Investing Strategies. What is your move?

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Well payrolls came in at 253K

Of course March was also a "beat" when announced at 236K - but has now been revised down to 165K - so overstated by 71K

February was also revised lower by -63K last month

January was revised down by -45K a month after published.

So this number is pretty much a headline grabbing joke AFAIC. I presume the April number will revised down to around 183K (the consensus estimate) next month. Extend and pretend.

www.bls.gov

Nonfarm Payroll Employment: Revisions between over-the-month estimates, 1979-present

www.bls.gov www.bls.gov
 
PimTac said:
This is just one story but this trend in commercial real estate is the elephant in the room right now.


Click to expand...

Yep, lots of companies will simply walk away from commercial real estate.

I was watching a video a few months ago and Houston has lots of vacant office buildings, many older buildings that have trouble finding tenants.

Seems like WFH is best for many employees and employer. Lots of times I’m on a company Tcon and I hear a dog barking in the background, person apologize saying Amazon driver just knocked on their door. 🐶 🚚. No need for expensive office lease if 95% of everything can get done at home.
 
Dave Hess said:
Yep, lots of companies will simply walk away from commercial real estate.

I was watching a video a few months ago and Houston has lots of vacant office buildings, many older buildings that have trouble finding tenants.

Seems like WFH is best for many employees and employer. Lots of times I’m on a company Tcon and I hear a dog barking in the background, person apologize saying Amazon driver just knocked on their door. 🐶 🚚. No need for expensive office lease if 95% of everything can get done at home.
Click to expand...


Yep. The biggest reason employers want employees back to work in the buildings is because they pay for them full or empty.

I have heard and read that a large number of short term financing notes are due for refinancing this summer. The higher interest rates are pushing tenants to just walk.
 
PimTac said:
Yep. The biggest reason employers want employees back to work in the buildings is because they pay for them full or empty.

I have heard and read that a large number of short term financing notes are due for refinancing this summer. The higher interest rates are pushing tenants to just walk.
Click to expand...

Pensions are also invested in commercial real estate and will be hurting when the wave of defaults begin.

Lots of bad news in the next year.

Wave of home foreclosures will most likely be held off until after the election. Maybe student loan repayments will be postponed for another year or two ?
 
I would imagine diversified products are a good thing paper and real estate . These day who knows , just don't do stupid.
 
I personally don't think home foreclosure this time will be as bad as 08. The lending standard has gone up a lot and people locked into historic low rate like 2-3%, they can manage as long as they are not lying on the application.

Commercial real estate in places like NYC have been ridiculous for a long time, and landlords would rather vacant the building instead of lowering rent. This typically means they are more worried about appraisal and mark to market than cash flow. I have been running away from REIT fund (and many fund with heavy REIT involvement) in my 401k since 4 years ago because of that.

I think many office buildings would be torn down like the old malls, they were from a different era and the land they were on are either no longer valuable or are worth more as something else (residential, data center, etc).
 
PandaBear said:
I personally don't think home foreclosure this time will be as bad as 08. The lending standard has gone up a lot and people locked into historic low rate like 2-3%, they can manage as long as they are not lying on the application.

Commercial real estate in places like NYC have been ridiculous for a long time, and landlords would rather vacant the building instead of lowering rent. This typically means they are more worried about appraisal and mark to market than cash flow. I have been running away from REIT fund (and many fund with heavy REIT involvement) in my 401k since 4 years ago because of that.

I think many office buildings would be torn down like the old malls, they were from a different era and the land they were on are either no longer valuable or are worth more as something else (residential, data center, etc).
Click to expand...


It will depend on the building owner/s. Most of the CRE is owned by capital venture firms and other investment entities. It’s a complicated scheme. Just because a company has their name on a building doesn’t mean they own it.

Hotels are in focus due to the consolidation that has happened in the past ten years or so. Marriott is a huge entity now having bought Starwood several years ago. Marriott and Sheraton might have several locations in a large city. Some of those will be duplicative.
 
PandaBear said:
I think many office buildings would be torn down like the old malls, they were from a different era and the land they were on are either no longer valuable or are worth more as something else (residential, data center, etc).
Click to expand...
They tore down an old mall in Worcester at the start of the CV-19 and replaced it with a giant Amazon warehouse and that is no longer going to open...lol. The warehouse looks a whole lot better than the old mall though so I guess that's a positive.
 
There are too many distortions in the current economy.
After 15 years of:
- Zero interest rates to prevent short term recessions and postpone the pain until the future (the future is now).
This caused asset bubbles in all asset classes: Stocks, Bonds, Real Estate, Commodities, etc.
- Quantitative easing (several rounds of this). Governments printing trillions of new money.
- Household credit card debt at a level never seen before in history,
- US government debt at 31 trillion dollars (how are our children and their children ever going to pay this back)?
- Bank failures of regional banks continuing.

It obvious stocks are the place to be for long term gains. I get that.
But these distortions in the current economy will at some point wreck havoc with all asset classes sharply declining (aka Crash) before things go back to normal.

I would prefer to stay on the sidelines in a Money Market with a safe annual return of 5%+,
and wait for the crash to happen, and then buy stocks, real estate, etc at very low prices, and avoid the huge losses of holding the assets during the crash.
 
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