New Jersey Real Estate Report

From FreightWaves:

North America’s reshoring of the global supply chain

With manufacturing and labor markets on the decline with North America’s traditional partners in Asia — and with trade with Russia collapsing — North America is in prime position to take advantage by reshoring global sourcing.

“For the most part we can keep this in America — or at least North America,” said geopolitical strategist Peter Zeihan during the opening keynote Tuesday at FreightWaves’ F3: Future of Freight Festival in Chattanooga, Tennessee.

Zeihan is the author of the recently published book “The End of the World is Just the Beginning: Mapping the Collapse of Globalization.”

He said one of the keys to boosting U.S. trade will be reforming the Jones Act, a century-old trade protection law that Zeihan contends boosts transport costs.

“This would help the country bring manufacturing back on the water in a very big way,” he said. “Mexico is now ahead of Canada from a labor productivity measure, which means that Mexico now needs a low-wage partner. Colombia and Cuba are the obvious candidates. It’s a much simpler system, one that is reliant on things close to home.

“When you want to do a trade deal with Russia or China, it’s a pain. But calling on a country like Colombia, which is kind of desperate and wants to be part of the club, it’s a much easier process and we don’t need to do things at scale to the same degree. A small container ship is fine, you don’t need that massive Triple E container ship.”
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“If at the end of the five-year period we’ve succeeded in building out the industrial plant, we go back to a much tamer system that will be lower for longer, because the supply chains will be local, the processing will be local and we’ll be following our own labor metrics, which will have evolved because we will have had to do a lot more with artificial intelligence and automation than we currently have, especially as we bring in electronics manufacturing — we will have a choice.

“But if we fail to do that, then the 9% to 15% inflation continues and there are product shortages. From my standpoint, it’s a really clear path. The alternative is to go through the worst of it and get none of the benefits.”

For companies looking to survive in the new North American supply chain, “anything that makes you more modular and more capable and allows you to adapt more quickly is something I think that can provide an outsized advantage,” Zeihan said.

“We’re going to have fewer supply chain steps closer to home, and the competitive nature to that is going to be very different from just waiting for things to show up at the dock. We’re going to have the need to do everything that is currently done in Asia but in fewer steps and right in our own world.

From New York Magazine:

Wall Street Banks Are (at Least Somewhat) Freaked Out About a Recession

You know things are serious when David Solomon, the Goldman Sachs CEO who spent the summer DJ-ing at Lollapalooza, hasn’t posted on Instagramabout his music since August. The largest economies in the world — the U.S., China, the eurozone — are teetering on the edge of recession, and the coming months, maybe the next year or so, will probably be a time of rising unemployment, spreading bankruptcies, and the price of everything remaining high. Add to that a European land war and OPEC+ cutting oil production, and you’d expect Wall Street’s biggest banks would be hunkering down to protect themselves from a wipeout. To an extent, they are. This has been a rough year, with dealmaking all but halted, the stock market erasing two years of gains, and rampant inflation throwing the global economy off-kilter. Wall Street banks are designed to understand the economy better than anyone else. Assuming they do have some special insights, it’s worth reading their real-world-concern level: Just how freaked are the masters of the universe right now?

Well, that’s a bit complicated. Observers of the financial world have noted that there is currently no consensus view among the people who lead America’s biggest banks. For some, the economy is about to get much scarier, while others argue that consumers are still basically fine and that the U.S. may scrape by with relatively light economic damage.

The lead spokesman for Team Fear is Jamie Dimon, the longtime head of JPMorgan Chase, which is the largest bank in the U.S. by just about every measure. Back in June, Dimon warned about an incoming economic “hurricane,” and he doubled down on that prediction last week when he said the country would likely be “in some kind of recession six to nine months from now.” From a certain angle, his bank is definitely preparing for some kind of downturn as it’s sitting on a mind-boggling $1.2 trillion in cash, or almost $4 million for each of its 288,000 employees (though that headline number is a little complicated — more on that later). And Dimon certainly has experience with this kind of thing. He’s the only CEO of a major bank who lived through the 2008 financial crisis, and he pioneered the idea of a “fortress balance sheet” that would protect a bank from going under in times of emergency.
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But it’s not all doom and gloom. JPMorgan, Goldman, Bank of America, Citigroup, and Wells Fargo have reported that they’re still making plenty of money, and analysts are expecting them to have to set aside only $5 billion or so for busted loans — one of the key ways a bank would get hurt during a downturn. And Brian Moynihan, CEO of Bank of America, is far more upbeat than Dimon is about the state of the world. “The customers’ resilience and health remain strong,” he said on an analyst call Monday morning. And while Dimon has made plain his fear about the future, he has pointed out that right now people are spending money. Even Goldman’s annual round of culling was fairly light as layoffs go. (Bonuses, however, are probably not going to be anything like last year’s absolute bonanza.)
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But CEOs like Dimon have the luxury to say one thing while their bank does another. Since the passage of a package of reforms in 2010, banks have had to set aside more money to prepare for not only a recession but a complete systemwide failure. “It’s night and day from before the great financial crisis to today, from an oversight and financial-preparedness level,” Mayo said. The analyst noted that most people who work on Wall Street have been through only one major recession, in 2008, and that a more run-of-the-mill recession would be much more manageable for Wall Street. “The banks are signaling that they’re preparing for tougher times,” Mayo said, “but they’re not freaking out.”