There are a few records that transport me back to a particular time and place, no matter when or where I listen to them. That’s not exactly uncommon – the link between music and memory is well documented – but it’s always deeply personal.
In fact, it’s so personal and so profound that it has the power to lift Alzheimer’s and dementia patients out of the thick, weary fog of cognitive decline… even if just for a few minutes.
It’s truly amazing.
Like most kids of the MTV generation, I got sucked in by music videos. And Simon’s video for “You Can Call Me Al” – starring Warder family favorite Chevy Chase – was a big enough hook to convince my folks to spring for the album.
That song led off the “B-side” of the record… a phrase which makes me feel incredibly old. So, when I popped in the cassette for the first time on that cool September morning ride to school, I can remember fast-forwarding until I heard that satisfying “click”.
I had just transferred to a closer school, and the drive there only took about 7 or 8 minutes. So, by the time my Mom and I arrived, the second song – “Under African Skies” – had just finished.
I said goodbye, started to open the door… and then I stopped right in my tracks.
Seem All In My Way
I have never – and probably never will again – hear something as striking, haunting, beautiful, foreign, and glorious as those first few lines of “Homeless”.
I just stood there outside my parents’ 1980 Buick Regal – in the 55-degree weather with the smell of freshly burned leaves lingering in the air – mesmerized
In my ignorance, I assumed the duet between Simon and South African folk choir Ladysmith Black Mambazo was written entirely in a heavily accented English. And as such, I went from class to class that day humming to myself the first line… “seem all in my way”.
Only years later would I find out the group was singing in their native Swahili, and the actual lyric was “silale maweni,” which means…”we slept on the rocks”.
Actually not that far off, but just a touch heavier than my 6th grade self-realized.
In reality, the song – a traditional Zulu wedding tune with updated lyrics – wrestles with the harsh realities of apartheid, migrant labor, and the cycle of poverty. However, for Ladysmith founder Joseph Shabalala – who just passed away in February – it was also about overcoming those obstacles.
The first several verses depict broken homes, dangerous winds, and lamentations of “why, why why.” But then, the song crescendos into the phrase “yitho omanqoba”… Swahili for “it’s a victory”.
And while the stark, inherent beauty of that opening line may have forever etched this song in my mind, it’s Ladysmith Black Mambazo’s message of hope and unity in the face of adversity that has kept it in my heart all these years.
And that’s a language we should all speak.
But with the 20th consecutive week of 1M+ new claims and a still-staggering 16 million people out of work, it’s hard for most analysts to get very excited about the global economy’s prospects.
Source: FRED, Bloomberg
Source: Bureau of Labor Statistics
Roughly 70% of those currently collecting unemployment work in industries that lie far outside the Fed’s reach. After all, there’s nothing the Fed can do to raise capacity limits on restaurants or get people to stay in hotels again – which accounts for one-third of current jobless claims according to the Bureau of Labor Statistics.
Nor can the Fed affect teaching positions or government workers, which account for another 21% of all claims.
And let’s face it, the Fed certainly can’t raise aggregate demand for manufactured goods (another 8% of the currently unemployed) when that many people are out of work, and the ones that aren’t are still staying home a lot.
No, all the Fed can do is ensure banks have money to lend and control the price of those loans – which as it stands, only directly affects about 12% of the jobless population.
So with moratoriums on evictions set to expire, the only thing preventing a massive spike in US homeless population is Congress.
In the words of Joseph Shabalala, “Somebody cry why, why, why?”…
It’s a Victory?
To children of the 1980’s like myself, this dynamic is all too familiar, as we grew up during an epidemic of homelessness.
The primary driving factors were declining personal incomes and the resulting inability to afford housing – both of which are obviously staging a serious resurgence.
In addition, a growing number of people were facing personal problems – and while the challenges are different this time around, they could prove to be just as troublesome.
But it was the deep cuts in welfare programs that really exacerbated the problem. Fortunately for us, that appears to be a mistake Congress isn’t going to make again, despite still being relatively far off on a deal.
And in the event negotiations stall, President Trump appears willing to use Executive Powers to enact a temporary eviction moratorium to buy time.
That might seem like a no-brainer victory for renters on the surface, but there is one group that is adamantly lining up against it… landlords.
The reason is because those renters – the same ones that the Fed can’t help by printing money – will immediately owe months of back rent that they don’t have, and the landlords in turn can’t pay the bank.
While that’s understandable, it’s not exactly clear to whom those landlords are going to be able to rent if they can evict tenants.
So, whatever the ultimate action is, it has to address each stage in the money supply chain there – there must be enough aid available to renters so they can pay their landlords.
Those landlords in turn would be able to pay their mortgages.
And those payments then can help backstop both the banking and real estate sectors – something the Federal Reserve clearly has a vested interest in preserving.
Obviously, it’s hard to speculate exactly what kind of relief we’re going to see this particular go-round, so from an investment standpoint, we need to have a plan in both directions.
It’s largely been speculated that the commercial real estate sector is going to be in trouble no matter what happens – working from home is here to stay.
But given a sufficient stimulus, the residential sector may very well hold up this time around.
With work-from-home now a possibility, salaries likely on the downtrend, and COVID-19 causing skittishness about living in urban areas of high population density, many first-time homebuyers are turning to small towns and rural areas.
However, a more diversified REIT that has greater exposure to both lower-cost housing types and lower-cost locations just might work.
Sun Communities (NYSE: SUI) is just such an option, as they specialize in both manufactured and recreational vehicle (RV) communities. In particular, the RV industry has been enjoying a bit of a renaissance since the outbreak of COVID, as people have increasingly sought out socially distanced vacation options, and revenue for the company has been incredibly steady.
Source: Company Filings
Given a plausible 20% upside from current levels versus a downside about half that size, it seems like a reasonable spot to park ¼ of any intended stake for a little while. It will even pay a 2% dividend while we wait and see how markets shake out.
Steady revenue like this has been hard to come by in this market.
And with security like that in our corner, Joseph Shabalala’s lyric “moonlight sleeping on a midnight lake” takes on a completely different meaning.
All the best,