What I'm Reading Whipsaw: US GDP surprised to the downside last week, declining 1.4%. The drop stemmed from a widening trade deficit. Imports to the U.S. surged and exports fell, dynamics reflecting pandemic-related supply-chain constraints. A slower pace of inventory investment by businesses in the first quarter—compared with a rapid...
April 29th – On the Fence
What I'm Reading On the Fence: China's cabinet is split over whether or not to provide stimulus to bail out the country's tanking property market as fears of re-inflating a bubble persist. Financial Times Watch this space. Developers in China account for a large percentage of global commodity consumption. If...
April 28th – SALT in the Wound
What I'm Reading SALT in the Wound: The Supreme Court rejected a challenge to the SALT deduction cap from the 2017 Trump tax bill. Looks like the $10k cap is here to stay, at least until it sunsets in 2025. Commercial Observer Streamline: A new California bill - AB2234 -...
April 27th – Hitting the Wall
What I'm Reading Hitting the Wall: Trucking demand is “near freight recession levels,” according to Bank of America. Shippers’ outlook on rates, capacity and inventory levels are matching attitudes not seen since May and June 2020, when pandemic lockdowns sent freight volumes into a historic decline. Freight Waves Halted: Ships...
April 22nd – Tough Nut to Crack
What I'm Reading Tough Nut to Crack: The price of a home sold in March set a record, as inventory dwindled and sales fell. Sharply rising mortgage rates are not showing much of an impact on housing yet. CNBC As discussed here previously, I believe that structural factors in the...
April 20th – Stay
What I'm Reading Staying Put: Nine out of ten mortgages in America carry an interest rate of less than 5%, which is the official level at which most new 30-year fixed-rate mortgages are now being written. Expect homeowners to hold onto their houses longer. Axios Sounding the Alarm: A Riverside...
April 19th – Mean Reversion
April 6th – Here We Go Again
What I'm Reading Here We Go Again: After being thwarted last year, the Biden administration is going after 1031 exchanges again in its proposed fiscal budget for 2023. That said, the proposal will meet strong opposition (again) and I sort of doubt that there is appetite for this in a...
April 5th – Backslide
What I'm Reading Backslide: Troubled real estate loans for the likes of retail and offices that saw payments get back on track after the 2020 crash are re-defaulting -- signaling more pain for commercial mortgage-bond investors. This is occurring as commercial landlords who lost tenants during Covid are still having...
April 1st – Flexing
What I'm Reading Flexing: Leases on warehouse and distribution facilities are getting shorter as landlords seek flexibility to sign new tenants or renew existing leases at inflating rates. Typically, warehouse landlords (and lenders) have favored longer leases with strong credit tenants as a way to mitigate downside. High demand, tight...