Must Read: Counter to conventional wisdom, the yield curve inversion could actually be good for the commercial real estate market this time around as the return spread between property and bonds widens.
Economy
Pick and Choose: It’s not difficult to find indicators that are currently signalling a recession. But See: A decade of trying to recover from the Great Recession has distorted most of the indicators that we used to assess economic growth and job creation beyond recognition.
Twist of Fate: This is quite an opening sentence from Bloomberg’s John Ainger about sovereign bond yields in Spain and Portugal:
Less than a decade ago, investors could barely be compensated enough to hold the bonds of Spain and Portugal for fear the nations could be severed from the European Union. Now, they are a hair’s breadth away from having to pay for the privilege.
See Also: A ‘wall of new money’ is fleeing negative rates for American credit with a positive return.
Opportunity Knocks: With bonds near record lows again, it would sure make sense to extend the duration of the national debt as well as borrow to repair our crumbling infrastructure. But See: Despite super-low yield, countries are not rushing to issue century bonds.
Commercial
In the Clouds: The rise of co-location service providers, which lease space in data centers to cloud services has led to a booming market in the space.
Downward Pressure: Life companies are feeling the pressure to tighten their spreads thanks to competition from other lenders but have held firm so far this year, often adding flexibility on prepay penalties instead.
Gordian Knot: Zombie malls are typically difficult to re-develop due to restrictive covenants. Eminent domain could be the answer.
Residential
Race Past the Bottom: Jyske Bank A/S, Denmark’s third-largest lender is now offering a mortgage with a rate of NEGATIVE 0.5% before fees. You read that correctly, they are now paying you to buy a house. Don’t get too excited though since the banks that offer this since widespread adoption will almost definitely be offset by negative retail deposit rates.
Inefficient: It now costs $700k PER UNIT to build low-income transitional housing in Los Angeles. By way of comparison, the median sale price for a home in LA county is “only” $618k. I’m going to go out on a limb and assume that this is not a sustainable way to provide housing for homeless people.
Bargain Basement: A massive 157 acre undeveloped parcel atop Beverly Hills known as “The Mountain” was listed for $1 billion a few years ago. It didn’t sell and its lender just purchased it with a credit bid of just $100,000 – far less than the $200MM said to be outstanding on the property.
Don’t Call it a Comeback: The strict lending requirements that were put in place after financial crisis are starting to erode as the mortgage market starts to open up to riskier borrowers once again.
Profiles
Rise of the Clones: There are now 175 online mattress companies. However, most of them are selling the exact same mattresses and are only differentiated by marketing and branding.
Filtered: In huge news for the cannabis industry, online advertising giant Weedmaps said earlier this week that it will stop advertising unlicensed retailers. See Also: Cannabis restaurants are coming to California, with ‘budtenders’ and ‘flower’ service.
Invaders: Once discarded as pets that got too large, there are tens of thousands of non-native pythons in the Florida wild, attacking animals and damaging ecosystems – and the quest to stop them has become a collective crusade
Chart of the Day
Source: Washington Post
WTF
Just Happy to See Someone? A man was arrested for tying to steal two packs of ribeye steaks by sticking them down his pants because Florida.
Thirsty: A woman broke into a closed bar and drank until employees showed up the next morning because Kentucky.
We Are Doomed: Alligators have apparently learned to climb fences and we are all going to die because Florida.
Party Time: Five elderly men and an 85 year old woman were arrested for having an orgy in a Connecticut conservation area. (h/t Charlie Welsh)
Landmark Links – A candid look at the economy, real estate, and other things sometimes related.
Visit us at Landmarkcapitaladvisors.com
landmarkcapitaladvisors.wordpress.com 