ABRAHAM GULKOWITZabe@gulkowitz.com917-402-9039

2017 issue 5March 15, 2017

And the winner is… La La LandPolitical “risk events” around the globe have supplanted economic issues as driving forces. And market participants have kept awary eye on developments in the oil markets following the latest price declines. No big deal with the Fed. It had been welltelegraphed and therefore seems unlikely to create any great twists in financial markets. A year ago, hints that the Fed wouldmove sent markets into a tailspin. Moreover, the fact that the Fed can raise rates with such calm is testament to a change in theenvironment for central banking, a move closer to normalcy. After battling the threat of economic dislocation for so long, centralbanks appeared to have been stuck in some awkward reality. At last policymakers are moving out of their perpetual crisis-mode.Now, growth and inflation forecasts have risen from last winter’s lows. Financial markets are shrugging off Fed rate increases; andhave rallied since the Trump’s presidency. The Fed remains in a delicate spot, but no longer a desperate one. Markets shouldrecognize this path to some kind of normalcy. To be sure, normal or conventional in this context does not mean, even in the US,that central banks will be eager to return rates back to levels common before the financial crisis.

Walmart … New reports that the retail giant is looking to staycompetitive by launching a price war with rivals like German-baseddiscount grocery chain Aldi and Kroger by running a new price-comparison test in at least 1,200 US stores. Walmart held meetingslast week with packaged good suppliers such as Procter & Gamble,Unilever , Conagra , Johnson & Johnson and Kraft Heinz,demanding they reduce their cost of goods by 15%.

Euro zone economy: finally a real recovery or just another Sirens' song?Over the years, euro zone economic growth has been a bit like the Sirens in Homer's Odyssey: singing a song of promise, only to end up pulling you onto the rocks. Will it be different this time?

The Real 'La La Land' 

The Conference Board announced that the U.S. Consumer Confidence Index for February jumped to 114.8, the highest level since July 2001

Now France and Italy have joined Greece at the epicentre ofconcerns about the eurozone: the number of investors expecting thesingle currency area to lose at least one member state in thecoming months has increased, a survey showed on Tuesday, withthe risk of contagion now seen as bigger than during the height ofthe debt crisis in 2012/13.

China has cut its growth target this year as theworld's second-largest economy pushes throughpainful reforms to address a rapid build-up in debt,and erects a "firewall" against financial risks.

“QE Forever” View Quietly Slipping Away… On a path back to normalcy ?

Lift in U.S. job growth, rising wages set stage for Fed rate hikeHigh yield credit measures have reached bubble realms

CBO THROWS CHILL ON HEALTH BILL...

The owners of department store chain NeimanMarcus are considering a sale of the company,among other options, as it struggles in an era ofdeclining foot traffic and increased competitionfrom online sellers.

US business confidence highest for 8 yrsChief executives optimistic about tax reform and fewer regulations under Trump

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In This Issue

Headlines and data appearing in The Punch Line came from widely available publications including national and international newspapers, trade journals, economic and industrial bulletins and news websites.

• Households… (pg 4)

• The Future Ain’t … (pg 5)

• New Perspectives (pg 6)

• The Likelihood of Unlikely Events... (pg 7)

• Dislocation, Dislocation (pg 8)

• You Can’t Handle the Truth ! (pg 9)

• The Market Roar… (pg 10)

• Alternative Facts (pg 11)

• Credit… (pg 12)

• How Do You Figure? (pg 13)

• Pumping Iron (pg 14)

• The DNA of Business… (pg 15)

• Real Estate and Construction… (pg 16)

• More Real Estate (pg 17)

• Will Life Ever be the Same? (pg 18)

• La La Land… Political “risk events” around the globe have supplanted economic issues asdriving forces. And market participants have kept a wary eye ondevelopments in the oil markets following the latest price declines. No bigdeal with the Fed. It had been well telegraphed and therefore seems unlikelyto create any great twists in financial markets. A year ago, hints that the Fedwould move sent markets into a tailspin. Moreover, the fact that the Fed canraise rates with such calm is testament to a change in the environment forcentral banking, a move closer to normalcy. After battling the threat ofeconomic dislocation for so long, central banks appeared to have been stuckin some awkward reality. At last policymakers are moving out of theirperpetual crisis-mode. Now, growth and inflation forecasts have risen fromlast winter’s lows. Financial markets are shrugging off Fed rate increases; andhave rallied since the Trump’s presidency. The Fed remains in a delicatespot, but no longer a desperate one. Markets should recognize this path tosome kind of normalcy. To be sure, normal or conventional in this contextdoes not mean, even in the US, that central banks will be eager to returnrates back to levels common before the financial crisis. (pg 1)

• In This Issue (pg 2)

• Engines of GrowthIntense and confusing stress signals are still emanating from around the globe . Weakworld trade, along with high debt levels and policy limitations, continue to cloud the globaleconomic outlook. Despite extensive and massive easing, most of the global economystill faces woefully inadequate growth prospects and difficult policy options. Uncertainties-- particularly in Europe, in Asia, in the Middle East, and others - - have confoundedinvestors and contributed to intermittent bouts of severe volatility. The U.S. standsalone. The U.S. is facing a revolution… a repudiation of key fiscal, trade, economic andregulatory assumptions. We will continue to monitor the outlook for this seismic shift.

(pg 3)

Contact information:

Abraham Gulkowitz

phone: 917-402-9039 email:   abe@gulkowitz.com

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Engines of Growth…

Stronger than expected euro-area growth and inflation data haveincreased speculation about QE withdrawal but risks have also risen► German industrial output rose more than expected in January,

driven by strong demand for machinery, cars and other capitalgoods, suggesting Europe's biggest economy started into 2017 ona solid footing despite the threat of rising protectionism. The number of foreign workers in

Japan has reached a record level

Chinese manufacturing companies saw astronger improvement in overall businessconditions in February, with output andtotal new orders both rising at fasterrates than at the start of the year.

Exxon to invest $20 billion on US Gulf Coast refining projects

Brazil's worst-ever recession intensified unexpectedly in thefinal quarter of 2016, data showed, frustrating hopes for signsof a recovery and stepping up pressure on President MichelTemer and the central bank to do more to promote growth.Brazil's gross domestic product contracted by 3.6 percent last year, statistics agencyIBGE said, following a 3.8 percent drop in 2015. The nation's two-year downturn is thelongest and deepest on record for Latin America's biggest nation. The economiccontraction worsened in the fourth quarter, with a steeper-than-expected decline of 0.9percent, following a 0.7 percent drop in the previous three months. Investment tumbled10.2 percent in 2016, in a sharp drop that is partly blamed by economists on Brazil'schronically high interest rates. The central bank started to cut its benchmark rate from adecade-high of 14.25 percent in October and is expected to take it to single digits thisyear. The disappointing data fueled calls for the central bank to accelerate the pace ofrate cuts, currently running at 75 basis points per meeting. Yields on rate futures showedan increasing chance of a steeper cut when the bank makes its next scheduled policydecision in April, according to traders.

Brazil, Widening the Hunt for Corruption, Finds It Under Every Rock across the Country

Slowing India property market stirs investor angstDevelopers that bought more land instead of completing projects face liquidity crunch

China's industrial production and fixed asset investment growth accelerated more-than-expected atthe start of the year, while retail sales grew at a slower pace from a year ago. This industrialstrength remains heavily reliant on rapid investment growth that will be difficult to sustain givenclear signals that the fiscal and monetary policy stance will be less supportive this year Annualgrowth in retail sales slowed to 9.5 percent in the January to February period from 10.9 percent inDecember.

Growth in the U.S. is strong enough to raise rates from the abnormally constrained levels seen over the past several years…

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Households – Brave New World

CoreLogic US Home Price Report ShowsPrices Up 6.9 PercentHome prices nationwide, including distressed sales,increased year over year by 6.9 percent in January 2017compared with January 2016 and increased month overmonth by 0.7 percent in January 2017 compared withDecember 2016, according to the CoreLogic HPI.

Household Wealth: The net worth ofhouseholds and nonprofits rose to $92.8 trillion duringthe fourth quarter of 2016. The value of directly andindirectly held corporate equities increased $728 billionand the value of real estate increased $557 billion.

The NFIB Small Business Optimism Index in the United States dippedslightly for the first time in five months to 105.3 in February of 2017 from 105.9in January…Nearly half of respondents expect better business conditions in thecoming months.

U.S. Household Debts Climbed in 2016 by Most in a DecadeTotal household debt climbed by $226 billion in the final three monthsof 2016 to $12.6 trillion, driven by broad and steady increases in creditcard debt, auto and student loans, and a surge of mortgage originations.

More US car owners behind on loan payments than at any time since 2009The car loan delinquency rate also remains lower than for othertypes of debt. Americans continue to prioritise car loanrepayments, a sign of the importance they attach to their vehicles.Bankers say overall credit quality remains good. The mortgagedelinquency rate is significantly higher than the car loans rate, at2.28 per cent, although this remains low by the historicalstandards of the home loan market.

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Foreign property investment by Chinese companiesplunged 84 per cent last month as Beijing’s capital controlschoked off foreign acquisitions. In an effort to curbcapital outflows and ease downward pressure on therenminbi, Chinese regulators have in recent monthsimposed restrictions on outbound dealmaking. The curbscame after outbound investment in non-financial assetssurged 44 per cent in 2016 to a record $170bn. Therestrictions have had an effect. Overall non-financialoutbound investment fell 36 per cent in January from ayear earlier to Rmb53bn ($7.7bn), the commerce ministrysaid yesterday, following a 39 per cent drop in December.The commerce ministry did not reveal actual figures forJanuary, but the sharp fall in foreign real estate investmentcomes after an overall 53 per cent surge last year to arecord $33bn, say separate data from JLL, a global realtor.

Caution flags in the latest auto sector results, includingdiscounts that hit 10 percent of the average selling pricefor February, according to three companies that trackvehicle pricing.

China will cut steel capacity by 50 million tonnes andcoal output by more than 150 million tons this year, itstop economic planner said on Sunday as the world'sNo. 2 economy deepens efforts to tackle pollution andcurb excess supply.

Global human capital landscape will shiftMigration, education, aging and prosperity are shifting the world's demographic center of gravity from North to SouthU.S. Productivity Increase Slows

Growth in nonfarm output per hour during Q4'16 increased at an unrevised 1.3% rate(1.0% y/y) following a 3.3% Q3 rise, revised from 3.5%. A 1.5% increase had beenexpected in the Action Economics Forecast Survey. These latest two increases followedthree consecutive quarters of decline. During all of 2016, productivity increased 0.2%,the weakest rise since 2011.Productivity is the biggest factor affecting Americans’ living standards. When businessesare more productive, they essentially become more efficient, leading to higher profits andlower costs. That in turn enables them to expand and raise workers’ pay.

Scotland’s devolved government has issued ademand for a new independence referendum,handing Theresa May the challenge of keeping theUK united just as the prime minister grapples withthe country’s plans to leave the EU.

China and Japan in tug of war to shape trade pactBeijing eyes quick deal, while Tokyo and Canberrawould rather attract US back to table

The Future Ain’t WhatIt Used To Be

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Some New PerspectivesThink it Through…

Total nonfarm payroll employment increased by 235,000in February, and the unemployment rate was little changedat 4.7 percent, the U.S. Bureau of Labor Statistics reportedtoday. Employment gains occurred in construction, privateeducational services, manufacturing, health care, andmining…. Nonfarm payrolls increased by 235,000 jobslast month as the construction sector recorded its largestgain in nearly 10 years due to unseasonably warm weather,the Labor Department said on Friday. The economycreated 9,000 more jobs in December and January thanpreviously reported.

Expanded measure of unemployment is till at 9.2%

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The Likelihood of Unlikely Events

Global Disorder

Italy-EU budget conflicts may not abateHarsh negotiations are likely to prove detrimental for both sides

Sweden said it’s bringing back a military draft next year, and it’llinclude women for the first time ever. They country hasn’t had a draftfor years. But now Sweden - aka the geopolitical synonym forneutrality - is bulking up its military in part because it’s worried aboutRussian aggression in the region

UK services activity expanded at the slowest pace in fivemonths in February as cautious consumers curbed theirspending in the wake of the Brexit-related uncertainty.The headline services Purchasing Managers' Index dropped to 53.3 inFebruary from 54.5 in January, survey data from the CharteredInstitute of Procurement & Supply and IHS Markit showed

London: Permanent placements and temp billings bothrise at weaker rates

Geopolitical tensions in Asia… given North Korea’s continued provocations

East Asia's regional power struggles converge in SeoulSeveral separate but interacting crises are raising risk in and aroundthe Korean peninsulaChanges in US policy will interact in potentially volatile ways withmajor changes in domestic politics -- a forthcoming leadershipreshuffle in Beijing, a China-sceptic government in Taipei, apresidential impeachment in Seoul, and the administration of apopulist president in Manila.

China warned that North Korea and the United States were like two trainsracing towards a "head-on collision," calling on both sides to apply the brakesand avert a security crisis. Foreign Minister Wang Yi's warning came after acascade of events that has sent regional tensions soaring, includingprovocative North Korean missile tests and annual US-South Koreanwargames that infuriate Pyongyang. Beijing itself is particularly concernedover an American missile-defense system being rolled out in South Korea as ashield against the North Korean threat, but which Wang said also"undermines China's strategic security."

Swift Banking System Bars North Korean Banks

South Korea's Constitutional Court removed President Park Geun-hyefrom office on Friday over a graft scandal involving the country'sconglomerates at a time of rising tensions with North Korea andChina. The ruling sparked protests from hundreds of her supporters,two of whom were killed in clashes with police outside the court.Park becomes South Korea's first democratically elected leader to beforced from office, capping months of paralysis and turmoil over acorruption scandal that also landed the head of the Samsungconglomerate in jail.

Fake China data: was it just one province?Revelations Liaoning fabricated statistics raise questions over rest of rust belt

China’s fixation on stability creates economic risksPresident Xi would increase control over the economy by letting markets operate

Competition over Northern Syria could be explosive

Sterling weakens amid political uncertainty

After overcoming parliamentaryresistance to her plans to leave theEU, Theresa May faces a dilemmaover Scottish independence

The UK will not be in full control of the negotiating agenda, and specifically the order inwhich issues will be addressed. Prime Minister May has said that a comprehensive freetrade agreement with the EU is one of the government’s objectives, and that a smooth andorderly Brexit means having it in place by the end of the negotiating period. Mostobservers agree that two years is a short time to negotiate a free trade deal, but the actualtime available to do so could prove even shorter, as some European leaders have suggestedthat the UK’s post‐exit trade arrangements can only be negotiated once the most importantterms of its exit have been agreed, which could take several months.

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Dislocation, Dislocation, Dislocation

Total US sales of light vehicles were littlechanged m/m during February (-0.7% y/y) at17.58 million units (SAAR), according tothe Autodata Corporation. Passenger carsales eased 0.8% (-11.5% y/y) to 6.53million units. Domestically-made passengercar sales held steady at 4.67 million units (-14.9% y/y) and matched the lowest levelsince December 2011. Sales of importedpassenger cars fell 2.8% (-1.4% y/y) to 1.86million units. Light truck sales improved0.2% (7.1% y/y) to 11.05 million.Domestically-made light truck salesincreased 0.6% (6.1% y/y) to 9.28 millionunits. Imported light truck sales declined2.1% (+12.7% y/y) to 1.77 million units.Trucks' share of the U.S. vehicle marketedged higher to another record of 62.8%, upfrom 58.3% in February 2016.

GM Has Huge Supply of UnsoldCarsU.S. consumers want vehicles built on lighttruck bodies — pickups, sport utility vehiclesand crossovers. U.S. carmakers have failed toswitch production from passenger cars to lighttrucks fast enough to keep up with the changingdemand, and now they are paying the price withbloated inventories of cars nobody wants to buy.General Motors Co. (GM) has had inventoryproblems since the middle of the fourth quarterof last year. The company's Novemberinventory checked in with 87 days of supply,which dropped to 84 days in December, jumpedback to 87 in January, before popping to 108days of supply at the end of February.Automakers typically want to see inventorylevels of 60 to 70 days.

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YouCan’t Handle the Truth…

Uncertainty will dog Mexican economy in 2017Before any major policy changes have even begun, the economy is already feeling the strain of worsening US trade ties

Mexico’s Pemex will retrench in a bid to surviveWhile Pemex’s losses were far less in 2016 than in previous years, the company is still in serious danger

Industrial production in Mexico declined 0.1 percent year-on-year inJanuary of 2017, easing from a 0.6 percent drop in the previous monthand worse than market expectations of a 0.1 percent rise. Outputcontinued to fall for mining (-9.8 percent vs -10.5 percent in December)and tumbled for construction (-1 percent vs 1.8 percent). In addition,production of electricity, water and gas supply increased less (1 percent vs3.9 percent). By contrast, manufacturing output rose faster (4.3 percent vs1.8 percent in December).

Let's Take the “Con” out of Economics

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The Market Roar… History May Not Repeat, But It Often Rhymes

Skinny Caa Spread Defies Default OutlookAn exceptionally thin median spread for default -prone Caa- rated bonds reflects anunsustainably high tolerance of credit risk. Often, an ultra-thin spread for Caa-grade bonds isfollowed by wider yield spreads for both the Caa category and the entire high-yield market.

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Alternative Facts- Careful Reading

Washington will speed US energy export growthThe boom in US domestic oil and gas production is reshaping thedomestic and international politics of energy

U.S. shale oil producers are plotting ambitious production growthoutside the red-hot Permian Basin in Texas, widening a resurgencethat could confound OPEC's strategy to tighten global supplies.

⁎ Warm weather leads to first recorded natural gas storage injection in February

⁎ Oil prices fell, extending the biggest falls this year as record U.S. crude inventories kept sentiment weak, pointing to a global glut despite supply cuts. West Texas Intermediate crude, the US benchmark, was down by 2.% at $47.43 a barrel as of 10:59 a.m. ET. That is its lowest level since late November.

Oil Plunge Accelerates After EIA Forecasts Spike In April Shale Output

Saudis Report Big Jump In Production; Kuwait Warns Of Drop To $45

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Credit Matters - Know RiskMany Excel in Strategy, Few in the Management of Risk

The increasing complexity of China’s financial system hasmade it difficult to estimate the true level and growth rateof credit. Official data put nonfinancial debt at roughly 205percent of GDP. However, adjustments for additionalsources of credit not fully captured in the official datasuggest total credit could be higher. As shown in the chartbelow, the pace of total credit growth is higher when swapsof local government-related bank loans for municipal bondsare included. China’s credit measure excludes swappedbank loans but does not add back the municipal bondsthey were exchanged for.

Loan Challenges Loom for US Retail► Fitch predicts a 9% year-end institutional leveraged loan retail default rate, equating to

$6 billion of defaults► Fitch’s Loans of Concern list highlights retailers with a high risk of default over the next

12 months► In the past five months, average retail secondary bid prices declined roughly 260 bps,

to 89.1% of par, while all first-lien loans gained nearly 150 bps, to 97.8% of par► One year ago, 35% of all institutional loans were bid below 95% compared to just 11%

currently► There have been no defaults so far in February, and Fitch expects the leveraged loan

default rate will end February at 1.7%► Avaya’s January bankruptcy propelled the TTM telecommunications default rate to

7.2%, the sector’s first default since November 2014 US High Yield Default Rate Below 3% by End of May; Retail Lags in Secondary Market► The US TTM high yield default rate finished February at 4.2% and Fitch Ratings expects

4% for March► Fitch forecasts the rate to drop below 3% by the end of May as $29 billion in defaults roll

off the TTM calculations► The default rate should fall to the low-to-mid 2% range during the summer before closing

2017 at around 3%► The 30-day TTM post-default price continues to tick up, reaching 36% of par from 30% at

year-end 2016► The secondary bid, par-weighted average price stands at 99.7; however, retail is much

lower at 91.5, with numerous issues bid below 90 ► Energy secondary bid levels rallied dramatically over the past 12 months, climbing to 97.9

from 64.3, but retail bids advanced just 165 bps over that time frame

China's Funding Vehicles Reveal Public Finance RisksThe sustained rise of debt issued by Chinese LGFVs, created to borrow off-balance sheet to meet the country's growth targets amid local government (LG) borrowing capacity restrictions, means it is important to account for related LGFV debt when analysing LG credit.

“The massive size of China’s banking system is less a cause for celebration than a sign of an economy overly dependent on bank-financed investment, beset by inefficient resource allocation, and subject to enormous credit risks,” said Eswar Prasad, economist at Cornell University and former China head of the International Monetary Fund. Caterpillar shares fall after tax, accounting fraud report

Fiscal squeeze sets Puerto Rico for political turmoilThe island has little fiscal autonomy, but looming cuts pit its elected representatives against US federal oversight

STRONG SWISS FX INTERVENTIONSwiss two-year yields were at minus 0.846 percent,compared with minus 0.844 percent on similar-maturity German notes. The Swiss yield earlierclimbed above Germany’s, and the bonds haven’tclosed with a higher yield than their peers sinceNovember 2014, before the SNB removed its limit onthe franc’s strength.

Things are only getting worse for theworld’s most miserable economies,and no country is in as much pain asVenezuela. Bloomberg calculates thatthe price of a cup of cafe con leche hassurged 1,419 percent since mid-August.Consumer prices appear to be up morethan 180 percent over the year, while thejobless rate stands at 7.3 percent.Rounding out the top 5 in the miseryindex are South Africa, Argentina,Greece and Turkey. These are placeswhere people aren’t working and pricesare soaring.

The FSB starting to admit that Fintech may pose systemic risk for the financial system, warns on tougher regulation

Banks Start Cutting Lending to Riskier European Real EstateThe amount of money available for property investment globally has fallen on an annual basis for the first time since 2011, led by Europe, as the amount of debt on offer diminishes, according to a report published on Tuesday by broker Cushman & Wakefield Inc. Lenders are prepared to offer less credit than before, particularly on riskier properties, the report shows.

An exceptionally thin median spread fordefault-prone Caa-rated bonds reflectsan unsustainably high tolerance of creditrisk. Often, an ultra-thin spread for Caa-grade bonds is followed by wider yieldspreads for both the Caa category and theentire high-yield market.

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How Do You Figure? U.S. Flow of Funds

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Pumping Iron…The Old Economy Revisited

Containership orders at an all-time lowDrewry says lines have a golden opportunity to smooth out the capacity peaks in the coming years by deferring existing newbuild orders without penalties

The Association of American Railroads (AAR) has reported that totalU.S. rail traffic for February 2017 was 2,112,479 carloads andintermodal units, up 4.2 percent or 84,491 carloads and intermodal unitscompared with February 2016. February 2017, U.S. carloadoriginations totaled 1,044,040, an increase of 6.7 percent, or 65,141carloads, compared to February of last year. Excluding coal, carloadsfor the month were up 1.1 percent or 7,552 carloads compared toFebruary 2016. U.S. railroads also originated 1,068,439 containers andtrailers in February 2017, up 1.8 percent or 19,350 units from the samemonth last year. In February, 11 of the 20 commodity categoriestracked by the AAR each month saw increases last month comparedwith February of 2016. Commodities showing the largest increasesincluded coal, up 19.2 percent, or 57,589 carloads; crushed stone,gravel, and sand, up 13.1 percent, or 10,091 carloads; and primary metalproducts, up 6.8 percent, or 2,357 carload

Japan rejected U.S. demands for more access to Japan's car market on Friday,casting doubt over whether it can avoid friction over autos and agricultureimports at high level bilateral talks on economic relations next month. Thejoint economic dialogue, to be chaired by Deputy Prime Minister Taro Asoand U.S. Vice President Mike Pence, could re-write ties between the world'slargest and third-largest economies. "We do not impose import tariffs oncars, and we do not impose any non-tariff barriers," Chief Cabinet SecretaryYoshihide Suga told reporters. "Our position is that Japan's auto market isalready open. This is something that will be settled in our bilateral dialogue.“Suga issued the rebuff after the U.S. government submitted a statement to theWorld Trade Organization on Wednesday saying "a variety of non-tariffbarriers impede access to Japan's automotive market.“ The U.S. governmentalso said Japan's agriculture sector remains protected by "substantial"barriers, giving the clearest indication yet of where battle lines will be drawnin the upcoming bilateral talks.

US CAPEX: non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fcame in below expectations…

Oil prices fall to three-month low as U.S. rig count climbs

Consumer prices in the US increased 2.7 percent year-on-yearin February of 2017, following a 2.5 percent rise in January andin line with market expectations. It was the highest inflation ratesince March of 2012 as energy prices jumped 15.2 percent.

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The DNA of BusinessReconfiguring Industries to Define Growth

Target Slashes Outlook as Sales Fall France's PSA Group has agreed to buy Opel from General Motors in a deal valuing the business at 2.2 billion euros ($2.3 billion), creating a new European car giant to challenge market leader Volkswagen .

With data price wars, who needs wifi?now that every major U.S. carrier offers unlimited data plans, why bother?Analysts are betting that businesses won’t continue to offer or upgrade freeWi-Fi if it’s not needed. “Customers are rational,” said Craig Moffett, ananalyst at MoffettNathanson LLC. “When pricing incentives favor Wi-Fi,customers use more Wi-Fi. When pricing incentives shift, so does behavior.”

Auto TechnologyIntel to buy Mobileye for $15 billion in largest purchase of Israeli tech

Saks Owner in Talks to Buy Neiman MarcusThe disclosure highlights wider struggles at department stores,which have struggled to adjust as quickly as the rest of the retailindustry to the new ways that people shop — increasingly online,and away from brick-and-mortar stores.The private equity firms Ares Management L.P. and CPPIB purchasedNeiman Marcus in 2013. At the time, the company had largelystopped expanding into new markets, and was focused on growingits e-commerce business. The company operates 42 stores in theUnited States and two Bergdorf Goodman locations in ManhattanThe private-equity firms that own Neiman Marcus are in discussionsto sell the struggling retail chain to rival Hudson’s Bay, which couldput the business under the same owner as Saks Fifth Avenue.

Wary of an end to rising commercial real-estate values, big investors turn to funds that make loans rather than those that buy property.

U.S. Airlines Vie for Loyalty With Resumption of Coach-Class Free Food

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Real Estate and Construction Outlook

FED BEIGE BOOK SURVEY:Commercial real estate construction grew modestly, and sales and leasing activity grew moderately. Lending activity was steady to somewhat higher. Businesses were generally optimistic about the near-term outlook but to a somewhat lesser degree than in the prior report.

The Dodge Momentum Index rose 1.6% in February to 144.0 (2000=100)from its revised January reading of 141.7. The Momentum Index is a monthlymeasure of the first (or initial) report for nonresidential building projects inplanning, which have been shown to lead construction spending fornonresidential buildings by a full year. February’s increase was due to a 4.4%jump in institutional planning, while commercial planning slipped slightly,falling 0.3% for the month. The Momentum Index has now increased for fiveconsecutive months; however, the underlying components continue to bevolatile on a month-to-month basis as large projects continue to sway thedata. The overall trend, however, is rising. On a year-over-year basis theMomentum Index is 22% higher, with commercial planning up 28% andinstitutional planning moving 15% ahead of last year. This suggests thatconstruction activity will continue to see further growth as the yearprogresses.

The US construction sector recorded its largest gain in nearly 10 years due to unseasonably warm weather

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More Real Estate

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Will Life Ever Be the Same?

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