Las Vegas

Will we never learn? "Helping more folks in Phoenix realize the American Dream and own their own home."

Welcome to the new old normal 'Murica... buy those homes... lever up... spend the HELOC... die a debt serf...

No reason to sell.  No reason to buy.  That about sums it up.  Unfortunately, that is about as optimistic a scenario as we can come up with, supported by equally optimistic growth expectations. In reality, the market has no support.  We can only hope that it will not crash at the first sign of trouble. There are always good reasons to own a home, a place to raise a family. However, home ownership via extremely leveraged financing carries enormous and unprecedented risk. We think many potential buyers recognize the risk and are correctly staying out of the market. The new normal in real estate terms is unlikely to be what the market is hoping for.

“Don’t look back - something might be gaining on you,” Satchel Paige famously warned. For connoisseurs of civilizational collapse, 2014 was merely annoying, a continued pile-up of over-investments in complexity with mounting diminishing returns, metastasizing fragility, and no satisfying resolution. So we enter 2015 with greater tensions than ever before and therefore the likelihood that the inevitable breakdown will release more destructive energy and be that much harder to recover from.

"Customers who used to wager on casino tables are probably now sitting at home betting on stocks,” said Tai Hui, Hong Kong-based chief Asia market strategist at JPMorgan Asset Management. “Investors are levering up on margin trading, or ‘using a small knife to cut a large tree.’"

While we await today's update of the Glorious Leader's Hawaiian vacation, here is an update from Nevada on the outgoing senate majority leader's health condition: " Senate Democratic leader Harry Reid was injured today in an accident while exercising at his home in Henderson, Nevada. According to a statement from the Nevada Senator's office, Reid was hurt after a piece of equipment he was using broke, which caused him to fall. He broke a "number of ribs and bones in his face."

Case-Shiller's 20-city home price index dropped 0.1% MoM in October (on an unadjusted basis) - the second monthly drop in a row and biggest drop since the Polar Vortex. Year-over-year, home prices rose 4.5% - the weakest growth since October 2012. While this modestly beat expectations (+4.5% vs +4.4% exp.), it is the 11th month in a row of growth deceleration. Also of note: the Top 20 Composite index is now down for the second month in a row, dropping to 173.36. The question now is whether the downside momentum will pick up.

While the just revised Q3 GDP surprised everyone to the upside, the Case Shiller index for September which was also reported moments ago, showed yet another month of what it called a "Broad-based Slowdown for Home Prices." The bad news: the 20-City Composite gained 4.9% year-over-year, compared to 5.6% in August. However, this was modestly above the 4.6% expected. However, what was more troubling is that on a sequential basis, the Top 20 Composite MSA posted a modest -0.03% decline, the first sequential drop since February. And from the report itself: "The National Index reported a month-over-month decrease for the first time since November 2013. The Northeast region reported its first negative monthly returns since December 2013 and its worst annual returns since December 2012 due to weaknesses in Washington D.C. and Boston."

If anyone needed proof that golf and economics don't mix, it is the following two back-to-back tweets, one just sent out by Obama (or rather his teleprompter) attempting to do economics in under 140 characters, and the other describing what Obama is doing this very moment during his Las Vegas weekend trip.

• They go all in: China’s PBOC Cuts Interest Rates for First Time Since 2012 (BBG)
• And all in-er: ECB's Draghi throws door to quantitative easing wide open as recovery wanes (Reuters)
• Global Markets Rally: ECB Head Says Central Bank Is Ready to Expand Stimulus Program After China Cuts Rates (WSJ)
• Obama unveils U.S. immigration reform, setting up fight with Republicans (Reuters)
• U.S. increasing non-lethal military aid to Ukraine (Reuters)
• Russia warns U.S. against arms to Ukraine as Biden due in Kiev (Reuters)
• Ukraine slashed gold holdings in October, Russia added more - IMF (Reuters)
• Abe Dissolves Japan’s Lower House of Parliament (WSJ)

Having been shunned by all the major broadcast networks (unlike his predecessor 8 years ago), President Obama's 'prime time' address to the nation - which will be seen by dominant Spanish-language channel Univision viewers (and CNN and PBS) - will lay out the new steps he (and he alone in his executive order) is taking "to fix our broken immigration system." As Politico comments, Obama appears to be going all-in as he speaks from Las Vegas, as the cooperation talk has disappeared - “Make no mistake. When the newly elected representatives of the people take their seats, they will act,” warned incoming Senate Majority Leader Mitch McConnell.

Joint statement by NYC Health Department and NYC Health and Hospitals Corporation

An individual who came to the United States from Mali, a country with limited Ebola transmission, was taken to HHC Bellevue Hospital Center today. Due to the individual's travel history and symptoms, the patient has been isolated, and an Ebola test will be performed. Results are expected later today.

While what normally happens in Vegas, stays in Vegas; President Obama's decision to dictate his Immigration Executive Order from sin city will likely have repurcussions across the entire nation. As NY Times reports, Obama is preparing to use his executive authority to provide work permits for up to five million people who are in the US illegally, and to shield them from deportation. But these new arrivals will not receive one key benefit: government subsidies for health care available under Obamacare. The immigrants would also be unlikely to receive benefits like food stamps, Medicaid coverage or other need-based federal programs offered to citizens and to some legal residents. "The costs of extending these programs to millions of low-wage illegal immigrants would be enormous," said Senator Jeff Sessions "this is yet another danger posed to Americans by the president’s unconstitutional action."

While the central banks of the world have yet to directly unleash the helicopter drop of free money to the end-consumer, preferring instead to seek financial asset inflation (and all its unintended consequences), it appears there is another way to get 'free money' direct to the average Joe... "ATM Jackpotting." According to Wired, using a special button sequence and some insider knowledge, it is possible to reconfigure ATMs to believe they are dispensing one dollar bills, instead of the twenties actually loaded into the cash trays. Though industry sources claim this to be rare, they note that "independent operators and financial institutions are very tight lipped about this sort of thing."

Because, allegedly, according to a divorce complaint filed by his admittedly "cocaine-snorting" estranged wife and mother of two, former UBS healthcare banker poached by Jefferies in 2009, Sage Kelly (henceforth known as the "defendant") is quite an entertaining, all around swell guy who singlehandedly would have boosted Spain's GDP by several basis points. Here are the details from her recently filed affidavit.

For those living in Cleveland, where home prices rose a tiny 0.8% compared to last year (a number which is sliding every month), the latest dead housing cat bounce is almost over, and with the release of the September, or at the latest, October numbers, expect the first Top 20 US MSA to go back into annual price decline for the first time in two years. Those living in America's other cities are safe, for now. Then again, while still rising at a comfortable upper-single digit pace, all California cities as well as Las Vegas, are about to hit a brick wall, as the Y/Y pace of price increases is now grinding to a halt.