Chugging along: It seems like there is a new report or story every day on how the economy is either ready to go gangbusters to the upside or is regressing. Reality is that right now we are sort of treading water: certainly not shrinking but not surging aggressively either. Eric Rosengren, president of the Boston Fed and a leading dove has weighed in saying that the economy is not yet strong enough to sustain a rate increase. There are some areas where the economy is decidedly strong. First off, it’s a great time to be a new college grad. The class of 2015 has it better entering the job market than any class in the Millennial generation has so far meaning that they are more likely to get a job and less likely to spend the next few years camped out on mom’s couch. Second, things are good at the top. Summer in the Hamptons is likely to be an orgy of spending on private helicopters, ridiculously expensive houses, and five star restaurants if Memorial Day is any indicator (it almost always is). Third, non-bank lenders are back in a huge way after having been declared all but dead a few years ago. So called Shadow Banks are now bigger than they were before the Great Recession.
Commercial Real Estate
Playing Small Ball: Big deals get most of the attention but it’s often more profitable to focus on smaller projects with less competition and do more volume. Just ask George Marcus, founder of Marcus and Millichap who built his brokerage platform into a multi-disciplined powerhouse and became a billionaire in the process partially by focusing on smaller, under-the-radar deals.
Hard to Judge: Prices and rents are going higher but sales volumes and starts, while improving still have a long way to go. American attitudes towards housing have changed a bit since the Great Recession. It is still an important investment to many, to be sure, but recent studies suggest that retirement savings and paying for kids’ college have both surpassed buying a house in terms of investment priority. However, there seems to be little doubt that the market, buoyed by low rates, scarcity and a mostly stable economy is currently hot and residential construction spending picked up in April which bodes well for both sales volumes and job creation. When articles with a “buy now or get priced out forever” theme start showing up in major publications, its definitely a sign that housing is back in the spotlight.
The strong dollar is making it very attractive for Americans to invest in overseas real estate.
Fried Chicken Wars: KFC is trying really hard to change its image. Between shitty food, idiot employees, and that whole healthy eating thing that’s sweeping the country, the chain has fallen on hard times. Rather than actually improving its menu they are going to attempt to catch up to Chick-Fil-A by running a strange new ad campaign featuring Colonel Sanders. They are also suing Chinese competitors over posting false information like implying that KFC’s chickens have 8 legs.
Chart of the Day
FIFA FAIL: An ex-FIFA official cited a satirical article from The Onion while defending himself against corruption charges.
West Virginia: Florida rightfully gets a lot of flack for residents committing bizarre crimes. However, West Virginia residents might have something to say about that. This woman absolutely looks like the type of person that would bite off a pit bull’s testicles.
App Addiction: Moms are now suffering from “Pinterest Stress”
Headline of the Year: Escaped Pig Captured, Takes Dump in Police Car.
Landmark Links – A candid look at the economy, real estate, and other things sometimes related.
Visit us at Landmarkcapitaladvisors.com