Bits Bucket for September 25, 2014
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Vienna, VA Housing Prices Dive 14% YoY As Inventory Skyrockets 103%
http://www.movoto.com/vienna-va/market-trends/
It is not going to take a 40 percent dive in prices, although that may happen. A 15 percent drop in prices crashes this market now because people’s expectations are so out of Whac. If comps go down that much in your area it is a psychological disaster for sellers.
A person who thinks they have a $300,000 house now has a $255,000 house. And that’s all the profit margin for flippers and investors.
We’re still talking 50-70% declines in resale housing prices to make new construction unprofitable.
people gotta eat
quality construction is exspensive
the stuff you build has probably depreciated to sh@t in 10 years due to all the cost cutting and corner cutting
That gives you a good idea how much you overpaid Az_Fraud.
Buy a house today and your losses will be incalculable.
Load up on fiat money and balance that by loading up on precious metals bullion. Sell stocks. Bag your gains.
What happened to dollar cost averaging?
I only dollar cost average into stock mutual funds.
I try to time stocks on an individual basis. The last 8 years of doing so on individual stocks - I had dumb luck. Both in buying and in selling.
You can’t dca into a home purchase. Once you buy at massively overpriced levels, you’re stucco forever.
hmmm, what if you bought gold 6 mos ago?
CRATER.
And what if I also bought gold 10 years and 6 months ago?
Hmm.. And I did. And also 10 years ago.
And also 9 years and 6 months ago.
And also 9 years ago.
and so on
Oh and in 2001
Dallas - Fort Worth home foreclosure filings are down by almost a quarter for October.
Lenders have scheduled more than 1,500 homes for forced sale, compared with about 2,000 properties in October 2013, according to Foreclosure Listing Service.
The decline continues a long trend of fewer problem residential loans.
http://www.dallasnews.com/business/residential-real-estate/20140923-d-fw-home-foreclosure-filings-drop-again-for-october.ece
That’s great but there is a massive defaulted housing inventory that is still sitting there.
no one cares its been there for 6 years its not going anywhere until prices go up more
That wont work considering housing demand is already at 20 year lows.
Are you sympathetic to Debt Donkeys that bought rotting 1960s jalopies at 2006 prices?
D O N K E Y
A M Y
“Are you sympathetic to Debt Donkeys that bought rotting 1960s jalopies at 2006 prices?”
On the contrary, I laugh a great belly laugh at them.
I only feel sorry for them because they are so foolish. Poor, poor foolish donkeys.
Indeed…. Now they live unhappily ever after.
http://fp.images.autos.msn.com/Media/RE/330×198/9e/9e6c7579475f4d10a93cf54e1648b536.jpg
any thoughts on silver- favorite silver miner?
It’s crashing, but no worries — PM prices always go back up.
Further thought: Last time before the recent episode when silver hit a major top was 1980. It took over two decades to bottom out.
I know this time is different (blah, blah, blah…)
PAAS
bought an sold PAAS- if that’s the safest one I’ll pass
HL, CDE, and SSRI
72 percent of americans think the country is still in a recession
http://www.washingtonpost.com/blogs/the-fix/wp/2014/09/25/americans-think-were-in-a-recession-theyre-wrong-but-still/
there is no ‘pent-up demand’ for $500,000 starter homes
not today, not tomorrow, not ever
ever
rasis? soon to be sexist for thinking new deal type keynsian bs works
never has -never will
The leftist trolls seem to have pulled out. Bloomberg broke?
No.
There’s just a growing understanding that Obama=Bush.
The Hope and Change adherents now have serious buyers remorse. Not only is Obama in favor of the 1%, he also is a war monger.
His standing internationally is horrendous. His reputation is one of a liar. He willingly ignores laws. He plays golf as Americans are murdered overseas and illegals stream across the border.
Obama = Bush.
Or is the Bush mess so big, we cant get out of it?
Wars are expensive, lets cut taxes!!
more illegals came over during Clinton and Bush than O.
Do some fact checking, then whine.
The president will be Bush from now on. The banks own the government, the wars we stoked will go on forever, and we’ve crossed over to the land of permanently increasing national debt.
You could put Jimmy Carter back in there, and he’d behave exactly the same. There are simply no other viable options given the balance of power.
Jessie Ventura is the only man that can save us, but he won’t.
Ben banned someone.
Who got banned? Rio troll?
Once a guy is banned, we’re not supposed to talk about him anymore.
Ben banned Rio. Personally, I thought he was a valued contributor most of the time, even when we were on opposite sides of an issue. We do not want to become an echo chamber in here.
class warfare from the washington post
‘a new study conducted at harvard business school found that americans believe ceos make roughly 30 times what the average worker makes in the u.s., when in actuality they are making more than 350 times the average worker.’
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/09/25/the-pay-gap-between-ceos-and-workers-is-much-worse-than-you-realize/
no recession for the 0.1%er pigmen, lolz
That’s only because people can’t do math.
I once had the delightful experience of working for a CEO who couldn’t tell the difference between an exponent and a multiplier. He was sooooooo condescending, and he drove a Corvette to work. Fat too. Apparently, math skills and people skills are only for the little people.
Why cant investors see when these company insiders are draining off the equity in the company to pay themselves fat paychecks? Are these folks blind or they just hope for a miracle turnaround?
I think you are onto it:
- Use low-interest debt to buyback shares, pumping up their prices.
- Corporate insiders cash out their options at these high prices.
- When interest rates go back up, the value of the debt used to buy the shares crashes, but it’s all good, as the corporate insiders will have already cashed out the value of their options by then.
P.S. On a related note, how are your junk bond holdings doing these days?
Credit Markets
Junk-Bond Investors Start to See Warning Signs
Some Pare Riskiest Holdings as They Gird for Long-Running Rally to Falter
By Mike Cherney
Sept. 24, 2014 12:32 p.m. ET
John Ueland
Brian Kloss isn’t letting buoyant markets and U.S. economic expansion dull his sense of danger.
Mr. Kloss, a portfolio manager who helps oversee junk bonds at Brandywine Global Investment Management, has been selling bonds from companies with some of the lowest ratings and highest levels of debt, or leverage. He’s doing so despite a long-running rally in so-called junk bonds at a time when many analysts forecast that U.S. growth will pick up, potentially fueling further gains.
And he is carefully vetting those junk bonds he does buy. Earlier this month he purchased bonds in a $1 billion sale by W.R. Grace & Co., a Columbia, Md., chemicals company. The fund manager cited W.R. Grace’s double-B rating, which puts it at the high end of the junk, or noninvestment grade, range, and its low level of borrowings compared with other junk-rated firms.
“We think their business is poised to perform well given the recovery we’re seeing in the U.S.,” Mr. Kloss said. “We like companies that at this point do have slightly less leverage.”
Mr. Kloss’s decision underscores the question that investors all over the globe are grappling with, as the Federal Reserve prepares to begin raising key U.S. interest rates as early as next year for the first time since 2006: How long will the conditions persist that gave rise to a five-year rally in junk bonds and other risky assets?
The economy is gaining steam, many economists say, judging by job growth, factory activity and other metrics. An improving economy is generally good for bondholders, because rising employment creates demand that enables debt issuers to sell more goods and services and pay down their borrowings.
But now, many investors expect stronger growth to prompt the Fed to raise interest rates in a move that would likely hit the prices of the riskiest assets, including low-rated corporate debt. Over time, rising borrowing costs could lead to a rise in defaults.
Accordingly, many investors are still buying new bonds but keeping a close eye on metrics such as corporate leverage—or use of borrowed money—as well as share repurchases and company cash holdings. They’re watching for signs of any cracks in the bond-market rally of the past five years.
In a sign that companies are taking on more debt, corporate borrowings have risen to two times earnings as of March 31, compared with 1.76 times at the end of 2010, according to a measure from Morgan Stanley. The percentage of new junk-rated loans with minimal investor protections has increased to about 61%, higher than the 25% in 2007, Morgan Stanley says. And companies are embarking on share repurchases at the fastest rate since the financial crisis, a tactic that is generally viewed as negative for bondholders because it means companies have less cash on hand to pay back debt.
Jim Swanson, chief investment strategist at MFS Investment Management, said he recently scaled back his exposure to high-yield, or junk, corporate bonds in the $2.3 billion MFS Diversified Income Fund, noting that bond prices are high and “fundamentals are very strong, but getting a little worse.”
…
They have basically let these corporations legally rip off shareholders.
You turn on these business channels and they are all about marketing and selling stock. Its a dam shame they get away with this bs.
I would not touch a junk bond with a 30′ pole.
at least house are tangible and you know what you have.
Stock prices keep going up. Housing depreciates resulting in massive sustained losses every day you own it.
“You turn on these business channels and they are all about marketing and selling stock.”
Business channels. Marketing. Selling stock.
There’s a connection here: The business channels are Wall Street’s marketing mechanism for selling stock.
To steal and modify a line or two from Mark Twain:
Those who do not watch business channels are uninformed. Those who do watch business channels are misinformed.
“You turn on these business channels and they are all about marketing and selling stock. Its a dam shame they get away with this bs.”
+1 And the other channels feature Kim “living the life.”
The other day, I was waking up to my alarm on NPR, and they were talking about the new Wal*Mart bank. They were just describing the service that will be offered, and I was wondering why this was news. At the end of the “story”, the announcer said (with no change of tone in his voice) that the story was paid for by Wal*Mart. If a person wasn’t paying attention (while waking up, getting ready for work, driving to work, or working), then they probably would have missed that last part.
So NPR sells stories too. Everyone does it.
Auntie Fed
I like NPR for things like health, food labeling, music bios, and odds and ends. I like “low demand” or “noise” (distractions while on the treadmill).
I had my checks printed by Wal-Mart (online transaction), and it was much cheaper than my credit union, and the delivery time was terrific. My CU has the business model of a bank now. Fees and costs up the ying-yang.
“When interest rates go back up, the value of the debt used to buy the shares crashes…”
And in case my post didn’t make this clear,
‘the value of the debt’ = ‘the value of the company’ = SHARE PRICE
Wait…maybe I got that backwards. Is it the creditor who gets stiffed when rates go back up?
(Also trying to recall why a stock market meltdown in Fall 1987 followed the junk bond crash which preceded it…)
“Is it the creditor who gets stiffed when rates go back up?”
If they want to be able to sell the debt at some point before maturity (or if the debt is collateral for their own balance sheet), yes.
“Are these folks blind or they just hope for a miracle turnaround?”
Oedipus couldn’t “see” until he was bind.
I recently watched Mel Brooks’ “History of the World Part 1″ for the first time in forever and there’s a scene I never picked up on before in the Rome sequence with Gregory Hines and Oedipus.
Classic movie…I need to watch again.
These are Drudge Report links and were not written by real journalists:
http://www.nationalreview.com/corner/388813/us-immigrant-population-hits-all-time-high-413-million-people-ryan-lovelace
http://washingtonexaminer.com/u.s.-immigration-reached-record-high/article/2553927
http://www.breitbart.com/Big-Government/2014/09/24/Report-Nearly-2-5-Million-Immigrants-From-Predominantly-Muslim-Countries-Reside-Inside-U-S-Right-Now
The National Review are not real journalists. The Washington Examiner are not real journalists. Breitbart dot com are not real journalists.
The “correct” narrative about immigration, diversity, multiculturalism does not come from links like these.
The narrative comes from the Media / Academia / Social Justice Industrial Complex, of which real journalists are a key component.
The New York Times, Washington Post, Associated Press, National Public Radio, these are the real journalists.
And if you disagree with the real journalists, you are a racist.
Have a nice day
Buying the Permanent Democrat Supermajority
http://online.wsj.com/articles/the-big-money-democrats-1411599398
And within a few decades, you will have the “choice” of voting for the Free Sh*t Party or the More Free Sh*t Party
Forward
And remember kidz, America isn’t a country, it’s a game
http://www.bloombergview.com/articles/2014-09-24/rich-on-rich-warfare-in-u-s-politics
“If voting made any difference they wouldn’t let us do it” — Mark Twain
A few decades? Try a couple more years.
How are your dollar cash deposits holding up?
Europe Markets
Dollar at Nearly Two-Year High Against Euro
Broad Dollar Strength, Dovish ECB Weigh on Common Currency
By Tommy Stubbington
Updated Sept. 25, 2014 7:07 a.m. ET
The euro has been whacked by the runaway dollar, likely to the joy of the ECB. Andrew Peaple and Katie Martin discuss how low the euro can go.
The runaway dollar extended its rise Thursday, climbing to its highest level against the euro in almost two years.
The buck has soared in recent weeks as a strengthening economy prompts investors to wonder if the Federal Reserve will soon have to think about bumping up interest rates.
The dollar climbed to ¥109.35 against the yen on Thursday, just shy of last week’s six-year high. Gains against the euro were even sharper, with the common currency sinking to $1.2697, its weakest since November 2012.
…
The buck has soared in recent weeks as a strengthening economy prompts investors to wonder if the Federal Reserve will soon have to think about bumping up interest rates.
Personally, I have attributed this to the fact that our rates are less negative than other central banks at the moment.
Translation: QE is effectively a negative interest rate, even though rates are still nominally zero. Ending QE-infinity is not a nominal change, but it is a practical rate change, from a sub-zero rate back to essentially a zero rate. Europe is moving in the opposite direction, so it should be no surprise that the dollar strengthens relatively.
Have you hugged your wallet today?
China News
Chinese Leaders Discuss Replacing PBOC Chief
Potential Move Reflects Disagreements Over Fiscal Steps, Xi’s Plan to Place More Allies in Top Offices
By Lingling Wei and Bob Davis
Updated Sept. 24, 2014 7:43 p.m. ET
Chinese leader Xi Jinping is considering replacing central bank chief Zhou Xiaochuan. The WSJ’s Lingling Wei tells Deborah Kan about why Beijing may be looking for a new steward for the world’s second-largest economy.
BEIJING—Chinese leaders are discussing replacing the central bank chief amid disagreements over the direction of financial policy, raising questions over how quickly and deeply Beijing wants to remake the economy amid slowing growth.
Chinese leader Xi Jinping is considering removing Zhou Xiaochuan —the face of the Chinese economy to markets globally—as part of a wider personnel shuffle that comes after internal battles over economic overhauls.
The discussions occur as Mr. Xi, now two years in office, tries to place more allies into top positions in the government, military and Communist Party, said party officials with knowledge of the plans. The personnel shifts are expected around a major party conclave to be held in October, the officials said, while cautioning that no final decision about Mr. Zhou has been made.
Over the past few months, Mr. Zhou has continued to press for market changes, including liberalizing interest rates. The Chinese leadership, meanwhile, has become concerned that overhauls now will place another burden on an economy that is struggling to meet the government’s target of 7.5% annual growth.
One reason to retain Mr. Zhou is fear of the market reaction to his departure, the party officials said. Removing him could add to uncertainty about the direction of China’s economic-policy making and the strength of the leadership’s commitment to overhauls, said the party officials, at a time when many other parts of the global economy are sputtering.
…
It seems ABQDan’s magic number of 7.5% annual GDP growth is looking ever more unattainable.
ABQ Dan is busy this week, he is in New York counterprotesting the climate change protesters. I read a Drudge Report link that said he got arrested for throwing ice cubes at Leonardo DiCaprio, LOLZ.
I can categorically refute that. He was arrested for unlawful carnal knowledge of a goat in the greater Albuqueque area.
The Chinese are pretty fond of killing the messenger. Mr. Zhou should buy a safe house in San Diego six months ago.
One out of four vehicles financed with subprime auto loans have an ignition lock that is remotely activated when they miss a payment:
http://dealbook.nytimes.com/2014/09/24/miss-a-payment-good-luck-moving-that-car/
These broke @ss loosers will have to get out and walk, LOLZ
“These broke @ss loosers will have to get out and walk, LOLZ”
Wonder what Thoreau would have to say?
Thoreau doesn’t drive, he rides the bus yo
“Thoreau doesn’t drive, he rides the bus yo”
More likely on disability; challenges, ‘ya know.
Good article, good comments. I can understand installing the ignition lock but I see NO grounds for the GPS tracker without specific reason. And since the poor buyers are going to have a tracker which makes the car easier to repo, they should be paying much less in interest than 25+%.
but I see NO grounds for the GPS tracker without specific reason.
Here’s a specific reason: the lender would like to know where to go to collect their collateral.
Seems reasonable, given the high-risk segment that we are talking about.
There are special federal tax rules for used car dealers. I think once they sell it twice, they get to deduct the total cost even though they repo it and sell it again…something like that. It is a favorable inventory method and defers recognition of income.
One out of four vehicles financed with subprime auto loans have an ignition lock that is remotely activated when they miss a payment
How hard can it be to have that device removed? I could see a cottage industry dedicated to that.
Too bad they can’t perfect that technology with houses. Miss a car payment and the car won’t run; miss a mortgage payment and live in your house free for 5+ years.
It’s like giving free gas to people who “can’t afford” their car.
Progressive New York City Mayor Bill de Blasio dropped a groundhog on the ground and killed it, because when you vote for class warfare, you’re voting for abusing animals
http://www.businessinsider.com/groundhog-bill-de-blasio-dropped-died-week-later-2014-9
Forward
Poor little hog!
Not to worry about the big tumble in durables orders…’tis a mere flesh wound.
Until New York Markets Open
Futures: S&P 500 -0.26% DOW -0.18% NASDAQ -0.31%
Look past 18% tumble — durable-goods data was solid
Published: Sept 25, 2014 8:43 a.m. ET
A Boeing Co. 787 Dreamliner undergoing fatigue testing
By Jeffry Bartash
Reporter
WASHINGTON (MarketWatch) — Boeing giveth, and Boeing taketh away.
Orders for durable U.S. goods plunged by a record 18.2% in August after a record 22.5% gain in July, mainly because of up-and-down demand for large and expensive commercial airplanes, government data showed Thursday.
…
what I see is a lot of currency creation with little products or services to back it up.
That dollar is still getting people out of bed though.
Who needs an economy that builds stuff?
Within a decade, Facebook mobile advertising will be 25% of U.S. GDP
exactly
I feel like we are just creating dollars so people can buy stuff.
The people getting rich are connected to the printed money one way or another.
Hold onto your dollars. You’re going to need every penny you’ve got and then some.
when is this doomsday scenario you have been talking about for 6 years going to play out?
.Pick yourself up off the floor and cheer up. Increasingly valuable dollars is positively bullish and good for the economy.
Doomsday?
Falling prices of all types is positively bullish and good for the economy.
Cheer up!
what is your ideal home price that is gonna make you go away?
You need to be more data driven Az_Fraud.
“Within a decade, Facebook mobile advertising will be 25% of U.S. GDP”
“A new life awaits you in the Off-World colonies. The chance to begin again in a golden land of opportunity and adventure.”
print some more cash and ignore the inflation noise?
Oh my goodness-
Santa Rosa, CA Housing Prices Crater 11% YoY As Inventory Surges On Collapsing Demand
http://www.movoto.com/santa-rosa-ca/market-trends/
do you even read this bs before posting?
the list price is not the sold price.
do you bother to see that the avg size of the home for sale has went down thus a lower list price overall?
price / sq ft is actually up
If you can interpret the data quit posting this bs here.
nnnnnnnnope! List prices are falling Az_Fraud.
Arlington, VA Housing Prices Plunge 12% YoY; Inventory Doubles As Demand Collapses
http://www.movoto.com/arlington-va/market-trends/
your data sucks take a hike loser
Oh my….
Encino, CA Housing Prices Crater 26% As Demand Collapses Statewide
http://www.movoto.com/encino-ca/market-trends/
Millennials got some first world problems yo
http://www.businessinsider.com/i-just-got-my-iphone-6-plus-and-i-am-already-thinking-about-returning-it-2014-9
sheep
Don’t know whether I’m laughing harder at the Apple fanbois or the Apple shareholders, soon to be bagholders.
I used to support the concept of a CFPB. I still do, but I think its prospects are much dimmer for preventing corruption. Why? Because:
1) Heads of FHA are former top FIRE executives.
2) Top FDA deputy is a former top Monsanto executive.
3) Head of FCC is a former leading cable executive.
4) 2nd in command at the Fed is a former top FIRE executive.
5) White house chief of staff is a former top FIRE executive.
Jobs in the government for top-level executives pay much, much less than they can get in their own industry. The duration in government is also brief as political winds change. These people are humans - they have the similar physical and economic concerns as the rest of us, though involving larger sums.
It’s just a matter of time before a FIRE executive becomes CFPB head.
The core perverse incentives from the bubble have not been eliminated. Those are 1) The ability of lenders to shed repayment risk and 2) Taxpayer guarantees of private debt.
These are the twin pillars which incentivize the creation of bad debt. They are profitable for executives of companies generating that debt, but not for the society.
Rube Goldberg exercises like Dodd Frank are designed to save those perverse incentives amidst a multi-thousand-page blizzard of BS.
The Onion nails it:
http://www.theonion.com/articles/woman-worried-student-loans-could-prevent-her-from,37002/
The ‘pool of 1st time homebuyers’ is on the march!
NPR reports that Eric Holder is stepping down as AG.
I know I’m dreaming, but wouldn’t it be fun to see Elliott Spitzer as his replacement?
Yep.
http://abcnews.go.com/Politics/attorney-general-eric-holder-resign/story?id=25752751
My pick would be Preet Bahrahara (sp?). I’d like to see someone go after the real criminals, the pigmen.
Looks as if Deval Patrick may be the choice for replacement, at least, I just read that this is what Obama may want, whether Patrick wants it is another matter. He probably does, though. Could be a springboard to being the next Dem candidate for Pres. This could get interesting.
I look forward to seeing where AG Holder goes. He will be well compensated for his restraint and discretion.
He accomplished the mission his Wall Street handlers assigned him: Leave the Banksters alone until the statutes of limitations run out.
Be interesting to see how he is rewarded.
Wasn’t Spitzer the one who liked to have hookers lead him around on a leash? Or maybe I’m thinking of that sleazeball Clinton administration guy Moris whatshisname. That’s really who you want as AG?
I dunno. I’d rather have a AG want to be leashed by hookers and avoid going after real criminals, than to be leashed by the criminals and avoid going after the hookers. The second scenario explains most of Congress.
It’s good to set back and sell off some stocks for a comfy cash cushion (CCC) every few years, like when a bull market in stocks gets long in the tooth.
But this makes buying precious metals bullion more comfy:
http://www.brillig.com/debt_clock/
no ‘pent-up demand’ here
http://mobile.nytimes.com/2014/09/24/upshot/for-the-young-money-is-increasingly-trumping-marriage.html?referrer=&_r=0
nobody is buying $500,000 starter homes
not today, not tomorrow, not ever
ever
Whoa, Nellie!
I came across an MSM article about Adobe’s R&D pullback from China. By their own admission, they are among the most corrupt countries in the world.
The second comment in the comments section is written by an engineer with a financial background who has lived there for three years, and visited extensively according to his self-report.
http://www.cnbc.com/id/102029848#
Adobe to shut China R&D as sour business climate bites
Workers are paid monthly. at the end of the month they go into to work only to find the factory they were working in shuttered - the owners nowhere to be found.
There are no agencies overseeing the environmental damage left behind…
If their GDP dips below 6% there is a strong possibility of another revolution. As a matter of fact China has one foot on a revolution and the other foot on a banana peel………….
I hope Carl Morris will weigh in. Trust he’s maintaining his even keel. He’s my role model - “Software Engineer Avoids Banking Extortion by Opting for a Trailer Park”.
Adobe blows goats - have proof! They’ve tried to force their once-loyal user base into a “cloud” subscription scheme that is a buggy, insecure rip-off - in effect renting software instead of ever owning it on your desktop. Ask Jennifer Lawrence about “cloud” security, not to mention Adobe data-mining your personal information to sell to advertizers.
Got popcorn? Cue ponzi market meltdown in 3-2-1….
http://www.businessinsider.com/marc-andreessen-on-startup-burn-rates-worry-2014-9
Well looky here - this is getting interesting. How long before Russian oligarchs in London start getting their mansions and bank accounts seized?
http://www.zerohedge.com/news/2014-09-25/russia-asset-freeze-threat-sends-dax-reeling
FBI — Table 8 - Connecticut
http://www.fbi.gov/…e_8_offenses_known_to_law_enforcement_by_connecticut_by_city_2012.xls - 243k -
Tune into the HBB bright and early for conclusive data and links and compelling discussion!
The stock market sold off again today for no discernible reason.
Just imagine how ugly things will get when the Fed finally gets around to withdrawing the punch bowl!
This stock selloff has everyone talking about ‘divergence’
Published: Sept 25, 2014 5:20 p.m. ET
Few see single catalyst as stocks see biggest fall in 2 months
By William Watts
Reporter
NEW YORK (MarketWatch) — Strategists have few pat answers to explain the carnage across U.S. stocks on Thursday, but it’s clear that concerns over divergences within and between markets is taking a toll on investor sentiment.
“I think its’ a confluence of catalysts occurring,” said Adam Sarhan, chief executive of Sarhan Capital, in a phone interview.
Investors are again growing uneasy over what will happen when the Federal Reserve withdraws quantitative easing, he said. Other pressures include long-standing but recently dormant geopolitical fears as well as internal divergences between suffering small-cap stocks and the broader market and technical factors, including the S&P 500 index’s fall through its 50-day moving average. See: Stock market live blog for a rundown of other potential catalysts cited by strategists.
The tone also wasn’t helped by remarks by Iraq’s prime minister, who warned of potential plots by Islamic State to launch terror attacks on subway systems in New York and Paris.
Stocks saw their biggest one-day drop since July 31, with the Dow Jones Industrial Average (DJIA, -1.54%) falling 264.26 points to 16,945.80. The S&P 500 (SPX, -1.62%) dropped 32.31 points, or 1.6%, to 1,965.99, while the Nasdaq Composite (COMP, -1.94%) dropped 1.9% to 4,466.75.
Gold, which has suffered a bruising September beat-down, rebounded from early losses to end $2.40 higher at $1,221.90 an ounce.
“It is not clear what caused this sudden shock to the system, but it serves as a reminder about the dangers of complacency – especially for the bulls in the case of stocks and the bears in the case of precious metals,” said Fawad Razaqzada, technical analyst at Forex.com, in a research note.
…
Is the stock market bubble of 2014 ready to burst?
Published: Sept 25, 2014 1:21 p.m. ET
By Thomas H. Kee Jr.
Is the stock market in a bubble? The answer is yes, absolutely, you bet it is. The interesting part is that it is not the only asset class that is in a bubble. In addition to the stock market, real estate is also in a bubble, and these prices have absolutely been influenced by FOMC policy.
Although I’m not making observations outside of the United States, the policy of central banks to inflate asset prices using a tool invented, it seems, by Ben Bernanke certainly has reshaped economic conditions, and thus far, they have prevented a Greater Depression. But before the stimulus packages were enacted, back when the credit crisis made everyone concerned about the economy, I was warning about something that no one wanted to hear.
I pounded the table in 2007 (and before) suggesting that in December of that year, the beginning of the third major down period in us history would become official. My findings using my macroeconomic tool The Investment Rate suggested that the economy would continue to weaken naturally, based on the societal norms that govern investment and spending patterns of individual investors.
Digging a little deeper, these observations suggested that although the market and economy had overshot to the downside late in 2008 and early 2009, the bounce back that would occur would also be short-lived and eventually the natural weakness in our economy would put pressure on asset prices again.
Interestingly, and although weakness started to happen in 2011, the policy of the FOMC to inflate asset prices (the wealth effect) prevented that dire prediction from becoming a reality. To my chagrin, the policy of the FOMC to inflate asset prices made my macroeconomic model appear less than accurate after 2011.
Because my model is based on natural investment inflows into the economy, something I have calculated beyond 2030, and because the capital being injected into the economy over the past couple of years was not natural, the direction of the economy diverged from what my analysis suggested.
It is important to note here that my macroeconomic tool is a demographic analysis using societal norms and lifetime investment patterns to identify longer-term economic cycles.
Over the years, it identified strength in the economy by seeing that more and more new money was naturally available to invest in the economy, and conversely times in which fewer and fewer new investment dollars were available to invest naturally. That is, as of December 2007, where we exist on a naturalized basis in today’s economy.
The twist is that FOMC policy has caused us to diverge from that natural condition. According to the FOMC, they will officially end their bond-buying program in the next meeting unless extraordinary circumstances arise. My analysis to clients suggests that the net real stimulus in the financial system is already negative when the operations of the U.S. Treasury are included, but everyone can see that the stimulus program is ending, and as it comes to an end, the economy is again allowed to operate on a more natural basis.
The question I pose to you is if the economy actually would have been weakening over the past few years on a naturalized basis as my analysis suggests, but instead it has been supported by capital injected by the FOMC to inflate asset prices, what do you think will happen when the money flows stop?
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Now that the stock market has had a mini swoon, is it safe to get back into the water now?
Depends. Do you have enough cash that you can go into an Audi dealership closest to La Jolla and throw down the money and walk out with the top of the line car that is there? - R8. If so, you probably can just about rest on your laurels and put any extra money into stock index funds. “Extra” because you need to maintain that amount of fiat and add to it time to time to keep up with fiat deflation.
Asian shares fall after overnight selloffs
Published: Sept 26, 2014 1:23 a.m. ET
By Brad Frischkorn
Chao Deng
Reuters
Asian stocks fell Friday, with Tokyo shares dropping sharply after a selloff in global markets and Australia’s benchmark index wiping out its gains for the year.
The benchmark Nikkei Stock Average (NIK, -0.88%) was down 1.3% and the S&P/ASX 200 (XJO, -1.28%) lost more than 1.0% to 5326.5 as the Aussie dollar (AUDUSD, -0.40%) fell. Hong Kong’s Hang Seng Index (HSI, -0.34%) was also down 0.7% as skepticism builds over China’s targeted stimulus efforts. The Hang Seng is on track for its third straight week of losses.
In New York on Thursday, the Dow Jones Industrial Average (DJIA, -1.54%) fell 1.5% to 16945.80. Its biggest decline since July 31 was blamed on the uncertain global economy, high stock prices, international conflicts and fears of asset seizures in Russia.
“Japan is never immune to global equity sentiment which, at least for the moment, has taken an abrupt turn for the worse,” said Naoki Fujiwara, fund manager at Shinkin Asset Management.
A weaker dollar (USDJPY, +0.31%) also put Japan’s market under pressure, trading at ¥108.92–down from ¥109.16 at Thursday’s close in Tokyo. A weaker dollar is bad for Japanese companies that market products overseas, as it hinders price cuts and buys them fewer yen when repatriating profits. Among major market movers, yen-sensitive exporters Honda Motor Co. (7267, -1.89%) and TDK Corp. (6762, -2.98%) fell 1.5% and 0.5%, respectively.
Earlier, closely watched consumer-price index data showed a slightly larger than expected fall in Japan’s underlying inflation rate to 1.1%, though traders discounted the impact on stock trading. The Bank of Japan’s policy goal is to raise the rate to 2% by sometime next year.
Mainland China’s market bucked the trend as investors looked to a possible replacing of the central bank chief as a signal the country is steering toward a more accommodating monetary policy stance. The Shanghai Composite Index (SHCOMP, +0.16%) was roughly flat while the Shenzhen Composite (399106, +0.26%) was up 0.2%.
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I got so much money left over after renting that I think I will return to downhill skiing this December and pay a resort to boost my skinny a$$ up a mountain so I can slide down several times per day.
Mammoth Mountain?
Life is great when you are rich in fiat money and have no debt. It is fun to laugh at those who are poseurs - the debt donkeys!
U.S. Cities Where Home Prices Are Actually Falling
5/13/2014 10:42AM
Yes, the housing market is recovering from its historic crash, but home prices still have not regained their 2005 highs, and in a number of markets, prices actually slipped in the first quarter. MarketWatch’s Quentin Fotrell joins MoneyBeat for a cross-country tour. Photo: Getty Images.
While East German-born Angela Merkel and Germany’s establishment political parties have proven to be a slavishly servile water carriers for the banksters and oligarchs, some of Germany’s taxpayers are pushing back.
http://libertyblitzkrieg.com/2014/09/25/standard-poors-warns-on-germany-as-anti-euro-political-party-soars-in-popularity/
Keynesian “Abenomics” is destroying the Japanese Yen, just as Yellen the Felon’s money-printing will ultimately destroy the dollar.
http://www.marketwatch.com/investing/Currency/USDJPY?countrycode=US