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The Economic Dominoes Are Falling and Falling Fast! Don’t Get Caught Up in the Stock Market Euphoria.

The national commercial real estate crisis is looking more and more like a developing depression with all major markets pretty much in freefall. Look out below if you own bank stocks, REIT’s, and pretty much all lenders as consumer delinquencies are spiking up. Additionally, the BRIC’s countries are now “locked and loaded” attacking the U.S. dollar through the energy markets now and soon to be the raw materials markets. The U.S. and West doesn’t want a gold standard but the BRIC’s countries may force our hand and they are primary gold and silver buyers as well as the primary producers globally of most raw materials. As I am retiring from UCLA Extension in June and plan only one more podcast please let me know if you’re interested in subscribing to my planned YouTube channel after the summer at Rtorneden@aol.com.

There is a continuation of the free fall in the commercial real estate market and problems for our small/medium sized banks. Government agency reporting or mis-reporting of inflation, growth, and unemployment under the microscope with the reality of a difficult economy is starting to surface for all to see. White collar workers are facing new and serious job retention issues with many new layoffs reported on a weekly basis. China is stockpiling raw materials, including copper and gold, while reducing their holding of the burgeoning U.S. government debt. Recent debt auctions reflect an insufficient interest in traditional investors in U.S. Treasury securities with expectations of higher long term interest rates.

The U.S. employment data has been significantly overstated since 2022. The economy has not generated more full-time jobs for native Americans with all the reported increases either non-existent (later adjusted out of the data), part-time, or non-native Americans (importantly non-documented in America). The Fed is likely throwing in the towel, albeit slowly, on its higher interest rate policy (motivators include the commercial real estate crisis, growing banking issues, and government selling of $7 Trillion in Treasury debt this next year).

California employment reporting adjustments show most of reported employment gains last year had to be adjusted substantially downward. In brief, reported employment increases of close to 300,000 had to be revised downward to only 50,000 actual. Across the U.S. food prices and oil prices again moving higher as keeping overall inflation expectations at a higher rather than lower range. Meanwhile, the leaders of the stock market rally are experiencing serious issues in term of their cash flows and valuation. Expectations for no Fed easing of interest rates gaining traction.

Banks have run out of time to camouflage their substantial bad debt losses on commercial real estate as the price decline continues. Consumer confidence declining and likelihood of an official recession is increasing. Major stock indices and capital flows into the U.S. at highs while businesses try to increase prices to maintain present levels of profits….the big money is not made in buying or selling it’s made by waiting [for the impacts of all that is already in process].

The contagion of U.S. commercial real estate just spread to Asia and Europe in a big way…with an estimated loss of $1.2 Trillion in office building market values more is certainly on the way. Meanwhile, the stock market is oblivious with flows of international money (thanks to the many wars), a European recession with Germany being ground zero, and large momentum funds juicing the Magnificant 7 FAANG stocks. It’s a great time to appreciate liquidity and safety while avoiding FOMO (fear of missing out).

Additionally, there is a rapidly declining commercial real estate market and an increasing bank balance recognition of forthcoming bad debt in a major way. Meanwhile, the BLS has revised its key employment index which paints a seemingly mis-leading picture of the U.S. labor market which is characterized by long term declines in full time jobs and in jobs held by native born Americans. This is a great time to avoid new debt as well as new stock market investments, IMO.