Positive Spins And Russian Realities

Image Source: Pixabay

There are times when putting a positive spin on things probably won’t be well-received for obvious and understandable reasons.

That was my first (second and third) thought when I saw the Yahoo Finance headline, “Gas Prices Aren’t Really at a Record High,” not to mention its opening paragraphs:

Drivers are squirming as gas prices blast through levels last seen during the oil crunch of 2008. In July of 2008, U.S. oil prices hit $145 per barrel and gas prices peaked at $4.16, according to government data. With average gas prices now around $4.19, we seem to have set a new record high.

But those are nominal prices that don’t account for inflation. If you adjust for overall price changes since 2008, gas prices would have to hit $5.25 per gallon to be a new record high, in real terms.

If that’s meant to be comforting, I think it fails considering that every other price is up as well – some of which we’ll touch on as this blog post continues. Our wages might be higher, but so is our cost of living.

Intensely so.

Moreover, according to all reports – including direct statements from Biden – gas prices are headed higher still. ABC News tweeted the other day, complete with matching video, how:

Pres. Biden responded to a question on gas prices as he arrived in Fort Worth, Texas, saying, “They’re gonna go up.”

“Can’t do much right now. Russia’s responsible.” Abcn.ws/3sRblan.

Then again, consumers in the U.K. might have it worse. A new report out from Resolution Foundation reads:

Our preliminary estimate is that the conflict in Ukraine could push peak inflation in 2022-23 above [8%]. This could leave the typical real household income for non-pensioners [4%] – or £1,000 – lower than in 2021-22.

And it goes on from there.

More Non-REIT News

The report is quite detailed, but I’ll just highlight two sentences:

  • Considering the impact on petrol and energy costs alone leads us to estimate the monthly peak of inflation… could rival the [8.4%] reached in 1991 (in turn the highest inflation since 1982).
  • High inflation will make falling real household incomes the defining economic feature of 2022.

Now, British Transport Secretary Grant Shapps did say the country will increase its oil production to make up for the 8% Russian imports it usually relies on. That comes after both the U.K. and the U.S. announced yesterday they’ll no longer be buying the Russian commodity.

Meanwhile, European Commission President Ursula von der Leyen believes its collective countries have enough liquefied natural gas (LNG) to make it through the winter – news that sent many a market up this morning.

Also up, strangely enough, is cryptocurrency right as Biden is set to approve regulations on it. Bitcoin hit $42,245 earlier this morning, a near-8.5% 24-hour rise. And Ethereum climbed 6.5%+ to $2,755.

What’s down, at least as of last month, is mom-and-pop shop sentiment, according to the National Federation of Independent Business. Its Small Business Optimism Index fell 1.4 points in February to 95.7, its lowest reading since January 2021.

Naturally, inflation was behind a good chunk of that. So were weaker earnings, supply chain issues, and labor shortages.

And let’s see if I can fit in two more news stories before we switch over to real estate investment trusts (REITs)…

First up, Coca-Cola (KO), PepsiCo (PEP), Starbucks (SBUX), and McDonald’s (MCD) are pulling out of Russia. And secondly, that country will likely be cutting off its main gas line into Germany now that the U.S. and U.K. aren’t buying anymore.

As always, we’ll see what happens from here…

The World According to REITs

A quick note on the residential-ish side of real estate, namely what Zillow economist Nicole Bachaud said about rent:

… definitely growing at a rate that’s putting a lot of pressure for budgets for renters and causing people to get stuck in this affordability problem right now.

That’s to the point where they’re looking to buy instead, adding more shoppers to an already intense sellers’ market. This has especially been pronounced in major Californian hubs as well as NYC and Chicago.

That, in turn, has led to such increased interest in Sun Belt cities that they’re seeing skyrocketing prices as well – both for renting and buying. Which naturally means commercial real estate prices are climbing too.

At the moment, admittedly, it’s pretty quiet in REIT-dom, with only two headlines to highlight from The Daily REITBeat today:

  • Chatham Lodging Trust (CLDT) bought the 111-room Hilton Garden Inn Destin Miramar Beach in Florida. The off-market transaction is worth $31 million.
  • American Assets Trust (AAT) completed its purchase of Bel-Spring 520, a 93,000 square-foot, a multi-tenant office campus in Bellevue, Washington. The downtown asset – which cost it $45.5 million in cash – is 69% leased to a range of tenants with contracts at below-market rates.
  • Invitation Homes (INVH) promoted Greg Van Winkle from VP of investor relations to senior VP of corporate strategy and capital markets.

As I said, that’s it for today. 

(Click on image to enlarge)

(Source: The Daily REITBeat)

Brad Thomas is the Editor of the Forbes Real Estate Investor.

Disclaimer: This article is intended to provide information to interested parties. As ...

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