The Real Estate Channel

Monty Hall and Door Number 1, 2, or 3

The Three Prisoners problem appeared in Martin Gardner’s “Mathematical Games” column in Scientific American in 1959. It is mathematically equivalent to the “Monty Hall problem” with the car and goat replaced with freedom and execution, respectively, and equivalent to, and presumably based on, Bertrand’s box paradox.

Secular Trends in Residential Building Permits and Housing Starts

Over the long haul the two series offer a compelling study of trends in residential real estate. Here is an overlay of the two series since the 1959 inception of the Starts data and the Permits data, which began being tracked a year later. The monthly data points are preserved as faint dots. The trends are illustrated with 6-month moving averages of data divided by the Census Bureau's mid-month population estimates.

With Rollback, Dodd-Frank Is Now Officially a Dud

You can be forgiven, for missing what I believe is the most significant development of the past few days. On Wednesday, the Senate, in a bipartisan vote, quietly approved plans to roll back key banking rules in 2010’s Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

New Residential Housing Starts Down in February

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential housing starts. The latest reading of 1.236M was below the forecast of 1.290M and a decrease from the previous month's revised 1.329M.

New Residential Building Permits: 1.3M in February

The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for February new residential building permits. The latest reading of 1.298M was a decrease from a revised 1.377M in January and below the forecast of 1.320M.

Emerging Markets: Keep an Eye on Reform

Economic reforms remain critical for emerging economies' attempts to successfully transition from low-wage industrial economies to high-skilled, consumption-based economies.

Emperor Xi: Part II

Last week, we discussed China’s power structure and how the suspension of term limits changes recent precedents. This week, we continue this topic by analyzing China’s challenges while shifting from the world’s high growth/low cost producer to a slower growth, “normal” economy.

NAHB Housing Market Index: "Builder Confidence Remains on Solid Footing"

The National Association of Home Builders (NAHB) Housing Market Index (HMI) is a gauge of builder opinion on the relative level of current and future single-family home sales. It is a diffusion index, which means that a reading above 50 indicates a favorable outlook on home sales; below 50 indicates a negative outlook. The latest reading of 70 is down from last month's revised number. had a forecast of 72.

Q4 Household Net Worth: The "Real" Story

Let's take a long-term view of household net worth from the latest Z.1 release. A quick glance at the complete data series shows a distinct bubble in net worth that peaked in Q4 2007 with a trough in Q1 2009, the same quarter the stock market bottomed. The latest Fed balance sheet shows a total net worth at an all-time high — 76.7% above the 2009 trough. The nominal Q4 net worth is up 2.1% from the previous quarter and up 7.8% year-over-year.

Income + Tariffs + Inflation = Underperformance

Many income-oriented investors may not be appropriately positioned for the current market environment, with increasing inflation and looming tariffs poised to lead to significant underperformance.

All Asset All Access, March 2018

In this issue, Research Affiliates discusses positioning for potentially volatile markets and the link between equity valuations and macroeconomic conditions.

What Could Billions of Repatriated Dollars Mean for Bonds?

Tax reform has incentivized companies to return their offshore cash to the US. This could create opportunities for US investment grade bonds.

Is Retail Exposure a Problem for CMBS?

It’s no secret that the retail sector has been under a lot of pressure. Retailers are facing significant headwinds, including high competition, increasing promotional costs and declining mall traffic. So is retail exposure a problem for CMBS? The short answer is yes. But it’s complicated.

How a Volatile Stock Market Turns Investors into Gamblers

Don’t let this wave of stock-market volatility go to your head. The value of the companies in your portfolio doesn’t change by a positive or negative 5% three times a day.

Asset Allocation Views: Singles and Doubles

With market volatility on the rise, consider a broad set of relative value opportunities across global markets.