They're changing the narrative already

No its not... Believe me on this, even if you don't, just trust me... It will be very very bad, Collateralized loan obligations, BDC's and CMBS are gonna pop in mid 2019! Japan,Italy,Spain and maybe the worst of them all England, have yet to even start imploding. I got trapped in a long position in Energy fuels Uranium Mining company, I am gonna exit only long January 2nd and place plays for 2019, keeping my Gold Mining call due to momentum, rest is puts

 

@Stockolio why do you say this? what is your basis for this? central bank rate increase?

 

Fixed income market is extremely dry, RMBS quality have been deteriorating all through out 2018, there at the bottom of the barrel and have been back with sub-primes for 2 years now, now called non-qm loans, the politicians got lobbied by Wall Street, pushed the responsibility of shit quality credit score to Ginnie Mae after last crisis, and Ginnie Mae is backed by US treasury, they made sure the next housing crash after 08 was not gonna fall on there lap, next housing crash falls directly into government, giving them less power to fight off other urgent matters that will arise. Clo's which is exactly the same as cdo's that added destruction in 08, well there back even higher then before and data isn't looking good, its horrible. CMBS's are starting to crack even by the fake SP's and Moody's diluted standards, they add new mortgage backed securities being produced into older pools, hence diluting delinquency data, real deliqency's are actually higher then they indicate. Australian PHd guy made a thesis on this few months ago, it's a little over my head, he's a genius but it sounded the alarm in Australia, not in rest of world for some reason. BDC's will be the main catalyst in my opnion along with Brexit for the US Stock market, all those private equity firms with very bad debts, or bdc's giving loans to failing companies, huge construction projects based on equity estimates of 2015-2016, asset prices have dramatically fallen since then, and will continue further in 2019, most loans are senior loans, but as the saying says, if there's nobody behind you, it doesn't matter if your first in line... Yields on junk CLO's range from 6-10 %, look at amount of clo's in circulation, just a lot of bad debt man. When liquidity starts drying up which it has, the gig is up and they have to let the pressure release ( defaults happen ), central banks intervene and restart new cycle right. Brexit and whole European issue is gonna deteriorate, china has been on permanent QE since 2009, not even kidding read about them, Japan interest rate is 0.1, they are smoked at next downturn. Happy times aren't ahead, and only way to profit is blasting PUTs, I believe world central banks will have to intervene by end 2019, collapse starts early 2019, if brexit doesn't happen june at latest, interest rate using shadow rate theory peaked September 2018, quant rules are 6-9 months after rates peak, economy always drags by that time, indicative of March-June 2019, but external factors like brexit could fasten recession

 

Thanks for a very interesting post. Some of it I already knew, some was news to me.

 

I think you're looking in the wrong area regarding residential-related loans. There is one main reason: the economy is still doing well, the central banks will raise rates before the economy tumbles which will give them ammunition during the recession. There won't be a "Lehman Brothers"-style event for residential loans.

However, lots of people have been sounding the alarm on commercial loans. It still remains to be seen what that looks like. According to Dalio, what we should see is:

1. Increased stock prices (duh)
2. Declining real estate prices/demand - not yet



3. Increasing corporate credit spreads (meaning, corporations need to pay higher interest to attract investors) - not yet



Further, household debt is in decent shape:



There are no cracks yet. I think it'll go sideways for a bit while earnings are still strong. Once the tightening catches up (and I hope they raise the next two quarters), things will tank, at which point if unemployment increases, the fed has _some_ fuel in the tank.

I was a bear, but I think I'm wrong. It's too early to call it.

 

The biggest danger in my opinion right now is not corporate credit, but government credit.

 

Been hearing similar stories since like 2011-12. I say we're in a so-called trader's, muddle-through market for quite a bit. Corrections (not major bear markets) followed by rallies and sideways activity. Not too much actual upward movement while earnings slowly creep up until valuations are decent again. It may take a while.

 

Have a name?

 

I doubt it. He sounds like the type who's emotionally involved and not willing to change his permabear outlook--regardless of evidence or how things play out.

 

I would simply like to read the material.