This is an old-time UK market saying (in the pre-Brexit days when the UK market had some world equity investor relevance) that has its roots in Northern Hemisphere weather patterns. Two related aspects: August is the hottest month of the year, so it’s traditionally when factories shut down and companies gave workers vacation time; suppliers of raw materials to these factories, from wood to coal to copper to cloth began to slow their production lines a couple of months earlier, in anticipation of this.

The long-ago shift in the nature of work among publicly-traded companies toward intellectual labor has made the traditional summer market slump much less of a thing. Still, summer doldrums is where I sense the US stock market is right now.

That’s actually good for you and me, however. It gives us more time to think about how the post-pandemic economy in the US–and maybe elsewhere–is evolving.

The sagging market for urban office space, for example, is something I’ve been interested in for some time. Where’s the bottom? How is economic energy being redistributed, which is another way of asking who the winners and losers will be?

An interesting turn that I’ve just been reading about–meaning it has been under way for a while–is the banks’ reaction to giant real estate investment firms, like Brookfield, defaulting on office building loans where current cash flows don’t cover loan payments and they don’t see the situation improving any time soon (the dynamic is that the newest, state-of-the-art office buildings lower rents to entice firms in older buildings to upgrade–if for no other reason than to keep from looking like it’s unwise or unsafe to be there.) So essentially they’re putting the keys in the mail and sending them to the lender bank.

The latest chapter in the story is that banks, who aren’t either eager or equipped to manage real estate themselves, are beginning to sell their suspect loans at a discount

I’m not sure to whom, but what I take from this is that the discounts will be big enough to satisfy a buyer who is either going to run a cut-rate office operation or (more likely, I think) to repurpose the buildings as residential.

It’s probably too early to buy the new owners, but this is a significant wealth transfer. It also is another point of economic stabilization, one more worry removed.