The Real Estate Espresso Podcast

Kevin May is the founder and CEO of Land Hub (www.landhub.com). His company specializes in land and only land. On today's show we are talking about how marketing land is different from other asset classes.  ---------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about inversions of all kinds. We have an interest rate inversion. That’s when short term rates are higher than long term rates. That’s the market signalling that they believe an economic slowdown is upon us and that central bankers will have little choice but to lower rates when the realization of economic contraction becomes apparent. Higher interest rates have impacted returns in the stock market. They have caused prices to fall in the bond market which has devalued virtually all of the debt that has been issued in the past decade. The real story is that the path to improved returns relies on timing a transient effect. What investors really want to happen is for good quality investments to drop precipitously in value in the short terms. Those good quality investments will do well over the medium and long term. So the drop in value represents an opportunity for an entry point that will offer outsized returns. It’s really as if the market is asking for a repeat of the GFC. The vultures can then swoop in and pick over the carcasses of these good quality, but slightly damaged assets. -------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are dissecting the latest rate 0.5% federal funds rate increase announced Wednesday by Jerome Powell, chair of the Federal Reserve. We have become conditioned to believe that the Fed, acting as the central bank for the world’s reserve currency holds disproportionate power in the monetary system, and indeed in the global financial system. Printing of money is inflationary, and the banks themselves print a lot of money. In many ways, the private sector prints more money than the Fed. That over-supply of money is actually the cause of inflation. So the question is whether interest rates and reducing the Fed’s balance sheet will be enough to reduce inflation. Price stability is the Fed’s objective. The fact is, the US government is still spending well above its means. In fact the deficit is $250B a month. As interest rates increase, so too does the deficit, despite all the rhetoric about wanting to stamp out inflation,

Today’s show is probably going to go down in history as one of the most important shows ever published on this podcast. That sounds like a bold statement. But the more I look at our global financial system, and out global monetary system, I’m increasingly convinced that there are so many time bombs out there, another financial crisis is inevitable. The only thing I can’t tell you is which pin will actually pop the balloon. On today’s show we are talking about how the Fed, the all powerful Fed, is actually a minor player in the global financial system. In fact, the Fed is so far behind what’s happening in the financial world, that they are relegated to the role of janitor cleaning up the mess. When you’re at the grocery store and you hear the announcement calling for a cleanup in aisle 4, that’s the Fed. The jar of pickles has already smashed and the only thing to do is to clean up the mess. Last week we reported on a story that came to light in the quarterly report of the Bank of International Settlements. If you remember, the BIS reported 97T in off-balance sheet foreign exchange, currency exchange and Forward derivatives. Because these are derivatives, they represent a contingent liability that theoretically have a low probability of triggering. According to GAAP, low probability contingent liabilities are not to be disclosed in the financial statements on the balance sheet. We did experience a problem in 2007 and 2008 with another bunch of derivatives that were similarly off balance sheet. We’re going to look at off-balance sheet practices because, just like 2007, just like Enron, these practices can be used to hide liabilities. Sometimes this obfuscation is legitimate, and in other cases like Enron, it’s outright fraud. Then there is a whole bunch that are in the grey zone. I’m going to go out on a limb and state categorically that the next financial bomb to go off will come from an off-balance sheet derivative exploding. ------------- Host: Victor Menasce email: podcast@victorjm.com

On today's show we're coming to you live from the 2023 annual goal setting workshop. These few minutes extracted from 2.5 days will give you a sense for the factors that enable effective goal setting. ------------------------ Host: Victor Menasce email: Podcast@victorjm.com

On today’s show we are repeating words that have not been heard for nearly a decade. In the wake of the GFC, short sales, underwater mortgages were pervasive in some markets and made up a significant percentage of market activity. Well according to a recent report from Black Knight, About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth. These market conditions are being compared with 2008 very regularly. It’s been nearly a decade since we heard the phrase short sale. It’s been nearly a decade since the term underwater mortgage was used frequently in a sentence. Many of the same playbook techniques that were used in the wake of the GFC are now being dusted off. We won’t know how pervasive the damage to the housing market will be as a result of these interest rate increases. ----------------- Host: Victor Menasce email: podcast@victorjm.com

Today's episode was recorded on-location at the Renault Winery in southern New Jersey. Josh and his wife Melanie rescued this storied property out of bankruptcy four years ago with a tentative mission of extracting value from a distressed asset. Fast forward four years, a pandemic, and an economic cycle and this property has been transformed into a legacy project befitting its 150 year history. On today's show we're talking about the journey that Josh has taken the organization, and the property to deliver an experience that is extraordinary.  To connect with Josh visit renaultwinery.com or the investment arm at accountableequity.com ----------------- Host: Victor Menasce email: podcast@victorjm.com

Eric Weiss is a world renowned executive chef and sommelier. He has served as food and wine consultant to the white house for 15 years, trained the staff at major properties all over the world. To connect with Eric, visit servicearts-inc.com ------------- Host: Victor Menasce' email: podcast@victorjm.com

On today’s show we are talking about what impacting labor markets and how that can affect real estate. In the food and beverage industry we’re seeing a massive shortage of workers. The question is, where did they all go? We saw in the most recent statistics for the past month a trend that has been underway for much of the past six months. In November, the US enterprise employment report shows that 263,000 new jobs were created and that unemployment remains at a low 3.7%. A large percentage of jobs hired were in the travel, leisure and hospitality industry. What does that mean? It means hotel staff, restaurant staff, retail staff, flight attendants have been hired in record numbers. While we have seen major job losses in the tech sector at with 10,000 google, 11,000 at Facebook, Twitter of course, and major layoffs at Amazon. In the past week alone some of the more notable announcements have been layoffs of 400 people at reverse mortgage funding, 1500 at H&M, Doordash, 1250, Global Foundries 800, Wireless Advocate, up to 1800 inside Costco Wholesale stores, Morgan Stanley, 1600, Blue Apron Holdings, 10% of corporate workforce. Intel corporation let go 300, 100 at corporate headquarters and 200 in Santa Clara. Hewlett Packard is expected to lay off 4000-6000. I’ve only listed a handful of more notable layoff announcements in the past week. There are certainly many, many more. But frankly, having me list layoffs for five minutes will get boring. I think you get the point. So are these people showing up as unemployed? Well no, they’re not. Almost all of these will have received a severance package and they won’t appear on the unemployment rolls for months. Many of the job losses are higher paying corporate jobs. Some of the job losses are in retail with H&M and Wireless Advocate. But most are high paying white collar jobs. The hiring is also happening in ways for restaurants to stay in business. We spoke with a hotel owner this week who said that applicants for the role of dishwasher in the hotel kitchen were asking for $30 per hour. ------------- Host: Victor Menasce email: podcast@victorjm.com

On today’s show we are talking about off-balance sheet financing. Increasingly, borrowers are seeking ways to hide their liabilities so as to appear financially stronger than they are in reality. This represents a growing risk to the economy and financial as our debt laden world sinks deeper into the abyss of rising interest rates. Let’s start with whether a liability needs to be disclosed on the balance sheet in the company financials or not. If not, why not? ------------- Host: Victor Menasce email: podcast@victorjm.com