Frank Curzio
Founder & CEO of Curzio Research, Wall Street Unplugged Host
REITs stay in the penalty box because a reaccelerating labor market rules out Fed cuts this year. Job openings jumped to 7.618M against a 7.295M forecast and a prior 6.887M, and with core inflation still hot, Warsh can't cut into that. Rate-sensitive sectors such as REITs, small caps and anything long-duration stay under pressure, while shorter-duration, cash-flow-positive value keeps working. x.com x.comÂ
High Treasury yields keep US real-estate stocks from being a buy yet, despite a record low against the S&P 500. Each hike pushes the sector lower; the 10-year yield above 5% argues for waiting rather than assuming rotation is inevitable. A turn likely needs falling rates, perhaps a first cut or the 10-year back below 4%. x.com x.com x.com x.com x.com x.com x.com x.com x.com x.comÂ
Real estate stocks suffer badly as interest rates rise, and the sector needs help or its 50-day moving average will be taken out. Welltower, the sector's largest name, is starting to struggle to sustain its parabolic move. x.comÂ
Private cap rates can overstate apparent bargains in public REITs when only prime properties trade during a liquidity drought. Weaker owners may refinance, while distressed assets remain with lenders. Overhead, leverage, management and liquidation costs can justify NAV discounts; scale, low capital costs and disciplined acquisitions can warrant premiums. Favor property quality, sound balance sheets and a margin of safety rather than every discount. x.com x.comÂ
The Fed's continuing inflation focus and prospect of expensive money for longer are eroding Bitcoin's initial relief from the rate hold. At the 3.75%-4.00% hold, two officials voted to hike; Warsh left further tightening open but did not commit to a December hike. BlackRock's Bitcoin ETF drew $136M yesterday, its third straight inflow session, showing buyers are still present. x.com x.com x.comÂ
Real estate is on the verge of a multi-year breakout as the unaffordable housing market that is crushing homebuilders fuels REITs. When people cannot afford to buy, they rent, and REITs collect. x.comÂ
US large-cap equities are vulnerable because earnings have not caught up with total market capitalization. The market is farther from its 200-week moving average than at any point in 18 years, and cracks are starting to show; staying bullish ignores these risks. Rate hikes remain possible, oil is still high, and yields may climb again, so now is the time for caution. x.com x.comÂ
Rising mortgage rates and no apparent Fed concern about yields make BlackRock's bullish turn on Treasuries feel early. Mortgage rates reached 7.4% after seven straight weekly increases. x.comÂ
The US large-cap correction isn't over until interest rates top and bonds bottom, which hasn't happened yet. The summer 2023 S&P 500 correction ended right when bonds bottomed in October, with TLT trading massive upside volume, and there is no sign of that now. Higher rates keep pressuring real estate, where lots of money has been trapped since 2022, a possible source of downside dislocation, and an aggressive further rise in rates could bring a panic bottom. x.com x.com x.com x.com x.com x.comÂ
As the AI infrastructure crash takes form, its recessionary effect suppresses bond issuance and powerfully caps yields, giving battered housing, mortgage and related stocks a lift. Starwood Property Trust, Rocket Companies and Builders FirstSource should get a powerful boost as yields fall, with huge short covering and fundamental improvement; many in the group trade well below book value. x.com x.com x.comÂ
Essential Properties' disciplined underwriting is delivering steady growth amid a changing cost-of-capital environment without stretching for growth. Q3 AFFO per share rose 6% year over year to $0.51, rental revenue of $157.8 million beat estimates, and 2027 AFFO guidance debuted at $2.10-$2.18. Strong margins and deal flow were expected ahead of earnings; it remains one of the best net-lease REITs to own. x.com x.comÂ
