Federal Reserve Chairman Ben S. Bernanke said a potential wave of defaults in commercial real estate may present a “difficult” challenge for the economy, without committing to additional steps to aid the market.
Bernanke, testifying before the Senate Banking Committee today, urged lenders to modify “problem” mortgages to avert defaults. Christopher Dodd, the Connecticut Democrat who chairs the panel, told Bernanke that “some have suggested” the commercial market “may even dwarf the residential mortgage problems” in the U.S.
It “may be appropriate” for the government and Congress to consider “fiscal” steps to support the industry, Bernanke said today. Ideas for fresh support for the market could include government guarantees for commercial mortgages, Bernanke also said today, while noting no proposal on the subject has emerged.
U.S. commercial property prices fell 7.6 percent in May from a month earlier, bringing the total decline to 35 percent since the market’s peak, Moody’s Investors Service said in a report this week. Commercial properties in the U.S. valued at more than $108 billion are now in default, foreclosure or bankruptcy, almost double than at the start of the year, Real Capital Analytics Inc. said earlier this month.
“As the recession’s gotten worse in the last six months or so, we’re seeing increased vacancy, declining rents, falling prices — and so, more pressure on commercial real estate,” Bernanke said yesterday. “We are somewhat concerned about that sector and are paying very close attention to it. We’re taking the steps that we can through the banking system and through the securitization markets to try to address it.”
One of the main issues for the industry is that the market for debt backed by commercial mortgages “has completely shut down,” the Fed chief said yesterday.
Bernanke Terrified Over Commercial Real Estate
Given the commercial mortgages have "completely shut down", does anyone buy Bernanke’s line that he is "somewhat concerned"?
Here is the real deal: Bernanke is terrified and so is the rest of the Fed.
Note: This commentary has been updated to include this morning's release of Nonfarm Employment for April.
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.
There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:
By Jacob Wolinsky. Originally published at ValueWalk.
SpaceX completes another successful rocket launch and landing [CHARTS]
On Friday, SpaceX successfully launched a Falcon 9 rocket, which delivered a television broadcast satellite into orbit and subsequently landed on an ocean platform. SpaceX was contracted by SKY Perfect JSAT Corp, a Japanese telecommunication company. Friday’s delivery was the fourth successful mission for SpaceX in 2016.
See the following visualizations which highlight relevant figures regarding SpaceX missions, as well as the company’s funding history.
SpaceX Missions by Year
SpaceX Missions by Customer
Space Exploration Technologies Corporation’s Funding History
Grab your popcorn. Having proclaimed his greatest achievement during his presidency as "saving the world from another Great Depression," we wonder what President Obama will have to say today when he discusses the economy. Following the decline in corporate profits, a manufacturing sector in recession, an auto industry which is shuttering production, minimum wage state job losses rising, and an equity market that is unable to make new highs, what cynical, skeptical, "fiction-peddlers" will he blame today's dismal jobs ...
Two years after Newsweek wrote an inaugural article upon returning to print in which it "unmasked" bitcoin creator Satoshi Nakamoto and which turned out be a hoax (the author "found" Nakamoto using a white pages search), earlier this week the world was fixated on the story of another self-professed bitcoin "creator", this time Australian entrepreneuer Craig Wright, who &quo...
Relypsa Inc (NASDAQ: RLYP) shares have plummeted 51 percent year-to-date, under pressure from debt-financing related concerns. Cantor Fitzgerald’s Mara Goldstein reiterated a Buy rating for the company, while reducing the price target from $42 to $41. The analyst believes the 1Q16 results would be “a stabilizing force for the shares.”
Positive Data Points For Veltassa Launch
Veltassa metrics look favorable so far, including a low payer rejecti...
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Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,
The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now.
And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now.
Phil writes back,
I was expecting them to start throwing poop at each other &n...
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