TAG Industrial Watch: March 18, 2023

In the Industrial Watch magazine that was published in July of 2022, TAG Industrial emphatically stated, “Since the Federal Reserve’s attempt to fight inflation will likely result in a financial crisis or recession, the Fed will be compelled to reverse course in the face of rising prices.”

Not only has the financial crises that TAG Industrial predicted come to fruition, but the Federal Reserve wasted no time in reversing its course despite the consumer price index still hitting 6%. In the process of bailing out Silicon Valley Bank and Signature Bank, the Fed’s balance sheet of credit soared by $297 billion in one week (FRED). To put that into perspective, aside from the onset of Covid-19, that is the biggest weekly increase on record, undoing all of the Fed’s work to reduce its balance sheet over the past 4 months.

As a result of the recent string of bank failures, commercial real estate lending is expected to tighten. With lending standards becoming more conservative, the recent historical decline in industrial sales (which was also forecasted in the July 2022 Industrial Watch) will likely continue. While it seems like a good time for industrial owners to sit on the sidelines for a better opportunity to sell, there are several reasons that suggest there is still no better time than today.