Real estate

Bill Gross Says Yellen "Worships False Idols" So "Worry About The Return Of Your Money, Not On It"

"Investors should not hope unrealistically for deficit spending any time soon. To me, that means at best, a ceiling on risk asset prices (stocks, high yield bonds, private equity, real estate) and at worst, minus signs at year's end that force investors to abandon hope for future returns compared to historic examples. Worry for now about the return "of" your money, not the return "on" it."

Frontrunning: July 6

  • For Hillary Clinton, Political Fight Over Emails Is Far From Over (WSJ)
  • More "Extreme carelessness" - Iraq inquiry slams Blair over legal basis for war (Reuters)
  • FBI Director Rebukes State Department Over Security Practices (WSJ)
  • Gold Climbs to Two-Year High as UBS Sees Start of New Bull Run (BBG)
  • Stocks and bond yields sink as growth fears set in (Reuters)

"We've Never Had A Shock To The System Like This" - Global Selloff Accelerates On Brexit, Italy, "Unknown" Fears

The flight to safety following last week's quarter-end window dressing is accelerating, with constant news and flashing red headlines of record low yields across DM government bonds once the norm, and as of moments ago Denmark's 10Y bonds joined the exclusive club of sub-zero yields; gold has soared to fresh multi-year highs above $1,370, the risk-off currency, the Yen, soaring and sending the USDJPY just above 100, while sterling crashed overnight once again below 1.27, levels not seen since 1985.

Time To Take The Fed's Warning Seriously: CMBS Has "Greatest Ever Monthly Delinquency Increase"

15 loans totaling $221MM became newly delinquent in June. In total, 71 loans with a balance of $760.6MM were delinquent in June, resulting in a delinquency rate of 32bp. The $142MM month-over-month increase in the volume of delinquent loans was the greatest ever - it eclipses the $116MM increase in March 2016 and compares to an average monthly increase of $40.7MM.

"The Dominoes Are Fallling": Three Largest UK Property Funds Freeze $12 Billion In Assets, More To Come

In an episode painfully reminiscent of the Bear hedge fund "freezes" that preceded the bank's 2008 collapse and the great financial crisis, first Standard Life halted trading in its property fund, followed hours later by both Aviva and M&G which likewise announced they are suspending trading in their own portfolio funds. And, as Bloomberg summarizes, three of the U.K.’s largest real estate funds have frozen almost 9.1 billion pounds of assets after Britain’s shock vote to leave the European Union sparked a flurry of redemptions.

Brexit Blowback - The Panic Will Start With Property

The problem lies mostly with the human tendency to avoid short-term pain...Unless it is accepted that demand must be tied to income growth, and not extra debt, we’re never getting out of this one. The current disconnect between high asset prices, stagnant incomes and increasing, overall debt levels, is both economically and politically unsustainable. And what is the ultimate result? Brexit politically and economically there is no housing market for our young workers.

Something Interesting From The Rumor Bag: The Next Big Risk For UK Stocks?

"Had an interesting chat with a senior pm at brewin dolphin yesterday. Bd manages significant pool of uk pensions / charities / endowment funds. Their mandate is long only, real estate bonds shares. Essentially they selling out all the real estate and piling up in iShares ftse etf. Minimum fees, simple transaction, they get 10% return in one week. Everyone going into Blackrock I Shares FTSE ETF."

Frontrunning: July 5

  • Pound Tumbles to 31-Year Low as Its Post-Brexit Selloff Resumes (BBG)
  • Bad Debt Piled in Italian Banks Looms as Next Crisis (WSJ)
  • Stock Market to Bond Market: ‘La-La-La I Can’t Hear You' (WSJ)
  • A Prime Minister, a Referendum and Italy’s Turn to Get Worried (BBG)
  • Brexit Vote Paralyzes Companies Across Europe  (WSJ)

Bank Of England Unveils First Easing Measures After Brexit

In its first official easing act, the Financial Policy Committee lowered the countercyclical-capital buffer rate for UK exposures to zero from .5% of risk-weighted assets in a move that it said would raise the capacity for bank lending to households and businesses by as much as £150 billion. "This action reinforces the FPC’s view that all elements of the substantial capital and liquidity buffers that have been built up by banks are to be drawn on, as necessary" the committee said in a statement.

Bear Stearns 2.0? UK's Largest Property Fund Halts Redemptions, Fears "Vicious Circle"

In the summer of 2007, two inconsequential Bear Stearns property-related funds were gated and then liquidated, exposing the reality of the US housing bubble and catalyzing the collapse of the financial system. Fast forward eight years later when the UK's Standard Life has been forced to stop retail investors selling out of one of the UK’s largest property funds for at least 28 days after rapid cash outflows, due to fears over falling real estate values: "the risk is this creates a vicious circle, and prompts more investors to dump property."