Rich Excell's avatar
$16.8m follower assets
Chart of the Day - fear
"Comes a day when you slower, time is taking its toll
45 on the back of the jersey upon your soul
I'm scared of letting go, I don't know what the future holds
My nightmares are having nightmares
I'm quite scared of what's right and fair" - Lecrae

Finishing up my rap/hip-hop week with Lecrae. He is the #1 Christian music rapper. It is a Friday during Lent after all.

I also like the reference the to Michael Jordan's second comeback and how he was a step slow: "45 on your back". It was tough to watch for a big MJ fan.

However, one of the benefits of getting older is that even though you've lost a step, you can anticipate what will happen better so you can still make plays for a while.

How do athletes anticipate? They have seen the plays before. They know what is going to be run to expose a weakness and they are ready for it.

How do market practitioners do it? They look at the same variables that have exposed economic fragility in the past. They see what it is telling them even if the trouble is a month or more away. They anticipate.

The charts today come from Nancy Lazar and her crack team at PiperSandler. The charts today give me the fear that Lecrae is singing about. Yeah, I got 45 on my back now.

However, this is one where your nightmares start to have nightmares. you know how I have spoken about the cost of money affecting economic activity? You know how I started this week on the propensity of consumers to spend?

The first chart is the banks willingness to make commercial real estate loans. We have seen both Brookfield and PIMCO, the biggest funds out there in this space, defaulting on these loans. That is what Nancy and I would call the canary in the coal mine.

See how that affects banks? Banks are greedy. If there is money to make they will lend it. However, as soon as the losses start, they run away. The willingness to make CRE loans? Running away.

That spills over into consumers. Sure, the job market is great right now. Wages are going up (see Delta pilot raise which I am sure JayPo didn't like) yet in spite of this banks don't want to loan money.

Again, banks are greedy, they will loan if there are profits. If there aren't? Even at a credit card rate of 19%? Look at the no-mortgage interest payments for consumers up 34.5% yoy.

Payments going up and what happens? The delinquencies are starting. Not quite back to the Financial Crisis levels but creeping up.

One sees all of this and can only think, as Lecrae would say, "I'm quite scared of what's right and fair"

Even with a healthy job market, surplus savings and rising wages, consumers are showing signs of stress. Even the biggest firms in CRE are showing signs of stress.

"I'm scared of letting go, I don't know what the future holds"

Stay Vigilant
#markets #investing #loans #commericalrealestate #consumer #economy2023

Image upload
Joshua Simka's avatar
Great post, @stayvigilant! I love drawing lessons on the market from every corner of life—even rap lyrics! Here's a Filet-O-Fish for full Lenten Friday effect. $MCD

Image upload
Nathan Worden's avatar
Credit card balances going up and 19% rates is scary to me 😬
Josh Worden's avatar
Love filtering Lecrae’s lesson throughout. Great thought



Already have an account?