Personal Finance
Since the blow off in April 2012, total market sales have tried and failed several times to break above the new lower stair tread of declining sales. Bulls now have to wait until the spring of 2014 before they can try to bring the rest of us along for another ride, because seasonally, the peak sales window is in late spring, early summer.
One other observation is that the ZIRP petite market top in the spring of 2008 was accomplished with a Bank of Canada Bank Rate set at 3.25% and retail banks posting a consumer 5 Year Fixed rate mortgage at 6.99%; but the sales crash was already in motion and headed towards the March 2009 pit of gloom. To get the housing market not to collapse because well over 10% of Canadian GDP is a result of the construction industry (twice the U.S. reliance) Chart Here; the BoC moved to ZIRP grande with a Bank of Canada Bank Rate set at 1.25% and the retail banks posted their consumer 5 Year Fixed rate mortgage at 5.39%. This policy of price controls on the cost of credit has not stopped sales from stair stepping lower. If you want to remove the mask from asset price discovery, do what a good appraiser does; an income approach. Imagine what a small increase in mortgage rates, say back to ZIRP petite will do to your disposable income.
Wikipedia defines a BULL TRAP as “an inaccurate signal that shows a decreasing trend in a stock or index has reversed and is now heading upwards, when in fact, the security will continue to decline. It is seen as a trap because the bullish investor purchases the stock, thinking it will increase in value, but is trapped with a poor performing stock whose value is still falling.”
“The Condo Game”
QUESTION: From reading your blog, my understanding of your view is that all relationships are in flux with respect to markets and market drivers, except for confidence. For example, the stock/bond relationship can change over time, so stocks do not ultimately go up or down based on what bonds do but based on where confidence stands. If that is correct, then I would submit that both stocks and bonds globally reflect a high degree of confidence in the authorities to “manage” the situation without an accident. European bond market yields reflect complete confidence in the EU and ECB. The US stock market is exactly positively correlated to the belief that the Fed has things under control (see Wednesday’s reaction). Logically, loss in that confidence would obliterate stocks. Yet you suggest we are on the verge of a massive collapse in confidence in government and its agencies and that stocks will double. How do I reconcile?
ANSWER: I am finishing up a new book on the global economy. The interpretation ofCONFIDENCE you assume is actually post Great Depression. This relationship between bonds and stock did not exist previously. Even when the Federal Reserve was formed and people argue that was a Jekyll Island Conspiracy, they too judge the past by the present. When the Fed began it had a direct tool to manage the economy. To stimulate it would buy corporate paper stepping in when banks would not lend. That made PERFECTeconomic sense. However, that was 1913. When World War I erupted and government needed to borrow, they instructed the Fed to buy their debt and not corporate. As always, they never returned the Fed to its original intent – a quasi-FDIC for banks.
The rates today no longer reflect CONFIDENCE in the state – only manipulation by the state. You will see divergences emerge between state bond rates and private. This took place even during the Great Depression. What will emerge is capital will migrate to stocks and private sector bonds at first for yield. This will cause the central banks to eventually have to buy government debt themselves (monetize) or allow rates to rise. This is what the Fed Tapering is all about. I have already reported that the Fed was going around and informing the banks to re-calibrate their models. They have been warning behind the curtain that they DO NOT SEE a flight to quality for the next decline. This is part of the negative nonsense coming from Summers.
There will be a split with this post-Great Depression thinking that government debt is best. This is the change on the horizon and the Fed even knows this. So open your mind and observe the subtle movements that are revealing the change in trend on the threshold of this chaos. Our sources are real. I do not bullshit with my “opinion” for like assholes, everyone has one. I report facts. That is what my clients expect. I am neither Republican nor Democrat. I am for practical economics.
Tax Revolts and that 309 Year Cycle – read it all HERE
Last night, Apple confirmed that it bought Israeli-based startup PrimeSense, the company best known for helping Microsoft develop the motion-tracking technology used for the Xbox Kinect.
The price of the acquisition is reported to be $360 million, which makes it one of Apple’s biggest purchases.
As the Guardian points out, this means Apple is going to put PrimeSense’s technology to work. Apple’s other big buys: PA Semi, which has been used to develop iPhone chips; Authentec, which was used for the fingerprint scanner in the iPhone 5S; Quattro Wireless which became iAd; and so on …
So, what’s Apple going to do with it? We’re speculating here, but it sure seems like PrimeSense’s 3D technology will be used in the Apple TV. It may or may not work its way into a full-on Apple television, but it seems fairly certain it will be in the little Apple TV box.
PrimeSense is primarily known for 3D sensors, which are used for gesture-based interactions. So, imagine swiping your hands in the air, and stuff on your screen moves — that’s what PrimeSense does.
In September, Mark Gurman, one of the best Apple reporters in the world, said, “we have been consistently hearing from our sources that Apple is thoroughly testing Xbox Kinect-like motion sensors for future TV-related products. When Apple plans to release motion-controlled TVs, however, is uncertain.”
Perhaps with the PrimeSense team in-house, Apple will be able to smooth out the kinks in its motion-based technology and implement it in a forthcoming version of the Apple TV.
Read more: http://www.businessinsider.com/apples-acquisition-of-primesense-may-be-for-tv-2013-11#ixzz2lhIvBfXy
Oil prices tumbled on Monday after a groundbreaking agreement aimed at curbing Iran’s nuclear program eased tensions in the region and raised the prospect of more oil exports from the country.
The preliminary accord, which was struck between Iran and six world powers, offers the Middle East nation $7 billion in immediate relief from economic sanctions.
The U.S. government estimates that Iran has lost about $80 billion in revenue as oil sales slumped by 60% since the start of 2012 as a result of the sanctions.
Iran sits on about 9% of the world’s proven oil reserves. But its crude oil output is languishing at 20-year lows, the International Energy Agency said in a recent report.
Related: What the deal means for Iran’s oil sector
The preliminary deal suspends certain sanctions on gold and precious metals, Iran’s auto sector, and petrochemical exports, but won’t allow Iran to increase oil sales above one million barrels per day for six months.
Still, some analysts reckon Iranian exports could climb in the near term because sales have fallen short of that limit in recent months. And if the deal goes well, and sanctions are relaxed further, Iran could be pumping much more oil into world markets by the end of next year.
“From a big picture perspective, the deal… opens up the possibility of at least one million barrels per day of Iranian crude returning to world markets by the fourth quarter of 2014,” said ClearView Energy Partners analyst Kevin Book.
Reduced political risk and the prospect of rising Iranian oil supplies weighed on energy prices in Monday trading.
Brent crude for January delivery fell 1.6%, or $1.77, in London, to $109.3 per barrel. Light crude in New York lost $1.32 to $93.52 a barrel.
Book said the impact of the Iranian deal on oil prices would have been greater were it not for the loss of most Libyan production in recent months. Oil exports from the north African state have dwindled due to ongoing political turmoil.
Related story: U.S. to seize Manhattan skyscraper secretly owned by Iran
World stock markets were also buoyed by the Iran deal as cheaper energy prices could give a much-needed boost to economic growth.
Germany’s DAX index rose 0.95% in European trading, while the CAC added 0.6% in France.
In Asia, Japan’s Nikkei closed up 1.5% and Australia’s ASX All Ordinaries put on 0.3%.