Landmark Links May 19th – No Shortcuts


Quote of the Day…..  – “It’s difficult to make predictions.  Especially about the future.” – The always quotable Yogi Berra, who turned 90 this week weighing in on the latest batch of inaccurate economic forecasts.


No Shortcuts to Recovery: There is ample evidence that, although we are experiencing an economic recovery in the US, it has been uneven at best.  The recovery has been great in some areas and subpar in others.  The Federal Reserve seems perpetually stuck in wait and see mode as economic data improves, than regresses in fits and starts.  It’s tough to raise rates when there is little to no consistency in economic data on a month-to-month basis.  Many top economists can’t agree on what exactly constitutes full employment as demographics change.  Over the past few years, consumers have adapted to their new reality and are more comfortable with their finances despite tepid wage growth leading to difficulty meeting monthly expenses.  It’s definitely possible that there is more at play here than just a grinding recovery to a garden-variety cyclical downturn.  In other words, welcome to the New Normal.

The oft-sighted $150 Billion windfall to US consumers due to reduced energy costs hasn’t made its way into retail sales numbers.  However, there is more to the story.  Cyclical services which are not part of retail sales and receive very little attention (think health care, vehicle leasing, air travel, theme parks, hotels, etc) is growing at a torrid 6.5% annualized pace and makes up 25% of all consumer expenditures.

It Could Be Worse – Venezuela Edition: Regarding any of the above, it could be far, far worse.  Take Venezuela for example.  The country is an absolute mess and is nearly 100% reliant on oil production.  As such, it has been experiencing hyperinflation of roughly 200% a year.  It’s not all bad though….if you happen to be a credit card company.

Commercial Real Estate  

CEQA Bypass: Are you sick of dealing with CEQA approvals?  Thought so.  The owners of the Rams, Raiders and Chargers didn’t want to deal with them either which is why they decided to put their new NFL stadium deals in LA on the ballot instead.

Multi-Family Demographics Update: The tailwind of positive demographics for the multi-family sector is still present but has slowed down a bit.  Couple that with higher starts and completions and supply and demand are likely to balance sooner rather than later.

Command and Control: It must suck to be a banker in China.  The economy has slowed dramatically and is now paying the price for over-developing on a massive scale.  However, you aren’t able to pull back from the market and deal with workouts since your government is ordering you to keep lending to insolvent, state sponsored projects.


Homebuilder confidence has remained anemic as cautious consumers are still slow to jump into the housing market with both feet.  Still, the latest NAHB builder confidence index came in at 54, which, while lower than expected, still indicates that more builders see conditions positive than negative.  Part of the reason that builders remain cautiously optimistic might be that, at least in CA, it is so difficult to get anything approved and built that we are in a perpetual condition of low supply.  Our large population of NIMBYs are doing their best to ensure that this remains and issue for a long, long time.  There are some positive signs that affordability is getting better in the Golden State but we still have a ways to go.  In the most positive news of the day, the NAR is forecasting (heavy caveat here that this is an industry group with a very large bias) that 2015 existing home sales will be the highest since 2006.  Today’s housing starts came in very strong, showing the largest percentage increase since 1991.  There is substantial difference between what builders are saying (confidence) and what they are doing (starts).  Stay tuned.


The Answer is Broke: How could Alan Iverson make $154MM over 15 years and go broke?  Start with a monthly budget that includes $10k for clothes, $10k for groceries and household items, $10k for entertainment and $1k for dry cleaning (not even sure how that last one is possible unless you go through 4 suits a day).  All in all, his burn rate reached $360k per month which could have probably qualified this for the WTF section.  Moral of the story?  Don’t spend tons of money on dumb crap.

How the Upper East Side Rolls:  “A wife bonus, I was told, might be hammered out in a pre-nup or post-nup, and distributed on the basis of not only how well her husband’s fund had done but her own performance — how well she managed the home budget, whether the kids got into a “good” school — the same way their husbands were rewarded at investment banks.”  Yes, this is real and is not from the Onion, and there is no way that my wife is getting one.

Chart of the Day

Source: Wall Street Journal


Inbreeding – it’s not just for hillbillies and British Royalty anymore: There are a shocking number of people married to their cousins and it’s not only happening in Alabama.

Defecating Dumbasses: Florida (of course) is experiencing a near epidemic of criminal public defecation.  Here is the latest:   “About 3:10 p.m., an officer wrote in the report, Felegi was in the back of a marked cruiser when she “intentionally removed her pants and defecated … thus creating biohazard waste.”  Lovely.

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Landmark Links May 19th – No Shortcuts

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