Uncertainty Over How ‘Bad’ This Could Become
A report from the Corridor News. “Federal Reserve officials came and left on Wednesday. They came with an interest rate increase. They increased the range on the federal funds rate 25 basis points. The toastier the market, the more abrupt the cooling, so dictate the laws of financial physics. We refer to a recent update from Grant’s Interest Rate Observer that featured the Toronto housing market (which regular viewers of HGTV’s Love It or List It are likely familiar). Grant’s tells us that Toronto home prices – once white-lava hot – have dropped 12.4$ year over year; active listings have nearly tripled. We’re not saying similar toasty burgs in the States are in imminent danger of an abrupt cooling. We are saying to at least be alert to the possibility.”
From the Vancouver Sun in Canada. “Throughout history, politicians and the public have hated speculators on the grounds that they create scarcities, raise prices and cause hardships for consumers. This view is behind the recent decision by the B.C. government to impose a tax on unoccupied housing presumed to be owned by speculators and which is expected to lower the cost of housing.”
“The implementation of this policy has run into a number of problems that can be solved by some tweaking of the law, but it will do nothing to reduce prices in the long-run. Speculators raise house prices when they buy and keep them empty or rent them out. The speculators realize profits only when they sell them later, at which time they lower prices. In effect, speculators do not add to the demand for and cost of housing, but only smooth it through time. The real cause of the high and rising cost of housing is a continuous excess of demand over supply.”
From the Daily Herald Tribune in Canada. “Grande Prairie’s new home starts were down year-over-year as of February, as the city gradually recovers from the economic turndown and an oversupply of homes. Year-over-year declines were also seen in the Lethbridge census metropolitan area (CMA), Red Deer, Wood Buffalo, and the Edmonton CMA. Housing prices are a bit lower than last year, but that’s to be expected, given the oversupply. ‘With prices, we’re not expecting a lot of growth … What we’re expecting is the price not to move a lot as the oversupply situation resolves itself,’ said Timothy Gensey, CMHC analyst for the Grande Prairie region.”
From CBC News in Canada. “A well-known Saint John developer is being sued by 40 out-of-province investors over real estate deals in Saint John and Fredericton. John Rocca, the estate of his brother, the late Pat Rocca, several family companies, and a Montreal-area real estate investment promoter are named in the suit. The investors allege they purchased condominiums at artificially inflated prices after the units and a number of promised extras were misrepresented by the sellers.”
“Most of the buyers live in Ontario but others are from British Columbia, Alberta and Quebec. The 40 owners purchased a total of 57 units. Their statement of claim describes a rental agreement that was purchased on top of the price paid for the unit itself. ‘Due to the various misrepresentations made by the defendants, the Plaintiffs now own units which are actually valued far below the mortgages being carried on those units,’ said the claim. ‘Some of the Plaintiffs have been forced to sell their units at significant losses and are still carrying mortgages as a result of the Defendants’ blatant overvaluation of their units.’”
“The allegations have not been proven in court and are described as ‘false and outrageous’ by John Rocca, who promised an aggressive defence.Rocca said the claimants in the suit are suffering from ‘buyers remorse.’ ‘The vast majority of the individuals who purchased a condo had their condos appraised before the closing date by an appraiser picked by their bank,’ said Rocca. Rocca describes the group as ‘experienced investors’ who want to be reimbursed because the units are worth less today than when they were purchased.”
From ABC News in Australia. “It has been going just two weeks but the royal commission into the banks has had a vastly more material impact than most observers expected. Banks have been absolutely crunched as evidence of all manner of dodginess and outright fraud mounted up. The big investment bank UBS has marshalled its banking and economic analysts to look at the impact on future credit conditions that will inevitably tighten as banks are forced to become more responsible with the loans they have been selling.”
“UBS’s George Tharenou said the ‘credit crunch’ scenario could not be ruled out, even though it would clearly be unintended by regulators and policy makers — and banks for that matter. Under this scenario, house prices would likely fall over a prolonged period across a few years, according to UBS. ‘There is a great deal of uncertainty over how ‘bad’ this could become, simply because Australia has never had a fall in house prices of 10 per cent or more. Even during the GFC prices ‘only’ fell to 8 per cent over the year, but the RBA slashed rates by 4.25 percentage points and reflated the housing market, and neither have we had a domestic recession in almost three decades,’ he said.”
The Herald Sun in Australia. “Home seekers have been gifted a once in a decade opportunity to nab properties for less as Sydney’s slowing housing market puts pressure on sellers to set more realistic price expectations. With the city having largely shifted to a buyers’ market, industry figures revealed home sellers in some parts of the city have been dropping their asking prices by 10 to 30 per cent, a major departure from a year ago when vendor discounting was rare.”
“In Eastlakes, the sellers of a four-bedroom duplex on Universal St have cut $100,000 off their original price and are now expecting $1.725 million to $1.775 million. In Chifley, the sellers of a four-bedroom house in Melba Ave dropped their expectations by $500,000, while the price for a four-bedroom duplex in Caley St has dropped $75,000.”
“Greg Gladstone of South East Realty said the vendors were simply adjusting to the current market. ‘The days on the market are stretching out and buyers are not making the offers so vendors are putting in lower offers,’ Mr Gladstone said. ‘In Botany, there are lots of units going up and developers are reducing their pricing. Pagewood prices are also adjusting to the market because of developments like Pagewood Green.’”
The Daily Mail in Australia. “Australian homeowners could lose up to $100,000 from the value of their home over the next 12 to 18 months, as the nation’s housing market bubble finally bursts. With house prices falling and indications that interest rates will rise, homeowners are in for a rocky ride - particularly those who stretched their budgets to join the ‘boom’. Former federal treasurer Peter Costello recently claimed the outlook is ‘painful’, with millions of homeowners to be put under financial stress by any interest rate rise.”
“‘The problem is now that you’ve borrowed so much, how do you normalise?’ Costello told a recent Urban Development Institute of Australia conference. ‘It’s going to be slow and it could be painful - the question is will it be a hard landing or a soft landing but it’s going to be a landing.’”
“Someone who has seen the market drop firsthand is Robert Klaric, a Sydney property expert who was among the first to predict that 2017 would be the end of the boom. ‘We had a young client of ours who bought a one-bedroom apartment off the plan in Meadowbank, in Sydney’s inner-west in 2016,’ Mr Klaric said. ‘So he bought that apartment for $550,000 and was told at the time he’d get a guaranteed rental return of $450-a-week. But there’s so many units he struggled to rent it for that price and so couldn’t pay the mortgage. He’s just had to sell it for $505,000, which is a 10 per cent adjustment and a perfect example of what’s occurred in the market. By the time you add in stamp duty he’s lost close enough to $100,000 and that’s tough for a 25-year-old.’”
From News.com.au in Australia. “Though it’s not a mining town, Miles was part of southwest Queensland’s coal seam gas construction boom. Developers and investors flooded in from all over Australia, and there was a surge in new housing with 1500 new homes approved. ‘It was like being caught in a gold rush,’ said local Rachel Kerwick, president of the Miles & Districts Chamber of Commerce. ‘There were investors from Melbourne and Sydney, well-educated people who did their homework and believed the literature the government and the CSIRO all put out.’”
“At the peak of the boom, even a space at one of the local caravan parks crept up to nearly $1000 per week. Long-term residents who could no longer afford the rent moved out. But when the construction phase of all major coal seam gas projects progressed to the export phase, many mining contractors and employees were laid off. And once the Condabri workers camp that many of them were living in was emptied, the overflow of those renting in Miles were shifted to fill the camp’s 400 beds.”
“After the last of the mining workers were shifted out to Condabri, the vacancy rate in Miles rose to 45 per cent, where it stayed at for several years. ‘Rents were down to $150 a week for those fortunate to have it,’ said David Sweetapple, a real estate agent and land developer in Miles. ‘That was furnished apartments, furnished houses.’”
“According to Ms Kerwick, some people just walked out, and those who stayed all suffered financially. ‘We’re left with people whose businesses went bankrupt and who lost their homes because they took the punt and invested in building another one. Mortgages and repossessions are happening at least once a week,’ she said. ‘We have even less people than we did before [the boom]. The Miles community itself was almost decimated. Brand new homes that cost the investor $700,000 to build are being sold for $200,000.’”
From the CBC News article:
‘The condo owners allege the units were “advertised, promoted, and sold” by Montreal-based real estate investment promoter, Marie-France Dayan. Dayan owns a company called The Zen Investor. Its website says Dayan is also a life coach.’
‘According to the company’s website, “Marie F. Dayan challenges her clients … she inspires them to deconstruct the paradigms of convention that serve only as barriers to financial success and spiritual fulfillment.”
‘Dayan declined to answer questions, referring CBC to her lawyer, Robert Astell. Astell claimed his client was involved only in marketing for Rocca companies and will soon be dropped from the list of defendants in the suit.’
There’s a photo too.
‘Dayan is also a life coach.’
I ran into someone not that long ago who was a life coach for life coaches, i.e. a life coach trainer. I am not familiar with that industry but they grossed over a $500k / yr…seriously, I was pretty blown away. The things people spend money on.
It is the insanity of bubbles. It is defined by opulence, corruption, extravagance and waste.
At the height of the Japanese housing bubble (1985) I remember articles on of housewives in Nara sipping $500 cups of coffee sprinkled with gold dust and people spending millions to join golf clubs (and who didn’t even play golf).
Heck, even reading the “Great Gatsby” you see the same thing.
Unfortunately, wisdom that people used to learn from a grandparent or wise family member now has become commoditized and forms the basis for an industry. There are “mom coaches” too. Amazingly, there also are consultants who can help you pick a name for your child.
What a dingbat. The woman has rocks in her head.
I think she made that dress herself. Or bought it from a wandering mongol tribe.
FWIW, dresses and leggings with embroidery like that are now in fashion, so they are becoming common. But yeah, that one looks lo qual.
Everyone is a genius in an “easy and cheap money” housing bubble on the WAY UP.
On the way down - everyone is a victim looking to someone else to fix their own bad money losing decisions.
+++++
John Rocca said the claimants in the suit are suffering from “buyers remorse.”
“The vast majority of the individuals who purchased a condo had their condos appraised before the closing date by an appraiser picked by their bank,” said Rocca.
“They had lawyers at home and in New Brunswick represent them and some had financial advisers.”
Rocca describes the group as “experienced investors” who want to be reimbursed because the units are worth less today than when they were purchased.
“The woman has rocks in her head.”
I’m in love. Her inspired disciples flock to the banks and willingly sign debt papers that enslave them for years, for decades, and this bizarre behavior allows me a free and comforfable ride through life.
Clone her.
Let’s see if Donk Craterton weighs in.
A few years ago I read about LOHAS consumers and the SHAM industry.
Lifestyles
Of
Health
And
Sustainability
Self-
Help
And
Motivation.
LOHAS folks are the ones who were veggie/vegan, yoga, organic, meditation, tangential to the Mother Earth News and Whole Paycheck crowd, with some astrology and crystals thrown in. I was on the fringes of LOHAS. It’s actually rather comforting. But such movements rise and fall with the economy, and LOHAS didn’t escape. Remember New Age music, the Iron John manhood thing, with guys out in the woods meeting their inner child or whatever. That was mid-90s, also during an economic boom. It disappeared with the dot-com bust. Same for LOHAS. LOHAS fell with the 2008 financial crisis, at which point everyone retrenched into just getting by. No time or money for organic (grass-fed hadn’t caught on yet).
Now, SHAMs are the waste of time and money, at any time.
Hey Donk
https://www.youtube.com/watch?v=4mfg5j52oDA
“‘The problem is now that you’ve borrowed so much, how do you normalise?’ Costello told a recent Urban Development Institute of Australia conference.”
Oh, so now, after all this time, this question is finally being asked?
(chuckle)
“‘It’s going to be slow and it could be painful - the question is will it be a hard landing or a soft landing but it’s going to be a landing.’”
I have an idea, let’s take a look at what we have learned from history regarding such, er, landings.
Go here …
https://goo.gl/images/4ZUk5s
Now they realize that if you need a several decade long loan to purchase something, you can’t afford it.
As I recall, a wise man once said, “If you have to borrow for 15 or 30 years, you can’t afford it nor is it affordable.”
He’s right.
CR8R (pizzed off the whole family when I dragged them out there while on vacation a few years ago)
Santa Clarita, CA Housing Prices Crater 7% YOY As LA Area Housing Correction Expands
https://www.movoto.com/santa-clarita-ca/market-trends/
This blog is so much fun …
“‘There were investors from Melbourne and Sydney, well-educated people who did their homework …”
(snort)
“… and believed the literature the government and the CSIRO all put out.’”
Bahahahahahahahahahahahahahahaha.
“At the peak of the boom, even a space at one of the local caravan parks crept up to nearly $1000 per week. Long-term residents who could no longer afford the rent moved out. But when the construction phase of all major coal seam gas projects progressed to the export phase,…”
… IOW when THE PROJECT phase came to an end, something that well-educated people who “did their homework” SHOULD HAVE KNOWN was going to happen …
“… many mining contractors and employees were laid off.
Surprise!
“… was going once the Condabri workers camp that many of them were living in was emptied, the overflow of those renting in Miles were shifted to fill the camp’s 400 beds.”
“After the last of the mining workers were shifted out to Condabri, the vacancy rate in Miles rose to 45 per cent, where it stayed at for several years.”
Another Surprise!
“‘Rents were down to $150 a week for those fortunate to have it,’ said David Sweetapple, a real estate agent and land developer in Miles. ‘That was furnished apartments, furnished houses.’”
Bahahahahahahahahahahahahahahahaha.
“According to Ms Kerwick, some people just walked out, and those who stayed all suffered financially. ‘We’re left with people whose businesses went bankrupt and who lost their homes because they took the punt and invested in building another one.”
Bahahahahahahahahahahahahahahaha.
“Mortgages and repossessions are happening at least once a week,’ she said. ‘We have even less people than we did before [the boom]. The Miles community itself was almost decimated. Brand new homes that cost the investor $700,000 to build are being sold for $200,000.’”
Bahahahaha … the entire planet is populated by a bunch of dummies.
In case people dont know, CSIRO is the Commonwealth Scientific and Industrial Research Organisation and is an “independent agency” of the Australian Federal Government responsible for scientific research in Australia. I have worked with some of the folks at CSIRO in a previous life. That aside, those same “scientists” and government mandarins that were pumping a bubble in RE are also pumping the global warming bubble - because theres a consensus, dontcha know - and the anointed are never, ever wrong. You must trust them
Realtors are liars.
And every closing like the mansion scene in Eyes Wide Shut.
Cheeze and crackers, Housing Analyst, another new name? Get back on your meds . . .
Another government manufactured bubble about to pop
++++
“Tesla, without any doubt, is on the verge of bankruptcy.”
The Sovereign Man | 03/26/2018 | Simon Black
Just a few days ago, shareholders of Tesla approved an almost comical pay package for their cult leader CEO Elon Musk that could potentially put $50 BILLION in his pocket over the next decade.
Let’s put this figure in perspective: at $5 billion per year, Musk would make more than every single CEO in the S&P 500. COMBINED.
That’s pretty astounding given that Tesla’s own 2017 4th quarter financial report (page 24) states that Elon “does not devote his full time and attention to Tesla”.
Or more importantly, that under Musk’s leadership, Tesla’s chronic financial incompetence has racked up more than $4.97 billion in operating losses for its shareholders.
Or that the company has been under SEC investigation (without bothering to disclose this fact to shareholders).
Yet they saw fit to reward him with the largest CEO pay package in the history of the world.
This is precisely the type of behavior that is only seen during periods of extreme irrationality when financial markets are at their peak… and poised for a serious correction.
I’ll close this brief letter today quoting John Thompson, Chicago-based value investor and Chief Investment Officer of Vilas Capital Management.
I think Tesla is going to crash in the next 3-6 months. . .
. . . partially due to their incompetence in making and delivering the Model 3, partially due to falling demand for the Model S and X, partially due to the extreme valuation, partially due to their horrendous finances that will imminently require a huge capital raise, partially due to a likely downgrade of their credit rating by Moody’s from B- to CCC (default likely) which should scare their parts suppliers into requiring cash on delivery (a death knell), partially due to the market’s recent falling appetite for risk, and partially due to our suspicions of fraudulent accounting activities, evidenced by 85 SEC letters/investigations and two top finance people leaving in the last month. . .
Tesla, without any doubt, is on the verge of bankruptcy.
. . . As a reality check, Tesla is worth twice as much as Ford* yet Ford made 6 million cars last year at a $7.6 billion profit while Tesla made 100,000 cars at a $2 billion loss.
Further, Ford has $12 billion in cash held for “a rainy day” while Tesla will likely run out of money in the next 3 months.
. . . I have never seen anything so absurd in my career.
They can join Remington in bankruptcy!
How will poor Elon pay for all his expensive hobbies if Tesla goes under? LOL
He still has SpaceX, though for all I know SpaceX doesn’t make any money either.
The cult that worships Musk is beyond belief. He’s insisting that SpaceX will be launching its first Mars rocket (the so called BFR in 2019). This is a rocket that at the moment only exists on paper.
Tesla can’t assemble a lousy sedan in a timely manner, something every other carmaker in the world does, and often in 3rd world locales.
Watch “African Space Programs” on YouTube
https://youtu.be/f4CGwSqrGq8
If I had a chance to own a piece of any of his ventures, it would be Space X.
I don’t know if it makes any money, but the logically, that’s the company with a real advantage in the market (the re-use of rocket boosters).
Sure, someone else might also be able to figure out how to re-use the boosters, but Space X has a chance at gaining lots of trust before that happens.
I don’t particularly think Teslas are all that special.
Space is a big hole into which you throw money.
Space is a big hole into which you throw money.
Colonizing Mars certainly is such a hole. How will this be financially justified?
SpaceX makes a lot of hay about their boosters coming home and being reused. Bu the thing is they aren’t airliners, you don’t just refill the tank and launch. The refurb process has to be costly. And their rockets fail more than ULA’s or Arianespace’s.
Space is a big hole into which you throw money.
Like houses.
http://spacenews.com/spacex-gaining-substantial-cost-savings-from-reused-falcon-9/
““It was substantially less than half” the cost of new first stage”
And they are still working on getting the turnaround right:
“The company’s long-term goal for first stage refurbishment is to turn the stage around within 24 hours for another launch. “Looking forward for reusability, we don’t believe it really, really counts unless you can turn it around rapidly, or almost as rapidly, as you turn around an aircraft,” she said. “Our challenge right now is to refly a rocket within 24 hours. That’s when we’ll really feel like we’ve got reusability right.””
24 hours seems like a real stretch goal, but it seems likely that the refurb costs will come down over time…and if their starting point is less than 50% the cost of a new rocket, that seems like a pretty meaningful cost advantage.
Tesla has no competitive advantage that can’t be overcome with money buying today’s technology. And what they are bad at (building cars at high volumes), others excel.
To be fair, you throw money away into outer space. The near earth orbit is pretty useful. It’s packed with satellites for TV, GPS, cell phones, radio.
Way more data is transmitted around the world via buried fiber optic cable than satellite because it is faster and cheaper. The air gap usually occurs at the endpoint(s).
Not sure why there is this obsession with going to Mars, ostensibly to colonize it. There’s plenty of land in northern Canada and Siberia. Sure, it’s cold, but they have air. And gravity.
I’ve said it many times, as I worked with these Californians in the dotcom. It’s drugs. Hard drugs.
You’re right. And this clown even Tweeted about one of his hard booze and Ambien benders. Look at his eyes and he looks lit up all the time. In fact, during his interviews he even seems drugged up.
There’s plenty of land in northern Canada and Siberia.
And it doesn’t take 6 months to get there nor costs millions to get a single pound of equipment there.
And for those colonists it’s going to be a dangerous, one way trip, to live in a cramped bubble for the rest of their lives. As crappy as California is, it’s still better than Mars.
The Model Y Tesla is on the drawing board. It will go straight up in the air one mile and then come straight down and land on all four wheels. It will be the culmination of applied SpaceX technology.
Just this past week, I saw a girl jumping up and down on a pogo stick. No wheels.
Followed by the Model Z which will take off, land, and then start boring its own hyperloop tunnel, pooping out bricks which will then be shipped to Africa to build affordable housing.
This company is the poster child for everything that is wrong with the eCONomic system today. Massive financial rewards for producing nothing of value.
Some real winning financial advice from the tail end of article you posted. It might as well have come from Marie-France Dayan Zen Investor website.
“No Brainer Strategies to Ensure You Thrive No Matter What Happens Next
Perfect Plan B Guide
Invest outside the mainstream and make 12% with minimal risk
Protect your assets and become invincible to financial crisis and frivolous lawsuits
Legally slash your tax bill up to $1.2 million each year
Obtain a valuable second passport… for free”
Tesla is not going bankrupt anytime soon. EV sales are up 35% in the US YoY even though US auto sales overall are down over 2.4% YoY. Almost all other automakers are playing catch up trying to transition to EVs. VW just committed to $25 billion in batteries for the electrification of its fleet. Tesla will have some competition, but they are going to have over half a million EVs on the road before any major automaker really steps up. Chevy and Rennault-Nissan are they only ones that are even playing right now. VW is way behind. Ford is going to really struggle, as will Toyota and Honda.
If I were an exec at Toyota or Honda, why should I bother to lead the way? Leading the way strokes the ego, but it’s risky and expensive. I would sit back and allow Tesla or Nissan drain their people and reserves on figuring out how to refuel hundreds of millions of cars — charge or swap. Then, when they are exhausted and struggling and the dust settles, I would tailor my cars to whatever is decided on.
If I were an exec at Toyota or Honda, why should I bother to lead the way?
That is a fair point. The legacy automakers have a lot to lose if they disrupt themselves because the entire car manufacturing ecosystem is geared to their business model. The paradox is that if they engage in the disruption, they may impairing their well-established profit and current, lucrative business model. However, if they do not, they risk become fat, dumb, and happy and irrelevant as upstarts and new “mobility” companies, much like the cable companies are now as Hulu, Netflix, Amazon, and now Apple are entering the entertainment space.
Three vectors are quickly converging for transportation: ride sharing, self-driving, and electrification. Upstarts are the ones that can disrupt with no strings attached. Legacy automakers have the cash, however. Whether or not first-movers advantage will prove beneficial in electrification remains to be seen. After the auto bailout, the big automakers were paying building compliance EV cars so they could still sell gas-guzzling SUVs and behemoth trucks. Tesla is probably the reason the EV transition has moved forward by about 10 years. BMW’s i3 is a pretty awesome car, except for the price. It retails for $60k and it has 84 miles range. That is exactly what the market wants, a carbon fiber vehicle with 84 miles EV range.
The network effect may mean that Tesla wins by default. They have so many superchargers now that the convenience of being able to recharge on road trips is a huge advantage. They are way ahead. Other automakers might be able to catch up, but they better hurry or else it will be too late.
“The entire car manufacturing ecosystem is geared to their business model…. ”
“Hulu, Netflix, Amazon, and now Apple ”
I don’t believe that you can equate disruption in the vehicle industry with disruption in the image and information industries. People are still physical people. Note that ride sharing and Uber may have disrupted the taxi industry, but it didn’t disrupt the idea of cars themselves, or roads either. Uber didn’t change the car ecosystem. You still have the same number of people who need to get their physical bodies somewhere, and the same number of cars on the roads. The only difference is that you’re using an Uber driver’s car instead of your own, ie. there’s one less car in a driveway somewhere. Electric cars won’t change the car ecosystem either. You’re just filling up the tank differently, but you’re still building cars and you’re still driving on roads to get somewhere. Same for self-driving cars. Humans may be driving less, but the cars themselves are still cars, still on roads.
The information industry was disrupted by using an electron packet instead of a physical thing. So in order to disrupt the car industry, I guess you’d have to send an electron packet instead of a human. Teleworking (so you don’t have to commute), teleport (so you don’t need to drive), and synthesizing your food from a tank of protein (so you don’t need to go to the store). Basically, Star Trek. Then we never have to leave the house.
Of course, this only applies to wealthy hipster knowledge workers. You’re always going to have an underclass of people keeping the electricity on. And they can’t telework.
Uber didn’t change the car ecosystem. You still have the same number of people who need to get their physical bodies somewhere, and the same number of cars on the roads.
You are 100% correct. The much maligned–and rightly so–Travis Kalanick used to tout that the end game for Uber is not a replacement taxi fleet with a newfangled smart phone app. Travis had been beating the drum of self-driving for years, which is why he hired Levandowski and bought Otto, the self-driving trucking company. Uber will not mean much unless they get to self-driving cars. They are losing a lot of money as it is, and their prospects are probably worse than Tesla if they don’t turn the corner. They don’t actually own or produce anything, they are just the intermediary. For Uber, the humans are just place holders. Same with Lyft; they have partnered with NuTonomy for self-driving. It’s hard to keep track these days of the car/tech/ride sharing alliances.
If Uber/Lyft/Waymo/Tesla/Apple do get to self-driving fleets, then that changes the calculus dramatically. The potential to have houses with no garages because car ownership is now far more expensive than subscribing to a car mobility service is the real end-goal. Remember, cars sit idle 95% of the time, so it’s a very underutilized asset. Tesla’s plan is to allow owners to put their vehicles in a pool and earn money while it is idle. The details of this Tesla Network have not really been fleshed out. But the concept of all of these new business models is extremely. The aim is to make car ownership optional. Remember, Netflix first started out by simply allowing people to mail DVDs. That was just the springboard to allow them to become the streaming giant and, later, a huge content push as they now have burnished their credentials.
The New York Times Magazine devoted an entire magazine to fully self-driving cars a few months ago. It was a deep dive and it re-imagined how every aspect of society might be transformed. Some of the articles were very thought-provoking:
https://www.nytimes.com/interactive/2017/11/08/magazine/tech-design-autonomous-future-cars-100-percent-augmented-reality-policing.html?mtrref=www.google.com
But the concept of all of these new business models is extremely disruptive.
Yeah, that’s wonderful, but who is profitable right now?
Uber?
Lyft?
Tesla?
Netflix?
Spotify?
Netflix had profit of $178 million in 2017. None of the others are profitable yet.
EV sales are up 35% in the US YoY even though US auto sales overall are down over 2.4% YoY.
Another BS statistic. As of the end of January, EV sales rose from 11547 units to 13751 units. That’s 20%, but your numbers might be a little more recent. Meanwhile, 16-17 million vehicles are sold *each month*.
Electric vehicles just aren’t there yet.
“Meanwhile, 16-17 million vehicles are sold *each month*.”
Is that sold, both new and used?
The 17MM number is the annual rate for new cars, not a monthly rate.
Otherwise, we would be selling a new car for every US household every year…and that makes no sense what-so-ever.
No, you’re right. They keep seasonally adjusting that figure every month, so I thought it was a fresh 17M/month. It averages around 17M per year.
And that’s new vehicles total, foreign domestic sedan truck SUV etc.
Oxide, here is a link to EV sales:
https://insideevs.com/monthly-plug-in-sales-scorecard/
Feb 2017 = 12,375
Feb 2018 = 16,745
That is the 35% increase YoY. Total EV sales in the US are maybe only 1%, so a drop in the bucket. In Trump’s beloved Norway, EVs are now at 32% of total vehicle sales, but over half of all vehicle sales are either electric or hybrid. But Tesla has recently started outselling the German luxury cars (Mercedes S-Class and BMW 7-series) in their own country. That should be a pretty good indicator of what the future will look like.
Toronto is in the “Not giving it away” phase of an epic housing collapse.
++++
Grant’s tells us that Toronto home prices – once white-lava hot – have dropped 12.4$ year over year; active listings have nearly tripled.
So a central Texas website has someone subscribed to a newletter and they found this information. Interesting that US media (besides the odd Bloomberg piece) are unaware of what’s happening in Canada and Australia. One would think that the discovery of a bursting housing bubble might garner more interest given how red hot things are in places. Heck, few people even know the Miami Beach and Manhattan bubbles have popped.
Buy we do get 24/7 coverage of Stormy Daniels and little marxists wanting to ban guns.
The fake legacy news media has an agenda.
And it is not to report to the news.
15.5% mortgage rates have zero effect on real e$tate market$!!!
Headline banner from The Taoist Amish Times
Malaysia proposes law that would make spreading fake news illegal!
https://finance.yahoo.com/news/malaysia-proposes-law-spreading-fake-183900837.html
I have come to the conclusion that the U.S. mainstream media is in the job of advancing approved narratives and as a result is unaware of just about anything that matters. In fact, awareness actively is penalized in that culture.
This is a great article and well worth your time to read.
The same logic applies to the housing bubble.
https://wolfstreet.com/2018/03/24/so-is-the-trade-war-crushing-stocks/
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So is the “Trade War” Crushing Stocks?
Wolf Richter • Mar 24, 2018
OK, it was an ugly week. Facebook (FB) dropped 14% and lost $75 billion in market cap. It’s down 10% year-to-date. It’s currently trying to dig itself deeper into its self-inflicted debacle. It wasn’t just Facebook. Alphabet (GOOG) dropped 10% in the week and is down 2.4% year-to-date. This was a broad selloff.
The S&P 500 index dropped nearly 6% for the week and 9.9% from the peak on January 26. It’s down 3.2% year-to-date. At 2,588, it’s just 7 points above the low point on February 8, which is begging to be taken out on Monday. This drop is big enough to show up on a long-term chart, but given the nine-year 320% rally, why would anyone be surprised?
The Nasdaq dropped 6.5% for the week, and 7.8% from its peak on March 12, but is still up 1.3% for the year.
When stocks soared no matter what, it was because they were “climbing a wall of worry,” which is, as it was ceaselessly pointed out, what bull markets do. Bad news was good news. It didn’t matter what happened. The worse the news was, the more stocks would climb. Falling earnings and revenues no problem. Geopolitical nightmare scenarios no problem. Trump’s promises during the campaign and after the election to fix the trade imbalances in the US were just as well communicated as his promises to cut taxes. From the day Trump was elected until its peak on January 26, the S&P 500 soared 30%.
And yet, suddenly, according to Wall Street analysts and the media, the universally declared culprit for the sell-off this week was the decision by the White House to do what Trump had been promising to do since the campaign.
When markets head south, the media and analysts are trying to find a reason, other than reality. This time, the excuse du jour was the risk of a “trade war.” Next time, it’s some other excuse du jour.
Reality is a little harder to stomach for these folks. The stock market is horribly overpriced, with many individual stocks at absolutely ludicrous levels. This is a flaming stock market bubble. Every indicator has been pointing it out for years. At some point, bubbles reach their maximum and begin to deflate.
In addition, the Fed has been tightening, and the markets have been fighting the Fed. This always ends the same way. Eventually, the markets will back off from fighting the Fed, and this leads to a long series of downward adjustments in the markets.
The Fed has also been unwinding QE. This started in October with baby steps that are now accelerating. Just as ZIRP and QE caused the biggest bout of asset-price inflation the world has ever seen, rate hikes and the QE-Unwind will reverse some of this. It’s not a secret. What are people thinking?
Toronto, Manhattan, Miami, London…
So many “can’t lose” red-hot housing cities now in just the red.
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London House Prices Falling Sharply - UK’s Much Needed Wake-Up Call
ZeroHedge - 03/26/2018
London house prices falling at fastest pace since 2009
- Values fell by 2.6% in year through January
- London house prices likely to be weakest in UK over next five years
- Inflated prices make London property more exposed to economic and political shocks
- Worries over house prices are having a knock-on effect in wider economy
A new study by Acadata as covered by Bloomberg has found house prices in London are falling at their fastest pace since 2009. In the year through to January, London house prices have fallen by 2.6%. In the Greater London area they are down 0.8% in the last month alone.
Whilst the house price crunch is reportedly only happening in London and the outskirts, in the UK the repercussions are being felt everywhere. A report by Visa has found that last month consumer spending, fell for the ninth month in the last 10. This suggests that Brits are worried about a collapse in house prices.
The fall in London house prices is likely a warning shot before prices begin to fall elsewhere. Policy makers and the government should pay close attention. This will prove to be a lesson in how pumped up asset prices and low interest rates are no way to support a growing economy.
A fall in prices does not just mean that property is finally affordable. It means thousands of people will face negative equity, industries such as home builders will collapse and consumer spending will fall. All this against a backdrop of increased interest rates, rising inflation and uncertainty over Brexit.
“house prices falling at fastest pace since 2009″
We’ll be seeing numerous versions of that headline alot in the near future!
Soros spent some serious coin this gun grabbing weekend.
David Hogg has such a punchable face
He looks rather like a young Mike Pence, IMO.
Nice raised fist gesture, there. Disarm or we’ll kill you.
Notice how the media completely forgot the FBI got a call saying this was going to happen and did nothing.
I’m really worried about a guy who probably wears his jeans below his a$$ and has a neck smaller than my wrist. I do wish we’d cut to the chase on this cuz we’ve already said, come and take it!
He’s just another half-wit wearing his sisters hot pants looking for his moment in the spotlight. Then they become realtors.
Notice how the media completely forgot his father is a (supposedly former) FBI agent?
Oh, HEY, and what’s this:
Pulse Nightclub Killer’s Father Was Decade-Long FBI Informant, Planned Terrorist Attacks Against Pakistan
https://www.zerohedge.com/news/2018-03-26/pulse-nightclub-killers-father-was-decade-long-fbi-informant-planned-terrorist
Yeah, the more this stuff goes on, the more I feel like “Let’s roll.”
Always the FBI is somehow, somewhere behind this stuff.
Where is the picture of the outgoing Obama administration with the nasty looks on everyone’s faces?
He looks rather like a young Mike Pence, IMO.
I think he looks like a young wannabe left wing version of Shkreli.
Yeah, that pulse night club/fbi connection definitely raises my antenna. And this junior mint nazi gun grabber is the son of an fbi agent, and we have the possibility that the vegas shooting investigation was suppressed by the fbi.
Time for Trump to roll the guillotines. I’m open to whether McCabe or Comey should go first - maybe both together.
Pay per view!
Some of the comments on the Zero Hedge article are sobering. I don’t know if I can believe anything from the media anymore.
The Las Vegas massacre is particularly troubling to me in terms of the lack of transparency into the investigation and the fact that the FBI was essentially standing behind the local police at every single press briefing as if to make sure that the cop followed the script.
And this Stephen Paddock lone wolf thing just does not add up. No motive, no accomplices, no warnings, no prior criminal record, multi-millionaire professional gambler and video poker machine high roller (give me a break, those machines NEVER lose), etc. This crap does not pass the sniff test.
“Time for Trump to roll the guillotines.”
You might want to lighten up on your policy recommendations, or at least read up on French history to see how well things turned out the last time guillotines were in fashion. Like yourself, Robespierre was a big advocate of the guillotine as a policy panacea. Things turned out rather badly for him.
https://en.m.wikipedia.org/wiki/Maximilien_Robespierre
“Time for Trump to roll the guillotines.”
You might want to lighten up on your policy recommendations, or at least read up on French history to see how well things turned out the last time guillotines were in fashion. Like yourself, Robespierre was a big advocate of the guillotine as a policy panacea. Things turned out rather badly for him.
Lighten up Frances.
“David Hogg has such a”
DAVID HOGG CAUGHT LYING ABOUT WHERE HE WAS DURING PARKLAND SHOOTING
Anti-gun activist told CBS he was at home during massacre
Jamie White | Infowars.com - MARCH 26, 2018 1091 Comments
Anti-gun activist David Hogg made contradictory statements about where he was when the Parkland shooting took place, based on several video interviews.
For example, in this interview, Hogg describes being in an “AP environmental science” class when he heard gunshots, which he claims prompted his teacher to shut the door.
“So yesterday I was in my AP environmental science class, we had taken out all of our notes and we’re about to pack up to leave school and we hear a ‘pop’ and it happened to be a gunshot that echoed through the hallway,” Hogg told MSNBC last month. “And because of that, my teacher actually went and closed the door but as soon as she closed the door the fire alarm was pulled so this sick man could get more soft targets.”
He repeats the story, more or less, in this video:
But in another interview with CBS News, Hogg says he was at home during the shooting, and had to ride his bike several miles to get to Marjory Stoneman Douglas High School to “get as much video as he could” of the event.
“On the day of the shooting, I got my camera and got on my bike and rode as fast as I could three miles from my house to the school to get as much video and to get as many interviews as I could because I knew that this could not be another mass shooting.”
These contradictions aren’t unusual for Hogg.
https://www.infowars.com/
“Soros spent some serious coin this gun grabbing weekend.”
SOCIOLOGIST: LESS THAN 10 PERCENT OF MARCH FOR OUR LIVES PARTICIPANTS WERE CHILDREN
Daily Caller - MARCH 27, 2018
A sociologist on MSNBC threw cold water on all the media’s claims that the March For Our Lives protests were spontaneous and led by the nation’s children during a “Morning Joe” segment on Monday.
University of Maryland sociologist Dana Fisher conducted a study of the demographics of Saturday’s march in Washington, D.C., and discovered that only less than 10 percent of those in the crowd were under the age of 18.
While Fisher tried to make it sound like these individuals were all potential voters, it is likely that many of those who showed up were simply run-of-the-mill liberal activists.
The study was done by going through the crowds with tablets and conducting surveys of participants and then extrapolating trends from the data collected, according to Fisher.
Yup, I said that before the march. Sure they’ll put the kids in the front row, but it was definitely just another march. The speeches are always the same. We’re together, we will unite, we hate Trump, we like hastags, we like hash, we make our voices heard, they’ll have to listen to us now, we have more people here than at Trump’s inauguration.
Etc.
You know who I admire? Ambra Battilana Gutierrez. She’s the model who brought down Harvey Weinstein. She didn’t make up a cutesy hashtag, or make allegations 25 years after the fact, or cry alligator tears, or put on a pretty gown to “raise awareness.” She actually did something useful. She’s the one who wore the wire. If these activist libs actually did something useful liek that, instead of jawboning on march after march, I’d be more inclined to listen to them.
Yeah, like Santorum said.They should do something useful, like learning CPR:
“How about kids, instead of looking to someone else to solve their problem, do something about maybe taking CPR classes or trying to deal with situations where there is a violent shooter and you can actually respond to that?” Santorum said. He continued: “They took action to ask someone to pass a law. They didn’t take action to say, ‘How do I as an individual deal with this problem? How am I gonna do something about stopping bullying in my community? What am I gonna do to actually help respond to a shooter?’”
https://www.washingtonpost.com/news/morning-mix/wp/2018/03/26/doctors-assure-rick-santorum-learning-cpr-wont-save-mass-shooting-victims/
When bigger and bigger government creates bubbles to buy votes - those that have supported the growth of government should feel the full effects of their voting decisions - NOT be sheltered from them.
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Teachers can’t afford Miami rents. The county has a plan: Let them live at school.
Miami Hurled | 3/26/18 | D Hanks
Amid a wide gap between modest teacher salaries and Miami’s high housing prices, the county has a new plan: build apartments on school property and let faculty live there.
A preliminary proposal includes constructing a new mid-rise middle school in the luxe Brickell area for Southside Elementary, with a floor devoted to residential units, and several more reserved for parking and the classrooms on top. If that goes well, Miami-Dade wants a full-fledged housing complex next to Phillis Wheatley Elementary, with as many as 300 apartments going up on the campus just north of downtown.
County teachers would get priority for the apartments, but the school system doesn’t plan to reserve units for faculty at the schools involved. Still, the apartments would likely be most in demand for those teachers, given the non-existent commute.
“When you look at teacher salaries, it’s just impossible for them to get into the housing market,” said Ned Murray, associate director of Florida International University’s Metropolitan Center, which studies the gap between income and housing in Miami. Using school property to create housing for the school system’s workforce “is a good idea, because land is such a difficult piece of the puzzle.”
The proposal touches on some dicey territory. Miami-Dade’s housing arm would be creating units reserved for a single workforce — the roughly 31,000 full-time employees of the school system. The plan is to give teachers priority on the units, then the rest of the employees, said Lisa Martinez, chief strategy officer for Superintendent Alberto Carvalho.
For Ana Valdes, the plan would mean a welcome lifestyle change and an ideal commute. The kindergarten teacher at Southside and her daughter live with Valdes’ parents in Palmetto Bay. She blames a salary of about $43,000 a year and housing prices that are just too high for even modest apartments . “I always thought, ‘Oh, what if I lived in Brickell?’ ” she said. “But even a one-bedroom costs you close to $2,000.”
“In effect, speculators do not add to the demand for and cost of housing, but only smooth it through time.”
I think Herbert is not so good at math concepts. His statement could only be true if no speculator ever owned a house, ever, through time. It could only be true if there was never any misallocation of resources, like building houses four times normal size. It could only be true if there was never any wealth extraction from renters who pay exorbitant rents during bubbles.
“At the peak of the boom, even a space at one of the local caravan parks crept up to nearly $1000 per week. Long-term residents who could no longer afford the rent moved out…After the last of the mining workers were shifted out to Condabri, the vacancy rate in Miles rose to 45 per cent, where it stayed at for several years…Rents were down to $150 a week for those fortunate to have it…’we have even less people than we did before [the boom].’ The Miles community itself was almost decimated. Brand new homes that cost the investor $700,000 to build are being sold for $200,000.”
While it’s Australia, these kinds of stories actually give me warm fuzzies. The greed is absolutely sickening during these bubbles, and people were charging $1,000 per week to park an RV. That’s for a parking space, and it displaced a bunch of poor people who were barely scraping by as it was. You know what? Fawk you. I am so happy you went broke you miserable pieces of garbage.
This isn’t unlike a story I read out of Texas in the not too distant past. I’ll see if I can find the link. A woman was boohooing after her nasty, rundown trailer park was about empty after oil prices drifted into the $30 range and the oil patch started drying up. Some sob story about how she had increased her size but now she couldn’t make her loan payment or something. Somebody cue up the world’s tiniest violin.
via GIPHY
Portland, OR 97239 Housing Prices Crater 14% YOY As Heroin Epidemic Ravages West Coast</b.
https://www.zillow.com/portland-or-97239/home-values/
*Select price from dropdown menu on first chart
Only Oxide n I survive
See budget bill
‘So he bought that apartment for $550,000 and was told at the time he’d get a guaranteed rental return of $450-a-week. But there’s so many units he struggled to rent it for that price and so couldn’t pay the mortgage. He’s just had to sell it for $505,000, which is a 10 per cent adjustment and a perfect example of what’s occurred in the market. By the time you add in stamp duty he’s lost close enough to $100,000 and that’s tough for a 25-year-old.’
‘was told at the time he’d get a guaranteed rental return of $450-a-week. But there’s so many units he struggled to rent it for that price and so couldn’t pay the mortgage’
Did this FB get this guarantee in writing? Sounds like he didn’t.
‘he’s lost close enough to $100,000 and that’s tough for a 25-year-old’
I keep thinking, 100k pesos is a lot of money.
with escrow and real estate fees u are underwater 10% as soon as u get the keys.
This guy must have SUCKER written on his forehead, and likely never took math. Because, $450 per week = $450*52/12 = $1,950 per month. If you told me that a $550,000 rental was going to garner $1,950 in the market, I would laugh heartily and move on. I wouldn’t even pay $250,000 for something that was renting for that amount. $195,000 is the going rate. 100x rent - the old standby.
u sill on facebook?
Huh? I’ve never even had a Fakebook account.
Hold on there Swandive. Let me introduce you to Jingle Math. The $550,000 doesn’t enter into it at all. You borrow that, well except for maybe 50 Grand. That’s a cash flow of 47% of money invested. Maybe we’ll call that our ROI. Cash Flow baby. Where you going to get a return like that? Even better, you borrow some of the $50K from your mom. The returns would be astronomical!
When I was 25 and had been married for six years I could probably come up with $500. Actually, I remember buying a lathe for $600 around then.
I own several rentals and have been a landlord for 15 years. Not in my wildest dreams nor at the depths of the housing crash, could I get a $1950 rental for $195K. Closest I have is one I bought for $230K and is rented at $1600. It’s worth in the neighborhood of $260-270K now and I plan to increase rent to $1650 when the lease is up for renewal this summer.
$195K would rent for maybe $1200 in my neck of the woods. And that’s if you can find one. Anything under $200K sells within hours from being listed.
‘Not in my wildest dreams nor at the depths of the housing crash, could I get a $1950 rental for $195K’
I was asked to find a 1031 deal in 30 days. Found a 4 plex that rents $2600 a month for $265K in 2014. Not distressed either. You need to bargain a little harder.
Yeah, really. These Johnny-come-lateleys are the ones responsible for prices getting so screwed up. A lot of them think it’s normal to kick in a little of their own cash each month to cover the expenses. What a joke.
“the depths of the housing crash”
Housing experienced a very mild correction. There was no crash.
“I own several rentals and have been a landlord for 15 years. Not in my wildest dreams nor at the depths of the housing crash, could I get a $1950 rental for $195K.”
Well that’s your problem - you’re nothing but a newbie operating in bubble times. It never used to be that way. 15 years ago puts you at 2003 - WAY into the bubble already, which started in the 1990s.
A couple weeks ago I was in Myrtle Beach with my lady friend and cruising companion. She took a class in wire jewelry and bought some colored aluminum wire on my ccd. My treat, It wasn’t a big deal.
The last couple of days I’m getting splattered with internet ads from Alibaba for colored aluminum craft wire. I’ve never done a google search for this stuff or bought it over the internet. Very creepy.
Who has (and is selling) your data?
I think they use tracking cookies. IIRC, Google chrome has an extension to stop that
The thing is, I never looked this stuff up on Google.
No, she brought her own. I had my WiFi card on board the Airstream, so I suppose we had the same IP address. Maybe that is it.
It’s concerning for sure.
All Your Data Are Belong To Us . . .
Finally, people are waking up to this fact. We have blown past the novel ‘1984′ in terms of the depth of the surveillance state.
Sounds like Google bought your credit card purchase records, and then used those records to sell targeted advertising to interested parties.
And she’s never used your computer?
I just can’t seem to put my reply in the right place!
I’m convinced credit card sales data is being sold or otherwise being factored into your choices.
The thing is - the Credit Card company doesn’t have to sell it to a third party at all for this to happen (and thus they can say they don’t sell your data) - instead they offer a service to the merchant - give us a list of everything you sell, and who you have identified via their browser. If they are one of our customers, we’ll give you a targeted advert recommendation. No data sold.
BlueSkye
https://www.digitaltrends.com/mobile/is-your-smartphone-listening-to-your-conversations/
The courts need to shut this stuff down. Enough is enough.
What would a digital cloud plan cost without data harvesting?
You don’t get it. YOUR data is what is keeping our economy going right now!
Be careful in what you are asking for. I don’t like it either, but don’t be fooled - the deep state by design set everything up exactly as they want it to be. The courts aren’t going to change that, or judges will wake up dead in the morning with a pillow over their head.
https://www.yahoo.com/finance/news/suspect-arrested-cyber-bank-heists-150300318.html
“The stolen cash was ultimately laundered with cryptocurrencies.”
Albany, OR Housing Prices Crater 23% YOY
https://www.movoto.com/albany-or/market-trends/
Oops. Look above.
I was just checking out listings in a podunk town where you used to be able to buy a house for under $50,000. This is a place where unemployment is always high, and wages low. Now, a buildable lot is running $50,000.
Here’s an example of what I’m talking about, and this is an even more remote location. Huge commutes, not exactly a great quality of life. Even minimum wage jobs are REALLY hard to find. Pre-bubble, you could buy these houses for $20,000 all day long. Now look at the prices.
https://www.windermere.com/listing/76733819?overlay=true&xdm_e=https%3A%2F%2Fwww.windermere.com%2Fsearch&xdm_c=default1461&xdm_p=4
And not only to buy, but to rent as well . . . last year I was out in (middle of nowhere) Morrow County, OR, where they were asking something like $800/month just for an RV parking space.
when u inflate stock and home prices people have money to buy stuff.
When are you gonna hit the housing lottery?
“We’re not saying similar toasty burgs in the States are in imminent danger of an abrupt cooling. We are saying to at least be alert to the possibility.”
This is ‘Merika. Housing price declines here are unpossible.
Debt is MONey
https://www.reuters.com/article/sweden-housingstarts/swedish-housing-starts-seen-falling-15-pct-as-boom-ends-trade-group-idUSL8N1R41UK
“The building boom is thereby coming to an end,” it said.
Seminole, FL Housing Prices Crater 32% YOY
https://www.movoto.com/seminole-fl/market-trends/
“UBS’s George Tharenou said the ‘credit crunch’ scenario could not be ruled out, even though it would clearly be unintended by regulators and policy makers — and banks for that matter. Under this scenario, house prices would likely fall over a prolonged period across a few years, according to UBS.”
WEalth EffECT
Our economy is based on rising stock and home prices.
This is worth watching…
excerpt:
Uncle Sam needs to borrow a ton of money this week — in the middle of a fight with its biggest creditor.
The United States plans to sell about $294 billion of debt, according to the Treasury Department. That’s the highest for a week since the record set during the 2008 financial crisis.