Just A Garden-Variety Consolidation (Technically Speaking For 10/13)

Initial unemployment claims have been a sticking point for the recovery narrative:

The current level is 857,000, which is ~250,000 higher than the highest point from the last recession. Some people have argued that this number is soft due to issues with state unemployment programs, which are being flooded with applications (emphasis added).

Adding to the challenge for analysts and forecasters, the pandemic has thrown the data itself into disarray. For the second week in a row, the jobless claims data carried a Golden-State-size asterisk: California last month announced that it would temporarily stop accepting new unemployment applications while it addressed a huge processing backlog and installed procedures to weed out fraud.

In the absence of up-to-date data, the Labor Department is assuming California’s claim number was unchanged from its pre-shutdown figure of more than 225,000 applications, or more than a quarter of the national total. The state began accepting new filings this week, and is expected to resume reporting data in time for next week’s report.

While this is a standard statistical practice (substituting past data for new data), there are legitimate questions about whether the unprecedented nature of the pandemic is making this method of substituting data moot. I don’t have an answer on that, but will keep my eyes open.

I’ve been lukewarm on REITs, even though they’re a traditionally conservative investment. The reason is pandemic related: small businesses are going under, lowering the amount of rental income. High unemployment and the drop in fiscal support are increasing residential evictions. And, larger businesses are rethinking their use of office space – a trend that will continue:

Many more companies are expected to delay their return-to-office dates to keep workers safe. And workers said they were in no rush to go back, with 73 percent of U.S. employees fearing that being in their workplace could pose a risk to their personal health and safety, according to a study by Wakefield Research commissioned by Envoy, a workplace technology company.

Here’s a chart of the main real estate ETF that I track:

The VNQ has been trading sideways, mired with the 200-day EMA – since early June.

The IMF released its latest Global Financial Stability Report, which contained the following observations (emphasis added):

However, vulnerabilities are rising, intensifying financial stabilityconcerns in some countries. Vulnerabilities have increasedin the nonfinancial corporate sector, as firms have taken onmore debt to cope with cash shortages, and in the sovereignsector, as fiscal deficits have widened to support the economy.

This was also discussed in the latest Federal Reserve meeting minutes and was highlighted in a recent speech by Boston Fed President Rosengren.

Let’s take a look at today’s performance tables:Yes, the indexes were down. But the overall drop wasn’t that large. Mid-caps were the worst-performing broad index, and they only lost .68%. The SPY was off .61%; the QQQ was only down .04%. This is hardly anything to get concerned about. Only two sectors rose, and then only marginally. Real estate dropped on

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Vancouver Island couple triumphs over ‘garden-variety bully’ in battle for renowned hotel

a large brick building with grass in front of a house: The founders of the internationally renowned Sooke Harbour House resort hotel have been vindicated after a tangled ownership battle. The inn has hosted dignitaries and Hollywood actors.

© Michael McArthur/CBC
The founders of the internationally renowned Sooke Harbour House resort hotel have been vindicated after a tangled ownership battle. The inn has hosted dignitaries and Hollywood actors.

The Vancouver Island couple who built Sooke Harbour House into one of Canada’s most renowned tourist destinations has won a resounding victory in their battle to wrest control of their beloved hotel away from a pair of purported financiers. 

In a blistering decision Tuesday, a B.C. Supreme Court judge awarded Frederique and Sinclair Philip — now in their 70s — more than $4 million for the “six-year odyssey of lies, excuses, threats, intimidation and bullying” they suffered at the hands of Timothy Durkin and his partner Roger Gregory.

In a 94-page ruling, Justice Bill Basran concluded the Philips’ “reasonable expectation of a comfortable and well-deserved retirement has been effectively stolen from them because they unknowingly put their future in the hands of these two fundamentally dishonest individuals.”


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The judge reserved especially harsh words for Durkin, who — according to the judgment — swore a false affidavit in order to obtain an injunction that kept the Philips away from the hotel while he fought them in court.

“His view of the truth is whatever will serve his interests in the moment. He is entirely unencumbered by ordinary norms of morality, integrity and decency. He is a garden-variety bully who preys upon those whom he perceives to be weaker than himself and vulnerable to his mistruths and manipulation,” Basran wrote.

“Unfortunately for the Philips, they were victims of Mr. Durkin’s countless lies and deceptions.”

The toast of the culinary world

The decision marks the latest turn in a saga that has been ongoing since 2014, when the Philips — burdened by debt that started with the global financial crisis — first met Durkin and Gregory.

In the 35 years prior, they had turned the six-room bed and breakfast they purchased in 1979 into a culinary sensation beloved by wine and food critics, frequented by celebrities and world leaders and honoured by Canada’s Governor General.

The Philips reached a share purchase agreement in 2014 that would have seen Durkin and Gregory purchase their interest in the hotel for $6 million. 

The Philips believed they were going to get $2 million, and according to the judgment, Durkin assured them that his company — SHH Holdings — had the resources to cover the existing mortgage and interest owed to the Business Development Bank of Canada.

In fact, Basran found that despite Durkin and Gregory’s grand promises of a “syndicate” or “posse” of investors from Tehran to Zurich — SHH Holdings never raised more than $54,000.

‘Lies, excuses and misrepresentations’

The judge said Durkin took control of hotel operations and kept stringing the Philips along, until they ultimately signed a settlement agreement in which Durkin promised his company would pay off the mortgage and give the Phillips $1.5 million.

But that never happened, and the Phillips attempted to take control of the hotel in

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