Global Market Strategist, @gameoftrades_ | Global macro trader, investor, and avid reader
Joined June 2022
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US office vacancy rate just hit the highest level since the global financial crisis
The commercial real estate crisis is has yet to unfold
The use of the word "job automation" since 1800
This only goes up to 2019 (pre chat GPT)
Structural unemployment will be a major theme over the next decade
- Deepest contraction in home sales since '08
- Most rapid rise in mortgage rates since 1980
- Deepest contraction in Manufacturing activity since '20
- Fastest tightening in credit since '07
Meanwhile, top 5 components in the SP are in the 90th percentile of valuations
Manufacturing activity is contracting
Since 1970, the Fed cut rates every time PMIs reached 46 (today ISM PMI is at 46.4)
Today, the fed is considering raising rates further
Is this what a "soft landing" is meant to look like?
Regional Banks (KRE) are still down 32% since the SVB bank run.
There are still some major concerns:
1. Deposit flight hasn't reversed
2. Treasuries continue to fall (deepening their unrealized losses)
3. They are over-exposed to the brewing crisis in commercial real estate
Small banks own 14% of commercial real estate loans
Delinquency rates for CMBS loans just hit 5% in July
Regional banks are not out of the woods yet
Currently working on a video analyzing the spread between SP500 earnings yield and the 3 month bill rate.
The spread is negative for the first time since 1999.
1/4
Forward returns don't look good following this signal. Median SP500 returns 12 months out are -6% (average SP500 return since 1960 is around 10%)
3/4
Hi everybody, after staying anonymous for a long while, I’ve chosen to go public and create a personal Twitter account.
I’ll be highlighting some of my personal thoughts on financial markets and other topics here.