• Alex Pettee, CFA

Data Center M&A • Sentiment Sours • Shortages Abound

Summary

  • U.S. equity markets finished higher Friday - but snapped a five-week streak of gains - as weaker-than-expected consumer sentiment data capped of a week that saw inflation concerns reemerge.

  • Ending the week lower by 0.3%, the S&P 500 gained 0.7% today while the Mid-Cap 400 advanced 0.3% and the Small-Cap 600 finished higher by 0.1%.

  • Real estate equities were mixed today - but were slightly lower on the week - as the Equity REIT Index declined 0.1% today with 7-of-19 property sectors in positive territory.

  • The University of Michigan's Consumer Sentiment Index dipped to a 10-year low in the preliminary November reading - significantly worse than expectations - as soaring inflation continues to take a toll on sentiment.

  • Data center REIT CyrusOne (CONE) rallied more than 3% today on reports that it's near a deal to be sold to private equity firms with KKR (KKR) and Brookfield Asset Management (BAM) emerging as front-runners.

Income Builder Daily Recap

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U.S. equity markets finished higher Friday - but still snapped a five-week streak of gains - as weaker-than-expected consumer sentiment data this morning capped of a week that saw inflation concerns return to the forefront. Ending the week lower by 0.3%, the S&P 500 gained 0.7% today while the Mid-Cap 400 advanced 0.3% and the Small-Cap 600 finished higher by 0.1%. Real estate equities were mixed today - but were slightly lower on the week - as the Equity REIT Index declined 0.1% today with 7-of-19 property sectors in positive territory while Mortgage REITs declined 0.6%.

Nine of the eleven GICS equity sectors finished higher today, led to the upside by the Communications (XLC) and Technology (XLK) sectors while Energy (XLE) stocks lagged. Homebuilders and the broader Hoya Capital Housing Index finished a strong week with gains again today ahead of a busy slate of housing data next week. 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 report published this weekend.

The University of Michigan's Consumer Sentiment Index dipped to a 10-year low in the preliminary November reading - significantly worse than expectations - as soaring inflation continues to take a toll on sentiment. One-year consumer inflation expectations climbed to highest since 2008 – and the 4th highest since 1981. The historic dip in confidence reflects “an escalating inflation rate and the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation” and comes after hotter-than-expected CPI data earlier this week in which prices rose the fastest rate in more than three decades.


We're excited to announce the launch of our new investment research service here on Seeking Alpha - Hoya Capital Income Builder. We've put together a great team of contributors from across the REIT, dividend, and ETF industry, so whether your focus is High Yield or Dividend Growth, we’ve got you covered with high-quality, actionable investment research and a comprehensive suite of tools and models to help build sustainable portfolio income targeting premium dividend yields of up to 10%. And of course, subscribers receive complete access to our investment research - including reports that are never published elsewhere - from Hoya Capital and our team of contributors.

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.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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