Ross Perot Jr., whose family is one of the largest independent property developers in the country, warned of a looming real estate recession if banks don’t start lending again.
The Federal Reserve’s higher interest rates, the work from home trend, ESG distractions, increases in crime, etc., are having far reaching effects on our economy and investors.
Valid until the market close on June 30, 2023
The S&P 500 closed May with a monthly gain of 0.25%, after a gain of 1.46% in April. At this point, after close on the last day of the month, two of five Ivy portfolio ETFs — Vanguard Real Estate ETF (VNQ) and Invesco DB Commodity Index Tracking Fund (DBC) — are signaling "cash", unchanged from last month's final double "cash" signal.
The stresses in the CRE market do not appear to pose a systemic threat to the global banking system.
Chief Economist Eugenio J. Alemán discusses current economic conditions.
Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month.
Advising professional athletes is an exciting and rewarding experience. It also presents unique challenges that require a different approach than working with more traditional clients.
In March, S&P Case-Shiller Home Price Index revealed seasonally adjusted home prices for the benchmark 20-city index saw a 0.5% increase month-over-month (MoM) and a 1.2% decrease year-over-year (YoY). After adjusting for inflation, the MoM was reduced to 0.0% and the YoY was reduced to -8.5%.
The Federal Housing Finance Agency (FHFA) has released its U.S. house price index (HPI) for March. The index reached a record high last month, coming in at 398.0. U.S. house prices increased by 0.6% from the previous month. Year-over-year the index is up 3.6%. After adjusting for inflation, the real index is up 0.8% in March and up 0.2% year-over-year.
I originally posted a video covering the hospital REIT Medical Properties Trust on February 17, 2023, when the price was $12.96. On February 28, 2023, I did a follow-up update video after the price had fallen to $8.72.
Swiss money manager Felix Zulauf is a crowd favorite at SIC. His 2022 presentation was right on target, so I asked him back to tell us what he expects for the rest of 2023 and beyond. Unfortunately, he thinks a slowdown is coming that will hit markets hard.
If you were doubting whether the age of AI has arrived, NVIDIA’s stock performance this week may have given you second thoughts.
According to the company’s investor relations page on this REIT, Simon Property Trust (SPG) is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment, and mixed-use destinations and an S&P 100 company.
With the release of this morning's report on April's personal incomes and outlays, we can now take a closer look at "real" disposable personal income per capita. At two decimal places, the nominal 0.37% month-over-month change in disposable income comes to 0.00% when we adjust for inflation. The year-over-year metrics are 7.36% nominal and 2.87% real.
Rick Rieder and team argue that a series of small, but more probable, wins in fixed income can pave the way for portfolios to outperform benchmarks in 2023.
The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The latest index remained at 78.9, representing a 0.0% change from last month, lower than the expected 0.5% increase. Pending home sales are down 20.3% compared to one year ago.
The two primary styles of dividend investing are growth and yield. In the latter, investors embrace stocks with what are deemed above-average yields — often from slower-growth sectors, such as utilities and real estate.
Cities and states may have their work cut out for them as they explore solutions to preserve their commercial tax bases and maintain the vibrancy of their downtowns.
One of the advantages of exchange-traded funds (ETFs) compared to other investment vehicles is their relative liquidity. But what is liquidity for an ETF? How does that liquidity actually give ETF investors the upper hand, compared to other assets?
Several key economic indicators are released every week to help provide insight into the overall health of the U.S. economy. Policymakers and advisors closely monitor these indicators to understand the direction of interest rates.
This morning's release of the April new home sales from the Census Bureau came in at 683K, up 4.1% month-over-month from a revised 656K in March. This is above the Investing.com forecast of 663K and the highest level in over a year. The median home price is now at $420,800, down $35K from March on a nominal basis.
According to Buffett, the US economy just went through the “most extraordinary economic period since World War II.” That’s a heck of a statement.
Many investors view real estate as an attractive long-term investment opportunity that plays an important role in portfolio diversification. With that in mind, Columbia Threadneedle Investments recently announced the expansion of its exchange-traded fund offerings with the launch of the Columbia Research Enhanced Real Estate ETF (Ticker: CRED). The fund offers investors and allocators an accessible, research-driven way to gain exposure to the real estate asset class. REITS have a history of low correlations and attractive long-term returns and have a strong historical performance record in high inflation. According to a recent Columbia Threadneedle survey, 93% of financial advisors plan to maintain or increase their real estate allocations over the next 12 to 24 months.
What generally follows that expression is a succinct synopsis. We’re always trying to be concise; however, distilling complex economic and investment matters usually requires several pages.
Credit conditions are tightening in both Europe and the United States. Our analysis follows in our mid-quarter update, Tightening Credit.
The U.S. economy is likely slowing down, and a recession seems likely in the 12-18 month time horizon.
REITs are most often thought about as income-producing investments. Although this is generally a true statement, REITs can also be great builders of wealth if invested correctly. To invest in REITs correctly, it is imperative that the investor understand the true nature of the beast.
Despite economic uncertainty, we see compelling value in high-quality, liquid assets that we view as more resilient in the face of a potential recession.
April's ZHVI came in at $339.048, up 0.34% from March and up 3.30% from April 2022. This is the second consecutive monthly increase in home value. After adjusting for inflation, the real figures are -0.21% month-over-month and -4.45% year-over-year.
This morning's release of the April existing home sales showed that sales continued to fall for a second straight month to a seasonally adjusted annual rate of 4.28 million units from the previous month's 4.43 million. The latest number represents a 3.4% month-over-month decrease and was well below the forecast of a 0.1% increase in sales. Existing home sales are now down 23.2% compared to one year ago.
The Federal Reserve’s latest 0.25% interest-rate hike has likely capped one of its most aggressive policy-tightening cycles in 40 years. And the cumulative 5% policy rate increase in just over a year is now starting to have an effect on rate-sensitive sectors and inflation.
Earlier today, the U.S. Census Bureau and the Department of Housing and Urban Development published their April findings for new residential housing starts and building permits. 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 and permits data, which was tracked beginning a year later.
Rising rates in today's fixed-income markets have led to more attractive bond prices and higher yields, alleviating some of the challenges facing income investors.
The paradox that this marriage potential created at the college was that the odds are good, but the goods are odd. This is the statement that can be made for common stock investing today.
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential housing starts. The latest reading of 1.401M was just above Investing.com's forecast of 1.400M and is a 2.2% increase from the March's revised figure of 1.371M. Housing starts are down 22.3% compared to this time last year.
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential building permits. The latest reading of 1.416M came in below Investing.com's forecast of 1.437M and is a 1.5% decrease from March’s revised figure of 1.437M. Building permits are down 21.1% compared to one year ago.
The future of money is uncertain, and speculation about what comes next is all over the place. The Federal Reserve note "dollar" is the world's reserve currency, but its seat on that throne is no longer secure.
Treasury Secretary Janet Yellen warned that the US is already paying a price for its failure to raise the federal debt limit, as talks between the White House and lawmakers from both parties continued into a second week.
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. The latest reading came in better than expected (45) at 50, up 5 from last month, and is the index's highest reading in the last ten months.
Influence, by Robert Cialdini, has impacted my professional and personal life for more than 30 years.
Over the next decade, the total return for U.S. or global equities will be nearly zero, according to Felix Zulauf.
This week’s inflation numbers were mostly positive and benign for the U.S. economy as well as for the Federal Reserve (Fed) and confirms our view that, at least for now, the Fed is done increasing interest rates for this monetary tightening cycle.
The Banking emergency arising with mid-sized, regional banks is a direct consequence of policy decisions. Examine the causes of bank failures in 2023 and the potential for larger contagion.
Jamie Dimon said it’s time for regulators to help put an end to the turmoil in the banking industry, but he’s already predicting policymakers will take away the wrong lessons from this year’s upheaval.
The central bank likely won't have enough reason to hike rates again this cycle. In fact, we wouldn't be surprised to see one or two rate cuts later this year.
Fixed-income markets are likely to be volatile given macro-driven risks and the higher cost of borrowing.
Financial cracks from rate hikes have led to jitters over commercial real estate. Yet granularity is key. We see opportunities in some U.S. industrial properties.
For this edition of Bull vs. Bear, Karrie Gordon and Nick Peters-Golden debated the long-term investing case for gold ETFs. Have the yellow metal’s fundamentals fundamentally changed?
Investments in a selection of private markets – also known as “alternatives” – reduced the volatility of portfolios in 2022.
The conventional wisdom is that the pandemic induced a trend of de-globalization, as major economies decreased the reliance of their supply chains on other countries. But, according to Louis-Vincent Gave, globalization will thrive, and the focus will shift from China to India and other southern hemisphere countries.
A direct repercussion of higher central bank policy rates is on the cost of capital for corporations and other issuers of debt. However, not all issuers feel the impact of higher rates at the same time, and we’re more cautious on asset classes that are experiencing higher interest costs sooner.
If there was a message the Federal Reserve (Fed) wanted to make clear after the end of the Federal Open Market Committee (FOMC) meeting on May 3, it was that it reserves the right to remain hawkish.
This is part of a continuing series of analyze out loud videos prepared at the suggestion of subscribers to the FAST Graphs’ YouTube Channel on how to research stocks.
It is not yet clear when or if we’ll have a recession in 2023— but it has certainly been a challenging market environment, and with dislocation comes opportunity.
Along with identifying your goals and time horizon, assessing risk is a key part of building a holistic financial plan. And while affluent investors generally have higher risk tolerances, determining their individual risk profiles isn’t straightforward.
Bank stocks have underperformed conservative sectors and the broader S&P 500. Despite the broad risks, there are good banks that can be investment worthy.
PacWest Bancorp has become the latest focal point of investor concern about the health of US regional banks, shedding nearly half its value in premarket trading, a day after Federal Reserve Chair Jerome Powell said authorities were closer to containing the turmoil that’s claimed four lenders this year.
As the name implies, loss aversion is our instinct to not just prefer a gain over a loss but to prioritize avoiding losses over almost anything. It might sound wise to try avoiding losses but taking it too far could keep you from realizing your financial goals.
Over the last decade, the general trend has been consistent: The rate of homeownership has struggled. The Census Bureau released its latest quarterly report for Q1 2023 showing the latest homeownership rate is at 66.0%, up 0.1% from Q4 2022.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon made a bold call on Monday: his firm’s rescue of First Republic Bank ended the initial phase of the turmoil engulfing banks.
The threat of recession is making debt securities a safer bet, while the stock market is yet to price in those risks.
Lending standards are a lot like carbon monoxide since they operate in the back ground. When the Senior Loan Officer Opinion Survey (SLOOOS) showed that banks significantly increased lending standards in the third quarter, no one on Wall Street noticed.
What would you do with a million-dollar windfall?
And neither should you.
The pandemic hurt small retailers by hastening the transition to digital commerce and emptied office buildings by turning living rooms into workspace. But it also fueled a warehouse building boom and unleashed a torrent of pent-up travel-and-leisure spending when economies reopened, underscoring the diversity of commercial real estate.
There's a potential illiquidity premium - the excess return received for tying up capital for an extended period of time - for allocating capital to private equity, private credit and private real estate markets that have historically delivered a substantial illiquidity premium relative to their public market equivalents.
Learn how you can help clients determine the appropriate percentage to allocate to private markets by developing an "illiquidity bucket" that can also help instill a long-term disciplined approach to investing.
Next week also brings what could be a pivotal Federal Reserve policy meeting. We use this word “pivotal” to say an event is important. Taken literally, it means to turn in a different direction than you were previously going.
The current Federal Reserve’s (Fed’s) tightening cycle is approaching an end. This has been one of the most forceful as well as the fastest tightening cycle in history. However, because the federal funds rate was well below the neutral federal funds rate, the time it has been above that neutral level has not been that long.
A few months ago, the internet was filling up with predictions that we’d have a 2008-style crash in home prices. The thinking was that the increase in interest rates would cause mortgage payments to skyrocket and price out an entire generation of homebuyers.
India’s ability to attract foreign investment has long been hampered by subpar infrastructure and excessive bureaucracy. But reputations can obscure real change.
With the European Market’s earning season fully upon us, let’s look at expectations for the month ahead. According to our proprietary analytics, the European energy and real estate sectors have experienced the highest level of downward revision to sales of all sectors on both a one- and three-month basis.
Discussion about inflation and the Feds efforts to fight it, the recent bank failures, and the odds of a U.S. recession.
A new report from Bain highlighted a key statistic: Individual investors hold roughly 50% of the estimated near-$300 trillion of global assets under management. Yet those same investors hold just 16% of AUM in alternative investment funds. Some HNW investors are seeking to diversify away from public equities to safeguard their portfolios and are allocating to private market investments through alternatives. Opto Investments and Riskalyze recently announced a strategic partnership that combines Riskalyze’s growth platform with Opto's technology-enabled private markets solution to build investment strategies that offer exposure to private credit, private equity, real estate, venture capital, and infrastructure.
“Be careful in the equity markets,” warned Larry Summers. The bond market is predicting a recession but, he said, the equity market has not priced that in.
The sudden collapse of two US regional banks and the forced acquisition of Credit Suisse in Europe introduced a third dimension to the existing policy dilemma of balancing inflation and growth objectives: financial stability.
The disruption in office real estate is outlasting the term on its loans.
How will tighter lending standards become evident in the economy?
Pricing power and profit margins showed signs of stabilizing in the first quarter. But a survey of Loomis Sayles’ credit analysts leads us to believe the bottom in corporate fundamentals is yet to come.
Can central banks simultaneously provide liquidity to banks suffering sharp deposit withdrawals while also slowing money and credit creation by raising interest rates? In essence, can central banks quantitatively tighten and quantitatively ease at the same time?
Corporate bond investors may be wondering if banking sector turmoil will affect financial institution bond issuers. Here's what to know now.
Consisting of 60% stocks/40% bonds, this classic investment portfolio has historically been a trusted way to generate returns and diversify investor portfolios. However, we believe the 60/40 allocation may now be working against investors.
This week as regional banks start reporting earnings we will get a better look at the lasting effects of the bank crisis kicked off by the failure of Silicon Valley Bank last month. Looking at recent earnings forecast revisions, regional banks appear particularly exposed to short- and longer-term headwinds.
Our entire financial system revolves around credit. This includes the ability to access credit for new loans, and more importantly, the refinancing of existing loans.
Disagreement is bubbling up at the Federal Reserve as dueling growth and inflation risks pull policymakers in different directions. If you think the debate seems fiery now, just wait until the third quarter, when recession may be at the nation’s doorstep.
In his latest memo, Howard Marks discusses the significance of the Silicon Valley Bank collapse. He argues that it likely doesn’t portend a wave of banking failures but may amplify preexisting wariness among investors and lenders, leading to further credit tightening and additional pain across a range of industries and sectors.
Markets have been very positive this week on better-than-expected inflation numbers. The Consumer Price Index (CPI) printed a better than expected 0.1% in March with the year-over-year rate declining to 5.0% compared to a 6.0% year-over-year rate reported in February of this year.
It’s believed that to meet this goal, two out of every three passenger vehicles manufactured in the U.S. would need to be electric models.
2023 has already been an eventful year, featuring a banking crisis and more Fed rate hikes. In our view, this is not a “set it and forget it” type of market – investors need to stay vigilant.
Kyle Bass has some advice for real estate investors: Tear it down. The founder of Dallas-based Hayman Capital Management says office buildings in cities need to be demolished because demand isn’t returning and it’s impractical to turn most towers into apartments.
Real Estate
Billionaire Perot Warns of Real Estate Recession as Loans Dry Up
Ross Perot Jr., whose family is one of the largest independent property developers in the country, warned of a looming real estate recession if banks don’t start lending again.
The Far-Reaching Effects of Commercial Real Estate’s Downward Spiral
The Federal Reserve’s higher interest rates, the work from home trend, ESG distractions, increases in crime, etc., are having far reaching effects on our economy and investors.
Moving Averages: S&P Finishes May Up 0.25%
Valid until the market close on June 30, 2023
The S&P 500 closed May with a monthly gain of 0.25%, after a gain of 1.46% in April. At this point, after close on the last day of the month, two of five Ivy portfolio ETFs — Vanguard Real Estate ETF (VNQ) and Invesco DB Commodity Index Tracking Fund (DBC) — are signaling "cash", unchanged from last month's final double "cash" signal.
Is the Commercial Real Estate Market a Potential Threat to the Banking System?
The stresses in the CRE market do not appear to pose a systemic threat to the global banking system.
The Resilience of the U.S. Economy: It’s All About Employment, and the Consumer
Chief Economist Eugenio J. Alemán discusses current economic conditions.
Moving Averages Month-End Preview: May 2023
Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month.
How I Built a Practice for Professional Athletes
Advising professional athletes is an exciting and rewarding experience. It also presents unique challenges that require a different approach than working with more traditional clients.
S&P Case-Shiller Home Price Index: Rebound Continued in March
In March, S&P Case-Shiller Home Price Index revealed seasonally adjusted home prices for the benchmark 20-city index saw a 0.5% increase month-over-month (MoM) and a 1.2% decrease year-over-year (YoY). After adjusting for inflation, the MoM was reduced to 0.0% and the YoY was reduced to -8.5%.
FHFA House Price Index Reaches Record High in March
The Federal Housing Finance Agency (FHFA) has released its U.S. house price index (HPI) for March. The index reached a record high last month, coming in at 398.0. U.S. house prices increased by 0.6% from the previous month. Year-over-year the index is up 3.6%. After adjusting for inflation, the real index is up 0.8% in March and up 0.2% year-over-year.
Medical Properties Trust: Fundamentals Support A Higher Valuation For This High-Yield REIT
I originally posted a video covering the hospital REIT Medical Properties Trust on February 17, 2023, when the price was $12.96. On February 28, 2023, I did a follow-up update video after the price had fallen to $8.72.
SIC Mix
Swiss money manager Felix Zulauf is a crowd favorite at SIC. His 2022 presentation was right on target, so I asked him back to tell us what he expects for the rest of 2023 and beyond. Unfortunately, he thinks a slowdown is coming that will hit markets hard.
The AI Era Unleashed: How NVIDIA’s Stock Boom Reflects The Future Of Tech
If you were doubting whether the age of AI has arrived, NVIDIA’s stock performance this week may have given you second thoughts.
This A Rated REIT Just Increased Their Dividend Offering a 7% Current Yield
According to the company’s investor relations page on this REIT, Simon Property Trust (SPG) is a real estate investment trust engaged in the ownership of premier shopping, dining, entertainment, and mixed-use destinations and an S&P 100 company.
Real Disposable Income Per Capita Flat in April
With the release of this morning's report on April's personal incomes and outlays, we can now take a closer look at "real" disposable personal income per capita. At two decimal places, the nominal 0.37% month-over-month change in disposable income comes to 0.00% when we adjust for inflation. The year-over-year metrics are 7.36% nominal and 2.87% real.
It’s Time to Start Playing Investment “Small Ball” in Portfolios
Rick Rieder and team argue that a series of small, but more probable, wins in fixed income can pave the way for portfolios to outperform benchmarks in 2023.
Pending Home Sales Unchanged in April
The National Association of Realtors® (NAR) released the latest monthly data for its pending home sales index. The latest index remained at 78.9, representing a 0.0% change from last month, lower than the expected 0.5% increase. Pending home sales are down 20.3% compared to one year ago.
Examining the Importance of Dividend Growth
The two primary styles of dividend investing are growth and yield. In the latter, investors embrace stocks with what are deemed above-average yields — often from slower-growth sectors, such as utilities and real estate.
The Urban Challenge: Can Cities Fill the Tax Gap Created by Empty Offices?
Cities and states may have their work cut out for them as they explore solutions to preserve their commercial tax bases and maintain the vibrancy of their downtowns.
ETF Liquidity: What Is It and How Does It Benefit Investors?
One of the advantages of exchange-traded funds (ETFs) compared to other investment vehicles is their relative liquidity. But what is liquidity for an ETF? How does that liquidity actually give ETF investors the upper hand, compared to other assets?
It's the Economy That Matters: Most Recent Housing Market Trends
Several key economic indicators are released every week to help provide insight into the overall health of the U.S. economy. Policymakers and advisors closely monitor these indicators to understand the direction of interest rates.
New Home Sales Jump 4.1% in April
This morning's release of the April new home sales from the Census Bureau came in at 683K, up 4.1% month-over-month from a revised 656K in March. This is above the Investing.com forecast of 663K and the highest level in over a year. The median home price is now at $420,800, down $35K from March on a nominal basis.
Buffett’s Calling a Recession—and He’s Probably Right
According to Buffett, the US economy just went through the “most extraordinary economic period since World War II.” That’s a heck of a statement.
A New, Low-Cost REIT ETF
Many investors view real estate as an attractive long-term investment opportunity that plays an important role in portfolio diversification. With that in mind, Columbia Threadneedle Investments recently announced the expansion of its exchange-traded fund offerings with the launch of the Columbia Research Enhanced Real Estate ETF (Ticker: CRED). The fund offers investors and allocators an accessible, research-driven way to gain exposure to the real estate asset class. REITS have a history of low correlations and attractive long-term returns and have a strong historical performance record in high inflation. According to a recent Columbia Threadneedle survey, 93% of financial advisors plan to maintain or increase their real estate allocations over the next 12 to 24 months.
The Long and Short of It
What generally follows that expression is a succinct synopsis. We’re always trying to be concise;
however, distilling complex economic and investment matters usually requires several pages.
Real Money Supply and The Real Price of Petroleum, Examined
Chief Economist Eugenio J. Alemán discusses current economic conditions.
Mid-Quarter Update: Tightening Credit
Credit conditions are tightening in both Europe and the United States. Our analysis follows in our mid-quarter update, Tightening Credit.
Final Approach: May 2023 Economic Update
The U.S. economy is likely slowing down, and a recession seems likely in the 12-18 month time horizon.
4 High-Quality REITs In Value Yielding 5%
REITs are most often thought about as income-producing investments. Although this is generally a true statement, REITs can also be great builders of wealth if invested correctly. To invest in REITs correctly, it is imperative that the investor understand the true nature of the beast.
Income Fund Update: Building Resilience and Harnessing Yield in High Quality Assets
Despite economic uncertainty, we see compelling value in high-quality, liquid assets that we view as more resilient in the face of a potential recession.
Zillow Home Value Index: Increases for Second Straight Month
April's ZHVI came in at $339.048, up 0.34% from March and up 3.30% from April 2022. This is the second consecutive monthly increase in home value. After adjusting for inflation, the real figures are -0.21% month-over-month and -4.45% year-over-year.
Existing Home Sales Fall Again in April
This morning's release of the April existing home sales showed that sales continued to fall for a second straight month to a seasonally adjusted annual rate of 4.28 million units from the previous month's 4.43 million. The latest number represents a 3.4% month-over-month decrease and was well below the forecast of a 0.1% increase in sales. Existing home sales are now down 23.2% compared to one year ago.
Connecting the Disinflation Dots in Multi-Asset Strategies
The Federal Reserve’s latest 0.25% interest-rate hike has likely capped one of its most aggressive policy-tightening cycles in 40 years. And the cumulative 5% policy rate increase in just over a year is now starting to have an effect on rate-sensitive sectors and inflation.
A Long-Term Look: Residential Building Permits and Housing Starts
Earlier today, the U.S. Census Bureau and the Department of Housing and Urban Development published their April findings for new residential housing starts and building permits. 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 and permits data, which was tracked beginning a year later.
Getting Income From a Portfolio Is Easier These Days but Risks Remain. Model Portfolios May Be the Answer.
Rising rates in today's fixed-income markets have led to more attractive bond prices and higher yields, alleviating some of the challenges facing income investors.
Good Odds and Odd Goods
The paradox that this marriage potential created at the college was that the odds are good, but the goods are odd. This is the statement that can be made for common stock investing today.
Housing Starts Rise 2.2% in April
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential housing starts. The latest reading of 1.401M was just above Investing.com's forecast of 1.400M and is a 2.2% increase from the March's revised figure of 1.371M. Housing starts are down 22.3% compared to this time last year.
Building Permits Fall 1.5% in April
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for April new residential building permits. The latest reading of 1.416M came in below Investing.com's forecast of 1.437M and is a 1.5% decrease from March’s revised figure of 1.437M. Building permits are down 21.1% compared to one year ago.
Holding Gold Is Like Holding a Wildcard
The future of money is uncertain, and speculation about what comes next is all over the place. The Federal Reserve note "dollar" is the world's reserve currency, but its seat on that throne is no longer secure.
Yellen Warns US Paying Price as Negotiators Battle on Debt Limit
Treasury Secretary Janet Yellen warned that the US is already paying a price for its failure to raise the federal debt limit, as talks between the White House and lawmakers from both parties continued into a second week.
NAHB Housing Market Index: Lack of Existing Inventory Boosts Builder Confidence
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. The latest reading came in better than expected (45) at 50, up 5 from last month, and is the index's highest reading in the last ten months.
The Sales Book that Helped Me for 30+ Years
Influence, by Robert Cialdini, has impacted my professional and personal life for more than 30 years.
Felix Zulauf Predicts a Decade of Zero Returns for Equities
Over the next decade, the total return for U.S. or global equities will be nearly zero, according to Felix Zulauf.
Inflation Continued its Disinflationary Path in April...
This week’s inflation numbers were mostly positive and benign for the U.S. economy as well as for the Federal Reserve (Fed) and confirms our view that, at least for now, the Fed is done increasing interest rates for this monetary tightening cycle.
The Danger Beneath the Surface: How Bad Policy Led to Bank Failures
The Banking emergency arising with mid-sized, regional banks is a direct consequence of policy decisions. Examine the causes of bank failures in 2023 and the potential for larger contagion.
Jamie Dimon Says US Needs to 'Finish' the Bank Crisis
Jamie Dimon said it’s time for regulators to help put an end to the turmoil in the banking industry, but he’s already predicting policymakers will take away the wrong lessons from this year’s upheaval.
Federal Reserve: Pause or Peak?
The central bank likely won't have enough reason to hike rates again this cycle. In fact, we wouldn't be surprised to see one or two rate cuts later this year.
Financial Stability Risk and Recession Odds Rise
Fixed-income markets are likely to be volatile given macro-driven risks and the higher cost of borrowing.
Commercial Real Estate: Going Granular
Financial cracks from rate hikes have led to jitters over commercial real estate. Yet granularity is key. We see opportunities in some U.S. industrial properties.
Bull vs. Bear: When Investing in Gold ETFs, Find What Glitters
For this edition of Bull vs. Bear, Karrie Gordon and Nick Peters-Golden debated the long-term investing case for gold ETFs. Have the yellow metal’s fundamentals fundamentally changed?
Alternative Investments for Volatile Markets
Investments in a selection of private markets – also known as “alternatives” – reduced the volatility of portfolios in 2022.
Louis-Vincent Gave – Prepare for a Boom in Emerging Markets
The conventional wisdom is that the pandemic induced a trend of de-globalization, as major economies decreased the reliance of their supply chains on other countries. But, according to Louis-Vincent Gave, globalization will thrive, and the focus will shift from China to India and other southern hemisphere countries.
The Cost of Capital Is Up – Your Guardrails Should Be Too
A direct repercussion of higher central bank policy rates is on the cost of capital for corporations and other issuers of debt. However, not all issuers feel the impact of higher rates at the same time, and we’re more cautious on asset classes that are experiencing higher interest costs sooner.
The Federal Reserve... Reserves the Right to Remain Hawkish
If there was a message the Federal Reserve (Fed) wanted to make clear after the end of the Federal Open Market Committee (FOMC) meeting on May 3, it was that it reserves the right to remain hawkish.
How To Research Stocks To Make Smart Buy Sell And Hold Decisions (Part 1)
This is part of a continuing series of analyze out loud videos prepared at the suggestion of subscribers to the FAST Graphs’ YouTube Channel on how to research stocks.
Will 2023 Be a Good Vintage Year for Private Markets?
It is not yet clear when or if we’ll have a recession in 2023— but it has certainly been a challenging market environment, and with dislocation comes opportunity.
Risk Mitigation's Crucial, Complex Role for Wealthy Families
Along with identifying your goals and time horizon, assessing risk is a key part of building a holistic financial plan. And while affluent investors generally have higher risk tolerances, determining their individual risk profiles isn’t straightforward.
Are Bank Stocks Too Risky?
Bank stocks have underperformed conservative sectors and the broader S&P 500. Despite the broad risks, there are good banks that can be investment worthy.
Regional Banks Sink as PacWest Weighs Strategic Options
PacWest Bancorp has become the latest focal point of investor concern about the health of US regional banks, shedding nearly half its value in premarket trading, a day after Federal Reserve Chair Jerome Powell said authorities were closer to containing the turmoil that’s claimed four lenders this year.
Unpacking The Psychology Of Loss Aversion
As the name implies, loss aversion is our instinct to not just prefer a gain over a loss but to prioritize avoiding losses over almost anything. It might sound wise to try avoiding losses but taking it too far could keep you from realizing your financial goals.
Home Ownership Rate: 66.0% in Q1 2023
Over the last decade, the general trend has been consistent: The rate of homeownership has struggled. The Census Bureau released its latest quarterly report for Q1 2023 showing the latest homeownership rate is at 66.0%, up 0.1% from Q4 2022.
Wall Street Is Betting the Regional Bank Crisis Isn’t Over Yet
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon made a bold call on Monday: his firm’s rescue of First Republic Bank ended the initial phase of the turmoil engulfing banks.
Morgan Stanley, UBS Pick Bonds Over Stocks on Recession Risk
The threat of recession is making debt securities a safer bet, while the stock market is yet to price in those risks.
Economic Carbon Monoxide
Lending standards are a lot like carbon monoxide since they operate in the back ground. When the Senior Loan Officer Opinion Survey (SLOOOS) showed that banks significantly increased lending standards in the third quarter, no one on Wall Street noticed.
How Americans Spend Their Lottery Winnings
What would you do with a million-dollar windfall?
I Don’t Like the Fed
And neither should you.
US Commercial Real Estate Outlook: Seeking Calmer Waters in Quality
The pandemic hurt small retailers by hastening the transition to digital commerce and emptied office buildings by turning living rooms into workspace. But it also fueled a warehouse building boom and unleashed a torrent of pent-up travel-and-leisure spending when economies reopened, underscoring the diversity of commercial real estate.
The Cost of Being Too Liquid
There's a potential illiquidity premium - the excess return received for tying up capital for an extended period of time - for allocating capital to private equity, private credit and private real estate markets that have historically delivered a substantial illiquidity premium relative to their public market equivalents.
Learn how you can help clients determine the appropriate percentage to allocate to private markets by developing an "illiquidity bucket" that can also help instill a long-term disciplined approach to investing.
Pivot to the Fourth Turning
Next week also brings what could be a pivotal Federal Reserve policy meeting. We use this word “pivotal” to say an event is important. Taken literally, it means to turn in a different direction than you were previously going.
The End of the Tightening Cycle Is in Sight
The current Federal Reserve’s (Fed’s) tightening cycle is approaching an end. This has been one of the most forceful as well as the fastest tightening cycle in history. However, because the federal funds rate was well below the neutral federal funds rate, the time it has been above that neutral level has not been that long.
How ’Bout Those Housing Doom Predictions
A few months ago, the internet was filling up with predictions that we’d have a 2008-style crash in home prices. The thinking was that the increase in interest rates would cause mortgage payments to skyrocket and price out an entire generation of homebuyers.
India’s New Look: Paving Roads to Efficiency and Investment
India’s ability to attract foreign investment has long been hampered by subpar infrastructure and excessive bureaucracy. But reputations can obscure real change.
European-Related Earnings Revisions
With the European Market’s earning season fully upon us, let’s look at expectations for the month ahead. According to our proprietary analytics, the European energy and real estate sectors have experienced the highest level of downward revision to sales of all sectors on both a one- and three-month basis.
Muhlenkamp & Company Quarterly Letter – April 2023
Discussion about inflation and the Feds efforts to fight it, the recent bank failures, and the odds of a U.S. recession.
Aaron Klein of Riskalyze on Risk, SVB, and the Future of Advisor Technology
A new report from Bain highlighted a key statistic: Individual investors hold roughly 50% of the estimated near-$300 trillion of global assets under management. Yet those same investors hold just 16% of AUM in alternative investment funds. Some HNW investors are seeking to diversify away from public equities to safeguard their portfolios and are allocating to private market investments through alternatives. Opto Investments and Riskalyze recently announced a strategic partnership that combines Riskalyze’s growth platform with Opto's technology-enabled private markets solution to build investment strategies that offer exposure to private credit, private equity, real estate, venture capital, and infrastructure.
Larry Summers – Get out of U.S. Equities
“Be careful in the equity markets,” warned Larry Summers. The bond market is predicting a recession but, he said, the equity market has not priced that in.
Navigating a Trilemma
The sudden collapse of two US regional banks and the forced acquisition of Credit Suisse in Europe introduced a third dimension to the existing policy dilemma of balancing inflation and growth objectives: financial stability.
Out of Office
The disruption in office real estate is outlasting the term on its loans.
Bank Stress and Lending Standards
How will tighter lending standards become evident in the economy?
Corporate Health Stabilizes, but We Expect More Weakness Ahead
Pricing power and profit margins showed signs of stabilizing in the first quarter. But a survey of Loomis Sayles’ credit analysts leads us to believe the bottom in corporate fundamentals is yet to come.
The Fed—Quantitative Tightening or Quantitative Easing?
Can central banks simultaneously provide liquidity to banks suffering sharp deposit withdrawals while also slowing money and credit creation by raising interest rates? In essence, can central banks quantitatively tighten and quantitatively ease at the same time?
Will Banking Sector Issues Affect Corporate Bonds?
Corporate bond investors may be wondering if banking sector turmoil will affect financial institution bond issuers. Here's what to know now.
Move Over 60/40
Consisting of 60% stocks/40% bonds, this classic investment portfolio has historically been a trusted way to generate returns and diversify investor portfolios. However, we believe the 60/40 allocation may now be working against investors.
Regional Banks Face Headwinds
This week as regional banks start reporting earnings we will get a better look at the lasting effects of the bank crisis kicked off by the failure of Silicon Valley Bank last month. Looking at recent earnings forecast revisions, regional banks appear particularly exposed to short- and longer-term headwinds.
Beware The Credit Cycle
Our entire financial system revolves around credit. This includes the ability to access credit for new loans, and more importantly, the refinancing of existing loans.
Fed Unity Is Showing Cracks at a Critical Time
Disagreement is bubbling up at the Federal Reserve as dueling growth and inflation risks pull policymakers in different directions. If you think the debate seems fiery now, just wait until the third quarter, when recession may be at the nation’s doorstep.
Lessons from Silicon Valley Bank
In his latest memo, Howard Marks discusses the significance of the Silicon Valley Bank collapse. He argues that it likely doesn’t portend a wave of banking failures but may amplify preexisting wariness among investors and lenders, leading to further credit tightening and additional pain across a range of industries and sectors.
Inflation: It’s Not Over Until It Is Over
Markets have been very positive this week on better-than-expected inflation numbers. The Consumer Price Index (CPI) printed a better than expected 0.1% in March with the year-over-year rate declining to 5.0% compared to a 6.0% year-over-year rate reported in February of this year.
The Transition To Electric Vehicles And Renewables Will Test Global Commodity Supply
It’s believed that to meet this goal, two out of every three passenger vehicles manufactured in the U.S. would need to be electric models.
Strategic Income Outlook: And We Thought 2022 Was a Crazy Year
2023 has already been an eventful year, featuring a banking crisis and more Fed rate hikes. In our view, this is not a “set it and forget it” type of market – investors need to stay vigilant.
Offices Across America Must Be Torn Down, Says Investor Who Won Big in 2008
Kyle Bass has some advice for real estate investors: Tear it down. The founder of Dallas-based Hayman Capital Management says office buildings in cities need to be demolished because demand isn’t returning and it’s impractical to turn most towers into apartments.