Are We At The Brink Of A Bull Market?

If you haven’t noticed, there’s been a pretty big sale on stocks lately. In the last couple of weeks, we’ve seen slumps across trading indexes, from the S&P to the Dow. And with the markets looking this bearish, many believe a rebound, rally, or reversal could be coming our way.

Call it speculation. Call it desperation. Call it a shot in the dark by the most distressed sector of our American money machine, but there may be a couple of angles to this optimistic expectation that actually make sense.

The first indication comes from the CBOE Volatility Index, also known as the VIX or the fear index. The VIX measures the stock market’s expectation of volatility based on S&P 500 options.

The fear index has been at or above 30 for the past week — it touched a high of 32.82 yesterday. Investors will usually consider a reading over 30 to be an indication of intense fear in the market.

This gauge of short-term stress has previously been a turning point for risk assets, with volatility topping out in the days just before the Fed’s last three meetings of 2022. Look at it like the physics of fiscal volatility – what goes up must come down, every action has an equal and opposite reaction, etc. Except, this is all charted through the peaks and valleys of stock tickers.

Another indicator of an impending upswing comes from France through the Societe Generale, or SocGen. The Societe Generale is a French multinational investment bank that also gauges gut investment reactions through the SA sentiment indicator.

From Bloomberg:

JPMorgan Chase & Co. strategists led by Marko Kolanovic said this week that “investor sentiment is reaching extreme weakness,” meaning a rebound could be on the cards. Meanwhile, a Societe Generale SA sentiment indicator recently dropped to levels last seen during the peak of Covid-19 lockdowns in 2020.

“This will likely culminate in a bounce in equities,” Societe Generale strategists Manish Kabra and Arthur Van Slooten wrote last week.

In terms of volatility, these speculations could spell a peak in the precariousness of our current economy. Of course, only time will be the true arbiter of market adjustments, but we can hold out hope.

More Non-REIT News to Know About

Spirit Airlines Remains Free-Spirited

On Monday, Spirit Airlines snubbed an acquisition offer from JetBlue Airways, saying regulatory restrictions would likely prohibit the proposal.

JetBlue recently announced an alliance with American Airlines, prompting the Justice Department and several states to sue the airline, arguing that the merger is anti-competitive. Since JetBlue has no plans to abandon the partnership, Spirit plans to steer clear of any acquisition attempts.

In a statement on Monday, the chairman of Spirit’s board, Mac Gardner, said the company stood by plans to merge with Frontier Airlines instead, a courtship that preceded JetBlue’s offer and one that Spirit says reflects the best interests of long-term shareholders.

Gardner said:

After a thorough review and extensive dialogue with JetBlue, the board determined that the JetBlue proposal involves an unacceptable level of closing risk that would be assumed by Spirit stockholders. We believe that our pending merger with Frontier will start an exciting new chapter for Spirit and will deliver many benefits to Spirit shareholders, team members and guests.

Perhaps the Frontier partnership will bring out the best of both airlines to create a new one – one by which passengers can bring their backpack on the plane without paying a $50 fee. We can dream.

The World According to REITs

WhiteStone Puts Up Strong Q1

Whitestone (NYSE: WSR), a high-end neighborhood community and shopping center operator, just announced stellar Q1 earnings. This Sunbelt developer basically acquires, owns, manages, and leases outdoor shopping centers with a slant on building better communities.

For Q1, it reported $34.1 million in revenue, a huge increase from $29 million in Q1 of last year. Its NOI growth of 12.9% makes it super attractive to many REIT investors… And with a 7% year-over-year rental revenue growth, there must be something to the shopping experiences it’s creating in the Sunbelt.

CEO Dave Holeman said:

Our necessity-based community centers, located in high-growth sunbelt markets, continue to drive strong consumer traffic and tenant demand, as evidenced by increases in rent per square foot and occupancy levels. As we move through 2022, we will continue to focus on maximizing shareholder value through organic growth, prudent capital allocation, reducing G&A, improving our debt leverage and delivering on our targeted FFO per share growth of 14% to 19%.

This pretty much says it all. I mean, no matter what’s happening on Wall Street, Scottsdale stays about shopping.

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

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