by ilene - May 26th, 2015 6:29 pm
Courtesy of Mish.
To highlight the enormous and growing income inequality issue, please consider California Dreaming: Record $500 Million Tag on L.A. Home.
Nile Niami, a film producer and speculative residential developer, is pouring concrete in L.A.’s Bel Air neighborhood for a compound with a 74,000-square-foot (6,900-square-meter) main residence and three smaller homes, according to city records. The project, which will take at least 20 more months to complete, will exceed 100,000 square feet, including a 5,000-square-foot master bedroom, a 30-car garage and a “Monaco-style casino,” Niami said.
“The house will have almost every amenity available in the world,” he wrote in an e-mail. “The asking price will be $500 million.”
The priciest home ever sold was a $221 million London penthouse purchased in 2011, according to Christie’s. The most expensive properties on the market include a $425 million estate in France’s Cote d’Azur, a $400 million penthouse in Monaco and a $365 million London manor.
Whether Niami can get more than double the previous record for his mansion remains to be seen.
Nile Niami House at 944 Airole Way stands in Bel Air, California, U.S., on Monday, May 18, 2015.
Photographer: David Paul Morris/Bloomberg
Questions of the Day
- What is the estimated profit on this monstrosity?
- What are the construction carrying costs if this thing goes unsold?
- What about insurance?
- Who wants to lay $500 million to live in LA?
- How many people in the world can afford a half-billion dollar home?
- Does anyone who can afford such a home, want one?
- Could a single California mudslide wipe the entire property off the map?
I don’t have any answers, I am just asking.
Mike “Mish” Shedlock
by ilene - May 26th, 2015 4:45 pm
Courtesy of James Kunstler
America takes pause on a big holiday weekend requiring little in the way of real devotions beyond the barbeque deck with two profoundly stupid movie entertainments that epitomize our estrangement from the troubles of the present day.
First there’s Mad Max: Fury Road, which depicts the collapse of civilization as a monster car rally. They managed to get it exactly wrong. The present is the monster car show. Houston. Los Angeles. New Jersey, Beijing, Mumbai, etc. In the future, there will be no cars, gasoline-powered, electric, driverless, or otherwise. Mad Max: Fury Road is actually a perverse exercise in nostalgia, as if we’re going to miss being a nation of savages in the driver’s seat, acting out an endless and pointless competition for our little place on the highway.
Another theme running through both films is the idea that girls can be what boys used to be, that it’s “their turn” to be masters-of-the-universe, that men are past their sell-by date and only exist to defile and humiliate females. That this message is really only a mendacious effort to rake in more money by enlarging the teen “audience share” for the reigning wishful fantasy du jour is surely lost on the culture commentators, who are so busy these days celebrating the triumph and wonder of…
by ilene - May 26th, 2015 3:50 pm
Courtesy of Wade of Investing Cafe
I believe it was Bill Clinton who said, “If you don’t toot your horn, it usually stays untooted.” Good advice, but keeping his horn concealed may have helped his political and personal career in a few instances too.
In sticking with the horn metaphor, I will toot my own horn as it relates to my skepticism about bond behemoth PIMCO’s long failed attempt to enter the equity fund market. Since 2009, watching PIMCO’s efforts of gaining credibility in stock investing has been like observing a slow motion train wreck.
Although, PIMCO may continue its flailing struggles in its so-called equity offerings, the proverbial nail in the coffin was announced last week when PIMCO’s chief investment officer of global equities, Virginie Maisonneuve, left the bond giant after only a year. This departure adds to the list of high profile departures, including Bill Gross, Mohamed El-Erian, Paul McCulley, Neel Kashkari, and others.
The Wall Street Journal states PIMCO only has $3 billion (0.2%) of the firms $1.6 trillion of assets remaining in actively traded stock funds. PIMCO claims to have more assets in equity funds managed by Research Affiliates but good luck finding any stocks in these portfolios – for example, Morningstar lists 0 Stock Holdings and 698 Bond Holdings in its PIMCO RAE Fundamental Plus EMG Stock Fund. And please explain to me how this is a stock fund?
Regardless, any way you look at it PIMCO continues to flounder in its stock fund efforts. If you would like to read more about my victory lap, please reference my previous February 2013 PIMCO article, Beware: El-Erian & Gross Selling Buicks…Not Chevys.
Here is a partial excerpt:
PIMCO Smoke & Mirrors: Stock Funds with NO Stocks
Just when I thought I had seen it all, I came across PIMCO’s Equity-Related funds. Never in my career have I seen “equity” mutual funds that invest solely in “bonds.” Well, apparently PIMCO has somehow creatively figured out how to create stock funds without investing in stocks. I guess that is one strategy for a bond-centric company of getting into the equity fund market? This is either ingenious…
by ilene - May 26th, 2015 3:49 pm
Courtesy of Mish.
Two more regional manufacturing reports came out today, from Dallas and Richmond.
The Dallas region was the weakest in six years thanks to oil. For details, please see Dallas Fed Manufacturing Index Collapses: Lowest Production Reading in 6 Years, Orders Contract 7th Month, New Orders 5th Month.
- Some regions use the term "order backlog" others "unfilled orders"
- Some regions had a production index component, others not.
- Richmond discussed prices paid and received on an annualized basis, not an index component that could be directly compared to the others.
- The Dallas and Kansas City regions were both hammered by collapse in oil prices and oil related services.
- Order Backlog was negative across the board.
- Employee Workweek was down in four of five regions.
- Prices Received was down in three of four regions.
In aggregate, these are weak to very weak reports….
Dallas Fed Manufacturing Index Collapses: Lowest Production Reading in 6 Years, Orders Contract 7th Month, New Orders 5th Month
by ilene - May 26th, 2015 1:13 pm
Courtesy of Mish.
Dallas Fed Manufacturing Index Plunges Below Any Economist’s Estimate
Fed manufacturing surveys remain weak at best. Today the Dallas Fed Business Activity Index fell to negative 20.8, well below the bottom end of any Bloomberg Estimate.
Contraction in the energy sector continues to pull the Dallas Fed report into deeply negative ground, to a headline minus 20.8 vs minus 16.0 and minus 17.4 in the prior two months. Production shows a turn for the worse, at minus 13.5 vs April’s minus 4.7, as does employment, at minus 8.2 vs plus 1.8. New orders remain deeply negative, at minus 14.1 vs minus 14.0. Prices paid also fell further though the decline is easing, to minus 1.7 from minus 11.2.
The regional Fed reports all point to another slow month for the manufacturing sector which is struggling with energy contraction, especially evident in this report, as well as weakness in exports.
Dallas Fed Production Index Lowest in 6 Years
Orders Contract 7th Month, New Orders 5th Month
For additional details, let’s dive into the Dallas Fed Texas Manufacturing Outlook Survey.
Texas factory activity declined again in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell to -13.5, its lowest reading in six years.
Other measures of current manufacturing activity reflected continued contraction in May. The new orders index held steady at -14.1, and the growth rate of orders index held steady at -15.2, marking the fifth and seventh negative reading in a row for these indexes. The capacity utilization index edged down to -11.6. The shipments index fell nearly 8 points to -13.2, with more than 30 percent of firms noting lower shipment volumes in May than in April.
Perceptions of broader business conditions worsened further this month. The general business activity index fell to -20.8 in May, its lowest reading since June 2009. The company outlook index moved down to -10.5, also hitting a low not seen since summer 2009.
Labor market indicators reflected employment declines and shorter workweeks. The May employment index declined 10 points to -8.2, after rebounding slightly above zero last month. Twelve percent of firms reported net hiring, compared with 21 percent reporting net layoffs. The hours worked index fell from -5 to -11.6….
by ilene - May 26th, 2015 1:12 pm
Courtesy of Charles Hugh-Smith of OfTwoMinds
by ilene - May 26th, 2015 12:43 pm
Courtesy of Mish.
New Home Sales Rebound
Last month, new home sales fell a very steep 11.4 percent to a 481,000 annual rate. Given the volatile nature of this series one might have expected a bounce in May and sure enough we got one, albeit not enough to wipe out April's dismal performance.
May new home sales came in at an annualized rate of 517,000 units, stronger than the Bloomberg Consensus Estimate of 509,000 but pretty much in the middle of the consensus range of 485,000 to 540,000.
New home sales bounced back solidly in April, up 6.8 percent to a 517,000 annual rate that is on the high side of Econoday expectations. Strength is centered in the South which is the largest and important housing region and where sales rose 5.8 percent, this however fails to reverse the region's 11.8 percent drop in the prior month.
Supply rose slightly in the month, to 205,000 new homes on the market, but supply relative to sales fell to 4.8 months from 5.1 month. Low supply should encourage builders to bring more homes on the market but at the same time low supply hurts current sales. Price readings are mostly favorable led by a 4.1 percent rise in the median price to $297,300 for a strong 8.3 percent year-on-year gain.
Readings in this report are always volatile month-to-month but the gains for April underscore the recent surge in housing starts & permits and help offset last week's disappointing weakness in existing home sales. The housing sector is still trying to get off the ground but indications, taken together, are improving.
New Home Sales
The above chart should help put the rebound of new home sales into proper perspective.
Mike "Mish" Shedlock
by ilene - May 26th, 2015 11:24 am
Financial Markets and Economy
Iraq is taking OPEC's strategy to defend its share of the global oil market to a new level.
The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout. The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.
Through a quirk in state term limits combined with a terrible midterm election, the Nevada legislature has been taken over by amateurs and extremists. The legislature is now debating whether to dismantle the Nevada public employee pension system (PERS), a system that has gotten consistently high marks for transparency, responsibility and stewardship.
This attack on retirement benefits follows a very familiar pattern of fabricating data to destroy retirements that work and that people really like. It’s the same nonsense and lies used to destroy private pensions two decades ago, but this time it’s being done as part of a partisan wet dream of “limited government.” It’s a strategy as American as fast food and crumbling infrastructure.
After 17 months of civil war spanning a swathe of South Sudan bigger than Syria, President Salva Kiir’s survival may hinge on the fate of a single oil field.
Paloch in Upper Nile state, the only region still pumping crude in a nation with sub-Saharan Africa’s third-largest reserves, has re-emerged as the rebels’ prime target.
by ilene - May 26th, 2015 10:50 am
Courtesy of Pam Martens.
Troy Rohrbaugh, Head of Foreign Exchange Trading at JPMorgan Chase, Chairs the New York Fed’s Best Practices Group for Foreign Exchange Trading. JPMorgan Chase Just Pleaded Guilty to a Felony for Conspiring to Rig Foreign Exchange Trading.
As the U.S. Department of Labor deliberates giving JPMorgan Chase a waiver to continue business as usual after it pleaded guilty to a felony charge for engaging in a multi-bank conspiracy to rig foreign currency trading, a letter the bank sent to its foreign currency customers should become Exhibit A in the deliberations. The letter effectively tells JPMorgan’s customers, here’s how we’re going to continue to rip your face off.
Two sections of the letter stand out in particular. One section reads:
“As a market maker that manages a portfolio of positions for multiple counterparties’ competing interests, as well as JPMorgan’s own interests, JPMorgan acts as principal and may trade prior to or alongside a counterparty’s transaction to execute transactions for JPMorgan…” (Italic emphasis added.)
Most of the general public believes that proprietary trading (trading for the house) was outlawed by the Volcker Rule under the Dodd-Frank financial reform legislation. Most of the public believes that trading ahead of your client’s order is called front-running and is illegal. On both points, the public is dead wrong. First, the Volcker Rule has yet to be implemented. Its effective date continues to be pushed forward. Secondly, foreign exchange spot trading between big banks and institutions (like the folks who manage your pension money) is an unregulated market left to the non-legally-binding “best practice” agreements by the biggest banks. As we reported on May 14, the Chair of the group drawing up these best practices is Troy Rohrbaugh, the head of Foreign Exchange trading at JPMorgan Chase since 2005 – including the periods for which the bank has been charged with felony conduct.
Making this best practice committee even more specious is that it is sponsored by the Federal Reserve Bank of New York, part of the Federal Reserve which just fined JPMorgan Chase $342 million for lacking “adequate Firm-wide governance, risk management, compliance and audit policies and procedures to ensure that the Firm’s Covered FX [foreign exchange trading] Activities conducted…
by ilene - May 25th, 2015 3:12 pm
Financial Markets and Economy
There’s no denying the effect that fees have on investments. While the difference between a fee of 0.5% and 0.25% looks tiny on paper, apply it to an index fund over a quarter-century or more of investing and let the effects of compounding work on it and you can easily see a worker winding up with tens of thousands of dollars less on account at retirement.
So it’s easy to see how and why the case protects workers and retirement savers.
The potential problems from the ruling are much harder to see, but they’re just beneath the surface now and likely to surface as the effects of the ruling play out.
7 Lies Investors Tell Themselves (Market Watch)
After six years of rising U.S. stock prices, investors are no doubt richer. But they may be thinking a little less clearly.
“In a bull market, there’s a tendency for investors to think they’re brilliant,” says Brad Barber, a finance professor at the University of California, Davis, and an expert in behavioral finance. Indeed, as share prices climb, investors’ confidence grows and they start making all kinds of dubious claims.
Here are seven comments you have probably heard from friends—and that may have escaped your own lips.
Here's your complete preview of this week's big economic events (Business Insider)
It's a short week in America as everyone takes Monday off to celebrate Memorial Day and enjoy some barbecue with their friends and family.
Surely, they'll also be