Wednesday January 1 Housing and Economic stories

TOP STORIES:

EU lawmakers reach agreement on bank rescue rules - (www.euobserver.com) The bank recovery and resolution directive, which will apply to all 28 EU countries, sets out the hierarchy of creditors to be 'bailed-in' in the event of a bank crisis. Shareholders and bondholders would be first in line, with savers last in the queue, while tapping public money to prevent a bank collapse would only be done as a last resort. The new rules on bail-in will take effect from January 2016. Under the agreement, the bail-in rules would apply at least until 8 percent of a bank's total assets have been wiped out. Welcoming the deal on Tuesday night (11 December), Gunnar Hökmark, the centre-right MEP tasked with steering the legislation through Parliament, said that the bail-in mechanism "sends a clear message that bank shareholders and creditors will be the ones to bear the losses on rainy days, not taxpayers. "

Thai crisis deepens as PM's supporters weigh in - (www.reuters.com) Thai Prime Minister Yingluck Shinawatra's red-shirted supporters said on Wednesday they were ready to defend her government in the streets from an elite-backed protest movement seeking to install an unelected "People's Council". The warning highlights the risks of a crisis centered on the electoral and legislative power of the Shinawatra family, revered by the rural and urban poor but reviled by Bangkok's royalist elite as inept and graft-ridden. The turmoil has veered from violent protests in which five people were killed and more than 300 wounded to occupations of government buildings and, in recent days, bewildering statements by Suthep Thaugsuban, a veteran politician who quit the mainstream opposition to lead the protesters.

Ukrainian Life on Hold as Fight for Europe Grips Kiev - (www.bloomberg.com) For much of the past three weeks, Sergei Veklenko hasn’t given much thought to his clients or the 150 employees of his office supply company. Instead, he’s been out on the frozen streets of Kiev -- protesting to help bring about what he sees as a better future for Ukraine. “Of course I’m sacrificing some of my business interests by being here,” he said at Kiev’s City Hall, where demonstrators sheltered as the temperature hit an overnight low of minus 12 degrees Celsius (10 Fahrenheit). “But any investment is a risk. This is one big and very powerful investment in the future.” Like Veklenko, thousands of protesters are skipping work to demand the government’s ouster and steer Ukraine toward closer ties with the European Union. The continuing protests, now in their fourth week, spell further trouble for an economy going through its third recession since 2008, where foreign currency reserves are at a seven-year low.

IBM Says Economy Remains Discouraging - (www.bloomberg.com) International Business Machines Corp. (IBM), the world’s largest provider of computing services, continues to face economic challenges as it tries to reignite declining sales, Senior Vice President Erich Clementi said. Demand for technology services, IBM’s biggest source of revenue, “depends on what the economic climate is, and that has not been very encouraging,” Clementi said at a Bank of Montreal conference in New York yesterday. “Europe has shown signs of recovery. North America has been a little more uncertain.” Many businesses remain wary about spending money on physical assets, such as computer hardware, machinery or warehouses. Instead, they’re using software and cloud-computing services to increase efficiency and reach more customers over the Internet. While IBM ultimately expects to benefit from that shift to the cloud, the hardware slump has contributed to six straight quarters of declining revenue.

Iceland jails former Kaupthing bank bosses - (www.bbc.co.uk) Four former bosses from the Icelandic bank Kaupthing have been sentenced to between three and five years in prison. They are the former chief executive, the chairman of the board, one of the majority owners and the chief executive of the Luxembourg branch. They were accused of hiding the fact that a Qatari investor bought a stake in the firm with money lent - illegally - by the bank itself. Kaupthing collapsed in 2008 under the weight of huge debts. For years, Kaupthing and other Icelandic banks had aggressively pursued overseas expansion plans, but when they went into administration, they brought the country's economy to its knees. Just a few weeks before the collapse, Kaupthing announced that Sheikh Mohammed Bin Khalifa Bin Hamad al-Thani had bought a 5.1% stake during the financial crisis in 2008. The move was seen as a confidence boost for the bank.

OTHER STORIES:

[Tett] Forget the Fed, prepare for Tokyo ‘taper’ - (www.ft.com)

U.S. Budget Deal Heads for Passage by Limiting Scope - (www.bloomberg.com)

Ukraine protesters defy police, leaders reject talks with president - (www.reuters.com)

China to keep policy and growth steady in 2014, push reform - (www.reuters.com)

In China, Western Companies Cut Jobs as Growth Ebbs - (online.wsj.com)
Rajan in India Rate Dilemma as CPI Tops 11% Amid Growth Woes - (www.bloomberg.com)

Euro zone employment shows no change in third quarter - (www.bloomberg.com)

Tuesday December 31 Housing and Economic stories

TOP STORIES:

Washington is abandoning the unemployed - (www.washingtonpost.com) There's one big thing left out of the Murray-Ryan budget deal: unemployment insurance. On December 28, federal jobless benefits expire for 1.3 million workers. These aren't normal unemployment benefits. These are the extended, emergency benefits meant to help the long-term unemployed. A little-known fact about the economy is that short-term unemployment — the percentage of the labor force unemployed for five weeks or less — is back down to where it was before the recession. It's long-term unemployment — which lasts more than 27 weeks — where the crisis lingers. No one has a very good answer for these workers. They're often stuck in areas of the country where jobs are scarce. They face a vicious cycle of employment discrimination in which employers don't want to hire them because they've been unemployed for so long, which in turn extends their unemployment and makes it even harder for them to find a job. And now we're just cutting them loose. "If there was ever time to err on the side of overextending jobless benefits, it would be now,"wrote Jim Pethokoukis at the conservative American Enterprise Institute.

Blackstone's Hilton raises $2.35 billion in record hotel IPO - (www.latimes.com) Hilton Worldwide Holdings Inc., the world's biggest hotel operator, raised $2.35 billion in a record initial public offering for a lodging company. The company and existing shareholders sold about 117.6 million shares for $20 each, according to a statement Wednesday. The McLean, Va., company had offered 112.8 million shares for $18 to $21 apiece. Blackstone Group is taking advantage of U.S. stocks near highs and a rebound in the hotel market to take Hilton public six years after acquiring it for $26 billion at the end of the buyout boom. Since the New York-based private equity firm purchased Hilton, the company has expanded its room count by a third, most of it outside the U.S. and in franchised and managed hotels, which require almost no capital investment.

Bond Mutual Funds Headed for Record Withdrawals This Year - (www.bloomberg.com) Bond mutual funds are headed for record redemptions in 2013 amid signals the U.S. Federal Reserve will reduce its stimulus. Investors have removed $70.7 billion so far this year from bond funds, TrimTabs Investment Research said today in an e-mailed statement. Unless the trend reverses, the redemptions would surpass a record $62.5 billion that investors removed from bond mutual funds in 1994, according to TrimTabs. Investors have been pulling money from bond funds since May, when Federal Reserve Chairman Ben S. Bernanke first hinted that the central bank might begin scaling back its unprecedented asset purchases. The yield on the 10-year Treasury note is 2.8 percent, up from 1.93 percent on May 21, the day before Bernanke spoke about the possibility of tapering its stimulus. “The ‘taper talk’ that started in May proved to be a huge inflection point for the credit markets,” David Santschi, chief executive officer of TrimTabs, said in today’s statement, which didn’t provide details of redemptions across various categories within fixed income.

IMF chief Lagarde warns euro crisis is not solved - (www.telegraph.co.uk) IMF's Lagarde says euro crisis not solved, demands pre-emptive action from ECB. The International Monetary Fund has poured cold water over claims that the eurozone is safely recovering, calling on the European Central Bank to take pre-emptive action to alleviate the credit crunch for small business and head off the risk of deflation. Christine Lagarde, the IMF's managing director, said it is "premature to declare victory", warning that EU governments may have to ditch austerity policies and switch to fiscal stimulus to kick-start growth and avert lasting damage to the underlying economy. "Looking past the headlines, there are clearly signs that not all is well," she told a forum in Brussels, highlighting the risk of a "vicious cycle" in which depressed demand and stagnant investment feed on each other. The warning came as fresh data showed Greece's recovery may be stalling again, with mounting risks of a relapse into recession over the winter. The Greek statistics office said industrial output had fallen 5.2pc in October, a sharp deterioration from minus 1.3pc in September.

Global economy's recovery is a sheep in wolf's clothing - (www.marketwatch.com)  Officials promote government of the debt, by the debt, and for the debt. Many global stock markets are making new highs almost daily. Even the Nasdaq has risen to levels not seen since the 2000 tech bubble, as technology stocks are back in fashion with everybody looking for the new Google, Facebook or Twitter. Such is the bubble environment that a reader of the Financial Times commented that even an alien invasion would result in stock prices rising. Equity analysts would argue that companies could look forward to the prospect of gaining new non-human customers. Investors assume that the global financial crisis is now ancient history and normality has returned. But while financial markets are buoyant, the real economy remains moribund, stuck in a “secular stagnation” of low, volatile growth, high and rising debt, slow investment, overcapacity, high unemployment, low income growth and negative real interest rates. Yet despite talk of recoveries and reforms, little has actually changed. The global financial crisis (GFC) was the result of high debt levels, global imbalances, excessive financialization of economies and an entitlement society, based around borrowing-driven consumption and unfunded social entitlement programs in developed countries. These root causes remain substantially unaddressed. Since 2007, total debt levels in most economies have increased. Higher public borrowings have offset debt reductions by businesses and households. If unfunded entitlement obligations for pensions, health care and aged care are included, the level of indebtedness increases dramatically.

OTHER STORIES:

Eurozone industrial output in unexpected slump - (finance.yahoo.com)
China New Loans Exceed Estimates  - (www.bloomberg.com)
EU States Move Toward Clash With Lawmakers on Bank Plan - (www.bloomberg.com)
Germany Bends in Bank-Failure Talks Before EU Summit - (www.bloomberg.com)

China November Home Sales Rise to 2-Year High, Defying Curbs - (www.bloomberg.com)
U.S. Budget Deal Heads for Passage by Limiting Scope - (www.bloomberg.com)

IBM Says Economy Remains Discouraging - (www.bloomberg.com)

Wall Street Exhales as Volcker Rule Seen Sparing Market-Making - (www.bloomberg.com)

Monday December 30 Housing and Economic stories

TOP STORIES:

Madoff Planned Everything, Cried Before Arrest, Jury Told - (www.bloomberg.com) Bernard Madoff planned every detail of his firm’s demise in the days before he was arrested five years ago today to avoid being marched past his 200 employees in handcuffs, the con man’s former finance chief told a jury. Madoff, in papers spread across his desk, wrote a series of names and dates in a schedule of events leading up to the exact day his $17 billion Ponzi scheme would finally come to light, Frank DiPascali, the former executive, testified yesterday in Manhattan federal court in the trial of five ex-colleagues. DiPascali, who joined Madoff’s company as a researcher in 1975, when he was 19 years old, said he learned of the plan during a private meeting on Dec. 3, 2008, about a week before his arrest, after Madoff had been “staring out the window all day.” “He turned to me and said, crying, ‘I’m at the end of my rope,’” DiPascali told a jury. When DiPascali expressed confusion, Madoff shouted, “I don’t have any more goddamned money -- don’t you get it? The whole goddamn thing is a fraud!”

Volcker Rule Change Lets Banks Continue Muni Market Speculation - (www.bloomberg.com) U.S. financial regulations that curb banks’ ability to speculate with their own money included an exemption for the $3.7 trillion municipal bond market after issuers complained the rules could increase borrowing costs. The Volcker Rule, issued today by regulators, allows banks to invest in securities issued by states, localities and government agencies. A draft version would have barred the practice with debt sold by agencies and authorities. The Municipal Securities Rulemaking Board has estimated that such issuers account for about 40 percent of municipal bonds. The change is a victory for borrowers and municipal securities dealers that pressed regulators to broaden the exemption. Without it, agencies that sell bonds for public works projects said they might have faced higher borrowing costs by eliminating banks as investors.

Protesters halt Google's commuter bus in San Francisco - (abclocal.go.com) People are angry in one San Francisco neighborhood over what they call an invasion by dozens of private shuttle buses operated by tech companies that take their employees to and from work. They are large buses that ferry people to and from Silicon Valley and they drive around in the Mission District during the evening commute. The buses are from companies like Apple, Google, Facebook and Genentech and often stop at public bus stops in the Mission District, which sometimes cause problems for traffic and for buses operated by Muni. During the morning commute hour on Monday a group of activists decided that they had enough and marched right onto Valencia and 24th streets. Protesters say they were just doing what the city wouldn't: Penalizing Google for parking at a city bus stop. "They're not allowed to use these bus stops. They don't have a permit, they use over 200 of them in the city, and stop there, thousands and thousands of times," San Francisco Displacement and Neighborhood Impact Agency spokesperson Leslie Dreyer said. The fine would be $271 if it were enforced.

The rich do not pay the most taxes, they pay ALL the taxes - (www.cnbc.com) Buried inside a Congressional Budget Office report this week was this nugget: when it comes to individual income taxes, the top 40 percent of wage earners in America pay 106 percent of the taxes. The bottom 40 percent...pay negative 9 percent. You read that right. One group is paying more than 100 percent of individual income taxes, the other is paying less than zero. It's right there in Table 3 on page 13 of the report. The numbers are based on 2010 IRS and Census Bureau figures. How does someone pay negative taxes? The CBO's formula offsets whatever taxes are paid with "refundable tax credits." Some of these are due to "government transfers" of money back to the taxpayer in the form of social security and food stamps.

Why state tax collections may be set to fall NYT - (www.cnbc.com) While states are continuing to see modest progress in their struggle to dig out from the 2008 recession, the era of chronic budget instability and wholesale service cuts appears to have ended, according to a report released Tuesday by the National Association of State Budget Officers. The rate of revenue growth in 2014, however, is expected to be significantly lower than in 2013, the report said. Of particular concern to budget officers was a falloff in the taxes that states are projected to collect this fiscal year, said the executive director of the association, Scott Pattison. Growth is expected to be essentially flat — 0.8 percent — in the 2014 fiscal year, which started in October, compared with an estimated 5.7 percent increase a year before. One reason for the smaller growth was a one-time surge of revenue in 2013 due to changes in federal tax laws that led some individuals, particularly the most wealthy, to sell assets before Jan. 1, 2013, to avoid higher rates for capital gains and dividends.

OTHER STORIES:

Wall Street Exhales as Volcker Rule Seen Sparing Market-Making - (www.bloomberg.com)

Banks Poised to Reduce Rate-Swap Trading as Revenue Seen Reduced - (www.bloomberg.com)

China New Loans Exceed Estimates - (www.bloomberg.com)
EU States Move Toward Clash With Lawmakers on Bank Plan - (www.bloomberg.com)

SNB Gauges Bubble Risks as Euro Crisis Danger Recedes - (www.bloomberg.com)

The Volcker Rule Is Tough. It's Complicated. Will It Be Effective? - (www.bloomberg.com)

Americans Say Dream Fading as Income Gap Shows Unequal Chances - (www.bloomberg.com)

Friday December 27 Housing and Economic stories

TOP STORIES:

Could Detroit Bring Down The Chinese Economy? - (www.mfi-miami.com) For those of you who missed it, Gordon Chang at Forbes wrote a great piece today about Chinese real estate speculators buying property like crazy in Detroit and how they are encouraging other rich Chinese to park their money in Detroit. Chinese shoppers can’t resist a bargain.  Where else can you buy a two-story home in the U.S. for $39?  China Central Television, the state broadcaster, in March reported that two houses in Detroit cost the same as a pair of leather shoes.  No wonder a poster on Sina Weibo, the Twitter-like service, asked, “Seven-hundred thousand people, quiet, clean air, no pollution, democracy — what are you waiting for?” Who says the Chinese are waiting?  Dongdu International Group of Shanghai bought, sight unseen, two downtown icons, the David Stott building for $4.2 million and the Detroit Free Press building for $9.4 million, both at auction this September. Moreover, Chinese purchasers are making bulk purchases of “inexpensive properties” — those selling for $25,000 or less — in the rings surrounding the city center.  “They’re banking on the downtown resurgence spiraling out into those rings,” explains Kelly Sweeney of Coldwell Banker Weir Manuel.  Mainland parties often buy at tax and foreclosure sales, hold their property, and patiently wait for appreciation.

Ukraine Riot Police Flood Anti-Government Protest Camp - (www.bloomberg.com) Ukrainian riot police flooded into a camp built by anti-government protesters in the capital, dismantling barricades and advancing in groups to displace demonstrators. The authorities used tools including chain saws to break through makeshift wood and metal defenses around the camp at Kiev’s Independence Square, scene of the 2004 Orange Revolution. The protesters are seeking snap elections after President Viktor Yanukovych snubbed a European integration pact last month, favoring closer ties with Russia instead. The European Union’s foreign-policy chief visited the square yesterday after a 3 1/2 hour meeting with the Ukrainian leader, whose government is searching for at least $10 billion to stave off a default.

Homeless college students seek shelter during breaks - (money.cnn.com) They may have dorm rooms to sleep in during the school year, but many college students are technically homeless -- with no place to call home when classes aren't in session. Jessie McCormick, a senior at Aquinas College in Grand Rapids, Mich., has been homeless since running away right before her senior year of high school. Financial aid covers about 85% of her tuition and housing, and odd jobs that pay minimum wage, like helping out at the bookstore and setting up special events, pay for the rest. McCormick was shocked to learn, however, that her housing isn't covered during campus breaks. Instead, she must pay a fee of $12 to $24 a night (depending how far in advance the request is made), which she can't always afford. Over Christmas, the school shuts down completely and no one can stay on campus -- not even for a fee.

U.S. Investment-Grade Bond Sales Reach Record $1.125 Trillion - (www.bloomberg.com) Sales of investment-grade corporate bonds in the U.S. reached an all-time high for a second straight year as issuers took advantage of borrowing costs that touched record lows to offer deals of unprecedented size. Deere & Co. (DE)’s $1.25 billion offering today sent sales for the year to $1.125 trillion, exceeding the $1.122 trillion in 2012, according to data compiled by Bloomberg. Last week, dollar-denominated high-yield offerings also reached an annual record, pushing U.S. corporate bond sales to the most ever. Borrowers from Apple Inc. (AAPL) to Verizon Communications Inc. (VZ)tapped the bond market for the largest offerings with this year’s average yields of 3.11 percent almost 1.8 percentage points below the decade mean, Bank of America Merrill Lynch index data show. Yields have climbed from a record low 2.65 percent in May as concern mounts that the Federal Reserve is poised to curtail stimulus that’s bolstered credit markets since the end of 2008. “The main driver was for issuers to lock in low absolute yields,” Anthony Valeri, a market strategist in San Diego with LPL Financial Corp., said in a telephone interview. Borrowers tried “to get ahead of the Fed and the uncertainty over tapering. The Fed gave them more time and that probably incentivized more borrowing.” Issuers have been rushing to the market as speculation grows that interest rates will rise further as the central bank begins to curtail $85 billion of monthly purchases of mortgage bonds and Treasuries. The share of economists in a Bloomberg survey predicting the central bank will reduce its bond buying in December doubled to 34 percent after the unemployment rate fell last month to a five-year low.

Wealthy Go Frugal This Holiday Amid Uneven U.S. Recovery - (www.bloomberg.com) Last holiday season, literary agent Linda Chester bought herself a sheared sable fur coat and red evening gown, both from Ralph Rucci, and designer suede leggings. This season, the bicoastal fashion lover settled for costume jewelry earrings from SoHo designer Iradj Moini. “I am definitely tightening my belt this year,” said Chester, who cited an uneven economic rebound and concerns over a possible stock-market bubble, as well as a desire to spend more on charity. “I really am not looking.” It’s not just low-income shoppers who are pulling back on spending for loved ones and themselves this holiday season. Wealthy folks are watching their dollars, too.

OTHER STORIES:

China Adopts Board-Game Strategy to Blunt U.S. Pivot to Asia - (www.bloomberg.com)

Puerto Rico Economy Index Has 11th-Straight Drop in October - (www.bloomberg.com)

Budget Deal in U.S. Would Reduce Automatic Spending Cuts - (www.bloomberg.com)

Ghost of 1929 crash reappears - (www.marketwatch.com)

Low wages are stalling America’s economy - (www.marketwatch.com)

Buying a Tesla with bitcoin? Not so fast - (www.cnbc.com)

This is what it will cost you to start a hedge fund - (www.cnbc.com)

Investor sentiment hints at Santa Claus rally - (www.cnbc.com)

Thursday December 26 Housing and Economic stories

TOP STORIES:

Ghost of 1929 crash reappears - (www.marketwatch.com) In fact, the stock market is right now tracing out a pattern eerily similar to the lead up to the infamous 1929 market crash. The pattern, illustrated by Tom McClellan of the McClellan Market Report, and brought to his attention by well-known chart diviner Tom Demark, is shown below. Excuse me for throwing some cold water on the fever dream Wall Street has descended into over the last few months, an apparent climax that has bullish sentiment at record highs, margin debt at record highs, bears capitulating left and right, and a market that is increasingly dependent on brokerage credit, Federal Reserve stimulus, and a fantasy that corporate profitability will never again come under pressure. On a pure price-analogue basis, it’s time to start worrying. Fundamentally, it’s time to start worrying too. With GDP growth petering out (Macroeconomic Advisors is projecting fourth-quarter growth of just 1.2%), Americans abandoning the labor force at a frightening pace, businesses still withholding capital spending, and personal-consumption expenditures growing at levels associated with recent recessions, we’ve past the point of diminishing marginal returns to the Fed’s cheap-money morphine. All we’re doing now is pushing on the proverbial string. Trillions in unused bank reserves are piling up. The housing market has stalled after the “taper tantrum” earlier this year caused mortgage rates to shoot from 3.4% to 4.6% between May and August. The Treasury market is getting distorted as the Fed effectively monetizes a growing share of the national debt. Emerging-market economies are increasingly vulnerable to a currency crisis once the taper finally starts.

First China Default Seen as Record $427 Billion Debt Due - (www.bloomberg.com) Chinese company debt twice the size of Ireland’s economy will come due in 2014, spurring concern the nation is on the cusp of its first corporate bond default. A record 2.6 trillion yuan ($427 billion) of interest and principal on securities issued by non-financial companies must be repaid next year, 19 percent more than this year and the most since ChinaInternational Capital Corp. began compiling the data in 2008. Ten-year AAA corporate bond yields surged 89 basis points since Dec. 31 to 6.18 percent, touching a record 6.23 percent on Nov. 27. That compares with a 70 basis-point rise to 2.68 percent for similar-rated notes globally. People’s Bank of China Governor Zhou Xiaochuan’s signal the central bank will act to prevent excessive leverage has contributed to the surge in borrowing costs and forced many firms to delay financing plans. Rising interest rates may cause a “partial debt crisis to explode,” the official China Securities Journal said in a Nov. 26 editorial.

J.P. Morgan Is in Talks With U.S. Over Madoff Warnings - (online.wsj.com)  The U.S. Attorney's Office in Manhattan is looking into why JPMorgan Chase & Co did not file a suspicious activity report about Bernard Madoff before he was arrested for running a multibillion-dollar Ponzi scheme, the Wall Street Journal reported on Friday, citing people close to the probe. The bank is negotiating a settlement with U.S. Attorney Preet Bharara's office over the matter that will likely include a fine and a deferred prosecution agreement, the Journal reported. A spokesman for the bank could not immediately be reached for comment on the Journal story. JPMorgan had raised concerns with UK regulators about Madoff more than a month before his arrest in December 2008, the Journal reported. In a document filed with Britain' Serious Organized Crime Agency, the bank raised several concerns about Bernard L Madoff Investment Securities, such as returns that appeared "too good to be true," the Journal said. Madoff had a banking relationship with JPMorgan for two decades, the Journal said. In addition to the Madoff case, prosecutors and the Federal Bureau of Investigation are examining whether there was a larger pattern of failed controls at the bank, the paper said, citing people close to the probe.

Auto Lending Standards Plunge: New Car Loans Average 110% LTV; Used Car Loans 133% LTV with 55% Subprime! – (www.safehaven.com) The average loan on a new car climbed to $26,719 in the third quarter, up by $756 from a year earlier, and the most in at least five years, according to data collected by Experian Plc. Despite borrowing so much more, average monthly payments on new car loans rose only $6 to $458. That is because banks and finance companies were willing to lend at lower rates and grant borrowers more time to repay.

Lenders made 26.04 percent of their loans on new cars to buyers with subprime credit scores, up from 24.84 percent a year earlier, said Experian, which collects car title and financing information to compile its reports. For loans on used cars, the portion to subprime borrowers rose to 54.95 percent from 54.43 percent. As the lenders made bigger loans, they also extended credit further beyond the value of the vehicles. The average loan-to-value on new cars rose to 110.6 percent, up by 1.17 percentage points. On used cars it rose to 133.2 percent, up by 2.18 percentage points.

Risk Of A Major Stock Market Decline Outweighs - (www.businessinsider.com)  The following comment brings together in one article the various themes we have been writing about weekly, and emphasizes why we are maintaining our bearish position at a time when so many bears have thrown in the towel. The market continues to rise solely on the perception that the Fed’s easy money policy can hold stock prices up indefinitely.  We think that this line of thinking will prove to be no more durable than the dot-com bubble that peaked in early 2000 or the housing bubble that topped out in late 2007.  In both cases the market gave back a large proportion of the gains made during the bull market, and we believe that will prove to be the case this time as well.  When the vast majority of investors faithfully believe in a concept, no matter how faulty it may be, momentum takes over and the market goes up because it’s going up, ignoring all of the obvious warnings such as high valuations, over bullishness, decreasing earnings momentum and an underperforming economy.  When reality suddenly sets in, as it inevitably does, most investors are left holding the bag, hoping that the market doesn’t go any lower.

OTHER STORIES:

Retail, big-money crowd heading in opposite ways - (www.cnbc.com)

Investors are fleeing the municipal bond market - (www.cnbc.com)

What a 241 year-old Dutch credit crisis tells us about market optimism - (www.qz.com)

US household net worth reaches all-time high - (www.cnbc.com)

Ghost of 1929 crash reappears - (www.marketwatch.com)

Low wages are stalling America’s economy - (www.marketwatch.com)

Buying a Tesla with bitcoin? Not so fast - (www.cnbc.com)

This is what it will cost you to start a hedge fund - (www.cnbc.com)

Investor sentiment hints at Santa Claus rally - (www.cnbc.com)