Mall Vacancies Reach Six-Year High
Malls are the emptiest they’ve been since 2012, when the U.S. economy was still struggling to recover from the last recession.
The vacancy rate reached 8.6% in the second quarter, up from 8.4% in the first quarter, as more consumers shifted their shopping online, according to data from real-estate research firm Reis Inc. The highest postrecession vacancy was in the third quarter of 2011, when it hit 9.4%, Reis said.
The shopping slowdown is being felt in all types of brick-and-mortar retail outlets throughout the country. Vacancies in open-air shopping centers, for example, increased during the last quarter in 55 of the 77 metropolitan areas studied by Reis.
The impact is especially severe among strip malls and other neighborhood and community shopping centers, which suffered their worst quarter in nine years. About 3.8 million square feet of space was emptied from April to June, pushing the vacancy rate for this type of mall up to 10.2%, Reis said.
Soybeans Tumble Near 10-Year Low
Beijing said it plans to introduce tariffs on U.S. soybean imports starting Friday, part of a package of measures retaliating against the Trump administration’s own threatened duties against hundreds of billions of dollars worth of Chinese goods. Soybean buyers in China—the world’s largest consumer of oilseed, which gobbles up around a third of all the U.S.-grown crop—have sharply slowed their purchases in anticipation of the duties.
“That is the market,” said Jeff Kaprelian, a broker at advisory firm The Hueber Report. “There is nothing more important than Chinese demand.”
Record Defaults in China
China is zooming to a record year of corporate-bond defaults, with the 2018 total already more than three-quarters of the previous high even before an expected economic slowdown bites.
Chinese companies have reneged on about 16.5 billion yuan ($2.5 billion) of public bond payments so far this year, compared with the high of 20.7 billion yuan seen in all of 2016, according to data compiled by Bloomberg. Strains are set to get worse if the trends of credit-rating companies are anything to go by -- agencies including Dagong Global Rating Co. have been downgrading firms by an unprecedented margin.
With rising trade tensions with the U.S. threatening to hurt corporate cash flows, the temptation to shore up credit provision may rise. Data over the weekend showed that a gauge of export orders tumbled into contraction in June.
An escalation of the trade conflict could add to defaults in China’s financial system, said Jing Ulrich, JPMorgan Chase & Co.’s vice chairman for Asia Pacific. Consumer demand and the wider economy are likely to weaken and that “may translate into worse credit quality down the road,” she said in a Friday interview in Hong Kong.
Political Center Destroyed
President Trump will soon nominate his second Supreme Court justice. The first, Neil Gorsuch, has so perfectly replaced the late Antonin Scalia that it’s safe to assume retiring justice Anthony Kennedy’s successor will be in the same mold – which is to say formidable and unapologetically conservative. The result will be a solid conservative majority that’s more definite and less flexible on the issues where Kennedy was a swing vote. [Mish comment: Kennedy is best viewed as a centrist sometimes siding with the Left and sometimes right.]
Among the possible results of such a conservative judicial super-majority are the reversal of rulings that made abortion and gay marriage the laws of the land, making both state-level issues once again, where they’ll further polarize already-divided electorates.
Meanwhile, the Democrats are lurching waaayyy left. The implosion of the moderate Clinton wing of the party began during the past presidential election, when huge parts of the left openly supported socialist Bernie Sanders. This group now sees Elizabeth Warren – Bernie Sanders with a penchant for verbal street fighting – as the ideal candidate next time around. And despite a fairly consequential set of primary elections last Tuesday, pretty much all anyone is talking about is Alexandria Ocasio-Cortez, a latina “democratic socialist” who unseated a previously entrenched moderate incumbent and is now a lock to win a Bronx congressional seat in November – on a Sanders-esque platform of free everything for everyone and wide-open borders.
Each side is, as a result, finding it really easy to dehumanize the other. After Trump’s press secretary and family are evicted from a restaurant because the owner opposes Trump’s immigration policy, Democrat Senator Maxine Waters encourages liberals to make this a pattern by confronting White House officials in public whenever possible. Waters then gets death threats and responds “If you shoot at me, you better shoot straight.”
Marriage counselors say that when a couple view one another with contempt, it’s a top indicator that the relationship is likely to fail. Americans, who used to know how to disagree with one another without being mutually contemptuous, seem to be forgetting this. And the news media, which promote shrieking outrage in pursuit of ratings and page views, are making the problem worse.
Fights are increasing globally. Germany is a prime example. And look at the battles between Trump and literally everyone on trade.
Trade wars are hallmarks of deflationary times even if such battles lead to a temporary increase in inflation.
New Jersey Taxes
Two years ago, New Jersey’s richest resident – hedge fund billionaire David Tepper – decided to move himself and his business to Miami Beach.
Tepper, who personally earned more than $6 billion from 2012-2015, was tired of paying New Jersey’s top income-tax rate of 8.97% for the 20 years he lived there, in addition to the country’s highest property taxes, the estate tax and inheritance tax.
By moving to Florida, a state with ZERO income tax, Tepper stood to save hundreds of millions of dollars each year. And, as an added bonus, he’d be living in the Sunshine State.
Tepper’s departure left an enormous hole in its budget. Think about that: the departure of literally ONE person caused big problems for New Jersey’s budget. And Tepper wasn’t the only one leaving.
Now, what do you think New Jersey is doing to solve this problem?
Instead of making the state friendlier to productive people and businesses, New Jersey decided to RAISE taxes on the sad saps that remain within its borders (for now).
New Jersey tax residents making more than $5 million will now pay 10.75%, up from 8.97%. And the corporate rate on businesses with more than $1 million in net income increased from 9% to 11.5%.
The Left never learns.
Mike "Mish" Shedlock