INSIGHTS
Wind in the Willows
Jobs Report - Rate Cut Bets Fading
Well Wall Streeters, which is it? Do we want a strong economy, or low rates? The data that the Federal Reserve uses to determine interest rates refuses to relent. That should be great news as it means that despite the most rapid rate cycle in history, the economy remains resilient. Last week, the United States Department of Labor released their latest Non-Farm Payrolls report and like most of them since the depths of the pandemic, the report was above pre-pandemic averages and unemployment continues near historical lows.
Feeling Good vs. Looking Good
The stock market is up more than 10% this year. Unemployment is low, and compensation levels are rising. Sounds awesome right? Everyone should feel great about the economy and their personal finances. According to the Federal Reserve Survey of Household Economics and Decision-making, that may be true for personal finances, but nothing could be further for the truth about the broader economy. The numbers are startling. 73% of people feel good about their own personal finances, but only 18% feel good about the economy. F
CMBS Delinquencies
While Commercial Real Estate has been in the news a lot lately, the struggles that many had predicted hadn’t translated into a really meaningful change in delinquency….until this May.
Amazon and Meta – If You Plant Ice, You’re Gonna Harvest Wind
Amazon and Meta – If You Plant Ice, You’re Gonna Harvest Wind. In a fight no one would have expected in 2019, Amazon and Meta find themselves locked in a battle.
Office Occupancy – Short Term Uncertainty or “Doom Loop”?
Office Occupancy. Real estate investors, landlords and tenants have been looking for something…anything…to give them direction about the future of office space.
PE Add-on Acquisitions and a Bifurcation of Asset Prices
PE Add-on Acquisitions and a Bifurcation of Asset Prices. With market uncertainty hitting a bit of a crescendo...
VC Valuations and Generative AI – Remember That the Only Time is Now
VC Valuations and Generative AI – Remember That the Only Time is Now. It’s not very often that truly disruptive technology comes along.
Like an Old Neighbor, State Farm Won’t Be There
Like an Old Neighbor. In a move that felt like an inevitability, insurance companies are beginning to rationalize where and how they do business.
Default Doesn’t Require Bad Credit
One of the strangest things we’ve been hearing over the last several months is the idea that if/when a recession comes, it won’t be anything like the Global Financial Crisis because that was a credit problem, whereas, what we see today is a liquidity problem. It’s a fascinating distinction, but we wonder if this nuance may be hiding bigger issues that would have been intuitive in years passed.
Keep On Rollin’ My Old Buddy, You’re Movin’ Much Too Slow - PacWest Selling Real Estate Loans
Keep on rollin'. Banks are looking for ways to save themselves. The process of selling loans to adjust the balance sheet is not a new one.
Apple’s Tie Up With Broadcom
Pay close attention. While we heard the term “Trade War” a lot during the Trump Administration and associated it with tariffs, quotas and subsidies, the more dramatic part is just starting to lift off the ground. Last week, Apple announced a multi-billion-dollar deal with Broadcom to manufacture 5G radio frequency chips in the United States.
Interest Rates And Small Business
It’s easy to underappreciate the effect that increased interest rates really have on the economy. Intuitively, when rates go up, debt gets more expensive.
Consumer Health – Caught In A Slow-Motion Dash For The Door
Consumer health. Last week was this quarter’s consumer week in earnings reporting. Home Depot, Walmart, Target, Foot Locker and TJX all reported.
Hotels, Office, Chicago, Oh My
Some cities are a fast fail in today’s lending environment. We’ve spoken at some length about some of the cities in California and how the new taxes and a difficult regulatory environment have made it nearly impossible to do business in once (and recently) great cities.
Conferences Boosting Economies
It may not always seem it, but the world is returning to some sense of normalcy. Take the conference scene for example. When Covid-19 first hit, the world was tracking super spreader events that triggered the outbreak.
Fed – Everyone’s an Expert and No One Knows for Sure
Fed…everyone has something to say about the Fed. Whether it’s coming from the inside of the Fed, billionaire investors, or the guru of all things interest rates
The Old Playbook… Or the New?
The pursuit of profit in down markets has always been difficult. Academics have searched for years to find assets that go up in down markets or down in up markets. Market technicians have been scanning charts and data for decades in pursuit of durable patterns and inflection points with the hope of finding better hedges. They use measures of volume and direction to determine what happens next.
Banking Crisis Continues – Ya Ain’t Got Half of What You Thought You Had
Banking Crisis Continues. Anytime an industry is cumulatively down 35%, investors and the media start asking when the right time is to step in and buy.
California’s Self-Inflicted Wounds
Last month Los Angeles’ so called Mansion Tax went into effect. This tax, supported by 57% of voters was intended to help the city’s problem with homelessness. Instead, this tax is likely to crush sales of properties worth over $5M, and devastate transactions in properties over $10M. While this transfer of wealth is called the Mansion Tax, the name is a complete misstatement of what the tax actually is.