4 ms·

They will do the same thing homeowners will do; not pay. I hope nobody on here owns munis or bank stocks. Or REITs.

adventured 6y ago
The munis and banks all have a direct IV funding line from the Federal Reserve, they mostly have absolutely nothing to worry about. The gloves are entirely off for this one, the Fed can snap up trillions of dollars in toxic mortgages if needed, they've got the greenlight across the board for any and all actions. The Fed keeps lowering the thresholds (and they'll end up doing a lot more than that in the coming months; most of this won't be short-term credit, they'll switch it to long-term out of necessity): "Fed expands muni-debt program to cover smaller cities, counties" "The Federal Reserve expanded the scope and duration of the Municipal Liquidity Facility, a $500 billion emergency lending program aimed at providing short-term credit to state and local governments as they endure the economic fallout from the coronavirus pandemic. The U.S. central bank lowered the population thresholds under which counties and cities would be eligible to sell short-term debt to the facility. The new levels are at least 500,000 for counties and 250,000 for cities, down from 2 million and 1 million." https://www.bondbuyer.com/articles/fed-expands-muni-debt-program-to-cover-smaller-cities-counties https://www.bondbuyer.com/articles/fed-expands-muni-debt-pro...
- Consultant32452 6y ago
  I work for a fortune 500 financial institution. After what happened during the last crash we had a policy of 365 days of liquidity. So far this time we haven't used the Fed firehose of $, but according to our CEO the Fed has asked us to start using it. I don't understand why the Fed would ask us to use something we don't need.
  - DrAwdeOccarim 6y ago
    So that companies that need to use it don't feel stigmatized, and subsequently punished by the market.
dillondoyle 6y ago
I'm pretty worried about my family. My dad barely survived 2008. My extended family is heavily dependent on commercial real estate. My dad is the least (relatively) successful/smallest of the family. He's an agent (and small owner). At the end of 2019 helped facilitate a HUGE __ insert a top firm __ reit deal; $10 digits in a small ish state. Literally the top of the market. There's a reason his friend who sold that insane Sq Ft was already super wealthy. The small buildings my dad owns sounds like many can't pay rent. I personally hedged a bit and including put REIT exposure. But despite having a super pessimistic view on the economy, seeing losses now is scary and I'm thinking about closing (i did move my main savings into much safer territory before the biggest drop and govt said they will buy unlimited bonds/debt..). That idiom the market can remain irrational longer comes to mind
- 0x8BADF00D 6y ago
  It depends on your risk tolerance. If you're hedged with a long put on a decent time horizon, I don't think you have much to worry about, as you're locking in a price in case the REIT falls significantly. Your max loss is capped at the premium+commission you paid for the long put. It helps to have some physical precious metals, as paper precious metals are risky and I don't think COMEX can enforce their futures contracts effectively. This is to hedge against currency risk.
dehrmann 6y ago
Depends on the REIT. Some do malls, some do apartments, some do hospitals. I'd expect a residential REIT to see a one to two quarter drop in dividends by maybe 25%. I'm having a hard time justifying a longer term dividend drop or valuation drop because there's still a housing shortage in the US. Unless more people move in with their parents, or something...
- user5994461 6y ago
  >> I'm having a hard time justifying a longer term dividend drop or valuation drop because there's still a housing shortage in the US Real estate is all about location. Major cities have a housing shortage and will continue to be able to find some tenants. Rent is likely to go down or stabilize for some time. Small town will be decimated. All the jobs that are disappearing are not coming back, people will have no money for rent and there are no other tenants immigrating in.
deleted 6y ago
[deleted]

The munis and banks all have a direct IV funding line from the Federal Reserve, they mostly have absolutely nothing to worry about. The gloves are entirely off for this one, the Fed can snap up trillions of dollars in toxic mortgages if needed, they've got the greenlight across the board for any and all actions. The Fed keeps lowering the thresholds (and they'll end up doing a lot more than that in the coming months; most of this won't be short-term credit, they'll switch it to long-term out of necessity): "Fed expands muni-debt program to cover smaller cities, counties" "The Federal Reserve expanded the scope and duration of the Municipal Liquidity Facility, a $500 billion emergency lending program aimed at providing short-term credit to state and local governments as they endure the economic fallout from the coronavirus pandemic. The U.S. central bank lowered the population thresholds under which counties and cities would be eligible to sell short-term debt to the facility. The new levels are at least 500,000 for counties and 250,000 for cities, down from 2 million and 1 million." https://www.bondbuyer.com/articles/fed-expands-muni-debt-program-to-cover-smaller-cities-counties https://www.bondbuyer.com/articles/fed-expands-muni-debt-pro...

Consultant32452 6y ago
I work for a fortune 500 financial institution. After what happened during the last crash we had a policy of 365 days of liquidity. So far this time we haven't used the Fed firehose of $, but according to our CEO the Fed has asked us to start using it. I don't understand why the Fed would ask us to use something we don't need.
- DrAwdeOccarim 6y ago
  So that companies that need to use it don't feel stigmatized, and subsequently punished by the market.

dillondoyle 6y ago

I'm pretty worried about my family. My dad barely survived 2008. My extended family is heavily dependent on commercial real estate. My dad is the least (relatively) successful/smallest of the family. He's an agent (and small owner). At the end of 2019 helped facilitate a HUGE __ insert a top firm __ reit deal; $10 digits in a small ish state. Literally the top of the market. There's a reason his friend who sold that insane Sq Ft was already super wealthy. The small buildings my dad owns sounds like many can't pay rent. I personally hedged a bit and including put REIT exposure. But despite having a super pessimistic view on the economy, seeing losses now is scary and I'm thinking about closing (i did move my main savings into much safer territory before the biggest drop and govt said they will buy unlimited bonds/debt..). That idiom the market can remain irrational longer comes to mind

0x8BADF00D 6y ago
It depends on your risk tolerance. If you're hedged with a long put on a decent time horizon, I don't think you have much to worry about, as you're locking in a price in case the REIT falls significantly. Your max loss is capped at the premium+commission you paid for the long put. It helps to have some physical precious metals, as paper precious metals are risky and I don't think COMEX can enforce their futures contracts effectively. This is to hedge against currency risk.

dehrmann 6y ago

Depends on the REIT. Some do malls, some do apartments, some do hospitals. I'd expect a residential REIT to see a one to two quarter drop in dividends by maybe 25%. I'm having a hard time justifying a longer term dividend drop or valuation drop because there's still a housing shortage in the US. Unless more people move in with their parents, or something...

user5994461 6y ago
>> I'm having a hard time justifying a longer term dividend drop or valuation drop because there's still a housing shortage in the US Real estate is all about location. Major cities have a housing shortage and will continue to be able to find some tenants. Rent is likely to go down or stabilize for some time. Small town will be decimated. All the jobs that are disappearing are not coming back, people will have no money for rent and there are no other tenants immigrating in.

deleted 6y ago

[deleted]