Telegram Trading

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Assessment: Earlier this week in the NY Post, there was an article that low and middle income workers have been hit hard by the soaring prices on groceries, rent, cars, etc. despite the Fed’s work to cut down on inflation. Further stating that credit card delinquencies are at 3.8% and default rate on car loans is 3.6%….both are 10 year highs. The choice is to avoid paying for the card and credit cards to allow them to pay rent and buy groceries. A very sad situation and not something that happens in a booming economy or a bull market.

Today, the Wall Street Journal discussed a building problem for regional banks due to their exposure to commercial real estate. Exposure that now appears to be greater than expected. The “too big to fail” banks likely would avoid any problems, but these regional banks could see some serious issues…and will the US Treasury bail them all out in full?

According to the article, while large bank exposure to commercial real estate has remained about the same since 2020, regional bank real estate loans have gone up 50%…over $500B and currently stands at over $1.5 trillion. Side note, as a kid “Billion” seemed to large. Now everything is trillions. Trillions was a term reserved for kids jokes…”I would beat you a trillion times”. Now it is part of everyday finance.

Obviously these types of problems are slow moving, unless someone implodes over the weekend out of nowhere. However, as inflation remains persistent and as these issues get worse, it is only a matter of time before the implosion comes.

Good luck in your trades!