Landmark Links August 20th – Preparing for Battle

Must Read: Next Year’s election season in California is setting up to be an epic  battle thanks to a proposition that would strip commercial buildings of their Prop 13 protection (while maintaining it for residential properties).  As you can imagine, commercial landlords are not about to take this lying down.  I’m working on a much longer blog post to analyze the proposition that I’ll be posting soon.


Reading the Tea Leaves: Excellent commentary on inverted yield curves and recessions from Dr. Ed Yardeni of Yardeni Research:

(I)nverted yield curves do not cause recessions. In the past, they’ve predicted credit crunches caused by Fed tightening. So investors on the lookout for a recession should instead pay attention to credit availability. Recession-watchers should keep an eye on bank credit metrics—specifically, net interest margin, charge-offs and dividends, and business loans. Right now, those metrics aren’t signaling a credit crunch.

See Also: The yield curve inverting is a bigger deal when it occurs during a rate-hiking cycle.

The Real Story: Forget about the yield curve inversion.  The fact that investors are willing to take a ton of duration risk to push the 30-year Treasury below 2% is a bigger negative indicator for economic growth.

Headwinds: Issues with the global economy go a lot deeper than tariffs and trade wars – shrinking populations in developed economies mean that global growth rates are highly likely to fall and economists need to redefine the benchmarks success.


No End In Sight: Rents in the San Gabriel Valley industrial market are up 17% year-over-year after a run of epic growth that goes back to 2012.

Stuck in the Mud: Four legislative bills that pushed for the elimination of capital gains tax and full conformity for opportunity zones have stalled because California elected officials don’t fully understand the program.  Truly stunning (I really wish that there was a sarcasm font).


Healthy Recovery: US mortgage debt has hit a record, eclipsing the 2008 peak. However, the homeowner equity situation is A LOT healthier than it was a decade ago and home withdraws remain muted.

One Stop Shop: Flyhomes, which seeks to disrupt the housing industry by allowing buyers to make offers through its website while offering mortgage, title, escrow and home improvement services just raised a whopping $141MM  led by some of the biggest names in Silicon Valley and on Wall Street.

A Move in the Right Direction: In a move to roll back crisis-era rules, the FHA is going to start backing more low-down-payment loans to first-time condo buyers by approving individual units in buildings that aren’t certified


Second Hand: The market for high-end vintage clothing is booming as garage sales and thrift shops shed their ‘bigger-idiot-theory’ past.

Garbage In, Garbage Out: Discounted Cash Flow models or DCF’s are only as good as the information used to build them – and that information is often not very good.

The Claw is the Law: How hard seltzer went from a novelty item to taking over the US as a summer alcoholic beverage of choice.  I still can’t figure out how its any different from Zima, TBH.

Chart of the Day – WeWork S-1 Edition

WeWork’s org chart appears to be written in hieroglyphics…either that or they borred it from Enron.


This one is from Byrne Hobart’s long-form Medium post about the S-1.  If you want an even-handed analysis, its the best out there.


And finally, this gem from Rani Mola and Shirin Ghaffary at ReCode showing We Work versus its closest competitor, IWG which is profitable and has nearly 2x the gross revenue of WeWork, yet has a fraction of the valuation.  Thank SoftBank!



Fall is in the Air: There is now (for a limited time only – and only available in Walmart) such a thing as Pumpkin Spice Spam.  No, seriously.  Still better than pineapple pizza though.

How I Want to Go: A California man has died after participating in a taco-eating contest at a minor league baseball game.  No word as to whether or not he won.  RIP.

Combustible Relationship: A New Jersey woman torched a man’s home after she came over for a 4am booty call that fizzled when he fell asleep before she arrived.  Great to see my home state representing in the WTF section this week!

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