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Realist Real Estate Roundup, October 26–November 1

Part 6
Realist Real Estate Roundup, October 26–November 1 (Part 6 of 7)

What to watch for in real estate this week: Earnings and data

The Washington crisis is over—back to earnings and economic data

Now that the government has figured out a way to kick the can down the road for a while, the focus turns back to economic data and earnings. Earnings season started two weeks ago, but we’re heading into the the thick of it, with lots of REITs along with major bellwethers.

Unemployment rate - LTEnlarge Graph

Earnings season officially kicked off last week, but for the next few weeks, earnings reports will be coming in fast and furious.

Economic data this week

Monday, November 4

  • ISM New York
  • Factory orders

Tuesday, November 5

  • ISM non-manufacturing
  • IBD/TIPP Economic Optimism

Wednesday, November 6

  • MBA Mortgage Applications
  • Challenger Job Cuts
  • Leading economic indicators

Thursday, November 7

  • Initial jobless claims
  • Q3 GDP
  • Bloomberg Consumer Comfort
  • Personal consumption
  • Consumer credit
  • GDP price index

Friday, November 8

  • Nonfarm payrolls
  • Unemployment eate
  • Hourly earnings
  • Unemployment rate
  • Personal income
  • Personal spending
  • Personal consumption expenditures
  • University of Michigan Confidence

Earnings reports this week

Tuesday, November 5

  • Two Harbors Investment Corp (TWO)
  • Annaly Capital Management (NLY)

Wednesday, November 6

  • Freddie Mac (FMCC)

Thursday, November 7

  • Walter Investment Management (WAC)
  • American Realty Capital Properties (ARCP)
  • Fannie Mae (FNMA)
  • Nationstar (NSM)

Impact on mortgage REITs

Mortgage REITs like Annaly (NLY), American Capital Agency (AGNC), and MFA Financial (MFA) are highly interest rate–sensitive. While the upcoming economic data will factor into the Fed’s decision, the shutdown probably has ended the possibility of a near-term change in policy. Friday’s jobs report will loom large as a driver of Fed policy going forward.

We do have some important earnings next week, with agency bellwether Annaly (NLY) and non-agency Two Harbors (TWO). The Street will be looking particularly closely at Annaly’s results. Nationstar (NSM) will be an interesting window on the origination side.

Impact on homebuilders

Homebuilders like Lennar (LEN) and KB Home (KBH) are heading into a seasonally weak period, so they’re in inventory reduction mode. Of course, the situation in Washington hasn’t done great things for consumer confidence, which does affect the builders. Most of the builders have reported already.

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