by ilene - October 25th, 2014 4:15 pm
Courtesy of Mish.
China eased purchase restrictions last month ending its four-year campaign to contain home prices. And what a ridiculous campaign it was. Prices are down less than 1% this month and less then 1% year-over-year.
Bloomberg reports China Home-Price Drop Spreads as Easing Doesn’t Halt Fall.
Prices dropped in 69 of the 70 cities in September from August, the National Bureau of Statistics said in a statement today, the most since January 2011 when the government changed the way it compiles the data. They fell in 68 cities in August.
The central bank on Sept. 30 eased mortgage rules for homebuyers that have paid off existing loans, reversing course after a four-year campaign to contain home prices as Premier Li Keqiang seeks to prevent economic growth from drifting too far below the government’s 7.5 percent annual target. Home sales slumped 11 percent in the first nine months of this year.
Developers will keep prices attractive as they open more projects toward the end of the year to meet sales targets, boosting supply and increasing competition, Ping An Securities Co. Shenzhen-based analyst Yang Kan wrote in an Oct. 14 report.
New-home prices fell 0.7 percent from August in Beijing and 0.9 percent in Shanghai, according to the government. The port city of Xiamen in southern Fujian province was the only city where prices didn’t fall, remaining unchanged from the previous month.
Prices in Shanghai fell 0.8 percent from a year earlier, the first annual decline since December 2012, compared to a 17.5 percent jump in January this year. Hangzhou, the capital of southeastern Zhejiang province, had the biggest decline among all cities, with 7.6 percent.
The average new-home price in 100 cities tracked by SouFun Holdings Ltd. fell 0.9 percent in September from August, dropping for the fifth consecutive month. The price rose 1.1 percent from a year earlier, narrowing for a ninth month in a row, China’s biggest real estate website owner said.
The People’s Bank of China’s new rules give homeowners who have paid off their mortgages and want a second property the same advantages as first-time buyers, including a 30 percent minimum down payment, compared to at least 60 percent previously, and interest-rate discounts of as much as 30 off the central
by ilene - October 25th, 2014 4:11 pm
Chris Kimble likes the look of the XLE chart. When he wrote this article XLE was trading at $86.07. Now it's a bit cheaper.
Courtesy of Chris Kimble
CLICK ON CHART TO ENLARGE
This decline took XLE back to rising support off the 2010 lows and created a large bullish wick at this support line. The decline has also driven momentum to oversold levels seldom seen in the past few years.
Full Disclosure - Premium members picked up XLE last week when the S&P was creating bullish wicks. At the same time TLT created a monster bearish wick. See massive reversal wicks that took place a week ago today (see here)
by ilene - October 25th, 2014 3:59 pm
CLICK ON CHART TO ENLARGE
The Power of the Pattern highlighted several months ago that Amazon looked to have created a top at the same time the new drone was introduced on 60-Minutes at (A) above. As mentioned above, when the Drone was being introduced, AMZN was hitting channel resistance and a long-term Fibonacci extension level. While these two resistance points were coming into play, it also created a Doji Star topping pattern.
Lets now take a current look at what AMZN is doing. The above weekly chart reflects a break below a 5-year support line has taken place. This week it kissed the underside of this channel and failed to climb back into it, as it created a rather large bearish engulfing pattern at (1) above.
What does all of this suggest for Amazon going forward? I think Jeff's face says it all, as price action suggests lower prices are to come. This price action could be very important for the NDX 100, due to cap weighting!
by ilene - October 25th, 2014 2:54 pm
Via Phil, Health Care in America
by ilene - October 25th, 2014 2:10 am
"American madness: a teenager is allowed to receive a rifle as a birthday gift," NYU professor Nouriel Roubini tweeted. "Sick sick country."
Roubini's words come hours after a gunman killed one person and injured several others at Marysville-Pilchuck High School near Seattle, Washington.
The gunman was later identified as Jaylen Fryberg, a freshman at the school. Fryberg, who shot and killed himself, reportedly had access to firearms, and an Instagram photo suggested that he had recently received a rifle as a birthday gift from his parents.
Much of the media attention has shifted to the mental state of Fryberg, who reportedly had been demonstrating emotional distress.
Roubini, however, argued that the focus should rather be about how easily accessible firearms are to people who may be mentally unstable.
Sadly, this is not a new argument. Lax US gun control laws have been tied to numerous tragic school shootings in recent history.
While highly publicized mass shootings are often expected to spur legislative change, little seems to actually get done.
Here are Roubini's tweets:
by ilene - October 25th, 2014 1:41 am
Courtesy of Sober Look
Here is a quick follow-up to the discussion on the looming rental crisis in the US. The gap in growth rates of rental costs vs. wages continues to widen. This divergence is creating a drag on the GDP growth by suppressing household formation, consumer spending, and labor mobility. Over time this trend will also increase homelessness.
Sign up for Sober Look's daily newsletter called the Daily Shot. It's a quick graphical summary of topics covered here and on Twitter (see overview).
by ilene - October 24th, 2014 11:42 pm
Courtesy of The Automatic Earth.
Europe is fast turning into a freak comedy show. Very fast. Or maybe we should say it’s always been one, and it’s just that the Larry, Curly and Moe moves are only now coming out in droves. Or maybe, what do I know, we’re just starting to understand how much talent for farce and slapstick the boys from Brussels have always had.
Just Wednesday, I wrote in 40% of Eurozone Banks Are In Bad Shape about a Reuters report based on Spanish source Efe, that claimed 12 banks would fail the ongoing stress tests, results of which are due this Sunday at 12pm CET (their daylight savings time will be over by then). I noted how the indignation expressed over the leaked data by Brussels seemed odd, since in 2014 everything leaks.
Then, I cited Pimco’s global banking specialist, Philippe Bodereau, saying he thought 18 banks would fail, and moreover, almost a third would narrowly pass. Something that according to several sources was important than who actually failed. Because all banks have had many many months to shore up their capital positions, and if they’re now still below or just above the dividing line today, that’s suspect at best.
130 banks were supposed to have been tested, and ‘almost a third’ of that is some number north of 40. Add the 12 to 18 sure failures, and you’re north of 40%.
But today Bloomberg reports on a new draft they have obtained, which raises the numbers even further.
25 lenders in the European Central Bank’s euro-area bank health check are set to fail the regulator’s Comprehensive Assessment, according to a draft communique of the final results, seen by Bloomberg News. 105 banks are shown passing the review, according to the draft statement. Of the lenders that failed, about 10 will still face capital shortfalls they need to plug, according to a person with knowledge of the matter, who asked not to be identified…
by ilene - October 24th, 2014 7:22 pm
Courtesy of Lee Adler of the Wall Street Examiner
There seems to be lots of confusion about today’s Commerce Department release on new home sales. The report showed that new home sales were at a seasonally adjusted annual rate of 467,000. Part of the confusions stems from the fact that that is a completely bogus, made up, fictitious number in the first place. Seasonal adjustments are arbitrary attempts to create a smooth curve and they aren’t finalized until years after the fact. In addition, annualizing a single month is insane to begin with. Analysts are trying to make sense out of fiction. In the meantime, the headline number missed the Wall Street conomist guesspectation of 475,000.
The new home sales data has the benefit of being contract data reported just a few weeks after the survey date. It’s the closest thing we have to an official real time measure of the state of the housing market. All of the widely followed existing home sales data suffer from severe lag and the error is compounded by extreme smoothing in worthless measures like Case Shiller. By the time of the Case Shiller release, it represents an idealized market from deals that went under contract 5 months ago, not the market as it is today. The Commerce Department, to its credit, at least measures current contracts, and it does make available the actual, as reported, unsmoothed, unmanipulated data. The mainstream media, to its discredit, completely ignores the actual monthly data and only reports the made up, seasonally adjusted crap.
That being said, the actual data is also severely deficient, primarily because the survey sample is an infinitesimal, and therefore unreliable, slice of the market. As more data comes in during subsequent months, even the unmanipulated raw data is subject to large revisions. This month, the number for August was revised down by a whopping 10%. The July number suffered the same fate.
The data also suffers from the fact that the survey does not take into account contract cancellations. When the market is falling apart, cancellations can be epic. But they’re not subtracted from previous month’s data. We don’t see the impact until sales actually go off the cliff.
by ilene - October 24th, 2014 5:13 pm
Courtesy of Lance Roberts of STA Wealth Management,
Over the last few weeks, the markets have seen wild vacillations as stocks plunged and then surged on a massive short-squeeze in the most beaten up sectors of energy and small-mid capitalization companies. While "Ebola" fears filled mainstream headlines the other driver behind the sell-off, and then marked recovery, was a variety of rhetoric surrounding the last vestiges of the current quantitative easing program by the Fed. As I have shown many times in the past, there is a high degree of correlation between the Fed's liquidity programs and the advance in the markets.
This weekend's reading list is a compilation of views on whether the Fed will end the current QE program at next weeks FOMC meeting or not. In the past, the extraction of their monetary interventions has led to market declines that were halted only once a new program was started. Are the markets, and the economy, finally strong enough to stand on their own? Or, will the end of the current QE program be the start of a bigger correction?
Here is something to consider if you believe that the Fed will end their monetary purchases next week. The chart below shows the recent sell-off and rebound matched to the Fed's current monetary interventions.
What will happen when the Fed is absent altogether with just one round of purchases to go? ($1 billion on Monday)
1) Fed Official: End QE On Schedule by Robin Harding via Financial Times
"The comments by Mr Rosengren, an advocate for strong monetary stimulus in recent years, suggest there is limited support for a plan put forward by James Bullard, president of the St Louis Fed, to keep buying assets at a pace of $15bn a month until December.Mr Rosengren said Fed asset purchases have achieved their stated goal, the jobs report for September is already in and his economic forecasts have not changed. 'There has been substantial improvement in labour markets,' he said. 'As a result I would be pretty comfortable [ending purchases] at the end of the month.'”
by ilene - October 24th, 2014 4:46 pm
Courtesy of Lee Adler of the Wall Street Examiner
The median price of new homes sold in the US in September fell to $259,000 from $286,800 in August. That’s an extraordinary drop. It left prices down 4% on a year to year basis. Does that mean that 3 years of breakneck housing inflation have come to an end? Probably not. At least we cannot conclude that from this data.
That’s because the change in median price was due to a huge change in the mix of sales. In August, 48% of sales were in the $300,000 and up range. In September 2013, that ratio was 42%. But last month, sales of $300,000 and above were just 37% of sales. The median price dropped because there were more sales of less expensive homes than is typical. It’s just one month of data, so we’ll have to see if the trend persists. Price gains in existing home sales have moderated in the past year, but there’s been no sign of outright decline yet.
Median New Home Sales Prices Drop- Click to enlarge
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