The Bad News Report

[davidclt]

14 hours ago, mpretori said:

NCDOT cutting up to or over 1,000 jobs.

https://www.newsobserver.com/news/local/article233969157.html

I don't normally read comments on articles but the comments on this article nailed exactly what I thought, with the Berger/Moore axis declaring a surplus, could the "peoples' money" not be used to adequately fund the work performed by NCDOT? I realize there are some which could benefit from the $200 as a tax rebate they might get right before an election year (am I being cynical?).

Living in Charlotte, it's easy to lose sight of the fact that outside of a few relatively wealthy areas in the major population centers (Asheville, Charlotte, the Triad, the Triangle and Wilmington as well as mountain retreats and beach towns), our state is crushingly poor. A few weeks ago, I pulled off in the Triad in a place I always thought of as well off and was surprised at how poor everything looked. We really do live in a bubble in Charlotte, especially if our life is mostly lived within about two miles of uptown and in the wedge from South Tryon to Independence, the airport and UCity.

Edited September 2, 2019 by davidclt

[rancenc]

54 minutes ago, davidclt said:

I don't normally read comments on articles but the comments on this article nailed exactly what I thought, with the Berger/Moore axis declaring a surplus, could the "peoples' money" not be used to adequately fund the work performed by NCDOT? I realize there are some which could benefit from the $200 as a tax rebate they might get right before an election year (am I being cynical?).

Living in Charlotte, it's easy to lose sight of the fact that outside of a few relatively wealthy areas in the major population centers (Asheville, Charlotte, the Triad, the Triangle and Wilmington as well as mountain retreats and beach towns), our state is crushingly poor. A few weeks ago, I pulled off in the Triad in a place I always thought of as well off and was surprised at how poor everything looked. We really do live in a bubble in Charlotte, especially if our life is mostly lived within about two miles of uptown and in the wedge from South Tryon to Independence, the airport and UCity.

My comments should probably be constrained to the POLITICAL section, but remember elections are next year!!

 

[davidclt]

3 minutes ago, rancenc said:

My comments should probably be constrained to the POLITICAL section, but remember elections are next year!!

Well, I'm unable to move it but it's still bad news when 1,000 people lose their jobs and there isn't the POLITICAL will to save what to my mind is a core function of government (providing usable roads for transportation). I'm not intending to fight this one out though. My 2¢.

[queensguy06]

It will be interesting to see what affect the new tariffs that were imposed by the Trump administration will have on construction as they go into effect this month.  I received a notification from our largest supplier that due to the tariffs, most of our metals are going up anywhere from 5% - 18% starting tomorrow.   The specific field I am in is somewhat insulated, however new construction will certainly feel the hit and depending on how long the tariffs last could exacerbate a slow down in new construction.

Another indicator I have been following is the slow down in all areas of commercial architecture.   For the past two months this has been showing a weakening in commercial real estate demand, with inquiries for new projects at the lowest point in a decade, and overall design contracts down significantly as well.  I've been saying it for several months now - a recession is coming, and I think a lot sooner than most people are expecting.  Most projections have us about a year to two years out; I think by Q1 of next year we will be feeling some of the sting.  The big question mark is how big of a recession is looming on the horizon.

[kermit]

^ based on the number of job openings the commercial location decision industry (e.g. grocery store and fast food expansions) has been in decline for more than a year. As an indicator hiring in the industry is usually about 18 months ahead of the economy.

Edited September 2, 2019 by kermit

[urbanlover568]

5 hours ago, kermit said:

^ based on the number of job openings the commercial location decision industry has been in decline for more than a year. As an indicator it normally runs about 18 months ahead.

National trucking companies are going bankrupt monthly it seems. 8,000 retail closings this year already.  And RV sales down drastically. Manufacturing PMI down also. All bad for Charlotte and all bad for the United States and is not making America great again. 

Edited September 2, 2019 by mpretori

[A2.]

6 hours ago, queensguy06 said:

The big question mark is how big of a recession is looming on the horizon.

It will be one you will tell your grandkids about. The best thing to do is prepare. How long until the vice grip tightens is a fools game (best guess is we are entering the early stages now, with the real bust sometime within the next eighteen months). The fact that debt on all levels (corporate, personal, and sovereign) is at levels never seen in our lifetimes, it’s safe to say that when the bubble pops, it will be catastrophic.

The problem is that the stock market is so manipulated, the best indicator will be the ones we see on Main Street and not Wall Street. 

Just remember it’s a recession when your neighbor loses their job, it’s a depression when you lose yours. 

I hate being the bearer of bad news, but things are ugly out there and with the Geopolitical issues seemingly getting hotter by the day(Brexit, Hong Kong, China, etc),  we are truly cruising on borrowed time.  

Get out of debt, raise cash, and always keep a level head. 

The one good piece of news is that Charlotte is actually better prepared than most cities with an influx of new residents and a more diversified economy than the last recession. That said, any slow down WILL have a material impact on development.

 

A2

 

Edited September 2, 2019 by A2.

[jednc]

53 minutes ago, A2. said:

It will be one you will tell your grandkids about. The best thing to do is prepare. How long until the vice grip tightens is a fools game (best guess is we are entering the early stages now, with the real bust sometime within the next eighteen months). The fact that debt on all levels (corporate, personal, and sovereign) is at levels never seen in our lifetimes, it’s safe to say that when the bubble pops, it will be catastrophic.

The problem is that the stock market is so manipulated, the best indicator will be the ones we see on Main Street and not Wall Street. 

Just remember it’s a recession when your neighbor loses their job, it’s a depression when you lose yours. 

I hate being the bearer of bad news, but things are ugly out there and with the Geopolitical issues seemingly getting hotter by the day(Brexit, Hong Kong, China, etc),  we are truly cruising on borrowed time.  

Get out of debt, raise cash, and always keep a level head. 

The one good piece of news is that Charlotte is actually better prepared than most cities with an influx of new residents and a more diversified economy than the last recession. That said, any slow down WILL have a material impact on development.

 

A2

 

I've been here long enough to remember the original A2. It was all doom, gloom and melodrama then too. 

[urbanlover568]

5 minutes ago, jednc said:

I've been here long enough to remember the original A2. It was all doom, gloom and melodrama then too. 

Tell us all the MAGA news! Biggest tax increase(Tariff) in United States history is doing wonders for the markets and everything, right? 

[jednc]

Just now, mpretori said:

Tell us all the MAGA news! Biggest tax increase(Tariff) in United States history is doing wonders for the markets and everything, right? 

I have no idea what this hissy fit is about. Sorry

[KJHburg]

In other bad news there is a doughnut pile up on the line at Krispy Kreme today at Concord Mills.  Unfortunately these all had to be destroyed.  

I am 100% AGAINST A RECESSION no matter who the President is and I would suggest taking the  debates to the Political thread.

 

[A2.]

1 hour ago, jednc said:

I've been here long enough to remember the original A2. It was all doom, gloom and melodrama then too. 

 I am never doom and gloom, just realistic. I warned in late 2007 a lot of my friends to take measures to protect their hard earned savings and investments from what would eventually be one of the worse financial debacles in modern history. I was ridiculed then by many as markets and home prices kept going up, but I was willing to speak truth to spare many some pain. I am not being negative, just warning that this recession will be quite severe. If we can’t be real, then what’s the point. Plus I would rather people prepare than simply whistle past the graveyard. I could be like other talking heads and tell you it’s all good and keep on rolling like nothing is going to happen. But then I would be being dishonest to myself.  That said, I am not a fortune teller. However,  I am willing  to put my neck, my money and most importantly my name on the line to warn you and others of what is dead ahead. The timing is always tough, but suffice it to say it will be within 18 months. And you can take that to the bank. 

ps—-I am not mad in my response towards you jednc (or anyone who might disagree with my comments for that matter), but I just don’t want anyone to overlook what is about to unfold abroad and here stateside. This calamity is coming. We can be foolish and act as though it’s not, or we can prepare. The best part is in preparing for any storm, you never lose, even if the storm isn’t as bad as predicted. But to do nothing is utter stupidity. 

A2

Edited September 3, 2019 by A2.

[A2.]

On a related note, I just want to say that I totally understand whenever someone pushes back on me for a post that is negative in its scope. That said, I have no  agenda. I don’t make money by anyone who likes my posts. I am not offended when anyone disagrees with me, as that is what makes for a good discussion. However, I just wanted everyone to know that I’m as bullish on Charlotte as ever. In spite of what I have posted, the longer term prospects for Charlotte remain quite bright. Just wanted everyone to know I am not trying to bring down the mood. Just trying to let my UP buddies know what’s up in the Financial world. Plus Charlotte has grown up so much this last decade, it should make us all proud. Even in the face of a Recession, the QC is head and shoulders above where many other cities are. I know of many places that wish they had just half as much in the development pipeline as Charlotte. Yes, in the event of a major downturn, the development will slow (and probably quite a bit), but recessions are meant to bring back equilibrium. Markets that overheat correct. It’s just the way it is. It’s just this time there is a ton of correcting that has to happen. Never fun to take the medicine, but it is what it is. 

A2

Edited September 3, 2019 by A2.

[TheMightyBK]

A2, are you an economist by profession?  Genuinely curious why you're so certain of a recession on the horizon...my financial advisor isn't reading the tea-leaves as quite so dire...

[A2.]

58 minutes ago, TheMightyBK said:

A2, are you an economist by profession?  Genuinely curious why you're so certain of a recession on the horizon...my financial advisor isn't reading the tea-leaves as quite so dire...

I currently work in the area of Finance & Trading and have been doing it for the last twenty years. Over the last couple of decades I have had the privilege of advising traders & advisors at both the retail and Institutional level. In the most simplistic of terms, my profession is one where I actually “advise” the advisor and help them not to make major financial mistakes (literally).  I help them to construct portfolios based on the needs of the client with a balance on managing risks and giving equal ground for sensible growth.. In just the last few years I have helped place billions of dollars into strategic investment strategies, mainly with clients on the Eastern seaboard. So I guess you can say that it’s my job to read the “tea leaves”. 

On a related note, most advisors and talking head economists are by default perma-bulls. It isn’t easy to be a Bear when your practice is profitable based on assets under management. That said, the good ones are players on both sides of the market. And they are the ones who manage the Big bucks. Retail guys are always focusing on buy and hold and ripping clients for another commission on another sale of a security or product. 

On the personal side, I’m also an avid trader and have a fairly good grasp on both the technical and fundamental side of the markets. One of my best years in trading  was actually 2008 where several of my option strategies worked out quite well in the market rout. 

A wise man once said, “Bulls make money, Bears make money, but pigs get slaughtered!”

My sole job is to be nimble enough to know when to be bullish and also when to be bearish. But above all to not be a pig.

Ps—-if you want data points as to the why this market and economy are in trouble focus on the Bond market. It’s the canary in the coal mine. And right now, it’s screaming recession. Not to mention we have trillions in sovereign debt with negative yields. This is an insane situation and the resulting effects are more dire than I have the time to type up. Just know that with local, state and federal deficits growing to all tine highs and personal and corporate debt equally as high, the end result is not a good one. Not to mention the actual inversion of the yield curve which is telegraphing trouble dead ahead. 

I will be in San Diego this week giving a talk to hundreds of advisors on this very topic. And trust me when I say that your advisor has a lot of company with other advisors out there  that aren’t as worried. And that is what worries me most. Not to mention the retail investor who is still throwing money in the equity market while Institutional shares are being unloaded at the fastest pace in nearly a decade. 

A2

Edited September 3, 2019 by A2.

[Vitamin_N]

8 hours ago, A2. said:

Ps—-if you want data points as to the why this market and economy are in trouble focus on the Bond market. It’s the canary in the coal mine. And right now, it’s screaming recession. Not to mention we have trillions in sovereign debt with negative yields. This is an insane situation and the resulting effects are more dire than I have the time to type up.

Can you throw us a bone on the effects of all the sovereign debt with negative yields? It's something that's perplexed me for a while. I've figured it's going to cause problems but I don't know what exactly.

[Miesian Corners]

14 hours ago, jednc said:

I've been here long enough to remember the original A2. It was all doom, gloom and melodrama then too. 

And as I recall, the economy collapsed, Wachovia failed, and billions in payroll left Charlotte. That wasn't melodrama, that was our reality. 

[Norm2]

I totally trust A2. I have been here long enough to know his predictions for our last recession came true.

[A2.]

2 hours ago, Vitamin_N said:

Can you throw us a bone on the effects of all the sovereign debt with negative yields? It's something that's perplexed me for a while. I've figured it's going to cause problems but I don't know what exactly.

Your not alone, it’s perplexing to many, including many bond traders. The way bonds are priced is they go up when yields fall and conversely bond prices go down when yields rise. Having negative yields on bonds means you are actually paying as the lender to the borrower. That is the ultimate in a fear trade. Essentially large institutional money is willing to pay a portion of their investment for the perceived safety of government debt in order to get back most of their principle. One theory is that there might be a currency crisis in the intermediate  future. So investors  are willing to invest $100 to get back $99, so that if there is a realignment in the currency of the country your investing in, that they would at least make good on their debt obligation with the new currency. I personally believe that is a fallacy as they could just as easily default on their debt. 

The other rationale is that some investors believe that we might be entering a period of deflation where return of your money is more important than the return on your money. 

The truth is no one knows how this eventually shakes out, including me. However, when trading and investing you have to read the data you have. And the data we have isn’t good. 

On a related, but conspiratorial note, I believe there are players positioning for a take down on Trump. He has had one thing to hang his hat on and that’s been the economy and the hot stock market. So a massive collapse all but insures he isn’t re-elected. 

On the other side of that coin, Trump isn’t stupid (enter jokes here) and he knows that there are players who want him out. So he is doing whatever he can, including massive tax cuts and wailing on the Fed to cut rates to keep the debt machine going a little longer to keep markets up through the elections. 

So we have essentially a big game of political chicken, that will have to resolve itself one way or the other. Throw on top of that other geopolitical issues and you can see why there is going to be fireworks

Hopefully that was clear as mud, lol.

 

A2

Edited September 3, 2019 by A2.

[A2.]

Can’t say it’s just me. Here is a geeky article on what is really going on underneath the surface. Again I could tag a hundred different articles, but suffice it to say that all that we are told by the talking heads that all is well  isn’t exactly truth. 

https://www.zerohedge.com/news/2019-09-03/us-manufacturing-weakest-10-years-new-export-orders-collapse

[Windsurfer]

Pretty awesome that I not only live in a boom town, but have all these brilliant econ minds, like A2, in the area.

I remember several folks at BOA and Wells remarking (4-5 years ago) that the cycle will be over around 2019.  Okay, it's been delayed a few months, but the natural cycle seems to be kicking in, regardless of what you may think about the president and/or conspiracies to do him in. ;-)

[A2.]

3 minutes ago, Windsurfer said:

Pretty awesome that I not only live in a boom town, but have all these brilliant econ minds, like A2, in the area.

I remember several folks at BOA and Wells remarking (4-5 years ago) that the cycle will be over around 2019.  Okay, it's been delayed a few months, but the natural cycle seems to be kicking in, regardless of what you may think about the president and/or conspiracies to do him in. ;-)

Indeed. Charlotte has a wealth of great people and talent. It will continue to be a magnet for years and decades to come for those seeking a higher quality of life with amenities galore and natural beauty all around from the Mountains to the Coastal region .

As I said before, recessions are all but certain in our economy. The great news is the people of Charlotte have a lot to be thankful for in spite of any future recession. And when the cycle booms again, Charlotte will be there to pick up where it left off. I personally believe it will still be building through the next downturn, albeit at a slower clip. 

A2

[Madison Parkitect]

Really appreciate all this info, @A2. I'm in the process right now of trying to figure out what to do with a small amount of money we have (do we stay in our current house and renovate a little and wait for the crash to buy a rental property, do we stay in our current house and buy a rental property now, or do we buy a new primary residence now and keep our current house as a rental), so it's nice to get another opinion from someone knowledgeable.

[QClifer]

@Madison Parkitect sell me your house in madison park. Im looking

[KJHburg]

5 minutes ago, Madison Parkitect said:

Really appreciate all this info, @A2. I'm in the process right now of trying to figure out what to do with a small amount of money we have (do we stay in our current house and renovate a little and wait for the crash to buy a rental property, do we stay in our current house and buy a rental property now, or do we buy a new primary residence now and keep our current house as a rental), so it's nice to get another opinion from someone knowledgeable.

I would not look for any crash in housing properties to wait to buy a rental homes.  Prices may come off their highs but does that mean crash in prices.  Rental home purchases should be looked as long term investment income stream.  All my rental properties when down in value in the 2008/2010 period all have recovered but I continue to own them so even when they dipped it prices it had no affect on me.  Large number of homes in the market that are rentals are own by institutional investors and they would love to squeeze out me the mom and pop investor (won't ever happen while I am alive)

It is much tougher to get a mortgage loan nowadays and even if unemployment goes up and foreclosures go up I don't think we have the level of foreclosures we had in 2008-2010.