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Will Rates/Yields Peak Soon?

Published Fri, 30 Nov 2018 14:27:11 -0500 on Seeking Alpha

Keeping Investors Puzzled
Jerome Powell has done it again.
This time, it wasn't an official FOMC meeting, but the release of the Fed's financial stability report ("FSR"), combined with Mr. Powell's remarks, was enough to leave investors more puzzled than they were before.
What is the Fed mostly worried about?
Aside of the historically prices across many assets - commercial real estate (VNQ, IYR, REM, MORT, SCHH, KBWY, XLRE, RWR), housing (PKB, XHB, ITB, AIRR), farmland (DBA, RJA), the Fed is mostly worried about two things:
Several participants were concerned that the high level of debt in the nonfinancial business sector, and especially the high level of leveraged loans, made the economy more vulnerable to a sharp pullback in credit availability. - FOMC minutes from its November 7-8 meeting.
1. Amount of borrowing.
The Fed is worried about historically-high corporate leverage levels (BKLN, SRLN, FTSL, SNLN)

2. Credit quality (concentrated among low-credit-risk borrowers.)
Powell warns of a tsunami of junk rated debt (HYG, JNK, AWF) as the share of investment-grade debt classified at the low end of the range has "reached near-record levels". Borrowers will "surely face distress if the economy turned down."

The Fed also sees near-term risks from:
the UK (EWU) Brexit European/Eurozone (VGK, EZU, HEDJ, FEZ) fiscal/budget challenges China (MCHI, FXI) level of debt, economic growth and... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
NUVEEN REAL ESTATE INCOME FUND 10.51   0.0 0.00 0.00 7.29
RMR REAL ESTATE INCOME FUND 19.29   0.0 0.00 0.00 6.89
ALLIANCEBERNSTEIN GLOBAL HIGH INCOME FUND 11.64   0.0 0.00 0.00 6.76
COHEN & STEERS TOTAL RETURN REALTY FUND 14.40   0.0 0.00 0.00 6.68
COHEN & STEERS QUALITY INCOME REALTY FUND 14.70   0.0 0.00 0.00 6.59
COHEN & STEERS REIT 23.02   0.0 0.00 0.00 6.56
TCW STRATEGIC INCOME FUND 5.71   0.0 0.00 0.37 6.36
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF 107.14   0.0 0.00 6.10 5.66
ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND 85.81   0.0 0.00 4.60 5.33
FIRST TRUST/FIDAC MORTGAGE INCOME FUND 13.71   0.0 0.00 0.00 5.21
GENERAL MOTORS 36.47   5.8 6.29 1.52 3.90
MORGAN STANLEY 39.10   8.5 4.59 1.40 3.44
CITIGROUP 63.48   8.8 7.19 2.04 3.32
VANGUARD EMERGING MARKETS ETF 39.22   0.0 0.00 1.09 2.73
ISHARES BARCLAYS TIPS BOND FUND 117.56   0.0 0.00 2.47 2.12
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 256.36   0.0 0.00 5.54 2.10
SPDR S&P 500 ETF 284.65   0.0 0.00 5.42 1.85
GOLDMAN SACHS 196.18   8.2 23.84 5.00 1.67
MOODY'S 209.95   32.6 6.43 2.00 0.94
POWERSHARES QQQ TRUST SERIES 1 185.48   0.0 0.00 1.49 0.82
ISHARES COHEN & STEERS REALTY MAJORS INDEX FUND 116.81   0.0 0.00 0.00 0.00
ISHARES FTSE NAREIT MORTG PLUS CAPPED INDEX FUND 41.40   0.0 0.00 0.00 0.00
ISHARES BARCLAYS AGGREGATE BOND FUND  
VANGUARD TOTAL BOND MARKET ETF  

NUVEEN REAL ESTATE INCOME FUND - JRS
NUVEEN REAL ESTATE INCOME FUND - JRS  


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