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Foreign investors are selling Japanese stocks due to concerns that the U.S. may be heading for a recession, said Naka Matsuzawa, chief strategist at Nomura Securities. “The fall is not really happening due to Japan-specific reasons,” he said. “Markets are still trying to find the bottom.”

He said he is taking a “wait-and-see approach until U.S. tech stocks show some kind of resilience.” He does not foresee a global recession, and said markets will be volatile until the U.S. Federal Reserve lowers rates. Investors are pricing in a cut by September.

U.S. banks face a reckoning: Over the next two years, more than $1 trillion in commercial real estate (CRE) loans will come due

The damage could metastasize into a full-blown financial crisis if scores or even hundreds of small- and midsize commercial banks fail simultaneously. A worst-case scenario might include contagion to other economies and banking deserts across the U.S.

Fed officials have indicated that a CRE crisis will probably lead to bank failures. Multiple, simultaneous bank failures could be catastrophic for the financial system.

It’s unlikely that the Fed, FDIC, and a consortium of the largest banks can rescue hundreds of compromised commercial banks at once.

Pandemic-accelerated troubles in the CRE market may take more than a decade to resolve.

Increasing office space vacancies linked to remote and hybrid work could extend price declines and deepen losses for lenders in this space. Most empty or underutilized office space is too costly to convert to residential or other uses and will require deeper price concessions. As leases can stretch to 10 years before they are due for renewal, it may take years for the office space market to clear.

Rapid collapses are quickly becoming old news.... The new bankruptcy data that just came out shows a spike in the number of corporate bankruptcies for June 2024, reaching back to the scary levels we saw at the beginning of the pandemic.

June 2024 also marked the release of the new KPMG Futures Report, which starts with a sobering statistic: “Since 2000, 52% of Fortune 500 companies have been replaced or don’t exist anymore.”

“Fifty years ago, ‘milking the cash cow’ could go on for many decades. What’s different today is that globalisation and the shift in power in the marketplace from buyer to seller is dramatically shortening the life expectancy of firms that are merely milking their cash cows. Half a century ago, the life expectancy of a firm in the Fortune 500 was around 75 years. Now it’s less than 15 years and declining even further.”

Personal and business bankruptcy filings rose 16.2 percent in the twelve-month period ending June 30, 2024, compared with the previous year.

Business filings rose 40.3 percent, from 15,724 to 22,060 in the year ending June 30, 2024.

Loans from official creditors Canada, France, Germany, Italy, Japan, Netherlands, Poland, Britain and the United States add up to $7.5 billion, with just over $5 billion owed to Canada alone.

State money owed on loans or other commercial bank debt externally added up to $1.63 billion in April, the largest chunk of which (about $700 million) is owed to U.S. agribusiness giant Cargill.

In our vision of the future, we see a place where every person has the opportunity not just to get by but to get ahead — a future where no child has to grow up in poverty, where every senior can retire with dignity...

So how did the Fed lose so much money?

Some of it comes from their paying Wall Street to park money at the Fed, which it does to hide inflation and because it likes handing money to Wall Street.

But the bulk of the Fed’s losses are because they printed trillions to finance Covid lockdowns, and used those trillions to buy bonds — mainly government debt. Then when they panic-hiked rates to try and choke off inflation, bond prices collapsed.

Meaning the Fed’s pile of $9 trillion worth of bonds started losing money hand over fist. In fact, estimates of unrealized losses — meaning money the Fed has lost but hasn’t yet fessed up to — could be well over a trillion dollars at this point.

There are more dormant office towers in the United States than at any point since 1979, according to a new report from Moody's Analytics, which began tracking office leasing vacancies that year.

There’s no great solution. Most cities are floating quixotic proposals to turn empty offices into apartments to “fix” the crisis, but this is often too expensive to be practical and requires navigating lots of bureaucratic red tape, like changes to zoning laws.

office loan delinquencies were up a shocking four times compared to the previous year. In under two years, commercial real estate loans totaling $1.5 trillion are due to expire, portending disaster for the economy when the bill comes due and office owners can’t pay it. According to data from the St. Louis Fed, delinquency rates on commercial real estate loans have already ticked above their Covid peak:

A leaked document by Business Insider reveals that Amazon is trying to save $1.3 billion over the next three to five years. A person familiar with the new strategy said the company plans to "let certain leases naturally expire, stop the use of some office floors, and negotiate early lease terminations for some buildings."

Amazon is one of many companies that have been shrinking its corporate footprint. Many other big tech firms have been slashing square footage as office space floods the market, pressuring tower values lower and leaving owners with a difficult decision to either refinance (if they can) or default.

When the Fed panic-hiked interest rates in the 2021 inflation, that put trillions of commercial real estate underwater even without other factors. Add to that crime, inflation, plus remote work, and you have a dangerous mix that could toppled cities as we know them.

This could mimic and elaborate upon last year’s bank crisis, where falling bond prices panicked depositors. That crisis only stopped when Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell effectively bailed out every bank in America with sweetheart loans written on fictitious asset values along with unlimited taxpayer guarantees through the comically underfunded FDIC....

Without those government pre-bailouts, one paper last year by researchers at Stanford and Columbia estimated that 1,619 US banks – about a third of them – could be at risk of failure.

Bottom line: after several years of tightening, 2024 is when the liquidity floodgate reopen and not only does the Fed start to cut rates aggressively, but with QT tapering, we fully expect the next QE to be launched in the near future

Grayling813 wrote: ↑Wed Dec 27, 2023 8:03 pm

Paladin wrote: ↑Wed Dec 27, 2023 3:24 pm Banks Terminate 60,000 Workers In One Of The Bleakest Years For The Industry Since 2008

A new report from the Financial Times shows twenty of the world's largest banks slashed 61,905 jobs in 2023, a move to protect profit margins in a period of high interest rates amid a slump in dealmaking and equity and debt sales. This compared with the 140,000 lost during the GFC of 2007-08.

"There is no stability, no investment, no growth in most banks — and there are likely to be more job cuts," said Lee Thacker, owner of financial services headhunting firm Silvermine Partners.

FT noted that corporate disclosure data and its independent reporting did not include smaller regional bank cuts, indicating total job loss could be much higher.

Clear case of Bidenomics.

G.W. Bush and CONgress bailed out the financial sector in 2008, ensuring most of the guilty continued on without sacrifice or paying the consequences to bring them back to the brink of collapse today.

Is it just coincidence that CONgress is full of multi-millionaires?

A new report from the Financial Times shows twenty of the world's largest banks slashed 61,905 jobs in 2023, a move to protect profit margins in a period of high interest rates amid a slump in dealmaking and equity and debt sales. This compared with the 140,000 lost during the GFC of 2007-08.

"There is no stability, no investment, no growth in most banks — and there are likely to be more job cuts," said Lee Thacker, owner of financial services headhunting firm Silvermine Partners.

FT noted that corporate disclosure data and its independent reporting did not include smaller regional bank cuts, indicating total job loss could be much higher.

The Federal Reserve kept the target range for the federal funds rate at its 22-year high of 5.25%-5.5% for a second consecutive time in November