April 5, 2023
As we head into a big Holdiay Week, with both Passover and Easter celebrations ahead, the market is slowly grinding lower. A lack of direction? The calm before the storm?
Many investors are hoping that the signs that the economy is slowly dipping into a recession will force the hand of the Federal Reserve to shortly “pause” their inflation fighting program. The bullish thinking is one more small increase in April and then a pause, with maybe a cut in interest rates during the summer.
From my vantage point this is all wishful thinking as the debt problems will continue to affect banks and currencies, around the world.
Although this is not investment advice, I would think about reducing growth stock positions on rallies. I think I also see stories of car dealer inventories of unsold vehicles increasing. Not a positive sign for future car sales, and technically I am negative on all the auto makers, including Ford, General Motors and even Tesla. Keep an eye on the delinquencies rates for auto loans.
Another major problem I am monitoring, is the Commercial Real Estate Loan Market. Some of the big players are allowing mortgages go into default, so they can “renegotiate” with their lenders. These lenders certanly do not want to take back these commercial buildings on foreclosure. Keep an eye on Blackstone Stock, symbol BX ($81).
Another troubling sign is that a growing number of investors, like Chinese investors, are trying to exit their holdings in these private, not-trading real estate income funds.
Over the past few years many investors have been pouring money into these private funds as if they can only go up. Now that they may want to sell, they are limited to withdrawal restrictions built into these products. Easy to put money in, difficult to get it out?
These investors may have forgotten that Wall Street is a two way street.
Of course, these are my personal thoughts, subject to change without notice. Do your own research and talk with your own paid advisors before making any investment decisions.
I also see growing problems in the Chinese economy. But we will save that discussion for another day.
Happy Holidays to all.