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HFF Research Update for July 15, 2015: Can I Buy You a Drink?

Wednesday, July 15, 2015

Weekly insights on current research in the commercial real estate industry from HFF Managing Director of Research Jimmy Hinton. View Daily Rates on the HFF website or access the HFF Daily Rates App in iTunes.

In the Winter War of 1939, Soviet bombers dropped bombs on Helsinki. Meanwhile, the Soviet Union's foreign minister proclaimed to his own citizens that the war planes were in fact dropping pallets of food to Finnish citizens in a humanitarian mission. Sneering at the propaganda, Finns referred to the deliveries as "Molotov bread baskets" naming them after the Soviet Foreign Minister.

Analysis of Market Insights and Economic Performance

Shortly after the bombing subsided the Soviet infantry invaded by land. Necessity being the mother of invention, the Finnish army created a mechanism to engulf armor-plated Soviet tanks in flames – what is now ubiquitously referred to as the Molotov Cocktail.

It's the drink of choice in Athens at the moment, as imagery of civilian protests being aired on television screens turns violent. These Greeks are obviously not championing proposed bailout terms after Greece's Prime Minister pitched the deal in Parliament earlier today.

The market is recognizing the risk of a "no" vote and yields are back down 2-5 bps.

This movement downward comes directly in the face of comments Fed Chair Janet Yellen made on Capitol Hill this morning declaring her intent to drive the FOMC's Fed Funds Rate higher in 2015, and no later.

It would appear investors are more nervous about the unexpected than they are emboldened by the transparently guided.

Maybe less transparently guide, China reported its GDP late last night and it appears the second largest economy in the world grew by 7 percent over the past year. Not only beating expectations, this figure also proved to be precisely on target as well; and in the face of weakness in Chinese equities and signals of slowing in the industrial sector. Even China's current Premier Li Keqiang once famously quipped that GDP data is "man-made and therefore unreliable."

Ironic. But then so were Eastern Bloc protestors throwing flaming glasses of petrol at Soviets after World War II.

About Jimmy Hinton

Mr. Hinton serves as Managing Director of HFF, responsible for the firm’s research efforts. Mr. Hinton works with the HFF Jimmy Hintonexecutive management team to assist in investor relations and to inform both HFF staff and firm clients with in-depth analysis of economic, property and capital market trends. He is also responsible for providing extensive market reports, client presentations and deal-specific analysis for debt placement and investment sales assignments. Mr. Hinton’s responsibilities include substantial interaction with pension funds, life insurance companies, regional and CMBS lenders, REITs, foreign investors and private equity funds.





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