When it comes to the US housing market there appear to be three groups of people: those who who have either unlimited cash and/or access to credit, and like the most rabid of bubble-chasing speculators, are perfectly happy to engage in a game of Flip That House for a short-term profit pending the discovery of a greater fool (often times converting the house into rental properties as numerous hedge funds have been doing on cost-free basis courtesy of the government's REO-To-Rent program) - they are the vast minority of speculators; then there are those who currently rent and are opportunistically looking at home prices, willing to dip their toe at the right price - these too are few and far between and mostly represent a function of the natural growth of the US household offset by the availability of jobs; and then there is everyone else. Sadly, it is the "everyone else" that is the vast majority of the US population. It is this "everyone else" who comprises the bulk of those who have been kicked out of the American Dream, whose core pillar has always been owning your own home (with or without a massive mortgage attached), not renting. As the US Census Bureau reported earlier today, the US homeownership rates in the first quarter of 2013 dropped by another 0.4% to a fresh 18 years low, or 65% - the lowest since 1995!
The Baltic States are unique in Europe in that they went through an austerity crash program a while ago already (beginning right after the 2008 crisis) and have in the meantime recovered strongly. Der Spiegel has an interesting interview with Lithuanian president Dalia Grybauskaite, in which she explains her views on the topic. It can obviously be done successfully. And while we are aware that every case is unique - the problems are not the same in every country, and due to cultural norms and traditions, it may be easier to enact reform in certain countries than others; it seems that no matter how many times Paul Krugman insists that no Baltic nation can possibly be held up as an example, the fact remains that they have imposed fiscal austerity and implemented wide-ranging reform measures and have succeeded.
As was announced earlier today, the Cypriot parliament was set to vote on the country's deposit confiscatory bail in, a vote that was largely expected to pass. Moments ago it did.
- CYPRUS LAWMAKERS APPROVE BAILOUT IN PARLIAMENTARY VOTE WITH 29 VOTES IN FAVOR, 27 AGAINST
And with that, the resulting depression that is about to be unleashed in Cyprus is nobody else's fault but of the country itself, its politicians and ultimately, its people. So dear Cyprus, you may have a 20% GDP drop every year for the foreseeable future and triple digit unemployment, but at least you will have the EUR and your Stockholm Serf Syndrome.
While many will shrug at yet another "fat finger", we thought it useful to 'know' - as opposed to 'guess' - what really drove a more-than-10% flash-crash in Symantec stock this morning. As Nanex illustrates so clearly, in less than a second, over 500,000 shares were traded in a waterfall across 13 exchanges (and who knows how many dark pools). This triggered a circuit breaker which halted the stock trading for 5 minutes and when it resumed... it had recovered all those losses. We await news of the Johnny 5s' trades being disqualified as this was simply not a fat finger. Just another day in our efficient and highly liquid stock markets...
The President will take questions from the White House reporters at 1015ET. Will he mention the equity market at all-time highs? The strength of the housing market? The 'rising' unemployment rate? The 'falling' macro economy?
Total collapse. That is the only way to explain what just happened with the Chicago PMI which imploded from 52.4, and printed at a contractionary 49: the first sub-50 headline print since September 2009. But that's not all: Deliveries, Prices Paid and Production all hit their lowest since 2009; Backlogs posted their tenth month of contraction in the past 12 months. And what's worst for the Department of Making Shit Up, Employment plunged from 551. to 48.7, its third month over month decline. Actually another way to phrase it: complete disaster. Obviously this number explains why S&P should have no problems crossing 1,600 today. Because for that other Department: of Propaganda and Creating money out of thin air, this means only one thing: the Fed is preparing to print ONE KROOGOL MORE!
When the largest currency cross in the world spikes 70 pips on no news and starts trading like a penny stock, you know that beneath the calm surface of all-time high nominal stock prices, something is brewing... Of course, as we tweeted earlier, there is another reason for the ramp...
It's momentum ignition time. Who goes first EURUSD or USDJPY?
— zerohedge (@zerohedge) April 30, 2013
Retail needs to see S&P 500 at 1600... and in the face of macro data and micro earnings, there's only one way that is going to happen.
If there is one admirable thing about the Case Shiller Home Price Index report (which sadly shows data for February so a nearly three month delay) is that even according to its authors, it is the Non-Seasonally Adjusted number that is representative of what is going on in housing. And, as the chart below shows, very little is going on as the broader price level continues to undulate in a very tight range with little real moves to the up or downside.
While near record low sovereign bond spreads and near record high equity prices have been taken as vindication by the European elites that all is well and 'we just need a little less fauxsterity' to be done with this crisis; the data, as it so often does, says the exact opposite. European unemployment just broke above 12% for the first time ever and European youth unemployment remains miserably above 24%. And while 1-in-4 under-25s unemployed is a bad enough statistic in terms of likely emergence of social unrest, the individual countries are in general deteriorating once again at a faster rate. French youth unemployment has risen for 13 months in a row to a record 26.5%; Spain (at 57.2% of under-25s unemployed) is catching up fast to Greece's stunning 59.1%; but perhaps the most concerning for the broader economies is the fact that Italy's youth unemployment has now topped that of Portugal at 38.4%. The only nation to see a drop in its youth unemployment was Ireland - which fell back modestly to January levels. Not a rosy picture, but then again, it doesn't matter...
Australia’s Perth Mint, the largest refinery in Australia and one of the largest in the world, said that demand has jumped to the highest level since the Lehman crisis in 2008. Demand has been robust due to currency devaluation concerns and then the 15% price fall led to a massive surge in demand as store of wealth buyers leapt at the chance to acquire physical bullion at much cheaper prices. This led to the Perth Mint which refines nearly all of the nation’s bullion, having to stay open over the weekend to meet orders. There’s been strong interest, including from the U.S., with buyers confident that the metal will rebound from the decline, Ron Currie, sales and marketing director, told Bloomberg in a phone interview from Perth. “We haven’t seen levels like this since the 2008 global financial crisis,” Currie said yesterday. “Compared to March sales, April sales have doubled or tripled,” he said. “We worked all weekend to keep the factory running to make more stock and that was only to fill orders,” Currie said from the facility founded in 1899. “We’re being inundated with people buying products.”
Who could have thought, one year ago, that we would one day see an AAPL bond prospectus for floating and fixed rate notes (due between 2016 and 2043). And yet here we are, as the preannounced AAPL bond prospectus goes live and proves what we said months ago: that some $100 billion of the company's offshore held cash is non-US recourse courtesy of repatriation taxes, forcing the company to raise even more cash to fund US-based capital decisions. Perhaps the most surprising (or least) thing is who the lead underwriter would be. No surprise anymore: Goldman Sachs.
It appears the Eurozone Stockholm Syndrome of absolutely (mutual, but ignore that) Assured Destruction has once again bloomed in tiny Cyprus, where capital controls have now had their one month birthday despite promises for a "very short duration" by the IMF's Lagarde, yet where people - all of whom far poorer and with nothing but a catastrophic depression to look forward to - just don't want to leave the Euro and the Belgian neofeudal kingdom. Because today, Cyprus actually has the power to say no to Europe when its parliament decides whether to back the EU bail-in out imposed on its by its EU "partners." However, as Reuters reports, it most likely will not "with approval likely from a thin majority against mounting calls for the island to exit the euro." Which means that Iceland's miraculous growth case study aside, Cyprus will only have itself and its politicians to blame next year when everyone's standard of living is reduced by 20%, then 20% the year after and so on. All in the name of making sure Deutsche Bank's spring clip loaded €55.6 trillion in notional derivatives never snaps shut.
- Euro-Area Unemployment Increases to Record 12.1% Amid Recession (BBG)
- Fed faces calls for radical reform (FT) - Has Jamie Dimon approved of this message? No? Carry on then
- CEO Pay 1,795-to-1 Multiple of Wages Skirts U.S. Law (BBG)
- Ex-UBS Executive Convicted of Paid Sex With Underage Girl (BBG)
- Six months after Sandy, New York fuel supply chain still vulnerable (Reuters)
- Older, richer shoppers lead Japan’s surge in consumer spending (FT)
- Sharp euro zone inflation fall, joblessness point to ECB rate cut (G&M)
- Gold Rush From Dubai to Turkey Saps Supply as Premiums Jump (BBG)
- Japan Industrial Output, Retail Sales Disappoint (MW)
- Gunmen surround Libyan justice ministry (Reuters)
- Insider-Trading Probe Trains Lens on Boards (WSJ)
- Best Buy exits Europe (WSJ)
- Banker Roommates Follow Zuckerberg Not Blankfein With IvyConnect (BBG)