Image used with permission of Philadelphia Inquirer Copyright© 2018. All rights reserved. Amazon, Inc. sent hundreds of municipalities into frenzy in September 2017 when the e-commerce juggernaut announced plans to establish a second corporate headquarters in North America, uninspiringly dubbed HQ2. Nearly 250 cities responded to Amazon’s Request for Proposal (RFP), with hopes of adding 50,000 full-time, highly-paid Amazons (Amazonians?) to its tax coffers within 15 years, in addition to $5 billion of promised capital expenditures over a similar time period. HQ2 is also expected to have a halo effect, with the “winner” validated by one of the largest, most successful and fastest growing companies on earth – other employers and employees will desire a nearby presence, boosting economic growth

Make no mistake; the US economy is doing well. The third estimate of Second Quarter GDP growth came in at 4.2% compared to 3.0% for Second Quarter 2017 and the latest estimate for Third Quarter GDP growth from the Federal Reserve Bank of Atlanta is 4.2%. According to the Bureau of Labor Statistics, changes in total nonfarm payroll in the past three months were 134,000, 270,000 and 165,000, respectively, an average of 189,667 in-line with the average of 199,417 for the 12 months prior. With the Index of Small Business Optimism from the National Federation of Independent Business hitting an all-time high of 108.8 in August, is it any wonder that risk assets, at least in the US, are setting

In an era of rising rates, proponents of sectors like Utilities and REITs which are perceived to be interest rate sensitive can only offer two arguments in their defense: (i) interest rates (on the long end) aren’t going to go up much further or (ii) the afore-mentioned sectors aren’t really negatively impacted by rising rates. On September 25 last year, the Federal Reserve Bank of San Francisco published a paper titled Demographic Transition and Low US Interest Rates by Carlos Carvalho, Andrea Ferrero and Fernanda Nechio which proposes that a change in life expectancy higher is leading to a greater propensity to save rather than spend, putting a downward pressure on the natural rate of interest. Of course, there is

To a certain extent, all of the headwinds confronting the asset class are still gusting against the bow of USS REITs but perhaps the 13% decline to start the new year was overdone. Retail REITs still comprise 18% of the Index but sentiment has certainly shifted in favor of the tenants and, by extension, the landlords. The message coming out of RECon, ICSC’s (International Council of Shopping Centers) annual convention, was one of optimism – attendance was lower but mood and deal making was better than in 2017. On June 3, Evercore ISI, a prominent sell-side firm, came out with a research piece titled The “Retailpocalypse” is Over suggesting that retailers are learning to adapt in the digital era, something

US equity investors spent most of Second Quarter wondering if the various indices would revisit the lows made in February. From a top down perspective, they had every reason to worry: (i) an activist FOMC, (ii) trade wars all around and (iii) mega-cap tech companies under regulatory threat; however, the balance or risk did seem more favorable within the US rather than without (political risk in Italy/EU, FX problems/bear markets for a number high profile emerging markets, etc.) and, buoyed by a strong earnings season (and subsequent share buy backs), risk assets saw a rebound in the US with domestically focused stocks (Russell 2000) outperforming companies which derive their revenues from overseas (S&P 500). The third estimate of First Quarter