Private Equity

It's not Bitcoin, it's the underlying technology

• 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)

“There was a moment when it made sense,” said Blackstone Group, largest home buyer in the US. But not anymore.

A mere two weeks since former JPMorgan banker, Kenneth Bellando jumped to his death, Bloomberg reports that the former CEO of Dutch Bank ABN Amro (and his wife and daughter) were found dead at their home after a possible "family tragedy." This expands the dismal list of senior financial services executive deaths to 12 in the last few months. The 57-year-old Jan Peter Schmittmann, was reportedly discovered by his other daughter when she arrived home that morning. Police declined to comment on the cirumstances of his (and his wife and daughter's) death. This is not the first C-level ABN Amro banker to be found dead. In 2009, former CFO Huibert Boumeester was discovered with (assumed self-inflicted) shotgun wounds. 

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.

• Nato chief defends eastern advance (FT)
• Russia looks east as it seeks to rebalance trade interests (FT)
• Plane from Guinea briefly quarantined in Paris after Ebola scare (AFP)
• US attacks Japan’s stance on Trans-Pacific Partnership (FT)
• Thank you IMF: Ukraine PM says will stick to austerity despite Moscow pressure (Reuters)
• U.S. Army seeks motive for Fort Hood shooting rampage (Reuters)
• China Slowdown Adds to Emerging-Market Growth Hurdles, IMF Says (BBG)
• Top investors press Allianz to step up oversight of Pimco (Reuters)
• U.S. to Evaluate Role in Mideast Peace Process, John Kerry Says (WSJ)
• Scientists dismiss claims that Yellowstone volcano about to erupt (Reuters)
• Ukraine detains 12 riot police on suspicion of 'mass murder' (Reuters) - on CIA orders?

Has the United States ever experienced a time when a foreign nation has attempted to buy up so much of our land all at once? As Michael Snyder details below, it appears the Chinese are on a real estate buying spree all over America as they are now the dominat 'buyers' of investment green cards. This is occurring as private equity buyers and hedge funds exit the buy-to-rent business en masse and are, as Mike Krieger explains, are desperate to pitch American property to anyone willing to keep Housing Bubble 2.0 inflated... it seems Zillow is more than happy to enable that, "Zillow agreed to make its U.S. property listings available to Chinese consumers through a partnership with a Beijing-based website."

• Russia says expects answers on NATO troops in eastern Europe (Reuters)
• Dealers say GM customer anxiety rising, sales may take hit (Reuters)
• China Unveils Mini-Stimulus Measure (WSJ)
• Londoners Priced Out of Housing Blame Foreigners (BBG)
• New earthquake in Chile prompts tsunami alerts (Reuters)
• Ukrainian Billionaire Charged by U.S. With Bribe Scheme (BBG)
• Chinese Investments in U.S. Commercial Real Estate Surges (BBG)
• Old Math Casts Doubt on Accuracy of Oil Reserve Estimates (BBG)
• US secretly created 'Cuban Twitter' to stir unrest (AP)

As the following table also by RealtyTrace confirms, the US still has an abundance of "own-to-rent" cities, where one can generate a return as high as 30% in one year, if one is willing to drive through the downtown area at 65 mph. Places like bankrupt Detroit, where the median sales price is $45K, and somehow the average market rent is $1.1K, meaning one can recoup their investment in just over 3 years! (how Detroit's residents can afford $1K on rent is another of those great mysteries of life). In other words, the housing bubble will still be raging in these 20 cities, at least until such time as the yield drops sufficiently due to soaring prices that the Blackstones of the world are forced to dump other people's money in such undervalued places as Ulan Bator and Almaty.

Did Facebook really just buy a company at THESE Valuations?

We’ve chronicled the saga of “buy-to-rent” for well over a year now. From some of its most exuberant phases to its now epic retreat (investment firm property purchases are now down 70% year-to-date). It seems as if the pullback of private equity and hedge funds from this asset class is even more brutal in certain regions, with Blackstone now reporting its purchases in California down a staggering 90% this year. Not to worry, we're quite certain unemployed and deeply indebted recent college graduates will soon pick up the slack due to the anticipated resurgence of subprime lending.

Among other things, there is one major obstacle to the West's "costs" imposition on Vladimir Putin and his Russian economy - China. So far, a Xi Jinping has described, China has been a "sleeping lion" but today "the lion is awake" and with the Chinese President's first trip to Europe, as WSJ reports, western leaders are hoping to enlist his support over the crisis in Ukraine. However, privately, European diplomats concede that China's relationship with Russia remains solid and that was evidenced by their most recent investment in Russia's $10bn state-backed Direct Investment Fund (which just happens to be run by a former Goldman Sachs banker. It seems "money talks" once again and China will likely continue to play the middle ground.

• Crimea Resolution Backed by U.S. Barely Gets UN Majority (BBG)
• Russian Buildup Stokes Worries (WSJ)
• As reported here first: China’s Developers Face Shakeout as Easy Money Ends (BBG)
• U.S. House Poised to Clear Sanctions Called Putin Warning (BBG)
• Bitcoin Prices Plunge on Report PBOC Orders Accounts Shut (BBG)
• Search for lost Malaysian jet shifts significantly after new lead (Reuters)
• Russian fund taps China and Middle East (FT)
• Long battle looms between U.S. college, athletes seeking to unionize (Reuters)
• Official warns EU-US trade deal at risk over investor cases (FT)
• New iPhone likely out in September, Nikkei daily says (AFP)

• One-Ship Ukraine Navy Defies Russia to the End (WSJ)
• Crimea-Induced Trading Surge Stokes Moscow Exchange Rally (BBG)
• Moscow says Ukraine stops Russian crews disembarking in Kiev (Reuters)
• New images show more than 100 objects that could be plane debris (Reuters)
• Anger of Flight 370 Families Explodes in Beijing (BBG)
• Murdoch Promotes Son Lachlan in Succession Plan for Empire (BBG)
• Facebook to buy virtual reality goggles maker for $2 billion (Reuters)
• Syrian Regime Exploits Rebel Despair (WSJ)
• King Digital IPO price may not bode well for stock (Reuters)
• Rothschild in Twitter Spat as Bakries Cut Ties With Miner (BBG)

• Australia says nothing spotted in search for plane (AP)
• Putin looks to Asia as West threatens to isolate Russia (Reuters)
• China Billionaire Builds Metals With Dreyfus, Glencore Hires (BBG)
• China Beige Book Says Economy Slowing (BBG)
• Caterpillar Said to Be Focus of Senate Overseas Tax Probe (BBG)
• US Cancels Summit With Divided Group of Gulf Nations (WSJ)
• Cyprus defense minister suffers aneurysm (AP)
• Abe to zero in on economy as tax hike looms (Nikkei)
• Europe strikes deal to complete banking union (Reuters)