Economic and Financial News, June 14, 2023

 

Landlords Face A $1.5 Trillion Dollar Bill For Interest Only Commercial Mortgages

 

Wednesday June 07, 2023 Interest-only loans as a share of new commercial mortgage-backed securities issuance increased to 88% in 2021, up from 51% in 2013, according to Trepp... Share of Interest Only Commercial Mortgage Backed Securities  Commercial Real Estate Bust A trend to walking away from commercial mortgages is just beginning. The Wall Street Journal reports Interest-Only Loans Helped Commercial Property Boom. Now They’re Coming Due. Interest-only loans as a share of new commercial mortgage-backed securities issuance increased to 88% in 2021, up from 51% in 2013, according to Trepp. Nearly $1.5 trillion in commercial mortgages are coming due over the next three years. Fitch Ratings recently estimated that 35% of pooled securitized commercial mortgages coming due between April and December 2023 won’t be able to refinance based on current interest rates and the properties’ incomes and values. While many malls and hotels face high default risks, the situation is particularly dire for office owners.  Mark Edelstein, chair of law firm Morrison Foerster’s global real-estate group, said he is seeing more lenders take over office buildings than at any point since the early 1990s.  Oblivious to Risks Lenders and borrowers had widespread belief in two things, both now proven false. Interest rates would stay low forever Property values, already clearly in a bubble, would keep rising forever Now a $1.5 trillion bill is coming due, with property values, especially office space and some big city hotels, plunging like a rock. * Information contained within this press release should not be construed as Legal, Accounting, Tax or Investment advice. Patriot Gold Group is Gold & Silver Dealer, representatives are NOT Licensed Financial Planners and do NOT give investing or tax advice.

 

BARRON’S: Market Declines Last Year Wiped Out $3 Trillion Of Rich Investors Wealth

 

June 1, 2023 The ranks of the world’s rich investors shrank last year, as did their combined wealth, a new report finds. Market declines last year were largely to blame, while rising interest rates prompted the world’s wealthy to significantly boost portfolio allocations to cash and cash equivalents, according to the report, from consulting company Capgemini (ticker: CAPMF). North America suffered the steepest wealth decline with a 7.4% drop. Europe and the Asia-Pacific regions suffered smaller declines of 3.2% and 2.7%, respectively.  The declines represent a setback for rich investors, two-thirds of whom say preserving wealth is a critical goal.  High-net-worth investors reported significant changes in their portfolios in 2022. The average share of equities in portfolios declined year over year by nearly six percentage points to 23%, Capgemini said. Average allocations to cash and cash equivalents jumped almost ten percentage points to 34% as of January. * Information contained within this press release should not be construed as Legal, Accounting, Tax or Investment advice. Patriot Gold Group is Gold & Silver Dealer, representatives are NOT Licensed Financial Planners and do NOT give investing or tax advice.

 

Plenty Of Value In Gold As WisdomTree Forecasts $2,285 By Q1 2024

 

Tuesday June 06, 2023 Shifting interest rate expectations is creating renewed volatility in the gold market as prices struggle to push back to $2,000 an ounce; however, according to one market strategist, this volatility is creating a buying opportunity for investors looking for value in the precious metals market. In a recent interview, Nitesh Shah, head of commodity research at WisdomTree, reiterated his stance that any price below $2,000 remains an attractive entry point for investors as he expects gold prices to be much higher a year from now. He added that he expects gold prices to push to $2,285 an ounce by the first quarter of 2024, representing a new all-time high for the precious metal. WisdomTree's outlook comes as gold prices last traded around $1,975 an ounce, roughly unchanged on the day. "Gold prices are elevated compared to last year, but it still looks cheap compared to where we see it going," he said. "There is still plenty of value at current prices." Shah said that central banks have never successfully engineered a "soft landing" for the economy and are unlikely to do so in this tightening cycle. "I'd love to be able to believe in a soft-landing scenario, but there's something inside me that makes me doubt that that's achievable. They're just too focused on the inflation part of the equation." As to what will get investors back into the gold market, Shah said it will probably take a full-blown recession to drive investment demand in earnest as equity markets fall. He added that because a recession has been telegraphed for so long, investors won't be convinced it is happening until they are in the midst of it. However, Shah said that investors shouldn't wait for the recession. "Now is the time to prepare your portfolio. The time to move in is not at the time of the risk event but is before the risk is realized," he said.