Commercial Real Estate Finance Counsel Conference Recap

From Datsun to Nissan

Last week, commercial real estate professionals (~1,200) around the nation gathered at the GW Marriott in DC to attend the CREFC (formerly known as CMSA) conference braving snow, horrendous local drivers, and no-touch strip clubs.  Like a spiritual retreat, attendees came to reflect upon the current status and inner child of the commercial real estate market including topics of CMBS V2.o, market liquidity, senior class investor rights, special servicer rights, and, everyone’s favorite boogeyman, government regulation…

Survey: Anonymous/Pseudonymous Blogging & Tweeting, Good or Bad?

I’ve written on this subject before, and my bottom line is that its a net positive for society for people who know what they’re talking about to do so in a public forum, even if in order to do so they must use a pseudonym.  I want to take a poll here and see what you all think, but before that, I want to clarify a few things (click through for the poll):

U.S. Income Inequality Relative to Rest of World: Surprise?!

There’s so much (and then some) talk about how the U.S. is the most unequal (in terms of income) of developed countries in the past few months I’ve written about it probably a dozen times already.  Today, I saw something from Marginal Revolution that really puts the argument in a TOTALLY different light than almost everything else I’ve seen on the subject:

Everyone’s been claiming (the list of flapping heads/economists in this group is far too long to name them all) that income inequality in the U.S. is a HUGE terrible problem and its getting much MUCH worse, but this chart shows quite clearly that relative to other countries, income inequality is actually less of a problem in the U.S. and that even the poorest people in the U.S. are MUCH better-off than some of the wealthiest in these countries!

Now, before you jump down my throat, I will acknowledge that this is not necessarily a major surprise as the U.S. is a more advanced and productive economy.  Similarly, if we look at this graph in another generation, the slope of the lines for Brazil/India/China will likely be much flatter due to the productivity gains and the nature of returns of labor, etc.

There are some good comments in the Marginal Revolution thread that are worth reading, I suggest you check them out.

 

Jan 31 Auctions, Buybacks and Morning Reading

As I highlighted in the previous weekly summary, while there are no notable auctions taking place this week, the Fed will be very active in the 5-10Y range with buybacks – also at the same time where we could potentially see a flight to quality from the political unrest abroad. It will be interesting to see how the Magic Fed desk down on Maiden Lane handles these events.

The Art of War, or: How China plans to dominate the world economy ….

“If you lay siege to a town, you will exhaust your strength and resources. Therefore, feed off your enemies and forage for their resources.”

~ Sun Tzu

With a war chest of $2.85 trillion, and a renewed swagger it was only a matter of time before China flexed its economic might by diving back into investing in western banks.  After ill-fated multi-billion dollar investments in Blackstone Group LP, Morgan Stanley and Barclays PLC, last week a Chinese bank agreed to buy a stake in the US arm of Bank of East Asia.

Industrial and Commercial Bank of China (I.C.B.C.), the largest of China’s “big 4” state owned commercial banks agreed to pay $140 million for an 80% stake in the United States subsidiary of the Bank of East Asia, which is based in Hong Kong and has 13 branches in New York and California. The rationale was:

1/29 Week In Review

I realize this is a bit late, but here’s the weekly review along with a few short notes of what I’m looking at in the week ahead, along with a chartbook.

1/29 Week In Review [GDocs]

An Investment Pro thinks World War III has Started: and other musings from the final installment of Barron’s Roundtable

The portfolio managers convene on January 10^th to discuss their top picks. The editors at Barron’s dispense these musing over three weeks. This edition continues previous themes around Gold and other commodities. This makes one wonder if the gold’s recent downdraft is just a pause that refreshes. Continue reading for a summary of the last of the three installments from this year’s roundtable.

Weekend Reading: The Long(er) Stuff

William Black: Why Our Fundamental Approach to Banking Regulation is Inherently Unsound. Naked Capitalism – I’ve argued in many a post that we need to re-think financial regulation and maybe even start over from square one.  Black makes several good points here, among others, that capital-based regulation is silly as equity capital is mrerely an accounting construct, subject to the virtually infinite # of ways banks can value assets and liabilities.

William Black: How Can The Architects of the Crisis Investigate It? The Big Picture – short answer: they can’t.

Raghuram Rajan: Income Inequality: Some Thoughtful Criticisms and a Response. The Economist – Continuing an excellent series of articles on (income) inequality (see last weekend’s weekly reads).  A must-read for anyone who fancies themselves qualified to speak on this topic.

Barry Ritholtz (via NYT): Highlights from the FCIC Report The Big Picture – for those too lazy to read the actual report.  I’m a few pages in, but I gotta tell you, it is not an easy read, especially since some of the “facts” quoted and “conclusions” reached make me very angry.

1/28 Buybacks

Today’s buybacks are from 2/15/2018 – 11/15/2020. The full SOMA sheet (with holdings as of 1/5/11) is here [GDocs]

Deutsche Bank’s 2011 MBS and Securitization Conference

A journey of 1,000 miles begins with a single step.

It’s fitting my inaugural post is a review of Deutsche Bank’s inaugural MBS and Securitization Conference.  The conference attended by some 60 investors from roughly 40 companies highlights DB’s poor standing in the world of structured finance (SF). Deutsche Bank has never been a major player in the securitized finance market though it has spent billions trying to be. In 1996, DB bought Morgan Grenfell to create Deutsche Morgan Grenfell and hired senior bankers from Goldman Sachs and Merrill Lynch.  When the Russian Currency crisis hit, DMG fired all but 3 of its SF staff after paying almost a billion dollars of guaranteed bonuses. They tried again after the Banker’s Trust purchase and this is their third attempt. Third time is a charm right? Nope.  The conference demonstrated the lack of gravitas so evident at Goldman, Morgan Stanley and even, may they rest in peace, Bear Stearns.

Deutsche bank event planners decided to hold this poorly attended conference not in a fancy hotel (like Citi or Wachovia) but in an auditorium two stories below street level in their “marque building” 60 Wall Street. Fortunately, the poor catering did not make me sick.  Good job of impressing investors.