Summary of J. Martin’s Summit in Oakland

Two persons on the panel were Jim Glassman, Head Economist of Chase and Tod Spieker who is a Bay Area multi-family investor. He owns 3,800+ units from Los Gatos to Burlingame (basically Santa Clara and San Mateo Counties) and 200+ units in the LA Basin. Why LA? He went to UCLA so he knows the area and does some investing there.

According to Jim Glassman,

The Bay Area economy is one of the stars in the last decade.

Our economy as a whole has been growing at an annual rate of 2% since 2008. Historically, it grew at 3.5% as we came out of a recession.

There has been a demographic shift from the baby boomer generation to the millennial, and it reflects in the slower growth and smaller labor participation.

Funny he used the unemployment rate chart and showed how we tend to make a U turn every time we get to peak employment. He titled the chart “History Has a Sober Story to Tell”. He said we’re at the top of the 9th inning but believes we’ll go the extra innings this time around.

The bright spots are the East and West Coasts. There are some other bright spots in middle America including TX, UT, Nashville and Reno.

He thinks the Fed will push rates to 2.25-3% in the coming years while he believes the 10-year T bill will hit 3-3.5% by the end of next year.

Tax reform is going to be difficult to achieve because it’s much more complicated than the Health Care Bill, and they couldn’t even get that done.

According to Tod Spieker,

The market is healthy but frothy. Prices are too damn high. Rents have plateaued since last year while prices continue to climb. Buyers are stretching to buy while sellers are getting away with it.

He doesn’t think Costa Hawkins will get repealed. That would kill new development. If we think there’s a housing shortage now, it’d be 10x worse if repealed.

He doesn’t think 1031 exchange and depreciation will be eliminated under the Tax Reform Bill.

Just for giggles, one investor asked what would lead to the next downturn? Jim’s response was “A meteor strike.”

The stock market has been going up since Trump got elected. I guess investors are counting on money repatriation due to the Tax Reform. This can be a catalyst for the next recession if this Bill doesn’t pass. We’ll have to wait and see.

2 Likes

Hmmm…correction. The stock market has been going up since 2009-2010…LOL

How much did you pay to get in? Do you think you get your money’s worth?

Did @myo go this time?

Nope, too busy with outside of RealEstate. I wish I did though. I enjoyed last year.

@hanera, what else did you hear about it? Any trending topic? People still investing in mid-west turnkeys?

The unemployment thing makes sense. That would correspond with inflation for past cycles and when rates are increased enough to push us into economic contraction. I’d argue the low labor force participation rate combined with high number of part-time workers that want to be full-time gives us more runway than most cycles. That’s why inflation is still very low.

My worry is the next recession since we don’t have much room to cut rates without going negative. Each cycle has a lower high and lower low for rates.

Lesson # 3:

The so called beautiful economy from this attempting to become a good president stating “we cut the national debt because of the raising in gains from the stock market” is a fantasy copy cat movie from Disneyland, or just the pure ignorance coming from a guy whose position is too big for him.

We lost jobs in August, or was it September? cutting the record we had for so many years/months. We knew that, there hasn’t been any tax initiative worth commenting from this administration.

Come on guys, I am the only guy worried about racism, the same practice that your people have gone through and perhaps the same practice that is being applied to your people across the US? You don’t need to be specific, be political, perhaps you don’t need to be political but be neutral in your opinion and see things from the regular American citizen’s perspective not being an investor, and see how the tweeter in chief is more worried about golfing every weekend, insulting the football players kneeling calling them as he said, sons of a bitch, (so presidential), and berating Puerto Rico on their disgrace rather than speaking about why they are human beings and, put his foot on the ground, learning about the economy. If he knew anything about it.**

Republicans’ latest attempt to push through a tax plan hasn’t given an outsized boost to the shares of companies expected to benefit the most from it.

Since September, President Donald Trump and GOP leaders have been working to garner support for a tax overhaul that includes slashing corporate tax rates to 20% from the current 35%, ending estate taxes and introducing incentives for business investment.

Shares of the most highly taxed companies in the S&P 500 briefly bounced higher after Republicans introduced their plan on Sept. 27, according to a report from Credit Suisse . Then they gave up those gains.

In fact, Credit Suisse said its basket of high-tax-rate stocks hasn’t outperformed the S&P 500 since late 2016.

Why the humdrum response? Some investors say the initial excitement around taxes from after Election Day has abated somewhat. Many believe tax cuts could boost corporate earnings growth and support the stock rally, but they aren’t counting on everything proposed in Republicans’ plan to be successfully pushed through, especially in a gridlocked Washington. And in any case, economic growth in the U.S. and abroad has been solid, helping stocks climb this year in the absence of a tax overhaul.

Some investors may also worried a tax cut “might elicit a hawkish response from the Fed, undermining potential benefits,” Credit Suisse said. Signs that the economy is heating up too much could push the Federal Reserve to hike interest rates faster than investors are currently expecting, sending borrowing costs higher and pressuring stocks.

So while some analysts warned at the start of the year that disappointment on the legislative front could put some pressure on stocks, it seems like more people are coming around to another idea:

The stock market will probably be okay, with or without tax cuts.

https://www.msn.com/en-us/money/markets/the-stock-market-cares-about-more-than-just-taxes/ar-AAtlwSG?ocid=spartanntp

Bruce Norris was there, right? What’s his take on where we are in terms of market cycle?

Just saw J Martin’s email about this year’s summit. Anyone going?