Tuesday June 27 2017 Housing and Economic stories

TOP STORIES:            

Fed Losing Control: 100% Proof That A Massive Economic Meltdown Is Closer Than You Think - (www.steemit.com) This past Wednesday we heard from the Federal Reserve with regard to monetary policy, and as I predicted they did raise the federal funds rate 25 basis points however, instead of yields rising, they are dropping. More than a year and a half ago I had said publicly that the Federal Reserve's attempt at trying to normalize bond yields would backfire-and this is exactly what is happening. It is clear to me that the Federal Reserve has absolutely lost control of what is occurring in the bond market. Remember, this is uncharted territory, we have never been here before in the history of the financial world-so the Federal Reserve actually has no idea of how the market will react in the current environment with regard to their attempt at normalizing interest rates.

Tough Time for Automakers, Great Time to Buy a Car? - (www.wolfstreet.com) Wolf Richter Talks Shop: “Carmageddon” and tips on buying a car. Here I am with radio host Jim Goddard on “This Week in Money,” discussing the worsening conditions that the US auto industry is facing. Jim is also asking whether it’s better to buy or lease, go directly to a sales manager or start with a salesperson first, whether to buy new or used, what to watch out for when buying used, what to research, and many more things I don’t normally write about since WOLF STREET isn’t a how-to site. So here’s an in-depth conversation on the nuts and bolts of the industry I used to work in: And here’s more: Subprime Auto-Loan Backed Securities from 2015 on track to be Worst Ever. Read… This Toxic Trifecta for Auto Loans is Fueling #Carmageddon

Mark Hanson: Housing Bubble 2.0 - The End Is Nigh?  - (www.zerohedge.com) "If, the past 8-years of a Fed in Armageddon-mode created the 'everything bubble', what will shifting monetary policy into reverse do to said asset price levels? ..Remember, a 'house-price recovery' and 'housing market recovery' are two vastly different things." The incredible essay below is reproduced here with permission by Dr. Hunt for Epsilon Theory. If Dr. Hunt is even moderately accurate, which I believe he is, the housing market headwind on deck could be every bit as powerful as what hit at the end of Bubble 1.0. Bottom line: The Fed, during Obama, did everything in its power to surge all asset prices — stocks, bonds, real estate, collectables, et al — with no regard for its own guidance, as to when it would take its lead-foot off the accelerator.  Now, under Trump, they are doing the exact opposite;  looking “through” all the obvious coincident and near/mid term, economic weakening trends in an effort to raise rates as quickly as possible.  If, the past 8-years of a Fed in Armageddon-mode created the “everything bubble” (hat-tip Wolf Richter), what will shifting monetary policy into reverse do to said asset price levels? Back in Bubble 1.0, the helium came out of house prices when the “unorthodox credit and liquidity” was forced out of the markets all at once precipitated by the mortgage credit market implosion.  Quickly, house prices “reattached” to end-user, shelter-buyer employment, income, and credit fundamentals…or, to what end-user, shelter-buyers could really buy using a traditional, 30-year fixed rate mortgage, and a truthful loan application, which was about 30% less.

Ten years since the global financial crisis, world still suffers 'debt overhang'  - (www.smh.com.au) It is almost exactly 10 years since the financial world began a wobble that would swing into what we now know as the global financial crisis. Today, the scars of the global financial crisis remain. There have been trillions of dollars in losses. And in a world of subpar economic growth, even optimists are downbeat about whether the economic medicine has been taken... Firstly, excessive debt. In the aftermath of the world market crash, rather than pushing for debt destruction, world leaders used fiscal and monetary policy to fan demand. Global debt now stands at a staggering US$215 trillion.

History of Great Depression Interest Rates Shows "Waiting-for-Recovery Exhaustion Effect" Echoed in the Present - (www.alhamgrapartners.com) The similarities are remarkable, particularly in this "reflation" view. It proves, I suppose, irresistible because of human nature; again the belief that lack of full recovery is somehow impossible. At some point after so many years, "we" believe recovery just has to kick in if for no other reason than luck, and therefore amplify whatever small positive indication into the convincing proof it never was. Belief in authorities certainly plays a role, but as the history of all these curves really shows, that belief isn't permanent. The longer it goes without recovery, the lower curves drop in each cycle, meaning the more jaded (for every good reason) these markets become. It is not so much despair vs. reflation or hope, rather it's making peace with reality. To today's policymakers, the yield curve as well as eurodollar futures are some kind of mystery. They aren't. They simply prove that these people who claimed to have studied all the necessary facets of the Great Depression didn't actually do that. How else could 2008 have happened, let alone the aftermath? They surely didn't listen to Friedman.

OTHER STORIES:

Asian Stocks Face a Mixed Start; Euro Gains: Markets Wrap - (www.bloomberg.com)
Italy, EU Race to Find Solution for Two Troubled Banks - (www.bloomberg.com)
Liquidity is the liquid of life for the rally, BMO's Jack Ablin says - (www.cnbc.com)

Australia's Haunted Housing Market - (www.bloomberg.com)
The Car Was Repossessed, but the Debt Remains - (www.nytimes.com)
U.S.-Led Coalition Shoots Down Syrian Military Jet West Of Raqqa - (www.npr.com)