AuthorTopic: Official Death of Retail Thread: Life Without Walmart  (Read 31402 times)

Offline RE

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🏬 Amazon abruptly stopped buying goods from third-party sellers
« Reply #240 on: March 08, 2019, 12:29:29 AM »
Even Bozos is feeling the pinch.

RE

https://qz.com/1567934/amazon-sellers-panic-after-the-company-reportedly-canceled-orders/

REUTERS/David W Cerny


Amazon stopped taking orders.
CAVEAT VENDITOR

Amazon abruptly stopped buying goods from third-party sellers
By Alison Griswold6 hours ago

Amazon is reportedly going cold turkey on thousands of vendors.

The e-commerce behemoth has canceled orders with many wholesalers, pushing them instead to sell directly to consumers on its marketplace, Bloomberg reported today (March 7). Having vendors sell directly to customers is a better arrangement for Amazon because it can charge merchants for services like storing and shipping products and take a commission on each transaction, plus it avoids the risk of buying inventory that doesn’t sell.

The shift in strategy comes as several of Amazon’s core businesses have slowed. For the fourth quarter of 2018, Amazon reported 12.5% year-over-year growth in its online stores segment, significantly slower than the 19.7% annual growth rate it posted in the 2017 fourth quarter. Third-party seller services, Amazon’s business of making money from services provided to merchants who sell on its marketplace and commissions on those sales, brought in $13.4 billion in revenue in the quarter that ended Dec. 31, 2018, but also posted its slowest growth of the year.

Forcing more sellers onto the marketplace could help Amazon revive those numbers, especially in the third-party seller services segment. Meanwhile, Amazon is investing heavily in its own private-label brands, and others that are sold exclusively on its site. Many of those brands will ultimately compete against merchandise currently purchased by Amazon from third-party sellers, which might also be a reason why the company is eager to shift those third-party sellers to its marketplace.

The company’s new stance has put some sellers in a tight spot, Bloomberg reported, as they source their products from manufacturers months before actually selling them. Attendees at this week’s ShopTalk retail conference reportedly said Amazon abruptly and without explanation stopped submitting regular orders for products the previous week. That could leave those sellers with no other option than to sell their wares on Amazon’s marketplace for now.

“If you’re heavily reliant on Amazon, which a lot of these vendors are, you’re in a lot of trouble,” Dan Brownsher, CEO of e-commerce consulting business Channel Key told Bloomberg. “If this goes on, it can put people out of business.”
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Offline azozeo

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Re: 🏬 Amazon abruptly stopped buying goods from third-party sellers
« Reply #241 on: March 08, 2019, 05:34:18 AM »
Even Bozos is feeling the pinch.

RE

https://qz.com/1567934/amazon-sellers-panic-after-the-company-reportedly-canceled-orders/

REUTERS/David W Cerny


Amazon stopped taking orders.
CAVEAT VENDITOR

Amazon abruptly stopped buying goods from third-party sellers
By Alison Griswold6 hours ago

Amazon is reportedly going cold turkey on thousands of vendors.

The e-commerce behemoth has canceled orders with many wholesalers, pushing them instead to sell directly to consumers on its marketplace, Bloomberg reported today (March 7). Having vendors sell directly to customers is a better arrangement for Amazon because it can charge merchants for services like storing and shipping products and take a commission on each transaction, plus it avoids the risk of buying inventory that doesn’t sell.

The shift in strategy comes as several of Amazon’s core businesses have slowed. For the fourth quarter of 2018, Amazon reported 12.5% year-over-year growth in its online stores segment, significantly slower than the 19.7% annual growth rate it posted in the 2017 fourth quarter. Third-party seller services, Amazon’s business of making money from services provided to merchants who sell on its marketplace and commissions on those sales, brought in $13.4 billion in revenue in the quarter that ended Dec. 31, 2018, but also posted its slowest growth of the year.

Forcing more sellers onto the marketplace could help Amazon revive those numbers, especially in the third-party seller services segment. Meanwhile, Amazon is investing heavily in its own private-label brands, and others that are sold exclusively on its site. Many of those brands will ultimately compete against merchandise currently purchased by Amazon from third-party sellers, which might also be a reason why the company is eager to shift those third-party sellers to its marketplace.

The company’s new stance has put some sellers in a tight spot, Bloomberg reported, as they source their products from manufacturers months before actually selling them. Attendees at this week’s ShopTalk retail conference reportedly said Amazon abruptly and without explanation stopped submitting regular orders for products the previous week. That could leave those sellers with no other option than to sell their wares on Amazon’s marketplace for now.

“If you’re heavily reliant on Amazon, which a lot of these vendors are, you’re in a lot of trouble,” Dan Brownsher, CEO of e-commerce consulting business Channel Key told Bloomberg. “If this goes on, it can put people out of business.”


This is a GYNORMOUS tell... This tells me that our money supply is about to change. Bozos needs to lose the pocket change mom & pops during the reset.

When BigJeff circles the wagons, somethings a foot in bizness  :coffee:
« Last Edit: March 08, 2019, 06:20:27 AM by azozeo »
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline azozeo

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There’s a very good reason why they named it AMAZON!
« Reply #242 on: March 08, 2019, 06:37:34 AM »


Just like Walmart was used to take over the American retail industry after it was incorporated in October of 1969, Amazon was actually established to completely dominate the Internet-based retail industry, which it has successfully done.

    As of January 31, 2019, Walmart has 11,348 stores and clubs in 27 countries, operating under 55 different names.[1]

Not only did Walmart put hundreds of thousands of “mom and pops” out of business across America, the retail giant greatly diminished both access and choice for the shopper in the pre-Internet Age.
Amazon

Do you really think that the very name — A M A Z O N  — wasn’t chosen with purposeful design?

Not only is this joint C.I.A.-Corporate venture a stone-cold black operation, it’s also a massive psyop that only gets bigger by the day.

http://stateofthenation2012.com/?p=117984
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline azozeo

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Official Death of Retail - Uber & LYFT are losers....
« Reply #243 on: March 09, 2019, 02:10:15 PM »

Legend has it that in 1929, businessman Joseph Kennedy, the father of the future president, realized it was time to get out of the stock market when the shoeshine boy started offering him trading tips.

I had my own such moment a couple of years back when I started hearing people say they were selling their cars because “it’s cheaper to take Uber everywhere!”

It wasn’t that I doubted them, mind you. I just started to wonder about the math.


https://www.washingtonpost.com/opinions/uber-and-lyft-are-losing-money-at-some-point-well-pay-for-it/2019/03/05/addd607c-3f95-11e9-a0d3-1210e58a94cf_story.html?noredirect=on&utm_term=.6647ea058e2d
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline RE

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🏪 E-Commerce is Wiping Out Mall Retailers One by One. Here’s the Data
« Reply #244 on: March 14, 2019, 05:05:37 AM »
So what's wiping out Amazon?

RE

https://wolfstreet.com/2019/03/13/e-commerce-is-wiping-out-mall-retailers-one-by-one-heres-the-data/

E-Commerce is Wiping Out Mall Retailers One by One. Here’s the Data
by Wolf Richter • Mar 13, 2019 • 54 Comments • Email to a friend   
Department store sales hit a new record low in the data going back to 1992.


E-commerce sales in the fourth quarter soared 12.1% from a year ago to a new record of $132.8 billion (seasonally adjusted), the Commerce Department reported this morning. For the whole year 2018, e-commerce sales blew through the $500-billion level for the first time, reaching $513.6 billion, up 14.2% or $64 billion from a year ago.

Not seasonally adjusted, e-commerce in Q4 jumped to $158.5 billion, 11.2% of total retail sales. E-commerce sales have doubled over the past five years.

E-commerce includes sales by the online operations of brick-and-mortar retailers, such as Macy’s, Walmart, and Best Buy, along with the sales of online-focused retailers, from small operations all the way up to Amazon.

People still say that e-commerce accounts for only 11.2% of total retail sales and therefore doesn’t matter. But this metric is misleading because e-commerce doesn’t yet seriously compete with a number of retailers, including gasoline stations, new and used auto dealers, and grocery and beverage stores. These three categories alone account for 52% of all brick-and-mortar sales.

Where the e-commerce bloodbath takes place is in other categories, including – with some choice casualties in parentheses:

    Department stores (Sears Holdings, Bon-Ton Stores)
    Book stores (see Borders, B. Dalton, Waldenbooks)
    Video stores (Blockbuster),
    Music stores (Tower Records)
    Hardware and hobby (Orchard Supply Hardware)
    Toy stores (Toys ‘R’ Us)
    Jewelry and accessory stores (Claire Stores)
    Sporting goods stores (Sports Authority)
    Electronics and appliance stores (Circuit City, CompUSA)
    Clothing and clothing accessory stores (Limited Stores, Pacific Sunwear, Aeropostale)
    Shoe stores (Payless Shoe Source)

The chart below shows who is winning this race. The blue line represents sales at these mall stores, and the red bars represent e-commerce sales. Note how resistant online sales were during the Great Recession: They dipped, but only briefly, and then continued soaring. But sales at mall stores took a deep dive during the Great Recession and have still not recovered from it, and will never recover from it:


Sales at these mall-based stores that are under attack from e-commerce fell to $159 billion (seasonally adjusted) in Q4 2018, a level they’d first reached in Q4 2005, while e-commerce sales soared to a new record of $132.8 billion. And the above chart is not even adjusted for inflation! E-commerce is killing these stores, one after the other:

Department store sales have plunged 37% since their peak in 2001 — not adjusted for inflation! — to $37.1 billion in Q4 2018, a new record low in the data going back to 1992. These are the stores that anchor malls. The sector is populated by the brick-and-mortar stores of Macy’s, bankrupt Sears, soon-to-be bankrupt J.C. Penney, liquidated Bon-Ton Stores, and Nordstrom whose booming online sales were already one-third of its total sales in Q4, while its brick-and-mortar sales declined.

The chart below of sales at department stores going back to 1992 shows an industry that is slowly dying – not because Americans are “tapped out,” but because the mall-store business model, and particularly, the department-store business model is being obviated bit by bit, year after year, by e-commerce:


Store-closings by retail chains, and malls losing their anchor stores, are now a painful routine. The largest mall landlord in the US, Simon Property Group, said in the last earnings call that the company’s president is sitting on “his 200th unsecured creditors committee.” That’s how many bankruptcies and restructurings SPG’s tenants have gone through so far.

Sales at electronics and appliance stores, despite the booming business in electronics and appliances, have dropped 11.3% over the past 10 years to $24.4 billion in Q4, as much of it has migrated to online operations, including to the successful online operations of brick-and-mortar retailers such as Best Buy.

Americans have figured out that buying a large-screen TV or a dishwasher is easier and often cheaper online, with delivery and installation – same issues as with a local store – included. And buying smaller electronics online has become normal years ago.

Retailers that have decided to carve out a future for themselves have invested heavily in their online operations, including in their fulfillment and delivery operations. Many of them are succeeding in these efforts. This isn’t about Amazon – this is about thousands of small and large retailers that are making this transition successfully. It has taken two decades to get this far, and it will take many more years to play out completely. And those that fail to make the transition will fall by the wayside.

Nordstrom just did a surprising thing that other major retailers keep a secret: It disclosed how its own booming online sales, now one-third of its total sales, eat its brick & mortar sales. But it’s a matter of survival. Read…  The Biggest Retailers Are Too Scared to Disclose this Data. But Nordstrom Just Did
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Offline RE

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🏬 Worsening Inventory Pileup Rattles Goods-Based Economy
« Reply #245 on: March 24, 2019, 02:28:16 AM »
https://wolfstreet.com/2019/03/22/worsening-inventory-pileup-rattles-goods-based-economy/


Worsening Inventory Pileup Rattles Goods-Based Economy


Worsening Inventory Pileup Rattles Goods-Based Economy

And how it compares to what happened during the Financial Crisis.

The goods-based segment of the economy is heading for rough waters, and it is further diverging from the path of the services-based segment of the economy that is still growing at a solid rate: that’s what the current inventory pileup tells us.

When inventories pile up, sales by those companies that supply that inventory do well. But companies that sit on that inventory and have trouble selling it will at some point cut their orders to reduce their inventories. When this happens, sales drop all the way up the supply chain.

And the inventory pileup, particularly in durable goods at the wholesale level, just keeps getting worse. In January, these inventories surged 11.7% from January a year ago, and are up 17% from January two years ago, hitting $415 billion, the highest ever, according the Commerce Department this morning.

At the same time, sales of durable goods by these wholesalers rose 4.7% in January year over year, to $245.6 billion. Sales had peaked in September last year.

And the inventory-to-sales ratio for durable goods rose to 1.69 in January, the highest ratio since August 2016, back when the goods-based sector was coming out of the last inventory pileup that had led to the recession in the goods-based sector that had dragged down overall economic growth for 2016 to just 1.6%, the worst since the Financial Crisis. Only the much larger services sector, which was still growing, kept the economy out of an overall recession.

During 2015 and 2016, wholesales of durable goods declined and inventories were whittled down as wholesalers cut orders, which slowed down the whole supply chain. It was a drag on GDP, but eventually the inventory-to-sales ratio was brought into line. Now a similar scenario is building up:

Over the seven years of the chart, sales rose 23%, from $197 billion in January 2012 to $246 billion in January 2019. But inventories surged 41%, from $295 billion to $415 billion. This inventory buildup is considered investment in inventories, and as such is added to GDP growth. When inventories get whittled down, the reduction is subtracted from GDP.

The transportation sector fell into a steep recession in 2015 and 2016, based on the Cass Freight Index for Shipments, which covers consumer and industrial goods shipped by all modes of transportation — truck, rail, barge, and air — but does not cover commodities such as grains.

Now a similar pattern is forming: Inventories have been piling up, and shipment volume of goods, as tracked by the Cass Freight Index, have started to decline on a year-over-year basis.

The chart below shows the Cass Freight Index for Shipments (columns) and wholesale inventories of durable goods (green line), both expressed as percent change from the same month a year earlier. Inventories follow shipments with a lag:

For folks who like to compare routine slowdowns to the Financial Crisis, I include that beloved era in the chart below. It shows inventories and sales in billion dollars (right scale) and the inventory-to-sales ratio (left scale). On the surface, there appear to be some parallels with the current dynamics; but in a moment, we’ll get to why that’s only on the surface.

On the surface, there are starting to be parallels with the conditions before and during the Financial Crisis. But what happened at the time? Secretary of the Treasury Hank Paulson got in front of Congress and told the entire world that he needed unlimited powers to bail out Wall Street, or else the world would come to an end. The moment he said this, everyone in the real economy that had so far more or less brushed off the turmoil on Wall Street pulled the ripcord. People still bought food and went to restaurants but they stopped buying big-ticket items such as cars or couches, and companies stopped ordering stuff, and cancelled what they could, and supply chains froze up.

The chart below shows the percent changes at wholesalers of durable goods sales and inventories, along with the inventory-to-sales ratio. It’s the same data as the chart above, but sales and inventories are expressed in percent-change from a year earlier: Sales plunged by 17% year-over-year in October 2009. That was a wild plunge in sales compared to the current 4.7% year-over-year increase in sales:

During the Financial Crisis, the inventory-to-sales ratio spiked because sales collapsed. These days, sales are still increasing year-over-year, though sequentially they have started to flatten out. The inventory pileup these days is happening because inventories have been rising persistently faster than sales have been rising – a very different set of dynamics than a collapse in sales. One was a panic that led to what was the first such crisis in my entire life, and thus a rare event; the other is just a run-of-the-mill harbinger of a routine slowdown in the goods-based sector, with no signs of a crisis in sight.

And as long as the services sector holds up – it is for now still holding up – there won’t even be an overall recession. There cannot be a recession without a pullback in services. Read…  Finance & Insurance Hit it Out of the Ballpark, No Slowdown in the Huge Services Sector

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Offline azozeo

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Americans Can’t Afford To Buy A Home In 70% Of The Country
« Reply #246 on: March 31, 2019, 11:59:12 AM »

Even at a time of low interest rates and rising wages, Americans simply can’t afford a home in more than 70% of the country, according to CBS. Out of 473 US counties that were analyzed in a recent report, 335 listed median home prices were more than what average wage earners could afford. According to the report from ATTOM Data Solutions, these counties included Los Angeles and San Diego in California, as well as places like Maricopa County in Arizona.

New York City claimed the largest share of a person’s income to purchase a home. While on average, earners nationwide needed to spend only about 33% of their income on a home, residents in Brooklyn and Manhattan need to shell out more than 115% of their income. In San Francisco this number is about 103%. Homes were found to be affordable in places like Chicago, Houston and Philadelphia.


https://www.zerohedge.com/news/2019-03-30/americans-cant-afford-buy-home-70-country
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Offline Eddie

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Re: Americans Can’t Afford To Buy A Home In 70% Of The Country
« Reply #247 on: March 31, 2019, 12:55:19 PM »

Even at a time of low interest rates and rising wages, Americans simply can’t afford a home in more than 70% of the country, according to CBS. Out of 473 US counties that were analyzed in a recent report, 335 listed median home prices were more than what average wage earners could afford. According to the report from ATTOM Data Solutions, these counties included Los Angeles and San Diego in California, as well as places like Maricopa County in Arizona.

New York City claimed the largest share of a person’s income to purchase a home. While on average, earners nationwide needed to spend only about 33% of their income on a home, residents in Brooklyn and Manhattan need to shell out more than 115% of their income. In San Francisco this number is about 103%. Homes were found to be affordable in places like Chicago, Houston and Philadelphia.


https://www.zerohedge.com/news/2019-03-30/americans-cant-afford-buy-home-70-country

This is the very worst kind of bullshit. This should be on a "Debunking Statistics" poster somewhere.

Even at a time of low interest rates and rising wages, Americans simply can’t afford a home in more than 70% of the country, according to CBS. Out of 473 US counties that were analyzed in a recent report, 335 listed median home prices were more than what average wage earners could afford.

Oh yeah. Well, who owns the fucking homes in those 335 counties where homes are so expensive? Perhaps a secret cabal of global elites? Chinese bitcoin billionaires?)

 Uh, no.........that'd be.....mostly homeowners. I'd be willing to bet that the vast majority of homes in the vast majority of those counties are owner-occupied. I challenge your lazy ass to prove otherwise.

It's an apples v. oranges comparison. Prices and incomes vary a lot in this country Using mismatched "averages" obscures the facts.

N0..... the average wage-earner (nationwide stat) can't afford a home in Marin County (one expensive-ass county). That is true. Which explains why wage-earners aren't flocking to Northern Cali to buy a house. But does that really mean what the author is trying to claim? No fucking way.

And who says mortgage rates are low, anyway? Rates bottomed in 2013, and in the last five years they've headed up. Higher rates are what are what are hurting the markets. The average wage-earner makes 44.5K.year, and in a two earner family, that's 90K income if you're so intent on looking at "averages".( I know I'm playing the same game here as the author of that shitty article by saying 90K, but he made the rules for this game, and I can play it too.) Here's my source for avg. wage-earner income.

https://www.thebalancecareers.com/average-salary-information-for-us-workers-2060808

At 90K income you could qualify for a mortgage of about 415K, IF interest rates were 3.4% like in 2013.

Recently mortgage rates have touched 5%, which would knock that way down, to about 345K.

The median home price nationwise today? Only 226K. I just checked and only in about 15 or so of the most nose-bleed high real estate counties would  a family with two average wage-earner salaries of 90K total income be shut out of home ownership of a median priced house. Look for yourself.

https://www.kiplinger.com/tool/real-estate/T010-S003-home-prices-in-100-top-u-s-metro-areas/index.php



That might explain why most counties aren't full of empty, overpriced houses. Only a very few places with weird market forces in play are like that. Like Seattle and Vancouver. I mean, think about it. That WOULD have to be the case in a lot of places if this article were anything like accurate.

Because renting isn't cheaper than buying in this country. Not in most places. Not right now.

Use some common sense in evaluating what you read. AZ, as a former RE agent, you should instantly know this article can't be right.

ZH is such a  sewer anymore. Full of crap articles of all kinds. Don't believe every headline you read, folks.


« Last Edit: March 31, 2019, 01:08:24 PM by Eddie »
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Offline RE

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Re: Americans Can’t Afford To Buy A Home In 70% Of The Country
« Reply #248 on: March 31, 2019, 01:09:58 PM »
Oh yeah. Well, who owns the fucking homes in those 335 counties where homes are so expensive? Perhaps a secret cabal of global elites? Chinese bitcoin billionaires?)

It's no secret.  Blackstone bought them.

https://www.motherjones.com/politics/2013/11/wall-street-buying-foreclosed-homes/


How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme—Again

Hedge funds and private equity firms have quietly bought 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown.
Laura GottesdienerNovember 29, 2013 11:00 AM   



This story first appeared on the TomDispatch website.

You can hardly turn on the television or open a newspaper without hearing about the nation’s impressive, much celebrated housing recovery. Home prices are rising! New construction has started! The crisis is over! Yet beneath the fanfare, a whole new get-rich-quick scheme is brewing.

Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix. In total, these deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown.

Wall Street’s foreclosure crisis, which began in late 2007 and forced more than 10 million people from their homes, has created a paradoxical problem. Millions of evicted Americans need a safe place to live, even as millions of vacant, bank-owned houses are blighting neighborhoods and spurring a rise in crime. Lucky for us, Wall Street has devised a solution: It’s going to rent these foreclosed houses back to us. In the process, it’s devised a new form of securitization that could cause this whole plan to blow up—again.

Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. Using a subsidiary company, Invitation Homes, Blackstone has grabbed houses at foreclosure auctions, through local brokers, and in bulk purchases directly from banks the same way a regular person might stock up on toilet paper from Costco.

In one move, it bought 1,400 houses in Atlanta in a single day. As of November, Blackstone had spent $7.5 billion to buy 40,000 mostly foreclosed houses across the country. That’s a spending rate of $100 million a week since October 2012. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain.

Few outside the finance industry have heard of Blackstone. Yet today, it’s the largest owner of single-family rental homes in the nation—and of a whole lot of other things, too. It owns part or all of the Hilton Hotel chain, Southern Cross Healthcare, Houghton Mifflin publishing house, the Weather Channel, Sea World, the arts and crafts chain Michael’s, Orangina, and dozens of other companies.

Blackstone manages more than $210 billion in assets, according to its 2012 Securities and Exchange Commission annual filing. It’s also a public company with a list of institutional owners that reads like a who’s who of companies recently implicated in lawsuits over the mortgage crisis, including Morgan Stanley, Citigroup, Deutsche Bank, UBS, Bank of America, Goldman Sachs, and of course JP Morgan Chase, which just settled a lawsuit with the Department of Justice over its risky and often illegal mortgage practices, agreeing to pay an unprecedented $13 billion fine.

In other words, if Blackstone makes money by capitalizing on the housing crisis, all these other Wall Street banks—generally regarded as the main culprits in creating the conditions that led to the foreclosure crisis in the first place—make money too.

An All-Cash Goliath

In neighborhoods across the country, many residents didn’t have to know what Blackstone was to realize that things were going seriously wrong.

Last year, Mark Alston, a real estate broker in Los Angeles, began noticing something strange happening. Home prices were rising. And they were rising fast—up 20% between October 2012 and the same month this year. In a normal market, rising home prices would mean increased demand from homebuyers. But here was the unnerving thing: the homeownership rate was dropping, the first sign for Alston that the market was somehow out of whack.

The second sign was the buyers themselves.

Click here to see a larger version

About 5% of Blackstone’s properties, approximately 2,000 houses, are located in the Charlotte metro area. Of those, just under 1,000 (pictured above) are in Mecklenberg County, the city’s center. (Map by Anthony Giancatarino, research by Symone New.)

“I went two years without selling to a black family, and that wasn’t for lack of trying,” says Alston, whose business is concentrated in inner-city neighborhoods where the majority of residents are African American and Hispanic. Instead, all his buyers—every last one of them—were besuited businessmen. And weirder yet, they were all paying in cash.

Between 2005 and 2009, the mortgage crisis, fueled by racially discriminatory lending practices, destroyed 53% of African American wealth and 66% of Hispanic wealth, figures that stagger the imagination. As a result, it’s safe to say that few blacks or Hispanics today are buying homes outright, in cash. Blackstone, on the other hand, doesn’t have a problem fronting the money, given its $3.6 billion credit line arranged by Deutsche Bank. This money has allowed it to outbid families who have to secure traditional financing. It’s also paved the way for the company to purchase a lot of homes very quickly, shocking local markets and driving prices up in a way that pushes even more families out of the game.

“You can’t compete with a company that’s betting on speculative future value when they’re playing with cash,” says Alston. “It’s almost like they planned this.”

In hindsight, it’s clear that the Great Recession fueled a terrific wealth and asset transfer away from ordinary Americans and to financial institutions. During that crisis, Americans lost trillions of dollars of household wealth when housing prices crashed, while banks seized about five million homes. But what’s just beginning to emerge is how, as in the recession years, the recovery itself continues to drive the process of transferring wealth and power from the bottom to the top.

From 2009-2012, the top 1% of Americans captured 95% of income gains. Now, as the housing market rebounds, billions of dollars in recovered housing wealth are flowing straight to Wall Street instead of to families and communities. Since spring 2012, just at the time when Blackstone began buying foreclosed homes in bulk, an estimated $88 billion of housing wealth accumulation has gone straight to banks or institutional investors as a result of their residential property holdings, according to an analysis by TomDispatch. And it’s a number that’s likely to just keep growing.

“Institutional investors are siphoning the wealth and the ability for wealth accumulation out of underserved communities,” says Henry Wade, founder of the Arizona Association of Real Estate Brokers.

But buying homes cheap and then waiting for them to appreciate in value isn’t the only way Blackstone is making money on this deal. It wants your rental payment, too.

Securitizing Rentals

Wall Street’s rental empire is entirely new. The single-family rental industry used to be the bailiwick of small-time mom-and-pop operations. But what makes this moment unprecedented is the financial alchemy that Blackstone added. In November, after many months of hype, Blackstone released history’s first rated bond backed by securitized rental payments. And once investors tripped over themselves in a rush to get it, Blackstone’s competitors announced that they, too, would develop similar securities as soon as possible.

Depending on whom you ask, the idea of bundling rental payments and selling them off to investors is either a natural evolution of the finance industry or a fire-breathing chimera.

“This is a new frontier,” comments Ted Weinstein, a consultant in the real-estate-owned homes industry for 30 years. “It’s something I never really would have dreamt of.”

However, to anyone who went through the 2008 mortgage-backed-security crisis, this new territory will sound strangely familiar.

“It’s just like a residential mortgage-backed security,” said one hedge-fund investor whose company does business with Blackstone. When asked why the public should expect these securities to be safe, given the fact that risky mortgage-backed securities caused the 2008 collapse, he responded, “Trust me.”

For Blackstone, at least, the logic is simple. The company wants money upfront to purchase more cheap, foreclosed homes before prices rise. So it’s joined forces with JP Morgan, Credit Suisse, and Deutsche Bank to bundle the rental payments of 3,207 single-family houses and sell this bond to investors with mortgages on the underlying houses offered as collateral. This is, of course, just a test case for what could become a whole new industry of rental-backed securities.

Many major Wall Street banks are involved in the deal, according to a copy of the private pitch documents Blackstone sent to potential investors on October 31st, which was reviewed by TomDispatch. Deutsche Bank, JP Morgan, and Credit Suisse are helping market the bond. Wells Fargo is the certificate administrator. Midland Loan Services, a subsidiary of PNC Bank, is the loan servicer. (By the way, Deutsche Bank, JP Morgan Chase, Wells Fargo, and PNC Bank are all members of another clique: the list of banks foreclosing on the most families in 2013.)

According to interviews with economists, industry insiders, and housing activists, people are more or less holding their collective breath, hoping that what looks like a duck, swims like a duck, and quacks like a duck won’t crash the economy the same way the last flock of ducks did.

“You kind of just hope they know what they’re doing,” says Dean Baker, an economist with the Center for Economic and Policy Research. “That they have provisions for turnover and vacancies. But have they done that? Have they taken the appropriate care? I certainly wouldn’t count on it.” The cash flow analysis in the documents sent to investors assumes that 95% of these homes will be rented at all times, at an average monthly rent of $1,312. It’s an occupancy rate that real estate professionals describe as ambitious.

There’s one significant way, however, in which this kind of security differs from its mortgage-backed counterpart. When banks repossess mortgaged homes as collateral, there is at least the assumption (often incorrect due to botched or falsified paperwork from the banks) that the homeowner has, indeed, defaulted on her mortgage. In this case, however, if a single home-rental bond blows up, thousands of families could be evicted, whether or not they ever missed a single rental payment.

“We could well end up in that situation where you get a lot of people getting evicted… not because the tenants have fallen behind but because the landlords have fallen behind,” says Baker.

Bugs in Blackstone’s Housing Dreams

Whether these new securities are safe may boil down to the simple question of whether Blackstone proves to be a good property manager. Decent management practices will ensure high occupancy rates, predictable turnover, and increased investor confidence. Bad management will create complaints, investigations, and vacancies, all of which will increase the likelihood that Blackstone won’t have the cash flow to pay investors back.

If you ask CaDonna Porter, a tenant in one of Blackstone’s Invitation Homes properties in a suburb outside Atlanta, property management is exactly the skill that Blackstone lacks. “If I could shorten my lease—I signed a two-year lease—I definitely would,” says Porter.

The cockroaches and fat water bugs were the first problem in the Invitation Homes rental that she and her children moved into in September. Porter repeatedly filed online maintenance requests that were canceled without anyone coming to investigate the infestation. She called the company’s repairs hotline. No one answered.

The second problem arrived in an email with the subject line marked “URGENT.” Invitation Homes had failed to withdraw part of Porter’s November payment from her bank account, prompting the company to demand that she deliver the remaining payment in person, via certified funds, by five p.m. the following day or incur “the additional legal fee of $200 and dispossessory,” according to email correspondences reviewed by TomDispatch.

Porter took off from work to deliver the money order in person, only to receive an email saying that the payment had been rejected because it didn’t include the $200 late fee and an additional $75 insufficient funds fee. What followed were a maddening string of emails that recall the fraught and often fraudulent interactions between homeowners and mortgage-servicing companies. Invitation Homes repeatedly threatened to file for eviction unless Porter paid various penalty fees. She repeatedly asked the company to simply accept her month’s payment and leave her alone.

“I felt really harassed. I felt it was very unjust,” says Porter. She ultimately wrote that she would seek legal counsel, which caused Invitation Homes to immediately agree to accept the payment as “a one-time courtesy.”

Porter is still frustrated by the experience—and by the continued presence of the cockroaches. (“I put in another request today about the bugs, which will probably be canceled again.”)

A recent Huffington Post investigation and dozens of online reviews written by Invitation Homes tenants echo Porter’s frustrations. Many said maintenance requests went unanswered, while others complained that their spiffed-up houses actually had underlying structural issues.

There’s also at least one documented case of Blackstone moving into murkier legal territory. This fall, the Orlando, Florida, branch of Invitation Homes appeared to mail forged eviction notices to a homeowner named Francisco Molina, according to the Orlando Sentinel. Delivered in letter-sized manila envelopes, the fake notices claimed that an eviction had been filed against Molina in court, although the city confirmed otherwise. The kicker is that Invitation Homes didn’t even have the right to evict Molina, legally or otherwise. Blackstone’s purchase of the house had been reversed months earlier, but the company had lost track of that information.

The Great Recession of 2016?

These anecdotal stories about Invitation Homes being quick to evict tenants may prove to be the trend rather than the exception, given Blackstone’s underlying business model. Securitizing rental payments creates an intense pressure on the company to ensure that the monthly checks keep flowing. For renters, that may mean you either pay on the first of the month every month, or you’re out.

Although Blackstone has issued only one rental-payment security so far, it already seems to be putting this strict protocol into place. In Charlotte, North Carolina, for example, the company has filed eviction proceedings against a full 10% of its renters, according to a report by the Charlotte Observer.

Click here to see a larger version

About 9% of Blackstone’s properties, approximately 3,600 houses, are located in the Phoenix metro area. Most are in low- to middle-income neighborhoods. (Map by Anthony Giancatarino, research by Jose Taveras.)

Forty thousand homes add up to only a small percentage of the total national housing stock. Yet in the cities Blackstone has targeted most aggressively, the concentration of its properties is staggering. In Phoenix, Arizona, some neighborhoods have at least one, if not two or three, Blackstone-owned homes on just about every block.

This inundation has some concerned that the private equity giant, perhaps in conjunction with other institutional investors, will exercise undue influence over regional markets, pushing up rental prices because of a lack of competition. The biggest concern among many ordinary Americans, however, should be that, not too many years from now, this whole rental empire and its hot new class of securities might fail, sending the economy into an all-too-familiar tailspin.

“You’re allowing Wall Street to control a significant sector of single-family housing,” said Michael Donley, a resident of Chicago who has been investigating Blackstone’s rapidly expanding presence in his neighborhood. “But is it sustainable?” he wondered. “It could all collapse in 2016, and you’ll be worse off than in 2008.”

Laura Gottesdiener is a journalist and the author of A Dream Foreclosed: Black America and the Fight for a Place to Call Home, published in August by Zuccotti Park Press. She is an editor for Waging Nonviolence and has written for Rolling Stone, Ms., Playboy, the Huffington Post, and other publications. She lived and worked in the People’s Kitchen during the occupation of Zuccotti Park. This is her second TomDispatch piece.

[Note: Special thanks to Symone New and Jose Taveras for conducting the difficult research to locate Blackstone-owned properties. Special thanks also to Anthony Giancatarino for turning this data into beautiful maps.]
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Offline Eddie

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Re: Official Death of Retail Thread: Life Without Walmart
« Reply #249 on: March 31, 2019, 01:24:20 PM »
You know how many homes are owned by big corporate entities like Blackstone?

1.43%. Read it if you want. I'm not going to get into a cut and paste war.

https://www.curbed.com/2018/5/18/17319570/wall-street-home-rentals-single-family-homes-invitation

They're getting into it because it's hard to find a return in stocks and bonds. I'm not surprised they've done it, but it remains to be seen if it will will be a long term trend.

Home ownership rates are about the same now as 1970. Look it up.
What makes the desert beautiful is that somewhere it hides a well.

Offline RE

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Re: Official Death of Retail Thread: Life Without Walmart
« Reply #250 on: March 31, 2019, 01:29:34 PM »
You know how many homes are owned by big corporate entities like Blackstone?

1.43%. Read it if you want. I'm not going to get into a cut and paste war.

https://www.curbed.com/2018/5/18/17319570/wall-street-home-rentals-single-family-homes-invitation

They're getting into it because it's hard to find a return in stocks and bonds. I'm not surprised they've done it, but it remains to be seen if it will will be a long term trend.

Home ownership rates are about the same now as 1970. Look it up.

Amazing how statistics become important to you when you think they support your POV, but when they don't they are bullshit.  lol.

RE
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Offline azozeo

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Re: Official Death of Retail Thread: Life Without Walmart
« Reply #251 on: March 31, 2019, 01:51:05 PM »
You know how many homes are owned by big corporate entities like Blackstone?

1.43%. Read it if you want. I'm not going to get into a cut and paste war.

https://www.curbed.com/2018/5/18/17319570/wall-street-home-rentals-single-family-homes-invitation

They're getting into it because it's hard to find a return in stocks and bonds. I'm not surprised they've done it, but it remains to be seen if it will will be a long term trend.

Home ownership rates are about the same now as 1970. Look it up.


The Asian buyer market in Cali is off the charts ED....

Come on already. Chinese gold baby  :icon_sunny:
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline azozeo

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Re: Americans Can’t Afford To Buy A Home In 70% Of The Country
« Reply #252 on: March 31, 2019, 01:55:41 PM »

Even at a time of low interest rates and rising wages, Americans simply can’t afford a home in more than 70% of the country, according to CBS. Out of 473 US counties that were analyzed in a recent report, 335 listed median home prices were more than what average wage earners could afford. According to the report from ATTOM Data Solutions, these counties included Los Angeles and San Diego in California, as well as places like Maricopa County in Arizona.

New York City claimed the largest share of a person’s income to purchase a home. While on average, earners nationwide needed to spend only about 33% of their income on a home, residents in Brooklyn and Manhattan need to shell out more than 115% of their income. In San Francisco this number is about 103%. Homes were found to be affordable in places like Chicago, Houston and Philadelphia.


https://www.zerohedge.com/news/2019-03-30/americans-cant-afford-buy-home-70-country


<a href="http://www.youtube.com/v/v25GeBMiJlQ&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/v25GeBMiJlQ&fs=1</a>
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

Offline azozeo

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Re: Americans Can’t Afford To Buy A Home In 70% Of The Country
« Reply #253 on: March 31, 2019, 01:59:34 PM »

Even at a time of low interest rates and rising wages, Americans simply can’t afford a home in more than 70% of the country, according to CBS. Out of 473 US counties that were analyzed in a recent report, 335 listed median home prices were more than what average wage earners could afford. According to the report from ATTOM Data Solutions, these counties included Los Angeles and San Diego in California, as well as places like Maricopa County in Arizona.

New York City claimed the largest share of a person’s income to purchase a home. While on average, earners nationwide needed to spend only about 33% of their income on a home, residents in Brooklyn and Manhattan need to shell out more than 115% of their income. In San Francisco this number is about 103%. Homes were found to be affordable in places like Chicago, Houston and Philadelphia.


https://www.zerohedge.com/news/2019-03-30/americans-cant-afford-buy-home-70-country


<a href="http://www.youtube.com/v/v25GeBMiJlQ&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/v25GeBMiJlQ&fs=1</a>


Orange Julius has seen fit to double speak his wall BS...

You got's bucks Mr. & Mrs. Asian bizness folks. Come on in. Marin County, Pasadena perhaps. 1mil & up amigo.  :icon_mrgreen:


No entrado de mehicano's however  :evil4: No bucks no entrado. Only in the merry old land of Oz  :icon_sunny:
I know exactly what you mean. Let me tell you why you’re here. You’re here because you know something. What you know you can’t explain, but you feel it. You’ve felt it your entire life, that there’s something wrong with the world.
You don’t know what it is but its there, like a splinter in your mind

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🏬 Walgreens: The Ship Isn't Sinking - Yet
« Reply #254 on: April 03, 2019, 12:16:43 AM »
The operative word here is "YET".  ::)

RE

https://seekingalpha.com/article/4252436-walgreens-ship-sinking-yet

Walgreens: The Ship Isn't Sinking - Yet
Apr. 2, 2019 3:54 PM ET|


About: Walgreens Boots Alliance, Inc. (WBA)

Wealth Insights
Dividend growth investing, long-term horizon, dividend investing, portfolio strategy
(5,000 followers)
Summary

Walgreens Boots Alliance is setting new multi-year lows after "the most difficult quarter since the formation of Walgreens Boots Alliance".

While the company is being slammed by a rapidly changing operating environment, the company's solid financial footing and cash flows will buy it time to adapt.

The stock is now priced very attractively, but investors should be aware that Walgreens isn't "out of the woods" until the company adapts to new industry trends.

Walgreens Boots Alliance (WBA) is currently tracking at multi-year lows after a horrendous second-quarter report came out that included a massive cut to the company's 2019 guidance. Despite the company being caught up in a rapidly changing operating environment, it is still on solid footing. The balance sheet is strong, and the dividend payout is well managed - despite Walgreens' 43-year dividend growth history. The current stock price now presents a bargain level valuation that optimistic investors can take advantage of. However, we caution that investors need to remain vigilant with Walgreens. Stable footing today can become treacherous territory in the future if Walgreens fails to successfully adapt its business to shifting trends.


Source: YCharts
A Horrendous Second Quarter

Make no mistake about it, the 2019 second quarter was so bad for Walgreens that CEO Stefano Pessina didn't even attempt to sugar coat anything:

    "The market challenges and macro trends we have been discussing for some time accelerated, resulting in the most difficult quarter we have had since the formation of Walgreens Boots Alliance."

In other words, the company was caught off guard by how rapidly its operating environment is shifting (even though these headwinds have been known for some time), and it reflected in the company's second-quarter results.
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