KeNo's Housing and Economic Portal: Thursday May 4 2017 Housing and Economic stories

TOP STORIES:

Atlanta Fed GDPNow Nails it: Economy “Surprises” to Downside, Growth Near Zero - (www.wolfstreet.com) The US economy surprised economists to the downside once again, a terrible habit it has picked up over the past years. GDP adjusted for inflation inched up only 0.7% “compound annual rate of change.” This means that if the economy keeps growing at this rate for four quarters in a row, economic growth for the entire year would only be 0.7%. By comparison, in 2016, economic growth was 1.6%, matching 2011 for the worst rate since the Financial Crisis. So 0.7% is ugly. It was the weakest growth since Q1 2014. But wait. It gets worse. This is the seasonally adjusted “compound annual rate of change,” according to the “advance” estimate of the Bureau of Economic Analysis. The BEA’s seasonally adjusted “annual rate of change” – without the “compound” – which is what the Atlanta Fed’s GDPNow model is forecasting, was only 0.2%, just a hair above zero. From the BEA:

"As If Millions Of Unicorns Suddenly Cried Out In Terror": Cloudera IPOes At Less Than Half Its Last Private Valuation Round - (www.zerohedge.com) Cloudera, once one of the most highly valued private tech companies, priced its IPO at less than half the company's valuation from its last private financing round back in 2014. As the FT notes, the share sale marked a new low for so-called unicorns, or private tech companies once valued at more than $1bn. Companies such as Cloudera have turned to Wall Street as the once red-hot private investment market has cooled, forcing some to take big discounts on their former valuations to raise more money. Among the biggest losers in the Cloudera IPO, if only on paper, will be Intel, which sank $742m into the big data company in 2014. At the time, that investment set a record $4.1 billion valuation for Cloudera, pushing it into the top 30 ranking of most valuable global "unicorns" according to the WSJ. Fast forward to late on Thursday, when the company announced a price of $15 for shares in its IPO. While above the indicated range of $12-$14, it was less than half the $30.95 it sold its shares for in 2014.

Cloudera will raise $225 million in cash proceeds from its NYSE IPO on Friday, giving it an initial market cap of $1.9 billion.

Brazilian Labor Unions Stage Nationwide Strike Against Temer’s Agenda - (www.bloomberg.com) Millions of Brazilians were stranded without public transport and faced shuttered banks and schools on Friday as labor unions staged a nationwide strike against President Michel Temer’s reform agenda. Buses and trains were down in several major cities. Access roads to airports in Rio de Janeiro, Sao Paulo and Brasilia were temporarily blocked by protesters but, barring some delays and cancellations, flights around the country continued to operate. In the nation’s capital Brasilia, the number of security officials protecting government buildings outnumbered protesters who mixed with cyclists enjoying a sunny, traffic-free day downtown. The general strike comes at a delicate moment for the Temer administration. Its commitment to tackle Brazil’s rising budget deficit has drawn praise from investors and helped fuel a currency and stock market rally over the past year.

This Is What Americans Spent The Most Money On In The First Quarter - (www.zerohedge.com) …. Recreational vehicles ;-) As discussed earlier, it was an abysmal quarter for the US, pressured by what is traditionally the strongest segment of the economy, responsible for 70% of GDP growth: US consumer spending. At 0.23% annualized, this was the worst print going back to 2009. But that doesn't mean that Americans stopped spending completely, quite the contrary. According to the BEA's "goalseeked" models, even as retail sales tumbled, as Obamacare continued to drain disposable income away from other discretionary purchases, Americans - who spent far less on cars, clothing and housing in the first quarter than in Q4 - were scrambling to buy... recreational vehicles!? Incidentally, this won't be the first time Americans splurged on RVs. The last time they did this? Exactly one year ago.

ETFs Are ‘Weapons of Mass Destruction,’ FPA Capital Managers Say - (www.bloomberg.com) Exchange-traded funds are “weapons of mass destruction” that have distorted stock prices and created the potential for a market selloff, according to the managers of the FPA Capital Fund. “When the world decides that there is no need for fundamental research and investors can just blindly purchase index funds and ETFs without any regard to valuation, we say the time to be fearful is now,” Arik Ahitov and Dennis Bryan, who run the $789 million fund, said in an April 6 letter to investors in the actively managed fund. The flood of money into passive products is making stock prices move in lockstep and creating markets increasingly divorced from underlying fundamentals, the managers said. As the market moves ever higher, there’s the potential for a sharp decline. The U.S. ETF market has about $2.7 trillion in assets, the majority in products that track indexes. ETFs have attracted more than $160 billion in new flows so far this year, Bloomberg data show.

OTHER STORIES:

Goldman Sachs Prepares to “Better Weather Future Disasters” - (www.wolfstreet.com)

Asian Stocks Mixed on Earnings; Dollar Strengthens: Markets Wrap - (www.bloomberg.com)
How China's Capital Controls Make Bond Market Fragile - (www.bloomberg.com)