March 1, 2018

A Further Sign The Boom Is Over

A report from the Sydney Morning Herald in Australia. “Cracks are showing in the Sydney property market, with prices now falling for the first time over a 12-month period since the boom began. The harbour city recorded a 0.5 per cent drop in housing prices in the year to February, CoreLogic data shows. This figure includes apartments and houses. The median property value now stands at $880,743, after the first 12-month decline since 2012. Over the three months to February, Sydney prices dropped 2.4 per cent. This was the weakest result in the country.”

“Sydney property prices are now 3.7 per cent below their peak in July 2017, representing a drop in their median price of about $35,000. At the Property Council of Australia’s NSW Residential Outlook, HSBC chief economist Paul Bloxham expected prices to slow across Sydney. However, he broadly expected Australia to benefit from an ‘economic recovery’ that was underway globally. This underpins the case for the Reserve Bank to increase interest rates in the future, he said.”

From Bloomberg. “Australian home prices fell for a fifth consecutive month in February, in a further sign the property boom is over. Prices in Sydney, the epicenter of the boom, are down 0.5 percent from a year earlier — the first annual decline since 2012. ‘Considering the tighter credit environment, the eventual prospect of higher interest rates and ongoing housing affordability constraints, we expect housing market conditions will remain sedate relative to previous years,’ CoreLogic’s head of research Tim Lawless said.”

From Domain News. “One ’silver lining’ of investors retreating from Sydney’s property market is that developers will be forced to lift their standards, industry experts say. While the withdrawal of investors could spark a slowdown of the ‘much-needed’ supply of apartments, it’s also likely to prompt developers to rethink the homes they’re building. ‘No question, investors are retracing,’ said Frasers Property Australia chief executive Rod Fehring.”

“However there is a ’silver lining,’ according to Stockland CEO Mark Steinert, who thinks the retreat of local and foreign investors will prompt developers to deliver better properties. Mr Steinert said restrictions on the outflow of money from China and tighter lending restrictions in Australia could see the supply shift away from apartments aimed at investors. ‘It’s going to challenge everybody for a little bit of time because you can’t just go and do a launch and sell out on day one and orientate towards the investor, you have to think carefully as to who is going to occupy that space,’ he said.”

“‘The market is starting to ask itself questions about how long easy money will be in place, interest rates have been extraordinarily low for some time,’ HSBC chief economist Paul Bloxham said. ‘Sydney is obviously showing some signs of prices falling at the moment – I don’t think that’s going to persist. I think we’re going to see low single digit rates of house price growth going forward – it is hard to get house prices to fall in any sort of decent way without the unemployment rate rising.’”

The Australian Financial Review. “Developers are offering commission payments of $30,000 and trebling apartment sizes in a bid to attract new buyers as investor demand slides and prices begin to fall, analysis of deals reveals. Luxury fixtures interest on deposits, part payment of stamp duty and cash rebates are also being offered ‘free’ to encourage buyers squeezed by tougher lending conditions and lower expectations of price growth, it reveals.”

“Financial advisers and mortgage brokers are being offered a share of $30,000 commission plus GST by developers and builders, with half paid on exchange of a property and the balance on settlement. Mortgage brokers claim slowing demand means it is increasingly a buyers’ market and recommend buyers ask questions about any incentive payments and request rebates. Developers are also offering to do deals that amalgamate multiple apartments, or offering entire floors.”

“For example, OSK Property’s $2.8 billion Melbourne Square project in Southbank, and CBus Property developments in nearby Spring Street are offering top-end off-the-plan buyers the option of amalgamations. Falling prices, four-year low credit growth, high debt, stagnant wages and fears about over-supply in key markets are combining to slow housing growth, according to analysis by investment bank UBS.”

“‘The drop in credit growth – to an annual rate of about 4.9 per cent – suggests macroprudential policy is starting to have a more material negative impact on housing with negative wealth effects to constrain consumption,’ according to its analysis.”

“The rush of supply in apartments in Sydney in the past five years has caught up with demand, giving rise to a cap on price rises, according to BIS Oxford Economics. While there has been an under-supply of dwellings including apartments before the boom of 2012 to 2017, there were 47,200 apartment construction starts in 2016-17, doubling from 23,100 in 2012-13, against underlying demand of about 42,500.”

From Radio Australia. “Australian housing values have slipped for the fifth straight month, as the crackdown on interest-only lending continues to dampen housing demand. That was the key finding of national property report by CoreLogic, which found housing values — on a national basis — fell 0.8 per cent since September 2016. ‘This was fuelled by tighter credit policies, particularly focused on investment and interest-only lending, which reduced demand from that part of the market,’ said CoreLogic’s head of research Tim Lawless.”

‘The report found, over the past month, values fell across every capital city except Hobart and Adelaide. Sydney values have fallen 3.7 per cent since its peak of July 2016, Mr Lawless said. ‘It’s not like the Sydney market is crashing — it’s more a controlled or managed slowdown, largely due to a reduction of investment in the marketplace.’”

From Nine News. “A new report has identified Australia’s worst property spots, listing 24 negative growth traps for investors to avoid. Two Western Australian suburbs have made the report, which was based on Core Logic data from the 12 months leading up to November 2017. Burswood is named WA’s worst housing market performer with a 37.2 percent decline. Crawley also made the national list because of its unit market which plunged 46.2 percent in value with over supply to blame, according to the report.”

“The slump comes as housing affordability is still a major concern for Australians. Research released by the Salvation Army has revealed almost half the country, 9.9 million, believe owning their own home is unattainable.”

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Comment by Ben Jones
2018-03-01 08:22:09

‘It’s not like the Sydney market is crashing — it’s more a controlled or managed slowdown’

Right Tim, now everybody stay calm. Don’t rush for the exits all at once.

We have seen there are pricey neighborhoods that are down double digits in Sydney. The REIC just quit reporting them a few months ago.

Comment by Lurker
2018-03-01 11:40:34

“pricey neighborhoods that are down double digits in Sydney.”

From my spreadsheet (doesn’t include this week):

> -17% Sydney - Darling Point and Point Piper (yoy ~Jan18)
> -14% Sydney - Olympic Park and Parramatta / MED VAL CND (yoy -Jan18)
> -4.4% Sydney - Canterbury Bankstown / MED CND (Q417)
> -3.7% Sydney - southwest / MED CND (Q417)
> -2.3% Sydney - lower north shore / MED (yoy -Dec17)
> -2% Sydney - inner west / MED (yoy -Dec17)
> -2.1% Sydney - south / MED CND (Q417)
> -2%+ Sydney - Inner West, Lower North Shore, Northern Beaches / MED EST (Feb18)
> -1.9% Sydney - west / MED CND (Q417)
> -0.9% Sydney / MED (mom Dec17)
> -0.8% Sydney / MED (mom Feb18)
> -0.7% Sydney / MED (mom Nov17)
> -0.5% Sydney / MED (mom Oct17)

Comment by In Colorado
2018-03-01 11:43:02

No MID and no fixed rate mortgages. Yeah, I could see people rushing for the exits.

Comment by Mortgage Watch
2018-03-01 08:23:28

Neptune Beach, FL Housing Prices Crater 19% YOY As Speculators Flood Coastal Markets With Inventory

Comment by Dave
2018-03-01 10:22:17

Check out Pebble Beach, CA Down 47%!

Comment by Jingle Male
2018-03-02 04:52:59

San Diego waterfront condos in 92101:

267 listings in March 2018

225 listings in March 2017

Inventory up 18% YoY. It does seem like the worm is turning…..

Comment by Rental Watch
2018-03-02 09:40:13

And there are a HUGE number of units being built in downtown SD.

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Comment by Professor 🐻
2018-03-01 09:37:38

“Sydney property prices are now 3.7 per cent below their peak in July 2017, representing a drop in their median price of about $35,000. At the Property Council of Australia’s NSW Residential Outlook, HSBC chief economist Paul Bloxham expected prices to slow across Sydney. However, he broadly expected Australia to benefit from an ‘economic recovery’ that was underway globally. This underpins the case for the Reserve Bank to increase interest rates in the future, he said.”

Higher interest rates will represent another pin stuck into the Housing Bubble.

I can’t help but wonder whether the Australian housing market flu is contagious?

Comment by BlackSwandive
2018-03-01 10:16:55

“Australian home prices fell for a fifth consecutive month in February, in a further sign the property boom is over. Prices in Sydney, the epicenter of the boom, are down 0.5 percent from a year earlier — the first annual decline since 2012.”

Is it just a mere coincidence that the last annual decline in the US was also in 2012?

Comment by Sam (SW)
2018-03-01 11:49:34

QE3 started in 2012. Follow the money.

Comment by taxpayer
2018-03-01 14:21:19

council of this,dept of that
does aus have as many gov agencies w bureaucrats as USA watching housing wonders?

Comment by Professor 🐻
2018-03-01 09:44:49

Considering all of the rate hike hysteria, does it seem odd for bond yields to fall during Jerome Powell’s Congressional testimony, along with stocks? I guess markets are still unpredictable.

Treasury yields slide as Powell’s Senate testimony gets under way
By Mark DeCambre and Sunny Oh
Published: Mar 1, 2018 10:15 a.m. ET

U.S. government bonds saw buying early Thursday, driving yields lower, as the second day of congressional testimony by Federal Reserve Chairman Jerome Powell in front of a Senate committee was scheduled to get under way.

How were Treasurys performing?

The yield on the 10-year Treasury note (TMUBMUSD10Y, -0.41%) shed 2.6 basis points to 2.842%, the 2-year yield (TMUBMUSD02Y, -0.18%) the most influenced by the monetary policy outlook, lost 1.6 basis point to 2.246%.

Comment by Neuromance
2018-03-01 17:18:07

Here’s one opinion: “Buying Treasuries on Stocks Slump? That’s a ‘Pavlovian’ Response” :

Comment by Professor 🐻
2018-03-01 19:30:17

What kind of response was it if you went to bonds before the return of stock market volatility?

Comment by Professor 🐻
2018-03-01 19:34:50

How long and high will the Trump tariff bond market rally go?

Comment by Professor 🐻
2018-03-01 21:12:41

U.S. Government Bonds Surge on Trump Tariffs
Investors said president’s move could curb economic growth
By Daniel Kruger
Updated March 1, 2018 5:20 p.m. ET

U.S. government bonds rallied Thursday after President Donald Trump announced he would impose tariffs on imports of steel and aluminum, which investors said could curb economic growth.

The yield on the benchmark 10-year U.S. Treasury note posted its biggest one-day decline since Sept. 5 to 2.802% from 2.870% Wednesday. Yields fall as bond prices rise.

Comment by taxpayer
2018-03-02 06:01:30

I’m ready for Pense. It’s been fun but tariffs are stupid.

Comment by Ben Jones
2018-03-02 06:19:19

I like tariffs. More tariffs! You do realize this is how we used to pay for our government, before income taxes? I guess that’s too much to expect even given your screen name.

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Comment by Professor 🐻
2018-03-02 08:19:17

I guess we can look forward to obtaining another data point to back or refute whether the 1930s Smoot-Hawley Tariffs were as destructive as most economists claim.

Comment by taxpayer
2018-03-02 08:50:46

1893- till less tariffs and modern banking etc
that’s when the tariff system failed

Comment by Oxide
2018-03-02 09:03:28

In the late 19 th century, the Harrison administration was actually worried that the US had *too much* money from all the Tarrifs. Of course, this was the Gilded Age when gov spent almost no money on social services.

Anyway, Hillary herself mocked Trump in one of the debates for using Chinese steel. So surely even she supports the tarrifs as well, right?

Comment by Justme
2018-03-01 20:45:12

Falling US bond yields during times of stock market stress/drops is not strange at all. It is simply a matter of seeking a safe haven in which to store cash after selling stocks, which causes high demand, which causes UST prices to rise and yields to drop correspondingly. The big boys cannot store all their cash in FDIC-insured bank accounts.They must buy bonds instead.

If you look at corporate bonds instead or UST bonds, the yields are indeed rising and the prices are falling (look at the JNK ETF symbol, for example).

Comment by Professor 🐻
2018-03-01 21:04:46

Take it from Uncle Warren: Stocks and bonds are more similar than not. And both are in for a hammering if the Fed finds itself behind the curve in controlling inflation, as happened in the 1970s.

Stocks Are More Similar to Bonds Than You Think
Ignore conventional wisdom, inflation can harm both at the same time.
by Ben Carlson
March 1, 2018, 6:00 AM PST
Warren Buffett called it in the 1970s. Photographer: Chip Somodevilla/Getty Images

Historical data show that stocks tend to post strong performances during periods of rising interest rates but only below-average results when inflation is rising or above average.

This counterintuitive dynamic was explained by Warren Buffett in 1977 in “Why Inflation Swindles the Equity Investor,” which he wrote as the U.S. was experiencing some of the worst price increases in its history. Buffett showed that inflation can wreak havoc on bond investors because it causes their periodic income payments to depreciate over time. But he said stocks are more like bonds than most investors realize:

The main reason, I believe, is that stocks, in economic substance, are really very similar to bonds.

I know that this belief will seem eccentric to many investors. They will immediately observe that the return on a bond (the coupon) is fixed, while the return on an equity investment (the company’s earnings) can vary substantially from one year to another. True enough. But anyone who examines the aggregate returns that have been earned by companies during the postwar years will discover something extraordinary: the returns on equity have in fact not varied much at all.

He also demonstrated that the return on equity, or book value, has been relatively stable over time across a number of different economic regimes. ROE measures how much profit a corporation generates for every $1 of shareholder equity. So if the returns on that shareholder equity don’t change much over time, inflation would gradually eat into those returns, causing a lower payout to investors in the form of profits.

Comment by Professor 🐻
2018-03-02 08:57:12

What Buffet seems to have neglected in his comparison is a key difference between the revenue flows underlying stocks and bonds (at least low-risk bonds like long-term Treasurys). Corporate earnings are flush during boom times and lean during recessions. When set by market forces, long-term Treasury yields are similarly procylical, due to heightened credit demand during booms coupled with a flight-to-quality during busts, though less volatile than corporate earnings. But most importantly, the yield on long-term Treasurys you own is fixed, that is it won’t dry up in a recession the way corporate earnings that impact the value of your stocks will. Uncle Warren’s focus on average returns missed this important driver of the flight-to-quality into Treasurys during periods of declining corporate earnings.

However, given that we are currently exiting a period when long-term Treasury yields were artificially suppressed, I’m not sure how well the traditional relationship between stock and bond prices will hold up in the near future.

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Comment by cactus
2018-03-01 09:48:46

Possible Answers to Bond questions posted by Professor B

” Paul Tudor Jones has doubled down on his warnings of impending doom in the bond market.
I would steer very clear of bonds,” he said in an interview with Goldman Sachs.
Jones predicts the 10-year could reach 3.75% this year. It recently hit a four-year high of 2.95%.

Paul Tudor Jones, the billionaire founder of hedge fund Tudor Investment Corporation, is doubling down on his warnings of an impending financial bubble.

“With rates so low, you can’t trust asset prices today,” he said in an interview with Goldman Sachs sent to clients Wednesday. “And if you can’t tell by now, I would steer very clear of bonds.”

Jones predicts the 10-year yield will rise to 3.75% by the end of 2018, even adding that he believes that’s a “conservative” target.”

3.75% !! Even a banker I know said to get out of all but the shortest term Bonds.

Comment by octal77
2018-03-01 11:31:23

“…“With rates so low, you can’t trust asset prices today…”

Certainly agree with Paul Tudor Jones but I have to say his comment is about 10 years too late.

On the other hand, “With rates so low, you can’t trust asset prices today” is a statement you will *never* hear from Lawrence Yun of the NAR.

Comment by Professor 🐻
2018-03-01 15:47:17

If this is what a bond market crash looks like, I wonder how much prices would go up in a rally?

Comment by Professor 🐻
2018-03-01 21:19:42

Treasury yields drop as Trump announces steel, aluminum tariffs
By Mark DeCambre and Sunny Oh
Published: Mar 1, 2018 4:17 p.m. ET
Fed’s Powell sees no significant wage pressures

Treasury prices rallied Thursday, pushing down yields, with investors rushing into government paper after the Trump administration’s decision to impose global tariffs on steel and aluminum imports triggered a stock-market selloff.

Also, Federal Reserve Chairman Jerome Powell said he saw no signs of significant wage pressure in congressional testimony, language that some investors saw as an attempt to walk back his hawkish comments earlier in the week.

How were Treasurys performing?

The 10-year Treasury note yield (TMUBMUSD10Y, -0.16%) fell 6.7 basis points to 2.802%, marking the largest one-day fall since Sept. 5, according to WSJ Market Data Group.

The 2-year note yield (TMUBMUSD02Y, +0.54%) the most influenced by the monetary policy outlook, slipped 5.6 basis points to 2.206%, the biggest one-day dip in three weeks. The 30-year bond yield (TMUBMUSD30Y, -0.12%) declined 4.6 basis points to 3.084%.

The last two days of trading helped to erase part of the selloff in February when a resurgence of inflation anxieties sapped appetite for bonds.

Bond yields fall as prices rise.

What is driving markets?

Treasurys rallied after President Donald Trump announced tariffs on steel and aluminum imports, sending stock prices lower. Nervous investors jumped into government paper in pursuit of havens where they could take shelter from the market volatility.

Bond prices initially rose after Powell told the Senate Banking Committee he saw no sign of significant wage inflation, but he expected wages to rise in the future. This comes two days after his first appearance on Capitol Hill, a test of his early days as head of the Fed, roiled currency, bond and stock markets, sending debt yields higher and stocks tumbling.

The market had interpreted Powell’s comments on Tuesday as implying that the Fed might be more aggressive than expected as it attempts to tamp down inflation amid a healthier outlook for the U.S. economy. But today’s remarks appeared to walk back the hawkish tone. Bonds generally benefit from a more gentle pace of monetary tightening.

Comment by CryptoNick
Comment by BlackSwandive
2018-03-01 14:23:29

And crypto responds to that with a 15% move to the upside.

Comment by oxide
2018-03-01 11:05:13

you can’t just go and do a launch and sell out on day one and orientate towards the investor, you have to think carefully as to who is going to occupy that space,’

Ben talked about this months ago. “Orient towards the investor” is fancy talk for building crap to be bought sight unseen, unlivable and many times against basic code. Like a bedroom with no window, or a bathroom with a too-narrow door, or missing appliances. Now that the occupant is going to be an actual person and not a pile of money, they might have to install a real toilet. Oh the horror.

Comment by Mafia Blocks
2018-03-01 11:08:38

Hey Donk

Comment by Young Deezy
2018-03-02 08:50:23

Holy cow you’re obsessed. Give it up.

Comment by Oxide
2018-03-02 09:07:22

He’s just angling for some Cheetos. :razz: I might toss him few later today.

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Comment by Carl Morris
2018-03-02 10:37:23

Now you’re making me hear “Hey Donk” in a parrot voice.

Comment by Mafia Blocks
2018-03-02 10:10:30

degenerate gambler

Albany, OR Housing Prices Crater 23% YOY

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Comment by DantheMan
2018-03-01 11:32:39

For some reason the other day when I was listening to these lyrics I was thinking there’s a relationship somewhere between these lyrics and housing bubble.

“We come from the land of the ice and snow
From the midnight sun where the hot springs flow
How soft your fields so green
Can whisper tales of gore
Of how we calmed the tides of war
We are your overlords
On we sweep with threshing oar
Our only goal will be the western shore
So now you’d better stop and rebuild all your ruins
For peace and trust can win the day despite of all your losing”

Maybe it was just the booze!

Comment by Apartment 401
2018-03-01 12:05:42

Realtors are liars.

Comment by Mafia Blocks
2018-03-01 12:11:45

….. and every appraisal apocryphal.

Comment by ironknee
2018-03-01 14:06:22

Maybe the aussies can take the white south africans that are getting their land confiscated in order to, uh, I guess foster starvation. I read theres already a good number heading to western australia, makes sense as the climate is similar - wine growing regions both.

Comment by Mr. Banker
2018-03-01 14:52:13

Georgia too!

(Not the Georgia Ray Charles had on his mind, but the other one.)

IMO thems Georgianians is doing the smart thang.

Comment by Mr. Banker
2018-03-01 16:32:01

A snippet from Wikipedia …

“Sandra Roelofs, the Dutch-born wife of Georgian President Mikhail Saakashvili, has recently promoted a program encouraging Afrikaans South African farmers to migrate to Georgia. The country is actively recruiting Afrikaner farmers to help revive the nation’s moribund agriculture. In the 20 years since the collapse of the Soviet Union, half of Georgia’s farmland has gone out of production.”

Comment by alphonso bedoya
2018-03-01 14:06:25

I tell ya, there goes the neighborhood.
Do you think we can pitch a nice condo that will have an unobstructed view of the mushroom cloud?

Comment by taxpayer
2018-03-01 14:22:40

when does the recession start?
now , ok I get it

Comment by BlueSkye
2018-03-01 19:18:46

It’s a Recession when your neighbor loses his job. It’s a Depression when you lose yours. When you watch the news on TV, it’s a Recovery either way.

Comment by azdude
2018-03-02 07:55:22

this was a financial asset recovery for the rich.

Comment by Professor 🐻
2018-03-01 21:32:07

Any thoughts on how much further and longer the stock market will have to fall in order to price in the prospect of a trade war? It seems like it could last for a week or two at a minimum, as our trade partners make countervailing threats which seem likely to trigger an escalating exchange of mutually detrimental proposed countermeasures.

Comment by palmetto
2018-03-02 06:52:45

Judging from the screams of protest from around the globe, it would appear Trump is on to something regarding trade policy.

Buy our stuff or we’ll kill you!

Maybe they’ll eject US military bases.

Comment by rms
2018-03-02 07:44:31

“Maybe they’ll eject US military bases.”

Or stop buying our treasury bills.

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Comment by Oxide
2018-03-02 09:10:49

Trump can move the bases to the southern border.

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Comment by Mortgage Watch
2018-03-01 14:31:58

Bethesda, MD Housing Prices Crater 5% YOY As Appraisals Sink Lower

Comment by jeff
2018-03-01 22:04:05

Region IV

Comment by Professor 🐻
2018-03-01 23:34:51

Did your stock HODLings get schlonged by the tariff announcement?

Comment by Professor 🐻
2018-03-01 23:41:03

It is hard to argue that Donald Trump has failed to follow through on campaign promises.

Stocks now risk retesting February sell-off lows on trade-war fears
- March rolled in like a lion, taking a big bite out of stock market gains, and it may be a sign of more to come as investors consider a more aggressive trade policy from the White House, analysts said.
- The S&P broke an important threshold Thursday but held its 100-day moving average.
- However, some strategists said the threat of a trade war could mean stocks could retest the lows of February.
Patti Domm
Published 6 Hours Ago Updated 5 Hours Ago
Traders work on the floor of the New York Stock Exchange (NYSE) on February 5, 2018 in New York City.

March rolled in like a lion, taking a big bite out of stock market gains, and it may be a sign of more to come as investors consider a more aggressive trade policy from the White House, analysts said.

Many strategists have been expecting the market to recover from February’s lows without a retest, but this week’s harsh sell-off has some rethinking the outlook. Stocks were already having a bad week before President Donald Trump announced new sweeping tariffs on steel and aluminum Thursday.

The Dow lost 420 points to 24,608 on the first day of March and was on track for a 2.8 percent decline for the week as of late Thursday. The S&P 500 plummeted below the key 2,700 level, dropping to 2,677, or 1.3 percent, in Tuesday trading. That sent up a warning that more technical damage could be ahead.

Comment by azdude
2018-03-02 06:54:39

so it appears trump is making the same mistakes as the bush’s.

So who gets to keep all the tariffs that are collected?

Comment by jeff
2018-03-02 05:20:39

Were your conservative books burned or I mean channel taken down by YouTube?

Comment by azdude
2018-03-02 07:37:34

“But it was the market’s response that broke the camel’s back: what followed immediately after the tariffs were announced was a 30% plunge in the S&P 500, a slump in the dollar and a rally in bonds that slashed 10Y yields in half.

After receiving the verdict, both from the market and the WTO, the United States backed down and withdrew the tariffs on December 4, 2003.”

seems like trump is using this as a negotiating tool.

Comment by palmetto
2018-03-02 08:23:32

I agree. He’s also settling some scores, bigly. Probably the biggest move of his presidency.

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Comment by Professor 🐻
2018-03-02 09:01:31

Does he have a lot of enemies on Wall Street?

Comment by palmetto
2018-03-02 09:29:18

Judging from the howls emanating from the Wall Street Journal and reports of Gary Cohn preparing to commit seppuku, I’d say so.

But it appears he’s settling some foreign country scores as well.

Comment by Mortgage Watch
2018-03-02 04:13:04

Addison, TX Housing Prices Crater 7% YOY

Comment by jeff
2018-03-02 06:01:56

I saw Andrea Mitchell repeat this quote yesterday and she lit up like a Christmas tree.

03/01/18 08:00 AM

By Steve Benen

“Take the guns first, go through due process second,”

Comment by Young Deezy
2018-03-02 08:53:12

Come and take them.

Comment by taxpayer
2018-03-02 06:03:20

FED gov closes- too windy
2′ snow
holidays you never heard of
except Oxide

Comment by azdude
2018-03-02 06:51:47

“Between the March 2009 bottom and the January 26, 2018 peak, the S&P 500 index advanced at an 18% annual rate in an economy that grew at just 3.7% per annum in nominal terms. Yet in that trees-which-grow-to-the-sky context, there was no downside risk for C-suites which diverted cash flow and debt capacity into stock buybacks or vanity M&A projects: Their stock option packages kept getting ever fatter and there was no board or stock market punishment for buying at temporarily high stock prices which subsequently fell back to earth—even as interest expense remained permanently enlarged.

Over the past decade, there has been no corporate instrument of mistruth more powerful than buybacks, an issue we have dissected in these pages for years. U.S. firms have spent roughly $4 trillion on buybacks since 2009, making corporations the biggest single source of demand for U.S. shares. According to Artemis’s calculations, buybacks have “accounted for +40% of the total earnings-per-share growth since 2009, and an astounding +72% of the earnings growth since 2012.”

is it time for corporations to get schlonged?

Comment by Professor 🐻
2018-03-02 09:07:05

It seems like the ultra-low rate environment led to a decoupling of stock prices from corporate earnings.

Interest rate normalization should reverse this situation.

Comment by Mr. Banker
2018-03-02 06:55:28

A snippet …

“This Fed isn’t going to try to bail out every whiner on Wall Street. It has been clear about that. It won’t take Wall-Street whining seriously until credit starts freezing up – and the credit markets are far away from that.”

Comment by azdude
2018-03-02 08:06:20

so what level on the s&P does trump get a fed lifeline? I need numbers, not more bs out of u today.

Comment by Mr. Banker
2018-03-02 09:13:31

What u need from me is a HELOC.

Comment by Rental Watch
2018-03-02 09:44:35

And by mid-2018 the Fed (by it’s own projections) will no longer be buyers of any MBS.

They won’t be sellers, mind you (yet), but they won’t be buying any more…simply letting the bonds they have mature without repurchasing.

Comment by Rental Watch
2018-03-02 09:51:41

By the way, I think the article misstates what the Fed is doing. The $20B per month, etc. is the CAP on how much they will reduce their balance sheet.

Initially, that cap will definitely be met each and every month. However, by the end of 2018, the amount of principal repayment for both US Treasuries and MBS will be less than the $50B self-imposed cap. It is yet to be seen whether the Fed will be active sellers of bonds on the open market, or whether they will simply reduce their balance sheet as debt matures.

I suspect it will be the latter…if it all works as expected, rates will be higher (bonds will be worth less), and the Fed probably doesn’t want to press of “taking losses” by being active sellers of the bonds.

In other words, a decade out, I suspect the Fed’s balance sheet will still not be “normal”.

Comment by taxpayer
2018-03-02 06:55:39

25 pe
does this include this weeks earnings? I thought earnings were kick asz and we are still at 25 for the S&P ?

Comment by azdude
2018-03-02 08:02:30

so what imports do u get to pay more thanks to your buddy trump?

Comment by Obama Goons
2018-03-02 08:17:35

Trump Cream is free. Can I get a portrait of SHP for free?

Comment by Mortgage Watch
2018-03-02 07:30:27

Oakton, VA Housing Prices Crater 17% YOY As Housing Correction Expands Across Northern Virginia

*Select price from dropdown menu on first chart

Comment by azdude
2018-03-02 07:40:11

the FED needs buyers for its bonds. how do u get more buyers? Well a good old stock market plunge and a flight to quality might get you some buyers.

Comment by Professor 🐻
2018-03-02 09:09:41

You have to admire the outside of the box approach.

Comment by cactus
2018-03-02 08:19:02

its all about the degree you can be an idiot but as long as you have a degree..

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