China Pumps and Today Markets Finally Say–Greece? Who Cares?

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So yesterday we wondered aloud what markets would react to this week.  Today we got our answer–China turns up the economic pump and investors finally have figured out that Greece just isn’t something to fixate on right now. So up we go–for now forgetting that U.S. Navy ships are steaming toward the gulf area for a possible encounter with Iran. Oh well, that is apparently for another day.

China lowered their reserve requirements for banks in their effort to pump up their economy–China is still at a 7% growth rate, which to them is slow, but like the rest of the developed world they are slowing and whether they can really change that is questionable–no one else has had much luck fueling growth.

We note that the 10 year treasury has moved in a very tight range in the last week–maybe preparing for a leg down again–can’t think of any reason there would be a move up, but we shall see.

We also note that the REITs today moved up by only 1/10th of 1% while the DJIA was up over a percent–definately not in favor at the moment. We wouldn’t mind if the whole sector would move down 10%. 3 or 4% dividends do NOT adequately reward the investor at this point in the cycle (of course the mREITs toss off 10-11%, but we don’t buy those vehicles).  We would love to get into Realty Income (ticker:O), but at a 4.62% yield it is a good 1/2% or more from where we would consider purchase.  We would also consider Store Capital (ticker:STOR) and Hannon Armstrong (ticker:HASI) as well–but LOWER please.  We would speculate that almost any purchase in the REIT sector now is subject to a instant pounding if we get any sustained downdraft (not that we have had one in years).  We are very patient–we wait.

By now we hope that all income investors have realized that you will best be rewarded on a consistent basis by being in the right sectors at the right time.  Realizing that predictions of market moves up and down are near impossible, we do believe that losses can be minimized by slowly moving in and out of sectors–I mean at this moment we can’t see any reason to be overweight REITs given their tepid performance this year. So we wait.  It isn’t necessary to be trading in and out of shares everyday.

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