Miami’s crop of new condo towers, built with big deposits from Latin American buyers and lots of marketing glitz, are opening with many owners heading for the exits.
A third of the units in some newly built high-rises are back on the market, though most are listed for more than their owners paid in the pre-construction phase. At the current sales pace, it would take 29 months to sell the 3,397 condominiums available in the downtown area, according to South Florida development tracker CraneSpotters.com.
With the U.S. dollar strong, South American investors who piled into the downtown Miami market after the real estate crash are now trying to unload their recently built condos, adding inventory to an area where 8,000 units are under construction and nine towers were completed since the end of 2013. Some are offering homes at a loss as demand cools. Condo purchases from January through April slid 25 percent from a year earlier, while the average price fell 6 percent on a per-square-foot basis, CraneSpotters data show.
“The problem is that investors are no longer buying, and now they’re going to be looking to sell,” said Jack McCabe, a housing consultant based in Deerfield Beach, Florida. “And what buyers are going to replace those other than vulture buyers looking for deals?”
After several price cuts, one Brazilian owner at Related Group’s new Icon Bay tower is offering his two-bedroom condo for $539,000, 7 percent less than he paid in July. It’s now one of 100 listings in the 299-unit building.
“The ticking time bomb is based on rental rates,” said Peter Zalewski, owner of CraneSpotters. “When some of the foreign investors sitting on the sidelines have to dig into their pockets and subsidize renters, that’s the fuse that will lead to a correction.”
Boom Turns to Bust
Yet another cheap money boom has turned to bust. More are on the way.
The side effects of Negative Interest Rate Policies in Europe and Japan — what we’ve come to call the NIRP absurdity — are becoming numerous and legendary, and they’re fanning out across the globe, far beyond the NIRP countries.
Memorial Day marks the unofficial beginning of summer, but baseball and barbecues may have to take a back seat to Fed watching for a while longer for investors who remain preoccupied with the timing of the Federal Reserve’s next rate increase.
The most widely-reported result of the recent G-7 meeting was Japan’s attempt to convince the other major economies to admit that a crisis is imminent and take appropriately radical steps. The response seems to have been a bunch of blank stares. As India’s Business Standard noted:
A Group of Seven compromise offers minimal cover for Shinzo Abe. The Japanese prime minister’s plan to revitalize the world’s third-largest economy needs fresh impetus. Abe didn’t get as much international backing as he might have liked from hosting the rich nations’ club. But, the summit communique can, just about, be spun his way.
Abe’s counterparts, understandably, do not share his view that the world risks another Lehman Brothers-style financial crisis. That is important because Abe has inexplicably committed to raising the country’s sales tax next April, a surefire way to choke off recovery – unless a shock of this scale emerges.
So Japan — which, remember, has already borrowed eye-popping amounts of money, increased its central bank balance sheet by more as a percent of GDP than have either the Fed or ECB, and pushed interest rates on most of its government bonds into negative territory, all to no avail — has decided to act on its (manifestly justified) sense of panic by starting a new round of deficit spending:
(Bloomberg) – Japan Prime Minister Shinzo Abe plans to propose a fiscal stimulus package of as much as 10 trillion yen ($90.7 billion) after warning Group of Seven leaders that the global economy faces significant risk of another crisis, according to the Nikkei newspaper.
Abe will seek a second supplementary budget worth 5 trillion yen to 10 trillion yen after July’s upper-house election, the Nikkei reported Saturday without attribution. Proposals will include accelerating the construction of a magnetic-levitation train line from Nagoya to Osaka, issuing vouchers to boost consumer spending, increasing pay for child-care workers and setting up a scholarship fund, the Nikkei said.
“When you want to get the economy going, as long as demand in Asia is weak, you need additional public spending,” Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo, said by phone. “Since private spending is still not picking up, the government is simply
Is there any smarter group of homo sapiens on the planet? Or in all of history? We’re talking about Fed economists, of course.
Not only did they avoid another Great Depression by bold absurdity…giving the economy more of the one thing of which it clearly had too much – debt. They also carefully monitored the economy’s progress so as to avoid any backsliding into normalcy.
And where do we get this penetrating appraisal? From the Fed economists themselves, of course. Bloomberg:
“The U.S. Federal Reserve’s decisions to delay interest-rate hikes helped cushion the economic shocks caused by rapidly rising borrowing costs for U.S. companies from late last year through early 2016, according to economists at the New York Fed.
“By maintaining the federal funds rate lower, the FOMC managed to substantially offset the effect of tightening financial conditions on the economy,” the authors, referring to the rate-setting Federal Open Market Committee, wrote in a blog post on the bank’s website on Wednesday.”
They’re geniuses. No doubt about it. That’s why they’re in charge and we’re not. They’re the elite. They run the Deep State. They may not pay the piper, but they call the tune anyway. And good on them! Who knows what prices we might discover if we were left on our own?
The gap between economic output and the debt accumulated to achieve it continues to widen…while savers are expropriated and capitalists are given an incentive to consume their capital (the “euthanasia of the rentier” propagated by Keynes has finally been achieved)
Four Lost Decades
One of the endearing features of the ruling classes is their abiding faith in their own judgment. Despite inexhaustible evidence that they are bumbling incompetents, the power elite stick to their guns – literally – and to their cushy sinecures.
We are now seven years into the “recovery” supposedly engineered by the PhDs at the Fed. At a cost variously estimated between $4 trillion and $10 trillion, we have now achieved a growth rate that is about half what it was 40 years ago…
Illinois Gov. Bruce Rauner vetoed Friday a bill that reduces Chicago’s pension contributions to its police and fire retirement systems in the near term, nearly one year after the measure passed the General Assembly.
SB 777, which passed the General Assembly on May 31, 2015, reduced Chicago’s required pension payments to the $2.4 billion Chicago Policemen’s Annuity & Benefit Fund and the $1 billion Chicago Firemen’s Annuity & Benefit Fund over five years, starting in 2016, and extended the deadline for the fire and police pension funds to reach 90% funding to 2055 from the current 2040 deadline.
Mr. Rauner wrote in his veto letter to legislators on Friday that the bill continues the “irresponsible practice of deferring” pension funding decisions and that reducing pension contributions in the near term sticks taxpayers with higher future pension contributions.
Governor Rauner: “By deferring responsible funding responsible funding decisions until 2021 and then extending the timeline for reaching responsible funding levels from 2040 to 2055, Chicago is borrowing against its taxpayers to the tune of $18.6 billion,” Mr. Rauner wrote. “This practice has to stop. If we continue, we’ve learned nothing from our past mistakes.”
Mayor Emanuel: “With a stroke of his pen, Bruce Rauner just told every Chicago taxpayer to take a hike,” said Chicago Mayor Rahm Emanuel in a statement Friday. “Bruce Rauner ran for office promising to shake up Springfield, but all he’s doing is shaking down Chicago residents, forcing an unnecessary $300 million property tax increase on them and using them as pawns in his failed political agenda. And it is an unspeakable act of disrespect toward our men and women in uniform — and toward Chicago taxpayers — that the governor would veto a bill to protect taxpayers and police and fire pensions as we head into Memorial Day
If you’re confused about why American economic growth has been so disappointing, consider this: US government investment in capital, research and development, and education and training is at its lowest point in 45 years. In 2014, federal investment turned negative for the first time since 2001, meaning that government capital is depreciating or becoming obsolete faster than it is being replaced.
When Erika Cajic woke before dawn one morning in early May and read that wildfires were breaking out in an oil-producing region of Alberta, she sat down on the family room couch with a cup of hot chocolate and her laptop and bought shares of an investment linked to crude.
Apple was reportedly considering buying media giant Time-Warner late last year, which would've given it a huge content business including media brands like CNN and HBO. It also would've cost at least $60 billion, which is Time-Warner's current market capitalization.
If you allow someone to pump hours of “programming” into your mind every single day, it is inevitable that it is eventually going to have a major impact on how you view the world. In America today, the average person consumes approximately 10 hours of information, news and entertainment a day, and there are 6 giant media corporations that overwhelmingly dominate that market. In fact, it has been estimated that somewhere around 90 percent of the “programming” that we constantly feed our minds comes from them, and of course they are ultimately controlled by the elite of the world. So is there any hope for our country as long as the vast majority of the population is continually plugging themselves into this enormous “propaganda matrix”?
Just think about your own behavior. Even as you are reading this article the television might be playing in the background or you may have some music on. Many of us have gotten to the point where we are literally addicted to media. In fact, there are people out there that become physically uncomfortable if everything is turned off and they have to deal with complete silence.
It has been said that if you put garbage in, you are going to get garbage out. It is the things that we do consistently that define who we are, and so if you are feeding your mind with hours of “programming” from the big media corporations each day, that is going to have a dramatic affect on who you eventually become.
These monolithic corporations really do set the agenda for what society focuses on. For example, when you engage in conversation with your family, friends or co-workers, what do you talk about? If you are like most people, you might talk about something currently in the news, a television show that you watched last night or some major sporting event that is taking place.
Virtually all of that news and entertainment is controlled by the elite by virtue of their ownership of these giant media corporations.
I want to share some numbers with you that may be hard to believe. They come directly out of Nielsen’s “Total Audience Report“, and they…
This is what happens when politicians think they are smarter than the great unwashed whom they rule over.
They lack common sense on every possible level. The rise of third parties is a reality and our computer has been spot on with this forecast for 2016. It accomplished this forecast by simply doing what government does not seem capable of doing — correlating political trends with economic trends.
Socialism is the lite version of communism where you let the people own property and freely buy and sell homes instead of dictating where they live, but you tax the hell out of them for the privilege of existing. They pretend to be all noble for they are taking your money for some greater good, but somehow there is a sea of hands in the pot belonging to government employees with pensions that often include free healthcare for life that nobody in the real world can possibly get.
Would you give to a pretend charity such as Hillary’s that actually keeps 88% for itself and precious little is actually given to needy people? Then Hillary takes a tax deduction claiming 10% of her income she donates to herself — tax-free of course. Now she is worth more than any other Republican who ran for office except Trump. Hillary Clinton’s campaign emphasized her charitable giving in a press statement, actually claiming she donated “10.8 percent” of her income in 2014.
Politics reek of corruption. We deserve what we get for being stupid enough to put up with this stuff, regardless of whether we are talking about Democrats or Republicans. When it comes to money, there is no difference. Both parties always look to grab whatever you have for themselves, claiming they are helping the poor. The polls show that 57% of Americans believe Hillary is dishonest.
So what’s going on should be of no surprise. There are many separatist movements building throughout Europe all because government has become corrupt.
There are separatist movements in Hawaii, Texas, and Vermont in the USA for starters. This is ALL predictable. All you have to do is let the data speak for itself — no water or hot air needs to be added.
When it comes to Wall Street superstitions, few things – even fading the most recent Dennis Gartman call – beats the Barron's front page article jinx: just when you think something will never happen, Barron's confirms it on the cover, virtually assuring that it does.
In which case, be afraid bulls, be very afraid, because if past is prologue Barron's just green-lit the next crash.
The current period of gain has lasted more than seven years and propelled the stock market averages to new highs. But since the peak of last May, the market has faltered, briefly touching double-digit lows early this year. Bears have begun to wonder whether the crash to which the market is always headed is just ahead.
Well, not anymore. In the article, author Gene Epstein unveils such quantitative pearls as:
[T]here has been just one market crash over the past 35 years that wasn’t accompanied by a recession: the 12-month decline of more than 20% from August 1987 through August 1988. Arithmetically, this crash would not have happened were it not for the largest one-day plunge in U.S. history: Black Monday, Oct. 19, 1987, when the market tumbled more than 20% in a single day, the only one-day bear market on record. The previous crash on a single day that was at all comparable ran in the low-double digits and occurred 58 years earlier, in October 1929.
if a one-day crash does strike every 58 years, the next one is due 58 years from 1987, or in 2045. So if we treat the Black Monday–induced crash as an outlier, we are left with just three market crashes over the past 36 years plus one near crash, all four coinciding with the past four recessions.
So smooth sailing for the next 30 or so years then? He then presents what he believes are various reasons why there will be no crash this time. Among these are: stocks valuations are "not too exuberant"; that the inflation-adjusted house price is not above previous peak; that the yield curve is not flat or inverted;…
Having pledged to end the wars of his predecessor, President Obama came into office almost eight years ago as an anti-war candidate but instead has now been at war longer than any other American president. Mr. Obama, who won the Nobel Peace Prize in 2009, has made endless promises of "bring the troops home" or "no boots on the ground" but wi...
By Jacob Wolinsky. Originally published at ValueWalk.
George Soros is Lucifer? Yes, according to Russian Insider in a new article titled “George Soros: The Ugly Face Behind Many Protest Movements” A photo of an evil looking Soros with a black hood who appears to be casting a spell in the story. Since I am not sure who has rights to the photo I cannot repost it here but you can view it here.
In the piece George Soros is blamed for funding the black lives matter movement, The Arab Spring (which long ago I coined the Qatari winter), Occupy Wall Street, and the...
If Australia is an economic miracle -- the so-called Lucky Country, beneficiary of more than a quarter century of uninterrupted growth -- then its banks are its most visible sign of strength. After a near-death experience in the 1990s, they’ve reformed and bounced ...
Semiconductors were the star of the week. The index cleared Match/April congestion and posted six consecutive winning days in a row. Technicals are all in the green and the index is above all key moving averages. Weakness will be a buying opportunity; a test of the 50-day MA would be a good start.
The Russell 2000 managed to regain the prior rising channel. Technicals are positive although it still has to make up relative ground against the Nasdaq. The index hasn't yet cracked new highs but one more days gain may be en...
The rally in mining stocks since the first of the year has been very impressive.
The rally has taken Gold Miners ETF GDX up to test the 23% retracement of the collapse over the past 5-years. At the same time it is hitting the 23% level, two other resistance lines are being put to a test, with momentum at the highest levels in the past 5-years.
Graham Media Group, Inc., a Graham Holdings Company (NYSE: GHC) subsidiary, said it struck a deal with Nexstar Broadcasting Group, Inc. and Media General, Inc. to purchase WCWJ, a CW affiliate television station in Jacksonville, Florida and WSLS, an NBC affiliate television station in Roanoke, Virginia for $60 million in cash and the assumption of certain liabilities.
The agreement to acquire Nextar Broadcasting included pension obligations. Graham Media Group, Inc. would continue to operate both stations under their current network affiliations.
Graham Media said the acquisition is subject to approval by the FCC, other regulatory appr...
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Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?
Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.
I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.
I was thinking of this since a buddy of mine recently started ...
After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,
The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now.
And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now.
Phil writes back,
I was expecting them to start throwing poop at each other &n...
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Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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