2015 issue 22

December 17, 2015

Last Chapters
What a way to end 2015. The Federal Reserve voted Wednesday to raise interest rates and begin pulling back its
unprecedented support for the American economy and financial markets. The shift, ending an era of easy money that
helped save the nation from another Great Depression, had been slow in coming , and the years of easing had created its
own distortions and dependencies. The Fed also pledged to wean the nation off its stimulus slowly, an acknowledgement
that further progress is not guaranteed and that the central bank is operating in uncharted territory. In addition, the shift
amounts to a vote of confidence that the American economy finally stands somewhat more resilient. - - perhaps uniquely
in the world. Yet we cannot ignore the reality of a poor global growth trajectory, dogged by crashing commodity prices, a
slowdown in China and new traumas in the speculative high-yield and emerging markets. Indeed, even the U.S. economy
has yet to produce a full-throttled expansion. We will continue to highlight the nuances, peculiarities of the regional and
sectoral differences in business recovery and worlds of finance. Fasten your seatbelts for 2016.

OPEC

JustKeepPumping

Commodity Rout

Oil prices fell sharply after the Organization of Petroleum

Exporting Countries decided to raise the groups production
ceiling to 31.5 million barrels a day.

Junk bonds are headed for their

first annual loss since the credit
crisis, raising concerns that a sixyear U.S. economic expansion and
stock-market boom may be on
borrowed time

Is a credit apocalypse awaiting us in 2016?

CHINA RESERVES SLIDE FURTHER

Chinas massive war chest of foreign exchange
reserves dropped to its lowest level since February
2013 as the central bank sold dollars to prop up the
yuan amid rising capital outflows. Foreign currency
reserves fell by $87.2bn to $3.44 trillion at the end
of November, from $3.53 trillion a month earlier,
according to the Peoples Bank of China (PBOC).
This is the lowest level since February, and extends
this years decline to $405bn.

ABRAHAM GULKOWITZ
abe@gulkowitz.com
917-402-9039

The first rise in US interest rates since 2006

does not portend immediate emergingmarket external financial crises. But EM
sovereign ratings are likely to continue on the
downward trajectory they first took in mid2013. This would be consistent with their
closer historical alignment to the value of the
US dollar and global commodity prices than
the level of US interest rates.

FEDshouldnotfeartightening

BISwarnsagainstpolicyconcernsduetoanxiety
overmarketvolatilityorcorporatebondfalloutfears
Central banks should press ahead with plans to tighten monetary
policy and not let market volatility sway their judgment, the
Bank for International Settlements has warned ahead of the
expected first rate rise by the US Federal Reserve in nine years.

Federal Reserve raises key

interest rate after historic era

ECB to Extend Asset-Purchase Program to 2017 or Longer

Regions unpredictable geopolitical situation will affect policy in future, says
Mario Draghi

The European Central Bank extended its

quantitative easing program by 6 months or beyond
while cutting its overnight deposit rate further into
negative territory by 10 basis points to -0.30
percent beginning on December 9, 2015 to penalize
banks for parking money at the ECB and encourage
lending in the overall economy.
The ECB is
undertaking a 60bn per month quantitative easing
program of government bonds that was extended
today until March 2017 from its earlier end point of
September 2016.

The PunchLine...

December 17, 2015

In This Issue
Engines of Growth

Last Chapters
What a way to end 2015! The Federal Reserve voted Wednesday to
raise interest rates and begin pulling back its unprecedented support
for the American economy and financial markets. The shift, ending an
era of easy money that helped save the nation from another Great
Depression, had been slow in coming, and the years of easing had
created its own distortions and dependencies. The Fed also pledged
to wean the nation off its stimulus slowly, an acknowledgement that
further progress is not guaranteed and that the central bank is
operating in uncharted territory. In addition, the shift amounts to a
vote of confidence that the American economy finally stands
somewhat more resilient. - - perhaps uniquely in the world. Yet we
cannot ignore the reality of a poor global growth trajectory, dogged by
crashing commodity prices, a slowdown in China and new traumas in
the speculative high-yield and emerging markets. Indeed, even the
U.S. economy has yet to produce a full-throttled expansion. We will
continue to highlight the nuances, peculiarities of the regional and
sectoral differences in business recovery and worlds of finance.
Fasten your seatbelts for 2016.
(pg 1)

In This Issue
Its the Combo effect
The Return to Normal ?
You Cant Handle the Truth !
Market Roar
New Perspectives
Dislocation, Dislocation

(pg 2)
(pg 3)
(pg 4)
(pg 5)
(pg 6)
(pg 7)
(pg 8)

Intense and confusing stress signals emanating from around the globe
but particularly from the commodity markets, high yield and key
emerging markets such as China, Brazil, Russia have confounded
investors and contributed to intermittent bouts of severe volatility.
Despite massive easing, most of the global economy still faces
woefully inadequate growth prospects and difficult policy options. The
U.S. stands alone in the shift in monetary policy and the improvement
in job markets. Very obvious financial vulnerabilities and serious
geopolitical concerns are aggravating the uncertainty. And lets not
forget that many of the challenges are not fleeting, and many cannot be
resolved easily or quickly
(pg 9)

Households
New Reference Points
The Likelihood of Unlikely Events...
Risk Now You See it
Credit
A New Geography of Business
Pumping Iron
The DNA of Business
Real Estate and Construction
More Real Estate
Will Life Ever be the Same?

Contact information:

Abraham Gulkowitz
phone: 917-402-9039

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.

email:abe@gulkowitz.com

(pg 10)
(pg 11)
(pg 12)
(pg 13)
(pg 14)
(pg 15)
(pg 16)
(pg 17)
(pg 18)
(pg 19)
(pg 20)

The PunchLine...

December 17, 2015

Its the Combo Effect

A sharp slowdown in
China's GDP growth rate
to below 5% during 20162018 would disrupt global
trade and hinder growth,
with significant knock-on
effects
for
emerging
markets
and
global
corporates, according to
new analysis

US industrial production declined 0.6 percent in November after decreasing 0.4 percent in October. In
November, manufacturing production was unchanged from October. The index for utilities dropped
4.3 percent, as unusually warm weather held down the demand for heating. The index for mining fell
1.1 percent in November, with much of this decrease attributable to sizable declines for coal mining
and for oil and gas well drilling and servicing. At 106.5 percent of its 2012 average, total industrial
production in November was 1.2 percent below its year-earlier level.

The PunchLine...

December 17, 2015

The Return to Normal ?

Markets bet on great divergence
Dollar strengthens against leading currencies
Investors prepare for transatlantic rif

The People's Bank of China (PBoC) has cut interest rates and required
reserve ratios five times this year -- the fastest pace of monetary policy
adjustment since the 2008-09 financial crisis. However, the effectiveness of
the intervention is diminishing each time, leading to pessimistic expectations
of both the stock market and the macroeconomic outlook.

Joining the IMFs reserve basket is a symbolic feat. China is still a long
way from letting free markets set the value of its currency. But a
slowing economy, lower interest rates and capital outflows all suggest
the yuan will continue to slip against the resurgent U.S. dollar.
The yuan has made it into the global lenders basket of reserve
currencies, despite Chinas patchy reform record and clumsy market
interventions. For Beijing politicians, getting into the IMFs club is itself
a reward. Persuading investors to want more yuan will be tougher.

Forex forecast clouded by policy fallout

Over time, Chinas new status may encourage central banks and other investors
to hold more assets in renminbi. But that process if it happens at all is likely
to be slow. Beijings bureaucrats still monitor cross-border capital flows, and
have recently clamped down on unauthorized transfers. The freely traded
Japanese yen has been an official reserve currency for decades, yet accounts for
less than 4 percent of central bank reserves.

Weaker renminbi and a strong dollar are expected in

2016 but the devil is in the details
The currency market forecast looks reasonably clear from here, but it
will not be long before the weather turns.
Currency strategists
drawing up their predictions for 2016 largely agree on some broad
themes the US dollar will get stronger, emerging market currencies
will stay weak and Chinas renminbi will depreciate gradually. When?
By how much? Answering these follow-up questions in depth becomes
trickier.
John Normand, JPMorgans head of foreign exchange
research, sums up his peers sentiment: Im more confident about the
second half of 2016 than the first.
The first-half outlook for FX is
built on the near-certainty that December will bring long-awaited
monetary policy divergence a Federal Reserve rate rise and further
easing by the European Central Bank. Sandwiched between these
leviathans is the small matter of a Swiss central bank policy meeting.

The PunchLine...

December 17, 2015

YouCant Handle the Truth

Let'sTaketheConoutofEconomics
CUTS BOTH WAYS The decision on November 30
to include the Chinese currency within the IMF's basket of
currencies has little immediate impact, but there may be
important long-term consequences. The deeper question is
whether China's accelerating integration with the global
financial system will catalyze transformative change in
China's state-market relationship or whether global market
actors will adapt to accommodate the peculiar Chinese
mode of financial governance.

Euroarea government bond yields fell to record lows after

data showed the regions annual inflation rate remained well
below the central banks target in November, boosting the
argument for additional stimulus from the European Central
Bank. The yield on German 2year notes slid to a record low
of minus 0.443 percent. Yields on Finland, Netherland, and
Spains 2year securities dropped to alltime lows as well.
The junk-bond market is set to post its
first annual loss since 2008 after seven
years of easy credit. That has triggered
a wave of redemption requests from
fund investors and some funds
liquidating their assets.
Investor
poured $240 billion into junk-bond
funds since 2008, tripping the total
commitment, in a frantic search for
higher returns.
Corporate Credit May Bend Hopefully
But Not Break

Asia
Manufacturing remains mired
in stagnation

Oil prices
declined again

The recent widening of the high-yield bond

spread stems from less confidence in 2016s
outlook. Though subpar sales and profits
warrant caution, the recovery should persist
and that would limit the downside for
corporate credit.

The PunchLine...

December 17, 2015

The Market Roar

History May Not Repeat But It Often Rhymes

Oil prices tumbled towards their 11-year low on Monday, amid growing
concerns that the global oversupply would worsen in coming months.

The PunchLine...

December 17, 2015

New Perspectives
Think it Through
Retail Spending(%) Nov

Nov Y/Y

2014

2013

2012

------------------------------------------------------------------

Total Retail Sales & Food Services

0.2
1.5
3.9 3.7
5.0
Excluding Autos
0.4
0.9
3.1 2.7
4.1
Non-Auto Less Gasoline, Building Supplies & Food Services
0.6
2.9
Retail Sales
0.2
1.0
Motor Veh & Parts -0.4
4.3
Gasoline Stations
-0.8
-19.7
Food Service & Drinking Places Sales
0.7
5.4

3.3 2.7
3.7 3.8
7.5 8.3
-2.7 -0.7
6.2

3.4

3.6
4.9
9.0
4.3
5.9

The liquidation of a Third Avenue Management

fund may prompt re-examination of whether
mutual funds might be systemically important in
some circumstances.

The PunchLine...

December 17, 2015

Dislocation, Dislocation, Dislocation

A storm is coming to the credit markets

Emerging Markets More Vulnerable to the Dollar and Commodities

than U.S. Rates
Continued U.S. dollar strength and commodity price weakness imply further pressure on
emerging market sovereign ratings. The seemingly imminent first rise in U.S. interest rates
since 2006 does not portend immediate emerging market external financial crises. But
sovereign ratings are likely to continue on the downward trajectory they first took in mid2013. This would be consistent with their closer historical alignment to the value of the
U.S. dollar and global commodity prices than the level of U.S. interest rates.

Rising Sovereign Risk from Private Sector Debt in Emerging Markets

Private sector debt has risen rapidly in key emerging markets over the past 10 years,
surpassing government debt levels and potentially exposing their economies, financial
systems and sovereign creditworthiness to downside risks.

The PunchLine...

December 17, 2015

Engines of Growth
NocheerasChinayuanhitsfourandahalfyearlow,oilatsevenyearlow

OPECs Faith in Oil Demand

Rise Rests on Shaky Ground

China services sector key to growth revival High hopes for

healthcare and entertainment from Beijing and investors alike
Sluggish corporate revenues and subpar operating
profits warn of further erosion of corporate credit
quality. Moreover, concerns extend beyond the
hardhit energy and basemetals industries to core
business sales.

Shrinking for the 12th

consecutive month, India's
exports fell 24.4 percent (y/y)
in November to $20 billion
amid a global demand
slowdown
and
plunging
commodity prices, govt data
showed. Meanwhile, imports
declined by 30.3 percent to
$30 billion, leaving a trade
deficit of $9.8 billion for the
month.

Its now three quarters of negative GDP stats for BRAZIL. Thats the
first three-quarter streak of negative GDP growth since 1999, and its a
far worse one at that.
Brazils sovereign credit rating was cut to junk status by Fitch
Ratings, which became the second major ratings agency to strip the
country of its investment grade this year. The downgrade left
Brazils rating at BB+, with a negative outlook. The agency cited
the countrys ballooning budget deficit, political turmoil, and worsethan-expected recession behind the move. The Brazilian real dropped
as much as 2.3 percent to 3.96 per dollar following the downgrade.

The PunchLine...

December 17, 2015

Households Brave New World

The U.S. economy added 211,000 non-farm payroll jobs in November,
while the unemployment rate was unchanged at 5.0 percent, according
to a new report today from the Bureau of Labor Statistics. Novembers
211,000 non-farm job gain was close to the average monthly gain of
237,000 over the prior 12 months and puts the U.S. economy on a likely
track for an upcoming rate hike, the first one since 2006, during the next
Federal Reserve meeting in mid-December. Over the past 3 months, job
gains have averaged 218,000 per month. Job revisions for September
and October were revised 35,000 higher.

Unaffordable rents have become

drag on longer-term US growth
Forget a sharp V-shaped recovery in U.S. single family housing
the best that we can expect is continued, moderate increases

Rising home values have helped more

underwater homeowners surface in the third
quarter, but some of the areas worst hit by the
housing crash were still continuing to struggle.

U.S. household net worth fell $1.23 trillion in Q3

After an impressive recovery in recent years, this past quarter, the
value of directly and indirectly held corporate equities decreased
$2.3 trillion and the value of real estate rose $482 billion.

Unless core business sales accelerate sufficiently,

privatesector payrolls average monthly increase
of 220,000 new jobs for the yearended November
2015 will prove to be unsustainable.

Small Business Optimism Collapses in

November After Three Stagnant Months

10

The PunchLine...

December 17, 2015

New Reference Points

11

The PunchLine...

December 17, 2015

The Likelihood of Unlikely Events

The
Federal
Financial
Institutions
Examination Council (FFIEC) published a
press release alerting financial institutions to
the increasing frequency and severity of
cyber attacks involving extortion.

Chinas slowdown may yet be responsible

for a slowing in the US housing market
China and Japan Continue to
Liquidate US Treasury Holdings
Rate rise belies frailties in US economy
Too many have become junkies to extra low
interest rates

With much unfinished business left from the

euro-area crisis, EU single market
fundamentals are now also in question

China's exports declined for the fifth straight

month on weak global demand, while imports
dropped less than expected in November,
official data showed Exports decreased 6.8
percent in November from last year, the
General Administration of Customs reported.
At the same time, imports slid 8.7 percent
annually, but better than an 18.8 percent fall
seen in October.

Energy Sector Rout Intensifies

on Mild Weather, OPEC

The governor of the Bank of Canada just said the three most
controversial words in central banking: "negative interest rates.
In a speech on Tuesday, BoC Gov. Stephen Poloz discussed some
of the bank's framework for thinking about potential responses to
future incidents of financial distress. And among the tactics the
BoC could choose to take in the future, Poloz mentioned negative
interest rates. This is something central banks in Switzerland,
Denmark, and Sweden and most notably the European
Central Bank have all put in place.

Some of the heaviest declines are in shares

of companies with heavy debt loads
Global oil markets will remain oversupplied
at least until the end of 2016 as demand
growth slows and OPEC output booms,
putting oil prices under further pressure,
the International Energy Agency said

Uncertainty swirls over outlook

Russia-NATO tensions will grow in 2016
Russian Deputy Foreign Minister Grigory Karassin said that
Russia is worried by NATO's growing activity in the South
Caucasus and criticised Georgia's desire for membership of the
alliance. This rebuke follows angry reaction from Moscow to
NATO foreign ministers agreeing on December 2 to invite
Montenegro to join the pact. NATO's ties with Russia are at an alltime low following Russia's continuing interference in Ukraine as
well as the recent downing of a Russian Su-24 jet by Turkey.

12

The PunchLine...

December 17, 2015

RISK
Now You See it and Now You Dont

Credit spreads referencing oil-and-gas and

metals-and-mining companies spiraled
wider again, as oil prices explored new
lows. Marathon Petroleum marketed a
$1.5 billion, three-part offering into the
teeth of the declines, making for
challenging price discovery.
Marathon
Petroleum ultimately weighted the no-grow
offering to the shorter tranches, after setting the
spread for a $250 million 2045 bond offering at
T+290, or 20 bps wide of initial whispers this
morning. The $600 million of three-year notes
and $650 million of five-year notes were set at
the midpoints of guidance ranges and in line with
early whispers, at T+150 and T+175, respectively.
For reference, the company placed M&A-driven
long bonds on Sept. 2, 2014 at T+165, just two
days before offshore driller Noble Corp. warned
of decoupling supply and demand in the oil space,
sparking the start of a trend of rapid widening in
credit spreads across the energy sector.

13

The PunchLine...

December 17, 2015

Credit Matters-Know Risk

Many Excel in Strategy, Few in the Management of Risk
A large mutual fund specializing in risky, high-yielding bonds has
blocked investors from getting their money back, citing difficult
trading conditions for its securities. This unusual move by Third Avenue

Feds Win Fight Over Risky-Looking Loans

Controversial push on leveraged loans extends regulators
reach beyond banks and across entire financial system

Management funds, which manages $8 billion in customer assets, highlights

a long-standing fear among regulators and economists that too many
investors have piled into risky areas of the bond market, like junk bonds,
leveraged loans and emerging-market debt.

RETAIL
Claire's Stores bonds slump on third-quarter results miss

Puerto Rico Governor Predicts a Default "Puerto

Rico will default in January or in May - there is no
money," said Gov. Alejandro Garca Padilla said.

Bonds banking Claires Stores slumped today after the Apollo-owned jewelry and accessories retailer
reported third-quarter earnings that fell short of analyst expectations. The first-lien 9% notes due
2019 fell five points to a 70.25/71.25 market, trade data show. Adjusted EBITDA for the third quarter
came in at $39.2 million compared to $50.7 million during last year's third quarter, falling short of
expectations from Citi analysts, which predicted $49.6 million for the quarter.

14

Fitch Ratings forecasts the 2016 U.S. high yield

bond default rate at 4.5%, as weak commodity
prices will continue to challenge energy and
metals/mining issuers
The energy sector default rate is projected to hit
11% in 2016, eclipsing the 9.7% mark seen in 1999
Excluding energy and metals/mining, the
remainder of the high yield universe is expected to
finish 2016 with a 1.5% default rate
The current trailing 12-month (TTM) rate is at 3.3%,
with more than $5.5 billion of defaults in
December, the most tallied since January
The current energy TTM rate is at nearly 7%, while
the E&P rate is closing in on 12%
At the end of Friday, $113 billion of the high yield
universe was bid below 50 cents while $304 billion
was bid below 80 cents

The PunchLine...

December 17, 2015

A New Geography of Business

China Loses Edge on Labor Costs
Canadas household debt as a share of disposable
income reached a record high of 163.7 percent in
Q3, up from 162.7 percent in Q2.

Brazil Annual Inflation at

12-Year High In November

State funds pull $19bn from managers

Oil-dependent economies forced to repatriate cash

The reason the eurozone will end up monetising

debt is not because it is the intrinsically best way
to do it, but because rules and political limits
leave them with no choice. Expect this process to
take a very long time.
Atlantic City Gaming More Pressures Ahead
The Year After the First Wave of Closures. Based on current trends, we anticipate
that the Atlantic City market will end 2015 with total GGR of $2.41 billion (-8.0%
versus $2.62 billion).

15

The PunchLine...

December 17, 2015

Pumping Iron
The Old Economy Revisited
November U.S. Rail Traffic Decreased 6 Percent
The Association of American Railroads (AAR) has reported that
U.S. rail traffic for the month of November 2015 when compared
with November 2014 was down 6 percent or 131,087 carloads and
intermodal units. Total U.S. rail traffic for the month was
2,065,767 carloads and intermodal units. November 2015 U.S.
carload originations totaled 1,041,605, a drop of 10.4 percent, or
120,259 carloads, compared to November of last year. Excluding
coal, carloads for the month were down 5.8 percent or 41,461
carloads compared to November 2014. Intermodal traffic for
November reached a total of 1,024,162 containers and trailers,
down 10,828 units, or 1 percent, compared to last November.

Oil prices continued to tumble, touching their

lowest levels in nearly 7 years, after OPEC
meeting ended in disagreement over production
cuts, while strong dollar added pressure to
oversupplied crude futures. Brent, the global
benchmark, dropped 3.6 percent (or $1.56) to
$41.44 a barrel, and West Texas Intermediate
(WTI) slumped 4.6 percent (or $1.83) to $38.16.
Both Brent and WTI havent traded at levels this
low since February 2009.

Oil and mining companies hope worst is over

New York Exxon probe portends industry practice shift
Domestic US politics hinders President Barack Obama's push for global climate
change mitigation at the COP21 summit in Paris, but state-level regulators are
responding to public pressure in some areas for fossil fuel-dependent energy
companies to change their practices and reporting, with significant financial and
legal implications.

US tech sector-military ties face spending hurdles

The United States seeks to leverage its commercial technology
advantage to maintain its post-Cold War military superiority as
part of its 'third offset strategy'. In light of policymaker concerns
about the capabilities of US conventional forces and Chinese and
Russian military assertiveness, the strategy presents commercial
opportunities to manufacturers, tech companies and academic
institutions in the United States.

A sharper decline in U.S. railroad cargo this quarter

points to weak spots in the U.S. economy as a
strong dollar crimps exports, retailers whittle down
excess inventory and energy investment stalls.
Union Pacific, Warren Buffetts BNSF Railway Co.
and other large U.S. railroads have posted a 5.1
percent drop in carloads since the beginning of
October, topping decreases of 1.6 percent in the
third quarter and 1.8 percent in the second. A
decline in consumerrelated cargo this quarter is
adding to weakness in industrial and energy traffic.

Aircraft maker Airbus Group announced on Monday that it

has taken net new orders for 1,007 passenger airplanes
through the end of November. That total is well above the
568 net new orders written by Boeing Co. through
December 2. The really unhappy news for Boeing is that
new orders for the Airbus A330, A350 and A380 have
pushed the European makers total for net new widebody
orders to 127, compared with 113 net new widebody
orders for Boeings 747, 777 and 787.

Competition will rise in global civil aerospace

The November Dubai Airshow may herald a slowdown in
the global civil aerospace business as neither Airbus nor
Boeing registered large airline orders. The falling cost of
fuel has led many airlines to delay expensive modernization
plans. Concerns over the state of the global economy will
also dampen short-term demand.

16

The PunchLine...

December 17, 2015

The DNA of Business

Reconfiguring Industries to Define Growth
Activist pressure helps reshape U.S. corporates, from Yahoo to Dow

Keurig Green Mountain Taken Private in $13.9 Billion Deal

Keurig Green Mountain agreed to get bought by an investor group led
by JAB Holding for $13.9 billion, a sizable premium for the slumping
coffee maker.

Yahoo kills $32bn Alibaba stake spin-off

U.S. health care spending last year grew at the fastest pace since
President Barack Obama took office, driven by expanded
coverage under his namesake law and by zooming prescription
drug costs, the government said. After five years of historically
low growth, national health expenditures increased by 5.3
percent in 2014, reaching $3 trillion, or $9,523 for every man,
woman and child. That followed a 2.9 percent increase for 2013.
Such seemingly small percentage shifts resonate when the total
is $3 trillion.
The report by nonpartisan experts at the
Department of Health and Human Services may signal the end
of an unusually long lull in health care inflation that has
benefited the Obama administration. While the presidents
health care law has increased coverage, the cost problem doesnt
appear solved.

Some examples of the decline in the third quarter

sales for media:
Time Inc. sales down 13.1 percent, revenue off
$11.3 percent.
Hearst sales down 21.9 percent, revenue off 20.3
percent.
Wenner Media, publisher of Rolling Stone, down
15.9 percent, revenue off 15.1 percent.
Conde Nast sales down 9.3 percent, revenue off
7.2 percent.
North American newsstand magazine sales declined 10.1 percent
in the third quarter of 2015 from the same period last year,
according to analysis from MagNet, although an average cover
price increase of $0.04 (to $5.38) meant that the revenue
downturn remained in single digits, falling 9.8 percent to $628.9
million.
Across the industry, sell-through efficiency in the third quarter
was 27.4 percent, an improvement on the 26.5 percent recorded
in the first half of 2015, but still below the 31 percent sellthrough rate recorded over the same period last year.
Lost distribution from Source Interlink's May 2014 exit from the
newsstand business had stabilized by the third quarter of last
year, reports MagNet, meaning the data once again provides an
unskewed year-over-year glimpse of industry sales trends.
Time Inc. remains the largest newsstand publisher, with 18
percent of market share, followed by Bauer Publishing Group
(10.9 percent) and American Media Inc. (9.9 percent). Hearst and
Trusted Media Brands saw the largest declines in newsstand
revenue among publishers, at 20.3 and 20.6 percent, respectively.
Penny Press/Dell and Kappa Publishing Group, specialists in the
Game/Puzzle/Crossword category, bucked the trend by
substantially increasing draw. Both saw significant increases in
revenue. Of the top five publishers, only Bauer increased draw
over the same period last year, which likely led to its
comparatively low revenue decline (2.7 percent).

Will holiday blockbusters redeem 2015 Movie year?

Star Wars: The Force Awakens
could rocket cinema audiences to 13-year high

17

The PunchLine...

December 17, 2015

Real Estate and Construction Outlook

Shrinking U.S. Shopping
Malls Get Makeovers
Overbuilding, e-commerce force
landlords to get creative with new
developments

FED SURVEY:
Commercial loan demand was reported
to be generally strengthening in most
Fed Districts. Credit quality was mostly
stable. San Francisco noted an
increasing role of nontraditional
lenders in mortgage markets.

EuropeanRetailPropertyDealsSurge
Sales volume of European malls, shopping centers and other
retail real estate hit 64 billion as of the end of November
making 2015 a post-crash record
Rents are rising as a result in many markets with growing
demand for space from domestic retailers, U.S. companies like
Apple, Victorias Secret and Forever 21 and Asian stores like
Uniqlo, Muji and Samsung. Listed European retail companies,
excluding those in the U.K., saw 2.6% annual rental growth in
the first half of 2015, crushing inflation, which remained at
0%, according to a recent report by Green Street Advisors.

18

The PunchLine...

December 17, 2015

Some More Real Estate Views

19

The PunchLine...

December 17, 2015

Will Life Ever Be the Same?

This publication is provided to you for information purposes and is not intended as an offer or solicitation for the purchase or sale of any financial
instrument. The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and its
accuracy cannot by guaranteed. The views reflected herein are subject to change without notice. No one connected to this publication accepts any
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