Commercial Real Estate Finance

Posts Tagged ‘GDP’

Are we headed for a double dip recession? Nouriel Roubini, professor of NYU’s Stern School of Business, and recent author of the book “Crisis Economics” weighs in on the Kudlow Report.

Julia Coronado, senior US economist at BNP Paribas, and Stuart Hoffman, chief economist at PNC Financial, share their economic outlooks for the second-half of 2010.

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Reuters reports that two-year notes sold by Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity. In school I learned that investing in international real estate is risky because of differences in property rights; political risk including layers of taxations; and financial risk such as foreign exchange risk. There are several ways one can try to adjust account for international investment risks. One way is to use the adjusted NPV model proposed by Hayden and Musa (1990). Unlike the standard DCF model which discounts the cash flows by the discount rate, the international DCF model multiplies the Cash Flows by the Forward Exchange Rate in the numerator, and uses a discount rate that incorporates political risk, labor risk, and un-hedged currency risk. Read the rest of this entry »

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We’ve been writing about it for months, so I’ll not have any sympathy for those caught off guard by recent headlines regarding the US Yield Curve. As this chart from the New York Times shows, 2009 was the year of curve steepening. With the Fed printing money like mad to keep over night fed target rates low, it’s been up to the back end of the curve to do all the moving. The question, of course, is why? And, why do we, the commercial real estate market, care? Read the rest of this entry »

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I’m pretty sure I’m just paraphrasing Ben Franklin with that one. Last week, an article on Time magazine’s website purported that the massive trade imbalance between China and the rest of the world (but specifically the United States) has caused the Chinese government to take certain measures uncharacteristic of its past in order to maintain its own balance between consumption and savings.  Up until recently, America’s savings rate was hovering around zero percent.  Since the credit crisis, we’ve closed our collective wallet, and seen our saving shoot to a whopping (by our own standards) 4.5% of GDP.  Conversely, China’s savings rate, who at the onset of the financial crisis was saving roughly 10% of GDP has fallen by a similar margin. With the RMB (Chinese currency) being undervalued between 15-25%, many global economists have wondered why China has decided not to let their currency’s value float.  Instead, they have done everything possible to keep its value as close to 7 to 1 to the dollar (where it has been historically) as they can. The most intriguing aspect of these measures is not why they are doing what they are doing, but rather what they are doing, and the greater impact that could have on their economy down the road. Read the rest of this entry »

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