Real estate

Bitcoin Soars Above $600: Rises 20% In One Day Ahead Of Senate Hearing

While the relentless multiple expansion (if not so much earnings growth and certainly not revenue contraction) looks set to push all three main stock indices over the key psychological levels of 16000, 1800 and 4000, with the all time bubble high on the Nasdaq increasingly looking like the next big target, the stock market mania has nothing on Bitcoin, which only yesterday crossed $500 for the first time ever, and as of this morning is already 20% higher, having just crossed $600 minutes ago. Which means that anything prices in Bitcoin has entered bear market in just the past day. How high BTC goes, is nobody's guess (Raoul Pal had a truly stunning price target): once the buying frenzy kicks in, step aside, especially since China is increasingly looking like it may be jumping on board the latest mania.

Guest Post: Take It To The Bank

If one was a foreigner visiting for the first time, one would think Space Available was the hot new retailer in the country. Thousands of Space Available signs dot the bleak landscape, as office buildings, strip malls, and industrial complexes wither and die. At least the Chinese "Space Available" sign manufacturers are doing well. The only buildings doing brisk business are the food banks and homeless shelters. However, reports like the recent one from SNL Financial – Branch Networks Continue to Shrink - are emblematic of the mal-investment spurred by the Federal Reserve easy money policies, zero interest rates, and QEternity... In a truly free, non-manipulated market the weak would be culled, new dynamic competitors would fill the void, and consumers would benefit. However, extending debt payment schedules of the largest zombie entities and pretending you will get paid has been the mantra of the insolvent zombie Wall Street banks since 2009.

The Onion Revealed As Mystery Source Of Larry Summers' And Paul Krugman's Economic Insight

"Every American family deserves a false sense of security," said Chris Reppto, a risk analyst for Citigroup in New York. "Once we have a bubble to provide a fragile foundation, we can begin building pyramid scheme on top of pyramid scheme, and before we know it, the financial situation will return to normal." Despite the overwhelming support for a new bubble among investors, some in Washington are critical of the idea, calling continued reliance on bubble-based economics a mistake. Regardless of the outcome of this week's congressional hearings, however, one thing will remain certain: The calls for a new bubble are only going to get louder. "America needs another bubble," said Chicago investor Bob Taiken. "At this point, bubbles are the only thing keeping us afloat."

Marc Faber Fears "The End Of The Capitalist Economic System As We Know It"

"We already live in a financial economy in which the debt and capital markets exceed the value of the real economy by far," Marc Faber explains to Germany's Finanzen100, "and that's before the current formation of bubbles." His most ominous warning, and one that fits perfectly with the seeming insanity of Federal Reserve (and all developed market central banks) is that "the next time a bubble bursts, then the capitalist economic system as we know will falter."

Bitcoin Rises Over $500

One day before the Senate's digital currency hearing titled "Beyond Silk Road: Potential Risks, Threats, and Promises of Virtual Currencies", Bitcoin is largely oblivious to any potential regulatory threats, either at the legislative or the city level, where as reported previously the New York superintendent is in a rush to enforce BitLicenses on businesses that accept BitCoin, and moments ago crossed $500 for the first time ever. Instead, it appears that as we also reported previously, the Chinese Bitcoin craze has reached the parabolic threshold, going so far as making Bitcoin an acceptable payment for real estate, which means that while for the time being Bitcoin becomes the alternative inflation protection medium for hundreds of millions of Chinese, all bets on how high it can get are off.

"The Terminator" Explains Janet Yellen's Confirmation To The Middle Class

The woman who is set to become one of the most powerful people in the world begins her confirmation hearing today. And few people have ever even heard of her. A tiny elite orchestrates the whole system. And one of the most influential conductors is the Chairman of the Federal Reserve, a post about to be taken over by Janet Yellen. Since most people have no idea how central banking really works, her confirmation hearing today is just a footnote. Even people who are otherwise financially sophisticated simply trust that the men behind the curtain know what they’re doing. This is quite strange when you consider that central bankers have nearly total control over the economy. Kyle Reese from the first Terminator movie sums this up rather succinctly...

Guest Post: Too Much Bubble Talk?

Discussion of a market bubble (in stocks, credit, bonds, Farm-land, residential real estate, or art) have dominated headlines in recent weeks. However, QEeen Yellen gave us the all-clear this morning that there was "no bubble." Are we currently witnessing a market bubble? It is very possible; however, as STA's Lance Roberts notes, if we are, it will be the first market bubble in history to be seen in advance (despite Bullard's comments in opposition to that "fact"). From a contrarian investment view point, there is simply "too much bubble talk" currently which means that there is likely more irrational excess to come. The lack of "economic success" will likely mean that the Fed remains engaged in its ongoing QE programs for much longer than currently expected - and perhaps Hussman's pre-crash bubble anatomy is dead on...

QEeen Yellen Nomination Hearing - Post Mortem (Dovish 32 : 18 Hawkish)

The soon-to-be-confirmed Mr. Chairwoman had plenty to say - none of which came as a great surprise. Overall we scored her comments 32 Dovish to 18 Hawkish (which fits with all pre-conceved ideas about the size of her index-finger in relation to the 'print' button). A few cherubs include:

  • *YELLEN SAYS BENEFITS OF QE STILL EXCEED THE COSTS
  • *YELLEN SAYS QE `CANNOT CONTINUE FOREVER'
  • *YELLEN DOESN'T SEE ASSET BUBBLE IN HOUSING PRICES
  • *YELLEN SAYS QE IS NOT AIMED AT HELPING TO FINANCE U.S. DEFICIT
  • *YELLEN: NO ONE HAS A GOOD MODEL ON WHAT INFLUENCES GOLD PRICES

She covered fiscal policy, regulation, gold, income inequality, and bubbles; but it was her admission late in the Q&A that "real" unemployment is around 10%  that perhaps leaves the most room for moar...

Frontrunning: November 14

  • Yellen to defend Fed's ultra-easy monetary policy (Reuters)
  • Japan growth slows on global weakness (WSJ)
  • Eurozone third-quarter growth falters (FT)
  • Fed Debates Its Low-Rate Peg (Hilsenrath)
  • Yellen: Economy Still Needs Fed Aid (WSJ)
  • ‘Obamacare’ launch fiasco rouses sceptics (FT)
  • DoubleLine's Gundlach says U.S. equities 'only game in town' (Reuters)
  • Indian Inflation Exceeding Estimates Adds Rate-Rise Pressure (BBG)
  • HUD Said to Fail in Bid to Sell $450 Million of Mortgages (BBG)
  • Boeing machinists reject labor deal on 777X by 67 percent (Reuters)

Beware The Looming "Wave Of Disaster" From Home Equity Payment Resets

Of all the screwed up, misallocated parts of the U.S. economy, the housing market continues to be one of the biggest potential train wrecks. While the extent of the insanity in residential real estate should be clear following the peak insanity yesterday, there are other potential problems just on the horizon. One of these was written about over the weekend in the LA Times. In a nutshell, the next several years will start to see principal payments added to interest only payments on a large amount of second mortgages taken out during the boom years. The estimate is that $30 billion in home equity lines will reset next year, $53 billion in 2015, and then ultimately soaring to $111 billion in 2018 - a looming “wave of disaster” because large numbers of borrowers will be unable to handle the higher payments. This will force banks to either foreclose, refinance the borrower or modify their loans.

Frontrunning: November 13

  • Desperate Philippine typhoon survivors loot, dig up water pipes (Reuters)
  • Fading Japanese market momentum frustrates investors (FT)
  • China's meager aid to the Philippines could dent its image (Reuters)
  • Headline du jour: Granted 'decisive' role, Chinese markets decide to slide (Reuters)
  • Central Banks Risk Asset Bubbles in Battle With Deflation Danger (BBG)
  • Navy Ship Plan Faces Pentagon Budget Cutters (WSJ)
  • Investors pitch to take over much of Fannie and Freddie (FT)
  • To expand Khamenei’s grip on the economy, Iran stretched its laws (Reuters)
  • Short sellers bet that gunmaker shares are no long shot (FT)
  • Deflation threat in Europe may prompt investment rethink (Reuters)

Peak Insanity: Retail Investors Are Making Direct Subprime Loans In A Reach For Yield

Being somewhat conscious human beings in a world in which our “leaders” have completely lost their minds can be challenging at times. One side effect of this condition is a certain emotional numbness when it comes to reacting to new events occurring in the world around you. It’s simply hard to shock us these days, but every now and then it does happen. The following article had us literally shaking our heads the entire time. If this isn’t peak insanity, we do not want to know what is.

Meet The Firm Whose $95 Billion In Assets Keeps Iran's Ayatollah In Power

Bloomberg may be in hot water for scuttling an article that "might anger China" as exposed over the weekend, but that was only after winning investigative prizes for its series of reports exposing the epic wealth of China top ruling families in 2012: a topic that has received prominence at a time when the forced wealth redistribution plans of developed and developing nations, usually originated by these same uber-wealthy families, is all the rage. Another country, whose oligarchic wealth had largely escaped press scrutiny, was Iran. At least until today, when in a six month investigation culminating in a three-part report on the assets of the Iranian Supreme Leader Ayatollah Ali Khamenei, Reuters exposed Setad, an Iranian company that manages and sells property on order from the Imam. In a nutshell, the company has built up its wealth by seizing thousands of properties from Iranian citizens. According to the investigation, Setad’s assets are worth $95 billion – 40 percent more than Iran’s total 2012 oil exports. It is this confiscated "wealth" that has allowed the Iranian clergy, and especially the Ayatollah, to preserve their power over the years.