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This surprising sector is beating the S&P 500, and it seems impervious to coronavirus

January 29, 2020, 10:39 AM UTC

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Good morning, Bull Sheeters. The sun is shining here in Rome, the European markets are all trading in positive territory, as are U.S. futures. Even crude is rebounding, as I write. So, no need to worry about coronavirus, right?

Hardly. CEOs on earnings calls are getting hounded about the virus’ impact on sales. Apple, which crushed it in Q4, says it’s cutting store hours in this vital market, and limiting employee travel there. The upshot: you’re going to hear a lot more about coronavirus this quarter, and into the next.

But I want to switch gears this morning and talk about a sector of the market that seems remarkably immune to global contagions: real estate. Our Adrian Croft dug deep into the global real estate sector in the “chasing returns” feature for Fortune‘s Quarterly Investment Guide and found 12 take-aways for investors. What caught my eye is the booming market in REITs, or real estate investment trusts. REITs trade on stock exchanges and pay dividends, so they’re becoming more attractive to every-day investors.

And there’s an impressive bull run going on in the REITs market at the moment. The Wall Street Journal‘s Matt Wirz suggests it’s no fad. Investors are looking for returns that they can’t get from bonds in this low-interest rates world.

And that brings me to today’s chart.

S&P 500 had a good 2019, but nothing like the REITs


Nobody would complain about the S&P 500 performance in 2019. But select REITs had an even better year. If you looks closely at the chart you’ll see the hottest REITs reflect bigger business trends. There’s been a boom in data center construction, for example. Not surprisingly data center REITs are flying.  

Nareit, the trade group for REITs, broke it down further in a recent report.

Check out the rest of Adrian’s story on real estate. There’s also a fascinating breakdown on the overseas real estate markets for those of you looking to invest in a place in the sun. It’s January. Why not?

Bernhard Warner

Today's reads

Comeback. In the summer of 2011, Bank of America was on the ropes. It had the capital reserves, but not the confidence of the markets, to bail itself out of the mortgages crisis it inherited in buying up parts of Merrill Lynch and Countrywide. Fortune's Shawn Tully goes back to that moment and talks to the men, including CEO Bryan Moynihan, about how they pulled off what Tully calls "the single most outstanding comeback from the financial crisis." What's next for BofA? Read on.

Boeing in the spotlight. All eyes will be on Boeing's new CEO David Calhoun today as he faces equity analysts for the first time as the company reports results. We'll hear more about, among other things, the progress it's made on raising debt to shore up finances in the wake of the 737 MAX crisis. It may be the toughest call of the year for a CEO. Analysts say Calhoun has to be candid and clear about how the company is addressing the toxic corporate culture at the root of its problems. 

Apple Cash. Of the many impressive metrics Apple reported yesterday, the one that stands out to many analysts is its cash reserves. In short, it's ticking up again, topping $207 billion. I've been watching Apple pre-market trading much of the morning, and it looks set to pop at the open of markets today.

Market candy

Parabolic chart of the day. Never heard of Kawamoto? It's a Japanese medical supplies manufacturer that specializes in surgical-style masks. Its shares achieved escape velocity earlier this week thanks to the Wuhan coronavirus contagion that's going global. This chart says it all. Buckle up before viewing.

HT to Welt's Holger Zschaepitz.