The Bubble Boys
Trader Scott’s Market Blog
March 8, 2017
There is a famous Seinfeld episode about an arrogant guy who unfortunately has to live in a bubble. This is the same situation which millions and millions of good people around the world are in. The arrogant central bankers, The Bubble Boys (+ Janet) have created the conditions for speculation to metastasize all over this Planet. The rampant money printing and the low rates have “forced” speculators to pile into numerous markets, turning them into orgies of greed. Speculators have piled into collector cars, high end art, and knick knacks and doo dads galore. But those are just side shows. The truly disgusting side effects stemming from decisions made by the arrogant, omniscient Bubble Boys +, can be seen in the real estate market. Their unforgivable hail Mary “policies” (experiments) have put so many good people in very tough situations. The incessantly rising home prices are great for speculators. And of course many of these speculators have lived off of the government teat (courtesy of the always shafted non-insider tax payers) for years. And our current President apparently has no problem with these “teaters”, like Treasury Secretary Steve Mnuchin and his RE shenanigans. Many of the small, independent flippers and rehabbers aside, the insiders, thanks to our compassionate governments all over the world, have gotten disgustingly, grotesquely rich. And their lucre (basically) has come at the expense of so many good people, who have zero say in the policies enacted by the arrogant clowns running governments and central banks.
So as these RE banditos move from pueblo to pueblo, pillaging, plundering and looting, the unfortunate citizens have to pay their ransom to their new landlords. And if they wanted to buy, they are forced to pay bubble prices, or keep renting at higher and higher rates. We are so lucky to have such compassionate leaders around the world. And now Portland, Oregon has been invaded by the marauders:
“The migration from Silicon Valley, as well as Seattle, adds to the pressure on Portland real-estate prices.
New arrivals flush with money from home sales in the higher-priced regions often bid up prices. Through most of last year, the monthly rate of increase in Portland home prices led the nation, according to the S&P Case-Schiller price index.
Meanwhile, rapidly rising rents are straining tenants.
Scott San Filippo, a software developer from the Bay Area, got a front-row seat to that process after he moved to Portland last year. His new home was just across the street from a four-plex that was sold to a new landlord. He then watched three of the tenants, a single father with his son, a couple and an older gentleman, vacate.”
And of course, what does the compassionate government do, the situation which was caused by the governments and central banks to begin with, by meddling in the “free market” (not that their are any around anymore)? Why just add in more bureaucracies and meddling:
“I was shocked how people could be forced out.’ …. ‘In San Francisco, there is rent control.’
In Portland, there is a new push for rent control.
That movement has gotten a boost from state House Speaker Tina Kotek, a Portland Democrat, who supports a bill in the Legislature that would remove a statewide ban on rent control. She also backs a temporary, one-year measure to limit rent increases to no more than 5 percent and forbid evictions without cause.
‘Too many property owners are taking advantage of the market conditions by evicting tenants, raising rents and finding new people who can pay more each month,’ Kotek said in a September speech.”
So as the speculation keeps forcing average folks to make very tough choices, and the arrogant buffoons running the show continue downing their cognac and devouring their Kobe beef filets, the citizens are getting extremely restless. They continue to see their real wages fall, as everything else around keeps going up in price (stagflation). But the elites time is coming. As the Seinfeld episode ends, George pops the bubble boy’s bubble, and an angry mob chases him and his colleagues down the street. The central bankers and politicians will suffer the same fate when their government/central bank bubbles finally implode. And we’re getting close.
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.
March 8, 2017 @ 5:48 am Larry
Having lived in the same two states, Rhode Island and Massachusetts, all my life I know the area real estate market pretty well. Also, having 4 kids I found myself moving around a few times either to better my job, search for a better neighborhood or school system or start over after a divorce (yea, I know, but that’s not the story here). My point is that I have seen first hand what the fed policies have done to the real estate market. In the late 90’s I purchased a house for 70,000 and sold it a few years later for 179,000. Not 6 months later, the housing market collapsed and the houses’ real value fell to 100,000 if you could sell it at all (real value to me is what you could get, not what the city’s tax appraisal is). Today, the person I sold it to will be lucky to get 120,000.
I see the same thing setting up now. I’m in the position where I’m sell in my house again (yea I know, but that’s not the story here). The house I purchased for 150,000 a few years back when the market depressed is on the market for $229,000. People are in a hurry to buy “before the rates go up”.
I could go on and on about how much the world has changed from when I was just starting out 40 years ago and today but that would take a book. My point is, because of their past policies and their mindset, the Fed keeps making the same mistakes and I don’t see this ending very well and I don’t think most people are smart enough to wrap their brains around it or understand what the word “bad” really means as in “it”s going to get bad”. History does repeat itself and as Churchill said ““Those who fail to learn from history are doomed to repeat it” (yea, I know, but that’s not the story here).
March 8, 2017 @ 7:53 am traderscott
It’s about the confidence in THEM. And it’s the breaking thru of 3.05% on the 10 year. The world looks a whole lot different then, as the confidence in the Fed, and central banking is “officially” in a downtrend. It’s the topping process in CB confidence which is occurring now – seen by the process in the long bond since 2008. And what happens to RE then – it probably becomes a not great hedge against the consequences of the loss of confidence. Larry you’ve seen the market volatility in RE in your experiences, just wait for the Brave New World.
March 8, 2017 @ 6:14 am Larry
Oh yea, I would be remiss if I didn’t take this opportunity to wish you a very merry “Day Without Women Day”. Quoting one of my favorite women, “Oh what a world, what a world!!”
March 8, 2017 @ 7:58 am traderscott
That’s a depressing thought – I’d be a mess without the women in my life, even for just a day.
March 8, 2017 @ 8:41 am Larry
I totally hear that and wholeheartedly concur!!! I have a feeling tho that the women that are partaking in that march are not the kind that I, nor you most likely, would consider as the type that would be a positive driving force in a sane man’s life or even one that would keep a man sane for that matter!
Take a look at ADMP if you have a second. I’ll be looking to go long.
March 8, 2017 @ 2:28 pm traderscott
Good job Larry, I was going to tell you this AM to wait for a reaction, but forget that brilliant idea. I really dig these biotechs. Of course I’m not sure if you’re investing or trading.
March 8, 2017 @ 6:39 am David
March 8, 2017 @ 10:21 am traderscott
Same from yesterday gold first needed to go below 1216, now the EA is the thing. There is going to be more volatility. Silver came back around support, but breaking these support areas and running sell stops on this overloaded ship would help a lot. Silver is a weird mess right now. To repeat – there are too many silver bulls still. What is wrong with silver permabulls. But like I said in the weekend video, I do expect this process in the miners to leak into the second quarter – with volatility. Second half will be better. It’s been a long wait, but this is accumulation, combined with an uptrend, we’re still subjected to this situation. I made my bearish feelings about PMs known for several years, until December 2015, as listeners of the radio show know very well. I’m no gold permabull, but a secular low is a powerful thing. The secular low was on Dec. 17th for gold, and Jan. 19th for the miners as a group. The fear and volatility are the buying opportunities (big picture). Trading is something else, and it’s even helpful during a layering in process to take some profits on rallies and (potentially) redeploy. The risk is you have less of a position if the rally really kicks in. It happens to me, but I’m fine with it. There are always opportunities in markets. This thing with gold and silver is not a conspiracy, nor manipulation. It’s a market subjected to all of the forces – good vs. evil, bear vs. bull. The gold permabears will have their last hurrahs this first half of 2017.
March 8, 2017 @ 1:59 pm Martin
Seems like the risk/reward ratio is in favor of a gold and gold miner purchase here.
March 8, 2017 @ 2:22 pm traderscott
Big picture, it’s pretty good. And for the folks at the recent highs in PMs who had none/little, it’s certainly a better spot now. I’ve been complaining about the lack of volatility in PMs – well this is helpful. And BTW, good UGAZ trade from Feb. 24th Martin.
March 8, 2017 @ 2:47 pm Martin
thanks, I’ve been trading around my position in UGAZ. I am holding a small core position now, lightened up some more today.
March 8, 2017 @ 3:04 pm Martin
Seems like the mining indexes are trying to find a bottom. Price has been moving essentially sideways for the last 2-3 days. It will break one way or another soon enough. If we gap down tomorrow, I will be a buyer.
March 8, 2017 @ 3:14 pm traderscott
Useless NFP number on Friday, but point well taken.
March 8, 2017 @ 10:21 am Easy Al
Jeffrey Gundlach yesterday was predicting the 10-year Treasury yield rising to 6% within a few (5 ?) years. If he is correct, can you imagine what 6-7% mortgage rates will do to the real estate market?
March 8, 2017 @ 11:13 am traderscott
Right, but some of the pressure on pricing in that scenario will be alleviated with persistent inflation, and a major top in the US$.
March 8, 2017 @ 10:28 am Easy Al
It looks like that Miners are showing some strength today. A few of them, such as EGO, NEM and SVMLF, were even in green at some stages. I was expecting another few percent drop today and had put an limited order for SVMLF for $3.29 before the market opened. It is very unlikely that the order will be filled today.
March 8, 2017 @ 11:10 am traderscott
But that’s the way to do it, leave those orders in and roll them, or keep re-sending. We’ve got to have a margin of error in this business. No one gets this right all of the time, except maybe the GURUS. Margin of error is a really important concept to incorporate in an approach. It helps to cement in our minds this notion that we can somehow predict an uncertain outcome. That’s gambling, not taking this seriously and professionally. When we can accept that about ourselves it alleviates some of the stress and pressure we place upon ourselves, because then right from the start we are fine with the notion that we will be flat out wrong at times. But there are so many great opportunities in markets which are constantly arising. So we’re not predicting/guessing, we’re buying and taking some profits, and maybe buying again lower, if it keeps going higher after we sell, so what. Like there will never be another opportunity? And yes. I also have a couple orders much lower in the miners which have been sitting for awhile. My belief is, by next quarter some will be filled. But once again when I was saying (complaining) about selling too early in the beginning of Feb. and miners kept going higher, so now they’re looking better than in early Feb. and certainly where they were on Feb. 8th, and I have those funds which can be redeployed lower. But at the time I looked like an idiot selling too soon.
March 8, 2017 @ 11:33 am Jon
Kinda looks like the fire sale is winding down for now. Bought CDE at 7.49 on the Jun 2 gap.
March 8, 2017 @ 11:45 am traderscott
Good planning and good patience Jon. Once again, who needs a fancy method. And I also did some nibbling today.
March 8, 2017 @ 11:49 am traderscott
I have yet to see a GURU who knows how to step up to the plate – they just know how to predict (guess) and collect fees from people. Traders/investors have to do, not sit around analyzing.
March 8, 2017 @ 11:57 am Jon
Actually, CDE wasn’t on my radar till Nico mentioned it yesterday. Did some research and decided to pull the trigger as the gap filled today.
March 8, 2017 @ 11:46 am Easy Al
Rick Rule interviews someone else in finding value in natural resource stocks
March 8, 2017 @ 11:38 am Jon
Watching the retest of Feb 3 gold at 1207.38 today…
March 8, 2017 @ 11:44 am Jon
Also Feb 3 silver 17.28 retest…
March 8, 2017 @ 1:05 pm Jon
I’ve been watching FFMGF, a mining exploration outfit run by Keith Neumeyer of First Majestic. Price is rising in a nice long term channel and is currently at the bottom of the channel.
March 8, 2017 @ 1:23 pm traderscott
Silver just went below its’ 2/3 low and has started to rally a bit. Did I buy any. No way. Silver had so many theories about why it was relatively “stronger” sitting into the highs. It got bloated up there. On that rally in silver, and once again selling some too early – I kept saying it really needs a selloff, but silver could care less what I think. And it kept going higher. But the people buying should have had the same outlook. When I bought silver on 12/20 very few people wanted it. I need to see much more volatility in silver before considering buying again.
March 8, 2017 @ 1:28 pm traderscott
At the highs we had Andrew Maguire timing it perfectly again, that was the general point of the post I put up on 2/25 about his dumb comments – it certainly was not bullish for him to show up again. And Billionaire Sprott was all bullish up there again. We heard the coiled spring theories and all the total crap.
March 8, 2017 @ 2:38 pm traderscott
I promised a video to a couple of folks about some questions which I received regarding stops, etc. I am still working on it, the first version was a bit unclear. It’s on the way.