Comment

I agree very strongly with what you say about how to invest and what to think about when doing so. But I can't like or recommend your columns, because you lead with views of macroeconomic issues than in my opinion are often in error.

You write as though it is present housing costs that impact CPI but it is not. Their impact is lagged by more than a year. CPI Ex-Shelter tells a very different story than CPI-shelter, and the latter is at odds with many measures of real-time housing costs. Hoya Capital has covered this thoroughly (most recently at seekingalpha.com/articl…). Scott Grannis has too (scottgrannis.blogspot.c…).

Also, the story on multifamily REITs, which I pay close attention to, is far more nuanced than your account would suggest. Lower than projected expenses, especially insurance and property taxes, is also playing a role in improvements to their results. Sill, 2024 FFO/share post Q1 earnings for that sector is still projected to be down 0.6% for the year. As for any companies with a lot of debt, a significant contributor is increased interest costs for whatever debt must roll. One must always be wary of oversimplifying observed summary trends to fit a desired narrative, which might not be correct.

Beyond that, inflation is an increase in the general level of prices in the economy. It is not foundationally caused by price increases in small economic areas. In the absence in changes in money and its use, no price increase in any one area can cause inflation. Scott Grannis likewise is one who covers this often (e.g., scottgrannis.blogspot.c…). Lyn Alden covers it at a more theoretical level.

Certainly interest rates could end up higher for longer, and maybe much longer. And as you say, investors should pay attention to this.