Mr. Obvious Award: Builder Confidence increases for the 55 Housing Market in Q3 (But Will Fed Raise Rates?)

This is a syndicated repost courtesy of Confounded Interest – Online Course Notes For Financial Markets. To view original, click here.
The National Association of Home Builders (NAHB) deserves ‘The Mr. Obvious Award’ for its finding that builder confidence increased for the 55 year old and older market in Q3.
Builder confidence in the single-family 55 housing market remains strong in the third quarter of 2015 with a reading of 60, up three points from the previous quarter, according to the National Association of Home Builders’ (NAHB) 55 Housing Market Index (HMI) released today. This is the sixth consecutive quarter with a reading above 50.
‘Builders have a positive outlook on the 55 housing market,’ said Timothy McCarthy, chairman of NAHB’s 55 Housing Industry Council and managing partner of Traditions of America in Radnor, Pa. ‘In fact, the markets for single-family, apartments and condos are all doing quite well, and we expect that trend to continue.’

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ November 8, 2015.

The Boom-Bust Cycle – Five Stages of the Oil Industry

It’s Not That Simple
In my previous article Why the Bakken Boomed, I discussed the shale oil boom that has had such a dramatic impact in North Dakota’s Williston Basin over the past decade. But throughout the U. S. shale boom there have been those who doubted that the production gains would prove anything other than fleeting. Those doubts were grounded in the fact that shale oil production is more complex and expensive than conventional oil production, and the fact that cash flow has been consistently negative for virtually all shale oil producers.
While the doubts are based on fact, the story is more complex than it may appear. Isn’t that always the case though? Things are never quite as simple as they seem. Superficially, the narrative for many has been ‘Shale oil isn’t economical. The wells deplete too quickly. Just look at the negative cash flow.’ But it’s just not quite that simple. Let’s dig a little deeper to gain a better understanding of what has happened, what is happening, and what is likely to happen moving forward.
The Boom-Bust Cycle for Dummies
First it’s important to understand that the oil industry is cyclical, and more importantly to understand the reason that it is cyclical. The long history of the oil industry has been one of boom and bust cycles. During the booms we hear about windfall profits, but during the downward part of the cycle, oil companies lose a lot of money and many people lose their jobs.

This post was published at FinancialSense on 11/05/2015.

Near-Sighted Investors Don’t See These Signals

All eyes were on the October jobs report this week – to see whether it would increase the odds of a Fed rate hike in December – but they should have been on the dollar.
The U. S. Dollar Index (DXY) ended the week at 99.17, up sharply from its mid-October low of 94 as the Japanese Yen and Euro pierced key levels of 122 and $1.08, respectively. The Yen ended the week at 123.13 and the Euro at 1.074 based on expectations that the Fed will move in December – and the realization that the ECB and Bank of Japan have no choice but to increase easing measures as their economies continue to circle the drain.
A stronger dollar will make it very difficult for the price of oil and other commodities to rise and much more likely they will test new lows. A stronger dollar will also pressure the earnings of S&P 500 companies in the fourth quarter and 2016.

This post was published at Wall Street Examiner by Michael E. Lewitt ‘ November 8, 2015.

Goldman Now Thinks “The Economy Might Start To Overheat Unless Growth Slows From The Current Pace”

Remember when a month ago Goldman “called it” on the question whether there would be a rate hike in 2015, when, in response to the rhetorical question of “What is your own view of the appropriate liftoff date?” chief economist Jan Hatzius said the following:
A: Our own answer to that question has long been 2016. In fact, our own view is similar to that of Chicago Fed President Charles Evans, who recently shifted his call from early 2016 to mid-2016. Although it is definitely possible to rationalize a December 2015 liftoff using various forms of the Taylor rule, there are two good reasons to delay the move longer. First, the risk of hiking too early is bigger than the risk of hiking too late when inflation is so far below target and we have spent so much time stuck at the zero bound. Second, we have seen a sizeable tightening of financial conditions. At this point, our ‘GSFCI Taylor rule’ suggests that the FOMC should be trying to ease rather than tighten financial conditions. Our own view in terms of optimal policy is quite strongly in favor of waiting well into 2016. Well, the gambit worked and while the “rate hike delay thesis” sent markets soaring in October on one after another piece of bad news as “bad news was good news”, the tables have now turned, and following the “stellar” October jobs report, it is time to attempt “good news is good news” for a change, and engage in the most hypocritical game of revisionist history, and pitch a rate hike as the bullish catalyst this economy has needed all along – because if only the Fed has raised rates in 2009 instead of engaging in QE2, Twist, QE3 and keeping ZIRP until now, the middle class would be thriving… just ignore the S&P at 2100.

This post was published at Zero Hedge on 11/08/2015.

Kiss of Death for the Housing Market?

Economists and bankers who have been clamoring for a Fed rate hike should be careful what they wish for, since rates at the long end of the yield curve look primed to soar. They are already up spectacularly over the last month – from 2.75% on October 2 to a high on Friday of 3.10% – after bottoming earlier this year at 2.23%. Now, with just a little more upward pressure, 30-year rates could lurch to 3.21%, since, technically speaking, the dam is close to bursting. If it does, you can kiss the housing market good-bye, along with the illusion of economic recovery that real estate inflation has helped sustain.

This post was published at Rick Ackerman on November 8, 2015.

Three Ads That Summarize The Current State Of The Subprime Housing Market

If 2014 was the year that saw the return of No Income, No Job, No Assets (NINJA), and Stated Income, Stated Assets (SISA, or “plug in random numbers”) mortgage loan applications, then the current three recent ads shown below, courtesy of KGBinvestor, demonstrate just how further down the subprime rabbit hole we have fallen in 2015.
One can only imagine what happens in 2016.
No seasoning is now pretty much standard for all prior bankruptcies Loans are issued up to 80% LTV, and in some cases up to 97% for conventional loans FICO scores of 500 only need 10% down; FICO scores of 580 (subprime) – only 3.5% down Tax returns aren’t needed Got caught fabricating your tax returns (4506-T) – no problem there either.

This post was published at Zero Hedge on 11/08/2015.

Rupture in Spain: Catalan Parliament to Vote for Independence

A major showdown with Madrid is in the works as the Catalan Parliament to Vote on Independence from Spain.
The Catalan independence campaign heads for a potentially perilous new phase on Monday, as the regional parliament prepares to vote on a resolution to ‘disconnect’ from the rest of Spain and renounce all rulings from the country’s constitutional court.
The resolution commits the recently elected parliament to the ‘creation of the independent state of Catalonia, in the form of a republic’.
It also calls for the passing of new legislation to set up an independent tax authority and social security system within 30 days.
Most controversially, perhaps, it states that the Catalan parliament is no longer bound by the decision of Spanish institutions and, in particular, the constitutional court, the highest tribunal in Spain.

This post was published at Global Economic Analysis on Sunday, November 08, 2015.

What America Has Devolved To: “Online Begging Has Become The New Economy”

With a record 46.7 million Americans living in poverty (9.4 million more than before the financial crisis), it is perhaps not entirely surprising that the need for ‘help’ is surging. However, as NYTimes reports, there is a spreading epidemic on social-media that smacks of anything but providing for the needy – and one man whose mailboxes have been increasingly filled with monetary requests, has a theory about it all – “I think online begging has become the new economy.”
‘I woke up to four new people today asking me for money on four different donation platforms,’ one friend said. ‘One was my ex-babysitter announcing her wedding and where I could send cash. No invitation to the wedding. Just cash.’ ‘I’m a believer in giving to real charities: medical research, school drives, the Red Cross, et cetera,’ said Heidi Knodle, owner of a picture framing store in San Francisco. ‘I’m tired of people asking for a vacation, funds for a wedding or their college tuition.’

This post was published at Zero Hedge on 11/08/2015.

Automation Doesn’t Just Destroy Jobs–It Destroys Profits, Too

The idea that taxing the owners of robots and software will fund guaranteed incomes for all is not anchored in reality.
Automation is upending the global order by eliminating human labor on an unprecedented scale–and the status quo has no reality-based solution to this wholesale loss of jobs.
Two recent articles highlighted the profound consequences of advances in robotics and AI (artificial intelligence) on employment: four fundamentals of workplace automation and Robots may shatter the global economic order within a decade as the pace of automation innovation has gone from linear to parabolic (via Mish).
The status quo apologists/punditry have offered two magical-thinking solutions to the sweeping destruction of jobs across the entire spectrum of paid work:
1. Tax the robots (or owners of robots) and use the revenues to pay a guaranteed income to everyone who is unemployed or underemployed.
2. Let the price of labor fall to the point that everyone has a job of some sort, even if the pay is minimal.

This post was published at Charles Hugh Smith on SUNDAY, NOVEMBER 08, 2015.

The 20 small cities struggling the most in the U.S. based on economics, education, quality of life, and affordability: All of the cities are in California.

It is hard to quantify what makes a city great or bad. Simply having a higher income is not enough to separate an area from another city if the cost of living is outrageous. There have been attempts to use cost of living adjustments but the attempt to rank cities has been paltry. Most of the rankings looked at larger areas but failed to look at smaller cities where a large portion of our population lives. A recent report actually made the effort to rank small cities based on four key metrics. The first item looks at economics. The next metric looks at education and health. The third metric looks at quality of life which includes things like commute time. Finally, affordability is looked at since housing prices have outpaced income gains in many areas of the U. S. It should comes as no surprise that 20 of the lowest performing cities that popped up on the list are in California.
The 20 cities that have it toughest are all in California
It may (or not) come as a surprise to you that all of the 20 cities on the bottom of the list of 1,268 small cities are all in California. California is largely looking more like a state where you have a small coastal elite and a large population that is struggling to get by. The metrics picked up on the incredibly high housing costs even in areas that simply don’t warrant it. You also find that many people are taking on brutal commutes just to live in the area.

This post was published at MyBudget360 on Nov. 8, 2015.

Ted Butler: The Count

The gold price rallied about six bucks by around 2:30 p.m. Hong Kong time on their Friday afternoon – and then gave about half of that back going into the job numbers. As expected, JPMorgan et al showed up – and the only thing we can be thankful for is that the pounding wasn’t worse than it was, as I was expecting at least double that amount, if not more. The low tick came just before the equities markets opened in New York – and it rallied a few dollars into the London p.m. gold fix, then didn’t do much after that.
The high and low ticks were recorded by the CME Group as $1,109.70 and $1,084.50 in the December contract.
Gold closed in New York yesterday at $1,089.40 spot, down $14.20 from Thursday’s close. Net volume was decent, but not heavy, at just under 150,000 contracts.

This post was published at GoldSeek on Sunday, 8 November 2015.

The Fly In The Buyback Ointment: Corporate Leverage Is At Record Levels

We’ve gone out of our way over the last year to explain that whatever monthly flow was lost to the taper was promptly recouped by corporate management teams via an endless stream of ZIRP-induced buybacks.
Put simply, thanks to the now ubiquitous global hunt for yield, anything that even looks like a creditworthy company can borrow for nothing and then promptly funnel the proceeds into EPS-inflating buybacks. That’s great from a myopic, ‘let’s worry about this quarter first and longevity later’ perspective, but in the long-run, it can’t possibly work as all you’re doing is leveraging the balance sheet to explain away a poor top line.

This post was published at Zero Hedge on 11/08/2015 –.

Amazon dot Con Is Updated – See Why Stanley Druckenmiller Embarrassed Himself

The run-up in AMZN has been stunning to say the least. It reminds of Commerce One (CMRC) at the peak of the tech/internet bubble. CMRC ran from $10 to $600 in vertical fashion. The only difference between CMRC and AMZN is that AMZN has revenues. Both companies burn cash like a Weimar Republic furnace.
The move last week was precipitated by comments made Stanley Druckenmiller at a CNBC investment symposium. Druckenmiller was comparing IBM to AMZN. Unfortunately, if you have bothered to study AMZN’s financials, you know that Druckenmiller was blowing smoke out of his ass with regard to his assertions about AMZN. Druckenmiller’s comments begin at about the 14:30 mark: Druckenmiller’s Follies
Even the best and the brightest make mistakes. I made a lot of money for Bankers Trust in the mid-1990’s take the other side of one of Carl Icahn’s mistakes in the junk bond market (Stratosphere Casino bonds). When AMZN’s bubble pops, the stock quickly deflate and likely end up where it was when the Fed started its QE, which is under $50.

This post was published at Investment Research Dynamics on November 8, 2015.

San Francisco’s Luxury Condo Bubble Turns into Condo Glut

A few days ago, I shared some observations about the San Francisco housing market, as seen from a walk though residential areas. I walk everywhere and see realtor signs here and there. But that day, I saw 14 realtor signs, advertising 15 units for sale – by far the most I’d seen since the Financial Crisis.
‘San Francisco is on sale,’ I wrote. At the worst time of the year – November, December, January. I advised caution using this observation. It needed to be confirmed by data, I wrote; but if confirmed, San Francisco’s crazy Housing Bubble 2 is going to have a problem.
Now confirmation is piling up. In late October, national real estate brokerRedfin had already reported that the median home price in San Francisco in September had jumped 14.9% from last year, as home sales in units had plunged 25.3%!
This is year-over-year data. Seasonality has nothing to do with it.

This post was published at Wolf Street by Wolf Richter ‘ November 8, 2015.

Greece May Open Border Fence With Turkey, Accept Refugees In Exchange For Release Of Bailout Cash

As part of its third bailout from this summer when the party that was elected on an anti-austerity, “no more debt” platform caved to Europe’s every demand (under the threat of deposit confiscation and bank failure) and promised to unleash even more “austerity”, while raising Greek debt to 200% of GDP over the next few years, Athens was supposed to get its first 2 billion installment of the first 26 billion tranche for discretionary spending purposes sometime around now.
Unfortunately, it isn’t, if only for the time being, for the simple reason that – surprise – it hasn’t implemented most of the reforms demanded under the terms of the Third bailout agreement.
According to Reuters reports, the country and its international creditors “remained at odds over the treatment of non-performing loans at Greek banks, a government official said on Sunday, holding up part of the first installment of aid under a multi-billion-euro bailout.”
Furthermore, “discussions have stumbled over how to foreclose on non-performing loans at Greek banks. Athens insists resolving the issue should not result in thousands of Greeks at risk of losing their homes.”
According to Kathimerini, the key issues being discussed over the weekend were the criteria that apply to home repossessions, the rules governing the 100-installment payment plan for unpaid taxes and the coalition’s continuing efforts to find a fiscal measure to replace the 23 percent value-added tax rate on private education, which it agreed in the summer but has since pledged to scrap.

This post was published at Zero Hedge on 11/08/2015 –.

What Can Yellen Really Do?

Submitted by Jeffrey Snider via Alhambra Investment Partners,
For one, eurodollar futures are ‘obliged’ to take account of any threats from the FOMC even though, in the end, they might only be self-fulfilling. Because the Fed has very little actual ability to condition money markets, none of that is truly ‘real’ but there remains the unknown and money dealing agents still seem reticent about any kind of (further) showdown. Where the eurodollar curve was shriveled toward nothing up to the September payroll report released on October 2, the October payroll report has advanced the recent run of Yellen’s apparently restored resolve.
At pivotal points on the curve, such as the June 2018 maturity, that has obliterated the ‘dollar’ run trend that began back around July 6. However, as the fuller curve displays, that seems to be only a change in policy perceptions and not especially much more than that.

This post was published at Zero Hedge on 11/08/2015 –.

Metals Searching For Lows While Stocks Rock

Markets and leading stocks had a great week, not necessarily moving higher, but setting up to do so very soon.
We can’t move up in a straight line and backing and filling, or resting action, is what we need for this bull market to remain healthy and strong.
From my chair, I think we’ve entered another buy the dip market just now, so I am holding strong my good positions and looking to buy dips, so if you’ve missed the moves thus far, many stocks are giving you a second chance.
Last weekend I mentioned the metals were showing failed breakouts, which is never good, and often leads to a breakdown, and that is what we saw in the metals this week so let’s see where support lies now.

This post was published at GoldSeek on Sunday, 8 November 2015.

Why Tony Robbins Is Still Asking The Wrong Questions

Authored by Mark St. Cyr,
One year ago this month I wrote an article bearing the same title less the ‘still.’ I’ll premise this one as I did then with the following: This is not a hit piece, nor an effort to arbitrarily take swipes. Or worse; some feeble attempt at click-bating. I’ve been a true fan since he first hit the motivational stage decades ago. However, that doesn’t stop me from pointing out issues where I see a compelling reason to do so. So with that said I’ll get on with it…
Over the last few weeks the financial markets have been on a tear. And not just any tear. The month of October saw gains that were not just spectacular: It now sports the position as the 4th grandest Oct. rally in the history of the markets.
It sure does sound ‘grand’ if you don’t look at what it took to make it so. i.e., A collapse of an also historic nature that preceded it by mere weeks. Suddenly the praise of ‘grand’ looses its largesse when reminded of why it took place to begin with. Yet, not to worry. The financial media will never remind or, alert you to such facts because – ‘everything is awesome!’ once again.
Then on Thursday I was alerted that Tony (I’m using the personal only for ease) was out making the rounds on the financial/business shows. So, I tuned in to see. And what was the bulk of the conversation or questioning about? Fees. In other words, by using different instruments, brokers, et al, you could significantly reduce your brokerage fees by doing many things yourself in different ways such as investing in ETFs and other instruments. One example he used was from his own company’s experience where he reduced his outlays by some $5 million dollars. Sounds great at first blush. However, there’s two things overshadowing this enlightenment in my opinion.

This post was published at Zero Hedge on 11/08/2015.

Dealing Desk: Volatile markets give clients incentive

This week has seen buying across most metals with silver being the buying favourite.
GoldMoney’s Singapore vaults remained the most popular this week, with UK, Swiss and Hong Kong vaults seeing the most selling.
Kelly-Ann Kearsey, Dealing Manager at GoldMoney, says we have seen a large drop in the prices across all the metals this week due to more positive US economic data, which has strengthened the US dollar, together with the Federal reserve news last week. In turn, our clients have responded by taking the opportunity of buying metal at prices lower in comparison to last week. This week, the market is watching Friday’s October employment report, as it may give encouragement to the Fed’s decision in December.
Gold remains weighed down by the recent US Federal Reserve statement, alongside positive US data which has halted gold’s upward momentum. The market pricing is now representative of a December rate hike and gold has reacted by decreasing by $40.

This post was published at GoldMoney on NOVEMBER 05, 2015.