Real Estate

On Friday, Congress approved and President Trump signed into law a $2.2 trillion emergency stimulus package, the largest in U.S. history. Most American adults will be receiving a one-time payment of $1,200 in cash.

With the economic and market situation changing by the day, I decided to approach this letter a little differently. Rather than go deep on one topic, I’ll share brief bullets on the many points swirling in my mind. Think of it as Postcards from the Frontline. These will be in no particular order and may generate even more questions.

With the release of this morning's report on February Personal Incomes and Outlays, we can now take a closer look at "Real" Disposable Personal Income Per Capita. At two decimal places, the nominal 0.50% month-over-month change in disposable income was reduced to 0.41% when we adjust for inflation. This is a change from last month's 0.56% nominal and 0.42% real increase last month. The year-over-year metrics are 3.50% nominal and 1.68% real.

As both traditional and alternative asset markets descend into turmoil this month, it’s important to remember the inherent strengths of a diversified portfolio. A market rout always causes correlation to go to 1 across virtually all assets as investors flee to the perceived safety of cash.

The Federal Housing Finance Agency (FHFA) has released its U.S. House Price Index (HPI) for January. U.S. house prices were up 0.3 percent on a seasonally adjusted nominal basis from the previous month. Year-over-year the index is up 5.2% (nonseasonally adjusted). After adjusting for inflation and seasonality, the index is up 0.29% in January and up 3.07% year-over-year (seasonally adjusted).

Chains are calling for rent reductions through lease amendments and other measures starting in April.

This morning's release of the February New Home Sales from the Census Bureau came in at 765K, down 4.4% month-over-month from a revised 800K in January.

Research Affiliates assesses the potential impact of COVID-19 on economies and investments, and what it means for the All Asset strategies.

These extreme measures appear to be having great success, particularly in Asian countries. Whereas the number of cases continues to rise in Italy, Spain, Iran and elsewhere, the number has begun to stabilize, if not plateau, in Asian countries.

It’s stating the obvious to say that the stock markets have been in a freefall as a result of the coronavirus. However, I think it’s also important to point out that what we have recently experienced in the stock markets more resembles a flash crash than it does a correction.

This morning's release of the February Existing-Home Sales fell to a seasonally adjusted annual rate of 5.77 million units from the previous month's revised 5.42 million. The Investing.com consensus was for 5.50 million. The latest number represents a 6.5% increase from the previous month and a 7.2% increase year-over-year.

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.

A number of cash-rich family offices poised to benefit from tumbling markets.

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 1.599M was above the Investing.com forecast of 1.500M and a decrease from the previous month's revised 1.624M.

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 1.464M was a decrease from 1.550M in January and below the Investing.com forecast of 1.500M.

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 72 is down 2 from last month.

We have a full economic calendar. Only the FOMC decision will get major market attention. Initial jobless claims provide a post-virus look at the job market. Housing data remains interesting. Despite this, the media focus will remain on the coronavirus crisis.

As a result of the COVID-19 virus and its effects on the market, here's a short analysis of major ETF market sectors and the S&P 500 since February 21.

In a move that has bewildered many CFPs, the CFP Board of Standards took a giant step backward in transparency. It chose to no longer inform consumers searching for a CFP of advisors' compensation models.

Given the instability that the coronavirus has created, what I am going to say may sound highly unusual. This is a great time for financial advisors who can offer a higher level of service and deliver more to their clients. But how do you humbly and graciously communicate that without putting on “the marketing mask?”

Coronavirus is a global pandemic that few if any could have predicted, but it’s deteriorating fundamentals throughout 2019 into 2020 that set the table for the recent extreme market volatility. Now that volatility has clearly arrived, what‘s the strategy when black swans swim?

The latest Fed balance sheet shows a total net worth that is 96% above the 2009 trough. The nominal Q4 net worth is up 2.7% from the previous quarter and up 10.4% year-over-year.

The Tax Policy Center estimates that income taxes would go up for all Americans, but the largest raises in both dollar and percentage amounts would be on the wealthiest.

Our Emerging Markets Equity team examines the impact of the spread of coronavirus across emerging market economies during the month of February.

Small-value investors can choose between index funds and passively managed, structured products. While index funds have lower costs, they don’t offer the same degree of exposure to the small-cap and value factors. Here is how that difference has played out in three prominent funds over the last eight years.

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We have a modest economic calendar. Only two reports will provide any hint about the coronavirus economic impact. The punditry will not be hampered. Without meaningful data, speculation blossoms. There is one idea that could help both your interpretation of data and your investment decisions.

The coronavirus outbreak has affected global supply chains, consumer demand and interest rates. In response, we’re downgrading Financials and upgrading Utilities.

Chinese manufacturing activity slumped to a record low in February as the coronavirus outbreak temporarily shuttered plants and factories and travel restrictions impacted the supply of labor.

What impact will coronavirus and market volatility have on your portfolio?

Responsible investing has gathered enough momentum in recent years to reach the mainstream. What is less clear is how far along global institutional investors are in the process of integrating environmental, social and governance (ESG) principles into their investment decisions.

Equities have fallen on continued news of the virus’ spread, and bonds have rallied as investors seek safety.

Margaret Farquharson is a senior director with the Nationwide Funds Group and leads its exchange traded fund business, where she has oversight for all aspects of the business including product development, product management, marketing, distribution, and operations.

Bob Browne is the chief investment officer of Northern Trust Asset Management, which has more than $900 billion in assets. He chairs the firm's investment policy committee, which sets investment policy for all Northern Trust groups. In this interview, he discusses his views on the global economy and markets.

Lesson #2: Reversion to the mean occurs because people persuasive enough to make something grow don’t have the kind of personalities that allow them to stop before pushing too far.

As China’s leaders scramble to contain the COVID-19 epidemic, the global community braces for impact to China’s people, equity and bond markets, and economy.

When it comes to investing it’s never different this time; nor, however, is it ever the same. This difficult-to-navigate paradox creates a scarcity of longevity. Today’s persistently low yield environment has upped the ante and put many marquis names out of business.

Legendary investor and mentor to many investing greats Benjamin Graham once aptly stated that: “investing is most intelligent when it is most businesslike.” Personally, I agree which is why I refer to what I personally adhere to and practice with my own investing as “business perspective investing.”

We have a big economic calendar including important data on consumer confidence, personal income and spending, and inflation. There will also be another round of housing news – two measures of prices, new home sales, and pending home sales. While it is not expected to change, the second estimate of Q4 GDP will be reported.

Reverse mortgages seem like a great idea for hordes of baby boomers who don’t have enough income to maintain their lifestyles, or – worse – to buy basic necessities when they retire. Although some advisors and academics have demonstrated how reverse mortgages are good wealth management tools for certain clients, a new working paper from the World Bank examines why they haven’t worked to solve inadequate retirement savings and longevity risk.

Gold mining stocks have broken out, with several hitting new 52-week highs this week. Gold royalty and streaming companies, including Franco-Nevada and Wheaton Precious Metals, also hit fresh 52-week highs.

I don’t believe they really want socialism. Few even understand what it is. What they want is change. They see little hope for improvement in their situations, no matter how hard they work and sacrifice. They don’t see anyone in authority trying to help them. So, when someone offers what sound like easy answers, they jump aboard.

The coronavirus outbreak and the Democratic primary have affected sector leadership. However, we’re keeping our sector views unchanged—for now.

Every January, I start keeping track of the predictions for the upcoming year I hear in the financial media and from advisors and investors. Today we’ll look at a list of “sure things” I’ve been hearing for 2020.

Thirty years ago, many in the US were in fear that a rising power in Asia was on the verge of eclipsing the US. Now it's China, back then it was Japan.

Friends of mine who are enduring the crucible of the loss of their spouses tell me that one of the hardest things, along with the grieving process, is the uncertainty surrounding finances.

In 2007, I was at a conference where Paul McCulley, who was with PIMCO at the time, was discussing the idea of a “Minsky Moment.” At that time, this idea fell on “deaf ears” as the markets, and economy, were in full swing. However, it wasn’t too long before the 2008 “Financial Crisis” brought the “Minsky Moment” thesis to the forefront.

So far in 2020, the yield on the 10-year Treasury has averaged 0.01 percent when adjusted for inflation. Since the end of January, it’s actually dipped below 0 percent, trading as low as negative 0.14 percent on January 31.

Today we’ll extend the GDP discussion, looking at where these numbers originate, what they miss, and what the Fed in particular does with them. As you’ll see, we need better data… but it’s not at all clear Fed officials would use such data correctly, even if they had it.

Research Affiliates examines how different asset classes perform across full market cycles, and discusses how macro forecasts inform its investment strategies.

Founded in 1999, Tiger 21 is a peer-to-peer network of wealthy individuals who meet on a regular basis to discuss the issues that matter most to them. Many of those discussions are focused on investing.

Mike LaBella takes a deep dive into the state of the U.S. equity markets and why investors should be paying attention to dividend paying equities that have attractive valuations and sustainable high yields.

A deep dive into the factors that brought inflation down and are keeping it low.

Private assets are popular today as investors are reaching out on the risk spectrum for return. This behavior is always interesting to us since history shows it often leads to losses. We wanted to dig into private markets and see if excess returns are easily earned.

The past decade has been one for the record books. There has been unprecedented change in almost every aspect of life including technology, transportation, politics, etc.

The typical vendor agreement is often one-sided and fundamentally unfair. I don’t sign them and neither should you.

These are the investment guidelines our firm uses. We invite you to adapt it and share it with your clients.

Two topics seemed to dominate at this year’s Inside ETFs conference: the rise of ESG investing, and the emergence of so-called “nontransparent” ETFs. Both promise some big changes to financial markets.

The year 2019 was the complete opposite of 2018 across investment markets. Across the board nearly every asset class around the world, from bonds to stocks to gold to real estate, was down in 2018. 2019, on the other hand, delivered above average gains across those same asset classes.

Over the last decade, the general trend has been consistent: The rate of home ownership continues to struggle. The Census Bureau has now released its latest quarterly report with data through Q4 2019.

One of the most important discoveries in finance over the past few decades is that stocks of firms that share certain fundamental characteristics called “factors” exhibit different return and risk characteristics than the overall market. Critical to investors is the fact that, over long periods of time, certain of these factors have earned excess returns compared to the overall market.

In my 18 years as a referral coach for financial advisors, I’ve heard every complaint about COI relationships. The number one complaint centers on reciprocity. My clients want the secret to productive, reciprocal COI relationships.

Every instance of financial speculation today is termed a “bubble”, but true financial bubbles are rarer than most investors believe and they go beyond the financial markets and pervade society.

Much has been written on measuring equity market valuations – but precious little on developing effective strategies to capitalize on the imbalances.

The last decade produced great performance across most asset classes. But in the 2020s, we expect investment market returns will be lower and risk harder to manage. Looking forward, a disciplined multi-asset approach will be especially valuable to identify opportunities and help mitigate setbacks.

Private credit relies less on broad market trends and more on the strength of each specific investment. For individuals facing retirement, institutions looking to satisfy long-term pension liabilities or even private investors looking for alternative investments, it offers high current income, low correlations with public markets and lower default risks than yield spreads would imply.

Our definition of value is to buy meritorious companies at a significant discount to intrinsic value with a high margin of safety. Since doing this is more art than science, the margin of safety is important.

It has been a great year for equity investors. The S&P 500 index posted a 31% annual return, the Dow 25%, and the NASDAQ a spectacular 39%. More than $6T of equity paper wealth was created for domestic investors this year alone.

Looking ahead, we believe the global economic environment will remain supportive for securitized sectors despite potentially slowing economic growth. In the US, we believe strong fundamentals, including robust wage growth and healthy household balance sheets, will provide solid support for real estate and consumer-related credit.

Now is the season for forecasting as one decade turns into the next. Pundits and market prognosticators too often treat nowcasts as true market forecasts, which can be very dangerous for investors’ financial health. Our forecasts for the decade ahead rely on empirically driven quantitative models.

A new decade, seismic shifts and the importance of diversification.

Research Affiliates provides its outlook for 2020 and discusses where it sees attractive return opportunities across the globe.

Foreign trade ends up being cleared through international money – a currency that the world accepts as final payment, even in places where it is not legal tender.

The best environment would be moderate U.S. growth, a sideways U.S. market and a weaker U.S. dollar.

2019 was a triumphant year for the US large cap equity market, with the S&P500 index up 31% on a total return basis. The resolution of two major concerns in the year, namely the US Fed being too aggressive on rate hikes, and the US/China trade relationship hanging in a total impasse, drove the market higher, particularly in 1st and 4th quarter.