Obama's total failure to have a winning Mideast terror strategy will lead to more terror attacks in Europe and maybe here, and a continued disruption of US relations with everyone we used to have as key allies in the region. He has left Putin to do as he wishes, and to create problems all over. He has tripped the US military to the bare bones and that will lead to more bad guys doing more bad things since the cop is no longer on the beat. Result is we will have a much more unstable and dangerous world unless we have a real president who rebuilds the military and takes a very different direction in foreign policy. That is not Hilary. I have been told by someone with very high inside friends in DC that she will be indicted and Biden may be drafted in. That will not be any better.

While US jobs are certainly better, wages are not a lot better after inflation. Obamacare is in serous trouble now that United Health has pulled out, and that will mean much higher premiums and more uncertainty for companies and employees. There will be a flood of new regs on everything as Obama tries to put these in place before he leaves, which means getting a loan will be tougher, costs will rise and employers will be looking for more ways to cut hiring. A $15 minimum wage means less hiring, more layoffs and higher wages up the line, meaning less margin, so less demand for new development. None of this is good for CRE.

Bottom line is while things may feel better as the stock market returned to 2015 year end levels, keep in mind earnings are declining for many companies, and so expansion and new space requirements will be more limited going forward.

While things generally seem like they are settling down, and oil has seemingly plateaued, China on the surface seems Ok, and there are no new terror incidents, under the surface is another story. Chinese consumers seem to be out spending as normal and shopping and eating out, the debt situation in the country is ominous. Small and medium sized companies are still struggling under debt burdens they are unable to keep current, and many are in default. The government is pouring out more and more debt to carry the unprofitable state owned companies, and that is a road to nowhere good. The underlying movement back to more state control and the unwinding of the past 30 years reforms is causing a political displacement that could well become very serious and lead to major leadership battles which could become violent. China remains at serious risk in ways that are more concerning than at any time over the past 20 years or more. It was the government that killed the Anbang deal, and that should be a risk concern you need to be aware of if you are contemplating any new large transaction with a large Chinese company. It ain't over until the fat lady sings, as the saying goes.

The CMBS situation is still not good and will remain unclear and dicey maybe all year. As bond markets remain uncertain, and bond buyers remain risk off, they will continue to view US real estate as high priced and over priced, and at risk. Hotel values have already declined around 10% this year, and occupancy has fallen continuously since the start of the year. With higher minimum wages coming, margins will be squeezed. Other real estate continues to be at risk of price declines if rates rise as they are now likely to do in the summer or fall. Debt is going to be hard to get and when available it will be at lower leverage than last year by a considerable amount. If you are not a strong borrower, you will have issues getting debt or getting debt you fell you need. That means the nearly $200 billion of maturing CMBS is going to see material defaults or a lot of new equity required.

As we get closer to the election, if Trump gets the nomination, it could seriously unsettle credit markets as would a Hilary presidency. Ted Cruz thinks we should go back to the gold standard and have political control of the Fed-both would be disastrous. Unless Kasich gets the nomination, we are in a lot of trouble next year. It is hard to believe that anyone could more to damage the country and the world than Obama who has been a disaster, but it could happen depending on who wins. This presents a real risk we cannot predict at this point.

Obama's total failure to have a winning Mideast terror strategy will lead to more terror attacks in Europe and maybe here, and a continued disruption of US relations with everyone we used to have as key allies in the region. He has left Putin to do as he wishes, and to create problems all over. He has tripped the US military to the bare bones and that will lead to more bad guys doing more bad things since the cop is no longer on the beat. Result is we will have a much more unstable and dangerous world unless we have a real president who rebuilds the military and takes a very different direction in foreign policy. That is not Hilary. I have been told by someone with very high inside friends in DC that she will be indicted and Biden may be drafted in. That will not be any better.

While US jobs are certainly better, wages are not a lot better after inflation. Obamacare is in serous trouble now that United Health has pulled out, and that will mean much higher premiums and more uncertainty for companies and employees. There will be a flood of new regs on everything as Obama tries to put these in place before he leaves, which means getting a loan will be tougher, costs will rise and employers will be looking for more ways to cut hiring. A $15 minimum wage means less hiring, more layoffs and higher wages up the line, meaning less margin, so less demand for new development. None of this is good for CRE.

Bottom line is while things may feel better as the stock market returned to 2015 year end levels, keep in mind earnings are declining for many companies, and so expansion and new space requirements will be more limited going forward.