The S&P 500 reached all time highs on Friday so what is the real state of the economy? We dug thru various sets of data to try to figure it out.
First we created this chart from data from the St. Louis Fed on loan delinquencies.
The data only goes thru July 2023 but it clearly shows credit card delinquencies rising however mortgages and other loans are relatively flat.
Commercial Real Estate
Cred-IQ.com does an excellent job in tracking issues with commercial real estate loans and the numbers there look very troubling. A recent article shows climbing distress:
As of the December 2023 remittance reports, 15,373 loans were added to the servicer watchlist in the second half of 2023 (July-December). During the final 6 months of 2023, almost $100 billion of loans have been added to the watchlist for signs of upcoming distress. In that same 6-month period 860 loans were transferred to the special servicer.
source: Cred-IQ.com
The Wall Street Journal notes that commercial real estate has $2.2 trillion dollars in commercial real estate loans coming due by 2028.
Residential Real Estate
Meanwhile, CNBC is reporting home sales slump to lows not seen since 1995 while 30 year mortgage rates are creeping back close to 7 percent. People that bought or refinance their homes when interest rates were at zero percent don’t seem too eager to sell or move.
Geo-Political Risk
Lastly, there is a seemingly an ever expanding war in the Middle East, disruption to shipping, Russia-Ukraine, China-Taiwan, and any number of wild cards that may cause massive inflation (or deflation) or other calamities. This week the Chinese stock market suffered massive losses so anything can happen next week.
Safest Investment
The best thing for us to do right now is continue on with T-Bills and wait and see so stay tuned, stay profitable and stay solvent…