalanced, debt-fueled economy that is a disaster waiting to happen; and Italy, if they eventually leave the eurozone. If either of those implode, look out.