New Year Things I Think I Think
Hey... I got a new landlord... what could go wrong? And... the real issue with China.
Dear Fellow Expat:
“Three more days…”
We echoed last night's mantra about “a return to school” come Monday for my daughter.
She’s been on a rampage during the holiday break.
I’ve stepped on more Legos than I can count.
I’ve heard nothing but the Sound of Music and Wicked songs echoing through the house.
And I’ve been requested to make countless PB&J sandwiches – and I still screw it up each time. (I know… I know… I know…)
She’s supposed to head back to school on Monday.
But – spoiler alert – Baltimore expects its first snowstorm of the year.
Traveling that day is supposed to be too dangerous, so she will have her first sledding experience in homegrown snow on Monday.
That’s not the only surprise announcement we received…
Let’s get to a few other things, I think, on a Friday.
1. Blackstone is Not Going to Like Me
I received an email last night at 11 pm from my landlord.
When we moved from Florida, I didn’t want to own property for a while. So, we rented a townhouse near my then-office and my daughter’s school.
It turns out… my landlord has tapped out, and the property is now in the hands of TriCon (TCON).
You might recall that Tricon was the subject of a 60 Minutes investigation two years ago because it is one of the Wall Street firms buying up single-family homes around the country.
And Tricon is now owned by… Blackstone Group (BX).
Great… I have a private equity company using me for cash flow.
Here’s the fun part.
There are eight problems with this property, including the lack of insulation in the basement walls.
I can’t wait to deal with this as a former Private Equity journalist…
“HI… I WANT TO SPEAK TO YOUR BOSS… STEPHEN SCHWARTZMAN… NO, I WON’T HOLD…”
2. Bring the Troops Home
Chalk this up to a lack of understanding leverage.
The President of Honduras threatened to shut down military bases in her nation if the United States deported people back to her country.
She complained that the U.S. hasn’t paid rent in Honduras for those bases over our 70-year relationship.
A few things…
Remember, those people are in the United States illegally.
Second, there’s a reason she’s worried. Roughly 20% to 25% of Honduras’ economy is based on remittances… payments from people living and working here who send money back to their home countries.
Meanwhile, the U.S. provided about $785 million in foreign aid to Honduras and provided the country with about 6 million pounds of goods through the Denton program.
Third… are you sure you want the U.S. military to leave?
This isn’t a good way to start negotiations…
3. China’s Lifting Oil Expectations, But Buyers Beware
The only sector this week that’s getting a boost?
Energy… and it’s been on a run.
We’ve been commenting on it all week at Republic Risk, which had several new portfolio names arrive in the sector on Thursday.
The reason for the pop: Expectations for policy support out of China.
This came from StoneX analyst Alex Hodes.
“As China’s economic trajectory is poised to play a pivotal role in 2025, hopes are pinned on government stimulus measures to drive increased consumption and bolster oil demand growth in the months ahead.”
The CNBC article follows that quote with this:
“China raised wages for government workers in a surprise one-off move that would inject up to $20 billion into the economy.”
$20 billion!!!
Weeeeeeeeee!
We must define government stimulus and expectations, Wall Street.
Fiscal policies are a band-aid now. As I’ve repeated at Republic Risk for two weeks, China’s hopes of avoiding this debt-deflation spiral aren’t measured in billions.
They’re not measured at $1 trillion.
We’re talking about a multi-trillion-dollar stimulus to address real estate pressures worse than those in the United States in 2008.
They’re going to devalue their currency… and they’re going to have to print.
It’s inevitable. The real problem is trying to guess when it will happen.
Just know that such monetary inflation is the never-ending trend of these markets.
4. Do We Need Another Warning About Mortality?
Alcohol stocks fell today on the news that the Surgeon General wants to label bottles with “Cancer warnings.”
The argument goes that cancer is the third-leading cause of preventable cancer in the United States after smoking and obesity. So, let’s warn people.
I don’t mean to be a bummer on this topic… but a few things:
Do they think this is going to work? Especially with our education system?
Many TikTokers probably think a “Cancer warning” is linked to astrology.
Second, why would you put a reminder of someone’s impending mortality on a bottle of alcohol?
That could increase stress… and make someone want alcohol (those labels are removable, by the way).
And third, cancer doesn’t happen overnight…
If we were worried about the negative impacts of alcohol, we’d want to focus on the short term. There’d be warnings about… alcohol poisoning, traffic accidents, violence and assault, self-harm, medical emergencies, aspiration, harmful interactions with medicine, or excessive water intake (hyponatremia).
It feels like a way to punt on those issues, right?
In the end, it’s not going to matter.
We had gang wars over alcohol after Prohibition. I doubt this moves the needle much.
The most underused books in public policy are history ones.
5. Buy Your Steaks Now
Finally – keep your eye on your wallet.
As that Polar Vortex comes screaming at the United States (bringing that first snow day off from school), it’s also about to drive up beef prices.
With the U.S. beef herd already at its lowest levels since the early 1960s, this cold has driven beef futures in Chicago to all-time highs.
Natural gas might be what traders are slinging… but I need my steak come April.
That Tomahawk steak on my 44th birthday in 90 days looks more expensive.
Ground beef isn’t getting any cheaper, either.
I don’t mess with anything under 95% lean meat… so I’ll eat a lot more pork this year.
That’ll do… for now.
Stay positive,
Garrett Baldwin
Secretary of Thoughts
It looks like nothing has gone right since you moved out of Florida. On behalf of governor DeSantis I’m welcoming you back with open arms. We still do not have a state income tax unlike MD. and we don’t have a piggyback county tax. We also don’t have a bag tax. Other than that and. is still a great state. Oh yeah, it just got rated as top 10 worst states to retire to.
"The argument goes that cancer is the third-leading cause of preventable cancer in the United States after smoking and obesity. So, let’s warn people." I know you "hate" me for these, but...I was not aware that cancer was contagious. :-) P.S. Any thoughts on the "still-pending" possible east coast port strikes in two weeks? I can picture the following reaganesque quote coming from DJT, with help from Elon, on the afternoon of the inauguration: Go back to work or we will just automate them all! And remind your daughter that to ensure a snow day, you have to go to bed with your pajamas on inside out. Happy New Year!