Join us as we venture into a realm of knowledge with the brilliant Dr. Peter Linneman, author of the renowned Linneman Letter—an exceptional macroeconomic resource. Unveiling the US economy's resilient recovery from the 2020 pandemic, Dr. Linneman explores the intriguing concept of "economic long covid." This riveting discussion encompasses monetary policy, inflation rates, housing costs, supply chain disruptions, and more. It serves as a cautionary tale, highlighting the dangers of overcorrecting during these trying times. Together, we delve into the dynamics of the housing market, the prospects of hospitality and industrial sectors, and the significance of collaborative decision-making for investment success. Prepare to unlock a wealth of insights!

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[00:00 - 08:02] Dr. Peter Linneman welcome: Exploring Economic Long Covid and Maximizing Wealth

• Dr. Peter Linman is the author of the Lineman Letter, one of the most advanced and current macroeconomic letters in the market today

• Before 2020, the US economy was doing just fine with low unemployment and steady job growth

• When Covid happened, governments shut down huge swaths of the economy and individuals panicked

• The only two possibilities were either supply would come back before demand or demand would come back faster than supply

[08:02 - 17:25] Faster Interest Rate Hikes Lead to Systematic Inflation and Overreaction Damage

• Prices went up due to systematically short supply

• Profits went up a lot as supply lagged behind demand

• Fed first said no to raising interest rates, but then changed its mind and raised them by 5% in a year, the fastest in history

• The slower the Fed raises rates, the longer it takes for the first rate cut; the faster they raise rates

[17:25 - 26:38] Fed's Abnormal Inflation and Supply Chain Disruptions Could Lead to Another Cycle of Interest Rate Changes

• Need to be cautious when making decisions as overcorrecting can cause more damage

• Main driver of inflation has been housing, which lags by 6 months

• Two thirds of households had no increase in costs, and one third are being counted as if it's the rental increase of 6 months ago

• Supply chain disruptions were 4 standard deviations above normal in 2021 and 2022

[26:38 - 35:53] Exploring the Long-Term Supply and Demand Imbalance in Housing

• Job openings have narrowed and wage growth has diminished

• Real estate is a long-term game, with an imbalance in supply and demand for homes

• Low interest rates, lack of down payments, and nimbyism are factors contributing to the deficit in housing

• Investing during periods of capital market disarray can generate higher returns over the long term

[35:54 - 45:14] The Fundamentals of Housing and Retail

• Single-family housing is underproduced, leading to a 3.5% shortfall

• Low interest rates have given homeowners a 5% income subsidy not to sell their homes

• Hospitality and Industrial sectors are poised for growth due to pent-up demand

• Retail is always hard work and requires changing consumer demand

[45:16 - 55:31] Optimal Retail Location, Quality, Collaboration, and the Influence of Sam Zell

• Retail needs to be in a good, walkable spot to attract people

• Quality is more important than convenience when it comes to retail

• Sam Zell was an avid reader and a great mentor who taught Dr. Linneman a lot

• They stole each other's best material and made their presentations better by collaborating

• Collaboration is key to success in investment management

Quotes:

"It's not about spamming people, it's about building a meaningful relationship in a systematic and engaged way." - Dr. Peter Linneman

Connect with Peter through LinkedIn, Facebook, or visit Linneman Associates

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