Who’s Paying Attention

Sometime in the 2030-2031 timeframe, 100% of US Federal tax revenue will be needed to pay for entitlements and interest on the US debt. This isn’t an “if”, it’s a “when”.

I give Michael Cemblest, Chairman of Market and Investment Strategy at JP Morgan (and Cory’s former boss) a lot of credit for talking very publicly about this often and most recently in his Eye On The Market weekly column. I have heard him say more than once that he hopes to be retired by the time this happens. As a major spokesman for the largest financial institution on the planet, this is not a comforting comment from someone so well-versed in national and global economics

Two levers remain: tax increases and cuts to entitlement programs.

We are all watching the bond market and thinking, how does this affect my personal investments, commercial real estate, home prices, all of it. The biggest loser might be the biggest borrower of them all, the US Federal Government, as the arrival of “D-Day” accelerates.

It’s worth looking at the suggested options to reduce the Federal Debt and thinking about your investment strategy. In commercial real estate, we are focused on long-term capital gains, which was the first thing I searched. Of course it was there

$103 Billion in Additional Revenue - Raise the Tax Rates on Long-Term Capital Gains and Qualified Dividends by 2 Percentage Points

If that’s where we end up, I’d call that a huge win for commercial real estate investors.