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Some reflections on the current situation:
1) The movie-theatre business may not make it. Obviously, social-distancing rules will impact attendance when they open back up. It's not just that, though. Two studios have already gone direct to consumer successfully. People's
1) The movie-theatre business may not make it. Obviously, social-distancing rules will impact attendance when they open back up. It's not just that, though. Two studios have already gone direct to consumer successfully. People's
TVs are getting bigger and better by the year. Streaming services offer up tremendous competition. Many industry players have heavy debt levels and expensive real estate. I LOVE going to the movies but, wow, the biz is in tough.
2) I think mask use in public should be mandated for the time being. Yes, we have to watch "regulation overreach," and, no, masks aren't a cure-all, but the data is making it clear that they make a significant difference. Frankly, my friends have wanted me to wear one for years.
3) "Experts" who argue there is no way we'll see negative interest rates in the US must have forgotten all the other "no ways" we've seen from the Fed in the last 12 years. I think negative rates would be a policy mistake, but I wouldn't bet against seeing them. The high US
dollar is already causing challenges and, without negative rates, other countries will find it easy to export their deflation to the US. Wow, are these crazy and tricky times. No easy answers.
4) You may not have understood the previous point, but the basic problem we face is more grade-three arithmetic than complex macroeconomics: There is way too much debt in the world. Way, way too much.
5) Crazy how many economists talk like the world of small-and-medium-sized businesses exists in a separate universe from the world of big business. Not true. They are very much connected. Many SMBs supply big biz. Many buy from big biz. ALL employ people (or did!) who buy from
big biz. If things get much worse for the SMB space there is no way it doesn't spill over big time to many large enterprises.
6) I'm amazed how quickly the work-from-home movement is picking up momentum. There will not be a sudden wholesale abandonment of office buildings but many/most companies will look for less space on renewal. Interestingly, the saved rental dollars are not the lead reason why
in most cases. A good percentage of employees (not ones with little kids at home, I'm sure) are reporting much higher productivity at home. And that's before they factor in saved commuting time. Many of us like the office, and that option will remain in some form for a variety
of reasons, but new days are coming. What about the need to socialize? To connect? To brainstorm? Well, we'll see play dates, field trips, shared spaces, group lunches, etc. Will be fun to watch evolve. Unless you're a landlord.
7) Many retail tenants have clauses in their leases that allow them to escape the lease or receive a discount if their mall's occupancy rate falls below a certain threshold. Uh oh. The retail-real-estate market is in big trouble. Lots of repurposing to come.
8) Being asked why we're not seeing more bankruptcies announced in the retail space. During these crazy times, it's often in the landlords' and lenders' best interest to not push too hard, to be flexible and creative. Everything from no new tenants-in-waiting to no ability to
have a physical liquidation sale to closed-down courts to...well, you get the idea.
9) I honestly like everyone I meet. And I always try to stay positive. But I have little interest in hanging around people who can't disagree with others without being rude, abrasive and condescending. Calm. Classy. Respectful. Polite. Better way to go. I know, what an idiot.
10) We will get through this. In fact, I think we'll be stronger in many ways. We'll feel closer. I really believe that. Not so close that I want you to drop over, though.
