![]() Based on historical demand levels (which is not a given post-pandemic), it would take 5-13 years for the global office market to return to pre-COVID occupancy levels. “…the gap between the class A prime assets and the rest of the commodity B&C space is widening at an accelerating pace. Also from Morgan Stanley equity analysts: Property markets are bifurcating – the rise of the quality lets. This all changes though if bond yields start to come down.Ģ. Moral of the snippet – I understand why many US investors are bullish but long-term fundamentals look slightly scary. The earnings yield for US mid-cap equities (6.4%) is below the yield on high yield bonds (8.3%), which is less unusual, but still more extreme than three-quarters of the last two decades” “… the forward earnings yield for the Russell 1000 (4.8%) is now below the yield on IG corporate bonds (5.4%), with the basis more extreme only 2% of the time in the last 20 years. Investors may be bullish but valuations look stretched.
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