Juggling Dynamite

A little levity is needed. Well done.

Melissa McCarthy returned to “SNL” with her explosive impression of President Trump’s press secretary Sean Spicer.
Here is a direct video link.

It seems many people today are unaware of history or why separation of powers is so critical to a democratic society. This little video offers a refresher.

Political power is divided in a democracy in order to prevent abuse of power by a single person or party. That is the so-called “separation of powers.” In case you ever wondered what the meanings of executive (government and public administration) legislative (law) and judicial (court rulings) are, we will clarify you on this!  Here is a direct video link.

As I have mentioned several times over the past year (see:‘Genius’ fails again and Commercial realty loan defaults booming, for just a couple), the retail sector is dramatically over built and mean reverting in North America.  As stores close, mall operators are facing a domino effect of falling rents and bankrupt tenants which leads to rising defaults on property mortgages.  This is bad news for the investors who have funneled yield-desperate capital into commercial mortgage backed securities the past few years.

This next “Big Short” has many of the same old characters, products and behaviors as the residential mortgage bust did in 2007-08.  That ought to have served as a warning for people, but apparently not. It seems Michael Lewis will need to write a sequel.  See, Deutsche Bank says next ‘Big Short’ is on CMBS as malls suffer:

Analysts at Deutsche Bank AG, one of the biggest underwriters of bonds tied to U.S. commercial mortgages, say now it’s time to bet against the securities.

The bonds are vulnerable because they are supported in part by leases from retailers, a lagging part of the economy, wrote Ed Reardon and Simon Mui in a note this week. A combination of bankruptcies and closures could lead to faster-than-expected mortgage defaults for stores and malls, as long-term pressure from internet competitors wears many companies down, the analysts wrote.

“Big mall loans have outsize losses for investors,” said Morningstar analyst Edward Dittmer. “We expect the stores like Sears, Macy’s and Penney to close more stores later this year and next year, and as they close, there will be knock-on effects that lead to other mall tenants leaving. This can start the cycle of blight.”