Bumping Up Against An Affordability Problem
The Orlando Sentinel reports from Florida. “In November, the core Orlando market had a 5.4-month supply, according to Orlando Regional Realtors Association. In spring 2013, the area had half the inventory that’s now offered for sale. The supply of houses on the market in Orange and Seminole counties is at its highest level since 2011 and nearing the six-month mark that is considered the point at which the market shifts from favoring sellers to giving the advantage to buyers. Laurie Millman is not a first-time buyer, but she said the low interest rates recently helped her purchase a newly built home for $210,000 in Lake County’s Sorrento Springs community. And the pickings were plentiful, she said. ‘I think we’re reaching the point where the market is getting saturated with people trying to sell,’ said Millman.”
The Virginian Pilot. “Existing home sales in Hampton Roads last year lost the forward momentum that had been building slowly since 2012, according to data. Active listings have increased every month since August 2013. In December, 10,450 homes were listed across the region, compared with 9,836 the same month in 2013 - a 6.24 percent increase. December’s sales brought the total number of existing homes sold in South Hampton Roads last year to 13,216 - down 1.1 percent from 2013, according to data from the Virginia Beach-based Real Estate Information Network.”
“Compared to the previous two years, ‘you could certainly say that in terms of sales, the housing recovery has slowed down,’ said Vinod Agarwal, Old Dominion University economics professor. ‘Things should have gotten better.’ Agarwal said the lack of consistent job growth likely took the wind out of the market’s sails last year.”
The Orange County Register in California. “The Orange County housing market ended 2014 on a so-so note, with home prices up a little, sales trending downward and another lackluster year forecast for 2015. The median home price – the price at the midpoint of all sales – was $591,000 for housing deals that closed in December, CoreLogic DataQuick reported. That’s a gain of $21,000, or 3.7 percent, from the start of the year. It’s the smallest year-over-year percentage gain since a home-buying frenzy took off in the summer of 2012. By comparison, 2013 ended with home prices up a whopping $100,000, or 21.3 percent.”
“In all, 34,014 houses, condos and townhomes changed hands last year, compared to an average of 42,300 sales per year since 1988. The reason for slow sales in Orange County, observers said, is that prices are too high. ‘What we’re doing is bumping up against an affordability problem,’ said Chris Pollinger, senior vice president of sales for Irvine-based First Team Real Estate.”
The Houston Chronicle in Texas. “Houston-area home sales hit a record high in 2014, but with low oil prices expected to drag down regional growth, the local real estate market is poised for a slower year ahead. The market was so competitive last year that buyers purchased houses sight unseen, while sellers collected multiple offers within days of putting their properties on the market. ‘We’ve seen a 20 percent increase in the last two years,’ said Bill Gilmer, director of the Bauer Institute for Regional Forecasting at the University of Houston. ‘We may have very well overdone it, especially in the new home market where builders have been able to set the price anywhere they wanted to.’”
“Less than a week ago, Ofelia McDonald put her house in Upper Kirby on the market. The house, built in 1938, has an ‘unconventional floor plan’ and a pool in the backyard. It sits on 6,875 square feet. McDonald is listing it for $575,000, ‘lot value,’ she said. She’s already had three offers, but they’ve all been for less than she wants to sell it for. The Inner Loop housing market has historically been a strong area for real estate, interest rates are low and the stock market has done well, she said. ‘Not everybody has their money in oil,’ McDonald said.”
The Calgary Herald in Canada. “Prices for repeat home sales in Calgary fell by 1.1 per cent in December from November, according to the Teranet-National Bank National Composite House Price Index released on Wednesday. They also fell by 0.2 per cent across the country in 11 markets surveyed. ‘The slump in world oil prices will hit oil-producing regions hard, and it won’t be long before housing activity and prices begin to fall significantly in Calgary,’ said David Madani, economist with Capital Economics.”
“It was the second consecutive month for a monthly decline on the national level. In December, prices were down in five of the 11 metropolitan markets surveyed: Halifax (1.9 per cent), Calgary, Quebec City (1.0 per cent), Montreal (0.9 per cent) and Vancouver (0.4 per cent).”
The Leader Post in Canada. “Regina house prices decreased year-over-year in two of three major housing categories, due in part to an oversupply of both resale and new homes, according to Royal LePage’s fourth quarter house price survey. Compared with the fourth quarter of 2013, two-storey homes dropped in price by 6.8 per cent to $345,000; detached bungalows dropped 6.5 per cent to an average of $310,000. ‘Over the past year, Regina real estate prices have been largely influenced by an oversupply of housing, comprised of both resale homes and new builds,’ said Mike Duggleby, broker and managing partner with Royal LePage Regina Realty. ‘This accumulation of homes available for sale has put downward pressure on most housing types.’”
“‘For our 2015 forecast, we could not ignore the potential impact of the steep decline in the price of oil on housing markets across Canada,’ said Phil Soper, CEO of Royal LePage. ‘In the immediate term, we anticipate that the natural slowing of home price appreciation we called for in the third quarter of 2014 will be delayed in Central Canada and accelerated in the West by recent developments in the energy sector.’”
The Winnipeg Sun in Canada. “Winnipeg’s housing market in 2015 is going to look a lot like it did in 2014: flat, according to Royal LePage. ‘We continue to see a trend of prices flattening across the board in Winnipeg,’ said Rick Preston, a broker and owner of Royal LePage Dynamic, in a press release. ‘With supply at a current 10-year high, and a smaller pool of willing buyers, prices have softened across the city.’”
“Preston suggested one cause of the current over-supply in the local market is the tendency of ‘newcomers’ to buy not only a home to live in, but a second home as an investment property. Some of those properties are sitting vacant and up for sale again, said Preston, giving buyers even more bargaining power.”
Every one of these articles state the same thing; collapsing housing demand.
Housing Demand Plummets To 20 Year Lows
http://2.bp.blogspot.com/-fqSztKilps8/VFlPKlr52JI/AAAAAAAAhKU/v5oS41S-y0s/s1600/MBANov52014.PNG
“housing market in 2015 is going to look a lot like it did in 2014: flat, according to Royal LePage”
By “flat” he means flattened, pancaked, devastated, obliterated, sail-kittied.
Flat does not exist in housing from what I’ve seen the last few years. Am I crazy? I don’t have stats at my fingertips but the last 10-15 years seem to be boom or bust. And a flat floor after a huge drop isn’t the same as flat after a big runup in my mind.
“Flat” means falling prices in Realtorspeak.
I agree, but for the remaining unknowing buyeys the Realtors will sell this as a stable and recovered market. The question is how long can they keep this ruse up.
‘We may have very well overdone it, especially in the new home market where builders have been able to set the price anywhere they wanted to.’”
Seems like the only time these sales geniuses are correct is when it’s all over.
As long as the music is playing they will continue to dance.
have been able to set the price anywhere they wanted to
Note the past tense used. Going forward, they can “set” the price at whatever they want, but they will be “accepting” the price the market offers. I can “set” the wishing price of my used Toyota at $20,000; doesn’t mean some fool is going to come along a give me the $20,000 unless there’s second fool willing to lend the first fool the money.
I saw some interest rate quotes yesterday for various time frames. I found it curious that rates for 10-year debt were similar to 3, 5, & 7 year debt.
It is hard to know if the yield curve is inverted, because the Fed has driven short term rates artificially low. However, pricing in the private sector is leading me closer to such a conclusion.
Whac knows what that means. He has been watching for the same clues over the last year. An inverted yield curve has correctly predicted 8 of the last 9 recessions.
Housing is sinking regardless of borrowing costs Jingle_Fraud.
You missed the point entirely HA.
‘It is hard to know if the yield curve is inverted’
Ah, I miss the good old days too. Back when we actually believed in stuff like this. The central bank has been purposefully manipulating the yield curve for years. It’s pretty hard for an “indicator” to work when it’s being targeted like that. But yeah, the good old yield curve. Like we used to hear, “the Fed doesn’t set long term interest rates” and “monetizing the debt would be illegal and catastrophic”.
Let’s go way all 1980’s! Why back then, we’d say a ten year bond yield under 2% means you ain’t got no recession - it’s full on depression baby!
It probably is a full on depression, but this time with a credit line.
It’s like using stats in housing for the last 10 years of bubble mania without realizing the context. This was some of what allowed the whole thing to happen. All those geniuses at Lehman able to say that housing had never dropped nationally ever before so the MBSs couldn’t blow up.
It IS a full-on depression, this time a structural one, and global to boot. Too many people who need food and services and health care, and not enough work to be done. The US has been keeping much of the world afloat by speading that work from 300 million people to about 2 billion people, but it’s still not enough, and we have to borrow heavily to do it.
Somebody here mentioned the possibility of several global housing bubbles collapsing at roughly the same time. Let’s see; Canada, China, Australia, Singapore, UK, Nigeria, Dubai, Russia. Did I miss any? Let’s throw in Texas, North Dakota, Oklahoma, Colorado, gosh, this list is getting long. California, Massachusetts, New York…
MA, VA, WV, AL, IA all negative YoY
21 states have fallen to zero YoY in the last 60 days.
7 other states at low single digits and falling… including CA.
CRATER
Ireland appears to be at the peak of an “echo bubble” like ours, maybe worse…looks like the pop in imminent and inevitable.
http://www.irishexaminer.com/ireland/central-bank-urged-to-stop-housing-bubble-278096.html
Lets not forget Nevada and Las Vegas, they only went up 40% in two years….how can that not be real. Seeing new builders offering concessions again.
“Winnipeg’s housing market in 2015 is going to look a lot like it did in 2014: flat, according to Royal LePage.
No need to panic as HGTV’s shows out of Canada are always telling me that prices are going up, up, up! Luckily Canada has lots of rich hockey players to keep the Toronto condo market afloat.
‘“Winnipeg’s housing market…. supply at a current 10-year high, and a smaller pool of willing buyers ??
Is that a miss print ?? If not, that market is in big trouble…
Dublin-Livermore, CA Sale Prices Plunge 8% YoY; Defaults Balloon As Prices Slide Lower
http://www.zillow.com/livermore-ca-94568/home-values/
HA, do you READ the data. It is like you are illiterate. There is nothing indicating this market is collapsing…..
84% of homes sold at or above listed price.
Prices up 12.9% last year.
Prices forecast to appreciate 2.7% next year.
Foreclosure less than 20% of the national average.
HA, you have no credibility!
Nice try Jingle_Fraud.
Dump those rotting shacks before you go further underwater.
Keep looking in the rear view mirror and believing what you want to beleive JFraud. Like an alcoholic’s family, “he promised he’d never drink again.”
Hey Shillow,
I get that housing can go up and down in value and that after a long recovery, it is more likely to go down than up. I have no dispute with the concept or the historical facts.
What I object to is HA’s brainless postings of sensationalist headlines that don’t relate to the actual story. It is almost like he is employed by the National Enquirer and has been kidnapped by aliens (see how sensationalism works!).
So you can just Shull it Shillow. HA!
The page shows median sale price Nov 2013 @ $679K and median sale price Nov 2014 @ $618. I suspect you were attracted to the wishing prices, which are still going up.
Yes Blue, but the median over the prior year has enormous variability. This is due to the fact the HA likes to find a list of all zip codes (not even cities), and pick one that shows the result he’s trying to find. The smaller sample size leads to big swings.
This particular zip code has 82 homes for sale, and sells about 100 per month over the past 12 months. Does that seem like an unhealthy amount of listings relative to sales pace?
If you take Livermore as a whole, not just one cherry picked zip code within Livermore, you see a different story…median prices up 1% on the year…about flat.
Nothing remarkable to see here.
If I wanted to make the bear argument for Livermore, it would be this:
1. There is massive job growth west of Livermore, which has been driving people east for housing (since there is a lack of supply where the jobs are);
2. There is very little supply on the market (about 1 month of inventory).
These two conditions should lead to significant home price growth, but all Livermore has seen is a 1% increase.
If nothing else, flat home prices in context of a market with good supply/demand dynamics is an indication that prices have reached the cyclical peak. It’s not getting any better from a supply/demand dynamic standpoint, so any significant increase in supply, or decrease in demand will lead to lower home prices.
There it is…the bear argument. Prices not falling yet, but the air is thin up there–it’s not going to get much better than this.
And prices are falling in every other area in CA too.
HA, do you READ the data. It is like you are illiterate ??
Why do you continue to banter with him ?? Makes you as annoying as he is…don’t respond to his posts…ignore HA and all his other handles…Maybe he will go away…
Oh my….
Fountain Valley, CA Sale Prices Dive 6%YoY; Plunge 10% QoQ As Housing Demand Evaporates
http://www.zillow.com/fountain-valley-ca-92708/home-values/
OK scdave.
Beaverton, OR Sale Prices Sink 3% YoY As Price Declines Resume
http://www.zillow.com/or-97007/home-values/
3% DOES NOT EQUAL “Sink”, maybe 15 or 20% could be called sink
One zip code was cherry picked, but the headline says “Beaverton”
One month for one zip code has very few total sales. Thus you are going to get ENORMOUS variability comparing data for a few sales in just one month.
This is stooooopid.
It’s a long way down for housing prices.
Portland, OR Sale Prices Plunge 4% YoY; Crater 17%QoQ As Defaults Swell
http://www.zillow.com/west-slope-or-97225/home-values/
‘Global markets were thrown into turmoil on Thursday as a shock move by Switzerland to abandon its more than three-year-old cap on the franc sent the currency soaring and Europe’s shares and bond yields tumbling.’
‘The franc jumped by almost 30 percent in a chaotic few minutes after the 1.20 per euro cap in place since late 2011 was lifted, surging past parity to trade as high as 0.8052 francs per euro. It was trading at 1.02600 at just after 1200 GMT.’
‘Over 100 billion francs ($98 billion) was wiped off the value of Swiss stocks, their biggest daily fall in 26 years, while the pan-European FTSEurofirst 300 slumped 2 percent and Wall Street futures turned negative.’
‘As investors scrambled for traditional safe-haven assets, there were new record low yields for Germany’s government bonds and gains for the yen and gold.’
“This is extremely violent and totally unexpected, the central bank didn’t prepare the market for it,” said Alexandre Baradez, chief market analyst at IG in France. “It’s sparking panic across all asset classes. It suddenly revives the risk of central bank policy mistakes, right when central bank action is what’s keeping equity markets going.”
I’m buying Euros and was buying SFrancs last week. I was floored this morning when I woke up to USD/CHF at 0.89 after seeing it at 1.01 Wednesday night. I was all, like, WTF? Fat fingers?
‘Dow Jones Switzerland Index CHF -9.69%’
http://www.marketwatch.com/tools/stockresearch/globalmarkets/intIndices.asp
It cost you .0075 to deposit money in the banks…
This deflation thing is getting worse….
Falling prices is always a good thing Dave.
“The central bank didn’t prepare the market for it.” Too funny. In other words, no one leaked the move to the financial services industry so that it could be front-run.
‘Dennis Gartman told CNBC the Swiss decision Thursday to abandon a key part of its monetary policy is the worst central bank move he’s ever seen. “This really is I think a silly decision on their part and it has inflicted enormous losses across the world to a great number of people,” the editor of the Gartman Letter said.’
“They gave you no indication that this was going to happen. They had been spending enormous amounts of money, enormous amount of Swiss francs, which they could create as a central bank out of the thinnest of air,” Gartman said. “They promised that they would be doing that on a consistent basis. Intervention to defend your currency is very difficult, but intervention to send your currency lower or keep it lower is easily accomplished.”
‘The move was part of a strategy to fight deflation, said Marc Chandler, global head of markets strategy at Brown Brothers Harriman. Before 2011, when the central bank implemented the cap, it tried buying foreign bonds as a type of quantitative easing, Chandler told “Squawk Box.” That failed to fight to deflation, so the Swiss enforced the currency cap, he said.’
“Now they’re giving up on it. The force at work here is not about the euro zone, though I agree that anticipation of sovereign bond-buying in the euro zone in the next two meetings helped compel the central bank to abandon it’s previous strategy,” he said. “The key here is that oil prices, commodity prices have collapsed. Many countries are fighting with deflation.”
‘Billionaire value investor Mario Gabelli told CNBC, “In that currency change, there are a lot of dynamics, and the Swiss will do what the Swiss will do. Too bad. If somebody is caught naked, it is what it is and you’re going to lose a lot of money.”
From the bits bucket today:
‘I remember saying on HBB that you’ll never see a decrease in prices.’
3.7% appreciation is already above the historical norm for inflation. What is Orange County crying about?
Sounds great until the losses to depreciation are figured in.
ooooooof.
For one, when prices stop going up, speculators bail. Two, prices could already be falling:
‘Movements in sales prices should not be interpreted as changes in the cost of a standard home. The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold. Due to the low sales volume in some areas, median price changes July exhibit unusual fluctuation. The change in median prices should not be construed as actual price changes in specific homes.’
‘The statewide median price of an existing, single-family detached home edged up 1.6 percent from June’s median price of $457,630 to $464,750 and up 7.1 percent from the revised $433,740 recorded in July 2013. The statewide median home price has increased year over year for the previous 29 months, marking more than two full years of consecutive year-over-year price increases.’
“While the market improved on a month-to-month basis, statewide home sales experienced another double-digit loss on an annual basis and is down 10.2 percent year to date. Last July’s sales level was higher than normal as sales increased in response to rising interest rates as the markets anticipated the Fed’s “tapering” initiative,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Moving forward, improving inventory, recent lower interest rates, and a tempering of home prices should help spur sales in the coming months.”
Canadian housing market is being sucked into the deflationary vortex
Canadian Housing Market Is Being Sucked Into The Deflationary Vortex
http://www.globaldeflationnews.com/canadian-housing-market-is-being-sucked-into-the-deflationary-vortex/
“Calgary housing prices have fallen below 2012 levels”
Got cash?
Update: “Calgary Home Prices Drop Most in Almost 2 Years on Oil Fall”
http://www.bloomberg.com/news/2015-01-14/calgary-home-prices-drop-most-in-almost-two-years-on-oil-plunge.html
In 2014 most Canadians lost 20% of their income and 20% of the “value” of their house on the currency fall alone. I’m sure they don’t see it that way, but they complain that groceries are sure expensive.
“The dive in energy prices will put pressure on house prices in the Western provinces in the coming months,” Marc Pinsonneault, senior economist with National Bank Financial in Montreal, wrote in the Teranet report.’
Now that’s some fancy predicting there Marc.
“Sellers will likely have to adjust their price expectations and be realistic about the amount of time their home will be on the market,” Calgary Real Estate Board President Corinne Lyall said in today’s statement.’
Wait for it:
‘The realtor group forecast prices would climb 1.6 percent this year.’
Aww, now you just couldn’t bring yourselves to say lower prices.
Update: Oil Falling, Dow Falling, S&P Falling, Nasdaq Falling, Housing Falling
http://www.marketwatch.com/
10-Yr Bond 1.7670 -3.81%
Corn 379.00 -0.52%
Copper 2.56 +2.18%
Silver 17.05 +0.34%
Natural Gas 3.16 -2.20%
Oh dear…
‘Lennar Corp, the second-largest U.S. homebuilder by the number of homes sold, reported its first fall in quarterly margins in three years and forecast a further drop in 2015 as costs rise.’
‘The warning overshadowed a 50 percent jump in quarterly profit and pushed Lennar’s shares down as much as 4.3 percent in morning trading on Thursday.’
‘Shares of other homebuilder stocks were also down. D.R. Horton Inc was down 4 percent, while PulteGroup Inc fell 2.4 percent.’
I predict house builder stocks will fall.
I am going to Las Vegas next week Ben…I will try and get out a bit and report back in…
‘Shares of KB Home plunged following the fourth quarter earnings release. While sales numbers and headline earnings numbers were solid, I personally was a bit disappointed by the order intake. Adjusting for one-time items impacting the bottom line the performance has been detrimental as the company essentially already issued a big profit warning for 2015.’
‘This is very disappointing as the company has made a huge bet on the housing recovery this year, having bought a lot of land and lots to build its future homes on.’
‘The company saw its activity peak in 2006 when it delivered more than 28,000 units…The company has been aggressive in its lot acquisition strategy, controlling a total of 54,000 lots by the third quarter, of which 78% is owned at a total inventory value of $3.2 billion. This acquisition strategy by buying new lots and buying into new communities is based on the anticipation of future expansion driven by the housing recovery. Given the modest increase in unit numbers over the past year, inventories are increasing faster than production which can be a worrying sign, especially if KB Home is buying these lots at prices which might be on the high side.’
Posted this yesterday and thought it pertinent again today given your post Ben…..
As of 1.14.2015 – UBS Stock index ticker for housing in percent gain or loss
1 yr 2yr 5yr
KBH -24.78 -17.24 -13.68
LEN +19.70 +11.75 +179.88
PULT +13.88 +14.54 +97.95
DRH +16.44 +20.00 +105.22
Mortgage interest rates taking a dive, re-fi apps soaring. Online quote this morning for 30-year fixed conforming is 3.5% no points.
http://www.freddiemac.com/pmms/images/pmms_chart.jpg
If these low rates hold through the spring, I think we’ll see some upticks in home prices, especially in the better markets that don’t have fracking exposure.
The so-called better markets are likely the most fracking exposed.
I’m thinking west coast/southwest. California car culture benefits from cheap gas, has high home prices, little or no fracking exposure… could be some more life left in the housing mini-bubble in these areas. But only if the 3.5% rates hold.
Prices continue to fall in the meantime…
Seattle, WA Sale Prices Dive 6% YoY As Price Correction Resumes
http://www.zillow.com/seattle-wa-98144/home-values/
I would never use zillow, well, for anything other than a laugh!
I live in the greater Seattle area - we are the San Francisco of the north - still tremendous demand from rich, young techies and extremely limited supply in the close-in areas.
It is different this time - the job growth now is much higher than during the last real estate downturn. Who knows, maybe that will change, but I don’t see it in the short term in this area.
uh oh…..
Renton, WA Sale Prices Crater 15% YoY
http://www.zillow.com/newcastle-wa-98056/home-values/
‘Currency speculators, especially large global macro hedge funds with big short positions in the Swiss franc, are staring massive losses in the face after the Swiss National Bank shocked markets on Thursday by removing a three-year-old cap on the currency.’
‘The move sent the safe-haven franc soaring against the euro and the U.S. dollar at a time when more than $3.5 billion was positioned in favor of franc weakness, the largest such position in more than a year and a half.’
‘Only days ago, the SNB termed the 1.20 francs per euro cap the cornerstone of its monetary policy.’
“You have these massive policies which forced all investors to invest with the policy and then they remove the policy and everyone is left high and dry,” said Chris Morrison, strategist for the $550 million Omni Macro Fund.’
http://finance.yahoo.com/news/hedge-funds-speculators-face-big-171046985.html
Ho ho ho, Chris! Is that forced, like gun to the head forced? Cuz if not, it sounds more like some greedy Fed watching-type BS to me.
(BTW, yahoo, you probably want to change that to: Chris Morrison, strategist for the until-recently $550 million Omni Macro Fund).
The last sentence in Kotok’s brief write up says it all in regards to assets including me thinks - housing.
Switzerland
David R. Kotok
January 15, 2015
Switzerland’s abrupt removal of the cap on the Swiss franc’s value against the euro does nothing to alter our outlook for both US interest rates and US stock markets. Subsequent commentaries will discuss the international aspects and those portfolios. Emails this morning from clients and consultants have been focused on the US market.
Simply put, the interest rates on Swiss riskless government debt are now near zero, whether it is a one-day or ten-year instrument. Until the policy change, Switzerland was pegging the franc at 1.2 to the euro. Now it is at parity. Overnight the Swiss currency gained approximately 17% against the euro.
If you are going to Switzerland for the Davos meeting, everything will cost you more. If you are Swiss and leaving Switzerland to avoid the Davos meeting, everything will cost you less.
There is not a lot of trade impact on the US from the Swiss policy change. Swiss watches will be more expensive. Some very specialized medical devices will, too.
But Switzerland immediate neighbors are countries in the Eurozone. The franc’s contiguous boundaries are with the euro. Switzerland’s central bank worried about inflows of hot money from Russia, either directly or via the euro. Think of it this way: yesterday a Moscow-based oligarch could move money from ruble to euro. Then he could move it from euro to Swiss franc, and the Swiss government and Swiss National Bank would maintain a 1.2 currency peg.
That is now over. The game has changed.
For the US to have another major, reliable, sovereign nation trading near zero on its 10-year government bond only puts more downward pressure on global interest rates. Switzerland joins the ranks of Japan, Germany, and others where a riskless 10-year bond is below 1% and close to zero.
Translate all of that into the valuation of financial assets, particularly those in the US, and there is only one outcome. The general trend remains toward higher asset prices while US interest rates remain very low.
I like swiss SWZ
machine guns for everyone
“Translate all of that into the valuation of financial assets, particularly those in the US, and there is only one outcome. The general trend remains toward higher asset prices while US interest rates remain very low.”
Unless deflation continues to appear more and in more markets. That was the point of the Swizz move - to strengthen a weakening SF. Swiss was already in deflation between 2012 and 2014. Their CB saw that accelerating and moved to stop it.
That seems odd, fighting deflation by strengthening the currency.
‘Asia shares wobble as Swiss move heightens volatility’
A comment:
‘There is not one word about the strong dollars drop from 1.02 to 0.71 and now up 0.85!
It is obvious that the American financial media have been talking up the dollar for some months now and speculating down the Euro. What will happen if say Draghi resigns under German pressure and the whole talk about Euro QE disappears. This is a real world possibility in the months and weeks ahead. Those American analysts and media types only read each other. Now had they been able to read an article with the former teacher of current SNB chairman Jordan four days prior to this it would have been clear that this professor (Baltensperger) said the Swiss franc cap needs to be abandoned because that way American hedge funds cannot just make a one way bet against or for the Swiss franc. It is important to know that the same man advised for the cap in 2011. It is also significant to know that nobody in Northern Europe wants to have a currency like Italy or even France used to have. And the American hedge funds and the Federal reserve better take note.
By the way, exports are not an end to itself. Switzerland exports to buy its imports. Now, if the currency is stronger the imports get cheap and therefore less exports are required. End of story, this is called market equilibrium as opossed to central planned market manipulation.’