Your Good Thing (Is About To End)
Dishonest money begets dishonest statistics, dishonest accounting, dishonest balance sheets, dishonest means, dishonest objectives, dishonest compensation policies, and dishonest relationships; that it begets ambiguousness and corruption in every aspect of life... - Anthony Deden
At the outset, the masses misinterpreted it as nothing more than a scandalous rise in prices; only later, under the name of inflation, was the process correctly comprehended as the downfall of money. - Konrad Heiden, The Fuhrer
Hey, look - some QT!
Fed Treasury holdings fell by $798 Million this week - literally a rounding error - and MBS holdings declined by $2.627 billion, which is about what Ken Griffin made in 2021. (I got some pushback about using week to week numbers - fair enough, but they do come out every Thursday, and it doesn’t affect my point, which is that QT is pretty much a joke so far.)
Note that Fed Treasury holdings are UP $476.788 Billion and MBS holdings are up $321.9 Billion since July 28, 2021, when official CPI was already running over 5%. Really inexcusable.
"Interest-bearing assets on the Fed balance sheet are off only $48 billion from their late March peak and remains higher by $4.7 trillion from the onset of the Fed’s stimulus barrage in March 2020." - Grant’s
Managing The Inflation Narrative Versus Actually Managing Inflation
…there is a major problem with using TIPS-implied inflation expectations as a report card for Fed policy and that is the fact that the Fed, after buying up more than a quarter of the total outstanding, is now the single most dominant force in the market for TIPS! To some degree then the Fed, in managing its TIPS portfolio via QE and QT, is able to write its own report card. And this at least creates the temptation to try to manage inflation more by controlling the narrative than by actually addressing it directly.
Welcome to the dead zone May 5, 2006
Contracts are being canceled, deals are drying up, prices are starting to drop. The psychology is shifting even as thousands of new homes and condos join the for-sale listings each day - so the downward pressure will only get worse.
I've been noticing a lot posts about Opendoor (and Airbnb) while diving into the real estate situation recently. Anyway, I've received 12 emails from OpenDoor since last Sunday - never got any from them before, and I didn't sign up for anything recently. Each email has over 50 homes.
ATLANTA — Hudson Capital Properties (HCP) has sold Hudson Ridge Apartments, a 434-unit multifamily community located at 3505 Windy Ridge Lane in Atlanta’s Cumberland-Galleria submarket. An affiliate of New York-based L+M Fund Management purchased the community for $143.5 million.
Built in 1988, renovated after 2016, at $334.1k per unit. So that’s a green shoot.
KBS Real Estate Investment Trust II…has agreed to sell Union Bank Plaza in Los Angeles…to an affiliate of Waterbridge Capital for $155 million…a 40-story office building totaling approximately 702,000 square feet that sits on 3.7 acres of land. The REIT purchased the property in September 2010 for $208 million from Hines’ U.S. Office Value Added Fund. Last month, Harbor Associates terminated its agreement to purchase the property for $165 million. In late 2017, RC Acquisition, an affiliate of Pacific Reach Properties, agreed to purchase Union Bank Plaza for $280 million, but later “exercised its right to terminate the agreement.”
So an office building in LA: $208M in 2010, $280M in 2017 fell through, a month ago $165M (fell through), and now $155M. This is after the biggest overall asset bubble in history. Then again, all real estate is local, or something. I avoid L.A. as much as possible nowadays.
Off to the other coast:
RXR and the Blackstone Group are in contract to sell 1330 Sixth Avenue weeks after putting the 40-story office property on the market. The joint venture is selling the building to Empire Capital Holdings for $325 million, a person with knowledge of the deal told the Commercial Observer. When marketing efforts were first reported in June, the joint venture was looking for $350 million.
RXR led a group of investors in the purchase of the building in 2010 for about $400 million. The seller at the time was Canadian lender Otera Capital, which took the 520,000-square-foot property from Harry Macklowe after he was forced in 2009 to put it up for auction; Macklowe purchased the property in 2006 for $498 million.
Ok, so $498M in 2006, $400M in 2010, $350M in June (oops), and now $325M. Ouch.
I heard of these three properties on the Treppwire Podcast. Just like I’m kind of “glass half-empty,” they are normally very “glass half-full.”
Just over 27 percent of pending sales in the Las Vegas area fell through in June, the highest cancellation rate in the nation, according to Redfin
Or…
As housing prices fall, the 'American dream' of homeownership becomes possible again for some
From Almost Daily Grants
From fresh as a daisy to pushing up daisies. The Financial Times documents the travails of eight-year-old Chinese grocery delivery startup Missfresh, which broke the news to staffers this week that it has run out of cash, leaving it unable to pay employee salaries for June and July and suppliers for previously delivered goods.
“Our operations are in big trouble,” Xiao Yungui, head of supply chain management at Missfresh, admitted to staffers on a recent call. The company announced it will shut down its network of mini-warehouse distribution centers, marking the end of its “pioneering business model,” in the FT’s words, focused on delivering meats and produce to customers within 30 minutes.
Missfresh, which completed an IPO on the Nasdaq last June at a $3 billion valuation, boasted a roster of household name investors. Venture capital-cum-hedge fund Tiger Global owned an 11% stake in the firm as of Dec. 31, shelling out $117 million for the privilege over several years. Likewise, Goldman Sachs kicked in $66 million and local tech behemoth Tencent invested seven figures.
With the business subsequently going pear-shaped, Missfresh told all employees to work from home today, the FT relays, though several staffers found that the company had switched off its IT system. Missfresh executives have gotten out front of the situation, in a manner of speaking, removing their names from registration documents, “a common tactic in China to avoid being slapped with personal spending restrictions by courts over unpaid debt.”
“MF” is a very appropriate symbol. Check out the chart!
…two years ago we were selling at 10 times revenues when we were at $64. At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking? - Scott McNealy, Sun Microsystems co-founder, March 31, 2002
Tomorrow's Energy: Hydrogen, Fuel Cells, and the Prospects for a Cleaner Planet by Peter Hoffmann A book review of sorts. Another interesting post from Creditbubblestocks.com.
Have not listened to any of these yet except the first two, but here you go:
Harry Melandri: Rob Dugger Spots Potholes of Economic Growth Very good! Melandri is great as always.
Market Wrap With Jim Chanos of Kynikos Associates and Deirdre Bosa of CNBC Chanos is always interesting (to me)
TIP466: THE BEAR HAS ARRIVED: JEREMY GRANTHAM (Here’s one I loved with Grantham from August 2021.)
Macrovoices: Adam Rozencwajg: Understanding the Global Energy Crisis
Wealthion: Abolish the Federal Reserve?
The Fifteen Faces of Fiat News Good reference.
"The most serious inflation we have is asset-price inflation." - Rob Dugger
You say that money, isn't everything
But I'd like to see you live without it
You think you can keep on going living like a king
Ooh babe, but I strongly doubt it
“People will very rapidly spit into a cup and send it to 23andMe and get really interesting data about their background. And guess what? Their DNA is now owned by a private company. It can be sold off with very little intellectual property protection or privacy protection and we don’t have legal and regulatory regimes to deal with that.”
“Watch out! Be on your guard against all kinds of greed; life does not consist in an abundance of possessions.” - Jesus
'dishonest balance sheets' - Since FASAB Statement 56 has effectively placed the official federal budget in the Sci-Fi/Fantasy section, it stands to reason that the same rationale could be extended to the Fed's balance sheet. Why would we believe any of their numbers at this point? They could have two sets of books (like any well run criminal organization) and we would have no idea; and it's all 'legal' by claiming 'national security interests' - the classic catch all for tax payer funded dirty deeds.
*cue the AC/DC here*
Zero trust in any federal institution.
Such lucrative ponzi schemes are worth lying for. They just need bodies to convince it's worth dying for. I don't think it's a coincidence that Japan wants to make a constitutional change to increase military spending. And then a few weeks later redefine what the legal age is from 20 to 18. Military still at 20 but I'm sure it's coming. Shooting war within China in 10 years?