June 21, 2018

This Summer’s Market Has Turned Out To Be Crowded

A report from the Sierra Sun. “As we reach the end of January 2018, it’s interesting to note that the inventory of Incline Village and Crystal Bay residential real estate currently for sale on the multiple listing service is far less than what it was just 2 years ago. Part of the reason that we have seen the inventory drop to its lowest level in several years is the unusually high rate of sales during the past two years. In 2016 and 2017, we had well over 400 properties closing escrow each year in Incline Village and Crystal Bay. This is well above the historical norm of the mid 300s that we saw in 2014 and 2015.”

“Realistically, we are not going to see a return to the boom times of 500 to 600 residential transactions per year anytime soon unless there is some type of extraordinarily positive economic event or a new buying mania grips the general public.”

The Portland Mercury on Oregon. “Portland City Council is considering adding two new fees to Portland’s growing Airbnb market. Over a dozen Airbnb hosts spoke in opposition to the ordinance at a June 13 city council meeting, calling it ‘regressive’ as well as a threat to their own ability to afford Portland’s housing prices. ‘Airbnb is helping thousands of Portlanders like myself to monetize our biggest asset and stay in our homes,’ said Airbnb host David Bo at the meeting.”

“Data from Insideairbnb.com, an independent website that provides data on Airbnb’s footprint in major cities, shows the company has more than 4,700 listings in Portland. Entire houses and apartments (as opposed to a single room in a home) make up about 66 percent of those listings. The proposed fee, however, is meant to address a housing crisis that is exacerbated by a glut of STRs in Portland.”

From Curbed Seattle in Washington. “Despite a glut of luxury apartment towers moving into Seattle, very few of them are actually the condos they appear to be—except when they suddenly switch it up. A 41-story tower coming up at Sixth Avenue and Wall Street, bordered on one side by Denny Way, will be condos and not rental units as originally planned. The building broke ground on Tuesday.”

“The project, now dubbed ‘Spire,’ has been in the works since 2006, when California-based Laconia Development bought the property. Plans were ultimately abandoned during the recession, then picked back up in 2013, when it started winding through design review.”

From Builder Online on New York. “Home prices and sales inventory in Manhattan, Brooklyn and Queens spiked in May, with inventory across the city reaching all-time highs, according to StreetEasy. The company said that while sales inventory often peaks in May amid home-shopping season, this year set new records. Inventory in Manhattan rose 16.7% compared to last year, the largest year-over-year increase on StreetEasy record. Brooklyn and Queens saw similar surges, with inventory up 23.4% and 42.8%, respectively.”

“While inventory levels rose dramatically, the number of recorded sales fell for the third consecutive month. Recorded sales dropped in every submarket across Brooklyn, Manhattan and Queens, with the largest annual dips occurring in Upper East Side, Midtown and the Rockaways.”

“One out of every six homes received a discount. 16% of homes for sale were discounted, an increase of 3.6 percentage points year-over-year. ‘Sellers are betting on a wave of demand from the peak shopping season, but this summer’s market has turned out to be a crowded one,’ says StreetEasy Senior Economist Grant Long. ‘Higher-end homes, particularly those joining the market from the ongoing stream of new development, will be pressured to lower prices or linger on the market. This summer is poised to offer an excellent negotiating opportunity for buyers with big budgets.’”

The Voice of San Diego in California. “Kirk Effinger, a Realtor and writer from Escondido, gets very defensive in his letter to Voice of San Diego in response to a recent op-ed by Russell York. In Effinger’s letter, his aggressive tone would suggest that York hit a raw nerve by pointing out the fly in the ointment of the ‘build anywhere and everywhere’ paradigm. This glut of high-end housing is not being purchased by people trading up, as Effinger argues.”

“Effinger shrugs his shoulders, admitting, ‘Will the housing being proposed in the unincorporated areas of the county be largely available only to upper-middle and upper-income families? Perhaps.’ This lack of certainty echoes the Building Industry Association’s position that we can’t guarantee affordable housing but maybe, just maybe, if we build enough high-end housing, it will somehow trickle down to the poor and the homeless. Unfortunately, the facts have not borne this out. When we produced 152 percent more ‘above moderate’ units than needed between 2007 and 2014, it had no impact on housing costs overall.”

From KSBY in California. “Mission Hills residents are buzzing about plans for a new supportive housing facility called Brisa Encina. The County of Santa Barbara posted a sign for public notice. Some neighbors do not support the planned project. ‘I don’t like the idea of them putting a facility up here when they have so many vacant buildings downtown,’ said Denise Rojas, Mission Hills resident.”

The Hartford Business Journal in Connecticut. “Hartford area sales of existing dwellings — as well as inventory — dropped in May just as the peak summer sales season opens, Realtors say. There were 1,089 single-family houses sold last month, down 2.3 percent from 1,115 units closed on in May 2017, Greater Hartford Association of Realtors (GHAR) said. Median price for those sold homes fell 1.7 percent, to $225,000 vs. $$228,900 a year earlier.”

“The inventory of houses for sale plummeted 13 percent to 5,344 units available from 6,147 for sale a year ago, GHAR said. A lack of inventory — or too much — impacts sales and prices. ‘Low inventory levels are making it difficult for housing sales to progress,’ said GHAR CEO Holly Callanan.”

From Tap into Newark in New Jersey. “Prominent members of Newark’s African-American clergy community converged at an Essex County government hearing to argue that additional measures are needed to find some relief for local homeowners facing foreclosure. ‘This is a crisis of epidemic proportion in our particular county,’ said the Rev. Ronald Slaughter, the pastor of St. James AME Church in Newark, at a hearing held earlier this week at the Essex County Hall of Records. ‘To put someone out of their home after 15 or 20 years for missing a few payments, and not allowing them to make things right, is a crisis.’”

“According to a January report from ATTOM Data Solutions, New Jersey led the nation in foreclosures in 2017 at a rate of 1.61 percent of all housing units, compared to a rate of .51 percent nationally. The report noted that as of the end of 2017, there are 57,559 New Jersey properties with a foreclosure filing, including default notices, scheduled auctions or bank repossessions. Essex County has been particularly hard hit by the wave of foreclosures. According to statistics cited by Slaughter, provided by Essex County Sheriff Armando Fontoura, the county executed about 3,000 foreclosure notices in 2017.”

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Comment by Ben Jones
2018-06-21 09:14:14

‘exacerbated by a glut…a glut of luxury apartment towers… sales inventory…this year set new records…This glut of high-end housing is not being purchased…they have so many vacant buildings downtown’


’sales of existing dwellings — as well as inventory — dropped in May just as the peak summer sales season opens, Realtors say…Median price for those sold homes fell 1.7 percent, to $225,000 vs. $$228,900 a year earlier.’

‘A lack of inventory — or too much — impacts sales and prices. ‘Low inventory levels are making it difficult for housing sales to progress’

Now hold on Holly, the UHS have been saying low inventory makes rocket go now. And you are standing there with a straight face telling us low inventory makes sales slow and prices go down? Why that means a bunch of your fellow UHS are a lion!

Comment by Ben Jones
2018-06-21 09:27:09

‘we produced 152 percent more ‘above moderate’ units than needed between 2007 and 2014′

For seven years. Not building enough?

Comment by Mafia Blocks
2018-06-21 11:08:37


Not in Arlington, VA

Arlington(North Rosslyn), VA Housing Prices Crater 26% YOY As Double Digit Price Declines Spread



Comment by Mafia Blocks
Comment by oxide
2018-06-22 04:43:50

Shortage… of luxury and high-end. Says so right in the article.

I was driving around some nicer outer suburbs the other day. Higher-end estate-type houses, in the $700K-$1M range, are languishing and prices are being cut 10%. Even more if the seller is motivated.

Comment by taxpayers
2018-06-22 07:01:08

in Peoples Republic of MD ?

can’t be

Comment by cactus
2018-06-21 09:18:46

Big Tech really doesn’t want to loss access to labor, And these guys will pay up to live here .. yea its expense to live in CA I wonder why ??

“By way of background, the Silicon Valley Leadership Group was created 41 years ago by David Packard, Co-founder of Hewlett Packard. Today, the Leadership Group consists of 360 employers - large and small - from throughout our innovation economy. Our country has been built through the brains, and on the backs, of immigrants who have often risked everything to seek a better life in the United States. We celebrate the fact that 53 percent of the engineers that fuel Silicon Valley’s innovation economy may not have been blessed to be born here, but were eager to come here and contribute to the innovation that is world-renowned and recognized. We celebrate the fact that more than half of the innovation economy companies formed today have an immigrant CEO or member of the founding team. We celebrate a rich diversity that unifies and strengthens both our economy and our communities.”

Comment by Ben Jones
2018-06-21 09:58:47

‘A 6-year-old Costa Rican boy was rescued by U.S. Border Patrol agents after he was abandoned on a border road in Arizona on Tuesday evening. The agents discovered the boy just north of the border west of Lukeville in temperatures over 100 degrees. The child claimed that he was dropped off by “his uncle” and that Border Patrol would pick him up. Agents say the boy said he was on his way to see his mother in the U.S.’


Probably just got his GPS settings wrong. Happened to me all the time when I was six and on a multi-national walk.

Comment by Boo Randy
2018-06-21 10:23:40

Our media sheepdogs have convinced me that anyone opposed to open borders is a horrible person, as well as being a racist and xenophobe. We must welcome and support all the wretched teeming hordes…for the children.


Comment by OneAgainstMany
2018-06-21 10:59:03

To Trump’s credit, he has listened to the broad coalition from both sides asking for more humane treatment of migrant families. I applaud him for adjusting his stance. Zero tolerance is not synonymous with zero humanity. Treating people with dignity does not mean open borders. Stricter enforcement of immigration laws in a humane way is what many people want.

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Comment by steadykat
2018-06-21 12:20:06

Fake photo of kid in cage that went viral on Twitter last week:

Nobody in the MSM or Hollywood gave a sh!t about illegal alien kids at the border being “ripped” from their parents and held “captive” in cages when Obama was doing it.


We’re getting this mestizo/border sob story about “the children” right now to distract us from the much more important news story that, at a minimum, several high ranking FBI members decided to use the power of their offices to try and destroy an individual that was legally elected to the office of President because they wanted Clinton to be their boss.

In regards to “more humane treatment of migrant families”.

My wife works with an individual who, along with his wife, will never be reunited with his son. An illegal alien gangbanger shot him in the head here in St George about 10 years ago and left him to die on a lonely stretch of dirt road over a $50 debt.

This was one of many senseless, violent crimes perpetrated by illegal aliens that we experienced in SoUtah during the last housing boom. The local builders were too cheap to pay fair wages to the locals so they made their profits using south of the border slave labor and the locals were expected to contributed their blood, or that of their loved ones, to the effort.

Comment by Carl Morris
2018-06-21 14:05:13

Treating people with dignity does not mean open borders.

This is a tough one. If some of the kids end up permanently separated from a real family member that they crossed with, that’s terrible.

But this whole weaponized compassion thing that the left is trying to use to beat the deplorables into submission is also terrible and should be opposed.

How comfortable do we want an illegal border crossing to be?

Comment by steadykat
2018-06-21 15:29:19

A married mom pays a coyote 6K to get to our country illegally for better career opportunities. She only takes the two year old and leaves her other 3 children along with their father who has no idea where she is until he sees her and his crying daughter three weeks later in photos being used world-wide to promote the meme about children being split from family members at the border.

This woman basically ends up risking her child’s life for some possible financial gains in our Country even though her husband has a job and appears to support both her and their children. I wonder where the $6,000 came from?

Someone should tell Peter Fonda about this.


Comment by oxide
2018-06-21 15:56:22

I recall those shocking articles where 46% of Americans couldn’t write a check for $400. Meanwhile an illegal immigrant is ponying up $6000 — in valuable American dollars — to come to the US for the privilege of being paid $6/hour. Something isn’t adding up.

Comment by GreenEggsAndSpam
2018-06-21 16:22:16

And the libscum pols screaming the loudest about “muh immigrants” also just happen to lord over the cities and states with exploding homelessness.

Its amazing they arent given helicopter rides a la Pinochet by the taxpaying citizenry, but those days may be coming

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Comment by Neuromance
2018-06-21 16:58:57

Politicians get elected by being most broadly appealing to the most people. On each issue, there’s a position that’s perceived to be the least offensive, which has historically been considered the most broadly appealing.

I call that the “Position Of Least Offense.” The POLO - it’s the center of gravity in politics. Politicians of all stripes try to tend towards it. This is one reason there’s a perception that both parties are tending to one uni-party, despite their stated differences. Their actual actions tend to be much closer to the POLO.

Illegal immigration terrifies many politicians because the children of those decades of illegals are American citizens (born on American soil one way or another) and to oppose illegal immigration or open borders risks the wrath of those voters. The POLO is to laud illegals (who are constantly conflated with legal immigrants - a common rhetorical tactic) and make vague statements about border security that will never actually happen.

It seems to me one group of pundits first asks “Is it offensive?”, then considers whether it’s true if it is not. Another group asks “Is it true?” and then may consider whether it’s offensive.

Unfortunately, the POLO is not always good for the long term health of the society. People take America for granted, that prosperity can be obtained with a few keystrokes or strokes of a pen. What America has was created by people who came here and hewed the country out of the frontier (which is of course probably offensive to Native Americans). Luck, ingenuity, the intelligence, values and temperament of the population, through blood and brutality, America as we know it was created. Importing vast numbers of unvetted people from dysfunctional countries should be approached with caution.

Comment by BlackSwandive
2018-06-21 17:48:28

“Their actual actions tend to be much closer to the POLO.”

I agree with almost everything you post, but I’m going to have to disagree with this.

Nobody wanted bank bailouts, and Congress slammed it through, right up peoples’ azzes.

Nobody wanted these phony middle-eastern “wars,” and they slammed them right up peoples’ azzes.

Nobody wants this illegal immigration and the associated decimation of wages, and they’re slamming it right up their azzes.

POLO - I completely disagree.

Comment by Apartment 401
2018-06-21 10:40:52

Peter Fonda didn’t tweet about this one.

Comment by Ben Jones
2018-06-21 10:54:30

We have billboards down here that point out that human trafficking is human slavery. How did this 6YO get to Arizona? The drug cartels. Some of the worst people on the planet, getting rich doing it, bribing government officials and police, killing whoever gets in their way. And those on the border have to live with this day in and out. Ya’ll enjoy those cheaper airbnb cleanings, ya hear? But take a look in a Phoenix emergency room and get back to me on that “cheap” labor.

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Comment by BlackSwandive
2018-06-21 17:52:07

“But take a look in a Phoenix emergency room and get back to me on that “cheap” labor.”

I’ve been in a Phoenix ER, and it ain’t pretty. It’s loaded with MS13 types, especially on weekend nights.

Comment by Apartment 401
2018-06-21 19:47:20

“The Narrative” on this topic has become rather heated.

My greatest takeaway from it, is that if you grew up in Northeast Ohio, you should probably kill yourself now. Your life doesn’t matter. People on the coasts will decide what’s best for you…

Comment by MacBeth
2018-06-22 04:29:37

“My greatest takeaway from it, is that if you grew up in Northeast Ohio, you should probably kill yourself now. Your life doesn’t matter. People on the coasts will decide what’s best for you…”

Well, they ARE smarter than you, you know. You’re just too dumb to know it.

It would benefit you to understand nuance. Adding some nuance to your posts might help you to blossom organically.

Practice, and in no time you can utter brilliant utterances without even trying.

Comment by Boo Randy
2018-06-21 09:22:59

‘Airbnb is helping thousands of Portlanders like myself to monetize our biggest asset and stay in our homes,’ said Airbnb host David Bo at the meeting.”

Minor correction, Dave. That “asset” that you acquired with borrowed money becomes a liability when it starts depreciating and you can no longer afford to feed the alligator. If you depend on paying guests to cover your mortgage, then clearly, you financially overextended yourself to acquire your “biggest asset.”

Also, unless you’ve been frozen for the last 50 years, you should realize Portland’s, er, left of center municipal government will be endlessly creative in coming up with new taxes to fund its Nanny State initiatives. And you’re the low-hanging fruit for the tax man, Dave. Happy motoring!

Comment by Ben Jones
2018-06-21 09:33:49

From the article:

‘Deborah Hanthanor, who turned a room in her house into an Airbnb rental, says the fees could force her out of the city. “The income I earn helps me pay for my property taxes, water and electricity bills, and to take care of general maintenance,” said Hanthanor. “I’m a divorced single woman, [I] live alone, and without this additional income I would need to sell my home. But where would I go?”

I dunno Deborah.You gotta roll with it.

Comment by Mr. Banker
2018-06-21 09:41:26

“I live alone, and without this additional income I would need to sell my home. But where would I go?”

Here’s an idea…


Comment by Boo Randy
2018-06-21 09:55:27

Would’ve thought your suggestions would be more, er, mercantile, Mr. Banker.

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Comment by Mr. Banker
2018-06-21 11:52:32
Comment by rms
2018-06-21 18:49:09

“I’m a divorced single woman, [I] live alone, and without this additional income I would need to sell my home. But where would I go?”

Don’t even think about San Francisco!

“If you don’t make $50,000 a year in San Francisco then you shouldn’t live here.” —Willie Brown, former state speaker

Comment by Bellinghouse
2018-06-22 08:37:11

Here’s another idea, the Salton Sea:

And there’s always Wonder Valley just outside 29 Palms.

Nice homes can be had in either place for about $30,000. You get acreage to go along with the homestead.

Comment by MGSpiffy
2018-06-21 10:35:26

Per the article two-thirds of those people aren’t “staying in their homes
” at all…

For every person who is what ‘David Bo’ claims to be, there are 2 who are running (mostly) unregulated hotels in residential neighborhoods and buildings.

And let’ be honest - you don’t do that to ‘make ends meet’ on the dwelling - you bought the dwelling (or leased the apartment) to make a profit - no other reason possible or believable.

Comment by BlackSwandive
2018-06-21 11:09:36

‘Airbnb is helping thousands of Portlanders like myself to monetize our biggest asset and stay in our homes,’ said Airbnb host David Bo at the meeting.”

Fawk you, David, and everybody like you.

Comment by Mafia Blocks
2018-06-21 11:21:14

Easy Bobo.

Comment by BlackSwandive
2018-06-21 17:55:59

You’re right, I need to watch the language. I won’t post that again. It’s just that people like this specuvestor are the ones who have driven housing prices sky high, and now they want to re-write the rules to try to park them at a permanently high plateau.

Nobody should ever need to turn their house into a short term rental in order for it to be affordable. There is something seriously wrong with that model, and this jackwad is all in on it, trying to fight to legitimize it.

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Comment by Boo Randy
2018-06-21 09:25:10

his lack of certainty echoes the Building Industry Association’s position that we can’t guarantee affordable housing but maybe, just maybe, if we build enough high-end housing, it will somehow trickle down to the poor and the homeless.

Did he actually say that with a straight face? In our neofeudal economy, the only thing that’s going to be trickling down on the poors is yellow rain.

Comment by Jingle Male
2018-06-22 01:22:44

92101 inventory (San Diego)

May 2017 = 225

May 2018 = 341

It is still less than 60 days of inventory, but moving in the right direction.

Comment by MacBeth
2018-06-22 04:18:07

What is their definition of “inventory”? Do they spell it out?

Comment by Mortgage Watch
2018-06-21 09:30:54

Murphy, TX Housing Prices Crater 7% YOY


Comment by Boo Randy
2018-06-21 09:45:19

Mortgage rates rising, affordability diminishing. Something’s gotta give.


Comment by MGSpiffy
2018-06-21 10:55:52

A 41-story tower coming up at Sixth Avenue and Wall Street, bordered on one side by Denny Way, will be condos and not rental units as originally planned. The building broke ground on Tuesday.”

“The project, now dubbed ‘Spire,’ has been in the works since 2006, when California-based Laconia Development bought the property.”

OMG - this project is a guaranteed disaster - If I was an investor I would have pulled out of the deal with extreme prejudice. Do any of the other Seattle-area HBB posters (rms, redmondjp, b, ..) agree or not.

First off, this has to be the lot adjacent and east of the Skye Apartments: right on Denny. If it was the triangle lot SE of that lot (Across from City University), it would be on top of the Battery Street Tunnel and any thing that tall would need to dig down through it. A tiny lot (currently a surface parking lot) in a location that is a true pain in the ass to access.

At 41 stories - did they get a zoning waver? as I though the height limits tapered down as you got to Denny/the very north end of the downtown buildup and near the Space Needle.

Anyway, problem #1 - the condo liability laws - specifically The Washington State Condo Act will have the developer ‘on the hook’ for years to come. Read the summary they have here: http://www.seattlemag.com/news-and-features/condo-conundrum-10-reasons-why-theres-sale-shortage-seattle

Problem #2: Pricing: $0.5M for 500 sq ft to $1.6M for 1100 sq ft, and it only gets more expensive as you go up (literally) from there to $3.5M for 2,000 sq ft. Look carefully at who can actually afford those prices - that’s well beyond the vast bulk of the tech worker crowd. And for those who can buy…why would they settle for so little space if they got that kind of money? The take up rate, given the alternatives available, is going to be very slow in good economic times. If we’re in a downturn when it opens, it’ll be a ghost tower for years. And if that happens.. what happens to the condo fees for those who did buy there?

I don’t think I need to add a third problem.

Comment by Avg Joe
2018-06-21 16:57:52

It’s definitely the lot right next to Skye, I have friends who used to live in that building.

Comment by MGSpiffy
2018-06-21 17:41:58

No wonder it’s nearly 40 stories - that’s a damn tiny footprint to build on. I wonder how much the land sold for.

Comment by b for banker
2018-06-21 17:49:37

the lot is tiny - i walk or cycle by it at least 2 times a week.

I just don’t know how the garage will work? There is a stupid hut with a skateboard shop in the next lot and another parking lot south. They should have bought all 3 and delivered something nice

Comment by Mortgage Watch
2018-06-21 11:16:57

Seattle, WA 98121 Rental Rates Crater 9% YOY As Seattle Area Housing Prices Tank


*Select price from dropdown menu on rental chart

Comment by Boo Randy
Comment by rms
2018-06-21 18:51:50

FWIW, being cool ain’t cheap!

Comment by MacBeth
2018-06-22 04:16:48

“FWIW, being cool ain’t cheap!”

How does this apply to Johnny Depp?

Comment by Professor 🐻
2018-06-22 06:08:37

What’s the mystery?

The Trouble With Johnny Depp
Multimillion-dollar lawsuits, a haze of booze and hash, a marriage gone very wrong and a lifestyle he can’t afford – inside the trials of Johnny Depp
By Stephen Rodrick
1 day ago

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Comment by rms
2018-06-22 08:27:29


Comment by oxide
2018-06-22 05:01:00

From the article:

““My son had to hear about how his old man lost all his money from kids at school, that’s not right,” [Depp] said.”

Well I suppose not, Johnny. Were you too busy drinking and to-king to tell them yourself?

Comment by Professor 🐻
2018-06-22 06:15:55

Up in smoke (from The Rolling Stone):

It’s estimated that Depp has made $650 million on films that netted $3.6 billion. Almost all of it is gone. He’s suing The Management Group, run by his longtime business manager, Joel Mandel, and his brother Robert for negligence, breach of fiduciary duty and fraud. The suit cites, among other things, that under TMG’s watch Depp’s sister Christi was given $7 million and his assistant, Nathan Holmes, $750,000, without his knowledge, and that he has paid the IRS more than $5.6 million in late fees. (Most of the ire is directed toward Joel, who had day-to-day responsibility for Depp’s account.) There are additional charges of conflict of interest, saying that TMG invested Depp’s money for its own purposes and returned it without profit. The suit seeks more than $25 million from TMG, accounting for “tens of millions” it claims TMG illegally took for its commission, plus any additional damages the court sees fit.

Comment by Boo Randy
2018-06-21 13:54:05

Sorry, Manhattan greedheads, but we’ll wait and buy your overpriced shack at the foreclosure auction.


Comment by Professor Bear
2018-06-21 15:53:04


Trade concerns could give the Dow its longest losing streak since the 70s
Published: June 21, 2018 4:33 p.m. ET
If the Dow extends losing streak to 9 days on Friday, it would be longest since 1978
Courtesy Everett Collection
A disco-era move for the Dow?
By Ryan Vlastelica
Markets reporter

The Dow Jones Industrial Average could soon do something it hasn’t done in more than 40 years, but it isn’t a milestone most investors will feel too happy about.

The blue-chip Dow (DJIA, -0.80%) has been struggling for nearly two weeks, pressured in large part by growing fears a series of spats between the U.S. and its trading partners could turn into a full-fledged trade war.

The index fell 0.8% on Thursday, a decline that marks the Dow’s eighth straight daily decline. This matches a stretch of losses that ended in March 2017. Should the index close lower on Friday, extending the streak to nine, that would mark the longest such stretch in just over 40 years.

According to the WSJ Market Data Group, the last time the Dow fell for nine straight trading days was a stretch that ended in February 1978, when the index traded at just under 750. It is at nearly 24,500 currently.

Going back to 1896, there have only been 10 instances when the average put together 9-day losing streaks. Should it do so again on Friday, it would mark the 11th. The Dow’s longest-ever losing streak was a 14-day stretch that ended in August 1941.

Comment by Professor 🐻
2018-06-21 19:32:19

It’s lucky for stock traders that central bankers are doing everything possible to stabilize stock markets as investors run for cover!

The Financial Times
Gillian Tett
Markets appear calm, but are behaving abnormally
The pessimistic view is years of loose monetary policy have made investors complacent

US-China trade dispute
Global equity funds suffer record outflows
Trade war concerns roiled markets and sent investors running in the past week

Comment by Professor 🐻
2018-06-21 19:44:20

June 21, 2018 3:47 pm by Gillian Tett

Do markets look a little weird right now? That is a question many investors might be asking. In recent weeks geopolitical tensions have intensified, and the monetary policy cycle is turning in both the US and Europe.

Equity markets quivered on Monday, which was the day after China said it would retaliate against new US tariffs by imposing tariffs of its own, but the jitters were modest. Indeed, the MSCI world equity index is up 10 per cent up for the past 12 months — never mind that pesky trade war.

This is odd. But what is more striking — and alarming — is that equity valuations are far from the only bizarre feature of today’s markets. If you peer into the weeds of global finance, you will see peculiarities sprouting all over the place.

Consider credit. These days, pundits often wail about the rising risks attached to corporate debt. A survey from Bank of America Merrill Lynch shows that 42 per cent of asset managers now think that developed world companies have borrowed too much money— beating a previous 2008 peak of 32 per cent.

No surprise there, perhaps: corporate borrowing has indeed soared, amid numerous leveraged buyouts and mergers, and almost half of all US corporate bonds issued this year carry a risky rating of triple B-plus, triple B or triple B-minus. What is startling is that investors are not running scared. Instead, demand for risky debt is so high that the spread between safe and hazardous corporate debt (bonds rated triple A and triple B respectively) is a wafer-thin 50 basis points. In 2012 it was 200bp.

The second puzzle is the so-called dollar “term premium”— the US Federal Reserve’s calculation of the extra compensation investors require to convince them to tie up their money in longer term bonds rather than rolling over a series of short-term ones. Normally this would be positive in this stage of the business cycle. The Fed is raising rates, inflation is edging up and the US government will sell lots more debt in the coming years, due to tax cuts and rising budget deficits. But the US term premium has been zero in recent months. More peculiar still, JPMorgan calculated that the global yield curve has recently inverted for the first time since 2007.

A third oddity is the lack of correlation between currencies and interest rates differentials. Derivative prices currently suggest that investors expect to see a widening gap between US, European and Japanese interest rates. Citigroup calculates that the spread between projected overnight rates for dollars and euros is 250 basis points, up from 25 basis points in 2016 and 100 basis points last year.

In past economic cycles this gap has led to a stronger dollar. That has recently appeared — a bit. On a trade weighted basis, the dollar is 5 per cent stronger than in February, but it is also 4 per cent lower than it was at the start of the year. The correlations seem to have broken down, as Catherine Mann, Citi’s chief economist, points out.

The list goes on — and on. Ms Mann thinks it is odd that house prices keep surging in countries such as Denmark, the Netherlands and Canada, even as the monetary policy cycle turns; and that investors keep rushing into US equity markets, even though valuations should favour non-US assets. Then there is the fact that gold prices have fallen 5 per cent in the past two months — even though geopolitical turmoil normally boosts the price of gold. And the Vix index (which reflects expected US equity market volatility) has recently fallen below 15, after rising above 30 earlier this year. That looks completely counter-intuitive given the geopolitical risk — and the fact that some investors holding Vix derivatives suffered big losses a mere four months ago, when this index gyrated.

Comment by Professor 🐻
2018-06-21 19:57:06

Not to worry… it’s all contained.

Business > Finance
Global trade row sparks stock sell-off
Thai bourse could fall below 1,600 points
22 Jun 2018 at 04:00 0 comments
Thai shares plunged 1.79% to close at 1,634.44 points amid fears of an escalating trade war between the EU and US. 

Following Wednesday’s rebound, the Stock Exchange of Thailand (SET) suffered a heavy sell-off as fears of an escalating global trade war were fanned by the EU’s retaliation against punitive US tariffs.

Thailand’s bourse closed Thursday at 1,634.44 points, down 1.8%, in trade worth 61.6 billion baht.

Foreign investors continued to be net sellers, shedding 3.8 billion baht, with brokerage firms selling 2.2 billion worth of shares. Retail investors were net buyers of 4.9 billion baht and institutional investors bought 1.16 billion.

Concerns about a global trade war flared up again as the EU launched a raft of retaliatory tariffs against US exports such as blue jeans, motorbikes and bourbon whiskey.

The move comes in response to a US decision to impose high import duties on steel and aluminium against the euro-zone bloc earlier this month.

Other Asian stock markets also experienced capital outflows, with China’s Shanghai SE Composite index and Hong Kong’s Hang Seng index falling by 1.37% and 1.35%, respectively.

Earlier this week, the SET tumbled for two consecutive days because of persistent negative sentiment swirling around the US-China trade row and volatile oil prices ahead of Opec’s meeting scheduled for tomorrow, where it’s anticipated that production output will be raised.

Win Udomrachtavanich, chief executive of KTB Securities, said foreign funds continue to move out of emerging markets for bonds and stocks, as the US Federal Reserve has signalled a faster interest rate hike pace.

Concerns over the global trade war have also kept a lid on investor confidence and lowered their risk appetite, said Mr Win.

The baht’s value is expected to be 33 against the greenback in the coming period as foreign funds have exited the Thai bond market for over two months, he said.

Thailand’s equity market valuation is currently quite cheap and its price-to-earnings ratio has declined to around 15 times, said Mr Win.

Terdsak Taweethiratham, senior executive vice-president at Asia Plus Securities, said market sentiment tumbled Thursday as the global trade war intensified, pressuring fund flows to shift from emerging markets into US Treasury bonds and the US dollar, considered safe-haven assets.

The SET index remains highly volatile and the bourse’s support level could fall below 1,600 points given the continuous fund outflows, said Mr Terdsak.

Comment by Professor 🐻
2018-06-21 20:22:28

Jun 21 2018 at 9:27 AM
Updated Jun 21 2018 at 12:27 PM
Flat yield curve sends a grim message to investors in 2019
by Robin Wigglesworth

Of all the fashionable alarm bells that market-watchers keep an eye on, the yield curve is the most timeless. It is Coco Chanel’s proverbial “little black dress” of economic indicators.

The slope made up of bond yields of various maturities has a record of predicting recessions that would make even the savviest econometrician turn pea-green with envy. It is not perfect, but the curve has become flat and inverted — when short-term bond yields are actually higher than long-term ones — ahead of most economic downturns in most major countries since the second world war.

This is why some analysts and investors are worryingly eyeing the US yield curve, where the difference between the two- and 10-year Treasury yields has narrowed to just 37 basis points. That is the slimmest spread since September 2007. But interestingly, and worryingly, the global yield curve has now already inverted.

The average yield of bonds in JPMorgan’s broadest Government Bond Index that mature in seven to 10 years last week slipped below the average yields of bonds maturing in one to three years for the first time since 2007, when it preceded a global recession, notes JPMorgan’s Nikolaos Panigirtzoglou.

In other words, on a global aggregate level investors no longer get a premium to hold longer-maturity bonds. Setting aside the cost of hedging currencies, that indicates that investors have a pretty grim view of where the world economy and equity markets are heading.

Comment by Professor 🐻
2018-06-21 23:55:53

If Goldman Sachs is correct, then you’d do better holding 10 year Treasurys this year than gambling in stocks. Three percent added to a one percent loss so far is a two percent return. Booyah!

Goldman Sachs: Weak stock market returns are ahead even with booming earnings
Goldman Sachs strategists raised their corporate earnings forecasts through 2020 but said stocks will see only limited benefit.
The bank expects the S&P 500 to rise just 3 percent more in 2018 and about 5 percent in 2019.
Market obstacles include rate hikes from the Federal Reserve, the prospect that economic growth will slow after the tax cut benefits begin to diminish, and the rising U.S. budget deficit.
Jeff Cox | @JeffCoxCNBCcom
Published 15 Hours Ago Updated 11 Hours Ago

Comment by Professor 🐻
2018-06-22 00:00:46

Why Emerging-Market Funds Are Seeing Their Biggest Outflows In Years
Investors are yanking money from emerging-market exchange traded funds as rising interest rates in the U.S. weaken emerging-market assets.

Comment by Neuromance
2018-06-21 17:26:07

Harvard’s Join Center for Housing Studies released an annual report, “The State of the Nation’s Housing 2018″. It talks about affordability problems. The solution it proposes? More federal subsidies (last page). Also it recommends state and local governments pony up as well: http://www.jchs.harvard.edu/research

Injecting more money into a market always brings prices down and/or increases affordability :)

This organization’s core thesis is that lack of housing is driving affordability problems. But note that prices skyrocketed from 2002 to 2008 as vacant units dramatically increased: https://fred.stlouisfed.org/series/EVACANTUSQ176N

Of course not a peep about bubbles or monetary policy or speculative demand.

I’m not opposed to speculation, but I’d wish they speculate in something less environmentally and socially and economically destructive as housing. “Go play with your bitcoin.” Of course bitcoin doesn’t leave higher government revenue in its wake.

I’d be curious to know who funds this department, as well as these types of departments at other universities. Because if you can capture and direct the thought leaders through grant funding, you can provide academic/intellectual cover for all kinds of shenanigans. Lobbyist just needs to point to a Harvard study to say “you need to build this [lucrative] high density housing in this last tract of forest - housing problems are caused by lack of inventory. Harvard says so.”

Comment by Professor 🐻
2018-06-21 19:18:56

JCHS hast been a consistent voice of idiocy for the full duration of the Housing Bubble. It’s great to see them remain true to form.

Comment by Professor 🐻
2018-06-21 23:47:38

‘I’m not opposed to speculation, but I’d wish they speculate in something less environmentally and socially and economically destructive as housing. “Go play with your bitcoin.” Of course bitcoin doesn’t leave higher government revenue in its wake.’

The problem is easily solved.

1. Govt monitors Bitcoin HODLers.

2. Govt tracks Bitcoin capital gains.

3. Govt taxes Bitcoin capital gains.

Comment by oxide
2018-06-22 05:07:03

I’d wish they speculate in something less environmentally and socially and economically destructive as housing.

This is precisely WHY they chose housing. Social ties = government cheese which is supposed to be “for the children” but of course ends up in the pockets of builders and banks. What do you think all this luxury glut is about? Collecting luxury rents by any means, whether it’s from a wealthy Millenial lawyer or a methhead on Section 8.

Comment by Professor 🐻
2018-06-22 05:57:10

We’ll stated. Wall Street types have a nose for free cheese.

Comment by Professor 🐻
2018-06-22 05:58:45

Well stated (spe’ll checker is not a grammar checker)

(Comments wont nest below this level)
Comment by Neuromance
2018-06-21 17:57:56

Just heard a radio host laud the unemployment rate while pundits puzzle over why there’s not been a commensurate increase in wages. Here’s another measure of unemployment from the Richmond Fed: https://www.richmondfed.org/research/national_economy/non_employment_index

Comment by Mortgage Watch
2018-06-21 18:35:25

Las Vegas, NV 89109 Housing Prices Crater 10% YOY On Escalating Short Sales


*Select price from dropdown menu on first chart

Comment by Professor 🐻
2018-06-22 06:02:02

Are dips planning to buy today? You know full well the market riggers are gonna pump it up today to avoid unfavorable comparisons with the 40-year-old record streak of Wall Street losses.

Comment by aNYCdj
2018-06-22 06:15:11

and the left will never apologize…

BOMBSHELL: Girl Never Separated At Border; Mom Paid Smuggler And Abandoned Family, Father Says


Comment by Boo Randy
2018-06-22 06:25:34

Looks like Canadian mortgage slaves are paring back their discretionary spending to feed their alligators.


Comment by SUGuy
2018-06-22 07:17:07

SU Guys observation’s from the dock while observing and speaking to many truck drivers of major trucking companies as well as speaking to restoration companies across the US.

Trucking companies are hiring drivers not just 1 or 2. They are hiring 6 to 7 drivers even in small terminals in cities like Syracuse. Trucking companies are strained and it will only get worse.

Restoration contractors can be picky and choosy which type of jobs they take. Most of them are not taking lower profit jobs. They are also booking jobs a few months in advance.

I have heard trucking drivers say “buy stocks when trucking companies hire and sell stocks when trucking companies lay off”. I am by no means advocating buying stocks.

My prediction is an overheated economy in the near future. THANK GOD FINALLY

Comment by Mortgage Watch
2018-06-22 07:48:08

Cedar Mill, OR Housing Prices Crater 11% YOY As Urban Housing Correction Extends To Rural Areas


*Select price from dropdown menu on first chart

Comment by dandroidz
2018-06-25 13:55:05

I can attest to Portlands crazy AirBnb market.
Owners have been building “ADUs” - alternate Dwelling Units on their front and back yards. Most Portlanders have small yards, but folks are cramming small studio or 1 Bdr structures in their yard, applying for an ADU permit, and Airbnb’ing it. It has led to a boom, and parking on neighborhood streets is filled to the brim. As what was once enough curb space for 1-2 cars per household, is now, 4+ cars. Or they built a dense duplex unit where 1 house used to be.

I have been coming to Portland since 2013 for long term work projects. I have seen the explosion first hand. The past 2 yrs have been NUTs. AirBnb is helping push this city to the brink, along with Californians, and moocher homeless millenials and mentally ill.

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