Landmark Links October 20th – Too Big To FAIL

toobigtofail

Lead Story…. It wasn’t that long ago that most of Washington wanted to shut down Fannie Mae and Freddie Mac for good citing their role in providing easy money in the lead up to the housing bubble.  However, no steps have been taken to wind down the GSEs since their implosion and subsequent government bailout.  The reason: Fannie and Freddie are awful but essential to the modern US housing market.

Economics

Much Ado About Nothing: During the Great Recession, there was much hand-wringing about what would happen if China, one of our largest creditors were to start selling Treasuries or not bid on new offerings.  Well, China’s treasury holdings have fallen by $200MM in 2015 and the Treasury market has barely yawned.

Perhaps They Could Try a Mattress: Big US banks are doing their best to DISCOURAGE companies from depositing large amounts of cash by charging fees on large deposits as low interest rates and strict regulations make it more difficult than ever to make money. 

In a Vice: The collapse in commodities has masked inflation in other parts of the economy like services.  If energy stabilizes and inflation picks up while growth slows, things could get very ugly.

Residential

Generational Crossover: Over the past few years builders have designed a lot of new, higher density condo product with Millennials in mind.  However, their buyers are often downsizing baby boomers who are better capitalized and don’t want to deal with the maintenance of a yard and big house.  As Millennials become a larger part of the home buying market, they are likely to compete against their downsizing parents as the first time buyer and move down markets converge.

Mutually Exclusive: Local governments claim to want to help keep housing broadly affordable and also make it a good investment.  These two objectives couldn’t be more in conflict if they tried.

The Law of Unintended Consequences: San Francisco’s Proposition F, which will be on the ballot in a couple of weeks is meant to limit short term rentals.  Here’s why it could backfire on the hotel workers who support it.

Haves and Have Nots: There is a stark contrast between neighborhoods that are booming and those that are not in NY and SF.  Here’s a few fascinating maps that show how neighborhoods within the two of the hottest major cities for housing in the US have fared since 2004.

Profiles

Swiping Right: Tinder’s parent company just filed for an IPO.

Struggling: McDonald’s franchisees believe the brand is in a deep depression and nearly 30% are insolvent according to a new survey by Nomura (*because their food is disgusting). *Landmark Links opinion.  See Also: McDonald’s real estate is a lot better than it’s food which has some investors calling for the company to spin it off.

In Soviet Russia…..  Russians don’t like the United States very much according to public opinion polls.  However, they all seem to want to move here because, if you haven’t gotten the memo, Russia is pretty messed up.

Getting Crowded: Once on the fringes, crowdfunding is nearing critical mass.  However, fees are still high and exits can be difficult.

Sports

The Good, The Bad and the Ugly: Welcome to a new Landmark Links feature where we recap the best football plays from the previous week.

The Good: Stanford’s double reverse and bear hug catch was amazing as was Bucknell’s incredible Odell Beckhamesque interception against Army.

The Bad: Michigan blew a game against Michigan State on a botched punt, leading to at least one heart attack.

The Ugly: WTF was Rutgers thinking spiking the ball on 4th down to stop the clock (I know this happened a couple of weeks ago).  And finally, not sure what one might call this play but Chuck Pagano of the Colts should probably lose his job because of it (among other things).

Chart of the Day

Builder confidence is the highest it’s been in 10 years.

WTF

Zombie Apocalypse: Man bites fellow passenger on plane.  Promptly dies.

DUI, Florida Style: A Florida man got his 3rd DUI while blocking traffic riding a motorized wheel chair across a bridge.  Because, Florida.  Not to be out done, a Florida ex-con, allegedly high on pot and drunk claimed to police that his dog was driving his car once in custody after a high speed chase.

Happy Halloween: Burger King’s black-bunned Halloween Whopper, which looks and sounds as appetizing as 6 month old dog food leads to “a curious and colorful gastrointestinal endgame” according to Deadspin.

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

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 20th – Too Big To FAIL

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