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It’s A Big Drop From What You’ve Been Sold

A report from Market Watch. “Like floodwater, mortgage bond losses flow from the bottom up. But with today’s compressed bond yields and an uncertain backdrop for commercial properties, Daniel McNamara, principal at a hedge fund that’s been in the spotlight for its success shorting debt tied to struggling malls. sees ‘little room for error’ in owning some lower-rated notes. ‘Everyone has been very vocal about struggling malls, but I really think multiple sectors of commercial real estate are in secular decline,’ he told MarketWatch.”

The Union Tribune in California. “For the first time in roughly 10 years, rent prices did not go up for much of San Diego County. Landlords had more than just slowed rent growth to worry about in 2020. A patchwork of laws prevented eviction of tenants. All of this makes what is happening right now surprising. There are more than 4,000 new apartments set to open this year and developers show no sign of slowing down. If the total number of projected apartments are built in 2021, it could be one of the biggest years for multifamily construction in recent memory.”

“Zumper said the price of a one-bedroom in San Diego was up 2.9 percent for a one-bedroom, other markets across the nation experienced declines. San Francisco was down 23.9 percent, New York down 21.7 percent, Boston down 19.2 percent, Seattle down 14.8 percent and Miami down 9.1 percent.”

The Chicago Tribune in Illinois. “A Canadian firm wants to build more than 1,000 apartments on West Monroe Street near the Kennedy Expressway, the latest example of a developer forging ahead with big plans despite the economic devastation. Downtown Chicago apartment occupancy fell to 86.5% in 2020, according to Integra Realty Resources, which is the lowest level recorded since the research and appraisal firm began its downtown survey in the 1990s.”

“Net effective rents, which factor in concessions such as free rent, fell more than 18% in 2020 in higher-end buildings, reaching their lowest level since 2013, according to Integra. Another Vancouver-based developer, Onni Group, last year confirmed plans to build more than 2,000 apartments on the southern tip of Goose Island. On the Near North Side, Onni Group is in the process of developing the three-tower, 1,289-unit Old Town Park development that’s replacing the Atrium Village apartment complex. Near there, Chicago’s JDL Development in October disclosed plans to build more than 2,600 apartments, condos and townhomes.”

From Bisnow New York. “About 200 hotels have been closed in New York City since the start of the coronavirus pandemic, and occupancy is said to be less than 40%. ‘Demand in New York City has never really been the problem, any weakness in performance that we have seen has been supply-induced,’ said HVS Director Chris Fernandes. ‘So I think the bigger headline when it comes to New York City isn’t if demand will return … the bigger if is the supply side of the equation. Depending on how many hotels we actually see fall from COVID will really begin to dictate how quickly the recovery can ramp up over the next few years.'”

The Sun Coast News in Florida. “Pasco County’s leaders might be killing its economic and job-creating future by turning properties zoned for business into multifamily locations, Commissioner Mike Moore said. Moore declared that there are many multifamily development ‘entitlements’ that can be built, and stopping the ‘plopping’ of more of them in some areas of the county through rezoning will not have a negative effect on the future economy. ‘There are tons of entitlements for apartments. They’re sitting and waiting for them to be built,’ Moore said. ‘Keep rezoning these properties and doomsday will come.'”

“At a kiosk outside the commission chambers, resident Mark McBride said that he and others are not opposed to apartments. ‘We just don’t want oversaturation of apartments,’ he said.”

“Joel Tew, a development attorney, cautioned the commissioners on trying to interfere with the free market they claim to support. ‘Government is supposed to determine if use is consistent with the comp plan,’ he said. ‘I’ve never seen a Pasco County Commission that tried to control the free marketplace. That is anathema to what you stand for.'”

From Bisnow Washington DC. “Just two years ago, coworking was the fastest-growing sector in the D.C. office market. That dynamic has now flipped. Flexible workspace providers have given back hundreds of thousands of square feet of space during the pandemic, further weakening a D.C. office market in desperate need of new growth sectors. ‘WeWork, even before the pandemic, we all realized that their business model of expanding as rapidly as possible in some of the most expensive buildings in the city was unsustainable pre-pandemic,’ Savills Corporate Managing Director Jon Glass said. ‘Now they are recorrecting a lot of the mistakes that they made in the past, and it’s these landlords that took a flyer on them that are bearing the brunt of their mistakes.'”

From CBC News in Canada. “Empty offices left behind by newly minted remote workers and other upheaval caused by the pandemic have begun to show up on the rental market. For those clients who are looking for new space, Darren Fleming, an Ottawa-based commercial real estate broker, says they have an ‘unparalleled amount of choice’ and the potential to land incentives such as free rent for one year. ‘If you’re a tenant looking for space right now, there’s a whole lot of people who don’t have a lot of alternatives to rent to,’ he said.”

“Raymond Wong, vice-president of data operations and data solutions at Altus Group, characterizes the difference in availability in Toronto from pre-pandemic to now as ‘night and day.’ ‘That’s why [the city has] close to nine million square feet under construction right now in the downtown to facilitate that [pre-pandemic] pent-up demand,’ Wong said.”

“For more than five years, Toronto has had the most construction cranes in operation in North America, according to international construction cost surveyors and consultants Rider Levett Bucknall. The firm is set to release its latest crane index ranking later this month that it says will show Toronto is still at the very top.”

The Weston Mercury in the UK. “The coronavirus pandemic has wiped £26million of the value of two investment properties bought by North Somerset Council for more than £62million in 2018. Leader Don Davies said he had spoken out against buying the Sovereign Shopping Centre for £21million and the £38million purchase of the North Worle District Centre when he was an opposition councillor, but both deals went ahead. Following the devastation inflicted on the retail sector by Covid-19, the properties are now worth £4.1million and £30.7million respectively.”

“Asked if he regretted the investments, Councillor Davies said: ‘I questioned the purchase of them. I don’t think it was a good investment. I don’t think it was properly thought through. I can’t do anything about it. The last thing anyone would expect us to do is sell them off in a buyers’ market. We’d take a bigger hit if there was a fire sale.'”

From Stuff New Zealand. “Auckland’s CBD is the country’s largest employment centre and the central node for almost every form of private and public transport. Yet its rents keep falling thanks to a city-wide building binge spurred on by the Auckland Unitary Plan (which loosened planning rules across the city), more ex-AirBnB rental supply coming online, and a severe post-Covid-19 drop-off in demand. Additionally, the number of new homes consented per 1000 residents there increased to 9.5, a significant increase on the low of 2.2 seen just over a decade before in the year ended August 2009.”

“One of the latest is New Zealand’s largest residential tower, the Pacifica. Around 80 per cent of the apartments were reportedly sold two years ago, but a lot of apartments in Auckland are bought by investors who then rent them out to people working, studying or simply visiting the CBD. Apartment Specialists director ​Andrew Murray says you will see further movement downwards even at the Pacifica.”

“‘[The Pacifica has] got to find its rental market. It’s going to affect the high-end market. And stuff that’s not new is going to come in behind [the Pacifica] because everybody likes brand new, but the prices they thought they were going to get for rentals, it’s going to be way lower. I reckon it’s going to be 20 per cent lower than what they thought it would be. It’s a big drop from what you’ve been sold, and I pretty much guarantee that.'”

The Daily Mail on Australia. “Inner-ring suburbs are expected to outperform the outer suburbs in 2021 – provided the properties aren’t home units. Metropole Property Strategists director Michael Yardney said newer apartments near the central business district, however, would miss out on the boom. ‘High-rise apartment towers in our CBDs which were already suffering from the adverse publicity of structural problems prior to Covid-19 will now become the slums of the future as they are shunned by homeowners and investors,’ he said.”

This Post Has 62 Comments
  1. ‘the difference in availability in Toronto from pre-pandemic to now as ‘night and day.’ ‘That’s why [the city has] close to nine million square feet under construction right now in the downtown to facilitate that [pre-pandemic] pent-up demand’

    Yer fooked Ray.

    1. the article is talking in particular about commercial real-estate.

      Cadillac Fairview is by far the leading owner and operator of downtown commercial real-estate in Toronto and Canada. It is now fully owned the the Ontario Teachers Pension Fund – who could only make the growing amount of payments by taking on more specialized investments.

      So yes – in the long run they are fooked – but in the short-term, they need to hold off the equivalent of mark-to-market, and everyone including the teachers and the government will be all the stupider for it. What i knew instinctively – but is more apparent intellectually is how rigged the game by the current generation of executives who are only hanging on for their large paydays.

  2. ‘cautioned the commissioners on trying to interfere with the free market they claim to support. ‘Government is supposed to determine if use is consistent with the comp plan…I’ve never seen a Pasco County Commission that tried to control the free marketplace’

    I’ve got a lot to say about this. I have a pretty good idea of how business works and supply/demand, etc. We’ve come so far from free markets regarding real estate that suggesting market forces are determining, say, how many apartments are needed in a given area is a farce. Artificially low interest rates for many years and way too much phony money have turned these assets into commodities to be flipped. So if you want to know why in the heck they are building many thousands more of everything, including “high-end” that people don’t need nor can afford, there’s the answer.

  3. ‘Demand in New York City has never really been the problem, any weakness in performance that we have seen has been supply-induced’

    I found many reports saying NYC had a hotel glut before the Marxists took over up there. There’s really too much of it everywhere. This is a good example of how QE results in deflation. Fake money seeks a place to die. They pay too much, oversupply each sector, returns fall and assets like bonds and malls get wiped out. Many years ago it was known the US has 30-40 times the per capita retail space that Europe has.

  4. ‘WeWork, even before the pandemic, we all realized that their business model of expanding as rapidly as possible in some of the most expensive buildings in the city was unsustainable pre-pandemic’

    Here we go, the “everybody knew” thing.

    ‘expanding as rapidly as possible in some of the most expensive buildings’

    QE = deflation.

    ‘Now they are recorrecting a lot of the mistakes that they made in the past, and it’s these landlords that took a flyer on them that are bearing the brunt of their mistakes’

    Read the article. DC is toast. Eat yer crowz taxpayer.

  5. I know this is really too long, but I still have CRE crater piled up, along with shack foreclosures, etc. One almost wonders if the red-hotcakes are a lion? This is what a growing recession looks like. It is self-reinforcing. Each tumble down destroys more jobs, and on it will go.

  6. Washington Post — The wave of covid bankruptcies has begun (2/26/2021):

    “Nearly a year since coronavirus-related shutdowns began affecting large swaths of the American economy, more businesses are filing for bankruptcy as Chapter 11 filings were up nearly 20 percent in 2020 compared with the previous year, court records show.

    Data on a subset of businesses ― those registered as corporations ― show that some sectors are faring much worse than others, with restaurants, retailers, entertainment companies, real estate firms and oil and gas ventures filing for protection in far greater numbers than in previous years, according to New Generation Research.

    Bankruptcies filed by entertainment companies in 2020 nearly quadrupled, and filings nearly tripled for oil and gas companies, doubled for computer and software companies and were up 50 percent or more for restaurant owners, real estate companies and retailers, compared with 2019, data from the research firm show. There were 5,236 Chapter 11 filings in 2019, but 6,917 last year, a tally at least 30 percent higher than any of the previous four years.

    Economists are predicting strong economic growth this year overall. But the bankruptcy data show that despite $3.7 trillion in federal stimulus spending to combat the recession triggered by the pandemic, and another $1.9 trillion being proposed by President *, businesses in certain industries have become particularly vulnerable and may take years to recover enough to pay their bills. Others will not recover at all.”

    https://archive.is/9YveH

    Tomorrow is the 1st of March, happy ONE YEAR ANNIVERSARY of “fifteen days to flatten the curve.”

  7. With all out collapse of tourism and related businesses in San Diego due to pandemic restrictions on travel, indoor dining, etc., it’s quite puzzling that real estate has kept chugging along as if nothing happened.

    “Zumper said the price of a one-bedroom in San Diego was up 2.9 percent for a one-bedroom, other markets across the nation experienced declines. San Francisco was down 23.9 percent, New York down 21.7 percent, Boston down 19.2 percent, Seattle down 14.8 percent and Miami down 9.1 percent.”

    1. I suppose the 2.9 percent rent growth figure for San Diego fails to average in all the rents that dropped to $0 with the pandemic eviction moratoriums.

  8. Pearl District protests turn ‘destructive,’ 2 arrested:

    “Dozens gathered for a protest at the Pearl District Saturday night, at around 9 p.m. in response to immigration policy under the * administration, according to social media posts.

    Businesses in the district have been coated with graffiti decrying police and Immigration and Customs Enforcement. Demonstrators also broke windows at some businesses.

    At around 10 p.m., Portland Police Bureau deemed the demonstration “destructive” and demanded crowds to “immediately stop participating in criminal activity.” They said failure to adhere to this order may result in detention, citation, arrest, or use of crowd control agents.

    Police said they were limited to addressing criminal behavior among the protesters due to several shootings that had occurred around the city while the demonstration was going on.”

    https://www.koin.com/news/protests/portland-protests-ice-facility-pearl-district-02272021/

    Note that the Oregon Live website (for the alleged newspaper The Oregonian) has no mention of any of this.

    Real Journalists lie by omission. Real Journalists always lie about left wing violence, because Real Journalists hate America.

    Multiple video clips available here:

    https://twitter.com/mrandyngo

    1. “You worry about leaving a better planet for our kids how bout leaving better kids for our planet”

      Tom MacDonald – “Clown World”

    2. “Pearl District protests…”

      This area is where the real money is invested…and spent. This will be the first thing on the agenda tomorrow morning, guaranteed.

  9. Seriously off topic, but did any of you catch this? It reminded me of Ben’s story where his arm was in a sling and a bully was harassing him, so Ben took his sling off and jacked him up.

    These brothers were being harassed by much larger OSU football players. The football players made a gross error in judgment by failing to account for the fact that these two brothers are professional cage fighters. Bad move.

    Not only does big bro handle the first guy, but check out little bro doing serious work at the end of the vid. Extremely impressive efforts.

    Warning: NSFW language from play-by-play spectator.

    https://twitter.com/OldRowSooners/status/1362962386592755715?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1363223823085015040%7Ctwgr%5E%7Ctwcon%5Es2_&ref_url=https%3A%2F%2Fwww.mmafighting.com%2F2021%2F2%2F22%2F22296179%2Fviral-video-shows-ou-football-star-beaten-up-by-mma-trained-man-police-investigating

    1. Notes to self:

      1) The football players got what they asked for.

      2) Size doesn’t always matter.

      3) Never pick a fight with a cage fighter!

      1. Never pick a fight. Full stop. Not everybody is wearing their MMA pin or is advertising that they’re packing heat. Or that they’re just tougher you.

        Back in the day I had some fraternity brothers who liked to pick fights. Two of them, ‘The two Scottys,’ picked fights all the time. One night while back home for the summer, the two Scottys picked a fight at some random party, without the whole brotherhood to back them up. They showed up for the start of school with two black eyes, each. Served them right.

      2. “1) The football players got what they asked for.”

        My @ss.

        That was a setup before the word go.

        What do you think, the video dude friend of the cage fighting brothers who spoke fluent MMA just happened to be filming from the perfect location in a GD public restroom before the fight even started?

        I would be very surprised if serious charges weren’t brought against the brothers who trained to fight in cages before this story is done.

        1. Quick search turned this up.

          By Nolan King | February 25, 2021 4:10 pm

          Walker Brown, a man with MMA training, was captured on video in a two-on-two altercation with Sooners wide receiver Spencer Jones that rendered both men injured.

          Police are currently investigating the incident, which took place inside of a men’s room at a bar near the OU campus. Norman Police spokesperson Sarah Jensen recently told Sports Illustrated the department has labeled the incident “aggravated assault and battery,” with all parties identified. No arrests have been made at this time.

          Brown wrote. “I will say that YES, there was something that occurred prior to the start of the video as my nose doesn’t bleed for no reason.”

          Brown’s attorney, Steve Sice, expanded on Brown’s statement and backed his client’s claim the altercation began before the video begins.

          “What is not shown is the original assault and battery suffered by Mr. Brown at the hands of Mr. Jones and his friend shortly before the captured footage,” Sice wrote. “As can be seen, my client’s nose and clothing were bloodied prior to the beginning of the video. Mr. Brown was legally justified in defending himself in this matter. As a result, Mr. Brown received several injuries, including a torn bicep which will require surgery. We will not make any further comment until the conclusion of the investigation by the authorities.”

          https://mmajunkie.usatoday.com/2021/02/viral-bathroom-fight-walker-brown-okalhoma-football-player-attorneys-speak-out

          1. Mr. Brown was legally justified in defending himself in this matter.

            Maybe one of the legal types can help me out.

            1. IIUC, allegedly the Sooners first assaulted the MMA, but then stopped assaulting and just trash talked. So, when the MMAs allegedly attacked the Sooners, was that still self-defense, or is that considered initiating a new assault?

            2. If they were trained MMA, then how would they allow themselves to be so injured in the alleged first assault? They didn’t duck or go on guard? Was the alleged assault entirely unprovoked with no warning at all?

            3. There were a lot of witnesses in that restroom. They would corroborate whether an assault took place prior to the start of the video. Any judge/lawyer would know not to rely on the video alone.

          2. “Maybe one of the legal types can help me out.”

            For certain one thing I have learned in the last couple of years is to let all the evidence come out.

            “Hands up don’t shoot” according to a Grand Jury was a lie.

            “there are still few details on who threw the fire extinguisher believed to have fatally injured Officer Sicknick during the Capitol riot.” was also a lie.

            Obviously I could go on.

            Although hours after my post I realize I should have said…
            probably best to let all the facts come out before coming to a conclusion and I shouldn’t have been so abrasive to the commenters who came to a different conclusion for which I apologize. However I still find the camera work, the commentary and the fact the fighter hired an attorney when he can’t pay his medical bills troubling.

            None the less, I respect all of your opinions and will take my own advice and wait until the investigation is done before commenting on this subject again.

          3. The commentary was the best part.

            It was great, and highlighted how they got their comeuppance. “You got your nobody comin’ back.” The MMA guy has a bloody nose when the camera starts rolling. Then one of the guys pushes him. You can see in their demeanor that they are bullies. This is a far cry from a “setup.”

          4. 2. If they were trained MMA, then how would they allow themselves to be so injured in the alleged first assault? They didn’t duck or go on guard? Was the alleged assault entirely unprovoked with no warning at all?

            My guess is the guy got sucker punched. Anybody can get punched when they’re not expecting it. I’d bet after he got sucker punched is when somebody started filming, knowing something was about to go down.

          5. By the way, look in the mirror at how big the guy in the denim jacket is vs everybody else, and especially little bro’ who dispatches of him. He’s more than a head taller than little bro’, and it’s evident as little bro’ locks him up and is clinching him by the urinals.

            Also, if you look in the mirror right as big bro’ lands the first punch, you can see the guy’s head snap back from the force. The punch doesn’t look like much until you see that angle. That’s probably the one which broke his orbital bone. The first one he lands after taking the guy down is pretty brutal, too.

          6. “This is a far cry from a “setup.”

            Hands up don’t shoot

            Looks like the walk on place kick holder is going to sue.

            “Jones’ attorney, Woody Glass, said Jones was not the aggressor in the fight and that it’s “safe to say” a civil lawsuit is in the cards.”

            Walker Brown’s Lawyer: Fight with OU’s Spencer Jones Caught on Video ‘Justified’

            MIKE CHIARI
            FEBRUARY 25, 2021

            Stice also said Brown was injured in the fight caught on video and an alleged previous scrap with Jones, noting that Brown suffered a torn biceps that will require surgery.

            Per TMZ, Jones underwent surgery to repair damage suffered to his eye as a result of the brawl.

            Jones’ attorney, Woody Glass, said Jones was not the aggressor in the fight and that it’s “safe to say” a civil lawsuit is in the cards.

            The Norman Police Department is currently investigating the fight on the heels of Jones reporting an assault to the authorities.

            Jones is a Nashville, Tennessee, native who transferred to Oklahoma after beginning his college football career at Liberty.

            Jones, who is set to enter his redshirt senior season in 2021, did not make a catch last season but served as the Sooners’ regular holder on place kicks.

            https://bleacherreport.com/articles/2933446-walker-browns-lawyer-fight-with-ous-spencer-jones-caught-on-video-justified

          7. redshirt senior season in 2021, did not make a catch last season but served as the Sooners’ regular holder on place kicks.

            I hope he majored in something other than Communications.

          8. “By the way, look in the mirror at how big the guy in the denim jacket is vs everybody else”

            Since I had never heard of a place kick holder referred to as how big he was compared to everyone else, I went back and looked at the video and noticed one thing that isn’t going to help the “little” MMA fighter in a court of law.

            The guy in the “denim jacket” pushes the “little” MMA fighter and the “little” MMA fighter sucker punches the kick holder (not the guy who pushed him) while the place kick holder was doing nothing more than talking with his hands at his side

            Hands up don’t shoot

          9. The “little” guy I’m referring to is little brother, and I wasn’t referring to the placeholder when I was talking about how big the guy is, I was talking about denim jacket guy. It’s pretty clear in my post.

            But I do find it interesting that you are so adamantly defending the aggressors here. You think bloodying somebody’s nose and pushing them around is ok? I sure don’t. This was an absolutely beautiful display of instant karma.

          10. “This was an absolutely beautiful display of instant karma.”

            Quite honestly I think they all could have walked away and come out better than torn biceps and broken eye sockets and no I don’t think think bloodying somebody’s nose and pushing them around is ok.

            But many people including you have become judge and jury without knowing everything that happened and as I stated I have seen these things come out differently when ALL the facts were in.

            Hopefully the Norman Police Department will conclude their investigation soon and then we will know if the kick holder deserved it or the fighter will be making payments on a civil lawsuit judgement.

  10. Interesting to know what individual real estate investors are thinking about these days.

    I thought that they would be panicked with the economy and asking rents coming down … but it seems no.

    Just saw the following on bogleheads – guy in Denver who has the following rentals (cash positive) asking if he should pull equity out to buy more investment properties. Thats right – not to diversify or to stay safe – but to continue to increase # of his properties.

    House #2: Rental – $468K (Redfin) / 191K (Mortgage) = $277K equity
    House #3: Rental – $370K (Redfin) / 113K (Mortgage) = $257K equity
    House #4: Rental – $357K (Redfin) / $98K = $259K equity

    I just looked at biggerpockets and rfd and yes – that is what a number of participants are thinking. They are looking for properties that will be cashflow positive

    Wow –

    1. Until it truly craters and nothing is left but a smoldering hole in the ground, they won’t believe.

    1. From the comments: “is there anywhere for decent people in America that don’t buy into this woke garbage to go live and not be bothered?”

      Is someone pining for Apartheid? I believe critical race theory has other plans for this commenter.

    1. Everyone we know in San Diego of any means whatever automatically assumes that borrowing boatloads of money to purchase a home is the only reasonable housing option, despite super-inflated prices and a dearth of inventory.

      It really does bring to mind people borrowing money to buy GameStop stonks on margin.

      1. If DJT wants to run again, ideally he would lay low for at least two years. Get this pandemic over and done with, let Biden get his economic bump from pent-up demand for socializing and travel, and then let the economy crash from too much debt and society crash from too much woke&cancel. Then DJT can ride in on his white helicopter and rescue us all from chiyna.

        1. lay low for at least two years

          That would be fine if there weren’t midterms. He’s backing candidates for those.

      1. The Financial Times
        Opinion Global Economy
        The end of the party looms for markets high on stimulus
        An economic boom could make last year’s gains go flat for investors
        Ruchir Sharma
        As consumers emerge from lockdown, the release of pent-up demand could add two to three percentage points to GDP growth in the US alone
        © David Paul Morris/Bloomberg
        Ruchir Sharma 14 hours ago
        The writer, Morgan Stanley Investment Management’s chief global strategist, is author of ‘The Ten Rules of Successful Nations’

        It was a jarring image. As deaths from the pandemic rose in 2020, financial markets high on government stimulus partied through a devastating global downturn. Most people expect the revelry to continue as economies recover. But now there are signs the recovery could turn into a boom — and an overheating economy could end the market party. This year could unfold as a mirror image of 2020, with markets going flat amid soaring economic growth.

        To understand why, follow the money. After a brief crash last March, markets started rallying the day after the US Federal Reserve announced its first pandemic relief measures — and kept on rallying. Nearly 20 per cent of all dollars in circulation were printed in 2020 alone. Major central banks followed the Fed, and governments topped that up with stimulus spending. US disposable incomes rose at the fastest rate in decades, but much of that went unspent. Americans saved at the highest rate since the second world war, putting away an additional $1.7tn, or more than 16 per cent of their 2020 income.

        With more money in the bank, and more time on their hands because of lockdowns, many workers turned to punting in the markets. Of 49m online brokerage accounts in the US, 13m opened in 2020, according to calculations by Scott Rubner of Goldman Sachs. The week after stimulus checks went out in April, trading by middle-class Americans soared.

        US retail investors helped fuel flash manias for bankrupt companies like JC Penney, and more recently for another faltering retailer, GameStop. From South Korea to India, individuals bought stocks at a furious pace. The huge winners were large growth stocks, particularly in the US and China. Together they accounted for most of the 2020 market gains worldwide.

        Where will all the money go when the virus fades? Epidemiologists say the pandemic could be contained by summer, perhaps even by spring in the US and UK, where vaccines are rapidly rolling out. As consumers emerge from lockdown, excess savings are likely to drop sharply. Even by conservative estimates, the release of pent-up demand could add two to three percentage points to gross domestic product growth in the US alone.

        The consensus prediction for global GDP growth in 2021 is just over 5 per cent. But my team thinks growth could top 6 per cent worldwide, and reach 8 per cent in the US. I think other forecasters are underestimating the recovery, given the savings glut and the apparent eagerness of policymakers to err on the side of overstimulating. Ironically, a booming economy may not be good for markets. Savers will become shoppers again. Resurgent demand for leisure travel, fine dining and other services will strain the capacity of industries gutted by the pandemic.

        The deflationary impact of business closures could give way to the potentially inflationary impact of supply shortages, which are already visible in sectors such as shipping, airlines and semiconductors. The prices of commodities from oil to soyabeans have also been surging of late.

        The bond market is beginning to price in higher inflation, and the prospect of higher yields could suck money out of stocks, which are now much more vulnerable to interest rate swings. Last year stock valuations received an unusually large boost as rates plunged. A sharp rise would deliver a proportionately large shock. Further, the rally was driven mainly by growth stocks — the kind most sensitive to interest rate shifts — and they now dominate many stock market indices.

        Higher long-term interest rates could end the extraordinary bull run for giant tech stocks in the US and China and move flows towards a new set of countries and industries. The buzzwords of last year — the virus, virtual, work from home, recession — are likely to make way for vaccines, the real world, back to the office and reflation. This transition may be more disruptive than imagined for financial markets, which have become hooked on last year’s themes and low long-term interest rates.

        Markets often underestimate the impact of big shifts in the global economy. In the early 1980s, disinflation led to a sharp fall in interest rates, with much greater fallout for the markets than most investors had foreseen. Now the risk is that inflation resurfaces, and bond yields rise more sharply than anticipated, overwhelming the rise in earnings during a recovery. The impact could easily end the rally of 2020, leaving markets suffering withdrawal symptoms despite a global economic boom.

  11. I think it’s ironic that the computer, that was suppose to usher in the information Society, is now being used as a weapon of mass destruction of information and 24)7 fake narratives.

    It took such a long time for workers to get out of slave labor because of the 1850’s Monopolies in the US. Now this return to Globalist Monopoly Rule who partner with our enemies like China and Commie insurrectionists.
    Rigged economies cause the damage and rise of poverty and class warfare, not the bogus white privilege narrative.
    These Entities that have corrupted Government to get their Rule by Monopolies are destroying everything that was gained in 100 years in the US by the worker populations.
    And the Medical Tyranny is a new twist to population control, along with bogus Climate Change.
    Monopolies ruling the World in conjunction with Foreign enemies isn’t Government by the people, but rigged elections took care of that.
    A inhumane freak like
    Bill Gates wanting to dictate what people eat, and get needle jabs, while the nut wants to block out the Sun to mess with mother nature.
    Klaus Schwab , the Nazi like power monger who wants top down control of resources, where these nuts dictate what populations get , by TOP Down control of people, where they are the Kings of the World.
    They envision that they will own everything and people will get back what they say.
    George Soros, another big Nazi like control freak want open borders and no sovereign states so a one World Order of Soros vision of the World.
    Terrible power mongers who are old nuts , controlling old corrupt bribed nuts like Pelosi and Biden.
    It’s noticeable that all these creeps pulling the strings are about 80 years old and above , and not competent or sane. It’s like they are going thru their second childhoods in la la land.

    1. think it’s ironic that the computer, that was suppose to usher in the information Society, is now being used as a weapon of mass destruction of information and 24)7 fake narratives.

      It’s only because it is an effective and convenient way to communicate, and we have this given up on the old ways.

      Letters are out. The only snail mail I get are bills and junk mail. The exception seems to be greeting cards around holidays and birthdays.

      Phone calls? If you call a friend to chat with on the phone, it means you’re a geezer. It wasn’t that long ago that people would actually have conversations on their cell phones, or heaven forbid, their land lines. Small wonder we now get unlimited minutes. The carriers know that they will hardly be used.

      What is going to be fun to watch in the not too distant future is when all the young wokesters, who bare every aspect of their private lives on social media, suddenly get cancelled for previously kosher posts. I warn many, and they laugh at me. Oh well.

      1. I warn many, and they laugh at me.
        Quite right.
        I never joined Facebook. I just thought, oh hell no. I discouraged my daughter from signing up, not just because of my attitude towards it, but because I feared her being bullied online.

        1. Fedgov perspective: Emails can be requested through the Freedom of Information Act. So, staff learned very quickly to discuss matters of high importance or high visibility in-person in cubicles and hallways, or over the phone. No record of the conversation, no FOIA. If any decisions of importance are made in a conversation, the staff is supposed to write a memo documenting the conversation. It will get interesting with all the w@h. It will be nearly impossible to have a non-recorded discussion with more than two people.

          1. I suppose that email contents could be encrypted. I expect that would set off alarms on the spynet monitoring systems and suddenly you would become a person of interest.

          2. All the emails are already encrypted. In order to escape a FOIA, the staff would have to redact every email, or cite a specific reason why the email should remain non public. In the end it was just easier to not write anything down.

  12. After World War 2 in the US you had this rise in the middle class that was a balance of power that occurred that showed how much capitalism could uplift the wealth of the worker. But, they messed it all up for what is occurring today. . I blame the Politicians for selling out.
    When Congress bailed out the Banks/Lenders in 2008, that was the beginning of lawlessness, and a unholy alliance between Big Monopolies and Big Government and to get more of the same.
    The Government is suppose to break up Monopolies, not be the pawn for their power grabs, that now resulted in rigged elections so the Puppets could be put in.
    And really these Entities who bribe , cheat and loot have criminal mentalities , and they are really parasites who figure out how to rig systems and loot.
    Not people who should be running the World.

    1. The Government is suppose to break up Monopolies, not be the pawn for their power grabs

      The government is the monopoly on force in a given territory, and it is the enabler of and partner in all other monopolies therein.

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