• Investors have aggressively invested in publicly traded real estate companies (REITS) this year and have been rewarded for doing so with the Vanguard Real Estate ETF rising 29% YTD (compared to the S&P500’s 20%). So far this year $10 billion of new money has flowed into REITS, which is more than the preceding five years combined. Now some are worried that this sector of the market is overvalued with the average REIT stock trading at 24x FFO (funds from operations) compared to around 16x FFO over the past two decades.
• Recent data from the Michigan consumer sentiment survey show that only 29% of American’s now believe it is a good time to buy a home. This is the lowest level since 1982 when the interest on a fixed 30-year mortgage was above 15%. Clearly consumers today are facing some sticker shock with the median home price now at $367,000.
• Gallup estimates that 65% of all Americans today approve of unions, which is the highest rating in two decades. This public sentiment in addition to a pro-union white house have led to the first increase in union membership in years (increasing to 10.8%). All of this may mean that more large corporations will soon face the pressure (Google, Amazon, and Starbucks are already facing this reality).  
• Cyclical stocks in the S&P500 saw their net income drop 31% over the past year compared to the same time period two years ago and also reduced their dividends and stock buybacks by an even larger 41%. Non-cyclical stocks meanwhile increased their profits by 14% over this time period but still cut their dividends and buybacks by 11%. These differences may mean that investors will continue to see an increase in capital returns over the next year as companies close the gap between their earnings and their payout to shareholders.