Joel Ross

The only thing that is visible right now is the total lack of visibility. The election is as stark a contrast in politics as I have ever seen. The differences in potential policies on such things as regulations, banking, politically correct speech, defense spending, destruction of ISIS and terrorism, backing for police, school choice and the role of government are worlds apart.

We know Hillary means even more regulatory pressure on banks and business, higher taxes, Elizabeth Warren attacking corporations and anything financial, and a weak defense and foreign policy. With Trump we really do not know what to expect. It will need to take time if the campaign rhetoric translates into policies and actions. Right now it is anyone's election to lose, and I believe there are many more emails to be released by Wikileaks and the courts that will further prove Hillary has lied about almost everything and that there was much more massive pay-to-play than we know so far. Her latest comments on the “deplorable 50%” will have a major impact by showing how she really feels about mid America. With Trump's new campaign team, he really might pull it off. There is no way to know, and without knowing who wins, we have no way to even begin to forecast anything.

Just as Obama has made numerous policy decisions that negatively impacted business and the world, the next president will potentially have even more critical decisions to make. It is folly to predict 2017 and especially 2018. This is why corporations are not investing in long term assets right now. There is just no way to know if taxes will increase, if tariffs will be levied, or where infrastructure spending will end up. Just as important taxes will be very different depending on who wins and if the Republicans hold both houses.

It is also unknown where rates will be a year from now. The Fed is 100% sure to raise rates at some point soon. The issue is not the first 25 basis points, it is what's after that. Real estate values and the stock markets have been subsidized by the low rates and the dollar. Brexit will very likely turn out to be very good for the UK, with lower taxes, the top financial markets next to New York, and a solid economy run by a conservative government. It is Europe that will suffer, and the more successful the UK looks because of Brexit, the more the pressure builds inside the EU for other departures. This will be especially true as the refugee problems multiply and as more terror attacks occur. The right wing will continue to gain strength and in time will have real power in various countries. If there is a major terror attack inside Germany and it is a refugee that did it , Merkel loses the next election and the right gets real power, then everything in the EU changes in ways we cannot yet know.

Clearly the weakness of the whole EU system is not working well and as poor economics will continue to be a major issue. Those of you who raised funds and invested in Europe will find further disappointment in your asset values and returns. Exit will be a lot more difficult than you ever imagined. As the Fed raises rates and the EU does not, the currency issues will magnify. The rush into the EU by many PE funds will not have been a smart move. Staying in the US would have proven to be a far more profitable strategy.

Topping off all of this is the slowdown in data on factory orders, corporate profits, slower job growth, and little cap ex spending, and what is possibly a topping out of the stock market. We are not going to have a recession, but 1% growth is not out of the question. It is probably not a time to be a buyer right now, unless it is an unusual situation with special conditions for the longer term. Now is the time to be cautious, until the world is a more transparent place which will not be until possibly mid 2017.

Joel Ross

The only thing that is visible right now is the total lack of visibility. The election is as stark a contrast in politics as I have ever seen. The differences in potential policies on such things as regulations, banking, politically correct speech, defense spending, destruction of ISIS and terrorism, backing for police, school choice and the role of government are worlds apart.

We know Hillary means even more regulatory pressure on banks and business, higher taxes, Elizabeth Warren attacking corporations and anything financial, and a weak defense and foreign policy. With Trump we really do not know what to expect. It will need to take time if the campaign rhetoric translates into policies and actions. Right now it is anyone's election to lose, and I believe there are many more emails to be released by Wikileaks and the courts that will further prove Hillary has lied about almost everything and that there was much more massive pay-to-play than we know so far. Her latest comments on the “deplorable 50%” will have a major impact by showing how she really feels about mid America. With Trump's new campaign team, he really might pull it off. There is no way to know, and without knowing who wins, we have no way to even begin to forecast anything.

Just as Obama has made numerous policy decisions that negatively impacted business and the world, the next president will potentially have even more critical decisions to make. It is folly to predict 2017 and especially 2018. This is why corporations are not investing in long term assets right now. There is just no way to know if taxes will increase, if tariffs will be levied, or where infrastructure spending will end up. Just as important taxes will be very different depending on who wins and if the Republicans hold both houses.

It is also unknown where rates will be a year from now. The Fed is 100% sure to raise rates at some point soon. The issue is not the first 25 basis points, it is what's after that. Real estate values and the stock markets have been subsidized by the low rates and the dollar. Brexit will very likely turn out to be very good for the UK, with lower taxes, the top financial markets next to New York, and a solid economy run by a conservative government. It is Europe that will suffer, and the more successful the UK looks because of Brexit, the more the pressure builds inside the EU for other departures. This will be especially true as the refugee problems multiply and as more terror attacks occur. The right wing will continue to gain strength and in time will have real power in various countries. If there is a major terror attack inside Germany and it is a refugee that did it , Merkel loses the next election and the right gets real power, then everything in the EU changes in ways we cannot yet know.

Clearly the weakness of the whole EU system is not working well and as poor economics will continue to be a major issue. Those of you who raised funds and invested in Europe will find further disappointment in your asset values and returns. Exit will be a lot more difficult than you ever imagined. As the Fed raises rates and the EU does not, the currency issues will magnify. The rush into the EU by many PE funds will not have been a smart move. Staying in the US would have proven to be a far more profitable strategy.

Topping off all of this is the slowdown in data on factory orders, corporate profits, slower job growth, and little cap ex spending, and what is possibly a topping out of the stock market. We are not going to have a recession, but 1% growth is not out of the question. It is probably not a time to be a buyer right now, unless it is an unusual situation with special conditions for the longer term. Now is the time to be cautious, until the world is a more transparent place which will not be until possibly mid 2017.

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Joel Ross

Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.

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