Everyone interested in real estate is asking the same question: Is the bottom in, or is this just another "green shoots" recovery that will soon wilt? Let’s start by reviewing the fundamental forces currently affecting real estate valuations. ZIRP has created a "crowded trade" in low-risk investments with attractive yields such as corporate bonds, dividend stocks, and real estate, which is being fueled by a self-reinforcing perception that "the bottom is in." The question now is will these forces continue pushing prices higher? If these forces deteriorate or lose their effectiveness, then the “green shoots” of investor interest may wither as the U.S. economy joins Europe and Japan by re-entering recession.
We now have something of a capital freeze occurring in the US at the very same time that the primary pillar of EU stability (Germany) will very likely begin to pull back from providing additional aid (case in point, Greece is still waiting on receiving proposed aid from six months ago).
In a perfect trifecta of disappointment, overnight we had reality reassert itself with a thud as first Japan reported weaker than expected GDP which contracted for a second consecutive quarter and which technically sent the country into yet another recession, merely the latest one in its 30+ year deflationary collapse. Which isn't about to get better: "Analysts expect another quarter of contraction in the final three months of this year due to sluggish exports to China, keeping the Bank of Japan under pressure to loosen monetary policy as early as this month." Of course, there is hope that the new, old PM, Abe will restore money trees and unicorns and get Japan to a 3% inflation target, without somehow destroying bank and insurance co balance sheets in the process, all of which are loaded to the gills with JGBs set to collapse should inflation truly return. Then after Japan, China reported miserable trade data, which flatly refuted all hopes of an economic pick up both in the mainland and across the world. Perhaps the reason China can not openly fudge its trade data, unlike its GDP, inflation, retail sales, industrial production and all those other indicators that none other than the incoming head of government Li Keqiang said are for "reference only" (a fact conveiently ignored when they are all going up, and duly noted when China is self-reportedly sliding) because other countries report the counterparty data and it is very easy to catch China lying in this particular case. And finally there was Europe...
Update: The devolution is complete as Egypt declares martial law.
It was only a matter of time before Egypt's US-endorsed temporary dictator resolved to what will be spun as temporary military intervention against what is increasingly looking like a permanent counterrevolution by deploying the army to crush local protesters who have besieged the Egyptian presidential palace for almost a week, and have put the country's new "democratic" regime increasingly under threat of collapse. RT reports that "Egyptian President Mohamed Morsi will authorize the deployment of the country's armed forces to quash protests in Cairo, al-Ahram reported. The military said prolonging the crisis would be "disastrous,” and that they would not tolerate violence. At least six people died and hundreds were reported injured over the last few days in the unrest that has gripped the Egyptian capital since late November. Al-Ahram reported that the armed forces will be given powers of arrest, previously an exclusive right of the police."
It is no secret that for many years the SEC has been looking into ways of taking down the most infamous of all "information arbitrage" abusing hedge funds: Steve Cohen's SAC Capital, a quest that has finally accelerated to its inevitable terminal point weeks ago. Of course, had the SEC been reading Zero Hedge, the time to get to that critical civilian conviction would have been far shorter. But where the SEC was demonstrating ongoing incompetence, its peer organization - one with all-important criminal enforcement powers - the FBI, was actually several steps ahead, and as Bloomberg reports, is now probing specific trades by SAC, a process which very likely will culminate with criminal charges against one or more people not at CR Intrinsic, but SAC itself. Of course, by several steps ahead, we do mean two years behind Zero Hedge.
It is a truism that food is expensive in America. What if we ask, "is 'real' food expensive in America?" Apologists often cite four reasons why people (and more particularly, low-income people) tend to eat so poorly in America. None of these excuses hold water. What it boils down to is convenience, marketing and engineering: processed food and fast-food are engineered to "taste good" (i.e. salty, fatty and sweet), marketing hypes them 24/7 and Americans have been brainwashed to worship convenience above all else. So please don't claim real food is "too expensive" to eat. What's "too expensive" is unhealthy processed and fast foods.
In a day in which it was all supposed to be about today's far weaker (because there is a perfectly good alibi in the face of Hurricane Sandy) Nonfarm payroll report, expected to print at 85,000, due out in 2 hours, once again it is the the "rest of the world" that stole the scene, starting with a reality slam out of Germany whose Bundesbank came out with revised forecast for German economic growth, which collapsed projected 2013 growth from 1.6% to a tiny 0.4%, adding that there are "growth projections risks to the downside" in effect all but sealing Germany's recessionary fate in the coming year, and send the EURUSD to overnight lows. Sure enough, as if to confirm this forecast, moments ago German Industrial Production in October tumbled -2.6%, on expectations of an unchanged print. None of this should come as a surprise to our readers whom we have been warning for weeks and months that the European economic malaise is spreading closer to the core with each passing day. What this means is that as we have been saying for months, slowly but surely the narrative that the ongoing German bailout of Greece is crushing the AAA-rated economy will become louder and louder until it is the German people themselves who demand a severing of all ties with Greece.And speaking of Greece, there are simply no words to explain the stupidity of what may be happening there. Perhaps the following Bloomberg headline captures it best: Greece to Buy Debt It Already Owns to Reach Target. Er, LOLWUT?
The antics of the world's most cartoonish CEO, that would be NFLX' Reed Hastings of course, who once upon a time posted on Seeking Alpha telling naysayers not to short him, bro, (only to continue sell his company's stock even as NFLX proceeded to use corporate money to buyback its own stock in the $200+ area), before promptly collapsing to multi-year lows, has finally been called to task by none other than that other most cartoonish of organizations: the SEC, which is now desperate to clean up its image as the bulk of the most coopted personnel are jumping ship, and will likely end up in various Wall Street companies.
The news Deutsche Bank apparently sat on potential super-senior losses of $12 bln through the banking crisis is bound to anger the many bankers who saw their careers crumble or subsumed into bureaucracy. Other banks up the ying-yang with unhedgable risk went bust or were forced into the ignominy of public bailouts. From a proper accounting or risk-management perspective DB should have been bust - but to the unknowing world it wasn't. And that sums up the complexity of the bank world - if management can hide or not recognise risks (and even sack whistleblowers who disagree with them), what's the answer? It's the No-See-Ums that kill institutions. On the basis if you can't see it, then it can't see you... should DB have survived? If Lehman had kept schtumm about its leverage and unquantifiable risk, would it still be with us? Not getting caught is an objective all management have quietly inscribed into their heads. And as far as the UK's fiscal projections... on the basis QE has historically proved to be little less effective than pushing uphill on a length of wet wool, then we might just be staring down the Japanese abyss - no growth as CAPEX will stay subdued on the weak outlook. Lastly, we've been told (forceably) our concerns the Greek buyback could be difficult are completely overstated. We are idiots for even thinking it... apparently.
Why does the Big Media other than WSJ refuse to report on the TAG subsidy grab by the largest banks?
Forget the perfectly anticipated Greek (selective) default. This is the real deal. The FT just released a blockbuster that Europe's most important and significant bank, Deutsche Bank, hid $12 billion in losses during the financial crisis, helping the bank avoid a government bail-out, according to three former bank employees who filed complaints to US regulators. US regulators, whose chief of enforcement currently was none other than the General Counsel of Deutsche Bank at the time!
There are almost as many theories about why obesity has exploded in America and the world since the 1980s as there are researchers compiling data. The rise in Body Mass Index (BMI) appears to correlate with the rise of high-fructose corn syrup (HFCS), a simple carbohydrate. Unfortunatley, obesity and well-being are not just a matter of carbs/no-carbs; the causal chain is just not that simple.
I’m going to lay out everything you need to know about the fiscal cliff negotiations. After reading this, you can ignore all of the media’s coverage of this topic as well as various politicians’ announcements pertaining to this subject.
And so yet another saga of a trader who bet on AAPL rising, just before it tumbled, ends in tears, this time with what appears to be near certain incarceration of another small, 2-bit trader. As we previously reported, back in November, as AAPL stock was in freefall, none other than the firm of everyone's favorite financial permabull, Rochdale, ended up being a proud if involuntary holder of nearly $1 billion in AAPL stock. The scapegoat for AAPL's price drop: one ex-trader David Miller. What Miller is accused of, is buying 1.6 million shares of AAPL on the day of the company's last earnings announcement in hopes, of course, the stock would surge. It didn't. Furthermore, Miller was in reality executing a trade for a client who had only wanted to buy 1,625 shares, but Miller was confident enough the stock would go up, he bet the firm's money to buy the difference. Sadly, neither the AAPL earnings announcement, nor its stock price, did quite as planned. End result: $5 million loss, Miller terminated and now arrested and charged, and Rochdale left scrambling for a bailout.