What I’m Reading
Payoff: Gov. Gavin Newsom says California will pay off all the past-due rent that accumulated in the nation’s most populated state because of the fallout from the coronavirus pandemic, a promise to make landlords whole while giving renters a clean slate. I’m sure that its just a coincidence that this is going to happen while Newsom is in the middle of a recall campaign. CA estimates that the tab will run about $5.2 billion and I haven’t seen anything about income restrictions. In hindsight, I should have YOLO’d a beach rental for like $30k a month when all of this started and just refused to pay. ABC News
Leading Indicator? Sales of both new and existing homes are slowing a bit after massive price gains. If sales continue to trend lower, it is fair to assume that price inflation will slow as well. As stated previously, my view is that this is bullish for rentals as high prices have pushed marginal buyers to become renters instead. Bonddad Blog
Cause for Concern: US birthrates are on the decline. This alone isn’t a huge reason for concern as we have typically made up for the (expected) lower birthrates that come with being a developed country through increased immigration. However, immigration declined 40% from 2015-2019. If the trend doesn’t reverse, our population is going to start looking more like that of Japan or Germany with fewer workers to support a growing base of retirees. The Conversation
Mixed Messages: Big bank CEOs like JP Morgan’s Jamie Dimon have gone on the record saying that office employment will soon look more or less as it did before the pandemic. However, their real estate lending teams seem less sure. Banks are becoming more selective about which offices they will lend against and are demanding higher spreads, leading to more expensive borrowing costs. Wall Street Journal
Supply Crunch: Supply constraints that have caused shortages in a wide range of products are deepening. A combination of labor shortages and resurgent demand have sent the retail inventory to sale ratio plunging and the issue is unlikely to resolve itself until sometime in 2022. Wall Street Journal
Chart of the Day
FWIW, the whole car inflation thing is about as transitory as it gets.
Source: St Louis Federal Reserve
WTF
Mystery Meat: A New York Times analysis found no identifiable tuna DNA in Subway’s tuna sandwich, citing tests conducted by a commercial lab. This quote from the lab was particularly encouraging:
“One, it’s so heavily processed that whatever we could pull out, we couldn’t make an identification,” the spokesperson said. “Or we got some and there’s just nothing there that’s tuna.”
On one had, Subway is disgusting and there are better options for around the same price in cities across the US. On the other, where else can one find a yoga mat and mystery fish sandwich that may come with extra sausage? New York Times
Cracked Case: Cops busted a trucker in California for stealing a trailer containing 42,000 pounds of pistachios and attempted to sell them. New York Post
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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