Funds circulation in usa commercial property
If inflation causes the loan interest rates in usa (as a reference benchmark US10Y) to rise too much, leading to a decline in demand for real estate and concerns about financial crisis due to the breakdown of fund circulation. Therefore,
Issue 1: Possibility of worst-case scenario
Task 2: Examples of preparations for emergencies
I have gathered information about the implications of the financial results of US financial institutions after April 15, which may cause the market to fluctuate again.
★ Issues Raised by IMF Jan 18, 2024
Despite expectations of a soft landing, there are significant risks associated with commercial real estate in the United States.
★ Stability of National Banks Raised by the Real Estate Loan Bank Association on Feb 23, 2024
Many commercial real estate loans scheduled to mature in 2023 have only been postponed or extended until 2024-2026, with the debt and credit not yet resolved.
★ Bank Profile
2023 4Q Martin Gruenberg, FDIC Chairman Speech on March 7, 2024
Large extraordinary expenses had a negative impact on net profit in the fourth quarter, but non-performing loans were within the range that can be managed by bank profits, and the soundness of the financial system in the USA was maintained.
★ Worst-Case Scenario
The indicator value of Loan To Value (LTV) is increasing. For example, a loss of 20% would result in a $160 billion loss to the bank. This could indicate the risk of about 2,000 banks collapsing in a chain reaction as depositors are attracted to withdraw large amounts of non-insured deposits.
Reference youtube by Money Health ch on 2024/04/04 https://youtu.be/XRAIsp12brc
★ Measures against emergencies (example): Incorporating the portfolio of medium to long-term U.S. Treasury bond ETFs.
During Quantitative Tightening (QT) and an inverted yield curve, prices are at their lowest level (high interest rates); during a severe financial crisis, Quantitative Easing (QE) maximizes prices (lowest interest rates).
[For example, in the case of 2621 IS U.S. 20-year Treasury Bonds ETF, High value: 2532, Low value: 1138, Current value (4/11): 1213. In a worst-case scenario similar to the COVID-19 pandemic, it would approximately double to 2.09 times. Even without such a severe situation, a decrease in the Federal Reserve's interest rates could potentially lead to some price increase (lower interest rates).]
However, in the case of persistent inflation and Federal Reserve Bank (FRB) raising interest rates, losses could occur due to price decrease (increase in interest rates). It is important to carefully consider entry points, exit points, and the validity of assumed scenarios.
stem inc's concentrated diversification investment strategy assuming a financial crisis.
Assuming a crash will occur around the second half of 2025, the current situation is viewed as a bull trap, and a strategy is being developed. Once able to utilize a securities account, I am now solely working to save yen cash. In the event of a financial crisis and a stock market crash, I will concentrate and invest in indexes, etc., to diversify. If the stock market recovers afterwards, unrealized gains will be substantial.
/Reference Youtube by Money Health Channel 3/14/2024 https://youtu.be/LbwXYr5oQEs
Above is a summary of research information only. For reference only. All investment decisions are made at your own risk.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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