Welcome to 2 Question Tuesday. This week’s client submitted questions were:

1. Is the commercial real estate market in a bubble?
2. After First Republic, do you expect more banks to fail?

Phil, Mike, and Larry discuss the idea that there is a bubble in commercial real estate and the forecast from Morgan Stanley that market prices could plunge as much as 40% over the next two years, worse than in the Great Financial Crisis. This throws another wrinkle into small and regional banks that are the biggest source of credit to the $20 trillion market and hold 80% of the sector’s outstanding debt. They then talk about JP Morgan Chase’s takeover of First Republic Bank and if there are more bank failures hiding in plain sight.

Submit your questions to question@2questiontuesday.com

As always, if you have any questions at any time, please feel free to call your adviser directly at (845) 691-4035.