Risk assets enjoyed a smooth upward ride in Fourth Quarter. Investors are learning to ignore short-term political volatility and any suspense surrounding intermediate-term uncertainty involving the next chairman of the FOMC and the Republican tax plan seemed manufactured at best. There was some passing of the baton back and forth between secular growth (FANG stocks) to cyclical (airline, oil stocks, etc.) but in reality, there was just too much money chasing too few goods as amply demonstrated by the meteoric rise of crytocurrencies, breathlessly covered by CNBC reporters. Economic data released during the quarter was good. The third estimate of Third Quarter GDP growth came in at 3.2%, compared to 3.1% for Second Quarter 2017 and average GDP growth of

During their last meeting of 2017 held on December 12-13, the Federal Open Market Committee decided to raise the target range for the federal funds rate another 25 bps. There were two dissenters to the decision, Charles Evans and Neel Kashkari, both citing a rate of inflation well below the Committee’s 2% target. Governor Kashkari also cited concerns about a flattening yield curve which he speculated was “partly due to falling longer-term inflation expectations or a lower neutral real rate of interest.” Counterbalancing those concerns are thoughts and observations that financial conditions are still too accommodative, resulting in elevated asset prices with very little volatility; even the conundrum of the flattening yield curve can be explained by “large holdings of

Third Quarter 2017 is the fifth in a row that the Wilshire US REIT Index has underperformed the S&P 500 Index, an unprecedented losing streak based primarily on the assumption that deregulation and tax cuts at home and a broad based economic recovery abroad will jump start an economy (and earnings) in its eighth year of expansion, leading to outsized benefits for the tenants rather than the landlords. The sharp rally in the S&P 500 Index is somewhat surprising in the face of geopolitical turmoil and dysfunction in Washington D.C.; when interviewed on Bloomberg Television, the newly minted Nobel Laureate in Economics, Richard Thaler, stated, “We seem to be living in the riskiest moment of our lives, and yet the

Global synchronous recovery seems to be the financial community’s mantra for 2017, used to ward off evil spirits associated with tightening monetary policy, particularly in the US. Although Balkanization across the globe and climate change pose great long-term threats, their symptoms (Charlottesville, Catalonia and the severity of Hurricanes Hugo and Irma) resulted in only short-term market volatility and, thus far, prospects for tax cuts has certainly trumped (pun intended) the threat of a nuclear strike from North Korea. Economic data released during the quarter was mixed. The third estimate of Second Quarter GDP growth came in at 3.1%, compared to 1.2% for First Quarter 2017 and average GDP growth of 1.9% and 1.6% in 2015 and 2016, respectively. According to

Amazon’s (AMZN) announcement on the morning of June 16, 2017 that it had entered into an agreement to acquire Whole Foods Market (WFM) for $42 per share in an all-cash transaction valued at $13.7 billion was positively received by shareholders of both companies. WFM shares ended the day up 29.1% (above the acquisition price in anticipation of a competing/higher offer) with AMZN shares closing 2.4% higher as the market cheered the e-commerce giant’s aggressive and decisive action. Remarkably, Amazon’s market capitalization increased by over $11 billion on the announcement, nearly as much as the entire price tag for Whole Foods Market whose acquisition boosted AMZN shares in the first place! Share prices have retreated a bit since then, with WFM