Investment banker and author Chris Whalen, chairman of Whalen Global Advisors, who is also the author of The Institutional Risk Analyst, returns to The Julia La Roche Show to discuss the big picture of the economy and markets, including an impending maxi reset in home prices and the potential for more bank failures. 

He also highlights the “silent crisis” in commercial real estate and the potential increase in bank failures. Whalen shares his insights on the earnings of big banks and media coverage. He provides an outlook on the Federal Reserve and discusses the debt situation in the US. Lastly, he addresses the possibility of releasing Fannie Mae and Freddie Mac from conservatorship and shares his work and parting thoughts.

Takeaways

• The commercial side of the economy is experiencing pain, particularly in commercial real estate and corporate defaults.
• The housing market is expected to undergo a reset in the future, leading to a decrease in home prices and potential challenges for developers.
• There is a silent crisis in commercial real estate, with legacy properties becoming toxic and banks being urged to sell assets.
• The Federal Reserve may need to drop rates, start buying bonds, and increase reserves to address the challenges in the economy and banking sector.
• The US debt situation is a significant concern, and long-term rates may rise, impacting various sectors of the economy.
• The release of Fannie Mae and Freddie Mac from conservatorship is unlikely due to their credit ratings and challenges in functioning as private entities.

Links:

Twitter/X: https://twitter.com/rcwhalen

Website: https://www.rcwhalen.com/

The Institutional Risk Analyst: https://www.theinstitutionalriskanalyst.com/

Comments most recent Fed proposal in Basel III Endgame: https://www.regulations.gov/comment/OCC-2023-0008-0052

Timestamps:

00:00 Intro

01:08 Big picture view of the economy and markets

3:29 Impact of Basel III endgame 

4:50 A maxi reset in housing

06:20 Silent Crisis in commercial real estate

09:28 Potential increase in bank failures

13:00 Big bank earnings and media coverage

15:30 Grim economic picture for commercial 

21:15 Outlook on the Federal Reserve

24:55 Fed could cause a bank crisis 

26:15 Debt situation in the US

31:30 Release of Fannie Mae and Freddie Mac from Conservatorship? 

35:15 Parting Thoughts