2 Feb 2022

When last did you read about an office landlord in financial trouble. I suspect many landlords have managed to survive because they have long leases in place and or their banks have deferred some of their debt servicing. I just looked at Boston Properties the largest US Office REIT and its only 20% below its all time highs just pre the pandemic. I think US Office REITs are a short in my book. I think work from home is here to stay. I expect to read a lot more about financial hardship and bankruptcy in the office property space.

The so called cash on the side lines has recently dropped modestly could this be an interesting sign of the times. I need to go into more of a deeper explanation (not today) but I am not sure its cash on the side lines like everyone suspects. People might be surprised as QE runoffs take place so might the cash runoff from the money markets and all others and vanish. Remember QE is a form of a magic, now you see it now you don’t.

I just added to my SP500 shorts. It appears I am not the only bearish CTA.

Money Complex

It is all RBA talk in the press with Lowe hanging on to his employment mandate that needs to be below 4% before he addresses inflation because he sees it as transitory. He is sticking to his knitting, lets watch this space. He has already been “taken out” with his yield curve pegging in October and had to abandon that strategy. He is calling off QE. I think the wage growth from the anecdotes I am hearing and reading is much more of a problem than he thinks, and one thing I can assure Lowe is that salaries are not transitory. Good luck trying to decrease someone’s salary after a raise. Once again I think the RBA is asleep at the wheel. Could it be that with an election in a few more months, Lowe is covering his buddies in Canberra’s back, or as I like to say, taking one for the team.

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