A Look at Infrastructure Spending and Evaluating the REIT & High-Yield Rallies
November 11, 2020 | FIRESIDE CHARTS
Infrastructure spending—a popular form of economic stimulus—is increasingly being shouldered by state and local governments, where investment has established a downward trend over the past 60 years. With local governments already stretched thin during the pandemic, will they face obstacles attempting to employ this particular policy move? REITs have established some upward momentum lately, but they may face headwinds as offices continue to close and subleases surge in the work-from-home era. And junk bond yields climbed on vaccine news, but not before hitting a new record low on Monday. Highly leveraged companies have been particularly vulnerable during the pandemic—have many already passed the point of no return, and could it spell trouble for high yield investors?
1. Who repairs our roads, bridges and infrastructure?
Source: The Daily Shot, from 11/10/20
2. Will the economic impact of the pandemic make this worse?
Source: The Daily Shot, from 11/10/20
3. Covid-related office closures are inducing many sub-lease opportunities. Should we be questioning the sustainability of the REIT rally in this space?
Source: The Daily Shot, from 11/11/20
4. Is the rally into cyclicals ahead of itself?
Source: S&P Dow Jones Indices, as of 11/9/20
5. The S&P’s current yield is about 1.8%…
Source: The Daily Shot, from 11/10/20
6. OK, but is it safe to say that this election and the rate environment was rather unusual?
Source: Bloomberg, from 11/11/20
7. Caveat emptor? Junk bonds set a record low yield on Monday. A vaccine will be too late to help all those companies that already have or are going bankrupt…
Source: The Daily Shot, from 11/10/20
8. A great example of how yield starvation can “force” investors to take on new forms of risk. Remember the European financial crisis and the fiscal crisis in Greece causing “Grexit” concerns?
Source: The Daily Shot, from 11/11/20
9. China’s inflation has nose-dived….
Source: The Daily Shot, from 11/10/20
10. Are the Japanese markets (finally!) set to break out?
Source: The Daily Shot, from 11/10/20
11. Some more perspective on the enormity of the Covid crisis…
Source: The Daily Shot, from 11/11/20
12. Today is Veteran’s Day and this is just wrong! We must do better to help those who fought for all we enjoy let alone our freedom. We thank all who have served across all ages and conflicts.
Source: The Daily Shot, from 11/11/20
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.