4 Jan 16

The Association of Foreign Investors in Real Estate (AFIRE) reports in its annual survey that the US will continue to be the safe haven for RE money, perhaps topping the $87B in inflows that it saw in 2015. FIRPTA reform is obviously a factor.

In light of Iran’s severance of diplomatic ties with Saudi Arabia this weekend, the NYT offers an overview of the Sunni / Shia split.


23 Sep 15

S&P 1,938.28 -0.23% | US10Y 2.15% +2bps | €/$ 1.1184 +0.58% | 30YFRM 3.79% -10bps (MoM) | WTI Crude ($/bbl) 45.07 -2.78% | COMEX Copper ($/lb) 2.296 -0.07% | BAA-US10Y: 3.13% | US10Y-US2Y: 1.46% | US10Y-Bund 1.56%  [@2:00PM]

US Multifamily investment hit $127B for the year ending June 30th 2015 – the most ever in a 12 month period, according to ULI. A positive history of public housing in the US. Harvard study forecasts tough times ahead for income constrained renters. 16 Real Estate apps. HSBC got the go-ahead from the Chinese government to issue $157M in “Panda Bonds” – yuan-denominated debt listed in China’s domestic markets. FT’s This is Africa released its “Africa Investment Report” this morning. Christopher Nolan may be remaking a live-action version of Katsuhiro Otomo’s Akiraa cult classic. A Belgian photographer gained access to the Yakuza crime families in Japan, living among them for two years and at one point even meeting the Godfather himself.

22 Sep 15 – News and Questions

The FHFA’s House Price Index – which does not include high-end single-family housing – came in strong at 0.6% MoM/ 5.8% YoY. Home sales data have been strong, but home price data has been less robust.

Some of the massive, single-family housing landlords that REPE shops built out in the aftermath of the housing crisis are merging into even more massive single-family housing landlords. David Cameron may or may not have put his dick into a dead pig’s mouth while at Oxford. Here is a surprising response to this revelation – a thoughtful essay about the nature of power networks. Japan is eating less rice! What are other countires eating less of? VW scandalously cheated on their emissions testing for diesel vehicles. They are going to get crushed with lawsuits from governments around the world. What is an estimate of the actual emissions consequences?

11 Sep 15 – Starbucks Charging Costs

The WTC plane attacks happened 14 years ago today. I was ten years old. RIP. Link to the 9/11 Memorial website.

I saw a homeless man charging his laptop in Starbucks this morning and realized two things: one, that man will spend his day in more or less the same way as most people in America, rich or poor – in front of computer. Two, providing public access to its power output might affect Starbuck’s bottom line.

I did some napkin math and it turns out it really doesn’t, even under generous assumptions (for example, I assumed there are about as many Starbucks as there are gas stations, which is probably a few thousand too high. Calculations below:

How much does device charging cost Starbucks USA?
Hours charged/per. 1.0
Power use (W)/h (1) 100.0
Price (kWh) $0.1
Cost per hour $0.01
Avg. Daily Traffic 500.0
Avg. Pct. Charging 10.0%
Cost / loc. / day $0.50
Cost / loc. / year $182.50
National locations 10,000
Total cost per year $1,825,000
(1) Assuming that most people are charging laptops (~150 W) rather than phones (~5 W)

So there you have it. It costs Starbucks about $2 million annually for everyone to charge their stuff  – a rounding error for a company that reported $16.5B in total revenues for 2014. They probably just look at it as a COGS item for $37 coffees.

9 Sep 15 – Africa Roundup

“As you are all aware, roads and information superhighways are two of the most effective means of realising accelerated development of any modern economy. Today we are witnessing the implementation of both at the same time in this region,”  – Robert Mugo, ICT

A high speed fiber cable/road project will connect Southern Sudan and Kenya in two years; the project is funded by the World Bank. Multinational purveyors of RCP need to shift their gaze to countries like Gabon and Angola. An overview of Africa’s startup scene. BPC-ABC consortium to finance 275,000 companies in Angola.

9 Sep 15 – Puerto Rico’s Five Year Plan

S&P 1,942.04 -1.39% | US10Y-Bund 150bps | US10Y 2.20% +2bps | €/$ 1.1242 +0.31% | 30YFRM 3.84% -7bps (MoM) | WTI Crude ($/bbl) 44.17 +0.05% | COMEX Copper ($/lb) 2.435 -0.45% | BAA-US10Y: 3.16% | Term Premium: 0.713% [@8:00PM]

Puerto Rico’s five year debt restructuring plan, in its entire 77-page glory. The plan (called the “FEGP” – Fiscal and Economic Growth Plan) is the result of a working group put together by Puerto Rico’s Governor, Alejandro Garcia Padilla. This working group finds that Puerto Rico will be short around $30B between now and 2020. Even if all the mitigating actions identified are adopted (e.g., restructuring PPPs, adopting more liberal corporate tax code, reducing all sorts of subsidies, applying for subsidies through USG entities such as HUD – general reduce expenses and increase revenues type stuff), Puerto Rico is projected to remain short around $16B, and the FEGP states pretty clearly that unless creditors are willing to undergo some sort of restructuring, the burden on Puerto Rico would result in significant infrastructure shortfalls for Puerto Rican citizens. A list of interesting requests to the US Government starts on page 46.

In other Sovereign news, The Economist writes a brief history of a very curious Ukrainian bond issue (which involves Russian creditors and ousted President Viktor Yanukovych). Elsewhere, William McCants of the Brookings Institute writes a fascinating mini-biography on Abu Bakr al-Baghdadi, leader of the Islamic State.

Weekend Miscellanea – 29 Aug 15

Laurie Goodman’s monthly housing finance chartbook. How globes are made, the original way. Re-designing the sidewalk shed (you know, those scaffolding set-ups that cover most of Manhattan’s walkways?). How hackers stole $50M in tax refunds from the IRS. Eliminating the FAFSA may be the right sort of nudge towards increased university and vocational school attendance.

Persons of Interest: Christiana Figueres, who oversees the Framework Convention on Climate Change, is more or less responsible for brokering agreement on carbon emissions reduction (Profile in the New Yorker). Fatih Birol, as Chief Economist and Director of Global Energy Economics at the International Energy Agency, is one of world’s foremost experts on energy markets.

11 May 2015

S&P 2,116.10 +1.35% | US10Y-Bund 164bps | US10Y 2.17% +0bps | €/$ 1.1149 -0.45% | 30YFRM 3.83% +7bps (MoM) | WTI Crude ($/bbl) 58.92 -0.79% | COMEX Copper ($/lb) 2.930 -0.60% | BAA-US10Y: 2.65% | Term Premium: 0.575% [@8:00am]

Not much on the economic calendar today. Blackstone is selling 90M shares of Hilton Worldwide today (@~$30/share, depending on how well the sale goes). TPG is buying Cushman for $2B. American Residential Properties may be a good buy for a larger REO-to-rental portfolio manager such as IH or AHFR. With Tesla moving in, is Reno positioned to pivot towards tech? An (older) annual report from the Vatican Bank.

TIL how Ed Snowden identified himself to Laura Poitras and Glenn Greenwald when they met in Hong Kong (from “No Place to Hide”):

“We were to go to the third floor of Snowden’s hotel, which was where the conference rooms were located. He had chosen a specific conference room for what he thought was its perfect balance: sufficiently isolated to discourage substantial “human traffic”, as he called it, but not so obscure and hidden that we would attract attention while waiting there.

Laura told me that once we got to the third floor, we were supposed to ask the first hotel employee we ran into near the designated room whether there was a restaurant open. The question would signal to Snowden, who would be hovering nearby, that we had not been followed. Inside the designated room, we were to wait on a couch near “a giant alligator,” which, Laura confirmed, was some kind of room decoration rather than a live animal.

We had two different meeting times: 10:00 and then 10:20. If Snowden failed to arrive within two minutes of the first time, were were to leave the room and come back later at the second time, when he would find us.

“How will we know it’s him?” I asked Laura. We still knew virtually nothing about him, not his age, race, physical appearance, or anything else.

“He’ll be carrying a Rubik’s Cube,” she said.

Spies. Classic.

24 Apr 15

S&P 2,118.08 +0.24% | US10Y-Bund 175bps | US10Y 1.91% -5bps | €/$ 1.086 +0.35% | 30YFRM 3.79% -3bps (MoM) | WTI Crude ($/bbl) 56.77 -1.68% | COMEX Copper ($/lb) 2.752 +1.85% | HY Spread: 3.95% | Trm Premium: 0.496% [@12:00pm]

Durable goods orders rose 4% MoM. Core durable goods (ex-transportation) fell by around .2%. The US10Y yield dropped as a result, as analysts expected a core rise of around 0.3%. This data entrenches the view that the Fed will keep rates low until the end of the year.

21 Apr 15

S&P 2,097.76 -0.13% | US10Y-Bund 181bps | US10Y 1.91% +2bps | €/$ 1.073 -0.04% | 30YFRM 3.73% -5bps (MoM) | WTI Crude ($/bbl) 55.26 -1.99% | COMEX Copper ($/lb) 2.702 -1.01% | HY Spread: 3.95% | Trm Premium: 0.499% [@7:00pm]

Not much news on the economic calendar today. Bill Gross calls the German 10Y Bund the short of the year, and adds that it acts as an anchor on the the US10Y. With a current spread of around 180bps, I’d say that the Bund’s richness has been dogging my initial projection of 200bps on the US10Y by late March.

Existing home sales numbers for March come out tomorrow. February showed moderate improvement from January, although at an annual pace 4.88M, it has been below stronger readings from late 2014 of above 5.00M. A number at the upper range of consensus, say 5.2M could put a little pep in the US10Y, but existing home sales are more a marker of going forward confidence than immediate climate. Consumer confidence looks good for Q2/Q3 – that won’t impact the US10Y much in the next week, although a good reading does bode well for consumption going forward.

Tomorrow we’ll get jobless claims at 8:30, and durable goods orders on Friday. Jobless claims have been decent, consistently on a 4-week average of around 280K. This hasn’t translated to much movement in the US10Y. A strong reading of 200K or something like that would push the US10Y up. Durable goods orders, a measure of factory activity going forwards, have been weak and the core consensus is around 0.3%. PPI-FD, which came in last week at 0.3% MoM, won’t have much real adjustment effect on durable goods (a nominal measure). A strong reading, again, might have some slight upkick on the US10Y, but as far as the next week goes, the case will likely be moderate growth and little effect on the near future.


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