Sancho Panza

Just different ways of calculating an index.I'm not a statistician Tony.Some others on here may know..

Nice turn pf phrase. That;s fascinating re the lag.Seems unreall that 0.2% of sales can be from over a year before.

Worth noting that the way the Land reg is calcualted increases the wighting of lower priced properties.Hence the Acadata series which are arithmetically averaged,tend to show more downward pressure at the moment-according to the blurb on the LCP Acadata report ..

When you think about it,normal simple transactions take a few months max. Somethings slowing things down,it's either MMR....or..chains taking time to complete.Either way there's a lot of EA time getting spent they're not getting paid for. According to RM there's 100 transactions per month in LE2

https://wolfstreet.com/2018/03/19/what-are-we-going-to-do-with-mall-reits/ 'This is my now classic twice-a-year progress report on the decline of mall REITs. The series began in May 2016, shortly before the peak of mall REITs in July 2016. Their shares started getting hit in August that year, and the pain hasn’t abated since. All along the way, the industry and its Wall Street analysts soothed our rattled nerves with assurances that the brick-and-mortar meltdown didn’t actually exist, that there were more new stores being opened than closed, that the selloff at each stage was overdone and that these were buying opportunities. They keep pointing out that online retail is only around 10% of total retail. But they’re hiding the fact that mall retailers are the ones under attack, not gasoline stations, auto dealers, bars, restaurants, grocery stores, and other categories that are considered “online resistant.” And these mall retailers have surrendered a large part of their sales to the Internet – see: Brick & Mortar Meltdown Hits These Stores the Most. And then there are rumors that leave room for hope. Today’s rumor of hope is that Amazon is considering buying some of the locations of Toys ‘R’ Us, which is being liquidated. Similarly, in 2015, Amazon considered buying some of the locations of RadioShack as it was heading into bankruptcy for the first time. And nothing came of it. With already too many malls in America to begin with, the brick-and-mortar meltdown is now putting further pressure on them, and investors have taken a huge licking. So here are some of the mall REITs and how they have performed recently, in no particular order, except for the top two: CBL Properties (CBL): Shares closed at $4.36 today, down 55% from a year ago, down 68% from end of August 2016, and down 83% from May 2013. As part of its earnings fiasco report last November, CBL announced it would slash its quarterly dividend by nearly 25% to $0.20 a share. At today’s share price, the dividend yield is a juicy 18%. But expect further dividend cuts. Moody’s pointed out last July that 22% of CBL’s square footage was exposed to “distressed retailers,” the highest among of the mall REITs. The other mall REIT up there in this rarefied air of max exposure to “distressed retailers” is Washington Prime Group. Washington Prime Group (WPG). At $6.26, shares are down 13% year-to-date, 25% from a year ago, 55% from August 2016, and 71% from the peak of $21.49 in May 2014, just after its spin-off from Simon Property Group – a mall REIT (more in a moment) that apparently knew what it was getting rid of. With a quarterly dividend of $0.25 a share, for a dividend yield of 16%, a dividend cut is lining up. Pennsylvania REIT (PEI): At $9.48, shares are down 36% from a year ago and 63% from end of July 2016. At the current stock price, its quarterly dividend of $0.21 generates a yield of 8.9%. Tanger Factory Outlets (SKT): At $21.49, shares are down 34% from a year ago and 48% from the end of July 2016. Quarterly dividend: $0.34 a share for a yield of 6.4%. Kimco Realty (KIM): At $14.25, shares are down 37% from a year ago and 56% since the end of July 2016. Quarterly dividend: $.50, for a yield of 7.8%. Macerich (MAC): At $57.85, shares are down 10% from a year ago and 35% since the end of July 2016. Quarterly dividend: $0.74 for a dividend yield of 5.1%. Simon Property Group (SPG), which had spun off the misbegotten Washington Prime Group mentioned above: Shares, at $155.43, are down 7.5% from a year ago and 32% since the end of July 2016. Its quarterly dividend of $1.95 generates a yield of 5.0%. Taubman Centers (TCO): At $56.91, shares are down 13% from a year ago and 29% from the end of July 2016. Quarterly dividend: $0.66 for a yield of 4.6%. GGP (formerly General Growth Properties): At $21.52, shares are down 7.2% from a year ago and 33% since the end of July 2016. Quarterly dividend: $0.22 for a yield of 4.1%. Federal Realty Investment Trust (FRT): Shares, at $116.49, are down 13% from a year ago and 31% since the end of July 2016. Quarterly dividend: $1 for a yield of 3.4%. Regency Centers Corp (REG): At 56.32, shares are down 14% from a year ago and 32% since the end of July 2016. Dividend: $0.56 for a yield of 3.9%. Seritage Growth Properties Class A (SRG): Shares, at $34.97, are down 20% from a year ago and 38% from their peak in April 2016. With a quarterly dividend of $0.25, the dividend yield is 2.9%. The REIT was spun off from Sears Holdings in July 2015 via a rights offering. Shares started trading at $36.02 on July 6. The offering raised $1.6 billion, which was used to fund in part the $2.72-billion purchase of 235 of the most valuable properties and 31 joint-venture interests from Sears Holdings. Seritage initially leased back most of the stores to Sears Holdings. But many stores have since been closed, and Seritage is trying to lease those spaces to other tenants at higher rates. Sears Holdings CEO and largest investor Eddy Lampert is also chairman and major shareholder of Seritage. The transaction didn’t pass the smell test. In theory, Seritage would make a killing since it had acquired many of the best properties in a sweetheart deal. But the decline in value of retail properties since then might have x-ed out that theory. This lineup of REITs shows the bifurcation: Some REITs, whose malls are more exposed to “distressed retailers,” have gotten totally crushed, with shares down over 70% or 80% from their peaks, and have been or will be forced to cut their dividends to preserve capital. The REITs with the strongest malls have only gotten crumpled, instead of totally crushed, with shares down “only” around 30%. The big-fat dividend yields are very tempting, but a drop in the share price on a bad day can easily wipe out the value of the dividend of several years. In addition, if the dividend yield is too high, the company will slash the dividend, and the market slashes the shares. This isn’t going to happen tomorrow, knock on wood, but the brick-and-mortar meltdown will continue for years, and mall owners will have to figure out how to deal with it.'

UST's always get paid out.Same as NS&I.

I'd rather take a punt on the National Grid divi

If you can't be struck off a register it's not a profession.

20 years ago my local High st had two EA's and one LA.Now they've got about 10 in the same area and they're about to lose their lettings fee income. Let the race to the bttom begin.

This. LE2 has 435 properties for sale,including SSTC there's 852. Half the available properties are stuck in limbo. A few years back,LE2 would have had 800 for sale and another 400 SSTC.sO 1200 in all. What looks like a major dislocation is ongoing here.Don't know what it is and where it's going,but these current figures are highly unusual.

The LCP Acadata report of Feb highlighted this anomaly as well.New build premium has covered upo the woes in the market. you can live in run down places in Leicester for a lot less than that...

15/30 unsold.I hope some local family picked up that hosue in Durham for £25k Could also be people trying to optimise CGT allowances,quite possible given the amount of Mom and pop BTLers

It's an industry in it's death roll.The flip side of all these retail failures is that it will strengthen the hand of the remaining stores to negotiate substantial rent reductions. When you look at it holistically,it's quite likely that the profit for retailers is pretty much in the top 20% of footfall at these rental levels.Back of fag packet calcs admittedly but sans rent reductions the figures will stop stacking up in the next year or two for all but the anchor stores. The impact on credit creation will be substantial if they marked the loans to market. Wouldn't want to be a small retail CRE LL over the next few years trying to hawk empty sadnwich shops in Leicester for £15k in rent. As per previous discussion re the Fed raising rates,it can't have escaped their notice that the natural follow on from Zirp was zombie companies destroying price discovery on every level. Worth noting that Jerome Powell has no formal education in Economics so may not be as prone to the delusions of his predecessors about the cure for GD1 being printed cash. The US of A are hiking with CPI at 1.8% and we're staying flat depsite CPI at 2.7%.....................Carnage. To misquote Forrest Gump 'Stoopid is as stoopid does.' The CBers are our representatives and they rarely get held to account.You can't blame the private equity guys for helping themselves in some respects. If it was a zero sum game I'd be mightily relieved.Future generations will be paying for this profligacy for decade

Another Private Equity success story to add to the long list of Zirp Zombie failures.

Worth n oting they did shareholders for £18mn in December ' The group reported that it has engaged in discussions regarding debt headroom and resetting covenants with its bank as its net debt is expected to rise to approximately £34m at 30 April despite a gross £18m having been raised from shareholders in December. ' The balance sheets of the big boys are quite opaque,the smaller ones with less analyst coverage................ Apparently Poundstretcher struggling as well................. Plymouth Herald 19/3/18 'Poundstretcher has become the latest chain facing problems as even the discount retailers are hit by rising inflation and declining consumer spending. Credit insurers are now tightening terms for suppliers to Poundstretcher – a move which is generally seen as an indicator of concerns a retailer is about to go bust. Private equity-owned Poundworld, which has a huge Plymouth store in New George Street, said it was facing “brutal” trading conditions. Poundworld, which has more than 350 stores, is owned by American buyout giant TPG Capital, but competes fiercely with Poundland and Poundstretcher. The discount retailer, founded in 1974 as a market stall, revealed losses of £17.1million in the year to the end of March 2017.'

Both 97% off peak.Impressive.

https://e2nz.org/goodbye-new-zealand/ This one was eye opening................................completely ruins my rose tinted view of the place.

Wolf St:2 to 10 year spread at 10 year lows, 2 yr UST at 10 year high. Good rationale for flattening of the 2 to 10 yr spread. No inversion as Fed will speed up QT. https://wolfstreet.com/2018/03/18/how-seriously-is-the-treasury-market-taking-the-fed/ 'Back in October 2015, the three-month Treasury yield was 0%. Many on Wall Street said that the Fed could never raise interest rates, that the zero-interest-rate policy had become a permanent fixture, like in Japan, and that the Fed could never unload the securities it had acquired during QE. How things have changed! On Friday, the three-month Treasury yield closed at 1.78%, the highest since August 19, 2008. The Fed’s target range for the federal funds rate has been 1.25% to 1.50% since its last rate hike at the December FOMC meeting. In other words, the three-month yield is already above the upper limit of the Fed’s target range after the next rate hike. So the market has fully priced in a rate hike at the FOMC meeting ending March 21. And it’s also starting to price in another rate hike in June. In past rate hike cycles, the two-year yield reacted faster to rate-hike expectations than the 10-year yield. This is happening now as well. The 10-year yield has its own dynamics that are not in lockstep with the Fed’s rate-hike scenario But I do not think that the yield curve will “invert” – a phenomenon when short-term yields are higher than long-term yields, which has been closely associated with recessions or worse. The last such inverted yield curve occurred before the Financial Crisis. This time, the Fed has a tool that it didn’t have before: During QE, it acquired $1.7 trillion in Treasuries and $1.8 trillion in mortgage-backed securities that it has now started to unload. It can start jawboning the markets by telling them that it will unload the securities more quickly, and it could then actually unload them more quickly. This would be a “monetary shock.” It would put a lot of pressure on long-term Treasuries, and yields would jump at the long end of the curve, thus steepening the yield curve and causing all kinds of turbulence.'

https://www.themaven.net/mishtalk/economics/treasury-yield-convergence-when-might-perfect-flatness-arrive-_qjSijk120SUz2PU_1Jx9Q Shedlock:yield curve flattening https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr 03/01/18 1.50 1.63 1.85 2.05 2.22 2.36 2.58 2.74 2.81 2.97 3.09

If the Fed do carry through then could be an interesting time for remortgagors. Worth noting the 1.8% core CPI doesn't look particularly extreme given it was well above 2% in 2011/12 and 2016/17. As per previous discussion on why Fed hiking CNBC 16/3/18 ' The Fed is expected to raise interest rates for the first time this year on Wednesday, and markets are hoping for clarity on whether it intends to stick with its current forecast for three rate hikes this year or raise it to four. The Fed has said it expects inflation to move toward its 2 percent target by the end of the year. Core consumer price index inflation rose 1.8 percent in February. A pickup in inflation could push the Fed to raise interest rates faster. "We changed our call from three to four hikes. We think they'll do another 25 basis points hike. They acknowledged the economy is on a fairly robust path without too many signs of overheating," said Boris Rjavinksi, director of rate strategy at Wells Fargo. "Last time around, they upgraded their language on inflation." A 25-basis-point hike would put the fed funds target rate range at 1.50 to 1.75 percent, and four hikes this year would take it to 2.25 to 2.50 percent. Some economists expect the Fed to hold next year's hikes at two.'

' There are currently about 25 per cent more homes for sale compared to a year ago and only 80 per cent as many people actively looking for property, industry figures reveal. The average house seller in the inner city suburb of Darlinghurst had to cut 30.6 per cent off their advertised price to sell. Bellevue Hill sellers dropped their prices by an average of 16 per cent before selling, while in Vaucluse the adjustment was 13 per cent. Down south, sellers in nearby suburbs Sutherland and Alfords Point slashed an average of more than 15 per cent off their listed prices prior to selling. Other suburbs where sellers discounted their prices by more than 10 per cent included Narrabeen, Cammeray, Tempe, Coogee, Mascot, Belfield and Matraville. Cobden and Hayson agent Samantha Elvy, who is selling the rundown home on Balmain’s Harris St, said fewer prospective buyers were going through open homes in general terms. Exceptional properties on the other hand were still attracting keen interest, she said. “Fixer uppers like (the Harris St home) are rare so they get a lot of inquiries.” LARGEST 3-MONTH MEDIAN PRICE FALLS BY LGA NORTH: Mosman units -1.9% EAST: Woollahra houses -2.1% WEST: Camden units -1.7% SOUTH: Botany Bay units -3.6% INNER WEST: Ashfield houses -6%' Intersting snipets from the link above.Market timing is always hard.

Another big leveraged fail in the US of A. If the CB's aren't watching this sheetshow,they should be.This tends toward the destruction of demand. https://wolfstreet.com/2018/03/15/bain-capital-wins-again-iheartmedia-finally-files-for-bankruptcy/ 'The biggest radio broadcaster in the US with nearly 850 radio stations, iHeartMedia, formerly called Clear Channel Communications – which was acquired by private equity firms Bain Capital and Thomas H. Lee Partners in a leveraged buyout at the apex of the LBO boom just before the Financial Crisis – has finally filed for Chapter 11 bankruptcy, after threatening to do so since 2010. The company has been buckling under more than $20 billion in debt, up from $8 billion before the PE firms got their hands on it. About $10 billion of debt was loaded on the company as a result of the leveraged buyout – where the company leverages up its own balance sheet to fund its own buyout and to compensate the PE firms. And this surge in indebtedness has occurred despite large-scale asset sales, corporate shrinkage, and radical cost cutting after the buyout.'

Paul Hodges 18/2/18 Looks like the issue of invesment demand pumping prices hasn't gone away at all.Hodges seems to be saying that the contango you refer to is still present and still steep..... http://www.icis.com/blogs/chemicals-and-the-economy/2018/02/economy-faces-slowdown-oil-commodity-prices-slide/ 'Oil and commodity markets long ago lost contact with the real world of supply and demand. Instead, they have been dominated by financial speculation, fuelled by the vast amounts of liquidity pumped out by the central banks. The chart above from John Kemp at Reuters gives the speculative positioning in the oil complex as published last Monday: It shows hedge fund positioning in terms of the ratio of long to short positions across the complex The ratio had been at a near-record low of 1.55x back in June last year, before the rally took off On 30 January it had risen to a record 11.9x – far above even the 2014 and 2017 peaks The size of the rally has also been extraordinary, as I noted 2 weeks ago. At its peak, the funds owned 1.5bn barrels of oil and products – equivalent to an astonishing 16 days of global oil demand. They had bought 1.2bn barrels since June, creating the illusion of very strong demand. But, of course, hedge funds don’t actually use oil, they only trade it. The funds also don’t normally hang around when the selling starts. And so last week, as the second chart shows, they began to sell their positions and take profits. The rally peaked at $71/bbl at the end of January, and then topped out on 2 February at $70/bbl. By last Friday, only a week later, Brent was at $63/bbl, having fallen 11% in just one week. Of course, nothing had changed in the outlook for supply/demand, or for the global economy, during the week. And this simple fact confirms how the speculative cash has come to dominate real-world markets. The selling was due to nervous traders, who could see prices were challenging a critical “technical” point on the chart: Most commodity trading is done in relation to charts, as it is momentum-based The 200 day exponential moving average (EMA) is used to chart the trend’s strength When the oil price reached the 200-day EMA (red line), many traders got nervous And as they began to sell, so others began to follow them as momentum switched The main sellers were the legal highwaymen, otherwise known as the high-frequency traders. Their algorithm-based machines do more than half of all daily trading, and simply want a trend to follow, milli-second by milli-second. As the Financial Times warned in June: “The stock market has become a battlefield of algorithms, ranging from the simple – ETFs bought by retirees that may invest in the entire market, an industry, a specific factor or even themes like obesity – to the complex, commanded by multi-billion dollar “quantitative” hedge funds staffed by mathematicians, coders and data scientists.” JP Morgan even estimates that only 10% of all trading is done by “real investors”:

.

That's a fascinating piece and it covers an angle of owning ETF's that I didn't cover in my reasons to be cautious.Aside from being hit by rotation from contango to backwardation or vice versa.The very presence of ETF's has inflated the cost of ownership. Admittedly,it was written back in 2010 when everyman and his dog was seeking protection from devaluation-an issue covered by Paul Hodges extensively who referenced the fact that futures trading was dwarfing daily demand for physical oil for a sustained period of time.I'll try and dig one of those out. I'm not a futures trader-it's beyond my risk profile-but I would suspect many of these issues are current and not jsut historical post GFC. From the piece 'ZIRP AND HIGH STOCKS Several aspects of the current environment have combined to make cash-and-carry strategies extremely profitable: (a) Banks and physical traders have exploited the gap between the low cost of funds for institutions at the heart of the financial system and the much higher cost of borrowing for everyone else, as well as the big gap between short term and long term rates. (b) Central bank commitments to keep rates at exceptionally low levels for an extended period have slashed risks associated with maturity transformation. (c) High inventories and persistent oversupply have reduced the likelihood stocks will be needed in the short to medium term, making it less risky to strike storage deals in exchange for guaranteeing stock will be held for a minimum period. Recession, the credit crunch and zero interest rate policies (ZIRP) have come together to create ideal positions for cash-and-carry strategies. PENSION FUND PRISONERS The final factor has been strong interest from pension funds, other institutions and retail investors who see commodity indices and exchange-traded products (ETPs) as a hedge against inflation, dollar devaluation and counter-party risk. By establishing long positions in futures and options, but never wanting to take physical delivery, pension funds and investors are natural counterparties for the cash-and-carry trade, which wants to be short futures and options, but never have to make delivery. Constant rolling of index and ETP positions has forced many markets into much larger and more persistent contango structures than before 2004-2005 (when commodities first became popular as an “asset class”).'