Energy & Commodities

How to Play Coal’s Demise

Posted by Keith Kohl Editor, Energy and Capitalh

on Tuesday, 17 September 2013 16:33

The United States isn’t the only country hoping to curb its exorbitant coal consumption by taking even more drastic steps than setting incredibly difficult carbon dioxide standards.

China, for example, is outright banning the construction of all new coal-fired power plants near three major industrial regions. The goal is simple: Cut the country’s coal consumption enough so the fossil fuel accounts for only 65% of total energy mix (it’s currently in excess of 70%).

One of the consequences, however, is the threat to U.S. coal exports, which have been steadily rising since shale gas emerged as a cheap, abundant source of energy during the last five years.

…..more commentary & charts HERE

E- Wave Triangle Pattern pointing Gold lower

Posted by Gregor Horvat - EW Forcast

on Tuesday, 17 September 2013 15:29

GOLD has turned bearish last week and made a sharp decline towards 1300 with a personality of an impulsive price action; strong and large move in the short period of time. As such, we believe that metal is in a new bearish period which could bring price even back to June lows. We will be looking lower as long as 1434 is in place. With that said, to take advantage of the current down move it’s important to keep an eye on intra-day wave patterns and any evidences of a corrective or contra-trend patterns that will give you an opportunity to join the trend.

Well, on the hourly we see a sideways movement in tight range which is a very important guideline for a correction, or temporary pause within downtrend. From an Elliott Wave perspective we see current pause as a triangle which is a continuation pattern, most likely placed in wave four. As such, we anticipate trust out of a triangle into wave (v) that could reach levels around 1280 in the next 24-48 hours once 1300 support is taken out.

TRIANGLE-BASIC STRUCTURE

A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.

• structure is 3-3-3-3-3
• each subwave of a triangle is ussaly a zig-zag
• wave E must end in the price territory of wave A
• one subwave of a triangle usually has a much more complex structure than others subwaves
• appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X or wave Z in a triple threes

About the Author

Gregor Horvat

Gregor is based in Slovenia and has been in Forex market since 2003. Most of the charts that you can find on the website is his work. His approach to the markets is mainly technical. He uses a lot of different methods when analyzing the markets; from candlestick patterns, MA, technical indicators etc. His specialty however is Elliott Wave Theory which could be very helpful especially if you know how to use it in combination with other useful tools.

]Website: http://www.ew-forecast.com/

Non-Economic Reasons the Fed is Tapering

Posted by Matthew Boesler - Business Insider

on Tuesday, 17 September 2013 15:20

The Economic Data Has Nothing To Do With It

Wall Street expects the Federal Reserve to announce the first reduction in the pace of monthly bond purchases it makes under its quantitative easing (QE) program at the conclusion of its FOMC monetary policy meeting Wednesday.

Right now, the Fed buys $45 billion in U.S. Treasuries and $40 billion in mortgage-backed securities each month – $85 billion of bonds in total – in a bid to stimulate the American economy. The consensus on the Street is that the Fed’s first “tapering” of QE will consist of a $10 billion reduction in monthly purchases, bringing the monthly total to $75 billion.

….more commentary on Frothy Markets, Effectiveness of QE, Bernanke’s Legacy, Fed Credibility & A Shrinking Deficit HERE

CDN Real Estate Prices at a Glance

Posted by Canadian Housing Price Charts

on Tuesday, 17 September 2013 14:48

Average SFD prices drop after oil spikes:

City Charts HERE

VANCOUVER average single family detached prices in August 2013 ticked up 0.3% M/M but remain 13.3% ($141,100) below their peak set last April 2012 (Vancouver Chart). Vancouver combined residential sales although up 52.6% from last year’s drubbing are down 14.6% M/M (Scorecard) as we head into leaky condo season. Average strata units continue to trade at 3Q 2007 prices and as with SFDs, strata townhouse and condo sales dropped 8% and 16% M/M. Prime location inventory remains static (see the Bubble Deflator)

If you are thinking of buying a Vancouver Condo as an Investment, see my Vancouver Condo Yield Case Study and now that you have the August data, where do you think Vancouver SFD prices will be one year hence? VOTE HERE.

CALGARY average detached house prices in August 2013 met with more resistance and ticked down another 1.5% (Calgary Chart) and down 2% from the June peak (Plunge-O-Meter). Strata unit prices split with Townhouse prices up 1.3% M/M and condo prices down 1.4% M/M. Combined residential sales slumped 3.2% M/M and inventory levels remain deeply red (Scorecard) as migrant workers and flood victims compete for housing. Alberta remains a different country with respect to record high earnings and immigration.

The sentiment in Calgary is the least bearish (33% bears to bulls) of the 3 markets polled with only 22% of the survey thinking Calgary SFD prices will be 20% lower in 12 months. What do you think? VOTE HERE.

EDMONTON average detached house prices in August 2013 ticked up 1.5% M/M (Canada Chart) and townhouse and condo prices also increased 1.5% and 2.1% M/M but the joy was all happening on mostly double digit drops in M/M sales (Scorecard). Bidding has yet to break the May 2007 peak SFD price (Plunge-O-Meter) which remains like Calgary 2% below the high.

TORONTO average detached house prices for the GTA in August 2013 dropped another 1.4% M/M and are 6.1% ($41,266) below the trifecta breakout highs set in May (Toronto Chart). Combined residential sales are off 11.4% M/M with average SFD sales leading the way down 12% M/M. The gap between Vancouver and Toronto housing prices (Vancouver vs Toronto) widened to 45% more expensive in Vancouver. The GTA may have appeal to the HNWI as a “safe” haven but the media does not rate Toronto as investment grade.

Polled sentiment here continues to suggest that prices will be down another 20% in 12 months. What do you think? VOTE HERE.

OTTAWA average detached house prices are not available, instead the chart on this site reflects Ottawa’s average combined residential prices. OREB’s report is sparse and opaque and the CMHC, records for Ottawa inventory remain one month lagging. In August 2013 Ottawa combined residential prices dropped 3.1% M/M (Scorecard) and remain 6.2% below the peak price set in April (Plunge-O-Meter).

MONTREAL median (not average) detached house prices in August 2013 ticked back up 0.7% M/M to the June 2013 record price peak (Canada Chart). SFD prices are range bound held in by negative sales dropping 13.2% M/M and down 0.4% Y/Y. The joy came in with condo sales up 5.5% M/M and up 8.9% Y/Y and condo prices rose 1.8% M/M and 3.3% Y/Y (Scorecard). In the 2011 Census, Montreal added 6.4% more dwelling units while only adding 5.2% more people. There is no shortage of housing, but there is a shortage of earnings; the Province of Quebec ranks 6th in Canada’s 10 provinces for earnings and printed an unemployment rate of 7.7% in May (0.4% above Ontario’s).

Real Estate: ‘Flipping’ in America

Posted by Ozzie Jurock; Jurock's Real Estate Insider

on Tuesday, 17 September 2013 14:33

Ballsy residential flippers may make faster money in recovering U.S. housing market than in Canada

Real estate expert Ozzie Jurock will host a Real Estate Power WeekendSept. 28-29 in Vancouver.

There are many areas in Western Canada – northern British Columbia is a prime example – where I believe residential investors can make money. But, if you aspire to be a real estate flipper, you are perhaps better off aiming for fast money in the U.S. than in Canada.

Some U.S markets – particularly parts of Florida hit hard during the 2008 crash – have seen price hikes as high as 240 per cent in the past year. In Canada the overall price increase for a detached house from June 2012 to June 2013 was 3.2 per cent, and not all markets fared that well. The price a typical condominium in the City of Vancouver is the same now as it was a year ago, and up just 2.5 per cent in the past six months – the time frame for buying and selling that often defines an aggressive flip.

The U.S. on the other hand should lead the lead the world in residential price appreciation for the next 12 months. The Gobal Economic Research Survey from Scotiabank picks the U.S. as the only western country to see strong residential price gains this year, with forecasts for a 7 per cent increase from 2012.

Some U.S. centres are seeing rocketing price appreciation – and a lot of flippers.

A recent Realtytrac survey shows that the U.S. posted 136,184 detached-house flips – where a home is purchased and re-sold within six months – in the first half of 2013, up 19 per cent from a year earlier and up 74 per cent from the first half of 2011.

The average U.S. real estate investor made an average gross profit of $18,391 on single-family home flips in the first half of the year – a 9 per cent gross return on the initial purchase price. That was up 246 per cent from an average gross return of $5,321 in the first half of 2012 and an average loss of $13,206 in the first half of 2011.

Out of the 100 markets analyzed for the Realtytrac survey, flipping was on the rise in more than two-thirds of them. And some of the strongest flipping markets are not where most people would think (see chart).

Source: RealtyTrac (realtytrac.com) Based on single-detached houses bought and sold within 6 months this year.

* Includes Metro area anchored by this city.

SHORT SALES

Many Canadian investors are tantalized by U.S. “short sale” properties, and they can offer exceptional prices. But they are also a challenge for flippers because of the time it takes to buy and sell them.

Short sales seem like such smoking deals, don’t they? And since these very cheap homes are listed on the Multiple Listing System (MLS), they must be real, mustn’t they? Well, yes, they are listed on a type of MLS (or realtor.com) and the prices quoted are cheap, but it ends there.

I have made offers on 15 U.S. short sales, but have only closed on four of them. They were great deals but also required renovations from $4,000 to $12,000, and it took months to have my offer accepted.

A short sale is a method for a U.S. realtor to obtain interest and offers in a property. The realtor does that by putting up a ridiculous price. Say a home sold for $200,000 three years ago. Well, the realtor puts on a short sale at $45,000. The owner – likely owing the full $200,000 (in the U.S. there were tens of thousands of properties financed at 100 per cent to 125 per cent of value) – does not care, since he/she gets nothing anyhow.

You come along and quickly realize two things:

there’s often no financing available; and
just because it seems listed at that price, this doesn’t mean the bank will write off the outstanding balance over $45,000.

So you make the offer – all cash – and then you wait. And wait.

Nothing happens in 90 out of 100 cases. But, once in a while, you get a short sale accepted. So, patience and making a lot of offers is the norm for the budding investor.

When making offers, however, note:

you must submit “proof of funds” from your bank within 48 hours to the bank having the “short sale.” If you can’t do it … don’t bother offering … they will not bother getting back to you;
properties are sold “as is” and you will need to sign a multi-page document designed to give you all the liability and the bank and former owner none; and
if you keep the property for less then a year, you cannot claim capital gains (you must own it longer than one year to do so).

Should you bother with U.S. short sales? Yes, go ahead. Just don’t fall in love with a property because less than one in four offers will get through the process. Note also that the market is now attracting multiple offers on well-priced short sales.

From the Western Investor, September 2013