Landmark Links August 16th – Delayed

Must Read: A new survey from Apartment Guide found that more than half of college graduates are moving in with their parents instead of renting or buying a house.


New Normal? Negative interest rates don’t seem as unusual when you think about them in the context of paying for storage of something where there is a ton of supply of that thing and relatively few places to store it. See Also: Are interest rates naturally negative? And: Low (and falling) interest rates are not at all unusual as societies become wealthier.

Running Low? Is China’s US dollar shortage risk forcing companies to sell overseas assets?  See Also: Beijing isn’t likely to allow the yuan to depreciate much further, as a weaker currency could trigger massive outflows But See: US delays China tariffs for some items including cellphones, removing other products from list.

We Never Learn: Credit-grading firms are giving out increasingly optimistic appraisals as they fight for market share in booming debt-securities markets, just as they did in the run-up to the Great Recession.


Seed Money: Commercial real estate is an effective backdoor to direct cannabis investing.

Just in Time: How modern supply chain innovation helps to explain the worldwide trend towards deflation.

It’s Happening! The long-awaited WeWork IPO will apparently happen next month.  The co-working giant filed earlier this week to raise $1 billion, although the ultimate offering will likely be much larger.  A couple of interesting tidbits from the S-1 filing:

  1. The company reported a shocking net loss of more than $900 million for the first six months of 2019 on revenues of $1.54 billion.
  2. CEO Adam Newmann (along with wife Rebekah) pledged to donate at least $1 billion to charitable causes by the IPO’s 10-year anniversary. If it doesn’t happen, his voting rights get slashed substantially.
  3. The filing described WeWor’s business plan as “space-as-a-service” which is a textbook description of a landlord (which WeWork claims not to be) and not at all a description of a technology company (which WeWork claims to be).

Either way, this ought to be fun.


Failure to Launch: Given the broader economic climate, homebuilding should be booming right now but isn’t largely because of the wealth gap between boomers and millennials.  But See: Housing is booming in some places, just not where you might think.  Many Midwestern markets have heated up so quickly they are now experiencing shortages of inventory and rising prices.

Bumping Along the Bottom: The overall US mortgage delinquency rate remained at the lowest level in more than 20 years.

No Surprises Here: California’s Department of Housing and Community Development released a long-awaited study detailing how much cities and counties charge developers to building housing in California.  The results should be of no surprise to anyone who is a regular Links reader:

“At first glance, this study confirms what we have long suspected: that in some areas, local fees on development are so burdensome that they are reducing the ability to construct needed housing and increasing the cost of living for residents,” (Assemblyman Tim) Grayson said in a written statement. “If we have any hope of lifting our communities out of this crisis, then our local fees must be aligned with our statewide production needs.”

The culprit for these high impact fees (they are not an issue in most other states) should also be obvious to regular readers:

While the study recommends that lawmakers examine ways to reduce fees, it warns that cities and counties often need the revenue to pay for services because of property tax restrictions put in place by Proposition 13 in 1978. The initiative limits taxes for homes and businesses to 1 percent of a property’s taxable value. The initiative also restricts a property’s taxable value from increasing more than 2 percent each year, no matter how much its value rises on the market.

“If the state wishes to lower impact fees but also ensure sufficient infrastructure funding, it should consider pathways to adjust Proposition 13 in order to expand the capacity of localities to generate their own revenue,” the report says.


Biting the Hand that Feeds: California fostered America’s tech industry but is becoming its greatest adversary as lawmakers seek to reign in Silicon Valley’s dominance.

Bait and Switch: Yelp is screwing over restaurants by quietly replacing their phone numbers with ones for affiliate Grubhub which then charges a marketing fee for orders.

I Give Up: Meet the 23-year-old who has made $120k by flipping Instagram pages.

Chart of the Day

It’s often lost on people that high nominal bond yields do not always equate to high real yields (and vice versa).

Source: The Irrelevant Investor 


Half Life of the Party: Scientists have made a vodka from Chernobyl’s exclusion zone and they say its safe to drink because Russia.

Can’t Take it Anymore: A drunk flight attendant who passed out for an entire flight was arrested when the plane landed because United Airlines.

Fast Lane: A man in a golf cart hit several customers while speeding through a Walmart because Florida.

Packing Heat: A woman pulled a small alligator from her yoga pants during a traffic stop because Florida.

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