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Landmark Links May 15th – Gotcha

One Big Thing

Here’s an amazing capital markets fact: there has never been a default of a senior, triple-A rated tranche of debt issued by a CLO since the instrument was created.  However, we have also never seen an environment quite like this one and defaults on the loans behind CLOs are piling up at a rapid pace, which could lead to the next phase of financial crisis.

What I’m Reading

Moving the Goalposts: Companies attempting to present their financial results in the most flattering light have created a new customized metric called EBITDAC: earnings before interest, taxes, depreciation, amortization – and coronavirus.  And no, this is not satire.

Data Play:  Data giant CoStar is purchasing commercial real estate division of Ten-X as a play on distressed property following the pandemic.

Never Enough: With Americans stuck at home, it would be reasonable to think that food delivery companies would be having their day in the sun.  In some ways they are, with order volume surging substantially.  However, they still are either losing money or barely breaking even, which calls into question the entire business model.  If these companies can’t make money in this environment, its very likely that they never will be able to.

Paying Up: US grocery costs jumped the most in 46 years, led by rising prices for meat and eggs.

Can’t Stop.  Won’t Stop: According to Redfin, home-buying demand has come roaring back, now 5.5% higher than it was pre-pandemic, while inventory has fallen 24%.

Charts of the Day

Mortgage applications to purchase have been incredibly resilient.

Source: The Daily Shot

And rates could fall fairly substantially from here.

Source: Piper Sandler 

WTF

Let it All Hang Out: A man was arrested after deputies said he exposed himself to a woman while driving because Florida.

This Was Inevitable: A church is suing Zoom after a bible study class was hijacked by porn-posting hackers.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

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