How Public Companies Impact Main Street

Taking a sip from the Wall Street “Fire Hydrant”

This segment first appeared in the 12/30/22 episode [https://atlantarealestate.substack.com/p/wall-st-main-st] of the Atlanta Real Estate Report… Taking a sip from the Wall Street “fire hydrant” * Earnings announcements * Impact * Announcements impacts stock prices in the short term * EPS growth rate (predictablity and sustainability) impacts price in the longer term * Investors focus on… * Reported vs Expected (Concensus) — by “The Street” * Guidance — provided to Wall St analysts by company management * Financial Statements * Quarterly * Annual * Investor Relations * Earnings Calls (live + recorded) * Investor Presentations * Research Reports * Wall Street Analysts * Company and industry / sector specific * Strategy (asset allocation, market outlooks, etc.) * Economic forecasts (consumer spending, etc.) * Thematic (innovation, etc.) * Company-sponsored content * Third-party (Market Watch, Seeking Alpha, etc.) * Financial journalism * Barron’s, Bloomberg, CNBC, Financial Times, Forbes, Fortune, Wall Street Journal, etc. * Free vs. subscription-based * Bloggers, vloggers & podcasters * Social media * Twitter — preferred platform for journalists * YouTube — long-form content; interviews This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit atlantarealestate.substack.com [https://atlantarealestate.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

Monetary & Fiscal Policy

This segment first appeared in my November 2022 podcast entitled, Imperfect Storm: Cat 5 Housing Market Cools to a Cat 3 [https://atlantarealestate.substack.com/p/imperfect-storm]… Monetary Policy Refers to the actions of central banks to achieve macroeconomic policy objectives such as price stability, full employment, and stable economic growth. “We have both the tools we need and the resolve to bring back price stability,” Jerome Powell, Chairman of the Federal Reserve A decline in rent prices is 'well out' from where we are now, says Fed Chair Powell… Fiscal Policy Refers to the tax and spending policies of the federal government. Fiscal policy decisions are determined by the Congress and the Administration; the Fed plays no role in determining fiscal policy. The Fed The U.S. Congress established maximum employment and price stability as the macroeconomic objectives for the Federal Reserve (aka, The Fed); they are sometimes referred to as the Federal Reserve's dual mandate. The monetary policymaking body within the Federal Reserve System is the Federal Open Market Committee (FOMC). The FOMC currently has eight scheduled meetings per year, during which it reviews economic and financial developments and determines the appropriate stance of monetary policy. In reviewing the economic outlook, the FOMC considers how the current and projected paths for fiscal policy might affect key macroeconomic variables such as gross domestic product growth, employment, and inflation. In this way, fiscal policy has an indirect effect on the conduct of monetary policy through its influence on the aggregate economy and the economic outlook. For example, if federal tax and spending programs are projected to boost economic growth, the Federal Reserve would assess how those programs would affect its key macroeconomic objectives--maximum employment and price stability--and make appropriate adjustments to its monetary policy tools. Source: Board of Governors of The Federal Reserve System [https://www.federalreserve.gov/faqs/money_12855.htm] Atlanta Real Estate Report by ATLsherpa is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit atlantarealestate.substack.com [https://atlantarealestate.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

How Public Companies Impact Main Street

This segment first appeared in the 12/30/22 episode [https://atlantarealestate.substack.com/p/wall-st-main-st] of the Atlanta Real Estate Report… How do these Wall Street companies impact Main Street? * Access to capital * M&A activity * Economic impact * Wealth effect Access to Capital * By tapping equity & debt markets * Use for expansion, R&D (innovation) Going public in a bear market… Timing is everything… Mergers & Acquisitions * Public + private combos create a liquidity event at the local level (e.g., Green Brick [https://greenbrickpartners.com/about/] + Providence Group [https://theprovidencegroup.com/blog/the-providence-group-celebrates-20-years-of-success-in-homebuilding/], 2011) * Public + public combos seek to create diversification, scale and/or synergy (e.g., Home Depot + HD Supply [https://ir.homedepot.com/news-releases/2020/11-16-2020-130214974], 2020) — MRO (Maintenance, Repair, and Operations) * Especially significant in CRE market (size) * Primarily REITs and public companies like Blackstone and Blackrock * Private equity, pension funds and foreign investors Economic Impact * Huge multiplier effect * Residential Housing: 15-18% of GDP ($3.9 - 4.7 trillion) + 33% of consumer spending (Source: NAHP + Hoya Capital) * Commercial Real Estate: $1.2 trillion in GDP + $418.7 billion in salaries and wages (Source: NAIOP) * Commercial Real Estate: 8.5 million jobs * Construction employment = 7.6 million jobs (3.1M residential) * Construction jobs: ~300,000 to 400,000 per month NOTE: Economic impact and employment data are for the entire real estate industry, which includes both public and private companies Wealth Effect * Equities = ownership = wealth creation * Bear markets lead to wealth destruction which, in turn, can lead to demand destruction (including real estate and related sub-sectors) * Stock prices affect consumer confidence which, in turn, impacts consumer spending * Most 401(k) plans invest in stocks Atlanta Real Estate Report by ATLsherpa is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit atlantarealestate.substack.com [https://atlantarealestate.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

Understanding the Housing Sector Ecosystem

This segment first appeared in the 12/30/22 episode [https://atlantarealestate.substack.com/p/wall-st-main-st] of the Atlanta Real Estate Report… Let’s look at some publicly-traded companies in the housing sector… Publicly-traded companies are the “fulcrum” between Wall Street and Main Street. They allow us to participate in the long-term growth of the real estate industry with a much lower investment than owning real property directly — and, in the case of rental property, with less headaches. They also allow us to focus our investment capital on very specific sectors and segments of the industry. > > > Click on the company names below to access their investor relations pages… * Home Builders — DR Horton [https://investor.drhorton.com/] + Century Communities [https://investors.centurycommunities.com/ir-home/default.aspx] + Lennar [https://investors.lennar.com/]+ Pulte Group [https://www.pultegroupinc.com/investor-relations/investor-overview/default.aspx] + Meritage [https://investors.meritagehomes.com/]+ Taylor Morrison [https://investors.taylormorrison.com/investor-relations/default.aspx] + Green Brick Partners [https://investors.greenbrickpartners.com/overview/default.aspx] + Toll Brothers [https://investors.tollbrothers.com/] + Beazer [http://ir.beazer.com/]+ LGI [https://investor.lgihomes.com/] * Banks — Truist [https://ir.truist.com/]+ Bank of America [https://investor.bankofamerica.com/] + Wells Fargo [https://www.wellsfargo.com/about/investor-relations/] + Synovus [https://investor.synovus.com/corporate-profile/default.aspx]+ Ameris [https://ir.amerisbank.com/corporate-profile/default.aspx]+ United Community [https://ir.ucbi.com/] + JP Morgan Chase [https://www.jpmorganchase.com/ir] + Regions [https://ir.regions.com/]+ South State [https://southstatecorporation.q4ir.com/overview/default.aspx] + OZK [https://ir.ozk.com/] * Mortgage — Rocket [https://ir.rocketcompanies.com/home/default.aspx]+ United Wholesale [https://investors.uwm.com/] + Loan Depot [https://investors.loandepot.com/overview/default.aspx] * Residential Brokerage — Anywhere [https://www.anywhere.re/]+ Berkshire Hathaway [https://www.bhhs.com/] + Compass [https://investors.compass.com/overview/default.aspx]+ + RE/MAX [https://investors.remaxholdings.com/overview/default.aspx] * iBuyers & Hybrids — eXp [https://expworldholdings.com/investors/]+ Offerpad [https://www.offerpad.com/]+ Opendoor [https://sell.opendoor.com/]+ Redfin [https://www.redfin.com/]+ Zillow [https://www.zillow.com/] * Single-Family Home Rental — American Homes 4 Rent [https://investors.ah4r.com/home/default.aspx] + Invitation Homes [https://www.invh.com/news-events/events-presentations/default.aspx] * Commercial — CBRE [http://cbre.us/]+ Cushman & Wakefield [https://www.cushmanwakefield.com/en] + JLL [https://www.us.jll.com/]+ Colliers [https://www.colliers.com/en] * Building Supplies — A.O. Smith [https://www.aosmith.com/] + Carrier [https://www.carrier.com/residential/en/us/]+ Owens Corning [https://www.owenscorning.com/en-us] + Home Depot [http://hd.com] + Mohawk Industries [https://mohawkind.com/] + Sherwin Williams [https://www.sherwin-williams.com/homeowners] * Home Furnishings — RH [https://ir.rh.com/]+ Sonos [https://investors.sonos.com/investors/default.aspx]+ Lazy Boy [https://lazboy.gcs-web.com/] + Sealy [https://investor.tempursealy.com/] + Wayfair [https://investor.wayfair.com/overview/default.aspx]+ Williams-Sonoma [https://ir.williams-sonomainc.com/investor-information/default.aspx] * Exchange Traded Funds (ETFs) — SPDR® S&P® Homebuilders ETF [https://www.ssga.com/us/en/intermediary/etfs/funds/spdr-sp-homebuilders-etf-xhb] + iShares U.S. Home Construction ETF [https://www.ishares.com/us/products/239512/ishares-us-home-construction-etf] + Invesco Dynamic Building & Construction ETF [https://www.invesco.com/us/financial-products/etfs/product-detail?productId=ETF-PKB] + Hoya Capital Housing ETF [https://www.hoyaetfs.com/homz] * Real Estate Investment Trusts (REITs) — Separate topic / future episode * Public REITs own 535,000 properties across the U.S. as of year-end 2020. * Equity and mortgage REITs combined own roughly $3 trillion in gross real estate assets. * Private REITs own an additional $1.5 trillion in gross assets bringing the total REIT ownership value to $4.5 trillion in the U.S. as of year-end 2021. * U.S. REITs contributed the equivalent of an estimated 3.2 million full-time jobs to the economy in 2021 generating $229 billion of labor income. * REIT activities resulted in the distribution of $92.3 billion of dividend income in 2021. * Source: Nareit [https://www.reitsacrossamerica.com/index.php/united-states] NOTES: Keep in mind that this a small sample of the PUBLIC companies that operate in the real estate industry. As such, they are some of the largest in their respective categories. These are HUGE companies. There are also thousands of PRIVATE companies (typically much smaller) that also contribute greatly to the real estate economy, especially in the way of builders, brokerage companies and mortgage companies. Clicking on the company names will take you to their investor relations pages. Look for press releases, investor presentations, conference calls and webcasts. The names listed under “Home Builders” and “Banks” are the Top 10 publicly traded companies operating in the Atlanta region for their respective categories. Note that these rankings may change from year to year. The real estate “ecosystem” is dynamic and really interesting… > > > Click on the images below to enlarge the charts… Atlanta Real Estate Report by ATLsherpa is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit atlantarealestate.substack.com [https://atlantarealestate.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

Using Charts to Gain Perspective

This segment first appeared in the 12/30/22 episode [https://atlantarealestate.substack.com/p/wall-st-main-st] of the Atlanta Real Estate Report… Let’s look at a few charts to gain some perspective… The sheer size of the equity markets makes them a powerful force when it comes to their economic impact on Main Street… > > > Click on the images below to enlarge the charts… In the chart above, note the move from the GFC low in 2009 to the pandemic high of late 2021. Equity market cap rose from about 50% to almost 200% of GDP. That is one heck of a run! Stock prices and the business cycle… Stock prices and building permits are leading indicators… Atlanta Real Estate Report by ATLsherpa is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit atlantarealestate.substack.com [https://atlantarealestate.substack.com?utm_medium=podcast&utm_campaign=CTA_1]