More Than Half of Mortgage Borrowers Didn’t Shop Around

When it comes to getting a mortgage, comparing lenders and shopping around can get you the best rates, but a recent survey by LendingTree shows most people are not doing that. The company recently surveyed more than 1,000 homeowners to find out why some compare and save, while others believe they got the best rate without seeing competing… The post More Than Half of Mortgage Borrowers Didn’t Shop Around appeared first on RISMedia. When it comes to getting a mortgage, comparing lenders and shopping around can get you the best rates, but a recent survey by LendingTree shows most people are not doing that. The company recently surveyed more than 1,000 homeowners to find out why some compare and save, while others believe they got the best rate without seeing competing loan estimates. Here’s are the key findings from the survey: 56% of mortgage borrowers didn’t compare offers from more than one lender to find their best rate. Women, baby boomers and low-income borrowers were less likely to shop around. But why not shop around? The majority of respondents who didn’t shop around say they were confident they got the best rate (48%)—though that may not have been true. Nearly half of those who compared rates were able to save money. 46% of borrowers who shopped around for mortgage rates say the first offer they received was not the lowest rate. A third of homeowners say mortgage rates impacted their homebuying time frame. Notably, 23% bought a home earlier than planned to take advantage of low rates. That jumps to 36% among millennial homeowners and 28% among first-time homeowners. Real estate agents are the No. 1 way homeowners get connected with their lenders, representing nearly a third (31%) of borrowers. Further, 51% of homeowners first met with a real estate agent to kick off the homebuying process before meeting with a bank to learn how much house they could afford. 55% of homeowners borrowed the maximum amount for which they were preapproved, but this can lead to unaffordable monthly payments. First-time homebuyers were more likely to take out the maximum mortgage than those who have owned before (59% versus 50%). Prospective borrowers should use a monthly payment calculator to better understand the impact of payments on their budget. The takeaway: “Though many people might not realize it, shopping around for a mortgage before you buy can help you get a lower rate and save tens of thousands of dollars over the lifetime of your loan,” said Jacob Channel, LendingTree’s senior economic analyst and report author. To view the full report, click here. The post More Than Half of Mortgage Borrowers Didn’t Shop Around appeared first on RISMedia......»»

Category: realestateSource: rismediaMay 18th, 2022

Check out these 43 pitch decks fintechs disrupting trading, investing, and banking used to raise millions in funding

Looking for examples of real fintech pitch decks? Check out pitch decks that Qolo, Lance, and other startups used to raise money from VCs. Check out these pitch decks for examples of fintech founders sold their vision.Yulia Reznikov/Getty Images Insider has been tracking the next wave of hot new startups that are blending finance and tech.  Check out these pitch decks to see how fintech founders sold their vision. See more stories on Insider's business page. Fintech funding has been on a tear.In 2021, fintech funding hit a record $132 billion globally, according to CB Insights, more than double 2020's mark.Insider has been tracking the next wave of hot new startups that are blending finance and tech. Check out these pitch decks to see how fintech founders are selling their vision and nabbing big bucks in the process. You'll see new financial tech geared at freelancers, fresh twists on digital banking, and innovation aimed at streamlining customer onboarding. Helping small businesses manage their taxesComplYant's founder Shiloh Johnson wants to help people be present in their bookkeeping.ComplYantAfter 14 years in tax accounting, Shiloh Johnson had formed a core philosophy around corporate accounting: everyone deserves to understand their business's money and business owners need to be present in their bookkeeping process.She wanted to help small businesses understand "this is why you need to do what you're doing and why you have to change the way you think about tax and be present in your bookkeeping process," she told Insider. The Los Angeles native wanted small businesses to not only understand business tax no matter their size but also to find the tools they needed to prepare their taxes in one spot. So Johnson developed a software platform that provides just that.The 13-page pitch deck ComplYant used to nab $4 million that details the tax startup's plan to be Turbotax, Quickbooks, and Xero rolled into one for small business ownersHelping LatAm startups get up to speedKamino cofounders Gut Fragoso, Rodrigo Perenha, Benjamin Gleason, and Gonzalo Parejo.KaminoThere's more venture capital flowing into Latin America than ever before, but getting the funds in founders' hands is not exactly a simple process.In 2021, investors funneled $15.3 billion into Latin American companies, more than tripling the previous record of $4.9 billion in 2019. Fintech and e-commerce sectors drove funding, accounting for 39% and 25% of total funding, respectively.  However, for many startup founders in the region who have successfully sold their ideas and gotten investors on board, there's a patchwork of corporate structuring that's needed to access the funds, according to Benjamin Gleason, who was the chief financial officer at Groupon LatAm prior to cofounding Brazil-based fintech Kamino.It's a process Gleason and his three fellow Kamino cofounders have been through before as entrepreneurs and startup execs themselves. Most often, startups have to set up offshore financial accounts outside of Brazil, which "entails creating a Cayman [Islands] holding company, a Delaware LLC, and then connecting it to a local entity here and also opening US bank accounts for the Cayman entity, which is not trivial from a KYC perspective," said Gleason, who founded open-banking fintech Guiabolso in Sao Paulo. His partner, Gonzalo Parejo, experienced the same toils when he founded insurtech Bidu."Pretty much any international investor will usually ask for that," Gleason said, adding that investors typically cite liability issues."It's just a massive amount of bureaucracy, complexity, a lot of time from the founders. All of this just to get the money from the investor that wants to give them the money," he added.Here's the 8-page pitch deck Kamino, a fintech helping LatAm startups with everything from financing to corporate credit cards, used to raise a $6.1M pre-seed round 'A bank for immigrants'Priyank Singh and Rohit Mittal are the cofounders of Stilt.StiltRohit Mittal remembers the difficulties he faced when he first arrived in the United States a decade ago as a master's student at Columbia University.As an immigrant from India, Mittal had no credit score in the US and had difficulty integrating into the financial system. Mittal even struggled to get approved to rent an apartment and couch-surfed until he found a roommate willing to offer him space in his apartment in the New York neighborhood Morningside Heights.That roommate was Priyank Singh, who would go on to become Mittal's cofounder when the two started Stilt, a financial-technology company designed to address the problems Mittal faced when he arrived in the US.Stilt, which calls itself "a bank for immigrants," does not require a social security number or credit history to access its offerings, including unsecured personal loans.Instead of relying on traditional metrics like a credit score, Stilt uses data such as education and employment to predict an individual's future income stability and cash flow before issuing a loan. Stilt has seen its loan volume grow by 500% in the past 12 months, and the startup has loaned to immigrants from 160 countries since its launch. Here are the 15 slides Stilt, which calls itself 'a bank for immigrants,' used to raise a $14 million Series A Saving on vendor invoicesHoward Katzenberg, Glean's CEO and cofounder.GleanWhen it comes to high-flying tech startups, headlines and investors typically tend to focus on industry "disruption" and the total addressable market a company is hoping to reach. Expense cutting as a way to boost growth typically isn't part of the conversation early on, and finance teams are viewed as cost centers relative to sales teams. But one fast-growing area of business payments has turned its focus to managing those costs. Startups like Ramp and established names like have made their name offering automated expense-management systems. Now, one new fintech competitor, Glean, is looking to take that further by offering both automated payment services and tailored line-item accounts-payable insights driven by machine-learning models. Glean's CFO and founder, Howard Katzenberg, told Insider that the genesis of Glean was driven by his own personal experience managing the finance teams of startups, including mortgage lender, which Katzenberg left in 2019, and online small-business lender OnDeck. "As a CFO of high-growth companies, I spent a lot of time focused on revenue and I had amazing dashboards in real time where I could see what is going on top of the funnel, what's going on with conversion rates, what's going on in terms of pricing and attrition," Katzenberg told Insider. See the 15-slide pitch deck Glean, a startup using machine learning to find savings in vendor invoices, used to raise $10.8 million in seed fundingBetter use of payroll dataAtomic's Head of Markets, Lindsay Davis.AtomicEmployees at companies large and small know the importance — and limitations — of how firms manage their payrolls. A new crop of startups are building the API pipes that connect companies and their employees to offer a greater level of visibility and flexibility when it comes to payroll data and employee verification. On Thursday, one of those names, Atomic, announced a $40 million Series B fundraising round co-led by Mercato Partners and Greylock, alongside Core Innovation Capital, Portage, and ATX Capital. The round follows Atomic's Series A round announced in October, when the startup raised a $22 million Series A from investors including Core Innovation Capital, Portage, and Greylock.Payroll startup Atomic just raised a $40 million Series B. Here's an internal deck detailing the fintech's approach to the red-hot payments space.Data science for commercial insuranceTanner Hackett, founder and CEO of Counterpart.CounterpartThere's been no shortage of funds flowing into insurance-technology companies over the past few years. Private-market funding to insurtechs soared to $15.4 billion in 2021, a 90% increase compared to 2020. Some of the most well-known consumer insurtech names — from Oscar (which focuses on health insurance) to Metromile (which focuses on auto) — launched on the public markets last year, only to fall over time or be acquired as investors questioned the sustainability of their business models. In the commercial arena, however, the head of one insurtech company thinks there is still room to grow — especially for those catering to small businesses operating in an entirely new, pandemic-defined environment. "The bigger opportunity is in commercial lines," Tanner Hackett, the CEO of management liability insurer Counterpart, told Insider."Everywhere I poke, I'm like, 'Oh my goodness, we're still in 1.0, and all the other businesses I've built were on version three.' Insurance is still in 1.0, still managing from spreadsheets and PDFs," added Hackett, who also previously co-founded Button, which focuses on mobile marketing. See the 8-page pitch deck Counterpart, a startup disrupting commercial insurance with data science, used to raise a $30 million Series BCrypto staking made easyEthan and Eric Parker, founders of crypto-investing app Giddy.GiddyFrom the outside looking in, cryptocurrency can seem like a world of potential, but also one of complexity. That's because digital currencies, which can be traded, invested in, and moved like traditional currencies, operate on decentralized blockchain networks that can be quite technical in nature. Still, they offer the promise of big gains and have been thrusted into the mainstream over the years, converting Wall Street stalwarts and bankers.But for the everyday investor, a fear of missing out is settling in. That's why brothers Ethan and Eric Parker built Giddy, a mobile app that enables users to invest in crypto, earn passive income on certain crypto holdings via staking, and get into the red-hot space of decentralized finance, or DeFi."What we're focusing on is giving an opportunity for people who otherwise couldn't access DeFi because it's just technically too difficult," Eric Parker, CEO at Giddy, told Insider. Here's the 7-page pitch deck Giddy, an app that lets users invest in DeFi, used to raise an $8 million seed roundAccess to commercial real-estate investing LEX Markets cofounders and co-CEOs Drew Sterrett and Jesse Daugherty.LEX MarketsDrew Sterrett was structuring real-estate deals while working in private equity when he realized the inefficiencies that existed in the market. Only high-net worth individuals or accredited investors could participate in commercial real-estate deals. If they ever wanted to leave a partnership or sell their stake in a property, it was difficult to find another investor to replace them. Owners also struggled to sell minority stakes in their properties and didn't have many good options to recapitalize an asset if necessary.In short, the market had a high barrier to entry despite the fact it didn't always have enough participants to get deals done quickly. "Most investors don't have access to high-quality commercial real-estate investments. How do we have the oldest and largest asset class in the world and one of the largest wealth creators with no public and liquid market?" Sterrett told Insider. "It sort of seems like a no-brainer, and that this should have existed 50 or 60 years ago."This 15-page pitch deck helped LEX Markets, a startup making investing in commercial real estate more accessible, raise $15 millionHelping streamline how debts are repaidMethod Financial cofounders Jose Bethancourt and Marco del Carmen.Method FinancialWhen Jose Bethancourt graduated from the University of Texas at Austin in May 2019, he faced the same question that confronts over 43 million Americans: How would he repay his student loans?The problem led Bethancourt on a nearly two-year journey that culminated in the creation of a startup aimed at making it easier for consumers to more seamlessly pay off all kinds of debt.  Initially, Bethancourt and fellow UT grad Marco del Carmen built GradJoy, an app that helped users better understand how to manage student loan repayment and other financial habits. GradJoy was accepted into Y Combinator in the summer of 2019. But the duo quickly realized the real benefit to users would be helping them move money to make payments instead of simply offering recommendations."When we started GradJoy, we thought, 'Oh, we'll just give advice — we don't think people are comfortable with us touching their student loans,' and then we realized that people were saying, 'Hey, just move the money — if you think I should pay extra, then I'll pay extra.' So that's kind of the movement that we've seen, just, everybody's more comfortable with fintechs doing what's best for them," Bethancourt told Insider. Here is the 11-slide pitch deck Method Financial, a Y Combinator-backed fintech making debt repayment easier, used to raise $2.5 million in pre-seed fundingSmarter insurance for multifamily propertiesItai Ben-Zaken, cofounder and CEO of Honeycomb.HoneycombA veteran of the online-insurance world is looking to revolutionize the way the industry prices risk for commercial properties with the help of artificial intelligence.Insurance companies typically send inspectors to properties before issuing policies to better understand how the building is maintained and identify potential risks or issues with it. It's a process that can be time-consuming, expensive, and inefficient, making it hard to justify for smaller commercial properties, like apartment and condo buildings.Insurtech Honeycomb is looking to fix that by using AI to analyze a combination of third-party data and photos submitted by customers through the startup's app to quickly identify any potential risks at a property and more accurately price policies."That whole physical inspection thing had really good things in it, but it wasn't really something that is scalable and, it's also expensive," Itai Ben-Zaken, Honeycomb's cofounder and CEO, told Insider. "The best way to see a property right now is Google street view. Google street view is usually two years old."Here's the 10-page Series A pitch deck used by Honeycomb, a startup that wants to revolutionize the $26 billion market for multifamily property insuranceRetirement accounts for cryptoTodd Southwick, CEO and co-founder of iTrustCapital.iTrustCapitalTodd Southwick and Blake Skadron stuck to a simple mandate when they were building out iTrustCapital, a $1.3 billion fintech that strives to offer cryptocurrencies to the masses via dedicated individual retirement accounts."We wanted to make a product that we would feel happy recommending for our parents to use," Southwick, the CEO of iTrustCapital, told Insider. That guiding framework resulted in a software system that helped to digitize and automate the traditionally clunky and paper-based process of setting up an IRA for alternative assets, Southwick said. "We saw a real opportunity within the self-directed IRAs because we knew at that point in time, there was a fairly small segment of people that was willing to deal with the inconvenience of having to set up an IRA" for crypto, Southwick said. The process often involved phone calls to sales reps and over-the-counter trading desks, paper and fax machines, and days of wait time.iTrustCapital allows customers to buy and sell cryptocurrencies using tax-advantaged IRAs with no monthly account fees. The startup provides access to 25 cryptocurrencies like bitcoin, ethereum, and dogecoin — charging a 1% transaction fee on crypto trades — as well as gold and silver.iTrustCapital, a fintech simplifying how to set up a crypto retirement account, used this 8-page pitch deck to raise a $125 million Series AA new way to assess creditworthinessPinwheel founders Curtis Lee, Kurt Lin, and Anish Basu.PinwheelGrowing up, Kurt Lin never saw his father get frustrated. A "traditional, stoic figure," Lin said his father immigrated to the United States in the 1970s. Becoming part of the financial system proved even more difficult than assimilating into a new culture.Lin recalled visiting bank after bank with his father as a child, watching as his father's applications for a mortgage were denied due to his lack of credit history. "That was the first time in my life I really saw him crack," Lin told Insider. "The system doesn't work for a lot of people — including my dad," he added. Lin would find a solution to his father's problem years later while working with Anish Basu, and Curtis Lee on an automated health savings account. The trio realized the payroll data integrations they were working on could be the basis of a product that would help lenders work with consumers without strong credit histories."That's when the lightbulb hit," said Lin, Pinwheel's CEO.In 2018, Lin, Basu, and Lee founded Pinwheel, an application-programming interface that shares payroll data to help both fintechs and traditional lenders serve consumers with limited or poor credit, who have historically struggled to access financial products. Here's the 9-page deck that Pinwheel, a fintech helping lenders tap into payroll data to serve consumers with little to no credit, used to raise a $50 million Series BA new data feed for bond tradingMark Lennihan/APFor years, the only way investors could figure out the going price of a corporate bond was calling up a dealer on the phone. The rise of electronic trading has streamlined that process, but data can still be hard to come by sometimes. A startup founded by a former Goldman Sachs exec has big plans to change that. BondCliQ is a fintech that provides a data feed of pre-trade pricing quotes for the corporate bond market. Founded by Chris White, the creator of Goldman Sachs' defunct corporate-bond-trading system, BondCliQ strives to bring transparency to a market that has traditionally kept such data close to the vest. Banks, which typically serve as the dealers of corporate bonds, have historically kept pre-trade quotes hidden from other dealers to maintain a competitive advantage.But tech advancements and the rise of electronic marketplaces have shifted power dynamics into the hands of buy-side firms, like hedge funds and asset managers. The investors are now able to get a fuller picture of the market by aggregating price quotes directly from dealers or via vendors.Here's the 9-page pitch deck that BondCliQ, a fintech looking to bring more data and transparency to bond trading, used to raise its Series AA trading app for activismAntoine Argouges, CEO and founder of Tulipshare.TulipshareAn up-and-coming fintech is taking aim at some of the world's largest corporations by empowering retail investors to push for social and environmental change by pooling their shareholder rights.London-based Tulipshare lets individuals in the UK invest as little as one pound in publicly-traded company stocks. The upstart combines individuals' shareholder rights with other like-minded investors to advocate for environmental, social, and corporate governance change at firms like JPMorgan, Apple, and Amazon.The goal is to achieve a higher number of shares to maximize the number of votes that can be submitted at shareholder meetings. Already a regulated broker-dealer in the UK, Tulipshare recently applied for registration as a broker-dealer in the US. "If you ask your friends and family if they've ever voted on shareholder resolutions, the answer will probably be close to zero," CEO and founder Antoine Argouges told Insider. "I started Tulipshare to utilize shareholder rights to bring about positive corporate change that has an impact on people's lives and our planet — what's more powerful than money to change the system we live in?"Check out the 14-page pitch deck from Tulipshare, a trading app that lets users pool their shareholder votes for activism campaignsThe back-end tech for beautyDanielle Cohen-Shohet, CEO and founder of GlossGeniusGlossGeniusDanielle Cohen-Shohet might have started as a Goldman Sachs investment analyst, but at her core she was always a coder.After about three years at Goldman Sachs, Cohen-Shohet left the world of traditional finance to code her way into starting her own company in 2016. "There was a period of time where I did nothing, but eat, sleep, and code for a few weeks," Cohen-Shohet told Insider. Her technical edge and knowledge of the point-of-sale payment space led her to launch a software company focused on providing behind-the-scenes tech for beauty and wellness small businesses.Cohen-Shohet launched GlossGenius in 2017 to provide payments tech for hair stylists, nail technicians, blow-out bars, and other small businesses in the space.Here's the 11-page deck GlossGenius, a startup that provides back-end tech for the beauty industry, used to raise $16 millionPrivate market data on the blockchainPat O'Meara, CEO of Inveniam.InveniamFor investors in publicly-traded stocks, there's typically no shortage of company data to guide investment decisions. Company financials are easily accessible and vetted by teams of regulators, lawyers, and accountants.But in the private markets — which encompass assets that range from real estate to private credit and private equity — that isn't always the case. Within real estate, for example, valuations of a specific slice of property are often the product of heavily-worked Excel models and a lot of institutional knowledge, leaving them susceptible to manual error at many points along the way.Inveniam, founded in 2017, is a software company that tokenizes the business data of private companies on the blockchain. Using a distributed ledger allows Inveniam to keep track of who is touching the data and what they are doing to it. Check out the 16-page pitch deck for Inveniam, a blockchain-based startup looking to be the Refinitiv of private-market dataHelping freelancers with their taxesJaideep Singh is the CEO and co-founder of FlyFin, an AI-driven tax preparation software program for freelancers.FlyFinSome people, particularly those with families or freelancing businesses, spend days searching for receipts for tax season, making tax preparation a time consuming and, at times, taxing experience. That's why in 2020 Jaideep Singh founded FlyFin, an artificial-intelligence tax preparation program for freelancers that helps people, as he puts it, "fly through their finances." FlyFin is set up to connect to a person's bank accounts, allowing the AI program to help users monitor for certain expenses that can be claimed on their taxes like business expenditures, the interest on mortgages, property taxes, or whatever else that might apply. "For most individuals, people have expenses distributed over multiple financial institutions. So we built an AI platform that is able to look at expenses, understand the individual, understand your profession, understand the freelance population at large, and start the categorization," Singh told Insider.Check out the 7-page pitch deck a startup helping freelancers manage their taxes used to nab $8 million in funding Shopify for embedded financeProductfy CEO and founder, Duy Vo.ProductfyProductfy is looking to break into embedded finance by becoming the Shopify of back-end banking services.Embedded finance — integrating banking services in non-financial settings — has taken hold in the e-commerce world. But Productfy is going after a different kind of customer in churches, universities, and nonprofits.The San Jose, Calif.-based upstart aims to help non-finance companies offer their own banking products. Productfy can help customers launch finance features in as little as a week and without additional engineering resources or background knowledge of banking compliance or legal requirements, Productfy founder and CEO Duy Vo told Insider. "You don't need an engineer to stand up Shopify, right? You can be someone who's just creating art and you can use Shopify to build your own online store," Vo said, adding that Productfy is looking to take that user experience and replicate it for banking services.Here's the 15-page pitch deck Productfy, a fintech looking to be the Shopify of embedded finance, used to nab a $16 million Series AReal-estate management made easyAgora founders Noam Kahan, CTO, Bar Mor, CEO, and Lior Dolinski, CPO.AgoraFor alternative asset managers of any type, the operations underpinning sales and investor communications are a crucial but often overlooked part of the business. Fund managers love to make bets on markets, not coordinate hundreds of wire transfers to clients each quarter or organize customer-relationship-management databases.Within the $10.6 trillion global market for professionally managed real-estate investing, that's where Tel Aviv and New York-based startup Agora hopes to make its mark.Founded in 2019, Agora offers a set of back-office, investor relations, and sales software tools that real-estate investment managers can plug into their workflows. On Wednesday, Agora announced a $9 million seed round, led by Israel-based venture firm Aleph, with participation from River Park Ventures and Maccabee Ventures. The funding comes on the heels of an October 2020 pre-seed fund raise worth $890,000, in which Maccabee also participated.Here's the 15-slide pitch deck that Agora, a startup helping real-estate investors manage communications and sales with their clients, used to raise a $9 million seed roundCheckout made easyBolt's Ryan Breslow.Ryan BreslowAmazon has long dominated e-commerce with its one-click checkout flows, offering easier ways for consumers to shop online than its small-business competitors.Bolt gives small merchants tools to offer the same easy checkouts so they can compete with the likes of Amazon.The startup raised its $393 million Series D to continue adding its one-click checkout feature to merchants' own websites in October.Bolt markets to merchants themselves. But a big part of Bolt's pitch is its growing network of consumers — currently over 5.6 million — that use its features across multiple Bolt merchant customers. Roughly 5% of Bolt's transactions were network-driven in May, meaning users that signed up for a Bolt account on another retailer's website used it elsewhere. The network effects were even more pronounced in verticals like furniture, where 49% of transactions were driven by the Bolt network."The network effect is now unleashed with Bolt in full fury, and that triggered the raise," Bolt's founder and CEO Ryan Breslow told Insider.Here's the 12-page deck that one-click checkout Bolt used to outline its network of 5.6 million consumers and raise its Series DHelping small banks lendCollateralEdge's Joel Radtke, cofounder, COO, and president, and Joe Beard, cofounder and CEO.CollateralEdgeFor large corporations with a track record of tapping the credit markets, taking out debt is a well-structured and clear process handled by the nation's biggest investment banks and teams of accountants. But smaller, middle-market companies — typically those with annual revenues ranging up to $1 billion — are typically served by regional and community banks that don't always have the capacity to adequately measure the risk of loans or price them competitively. Per the National Center for the Middle Market, 200,000 companies fall into this range, accounting for roughly 33% of US private sector GDP and employment.Dallas-based fintech CollateralEdge works with these banks — typically those with between $1 billion and $50 billion in assets — to help analyze and price slices of commercial and industrial loans that previously might have gone unserved by smaller lenders.On October 20th, CollateralEdge announced a $3.5 million seed round led by Dallas venture fund Perot Jain with participation from Kneeland Youngblood (a founder of the healthcare-focused private-equity firm Pharos Capital) and other individual investors.Here's the 10-page deck CollateralEdge, a fintech streamlining how small banks lend to businesses, used to raise a $3.5 million seed round Quantum computing made easyQC Ware CEO Matt Johnson.QC WareEven though banks and hedge funds are still several years out from adding quantum computing to their tech arsenals, that hasn't stopped Wall Street giants from investing time and money into the emerging technology class. And momentum for QC Ware, a startup looking to cut the time and resources it takes to use quantum computing, is accelerating. The fintech secured a $25 million Series B on September 29 co-led by Koch Disruptive Technologies and Covestro with participation from D.E. Shaw, Citi, and Samsung Ventures.QC Ware, founded in 2014, builds quantum algorithms for the likes of Goldman Sachs (which led the fintech's Series A), Airbus, and BMW Group. The algorithms, which are effectively code bases that include quantum processing elements, can run on any of the four main public-cloud providers.Quantum computing allows companies to do complex calculations faster than traditional computers by using a form of physics that runs on quantum bits as opposed to the traditional 1s and 0s that computers use. This is especially helpful in banking for risk analytics or algorithmic trading, where executing calculations milliseconds faster than the competition can give firms a leg up. Here's the 20-page deck QC Ware, a fintech making quantum computing more accessible, used to raised its $25 million Series BSimplifying quant modelsKirat Singh and Mark Higgins, Beacon's cofounders.BeaconA fintech that helps financial institutions use quantitative models to streamline their businesses and improve risk management is catching the attention, and capital, of some of the country's biggest investment managers.Beacon Platform, founded in 2014, is a fintech that builds applications and tools to help banks, asset managers, and trading firms quickly integrate quantitative models that can help with analyzing risk, ensuring compliance, and improving operational efficiency. The company raised its Series C on Wednesday, scoring a $56 million investment led by Warburg Pincus with support from Blackstone Innovations Investments, PIMCO, and Global Atlantic. Blackstone, PIMCO, and Global Atlantic are also users of Beacon's tech, as are the Commonwealth Bank of Australia and Shell New Energies, a division of Royal Dutch Shell, among others.The fintech provides a shortcut for firms looking to use quantitative modelling and data science across various aspects of their businesses, a process that can often take considerable resources if done solo.Here's the 20-page pitch deck Beacon, a fintech helping Wall Street better analyze risk and data, used to raise $56 million from Warburg Pincus, Blackstone, and PIMCOInvoice financing for SMBsStacey Abrams and Lara Hodgson, Now cofounders.NowAbout a decade ago, politician Stacey Abrams and entrepreneur Lara Hodgson were forced to fold their startup because of a kink in the supply chain — but not in the traditional sense.Nourish, which made spill-proof bottled water for children, had grown quickly from selling to small retailers to national ones. And while that may sound like a feather in the small business' cap, there was a hang-up."It was taking longer and longer to get paid, and as you can imagine, you deliver the product and then you wait and you wait, but meanwhile you have to pay your employees and you have to pay your vendors," Hodgson told Insider. "Waiting to get paid was constraining our ability to grow."While it's not unusual for small businesses to grapple with working capital issues, the dust was still settling from the Great Recession. Abrams and Hodgson couldn't secure a line of credit or use financing tools like factoring to solve their problem. The two entrepreneurs were forced to close Nourish in 2012, but along the way they recognized a disconnect in the system.  "Why are we the ones borrowing money, when in fact we're the lender here because every time you send an invoice to a customer, you've essentially extended a free loan to that customer by letting them pay later," Hodgson said. "And the only reason why we were going to need to possibly borrow money was because we had just given ours away for free to Whole Foods," she added.Check out the 7-page deck that Now, Stacey Abrams' fintech that wants to help small businesses 'grow fearlessly', used to raise $29 millionInsurance goes digitalJamie Hale, CEO and cofounder of Ladder.LadderFintechs looking to transform how insurance policies are underwritten, issued, and experienced by customers have grown as new technology driven by digital trends and artificial intelligence shape the market. And while verticals like auto, homeowner's, and renter's insurance have seen their fair share of innovation from forward-thinking fintechs, one company has taken on the massive life-insurance market. Founded in 2017, Ladder uses a tech-driven approach to offer life insurance with a digital, end-to-end service that it says is more flexible, faster, and cost-effective than incumbent players.Life, annuity, and accident and health insurance within the US comprise a big chunk of the broader market. In 2020, premiums written on those policies totaled some $767 billion, compared to $144 billion for auto policies and $97 billion for homeowner's insurance.Here's the 12-page deck that Ladder, a startup disrupting the 'crown jewel' of the insurance market, used to nab $100 millionEmbedded payments for SMBsThe Highnote team.HighnoteBranded cards have long been a way for merchants with the appropriate bank relationships to create additional revenue and build customer loyalty. The rise of embedded payments, or the ability to shop and pay in a seamless experience within a single app, has broadened the number of companies looking to launch branded cards.Highnote is a startup that helps small to mid-sized merchants roll out their own debit and pre-paid digital cards. The fintech emerged from stealth on Tuesday to announce it raised $54 million in seed and Series A funding.Here's the 12-page deck Highnote, a startup helping SMBs embed payments, used to raise $54 million in seed and Series A fundingAn alternative auto lenderDaniel Chu, CEO and founder of Tricolor.TricolorAn alternative auto lender that caters to thin- and no-credit Hispanic borrowers is planning a national expansion after scoring a $90 million investment from BlackRock-managed funds. Tricolor is a Dallas-based auto lender that is a community development financial institution. It uses a proprietary artificial-intelligence engine that decisions each customer based on more than 100 data points, such as proof of income. Half of Tricolor's customers have a FICO score, and less than 12% have scores above 650, yet the average customer has lived in the US for 15 years, according to the deck.A 2017 survey by the Federal Deposit Insurance Corporation found 31.5% of Hispanic households had no mainstream credit compared to 14.4% of white households. "For decades, the deck has been stacked against low income or credit invisible Hispanics in the United States when it comes to the purchase and financing of a used vehicle," Daniel Chu, founder and CEO of Tricolor, said in a statement announcing the raise.An auto lender that caters to underbanked Hispanics used this 25-page deck to raise $90 million from BlackRock investorsA new way to access credit The TomoCredit team.TomoCreditKristy Kim knows first-hand the challenge of obtaining credit in the US without an established credit history. Kim, who came to the US from South Korea, couldn't initially get access to credit despite having a job in investment banking after graduating college. "I was in my early twenties, I had a good income, my job was in investment banking but I could not get approved for anything," Kim told Insider. "Many young professionals like me, we deserve an opportunity to be considered but just because we didn't have a Fico, we weren't given a chance to even apply," she added.Kim started TomoCredit in 2018 to help others like herself gain access to consumer credit. TomoCredit spent three years building an internal algorithm to underwrite customers based on cash flow, rather than a credit score.TomoCredit, a fintech that lends to thin- and no-credit borrowers, used this 17-page pitch deck to raise its $10 million Series AAn IRA for alternativesHenry Yoshida is the co-founder and CEO of retirement fintech startup Rocket Dollar.Rocket DollarFintech startup Rocket Dollar, which helps users invest their individual retirement account (IRA) dollars into alternative assets, just raised $8 million for its Series A round, the company announced on Thursday.Park West Asset Management led the round, with participation from investors including Hyphen Capital, which focuses on backing Asian American entrepreneurs, and crypto exchange Kraken's venture arm. Co-founded in 2018 by CEO Henry Yoshida, CTO Rick Dude, and VP of marketing Thomas Young, Rocket Dollar now has over $350 million in assets under management on its platform. Yoshida sold his first startup, a roboadvisor called Honest Dollar, to Goldman Sachs' investment management division for an estimated $20 million.Yoshida told Insider that while ultra-high net worth investors have been investing self-directed retirement account dollars into alternative assets like real estate, private equity, and cryptocurrency, average investors have not historically been able to access the same opportunities to invest IRA dollars in alternative assets through traditional platforms.Here's the 34-page pitch deck a fintech that helps users invest their retirement savings in crypto and real estate assets used to nab $8 millionConnecting startups and investorsHum Capital cofounder and CEO Blair Silverberg.Hum CapitalBlair Silverberg is no stranger to fundraising.For six years, Silverberg was a venture capitalist at Draper Fisher Jurvetson and Private Credit Investments making bets on startups."I was meeting with thousands of founders in person each year, watching them one at a time go through this friction where they're meeting a ton of investors, and the investors are all asking the same questions," Silverberg told Insider. He switched gears about three years ago, moving to the opposite side of the metaphorical table, to start Hum Capital, which uses artificial intelligence to match investors with startups looking to fundraise.On August 31, the New York-based fintech announced its $9 million Series A. The round was led by Future Ventures with participation from Webb Investment Network, Wavemaker Partners, and Partech. This 11-page pitch deck helped Hum Capital, a fintech using AI to match investors with startups, raise a $9 million Series A.Payments infrastructure for fintechsQolo CEO and co-founder Patricia Montesi.QoloThree years ago, Patricia Montesi realized there was a disconnect in the payments world. "A lot of new economy companies or fintech companies were looking to mesh up a lot of payment modalities that they weren't able to," Montesi, CEO and co-founder of Qolo, told Insider.Integrating various payment capabilities often meant tapping several different providers that had specializations in one product or service, she added, like debit card issuance or cross-border payments. "The way people were getting around that was that they were creating this spider web of fintech," she said, adding that "at the end of it all, they had this mess of suppliers and integrations and bank accounts."The 20-year payments veteran rounded up a group of three other co-founders — who together had more than a century of combined industry experience — to start Qolo, a business-to-business fintech that sought out to bundle back-end payment rails for other fintechs.Here's the 11-slide pitch deck a startup that provides payments infrastructure for other fintechs used to raise a $15 million Series ASoftware for managing freelancersWorksome cofounder and CEO Morten Petersen.WorksomeThe way people work has fundamentally changed over the past year, with more flexibility and many workers opting to freelance to maintain their work-from-home lifestyles.But managing a freelance or contractor workforce is often an administrative headache for employers. Worksome is a startup looking to eliminate all the extra work required for employers to adapt to more flexible working norms.Worksome started as a freelancer marketplace automating the process of matching qualified workers with the right jobs. But the team ultimately pivoted to a full suite of workforce management software, automating administrative burdens required to hire, pay, and account for contract workers.In May, Worksome closed a $13 million Series A backed by European angel investor Tommy Ahlers and Danish firm Lind & Risør.Here's the 21-slide pitch deck used by a startup that helps firms like Carlsberg and Deloitte manage freelancersPersonal finance is only a text awayYinon Ravid, the chief executive and cofounder of Albert.AlbertThe COVID-19 pandemic has underscored the growing preference of mobile banking as customers get comfortable managing their finances online.The financial app Albert has seen a similar jump in activity. Currently counting more than six million members, deposits in Albert's savings offering doubled from the start of the pandemic in March 2020 to May of this year, from $350 million to $700 million, according to new numbers released by the company. Founded in 2015, Albert offers automated budgeting and savings tools alongside guided investment portfolios. It's looked to differentiate itself through personalized features, like the ability for customers to text human financial experts.Budgeting and saving features are free on Albert. But for more tailored financial advice, customers pay a subscription fee that's a pay-what-you-can model, between $4 and $14 a month. And Albert's now banking on a new tool to bring together its investing, savings, and budgeting tools.Fintech Albert used this 10-page pitch deck to raise a $100 million Series C from General Atlantic and CapitalGRethinking debt collection Jason Saltzman, founder and CEO of ReliefReliefFor lenders, debt collection is largely automated. But for people who owe money on their credit cards, it can be a confusing and stressful process.  Relief is looking to change that. Its app automates the credit-card debt collection process for users, negotiating with lenders and collectors to settle outstanding balances on their behalf. The fintech just launched and closed a $2 million seed round led by Collaborative Ventures. Relief's fundraising experience was a bit different to most. Its pitch deck, which it shared with one investor via Google Slides, went viral. It set out to raise a $1 million seed round, but ended up doubling that and giving some investors money back to make room for others.Check out a 15-page pitch deck that went viral and helped a credit-card debt collection startup land a $2 million seed roundBlockchain for private-markets investing Carlos Domingo is cofounder and CEO of Securitize.SecuritizeSecuritize, founded in 2017 by the tech industry veterans Carlos Domingo and Jamie Finn, is bringing blockchain technology to private-markets investing. The company raised $48 million in Series B funding on June 21 from investors including Morgan Stanley and Blockchain Capital.Securitize helps companies crowdfund capital from individual and institutional investors by issuing their shares in the form of blockchain tokens that allow for more efficient settlement, record keeping, and compliance processes. Morgan Stanley's Tactical Value fund, which invests in private companies, made its first blockchain-technology investment when it coled the Series B, Securitize CEO Carlos Domingo told Insider.Here's the 11-page pitch deck a blockchain startup looking to revolutionize private-markets investing used to nab $48 million from investors like Morgan StanleyE-commerce focused business bankingMichael Rangel, cofounder and CEO, and Tyler McIntyre, cofounder and CTO of Novo.Kristelle Boulos PhotographyBusiness banking is a hot market in fintech. And it seems investors can't get enough.Novo, the digital banking fintech aimed at small e-commerce businesses, raised a $40.7 million Series A led by Valar Ventures in June. Since its launch in 2018, Novo has signed up 100,000 small businesses. Beyond bank accounts, it offers expense management, a corporate card, and integrates with e-commerce infrastructure players like Shopify, Stripe, and Wise.Founded in 2018, Novo was based in New York City, but has since moved its headquarters to Miami. Here's the 12-page pitch deck e-commerce banking startup Novo used to raise its $40 million Series ABlockchain-based credit score tech John Sun, Anna Fridman, and Adam Jiwan are the cofounders of fintech startup Spring Labs.Spring LabsA blockchain-based fintech startup that is aiming to disrupt the traditional model of evaluating peoples' creditworthiness recently raised $30 million in a Series B funding led by credit reporting giant TransUnion.Four-year-old Spring Labs aims to create a private, secure data-sharing model to help credit agencies better predict the creditworthiness of people who are not in the traditional credit bureau system. The founding team of three fintech veterans met as early employees of lending startup Avant.Existing investors GreatPoint Ventures and August Capital also joined in on the most recent round.  So far Spring Labs has raised $53 million from institutional rounds.TransUnion, a publicly-traded company with a $20 billion-plus market cap, is one of the three largest consumer credit agencies in the US. After 18 months of dialogue and six months of due diligence, TransAmerica and Spring Labs inked a deal, Spring Labs CEO and cofounder Adam Jiwan told Insider.Here's the 10-page pitch deck blockchain-based fintech Spring Labs used to snag $30 million from investors including credit reporting giant TransUnionDigital banking for freelancersJGalione/Getty ImagesLance is a new digital bank hoping to simplify the life of those workers by offering what it calls an "active" approach to business banking. "We found that every time we sat down with the existing tools and resources of our accountants and QuickBooks and spreadsheets, we just ended up getting tangled up in the whole experience of it," Lance cofounder and CEO Oona Rokyta told Insider. Lance offers subaccounts for personal salaries, withholdings, and savings to which freelancers can automatically allocate funds according to custom preset levels. It also offers an expense balance that's connected to automated tax withholdings.In May, Lance announced the closing of a $2.8 million seed round that saw participation from Barclays, BDMI, Great Oaks Capital, Imagination Capital, Techstars, DFJ Frontier, and others.Here's the 21-page pitch deck Lance, a digital bank for freelancers, used to raise a $2.8 million seed round from investors including BarclaysDigital tools for independent financial advisorsJason Wenk, founder and CEO of AltruistAltruistJason Wenk started his career at Morgan Stanley in investment research over 20 years ago. Now, he's running a company that is hoping to broaden access to financial advice for less-wealthy individuals. The startup raised $50 million in Series B funding led by Insight Partners with participation from investors Vanguard and Venrock. The round brings the Los Angeles-based startup's total funding to just under $67 million.Founded in 2018, Altruist is a digital brokerage built for independent financial advisors, intended to be an "all-in-one" platform that unites custodial functions, portfolio accounting, and a client-facing portal. It allows advisors to open accounts, invest, build models, report, trade (including fractional shares), and bill clients through an interface that can advisors time by eliminating mundane operational tasks.Altruist aims to make personalized financial advice less expensive, more efficient, and more inclusive through the platform, which is designed for registered investment advisors (RIAs), a growing segment of the wealth management industry. Here's the pitch deck for Altruist, a wealth tech challenging custodians Fidelity and Charles Schwab, that raised $50 million from Vanguard and InsightPayments and operations support HoneyBook cofounders Dror Shimoni, Oz Alon, and Naama Alon.HoneyBookWhile countless small businesses have been harmed by the pandemic, self-employment and entrepreneurship have found ways to blossom as Americans started new ventures.Half of the US population may be freelance by 2027, according to a study commissioned by remote-work hiring platform Upwork. HoneyBook, a fintech startup that provides payment and operations support for freelancers, in May raised $155 million in funding and achieved unicorn status with its $1 billion-plus valuation.Durable Capital Partners led the Series D funding with other new investors including renowned hedge fund Tiger Global, Battery Ventures, Zeev Ventures, and 01 Advisors. Citi Ventures, Citigroup's startup investment arm that also backs fintech robo-advisor Betterment, participated as an existing investor in the round alongside Norwest Venture partners. The latest round brings the company's fundraising total to $227 million to date.Here's the 21-page pitch deck a Citi-backed fintech for freelancers used to raise $155 million from investors like hedge fund Tiger GlobalFraud prevention for lenders and insurersFiordaliso/Getty ImagesOnboarding new customers with ease is key for any financial institution or retailer. The more friction you add, the more likely consumers are to abandon the entire process.But preventing fraud is also a priority, and that's where Neuro-ID comes in. The startup analyzes what it calls "digital body language," or, the way users scroll, type, and tap. Using that data, Neuro-ID can identify fraudulent users before they create an account. It's built for banks, lenders, insurers, and e-commerce players."The train has left the station for digital transformation, but there's a massive opportunity to try to replicate all those communications that we used to have when we did business in-person, all those tells that we would get verbally and non-verbally on whether or not someone was trustworthy," Neuro-ID CEO Jack Alton told Insider.Founded in 2014, the startup's pitch is twofold: Neuro-ID can save companies money by identifying fraud early, and help increase user conversion by making the onboarding process more seamless. In December Neuro-ID closed a $7 million Series A, co-led by Fin VC and TTV Capital, with participation from Canapi Ventures. With 30 employees, Neuro-ID is using the fresh funding to grow its team and create additional tools to be more self-serving for customers.Here's the 11-slide pitch deck a startup that analyzes consumers' digital behavior to fight fraud used to raise a $7 million Series AAI-powered tools to spot phony online reviews Saoud Khalifah, founder and CEO of Fakespot.FakespotMarketplaces like Amazon and eBay host millions of third-party sellers, and their algorithms will often boost items in search based on consumer sentiment, which is largely based on reviews. But many third-party sellers use fake reviews often bought from click farms to boost their items, some of which are counterfeit or misrepresented to consumers.That's where Fakespot comes in. With its Chrome extension, it warns users of sellers using potentially fake reviews to boost sales and can identify fraudulent sellers. Fakespot is currently compatible with Amazon, BestBuy, eBay, Sephora, Steam, and Walmart."There are promotional reviews written by humans and bot-generated reviews written by robots or review farms," Fakespot founder and CEO Saoud Khalifah told Insider. "Our AI system has been built to detect both categories with very high accuracy."Fakespot's AI learns via reviews data available on marketplace websites, and uses natural-language processing to identify if reviews are genuine. Fakespot also looks at things like whether the number of positive reviews are plausible given how long a seller has been active.Fakespot, a startup that helps shoppers detect robot-generated reviews and phony sellers on Amazon and Shopify, used this pitch deck to nab a $4 million Series ANew twists on digital bankingZach Bruhnke, cofounder and CEO of HMBradleyHMBradleyConsumers are getting used to the idea of branch-less banking, a trend that startup digital-only banks like Chime, N26, and Varo have benefited from. The majority of these fintechs target those who are underbanked, and rely on usage of their debit cards to make money off interchange. But fellow startup HMBradley has a different business model. "Our thesis going in was that we don't swipe our debit cards all that often, and we don't think the customer base that we're focusing on does either," Zach Bruhnke, cofounder and CEO of HMBradley, told Insider. "A lot of our customer base uses credit cards on a daily basis."Instead, the startup is aiming to build clientele with stable deposits. As a result, the bank is offering interest-rate tiers depending on how much a customer saves of their direct deposit.Notably, the rate tiers are dependent on the percentage of savings, not the net amount. "We'll pay you more when you save more of what comes in," Bruhnke said. "We didn't want to segment customers by how much money they had. So it was always going to be about a percentage of income. That was really important to us."Check out the 14-page pitch deck fintech HMBradley, a neobank offering interest rates as high as 3%, used to raise an $18.25 million Series ARead the original article on Business Insider.....»»

Category: topSource: businessinsiderMar 28th, 2022

The Upshots Of The New Housing Bubble Fiasco

The Upshots Of The New Housing Bubble Fiasco Authored by MN Gordon via, “The free market for all intents and purposes is dead in America.” - Senator Jim Bunning, September 19, 2008 House Prices Go Vertical The epic housing bubble and bust in the mid-to-late-2000s was dreadfully disruptive for many Americans.  Some never recovered.  Now the central planners have done it again… On Tuesday, the Federal Housing Finance Agency (FHFA) released its U.S. House Price Index (HPI) for September.  According to the FHFA HPI, U.S. house prices rose 18.5 percent from the third quarter of 2020 to the third quarter of 2021. By comparison, consumer prices have increased 6.2 from a year ago.  That’s running hot!  But 6.2 percent consumer price inflation is nothing.  House prices have inflated nearly 3 times as much over this same period. Here in the Los Angeles Basin, for example, things are so out of whack you have to be rich to afford a 1,200 square foot fixer upper in a modest area.  Yet the clever fellows in Washington have just the solution. Massive house price inflation has prompted the FHFA, and the government sponsored enterprises (GSEs) it regulates, Fannie Mae and Freddie Mac, to jack up the limits of government backed loans to nearly a million bucks in some areas. Specifically, the baseline conforming loan limit for 2022 will be $647,000, up nearly $100,000 from last year.  In higher cost areas, conforming loans are 150 percent of baseline – or $970,800.  What gives? If you recall, ultra-low interest rates courtesy of the Federal Reserve following the dot com bubble and bust provided the initial gas for the 2000s housing bubble.  However, the housing bubble was really inflated by Fannie Mae and Freddie Mac.  The GSEs relaxed lending standards and, thus, funneled a seemingly endless supply of credit to the mortgage market. The stated objective of these GSEs was to make housing affordable for Americans.  But their efforts did the exact opposite. The GSEs puffed up the housing bubble to a place where average Americans had no hope of ever being able to afford a place of their own.  Then, when the pool of suckers dried up, about the time rampant fraud and abuse cracked the credit market, people got destroyed. If you also recall, it wasn’t until credit markets froze over like the Alaskan tundra in late 2008 that the Fed first executed the radical monetary policies of quantitative easing (QE).  To be clear, QE had nothing to do with the last housing bubble; ultra-low interest rates and GSE intervention did the trick on their own.  QE came after. But now, in the current housing bubble incarnation, the Fed’s been buying $40 billion in mortgage backed securities per month since June 2020.  Is there any question why house prices have gone vertical over this time? The Fed is now tapering back its mortgage and treasury purchases.  This comes too little too late.  And with Fannie Mae and Freddie Mac now jacking up their conforming loan limits, house prices could really jump off the charts. We’ll have more on the current intervention efforts of these GSEs in just a moment.  But first, to fully appreciate what they are up to, we must revisit the not too distant past… Socialized Losses A moral hazard is the idea that a person or party shielded from risk will behave differently than if they were fully exposed to the risk.  A person who has automobile theft insurance, for instance, may be less careful about securing their car because the financial consequence of a stolen car would be endured by the insurance company. Financial bail-outs, of both lenders and borrowers, by governments, central bankers, or other institutions, produce moral hazards; they encourage risky lending and risky speculation in the future because borrowers and lenders believe they will not carry the full burden of losses. Do you remember the Savings and Loan crisis of the 1980s? The U.S. Government picked up the tab –  about $125 billion (a hefty amount at the time) – when over 1,000 savings and loan institutions failed.  What you may not know is the seeds of crisis were propagated by Franklin Delano Roosevelt during the Great Depression when he established the Federal Deposit Insurance Company (FDIC) and the Federal Saving and Loan Insurance Company (FSLIC). From then on, borrowers and bank lenders no longer had concern for losses – for they would be covered by the government.  The Savings and Loan crisis confirmed this, and further propagated the moral hazard culminating in the subprime lending meltdown. Obama’s big bank bailout of 2008-09 socialized the losses.  Then the Fed’s QE and ultra-low interest rates furthered the moral hazard.  These are now the origins of the current housing and mortgage market bubble…and future bust. By guaranteeing mortgage securities up to nearly $1 million in some areas the government encourages risky lending by banks and speculation by investors.  Banks are less prudent about who they loan money to because the loans will be securitized and sold to investors.  Similarly, investors speculate on these securities because they are guaranteed by the government. Once again, the government is promoting a “heads, I win…tails, you lose” milieu where banks and investors reap big profits taking on big risks and where the losses are socialized by tax payers.  It also sets the stage for massive grift… The Anatomy of a Swindler FDR – the thirty-second U.S. President – was responsible for setting up Fannie Mae.  But another FDR – Franklin Delano Raines – was responsible for running it into the ground. The son of a Seattle janitor, FDR grew up knowing what it was like to have not.  He concluded at a young age it was better to have. Yet it was while mixing with Ivy Leaguers at Harvard University and Harvard Law School where he really refined his thinking.  He came to believe the government should be responsible for supplying the have nots with tax payer sponsored philanthropy. FDR came out of school with the wide eyed ambition of a lab rat.  He was determined to sniff out his way to wealth…and once and for all, find that ever illusive cheese at the end of the maze. The first corner he peered around smelled remarkably prospective.  But he came up empty.  Three years in the Carter Administration didn’t offer the compensation he’d dreamed of. To have was better, remember.  The next corner FDR peered around was much more lucrative.  He did an 11 year stint at an investment bank. But it was in 1991 when FDR got his big break.  For it was then that he became Fannie Mae’s Vice Chairman.  And it was then that he garnered hands on access to muck with the lives of millions.  Still, he wasn’t quite sure how to go about it. To learn such tips and tricks, FDR studied one of the true masters of our time…Bill Clinton.  From 1996 to 1998, he was the Clinton Administration’s Director of the U.S. Office of Management and Budget.  There he discovered you must have a vision…a mission…a delusion that is so grand and so absurd, the world will love you for it. One evening, in the autumn of 1997, it came to him in a flash.  Staring deep into the pot of his chicken soup, just as it approached boil, he hallucinated an image of a house.  Suddenly a small part of the grey matter of his brain opened up… For where Hoover had foreseen a chicken in every pot and a car in every garage, FDR now foresaw much, much more.  A chicken and a car were not good enough.  In FDR’s world, everyone should also get a house with a pot to cook the chicken in and a garage to park the car in.  And he knew just how to give it to them. Yet best of all, FDR also knew he could become remarkably rich pawning houses to the downtrodden.  So in 1999, he returned to Fannie Mae as CEO and got to work on his master plan… Fraudulent Earnings Statements It was a pretty simple four point plan… If low interest rates make housing more affordable, then even lower interest rates make housing even more affordable. So, too, if 20 percent down put housing out of reach for some, then 10 percent down was better. And zero percent down was optimal. Similarly, if a borrower’s credit score doesn’t meet the requisite credit standard, just relax the standard. And lastly, if a borrower’s income is too low to qualify for a loan, just let them state what ever income it is that they must have to get the loan. With the ground rules in place by 1999, FDR began the pilot program that would ultimately ruin the finances of the western world.  It involved issuing bank loans to low to moderate income earners, and to ease credit requirements on loans that Fannie Mae purchased from banks. FDR promoted the program stating that it would allow consumers who were, “A notch below what our current underwriting has required,” get a home. Here’s how it worked… Banks made loans to people to buy houses they really couldn’t afford.  Fannie Mae bought the bad loans and bundled them together with good ones as mortgage backed securities.  Wall Street then bought these mortgage backed securities, rated them AAA, and then sold them the world over…taking a nice cut for their services. FDR had a heavy hand in the action too.  By overstating earnings, and shifting losses, he pocketed the large bonuses a janitor’s son could only dream of.  According to a September 19, 2008 article by Jonah Goldberg, titled, Washington Brewed the Poison, FDR “…made $52 million of his $90 million compensation package thanks in part to fraudulent earnings statements.” Efforts to reform the scheme were stopped by the Democrats in Congress, who weren’t ready to give up the gravy train of money that flowed from Fannie Mae to their campaigns.   “Barack Obama, the Senate’s second-greatest recipient of donations from Fannie and Freddie after [Christopher] Dodd, did nothing.” Now, just 13 years later, Fannie Mae and Freddie Mac are at it again… Here We Go Again On June 23, 2021, in Collins v. Yellen, the Supreme Court decided the President could remove the FHFA director without cause.  The next day, President Biden replaced Trump’s director of the FHFA, Mark Calabria, with a temporary appointment. FHFA, as noted above, regulates government-backed housing lenders Fannie Mae and Freddie Mac.  Prior to getting his pink slip, Calabria had been working to reduce the harm these GSEs could do to the economy. Biden’s replacement immediately reversed course, reinstituting the social engineering policies that brought down the housing market in 2008.  Acting Director Sandra Thomas: “There is a widespread lack of affordable housing and access to credit, especially in communities of color.  It is FHFA’s duty through our regulated entities to ensure that all Americans have equal access to safe, decent, and affordable housing.”  One could mistake these words for those of Franklin Delano Raines.  Certainly, the madness it fosters will be Raines like.  The Wall Street Journal reports: “The problem the [Biden] administration sees is that housing and rental prices are too high.  The fact that the administration’s own policies have caused an inflationary trend in housing along with food, energy and gasoline, among others, is no deterrent. “[…] the administration wants people who would otherwise rent to become homeowners.  These young families would take on the risk and the burden of a mortgage, which the government—through Fannie Mae and Freddie Mac—will make much cheaper.  Investors, of course, will buy these risky mortgages from Fannie and Freddie because they are backed by the government.  “Here we go again.  The only difference between what the administration is proposing, and what brought about the 2008 financial crisis is that the economy is already in an inflationary period, induced by the administration’s other policies.  This will make homeownership even riskier.  In addition, Fannie and Freddie will be buying mortgages of up to $1 million, instead of $450,000. “But the government’s lower underwriting standards drive down standards for private lenders, too.  Banks and other mortgage lenders—if they want to stay in the business—have to offer their mortgages on similar terms.  People who own homes then dive into the market to take advantage of the low down payments, and housing prices rise even faster. This encourages cash-out mortgages, in which homeowners reduce the equity in their homes, sometimes to buy a boat.  “The process goes on for years until prices are so high that sales growth falls and homeowners can’t sell their homes to pay off their mortgages.  Housing prices then collapse, mortgages go unpaid.  Banks, other lenders, and even Fannie and Freddie incur losses and another financial crisis begins.” But wait, there’s more… The Upshots of the New Housing Bubble Fiasco House prices are already in bubble territory in many places across the county.  At these prices, who’s buying? Wall Street.  Pension funds.  BlackRock Inc.  And many, many others… Institutional investors have securitized the residential real estate market.  Hundreds of firms are competing with regular house buyers.  They’re also bidding up house prices. Invitation Homes, for example, is a publicly traded company that was spun off from BlackRock in 2017.  Invitation Homes gets billion dollar loans at interest rates around 1.4 percent – about half the rate of what regular house buyers get.  Often times they just pay in cash. According to a recent SEC disclosure, Invitation Homes’ portfolio of houses is worth $16 billion.  The company collects about $1.9 billion in rent per year.  Thus it takes only about eight years of rental payments to pay back a typical house that Invitation Homes has bought. Invitation Homes now owns over 80,000 rental houses and has a market capitalization of $24.6 billion.  The company has deep pockets.  Regular house buyers cannot compete. No doubt, this is an ugly situation.  The ugliness hasn’t been created by institutional investors.  They’re merely scratching for yield in a world where capital markets have been destroyed by the Fed.  Of course, there’s no situation that’s too ugly for Washington to not make even uglier. According to a recent White House fact sheet: “As supply constraints have intensified, large investors have stepped up their real-estate purchases, including of single-family homes in urban and suburban areas. […].  Large investor purchases of single-family homes and conversion into rental properties speeds the transition of neighborhoods from homeownership to rental and drives up home prices for lower cost homes, making it harder for aspiring first-time and first-generation home buyers, among others, to buy a home. […] “President Biden is committed to using every tool available in government to produce more affordable housing supply as quickly as possible, and to make supply available to families in need of affordable, quality housing – rather than to large investors.” This logic validates FHFA jacking up the limits for conforming loans.  Indeed, the clever fellows in Washington want to make housing more affordable by allowing more and more people to take on massive subsidized mortgages.  The logic makes perfect sense…so long as you have the intelligence of a box of rocks. We all know where this goes.  We all know where this leads. First time house buyers, competing with institutional investors, will use the government’s relaxed lending standards to chase prices higher and higher.  Then, once the mortgage market is sufficiently riddled with fraud and corruption and tens of millions of Americans are tied into loans they cannot repay, the impossible will happen… House prices will go down! …along with the hopes and dreams of those that got sucked into this wickedness. Sandra Thomas will be flummoxed.  Congress will socialize the losses once again.  And populace rage will be channeled into some new Occupy Wall Street movement.  Then things will really get ugly. These – and many more – are the upshots of the new housing bubble fiasco. Tyler Durden Sat, 12/04/2021 - 09:20.....»»

Category: smallbizSource: nytDec 4th, 2021

Meet the typical Gen Zer, who is quitting their job, has over $17,000 in student debt, and is influencing nearly everything you buy

Gen Z has entered the spotlight. From fashion to work, they're setting the tone for the 2020s and poised to take over the economy in a decade. Gen Z is ready for the spotlight.TIMOTHY A. CLARY/Getty Images Gen Z, the oldest of whom turn 24 this year, is the new "it" generation. They're setting trends in fashion and in the workplace, influencing consumer and worker behavior. And they're saving more than they're spending and set to dominate the economy in 20 years. Gen Z has stolen the crown from millennials as the media darling of the moment. The generation, the oldest of whom turn 24 this year, is in the spotlight as they begin to wield influence over lifestyle, work, and consumer trends. Look no further than various headlines promising how-to meet Gen Z demands in the workforce or market beauty brands to them.It's a coming-of-age story, and Gen Z is shaking things up as they enter young adulthood. They're the first digitally native generation and they're best reached online, where they're often catapulting new trends. They're innovative, entrepreneurial social activists, ready to create and shape a better world.They were hit by the pandemic during some of their most formative years, which could shape their futures over the long term. The oldest members of the "TikTok generation," who graduated into a recession, run the risk of repeating millennials' economic plight, but they're already showing signs of behaviors that could define them for years, trying to save and invest early and embrace a lifestyle based on thrift.By size and spending power, they're set to take over the economy in a decade, but their spending restraint and skepticism about markets could make that economy very different.While it's hard to capture an entire generation when some members are still teens and others are adults — demographic differences that produce data filled with caveats — here's what life looks like for the typical Gen Zer in 2021.Gen Z emerged in the limelight during the pandemic, taking over as the latest "it" generation.ViewApart / Getty ImagesGen Z is the most ethnically diverse generation in history and set to unseat millennials as the most educated generation, too. But Jason Dorsey, who runs the research firm Center for Generational Kinetics (CGK), says they're not millennials 2.0."They are really a distinctive generation with a different set of parents raised at a different time, that are coming into the world with some different views," he said, adding that the oldest members are entering the life stage in which they're exerting enough influence to take the mantle as the "it" generation.Society feels like it finally understands millennials, he explained, and is switching focus to the next generation, which remains a mystery. That leaves Gen Z "shifting and driving much of the conversation," and he predicted they'll do so for the next 15 years.They're the first generation to grow up in a wholly digital era, making them tech-savvy and mobile-first.Roy Rochlin/Getty ImagesGen Z was born into a world marked by technology, the internet, and social media. The average Gen Zer got their first smartphone just before their 12th birthday. They communicate primarily through social media and texts, and spend as much time on their phones as older generations do watching television.The pandemic heightened their digital behaviors. With ample time to scroll on their phones, they digitally bonded with one another as many moved back home during the pandemic at a similar life stage, Dorsey said.This helped TikTok, Gen Z's favored platform, blow up during the pandemic. By September 2020, the social media app had grown by 75%, and expanded into intergenerational use. It signals the growing influence of Gen Z in leading consumer behavior, much like millennials did with Instagram.Like millennials before them, the typical Gen Zer has had — and will have — their share of economic troubles.Brothers91/Getty ImagesThe pandemic put Gen Z on track to repeat millennials' money problems. As is typical with recessions, the youngest workers were hit hardest. Gen Z students could lose $10 trillion of life cycle earnings due to Covid lockdowns, the World Bank has estimated.A Bank of America Research report called "OK Zoomer" found that the pandemic will impact Gen Z's financial and professional future in a similar way to how the Great Recession did for millennials."Like the financial crisis in 2008 to 2009 for millennials, Covid will challenge and impede Gen Z's career and earning potential," the report reads, adding that a significant portion of Gen Z entered adulthood in the midst of a recession, just as a cohort of millennials did."I'm a little worried about ending up like those who graduated around 2008," Maya Tribitt, a junior at the University of Southern California, previously told Insider. "A lot of the fear people my age have about getting jobs right out of college have come from the horror stories of people 10 years older than us. It's really scary to think that might be our new reality."But the typical Gen Zer is already trying to build wealth, hoping to avoid millennials' record of falling behind.Klaus Vedfelt/Getty ImagesAs of 2017, 70% of Gen Zers were already earning their own spending money, per a CGK survey. That's the same amount as millennials, who are 10 years older on average. A follow-up CGK survey in 2020 found that the pandemic has taught Gen Z how to be frugal. They've begun saving money and investing earlier than previous generations did, and they're seeking good job benefits, Dorsey said.More than half (54%) of Gen Zers are saving more since the pandemic began than prior to it, according to the State of Gen Z report. Thirty-eight percent have opened an online investment account, while 39% have opened an online bank account.Despite investing earlier, though, Gen Z is going to have to work harder to get a return. They're set to earn less than previous generations on stocks and bonds, as Credit Suisse's global investment returns yearbook found Gen Z can expect average annual real returns of just 2% on their investment portfolios — a third less than the 5%-plus real returns that millennials, Gen X, and baby boomers have seen. Their average credit-card debt is $1,963, less than any other generation.Noam Galai/Getty ImagesGen X has the most debt because they're in their prime spending years, followed by boomers, according to an Experian Consumer Debt study. It makes sense. With the oldest members of the generation in their early 20s, and the majority of the cohort still in its teen years, Gen Z has yet to enter their prime earning years or come into full spending power. The oldest are still getting their feet off the ground in the workplace, and most don't have assets like a house and a car as older generations do.That's not to say Gen Z is debt-free. On average, they carry loan debt of $15,574.They have less student-loan debt than other generations — an average of $17,338 — but that's likely to grow as the generation ages into college life.Gen Z has a smaller student-debt burden than other generations.Pat Greenhouse/The Boston Globe/Getty ImagesSo says the Experian study.What was once largely viewed as a millennial problem is now becoming an issue for Gen Z. The generation holds 7.37% of the national $1.57 trillion student loan debt, but college is only getting more expensive. That share is expected to grow as more Gen Zers enroll in college.The future of student debt is highly uncertain, as President Joe Biden campaigned on canceling thousands of debt for each student, but he's been reluctant to actually do it since his election. The Democratic Party is in something of a civil war over Biden's authority to cancel debt unilaterally, leaving borrowers at a standstill. Despite their good money habits, the typical Gen Zer drove debt growth during the pandemic. They owe $16,043 on average.Tim P. Whitby/Getty ImagesGen Z had the most debt growth of any generation between 2019 and 2020, with the average balance increasing by 67.2% from $9,593, per the Experian report. But that's still less debt than all other generations have, and Experian said the increase "seemed to track with age — the greatest growth occurred among the youngest consumer group."That growth was mainly across mortgage and personal loan debt; Gen Z owe $169,470 and $6,004, respectively. It seems, then, that homebuying Gen Zers are leading the charge in their generation's debt upswing.But the typical Gen Zer is still set to take over the economy in a decade.Charmedlightph/ Getty ImagesBank of America Research's "OK Zoomer" report found that Gen Z will fare well in the long run. The generation currently earns $7 trillion across its 2.5 billion-person cohort, it stated. By 2025, that income will grow to $17 trillion, and by 2030, it will reach $33 trillion, representing 27% of the world's income and surpassing that of millennials the following year.Research and advisory firm Gen Z Planet recently found that the generation is saving and investing more than it's spending, and now holds $360 billion in disposable income. They're already influencing consumer behavior. The typical Gen Zer is rebelling against all things 2010s, while reviving the trends of the early millennium.Alexi Rosenfeld/Getty ImagesResearch has shown that, in moments of economic turmoil, humans are more likely to feel nostalgia. Gen Z's version of a nostalgic escape from the pandemic is reviving the fashions from the time before social media took over. From wired headphones to claw clips and baggy jeans, they're reviving the Y2K trends of yore in what Sara Fischer of Axios has deemed a "throwback economy." Corded headphones instead of AirPods, for example, are a way for Gen Z to make an "anti-finance bro" statement.They've also been lusting after an "old money" aesthetic characterized by Oxford shirts, tennis skirts, and tweed blazers, a sharp contrast from the "California rich" look of the Kardashians and the casual outfits of the new millennial billionaire class that characterized the 2010s. Prior to the pandemic, the VSCO girl had the internet buzzing. Characterized by a natural look that embodied a crossover between '90s fashion and a surfer lifestyle, she was a contrast to the contoured faces and lip fillers of Instagram influencers. Gen Z's continued embrace of nostalgia is showing she was no fluke, but the harbinger of a new (old) look.Their love for nostalgia explains why the typical Gen Zer likes to shop at thrift stores.Westend61/Getty ImagesThrifting is booming thanks to Gen Zers in search of sustainable, stylish clothes."I've kind of stopped buying clothes from traditional stores," Gen Zer Grace Snelling told Axios. "People almost respect you if what you're wearing is thrifted, and it looks good because you've managed to pull off a cool outfit, and it's sustainable."Recycling and reselling clothes helps the digitally native generation wear new-to-them outfits on a budget they haven't yet posted to social, avoiding repeating looks. It's also a tool to start a lucrative side hustle, in which some are raking in as much as $300,000 a year on apps like Depop and Poshmark.The trend goes beyond clothing. Gen Z (and millennials) are even increasingly eschewing mass-market home decor for vintage furniture, Insider's Avery Hartmans reported. It's not just fashion. The typical post-college Gen Zer is taking their contrarian views to the workplace.Su Arslanoglu/Getty ImagesGen Z is asserting new norms in the workplace, and eschewing the ones implemented by millennials before them. The New York Times' Emma Goldberg wrote that young 20-somethings are challenging tradition by delegating work to their boss, asking for mental health days, working less once they've accomplished their tasks for the day, and setting their own hours. It's part of what Erika Rodriguez called a "slow-up" in a recent opinion piece for the Guardian, referring to a permanent shift in slowing down productivity with the aim of having more separation from work. But some Gen Zers are quitting their jobs altogether, in what LinkedIn CEO Ryan Roslansky called a "Great Reshuffle." He said his team tracked the percentage of LinkedIn members who changed the jobs listed in their profile and found that Gen Z's job transitions have increased by 80% during that time frame.In August, a study by Personal Capital and The Harris Poll found that a whopping 91% of Gen Zers were keen to switch jobs, more than any other generation. While some are seeking greener pastures in other jobs, others are opting out of working altogether, bolstering the "antiwork" movement that embraces a work-free lifestyle.While the vast majority of Gen Zers haven't yet entered the workforce, it stands to reason they'll be just as, if not more so, progressive than their older peers.They're also creative, entrepreneurial, and innovative both inside and outside work.Part of the Students for Hospitals team.Jalen Xing"Gen Z is innovative and powerful," Emma Havighorst, a 2020 graduate, told Insider last year. "The way we see the world is very different from prior generations."For three years, Havighorst has hosted the podcast "Generation Slay," which profiles Gen Z creators and entrepreneurs like mental-health advocate Gabby Frost and nonprofit founder Ziad Ahmed. She said she thinks the pandemic will produce even more innovators."Necessity breeds invention," she said. "We'll be trying to figure out solutions to problems that plagued past generations."Consider high schoolers Daniel Lan and Jalen Xing, who created homemade face shields for hospitals during the pandemic, starting the initiative Students for Hospitals.More than half (58%) of Gen Z respondents in a DoSomething Strategic survey said that, since the pandemic, they had picked up a new activity or were doing more of something they already enjoyed.But perhaps most significantly of all, the typical Gen Zer is ready for change — and they'll do what it takes to make that happen.RODGER BOSCH/AFP via Getty ImagesA generation whose childhood was defined by international protest movements including Occupy Wall Street and the Arab Spring, Gen Z has been at the forefront of activism, from the March for Our Lives anti-gun protest and the climate change movement. Arguably its most famous member is the climate-crisis activist Greta Thunberg.2020 also put the generation front and center in the anti-police-brutality demonstrations sparked by the killing of George Floyd, a Black man who was murdered by a white police officer in Minneapolis. Social networking app Yubo and Insider polled 38,919 US-based Gen Zers, and found that 77% of respondents had attended a protest to support equality for Black Americans.The generation also played a pivotal role in the 2020 election, Insider's Juliana Kaplan reported, which may have finally captured the elusive youth turnout. Tufts University's Center for Information and Research on Civic Learning & Engagement (CIRCLE) revealed youth voter turnout for 2020 was up by at least 5% from 2016 — and could have been up by as much as 9%.It seems, then, that change may start with Gen Z.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 28th, 2021

21 Investing Myths That Just Aren’t True

With all of humanity’s collective knowledge available at our fingertips, you’d think investing myths would have disappeared by now. Q3 2021 hedge fund letters, conferences and more Yet they persist, largely because too many people consider money a “taboo” subject and avoid talking about it. Many of us also never question these assumptions, so we […] With all of humanity’s collective knowledge available at our fingertips, you’d think investing myths would have disappeared by now. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Yet they persist, largely because too many people consider money a “taboo” subject and avoid talking about it. Many of us also never question these assumptions, so we don’t bother running a quick web search in the first place. These persistent investing myths cost you money though, in a very real sense. Once you move past these myths, a wider world of investing opportunities open up for you. Myth: You Can Time the Market to Earn Higher Returns When it comes to new investors learning how to invest their money one of the biggest myths is that you can time the market and earn better returns. To profitably time the market, you need to get it right twice. You need to buy at or near the bottom of the market, just as it turns upward. Then you need to sell at or near the top of the market, just as it prepares to plunge. The most experienced, best-informed professionals can’t do this predictably. If they can’t do it, you certainly can’t. Imagine you’re standing on the sidelines, telling yourself that you’ll invest “once the market drops.” But the market continues to rise for the next year or two before its next dip. When the dip does come, its low point might still cost more than today’s price. And that’s assuming you were able to buy at the low point, which you almost certainly won’t time properly. In the meantime, you’ve missed out on years of passive income from dividends or rents, or interest. Rather than trying to time the market, practice dollar-cost averaging. While it sounds complicated, it simply involves investing a set amount every month into the same diversified investments, based on what your budget allows for each month. You ignore timing and just mimic the broader upward trend, to earn better returns in the long run. Myth: You Need a Lot of Money to Start Investing A common myth that many people assume is investing a little bit of money doesn’t make sense. They think that investing $5 a month is pointless so they never even bother to start. That couldn’t be further from the truth. And it leads to wasted opportunities to save and invest over time. The truth is, investing a small amount of money can grow into large sums of money. Jon Dulin, owner of MoneySmartGuides, offers this example: “Let’s say you are 25 years old and invest $20 a month for 25 years. During this time you earn an average 8% return — nothing spectacular, just average returns. “At the end of 25 years, your $20 monthly investment has grown to nearly $19,000. If that doesn’t sound impressive, consider that your measly $20 each month could help your child or grandchild pay for college. Or it could pay for a family reunion vacation that you have on a tropical island. “If you instead keep the money invested for another 25 years, when you reach age 75, you’ll have close to $149,000. This can cover several years’ worth of living expenses during retirement.” Don’t make the mistake of assuming a small amount of money is a waste of time. Thanks to compounding, your money will grow into far larger sums over time. Literally anyone can get started even with little capital. Take the first step now and start investing any excess money you have, regardless of the amount. Read more: Invest in Art like the Ultra Wealthy Without Spending Millions Myth: I’m Too Young (or Too Old) to Start Investing The sooner you start and the longer you keep the money invested, the more it will grow. At an 8% return, you’d have to invest $5,467 each month to reach $1 million in 10 years. But it only takes $287 invested each month to reach $1 million in 40 years. That means that even people working for minimum wage can become millionaires if they invest consistently over time. On the other end of the spectrum, some older adults look at those numbers and despair, wondering why they should bother investing at all. But that’s the price of delaying: you need to save and invest more each month to reach the same goal. As the proverb goes, the best time to plant a tree was 20 years ago. The second best time is now. Start investing today with what you have, and let compounding work its magic for you. Read more: Don’t Miss These 12 Stocks Pay Monthly Dividends Myth: It Takes Decades to Save Enough to Retire In personal finance, the concept of “financial independence” means being able to cover your living expenses with passive income from investments. To make your day job optional, in other words, allowing you to retire if you like. It takes hard work and an enormous savings rate, of course. If you plod along with a 10-15% savings rate, then yes, it will take you decades to save enough to retire. My wife and I got serious about financial independence at 37, three years ago. We’re on track to reach financial independence within the next two or three years, in our early  40s. How? With a savings rate of 60-65% of our annual income and aggressive investing. Neither of us earns a huge salary either, but we still enjoy a comfortable lifestyle with plenty of international travel. We can save so much of our income because we house hack for free housing, avoid owning a car by living in a walkable area, and get full health insurance through my wife’s job. Nor are we alone. Read up on the FIRE movement (financial independence, retire early) to see how thousands of other people are achieving fast early retirement. Myth: Popular Companies Make Better Stock Picks The idea that popular companies make for good stocks sounds appealing on its surface. After all, if a company is popular, it’s probably growing its business. But the popularity and even the quality of a business only tell half the story. The other side is the price you pay for it. “Imagine someone approached you with two offers,” illustrates Ben Reynolds of Sure Dividend. “The first offer is to buy a $100 bill for $150. The second offer is to buy a $1 bill for $0.50. We all know the $100 bill is worth much more than the $1 bill… But any rational person would rather buy $1 for $0.50 than $100 for $150.” Two Warren Buffett quotes sum this up nicely: “For the investor, a too-high purchase price for the stock of an excellent company can undo the effects of a subsequent decade of favorable business developments.” “Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.” The reason it is difficult to do well investing in popular stocks is because they tend to be overvalued. Everyone already “knows” the business is going to be wildly successful, and that’s baked into the price. If there’s any hiccup in results, the price is likely to decline significantly. Also, as evidenced by the GameStop fiasco, amateur traders can make a significant impact on popular investments. Just because something is popular doesn’t make it a good investment. Read more:  Discover these 19 Blue Chip Dividend Stocks Myth: You Need to Spend Time Researching Stocks or Frequently Trading Many people believe that it takes a lot of time to research stock and make frequent trades to make money, resulting in people leaving their investments with a professional or relying on expensive mutual funds. But individual investors don’t need expensive investment advisors or managed mutual funds (more on them shortly). “For most retail investors, utilizing low-cost passive index ETFs is the easiest and cheapest approach,” explains Bob Lai of “These index ETFs track a special index, like the S&P 500 or the NASDAQ Composite Index. Because of index-tracking nature, you get to own all the stocks listed in that index.” There’s no need to spend time determining the earning trend of companies like Apple, Facebook, Amazon, or Pfizer because you own them all. By owning all these stocks in the index ETFs, you are also not making frequent trades. Counterintuitively, frequent trades generally lead to lower returns. Think of your investment portfolio like a bar of soap: the more you touch it, the smaller it gets. Read more: Related read: Diversify Your Portfolio With These Top 10 International ETFs Myth: Expensive Managed Mutual Funds Outperform Passive Index Funds Experienced, professional investors with the best data available to them still can’t pick stocks or time the market better than passive index funds. Need proof? Over the last 15 years, nearly 90% of managed mutual funds underperformed compared to their respective benchmark index. “The best investment strategy would be to invest in index funds of stocks or bonds that track an entire segment of the market — so you don’t have to worry about which specific security will give you the best return over short investing periods,” offers Kelan Kline, cofounder of The Savvy Couple. “My personal favorite low cost broad market index fund is Vanguard’s VTSAX.” Myth: Only the Wealthy Can Hire Investment Advisors A survey from JPMorgan Chase found that 42% of people who aren’t investing are staying out because they don’t think they have enough to invest. On some level, this isn’t surprising. After all, historically people had to work with private wealth managers who require $100,000 or more. Even many popular index funds required a minimum of $10,000 to get started, just 20 years ago. “That is changing with algorithm-driven investment tools such as robo-advisors,” says Jeremy Biberdorf of “In many cases, robo-advisors have no minimum investment and allow you to invest for a small fee. Even investing a small amount every year can make a big difference.” Robo-advisors also won’t run off with your money or engage in insider trading. Many investors let their guard down and trust human investment advisors without doing any due diligence on them, especially when referred to them by friends of family members. “This makes investors vulnerable to conflicting advice in even the best-case scenarios. In the worst-case scenarios, they are easy prey for scammers. That’s why I call this blind faith in financial professionals the worst investment advice I hear everywhere,” explains Chris Mamula of Can I Retire Yet?. Read more: Can I Retire at 62 With 400k In My 401(k)? Myth: Bonds Are Inherently Safer than Other Asset Classes Bonds offer one type of safety — but leave you exposed to other types of risk. When an investor buys a bond from the US Government or most municipalities, there’s little risk of the borrower defaulting. So investors can sleep at night knowing that as long as they hold that bond, they’ll probably receive their modest interest payments. But bond values gyrate on the secondary market just like stock prices. Investors who plan to sell their bonds rather than hold them can find themselves with paper that’s gone down in value, not up. Which says nothing of the corroding effect of inflation on bond interest payments. When inflation runs at 3% in a year, a bond paying 3% interest-only generates a 0% real return. That in turn means that bonds may not actually protect retirees against running out of money before they die. Sure, the stock market is volatile, but in the long term, it generates an average return of 10% per year. At a 4% withdrawal rate, investors will see their stock portfolio go up in value rather than down, in most years. Even conservative income stock investing, such as in dividend kings, can yield 3-4% in dividends alone, on top of share price growth. But bonds paying paltry 3-4% interest will cause a slow decay in your nest egg. None of that means that you should never invest in bonds. But every investor should understand all the risks — not just the risk of default. Myth: Options Trading is Risky For many, selling options is a risky business.  And strategies such as Iron Condors add to the complexity.   “However, when managed correctly, options trading can be a handy addition to an overall portfolio”, explains Gavin McMaster of IQ Financial Services, LLC. An iron condor is a delta-neutral option strategy that consists of both call options, and put options.  The strategy works if the underlying stock stays within a specific range during the course of the trade. The key with iron condors is trading an appropriate position size (never risk your whole account on an iron condor) and knowing how to manage them. Here are a few quick tips to reduce the risks with iron condors: Never risk more than 2-3% of your account size on any one trade Close the trade before the stock breaks through one of the short strikes Avoid earnings announcements Have one or two adjustment strategies ready in case the trade moves against you Focus on stocks and ETF’s with a high IV Rank “While iron condors can be risky if you don’t know what you are doing, using appropriate position sizing and risk management rules can reduce the risks”, adds McMaster.  Generating income from iron condors can be a superb way to increase the returns on your portfolio. Myth: Pay Off Your Student Loans Before Buying a Home Paying off student loans before buying a home is a common misconception. While there is no “one size fits all approach,” many people believe their student loan debt will prohibit them from purchasing a home, however, this isn’t always the case. “For example, doctors and dentists often carry large amounts of student debt, and typically have relatively high debt to income ratios. Therefore, exploring a Physician Mortgage, which allows individuals to carry more debt, may be a better fit than a traditional mortgage”, explains Kaitlin Walsh-Epstein with Laurel Road. For those nonhealthcare professionals looking to purchase a home while managing high outstanding student loan balances, refinancing their student loans can be a good option. By refinancing to a longer-term mortgage, the borrower may lower their monthly payments. However, this may also increase the total interest paid over the life of the loan. “Refinancing to a shorter-term mortgage may increase the borrower’s monthly payments, but may lower the total interest paid over the life of the loan.”, adds Walsh-Epstein. Questions to consider: What is your current student loan interest rate? (Calculate the true cost over the life of your loan) What are mortgage interest rates and are they projected to go up or down?  (Currently mortgage rates are low) Do you pay rent each month and if so, how will your rent payment compare to a mortgage payment?  (As well as carrying costs of owning a home) Is the home (or real estate) projected to appreciate in value? The first step is to review and understand your credit score, student loan terms, and financial goals. Working towards making payments to lower your overall debt will help to raise your credit score, yet again increasing your chances of getting into your dream home faster! Myth: The “Rule of 100” In the 20th Century, investment advisors droned out the same advice to most clients: “Subtract your age from 100, and that’s the percent of your portfolio that should be invested in stocks.” They pushed clients to move their money into bonds instead, as they grew older. A sound strategy — back when Treasury bonds paid 15% interest. This century has seen perpetual low-interest rates, and bonds have offered poor returns compared to stocks. This says nothing of the fact that people are living and working longer, so they both have more risk tolerance and need their nest eggs to last longer. Today, investment advisors tend to instead advise subtracting your age from 110 or 120 instead, if they bother issuing such generic advice at all. Everyone has their own unique risk tolerance and needs; as a real estate investor, I can earn safer, higher returns from real estate than bonds, so I avoid bonds altogether. A high earner nearing retirement might appreciate the tax benefits and security of municipal bonds and tailor their portfolio accordingly. Be careful of anyone peddling such a broad rule of thumb as the “Rule of 100.” Read more: Find Expert Tax Preparers Now! Myth: You Must Pay Off All Debt Before Investing There are plenty of great reasons to pay off consumer debt early. You earn an effective return equal to the interest rate, and it’s a guaranteed return on your money when you use it to pay off debt early. Mark Patrick of Financial Pilgrimage explains it like this: “Our family even went so far to pay down our mortgage debt despite record low-interest rates. With that said, throughout the entire process we invested in our retirement accounts, such as our 401(k) account. The benefits are just too good to pass up. “The company that I work for provides a 401k match of up to 6% plus an additional 1% that every employee receives regardless. Therefore, if I contributed 6% of my salary to my 401(k) I would receive an additional 7% in contributions from my employer. I was more than doubling my money right away! “If you decide to wait to pay down all of your consumer debt instead of starting to invest for your retirement you’ll miss out on years of compound interest. Compound interest is one of the most powerful forces in personal finance. The earlier you can get started, the better. For example, if someone invests $5,000 per year from age 25 to 35 and then never invests another dollar, they would likely have more money at age 65 than someone that invests the same amount every month from age 35 to 65. “While I am a huge proponent of paying down debt, it shouldn’t come at the expense of forgoing investing. Especially when you want that money to grow until retirement. Try to find the balance between paying down debt and investing. We certainly could have paid down our debt faster if we decided not to invest throughout the process, but after 15 years in the workforce I’m sure glad we didn’t. Those dollars invested early on have compounded into much larger amounts over the years. Read more: Should you Pay off Debt or Save for Retirement Myth: You Should Pay Off Your Student Loans Before Buying a Home It might make more sense to pay off student loans before buying a house. Or it might not. Ultimately it depends on your goals, your housing market, your loan interest rates, and your other finances. For example, you might live in a housing market where it’s cheaper to rent than own a home. In that case, it makes sense to pay off your student loans rather than rush into buying. Alternatively, if you plan on buying a duplex and house hacking, and thereby eliminating your housing payment, it probably makes more sense to buy. Just think about how much faster you could pay off your student loans, with no housing payment! Think holistically about how owning versus renting for another year or two would affect your finances. Don’t rush into buying a home — but don’t avoid it without deep analysis, either. Myth: Buying Is Always Better than Renting Despite having owned dozens of properties as a real estate investor, I live in a rental apartment. In some markets, renting makes more sense than buying. Look no further than San Francisco, where the median home price is $1,504,311, but the median rent for a three-bedroom home is $4,567. After adding in property taxes and homeowners insurance, it would cost roughly double the monthly payment to buy a median home as rent, despite all the perennial complaints by San Francisco tenants. And that says nothing of maintenance and repair costs, which average thousands of dollars each year for the typical homeowner. Renters don’t have to pay those costs or do that labor. They delegate them to the landlord. Nor do renters need the fiscal discipline to budget money each month for those irregular, but inevitable expenses. Not everyone has that discipline, and they’re better off with the steady, predictable housing cost of monthly rent. Finally, renting allows flexibility. Tenants can sign a month-to-month lease agreement and move out with a few weeks’ notice. Homeowners don’t have the flexibility; it takes months to sell a home, and typically tens of thousands in closing costs. Myth: Your Home Is an Investment Buyers love to delude themselves that they’re buying an “investment” rather than spending money on shelter. It helps them justify overspending on the biggest, fanciest house they can possibly afford. But make no mistake: housing falls under the “Expenses” category in your budget, not the “Investments” category. It costs you money every month, rather than generating it. House hacking marks a notable exception however, since your home helps you avoid a housing payment. Sure, real estate often goes up in value. So do baseball cards, but that doesn’t justify hobbyists spending as much as they possibly can on them, while patting themselves on the back for their wise “investments.” By all means, invest in real estate. But do it by buying true investment properties, or REITs, or real estate crowdfunding investments. The more you spend on housing, the less you can put toward true investments. Read more: House Hacking – 18 Ways to Never Pay Rent Again Myth: You Should Put the Bare Minimum Down When You Buy a Home Making the bare minimum down payment often enables buyers to overspend on housing. They end up overleveraging themselves, mortgaged to the hilt with an enormous monthly payment and little money left to actually furnish the place, or to enjoy any social life. It also leaves homeowners vulnerable to becoming upside-down on their home, owing more than the home is worth. At that point, they become prisoners in their own homes, unable to sell without the lender’s permission. They end up stuck there until the housing market either improves or they pay their loan balance down enough to be able to afford seller closing costs without coming out of pocket. While it sounds nice to put down next to nothing on a home, look at the bigger picture. If you spend far less on a home than you can afford, then a low down payment can serve you well. But if you’re straining against the limits of your budget, beware of putting every last penny into a tiny down payment with a huge monthly bill. Myth: You Should Put Down as Much as Possible on a Home The common wisdom was once to put down as much as possible when you buy a home, and 20% at the very least. However, this locks up a good portion of the money that could be growing at a faster rate with other investments. “Putting down less than 20% does increase the monthly mortgage payment due to the higher interest rate and PMI (private mortgage insurance),” explains Andy Kolodgie of The House Guys. “However, you should compare your expected returns on that extra down payment if you were to invest it elsewhere, to the annual savings on your mortgage. For example, investing in stocks and bonds could allow you to earn more money while providing the added benefit of easy liquidity. “A lesson learned from the 2008 mortgage crisis was you can’t eat equity in your home. During the recession, it was nearly impossible to refinance the equity out of any home, as home prices dropped below most people’s mortgage balance. Putting less than 20% down to stay more liquid and investing in alternative assets diversifies your portfolio, keeping buyers more risk-averse.” Again, look holistically at your personal finances. As you near retirement, it makes more sense to play conservatively with a larger down payment to avoid PMI and reduce your monthly mortgage bill. For younger borrowers looking to buy a first home, it often makes more sense to put down 3-10%, and invest their other cash more aggressively in the stock market or other assets with high return potential. Myth: You Need 6-12 Months’ Living Expenses in an Emergency Fund To hear the pundits crying from their soapboxes, we all need at least a year’s worth of living expenses parked in a savings account in cash to protect us from a financial apocalypse. And some people do. But not everyone. Those with either irregular incomes, irregular expenses, or both do need a deep cash cushion. For example, as an entrepreneur, there have been months where I didn’t earn enough to take a personal distribution for myself from the company, so I earned $0 in personal income those months. Someone like me does need 6-12 months’ worth of living expenses saved in an emergency fund. Salaried employees with safe jobs at stable employers don’t need as much cash in an emergency fund. That goes doubly if they live a predictable middle-class lifestyle with the same expenses month in and month out. They may only need 2-3 months’ expenses set aside in cash. I go a step further with my emergency fund and think of it as tiered levels of defenses, like a medieval castle. The first level comprises cash savings — you can tap it if you need it. I also keep several unused credit cards with low-interest rates, that I can also draw on in a pinch. Then I keep several low-volatility, short-term investments that I can also turn to if needed. All of which means I don’t actually need 6-12 months’ living expenses in cash after all. Myth: More Education Inherently Means a Higher Income From a statistical standpoint, education level correlates strongly with income. People with college degrees earn more than those with high school diplomas on average, and those with advanced degrees earn a higher average income still. On a personal level, it often doesn’t work out that way. I have plenty of friends and family members with advanced degrees, and most of them earn modest, middle-income salaries. Salaries with ceilings, and little room for advancement beyond their specialized niche. I can’t tell you how many teachers I know with several master’s degrees, who earn little or nothing more than their colleagues with bachelor’s degrees. In fact, my friends and family with the highest incomes all stopped at bachelor’s degrees and while some got high-paying jobs, others went into business in some capacity. This doesn’t mean you shouldn’t pursue an advanced degree if it’s required for your dream job. By all means, pursue your passion. But don’t assume that an advanced degree inherently means an advanced salary. Read more: How to Make $100k/yr As A Brand Ambassador Myth: Gold Offers the Best Hedge Against Inflation Many investors flock to gold when they fear inflation. But historically, gold often performs badly during times of high inflation. From 1980-1984, for instance, gold lost around 10% in value, even as inflation raged at a 6.5% annual rate. Historically repeated itself in the late 1980s as well. Gold actually works best as a hedge against a weakening currency — compared to other world currencies. When investors think the US dollar is about to crumble in value compared to the euro, pound, or yen, that marks a good moment to grab some gold. But investors more generally worried about inflation should consider better hedges against it. Real estate offers an excellent hedge against inflation, for example. It has inherent value: people will pay the going rate, regardless of the value of the currency. The same goes for commodities like food staples; no one stops eating just because inflation surges. Most professional investment advisors recommend holding no more than 5% of your portfolio in precious metals, if that. I personally own none, preferring to invest in stocks, real estate, and the occasional speculative gamble such as cryptocurrency. Article By G. Brian Davis, The Financially Independent Millennial Updated on Oct 5, 2021, 5:10 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 5th, 2021

Could Hyperinflation Ever Happen Here?

For weekend reading, Louis Navellier offers the following commentary: Something insidious began to happen a century ago in Germany – it was something like that proverbial frog getting warmer in a kettle of water over a flame. He didn’t notice when the water warmed, gradually at first. But I’m not talking about frogs (or Frenchmen) […] For weekend reading, Louis Navellier offers the following commentary: Something insidious began to happen a century ago in Germany – it was something like that proverbial frog getting warmer in a kettle of water over a flame. He didn’t notice when the water warmed, gradually at first. But I’m not talking about frogs (or Frenchmen) here. The German mark, trading at four per U.S. gold-backed dollar in 1914, before World War I, was still worth about 10 marks per dollar in 1921, but in 1922, the erosion began, slowly at first, and then in astronomical leaps and earth-defying rocket launches. Hyperinflation Has Devasted Savings This hyperinflation devastated the savings of a generation. Bonds, life insurance, and cash savings were wiped out. You had to cash your paycheck and shop within an hour since cash would be worth half as much within that hour. It’s often said that a “wheelbarrow of cash wouldn’t buy a loaf of bread,” but I always thought that was silly, since nobody owned thousands of small bills. The government just added 13 zeroes to a print run and then you didn’t need no stinking wheelbarrow for a 100 trillion mark note! As “Adam Smith” (George Goodman) described the scene in his 1982 book, “Paper Money,” Germany’s hyperinflation began June 24, 1922, when fanatics assassinated Walter Rathenau, a “moderate, able foreign minister, a charismatic figure.” That act “shattered the faith of the Germans, who wanted to believe that things were going to be all right,” so they began putting all their cash into “real goods.” War reparations were another cause: Germany owed impossibly high debts to foreign powers, so the German Central Bank responded by printing boatloads of fiat money. As their currency imploded in November 1923, the country exploded with Adolf Hitler’s failed Munich Beer Hall Putsch. Later, Hitler rode that sense of national unrest to power, as the Nazis won 32 seats in the next election, and the right-wing Nationalist party won 106 seats on promises of 100 percent compensation to the victims of inflation. Can it happen here? Probably not, but we crossed a monetary Rubicon in 2008, as explained by Lev Menand, in a new book, “The Fed Unbound: Central Banking in a Time of Crisis.” In essence, the author, an Associate Professor at Columbia Law School, says the Fed has lost control of those areas it ought to manage, while trying to expand its role in those areas it ought not to manage. Specifically, in 2008 it entered the business of bailing out companies – all in an effort to prevent a possible Greater Depression. In 2008, the new Chairman of the Fed, Ben Bernanke, had been a specialist in studying the Depression years. He had previously honored the great economist Milton Friedman on his 90th birthday (in 2002) by toasting Dr. Friedman, saying, “Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again!” He obviously lived up to that promise, but at great cost. “In March of 2008, [the Fed] lent $29 billion to prevent the bankruptcy of Bear Stearns… By year-end the Fed had committed $123 billion to save AIG…. The largest loan the Fed had previously made using this authority was $300,000, which it lent to Smith & Corona, the typewriter company, in 1933. Prior to 2008, the total of the Fed’s emergency lending to firms without bank charters in its history was just $1.5 million, all of which it lent during a period, the Great Depression, when nearly a third of the country’s banks closed their doors.”  –From “The Fed Unbound” by Lev Menard The Fed was chartered to supervise banks. Who gave the Fed power to decide that Bear Stearns should live, Lehman should die, and AIG should live? That’s the “unbound” nature the Fed took on in 2008. Then, a dozen years later, the Fed more than doubled its balance sheet in a matter of months. This chart, although nowhere near the hyperinflation of 1923 Germany (which was on a log scale) shows a hyper-inflated balance sheet. Only in the Civil War and World War II was there money creation near this scale. Historic Inflation Rates No, hyperinflation is not likely to happen on the scale of Germany in 1923, or Hungary in 1946, when an item that cost one Hungarian pengo at the end of World War II in September 1945 cost 2.5 trillion pengo by June 1946. (The inflation rate was 150,000% per day by late June 1946). There were five pengo to the dollar before the war and 460 trillion per dollar in mid-1946. In a twist of fate, the young George Soros, lived through that hyperinflation, which might have turned him into a gifted currency trader later. The Zimbabwe rate was worse, but took longer, from 1999 (50% a month) to 2008 (500,000,000,000%). In contrast, something like a slow death happened to the dollar 50+ years ago when President Lyndon B. Johnson took silver out of our coins and President Richard Nixon took any gold backing out of our dollar. First, on June 23, 1965, President Johnson and his brain trust thought we could over-spend on “guns and butter” (Vietnam and more social spending) if we could run up deficits, so he took silver out of our coins to save money – the first devaluation of our silver coins since 1792. But LBJ quickly added this warning. “If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.” –LBJ, 1965 Is that so, boss? Silver’s fixed price was then $1.29 per ounce. It is now over $20, up over 1,400 percent. Then, on August 15, 1971, President Richard Nixon closed the gold window when gold was just $35 per ounce, and gold is now around $1,775 an ounce – up 5,000 percent in the last 50+ years. Looking through the other end of the telescope, today’s paper dollar is worth just two percent of a gold-backed 1970 dollar. Inflation may go down to four or five percent by the end of this year, as I predicted at the start of the year, but if inflation still rises by four percent a year, on average, it’s as slow and insidious as that sizzling frog. Our friend Louis Navellier talked about his daughter finding a one-bedroom apartment near Columbia University costing $5,600 per month. I was just reading the memoirs of the great American composer Aaron Copland at the peak of his fame in 1943. He was upset that his fine room at the Empire Hotel in Manhattan just increased from $8.50 to $13.00 per month, up over 50 percent due to wartime inflation. No, it’s worse than that. It’s up 65,780 percent in 79 mostly peaceful years. That’s insidious inflation! Updated on Aug 12, 2022, 5:32 pm.....»»

Category: blogSource: valuewalkAug 13th, 2022

We visited an Aldi store in the US and the UK to find out what you can buy for $25

We were surprised by how much you can still get for $25 at the budget supermarket in both countries, but we ended up with rather different baskets. Insider Inflation and supply chain issues are pushing up the price of groceries around the world. Aldi has thousands of stores in the US and UK offering some of the lowest grocery prices. We were surprised by how much you could buy. for $25, but the UK had some especially good deals. Groceries are becoming more expensive around the world due to inflation and rising commodity costs.Daniel GoodmanBasics that many people rely on such as milk, eggs, and chicken have been hit particularly hard.Debanjali Bose/InsiderWe visited Aldi store in the US and the UK to see how many basic groceries we could purchase for $25 in each country.Stephen Zenner/Getty Images.Aldi has more than 2,000 US stores in 36 states, and is known for being a budget grocer with affordable private label brands.Mary Meisenzahl/InsiderI set out to get as much from my list as I could, though I knew I'd probably have to make some cuts.Mary Meisenzahl/InsiderStrawberries were appealing, but they didn't end up fitting the budget so I left them on the shelf.Mary Meisenzahl/InsiderIt would have been cheaper to buy a gallon of milk, but I live in a two person household and know it would go to waste, so I went with a half gallon instead, which was still well priced compared to other stores in my area.Mary Meisenzahl/InsiderI don't usually buy organic greens, but that's all Aldi had when I shopped, so I spent a bit more here than I'd anticipated.Mary Meisenzahl/InsiderAldi meat is generally cheaper than other grocery stores in my area, but the large quantities of chicken breasts and thighs would still have blown my budget.Mary Meisenzahl/InsiderI was able to get two bags of groceries and a case of Aldi private label brand seltzer for just under $25.Mary Meisenzahl/InsiderIt was certainly not a massive haul, but it aligned with most of the basics I'd typically buy.Mary Meisenzahl/InsiderI ended up with ground turkey, because I couldn't find ground beef and chicken came in quantities too large for my budget.Mary Meisenzahl/InsiderI was able to get a box of pasta and a jar of pasta sauce for just under $3 all up.Mary Meisenzahl/InsiderI think the ground turkey, plus pasta and sauce could make a few hearty meals with a meat sauce or meatballs.Mary Meisenzahl/InsiderIt wasn't an absolute necessity, but I love to have cans of seltzer to drink when I'm working. They were $3.79 compared with almost $5 for La Croix.Mary Meisenzahl/InsiderI spent $1.99 on pretzels for something to snack on.Mary Meisenzahl/InsiderAll together, this is what $25 can buy at Aldi in the Rochester, New York area.Mary Meisenzahl/InsiderIt's definitely enough food to make multiple meals, but that's only possible because I already have spices, cooking oils, cheese and other basics at home.Mary Meisenzahl/InsiderRealistically, I could easily go back to Aldi and spend another $50 or more to really fill out my standard shopping list for the week.Mary Meisenzahl/InsiderWe went to an Aldi Local near Insider's London office at Old Street, not too far from Kings Cross.Sam Tabahriti/InsiderAldi has close to 1,000 UK stores. As a student, I used to shop at a much bigger store than this one, which is the company's smaller convenience-focused store format.Sam Tabahriti/InsiderAs I knew I had $25 (£20.60) to spend, I had to be smart about what I would pick.Sam Tabahriti/InsiderI wanted some fresh produce. There wasn't much left when I visited at about 5pm, so I bought some tomatoes, mushrooms, and mixed peppers.Sam Tabahriti/InsiderI normally opt for frozen chicken breasts they are cheaper, but this store only carried fresh options.Sam Tabahriti/InsiderThey were on special, albeit only 16 pence cheaper than normal, so into my basket they went.Sam Tabahriti/InsiderI searched for an alternative to milk as I'm intolerant to dairy products, but it didn't have any plant-based options.Sam Tabahriti/InsiderI am not a big fan of mince, but I thought I could make a nice bolognese, so I bought a 250 gram pack that only had 5% fat and cost £1.89 ($2.30).Sam Tabahriti/InsiderI don't have much of a sweet tooth so I decided to get some plain salted potato chips. A pack of six small bags cost 79 pence, or about $1.Sam Tabahriti/InsiderThe lack of plant-based milk alternative meant I had enough for a "treat" in the form of a frozen Margherita pizza. However, this was £1.09 ($1.30) and I had previously found pizza costing as little as 49 pence (60 cents) in other Aldi stores.Sam Tabahriti/InsiderI grabbed a 2-liter bottle of Aldi lemonade, which cost 43 pence, or about 50 cents. I then headed to the checkout.Sam Tabahriti/InsiderI had kept track of the cost on my phone to avoid going over my budget. The bill £20.30, so I had a few pence to spare.Sam Tabahriti/InsiderThis is what $25 (£20.60) buys at Aldi in Old Street, London.Sam Tabahriti/InsiderOverall, I don't think this was near enough and certainly not what I would normally spend. I usually allow myself £100 (£120) a month for groceries excluding ad-hoc trips for cravings.Sam Tabahriti/InsiderIn both countries, Aldi remains a good choice for budget essentials, even if they're more expensive now than a few months ago.Peter Nicholls/ReutersAs an American, I was surprised and a bit jealous to find out about some of the low prices in the UK.Mary Meisenzahl/InsiderThough I felt like I was getting a good deal compared to other grocery stores, I don't think there are many things I could buy under $1 here besides maybe some canned food.Mary Meisenzahl/InsiderEven if it's not quite as cheap as the UK, I'm definitely going to keep shopping at Aldi.Beth Hall/AP Images for Weber Shandwick for AldiDo you have a story to share about a retail or restaurant chain? Email this reporter at the original article on Business Insider.....»»

Category: smallbizSource: nytAug 13th, 2022

Is Crossroads Impact (CRSS) a Worthy Investment Choice?

Alphyn Capital Management, an investment management firm, published its  second-quarter 2022 investor letter – a copy of which can be downloaded here. The fund’s Master Account returned -14.7% net in Q2 2022 vs -16.1% for the S&P500. As of June 30, 2022, the top ten positions comprised approximately 69% of the portfolio, and the portfolio […] Alphyn Capital Management, an investment management firm, published its  second-quarter 2022 investor letter – a copy of which can be downloaded here. The fund’s Master Account returned -14.7% net in Q2 2022 vs -16.1% for the S&P500. As of June 30, 2022, the top ten positions comprised approximately 69% of the portfolio, and the portfolio held approximately 3.50% in cash. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022. In its Q2 2022 investor letter, Alphyn Capital mentioned Crossroads Impact Corp. (NYSE:CRSS) and explained its insights for the company. Founded in 1996, Crossroads Impact Corp. (NYSE:CRSS) is a Dallas, Texas-based holding company with a $73.0 million market capitalization. Crossroads Impact Corp. (NYSE:CRSS) delivered a -12.51% return since the beginning of the year, while its 12-month returns are down by -50.55%. The stock closed at $12.24 per share on August 08, 2022. Here is what Alphyn Capital has to say about Crossroads Impact Corp. (NYSE:CRSS) in its Q2 2022 investor letter: “The company’s PPP operations from last year are winding down as loans are forgiven, with a $1.5bn loan balance remaining out of an initial $6.3bn. What remains is the company’s traditional mortgage lending business, and an expanding small business loans book. Crossroads $133 million loan book has continued to perform steadily, with under 1% in delinquencies and a net interest margin of approximately 5%. The company credits its performance to its deep connections in the community, manual underwriting process with conservative debt-to-income ratios, and focus on underserved firsttime borrowers who “have shown the financial discipline to operate without debt.” The company has been moving forward with its plans to expand its book of business from a single-family mortgage lending institution in Texas to a broader lender focused on serving minority individuals and small businesses through environmental and responsible social lending. To that end, it acquired an asset lending firm and a non-bank direct lender. It also signed a $250m agreement with Enhanced Capital, a subsidiary of P10 Holdings (a related company that shares a chair and several shareholders with Crossroads). Shortly after year-end, Crossroads announced a $180m equity injection from P10, with the option to add a further $350m, and a $150m debt facility led by Texas Capital Bank. Crossroads has deployed $70m so far in 2022 and expects its loan book to approach $500 million. It is too early to judge results, but we know that Crossroads is targeting “in excess of 20% return on equity.” Our calculations show that Crossroads Impact Corp. (NYSE:CRSS) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Crossroads Impact Corp. Crossroads Impact Corp. (NYSE:CRSS) delivered a -2.08% return in the past 3 months. In November 2021, we also shared another hedge fund’s views on Crossroads Impact Corp. (NYSE:CRSS) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page. Disclosure: None. This article is originally published at Insider Monkey......»»

Category: topSource: insidermonkeyAug 9th, 2022

Today’s mortgage refinance rates: 10-year rates stick well below 5% | August 8, 2022

Check out the mortgage refinancing rates for August 8, 2022, which are largely up from last Friday. Based on data compiled by Credible, three key mortgage refinance rates have risen and one remained unchanged since last Friday. Rates last updated on August 8, 2022. These rates are based on the assumptions shown here. If you’re thinking of doing a cash-out refinance or refinancing your home mortgage to lower your interest rate, consider using Credible. Credible's free online tool will let you compare rates from multiple mortgage lenders. You can see prequalified rates in as little as three minutes. What this means: Mortgage refinance rates surged for three key repayment terms today, with 20- and 30-year rates rising by half a percentage point, and rates for 15-year terms edging up a quarter point. Rates for 10- and 15-year repayment terms are still below 5%, meaning homeowners may want to consider refinancing to a shorter term to save on interest. At 4.750%, homeowners looking to refinance may find that 15-year terms offer the best opportunity for a lower interest rate and manageable monthly payment. WHAT IS CASH-OUT REFINANCING AND HOW DOES IT WORK? Today’s mortgage interest rates are well below the highest annual average rate recorded by Freddie Mac — 16.63% in 1981. A year before the COVID-19 pandemic upended economies across the world, the average interest rate for a 30-year fixed-rate mortgage for 2019 was 3.94%. The average rate for 2021 was 2.96%, the lowest annual average in 30 years. The historic drop in interest rates means homeowners who have mortgages from 2019 and older could potentially realize significant interest savings by refinancing with one of today’s lower interest rates. If you’re ready to take advantage of current mortgage refinance rates that are below average historical lows, you can use Credible to check rates from multiple lenders. If you’re interested in refinancing your mortgage, improving your credit score and paying down any other debt could secure you a lower rate. It’s also a good idea to compare rates from different lenders if you're hoping to refinance, so you can find the best rate for your situation. Borrowers can save $1,500 on average over the life of their loan by shopping for just one additional rate quote, and an average of $3,000 by comparing five rate quotes, according to research from Freddie Mac. Be sure to shop around and compare current mortgage rates from multiple mortgage lenders if you decide to refinance your mortgage. You can do this easily with Credible's free online tool and see your prequalified rates in only three minutes. Changing economic conditions, central bank policy decisions, investor sentiment and other factors influence the movement of mortgage refinance rates. Credible average mortgage refinance rates reported in this article are calculated based on information provided by partner lenders who pay compensation to Credible. The rates assume a borrower has a 740 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%. Credible mortgage refinance rates reported here will only give you an idea of current average rates. The rate you receive can vary based on a number of factors. Think it might be the right time to refinance? Be sure to shop around and compare rates with multiple mortgage lenders. You can do this easily with Credible and see your prequalified rates in only three minutes. Everyone’s situation is different, but generally, it may be a good time to refinance if: If your home needs significant, costly repairs it might be a good time to refinance in order to withdraw some equity to pay for those repairs. Just be aware that lenders generally limit the amount you can take from your home in a cash-out refinance.  Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column. As a Credible authority on mortgages and personal finance, Chris Jennings has covered topics that include mortgage loans, mortgage refinancing, and more. He’s been an editor and editorial assistant in the online personal finance space for four years. His work has been featured by MSN, AOL, Yahoo Finance, and more......»»

Category: topSource: foxnewsAug 8th, 2022

US service members eligible for PSLF are short on time to apply under new rules, CFPB warns

Service members could potentially have thousands of dollars in federal student debt forgiven if they apply to have these loans credited under the Public Service Loan Forgiveness (PSLF) program before the October deadline. Tens of thousands of U.S. service members are running out of time to potentially save money on their student loans by applying for the federal government's Public Service Loan Forgiveness (PSLF) program amid its new rules, the Consumer Financial Protection Bureau (CFPB) warned in a recent blog post.  An April 2021 report from the U.S. Government Accountability Office (GAO) showed that as of January 2020, more than 176,000 active-duty service members had federal loans that were eligible for the PSLF program. By that time, only 124 of these borrowers had received loan forgiveness. Additionally, about half of the active-duty service members who have federal student loans have balances of more than $13,000, according to the GAO. The Department of Education expanded the PSLF program in October 2021 to allow more loans to qualify. But the changes are for a limited time only. Under the new rules, any prior payment made by a borrower eligible for the PSLF program will count as a qualifying payment. That's regardless of the loan type, repayment plan or whether the payment was made on time or in full. Federal Family Education Loan (FFEL) Program loans, Federal Perkins Loans, or other types of federal student loans that are not Direct Loans must be combined into the Direct Loan program by Oct. 31, 2022 in order to qualify for forgiveness under PSLF. Missing the deadline means borrowers risk losing out on thousands of dollars in potential federal student debt credit. If you have private student loans, then federal relief doesn't apply to you. If you're looking to lower your monthly payments and ease the burden of student loan debt, then you could consider refinancing your student loans. Visit Credible to find your personalized interest rate without affecting your credit score. In the blog post, the CFPB urged student loan servicers to take action, saying they are best positioned to help identify military borrowers and ensure they get the credit for their loan payments that they deserve. "It is possible that tens of thousands of servicemembers could benefit if they get the right paperwork submitted by the deadline," the CFPB wrote. "But in order to do so, servicemembers must receive the information and support they need from their student loan servicer."  The loan servicers also have the added benefit of knowing which of their borrowers are in the military and are already paid to assist them, the CFPB said. "Managing student loan debt is a serious issue—these are not trivial amounts of money. Many military borrowers have education loans that exceed the average mortgage for a home in America," the CFPB wrote. "For military borrowers, failing to get their PSLF application approved will force them to pay thousands or tens of thousands of extra dollars on their student loans unnecessarily." If you have private student loans and aren’t eligible for federal forgiveness programs, you could consider refinancing to lower your monthly payments. Visit Credible to compare multiple student lenders at once and choose the one with the best interest rate for you.  Federal student loans are currently in COVID-related forbearance and payments have been paused until Aug. 31. During this time, borrowers are not required to make payments on their loans and interest rates have been set to 0%. The Department of Education has also stopped collections on defaulted loans.  President Joe Biden confirmed that he would decide on student debt by the end of August, although it wasn’t clear if he was referring to widespread student loan forgiveness or an extension to the student loan payment pause. Biden has previously indicated that he's considering canceling some student debt, though not the $50,000 debt reduction that some Democrats have called for. More than half of Americans (55%) said they would support forgiving up to $10,000 in federal student debt per borrower, according to a recent survey from NPR/Ipsos. Howver, that support wavered when talking about higher amounts of debt forgiveness. Just 47% of Americans said they supported forgiving up to $50,000 in student loans and 41% said they supported forgiving all federal student loan debt. If you are trying to pay down your private student loans, refinancing could help you lower your interest rate and reduce your monthly payment. To see if this is the right option for you contact Credible to speak to a student loan expert and get all of your questions answered.  Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column......»»

Category: topSource: foxnewsAug 8th, 2022

Transcript: Anat Admati

       Transcript: Anat Admati The transcript from this week’s, MiB: Anat Admati on Regulations and Techlash, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~… Read More The post Transcript: Anat Admati appeared first on The Big Picture.        Transcript: Anat Admati The transcript from this week’s, MiB: Anat Admati on Regulations and Techlash, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~  VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast, I have yet another extra special guest, Professor Anat Admati, teaches at the Stanford Graduate School of Business. She is an expert in so many fascinating areas that you wouldn’t think are related but they really are. Why has technology developed the way it has and, more or less, exempt from a lot of government regulations or protected by government regulations? It turns out their business model is a little similar to the way the banking industry has managed to capture a lot of regulators and continue to operate fairly freely without this sort of regulation and capital requirements and equity requirements that would make banking safer. Really a fascinating conversation about everything from misinformation to technology, to banking and financial fragility, I found the discussion to be quite fascinating and I think you will also. With no further ado, my interview with Professor Anat Admati of the Stanford Graduate School of Business. So, let’s talk a little bit about your background. You have a lot of degrees. You have a bachelors from Hebrew University then a Masters in Arts, a Masters in Philosophy and a PhD from Yale University. Tell us a little bit about your academic journey. ANAT ADMATI, PROFESSOR OF FIANCE AND ECONOMICS, STANFORD GRADUATE SCHOOL OF BUSINESS: So, my journey starts where I took a lot of math. I was good in math and I love the math. It was very pretty. It was all — but I decided I probably won’t be good enough to be a mathematician. So, I was kind of, in my romantic mind when I was in my early 20s, I was going to take but not give back to math, that kind of thing. RITHOLTZ: Right. ADMATI: And so, I had to find something and at first, it was going to be sort of applied math like Operations Research, which was the worst kind of math, like optimization. RITHOLTZ: Yes. ADMATI: It’s kind of boring and — but I got an opportunity to go to Yale and these degrees were just kind of simultaneously gotten. I mean, I was at Yale in three and a half years with all those degrees. RITHOLTZ: OK. ADMATI: And I just — an opportunity landed on my lap to go to this program in Operations Research at Yale and I was promised that Yale is very interdisciplinary and once you passed your qualifying exams, you can do whatever you want. RITHOLTZ: But? ADMATI: And I had never taken an economics course before that. But when I got to Yale, my advisor said, why don’t u take microeconomics and take mathematical economics and take some economics. And by the end of the first year, I kind of knew a new language like I — and it was all much more interesting because there was interactions with people and equilibrium and all of that. And by second year, I took the course that was absolutely a must-take in the crowd that I was hanging with, which was Steve Ross’ Financial Economics. Yale didn’t even have a programming in finance. The School of Management was just created. This was back in the late ’70s, early ’80s and he was just teaching people all they needed to know about finance, which was just coming up. RITHOLTZ: They had become professionalized when before it was just a bunch of … ADMATI: Exactly. RITHOLTZ: … disparate theories. So, you find your calling in economics. But you really take some of your background and dig pretty deep into financial regulations in technology. Where did the tech background come from? ADMATI: And then — I’ll tell you. So, that all — I was totally in the sort of finance bubble, first kind of market microstructure, trading mechanism. This is the quaint 1987, a little Black Monday, small Black Monday. RITHOLTZ: Just that little one day glitch. Sure. ADMATI: The little — 19 percent decline in one day. RITHOLTZ: Twenty-two, twenty-two point something. Yes. ADMATI: Yes. So, it was program training and insurance … RITHOLTZ: Yes. ADMATI: Portfolio insurance and all these application strategies and all this stuff. And so, that was kind of the little crisis of the day, right, in the little detail and this before high frequency trading and all the rest of it. RITHOLTZ: Right. ADMATI: But then I worked on trading mechanisms and information getting to prices and informed and uninformed trading and markets for information and newsletters and managed money portfolio theory. And then I got more interested in kind of governance but governance in the narrow sense, corporate governance and contract, which was all about the problems between shareholders and managers. So, that was that and then comes the financial crisis. So, until the financial crisis of 2007 and 2009 or however you go — you actually time it, I was in this finance bubble. I was teaching corporate finance. I did research, theoretical research. I built on mathematical models and analyzed them. And I lived in that little bubble thinking all is well until this crisis, I was like, what just happened? And so, I never was interested in banking particularly we have a lot of silos even within economics … RITHOLTZ: Sure. ADMATI: … let alone in all the social sciences and law and all of that. So, we’re itching our little silo with our little journals, all this stuff. So, I just go curious, wait a minute, I teach corporate finance, the bank is also a corporation, now why does it have like almost no equity funding, what’s going to there? I teach people capital structure theory and what — how are bank so different, why are they so different? They hate equity with this fashion. And so, the more I dug, the weirder it got. It really like I fell in a rabbit hole. It totally was rabbit hole, like curious or uncurious or that kind of thing. RITHOLTZ: Well, tell me if I’m oversimplifying banking because what we’ve seen over the past half century before the financial crisis was simply banks figured out that the less capital they keep on the books, the better their profit margins appear even though they’re essentially just assuming more risk and the better their profit margins are, the richer everybody got. And so, we’ve seen a half century of first deregulation then fairly radical deregulation, all of which works to the banks’ advantages until suddenly it no longer did. ADMATI: So, in the book, we go through a lot of the history of banking, including the basic banking model, which is sort of it’s a wonderful life kind of 363 boring banking model and that too had a crisis in savings and loan and in many other banking crisis. RITHOLTZ: Right. ADMATI: So, it’s not like — banking is inherently risky because inherently, the banks taking risk with depositors’ money and the depositors are unable to really behave like normal creditor. And that’s really sort of the beginning of the sort of original sin in banking that they’re always overleveraged. Always. They’re never efficient in providing any of the services on both sides of the balance sheet because they always have the temptation and the ability to take just a little bit more risk on both sides of the balance sheet. RITHOLTZ: That’s the nature of fractional reserve lending, you get … ADMATI: Well, but it’s their incentives. So, the key to understand it it’s not like essential or efficient. It’s just that that’s how they want it. So, the thing is that banking is sort of inherently fragile because banking is inherently inefficient that way or forever poorly regulated or poorly controlled by their investors, including the depositors. So, to that, you add expansion in the business model that allows taking more risk, hiding more risk with derivatives, with universal banking, all of that, and the increase in safety net, implicit and explicit, with deposit insurance, with all of that. They became able and obviously interested in living more and more and more in debt. Now, even my research, even after the first — after the book, we were already beginning to do this research, I understood a lot better. Stuff that we teach in basic courses is very static theory of how companies fund and it’s like one round of funding, debt and equity, and then the world is over. But for well-living breathing companies, any company, their funding decision as well as investment decisions are always made by shareholders or managers on behalf of shareholders maybe in light of previous commitment. So, in the dynamics of it, once you took debt, your preference has changed completely. You’re no longer maximizing total value of the firm. You’re maximizing the value of equity in the firm. And from that perspective, equity seems expensive to all heavily indebted corporations, banks in particular, because for other corporations, if they take on more and more debt, the creditors will start pushing back. The creditors will start putting covenants. The creditors will jack up their rates because the creditors will worry about all the distorted incentives of the borrower or lender. That happen. Gambled the money in Las Vegas or under investing things because there’s not enough upside. All of those things that characterize sort of the fortunes that characterize heavy indebtedness. RITHOLTZ: So, that makes the finance sector very different than the rest of the stock market? ADMATI: Well, the banking especially because the creditors in banking are particularly passive. And so, therefore, the usual market forces that push against high leverage in other companies that just naturally with no regulation would limit. There’s no corporation that lives its healthy — unless they’re on their way to bankruptcy that lives with single digit equity numbers. Of course, it depends how you measure it and there’s book market, all kinds of other things that we can discuss. But the banks basically got used to — and got stuck and it’s very addictive to be there especially at this extremely low equity level. From that vantage with the overhang of debt being so, so heavy that you’re effectively insolvent all the time but you just not recognize as such. Then you hate equity … RITHOLTZ: Hold on a second. ADMATI: … you want to take money out. RITHOLTZ: So, let’s stay with that point… ADMATI: Yes. RITHOLTZ: … because that’s pretty fascinating. It was pretty clear to observers that the reason Lehman brothers didn’t get bailed out is they were not just a little insolvent but deeply insolvent. The rest of the banks that were out there that survived seem to recapitalize. They sold equity. They brought more money in. Goldman Sachs took a big chunk of money from Warren Buffett. JPMorgan Chase bought Washington Mutual. They did more capital reserves and they ended up buying Bear Stearns as well. ADMATI: When you say capital reserve, again, I mean, people get very confused about what that is. You mean … RITHOLTZ: They put more cash … ADMATI: No. No. No cash. Not cash. Capital is not … RITHOLTZ: Just straight-up equity. ADMATI: Capital is not cash. It’s on the other side of the balance sheet. Capital is about how you fund. It’s not cash reserve. OK. So, it’s — this is really important, there’s a pile of cash. RITHOLTZ: So, let’s put shelves (ph) into that. ADMATI: It’s — let’s dive into that because it’s very, very confusing. To this day, you can find people saying set aside cash. That’s not what capital is about. Capital is about — obviously, there is the measurement to get at a given point of time but when you take a snap shot and you say — talk about capital ratios or risk-weighted capital ratios or all of that, they’re entirely on the funding side. So, you got your assets whatever they are. They have some risk and whatever — however you put numbers on that sort of accounting or — and what’s allowed and not allowed and all of that is like a big can of worms actually. But –and netting of derivatives and all of that. But then the question is how do you fund those assets. And so, the question is how much gets funded by making promises to investors by debt. Any kind, collateral, non-collateral. Now, deposit is very unique because deposits are unsecured debt to the bank. But … RITHOLTZ: To the depositors. ADMATI: To the depositors. They don’t have collateral. RITHOLTZ: Right. ADMATI: OK. So, it’s the FDIC that’s holding the bag there. Now does the FDIC even know how much risk they’re bearing 0 when all the assets are so encumbered that they’re all pledged as collateral? RITHOLTZ: Do they? Because one would assume … ADMATI: No, they don’t. RITHOLTZ: … they — now, I have a very vivid recollection during the financial crisis of the FDIC talking about their reserves dropping from 90 to 60, I think it dropped as low as $40 billion ADMATI: Yes. RITHOLTZ: And hey, if we get a bunch more disasters, we’re not going to be able to cover the depositors. ADMATI: Exactly. Because they stopped charging. Also because there were no defaults before the crisis. They stopped charging deposit insurance and all of a sudden, there was a lot of bank failures, not the big ones except for Lehman but Lehman wasn’t an FDIC insured bank. RITHOLTZ: Right. Right. ADMATI: And so — but when the other banks, small banks, started failing, what do they — what can the FDIC do in general? Well, they can go back to the large banks and just assess them more because they have no way and I can assert this you, no good way to risk adjust their deposit insurance fees. They’re supposed to be self-financing the FDIC through fees but they really are taking a huge leap for insuring what by now must be like, I don’t know, $13 trillion and more will come if there were tremors because money moves back in deposit from money market funds and all of that. RITHOLTZ: From uninsured money market to ensured bank deposits. ADMATI: Exactly. And so, the FDIC, which is assist for corporation, is totally backed by the government. However, in practice, they can — they have a line to treasury for, I think, 500 billion or something. But if — should something actually happen? So, we’re all on trust with the system. They tell us don’t run, don’t rush, your money is safe. And I trust that, RITHOLTZ: No bank runs. ADMATI: No bank runs. RITHOLTZ: So, when you … ADMATI: So, we saw the problem … RITHOLTZ: When you say that they stopped charging fees, I’ve been under the impression that the banks that have that nice little logo, the emblem, FDIC insured, aren’t those banks paying some small percentage of … ADMATI: Usually, they do and basically, I once asked a 40-year veteran of banking in all the biggest banks through the ’60s, ’70s, ’80s, ’90s who was basically came out of retirement to being a private equity firm that was buying distressed banks from the FDIC and he said to me, you’re looking at the big banks, let me tell you what goes on in the small banks. And then I asked him the following simple question because there are thousands of small banks in his country. RITHOLTZ: Right ADMATI: I said, what’s the business model of a small bank? And the answer … RITHOLTZ: They get purchased. ADMATI: The answer was three words, the business model, in other words, the positive net present value of the bank, he said, subsidized deposit insurance. RITHOLTZ: Subsidized deposit insurance. ADMATI: That’s it. In other words, their entire finding — so what they do on the asset side, anybody can do, zero NPV, commercial real estate, whatever. RITHOLTZ: Right. ADMATI: And how they fund is where they’re privileged. Now, what happens, my model of banking safety — basic safety net is that big banks may well be overpaying for the deposit insurance part to the FDIC and the FDIC — and they pass on some subsidies down to the small bank. So, they keep happy enough. And because the big banks have implicit guarantees that are priceless because they have access to the Fed and that is worth a ton. In the financial crisis, let’s remember, Goldman Sachs and Morgan Stanley became bank holding companies RITHOLTZ: Right. Previously, they were brokerage firms. ADMATI: They were investment banks. RITHOLTZ: Right. ADMATI: Regulated by the SEC which also Lehman was and at that time, the commercial banks, so Citibank within Citigroup, were regulated among others by the FDIC and the FDIC had Sheila Bair and Sheila Bair refused to implement this Basel II that had fancy-schmancy risk weights. Manipulable ways, model-based ways to allow the banks to tell us how risky they are and therefore, determined their equity requirements. RITHOLTZ: In other words, mislead regulators … ADMATI: And there’s research that showed that banks in Germany that were allowed to use this advanced approach to this fancy scientific approach to regulation were misrepresenting their own risk and making more loans with less risk weights. In other words, inappropriately low risk weights. RITHOLTZ: Just for that one small leverage. ADMATI: And the — yes. And, of course, the epitome of the failure of this regulation is assets that had zero risk weight but were risky like AAA rated security like Greek government, lending to Greek government in Europe. I mean, the banks in Europe basically fed this subprime lending to the Greek government. RITHOLTZ: Havong stories and he is in RITHOLTZ: Why should Greece pay more in interest rates than another country like Germany? That doesn’t make any … ADMATI: Well, they paid a tiny sliver but the French banks just went and lent them a ton and when they couldn’t pay, the European Union and all these other countries and the regulators that — who allowed these banks to make this reckless loan who had just bailed out these banks from investing in our real estate bubble … RITHOLTZ: Right. ADMATI: … couldn’t admit to their citizens that they would bail out their banks again if Greece default. So, that — they blamed all the things on the lazy Greeks and they kept bailing out Greece so Greece could pay the banks until the banks got out. So, that was the zero risk weight for sovereign lending in Europe and it’s just one example of how awful, awful the regulation was pre-crisis. And then you tell me that they recapitalized and did all of that. I’m not so impressed. Yes. First of all, Bank of America and Citi were zombies coming out of the crisis. RITHOLTZ: Right. ADMATI: Despite multiple bailout of Citi. RITHOLTZ: Citi for sure. Bank of America, not much better. ADMATI: Both of it. (inaudible) and zombie banks, I mean, I believe that. They were the examples where if you wanted to have this systemic resolution through the FDIC, we could have tried it in a — not in a crisis. RITHOLTZ: Meaning put them into a pre-packaged bankruptcy. ADMATI: Yes. Show me that it works. Show me that it works. Outside the crisis where everybody’s failing. I was in this FDIC Systemic Resolution Advisory Committee, was part of Dodd-Frank, was saying, if Lehman Brothers was sent to the FDIC for resolution because FDIC knows so well how to do the small bank resolution just come over the weekend, take over small bank and the people don’t even know. RITHOLTZ: Because they’re the same. Because Lehman Brothers are — so, Lehman Brothers had repo 105 where they were moving all of this risk in order … ADMATI: Thousands of subsidiaries. RITHOLTZ: Right. Just hundreds of billions of dollars and misrepresenting their books … ADMATI: Do you know … RITHOLTZ: … to their – to the regulators and to the investments. ADMATI: Do you know that the Lehman bankruptcy is not even over yet? Every year, I go back and check. RITHOLTZ: Yes. Still going on. Right.0 ADMATI: Still going on. RITHOLTZ: Still on though. ADMATI: So, this is how unresolvable this. Now, in the first … RITHOLTZ: To be fair, it was only 15 years ago. ADMATI: And it was a small — it was a small one by — I mean, this was the biggest bankruptcy at that time but there were … RITHOLTZ: Right. ADMATI: There were fraction of JPMorgan Chase or Citi or all of these that they tell you now can fail without and they have them do living with this all kind of stupid things. RITHOLTZ: I don’t think JPMorgan Chase had failed. ADMATI: No way. No. Because we don’t even … RITHOLTZ: If they did, it would just be incredibly disruptive. ADMATI: Exactly. So, I’m not even blaming for bailing out. I am blaming for not doing basic prevention RITHOLTZ: So, that raises really interesting point. You mentioned the French banks and the lazy Greeks When you offer people free money or dramatically discounted money, we shouldn’t blame the Greeks who took, hey, this is a great deal, we’re going to take this. You have to look at the banks that lent it to them and said, why these banks being so irresponsible and reckless to make such cheap loans to … ADMATI: Under the eyes of their regulators. RITHOLTZ: Yes. ADMATI: Under the eyes of their regulators. So, the regulators are not being called to why they allowed these loans to be made by too-big-to-fail French and German banks. RITHOLTZ: Right. ADMATI: French banks had in 2010 40 percent of Greek bond, government bonds. RITHOLTZ: That’s amazing. ADMATI: Yes. And Greece only did a little bit of restructuring after the banks pretty much got out, left the troika creditors to be a bailout fund of European nations. ECB and IMF, those where the troika. Now, why did IMF invest all? Because IMF was led by some French. No. Because IMF should not have intervened in a European … RITHOLTZ: It’s not their chore. ADMATI: Into European thing. Europe had enough to be able to resolve this. They just didn’t want to. So, IMF, being led by French people, Dominique Strauss-Kahn and then later by Lagarde who had to deal with it later in 2015 when they were kind of adopting their room if you want to call it. RITHOLTZ: So, let’s throw a parallel. The French banks and the Greek borrowers, there were a lot of people criticizing in the 2000s the U.S. homeowners who were taking HELOCs and refinancing and taking loans and I look at it as it’s not the responsibility of the consumer when an institution like a large bank says we’re going to loan you money and we’re not going to charge you interest for three years and then we’ll reset but don’t worry about it. The individual consumer doesn’t understand that. Wait, free cash, where do I sign? It’s the banks and the regulation, the regulatory … ADMATI: It’s the lady in the hot tub in “The Big Short” saying she’s got five houses. RITHOLTZ: Right. That’s right. ADMATI: Exactly. So, the question is how … RITHOLTZ: There is parallel decrease. ADMATI: No. Exactly. So, that’s why I used subprime to kind of raise a parallel. Yes. So, reckless loans were made to people who couldn’t pay, liar’s loans who are clearly couldn’t pay because of the commissions of the mortgages … RITHOLTZ: The whole structure was stuck. ADMATI: The whole structure. And you still had the Fed assuring us everything was fine there and you had a system incredibly levered and interconnected, create through all these contagion mechanisms that we explained in the book. A perfect storm from a small decline in housing prices. I mean, this should — the correction, the price collection itself was much smaller than … RITHOLTZ: Thirty percent of elevated … ADMATI: Than like Internet bubble burst. RITHOLTZ: Right. ADMATI: Which wiped out a lot of paper wealth. RITHOLTZ: And to put some numbers on that, the Internet peak to trough was about 81 percent decline in the NASDAQ comp whereas I think houses fell about 32 percent. Some sector — some areas that … ADMATI: And then there was some default. OK. But it means the amounts were trivial really. And how do they create a global financial crisis from a little housing bubble burst in the U.S.? RITHOLTZ: Securitization and it spread through everywhere. ADMATI: And super-duper triple securitization that are side bets basically on the mortgages and only the big short, they made money. RITHOLTZ: I mean, quite amazing. One of your research pieces really caught my eye. I love this title, “Is The Internet Broken?” Tell us about it. ADMATI: That was actually the title of a course that I taught with one of the producers of HBO “Silicon Valley” where … RITHOLTZ: Which we’ll talk more about later. ADMATI: Which — yes, which I got to be involved in in the last season only and therefore, it was — it was one of the ones I streamed kind of had to been stream sort of to see also the season I ended up at also being a cameo in the last, last show with Middleditch, the whole thing and being there in the Stanford graduation and decorating his office and all that stuff. Anyway, banking is super regulated but poorly regulated but it’s like born — kind of born tied at the hip with the state, with the government because of central banks, because of — so they’re just — because they’re about money, they’re kind of intertwined with government in ways that not everybody understands because they’re still private corporations but they are super-duper connected. RITHOLTZ: And just to put a little context about that, in the first, I don’t know, century of American history, they were completely independent and they failed with shocking irregularities (ph). ADMATI: Because they were all — because we had regulations that also prevented them from diversifying. So, they were very subject to local calamities and they just kept failing and their privately issued money was good as long as it was good and it wasn’t. So, then we decided to have a currency and the whole history of banking et cetera until we got to have national banks and these mammoth banks that consolidated and consolidated and still thousands of other banks. So, just a bloated huge system anyway. So, I was basically — I’ve seen banking since I started looking at it in 2009, 2010 and then becoming involved in that, consumed with that lobbying for policy, how I get to … RITHOLTZ: So, how did you go from banking to technology and the Internet? ADMATI: So, here’s what happened. So, then it’s over 2015, I’m kind of have already spent like literally five years of my life, fulltime, on banking where I just came to look and here I was just — and it’s just kind of — it’s a little bit sickening to kind of being in that environment. I’m like, wait a minute, I’m in Silicon Valley and now, at that point, there was already the first round of what’s called techlash.....»»

Category: blogSource: TheBigPictureAug 8th, 2022

AllianceBernstein Closes US Commercial Real Estate Debt Fund IV

AllianceBernstein Holdings L.P. (“AB”) (NYSE: AB), a leading global investment and research management firm, has announced the final closing of US Commercial Real Estate Debt Fund IV (“Fund IV”), securing commitments of $1.3 billion from global institutional investors.  Fund IV is a continuation of the successful value-add transitional lending strategy... The post AllianceBernstein Closes US Commercial Real Estate Debt Fund IV appeared first on Real Estate Weekly. AllianceBernstein Holdings L.P. (“AB”) (NYSE: AB), a leading global investment and research management firm, has announced the final closing of US Commercial Real Estate Debt Fund IV (“Fund IV”), securing commitments of $1.3 billion from global institutional investors.  Fund IV is a continuation of the successful value-add transitional lending strategy AB has been overseeing for the past nine years. Alongside Fund IV, the platform has grown substantially over the past 18 months with new segregated mandates focused on core-plus and fixed rate lending, and the launch of AB’s first private commercial mortgage REIT which has quickly grown to over $400 million in committed equity since accepting its first commitments in Q4 2021. The CRED IV closing is the latest milestone in a period of considerable growth for AB’s US Commercial Real Estate Debt platform, which has cumulatively secured new capital commitments of over $4.5 billion since December 2020. Total assets for the US Commercial Real Estate Debt platform, raised from investors worldwide since inception of the platform in 2013, currently amount to $10.5 billion with $9.0 billion of that AUM under active management today. The team has deployed $8.6 billion of capital to over 130 loans since inception.  “Attracting over $4.5 billion of new capital commitments for our US CRED platform is reflective of the successful deployment and management of our portfolio over the past decade, including navigating the COVID-19 pandemic,” said AB’s US Commercial Real Estate Debt Chief Investment Officer Peter Gordon. “The expansion in the cost and tenor of capital – combined with having access to both levered and unlevered strategies – enables us to deliver broader solutions to our clients and be more innovative and relevant to our borrowers. With nearly half of our transactions coming from repeat borrowers, we believe that this will continue to further differentiate the platform in the years to come.”  The continued expansion of AB’s US Commercial Real Estate debt platform is consistent with AB’s strategy of growing its private markets platform, in partnership with Equitable, to meet client needs. On July 1, AB completed its acquisition of CarVal investors, which expands AB’s private markets platform to $54 billion in AUM. CarVal brings investment expertise across opportunistic and distressed credit, renewable energy infrastructure, specialty finance and transportation investments. These strategies, combined with AB’s existing businesses focused on corporate direct lending and commercial real estate lending, provide clients with an array of alternative investment solutions. The post AllianceBernstein Closes US Commercial Real Estate Debt Fund IV appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyAug 7th, 2022

"It Only Hurts When I Laugh"

"It Only Hurts When I Laugh" By Michael Every of Rabobank It only hurts when I laugh Minister: Good morning. I'm sorry to have kept you waiting, but I'm afraid my walk has become rather sillier recently, and so it takes me rather longer to get to work. Now then, what was it again? Mr. Pudey: Well sir, I have a silly walk and I'd like to obtain a government grant to help me develop it. Minister: I see. May I see your silly walk? Mr. Pudey: Yes, certainly, yes. (He gets up and does a few steps, lifting the bottom part of his left leg sharply at every alternate pace. He stops.) Minister: That's it, is it? Mr. Pudey: Yes, that's it, yes. Minister: It's not particularly silly, is it? I mean, the right leg isn't silly at all, and the left leg merely does a forward aerial half turn every alternate step. Mr. Pudey: Yes, but I think that with government backing I could make it very silly. ----------------- It’s another payrolls Friday. This time, can a weak print provide more ‘pivot-fuel’ for a market already so drunk on it that it won’t heed the Fed saying “WRONG!” over and over – as they just did yet again yesterday? Conversely, will a strong payrolls number sober the market up? We have to wait for the usual silly game of guessing a silly number and the sillier market reaction. Meanwhile, government ministries are busily pushing out silly policies. Picking an example would be like shooting fish in a barrel, but closing down nuclear power plants in an energy crisis is very high on the list. Central banks are pursuing silly monetary policy in the eyes of markets, where yield curves continue to invert and bond yields fall (even at the short end!) even as official interest rates rise. For example, as the Bank of England hiked rates 50bps to 1.75%, the most in 27 years, 2-year gilt yields fells from 1.91% to 1.84%, with future hikes being priced out and cuts being priced in, while the 10-year yield slipped 3bps to 1.88%. GBP fell against its peers. The silliness also extends right across the commercial world. Warner Brothers just made a $70m ‘Batgirl’ film so bad they are opting to can it rather than put it up in any format on any streaming platform – which really says something given the pile of drivel on most of them. They also say they are going to drop the ‘spend, spend, spend’ streaming model though, which is actually very sensible. Why is this silliness happening? Not from any love of comedy. In a recent interview, ex-Python John Cleese --still no dead parrot at 82-- underlined the specific truism that, “In Hollywood, nobody knows anything… but they all laugh as if they do.” Relatedly, he recalls that back in the 60’s, almost all of the top BBC executives tried to cancel his legendary comedy show after just a few episodes because they didn’t get it. More broadly, he stressed such managers (rather than those with experience of doing or creating) are now in charge all over the place. Indeed, in his experience, 90% of people in most professions don’t know what they are doing. Worse, 90% of those who don’t know what they are doing don’t know that they don’t know what they are doing, “which makes them the most dangerous and destructive”. And inadvertently funny – because if you don’t laugh then you cry. One would like to think there are exceptions for surgeons, pilots, etc., but Cleese suggests this is not the case. He said that in a lifetime of deliberately asking people of different backgrounds to honestly tell him how many of their industry participants actually know what they are doing, the highest share he has ever been given was 15%(!) He didn’t say which industry that was for. Are politicians, economists, or central bankers exceptions? Don’t make me laugh! Next British PM Liz Truss wants to put the BOE under review (like the RBA already is), perhaps threatening their independence, on allusions to Japan’s ultra-low rates policy - as if somehow that is applicable to a UK with traditional current-account deficits, rather than surpluses. Presumably slashing taxes and red tape needs to be matched by slashing rates, and growth will magically take care of itself. Let’s see how GBP magically takes care of itself if that comes to pass. Of course, the BOE have made themselves few friends with their honesty about the staggering scale of the economic downturn and inflation upturn ahead - which they utterly failed to see coming. As Stefan Koopman notes in his review of the ‘Nightmare on Threadneedle Street’, the Bank just warned of the longest recession since the GFC, with a five-quarter downturn and cumulative GDP growth of -1.7% in the next three years. It also forecasts UK inflation to hit the highest in 42 years ahead at over 13%, and to still be around 10% a year from now. Worse, there will be a leap in unemployment from 3.7% to 6.3%, and the largest decline in real household income growth on record. Underlying this grim set of forecasts is a dark view on the UK’s structural rate of growth; a consequence of subpar investment and weak productivity growth, which makes the economy highly sensitive to shocks. By contrast, the Fed says there is no US recession ahead, even as the US yield curve screams there will be one --what a good one-liner that is-- and the White House and Paul Krugman dispute what recession actually means, taking us into more surreal comedy. The ECB says the same about recession, even as EU wholesale electricity prices rise to industry-crushing levels, and Russia makes clear “sanctions and non-compliance with current contractual obligations on the part of Siemens make it impossible” to restart normal NordStream 1 gas flows again: resulting runs on diesel and heating oil are already being reported in Germany. Pure black comedy. The RBA argues that while there is only a “narrow path” to avoid recession, GDP growth will remain strong, the labour market is red hot, inflation will peak soon and come down by itself, unemployment will hardly rise at all, and the wobbling housing market won’t be hit by higher rates because some households have large buffers. Yes, they are called households without mortgages. How one can argue that stops people with large mortgages from being pressured requires very silly random econometric walks. Presumably today’s Statement on Monetary Policy will have more such gems. The PBOC aren’t saying anything much, as 1,666 Chinese property developers had missed commercial paper payments at least three times in the last six months as of June, up from 135 in January, and talk is still of when the mega-bailout happens, the cost of which will end up on its balance sheet. Recall when everyone solemnly said this was all about Evergrande, and was “contained”, and/or that the US had debt and asset-bubble problems, but China didn’t? It was ironic, and you didn’t get it at the time. There are now lots of sensible financial media pointing to a deep ‘lack of Truss’ in central banks. Rightly so. However, they still aren’t getting the punchline about where this all goes next – it surely isn’t back to ‘2%-CPI targeting independence’. As such, many people with silly skill sets will need to learn to walk new walks. And don’t delude yourself that current markets are any kind of exception from Cleese’s 10% ratio. After all: Financial conditions continue to ease even as base rates rise, and the more they ease, the more rates will have to rise. US mortgage rates are now back to around 5% when they were recently at 6%, putting more juice back into the system. Is that another 100bps the Fed has to go? Despite Saudi Arabia raising oil prices for Asia steeply, US WTI prices just tested below $90. Is it US demand destruction, or claims that its gasoline usage is now lower than in 2020 under lockdown that is most questionable? A wider basket of commodities are also far off their recent highs even as there has been only marginal improvement in most fundamental supply-demand, and none in related geopolitics. That would make sense if the Fed’s aggressive rate actions were pushing commodity-backed ‘new world orders’ off the stage, as I have argued they will have to try to do – but financial conditions are easing, not tightening. Then again, ‘Copper Worth Nearly Half a Billion Dollars Goes Missing in Qinhuangdao, China’ says Bloomberg, pointing to why the idea of holding raw commodities over the greenback as a ‘safe haven/reserve’ leaves others laughing longest. Yet stocks are trying to snigger at central-bank actions and/or looming recessions, “because markets”. And, as a colleague related to me this week, perhaps because so many funds are so far in the red that they have nothing to lose in going all in on leveraged longs, hoping hopium acts like helium. Actually, all it will do is make their voices sound high, squeaky, and silly. Even the US market mega straight man is getting into crypto just as everyone else sees what a silly joke it was all along and new regulation looms. Cleese also stressed something else important: the 10% rule does not apply to comedy, because you cannot fake being funny. You either are or you aren’t. Neither can you repress a laugh when something is funny, even when it ‘shouldn’t’ be. That’s why the role of the fool as truth-teller in medieval courts was so important, and why authoritarians are renowned for their lack of a sense of humor – the levelling nature of comedy is always deeply iconoclastic and revealing.   Markets used to have that function. However, now *they* are the dangerously destructive bad comedy. On that note, I will leave you to wait for US payrolls and all its related silliness – Happy Friday! Tyler Durden Fri, 08/05/2022 - 08:21.....»»

Category: worldSource: nytAug 5th, 2022

Today’s mortgage rates: 30-year rates tumble back below 5% | August 4, 2022

Check out the mortgage rates for August 4, 2022, which are mixed from yesterday. Based on data compiled by Credible, three key mortgage refinance rates have fallen and one has risen since yesterday. Rates last updated on August 4, 2022. These rates are based on the assumptions shown here. Actual rates may vary. With 5,000 reviews, Credible maintains an "excellent" Trustpilot score. What this means: Three key mortgage refinance rates fell today, with rates for 20- and 30-year terms plunging back below 5%. Rates are likely to continue to fluctuate, meaning homeowners looking to refinance may want to lock in a low rate now ahead of future increases. Today’s mortgage rates for home purchases Based on data compiled by Credible, mortgage rates for home purchases are mixed since yesterday, with two rates falling, one rising and a fourth holding steady.  Rates last updated on August 4, 2022. These rates are based on the assumptions shown here. Actual rates may vary. Credible, a personal finance marketplace, has 5,000+ Trustpilot reviews with an average star rating of 4.7 (out of a possible 5.0). What this means: Mortgage rates for 20- and 30-year terms plummeted back below the 5% mark today, with rates for 30-year terms falling more than half a percentage point. Meanwhile, rates for 15-year terms edged up a quarter point, and 10-year rates held steady. With rates for all repayment terms back below 5%, borrowers may want to lock in a rate today ahead of future increases.  To find great mortgage rates, start by using Credible’s secured website, which can show you current mortgage rates from multiple lenders without affecting your credit score. You can also use Credible’s mortgage calculator to estimate your monthly mortgage payments. Today’s mortgage interest rates are well below the highest annual average rate recorded by Freddie Mac – 16.63% in 1981. A year before the COVID-19 pandemic upended economies across the world, the average interest rate for a 30-year fixed-rate mortgage for 2019 was 3.94%. The average rate for 2021 was 2.96%, the lowest annual average in 30 years. The historic drop in interest rates means homeowners who have mortgages from 2019 and older could potentially realize significant interest savings by refinancing with one of today’s lower interest rates. When considering a mortgage refinance or purchase, it’s important to take into account closing costs such as appraisal, application, origination and attorney’s fees. These factors, in addition to the interest rate and loan amount, all contribute to the cost of a mortgage. Are you looking to buy a home? Credible can help you compare current rates from multiple mortgage lenders at once in just a few minutes. Use Credible’s online tools to compare rates and get prequalified today. Thousands of Trustpilot reviewers rate Credible "excellent." Changing economic conditions, central bank policy decisions, investor sentiment and other factors influence the movement of mortgage rates. Credible average mortgage rates and mortgage refinance rates reported in this article are calculated based on information provided by partner lenders who pay compensation to Credible. The rates assume a borrower has a 740 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%. Credible mortgage rates reported here will only give you an idea of current average rates. The rate you actually receive can vary based on a number of factors. Many factors influence the interest rate a lender may offer you. Some – such as your credit score – are in your control. But others you have no ability to affect, such as: If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible's free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes. Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column. As a Credible authority on mortgages and personal finance, Chris Jennings has covered topics that include mortgage loans, mortgage refinancing, and more. He’s been an editor and editorial assistant in the online personal finance space for four years. His work has been featured by MSN, AOL, Yahoo Finance, and more......»»

Category: topSource: foxnewsAug 4th, 2022

As student loan forgiveness looms, half of college students are already behind in trying to complete a bachelor"s degree in even 5 years, a study says

A study released last month showed that half of college students are not on track to complete a bachelor's degree in 10 semesters. Yaritza Velazquez-Medina, center, weeps as students learn they no longer have college debt.Robert Gauthier/Los Angeles Times via Getty Images A study shows half of college students fall behind in their first year to graduate in 4 years. There is a gap among gender as well as racial/ethnic groups. The average student isn't on track to complete a degree in even 5 years. We may have found another datapoint to explain the high cost of college: It's taking students longer to finish.A new study released last month by the National Student Clearinghouse found that only 51% of full-time college students earned even 24 or more credits in their first year. Generally, an undergraduate degree can be earned in about 120 credits at many institutions, meaning a steady 15-credit-per-semester cycle would earn you a graduate degree in 8 semesters, or 4 years.But the study found that only fewer than a third (28%) of students earned at least 30 hours of credit, meaning that more than 70% are already off track to finish in 4 years after their freshman year.What's more, the average full-time student attempted fewer than 27 credits in their first year — and earned fewer than 22 credits. Because of existing completion rates, the study said, "this means the average full-time student is not on track to complete a bachelor's degree even in five years."A couple of caveats: the study did find wide disparities in attempting and earning credits across gender types, as well as racial and ethnic groups. The study noted that the percent of Asian students earning 30 or more credits in their first year was more than double the share of African American students.But other potential reasons for the differences didn't pan out: the study found no significant change in first-year credit progress between transfer and nontransfer students, and the same was true for age — in fact, students over the age of 24 made, on average, lower first-year progress on earning credits compared to their younger counterparts.All of this data comes amid the backdrop of a US Department of Education plan to potentially forgive some loans for millions of borrowers, though progress continues to be murky. As Politico reported, President Biden is considering executive action of $10,000 debt relief per borrower.A Forbes article recently reported that US student loan borrower between the ages of 25 and 34 carry a combined $500,000 in debt, the majority of them holding between $10,000 and $40,000 each. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 3rd, 2022

This is how much home prices grew in the second quarter

Home prices surged in the second quarter, nearing a record high, according to Fannie Mae. Here's how homeowners can tap into their home's value. Home prices surged in the second quarter this year, reaching nearly the highest growth rate on record, according to Fannie Mae’s Home Price Index (HPI).  Single-family home prices grew by 19.4% annually in the second quarter of 2022, down just slightly from the upwardly revised 20.5% annual growth in the first quarter, according to the index. On a quarterly basis, home prices rose 4.3% from the first to second quarter. "Home prices maintained a near-historic pace of appreciation in the second quarter, as low levels of housing inventory continued to support price growth," Doug Duncan, Fannie Mae senior vice president and chief economist, said in a statement. "At the end of 2021 and extending into 2022, we believe many homebuyers pulled forward their purchase plans to avoid expected increases in mortgage rates, contributing to demand for homes and strong price appreciation." If you want to take advantage of rising home prices, consider taking out a cash-out refinance to pay down debt or fund home improvement projects. Visit Credible to find your personalized interest rate without affecting your credit score. HOME PRICE GAINS COOL IN MAY, BUT REMAIN HISTORICALLY HIGH Although home prices are currently rising, that growth could soon slow. In fact, the latest report from CoreLogic showed that while home price gains remained historically high in May, they could decelerate rapidly over the coming year. CoreLogic forecasted that home price growth will slow to just 5% annually by May 2023. "Given the sharp rise in mortgage rates since that time, and the resulting negative impact on affordability to potential homebuyers, we expect purchase demand to cool in the quarters ahead, and for home price appreciation to moderate as a result," Duncan said.  Mortgage rates have nearly doubled since last year, when rates were below 3%. In June, mortgage rates surged to 6%, and have since come down, but remain significantly higher than last year, according to Freddie Mac data. If you want to take advantage of your home’s rising value before interest rates increase further, consider taking out a cash-out refinance. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best mortgage rate for you. HOME PRICE GAINS DECELERATE, BUT ONLY SLIGHTLY: CASE-SHILLER REPORT As home values surge, homeowners can take advantage by pulling cash out of their home for paying down debt or home improvement projects. Although mortgage rates are up from last year, they are still significantly lower than interest rates on a personal loan. At the mid-5% range, mortgage rates are approximately half the average rate for a three-year personal loan. If you are interested in pulling cash out of your home, consider using a cash-out refinance. Visit Credible to get preapproved for a loan in minutes and compare your options. Another option for homeowners is a home equity line of credit (HELOC), which allows borrowers to take out a loan based on the equity they have in their home. Unlike a cash-out refinance, a HELOC does not affect the interest rate on the entire loan, and sets a new, second loan with its own interest rate. This could be a good option for homeowners who already scored a low interest rate on their mortgage and don’t want to refinance out of it.  If you are considering your home equity options, contact Credible to speak to a home loan expert and get your questions answered.  Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column......»»

Category: topSource: foxnewsAug 3rd, 2022

Today’s best mortgage refinance deal? 15-year rates are the lowest available | August 3, 2022

Check out the mortgage refinancing rates for August 3, 2022, which are up from yesterday. Based on data compiled by Credible, mortgage refinance rates have risen across all terms since yesterday.  Rates last updated on August 3, 2022. These rates are based on the assumptions shown here. If you’re thinking of doing a cash-out refinance or refinancing your home mortgage to lower your interest rate, consider using Credible. Credible's free online tool will let you compare rates from multiple mortgage lenders. You can see prequalified rates in as little as three minutes. What this means: Mortgage refinance rates edged up across all repayment terms today, with 30-year rates rising half a percentage point. Rates for a 15-year refinance are currently lower than rates for all other repayment terms and are a full percentage point lower than 30-year rates. At 4.375%, homeowners looking to refinance may find that 15-year terms offer the best opportunity for a lower interest rate and manageable monthly payment. WHAT IS CASH-OUT REFINANCING AND HOW DOES IT WORK? Today’s mortgage interest rates are well below the highest annual average rate recorded by Freddie Mac — 16.63% in 1981. A year before the COVID-19 pandemic upended economies across the world, the average interest rate for a 30-year fixed-rate mortgage for 2019 was 3.94%. The average rate for 2021 was 2.96%, the lowest annual average in 30 years. The historic drop in interest rates means homeowners who have mortgages from 2019 and older could potentially realize significant interest savings by refinancing with one of today’s lower interest rates. If you’re ready to take advantage of current mortgage refinance rates that are below average historical lows, you can use Credible to check rates from multiple lenders. If you’re interested in refinancing your mortgage, improving your credit score and paying down any other debt could secure you a lower rate. It’s also a good idea to compare rates from different lenders if you're hoping to refinance so you can find the best rate for your situation. Borrowers can save $1,500 on average over the life of their loan by shopping for just one additional rate quote, and an average of $3,000 by comparing five rate quotes, according to research from Freddie Mac. Be sure to shop around and compare current mortgage rates from multiple mortgage lenders if you decide to refinance your mortgage. You can do this easily with Credible's free online tool and see your prequalified rates in only three minutes. Changing economic conditions, central bank policy decisions, investor sentiment and other factors influence the movement of mortgage refinance rates. Credible average mortgage refinance rates reported in this article are calculated based on information provided by partner lenders who pay compensation to Credible. The rates assume a borrower has a 740 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%. Credible mortgage refinance rates reported here will only give you an idea of current average rates. The rate you receive can vary based on a number of factors. Think it might be the right time to refinance? Be sure to shop around and compare rates with multiple mortgage lenders. You can do this easily with Credible and see your prequalified rates in only three minutes. Generally, you’ll encounter costs — $5,000 on average, according to Freddie Mac — when refinancing your mortgage. Your exact refinancing costs will depend on multiple factors, including the size of your loan and where you live. Typical refinancing costs include: Keep in mind there’s no such thing as a truly no-cost refinance. Lenders who market "no-cost loans" typically charge a higher interest rate and roll the costs into the loan — which means you’ll pay more interest over the life of the loan. Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at and your question might be answered by Credible in our Money Expert column. As a Credible authority on mortgages and personal finance, Chris Jennings has covered topics that include mortgage loans, mortgage refinancing, and more. He’s been an editor and editorial assistant in the online personal finance space for four years. His work has been featured by MSN, AOL, Yahoo Finance, and more......»»

Category: topSource: foxnewsAug 3rd, 2022

Transcript: Hannah Elliot

      The transcript from this week’s, MiB: Hannah Elliott on Hypercars & EVs, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters… Read More The post Transcript: Hannah Elliot appeared first on The Big Picture.       The transcript from this week’s, MiB: Hannah Elliott on Hypercars & EVs, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast I have an extra special guest. If you want to listen to me wonk out about automobiles, Hannah Elliott is my favorite automobile reviewer. The last time I had her on I had people writing me and saying, “You know, you were like a little puppy dog piddling over yourself. You couldn’t get out of your own way. You were so excited to talk about cars with somebody.” This time, I think I’ll let Hannah speak a little more than I did last time. I try to keep my excitement in check, especially on the broadcast portion. But we did go back and forth on some stuff. If you were all interested in the automobile industry, EVs, motorcycles, collectible cars, Ferraris, Formula One, well, strap yourself in and get ready. This is two hours of automobile wonkery. With no further ado, my conversation with Bloomberg’s Hannah Elliott. Hannah Elliott, welcome back. HANNAH ELLIOTT, STAFF WRITER, BLOOMBERG BUSINESSWEEK: Thank you. It’s great to be here. RITHOLTZ: I’m — I always enjoy talking to you because I’m — I’m kind of a car guy. And before we get into automobiles, let’s just start a little bit with your — a background of your career. You’re a staff writer at Forbes Luxury. What led you to being a writer? And what led you to luxury? ELLIOTT: It’s a really funny story. I always start out by saying, of course, at Bloomberg, I get to write about cars. I get to write about the fun thing. Most people here write about how to make money, I get to write about how to spend money. RITHOLTZ: How to spend it, right. ELLIOTT: This was not by design, this was not my plan. I did love words and books, and I did study journalism in college. I went to Baylor University. Thinking of Brittney Griner right now, she also went to Baylor, so shout-out Brittney. But I went to Baylor, I got a journalism degree and moved to New York. I had interned writing about politics and religion actually, but saw on Craigslist an ad to assist the automotive editor at Forbes. And I knew nothing about cars. I come from a sports family. I’m not a car — I still say I’m not actually a car person, this is my job. It’s a beat. RITHOLTZ: Did you play sports in college? ELLIOTT: Yeah, I ran track. RITHOLTZ: OK. ELLIOTT: Yeah, I was a runner. RITHOLTZ: I was going to guess volleyball … ELLIOTT: Yes. RITHOLTZ: … because you’re 6’1”. ELLIOTT: A lot of people say basketball, but I … RITHOLTZ: No, you’re short for basketball, but you’re the right height for beach volleyball. ELLIOTT: Yeah, well, I got some cousins who are very good at volleyball. RITHOLTZ: Yeah. ELLIOTT: They played at SMU. But yeah, I was runner. My dad ran for Nike in the 80’s. RITHOLTZ: Oh, really? ELLIOTT: A lot of marathon distance, so I come from a big running family. My brother played basketball actually in Europe professionally, so a big sports family. No car … RITHOLTZ: Really? ELLIOTT: … anything. I mean, my — no, I mean, I did how to drive a — a stick shift because my dad taught me in his old board when I was 16 mostly because I bugged him just to do it, but I had an uncle with like an Acura Legend, which was probably the nicest car I was ever exposed to … RITHOLTZ: Wow. ELLIOTT: … and just shared an old Buick Skylark with my sister in high school that I was very embarrassed by. So not … RITHOLTZ: Understandably. ELLIOTT: … yeah. Although my sister actually — I think she kind of liked it, but not interested in cars at all. But back to this Craigslist ad, I figured, well, Forbes is a good brand. RITHOLTZ: Sure. ELLIOTT: It’s is not recognizable. I know I want to do journalism. There’s my foot in the door. I’ll figure it out once I get in. And fast forward, you know, this was in like 2007-2008. A lot of people got laid off in the industry. My editor who I’ve been working with for a year and a half or so got laid off. He was expensive, I wasn’t. I was … RITHOLTZ: You’re cheap. ELLIOTT: … being paid … RITHOLTZ: Right. ELLIOTT: … next to nothing, so it was like, well, who can write about cars and, you know, pick this up because we just fired the guy who’s covering them, which doesn’t make sense. RITHOLTZ: Right. ELLIOTT: And so, yeah, Elliott, you go. And Matthew de Paula, I will always be so grateful to him. He was the editor at Forbes at the time who hired me and really for a year and a half took me around everywhere and just taught me the beat. That’s how I approached it. This is a beat. I’m going to approach this just like anything else. There are no wrong questions. It’s just like this is the way that I would cover anything. And I always kind of thought, “Well, I’ll eventually go into other things,” and I did certainly do luxury and watch coverage at Forbes and celebrity coverage. You know, I got to talk to everyone from Jennifer Lopez to a cover story on Elon Musk back in the day before anyone really knew about him, which is … RITHOLTZ: Right, right. ELLIOTT: … crazy to think about now. You know, Forbes was great, and it just kind of was like cars were the thing that I did because no one else at Forbes was doing them. And then I just never stopped. And, you know … RITHOLTZ: What — what was the first car you reviewed at Forbes? ELLIOTT: That’s a great question. The first car I remember being allowed to drive as a Forbes staffer was probably an Aventador, a Lamborghini Aventador. RITHOLTZ: Oh, really? So you’re not fooling around? ELLIOTT: Which I was terrified, but … RITHOLTZ: Like (inaudible). ELLIOTT: … yeah, yeah, that I was terrified. RITHOLTZ: Here’s a $0.5 million car. Have some fun. ELLIOTT: Yes. I remember Matthew was in the passenger seat, so I wasn’t completely so low, but … RITHOLTZ: Matthew? ELLIOTT: Matthew de Paula who was the editor who hired … RITHOLTZ: Right. ELLIOTT: … me there. He was still around. And I mean, I was terrified. But also, I was young and dumb enough not to know any better. RITHOLTZ: Right. ELLIOTT: And I think that actually really served me. I didn’t know what I was supposed to do or not do. I just approached it like a journalist … RITHOLTZ: Right. ELLIOTT: … which I was, you know — I — and I still am really proud to be a journalist. I — I think it’s the best job. And cars are way more fascinating now even then. I mean, that was, you know, 12, 15 years ago. And even now like the car industry is the most exciting industry, I think … RITHOLTZ: It’s crazy now, it really is. ELLIOTT: … to be (inaudible), yeah. RITHOLTZ: So I was telling a friend that I was going to speak with you again and talk about cars. And their response was, you know, I love pizza, but if I have to make pizza for a living I would hate pizza. Is that the same? Is there still a thrill here or … ELLIOTT: That’s a … RITHOLTZ: … you like, you know, no longer can smell the roses? ELLIOTT: That’s a really good question. I think it actually works to my benefit that I never was a car person anyway. I’m not a car person, and I always say, here’s the difference. Every … RITHOLTZ: Yeah, because I think you’d become a car person whether or not you wanted to do. ELLIOTT: Well, I can certainly speak the language if I need to, and I feel very comfortable on those circles. But here’s the difference. I don’t go to car things that I’m not basically paid to be there. And everyone else at the car event, I mean, whether it’s a Formula E race or, you know, a Concorde, I’m paid to be there. Yes, it’s enjoyable. Yes, it’s glamorous and fun, and I really do enjoy it, but I don’t go to car things on my own personal time. I play with my dog, you know, or go buy a flower, something else because, yeah, I just think like your — your pizza friend, that’s — it would be too much and it would … RITHOLTZ: Right. I mean, if you’re doing it … ELLIOTT: Yeah. RITHOLTZ: … for a living at a certain point it’s like … ELLIOTT: Oh, yeah, I mean … RITHOLTZ: … just change. Even if you love what you’re doing, hey, I love the markets and finance … ELLIOTT: Yes. RITHOLTZ: … and — but on the weekends, I want to go out in a boat or sit on the beach or just something … ELLIOTT: Yes. RITHOLTZ: … say it loud. ELLIOTT: And I — I really say, look, if your car is the most interesting thing about you, you’re probably a little bit boring. I like to be … RITHOLTZ: Interesting. ELLIOTT: … around people who have a lot of dimensions, and … RITHOLTZ: OK. ELLIOTT: … a cool car is one of them and that’s awesome. RITHOLTZ: Right. ELLIOTT: But to me, that should not be the most interesting thing about you. I love car people. I love talking about cars, but like come on, you got to have some depth … RITHOLTZ: Right. ELLIOTT: … too. So, yeah, that might be a little — not trying to put anyone down, but to me, it’s like if I’m going to spend social time with you, you got to be able to talk about more than car. RITHOLTZ: Right. And that’s why you send your angry emails to ELLIOTT: Yes. RITHOLTZ: So what sort of automotive trends are catching your eye these days? What do you like? What don’t you like? ELLIOTT: Well, I think E.V. — like electric mobility for lack of a better word … RITHOLTZ: Huge, absolutely huge. ELLIOTT: … is — is despite the fact that we’re still, you know, hovering around five percent penetration of EVs in the U.S. RITHOLTZ: So is it five percent of new sales that’s all it is? ELLIOTT: Of — of all cars on the road. RITHOLTZ: Oh, well … ELLIOTT: Yeah. RITHOLTZ: … the cars last 15, 20 years these days. ELLIOTT: Correct. RITHOLTZ: So it’s going to be … ELLIOTT: So — but this is a very … RITHOLTZ: … it’s going to take a long time. ELLIOTT: Yeah, so it’s — it’s like one thing to talk about the hype of EVs. Certainly, at every car show and every car launch and every debut, it’s all electric vehicles. But in real terms in the real world, I think we can expect to see SUV’s that continue to get more and more expensive. I mean … RITHOLTZ: But what about the Aston Martin SUV, the Bentley … ELLIOTT: Completely. RITHOLTZ: … and the Rolls. ELLIOTT: And the Rolls and, you know, Porsche’s got a couple SUVs that are going to get close to 200,000 if you get every — but I — I — and I don’t think — you know, I remember when the first SUVs were really starting to get over $100,000, it was like, “Wow … RITHOLTZ: Right. ELLIOTT: … this is really crazy.” This is a utility vehicle, but it’s being price like electric car, but now it’s just on top of that. I mean, Lamborghini, Ferrari’s coming out with theirs, it’s just going to continue. And there seems to be no limit. And let’s not forget SUVs have the biggest margins. They’re basically … RITHOLTZ: Right. ELLIOTT: … doubling the production volumes for a lot of these smaller automakers like Lamborghini, Ferrari. So they’re going to double production volume and then the profits are just massive. RITHOLTZ: Look back when Porsche was independent. The clients saved the company. ELLIOTT: Completely. And also, it’s so interesting because back — you know, the people who are very into these sports brands like Porsche, Ferrari, Lamborghini, there’s so much philosophical angst about, well, but we’re really a sportscar company; we’re r really a — you know, a — a supercar company. What is our consumer going to think when we go into an SUV? No one cares. RITHOLTZ: Right, right. ELLIOTT: No one cares. I mean, there was all this like polite, oh, what — what will we do? No one will accept our DNA as a true sportscar company anymore. Nobody cares. RITHOLTZ: Half the people I know who own 911s have … ELLIOTT: Of course. RITHOLTZ: … either a Macan or a — a — a Cayenne … ELLIOTT: Yeah. RITHOLTZ: … in the garage because they stay with the brand. And the only problem with those SUVs — so I have a Macan S — you just go through tires and brakes like they’re — because they’re — it’s a big, heavy truck, but you can throw it around like it’s … ELLIOTT: Yeah. RITHOLTZ: … a sportscar. And eventually, it’s like, oh, I got eight, 12,000 miles. I got … ELLIOTT: Yeah. RITHOLTZ: … new rubbers and … ELLIOTT: Yeah. RITHOLTZ: … I need to replace a — I need to replace the — the brake pads, but it drives like a sportscar. ELLIOTT: And those have done nothing to diminish the allure of a 911. It’s not … RITHOLTZ: Other than funding them … ELLIOTT: Yeah. RITHOLTZ: … letting them — letting them spend money. ELLIOTT: Yeah. I mean, it’s not like, oh, if we make an SUV now people won’t take our sportscar seriously. It just … RITHOLTZ: It’s the opposite. ELLIOTT: … it elevates everything. RITHOLTZ: Right, 100 percent. ELLIOTT: Yeah, and I think that will really continue. I mean, if you look even at — even if you look at the 992, the new 911 compared to, you know, call it a turbo from the 70’s … RITHOLTZ: Double the size. ELLIOTT: … this is a — double the size. RITHOLTZ: Right. ELLIOTT: So … RITHOLTZ: In fact, somebody did — what is it — the Porsche — not the Boxster, the hard top, the — the Cayman. A — a new Cayman today is the size of a 70’s 911. ELLIOTT: Yeah, yeah. RITHOLTZ: It’s just shocking. All right. So that’s what trends you like. What bugs you? What — what’s the trend that you find, oh, I wish this would stop, this is terrible? ELLIOTT: Well, honestly the flipside of the coin is the whole idea that when you are creating electric vehicles, they tend to be appliances. RITHOLTZ: Yeah. ELLIOTT: I find that so boring and unfortunate. I don’t know what that means for the future, but I — my number one thing is car should be fun. Even if you — if it’s a commuter car, it should still be fun. And I do think there is a place for autonomous driving, you know, for — for commuting, sure. RITHOLTZ: Especially if you can set your cruise control so that it starts and stops … ELLIOTT: Yes. RITHOLTZ: … it’s like an L.A., you’re on the 405. ELLIOTT: Yes. RITHOLTZ: Who wants to be stressed about … ELLIOTT: That’s not driving, that’s just commuting. RITHOLTZ: Right, right. ELLIOTT: It’s a completely different thing. So I do think there is a place for it. But it is kind of sad to see how consumers who have been marketed to to believe that they are going to be virtuous by purchasing an E.V. and they’re going to symbol their, you know, virtuous status by driving electric vehicle that they’re somehow doing good for the environment. This is a little bit of a separate point. But to me, the best thing you could do for an environment is to not buy a new car. Use a car that already exists. Use an old car. RITHOLTZ: Interesting. ELLIOTT: And this goes hand in hand with the appliance thing. You know, I just drove the Cadillac Lyriq. RITHOLTZ: Which you didn’t exactly love. ELLIOTT: I didn’t necessarily love it because for many reasons. But to this particular point, it’s just kind of like an appliance. RITHOLTZ: Right. ELLIOTT: It — it looks interesting. The looks are there. But driving, it could have been from any brand. And I’m not sure. Cadillac used to really mean something. I’m not sure that’s going to have the same pull as the Cadillacs of yesterday. RITHOLTZ: Right, especially without the fins. ELLIOTT: Yeah. (COMMERCIAL BREAK) RITHOLTZ: This PS (ph) what really bugs me that I have to share, and I’ve been in a bunch of EVs. There is just no reason to bury the … ELLIOTT: Oh. RITHOLTZ: … the heating and air-conditioning controls … ELLIOTT: Yes, layers … RITHOLTZ: … at wee (ph) levels. ELLIOTT: … (inaudible). RITHOLTZ: And I know — I know you can’t expect a Volkswagen to be a Bugatti … ELLIOTT: Yes. RITHOLTZ: … even though they have the same ownership. But I just was watching review of the Chiron, and they brilliantly integrated just three buttons across all of your … ELLIOTT: Yes. RITHOLTZ: … heating, cooling fan, heated and cooled seats, just three little buttons. ELLIOTT: Yes. RITHOLTZ: You can push it in, you could pull it out or you could just turn the knob. And, you know, we have to pull that stuff. I know a lot of companies like to keep them at the bottom of the screen. ELLIOTT: Yes. RITHOLTZ: It’s still a pain in the neck. ELLIOTT: Yeah. And I’ve — I have mixed feelings about this. For instance, the new Mercedes cars like the S-Class and the EQ have this very big … RITHOLTZ: Giant. ELLIOTT: … giant screen that’s curved, and it goes across the entire dashboard. And it’s actually was very beautiful. And it is pretty well-designed. So I’m not — I actually did find it was intuitive, and I purposely don’t ask for help when I first get into a car. I want to be able to … RITHOLTZ: You want to see, right. ELLIOTT: … see if I can figure it out. I don’t want them to show me because that to me is a little bit more of a controlled environment to see if it’s intuitive. So I don’t have a problem with that necessarily, but in general, I do like some tangible knobs and buttons. RITHOLTZ: Hard buttons, yeah. ELLIOTT: Yes. And if you are having to scroll through multiple layers of software to turn on a seat heater, that’s distracting … RITHOLTZ: Right. ELLIOTT: … and annoying. RITHOLTZ: While you drive. ELLIOTT: Yeah, I just — yes. RITHOLTZ: Right. But meanwhile, the flipside of that is all the new Ferrari steering wheels. ELLIOTT: Yeah. RITHOLTZ: It’s like you don’t need anything else. ELLIOTT: (Inaudible). RITHOLTZ: Everything is at your thumbs. ELLIOTT: Did you get in the Roma, the Ferrari Roma? RITHOLTZ: I did. I don’t love the interior. ELLIOTT: What? RITHOLTZ: I find the exterior of that car just silky, sexy … ELLIOTT: Yes. RITHOLTZ: … gorgeous. ELLIOTT: Yes. RITHOLTZ: And the interior is a little disappointing. ELLIOTT: From the (inaudible) or the technology? RITHOLTZ: Just a little bit of both. I mean … ELLIOTT: Yeah. RITHOLTZ: … it’s — you know, not everything is a 488 or … ELLIOTT: Yeah. RITHOLTZ: … you know, I — I’ve kind of been looking at the F12 lately … ELLIOTT: Ooh. RITHOLTZ: … because the 812s have gone postal. And pre-pandemic, the F12 was just starting to come down in price. And for any three of my cars like … ELLIOTT: Yeah. RITHOLTZ: … well, you know, I could save a little maintenance and insurance if I swap … ELLIOTT: Sure. RITHOLTZ: … these three for that … ELLIOTT: Yeah. RITHOLTZ: … one. ELLIOTT: Quality over quantity. RITHOLTZ: And it was — it was — there was definitely — I love paying half of MSRP for a three-year-old car that still has most of its useful life ahead of it. And then it just, you know, they’re up 40, 50 percent … ELLIOTT: Yeah. RITHOLTZ: … from where I was like, oh, you’re $10,000 away … ELLIOTT: Yeah. RITHOLTZ: … from where I could think about this. So — so — so that’s a beautiful interior with hard … ELLIOTT: Yes. RITHOLTZ: … buttons … ELLIOTT: Yes. RITHOLTZ: … and a screen … ELLIOTT: Yes. RITHOLTZ: … and a separate little screen if you … ELLIOTT: Yes. RITHOLTZ: … buy the upgrade for the passenger. ELLIOTT: But you didn’t love it, you didn’t love it? RITHOLTZ: The Roma. ELLIOTT: Yeah. RITHOLTZ: So — so the 812 and the F12 are both just — I like that … ELLIOTT: Yes. RITHOLTZ: … environment. The Roma was just kind — it was a little too minimalist and … ELLIOTT: Oh, interesting. RITHOLTZ: … I kind of really like the dials, the buttons, the tack like — I want to feel — when I get into a Ferrari, I want to feel like I’m in a … ELLIOTT: Cockpit. RITHOLTZ: … right, a fighter plane. ELLIOTT: Yes. RITHOLTZ: What else looks really new and interesting to you? What cars or SUVs are you excited about even if they’re not out until ’23 or ’24? Not the Lyriq (inaudible) … ELLIOTT: OK. RITHOLTZ: … but what else? ELLIOTT: This is going to surprise you. I really did like the Hummer E.V. RITHOLTZ: Everybody I know who’s driven it says it’s spectacular. ELLIOTT: It’s (inaudible) — it’s — this is a — this is a vehicle … RITHOLTZ: Immense but spectacular. ELLIOTT: … yes, at 9,000 plus pounds. RITHOLTZ: Wow. ELLIOTT: And you’re going to be on the same level as a school bus basically height-wise. Again, if you love the Hummer, you’re going to love it. If you hate the Hummer, you’re going to hate it. RITHOLTZ: Right. ELLIOTT: But what I love about it is it’s not trying to be anything it isn’t. This is a very obnoxious vehicle, you know. RITHOLTZ: Right. ELLIOTT: But it doesn’t — it’s not trying to hide it. It has a point of view … RITHOLTZ: But it’s electric. ELLIOTT: … it’s going to pop you in the nose. RITHOLTZ: Right. ELLIOTT: But it’s electric, and it’s really fast. I drove that … RITHOLTZ: Insane 9,000 pounds, really fast. ELLIOTT: Yes, with launch mode, which also is ridiculous. There’s no … RITHOLTZ: Really? ELLIOTT: … there’s no reason a Hummer E.V. needs to have a launch mode. And I’m telling you, it pushes you back (inaudible). RITHOLTZ: Right. ELLIOTT: It’s crazy. And it was a … RITHOLTZ: Well, you’ve seen the YouTube videos of the people on the Tesla Plaid … ELLIOTT: Sure, yeah. RITHOLTZ: … just like having their minds blown probably. ELLIOTT: Yeah, well, imagine that and like something the size of a school bus basically. RITHOLTZ: Wow. ELLIOTT: It’s crazy, but I loved it. They did a good job with it. I think, you know, good luck trying to get one. And I saw they were — those … RITHOLTZ: 200 plus. ELLIOTT: … on Bring a Trailer already. RITHOLTZ: Right. ELLIOTT: Did you see the one that sold on Bring a Trailer for — I think it was around $200,000. RITHOLTZ: Yeah, yeah. ELLIOTT: Yeah. RITHOLTZ: There’s been several that have been going for 200 plus. ELLIOTT: Yeah, yeah. So I mean, it’s crazy, but I really did like it surprisingly. I thought they did a great job of incorporating the look of the old Hummer. I mean … RITHOLTZ: Yes. ELLIOTT: The minute you look at it, you know, it’s a Hummer … RITHOLTZ: It’s clearly a Hummer. ELLIOTT: … but it does look updated, too. I thought they did a better job, then maybe I don’t know a Defender. You know how they brought the new Defender in? Yeah, I was … RITHOLTZ: Yeah, but the new — so the new Defender has been slagged by a lot of people. ELLIOTT: Yeah, yeah. RITHOLTZ: The folks I know who won’t it all love it. ELLIOTT: Yeah. RITHOLTZ: I mean, the only beef anyone has is Range Rover so … ELLIOTT: Yeah. RITHOLTZ: … reliability is not their forte. ELLIOTT: Yeah, I was just going to say that it might be in the — in the shop every now and then. RITHOLTZ: And — and, by the way, it’s really interesting given the lack of availability of — of new cars and used cars go on any used car site and look for like a 2021 Range Rover Sport HSE, which is an expensive car. There are tons of them available. ELLIOTT: Yes. RITHOLTZ: And it’s mostly because the reliability downgrades their appeal as a used car. But … ELLIOTT: Yes. RITHOLTZ: … I was interested in — you mentioned the Defender, so I know someone in the U.K. who has the Defender as a hybrid … ELLIOTT: Right, OK. RITHOLTZ: … and says he gets 40, 50 miles a gallon … ELLIOTT: Amazing. RITHOLTZ: … because I think it was 45 miles local. So all your local … ELLIOTT: That’s great. RITHOLTZ: … driving is E.V., but if you want … ELLIOTT: Yeah. RITHOLTZ: … to go from London to take the Chunnel to Paris, you can tank up and you could make that trip. ELLIOTT: Yeah. I love that, and I — and I think, you know, I am — I am neither for nor against EVs. I — I do feel genuinely neutral about them. I — I think, OK, they’re probably going to happen, great. But it is true that like now that I’m living in Los Angeles, I can’t drive to Vegas in an E.V. without … RITHOLTZ: Right. ELLIOTT: … stopping for a considerable … RITHOLTZ: Perhaps hour, yeah. ELLIOTT: … amount of time — I mean, more than that — to — to … RITHOLTZ: Oh, really? ELLIOTT: … try to get a recharge. Yeah, I mean, realistically, you can’t drive up to San Francisco in an E.V. The hybrid solves that problem. RITHOLTZ: Right, that’s right. ELLIOTT: Yeah. And you still have decent efficiencies, so yeah. RITHOLTZ: And the same thing with the — the Range Rover, that HSE Sport, the new version which looks … ELLIOTT: Yeah. RITHOLTZ: … lovely is also available in a hybrid in the U.K. I don’t think it’s here, but what’s the giant Range Rover? Is the Land Rover? ELLIOTT: Yeah. RITHOLTZ: That is here with a hybrid, so you do get … ELLIOTT: So there you go. RITHOLTZ: … arguably the best of both worlds. You’re not a fan of the Defender, the new Defender’s look? ELLIOTT: I think — I think they could have done a little better, like the rear box, you know, how on the rear, the rear (inaudible) … RITHOLTZ: Yeah, yeah, so does … ELLIOTT: … there’s a box there. RITHOLTZ: … yeah, (inaudible) and out, yeah. ELLIOTT: It’s a step. Now, that blocks a lot of vision when you’re driving it. RITHOLTZ: I have an X4 so I know all … ELLIOTT: Yeah. RITHOLTZ: … about that blind spot back there. ELLIOTT: I — I don’t think it’s bad, I just think they could have done a little bit better, I don’t know. To me, it just really — I think Bronco, you know, they brought the Bronco back? RITHOLTZ: Spectacular. ELLIOTT: It looks amazing. RITHOLTZ: What a great job. ELLIOTT: Just — just had the Raptor, oh, my God, wow. RITHOLTZ: Have you driven the F150 Lightning yet? ELLIOTT: No, I haven’t. RITHOLTZ: I had it for a week. ELLIOTT: OK, thoughts? RITHOLTZ: Amazing, just a — first of all, if you’re not a pickup guy or girl, right, it’s immense and it’s, you know, almost to the engine exactly … ELLIOTT: OK. RITHOLTZ: … what the internal combustion version is. ELLIOTT: OK. RITHOLTZ: So it’s immense. By the way, the — the Bronco — I had the Bronco for a week also, and so I have a old Jeep Rubicon. And the interesting thing about the shape of the Jeep is it’s a great glass greenhouse. You can see everything. ELLIOTT: Yeah. RITHOLTZ: And the way the fenders are set off of the hood, you could see your corners. You really … ELLIOTT: Oh, yeah. RITHOLTZ: The Bronco is a giant rectangle, and you can’t see anything. I mean, your greenhouse is clean. ELLIOTT: Yeah. RITHOLTZ: You could see out the back, and they have great cameras. But you’re completely … ELLIOTT: Yeah. RITHOLTZ: … blind what’s in front of the truck for like 10 feet. It’s a … ELLIOTT: Yeah. RITHOLTZ: … other than that, it was a blast. We took it on the beach. We went off-roading. ELLIOTT: Are you converted? RITHOLTZ: What, into? ELLIOTT: To — from Jeep to — to a Bronco? RITHOLTZ: No, because … ELLIOTT: No, feasibility. RITHOLTZ: … the Jeep, I have a 2013 Rubicon, and it just goes anywhere. And I’m not like a crazy Jeep guy … ELLIOTT: Yeah. RITHOLTZ: … but my house is set-up on a hill, and four-wheel drive cars in the rain have a hard time getting up there. ELLIOTT: OK, yeah. RITHOLTZ: So the snow is impossible. ELLIOTT: Yeah. RITHOLTZ: And the Jeep just — it just laughs at everything, so yeah, for the snow … ELLIOTT: Some of that. RITHOLTZ: … four-degree angle … ELLIOTT: Yeah, that’s great. RITHOLTZ: … no — no issues. If I was looking to replace that, I would consider the Bronco. Two of my neighbors have one. They both love it. ELLIOTT: Yeah. RITHOLTZ: One has the convertible and the other one has a — a four-door. And, you know, every — I had it for a week. I thought it was a blast. It — it seems unstoppable. The — the F150 was just a wholly different experience. ELLIOTT: Let me ask you about that. You said it was amazing — amazing for a Ford F150 truck or amazing for an E.V.? RITHOLTZ: So I’ve never had a — any SUV. ELLIOTT: OK. RITHOLTZ: And I’ve driven EVs, but not — I mean, pickup, I’ve never had a pickup. And I’ve driven EVs, but I haven’t really had them for a week or so. So the first thing I learned is — and I wrote a long review on it. I — I plugged it in and it lights up, and the next morning it come out, and there’s no change. Oh, it lights up orange, I have to … ELLIOTT: Oh. RITHOLTZ: … oh, really put this in, so now it’s lighting up blue. And then on a 120 without a special charger, you’re adding like two miles … ELLIOTT: Yeah. RITHOLTZ: … an — an hour. ELLIOTT: A tricke. RITHOLTZ: Yeah, it’s a trickle. And then what was interesting, we went to the beach and they’re all these … ELLIOTT: The fast chargers. RITHOLTZ: Yeah, well, there’s semi fast chargers, and so we’re on the — at the beach for two hours, and I — it cost me $6.49 to add 48 miles. So kind of like $3 a gallon. ELLIOTT: Yeah. RITHOLTZ: It seems pretty cheap. It’s — like — like the Hummer, it’s stupid fast for its … ELLIOTT: Yeah. RITHOLTZ: … size and weight. ELLIOTT: Yeah. RITHOLTZ: It’s just stupid. And it’s a full pickup bed, so I dragged out to the beach house. I dragged — yeah, ever see the Roman arch for Hamax (ph). I had one taken apart. It’s like 16 feet. ELLIOTT: OK. RITHOLTZ: I threw that in the back. I threw … ELLIOTT: No. RITHOLTZ: … a six-foot table I had taken apart. I threw a big four-burner Weber. I just loaded up with stuff and I’m like … ELLIOTT: That’s great. RITHOLTZ: … I got a ton more room back here. ELLIOTT: Yeah. RITHOLTZ: So I — I — anybody who’s using stuff, I — I appreciate having a pickup. But to me, it’s like the SUVs — so I have an X4, the X — similar to the X6 or the GLE … ELLIOTT: Sure. RITHOLTZ: … that rounded back, and friends tell me … ELLIOTT: Yeah. RITHOLTZ: … oh, look how much space you’re giving up. I’m like … ELLIOTT: Yeah. RITHOLTZ: … twice a year I fill the back of the truck … ELLIOTT: Sure. RITHOLTZ: … all the way up. ELLIOTT: Sure. RITHOLTZ: The other 360 days … ELLIOTT: It’s fine. RITHOLTZ: … I look at an ugly rectangle. ELLIOTT: Yeah. RITHOLTZ: I’d rather have something that’s a little sexier, and if I … ELLIOTT: Yeah. RITHOLTZ: … really need to — I’ll either make two trips or take two cars or rent a truck if that’s what I really need. ELLIOTT: It’s not (inaudible), yeah. RITHOLTZ: But — but some people are just — can’t wrap their head … ELLIOTT: Yeah. RITHOLTZ: … arounds. ELLIOTT: Yeah. RITHOLTZ: Does the look of a car matter to you relative to its utility? And if it’s not your only car — hey, listen, if I had one car then OK, maybe … ELLIOTT: Right, yeah. RITHOLTZ: … (inaudible). I got too many cars. So to me, it’s not … ELLIOTT: You got a space issue. RITHOLTZ: We were discussing building a garage. ELLIOTT: See, this is how you’re … RITHOLTZ: So it’s the … ELLIOTT: … you’re crossing over into danger territory. RITHOLTZ: So, a friend said to me one tattoo is either too few or too many. ELLIOTT: Yeah. RITHOLTZ: It’s like there’s … ELLIOTT: That’s a very good point. RITHOLTZ: And — and so I’m at a point … ELLIOTT: Yes. RITHOLTZ: … where six cars are either too few — actually, five. I totaled my wife’s Panamera. ELLIOTT: Oh, are you OK? RITHOLTZ: Everybody’s fine. ELLIOTT: OK. RITHOLTZ: It was — this was — this was December — January, February, something like that, five miles an hour. ELLIOTT: No. RITHOLTZ: I slowed down to make a left, and the person … ELLIOTT: Oh, no. RITHOLTZ: … behind me thought I was pulling over … ELLIOTT: Yeah. RITHOLTZ: … crossed the double yellow. And you look in your rear view mirror in a truck … ELLIOTT: Oh, God. RITHOLTZ: … there’s no one behind me, so I make a left … ELLIOTT: Yeah. RITHOLTZ: … (inaudible) does. And a Panamera 4S got — it was six months old. ELLIOTT: Oh. RITHOLTZ: And the funny thing was I got 24 grand more than I paid for the car … ELLIOTT: Perfect. RITHOLTZ: … because the market prices had gone up so insane. So other than chipping my tooth and being sore for a week … ELLIOTT: Yeah. RITHOLTZ: … it happened in — right in front of my dentist building. ELLIOTT: Oh. RITHOLTZ: So when I called and said, “Hey, I chipped a tooth in a car accident … ELLIOTT: Oh, no. RITHOLTZ: … can I come in tomorrow?” ELLIOTT: Yeah. RITHOLTZ: She’s like that was in you in front of our building was it? ELLIOTT: Oh. RITHOLTZ: I’m like, yeah, that was. ELLIOTT: She saw it. RITHOLTZ: They — they heard it. ELLIOTT: Oh, my gosh. RITHOLTZ: They heard kaboom. ELLIOTT: Yeah. RITHOLTZ: And the crazy thing is the woman who’s driving the — the Lexus truck that hit us, she went to the hospital. She was fine. ELLIOTT: Oh, no. RITHOLTZ: It turned out she’s fine. ELLIOTT: OK. RITHOLTZ: She was just nervous and whatever. ELLIOTT: Yeah, yeah. RITHOLTZ: But — but was — she’s scared and shaken up. ELLIOTT: It’s scary. RITHOLTZ: But my wife and I were like black and blue (inaudible). ELLIOTT: Oh, no. RITHOLTZ: We just … ELLIOTT: It’s scary. RITHOLTZ: Car accidents are no fun. ELLIOTT: Yeah, scary. RITHOLTZ: But, you know, the Panamera did what it supposed to. ELLIOTT: Yeah, good. RITHOLTZ: All the airbags came down. ELLIOTT: Good, good. RITHOLTZ: The only weird thing is, as it’s happening, I’m like trying to cover the skin, I can’t — your brain can’t figure out what’s going on because nothing’s … ELLIOTT: Wow. RITHOLTZ: … operating. You can’t see … ELLIOTT: Yeah, yeah. RITHOLTZ: … like you’re blinded. ELLIOTT: Yeah. RITHOLTZ: The steering wheel doesn’t respond. So when we stopped moving, I went to open the driver door, and I — I couldn’t open the door, and like something’s wrong with the door. And I turned to my wife, I’m like, “Are you OK there’s something wrong with our door?” And people came running over to the car. ELLIOTT: Oh. RITHOLTZ: They opened our door and took her out. And so I had to climb over the seat … ELLIOTT: Oh. RITHOLTZ: … to get out. And I was genuinely shocked to see a car … ELLIOTT: Oh. RITHOLTZ: … t-boned. ELLIOTT: That’s scary. RITHOLTZ: Yeah, it’s just — and — and I’m like a religious signaler. And so normally, I would absolutely swear on a stack of bibles that I signaled, but the fact that the person want to pass us makes me wonder. Hey, was this the one time I made a left without saying, oh, how much of it is my fault? I don’t think it was because … ELLIOTT: It’s not your fault, Barry. RITHOLTZ: Well, normally … ELLIOTT: I’m telling you … RITHOLTZ: … when you’re making a left, the assumption is it’s your fault … ELLIOTT: Yeah. RITHOLTZ: … right? I mean … ELLIOTT: Yeah. RITHOLTZ: … but they crossed the double yellow line so … ELLIOTT: Yeah. RITHOLTZ: … I don’t … ELLIOTT: Yeah. RITHOLTZ: … look, New York is a no fault state so … ELLIOTT: It’s great. RITHOLTZ: … it doesn’t matter. But anyway, how do we get on the (inaudible)? ELLIOTT: We were talking about trucks … RITHOLTZ: Oh, that’s right so … ELLIOTT: … and space just to keep your cars. You got six cars, but now you’re having five. RITHOLTZ: Well, now I get five, from down to five … ELLIOTT: Yeah. RITHOLTZ: … I’m down to five. ELLIOTT: Are they all inside? RITHOLTZ: Three inside. ELLIOTT: OK. RITHOLTZ: The Jeep and the X4 outside. ELLIOTT: So you were potentially looking at another … RITHOLTZ: Oh, I am. We are at six. ELLIOTT: Yeah. RITHOLTZ: I got the FJ also. ELLIOTT: OK. (COMMERCIAL BREAK) … sky blue with a white roof and a black interior. ELLIOTT: I think you sent me a picture of that. RITHOLTZ: I started rebuilding one in Colombia pre-pandemic, then we went into lockdown. And they said, “Listen, we can’t hold onto the car. We — we have to … ELLIOTT: OK. RITHOLTZ: … we’re — we’re stuck.” I’m like, “Go ahead, sell it … ELLIOTT: Yeah. RITHOLTZ: … and I will find another one when this is over.” So long story short, 2021, rebuild a new one, imported to the U.S. in January. It sits in customs for two months because they’re so backed up in Port of Miami. Finally get it up here in like February-March, waiting for the last of the documentation to come in, which just came in like a week ago. ELLIOTT: Cool. RITHOLTZ: I had to get a certified translation of the purchase agreement because you can’t send them something showing 100 million pesos in — in Spanish. They don’t want to hear that at DMV. ELLIOTT: Yeah. RITHOLTZ: And so the car gets registered this week. So that’s … ELLIOTT: Oh, that’s exciting. RITHOLTZ: … number six. ELLIOTT: Cool. RITHOLTZ: So seven is … ELLIOTT: OK. RITHOLTZ: … too many. So the trucks are outside, the cars are inside. ELLIOTT: All right, all right. RITHOLTZ: But at a certain point, it’s, you know — you got to make a decision. Am I going to build a garage for all these things? And it’s worth keeping six cars (inaudible). ELLIOTT: Yes, this is a part-time job just maintain … RITHOLTZ: Yeah. ELLIOTT: … making sure the registrations are current, and making sure the batteries are all alive … RITHOLTZ: Insurance, right. ELLIOTT: … and the insurance, and oh, you got to (inaudible) them. RITHOLTZ: I put a triple charger on that, so that is … ELLIOTT: OK. Wait, what Corvette do you have? RITHOLTZ: ’67 Coupe, spectacular. ELLIOTT: I didn’t know that. RITHOLTZ: Yeah, all this show up on the website. ELLIOTT: I’ve been looking for a — I want to see three, white. They didn’t make very many of them. RITHOLTZ: So the — the C3 is the Corvette of my youth. ELLIOTT: Yeah. RITHOLTZ: Like when I was in high school … ELLIOTT: Yeah. RITHOLTZ: … it was a little 10 years before that … ELLIOTT: Yeah. RITHOLTZ: … but, you know … ELLIOTT: Yeah. RITHOLTZ: … they were used cars. ELLIOTT: Yeah. RITHOLTZ: And guys would buy a, you know, 10-year-old Vette, and it’s like I came very close to getting a ‘69 in yellow over black. ELLIOTT: Ooh. RITHOLTZ: And the prices hadn’t gone up. And I started seeing the C2s. I’m like, “These are just the most amazing (inaudible) cars.” ELLIOTT: I know. They’re so cool. RITHOLTZ: They’re just so gorgeous. ELLIOTT: They’re — they’re — I — you know, I just saw one. I follow this thing called Hobby Car Corvettes, and I just saw one. RITHOLTZ: Oh, really? ELLIOTT: They’ve got a white one in my birth year … RITHOLTZ: Right. ELLIOTT: … for sale in Pennsylvania. And I — I really thought, yes … RITHOLTZ: White over white or … ELLIOTT: White over red. RITHOLTZ: OK. ELLIOTT: A C3. It is an automatic (inaudible) … RITHOLTZ: That’s my wife’s old II Series. ELLIOTT: Oh, that is so cool. RITHOLTZ: I don’t get the automatic. ELLIOTT: I know, I know. California traffic though, I don’t want to sit in (inaudible). RITHOLTZ: So here’s — here’s the one thing you have to know about the old Vette. ELLIOTT: OK. RITHOLTZ: They’re tractors, like … ELLIOTT: Well, we know that. RITHOLTZ: I mean … ELLIOTT: Same with every old Lamborghinis. RITHOLTZ: … the clutch is heavy. The steering is heavy. The brakes … ELLIOTT: Yes, this is why I want an automatic. RITHOLTZ: I have drum brakes on (inaudible) … ELLIOTT: Oh, gosh. RITHOLTZ: … my ‘67, which, by the way, is supposed to be the pinnacle of the CII (inaudible). ELLIOTT: How often do you drive it? RITHOLTZ: I try and rotate all the cars out on the road once a week. ELLIOTT: OK, OK. RITHOLTZ: Although, you know, on a day like today when it’s … ELLIOTT: Yeah. RITHOLTZ: … raining cats and dogs … ELLIOTT: Yeah. RITHOLTZ: … it’s not … ELLIOTT: No. RITHOLTZ: … it’s not coming out of the garage. ELLIOTT: Yeah. But it is — to your point, it is a bit of a chore to maintain car — maintaining cars. RITHOLTZ: It’s worked. Six is too few or too many. ELLIOTT: It’s a relationship, yeah. RITHOLTZ: You — you need 20 and a … ELLIOTT: Yeah. RITHOLTZ: … a guy. ELLIOTT: A guy. RITHOLTZ: Right, or like four — you know, we have — we each have a daily driver. ELLIOTT: Yeah. RITHOLTZ: So when I was younger, we each had a daily driver, and there’ll be a convertible in the garage. ELLIOTT: Oh, cool. RITHOLTZ: So we had an old SL for a long time, and then we had a Z4. So there was always a fun car that we could take out on weekends. And you know what? A third car, hey, you start it once a month. Who cares? ELLIOTT: Yeah, not a big deal. RITHOLTZ: Six cars, it’s just — it starts to be work. ELLIOTT: It’s like cats, but for car guys. RITHOLTZ: Yeah. ELLIOTT: You keep acquiring. You know like the crazy cat lady? RITHOLTZ: Yeah, yeah, yeah. ELLIOTT: She just keeps taking them in. RITHOLTZ: Right, that’s what starts to happen. ELLIOTT: Yeah. RITHOLTZ: And once you go beyond a couple of cars just for what you need, it’s — well, what is the difference between having four extra cars and six extra cars? ELLIOTT: Not a lot. RITHOLTZ: It’s … ELLIOTT: Volume (inaudible). RITHOLTZ: … it’s excessive, right. ELLIOTT: Yeah. RITHOLTZ: Either way is excessive. ELLIOTT: For sure, but also … RITHOLTZ: My — my partner thinks I’m insane. My — my partner is at work … ELLIOTT: Yes. RITHOLTZ: … look at me and like, “How many cars are you going to buy?” And I’m like, “I don’t know.” I … ELLIOTT: Well, what about during the — this market? Isn’t it — wouldn’t be a bit smarter to put some cash into a car rather than — I mean, I have my own theories about that and I’ve been talking to a lot of people about it. RITHOLTZ: Yeah. ELLIOTT: But, you know, what I hear is … RITHOLTZ: At these elevated prices? Because I … ELLIOTT: I’m talking — I’m talking collecting old cars — old cars. RITHOLTZ: So, OK, how old is old? ELLIOTT: You know, it’s something — something 20 years or older. RITHOLTZ: OK. ELLIOTT: The — the vintage … RITHOLTZ: Well, the Vette is 50 years old and the … ELLIOTT: Sure. RITHOLTZ: … the — whatchamacall the … ELLIOTT: And that’s probably appreciated quite a bit. RITHOLTZ: It has — since I got that last summer … ELLIOTT: Yes. RITHOLTZ: … in the beginning of the pandemic, I kind of accidentally bought an R8 on Bring the Trailer. ELLIOTT: OK. RITHOLTZ: So my — I’m sitting outside, reading a book, and my wife says, “John from Salt Lake City on the phone.” And, you know, I have bids out on … ELLIOTT: Sure. RITHOLTZ: … Cars & Bids … ELLIOTT: Sure. RITHOLTZ: … and Bring a Trailer like 30, 40 percent away … ELLIOTT: Yeah. RITHOLTZ: … from the market constantly. And, you know, my credit card company thinks I’m crazy because, you know, they put the Holt (ph) … ELLIOTT: Because — holding, yeah, yeah, yeah. RITHOLTZ: And — and I pick it. Hi, can I help you? Congratulations on the car. I’m like, what? Which car? And he said the R8. I’m like, “I won want that? Really? That’s fantastic.” ELLIOTT: Yeah. RITHOLTZ: I go, “Wait a second. Are you sure? I was way off the market.” And as I say that … ELLIOTT: Uh-oh. RITHOLTZ: … I’m like, “Oh, this (inaudible) to take. You just … ELLIOTT: Yeah. RITHOLTZ: … stepped in it. ELLIOTT: Yeah. RITHOLTZ: And he said, “Well, tell you the truth,” he goes, “Did you have any idea what the reserve is?” I’m like, “No, how would I know that?” He said, “Because two days ago I spoke to Bring a Trailer and they took me into loan and reserve. ELLIOTT: Oh. RITHOLTZ: He goes, “You just barely beat the reserve.” ELLIOTT: Oh, wow. RITHOLTZ: And I’m like, “Why did you lower the price?” He’s like, “Well, I have a new Ferrari coming.” ELLIOTT: Yeah. RITHOLTZ: I had to make a room in the garage. ELLIOTT: Yeah. RITHOLTZ: OK. ELLIOTT: Yeah. RITHOLTZ: So I’m like, “Listen, I’ve always been a fan of that car. I love the gated shifter. ELLIOTT: Cool, sure. RITHOLTZ: And I think the V10 is kind of cheating. As much fun as it is, the V8 and that is — is a monster. So he — so everything was — he was a little miffed at me because this was April of 2020. It took me like six weeks to arrange insurance, register … ELLIOTT: Yeah. RITHOLTZ: … and shipping because nobody was doing anything. ELLIOTT: Yeah. RITHOLTZ: So he — I actually got an email from Bring a Trailer, which is like, “Hey, what’s going on?” I’m like … ELLIOTT: Yeah. RITHOLTZ: … “Dude, nobody is shipping cars.” ELLIOTT: He was in Texas? RITHOLTZ: He was in Utah. ELLIOTT: Oh, Utah. Oh, yeah. RITHOLTZ: And I was like, “Nobody is shipping cars.” ELLIOTT: Yeah. RITHOLTZ: “I can’t get my insurance company on the phone.” ELLIOTT: Yeah. RITHOLTZ: What am I going to do? ELLIOTT: Yeah. RITHOLTZ: Trust me, I … ELLIOTT: Yeah. RITHOLTZ: … I will wire the money in advance. ELLIOTT: Yes. RITHOLTZ: I just need to straighten all this stuff out. ELLIOTT: And logistics. RITHOLTZ: Right. ELLIOTT: Yeah. RITHOLTZ: If — if you need the cash, I’ll send the money today. ELLIOTT: Sure. RITHOLTZ: I just … ELLIOTT: Yeah. RITHOLTZ: So — so it was — it was interesting because when the car arrived I had all my paperwork, I had my insurance, I had my inspection, but DMV was closed. You can’t register the car. So I would take auction … ELLIOTT: Oh, don’t let that stop you. RITHOLTZ: … I would take the auction pay. I have a whole file … ELLIOTT: Yeah. RITHOLTZ: … and I would go out each morning at 7 a.m., and there’s nobody on the road. There’s no joggers. There’s no bicyclists. There’s no other cars and there are no police. So my local sideroads became a … ELLIOTT: That’s … RITHOLTZ: … little auto bond for me. ELLIOTT: … oh, that’s great. RITHOLTZ: And that lasted about two months, three months. ELLIOTT: Yeah. RITHOLTZ: And then, you know, I’m not an idiot. I — when people — they’re bicyclists or pedestrians or — fun time is over. ELLIOTT: Yeah. RITHOLTZ: It’s 7 a.m. in the beginning of the pandemic. ELLIOTT: There was a little sweet spot in there. RITHOLTZ: There was a huge sweet spot. ELLIOTT: You really get out the road. I remember we drove once from Santa Monica and Los Angeles to downtown in about 12 minutes, and we were not even speeding that much, it was just open road. RITHOLTZ: There’s nobody … ELLIOTT: Usually that drive takes an hour at least. RITHOLTZ: Right. ELLIOTT: Yeah, it’s great. RITHOLTZ: So — so I had my like stack of papers … ELLIOTT: Yeah … RITHOLTZ: … because I was … ELLIOTT: … just in case. RITHOLTZ: … I was fully … ELLIOTT: Yes. RITHOLTZ: … anticipating a conversation with the local constables … ELLIOTT: Yeah, yeah. RITHOLTZ: … saying … ELLIOTT: Are you a booster (inaudible) local that … RITHOLTZ: Years ago I used to do that. ELLIOTT: OK, yeah. RITHOLTZ: I kind of stopped because it’s a little — it’s just a little … ELLIOTT: Oh. RITHOLTZ: … dirty feeling … ELLIOTT: OK. RITHOLTZ: … sometimes. ELLIOTT: Yeah. RITHOLTZ: And I — I would rather churn my way out of a ticket that — you saw it. The — the badges, the courtesies, (inaudible) … ELLIOTT: Yeah. RITHOLTZ: … they don’t work the way they used to. ELLIOTT: Oh, really? RITHOLTZ: Yeah. ELLIOTT: I’ve never had one, but I always just thought that was kind of a nice thing. RITHOLTZ: I had one … ELLIOTT: Yeah. RITHOLTZ: … from someone I worked with. Long story, I did some work for the family of someone who passed away, and I got a shield as a thank you. ELLIOTT: OK. RITHOLTZ: And in New York City, the shield worked great. ELLIOTT: Yeah. RITHOLTZ: But once it’s stopped working and Nassau — I remember coming home from somewhere and getting pulled over, and the cop was like apologetic. ELLIOTT: Oh. RITHOLTZ: And he’s like, “Listen, we — we just can’t (inaudible).” ELLIOTT: You can’t? RITHOLTZ: Hey, man, you got a — so I learned as a kid … ELLIOTT: Yeah. RITHOLTZ: … just painfully honest with cops. ELLIOTT: Yes. RITHOLTZ: When cops pull me over … ELLIOTT: Yes, yes. RITHOLTZ: … it’s like the scene … ELLIOTT: Yes. RITHOLTZ: … from Liar Liar. That’s how I am. And usually, they … ELLIOTT: Yeah. RITHOLTZ: … basically — you know, they appreciate not blowing smoke up their … ELLIOTT: Yes. RITHOLTZ: … behind because they’re lied to all day long … ELLIOTT: Yeah. RITHOLTZ: … every day so … ELLIOTT: It must be refreshing. RITHOLTZ: … so right. So … ELLIOTT: Honesty. RITHOLTZ: … you know, tell — tell the officer when he says how fast were you going, I said, “Well, Officer, as I drove … ELLIOTT: Yeah. RITHOLTZ: … by, I saw you and I looked down, and I looked … ELLIOTT: You just look down. RITHOLTZ: … at the speedometer. ELLIOTT: Yeah. RITHOLTZ: And he goes, “And what did it say?” It said pull over because this office is going to have a few words with you. ELLIOTT: That’s correct. RITHOLTZ: And they laughed and … ELLIOTT: Yeah, that’s great. RITHOLTZ: … they thought you’re — you’re being honest with them. ELLIOTT: Yeah. RITHOLTZ: You don’t have to say, you know, “I was 25 over.” You could say, “I thought you would want to have a little conversation.” ELLIOTT: I’m going to note that down for my future reference. RITHOLTZ: Right, thought you would like to have a chat … ELLIOTT: Yes, yes. RITHOLTZ: … and don’t want to make you drive too far. That’s … ELLIOTT: Yeah, that’s not — it’s really courtesy. RITHOLTZ: So let’s talk about some of your favorite columns of recent days starting with I mentioned EVs and Harleys. Let’s combine that. ELLIOTT: Oh, yeah. RITHOLTZ: Harley … ELLIOTT: LiveWire. RITHOLTZ: Yeah, tell us about that. ELLIOTT: Yeah. Cool bike … RITHOLTZ: No clutch, right? ELLIOTT: No clutch. You don’t — no gears, no oil to replace … RITHOLTZ: Wow. ELLIOTT: … none of that. No rumble, no growl. It does have a … RITHOLTZ: What do they do for a sound to … ELLIOTT: It does have a sound, you know? It’s like a whirring sound. RITHOLTZ: Right. ELLIOTT: It’s — if you’re a Harley guy who’s going to need the — the loud pipes … RITHOLTZ: Right. ELLIOTT: … you’re going to object probably to this vehicle. RITHOLTZ: So as a kid … ELLIOTT: Yes. RITHOLTZ: … running dirt bikes, the expression I always loved was loud pipes saves lives. ELLIOTT: Sure, sure. RITHOLTZ: So what do you do about that? ELLIOTT: To which I say if you’re relying on your loud pipes to keep you safe … RITHOLTZ: Yeah. ELLIOTT: … your — that’s (inaudible). RITHOLTZ: You’re in trouble, right. ELLIOTT: Yeah. You got to be heads up. And — and honestly, you can do everything right and you can still get in a lot of trouble … RITHOLTZ: Right, right. ELLIOTT: … on a motorcycle. So I think, yes, loud pipes are — can be nice, but that should not be your safety plan. RITHOLTZ: The — the problem is when people see you coming … ELLIOTT: Yes. RITHOLTZ: … they see a little blip instead of a big car. Your brain … ELLIOTT: Yes. RITHOLTZ: … assumes you’re further away. ELLIOTT: Yes. RITHOLTZ: So the pipes kind of compensate for that. ELLIOTT: Potentially. And I would say on this — the LiveWire one, there is a noise associated with .....»»

Category: blogSource: TheBigPictureAug 2nd, 2022

Global Markets Slump With Terrified Traders Tracking Pelosi"s Next Move

Global Markets Slump With Terrified Traders Tracking Pelosi's Next Move Forget inflation, stagflation, recession, depression, earnings, Biden locked up in the basement with covid, and everything else: today's it all about whether Nancy Pelosi will start World War 3 when she lands in Taiwan in 3 hours. US stocks were set for a second day of declines as investors hunkered down over the imminent (military) response by China to Pelosi's Taiwan planned visit to Taiwan, along with the risks from weakening economic growth amid hawkish central bank policy. Nasdaq 100 contracts were down 0.7% by 7:30a.m. in New York, while S&P 500 futures fell 0.6% having fallen as much as 1% earlier. 10Y yields are down to 2.55% after hitting 2.51% earlier, while both the dollar and gold are higher. Elsewhere around the world, Europe's Stoxx 600 fell 0.6%, with energy among the few industries bucking the trend after BP hiked its dividend and accelerated share buybacks to the fastest pace yet after profits surged. Asian stocks slid the most in three weeks, with some of the steepest falls in Hong Kong, China and Taiwan. Among notable movers in premarket trading, Pinterest shares jumped 19% after the social-media company reported second-quarter sales and user figures that beat analysts’ estimates, and activist investor Elliott Investment Management confirmed a major stake in the company. US-listed Chinese stocks were on track to fall for a fourth day, which would mark the group’s longest streak of losses since late-June, amid the rising geopolitical tensions. In premarket trading, bank stocks are lower amid rising tensions between the US and China. S&P 500 futures are also lower, falling as much as 0.9%, while the 10-year Treasury yield falls to 2.56%. Cowen Inc. shares gained as much as 7.5% after Toronto-Dominion Bank agreed to buy the US brokerage for $1.3 billion in cash. Meanwhile, KKR’s distributable earnings fell 9% during the second quarter as the alternative-asset manager saw fewer deal exits amid tough market conditions. Here are some other notable premarket movers: Activision Blizzard (ATVI US Equity) falls 0.6% though analysts are positive on the company’s plans to roll out new video game titles after it reported adjusted second-quarter revenue that beat expectations. While the $68.7 billion Microsoft takeover deal remains a focus point, the company is building out a “robust” pipeline, Jefferies said. Arista Networks (ANET US) analysts said that the cloud networking company’s results were “impressive,” especially given supply-chain constraints, with a couple of brokers nudging their targets higher. Arista’s shares rose more than 5% in US after-hours trading on Monday after the company’s revenue guidance for the third quarter beat the average analyst estimate. Avis Budget (CAR US) saw a “big beat” on low Americas fleet costs and strong performance for its international segment, Morgan Stanley says. The rental-car firm’s shares rose 5.5% in US after-hours trading on Monday, after second-quarter profit and revenue beat the average analyst estimate. Snowflake (SNOW US) falls 5.3% after being cut at BTIG to neutral from buy, citing field checks that show a potential slowdown in product revenue growth in the coming quarters. Clarus Corp. (CLAR US) should continue to see “outsized demand” from the “mega-trend” of people seeking the great outdoors, Jefferies says, after the sports gear manufacturer reported second-quarter sales that beat estimates. Clarus’s shares climbed 9% in US postmarket trading on Monday. Cryptocurrency-exposed stocks are lower in US premarket trading as Bitcoin falls for the third consecutive session as global markets and cryptocurrencies remain pressured over deepening US-China tension. Coinbase (COIN US) falls 2.3% while Marathon Digital (MARA US) drops 3.3%. Transocean (RIG US) rises 18% in US premarket trading after 2Q Ebitda beat estimates, with other positives including a new contract and a 2-year extension of a revolver. US-listed Chinese stocks are on track to fall for a fourth day, which would mark the group’s longest streak of losses since end-of-June, amid geopolitical tensions related to House Speaker Nancy Pelosi’s expected visit to Taiwan. Alibaba (BABA) falls 2.5% and Baidu (BIDU US) dips 2.7% ZoomInfo Technologies analysts were positive on the software firm’s raised guidance and improved margins, with Piper Sandler saying the firm is “in a class of its own.” The shares rose more than 11% in US after-hours trading, after closing at $37.73. Pelosi is expected to land in Taiwan on Tuesday, the highest-ranking American politician to visit the island in 25 years, a little after 10pm local time evening in defiance of Chinese threats. China, which regards Taiwan as part of its territory, has vowed an unspecified military response to a visit that risks sparking a crisis between the world’s biggest economies. “There is no way people will want to put on risk right now with this potential boiling point,” said Neil Campling, head of tech, media and telecom research at Mirabaud Securities. The potential ramifications of Pelosi’s planned visit “are huge.” The growing tensions are the latest addition to a myriad of challenges facing equity investors going into the second half of the year. Fears of a US recession as the Federal Reserve tightens policy to tame soaring inflation have weighed on risk assets. US manufacturing activity continued to cool in July, with the data highlighting softer demand for merchandise as the economy struggles for momentum. In the off chance we avoid world war, there will be a shallow recession that could start by the end of the year, according to Rupert Thompson, chief investment officer at Kingswood Holdings. Meanwhile, the market is too optimistic about the path of monetary policy and “the risk is the Fed goes further than the markets are building in in terms of hiking,” Thompson said in an interview with Bloomberg Television. Goldman Sachs strategists also said it was too soon for stock markets to fade the risks of a recession on expectations of a pivot in the Fed’s hawkish policy. On the other hand, JPMorgan strategists said the outlook for US equities is improving for the second half of the year on attractive valuations and as the peak in investor hawkishness has likely passed. “Although the activity outlook remains challenging, we believe that the risk-reward for equities is looking more attractive as we move through the second half,” JPMorgan’s Marko Kolanovic wrote in a note dated Aug. 1. “The phase of bad data being interpreted as good is gaining traction, while the call of peak Federal Reserve hawkishness, peak yields and peak inflation is playing out.” Markets are also bracing for commentary on the US interest-rate outlook from Chicago Fed President Charles Evans and St. Louis Fed President James Bullard. In Europe, tech, financial services and travel are the worst-performing sectors. Euro Stoxx 50 falls 0.8%. FTSE 100 is flat but outperforms peers. Here are some of the biggest European movers today: BP shares rise as much as 4.8% on earnings. The oil major’s quarterly results look strong with an earnings beat, dividend hike and increased buyback all positives, analysts say. OCI rises as much as 8.6%, the most since March, on its latest earnings. Analysts say the results are ahead of expectations and the fertilizer firm’s short-term outlook remains robust. Maersk shares rise as much as 3.7% after the Danish shipping giant boosted its underlying Ebit forecast for the full year. Analysts note the boosted guidance is significantly above consensus estimates. Greggs shares rise as much as 4% after the UK bakery chain reported an increase in 1H sales. The 1H results are “solid,” while the start to 2H is “robust,” according to Goodbody. Delivery Hero shares gain as much as 3.8%. The stock is upgraded to overweight from neutral at JPMorgan, which said many of the negatives that have weighed on the firm are starting to turn. Rotork gains as much as 4%, the most since June 24, after beating analyst expectations for 1H 2022. Shore Capital says the company shows “good momentum” in the report. Credit Suisse shares decline as much as 6.4% after its senior debt was downgraded by Moody’s, and its credit outlook cut by S&P, while Vontobel lowered the PT following “disappointing” 2Q earnings. Travis Perkins shares drop as much as 11%, the most since March 2020. Citi says the builders’ merchant’s results are “slightly weaker than expected,” with RBC noting shortfalls in sales and Ebita. DSM shares drop by as much as 4.9% as Citi notes weak free cash flow after company reported adjusted Ebitda for the second quarter up 5.3% with FY22 guidance unchanged. UK homebuilders fall after house prices in the country posted their smallest increase in at least a year, indicating that the property market is starting to cool, with Crest Nichols dropping as much as 5.2%. Wind-turbine stocks fall in Europe after Spain’s Siemens Gamesa cut sales and margin guidance, with Siemens Energy dropping as much as 6.1%, with Vestas Wind Systems down as much as 4.7%. Earlier in the session, Asian stocks fell as traders braced for a potential escalation of US-China tensions given a possible visit by US House Speaker Nancy Pelosi to Taiwan. The MSCI Asia Pacific Index dropped as much as 1.4%, poised for its worst day in five weeks. All sectors, barring real estate, were lower with chipmaker TSMC and China’s tech stocks among the biggest drags on the regional measure. Pelosi is expected to arrive in Taipei late on Tuesday. Beijing regards Taiwan as part of its territory and has promised “grave consequences” for her trip. Benchmarks in Hong Kong, China and Taiwan were among the laggards in Asia, slipping at least 1.4% each. Japan’s Topix declined as the yen received a boost from safe-haven demand.  还没打就见血了。4400个股票受伤。 Chinese stocks collapsed in the shadow of a looming conflict. 4400 of 4800 stocks hurt. — Hao HONG 洪灝, CFA (@HAOHONG_CFA) August 2, 2022 “I do expect a negative feedback loop into China-related equities especially those related to the semiconductor and technology sectors as Pelosi’s potential visit to Taiwan is likely to harden the current frosty US-China tech war,” said Kelvin Wong, analyst at CMC Markets (Singapore). Pelosi’s controversial trip is souring a nascent revival in risk appetite in the region that saw the MSCI Asia gauge rise in July to cap its best month this year. China’s economic slowdown continues to weigh on sentiment, as authorities said this year’s economic growth target of “around 5.5%” should serve as a guidance rather than a hard target.  Japanese equities fell as the yen soared to a two month high over concerns of US-China tensions escalating with US House Speaker Nancy Pelosi expected to visit Taiwan on Tuesday.  The Topix fell 1.8% to 1,925.49 as of the market close, while the Nikkei declined 1.4% to 27,594.73. Toyota Motor Corp. contributed the most to the Topix Index decline, decreasing 2.6%. Out of 2,170 shares in the index, 227 rose and 1,903 fell, while 40 were unchanged. Pelosi would become the highest-ranking American politician to visit Taiwan in 25 years. China views the island as its territory and has warned of consequences if the trip takes place. “The relationship between the US and China was just about to enter into a period of review, with a move from the US to reduce China tariffs,” said Ikuo Mitsui a fund manager at Aizawa Securities. That could change now as a result of Pelosi’s visit, he added Meanwhile, Australia’s S&P/ASX 200 index erased an earlier loss of as much as 0.7% to close 0.1% higher after the Reserve Bank’s widely-expected half-percentage point lift of the cash rate to 1.85%. The index wiped out a loss of as much as 0.7% in early trade. The RBA’s statement was “not as hawkish as anticipated and the lower growth forecast suggests the RBA is aware of both the domestic and international drags on the economy,” said Kerry Craig, global market strategist at JPMorgan.  “We expect the RBA will continue to push interest rates back to a neutral level this year given the successive upgrades to the inflation outlook, but 2023 looks to be a much less eventful year for the RBA,” Craig said.  Banks and consumer discretionary advanced to boost the index, while miners and energy shares declined.   In New Zealand, the S&P/NZX 50 index rose less than 0.1% to 11,532.46. Indian stock indexes are on course to claw back this year’s losses on steady buying by foreigners. The S&P BSE Sensex closed little changed at 58,136.36 in Mumbai, after falling as much as 0.6% earlier in the day. The measure is now just 0.2% away from turning positive for the year. The NSE Nifty Index too is a few ticks away from moving into the green. Nine of the BSE Ltd.’s 19 sector sub-indexes advanced on Tuesday, led by power and utilities companies.  Foreigners bought local shares worth $836.2 million in July, after pulling out a record $33 billion from the Indian equity market since October. July was the first month of net equity purchases by foreign institutional investors, after nine months of outflows. Still, “choppiness would remain high due to the upcoming RBI policy meet outcome and prevailing earnings season,” Ajit Mishra, vice-president for research at Religare Broking Ltd. wrote in a note. “Participants should continue with the buy-on-dips approach.” The Reserve Bank of India is widely expected to raise interest rates for a third straight time on Friday. Of the 33 Nifty companies that have reported results so far, 18 have beaten the consensus view while 15 have trailed. Of the 30 shares in the Sensex index, 16 rose, while 14 fell. IndusInd Bank and Asian Paints were among the key gainers on the Sensex, while Tech Mahindra Ltd. and mortgage lender Housing Development Finance Corp were prominent decliners.  In FX, the Bloomberg dollar spot index rises 0.1%. JPY and CAD are the strongest performers in G-10 FX, NOK and AUD underperforms, after Australia’s central bank hiked rates by 50 basis-points for a third straight month and signaled policy flexibility. USD/JPY dropped as much as 0.9% to 130.41, the lowest since June 3, in the longest streak of daily losses since April 2021. Leveraged accounts are adding to short positions on the pair ahead of Pelosi’s visit, Asia-based FX traders said. In rates, treasuries extended Monday’s rally in early Asia session as 10-year yields dropped as low as 2.514% amid escalating US-China tension over Taiwan. Treasury yields were richer by up to 5bp across long-end of the curve, where 20-year sector continues to outperform ahead of Wednesday’s quarterly refunding announcement, expected to make extra cutbacks to the tenor. US 10-year yields off lows of the day around 2.55%, lagging bunds by 4bp and gilts by 4.5bp. US stock futures slumped given risk adverse backdrop, adding support into Treasuries while bunds outperform as traders scale back ECB rate hike expectations. The yield on the two-year German note, among the most sensitive to rate hikes, fell as low as 0.17%, its lowest since May 16. Gilts also gained across the curve. Bund curve bull-steepens with 2s10s widening ~2 bps. Gilt and Treasury curves mostly bull-flatten. Australian bonds soared after RBA delivered a third- straight 50bp rate hike as expected, but gave itself wriggle room to slow the pace of tightening in the coming months. In commodities, WTI trades within Monday’s range, falling 0.6% to trade around $93, while Brent falls below $100. Spot gold is little changed at $1,779/oz. Base metals are mixed; LME nickel falls 2% while LME zinc gains 0.6%. Bitcoin remains under modest pressure and has incrementally lost the USD 23k mark, but remains comfortably above last-week's USD 20.6k trough. Looking to the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Market Snapshot S&P 500 futures down 0.6% to 4,096.50 STOXX Europe 600 down 0.5% to 435.13 MXAP down 1.3% to 159.73 MXAPJ down 1.3% to 516.82 Nikkei down 1.4% to 27,594.73 Topix down 1.8% to 1,925.49 Hang Seng Index down 2.4% to 19,689.21 Shanghai Composite down 2.3% to 3,186.27 Sensex little changed at 58,120.97 Australia S&P/ASX 200 little changed at 6,998.05 Kospi down 0.5% to 2,439.62 German 10Y yield little changed at 0.74% Euro down 0.3% to $1.0231 Brent Futures down 0.6% to $99.44/bbl Gold spot down 0.1% to $1,770.93 U.S. Dollar Index up 0.15% to 105.61 Top Overnight News from Bloomberg Oil Steadies Before OPEC+ as Traders Weigh Up Market Tightness China Slaps Export Ban on 100 Taiwan Brands Before Pelosi Visit Pozsar Says L-Shaped Recession Is Needed to Conquer Inflation Pelosi’s Taiwan Trip Raises Angst in Global Financial Markets Taiwan Risk Joins Long List of Reasons to Shun China Stocks Biden Says Strike in Kabul Killed a Planner of 9/11 Attacks Biden Team Tries to Blunt China Rage as Pelosi Heads for Taiwan The Best and Worst Airlines for Flight Cancellations GOP Plans to Deploy Obscure Rule as Weapon Against Spending Bill US to Stop TSMC, Intel From Adding Advanced Chip Fabs in China US Anti-Terrorism Operation in Afghanistan Kills Al-Qaeda Leader They Quit Goldman’s Star Trading Team, Then It Raised Alarms Sinema’s Silence on Manchin’s Deal Keeps Everyone Guessing Manchin Side-Deal Seeks to Advance Mountain Valley Pipeline A more detailed look at global markets courtesy of Newsquawk APAC stocks followed suit to the weak performance across global counterparts as tensions simmered amid Pelosi's potential visit to Taiwan. ASX 200 was initially pressured ahead of the RBA rate decision where the central bank hiked by 50bp, as expected, although most of the losses in the index were pared amid a lack of any hawkish surprises in the statement and after the central bank noted it was not on a pre-set path. Nikkei 225 declined amid a slew of earnings and continued unwinding of the JPY depreciation. Hang Seng and Shanghai Comp underperformed due to the ongoing US-China tensions after reports that House Speaker Pelosi will arrive in Taiwan late on Tuesday despite the military threats by China, while losses in Hong Kong were exacerbated by weakness in tech and it was also reported that Chinese leaders said the GDP goal is guidance and not a hard target which doesn't provide much confidence in China's economy. Top Asian News Tourism Jump to Power Thai GDP Growth to Five-Year High in 2023 China in Longest Streak of Liquidity Withdrawals Since February Singapore Says Can Tame Wild Power Market Without State Control India’s Zomato Appoints Four CEOs, to Change Name to Eternal Taiwan Tensions Raise Risks in One of Busiest Shipping Lanes Japan Trading Giants Book $1.7 Billion Russian LNG Impairment     Japan Proposes Record Minimum Wage Hike as Inflation Hits European bourses are pressured as the general tone remains tentative ahead of Pelosi's visit to Taiwan, Euro Stoxx 50 -0.9%; note, FTSE 100 -0.1% notably outperforms following earnings from BP +3.0%. As such, the Energy sector bucks the trend which has the majority in the red and a defensive bias in-play. Stateside, futures are similarly downbeat and have been drifting lower amid the incremental updates to Pelosi and her possible Taiwan arrival time of circa. 14:30BST/09:30ET; ES -1.0%. Apple (AAPL) files final pricing term sheet for four-part notes offering of up to USD 5.5bln, according to a filing. Top European News Ukraine Sees Slow Return of Grain Exports as World Watches Ruble Boosts Raiffeisen’s Russian Unit Despite Credit Halt DSM 2Q Adj. Ebitda Up; Jefferies Sees ‘Muted’ Reaction Credit Suisse Hit by More Rating Downgrades After CEO Reboot Man Group Sees Assets Decline for First Time in Two Years Exodus of Young Germans From Family Nest Is Getting Ever Bigger FX Yen extends winning streak through yet more key levels vs Buck and irrespective of general Greenback recovery on heightened US-China tensions over Taiwan USD/JPY breaches support around 131.35 and probes 130.50 before stalling, but remains sub-131.00 even though the DXY hovers above 105.500 within a 105.030-710 range. Aussie undermined by risk aversion and no hawkish shift by RBA after latest 50bp hike; AUD/USD nearer 0.6900 having climbed to within a few pips of 0.7050 on Monday. Kiwi holds up better with AUD/NZD tailwind awaiting NZ jobs data, NZD/USD hovering just under 0.6300 and cross closer to 1.1000 than 1.1100. Euro and Pound wane after falling fractionally short of round number levels vs Dollar, EUR/USD back under 1.0250 vs 1.0294 at best, Cable pivoting 1.2200 from 1.2293 yesterday. Loonie and Franc rangy after return from Canadian and Swiss market holidays, USD/CAD straddling 1.2850 and USD/CHF rotating around 0.9500. Yuan off lows after slightly firmer PBoC midpoint fix, but awaiting repercussions of Pelosi trip given Chinese warnings about strong reprisals, USD/CNH circa 6.7700 and USD/CNY just below 6.7600 vs 6.7950+ and 6.7800+ respectively. South Africa's Eskom says due to a shortage of generation capacity, Stage Two loadshedding could be implemented at short notice between 16:00-00:00 over the next three days. Fixed Income Taiwan-related risk aversion keeps bonds afloat ahead of relatively light pm agenda before a trio of Fed speakers. Bunds hold above 159.00 within 159.70-158.57 range, Gilts around 119.50 between 119.70-20 parameters and T-note nearer 122-02 peak than 121-17+ trough. UK 2032 supply comfortably twice oversubscribed irrespective of little concession. Commodities WTI Sept and Brent Oct futures trade with both contracts under the USD 100/bbl mark as the participants juggle a myriad of major factors, incl. the JTC commencing shortly. Spot gold is stable and just below the 50-DMA at USD 1793/oz while base metals succumb to the broader tone. A source with knowledge of last month's meeting between President Biden and Saudi King Salman said the Saudis will push OPEC+ to increase oil production at their meeting on Wednesday and that the Saudi King made the assurance to President Biden during their face-to-face meeting July 16th, according to Fox Business's Lawrence. US Senator Manchin "secured a commitment" from President Biden, Senate Majority Leader Schumer and House Speaker Pelosi for completion of the Mountain Valley Pipeline, according to 13NEWS. US Event Calendar July Wards Total Vehicle Sales, est. 13.4m, prior 13m 10:00: June JOLTs Job Openings, est. 11m, prior 11.3m 10:00: Fed’s Evans Hosts Media Breakfast 11:00: NY Fed Releases 2Q Household Debt and Credit Report 13:00: Fed’s Mester Takes Part in Washington Post Live Event 18:45: Fed’s Bullard Speaks to the Money Marketeers DB's Jim Reid concludes the overnight wrap In thin markets, US House Speaker Nancy Pelosi's visit to Taiwan today for meetings tomorrow (as part of her tour of Asia) could be the main event. She's scheduled to land tonight local time which will be mid-morning US time. She'll be the highest ranking US politician to visit in 25 years. Expect some reaction from the Chinese and markets to be nervous. Meanwhile to dial back rising tensions, the White House has urged China to refrain from an aggressive response as speaker Pelosi’s visit does not change the US position toward the island. As the headline confirming her visit was going ahead broke, 10 year US Treasuries immediately fell a handful of basis point from 2.69% (opened at 2.665%) and continued falling to around 2.58% as Europe retired for the day, roughly where it closed (-6.8bps). Breakevens led most of the move. 2 year notes actually held in which inverted the curve a further -6.12bps and to the lowest this cycle at -30.84bps. Remember that August is the best month of the year for fixed income (see my CoTD last week here for more on this) so the month has started off in line with the textbook. This morning 10yr USTs yields have dipped another -3bps to 2.55%, some 14bps lower than when Pelosi stopover was first confirmed 18 hours ago. 2yr yields have slightly out-performed with the curve just back below -30bps again. Lower yields initially helped to lift equities yesterday, with the Nasdaq being up more than a percent at one point before falling with the rest of the market and closing -0.18%. The S&P 500 was -0.28% and dragged lower by energy (-2.17%). The latter came as crude prices moved substantially lower, with WTI losing -4.91% and Brent (-3.97%) dipping below $100 per barrel as well. Growth concerns, partly due to the weekend and yesterday’s data from China, and partly due to the US risk off yesterday, were mainly to blame. These worries filtered through other commodities as well, including industrial metals and agriculture. For the latter, Ukraine’s first grain shipment since the war began was a contributing factor. European gas was a standout, notching a +5.2% gain as the relentless march continues. In an overall risk-off market, staples (+1.21%) were the only sector meaningfully advancing on the day, followed by discretionary (+0.51%) stocks. Meanwhile, real estate (-0.90%), financials (-0.89%) and materials (-0.82%) dragged the index lower. Although yesterday’s earnings stack was light, today’s line up includes BP, Starbucks, Airbnb and PayPal. Asian equity markets opened sharply lower this morning on the fresh geopolitical tensions between the US and China over Taiwan. Across the region, the Hang Seng (-2.96%) is leading losses after yesterday’s data showed that Hong Kong slipped into a technical recession as Q2 GDP shrank by -1.4%, contracting for the second consecutive quarter as global headwinds mount. Mainland China stocks are also sliding with the Shanghai Composite (-2.90%) and CSI (-2.33%) trading deep in the red whilst the Nikkei (-1.59%) is also in negative territory. Elsewhere, the Kospi (-0.77%) is also weak in early trade. Outside of Asia, DMs stock futures point to a lower restart with contracts on the S&P 500 (-0.38%), NASDAQ 100 (-0.40%) and DAX (-0.50%) all turning lower. As we go to print, the RBA board has raised rates by another 50 basis points to 1.85%. Their economic forecasts seem to have been lowered and they have now said monetary policy is "not on a pre-set path" which some are already interpreting as possibly meaning 25bps instead of 50bps at the next meeting. Aussie 10yr yields dropped 7-8bps on the announcement and 10bps on the day. Back to yesterday, and the important US ISM index, on balance, painted a slightly more comforting picture than it could have been – although the index slowed to the lowest since June 2020. The headline came in above the median estimate on Bloomberg (52.8 vs 52.0). We did see a second month in a row of below-50 score for new orders, but a fall in prices paid from 78.5 to 60.0, the lowest since August 2020, offered some respite to fears about price pressures. Similarly, a rise in the employment gauge from 47.3 to 49.9, beating estimates, was also a positive. The manufacturing PMI was revised down a tenth from the preliminary reading which didn't move the needle. JOLTS today will be on my radar given it's been the best measure of US labour market tightness over the past year or so. Also Fed hawks Mester (lunchtime US) and Bullard (after the closing bell) will be speaking today. Turning to Europe, price action across sovereign bond markets was driven by dovish repricing of ECB’s monetary policy, in contrast to the US where the front end held up. A cloudier growth outlook from yesterday’s European data releases helped drive yields lower – retail sales in Germany unexpectedly contracted in June (-1.6% vs estimates of +0.3%) and Italy’s manufacturing PMI slipped below 50 (48.5 vs 49.0 expected). So Bund yields fell -3.8bps, similar to OATs (-3.1bps). The decline was more pronounced in peripheral yields and spreads, with BTPs (-12.9bps) in particular dropping below 3% for the first time since May of this year, perhaps on further follow through from last week's story that the far right party leading the polls aren't planning to break EU budget rules. Spreads have recovered the lost ground from Draghi's resignation announcement now. Weaker economic data overpowered the effect of lower yields and sent European stocks faded into the close after being higher most of the day with the STOXX 600 eventually declining -0.19%. The Italian market outperformed (+0.11%) for the reasons discussed above. Early this morning, data showed that South Korea’s July CPI inflation rate rose to +6.3% y/y, hitting its highest level since November 1998 (v/s +6.0% in June), in line with the market consensus. The strong inflation data comes as the Bank of Korea (BOK) mulls further interest rate hikes at its next policy meeting on August 25. To the day ahead now and there is a relatively short list of economic indicators to watch, including June JOLTS report and total vehicle sales (July) for the US, UK’s July Nationwide house price index and July PMI for Canada. Given the apparent uncertainty about the direction of the Fed in markets, many will be awaiting Fed’s Bullard, Mester and Evans, who will speak throughout the day. And in corporate earnings, it will be a busy day featuring results from BP, Caterpillar, Ferrari, Marriott, KKR, Uber, S&P Global, Occidental Petroleum, Electronic Arts, Gilead Sciences, Advanced Micro Devices, Starbucks, Airbnb, PayPal, Marathon Petroleum. Tyler Durden Tue, 08/02/2022 - 08:05.....»»

Category: personnelSource: nytAug 2nd, 2022

Meet a man with $47,000 in student debt who"s been trapped in a student-loan repayment "bureaucracy nightmare" for nearly 3 decades without the debt cancellation he was promised

Jason Harmon qualified for student-loan forgiveness 2 years ago — but his paperwork is missing, and he's stuck in repayment for at least 9 more years. Jason Harmon, 53, has been on an income-driven repayment plan for his student loans for nearly three decades.Jason Harmon Jason Harmon enrolled in an income-contingent repayment plan for student loans in 1995. He was promised loan forgiveness after 25 years, but he's still repaying the debt with nearly a decade to go. This is due to paperwork mismanagement by loan companies that have kept many borrowers in repayment.  In 1995, Jason Harmon graduated from the University of Arkansas with $26,000 in student debt, and he enrolled in a 25-year income-driven repayment plan.The plan, along with others that have collectively enrolled millions borrowers over the years, was designed to keep his loan payments manageable by pegging them to his earnings each year. After the quarter century passed, any lingering balance was to be forgiven.Twenty-seven years later, Harmon now holds a $47,000 student-loan balance and still has an estimated nine more years of repayment, and that's thanks to accrued interest on top of yearslong servicer mismanagement of student-loan repayment plans based on income. On top of it all, his wife — who he married in 2004 — also holds a debt load of nearly $200,000."We are literally crushed by this debt," Harmon, 53, told Insider. "This loan's never going away. We could have no vehicles, we could have a rental instead of a mortgage, we could cut most things out of our life, and we still wouldn't touch the debt we have."Harmon said he had every intention of paying off the debt that he borrowed, but at the time, the repayment plan established under President Bill Clinton — known as the income-contingent repayment plan — seemed like the best option for him because he was not making sufficient income as a journalist. Then, the 2008 recession hit and he lost his journalism job, and Harmon said he has been unable to maintain meaningful employment since then. He now works as a fishing guide in Arkansas and brings in only a small income.Despite the employment hurdles, Harmon said he remained consistent on his monthly student-loan payments. But issues arose when his loans were transferred to a new student-loan company and progress that he made toward his payments were lost, pushing back his repayment timeline by nearly a decade.He said he just wanted the loan forgiveness he signed up for so he and his wife — whose income they mainly rely on — wouldn't have monthly bills hanging over their heads for the foreseeable future."I don't think I'm ever going to pay this debt off in my whole life," Harmon said. "And it's crippling psychologically in the sense that it's a physical manifestation of your dreams not working out. And I don't think the government should earn interest off the dreams of its citizens."'I was in this bureaucracy nightmare'Harmon thought the terms of the income-contingent plan he agreed to under Clinton were simple. He would send in paperwork once a year verifying his income, and he would make the monthly payments the Education Department calculated for him for 25 years, with loan forgiveness at the end.But he couldn't have foreseen the challenges that arose in 2013, when his loans were transferred to the student-loan company MOHELA. After he was notified of the transfer, Harmon said, he was instructed to select a new version of the income-driven repayment plan he had been on for 18 years, and when he later contacted the company to ask about loan forgiveness it said some of his paperwork was missing, pushing him off track."Suddenly, I was in this bureaucracy nightmare where any question I had didn't go anywhere — any time I needed help it was a never-ending phone tree where I'm just being transferred from one person to another," Harmon said.An NPR investigation from April delivered proof of paperwork issues with the types of plans people like Harmon were on. NPR obtained internal documents indicating that three student-loan companies — PHEAA, CornerStone, and MOHELA — weren't tracking payments borrowers made over the past two decades for their income-driven repayment plans.And a student-loan worker who helped enroll borrowers in a 2007 version of the repayment plan previously described the paperwork to Insider as "overly" complicated.'The government is not fulfilling its obligation'US lawmakers are aware of failures with income-driven repayment plans. After NPR's investigation came out, Rep. Bobby Scott, the top Democrat on the House education committee, said the findings were "worse than we expected," and the ranking member of the committee, Rep. Virginia Foxx, later said the program "turned out to be a complete disaster and taxpayers are forced to foot the bill for these mistakes."A report from the Government Accountability Office in April expanded on the plans' failures. It found that the department had approved just 157 loans for full forgiveness under income-driven repayment plans, with 7,700 more loans "potentially eligible" for forgiveness.Following revelations of the plans' failures, the Education Department in April announced temporary reforms meant to bring 3.6 million borrowers who were on income-driven plans closer to relief, and Under Secretary of Education James Kvaal said in a recent interview that the department would release details on a new income-based plan in the coming weeks, as part of its regulatory proposals. Insider previously reported that the release of those details was delayed.While Harmon agrees these reforms are warranted, he said that they were long overdue — and that failures to address them had changed the trajectory of his life."I never wanted a free ride and was always willing to repay my original loan balance, but the government is not fulfilling its obligation," he said. "This debt is a trap that prevented us from having children or enjoying life together as a married couple for decades."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJul 31st, 2022

Affordability Crisis Boosts Borrower Appetite for ‘Riskier’ Loan Products

As the housing affordability crisis persists, aspiring homeowners have developed a larger appetite for riskier mortgage products that can lighten the load of the growing expense associated with purchasing a home. That has been evident in the adjustable-rate mortgage (ARM) market, as experts say they’ve seen a significant uptick in their popularity among borrowers this… The post Affordability Crisis Boosts Borrower Appetite for ‘Riskier’ Loan Products appeared first on RISMedia. As the housing affordability crisis persists, aspiring homeowners have developed a larger appetite for riskier mortgage products that can lighten the load of the growing expense associated with purchasing a home. That has been evident in the adjustable-rate mortgage (ARM) market, as experts say they’ve seen a significant uptick in their popularity among borrowers this year compared to 2021. “The main reason they are becoming much more popular now is that usually, they offer lower introductory rates than fixed-rate mortgages do,” says Jacob Channel, a senior economist at LendingTree who authored a recent report showing that the amount of ARMs offered to its users more than tripled in the first half of 2022 compared to the same period last year—up 230% Experts tell RISMedia that ARMs have made a significant comeback in the past decade. According to Joel Kan, associate vice president of Economic and Industry Forecasting for the Mortgage Bankers Association (MBA), LendingTree’s report is indicative of a more significant trend taking hold in the lending industry as well. Based on MBA data, the share of ARM applications has settled between 9% and 11% of all mortgage applications in recent months compared to the 3% share it had during 2020 and 2021 when the refinance market boomed under record-low mortgage rates. As mortgage rates climbed from 3% to nearly 6% in the first half of the year, Kan says the shift toward ARMs indicates that borrowers are looking to remain competitive while keeping monthly payments relatively low. That’s been the case for mortgage broker Shant Banosian of Guaranteed Rate, who says that he and his team have been having more conversations about adjustable-rate loans than they have in a long time. “It’s become sensible and strategic,” Banosian says. “We’re having a lot of those conversations, and we’re finding that a lot of our clients are using products like seven-year and 10-year ARMs in replacement of using a 30-year fixed-rate loan.” That’s mainly due to the runup of borrowing costs and home prices in the past couple of years. The share of ARMs during 2020 and 2021 was negligible compared to the boom that refinancing and traditional 30-year fixed-rate loans saw while mortgage rates were still at record lows. That’s changed significantly this year, as potential buyers are looking to borrow cheaper to remain in the market and compete, according to Banosian. “Many people, especially first-time homebuyers, are not going to stay in these houses for 20 or 30 years anyways,” he says. “The thought is to use the seven- or 10-year ARM if it makes sense and if it’s something you can be comfortable with. And if the opportunity presents itself, or if rates come down in the future, consider refinancing.” While ARMs have become more common this year than last year, Channel says they still pale compared to fixed-rate mortgages, which still account for the lion’s share of purchase originations. LendingTree’s report indicated that nearly 11 30-year, fixed-rate mortgages are offered for every 30-year ARM. “This means that borrowers are still much more likely to get offered a fixed-rate mortgage than an ARM,” Channel stated in the report. “That said, about 41 fixed-rate mortgages were offered for every one adjustable-rate mortgage in the first half of 2021, so the popularity gap is shrinking.” Remembering the crash For those who remember the 2008 financial crisis—and some of the factors that caused it—the rise of adjustable-rate mortgages may evoke mixed feelings. At that time, ARMs accounted for 42% of all new mortgage originations before nosediving after the financial downturn. That’s not far from MBA data, which places the share peak at 36% in March 2005. The share hovered around 10% or below from 2009 through 2021. According to Rick Sharga, executive vice president of market intelligence for ATTOM Data Solutions, ARMs make sense for the “right kind of borrower and the right situation.” “It’s important for borrowers to understand the potential risks of taking an adjustable-rate mortgage,” Sharga says. They were a popular product before the housing market collapse; however, many borrowers that got adjustable-rate loans back then because of their low introduction rates ended up defaulting when the rates rose, leading to a ripple effect that dragged the global economy down. Experts agree that the current market has come a long way since the days of the 2008 crash, specifically when it comes to the lending standards and regulations surrounding ARMs. “The lending standards and the environment where these ARMs are being given is just a little bit better than what it was prior to the Great Recession,” Channel says. Sharga also noted that qualified mortgage rules from the financial crisis helped mitigate unnecessary risks that came back to bite consumers during the Great Recession. In particular, most adjustable-rate products are capped at how high rates can be raised at the first adjustment and throughout the loan’s lifetime based on the Consumer Financial Protection Bureau (CFPB) standards. According to the CFPB, the first rate change typically can’t go above 2% of the original rate, while the cap over the loan’s lifetime typically sits at about a 5% increase. “It was a very different scenario than we are in today when people are making reasonable down payments on properties in many cases,” Sharga says. Homeowners’ equity also provides a safeguard for borrowers as home prices have surged in the past year and a half. According to Sharga, there is $27 trillion of homeowner equity in today’s market, which is vastly different from the last economic cycle. “The conditions we had 10 years ago are nothing like the conditions that we are seeing today,” he says. “There is some risk involved anytime you take out a loan to buy a house. The only risk you’re looking at right now is if rates go up during that period before your first adjustment.” Still risky Despite the safeguards designed to protect borrowers from being overwhelmed by the rate change, the nature of an adjustable-rate mortgage is still inherently riskier than a fixed-rate product. At the moment, an ARM-fueled collapse is unlikely, but Channel says that over the next several years, that could change if it balloons into another problem as it did in the early 2000s. “A lot of the people who are getting ARMs right now are probably not going to see their rates change for the next five years, so there are multiple years of leeway, and certainly nobody knows where rates will be six months from now, let alone five years from now,” Channel says. “It’s worth pointing out that what led to the housing collapse last time was good intentions turned into something unsustainable,” Channel says. “There was this real push to make homeownership more accessible and to make it so lenders could give more loans to more people, and that did help some people.” According to Channel, if home prices remain steep and rates remain elevated or climb higher over the next decade, there could be a similar push by the government agencies and lenders to become more permissive with borrowers. “You can very quickly find yourself on a slippery slope back to what got us into trouble last time, and I think there is potential for ARM to be a part of that issue again,” he adds. 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Category: realestateSource: rismediaJul 29th, 2022