Market Perspective

The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 7

Posted by on Feb 19, 2019 in Ned Massie, Perspective | 0 comments

Brexit: This drama is scheduled to end around March 29th, 2019. Britain’s Prime Minister May actually voted against Brexit and has negotiated in a manner consistent with her vote. The European leaders are trying to drive a very hard bargain because of the other cracks that are appearing in their unsustainable union. If Great Britain actually leaves, Great Britain will thrive economically. However, the splintering of the Eurozone will accelerate. Even if Great Britain stayed, the Eurozone will fail. The ripple effects of the splintering of the Eurozone will have significant economic impacts around the...

read more

The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 6

Posted by on Feb 6, 2019 in Ned Massie, Perspective | 0 comments

The proper term for the country we call China is, “The World’s Danger Zone”: The so-called “China Miracle” is just growth funded by out of control government debt in their economy. Unsustainable actions continue until they do not. This chronic house of cards will fail and the economic impact will be felt globally, the only question is when. There are two terms you need to add to your vocabulary: LGFV (Local Government Financing Vehicles). These are part of China’s shadow banking system. Typical of Communist countries, LFGV investments were made because of central government instructions, not because they were good investments. FACE – Finally, a leader of the western world stood up to the Chinese and called them out for their illegal and constant theft of intellectual property, as well as many other unfair trade practices. Given the fact that the Chinese have to “Save Face”, Dictator for Life Xi, is in a really bad spot. If he makes a deal with the U.S.A., he will “Lose Face”. If he does not make a deal with the U.S.A., the Chinese economy will crater. To me, the highest probability is that Xi will be deposed and a new Chinese leader makes a deal with the U.S.A. The question then becomes, will the Chinese line up to our agreement? If so, it will be the first time. Because of the size of China’s economy, turmoil there ripples around the...

read more

The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 5

Posted by on Feb 6, 2019 in Ned Massie, Perspective | 0 comments

European Banks: On December 28, 2018, it was reported that the Euro Stock Bank Index was 34% lower than it had been at the beginning of 2018. The USA Bank Stock Index in 2018 had a decline of 23%. European banks today, as a whole, are selling for about 40% below their book value. Some European banks’ stocks are now trading at almost 60% lower than they were in January of 2018. This reflects the European bank’s lack of profitability because of holding too many bad loans, etc. As a result, a very small economic bump could create massive problems in the European banking system and therefore their economy. Japan has showed the world that if your banks are zombies, your economy is stagnant. Europe is in serious economic trouble with a welfare program bloated by illegal immigrants, weak banks, and an unstable regional governmental structure. Because the Euro zone is such a large economic block, economic turmoil there ripples around the...

read more

The Forces That Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 4

Posted by on Jan 30, 2019 in Ned Massie, Perspective | 0 comments

Pension Fund Crisis: There was a movie some years ago called “Wag The Dog”, that had to do with a politician obscuring what was actually going on by focusing everybody on something else of lesser importance. Here are the facts that no one is telling you about the Pension Fund Crisis: One half of the states in the U.S.A. have pension funds with balances that are less than 70% of the amount required to meet their obligations; While many of the states in the U.S.A. have recovered from the Great Recession, Virginia is rated among the very worst states in their financial structure; When the pension crisis hits, probably within five years from now, the effects on the economy will be both Direct and Indirect. Direct Effects: At some point the pension funds simply will not be able to meet their obligations which will mean that pensioners will receive less of a pension amount than they anticipated. Pensioners will have to cut back their spending. Indirect Effects: The loss of income by the pensioners will ripple through the economy, because of their reduced consumer spending and loan defaults. That means economic distress called a recession. The solution that will be proposed will be to radically increase taxes. The amount of the tax increase required to solve the pension fund crisis will have the same effect on all households – reducing their disposable income and thereby causing a recession. This will be ugly when it hits. You want to have your portfolio balanced and have some liquidity before it hits. Please re-read our first two points in this series of blogs as you plan your investment...

read more

The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 3

Posted by on Jan 23, 2019 in Ned Massie, Perspective | 0 comments

Politics: Although the blue wave tsunami turned out to be more of a blue ripple, the Democrats now have control of the House of Representatives. Looking at the economy and therefore the land market, there are two critical things to focus on: Our Politicians in both parties have no real desire or incentive to actually solve problems. That would actually eliminate their campaign slogans and fund raising. The Democratic plans of universal healthcare and open borders ignore the mathematical reality that we simply cannot afford their plans. If Democrats raise taxes as they are discussing: (A) taking every dollar of the upper 20% of American households that by itself would diminish the ability of households to buy goods and services, thereby causing economic recession and (B) it would not pay for their plans. In history, we have had equally incompetent politicians. But this may be the first time we have had one political party reflecting the behavior and intelligence of a collection of three year olds. Legislative turmoil is not a positive for the economy. When politicians are focused on power rather than solving problems to grow the economic pie, bad things happen....

read more

The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 2

Posted by on Jan 16, 2019 in Ned Massie, Perspective | 0 comments

Interest Rates: October 1, 2018 was an extremely important day in the economic history of the world. That was the day that the European Central Bank (ECB) actually began to taper their Quantitative Easing (QE). The result was the commencement of turmoil in the global stock markets. That turmoil reflects that as the ECB joins the Fed in reducing QE, (in the U.S. that is allowing the assets on the balance sheet to bleed off, as well as rising interest rates) the impact on assets values around the globe is that they will decline. It is really quite simple. As the cost of money goes up, the rate of return investors demand also goes up, and that means that they can pay less for an investment. The talking heads reading scripts prepared by those who do not understand economics tried to make it a story about the trade wars, etc. But the fact is the driving force of the turmoil is that interest rates are rising, and that means that asset values will decline. The only question is how fast? My prediction – The Fed will either reduce interest rates by July 2019, or they will hold interest rates still for at least two years. That should allow asset values to stabilize and...

read more