*YELLEN SAYS FED COMMITTED TO ACCOMMODATION TO SUPPORT RECOVERY
Markets will be hanging on every word of what is likely Janet Yellen's first monetary policy speech and even more so the Q&A afterwards as she suggests that a considerable time is more than 6 months, and the delicate balance she has to play between admitting the economy is ugly while admitting that QE is over no matter what... all the while maintaining some semblance of credibility. One has to wonder if the ripfest rally of the last 24 hours is a buy the rumor ramp ahead of a sell the Yellen news event as once again she is tested...
We believe Fed’s actions would be more appropriately described as permitted cancerous beliefs to spread throughout the financial system, thereby killing Democratic Capitalism which is the basis of the capital markets.
Earlier today, the NAHB released its latest builder confidence report. Something stood out to us, namely the following data, which shows that while confidence picked up modestly in the Northeast in April, it tumbled in the West and Midwest. What's the explanation for this ongoing deterioration in housing market sentiment in states that had, not only were not impact by the "vortex" but if anything, were "crushed" by the balmy March atmospheric conditions? Why, "it's the weather, duh."
- Ukraine forces move against separatists (FT)
- China GDP Gauge Seen Showing Deeper Slowdown (BBG)
- China Is Losing Its Taste for Gold (WSJ)
- Regulators Weigh Curbs on Trading Fees (WSJ)
- Obama, Putin Talk as Unrest Roils Eastern Ukraine (WSJ)
- Japan PM talks with BOJ chief, does not push for easing (Reuters)
- BRICS countries to set up their own IMF (RBTH)
- IMF Members Weigh Options to Sidestep U.S. Congress on Overhaul (WSJ)
- Zebra to Buy Motorola Solutions Unit for $3.45 Billion (BBG)
- Chinese Thunder God Herb Works as Well as Pain Therapy (BBG)
One can see that while the traditional 6:00 AM USDJPY buy program is just duying to resume aggressive upward momentum ignition, futures are still leery and confused by the recent post-open high beta selloffs. Then again, things like yesterday's ridiculous no news 3:30pm ramp happen and confused them even more just as momentum is about to take a downward direction. Stocks in Asia (ex-China) advanced amid a reversal in sentiment after Citigroup (+4.15%) inspired positive close on Wall Street, however Shanghai Comp (-1.4%) underperformed as concerns over GDP data on Wednesday following weak money supply data weighed on sentiment. Stocks remained on the back foot (Eurostoxx50 -0.42%), with Bunds supported by the release of lower than expected German ZEW survey and also ongoing concerns surrounding the stand-off between Ukraine/Russia. Short-Sterling bear steepened after UK CPI fell to its lowest level since October 2009, but house prices across Britain posted its biggest rise since June 2010, reviving concerns over an overheating market.
During the course of its massive money printing campaign after the financial crisis of 2008, the Fed drove the 30-year mortgage financing rate down from 6.5% to 3.3% at its mid-2012 low. The ostensible purpose was revive the shattered housing market which had resulted from the crash of its previous exercise in bubble finance. But what it really did was touch off another of those pointless “refi” booms which enable homeowners to swap an existing mortgage for a new one carrying a significantly lower interest rate and monthly service cost. Such debt churning exercises have been sponsored repeatedly by the Fed since the S&L debacle of the late 1980s.
What was worst, and naturally will not be discussed at all by the peanut gallery, about Citi's just announced results is that the amount of Citigroup mortgage originations - that key aspect of the trumpeted "housing market recovery" - did what it has done at every other bank. It plunged. Only at Citigroup, it plunged so badly, it just reached a new record low which at $5.2 billion is a 71% drop from a year ago! Long live the housing recovery... in which nobody seems to be participating.
Does the average American actually exist? The guy that the Bureau of Labor Statistics basis its figures on. It seems that the fictitious character is out there somewhere being hunted down; or perhaps the man was shot down long ago in some past that the country invented for itself in the hope of spinning another yarn about how rich the Nation was
- Sensitive Market Data Leaked After Government Phone Call (WSJ)
- This is a actual Bloomberg headline: China Fake Data to Skew More Export Numbers (BBG)
- This is another actual BBG headline: U.S. as Global Growth Engine Putt-Putts Instead of Purring (BBG)
- Ukraine wants to buy European gas to boost energy security (Reuters)
- JPMorgan Profit Falls 19% on Trading, Mortgage Declines (BBG)
- Record Europe Dividends Keep $2.8 Trillion From Factories (BBG)
- Why is Goldman shutting down Sigma X: SEC eyes test that may lead to shift away from 'dark pools' (Reuters)
- Ebola Outbreak Empties Hotels as West Africa Borders Closed (BBG)
- Australian PM says searchers confident of position of MH370's black boxes (Reuters)
- Gross Says El-Erian Should Explain Reason for Exit (BBG)
- Russia's Gazprom says Ukraine did not pay for gas on time (Reuters)
- Ukraine Moves to Keep Control in East (BBG)
- Banks Set to Report Lower Earnings as Debt Trading Slumps (BBG)
- More DeGeners and Obama selfies needed: Samsung's lower first-quarter estimate highlights smartphone challenges (Reuters)
- Citi Is Bracing to Miss a Profit Target (WSJ)
- Another slam from GM? Safety group calls for U.S. probe of Chevy Impala air bags (Reuters)
- Japan drugmaker Takeda to fight $6 billion damages imposed by U.S. jury (Reuters)
- EU court rules against requirement to keep data of telecom users (Reuters)
- White House may ban selfies with president after Ortiz-Obama photo promotes Samsung (Syracuse)
Hot Air Hisses Out Of Housing Bubble 2.0: Even Two Middle-Class Incomes Aren’t Enough Anymore To Buy A Median HomeSubmitted by testosteronepit on 04/07/2014 12:35 -0400
“There was a moment when it made sense,” said Blackstone Group, largest home buyer in the US. But not anymore.
New mortgage originations fell over 23% month-over-month and a stunning 47% year-to-date according to Black Knight (formerly LPS). As they show in their detailed presentation, with a 65% year-over-year drop, new mortgage originations are at their lowest since their records began and what is perhaps more concerning is prepayment speeds signal further declines are ahead and the ratio of serious deterioration to foreclosure (along with huge numbers of loan mods due to reset) suggest the housing market is anything but recovering fundamentally with the average loan in foreclosure now 2.6 years past due.
Market consensus is that deflation remains the greatest threat to the global economy. But that's ignoring signs of impending inflation, particularly in the US.
In a further demonstration of the socially destructive and ever widening gap between the haves and have nots, we see that the affluent are buying second homes at an ever increasing clip (up 30% last year), while first home buyers recede into the abyss as private equity and Chinese buyers make purchasing a home unaffordable for the average American. Specifically, a recent study from Zillow showed that more than half the homes in seven major American cities are unaffordable based on historical standards.