The famous Queen’s song is a perfect fit as the soundtrack of the current stock market, isn’t it? Anything that doesn’t fit the (manic) #fomo narrative must be ignored, even though the giant 560bn $USD size #CRE Elephant in the room is now patting people on the shoulder. What’s that 🐘 about? It is the amount of US Commercial Real Estate maturities expected by 2025.
I started warning about #CRE a long time ago (TwitterX), but what’s worse is that #CRE isn’t the only Elephant about to go nuts in the porcelain storage (Credit Cards, Buy Now Pay Later, Auto Loans,… the list is long). What do you think is going to happen to the beloved #MAG7 #stocks standing gingerly in one corner of that room full of porcelains? It will be hard not to be crushed by raging wild elephants… You don’t believe me this can happen? Then look at #China and #HongKong #stocks and compare 🍎 $AAPL to $AAPL 🍎 (sneaky joke 😉).
$BABA 10 vs $AMZN 83
$TCEHY 12 vs $META 34
$BYD 16 vs $TSLA 44
(this is enough to give you an idea, but we could easily keep going for hours)
I warned at the beginning of the week that ultimately no one was prepared for #Evergrande to implode, it was simply something inconceivable and clearly not “priced in”. Want more confirmation that the losses piling up in bank books weren’t “priced in” at all? Here you go:
$NYCB – 44.5% (in the past 48h)
$AOZORA – 33.4% (in the past 48h)
$KRE – 8.75% (in the past 48h)
$KBN -6.3% (in the past 48h)
$BNP -9.21%
$ING -5.92%
Now, deep down, why do you think US #stocks valuations can still demand such multiples compared to the largest economy in the world after them? Because, contrary to all the crap being said out there, banks still provide easy credit (in particular consumer one) to the economy. Even if people are pretending not to leverage to buy #stocks, and perhaps they are right in theory, piling up on debt to get going in your daily life without needing to cash out your #stocks is a form of leverage too. This already happened in the past during the DotCom bubble when a lot of people ended up with a ton of credit card debt and worthless #stocks portfolios.
US #NFP is coming tonight to end the week with a thrill, but nevertheless, the show will go on… until the end (god bless Freddy Mercury)
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