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The Latest Example Of The Slowdown

A report from Globe St. “As the cycle continues to mature, apartment developers are seeing more opportunities for ground-up apartment construction in semi-urban or urban-core-adjacent neighborhoods and mid-rise construction. Some capital sources have been concerned about overbuilding in urban core markets, where most apartment construction has been concentrated this cycle. ‘Because there has been a concern that core urban markets are overbuilt, we have started to look into the neighborhoods surrounding the urban core,’ says Navi Sandhu of Century West Partners and Fifield Cos.”

From WCPO in Ohio. “Luxury apartments with health clubs, stainless steel appliances, and granite counter tops are all the rage these days with millennials. But tenants in a new Loveland, Ohio luxury complex are saying ‘where’s the luxury?’ Heather Poast showed us the unfinished community center at River Ridge apartments, 6 to 9 months after most tenants moved in.”

“‘There’s supposed to be a fitness center and coffee bar with free coffee,’ she said. But all that stands there is an unfinished building, surrounded by yellow tape. Tenants told us they could have moved to any number of other apartment complexes in Warren County for less money.”

From on New York. “This $48.5 million, three-story penthouse in Manhattan’s SoHo neighborhood is once again the most expensive listing of the week on®. A little over a year ago, the 8,000-square-foot, four-bedroom, seven-bath condo was introduced with a significantly higher asking price of $65 million.”

“The price was reduced to $59.5 million in November 2018, and then $52.75 million in March 2019. The home reappeared this week with a new broker and a new price tag.”

The Houston Chronicle in Texas. “The letter literally took her breath away. ‘Notice of foreclosure sale,’ Aurora St. Andrassy read as a friend drove her home from work in August 2016. The letter informed her that her home in the Sugar Branch Condominiums in southwest Houston would be sold at auction due to about $11,000 she owed to the homeowners association.”

“‘I felt a block of rocks fell on my head, my heart pounding,’ recalls St. Andrassy, now 85. ‘I could hardly breathe. I had to be helped, almost carried, from the car to my doorstep.'”

“‘If what the plaintiffs are alleging in this case is true, it’s been clear in this lawsuit that there is just a huge disparity of power between homeowners who live in a condo and the condo association because of the way the current law is set up, as opposed to traditional homeowners in subdivisions that have a little more protection,’ said Amir Befroui, managing attorney for the Foreclosure Prevention Project at Lone Star Legal Aid, a legal service for the poor.”

“A Houston Police Department inspection in September 2017, more than a year after the defendants became board members, found numerous code violations. The report mentioned failure to secure gates, unmaintained fencing, a dirty pool, unsafe structures, exposed hazardous materials, opened mailboxes, rodents and lack of parking illumination, among other issues.”

The Mountain View Voice in California. “Santa Clara County issued permits for 2,781 housing units from January through June this year, a precipitous drop from the 3,808 permits issued over the same period in 2018, according to the U.S. Department of Housing and Urban Development. Alameda, Contra Costa and San Mateo counties also saw permits fall over the same period, contributing to the sudden reversal of otherwise consistent growth across California extending back to the 2008 recession.”

“Part of the problem is that the price to build is through the roof, and residential projects that used to pencil out are no longer feasible, said Leslye Corsiglia, executive director of the nonprofit SV@Home. Despite the regional housing crisis and the need to build more homes, she said market forces are working against residential projects. High costs are causing some developers to revoke proposals, while projects that have already been approved are sitting inactive because of rising costs.”

“‘What we’ve seen in San Jose in particular is they have about 7,000 units right now in the pipeline, but most are stalled,’ Corsiglia said, adding that a grand total of 1,400 units have been completely withdrawn from the city’s planning process.”

The Real Deal on California. “Los Angeles homes linked to two Oscar-winning actresses and an Oscar-winning director made the news this week. Brie Larson — Laurel Canyon — and Reese Witherspoon — Zuma Beach — both sold their houses. In Encino, the former home of director Ron Howard hit the market. The Beverly Hills home that once belonged to tycoon and Hollywood producer and director Howard Hughes was set to be auctioned off.”

“In Beverly Hills, a home tied to the late — and eccentric — tycoon Howard Hughes is set to be auctioned off after some price cuts. It was most recently listed at $10.9 million, but after lingering for two years on the market, the 4,600-square-foot home is headed for auction. It’s the latest example of the slowdown in Los Angeles’ luxury market.”

“Oscar-winning actress Brie Larson took a slight loss after selling her place in Laurel Canyon. Variety reported that the actress sold the recently upgraded 2,900-square-foot residence for $2.17 million, after she purchased it in 2016 for $2.25 million.”  

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  1. ‘Part of the problem is that the price to build is through the roof, and residential projects that used to pencil out are no longer feasible…Despite the regional housing crisis and the need to build more homes, she said market forces are working against residential projects. High costs are causing some developers to revoke proposals, while projects that have already been approved are sitting inactive because of rising costs’

    Anything but admit you are broke and people can’t afford it.

        1. The late Charles Krauthammer said it years ago (and I remember disliking it at the time): we need inventors and engineers, not maids and landscapers.

          1. Yes, but we do need maids and landscapers too! The question becomes whether or not our society will allow the likes of a maid and landscaper to survive.

            My right-hand man is a cleaning guy and if it weren’t for him the Airbnb empire I have wouldn’t be doing so hot. And by the way, last week I got two full-time residents out of the Airbnb guests, which is pretty cool. One is from the middle east and the other is an MBA grad who just took a job in the area. The synergies from these short-term rental things has been very good. I have a quite a few Amazon AI programmers who use my units regularly as they come in to work on some new projects.

  2. ‘the actress sold the recently upgraded 2,900-square-foot residence for $2.17 million, after she purchased it in 2016 for $2.25 million’

    Three bubble years gone, poof!

    1. ‘…$2.17 million, after she purchased it in 2016 for $2.25 million’

      $250,000 – $170,000 = $80,000 loss over three years, before considering transaction and HODLing costs. I suppose $100,000 is throwaway money for a Hollywood actress.

        1. Ha! Don’t you wonder how much she sunk into renovations to get the place ready to sell for a higher price than she paid?

      1. I wonder if she was the one to do the upgrades. That’s even more loss. 2600 sq ft is paltry for Hollywood. But she’s worth only $10 million, which is relatively little.

        1. If she’s worth $10,000,000, then a $100,000 loss represents only 1% of her wealth.

          ‘Tis a mere flesh wound.

    2. Maybe more depending on whether she was the one who upgraded the home, the story is vague about that:

      Oscar-winning actress Brie Larson took a slight loss after selling her place in Laurel Canyon. Variety reported that the actress sold the recently upgraded 2,900-square-foot residence for $2.17 million, after she purchased it in 2016 for $2.25 million.”

        1. “split-level residence was built in the early 1950s”

          I would consider anything in the last five years as recent.

  3. ‘Some capital sources have been concerned about overbuilding in urban core markets, where most apartment construction has been concentrated this cycle. ‘Because there has been a concern that core urban markets are overbuilt, we have started to look into the neighborhoods surrounding the urban core’

    Translation – we’ve wasted billions of Yellen bucks and we’re going in search of more places to die.

    1. ‘Because there has been a concern that core urban markets are overbuilt, we have started to look into the neighborhoods surrounding the urban core’

      Uh, you guys started doing that 5 years ago. Try to keep up.

    2. When all these Yellenbucks “die,” do they actually go somewhere? I’m assuming they are absorbed by somebody. Even if it’s only reflected in stock price and dividends when companies “write it off.” Do millions of people take a tiny hit to the 401K and it’s absorbed that way?

        1. do they actually go somewhere?

          Did they actually come from somewhere?

          But they do go somewhere — into the economy, and into someone’s pockets.

          The only way money “goes away” is if the debt gets paid back. By defaulting, the money remains in the system, so the yellen bucks don’t actually die in this scenario, I believe.

          1. ‘The only way money “goes away” is if the debt gets paid back’

            I’ve explained this a few thousand times. Let’s say I build a million dollar shack. I sell it to you for a million. You have the shack, I have your million $. In the economy there are two millions. Then the value of the shack drops by half. I still have your million, you got half. Money goes away.

          2. OK Ben, I get that. So if the value stays at half a million, I guess that I, as the buyer, swallowed that loss in the forms of trips not taken or toys not bought. Which means that there’s some tour guide who made one less tour or one toymaker making one less toy. I guess it’s absorbed that way.

            But if the value goes back up a million and someone buys it for me for a million, I guess some bank created another half million.

          3. But if the value goes back up a million and someone buys it for me for a million, I guess some bank created another half million.

            Typically it’s not a big deal for some object to depreciate. Most people don’t buy cars expecting them to go up in value, unless you are a classic car value. So the depreciation is expected and is not going to affect the aggregate demand.

            The problem, as I see it, is that when housing increases is used as cash-out refi and a source of credit that fuels consumption, investment, business inventory, etc. Home “equity” becomes a proxy for working capital and when equity is reduced (or goes negative) there is a pretty substantial contraction in aggregate demand. Most people when they take out a loan to pay a vehicle, the vehicle will be worth less (maybe about half), but it doesn’t affect the broader economy too much as long as the loan is servicable. Housing is a different beast because of how it is used for credit.

  4. From the Mountain View piece: “An April report on international construction costs by the management and consulting firm Turner & Townsend found that the San Francisco Bay Area is, in fact, the most expensive place to build in the world, costing an average of $417 per square foot, followed by New York at $368. The report found a shortage of skilled labor, high hourly wages and U.S.-imposed tariffs on steel imports are all contributing to the sky-high costs, which are expected to increase by another 6% in 2019.”

    Good thing that the weather usually cooperates.

    1. Prices have been falling all over California for more than a year. The REIC has struggled to maintain their lies, but it really falls apart when the shack people just give up. Wa happened to my shortage bay aryans? Where’s Thornberg to tell us we need millions upon millions of shacks and it still wouldn’t be enough?

      People have been pouring out of California for years. This shortage nonsense was a made up thing all along.

  5. Speaking of wasting billions:

    Uber imposes engineer hiring freeze as losses mount

    ‘Uber isn’t letting tech workers join the ride, at least for now. The ride-hailing giant has been canceling scheduled on-site interviews for tech roles this week, and job applicants have been told positions are being put on hold due to a hiring freeze in engineering teams in the U.S. and Canada, according to multiple people who received the communications. Uber didn’t respond to repeated requests for comments.’

    ‘In emails sent to job interviewees, Uber recruiters explained “there have been some changes” and the opportunity has been “put on hold for now,” according to emails reviewed by Yahoo Finance.’

    ‘The hiring freeze comes after 400 layoffs in its marketing department last week, which raised concerns and fears company-wide. During a recent all-hands meeting, a question about potential layoffs in the engineering department was also raised, but executives didn’t provide any timelines. The number of hiring posts for software engineer roles at Uber peaked in March.’

    ‘The move highlights the challenges that Uber faces as it scrambles to prove to Wall Street, since its IPO in May, that it’s on the right track to achieve profitability. The company, with 100 million monthly active users, reported $5.23 billion in losses for the second quarter on Thursday. It attributed the massive loss to a $3.9 billion stock-based compensation charge due to restricted stock units that vested during its IPO. Meanwhile, revenue growth dropped 14%. Uber shares fell 6.4% on Friday, below its IPO price of $45 per share.’

    It’s gonna be another twitter…

    1. ‘The company, with 100 million monthly active users, reported $5.23 billion in losses for the second quarter’

      Losing money on every ride, but making it up on volume.

    2. LOL I have never used the Uber app and I have only rode in an Uber once, ordered from someone else’s app. My driver who didn’t speak English well said “thank you Stephanie” when I tipped him $3.00.

      1. Wow, new immigrant and he was already “woke”, 401 you are allowed to use the pronoun of your choice.

    3. “Uber imposes engineer hiring freeze as losses mount”

      Sure, dump the brains and retain the snowflakes!

    4. Uh-oh, the millennials who thought they would just use Rideshare all their life might have to get their own driver licences and cars!

    5. It is only thanks to the Fed that a company that helps you hitchhike was deemed worth billions and still is. The engineers are going to get screwed but the top guys are going to come out rich even though the whole idea was worth nothing to start with. But the Fed enabled them to sell their bullshit and make out like bandits.

    1. Yesterday I read an article on copper saying “this price plunge is gonna result in a shortage!” They never stop.

      1. Copper prices falling

        Crude prices plunging

        Housing prices cratering

        China collapsing

        All very good news for the US economy

        1. Nothing accelerates the economy like rapidly falling house prices, NOTHING.

          Let’s get interest rates back to 10% and get this economy humming again.

    2. The Wall Street Journal
      Growth Fears Send Copper Prices to Two-Year Low
      The metal, a bellwether for the world economy, declined the most this week since August 2018
      By Joe Wallace
      Updated Aug. 2, 2019 3:13 pm ET

      Copper sank to a two-year low, as renewed trade hostilities between the U.S. and China reinforced fears about the world economy.

      The metal dropped 2.9% on the London Metal Exchange on Friday, the steepest one-day drop in a year, after President Trump earlier in the week threatened to impose tariffs of 10% on an additional $300 billion worth of imports from China. The decline dragged three-month futures prices down to $5,729.50 a ton, its lowest level since June 2017.

      To Read the Full Story

      U.S.-China Trade Battle Is Crimping Global Oil Demand

        1. The obvious explanation is that investors are less interested in risk assets like copper, stocks, and houses when prices are a cratering. So investors stop buying, leading to an inventory buildup and a glut. And the only way to eliminate a glut in the absence of any uptick in demand is to reduce the offer price, which leads to more cratering.

          1. Case in point…not eeebola, but rather bubonic plague.

            Global Oil Prices Slide Into Bear Market
            Brent has fallen more than 20% since April amid concerns the trade war will curb fuel demand
            Weekly data on gasoline demand in the U.S.—the largest gasoline consumer in the world—has disappointed market expectations.
            Photo: Daniel Acker/Bloomberg News
            By Dan Molinski
            Updated Aug. 6, 2019 7:56 pm ET

            Oil investors are as worried about slowing demand as they are about excess supply, amid fresh concerns that the U.S.-China trade fight will hurt the global economy and curb fuel consumption.

            On Tuesday, the U.S. crude benchmark settled 1.9 % lower at $53.63 a barrel, while Brent, the global price, slid into a bear market after falling more than 20% from its April peak to $58.94.

            U.S. crude tumbled roughly 8% last Thursday, the steepest one-day drop since 2015, after President Trump announced a new round of tariffs on China. Analysts said that the latest tariff threats remain a worry and that if enacted on Sept. 1, as Mr. Trump pledged, they could quickly sap oil demand world-wide.

            “President Trump’s unexpected tariff announcement Thursday suddenly revived the specter of an economic slowdown—akin to bubonic plague for oil demand,” said Robert McNally, president of Rapidan Energy Group.

          2. Brent may be off 20% but US WTI is not anywhere near that. A year ago Brent was selling for ten dollars or more higher than WTI at one point $13 higher. At Fridays close the gap was down to just a little over $4. The Atlanta Fed has growth for the quarter at 1.9% which is exactly the average under Obama thus even during a trade war Trump is matching Obama. The closing of the oil price gap shows that compared to the rest of the world we are doing fine. The high dollar does hurt growth but it reflects the money that is pouring into this country to buy US. bonds and the lower interest will help growth. Dr. Copper is saying very little about the US economy. The printing of money all over the world has led to overproduction of many commodities but I would like to see a graph from you which shows that we are using significantly less copper than last year. I know we are using around a million barrels a day more oil this year than last, so demand does not seem to the problem.

          3. Did you dump your junk?

            The Financial Times
            Capital markets
            Investors dump risky assets as trade war flares
            Junk bond and equity funds have suffered their biggest outflows of the year
            Richard Henderson and Colby Smith in New York August 8, 2019

            Investors pulled tens of billions of dollars from equities and risky corporate debt over the past week, according to new data that reveals the extent of the flight to safety in the wake of the escalation of the US-China trade war and concerns about global growth.

            Equity mutual funds and exchange traded funds across the world suffered $24.5bn in outflows for the week ending Wednesday, the worst seven-day stretch of the year, led by a $15.2bn outflow from US stock funds, EPFR Global data showed. High-yield bond funds shed $3.9bn, their largest weekly outflow since December.

            The data cover the first full week since the Federal Reserve cut US interest rates by 25 basis points and disappointed investors by not strongly signalling further monetary easing. Also early in the period, US President Donald Trump promised new tariffs on China and Beijing allowed the Chinese currency to weaken in response.

            The resulting concerns about the effect on global growth spilled over into a sell-off of risk assets on Monday, when US stocks lost 3 per cent of their value, their worst daily drop of the year.

            “Investors are jittery,” said Nela Richardson, investment strategist for Edward Jones. “China is slowing, the US is slowing, Europe is slowing . . . these outflows are not just about this week, they’re about the late stages of the cycle.”

      1. Like many Californians who wish to sell their homes but can’t, Disney has priced themselves out of the market.

    1. The drop in Disney does not indicate a general economic slowdown. It’s due to Disney putting out a crappy product. By all accounts, the Star Wars movies have been utter trash. Disney’s latest strategy is to buy up old properties and re-make and re-boot the utter living sh!t out of them — we’re expecting a re-make of Home Alone — just to put bodies in theaters or in front of their new streaming service. (bonus points for remaking the movies to be “woke,” for example a female Thor and an African American Ariel.)

      The recent crappy product has exposed what most people knew all along: Disney is obscenely overpriced. They’re a money suck and the merch is terrible — the only good merch in the last decade was BB-8 and the Queen Elsa blue dress from Frozen. Everything else sucks. Disney needs some new material soon, but there is none, and I mean none, on offer.

      1. If you haven’t been to Disneyland at least once while growing-up then you have missed-out as a child and something is wrong with you that will take years to identify. You’ll have a developmental handicap that can’t be undone, you’ll never have a good job, never make it to the top, eventually you’ll realize that you’re not truly happy like those who have made the American pilgrimage.

      2. I predict that Disney’s new streaming service bundle (Disney + Hulu + ESPN) is going to crush it.

    2. Apparently Disneyland has been a ghost town all summer…canary in the coal-mine?

      I was there a few weeks ago for step-daughter’s dance performance. What a racket that is…they take advantage of the moms to get them to shell out ridiculous money to let their daughter do something they would have enjoyed as a kid. But they wouldn’t have actually enjoyed it that much…it’s the fantasy of something that doesn’t actually exist that’s being sold.

      But anyway, we got through it and there were a few highlights that made it nice if you forget about the money that’s going up in smoke every moment you’re in there. I didn’t think it was a ghost town. But it wasn’t insanely crowded like the Asian parks so maybe that’s a ghost town to them. I checked out the new Star Wars stuff but didn’t have time to wait in line for the big ride associated with it. But yes…the line was probably less than 2 hours. If that makes it a failure then I think the bigger problem is with expectations.

      1. at makes it a failure then I think the bigger problem is with expectations.

        Disneyland is overpriced, but we still took our son there this past Spring. A much better deal was our season pass to Lagoon (local theme park). We had memories all summer long.

        I can’t believe that Disneyland has become part of the “culture wars”, but here we are. Did any of you catch this crazy?

        “This is my new favorite wild mommy post. It’s me, the millennial s*** who just goes to Disney World to make children cry:”

    1. Virtual power grids that move away from centralized power distribution should be on the table not just from an environmental perspective but also from a national security perspective. Redundancy is key and the type of grid that Tesla is doing in Australia is the type that would be resilient since there is no major node to target.

      1. Tesla’s battery is not the answer it is part of the problem, a NG plant would have been a far better solution.

        1. You missed the point. An NG plant is a single point of failure and is centralized energy distribution. This would still be ripe for hacking.

          1. Battery storage Dan, batteries. Tesla is going to sell a ton of their new MegaPacks to utilities which will be useful and will start to replace nat gas peaker plants.

            A major storm took out power in Michigan for 600,000 – 800,000 people for up to six days. This had nothing to do with renewables. But if you had your own battery, you would have had some backup power. A massive power outage hit New Jersey too just a few weeks ago. Again, a good home battery pack will be part of my next place when I do buy.

          2. Battery storage Dan, batteries

            You already have a $100,000 backup battery in your garage. That will keep your beer cooler going for a few days.

    2. Most of the western democracies have systematically under-invested in infrastructure and energy grids. These blackouts seem to be happening with greater frequency, and of course almost none of the sheeple are ever prepared when the lights go out.

      Brits can stamp their little feet, but that isn’t going to fix the problem.

    3. In those countries there is less and less power than can be quickly dispatched. To keep costs down they have try to reduce the redundancy in the system but it is redundancy which increases reliability. It does not help to build more wind power which you cannot call when a plant goes down. Bottom line more alternative energy means higher prices and less reliability, it is true in Australia and it is true everywhere. Spending hundreds of millions on batteries which last a few hours and then having to shutdown coal plants due to escalating costs only makes the problem worse.

      1. ABQDan, I am referring to South Australia’s virtual power plant. Your comments suggest that you might not understand how this works. It’s not just the wind/solar or renewable mix that makes the virtual power plant work. What makes it work well is that each house has rooftop solar and Tesla power pack (e.g. battery storage). The battery storage is crucial because it means that every house is a source of redundancy for every other house. The cumulative effect of all these batteries means there is substantial capacity if any renewable source goes off line (or non-renewable source for that matter).

        The residents who are participating have had significant cuts in their power bill. Their utility bills are minuscule compared to what they were.

        1. “The residents who are participating have had significant cuts in their power bill. Their utility bills are minuscule compared to what they were.”

          Which are passed on to other consumer who cannot afford solar panels. I do not know if you read the earlier thread but when you lose Michael Moore, you have lost the war. Now, I think losing Bill Gates goes more to the merits but Moore appeals to emotion so you have now lost the heart and the brain.

      2. They ought to just take all those Teslas and put them underneath boilers to generate steam from the spontaneous combustion.

        1. Jay Leno two days ago:

          “I have a Tesla. I’ve had it for three years. I’ve never done anything. There’s no fluids to change. There’s nothing.

          “Steam ran everything from 1800 to about 1911. Then internal combustion took over from 1911 to right about now. And I predict that a child born today probably has as much chance of driving in a gas car as people today have been driving a car with a stick shift.”

          “For new technology to succeed, it can’t be equal. It’s got to be better and [Tesla] sort of solved the battery problem. It can go 350 to 400 miles at a charge. … There’s no maintenance. They’re faster than the gas car. So there’s almost no reason to have a gas car unless you’re doing long-haul duty.”

      3. Alternative energies needs to drop their bullsheet NOW and work on storage and battery tech. Keep 3-10 days of stored electricity on-site to call up at will. I bet that’s worth a few government subsidies.

        Apt 401, was anyone working on that in DOE, or was it the same feel-good BS from 1979?

        1. Look up what Jeff Dahn’s research team is doing at Dalhousie University in Canada. He’s pretty much the pioneer in advancing battery tech.

  6. ‘There’s supposed to be a fitness center and coffee bar with free coffee,’ she said. But all that stands there is an unfinished building, surrounded by yellow tape’

    This is why it’s important that companies make money. If they don’t somebody is gonna take a hit.

    1. I think my morning cup of Peets, brewed by me, costs around .18 a cup. Oh, and I clean my Krups coffee maker weekly, unlike the poorly paid “help” manning such coffee bars. Buying into “luxury” for such amenities as a free coffee bar is ludicrous.

      1. For a glorious couple of years, my daughter worked as a Peet’s barista, which meant my morning cups were free aside from the costs of grinding the beans and brewing the coffee.

        1. PS Life is still good, as her younger brother recently started working at Starbucks. He gets free beans faster than I can use them, so my friends and family are also in luck.

          1. her younger brother recently started working at Starbucks. He gets free beans faster than I can use them, so my friends and family are also in luck.

            Not if they have to drink Starbucks coffee! 😉

            (now if it were Top Pot, then I agree!)

  7. “‘I felt a block of rocks fell on my head, my heart pounding,’ recalls St. Andrassy, now 85. ‘I could hardly breathe. I had to be helped, almost carried, from the car to my doorstep.’”

    Right on cue, here comes the MSM with the Victim Chronicles. Sorry, Aurora, the only ones I feel sorry for in this scenario are your fellow condo residents who have been carrying your deadbeat asses while you let $11,000 in arrears pile up. But of course she’ll play the “frail, helpless old lady” card rather than acknowledging she had no business buying a condo she couldn’t afford.

  8. While the MSM has been beating the drum of a global recession. It is important to know what the means. Unlike in the US, where a recession means two quarters of negative growth, a global recession just means growth has slowed to between 2.5 to 3%, hardly a calamity except for globalists who are actively trying to narrow the wealth gap between the US and the rest of the world while they make their billions for their good “deed”:

      1. If the economy is growing over 3%, it’s due to Trump’s economic policies. If the economy is slowing or growing below 3%, it’s because of the Fed’s policies.

    1. Unlike denialists, the bond market is very forward looking.

      Key Bond Market Indicator Sparks Fear of Recession, But Economic Downturn Might Not Be Impending
      By Daniel Moritz-Rabson On 8/9/19 at 4:41 PM EDT

      Changes to a closely-watched bond market indicator that can signal recession has provoked concern among Wall Street analysts, but the inverted yield curve may not mean an economic downturn is impending.

      The yield curve, which measures the yields rates on bonds with different maturity dates, has inverted prior to every recession in the last 40 years. Typically, short-term bonds provide investors lower yields because they present less risk.

      But the yield rate on three-month bonds rose above the yield rate on 10-year U.S. Treasury bonds this week, trading with a gap larger than any since March 2007. Yields on the 10-year bond fell below 1.7 percent on Friday, and the 2-year bond had a yield as high as 1.64 percent.

      1. You a Bill can continue to wish but we have about 2% growth, not great but hardly a recession. We have seen negative rates for about a year every since the Fed aggressively raised rates after eight years of doing nothing. The Fed got a head of inflation. Meanwhile here is Bill wishing for the recession under Trump that the left has been hoping for every since he was elected and predicting it every year too:

  9. Even The Economist writers have finally taken note of cratering bond yields around the developed world economies.

      1. “I don’t know any other market,” Caitlin said.

        Sounds like her husband has little input regarding where to live. 🙂

        1. When Caitlin’s galactic sense of entitlement costs them a ton of money, I’m guessing hubby’s pre-existing dissatisfaction with his domineering wife is going to fracture this “union.”

    1. The owner for the first listing was really into cars. The length of the garage from floor to ceiling looked like a mechanics garage (and smelled like one too), presumably to maintain the older and pristine Corvette and Camaro as well as the newer Porsche.

    2. The Huntington Gate property is hideous. Looks like old cheap markdown/salvage tile throughout.
      The Old Westminster looks like an overpriced rehab center

    3. It will only cost you a measly $4881 a month. Plus the Poway ISD taxes. How many billions do they owe on that bond issue again?

      1. It’ll be a 1031 exchange so the mortgage will be around $1650. After property values take a hit, I’ll have the property value reassessed for tax purposes.

        I’m familiar with the bond situation but PUSD is the best school district in San Diego for children with special needs. Outside of Poway but still within the school district’s boundaries, most homes have HOAs and Mello-Roos.

        1. Everyone does the best they can for their children. Good on you for figuring out a way to get your son the help he deserves. The CEO of the company I worked for about 10 years ago had a son who was high-functioning Asperger’s. Traditional and charter schools didn’t work for him. His mom was a professor at BYU and he did half-day home school and basically skied up at Sundance and got really big into mountain biking. The whole kinetic learning avenue was beneficial for him. The kid thrived and seems to be doing well now. Traditional schooling for kids on the spectrum can be challenging. My wife deals with several students who have IEPs and it’s difficult to get them the help they need. Good luck!

    1. An up-and-coming artist or musician will easily snap this up….all cash of course, and over ask just to impress

    1. The Bond Market Smells Big Trouble. Where to Hide.
      By Alexandra Scaggs
      Aug. 9, 2019 9:05 pm ET
      Illustration by Zohar Lazar

      Bond investors tend to fixate on worst-case scenarios, and that has been the case in the past two weeks. Bonds rallied and yields tumbled around the world, with holders of 30-year U.S. Treasury bonds earning a supersize (for bonds) 8.4% on their money over 10 trading sessions.

      Run-of-the-mill worries about corporate profits or tighter monetary policy can’t be blamed for the latest gyrations, which sent 10-year Treasury yields as low as 1.6% Wednesday, especially as three Asian central banks announced surprise rate cuts this past week. Something else is gnawing at the market—fears of a looming recession, perhaps, or an escalation of the trade spat between the U.S. and China, or even a Chinese military response to the weeks-long protests in Hong Kong that could spark a regional conflict and draw in other countries. Global markets are “expecting Armageddon,” as one trader wrote in a note to clients on Wednesday.

      Around the world, even the safest bond markets are priced for bad outcomes, and fixed-income investors should prepare for a bumpy ride. The amount of debt with negative yields topped $15 trillion last week for the first time, according to the Bloomberg Barclays index.

    2. Stock Market Builds On Losses; China, Brexit Add To Fears
      PAUL WHITFIELD 8/09/2019

      The U.S. stock market started Friday on a weak note and then built on the losses. Trade-war fears flamed up on reports that President Donald Trump will hold off on licenses for U.S. companies seeking to do business with China’s Huawei Technologies.

      Trump’s move was in response to China’s decision to halt purchases of U.S. farm goods. According to a CNBC report, Trump said, “China wants to do something, but I’m not doing anything yet. Twenty-five years of abuse. I’m not ready so fast.”

    1. I actually do believe he committed suicide. Not out of remorse, but out of a recognition that it was game over for his high-roller lifestyle. It was easier to check out than to face the trials, the lawsuits, and the prison time that awaited him. Death was preferable to the alternative.

      1. I agree that’s more likely than pulling off a murder in a prison like that. He plead not guilty. Bail was refused, he knew they had what was in his safe, more accusers every day, and those court documents were unsealed 24 hours before his death. Even had he turned states evidence there’s no way he was ever going to be a free man again. Like I said, his suicide, if that’s what it turns out to be, means these women are likely telling the truth.

        1. I agree that he probably did himself in but where were the guards in what should have been a high security situation? It does not make sense to me and more importantly it does not make sense to Bill Barr.

          1. Alive, Epstein could spill the beans. Dead, the prosecution timeline of other defendants accelerates.

        1. PJW really cuts to the chase. No wonder the Oligopoly has gone all out to deplatform, demonetize, and silence him.

  10. I lost my internet for most of the day, so I’ll catch up on the crater tomorrow.

    I was thinking about this Epstein thing. If he killed himself it would have to mean he was guilty of some pretty serious crimes. Crimes that would mean he would never get out of prison. If he was innocent, or even had an idea he could get off or not serve much time, he would have gone to court. He had money for lawyers. An innocent person would not kill himself before the trial began.

    If someone had him killed, it would also be because Epstein had committed some serious crimes and could possibly implicate those who had him killed. So either way, IMO Epstein’s violent death means there’s something to all this. And isn’t it most likely that the crimes Epstein must have done are the ones he’s charged with? Trafficking under-aged girls to others for sex?

    Who was in Epstein circle? Not mobsters, not drug smugglers. It was super wealthy, royalty, politicians, celebrities. It looks to me that this death must mean these girls were being trafficked to some of these people. There are “co-conspirators” (reportedly ex-employees) in the indictment. And I don’t think this thing is over by a long shot.

    1. The guy on the gurney seemed a bit off, appearance-wise.
      I don’t see what use JE would be to the cabal now under a different identity since his m.o. was cultivating friendships with people he could use/blackmail.

    2. One report I heard on the radio said that they had called off the suicide watch. He didn’t want to be embarrassed; nobody wanted him to spill the beans. And no, I don’t think it was Trump.

      Ben says below they also have the employees. Surely Epstein didn’t host all those parties by himself. They might sing more sweetly than Epstein ever would have. Let’s see if they turn up dead too.

    3. Child molesters are at the very bottom of the totem pole in jail, so killing him would be a mark of honor among inmates.

  11. Apparently the REIC is still seeing “shortage” everywhere. The shortage is due to high prices; a shortage of affordable houses. Lower mortgage rates aren’t helping boost sales. It’s apparently a conundrum, but the obvious culprit is that prices are too darn high.
    Real Estate
    Lower Mortgage Rates Aren’t Likely to Reverse Sagging Home Sales
    Market has been weighed down by steep prices, limited [affordable] starter-home inventory
    By Laura Kusisto
    Aug. 9, 2019 10:43 am ET

    excerpts here…

    “Average rates for a 30-year mortgage hit their lowest level since November 2016, falling to 3.6% from 3.75% last week, Freddie Mac said on Thursday. Those mortgage rates have been falling for much of this year, after hitting nearly 5% in November.”

    “Existing home sales [~90% of the market] are down about 4% so far this year, according to an analysis of National Association of Realtors data by Ted Jones, chief economist at Stewart Title Guaranty Co.”

    “Even in more affordable markets, falling rates may have come too late to offer a significant boost to the housing market. About 40% of existing home sales take place from March through June each year.
    “We’re already far along in the housing season. I think people were making the decision whether to buy or not earlier in the year,” said Daryl Fairweather, chief economist at Redfin.”

    “The strongest headwind facing the housing market at the moment is a shortage of [affordable] starter homes, said Sam Khater, chief economist at Freddie Mac. Lower mortgage rates could make those homes slightly more affordable to buyers but don’t help if they simply can’t find homes in their price range to buy.”

    1. “It’s apparently a conundrum, but the obvious culprit is that prices are too darn high.”

      I would say the problem is that the prices sellers are willing to accept are higher than what buyers are willing to pay. Rather than sell at a loss relative to expectations, sellers who don’t need to sell are keeping their homes off the market until bids exceed their strike prices. Perhaps with just slightly lower interest rates or other additional stimulus, we’ll get there!

    1. Sounds like oil prices are headed even lower, thanks to an additional source of new supply to augment the extant glut.

      1. The expected supply is from the shale fields, lower pipeline costs will help that but decreasing production from individual wells means more wells will need to be drilled for the same amount of oil. This means more workers, more steel used and ironically more energy used. This will promote US growth. Already, we have worked off a substantial amount of the drilled but not fracked wells. The remaining ones are the poorest quality and thus the lowest producers. Thus, more drilling has to start soon. Probably just waiting for the pipelines to be finished some are just months a way from being finished.

        1. “…ironically more energy used.”

          Uh, no. Not ironic, but rather textbook Econ 01. Supply increases, price declines, usage increases.

          1. “Uh, no. Not ironic, but rather textbook Econ 01. Supply increases, price declines, usage increases.”

            No, more energy will be used to produce the same amount of energy, I am not talking about lower prices producing more demand since it will take higher prices just to keep production from dropping.

    2. The Wall Street Journal
      Oil Markets
      Expected Surge in Oil Supply and Tariffs Add to Glut Concern
      U.S. benchmark for crude posts biggest drop in four years as Trump threatens new levies
      By Amrith Ramkumar
      Updated Aug. 1, 2019 9:32 pm ET

      Growth in oil supply is expected to accelerate next year as global production increases, keeping crude mired in a bear market and possibly lowering fuel prices for consumers.

      At the same time, anxiety about trade tensions crimping global growth and weakening demand has bolstered concern about a supply glut in recent months, investors say.

  12. Drug charge dropped; driver said white spots were bird poop

    AUGUST 09, 2019

    A drug charge has been dropped against a Georgia Southern quarterback after a white substance he identified as bird poop on his car’s hood tested negative for cocaine.

    A Saluda County Sheriff’s Office police report said deputies pulled Shai Werts over for speeding July 31 and noticed two white spots on his car they thought were cocaine. The report says Werts told them it was bird poop he had tried to wash off. The deputies then did a field test that came back positive for cocaine and charged him with possession of the drug.

    Werts’ lawyer Townes Jones IV told The Savannah Morning News more sophisticated lab testing showed the substance was not cocaine and the drug charge was dropped.

  13. Kaneohe, Hawaii Housing Prices Crater 14% YOY On Collapsing Vacation And Retirement Property Demand As Boomer Trend Ends

    What a puzzle perhaps it is something to do with the age profile of Boomers. The youngest are 55 the oldest are 74. For many the next move they will be making is into a six foot hole or a small urn.

    1. FTfm Investing in funds
      Anxious investors rush to bond funds at fastest rate since crisis
      Almost $500bn went into fixed income products in first half of the year
      Federal Reserve chairman Jay Powell. Investors have moved to bond funds in anticipation of the central bank’s rate cut © Jim Lo Scalzo/EPA-EFE/Shutterstock
      Attracta Mooney
      August 10, 2019

      Investors have flocked to fixed income mutual funds at the fastest rate since the financial crisis, piling in almost $500bn in the first half of 2019 during trade war tensions, recessionary fears and market volatility.

      About $487bn flowed into fixed income funds this year, up from $148bn in the first half of 2018, according to figures from Morningstar, the data provider. It is the highest level of first-half net inflows into bond mutual funds for at least a decade.

      Assets under management in bond funds have doubled since 2010 to a record $9.4tn at the end of June 2019, as the spread of negative rates across fixed income markets drove up the value of the bond market globally.

      Robert Tipp, head of global bonds for PGIM Fixed Income, the US asset manager, said investors were grappling with increased volatility in equity markets at a time when levels of savings are high.

      “With ageing demographics and burgeoning savings, bond markets are attractive. Trade tensions, very muted growth globally and high volatility have also pushed investors to bonds,” he said. “The bottom line for investors is they are looking for income and are concerned about risk.”

      Bond funds have emerged as a big winner in the shift in central bank policy this year, with investors flocking back to the products in anticipation of interest rate cuts and further monetary easing from central banks globally.

    2. Aug 9, 2019, 3:58 pm
      Who In The World Is Buying All These (Low and Negative Yielding) Bonds?
      Vineer Bhansali, Contributor
      I find opportunities and risks in financial markets.

      A lot has been written recently about negatively yielding bonds in the press. In full disclosure, this author has been writing about negatively yielding bonds for almost five years, though what seemed like a conundrum in the beginning has become all too normal for professionals today. But now that this “anomaly” has caught the attention of the common public, we can be sure that there will be many arguments coming out on both sides of the debate, many of which will rationalize what others consider irrational. Indeed, just in the last day I have seen viewpoints on why negatively yielding bond markets mark the top of the bond bubble similar to the dotcom crash in tech stocks in 2000, and also arguments taking the other side, saying why negative yields may be normal in a world of excess savings, extended lifespans and excess wealth. Regardless, I will say that the current level of negative yields in trillions of bonds is perhaps the biggest event of my financial career.

      1. I agree with this guy about the significance of this negative yield event. Never in the history of finance back to the invention of money has anything like this previously occurred, and nobody knows what the unwind will bring, except that it predictably will not be pretty.

        If anyone has bright ideas for how to financially survive the aftermath of this period of historically low risk premiums, please share.

        1. If anyone has bright ideas for how to financially survive the aftermath of this period of historically low risk premiums, please share.

          Surviving is easy — don’t make big bets and don’t fool yourself into believing you know what the outcome will be. Consider all the possible outcomes and position yourself to benefit at least a little from each of them, and definitely not get wiped out by any of them.

          1. Wise words. Risk mitigation is the name of the game. Blue said something wise in the other thread: sometimes return of investment is more important than return on investment.

    3. The Wall Street Journal
      Investors Ponder Negative Bond Yields in the U.S.
      Last week’s slide in Treasury yields is deepening worries about lackluster growth, low inflation
      Sam Goldfarb and
      Daniel Kruger
      Aug. 11, 2019 7:00 am ET

      A steep slide in U.S. government-bond yields last week wrong-footed investors and left some pondering what was once unthinkable: whether interest rates in America could one day turn negative.

      Historically, people who lent money out got more money back later, a way to compensate for inflation, for the risk of not being repaid and for forgoing other investments.

      Now, though, there is more than $15 trillion in government debt around the world with negative yields. That means, essentially, that savers holding these bonds are paying the government to store their money.

      So far, the U.S. has avoided that fate. Less than a year ago, the Federal Reserve was hiking short-term interest rates, and investors were betting that yields—which rise when bond prices fall—on longer-term debt would continue climbing as U.S. growth showed signs of accelerating and as unemployment plumbed historic lows.

      The trade dispute between the U.S. and China, slowing global growth and financial-market turmoil late last year changed that. The Fed pivoted in the beginning of 2019 and, late last month, cut short-term rates for the first time since 2008.

      Last week, the added fear of a currency war sent yields tumbling. That sparked new discussion about larger forces that have dragged yields below zero elsewhere and to which the U.S. may not be immune. Those include lackluster economic growth since the financial crisis and persistent soft inflation that has puzzled many economists.

      “If you proposed negative rates 10 years ago, people would have laughed you out of the room,” said Mark MacQueen, a bond manager and principal at Sage Advisory Services. “Today people are getting on board the negative-rate idea very quickly.”

      1. New conundrum for the Fed noted: You can’t QE your way out of negative bond yields. In fact, QE would only exacerbate the problem.

        1. “You can’t QE your way out of negative bond yields. In fact, QE would only exacerbate the problem.”

          Why would they need to? Governments borrow to fund things. If they can fund them without any cost, actually being paid to do it why is that a problem for them? It is when bond yield are surging when governments feel constrained. The bond market vigilantes can actually slow deficit spending. Right now, because no inflation is on the horizon, governments are free to engage in as much stimulus spending as they want.

      2. “Today people are getting on board the negative-rate idea very quickly.”

        This is flat-out amazing.

    4. Not all bond funds are created equal.

      Investors Flee Junk Bonds in Droves as Trade War Batters Markets
      By Rizal Tupaz
      and Gowri Gurumurthy
      August 8, 2019, 12:40 PM PDT
      – Buyers pull most from speculative-grade bond funds since 2018
      – Investment-grade funds had $2.8 billion of inflows for week

      Credit investors yanked cash from U.S. high-yield bond funds and added money to investment-grade securities as the global trade war and recession concerns prompted a move away from risky assets.

      Investors withdrew $4.07 billion from junk funds for the week ended Aug. 7, according to Refinitiv’s Lipper. It was the biggest outflow since the end of October as the U.S.-China trade war heated up, causing equities to drop and interest rates to rally earlier this week. Investment-grade funds posted inflows of $2.8 billion.

  14. The important thing to remember about that Texas case. Texas and Florida have among the lowest state and local tax burdens in the country, as a share of their residents’ income. Florida is in fact the lowest, despite benefitting from taxes paid by tourists and second homeowners.

    But that doesn’t count the “taxes” paid to these “private governments.”

    My guess is the same Generation Greed attitudes — we want to take more out and put less in — that are killing public infrastructure will do even more damage to private infrastructure. It’s the same sort of people after all.

    So what will happens to them when it’s time to rebuild the roads, water system, sewer system? Will they seek to free ride on those who are not in private communities by suddenly going public?

      1. I actually applaud what these people are doing. The rents and housing costs haven’t corrected as fast as we would like in these places and so they are taking things into their own hands and finding a solution. I applaud this effort. In the aggregate, this is a way of opting out of the madness and it should reduce some of the demand for rentals/purchasing and will, in theory, hasten the collapse of the bubble.

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