Dick Bove: Recession Will Hit by 2018

Dick Bove: Recession Will Hit by 2018

Bank analyst Dick Bove of Rafferty Capital Markets sees economic growth, inflation and interest rates heating up and then a recession ensuing by 2018.

The yield on the 10-year Treasury note will rise to 8 percent in 2017, he says in a report obtained by CNBC. The 10-year Treasury yielded 2.78 percent Monday afternoon.

“In order to develop earnings models for banking companies, you must have a ‘worldview’ related to money supply, the economy, inflation and interest rates,” Bove writes.

“The view that I am using . . . implies a relatively fast growing economy, increasing rates of inflation, much higher interest rates, and a move back to recession by 2018.”

Traditionally GDP moves in synch with M2 money supply, which includes coins, currency, demand deposits (checking accounts) and time deposits (savings accounts).

But in the last few years, M2 grew more rapidly than the economy and is now expanding at a 5.4 percent rate.

“My view is that the nominal GDP is about to catch up,” Bove said. “This means a stronger economy and a surge in inflation and interest rates. For banks, this would be nirvana. It means more loans at higher rates and wider spreads.”

Meanwhile, the Congressional Budget Office recently revised downward its estimate of potential GDP in 2017 to $19.2 trillion from $20.7 trillion.

“The assumption has always been that the U.S. economy will gain back what was lost in a recession,” Barry Bosworth, senior fellow at the Brookings Institution, told Bloomberg Businessweek.

“Academics are coming to the realization that this time is different and that those losses appear permanent and cannot be regained.”

https://www.newsmax.com/Finance/StreetTalk/Bove-recession-hit-2018/2014/03/11/id/558773/

The last frame – Tustin Lanes to close after nearly four decades

Tustin, California –

The last pin is expected to fall soon at Tustin Lanes, as the family-owned bowling alley gets ready to shut down after 38 years.

Tustin Lanes has been a long-time favorite for leagues and tournaments. Customers say that’s because the Old Irvine Boulevard property hung onto affordable prices and a neighborhood feel, even as trendy bowling centers with flashy technology and high-end cocktails popped up around it.

“Tustin Lanes is like home,” bowler Patty Wood said. “It is just so sad.”

The last day of operations will be Oct. 6, according to a worker and frequent customers.

The closure is in keeping with a national trend. There are less than half as many bowling alleys nationwide today as when league play was at its peak in the late 1970s and early 80s, according to Tom Martino, president of the Bowling Proprietor’s Association of America.

“Now you have to rely more and more on casual bowlers who come only when they want to. That puts the bowling center in a bad situation,” Martino said, with many businesses now worth less than the real estate they sit on.

Tustin Lane managers didn’t respond to multiple requests to discuss the pending closure, though a “Business Closing” banner hangs outside the 42-lane bowling alley and the website states “We are closing soon!”

Wood and her husband, Matt, have bowled in a league at Tustin Lanes just about every Monday night for the past 27 years. Their five-person team is called Aces or Better, and it includes another couple they met at the bowling alley more than 20 years ago.

“I’ve seen engagements. I’ve seen people having babies,” Wood said. “These are lifelong friendships we’ve made with some people.”

Tustin Lanes has been a family affair not only for the customers, but for the owners as well.

Jack Mann, who once owned an orthodontist practice in town, broke ground on the property at the height of the bowling craze in March 1977. Mann had quite the bowling empire, owning for some time Fountain Bowl in Fountain Valley, Regal Lanes in Orange, Kona Lanes in Costa Mesa and another bowling alley in San Dimas.

Competition got stiffer in Tustin in 2008, when Strike Orange County opened a bowling alley at The District. The center, which is now Bowlmor, includes such features as glow-in-the-dark lanes and audio-visual technology.

In 2009, Mann bowed out of the industry when he sold Tustin Lanes to his youngest son, Alex Mann, who also owns Arlington Lanes in Riverside. Within months of taking over, Alex Mann made updates to electronic scoring equipment, decor and signage at the Tustin property.

Along with its 42 bowling lanes, Tustin Lanes offers pool tables, flat-screen TVs and projectors throughout, an arcade, laser tag, two party rooms, a full bar, a snack bar and a pro-shop. Alex Mann told the Register when he took over that he was surveying customers about other possible improvements, but insisted Tustin Lanes would never convert to a trendy center like Bowlmor.

Many bowling alleys that have survived the shifting industry have removed some lanes and added other forms of entertainment such as bumper cars that generate more revenue, Martino said. Many have also embraced high-end food – a trend that’s hit shopping malls, airports and other industries, too.

While Tustin Lanes isn’t the most modern of bowling alleys, Cynthia Edes said it remains friendly and affordable.

“Where else can you take a family and have a couple sodas and maybe a pizza for the price of one ticket to Disneyland?” she said.

Edes took up bowling at Tustin Lanes nine years ago, to keep up with her then-80-year-old mother. Her mom is 89 now and can no longer bowl, but Edes discovered she liked the sport so much she joined a Thursday league.

As word began to spread about the pending closure, Edes said, “It’s really a shame. This will displace over a dozen leagues, which use the alley Monday through Sunday, affecting hundreds of leaguers, other families, church groups and kids birthday party people.”

When the current season ends for Wood’s league, she said they’ll move over to Irvine Lanes. That bowling center is more than 8 miles away, south of the 405 freeway.

Wood hopes it’s just a temporary move, though, with customers and workers holding out hope the owners will open another local bowling center down the road.

“Every year we think we’re at the bottom,” Martino said, with owners watching for a year when the industry’s steady decline will stop. “But that hasn’t been true.”

Proprietors see some glimmers of hope, he said, with a push to get bowling in the 2020 Olympics and attract more young people.

Martino’s friend recently opened a new center in Florida with “pin boys,” where staff members replace fallen pins rather than the pinsetting machines that took over more than 50 years ago.

With such nods to nostalgia, owners hope league bowling might see the same sort of revival that’s made vinyl and beards cool again.

https://www.ocregister.com/articles/bowling-681763-lanes-tustin.html

Contact the writer: 714-796-7963 or [email protected]

“If we use dollars to make debt payments, we may not have the cash to pay for government services,” – Puerto Rico on the Brink Owes Investors $5 Billion in Next Year

Puerto Rico on the Brink Owes Investors $5 Billion in Next Year

Puerto Rico faces $5.4 billion of bond payments over the next 12 months, showing the pressure on the Caribbean island as it moves closer toward defaulting on its debt.

Puerto Rico and its agencies are on the hook for $635 million in August, the largest monthly bill for the rest of 2015, JPMorgan Chase & Co. said in a July 17 report, citing data from Bloomberg and Standard & Poor’s. That includes a $36.3 million payment due Aug. 1 from the Public Finance Corp., which may not be made because the legislature failed to appropriate the funds.

The schedule illustrates the costs ahead for the cash-strapped commonwealth, where Governor Alejandro Garcia Padilla is pushing to restructure a $72 billion debt load he says the island can’t afford. The payments approach $1 billion in January and about $2 billion in July 2016, JPMorgan said. Puerto Rico has a $9.8 billion budget for the year through next June.

“If we use dollars to make debt payments, we may not have the cash to pay for government services,” Luis Cruz, the commonwealth’s budget director, told reporters Monday in San Juan. He said officials are looking at “all options” for honoring its obligations.

Puerto Rico is veering toward the largest restructuring ever in the $3.6 trillion municipal-debt market after years of borrowing to paper over budget shortfalls. The prospect has pushed down the price of commonwealth bonds amid speculation about how investors will fare. Officials are seeking to draw up a plan by the end of August.
Many Securities

The island has more than a dozen types of bonds with different security pledges, which complications negotiations. General-obligation bonds are protected by the commonwealth’s constitution, while others are backed by revenue such as sales taxes.

The scheduled August payments will cover $333 million of interest and $263 million of principal, according to JPMorgan. Most of that is for sales-tax debt, known as Cofina, and securities sold by the Government Development Bank.

Garcia Padilla said last month that Puerto Rico would look to delay debt payments for “a number of years.”

Melba Acosta, the development bank’s president, has said a restructuring wouldn’t necessarily involve paying less than the full value of securities when they mature. Even so, analysts at money-management firms including BlackRock Inc. and Pacific Investment Management Co. have speculated that bondholders may have to accept less than they are owed.

Puerto Rico bonds have slumped 8.9 percent this year, according to S&P Dow Jones Indices data. By contrast, the $3.6 trillion municipal market has rallied 0.3 percent.

https://www.bloomberg.com/news/articles/2015-07-20/puerto-rico-on-the-brink-owes-investors-5-billion-in-next-year

 

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