Real estate is not local: Housing markets across the US are overheating outpacing household income gains.

2017 starts with US housing markets in full mania. This recovery is largely disconnected from household wage gains and with the election results, mortgage interest rates surged making housing even more unaffordable. Now while this blog is largely focused on California and many see things through the Hollywood only lens, a large number of metro areas across the nation saw wicked price increases. This price jump has come in an environment with tight inventory, investors, and low interest rates (until the end of 2016). The fastest growing markets in terms of price gains are not in California. In fact, the top 10 metro areas with more than 1 million people are all outside of California. Will this trend continue into 2017?
The top 10 fastest growing real estate markets
In California we have insane markets like San Francisco where $1.2 million is the entry point for a crap shack. In many ways, the capitulation talk is dominant as the Dow Jones Industrial Average nears 20,000. People are itching to get a piece of the crap shack mania and don’t want to miss out on homes going from $1.2 million to $2 million. Forget about incomes, logic, quality of life, other investments, or the reality that you are buying what is an inflated poorly built property. The delusion now runs very deep.

This post was published at Doctor Housing Bubble on January 2nd, 2017.

What IF Gold has a Drop Dead Line?

In part 2 of this Weekend Report we’ll take an indepth look at gold and especially the long term view. Again, this is just for entertainment purposes only until gold can close below a very important trendline. I’ve been following this potential scenario since shortly after the US elections. Up until the elections this pattern I’m about to show you didn’t show its self, but now it’s one of the most important chart patterns for gold that I’ve posted in several years. As we discussed in part 1 , please read forward with an open mind regardless of what other information you re processing and what your current expectations are. This is an exercise in my preferred method of Technical Analysis , Chartology.
There are three daily charts we’ll look at first, which are reversal patterns that formed at a very critical spot on the long term charts.
I’m going to start with a few daily charts and then work our way back in time to see the big picture. This first chart for gold shows the H&S top which we’ve been following on the PM combo chart that I post several times a week. This H&S top is an unbalanced H&S top with two left shoulders and one right shoulder. Note how the moving averages are crossing to the downside with the 20 and 50 day moving average now having crossed below the all important 300 day moving average. In the not so distance future, if gold keeps dropping, the 150 day will cross below the 300 day ma which will be a long term sell signal.

This post was published at GoldSeek on Tuesday, 3 January 2017.

Dallas Pension Not Only “Ticking Time Bomb Ready To Explode,” Public Policy Director Warns

For months, if not years, we’ve warned that conflicted politicians and union bosses pursue a perverse set of goals in their management of pension funds, most of which have nothing to do with the application of sound financial principles. Here’s how we summarized the situation back in the summer (see “An Unsolvable Math Problem: Public Pensions Are Underfunded By As Much As $8 Trillion“):
Defined Benefit Pension Plans are, in many cases, a ponzi scheme. Current assets are used to pay current claims in full in spite of insufficient funding to pay future liabilities… classic Ponzi. But unlike wall street and corporate ponzi schemes no one goes to jail here because the establishment is complicit. Everyone from government officials to union bosses are incentivized to maintain the status quo…public employees get to sleep better at night thinking they have a “retirement plan,” public legislators get to be re-elected by union membership while pretending their states are solvent and union bosses get to keep their jobs while hiding the truth from employees.
Then, just a couple of weeks ago, CalPERS confirmed our fears when they chose to lower their discount rate by only 50bps to 7%, nearly a full point above their 6.2% projected annual returns over the next decade. Even more startling was the open admission from Richard Costigan, chairman of the CalPERS finance committee, that the decision was motivated by the board’s desire to maintain the ponzi, saying: “this is just a start…municipalities and other government agencies need some breathing room before they absorb the impact.”

This post was published at Zero Hedge on Jan 3, 2017.