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I remember 125% loans to equity in 2007. What most do not understand is that 'liar loans' had been around for 25 years or more before that. My wife and I have always been entrepreneurs. At least one of us have always owned a business. When we bought our first home in 1980 the mortgage broker told my wife to 'estimate' the earnings for her new clothing store. He then suggested the earnings and we both said, sure. The bank did not ask for a P and L, balance sheet, etc. Why? The loan was a 2nd at 18%. It was all about the money in 1980 and home prices were moving up so banks took zero fiduciary responsibility. It never changed. As we bought more homes we continued to 'estimate' our earnings. It always worked out for us because we had a plan to pay down loans as quickly as possible. I see the same problem with student loans. Most people don't take this easy money understanding how they'll use it as an investment. Like liar loans, it's just a trap. This is a tough country for anyone without a plan to get ahead.
While I'm still out of the market now that treasuries / CDs, etc. are paying so well, UL is one of my standard bond-like holdings in my retirement account.
For Hawaii Electric, the situation is going from bad to worse. It's beginning to look like a PG&E situation. From the WSJ:
Maui Alleges Hawaiian Electric Caused Lahaina Wildfire
County files lawsuit against the utility claiming negligence
Maui County filed a lawsuit Thursday against utility company Hawaiian Electric, alleging that its power lines caused recent wildfires on the island—including one that destroyed the town of Lahaina and killed at least 115 people.
The suit was filed in state Second Circuit Court in Hawaii against Hawaiian Electric and its subsidiaries on Maui, alleging the company failed to maintain the electrical system and power grid during a windstorm that lashed the island, resulting in three different fires that erupted on Aug. 8.
The fires in Lahaina and another community, Kula, burned over 3,000 acres, destroyed more than 2,200 structures and caused an estimated $5.5 billion in damage in the nation’s deadliest wildfire in more than a century. Some 1,000 people are still unaccounted for.
The lawsuit claims that the utility, known as HECO, acted negligently by not pre-emptively cutting power despite a warning the prior day from the National Weather Service of high winds and temperatures, along with low humidity—prime conditions for a wildfire. It also says HECO’s failure to maintain its system led to energized, downed power lines causing the fires.
Maui is seeking unspecified civil damages to cover losses to public infrastructure, fire response and other costs, decreased tax revenue, environmental damage and losses of historical and cultural landmarks.
“Maui County stands alongside the people and communities of Lahaina and Kula to recover public resource damages and rebuild after these devastating utility-caused fires,” the county said in a press release.
A HECO representative said in a statement, “Our primary focus in the wake of this unimaginable tragedy has been to do everything we can to support not just the people of Maui, but also Maui County. We are very disappointed that Maui County chose this litigious path while the investigation is still unfolding.”
The Wall Street Journal reported last week that HECO was in talks with firms that specialize in restructuring advisory work, after investors sold off its stock and bonds and Maui residents began filing lawsuits alleging it was negligent before and during the fires.
The utility’s power lines have been a suspected cause of the fires since videos surfaced of grass and brush being ignited near Lahaina and Kula and numerous home electronic sensors detected faults around the island. The fires were fanned by high winds as Hurricane Dora passed hundreds of miles to the south.
Several people reported utility equipment igniting fires. In the hills above Lahaina, Dominga Advincula said she was leaving for work between 6 a.m. and 6:30 a.m. on Aug. 8 when she heard a power transformer blow in a field nearby. “It sparkled like fireworks and landed in tall grass,” said Advincula, 56. “That started the fire.”
Proactively shutting off power lines to reduce wildfire risk is common practice among utilities in California, but that strategy has to date been rarely used elsewhere. Utilities across the West are working to establish formal plans for doing so when dangerous winds pick up.
PG&E, the utility company serving most of Northern California, has relied heavily on shutoffs after its equipment ignited more than a dozen destructive wildfires, including the 2018 Camp Fire that killed 84 people and destroyed the town of Paradise.
But shutoffs pose challenges. A range of critical infrastructure requires electricity, as do customers who need it for medical reasons. Utilities planning to take such measures are working to determine how best to alert customers of the need for outages and minimize their impact by installing technologies that allow them to pinpoint risky areas.
Trump mentioned going to Russia the other day. Maybe he should reconsider as he'll be useless to Putin unless he can keep the faithful sending money to him.
There are some services that should always be socialized. Some may know that fire departments in the US were private enterprises in the 19th Century. That didn't work out well for anyone who was not connected or the high bidder during a large fire. Electric services should be socialized in the 21st Century. I'm not sure that will happen since we don't understand that education should be socialized at the federal level so we can educate all of our kids at the same level and find the genus children who happened to be born into poor families.
This headline from the WSJ:
Come on, this board is too important for anti-government drivel from the WSJ editorial board. I read the WSJ every day but their editorials are mind-numbingly stupid. Many, if not most, significant ideas are funded by the government through universities and other entities and then handed off to business as it makes economic sense. Example: Solar panels cost $1,000 a watt when the government developed them for the space program, then oil companies stepped in when solar was $100 a watt and pot growers stepped in when they cost $10 a watt. Now panels are under $1 a watt. The right hates the government, the left hates oil companies and we demonized pot growers for decades until we figured out how to monetize and tax pot.
The internet was invented at UCLA and a few other universities with government money. I first ran into it a decade later consulting for JPL. Yup, more government money. Then Berners-Lee, (government funded at CERN), put a hypertext/hyperlink front end on the old tree structure Web 1.0 was ready for who? Pornographers. Pornographers were the first real wave of entrepreneurs to monetize the web. And of course today, the web is the backbone of every important business. There's a reason Jefferson saw religion as one of the three great evils of mankind.
The utter stupidity of the political left and right in this country drive me nuts. Our system works very well and we don't need the editorial goofballs at the WSJ or Mother Jones selling us their political opinions as fact when it's nothing short of religion. I don't care if they pray for salvation or the end of micro-aggressions but I do care when they try to upset a well oiled machine like we have in the US.
I grew up in Northern LA County and in high school my friends and I would make regular weekend trips to Death Valley in the cooler months and into the Panamint Range in the hotter months. We were much less interested in the geologic importance of these areas than the idiosyncratic nature of the people who lived there. In the Panamints there were still old prospectors searching for the next vein of silver which had clearly run out 40 years before. Along with viewing mountain goats and trekking through the valley we'd also attend Marta Becket's Opera House when in Death Valley. I would attempt to describe her performance but anything I write will miss the surreal experience of listening to a truly horrible operatic performance in full regalia surrounded by mid-west gamblers bused in from Las Vegas to take in "opera in the desert".
When I met my, now, wife, I had to go through the interview process with her step-father. That lasted for about two minutes until we realized we'd gone to the same Los Angeles college, (Barry went there), and that we had a complete fascination with Death Valley and surroundings. He was a geologist and now he had an eager intern who would help him scout locations and draft curriculum for his class field trips. It was shortly after our first trip that my wife said, "I guess I'm stuck with you". It's worked out pretty well..:).
The former guy is going to have to bail himself out of jail before the end of the week. So the Republican front runner will officially be out on bail. When a defendant is allowed out of jail on bail, the judge sets rules for that defendant. Here are some of the rules for Donnie: The defendant shall make no direct or or indirect threat against any member or property of the community. This includes, but is not limited to, a post or repost on social media. I give Donnie 24 hours before he can't stand it and breaks the rules. Let's hope Vegas let's us bet on the over/under. They've already set the indictment check-in weight over/under at 273.5 lbs. Fat shaming is of course awful but I'll give everyone a pass on this one.
In other news: Trump is leading in Iowa by almost 25% but almost 60% of Republican who caucus in Iowa don’t want Donnie leading the party. It seems he’s rather limited to the crazy caucus. I see Republicans, thankfully, turning on him.
Hilarious. You couldn't make this stuff up. I read new real estate listings in Annapolis weekly and occasionally the editing is less than excellent. Today I read this:
I understand it's Hurriquake season in LA...:).
Governor white boots has the personality of a stone, the imagination of your worst junior high teacher and the ultra-religious standing of VP Pence. And his plan is to be the new Trump when Trump goes down. Harvard should be ashamed but of course they crank out these useless idiots by the hundreds every year.
I'm still in short term fixed income but my situation may not be right for everyone. As we're in the midst of moving 2,000 miles East, there's enough turbulence in our daily lives that I've little time to study the market so I have to rely on a 30,000 foot view and I don't see a bull market over the next several months so I'll keep clipping coupons for a while.
My thoughts exactly. Chat-GPT 4 has learned to avoid micro aggressions and unlearned basic mathematics. Excellent.
The Kovacs brothers are two of the better analysts on SA.
The moment of reckoning has been a long time coming. This reminds me of 2008 in the US. However, it's unlikely this one will bring down the world economy.
The talking heads appear to think this was part of the problem today. China, being China, will stop reporting bad news.
China Cuts Key Rates as Economy Sours. Its Other Move Was Concerning
China’s central bank lowered interest rates on Tuesday after fresh data showed consumer spending and factory output weakening.
It’s the latest effort to nudge the world’s second biggest economy toward growth amid a disappointing rebound from Covid-19-era lockdowns. Officials from the government and central bank are resorting to increasingly desperate measures to revive confidence as the bad news piles up.
In a move that is perhaps more worrying than the poor data itself, the National Bureau of Statistics also announced it would stop reporting youth unemployment figures after they rose every month this year to exceed 20%. It halted the release of a consumer confidence report earlier this year.
Besides the pandemic lockdowns that lasted until late 2022, China is coping with a property bubble that’s deflating. Real estate developer Country Garden Holdings 2007 +1.25% (2007.HK) suspended payments on some of its bonds. Authorities are reluctant to go big on new stimulus measures for fear of reigniting a speculative frenzy.
China’s central bank cut a key interest rate on one-year loans on Tuesday, as well as one for one-week borrowing, after a report last week showing the inflation rate turned negative in July.
Other data on Tuesday revealed retail sales and industrial production rose less than expected in July.
The latest measures to get China’s economy back on track are unlikely to be the last. The stakes for the government are high as it looks set to miss its 5% target for economic growth this year, which was already the lowest goal in years.
And this take on the move from the WSJ: Headline only:
China’s Well-Honed Playbook: Cut Rates, Hide Data
Good point. I was thinking the current administration would stop this deal but much less likely if the union backs the deal.
Back from a weekend trip to LA to visit with friends and family before we head east. The SPX is down below its 50 day MA for the first time since March. Since all of the irrational exuberance occurred in June and July and the 200 day MA is well below the 50 I don't see a signal that the market is headed for an immediate retrace. PPO, (the 2nd section of the chart), signaled a downturn in July well before the downturn began. For me this is the technical signal to watch as RSI, (at the top) and VIX, (at the bottom) are not showing any severe signs of trouble. I suspect the market will remain weak during the traditionally weak September and October months. If so I'll begin doing some buying again. As CD's mature I'm moving money into Treasuries as we may be entering a period where a very volatile week offers some serious bargains and as always Ms. Market is not showing her cards.
I rented a Tesla Model 3 while in LA. Decent car to rent but I would not buy one. Very mediocre mapping app and no support for Apple Carplay - That's a non-starter for me. That said, Tesla is the people's car of Los Angeles. You can't drive a block without seeing one.
Georgia charges Trump under RICO for heading a criminal organization. No surprise, he's a mob boss. Mark Meadows better sing loud now that he's charged on the state level. There are 18 named co-conspirators and other un-named but numbered co-conspirators.
Interesting timing for this post. I'm in LA for a few days and rented a Model 3. Yesterday the hotel in Pasadena topped up the batteries and we drove to Silver Lake and the Los Feliz area to visit family and have lunch, maybe 70 miles round trip. The car is rated for a 350 mile range. When we returned to the hotel we were at 48% battery level. The air was on of course and when LA traffic isn't moving at 2 mph it's more like 75-80. Still, that's ridiculous.
For me the deal killer was the fact that Tesla doesn't support Apple Carplay. Telsa maps are horrible in any complex turn situation of which there are several in the Silver Lake area of LA. Plus if you're used to making and receiving calls and texts with Carplay while driving you'll never want to drive a vehicle without it. There are several positives but, for me, the negatives outweigh these attributes.
I suppose the most obvious delusion, religion, is not an area Dr. Burns is willing to address..:)
And 12-year-old budding comedians.
Now post an article from MSNBC on while oil is the devil..:).
DIS results were again underwhelming. They're raising prices for DIS+ while it's not growing and seem to have no exit from the woke / no-woke argument. Even if they're on the right side of history it seldom pays for public companies to tread into religious and/or political stances. I'll look at DIS again next year.
Understood but I still find the numbers a bit hopeful. Solar panels work ideally at 70 degrees F and degrade in 110 degree temperatures. I've designed and supervised the installation of dozens of large array systems. Also, solar panel costs have, lately, not gone down, they've moved up in US$ terms. It's possible these calculations do not consider land cost or the cost to bring utility level sub-stations to the site.
In any event, all of my points don't negate your thesis, solar is quite inexpensive as long as it's piggybacking on an existing infrastructure and there's not so much mid-day output that storage is required.
I'd like to put some hard numbers to the idea that solar can be installed and brought on-line for 1.5 cents a kWh. In a modern solar installation, sited at an ideal location, tilt and azimuth, a solar panel will produce 1.5 kWh per year for every installed watt. That is, a megawatt install will produce 1.5 million kWh of energy per year.
The life of a solar panel is roughly 30 years. That is, each installed watt will produce 45 kWh over its lifetime. To meet the 1.5 cents per kWh the installation would have to cost, all in, 67.5 cents per installed watt. Even after all incentives and tax rebates I don't see how that's possible.
Then we must consider the time value of money. We pay for a system with present money value and expect a return over time at a lower future value. By the 30th year, it's exponentially lower. This is not a problem unique to solar, but it's a serious consideration when attempting to understand the real cost of a kWh over a 30 year time period.
I met Ted Lieu a few years ago when we were both speaking at a conference in Los Angeles. Smart guy.
Meme of the week. When Montgomery AL dock security moved a private boat because it was blocking the return of a tourist ferry, the four white men who had parked illegally, decided to gang up on the black security guard instead of moving their boat. Then, as you may know, all hell broke loose. After taking a beating of their own, these four were arrested. This is just one of the funny memes working it's way along the Internet.
When you're busy planning a crime it's usually best to:
A) Not do it on a phone.
B) Not write down the crime details.
Just in case prosecutors needed another smoking gun, co-conspirator #5 just gave it to them. From the NYT:
Previously Secret Memo Laid Out Strategy for Trump to Overturn Biden’s Win
The House Jan. 6 committee’s investigation did not uncover the memo, whose existence first came to light in last week’s indictment.
A lawyer allied with President Donald J. Trump first laid out a plot to use false slates of electors to subvert the 2020 election in a previously unknown internal campaign memo that prosecutors are portraying as a crucial link in how the Trump team’s efforts evolved into a criminal conspiracy.
The existence of the Dec. 6, 2020, memo came to light in last week’s indictment of Mr. Trump, though its details remained unclear. But a copy obtained by The New York Times shows for the first time that the lawyer, Kenneth Chesebro, acknowledged from the start that he was proposing “a bold, controversial strategy” that the Supreme Court “likely” would reject in the end.
But even if the plan did not ultimately pass legal muster at the highest level, Mr. Chesebro argued that it would achieve two goals. It would focus attention on claims of voter fraud and “buy the Trump campaign more time to win litigation that would deprive Biden of electoral votes and/or add to Trump’s column.”
The memo had been a missing piece in the public record of how Mr. Trump’s allies developed their strategy to overturn Mr. Biden’s victory. In mid-December, the false Trump electors could go through the motions of voting as if they had the authority to do so. Then, on Jan. 6, 2021, Vice President Mike Pence could unilaterally count those slates of votes, rather than the official and certified ones for Joseph R. Biden Jr.
While that basic plan itself was already known, the document, described by prosecutors as the “fraudulent elector memo,” provides new details about how it originated and was discussed behind the scenes. Among those details is Mr. Chesebro’s proposed “messaging” strategy to explain why pro-Trump electors were meeting in states where Mr. Biden was declared the winner. The campaign would present that step as “a routine measure that is necessary to ensure” that the correct electoral slate could be counted by Congress if courts or legislatures later concluded that Mr. Trump had actually won the states.
It was not the first time Mr. Chesebro had raised the notion of creating alternate electors. In November, he had suggested doing so in Wisconsin, although for a different reason: to safeguard Mr. Trump’s rights in case he later won a court battle and was declared that state’s certified winner by Jan. 6, as had happened with Hawaii in 1960.
But the indictment portrayed the Dec. 6 memo as a “sharp departure” from that proposal, becoming what prosecutors say was a criminal plot to engineer “a fake controversy that would derail the proper certification of Biden as president-elect.”
“I recognize that what I suggest is a bold, controversial strategy, and that there are many reasons why it might not end up being executed on Jan. 6,” Mr. Chesebro wrote. “But as long as it is one possible option, to preserve it as a possibility it is important that the Trump-Pence electors cast their electoral votes on Dec. 14.”
Three days later, Mr. Chesebro drew up specific instructions to create fraudulent electors in multiple states — in another memo whose existence, along with the one in November, was first reported by The Times last year. The House committee investigating the Jan. 6 riot also cited them in its December report, but it apparently did not learn of the Dec. 6 memo.
“I believe that what can be achieved on Jan. 6 is not simply to keep Biden below 270 electoral votes,” Mr. Chesebro wrote in the newly disclosed memo. “It seems feasible that the vote count can be conducted so that at no point will Trump be behind in the electoral vote count unless and until Biden can obtain a favorable decision from the Supreme Court upholding the Electoral Count Act as constitutional, or otherwise recognizing the power of Congress (and not the president of the Senate) to count the votes.”
Mr. Chesebro and his lawyer did not respond to requests for comment. A Trump spokesman did not respond to an email seeking comment.
The false electors scheme was perhaps the most sprawling of Mr. Trump’s various efforts to overturn the results of the 2020 election. It involved lawyers working on his campaign’s behalf across seven states, dozens of electors willing to claim that Mr. Trump — not Mr. Biden — had won their states, and open resistance from some of those potential electors that the plan could be illegal or even “appear treasonous.” In the end, it became the cornerstone of the indictment against Mr. Trump.
While another lawyer — John Eastman, described as Co-Conspirator 2 in the indictment — became a key figure who championed the plan and worked more directly with Mr. Trump on it, Mr. Chesebro was an architect of it. He was first enlisted by the Trump campaign in Wisconsin to help with a legal challenge to the results there.
Prosecutors are still hearing evidence related to the investigation, even after charges were leveled against Mr. Trump, according to people familiar with the matter. The House committee last year released emails its investigators obtained showing that Mr. Chesebro had sent copies of the two previously reported memos, one from Nov. 18 and another from Dec. 9, to allies in the states working on the fake electors plan.
But he did not attach his Dec. 6 memo to those messages, which laid out a more audacious idea: having Mr. Pence take “the position that it is his constitutional power and duty, alone, as president of the Senate, to both open and count the votes.” That is, he could resolve the dispute over which slate was valid by counting the alternate electors for Mr. Trump even if Mr. Biden remained the certified winner of their states.
Mr. Chesebro, who is described as Co-Conspirator 5 in the indictment but has not been charged by the special counsel, addressed the second memo to James R. Troupis, a lawyer who was assisting the Trump campaign’s efforts to challenge Mr. Biden’s victory in Wisconsin.
By the next day, the indictment said, Mr. Chesebro’s memo had reached Rudolph W. Giuliani, Mr. Trump’s personal lawyer.
According to the indictment, Mr. Giuliani, who is referred to as Co-Conspirator 1, spoke with someone identified only as Co-Conspirator 6 about finding lawyers to help with the effort in seven states. An email reviewed by The Times suggests that particular conspirator could be Boris Epshteyn, a campaign strategic adviser for the Trump campaign who was paid for political consulting. That day, Mr. Epshteyn sent Mr. Giuliani an email recommending lawyers in those seven states.
As he had done in the earlier memo, Mr. Chesebro cited writings by a Harvard Law School professor, Laurence H. Tribe, to bolster his argument that the deadlines and procedures in the Electoral Count Act are unconstitutional and that state electoral votes need not be finalized until Congress’s certification on Jan. 6. Mr. Chesebro had worked as Mr. Tribe’s research assistant as a law student and later helped him in his representation of Vice President Al Gore during the 2000 election.
Calling his former mentor “a key Biden supporter and fervent Trump critic,” Mr. Chesebro cited what he described as Mr. Tribe’s legal views, along with writings by several other liberals as potential fodder for a messaging strategy. It would be “the height of hypocrisy for Democrats to resist Jan. 6 as the real deadline, or to suggest that Trump and Pence would be doing anything particularly controversial,” he wrote.
But in an essay published on Tuesday on the legal website Just Security, Mr. Tribe said Mr. Chesebro’s Nov. 18 memo “relied on a gross misrepresentation of my scholarship.”
For one, Mr. Chesebro quoted a clause from a law review article by Mr. Tribe about Bush v. Gore as support for the idea that the only real legal deadline is Jan. 6. That was taken out of context, Mr. Tribe wrote, saying he was only narrowly “discussing the specifics of Florida state law.” Mr. Chesebro, by contrast, made it sound as if he was putting forward “a general proposition about the power of states to do what they wish regardless of the Electoral Count Act and independent of the deadlines set by Congress,” he added.
For another, Mr. Chesebro cited a constitutional treatise in which Mr. Tribe wrote that a past Congress cannot bind the actions of a later Congress, which Mr. Chesebro used to buttress his proposal that parts of the Electoral Count Act are unconstitutional. But Mr. Tribe wrote that what he meant was Congress can pass new legislation changing such a law.
The indictment also accuses Mr. Trump and his unindicted co-conspirators of acting with deception in recruiting some of the fraudulent electors. That included telling some of them that their votes for Mr. Trump would be used only if a court ruling handed victory in their state to Mr. Trump.
The Dec. 6 memo dovetails with that approach. Mr. Chesebro wrote that Mr. Pence could count purported Trump electors from a state as long as there was a lawsuit pending challenging Mr. Biden’s declared victory there. But he also proposed telling the public that the Trump electors were meeting on Dec. 14 merely as a precaution in case “the courts (or state legislatures) were to later conclude that Trump actually won the state.”
Mr. Chesebro also suggested he knew that even that part of the strategy would draw blowback.
“There is no requirement that they meet in public. It might be preferable for them to meet in private, to thwart the ability of protesters to disrupt the event,” he wrote, adding: “Even if held in private, perhaps print and even TV journalists would be invited to attend to cover the event.”
The SPX moved up just over 5% from the July 6 bottom to the peak on July 27. Since then we've given up almost 2/3 of that gain. It's been a good market for traders this summer. I remain mostly on the sideline in fixed assets.
The market is taking back some gains this morning. From CNBC:
Moody’s cuts ratings of 10 U.S. banks and puts some big names on downgrade watch
Moody’s cut the credit ratings of a host of small and mid-sized U.S. banks late Monday and placed several big Wall Street names on negative review.
The firm lowered the ratings of 10 banks by one rung, while major lenders Bank of New York Mellon, U.S. Bancorp, State Street, Truist Financial, Cullen/Frost Bankers and Northern Trust are now under review for a potential downgrade.
Moody’s also changed its outlook to negative for 11 banks, including Capital One, Citizens Financial and Fifth Third Bancorp
Among the smaller lenders receiving an official ratings downgrade were M&T Bank, Pinnacle Financial, BOK Financial and Webster Financial
“U.S. banks continue to contend with interest rate and asset-liability management (ALM) risks with implications for liquidity and capital, as the wind-down of unconventional monetary policy drains systemwide deposits and higher interest rates depress the value of fixed-rate assets,” Moody’s analysts Jill Cetina and Ana Arsov said in the accompanying research note.
“Meanwhile, many banks’ Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital. This comes as a mild U.S. recession is on the horizon for early 2024 and asset quality looks set to decline from solid but unsustainable levels, with particular risks in some banks’ commercial real estate (CRE) portfolios.”
Regional U.S. banks were thrust into the spotlight earlier this year after the collapse of Silicon Valley Bank and Signature Bank triggered a run on deposits across the sector. The panic eventually spread to Europe and resulted in the emergency rescue of Swiss giant Credit Suisse by domestic rival UBS.
Though authorities went to great lengths to restore confidence, Moody’s warned that banks with substantial unrealized losses that are not captured by their regulatory capital ratios may still be susceptible to sudden losses of market or consumer confidence in a high interest rate environment.
The Federal Reserve in July lifted its benchmark borrowing rate to a 5.25%-5.5% range, having tightened monetary policy aggressively over the past year and a half in a bid to rein in sky-high inflation.
“We expect banks’ ALM risks to be exacerbated by the significant increase in the Federal Reserve’s policy rate as well as the ongoing reduction in banking system reserves at the Fed and, relatedly, deposits because of ongoing QT,” Moody’s said in the report.
“Interest rates are likely to remain higher for longer until inflation returns to within the Fed’s target range and, as noted earlier, longer-term U.S. interest rates also are moving higher because of multiple factors, which will put further pressure on banks’ fixed-rate assets.”
Regional banks are at a greater risk since they have comparatively low regulatory capital, Moody’s noted, adding that institutions with a higher share of fixed-rate assets on the balance sheet are more constrained in terms of profitability and ability to grow capital and continue lending.
“Risks may be more pronounced if the U.S. enters a recession – which we expect will happen in early 2024 – because asset quality will worsen and increase the potential for capital erosion,” the analysts added.
Though the stress on U.S. banks has mostly been concentrated in funding and interest rate risk resulting from monetary policy tightening, Moody’s warned that a worsening in asset quality is on the horizon.
“We continue to expect a mild recession in early 2024, and given the funding strains on the U.S. banking sector, there will likely be a tightening of credit conditions and rising loan losses for U.S. banks,” the agency said.
To be clear, China adopts EVs in greater number than any other country only because they have a huge population. Per capita they're not even in the top 10. Norway is adopting EVs at more than 5X the rate of China. If we want to talk about EV adaptation, only Europe is an example with the top 10 countries averaging over 38% EV sales. China is at 16% which means they're massive polluters. Not that we're any shining example, but let's not pretend China is leading anything.
I've no expertise in this area and it's both a complex scientific and political calculation. That isn't an area where I'd invest.
My wife and I are admittedly mass transit rubes. We grew up in Los Angeles where mass transit went to die and then moved to a small town in New Mexico where it's not really required because the town is 7 miles from stem to stern.
We are, after 40 years, real estate and neighborhood experts but we got a real modern city lesson from one of our daughters and her husband when we were advising them on a home purchase last year. The number one deal breaker for them was distance to a DC metro station. After several attempts at recommending based on neighborhood, good bones, etc, I finally added the Google metro map to my list of criteria.
What we found was a great little neighborhood just outside DC that met all of our criteria for value and a reasonable walk to the nearest stop. What sealed the deal was a new metro line with a stop that will be less than a 1/4 mile from the house they chose. No condos yet but we'll have to see what happens in the future.