Friday March 24 2017 Housing and Economic stories

TOP STORIES:            

Liquidity Suddenly Collapses As Stocks Tumble - (www.zerohedge.com) This is the biggest drop for Bank stocks since Brexit, as investor concerns over Trump's reform agenda grow... And, as Nanex points out, S&P 500 futures liquidity is collapsing today. Why? Because whereas the BTFDers have been willing to jump in and, well, BTFD, on days where there is a sharp move lower, both the HFTs and the carbon-based traders step aside and pull their bids, unsure if this is "the start" of the selloff.  Maybe this time they are right, as the bank bloodbath continues:

Australia Housing Insanity: Tent Outside, Full Use of Apartment, Cheap, $90 Per Week - (www.mishtalk.com) Every time you think things in Australia cannot get any more ridiculous, you are proven wrong. Housing has skyrocketed beyond belief and so have property taxes and rent. Homeowners now stack bunk beds and rent out 4-person shared rooms for $120 a week. Those who prefer their own private sleeping space, with full use of the associated apartment, can lease a tent out back for only $90 a week.  News AU reports Renters resort to paying for tents and shared rooms due to the high cost of living. People have been so desperate for cheaper rent, they have even resorted to paying about $100 a week for tents set up in backyards and on balconies, that were advertised on Gumtree. Others share a small living space, with a number of curtains strung up so each housemate can have their own space. Renters are also sharing bedrooms, with one ad on Gumtree offering a bed in a room with three others for $120 a week.

Interest Rates After Inflation May Be a Real Bubble - (www.bloomberg.com) - (www.bloomberg.com) U.S. equity and debt markets have ridden a reflationary wave this year, thanks to optimism over the momentum of the U.S. economy. However, some key gauges for growth sit awkwardly with this narrative. Nominal yields on five-year Treasuries are negative when adjusted for the price outlook. And on Treasury Inflation Protected Securities five years forward, a metric the Federal Reserve uses to gauge long-term inflation expectations, the rate projected for 2022 is falling. Real rates, which have generally moved in lockstep with real gross domestic product, are some two percentage points below what’s implied by the momentum of the U.S. economy, an unsustainable divergence, according to Deutsche Bank AG. "We see real rates as extremely misvalued if not in a bubble," Deutsche Bank analysts, led by Chief Global Strategist Binky Chadha, wrote in a note on Friday.

While Nobody's Watching, Paul Ryan Is Taking A Sledgehammer To Medicaid's Promise To Seniors – (www.huffingtonpost.com)  The new version of the program would ... devolve Medicaid to the states and reimburse them using a predetermined formula that, as the Congressional Budget Office and other experts have concluded, would not actually keep up with the cost of care. As the federal contribution toward Medicaid eroded over time, states could make up the difference on their own or ― more likely ― they could make cuts in who or what the program covers. The federal guarantee would be over, and with it, the Medicaid program as we know it. 

Rise in new form of ‘portfolio insurance’ sparks fears - (www.ft.com) On Wall Street, bad ideas rarely die. They often go into hibernation until resurrected in a new form. And portfolio insurance — a leading contributor to the 1987 “Black Monday” crash — is, for some, making a return to markets. Sample the FT’s top stories for a week You select the topic, we deliver the news. Select topic Enter email addressInvalid email Sign up By signing up you confirm that you have read and agree to the terms and conditions, cookie policy and privacy policy. Institutional investors are allocating billions of dollars to “risk mitigation” or “crisis risk offset” programmes that are designed to act as a counterweight when markets are in turmoil. They mostly comprise long-maturity government bonds and trend-following hedge funds, which tend to do well when equities plummet. But some analysts and fund managers worry that if taken to extremes, allocations to trend-following “commodity trading advisors” hedge funds, in particular, could play the same role as an investment concept called portfolio insurance did in 1987, when it was blamed for aggravating the worst US stock market collapse in history.

OTHER STORIES:

U.S. Stocks Retreat, Bonds Rise as Dollar Slips: Markets Wrap - (www.bloomberg.com)
Kashkari Emerges as Opposing Voice as Fed Shows Optimism - (www.bloomberg.com)
The Four Biggest U.S. Banks Top $1 Trillion - (www.bloomberg.com)

Why Not Everyone Thinks Smart Beta's a Smart Idea: QuickTake Q&A - (www.bloomberg.com)
The Fed Is Stuck in the Past With Its Forecasts of the Future - (www.wsj.com)
China’s Taxes on Imported Cars Feed Trade Tensions With U.S. - (www.nytimes.com)