From a small northwestern observatory…

Finance and economics generally focused on real estate

Merry Christmas to all!

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Hope everyone’s having a great holiday season (Christmas here, but with homage to Hanukkah, Kwanza, Winter Solstice, Festivus, and such and so forth….)!  Needless to say, 2016 has continued is reign of terror — our condolences go out to the families of Carrie Fisher, George Michael, and a long list of folks who left us w-a-a-a-a-a-y too soon. (We lost three of my favorite space travelers this year — John Glenn, Carrie Fisher, and David Bowie!)  This past year suggests the United States may have been founded on an old Native American burial ground….

Ahhh… but enough on that.  NAREIT tells me this morning that 2016 was a tough one for REITs in general, but 2017 looks better.  (My wife’s Pomeranian could have written THAT press release.)  On a somewhat more realistic tone, private equity fund raising is projected to be down among real estate funds in the coming year, which does not portent good things.  The Limited appears to be poised for bankruptcy filing, and many (most?) stores that are still open are refusing to accept returns this week.  I just wandered into a shopping mall this morning (as I do about twice a year) and noted that The Limited was boarded up.  The timing is interesting, since retailers do about 14% of their holiday sales during the week AFTER Christmas.

On another note, S&P CoreLogic’s Case Shiller Index (whew… a mouthful for something started as a student’s MBA project a few years ago…) just announced that house prices from October 2015 to October 2016 rose 5.8%, which isn’t a bad number, and in fact may be a bit high given the present rate of inflation.  However, this doesn’t take into account the impact of November’s election, and the likelihood that newly empowered Republicans in Congress will likely tighten capital constraints on major banks.  (Ha-Ha-Ha to everyone who thought the GOP was in the pockets of the bankers.)  This portends tightening of capital throughout the lending system.  Add to this that the dollar is strengthening (the dollar always strengthens in the wake of global uncertainty, irrespective of the source of the uncertainty!) and you get declines both on the supply side and demand side for capital.  Couple with this both recent and impending rate hikes at the FED, and one has to wonder what will be a good investment in 2017.  (Hint — cash continues to be King.)

Once again, this blog is NOT investment advice, and Greenfield and its senior folks may, from time to time, have investments in things discussed here.  It’s just a blog… nothing more….

Well, by for now!  May the Force be with you!

Written by johnkilpatrick

December 27, 2016 at 11:12 am

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