What a week it was. Between failed assassinations and lower-than-expected inflation reports, it appears that markets are now on a one-way road to September rate cuts.
Stocks are at new all-time highs, and the consensus on rate cuts being bullish for stocks continues to grow.
I’m pleased with the sector performance rankings that I’m seeing right now. While we’re still “risk-on,” I am noticing some “lower-rate plays” coming into the picture, which is increasing the odds that an economic slowdown is on the horizon.
Here’s what I mean…
Real Estate’s Return - Bullish or Bearish?
Check out last week’s top-performing sector: real estate. Granted, this sector consists largely of real estate investment trusts (REITs), but it still offers a decent bellwether in terms of sentiment in the space.
If you go online, there’s no shortage of bearish data on real estate. Between banks holding bad loans, to increasing supply in “boom” states like Texas or Florida, the picture can undoubtedly be construed as gloomy.
But what if this is the ultimate contrarian indicator right now? Admittedly, I don’t trade that many REITs, but they are useful for income generation, and they can even offer a nice bit of capital appreciation if you buy them at the right time.
If the economy does slow down, and rates drop, don’t be surprised to see the real estate space rebound. People are eager for lower rates to start moving again, but it may turn into a case of, “Be careful what you wish for, you might just get it.”
Keep you posted,