PPCC: Pisitófilos Creditófagos. Verano 2023

[el malo]

Lucha de tesorerías.

En algún hogar español, miércoles, 5 de julio de 2023:

- ¿Has visto, marujita, lo bien que hicieron los niños en ahorrar durante la pandemia?, gracias a eso ahora pueden seguir pagando, ¡anda que no estarán rabiando las autoridades monetarias, viendo que se acerca la crisis pero que los niños nos siguen pagando un pastizal sin fallar ni un mes!


https://fred.stlouisfed.org/series/DRSFRMACBS

Mientras, tanto, en un edificio alto en una importante ciudad del imperio, un directivo está en plena jornada laboral:

- Necesito hablar inmediatamente con Michael Stocksucker de GS..., mmmm, no está..., bien, de acuerdo, tome nota, soy XXXXXX de FAANG, dígale que queremos que incremente los buybacks un 50%..., sí, sí, lo sé, no hay problema, si tiene que usar opciones que lo haga, los marketmakers tienen liquidez infinita y cubrirán la posición comprando contado, no hay riesgo de que nadie mueva el árbol...

https://www.yardeni.com/pub/buybackdiv.pdf

Al mismo tiempo, en alguna parte del repositorio de datos de la FED:

https://fred.stlouisfed.org/series/DRCCLACBS
https://fred.stlouisfed.org/series/DRCCLT100S
https://fred.stlouisfed.org/series/DRCCLOBS

BENDITA te hago otra lectura: los préstamos hipotecarios fallidos a la baja y los de tarjetas de crédito al alza y con visos de crecer exponencialmente 

El pepito prefiere endeudarse para comer antes de dejar de pagar el tesorito, aunque financieramente sea un suicidio. Una deuda de tarjeta de crédito de un par de meses puede escalar en una bola de nieve de la que no te recuperas. Para muchos es la patada adelante más cara de su vida. Si el Mercader de Venecia se escribiera hoy dia, Shylock se dedicaría a las tarjetas de crédito. Las libras de carne son para aficionados.

Si la gente fuera capaz de hacer dos Excel simples se daría cuenta de que lo primero que hay que dejar de pagar son cuotas alternativas de la hipoteca (que es la mayor partida de gasto, la que te evita meterte en otras deudas, y la que más tarda en ejecutarse), pero por mi pisito ¡MATO!

[sudden and sharp]

 

[BENDITALIQUIDEZ]

Lucha de tesorerías.

En algún hogar español, miércoles, 5 de julio de 2023:

- ¿Has visto, marujita, lo bien que hicieron los niños en ahorrar durante la pandemia?, gracias a eso ahora pueden seguir pagando, ¡anda que no estarán rabiando las autoridades monetarias, viendo que se acerca la crisis pero que los niños nos siguen pagando un pastizal sin fallar ni un mes!


https://fred.stlouisfed.org/series/DRSFRMACBS

Mientras, tanto, en un edificio alto en una importante ciudad del imperio, un directivo está en plena jornada laboral:

- Necesito hablar inmediatamente con Michael Stocksucker de GS..., mmmm, no está..., bien, de acuerdo, tome nota, soy XXXXXX de FAANG, dígale que queremos que incremente los buybacks un 50%..., sí, sí, lo sé, no hay problema, si tiene que usar opciones que lo haga, los marketmakers tienen liquidez infinita y cubrirán la posición comprando contado, no hay riesgo de que nadie mueva el árbol...

https://www.yardeni.com/pub/buybackdiv.pdf

Al mismo tiempo, en alguna parte del repositorio de datos de la FED:

https://fred.stlouisfed.org/series/DRCCLACBS
https://fred.stlouisfed.org/series/DRCCLT100S
https://fred.stlouisfed.org/series/DRCCLOBS

BENDITA te hago otra lectura: los préstamos hipotecarios fallidos a la baja y los de tarjetas de crédito al alza y con visos de crecer exponencialmente 

El pepito prefiere endeudarse para comer antes de dejar de pagar el tesorito, aunque financieramente sea un suicidio. Una deuda de tarjeta de crédito de un par de meses puede escalar en una bola de nieve de la que no te recuperas. Para muchos es la patada adelante más cara de sus vida.Si el Mercader de Venecia se escribiera hoy dia, Shylock se dedicaría a las tarjetas de crédito. Las libras de carne son para aficionados.

Si la gente fuera capaz de hacer dos Excel simples se daría cuenta de que lo primero que hay que dejar de pagar son cuotas alternativas de la hipoteca (que es la mayor partida de gasto, la que te evita meterte en otras deudas, y la que más tarda en ejecutarse), pero por mi pisito ¡MATO!

Parece claro lo que está pasando:

[Benzino Napaloni]

Pues está pasando lo que se sabía que iba a pasar. 2008 bis.

El pisito no se toca, el precio aún menos, y a lo sumo "hay que pasar el catarro". Hasta que la reserva de gasolina se termina.

Cuando ya necesitas liquidez sí o sí, y ya no te llega, es el momento de tomar las decisiones que has estado posponiendo. En concreto, se empieza a ver que el parón va para largo, y que hay que empezar a ceder.

Como en 2008, lo único que ha diferenciado el mercado español de los demás es la defensa numantina, que dura lo que dura. Y si la temporada turística no está chutando lo que se esperaba, pues blanco y en botella.


"Lo que se esperaba": colgar el cartel de no hay billetes y cobrando precios de locura. Una ocupación de más del 80% es muy buena... salvo que hayas apostado por un 95% y hayas fiado gastos a esos ingresos. Entonces un 80% es una catástrofe.

[Derby]

https://www.bloomberg.com/news/articles/2023-07-05/german-landlords-face-risk-of-very-large-cash-calls-stifel-says

German Landlords Face Risk of Large Cash Calls, Stifel Says

Tough refinancing conditions could necessitate rights issues
Vonovia, LEG Immobilien and TAG Immobilien cut to sell

Germany’s real estate companies may need to undertake very large rights issues as refinancing becomes more challenging, according to analysts at Stifel Nicolaus & Co.

Residential property firms will find it difficult to refinance their debt as loan-to-value ratios spike, and they may need to tap investors for funds through “potentially enormous” rights issues, analysts led by Denese Newton wrote. They downgraded Vonovia SE, LEG Immobilien SE and TAG Immobilien AG to sell from hold.

Loan-to-value ratios — a measure of the amount borrowed versus the current price of an asset — have been rising, with real estate valuations hit by higher borrowing costs and an economic slowdown. Stifel estimates that German property valuations could “easily” fall 20% from where they were at the end of last year, pushing LTVs above 50%.



“This could make refinancing even more difficult,” Newton wrote in a note as she took over coverage of the three stocks. “Were companies then to be forced into remedial rights issues then the amounts of equity involved are potentially enormous.” To get LTVs back below 45% would require raises of around 50% of the current market capitalizations, according to Stifel’s analysis.

The analysts said that the companies probably aren’t entertaining rights issues — which involves asking existing investors to buy newly issued shares and typically dilutes the share price — at the moment.

A Vonovia spokesperson said this year’s refinancing needs are fully covered, as well as a significant part of those coming up in 2024. There’s no need and no plans to take action on capital, the company said. A spokesperson for LEG Immobilien said that it has given investors a clear path to refinancing bonds maturing in 2024, and that there’s further headroom to expand its secured financing base from current levels.

Last month, LEG Immobilien boosted its guidance for adjusted funds from operations and said it expects a devaluation of its real estate portfolio of around 7% in the first half of the year. It sees no impact on its ability to refinance, the company said today.

Bloomberg has also reached out to TAG Immobilien for comment.

TAG Immobilien shares fell as much as 5.7% in Frankfurt on Wednesday, while LEG and Vonovia also dropped. The heavily-indebted real estate sector is the worst-performing group in Europe over the past 12 months, down 18%.

The three companies have a combined $13 billion-equivalent of debt maturing by the end of 2026, according to data compiled by Bloomberg. TAG Immobilien has a €470-million convertible bond maturing in 2026, representing a “potential cliff edge” for the company, according to Stifel.

Even if rights issues are avoided, companies face a decade of limited earnings growth, Stifel said. After an era of rapid growth, fueled by cheap debt, “the next phase will be a protracted hangover, rather than a civilized after party,” the analysts said.

[Derby]

https://www.ft.com/content/ddcf5728-2778-4725-aae3-1877439527ea

Global regulators recommend exit fees for property funds

FSB and Iosco publish proposals to protect investors who remain in funds with hard-to-sell assets

Fund managers investing in hard-to-sell assets such as property should charge clients for withdrawing their cash in an attempt to discourage a rush for the exit, global financial regulators have recommended.

The Financial Stability Board and International Organization of Securities Commissions on Wednesday published guidance for asset managers, saying that investors who withdraw their money from an open-ended fund — a portfolio that allows investors to inject or withdraw cash on a regular basis — should not disadvantage clients choosing to remain in the fund.

The guidelines come as global authorities comb over the fallout from the coronavirus-led panic that swept across markets in March 2020, which forced investors to sell assets in a “dash for cash” and exacerbated market instability.

Property funds in particular, whose assets can take time to sell, have come under pressure in recent years as investors rush to withdraw their cash, spooked by rising global interest rates and depressed commercial real estate valuations. Regulators are concerned redemptions can spiral out of control if they force the fund to sell illiquid assets at knockdown prices, further spooking investors.

“There’s a substantial portion of the funds industry with significant illiquid assets,” said Martin Moloney, Iosco secretary-general.

“There’s certain obvious candidates,” he added. “If you think about the turnround time to get rid of the property asset, that is very long, that is months, and if you’re offering somebody daily redemption with an asset on the other side that takes months to release, there clearly is a timing problem.”

Blackstone limited withdrawals from its Real Estate Income Trust in December and BlackRock this year started paying back investors stuck in its UK Property fund since early last year. UK fund managers including M&G, Schroders and Columbia Threadneedle have also previously limited withdrawals in their UK real estate funds after experiencing surging redemption requests.

Regulators have taken note. The European Central Bank warned of “declining market liquidity and price corrections” earlier this year, and said open-ended real estate funds were vulnerable to a “structural liquidity mismatch between their assets and liabilities”.

The FSB and Iosco are recommending a range of ways for managers of open-ended funds to manage liquidity. These include swing pricing, a mechanism whereby the net asset value of a fund is adjusted up or down when investors buy or sell into a fund to reflect the costs incurred.

Another recommendation is for subscription or redemption fees, where a fixed fee is charged to redeeming investors “for the benefit of the fund to cover the cost of liquidity”.

“These tools can be used to . . . prevent redemptions from having negative effects on remaining investors,” said John Schindler, FSB secretary-general.

“In effect it works like a fee,” said Moloney about the proposed measures. “It’s about imposing on the redeeming investor a cost which we have long since recognised arises when somebody redeems from the fund.”

He added that the two authorities were seeking to provide “a more coherent and systematic approach around the world to ensure that those investors that are leaving pay the full cost”.

https://www.iosco.org/library/pubdocs/pdf/IOSCOPD739.pdf

[Derby]

https://www.ft.com/content/1406fee1-4a74-424e-9869-17dcd6d5a0e8

Eurozone producer prices fall into negative territory for first time since 2020

House prices decline for two quarters in a row as higher rates weigh on demand

A key measure of eurozone inflation has fallen into negative territory for the first time in two and a half years, in a further sign that the surge in prices that has plagued businesses and households is now in retreat.

The EU’s statistics office, Eurostat, said factory gate prices in the region fell 1.5 per cent in the year to May, the first outright decline since December 2020.

The measure has fallen significantly since the summer, when annual price rises hit a peak of 43.3 per cent in August after energy costs surged in the wake of Russia’s full-scale invasion of Ukraine.

The decline will raise hopes that a series of rate rises by the European Central Bank is finally beginning to pay off.

Central bank figures out on Wednesday showed households increasingly expect inflation to fall sharply over the coming year, a trend that Andrzej Szczepaniak, an economist at Nomura, described as “exactly what the ECB will have been looking for”.



However, consumer price inflation remains well above the ECB’s 2 per cent target at 5.5 per cent in the year to June. At 5.4 per cent, the core consumer prices are close to record highs.

Higher borrowing costs are also weighing on activity in the region’s housing market. Separate data published by Eurostat on Wednesday showed house prices fell for the second quarter in a row — though by a smaller amount in the three months to March than in the final quarter of 2022.

Average mortgage rates across the eurozone now stand at 3.58 per cent, up from 1.78 per cent a year ago, according to ECB figures. The central bank has raised its benchmark deposit rate by 4 percentage points to 3.5 per cent over the past year.

A breakdown of producer prices showed energy costs were down 13.3 per cent compared with May last year. Factory gate prices charged on intermediate goods, such as parts of machinery, also contracted.

Producer prices were down 1.9 per cent between April and May, with all EU countries except Malta reporting a contraction.

Eurozone house prices fell 0.9 per cent in the first quarter compared with the previous three months, following a 1.7 per cent contraction in the previous quarter. That marked the first two consecutive contractions in almost a decade.



Households’ expectations for inflation over the next 12 months decreased to 3.9 per cent in May, from 4.1 per cent in April, according to the ECB’s quarterly poll. The fall in inflation expectations to the lowest level since last March “nicely illustrate that the disinflationary process in the eurozone is gaining momentum”, said Carsten Brzeski, an economist at Dutch bank ING.

He added that it confirmed his view “that both headline and core inflation could fall faster towards the end of the year than the ECB currently thinks”.

Markets expect rate-setters to raise borrowing costs by a quarter point at the next two policy meetings in July and September.

In Germany, the region’s largest economy, prices have fallen 6.8 per cent. Sven Jari Stehn, economist at Goldman Sachs, said: “The drag from policy tightening via the housing market is likely to build.”

[Derby]

https://www.ft.com/content/47290a5b-a23a-444e-ba06-d35bff9998b9

Russia’s energy revenues plunge, bringing the rouble down Anastasia Stognei in Riga

Russia’s income from oil and gas in June fell by a quarter year on year, as the decline in export revenues weakens its currency.

Total energy revenues have decreased by almost 50 per cent since the start of the year to Rbs3.38tn ($37.3bn), according to data from the Ministry of Finance, which reflects the impact of western sanctions on Russian exports and Russia’s inability to compensate for the loss of the European gas market.

As export revenues fall, the rouble has weakened to a 15-month low against the dollar.

“The cash flow in Russia is drying up, and capital outflow is increasing,” said Alexandra Prokopenko, a visiting fellow at the German Council on Foreign Relations. “All of this is a direct consequence of the sanctions.”

[Derby]

https://www.nytimes.com/2023/07/05/business/germany-budget-spending.html

German Government Slashes Spending, Except on the Military

The News

Germany plans to slash social benefits and rein in government debt but increase the amount spent on the military in 2024, according to a federal budget approved Wednesday by the government of Chancellor Olaf Scholz.

The proposed package foresees spending 445.7 billion euros ($485 billion) next year, down about 6 percent from this year, while taking on just €16.6 billion in fresh debt, a considerable cut of more than 50 percent. Next year’s budget will be the first to return to the cap on borrowing imposed by the country’s constitution since it was suspended at the outset of the coronavirus pandemic.

Staying within that limit meant slashing spending over the next two years, for all sectors except the military. Funds earmarked for defense would help Germany reach its obligation as a NATO member to spend at least 2 percent of gross domestic product on its military next year.

Christian Lindner, Germany’s finance minister, presented the budget as a return to the fiscal austerity for which his country is known, but critics charged that the insistence on steep cuts outside the military would limit Germany’s ability to remain a globally competitive industrial power. (...)

Background: A national aversion to debt and taxes.

Germany’s decades-old aversion to borrowing led it to adopt a constitutional “debt brake” in 2009 that requires a nearly balanced national budget. The government is only allowed to break it in times of crisis, as it did at the beginning of 2020.

At the same time, Mr. Lindner has refused to consider raising taxes on the wealthy or altering taxes to attract more foreign investment.

The United States is using incentives, including tax breaks, to lure businesses in the green energy and technology sectors. Leading industrialists in Germany have called for similar measures to maintain the country’s position as an industrial hub.

“Germany is increasingly falling behind when it comes to investment and location decisions,” said Tanja Gönner, general director of the German Federation of Industries. “The tax framework in Germany is not competitive.”

[sudden and sharp]

 

[Derby]

https://www.ft.com/content/d3b06ad6-6b96-42bb-9fac-ebe1b8dc7fa6

Federal Reserve signals determination to raise interest rates after June pause

Officials think more tightening is needed amid tight labour market and ‘upside risks’ to inflation

Federal Reserve officials signalled they intend to resume interest rate increases amid a growing consensus that more tightening is needed to stamp out high inflation in the world’s largest economy. 

According to minutes from June’s meeting of the Federal Open Market Committee, “almost all” officials who participated said that “additional increases” in the Fed’s benchmark interest rate would be “appropriate”.

They added that the “tight” labour market and “upside risks” to inflation were still “key factors” shaping the outlook nearly a year and a half after the US central bank embarked on an aggressive cycle of interest rate rises to tame price pressures.

Some Fed officials had favoured a 25 basis point increase in interest rates in June, rather than the pause in further tightening that was ultimately backed by the committee, according to the minutes. But most Fed officials noted the “uncertainty” about the outlook and said additional information about the economy would be “valuable”.

On the economic outlook, Fed officials said they expected growth to be “subdued” for the remainder of the year, even though “banking stresses” had “receded” compared to earlier in the year. According to the account, Fed staff who briefed policymakers at the June meeting stuck by their previous expectation of a “mild recession” starting later this year to be followed by a “moderately-paced recovery”. (...)

[Derby]

https://www.realtor.com/research/may-2023-rent/

May 2023 Rental Report: Rents Start to Decline and the Trend is Expected to Continue

Highlights

*May 2023 marks the first year-over-year rent decline for 0-2 bedroom properties (-0.5% Y/Y) observed since trend data began in 2020.

*The median asking rent in the 50 largest metros increased to $1,739, up by $3 from last month and down $38 from its July 2022 peak.

*Rent for 2-bedrooms saw its first year-over-year decline in our data history, while smaller units saw rents increase. Rent by size: Studio: $1,463, up 2.0% ($28) year-over-year; 1-bed: $1,628, up 0.4% ($6) year-over-year; 2-bed: $1,923, down 0.5% (-$10) year-over-year.

*Rents in the Midwest are slowing, but continue to increase (4.5% Y/Y), while rents in the West (-3.0% Y/Y) and South markets (-0.7%) were lower than a year ago.

*With the release of the mid-year forecast, we expect that the median asking rents will experience a small annual decline at a rate of -0.9% in 2023.

Figure 1: Year-over-Year Rent Trend


Figure 2: National Rent Trend by Unit Size

[Derby]

Es un poco fuera del hilo...

https://www.npr.org/2023/07/04/1185938591/russia-says-talks-possible-on-prisoner-swap-for-detained-u-s-reporter

Russia says talks possible on prisoner swap for detained U.S. reporter

MOSCOW — The Kremlin on Tuesday held the door open for contacts with the U.S. regarding a possible prisoner exchange that could potentially involve jailed Wall Street Journal reporter Evan Gershkovich, but reaffirmed that such talks must be held out of the public eye.(...)

[Derby]

https://twitter.com/NewsLambert

@NewsLambert FOMC minutes: "Some [Fed] participants remarked that the effect of high interest rates on the housing sector appeared to be bottoming out, with home sales, builder sentiment, and new construction all having improved a little since the start of the year"

https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230614.pdf

[Derby]

https://seekingalpha.com/article/4615248-the-looming-crash-in-multifamily-rents-is-a-hard-landing-inbound

The Looming Crash In Multifamily Rents: Is A Hard Landing Inbound?

(...) And in case you were wondering, the biggest declines in rent are occurring in Sunbelt markets like Austin and Phoenix and not in New York or California at this time. There was also an explosion in speculators renting apartments and turning them into Airbnb in Florida, Texas, and Arizona. Now that boom has soured into the so-called "Airbnbust," in many markets. If you look at the markets where Airbnb operators are seeing the sharpest revenue declines, you'll again find Austin and Phoenix near the top of the list.



In 2008, much of the leverage in the system was explicit. Banks made bad loans to people who couldn't pay them back. Now, much of the leverage in the system is implicit– with low savings rates and high fixed expenses for consumers. As far as the business cycle is concerned–it's six of one and a half dozen of the other. I've tracked Yardeni Research's housing data for a while, and I've always been fascinated by the ratio of those owning or renting housing (left) with those who work (right). These correlate very highly historically but sharply diverged during the pandemic.



The implication here is that a rise in the unemployment rate could flood the housing market with millions of units held by those living off of investment income. Similarly, people moving out of housing could slow the construction sector of the economy, leading to a negative feedback loop. If you're owning or renting a house and aren't independently wealthy, history shows you really need a job! With the median 401k balance sitting at about $70,000 for those 55-64 years old, this divergence won't fly in the long run.

Throw on a roughly 1% reduction in consumer disposable income from student loans resuming, and I think you have the match that will light the tinderbox. The Fed will likely hike at least once more and hold rates there, but the action in the rental market is showing a serious slowdown in consumer demand coming down the pike.(...)