A Cosmic Monster.
A huge hurdle.
News Items will be off the grid for the next three days. It will return on Monday, 10 April.
1. Investors and economists are sounding the alarm about the commercial real estate market, seeing trouble ahead with refinancing. This sector has been hit hard for years now with the shift to remote work bringing about rising vacancy rates and falling property values. For her part, Lisa Shalett, the chief investment officer for Morgan Stanley Wealth Management, sees a “huge hurdle” ahead. “We fear stresses in other asset classes will become another headwind for mega-cap tech stocks alongside those posed by a profits recession and/or economic recession,” Shalett wrote in the weekly Global Investment Committee note. And she had some frightening figures. “More than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points,” Shalett writes. Alarmingly, Shalett notes that regional banks accounted for 70% to 80% of all new loan originations in the past cycle, with all eyes on the sector after the historic implosions of Silicon Valley Bank and Signature Bank last month. She said office properties were already facing “secular headwinds” from remote work, and she now sees a wipeout with vacancy rates close to a 20-year high: “MS & Co. analysts forecast a peak-to-trough CRE price decline of as much as 40%, worse than in the Great Financial Crisis.” (Source: fortune.com, finance.yahoo.news, morganstanley.com)