PPCC: Pisitófilos Creditófagos. Verano 2024

[sudden and sharp]

[...]
Posedición:

«Milei cancela su reunión con Scholz tras censurar el Gobierno alemán sus insultos contra Sánchez. No habrá ni bilateral ni rueda de prensa conjunta ni Milei será recibido con honores militares. Sólo habrá una 'breve visita de trabajo' en Berlín. El cambio en la agenda se produce dos días después de que el portavoz principal del Gobierno alemán, Steffen Hebestreit, calificara de 'falta de gusto' y 'desagradables' los comentarios de Milei sobre el presidente del Gobierno de España, Pedro Sánchez, a quien calificó de 'calaña de gente atornillada al poder', y a la mujer de este, Begoña Gómez, a la que se refirió como 'corrupta'. Desde el Gobierno argentino, el portavoz presidencial Manuel Adorni se ha militado a decir sobre esta suspensión de agenda que desde el principio la reunión entre Milei y Scholz sería 'una reunión que no revestía carácter bilateral', extremo que niega Alemania».

Es mala idea que el PP le quite Milei a Vox. A Milei no le traga el propietariado español de base. Es cosa solo de superasalariados. Este es el momento de hacerle a Feijóo un Trump o un Le Pen, antes de que avance el proceso penal-fecal, es decir, antes de que el PP tenga la oportunidad de defenestrar a la defenestradora.

Esta vez no merece la pena estar al frente del Gobierno de España. Es demasiado malo lo que viene.


Posedición 2:

Es imposible que, dada la situación procesal-penal-fecal de La Frugívora & Cía., la decisión de condecorar al angloide rarito haya sido por su sola cuenta y riesgo. La Sra. Ayuso, buena incomodahombres, no es ningún verso suelto. Está amparada por la jefatura nacional del PP, que querría apropiarse o participar del halo de Milei, que simboliza la supuesta solución 'de mercado' al desmadre en que se ha convertido el tardopopularcapitalismo. ¡Craso error! Ha brindado al PSOE la maravillosa baza de instalar en el inconsciente colectivo que Milei está 'entre las sábanas', metáfora de este, de la liberalísima cama de La Chelito, una lumbreras que la usa con quien le da la gana, como dice ella. Milei, en España, ya no es solo un ultraderechista filo-Vox, pro-Lubavitch y pro-Zelenski. Ahora es, además, «la» prueba de que PP ha enloquecido. El PSOE solo ha tenido que hacer una llamada telefónica en alemán para contragolpear eficacísimamente. El PP está dirigido por idiotas dostoyevskianos. El popularcapitalismo es más devastador en la derecha política que en las izquierdas políticas. El actual PSOE impresiona por lo buenísimo que es, a diferencia de la época del paleto hortera del Sr. González. El cuerpo nos pide que le ceda el Hostión a Feijóo-Ayuso, para, luego, gozar él de las dos primeras legislaturas fundacionales del nuevo modelo desinmobiliarizado. El problema es que el Hostión es tan inminente que, mejor aguantar y estar ahí, al menos, en los primeros dos años tras las suelta del capitalismo planificado.

Bueno... podría ser... que tampoco --tanto da, o daría--; pero ésa no es la cuestión.


Lo pongo otra vez, que parece no haber calado. (Ni fosas, ni fetos, ni anos. Ni dineros, vaya.)











República in-de-pen-dien-te, je, je; de Madrí.*  [ Ésa es la cuestión.  ]








--------
  *) Madrí, en sentido hamplio. **
**) Por las risas, es clar.   












[ ... ¡y viva la república! ]

[senslev]

Nq100 contado rondando los 20000, casi doblando desde los mínimos de 2022. Los futuros en 20300.

El Sp500 contado 5500.

El Dow Jones contado 40000.

A ver qué hace el Russel2000.

[sudden and sharp]

Nihil novum sub sole... 

[asustadísimos]

[Me estremece la imagen de Belfegor, disfrazada de roja, procesionando delante de San Antonio de La Florida (frescos de Goya), un servidor, fanático de El Rastro (y de Goya). Aún no sé que tratamiento dar a esta magnífica imagen. Desde luego es importantísima. Quiero decir que yo no quiero que caiga la impresentable porque su sola presencia nos recuerda la urgencia de la sanación estructural.]



P. S.: Belfegor = Dirac = Nihil novum sub sole, je, je.

[sudden and sharp]

Pues la cosa no ha hecho más que empezar...









... es lo que hay. 

[JENOFONTE10]

- mucho vocabulario sobre "conexiones sospechosas" y de sombras políticas, pero sin decir nada realmente (JENOFONTE, después de lo marcado en negrita, el artículo dice esto: Del activista digital no hay aparentes nexos con el sector").

La negrita la he puesto yo.

He leído el artículo entero, incluyendo las conexiones dominicanas y el negocio de placas fotovoltaicas para tejados de chaletes.

En análisis sectorial de empresas, distinguíamos entre integración vertical y horizontal.

La incontinencia de adultos es la escatología del Ladrillariado, por la vejez, los pañales y las cuidadoras inmigrantes. 

Lo dicho, este chico no tiene pinta de ser disidencia controlada, tiene pinta de ser disidencia "de verdad". Si limpia de corrupción España le perdono hasta que los zulos no bajen de precio. Lo de votarle no me lo planteo hasta que no vea mucho más.

La 'pinta' de Alvise me parece muy integradora (vertical y horizontal) del PLU. Disidente, no. Todos somos PLU.

¿Corrupción?, el que esté libre, tire el primer ladrillo.

Saludos.

[Derby]

https://www.ft.com/content/f0d2a5a7-e5ef-4044-8380-ff690b609a5a

Birth rates in rich countries halve to hit record low

Steep decline in fertility will ‘change face of societies’ and affect growth prospects, says OECD


The average number of children per woman across the OECD has more than halved from 3.3 in 1960 to 1.5 in 2022 © FT montage; AFP/Getty Images

Birth rates in the world’s rich economies have more than halved since 1960 to hit a record low, according to a study that urged countries to prepare for a “lower fertility future”.

The average number of children per woman across the 38 most industrialised countries has fallen from 3.3 in 1960 to 1.5 in 2022, according to a study by the OECD published on Thursday.

The fertility rate is now well below the “replacement level” of 2.1 children per woman — at which a country’s population is considered to be stable without immigration — in all the group’s member countries except for Israel.

“This decline will change the face of societies, communities and families and potentially have large effects on economic growth and prosperity,” warned the Paris-based organisation.



Faltering population growth acts as a drag on economic expansion. Across the EU, the rise in overall labour force participation will soon not be enough to compensate for its falling working-age population, exacerbating labour shortages, according to the IMF and European Commission’s 2024 ageing report.

Coupled with rising life expectancy, low births also put pressure on public finances as they leave fewer people contributing the tax revenues needed to pay for the rising costs of an ageing population. A lack of pupils is also driving an increase in school closures across Europe, Japan and South Korea.

Willem Adema, co-author of the report and senior economist in the OECD’s social policy division, said countries can support fertility rates by implementing policies that promote gender equality and a more equitable sharing of work and parenting activities.

The study found a positive association between female employment rates and higher fertility rates, but found that the cost of housing was an increasing barrier to having children.



But even family-friendly policies are unlikely to raise birth rates to replacement levels, said Adema.

A “low fertility future” would require a focus on immigration policies, he added, as well as “measures which can help people to stay healthy and work longer, and productivity improvements more generally”.

France and Ireland have the highest fertility rates in Europe, with anglophone and Nordic countries typically being at the top end of the scale.

Hungary has raised its fertility rate to the OECD average over the past decade with spending on family benefits accounting for more than 3 per cent of gross domestic product, according to the latest national data.

The lowest fertility rates were recorded in southern Europe and Japan at about 1.2 children per woman, with South Korea having the lowest birth rate at about 0.7.



However, a fall in birth rates in countries with extensive policies to support families, such as Finland, France and Norway, “has been a big surprise”, said Wolfgang Lutz, founding director of the Wittgenstein Centre for Demography and Global Human Capital in Vienna.

The OECD said the “second demographic transition”, a trend that marks the shift in attitudes towards greater individual freedom and alternative life goals and living arrangements, helped to explain the decline in family formation.

Childlessness more than doubled in Italy, Spain and Japan among women born in 1975 compared with women born in 1955. Some 20-24 per cent of women in Austria, Germany, Italy and Spain are childless among those born in 1975, with the figure rising to 28 per cent in Japan.



Mothers across the OECD on average had their first child at nearly 30 in 2020, up from the average age of 26.5 in 2000. The figure rises to over 30 in Italy, Spain and South Korea.

Adema said delays having children increased the risk that childbearing does not occur at all. “There is an increased desire to pursue life objectives which do not necessarily involve children,” he added.

[Derby]

https://www.ft.com/content/1c7beb93-4809-407d-bc85-7e320287a1d6

Bank of England holds rates at 5.25% in ‘finely balanced’ decision

MPC deals blow to Rishi Sunak but leaves door open to post-election cut


The Bank of England’s decision follows data from Wednesday showing that headline inflation has fallen to its target of 2% © Reuters

The Bank of England has kept interest rates on hold at 5.25 per cent in a “finely balanced” decision that dented Conservative hopes of a boost to personal finances just two weeks before the UK’s July 4 election.

But the BoE signalled a reduction was possible as soon as its next meeting in August, prompting traders to increase their bets on a summer rate cut.

Thursday’s seven-to-two decision by the Monetary Policy Committee was in line with economists’ expectations and leaves rates at a 16-year high.

It came despite data the day before showing that headline inflation fell to the BoE’s target of 2 per cent for the first time in three years. However, services inflation was higher than expected at 5.7 per cent.

“It’s good news that inflation has returned to our 2 per cent target,” said Andrew Bailey, the BoE’s governor. “We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25 per cent for now.”

The BoE’s decision will come as a disappointment to Prime Minister Rishi Sunak, who has claimed credit for falling inflation and suggested his government has paved the way to rate cuts.

Traders are now pricing in a more than 40 per cent chance of a first quarter-point cut at the BoE’s August 1 meeting — after the election — up from roughly a third before Thursday’s announcement.

Minutes of the meeting showed that some MPC members who voted to hold rates judged the decision “finely balanced”, in a sign they are getting close to voting for a cut.

Despite the higher services inflation figure for May, the group maintained that this “did not alter significantly the disinflationary trajectory that the economy was on”.

Bailey has been among the committee members who have sounded most confident that inflation is heading in the right direction.

Jens Larsen, an economist at Eurasia Group, a consultancy, said the bank was sending a “pretty strong signal” that its rate-setters are ready to vote for a reduction on August 1. “Monetary policy is clearly restrictive, and you can easily argue for some easing,” he said.

However, August’s decision is still likely to be close. Members who voted to keep rates on hold on Thursday called for “more evidence of diminishing inflation persistence” before rate cuts.

The MPC’s statement stressed the importance of the inflation forecast that will be released at its August meeting, suggesting that more officials might back a rate cut if it points to sustainably low price pressures.

Adding to the uncertainty is the imminent departure of deputy governor Ben Broadbent, who will be succeeded on the MPC by Clare Lombardelli.

Sterling was down 0.2 per cent against the dollar to $1.2688 after the decision. The yield on the interest rate sensitive 2-year gilt was down 0.06 percentage points at 4.13 per cent.

The BoE’s decision leaves it lagging behind the European Central Bank and the Bank of Canada, which have already begun lowering interest rates.

By contrast, the US Federal Reserve has also kept rates on hold so far, with its latest forecasts suggesting it may only cut once this year.

[Derby]

https://www.ft.com/content/0b1d99dd-ee3e-4686-858b-0d570198103d

Swiss National Bank cuts rates to 1.25 per cent

The Swiss National Bank has cut its headline interest rate by 25 basis points to 1.25 per cent, months after delivering a surprise cut in March.

The SNB was the first major western central bank to begin reversing the rate-hiking cycle that came as global inflation spiked in 2021 and 2022.

The quarter percentage point cut in the benchmark rate led to a fall in the franc, which dropped 0.5 per cent against the euro and the dollar.

SNB chair Thomas Jordan said after the move it was “willing to be active in the foreign exchange market as necessary”. The franc has appreciated in recent weeks as investors sought a safe haven amid uncertainty caused by the snap French parliamentary election.

Meanwhile, Norway’s central bank Norges Bank today left interest rates on hold at a 16-year high of 4.5 per cent, and said a first rate cut was not expected until 2025.

[senslev]

 

[Derby]

https://fortune.com/2024/06/20/housing-affordability-crisis-long-plagued-renters-coming-for-homeowners/

The ‘affordability crisis’ has long plagued renters—but now it’s coming for homeowners

“Lack of affordability defines both the for-sale and the for-rent housing markets.” That’s one of the first lines in a report from Harvard University’s Joint Center for Housing Studies* out today. Home prices are high, rents are high, and people are feeling the pain. We’re seeing that in the number of cost-burdened households, defined as those who spend more than 30% of their income on housing costs.

From 2019 to 2022, the number of cost-burdened homeowners rose by 3 million, to a total of 19.7 million. That means nearly one in four homeowner households “are now stretched worryingly thin,” the report states, of which, 27.4% are aged 65 and up. More concerning, it was households that earned less than $30,000 a year that “constituted over half of the growth in cost-burdened homeowners from 2019 to 2022.” Not to mention, 9 million homeowners are severely cost-burdened, defined as those spending more than half of their income on housing.

“For renters, the landscape is even more challenging,” the report read. “While rents have been rising faster than incomes for decades, the pandemic-era rent surge produced an unprecedented affordability crisis.”

Half of all renter households were considered cost-burdened in 2022; 22.4 million renters, the highest on record. And the number of severely cost-burdened renter households hit an all-time high of 12.1 million in the same year. The number of cost-burdened renters is up 2 million from 2019, and the number of severely cost-burdened renters is up 1.5 million.

Home prices are 47% higher than they were in early 2020, despite declining briefly at the beginning of last year—and rents are still 26% higher, despite some softening in the rental market. And let’s not forget mortgage rates, which reached a more than two-decade high last year, and despite coming down some, are still substantially higher than the pandemic’s historic lows. “The low interest rates that helped shield homebuyers from rapidly rising home prices have disappeared…Consequently, homeownership is less affordable than it has been in decades,” the report read.

A recent uptick in the supply of multifamily homes is behind some of that softening we’re seeing in rents, but apartment construction has already begun to plummet, so it’s not clear how long that slight bit of relief will last. There aren’t enough existing homes in the for-sale housing world, to boot. And in some parts of the country, it’s hard to build new homes because of zoning and broad land-use regulations. So it’s no secret that “homeownership is increasingly out of reach,” as the report suggests.

Higher prices squeeze households

“To afford such a high payment under common payment-to-income ratios, a borrower would need an annual income of at least $119,800, a threshold just one in seven (6.6 million) of the nation’s 45 million renter households can meet,” the report says. “It now takes an annual household income of at least $100,000 to afford the median priced home in nearly half of all metro areas.”

So only 6.6 million renters, which equates to 14.5%, had the necessary income to afford  a median-priced home in the first quarter of this year. That’s down from 7.7 million early last year and 10.2 million in 2022. If you were to include a 3.5% down payment and 3% closing costs, only 2.6 million renters could afford a median-priced home, so 5.8%. 

The homeownership rate across all ages across the country only increased 0.1% last year, the smallest increase since 2016 (the same year a post-Great Recession low was reached). The number of unhoused individuals has risen, too. As of last year, 653,100 people were experiencing homelessness, an all-time high, according to the report.

Literally, millions of people are priced out of homeownership and are cost-burdened, and it doesn’t seem as though much will change. “Looking forward, housing costs are likely to remain high,” the report read. “On the for-sale side, home prices are set to rise in the face of highly constrained supply, prolonging this unusually difficult market for first-time homebuyers.” And the for-rent space might see more softening, but “subdued rent growth will not last long.”

*https://www.jchs.harvard.edu/state-nations-housing-2024

[Derby]

https://www.theepochtimes.com/opinion/the-price-of-everything-the-value-of-nothing-5670010

The Price of Everything, the Value of Nothing

The inflation of the past three years has been devastating for households and businesses running on small margins. It’s all the more frustrating that during those years, we kept being told that it is transitory, softening, calming, cooling, settling down, and essentially not much of a problem anymore. We look back and know now that it was never true.

In reality, three years is a very short time for a major currency to lose at least a quarter of its domestic purchasing power. In the postwar period, it took from the war’s end until 1965 for that to happen. This was also the loss from 1982 to 1992, from 1992 to 2000, and from 2001 to 2012.

That’s hardly a record of stable money, but it is manageable, from the standpoint of accounting and psychology. We were used to it.

What’s happened to the dollar over the past three years is a more extreme loss than anything experienced since the late 1970s. Back then, the dollar lost a quarter of its value between 1975 and 1979, which roughly fits with current experience.

Keep in mind that the current numbers are likely underestimated because they exclude interest rates and completely miscalculate categories such as rent and health insurance (do you believe that health insurance costs less today than in 2018?). Moreover, the inflation index cannot account for the full impact of shrinkflation, quality changes, and hidden fees.

In any case, and even using conventional numbers, the bad news is that the dollar of 1913 has a purchasing power of about 3 cents today.


(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)

Any purchasing power loss sets in motion a gravitational pull against living standards. It means working harder, scrambling more, adding income to the household revenue stream, and otherwise never quite getting ahead. It also eats into savings by punishing rather than rewarding thrift as should be the case.

But for this to happen in such a short period of time from 2021 to the present is extremely damaging to economic structures. It also damages our understanding of the world around us.

You know this feeling. Not long ago, when you were out shopping, you had a sense if something was a bargain or a ripoff, overpriced or underpriced, something to snap up or leave on the table. Now, everything seems too expensive, but you cannot know for sure.

I see people all the time at the store who pick up an item, look at the price in shock, pull out their phones to price compare, discover that it is pretty much in line with market standards, decide whether they must have the thing, and then reluctantly put it in their cart with some element of disgust.

Inflation turns the once-happy experience of being out and about in the commercial marketplace into a grind and an annoyance. For many people, it is utterly terrifying because they are having a hard time staying ahead no matter what.

Have you ever been in a foreign country, using an unfamiliar currency, and attempted to haggle with a vendor on the street? It is extremely disorienting simply because you are out of your element. You don’t know if you are getting a good deal or being pillaged. This is because the prices you are quoted are detached from any context that you know.

Inflation brings this problem home. Suddenly, everything feels unfamiliar and you lose your footing. Societies that have dealt with extreme versions of hyperinflation like Weimar in 1922 utterly fall apart. We are nowhere close to that problem but still experience elements of the results. Even inflation on our current level can usher in dramatic social and cultural changes: It was the inflation of the 1970s that converted U.S. households from one income to two (and now three).

Now imagine this problem from the point of view of a business manager. Every good or service you need for your business is nothing but up in price. It blows up the accounting ledger. And your employees are demanding more, not only to pay their own bills but also because they know of another firm vying for their services.

Well-heeled and highly capitalized businesses fare much better in this environment. Those living off credit, paying high rates, and running very thin margins lose out to the competition that is in a better financial position. The pain is intensified given that in the year before the great inflation began, many small businesses were forcibly closed by the government in the name of stopping a virus.

Having barely gotten through that period, they then faced a barrage of other absurdities. They dealt with capacity restrictions, supply-chain breakages, and then mask mandates on employees and customers. Following that, there was a looming threat, emanating from a Biden administration edict that was later reversed by the court, to make their employees take an experimental shot.

The wounds of this period are still obvious everywhere, but life didn’t return to normal. Instead, this inflation began, which hit the core of business operations in other ways.

Every business facing inflation has to figure out the key issue: how to absorb the blow. End-user consumers must face higher prices, but how high can they go before a quiet revolt begins to happen? Contrary to what you hear, no business wants to raise its prices on the consumer (there are some exceptions for luxury goods and so on, but this is hardly the norm). They do not like making their customers unhappy.

There have been some innovations in how this hot potato gets passed on. It can come in the form of smaller portions and packages, ingredients of lesser quality, or new fees snuck in here and there. Many restaurants found that they have far more flexibility in raising prices on beer, wine, and cocktails because these are things that people get regardless and are unused to examining the price structure of carefully before purchasing.

This worked for a while, but it is not a complete solution. Plus, the public has become newly aware of these fees. They start to infuriate people who incorrectly blame the business rather than the inflation itself. The Biden administration has even begun a kind of verbal war against fees, threatening to turn regulators loose on the problem.

For the most part, people take for granted the existence and meaning of prices and the information they convey. The network of pricing structures governs our lives in ways we do not entirely notice.

Think of your own consumption habits. For generations now, Americans habitually go through vast amounts of paper towels to clean every spill and wipe every counter. We think nothing of it. But if those towel rolls were $15 each, think what that would do to your kitchen habits. You would likely discover the merit of cloth towels. It would change everything.

This once-small example pertains to vast amounts of your life. We go through toothpaste like it is nothing, but if the tubes were $50 each, you would see people suddenly discover the merits of straight baking soda, which is a fraction of the price, cleans as well or better, and lasts far longer.

In a complex modern economy with elaborate capital structures, prices serve as information-generating systems for the world that allow for rational use of resources throughout the whole of the production structure.

Without them, we would all be flying blind, producers and consumers alike. Accounting would be impossible and hence there would be no chance for rational calculation. Economizing would become hopeless. The societies that have variously attempted to implement what’s called “socialism”—meaning the abolition of ownership and market-based exchange of capital goods—have discovered that the result is nothing but chaos.

Every systemwide hit to the price system is an attack on economic rationality. Socialism as a system is one version, but there are many others. Price controls rob producers and consumers of valuable information they need for business. These take many forms; for example, minimum wage laws that force people out of the job market and make it impossible for businesses to operate, as we are seeing in California today.

Inflation also amounts to an attack on the functionality of prices themselves. With stable money, prices work as guides to action, tools of rationality, points of connection between people who otherwise do not know each other, and as building blocks of a global communication network that requires no central management.

Blowing up the price system and distorting it with inflationary pressures reduces its ability to make our lives better and eats away at productivity. It’s just another form of robbery. For this to hit just after lockdowns is a deep attack on U.S. economic vitality. We’ll all be paying a heavy price for many years.

[Cadavre Exquis]

https://x.com/danielvguisado/status/1803737984707022857

Saludos.

[asustadísimos]

[¿«Tags: ayuso [X] milei [X] sanxe [X]»? No entiendo nada.]

[Derby]

https://philbak.substack.com/p/the-big-bad-breit-post

The Big Bad BREIT Post

One year after writing our BREIT white paper, here it is. Along with the story about how it got stifled.

(...)The Blackstone’s Hellish NAV Disclosures

Given the vital role that “NAV” plays in fundraising and performance reporting, it’s surprising that a greater amount of transparency is not provided by sponsors into their valuation methodology. Remind me again why they don’t provide a comprehensive explanation for each input in the DCF model?  Contrary to popular assumption, NAV is not based on appraisals that utilize sales comparisons. Instead, it’s based on an opaque discounted cash flow (DCF) methodology that is based on assumptions that are at the discretion of the sponsor who realizes fee streams pegged to the asset values they assign.

BREIT’s self-reported performance is – by their own admission – “not reliable.” Why we didn’t take a closer look at it before is as much a mystery as how they compute it. Management can’t just pull numbers out of thin air, and they’ve done nothing illegal, but they have a lot of discretion on where they estimate share values to be.

According to their prospectus, Blackstone values the fund itself once a month; then once a year it brings in an outsider who prepares a valuation based on their direction. But in its March 28, 2023 prospectus amendment, BREIT removed the steps in bold.  (1) a third-party appraisal firm conducts appraisals and renders appraisal reports annually; (2) an independent valuation advisor reviews the appraisal reports for reasonableness; (3) the advisor (Blackstone) receives the appraisal reports and based in part on the most recent appraisals, renders an internal valuation to calculate NAV monthly; (4) the independent valuation advisor reviews and confirms the internal valuations prepared by the advisor. (5) BREIT will promptly disclose any changes to the identity or role of the independent valuation advisor in its reports publicly filed with the SEC.

The verbiage in their disclosures doesn’t suggest that their calculation will be better than relying on market prices. The highlighted portions seem to be saying that Blackstone uses baseless returns in their SEC filings. They are not using a methodology prescribed by the SEC or any regulatory body. They do not adhere to any accounting rules or standards. Nor is their monthly NAV calculation audited by an independent public accounting firm. Blackstone uses it solely to determine the price at which the fund will redeem and sell shares. The NAV also happens to dictate the fees they can earn.


Source: Page 16 of BREIT’s December 31, 2022, 10-K.

BREIT’s disavowal of its NAV for calculating historical performance is unambiguous but Blackstone’s website, press releases, presentations and SEC filings prominently tout returns based on it. Despite this clear admission, they’ve been using it to report performance to the SEC and felt comfortable enough to pay themselves $4.6 billion in asset management and performance incentive fees based entirely on it. If it can’t be used as a measure of performance, what’s all this bragging about?



If it’s not reliable, please don’t do it again for me.

Very Few Investors Have Made BREIT’s Stated Return

BREIT uses misleading language when it says, “BREIT has delivered strong returns...” BREIT has not delivered any returns except distributions to 80% of its investors. And about half of those haven’t received a dime, since they elect to reinvest their distributions.



BREIT has sold 5,380,409,198 shares since inception and has met redemption requests for just 1,318,817,970 shares. Only investors who bought and redeemed shares have experienced both distributions and changes in NAV. Most of the remaining 76% have been told they cannot sell their shares, so few investors have received what BREIT claims as returns delivered to investors.

The Dividends Are Fake

Did they compute the yield by asking themselves what would sell? Because they’re not earning it. One of BREIT’s big selling points was the ability to get a dividend of around 4% when interest rates were near zero, but the fund cannot – and has never been able to - cover the dividend payment. The current Class S distribution of 3.74% and Class I yield of 4.6% aren’t fully earned based on a key REIT cash-flow measure: Available Funds from Operations (AFFO). AFFO is used to approximate the recurring free cash flow from an income producing real estate vehicle and calculate the dividend coverage.

Blackstone reports AFFO, but their reported number is janky. It omits the management fees they charge.  Their rationale is that they have not taken their fees in cash but instead converted their $4.6 billion in fees into I-Shares, which is a class of BREIT shares that has no sales cost load.  But their election to accept shares is optional, the shares they receive are fully earned and they can redeem their shares at stated NAV.  What’s more, they have redemption priority over other BREIT investors; there is no monthly or quarterly redemption limitation.  Blackstone has already redeemed $658 million in shares.

BREIT’s AFFO also omits recurring real estate maintenance capital expenditures and stockholder servicing fees which are part of the sales load. Computing an AFFO more consistent with public company peers would result in a payout ratio for the first half of 2023 of more than 250%.

BREIT Doesn’t Make Enough Income to Pay Their Distribution



BREIT, unlike most big public REITs, has only covered about 13% of their promised dividend distribution. There’s not a single year in which they could cover their payment if everybody elected to receive it. Since inception, the company has delivered $950 million in AFFO and declared $7.3 billion in distributions.  That’s a stunning 768% dividend payout ratio.

The website allows users to toggle between the various share classes to see their yield. There’s a distinction between yield on cost and yield on NAV that is important. Investors rolling their dividends are paying 17% above cost.



BREITs recurring distributable cash flow doesn’t come close to covering the dividend. Dividend payout ratios tend to average around 70% or so but Blackstone established a dividend yield unmindful of how much cash was really there to pay it.

And leverage won’t bootstrap these returns. BREIT is levered approximately 49% against NAV and closer to 60% as measured against cost - the average cost of BREIT’s secured borrowings stands at approximately 5.5 % before hedges so the cost of their debt exceeds the yield. There are few ways you can turn these numbers into a double digit return.  Rents would have to go to the moon. The only way there can be positive leverage over a holding period (IRR) is if there is a shedload of positive income growth. And that’s exactly what BREIT has baked in the valuation cake. Interest rates went up so the NPV should be way down but – in a fabulous coincidence – future cash flow expectations went up by just enough to offset it. The numerator where revenue growth shows up made up for the rise in rates in the denominator. It’s like a Christmas miracle.

BREIT’s is an odd business model but no analysts cover them – only Robert Stanger and they don’t produce reports for shareholders. The data is out there for anybody to see but Wall Street excels at selling things and there’s no motivation for anybody to connect the dots.

Here’s the BREIT Story in a nutshell: They’ve reported an annual return since inception for its Class S investors north of 10% with real estate investments that have a gross current rate of return of less than 5% on their cost.  They’ve been buying assets at a 4% cap rate, paying a 4.5% dividend and reporting 10+% returns. And nobody has called bullshit.

Attracted by marquee name sponsorship, high distribution rates and the promise of non-correlated returns, investors poured large sums of capital in. At its peak, BREIT was raising more than $3 billion in new equity a month and approximately half of BREIT’s investors elect to reinvest their shares, which reduces the amount of cash that must be distributed.

Blackstone is very clear in their marketing materials that distributions are primarily paid through subscriptions, borrowings and asset sales - and not necessarily from recurring cash flow which is typical for listed REITs.

If you’re an investor, you’d like to think you’re buying new real estate, not subsidizing fellow investors who want their cash. But that’s exactly what you’re doing. Newly sold shares, together with reinvested dividends, is cashing out investors who have elected to redeem their shares at NAV and receive their declared distributions in cash.

It’s hard to overcome a bad business model even if you’re Blackstone.  Having such high fees and front end load and paying out yields on uninvested dollars is a steep hill to climb.  Then, to make it worse, they raised money at light speed at a time when interest rates were low and. Real estate values for the sectors they chased were really high. Blackstone assuredly would have preferred to dollar cost average but they didn’t have that luxury.

AFFO yields generally approximate the recurring equity yields that could be paid to investors if all the cash were to be distributed. As low as BREIT’s current 1.8% AFFO yield is, BREIT’s debt maturities could make it even worse. In 2023, $632MM of their secured borrowings comes due; that number rises to $4.7B in 2024, $9.8B in 2025 and $17.5B in 2026. They will need to roll this debt or distributable cash flow will be further pinched.

NAV is Inflated Because They’re Using Unrealistically Low Cap Rates

By taking BREIT’s current NOI and dividing it by the NAV, investors can compute the implied cap rate on BREIT’s portfolio as they are valuing it – and compare it with public REITs. Interest rates have moved 200-300 basis points in recent months, and in public markets elevated cap rates have driven a 25% decline in values. A recent analysis of two vehicles in the non-traded REIT space concluded that both funds are being valued at implied cap rates of approximately 4.0% when publicly traded REITs with a similar property sector and geographic are trading at an implied cap rate closer to 5.75% . Applying that 5.75% cap rate to BREIT would result in a reduction in shareholder NAV of more than 50%. The current valuation of roughly $14.68/ share should be closer to $7-8/share.

BREIT’s been delivering yields they don’t earn but if I was in their shoes, I would have done the same thing because I don’t have a fiduciary bone in my body either. But it creates a serious problem. Through the end of 2022, BREIT’s performance management fees averaged approximately 1.5X its base management fee, coming entirely from reported appreciation and not increases in real estate yields. Some market participants suggest that the published NAV of BREIT as of December 31, 2022 may be more than double of its true value. The table below shows the potential extent to which BREIT’s shareholders may have overpaid in management fees alone in 2022:


Source: Fideres.com

As Robert Chang of Fideres points out, “To the extent that it emerges that inflated valuations resulted in overpayments in management and performance fees, BREIT’s shareholders may consider legal action to seek compensation for their losses. Given Blackstone’s earnings greatly rely on such fees generated by BREIT, potential misconduct could also have a profound impact on the NYSE listed Blackstone’s future earnings.”

Rate hikes have led to a cap rate inversion. The interest rate used to finance real estate is now higher than the average cap rate. How does one own real estate at a negative spread - and justify the values? Cap rates have lagged interest rates, leaving room for cap rates to move higher and put further downward pressure on asset values. Unless interest rates reverse, on a forward-looking basis, we’re going to see write downs that are substantial*.



Who would want to own a bunch of 4.6% real estate at cost in a market with 1-year Treasuries earning north of 5% and 5.5% borrowing costs? And it gets worse: if BREIT investors don’t know anything about Gresham’s Law – they will soon. Their recent report titled ‘Strategic Asset Dispositions: Maximizing Value and Recycling Capital’ notes that “Since January 2022, BREIT has sold $12 billion of real estate assets at a 4% premium to carrying values.” What does that mean exactly? “Premium to carrying values”? Their balance sheet assets are held at cost less depreciation so these so-called 4% gains could be below original cost. The footnotes further report “Profit reflects BREIT’s net sale proceeds and cumulative income.” I’ve never seen a profit disclosed like that. Other verbiage is equally worrisome: “Analysis excludes sales in our single family rental housing and affordable housing sectors where certain third parties, including existing tenants and joint venture partners, have certain buyout rights that may not be reflective of market value.” In the past, BREIT sold assets to newly launched Blackstone funds so they can provide a floor to the assets themselves.

BREIT liquidity means the right to buy, but not to sell BREIT. Blackstone has been adept at damage control, but its handling of the redemption process will rightly open it up to criticism.  And potentially litigation. If the true liquidation value is $8-$11/share and the sponsor has been selling shares to new investors at the stated NAV of $14/share, who would pay to defend such suits - BX as sponsor, or the existing BREIT shareholders? YTD, the write down has only been $.27/share. If the NAV is overstated and the assets being sold are their best holdings, shareholders redeeming increase the mispricing of the remaining shares.

If I’m very cynical, and I am, I’d say BREIT has dramatically overstated its performance.

I understand the economics behind what Blackstone did. As you can see, it’s a beautiful day, the beaches are open, and people are having a wonderful time. Blackstone is a summer town. It needs summer dollars. The higher the NAV, the higher the fee and private-equity firms, particularly publicly traded ones, must continually add assets under management to earn more fees and satisfy their shareholders. A management fee of 1.25% applied to BREIT’s Q1 shareholder NAV of $70 billion is $875 million. If the assets are 20% overvalued, that’s almost $325 million extra per year adjusted for leverage. But there’s more to it than that. Blackstone makes a performance fee if the fund exceeds a 5% rate of return. The fund pays 3.7% to Class S investors as a dividend so it doesn’t take much reported appreciation to push this over 5%. Remembering, of course, that they never could afford to pay that 3.7% dividend if shareholders showed up en masse with their palms turned up.

Redemption queues beget more queues. When you yell ‘Gates up!’ you get a panic on your hands. In April, May, and June, BREIT fulfilled 29%, 30% and 17% of share redemption requests as it bought in 5% of its reported share value for $3.4 billion.  Meanwhile, new share issuances for the quarter could not help meet the redemption demand, coming in at just $668 million. The imbalance between investments (ex-California) and withdrawal requests reveals their problem. Withdrawals exceed new capital so they are in the position of having to liquidate to meet withdrawals…$3.3 billion per quarter or $13.2 billion per year. The company is shrinking, the balance sheet is contracting, they will have to start liquidating assets and the values they realize are not likely to be those reported via their discounted cash flow analysis.

The spread tells you that Mr. Market does not believe the NAV is right.  For the first two quarters of 2023, redemptions requests outnumbered honored redemption requests by about 4:1.



Despite a public-relations blitz by Blackstone, BREIT still has a backlog of billions of dollars’ worth of redemption requests to work through so reassuring investors remains paramount.


Source: Fideres.com

The wide chasm between the quarterly demand and the paltry new issuance reveals a supply/demand curve wildly out of synch.

On January 3, 2023, BREIT announced an extraordinary $4.5 billion emergency investment by the University of California Board of Regents. The cash infusion eased pressure on Blackstone to raise cash by selling properties, but it came at the cost of a preferential waterfall. The University of California agreed to hold the position for six years and Blackstone pledged $1 billion of its own BREIT shares to guarantee them a minimum 11.25% annual return. The investment accounted for over 80% of the new shares sold by BREIT in the first quarter, while shares redeemed from selling shareholders amounted to $3.4 billion.

Blackstone says the UC Regents investment of $4.5 billion is an affirmation of their strategy but it’s quite the opposite. It's extraordinary to give one investor preferential treatment. You can’t get your money out, but BX is incentivizing new investors with a better deal than you? They wouldn’t have sold shares at a 22% discount if they were confident that they could defend the franchise without paying $1 billion. Blackstone would only do this deal if it thought burning $1 billion would save the BREIT fee franchise. It is telling that UC didn’t own a share of BREIT until offered a 22% discount.

Blackstone and BREIT’s time and dollar-weighted performance might soon be in a very similar situation. Why? The money came rolling in all at once and they took it, investing in some of the lowest yielding real estate possible. If BREIT honors redemption requests at posted NAVs, it will have to sell properties but most of its assets have been on the books less than two years and are likely under water because they were the biggest buyers of commercial real estate at the top of the market. Private real estate investors couldn’t help themselves from buying record amounts of property at peak prices in 2021-2022. This buying binge is referred to as the “Pie Eating Contest of 2021-22”. The fact that BREIT was paying out distributions on uninvested cash elevated the investment urgency. Investors often invest at the top of the market – it’s not Cathy Wood’s fault, nor is it Blackstone’s. In all fairness to Blackstone, these arguments apply to Starwood, KKR, Hines, Nuveen, and Ares/Black Creek as well.

Mark to Magic

Everybody is slow to sell amid higher rates. Private equity, residential homeowners, commercial real estate – they’ll all in denial. The private market has yet to mark down its assets, while the public market has already re-rated. Principal published a chart recently showing that listed and private infrastructure is in the same predicament:



It’s odd. Managers of existing funds say that everything is fine while new fund launches - promising to “capitalize on one of the most trouble commercial-property markets in decades” - claim that values in this highly leveraged sector nosedived when borrowing costs soared.

Where Do We Keep the ‘Beach Closed’ Signs?

The BREIT outflow bear case is playing out. Steve Schwarzman is the Mayor of Shark City, and he finally realizes that he has to close the beaches. Blackstone is the largest commercial landlord in history. This is their crown real estate fund; there are a lot of real estate investors in it. It’s possible they get out of this jam but, short of a reversion of interest rates to historic lows, it ain't gonna be easy. Not like going down to the pond chasin' bluegills and tommycods.   

Selling properties to meet liquidity demands is the obvious thing to do but they’re doing everything they can to avoid it because it could be the catalyst for NAV marks to true up to reality. Even with the gates closed, nearly $70 billion in equity NAV with 47% embedded leverage means that if they allow 20% redemptions per year, they will need $27.6 billion in asset sales. $6.9 billion in real estate sales per quarter; $2.3 billion per month. Unless they can start selling properties at the appraisal-based NAVs, they’re in big trouble.

BREIT is the poster child for the “democratization of private assets” but the discounted deal with the University of California doesn’t sound very democratic at all. If your fund manager has to lure investors with an 11.25% guarantee to invest alongside you, you should probably get out as soon as you can - or get your own 11.25% guarantee.  In its UC sale,  BX appears to have acknowledged that its claimed after-tax yields and tax-equivalent yields were inflated nearly 25% for every webpage report for the six month-ends September 30, 2022 through March 31, 2023. The mammoth increase in alts allocations was driven by a belief shift, propelled in part by performance.

Are We at Peak E&F Model?

Blackstone’s extreme outperformance, however, appears to reflect more than the reporting methodology difference between public and private markets. What if Blackstone has been reporting inflated returns for years? What if it all ends with them saying, “Just kidding”? It might call everything into question. This space has been gaining market share at a rapid pace but if this doesn’t have a happy ending people might not trust these guys in polyester vests as much as they used to. And if you don’t trust PE guys, who do you trust?

This should not be that hard to understand. If you’re awake, you know there is material softness in the commercial real estate market. Brookfield has already defaulted on more than a billion dollars of loans this year. The industry is grappling with growing redemption queues. Investors know something’s coming and don’t need to wait until they see it.

Any investor in BREIT should be monitoring this situation and receiving their dividends in cash. We suggesting getting in the redemption queue, and to remember that it’s not an illiquidity premium that you want to pay for. It’s a liquidity premium. Because when liquidity matters, it suddenly matters the most.

*Footnote: NCREIF National Property Index (NPI) cap rates are value weighted and reflect a blended rate that values the entire NPI as a portfolio based on its most recent NOI. NOI is accounting based and what was collected – not projected next year. Implied Interest rates are based on the interest reported relative to the beginning loan balance on those properties in the National Council of Real Estate Investment Fiduciaries (NCREIF) Index that have leverage. These returns are at the asset level, before fees.