patrick.net

Wow, Fed’s Statement Pushes Back against Rate-Cut Mania and End-of-QT Mania, Holds Rates at 5.50% Top of Range, QT to Continue as Planned

https://wolfstreet.com/2024/01/31/wow-feds-statement-pushes-back-against-rate-cut-mania-and-end-of-qt-mania-holds-rates-at-5-50-top-of-range-qt-to-continue-as-planned/

Not a surprise to me. I called it!

GNL says

AD says

Perhaps despair is this year much to the dismay and disapproval of the Democrats (unless it drops off right after the election).

Despair over what?

Refer to Eman's housing bubble chart, and "despair" is the region where housing prices bottom. Maybe prices bottom by late summer 2024, so another 10% drop at least in housing prices from current price level.

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AD says

GNL says

AD says

Perhaps despair is this year much to the dismay and disapproval of the Democrats (unless it drops off right after the election).

Despair over what?

Refer to Eman's housing bubble chart, and "despair" is the region where housing prices bottom. Maybe prices bottom by late summer 2024, so another 10% drop at least in housing prices from current price level.

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It could also be next year or the year after. No one knows when the next recession will hit us, and no one knows how deep it will be. It’s all a guess.

Based on historical data, I thought the current cycle would peak around 2017. I remember when we bought 2 buildings in 2018 and I told myself I’m going all in at the peak of the market. We did well, and we bought 2 more buildings in 2019. They all have worked out ok thanks to low mortgage rates.

AD says

They want rates cut because the economy is shedding jobs that are middle class. The only major job growth is in low wage jobs.

They figure it will cause another asset-inflation cycle and a repeat of 2023 for the stock market is going to help Biden.

And they think we'll get a repeat of a hiring boom by the major corporations since interest rates are lower.

Economic conditions are delicate for Biden because you could have a major increase in unemployment within a couple of months of the election.

Timing is working against Biden since the stock market is over bought from 2023, and unemployment cannot remain this low.
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The probability of the Fed cutting 0.25% in March currently stands at 55%. There was no chance of the Fed cutting rate today although Pocahontas and 3 D senators pleaded for a cut

https://x.com/kobeissiletter/status/1752781170742350184?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

So Fed is not beholden to Dims as much as people alleged?

Eman says

The probability of the Fed cutting 0.25% in March currently stands at 55%. There was no chance of the Fed cutting rate today although Pocahontas and 3 D senators pleaded for a cut

I doubt it Mister Eman unless PCE remains below 2.5% for three consecutive months ..then the Fed may start to lower rates, especially if unemployment upticks ...

AD says

They want rates cut because the economy is shedding jobs that are middle class. The only major job growth is in low wage jobs.
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Ok. But how much of that is due to structural changes vs whatever the Fed does or dies not do?

Eman says

Guessing surplus in Dallas and Phoenix are due to lots of new construction. But New York and Denver, shithole conditions combined with ridiculous rents.

"Y’all know that I watch this because, as Luke Gorman has taught me, “[T]he US government’s debt to GDP ratio is about 120% and its budget deficit is forecast to be about 7% of GDP [in 2022]. A 300-basis point hike should increase the budget deficit to about 11% of GDP. Since 1991, all 18 other governments with deficits exceeding 11% of GDP and debt to GDP ratios exceeding 110% defaulted within two years.

Here’s the other piece of the puzzle: The federal deficit will probably reach 6.8% for 2023."

-Franklin Sanders

AD says

Eman says

The probability of the Fed cutting 0.25% in March currently stands at 55%. There was no chance of the Fed cutting rate today although Pocahontas and 3 D senators pleaded for a cut

I doubt it Mister Eman unless PCE remains below 2.5% for three consecutive months ..then the Fed may start to lower rates, especially if unemployment upticks ...

The probability is down to 31% now for a March rate cut. I’m not smart enough to know what the Fed will or will not do. I just share statistics. If I knew what the Fed would do, I wouldn’t be posting on Patnet.

Eman says

If I knew what the Fed would do, I wouldn’t be posting on Patnet.

You keep telling us how rich you are in investing in real estate and still post on Patnet. So why would it make a difference if you knew what the Fed would do as far as posting on Patnet. Knowing this info is not going to make you rich as much as having inside information on a stock and buying calls or puts.

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AD says

Eman says

If I knew what the Fed would do, I wouldn’t be posting on Patnet.

You keep telling us how rich you are in investing in real estate and still post on Patnet. So why would it make a difference if you knew what the Fed would do as far as posting on Patnet. Knowing this info is not going to make you rich as much as having inside information on a stock and buying calls or puts.

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What is your definition of rich? I’ve done alright, and I live a comfortable life thanks to my wife. Our net worth is peanut compared to some people in our sphere and our neighbors.

Do you know you much you can make buying 0DTE calls or puts and be on the right side of the trade? I’ve seen it up to 10,000% ROI.

Eman says

Do you know you much you can make buying 0DTE calls or puts and be on the right side of the trade? I’ve seen it up to 10,000% ROI.

I would say you have equity of at least $5 million in real estate and $1 million in stocks/bonds/ETFs, and at least $100,000 in cash such as checking and savings account. Anymore than $3 million in equity is rich, even in California.

Yes I know this as far as zero days to expiration (0DTE) but its not that you are going to make that much money based only on a Federal Reserve decision on the same day such as for ticker SPY or even on the leveraged or inverse ETFs with Proshares.

Which ETF or stock have you seen the 10,000% ROI ?

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NuttBoxer says

Eman says

Guessing surplus in Dallas and Phoenix are due to lots of new construction. But New York and Denver, shithole conditions combined with ridiculous rents.

Exactly as far as Democrat shitholes. Zillow insists Denver is still got warm demand conditions but the chart shows rent is trending down.

https://www.zillow.com/rental-manager/market-trends/denver-co/

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This guy is generally a bear. He thinks yields are heading lower. Based on the bear flag thesis, 10-year T bond is projected to drop to 3%.



https://x.com/northmantrader/status/1752720530740818261?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

AD says

Eman says

Do you know you much you can make buying 0DTE calls or puts and be on the right side of the trade? I’ve seen it up to 10,000% ROI.

I would say you have equity of at least $5 million in real estate and $1 million in stocks/bonds/ETFs, and at least $100,000 in cash such as checking and savings account. Anymore than $3 million in equity is rich, even in California.

Yes I know this as far as zero days to expiration (0DTE) but its not that you are going to make that much money based only on a Federal Reserve decision on the same day such as for ticker SPY or even on the leveraged or inverse ETFs with Proshares.

Which ETF or stock have you seen the 10,000% ROI ?

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This was 7/29/2022. This guy bought $880 TSLA calls (pre-split) for 10 cents that morning. Before the market closed, it was worth over $10. I was just following the guy. I made $10k on that trade while he made millions. Learned a few nuggets from him before he quit the discord to open his own Private Equity firm. The guy is a pro day trader who trades big big money.

Eman says

This was 7/29/2022. This guy bought $880 TSLA calls (pre-split) for 10 cents that morning. Before the market closed, it was worth over $10. I was just following the guy. I made $10k on that trade while he made millions. Learned a few nuggets from him before he quit the discord to open his own Private Equity firm. The guy is a pro day trader who trades big big money.

Eman, yes but this example had nothing to do with a decision by the Federal Reserve such as rate cut decision.

That is what I originally asked you as far as you saying if you knew what the Federal Reserve was going to decide then you would not be on Patnet.

I was stating it still would not make you a lot of money by having inside info on an upcoming Federal Reserve rate cut compared to having insight on a stock.

I’ve seen he caught and rode the waves before on SPX and QQQ. 500-1,000% return was achievable. It was once of those “ fight the trend” until it reverses/changes. He kept adding to his position, be it calls or puts, on each bounce or pullback of the trend. It was fascinating to watch.

I don’t have the skills he has and the balls to bet like he bets. I remember he said: Once the Fed announced, the first move is the direction of the move, followed by a reverse head fake, then the 3rd move is the real move. So if A is up, then B is down, and C is up.

Today, the first move was down, second move was up, and the third move was a flush down.

When market expects something and it doesn’t get it, it throws a tantrum. Oversold will get more oversold. It was fascinating to watch he kept adding to his downtrend positions on each bounce. It was crazy.

So knowing what the Fed will, or will not do, can help one front run the market. Just ask Nancy Pelosi.

I believe his name was shared on here before. Looks like he expects the commercial real estate (CRE) market will experience a big downturn. If he’s right, the Fed will cut rates so fast when this CRE market hits the fan. Time will tell.

One thing Warren Buffet said while Sam Zell aka the grave dancer, learned it the hard way: “Liquidity = Value” during time of crisis. That’s the best time to go shopping.

https://x.com/triplenetinvest/status/1752859069734670590?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

Someone has been paying attention. If tech do well, Bay Area real estate will do well and vice versa.



https://x.com/rohindhar/status/1753839040162591074?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

Eman says

Someone has been paying attention. If tech do well, Bay Area real estate will do well and vice versa.

Need to look at the Heat Map for San Fran / San Jose companies.

Facebook (or Meta) may do very well but overall the jobs market for that area may be barely satisfactory.

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Been looking at homes in the Castle Rock, CO area. The place is exploding with new development.

While Colorada has a reasonable low median property tax rate (0.6%, 39/51 lowest), the “Metro Districts” zing you to make you payoff infrastructure bonds, taxing you at around 1.24%, right around the median tax rate of New Yawk.

Al_Sharpton_for_President says

Been looking at homes in the Castle Rock, CO area. The place is exploding with new development.

Love me some CO, but I'd tread lightly. Not searching for links, but I've been hearing from friends out there it's not good. I don't know Castle Rock, CO but just a warning. Great state to visit. Not sure I could live there with the types of people out there. And I think their housing has peaked. It's south of Denver, but to do anything fun in the mountains you're going to have to take I-70. It's a shit show in the summer and when it snows even worse. Traffic. They need a multi-billion infrastructure project to widen 70.

Unless you're just moving to get out of a state you don't like that's worse. I wouldn't be moving to basically a blue state at this point either. My 0.2¢ but you might enjoy it. The popular areas of Montana where I was last week are turning into blue, hipster shit holes. Colorado is already there.

Yeah, probably right, Wookie. I think I’ll stick with Idaho.

Eman says

I believe his name was shared on here before. Looks like he expects the commercial real estate (CRE) market will experience a big downturn. If he’s right, the Fed will cut rates so fast when this CRE market hits the fan. Time will tell.

Last week I heard the Fed is absolutely going to be forced to cut rates soon if only because that insufferable cunt Yellen in the Treasury is flooding the Fed with bonds in order to force them to cut rates to fake a better economy for Biden in an election year.

Seems like the decade of inflation predictions may be true and we're not really heading out of the woods.

just_passing_through says

Last week I heard the Fed is absolutely going to be forced to cut rates soon if only because that insufferable cunt Yellen in the Treasury is flooding the Fed with bonds in order to force them to cut rates to fake a better economy for Biden in an election year.

Seems like the decade of inflation predictions may be true and we're not really heading out of the woods.

I don’t know how this downturn will play out be it inflation, deflation, or stagflation, but this cycle has taught me a valuable lesson. Interest rate can spike at a much faster pace than all previous cycles so taking “the average” is no good.

What we have done right is stress testing our portfolio on an annual basis and keeping adequate reserves using 25% vacancy/rent reduction. This has made our lenders very comfortable. Had lunch with two of them in December. They said our loans/portfolio are fine. Apparently, banks are stress testing their borrowers’ loans/portfolios too.

Whenever the next downturn comes, I’ll do things a little different. Experience is the best teacher.

Apparently, someone is using a formula similar as us. Buy flips at 50-60% ARV.

If anyone learns it from the gurus and buy at 70% ARV, good luck. Reality is different, and buying at 50-60% ARV is possible.

ARV = After Renovation Value, correct?

Eman says

Apparently, someone is using a formula similar as us. Buy flips at 50-60% ARV.

If anyone learns it from the gurus and buy at 70% ARV, good luck. Reality is different, and buying at 50-60% ARV is possible.

As the buyer I'd run. The only way to save money is to put "pretty" shit quality into it. That's what it looks like to me. Lipstick on a pig. Nothing post 1980 is built worth a shit. Not an opinion. Fact.

A flip is even more scary with the shit products coming out. Real hardwood floors were a thing at one time. And anyone with design sense would have painted it instead of white. That's a classic cheap flip look and the excuse is they'll want to paint it their colors. Bull shit. My wife isn't a designer by any means, but we get compliments on our paint colors any time someone comes over. If you're painting the walls make it fucking look good. It's not hard.

Most flippers are destroying housing. It's sad honestly. Cut corners. I rehabbed my entire house personally. Didn't use shit tile. Spent money on quality paint. Nice appliances. My fireplace wall and mantle is $7k. I could have painted the brick fireplace for $200 and call it a day. That's what flippers do. Don't ever buy a listing that was sold in less than a year previous. It 100% is shit. Life experience. You will get screwed. Our sellers screwed over countless people. I knew, but not my business or place to call it out. I just know what flippers do.

just_passing_through says

Last week I heard the Fed is absolutely going to be forced to cut rates soon if only because that insufferable cunt Yellen in the Treasury is flooding the Fed with bonds in order to force them to cut rates to fake a better economy for Biden in an election year.

What you heard is crap.

For the reasons you mention and more, there are vested interests in forcing the Fed to cut by pitching viral bullshit saying they will to present a fait accompli in an attempt to force the Fed's hand.

Sort of like how Justice Souter discovered he was retiring by reading about it first in the NY Times.

I smelled this a mile away when all the 'experts' on PatNet (and all over the internet & media) starting in mid to late last year were pitching this viral BS w/o applying any critical thinking to what was really going on.

In the end, the Fed could be as hopelessly politicized as the test of our institutions and cave in later this year. But I am betting otherwise. Inflation has transferred to services and wages. This was always going to happen because of demographics affecting the working age population. Biden's fiscal fuckups and supply chain probs before that were just the impetus to ignite that.

The cost of Capital financing is triple. And will triple again going forward. The Fed doesn't have to do anything.and that will still happen.

It goes to show the difference between Bay Area flips and Midwest flips. I’ve shared my flips on here. I’ve also shared why it makes sense to flip houses at $1k/sf than $500/sf. It makes sense why Midwest flippers use the cheapest materials as their property value is closer to $200-$250/sf.

Labor cost is the same for us. Just upgrade the materials, and the ARV will go through the roof. No reason to cheap out like the Midwest.

Elisa Covington is in my market. She has done well leaving her W2 and becoming a full time flipper for several years now. Just by her accent, everyone knows English is her 2nd language. America is truly the land of opportunity for immigrants. We don’t know everything…..sometime including the language, but we’re willing to work hard, and this country rewards us for it.

https://youtu.be/ID49a3DKJYk?si=XLFB2wN1crczU2BC

In high priced markets like the Bay Area, whatever upgrades we put in our house, we tend to get back and more sometimes. I’m not sure the same can be for many Midwest markets especially the lower ends. To put things in perspective, working class neighborhoods in San Jose are still trading for $750/sf on average. A mind boggling number for Midwest folks.

Eman says

Labor cost is the same for us. Just upgrade the materials, and the ARV will go through the roof. No reason to cheap out like the Midwest.

Nope. Labor is more. Materials are more. The midwest isn't cheap though either. I've been in enough CA properties on vacation. They're generally trash. You getting defensive as a flipper. Why? I know construction. My family has been in it for decades. My uncle has 3 gates to get to his home in Scottsdale. The tweet you posted is a trash flip. I've seen it. I know it.

Shit on me all you want. I know a shit flip when I see it. These are facts and not opinion. What you posted is pure trash.

A lot of sharks out there. Owner paid $28k for this house during the downturn, it’s now worth $150k. I guess the house is in a working class neighborhood in the Midwest somewhere? Seller financing at 11%? Yikes!

https://x.com/1chrismcg/status/1754169078585938213?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

WookieMan says

Eman says

Labor cost is the same for us. Just upgrade the materials, and the ARV will go through the roof. No reason to cheap out like the Midwest.

Nope. Labor is more. Materials are more. The midwest isn't cheap though either. I've been in enough CA properties on vacation. They're generally trash. You getting defensive as a flipper. Why? I know construction. My family has been in it for decades. My uncle has 3 gates to get to his home in Scottsdale. The tweet you posted is a trash flip. I've seen it. I know it.

Shit on me all you want. I know a shit flip when I see it. These are facts and not opinion. What you posted is pure trash.

Why would I be defensive? I said labor is the same for us, which is my partner and I. We get a higher ARV if we use better materials. No reason to cheap out like the Midwest where the cost per square foot is a lot lower.

I shared my flips on here with links for the readers to see. What did you share with links? It’s all your opinions, and we know what people say about opinions.

Eman says

I shared my flips on here with links for the readers to see. What did you share with links? It’s all your opinions, and we know what people say about opinions.

Dude, you're flipping for a profit. You definitely don't use quality products and materials. I've been in well over 5k properties. I've seen the links and photos. Just because you sold at a profit doesn't mean it was good work dude. I think you know this.

Never met a flipper that didn't cut a corner on labor, construction or materials. 100% of the time. Not even debatable and you know it. Just own it. You put lipstick on a pig and screwed someone. That's the game. I'm not an idiot.

WookieMan says

Never met a flipper that didn't cut a corner on labor, construction or materials. 100% of the time. Not even debatable and you know it. Just own it. You put lipstick on a pig and screwed someone. That's the game. I'm not an idiot.

So true. I met a victim who fell for a shack of ~1.6m that the flipper paid ~1.1m few months back!