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In the end, isn't everything?
Have been busy the past week setting up a revamped dashboard. It’s more of a “fill the gaps” affair where I built what I couldn’t find elsewhere. It aims to add rather than replace existing resources. If you have any suggestions, do drop it on chat or comments below.
Markets this Week
Inflation is rolling over. Yay!
Over the past five months (June to November 2022), inflation has slowed to a crawl. Whether measured by the consumer-price index, or CPI, which most people watch, or the price index for personal consumption expenditures, or PCE, which the Federal Reserve prefers, the annualized inflation rate has been around 2.5% over these five months. (WSJ)
An “inflation surprise” is the difference between the actual inflation rate and the median of forecasts collected a month before the data release. In early 2022, those inflation surprises kept getting bigger. But now the gaps seem to be getting smaller. Over that last few months, global inflation surprises have swung broadly negative, indicating price increases have cooled more than many economists expected. (@acemaxx)
“Free” trade never existed.
Aswath Damodaran doing God’s work.
You only think you know…
Level 2 thinking…
Your higher Sharpe could be just a liquidity & transparency premium.
The problem of having liquid wrappers around illiquid assets has been flagged ad nauseum. But hope prevails over experience. Exhibit A: BREIT
Investors find out that the fund is grossly mismarked and run for the exit…
Since the fund repurchases redemption requests at their most recent quarter’s net asset value, it became a rare asset investors looking to raise cash could sell at annual highs. (FT)
… the fund manager closes the gates…
Blackstone Inc limited withdrawals from its $69 billion unlisted real estate income trust (REIT) on Thursday after a surge in redemption requests. (reuters)
… waking up the SEC…
The U.S. Securities and Exchange Commission (SEC) has reached out to Blackstone Inc following an increase in investors pulling money from its real estate fund. The regulator is trying to understand the market impact and circumstances of the events. (reuters)
… and then comes the bailout…
The tl;dr is that the UC is handing BREIT $4bn of cash for six years and getting a guaranteed minimum net return of 11.25 per cent in return. The endowment will pay higher fees if BREIT hits that hurdle — in practice giving up some upside — and if it doesn’t then Blackstone will compensate it from a $1bn backstop of its own BREIT shares. (FT)
… but the fees are forever.
BREIT has two fees: an annual management fee of 1.25% of net assets and an incentive fee of 12.5% if the annual total return is 5% or higher. These fees totaled $1.4 billion so far this year. (barrons)