it's all about what's priced into the market, right? My understanding is that commercial real estate prices have held up better than expected, so the REITS haven't been hurt too badly. I mean they are bad...flat for year when the SP500 is +20%, but no losses because the price declines of office real estate are baked in.
Carl Quintanilla @carlquintanilla · 12m MORGAN STANLEY: “Commercial Real Estate: Price Decline Is Progressing Better Than Our Expectation” [Huberty] $KRE
Nice job including dividends on S & P return for the year.To leave them out is very misleading. Over the last 100 years, dividends have contributed 32% for total return for S & P, while capital appreciations have contributed 68%.
but we all know the Fed won't be forced to sell at a loss - the Fed will hold those treasuries until maturity, eliminating the loss. And if interest rates come back down, that will also make losses disappear.
And anyway, the Fed delivered massive profits to the US treasury during the 2008-2021 period that will outweigh these losses. This among all things is not a problem.
Interesting, igy. One of the commenter's, with a very funny user name fwiw, asked the following rather probing question:
"Dave the Blind Tesla Guy @DaveWarnedYou
How much of those assets were bought up when Trump had the Fed propping up the stock market and lowering interest rates to 0%. I wonder who really benefited from those insanely low rates... certainly not the American people, as that was a leading cause of rising inflation!"
Massive profits wiped out: “between 2011 and 2021, the Fed’s remittances totaled over $920 billion. However, beginning in September 2022, remittances due became negative. Since then, the Fed has experienced a shortfall in earnings that is generally between about $5 billion and $11 billion per month.”
I guess you forgot I was responding to your quote on the “Fed delivering massive profits.” Therefore, you characterization, not mine. Anyway, if looked at as normal accounting there are huge losses. To pretend this has no consequences seems both disingenuous and foolish.
heh I only brought up profits because you brought up the losses on the bonds in the Fed's balance sheet. Circular.
Well anyway the Fed is a very strange creature. That it is a quasi-private organization that can create unlimited amounts of money, buy trillions of US gummint bonds with it, collect interest from those bonds...and then give that interest back the US as real money that reduces the deficit...boggles.
So strange. Black magic.
But it's all worked somehow - the number and severity of recessions since its creation have fallen.
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Remember all those high-conviction predictions that 2023 would be a recession year? That was the consensus view even just 7 months ago. instead, we're ripping and roaring.
Particularly amazing that one of those quarters predicted to be recessionary....had shocking +4.9% growth. How can you be that wrong?
Robin Brooks @RobinBrooksIIF It doesn't look like it at first glance, but Bloomberg consensus has tumbled into recession for the US. The Q4/Q4 2023 consensus is 0.2%, which - given strong tracking for Q1 2023 - implies a pretty deep recession in Q2 and Q3 2023. Recession is now the base case for the US...
Igy - when the Magnifico 7 is up 1000s of % in 10 years, will you Permabears just copy that chart depicting their demise and just change the dates? It is becoming laughable. How is that 3000 S & P coming? Too funny!