Bran, Dagny, Blake and Abby

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Facebook CRIPPLES Georgia Republican Days Before Election

This is outrageous!

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Another Rant:

The next three days is going to set the course for the next two years in DC and the stock market. I have no idea who wins on Tuesday, but my sense is the Republicans pull it out. Trump nearly won despite whatever the Stacy Abrams group was doing with ballots. Perdue barely lost by .25%. It is GA still, and it is not all Atlanta. As to the challenge to the presidency in Congress on Wednesday, it will fail, but there is a constitutional possible way to pull it off. In my view this will just exacerbate the anger and polarization, and not accomplish their goal of overturning the election. If they really overturned the result, there would be civil unrest the likes of which we have never seen. It would tear the country apart. There is no question there was fraud and mail-in ballots are an invite to fraud. What we need is a real non-partisan commission to recommend new laws to prevent this from happening again. I am not hopeful. The Republicans better to have learned their lesson to take steps as they are doing now in GA to prevent this in 2022. Nixon, and many people, knew Richard Daley packed the ballot boxes and cheated Nixon out of a win, but he decided to not tear the country apart by challenging that outcome.

 

The whole issue of $2000 was a political stunt by Trump, and was fiscally absurd, and has now backfired. First, while there are around 10 million unemployed, most of them are getting unemployment with $300 added. That means 50% or so are earning more than their normal paycheck. It is not as bad as the $600 added unemployment check subsidy when 75% were earning more and refused to go back to work, but it is part of what is causing unemployment to be higher.  Other causes are shutdowns in major cities which has created large numbers of restaurant and related people to be unemployed.

 

  Hotels account for 33% of the unemployed, and they will be getting back to work by late spring as vaccines are widespread. CBO has estimated that 80% of the $1200 payment went to savings or debt reduction, and not to pay living expenses as was advertised by the politicians. That is why savings are at 14%, a huge record high. It is why consumer debt is in very good shape despite the virus and unemployment. Only 2.3 million more people fell into poverty, and only 2 million more mortgages fell into delinquency, which does not necessarily mean foreclosure. Helping those people would likely not cost more than $15-$20 billion by one estimate. With the $600 and the extra $300 a week, many of those people will be able to work with their landlord or mortgage lender to work it out.

 

While those numbers may seem high to some, they are a very small percentage of the total.  Perspective is needed. A lot of the real problem is many states have very old unemployment computer systems, and so they are late getting checks to people, or they make mistakes. Solve that simple issue and part of the problem goes away. While the press can always find someone to interview to make their negative case, it is usually some single mother with three kids. What is she doing with three kids if she is single and poor. If she had been responsible, she would not be poor, but now I am expected to support her. That is why we got revised welfare laws in 1994. The cost of the $2000 is $400 billion. We can’t afford that. There is tons of pork in the spending bills that could be cut to pay for any unemployment supplement, but the excuse is always well we had to agree to that to get the bill passed. That is the real issue. With $600 plus an extra $300 a week, most of the unemployed are OK. It is not the role of taxpayers to pay them more than if they were working. Reality is 94% of workers are working, and getting paid.

 

The idea that millions are going to get evicted is also political nonsense. Most landlords of B and C multifamily know if they throw out a lot of tenants there will be high vacancy so they make some modifications and deferrals, and work with most of the tenants who are trying to get by. As usual the press and politicians make the situation sound like there are going to be millions living on the street, or in their cars, and that is simply not true. If you recall when welfare was changed in 1994, the left and press predicted over a million starving kids in the streets. The rhetoric of the left and press has not changed much.

 

While rates are historically low now and so it appears that it is not a problem to borrow, the  reality is one day rates will not be low and we simply cannot afford the level of debt we already have unless taxes are raised and then the economy slows and we get more unemployment. The whole issue of helping local and state governments is really all about outrageous pensions which cannot be paid for in good times. It is not for me to pay retired teachers health insurance for the rest of their life. Keep in mind this whole stimulus and $27 trillion of debt is BEFORE Biden and the Dems start all of their giant spending programs, which will add trillions more that we cannot afford. One day the bill comes due, and one day maybe all this deficit spend creates inflation and higher interest rates. Then there is no going back. It will be too late.

 

Different people have their own nifty fifty lists but one that was sent to me which looks like a reasonable list has an average PE ratio of 96 with Shopify at 2042x.  Several lose money so are negative ratios. This is not your father’s nifty fifty. It is almost all internet, software and other tech.  Then there is another list of well established companies like APPL, Cisco, Intel, Salesforce, and Samsung-mainly also tech related with an average  28 PE. Point being the multiples are very high. Maybe they will all grow into their PE ratios over the next two years, but there is real risk now at these levels.  We just have no good way to measure it in several cases as they are too new, or just on  a very rapid growth curve that may or may not last. We need to also note that of the original nifty fifty, almost  all are now out of business through merger or just disappeared. Then there is the old “widows and orphans” stock -GE- which has barely stayed alive. Which all goes to show, there are only individual stocks to be assessed individually, and not some list that you should blindly invest in. What is hot today could be gone tomorrow. It is my view that 2021 could potentially be a more risky year in the market than 2020.

 

Bitcoin is on a speculative tear, and there is no way to predict where it goes from here. Some project further huge increases, while some believe that there will be a major correction coming. Now institutional money is buying Bitcoin, and that may make it more acceptable as an investment for a wider population of investors. For example, Mass Mutual just bought $100 worth. I believe it is a purely speculative play now, and while it could race much higher, it could potentially come crashing back down if the momentum reverses. There are no fundamentals to assess, so it is a pure gamble which may pay off very big, or may lose big. As long as you realize what it really is, then it is up to you to play or not.

 

REITs were the second worst performing sector in 2020, with only energy doing  worse. As expected malls and strips and lodging lost substantially. Data centers, storage and industrial gained nicely, but storage is weakening as supply is becoming too great. An average of all REITs was down 5.9%. As the vaccine gets applied, lodging will do much better, but is still a real risk as most lodging REITs won large assets which are the ones that will be slow to recover. Since the vaccine, the prices of REIT shares has reversed with lodging being the biggest winner, followed by strips and malls, with data centers and storage losing. And you thought REITs were safe investments! For 2020 lodging lost 23.6% and malls 37.2%

 

Shootings and homicides in major cites went through the roof last year. In most, the numbers are up over 50%.  In Chicago, 79 cops were shot at vs 22 in 2019. Note that in all of these cities they have a black, or left wing mayor, black police chief, and lots of black cops. Many of these cities have consent decrees limiting cops actions. Chicago even has an Office Of Violence Reduction, which is what BLM and the left  says it needed instead of cops. Result, black on black shootings are through the roof. 78% of victims are black, shot by other blacks. Hard to claim cops or discrimination for this.

 

Whites are also locked down, but they are not shooting each other, nor are Asians, so the pandemic is not the cause. Can we try to deal with data and not hyperbole about George Floyd. The cop killing Floyd has nothing to do with black thugs shooting other blacks. It really is all about bad schools, closed schools, 75% of kids born to a single mother, and a culture of gangs and violence in these neighborhoods. Social workers and more  government funded programs is not the answer. More cops allowed to do their job, and more judges who put away the lawbreakers is the answer. In many of these cites there is little to no penalty for lawbreaking. In LA now the line prosecutors have been ordered to not prosecute many crimes, but they are now suing the new DA to reinstate law and order.

 

In NYC, no bail has let many criminals walk, and the effect is the exact opposite of the highly successful broken windows policies of Giuliani which brought crime down to some of the lowest levels ever. If there is no consequences for crime, then what will deter anyone other than family, school and culture. How is a kid in these neighborhoods supposed to excel in school if violence is a part of daily life. They need to stop teachers unions from having any say about how school is run. The federal government needs to assure charter schools and vouchers are allowed and generously funded. DeVos tried, but could not get federal law to make it happen. Under Biden it will go far backwards and the black kids will suffer badly, but the unions will be happy.

 

They need to end the victimization ideology, and make everyone responsible for their own actions. Instead there is a mantra of, you are victims and it is not your fault, or your mother’s fault that you have no nuclear family life. It is not your fault the cops got rough when you resisted arrest like Michael Brown who tried to kill the cop. Once Obama and Holder used Michael Brown in Ferguson as the symbol and cause celeb, it was all over. That set the tone and story line that cops are racists, and the victim ideology that now permeates minority communities, campuses and other places. That was when Obama set back race relations by 30 years, and did so much damage which he then amplified with his Travon could be my son speech. People are victims of their own choices in life.  Floyd was just the culmination of what Obama and Holder started, and was just the excuse for BLM to go on a tear with massive support from the press and left wing. Seeing Pelosi leading Dems kneeling in the capital over Floyd was disgusting, and just fed the victim ideology. The damage to American culture from all of this is huge.

 

Most every university and major company now has  diversity and inclusion officer. Instead of hiring on merit, Biden and these people hire by skin color, and gender, or admit to school by the same non-meritorious criteria. The definition of diversity these days is exclusion and discrimination against the candidate that won on merit, but lost on skin color or gender. Hire a diversity officer and they need to find ways to discriminate against white males so that the quotas of blacks, browns, and of mysterious sexual orientation get hired. That is their job. They are not there to push equality of opportunity. You never hear “equal opportunity” from Biden or the diversity mobs. That is what the Harvard Asian applicants lawsuit is all about. It will set a major precedent when it finally reaches the SCOTUS. Diversity, not merit, now rules all sorts of places.

 

A black female with a Hispanic father can just take bids these days. All the better if she is lesbian. Extra credit for that. Diversity by hiring of less qualified people just because they are black or female or whatever, other than white males, just breeds anger over time by the white males who earned the right to be hired, but were not, or by the white supervisors who have to employ unqualified blacks or women just to look good for promotion. Some companies are actually adding efforts toward diversity in their annual reviews. You know what that will mean. Hire anyone other than white males if you want a better bonus. Just because a black female is hired to a job, does not make them qualified, or able to do the job better than other candidates who applied. We used to have equality of opportunity, not hiring by quota.

 

When I was young I could not get hired by certain companies because I was Jewish, and several Ivy League schools like Brown, Harvard, Princeton and Dartmouth had Jew quotas of 15%. Quotas were finally deemed illegal discrimination, and now they are deemed to be the right things  to do. So now it is all reversed, and there seem to be quotas for hiring blacks at least up to the quota. That is just as wrong because it means there is a quota limit for hiring white heterosexual males, and leaving the rest for blacks and women, and those who claim they can’t figure out  what sex they are even when they are nude in the shower.  And now NASDAQ requires you to have a black and a woman, or a undetermined sex on your board, as though that will make your company somehow operate better.

 

So now there should be a new title -token board member. These people can rent themselves out to allow a company to comply. What is your occupation  -token board member- very lucrative. Qualifications -none. I am very happy I no longer own any companies, nor am I hiring anyone anymore. One of the real problems with identity selections is the person knows they are a token, and therefore lacks the sense of accomplishment that means so much to self-worth. In the end, the diversity selected person becomes frustrated because deep down they know they are only there due to skin color or gender, not due to accomplishment, and those who really got ahead on talent get frustrated because they know everyone will think they got there by being the token. I have had a genuinely successful black banker explain this frustration to me, and it is real.

 

Now that work from home has lasted so long it is bad news for office landlords. Several new objective surveys have been done, and the results are that around 85% think their efficiency is as good as, better, than if physically in the office. 61% say it has been better than expected to work remote. 80% want to work remote 3 days a week. Many employers have determined that they will get their staff together periodically- once a week, or once a month for team building, but not to all be together in the office daily. People are ending up putting in a little more productive time at home now since there is no commuting time, and no hanging out just bullshitting. The implications for office landlords is ugly as leases expire. Lower occupancy space and lower rents.

 

New surveys of hoteliers is also not pretty for big urban hotels, and especially conference properties. Recent surveys suggest new conference bookings are very few, and until there is widespread vaccinations. It may be 23 before those properties are fully back to 2019 cash flows. In addition, Zoom has changed behavior.  Many people now are saying they can do some meetings on Zoom. Every such decision is one less hotel room night. There is no way to know what this will look like by 2022, but it is very unlikely we will ever see the jump on a plane for a meeting as much as before. They have managed well this past year without that, and seen the cost and time saved. Behavior is permanently changed.

There will be material cost savings on T&E. Business hotels will have a harder time filling rooms. We just do not know to what extent.

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I understand the need to stimulate the economy but it set's a bad precedence which I am sure politicians will use now with abandon and tax payers will come to expect.

Buying votes with voter's own money is a clever way for politicians to gain favor  and re-election but it is a lousy way to run a business. Reagan loved  Jelly Beans and now Government has turned itself into a candy dispensing machine. 

We know sugar highs are bad, cause all kind of maladies from bad teeth to

 diabetes Type 2. There is even medical evidence it provides a source for cancer. Let the good times roll while fiscal discipline goes to hell.

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