The Fed's biggest challenge has become the 'Sasquatch of the financial world'
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Stocks have surged since the election, while bonds are caught in a tug-of-war between bulls and bears, with participants in both markets attempting to divine the path of the US economy under the incoming Trump administration.
At the heart of the matter lies a hotly debated topic that grips Fed economists and Wall Street alike. Something that, like the mythical yeti, no one has ever seen but everyone agrees exists: the neutral rate.
Kathy Jones, chief fixed income strategist at Schwab, recently joined Yahoo Finance’s Stocks in Translation podcast and described the neutral rate as “the Sasquatch of the financial world.”
The neutral rate is simple enough to define. It’s the interest rate that neither stimulates nor slows the economy. It’s the sweet spot where growth and inflation sit in balance. Too low, and the economy might overheat; too high, and growth stalls.
The problem is no one really knows precisely what level of interest rates meets this high standard.
“You model its inputs by looking at the past,” said Jones. “Things like productivity might go into it.” She noted that if workers can boost their productivity and increase their output, the economy can grow — critically, without inflation.
Minneapolis Fed president Neel Kashkari echoed this recently at the Yahoo Finance Invest 2024 event, explaining, “In a higher productivity environment, the neutral rate ought to be higher.” He said that if productivity is structurally higher, the Fed has less room to cut until the economy gets back to neutral.
Nevertheless, this nebulous rate is critical in shaping Federal Reserve policy.
At Invest, Kashkari echoed Fed Chair Jerome Powell’s words at the September FOMC presser, saying, “The neutral rate is not directly observable. We know it by its effect on the economy.”
With the Fed currently in the process of lowering rates, a higher neutral rate implies the Fed doesn’t need to cut rates as much to support the economy. Alternatively, a lower neutral rate would argue for more aggressive cuts.
Lately, investors have been coming around to the idea of a higher neutral rate.
When the Fed began its rate-cutting cycle in September, investors expected the Fed to cut short-term rates to 2.8% — or a range of 2.75% to 3% — by the end of 2025. Six weeks later, the bond market is now pricing in four fewer rate cuts — bringing the projected rate next year to a range of 3.75%-4%.
Minto Apartment REIT Announces the Sale of Non-Core Asset in Ottawa for $69 million
— Sale price is at a premium to IFRS fair value, highlighting the significant net asset value discount implied by the unit price —
OTTAWA, ON, Nov. 15, 2024 /CNW/ – Minto Apartment Real Estate Investment Trust (the “REIT”) MI announced today that it has entered into an agreement to sell its Castleview property located in Ottawa, Ontario to a private real estate investor (the “Transaction”). The sale price of $69 million is at a premium to the REIT’s IFRS value for the asset. Upon closing, the proceeds of approximately $33.8 million, net of mortgages and commissions, will be used to repay a portion of the REIT’s variable-rate revolving credit facility. Castleview was built in 1973 and comprises 241 suites. The Transaction is anticipated to close in late January 2025.
“In total, upon closing of the transaction, we will have completed approximately $200 million of older non-core asset sales located in the Edmonton and Ottawa markets. These sales have increased the overall quality of our portfolio, reduced our future major capital expenditure requirements, strengthened our balance sheet and increased our financial flexibility.” said Jonathan Li, President and Chief Executive Officer of Minto Apartment REIT.
About Minto Apartment Real Estate Investment Trust
Minto Apartment Real Estate Investment Trust is an unincorporated, open-ended real estate investment trust established pursuant to a declaration of trust under the laws of the Province of Ontario to own income-producing multi-residential properties located in Canada. The REIT owns a portfolio of high-quality multi-residential rental properties located primarily in urban centers in Canada’s major markets of Toronto, Montreal, Ottawa and Calgary. For more information on Minto Apartment REIT, please visit the REIT’s website at www.mintoapartmentreit.com.
Forward-Looking Information
This news release may contain forward-looking information within the meaning of applicable securities legislation, which reflects the REIT’s current expectations regarding future events and in some cases can be identified by such terms as “will” and “anticipated”. In particular, this news release contains forward-looking information in relation to: the Transaction; timing for completion of the Transaction; and the use of the proceeds from the Transaction. Forward-looking information reflects management’s current beliefs and is based on a number of assumptions that the REIT believes are reasonable and is subject to a number of risks and uncertainties, many of which are beyond the REIT’s control that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such risks and uncertainties include, but are not limited to, the factors discussed under “Risks and Uncertainties” in the REIT’s Management Discussion & Analysis dated November 12, 2024 which is available on SEDAR+ (www.sedarplus.ca), as well as the ability of the REIT to complete the Transaction. Certain information in this press release may be considered as “financial outlook” within the meaning of applicable securities legislation. The purpose of this financial outlook is to provide readers with disclosure regarding the REIT’s reasonable expectations with respect to the Transaction. Readers are cautioned that the financial outlook may not be appropriate for other purposes. The REIT does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law. This forward-looking information speaks only as of the date of this news release.
SOURCE Minto Apartment Real Estate Investment Trust
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1 Magnificent Growth ETF That Could Turn $400 Per Month Into $1.4 Million While Barely Lifting a Finger
As the stock market continues to surge, right now can be a fantastic time to invest. The current bull market is still going strong, and the S&P 500 (SNPINDEX: ^GSPC) has soared by nearly 26% so far this year.
If you’re looking for a simpler way to supercharge your savings, investing in an exchange-traded fund (ETF) can be a smart choice. An ETF is a collection of stocks bundled into a single investment, providing exposure to hundreds of companies with very little effort.
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The right ETF for you will depend on a variety of factors, like your risk tolerance and overall investing goals. For those looking for a powerhouse growth ETF to potentially turn a few hundred dollars per month into $1 million or more, this investment could get you there while barely lifting a finger.
A growth ETF is a fund that only includes stocks with the potential for faster-than-average growth over time. Some are more niche, such as industry-specific ETFs or funds that only include large-cap stocks, while others offer more variety and diversification.
If you’re looking for a somewhat safer option, the Vanguard Growth ETF (NYSEMKT: VUG) could be a good fit for your portfolio. This ETF contains 183 stocks from 12 industries, though it’s heavily weighted toward the tech sector — with tech stocks making up nearly 58% of the fund.
One advantage of this particular ETF is that it aims to balance risk and reward. All the stocks within the fund are large-cap stocks, and the median market cap is a staggering $1.4 trillion. The top 10 holdings in this ETF make up over 57% of the entire ETF, and this list includes industry titans like Apple, Microsoft, and Nvidia.
The rest of the fund comprises the other 173 stocks. Not only can investing in more stocks help diversify your portfolio, but it can also increase your chances of buying a winner. If any one of these smaller stocks becomes a powerhouse, it can more than make up for any underperforming stocks in the fund.
This balance of risk and reward can help maximize your earnings while better protecting your savings. Behemoth companies like Apple and Microsoft will likely survive market turbulence, while the smaller stocks have potential for explosive growth.
First, it’s important to preface that growth ETFs, in general, are higher risk than many other types of funds. While this particular ETF does limit some of that risk, it’s still going to be more volatile than, say, an S&P 500 ETF or total stock market ETF.
Goldman Sachs: US To Dominate 2025 Growth With 2.5% GDP Boost, Euro Area Will Struggle
Goldman Sachs Research predicts a strong year for global economic growth in 2025, forecasting a 2.7% increase in global GDP on an annual average basis, just above the consensus.
The US is expected to lead the way, with GDP growth of 2.5%, significantly surpassing the consensus of 1.9%, Goldman Sachs Research said in a report. The consensus forecast is done by economists surveyed by Bloomberg.
However, the euro area is projected to lag behind, with growth forecasted at just 0.8%, below the consensus of 1.2%. A key factor driving these disparities is the potential for new trade policies under President-elect Donald Trump, who is predicted to impose fresh tariffs, particularly on China and imported cars.
Also Read: US GDP Rises 2.8% In Q3, But Can The Momentum Last? What 6 Top Economists Are Saying
Goldman Sachs Chief Economist Jan Hatzius highlights that global inflation has significantly declined over the past two years, which supports real income growth and allows central banks to normalize monetary policy.
The US Federal Reserve is expected to cut its policy rate to 3.25-3.5%, while the European Central Bank is anticipated to lower its rate to 1.75%. Despite these adjustments, inflation in the US is expected to slow to 2.4% by late 2025, although an across-the-board 10% tariff could push it higher.
The forecast for the US economy reflects continued strong productivity growth, which has outpaced other developed markets. Since 2019, US labor productivity has grown at an annualized rate of 1.7%, compared to just 0.2% in the euro area.
However, potential US trade policies could create headwinds. Tariffs are expected to subtract 0.4% from global GDP, with larger tariffs possibly having a more severe impact.
For the euro area and China, trade uncertainty could reduce GDP growth by up to 0.9% and 0.7%, respectively. Despite this, Goldman Sachs remains optimistic about global economic growth, assuming that trade tensions do not escalate further.
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Prediction: These 2 Stocks Will Be Worth More Than Tesla in the Next 5 Years
Tesla (NASDAQ: TSLA) is currently the eighth-largest company in the world with a market cap of just over $1.05 trillion as of this writing.
The stock underperformed the S&P 500 for the majority of 2024, but it has jumped nearly 50% in the past month. The results of the U.S. elections have helped drive Tesla’s share price higher, thanks to the belief that CEO Elon Musk’s close relationship with President-Elect Donald Trump could benefit the electric vehicle (EV) manufacturer during the new administration.
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However, Tesla’s recent financial performance has been less than impressive as you can see below.
Tesla stock’s underperformance through most of 2024 can be attributed to growing competition that’s bringing down its delivery numbers, as well as the company’s failure to impress investors with the recent unveiling of the Cybercab. Moreover, Tesla’s earnings are expected to increase at just over 4% annually in the next five years, according to the analyst consensus, suggesting the company’s growth may remain bumpy going forward.
With this challenging outlook, it won’t be surprising to see Tesla overtaken in the list of world’s largest companies. Specifically, Taiwan Semiconductor Manufacturing (NYSE: TSM), popularly known as TSMC, and Broadcom (NASDAQ: AVGO) are fast on Tesla’s heels. Both companies are expected to enjoy strong growth due to unprecedented demand for their chips too.
Here’s a closer look at the reasons why these two semiconductor stocks may be able to surpass Tesla by market cap over the next five years.
TSMC is the world’s 10th largest company with a market cap of around $995 billion as of this writing. It isn’t far behind Tesla thanks to its position as the leading player in the semiconductor foundry industry with a market share of 62%, according to Counterpoint Research. It enjoys a massive lead over second-place Samsung, which has a foundry market share of 13%.
This allows TSMC to make the most of the secular growth of the semiconductor market, which is being driven by the growing demand for artificial intelligence (AI) applications. From smartphones to personal computers (PCs) to data centers, AI is positively impacting multiple verticals, which bodes well for TSMC as it manufactures chips for all the leading players serving these sectors.
From Nvidia to Apple to AMD to Qualcomm, all the major fabless chipmakers use TSMC’s fabrication plants for their chip manufacturing. Not surprisingly, TSMC’s growth has shot up remarkably in 2024. The Taiwan-based company’s revenue in the first 10 months of 2024 increased 31% year over year.
MicroStrategy’s $26 Billion Bitcoin Cache Is Larger Than IBM, Nike Cash Holdings
(Bloomberg) — Michael Saylor’s unorthodox decision to hold Bitcoin instead of cash on MicroStrategy Inc.’s books has vaulted the once obscure software maker into the upper echelon of the wealthiest corporations when it comes to financial assets.
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The Tysons Corner, Virginia-based firm’s approximately $26 billion Bitcoin cache is larger than the cash and marketable securities of global market leaders such as International Business Machines Corp., Nike Inc. and Johnson & Johnson, according to data compiled by Bloomberg. Only about a dozen companies, led by Apple Inc. and Alphabet Inc., hold more assets in their corporate treasuries.
Saylor, a co-founder and chairman, decided to invest in Bitcoin in 2020 as a hedge against inflation while MicroStrategy’s revenue growth stagnated. The firm initially used cash from operations to make the purchases, and has shifted to using the proceeds from the issuance and sale of stock, as well as convertible debt sales to leverage its buying power. It has become the largest publicly traded corporate holder of the digital currency.
While the strategy has drawn skepticism from traditional corporate governance observers, it has been embraced by investors as a leveraged way to participate in the Bitcoin rally without having to deal with digital wallets or crypto exchanges. The company’s shares have surged by over 2,500% as the value of Bitcoin has soared around 700% since the middle of 2020, making it the best-performing US major stock during the period. Bitcoin reached a record of almost $93,500 on Wednesday.
“Their balance sheet is primarily a function of the price of Bitcoin,” said Dave Zion, founder of Zion Research Group, a Chadds Ford, Pennsylvania-based firm that focuses on accounting and tax issues. “They’re not in control of the price of Bitcoin, so they’re just going to ride that wave, and it’s a wave that could go up or down.”
Most corporate treasurers use a company’s financial assets to support the business or generate returns, including to pay dividends or to fund share buybacks. Saylor has argued that shareholders benefit from the buy and hold strategy even though the company doesn’t pay a dividend.
Billionaire Bill Gates Has 80% of His $45 Billion Portfolio in Just 4 Stocks
Bill Gates is among the most recognizable names in technology. The billionaire turned philanthropist is best known as the co-founder and longtime CEO of Microsoft (NASDAQ: MSFT), the company he helmed for more than 25 years, though he now spends much of his time focusing on charitable work.
Gates is currently worth $104.8 billion (as of this writing), according to Forbes, making him the world’s 13th richest person. It’s important to note that Gates has pledged that “the vast majority of my wealth would go toward helping as many people as possible.”
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To that end, he set up the Bill & Melinda Gates Foundation Trust. “Our mission is to create a world where every person has the opportunity to live a healthy, productive life,” the Gates Foundation website says. By the end of 2023, the foundation had dispersed $77.6 billion since its inception, with a focus on “taking on the toughest, most important problems.”
While the Trust continues to own stakes in 24 stocks in all, at the end of the third quarter, 80% of its holdings were represented by just four stocks.
Given his deep ties to the company, it shouldn’t be any surprise that Microsoft is Gates’ largest holding by far. The Trust owns roughly 39 million shares of Microsoft stock worth about $12.4 billion (as of this writing).
There are a number of reasons Microsoft holds such a prominent place in the portfolio. In addition to the company’s lucrative browser, software, and operating systems, Microsoft is the world’s second-largest cloud infrastructure provider, with 20% of the market. It’s also a key player in the field of artificial intelligence (AI). The two are inexorably linked, giving Microsoft a pole position in these important growth industries.
Management revealed that its Azure Cloud growth included “12 points from AI services,” which is now a strong contributor to its growth. In fact, according to analysts at Evercore ISI, Microsoft’s AI offerings could generate incremental revenue of $143 billion by 2027.
Microsoft has also been paying a dividend since 2004, which has increased every year since 2011. While the yield of 0.8% might seem paltry, it’s supplemented a stock price that has soared 190% over the past five years (as of this writing). Given its payout ratio of just 25%, there are likely plenty more dividend increases to come.
With all that working in its favor, it isn’t surprising that Microsoft represents such a large part of the Trust’s holdings.
2 High-Yield REIT Stocks to Buy Hand Over Fist and 1 to Avoid
The average real estate investment trust (REIT) has a yield of around 3.9%, which is already pretty compelling, given the tiny 1.2% yield on offer from the S&P 500 index. But there are some REITs with even higher yields, with AGNC Investment‘s (NASDAQ: AGNC) yield at a massive 14.9% today! But don’t jump at that outsized yield; you’ll probably be better off with the 7% yield from Innovative Industrial Properties (NYSE: IIPR) or the 5.5% on offer from VICI Properties (NYSE: VICI). Here’s what you need to know.
AGNC Investment’s yield is a huge 14.9%, which should probably scare you more than excite you. The glaring question is, why is the dividend yield so shockingly high? The quick answer is that this mortgage REIT is a total return investment, not an income investment. A single graph is all you need to understand what really matters here.
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The orange line in the graph above is the dividend, which rose quickly out of the gate but has been heading steadily lower for years. The purple line is the stock price, which basically tracked along with the dividend — higher and then steadily lower. If you used the dividend to pay for living expenses, you would have ended up with less income and less capital — a terrible outcome. However, look at the blue line, which is the total return. If you reinvested the outsized dividend, you would have ended up doing much better, as reinvesting the dividend more than offset the impact of the declining stock price. This is not your typical dividend stock.
Most dividend investors are looking to someday live off of the dividends they collect, so AGNC Investment just isn’t going to be a great fit for such investors. The lofty yield simply won’t do you much good if you don’t plow it all back into the stock.
If you are willing to take on a bit more risk to get a higher yield, which is a reasonable thing to assume if you have been considering AGNC, you might want to look at Innovative Industrial Properties. Although the name is pretty innocuous, this REIT is focused on owning marijuana-related assets. That’s not low-risk, though you can argue that it might be innovative. The REIT owns 108 properties across 19 states, with a heavy leaning toward marijuana growing facilities.
The legal status of marijuana is a bit up in the air, which is the risky aspect here. But the legal marijuana market has been growing and is actually projected to overtake the beer and spirits sectors, size-wise, by 2028. So, there’s a solid business foundation here. Innovative Industrial Properties’ adjusted funds from operations (FFO) payout ratio was a reasonable 85% or so in the third quarter of 2024. That’s not low, but there’s still ample room for adversity there before a dividend cut would be in order. Notably, the dividend has been increased each year since 2017 (the REIT was only founded in 2016). This appears to be a good risk/reward balance for those who can handle a little regulatory uncertainty.
ROSEN, TOP RANKED GLOBAL COUNSEL, Encourages WM Technology, Inc. Investors to Secure Counsel Before Important Deadline in Securities Class Action First Filed by the Firm – MAPS
NEW YORK, Nov. 16, 2024 (GLOBE NEWSWIRE) —
WHY: Rosen Law Firm, a global investor rights law firm, reminds purchasers of the securities of WM Technology, Inc. MAPS between May 25, 2021, and September 24, 2024, both dates inclusive (the “Class Period”), of the important December 16, 2024 lead plaintiff deadline in the securities class action first filed by the Firm.
SO WHAT: If you purchased WM Technology securities during the Class Period you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement.
WHAT TO DO NEXT: To join the WM Technology class action, go to https://rosenlegal.com/submit-form/?case_id=29177 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on the class action. A class action lawsuit has already been filed. If you wish to serve as lead plaintiff, you must move the Court no later than December 16, 2024. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.
WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually litigate securities class actions, but are merely middlemen that refer clients or partner with law firms that actually litigate the cases. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm achieved the largest ever securities class action settlement against a Chinese Company at the time. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs’ Bar. Many of the firm’s attorneys have been recognized by Lawdragon and Super Lawyers.
DETAILS OF THE CASE: According to the lawsuit, defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose, among other things, that: (1) WM Technology’s monthly average user metrics (“MAUs”) were severely inflated for years; and (2) as a result, defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
To join the WM Technology class action, go https://rosenlegal.com/submit-form/?case_id=29177 or call Phillip Kim, Esq. toll-free at 866-767-3653 or email case@rosenlegal.com for information on the class action.
No Class Has Been Certified. Until a class is certified, you are not represented by counsel unless you retain one. You may select counsel of your choice. You may also remain an absent class member and do nothing at this point. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff.
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Contact Information:
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Cannabis Could Save $29 Billion Per Year In U.S. Healthcare Costs, Says CEO
Emily Fisher, founder and CEO of Leafwell, took the stage at the recent Benzinga Cannabis Capital Conference to share groundbreaking insights from her company’s latest research. She emphasized the importance of following the science in shaping the future of cannabis policy and healthcare, pointing to significant financial and societal impacts.
“We published a study a couple of weeks ago that looked at the impact of medical cannabis on U.S. healthcare and found that it could save U.S. healthcare $29 billion annually,” Fisher said. Her remarks highlighted the untapped potential of cannabis in reducing healthcare costs and improving patient outcomes.
Key Findings From New Research
Fisher also unveiled preliminary results from another study conducted by Leafwell, involving over 15,000 patients. Half of the participants were new to cannabis use, while the other half had been using cannabis for more than a year. The findings were striking:
- A 48% reduction in doctor visits among long-term cannabis users
- A 50% reduction in emergency room visits
These reductions, Fisher explained, could have cascading benefits beyond the healthcare system. “What does that mean when you trickle it down into the workforce?” she asked. “It means fewer days off. It means a reduction in absenteeism. This is speaking directly to an employer’s objectives.”
A Call To Action
Fisher’s presentation highlighted the early days of cannabis’ integration into mainstream healthcare but also its growing importance as a tool for employers and policymakers. She called for a science-driven approach to cannabis advocacy and policy-making, emphasizing the broader economic and social benefits that legalization and medical adoption could bring.
“This could help many, many more people than it’s already helping,” Fisher said, urging the audience to consider the evidence and support further research.
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Cannabis is evolving – don’t get left behind!
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Join top executives, policymakers, and investors at the Benzinga Cannabis Market Spotlight in Anaheim, CA, at the House of Blues on November 12. Dive deep into the latest strategies, investment trends, and brand insights that are shaping the future of cannabis!
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