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Markets still falling like whoa

Llano Estacado

By Llano Estacado
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Hefeweizen

Hefeweizen 5,416

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Posted
4 hours ago, Fudge Nuggets said:

A lot of you are really and truly bitch ass pussies.  I hope y’all are letting your wives handle your finances / portfolios.

Hell I’ve thought about it before.  She wanted to buy a ton of AMC when it was sub 5 dollars and I laughed at her.

 

Jokes on me.

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Eastwood
Eastwood

That's why I'm out. There is no end game, IMO. This has to be fixed outside of the market and I got too nervous about what that entails for retail investors. They will always be last on the list, if o

Rusty Shackelford
Rusty Shackelford
Eastwood
Eastwood

I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the l

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Hefeweizen

Hefeweizen 5,416

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1 hour ago, Shaggy3.0 said:

*All* construction loans?  Doesn't the project size / build out matter?  Can small construction builds (convenience store, gas station) get access to loans?

Yeah I was talking about ones for large projects, that can take a while to repay.  The interest rates on those are killing project margins to a point the pro forma doesn’t pencil.

 

 Think double digit interest rates, with serious penalties.  Then weigh the risk that the project doesn’t occupy/produce revenue because of market conditions and all of a sudden it makes no sense to build.  So right now everyone is entitling projects then putting them on hold.

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tbone_

tbone_ 14,411

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Floating rate construction debt for new build apartment complexes is priced at about 8 all in given sofr projections and 350-375 spread. They were at 3 1Q.

The banks are seized up. No one has funds to loan because their existing loans aren’t getting paid off because other projects aren’t selling due to cap rate increases due to rising interest rates.

Cap rates on newly stabilized apartment complexes were at mid 3s earlier this year. Now the 10 year is at nearly 4. Better to just buy 10 years.

We’ve got some shit to work through.

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Posted
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On 10/7/2022 at 9:43 AM, Storm the Field said:

Job market is too good, which means the economy is bad, which means that the FED has to hike rates and punish the markets until enough people lose their jobs to make the economy good again. 

I think that's it, right?

S&P down 4.5% since the jobs number came in too good.

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Trey3216

Trey3216 15,450

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On 10/8/2022 at 7:06 PM, tbone_ said:

Floating rate construction debt for new build apartment complexes is priced at about 8 all in given sofr projections and 350-375 spread. They were at 3 1Q.

The banks are seized up. No one has funds to loan because their existing loans aren’t getting paid off because other projects aren’t selling due to cap rate increases due to rising interest rates.

Cap rates on newly stabilized apartment complexes were at mid 3s earlier this year. Now the 10 year is at nearly 4. Better to just buy 10 years.

We’ve got some shit to work through.

Anyone buying commercial real estate on a 3 cap rate is a fucking idiot to begin with.  

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Fico

Fico 1,806

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53 minutes ago, Trey3216 said:

Anyone buying commercial real estate on a 3 cap rate is a fucking idiot to begin with.  

Not with the annual rent growth that segment has been experiencing... which is only going to continue as single family developers pull back on new construction starts in what is already an undersupplied segment of the economy.  More people are going to be forced to rent, and less units are going to be delivered due to rising capital costs and construction costs coupled with discounts on the exit.  All of which means that rent growth is going to continue to  increase substantially. If you have the ability to execute cash acquisitions on MF transactions, with long money, you are going to look smart over the next several years.

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Trey3216

Trey3216 15,450

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4 hours ago, Fico said:

Not with the annual rent growth that segment has been experiencing... which is only going to continue as single family developers pull back on new construction starts in what is already an undersupplied segment of the economy.  More people are going to be forced to rent, and less units are going to be delivered due to rising capital costs and construction costs coupled with discounts on the exit.  All of which means that rent growth is going to continue to  increase substantially. If you have the ability to execute cash acquisitions on MF transactions, with long money, you are going to look smart over the next several years.

I mean, if you are a bank, yeah.   But we’re staring a major economic downturn in the face with rising rates and soon to be higher rates of both foreclosures, rental vacancies and such. Back to the days of roommates and Mom & dad for a cycle.   Cap rates below 4 are pretty much only for the Blackrock’s of the world in my book.  

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Blotto

Blotto 23,974

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Posted

I noticed that Cathie Woods took a break from lighting money on fire to write an open letter to the fed begging them to stop with the rate hikes. WSB thread goes off on a little bit of an Eminem Stan tangent that cracked me up 

https://www.reddit.com/r/wallstreetbets/comments/y0frit/cathie_wood_and_ark_invest_just_released_a_letter/

Dear Fed, I wrote you but you still ain’t callin, I wrote my ideal interest rate on the bottom 

Dear Cathie, I meant to write you sooner but I just been busy. You said your funds aren’t doing well? How deep in the red is they?

I heard about your tech stocks, man that shit is f'ed up..I think you need to stop buying them, just to give you a heads up.

And what’s the shit about us meant to be together? I say that shit makes me not want us to drop rates another. I really think you and your fund need each other, but maybe you just need due diligence better.

Dear Mr. I'm-too-regarded-to-handle-inflation-adquately, this will be the last letter i'll even sent your ass. I drank a fifth of vodka, dare me to trade? Oh, that's just my investors screaming in the trunk.

I heard about this fund manager that kept on making the same mistakes and is about to blow itself up. Come to think about it, her name was—it was you, damn
 

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washparkhorn

washparkhorn 9,967

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She does have a point. There are deflationary headwinds building. From Ms. Woods open letter to JPow:

32937B1B-170F-4923-897F-E432DA75D0BC.thumb.jpeg.0915606a4520a0b6145bcba8c2715d16.jpeg

Bernanke, Janet and Jay Dove would have had the brrrt machines in maximum overdrive with those headwind numbers (and Cathie would have been stacking money for nothing).  Those days are over. There has been a regime change since the inflation bogeyman was reanimated. 
38F47530-379F-4FE1-89CC-0E68DF013BC6.jpeg.2964b67552f3cedc85d0dc4a5fe7c399.jpeg

Cathie needs to ramp up her pump and dump game if she is going to keep up with the vultures making money in the equity markets these days.  

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Posted (edited)

Channel checks at Costco. If the Fed wants to slow things down, an emergency 500 bips interest rate rise is needed. Place was packed.

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LCHorn

LCHorn 2,749

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Posted

Fwiw, in regards to the mortgage industry secondary market, it sounds like the banks are starting to hoard cash (this is going to reduce availability of non-depository bank Jumbo financing, non-QM lending, etc.) this is highly likely to increase borrowing costs even further.  Presumption is they see a recession incoming and possibly a bad one.  
 

Also stolen from a conference call today-mortgage rates have risen for 14 months straight, record is 27 set in the 70’s.

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