-FED has been started to reduce its balance sheet since June 10th
This translates to less mortgage-backed securities owned by FED => lower stock price on certain commercial/reit companies.
-To understand further about FED's QE, here is the...
FED actions in late May has disrupted the entire commercial rental and REIT market by overly purchasing mortgage-backed securities.
With this action, more and more people rushed into investing in real estate and FOMO-ly bought commercial real estate stocks and pushed them to All-time-high.
At that point, commercial renting was a zero-risk investment as FED was...
DRV tracks the inverse of commercial REITs. Ever since the pandemic began several companies have instituted work from home policies.
A large majority of companies will either default or give up on their leases. On the other side hotels & malls are not seeing much traffic either.
All this points to a drastic drop in returns for REITs.
Daily RSI has...
Please check my other DRV posts for basic analysis.
FED keeps rates at 0%. Which means no further interest expense can be reduced for rental businesses.
-DRV is having a bullish trend, trading above moving averages. However, less than EMA 200.
-DRV broke-out $26 trend resistance which means DRV can be trading higher.
-Squeeze + RSI are signaling...
-Retails are suffering financially (as expected), some will file for bankruptcy: JC Penny.
-FED is buying corporate ETFs (mostly debt). So REIT or Retails debt are some of the options. This will reduce the rate of filing for bankruptcy and help businesses to deal with debts.
-States are opening, however, worries about 2nd wave of Covid-19 will discourage...
Last week's drop was due to FED bail-out, investor's speculations on economy reopening, and the small business loans was distributed.
3 key factors that will lead to this week rally:
-The economy is open, however, only 25-50% capacity, which means, businesses will consider their profit by shopping for cheap rental.
-Malls are not coming back soon. Rental spaces...
Commercial rental are still taking the hit domestically as businesses are deferring or missing payments.
Rental houses also have same issue.
Some investment with high mortgage debt will also miss mortgage payment.
If this lasts more than a month it will create a 2008-like crash.
Unemployment = less income = less payment = less profit