Reggie Middleton's picture

Those who feel that CRE is a good buy now due to cap rate spreads over treasury yields are ignoring a) that treasuries are most likely in a bubble and b) this thesis if applied last year when spreads were even higher would have lost you a lot of money. Just because something costs less than it did when it was very expensive doesn't mean it is cheap. Being less broke then extremely broke still means that your broke, doesn't it???

Paul Farrell's New Normal: Bankrupt Nation. Deflation. Zeros. Junk. No jobs. Depression

Paul Farrell knocks it out of the ballpark today: "Yes, it's going to get worse, a whole lot worse ... Bill Gross warns this is the "New Normal. Forget 10% returns. Think 5%". ... Economist Larry Kotlikoff, author of The Coming Generational Storm, warns: "Let's get real. The U.S. is bankrupt. Neither spending nor taxing will help the country pay its bills" ... Economist Peter Morici warns: "Unemployment is stuck near 10%. Deflation coming. Stock market threatens collapse. The Federal Reserve and Barack Obama are out of bullets. Near zero federal funds rates, central bank purchases, a $1.6 trillion deficit have failed to revive the economy." ... Simon Johnson, co-author of 13 Bankers, warns: "We came close to another Great Depression, next time we may not be so lucky." Why? Because Wall Street's already well into the next bubble/bust cycle -- the "doom cycle."

We are getting a sense why traditionally optimistic and hopeful Americans tend to broadly despise realists...

Amanda's Cleavage and FOMC Statement Incites Meltup in Everything

It appears that the Monster Energy chugging traders on Wall St. had their "Animal Spirits" re-invigorated when they were watching Closing Bell yesterday where Amanda was showing off her cleavage in black. No doubt to prime the pump for today's announcement of QE2 by the FOMC.

From 70% To 35% To 75% Net Long In Under A Month: Ultra High Frequency Day Trader Extraordinaire Barton Biggs Flip Flops... Again... And Again

The only thing worse than HFT algos that buy and sell the same stock 1 million times a day, are highly overrated "hedge fund managers" who pretend to have a long-term view on the market, yet flip their mind 180 degrees not once, not twice, but three times in the span of less than 30 days. At least HFTs are merely programs: their stupidity is endowed in their decision making process by their 19 year old math Ph.D. creators, who incidentally have long proven that correlation is in fact causation (until the market plunges by 90%... at that point it is always time to reevaluate one's stupidity for about 2 minutes, and then jump on the latest Fed reflation attempt with no changes). The question is: what excuse can Barton Biggs use?

Reggie Middleton's picture

Many people have asked me how SRS and REITs share prices can defy gravity the way they have given the abysmal state of commercial real estate (CRE). Well my opinion is that the equity and the debt markets have allowed agent and principal manipulation to the extent that it materially distorts and interferes with the market pricing mechanism.

Reggie Middleton's picture

It may take a while, but the fictitious valuations of CRE REITs will eventually come to reflect what is actually going on in the actual physical real estate world. It may be like matter meets anti-matter, investment banking secondary offering meets bricks and mortar reality. After all, the antics in Germany and greater Europe are not doing anything to actually help the debt markets.
I think I feel another "I told'ja so" coming on...

Reggie Middleton's picture

You heard my warnings about the "best of breed", "incomparable on the Street" (and all of the other groupie talk, worshiping phrases thrown at this company) Goldman pillaging clients and of their excessive overvaluation for over two years in BoomBustBlog, yet now the mainstream media is starting to catch on as Goldman's stock plummets (down over $5 yesterday and over 20% for the month, with more to go). I wonder when they will get around to the other investment banks and FIRE sector companies that I warned about. Let's reminisce...

Fed Discloses No New Liquidity Swaps, Lies About Value Of Maiden Lane I-III

Yesterday, the Fed disclosed that liquidity swaps have remained at 0 for the eleventh week in a row. This is not unexpected, as it is in line with the Fed's statement of eliminating emergency liquidity facilities (and the CB liquidity swap lines are among these). Of course, there is no way to truly verify whether or not the Fed is syphoning off US money to once again bail out foreign central banks as the Fed is shrouded in secrecy, and while we have to figure out just what exchange Bernie Sanders concluded with Chris Dodd, on the surface we are disappointed that the socialist is not sticking with his initial much stronger language for Fed transparency. Furthermore, we know all too well that the Fed would never lie to the US population, right - just look at the chart below, which discloses the Fed-determined values of Maiden Lane I-III. Somehow, the combined value of these three Bear/AIG rescue facilities have surged to one year highs in the last week. This is somewhat stunning as we reported a week ago that the Fed is about to be crammed down on its Red Roof portfolio holdings due to initiatied foreclosure proceedings. We have no figured out why REITs have been defying gravity for the past year - according to the Fed and the FASB, foreclosures are now a valuation enhancing process. How could we be so blind not to realize this.

Euro Tanks on Bailout, Hedge Funds Cheer and Buy REITs, Retailers, et al

How many times can they run the same play over and over? The Eurozone dive bombs, and investors immediately start buying REITs, retailers, and other assorted garbage. Maniacal trading has overtaken the stock exchanges as the 20-yr. old motion chasers are getting frantically horsewhipped by the FemBot portfolio managers to "buy whatever is going up, regardless of fundamentals".

PIIGS On The Verge of Insolvency. Investors Celebrate By Buying REITs and Brokers

Once again, the algospasms have turned many funds into dust as those attempting to short brokerage stocks, REITs, etc. in front of the European implosion are getting killed. Clearly, investors are voting that U.S. commercial real estate is the last bastion of safety, and the primary growth industry in 2011 will be stock trading.

Whipping By FemBots Intensifies, Gamers Dump GOOG and Buy TZOO

The pressure is on the 19-year old motion-chasing "portfolio managers" at TIAA-CREF, CalPers, Harvard Endowment, Gates Foundation, et al to buy whatever is going up and sell losers immediately, and continue looking in the garbage bins for more "alpha" to goose returns.