Black Swan Author Taleb on Fragility of Markets, Political Risk, AI (youtube.com)
Once you confiscate/'freeze' property/money from people once (like US did of Russians), people don't wanna invest anymore, they're reticent. In the Middle East, et al, and this effects negatively the US, said Taleb.
France public debt at record high.
Why do governments currently think it's fine to run up any debt?
Current estimate for Hurricane Milton is $150b, according to Accuweather. But it might be a $40-50b loss event for insurance, which exceeds Florida state's re-insuance capacity (effectively bankrupt). Will Fed government step in to support the price of houses? Will Florida become a mass emigration location. If you have a $15b re
insurance fund and $50b of damage (every several years), expect insurance premiums to double or triple. Insurance companies have already done the calculations to figure these higher risk areas are no longer worth the downside. Insurers will insure anything if they can get the price, but most consumers can't afford this.
These places might be very overpriced. How do you even do math on Florida to wind up bullish on Florida real estate?
...
Small and mid sized Florida based banks since regional banks make 80% of commercial real estate loans. But the federal government will come in and the rest of America will subsidize the cost of Florida real estate, many think. FNF seems unaffected by the hurricane. ... Smaller regional banks that have a heavy concentration in CRE, but If they sold the mortgages to the secondary market (Fanny and Freddy) it’s not on them. Smaller institutions don’t carry mortgages on their books.' ... Larger banks can easily absorb something like this. ... Maybe Lennar, Pulte, ... If they slow down on lending while increasing their loan loss reserves, this is a sign they might be having some defaults or at least expecting them.
Alternative take: ‘Just because sales are down 6% from an all time high doesn’t mean this is a crash. An all time high is just that and not sustainable. Interest rates will come down and the market will heat right back up.’
A redditer: ' All condos in Florida are organized as a non profit entity. Condo associations are obligated to maintain common areas, eg garage roof walkways hallways walls etc. In furtherance of that, they have to maintain certain budgeted financial reserves, for eg a roof repair, etc. The Florida legislature changes the condo reserve requirements and that comes into effect this fiscal. Massive increase in assessments for condo owners. If you don’t pay your assessments, the condo can foreclose on you. They have a secured interest in your property. That’s why in 2008 the market down in Florida got very bad'
There's $500b to $1t value of real estate on the Florida coast line ($450b in homeowner, with a debt to equity ratio of 50-80%). They pay about 1% of that value in insurance per year. Also, if house prices dip 20-50%, their net worth will be reduced by half, a social issue where so many people have put their value of their assets in their house.
What used to be a 100-year frequency storm event (hurricanes) now can and I guess does happen every couple years. So maybe instead of real estate value being wiped out every 500 years it's every 20 years, insurance might become untenable level.
States with the highest home insurance rates
1 Oklahoma $5,858
2 Kansas $4,843
3 Nebraska $4,800
4 Florida $4,419
5 Colorado $4,099
Lowest home insurance rates by state
1 Hawaii $613
2 New Hampshire $1,221
3 Vermont $1,263
4 Washington, D.C. $1,342
5 Delaware $1,384
“Home insurance is much cheaper in some states than others partially because states have different rules regarding what a standard home insurance policy includes. Exclusions or separate deductibles for wind storms are common and greatly impact the average rate. Standard home insurance policies in Hawaii exclude damage from hurricanes, which is why home insurance is so cheap in Hawaii.”
NASDAQ creates $800b of enterprise value per year, so private markets have to exceed that to be a viable alternative to just owning the market. Seems hard to do in venture. Chamath
A Venture fund needs to be able to enter at a reasonable price, and it needs a 20x or 30x to make it worthwhile. The bigger the fund the bigger the winner it needs. Smaller ($500m) funds tend to do better therefore.
Are active managers no longer a thing (can't beat the market, passive) becaues competition is over in the US? reflecting several decades of pro-monopoly treatment by the government. for the past few years 5-7 stocks have been the market, and all are highly cooperative and used by government, and are permitted to buy successful competitors. (This may be changing with recent anti-trust, but that might just be an act.)
Stock market has been (surprisingly) strong last month or two. It seems like people were just uninvested, expecting a recession.
Inflation has been high because of shelter (which is finally rolling over in last resort) and auto insurnace (now beginning to sunset so will become a tailwind in second half).
Spetermber CPI Report
Food up 2.3%
Energy down 7%
Services up 5%
Shelter up 5%