Posted on 05/03/2022 11:55:11 AM PDT by Browns Ultra Fan
As The Federal Reserve seems hellbent on raising interest rates to fight the rapid increases caused by Biden’s follicies, we see the S&P 500 index taking a hit in 2022, but NAREIT’s all equity index as well.
An example of how a REIT can be impacted by The Fed is the Industrial REIT index that tanked with Amazon’s declining earnings prospects.
While industrial REITs is a broad category, Amazon’s crashing EPS has certainly shocked the market.
Retail REITs? How about Simon Properties? Simon Properties, a large mall REIT, go “Fauci’d” as the Covid economic shutdown really caused pain for shopping malls. Simon’s occupancy rate has increased as the economy opens back up (we hope).
Meanwhile, Simon Properties equity has declined along with the S&P 500 index as The Fed raises rates. In other words, both the S&P 500 and shopping mall REITs are getting “Fauci’d” by The Fed. Or Powell’d.
Clubbed by The Fed.
(Excerpt) Read more at confoundedinterest.net ...
Damned if they do and damned if they don't.
The real solution is to get rid of the Fed, let the market decide interest rates, and let private insurance companies takeover for the FDIC so that the more reliable banks can lend more money than they have in their customers' savings accounts.
I got my wealthy pal to whom I give stock suggestions into SPG at 54. One of my best-ever calls. Now it’s 121. I’ve been yelling at him to exit the thing for the last 35 points down, but he’s a “buy and die” type.
That makes far too much sense to ever be implemented.
The Federal Reserve tends to keep interest rates below true market rates.
In a 10% inflation environment and say a typical retiree marginal tax rate of 27%, interest rates should be about 13% to 14%.
How can people pay that? Many paid similar rates for years.
Borrowing at 5% to buy something going up at 10% a year is a true bargain. It beats paying 3% interest to buy something going up at 3% a year, if you can pay.
And it is possible to say have people pay just 3% on a 5% interest rate and tack the 2% difference onto the principle to keep payments highly affordable.
The federal government should not be lending out money.
If there were no federal student loans, Trump would have clobbered Biden by maybe 7 million votes.
College can be financed by gain-sharing. If Junior the Graduate makes $31/hour instead of say a typical $15/hour wage, then Junior can share a percentage of his $16/hour educated premium, perhaps say two percent per year of college, for say up to 20 years. This would be $3200/year and would be far more as Junior rises up the corporate ladder.
“the S&P 500 and shopping mall REITs....”
Though I no longer follow the market closely, it is my understanding that a correction is going on.
A correction is when stocks are repriced according to reality instead of being priced based on hope and puffery.
They’ll never give up that control and we’ll continue to elect those that want more.
As for Amazon, leading companies tend to have more stable and predictable earnings as they are price setters.
I suspect [but can’t say for sure] that Amazon is suffering more from Chinese lockdown shortages than other factors.
Gone would be any major with the word "Studies" in it.
The Fed feared a Covid recession but it overstimulated the markets, causing them not to function smoothly.
Many leading corporations were very willing to pay for further education when I was young.
I found college very stressful and never attended again after graduation.
I like the easygoing pace of Free Republic.
I have clients in real estate development who were basically run out of business because they couldn’t afford to buy property for new projects and develop them for a decent profit. These huge REITs chased many smaller competitors out of the market because they were willing to accept tiny rates of return on their new industrial and commercial development projects. When your business model is based on a 10% return on your leases, you can bid $10 million for a project that will generate $1 million in annual lease revenue. You are always going to lose out to a REIT backed by giant institutional investors who are willing to pay $25 million for the same project because they think a 4% return on their investment is fantastic.
It’s all part of the PRC/Dem plan to bankrupt not the Government but the American people!
I always thought that as well. Colleges exchange their services for a “piece of the action” for 10-15 years.
That would have returned much better results than my student loans.
The one big stipulation is that the education MUST relate to the job. That’s why I was able to get my employer to pay for a big portion of my master’s degree in a STEM field, while my coworker left the company in a huff because they refused to pay any of his expenses for law school.
My company paid for grad school that way. They were careful about who signed on, but you were committed for a while.
I’m suggesting to extend it to Bachelor’s degrees as well. More risk for the corporation, but a good deal if they want a leg up in getting the best recruits from an ever-tightening job market.
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