Landmark Links August 30th – Expecting the Unexpected

Must Read: The 2008 recession yielded housing bargains in subsequent years.  However, that recession was somewhat of an historical anomaly where the housing market going into free-fall caused the recession – not the other way around.  Statistically, that’s highly unlikely to happen this time around.  In addition, the dearth of supply or new housing production in the market suggests that those waiting for a another significant price correction in the housing market may be in for an unpleasant surprise and the next recession could end up mirroring those in the early 1980s or early 2000s where housing prices actually rise.


No Good Options: Plunging yields have put already-underwater pension funds in the unenviable position of having to buy negative-yielding bonds in order to keep their portfolios balanced.  And you thought that funding deficits were bad before.

Storm Clouds: Falling RV sales (typically a reliable leading indicator) are pointing towards a high probability of recession for 2020.

Foot in the Door: Treasury secretary Steven Mnuchin has indicated that the US is open to issuing ultra-long bonds as some other countries have done in order to take advantage of extremely low interest rates.  But See: The US is spending more on debt in GDP terms even as other advanced countries spend less.


Mislabeled: WeWork doesn’t pass any of the basic tests of what qualifies an entity to reasonably be considered a technology company (h/t Stone James). See Also: One of WeWork’s early investors (other than CEO Adam Neuman) runs a fund that leases buildings to the workspace giant, raising conflict-of-interest concerns.

Squeezed: As minimum wages rise, owners and occupiers of hotel, warehouse and retail properties are being forced to rethink their business models.

Not Getting Better: NYC’s Department of City Planning’s recent Storefront Vacancy Report suggests that the city is in a retail leasing crisis.


Hot Potato: Flippers are selling homes to each other now in Long Island’s red-hot house flipping market where wholesalers are taking over.

Elephant in the Room: The Trump Administration has stated that they want to bring Fannie Mae and Freddie Mac out of federal conservatorship and are scheduled to release a plan after Labor Day.  However, there are still a lot of questions about how viable this will be for either the mortgage bond market or Congress.

Wow: Rising spreads in the agency debt market that are offsetting the fall in bond yields have some multi-family borrowers looking to an unlikely source of debt financing – CMBS.  My initial read on this is that the small savings in cost can’t be worth the headache of CMBS but apparently it is for some.  See Also: Despite talk of a market peak, rising rents and stable-to-falling financing costs have allowed multi-family to remain attractive.


Different Playing Field: Amazon’s tiny profits are a feature, not a bug as the company continues to invest in ways that build itself a bigger moat against competitors.  But See: Amazon has ceded control of its site to independent merchants and the result is thousands of banned, unsafe or mislabeled products.

Alternative Revenue Sources: A new study finds that police in communities facing economic decline have been shifting arrests towards crimes and misdemeanors with greater potential for revenue rather than greater social harm.

Smoke and Mirrors: Yes, the Amazon rain forest is burning. However, nearly everything that you are hearing about it from the 20 year old pictures (from locations not even in the Amazon), to deforestation claims to wildly inaccurate statements about net oxygen generation, are incorrect.

Charts of the Day

US home owners now have $6.3 trillion of equity that they can tap.

Source: Black Knight

Refinance activity is surging thanks in part to falling interest rates.

Source: The Daily Shot


What a Way to Go Part I: An Indian man survived a lightening strike, only to suffocate to death when villagers insisted on treating his injuries by covering him in cow poop as a superstitious treatment for the burns.

What a Way to Go Part II: Sex robots with ‘coding errors’ could be prone to violence and could strangle humans.  The downside is that this is going to be the next frontier for hackers looking to kill someone.  The good news is that the obituaries are going to be epic.

Selling Yourself: A Nashville realtor is in hot water after posting a picture of himself in a sex act with a woman on a listing.

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