Bits Bucket for August 11, 2015
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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crushing.housing.losses.
Anybody paying a mortgage after age 50 has failed at life
Anybody who doesn’t inherit a pile of money from their parents has failed at life. “Pick the right parents.” Arnold Schwarzenegger.
A guy I know had his parents move into their basement, pay off their house and proceed to have endless childcare at the drop of a hat.
Jealous much? You bet. But I’ll tell you what, a paid off house with no relatives in the basement sounds like a much better proposition even if it took me an additional 5 years to get there.
A paid off boat has an additional advantage. There is no basement for the relations to consider moving into.
Renting for half the cost of buying with a stack o’ cash in the $1 million + range, no debt in an environment of falling prices?
Priceless.
At a certain level I agree, but the popular media has people expecting the diametric opposite. The media is pushing people to believe that being in a mortgage is the very pinnacle of winning in life. According to the pervasive propaganda, you’re supposed to be servicing a mortgage your entire life, from about age 25, all the way into your 80s. Instead of paying a mortgage for 25-30 years, you’re paying for double that time, all the while desperately playing the asset appreciation game with your housing.
This has broken American families with a raspy snap like they were sun-dried sticks. I despise what’s been done to my culture. I live in it like I’m an agent placed behind enemy lines.
You’re paying double if you borrowed the money, no matter what. Stack on losses to depreciation and your double the cost of rental rates at current grossly inflated asking prices of resale housing.
“According to the pervasive propaganda, you’re supposed to be servicing a mortgage your entire life, from about age 25, all the way into your 80s.”
The more of their lives people spend in a mortgage, the longer the period of interest payments they make to Megabank, Inc.
To quote one of our more knowledgeable contributors here;
“If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.”
“At a certain level I agree, but the popular media has people expecting the diametric opposite. The media is pushing people to believe that being in a mortgage is the very pinnacle of winning in life. According to the pervasive propaganda, you’re supposed to be servicing a mortgage your entire life, from about age 25, all the way into your 80s”
Leasing (renting) a car is the same thing. Car leasing use to be for businesses back in the 80’s. Then GM came up with a plan to convince the American population that they are suppose to have a mortgage payment, rent payment, utility payment and telephone payment so they should be convinced of having a car payment. This was the introduction of car leasing to America.
“Car Fleecing”
At this point, given how complex vehicles are and how expensive they are to fix, I’m pretty sure that once I’m done with my current vehicle, I will be leasing a modest vehicle from then on.
With new cars being all computerized and repairs being in the thousands of dollars, leading is smart, especially a BMW or Audi. Who wants one with over 100k on it?
Why bother with rapidly depreciating Eurotrash when you can buy the same asian or domestic four wheels for 65% less?
Another popular and extremely foolish trend I’ve seen is for people to buy an expensive new vehicle with a loan, then take out a HELOC to pay off the car loan and afterwards tell friends that the car is paid for…when in reality they have a 30 year loan on the car and will still be paying it off long after it is scrapped.
correction, I meant using a cash out refi, not a heloc, to “pay off” a car….
The car depreciates just a little faster than the house.
Imagine the losses to depreciation on the house over 30 years. A few hundred thousand dollars, minimum versus say…. $50k on the HELOCed car.
I was thinking more of leasing a modest subcompact, not a luxury car…
on the 1 year anniversary or mike brown……more riots
how will this affect property values in the future….since…
http://fusion.net/story/104184/ferguson-home-values-are-plummeting-and-residents-are-feeling-the-pain/
zillow says ferg up 3.5%
the rioters are buying !
I’m not seeing any propaganda that you’re supposed to service a mortgage until death. But I *am* seeing propaganda that you’re supposed to have a lot of toys and/or travel to idyllic paradise with pairs of bathtubs conveniently located on the beach.
However the only way to obtain the money to acquire such toys, tubs, and wimmen to fill the tubs, is to take on mortgage until death. So I guess the propaganda is indirect?
“Leasing (renting) a car is the same thing.”
Nowhere do I see the message that we’re “supposed” have this or that payment. The message is that we’re supposed to have TOYS, and that’s it’s “okay” to go into debt to get the toys.
It’s a huge difference in the messaging.
Wants vs. Needs.
The message is loud and clear Donk. You responded to it willingly.
I live in it like I’m an agent placed behind enemy lines.
Think of how I feel living among retards who voted for Obama, McCain, and Romney.
The 25 yr olds could get a 15 yr mortgage and have the house paid off before Jr. gets to college.
The math doesn’t work. That’s why housing demand is at 20 year lows and falling.
True dat!
Excellent article about the disappearance of the new starter home.. the $200,000 kind, not the $500K Denver variety. There isn’t much that’s new, but it’s a nice summary.
Main points:
1. Lots of new high end housing, lots of new gov cheese housing, no new housing for young families with 2 kids.
2. New builds are $50/sq ft but it you add in land and fees, it’s not profitable (enough) to build a $200K SFH. Builders would rather sell premium granite McMansions for profit.
3. Used houses are the right size, but they are either falling apart, or have already been snapped up by investors for rentals.
4. Middle class is therefore stuck.
http://www.dailyfinance.com/2015/08/11/death-of-starter-homes/
$200k is too much for a “starter” home.
Not for a new starter home, and not in an area anywhere with real jobs, not to mention schools. But go ahead and wait for your dream home at your dream price.
‘go ahead and wait for your dream home at your dream price’
Better yet, go to an auction and pick up one where an FB paid too much, and give the bank an a$$-pounding!
Make sure you get a title report.
So, what do YOU think a starter home should cost?
‘Eight years ago, Mark and Lauren Greutman were over $40,000 in debt with an underwater mortgage, and running a deficit of $1,000 each month. Less than three years later, they paid it all off. How did they do it? Lauren credits their success to one habit in particular: learning to coupon and meal plan.’
“I saw cutting back our food budget as the first place that I could make an immediate impact in our finances,” she tells Business Insider. “I fed my family on $50 per week for three years. We used the money that we were saving on groceries to help pay down debt.”
‘When she couldn’t save any more, she made an effort to earn some extra cash, like earning gift cards from online rewards site Swagbucks and taking paid online surveys.’
‘Today, the only debt they have left is their mortgage, which they plan to pay off in 11 years.’
http://finance.yahoo.com/news/woman-paid-off-over-40-160000789.html
Just a few years ago, newer single-family homes with lots of space in nice neighborhoods in proximity to lots of good jobs were going for about $100k. They were much newer, nicer, and bigger than the typical starter home (intended for twenty-five year old newly weds).
————–
“She started paying close attention to sales, and was able to pay down over $5,000 of debt in a single year with money she saved.
“As her couponing website, I Am That Lady, reached six figures in revenue, she was able to funnel the profits to help pay down the debt. ”
————–
In other words, she was born on third and thinks she hit a triple. If she hadn’t gotten lucky with a website, she would be in Year 3 of paying off ~9 years of debt, $4-5K at a time. Even the commenters on Yahoo smoked this out right away.
She would have done better to drive Uber in the evenings.
And, news flash. It doesn’t matter if you’re underwater. Your monthly payment is the SAME, whether the house is worth less than you paid, exactly what you paid, or if you’re one payment away from paying it off.
Being deep underwater from overpaying a grossly inflated amount for a depreciating asset may not matter to you Donk but it sure does to the rest of us.
“It doesn’t matter if you’re underwater”
It doesn’t matter if you are foolish. It doesn’t matter if you chose to “buy” twice the house you need. It doesn’t matter if you paid twice what said house was worth. It doesn’t matter if you couldn’t afford to buy the house and had to finance it for 20 or 30 years, thus paying double yet again!
You will pay more than half a million more than me for your house over the next several decades. It doesn’t matter. It doesn’t matter because it is not my money and not my jail time.
Blue sky - can you explain your comment: “and had to finance it for 20 or 30 years, thus paying double yet again” ?
With a 4% apr a 20 yr loan will add 45% in interest, a 30 yr loan adds 71%. I get your point that interest adds up - but not to the point of double at current rates.
It would take about 5.4% for the interest to surpass principal over 30 yrs. Not that we won’t see that in the near future but your statement will appear to be hyperbole to someone looking in the current market.
Add on depreciation and you’re well over double.
“So, what do YOU think a starter home should cost?”
Basically whatever it cost in 1997.
Donk,
A contractor will build anything, anywhere for much less than $200k.
Now what is a “builder”?
between free college and mo free-er HC Hilary has already spent an extra trillion before taking office
20 years w/o the big “O” can effect your judgement
Your spelling, reasoning, and assumption of male exceptionalism are all incorrect.
I do not support “free college” for everybody.
But I do support “merit scholarships” with a ton of strings attached: Tuition only, take admissions test, no remedial crap classes, ~3.0 GPA, must choose from a list of useful majors, must graduate, etc. Put the pressure on the kids in high school to earn that money.
A 2-year degree at Northern VA CC costs ~$11K. You could probably find the money to pay for that just by making kids study enough to stay out of expensive jail.
Paging ABQ Dan…Paging ABQ Dan…your crow dinner is ready for pickup.
http://wolfstreet.com/2015/08/11/peoples-bank-of-china-pboc-freaks-out-devalues-yuan-by-record-amount-vows-to-severely-punish-capital-flight/
they sure learned how to use a printing press fast. I keep seeing all these billionaires coming to america from china and it seems most of their cash is a result of the printing press. Then they buy up hard assets over here.
He’s off enjoying an expensive vacation right now, which he can afford because he makes a lot of money and wisely invests it in all the right assets. He’ll be back when this is all over, with proof that he wasn’t wrong.
Carnival Crow Lines?
Maybe he got a Margin Caw.
Hahahahahahahah.
Bloomberg: “It’s hard to believe this will be a one-off adjustment,” Roach said. “In a weak global economy, it will take a lot more than a 1.9 percent devaluation to jump-start sagging Chinese exports. That raises the distinct possibility of a new and increasingly destabilizing skirmish in the ever-widening global currency war. The race to the bottom just became a good deal more treacherous.”
beggar they neighbor?
It didn’t work very well in the 1930s. Maybe this time is different?
If the rest of the world is too messed up to buy China’s products, it won’t matter how low the Yuan goes. Why didn’t China’s brilliant leaders see this coming?
Yup, they went they wrong way. They should have raised the value of the Yuan to stimulate domestic consumption.
Economy Asia Economy
WSJ PRO
Devalued Yuan Could Mark Next Chapter in Currency Wars
Trend seen most likely among China’s trading partners in Asia
By Rachel Rosenthal
Updated Aug. 11, 2015 9:17 a.m. ET
China’s move to weaken its currency is likely to deepen a round of competitive devaluations globally, especially among the country’s trading partners in Asia, as nations seek advantage over their neighbors in a world of slower growth.
Beijing’s decision this year to keep the yuan stable against the U.S. dollar stood in contrast to the situation in Europe, Japan, and emerging markets such as Turkey and South Africa and other emerging markets, which have used a combination of interest-rate cuts and extraordinary monetary stimulus to weaken their currencies. Expectations the U.S. will raise short-term interest rates soon added to downward pressures on a range of currencies as the dollar strengthened.
The People’s Bank of China, which tightly controls its currency within a band, opted not to follow suit, in part because it is trying to promote the yuan as a stable international currency and because it fears instability will deter investment.
But Tuesday, the central bank moved to weaken by 2% the fixing rate around which it allows its currency to trade against the dollar. The bank also said it would allow market forces to play a greater role in setting the value of its currency, which could spawn further weakness.
The move signals that China no longer is willing to withstand a relatively strong yuan—which has been on an upward trajectory against the dollar for a decade—amid slowing economic growth, weak consumer prices and anemic exports.
The impact of the devaluation is likely to add further pressure in many nations for interest-rate cuts and beggar-thy-neighbor devaluations. In the U.S., which still considers the yuan below its fair market value, the action is likely to intensify criticism of China’s currency policy. Many in Congress say the policy hurts U.S. exporters and could add to growing unease over the impact of a stronger dollar on U.S. manufacturers.
“In terms of competitive forces, this raises the stakes. This isn’t a war per se but about maintaining competitiveness. A lot of significant emerging markets have been using this valve,” said Andre da Silva, global head of interest rate strategy at HSBC Holdings, referring to currency devaluations.
…
China is not attacking anyone. They are bleeding from a self inflicted gut shot.
Emerging-markets currencies sell off after China devalues yuan
Published: Aug 11, 2015 12:14 p.m. ET
By Joseph Adinolfi
Markets reporter
Shutterstock/Dmitry Kalinovsky
Chinese yuan notes
China’s decision to devalue the yuan sparked a widespread selloff in the currencies of economies whose exporters either rely on Chinese companies to buy their products — or compete with Chinese exporters for customers.
The currencies of Asia economies — like the South Korean won and Japanese yen — sold off in sympathy with the yuan. Exporters in Japan and South Korean compete with exporters and China.
Meanwhile, the currencies of large commodity exporters like Australia and New Zealand, which depend on China to buy their exports, sold off because a weaker yuan means Chinese companies might not be willing to pay as much for raw materials like iron ore.
“If your biggest trading partner has their purchasing power diminish, you figure their ability to buy your exports at the going has also diminished,” said Steve Englander, global head of G-10 FX strategy at Citigroup.
…
Jeff Mizanskey has been in prison for over 20 years in Missouri for three marijuana convictions under the three strikes law, but he is getting released soon
No “smaller government” or “less regulation” or “lower taxes” there, LOLZ
Missouri is the state that gave us John Ashcroft, who has himself anointed in oil when sworn into public office, who is afraid of calico cats, and who had the nude female statues at the Department of Justice covered in cloaks
And now back to your regularly scheduled Drudge Report links
Missouri is like Illinois with more suck.
This is an article for 2brony and for Selfish Hoarder:
http://mobile.wnd.com/2015/08/americas-fight-against-creeping-atheism
There can be only one possible solution to this, and that is a ground invasion of Iran
The solution is blue jeans, iPhones, Netflix and KFC. How ha gonna keep me down on the madrassa once they’ve seen Breaking Bad.
Another night of rioting in Ferguson over the “Gentle Giant”
Baltimore just hit 200 homicides year to date
Seven years of Obama and that’s what you get
Sigh, forward
Interesting story. Apparently InfoWars hired some Oathkeepers to provide security in Ferguson.
http://www.reuters.com/article/2015/08/11/us-usa-ferguson-oath-keepers-idUSKCN0QG0SG20150811?mod=related&channelName=domesticNews
Three points stood out for me:
1) The police don’t like these guys muscling in on their territory.
2) Blacktivists don’t like these guys muscling in on their territory.
3) The Southern Poverty Law Center doesn’t like these guys muscling in on their territory.
zillow has furgeson going up 3.5% !
get a move on
lol, if you step back and take a look at Ferguson, it’s playing field where there’s a game in progress. With three teams playing, two of them obvious, one behind the scenes.
A fourth team showed up and that has everyone in a tizzy. Maybe REDSTATE should disinvite them.
Wait, it’s a weekday. Shouldn’t these Oathkeepers have JOBS and be at work? Or are they on one of the many public teats? And how are they different from the “paid protestors” that they so like the disparage?
Armed irregulars showing up in a powder keg like Ferguson maybe isn’t a good idea. Leave policing to the police.
If there had been a trial, then none of this would be happening. Instead, there was a cover up and the whole thing was whitewashed. That’s what happens when you elect a hillbilly prosecutor to enforce the law.
“If there had been a trial, then none of this would be happening.”
This Day in History
Crime
1992
Rodney King trial verdict announced
An jury of 10 whites, one Hispanic, and one Filipina in the Los Angeles suburb of Simi Valley acquits four police officers who had been charged with using excessive force in arresting black motorist Rodney King a year earlier. The announcement of the verdict, which enraged the black community, prompted widespread rioting throughout much of the sprawling city. It wasn’t until three days later that the arson and looting finally ended.
Immediately after the verdict was announced that afternoon, protestors took to the streets, engaging in random acts of violence. At the corner of Florence and Normandie streets, Reginald Denny, a white truck driver, was dragged from his truck and severely beaten by several angry rioters. A helicopter crew caught the incident on camera and broadcast it live on local television. Viewers saw first-hand that the police, woefully unprepared, were unwilling—or unable—to enforce the law in certain neighborhoods of the city.
…
I don’t know who could have watched that video and not found those L.A. cops guilty. Letting thugs get away with assault because they’re wearing cop uniforms doesn’t help either.
You missed the point. Jury trials provide no insurance against rioting.
Not always, but if all the facts had been allowed to come out, at least people would have seen that the system applies to everybody equally. The prosecutor in Ferguson basically acted as a defense attorney for the cop. I bet a lot of people who are protesting now wouldn’t be there if they thought the system had been allowed to function as it’s supposed to. But it sounds like the courts and government there were as sleazy as they come when it came to selectively enforcing the law, and this is what happens.
You’re backpedaling.
Do people think there would be protests anyway if the case had gone to trial? How do they know?
Last night would have been a bad one to have to fly out of St. Louis.
Michael Brown Shooting
Aug 10 2015, 11:15 pm ET
Mass Arrests After Ferguson Protesters Block Highway
Dozens of protesters were arrested after blocking rush-hour traffic on Interstate 70 a few miles from Ferguson.
Officers from the St Louis County Police Department process demonstrators from the #BlackLivesMatter movement who were arrested for protesting on Interstate 70 in Earth City, Missouri, on August 10, 2015.
St. Louis County declared a state of emergency Monday following a night of unrest in Ferguson. The order was issued as an 18-year-old was charged in connection with a shootout in Ferguson on Sunday, after a day of peaceful protests marking the first anniversary of the police shooting of unarmed black teenager Michael Brown.
Blocking the freeway is a good way to become a human speed bump.
Article for 2brony
Salon dot com takes a break from incessant SJW bleating, flips the mattress over to hide the yellow stains, and turns its guns on Scott Walker:
http://www.salon.com/2015/08/11/scott_walker_is_americas_biggest_hypocrite_the_fiscal_conservative_is_giving_450_million_to_wealthy_sports_owners
This is the same man who is promising a ground invasion of Iran on the day of his inauguration
Are U.S. stock investors taking a hit due to China’s yuan devaluation move? And does this development affect liftoff prospects?
Are U.S. stock investors taking a hit due to China’s yuan devaluation move? And does this development affect liftoff prospects?’
yes x 2
Is your primary allegiance to the United States, or to a foreign nation?
“In a meeting with 22 Democratic lawmakers on Sunday in Israel, Prime Minister Benjamin Netanyahu said that he did not intend to tell them how to vote next month on the Iranian nuclear agreement … The congressional trip to Israel, sponsored by the charitable arm of the American Israel Public Affairs Committee, came as Democratic Sen. Chuck Schumer of New York announced his opposition to the deal last Thursday.”
http://www.politico.com/story/2015/08/benjamin-netanyahu-democrats-iran-deal-vote-121219.html?hp=b1_l3
Maybe you should pick a country, because you can’t serve both
I think it’s a horrible deal, but not because of Israel. I just think it makes us look bad and sets a bad precedent. If we’ve decided that a nuclear Iran is not something we have a mandate to try to prevent then we should just openly declare our intentions to remain hands off on the issue. Creating conditions where they are allowed to develop this capability behind our back and against our public wishes as they mock us in front of the world just makes us look rather pathetic. We should either broker a deal with teeth or back the hell off.
Iran poses zero threat to the sovereign territory of the United States
Read that last part again: the sovereign territory of the United States
Iran poses zero threat to the sovereign territory of the United States
Concur. Wake me up when Iran has a serious navy, air force and ICBM that actually deliver a weapon here.
So you support letting them get nukes. My opinion is if that is going to be our national policy, then just be open about it. This play acing where we make ourselves look like feckless fools who brokered an embarrassingly weak deal is not going to help us in the long or short term.
As I said before…a deal with teeth or just back the hell off. Is my position troubling to you because it does not make snubbing Israel its focus? If it is, notice I don’t make bending to Israel’s will a priority either. We are their ally but we should never be their supplicant. We decide what is best for us and act accordingly.
Pakistan has nukes, why should Iran be any different?
The era of America playing world cop is over
So you support letting them get nukes.
No, I don’t support Iran having nuclear arms — but it’s also none of our business. Why is the U.S. so arrogant to think we can tell any sovereign nation what to do internally with uranium? And if we’re worried about terrorists bringing a suitcase bomb over here well there’s already potential underground sources of material already in former USSR republics, Pakistan, etc.
Mutually Assured Destruction has worked very well to prevent nuclear exchanges for over 50 years. You can sleep well.
Iranian nukes are Israelis problem. Let them deal with it.
Goon I understand you position. I’m not sure how you think it contradicts anything I said. I think even if your position is to be the official national position the Iran deal is a joke and does us more harm than good.
If we are going to make deal with them, make a deal with teeth, or back off. By “back off” I mean get out of their way, but do it in a way that we are openly acknowledging what we re doing. With this current deal they’ve made fools of us, which diminishes our leverage in future negotiations, not just with them but with others.
Or, perhaps, more properly, Iran poses no direct threat to American Soveriegn Territory at this time.
Or do you mean that soveriegn territory is unable to sustain damage as it is simply just land?
Or, do you really think, that Iran is not a threat now, or in the future?
Or, are you just spinning your wheels?
just offer them a 50 to 1 lunch ratio
Paging AlbqDan…
As reported by real journalists:
“Whenever we stand together, when we do not allow them to divide us by the color of our skin or our sexual orientation — by whether a man or a woman is born in America or born somewhere else — whenever we stand together, there is nothing, nothing, nothing we cannot accomplish”
http://www.washingtonpost.com/politics/how-does-bernie-sanders-draw-huge-crowds-to-see-him/2015/08/11/4ae018f8-3fde-11e5-8d45-d815146f81fa_story.html
I am reading a biography of Trotsky right now, and this sounds like an updated 21st century version of him “rallying the base”
…and we have trump doing Mussolini. History truly repeats itself.
A real journalist is tired of the Kardashians.
http://www.zerohedge.com/news/2015-08-11/theres-hope-america-anchor-walks-live-tv-refuses-report-kardashians
Can’t say as I blame him.
extra has a story about the family every night, its a joke.
Why the hell are those people famous, anyway?
Old white “Oath Keepers” militia with assault rifles show up uninvited and “patrol” the streets of Ferguson, unimpeded by the police.
On Twitter: Anré D. Washington So let me get this straight “oath keepers” with assault weapons can walk around freely but protestors are maced & arrested? An understandable viewpoint.
Oath Keepers go home. Yes, they have 2nd Am. rights and open carry. But legal rights are no substitute for good judgment. I have the right to fart in an elevator but good judgment and decency prevents me from doing so. Bringing your weapons to an incendiary situation is irresponsible and bad judgment.
Yeah, what’s the big idea?
They were providing security for InfoWars reporter.
You believe that spin? It’s a bunch of vigilante wanna-bes who make themselves feel important by appointing themselves as a faux police force.
It’s incendiary all around, W.
It’s one thing to protect your own property, or your neighbor’s. It’s another to grab your AR-15 and interject yourself into a volatile situation where a miscalculation can have catastrophic consequences. This is going to be one of those rare times when I agree with WPA. What these Oath Keepers are doing is inflammatory and unwise, and is more likely to provoke trouble than prevent it.
Business
Meet the New King of Subprime Lending
Fortress Investment’s Wesley Edens turns $124 million into $3.5 billion; ‘it’s not a bad thing’
Wesley Edens, chairman and co-founder of Fortress Investment Group, at the private-equity and hedge-fund firm’s headquarters in Manhattan. “Subprime is used as an invective, but a lot of people have a problem raising financing,” he says. “It doesn’t mean they’re bad people.”
Photo: Kevin Hagen for The Wall Street Journal
By Gregory Zuckerman
Aug. 10, 2015 10:34 p.m. ET
Wesley Edens still rues his decision not to bet against subprime mortgages before the financial crisis. That left Fortress Investment Group LLC, the private-equity and hedge-fund firm where he is co-founder and co-chairman, exposed to big losses that sank its stock price below $1.
On Wall Street, the best way to get over a losing trade is to bounce back with a winner. Mr. Edens is enjoying a surprising whopper: subprime loans.
A resurgence in loans to Americans with scuffed or limited credit is giving Fortress one of the largest financial windfalls in the history of the private-equity industry.
The New York company’s majority stake in subprime lender Springleaf Holdings Inc. has ballooned in value to $3.5 billion—putting the firm’s gain at more than 27 times Fortress’s original investment of $124 million in 2010. Buying the stake was Mr. Edens’s idea.
Fortress also has turned around its $1 billion investment in Nationstar Mortgage Holdings Inc., led by Mr. Edens in 2006 but soon worthless, into $350 million in paper and actual gains. Nationstar collects payments on home loans, about 20% of which are subprime.
…
The Fed has his back.
“The Fed has his back.”
Yep.
Is the yuan devaluation expected to have any effect on commodities prices?
Futures Movers
Oil slides toward 6-year low after China yuan devaluation
Published: Aug 11, 2015 9:54 a.m. ET
OPEC production hits 3-year high in July
By William Watts, Deputy markets editor, & Biman Mukherji, Petrofac
China’s decision to devalue the yuan sent the U.S. oil benchmark tumbling back toward a six-year low on fears over the health of the Chinese economy and the country’s appetite for crude.
Light, sweet crude futures for delivery in September (CLU5, -4.03%) fell $1.59, or 3.6%, to $43.36 a barrel on the New York Mercantile Exchange, trading below the six-year closing low at $43.46 set in March.
…
This explanation falls flat for me. OPEC said last year that they were expecting demand to decrease because of weakness in the Chinese and European economies. Then OPEC proceeded to increase production. In other words, they are doing it on purpose.
Don’t look now, but oil closed at March 2009 levels. Regular readers here doubtless are aware that March 2009 represented the trough of asset prices in the wake of the Fall 2008 financial meltdown and before the Fed’s announcement of QE1.
Yes, the Chinese will pay more for raw materials.
Markets Commodities
With Yuan Devaluation, China Digs a Hole for Commodities
Weakening of currency should lessen demand for gold, copper and other metals, hitting prices
Workers monitor production of coiled copper tubes at a plant in Nantong, in eastern China’s Jiangsu province. China’s decision to devalue the yuan should lower demand for commodities—and prices.
Photo: Xu congjun - Imaginechina
By Biman Mukherji
Aug. 11, 2015 7:23 a.m. ET
HONG KONG—China’s appetite for commodities from gold to crude oil is likely to abate in the near term after the country’s surprise decision to devalue its currency, although a weaker yuan could boost steel exports.
As one of the world’s largest buyers of commodities, China’s decision to devalue the yuan Tuesday—effectively lowering the value of exports and increasing the cost of imports for domestic buyers—is likely to deepen price declines among copper, aluminum and other metals. China consumes nearly half of the world’s annual output of metals.
Commodities that were already at multiyear lows due to worries about China’s slowing economy and a strengthening dollar—the unit in which most commodities are priced—suffered an immediate hit Tuesday on the People’s Bank of China’s action. The move also took a toll on the currencies of commodity-dependent countries; the Australian and New Zealand dollars each fell around 1% against the U.S. dollar.
“In the short run, this [devaluation] is more bad news for commodity prices. A weaker Chinese currency is likely to mean weaker demand for internationally produced commodities,” said Paul Bloxham, chief economist for Australia and New Zealand at HSBC.
Aluminum futures fell 1.8% to $1,583 a ton, copper slipped 2.3% to $5,173 a ton and Nymex crude-oil futures were down 1.6% at $44.25 a barrel. Brent crude on London’s ICE Futures exchange fell 1.2% to $49.79 a barrel. Gold, which touched five-year-lows last month, fell 0.9% in Asia to as low as $1,094.08 before rebounding on a spate of short-covering and stop-losses to $1,113.14 an ounce in recent trade.
“When oil becomes more expensive, it is likely to hurt China’s demand,” said Daniel Ang, investment analyst at Phillip Futures. “I think that there is definitely going to be more bearish momentum to what we are seeing now, and we could see oil prices fall further.”
Among precious metals, the price of silver edged down $0.01 to $15.18 per ounce, while platinum slipped to $980 an ounce recently, down $0.75 from the previous close.
Gold’s gains in London trade, meanwhile, are unlikely to be sustainable, analysts said, as China accounts for nearly a third of the yellow metal’s global demand.
“If anything it may worsen the gold demand,” Barnabas Gan, economist with OCBC Bank in Singapore, said of the yuan’s devaluation.
…
A weaker yuan would make dollar-priced commodities more expensive for Chinese buyers, limiting demand for commodities, Hamza Khan, senior commodities analyst at ING Bank, said.
“On the other hand, if this devaluation is strong enough to lead to a recovery in Chinese exports and improve China’s GDP figures, then it will be bullish for oil.”
“The short-term impact is muted and the long-term impact is bullish,” Khan said.
does this mean they will need to buy some more US treasuries?
No, but the ones they have on hand now are worth more (in Yuan).
“On the other hand, if this devaluation is strong enough to lead to a recovery in Chinese exports and improve China’s GDP figures, then it will be bullish for oil.”
That argument holds just as much water as all the many specious economic arguments that AlbqDan used to post here.
I thought China was a world superpower. Shouldn’t that mean that a currency devaluation on their part would make the price of gold (and oil) go up? Maybe they’re not what ppl thought they were.
They are a commodity. It is time to sell commodities.
It’s a long way up from here to $80/bbl by December 2015, four months from now.
Energy Commodities
US crude dips below 2015 closing low on China demand, OPEC outlook
19 Mins Ago
Reuters
Oil fell on Tuesday on concerns of weaker demand from China after the world’s top energy consumer devalued its currency and as OPEC signaled supplies from rivals were proving more resilient than expected to low prices.
China’s central bank made a “one-off depreciation” of nearly 2 percent in the yuan after a run of poor economic data, guiding the currency to its lowest point in almost three years.
Front-month Brent futures were down $1.45, or 2.9 percent, at $48.96 a barrel by 11:03 a.m. EDT (1503 GMT), erasing most of the gains made in oil’s biggest daily rally since late May the previous session.
U.S. crude fell $1.82, or 4 percent, to $43.14 a barrel, below the 2015 closing low of $43.46 reached on March 17.
“There is still no solid basis for any prolonged price recovery given that the huge oversupply remains firmly in place,” Commerzbank said in a note.
A slowdown in China’s economy, which is still expected to grow by around 7 percent annually, has been a key driver for the sharp drop in oil prices over the past year along with rising global supplies.
…
How is it still expected to grow by 7%?
Crude oil is getting smoked
Akin Oyedele
Aug. 11, 2015, 8:24 AM 5,189
There goes crude oil again.
On Tuesday morning, West Texas Intermediate crude futures in New York fell 4% to as low as $43.03 per barrel. Brent crude, the international benchmark, was also lower, near $50 per barrel, after having its biggest one-day jump in a month on Monday.
We got OPEC’s latest monthly production numbers this morning, and they showed that production surged to a three-year high in July. The 12-member oil cartel has overshot its production target for at least a year in a bid to maintain its market share.
After what seemed like a recovery in prices around May, crude continued its plunge late in June and collapsed 20% from recent highs into a bear market last month.
Analysts do not see the slide in commodity prices slowing down soon. As Business Insider’s Myles Udland highlighted over the weekend, Goldman Sachs’ commodities experts think we’ve entered a New Oil Order, where the barriers to entry are much lower, and small shale producers can produce plenty of oil cheaply and quickly.
On Monday, Macquarie analysts said that commodities are re-entering a ‘deflationary vortex.’ The undersupply of the dollar is making it more expensive, and fewer dollars are buying commodities, creating an excess.
And today, WTI moved closer to a year-to-date low.
…
FastFT
Markets
Brent nears January low as oil drop quickens
3 hours ago
Another day, another big drop in oil prices.
Brent crude, the international benchmark, fell $1.63 to $48.78 a barrel in afternoon trading, close to its January low.
West Texas Intermediate, the US marker, lost $1.90 to $43.06 a barrel, the lowest it’s fallen to since March, reports Anjli Raval, oil and gas correspondent.
The market was reacting to a bearish assessment of the oil market put forward in Opec’s monthly report published on Tuesday, that pointed to a persistent glut that failed to be sopped up even with an uptick in global demand.
Despite a drop in Saudi oil production, Opec output overall continued its upward move to the highest since 2012.
Iraq, Iran, Angola and the UAE all reported sizeable increases in production in July.
The cartel was hopeful for a drop in output from rivals outside the producers’ group (such as from the US, Russia, Canada etc) earlier this year.
This was the motivation behind the November Opec decision to maintain, rather than cut output, believing high cost producers outside the cartel would be the first to blink amid lower prices.
But the group, in fact, raised the forecast for non-Opec production, which is proving to be more resilient than expected in the face of prices that are down by more than half since June last year.
…
plunging commodity prices seem to indicate we are in a strong recovery still right?
whats up with the egg prices? Is it their turn to fleece the consumer?
OPEC just kicked oil into the $30s
Patti Domm
2 Hours Ago
CNBC.com
Increased pumping by OPEC as Chinese demand appears to be slackening could drive oil to the lowest prices since the peak of the financial crisis.
West Texas Intermediate crude futures skidded through the year’s lows and looked set to break into the $30s-per-barrel range after the Organization of the Petroleum Exporting Countries admitted to more pumping and China devalued its currency, sending ripples through global markets.
“The familiar theme of oversupply and shaky demand is getting punctuated today,” said Again Capital partner John Kilduff, who has expected WTI to aim for $30 per barrel. WTI futures for September fell more than 4 percent Tuesday and traded below $43.26 per barrel, the March 17 low.
Kilduff said, “$42.03 is going to be key. Then we’ll be back to extrapolating back down to the low 30s from the financial crisis.” The intraday low in 2015 was $42.03, also reached in March. Brent futures, meanwhile, were just below $49 per barrel.
“Overall, I think this devaluation by the Chinese suggests maybe the slowdown in economic growth is greater than people anticipate, and that’s where fear on the demand side is coming from and driving us lower,” said Gene McGillian, analyst with Tradition Energy.
He said if oil breaks $42.03, the next target is in the upper $30s at about $36, and then $32. The question is how fast could oil spring back, if it does reach the lows set in 2008 and 2009 during the financial crisis.
“There’s no positives on the supply side, and there’s bearish fears on the demand side,” McGillian said.
…
is it to late to short oil?
Dug
ery
Seems like the easy money has been made?
$4.29 in Mammoth Lakes, CA
Commodities were hammered today…ouch!
Financial Post
China’s surprise currency devaluation sends commodities plunging: ‘Another sign of economic weakness’
Peter Koven
Tuesday, Aug. 11, 2015
Tuesday’s currency devaluation, along with China’s other recent stimulus measures, are only hurting commodities this time around. Tomohiro Ohsumi/Bloomberg
The last time China imposed extreme economic stimulus measures they drove huge gains in commodity prices.
But this time, they’re just making things worse.
Commodities plunged to new multi-year lows on Tuesday after China’s surprise move to de-value its currency by nearly two per cent. Oil and copper both dropped to their lowest levels since 2009. Zinc fell as much as four per cent, and nickel and aluminum were down as well.
The drop in commodities underscores the fact that investors have deep-seated concerns about China’s shrinking growth, and the government’s ability to stem the slowdown. China is the world’s primary driver of commodity demand, and its recent equity market meltdown and disappointing economic data have been rattling commodity markets for weeks.
This is a real contrast to what happened after the 2008 financial meltdown.
At that time, the Chinese government unveiled a massive US$586-billion stimulus program to jumpstart its economy. The plan worked, as China’s annualized GDP growth jumped from a low of 6.2 per cent back into the double digits in under a year. Commodity prices also rocketed higher in that period, as China’s stimulus unlocked enormous demand.
But Tuesday’s currency devaluation, along with China’s other recent stimulus measures, are only hurting commodities this time around.
…
Jeb Bush to embrace family legacy on Iraq in hawkish foreign policy speech:
http://www.theguardian.com/us-news/2015/aug/11/jeb-bush-iraq-foreign-policy-speech
And thus a base is rallied
The mouth breathers, window lickers, knuckle draggers, sister diddlers, coal rollers rallied by this are almost as f*ing dumb as the Social Justice Warriors™ who equate violent criminal thug Michael Brown with lucky duck Eric Garner who got murdered by NYPD
Iraqis are Arabs, and Iranians are Persians, but they are both brown
Nothing, repeat nothing, rallies a base more than dropping bombs on brown people
And now back to your regularly scheduled HuffPost, BuzzFeed, and Gawker links
‘ Michele Bachmann: Iran deal a cause for celebration because it proves the End Times have begun in earnest’
“The prophets longed to live in this day,” she said, “you and I are privileged to live in it”
http://www.salon.com/2015/08/10/michele_bachmann_iran_deal_a_cause_for_celebration_because_it_proves_the_end_times_have_begun_in_earnest/?utm_source=twitter&utm_medium=socialflow
And note Bachmann’s and Palin’s silence on Trump’s misogynist comments. They must be following scripture, the part where it says women are to be subservient to men…
The republican base speaketh.
Squeleth.
Proof positive, as if more were needed, that 95% of our electorate are denizens of IDIOCRACY.
Bloomberg reporting that Hillary Clinton has 80% favorable rating by black Americans
And how is giving amnesty to 50,000,000+ criminal alien invaders from Mexico, El Salvador, Honduras, Guatemala going to make life better for native born black Americans?
The future belongs to Lucky Ducky:
http://www.bloomberg.com/news/articles/2015-08-11/why-dismal-pay-growth-may-be-here-to-stay
Almost 10am local time, and I have customers to serve
Have a nice day
Trying to solve a debt problem with more debt seems logical doesnt it?
Corporate debt has more than doubled since the crisis. all those stock buybacks to enrich ceo’s via stock options are expensive.
Its up to master yellen to keep the cost of servicing the debt manageable.
So as your savings accounts yield enough for some alpo be thankful people get their entitlement checks thx to the ability to sell more treasuries.
Beware the stock market death cross (LOLZ!).
The Tell Get
Dow death cross is a bearish omen for the stock market
Published: Aug 11, 2015 12:05 p.m. ET
Two of the previous three death crosses have produced sharp losses
By Tomi Kilgore
Reporter
“Death cross” warns of new long-term downtrend.
A rare “death cross” appeared Tuesday in the chart of the Dow Jones Industrial Average, suggesting the stock market may have already begun a new long-term downtrend.
Although chart watchers have seen the bearish technical pattern coming for some time, it can still send a chill down bulls’ spines when it is finally confirmed.
The fact that the Dow industrials’ (DJIA, -1.24%) death cross follows the appearance of one in its sister index, the Dow Jones Transportation Average (DJT, -0.49%), warns that this one is more than a one-off event.
…
financial engineering has run its course. Time to flush out mom and pop and steal their money again.
lather, rinse , repeat!
Good grief I sure hope so. Bring on da bearz. Time to do some blue light shopping.
Media is three days late. I called the “death cross” last week as original content right here on HBB:
http://thehousingbubbleblog.com/?p=9170#comment-2468703
See, if you want to be a step ahead of the media, just read WPA.
Do u think the smart money has made enough profits the past 6 years? They seem to be getting real greedy these days.
@azdude: My best returns in stocks have come from looking at charts and ignoring the pundits, analysts, and so forth. Regardless of all of the doom and gloom about debt, China, oil, and other blah blah, the fact is a 6 year bull run in stocks is getting long in the tooth. The average bull run is on the order of 6 to 7 years so it’s due for a good pullback.
The sideways SP500 action is a tough call because sideways consolidations do break decisively but it can be either way. My guess is there’s a greater chance the smart money is distributing their holdings now and ultimately the SP500 will break to the downside.
Again ignoring all of the doom and gloom and “analysts,” on average and statistically, we are due for a normal business contraction (recession). Once that kicks in then a good 20, 25 or even 30% pullback in the market would be expected… and quite healthy.
There are way to many people on the same side of the trade. There aren’t a lot of shorts around anymore either. so when the selling starts there is a lot of people running out the door at the same time. I’ve seen this game before.
It has been so orchestrated you feel the bottom could fall out any day. No confidence in these absurd valuations and rigged earnings numbers.
Dow 5000 is our forecast.
That seems about right since 2009 hit 6,500 even with rescue funny money.
just read WPA.
WPA = white people apologizing
WPA = white people apologizing
Heh heh… good one Goon. Best laugh I’ve had in a while, thank you.
B@assassinating
Wpa is racked w whitey environment guilt !
Article for the Social Justice Warriors™ because SJWs are intellectual cowards:
http://www.counterpunch.org/2015/08/10/liberals-and-the-new-mccarthyism
The coming Great Reset is going to take care of the SJWs. Very few will come out the other side, and they will no longer be naive idiots.
Cut the cord & starve the beast. Just say no to corporate media.
http://www.breitbart.com/big-hollywood/2015/08/11/bundled-cable-death-watch-q2-cord-cutting-soars-to-566000/
-c-r-a-t-e-r-
The stock market can remain flat forever.
(except for craters)
John Kerry warns the dollar’s days as the world reserve currency are numbered if the Iran deal doesn’t work out - while of course saying nothing about how the Fed’s deranged money printing is turning the Greenback into so much confetti to be showered on the Fed’s Wall Street accomplices.
http://www.zerohedge.com/news/2015-08-11/john-kerry-warns-american-dollar-will-cease-be-reserve-currency-world-if-iran-deal-r
John kerry? lolz. And use what as medium of exchange…. mexican pesos?
Keep voting for more of the same, ‘Murikans, then wonder, slack-jawed, while nothing changes.
http://www.theburningplatform.com/2015/08/11/why-we-need-term-limits/
Umm, the new auto-play ads on this page SUCK!
go away!
I haven’t changed anything. And I don’t get auto play ads.
Probably got some malware on his machine that replaces site-ads with malware-autoplay-ads, and mistakenly thinks it’s your site…
In a world where cyber-terrorism is the new battlefront (just read the newspaper), how technologically savvy should our Commander in Chief be?
Taken to an extreme, the late Ted Stevens (who referred to the internet as a series of tubes) would NOT be qualified to be Commander in Chief, IMHO.
If we were a nation of laws, this criminal would be headed for jail.
http://www.mcclatchydc.com/news/nation-world/national/article30714762.html
QE 4 is around the corner.
Good for him.
I hope he stays healthy and gets to that second contract.
Lions wide receiver Ryan Broyles lives on budget of $60,000 a year
Nina Mandell
9 Hours Ago
USA Today
Lions wide receiver Ryan Broyles signed a contract with more than a million in guaranteed money, but his annual budget reflects one of a much smaller salary: $60,000 a year between him and his wife.
From ESPN:
Broyles wanted to make sure his NFL career, however long it lasts, really did set him up for life.
“Then you know how much you can invest, how risky you can be,” Broyles said, as he enters the last year of his rookie contract with no guarantee he’ll make the Lions roster. “Then, when I was hitting the same budget over three, four, five months, it was all right, this is what your budget is and I had some spending money.”
Broyles signed a four-year contract in 2012 worth $3.6 million with $1.42 million guaranteed. He’s faced a litany of injuries since being drafted by the Lions in the second round of the 2012 draft. But this year, he’s hoping to make an impact.
From the Detroit News:
When Broyles has been healthy, he has displayed a knack for finding holes in the defense to get open. He did that during the preseason in 2014, too, but still couldn’t become an integral part of the offense.
“Be patient, man,” Broyles said when asked what he learned last season. “Control what you can control. Whenever opportunity presents itself, try to make the best of it.”
But thanks to his budgeting, in addition to not being one of those stories of athletes who went broke, Broyles said that the budget enables him to play football for the reason he’s playing it in the first place: Love of the game.
“The pressure I put on myself is just being the best player I am,” Broyles said. “I would never play [just] for money, you know what I mean, that’s not my intentions whatsoever.
(Thanks to ESPN for sharing)
Wow, great story! Now that’s a sports/financial hero much of America needs to emulate.
OK we’ve done smart, now let’s do stupid.
Geno Smith out 6-10 weeks; ’sucker punch’ over $600 dispute
Rich Cimini and Adam Schefter
FLORHAM PARK, N.J. — The altercation in the New York Jets locker room that ended with quarterback Geno Smith suffering a broken jaw began as a dispute over $600, sources told ESPN NFL Insider Adam Schefter.
Smith, who will miss at least six to 10 weeks with two fractures in his jaw, accepted a $600 plane ticket from IK Enemkpali to appear at the reserve linebacker’s football camp in Pflugerville, Texas, according to sources. Problems arose when Smith did not show to the camp, which took place days after someone close to Smith died in a motorcycle accident in Miami, sources said.
After Smith did not attend, Enemkpali demanded that the Jets quarterback refund him the $600 he allegedly used to purchase the plane ticket. Smith told Enemkpali he would reimburse him the money, but he had not as of Tuesday morning. Enkempali confronted Smith on Tuesday about the money, and the confrontation ended in a punch and a broken jaw.
Enemkpali, a sixth-round pick in 2014, was released immediately by the team, with coach Todd Bowles saying it’s up to Smith if he wants to formally press charges. The coach also said he spoke to the team and then made the decision to let go of Enemkpali.
“It had nothing to do with football. … I thought it was childish either way and it was stupid,” Bowles said. “He got cold-cocked … sucker punched, whatever you want to call it, in the jaw. He’s got a broken jaw, a fractured jaw.”
Enemkpali released a statement Tuesday afternoon saying he was sorry for his actions.
“I apologize to the Jets organization, coaches, teammates and fans,” Enemkpali said. “Geno and I let our frustration get the best of us, but I should have just walked away from the situation. I deeply regret and apologize for my actions. It was never my intention to harm anyone. I appreciate the opportunity I had with the Jets.”
“Once [Enemkpali] calmed down, he was very remorseful,” Bowles said. “From Geno’s standpoint, anytime someone punches you in the face unwarranted, you’re going to be pissed off — and he was pissed off.”
Bowles, who was informed of the situation by a trainer, said Smith did not throw a counter-punch and that several players stepped in to break up the altercation.
Bowles said he was also upset with Smith regarding the incident with Enemkpali.
“It takes two to tango — one to throw a punch, but two to tango,” Bowles explained.
Cornerback Darrelle Revis agreed with that sentiment, saying, “I hold both of them responsible, just the way it played out.”
Smith, who was the presumptive opening day starter, will have surgery, according to Bowles. There’s no guarantee that Smith will regain the starting job when his recovery ends, Bowles said.
Cecil the lion: ‘We knew this is how he would die’
By David McKenzie, CNN
6:26 AM ET, Tue August 11, 2015
For nine years Stapelkamp, a field researcher with an Oxford University-funded project, has been tracking the lions of Hwange. He knows more than 200 by sight and by name.
But one lion was always his favorite: a black-maned male called Cecil who, in death, has perhaps become the world’s most famous lion.
——————————————————————————
Anybody here seen my old friend Cecil?
Can you tell me where he’s gone?
He ate a lotta Zebra but it seems the good they die young
You know I just looked around and he’s gone
Just remember that no matter what happens, I will always be smug.
And furthermore,
I just got paid $6784 working off my laptop this month. And if you think that’s cool, my divorced friend has twin toddlers and made over $9k her first month. It feels so good making so much money when other people have to work for so much less. This is what I do,