Luxury Home Listings ‘Overpriced by a Third?’

Why a real estate insider thinks era of ‘aspirational pricing’ is over.
Luxury real estate got battered in 2016 in some of the toniest markets – in Manhattan, in the Hamptons, in Aspen, in Miami, etc., but then some sales closed this year, and traffic ticked up in some places, and the meme cropped up that the soaring stock market or whatever was pulling luxury real estate out of its funk.
Last month, Bloomberg explained the phenomenon this way:
Manhattan’s luxury apartment market is seeing sparks of life after sputtering for much of last year as a construction surge created an abundance of choices for the well-heeled. The first two weeks of January marked the strongest start to a year since 2014 for sales at $4 million or higher, with 50 contracts in that range signed, according to a report from Olshan Realty Inc. The increase in deals, coinciding with a stock-market euphoria and developers’ greater price flexibility, follows a year in which luxury contracts fell by 18% from 2015….

This post was published at Wolf Street by Wolf Richter ‘ Feb 19, 2017.

Trump Left Saudi Arabia Off His Immigration Ban… Here’s Why

Submitted by Nick Giambruno via InternationalMan.com,
On August 15, 1971, President Nixon killed the last remnants of the gold standard.
It was one of the most significant events in US history – on par with the 1929 stock market crash, JFK’s assassination, or the 9/11 attacks. Yet most people know nothing about it.
Here’s what happened…
After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar.
The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.
The Bretton Woods system made the US dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the US government for gold.

This post was published at Zero Hedge on Feb 18, 2017.

Goldman: Investors Will Soon Realize They Were Too Optimistic

Goldman Sachs really wants the market lower.
After several increasingly more comprehensive critiques of Trump’s fiscal policies (most recently this past weekend), on Friday, just as the S&P closed at fresh all time highs propelled by a late day ramp, Goldman’s chief equity strategist who has a 2,300 year end target on the index, cautioned that “cognitive dissonance exists in the US stock market” as “investors must reconcile S&P 500’s performance with negative EPS revisions from sell-side analysts.” Specifically, Kostin notes that the “S&P 500 has returned 10% since Election Day while consensus 2017E adjusted earnings have been lowered by 1%“, and predicts that “investors will soon de-rate their expectations of potential 2017 EPS growth as they face the reality that the accretive impact from tax reform will not occur until 2018.”
In short, “Financial market reconciliation lies ahead: We are approaching the point of maximum optimism and S&P 500 will give back recent gains as investors embrace the reality that tax reform is likely to provide a smaller, later tailwind to corporate earnings than originally expected.”
First, Goldman points out that the underlying current of optimism unleashed with the Trump election is no longer warranted:
Cognitive dissonance exists in the US stock market. S&P 500 is up 10% since the election despite negative EPS revisions from sell-side analysts (see Exhibit 1). Investors, S&P 500 management teams, and sell-side analysts do not agree on the most likely path forward. On the one hand, investors, corporate managers, and macroeconomic survey data suggest an increase in optimism about future economic growth. In contrast, sell-side analysts have cut consensus 2017E adjusted EPS forecasts by 1% since the election and ‘hard’ macroeconomic data show only modest improvement.

This post was published at Zero Hedge on Feb 18, 2017.

The Three Seasons Of Greenspan – And Why The Third Won’t Redeem The Second

When the history of these times is written, former Fed Chair Alan Greenspan will be one of the major villains, but also one of the greatest mysteries. This is so because he has, in effect, been three different people.
He began public life brilliantly, as a libertarian thinker who said some compelling and accurate things about gold and its role in the world. An example from 1966:
An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other…
… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1934 under FDR]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This post was published at DollarCollapse on FEBRUARY 18, 2017.

“Recessionary” Demand Forces New York Harbor To Divert Gasoline Shipments

Two weeks ago, Goldman analysts were stunned when they noted that in recent weeks gasoline demand in the US has collapsed to levels that suggest not all is well with the economy. In fact, as the bank’s oil expert Damien Courvalin said “to achieve the 5.9% decline suggested by the weekly data, our model requires PCE to contract 6%, in other words, a recession.”

Goldman then quickly changed the unpleasant narrative – one which would suggest that the US economy is in far worse shape than official data represent – and provided several alternative explanations why such a “sudden collapse is unlikely” and said that “we view the larger than seasonal ytd builds in US gasoline stocks as driven by transient supply factors rather than persistent demand issues.”
Perhaps, but so far those “transient” supply factors are only getting more chronic, and as supply continues to grow in anticipation of a demand bounce that refuses to materialize, leading to ever louder speculation that there is something very wrong with the US consumer…

This post was published at Zero Hedge on Feb 18, 2017.

Proposed Global Class Action Gold & Silver Manipulation Lawsuit

This news was originally disseminated by GATA on February 5th. A British law firm, Leon Kaye Soliciters, has proposed the initiation of a class-action lawsuit charging that six ‘well known’ financial services groups conspired to manipulate the London Gold Fixing from 2004 – 2014. The proposal cites the recent settled Deutsche Bank class action suit for in New York and the ongoing billion dollar class action suit in Ontario, Canada. The class action suit would be open to investors globally. If interested contact Leon Kaye at info@leonkaye.co.uk. Here’s a summary of the proposal:
Based on documents in the public domain to which we refer below, we consider that there are good grounds to believe that members of six well-known financial services groups combined together to manipulate the outcome of the London Gold Fixing between about 2004 and 2014 and that members of four of those groups combined to manipulate the outcome of the London Silver Fixing between about 1999 and 2014. The effect of this was to create false market prices, in particular by artificially depressing prices after the 3pm (London time) Gold Price Fixing and to increase bid-offer spreads in physical gold, physical silver and their respective derivative instruments. The relevant institutions did this to increase their profits from their own activities in these markets at the expense of other market participants who have therefore suffered loss and damage, probably running into hundreds of millions of pounds in aggregate.

This post was published at Investment Research Dynamics on February 19, 2017.

The Shadow Government’s Destruction Of Democracy

The ‘Deep State’ has one simple rule – “do it my way… or else!”
And on the heels of Dennis Kucinich’s warnings, The Intercept’s Glenn Greenwald, who opposes Trump for a variety of reasons, warns that siding with the evidently powerful Deep State in the hopes of undermining Trump is dangerous. As TheAntiMedia’s Carey Wedler notes, Greenwald asserted in an interview with Democracy Now, published on Thursday, that this boils down to a fight between the Deep State and the Trump administration.

This post was published at Zero Hedge on Feb 18, 2017.

The Great Gatsby and the Fed

Even the most innocent novel can give its reader a fresh perspective on the economy during the author’s time. Economic writings and economic conditions often inspired great writers who, in turn, allowed us to contemplate either a glimpse or a detailed picture of economic reality. Stendhal was influenced by Malthus, Flaubert by Bastiat, and Ayn Rand by Mises. Other novelists faithfully described the economic times of their lives. mile Zola, for instance, brilliantly accounts for the French 1882 financial crisis in his novel L’Argent (1891) and unconsciously exhibits the evils of fractional reserve banking.
Just as Zola’s L’Argent, so too F. Scott Fitzgerald’s The Great Gatsby (1925) is a product of the business cycle. Some have interpreted Fitzgerald’s novel as an indictment against capitalism. It is not. It has been said that Gatsby is a product of alcohol prohibition, but Gatsby is also the unfortunate product of the Federal Reserve’s expansionist monetary policy. The ‘constant flicker’ of the American life described by Fitzgerald in his celebrated novel is no less than the artificial boom driven by the Fed during the roaring twenties.
Inequality and the Fed during the Twenties The Franco-Irish economist Richard Cantillon was among the first to notice the redistributive effects of monetary creation. Cantillon observed that the first to receive the newly created money saw their incomes rise whereas the last to receive the newly created money saw their purchasing power decline as consumer price inflation came about.

This post was published at Ludwig von Mises Institute on Feb 18, 2017.

The Unthinkable Just Happened in Spain

Six central bankers and a financial regulator get dragged to court
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
Untouchable. Inviolable. Immunity. Impunity. These are the sort of words and expressions that are often associated with senior central bankers, who are, by law, able to operate more or less above the law of the jurisdictions in which they operate.
Rarely heard in association with senior central bankers are words or expressions like ‘accused’, ‘charged’ or ‘under investigation.’ But in Spain this week a court broke with that tradition, in emphatic style.
As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel ngel Fernndez Ordez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV (the Spanish equivalent of the SEC in the US).

This post was published at Wolf Street by Don Quijones ‘ Feb 18, 2017.

There’s Not Nearly Enough Growth To Keep Growing

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
It’s amusing to see how views start to converge, at the same time that it’s tiresome to see how long that takes. It’s a good thing that more and more people ‘discover’ how and why austerity, especially in Europe, is such a losing and damaging strategy. It’s just a shame that this happens only after the horses have left the barn and the cows have come home, been fed, bathed, put on lipstick and gone back out to pasture again. Along the same lines, it’s beneficial that the recognition that for a long time economic growth has not been what ‘we’ think it should be, is spreading.
But we lost so much time that we could have used to adapt to the consequences. The stronger parties in all this, the governments, companies, richer individuals, may be wrong, but they have no reason to correct their wrongs: the system appears to work fine for them. They actually make good money because all corrections, all policies and all efforts to hide the negative effects of the gross ‘mistakes’, honest or not, made in economic and political circles are geared towards making them ‘whole’.
The faith in the absurd notion of trickle down ‘economics’ allows them to siphon off future resources from the lower rungs of society, towards themselves in the present. It will take a while for the lower rungs to figure this out. The St. Louis Fed laid it out so clearly this week that I wrote to Nicole saying ‘We’ve been vindicated by the Fed itself.’ That is, the Automatic Earth has said for many years that the peak of our wealth was sometime in the 1970’s or even late 1960’s.
Intriguing questions: was America at its richest right before or right after Nixon took the country off the gold standard in 1971? And whichever of the two one would argue for, why did he do it smack in the middle of peak wealth? Did he cause the downfall or was it already happening?

This post was published at Zero Hedge on Feb 18, 2017.

F-15s Cause Sonic Boom Over Palm Beach In Scramble To Intercept Unresponsive Aircraft

New Yorkers, and certainly their mayor Bill de Blasio, complained bitterly about the traffic chaos unleashed by then president-elect Donald Trump when he used his Fifth Avenue-located Trump Tower as campaign headquarters, resulting in logistical and security chaos. Now it’s the turn of Palm Beach, where Trump resides on most weekends in his Mar-A-Lago “Winter White House” (at a cost to taxpayers of approximately $3 million per trip).
On Friday evening, two F-15s caused a sonic boom as they were scrambled from their base in Homestead, Florida, to intercept an unresponsive general aviation aircraft that flew near Palm Beach during a stay by President Trump at Mar-a-Lago, Fox News reported. The jets flew at supersonic speeds the North American Aerospace Defense Command, NORAD, said in a statement leading to started residents confused by the loud noise.

This post was published at Zero Hedge on Feb 18, 2017.

Doug Noland: China Credit and Global Inflationary Dynamics

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
February 14 – Bloomberg: ‘China added more credit last month than the equivalent of Swedish or Polish economic output, revving up growth and supporting prices but also fueling concerns about the sustainability of such a spree. Aggregate financing, the broadest measure of new credit, climbed to a record 3.74 trillion yuan ($545bn) in January… New yuan loans rose to a one-year high of 2.03 trillion yuan, less than the 2.44 trillion yuan estimate. The credit surge highlights the challenges facing Chinese policy makers as they seek to balance ensuring steady growth with curbing excess leverage in the financial system.’
Like so many things in The World of Finance, we’re all numb to Chinese Credit data: Broad Credit growth expanded a record $545 billion in the month of January, about a quarter above estimates. Amazingly, last month’s Chinese Credit bonanza exceeded even January 2016’s epic Credit onslaught by 8%. Moreover, as Bloomberg noted, ‘The main categories of shadow finance all increased significantly. Bankers acceptances – a bank-backed guarantee for future payment – soared to 613.1 billion yuan from 158.9 billion yuan the prior month.’

This post was published at Wall Street Examiner by Doug Noland ‘ February 18, 2017.

17/2/17: European Non-Performing Banks’ Loans 2016

Latest Fitch data shows some significant progress achieved by Ireland in dealing with non-performing loans on banks’ balancesheets:
According to Fitch, Irish banking system ranked 6th worst in terms of NPLs in the EU at the end of 2016. This is a significant improvement on second and third places for Ireland during the height of the Greek and Cypriot crisis. However, the above data requires some serious caveats:
Ireland has been the earlier starter in the game of repairing banks’ balancesheets than any other country in the Fitch’s Top10 Worst systems table above

This post was published at True Economics on Saturday, February 18, 2017.

Week in Review: February 18, 2017

This week, Janet Yellen was again before Congress to once again kick the can down the road. The position of Yellen and the Fed appears to be, yet again, that they’ll some day move back toward what might be called more “normal” monetary policy. For the foreseeable future, though, it looks like the “new normal” is ultra-low interest rates, failing economic models, and continued growth in power for both the central bank and the crippling regulatory state that continues to drive up costs and weigh businesses down.

This post was published at Ludwig von Mises Institute on February 18, 2017.

Who Really Rules The United States?

Submitted by Matthew Continetti via FreeBeacon.com,
How bureaucrats are fighting the voters for control of our country
Donald Trump was elected president last November by winning 306 electoral votes. He pledged to “drain the swamp” in Washington, D. C., to overturn the system of politics that had left the nation’s capital and major financial and tech centers flourishing but large swaths of the country mired in stagnation and decay. “What truly matters,” he said in his Inaugural Address, “is not which party controls our government, but whether our government is controlled by the people.”
Is it? By any historical and constitutional standard, “the people” elected Donald Trump and endorsed his program of nation-state populist reform. Yet over the last few weeks America has been in the throes of an unprecedented revolt. Not of the people against the government – that happened last year – but of the government against the people. What this says about the state of American democracy, and what it portends for the future, is incredibly disturbing.
There is, of course, the case of Michael Flynn. He made a lot of enemies inside the government during his career, suffice it to say. And when he exposed himself as vulnerable those enemies pounced. But consider the means: anonymous and possibly illegal leaks of private conversations. Yes, the conversation in question was with a foreign national. And no one doubts we spy on ambassadors. But we aren’t supposed to spy on Americans without probable cause. And we most certainly are not supposed to disclose the results of our spying in the pages of the Washington Post because it suits a partisan or personal agenda.

This post was published at Zero Hedge on Feb 17, 2017.

One Sign Germany’s Preparing for Euro’s Collapse?

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
‘It’s tradition. Long-term tradition.’
July 2011. Rep. Ron Paul (R-TX), since retired, had just asked Fed chair Ben Bernanke why central banks own gold.
And old Ben said it all came down to tradition. Tradition. Like that annual Easter egg hunt… Thanksgiving turkey… or Friday night pizza. Nothing more.
We can only conclude then that the German central bank is a highly traditional lot…

This post was published at Wall Street Examiner by Brian Maher ‘ February 18, 2017.

Merkel Says There Is A “Problem” With The Euro, Blames Mario Draghi

Two weeks ago, German finance minister Wolfgang Schauble confirmed Donald Trump’s charge that the Euro is far “too low” for Germany, but said he is unable to do anything about it and instead blamed Mario Draghi. ‘The euro exchange rate is, strictly speaking, too low for the German economy’s competitive position,’ he told Tagesspiegel on February 5. ‘When ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany’s export surplus’.’.’.’I promised then not to publicly criticise this [policy] course. But then I don’t want to be criticized for the consequences of this policy.’
Then, on Saturday, his boss German Chancellor Angela Merkel echoed her finance minister, and also admitted that the euro is indeed “too low” for Germany, but once again made clear that Berlin had no power to address this “problem” because monetary policy was set by the independent European Central Bank.
“We have at the moment in the euro zone of course a problem with the
value of the euro,” Merkel said in an unusual foray into foreign
exchange rate policy.
Merkel also confirmed that Germany benefits from not having the Deutsche Mark, whose value would be far higher, and instead piggybacks on the weakness of other European nations, implicitly confirming recurring allegations that Germany benefits from the misery of Europe’s periphery.
“The ECB has a monetary policy that is not geared to Germany, rather it is tailored (to countries) from Portugal to Slovenia or Slovakia. If we still had the (German) D-Mark it would surely have a different value than the euro does at the moment. But this is an independent monetary policy over which I have no influence as German chancellor.”

This post was published at Zero Hedge on Feb 18, 2017.