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  • Alex Pettee, CFA

Crypto Crisis • Stocks Rally • China Eases Restrictions

  • U.S. equity markets advanced Friday- posting their best weekly gains since June- sparked by a trio of positive market developments: cooling inflation, China reopenings, and a divided government in Washington.

  • Pushing its gains to nearly 6% for the week, the S&P 500 advanced another 0.9% today while the tech-heavy Nasdaq 100 rallied nearly 2%.

  • Real estate equities were mixed today - but were among the leaders on the week - as the Equity REIT Index finished flat today while the Mortgage REIT Index advanced 1.6%.

  • While investor sentiment may be beginning to improve, consumer sentiment remained historically downbeat according to the latest University of Michigan survey released this morning with the headline Consumer Sentiment Index diving to its lowest level since June.

  • Somewhat obscured by the focus this week on midterm elections and CPI inflation, cryptocurrency markets remain in turmoil following the implosion of FTX - one of the largest crypto exchanges.

 

Income Builder Daily Recap

U.S. equity markets advanced Friday - posting their best weekly gains since June - sparked by a trio of positive market developments: cooling CPI inflation, China reopenings, and a divided government in Washington. Pushing its gains to nearly 6% for the week, the S&P 500 advanced another 0.9% today while the tech-heavy Nasdaq 100 rallied nearly 2%. Real estate equities were mixed today - but were among the leaders on the week - as the Equity REIT Index finished flat today while the Mortgage REIT Index advanced 1.6%. Homebuilders extended their weekly gains to over 10% as the 30-Year Mortgage Rate pulled back by nearly 50 basis points in two days.

Somewhat obscured by the focus this week on midterm elections and CPI inflation, cryptocurrency markets remain in turmoil following the implosion of FTX - one of the largest crypto exchanges. Bitcoin extended its weekly declines to roughly 20% - now nearly 80% off its record highs - as some analysts speculated that contagion may spread across the crypto industry. Crude Oil prices, meanwhile, rallied more than 3% after China announced steps to ease its "dynamic zero COVID" policy which included shorter quarantine time and easing travel restrictions. Energy (XLE) stocks led the gains among the 11 GICS equity sectors while Healthcare (XLV) and Utilities (XLU) stocks lagged.

While bond markets were closed in observance of Veterans Day, currency and futures markets indicated further downward pressure on U.S. interest rates today with the U.S. Dollar plunging another 1% today - posting one of its worst weekly declines on record. While investor sentiment may be beginning to improve, consumer sentiment remained historically dim in the latest University of Michigan survey released this morning with the headline Consumer Sentiment Index diving to its lowest level since June. Inflation expectations for the next year rose to 5.1% from 5% in the prior month, while five-year inflation expectations rose to 3% from 2.9% in October.

We'll publish a full analysis and commentary of this week's developments in the real estate industry, as well as an analysis of the busy week of economic data in our Real Estate Weekly Outlook this weekend.

Real Estate Daily Recap

Best & Worst Performance Today Across the REIT Sector

Today we published our REIT Earnings Recap: Rents Paid, Dividends Raised. Nearly 200 REITs and a dozen homebuilders have reported third-quarter earnings results over the past three weeks, providing critical information on the state of the U.S. real estate industry. REIT earnings season was surprisingly strong across nearly all property sectors. Of the REITs that provide guidance, nearly two-thirds raised their full-year FFO outlook alongside another two dozen dividend hikes. During third quarter earnings season, the Equity REIT Index outperformed the broader S&P 500 by nearly 10 percentage points while Mortgage REITs outperformed by over 15 percentage points. Earnings results from Shopping Center, Industrial, and Net Lease REITs were most impressive - accounting for exactly half of the 58 guidance hikes. Residential and technology REIT results were more hit-and-miss - accounting for half of the 14 downward guidance revisions. Read the full report here.

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, mortgage REITs continued their rally today with residential mREITs pushing their weekly gains to over 8% while commercial mREITs gained nearly 4% on the week. We'll discuss the busy slate of mREIT earnings reports this week in our Real Estate Weekly Review published this weekend.


Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

Hoya Capital Research & Index Innovations (“Hoya Capital”) is an affiliate of Hoya Capital Real Estate, a registered investment advisory firm based in Rowayton, Connecticut that provides investment advisory services to ETFs, individuals, and institutions. Hoya Capital Research & Index Innovations provides non-advisory services including market commentary, research, and index administration focused on publicly traded securities in the real estate industry.


This published commentary is for informational and educational purposes only. Nothing on this site nor any commentary published by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. This commentary is impersonal and should not be considered a recommendation that any particular security, portfolio of securities, or investment strategy is suitable for any specific individual, nor should it be viewed as a solicitation or offer for any advisory service offered by Hoya Capital Real Estate. Please consult with your investment, tax, or legal adviser regarding your individual circumstances before investing.


The views and opinions in all published commentary are as of the date of publication and are subject to change without notice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Any market data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any outlook made in this commentary will be realized.


Readers should understand that investing involves risk and loss of principal is possible. Investments in real estate companies and/or housing industry companies involve unique risks, as do investments in ETFs. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.


Hoya Capital Real Estate and Hoya Capital Research & Index Innovations have no business relationship with any company discussed or mentioned and never receives compensation from any company discussed or mentioned. Hoya Capital Real Estate, its affiliates, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and additional important disclosures is available at www.HoyaCapital.com.