Commercial Real Estate

Can Yellen Keep The Boom Going?

Yellen, like notorious previous Fed chiefs including Strong, Martin, and Greenspan, can now claim success in having prolonged and strengthened an asset price inflation which otherwise may well have been about to enter its severe end phase. If history is any guide, the result of that success is to be feared.

Fed's Beige Book Notes Decline In Optimism About The Outlook, Sharp Drop In Broadway Attendance

What was most interesting in the latest Beige Book was not the comprehensive summary but the anecdotes revealed by the various districts among them concerns about the stronger dollar, worries about Obamacare repeal, Atlantic City casino revenues, retailer fears about online competition, shipping container volumes, the impact of immigration policy on labor supply and even a sharp drop in Broadway theater attendance. 

The Lowest Common Denominator

More debt and less discipline is not the solution to a pre-existing condition characterized by the same. The price tag for failing to acknowledge and address that reality rises exponentially over time.

Fed Loan Officers Survey Shows Demand Is Tumbling

If ever there was proof that 'hope' is not a strategy, it is the 2017 Q1 Fed Senior Loan Officer Survey. Despite soaring confidence, spiking optimism, and striking gains in financial assets, demand for loans (from credit cards to autos to residential and commercial) have all plunged in the last 3 months... and lending standards are expected to tighten.

Key Events In The Coming Week

It is a relatively light week in the US, with mainly trade balance, JOLTS and consumer credit data out. The key economic release this week is University of Michigan consumer sentiment on Friday. In addition, there are a few scheduled speaking engagements from Fed officials this week. 86 S&P 500 companies reporting, representing 11% of the index market cap

Beige Book Notes Minimum Wage Increases, Warns Of Building Margin Pressures

The Fed's latest beige book, perhaps the most boring report released by the Federal Reserve, found 10 of the 12 Fed districts growing at the now ubiquitous "modest or moderate pace" with Cleveland growing only slightly and New York reporting little change for the fourth period in a row.  However, despite stagnant growth, margin pressures are building as input prices are rising faster than final goods prices.

Why Morgan Stanley Thinks Stocks "Will Do Worse Under The New Administration"

"Returns will likely do worse under the new administration than under the departing one, and where exceptions to this may be. That statement is linked to a simple idea. Good market environments often involve a shift from economic despair to optimism, and a shift in psychology from ‘fear’ to ‘greed’. Both occurred over the last eight years, producing returns well above the long-run average."

Frontrunning: January 9

  • European shares dip, sterling falls on Brexit comments (Reuters)
  • Pound Falls to 10-Week Low as May Hints at Single-Market Exit (BBG)
  • Offshore Yuan Falls for Second Day as Bears Reload After Squeeze (BBG)
  • Trump's choices for top Cabinet posts face big tests this week (Reuters)
  • Nine Trump Nominees Who’ll Face Extreme Vetting by Democrats (BBG)
  • Meet the Mercers: New Power Brokers in Trump’s Washington (WSJ)