The Siskind Law Firm- Neil Siskind, Esq.-Licensing, Distribution, Real Estate, Business Law

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Neil S. Siskind, Esq, pictured center, Holiday party, December 2016

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A Housing Slowdown May Not Be All Bad News- by NEIL SISKIND

Housing prices have been too high for too long. People bought low in 2011 and 2012, low interest rates have fueled speculation, and corporate buyers have entered the markets to rent out homes for income- depleting inventories for home-buyers.

Recent reports on housing starts are mixed- down 14% in the mid west, up 29% in the northeast … so, mixed.

The Fed has been raising interest rates. Most indicators seem to show that housing is slowing. Assuming this to be the case, it may not be the worst news.

If the Fed can coordinate a “slow” deflation of asset prices (housing and equities) that have been inflated by excess (or excessive) liquidity, while people are working, this could be an excellent result (i.e a soft landing). Moreover, as construction jobs slow, it will free-up the labor market for small businesses who need the kind of employees that have migrated to construction (i.e. laborers or blue collar) and mortgage and real estate brokering (sales and office administration workers).

So, housing may not result in a 2007-like popping of a bubble that takes down the entire economy and financial system- it may have a more muted, and even beneficial result, as it helps keep wage inflation low.

Of course, it’s not all good news. As housing prices go lower, so does household wealth and refinancing, which negatively affects consumer spending.

This is all separate from issues related to energy prices, trade disputes and tariffs, shadow banking, and the other affects of rising interest rates. When you take economic data and factors together, rather than individually, the picture, of course, can change. But, taking housing, alone, a slowdown, making homes more affordable as people are still working, while also alleviating pressures on wages as labor is freed-up from housing related businesses, is not the worst thing in the world- especially if the benefits of lower housing prices outweigh the negatives of higher costs of borrowing to buy a home- so that net, net, buyers can do a bit better as asset prices decline. At the same time, home owners who are not selling, will not really be negatively affected by the lower valuation (beyond their general personal net worth). Fairer, or more balanced prices for both buyers and sellers may mean a more active and healthy market- rather than no one being able to afford to buy a home because no one can afford to move because they can’t afford a different home.

If net, net, jobs are not lost, or are easily replaced, and there is no negative systemic affect on the financial system, then lower asset prices (houses and equities) can be a healthy outcome for all.

Lots Of “Bull” In The Bull Market- Let’s Look At What’s “Really” Growing- By NEIL SISKIND

BY NEIL S. SISKIND

Wall Street Bulls, including, analysts, CEOs, and asset managers from investment banks, continue to say that earnings and the stock market will grow into and throughout 2019, and into 2020, because the economy is getting stronger and is growing.

Really? The economy is growing?

Some of the bullishness is starting to sound … well … like bull.

What is it in the economy that is growing? The GDP? Consumer spending? Real wages? Home values? A positive trade balance? Earnings and guidance?

No. No. No. No No. And- we’ll see.

Let’s review the actual data we’ve seen in recent months to see if the economy really is “growing”:

  1. The most recent PPI print came in lower than expected.
  2. The most recent CPI print came in lower than expected.
  3. The most recent consumer spending prints came in lower than expected.
  4. The GDP is expected by all to be lower than in the second quarter. So, it’s growing- less and less. It’s expected to grow, less and less, in each quarter following Q2 of this year.
  5. Interest rates are rising on all ends of the curve.
  6. Housing is slowing. Home-building permits dropped in August by the most in seven years.
  7. The S&P Supercomposite Homebuilder Index just had its biggest annual drop since 2008.
  8. Non-defense capital goods orders excluding aircraft, which is considered a proxy for business investment, fell in August.
  9. Copper is in bear market territory.
  10. The breadth of equities that are rising is narrow.
  11. The EU announced it is weaker than expected (slower than expected growth in a major U.S. export market).
  12. China’s numbers are slowing- by its own hand and due to the new tariffs (slower than expected growth in, and a trade dispute with, a major U.S. export market).
  13. EM currencies and equities have been sinking (Turkey, Argentina, The Philippines, and others), with possible contagion risks.
  14. We receive data and earnings from public companies. But, earnings and stresses of private companies, often having less scale than their public counterparts, and which are, thus, more susceptible to input cost pressures, are, largely, unknown.

Here are the things that are “growing”:

  1. Consumer debt is growing. In May of this year, when the GDP hit 4.2% growth, consumer debt rose to a six month high. Overall consumer debt is now $618 billion higher than the previous peak of $12.68 trillion in the third quarter of 2008 (how’d things go after that?).
  2. Interest rates for businesses and on credit cards are growing.
  3. Mortgage rates for home buyers are growing.
  4. Corporate debt, and debt to cash ratios, are growing.
  5. The federal deficit and debt keep growing.
  6. Jobs with dead-end wages keep growing.
  7. The trade deficit is growing.
  8. Treasury sales to fund the federal deficit are growing.
  9. Energy prices are growing.
  10. Taxes (tariffs) on consumer goods are growing.
  11. Risks to China’s financial stability- and contagion risks to other Asian markets- may be growing.
  12. Investments in riskier corporate debt obligations are growing.
  13. Trade uncertainty and the effects on the economy are growing.
  14. Loans by unregulated “alternative” or “hard money” lenders to businesses and for real estate are growing. It’s estimated that 80% of mortgages today are from alternative (non-bank) lending sources.
  15. Large corporations taking all the available labor and leaving small businesses across America short-handed is growing.
  16. Large businesses scaling so large that small businesses can’t compete on price or on service and going out of business are growing.
  17. Economic inequality in America is growing.

Here are examples of Wall Street’s denials of realities that keep “growing”:

  1. Higher gasoline prices won’t matter to consumers until oil is $100.00 per barrel.
  2. The messages of the yield curve are different this time.
  3. Tariffs are not high enough to affect consumers or businesses.
  4. Oil prices are rising because of global economic strength.
  5. Earnings are all that matter (true- but, those earnings come from somewhere- from the real economy).
  6. We’re not in the late stages of a business cycle. It’s different this time. We extended the cycle.
  7. Because EM economies are so weak- America’s economy is very strong. (Really? Is this how it works?)
  8. The consumer will remain strong because of low unemployment. (Really? Wages, gasoline prices, credit card interest rates, tariffs, and debt don’t matter?)
  9. Wages are rising. (Real wages are not rising.)
  10. Interest rates are historically low, so the economy and stocks will stay vibrant. (Really? So, interest rates in 1985 control business planning today? What do rates in 1985 or 1997 matter to rates rising on the debt on corporate books today, or to business forecasts that are based on present yields? History is immaterial to business planning. Also, rising Treasury yields compress stock multiples, as rising yields for less-risky Treasuries may offer similar returns to what can be expected from risk assets under present and future conditions. So, it has nothing to do with history.)
  11. Fiscal policy is a tailwind going forward that will offset all other challenges, like monetary policy, stagnant wages, and tariffs.
  12. Companies will be able to pass-through rising input costs to consumers, because consumers have jobs.
  13. Job growth proves that the economy is growing. (Job growth is an element of the economy, but large companies taking on cheap labor, while small businesses can’t find people does not prove overall economic growth. Amazon and Home Depot grow, while small retailers across America close their doors.)

Are earnings “growing”?

Just be aware that earnings per share can be manipulated higher by companies repurchasing their shares or taking other measures to reduce their respective floats, making it look as if EPS has grown (Wall Street doesn’t like to talk about this too much). Share buybacks are at historical highs. Share buybacks can be good for shareholders (if such buybacks were the best uses of companies’ retained earnings and if no burdensome debt was incurred to make such buybacks) because they increase the values of the remaining shares. EPS has grown- but, this does not mean that the economy is strong, or even that that company has grown.

Even if revenues grow, remember that spending comes from income- as well as from debt. Consumers like to spend- but you also have to look at the debt they accumulate to achieve that spending and to cause those higher revenues.

Revenues of a business may show that consumers are spending, and such growth is not only by EPS growth due to share buybacks- it’s real growth. But, while sales revenues that come from debt is good for businesses (short term), it can be bad for consumers and the economy, and for everyone, in the long term (see 2007-2008).

The same goes for the GDP. GDP is a measure of spending, including by the government. The GDP can go higher and higher- it can grow and grow- the question is how much government debt-spending is in the number. Just ask China how this works. Ask the Soviet Union about its experience with this in the 1980’s. Or, just look at the Reagan-era deficits that had built up, leading to tax increases by Congress and the subsequent administration. Or, ask Greece.

In any event, with the PPI, the CPI, and consumer spending disappointments, and rising interest rates, tariffs, and higher gas and oil prices- let’s see how companies guide for future quarters. I expect that guidance, overall, will disappoint.

Semiconductor demand, or lack thereof, is a leading indicator for the economy- and memory chip demand is deteriorating.

Stocks’ sales-to-price ratios are at historical highs.

It’s rarely mentioned anymore that confidence surveys are often contrarian indicators.

Tight labor markets, rising energy prices, and a tightening Fed, all are markers of the late stages of a business cycle- so this tells us where we are in the cycle, and are signals not to be ignored. It can be argued that a low level of rising wages this late in the cycle would be less helpful to consumers than they would be damaging to businesses, as just another ding to margins- which could lead to layoffs. People have to realize that there is good inflation and bad inflation; and it’s not only the type of inflation it is that makes it good or bad- it’s also the timing of the inflation that matters. For example, wages rising early-on in a business cycle, as interest rates are low and as earnings and the GDP are growing, is a positive. Late in a cycle, wage inflation can do more harm than good, if, rather than being a demand side stimulus, it leads to layoffs as it accompanies other rising input costs and/or rising interest rates. (The cause of the inflation must also be understood. For example, increases in oil and gas prices can be due to economic growth, which, generally speaking, is good- or, price increases can be because of supply constraints, such as those due to sanctions or embargoes, which, at any point in a business cycle, is bad.)

The consumer and the S&P, which can track each other to a degree, have been strong this year- but interest rates were lower, gas prices were lower, and there were, relatively, few tariffs. All of that has changed.

And where is the trickle-down effect of the tax cuts? Analyses of capex investments are all over the map, but no significant capex has been proved- and certainly none that has led to higher real wages. Businesses certainly have invested in their own shares- but in the economy through capex? It’s not clear. Business investment is the most important element of GDP that we need to see grow right now- as opposed to more consumer and government spending on leverage. Trade disputes have no doubt hindered this endeavor for many companies.

Oil supply constraints due to sanctions on Iran at the same time as consumer product prices are likely to rise due to tariffs on Chinese products is too much for the economy to bear at a time when monetary policy is withdrawing liquidity from our economy and from the world through both target Fed funds rate hikes and quantitative tightening. Rising oil prices can be managed by an economy with low interest rates, an expanding GDP, and rising wages- but not with none of these. Oil prices and tariffs that are elevated due to policies will not alleviate with higher interest rates, as in a typical business and inflation cycle. Higher short term rates can collapse an economy experiencing rising consumer prices that are due to “non-growth” factors, by destroying demand, rather than steadily slowing the growth in prices to achieve price stability- because these aren’t demand issues.

We have been in a slow grind downward on the economic numbers, as challenged housing data, spending data, and political problems keep hitting the market. Stocks have been up-and-down, recently, while yields are on the rise all across the curve. China and the U.S.’s economic data have been slowing due to reductions in liquidity, per domestic policies, combined with trade concerns. Non-growth oriented inflation (tariffs and tight energy supplies due to sanctions) and higher interest rates are hitting world markets. Housing markets in China and the U.S. have slowed. Earnings and stocks have declined in China- and U.S equities are the Bulls’ last argument left to show anticipated economic growth. With all of the aforesaid, you’d have to be totally oblivious to economic matters to not see we are in the midst of an economic slowdown- solid growth in the S&P and FANG stocks this year, notwithstanding. That’s the past. Just as with the consumer- the headwinds are gathering, and the data show it.

I expect negative GDP growth to start (or, at the least, positive GDP growth to stop) during either the first quarter or the second quarter of 2019, unless there is a trade deal with China and significant capex- soon. Watch housing (because the Fed probably is), watch oil, watch for job cuts as input costs rise, watch consumer debt.

If we’re not going to see more growth at or near the same rate as heretofore, why has the 10-yr. Treasury yield been rising of late? The 10-yr. yield has, in fact, been climbing in the past week (something it has neglected to really do following earlier Fed hikes). Capital flows being re-directed from bonds into oil, energy stocks, and/or bank stocks and bank ETFs, as oil prices and interest rates rise, is more likely the reason (or much of the reason) for the rising yield than are any risk-on sentiments. These are, likely, inflation trades, rather than growth trades- perhaps compounded by concerns over increased Treasury offerings in the future, while the economy slows, combined with quantitative tightening. Investors may also be seeking equities of companies with pricing power that can benefit from, or at least shield themselves from rising prices. Finally, China’s holdings of 10-yr. Treasuries are shrinking. I would hesitate to conclude that rising yields are due to a wide belief in on-going organic earnings and economic growth in the U.S. or abroad. How can organic earnings rise while energy costs, labor costs, prices on consumer products from China, and the cost of money rise- all as consumer spending is in decline? Any inflation we are seeing in oil and interest rates and consumer products is U.S. policy-driven, and not demand-driven. It’s a distinction that makes all the difference- especially as the Fed raises rates.

It’s not demand-driven or growth-oriented inflation and higher interest rates that threaten the economy (i.e. typical inflation)- it’s rising political-oriented inflation (oil sanctions, tariffs) combined with rising rates, that will cause lessening of demand (and layoffs), or deflation. A sort-of stagflation (especially if the dollar weakens). (If these political-oriented inflation points reverse, or are effectively counteracted, my thesis of the timing of a slowdown or recession would be extended-out.)

If supply-constrain induced inflation (rather than growth-induced inflation), due to U.S. policy, is, in fact, the cause of curve steepening, the steepening should, eventually, reverse, due to demand destruction, or, in the case of oil, due to more supply coming online- or from risk-off re-asserting itself, moving investors from energy back to bonds (though, the movement from bonds to the energy sector by investors in order to protect against or benefit from policy-driven inflation is not what I would call risk-on). This said, the combination of quantitative tightening and growing Treasury auctions to fund the budget deficit could cause the curve to remain steep. This would be very bad news for the economy if rates on longer term obligations should remain elevated due to the deficit- rather than due to growth- when the economy needs them to decline, due to slowing.

To that latter point, how would the federal budget be funded if and when tax receipts to the government begin to decline? With interest rates so low, the Fed would have little room to help on the monetary side (which is probably why the Fed looks for any scintilla of inflation as a reason to raise rates). Certainly, fiscal stimulus has reached a high-water mark. We can’t keep selling bonds to fund the budget, and send longer term yields higher and higher. The budget has to be funded, largely, by tax income.

Such a scenario of tax receipts declining while the deficit keeps growing would leave only one option …

… Our tax rates would start growing.

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endnotes

  1. Fed Chairman Powell was asked today what he and the Fed are “buying” by raising interest rates. As usual, the Chairman refuses to even mention the word “housing” in his statements or Q&A sessions as a consideration of the Committee in raising the target funds rate- even as it’s perfectly clear to everyone how sensitive housing is to interest rates (he did address mortgage origination standards). For me, his silence on this topic has been deafening. I believe he’s been reticent to discuss anything even remotely related to a housing bubble for fear of causing panic.
  2. A few things to note about advice from people on “Wall Street” (analysts, CEOs, and asset managers from the large investment banks) to keep in mind as you evaluate markets and the economy:
  • They either didn’t see or didn’t warn us about the 2007 housing crisis (while some investment banks were selling housing-related securities short).
  • They touted a “global synchronized growth” story for months in 2017 and 2018 that never panned out- it’s been quite the opposite.
  • They spent the latter part of 2017 and early 2018 recommending emerging market stocks and bonds to everyone. Great call!
  • You never see calls from investment banks about shadow banking risks (even China had enough sense … and transparency … to try to acknowledge, address, and reel theirs in). The whole shadow banking issue is addressed only by “Wall Street” when brought up by others (such as by Bloomberg’s first class anchors), and gets glossed-over by many financial industry interviewees. The alternative lending/hard money lending risks percolate below the surface, along with other non-regulated, high-return debt investments.

In light of the above, when “Wall Street”, over and over, stresses a 2020 slowdown in the economy and stocks – you can be sure that investment funds and asset and portfolio managers will not be waiting until 2020 to do something about it. In 2019- not in 2020- they will be getting themselves and their clients out of the market or diversified into risk-off assets long before “you” are out. So, don’t wait until the so-called “professionals” call the slowdown and alert you about it on TV. It will be too late. Look at the CPI, the PPI, expected GDP, consumer spending, consumer debt, copper, the federal deficit, interest rate trajectories, housing permit applications, energy prices and their effect on businesses and consumers … the slowdown is upon us.

3. Any PPI, CPI, or PCE increases from here would result from tariffs (higher consumer product prices) and sanctions (higher product prices resulting from higher energy costs)- rather than from organic economic growth and demand.

 

NEIL S. SISKIND, ESQ., PRESIDENT
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
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The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

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To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
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Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

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– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

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The Flattening Yield Curve: It’s “Not” Different This Time- By NEIL SISKIND

Here is a link to a 2006 Ben Bernanke speech suggesting that a flat or inverted yield curve may “be different this time” Bernanke Yield Curve Speech. This speech could have been delivered yesterday. We’re in the exact same scenario- solid GDP growth, low inflation, and a flattening yield curve. Then-Chairman Bernanke makes the argument that a lower term premium due to strong demand for longer term obligations (accompanied by the government’s and lenders’/investors’ expectations of low inflation and low interest rates in the future), caused by factors besides lenders’/investors’ expectations of slowing growth or recession[1], may be the cause of the yield curve’s flattening (the 10-yr. Treasury bond rate falling, as the 2-yr. Treasury rate rises)- as opposed to strong demand for the 10-yr. bond due to lenders’ expectations of both low inflation and a slowdown or recession. He also suggested that a global savings glut may be putting downward pressure on yields and was an additional reason to not fear a flattening or inversion as indicators of a forthcoming recession.

Any “it’s different this time” line of commentary about the yield curve is concerning[2], and, at least with regard to inversion, has usually (or always) proved to be wrong. How did 2007 turn-out, subsequent to this Bernanke speech? This economy is shaping up to be much like the 2005-2007 economy.

A business (and inflation) cycle is supposed to be: Demand growth from low interest rates, then job growth, then wage growth, then more demand growth, then prices rise, then interest rates rise and things cool down; and “not”: Liquidity rises, asset speculation rises, big companies use cheap money to get larger and larger and steal all the market share in their respective categories and put small businesses out of business- and kill the Phillips curve by controlling labor markets, wages stay stagnant (for consumers, who make up about 70% of GDP), gas prices rise because of the sheer volume of people working (with stagnant wages), houses become unaffordable due to excessive liquidity (including due to investors buying homes to rent out), debt grows because wages are stagnant, interest rates rise, even with little or no wage inflation (largely, to control asset bubbles), to exacerbate the problem, layoffs begin, due to oil and interest rates hitting businesses’s margins (with no ability by businesses to pass-through the costs to consumers, because of their stagnant wages), asset values drop, due to consumer debt overload, and the economy enters a deep recession or a near-depression requiring a government bailout. This latter scenario was what led-up to 2007 and 2008- results that could be repeated in 2019[3] (significant capex could push this out- though capex will most likely be used for buying and developing software programs and technologies that create and increase automation of internal business processes and the delivery of consumer services, and reduce needs for human labor).[4]

We actually have had significant inflation for quite some time. Home prices are out of joint in relation to incomes and affordability- just as in 2005-2007. This is exactly the danger of inflation to a society- basic necessities, like shelter, becoming too costly. The yield curve may be speaking to this[5]. Investors may believe that “it is exactly the same” this time.

Fed governors recently saying that U.S. bonds are now safe havens for foreign (and domestic) capital as emerging market (EM) volatility runs its course, and, therefore, the flattening curve is “different this time” is perplexing[3]. Of course U.S. bonds are safe havens- that’s the point of bonds. The fleeing to them reflects investor sentiment about growth and inflation, and affects the curve. How is that any different than any other reason to buy bonds (beyond portfolio diversification)? The whole world is concerned about the whole world- so they buy U.S. bonds. It’s a signal. Otherwise foreign (and domestic) capital would go into U.S. stocks, rather than bonds and the dollar. Despite quantitative tightening and ever-increasing Treasury auctions- the curve is still flattening. Think about that. That is a lot of risk-off investment. That is a lot of fear. Fed governors should be cautious about dismissing this situation as merely transitory- or as irrelevant to the domestic economy. It’s a reflection of commercial and non-commercial investors’ sentiments about their own respective economies- which may be U.S. export customers. It also, of course, reflects investors’ expectations and fears about the U.S. economy, itself, and confidence that yields likely won’t significantly rise. Moreover, if the yield curve (or yield curves) inverts, for any reason, credit markets can seize-up. Finally, if international capital flows are, primarily, into shorter term Treasuries, then concerns by overseas investors about EM volatility would not be the cause of curve-flattening.

Keep the following facts and data points in mind when assessing the shape of today’s curve:

  • The unemployment rate in October, 2006, was 4.4%- so, not much higher than today. Interest rates were rising, debt was accumulating, gas prices were elevated, housing prices were high, most inflation indicators were tame, wages were stagnant, the yield curve was flat, and analysts saw no end to growth in sight. Sound familiar? (And there was no trade war, as we have today.)
  • Some days, the S&P is up only because oil and gas prices (i.e. energy stocks) are higher. Good for investors- bad for consumers.
  • Real wage growth is lower when you factor in other inflation.
  • Company earnings we see are for public companies. What about private businesses? What about their earnings? Home Depot and Amazon grow- while independent (and even chain) hardware stores and book stores across America close.
  • Emerging markets are experiencing economic weakness and growing currency crises.
  • Tariffs may lead to higher prices for consumers, while wages are stagnant and interest rates are rising.
  • Global trade is slowing.
  • Housing affordability in America is at its worst in nearly a decade.
  • As housing slows, or crashes, from rising rates meeting stagnant wages, it, necessarily, means that construction jobs will decline.
  • The worse single day point drop in Dow Jones Industrial Average history was this year- February 5, 2018. (It’s noteworthy, I think, that I published my article “The Yield Curve Speaketh: Why Stocks Might Crash In Early 2018” less than 60 days earlier.)
  • 2018 second quarter GDP grew by 4.2%- but U.S. consumer debt rose in May, 2018, by the most in six months. Of course, the national debt keeps growing, too. Spending is easy- paying the bill is harder.

______________________

fn

  1. In Bernanke’s 2006 speech, he discussed that more stable inflation, better-anchored inflation expectations, lower economic volatility, and a variety of other potential culprits that do not include investors’ expectations of slowing or negative economic growth, may be responsible for demand for longer term securities and the lower term premium that could be the reason for the flattening curve- an argument that is being reiterated- or recycled- by Fed Chairman Powell, some Federal Reserve governors, Goldman Sachs, and some analysts and portfolio managers, today.
  2. To suggest that curve flattening or inversion is an effect of a term premium that is reduced due to strong investor demand based on anything other than expectations of slow or negative growth (such as only being based on the government’s and investors’ better-anchored-inflation expectations, reduction in economic volatility, or pension fund needs) and, therefore, not predictive of recession, may be risky. In any event, studies show that if certain curves invert (the 10-yr.-3-month or the 10-yr.-2yr.), it is predictive of recession no matter what the cause of the lower term premium (most likely because an inversion, for any reason, impedes banks extending credit). Likewise goes for any dismissal of an inversion as being due to a global savings glut or a decline in the natural interest rate; such alternative explanations are fraught with perils if investors are, in fact, buying bonds with the expectations or fears of slowing growth, and policy fails to acknowledge and address such.
  3. A flattening or flat yield curve (as opposed to an inverted curve) does not, necessarily, portend recession. But, it is the overall and totality of circumstances (high corporate debt levels, a rising target Fed funds rate, rising consumer debt, elevated asset and gas prices, stagnant wages, lower than expected CPI, PPI, and consumer spending, and a growing national debt, etc.), and the similarities of today’s economy to the 2005-2007 period, that make a flattening curve feel like a precursor to an inversion, and, ultimately, recession (of equal magnitude to the one that began in 2007 and 2008). But, without an actual inversion, the historical value of inversions foreboding or causing recessions would, obviously, not apply. Mere flattening of an applicable curve, or an actually flat curve, is not enough for the predictive or causative nature of inversions to apply. In such a scenario, any steepening of the 10-yr.-3-month or the 10-yr.-2-yr. yield curves from here without ever having inverted, and any future economic growth, would not be haunted by a recession having been previously signaled (at least as far as the yield curves go).
  4. A flattening or flat curve is hardly a guaranty of recession in a year. An inverted curve may not even indicate a recession in anything less than 12 months. But, a recession need not be presaged by an inverted yield curve (though it most always is). Many problematic cyclical and/or structural problems, or a significant political or financial crisis, or exponentially growing Treasury sales on the longer ends of the curve to fund the growing national debt and deficit (which could affect the term premium) in the face of a slowing economy and declining GDP, could lead to recession without a preceding curve inversion.
  5. Commercial and non-commercial investors have no dearth of reasons to be moving capital into the U.S. bond market, especially where U.S. inflation is tame, including excessive housing prices in the U.S. as interest rates rise and wages stagnate, EM weakness and challenges to growth due to Fed tightening and tariffs, risks to EM lenders and to EM investors from such conditions, and the risk of contagion to the U.S. economy.

________________

endnote

To determine (or speculate on) the reason for the shape of a yield curve (or for the change of the shape of a yield curve), one must first determine the cause of the shape (or the cause for the change of the shape) of that curve. For example, in the case of an inversion, in order to determine the reason for the inversion, one would need to know if the inversion is caused by Fed rate hikes or, rather, due to excessive buying of the 10-yr. bond- or by both.

________________

 

Here’s a little poem I wrote:

If the the 10-yr.-3-month curve inverts,
or if the 10-yr.-2yr. curve inverts,
patient shorts will prove the warts-
and longs will lose their shirts.

 

About the Writer

Neil Siskind is: President of The Siskind Law Firm, focused on product investments, trademark licensing, product distribution, and real estate; Founder & Chairman of The Fatherhood Assignment™, a think tank and advocate for children with absentee fathers; Founder of the global charity marketing initiative, Caring is Free®; Founder of National Fatherhood Day™; Owner & Conservator of The Neil S. Siskind Nature Preserve, over 8 acres of conserved waterfront land along New York’s majestic Hudson River; and author of The Complete Guide To The Ways To Manufacture & Sell Your Products.On December 11, 2017, in his article The Yield Curve Speaketh: Why Stocks Might Crash in Early 2018, Neil Siskind successfully predicted the February, 2018 stock market crash, the largest single-day point drop in the Dow Jones Industrial Average’s history. If you are in need of office space in South Florida, contact Neil Siskind about space availability at The Siskind Executive Office Complex in Boca Raton, FL.

Other Recent Articles by Neil S. Siskind:

Oh, No. Is This The Future For Our Communities?- By NEIL SISKIND

As consumers do more of their shopping online, including for large items such as furniture, warehouse space is tight. New warehouse space is getting occupied as soon as its completed. The industrial availability rate has fallen for a record 2 consecutive quarters. We’re seeing a blur in the lines between retail and warehouse space as companies sell and warehouse and deliver orders from one location, making large industrial space necessary for businesses that, previously, only needed a storefront, which was kept filled with product to sell locally. Now, every retailer sells worldwide and has to be ready to do so. Of course, the largest retailers are always ready to do so and need more and more space for that purpose, including to warehouse items on the proverbial “last mile”.

Retail-space vacancies across Americas have been surging for years. Many storefronts across America, in rural, suburban, and even urban markets sit empty- and ugly. They are blights on our communities.

Owners of retail properties have been trying new strategies and ideas to make retail more appealing to shoppers.

With the surge in the need for warehouse and fulfillment space close to consumers and highly populated areas, will retail landlords seek to capitalize on this need for warehouse space and fulfillment centers by turning storefronts and strip centers into warehouses? Will all or much of the excess retail space become industrial space? Will our strip malls be turned into warehouses and shipping centers, and pickup and drop off facilities?

All this empty retail space has to be used. It will have to be re-purposed in some way- either as condos or as warehouses- as office and retail space needs dwindle- and as affordable housing and warehousing needs grow.

Will we all soon be living within a couple of miles, or within a couple of blocks from industrial parks?

 

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

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Typical Wall Street Arrogance … Or Ignorance? – By NEIL SISKIND

As bond yields flatten and stocks stagnate or decline, Wall Street analysts talk about economic growth, global synchronized growth, and earnings strength. The only problem is- no investor on earth agrees- if you use the yield curve as a measure.

They blame our flattening yield curve on low yields in DM (Europe, Japan) and EM (Asia and others markets), making our bonds more attractive. Ok … so? Those low yields show economic risk and the expectations of low growth in those markets- people (or their respective governments) are now buying their bonds instead of their equities- risk off- providing low yields. Their respective central banks are afraid to normalize on any end of their respective curves, and, instead, maintain low rates and resist reversing any QE. That makes U.S. bonds more attractive as risk-off and defensive safe havens as the world slows. So why the double talk- as if the general public can’t understand (well … it can’t)? Our bonds are not rising just because of comparative yields, they are rising because of investor concerns that “cause” those comparatively low yields (meaning that those those governments won’t raise rates- also one of the reasons the Dollar is so strong).

Never listen to Wall Street analysts – they will make you go broke. Either they are lying so that people don’t leave the markets- or they just don’t understand finance and economics. It’s worse than listening to advice from Jim Cramer (well … not really).

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
The Complete Guide To The Ways To Manufacture & Sell Your Products

Donald Trump And The Art Of The N. Korea Real Estate Deal- By NEIL SISKIND

President Trump has been concerned about China’s policies and economic activities and their affects on our economic interests for many years. Since being inaugurated as President, President Trump has had a target on China due to its growing economic, political, and technological powers, and its trade and currency activities, all to the detriment, or possible detriment, or potential detriment, of the United States. China is a major competitor to the United States, and, for the Trump administration, a major long-term threat to the United States’ position as the world’s foremost superpower.

The interaction and negotiations with North Korea is all about China. Just like Iraq in the Middle East, North Korea is a location where the United States wants a foothold (if not a stronghold) that provides us the proximity with which to monitor a threat to our security; in this case, China. Location, location, location. If Korea was in the Caribean, do you think the President

People are wondering why President Trump is being lenient, and amicable, with and towards North Korea. It’s because the Trump administration, in my own estimation, has decided that we need influence in and over North Korea, as leverage over China. President Trump’s showdown with Kim Jong-un has never been, primarily, about nuclear weapons. I think that for the President and his administration, this has always been about China, first and foremost, (just a few days after the Summit with North Korea in Singapore, with the confidence of what President Trump claimed was a success in developing a relationship and a soft agreement with North Korea, and, with the confidence of such, the President signed-off on billions of dollars in tariffs on China’s exports to the U.S.).  I don’t think that President Trump is up all night fretting about North Korea’s nuclear program. But, I do think that he is up all night worried about China’s growing power in the world and it challenge to U.S. dominance and security and stability.

The urgency and willingness with North Korea is all about proximity and location. Can you imagine the U.S. having a major threat to its economic and military ambitions right on our own border? We have Mexico on our border, and look how that drives the President up the wall (or, to build a wall, as it were). This is about valuable real estate.

If you’re not thinking that President Trump’s ambitions in North Korea are all about his ambitions in China … then you’re not thinking. The moment the Singapore Summit ended, Trump went right to work on China.

President Trump has been using U.S. strength and the demand for “denuclearization”, or else”, as leverage to get control over North Korea because of its strategic location from where the United States can better monitor China (and Russia), without an intervening unfriendly nuclear threat (such as having N. Korea as an intervening power between our friend, South Korea, and China). To the degree that it is about nuclear weapons, it is as much about keeping those weapons, and North Korea, out of China’s reach and control. North Korea offers the United States prime real estate due to its shared border and direct geographic link with China. Location, location, location. Likewise, Kim Jong-un’s use of nuclear weapons is a red herring to get something he wants from the United States- money.

Yes, folks … as shocking as it is- this is all about money and power.

President Trump has succeeded in getting a mad dictator into a dialogue with an enemy nation across the world (us)- as opposed to with its own neighbors. How could the U.S. have done this without the threat of war? It could not have. President Trump found the leverage to handle an impossible scenario and get an enemy to the bargaining table without really giving him anything that can’t be reversed.

For some reason, many in the press think that President Trump achieved and accomplished nothing in his meeting with Kim Jong-un. For the press, everything should happen in public so they can write a story, or else there is some sort of failure. The press wants a headline: “President Trump Signs Historic Deal In a Day” or “President Trump Fails In Singapore”. But, you can’t have a business deal or a political deal without a relationship on which such is predicated.

If I can play armchair psychologist for a moment, I think that President Trump is able to relate to Kim Jong-Un because he identifies with him. First, they are both rebels who operate outside of “the system”, outside of acceptable norms, and value great individual power through charisma and force of will. It is the same reason that Trump identifies with Vladimir Putin. He respects that modus operandi. But, with Jong-un, it goes even deeper. Trump identifies with a young man, who, like Trump, inherited a great empire from his father and grandfather, and commenced on a propaganda and marketing program to establish his own individual career and brand and identity, and to establish himself as a power separate from, and perhaps, greater than, his father. Further, Kim Jong-un, Like Trump, has engaged in building beautiful buildings throughout Pyongyang to establish and prove his strength and power; and, he’s gone into a lot of debt and financial turmoil doing that, and is now reaching-out for financial help … just like Trump did with his father when Trump Taj Majal was crumbling, and his debt burden was growing. Trump and Jong-un may have had similar, privileged childhoods, with constant demands and/or challenges to be their own men. They both lob bombs and take risky actions first, and ask questions later, which is typical of highly-privileged children with senses of entitlement. They use their inherited resources to control things. Trump and Jong-un would not be the first people to bond over the pressures of difficult and controlling and highly accomplished fathers. So, Trump’s implied message to Jong-un may be, “Trust me. I get it. I understand”.

But, maybe the news media doesn’t understand.

Perhaps the news media wanted the President to meet with Jong-un and lead the dialogue with a Godfather-like “offer he couldn’t refuse” so that the press could further its characterization of the President as a global antagonist and practicing isolationist.

President Trump negotiated and executed the meeting in Singapore with excellence. He can hardly explain his negotiation strategy or ultimate plan to the press, while, or before, executing upon it. He literally explained to the world during his Presidential campaign that he would not be warning his enemies that, and how, he was coming at them. So, what’s the surprise? President Trump has succeeded in his clear and vital objective of commencing a potentially productive dialogue with a mortal enemy that can provide us with a way to help keep China in check with U.S. access to North Korea’s strategically located real estate adjacent to China. Location, location, location.

Ultimately, we may likely have an Iran nuclear deal type of agreement, where we, the United States, pay North Korea a great deal of money for nuclear disarmament- and access to the closed-off nation. I, frankly, wouldn’t be shocked if North Korea gets to keep some of its nukes or nuclear development capabilities in exchange for a U.S. military base on the land or just off the coast of North Korea so that we can be in arms reach (proverbially and militarily) of China and Russia. Location, location, location. The more money we give to North Korea, the more access and control we will have over China’s next-door neighbor.

I’m confident that North Korea’s commercial potential as a location for real estate, hotel, and casino development so close to China and Russia, and all that Chinese and Russian money, with the United States getting the first-crack at such development opportunities (with debt or equity) has not been lost on Donald Trump- if not for his own benefit, then for future Trump generations, or, at least, for American developers and operators, in general. Trump knows that China and emerging Asia are the fastest growth markets in the world. He wants to fight … and he wants to join it.

For Donald, Trump, it’s a real estate deal, and it goes like this:

“We want access to and use of your land, with a restrictive covenant that you can’t build or maintain nuclear weapons. How much will this cost?”.

Successfully achieving access, and, possibly, someday, use and development of land directly connected to China, in exchange for payments to North Korea- a permanent land use or development option, if you will- would certainly be Donald Trump’s best real estate deal, yet.

 

Neil S. Siskind, Esq., President
The Siskind Law Firm
Tel: 646.530.0006

Neil Siskind is the Founder & Chairman of The Fatherhood Assignment
Neil-Siskind-photo
Learn more at:  http://www.neil-siskind-the-fatherhood-assignment.org/

Neil Siskind is the Conservator of the Neil S. Siskind Nature Preserve
Neil-Siskind-Picture

The Neil S. Siskind Nature Preserve is over 7 acres of environmentally-pristine waterfront land in a magnificent setting along New York’s majestic Hudson River. The Preserve includes a variety of species of animal and plant life, and is a precious example of the thoughtful maintenance of New York’s priceless open spaces. The land’s uses are limited to outdoor recreation such as hiking and climbing, and the study of ecology, nature and land use. The Neil S. Siskind Nature Preserve allows for the intelligent contemplation of our valuable natural resources and the most effective ways to maximize them and keep them protected.

Neil Siskind, Founder, “National Fatherhood Day” – March 29th

Neil-Siskind-pics
To encourage recognition of the needs of boys and girls who are living without fathers or father-figures in their lives.

Read about the non-profits and charities whose missions Neil Siskind supports and promotes: www.neilsiskindsupports.com
Caring is Free®

You can read what clients and associates say about Neil Siskind at: http://siskindlawfirm.com/neil-siskind-bio/.

Neil Siskind’s Volunteer Work:

– Memorial Sloan Kettering Cancer Center, Volunteer

– Memorial Sloan Kettering Cancer Center, My Fundraiser- Help Neil Siskindhelp children with cancer to be more comfortable: http://mskcc.convio.net/site/TR?px=3182108&fr_id=2632&pg=personal

– Make-A Wish Foundation- Help Neil Siskind make sick children’s wishes come true by creating your own fundraiser: Neil-Siskind/Help-Make-A-Child-Smile.htm

– DonorsChoose.org- Donate to one of my needy public classrooms: http://www.donorschoose.org/NeilSiskindGiving

– Champion Children– We seek to inspire people through stories of children who have overcome challenges: http://siskindlawfirm.com/neil-siskind-champion-children/


Neil Siskind’s Pro Bono
 Work:

– Saving Senior Citizens- Protecting New York’s senior citizens from fraud and financial abuse www.savingseniorcitizens.com

– Senior FreeStart Business– Pro Bono: We seek to help put senior citizens in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– Veteran FreeStart Business– Pro Bono: We seek to help put Iraq and Afghanistan war veterans in the right direction so that they can face the challenges of the modern economy: http://siskindlawfirm.com/free-start-business/

– In development: The Neil S. Siskind School of Hope: A free school to teach inner-city youths the skills of entrepreneurship and importance of economic self-sufficiency.

Neil Siskind’s Government Work:

– Suffolk County District Attorney’s Office, Boston, MA, 1994, Intern
– Office of Senator Christopher J. Dodd, Newington, CT, 1992, Intern
– Hartford County Department of Probation, Hartford, CT, 1991, Intern

Neil Siskind’s Community Assistance:

Financed & operated a legal clinic providing low-cost legal services to struggling Long Islanders during the recession to help clients resolve debt, organize finances, and launch new businesses.

Neil Siskind’s Professional Curriculum Vitae: http://neilsiskind.com/

Sponsored Advertisements

Inventors, IP Owners, Manufacturers
Learn How To Bring Products To Market And To Expand Your Distribution Channels
The Complete Guide To The Ways To Manufacture & Sell Your Products

 

 

LeBron James: Where Will “Cavalier King James” Go Next?- By NEIL SISKIND

Now that the Houston Rockets have shown that they, too, are vulnerable to the Golden State Warrior dynasty, they need a plan. Plan A would be to be sure that Chris Paul stays healthy. But, of course, that is impossible to plan. Plan B is to have an alternative option to Chris Paul on the court with James Harden in the event that Paul is injured, or resting, or having a bad night. Also hard to do, based on Paul’s excellence. Unless, of course, Plan B is Cavalier King, “LeBron James”.

Why would LeBron want to go to the Rockets?

Why would he not?

LeBron has to look at the next two years of his career as ones where he “MUST” win. He is 32 years of age. By 34, he will begin to decline. Perhaps, it will be more like 35 or 36- who knows? He must make a successful and correct career move “now” to enhance his legacy and prospects of winning more championships before he is too old to dictate his own terms with regard to money, teammates, and cities. He needs to get as close as he can get to a sure thing.

Cleveland is not an option- which is unfortunate, because “ideally”, a superstar plays in only one or two places during his career. But, that does not always happen. Moreover, LeBron actually left Cleveland and went back. So, to leave again, does not look great.

But, Cleveland and the NBA are leaving LeBron with no choice.

The age of the “superteam”, which, arguably, was started by LeBron James with his move to Miami to play side by side with Duane Wade and Chris Bosh, is forcing LeBron to join or create a new superteam. Superteams have existed all throughout NBA history. But many of them were organically created, rather than contrived by moving numerous pieces into one location.

The Warriors are unbeatable. If Kevin Durant had not joined Golden State, they would be beatable. They could be beaten by the Rockets and by the Cavaliers, and Golden State knew it (at least with regard to the Cavaliers; Chris Paul was not yet on Houston at the time of the Durant trade). The Warriors players saw that writing on the wall, and successfully lured Durant to the team- which has resulted in great success- and two championships.

What are LeBron’s options if he wants one or two more “chips”?:

Stay in Cleveland with his team composed as-is?

No.

Stay in Cleveland and hope to win with Kevin Love, J.R. Smith, Kyle Korver, and whomever he can bring to the team, such as Paul George?

No.

Go to another team with young players who have great potential, like the Lakers or the 76ers, and bring along Paul George and Kawhi Leonard to create a new superteam?

Maybe.

Go to the Houston Rockets, which needs one more element (and is the only team that can say such) to assure that they can and will defeat the Warriors (as they would have done this year with a healthy Chris Paul), and help a team that has world-class 3-point shooters, world-class point guards, young players, great defense, a great record, and a very successful playoff season, but is still in need of that final piece on the offensive and defensive sides of the ball to “guarantee” success?

Of course.

The Rockets are on fire and the state of Texas is on fire. Texas is a bigger and sexier market these days than even California- and we know LeBron will not go to the Knicks or the Nets or the Celtics. (There is a very small possibility that the other Texas team, the San Antonio Spurs, along with Leonard and George, is also on LeBron’s short list, and that would be because Leonard is already there, and, of course, because of Pop.)

LeBron would not be “selling-out” by going to the Rockets. The Warriors, with all their fire power and success, still recruited Kevin Durant. As for Durant, he went with the winners who were already winning- and made them even bigger winners. That’s life. That’s business. And that’s basketball. In the case of the Rockets, unlike with Durant and the Warriors, they haven’t even won, yet. Moreover, LeBron went to the Cavaliers, among other reasons, to play with Kyrie Irving, who, abruptly, left Cleveland and LeBron without fair or sufficient warning. According to LeBron, he asked Cleveland’s management to refrain from making the Irving trade.

Houston, Texas with the Houston Rockets …why would Cavalier King James take his talents anywhere else?

 

Sports writers: If you’re going to use my Cavalier King James moniker for LeBron, please have the decency to credit me.

Apple, Like Facebook, Following Snapchat’s Leads- by NEIL SISKIND

Facebook notoriously copies all of Snapchat’s features.

Now, Apple is focusing on multi-person face-time chats, advanced AR features, and AR enabled eyewear- all features and products offered by Snapchat for some time now.

Snapchat continues to be the leader in innovation, has been light-years ahead of Facebook and Apple for years, and will, eventually, get its due- in the form of a higher stock price, or by being acquired.