Commercial Real Estate

The 4 Key Themes From Q4 Conference Calls

  • Theme 1: US economy appears insulated from global weakness
  • Theme 2: Strong domestic consumer demand persists
  • Theme 3: Managements remain devoted to share repurchases
  • Theme 4: Outlook for China is positive despite recent turmoil

Fed Reveals Which "Developments To Financial Stability" It Is Most Worried About

Broad equity indexes have declined significantly since July 2015, and forward price-to-earnings ratios have fallen to a level closer to their averages of the past three decades.
Leverage [among speculative-grade and unrated firms] firms has risen to historical highs, especially among those in the oil industry, a development that points to somewhat elevated risks of distress for some business borrowers.

S&P Downgrades Banks With Highest Energy Exposure; Expects "Sharp Increase" In Non-Performing Assets

Moments ago S&P continued its downgrade cycle, this time taking the axe to the regional banks with the highest energy exposure due to "expectations for higher loan losses." Specifically, its lowered its long-term issuer credit ratings on four U.S. regional banks by one notch: BOK Financial Corp., Comerica Inc., Cullen/Frost  Bankers Inc., and Texas Capital Bancshares. The  outlooks on these banks are negative.

What's The Next 'Energy' Sector In Credit Markets? UBS Answers

While there may not be another 'energy' sector this cycle, our proverbial list of candidates includes lower quality high yield (ex-commodities) and commercial real estate (CRE). More broadly, the OCC's own examiners would also likely add asset-backed and auto loans to the list.

Negative Interest Rates Already In Fed’s Official Scenario

"The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities.... As a result of the severe decline in real activity and subdued inflation, short-term Treasury rates fall to negative ½ percent by mid-2016 and remain at that level through the end of the scenario."

3 Things: Fed Fails, Houston Horror, And Market Malaise

"With January looking like a loser, there is a 70% chance that February will decline also. The high degree of risk of further declines in February would likely result in a confirmation of the bear market. This is not a market to be trifled with. Caution is advised."

"How Bad Can Texas Get?" Goldman Answers

As we put it on Friday, "the Texas recession is only in its early innings," because we are just now beginning to witness the bankruptcies and shut-ins that will soon become endemic and sweep across the entire US oil patch as revolvers are reigned in and Wall Street suddenly refuses to finance uneconomic producers' funding gaps. So how bad can things get in Texas, you ask? Goldman has ventured a guess.

Why Oil Under $30 Is A Major Problem

Unfortunately, what we are facing now is a predicament, rather than a problem. There is quite likely no good solution. This is a worry. During the last 18 months we have read incessantly that low oil prices, for example, $30 per barrel oil, will stimulate the economy, and the economy will soon bounce back. What is wrong with this story? A lot of things, as we see it...

The Death Of The Canadian Oil Dream, A Firsthand Account

"It’s no secret that Alberta’s economy is closely linked to the peaks and craters of oil prices—nominal GDP (not adjusted for inflation) swings in tandem with crude prices. It’s why Fort McMurray is like a wounded beast these days. MacKay’s neighbour got laid off this fall. “I watched the bank come and take his truck,” he recalls—it was that or not feed the kids."

2015 Year In Review: "Terminal Phase" Excess & Peak Cognitive Dissonance

Important pillars of the bull case evaporated throughout 2015. Global price pressures weakened, the global Credit backdrop deteriorated and the global economy decelerated. The huge bets on central bank policies left markets at high risk for abrupt reversals and trade unwinds – 2015 The Year of the Erratic Crowded Trade. Indeed, a global bear market commenced yet most remain bullish. Serious and objective analysts would view this ominously.

The Uncomfortable Truth About The Great Boom And This "Recovery"

Despite such endless financial engineering, sales for the S&P 500 have been declining for the last three quarters. And profits have declined for the first time since the 2009 expansion. Simply put: The recovery is a mirage... It isn’t real... And it isn’t sustainable.

"Canadians Should Be Concerned" As Energy Sector Job Losses Spike To 100,000 This Year

It's grim up north... and getting grimmer. Amid soaring suicide rates, Canada's once-booming oil patch is rapidly accelerating its downward trajectory. "Canadians should be concerned in times like these," warned Tim McMillan, president and chief executive of the Canadian Association of Petroleum Producers, noting that the oil and gas sector will see 100,000 job losses by the end of this year. Apart from the protracted price declines, Alberta’s oil and gas sector has also had to contend with a 20 per cent hike in corporate taxes, increased provincial royalties, a carbon tax and new regulatory policies to limit rein in carbon emissions... and now a new competitot from US exports.

Obama Abruptly Waives 1980 Foreign Investment in Real Property Tax Act

FIRPTA was implemented during a better era for Americans in response to international investors in the late 1980s and early 1990s buying U.S. farmland, as well as the more publicly visible buying of trophy U.S. property by the Japanese.  The US government has now expediently waived FIRPTA.