Peaks And Possibilities To Peer At

Fears of continued inflation have been at the forefront of nearly every economic conversation since the beginning of this year. After June’s record 9.1% inflationary increase, many are bracing for the worst to still come.

The big question is, of course, “When will this trajectory level off?” Between interest rate increases and supply shortage softenings, it seems we should have at least some insulation…

Right?

Well, I don’t want to speak too soon, but new data does suggest we may have seen the worst of this inflationary economic whirlwind. Mind you, I’m not predicting anything, only reporting facts, such as:

  • Gas prices have dropped close to 10% from their mid-June high of $5.02 a gallon, according to information from AAA.
  • Wheat futures plunged by 37% since mid-May, and corn futures fell 27% from mid-June.
  • Shipping costs from East Asia are 11.4% cheaper than they were in June, according to Xeneta, a Norway-based data firm.

These numbers also suggest that the backlogs and snares within the shipping industry may finally be finding relief.

Other good news includes how the break-even inflation rate on inflation-indexed bonds fell to 2.67% from an all-time high of 3.59% in late March. And inflation-based derivatives are now predicting the CPI will drop to 2.3% in about a year.

Which brings me to the not-so-good news…

“It’s a step in the right direction, but ultimately, even if June is the peak, we’re still looking at an environment where inflation is too hot,” said Sarah House, senior economist at Wells Fargo. She expects fourth-quarter inflation to come in at 7.5%-7.8%. “So peak or not, inflation is going to remain painful through the end of the year.”

Plus, we’ve still got far too many factors that could flare up at any time. All it takes is another escalation in the Russian-Ukrainian conflict, further COVID restrictions, or a natural disaster to curtail the pricing progress we’ve made in the commodities market.

But at least we seem to be headed in a better direction for the time being. So here’s to hoping we’ve reached the peak.


More Non-REIT news to Know About

Yup, I’m covering Elon Musk some more.

After he backed out of his bid to take over Twitter, that social media giant said they’d see him in court. And now it looks like that’s precisely what’s going to happen.

A couple of days ago, the Tesla CEO sought to delay the trial set until February. But that’s been officially denied by the judge.

According to reports from CNBC:

“Musk’s lawyer, Andrew Rossman of Quinn Emanuel, argued the expedited timeline was far too aggressive for his team to review the massive data trove at Twitter, which Musk wants to review to verify the percentage of spam accounts on the platform.

“Rossman charged that Twitter wants ‘to continue to shroud in secrecy’ that number and failed to provide the information Musk asked of the company earlier.”

Too bad though, because the trial will proceed on Twitter’s terms. Right now, it’s not looking so great for the South African entrepreneur.

Will he escape the clutches of the world’s most popular social media site? Or will he have to make good on his word and ultimately purchase the platform?

As the old saying goes, be careful what you wish for.


The World According to REITs 

Speaking of team-expanding opportunities, American Tower (AMT) just announced a partnership with Stonepeak – a leading alternative investment firm specializing in infrastructure and real assets.

Once executed, Stonepeak will acquire about 25% of American Tower’s U.S. data-center businesses as part of a new long-term strategic partnership. AMT President and CEO Tom Bartlett said:

“We are pleased to partner with Stonepeak in our U.S. data center business, where we expect to create value through growth in our highly interconnected, cloud, on-ramp, rich portfolio of data center assets.

“In Stonepeak, we’ve found a like-minded partner, with deep communications infrastructure experience and a long-term investment philosophy that aligns with the principles of American Tower and our longer-term strategy in the data centers segment.

“While this transaction supports the equity financing component for our previously completed CoreSite acquisition, it also creates a platform through which growth opportunities can be strategically evaluated and financed, with American Tower and Stonepeak committed to executing on opportunities as the 5G ecosystem continues to develop.”

JP Morgan is slated to advise the deal’s closing in the next few months.

This is an exciting prospect, since Stonepeak has proven itself already to be a powerhouse in the data infrastructure space. With nearly $50 billion assets under management and over 200 institutional investors, it’s on track for rapid growth and strong capitalization.

Add in American Tower, and this could be the start of something even bigger for both.

Author’s Note: If you do determine this stock is right for you, make sure to purchase it at a smart entry point. Even the best of companies can burn you badly if you buy in at inflated prices.


More By This Author:

Amazon Wants To Ask What Ails You
More Real Estate Data to Digest – If You Can
Is Residential Real Estate on the Rocks?

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

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

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