I. Insanely Cheap Investment Property Financing!
I mentioned in a recent blog that we are getting a surprisingly large number of investment property purchases across the Sunbelt. This is for a few reasons: (1) falling prices enable investors to pick up rentals that cash flow nicely; and (2) the financing is now crazy easy and cheap. And it only requires 20% down, rather than the traditional 25%!
DSCR financing using rental income only to qualify was my recent focus. But more recently, our “full doc” options have become even more competitive, putting Fannie Mae to shame.
II. 74% Chance The Fed Will Cut Rates In December – But Who Cares?
I mentioned yesterday that there was only a 33% chance that the Fed would cut in December. But comically, the odds are now up to 74% because a single Fed Governor mentioned the weakness in the labor market. But again, who cares? Long-term rates are gonna do what long-term rates are gonna do, irrespective of the Fed.
III. Please Tell Your Kids To Drink More! This Is Serious!
Per capita alcohol consumption amongst 18 to 34-year-olds has fallen by as much as 25% over the last 10 years. And even sadder, binge drinking has dropped off by as much as 40%! What is wrong with these kids!
Let’s discuss why this is serious.
1. Huge Industry! Alcohol is close to a $1 trillion industry, and it is responsible for close to three million jobs (manufacturing, distribution, sales, etc.). Overall volume is holding steady thanks to us boomers and a few Xers who have no self-control, but as non-drinking young people turn into non-drinking old people, and as we drunk boomers die off, the industry will be in a world of hurt. Napa’s wine industry, for example, is already getting crushed. Facetiousness aside, this is a true economic threat.
2. The Restaurant Industry Survives On Alcohol! This is what really interested me, as I watched a restaurant consultant on X predict restaurant Armageddon because kids are not drinking. Most restaurants make very little or no money from food sales and make all of their money from high-margin drink sales. And many will simply not survive if current drinking trends continue – unless they find alternatives, e.g. “would you like to see our hallucinogenic drug menu to go with your dinner? We have some excellent mushrooms from Argentina that pair wonderfully with our sea bass…”
3. Impulsive Purchases. In 1985, approximately 40% of all retail sales were impulse purchases by drunk boomers. We desperately need to revive the impulse purchase market!
4. Mating. This is the most serious and least facetious point in this blog, as population decline is truly one of the most serious problems on the planet. Famed author, Peter Zeihan, insists that China, Russia, Japan, South Korea, and Germany will all cease to exist as countries in the years to come because they are not making enough babies. Declining and even stable populations seriously threaten economic growth and opportunities as well – even if a country can survive.
Enter renowned commentator and NYU Professor Scott Galloway. Galloway recently implored young people to drink more, as alcohol is the best social lubricant there is and one of the best ways for men to meet women … and then hopefully have babies (as opposed to sitting home alone in their parents’ basements). Galloway insists the health risks to a young body are not that significant.
I personally remember getting drinks after work in my 20s as being some of the best times of my life, and my liver 40 years later is just fine. I also watched our young JVMers literally wear out a conference table from playing rage cage so much, and I am pretty sure they are all still alive as well (and, more importantly, still very close friends).
HERE is a 40-second viral video in which Galloway made his case recently on Bill Maher’s show.
The next time one of your kids wants to stay home to play badminton with the family, you need to buy him a case of beer and tell him to get the heck out of the house… for America.
