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Adelaide Polsinelli Sells Prime Upper West Side Retail Condo

Adelaide Polsinelli, Vice Chairman of Compass, a publicly traded, technology-driven, real estate platform, has sold, the retail condo at 380 Columbus Avenue, also known as 101 West 78th Street, on the Northwest corner of 78th Street for a price of $8,950,000. The property is located in the Upper West Side... The post Adelaide Polsinelli Sells Prime Upper West Side Retail Condo appeared first on Real Estate Weekly. Adelaide Polsinelli, Vice Chairman of Compass, a publicly traded, technology-driven, real estate platform, has sold, the retail condo at 380 Columbus Avenue, also known as 101 West 78th Street, on the Northwest corner of 78th Street for a price of $8,950,000. The property is located in the Upper West Side Historic District, one of Manhattan’s most vibrant neighborhoods, steps away from The Museum of Natural History 72nd Street, with exceptional proximity to Central Park and Riverside Park,and a short walk from the transportation hub at West 77th Street.. “After a dedicated and thoughtful process of identifying who the perfect buyer should be, nonprofits with ties to the Museum of Natural History, were the best candidates. Having toured several art related and cultural end users, Aperture stood out as the perfect candidate”, Polsinelli noted. Aperture was represented by David Lebenstein, Executive Managing Director and Debra Wollens, Senior Director, both of Cushman Wakefield. Aperture, a not-for-profit foundation, connects the photo community and its audiences with the most inspiring work, the sharpest ideas, and with each other—in print, in person, and online. Created in 1952 by photographers and writers as “common ground for the advancement of photography,” Aperture today is a multi-platform publisher and center for the photo community. They are based in New York, where they produce, publish, and present a program of photography projects, locally and internationally. 380 Columbus Avenue is a neo-renaissance building, constructed in 1886 by architects Simon Schwartz and Arthur Gross and was designed by Emile Gruwe. It was recently converted to luxury residential condominiums. The retail condominium features oversized arched windows and a restored red brick façade with decorative limestone and terracotta. “Fortunately, we are finally seeing signs of a strong retail resurgence as more businesses and organizations, are realizing that owning their real estate instead of leasing it, is far more advantageous,” commented Polsinelli. “This is especially true today as real estate is one of the greatest hedges against inflation,” Polsinell concluded. The post Adelaide Polsinelli Sells Prime Upper West Side Retail Condo appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklySep 22nd, 2022

5 International REITs To Stabilize Your Investment Portfolio

The American housing and real estate market has seen a catastrophic year, with investors and prospective home buyers experiencing major headwinds as home prices – already at an all-time high – soar, often jumping by double digits. Broader economic conditions have left many investors and potential buyers out in the cold with inflation hitting a […] The American housing and real estate market has seen a catastrophic year, with investors and prospective home buyers experiencing major headwinds as home prices – already at an all-time high – soar, often jumping by double digits. Broader economic conditions have left many investors and potential buyers out in the cold with inflation hitting a four-decade high, and interest rates aggressively climbing. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   As part of its arsenal, the Federal Reserve has been actively raising its prime interest rates, the latest of which was 0.75% at the end of July as it looks to take the benchmark rate between 2.25% - 2.5%. The cost of owning a home has also become out of reach, even for the most financially sound buyers and investors. Since January, mortgage rates have already climbed by more than two percentage points, jumping from 3.22% to 5.81% by June. The high level of uncertainty has left many buyers and investors to put their search for a potential property on hold, for now at least. Albeit the negative macroeconomic conditions, it’s starting to look as if the market has slightly cooled in recent months. The high cost of borrowing has brought down applications to their lowest in more than two decades. Moreover, existing home sales have also somewhat subsided, trending below 2019 levels. The changing economic cycle has left buyers and investors looking for alternative ways in which they can recession-proof their investments and mitigate the possibility of experiencing a major loss in the event of a sudden economic turndown. For some potential buyers and investors, the possibility of owning some form of real estate is now lying in Real Estate Investment Trusts (REITs) especially as the market is sailing through choppy conditions.  Moreover, a handful of buyers and investors are also considering the possibility of international REITs, as a stronger dollar has allowed them the upper hand in the foreign real estate investment market. Though there’s a mixed consensus regarding REITs, the outlook is perhaps stronger and more fruitful than placing their investments in the bearish stock market. The burgeoning pressure has managed to push down on even the most seasoned buyers and investors. Costly borrowing, skyrocketing inflation, and a high level of uncertainty are forcing many in a completely alternative direction. Slowing economic conditions, at least in the U.S. are making international real estate investments increasingly attractive,, this is perhaps a foreign concept that not many have considered, though the opportunities are available, especially for international REITs. Depending on who you may ask, the U.S real estate market is starting to show signs of cooling, but the higher rates have left many first-time buyers hawkish. In some parts of the country, residential real estate has slowed, while commercial real estate has shot up in some states. In America, some states with high-end zip codes may soon see a softening in the market to attract potential buyers, but this would require buyers and investors to be patient before making a drastic decision. In a recent move, regional housing markets have been slashing home prices, with some listings taking a 34% cut in July, well above the 25.7% in May according to data by Redfin. Lucrative neighborhoods in major metropolitan cities, from San Francisco on the west coast, to areas such as Camden, Newark, and New York in the northeast have been cutting back on housing prices to attract investors as they navigate a housing recession. Local and foreign buyers have now seen entering the market at various stages, to take advantage of the current conditions.  In terms of localized efforts to boost the state economy, different states have been making adjustments to draw in more investment not just for the retail sector, but for innovation as well. Among economic indicators, some states are trailing include uplifting the quality of life through building better state-funded programs, and helping citizens with much-needed tax breaks amid soaring inflation. Tourism has also seen a major influx of economic activity throughout the summer months for many popular states with major connecting airports. In New Jersey, flights from Jersey to Europe, and inbound connections saw the Newark Liberty International Airport passenger count jump by 53% in June 2022. Other airports including Hartsfield-Jackson Atlanta International Airport, Fort Worth International Airport, Denver International Airport, Chicago O’Hare International Airport, and Los Angeles International Airport made up the top 5 busiest airports in the world, as both domestic and international leisure travel was up from pre-pandemic figures. The case here shows that economic activity has been going up in some sectors, but when it comes to local real estate, some states are lagging far behind their counterparts. Despite current conditions, many Americans are feeling a bit more positive about looking to Europe and abroad to purchase real estate as the stronger dollar-euro exchange rate helps them snap into affordable housing. Even if you don’t feel like going through all the trouble of moving abroad, or having to deal with foreign real estate laws, you can always look to invest your cash in some lucrative foreign REITs that still invest a majority stake outside of the American real estate market. 5 International REITs worth considering  While a majority of real estate investment trusts frequently invest in American properties, these REIT options are oftentimes used as a point of entry for foreign and international real estate as well. Just as with the domestic market, there is still a lot that buyers and investors need to consider when choosing a REIT option. For starters, international REITs typically concentrate on countries that already have a thriving real estate market. Then there’s the current economic and political climate that plays a major role in the performance of international REITs, regardless of where in the world they may be buying up properties. For better portfolio growth and stability, here are our five picks for international REITs buyers and investors should consider in the near term. iShares International Developed Real Estate ETF iShares (NASDAQ:IFGL) has been a popular and affordable purchase REIT option for many, as month over month performance has been steady, jumping by 2.86% between July and August. While year-to-date (YTD) performance has been down 17.91%, this investment tracks investment results of the FTSE EPRA/NAREIT Developed Index. The majority of the investment is made up of real estate equities that are developed in non-American markets. Unlike other well-known REITs, iShares measures underlying stock markets in developed countries, and typically engage with companies that own and develop real estate in foreign markets. Second, to Schwab U.S. REIT ETF (NYSEARCA: SCHH), iShares has one of the lowest expense ratios, currently at 0.08%, whereas SCHH sits at 0.07%, WisdomTree Global Ex-U.S. Real Estate ETF WisdomTree (NYSEARCA:DRW) has undergone major changes in recent months. In the past, the fund focussed on tracking dividend-centered indices of international real estate companies. Now since April 2022, the fund is focussing on companies that derive revenue from tech real estate operations. The makeover means that DRW works with megatrends that are globally recognized including cloud computing, internet connectivity such as 4G and 5G, logistics, and life sciences. Considering its change of direction, the fund is even now more attractive than before in terms of foreign real estate investment. DRW currently yields at 5.83%, while YTD performance has come down 5.87%, the fund is considered a remarkable purchase for long-term investors who are willing to hold for five years or longer, after which return on investment starts to substantially increase.n Vanguard Global ex-US Real Est ETF While Vanguard (NASDAQ:VNQI) takes a completely different approach, seasoned investors find more comfortable investing in a company that tracks the performance of the S&P Global ex-U.S. Property Index. Somewhat traditional than what you’d expect from American REIT funds, Vanguard allows for more transparent and reliable access to the international REIT market. The fund follows a float-adjusted, market capitalization-weighted adjusted index, making it easier to track and measure the basic equity market performance of international real estate stocks. Moreover, instead of only measuring indexes in developed economies, Vanguard follows trends in emerging markets for both REITs and specific real estate management and development companies (REMDs).  The other positive news about VNQI is that it holds around 99.17% foreign holdings, and has return equity of 8.3%. Throughout the first couple of years, performance is slower, and the initial return will most likely start after three to five years depending on the macroeconomic conditions. Dow Jones International Real Estate ETF Focused on tracking and measuring Select Real Estate Securities, the Dow Jones International Real Estate ETF (NYSEARCA:RWX) is a float-adjusted market capitalization index performance in conjunction with traded real estate equities in foreign markets outside of the U.S. Overall sentiment has been slightly more bullish in recent months as the sudden market turnaround helped major indices shed most of their bearish performance. Currently, YTD is down, but an upward trajectory has many experts suggesting that RWX could possibly rebound in the coming months as market conditions improve. RWX holds a steady yield of 5.49% and has a considerably low expense ratio of 0.59%. Moreover, in the last month, RWX has climbed by 5.59%, a steady performance as many buyers and investors are looking to start regaining interest in the international real estate market. FlexShares Global Quality Real Estate ETF Managed by Northern Trust, FlexShares corresponds with the price and yield performance of the Northern Trust Global Quality Real Estate IndexSM. The investment works alongside the performance of equities that receive major global exposure that hold well-known quality, value, and momentum. FlexShares Global Quality Real Estate Index Fund (NYSEARCA:GQRE) holds a one-year yield at 2.71%, and has a forward-looking price of $62.54 per share, slightly below its 52-week high of $74.34 and above its 52-week low of $54.88, according to recent company insights. There’s been strong recognition for FlexShares, mainly as it focuses on delivering results that are not commonly found with international REITs. Seeing as it tracks the performance of an underlying index, FlexShares is considerably more sustainable for long-term investment and portfolio growth. Final Thoughts While market conditions are set to improve in the coming months, potential buyers and investors who are interested in real estate investment trusts will need to consider macroeconomic trends that are affecting the broader global performance of the real estate market. Even as the changing economic cycle has made it increasingly difficult to establish a strategy that will last for the near term, it’s considered more feasible to hold onto current investments, especially REITs as the market cool-off is set to deliver sizable returns in the long term. .....»»

Category: blogSource: valuewalkSep 6th, 2022

Sam"s Club just raised membership prices, but it"s still cheaper than Costco. Here"s how the two clubs stack up.

The two retailers are nearly identical in many ways, but Costco's food court has better options and is more convenient. Here's how they stack up. Costco.Mohammad Khursheed/REUTERS Sam's Club and Costco are the two main membership club grocery competitors in the US. They're comparable in many ways, but Costco's food court has better options and is more convenient. Sam's Club has the edge on curbside pickup and scan and go shopping. I'm a Costco member, but I've never been to Sam's Club before.Mary Meisenzahl/InsiderBoth stores operate on the same premise: customers purchase annual memberships that give them access to bulk goods at prices lower than most other grocery stores, plus a discount on gas and other items.Mary Meisenzahl/InsiderCostco has over 500 stores in the US, and Sam's Club has about 600.Costco.Mohammad Khursheed/REUTERSCostco has far higher sales than Sam's Club, reporting $192 billion in the 2021 fiscal year, compared to less than half that at $63.9 billion for Sam's Club.A Costco truck makes a delivery to a Costco store in Carlsbad, California.Mike Blake/ReutersCostco's basic gold star membership costs $60 per year, and the upgraded executive membership is double that at $120.Shoshy Ciment/Business InsiderSource: CostcoSam's Club announced in August the membership fees would increase slightly, from $45 to $50 for regular members and $100 to $110 for Plus members.Sam's Club membership card.Zhang Peng/LightRocket via Getty ImagesSource: InsiderI visited both stores to get an idea of how they compare in person, beyond the balance sheet.Mary Meisenzahl/InsiderWhen you walk into Costco, a greeter checks to make sure you have your membership card, which is required to make purchases besides alcohol, the food court, and a few other exceptions.Mary Meisenzahl/InsiderWalking past the carts and greeters, I entered the gigantic Costco warehouse.Mary Meisenzahl/InsiderIn my location, large electronics are on display near the entrance, with TVs stacked up on huge shelves.Mary Meisenzahl/InsiderCeilings are extremely high, and stocks of products extend nearly all the way up. Many of the largest products at Costco are located along this side wall.Mary Meisenzahl/InsiderYou could outfit an entire home from the appliances in Costco, including washing machines, dryers, refrigerators, dishwashers, and more.Mary Meisenzahl/InsiderThen, we finally made our way to the food. Brand name snacks mostly made up the center displays, sitting on pallets.Mary Meisenzahl/InsiderProducts are loosely organized by type, like snacks or baked goods, but it's so overwhelming that it's good to come in with a game plan.Mary Meisenzahl/InsiderFor the most part, every section is inside the main warehouse itself, but dairy and some fruits and vegetables have their own separate refrigerated sections off the main area.Mary Meisenzahl/InsiderSome staples always seem to be available in the produce section, while others change out seasonally.Mary Meisenzahl/InsiderBack out in the main warehouse is the bakery with fresh and packaged goods.Mary Meisenzahl/InsiderFresh baked goods are displayed right in front of the kitchen.Mary Meisenzahl/InsiderYou can also buy custom cakes and order them in store, right in front of the bakery.Mary Meisenzahl/InsiderThe rest of the back wall next to the bakery is a deli and meat counter.Mary Meisenzahl/InsiderThis is where you can find the chain's famous $5 rotisserie chickens.Mary Meisenzahl/InsiderRows and rows of refrigerated cases hold more meat products.Mary Meisenzahl/InsiderA few aisles of refrigerated shelves hold cheeses, butter, and all different kinds of dips and spreads.Mary Meisenzahl/InsiderBeer and hard seltzers are available in the main area of the store, but other alcohol is only sold in the liquor store next door, which has a separate entrance.Mary Meisenzahl/InsiderRemaining aisles on the far side of the store are dedicated to freezers with entrees and desserts, and pantry goods in bulk.Mary Meisenzahl/InsiderMost of the non-food items are gathered in the center of the store, from clothes to books, furniture, electronics, and fine jewelry.Mary Meisenzahl/InsiderCostco also provides some services inside stores, including a pharmacy, optical store, and hearing aid center.Mary Meisenzahl/InsiderThere are about fifteen checkout lanes staffed by workers, plus newer self-checkout stations.Mary Meisenzahl/InsiderJust past the checkout lanes, the food court sells food and drinks, including the famous $1.50 hot dog and soda combination.Mary Meisenzahl/InsiderAfter easing pandemic restrictions, tables for indoor dining were added back.Mary Meisenzahl/InsiderNext up, I went to the closest Sam's Club to me, which was located about 60 miles away in a suburb of Buffalo.Mary Meisenzahl/InsiderThe first major difference I noted was that no one checked if I was a Sam's Club member as I walked in.Mary Meisenzahl/InsiderWhen I first walked inside, it looked nearly the same as Costco with large electronics placed near the entry.Mary Meisenzahl/InsiderI was struck by the large aisles full of tires taking up some prime real estate close to the front of the store.Mary Meisenzahl/InsiderCostco also has a tire center, but it is separated from the main shopping area.Mary Meisenzahl/InsiderOtherwise, the stores had the same main merchandise categories.Mary Meisenzahl/InsiderThey both carry large appliances, furniture, and some plants and gardening supplies.Mary Meisenzahl/InsiderBoth had jewelry displays, with salespeople around to talk about the products.Mary Meisenzahl/InsiderThey carry much of the same merchandise, like this inflatable outdoor shark slide that was on display in both locations.Mary Meisnezahl/InsiderIn most ways, the stores seem to be essentially the same.Mary Meisenzahl/InsiderI did find some other differences, though they were relatively minor.Mary Meisenzahl/InsiderSam's Club has an established curbside pickup program at no extra cost to members, similar to services available at Walmart and Aldi.Mary Meisenzahl/InsiderSource:Insider, InsiderA large area of the entryway is dedicated to holding these orders.Mary Meisenzahl/InsiderMost Costco locations only have "warehouse pickup," with curbside service limited to electronics, jewelry, and a few other items that do not include groceries.Mary Meisenzahl/InsiderSam's Club also seems to make it easier for customers to use these large pallet carts than at Costco, where I've only seen them pushed by shoppers on rare occasions.Mary Meisenzahl/InsiderBoth stores were very organized and had fully stocked shelves, but Sam's Club felt a bit more disheveled because there was no separation between shopping areas and loading organizational areas like there were at Costco.Mary Meisenzahl/InsiderI was surprised to find that at Sam's Club, all alcohol sales are made in the main store area.Mary Meisenzah/InsiderSam's Club had wine and other flavored drinks in the main store, while Costco typically is limited to beer and seltzers.Mary Meisenzah/InsiderThe food court was the area I was most interested to see in comparison.Mary Meisenzahl/InsiderSam's Clubs' food court was much smaller and less busy than Costco's, but they had essentially the same menu.Mary Meisenzahl/InsiderThey have the same basic lineup of pizza, hot dogs, and soda. Sam's also matches Costco's iconic $1.50 hot dog and soda, though they don't have my personal favorite, the chicken bake.Irene Jiang / Business InsiderThe two stores even have the same tables set up in their food courts.Mary Meisenzahl/InsiderBesides the lack of chicken bake, the biggest discrepancy between food courts was the self-service kiosks at Costco, which make ordering fast and easy.Mary Meisenzahl/InsiderOverall, the two stores were more alike than different.Mary Meisenzahl/InsiderIf I wasn't such a regular at my local Costco, I'm not sure I would have even noticed most of these small differences.Mary Meisenzahl/InsiderCostco also has better prices on more grocery staples, according to a recent price comparison by Insider, though they are quite close.Mary Meisenzahl/InsiderSam's Club, on the other hand, has lower membership prices.Mary Meisenzahl/InsiderCostco wins on prices and food court convenience, but I wish it had the curbside pickup service offered at Sam's Club.Mary Meisenzahl/InsiderDo you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 1st, 2022

Escobar: Ukraine - Somewhere Between Afghanization And Syrianization

Escobar: Ukraine - Somewhere Between Afghanization And Syrianization Authored by Pepe Escobar, Ukraine is finished as a nation – neither side will rest in this war. The only question is whether it will be an Afghan or Syrian style finale... One year after the astounding US humiliation in Kabul – and on the verge of another serious comeuppance in Donbass – there is reason to believe Moscow is wary of Washington seeking vengeance: in the form of the 'Afghanization' of Ukraine. With no end in sight to western weapons and finance flowing into kyiv, it must be recognized that the Ukrainian battle is likely to disintegrate into yet another endless war. Like the Afghan jihad in the 1980s which employed US-armed and funded guerrillas to drag Russia into its depths, Ukraine's backers will employ those war-tested methods to run a protracted battle that can spill into bordering Russian lands. Yet this US attempt at crypto-Afghanization will at best accelerate the completion of what Russia's Defense Minister Sergei Shoigu describes as the “tasks” of its Special Military Operation (SMO) in Ukraine. For Moscow right now, that road leads  all the way to Odessa . It didn't have to be this way. Until the recent assassination of Darya Dugina at Moscow's gates, the battlefield in Ukraine was in fact under a 'Syrianization' process. Like the foreign proxy war in Syria this past decade, frontlines around significant Ukrainian cities had roughly stabilized.  Losing on the larger battlefields, kyiv had increasingly moved to employ terrorist tactics.  Neither side could completely master the immense war theater at hand. So the Russian military opted to keep minimal forces in battle – contrary to the strategy it employed in 1980s Afghanistan. Let's remind ourselves of a few Syrian facts: Palmyra was liberated in March 2016, then lost and retaken in 2017. Aleppo was liberated only in December 2016. Deir Ezzor in September 2017. A slice of northern Hama in December and January 2018. The outskirts of Damascus in the Spring of 2018. Idlib – and significantly, over 25 percent of Syrian territory – are still not liberated. That tells a lot about rhythm in a war theater. The Russian military never made a conscious decision to interrupt the multi-channel flow of western weapons to kyiv. Methodically destroying those weapons once they're in Ukrainian territory – with plenty of success – is another matter. The same applies to smashing mercenary networks. Moscow is well aware that any negotiation with those pulling the strings in Washington – and dictating all terms to puppets in Brussels and kyiv – is futile. The fight in Donbass and beyond is a do or die affair. So the battle will go on, destroying what's left of Ukraine, just as it destroyed much of Syria. The difference is that economically, much more than in Syria, what's left of Ukraine will plunge into a black void. Only territory under Russian control will be rebuilt, and that includes, significantly, the bulk of Ukraine's industrial infrastructure. What's left – rump Ukraine – has already been plundered anyway, as Monsanto, Cargill and Dupont have already bagged 17 million hectares of prime, fertile arable land – over half of what Ukraine still possesses. That translates de facto as BlackRock, Blackstone and Vanguard, top agro-business shareholders, owning whatever lands that really matter in non-sovereign Ukraine. Going forward, by next year the Russians will be applying themselves to cutting off kyiv from NATO weapons supplies. As that unfolds, the Anglo-Americans will eventually move whatever puppet regime remains to Lviv. And kyiv terrorism – conducted by Bandera worshipers – will continue to be the new normal in the capital. The Kazakh double game By now it's abundantly clear this is not a mere war of territorial conquest. It's certainly part of a War of Economic Corridors – as the US spares no effort to sabotage and smash the multiple connectivity channels of Eurasia's integration projects, be they Chinese-led (Belt and Road Initiative, BRI) or Russian-led (Eurasian Economic Union , EAEU). Just like the proxy war in Syria remade large swathes of West Asia (witness, for instance, Erdogan about to meet Assad), the fight in Ukraine, in a microcosm, is a war for the reconfiguration of the current world order, where Europe is a mother self-inflicted victim in a minor subplot.  The Big Picture is the emergence of multipolarity. The proxy war in Syria lasted a decade, and it's not over yet. The same may happen to the proxy war in Ukraine. As it stands, Russia has taken an area that is roughly equivalent to Hungary and Slovakia combined. That's still far from “task” fulfillment – ​​and it's bound to go on until Russia has taken all the land right up to the Dnieper as well as Odessa, connecting it to the breakaway Republic of Transnistria. It's enlightening to see how important Eurasian actors are reacting to such geopolitical turbulence. And that brings us to the cases of Kazakhstan and Turkey. The Telegram channel Rybar  (with over 640k followers) and hacker group Beregini revealed in an investigation that Kazakhstan was selling weapons to Ukraine, which translates as de facto treason against their own Russian allies in the Collective Security Treaty Organization (CSTO). Consider too that Kazakhstan is also part of the Shanghai Cooperation Organization (SCO) and the EAEU, the two hubs of the Eurasian-led multipolar order. As a consequence of the scandal, Kazakhstan was forced to officially announce the suspension of all weapons exports until the end of 2023. It began with hackers unveiling how Technoexport – a Kazakh company – was selling armed personnel carriers, anti-tank systems and munitions to kyiv via Jordanian intermediaries, under the orders of the United Kingdom. The deal itself was supervised by the British military attaché in Nur-Sultan, the Kazakh capital. Nur-Sultan predictably tried to dismiss the allegations, arguing that Technoexport had not asked for export licenses. That was essentially false: the Rybar team discovered that Technoexport instead used Blue Water Supplies, a Jordanian firm, for those. And the story gets even justice. All the contract documents ended up being found in the computers of Ukrainian intel. Moreover, the hackers found out about another deal involving Kazspetsexport, via a Bulgarian buyer, for the sale of Kazakh Su-27s, airplane turbines and Mi-24 helicopters. These would have been delivered to the US, but their final destination was Ukraine. The icing on this Central Asian cake is that Kazakhstan also sells significant amounts of Russian – not Kazakh – oil to Kiev. So it seems that Nur-Sultan, perhaps unofficially, somehow contributes to the 'Afghanization' in the war in Ukraine. No diplomatic leaks confirm it, of course, but bets can be made Putin had a few things to say about that to President Kassym-Jomart Tokayev in their recent – ​​cordial – meeting. The Sultan's balancing act Turkey is a way more complex case. Ankara is not a member of the SCO, the CSTO or the EAEU. It is still hedging its bets, calculating on which terms it will join the high-speed rail of Eurasian integration. And yet, via several schemes, Ankara allows Moscow to evade the avalanche of western sanctions and embargoes. Turkish businesses – literally all of them with close connections to President Recep Tayyip Erdogan and his Justice and Development Party (AKP) – are making a killing, and relishing their new role as crossroads warehouse between Russia and the west. It's an open boast in Istanbul that what Russia cannot buy from Germany or France they buy “from us.” And in fact several EU companies are in on it. Ankara's balancing act is as sweet as a good baklava . It gathers economic support from a very important partner right in the middle of the endless, very serious Turkish economic debacle. They agree on nearly everything: Russian gas, S-400 missile systems, the building of the Russian nuclear power plant, tourism – Istanbul is crammed with Russians – Turkish fruits and vegetables. Ankara-Moscow employ sound textbook geopolitics. They play it openly, in full transparency. That does not mean they are allies. It's just pragmatic business between states. For instance, an economic response may alleviate a geopolitical problem, and vice versa. Obviously the collective west has completely forgotten how that normal state-to-state behavior works. It's pathetic. Turkey gets “denounced” by the west as traitorous – as much as China. Of course Erdogan also needs to play to the galleries, so every once in a while he says that Crimea should be taken back by kyiv. After all, his companies also do business with Ukraine – Bayraktar drones and otherwise. And then there's proselytizing: Crimea remains theoretically ripe for Turkish influence, where Ankara may exploit the notions of pan-Islamism and mostly pan-Turkism, capitalizing on the historical relations between the peninsula and the Ottoman Empire. Is Moscow worried? Not really. As for those Bayraktar TB2s sold to kyiv, they will continue to be relentlessly reduced to ashes. Nothing personal. Just business. Tyler Durden Thu, 09/01/2022 - 02:00.....»»

Category: worldSource: nytSep 1st, 2022

Futures Tumble As Market Braces For Jackson Hole Hawk-ano

Futures Tumble As Market Braces For Jackson Hole Hawk-ano The staggering "most hated rally" melt-up, which we warned back in June would steamroll shorts, and which ended up being one of the biggest summery rallies on record, is officially over... ... with BofA superstar strategist Michael Hartnett proven correct again this morning, as stocks retreated further from the bear market peak he called at 4,328 last week, with US equity futures sliding more than 1% on Monday along with stocks in Europe as a risk-off mood took hold at the start of a critical week for global markets when central bankers gather at their annual Jackson Hole symposium starting on Thursday.  Both S&P and Nasdaq futures slumped more than 1.1%, with spoos down 50 points to 4,180, as 10-year Treasury yields are little changed after briefly kissing 3.0%, while two-year yields rose about six basis points, deepening the yield-curve inversion that’s seen as a harbinger of a recession. The dollar spot index climbed to a five-week high, while gold and bitcoin slumped. In China, banks lowered the one-year and five-year loan prime rates on Monday in the aftermath of a decision by the nation’s central bank last week to cut a key policy rate. The Chinese demand outlook has weighed on oil, which briefly sank below $90 a barrel in New York before rebounding and turning green. Traders are monitoring Iran nuclear talks that could lead to more supplies. In premarket trading, GameStop and Bed Bath & Beyond led the declines in meme stocks as the latest frenzy in the cohort loses steam. GameStop -5.6%, Bed Bath & Beyond -8.6%; Fellow retail trading favorite AMC Entertainment Holdings was also down as the cinema theater operator’s preferred stock will start trading on the New York Stock Exchange under the ticker “APE” on Monday. Here are some of the biggest U.S. movers today: Signify Health (SGFY US) jumps 35% in premarket trading after reports of UnitedHealth (UNH US), Amazon.com (AMZN US), CVS (CVS US) and Option Care Health (OPCH US) vying to buy the health- care technology provider. Tesla (TSLA US) and fellow electric-vehicle makers fall amid worries over a hawkish Fed ahead of Jackson Hole symposium this week, and following data showing China EV registrations declined in July. Tesla drops as much as 2.7%; Rivian (RIVN US) -2.3%, Nikola (NKLA US) -2.8%. CFRA cut its recommendation on Netflix (NFLX US) to sell from hold, saying the stock may underperform the S&P 500 Index for the rest of the year after rallying 40% from mid-July lows. Netflix falls 2.2% amid a decline for Nasdaq futures. GigaCloud (GCT US) shares rally as much as 40%, before paring gains to trade around 12% higher. The Chinese e-commerce firm is on course for its third session of straight gains following its Nasdaq debut last week. A huge squeeze in global shares from June’s bear-market lows, stoked by the market’s expectations for a pivot to slower rate hikes, is rapidly fizzling after repeated Fed policy makers warned that interest rates are going higher. This weekend's Jackson Hole symposium gives Jerome Powell a platform to reset those bets, which are vulnerable to the possibility of persistently elevated price pressures even as economic growth stumbles. Investors are also waking up to the looming acceleration of the Fed’s balance-sheet reduction: quantitative tightening kicks into top gear next month, and will add to pressure on riskier assets which have benefited from ample liquidity. “It is likely central bankers, including Fed Chair Powell, will remain hawkish in dealing with inflation albeit with a bit of caution creeping in given the emerging economic downturn,” Shane Oliver, head of investment strategy at AMP Services Ltd., wrote in a note. Of course, the irony would be if markets melt up again next week just as hedge funds aggressively reset shorts: “The expectation is still that Powell will reaffirm what he and his colleagues have been saying in public recently,” said Craig Erlam, a senior market analyst at Oanda. “The risk is that he says something dovish -- intentionally or otherwise -- after investors position for the opposite and triggers another risk-on rally in the markets.” The selling also accelerate in Europe, where the Stoxx 600 index dropped to its lowest level in more than three weeks, with autos, chemicals and tech the worst-performing industries as all sectors fall.  The DAX lags, dropping 2%. S&P futures slide 1.3%, Nasdaq contracts tumble 1.6%. Here are some of the biggest European movers today: Fresenius SE shares rose as much as 7.1% after the company said Fresenius Kabi CEO Michael Sen will replace CEO Stephan Sturm. Berenberg says the choice is sensible and expected EVS Broadcast Equipment shares jumped as much as 4% after the company announced a 10-year, $50m contract with a US-based broadcast and media production company on Friday Scandinavian Tobacco Group shares fell as much as 19% after the Danish cigar and pipe tobacco manufacturer published its preliminary 2Q numbers and lowered its FY22 guidance Deliveroo shares dropped as much as 6.8% amid a broader decline among European food delivery stocks. FY23 growth expectations for Deliveroo seem “stretched,” according to Morgan Stanley B&S Group shares slid as much as 13%, dropping to the lowest since April 2020, after the company reported interim results ING described as a “weak set” of numbers Intrum shares fell as much as 7.5%, their biggest decline since early May, after the board of the credit management firm replaced CEO Anders Engdahl with immediate effect Covestro fell as much as 5.9%, hitting lowest since May 2020, after Stifel slashed its price target to EU34 from EU53,  citing “shaky prospects” for the company Dassault Aviation shares were down as much as 4.7% after French Transport Minister Clement Beaune said he wanted to regulate private jet use, according to an interview with Le Parisien newspaper Earlier in the session, Asian stocks fell to more than a two week low as investors braced for a hawkish stance by US officials at the upcoming Jackson Hole symposium. The MSCI Asia Pacific Index declined as much as 0.7%, with the region’s tech giants TSMC and Tencent Holdings dragging down the measure the most. MSCI Inc.’s Asia-Pacific share index fell for a third day with losses evident in most major markets except for some gains in China, where a move by banks to trimlending rates aided property developers. Philippine stocks were the region’s biggest losers, sinking more than 2% as the central bank there signaled more hikes. Chinese equities advanced.  Jerome Powell’s Friday speech at the central bankers’ gathering will be the highlight of the week, with markets expecting the Fed chair to reaffirm his determination to get inflation under control. Traders have already been paring back risky bets after Richmond Fed President Thomas Barkin said Friday that the central bank was resolved to curb red-hot inflation even at the risk of a recession. “The bear market rally seems to be fading ahead of the Jackson Hole symposium this week, which may see the Fed pushing back further on easing expectations for next year,” said Charu Chanana, a senior strategist at Saxo Capital Markets.   Equities in mainland China posted rare gains in the region after the nation’s banks lowered their borrowing costs in a bid to stabilize the property market. That gave a positive boost, said Banny Lam, head of research at Ceb International Inv Corp. But markets are still on a bumpy ride as the dollar’s rise extends the outflow of liquidity from Asian assets, he added.  Other key issues on the radar include corporate earnings results. More than 340 members of the MSCI Asia Pacific Index, including battery heavyweight Contemporary Amperex Technology and e-commerce giant JD.com, are expected to release their financial results this week. Japanese stocks fell as hawkish comments from a Federal Reserve official put investors on edge ahead of the Jackson Hole symposium later this week.  The Topix Index fell 0.1% to 1,992.59 in Tokyo on Monday, while the Nikkei declined 0.5% to 28,794.50. Keyence Corp. contributed the most to the Topix’s decline, as the producer of sensors and scanners decreased 1.3%. Out of 2,170 stocks in the index, 1,123 fell, 924 rose and 123 were unchanged. “There is a bit of hawkishness coming out from the Fed as its seen trying to correct the direction of the market,” said Naoki Fujiwara, a chief fund manager at Shinkin Asset Management. “In the end, it’s profit taking as the market has gone up so far.”  Indian stocks fell for a second session on concerns the US Federal Reserve may remain committed to tightening monetary policy, which could impact foreign inflows to local equities. The S&P BSE Sensex declined 1.5%, its biggest drop since June 16, to 58,773.87 in Mumbai. The NSE Nifty 50 Index fell by a similar magnitude. Of the 30 member stocks of the Sensex, all but two declined. ICICI Bank Ltd. slipped 2.1% and was the biggest drag on the index. All 19 sectoral sub-indexes compiled by BSE Ltd. dropped, with a gauge of metal companies the worst performer. “While a correction was overdue for sometime after the recent upsurge, fresh concerns of a likely hawkish stance by the US Fed in its September meet and strengthening dollar index turned investors jittery and triggered a massive fall in banking, IT, metal & realty stocks,” Shrikant Chouhan, head of equity research at Kotak Securities Ltd., wrote in a note.   Overseas investment into local stocks totaled $6.3 billion from end-June through Aug. 18, after record outflows since October. The Fed’s symposium at Jackson Hole, Wyoming this week will be key for markets for clues on how the central bank plans to tackle price pressures.  In Australia, the S&P/ASX 200 index fell 1% to close at 7,046.90, tracking Friday’s losses on Wall Street as investors weighed the Fed’s next steps. The benchmark posted its worst session since July 11 as all sectors declined in Australia. Adbri was the biggest laggard after reporting a drop in 1H underlying Npat and trimming its interim dividend. EML Payments gained after announcing a buyback. In New Zealand, the S&P/NZX 50 index rose 0.7% to 11,763.95. In FX, the Bloomberg Dollar Spot Index advanced for a fourth consecutive day, to the highest level since July 18, while the greenback advanced versus most of its Group-of-10 peers. The euro fell to a seven-year low against the Swiss franc, extending losses as concerns about a global economic slowdown prompted demand for the safe-haven Swiss currency.  Australia’s dollar gained for the first time in six days after Chinese banks cut their loan prime rates in an effort to bolster the struggling property sector. Aussie bonds extended opening declines. The yen slipped to its lowest level in nearly a month as higher US yields amid growing bets for a hawkish Federal Reserve stance weighed on sentiment. Bonds fell, tracking US Treasuries. In rates, Treasuries were cheaper, the 10- year US yield rising as much as three basis points to 2.9997%, adding to Friday’s climb, before falling back. 2-year yields rose by around 5bps, inverting the curve further with losses led by front-end of the curve where two-year yields trade 6bp higher versus Friday’s close. Further out the curve, bunds and gilts both lag with notable bear steepening move seen across UK curve. US yields cheaper by 6bp to 1bp across the curve in bear flattening move which sees 2s10s, 5s30s spreads trade tighter by 6bp and 1.5bp on the day; 10-year yields around 2.98% after peaking at 2.9997% in early Asia session. Focus this week is on US auctions which kick-off Tuesday with $44b two-year note sale, followed by $45b five-year Wednesday and $37b seven-year Thursday. IG dollar issuance slate empty so far; issuance expectations are low for the week and dependent on market conditions with the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, due to commence Thursday. Bunds and Italian bonds snapped four- day sliding streaks, with German debt gains led by the belly and Italy’s yield curve bull flattening as stock futures drop. Belgium sells five- and 10-year notes. In commodities, WTI trades within Friday’s range, first falling as much as 1% before spiking and recovering all losses, with Brent jumping from a session low of $94.50 to a high of $96.90. Most base metals are in the red; LME copper falls 1%, underperforming peers. Spot gold falls roughly $15 to trade near $1,732/oz. It's a busy week for the calendar, but we kick off on a day quiet note, with the day at hand featuring the Chicago Fed’s national activity index and earnings from Zoom and Palo Alto Networks. Market Snapshot S&P 500 futures down 1.1% to 4,183.75 STOXX Europe 600 down 1.1% to 432.35 MXAP down 0.6% to 159.83 MXAPJ down 0.9% to 518.65 Nikkei down 0.5% to 28,794.50 Topix little changed at 1,992.59 Hang Seng Index down 0.6% to 19,656.98 Shanghai Composite up 0.6% to 3,277.79 Sensex down 1.2% to 58,934.14 Australia S&P/ASX 200 down 0.9% to 7,046.88 Kospi down 1.2% to 2,462.50 Gold spot down 0.7% to $1,735.45 U.S. Dollar Index up 0.18% to 108.36 German 10Y yield little changed at 1.20% Euro down 0.3% to $1.0006 Top Overnight News from Bloomberg European gas prices surged after Moscow’s move to shut a major pipeline ramped up fears of a prolonged supply halt, leaving Germany once again guessing as to how much Russian fuel it can count on this winter About 2,000 dockers at the Port of Felixstowe began an eight-day walkout on Sunday, halting the flow of goods through the UK’s largest gateway for containerized imports and exports Federal Reserve Chair Jerome Powell will have a chance -- if he wants to take it -- to reset expectations in financial markets when central bankers gather this week at their annual Jackson Hole retreat A sober warning for Wall Street and beyond: The Federal Reserve is still on a collision course with financial markets. Stocks and bonds are set to tumble once more even though inflation has likely peaked, according to the latest MLIV Pulse survey, as rate hikes reawaken the great 2022 selloff New Zealand’s central bank is open to the possibility of raising its benchmark rate as high as 4.25% amid uncertainty over the amount of tightening needed to regain control of inflation, Deputy Governor Christian Hawkesby said Swedish kronor bonds tied to environmental, social and governance goals are helping keep the country’s waning issuance market afloat this year A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly lower after last Friday’s declines in stocks and bonds across global markets in the aftermath of red-hot PPI data from Germany which rose by a new record high and stoked inflationary concerns, while the region also digests the PBoC’s latest actions on its benchmark lending rates. ASX 200 was pressured with all sectors subdued and as the influx of earnings continued. Nikkei 225 declined at the open as it took its cue from global peers and following reports that PM Kishida tested positive for COVID-19, although the index clawed back around half of the losses with help from a weak currency. Hang Seng and Shanghai Comp were mixed with early indecision as participants reflected on the PBoC’s rate actions in which it cut the 1-Year LPR by 5bps to 3.65% and reduced the 5-Year LPR by 15bps to 4.30% vs expectations for a 10bps cut to both, while the reduction in the 5-Year LPR which is the reference for mortgages, also followed recent measures to support the construction and delivery of unfinished residential projects through special loan schemes from policy banks. This provided some early support for developers although the broader sentiment was restricted amid the extension of factory power cuts in Sichuan. Top Asian News China’s Sichuan extended its factory power cuts to August 25th, according to Caixin. Japanese PM Kishida tested positive for COVID-19 and is recuperating at his official residence, according to NHK. Singapore PM Lee announced to reduce mask requirements as the COVID-19 situation stabilises with masks to only be required for public transport and healthcare settings with everywhere else optional. PM Lee also confirmed that Deputy PM Wong has been chosen to be the next leader and said authorities will soon announce new initiatives to attract talent, according to Reuters Aluminum Up as China’s Worsening Power Shortages Tighten Supply Debt Audit, Constitution Change on Angolan Opposition’s Agenda Shanghai United Imaging Jumps 65% in Debut Post $1.6 Billion IPO China Province Extends Power Cuts on Worst Drought Since ‘61 European bourses are under pressure, Euro Stoxx 50 -1.8%, amid Nord Stream 1 maintenance. Updates that sparked a continuation of Friday's downbeat price action and has caused particular downside for the likes of Uniper (-10%) while defenisve sectors outperform slightly. S futures are in-fitting both in terms of direction and magnitude, ES -1.3%, amid global recession and inflation fears. Panasonic (6752 JT) is to increase prices on 17 products from September 1st due to increasing material and manufacturing costs, hike will range between 2-33%. Top European News Cineworld Says It Considers Filing for Bankruptcy in the US Vodafone Agrees to Sell Hungary Unit for 1.8 Billion Euros (1) Borealis Curbs Fertilizer Output for Economic Reasons UK Trial Lawyers Vote to Strike Indefinitely Over Fees Biggest Rate Hike in Decades Is in Play in Israel: Day Guide FX DXY sees a firm start to the week as the index extends gains above 108.00, topping Friday’s peak. EUR/USD has again dipped under parity amid jitters over a potential supply disruption as Russia is to shut the Nord Stream 1 pipeline. The Antipodeans are the relative outperformers but have waned off best levels amid the broader deterioration in sentiment. The JPY has climbed its way up the ranks having experienced mild losses in APAC trade owing to widening yield differentials alongside losses in broad APAC FX. Turkey’s Central Bank revised rules for Lira government bond collateral for FX deposits in which it raised the RRR for credit from 20% to 30% for bond collateral, according to Reuters. Fixed Income A session of pronounced two-way action for fixed benchmarks as energy and inflation vie for the limelight. Initial upside (Bunds tested 152.85 Fib of Friday) occurred as sentiment deteriorate on Nord Stream 1's unscheduled maintenance announcement. However, this then swiftly retraced with core benchmarks modestly negative at worst, perhaps as attention pivoted to the associated inflation implications. Stateside, USTs have been moving in tandem though the move lower was somewhat more contained as participants look to Jackson Hole at the tail-end of the week. Commodities WTI and Brent October contracts have continued trending downwards in a resumption of Friday’s action. The main focus of this morning has been on European gas prices surging on news that Russia’s Gazprom will shut down the Nord Stream 1 pipeline for three days. Dutch TTF October surged over 18% whilst European coal for the next year rose over 5% to a new record. Metals markets are hit by the firmer Dollar with spot gold losing further ground under USD 1,750/oz while LME copper eyes USD 8,000/t to the downside Libya’s NOC said oil production was running at 1.211mln bpd, while the Waha Oil Co said gas output from the Faragh field increased to 149mcfd on Sunday from 95mcfd on Saturday, according to Reuters. Caspian Pipeline Consortium suspended oil loadings from two of three single mooring points at its Black Sea terminal for inspection, while CPC exports continue from the third mooring point and August loadings are currently unaffected, according to Reuters sources. Subsequently confirmed Turkey has increased its imports of Russian oil to over 200k BPD so far this year (vs 98k BPD in the same period last year), according to Refinitiv data. Norway Prelim. July production: Oil 1.646mln BPD (vs 1.298mln BPD in June); gas 10.9bcm (vs 10.0bcm in June), according to the Norway Oil Directorate. US Event Calendar 08:30: July Chicago Fed Nat Activity Index, est. -0.25, prior -0.19 DB's Tim Wessel concludes the overnight wrap The annual plenary of the global central bank cognoscenti kicks off in Jackson Hole this week. The main macro dish of the deep dog days of summer – where this year’s theme is “Reassessing Constraints on the Economy and Policy” – will be highlighted by Chair Powell’s remarks due on Friday morning. Global production data will serve as suitable hors d’oeuvres throughout the week, while US PCE data on Friday will be a side dish commanding ample attention. Elsewhere, we receive the second estimate of 2Q US GDP; will the poor aftertaste of two consecutive quarterly retractions continue to overwhelm the otherwise supportive ingredients that comprise near-term growth? Back to Jackson Hole, as the market looks for direction on the uncertain economic outlook and Fed reaction function, Chair Powell’s remarks are one of the key events that can jolt US policy expectations from their recent range, along with inflation and employment data preceding the September FOMC. Indeed, since the day of the July CPI print, 2yr Treasury yields are on net less than a basis point lower, while pricing of the September rate hike has oscillated in a narrow range that effectively has placed equal probabilities on a 50 or 75bp hike, as conviction around the terminal rate and intervening path of policy is low until the market can assess which way inflation (and the Fed) is breaking. The Chair will likely strike an imposing tone against the inflationary scourge, all the more given his remarks last year noted the bout of inflationary pressure was likely to be a transitory phenomenon (important to keep in mind how much the policy outlook can evolve over a 12-month time frame, let alone when uncertainty is this high here). While the Fed has taken to emphasizing two-way risks around the tightening cycle, most visibly in the minutes at the July meeting, the easing of financial conditions since the July meeting may force the Chair to re-orient expectations away from the balance of risks back toward the primary objective of bringing inflation lower. Executive Board member Schnabel will be the highest profile ECB speaker at the gathering, where focus is on calibrating the ECB’s next policy action, which our team takes careful measure of, here, preserving another 50bp hike as their base case. Before Schnabel, due on a panel Saturday, the ECB’s account of the July meeting’s 50bp hike will provide yet more detail into the super-sized kickoff to the ECB’s tightening cycle. Elsewhere in Europe, the looming energy crisis will remain top of mind. German Chancellor Scholz and Vice Chancellor Habeck are in Canada to try and plug the energy gap left by dwindling Russian gas supplies. Along with alternative imports, the government is still weighing whether to extend the life of heretofore condemned nuclear facilities if sufficient supplies cannot be secured. Asian equity markets are trading in negative territory at the start of the week amid a broad strength in the US dollar coupled with a potentially tighter Fed policy path. The Kospi (-0.78%) is the biggest underperformer across the region followed by the Nikkei (-0.46%) and the Hang Seng (-0.45%). Over in mainland China, markets are reclaiming earlier losses, with the Shanghai Composite (+0.43%) and CSI (+0.60%) both in the green after the People’s Bank of China (PBOC) surprisingly slashed its benchmark lending rates yet again to shore up an economy battered by a worsening property slump and a resurgence of Covid-19 cases. The PBOC slashed the one-year loan prime rate (LPR) by -5bps to 3.65%, the first reduction since January while the five-year LPR (a reference for mortgages) was cut by -15 bps to 4.3% at the central bank’s monthly fixing. This move comes after a raft of data released last week indicated that the world’s second largest economy slowed in July. US stock futures point to continued losses after ending last week on the downbeat, with the S&P 500 (-0.38%) and NASDAQ 100 (-0.51%) edging lower. Elsewhere, crude oil prices are trading lower in Asia trading hours with Brent futures -0.98% down at $95.77/bbl. Turning to a brief wrap of last week, the S&P 500 retreated -1.29% on Friday to bring the index -1.21% lower on the week, its first weekly decline in a month. The sharp decline Friday came absent any material data or policy developments; instead, it appeared programmatic selling and large options expiries concocted headwinds that were too hard for the index to overcome, where health care (+0.27%) and energy (+0.02%) were the only sectors to escape the day in the green, and only just. The STOXX 600 also fell over the week, retreating -0.80% (-0.77% Friday). In rates, 10yr Treasuries gained +14.1bps over the week, +9.0bps of which came on Friday, though, as mentioned, the net move in 2yr Treasury yields was smaller, having fallen -0.08bps over the week (+3.6bps Friday) as we await further direction from the Fed or from the data. 10yr bund yields increased each of the last four days of the week to end +24.3bps higher (+12.8bps Friday), as the inflationary impact of the energy crisis gripped markets. For their part, OATs climbed +26.1bps (+12.8bps Friday) and BTPs were +43.0bps higher (+17.1bps Friday). Of course, European energy prices from natural gas (+18.65%, +1.47% Friday) to German power (+21.42%, +4.02% Friday) rose to record highs as crisis binds the continent. The week kicks off on a day quiet note, with the day at hand featuring the Chicago Fed’s national activity index and earnings from Zoom and Palo Alto Networks. Tyler Durden Mon, 08/22/2022 - 08:01.....»»

Category: blogSource: zerohedgeAug 22nd, 2022

Koontz Corporation Sells Encino Trace Luxury Apartment Homes in College Station

Koontz Corporation (Koontz) today announced it has sold Encino Trace Luxury Apartment Homes, a 302,292-plus square foot, 340-unit class A multi-family community located in College Station, Texas to California-based SB Pacific Group LLC.    “We have enjoyed incredible results and success with our multi-family project in College Station,” said Koontz... The post Koontz Corporation Sells Encino Trace Luxury Apartment Homes in College Station appeared first on Real Estate Weekly. Koontz Corporation (Koontz) today announced it has sold Encino Trace Luxury Apartment Homes, a 302,292-plus square foot, 340-unit class A multi-family community located in College Station, Texas to California-based SB Pacific Group LLC.    “We have enjoyed incredible results and success with our multi-family project in College Station,” said Koontz President and CEO Bart Koontz. “Encino Trace Luxury Apartment Homes is a prime example of our experience in developing luxury apartment homes in our region. We are pleased that SB Pacific Group LLC recognized the value that we have created.”  Developed and constructed by Koontz, Encino Trace was completed in January 2022 and is situated on a pristine 17.2-acre tract located at 2338 Harvey Mitchell Parkway South in College Station. The 14-building suburban development was designed with stone and stucco exteriors and one- and two-bedroom garden apartment homes. All apartments feature island kitchens with stainless steel appliances and high-quality finishes including quartz countertops, custom cabinetry, and brushed nickel hardware. Additional feature include nine-foot ceilings, simulated wood and ceramic tile flooring, garden-style bathtubs, full-size washers and dryers, oversized walk-in closets, ample storage space, private patios and balconies and private detached garages. The community’s amenities include a resort-style pool with tanning ledge and outdoor kitchen, poolside lounge and fire pit, as well as a two-acre dog park, fitness center and a resident clubhouse.  Will Balthrope, Drew Garza and Jennifer Campbell of Institutional Property Advisors, a division of Marcus & Millichap, brokered the sale on behalf of the seller.  Koontz has multiple commercial projects under construction and development including The Moderno Apartment Homes in New Braunfels, Fiesta Trails – a 10-acre site located at 12631 Vance Jackson Road in San Antonio, which previously housed the Regal Fiesta Stadium 16 theater, and Westport Industrial Park, a 35-acre industrial project near the corner of South Callaghan Rd and Highway 151 on the near west side of San Antonio.    Since its founding in 1997, Koontz Corporation has developed over seven million square feet of commercial properties, including 22 multi-family projects totaling over six million square feet and more than 6,000 units. In addition to multi-family, the scope of Koontz’s properties includes office, medical office, industrial/flex, and retail.   “We remain strongly committed to actively developing and investing in the city of San Antonio and Texas,” said Koontz. “And we look forward to continuing to provide exceptional caliber projects to serve the ever-growing communities where we are located.”  The post Koontz Corporation Sells Encino Trace Luxury Apartment Homes in College Station appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyAug 11th, 2022

The Rise of Medtail: Medical and Healthcare Tenants Occupying Ground-Floor Leases

By Nathaniel Mallon Conditions related to the COVID-19 pandemic have led some retailers to adopt a more permanent e-commerce business model. Forced to give up prime locations in street-level storefronts, malls, and shopping centers, these owner-operators have decided to pivot indefinitely to online models for moving inventory. As a result,... The post The Rise of Medtail: Medical and Healthcare Tenants Occupying Ground-Floor Leases appeared first on Real Estate Weekly. By Nathaniel Mallon Conditions related to the COVID-19 pandemic have led some retailers to adopt a more permanent e-commerce business model. Forced to give up prime locations in street-level storefronts, malls, and shopping centers, these owner-operators have decided to pivot indefinitely to online models for moving inventory. As a result, a new retail landscape is emerging in communities all across the country as healthcare providers move in to occupy these spaces, abandoning their traditional office paradigm for greater access, convenience, and visibility. This new opportunity in ground-floor leasing has become especially popular among medical practices and related facilities. While tenants gain access to daily, high-volume consumer foot traffic, landlords gain peace of mind, knowing that doctors, dentists, and other healthcare providers are valuable assets, able to bring employed, insured patients to their offices, ultimately increasing spending within the surrounding retail setting and luring higher profile clients to other portfolio properties. Today, we are seeing a surge of medical tenants taking the opportunity to lease ground-floor real estate as landlords who are reeling from the pandemic seek the advantages of longer term, more stable tenants who retain their value during hard times. Here’s a quick snapshot of what’s driving this trend. Medical Tenant Demand Is Changing Retail Landlord TI Packages Medical tenants are taking advantage of new vacancies in retail spaces, which has prompted landlords to offer higher tenant improvement (TI) capital compared to what they previously have given retailers. Evan Gassman, broker at CARR who specializes in representing healthcare providers, chimes in on the current trend, explaining that “healthcare is an expensive buildout,” especially when tenants such as dentists require specialized plumbing and face the challenges of meeting ADA requirements. However, these tenants, he says, have a much higher success rate than restaurants and other retailers. So, although the concessions New York landlords must make for medical tenants far exceed those of past retailers, they recognize the potential of renting to healthcare providers. Gassman shares, “If they want that kind of a tenant, landlords should be prepared to invest in the tenant a little bit because in return, the tenant is going to sign a long-term lease. That’s what they want.” New Mixed-Use and Planned Communities Are Hubs for Retail, Medical, and ResidentialServices Potential tenants are also targeting retail spaces for the demographics. Ground-floor retail space in dense urban areas and other mixed-use residential properties offer a tremendous opportunity for building owners, other retailers, and new businesses as synergy among tenants creates a win-win solution for all involved. The result is a consolidated hub of services for community members who prefer a self-contained lifestyle where everything – shopping and other daily and professional services – is within walking distance from their residence. Ground-floor spaces give tenants the opportunity to market their high visibility and accessibility to patients who live and do business in the area. Verada Retail, for example, recently represented the landlord at 24 Fourth Avenue, Boerum Hill – a luxury mixed-use condo building with 11,000 square feet. While the number of retailers in the area is growing, this particular landlord elected to diversify the retail space, leasing it to three different tenants, including two healthcare providers – a dental practice and a dermatologist – and an organic market. Overall, landlords leasing to healthcare tenants are benefiting from these new mixed-use communities. Gassman explains, “The plus side of having a medical provider in your space is that they sign a long-term lease and they’re class A tenants. They may not be a large retailer or standard retail place like Starbucks, a dream tenant, but medical providers, in general, pay their bills [and] have very low default ratios on their loans, so they’re a great tenant to have.” Demographic Studies Encourage Ground-Floor Leases Landlords have started to focus more on renting to medical offices after doing research and providing potential new tenants with demographics related to age, including the number of children, youth, and elderly in the area. These statistics provide various clinicians and primary practice providers with the information they need to determine whether a lease in a particular space is more or less ideal for their practice. Hospitals are also leasing out urgent care and other specific treatment facilities in ground-floor spaces that match the demographic profile of the area in lieu of having patients come to the hospital or medical campus to seek treatment. Gassman further explains how the pandemic has led healthcare providers to weigh the pros andcons of leasing retail space with the promise of greater exposure versus traditional office space.He says, “I think with COVID, people said, ‘Okay, I’m going to be working from home now, sowhere in my neighborhood am I going to go to the doctor, the dentist, or urgent care versus frommy office?’ Prior to the pandemic, workers often visited medical providers that were closer totheir office in Midtown than their residence. Now, however, someone working from home inBrooklyn may want to have their whole healthcare network within their neighborhood. It justmakes the commute a little easier.” The Ground Floor – Modernization Key to Reaching Next-Gen Patients In the past, medical office buildings have been short on amenities. Newly constructed and renovated ground-floor spaces with amenities have become increasingly attractive to medical tenants looking to modernize and make their practices more attractive to Millennials who are accustomed to a more consumer-oriented, retail-type experience. Ground-floor spaces are extremely popular in the dental and dermatology industries, where offices often occupy key corners in dense urban areas. This is in stark contrast to traditional medical buildings and campuses that house healthcare facilities, which are often distributed around multiple floors and out of sight from the public. Medtail Is the Retail Space of the Future Overall, landlords are repurposing spaces to include what tenants want and need. In the past, retail building owners may have shunned medical facilities with the mindset that those in need of healthcare may potentially run off shoppers and other tenants for fear of being around the sick and infirmed. Today, nothing could be further from the truth as landlords are recreating spaces to attract and accommodate medical professionals. How this trend progresses, however, remains to be seen as we move into a post-pandemic environment. It’s likely to depend on the provider, explains Gassman. Tenants who want the exposure and neighborhood appeal of a ground-floor retail space are more likely to make the move. However, they can expect to pay a premium for these locations and should take this into account when developing their overall business plans. For providers who specialize in aesthetic treatments such as teeth whitening, chemical peels, or botox injections, the retail component may be attractive. For other providers, the move to a retail location may pose greater risk, especially if they are part of a well-known practice and receive much of their business from other doctors. Regardless, medtail is here to stay and can be an effective way for providers to grow, attract new patients, and better serve existing patients by making healthcare more convenient and accessible. The post The Rise of Medtail: Medical and Healthcare Tenants Occupying Ground-Floor Leases appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyJul 22nd, 2022

I went to Costco, Sam"s Club, and BJ"s to compare warehouse clubs. Costco is still the best, even though it asks the highest price for membership.

Costco wins thanks to reasonable prices, a superior food court, and a clean store design. Mary Meisenzahl/Insider Sam's Club, Costco, and BJ's are the main membership club grocery competitors in the US. Sam's Club and Costco are nearly identical in most ways, but BJ's is smaller and sells more name brands. Costco wins thanks to reasonable prices, a superior food court, and clean store design.  Memberships are up at all three major warehouse clubs as inflation increases grocery bills.A Costco truck makes a delivery to a Costco store in Carlsbad, California.Mike Blake/ReutersI'm a Costco member, so I visited Sam's Club and BJ's to see how they stack up.Scott Olson/Getty ImagesAll three stores operate on the same premise: customers purchase annual memberships that give them access to bulk goods at prices lower than most other grocery stores, plus a discount on gas and other items.Shoppers leave a BJ's store in Alexandria, VirginiaReuters/Kevin LamarqueCostco has over 500 stores in the US, and Sam's Club has about 600.Shoppers leave Costco in Fairfax, VirginiaThomson ReutersBJ's is a bit smaller, with 229 locations along the East Coast of the US.Mary Meisenzahl/InsiderSam's Club offers memberships at two tiers: $45 a year for Club level, and $100 a year for Plus. Costco's Gold Star membership is $60 a year, and the Executive Level is $120 per year, and BJ's is $55 for the lower level and $110 for the higher tier.Shoshy Ciment/Business InsiderCostco has far higher sales than Sam's Club, reporting $192 billion in the 2021 fiscal year, compared to less than half that at $63.9 billion for Sam's Club.Mary Meisenzahl/InsiderBJ's is a smaller player, with $16.3 billion in sales in 2021, though that still made it the company's best year to date.Mary Meisenzahl/InsiderI visited all three stores to get an idea of how they compare in person, beyond the balance sheet.Scott Olson/Getty ImagesWhen you walk into Costco, a greeter checks to make sure you have your membership card, which is required to make purchases besides alcohol, the food court, and a few other exceptions.M. Spencer Green / API entered the gigantic Costco warehouse to be greeted by large electronic displays, with TVs stacked up high.Mary Meisenzahl/InsiderYou could outfit an entire home from the appliances in Costco, including washing machines, dryers, refrigerators, dishwashers, and more.Mary Meisenzahl/InsiderThen, we finally made our way to the food. Brand name snacks mostly made up the center displays, sitting on pallets.Mary Meisenzahl/InsiderProducts are loosely organized by type, like snacks or baked goods. Most products either come in huge boxes, or you're required to buy multiple bags.Mary Meisenzahl/InsiderFor the most part, every section is inside the main warehouse itself, but dairy and some fruits and vegetables have their own separate refrigerated sections off the main area.Mary Meisenzahl/InsiderBack out in the main warehouse is the bakery with fresh and packaged goods.Mary Meisenzahl/InsiderFresh baked goods are displayed right in front of the kitchen.Mary Meisenzahl/InsiderYou can also buy custom cakes and order them in store, right in front of the bakery.Mary Meisenzahl/InsiderThe rest of the back wall next to the bakery is a deli and meat counter.Mary Meisenzahl/InsiderThis is where you can find the chain's famous $5 rotisserie chickens.Mary Meisenzahl/InsiderA few aisles of refrigerated shelves hold cheeses, butter, and all different kinds of dips and spreads.Mary Meisenzahl/InsiderBeer and hard seltzers are available in the main area of the store. Other alcohol is only sold in the liquor store next door, which has a separate entrance, though that isn't the case in all locations.Mary Meisenzahl/InsiderThe remaining aisles on the far side of the store are dedicated to freezers with entrees and desserts, and pantry goods in bulk.Mary Meisenzahl/InsiderMost of the non-food items are gathered in the center of the store, from clothes to books, furniture, electronics, and fine jewelry.Mary Meisenzahl/InsiderA floral section has bouquets and arrangements, sometimes themed around upcoming holidays like Mother's Day.Mary Meisenzahl/InsiderCostco also provides some services inside stores, including a pharmacy, optical store, and hearing aid center.Mary Meisenzahl/InsiderThere are about fifteen checkout lanes staffed by workers, plus newer self-checkout stations.Mary Meisenzahl/InsiderJust past the checkout lanes, the food court sells food and drinks, including the famous $1.50 hot dog and soda combination.Mary Meisenzahl/InsiderAfter easing pandemic restrictions, tables for indoor dining were added back.Mary Meisenzahl/InsiderNext up, I went to the closest Sam's Club to me, which was located about 60 miles away in a suburb of Buffalo.Mary Meisenzahl/InsiderThe first major difference I noted was that no one checked if I was a Sam's Club member as I walked in.Mary Meisenzahl/InsiderWhen I first walked inside, it looked nearly the same as Costco with large electronics placed near the entry.Mary Meisenzahl/InsiderI was struck by the large aisles full of tires taking up some prime real estate close to the front of the store.Mary Meisenzahl/InsiderOtherwise, the stores had the same main merchandise categories, including large appliances, furniture, and some plants and gardening supplies.Mary Meisenzahl/InsiderBoth had jewelry displays, with salespeople around to talk about the products.Mary Meisenzahl/InsiderThey carry much of the same merchandise, like this inflatable outdoor shark slide that was on display in both locations.Mary Meisnezahl/InsiderIn most ways, the stores seemed to be essentially the same.Mary Meisenzahl/InsiderI did find some other differences, though they were relatively minor.Mary Meisenzahl/InsiderSam's Club has an established curbside pickup program at no extra cost to members, similar to services available at Walmart and Aldi.Mary Meisenzahl/InsiderA large area of the entryway is dedicated to holding these orders.Mary Meisenzahl/InsiderMost Costco locations only have "warehouse pickup," with curbside service limited to electronics, jewelry, and a few other items that do not include groceries.Mary Meisenzahl/InsiderSam's Club also seems to make it easier for customers to use these large pallet carts than at Costco, where I've only seen them pushed by shoppers on rare occasions.Mary Meisenzahl/InsiderBoth stores were very organized and had fully stocked shelves, but Sam's Club felt a bit more disheveled because there was no separation between shopping areas and loading organizational areas like there were at Costco.Mary Meisenzahl/InsiderI was surprised to find that at Sam's Club, all alcohol sales are made in the main store area.Mary Meisenzah/InsiderSam's Club had wine and other flavored drinks in the main store, while Costco is typically limited to beer and seltzers in the main area at my usual location.Mary Meisenzah/InsiderSam's Clubs' food court was much smaller and less busy than Costco's, but they had essentially the same menu.Mary Meisenzahl/InsiderThey have the same basic lineup of pizza, hot dogs, and soda. Sam's also matches Costco's iconic $1.50 hot dog and soda, though they don't have my personal favorite, the chicken bake.Shoshy Ciment/Business InsiderThe two stores even have the same tables set up in their food courts.Mary Meisenzahl/InsiderBJ's, my final stop, was quite different from the other two stores.Mary Meisenzahl/InsiderWhen I walked into BJ's for the first time, it was less overwhelming than the other two warehouse stores.Mary Meisenzahl/InsiderIt's still a big warehouse, but quantities are smaller, and products aren't stacked up nearly as high.Mary Meisenzahl/InsiderBJ's has most of the same product categories as Costco and Sam's Club, like outdoor equipment furniture, grills, and clothing in addition to groceries.Mary Meisenzahl/InsiderThe main difference is that there is less of everything. Outdoor furniture displays are smaller, and there aren't water slides and other summer accessories hanging from the ceiling.Mary Meisenzahl/InsiderBJ's does have an electronics section, but it's not highlighted at the entryway of the store, and it's definitely smaller than its competitors.Mary Meisenzahl/InsiderSome pieces of BJ's reminded me more of a standard Target or Walmart than another warehouse store, like a greeting card section.Mary Meisenzahl/InsiderThe bakery section was very similar to Costco's and Sam's bakeries.Mary Meisenzahl/InsiderFewer items seemed to be made in-house. Instead, they were from name brands I recognized.Mary Meisenzahl/InsiderSome things are baked in-store, though. BJ's sells custom-decorated cakes, just like both competitors.Mary Meisenzahl/InsiderOther baked goods, like cookies, cakes, and pies made the whole section of the store smell good.Mary Meisenzahl/InsiderWalking through BJ's feels quite different from Costco and Sam's Club, because it's more open and spacious, without the piles and miles of merchandise the other stores are known for.Mary Meisenzahl/InsiderThere are some prepared appetizers and snacks in refrigerated sections, but it doesn't hold a candle to Costco.Mary Meisenzahl/InsiderThere are a few unique kinds of cheese and other dishes, but not as many as you could find at Sam's, and Costco has more than either.Mary Meisenzahl/InsiderThe selection of dips and spreads wasn't bad by any means, but it isn't necessarily superior to the average Walmart.Mary Meisenzahl/InsiderOf course, BJ's sells rotisserie chickens for $4.99, just like Costco and Sam's Club.Mary Meisenzahl/InsiderThe frozen section, which makes up a major bulk of Sam's Club and Costco, was less extensive at BJ's.Mary Meisenzahl/InsiderMany of the bags and boxes are smaller than at the other stores, though, which might be more realistic for the average shopper with a modestly sized freezer.Mary Meisenzahl/InsiderThe same is true of pantry staples...Mary Meisenzahl/Insider...and produce, which are also available in more manageable quantities.Mary Meisenzahl/InsiderAnother major difference between the stores was what brands were available.Mary Meisenzahl/InsiderSam's Club and Costco heavily rely on their private label brands. BJ's also has a private label, but a larger proportion of stock was made up of brand names like Hostess.Mary Meisenzahl/InsiderBJ's lack of a food court is probably the biggest difference.Mary Meisenzahl/InsiderAfter visiting all three stores, it's clear to me that BJ's doesn't offer all the benefits of Costco or Sam's Club.Mary Meisenzahl/InsiderAll three memberships are priced relatively closely to each other, with Sam's Club at the lowest price point and Costco at the highest.Mary Meisenzahl/InsiderBJ's could be a happy medium for most people, selling food in quantities that can be easily stored without taking over your entire home.Mary Meisenzahl/InsiderBut, choosing BJ's does mean giving up the food court and the chance for larger bulk buys.Mary Meisenzahl/InsiderAfter eliminating BJ's for its smaller selection and lack of food court, it comes down to Sam's Club versus Costco.Mary Meisenzahl/InsiderCostco has better prices on more grocery staples than Sam's Club, according to a recent price comparison by Insider, though they are quite close.Mary Meisenzahl/InsiderSource: InsiderCostco wins on prices and food court convenience, but I wish it had the curbside pickup service offered at Sam's Club.Mary Meisenzahl/InsiderI still think Costco is the best choice for most people, even at the slightly steeper price of $60 per year.Mary Meisenzahl/InsiderDo you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJun 5th, 2022

I compared Sam"s Club and Costco, and the winner comes down to lower prices and a better-designed food court

The two retailers are nearly identical in many ways, but Costco's food court has better options and is more convenient. Here's how they stack up. Costco storefront in Mount Prospect, Illinois.Tim Boyle/Getty Images Sam's Club and Costco are the main membership club grocery competitors in the US. They're nearly identical in many ways, but Costco's food court has better options and is more convenient. Sam's Club has the edge on curbside pickup.  I'm a Costco member, but I've never been to Sam's Club before.Mary Meisenzahl/InsiderBoth stores operate on the same premise: customers purchase annual memberships that give them access to bulk goods at prices lower than most other grocery stores, plus a discount on gas and other items.Mary Meisenzahl/InsiderCostco has over 500 stores in the US, and Sam's Club has about 600.Costco.Mohammad Khursheed/REUTERSCostco has far higher sales than Sam's Club, reporting $192 billion in the 2021 fiscal year, compared to less than half that at $63.9 billion for Sam's Club.A Costco truck makes a delivery to a Costco store in Carlsbad, California.Mike Blake/ReutersI visited both stores to get an idea of how they compare in person, beyond the balance sheet.Mary Meisenzahl/InsiderWhen you walk into Costco, a greeter checks to make sure you have your membership card, which is required to make purchases besides alcohol, the food court, and a few other exceptions.Mary Meisenzahl/InsiderWalking past the carts and greeters, I entered the gigantic Costco warehouse.Mary Meisenzahl/InsiderIn my location, large electronics are on display near the entrance, with TVs stacked up on huge shelves.Mary Meisenzahl/InsiderCeilings are extremely high, and stocks of products extend nearly all the way up. Many of the largest products at Costco are located along this side wall.Mary Meisenzahl/InsiderYou could outfit an entire home from the appliances in Costco, including washing machines, dryers, refrigerators, dishwashers, and more.Mary Meisenzahl/InsiderThen, we finally made our way to the food. Brand name snacks mostly made up the center displays, sitting on pallets.Mary Meisenzahl/InsiderProducts are loosely organized by type, like snacks or baked goods, but it's so overwhelming that it's good to come in with a game plan.Mary Meisenzahl/InsiderFor the most part, every section is inside the main warehouse itself, but dairy and some fruits and vegetables have their own separate refrigerated sections off the main area.Mary Meisenzahl/InsiderSome staples always seem to be available in the produce section, while others change out seasonally.Mary Meisenzahl/InsiderBack out in the main warehouse is the bakery with fresh and packaged goods.Mary Meisenzahl/InsiderFresh baked goods are displayed right in front of the kitchen.Mary Meisenzahl/InsiderYou can also buy custom cakes and order them in store, right in front of the bakery.Mary Meisenzahl/InsiderThe rest of the back wall next to the bakery is a deli and meat counter.Mary Meisenzahl/InsiderThis is where you can find the chain's famous $5 rotisserie chickens.Mary Meisenzahl/InsiderRows and rows of refrigerated cases hold more meat products.Mary Meisenzahl/InsiderA few aisles of refrigerated shelves hold cheeses, butter, and all different kinds of dips and spreads.Mary Meisenzahl/InsiderBeer and hard seltzers are available in the main area of the store, but other alcohol is only sold in the liquor store next door, which has a separate entrance.Mary Meisenzahl/InsiderRemaining aisles on the far side of the store are dedicated to freezers with entrees and desserts, and pantry goods in bulk.Mary Meisenzahl/InsiderMost of the non-food items are gathered in the center of the store, from clothes to books, furniture, electronics, and fine jewelry.Mary Meisenzahl/InsiderCostco also provides some services inside stores, including a pharmacy, optical store, and hearing aid center.Mary Meisenzahl/InsiderThere are about fifteen checkout lanes staffed by workers, plus newer self-checkout stations.Mary Meisenzahl/InsiderJust past the checkout lanes, the food court sells food and drinks, including the famous $1.50 hot dog and soda combination.Mary Meisenzahl/InsiderAfter easing pandemic restrictions, tables for indoor dining were added back.Mary Meisenzahl/InsiderNext up, I went to the closest Sam's Club to me, which was located about 60 miles away in a suburb of Buffalo.Mary Meisenzahl/InsiderThe first major difference I noted was that no one checked if I was a Sam's Club member as I walked in.Mary Meisenzahl/InsiderWhen I first walked inside, it looked nearly the same as Costco with large electronics placed near the entry.Mary Meisenzahl/InsiderI was struck by the large aisles full of tires taking up some prime real estate close to the front of the store.Mary Meisenzahl/InsiderCostco also has a tire center, but it is separated from the main shopping area.Mary Meisenzahl/InsiderOtherwise, the stores had the same main merchandise categories.Mary Meisenzahl/InsiderThey both carry large appliances, furniture, and some plants and gardening supplies.Mary Meisenzahl/InsiderBoth had jewelry displays, with salespeople around to talk about the products.Mary Meisenzahl/InsiderThey carry much of the same merchandise, like this inflatable outdoor shark slide that was on display in both locations.Mary Meisnezahl/InsiderIn most ways, the stores seem to be essentially the same.Mary Meisenzahl/InsiderI did find some other differences, though they were relatively minor.Mary Meisenzahl/InsiderSam's Club has an established curbside pickup program at no extra cost to members, similar to services available at Walmart and Aldi.Mary Meisenzahl/InsiderSource:Insider, InsiderA large area of the entryway is dedicated to holding these orders.Mary Meisenzahl/InsiderMost Costco locations only have "warehouse pickup," with curbside service limited to electronics, jewelry, and a few other items that do not include groceries.Mary Meisenzahl/InsiderSam's Club also seems to make it easier for customers to use these large pallet carts than at Costco, where I've only seen them pushed by shoppers on rare occasions.Mary Meisenzahl/InsiderBoth stores were very organized and had fully stocked shelves, but Sam's Club felt a bit more disheveled because there was no separation between shopping areas and loading organizational areas like there were at Costco.Mary Meisenzahl/InsiderI was surprised to find that at Sam's Club, all alcohol sales are made in the main store area.Mary Meisenzah/InsiderSam's Club had wine and other flavored drinks in the main store, while Costco typically is limited to beer and seltzers.Mary Meisenzah/InsiderThe food court was the area I was most interested to see in comparison.Mary Meisenzahl/InsiderSam's Clubs' food court was much smaller and less busy than Costco's, but they had essentially the same menu.Mary Meisenzahl/InsiderThey have the same basic lineup of pizza, hot dogs, and soda. Sam's also matches Costco's iconic $1.50 hot dog and soda, though they don't have my personal favorite, the chicken bake.Irene Jiang / Business InsiderThe two stores even have the same tables set up in their food courts.Mary Meisenzahl/InsiderBesides the lack of chicken bake, the biggest discrepancy between food courts was the self-service kiosks at Costco, which make ordering fast and easy.Mary Meisenzahl/InsiderOverall, the two stores were more alike than different.Mary Meisenzahl/InsiderIf I wasn't such a regular at my local Costco, I'm not sure I would have even noticed most of these small differences.Mary Meisenzahl/InsiderCostco also has better prices on more grocery staples, according to a recent price comparison by Insider, though they are quite close.Mary Meisenzahl/InsiderSam's Club, on the other hand, has lower membership prices.Mary Meisenzahl/InsiderCostco wins on prices and food court convenience, but I wish it had the curbside pickup service offered at Sam's Club.Mary Meisenzahl/InsiderDo you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.Read the original article on Business Insider.....»»

Category: worldSource: nytMay 29th, 2022

Saga Partners 1Q22 Commentary: Carvana And Redfin

Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio […] Saga Partners commentary for the first quarter ended March 31, 2022. During the first quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 42.4% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 4.6%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio is 112.0% net of fees compared to the S&P 500 Index of 122.7%. The annualized return since inception for the Saga Portfolio is 15.4% net of fees compared to the S&P 500’s 16.5%. Please check your individual statement as specific account returns may vary depending on timing of any contributions throughout the period. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more Interpretation of Results I was not originally planning to write a quarterly update since switching to semi-annual updates a few years ago but given the current drawdown in the Saga Portfolio I thought our investors would appreciate an update on my thoughts surrounding the Portfolio and the current market environment in general. The Portfolio’s drawdown over the last several months has been hard not to notice even for those who follow best practices of only infrequently checking their account balance. Outperformance vs. the S&P 500 since inception has flipped to underperformance on a mark-to-market basis and the stock prices of our companies have continued to decline into the second quarter. In past letters I have spent a lot of time discussing the Saga Portfolio’s psychological approach to investing to help prepare for the inevitable chaos that will occur while investing in the public markets from time-to-time. It’s impossible to know why the market does what it does at any point in time. I would argue that the last two years could be considered pretty chaotic, both on the upside speculation and now what appears to be on the downside fear and panic. I will attempt to give my perspective on how events played out within the Saga Portfolio with an analogy. Let’s say that in 2019 we owned a fantastic home that was valued at $500,000. We loved it. It was in a great neighborhood with good schools for our kids. We liked and trusted our neighbors; in fact, we gave them a spare key in case of emergencies. It was the perfect home for us to live in for many years to come. Based on the neighborhood becoming increasingly attractive over time, it was likely that our home may be valued around $2 million in ~10 years from now. This is strong appreciation (15% IRR) compared to the average home, but this specific home and neighborhood had particularly strong long-term fundamental tailwinds that made this a reasonable expectation. Then in 2020 a global pandemic hit causing a huge disorientation in the housing market. For whatever reasons, the appraised value of our home almost immediately doubled to $1 million. Nothing materially changed about what we thought our home would be worth in 10 years, but now from the higher market value, the home would only appreciate at a lower 7% IRR assuming it would still be worth $2 million in 10 years. What were our options under these new circumstances? We could move and try to buy a new home that provided a higher expected return. However, the homes in the other neighborhoods that we really knew and liked also doubled in price, so they did not really provide any greater value. Also, the risk and hassle of moving for what may potentially only be modestly better home appreciation did not make sense. We could buy a home in a less desirable neighborhood where prices looked relatively cheaper, but we would not want to live long-term. Even if we decided to live there for many years, the long-term fundamental dynamics of the crummy neighborhood were weak to declining and it was uncertain if the property would appreciate at all despite its lower valuation. We could sell our home for $1 million and rent a place to live for the interim period while holding cash and waiting for the market to potentially correct. However, we did not know if, when, or to what extent the market would correct and the thought of renting a place temporarily for our family was unappealing. For the Saga family, we decided to stay invested in the home that we knew, loved, and still believed had similar, if not stronger prospects following the COVID-induced surge in demand in our neighborhood. Now, for whatever reason, the market views our neighborhood very poorly and the appraised value of our home declined to $250,000, below any previous appraisals. It seems odd because it is the exact same home and the fundamentals of the neighborhood are much stronger than several years ago, suggesting that the expected $2 million value in the future is even more probable than before. It is a very peculiar situation, but the market can do anything at any moment. Fortunately, the lower appraisal value does not impact how much we still love our home, neighborhood, schools, or what the expected future value will be. In fact, we prefer a lower value because our property taxes will be lower! One thing is for certain, we would never sell our home for $250,000 simply because the appraised value has declined from prior appraisals. We would also never dream of selling in fear that the downward price momentum continues and then hopefully attempt to buy it back one day for $200,000. We can simply sit tight for as long as we want while the neighborhood around us continues to improve fundamentally over time, fully expecting the value of our home to eventually go up with it. It just so happens humans are highly complex beings and do not always react in what an economist may consider a rational way. Our emotions are highly contagious. When someone smiles at you, the natural reaction is to smile back. When someone else is sad, you feel empathy. These are generally great innate characteristics for helping to build the strong relationships with friends and family that are so important throughout life. But it also means that when other people are scared, it also makes you feel scared. And when more and more people get scared, that fear can cascade exponentially and turn into panic, which can cause people to do some crazy things, especially when it comes to making long-term decisions. As fear spreads, all attention shifts from thinking about what can happen over the next 5-10+ years to the immediate future of what will happen over the next day or even hour. Of course, during times of panic, “this time is always different.” It may very well be the case, but the world can only end once. Historically speaking, things have tended to work out pretty well over time on average. I am by no means immune to these contagious feelings. My way of coping with how I am innately wired is by accepting this fact and then trying to know what I can and cannot control. A core part of my investing philosophy is that I do not know what the market will do next, and I never will. Inevitably the market or a specific stock will crash, as it does from time-to-time. This “not timing the market” philosophy or treating our public investments from the perspective of a private owner may feel like a liability during a drawdown, but it is this same philosophy of staying invested in companies we believe to have very promising futures which positions us perfectly for the inevitable recovery. Eventually, emotions and the business environment will normalize, and the storm will pass. It could be next quarter, year, or even in several years, but we will be perfectly positioned for the recovery, at which point the stock price lows will likely be long gone. The whole investing process improves if one can really take the long-term view. However, it is not natural for people to think long-term particularly when it comes to owning pieces of publicly traded companies. It is far more natural to want to act by jumping in and out of stocks in an attempt to outsmart others who are trying to outsmart you. When the market price of your ownership in a business is available and fluctuating wildly every single day, it is hard to ignore and not be influenced by it. While one can get lucky through speculation, the big money is made by investing, by owning great businesses and letting them compound owner’s capital over many years. As the market has evolved over the last few decades, there appears to be an ever-increasing percent of “investors” who are effectively short-term renters, turning over the companies in their portfolios so quickly that they never really know the business that lies below the surface of the stock. While more of Wall Street is increasingly focused on the next quarter, a potentially looming recession, the Fed’s next interest rate move, or trying to time the market’s rotation from one industry into another, we are trying to think about what our companies’ results will be in the year 2027, or better yet 2032 and beyond. The most significant advantage of investing in the public market is the ability to take advantage of it when an opportunity presents itself or to ignore the market when there is nothing to do. The key to success is never giving up this advantage. You must be able to play out your hand and not be forced to sell your assets at fire sale prices. Significant portfolio declines are a good reminder of the importance of only investing money that you will not need for many years. This prevents one from being in a position where it is necessary to liquidate when adverse psychology has created unusually low valuations. However, we do not want to simply turn a blind eye to stock price declines of 50% or more and dig our heals into the ground believing the market is just being irrational. When the world is screaming at you that it believes your part ownership in these companies is worth significantly less than the market believed not too long ago, we attempt to understand if we are missing something by continually evaluating the long-term outlooks of our companies using all the relevant information that we have today from a first principles basis. Portfolio Update Instead of frequently checking a stock’s price to determine whether the company is making progress, I prefer looking to the longer-term trends of the business results. There will be stronger and weaker quarters and years since business success rarely moves up and to the right in a perfectly straight line. As a company faces headwinds or tailwinds from time-to-time, the stock price may fluctuate wildly in any given year, however the underlying competitive dynamics and business models that drive value will typically change little. Regarding our companies as a whole, first quarter results reflected a general softness in certain end markets, including the used car, real estate, and advertising markets. However, the Saga Portfolio’s companies, on average, provide a superior customer value proposition difficult for competitors to match. Most of them have a cost advantage compared to competitors; therefore, the worse it gets for the economy, the better it gets for our companies’ respective competitive positions over the long-term. For example, first quarter industry-wide used car volumes declined 15% year-over-year while Carvana’s retail units increased 14%. Existing home sales decreased 5% during the quarter while Redfin’s real estate transactions increased 1%. Digital advertising is expected to grow 8-14% in 2022 while the Trade Desk grew Q1’22 revenues 43% and is expected to grow them more than 30% for the full year 2022. While industry-wide TV volumes remain below 2019 pre-COVID levels, Roku gained smart TV market share sequentially during the quarter, continuing to be the number one TV operating system in the U.S. and number one TV platform by hours streamed in North America. Weaker industry conditions will inevitably impact our companies’ results; however, our companies should continue to take market share and come out on the other side of any potential economic downturn stronger than when they went in. For the portfolio update, I wanted to provide a more in-depth update on Carvana and Redfin which have both experienced particularly large share price declines and have recent developments that are worth reviewing. Carvana I first wrote about Carvana Co (NYSE:CVNA) in this 2019 write-up. I initially explained Carvana’s business, superior value proposition compared to the traditional dealership model, attractive unit economics, and how they were uniquely positioned to win the large market opportunity. Since then, Carvana has by far exceeded even my most optimistic initial expectations. While the company did benefit following COVID in the sense that customers’ willingness to buy and sell cars through an online car dealer accelerated, the operating environment over the last two years has been very challenging. Carvana executed exceedingly well considering the shifting customer demand in what is a logistically intensive operation and what has been a tight inventory environment due to supply chain issues restricting new vehicle production. Sales, gross profits, and retail units sold have grown at a remarkable 104%, 151%, and 87% CAGR over the last five years, respectively. Source: Company filings Shares have come under pressure following their first quarter results, which reflected larger than expected losses. The quarter was negatively impacted by a combination of COVID-related logistical issues in their network that started towards the end of the fourth quarter as Omicron cases spread. Employee call off rates related to Omicron reached an unprecedented 30% that led to higher costs and supply chain bottlenecks. As less inventory was available due to these problems, it led to less selection and longer delivery times, lowering customer conversion rates. Additionally, interest rates increased at a historically fast rate during the first quarter which negatively impacted financing gross profits. Carvana originates loans for customers and then sells them to investors at a later date. If interest rates move materially between loan origination and ultimately selling those loans, it can impact the margin Carvana earns on underwriting those loans. Industry-wide used car volumes were also down 15% year-over-year during the first quarter. While Carvana continues to grow and take market share, its retail unit volume growth was slower than initially anticipated, up only 14% year-over-year. Carvana has been in hyper growth mode since inception and based on the operational and logistical requirements of the business, typically plans, builds, and hires for expected capacity 6-12 months into the future. This has historically served Carvana well given its exceptionally strong growth, but when the company plans and hires for higher capacity than what occurs, it can lead to lower retail gross profits and operating costs per unit sold. When combined with lower financing gross profits in the quarter from rising interest rates, losses were greater than expected. In February, Carvana announced a $2.2 billion acquisition of ADESA (including an additional $1 billion plan to build out the reconditioning sites) which had been in the works for some time. ADESA is a strategic acquisition to help accelerate Carvana’s footprint expansion across the country, growing its capacity from 1.0 million units at the end of Q1’22 to 3.2 million units once complete over the next several years. It is unfortunate the acquisition timing followed a difficult quarter that had greater than expected losses, combined with a generally tighter capital market environment. Carvana ended up raising $3.25 billion in debt ($2.2 billion for the acquisition and $1 billion for the buildout) at a higher than initially expected 10.25% interest rate. Given these higher financing costs and first quarter losses, they issued an additional $1.25 billion in new equity at $80 per share, increasing diluted shares outstanding by ~9%. Despite the short-term speedbumps surrounding logistical issues, softer industry-wide demand, and a higher cost of capital to acquire ADESA, Carvana’s long-term outlook not only remains intact but looks even more promising than before. To better understand why this is the case and where Carvana is in its lifecycle, it helps to provide a little background on the history of retail. While e-commerce is a more recent phenomena that developed from the rise of the internet in the 1990s, the retail industry has undergone several transformations throughout history. In retailing, profitability is determined by two factors: the margins earned on inventory and the frequency with which they can turn inventory. Each successive retail transformation had a similar economic pattern. The newer model had greater operating leverage (higher fixed costs, lower variable costs). This resulted in greater economies of scale (lower cost per unit) and therefore greater efficiency (higher asset turnover) with size that enabled them to charge lower prices (lower gross margins) than the preceding model and still provide an attractive return on capital. The average successful department store earned gross margins of ~40% and turned inventory about 3x per year, providing ~120% annual return on the capital invested in inventory. The average successful big box retailer earned ~20% gross margins and turned its inventory 5x per year. Amazon retail earns ~10% gross margins (including fulfillment costs in COGS) and turns inventory at a present rate of 12x times annually. The debate that surrounds any subscale retailer, particularly in e-commerce, is whether they have enough capital/runway to build out the required infrastructure and then scale business volume to spread fixed costs over enough units. Before reaching scale, analysts may point to an online business’ lower price points (“how can they charge such low prices?!”), higher operating costs per unit (“they lose so much money per item!”), and ongoing losses and capital investments (“they spend billions of dollars and still have not made any money!”) as evidence that the model does not make economic sense. Who can blame them since the history books are filled with companies that never reached scale? However, if the retailer does build the infrastructure and there is sufficient demand to spread fixed costs over enough volume, the significant capital investment and high operating leverage creates high barriers to entry. If we look to Amazon as the dominant e-commerce company today, once the infrastructure is built and reaches scale, there is little marginal cost to serve any prospective customer with an internet connection located within its delivery footprint. For this reason, I have always been hesitant to invest in any e-commerce company that Amazon may be able to compete with directly, which is any mid-sized product that fits in an easily shippable box. As it relates to used car retailing, the infrastructure required to ship and recondition cars is unique, and once built, the economies of scale make it nearly impossible for potential competitors to replicate. Carvana is in the very early stages of building out its infrastructure. There is clearly demand for its attractive customer value proposition. It has demonstrated an ability to scale fixed costs in earlier cohorts as utilization of capacity increases, providing attractive unit economics at scale. Newer market cohorts are tracking at a similar, if not faster market penetration rate as earlier cohorts. Carvana is still investing heavily in building out a nationwide hub-and-spoke transportation network and reconditioning facilities. In 2021 alone, Carvana grew its balance sheet by $4 billion as it invested in its infrastructure while also reaching EBITDA breakeven for the first time. The Amazon story is a prime example (pun intended) of a new and better business model (more attractive unit economics) that delivered a superior value proposition and propelled the company ahead of its competition, similar to the underlying dynamics occurring in the used car industry today. Amazon invested heavily in both tangible and intangible growth assets that depressed earnings and cash flow in its earlier years (and still today) while growing its earning power and the long-term value of the business. The question is, does Carvana have enough capital/liquidity to build out its infrastructure and scale business volume to then generate attractive profits and cash flow? Following Carvana’s track record of scaling operating costs and reaching EBITDA breakeven in 2021, the market was no longer concerned about its liquidity position or the sustainability of its business model. However, the recent quarterly loss combined with taking on $3 billion in debt to buildout the 56 ADESA locations across the country raises the question of whether Carvana has enough liquidity to reach scale. Carvana’s current stock price clearly reflects the market discounting the probability that Carvana will face liquidity issues and therefore have to raise further capital at unfavorable terms. However, I think if you look a little deeper, Carvana has clearly demonstrated highly attractive unit economics. It has several levers to pull to protect it from any liquidity concerns if needed. The $2.6 billion in cash (as well as $2 billion in additional available liquidity in unpledged real estate and other assets) it has following the ADESA acquisition, is more than enough to sustain a potentially prolonged decline in used car demand. The most probable scenario over the next several quarters is that Carvana will address its supply chain and logistical issues that were largely due to Omicron. As the logistical network normalizes, more of Carvana’s inventory will be available to purchase on their website with shorter delivery times, which will increase customer conversion rates. This will lead to selling more retail units, providing higher inventory turnover and lower shipping costs, and therefore gross profit per unit will recover from the first quarter lows. Other gross profit per unit (which primarily includes financing) will also normalize in a less volatile interest rate environment. Combined total gross profit per unit should then approach normalized levels by the end of the year/beginning of 2023 (~$4,000+ per unit). Like all forms of leverage, operating leverage works both ways. For companies with higher operating leverage, when sales increase, profits will increase at a faster rate. However, if sales decrease, profits will decrease at a faster rate. While Carvana has high operating leverage in the short-term, they do have the ability adjust costs in the intermediate term to better match demand. When demand suddenly shifts from plan, it will have a substantial impact on current profits. First quarter losses were abnormally high because demand was lower than expected. Although, one should not extrapolate those losses far into the future because Carvana has the ability to better adjust and match its costs structure to a lower demand environment if needed. As management better matches costs with expected demand, operating costs as a whole will remain relatively flat if not decline throughout the year as management has already taken steps to lower expenses. As volumes continue to grow at the more moderate pace reflected in the first quarter and SG&A remains flat to slightly declining, costs per unit will decline with Carvana reaching positive EBITDA per unit by the second half of 2023 in this scenario. Source: Company filing, Saga Partners Source: Company filing, Saga Partners With the additional $3.2 billion in debt, Carvana will have a total interest expense of ~$600 million per year, assuming no paydown of existing revolving facilities or net interest income on cash balances. Management plans on spending $1 billion in capex to build out the ADESA locations. They are budgeting for ~$40 million in priority and elective capex per quarter going forward suggesting the build out will take ~6 years. Total capex including maintenance is expected to be $50 million a quarter. Carvana would reach positive free cash flow (measured as EBITDA less interest expense less total Capex) by 2025. Note this assumes the used car market remains depressed throughout 2022 and then Carvana’s retail unit growth increases to 25% a year for the remainder of the forecast and no benefit in lower SG&A or increased gross profit per unit from the additional ADESA locations was assumed. Stock based compensation was included in the SG&A below so actual free cash flow would be higher than the chart indicates. Source: Company filings, Saga Partners Note: Free cash flow is calculated as EBITDA less interest expense less capex After the close of the ADESA acquisition, Carvana has $2.6 billion in cash (plus $2 billion in additional liquidity from unpledged assets if needed). Assuming the above scenario, Carvana has plenty of cash to endure EBITDA losses over the next year and a half, interest payments, and capex needs. Source: Company filings, Saga Partners The above scenario does not consider the increasing capacity that Carvana will have as it continues to build out the ADESA locations. After building out all the locations, Carvana will be within one hundred miles of 80% of the U.S. population. This unlocks same-day and next-day delivery to more customers, leading to higher customer conversion rates, higher inventory turn, lower risk of delivery delays, and lower shipping costs, which all contribute to stronger unit economics. Customer proximity is key. Due to lower transport costs, faster turnaround times on acquired vehicles, and higher conversion from faster delivery speeds, a car picked up or delivered within two hundred miles of a recondition center generates $750 more profit than an average sale. It is possible that industry-wide used car demand remains depressed or even worsens for an extended period. If this were the case, management has the ability to further optimize for efficiency by lowering operating costs to better match demand. This is what management did following the COVID demand shock in March 2020. The company effectively halted corporate hiring and tied operational employee hours to current demand as opposed to future demand. During the months of May and June 2020, SG&A (ex. advertising expense and D&A) per unit was $2,600, far lower than the $3,440 reported in 2020 or $3,654 in 2021. Carvana has also historically operated between 50-60% capacity utilization, indicating further room to scale volumes across its existing infrastructure without the need for materially greater SG&A expenses. Advertising expense in older cohorts reached ~$500 per unit, compared to the $1,126 reported for all of 2021, while older cohorts still grew at 30%+ rates. If needed, Carvana could improve upon the $2,600 SG&A plus $500 advertising expense ($3,100 in total) per unit at its current scale and be far below gross profit per unit even if used car demand remains depressed for an extended period of time. When management optimizes for efficiency as opposed to growth, it has the ability to significantly lower costs per unit. Carvana has highly attractive unit economics and I fully expect management will take the needed measures to right size operating costs with demand. They recently made the difficult decision to layoff ~2,500 employees, primarily in operations, to better balance capacity with the demand environment. If we assume it takes six years to fully build out the additional ADESA reconditioning locations, Carvana will have a total capacity of 3.2 million units in 2028. If Carvana is running at 90% utilization it could sell 2.9 million retail units (or ~7% of the total used car market). If average used car prices decline from current levels and then follow its more normal longer-term price appreciation trends, the average 2028 Carvana used car price would be ~$23,000 and would have a contribution profit of ~$2,000 per unit at scale. This would provide nearly $5.6 billion in EBITDA. After considering expected interest expense, maintenance capex, and taxes, it would provide over $4 billion in net income. If Carvana realizes this outcome in six years, the company looks highly attractive (perhaps unreasonably attractive) compared to its current $7 billion market cap or $10 billion enterprise value (excluding asset-based debt). Redfin I recently wrote about Redfin Corp (NASDAQ:RDFN) in this December 2021 write-up. I explained how Redfin has increased the productivity of real estate agents by integrating its website with its full-time salaried agents and then funneling the demand aggregated on its website to agents. Redfin agents do not have to spend time prospecting for business but can rather spend all their time servicing clients throughout the process of buying and selling a home. Since Redfin agents are three times more productive than a traditional agent, Redfin is a low-cost provider, i.e., it costs Redfin less to close a transaction than a traditional brokerage at scale. It is a similar concept as the higher operating leverage of e-commerce relative to brick & mortar retailers. Redfin has higher operating leverage compared to the traditional real estate brokerage. Real estate agents are typically contractors for a brokerage. They are largely left alone to run their own business. Agents have to prospect for clients, market/advertise listings, do showings, and service clients throughout each step of the real estate transaction. Everything an agent does is largely a variable cost because few of their tasks are automated. Redfin, on the other hand, turned prospecting for demand, marketing/advertising listings, and investments in technology to help agents and customers throughout the transaction into more of a fixed cost. These costs are scalable and become a smaller cost per transaction as total transaction volumes grow across the company. Because Redfin is a low-cost provider, it has a relative advantage over traditional brokerages. No other real estate brokerage has lowered or attempted to lower the costs of transacting real estate in a similar way. This cost advantage provides Redfin with options about how to share these savings on each transaction. Redfin has primarily shared the cost savings with customers by charging lower commission rates than traditional brokerages. By offering a similar, if not superior, service to customers compared to other brokerages yet charging lower fees, it naturally attracts further demand which then provides Redfin with the ability to scale fixed costs per transaction even more, further widening their cost advantage to other brokerages. So far, the majority of those cost savings are shared with home sellers as opposed to homebuyers. Sellers are more price sensitive than homebuyers because the buyer’s commission is already baked into the seller’s contract and therefore buyers have not directly paid commissions to agents historically. Also, growing share of home listings is an important component of controlling the real estate transaction. The seller’s listing agent is the one who controls the property, decides who sees the house, and manages the offers and negotiations. Therefore, managing more listings enables Redfin to have more control over the transaction and further streamline/reduce inefficiencies for the benefit of both potential buyers and sellers. Redfin also spends some of their cost savings by reinvesting them back into the company by hiring software engineers to build better technology to continue to lower the cost of the transaction. This may include building tools for agents to service clients better, improving the web portal and user interfaces, on-demand tours for buyers to see homes first, automation to give homeowners an immediate RedfinNow offer, etc. Redfin also invests in building other business segments like mortgage, title forward, and iBuying which provide a more comprehensive real estate offering for customers which attracts further demand. So far, the lower costs per transaction have not been shared with shareholders in the form of dividends or share repurchases, and for good reason. In theory, Redfin could charge industry standard prices and increase revenue immediately by 30-40% which would drop straight to the bottom-line assuming demand would remain stable. However, giving customers most of the savings through lower commissions has obviously been one of the drivers for attracting demand and growing transaction volume, particularly for home sellers. The greater the number of transactions, the lower the fixed costs per transaction, which further increases Redfin’s cost advantage compared to traditional brokerages, which provides Redfin with even more money per transaction to share with either customers, employees, and eventually shareholders. With just over 1% market share, Redfin should be reinvesting in growing share which will increase the value of the business and inevitably benefit long-term owners of the company. Redfin’s stock price has experienced an especially large decline this year. I typically prefer to not attempt to place an explanation or narrative on short-term stock price movements, but I will do it anyways given the substantial drop. There are primarily two factors contributing to the market’s negative view of the company: first, the market currently dislikes anything connected to the real estate industry and second, the market currently has little patience for any company that reports net losses regardless of the underlying economics of the business. Real estate is currently a hated part of the market, and potentially for good reason. It is a cyclical industry, and the economy is potentially either entering or already in a recession. Interest rates are expected to continue to rise, negatively impacting home affordability, while an imbalance in the housing supply persists with historically low inventory available helping fuel an unsustainable rise in housing prices. From a macro industry-wide perspective, the real estate market will ebb and flow with the economy over time, but demand to buy, sell, and finance homes will always exist. I do not have the ability to determine how aggregate demand for buying or selling a home will change from year-to-year, but I do know that people have to live somewhere and if Redfin is able to help them find, buy or rent, and finance where they live better than alternative service providers, then the company will gain share and grow in value overtime. Redfin has also reported abnormally high losses of $91 million in the first quarter for which the current market has little appetite. It feeds the argument that Redfin does not have a sustainable business model. While losses can be a sign of unsustainable economics, that is not the case for Redfin. There are several factors that are all negatively hitting the income statement at the same time, and all should improve materially over the next year or two. Higher first quarter losses largely reflect: Agent Productivity: First quarter brokerage sales increased 7% year-over-year, but lead agent count increased 20%, which meant agents were less productive, leading to real estate gross profits declining $17 million from the prior year. Lower productivity was a result of a steeper ramp in agent hiring towards the end of the year against lower seasonal transaction volumes. It typically takes about six months for new agents to get trained and start closing transactions and then contributing to gross profits. Any accelerated hiring, particularly during a softer macro environment, will be a headwind while Redfin is paying upfront costs before any revenue is being generated. Further, closing transactions has been difficult particularly for buyers, which is where most new agents start. The housing market has been unbalanced where there is not enough inventory. A home for sale will typically receive many competing offers which makes it difficult for a buyer to win the deal. Since Redfin agents are mostly paid on commission (~20% salary plus the remainder being commission), it has been more difficult for new agents to earn a sufficient income in the current real estate environment. In response, Redfin started paying $1,500 retention bonuses for new agents who could guide customers to the point of bidding on a home, regardless of whether those bids win. While the bonus may impact gross profits in the near-term before a customer closes a transaction, it will not impact gross margins in the long-term when a transaction eventually takes place. Going forward, agent hiring will return to more normal rates and the larger number of new hires from recent quarters will ramp up which will improve productivity and gross profits. RentPath: Redfin bought RentPath out of bankruptcy for $608 million in April 2021, primarily to incorporate its rentals on its website which helps Redfin.com show up higher on Internet real estate searches. Prior to the acquisition, RentPath had no leadership direction for several years and declining sales and operating losses. RentPath had new management start in August 2021 and was integrated into Redfin.com in March. It finally started to see operational improvement with sales increasing in February and March year-over-year for the first time since 2019 despite a significant decrease in marketing expenses. While RentPath had $17 million in losses during the first quarter and is expected to have $22 million in losses in the second quarter, operations will improve going forward. Management made it clear that RentPath will be a contributor to net profits in its own right and not just a driver of site traffic and demand to Redfin’s brokerage business. Mortgage: A recent major development was the acquisition of Bay Equity for $135 million in April. Redfin was historically building out its mortgage business from scratch but after struggling to scale the operation decided to buy Bay Equity. Redfin was spending $13 million per a year on investing in its legacy mortgage business but going forward, mortgage will now be a net contributor to profits with Bay expected to provide $4 million in profit in the second quarter. The greater implication of having a scaled mortgage underwriter that is integrated with the real estate broker is that they can work together to streamline and expedite the transaction closing which has become an increasingly important value proposition for customers. Looking just a little further into the future, having a scaled and integrated mortgage underwriter can provide Redfin with the capability of providing buyers with the equivalent of an all-cash offer to sellers. Prospective homebuyers who offer all-cash offers to sellers are four times as likely to win the bid and sellers will often accept a lower price from an all-cash buyer vs. one requiring a mortgage. A common problem that many homeowners face is that when they are looking to move, it is difficult to get approved for a second mortgage while holding the current one. Much of their equity is locked in their current home. Frequently, a homebuyer wins an offer on a new home and then is in mad dash to sell their existing home in order to get the financing to work. It is not ideal to attempt to sell your home as fast as possible because it decreases the chance of getting the best price possible. A solution that Redfin could offer as a customer’s agent and underwriter is provide bridge financing between when a customer buys their new home and is then trying to sell their existing home and is therefore paying on two mortgages. Redfin would be able to make a reasonable appraisal for what a customer’s existing home will sell for (essentially what Redfin already does with iBuying) and underwriting the incremental credit exposure they are willing to provide the buyer. The buyer would then have “Redfin Cash” which would work like a cash offer. If this service helps buyers win a bid four times more often, it would even further differentiate Redfin’s value proposition and attract further demand. At least in the near-term, the mortgage segment will go from being a loss center to a contributor to net profits as well as further improving Redfin’s customer value proposition. Restructuring and transaction costs: Redfin had $6 million in restructuring expenses related to severance with RentPath and the mortgage business as well as closing the Bay Equity acquisition. $4 million in restructuring expenses are expected in the second quarter but these expenses will go away in future quarters. The combination of the above factors provided the headline $91 million net loss for the first quarter. Larger than normal losses between $60-$72 million are still expected in the second quarter. However, going forward losses are expected to continue to improve materially. While Redfin is not done investing in improving its service offerings, it should benefit from the significant investments it has already made over the last 16 years. Redfin has been building and supporting a nationwide business that only operated in parts of the country and had to incur large upfront costs. Going forward, it will benefit from the operating leverage baked into its cost structure with gross profits expected to grow twice as fast as overhead operating expenses. Redfin is expected to be cash flow breakeven in 2022 and provide net profits starting in 2024. Redfin has built a great direct to consumer acquisition tool that is unmatched by any real estate broker. It has spent the costs to acquire the customer and has now built out the different services to provide customers any of the real estate services that they may need, whether that is one or a combination of brokerage services, mortgage underwriting, title forward, iBuying, or rental search. Being able to monetize each customer that it has already acquired by offering them any of these services provides Redfin with a better return on customer acquisition costs that no other competitor is able to do to the same extent. Additionally, these real estate services work better when they are integrated under the same company. One does not have to dig very deep to see how attractive Redfin’s shares are currently priced. Shares are now selling around all-time historic lows since its IPO in August 2017. The prior all-time lows were reached during the COVID crash which was a time the world was facing an unknown pandemic that would shut down the economy and potentially put us through a great depression. At its current $1.2 billion market cap, Redfin is selling for 3x expected 2022 real estate gross profits, or 4x its current $1.7 billion enterprise value (excluding asset-based debt). Both are far below the historic average of 15x (which excludes peak multiples reached towards the end of 2020 and early 2021), or the previous all-time low of 6x reached in the depths of March 2020. If we assume Redfin can raise brokerage commissions by 30%, in line with traditional brokerage commission rates, and it does not lose business, Redfin would be able to provide ~20% operating margins. If we take a more conservative view and say Redfin can earn 10% net margins on its 2022 expected real estate revenues of $990 million, it would provide $99 million in net profits, providing a current 12x price-to-earnings ratio. This is for a company that has a long track record of being able to grow 20%+ a year on average, consistently gains market share each quarter, and has barely monetized its significant upfront investments and fixed costs with a long runway to continue to scale. This also does not place any value on its mortgage or iBuying segments which are now contributors to gross profits. There may be macro risks as well as other concerns today, however Redfin’s business and relative competitive advantage have never been stronger. The net losses reported are not representative of Redfin’s true underlying earning power. Redfin has untapped pricing power, an increasingly attractive customer value proposition, and a growing competitive advantage compared to alternative brokerages, which will help Redfin to continue to grow and take market share in what is a very large market. Conclusion Of course, the future can look scary, as it often does when headlines jump from one risk to the other. Despite what may be happening in the macro environment, our companies on average are stronger than they have ever been and are now selling for what we believe are the most attractive prices we have seen relative to their intrinsic value. I have no idea what shares will do in the near-term and I never will. Stock prices can swing wildly for many reasons, and sometimes seemingly for no reason at all. They can diverge, sometimes significantly from their true underlying value. I have no idea when sentiment will shift from optimism to pessimism and then back to optimism. This is what keeps us invested in both good times and in bad. The current selloff can continue further, but assuming our companies continue to execute over the coming years by winning market share and earning attractive returns on their investment spending, the market’s sentiment surrounding our portfolio companies will eventually reflect their underlying fundamentals. I will continue to look towards the longer-term operating results of our companies and not to the movements in their stock price as feedback to whether our initial investment thesis is playing out as expected. While the market can ignore or misjudge business success for a certain period, it eventually has to realize it. During times of greater volatility and periods of large drawdowns, I am reminded of how truly important the quality of our investor base is. It is completely natural to react in certain ways to rising or declining stock prices. It takes a very special investor base to look past near-term volatility and to trust us to make very important decision on their behalf as we continually try to increase the value of the Saga Portfolio over the long-term. As always, I am available to catch up or discuss any questions you may have. Sincerely, Joe Frankenfield Saga Partners Updated on May 16, 2022, 4:44 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkMay 17th, 2022

Liquidity And Volatility: Decoding Market Jargon

Liquidity And Volatility: Decoding Market Jargon Authored by Michael Lebowitz via RealInvestmentAdvice.com, “Liquidity” and “volatility” are constantly thrown around by the financial media and Wall Street as if everyone fully understands them and their importance. These terms are vital, but regrettably, not many investment professionals take the time to help investors fully appreciate them. Mea culpa! We also use the terms extensively in our writings and podcasts, yet we fail to impress upon our followers their importance. With volatility spiking and the Fed removing liquidity, we think it is an excellent time to discuss the two terms and their dependency on each other. We hope this broader understanding of volatility and liquidity may help you better appreciate risk conditions. Liquidity “Fed Pumps $70.2 Billion in Short-Term Liquidity Into Markets.” – WSJ December 2019 “Is this a Liquidity Crisis or a Solvency Crisis? It Matters to the Fed.” WSJ April 2020 “Liquidity Shocks: Lessons Learned from the Global Financial Crisis.” NYT August 2021 Those headlines are just a few of the many ways the media use the word liquidity. Liquidity is the fuel that keeps the financial market’s engine running. As such, without enough liquidity, the motor seizes, and financial crises erupt. Liquidity refers to the amount of money investors are willing to use to buy and sell assets now. As you might surmise, the more investors willing to bid and offer assets, the more liquid the market. We cannot underline or highlight the word “AND” enough. Liquid markets must have both many willing bidders and offerors of an asset. Let’s consider markets in which only one side of the market offered good liquidity. In 2008, everyone was a seller of sub-prime mortgages, while buyers were few and far between. In late 2020 and early 2021, buyers of SPACs, meme stocks, cryptocurrencies, and an assortment of high-growth tech stocks dwarfed the number of sellers. The 2008 example highlights a surplus of sellers with limited buyers. The more recent example is the opposite. In hindsight, we know how both illiquid conditions ultimately ended up. That is why it is vital for a liquid market to have ample buyers and sellers.   Liquidity is in the Eye of the Transactor As we write this article, the price of Apple stock is 160.12. Currently, 350 shares are offered at 160.13, and 500 are bid at 160.11. Within five cents of the current price, well over 7,500 shares are bid and offered. Accordingly, for a retail investor looking to buy or sell 20 shares, the market for Apple is incredibly liquid. A 20-share transaction will occur at the market price and have no effect on the market. Warren Buffett’s Berkshire Hathaway has approximately 1 billion shares of Apple. If Buffett has a hankering to sell even a small portion of his billion shares asap, he might have a different opinion of Apple’s liquidity. The point of comparing these two opinions on liquidity is to stress the importance of assessing how current liquidity conditions affect your trading, but equally important to understand broader liquidity. The Warren Buffetts of the investment world dictates the price of Apple, not our 20-share trader! Therefore, if Mr. Buffett is desperate to sell, he will likely have to rely on bidders at lower prices. Then the amount of price concession is a function of how much liquidity exists. Liquidity defines risk! Volatility Volatility is often quoted in two ways, realized and implied. Realized, or historical, volatility is backward-looking. It is a statistical measure of an asset’s price movement over a prior period. Implied volatility is derived from options prices. It is a measure of what investors think volatility will be in the future. While calculated differently, the gauges quantify the movement of prices, past and expected. Further, and a story for another article, the difference between them can sometimes be telling. More importantly, volatility is not just a mathematical calculation. Volatility measures liquidity! And liquidity defines risk. Volatility Measures Liquidity Liquidity is variable. Changes in sentiment or policies, for example, can quickly alter liquidity. When liquidity is high, many buyers and sellers are poised to act on prices at or very close to current market prices. As we discussed in our earlier example, selling or buying 20 shares of Apple, even if done repeatedly, will have little to no effect on price. In such an environment, the price will move up and down as factors change, but the movement will be gradual. Now consider a market in which each 20-share purchase of Apple moves the stock by a nickel or more. In this circumstance liquidity is weak, and prices are susceptible to a motivated buyer or seller. In such instances, daily price moves in Apple are much more elevated than in the liquid market example. Accordingly, Warren Buffett could easily introduce significant downside pressure in such a market. This example shows how liquidity is the critical determinant of volatility. Evidence To help better cement the concept, we provide actual data. The graph below from the CME shows the S&P 500 E-mini futures contracts price (blue) and its book depth (red and green). Book depth measures how many bids and offers, on average, are available. As you see, when markets are rising, book depth is deeper. A deeper book implies investors are more comfortable, willing, and able to offer liquidity. The second graph shows the bullish trend from April through December of 2021 had relatively low levels of realized and implied volatility. In January 2022, markets started falling, and liquidity gave way. During that period, book depth weakened, and the volatility readings rose. Fed’s Liquidity Role Liquidity comes from those investors that are willing and able to buy and sell. Therefore, sentiment, monetary and fiscal policy and a host of other factors affect the willingness and ability of investors. Over the past 20 years, the Fed has increasingly played a more prominent role in regulating liquidity. The Federal Reserve does and doesn’t directly provide liquidity. As part of QE, the Fed purchases and sells bonds. In doing so, they add or remove securities available to markets. Removing assets increases liquidity as the amount of investable dollars chases fewer assets. However, and equally important, is the Fed’s indirect influence on liquidity. This occurs via the perception that the Fed is adding or reducing liquidity and supporting or not supporting markets. Investors feel more comfortable knowing the Fed is adding liquidity. As we have repeatedly seen, Fed liquidity is an excellent backstop in many investors’ opinion. Conversely, as we see now, angst tends to occur when they remove liquidity. Raising and lowering interest rates is another way they affect liquidity. Trades using margin increase the purchasing power of buyers and sellers. Higher interest rates make it more costly to buy assets on margin and vice versa for lower rates. The graph below from Jesse Felder shows margin debt (leveraged speculation) tends to peak at market tops and troughs near market bottoms. Lastly, the Fed regulates the banks. Accordingly, its rules and restrictions affect capital and collateral requirements, which directly influence the volume of financial market assets banks may own and or make loans against. Summary - Don’t Fight The Fed We often say, “don’t fight the Fed”. What we mean is that when the Fed is providing liquidity, do not fight them. It is likely the Fed’s liquidity will pacify investors and result in a less risky environment. Fed liquidity emboldens investors and adds liquidity, even when valuations are extreme. Conversely and incredibly important today, when the Fed is removing liquidity, do not get in their way. Anxieties are increased, which results in reduced market depth and increased volatility. There is no sign the Fed’s current quest to remove liquidity is close to ending. We recommend you carefully consider that liquidity is fading due to the Fed, and therefore, volatility is on the rise. Illiquid and volatile markets are not conducive to long-term wealth generation. Tyler Durden Wed, 05/11/2022 - 12:13.....»»

Category: blogSource: zerohedgeMay 11th, 2022

Here"s what $8 million can get you in Phuket, one of the world"s top island destinations

I got an inside look at two Phuket villas priced at $7.9 and $8.6 million, respectively. They offered very different takes on island living The exterior of an $8.64 million villa on the west coast of Phuket, Thailand.Lina Batarags / Insider I got an inside look at two villas on the Thai island of Phuket. While they were listed at similar price points, they offered very different takes on island living. The $7.9 million villa had a gleaming, ultra-modern feel to it, while the $8.6 million villa was timeless and sanctuary-like. Phuket, Thailand's biggest island, is flush with villas: In the past decade, the Southeast Asian island's villa stock has more than quadrupled to a total of 4,000 luxury homes.On a recent reporting trip to Phuket, I followed real-estate agent Norbert Witthinrich around for a morning to get a sense of the island's luxury real-estate offerings. Phuket is only 13 miles wide and 30 miles long, and while the island is famous for its sandy beaches, the highways that traverse the island are often clogged with traffic.I met up with Witthinrich on a weekday. He's originally from Germany, has lived in Thailand for 25 years, and founded and runs real-estate agency Sea Property Group.Witthinrich, I found, is punctual and excitable: We raced east across the island to the first villa, through it, then cut west across the island again to and through a second villa and back to his office, all in the perfectly timed span of two hours.Here's a look at what roughly $8 million can buy you on the Thai island of Phuket. Sea Property Group has both listings.First up: A modern five-bedroom villa on the island's east coastPrice point: 268 million Thai baht ($7.9 million)The specs: 5 beds, 6 baths, infinity pool, indoor entertainment area, private beach accessThe east coast of Phuket is less developed than the west, Witthinrich told me. We hopped into his car in Cherngtalay and headed for the east-coast development of Cape Yamu. The highway was a hectic scene, but as we approached the cape, I saw what he was saying: The highway gave way to ocean vistas, smaller roads, and a less-developed feeling. Fishing boats were tied up by the beach, and small shacks stood on prime oceanfront real estate. The villa is part of a gated development, and after we passed the guardhouse, we parked in a very steep driveway."Step inside," Witthinrich said, speed-walking ahead of me and throwing open the front door, "and let's talk about luxury."The entrance to the $7.9 villa on Phuket's east coast.Lina Batarags / InsiderThe decor of the home was modern and maximal — think huge driftwood-inspired installations and matte black chandeliers. The house knows its biggest asset — its ocean view — and every room was designed to capitalize on it.This is the view immediately upon stepping into the house.Lina Batarags / InsiderOn the left side of the photo above, you can see the stairs leading downstairs to the entertainment area, some more bedrooms, and the pool.Here's a shot of the kitchen, which opens right up to a patio:The kitchen is big, but it's not particularly well-outfitted.Lina Batarags / InsiderHere's a final shot of the main dining area, this time taken with my back to the ocean, that shows off the room's design:The main living space in the villa was enormous, airy, and well-outfitted.Lina Batarags / InsiderParting thoughts: It's full of shiny surfaces and modern finishings and has a killer ocean view. One of the bedrooms is in a separate house. The kitchen is more of a coffee kitchen than a chef's kitchen.Next up: A Japanese-inspired villa on the west coastPrice point: 292 million THB ($8.64 million)The specs: 4 beds, 4 baths, pool, movie theater, spaIn contrast to the gleaming surfaces of the first villa, the second had a timeless, wood-and-concrete theme going on. Like the first home, this villa, too, was designed to wow people with its greatest asset.Here's the view you're greeted with once you enter the home's gate:The villa is split into little sub-homes.Lina Batarags / InsiderEach of the small buildings on either side of the staircase has a bedroom, a bar, a bathroom, and a walk-in closet. The wood finishing was beautiful, and each suite felt totally private.The exterior of an $8.64 million villa on the west coast of Phuket, Thailand.Lina Batarags / InsiderThe walk-in closet has beautiful wood finishes.Lina Batarags / InsiderThe villa is built into a mountainside, so the entrance is on the home's upper level. Take the central staircase downstairs and you'll walk right up to the pool. To the left is the kitchen and dining space; to the right is another living space and more bedrooms.The communal living spaces are on the lower level, giving them a bit of a cave-like feel — which can be a welcome respite from the Thai sun.Lina Batarags / InsiderParting thoughts: This villa felt like a sanctuary. The finishings were timeless and minimal. Each of the bedrooms was basically its own mini house. Also, I did not realize until now that a bar is exactly what I need in my bedroom.An island take on luxuryBoth units I toured with Witthinrich are in gated communities. The second villa is part of Anantara, a hospitality brand that operates hotels, villas, and spas, so in addition to the villa, you also get access to the hotel amenities. The villa I toured is one of 30 Anantara villas in the same development.What struck me about both homes is that while they were impeccably manicured — the wild, undeveloped feeling of the Thai jungle lay just beyond the communities' borders.As far as the market in Phuket goes right now, the middle and top of the market are booming. After the pandemic slump, foreign buyers started picking up property on the island in late 2021 as Thailand relaxed border restrictions. Witthinrich said that homes in the $100,000-$500,000 range were in high demand before the pandemic. Now, demand has shifted to a higher price range, with those — like the ones we toured — in the $2 million to $10 million garnering the most interest."I would say 80% of our clients, they're looking for the dream," Witthinrich said. "You want the house in Phuket, you want the pool in Phuket."Read the original article on Business Insider.....»»

Category: worldSource: nytApr 22nd, 2022

Is The Woke Cultural Agenda Of Union Leaders Undermining Support For Organized Labor Groups?

Is The Woke Cultural Agenda Of Union Leaders Undermining Support For Organized Labor Groups? Authored by Batya Ungar-Sargon via Outside Voices, Doug Tansy is living the American Dream. A 44-year-old Native Alaskan, Tansy is an electrician living in Fairbanks in a house he and his wife Kristine own. Kristine has a social work degree, but for 13 years she stayed home to raise their five kids. It was something the couple could afford thanks to Tansy’s wages and benefits, secured by the International Brotherhood of Electrical Workers. All of Tansy’s union friends have similar stories; those who chose not to have kids traveled the world on the money they earned.  Buena Park, CA, Monday, April 11, 2022 - Union organizer answers questions as Southern California grocery workers vote to approve a union contract at UFCW Local 324. (Robert Gauthier/Los Angeles Times via Getty Images) Tansy started an apprenticeship right out of high school, a decision he calls “one of the best things I ever did for myself.” His high school pushed everyone to go to college, which Tansy did, but to pay for his first year he took a summer job working construction. It provided an instructive contrast with his college courses. “College was certainly challenging, but it didn't excite me. Construction did. It grabbed me,” Tansy told me. “I was always told ‘find what your hands want to do, and when you do, do it with all your might.’ And I did.” Tansy now serves as the assistant business manager of the IBEW in Fairbanks and as president of the Fairbanks Central Labor Council, which is sort of like the local chapter of the AFL-CIO. “I consider myself a labor person and that simply means a lot of what we do is focus on the middle class,” Tansy explained. “Putting really great wages into our economy and helping people save up to get ahead, to pay off a house.” But the union is about more than just securing a middle-class life for working class Americans. Tansy calls it a fraternity. “If I ever have trouble, I can make one phone call and that's the only call I need to make,” he says. “They will take care of the rest of it and whatever I need will be coming.” And this support system traverses ideological and ethnic divisions. The IBEW in Fairbanks has Republicans, independents, Democrats, progressives, and everything in between. Debates can get testy, especially when social issues like abortion come up in the breakroom. Tansy has also on rare occasions experienced racism. And yet there is a deep bond connecting the members of the IBEW that crosses ideological lines. This bond is the result of a simple fact: that more unites members of the union than divides them, and that what unites them is sacred. “Having good wages, good benefits, good conditions, and being treated fairly and with dignity in retirement should not be only for Republicans or Democrats or red states or blue states,” Tansy explained. “To me, these are nonpartisan issues that should be for everybody. And that's how we reach our common ground.” Tansy’s story is not unique. According to the U.S. Bureau of Labor Statistics, Americans who belong to unions in the U.S. make on average 17% more than their non-unionized brothers and sisters, with a median $1,144 in weekly earnings—compared to $958 for those not unionized. It’s not just wages, either. Unions offer apprenticeships and ongoing training, a debt-free career, a pension, and workplace safety and other protections. They give workers a seat at the table and a voice to balance out the power of the businesses they work for, no mean feat at a time when the majority of working-class Americans are living lives of precarity. Working-class wages decoupled from production and stagnated in the late 70s; it’s estimated that over $47 trillion of working- and middle-class wages have been sapped from the bottom 90% of earners and redistributed to the top 1% since then. So it’s no surprise that approval of labor unions is the highest it’s been since 1965: 68% of Americans told Gallup they approve of unions last year. And yet, despite this fact, Americans aren’t signing up to join unions at record rates. Just the opposite: fewer Americans than ever belong to unions, a scant 6% of Americans working in the private sector. Many believe they are a dying institution in the U.S. Some cast this as proof of yet another case of working-class conservatives choosing a cultural stand against their economic interests. William Sproule is the Executive Secretary-Treasurer of the Eastern Atlantic States Regional Council of Carpenters and says his union is actively engaged in combating negative stereotypes about unions when recruiting. “In the South and other parts of the country, the Southeast, even some of the middle of the country, you say the word ‘union,’ people have been basically brainwashed to think that there are people like me who are some kind of fat-cat millionaires who are stealing money from their pension funds and all this other stuff, all these bad things they try to present about unions,” Sproule says. Of course, there are political reasons unions aren’t popular in some corners of the South. Labor has for a century been affiliated with the Democratic Party and remains so. Sproule views the Democrats as much better for organized labor, and though the Carpenters Union will endorse pro-labor Republicans, right now he says it’s important that the Democrats maintain control over government. “The predominant anti-union forces do seem to come from the Republican Party,” Sproule says, citing things like punishing, anti-union “Right to Work” laws. The Carpenters Union advised its members to vote for Joe Biden based on the policies President Trump pursued that were hostile to organized labor—things like deregulations at the National Labor Relations Board and appointments of pro-business judges, among other things.  Certain pro-labor positions are undoubtedly the province of the Left, from minimum wage campaigns, to support for the NLRB and the PRO Act, to even the expansion of social security benefits. Then there’s healthcare. When employers are responsible for employee healthcare, they have immense, unfair, and corrosive leverage over their workers. The push for universal healthcare is crucial for stabilizing the downward slide of many working-class families, and it is something only Democrats bring up, however sporadically. And yet, thanks to an emergent class chasm in America, the laboring class is increasingly made up of people who find more in common with the Republican Party. In 2020, Bloomberg News found that truckers, plumbers, machinists, painters, correctional officers, and maintenance employees were among the occupations most likely to donate to Trump (Biden got the lion’s share of writers and authors, editors, therapists, business analysts, HR department staff, and bankers).  Others have blamed the fear of corporate consolidation—and corporate retaliation—for a lack of interest in unionizing. The pressures of starting a union are immense, like trying to hold an election in a one-party state, David Rolf, Founding President of Seattle-based Local 775 of the Service Employees International Union and author of The Fight for Fifteen: The Right Wage for a Working America, explained. “Sort of like if you were running to become the mayor, but before you were allowed to be the mayor, you had to first fight to establish that there should be a mayor at all. And then once you establish that there should be a mayor, then you find that your opponent is the only one with access to the electorate for eight hours a day, and that they've had the voter list for years and you just get it six weeks before the election. Also they have unlimited resources.” Meanwhile, there are numerous stories of ugly union busting and retaliation at companies like Tesla and Amazon. But even in companies where union busting is minimal, many people don't want to go to work and have a permanently conflict-based and litigious relationship with their boss, Rolf explained. And there’s the fact that things like sectoral or regional bargaining are just not part of the American worker’s lexicon. But in addition to overcoming the immense challenges of starting a union from scratch while facing corporate union busting, there’s another, less discussed reason workers give for not flocking to unions at a time when they are most in need of what unions offer: a political and class divide separating the people leading unions from the rank and file. More and more, unions are led not by people like Doug Tansy, who sees his job as overcoming partisan divides, but by people enmeshed in a progressive culture that is increasingly at odds with the values of the people the unions purport to represent. And it’s resulted in the paradox of waning union membership despite the near record level of popular support for unions. Labor is definitely having a moment. Anywhere from 25,000 to 100,000 workers went on strike in October 2021. Workers at four Kellogg cereal plants ended an 11-week strike after announcing a deal had been made with the company. The first Starbucks voted to unionize a branch in Buffalo, New York, and has been followed subsequently by other branches across the nation, many of them voting unanimously. At the end of last year over 10,000 workers at John Deere ended a five-week strike after making substantial improvements to their working conditions. Those included a 20% increase in wages over the next six years as well as a return on cost-of-living adjustments and gains to their pension plan. Most recently, an Amazon warehouse in Staten Island became the first Amazon center to unionize, an effort that the corporation spent $4.3 million to combat. The COVID-19 pandemic created a much tighter labor market, which has given workers the upper hand in negotiations for the first time in decades. Expanded unemployment and stimulus checks gave many workers a cushion, some for the first time in their lives, which, combined with the absence of childcare for much of the pandemic and a shortage of workers due to illness or even death, created a real labor shortage. In some cases, that shortage has led to resignations. Over 4 million Americans quit their jobs in November, the majority of them low-wage. In other cases, it’s led to workers demanding better conditions in order to stay—and succeeding at getting them. Chris Laursen lives in Ottumwa, Iowa and has worked at John Deere as a painter for 19 years. He says the strike was a long time coming and sees in it evidence of the rebirth of the American labor movement. “The strikes like the one that we spearheaded showed working people that it is possible to take a stand and get a seat at the table and secure better wages and benefits for your families and yourselves,” Laursen says. “The cheap labor bubble’s busted. Gone are the days where you can bring in employees and not pay them anything.” Like in the IBEW, for John Deere workers, the union’s power is a non-partisan proposition. Ottumwa is the kind of factory town that went for Barack Obama in 2012 then for Trump in 2016. A 2018 rally for Bernie Sanders saw 800 people turn out—followed by one for Trump two weeks later which drew a crowd of 1,200. “Twenty years ago, if you were a Republican here, you were pretty much a closet case about it,” Laursen, who was a delegate for Bernie Sanders, says. “That's really not the case anymore.”  Key to the strike’s success was a laser-like focus on what united the striking workers over what divided them. “We didn't want to politicize the strike or have anything that could divide us, because we understood the importance of us staying together,” Laursen explained. “People who own all the stuff and the media, they want to divide the herd and get us fighting amongst each other. And it really is nonsense because we work in the same place, and our kids go to the same schools. We eat in the same restaurants. We have a lot more commonalities than we do differences.” The COVID labor market has been a boon for non-union workers, too. Latasha Exum is a health aid in a school in Cleveland. She’s in charge of evaluating children who need medical attention. Exum has been in the medical field for 10 years—she’s certified as a medical assistant—but she’s new to her current job and not sure she’ll stay (she loves children, but she worries about how much they spread germs in the age of COVID). And due to the current pressures of the job market, she’s certain that she would be able to find another one. She had no trouble finding this job and was even able to negotiate for a higher starting pay, although the supply chain crisis has made her job harder (thermometers and even band aids have been in short supply).  “Pay isn't everything as far as working conditions,” Exum explained. “Pay is one of the factors that some places are willing to wiggle and negotiate, but the conditions might not be the best.” The COVID economy hasn’t worked for everyone, though. Jenna Stocker is a former marine who worked retail at a pet store in Minneapolis throughout the pandemic. Her job was deemed essential, and she couldn’t afford to miss a paycheck, so while millions were able to work from home, she went to work every day. “I couldn’t afford to stay home and bake bread,” she said. “And those who did looked at us like we were lepers. Essential workers were looked down upon for having a job that allowed other people to stay home.” And she does mean lepers. “They didn’t want to touch us,” Stocker recalled. “When I would deliver dog food, they made me leave it outside. It was dehumanizing.” But it was also part of a larger trend Stocker has noticed, of feeling what she calls “morally wrong” for being poor or working class. There’s a smugness that’s imposed on the lower classes by those in the upper classes, and the class divide is only getting worse. Yet within the working class, divisions evaporate. “I work with a whole spectrum of people, including liberals and conservatives,” Stocker says. “It’s just not something that divides us. We have to work together. We have to make it work. Politics is not something we let divide us at work or in our friendships.” They simply don’t have that luxury. One of the things that the labor shortage has done is something the federal government failed to do: It normalized the idea of a $15 an hour wage. 80% of American workers now make at least $15 an hour—up from 60% in 2014. But that’s nothing close to a living wage for most American cities. Working-class wages have simply not kept up with production; all that extra GDP that’s come from increased production went instead to the top 1%. “Had you merely kept pace with the economy since the 1970s, a full-time, prime-age worker in America who in 2020 made $50,000 a year, that person would be making between $93,000 and a $103,000 a year without any growth in their personal income or share of GDP since the 1970s,” Rolf said. “Half of the income people should have expected to receive over that time was functionally stolen by a series of public policy and boardroom decisions that rewired the economy as upwardly sucking.” Jason Offutt is a 47-year-old from Parma, Ohio who paints lines on roads and in parking lots. He’s seen wage stagnation firsthand. Offutt took a summer job as a line painter when he was 16 and stayed with the company after he left school. He worked for a number of other companies after that, until he was finally able to buy a line-painting machine—it was a friend's, and it was in pieces—for $1,000. He put it back together by hand, and now he works for himself. “I just got tired of watching everybody else making money that I was busting my butt for,” Offutt told me. It took a while to become viable, but once Offutt got in the church directories, the jobs started to come regularly.  In the 30 years Offutt has been a line painter, he’s seen the security of working-class life collapse. “Inflation has gone up so much, even compared to when I started,” he told me. “I was making $16, $17 an hour back in my 20s and 30s, so that was pretty decent money back then, if you had one kid and didn't have too many responsibilities. But as you get older and your kids get older, your son's out working and he barely has enough to pay for his apartment, where I could work and pay for my apartment and car and still be ok. Now, if you’re working class, you've got to have two incomes, two and a half incomes, just to be an above-board person and enjoy your life. Back then, you could do great on just one income.” The percentage of American workers who have what might be called a secure job—who work at least 30 hours a week and earn $40,000 a year with health benefits and a predictable schedule—is less than one in three, and for people without a college degree, it’s just one in five. That’s what Oren Cass, executive director of American Compass and author of The Once and Future Worker, recently found in an extensive survey. “The economy has generally bifurcated into a labor market that has relatively better paying, secure jobs in what we would call knowledge industries, that have tended to see expansion and wage growth and so forth, and generally less secure jobs in shrinking or stagnating industries, that tend to be filled with people without college degrees,” says Cass. One of those people is Cyrus Tharpe, a 46-year-old hazmat truck driver from Phoenix. Tharpe has spent his entire life living below the state median household income everywhere he has lived, and he is deeply cynical about talk of a resurgent labor movement. “Everything is getting worse,” Tharpe tells me. Working class bodies are born to work until they are in too much pain to do so—and then die. “If you’re working class, you die in your early seventies. You know that and there's nothing you can do about it. This is the business model,” Tharpe says. Most of the successful strikes have been won by the tiny percentage of workers who are already unionized. But the 94% of workers in private sector jobs without union representation like himself are just out of luck; to them, attempting to unionize means an antagonistic relationship with management or retaliation from bosses or risking their jobs entirely, facing an influx of new workers flown in from elsewhere or a corporation shutting down the branch where they work. These are luxuries most American workers just can’t afford. Someone from the AFL-CIO in Arizona once reached out to Tharpe and asked if he was interested in forming a union. He said yes and asked for contact information for the lawyers who would back him up when his boss started pushing back. He never heard back from the union representative. It's exhilarating to see workers at places like Amazon and Starbucks unionize. But those jobs tend to be temporary ones—by design at a place like Amazon, which is infamous for paying people to quit. Meanwhile Starbucks workers are often younger and even college-educated. Though both are huge employers—Amazon is America’s second biggest—they also aren’t typical of working-class jobs. And there’s a question of scale, too. The efforts at the Amazon warehouse in Staten Island succeeded where others had failed in large part due to the eschewal of a national union in favor of the creation of a new one specific to the site—the Amazon Labor Union. Far from an endorsement, the success of the Staten Island Amazon warehouse is largely being viewed as a rebuke of organized labor. Moreover, there’s something of a Catch-22 to starting a union in the workplaces where people most need union protections and collective bargaining: It requires someone who paradoxically doesn’t really need the work, who will be ok if the corporate backlash is extreme and they lose their job. Gianna Reeve is a 20-year-old shift supervisor who has worked at a Starbucks in Buffalo for a year and a half. Reeve is a student at Buffalo University where she’s studying psychology, and she is active in the effort to unionize her branch, hoping to follow the lead of another Buffalo Starbucks, the first to unionize. For now, Reeve’s branch seems to have voted against unionizing, though the pro-union faction is contesting the results. Reeve came to Starbucks from Tim Hortons, which she says was grueling work. At Starbucks, employees—Starbucks calls them “partners”—seemed happy to come to work, and Reeve initially felt that they were respected by the company. But in mid-August, a coworker texted to ask if they could talk about something to do with work but “outside of work.” They met at another coffee shop that had recently unionized—a symbolic choice, it turned out—and Reeve’s coworker explained the unionization effort to her and asked if she was interested in helping out.  “I was like, yeah,” Reeve recalled. “I mean, of course, if it means better working conditions for people like my partners, then absolutely.” Reeve was thinking of the people she supervises, most of whom are older than her. She made a point of checking her privilege, pointing out the sad irony of union organizing. “I don't blame any of my partners for being scared or being against unionizing,” she told me. “I'm in a position where I'm able to say, yeah, you know what, let's do it either way. But it's a privilege. I don’t have kids. I don’t have a family I support,” she explained. “I don’t really have anything personally that tethers me. I know that I’m going to be financially and benefits-wise stable, no matter what, so it’s not really a threat they can put against me.” But it’s not just economic privilege. There is an emerging cultural disconnect between the people who most need unions and the people who sometimes run them. At the national level, union staff—especially on the political and public policy side of things—are very likely to be part of what one longtime union leader called the “revolving door of Democratic operatives in Washington.” They have often been guilty of subordinating core working-class interests to what he called “the permanent culture of progressive college-educated coastal elites.” And they are alienating the workers they're supposed to be representing—who are much more socially conservative. A YouGov/American Compass survey of 3,000 workers found that “excessive engagement in politics is the number one obstacle to a robust American labor movement.” “Among those who said they would vote against a union, the top reason cited was union political activity, followed by member dues,” the survey found. “These workers anticipate that unions will focus on politics rather than delivering concrete benefits in their workplaces, and don’t want to pay the cost.” Meanwhile, fear of retaliation was the least cited reason workers gave for why they haven’t unionized. The alliance of unions and Democratic politics often goes beyond labor issues, whether it’s the president of the AFL-CIO applauding a Netflix walkout over a Dave Chappelle special, or one of America's biggest unions endorsing Supreme Court packing, or unionization efforts drawing on slogans like Black Lives Matter to convince workers to vote yes. “When you survey workers, which is what we did, what you find is that this is the thing that they most hate about unions,” Cass told me. Jeff Salovich is a pipefitter foreman at the Minneapolis City Hall, which means he’s in charge of all the heating, air conditioning, and ventilation systems for local government offices, including those of the police chief, the fire chief, City Council, and the mayor. Salovich has been with the Local 539 since 2002, something he’s proud of. But he’s worried about the future of labor in America.  “I think unions are dying,” Salovich told me. And he blames what he calls “political theater.” “There's too many progressives in my mind that don't really understand unions. And although they're trying to represent unions, they're actually doing more harm to unions than they are good.” Though Salovich’s union has people from across the political spectrum, it leans conservative, and there is a divide forming between the blue-collar members and the top-down liberal culture that’s being imposed upon them. “A great majority of the people that I work with—other pipefitters and plumbers and mechanical trades—I would say at least 75% of the workers tend to lean more conservative and are more concerned about keeping their jobs instead of saying the right things or addressing people by pronouns and this and that, all the theatrics that are going on,” he said. “Whereas the people that are running things are being pressured by outside influences to succumb to that.”  For example, in the pipefitter trade, there’s a tool called a nipple that connects different pieces of pipe. But as part of what Salovich sees as progressive pressures on leadership, the word is now verboten, and if you're caught saying it, you'll get reprimanded by your boss. It’s a small example of a much larger trend, he explained. “I think there's that breaking point where people will start to leave if they feel like their dues money is going to political alliances that don't line up with their family's convictions,” he explained.  Many conservatives in the union just stay quiet, hoping this new tidal wave will blow over. But for some, even the good pay and benefits that the union provides isn’t worth it. So, they’re willing to give up their economic interests for cultural issues? “No,” Salovich explained. “Because my interests are not just limited to my paycheck. It's your life,” he said. “They don't understand that people just want to work. I'm coming from a mechanical side. As far as trade staff like painting and plumbing and carpentry and trades that people work with their hands, we don't want to have to be perfect in how we address people and how we talk or be afraid to talk or be who we are as people And the Left side, the progressives, are really pushing a lot of agendas that are not aligned with how we raise our families.” There are a lot of people willing to work for half as much as the unions are offering for peace of mind and a stress-free environment, and to not see their dues go to groups that fund Planned Parenthood. But the more progressive culture may also be contrary to their economic interests; after all, marriage has been correlated with significantly higher earnings, especially for men. They may not have the data at hand to support what they can observe in their communities, but working-class people resisting a politics that is indifferent at best and hostile at worst to traditional values like marriage are, it turns out, acting in their economic interests, too. Many union leaders are cognizant of this cultural divide, like Doug Tansy of Alaska. Tansy is a registered Democrat, but he actively works to combat the politicization of his union. “I purposely always try to get people that will check me,” he told me. “I definitely want that conservative voice at the table, debating with me and decision-making with me because, left to my own devices, I will go too far. I represent a very diverse membership and I use my conservative friends to help check me, to make me defend my ideas and to defend my choices, because I don't want to be one-sided.” But how many Tansys are there?  There’s a devastating irony to the fact that it was a bipartisan anti-worker consensus that resulted in stagnant wages and downward mobility for America’s working-class, and that it is now partisanship that is keeping a strong working class from fighting back.  Americans are often told how divided the nation is, how politically polarized, how we entombed in our own tightly sealed echo chambers. But this is not the reality for millions and millions of working-class Americans outside the few elites who make up our political and chattering classes. Political polarization is a luxury they cannot afford in a marketplace dominated by powerful, profit-maximizing corporations. With the blessing of free-market policies pushed by both political parties in the U.S., millions of good working-class jobs have been shipped overseas, jobs that once catapulted working-class Americans into the middle class and now do the same for the burgeoning middle class in China and elsewhere.  What would help America’s working class? A number of solutions came up with everyone I spoke to. Vocational training was the first. America is unique among wealthy countries in its refusal to invest in skilled trades, something that in countries like Germany and Switzerland has offset the drastic effects of offshoring manufacturing. Universal healthcare was another thing nearly everyone I spoke to agreed upon. Regional or sectoral bargaining was another option that came up, or just a larger culture of collective bargaining that isn’t tied to individual workplaces; it’s why across Northern Europe, corporations like Starbucks and Amazon are forced to deal with unions. And we need new federal labor laws that protect workers—not just businesses.  But none of these goals are achievable so long as organized labor is a political football and what one longtime union organizer and leader called a “subsidiary of the Left wing of the Democratic Party.” Rather than holding the benefits of organized labor hostage until Republican workers agree to fund groups that support Planned Parenthood, those who claim to want a strong labor movement would do better to meet workers where they are—which is increasingly on the social and political right. In other words, Americans who truly care about a stable and thriving working class, one that has access to the American Dream, would do well to learn what workers understand: that more unites us than divides us. In other words, politicians and pundits and journalists and influencers who seek to advance workers’ causes should stop trying to lead and should start following.  Batya Ungar-Sargon is the deputy opinion editor of Newsweek. She is the author of "Bad News: How Woke Media Is Undermining Democracy." *  *  * NOTE FROM GLENN GREENWALD: As is true with all of the Outside Voices freelance articles that we publish here, we edit and fact-check the content to ensure factual accuracy, but our publication of an article or op-ed does not necessarily mean we agree with all or even any of the views expressed by the writer, who is guaranteed editorial freedom here. The objective of our Outside Voices page is to provide a platform for high-quality reporting and analysis that is lacking within the gates of corporate journalism, and to ensure that well-informed, independent reporters and commentators have a platform to be heard. To support the independent journalism we are doing here, please obtain a gift subscription for others and/or share the article Tyler Durden Fri, 04/15/2022 - 19:15.....»»

Category: personnelSource: nytApr 15th, 2022

Hooker Furnishings Reports Sales & Earnings for 2022 Fiscal Year

MARTINSVILLE, Va., April 13, 2022 (GLOBE NEWSWIRE) -- Hooker Furnishings Corporation (NASDAQ-GS: HOFT) today reported consolidated net sales of $593.6 million for its 2022 fiscal year ended January 30, 2022, a $53.5 million, or 9.9%, increase compared to a year ago. The revenue gain was driven by sales increases of over 20% in both the Hooker Branded and Domestic Upholstery segments compared to the prior year, partially offset by a 1.2% sales decrease in the Home Meridian segment ("HMI"). Consolidated net income for the fiscal year was $11.7 million, or $0.97 per diluted share, as compared to a net loss of $10.4 million or ($0.88) per diluted share in the prior year period. Consolidated operating income for the current year was $14.8 million compared to a $14.4 million operating loss in the prior year period. The prior year operating loss was driven by a $44.3 million ($33.7 million net of tax) non-cash intangible assets impairment charge. "We successfully mitigated a multitude of macroeconomic challenges for much of the year on the Hooker legacy side of the business and for the first half at Home Meridian. We were able to grow sales, remain profitable and undertake transformative strategic initiatives for the long-term expansion of the business," said Jeremy Hoff, chief executive officer. "Particularly during the first half of the year, when all segments achieved double-digit sales increases, we were able to better meet historical levels of demand with the right products and inventory readiness," he added. "HMI was more quickly and severely impacted by rising freight costs, reduced vessel space and the Covid-related factory shutdowns which began in August," Hoff concluded. Macroeconomic challenges the Company faced in fiscal 2022 included soaring ocean freight costs and shipping bottlenecks throughout the year, material and component parts inflation, and staffing and foam shortages. "Over the course of the last 18 months, transportation costs have roughly tripled, substantially increasing our cost of imported goods sold," Hoff said. "We were able to mitigate many of these dynamics until late summer, when the unexpected COVID-related shutdown of our Asian factories began and continued through most of the rest of the fiscal year," Hoff said. "While incoming orders and backlogs remained historically high, this loss of production capacity substantially reduced our supply of imported products, which impacted Home Meridian immediately and even began to cause out of stock issues and low inventory receipts at Hooker Branded in the 4th quarter, despite that segment's US warehousing model," he said. As a result, the Company reported a 13.2% consolidated sales decrease in the fourth quarter that began on November 1, 2021 and ended January 30, 2022. Fourth quarter consolidated sales were $134.8 million, with the decline driven by a 23.7%, or $18.9 million, revenue decrease at HMI and an 11.8%, or $5.8 million, sales decline at Hooker Branded. These lower sales were slightly offset by a $3.2 million or 13.5%, increase in Domestic Upholstery sales during the fourth quarter. Over the last few months, our Asian suppliers have begun to ramp up production again and are "currently operating at around 85% to 90% capacity and improving weekly," Hoff said, adding that "While we anticipate that production of imported goods will reach 100% capacity sometime during the first quarter of fiscal 2023, as we forecasted last quarter, we won't feel the full impact of higher production until the second quarter." Also in the 2022 fourth quarter, the Company reported a consolidated operating loss of $5.3 million, compared to $10.5 million of operating income in the prior year period. Net loss for the fourth quarter of fiscal 2022 was $4.0 million, or ($0.33) per diluted share, as compared to a net income of $8.5 million, or $0.71 per diluted share, in the fourth quarter of fiscal 2021. Driven by a $12.0 million operating loss at HMI, contributing factors in the Company's fourth quarter consolidated net loss included inventory unavailability due to the Asian factory shutdowns, high freight costs, a decline in ecommerce and hospitality furniture sales and the Company's planned exit from unprofitable businesses and channels. "Chargebacks from the Clubs channel that we are exiting and one-time order cancellation costs as we wind down our ready-to-assemble (RTA) furniture business at HMI had a combined cost of over $5 million," Hoff said. Segment Reporting: Hooker Branded For the 2022 fiscal year, net sales increased by $38.3 million, or 23.5%, at Hooker Branded, compared to the prior fiscal year. The revenue gains are attributed to a stronger product portfolio, effective supply chain and logistics management and robust consumer demand. "Hooker Branded managed well through some turbulent economic conditions, achieving double-digit sales gains and increased profitability for the year, despite losing sales momentum in the fourth quarter when inventory outages caused by the Asian factory shutdowns caught up with us," Hoff said. By the end of fiscal 2022, the majority of shipments in the Hooker Branded segment carried price increases implemented in July 2021 to mitigate higher ocean freight and product costs we had experienced to that point. However, sales volume declined in the fourth quarter due to reduced inventory availability, resulting in lower operating income compared to the fiscal 2021 fourth quarter. Incoming orders increased by 24.2% compared to the prior year period when business dramatically rebounded from the initial Covid crisis. Backlog remained historically high and nearly doubled as compared to the prior year end when backlog was already at a high level, with part of that increase being due to lower shipments in the fourth quarter. Segment Reporting: Home Meridian The Home Meridian segment's net sales decreased by 1.2% compared to the prior year period due to decreased unit volume as the result of COVID-related factory shutdowns in Vietnam and Malaysia, which led to lower shipments. For the fiscal 2022 fourth quarter, the HMI segment's sales decreased by $18.9 million or 23.7% as compared to the prior year fourth quarter. Sales increases in the first and second quarters of fiscal 2022 at HMI were offset by the sales volume loss during the second half of the year. Driven by higher freight costs, exit costs from the RTA furniture category, and significant chargebacks from the Clubs distribution channel, HMI reported a $21.3 million operating loss for the year. Higher freight costs adversely impacted gross margin by approximately 530 bps in fiscal 2022 and were the primary driver of increased product costs. Current and expected future freight costs, which will have an adverse effect on potential profit margins caused us to rethink our entry into the RTA furniture category. Consequently, HMI exited the RTA furniture category and incurred one-time order cancellation costs of $2.6 million in fiscal 2022. In addition, due to continued poor profitability and excess chargebacks of $2.9 million, HMI made the decision to exit the Clubs channel and incurred one-time order cancellation costs of $900,000. Although these actions adversely affected our earnings and partially resulted in an operating loss, "We believe these actions allow us to focus on more profitable businesses and stable channels to drive long-term growth," Hoff said. "We're now positioning our working capital and resources on solid businesses like Pulaski, Samuel Lawrence, ACH and PRI with a goal to be in stock in our new 800,000-square-foot Georgia warehouse to service growing channels such as brick and mortar retailers, the interior design trade and ecommerce, while still growing our major partners," Hoff said. Segment Reporting: Domestic Upholstery The Domestic Upholstery segment's net sales increased by $18.6 million, or 22.2%, in fiscal 2022 due to double-digit sales increases at all three divisions of the segment. For the fiscal 2022 fourth quarter, Domestic Upholstery net sales increased by $3.2 million or 13.5%. Domestic Upholstery achieved a year-over-year sales increase during every quarter of the 2022 fiscal year. However, gross margin decreased as compared to the prior year and pre-pandemic levels as this segment faced manufacturing constraints which adversely impacted profitability, including foam shortages early in the year, higher raw material and freight costs, and labor shortages and inefficiencies. The segment reported operating income of $4.3 million, or a 4.2% operating margin, as compared to a $12.4 million operating loss in the prior year, which was attributable to $16.4 million non-cash intangible assets impairment charge. Incoming orders increased by 38%, and this segment finished the year with an order backlog 122% higher than the prior year, when backlog levels were already at a historical high. Our manufacturing capacity is increasing weekly, which will help us address this higher backlog. Segment Reporting: All Other All Other net sales increased by $197,000 or 1.7% as compared to the prior fiscal year, due principally to a sales increase at Lifestyle Brands, a business started in fiscal 2019 targeted at the interior design channel. Although this business is still small, net sales to the growing interior designer channel increased nearly 80% compared to the prior fiscal year. For the fiscal 2022 fourth quarter, All Other net sales increased by $1 million or 46.1% as H Contract net sales increased by 44.2%, which offset the sales decreases in the first three quarters. H Contract's incoming orders increased by 27% in fiscal 2022 and finished the year with backlog 126% higher than prior year end. Cash, Debt and Inventory "While inventories are still not at optimum levels due to service demand and backlogs, we have significant inventory in transit and expect our inventory levels to improve incrementally during the first quarter of fiscal 2023 and dramatically in the second quarter," Hoff said. Cash and cash equivalents stood at $69.4 million at fiscal 2022 year-end, an increase of $3.5 million compared to the balance at the fiscal 2021 year-end due primarily to collection of accounts receivable. During fiscal 2022, the Company used a portion of the $19.2 million generated from operations and $372,000 in life insurance proceeds to pay $8.8 million in cash dividends to our shareholders, and $6.7 million in capital expenditures, primarily on our newly opened Georgia distribution center and enhancements of other facilities and systems. Outlook "Incoming orders and backlogs continue to be strong in most divisions," said Hoff. "We are concerned about ongoing global logistics constraints and economic headwinds affecting the consumer that could impact short-term demand, such as inflation, high gas prices and the war in Ukraine. As we mentioned earlier, we expect production capacity of our Asian suppliers to improve significantly, reaching 100% capacity at some point during the first quarter, although the full financial impact of this improvement in inventory readiness won't be felt until the second quarter. We remain optimistic that long-term trends will continue to benefit us, such as demand for housing, the renewed and sustainable focus on home interiors and exteriors, and the Millennial generation entering their prime earning and household formation years. We were also very encouraged by the recently concluded Spring High Point market. Attendance was up significantly compared to both the Fall 2021 and June 2021 markets, more in line with pre-pandemic levels. New products were very well received with major placements across all brands, including new placements of Home Meridian's licensed products.  While we have worked through a broad spectrum of challenges during the past year, our team has continued to focus on multiple strategic growth initiatives, many of which we expect will positively impact us in the next 6 to 12 months," Hoff said. "One such initiative is the integration of Sunset West, a leading manufacturer of outdoor furniture, which we acquired on February 1st of this year. The acquisition immediately positioned Hooker in the growing outdoor furniture segment of the industry with one of the most respected brands in the category and gives Sunset West access to our East Coast distribution system, our High Point showroom and retail and interior design customer base. We were pleased with the strong reception Sunset West received at its recent High Point market debut. As we integrate Sunset West and move past the current headwinds, we expect faster growth from Sunset West than our existing businesses as it is able to leverage the full capabilities of our organization," Hoff concluded. Conference Call Details Hooker Furnishings will present its fiscal 2022 fourth quarter and year-end financial results via teleconference and live internet web cast on Wednesday morning, April 13, 2022 at 9:00 AM Eastern Time. The dial-in number for domestic callers is 877.665.2466 and the number for international callers is 678.894.3031. The conference ID number is 5331177. The call will be simultaneously web cast and archived for replay on the Company's web site at www.hookerfurnishings.com in the Investor Relations section. Hooker Furnishings Corporation, in its 98th year of business, is a designer, marketer and importer of casegoods (wooden and metal furniture), leather furniture and fabric-upholstered furniture for the residential, hospitality and contract markets. The Company also domestically manufactures premium residential custom leather and custom fabric-upholstered furniture. It is ranked among the nation's largest publicly traded furniture sources, based on 2020 shipments to U.S. retailers, according to a 2021 survey by a leading trade publication. Major casegoods product categories include home entertainment, home office, accent, dining, and bedroom furniture in the upper-medium price points sold under the Hooker Furniture brand. Hooker's residential upholstered seating product lines include Bradington-Young, a specialist in upscale motion and stationary leather furniture, Sam Moore Furniture, a specialist in upscale occasional chairs, settees, sofas and sectional seating with an emphasis on cover-to-frame customization, Hooker Upholstery, imported upholstered furniture targeted at the upper-medium price-range and Shenandoah Furniture, an upscale upholstered furniture company specializing in private label sectionals, modulars, sofas, chairs, ottomans, benches, beds and dining chairs in the upper-medium price points for lifestyle specialty retailers. The H Contract product line supplies upholstered seating and casegoods to upscale senior living facilities. The Home Meridian division addresses more moderate price points and channels of distribution not currently served by other Hooker Furnishings divisions or brands. Home Meridian's brands include Accentrics Home, home furnishings centered around an eclectic mix of unique pieces and materials that offer a fresh take on home fashion, Pulaski Furniture, casegoods covering the complete design spectrum in a wide range of bedroom, dining room, accent and display cabinets at medium price points, Samuel Lawrence Furniture, value-conscious offerings in bedroom, dining room, home office and youth furnishings, Prime Resources, value-conscious imported leather upholstered furniture, and Samuel Lawrence Hospitality, a designer and supplier of hotel furnishings. The Sunset West division is a designer and manufacturer of comfortable, stylish and high-quality outdoor furniture. Hooker Furnishings Corporation's corporate offices and upholstery manufacturing facilities are located in Virginia and North Carolina, with showrooms in High Point, N.C., Las Vegas, N.V. and Ho Chi Minh City, Vietnam. The company operates distribution centers in North Carolina, Virginia, Georgia, California, China and Vietnam. Please visit our websites hookerfurnishings.com, hookerfurniture.com, bradington-young.com, sammoore.com, hcontractfurniture.com, homemeridian.com, pulaskifurniture.com, accentricshome.com, slh-co.com and sunsetwestusa.com. Certain statements made in this release, other than those based on historical facts, may be forward-looking statements. Forward-looking statements reflect our reasonable judgment with respect to future events and typically can be identified by the use of forward-looking terminology such as "believes," "expects," "projects," "intends," "plans," "may," "will," "should," "would," "could" or "anticipates," or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Those risks and uncertainties include but are not limited to: (1) disruptions involving our vendors or the transportation and handling industries, particularly those affecting imported products from Vietnam, China, and Malaysia, including customs issues, labor stoppages, strikes or slowdowns and the availability and cost of shipping containers and cargo ships; (2) the effect and consequences of the coronavirus (COVID-19) pandemic or future pandemics on a wide range of matters including but not limited to U.S. and local economies; our business operations and continuity; the health and productivity of our employees; and the impact on our global supply chain, inflation, the retail environment and our customer base; (3) general economic or business conditions, both domestically and internationally, and instability in the financial and credit markets, including their potential impact on our (i) sales and operating costs and access to financing or (ii) customers and suppliers and their ability to obtain financing or generate the cash necessary to conduct their respective businesses; (4) adverse political acts or developments in, or affecting, the international markets from which we import products, including duties or tariffs imposed on those products by foreign governments or the U.S. government, such as the prior U.S. administration's imposition of a 25% tariff on certain goods imported into the United States from China including almost all furniture and furniture components manufactured in China, which is still in effect, with the potential for additional or increased tariffs in the future; (5) risks associated with our reliance on offshore sourcing and the cost of imported goods, including fluctuation in the prices of purchased finished goods, ocean freight costs, including the price and availability of shipping containers, vessels and domestic trucking, and warehousing costs and the risk that a disruption in our offshore suppliers could adversely affect our ability to timely fill customer orders; (6) risks associated with domestic manufacturing operations, including fluctuations in capacity utilization and the prices and availability of key raw materials, as well as changes in transportation, warehousing and domestic labor costs, availability of skilled labor, and environmental compliance and remediation costs; (7) the risks related to the recent Sunset West acquisition including integration costs, maintaining Sunset West's existing customer relationships, the loss of key employees from Sunset West, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies across the business which could adversely affect our internal control or information systems and the costs of bringing them into compliance and failure to realize benefits anticipated from the acquisition; (8) changes in U.S. and foreign government regulations and in the political, social and economic climates of the countries from which we source our products; (9) difficulties in forecasting demand for our imported products; (10) risks associated with product defects, including higher than expected costs associated with product quality and safety, and regulatory compliance costs related to the sale of consumer products and costs related to defective or non-compliant products, including product liability claims and costs to recall defective products and the adverse effects of negative media coverage; (11) disruptions and damage (including those due to weather) affecting our Virginia, Georgia, North Carolina or California warehouses, our Virginia or North Carolina administrative facilities, our North Carolina and Las Vegas showrooms or our representative offices or warehouses in Vietnam and China; (12) risks associated with our newly leased warehouse space in Georgia, including risks associated with our move to and occupation of the facility, including information systems, access to warehouse labor and the inability to realize anticipated cost savings; (13) the risks specifically related to the concentrations of a material part of our sales and accounts receivable in only a few customers, including the loss of several large customers through business consolidations, failures or other reasons, or the loss of significant sales programs with major customers; (14) our inability to collect amounts owed to us or significant delays in collecting such amounts; (15) the interruption, inadequacy, security breaches or integration failure of our information systems or information technology infrastructure, related service providers or the internet or other related issues including unauthorized disclosures of confidential information or inadequate levels of cyber-insurance or risks not covered by cyber- insurance; (16) the direct and indirect costs and time spent by our associates associated with the implementation of our Enterprise Resource Planning system ("ERP"), including costs resulting from unanticipated disruptions to our business; (17) achieving and managing growth and change, and the risks associated with new business lines, acquisitions, including the selection of suitable acquisition targets, restructurings, strategic alliances and international operations; (18) the impairment of our long-lived assets, which can result in reduced earnings and net worth; (19) capital requirements and costs; (20) risks associated with distribution through third-party retailers, such as non-binding dealership arrangements; (21) the cost and difficulty of marketing and selling our products in foreign markets; (22) changes in domestic and international monetary policies and fluctuations in foreign currency exchange rates affecting the price of our imported products and raw materials; (23) the cyclical nature of the furniture industry, which is particularly sensitive to changes in consumer confidence, the amount of consumers' income available for discretionary purchases, and the availability and terms of consumer credit; (24) price competition in the furniture industry; (25) competition from non-traditional outlets, such as internet and catalog retailers; (26) changes in consumer preferences, including increased demand for lower-quality, lower-priced furniture and (27) other risks and uncertainties described under Part I, Item 1A. "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2021. Any forward-looking statement that we make speaks only as of the date of that statement, and we undertake no obligation, except as required by law, to update any forward-looking statements whether as a result of new information, future events or otherwise and you should not expect us to do so.   Table I HOOKER FURNISHINGS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)                       For the     Thirteen Weeks Ended   Fifty-Two Weeks Ended     Jan 30,   Jan 31,   Jan 30,   Jan 31,       2022       2021       2022       2021                     Net sales   $ 134,805     $ 155,259     $ 593,612     $ 540,081                     Cost of sales     118,409       121,648       491,910       427,333                     Gross profit     16,396       33,611       101,702       112,748                     Selling and administrative expenses     21,132       22,490       84,475       80,410   Goodwill impairment charges     -       -       -       39,568   Trade name impairment charges     -       -       -       4,750   Intangible asset amortization     596       596       2,384       2,384                     Operating (loss)/income     (5,332 )     10,525       14,843       (14,364 )                   Other income, net     213       229       373       336   Interest expense, net     29       107       110       540                     (Loss)/income before income taxes     (5,148 )     10,647       15,106    .....»»

Category: earningsSource: benzingaApr 13th, 2022

MDC or TPH: Which Homebuilding Stock is a More Profitable Pick?

Homebuilding prospects look solid for first-quarter 2022 on upbeat demand. Let's see whether M.D.C. Holdings (MDC) or Tri Pointe (TPH) is a better housing stock. The U.S. housing industry has been rallying on solid home buying activity despite supply-side bottlenecks as well as the risk of future interest rate hikes. Also, continued labor and material woes are not enough to limit homebuilders, thanks to solid demand and limited homes in inventory.Per the Commerce Department’s latest data released on Apr 1, spending on construction activity inched up 0.5% to $1,704.4 billion in February 2022 from January’s revised reading of $1,695.5 billion. The metric increased 11.2% on a year-over-year basis.Residential construction spending inched up 1.1% from a month ago and rose 16.5% from the prior year’s levels. Non-residential also increased 6.2% year over year but slipped 0.1% from the prior month’s levels. The upside was mainly attributable to increased spending on private projects like new single-family homes (up 2.5% from the previous month and 20% over a year).Non-residential construction was strong in lodging, public safety, power, sewage and waste disposal, water supply as well as manufacturing sectors.The latest construction spending data encourages the Zacks Building Products - Home Builders industry bellwethers like M.D.C. Holdings, Inc. MDC, Tri Pointe Homes, Inc. TPH, D.R. Horton, Inc. DHI and Lennar Corporation LEN, each carrying a Zacks Rank #2 (Buy). This winning streak will likely continue in 2022, given impressive unemployment data (which improved 0.2 percentage points to 3.6% in March from the previous month), low mortgage rates and increasing buyer traffic.Based on various parameters, let’s check whether MDC or Tri Pointe is a more profitable stock. It is to be noted that both companies are almost neck to neck in terms of market cap. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Determinants of the StocksMDC — with a market cap of more than $2.76 billion — engages in building and selling single-family detached homes for first-time and move-up buyers under the name “Richmond American Homes.”The company’s Build-to-Order process, also known as “dirt sales”, provides buyers with a wide range of choices in major aspects of their future home and personalized customer experience through in-house community teams. MDC’s Financial Services operations offer mortgage loans, insurance coverage and title agency services to its subsidiaries and customers in the United States.Tri Pointe — with a market cap of almost $2.22 billion — designs, constructs and sells innovative single-family detached and attached homes designed primarily for entry-level, move-up, luxury and active adult homebuyers. The company builds premium homes and communities in 10 states.The company has been benefiting from solid homebuilding industry fundamentals, land acquisition strategy and cost control measures. Also, strong demographics and limited availability of homes are likely to aid the company in the future. The company anticipates that potential homeowners will continue to seek homeownership despite rising home prices and increasing rental costs.Strong Brand Presence & Customer SpectrumAlthough MDC is a slightly bigger company in terms of market cap, Tri Pointe has a broad spectrum of customers as it serves luxury and active adults and entry-level and move-up buyers. Also, Tri Pointe’s homebuilding segments build attached and detached single-family homes, town homes as well as condominiums.Bboth companies’ investments in land acquisition and development are encouraging.OutlookFor the first quarter of 2022, MDC projects home deliveries to be 2,000-2,300 units and an average selling price within $550,000-$560,000. The home deliveries projection reflects 1.3% fall from a year ago figure of 2,178 units, considering the mid-point of the guidance. Home sales gross margin for the quarter is expected of approximately 25% (assuming no impairments or warranty adjustments), up from 21.9% reported a year ago.MDC anticipates 2022 home deliveries between 10,500 and 11,000 homes, reflecting 7.7% year-over-year growth (considering the mid-point of the guidance).For the first quarter, Tri Pointe projects home deliveries of 900-1,100 homes and average sales price in $650,000-$660,000 range. The home deliveries projection reflects 11.2% fall from a year ago figure of 1,126 units, considering the mid-point of the guidance. Homebuilding gross margins are expected to be in the range of 25-26%, up from 23.9% reported a year ago.TPH anticipates 2022 home deliveries between 6,500 and 6,800 homes, reflecting 7.5% year-over-year growth (considering the mid-point of the guidance).Zacks Estimates & Stock PerformanceDespite intense inflationary pressure and persistent supply issues, the housing industry has been rallying on robust demand. Depending on the ability to yield higher profits amid headwinds, both companies are expected to generate higher earnings.For MDC, the Zacks Consensus Estimate for 2022 earnings indicates 35.5% year-over-year growth. Tri Pointe’s bottom line for 2022 is likely to improve 21.1%. Although Tri Pointe’s earnings expectation reflects comparatively less year-over-year growth than MDC, it has a VGM Score of B, better than MDC score of C.Image Source: Zacks Investment ResearchShares of MDC and Tri Pointe have declined 39.5% and 8.5%, respectively, in the past year compared with the industry’s 22.54% fall. Although both the stocks have performed unimpressively, TPH have fared better than MDC and industry as a whole.A Look at Stocks’ Profitability & ValuationReturn on Equity in the trailing 12 months for MDC is 23.9% compared with Tri Pointe and the industry’s 20.1% and 22.8%, respectively. Markedly, MDC provides more impressive returns to investors than Tri Pointe and the industry.The trailing 12-month price-to-earnings multiple for MDC and Tri Pointe is 4.74 and 4.83, respectively, compared with 6.04 for the industry. Both MDC and Tri Pointe’s shares are cheaper than the industry.Our TakeTri Pointe certainly has the edge over MDC in terms of customer spectrum, VGM score and price performance. Nonetheless, MDC has solid prospects, provides better returns to investors and is quite cheaper than both Tri Pointe and the industry as a whole. Both the companies remain optimistic about overall homebuilding growth trends, given promising fundamentals and prospects.A Brief Overview of the Other Two StocksD.R. Horton: This Texas-based prime homebuilder continues to gain from industry-leading market share, solid acquisition strategy, a well-stocked supply of land, lots, and homes along with affordable product offerings across multiple brands.D.R. Horton’s earnings are expected to rise 39.2% year over year in fiscal 2022.Lennar: This well-known homebuilder is benefiting from effective cost control and focus on making its homebuilding platform more efficient, leading to higher operating leverage.Lennar’s earnings for fiscal 2022 are expected to rise 15.1% year over year. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Lennar Corporation (LEN): Free Stock Analysis Report D.R. Horton, Inc. (DHI): Free Stock Analysis Report M.D.C. Holdings, Inc. (MDC): Free Stock Analysis Report Tri Pointe Homes Inc. (TPH): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksApr 6th, 2022

JLL sells Upper West Side elevator building for $15.5M

JLL Capital Markets announced today the $15.5 million sale of 2647-2649 Broadway, a seven-story, mixed-use elevator building on the west side of Broadway, between West 100th & West 101st streets, in Manhattan Valley. JLL represented the seller, who has owned and operated the property for the past 35 years. The... The post JLL sells Upper West Side elevator building for $15.5M appeared first on Real Estate Weekly. JLL Capital Markets announced today the $15.5 million sale of 2647-2649 Broadway, a seven-story, mixed-use elevator building on the west side of Broadway, between West 100th & West 101st streets, in Manhattan Valley. JLL represented the seller, who has owned and operated the property for the past 35 years. The Capital Markets team leading the transaction was comprised of Managing Director Hall Oster, Vice President Teddy Galligan and Associate Braedon Gait. Aulder Capital, a New York-based investment management firm, was the buyer. 2647-2649 Broadway consists of two ground-floor retail spaces and 27 apartments. The apartments feature spacious layouts with ample light and air streaming from all sides of the building. The retail component is comprised of approximately 4,250 square feet on the ground level and a portion of the basement space. Situated within the lively Bloomingdale portion of the Upper West Side, the property is serviced by the 1, 2 and 3 subway lines and within walking distance of both Central Park and Riverside Park. It is surrounded by national and local retailers, seasonal farmers markets, cafes, restaurants, arts and cultural institutions. “2647-2649 Broadway is a great building offering a number of value-add opportunities,” said Oster. “Large unit configurations and a strong retail scene support a repositioning to capitalize on the post- COVID recovery. The location between two Broadway subway stations will appeal to both the Columbia University and traditional Upper West Side markets.” “2647-2649 Broadway is a unique building with a lot of character. Aulder has plans to refurbish the historic common areas and build-out luxury rental apartments to meet the growing demand on the UWS. With over 50 ft. of frontage on Broadway, the retail space offers great exposure to a dynamic and up- and-coming market, appealing to a diverse group of potential tenants,” said John Reid, SVP of Acquisitions at Aulder Capital. The purchase represents the fourth New York City acquisition by Aulder Capital in the last 12 months as it continues to target underutilized assets in Manhattan. JLL Capital Markets is a full-service global provider of capital solutions for real estate investors and occupiers. The firm’s in-depth local market and global investor knowledge delivers the best-in-class solutions for clients — whether investment sales advisory, debt placement, equity placement or a recapitalization. The firm has more than 3,700 Capital Markets specialists worldwide with offices in nearly 50 countries. For more news, videos and research resources on JLL, please visit our newsroom. The post JLL sells Upper West Side elevator building for $15.5M appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyMar 31st, 2022

"Looking For Truth? ...In Bonds There Are Fewer Lies"

"Looking For Truth? ...In Bonds There Are Fewer Lies" Authored by Bill Blain via MorningPorridge.com, “Believe whatever you want about equities, but in bonds there is truth..” The Stock Market Rollercoaster will continue a while longer, but a decisive divergence point is coming! Corporate debt is likely to crack on rising rates, price distortion, forgotten risk metrics, and rising defaults. It will signal the perilous financial health of some sectors – bursting the current bubble violently. Anyone for the last few choc-ices?   Meanwhile, back to the Unreal World, let me introduce you to a new Blain’s market mantra:  If you are looking for truth in markets, in bonds there are fewer lies.   Aren’t we having fun in the equity market. Up, Down, Shake it all about. Amazon down 15% one day and up 13% the next. Facebook among the most volatile stocks on the block. Around the globe investors wake up wondering if it’s a risk on or off day, wholly uncertain what they believe about equity market uncertainty… The question is why…? Dinnae fash! (translation: worry not….) But it’s Boy Scout time – as in Be Prepared. Unfortunately, an uncomfortable and deeply painful truth about corporate debt defaults are coming our way… What is likely to happen very soon is a widening divergence between corporate bonds and equity markets. As it happens it will be a big sell signal. When the bond market is working properly then bond prices tell us important things about the economy, but also truths about how well a company is doing in terms of its balance sheet and ability to pay. In contrast… Equity prices just tell us what everyone else thinks… In periods when everyone is prepared to believe seven impossible things before breakfast (a period we are now slipping out of), then every fantabulous, masterful equity stories seem investible. When it comes to equities…. I’m afraid they aren’t really that complex. Successful companies succeed on the back of great ideas, visionary management, strong corporate governance, and, most importantly, access to properly priced capital reflecting just how innovative, profitable and successful it is going to be… At least, that was how it was supposed to work. In the past capital was properly priced and acted as proper check on good vs stupid ideas. As a result the world was generally a happier place, and stockbroking was what we gave the idiot children of the upper middle classes who were too thick for even the clergy to do in financial markets. They would spend all day telling their “clients” which stocks to buy and sell.. Writing their scripts was the clever part. If you listen to the pundits on last week’s rollercoaster stock market ride they are saying things like: “looking for bargains”, “attractive prices at these almost distressed levels”, “there are certainly value spots”.. and the classic “buy-to-dip opportunities are increasingly short-lived because everyone is looking for value when cheaper levels occur.” Hah! Many in the market genuinely believe the stock market is going higher because… well why? Because stocks are cheap? Remember… the value of stocks is entirely based on what the market, as the great big voting machine it is, is telling you they are worth. Bond prices are based on the reality of who can and can’t repay principal and interest. If even the Financial Times has noticed problems in the corporate bond – then it must be a fact: Investors brace for turbulence in US corporate bond market. The reason we are in for trouble is that large parts of the markets now implicitly believe companies don’t go bust – because for the last 12 years of monetary experimentation, distortion and insanely low interest rates have kept all those companies that should have failed and tumbled into default… sort of solvent. There are two things to worry about here: There are fewer and fewer old bond dogs like me around who remember what the credit markets are actually about: who will and won’t pay. (Look around your trading floor – who was there 14 years ago when credit last puked?) The last 14 years has seen a massive shift in credit risk from banks (the SELL side) to investment managers (the BUY side). Banks used to have whole floors of highly trained, highly motivated credit analysts examing their clients. Modern investment managers outsource and maybe have a couple of junior analysts covering the entire junk universe. In short – the holders of corporate debt don’t necessarily understand the risk metrics of credit. Today’s equity market is a properly confused business… everyone wondering what is good, bad or indifferent in terms of what they will be worth short, medium and long-term. As companies haven’t been going bust at normal rates since 2008 (when QE, monetary experimentation and Zero rates begain), then it’s been easy to believe that a company that has been building out its business for the last 10-years but still hasn’t made a penny of profit will ultimately be worth billions because of the position its built and the clients it’s acquired. Not if the cheap capital that has sustained them this far suddenly were to dry up.. because… say interest rates rise or bond markets widen? This is where the divergence will happen. Equities continue to believe growing companies will tick upside. Bond markets are waking up to the reality a tidal wave of defaults is likely coming as rates normalise and QE programmes wind down. Even the rating agencies – who remarkably failed to spot the looming sub-prime crisis in 2007, happily giving AAA ratings to any poke of worthless mortgage – agree defaults will rise this year. Some equity analysts see it coming as well, but generally hedge the firms they’ve got their BUY recommendations on by noting cash on balance sheet, “strong capitalisation” and ease of access to bond markets (a comment that should have any investors reaching for a hard hat.) Generally, discount most things a SELL-Side analyst says. Their business – whatever the regulations say – is to support investment banks’ fee gathering process. When 59 out of 59 Amazon analysts are saying BUY – they are saying buy so that investors in their funds will be reassured and give them more money to manage (generating more fees), or that their buy recommendation will secure some lucrative investment banking mandate. (There are a couple of important rules in winning investment banking business… be the biggest (ie no corporate treasurer ever lost their job for giving JP Morgan or Goldman Sachs their business – even though they handled so mand deals no one was special.) An obvious rule was don’t expect to win debt or M&A business if your stock pickers were saying it’s a SELL Stock.) My warnings on the coming bond crisis have been simple: First, there is zero liquidity in corporate bonds. Central Banks have been backstopping bonds with QE programmes – which are ending. The sell-side, the banks, don’t make markets anymore – capital regulation and the transfer of risk to the BUY-side (investment managers), means leading bond deals is just a fee business for them.. The biggest dealers are now firms like Citadel Securities which commoditises trading through programmes like buying RobinHood’s retail orderflow. When a bond crash comes the market will set like concrete. Second, is the underlying market. Interest rates and inflation are rising. That’s bad for bonds – NSS. Central banks told us inflation was going to be “transitory” last year. Now they don’t use the word. Same thing is likely for folk who think bonds will rise a couple of basis points to a new long-term stability. The economics – like Friday’s US employment numbers – highlight stronger economic growth with serious supply chain and labour pressure on inflation – and the need for central banks to act by tightening aggressively, or letting inflation soar – which is lose/lose for bonds. Third, corporate defaults are going to rise. That’s simple logic – for the past 12 years a growing number of profitless, cash strapped companies have skirted the bankruptcy courts only through insanely low interest rates and the ready availability of cheap money – even the deepest, darkest depths of the junk bond market have been able to find bond market funds tight spreads to treasuries. 12 years of QE and monetary experimentation leaves a vast numbers of zombie firms to be decapitated (which I believe is SOP with an Infestation of the Living Dead…) Since 2008, (the opening salvo of the Global Financial Crisis 2007-2031), there has been a feeding frenzy in corporate bonds as low rates and insatiable demand allowed any junk companies unfettered market access. What did they do with the trillions of dollars of debt they raised? Did they spend it on new plant and equipment, or creating new jobs and markets? nope. Most of it has been spent buying back equity (share-buy-backs) which pushed up the stock price and, and coincidently, management bonuses! This year, rising rates, chronic illiquidity and rising defaults is likely to trigger at least a storm in corporate bonds as the most exposed companies are shown as Zombies… and that’s the point the Equity market might just spot which firms are swimming without any pants at all… Seen it all before… Tyler Durden Mon, 02/07/2022 - 08:40.....»»

Category: blogSource: zerohedgeFeb 7th, 2022

Stocks, Yields Tumble As Quad-Witching Fears Add To Broader Market Slide

Stocks, Yields Tumble As Quad-Witching Fears Add To Broader Market Slide US futures tumbled after hitting an all time high less than 24 hour ago, as the favorable if paradoxical bounce in risk from the hawkish FOMC pivot faded from memory and as investors questioned whether global stocks are due for a rough ride on the backdrop of growing risks from inflation and the omicron virus variant. S&P 500 futures slumped about 0.5% Friday morning, while the U.S. 10-year Treasury yield fell for a second straight day to 1.394%, the lowest since Dec. 6. Futures were dragged down by tech stocks as volatility surged amid mounting concerns about monetary tightening and the omicron coronavirus variant. “Rates hikes do not end bull markets, but reversal of central banks’ liquidity means less speculative froth and more volatility,” said Barclays strategist Emmanuel Cau. “Policy angst may be here to stay, but following months of unclear guidances and conflicting signals, the direction of travel is clear now.” Investors are also bracing for the quarterly rebalancing of the S&P 500 Index after the market close and the triple witching expiration of equity derivatives that could magnify market moves. General Motors dropped in premarket trading after the company said Cruise unit Chief Executive Officer Dan Ammann is leaving the company.  Here are some of the other notable premarket movers today: Tesla (TSLA US) shares fall as much as 2.4% in U.S. premarket trading as CEO Elon Musk sells another chunk of shares in the electric vehicle maker. FedEx (FDX US) boosted its adjusted earnings-per-share forecast for the full year, with the guidance beating the average analyst estimate. Shares rose about 4.8% in premarket trading. Spruce Biosciences (SPRB US) shares soar as much as 30% in U.S. premarket trading after Oppenheimer initiated coverage with an outperform rating and a $15 price target that implies 500% upside in the stock from Thursday’s closing price. Cerner (CERN US) shares rise 17% in U.S. pre- trading hours amid a report that Oracle is in talks to buy the medical-records company for about $30b. Rivian Automotive (RIVN US) shares slump 9% in U.S. premarket trading after the electric pickup maker reported results. Piper Sandler says that after- hours share-price loss is “noise,” and remains positive following earnings call. General Motors (GM US) dropped postmarket after it said Cruise Chief Executive Officer Dan Ammann is leaving the company. Steelcase (SCS US) declined in the after hours session after the furniture company reported 3Q revenue that missed the average analyst estimate due to supply chain disruptions. U.S. Steel Corp. (X US) shares declined premarket after it warned fourth-quarter results will be lower than Wall Street had been expecting. In Europe, technology companies and carmakers were among the worst-performing industries, dragging the Stoxx Europe 600 Index down 1%. Tech, autos and utilities are the weakest sectors. Miners and travel are the only Stoxx 600 sectors in small positive territory.  Cellnex slumped 4.1% to a six-month low after a British regulator said the Spanish company’s purchase of CK Hutchison Holdings’s European telecommunication towers raised “significant” competition concerns. Asian stocks slid, as a risk-off mode resumed amid concerns over tighter monetary policies and ongoing tensions between the U.S. and China. The MSCI Asia Pacific Index dropped as much as 1%, set for the fifth decline over the past six days. Technology shares around the region took a hit, led by Chinese giants including Tencent and Alibaba Group, as a global sector selloff continued on higher rate fears. China was among the region’s worst performers after the Biden administration added 34 Chinese targets to its banned-entity list, weighing on sentiment. Japanese stocks held their losses after the Bank of Japan lengthened its cautious withdrawal from emergency pandemic aid. Asia’s benchmark was set to cap a more than 1% slide this week as central banks around the world attempt to curb inflation, dampening prospects for the usual year-end rally. The Federal Reserve plans to double the pace of its asset-tapering program and the Bank of England hiked interest rates, prompting investors to edge away from riskier assets. “I expect the choppy price action to continue to spoof fast-money players into the year-end, both in the U.S. and elsewhere,” said Jeffrey Halley, a senior market analyst at Oanda. In Australia, the S&P/ASX 200 index rose 0.1% to close at 7,304.00, snapping a three-day losing streak. Material and energy shares led the advance on the back of strong commodity prices. Gold miner Norther Star was the best performer on the benchmark. Domain Holdings was the worst performer, followed by Afterpay, after the U.S. government said it launched a regulatory probe into buy now, pay later companies. In New Zealand, the S&P/NZX 50 index fell 0.5% to 12,717.94 In rates, treasuries were mixed with the yield curve flatter as U.S. trading begins, retracing a portion of Thursday’s bull-steepening move that unfolded as futures further marked down likelihood of Fed rate increases beyond mid-2022. Yields out to the 10-year are within 1bp of Thursday’s closing levels, with longer maturities lower by 1bp-2bp; 5s30s is flatter by ~2bp after steepening 7.2bp Thursday, remains ~4bp steeper on week. Yields remain lower on week led by the 5Y, which declined 8.1bp Thursday.  Bunds bull flatten a touch, long-end richer by ~2bps, brushing off some hawkish comments from ECB’s Muller. Peripheral spreads tighten slightly. Gilts are bear steeper, cheaper by 2.5bps at the back end. In FX, the Bloomberg Dollar Spot Index was steady and the greenback was mixed versus its Group-of-10 peers, with most currencies confined to narrow ranges. Treasury yields rose by up to 2bps, led by the belly. The euro was flat at $1.1330 and bund yields were little changed. The pound steadied amid seasonal flows into the dollar and as the boost from Thursday’s surprise Bank of England rate hike wore off. U.K. retail sales last month rose 1.4% from October, when they grew a revised 1.1%, the Office for National Statistics said. Economists had expected an increase of 0.8%. Sales excluding auto fuel grew 1.1%. The yen edged higher on concerns about the risk that eventual draw-down in central bank liquidity could trigger a reversal in the rally. Japanese government bonds were in ranges as they shrugged off the Bank of Japan’s status quo outcome. Australian and New Zealand dollar led G-10 declines as falling stocks and mounting virus numbers sapped demand for risk currencies. Turkish lira once again goes sharply offered, briefly weakening over 9% to print through 17/USD before further central bank intervention. In commodities, WTI dropped 1.5%, holding above $71 so far; Brent trades slips below $74. Spot gold holds Asia’s gains, near $1,804/oz. Base metals are in the green with LME tin outperforming. Bloomberg’s Markets Live team is running an anonymous survey on asset views for 2022. It takes about two minutes and the results will be shared in the latter part of December. Looking at the day ahead, data releases include Germany’s Ifo business climate indicator for December, as well as November data on German PPI and UK retail sales. From central banks, we’ll also hear from the Fed’s Waller and the ECB’s Rehn. Market Snapshot S&P 500 futures down 0.8% to 4,635.00 MXAP down 0.9% to 191.41 MXAPJ down 0.8% to 618.58 Nikkei down 1.8% to 28,545.68 Topix down 1.4% to 1,984.47 Hang Seng Index down 1.2% to 23,192.63 Shanghai Composite down 1.2% to 3,632.36 Sensex down 1.5% to 57,011.01 Australia S&P/ASX 200 up 0.1% to 7,303.97 Kospi up 0.4% to 3,017.73 STOXX Europe 600 down 0.6% to 473.64 German 10Y yield little changed at -0.36% Euro little changed at $1.1330 Brent Futures down 1.4% to $73.99/bbl Gold spot up 0.5% to $1,808.56 U.S. Dollar Index little changed at 95.98 Top Overnight News from Bloomberg Boris Johnson suffered a seismic political upset as his ruling Conservatives lost a key parliamentary election, a result that will heap intense pressure on the U.K. prime minister and may even call his position into question Leading central banks made a big call this week, deciding that the coronavirus is no longer calling the shots in their economies, and inflation is now the bigger threat Bank of France Governor Francois Villeroy de Galhau said the difference between the new forecast for 1.8% inflation in 2023 and 2024 and the ECB’s 2% target is within the “margin of uncertainty.” In a Bundesbank report showing German inflation will run above 2% through 2024, Jens Weidmann urged vigilance as he sees “risks to the upside” throughout the currency bloc ECB Governing Council member Olli Rehn said “there’s considerable uncertainty about the path which inflation will take” Germany’s main gauge of business expectations slipped to 92.6 in December, falling for a sixth month, according to the Ifo institute. That’s a bigger decline than predicted by economists in a Bloomberg survey. Current conditions were also assessed as weaker than in November EU leaders failed to reach a deal on how to react to the unprecedented gas crisis that sent energy prices to record levels after Poland and the Czech Republic demanded stronger action to cap the costs of pollution A more detailed look at global markets courtesy of Newsquawk Asian equity markets were mostly lower with sentiment in the region downbeat after the tech-led declines in the US and yesterday’s central bank frenzy. Overnight US equity futures held a downside bias. The ASX 200 (+0.1%) traded positively amid notable outperformance in the commodity-related sectors which was spearheaded by gold miners as the precious metal reclaimed with the USD 1800/oz level and with sentiment also helped by the announcement of a UK-Australia trade deal. The Nikkei 225 (-1.8%) was the biggest laggard as exporters suffered from detrimental currency inflows and following the BoJ announcement to scale back its pandemic relief measures in March. The Hang Seng (-1.2%) and Shanghai Comp. (-1.2%) were lacklustre after further restrictive measures by the US on Chinese companies including the passage of the Uyghur bill aimed at China which bans imports from Xinjiang unless the US government determines they were not produced with forced labour, while tech suffered after the US included several Chinese companies to its investment and trade restrictions lists. Finally, 10yr JGBs were flat despite the steepening seen in the US and underperformance of Japanese stocks, with demand subdued amid the BoJ decision to scale back pandemic relief measures. Top Asian News Japan Expedites Virus Boosters for Some as Omicron Looms Hong Kong Stock Exchange to Allow SPAC Listings Next Month Thailand May Impose Stock-Trading Tax to Lift Government Revenue Asian Stocks Drop as Worries on Global Policy Tightening Linger European equities have succumbed to the weakness seen on Wall Street and across most APAC markets (Euro Stoxx 50 -1.1%; Stoxx 600 -0.6%) as global central banks turn hawkish and Quad Witching gets underway in holiday-thinned liquidity. US equity futures have also drifted lower, with the March 2022 contracts softer to the tune of 0.1-0.3% across the ES, NQ, YM and RTY. On the recent central bank pivots, analysts at Barclays suggest that rate hikes do not end bull markets, but reduced liquidity means “less speculative froth”. Barclays sees persisting inflation as a risk to markets and Omicron as an increasing downside risk to European growth, albeit the impact is contained thus far. Back to trade, Eurozone bourses see broad-based weakness whilst the UK’s FTSE 100 (+0.2%) holds its head above water – aided by outperformance in the basic materials sector and a softer Sterling. Overall sectors kicked off the day with a defensive bias, albeit that theme has since faded, with some cyclicals making their way up the ranks. Sectors are mostly in the red, however. Auto names are the laggards, with European car registrations -17.5% in November (prev. -30% MM). Tech also resides towards the bottom amid outflows from growth, and with the hefty valuations state-side also stoking some concerns. Chip names are also hit amid news Apple (-0.8% pre-market) is reportedly planning to build a new office to bring wireless chips in-house which may replace parts from Broadcom and Skyworks. STMicroelectronics (-3%), ASM (-2.4%), BE Semiconductor (-2.6%) are among the biggest losers in the Stoxx 600. Top European News European Gas Plunges After Russia Books Pipeline at Last Minute Stellantis Revamps Auto-Finance Business With BNP, Santander Cellnex Drops Most in 11 Months on CK Hutchison Deal Woes Johnson Suffers Humiliating Defeat in U.K. Special Election In FX, it feels like Friday fatigue has set in and markets are already in weekend mode as the Greenback sticks to relatively tight lines against most G10 peers and the index holds close to the 96.000 level within a narrow 96.118-95.875 band. Consolidation and sideways price action is hardly a surprise given this week’s extremely volatile trade on a combination of thin seasonal volumes and the abundance of final global Central Bank policy meetings for the year all scheduled within a few days. However, the Dollar and a few of its key counterparts may also be tied up in option expiry interest that ranges from large to huge in certain cases, awaiting comments from Fed’s Waller as the first official post-FOMC speaker. CHF/EUR/GBP/JPY - The Franc remains above 0.9200 vs the Buck and is testing 1.0400 against the Euro again in wake of an unchanged SNB yesterday, while the single currency is holding above 1.1300 vs the Greenback even though Germany’s latest Ifo survey was downbeat and perhaps underpinned by hawkish remarks from ECB’s Simkus and Muller over the comparatively neutral/dovish Rehn. Elsewhere, Sterling retains an element of its post-BoE hike momentum, but not enough for Cable to breach the 30 DMA that comes in at 1.3344 today or stay above a Fib retracement at 1.3321 irrespective of Chief Economist Pill expressing the view that further tightening is likely. Conversely, the BoJ stuck to its dovish stance and balanced the termination of corporate and commercial QE by extending the COVID-19 funding facility for SMEs another 6 months, to leave the Yen meandering between 113.86-44, though nearer 113.50 amidst the latest bout of risk aversion. Note also, Usd/Jpy will likely be contained by a swathe of option expiries stretching from 113.00 up to 114.50 and the same can be said for Eur/Usd and the Pound given the sheer size of interest at various strikes rolling off today - see 7.24GMT post on the Headline Feed for details. NZD/AUD/CAD - A further deterioration in NBNZ business outlook and decline in own activity have compounded the aforementioned downturn in overall sentiment to the detriment of the Kiwi more than Aussie or Loonie that is feeling the heat from renewed weakness in WTI crude. Hence, Nzd/Usd is nearer 0.6750 than 0.6800, while Aud/Usd is hovering within a 0.7185-53 range and Usd/Cad sits just above 1.2800. In commodities, WTI and Brent futures have been trundling lower in tandem with risk appetite – with WTI Jan closer to USD 71/bbl (vs high USD 72.26/bbl) whilst Brent Feb resides under USD 73/bbl (vs high USD 74.98/bbl). The morning did see updates on the Iranian nuclear front whereby sources suggested the parties in the Vienna talks have been able to reach a new draft by incorporating Iran's views, which, if finalised, will be the basis for upcoming talks. Although nothing is yet set in stone, this is much more constructive than had been the case this time last week. Further, the oil complex juggles the fluid COVID situation as the steeper rise in global cases backs the notion of stricter measures. That being said, reports thus far continue to suggest the lower severity of the Omicron variant. Analysts at Goldman Sachs said Omicron hasn't had much of an impact on mobility and oil demand, while it sees strong oil demand in 2022 from rising CAPEX and infrastructure construction. Furthermore, it stated that average oil demand is to hit record highs in 2022 and 2023. Elsewhere, spot gold remains firm after topping the group of DMAs yesterday (21 at 1787, 100 at 1788, 200 at 1794 and 50 at 1798) alongside the USD 1,800/oz mark. LME copper hovers around the USD 9,500/t mark awaiting the next catalyst, whilst Dalian iron ore continued to gain overnight with traders citing a recovery in steel demand. US Event Calendar No economic events 1pm: Fed’s Waller Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Well this is my last EMR of 2021. Henry will be in charge on Monday and Tuesday of next week but by then I’ll be catching up on sleep to prepare myself for the onslaught of Xmas with three hyper excitable kids. Thanks for all your support and interactions over the past year. Hopefully you’ll continue to read in 2022. Try to have as exciting a holiday season as the virus permits and see you on the other side. As I have done most years, at the end today I’m listing my favourite TV series and films of the year. I used to do favourite albums of the year but I’m ashamed to say that the person who used to buy a few hundred albums a year and try out all sorts of new music has turned into someone who listens to playlists and old albums. All a bit dull. The odd film and lots of TV continues to keep me sane after a day working in financial markets. So I hope you enjoy the countdown. Talking of countdowns, yesterday was probably the last active market day of the year with a slew of Central Bank activity over the last 36 hours. However the FOMC-inspired risk rally peaked out by lunchtime in Europe and the S&P 500 eventually shed -0.87% amidst significant declines in technology stocks (Nasdaq -2.47%). Meanwhile there was continued caution about the Omicron variant among investors, as many of the key economies await a fresh wave of cases over the coming weeks. We’ll start with the ECB, who yesterday said that they would be ending net asset purchases under their Pandemic Emergency Purchase Programme (PEPP) at the end of March 2022, and that purchases over Q1 would be “at a lower pace than in the previous quarter”. Nevertheless, they also moved to soften the blow by confirming a step up in purchases by the Asset Purchase Programme (APP) to €40bn a month in Q2 2022, followed by a reduction to €30bn in Q3, and then €20bn a month from October “for as long as necessary to reinforce the accommodative impact of its policy rates.” They also said that they expected net purchases would conclude “shortly before it starts raising the key ECB interest rates.” Overall this was a somewhat hawkish decision (see European economists’ recap here), since although APP purchases will be increasing, those volumes are fixed and will taper out, whilst expectations were that the ECB may retain more flexibility with the APP. That flexibility seems confined to PEPP reinvestments, which will grant policy optionality as the inflation outlook remains uncertain. That said, it seems like the ECB communicated a set path for policy during 2022, with rate hikes not coming until 2023, according to our economists. Sovereign bond yields ended the day higher across most of the continent, although they gave up some of that increase towards the close, with those on 10yr bunds (+1.1bps), OATs (+2.2bps) and BTPs (+5.5bps) all rising. However, some shorter-dated yields did move lower, with those on 2yr bunds (-1.3bps) and OATs (-0.2bps) declining. When it comes to the ECB’s inflation forecasts, these were upgraded yet again, with the central bank now expecting 2022 inflation at +3.2% (vs. +1.7% in September), whilst their 2023 and 2024 projections now stand at +1.8%. However, the 2023 and 2024 projections are still beneath the ECB’s 2% target, and in their forward guidance they’ve said that they wouldn’t raise raises until inflation was seen reaching the target “durably for the rest of the projection horizon”, so even with the upgrade to 2023 they’re still forecasting inflation beneath target then. The other central bank decision came from the BoE yesterday, who hiked rates by 15bps to 0.25%. The consensus had been expecting them to keep rates on hold given the Omicron variant, hence the decision came as something of a surprise to markets, although we should say that DB’s own UK economist made an out-of-consensus but accurate call for a 15bps hike. In the minutes, the decision was described as “finely balanced” due to the uncertainty around Covid, but an 8-1 majority on the MPC voted in favour, and Governor Bailey said afterwards in a BBC interview that “We’ve seen evidence of a very tight labour market and we’re seeing more persistent inflation pressures, and that’s what we have to act on”. It comes as inflation has continued to surpass the BoE’s own forecasts, and the summary of the latest meeting said that Bank staff were now expecting inflation to peak “around 6% in April 2022”, up from its current level of 5.1%. Given the decision came as a surprise to many, there was a sharp rise in gilt yields in response, with those on 10yr gilts initially up +10bps before following the global bond rally which meant we only closed up +2.2bps to 0.75%. That move was entirely driven by higher real rates, and the 10yr inflation breakeven fell -5.5bps as investors moved to price in a lower trajectory for inflation, with the 5yr breakeven down by an even larger -12.3bps. Meanwhile investors also moved to price in a faster pace of hikes over the coming months, with the next 25bps hike fully priced in by the time of the March 2022 meeting, and a +73% chance of one priced in at the next meeting in February. In terms of DB’s own expectations, our UK economist writes in his reaction note (link here) that he now expects the next 25bps hike as soon as February 2022, followed by two further hikes in November 2022 and May 2023. Against this backdrop there was a fairly mixed equity reaction on either side of the Atlantic. The S&P 500 fell -0.88% as mentioned, with the NASDAQ seeing a major -2.47% decline, erasing their post-FOMC gains. In Europe however there was a much stronger performance as they caught up with the US rally following the Fed’s policy decision, and the STOXX 600 advanced +1.23%. Separately, US Treasuries also diverged from their European counterparts, with the 10yr yield down -4.6bps at 1.41%. In terms of the latest on the pandemic, there was a further record number of cases in the UK yesterday, with 88,376 reported, which beats the previous record set only the day before. Against that backdrop, France moved to restrict travel from the UK, with tourist and non-essential business travel prohibited. Separately in South Africa, hospitalisations now stand at 7,614, which is currently up +59% on the previous week. When it comes to the economic impact, yesterday’s release of the December flash PMIs from around the world pointed to weakening growth momentum across the major economies. Indeed, the composite PMI declined on the previous month in the US, Euro Area, Germany, France, UK, Japan and Australia. The headline numbers were the Euro Area composite PMI, which fell to a 9-month low of 53.4 (vs. 54.4 expected), whilst the US composite PMI fell to 56.9. So both still above the 50-mark that separates expansion from contraction, but some way down from their peaks in the middle of the year. Over in the US, it appears the gap between Democratic senators on President Biden’s Build Back Better bill is just too big, as Democratic leaders acknowledged that negotiations and votes could well drag over into next year. In a statement, President Biden said that “It takes time to finalize these agreements, prepare the legislative changes, and finish all the parliamentary and procedural steps needed to enable a Senate vote. We will advance this work together over the days and weeks ahead”. Obviously longer-term outlooks will hinge on whether or not the bill passes, but there’s implications for 2022 growth, too, as the bill was set to extend child tax credits that comprise a not-insubstantial portion of consumer income. Overnight in Asia the main equity indices are trading lower, with the KOSPI (-0.33%), Shanghai Composite (-0.90%), Hang Seng (-1.28%), CSI (-1.31%) and the Nikkei (-1.75%) all declining amidst losses in technology stocks. Some of the main headlines came from the Bank of Japan however, which kept its main policy rates unchanged, announced that it would slowly reduce its corporate debt holdings, but also extended a special covid loans program by six months to end in September 2022, which aims to support small and medium-sized firms. Futures markets in US & Europe are also indicating a slow start, with those on the S&P 500 (-0.14%) and the DAX (-0.67%) both trading in the red. In terms of yesterday’s other data, the weekly initial jobless claims in the US moved up from their half-century low the previous week to 206k (vs. 200k expected). In spite of the uptick however, it was still enough to push the 4-week moving average down to 203.75k. Otherwise, US industrial production grew by +0.5% in November (vs. +0.6% expected), housing starts accelerated to an annualised rate of 1.679m (vs. 1.567m expected), their highest level in 8 months, and building permits rose to an annualised 1.712m (vs. 1.661m expected). To the day ahead now, and data releases include Germany’s Ifo business climate indicator for December, as well as November data on German PPI and UK retail sales. From central banks, we’ll also hear from the Fed’s Waller and the ECB’s Rehn. Tyler Durden Fri, 12/17/2021 - 08:07.....»»

Category: blogSource: zerohedgeDec 17th, 2021

Metro sells six Manhattan apartment buildings for $65M

Cushman & Wakefield has arranged the sale of six multifamily properties in Manhattan, dubbed The Metro Portfolio, for a total of $64,675,000. Robert M. Shapiro, Andrew Berry, Michael Gembecki, Charlie Gravina, Austin Fabel and Nicholas Kontos represented the seller, Metro Management, in each transaction. “Our team executed a dynamic strategy... The post Metro sells six Manhattan apartment buildings for $65M appeared first on Real Estate Weekly. Cushman & Wakefield has arranged the sale of six multifamily properties in Manhattan, dubbed The Metro Portfolio, for a total of $64,675,000. Robert M. Shapiro, Andrew Berry, Michael Gembecki, Charlie Gravina, Austin Fabel and Nicholas Kontos represented the seller, Metro Management, in each transaction. “Our team executed a dynamic strategy to maximize value throughout the marketing process for each of these buildings,” said Shapiro. “We saw significant interest from a wide range of investors, which is no surprise considering these buildings are located in some of Manhattan’s most desirable residential neighborhoods which are poised to recover the quickest from the pandemic lows.” This is the second sale from the original 13-building portfolio that Metro has sold this year. In August, it sold five properties from the collection that are located along the west side of Manhattan for $27 million in a deal also arranged by the same Cushman & Wakefield team. 312 West 21st Street is an 8,930-square-foot, five-story walkup multifamily building comprised of 10 two-bedroom apartments in Chelsea. The final sale price was $3,400,000. The buyer was Leor Sabet’s Sabet Group. 357-359 West 22nd Street are two five-story multifamily buildings with 10 units. The buildings total 11,250 square feet and are located in Chelsea. The final sale price was $8,000,000. The buyer was Parke Leatherman of Lockhill Properties. 335 West 19th Street is a four-story, 45-unit residential apartment building spanning 14,540 square feet in Chelsea. The final sale price was $7,500,000. The buyer was Seiya Tokuyama. 320-326 and 329-333 West 55th Street are two four-story walkup apartment buildings. The properties consist of 63 units and span 27,552 square feet in Hell’s Kitchen. The final sale price was $11,550,000. The buyer was Andon Iksino of Xinos Construction Corp. 101-109 West 10th Street (pictured top) totals 15,939 square feet and boasts 184 feet of highly visible, wraparound frontage in the heart of Greenwich Village. The three-story, mixed-use property is comprised of eight residential apartments above six retail spaces. The final sale price was $16,725,000. The buyer was Bob Cohen of RA Cohen. 191-197 Seventh Avenue is a five-story, mixed-use elevator building totaling 34,090 square feet in the heart of Chelsea. The ground floor retail totals 7,500 square feet and is currently configured as four retail storefronts. The property features 99 feet of frontage and 25,297 square feet of available air rights for future development. The final sale price was $17,500,000. The buyer was an LLC associated with Twin Oaks Equity Partners. The post Metro sells six Manhattan apartment buildings for $65M appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyNov 2nd, 2021

Metro sells six-building Manhattan portfolio for $65M

Cushman & Wakefield has arranged the sale of six multifamily properties in Manhattan, dubbed The Metro Portfolio, for a total of $64,675,000. Robert M. Shapiro, Andrew Berry, Michael Gembecki, Charlie Gravina, Austin Fabel and Nicholas Kontos represented the seller, Metro Management, in each transaction. The buyer was real estate investor... The post Metro sells six-building Manhattan portfolio for $65M appeared first on Real Estate Weekly. Cushman & Wakefield has arranged the sale of six multifamily properties in Manhattan, dubbed The Metro Portfolio, for a total of $64,675,000. Robert M. Shapiro, Andrew Berry, Michael Gembecki, Charlie Gravina, Austin Fabel and Nicholas Kontos represented the seller, Metro Management, in each transaction. The buyer was real estate investor and manager, R.A. Cohen & Associates, according to public records. “Our team executed a dynamic strategy to maximize value throughout the marketing process for each of these buildings,” said Shapiro. “We saw significant interest from a wide range of investors, which is no surprise considering these buildings are located in some of Manhattan’s most desirable residential neighborhoods which are poised to recover the quickest from the pandemic lows.” This is the second sale from the original 13-building portfolio that Metro has sold this year. In August, it sold five properties from the collection that are located along the west side of Manhattan for $27 million in a deal also arranged by the same Cushman & Wakefield team. Those properties were acquired by Anbau Enterprises. 312 West 21st Street is an 8,930-square-foot, five-story walkup multifamily building comprised of 10 two-bedroom apartments in Chelsea. The final sale price was $3,400,000. 357-359 West 22nd Street are two five-story multifamily buildings with 10 units. The buildings total 11,250 square feet and are located in Chelsea. The final sale price was $8,000,000. 335 West 19th Street is a four-story, 45-unit residential apartment building spanning 14,540 square feet in Chelsea. The final sale price was $7,500,000. 320-326 and 329-333 West 55th Street are two four-story walkup apartment buildings. The properties consist of 63 units and span 27,552 square feet in Hell’s Kitchen. The final sale price was $11,550,000. The buyer is real estate investor and manager f, R.A. Cohen & Associates, according to public records. 101-109 West 10th Street (pictured top) totals 15,939 square feet and boasts 184 feet of highly visible, wraparound frontage in the heart of Greenwich Village. The three-story, mixed-use property is comprised of eight residential apartments above six retail spaces. The final sale price was $16,725,000. 191-197 Seventh Avenue is a five-story, mixed-use elevator building totaling 34,090 square feet in the heart of Chelsea. The ground floor retail totals 7,500 square feet and is currently configured as four retail storefronts. The property features 99 feet of frontage and 25,297 square feet of available air rights for future development. The final sale price was $17,500,000. The post Metro sells six-building Manhattan portfolio for $65M appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyNov 2nd, 2021

Stocks Slide, Ugly Mood Returns As Traders Ask "Did Anything Change"

Stocks Slide, Ugly Mood Returns As Traders Ask 'Did Anything Change' The brief post-BOE euphoria has worn off, and risk-off sentiment returned to markets as concern about inflation and the global economy overshadowed the Bank of England’s desperate attempt to restore calm by restarting QE, exacerbated by more hawkish central bank talk and defiance by British PM Liz Truss's tax plan (which has been slammed from the IMF all the way to the White House). Treasuries resumed their slide with UK gilts, while US equity futures fell as European stocks extended a selloff that’s caused valuations to drop to their lowest since 2012. As of 730am, emini S&P futures slid 0.7% to 3704, recovering from losses as big as 1.5% earlier. The dollar rose and Treasuries resumed their slump as investors focused on expectations the Federal Reserve will continue to deliver aggressive interest-rate hikes. The pound snapped a two-day gain and UK gilt yields rose as Prime Minister Liz Truss defended a giant package of unfunded tax cuts that sent markets into turmoil. “Other than the dollar, there are not many assets that are trading constructively,” said Julia Raiskin, Asia-Pacific head of markets for Citigroup Inc. “The markets are very pessimistic. Investors are fairly on the sidelines.” In premarket trading, US-listed Chinese stocks drop in premarket trading, following in the footsteps of Hong Kong- listed peers as the Hang Seng Tech Index erased almost all gains since a March nadir. Alibaba (BABA US) -3%, Nio (NIO US) -2.9%, Baidu (BIDU US) -2.4%, Pinduoduo (PDD US) -2.6%, JD.com (JD US) -2.4%. Bank stocks also slumped after snapping a six-day losing streak the day earlier. Here are other notable premarket movers: Coinbase falls 2.5% in premarket trading after Wells Fargo starts coverage at underweight, with operating results set to remain under pressure. Bakkt (BKKT US) and Riot Blockchain (RIOT US) are both initiated at equal-weight, with Riot declining 3% in premarket trading. Altus Power (AMPS US) slumped 16% in premarket trading after the company’s secondary offering priced at $11.50 per share, below Wednesday’s record close of $14.23. First Solar (FSLR US) gained 1.3% in premarket trading after Evercore ISI analyst Sean Morgan raised the recommendation to outperform from inline, saying the company is poised to benefit from the Inflation Reduction Act. Apple (AAPL US) shares were down 2.6% in premarket trading, set to extend Wednesday’s decline, as BofA Global Research cut the recommendation on the stock to neutral from buy. European stocks bounced off session lows amid heightened risk-off mood. Euro Stoxx 50 slumped as much as 1.2%. Autos, retailers and real estate are the worst performing sectors as all slump. European miners rose after news that the London Metal Exchange is launching a discussion paper that marks the first step toward a potential ban on new supplies of Russian metal.  Porsche AG rose as much as 5.2% as its shares started trading in Frankfurt after parent Volkswagen AG set the final listing price for the sports-car maker at the upper limit of its offer range. Here are some other notable European movers: Accor shares jumped as much as 8.1%, before paring gains, after the French hospitality company raised FY22 Ebitda guidance to a level which analysts said was above consensus estimates. Rational rose as much as 16% after the German kitchen appliances manufacturer raised its sales and Ebit guidance, citing improvements in the supply chain picture. Capricorn Energy shares rose as much as 8.9% to 261p amid a proposed merger with NewMed Energy that’s expected to deliver total value to Capricorn shareholders of 271 pence per share. H&M shares dropped as much as 7.2%, heading for the lowest close since September 2004, after it reported 3Q results that missed estimates and highlighted “very negative” market conditions. Next fell as much as 10% after the UK high street retailer cut its FY guidance, citing the cost of living crisis and saying the devaluation of the pound is set to prolong inflationary pressures. Colruyt shares plunged 24%, the most intraday on record, after it said the consolidated net result for FY22/23, ex. one-offs, is expected to decrease considerably compared with last year. Ubisoft shares fell after the video-game company pushed back its Skull & Bones title to March 2023 from November, despite maintaining FY guidance. Analysts say the decision raises concern. Wacker Chemie shares dropped as much as 7.8% after Stifel cut its price target, saying lower silicone and polysilicon prices hit sentiment. Hornbach shares dropped as much as 7% after it published its latest 2Q report. The home improvement retailer posted a worse-than expected Ebit decline y/y, Warburg said. European auto stocks fell and were among the worst performing subgroups on the wider market, with Volkswagen and its parent Porsche Automobil Holding SE leading declines. European bond yields also rose as investors digested the latest inflation data and commentary from European Central Bank officials. Euro-area economic confidence dropped to the lowest since 2020. Investors are contending with threats posed by discordant moves from central banks over the past few days, with Fed officials adamant on further monetary tightening, the BOE unveiling a £65 billion ($71 billion) plan to support government debt and authorities in Asia trying to prop up weakening currencies. “The central bank is in a very difficult position right now,” Julie Biel, Kayne Anderson Rudnick portfolio manager and senior research analyst, said of the BOE in an interview with Bloomberg TV. “Everyone has been a little bit backed into a corner in seeing the volatility and market reaction.” Former Bank of England Governor Mark Carney accused the UK government of “undercutting” the nation’s economic institutions, and said that its fiscal plans were to blame for the drop in the pound and bonds. Simon Wolfson, the boss of Next Plc and a Conservative peer, also appeared to blame the Tory government for a crash in the currency and a worsening outlook for UK inflation, which the company cited as it lowered guidance for sales and profits. Separately, the European Commission announced an eighth package of sanctions that would include a price cap on Russia’s oil exports as Russia vowed to go ahead with the annexation of the parts of Ukraine that its troops currently control after UN-condemned votes, putting the Kremlin on a fresh collision course with the US and its allies. Earlier in the session, Asian stocks pared earlier gains spurred by the Bank of England’s unlimited bond-buying plan, as sentiment again turned cautious with fears over a global recession. The MSCI Asia Pacific Index was up 0.2%, having earlier gained as much as 1.2%. Benchmarks in Australia and Japan outperformed, while South Korea’s market closed almost flat. Gauges in Hong Kong and China ended in the red with tech stocks sliding near the lowest since to a sector index was introduced in 2020. Hang Seng Tech Index Slides Toward Lowest Since 2020 Inception The key Asian equity benchmark slumped Wednesday to its lowest since April 2020 on concerns over the Federal Reserve’s ongoing rate hikes. While the the UK central bank’s intervention to avert a crash in the gilt market helped calm investor nerves briefly, few saw the rally as a signal for a full-fledged rebound.  “We remain very cautious on the markets and would exercise a degree of patience,” Kerry Craig, a global market strategist at JPMorgan Asset Management, said in an interview with Bloomberg TV. Central bank moves, inflation and “the looming risk of recession” need to be monitored, he said. Down almost 12% in September, the MSCI Asian benchmark is set to post its worst monthly performance since the pandemic-triggered crash in March 2020. An index of Asia Pacific stocks excluding Japan is on course for its fifth-straight quarterly loss, its longest losing streak in 21 years. Japanese equities rose, rebounding along with global peers as investors assessed the Bank of England’s move to buy government bonds. More than 1,100 Topix stocks traded without rights to the next dividend. The Topix rose 0.7% to close at 1,868.80, while the Nikkei advanced 0.9% to 26,422.05. Out of 2,169 stocks in the Topix, 1,854 rose and 271 fell, while 44 were unchanged. “Though there is still a strong uncertainty in the US and UK markets over the rise in long-term interest rates, for now there is a sense of relief in the markets as government bond yields in the UK settled down due to the unlimited purchase plan,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management. In Australia, the S&P/ASX 200 index rose 1.4% to close at 6,555.00, boosted by gains in mining shares and banks.  In New Zealand, the S&P/NZX 50 index rose 0.7% to 11,200.04 Stocks in India declined for a seventh straight day in the longest losing streak since February, tracking a selloff across global markets amid worries over possible recession.  The S&P BSE Sensex gave up an advance of as much as 1% to end 0.3% lower at 56,409.96 in Mumbai. The NSE Nifty 50 Index slipped 0.2% as both indexes posted their longest stretch of declines in seven months. The key gauges have dropped more than 5% each this month and are on track to record their worst monthly performance since the pandemic led crash of March 2020. Ten of the 19 sector sub-indexes compiled by BSE Ltd. declined Thursday led by the utilities gauge which has lost 11% for the month, making it the worst sectoral performer. In FX, the Bloomberg Dollar Spot Index first rose then fell, as Treasuries slumped to unwind some of the previous day’s swift rally. The euro fell as much as 1% to $0.9636, before paring losses. It’s significantly more costly to hedge against euro price swings compared to a week ago, as traders bet on wider ranges with risks skewed to the downside. The pound erased losses amid month-end flows, after earlier falling by as much 1.2% to $1.0763. UK bonds extended losses after Prime Minister Liz Truss defended her new government’s giant fiscal package of unfunded tax cuts, which have tipped markets into chaos. Commodity currencies led declines among G-10 peers.  Onshore yuan eked out the first gain in nine days following a stern PBOC warning against “one-sided” speculation, but offshore yuan weakened 0.4% In rates, Treasuries pared Wednesday’s gains with yields cheaper by up to 11bp across the 5-year tenor into early US session, with the belly’s underperformance helped by a large block sale in 5-year note futures. Treasury 10-year yields near highs of the day at around 3.83%, outperforming bunds and gilts by 3.5bp and 4.5bp in the sector; belly-led losses cheapens 2s5s30s Treasuries fly by 7bp on the day. Moves follow a more aggressive bear flattening move in gilts, wit front-end yields are cheaper by 20bp on the day. US session focus on GDP and Fed speakers throughout the day.   Bunds, Italian bonds dropped and money markets raised ECB tightening bets after German state CPIs rose in September while euro-area economic confidence dropped to 93.7 in September, the lowest since 2020. UK 10-year bonds decline after Truss doubled down on her economic package; In commodities, Brent rebounded from earlier lows, to trade near $89.50 following reports of OPEC+ considering production cuts. Spot gold falls roughly $12 to trade near $1,648/oz. Bitcoin is under modest pressure but lies within narrow ranges of less than USD 500 at present and well within recent parameters as such. Looking to the day ahead now, and data releases include German CPI for September, Italian PPI for August, and UK mortgage approvals for August (the calm before the storm). We’ll also get the weekly initial jobless claims from the US, as well as the third estimate of Q2 GDP. From central banks, we’ll also hear from an array of speakers, including ECB Vice President de Guindos, and the ECB’s Simkus, Panetta, Centeno, Villeroy, Knot, Elderson, Rehn, Vasle, Kazaks, Muller and Lane. In addition, there’ll be remarks from the Fed’s Bullard, Mester and Daly, as well as BoE Deputy Governor Ramsden and the BoE’s Tenreyro. Market Snapshot S&P 500 futures down 1.1% to 3,692.25 MXAP up 0.2% to 139.97 MXAPJ little changed at 453.71 Nikkei up 0.9% to 26,422.05 Topix up 0.7% to 1,868.80 Hang Seng Index down 0.5% to 17,165.87 Shanghai Composite down 0.1% to 3,041.21 Sensex down 0.3% to 56,446.56 Australia S&P/ASX 200 up 1.4% to 6,554.97 Kospi little changed at 2,170.93 STOXX Europe 600 down 1.6% to 383.23 German 10Y yield little changed at 2.23% Euro down 0.9% to $0.9650 Brent Futures down 1.2% to $88.23/bbl Brent Futures down 1.2% to $88.23/bbl Gold spot down 0.9% to $1,644.68 U.S. Dollar Index up 0.92% to 113.64 Top Overnight News from Bloomberg Britain is in a self-inflicted financial crisis that threatens to accelerate the economy’s dive into recession -- and the country’s new prime minister is coming under intense pressure to blink The ECB should opt for a “big” increase in interest rates in October, according to Governing Council member Martins Kazaks, who said in an interview that subsequent hikes are likely to be smaller. His Baltic counterparts Gediminas Simkus and Madis Muller also indicated they’d back significant moves, while Mario Centeno of Portugal called for a “measured and balanced” approach The ECB must ensure pay pressures don’t get out of control in its efforts to keep expectations stable, according to Governing Council member Olli Rehn The Riksbank believes it is very important that monetary policy continues to act for inflation to fall back and stabilize at the target of 2% within a reasonable time perspective, the Swedish central bank says in minutes from its latest monetary policy meeting Japan’s capital markets suffered the biggest foreign outflow in three months last week as growing fears of a global downturn fueled a search for liquidity China’s economy stabilized in the current quarter, and the final three months of the year will be key to the nation’s economic recovery, Premier Li Keqiang said As doubts grow over whether Xi Jinping still prioritizes expanding China’s economy over other goals, he’s tipped to appoint a new economic adviser who’s vowed to put growth first OPEC+ has begun discussions about making an oil-output cut when it meets next week, a delegate said A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks traded higher as the region took impetus from the rally on Wall St where risk sentiment was buoyed and yields retreated following the BoE's announcement to resume Gilt purchases. ASX 200 outperformed in which the commodity-related sectors led the broad advances across industries following the recent upside in energy and metal prices, while firm monthly CPI data did little to dent risk sentiment. Nikkei 225 was also positive but with gains initially capped as more than half of the stocks traded ex-dividend. Hang Seng and Shanghai Comp were also firmer with the Hong Kong benchmark spearheaded by tech and energy stocks, while the mainland also digested reports that the PBoC is setting up a more than CNY 200bln re-lending facility quota for equipment upgrades which aims to expand market demand in the manufacturing sector. Top Asian News PBoC injected CNY 105bln via 7-day reverse repos with the rate kept at 2.00% and injects CNY 77bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 180bln net injection. Chinese President Xi told Japanese PM Kishida that they attach great importance to the development of China-Japan relations and he is willing to work with Kishida to build relations, while Kishida told Xi that bilateral relations are currently facing many issues and challenges but he hopes to build constructive and stable relations to boost peace and prosperity, in messages to mark 50 years of diplomatic relations. Hong Kong’s Worst Trading Debut in 2022 Sends EV Maker Down 34% US’s Harris Goes to DMZ Hours After North Korea Missile Launch Japan’s First Bond to Help Ocean Planned by Major Seafood Firm Best HK IPO Quarter in Year Ends With Disaster Debut: ECM Watch Yuan Bears Bet China Is Powerless to Fight the Mighty Dollar China Vows to Speed Up Delayed Homes With Special Loans European stocks are experiencing another bleak session thus far as the overnight gains in futures dissipated heading into the cash open. Sectors are in a sea of red with no clear theme. Autos kicked off the day as the outperformer as the Porsche AG IPO occurred at a premium to the guided price of EUR 82.50/shr. US equity futures are also trading with losses across the board, with relatively broad-based downside of 1.3-1.5% seen across the front-month contracts. Top European News UK PM Truss says the fiscal statement (i.e. mini-Budget) is the correct plan. UK Chief Secretary to the Treasury says the growth plan will get the economy growing, one of the reasons growth plans included tax cuts was to alleviate the household burden. BoE intervention has had the desired effect. Disagrees with the IMF's remarks. US President Biden's administration was reportedly alarmed by the market turmoil caused by the UK's economic program and is seeking ways to encourage PM Truss's team to dial back its tax cuts, according to Bloomberg. France is reportedly considering proposals for up to two hour power cuts for parts of the country on a rotating basis, via Reuters sources; additionally, telecom names have highlighted power issues with the German and Swedish gov'ts. German Network Regulator says recent gas consumption by households is too high to remain sustainable, via Reuters; gas savings of 20% are required to avoid an emergency. German gov't could make a "low three-digit billion amount" available for the gas price break, discussion of EUR 150-200bln, via Handelsblatt citing gov't circles; will reportedly be announced today. Europe Gas Eases With Traders Weighing Impact of Pipeline Blasts Rational Jumps After Boosting Sales Guidance Above Consensus Truss Says UK Tax Cuts Are the ‘Right Plan’ Amid Market Rout German Economy Seen Shrinking Next Year Due to Energy Crisis Profligate Government to Blame for Pound Drop, Says Wolfson FX USD has regained some poise after a mid-week pullback; though, the DXY remains off earlier 113.79 highs and thus shy of the YTD/WTD peak at 114.78. Yuan has derived pronounced support from Reuters reports that China's state banks have been told to stock up for intervention offshore, sending USD/CNH to 7.1437 from circa. 7.20 pre-release. Cable managed to 'recover' to a test of 1.09 but failed to breach the level with multiple BoE speakers in focus later. EUR/USD moving at the whim of broader USD action and failing to glean any real traction from multiple speakers and German state/Spanish mainland CPI data. Fixed Income Core benchmarks are pressured across the board in a modest pullback of the pronounced BoE-induced 'recovery' seen yesterday, with numerous speakers due and the second BoE operation. Specifically, Bund lies towards the bottom of a 200 tick range while Gilts are holding onto the 95.00 handle with the associated yield lifting further above 4.0%. Stateside, USTs are similarly at the lower-end of parameters ahead of data and numerous speakers while the curve flattens further Central Banks ECB's Simkus says his choice of hike for October is 75bp, says 50bp would be the minimum, via Bloomberg. A 100bp hike would be too much at this point. ECB's Centeno says decisions must be measured and balanced, still far from the neutral rate, via Bloomberg. ECB's Rehn says prospect of recession in Euro Area is likely. ECB's Vasle says current hike pace is "appropriate" response to inflation; expects to raise rates at the next several meetings. ECB's de Cos says so far there is no clear evidence of de-anchoring of inflation expectations. Based on current models, median terminal rate value is at 2.25-2.5% (significant uncertainty). ECB's Kazaks says 75bp will likely be appropriate for October, via Bloomberg. PBoC says they are to add more loans to ensure property delivery when required, via Reuters. China's state banks have reportedly been told to stock up for Yuan intervention offshore, according to Reuters sources, in a bid to defend the weakening Yuan.. State banks were asked to asked offshore branches, such as those in Hong Kong, New York and London, to review holding of the CNH to ensure dollar reserves are ready to be deployed. RBI likely selling USD via state-run banks around 81.92-81.93 levels, according to traders cited by Reuters NBH hikes one-week deposit rate by 125bp, to 13.00%. Turkish President Erdogan says interest rates need to come down further; CBRT needs to lower rates at the next meeting, via Reuters. Geopolitics Japanese Chief Cabinet Secretary Matsuno said North Korea's multiple missile launches are unacceptable and Japan will maintain close contact with allies including the US to monitor and deal with North Korea, according to Reuters. Turkish President Erdogan said Turkey will increase its military presence in northern Cyprus, according to Sky News Arabia. EU Official expects an agreement on the next Russian sanctions package, or at least major parts of this, before the EU Summit next week. Expects the discussion to focus on referendums, possible annexation, nuclear threat and Nord Stream. Russian State Duma representatives have received invitations to the Kremlin for Friday, September 30th at 13:00BST, via Ria. Russian Kremlin says the ceremony on incorporating new territories will occur on Friday, September 30th - President Putin will speak. US Event Calendar 08:30: Sept. Initial Jobless Claims, est. 215,000, prior 213,000 08:30: Sept. Continuing Claims, est. 1.39m, prior 1.38m 08:30: 2Q GDP Annualized QoQ, est. -0.6%, prior -0.6% 08:30: 2Q PCE Core QoQ, est. 4.4%, prior 4.4% 08:30: 2Q Personal Consumption, est. 1.5%, prior 1.5% 08:30: 2Q GDP Price Index, est. 8.9%, prior 8.9% Central Bank Speakers 09:30: Fed’s Bullard Discusses Economic Outlook 13:00: Fed’s Mester and ECB’s Lane Take Part in Policy Panel 16:45: Fed’s Mary Daly Speaks at Boise State University DB's Jim Reid concludes the overnight wrap How could you have earned a 42% return yesterday from a AA-rated investment? Simple. At anytime between 8-11am all you had to do was buy 40yr Gilts before the BoE effectively restarted QE only days before QT was suppose to start (it’s been postponed until October 31st - ironically Halloween). The buying operation is aimed at restoring liquidity to a broken long end market and is temporary but it’s another stunning development to a stunning year. I’ve always felt that this debt supercycle would end up with central banks doing QE even if interest rates were positive. The reason being is that the economy can be growing and seeing inflation at a point when investors baulk at funding all the debt. I appreciate this BoE operation is slightly different and I would have never have guessed the series of events that got us here but it might not be the last time a central bank buys government bonds when not at the zero bound given how much debt there is and how much there's likely to be going forward. It's becoming clearer the extent to which Tuesday's rout at the long-end was exacerbated by collateral calls on LDIs (liability driven investments) that pension funds have typically used in some size in recent years. With these swaps moving so far out of the money, the risk was that investors would have to sell liquid assets to meet margin calls. If they didn't have this (which a lot don't), then obviously there would have been huge liquidity events. To understand the fears that were around over the last 48 hours, Sky News’ economics editor Ed Conway said yesterday that “I am told there were a swathe of pension funds that … would have essentially collapsed by this afternoon”. Whether that's true, we'll never know but it shows the level of fear. Overall, this isn't quite monetising debt in the purest sense but at the end of the day we have seen fresh central bank buying of debt after unfunded tax cuts pushed up yields dramatically. Despite the BoE’s insistence that these are targeted, temporary purchases designed to ease market dysfunction, global pricing reacted as if they were launching a new QE program to ease financial conditions. Global equities increased, with the S&P 500 (+1.97%) breaking a run of 6 consecutive losses and global bond yields fell across the curve. In yield terms, 30yr gilts had been trading above 5% prior to the BoE’s announcement, but afterwards they staged a stunning turnaround to fall by an astonishing -105.9bps yesterday. That was easily the largest decline in the 30 years of available Bloomberg data, with the next two closest being a -39.7bps and -30.5bps decline in 1997 and 2009, respectively. It was also the largest absolute daily yield move in the 30yr, with the next two closest being Monday and Tuesday’s sell-offs. The decline takes 30yrs back to 3.92%, which is still above the c.3.5% level prior to the fiscal announcement last Friday but more within normal market reaction levels. Yields on 10yr gilts were down by a smaller -49.8bps, although that reflected the BoE only purchasing gilts with a residual maturity of more than 20 years. Sterling also managed to strengthen for a second day running, with a +1.45% gain against the US Dollar. But that overall performance hides some incredible intraday swings, with sterling moving sharply higher immediately after the BoE’s announcement before tumbling by -2.74% over the subsequent hour and a half before paring back those losses once again. It is down -0.75% in Asia as I type. Remember that markets are still pricing in around +150bps worth of hikes by the next BoE meeting on November 3, and implied sterling-dollar volatility for the next month remains at levels we’ve only previously seen around the GFC, the Covid pandemic and Brexit in the 21st century, so we certainly haven’t heard the end of the UK’s turmoil just yet. That intervention from the BoE helped sovereign bonds across the world. Indeed, yields on 10yr US Treasuries had been trading just above 4% immediately prior to the intervention, before reversing course to close -21.0bps lower on the day at 3.71%, which is their biggest move lower since the wild intraday swings we had in March 2020 when the Fed was stepping in to buy Treasuries and MBS in unlimited size; sound familiar? Those gains came as investors moved to downgrade the likelihood that the Fed would be pursuing aggressive policy into next year, with the rate priced in for December 2023 coming down by -23.3bps. This morning in Asia, yields on 10yr USTs (+3.6bps) have edged higher again to 3.77% as we type. In terms of the Fed, we did hear from Atlanta Fed President Bostic, who said he favoured another 125bps of hikes this year, but Chair Powell didn’t comment on policy in an appearance at a Community Banking Research Conference. Over at the ECB, we heard from an array of speakers yesterday, including President Lagarde who said that the ECB would “continue hiking rates in the next several meetings”. Multiple speakers separately endorsed another 75bps hike next month as well, including Latvia’s Kazaks who said that “I would side with 75 basis points”, Austria’s Holzmann who said that “I think 75 would be a good guess”, and Slovakia’s Kazimir who said that 75bps was “a good candidate to continue and keep tightening.” However, sovereign bonds still rallied across the continent, with yields on 10yr bunds (-11.1bps), OATs (-11.8bps) and BTPs (-22.2bps) all down significantly. When it came to equities, yesterday also finally brought a reprieve from the heavy selling over recent days, which had taken a number of major indices to their lowest levels since late-2020. As mentioned at the top, the S&P 500 (+1.97%) ended its run of 6 consecutive declines with a strong advance that took the index back into positive territory for the week. Despite the rally, the Vix managed to finish above 30 again, as it has every day this week. Indeed, the Vix has finished above 30 on nearly 19% of trading days this year, which is the fourth most in the last 20 years, behind just the crisis years of 2008, 2009, and 2020. The count hides how skewed the distribution is as in ten of those years, the Vix never once finished the trading day above 30. Yesterday's equity rally was less extreme in Europe, with the STOXX 600 (+0.30%), the DAX (+0.36%) and the FTSE 100 (+0.30%) seeing modest gains. In Asia, the Hang Seng (+1.05%) is leading gains, rebounding from recent steep losses with the Kospi (+1.01%), the CSI (+0.50%), the Shanghai Composite (+0.24%) and the Nikkei (+0.25%) are trading higher. Stock futures in the US are pointing to a slightly more negative start though with contracts on the S&P 500 (-0.11%) and NASDAQ 100 (-0.22%) both in the red. As we go to print, the Swedish media is reporting that coast guards have found a fourth leak on the Nord Stream pipeline. What worries me is that if this can be done to this pipeline what stops it being done to a fully working pipeline. Elsewhere, the People’s Bank of China (PBOC) stepped up its efforts to limit FX weakness by warning banks against betting on the yuan, after its rapid decline against the US dollar this week which pushed the Chinese currency to as high as 7.25 yesterday. Indeed, the US dollar index (+0.59%) at 113.27 is trending upwards this morning, after hitting a fresh two-decade peak yesterday before pulling back. There wasn’t much in the way of data yesterday, although US pending home sales for August were down -2.0% (vs. -1.5% expected). With the exception of April 2020 during the lockdowns, that takes them to their lowest level in over a decade. In the meantime, the US goods trade deficit for August narrowed to $87.3bn (vs. $89.0bn expected), which is its smallest level since October 2021. To the day ahead now, and data releases include German CPI for September, Italian PPI for August, and UK mortgage approvals for August (the calm before the storm). We’ll also get the weekly initial jobless claims from the US, as well as the third estimate of Q2 GDP. From central banks, we’ll also hear from an array of speakers, including ECB Vice President de Guindos, and the ECB’s Simkus, Panetta, Centeno, Villeroy, Knot, Elderson, Rehn, Vasle, Kazaks, Muller and Lane. In addition, there’ll be remarks from the Fed’s Bullard, Mester and Daly, as well as BoE Deputy Governor Ramsden and the BoE’s Tenreyro. Tyler Durden Thu, 09/29/2022 - 08:08.....»»

Category: dealsSource: nytSep 29th, 2022