Real estate

The "Quite Gloomy" Chinese Housing Market Completes "Head And Shoulders" Formation

"New starts contracted 15% yoy (vs. -21.9% yoy in March); property sales fell 14.3% yoy (vs. -7.5% yoy); and land sales (by area) plunged 20.5% yoy (vs. -16.9% yoy previously). ... the housing market situation has undoubtedly turned quite gloomy. There has been a constant news stream of falling property prices everywhere, even in the 1-tier cities. A number of local governments, as we expected, have started to ease policy locally, especially relaxation of the home-purchase restrictions." - Soc Gen

Frontrunning: May 13

  • EU Court: Google Must Remove Certain Links on Request (WSJ), people have right to be forgotten on Internet (Reuters)
  • Harsh weather: German Investor Confidence Drops for Fifth Straight Month (BBG)
  • More harsh weather: China Slowdown Deepens (BBG)
  • Harsh weather as far as the eye can see: China’s New Credit Declines (BBG)
  • "Alien" artist, surrealist H.R. Giger dies aged 74 (Reuters)
  • Pfizer urges AstraZeneca to talk as UK lawmakers slam offer (Reuters)
  • Property sector slowdown adds to China fears (FT)
  • Russia says EU sanctions will hurt Ukraine peace efforts (Reuters)
  • U.S. Considers Relaxing Crude Oil Export Restrictions (WSJ)

Europe's Luxury Home Bubble: People Are Dying To Own Dracula's Castle

With 560,000 visitors a year, Dracula's Castle may not be the ideal seclusion spot for the uber-wealthy European real estate magnate, but, as the realtor notes "n the right hands it has the potential to generate far more revenue than we could ever imagine," - we suspect followed by an echoing 'mwuahahahahaha'. Construction on Bran Castle (for it's not actually Vlad The Impaler's residence of old but he was imprisoned there briefly) began in 1377 and as HuffPo notes, the 57-room manor on 22 acres has been on the market several times in recent years, with investors at one point hoping to get $135 million. As the firm running the castle noted, “If someone comes in with a reasonable offer, we will seriously entertain the idea." We suspect people will be dying to buy this and with rates so low, it won't bleed you dry either...

Guest Post: Yellen's Wand Is Running Low On Magic

There's not much good news for housing these days. For a little while, the Fed's suppression of interest rates juiced housing enough to distract Americans from weak job creation and stagnant real wages. Don't have a job? No problem! Just borrow against the appreciation of your house to feed your family. But Yellen's interest rate wand looks to be out of magic. The government had a pipe dream of white picket fences for everyone. But Americans can't refinance their way to wealth. Especially in the Greater Depression.

Angela Merkel On The Ledge: "This Is Not Fair... I Am Not Going To Commit Suicide"

... To the astonishment of almost everyone in the room, Angela Merkel began to cry.  “Das ist nicht fair.” That is not fair, the German chancellor said angrily, tears welling in her eyes. “Ich bringe mich nicht selbst um.” I am not going to commit suicide. For those who witnessed the breakdown in a small conference room in the French seaside resort of Cannes, it was shocking enough to watch Europe’s most powerful and emotionally controlled leader brought to tears....

The Decline Of Small Business And The Middle Class

It is not coincidental that the middle class and small business are both in decline. Entrepreneurial enterprise and small business have long been stepping stones to middle class incomes and generational wealth, i.e. wealth that is passed down to future generations rather than consumed. As the headwinds to entrepreneurial enterprise and small business rise, the pathway to middle class prosperity narrows.

The Bubble Expands: "No Money Down" Loans Come To Asia

Remember all of those credit card and loan offers you used to receive in the mail? Bad credit? No credit? No problem.  0% APR for the first six months. Free balance transfers. No money down. And my personal favorite– no credit check. These were all classic signs that the mother of all liquidity bubbles was upon us. Looking at the expansion of credit across the West, though, it’s happening again. Fool me twice, shame on me. But this is a worldwide phenomenon now.

"All Is Not Well In The Housing Market" As All Cash Buyers Double In Past Year, Hit Record High

Confirming and continuing a trend we first described a year ago, overnight RealtyTrac reported, as part of its Q1 institutional investor and cash sales report, that the percentage of all-cash buyers has soared in the past year with "42.7% of all U.S. residential property sales in the first quarter were all-cash purchases, up from 37.8% in the previous quarter and up from 19.1% in the first quarter of 2013 to the highest level since RealtyTrac began tracking all-cash purchases in the first quarter of 2011."

Marc Faber Redux: "I Don't Trust Anyone... Hold Gold Outside The US"

Sometimes it's worth remembering that while the demise of the status quo may take a while, there are actions one should be taking despite the sound and fury each and every day. As Marc Faber warned, "I don’t trust anyone." Simply put, Faber blasts, "the monetary policies as they are implemented by central banks around the world, are actually preventing the markets from clearing and [not allowing] the economy to truly improve." His recommendation, he'd "prefer investors hold physical gold in a safe deposit box, ideally outside the US," because "Fed policy will destroy the world."

Swiss Bureaucrats In Gold Panic

There should be no 'flexible currency' and no central planning of money. They are at the root of the boom-bust cycle, the very reason for the various crises that have beset Western economies in recent decades. Switzerland would be far better off if no-one had the power to meddle with its money supply. As it is, there has been plenty of meddling already, and quite a bit of suspension of disbelief would be necessary to conclude that there will be no price to pay. As always in monetary matters, the bill will be presented at an unknown future date, but it could be a very big bill in this case... but Switzerland's Keynesian dunderhesds are well on their way to that coming due as they blast any gold repatriation plans as "reducing the credibility of the SNB’s policy."

Frontrunning: May 7

  • Alibaba files for what may be biggest tech IPO (Reuters)
  • Early Tap of 401(k) Replaces Homes as American Piggy Bank (BBG)
  • Developers Turn Former Office Buildings Into High-End Apartments (WSJ)
  • Thai court orders Yingluck Shinawatra to step down as PM (Guardian)
  • German industry orders fell 2.8% in March, the biggest drop in one and a half years (RTE)
  • Ukraine Bulls Scatter as Death Toll Mounts (BBG)
  • China Property Slump Adds Danger to Local Finances (BBG)
  • Stein Says Fed May See Bouts of Volatility as It Approaches Exit (BBG)

It May Be Non-Tuesday, But The High Freaks Are Cautiously Optimistic

Perhaps the most important "news" of the day is that it is non-Tuesday. Yes, there was actual news news, like German factory orders dropping -2.8% on expectations of a 0.3% increase, French industrial production down -0.7% on expectations of a 0.3% increase (both misses driven by a soaring Euro which is now spitting distance away from the 1.40 ECB "redline"), the Nikkei tumbling 2.9% to just above 14000, the Shanghai Composite down 0.9%, SocGen Q1 profit plunging 13% and conveniently blaming it on Russia, speaking of Russia things continue to deteriorate even though Interfax reported that the country has received the first part, some $3.2 billion, of the promised IMF bailout - money which will be used to promptly pay Gazprom... and buy gold, a sudden conflict between China and Vietnam escalating over the placement of an offshore oil rig and so forth, but in the new normal, none of this matters.