KOMMONSENTSJANE – ROSS RANT – 03/25/2020

Reblogged on kommonsentsjane/blogkommonsents.

The last paragraph will warm your heart! This man is the real deal!

It now seems that they will start to reopen parts of the country for regular business on or about April 15. My April 1 date was optimistic.

The press and others need to pay attention carefully what is being said by Fauci and stop trying to claim Trump is pushing something that is dangerous and over-riding Fauci and Brix.

Despite the press trying hard to set up a contentious situation with Fauci and Trump, Fauci shot that down several times and said Trump does listen to he and Brix. Trump was on a call with some top Wall St execs on Tuesday, and those execs said he listened, and is flexible, and will pay attention to the doctors.

There are many areas of the country where there are almost no, or no cases at all. There are vast areas where life just goes on. Longboat Key is one. Life is partially shut, but the tennis club is open for singles and we are playing. The marinas are open. Many of us have a boat lift in the back yard on a canal. While there have been three cases here, they are isolated, and no new cases for over a week.

The one supermarket is open and most important their wine shop and cheese shop are open. My point is there are many places, like here, that are not at all similar to what is happening in NYC, and should be determined as to open or not depending on the data in three weeks. It is very different than NY or CA than most places.

The trade of the economy vs old people dying has been helped by the data from Italy that now seem to suggest that 99% of the people who die are over 80 and have 3 pre-existing health conditions. In short, they were likely to die soon anyway.

They still have another week of data to collect and analyze, but it is clear they are moving to relax the stay at home rules. They are likely to say if you are under 50 and no health issues, go to work, if you are older and no health issues go to work, but be careful.

Maybe wear a mask and don’t shake hands nor get too close. If someone had it and is resolved they have anti-bodies and can go back to work according to Cuomo. Or some variation of that sort of rules.

The cost to keep the country closed is simply too high given that the real risk is not so bad as first seemed. There is a huge spike in mental health issues, opioid use, suicide etc.

Those numbers are now becoming far more serious than deaths from the Virus. That is what Trump is talking about. Keep in mind that 65% of all workers are still at work and getting paid. 25% are working but accruing wages. Many, or both groups are working virtually, but they are working and conducting business.

We are still due to close a construction loan next week despite stories that no real estate loans are being made. It is likely there are no CMBS loans being made because there is no way to price them correctly right now. The Fed is buying CMBS and that is keeping the existing CMBS market from collapsing. Another reality is 500,000 jobs are being filled right now by truckers, super markets, Amazon etc.

Some businesses are making a fortune right now.

Now the issue is Pelosi. It is beyond disgusting that she took vacation while this was happening then flies in on Saturday night and blows up the whole deal with all sorts of left wing garbage trying to take political advantage of the pressure to pass the bill.

The Dems are so bent on being anti-big business, they still want to punish big companies and especially Boeing. Boeing is a critical part of the economy and defense. It cannot be allowed to be weak. They did make a lot of their own problems so they should give equity, or do a rights offering combined with some government guaranteed debt.

But loading on a bunch of union based demands is not getting the country back to work, and just shows where the Dems heads are at. They have been politicians all their lives and so have no idea what running a business means. They never had to make payroll which is the real test of a business. They never struggled through bad times to keep the company alive. They just want to add more and more regulations to keep their union benefactors happy so they can feed at the trough of union corruption.

If the Dems don’t get it about the economy they will get wiped in November.

The Fed and Treasury saved the economy this week by their unprecedented moves to provide extensive liquidity to the capital markets which had been on the verge of collapse. Nobody knew how to price anything, and it is still not clear. Until things start to normalize, spreads will probably stay wide and pricing on debt will be very volatile, if you can even get a quote.

It is impossible to determine risk and price it if the overall economy is not able to be forecast. There are no forecasts that mean anything right now. It will be a few months before any company can issue real guidance. The result is, there are no CMBS loans nor insurance company loans to real estate now, but there are some banks loans. Very short term. Treasuries just went negative rate.

First time in history. 2-3 month Treasuries being negative is not a major issue for now. If it were to spread to the ten year then we have a real problem. I think cash will now flow out of the ten year into stocks based on what I hear from some traders. Rates on the ten year are far more likely to rise from here, and so you will lose if you hold them.

It is not just that the US economy is screwed up, but the EU is unpredictable. It is a financial disaster and economic failure now. There is no way to even guess when, or if, the EU will stabilize.

It appears that China is mostly back in production, but not fully yet. There are still restrictions on movement in some places. The damage to the Chinese economy is extensive. There is a container problem with containers in the wrong places. It will take a while to sort that out. China’s GDP and production has declined by levels unimaginable.

It is unknowable now if they can ever return to former levels. Unlikely since so many factories are going to now move out, and the US is going to move all drug production out.

That was a major leg of the Chinese plan to dominate world trade. Now China has really proven it lies even in a health crisis and damages the whole world. They have lost any good will or credibility they may still have had.

How Obama let China get control of WHO and many other world organizations is simply irresponsible, and the whole world is now paying the price. What is your position on this Joe?

Because NYC is shut down, there is a major problem delivering gold in NYC, and with almost no international flights, there is no way to deliver physical gold to cover all futures, so gold futures are now trading at an all time wide spread to the spot market. This has never happened before. Beware if you are trading gold,. You could possibly get hurt. It is unpredictable right now.

We likely have passed through the bottom of the stock market. It could drop again, but it appears we may have restored hope and the light at the end of the tunnel is getting brighter. I continue to believe the S&P will have recouped a material portion of the losses by year end, assuming Trump is reelected.

As I said a week or so ago, you will be very sorry in May if you are not all in now even if there is another leg down. By Q4 the country will be back in business fully and there will be pent up demand. A lot of consumers will still be reluctant to spend until next year and they are sure things and their jobs are really back and secure.

The stimulus is huge and people are not really paying attention to the $4 Trillion the Fed has to spend, to loan, or to support liquidity of major companies and financial markets. That amount of capital is unprecedented and will be on top of the other $2 trillion in the bill. $6 Trillion boost to the economy all at once. Just imagine what that will do. We would normally have huge inflation as a result, but because the rest of the world is in such bad economic shape inflation will remain low. Interest rates will remain low into next year at least and likely longer.

I thought it might be helpful to give you a little bit of my background so you understand how I think, and where I get my optimism. I was born before Pearl Harbor, so by the end of the war I was old enough to recall rationing, shortages and the total devastation of Europe we saw in Newsreels. I went to Wharton with no money and worked to eat. My father was unemployed at the time. Upon graduation I joined the Navy, did two tours in Nam, and came back to NY and Wall St. I have been an investment banker all my life, but starting in 2002, I also became a large scale land developer of contaminated sites with two partners. In 1993 I formed the first hotel industry CMBS program in conjunction with Nomura, and then we were the outside hotel lending arm for Lehman who table funded us. Citadel was formed in late 1999 with the former worldwide head of real estate for Citibank, and an investment banker from DLJ. After 9-11 they went off to run a bank in one case, and to be exec VP of a major fund. I continued with Citadel. I have started several companies, mostly in the financial sphere. During my lifetime I have been told in three different situations by doctors that I was going to die, and in one case that I had cancer, which I did not. I did have cancer three years ago which is now cured. Almost everyone on both sides of my family have had cancer, but were cured. Everyone on both sides lives past 100 years old. I was paralyzed on my right side in 1981, and was told it was medically impossible to ever heal and use my right arm again. I play reasonable tennis with a perfectly good right arm. The mob threatened to murder me over a deal I sold them in 1979, a redneck in GA pulled a knife on me in a bar and threatened to kill me because I was a Yankee, and I was broke in the real estate crash of 1990.

Now I am perfectly healthy, I live in Manhattan, the Hamptons and Longboat Key. I still do deals when I feel like it. I have the ideal life now. Point of all this is, nothing really bothers or scares me at this point in my life. I lived through several market crashes, financial crisis, and personal crisis. It always was better than ever afterwards.

When my mother was 99 she told me it all works out in the end. She was right. It is why I am a bit of a Pollyanna now. Relax, this too will pass and your portfolio will again have good value.

kommonsentsjane

About kommonsentsjane

Enjoys sports and all kinds of music, especially dance music. Playing the keyboard and piano are favorites. Family and friends are very important.
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1 Response to KOMMONSENTSJANE – ROSS RANT – 03/25/2020

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