KeNo's Housing and Economic Portal: Thursday January 23 Housing and Economic stories

Wednesday, January 22, 2014

Thursday January 23 Housing and Economic stories

The Bearish Call to End All Bearish Calls - (online.wsj.com) In what may be the bearish call to end all bearish calls, one technician believes 2014 will be the year of “major reversals,” with the Dow Jones Industrial Average expected to start a two-year decline that could eventually take it down more than 70% to below 5000. United-ICAP chief market technician Walter Zimmerman said the Dow Industrials could still rally another 4% or so first, to a high around 17150, before the great reversal begins. And for those who thought 2008 was the worst bear market they will ever see, just wait. “Based on our longer-term time cycles the present stock market rally must be considered the bubble to end all bubbles,” Mr. Zimmerman wrote in a note to clients.

China Said to Escalate Shadow Banking Curbs With New Rules - (www.bloomberg.com) China’s Cabinet imposed new controls on the multi-trillion-dollar shadow-banking industry with an order that targets off-the-books loans and shores up enforcement of current rules, two people familiar with the matter said. The regulations include a ban on transactions designed to avoid regulations, such as moving interbank loans off balance sheets to reduce banks’ reported levels of lending, said the people, who asked not to be identified because the order hasn’t been made public. The rules were sent to ministries and local governments last month, the people said. Shadow finance refers to lending outside the banking system.

Where Deflation Risks Stir Concerns - (online.wsj.com) Why worry? If economies cope with inflation, why not with deflation? For centuries until World War II, capitalist economies experienced periods of severe deflation interspersed with spells of inflation and continued on a path of long-term growth. But historical experience is one reason policy makers don't want a return to the 19th century. Germany's hyperinflation in the 1920s was followed in the 1930s by deflation that created widespread economic hardship in that country as prices fell 23%. Today, German policy makers aren't too worried. A paper published in December by the Bundesbank, Germany's central bank, proclaims, "No deflation in sight." In Germany, that may be true: The latest figure for November shows annual inflation of 1.6%, the third highest in the euro zone.

Retreating U.S. stimulus poses risk to world recovery - (www.reuters.com) For emerging markets - major beneficiaries of cheap money unleashed by Fed stimulus - a scaling back of the program will prompt investors to reduce their holdings of stocks and bonds. Short-term economic growth could suffer due to a failure to reform during the years of easy money. Turkey is one country that relies on foreign capital to plug holes in its balance of payments and the country will be in focus again in the week ahead, not least because Ankara faces its greatest period of political instability in a decade. Markets have calmed since the last week of 2013, when Prime Minister Tayyip Erdogan dismissed police officers involved in a corruption investigation that has dragged in relatives of ministers and others with close links to the government.

Bond Tab for Biggest Economies Seen at $7.43 Trillion in ‘14 - (www.bloomberg.com) The world’s biggest economies will need to refinance $7.43 trillion of sovereign debt in 2014 as bond yields begin to climb from record lows, threatening to raise borrowing costs while nations struggle to bring down elevated budget deficits. The amount of bills, notes and bonds coming due for the Group of Seven nations plus Brazil, Russia, India and China is little changed from 2013 after dropping from $7.6 trillion in 2012, according to data compiled by Bloomberg. At $3.1 trillion, representing a 6 percent increase, the U.S. faces the largest tab. Russia, Japan and Germany will see refinancing needs drop, while those of Italy, France, Britain, China and India increase.

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