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Mann Overboard

AN EVERYTHING UPDATE :)

UPDATE – MARCH 23, 2023 – A few items to update regarding the post below and other recent posts. I had heard that 1/3 of bank deposits are uninsured. I just saw a chart from the FDIC that says about 1/2, or about $9 Trillion (!), in deposits are uninsured. No banking system could withstand even 20% of that amount being withdrawn. Money continues to leave banks as consumers can get 4%+ in money market funds and T-Bills versus 0.5% in banks. With the inverted yield curve, banks are unable to pay 4%-5% on deposits in line with the Fed Fund Rates.

Here is a list of banks with the most unrealized losses in relation to their total equity capital. Remember, the Fed is letting banks get funding on their underwater bonds at full par value. So, this doesn’t necessarily mean a run on deposits at these banks will make them go under. But, they are on thin ice. Customers Bancorp, Inc., First Republic Bank (been in the news for a week), Sany Spring Bancorp, Inc., New York Community Bancorp, Inc., First Foundation, Inc., Ally Financial, Inc. (by far the worst ratio….and like CACC, in the auto loan business), Dime Community Bancshares Inc., Pacific Premier Bancorp Inc., Prosperity Bancshares Inc., and Columbia Financial, Inc. The late-SVB was in this group, too.

The more I understand what the Fed has done, it appears this is what I would call IQE1 – Indirect Quantitative Easing 1. Leave it to us Baby Boomers and our invention of creative financing to now come up with an Indirect QE:) Gotta love us:) In the end, it will probably be referred to as QE4. See my next post as to a term you will want to watch for to know when the Fed has gone all in on the real QE4.

As an aside, the Regional Bank ETF hit a new low by a few pennies today. The market is still sorting out which banks to sell and which to buy.

Also, I mention in the original post below that the market is telling the Fed to lower rates 150bps in 2024. I heard today that has been moved up and the market wants the Fed to pivot in 3-4 months and start lowering rates. No pressure on Powell, eh!

MARCH 21, 2023 – As the 1st Quarter comes to an end, this seems like a good time to update my thoughts on forecasts on many items. So, here goes. No particular order.
BANKS – As this has been the hot topic for the last 10 days. It seems like everyone is predicting hundreds of bank failures to come. The Texas Ratio shows 200 banks at risk. Folks we have entered QE4. I think the last QE was QE3. Correct me if I am wrong. If Vegas gave me good odds, I would bet no more American banks would fail this year. Yes, you heard me right. As there might be some small banks that are in marginal shape, I am thinking a better bet is less than 5 or so banks will fail. I am thinking total assets of banks that might fail will be under $50 Billion. Maybe much lower. There are 10 banks with relatively high CRE ratios. But, their reserves are likely high enough to handle upcoming CRE losses. And the Fed thru QE4 already shored up the weakness in their Balance Sheets. I learned from QE1 thru QE3 that the Fed isn’t going to allow our markets to suffer for too long. As the saying goes, buy when there is blood in the streets. That occurred on Monday March 13th. The S&P Regional Bank ETF I mentioned bottomed that day at 41.92. It has been higher since and closed today at 46.07. Up 10%. No, you wouldn’t have bought at the bottom tick. But, you probably would have bought very close to it as it was such an obvious moment in time. I have been wrong before. But, I can see that panic bottom not being violated and the ETF continuing higher this year. The entire world is anti-regional banks. That is when you should be pro-regional banks.
INFLATION – Geez this will get extremely long if I write as much as I did about banks:) I still see a July 12th annual reading of 3% or lower. 2% is still likely. I will throw out something you likely have not heard from anyone. There is a slim chance of a NEGATIVE inflation (aka deflation) reading at yearend or, more likely, in 2024. That isn’t a prediction I would lay too much money on. But, if you gave me the same odds that FDU had of beating Purdue in The Big Dance, I would put some money down.

FED FUNDS RATE – Everyone is asking this week what will the Fed do at the upcoming meeting. It is truly a 50/50 chance they will not make a change or raise the rate 25bp. In the end, there is minimal difference. The difference is more psychological. My guess is they make no change and defer such to April. The market was telling them they had 50bp more to go. Now it is 25bp. Let’s wait a month and see what the market says after things have calmed down. A surprising item I saw was the market is telling the Fed to DROP rates 150bp in 2024. Although the market forecast last year’s rate increases early in the year, I think it is a bit early to put much weight into the 2024 message. Also, remember, the average time between the first rate decrease and the last rate increase is 4.5 months. Since, we will likely have the last increase in March-May, it would be difficult to have a decrease by yearend. Again, give me FDU odds, and I would take a chance on a decrease in November or December.

THE BIG SHORT 2 – As I posted last August, this cycle’s ‘big short’ was auto loans. As of Yearend 2022, $20 Billion of Generation Z and Millennials auto loans are over 90 days past due. They need to watch a classic cult movie of the early 1980’s – Repo Man. They can probably stream it:) Digressing, my uncle was a repo man. I went out one night in Fort Lauderdale with him getting cars. Scariest night of my life. Back to now….Also, for 20% of Generation Z, over 20% of their after-tax income goes to a car payment!!!! Insanity. Of course, I am sure it is like their college loans and a gun was put to their head and they were forced to take on this debt;) SCOTUS will be listening to a case in 2024 about Biden wanting to forgive auto loan debt. Have some ethics. Have some morals. Pay your debt even if it takes the rest of your life!!! The one stock I mentioned was Credit Acceptance Corporation (CACC). Its all-time high was 703.27. Its bottom to date was at the beginning of year at 358.00. That is a 49% decline. At today’s close of 415, it is down 41%. That is far in excess of the DOW being down 12% from its all-time high. Not a bad call for those who actually played The Big Short 2.

BITCOIN – There is a current setup that is similar to two times in the past that took Bitcoin up over 60x and then over 20x. As assets soar in price, it becomes more difficult to have the same huge percentage increases. So, if this setup plays out, then maybe a 5x-10x move over the next 1-3 years is possible. From the recent major low around $16,000, that would be $80,000-$160,000. This will take some time to play out.

STOCKS & BONDS – It seems like everyone is looking for a recession this year. Everyone is expecting the stock market to fall apart. As I have posted on here many times, 2022 was the recession. In 2022, the global loss for stocks and bonds was about $36.5 Trillion (!!!). In comparison, the maximum loss in 2008 was about $23.5 Trillion and in 2020 was about $24.0 Trillion. What more do people want? A CRASH 50% larger than what occurred in 2008 isn’t enough? Since I seem to be in the mood to put out crazy forecasts, let’s not stop here. By yearend, I can see the DOW above 38,000 and the S&P 500 in the 4800-4900 range. 40k in ’24 has a nice ring to it. I would be interested if you see anyone else forecasting the DOW above 38k or S&P 500 above 4800. Those who know me know I have been a bear my entire life. I have always lived for downturns. For me to be this bullish, is beyond amazing to even me. A question I always want to ask analysts is what would it take for you to say your forecast is wrong. In this case, that would be the DOW breaking below last October’s lows at 28,660. If that occurs, the above is out the door.

OIL – I honestly haven’t looked at a chart since I sold all my oil and gas (aka pro-plant stocks) holdings the day oil hit $137 per barrel. This was about a week into the Russia/Ukraine dustup. The opposite of buy when there is blood in the streets is sell when everyone wants to buy something. That was the day of the high and oil has recently traded as low as $70. Almost a 50% decline. Do you remember a year ago when everyone said we were in for a major shortage of oil and prices would go even higher? What are those people saying now? This is the first time in my life I have not owned oil and gas stocks. It is getting tempting after a 50% decline. I may check into the charts and see what is up. If I do, I will post my thoughts here. In the interim, please boycott EVs and buy only gas vehicles and devices and help the plants around the world flourish and feed its 8 billion people. I always tell people that whether it is bonds or corn or cattle or oil it is us futures traders that dictate what the price is and what consumers will pay. It is not supply and demand. It is not government actions. Commodity traders are the ones in control.

HOUSING – I am exhausted writing the above. I will cover housing in the near future. There are mixed signals. But, in general, I am feeling my expectation of unexpected market strength is playing out perfectly. NAR’s price index just declined on a year-over-year basis for the first time since 2012. However, AEI’s HPA saw a recent monthly increase. Also, Pending Home Sales are up 9.3% in the two months thru January. That is the dead of winter and home sales are up almost double digits. Remember, a year ago, the housing market was super strong. So, this isn’t working off of low numbers. Looking at a chart since 2001, when Pending Home Sales turn up they don’t usually turn back down. My prediction re mortgage rates has come very close to occurring. We have not been below 6% yet. This decline is getting long in the tooth and I am watching the charts to see when the bottom is in place and we turn back up. Although the rates have been down ever since I predicted such, it is looking like a move below 6% might not happen. Still a chance though.

You’re tired. I am tired. I hope you find the above of interest. Even eye-opening. Forecasts obviously do not come true 100% of the time. Keep that in mind. I certainly do:) I am disappointed with even a single incorrect forecast. I give it my best to be right as much as possible and to admit when I am wrong. I rarely see the pundits come out and say I was dead wrong. They should be forced to do such.

Always glad to hear from you. Please email me with any thoughts you have. Any charts or data you see that I might be interested in. I am at GeorgeRMann@Aol.Com.

Shalom,

The Mann

Mann Overboard

ENDING MARCH AND INTO APRIL WE GO

UPDATE APRIL 3 (EVENING) – Thankfully, a calmer week in the books.  Nothing has changed regarding my market forecasts.

I did want to congratulate Morgan Stanley on correctly forecasting the 700,000 job losses that was reported this morning.  That was an extremely difficult forecast to make and to nail it is impressive.

Oil was up 40% in two days.  We will let it play out a bit more to see if a final low is in place or not.

It is becoming apparent that there will be some major changes in our world going forward.  Hopefully, AirBNB and Uber are dead.  Dining in at restaurants might be forever changed, too.  How do we know that someone in the kitchen area doesn’t have the virus?  Plus, the virus can stay around 2-3 weeks after a place has been thoroughly disinfected (per the Diamond Princess experience).

Grocery delivery will finally succeed.  25+ years in to its existence, telecommuting will finally go mainstream.  Executive offices (now called shared worked areas, .e.g. WeWorks) should go back away.  They are simply VIs as I have termed them – Virus Incubators.

Other VIs are apartment complexes (especially mid- to -high rise buildings) and large cities like New York and San Francisco.  The denser the population the higher the rates of crime, disease, and numerous other issues.  If people truly want healthy lifestyles, move to the suburbs or rural areas.

The changes will be interesting to observe.  Everyone continue to be safe.  Maybe next week will be more interesting regarding the markets.

Godspeed

The Mann

UPDATE APRIL 1 (EVENING) – You know you are becoming immune to the chaos when 1000 point days in the stock market are no longer shocking.   Not much to add this evening.  Stocks might be starting their next significant downturn, but it isn’t a certainty.

One thing to note is that all of the stimulus acts that are being passed are only trying to replenish what has been lost.  There is no pent-up demand.  Wealth and Output have been permanently lost.  It is a misnomer to call these stimulus packages.  No stimulus is going to occur.  The money handout is simply trying to make as many people and companies as whole as possible.

I will say that it is about time that an infrastructure act is being considered.  $2 trillion at this time.  We missed the opportunity to do that in the last crisis.  With an expected 45 million people being unemployed over the next month, it would be good to put people to work to build our versions of the Hoover Dam and TVA and so on.

I won’t bore you as there isn’t much to add to what I have already said.  It is truly tragic that we will start seeing 3000 and 4000 Americans die each day.  Amazing we will likely hit 100,000 deaths by the end of this month.  And we just surpassed 4000 today.

Hopefully, we have learned a lot from this experience.  The sad thing we have learned is that some people are plain stupid and some just don’t care about others.  But, that is nothing new for the human species.  A lot of the virus spreading is due to plain selfishness.

The upside is we have seen how good most people are.  How we help each other out.  It would be great if we continued that after this pandemic is gone.  But, well before Election Day I am sure we will be back to a hateful 50/50 split country again.  Tragic.

I will post Friday evening.  As the markets are starting to calm down (well, to me they are getting boring already), I will likely post less frequently.

I did want to thank everyone that has been sharing information with me.  The more I can absorb the better.

Please stay safe!

The Mann

MARCH 30 (EVENING) – As expected, our essential shelter in place recommendation has been extended thru the whole month of April.  April has been projected to be the month where we finally peak in cases and start to see the curve flatten and rollover, hopefully.

I am confident the shelter in place will be extended to at least May 15th.  Maybe until Memorial Day weekend.

Trump is right when he says people in this country want to live a normal life.  Colds and the flu have never gone away.  We live normal lives with them coming and going thru the population and seasons.  I guess that will be the way with Covid-19, also – when we have a vaccination.  That is supposed to be 12+ months away.

There is a point where we just have to get back to normal and deal with the Covid-19 cases and deaths.  There is no choice.  But, we had to do this Social Distancing in this initial phase so as to avoid the 2,000,000+ deaths that were projected if we did nothing.

Continue to be safe.  And take advantage of the world being on a long time out.  I always wanted things to slow down.  To stop.  Time to stand still so we could relax and smell the roses.  Now is that time. This likely will not happen again in our lifetime.  Take advantage of this.  Reduce your stress, permanently.  Learn that things do not need to be rushed.  Do all of those things you stacked up to do when you finally had some time to do them.  You have that time now!

As for the stock market, today was up a bit.  I still cannot rule out a move above last week’s high of 22,595.  Whether or not that occurs, the expectation of a 25%+ decline remains.  I took advantage of the rally last week to get out of some oil stocks I stupidly got in too early.  We all make mistakes eh:)  But, best to cut your losses than let them ride.

Oil broke below $20 today.  I believe we are seeing the final down wave to what might well be the end of a 120-year combined bull and bear market.  I haven’t followed up on the timing issue mentioned last week.  So, just sitting on the sideline and watching the crash continue.

Gold and silver didn’t do much.  Significant declines are still expected.  That is a bit longer-term view so this isn’t a day-to-day forecast.

Everyone went crazy about the US Dollar being so strong.  So last week, I believe, was one of the worst weeks ever for the USD.  The markets love to get everybody to one side of the ship before sinking them.

So, nothing has changed re my forecasts.  The markets are starting to trade in a bit of a range.  This helps alleviate all of the record oversold readings for technical indicators.  We can’t go straight up to infinite nor straight down to zero.  More Wednesday evening when I post next.

I will drop this after one more mention of it….I don’t recall firefighters and police whining after 9/11.  Those people were proud of the fact that their peers ran straight into those towers to save as many people as possible.  I don’t recall them saying they were like lambs being led to the slaughter.  They were true heroes.  They know every day they go to work could be their last.  They don’t ask for sympathy.

So, I just don’t get it, and am truly disgusted by, the doctors and nurses in New York complaining about everything…we are risking our lives, we are overworked, whine whine.  They are truly ruining the appreciation they would get and deserve.  Maybe they just aren’t as tough as firefighters and police officers.  That isn’t in doubt really.  If you didn’t think you were going to be in many situations where you could become very sick or die by helping others, you shouldn’t have become a healthcare provider.  Thanks to the majority that do their job proudly and don’t whine in hopes of getting pity.

And as to us real estate appraisers arguing that what we do is essential….really?  An appraiser friend in Puerto Rico said they ruled it wasn’t essential.  I agree.  Albeit, I was happy the appraiser came out and appraised my daughter’s farm today so hopefully her closing will still occur in 2 weeks:)  But, truthfully, this isn’t an essential service.  Closings can be pushed back 2-3 months like everything else.

Enjoying life on the 5/3 Farm…..til Wednesday evening….be safe and stay well.

The Mann

Mann Overboard

JUST ANOTHER RECORD BAD WEEK

MARCH 20 (EVENING) – I had thought the markets had calmed down and it wasn’t much of a week.  Then I read this was one of the worst weeks since 2008.  I thought last week was.  Or the week before that.

I don’t have much to add to my lengthy post two evenings ago.

New lows should be set next week.  The question is will we have the largest declines to date – which would see more 3000 point down days.  Or will this be a moderate decline.  It is tough to see the DOW taking on another 3000 point down day or two.  But, …..

In trying to fine tune a range for a bottom, nothing has changed the 14,400 to 18,400 figures.  But, 15,500-15,700 is now looking good for a more precise bottom.  As I said initially, I think the low will be towards the bottom of the range.  I just can’t see us having an intermediate term bottom above 17,000.

The subsequent rally should return to the 21,000 area.  I didn’t think much about that, but then I realized that could be a 40%-50% rally.  I guess that isn’t something to sneeze at.

But, first let’s get down to the bottom.

VOO did have -$1.3 Billion this week.  So, it moved to the outflow list.  But, for the week investors poured over $6 Billion into stock ETFs.  This is insanity as the market crashes.  When tens of billions of dollars of funds are being taken out of stock ETFs we will be nearing a bottom.  We have a long way to go.

Remember, no need to be alarmed about the number of China Virus cases soaring for the next 4 weeks.  Experts say the cases should peak out by the end of April.  When optimism kicks in at the cases leveling out and then declining, don’t get carried away.  We are still in a major economic downturn that has only just begun.

For those looking for some perspective re the virus.  Wuhan had its first case on November 17th.  This week no new cases were reported in all of China.  From nothing to nothing in 5 months.  I forget when we had our first case – mid-February?  5 months gets us to July.  But, we got on top of this earlier than China did and the virus doesn’t like temps above 80 degrees and Summer is coming.  So, things are looking real good for the USA to be working on wrapping this virus up in May and June.  Let’s hope, eh.

Regarding real estate….I have heard that renters are leaving apartments to go to rental houses.  Less chance of catching the virus in a freestanding house.  Also, people are recognizing what I have been screaming about for decades – big cities are dense and it is easy for a virus to spread to the masses.  Ask the Big Apple about that!  Suburbs and especially rural areas are where people need to move to.  The jobs will follow.  The decay in our largest cities will accelerate as crime festers, diseases run rampant, homelessness gets out of hand, taxes are too high, traffic is a nightmare, on and on.

Thanks to those that have sent me information to look at.  I have found several new sources I will follow.  I truly appreciate it.

We just got our first known case of the virus in Aiken today.  We shall see how it plays out locally.

Learn to enjoy time at home with the family….like we used to before the internet ruined everything.  Put a dent in those honey-do lists:)  I know I am getting a lot done around the farm.

Stay safe.

My next update will be Monday evening.

Godspeed.

The Mann

Mann Overboard

THE BEAUTIFUL STOCK MARKET DECLINE THIS WEEK

UPDATES AT BOTTOM….last one Morning of March 9

February 27, 2020 – I know, I am one of the few people that enjoy market declines.  But, I have always said I was born to deal with Bear Markets.  Bear Markets are when you invest for the upcoming Bull Market.

I was just thinking last week that nothing could stop this market and when I have always had those thoughts a top would occur.  Many indicators were at extreme readings and sure enough this decline was likely to occur.

Gold is in a toppy range because it started to move $50 a day.  Gold tops occur when gold gets very volatile.  This isn’t to say a move into the $1700s cannot occur.  Just saying that the time for a top has been activated.

As for the market, let me try to make this very clear – this decline is NOT about the coronavirus.  The stock market reflects social mood about events 6 months in the future – not today!  The first two quarters of 2020 should be just fine for companies.  The question to answer is what has spooked the market about July-September of this year???

The first thing that came to my mind was when is the Democratic National Convention occurring.  That is July 13-16th.  Who can be nominated that would shock the markets?  Wall Street would clearly be worried if Pocahontas was nominated – and wins in November.  I am not so sure they are worried about Bernie Sanders.  Maybe they are worried about a Sanders/Warren ticket?  Regardless of what will occur this Summer….just know that it will occur and it will be shocking.  So, unlock the masses, don’t be shocked when it occurs….whatever ‘it’ will be.

As for a dead cat bounce rally in the markets, today’s low was 25,752 in the DOW 30.  It is likely a lower figure will be hit on Friday since the markets closed at their lows.  Wherever this temporary bottom occurs, a rally of at least 1500 points should occur.  That is a minimum.  I can tell more once that rally is finally underway.

In the interim, hold on tight.  The November Election will have a larger effect on the market than the coronavirus.  Around April or May the markets should telling us how the Election will play out.

And don’t forget about 23,377 I discuss in a prior post.  10 days ago that seemed out of play.  All of a sudden, it is a figure to keep an eye on.

As for the beer virus, educate yourself as always.  Over 16,000 (maybe as high as 48,000) Americans have died this Winter already from the flu!!!  Coronavirus has been around since the 1960’s.  Lysol cans say it kills coronavirus (maybe not this new strain).  This is nothing new.  We do not have vaccines for ALL of the flu strains.  We simply guess at what ones might appear this Winter.  But, the strains we guess wrongly on will hit the masses.  Why would it be different with coronavirus.

Wash your hands and cover your mouth – simple logic for all of the time.  Oh, and don’t buy masks.  They won’t help at all.  Not even professional medical masks will help (unless you are a professional who knows how to wear them….and they say even then, it would have to be worn all of the time).  The Fake News Media always has an agenda.  Almost always that is a bad Agenda.  As always, educate yourself and ignore whatever the Fake News Media says.

UPDATE Evening of February 28, 2020 – That was a week for the ages!  Simply beautiful to look at the charts.

Today proved the masses wrong that think when stocks go down, gold goes up.  Gold had its worst day since 2013.  When people panic they sell everything….except T-Bonds which they run to for security.  T-Bonds are at record highs.  Which, of course, means there is only one way to go:)

It is doubtful today’s low of 24,681 is the low for this initial move.  But, if it is, a counter trend rally should carry to the 26,500-27,700 range.  But, first we have to see if Friday’s low hold.  Should be another interesting time next week, volatility will start to subside.

UPDATE Evening of March 2, 2020 – Well, the largest declines in history were followed by the largest rally in history today.  In one day, the DOW rallied to the target range noted above and closed at 26,703.  The markets do in a day or week what used to take months and years.  Amazing to watch.

Although I think most of this rally has already been achieved, I believe the market will become range bound for a week or two.  We need to simply settle down and let all of the indicators get back to being meaningful.  Time needs to unfold for awhile and projections will become fine tuned.  I am not a buyer at this time.  I want to let some time pass by and see where we stand.

As an aside, the markets are telling the Fed to cut rates by 75bp.  I suspect a 50bp cut will occur first as the additional 25bp might come into question over the next week or two.  100% of the time the Fed takes action AFTER the market has already made its move.  The Fed has NEVER taken preemptive action.

Update Evening of March 5th – The trading range is occurring. My initial target of 27,100 has now been hit almost to the dollar twice in the past few days.  No way I am thinking that will be the top of this rally.  The market is too volatile.  With more days in the books, it looks like 27,500 to 28,100 is a good range for the top of this rally to occur.  The scary part is when this rally ends the subsequent decline should be more than 5000 points.  I would say 8000 points would be likely.  That would tell me that come the end of Summer and beginning of Fall the markets expect a Trump loss to be a sure thing.  We shall see how this plays out.

More people died in the Nashville tornado than the coronavirus has killed in America.  Just a total joke to even be talking about the beer virus.  Godspeed to those in Nashville.

Update Morning of March 9th – And it looks like the 8,000 point decline is underway.  Hard to believe my projection of a top at 27100 was almost to the dollar.  But, oh well, I will wake it.  The Dow is down almost 2000 points at the opening.  That is what is called Wave 3 of 3 and the maximum velocity down.  Usually it means we are half way to where a bottom might form.  As I write, they just closed the markets for a 15-minute break.  This is the 1929 and 1987 Crashes all over again.

I went in to energy stocks big time this morning with oil down 25% today.  I will wait to invest more in a different industry once we start forming a bottom.  Buy on panics not at bubble tops.  Enjoy the ride folks.  Be patient.

19,100 is the early target for this 3rd Wave decline.

The Mann