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The worse it is the more room it has to rise!
BUY REITS!!
Everyone certainly is today.
GOT JUNK?
We just need to figure out how to have a Super Bowl in every district
"Commercial real estate was still weak in nearly all Districts"
That's not what CNBC says.
I couldn't help but laugh when Erin was talking to Ponzi king Bill Gross about the Beige Book and she mentioned that Liesman had come up with a few factoids in an effort to be positive ...er..no he wasn't trying to be positive but these are positive facts...... Bill Gross then saves her by agreeing Liesman wasn't trying to be positive.
Freudian slips are becoming more and more common as the Ponzi grinds on.
I didn't read the beige book as my preference is non fiction.
CD - Bill's eyes at that moment said something else entirely... BTW http://www.zerohedge.com/article/goldman-admits-frontrunning-clients-thr...
Beige Book's own summary: "Reports from the twelve Federal Reserve Districts indicated that while economic activity remains at a low level, conditions have improved modestly further, and those improvements are broader geographically than in the last report."
Zero Hedge's summary of the Beige Book: "Commercial real estate was still weak in nearly all Districts"
And you complain of media bias!
but two districts ski resorts benefited from early season snow... wow, things really are in the hands of the gods...
Beige Book's summary: "Reports from the twelve Federal Reserve Districts indicated that while economic activity remains at a low level, conditions have improved modestly further, and those improvements are broader geographically than in the last report."
Zero Hedge's summary of the Beige Book: "Commercial real estate was still weak in nearly all Districts"
And you complain of media bias!
@libert
When the FRB writes that "things have improved modestly", what they mean is that their bankster friends were able to cash their bonuses with their heads in tact. It really has no correlation to economic activity. What, you think employment is on the rise? Sales tax receipts maybe? Federal quarterly income tax receipts? The FBR is a biased bunch of banksters trying to keep a lid on this pressure cooker.
I'm just pointing out that complaints about media bias seem a tad disingenuous when you engage it in yourself. CNBC's constant optimistic bias in the face of any and all information is just as bad as Tyler's pessimistic bias when confronted with the same. If you believe the numbers are faked, then argue that. Don't cherry-pick a quote that conforms to your pre-determined conclusion, then report it as news. Instead, relay meaningful information about what the report actually said--then add commentary. If you don't believe it, fine (the Beige Book is all anecdotal anyway), but that doesn't mean you should misrepresent the facts. Would you rather have your financial news filtered, or factual so that you can make your own conclusions?
As a side note, Tyler and ZH's commentators has a unique ability to interpret anything as bad news: stocks go up? its a bubble; stocks go down? see, I was right! employment up? the vast "bankster conspiracy" faked the data! employment down? told you so!
shheez.....all Tyler did was post the beige. He/She just needs a new headline writer, unless present headline writer is a futurist seer.
Time for cocktails.
They use these very subjective words like modestly, slightly........I mean there is no way they know JS in their district as a whole about some of these indicatiors.
...while economic activity remains at a low level, conditions have improved modestly further, and those improvements are broader geographically than in the last report."
This could me much, or it could mean very little. But to stress commercial real estate remains weak in nearly all districts means a lot - more toxic in bank portfolios, widespread lack of confidence, and failing businesses.
CRE stocks are up on this glowingly great news. Wierd, huh?
"Stress commercial real estate remains weak in nearly all districts"
This news is SO old and factored in everyone's outlook (even my 84 year old mother's). As they say, this trade is very crowded. So I do not think it is particularly actionable.
Also, check with sources who really know the public REIT sector (including management teams), and while commercial real estate outlook is not good, the outlook for public REITs is notably better than it was one year ago (which was near-death for a number). The outlook is not great, but much better than one year ago for public REITs.
Hey, thanks for the insight. What has changed from a year ago? Have the fundamentals improved? Have the management teams changed?
Yes it's a crowded trade, but you provide absolutely nothing of substance in this post. Typical equity investor.
from Costar
2009 Costliest Year Ever for Bank Failures; CRE Loans Could Make 2010 Even Worse By Mark Heschmeyer January 13, 2010 According to its own estimates, the FDIC will sustain losses exceeding $36 billion owing to the 140 banks that failed in 2009. By comparison, those losses will eclipse the total dollar amount of the losses the FDIC incurred during the six years spanning 1987 through 1992 inclusive, when 1,049 banks failed at a total cost to the FDIC of $29.6 billion, according to a report produced by Meridian Group of Seattle.
"Each time a bank failed in 2009, we heard that - bad as it seemed - 2009 wasn't as bad as 1989, when 534 banks failed," said Meridian CEO Darren Berg. "But that's simply not true. In fact, 2009 was the worst year ever for bank failures. In 2009, the banks that failed were significantly larger, roughly six times larger on average, than the banks that failed during the savings and loan crisis. Worse yet, losses have skyrocketed - on average, the FDIC is sustaining losses of nearly 10 times more per failed financial institution than it sustained during the savings and loan crisis of 20 years ago."
In the previous savings and loan crisis, the average failed banking institution had total assets of $205 million. In 2009, the average banking institution that failed had total assets of $1.2 billion. Perhaps more importantly, the average banking institution that failed during the savings and loan crisis cost the FDIC $28 million. In 2009, the average failed banking institution will cost the FDIC an estimated $261 million.
The Meridian report stops short of making a prediction for 2010. Rather, it offers an "observation" for the future.
"Given the secrecy surrounding the FDIC's Watch List, it's difficult to accurately predict the cost of looming bank failures," Berg said. "But in light of the fact that the FDIC continues to add staff at a frantic pace, we believe it's reasonable to assume the worst is yet to come."
Despite that outlook, it does not appear that the problem will morph into a true crisis that would endanger U.S. or global financial systems, according industry observers.
"Many have called commercial real estate 'the next shoe to drop,' but that's really an exaggeration," said Bob Bach, senior vice president, chief economist of Grubb & Ellis. "It implies that commercial real estate could wreak damage on the financial system equivalent to the subprime residential mortgage losses, which is highly unlikely because the value of outstanding commercial mortgages is a fraction of the value of outstanding residential mortgages. Nevertheless, losses will mount over the next several years. If banks aren't lending because they're coping with losses in their real estate portfolios, this could impede the economic recovery."
Commercial mortgage defaults will be highly elevated in 2010 and could wipe out profits at a number of U.S. banks but said Stuart A. Feldstein, president of SMR Research Corp. in Hackettstown, NJ: "The saving grace for the financial system is that most really large U.S. banks are modestly exposed."
For example, Feldstein said, highly delinquent commercial mortgages recently were only 0.1% of Citigroup's assets. JP Morgan Chase also appears "walled off" from the dilemma. Exposure at Bank of America is just slightly higher. None of the nation's largest banks risk failure due to commercial mortgage defaults, SMR noted.
The same cannot be said for some medium-sized and smaller banks. At small banks with less than $1 billion of assets, commercial mortgages recently were 32.5% of total assets - a level of dependence six-fold higher than at big banks with $50 billion or more of assets.
As of Sept. 30, 154 banks had highly delinquent commercial mortgages equal to 3% or more of their total assets. In a reasonably good year, banks earn profits of only about 1% of assets. Many of these institutions will be hard-pressed to make any money in 2010, Feldstein said. Some could become insolvent.
The study includes specific 2010 risk rankings for each of the nation's 477 largest bank holding companies.
As of late 2009, the 90-day-plus delinquency rate on all commercial mortgages (including multifamily apartment building loans and commercial construction loans) was rising fast. It reached 5.59% on Sept. 30, up from 3.51% just six months earlier.
Meanwhile, the vacancy rate on apartment buildings had reached its highest level since at least 1965. Vacancy rates were high as well at shopping centers and office buildings. The total commercial mortgage loan market was $3.4 trillion as of the third quarter of 2009.
Despite the gloom, SMR found reasons for cautious optimism.
Among them: The early-stage delinquency rate on commercial mortgages appears to have peaked in the first quarter of 2009. In addition, overall delinquency and write-offs on commercial mortgages were still below levels seen in the last commercial lending crisis in 1991.
"If the economic recovery continues apace, the new commercial mortgage crisis may peak in 2010 and improve in 2011," Feldstein said.
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