{"id":82076,"date":"2024-02-10T01:15:05","date_gmt":"2024-02-10T09:15:05","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=82076"},"modified":"2024-02-12T13:32:36","modified_gmt":"2024-02-12T21:32:36","slug":"black-coffee-10-feb-2024","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id82076-black-coffee-10-feb-2024.html","title":{"rendered":"Black Coffee: The Love & Money Edition"},"content":{"rendered":"

\"\"It’s time to sit back, relax and enjoy a little joe …<\/em><\/p>\n

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.<\/p>\n

I hope everybody had an enjoyable week. Without further ado, let’s get right to this week’s commentary …<\/p>\n

Money can’t buy love, but it improves your bargaining position.<\/em><\/p><\/blockquote>\n

– Christopher Marlowe<\/strong><\/p>\n

Credits and Debits<\/strong><\/p>\n

Debit:<\/strong><\/span> Did you see this? Typically, when people are struggling financially, they rein in their spending. However, a new article in Bloomberg<\/em> reports that younger Americans are now coping with their inability to buy a house and save for retirement by splurging on luxury goods. Why? Because they feel their financial futures are doomed no matter what. In fact, a new study finds that 35% of Gen Z and 43% of millennials admit they \u201cdoom spend<\/a>\u201d to cope with concern about the economy and the world at large. For all Americans, the figure is 27%. Now, if only we could get the resulting financial sugar highs to last longer.<\/p>\n

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Debit:<\/strong><\/span> Last week the Fed removed the following sentence from its monthly open-market committee statement: “The US banking system is sound and resilient.\u201d Less than 24 hours later, Aozora Bank, the 16th largest in Japan by market value, saw its shares plunge by 20% after reporting a net loss of 191 million<\/a> for the fiscal year. The reason? Toxic commercial real estate (CRE) loans on its books. That was followed days later by New York Community Bancorp being cut to “junk” status<\/a> by Moody’s for being heavily invested in the CRE market. But I’m sure this is all much ado about nothing. As is this:<\/p>\n

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Credit:<\/strong><\/span> According to Justin Onuekwusi, who is the chief investment officer for St. James’s Place, “It’s clear that the link between commercial property and regional banks is a tail risk for 2024<\/a>, and if any cracks emerge, they could be in the commercial, housing and bank sector.\u201d Ya think? As Zero Hedge<\/em> notes, “this is just another sign that the CRE\/regional bank mess is very far from over and may even be gathering momentum.” For whatever that’s worth.<\/p>\n

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(h\/t: @QualityReplyGuy)<\/p><\/div>\n

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Debit:<\/strong><\/span> Of course, the struggling banking system is exactly why the Fed is going to have to eventually cut interest rates. The problem, you see, is that inflation is still stubbornly hanging around. Don’t believe us? Then ask yourself: Is your grocery bill still rising? Has the bank reduced your credit card rate? Are energy prices back to where they were four\u00a0 years ago? Is the housing market still unaffordable for first-time homebuyers? In short: the Fed is snookered<\/a>. And they know it. How sure are<\/strong><\/em> we about this? Well … we believe the Fed’s predicament is even more certain than this:<\/p>\n

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Credit:<\/strong><\/span> As for CRE\u2019s woes, billionaire Barry Sternlicht warned yesterday that he sees more than $1 trillion of losses for office real estate, calling the properties \u201cone asset class that never recovered\u201d from the pandemic. \u201cThe office market has an existential crisis<\/a> because workers haven\u2019t gone back to their desks.\u201d The billionaire money manager estimates that what was once a $3 trillion asset class, are now \u201cprobably worth $1.8 trillion, which means there\u2019s $1.2 trillion of losses spread somewhere, and nobody knows exactly where it all is.\u201d Then there’s this guy, who doesn’t quite seem to know where he<\/em><\/strong> is …<\/p>\n