It had been a painfully quiet session in Asia (where Chinese levitation continues with the Shanghai Composite up another 0.6% oblivious of yesterday's rout in the US, because as we explained for China it is now critical to blow the world's biggest stock bubble) and Europe, where the only notable news as that for the first time in months the ECB had not increase the Greek ELA, keeping it at €80.2 billion on conflicting reports that Greek deposit withdrawals had halted even as Kathimerini said another €300MM had been pulled just yesterday, suggesting the ECB has reached the end of its road when it comes to funding nearly two-thirds of what Greek deposits are left in local banks. But the punchline came moments ago when Bloomberg reported that "Greece will likely miss a deadline for a deal with creditors by the end of the week as the two sides have made little progress during talks in recent days."
Despite stagnating incomes, record low home-ownership, surging interest rates, and stalling employment data, home-prices in America rose 5.04% YoY in March - the biggest jump since August - as overseas money floods into American real estate and crushes the affordability dream for Hillary's 'everyday American'. No surprise, San Francisco and Denver reported the highest year-over-year gains, with price increases of 10.3% and 10.0%, respectively, over the last 12 months. This is the highest home price index since Feb 2008.
While yesterday most markets were closed and unable to express their concerns at the very strong showing of "anti-austerity" parties in Spain's municipal election from Sunday, then today they have free reign to do just that, and as a result European stocks are broadly lower, alongside the EURUSD which dripped under 1.09 earlier today, with Spanish banks among the worst performers: Shares of Banco Sabadell, Bankia, Caixabank and Popular were down 1.8 to 2.3% earlier this morning, and while the stronger dollar was a gift to both the Nikkei and Europe in early trading, after opening in the green, Spain's IBEX has since slid into the red on concerns of what happens if the Greek anti-status quo contagion finally shifts to the Pyrenees.
This psychology of mass delusion now dominates housing, stocks and bonds: not only is this not a bubble, the expansion will continue forever. History, however, suggests otherwise: all bubbles burst, period.
Boom-and-Bust City at its glorious best.
Despite the weather, home prices surge more than expected in February (as we presume those who braved the icy or heaty weather were desparate to buy). S&P/Case-Shiller 20-City index rose 0.93% MoM (vs 0.7% exp) and 5.03% YoY (vs 4.70% exp.). San Francisco led the way with a 2.0% MoM surge and Cleveland and Las Vegas were worst with home prices falling.
Following yesterday's early MNI rumor that a Chinese QE is being "considered" and which sent the Shanghai Composite surging 3% and led to an initial boost in US stock futures, overnight the PBOC scrambled to once again deny such speculation. Of course, going full "cold Turkey" on Chinese stimulus would be too much for the market to handle, so in a piece by the WSJ also released overnight, the author said the PBOC would pivot from outright QE to mere LTRO, which is also not new and was reported over a week ago here in "China Floats QE Trial Balloon, PBoC May Launch LTROs." In any event, for now at least, Asian stocks are not happy despite Apple's latest blockbuster results, and neither is Europe, with the Stoxx 600 down 1%, and even the E-mini is hugging 2100 unable to levitate on any imminent central bank intervention.
This great generational injustice is the direct consequence of central banks lowering interest rates to zero and inflating asset bubbles in a corrosive (and vain) attempt to generate a wealth effect of households borrowing and blowing their newly created asset wealth. In an economy that isn't whipsawed by central bank manipulation, the difference between middle class households' asset wealth is largely behavioral, not the random luck of coming of age before central banks began blowing destructive asset bubbles as a matter of policy.
Bad News For America's Biggest Housing Bubble: San Francisco Home Prices Suffer Biggest Drop In Three YearsSubmitted by Tyler Durden on 03/31/2015 13:50 -0400
It was not only the annual growth rate of only 7.9%, matching the lowest since the European debt bubble burst in 2010, but also the sequential rate of price drops, at -0.9% - the biggest monthly drop in three years, or since January 2012 - that will once again be a subject for concern of housing watchers. Because should the price decline resume its acceleration without any emerging tailwinds to prop up the local housing market, then there will surely be some severe fallout such as this peak housing bubble example, in which as Curbed reported last week, a run down shack which listed for $799,000 sold for 50% more, or $1.2 million a few weeks later!
Weather-crushed January saw seasonally-adjusted Case-Shiller home prices - and as a reminder Case-Shiller expressly warns not to use seasonal data but opts for raw, unadjusted reporting - rise 0.87% MoM (better than expected), slower than the revised 0.91% gain in December. However, away from the 'make-everything-feel-better' adjustments, home prices slipped in January following December's brief interlude, leaving the index down 4 of the last 5 months. Of course, it goes witghout sayiung that weather was blamed, as they suggest, "unusually cold and wet weather may have weakened activity in some cities." What is more worrisome however, and farcical, is Case-Shiller's ominous warning against rate hikes, "home prices are rising roughly twice as fast as wages, putting pressure on potential homebuyers and heightening the risk that any uptick in interest rates could be a major setback."
- Iran, powers push for nuclear deal as clock ticks toward deadline (Reuters)
- How DIY Bond Traders Displaced Wall Street’s Hot Shots (BBG)
- MillerCoors Caught in a Downdraft (WSJ)
- Saudi-led strikes again hit Yemen overnight (Reuters)
- Even With Free Money, Merkel Still Reluctant to Spend (BBG)
- Britain Uses Tax Breaks to Lure Digital-Game Developers (WSJ)
- China to Insure Deposits in Move Toward Scrapping Rate Curbs (BBG)
- As China Expands Its Navy, the U.S. Grows Wary (WSJ)
Did stocks window dressing come one day early in this volatile, bipolar, stop-hunting, HFT-infested market? Looking at futures this morning, which are down about 12 points already on yet another surge in the USD which has sent the EURUSD just above 1.07, the lowest since March 20 , and the USDJPY back under 120 now that the "strong dollar is bad for stocks after all" algo seems to be back from vacation, all those hedge funds who chased risk higher yesterday because their peers did the same, may find they are all selling on the way down. It will be oddly ironic if all of yesterday's widely touted gains evaporate comparably in the first 10 minutes of trading today, and lead to an end in the longest streak of quarterly increases in two decades.
"The contribution of housing to US GDP continues to run at some of the lowest levels since the end of World War II. New construction of single- and multi-family homes, renovations, broker fees and the like still only make up a bit more than 3% of current GDP, well below the post-war average of 4.7%. Not only has the level of lift from housing come in low, but it has bounced out of the last official recession slowly, too," Deutsche Bank says.
- Invade Syria already, we know you will: Islamic State in Syria abducts at least 150 Christians (Reuters)
- Greece Struggles to Get Citizens to Pay Their Taxes (WSJ)
- Doubts Shadow Deal to Extend Greek Bailout (WSJ)
- In surprise result, Chicago's Mayor Emanuel faces election run-off (Reuters)
- Obama vetoes Keystone pipeline bill (Reuters)
- Another sign of the top: Cushman & Wakefield Going Up for Sale (WSJ)
- Lure of Wall Street Cash Said to Skew Credit Ratings (BBG) ... and threat of DOJ lawsuits also
- Oil rises to $59 as Saudis say demand growing (Reuters)
Case-Shiller Says "Housing Recovery Is Faltering" Despite December Home Prices Jumping Most Since MarchSubmitted by Tyler Durden on 02/24/2015 10:09 -0400
Home prices, according to Case-Shiller, rose 0.87% MoM in December (better than the expected 0.6% gain) for the biggest seasonally adjusted monthly gain since March, likely bringing the 'housing recovery is back on track' meme back into play (despite affordablity being a major driver of the slump in home sales). However, non-seasonally-adjusted the rise was a mere 0.1%, which nonetheless managed to snap the 3 consecutive months of sequential price declines. And yet, despite all this, Case Shiller was anything but optimistic: “The housing recovery is faltering. While prices and sales of existing homes are close to normal, construction and new home sales remain weak. Before the current business cycle, any time housing starts were at their current level of about one million at annual rates, the economy was in a recession”