Unless WFH reverses, this won’t end well:
OT: Stock and Investment Thread
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good, commerical real estate is way too expensive, not practical, and out of touch with the hybrid reality.
What happens to Manhattan? So much of the city revolves around commercial real estate yet even residential suffering with folks fleeing to suburbia and down South. Can’t simply convert commercial RE to condos.
don't care about manhattan, it's overpriced to the point of being unrealistic. On top of that, it's infested with liberals so don't care how much they suffer ha
From the article:
“This is not the end,” said Gary Cohn, former chief operating officer at Goldman Sachs, in an interview Monday on CNBC’s “Squawk Box.” “I don’t think we’re going to get three and done. Crises don’t sort of end this easily. There will be other issues out there in the banking world.”
But Cohn, who was the National Economic Council director under former President Donald Trump, said the broader impact of the Fed’s rate-hiking cycle will continue to be felt. If the Fed follows through on the increase, it will mark 5 percentage points worth of hikes in a 14-month period, the fastest tightening cycle since the early 1980s.
“The unintended consequences of that on banks and balance sheets is fairly substantial. We will see something in the commercial real estate market,” he said. “But that’s what we’re talking about. What you learn in the banking industry is it’s usually the problem you’re not talking about.”
Cohn said one area he is watching is what happens with consumer spending, which makes up 68% of all economic activity.
As it relates to the banking situation, most experts see tighter credit conditions ahead that could weigh on spending, particularly as inflation and interest rates both remain elevated.
“This is not the end,” said Gary Cohn, former chief operating officer at Goldman Sachs, in an interview Monday on CNBC’s “Squawk Box.” “I don’t think we’re going to get three and done. Crises don’t sort of end this easily. There will be other issues out there in the banking world.”
But Cohn, who was the National Economic Council director under former President Donald Trump, said the broader impact of the Fed’s rate-hiking cycle will continue to be felt. If the Fed follows through on the increase, it will mark 5 percentage points worth of hikes in a 14-month period, the fastest tightening cycle since the early 1980s.
“The unintended consequences of that on banks and balance sheets is fairly substantial. We will see something in the commercial real estate market,” he said. “But that’s what we’re talking about. What you learn in the banking industry is it’s usually the problem you’re not talking about.”
Cohn said one area he is watching is what happens with consumer spending, which makes up 68% of all economic activity.
As it relates to the banking situation, most experts see tighter credit conditions ahead that could weigh on spending, particularly as inflation and interest rates both remain elevated.
NY and other big cities need to adapt and transition to a new economy but they won't until they replace their corrupt and incompetent leadership. I don't see that happening anytime soon. NY will get worse before it gets better.
It’s simply mind-blowing that the Fed and its “transitory” nonsense created such a mess that we are now compared to the early 80s. And, I don’t see how commercial real estate doesn’t have a massive reckoning, not to mention it’s a problem that is almost impossible to fix. At least during the GFC we knew there would always be demand for residential homes and prices would rebound. But the future of commercial real estate is bleak with WFH and conversions to condos take time, tons of money, and assumes people want to live in cities again.
I don’t see how cities can adapt unless they stop new construction of commercial space or figure out a way to convert it to other uses. What can cities do about all the unused commercial space when WFH is becoming a way of life? Even companies in NJ are bailing on large commercial space. AT&T is moving out of its massive campus in Bedminster that it has occupied for as long as I can remember and housed the Global Network Ops Center. That campus was a tax windfall for Bedminster. No other company is going to touch that campus because it’s simply too much space.
Convert to residential. Not a big deal. This is a very slow moving problem, so there is plenty of time to figure it out. No surprises.
So much wrong here. Manhattan rents are ath. Cost to convert is way too expensive. Banks will lose money on CRE loans but it’s manageable.
This doesn't include Bear Stearns or Lehman. But it also doesn't cover all the crypto exchanges that went bust.
It's not going to be easy but they better get started sooner than later. Older office buildings will be torn down or sit empty.
NYC has benefitted in an outsized way from taxes from Wall St. That has been changing for a while and is going to keep getting worse. The city needs to right size spending, clean up the crime problem and people will come back. If they don't do that this will take a long, long time.
One interesting play on the collapse of NYC commercial leasing market - ESRT. It's the trust that is essentially the Empire State Building. It's an iconic structure and may have a portion of it converted to residential. Demand for that would be ultra high.
The goal is not to fight inflation. The goal is to make JPMC bigger. Why is the FED doing this? Have you contempalted this question?
they should break up the banks, creates more jobs, more manageable, better oversight and then create a loan bank similar to fed where they all 'buy into' for financing large projects
I know, I'm always ahead of the curve
there is more pain coming and especially with demand deposits surging at the big banks
I"m not so sure they can in this particular environment. It's one thing to backstop when no inflation or supply issues, it's entirely different to print money or expand balance sheet when inflation is high and we've got the inflationary pressures present as a result of bad gov't, panicked people over covid, and unrealistic spending habits
Private enterprise solutions will always be the first choice, and at some point there's only a handful of fortress-like institutions that can absorb others in this environment.
I think a lot of larger regionals also put in bids, but some of that is window-dressing. "Look we bid on this too because we're confident in our financial position." At the end of the day it's not a conspiracy to make JPM bigger, its more like a disjointed food chain where a few animals don't have predators and therefore have a disproportionate ability to feast. However, policymakers and central bankers did have a hand in creating the disjointed food chain in the first place.
Use real-time shelter data (Zillow, Refin, etc.) and YoY inflation is almost 2% right now. Inflation is not a problem.
there is sticky inflation that is not accounting for and you've not see rate locks hit that market. it's really not that simple right now. energy, food, clothing, are all still high as spending has not subsided to where we need it to be. I believe we'll get there but coming down is not the same is being ok
People are already back. Try to get a lunch or dinner reservation. People just don’t want to go back to the office. That’ll change once the job market softens.
no, very few companies are mandating this as it's cheaper for them and staffing is an issue. BofA and GS announced 5 day a week in office and we've been flooded with applications
Most of pharma/biotech has settled on 2-3 days in office (i.e., 50-50 with WFH). Obviously, not including lab people.
Most I-banks and buy-side firms are 4 or 5 days in.Most of pharma/biotech has settled on 2-3 days in office (i.e., 50-50 with WFH). Obviously, not including lab people.
Startups that I know about have recently gone from 2-3 days to 4-5 days in NYC.
Since President Trump moved out, the city has collapsed. Once he rightfully retakes Washington DC, his rising tide will raise all ships; including the hellscape known as NYC. But don’t worry, like Jesus Christ, Donald Trump will return.
You know, ironically, if I'm right about inflation and the economy, Biden will be reelection in a landslide. If you are right about inflation and the economy, Trump term #2 is happening. LOL!
Easy call. Biden win with the abortion issue and the changing demographics doesn’t help the Republican Party. A lot of Republicans appear to have moved to Florida from the swing states. On the other board I’m on, they are mostly Republicans that moved to Florida.
If they are already thinking about stopping increasing interest rates and inflation is easing, the market will start to take off and do well next year.
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Its always about the economy when it comes to elections.
US labor market softens as job openings drop, layoffs at highest level in over 2 years
JOLTs report shows fake-job openings continue to decline.
JOLTs report shows fake-job openings continue to decline.
I keep hearing the same thing but whenever I go to NYC it’s still nothing like it was pre-COVID. Now, with that said, restaurants and entertainment def busy, which may also be due to the fact that a fair amount of restaurants went out of business or cut staff to the point where they can’t accommodate as many guests creating this perception that everywhere is busier than ever.