Welcome to the new old normal 'Murica... buy those homes... lever up... spend the HELOC... die a debt serf...
- French policewoman killed in shoot-out, hunt deepens for militant killers (Reuters)
- The Bold Charlie Hebdo Covers the Satirical Magazine Was Not Afraid to Run (BBG)
- Evans Says Fed Shouldn’t Rush Rate Rise as Inflation Undershoots (BBG)
- Oil holds above $51 as traders search for floor (Reuters)
- Gross Helps Fuel New Fund With His Own Cash (WSJ)
- ECB warns Greek funding access hinges on keeping bailout (Reuters)
- Greece Jolts QE Juggernaut as ECB Gauges Deflation Risk (BBG)
- Analysts Say There's No Telling How Low Oil Prices Could Go (BBG)
- Scientists find antibiotic that kills bugs without resistance (Reuters)
No reason to sell. No reason to buy. That about sums it up. Unfortunately, that is about as optimistic a scenario as we can come up with, supported by equally optimistic growth expectations. In reality, the market has no support. We can only hope that it will not crash at the first sign of trouble. There are always good reasons to own a home, a place to raise a family. However, home ownership via extremely leveraged financing carries enormous and unprecedented risk. We think many potential buyers recognize the risk and are correctly staying out of the market. The new normal in real estate terms is unlikely to be what the market is hoping for.
But the oil-price crash was supposed to goose consumer spending.
"Something Is Not Right" Jeff Gundlach Is "Concerned About Health Of The Economy & Financial System"Submitted by Tyler Durden on 01/05/2015 21:30 -0400
Having warned of the "terrifying consequences" of oil prices staying this low, DoubleLine's Jeffrey Gundlach, in an extensive interview with Finanz und Wirtschaft, warns he is "beginning to see signs of investor concern around the edges about the health of the economy and about the financial system. Historically, when junk bonds give up the ghost and treasuries remain firm, it is a signal that something is not right." Touching on everything from a string dollar to Indian stocks, and from Oil to bonds, and The Fed, Gundlach concludes, "the only places where there is inflation is in places that are painful. Raising interest rates against that backdrop seems like a poor idea. So I just hope the Fed thinks carefully about what it is doing." Boxed-in much?
The surreal nature of this world as we enter 2015 feels like being trapped in a Fellini movie. The .1% party like it’s 1999, central bankers not only don’t take away the punch bowl – they spike it with 200% grain alcohol, the purveyors of propaganda in the mainstream media encourage the party to reach Caligula orgy levels, the captured political class and their government apparatchiks propagate manipulated and massaged economic data to convince the masses their standard of living isn’t really deteriorating, and the entire façade is supposedly validated by all-time highs in the stock market. It’s nothing but mass delusion perpetuated by the issuance of prodigious amounts of debt by central bankers around the globe. But now, the year of consequences may have finally arrived.
In Canada, there seems to be a cult belief that housing simply will not correct. They are full on drinking the good old tasting real estate Kool-Aid. Canada has enjoyed many years of the global commodities boom and now finds itself contending with a market full of debt and inflated housing values. Short of oil rising back up to $80 a barrel or higher, Canada is likely going to face some short-term pain. The housing market is due for a correction.
The US dollar closed higher against all the major currencies during the holiday shortened week. The lack of liquidity may have exaggerated the weakness of Swedish krona and Norwegian krone, the poorest performing major currencies. Both lost about 1.5% against the greenback.
The least weak currencies were in the dollar-bloc. The Canadian and New Zealand dollars were practically flat, and the Australian dollar slipped 0.2%. The euro and sterling slipped about 0.5%, while the yen shed 0.7% of its recent gains.
- Russia says NATO turning Ukraine into 'frontline of confrontation' (Reuters)
- Oil Drillers Under Pressure to Scrap Rigs to Cope With Downturn (BBG)
- Demonstrators Defy NYC Mayor's Call to Suspend Police Protests (BBG)
- U.S. to send more private contractors to Iraq (Reuters)
- ISIS Shoots Down Jet From U.S.-Led Coalition, Syrian Monitors Say (NYT)
- Russians Race to Secure Mortgages Before Costs Spiral (BBG)
- Abe Brings in Former Soldier Nakatani as Defense Minister (BBG)
- At Coke, Newest Flavor Is Austerity (WSJ)
- Fear and retribution in Xi's corruption purge (Reuters)
- UBS Raises Flag on China’s $1 Trillion Overseas Debt Pile (BBG)
Having exuberantly reached its highest level since September 2013 last month (despite the total collapse in mortgage applications), it appears the ugly reality of the housing market has peeked its head out once again. As prices rose, existing home sales plunged 6.1% - the most since July 2010 (against an expected 1.1% drop) to 4.93mm SAAR (the lowest in 6 months). As usual there is an excuse for this carnage... NAR's Larry Yun blames the stock market (and rising home values). Quite a conundrum for the Fed...
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"
Crude Continues Slide, Ruble Stabilizes, US Futures Rebound As Global Stocks Slump: All Eyes On YellenSubmitted by Tyler Durden on 12/17/2014 07:50 -0400
Previewing today's market: near record low liquidity, with chance of ridiculous volatility in the Ruble, energy and equity markets. While no doubt today's main event will be the "considerable" FOMC announcement and the Fed's downward-revised economic projections followed by Yellen's press conference, what traders will be most excited by is that, finally, Jim Bullard will no longer be bound by the blackout period surround FOMC decisions, and as such can hint of QE4 again at his leisure during key market inflection (i.e., selling) points.
For those wondering if the CBR's intervention in the Russian FX market with its shocking emergency rate hike to 17% overnight calmed things, the answer is yes... for about two minutes. The USDRUB indeed tumbled nearly 10% to 59 and then promptly blew right back out, the Ruble crashing in panic selling and seemingly without any CBR market interventions, and at last check was freefalling through 72 74 76, and sending the Russian stock market plummeting by over 15%.
The biggest event of the coming week is surely the FOMC announcement on Wednesday, when as most expect, will see the Fed's language shifting from "considerable time" to "patient." But while "most" also expect this to be the preamble toward Fed hiking rates in mid-2015, some disagree.