International Economies

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Several weeks ago, I wrote a commentary called Funny Times in which I bemoaned the complete lack of coherent data, making the process of predicting the course of interest rates, cap rates and transactional velocity over the next couple of quarters awfully hard.  This uncertainty, itself, contributes to a knock-on doom cycle sort of way…

What funny times in which we live; an observation perhaps highly dependent upon your notion of fun.  Maybe curious is the better description.  Daunting?  Frightening?  Opaque and unknowable?  All probably good descriptions.  True of politics.  True of business. 

Sticking to business, it’s hard to get conviction around anything right now.  Nonetheless, we must.  Everyone needs…

Conspiracy theory fans, tin-foil hat wearers everywhere, Nostradamus wannabes, the broadly unhinged and, of course, our professional purveyors of doom and gloom roosting on evening cable news see patterns where there are none, embrace straight-line projections based on disparate and unrelated data and loudly and often shrilly bleat that the end is nigh.  That’s all…

I’m back from vacation in the English countryside, away from the hurly burly of life in our capital markets.  While I tried hard not to obsess on the news whilst away, bad news has a way of slithering into your peripheral vision, doesn’t it (I stuck to the English papers which are great fun, and are way better than ours… “Emergency biscuits flow into UK due to national shortages”)?
Continue Reading My Hair Is Not on Fire…Yet

It’s coming up on awards season.  The Emmys were last week and weirdly, I got a thought bubble about nominees in the Black Swan category, walking the red carpet looking for attention!  Think the Masquerade scene from Phantom of the Opera when the Phantom comes prancing down the stairs to harsh the festivities (at least he sang well).  

We have some obvious nominees today.  But are they the real thing?  Will they move markets?  We have, with some reason, become inured to the disruptive headlines howling about threats to our way of life.  Is there simply too much chaos out there to pick out the things which are really relevant from the noise?  Our 24-hour news cycle is hardly helpful, is it?  The talking heads, with practiced expressions of concern, seriousness of purpose and faux competence, serve up our daily quantum of fear and distress (Film at 11!).  Don’t they seem almost gleeful to report yet another potential disaster?  With breathy anxiety, designed to tug at our atavistic fight or flight instincts, they repurpose as news exaggeration, hyperbole, vague allegations, unconfirmed reports and sheer speculation.

The scary part is, of course, that buried and obscured in all that noise might be real news, things that investors and market participants really ought to be paying attention to because they will matter.  The trick is sussing out the stuff that matters from the stuff that doesn’t.

So, we really do need to take into account these aspirational swans.  One of them could be that figurative dead archduke.

Let’s take a stroll along the red carpet and chat up some of these swans.Continue Reading Does A Red Carpet Full Of Black Swans Matter?

One of the good things about the 24/7 news cycle, perhaps one of its few positive externalities, is that it’s a boon for the pontification business. It enables all sorts of otherwise serious people to make fools of themselves day in and day out predicting generally gloomy stuff, as sunshine doesn’t sell.  As a card-carrying member of the chattering class, this empowers me to publish periodic outlooks about the future with little risk of any fundamental embarrassment.  It’s sort of a no risk undertaking, isn’t it?  If you happen to get something right (think blind cat finding dead mouse), you can claim to be a star.  If you get it wrong, well, everyone else got it wrong, too – and often on national television.

The other thing we’ve got going for us in the bloviating business is that we remain in fraught and friable times.  We are running short of good synonyms for shock and outrage and struggling to describe what might actually be viewed as extraordinary.  What really does extraordinary mean these days?  These make good times for the prediction biz.  It’s not much fun making predictions when not much changes.  Imagine that poor sod, talking to the Pharaoh during the Old Kingdom after reading many entrails,  I foresee…nothing really changing for 2000 years; more news at 11.

Unburdened by much of the way in data and little in the way of anxiety about getting it wrong, I’m ready to tell you all about 2020:Continue Reading 2020: An Outlook

Long ago, I read a book by a man named Herman Kahn, one of the founders of the Hudson Institute and a well-known public intellectual.  The book was entitled On The Year 2000.  (He was more famous for that truly uplifting missive, On Thermonuclear War.)  I suspect I didn’t understand a lot of it, but I was jazzed by this apparently serious effort to peer into the future.  How cool!  Mr. Kahn was an interesting character; think of a banal-looking, rotund academician, who talked about nuclear annihilation like I discuss box scores.  He was, in fact, an inspiration for Stanley Kubrick’s Dr. Strangelove and for General Jack D. Ripper’s famous line in that wonderfully dark comedy, “Casualties?  50 million…tops!”  A father of US nuclear deterrent strategy and a considerable intellect, he actually got much of what he thought of the Year 2000 wrong, but in a fun way.
Continue Reading Welcome to the Future

Beany & Cecil was a cartoon.  The Current Expected Credit Loss accounting rules, better known as CECL, which the FASB is insisting will go into effect at the beginning of next year for publicly traded banks and lenders and a year later for all other GAAP reporting entities is not.  Now, heaven forfend that I suggest that the work of the Financial Accounting Standards Board is cartoonish, but there’s a parallel in this pairing of harmless and obscured menace worth noting. 
Continue Reading Beany & CECL

We are all going to be heartedly sick of discussing LIBOR and LIBOR transition long before it becomes a thing at the end of 2021, but we really need to get this done. I can’t make this at all funny. We have a problem…but not a solution. Fixing it is going to be a heavy lift. Like a colonoscopy, demonstrably necessary, but in no way fun. (Actually, I really should say, that my doctor is a lovely person, but one simply can’t make wonderful really matter when discussing all things proctologic.)

Okay, we are indeed doing stuff. I appreciate and certainly don’t want to diminish the efforts of our trade organizations, major banking institutions or the Alternate Reference Rate Committee of the Fed (ARRC), but I fear we are not doing enough and not doing it quickly enough. Even as one who got a merit badge during an undistinguished boy scout career for procrastination (I never got around to picking it up), I know that to elide this from the immediate to do list, hoping someone rides in on a white horse to make all this better, is really a bad idea.Continue Reading LIBOR, Again (Sorry!)