Things to ponder over turkey and trimmings
The markets are quiet, both bonds and stocks. There's not much news on the economic front due this week, either. So let me take this opportunity to wish everyone a Happy Thanksgiving ... and share a few random thoughts to ponder over a plate of turkey with all the trimmings ...
* They don't ring bells at the top of any market. But how about that $36 billion Blackstone buy of Equity Office Properties? Is legendary investor Sam Zell's "cash out" a sign the nutty, liquidity driven lovefest in commercial real estate and the Real Estate Investment Trusts is just about over? Considering capitalization rates are hovering down there with that submarine from 20,000 Leagues Under the Sea ... and REIT dividend yields are (in some cases) the lowest in history ... you have to wonder how much gas is left in the tank. But I've been wrong on this sector before.
* Risk? Ha! This market is going to the moon. Let's light this candle! What a great time to buy! You're getting paid all kinds of extra yield to take on more risk her ... er sorry, I lost it a bit there. Must have been the lack of oxygen after I saw the VIX fear/complacency indicator at roughly the lowest level in history.
* Can monetary policy really be considered "tight" when everyone with a pulse can borrow all the money they want? Doesn't the explosion in global money supply ... global M&A ... extremely tight corporate and junk bond spreads ... $1,168-a-square foot price tags for Manhattan office property ... and more show that monetary policy is anything BUT tight?
Oh well. Someday this stuff will matter. Until then, look for the "Money, Money Everywhere" trade to continue.
* They don't ring bells at the top of any market. But how about that $36 billion Blackstone buy of Equity Office Properties? Is legendary investor Sam Zell's "cash out" a sign the nutty, liquidity driven lovefest in commercial real estate and the Real Estate Investment Trusts is just about over? Considering capitalization rates are hovering down there with that submarine from 20,000 Leagues Under the Sea ... and REIT dividend yields are (in some cases) the lowest in history ... you have to wonder how much gas is left in the tank. But I've been wrong on this sector before.
* Risk? Ha! This market is going to the moon. Let's light this candle! What a great time to buy! You're getting paid all kinds of extra yield to take on more risk her ... er sorry, I lost it a bit there. Must have been the lack of oxygen after I saw the VIX fear/complacency indicator at roughly the lowest level in history.
* Can monetary policy really be considered "tight" when everyone with a pulse can borrow all the money they want? Doesn't the explosion in global money supply ... global M&A ... extremely tight corporate and junk bond spreads ... $1,168-a-square foot price tags for Manhattan office property ... and more show that monetary policy is anything BUT tight?
Oh well. Someday this stuff will matter. Until then, look for the "Money, Money Everywhere" trade to continue.
posted by Mike Larson at
12:37 PM
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