New York City Developers Are Relying On A Shrinking Pool Of Buyers

Most of New York City’s largest developers are probably optimistic about the near future now that one of their own is occupying the most powerful office in the world. Bu, this very specific group of taxpayers stands to benefit immensely from several of the provisions that have appeared in the Senate or House plans: Repealing the AMT and estate taxes would allow them (and their heirs) to shave a pile of percentage points off their tax bills. And those are just two examples.
To be sure, the tax plan’s passage isn’t assured – now that Alabama Democrat Doug Jones has defeated Republican Roy Moore. With Jones expected to be seated some time after New Year’s, the time pressure facing Republicans has intensified. Because at the start of the next Congress, their already precarious two-vote majority will shrink to one. Beyond this, Republicans haven’t agreed on a final version of the bill yet, and existing differences between moderates, deficit hawks and conservatives within the party could prove insurmountable.

This post was published at Zero Hedge on Dec 13, 2017.

Watch Live: Janet Yellen’s Last FOMC Press Conference

Grab your handkerchief, it’s gonna be a tear-jerker. Having managed to get through her term as Fed Chair without a ‘crisis’, unlike her three previous colleagues, it would appear Janet Yellen has managed to jump ship at the perfect time. Will she leave her last press conference with a ‘hanging chad’ of uncertainty about extreme asset valuations, or toe-the-line for Powell that everything is awesome?

This post was published at Zero Hedge on Dec 13, 2017.

‘Replacement Demand’ from Hurricane Harvey Overhyped, Carmageddon Returns to US

Houston-area auto sales rise, but not nearly enough.
The total damage Hurricane Harvey inflicted on parts of Texas, particularly the vast Houston area, may never be fully known. In terms of vehicles, the estimates were all over the place. But one thing is known: Before the flood waters had even begun to recede, the entire industry, was salivating over that huge ‘replacement demand.’
This would come just in the nick of time, as total new vehicle sales in the US had already fallen by about 300,000 units for the year through July, despite record incentives, historically low interest rates, and muscular all-encompassing marketing. The industry’s elements on Wall Street propagated the idea that post-Harvey ‘replacement demand’ would boost auto sales in 2017, turn the year around, and possibly create another record year, with more booming sales in 2018.
The estimates I have come across at the time ranged from 300,000 vehicles at the low end to over 600,000 vehicles that would need to be replaced. Much of this replacement demand would occur over the remaining months in 2017 and early 2018. These sales would be so big that they would boost US sales overall to new highs.

This post was published at Wolf Street by Wolf Richter ‘ Dec 13, 2017.

Mark Yusko Hits a Four-Bagger

My friend Mark Yusko, founder and chief investment officer of Morgan Creek Capital Management, is a phenomenon; and when you read his third-quarter letter, excerpted in today’s Outside the Box, you’ll see what I mean. His missive (a 72-pager!), has two main parts: a ‘Letter to Fellow Investors’ and Morgan Creek’s ‘Third Quarter Market Review and Outlook.’
Now, I could subject you to the latter, but the former is a heck of a lot more fun. It’s an amazing disquisition that takes us deep into the weeds on the subjects of Isaac Newton, Yogi Berra, and Willy Wonka. As you savor Mark’s encyclopedic knowledge and obvious love of baseball (and just about everything else), you may begin to understand why he’s such an effective hedge fund manager. Energy like this is hard to top!
And of course, Mark isn’t just spouting off; he’s calling on the aforenamed greats (among others) to help us ‘solve the puzzle’ of today’s increasingly screwball market. As he says,
As we stand here today in November examining the data, Darkness did not Fall and Gravity did not Rule on the equity markets, so what do we make of these results? Has the Universal Law of Gravity (valuation) been repealed? Have the global Central Banks finally discovered Babson’s anti-gravity machine, or is QE the symbol for the new element Upsidasium?
Let’s look back over the past year and see if we can call on a few heavyweights to help us with these questions and then we’ll introduce a couple of new characters to our serial to help us solve the puzzle.

This post was published at Mauldin Economics on DECEMBER 13, 2017.

Do You Know What Is In The Tax Bill That Congress Is About To Pass?

A conference committee has been merging the tax bills that were passed by the House of Representatives and the Senate, and even though we could still see some minor changes, it looks like the major parameters of the final bill have now been agreed upon. The final bill will be known as the Tax Cuts and Jobs Act, and we are being told that it will be one of the largest tax cuts in U. S. history. Unfortunately, the impact on our tax bills will be relatively minor, but at least it is a step in the right direction. The following summary of the major provisions in the final bill comes from AOL…
A less generous corporate rate cut: Republicans may cut the corporate rate to 21% from the current federal rate of 35%, instead of the 20% proposed in both the house and Senate bills. The new rate would start in 2018. A lower top individual tax rate: The top individual bracket would drop to 37% instead of the 38.5% proposed in the Senate bill. It would still be down from the current 39.6%. Keep the estate tax, but raise the threshold to qualify: Instead of phasing out the estate tax over time, like the House bill, the compromise bill would instead simply increase the threshold for an estate to qualify – from $5.6 million to around $11 million. That aligns with the Senate bill. Repeal the corporate alternative minimum tax (AMT): The corporate AMT in the Senate bill was a sore spot for many companies because it would have negated the effects of many popular deductions and credits, like the research and development credit.

This post was published at The Economic Collapse Blog on December 13th, 2017.

FOMC Hikes Rates As Expected: Expects 3 Hikes, Faster Growth As Two Dissent

With a 98.3% probability heading in, there was really no doubt the most-telegraphed rate-hike ever would occur, but all eyes are on the dots (rate trajectory shows 3 hikes in 2018), inflation outlook (unchanged), and growth outlook (faster growth in 2018), and lowered unemployment outlook to below 4%. The Fed also plans to increase its balance sheet run off to $20 billion in January.
*FED RAISES RATES BY QUARTER POINT, STILL SEES THREE 2018 HIKES *FED SEES FASTER 2018 GROWTH, LABOR MARKET STAYING `STRONG’ *FED: MONTHLY B/SHEET RUNOFF TO RISE TO $20B IN JAN. AS PLANNED The dissents by Evans and Kashkari are significant as they send the signal that there is a significant fraction of the FOMC that would like to put off additional rate hikes until inflation is moving back closer to 2%. You could expect additional dissents in March if the FOMC goes ahead with a hike then, unless inflation rebounds by then.
On the other hand, the median target “dot” for 2020 rose to 3.063% vs 2.875% in September; suggesting even further tightening in store.
The Fed’s forecasts improved for growth and unemployment, while keeping inflation unchanged:

This post was published at Zero Hedge on Dec 13, 2017.

Yellen’s Big Goodbye (And What She’s Leaving Behind)

The past three Fed Chairs before Yellen all had their own crisis to deal with.
Volcker had the disaster of the early 1980’s as he struggled to tame inflation with double digit interest rates. That helped contribute to the Latin American debt crisis, and the subsequent global bear markets in stocks.
He handed over the reins to Greenspan in the summer of ’87 and within months, the new Fed Chairman faced the largest stock market crash since the 1920’s. That trial by fire was invaluable for Greenspan, as he faced a second crisis when the DotCom bubble burst at the turn of the century.
His successor, Ben Bernanke also did not escape without a record breaking financial panic when the real estate collapse hit the global economy especially hard in 2007.
But Yellen? Nothing. Nada. She has presided over the least volatile, most steady, market rally of the past century. Was she lucky? Or was this the result of smart policy decisions? I tend to attribute it more to luck, but it’s tough to argue that she made any large mistakes. Sure you might quibble about the rate of interest rate increases. And her critics will argue that economic growth, and more importantly, wage increases have been especially anemic under her watch, but to a large degree, those variables are out of her hands.

This post was published at Zero Hedge on Dec 13, 2017.

2 Charts That Might Define the Fed’s Jerome Powell Era

In September, we proposed a theory of the Fed and suggested that the FOMC will soon worry mostly about financial imbalances without much concern for recession risks. We reached that conclusion by simply weighing the reputational pitfalls faced by the economists on the committee, but now we’ll add more meat to our argument, using financial flows data released last week. We’ve created two charts, beginning with a look at cumulative, inflation-adjusted asset gains during the last seven business cycles:

According to the way that the Fed defines its policy approach, our first chart stamps a giant ‘Mission Accomplished’ on the unconventional policies of recent years. Recall that policy makers explained their actions with reference to the portfolio balance channel, meaning they were deliberately enticing investors to buy riskier assets than they would otherwise hold. Policy makers hoped to push asset prices higher, and they seem to have succeeded, notwithstanding the usual debates about how much of the price gains should be attributed to central bankers. (See one of our contributions here and a couple of other papers here and here.) But whatever the impetus for assets to rise, it’s obvious that they responded. In fact, judging by the data shown in the chart, policy makers could have checked the higher-asset-prices box long ago, and with a King Size Sharpie.

This post was published at FinancialSense on 12/13/2017.

Italian Bonds, Stocks Tumble On March Election Report

Two days after Prime Minister Paolo Gentiloni’s one-year anniversary of taking the country’s top job, Italy’s political parties have reached an agreement on when next year’s election will be held, according to Italian media reports, with the news prompting a selloff across Italian assets. According to local press, President Sergio Mattarella will dissolve parliament this month and set a March 4 election date.
The date has not yet been formally confirmed, but according to Repubblica, Italian President Sergio Mattarella – the only person who can call an election – and Italy’s main political parties have agreed on the date for Italy’s next general election. The vote has to be held before May 20th, 2018, The Local notes.

This post was published at Zero Hedge on Dec 13, 2017.

Watch Live: Rosenstein Takes The Hot Seat As Republican Fury Over FBI Bias Heats Up

Moments from now Deputy Attorney General Rod Rosenstein, who has the unfortunate role of overseeing Special Counsel Mueller’s Russia investigation, will take the hot seat before the House Judiciary Committee to get grilled by Republicans on what increasingly appears to be a hopelessly conflicted FBI.
As we’ve pointed out repeatedly over the past week (see here for the latest: “Trump Should Go F Himself” – Texts Leak From FBI Agents On Russia Probe, Hillary Emails Investigation), Mueller’s lead FBI agent, Peter Strzok, was completely exposed as a political hack after anti-Trump text messages between he and his mistress were revealed. The text messages allegedly resulted in his sudden dismissal back in August even though they were not revealed to the public until recently.

This post was published at Zero Hedge on Dec 13, 2017.

“You’re Fired… Again”: Omarosa Is Leaving The White House

One of Trump’s oldest familiars, Senior White House aide Omarosa Manigault Newman who is much more famous for being the former star of the initial season of “The Apprentice” – as well as a longtime supporter of President Trump – is leaving the White House next month. Her resignation will be effective Jan. 20, press secretary Sarah Huckabee Sanders told The Associated Press.
Technically, Manigault Newman serves as director of communications for the White House Office of Public Liaison, although the Trump aide and long-time supporter was better known for her role on the first season of “The Apprentice.” She was famous enough to go by one name: Omarosa.

This post was published at Zero Hedge on Dec 13, 2017.

US Stocks, Bonds, and Real Estate Most Expensive in History

After seeing the tax reform inspired to jump in small business optimism from the NFIB, today the Duke CFO survey optimism index rose the to the best level since June 2004. Also, it was driven by tax reform. This is though coming with building inflation pressures as the survey ‘also finds the difficulty that companies are having hiring and retaining qualified employees is at a 20 yr high, and that in part will lead to higher wages.’ The survey said CFO’s expect ‘median wage growth of about 3% over the next 12 months.’ Hopefully, higher productivity can offset this as opposed to companies passing that on in higher prices. There is also healthcare inflation that is a worry as expectations are for an 8% rise next year. ‘Nearly half of US companies indicate that the cost of employee health benefits crowds out their ability to spend on long-term corporate investment.’ Like I said before, embrace lower corporate taxes but don’t assume all else equal.
There was a slight ebbing of bullish enthusiasm according to Investors Intelligence. Bulls fell to 61.9 from 64.2 while Bears ticked up a hair to 15.2 from 15.1. The spread between the two of 46.7 is a 3 week low but is just 3.3 pts from a 30 yr high. Since bulls got back to 60 on October 11th, the Value Line Equal Weighted Geometric index is up 2.2%. A lot of tax reform generated optimism, along with better global growth will meet faster monetary tightening next year. The former certainly won that battle in 2017 also helped by $2 Trillion of ECB and BoJ largesse. That largesse changes dramatically in 2018 but markets are clearly betting on the soft landing scenario, aka a free lunch.

This post was published at FinancialSense on 12/13/2017.

The Running Of The Japan Bears

We’ve done a National Geographic – style deep dive into the world of the Japan bears, reading the scare stories about demographic decline, old people dying alone, underrepresentation of minorities on corporate boards, and other anecdotal ‘evidence’ of stagnant economic prospects. We tried to find the best examples of Japan bearishness: the scariest pieces of evidence we could find, stuff that portrays the world’s third largest economy as a zombie death trap for equity investors.
The two most established predictors of future equity returns are value and momentum. Academic research says buy stocks that are cheap and improving, at the fulcrum when other investors are starting to recognize that they are undervalued.
We believe Japanese equities today are at the fulcrum. Japan is the cheapest developed market in the world, and sentiment is shifting as other investors recognize the undervaluation. Japan bears are on the run.
Renowned investor and manager of the Yale endowment, David Swensen, recently highlighted his newfound enthusiasm for Japanese markets: ‘There are some very interesting things going in Japan, one of the places I’m most optimistic about. It seems like capitalism might actually be taking root, making progress there.’
Japan just hit its seventh consecutive quarter of positive GDP growth for its longest streak in 16 years. As the Wall Street Journal noted in November, ‘Japan’s economy has been remarkably consistent since the beginning of 2016, growing at an annual rate between 0.9% and 2.6% every quarter.’

This post was published at Zero Hedge on Dec 13, 2017.

Bank Of England Warns The UK: ‘Economic Collapse’ If UK Keeps Borrowing Money

The Bank of England is putting the United Kingdom on alert. Should the UK keep borrowing money, there will be a ‘Venezuela-style’ economic collapse that will devastate normal citizens.
A senior Bank official has warned that the UK’s economy would be unlikely to survive borrowing any more cash. Richard Sharp, a member of the Bank’s Financial Stability Committee, claimed an extra 1trillion had already been borrowed since the 2008 financial crisis, and any more could see the economy collapse in the same quick manner that Venezuela’s did.
The Times reported on the stark warning mere days after Philip Hammond announced a 25 billion spending spree in the budget.

This post was published at shtfplan on December 13th, 2017.

The US Government Is Spending Money Like a Drunken Sailor

The US federal government is spending money like a drunken sailor.
And that’s probably unfair to drunken sailors.
In November alone, the US government reported a $139 billion deficit.
Pause for just a moment and think about what that actually means. Last month, the government spent $139 billion (billion – with a B) more than the revenue it took in. In other words, it put $139 billion on a credit card.
In one month.
Of course, this is nothing new. In November 2016, the feds reported a $137 billion deficit.
Economists polled by Reuters projected a $134 billion deficit last month. So, the government actually managed to spend $5 billion more than expected. But what’s a few billion dollars between friends, right?
Through the fiscal year to date, the US government has run up a $202 billion deficit, compared to $183 billion in the comparable period for fiscal 2017. You might be thinking, oh, well that’s not too bad for the whole year. But you have to remember the fiscal year for the US government starts in October. So that’s $202 billion in two months.

This post was published at Schiffgold on DECEMBER 13, 2017.

Stocks Rebound From “Bama Shock”, All Eyes On Yellen’s Last Rate Hike

After an early slide last night following the stunning news that Doug Jones had defeated Republican Roy Moore in the Alabama special election, becoming the first Democratic senator from Alabama in a quarter century and reducing the GOP’s Senate majority to the absolute minimum 51-49, US equity futures have quickly rebounded and are once again in the green with the S&P index set for another record high, as European stocks ease slightly, and Asian stocks gain ahead of today’s Fed rate hike and US CPI print.
‘The big issue now is whether Republicans will push through their tax bill before Christmas,’ said Sue Trinh, head of Asia foreign-exchange strategy at RBC Capital Markets in Hong Kong. ‘And more broadly, U. S. dollar bulls will be more worried that this marks a Democratic revival into 2018 mid-term Congressional elections.’
The negative sentiment faded quick, however, because according to Bloomberg, despite the loss of a Senate seat, it probably won’t affect the expected vote on business-friendly tax cuts, however, as the winner won’t be certified until late December.

This post was published at Zero Hedge on Dec 13, 2017.

The best tax incentive in the world

In a move almost destined to prove that laws and policies have absolutely zero meaning, the European Union released a list of ‘tax havens’ last week… with a massive, giant, highly conspicuous omission.
The blacklist contains the names of the usual suspects – Panama, United Arab Emirates, etc., along with a few additions like Mongolia and Marshall Islands.
But, again, conspicuously missing from this list is far and away the biggest tax haven in the world – none other than the United States of America.
It’s hard for US taxpayers to imagine the Land of the Free being a tax haven.
Americans are taxed heavily on ALL of their income, no matter where in the world they live.
Americans are taxed when they earn, when they save, when they spend and when they die.

This post was published at Sovereign Man on December 13, 2017.

In Stunning Victory, Democrat Doug Jones Wins Alabama Senate Seat; Trump Responds: “A Win Is A Win…”

Update: President Trump has reacted to Doug Jones’ victory:
Congratulations to Doug Jones on a hard fought victory. The write-in votes played a very big factor, but a win is a win. The people of Alabama are great, and the Republicans will have another shot at this seat in a very short period of time. It never ends!
— Donald J. Trump (@realDonaldTrump) December 13, 2017

* * *
Update: US equity futures are sinking after Democrat Doug Jones unexpectedly wins the Alabama Senate special election against Roy Moore, the state’s Republican former chief justice who was dogged throughout the campaign by sexual misconduct accusations.

This post was published at Zero Hedge on Dec 13, 2017.

Roy Moore Refuses To Concede: “We’ve Got To Go By The Rules”

With 100% of precincts reporting, Doug Jones has officially defeated Republican Roy Moore in what was undoubtedly one of the most controversial special elections in modern history. But unsurprisingly, given the obstinance he displayed by steadfastly refusing to step aside following allegations of inappropriate sexual contact with teenagers, managing to infurate conservative commentator Matt Drudge in the process…
… Moore is taking it one final step too far, and is refusing to concede.
In a late-night speech to his supporters (not a concession speech, mind you), Moore said he realizes that ‘when the vote is that close, it’s not over,’ later saying that ‘it’s going to take some time’ before the final outcome is determined.
Moore suggested that the state’s ‘recount provision’ – which allows for a recount when the margin between the two leading candidates is less than half a percentage point – could still tilt the race in his favor.
‘We’ve still got to go by the rules about this recount provision. The Secretary of State has explained it to us, and we’re expecting that reporters will go up there and find out what’s going on.’

This post was published at Zero Hedge on Dec 13, 2017.