Real estate

China's "Secret Money Laundering" Story Goes Mainstream; Is Promptly Censored

When we broke the story of China's "secret" money laundering into US real estate scheme, we said "So what happens next? Assuming there is the anticipated resulting backlash and crackdown on Chinese banks, which will finally enforce the $50K/year outflow limitation, this could well be the worst possible news not only for Chinese inflation, which suddenly - no longer having a convenient outlet for the unprecedented liquidity formed in the country every month - is set to soar, but also for the ultra-luxury housing in the US. Because without the Chinese bid in a market in which the Chinese are the biggest marginal buyer scooping up real estate across the land, sight unseen, and paid for in laundered cash (which the NAR blissfully does not need to know about due to its AML exemptions), watch as suddenly the 4th dead cat bounce in US housing since the Lehman failure rediscovers just how painful gravity really is." What we forgot to add is that virtually every other financial mainstream outlet would promptly pick up on the story even as the original source back in China took its secrets to the grace. Metaphorically speaking, we hope...

What Hardcore Pornography Can Teach Us About Asset Bubbles

Exactly 50 years ago last month the US Supreme Court ruled on the now famous case of Jacobellis v. OhioAt stake was whether a French movie with graphic sexual content could be outlawed by the state via its obscenity laws. The court ruled that it could not because the film wasn’t hardcore pornography. How could they tell? In an explanation that has now turned into one of the most famous quotes in court history, Justice Potter Stewart explained that although he could not define exactly what hardcore porn was, “I know it when I see it” Like porn, asset bubbles are also hard to define, but given our economic history, and especially our recent economic history, we know it when we see it, and now we see it everywhere. We all see it. Apparently the only people that don’t see the bubbles are the people creating them.

Futures Levitate As Portugal Troubles Swept Under The Rug

Another round of overnight risk on exuberance helped Europe forget all about last week's Banco Espirito Santo worries, which earlier today announced a new CEO and executive team, concurrently with the announcement by the Espirito Santo family of a sale of 4.99% of the company to an unknown party, withe the proceeds used to repay a margin loan, issued during the bank's capital increase in May. This initially sent the stock of BES surging only to see it tumble promptly thereafter even despite the continuation of a short selling bank in BES shares this morning. Far more impotantly to macro risk, it was that 2013 staple, the European open surge in the USDJPY that has reset risk levels higher, while pushing gold lower by over 1% following the usual dump through the entire bid stack in overnight low volume trading. Clearly nothing has been fixed in Portugal, although at least for now, the investing community appears to have convinced itself that the slow motion wreck of Portugal's largest bank even after on Sunday, Portugal’s prime minister said taxpayers would not be called on to bail out failing banks, making clear there would be no state support for BES.

China - It's Politics, Not Just Finance

Scanning the Chinese press, the sense is primarily that problems related to their dysfunctional financial system and the gross lack of personal accountability in its exploitation are being detailed everywhere. Troubles involving mutual guarantee companies in Whenzhou, commodity shippers in Qingdao and elsewhere, Ping An insurance execs, BOC/CITI 'money launderers' in Guangzhou, steel execs, trust fund sellers, stockbrokers front running orders via their personal accounts, real estate developers colluding with their local government buddies - you name it; and the whole superstructure is, of course, intricately interlocking and hence becoming systemically fragile. Every day that goes by, China's "little Dutch boy" needs another finger to plug the new leak he caused by trying to stem the previous one. The risk is, he may soon run out of digits...

Daughter Of Mortgage Bankers Association CEO Has Lost Faith In American Homeownership Dream

"The world has changed," explains the 27-year old daughter of David Stevens - CEO of the Mortgage Bankers Association. Despite her father's constant 30-year pitch of the merits of homeownership - and knowing full well that rates are low, rents are high, and owning a home 'builds wealth' - Sara Stevens is not buying. After watching "cousins and other family members go through pretty tough situations in 2008 and 2009," her skepticism is broad-based as Bloomberg reports, t’s more than the weight of student loans, an iffy job market and tight credit -- even those who can buy are hesitant. As Bloomberg so eloquently concludes, when even the cheerleader-in-chief for housing can’t get a rah-rah out of his daughter, you know this time is different.

UK Economy "Boomerang'd" As Russians Shun $719 Bottles Of Cristal

The UK had feared whiplash from sanctions on Russian oligarchs but this 'boomerang' is too much to bear... As Bloomberg reports, “We’re seeing a lot less Russian surnames on the booking sheet," at London's Mahiki, a Polynesian-themed nightclub in upmarket Mayfair where a bottle of Cristal Champagne goes for $719 - and Russian customers are being supplanted by revelers from countries including China and Nigeria. “The Russian market was like a Champagne fountain,” notes on ereveler, "The money was coming into the top and flowing down..." but not so much anymore...

Introducing Ghost Skyscrapers... In New York City

Manhattan has been transformed into nothing more than an oligarch playground, or as some call it, “Disneyland for Wall Street.” We have discussed at length the head-shakingly insane money-laundering inflows that are 'stashed' into NYC real estate but, as the following reports, one of the most shocking and disturbing revelations from that article was the fact that: "The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park are vacant at least ten months a year." Forget China, ghost residences come to the US. Welcome to Planet Oligarchy, where empty skyscrapers loom over the hordes of freedom-hating, destitute slaves.

Bubbles, Bubbles Everywhere

Is there any doubt that we are living in a bubble economy? At this moment in the United States we are simultaneously experiencing a stock market bubble, a government debt bubble, a corporate bond bubble, a bubble in San Francisco real estate, a farmland bubble, a derivatives bubble and a student loan debt bubble. And of course similar things could be said about most of the rest of the planet as well. And when these current financial bubbles in America burst, the pain is going to be absolutely enormous.

China Stamps Out "Rat Traders" To Boost Stock Market Confidence

The utilization of the Chinese market as both policy tool and 'wealth' creator - as The Fed has done with the S&P 500 - remains less than the PBOC would like. It appears the Chinese prefer their 'risk' in Baccarat and real estate and don't trust those stock markets shisters... so the government is doing something about it. While American investors have to worry about high-frequency traders front-running them; in China, it's a low-frequency trade called "rat trading" where fund managers use personal accounts to buy shares cheaply, then sell them at a profit after purchases from the funds they manage have boosted their value. China’s securities regulator has decided enough is enough and has stepped up its probe into insider trading, taking on “rat traders” in an attempt to restore confidence in the country’s stock market.

President Obama To Explain Why Wal-Mart's CEO Is Wrong; Economy Is Doing Great - Live Feed

Stocks at record highs... Unemployment rates at multi-year lows... magical job creation 'impressive'... President Obama has a lot to proclaim "mission accomplished" over - except its all fallacious (as Wal-Mart's CEO recently explained). Of course, this will all be solved if everyone was paid 'fairly' at least $15/hour despite the greatest irony of Obama's inequality fight is that "his policies are squeezing the middle class and causing the Fed – with the President’s encouragement – to engage in the radical monetary policy, which is exacerbating inequality. This simple truth cannot be repeated often enough."

"Treasuries - As A Relative Asset Class - Look Cheap"

Long-duration Treasuries continue to look attractive; a view that Scotiabank's Guy Haselmann has unwaveringly maintained for the past six months for a variety of diverse reasons. Of all of the various reasons, private pension demand is the most interesting and compelling (and the least understood). The bottom line is that PBGC rule changes will cause persistent and incremental demand over time that overwhelms net visible secondary market supply.  Concerns about funding status will trump the private defined benefit plan manager’s fiduciary desire to ‘maximize return per unit of risk’. There are other factors, but the point is that Treasuries as a relative asset class looks attractive.

Stock Buyback Shocker: Companies Using Secured Bank Loans To Repurchase Stock

"US lending to businesses is reaching record levels but banks are privately warning that the activity should not be seen as evidence of an economic recovery." And the stunner: "Much of the corporate lending is going to fund payouts to shareholders, finance acquisitions and fuel the domestic energy boom, bankers say, rather than to support companies’ organic growth."