Real
home prices may decline for the next 30 years - (www.fool.com) "The housing boom in the early 2000s was
driven by a sense that housing is a wonderful investment. It was not informed
by good history," he said. Most people now agree on that much. "If
you look at the history of the housing market, it hasn't been a good provider
of capital gains. It is a provider of housing services," he explained. By
that, he means a home gives you a place to live, a place to sleep, a place to
store your stuff. But that's it. Americans believed -- and still believe --
that the value of their home will increase above the rate of inflation. And
that, Shiller says, is wrong. "Capital gains have not even been positive.
From 1890 to 1990, real inflation-corrected home prices were virtually
unchanged." Shiller -- a pioneer of behavioral finance and one of the
calmest, levelheaded economists I know -- becomes animated at this point,
almost irritated. Debunking the notion that housing is a great investment is
one of his favorite topics. Housing prices, he argues, could decline over long
periods of time -- decades, even.
Economy
puts the squeeze on grocery bills - (www.saukvalley.com) With
all the recent turmoil, it may seem the least of our collective worries is the
escalating cost of food. But for millions of Americans, this is a daily worry. Prices
of beef, pork, fruits and vegetables are rising; current bouts of bad weather
will not help. True, we pay a smaller percentage of our incomes for food than
much of the world. And too many of us have eaten too many calories over the
years. But most Americans get by on a fixed amount of money each week; 10 or 20
dollars more spent for the same amount of food means something has to give. Not
insignificantly, along with plain old bad weather, climate change seems to be
an increasing factor in food prices, along with mysterious blights, government
regulations, land prices and changing food tastes. The price of limes is
front-page news. (Yes, we now have the 89-cent lime. The Wall Street Journal
found a California Mexican restaurant needing 1,000 limes a week that will give
customers a 25-cent margarita in exchange for a bag of limes from backyard
fruit trees.)
Jeremy Grantham on Bubbles: ‘I Am Sure It Will
End Badly’ - (online.wsj.com) Legendary
investor Jeremy Grantham predicts the bull market still has plenty of room to
keep rallying, perhaps for another year or two. But another move higher will be
followed by an inevitable crash, one in which pain will be felt far and wide. Stocks
aren’t as frothy now as they were at previous market peaks, he says, and the
Federal Reserve is also keeping interest rates pinned near zero while
maintaining accomodative monetary policies. That’s why he doesn’t think the
market has topped now. But the day of reckoning is coming. “I am sure it will
end badly,” Mr. Grantham, founder of the Boston-based money-management firm
GMO, wrote in his quarterly letter to
investors. Mr. Grantham expects this year “should continue to be difficult”
through October (he didn’t specifically allude to “sell in May and go away” but his prediction matches that adage). He
then predicts the rally will regain steam in the fourth quarter and continue
through the end of 2016. He sees at least 20% rally in the S&P 500 through
the presidential election, one that would take the index to at least 2250.
After that, it’ll get ugly.
AIG
Profit Declines 27% on Property-Casualty Claims Costs - (www.bloomberg.com) American International Group Inc. (AIG), the largest commercial insurer in the U.S.
and Canada,
said first-quarter profit fell 27 percent as claims costs climbed at the
property-casualty business. The stock dropped in extended trading. Net income declined
to $1.61 billion, or $1.09 a share, from $2.21 billion, or $1.49, a year
earlier, New York-based AIG said today in a statement. Operating profit fell 26
percent to $1.16 billion at the property-casualty business. Chief Executive
Officer Robert
Benmosche,
69, is shifting the business mix and cutting jobs as he works to improve
results at the property-casualty unit. The CEO has used dividends and repurchases to
reward shareholders who’ve helped recapitalize AIG as the company emerged from
the U.S. rescue that it repaid at the end of 2012.
Who
really benefits from housing "recovery" - (www.miamiherald.com) Lured
by Miami’s cachet as an emerging international gateway and luxury getaway,
foreign investors ranging from Russian oligarchs to Brazilian supermodels to
anonymous Channel Islands companies have rushed in with mounds of cash. Along
Miami Beach’s North Bay Road and Sunset Islands, Key Biscayne and Gables
Estates, the elite are shelling out millions of dollars to buy teardowns to
make room for new Gatsby-esque spreads. Developers are hawking one new
pre-construction condominium tower after another. They feature gilded amenities
fit for Dubai or Hong Kong (one will be topped with a private helipad; another,
equipped with private automobile elevators). Glass-walled penthouses tout
360-degree views of the city, the ocean and Biscayne Bay. But that’s only part
of the story. Miami’s housing comeback is heavily lopsided. Many ordinary
people in South Florida are still under water. Others can’t get a mortgage for
a simple 3/2 and instead shell out an outsized portion of their income for
rent. The gulf between the haves and have-nots has been widening around the
nation, but in few places so diametrically as in South Florida.
Target CEO Steinhafel to Step Down Following Data
Breach - (www.bloomberg.com)
'Unusual' Bullish Options in B/E Aerospace Swelled Last Week - (online.wsj.com)
'Unusual' Bullish Options in B/E Aerospace Swelled Last Week - (online.wsj.com)
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