What Did You Say, Mr. Powell?

Another day, another dollar. So the saying goes.

As far as I’m aware, that’s supposed to be a dollar made. But in 2022, there’s no guarantee of any such thing. And even when it does go into our pocket, it’s bound to come back out with far less pricing power.

I’ve said this before across various platforms, and I’ll say it again. The markets make no sense, including when it comes to how they react to the Federal Reserve.

Sometimes, we’re told, they “shrug off” whatever remarks or movements the Fed or other  Central Banks make. And sometimes, they crash and burn.

Yesterday was much more of a “shrug,” as The Wall Street Journal notes:

“U.S. stocks rose on Wednesday as investors digested comments from central bankers at a panel in Europe that provided insight into their views on the economy, inflation, and the path of monetary policy.

“The S&P 500 added 0.2% after the broad-market index closed down 2% on Tuesday. The Dow Jones Industrial Average was up 0.5%, while the Nasdaq Composite Index rose less than 0.1%.”

That was after Fed Chair Jerome Powell spoke at a panel for the European Central Bank’s annual economic policy conference in Portugal. That’s where he explained how there might not be an easy way out of our inflationary situation.

He hopes that’s not the case. “We think… there are pathways for us to achieve the path back to 2% inflation while still retaining a strong labor market.” But it’s “going to be quite challenging.”

 That’s pretty contrary to what he’s been saying for months. But, hey, what do we expect at this point from someone who insisted that inflation was “transitory” for three-quarters of last year?

It is what it is. It will be what it will be. And we have to learn how to adapt with what we’ve got.

More Non-REIT News to Know About 

Just three years ago, Mark Tritton took the reins of home goods titan Bed, Bath & Beyond (BBBY). It was a rough time to take over. Yet he’s since helped the company weather the shutdowns and cull its coupon-driven product line for a private-label launch.

Let’s recognize those efforts for what they’re worth – even if they’re probably going to prove that they’re not worth enough.

At first, doing away with national brands and ushering in a product line of proprietary goods seemed like a good idea. Sadly though, time is telling otherwise.

After several months in a slump, the retail chain reported another quarter of dismal earnings. Sales plunged by 25% year-over-year, while net losses widened to $358 million from $51 million.

Bed, Bath & Beyond’s share price has now slipped more than 55% year-to-date… and almost 80% in the last 12 months. As such, its board just ousted Tritton at the request of multiple investors.

Sue Grove, the company’s new interim CEO, says, “The customer wants to see more of an optimal balance of national brands, direct-to-consumer brands, and company-owned brands. So we’re focused on improving the category mix.”

Will that new focus be able to save it? The answer is up in the air for the time being.

But one bit of advice to Ms. Grove: Everyone seems to love air fryers these days. Don’t lose out on those!

The World According to REITs  

Sure, Bed Bath & Beyond may be having a hard go of it. But generally speaking, the retail world seems to be doing surprisingly well.

As I reported yesterday – and despite increased inflation, shipping delays, and product shortages – American consumers are still turning up for the summer shopping season.

One real estate investment trust (REIT) that’s benefitting from this resilience is Phillips Edison & Co. (PECO). It’s one of the nation’s largest owners and operators of grocery-anchored shopping centers with an array of tenants including:

  • Grocery store Publix
  • Sprouts Farmers Market (SFM)
  • Walmart (WMT).

It’s ranked #1 in the retail sector with an overall score of 74 by analysts at InvestorsObserver. They look at both short- and long-term indicators to weigh it against the entire stock market. So when they give it a 74, that means it’s looking better than 74% of other stocks.

And apparently, they’re not alone in that evaluation, since PECO’s shares are up over 22% for the year.

In terms of retail REITs, this one is certainly on the right track. With premium fundamentals, excellent analyst rankings, and a rock-solid valuation, this purveyor of grocery stores could really improve any portfolio.

Author’s Note: If you determine this stock is right for you, make sure to enter it at a smart price point. Even the best of companies can burn you badly by buying in at an inflated price.

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

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