[Liveblog] Opening General Session
Carl Gaines Jan. 14, 2013, 3:07 p.m.
[4:30 p.m.] We’re done! Thanks for following and check back tomorrow for liveblogs of additional panels–and follow us on Twitter at @commercial_nyo and @carlosville.
[4:26 p.m.] Question: How likely is it that rates will stay low not just through 2014, but for the next 5 years? Answer: Possible, he says. We could be patterning Japan. He thinks that there is a 20 percent probability.
[4:17 p.m.] Question: Situation with Spanish banks worse than originally thought? Answer: Clearly what’s happening in Spain is that everyone has agreed to not close down the weak banks, Mr. Malpass says. He thinks that the IMF is doing this wrong. There’s not a way to get them to say how bad off individual banks are because it drags them into an IMF program that they don’t want to be a part of.
[4:15 p.m.] If the Euro begins breaking up, the per capita income of the periphery goes way down.
[4:13 p.m.] Question: Demise of Euro? Answer: Not today, not right now. His views have evolved. He was more bullish in 2010, 2011. Unfortunately the markets let Greece and Spain borrow too much money but the overall concept of the Euro is strong. The problem now is that they’ve lost so much money that it’s hard to see how Germany will plow enough money into Greece to keep it afloat. More challenges to the Euro are ahead, though.
[4:12 p.m.] Question: Next sector to need a bailout. Answer: Life companies but some of the municipalities more likely. States will be made to bailout municipalities.
[4:10 p.m.] Question: If profits are going to start falling, how will corporations react? Answer: He thinks it’s a stagflation environment. Since we just went through a restructuring of corporate structuring in 2008, he doesn’t anticipate many layoffs. We have a pretty stable environment.
[4:00 p.m.] Taking questions now.
[3:58 p.m.] Is outlook is that Germany is recession now, turning to Europe. Not the end of the world, but just a negative growth, or growth slowdown.
[3:53 p.m.] Household debt falling, government debt rising–owes more than the entire household sector. This is all based upon Sept. 30, 2012 snapshot.
[3:50 p.m.] No default, not much risk to Treasuries. Watch for vote in House on who’s for more debt and how many Republicans vote for it versus how many Democrats.
[3:48 p.m.] Sequester real issue, not debt limit. Will financial markets use it as an opportunity to downgrade their growth outlooks? He thinks they will.
[3:47 p.m.] How the bank regulators loosen the strings on banking an important, key issue. Turning to fiscal policy.
[3:45 p.m.] Working capital loans, which are job creative, have been weak in the current environment. Weakening GDP growth environment and employment environment, so Fed likely to continue buying assets. Quantitative Easing, as seen in Japan, doesn’t work.
[3:40 p.m.] He thinks that the Fed’s policies have been contractionary. Private sector credit constrained by regulatory policy.
[3:39 p.m.] As people are looking for a recovery out of the U.S. based on housing, it’s “just not there,” Mr. Malpass says. Labor market still a drag.
[3:37 p.m.] Corporate tax reform in D.C. would be positive, but he doesn’t see that in the cards, especially with Loo’s appointment to Treasury.
[3:34 p.m.] We’re in an artificial environment. Mr. Malpass’ view is that we’re not at a tipping point. Slow growth likely, with pressure building in Europe and weak links around the world.
[3:33 p.m.] Mr. Malpass is at the podium. He’s going to speak about the “wild macro economic environment.” We’ll try to keep up!
[3:33 p.m.] David Malpass, president of Encima Global, is currently being introduced…
[3:28 p.m.] CREFC is successfully growing revenue. 2012 second year in a row that the group booked a profit. On the “fun” front, Mr. Renna says, there’s an added after hours reception.
[3:23 p.m.] CREFC is working to communicate what’s going on in Washington to its members, Mr. Renna says. This conference has already exceeded 1,300 attendees, and still counting. June conference is the 10th – 12th in New York City.
[3:17 p.m.] Mr. Renna says that the group has been attempting to broaden the CREFC membership. See my earlier post. 30 new members were added to CREFC rolls in 2012, he said. Thirty more added already in 2013.
[3:15 p.m.] Stephen Renna, CREFC CEO, has taken the podium. Says that conference has the best selection of topics and speakers, including David Malpass, president of Encima Global, who is up next.
[3:15 p.m.] Another potential negative: at some point rates have to go up. Rates have been held artificially low by some of the Fed action. Higher rates generally not good for CMBS.
[3:10 p.m.] Floating rate CMBS market is back as well. There are six active B piece buyers right now, with one or two others looking to get into the market, Mr. Vanderslice says. On negative side: the two-thirds of Dodd-Frank that haven’t been implemented, like risk retention, etc.
[3:10 p.m.] Mr. Vanderslice says that deals have been aggressive but not egregious. Investors are back.
[3:00 p.m.] So we’re here at the CRE Finance Council’s Opening General Session. CREFC President Paul Vanderslice says that standing at the podium this year is better than it was last year. Things have improved.