The best way to make your dreams come true is to wake up. Paul Valerye
DECEMBER 21, 2015
Markets Can’t Hold Gains Despite the Federal Reserve (Fed) playing to script and meeting market expectations with a 0.25% interest rate hike, U.S. stocks ended the week down. All three of the major averages surrendered their early-week gains, with the Dow Jones Industrial Average dropping 0.79% to 17,128, the S&P 500 Index falling 0.35% to 2,005 and the tech-heavy Nasdaq Composite Index down 0.20% to close the week at 4,923. Meanwhile, the yield on the 10-year Treasury rose from 2.12% to 2.20%, as its price fell. The mystery surrounding the Fed has finally been resolved, at least until the next meeting. But even with liftoff in the rearview mirror, U.S. equities continue to struggle with a familiar litany of problems: lack of organic earnings growth, mixed economic data and deteriorating conditions in the credit markets. Unfortunately, it appears next year may deliver more of the same. Looking Beyond the Fed The Fed’s 25-basis-point (bp) rate hike was what the market expected, provoking only a modest reaction in short-term interest rates and a yawn on the long end of the Treasury curve. Instead, investors were focused on what happens next. Although the Fed maintained its implicit forecast for four hikes in 2016, which is more than the market expects, investors took comfort in the stated commitment to a gradual tightening cycle and the notion that the central bank will continue to reinvest its balance sheet until “normalization in the fed funds rate is well under way.” Consequently, long-term rates are largely unchanged from where they started the year, but the impact is being seen in shorter-term bonds and currency markets. Yields for two-year Treasuries climbed above 1% for the first time in 5½ years and the dollar rose more than 1% on the week. While the Fed more or less delivered, several other factors are contributing to the decline in investor sentiment. Investors continue to struggle with the fallout from a strong dollar, collapsing oil prices and a tightening in financial market conditions. The latter issue has been a particular problem of late. Last Monday, high yield spreads — the difference between the yield of a high yield bond and that of a comparable-maturity Treasury — reached nearly 700 bps, a level not seen since June 2012. Not surprisingly, all of this has contributed to a turn in investor flows, with U.S. high yield exchange-traded funds experiencing $1.7 billion in outflows. Moreover, fears regarding high yield are increasingly leaking over into equity markets.
U.S. economic data also remain mixed, leading to questions about 2016 earnings. Core inflation is firming and the housing sector is doing well, evidenced by a surge in housing starts and permits in November. However, manufacturing continues to slide. U.S. industrial production is now down year-over-year, the first contraction since the end of 2009. Markets outside the U.S. are proving more resilient. European stocks gained nearly 2% last week, with Germany leading the advance. Stocks were helped by a solid measure of German business confidence as well as strong manufacturers’ readings. More of the Same in 2016? U.S. stocks and bonds both appear likely to end the year close to unchanged. This has been a year of ample volatility with little to show for it. Unfortunately, many of the factors that have constrained U.S. equities in 2015 are likely to repeat next year. Markets can withstand a gentle tightening cycle. However, if the divergence in monetary policy between the Fed and the other central banks pushes the dollar still higher, this will continue to be a headwind for U.S. corporate earnings. In addition, the tightening of financial conditions, evidenced by wider credit spreads, is having the predictable effect on stocks. While we believe high yield (outside of issues from energy and other natural resources firms) can stabilize in 2016, the reality is that we’re getting late in the credit cycle. This suggests U.S. stocks and bonds may continue to struggle, unless we see a more meaningful acceleration in the global economy. With that as a backdrop, we maintain our overweight to both European and Japanese currency-hedged equities. While neither market has had a stellar year, in local currency terms they have outperformed U.S. equities by roughly 550 and 1100 bps, respectively, year-to-date. We believe that pattern could continue into the new year. Please note: This is the last commentary for 2015. We will resume publication on Jan. 4, 2016
SEE IT ALL: BlackRock WEEKLY INVESTMENT COMMENTARY 2015 A Blueprint for 2016
FROM ME:
Phoenix Commercial Real Estate and Investment Real Estate: investors and Owner / Users need to really know the market today before making a move in Commercial Properties or Investment Properties in Phoenix / Tucson / Arizona, as the market has a lot of moving parts today. What is going on socio-economically, what is going on demographically, what is going on with location, with competing businesses, with public policy in general — all of these things affect the quality of selling or purchasing your Commercial Properties, Commercial Investment Properties and Commercial and Residential Land in Phoenix / Tucson / Arizona. Therefore, you need a broker, a CCIM (Certified Commercial Investment Member) who is a recognized expert in the commercial and investment real estate industry and who understands Commercial Properties and Investment Properties in Phoenix / Tucson / Arizona, and Commercial Land or Residential Land in Phoenix / Tucson / Arizona.
I am marketing my listings on Costar, Loop-net CCIM, Kasten Long Commercial Group. I also sold hundreds millions of dollars’ worth of land and Investment Properties in Arizona and therefore I am working with many Land brokers, Investors and Developers. I am also a CCIM and through this origination ( www.ccim.com ) I have access to marketing not only in the United States, but also international. Click here to find out what is a CCIM: https://en.wikipedia.org/wiki/CCIM
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Click here to find Reasons to Consider me for Commercial Referrals
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Click here to View My Listings and Profile
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3rd QTR 2015 GREATER PHOENIX APARTMENT OWNER’S NEWSLETTER Kasten Long Commercial Grpup.
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Walter Unger CCIM – walterunger@ccim.net – 1-520-975-5207 – http://walter-unger.com
WHY PHOENIX ARIZONA : ???
http://walter-unger.com/?p=13391
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Timeline of Phoenix, Arizona history
http://en.wikipedia.org/wiki/Timeline_of_Phoenix,_Arizona_history
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http://en.wikipedia.org/wiki/Phoenix,_Arizona
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Facts of Arizona – year 1848 to 2013
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Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Properties in Phoenix.
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Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial / Investment Real Estate Broker in Arizona now for 20 years. I am also a commercial land specialist in Phoenix and a Landspecialist in Arizona. If you have any questions about Commercial / Investment Properties in Phoenix or Commercial / Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion with you. I am also in this to make money therefore it will be a win-win situation for all of us.
Please reply by e-mail walterunger@ccim.net or call me on my cell 520-975-5207
Walter Unger CCIM
Senior Associate Broker
Kasten Long Commercial Group
2821 E. Camelback Rd. Suite 600
Phoenix , AZ 85016
Direct: 520-975-5207
Fax: 602-865-7461
Reasons to Consider me for Commercial Referrals
View my listings and my profile at:
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a little about me and my expertise – video
commercial-investment real estate adviser-land specialist
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