Reits Should Rebound on Strong Eco Data: Brown

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July 15 (Bloomberg) -- Steven Brown, senior portfolio manager at American Century Investments, talks with Betty Liu about how interest rates, Federal Reserve policy and economic data impact the reit market. He speaks on Bloomberg Television's "In The Loop."

The reits peaked mid-may.

Then they had the tapering talk . they bounced back from then.

The 10-year at 2.75% or 3% is priced into the market.

Improving gdp, jobs, and income, and real estate fundamentals should do well.

Ok, julie hyman has been looking closer into the state of reits.

We have seen reads -- reits selloff a lot.

There is an index looking at north america.

It is down 8% this year.

Even worse is they move in mortgage reits.

Because the move up was so sharp and took not just bond traders but reits managers off guard as well, some traders have said some of these companies have to sell off mortgage securities in order to keep their capital at appropriate levels.

We have seen those mortgage reits selloff even worse.

Legs is that in there yet you would avoid?

-- is that an area you would avoid?

If rates go up, then the share would decline.

All investors are listening closely to what ben bernanke is going to say next.

Mike, you have been following the fed, interest rates, and ben bernanke's speech later this week.

The big question coming out of the ben bernanke testimony on capitol hill and his press conference after the last fed meeting was, how soon are they going to start cutting back?

You saw some losses there.

Let me pose a rather impolite question here that you might get from somebody at the fed.

You put on a reit tra de earlier in the year and then lost money when there was all this generation and rates went up.

You also say the economy is not strong enough to support reits and lest we had the fed in there.

Are you not investing on fundamentals or you just gambling on the rates?

What we expect is that the fed's policy will be there and tell they see concrete evidence of the economy recovering on its own.

We have seen the jobs market put up 190,000 jobs a month.

That was sort of enough evidence for the fed to begin the tapering talk.

They said they are not tired of accommodation, but they're saying that the economy is starting to be strong enough to be independent of the fed's support.

It is a good thing here it as appointment drops below 7% and gdp comes back to 3% and we see and come drive, too.

If we have a period of improving incomes and gdp, that is good for the fundamentals.

The question is, have you been enjoying success basically just because of the fed?

Right, we have tried to empathize two things.

We have benefited from the rates, yes.

Two, we have great real estate fundamentals in the u.s. back to the credit picture, yes, we have higher rates him about we still have a very good credit picture, meaning credit is available.

There has been no cutback in credit, it just costs a little more.

All right, thank you for joining us.

Steve brown of american century investments.

This text has been automatically generated. It may not be 100% accurate.


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