Lead story….. The much-anticipated 0.25% Rate hike finally happened on Wednesday after being telegraphed for an eternity. So what exactly does that mean? Probably not much when it comes to the mortgage market. However, it’s likely to hurt already-reeling high yield bond market and commodities. If you want to know what the likely economic impact will be, take a look at the yield curve which is quite steep right now but could flatten quickly (signaling a recession) if we don’t get real economic growth. Here’s a really cool interactive graphic from the Wall Street Journal that illustrates the affect the Fed policy has on the yield curve.
Alarm Bells: Billionaire Sam Zell is saying that there is a high probability of a recession in the next 12 months due to excessive dollar strength and chaos in the oil patch. He’s putting his money where his mouth is too having announced a sale of just over 23,000 apartment units to Starwood in October and an additional sale of over 4,700 units next year.
In the Shadows: Rules imposed after the financial crises have pushed an ever-larger share of lenders away from banks and into the unregulated shadow banking system which some analysts see as a major risk to an increasingly dependent economy.
What Could Go Wrong? The Pessimists Guide to the World for 2016 is a fascinating read regardless of your outlook.
Winners and Losers: Now that ZIRP is officially over its time to look at who won and lost in this unprecedented age of easy money. In short, corporate borrowers, stock market investors and those who could lower borrowing costs by refinancing were big winners while people on fixed incomes and savers were big losers.
Strange Bedfellows: The three largest landlords in the US are all in discussions with Airbnb about forming alliances.
Too Much Construction? Commercial construction is booming and closing in on 2007’s highs. However, spec projects are a relatively low percentage of total construction and vacancy remains low. That being said, we are in a mature stage of the cycle and rates are now rising. If VC funding slows and tech users need less office space, some markets could be in for a bumpy ride.
Pleasant Surprise: Housing starts were stronger in November than forecast. The surprising part is that they were led by single family starts, not multi family as had been the case for several quarters. Great news for job creation since single family developments tend to create more jobs than multi family typically do.
Priced Out: One of the main reasons that Toyota decided to leave the South Bay market for Texas is because it’s workers can’t afford housing in LA.
Genius: The first guy to hack the iPhone just built a self driving car……in his garage.
Price Check: New technology is allowing prices for services to change by the minute as demand ebbs and flows.
Schadenfreude: Martin Shkreli, the drug price gouger and possibly most hated man in America just got popped on securities fraud charges.
Chart of the Day
Auto-correct Tip of the Day: If you have an iPhone or iPad, type “lardass” on your keyboard and watch what it auto-corrects to. Just. Do. It. Trust me.
Anger Management: I hate the DMV as much as the next person but I’ve never come close to kicking a cop in the nuts out of frustration.
Five Stars: Andre Iguodala of the Golden State Warriors has come up with the best way ever to give a bad Uber driver a bad rating: he farts in their car.
Landmark Links – A candid look at the economy, real estate, and other things sometimes related.
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