Even if we see real estate prices fall in the next year or two, rents will most likely continue to rise. The reason is that rental yields, even for countries like Germany and the US, are still low.
It is currently much more profitable to invest in government bonds than in housing. This is what the chief investment consultant of “ELANA Trading” Tsvetoslav Tsachev told Radio “Focus”.
Fuel inflation is falling sharply, services are also seeing a slowdown, but U.S. housing costs are not falling, he said.
“The housing problem is a case study that is likely to persist for a long time because the price decline seen in the U.S. in terms of new property sales is not being translated into lower rents. This trend is discussed in global scale and remains a case study in Bulgaria as well”, explained Tsvetoslav Tsachev.
The rise in US government bond yields seen in the past few weeks is not helping to stop the growth of stocks, the investment consultant noted. Currently, the S&P 500 index is at the level of 5,000 points.
“Yes, it lacks that strong upward momentum that is seen when breaking such important levels, but then we have to see this week the report of perhaps the most significant company on “Wall Street” – the manufacturer of NVIDIA chips. Its shares have risen very strongly since the beginning of the year. The key to the markets is that when it goes up, the big tech companies come in after it, and they are at the heart of the market’s rise. In recent weeks, we have seen how the rest of the smaller companies from all sectors are following this trend,” Tsvetozar Tsachev pointed out.
Many companies are going up, close to their all-time highs.
“That positive trend, especially in the smaller companies that have been affected by the fact that with high inflation the Federal Reserve is not going to cut rates, they are now managing to hold up relatively well in terms of their performance. That’s why we’re seeing record highs on Wall Street. “to have a fairly broad base”, explained the expert.
He commented on the impact of the upcoming US presidential elections on the capital market.
“It has to do with the money that the state spends in election years, because the ruling party is very aware that if the economy is good, it has a chance to win the election again. But in recent years there has been an extremely strong antagonism between the two parties in the US, which leads to the blocking of important decisions precisely through the prism of this connection with the election campaign. It is possible that this will be a factor in a negative direction,” commented Tsvetoslav Tsachev.
“Donald Trump is not the guy to tighten government bonds, but more and more people in the Republican Party are realizing that this trajectory of the national debt represents the biggest problem for the country, much bigger than the case with China. for example. If this growth of the national debt continues, in 2050 the US will simply not be able to pay its interest, not to mention the other expenses,” added the expert.
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