It is what it is, or is it?

[an]

[quote=flu]still no inventory in MM….

And Qualcomm stock is still close to 52 week high….[/quote]Exactly. Where are all of these inventory and price decline? We’re still at the same inventory level as last winter. This is getting very sad.

[Jazzman]

“Foreclosure processors are still mostly plowing through a pool of toxic subprime mortgages originated back in mid-to-late 2006” “…Notices of Default (NoDs) on California house and condo owners …was up 6.0 percent from 18,120 NoDs in the prior quarter…” [Jan-Mar 2013] ” “… the foreclosure starts in recent quarters don’t reflect the ebb and flow of financial distress as much as they … may well be just working their way through a backlog…”
http://www.dqnews.com/Articles/2014/News/California/CA-Foreclosures/RRFor140422.aspx

[carlsbadworker]

Thanks to Bernanke/Yellen, the valuation of any asset is poor, but that does not mean the bubble is bursting anytime soon with Fed’s foot on the gas all the time.

I also disagree that “shadow inventory” is going to be a predictor of the next bubble burst. Every bubble is unique and will burst in its unique way. Last time, it was an over-supply from the foreclosures. Next time, it could come from under-demand with lower wages.

For example, I don’t think the Chinese real estate bubble will burst the same way as the U.S. housing bubble. The hefty down payment requirements there would ensure that foreclosures won’t be a problem there. But that is not to say, there won’t be a crack on the demand side (which is fueled by everyone’s wishes to be multi-millionaire just by buying a home) or from the middle man (shadow banking collapses, taking down the loans that factories need to operate).

Frankly, I think globally we are all paid too high for what we are worth on average. With huge improvement in machine learning in recent years, the machines that will take our jobs are just around the corner, unless you are the very few who invented the machines to replace the service jobs. Wages now need to be depressed for the service sector as they did for the manufacturing sector years ago. It is almost inevitable.

Luckily, in U.S., I think it just means we are just less wealthy than we thought we are. As for emerging market, I am not so sure about their social stability when everyone starts to realize still how poor they are.

There is a mother of all bubble-bursts coming, if that ultimately happens, as we see political turmoil around the world hurts the never-seem-to-end productivity growth. Until then, you can probably see both stock market and housing market keep climbing for quite a few percentage.

[Coronita]

Come on now. It’s not Yellen’s/Bernanke’s fault..

You know who’s fault it is?

Facebook. That’s right. Ever since facebook spent $19billion for a shitty chat app in the 21st century…It proves the USD is worthless.

The value of $1billion means nothing to nobody anymore…

$1billion.. Pfff… That’s pocket change for companies like Facebook….

My house is probably worth $10 million using that valuation…

Oh wait. My house doesn’t include a shitty chat app… It’s only worth $10million if I it includes a shitty social media app.

(Yes, I’m jealous… Thank you very much)

[spdrun]

Why pick on Yellen? The old cow actually seems to be more conservative than people assumed. Tapering despite zero GDP growth last quarter. Blurting out a six month timetable for tightening also speaks something to her personal views.

[SK in CV]

[quote=spdrun]Why pick on Yellen? The old cow actually seems to be more conservative than people assumed. Tapering despite zero GDP growth last quarter. Blurting out a six month timetable for tightening also speaks something to her personal views.[/quote]
“old cow”? Is that really necessary?

She is, by the way, doing exactly what Bernanke said would be done before he left.

And the “six months” is not 6 months from now. It’s more likely to mean around mid-2015. Which is also pretty much the same schedule that her predecessor described.

[FlyerInHi]

[quote=Jazzman]
Janet Yellen’s big concern: Housing slowdown. Really, I wonder why that might be. http://money.cnn.com/2014/05/07/investing/janet-yellen-housing/
[/quote]

She’s talking about housing starts, not housing prices in the big coastal metros.

Housing starts generate jobs and that’s what the economy needs.

[quote=Jazzman]
Las Vegas in trouble: Active inventory is up 103%, median prices fall. What happens in Vegas stays in Vegas, right? http://www.calculatedriskblog.com/2014/05/las-vegas-real-estate-in-april-year.html
[/quote]

I’m not seeing a lot of inventory in Vegas. Many of the listings are people testing the market… not serious.

but I’m seeing more construction which is good for jobs.

[quote=Jazzman]
Bank of England warns of another bubble. Commie Canadians have invaded. “UK households with debts that exceed four times their income accounted for around 30% of UK mortgage debt”
http://ampp3d.mirror.co.uk/2014/03/28/bank-of-england-raises-fears-of-a-housing-bubble-after-the-size-of-mortgages-explode/%5B/quote%5D

Price bubbles in some areas sure.

I listened to Larry Summers on BBC. He talked about secular stagnation and the UK making a mistake choosing austerity over growth. Apparently, the UK put the full faith and credit of country behind private mortgages. If mortgages default en masse, the country would be in crisis. While there was good growth in the UK last year, it was a from a bottom… and the UK’s GDP is still below peak.

[spdrun]

She was thought to be more liberal/dovish than B.S. Bernanke. So far, this has not been the case. Therefore, more conservative than assumed.

[FlyerInHi]

I don’t recall the exact numbers, but the Fed has no choice but to taper otherwise they will own all the new bond issues

The Federal deficit has been cut by almost 2/3 to now $560 billion.

Monthly QE is now $45 billion monthly.

Many economists are saying that central governments should be spending rather than cutting. This is a once in a lifetime opportunity to borrow at low rates to build and repair infrastructure like the third world airports we have to suffer.

I think that Yellen would be happy to see the Federal government spend more and she would act to keep rates low.

[Jazzman]

FlyerInHi, my reading is that Yellen’s concerns are about the overall market: “The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery,” she said.

Inventory has increased in Las Vegas a little, but that is not the issue here. It’s the number of offers received that has fallen off a cliff.

The problem in the UK can probably be isolated more or less to London, and central London in particular. Unfortunately, reliable statistics are not as forthcoming as in the US. One estimate is that 50% of central London buyers are foreigners.

I thought is was interesting that Yellen is concerned by a slow down, and the BoE is concerned by a bubble.

[SK in CV]

I’m reasonably sure that “housing activity” that Yellen was talking about is not resales or housing prices. Absent a bubble (and there’s no evidence there is a widespread bubble in US housing prices), resale prices and inventory doesn’t mean shit. She’s concerned with new home construction. That’s the “housing activity” that affects the economy as a whole.

[Author]

Posts