Real Insight. Real Estate.

Posts Tagged ‘Fed’

What’s a Regional Fed’s take on the Current State of the Economy?

Is Industrial Real Estate Currently a Good Buy?

If you enjoyed this post, make sure you subscribe to my RSS feed!

It’s been four full business days since the Fed announced a 25bps hike in the discount rate.  After a knee-jerk down, equities seemed to have basically yawned, until yesterday.  Interestingly, 10 year treasury yields rose after the announcement, held for a day, and they came way down today.

I think Bernanke was trying to get long term rates lower, and he knows it could mean a sustained bear market for equities.   He also knows he doesn’t really have a choice.  What it means for commercial real estate, however, remains a tough question; but, we’ll get to that later.

To start, I’m going to focus on why the fed chose to make a ’surprise’ inter-meeting announcement.  The answer is best revealed in a time line: Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

I have been confused as to why the Fed raised the discount rate on Friday.  Typically, increases in short term interest rates by the Fed follow increases in the expectation for short term inflation.  What is unusual about the current situation is that current and expected inflation is low. Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

After the New York close, the FOMC announced a hike in the Discount Rate (0.50% t 0.75%).  Please note: this is NOT the Overnight Rate (manipulated via Open Market Operations).  There is a significant difference and an inter-meeting hike, at this point, of the Overnight Rate would have been cause for a bit of panic.  The Overnight Rate effects all banks, right away.  The Discount Rate only effects banks that borrow at the Discount Window; i.e. tonight’s news immediately and directly effects only a tiny fraction of the financial world.

This does not mean, however, that tonight’s hike is without both real significance and real impact.  Don’t let the talking heads/cheerleaders on CNBC fool you.   This is a big deal and you should pay attention.

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

So, for months I’ve been subjecting you to my musings regarding the intersection between commercial real estate and macro economics.  Of course, right when I stop droning on for a week or two, a “crisis” in Greece ostensibly causes a 9% “correction” in stocks.

Well, I’m back, and I’m here to help…. well, at least to make some smart-ass comments.

Let’s begin.

The “crisis” really isn’t about Greece, it’s about the whole Eurozone, and it’s not over.   When they tell you the situation in Greece has been settled, just ask them if the “subprime crisis” is still well contained.  While it’s tempting to think I’m being overly dramatic, people far smarter than I will tell you the Euro is doomed to failure.  Tomorrow?  The next day?  Perhaps not, but well within your business career.

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

An analysis of the housing crisis by Karl Case:

For the last few years, we have shed many tears
Living through a recession.
The economy’s broke and it’s not a joke,
When we talk of another depression.
Fifteen million without a job,
Foreclosures and banks that fail,
401K’s became 201K’s,
And everything’s up for sale.

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

The Week of January 24-30

- Will 2010 set the record for commercial loan defaults?

- Stuyvesant Town and Peter Cooper Village got handed over to creditors.

- Obama was centrally focused on job creation in his first State of the Union Address with little talk of real estate markets.

- The Fed decided to go forward with a plan to end it $1.25 trillion program of mortgage-debt purchases in March.

- Did dealmakers get stuck on the issue of who will negotiate tenant rental concessions at Peter Cooper Village and Stuyvesant Town?
Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

Those of you generous enough to follow along with my weekly rants know I often like to go on about macro economics.  So, while I clearly have my own thoughts on the matter, it’s good to check in with the experts every now and then; even it it means blogging about another blog.

In this blog piece you can get the Real McCoy as it relates to economic analysis of commercial real estate.  Written by a professor of economics at the University of Chicago, the piece takes issue with another blog entry by the illustrious Paul Krugman.  ”Economists writing about economists?  Sounds a bit wonky,” you might say.  And, you might be right, but it’s still worth the discussion.

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

Where are we?

We need a little review to fully understand this article in Bloomberg about recent moves in the short end of the Treasury curve.

Basically, the markets reversed course regarding near tern interest rates, deciding the Fed will be on hold a bit longer after all.  With the 10 year TIP spread approaching 250bps, however, we have to ask, ‘what sort of inflation expectations warrant their prompt attention?’  As I’ve mentioned before, those of you with LIBOR floaters on the line should be following this macro story closely.

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!

Regardless of whether your political inclinations bear to the left or right, chances are that as an American you’ve become weary of government “bailouts.”  There’s something about the federal government meddling in free markets that is very “un-American.”  We scoff at the Chinese and call them “currency manipulators” when their government artificially holds down the value of the Yuan.  Both the Executive and Legislative branches of the U.S. Government have made requests to China to eliminate the peg.  But when we’re faced with similar circumstances in the U.S., do our officials step up to the plate and lobby for minimal government intervention?  No they don’t—And the best example right now is Fannie and Freddie.

Read the rest of this entry »

If you enjoyed this post, make sure you subscribe to my RSS feed!