Submitted by manx928 (101 comments) on Wed, 04/17/2013 - 09:41 #119471
While I'm not sure if my subject line is tongue-in-cheek or a genuine statistical interpretation, this is an interesting mathematical description of gold's price action taken from Marty Cej's BNN Morning Newsletter:
"Investors continue to keep a keen eye on gold prices after the steepest two-day rout since 1983 on Friday and Monday. Gold rose yesterday and is trading higher so far this morning. For those folks who are fretting that another wild swing could be imminent, I offer this bit of wonkish analysis from Russell Rhoads, CFA of the CBOE Option Institute:
Friday was a 4.88 standard deviation move in the price of gold. For simplicity sake let's call it a five standard deviation move. Statistically we get a five standard deviation move approximately once every 4,776 years. So we should not expect another move like this out of the price of gold until May 17, 6789….Currently the two day price change in GLD is 16.65 which can be converted to just over eight standard deviations. I wanted to share what this comes to, but the table I use only goes up to seven standard deviations. Let's just say the sun is expected to burn out first."
CAT - Repost "CAT remains a laggard within Industrials and broke support at $87, to target the next level near $80-78, with deeper risk to the 2011 low near $66. Resistance is the old support near $87."
"YRC Worldwide announced today that it has reached a tentative agreement with the leadership of the International Association of Machinists (IAM) on a new contract. The agreement will now go to the IAM-represented employees for a ratification vote. During the ratification process, IAM-represented employees will continue to report to work under provisions of the current agreement.
The previous contract with IAM employees expired on March 31, 2013 . Negotiations continued with IAM leadership during a mutually agreed-upon extension of the contract. While the agreement will affect less than 1% of the company's 32,000 employees, it offers important shared-sacrifice provisions that will bring IAM members in alignment with their fellow YRC Worldwide employees. The tentative agreement is an essential action to ensure that all employees participate in the recovery of the company on an equal basis."
Sounds to me like they got some concessions.
Keep in mind the union votes on the proposed network improvements on Friday. Not sure if we will hear from them on Friday or next week. Potentially huge bottom line benefit if they get approved.
Here's a good background on Welch: http://www.forbes.com/sites/genemarcial/2012/04/13/with-a-new-ceo-and-revamped-board-is-yrc-worldwide-back-on-track-for-a-turnaround/
He was a driver for the company way back when, became the CEO of Yellow Transportation, then left the company in 2007 because he didn't agree with the buying spree they went on.
You may be right. Yesterday a coyote tried to make off with one of the cats. A warning? The Border Collie took offense and chased it down and saved her cat. (She likes this cat).
"Today's undoubtedly the busiest day of the week in terms of economic data. In fact, today's the only day we care about on the economic front, as we got a bunch of major numbers all in rapid-fire succession. This data includes inflation, housing starts, and industrial activity. In that order...
The good news is, there's no real inflation. The bad news is, there's no meaningful inflation when there should probably at least be some.
Prices fell 0.2% last month when you include food and energy (oil/gasoline) costs. Taking food and energy spending out of the equation, consumer prices rose only 0.1% in March. That translates into an annualized inflation rate of about 1.5%, versus 2.0% as of February.
What's wrong with low inflation? The theory is - and I agree with it - were the economy truly healthy it should be able to sustain an inflation rate of about 3.0%. The fact that it can't (especially in this hyper-simulative environment) is something of a red flag.
And on a side note, the lack if inflation since around this time last year is one of the reasons gold prices have been crushed of late. Those gold fans largely bought gold to defend against inflation that never happened, and it doesn't appear like it's ever going to happen either. Why hang on to an asset that is slowly losing ground?
Housing starts rolled in WAAAAY better than the expected annual pace of 935,000 units. The Census Bureau said the pace of new starts reached 1.036 million last month. That's the best pace since June of 2008, when the number was on the way down. Though issued permits only came in at an annual rate 902,000 (down from February's 939,000), it's still a pretty strong number.
We've been saying for months the housing market is defying the naysayers, and there's nothing about today's numbers conflicting with that idea. There is one BIG side-note though - all the year-over-year growth is stemming from the construction of multi-family housing units like condos and apartments. All told, 392,000 of last month's new-starts pace were starts of multi-family housing. Rental demand is still sky high, and that's something you may want to consider if you're looking for an income-oriented position.
We still say a construction slowdown is in the cards, but even slower growth is still growth. The market will almost certainly freak out if the pace does taper off, but that steep dip will be a long-term buying opportunity.
The final piece of economic news we care about today is the Federal Reserve's report of March's industrial production and how much of the nation's manufacturing capacity we're using. Productivity grew 0.4% last month, and we're now using 78.5% of our capacity, up from February's reading of 78.4%.
If you're thinking those are very modest improvement, you're right. By economic standards, however, those are some significant increases.
We know most investors don't really care much about those two numbers, but they're actually a couple of best tools we've seen for making long-term buy/sell decisions. In short, they're telling us the bigger-picture bull market is still intact, and justified. Their bullishness WON'T stave off short-term corrections though. Just keep in mind that defining your timeframe (and sticking to it) is half your battle."
As much as I'd like to dazzle you with some brilliant, pithy take on where the market's headed next, my brilliant comment is simply going to be this: Wait! The market was up firmly today, but after Monday's 2.2% pounding, a bounce today was a foregone conclusion. Stocks are still trying to find their bearings here, and I'm just not ready to say the uptrend is underway again.
The good news is, the S&P 500 closed back above that key 1570 mark on Tuesday. Johnson & Johnson (JNJ) as well as Coca-Cola (KO) also posted strong first-quarter earnings today. On the other hand, Target (TGT) told us to lower our expectations for its first quarter results, and oil prices dropped following news that demand was tapering. The volume behind today's rally was also weaker than yesterday's.
The point is, traders can see whatever they want to see in stocks right now, and the dust from yesterday's plunge hasn't even settled yet.
My game plan from here is to look for a higher close, but at the end of the week. Said another way, I don't really care what happens between here and Thursday. For me to be bullish, I want to see a close on Friday anywhere above today's close of 1574.57. That gives the dust two more days to settle, and will also show the market's true conviction at a more critical time (heading into the weekend).
If instead the S&P 500 ends the week under 1570, that'll pretty much confirm my suspicion that the summertime downtrend has already started. You guys know how this works though... in the current environment, everything is on a day-to-day basis. ""
I found this on hotel property acquisitions, I thought it sounded lie the market is slowing. Is your take different?
"Lodging M&A tracker: 1Q13 update Based on data from Real Capital Analytics, 173 hotels changed hands for about $5.3 billion in 1Q13. The number of deals was about flat sequentially (178 deals in 4Q12) while the dollar value of the deals increased from $4.6B last quarter. In this report, we highlight the key full/limited service, institutional quality assets that are typical of a public Lodging REIT portfolio. On this metric, we tracked 23 major transactions in 1Q13 versus 19 major transactions in 4Q12. Private equity more active than public REITs once again For the second quarter in a row, private equity made up the vast majority of the buying activity at 57% of deals vs. public REITs at 43% (unchanged sequentially). Up until recently, public REITs dominated the transaction market given their cost of capital advantage, but they have recently dialed back activity, particularly as competition increases for top 10 market assets. Going forward, we believe private equity will remain a key buyer given strong industry fundamentals and an attractive financing environment. Cap rates ticked higher sequentially, above long term avg Average cap rates on deals ticked higher in 1Q13 to 7.4% vs. 6.7% in 4Q12 and an average of 6.7% since the beginning of 2010. The public REITs paid a wide range of cap rates in 1Q13 with key gateway market assets going for cap rates sub-7% while limited service assets drew cap rates over 9%. Across the industry, full service hotel cap rates continue to tick up from a low of 6.5% in 2Q11 to 7.5% recently (vs. LT avg of 7.8%). Meanwhile, the trend has been different for limited service hotels with cap rates coming down in 6 of the past 7 quarters to 8.9% vs. an average of 9.1% since 2005. 1Q13 average price per key in line with cycle average The average hotel traded at $350,000 per key compared to $418,000 per key in 4Q12 and $341,000 per key in 3Q12. 1Q13 per key pricing is in line with the average seen this cycle and was driven by some high per key deals such as the InterContinental Park Lane that sold for about $1M per key and 3 New York assets that each sold for at least $560,000 per key. Public REITs trading at a 15% discount to the private market Our Lodging REIT universe currently trades at an EV per key of $300,000 vs. current private market values of $350,000, a 15% discount. While appearing inexpensive on a per key basis, the public REITs are more appropriately valued on a cap rate basis with full service hotel REITs trading at a cap rate of 6.8% vs. 7% for our tracked deals this cycle. EV per key for the public REITs has been rising with fundamentals, and we expect the gap between public and private market pricing to narrow as the cycle continues. Our favorite hotel REIT name remains HST, which trades at $280,000 per key, a 20% discount to recent comps a nd a 35% discount to replacement cost."
The hotels have been doing better and revpar's increasing for a few years. Hard to see that this stops as supply still seems constrained. This should drive increased valuations. Hotels are a cyclical industry and the cycle usually stops when too much money starts chasing and too many get built driving down rates. I guess we could see the economy tank and also cause the same or if mortgage rates rise, that will hurt all real estate, but I still think they are woth holding.
I agree with BB's take. Typically the downturn is exacerbated by excessive spending/buildout. That is definitely not the case based on what I've read. A consumer slowdown could hurt things but most of the players have deleveraged and can sustain that.
What happened to the money spent on homeland defense, at least buy some street cameras for town centers where people are likely to gather in public areas. Permit revenue should be used for this too, as well as pay for public services during gatherings, raise the permit fees to pay for it if necessary.
"Residential Loan Charge-offs Down 23 Percent from Q4, at Five Year Low Decrease Font Size Text Increase Font Size Apr 16 2013, 3:40PM
The Equifax March National Consumer Credit Trends Report presents more evidence that the home finance related credit picture is improving rapidly. The report shows that the level of home finance balances written off in the first quarter was down nearly 23 percent from that written off in the fourth quarter of 2012.
Lenders wrote off $43.1 billion in so called severe derogatories in the first quarter, a five year low. These include loans for which foreclosures have been completed, loans where the borrowers had entered bankruptcy, and loans that were otherwise charged off. In the previous quarter write-offs totaled $55.4 billion.
First mortgage balances were charged off in the first quarter at a rate that was down 17.6 percent from the previous quarter while outstanding severely delinquent loans had an aggregate balance that dropped 25 percent from $477 billion in the fourth quarter of 2012 to $3.55 billion. "
Umm, yeah, the euro strength doesn't seem to be creating employment opportunities. But everyone loves a strong euro, what did they expect would happen?
NOR - It's probably not too much of a stretch of the imagination to think the gap down from ~$3.75 will eventually close, a better than 13% gain from here.
BTU - "Maintain Underperform, conference call at 11am Our $20 per share price objective uses 7-7.5x 2013-15E EV/EBITDA, compared with a 10-year average of 8.6x and a more recent three-year average of 7.2x. We expect the shares to re-rate lower going forward, as BTU is no longer a steady PRB-focused coal miner."
XLF is down, $17.95 seems to be the battle zone, so I guess we go nowhere without banks. That is, unless money is rotating somewhere else, such as energy?
Sold through support at $420 (aapl's favorite time) on it's way to 350. I don't think it's done, but technically 350 is the target. There is nothing bullish about a downward blue arrow. Nothing. Especially when the indices are at all time highs (multi year highs for the Q's) and they're rolling over.
Earnings on the 23rd, I haven't noticed any rallies into earnings this Q, and all those atories of a cellphone glut, talk about working yourself out of a job.....
Some of the non-gold portfolio managers seem to be getting too cocky about avoiding gold now - makes me think we get a bounce to throw things off and give a bit of pain to the shorters.
Street camera idea is interesting CP.
ReplyDeleteI smell distribution.
ReplyDeleteFeels like sell in May, to me. Repeat of last year?
Deletet3d- Let's not sully Genghis Khan's reputation like that.
ReplyDeleteAnother LOL! ;)
DeleteAVAV - Another potential island reversal for us?
ReplyDeletePAL - Getting back into the buy zone that always gets bought.
ReplyDeleteGDXJ 11.81 got snapped up pretty damned fast. Let's see if it holds.
ReplyDeleteBIDU - This one's green while China's crashing, eh?
ReplyDeleteNG - Punishing Paulson....
ReplyDeleteGold should never crash like this again
ReplyDeleteSubmitted by manx928 (101 comments) on Wed, 04/17/2013 - 09:41 #119471
While I'm not sure if my subject line is tongue-in-cheek or a genuine statistical interpretation, this is an interesting mathematical description of gold's price action taken from Marty Cej's BNN Morning Newsletter:
"Investors continue to keep a keen eye on gold prices after the steepest two-day rout since 1983 on Friday and Monday. Gold rose yesterday and is trading higher so far this morning. For those folks who are fretting that another wild swing could be imminent, I offer this bit of wonkish analysis from Russell Rhoads, CFA of the CBOE Option Institute:
Friday was a 4.88 standard deviation move in the price of gold. For simplicity sake let's call it a five standard deviation move. Statistically we get a five standard deviation move approximately once every 4,776 years. So we should not expect another move like this out of the price of gold until May 17, 6789….Currently the two day price change in GLD is 16.65 which can be converted to just over eight standard deviations. I wanted to share what this comes to, but the table I use only goes up to seven standard deviations. Let's just say the sun is expected to burn out first."
'Let's just say the sun is expected to burn out first.'
DeleteNot the kind of challenge to throw down here.
The market is reaching for a can of Whup Ass.
DeleteJones Soda makes Whoop Ass Grapple. You just nailed the reason coffee prices are tanking.....
Deletehttp://www.examiner.com/review/jones-soda-brings-it-with-whoopass-grapple-energy-drink
I hate it when they make stupid challenges. I'm not in that big a hurry to get to May 17, 6789
DeleteHa!
DeleteNowhere near as horrible as eyeball tattoos.
DeleteGive it up you old bag o' bones, you're not gonna make it to 6789 anyway and you know it. Be real, this challenge isn't for old geezers?
DeleteYeah, but I bet we see a similar type of decline in gold before my eventual demise.
DeleteORB - Cleared for launch
ReplyDeleteCAT - Repost "CAT remains a laggard within Industrials and broke support at $87, to target the next level near $80-78, with deeper risk to the 2011 low near $66. Resistance is the old support near $87."
ReplyDeleteAAPL -3.5%.
ReplyDeleteAAPL -4.7%.
DeleteDamn, bro. AAPL set a 52-wk low this morning!
DeleteAre they done introducing new products already? Cash has no value....
DeleteThat's a good point, CP.
DeleteDoes it matter? Technically it's going to $350.
DeleteI can wait for it, who knows what else may happen in the meantime.
DeleteOkay, so as money comes out of the high fliers (unproven, possibility), then maybe some will find it's way into BTU and KWK?
ReplyDeleteDistribution continues.
ReplyDeletePMT - Hopefully this qualifies as undeserved.
ReplyDeleteThe dudes that bought GDXJ @ 11.81 earlier this morning are starting to have second thoughts now.
ReplyDeleteThey hear the faint echo of JT's opening chords for Steamroller.
DeleteThe best time to buy has been afternoon, for some time now.
DeleteOh ----. They're cranking up the volume.
DeleteAPC - 12mo PO is $120 and on USA1 list, this one's coming to us guys!
ReplyDeleteNew 52-wk low for SLW.
ReplyDeleteGGB - This one was trading at $7 a couple days ago, perhaps that price is a fierce(Genghis Khan strong) support level.
ReplyDeleteThat's more like it.
DeleteLet me paraphrase Landry's question. wtf is going on in the mining sector. Who needs to raise cash that badly?
ReplyDeleteWell, BACML has a $50 PO on SLW... Umm, maybe it's BAC?
DeleteAlright. I picked up a little SLW/GDXJ @ 22.82/ 11.70.
ReplyDeleteSLW/GDXJ off @ 22.98/ 11.89.
DeleteYou go 1st, 2nd.... ;)
DeleteThis chart rolled over this time last year:
ReplyDeletehttp://www.crbtrader.com/data.asp?page=chart&sym=BVY00&name=BLS%20Raw%20Industrials&domain=crb&display_ice=1&cancelstudy=&type=LINE&studies=SMA%2813%29;&a=W
CRMB - Falling apart.
ReplyDeletecrumbling? i'll be here all day...
DeleteGive us the scoop, are the coffee shop revolutionists coming to the aid of their hangout?
DeleteAVAV - Is this one taking off or a spruce goose?
ReplyDeleteRoad Runner fans want to know if there been any confirmed deaths by falling pianos? How about anvils?
ReplyDeleteKWK - Call me crazy, but this one doesn't look to me like it's moving down.
ReplyDeleteMy broker shows it has a *H which is a 'halted' symbol. I don't see any news re a halt, but that's what it says.
DeleteWith any luck there's a bid to buy it for multiples of the current price and I (we) make a killing.
That's all for now from ACME pianos.
Looks like it's trading to me, maybe there was a brief period of zero volume.
DeleteSRS - I'm experiencing difficulty ignoring this one, will someone please talk me down off the ledge before I hurt myself?
ReplyDeleteWho's buying today?
ReplyDeleteSomebody must be, just not me.
Deletewell SPX is hitting 50 sma, that usualy finds support
DeleteNOK just perked up
DeleteSure did. Looks good but earnings tomorrow.
Delete"YRC Worldwide announced today that it has reached a tentative agreement with the leadership of the International Association of Machinists (IAM) on a new contract. The agreement will now go to the IAM-represented employees for a ratification vote. During the ratification process, IAM-represented employees will continue to report to work under provisions of the current agreement.
ReplyDeleteThe previous contract with IAM employees expired on March 31, 2013 . Negotiations continued with IAM leadership during a mutually agreed-upon extension of the contract. While the agreement will affect less than 1% of the company's 32,000 employees, it offers important shared-sacrifice provisions that will bring IAM members in alignment with their fellow YRC Worldwide employees. The tentative agreement is an essential action to ensure that all employees participate in the recovery of the company on an equal basis."
Sounds to me like they got some concessions.
Keep in mind the union votes on the proposed network improvements on Friday. Not sure if we will hear from them on Friday or next week. Potentially huge bottom line benefit if they get approved.
Sweeten the coffee, give 'em some free shares or cheap options. Is the CEO a Union-hired employee?
DeleteHere's a good background on Welch:
Deletehttp://www.forbes.com/sites/genemarcial/2012/04/13/with-a-new-ceo-and-revamped-board-is-yrc-worldwide-back-on-track-for-a-turnaround/
He was a driver for the company way back when, became the CEO of Yellow Transportation, then left the company in 2007 because he didn't agree with the buying spree they went on.
Thanks for link, will make for good reading this afternoon.
DeleteCC - They're lookin' for ya...
ReplyDeleteAgain?
DeleteYeah, they're circling, must be hungry.
DeleteYou may be right. Yesterday a coyote tried to make off with one of the cats. A warning? The Border Collie took offense and chased it down and saved her cat. (She likes this cat).
DeleteSo we're packing heat today.
ACME coyote snare with remote release.
Deletehttp://articles.latimes.com/1998/jan/07/local/me-5841
Deletehttp://imgur.com/a/sUrnA
ReplyDeleteHopefully there's enough street photos to figure it out.
DeleteCrazy Horse Guitarist Frank 'Poncho' Sampedro: 'My Gut Tells Me This Is the Last Tour'
ReplyDeleteRead more: http://www.rollingstone.com/music/news/crazy-horse-guitarist-frank-poncho-sampedro-my-gut-tells-me-this-is-the-last-tour-20130417#ixzz2Qkb0lYQi
I'd like to meet those guys someday, to see what they're really like.
Deleteread the story...they would get along with us!
DeleteReopening RYPMX at the close.
ReplyDeleteSLW @ 22.
ReplyDeleteGDX @ 27.37.
ReplyDelete"Today's undoubtedly the busiest day of the week in terms of economic data. In fact, today's the only day we care about on the economic front, as we got a bunch of major numbers all in rapid-fire succession. This data includes inflation, housing starts, and industrial activity. In that order...
ReplyDeleteThe good news is, there's no real inflation. The bad news is, there's no meaningful inflation when there should probably at least be some.
Prices fell 0.2% last month when you include food and energy (oil/gasoline) costs. Taking food and energy spending out of the equation, consumer prices rose only 0.1% in March. That translates into an annualized inflation rate of about 1.5%, versus 2.0% as of February.
What's wrong with low inflation? The theory is - and I agree with it - were the economy truly healthy it should be able to sustain an inflation rate of about 3.0%. The fact that it can't (especially in this hyper-simulative environment) is something of a red flag.
And on a side note, the lack if inflation since around this time last year is one of the reasons gold prices have been crushed of late. Those gold fans largely bought gold to defend against inflation that never happened, and it doesn't appear like it's ever going to happen either. Why hang on to an asset that is slowly losing ground?
Housing starts rolled in WAAAAY better than the expected annual pace of 935,000 units. The Census Bureau said the pace of new starts reached 1.036 million last month. That's the best pace since June of 2008, when the number was on the way down. Though issued permits only came in at an annual rate 902,000 (down from February's 939,000), it's still a pretty strong number.
We've been saying for months the housing market is defying the naysayers, and there's nothing about today's numbers conflicting with that idea. There is one BIG side-note though - all the year-over-year growth is stemming from the construction of multi-family housing units like condos and apartments. All told, 392,000 of last month's new-starts pace were starts of multi-family housing. Rental demand is still sky high, and that's something you may want to consider if you're looking for an income-oriented position.
We still say a construction slowdown is in the cards, but even slower growth is still growth. The market will almost certainly freak out if the pace does taper off, but that steep dip will be a long-term buying opportunity.
The final piece of economic news we care about today is the Federal Reserve's report of March's industrial production and how much of the nation's manufacturing capacity we're using. Productivity grew 0.4% last month, and we're now using 78.5% of our capacity, up from February's reading of 78.4%.
If you're thinking those are very modest improvement, you're right. By economic standards, however, those are some significant increases.
We know most investors don't really care much about those two numbers, but they're actually a couple of best tools we've seen for making long-term buy/sell decisions. In short, they're telling us the bigger-picture bull market is still intact, and justified. Their bullishness WON'T stave off short-term corrections though. Just keep in mind that defining your timeframe (and sticking to it) is half your battle."
"Stocks Up? So What?
DeleteAs much as I'd like to dazzle you with some brilliant, pithy take on where the market's headed next, my brilliant comment is simply going to be this: Wait! The market was up firmly today, but after Monday's 2.2% pounding, a bounce today was a foregone conclusion. Stocks are still trying to find their bearings here, and I'm just not ready to say the uptrend is underway again.
The good news is, the S&P 500 closed back above that key 1570 mark on Tuesday. Johnson & Johnson (JNJ) as well as Coca-Cola (KO) also posted strong first-quarter earnings today. On the other hand, Target (TGT) told us to lower our expectations for its first quarter results, and oil prices dropped following news that demand was tapering. The volume behind today's rally was also weaker than yesterday's.
The point is, traders can see whatever they want to see in stocks right now, and the dust from yesterday's plunge hasn't even settled yet.
My game plan from here is to look for a higher close, but at the end of the week. Said another way, I don't really care what happens between here and Thursday. For me to be bullish, I want to see a close on Friday anywhere above today's close of 1574.57. That gives the dust two more days to settle, and will also show the market's true conviction at a more critical time (heading into the weekend).
If instead the S&P 500 ends the week under 1570, that'll pretty much confirm my suspicion that the summertime downtrend has already started. You guys know how this works though... in the current environment, everything is on a day-to-day basis. ""
I found this on hotel property acquisitions, I thought it sounded lie the market is slowing. Is your take different?
Delete"Lodging M&A tracker: 1Q13 update
Based on data from Real Capital Analytics, 173 hotels changed hands for about
$5.3 billion in 1Q13. The number of deals was about flat sequentially (178 deals
in 4Q12) while the dollar value of the deals increased from $4.6B last quarter. In
this report, we highlight the key full/limited service, institutional quality assets that
are typical of a public Lodging REIT portfolio. On this metric, we tracked 23 major
transactions in 1Q13 versus 19 major transactions in 4Q12.
Private equity more active than public REITs once again
For the second quarter in a row, private equity made up the vast majority of the
buying activity at 57% of deals vs. public REITs at 43% (unchanged sequentially).
Up until recently, public REITs dominated the transaction market given their cost
of capital advantage, but they have recently dialed back activity, particularly as
competition increases for top 10 market assets. Going forward, we believe private
equity will remain a key buyer given strong industry fundamentals and an
attractive financing environment.
Cap rates ticked higher sequentially, above long term avg
Average cap rates on deals ticked higher in 1Q13 to 7.4% vs. 6.7% in 4Q12 and
an average of 6.7% since the beginning of 2010. The public REITs paid a wide
range of cap rates in 1Q13 with key gateway market assets going for cap rates
sub-7% while limited service assets drew cap rates over 9%. Across the industry,
full service hotel cap rates continue to tick up from a low of 6.5% in 2Q11 to 7.5%
recently (vs. LT avg of 7.8%). Meanwhile, the trend has been different for limited
service hotels with cap rates coming down in 6 of the past 7 quarters to 8.9% vs.
an average of 9.1% since 2005.
1Q13 average price per key in line with cycle average
The average hotel traded at $350,000 per key compared to $418,000 per key in
4Q12 and $341,000 per key in 3Q12. 1Q13 per key pricing is in line with the
average seen this cycle and was driven by some high per key deals such as the
InterContinental Park Lane that sold for about $1M per key and 3 New York
assets that each sold for at least $560,000 per key.
Public REITs trading at a 15% discount to the private market
Our Lodging REIT universe currently trades at an EV per key of $300,000 vs.
current private market values of $350,000, a 15% discount. While appearing
inexpensive on a per key basis, the public REITs are more appropriately valued
on a cap rate basis with full service hotel REITs trading at a cap rate of 6.8% vs.
7% for our tracked deals this cycle. EV per key for the public REITs has been
rising with fundamentals, and we expect the gap between public and private
market pricing to narrow as the cycle continues. Our favorite hotel REIT name
remains HST, which trades at $280,000 per key, a 20% discount to recent comps
a nd a 35% discount to replacement cost."
The hotels have been doing better and revpar's increasing for a few years. Hard to see that this stops as supply still seems constrained. This should drive increased valuations. Hotels are a cyclical industry and the cycle usually stops when too much money starts chasing and too many get built driving down rates. I guess we could see the economy tank and also cause the same or if mortgage rates rise, that will hurt all real estate, but I still think they are woth holding.
DeleteI agree with BB's take. Typically the downturn is exacerbated by excessive spending/buildout. That is definitely not the case based on what I've read. A consumer slowdown could hurt things but most of the players have deleveraged and can sustain that.
DeleteTons of fun....
ReplyDeleteWhat happened to the money spent on homeland defense, at least buy some street cameras for town centers where people are likely to gather in public areas. Permit revenue should be used for this too, as well as pay for public services during gatherings, raise the permit fees to pay for it if necessary.
Delete14:00 - Beige book hinted at a stronger economy.
ReplyDeleteRobot's still short of course, from 1566
ReplyDeleteAGO - Could be a good place here, or maybe we get even luckier?
ReplyDeletehttp://www.mortgagenewsdaily.com/04162013_delinquencies_defaults.asp
ReplyDelete"Residential Loan Charge-offs Down 23 Percent from Q4, at Five Year Low
Decrease Font Size Text Increase Font Size
Apr 16 2013, 3:40PM
The Equifax March National Consumer Credit Trends Report presents more evidence that the home finance related credit picture is improving rapidly. The report shows that the level of home finance balances written off in the first quarter was down nearly 23 percent from that written off in the fourth quarter of 2012.
Lenders wrote off $43.1 billion in so called severe derogatories in the first quarter, a five year low. These include loans for which foreclosures have been completed, loans where the borrowers had entered bankruptcy, and loans that were otherwise charged off. In the previous quarter write-offs totaled $55.4 billion.
First mortgage balances were charged off in the first quarter at a rate that was down 17.6 percent from the previous quarter while outstanding severely delinquent loans had an aggregate balance that dropped 25 percent from $477 billion in the fourth quarter of 2012 to $3.55 billion. "
What's your take on BAC earnings, doesn't seem that bad to me but it is what it is, what do I know?
DeleteSo according to FED policies, not only do savers get hosed, investors get hosed as well? Is that how it's gonna be?
ReplyDeleteUmm, yeah, the euro strength doesn't seem to be creating employment opportunities. But everyone loves a strong euro, what did they expect would happen?
ReplyDelete1552 - Volume was pretty high today, buying or selling?
ReplyDeleteNOR - It's probably not too much of a stretch of the imagination to think the gap down from ~$3.75 will eventually close, a better than 13% gain from here.
ReplyDeleteIEP - Gap down is closed.
ReplyDeleteHFC - Neut -> Buy
ReplyDeletePO is $66
DeleteGold:CPI Historic ratio is ~3.2, now over 6
ReplyDeleteNo volume yet, but the ZOO had good earnings.
ReplyDeleteHolly NOKer!
ReplyDeleteCellphone glut?
DeleteGASS - WTF?
ReplyDeleteGatekeeper pattern, rolling over. I'm waiting for a bit of a retrace that respects the gatekeeper then go short.
DeleteBTU - Wow!
ReplyDeleteAUMN - Insiders loaded up?
ReplyDelete$WTIC - lower BB held, time to get long?
ReplyDeleteBTU - "Maintain Underperform, conference call at 11am
ReplyDeleteOur $20 per share price objective uses 7-7.5x 2013-15E EV/EBITDA, compared with a 10-year average of 8.6x and a more recent three-year average of 7.2x. We expect the shares to re-rate lower going forward, as BTU is no longer a steady
PRB-focused coal miner."
XLF is down, $17.95 seems to be the battle zone, so I guess we go nowhere without banks. That is, unless money is rotating somewhere else, such as energy?
ReplyDeleteRussell/SPY/QQQ/DJIA
ReplyDeletehttp://www.youtube.com/watch?v=sIXLHtg2Btk
Anhydrous Ammonia - One breath and you're incapacitated, in a place where you can't survive.
ReplyDeleteAAPL - A falling wedge is a bullish pattern with price typically breaking out to the upside with a strong spike higher.
ReplyDeleteI heard a cab driver say AAPL is done like dinner.
Sold through support at $420 (aapl's favorite time) on it's way to 350.
DeleteI don't think it's done, but technically 350 is the target. There is nothing bullish about a downward blue arrow. Nothing. Especially when the indices are at all time highs (multi year highs for the Q's) and they're rolling over.
Are you sure the cab driver wasn't a laid off Goldman trader?
DeleteLOL, $350 isn't that far away, I can wait. You wouldn't be interested around there?
DeleteNot far and just below the 200. If there are signs buyers are coming back it might be a good entry with the 200 as the buy/stop.
DeleteThere's a gap down from $500 that sucker closes eventually, is what I'm thinking.
DeleteRight on the lower BB here.
DeleteEarnings on the 23rd, I haven't noticed any rallies into earnings this Q, and all those atories of a cellphone glut, talk about working yourself out of a job.....
DeleteGold stocks having a good day - maybe the bottom is in for the next while?
ReplyDeleteCould be a bounce, has something changed?
DeleteBMY - I believe this one can make it to $62
ReplyDeleteTXT - island reversal to $29?
ReplyDeleteJO has this one bottomed?
ReplyDeleteNatty - The oil is gushing and there's no gas?
ReplyDeleteSo strange, many energy stocks having a green day as major index's rolling over.
ReplyDeleteUmm, doesn't feel like a trap for those buying energy? Or maybe index's aren't rolling over, we're witnessing rotation?
Some of the non-gold portfolio managers seem to be getting too cocky about avoiding gold now - makes me think we get a bounce to throw things off and give a bit of pain to the shorters.
ReplyDeleteNow some talk from Fed governors about needing more easing, markets rolling over some, maybe the end of the selling for PM's at least ST.
DeleteI made a decent trade with SAND today.
http://www.bloomberg.com/news/2013-04-18/three-fed-presidents-say-disinflation-may-prompt-easing.html
DeleteYeah, just short it somewhere north of $1525, I guess. Shorts are waiting to reload around there no doubt.
DeleteCaster bean extract - Oh please, can we spend just a few minutes concentrating on something productive for a change?
ReplyDelete