Joel Ross
Only three of 50 economists got it right this month on their UK economy predictions for the third quarter. GDP grew 0.5%, versus the average prediction of 0.3% The UK has grown 0.6% over the past 60 years, so last quarter was pretty good proof that Brexit has so far not impacted their economy. Economists continue to predict problems in housing and employment, but at the moment that has not shown up. While it might, and probably to some degree will for a bit next year, I continue to believe the UK will get through this with nowhere near the damage predicted by many. We will know a lot more by next summer but until then, it is just speculation by everyone.
Just yesterday the EU was able to pressure Belgium to force the one holdout province to go along with the Canada trade deal. We don't know what concessions were made to the dairy farmers who were holding up the whole deal, but the fact that some farmers in Belgium had the power to derail such an agreement for the whole EU just magnifies the dysfunction of the group. There are nine more contentious trade deals lined up for approval so we will see if they get approved without similar resistance by others. There seems to be a rapidly growing realization by many that the EU is in real trouble.
Investing in Europe now is full of real risk, and until we see 2017 play out with Brexit and these other issues along with pressure from Russia, it is not a place to put money unless you understand how at risk your money will be. Chances of a bad outcome are far in excess of a good outcome. Ignore all the noise by the banks and others about getting ready to move to Frankfurt, etc. Right now it is noise to try to get May to make concessions, which she probably will not do on immigration. We won't know what the negotiations will yield until late next year and there is no reason any bank is going to move before then. Otherwise they might suffer the massive disruption to their business if they move early only to find there was no reason to go.
It is pretty clear the financial world is on hold for now until November 8. The S&P started the year at 2042 and is now 2139, up around 4.7%. So with dividends the year has not been bad for stocks. Not great but not bad given all we have had to absorb. This can all change in two weeks if Donald Trump wins. Then the market might tank for a bit, but probably not for a long time. Jobless claims are very low and not much will change over the next few months, so the market is not likely to stay low for long. The bond market is already showing signs of a downturn, and it is still possible, but highly unlikely the Fed raises in November. It seems almost sure to raise 25 bips in December. Bonds will lose form here.
It is impossible to make real sense of the polls. Maybe Trump really is only 3% behind, or maybe he is really much more behind. No way to know right now. It seems very fluid. The more the e-mails come out with all the corruption proof, the more questions arise about the FBI investigation, the more muddled this becomes. The one certainty is if anyone other than Hillary Clinton were the candidate Trump would lose by 20%, and if Trump was not the candidate she would lose by 20%. Joe Biden must be kicking himself now. All I know is either will be terrible, and we are in a lot of mess for the next four years. If the polls from today are anywhere near right, then the Republicans probably hold the Senate and gridlock is assured.
Ted Cruz is already doing his usual disruptive stuff and saying he will not allow any Supreme Court justice from Hillary to be selected. This idiocy is what is so typical of Washington today. Elizabeth Warren demands the head of the SEC be fired instantly and Cruz does this stuff. If we could just unelect all of them and start fresh it would be really nice. Or maybe someone credible can start a new centrist party we can all join and take over Washington next election. One analyst thinks it is possible to end up in the House if the rogue candidate wins Utah. That would not be out of line with all the other insanity this election. His analysis made sense when broken down by a few key states like Ohio, Florida and North Carolina, depending on if Trump takes those. What a circus that would be.
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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.
