Boston Properties

Frontrunning: February 12

  • The Man Who Killed Osama bin Laden... Is Screwed (Esquire)
  • G7 fires currency warning shot, Japan sanguine (Reuters)
  • North Korea Confirms It Conducted 3rd Nuclear Test (NYT)
  • Italian Police Arrest Finmeccanica CEO (WSJ)
  • Legacy, political calendar frame Obama's State of the Union address (Reuters)
  • China joins U.S., Japan, EU in condemning North Korea nuclear test (Reuters)
  • Wall Street Fading as Emerging-Market Banks Gain Share (BBG)
  • Berlin Conference 2.0: Drugmakers eye Africa's middle classes as next growth market (Reuters)
  • Barclays to Cut 3,700 Jobs After Full-Year Loss (BBG)
  • US Treasury comment triggers fall in yen (FT)
  • ECB Ready to Offset Banks’ Accelerated LTRO Payback (BBG)
  • Fed's Yellen Supports Stimulus to Spur Jobs (WSJ)
  • Libor Scrutiny Turns to Middlemen (WSJ)
  • Samsung Girds for Life After Apple in Disruption Devotion (BBG)

Frontrunning: January 25

  • Fed Pushes Into ‘Uncharted Territory’ With Record Assets (BBG)
  • Next up in the currency wars: Korea - Samsung Drops on $2.8 Billion Won Profit-Cut Prediction (BBG)
  • China Warns ‘Hot Money’ Inflows Possible on Easing From Abroad (Bloomberg)
  • BOJ Shirakawa affirms easy policy pledge but warns of costs (Reuters)
  • Merkel Takes a Swipe at Japan Over Yen (WSJ)
  • Wages in way of Abe’s war on deflation (FT)
  • Italian PM under fire over bank crisis (FT)
  • Senior officials urge calm over islands dispute (China Daily)
  • Spain tries to peel back business rules (FT)
  • Rifts Over Cyprus Bailout Feed Broader Fears (WSJ)
  • Soros Says the Euro Is Here to Stay as Currency War Looms (BBG)

Frontrunning: January 15

  • White House delays 2014 budget after "fiscal cliff" standoff (Reuters) - And Senate will pass this... never?
  • Amari Signals Limits to Abe’s Campaign to Weaken Yen (BBG)
  • Draghi’s Bond Rally Masks Debt Doom Loop Trapping Spain (BBG)
  • Obama backs gun limits, concedes tough fight ahead (AP)
  • Bernanke to Weigh QE Costs as Fed Assets Approach Record (BBG)
  • Japan to Sell Debt Worth 7.8 Trillion Yen to Pay for Stimulus (BBG)
  • France more than doubles forces in Mali (FT) and yet...
  • Malian Rebels Take Town and Vow to Avenge French Attack (NYT)
  • China’s Li Calls for Patience as Government Works to Reduce Smog (BBG)
  • EU berates China over steel subsidies (BBG)
  • Number of working poor families grows as wealth gap widens (Reuters)

Frontrunning: December 6

  • MSM discovers window dressing: Fund Managers Lift Results With Timely Trading Sprees (WSJ)
  • White House Unyielding on Debt Limit (WSJ)
  • Obama, Boehner talk; Geithner prepared to go off "cliff" (Reuters)
  • Republicans urged to resist tax rises (FT)
  • China looms large over Japanese poll (FT)
  • As predicted here two months ago, Greek Bond Buyback Leads S&P to Cut to Selective Default (BBG)
  • Japan opposition LDP set to win solid election majority – polls (BBG), but...
  • Japan Opposition LDP’s Main Ally Cautions Abe on BOJ Pressure (BBG)
  • U.S. and Europe Tackle Russia Trade (WSJ)
  • King Seen Maintaining QE as Osborne Extends Fiscal Squeeze (BBG)
  • Syria pound fall suggests currency crisis (FT)
  • Irish budget seeks extra €3.5bn (FT)
  • U.K. Extends Cuts Due to Poor Outlook (WSJ)
  • ECB Seen Refraining From Rate Cuts as Yields Sink on Bond Plan (BBG)

New York's Ultraluxury Office Vacancy Rate Jumps To Two Year High As Financial Firms Brace For Impact

Traditionally, when it comes to reading behind the manipulated media's tea leaf rhetoric and timing major inflection points in the economy, the most accurate predictor are financial firms, whose sense of true economic upside (or downside) while never infallible, is still better than most. Yet unlike employment, which is usually a lagging, or at best concurrent indicator, one aspect that has always been a tried and true leading indicator, has been real estate demand, in this case rental contracts. Due to the long-term lock up nature of commercial real estate contracts, firms are far less eager to engage in rental transactions (and bidding wars) when they expect a worsening macroeconomic environment. Which is why news that office vacancy in Manhattan's Plaza district, the area between Sixth Avenue and the East River from 47th to 65th streets, anchored by the landmark Plaza Hotel at Fifth Avenue and Central Park South which is home to some of the nation’s most expensive and prestigious office towers, and where America's largest hedge funds and PE firms have their headquarters, has just risen to 12.3%, or a two year high, is probably the most troubling news for the economy and a real indicator of what to expect of the immediate future.

Zuckerman To CNBC: "The Recession Never Ended"

Everyone's favorite perma-bullish stand-in for Cramer, Fast Money's Scott Wapner, seemed lost for words when Boston Properties CEO Mort Zuckerman laid down some basic truthiness on the state of the US economy "We have the most stimulative fiscal and monetary policy in the history of this country and here we are three years into the recession and it's not ended. I think we may be heading for an even weaker economy this year than people expect." The righteous REIT ruler went on to note that it is not just the US but Europe (ridiculously high unemployment rates) where he analogizes (rather picturesquely) that it reminds him of "the man who jumps off a 25-story building and as he's hurtling by the sixth floor he says 'don't worry, nothing has happened yet'." Wapner is silenced and changes the topic as we suspect he is stunned at the honest sentiment given the nominal three-year-highs in REIT indices. Truth is indeed stranger than fiat-fiction.

Frontrunning: October 26

  • Incoming ECB head gives euro zone pre-summit boost (Reuters)
  • Fears Euro Summit Could Miss Final Deal (FT)
  • Merkel Puts Rescue Fund to German Vote (Bloomberg)
  • Iron ore in record slide as China demand slows (Reuters) BHP, Rio CDS Soar
  • MF Global slumps 47% on unexpected loss (FT)
  • Bankers fear political moves will kill off CDS (FT)
  • EU Banks Warn of Credit Drought in Push for Capital (Bloomberg)
  • Analysis: Obama's moves pack political rather than economic heft (Reuters)

Mort Zuckerman: "Home Prices Will Decline For Years"

One can not blame Mort Zuckerman for being bullish on housing (or at least some segments thereof): after all the outspoken Obama critic just splurged $930 million on the John Hancock building (which recently went into foreclosure at a $660 million valuation, but Mort has a story about how improvements in the parking lot and somesuch are worth the 50% hike in price). Yet what the Boston Properties chairman likes in commercial real estate (and for a contrarian and somewhat more lucid view feel free to peruse comparable thoughts by Howard Davidowitz) he loathes in residential real estate, which would be bad news for Bank of America if the bank's real name wasn't Bank of Banana Republic. In an interview with CNBC's finest, the USNews editor said that the record shadow inventory is "what’s going to put downward pressure on residential prices. And in my judgment, that’s going to continue forat’s going to continue for several years. We’ve seen home prices go down now for four months in a row, according to the Case-Shiller Index , by 1.3 percent in the last month. So it’s an accelerating downtrend in those prices. This is on top of three to four years of declines.” Oddly enough, no mention of the fact previously discussed by Davidowitz that "we have 21 square feet of selling space for every man woman and child in this country" but then again that may not be too bullish for CRE. And at the end of the day everyone has an agenda.

Econophile's picture

The recovery of the economy depends on several important factors, but the recovery of the real estate market is near the top of the list, especially commercial real estate (CRE) because most of America's banks are loaded down with CRE debt. Here is a current assessment of the state of the CRE market.

Mort Zuckerman Laments "The End Of American Optimism", Takes His Criticism Of Obama To A Whole New Level

Mort Zuckerman has not kept his displeasure with Obama's economic policies secret. A mere two months ago, the Boston Properties Chariman penned "Obama Is Barely Treading Water" - one of the most critical missives by the corporate oligarchy targeted at the president. A few days ago, he followed up with an even more angry op-ed for the WSJ, titled simply enough: "The End of American Optimism" which concludes simply that the gridlock in the economy, driven by the two sets of opposing interest of Wall Street and Main Street is strategically spilling over into the political arena, and that the country is pretty much doomed to years of economic deterioration unless a clear, independent leader emerges in the meantime (and whose candidacy is not tactically "blocked" by the money lobby of Wall Street, which is the only party more than happy to preserve the status quo): "if
the economic scene these days is daunting, the political scene is
downright depressing. We have a paralyzed system. Neither the Democrats
nor the Republicans seem able to find common ground to address what is
clearly going to be an ongoing employment crisis. Finding that common
ground is a job opportunity for real leaders.
"

Daily Highlights: 8.23.2010

  • Asian stocks fluctuate amid growth concerns; Miners advance.
  • Australia set for hung parliament as elections deliver blow to PM.
  • China premier: Political reforms needed for growth.
  • FDA to find the cause of a salmonella outbreak.
  • Mobile operators predict app sales boom; apps expected to outstrip voice services by 2013.
  • Nikkei 225 fell to this year's low on European debt concerns.
  • Obama considering overhauling 26 troubled federal technology projects valued at $30B.
  • Obama admin: Effects of moratorium on deepwater drilling, would cost 23,000 jobs and freeze up to $10.2B in investment.
  • Oil rises above $74 in Asia amid hurricane season.
  • Weak economy, volatile markets, regulatory upheaval starting to trigger job cuts on Wall St.

Boston Properties' Mort Zuckerman Obliterates Barack Obama

Media and real estate tycoon Mort Zuckerman, who recently admitted he helped write Obama's speeches in the past, has come out blazing with easily the most damning missive of the president and his legacy to date. Mort joins such other distinguished and notable CEOs as Steve Wynn to openly blast the administration and its policies. In the meantime, the president has surely not made many new friends in the executive offices of the E&P space. Before all is said and done, look for letters such as the one attached to become a daily occurrence.

Daily Credit Summary: May 25 - No Ko Oh No

All-in-all a miraculous day (once again) but with geo-political risk revving up in Asia, liquidity remaining a threat in Europe, and contagion ever-darkening the horizon, the significance of the cash market's weakness/thinness (and concessions) and gappiness in single-name CDS leave us comfortable long risk here for now (625bps or 670bps for nervous-nellies in HY are decent stops and 115.5 and 122.5bps in IG). We almost reached out target for HY-IG today and would perhaps bring up the stop on that to 500bps differential (in line with 625bps stop on HY).
Let's take a breath and re-assess - HY and IG at multi-month wides (OCT09 and JUL09 respectively), short-end of the credit curve underperforming, cash underperforming synthetics, new issue concessions high, HY deals failing, close to close widening today in risk premia everywhere (except stocks...), carry pairs actually weaker on the day, US and EU FINLs wider on the day, sovereign risk rising globally, funding markets stressed, and CP rates starting to crack. Short-term bounces will always happen and we must be prepared for them but rising dispersion in single-names is where we will be spending the bulk of our time (as per today's MFCI strategy article) as an elevated volatility and discrimination-driven dispersion is just what we need to benefit as credit fundamentals re-appear from beneath the liquidity Tarp (pun intended).

Daily Credit Summary: April 19 - More Omphaloskepsis

Spreads ended the day modestly wider, underperforming stocks from Friday's close, as despite notable swings intraday, credit markets tracked equity markets almost perfectly, ending at the day's best levels. HY outperformed IG by the close (with its higher beta to stocks) but single-name breadth in credit was very negative.

Daily Credit Summary: February 1 - Volcker Off Risk On

Spreads were tighter in the US as all the indices improved (albeit marginally). IG trades 3.9bps wide (cheap) to its 50d moving average, which is a Z-Score of 0.4s.d. (and HY has now traded wide of its 50-day for 2 days). At 95bps, IG has closed tighter on 36 days in the last 280 trading days (JAN09). The last five days have seen IG flat to its 50d moving average.