Commercial Real Estate Foreclosures Soar To Levels Not Seen Since 2015 (Office Vacancy Rate Hit 13.1%)

I said over and over again, Bidenomics will be a drag.

Larger cracks are appearing in the US commercial real estate market at a time when uncertainty around the regional bank industry flashes red.

The latest report from real estate data provider ATTOM shows CRE foreclosures topped 625 in March, up 6% from February and 117% from the same period last year.

ATTOM has been tracking commercial foreclosures since 2014. The number of foreclosures is approaching the peak of 889 in October 2014.

“California began experiencing a notable rise in commercial foreclosures in November 2023, surpassing 100 cases and continuing to escalate thereafter,” the report said.

New York, Florida, Texas, and New Jersey also showed increases in CRE foreclosures last month.

Regional banks provide a bulk of the financing for the space. The ongoing mess in the lending space due to tighter conditions adds pressure to the CRE downturn. Banks are expected to set aside more money to cover potential CRE losses.

Last month, Federal Reserve Chair Jerome Powell testified on Capitol Hill, “We have identified the banks that have high commercial real estate concentrations, particularly office and retail and other ones that have been affected a lot,” adding, “This is a problem that we’ll be working on for years more, I’m sure. There will be bank failures, but not the big banks.”

Data from a recent Treasury Department’s Financial Stability Oversight Council (FSOC) warned office vacancy rates have climbed sharply in recent years, reaching a record of 13.1% at the end of 2023.

CoStar analyst Phil Mobley recently noted the “reset in office demand has rocked US markets.”

Morgan Stanley warned earlier this year that office prices could plunge 30% due to sliding demand.

With sliding demand comes a massive amount of supply. Morgan Stanley pointed out that most of the oversupply is in offices and apartments.

For those wondering why the excess supply of office towers can’t be converted into affordable housing, Goldman also noted that prices must drop 50% for housing conversions to make sense.

Powell has a rolling crisis on his hands. And the goal is to save the fireworks for after the election.

Goodbye Free Markets! Biden’s EV Mandate “Vision” For America Is In Full Collapse (Gasoline Prices UP 46.25% Under Biden, Diesel Prices UP 55.6%)

Goodbye free markets! Hello heavy-handed government cronyism.

So, despite recent declines in energy prices, gasoline prices are still up 46.25% under “Green Joe” and the all important for shipping, diesel prices, are still up 55.6% under Brainless Joe.

One would think that massive rises in gasoline and diesel prices would make everyone buy an electric vehicle (EV). But alas, the high cost and unreliability of EVs is turning off consumers. (I own a hybrid and wish I didn’t).

Another one of the Biden administration’s “visions” for forcing people to own electric vehicles isn’t working out exactly as planned.

This time it deals with supply chain logistics, with Bloomberg reporting this week that in the year and a half since passing the Inflation Reduction Act, automakers are finding out the hard way that the rigorous criteria for manufacturing batteries using materials from the United States and its free-trade allies could render them cost-inefficient compared to global competitors.

Companies like Tesla are instead taking advantage of a temporary shift in the rules to stock up with cheaper batteries from countries like China.

The Biden administration’s new rules will all but cut out China from the supply chain, however, which will make it tougher to find affordable metal suppliers.

This, in turn, will threaten President Biden’s goal to boost the domestic electric vehicle market. Bloomberg writes that mining companies and labor unions insist that without curtailing the influx of cheaper, Chinese-subsidized materials, the U.S. can’t develop a competitive EV market.

Meanwhile, the higher costs are driving automakers away from EVs. And as battery material requirements are set to double by 2027, fulfilling these mandates will be increasingly difficult, putting Biden’s ambitious EV strategy at risk.

The demand side of the equation also looks less than favorable. We wrote just hours ago about how Ford was slashing prices on its Mach E and Lightning 150. Tesla has been slashing prices to stoke demand for nearly a year now.

Both Ford and GM have said they’re going to curtail their investment in EVs. General Motors, who posted better than expected earnings earlier this month, said that it plans on changing its product lineup to include more hybrid vehicles, drifting away from pure electric vehicles.

CEO Mary Barra said on the earnings call: “Let me be clear, GM remains committed to eliminating tailpipe emissions from our light-duty vehicles by 2035, but, in the interim, deploying plug-in technology in strategic segments will deliver some of the environment or environmental benefits of EVs as the nation continues to build this charging infrastructure.”

Recall, a report from Consumer Reports last year found that electric vehicles have almost 80% more problems and are “generally less reliable” than conventional internal combustion engine cars.

But hey, what good is a “free” market if the government doesn’t have complete and total control of consumer choice, right Joe? After all, Biden drives a gas guzzling Chevy Corvette. When Biden sells his Corvette and buys a Chevy Bolt, I might believe him. Nah!

So, the free market is standing up to Biden’s hard left tyranny.

My new nickname for Biden is Dopey. And Kamala Harris is Happy (because she laughs constantly). Mayorkas is Bashful (he doesn’t do anything). NY Senator Chuck Schumer is Grumpy. Jill Biden is Doc (for her pathetic PhD in Education). The intellectual seven dwarves are running our country into the ground.

Living La Vida Biden! Fed Emergency Bank Bailout Facility Usage Hits New Record High (Regional Banks Still Suffering From Deposit Outflow) Bitcoin Above $30k, Gold/Silver Rise

The US is Living La Vida Biden (living the Biden life!) Which means you are making millions if you are a political elite, but suffering if you live on Main Street.

And regional banks (not the TBTF national banks) continue to suffer. The Bank Term Funding Program (1 of 2) is skyrocketing as The Fed cranks up rates to fight BidenFedflation (a combination of excessive monetary stimulus by The Fed and Biden’s lousy economic policies) and M2 Money growth crashes.

The regional banking index continues to fall as bank deposits shrink (like me when I used to jump in the Pacific Ocean in Santa Cruz).

Cryptos down this morning. But Bitcoin is above $30,000 … again.

Oil is down this morning but gold and silver are up slightly.

The 10Y-2Y US Treasury yield curve just dipped below -100 basis points (steep inversion) as M2 Money growth crashed and burned.

Living la vida Biden!

Winter Is Coming! Mortgage Rates, Gasoline Prices, Food Price Growth Slowing As Money Printing Slows (Just Wait For Winter!)

Politicians like to (falsely) take credit for things, such as Biden bragging about gasoline prices declining. Bear in mind that regular gasoline prices were $2.88 when Biden was inaugurated as President, rose to over $5 a gallon in June and now have declined to $3.98 for which Biden is taking credit. So, regular gasoline prices are still up 34% under Biden. Ouch!

But other rates and prices are dropping too. Bankrate’s 30yr mortgage rate started at , broke the 6% plane on June 21, 2022 only to drop to 5.53% on Friday. CRB’s foodstuffs price index started at 370.58 on Biden’s inauguration as President, rose to 606.71 on May 17, 2022 then retreated to 561.32 on Friday, August 13th. Even headline inflation (CPI YoY) is cooling … slightly.

You can see the recent declines in mortgage rates, gasoline and food prices (pink box) that corresponds to a shrinking of the US M2 Money stock growth. M2 Money is still growing at torrid pace (8.5% YoY) almost back to pre-Covid stimulypto levels of 6.8% YoY. So shrinking M2 Money growth is helping reduce mortgage rates and inflation, food/gasoline prices.

Instead of trying to remove Fed stimulus even more, Biden and Congress passed the “Inflation Reduction Act” which will barely scratch inflation and raises taxes across the board (despite Biden’s promise that no one making under $400,000 will see a cent of increase taxes). And Biden’s preposterous promise ignores the inflation tax which has been severe and still growing at 8.5% YoY. Not 0% as Biden and Harris claimed.

But wait for winter as food, gasoline and heating prices start to soar again.

My favorite dim-witted explanation of inflation belongs to Democrat Representative Pramila Jayapal who recently claimed that “inflation is a theoretical word that economists use.” Like the brilliant Milton Friedman???