A significant extension to my 3 minute Q&A on CNBC's Fast Money show yesterday that, in my opinion, provides irrefutable evidence that commercial real estate is about to enter a cyclical bear market. Then again, what do I know...
The Caisse de dépôt et placement du Québec, Canada's largest public pension fund, posted a solid 13.6% return on its investments last year, solidifying its ongoing recovery from a disastrous 2008 loss.
What You Need To Know About Buying Silver At A Time When Even The Canadian Mint Says "It Has Sold Everything It Has"Submitted by Tyler Durden on 02/24/2011 19:27 -0400
Even as silver performed some unprecedented fireworks today, plunging on what was a margin hike in... crude, the metal continues to trade just below its post-Hunt Brother highs. So for those who still have not decided whether or not to take the plunge and buy into the precious metal (which, granted, was selling at $8.80 three years ago, and has since nearly quadrupled in price), we present the following discussion between Jeff Clark of Casey Research and The Daily Crux, which answers "what you need to know about buying silver today." This comes a week after we first highlighted that the Canadian Mint has sold it last stock in silver and has demand for much more.
The Bank for International Settlements called it 2008 ...
In Case You Didn’t Get The Memo, The US Is In a Real Estate Depression That Is About To Get Much WorseSubmitted by Reggie Middleton on 02/24/2011 12:42 -0400
What!!!???? You didn't get the memo?
When Takahiro Mitani, Chairman of Japan's $1.4 trillion Government Pension Investment Fund (GPIF) expresses concern over his country's mounting public debt, you'd better pay attention...
The Inevitable Has Finally Been Admitted In Europe: The Macro Experiment Has Ignited Inflation Without Commensurate Growth; Rates Will SpikeSubmitted by Reggie Middleton on 02/22/2011 09:44 -0400
Is the ECB ready to admit the potential failure of the Great Global Macro Experiment? What will an increase in interest rates bring? Prepare for global cap rate expansion and the potential equivalent for the first global real estate depression...
The first thing that needs to be said is that IF we have another systemic meltdown like that of Autumn 2008, Gold will likely go down along with everything else. There are simply too many big players (hedge funds, investment banks, etc) with heavy exposure to Gold who would be forced to liquidate their positions during a systemic collapse.
ECB Swallows Massive Portuguese Bond Losses As It Is Clear That The Third State Will Soon Join The Bailout Brigade – Haircuts, Here We Come!!!Submitted by Reggie Middleton on 02/18/2011 12:03 -0400
Can the ECB outspend the Bond Markets? Is Portugal truly Insolvent? Will they default? What happens to rate sensitive assets that are already at depression levels, such as real estate, when rates spike world wide? Why am I asking questions that everybody already knows the answer to???? Well, just in case, here go those answers anyway.
European Sovereign Debt Crisis Deepening - Risk of Contagion And Bond Market Crash, And Why Rising Rates Mean Gold StrengthSubmitted by Tyler Durden on 02/16/2011 10:26 -0400
There is a real sense of the “calm before the storm” in markets globally. Complacency reigns, despite signs that the sovereign debt crisis in Europe is deepening and that Japanese and US bond markets also look very vulnerable due to rising inflation, very large deficits and massive public debt. US Treasuries have been sold by some of the largest investors (both private and sovereign) in the world recently (see news). These include large creditor nations Russia and China but also PIMCO, the largest bond fund in the world. A global sovereign debt crisis is now quite possible. At the very least, we are likely to have a long period of rising interest rates which will depress economic growth. Contrary to some misguided commentary, rising interest rates will benefit gold as was seen when interest rates rose sharply in the 1970s. It was only towards the end of the interest rate tightening cycle in 1980, when interest rates were higher than inflation, that gold prices began to fall.
Over the past few weeks, Citi's Steven Englander has not exactly kept it a secret that in his view, the US Dollar is due for the kind of flash dash that only stocks trading on the NYSE and BATS are capable of doing after reporting horrible news (bizarro market, remember). In an overnight note, Englander presents several scenarios on how to capitalize on what he notes are EURUSD "fat tails that are getting fatter" - specifically i) Long 6-month EUR Put USD Call 1.2500 At-Expiry Digital with KO at 1.3875 and ii) Long 6-month 1.3000/1.2000 EUR Put spread with KO at 1.3875. The 4 reasons why Citi believes conditions are ripe for sharp move in the pair are i) European sovereign debt is far from resolved, ii) Uncertainty emerging from governmental changes in the Middle East, iii) Unwinding commodity price inflation, and iv) Homeland Investment Act-2.
Today's Headlines Show Interest Rate Volatility, Sovereign Contagion, Geo-political Unrest & Double-Dip Recessions Coming: What's The Answer To Valuing Global Real Estate Through This Mess?Submitted by Reggie Middleton on 02/15/2011 13:36 -0400
I'm putting together what I see as solutions for the many pricing and valuation problems that I see coming down the pike. If you think real asset markets are a little soft now, wait until rates are controlled more by market forces than by concerted central planning cartels.
Markets are mixed this morning. Muni ETF rallied on Friday on news of the extension of the BABs program. The BABs program that expired in 2010, which originally permitted a 35% subsidy on state and local government-issued taxable munis, would now allow a 32% subsidy this year and 31% in 2012 under this new proposal. WSJ reported that due to Republican Party resistance, a more moderate 28% subsidy would create a political compromise. The Treasury department reported that interest expense is expected to rise to 3.1% of GDP in 2016, a threefold increase that is likely to raise borrowing costs.
Some pretty amazing developments in the past 48 hours in the world's 2 largest "easy money" central banks, that very few are talking about. If you are a conspiracy theorist this is one you are going to enjoy....First over in Europe, the ECB's head Trichet is facing the end of his term soon. It has been long thought German hawk (hawk = favors fiscal discipline and tighter money) Axel Weber was the shoo in for the job. But he is against handing money out in every direction to any country with its hand out (Greece, Ireland, Portugal, Spain... and someday Italy, France). I was actually fascinated to see how Weber would handle what Europe is doing (which is some combination of TARP + QE lite) since much of it seemed to go against his personal beliefs. But now there will be no opportunity to see how it would have played out. Out of the blue this week, he has withdrawn his name from a job that was presumed to be his... In the U.S., hawks are a rare breed. But there was one sitting very close to Ben B by the name of Kevin Warsh. He is a guy who has been vocally against QE infinity. Yesterday he decided its time to take his services elsewhere.
Gold, and particularly silver, lease rates (see chart) have been rising recently. The rate is found by subtracting the silver forward offered rate from the London Interbank Offered Rate (LIBOR). This likely signals increasing tightness and illiquidity in the bullion markets (as recently said by Sprott Asset Management, and UBS yesterday). The rise in silver has been very sharp, having gone from 4.29 basis points (0.0429%) to 77.65 basis points (0.7765%) since the start of the year (31 December 2010). While the rise is very sharp, it is important to put it in context, and silver lease rates remain well below the levels reached after the Lehman Brothers systemic crisis in late 2008 when silver lease rates surged to 2.5%. At the same time, the very small silver bullion market is clearly under strain as seen in the continuing backwardation. This clearly shows that demand for physical is robust, evident from retail demand in the US where there were record US Mint silver eagle sales last month. There are delays (3 to 4 weeks) to get branded LBMA silver bars (100 oz) in volume.