KeNo's Housing and Economic Portal: Friday May 12 2016 Housing and Economic stories

Wednesday, May 11, 2016

Friday May 12 2016 Housing and Economic stories

Wealth Confiscation for the Digital Age: the New “Cash Tax” – (www.wolfstreet.com) The government and the mainstream press won’t dare call it a tax. But that’s exactly what it is. A negative interest rate policy is a tax. Any time you hear a politician, central banker, or news anchor say “negative interest rates,” just think “TAX.” Think “TAX ON MY CASH.” Negative interest rates are going to result in financial disaster that will wipe out many people. But you don’t have to be one of them. I’ll explain how you can sidestep this disaster—and even make a lot of money as a result of it—in a moment. But let’s quickly cover one more thing about negative interest rates… If the government makes it unattractive for you to keep cash in the bank, you can pull cash out of the bank. You can simply store it in a safe or under the mattress. Politicians know this. That’s why they’ve created another dangerous policy that works hand-in-glove with negative interest rates.

High Rollers Are Flocking to ‘Hotel HYG’ in Record Numbers – (www.bloomberg.com) The guest list of visitors to the world’s largest junk bond exchange-traded fund (ETF) is pretty impressive. When the iShares iBoxx $ High Yield Corporate Bond ETF–better known as HYG–began trading more than a decade ago, it was mostly thought of as a buy-and-hold product used by financial advisers and retail investors. Yet more and more big institutional investors are using it like a hotel—checking in and out in increasingly large sizes with an average stay of less than a month. While some of those flows were linked to risk-off sentiment hitting the overall market, most appear to have been institutional portfolio maneuvering. Either way, it is all part of an increase in the size—and the volatility—of weekly flows, as seen in the chart below.

Another Condo Bubble Bites the Dust - (www.wolfstreet.com) In Lower Manhattan, 31 towers with over 5,000 apartments are sprouting up. They’re not exactly in the “affordable” category. The median price for condos – half sell for more, half sell for less – has soared 77% since 2013, to $2.43 million, while the median price in the overall Manhattan condo market has shot up “only” 54% to $1.84 million. These are stunning numbers, even for those of us who’ve become inured to stunning numbers by being exposed on a daily basis to the craziness in San Francisco. “Lower Manhattan is getting a facelift” — that’s how Frances Katzen, of Douglas Elliman Real Estate, explained the phenomenon to the Financial Times. The FT adds some color:

China steel, iron ore futures dive as demand worries batter commodities - (www.reuters.com) Chinese commodities dived on Monday, led by 6 percent falls in steel and iron ore futures, as deepening worries about China's demand extended a fortnight of sharp drops and false rebounds in the country's market for industrial metals. Speculative funds rushed into China's commodities futures last month, betting the country's economy was bottoming. The buying frenzy alarmed domestic exchanges and regulators fearing a bubble could be forming as volumes and prices soared. To limit speculation on futures from steel to coal, the country's three commodity exchanges have taken aggressive measures, including raising trading margins and transaction fees, and widening daily movement limits. The big market swings and the response of authorities have raised concerns about the risk of contagion for global markets, particularly after last year's stock boom and bust.

Gap shares plunge, analyst says company in big trouble - (www.cnbc.com) Gap is in big trouble, as the once-mighty retailer has lost its way, Deutsche Bank retail analyst Paul Trussel said Tuesday. "Gap used to be a core, basic, apparel retailer with low prices and great product for the family. I think there's other retailers that frankly have taken that place within the retail sector," he told CNBC's "Squawk on the Street." Trussel added that retailers like H&M and Ross Stores have taken considerable market share from Gap. "This is all happening while the consumer has been very willing to buy more and more on their mobile device," he said. Gap shares fell more than 11 percent Tuesday, to its lowest levels since 2012, on the heels of its first-quarter results warning. The company said Monday first-quarter revenue and profits would fall short of Wall Street's estimates, and issued a forecast for the period that reflected the slower traffic it saw in its stores, which led to more discounting.

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