• Alex Pettee, CFA

Twitter Trouble • Dividend Boosts • Inflation Week

Summary

  • U.S. equity markets retreated Monday, dragged on the downside by mega-cap technology companies amid reignited regulatory concerns following the de-platforming of President Trump and other conservative media outlets.

  • After gaining 2.0% last week, the S&P 500 finished lower by 0.7% while the Dow Jones Industrial Average declined 89 points and the Nasdaq 100 dipped 1.5%.

  • Following a disappointing start to 2021 last week, real estate equities were again laggards today as the Equity REIT ETF declined by 1.3% with 18 of 19 property sectors in negative-territory.

  • Twitter and Facebook plunged as the social media companies stepped into the center of the intensifying debate over monopoly power, censorship, free speech, and corporate influence in politics.

  • Two REITs - STAG and BRMK- boosted their dividends this afternoon. Inflation data highlights this week's economic calendar. Inflation expectations surged last week after Democrats won the "trifecta" of political control.

Real Estate Daily Recap

U.S. equity markets retreated Monday, dragged on the downside by mega-cap technology companies amid reignited regulatory concerns following the de-platforming of President Trump and other conservative-leaning media outlets. After gaining 2.0% last week, the S&P 500 ETF (SPY) finished lower by 0.7% while the Dow Jones Industrial Average (DIA) declined 89 points and the Nasdaq 100 (QQQ) dipped 1.5%. Following a disappointing start to 2021 last week, real estate equities were again laggards today as the broad-based Equity REIT ETF (VNQ) declined by 1.3% with 18 of 19 property sectors in negative territory while Mortgage REITs (REM) retreated by 0.9%.

Seven of the eleven GICS equity sectors finished lower on the day, led to the downside by the Consumer Discretionary (XLY) and Communications (XLC) sectors while the Energy (XLE) added to last week's rally on the upside. Homebuilders and the broader Hoya Capital Housing Index were also leaders on the upside. Twitter (TWTR) plunged more than 6% while Facebook (FB) and Amazon (AMZN) were also under pressure social media companies and tech platforms stepped into the center of the intensifying debate over monopoly power, censorship, free speech, and corporate influence in politics. Bitcoin (BTC-USD), an emerging proxy for inflation expectations, dipped more than 10% on the day after climbing to record-highs last week.

After a jam-packed week of employment data, it will be another busy week of economic data in the week ahead headlined by the two major inflation reports. On Wednesday, we'll see Consumer Price Index data for December, and on Friday, we'll see Producer Price Index data. Inflation expectations surged last week after Democrats won the "trifecta" of political control given the implications for additional stimulus, and investors will be looking for signs of inflation in the hard data in the months ahead. We'll also see Retail Sales data for December on Friday. As usual, we'll also be watching the weekly Mortgage Applications and Jobless Claims as well.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

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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