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The Downward Spiral In House Prices Will Continue, With Oversupply Remaining The Biggest Risk

A report from Bloomberg. “As the outbreak spreads, real estate markets in the U.S. and other countries that rely on Chinese buyers face a looming crisis as deals languish and potential purchases are delayed indefinitely. From Vancouver to Singapore, realtors are facing the same problems as their counterparts in U.S. that rely on Chinese buyers: With hundreds of millions of Chinese effectively quarantined, it’s hard to sell real estate. ‘People were planning to do open houses in early February and obviously the turnout wasn’t as good,’ said Jerry Huang, an agent in Vancouver. ‘Many investors aren’t planning to come at all.'”

“In California, where 34% of foreign purchases were from China last year, Keller Williams broker associate Coco Tan has taken to wearing a surgical mask to open houses and greeting clients with a wave rather than a handshake. Tan, who was born in China, said that normally about 25% of her clients are Chinese. With flights canceled, most have postponed visiting until after the summer, she said. ‘I tell them that I have some nice properties that I saved for them,’ Tan said.”

The Australian Financial Review. “The effects of the coronavirus have already hit the housing market in Melbourne’s premium suburbs, with travel restrictions preventing would-be buyers from coming to inspect properties aimed squarely at buyers from mainland China. McGrath agent James Moss last month cancelled the auction planned for a newly built five-bedroom house in the prestigious suburb of Balwyn North that he was advertising with a price guide of $3.3 million to $3.6 million.”

“‘We had to cancel the auction as we had two to three buyers who weren’t coming,’ Mr Moss told The Australian Financial Review. ‘In the top end, we are feeling the pinch. We’ve really lost that overseas connection with the coronavirus.'”

“The effects of the virus that triggered a 10 per cent slump in the Australian sharemarket last week, as well as a further 0.8 per cent decline on Monday, is prompting caution, even in lower-priced segments of the market, such as the $1 million to $2 million range, said Marshall White Stonnington agent Justin Krongold. ‘It’s a talking point across the board,’ Mr Krongold said.”

The Strait Times in Singapore. “Buyers will have the upper hand in the private residential market this year. Sellers may need to check prices and sweeten their offers, with unsold inventory rising amid falling demand from China due to the coronavirus outbreak. About 40 new project launches are in the pipeline while last year’s unsold inventory stands at 30,473 units, said CBRE Research. It noted in a report that Singapore will be a buyer’s market this year and potential customers will be spoilt for choice. ‘In the light of the Covid-19 outbreak, Chinese buyers are unlikely to feature in the short term,’ it added.”

“Buyers from China accounted for 19.3 per cent of new home purchases in the central core region last year. Developers may be motivated to reduce prices or give discounts when the stock of unsold homes increases over time with upcoming launches, CBRE said.”

From Edge Properties Malaysia. “Property companies must prepare to get the right talent in order to push buyers into the market to clear oversupply of properties in the country, according to a recruitment agency, Randstad Malaysia. The agency also noted the COVID-19 outbreak, first reported December last year, will undoubtedly impact the buyers’ market as a result of travel bans and additional precautionary measures implemented by companies.”

From Reuters on Dubai. “The downward spiral in Dubai house prices will continue this year, albeit at a slower pace than in 2019, with oversupply remaining the biggest risk, a Reuters poll showed. ‘Oversupply is the single largest contributor to Dubai’s declining residential prices, with continued project launches, coupled with rising levels of unsold developer inventory, continuing to place downward pressure on values,’ said Chris Hobden, head of strategic consultancy at Chestertons MENA.”

The Times of London on Italy. “In the centre of Florence, the situation was no less dramatic, with many people sporting face mask. It is the latest blow to the Italian economy — and housing market — which has stuttered and stalled more times than a vintage Vespa. As a result, sellers are finding ever more creative ways to entice buyers, from whole villages on sale for €1 to six-figure price cuts and even a return to staged payments: a way of buying that dates back to Roman times.”

“Two years ago, Martyn and Margaret Lewis decided that they wanted to sell L’Olmo, their farmhouse in the hills above Florence, and move back to England to spend more time with their family, but they have failed to find a buyer, despite reducing the price from €1.35m to €995,000. ‘The market has been depressed for a while,’ Martyn says. ‘Brexit has had a bearing on British buyers, while others have been put off by the Italian economy. Then there is the terrible oversupply.'”

The Property Industry Eye on the UK. “There are too many new homes in England, says a report which says that two-thirds of local planning authorities are over-delivering. The report from investment bank Goodbody flies in the face of widespread claims that there is a housing crisis caused by lack of supply. Goodbody says that there is ‘continuing over-supply’ across England.”

From Airdrie Today in Canada. “According to the 2020 forecast from CREB, ‘Improving demand & easing supply are helping push the Airdrie market closer to balanced conditions. However, the market continues to remain oversupplied, weighing on prices, which declined by three per cent in 2019. It will take some time before prices stabilize, but if these adjustments continue, we could start to see prices level off in 2020.'”

The Los Angeles Times in California. “‘American Idol’ creator Simon Fuller is finally moving on from his Bel-Air estate. The Georgian-style manor just sold for $28 million. It took Fuller more than a year to unload the mansion. He sought $35 million at the beginning of 2019 and trimmed the price to $32.5 million in October, according to the Multiple Listing Service.”

From CNBC on California. “Located in the Hollywood Hills neighborhood of Los Angeles is the “Shark House Mansion” — a $23 million mega-home with real sharks that live inside. The L.A. mega-residence first hit the market in September 2018 for a jaw-dropping $35 million. After a year and a half of no bites, and three price cuts later, it’s currently listed for $22.9 million. Along with that $12.1 million price reduction, there’s also been a change in brokers.”

From Multi-Housing News on New York. “Real estate investment firm BH3, which purchased the non-performing loan on a luxury condo skyscraper in Manhattan’s Financial District last July, has followed up that move by selling the debt to an arm of Japan’s SoftBank Group for $230 million. ‘As it stands now, the foreclosure’s ongoing,’ Daniel Lebensohn, principal & co-founder of BH2, told Multi-Housing News.”

“Oversupply and a weakening market have brought Manhattan’s high-end condo boom to an end, while creating opportunities for investors. The Financial District saw an 18.8 percent year-over-year drop in the number of apartment units sold in the fourth quarter of 2019, according to a market report by Platinum Properties. Median price per square foot was down 5.2 percent compared to the previous year, with all sectors recording a decline except for studios. ‘The uber luxury is just in a deep freeze,’ noted Lebensohn. ‘The more bite-size Manhattan luxury sub-$5 million—and specifically the $3 to $5 million category—I think has some momentum, but it’s not what it used to be.'”

This Post Has 166 Comments
  1. The Fed gives away 0.5% of financial crack cocaine and the market still craters.

    “This sucker could go down” — George W. Bush

    1. Powell $ays: Enjoy the ride! 😷🚑 🏥 💉🔥⛽… 📈 … 🎢 … 📉 … 🎢 … 📈 = 🚫🔪🐑🏡 🏧 💵💲🍼 … ♻ 🎉🎇 … ☕Cheer$!

      (Toll Bro$ @ 1.65% lendemender$ have tonne$ of “free.ticket$”🎫 $top by & grab $ome for those!)

    2. The sentiment is SELL. The FED is fighting a losing battle if they think they can prop this up. I guess they technically could if they were willing to expand their balance sheet to include almost the entire market cap of the DOW, but I am not sure there is the will to do so.

    3. Yesterday’s rally had already priced in today’s rate cut, so a drop is not a surprise. Basically, the rate cut caused and 800+ increase in the DOW (+1300 from yesterday, -500 today, give or take). But Powell was dumb, he should have rate cut 25 basis points and he would have gotten the same result in the DOW.

      1. ” … he should have rate cut .25 ba$is point$”

        Iffin’ punchbowl.Powell would have cut @ .10 x5 day$ in a row, he’d had a $tronger rebuttal$ to lil’.feet.$tamp’ dtRumpsis tantrum$! … $ad

      2. There is a theory that if they don’t have much ammo they should just empty the clip at the first sign of trouble and pray. Let’s see if it works…

          1. Plenty of rounds left.

            They can go negative. Negative 1, Negative 2……

            Won’t work.

    4. “…The Fed gives away 0.5% of financial crack cocaine..”

      Wonder if negative interest rates can be far ahead?

      “In theory there is no difference between theory and practice.
      In practice there is.” Yogi Bera

    1. The DOW is down 760 or so. Starting to look a little crashy. I don’t think Powell has inspired any confidence.

      1. He’$ $tampin’.them$.lol’dfeet … $tamp’em!


        Trump demand$ ‘more ea$ing and cutting’ after Fed $lashes rate$ amid coronaviru$ outbreak$

        CNBC | PUBLISHED TUE, MAR 3 2020| By Yelena Dzhanova

        KEY POINT$:

        President Donald Trump on Tuesday demanded that the Federal Reserve cut rates even more after the central bank announced it would slash rates by 50 basis points in an effort to combat the economic impact of the coronavirus outbreak.

        The Fed “must further ease and, most importantly, come into line with other countries/competitors,” Trump tweeted.

        “We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”

  2. Gee, just a week ago Sanders was cleaning house. Who would have thought all the DNC needed to do was force out two competitors and it’s “Biden the winner?” Do the voters automatically vote for who their previous candidate endorses?

    Biden is now about twice as likely as Sanders to win a plurality of pledged delegates, according to our primary model, which gives him a 65 percent chance of doing so compared with a 34 percent chance for Sanders.

    1. Reminds me of Buchanan V Dole just before Arizona in 2000. Buchanan was crushing everybody and then all the MSM could talk about was a nobody named Bob Dole just before AZ.

      People surmised that the votes must have been rigged in Palm Beach for Buchanan. I thought how so as I lived in Delray and voted for Buchanan. I will never forget the focus on Dole as if he was the second coming plus a rock star.

      I should never have sold that used shack on the lake in Delray… Ah the blessings of divorce and realtors are in fact liars.

      1. Reminds me of Buchanan V Dole just before Arizona in 2000.

        1996? The natives were smelling blood after 1994 and ready to put a populist in…

    2. How do you think Biden will do vs. Trump? Will the Bernie bros stay home again? And who would Biden pick as a running mate? Gotta be a POC. Being Obama’s VP might not be enough for the community.

      1. Biden will win.

        HE takes back PA, MI and WI.

        Not that he will be any better or different, but he will win provided that Hunter Biden stays off the limelight. Media will comply.

        1. Media will comply.

          I don’t think even a 100% in-the-bag media can cover up that stench. In his prime, sure, but I’m actually feeling bad for him and his family at this point. He’ll get a lot of anti-Trump votes but I don’t think that’s enough to convince the people in the middle who don’t like Trump’s style but do want someone who can think.

        1. Joe’s announcing positions in the administration for the dropouts as they endorse him.

          If I had a son, he would look like Pete?

        2. Everything is still too early to tell. In 2016, all the p-grabbing stuff came out in the summer. All the Comey-email stuff came out less than 10 days from the election. We don’t know what else will surface. Can the economy bounce back? Can Joe survive 3 debates? Trump’s tax returns? SCOTUS ruling on DACA?

          But at the moment, the biggest winner is clearly COVID-19.

  3. ‘People were planning to do open houses in early February and obviously the turnout wasn’t as good,’ said Jerry Huang, an agent in Vancouver. ‘Many investors aren’t planning to come at all.’”

    When it dawns on these greedheads and their realtors that there won’t be any Greater Fools coming along and the Everything Bubble is bursting, that’s when panic is going to set in.

  4. “…real estate markets in the U.S. and other countries that rely on Chinese buyers…”

    Umm, excuse me?

    1. We were sold out to the highest bidder long ago. The Yuan has been pushing up our prices since at least 2012, when I saw a Chinese speculator with no golf clubs lurking around a golf course, peeping into the windows of a house for sale.

  5. ‘We had to cancel the auction as we had two to three buyers who weren’t coming,’ Mr Moss told The Australian Financial Review.

    Two or three no-shows, huh? I’m guessing three would be the sum total of the crowd, with two lookey-loos and one low-baller.

  6. Remember when Biden was assuring all and sundry back in 2016 that Democrats “won’t take your guns away.” Now they’re dropping the mask as Biden says he’ll appoint Comrade Beto to “take care of the gun problem with me.” Their globalist oligarch puppet masters must be beaming at such zeal to carry out their marching orders.

    Molon Labe, Bitchez.

  7. “With hundreds of millions of Chinese effectively quarantined, it’s hard to sell real estate.”

    Right. Chinese buyers important to keep the market afloat. So, higher mortgage lending rates and foreign purchase bans are off the table then? Asking for a friend.

    1. i thought chinese buyers just sell off some of their sh!tcoins, grab a paper, circle some properties, then buy… whats the problem here? This lil Nyquil curable virus shouldn’t be hurting sales, must be an anomaly / short term spook. Soon we will be back to the moon! your truly, Realtor

    2. How could bedroom community residential U.S. real estate markets possibly even exist without Chinese buyers present to outbid all the locals?

      1. “The ninth just reported on KING5.”

        “Although there has been no exact count, officials said the H1N1 virus has killed more than 1,000 Americans and hospitalized over 20,000.”

        H1N1 Widespread in 46 States as Vaccines Lag

        By Jackie Calmes and Donald G. McNeil Jr.
        Oct. 24, 2009

        WASHINGTON — President Obama has declared the swine flu outbreak a national emergency, allowing hospitals and local governments to speedily set up alternate sites for treatment and triage procedures if needed to handle any surge of patients, the White House said on Saturday.

        The declaration came as thousands of people lined up in cities across the country to receive vaccinations, and as federal officials acknowledged that their ambitious vaccination program has gotten off to a slow start. Only 16 million doses of the vaccine were available now, and about 30 million were expected by the end of the month. Some states have requested 10 times the amount they have been allotted.

        Flu activity — virtually all of it the swine flu — is now widespread in 46 states, a level that federal officials say equals the peak of a typical winter flu season. Millions of people in the United States have had swine flu, known as H1N1, either in the first wave in the spring or the current wave.

        Although there has been no exact count, officials said the H1N1 virus has killed more than 1,000 Americans and hospitalized over 20,000. The emergency declaration, which Mr. Obama signed Friday night, has to do only with hospital treatment, not with the vaccine. Government officials emphasized that Mr. Obama’s declaration was largely an administrative move that did not signify any unanticipated worsening of the outbreak of the H1N1 flu nationwide. Nor, they said, did it have anything to do with the reports of vaccine shortages.

          1. CNN, MSNBC and the democrats forgot cast blame and tell everyone to panic in 2009.

            1,000 Americans dead and over hospitalized 20,000 while it was going on yet Home Depot shelves were full of masks and the store shelves were full of disinfectant wipes.

          2. Were there over 500 million people quarantined in China then, with worldwide spread?

          3. “Were there over 500 million people quarantined in China then, with worldwide spread?”

            500 million people quarantined in China no, but it started in Mexico.

            Worldwide spread yes, 151,700 – 575,400 people worldwide died the first year according to the CDC .

            But please, feel free to continue circling, flapping and screaming and I will continue to wash my hands and wipe off the shopping cart handle etc. when I have to.

            2009 flu pandemic
            From Wikipedia,

            Initially called an “outbreak”, widespread H1N1 infection was first recognized in the state of Veracruz, Mexico, with evidence that the virus had been present for months before it was officially called an “epidemic”.[10] The Mexican government closed most of Mexico City’s public and private facilities in an attempt to contain the spread of the virus; however, it continued to spread globally, and clinics in some areas were overwhelmed by infected people. The new virus was first isolated in late April by American and Canadian laboratories from samples taken from people with flu in Mexico, Southern California and Texas. Soon the earliest known human case was traced to a case from 9 March in a 5-year-old boy in La Gloria, Mexico, a rural town in Veracruz.[11][10] In late April the World Health Organization (WHO) declared its first ever “public health emergency of international concern,” or PHEIC,[12] and in June, the WHO and the U.S. CDC stopped counting cases and declared the outbreak a pandemic.[13]

    1. Is this thing really just taking the olds with colds (or other underlying health issues) or has it just recently taken on a different form?

      1. CNN, MSNBC and the democrats forgot to tell everyone to panic in 2009.

        “12,469 deaths (range: 8868-18,306) in the United States”

        The 2009 H1N1 Pandemic: A New Flu Virus Emerges

        While a monovalent (H1N1)pdm09 vaccine was produced, it was not available in large quantities until late November—after the peak of illness during the second wave had come and gone in the United States. From April 12, 2009 to April 10, 2010, CDC estimated there were 60.8 million cases (range: 43.3-89.3 million), 274,304 hospitalizations (range: 195,086-402,719), and 12,469 deaths (range: 8868-18,306) in the United States due to the (H1N1)pdm09 virus.

        Additionally, CDC estimated that 151,700-575,400 people worldwide died from (H1N1)pdm09 virus infection during the first year the virus circulated

        1. I hope you’re right, Jeff. I hope this goes away sooner rather than later. I really don’t want to argue about this at all, and I’ve already run afoul of the blog owner so I really don’t care to get in any more trouble. I’ve been reading and supporting this blog since 2005, and I’d like to continue.

          1. I’ve been reading and supporting this blog since 2005, and I’d like to continue.

            Maybe, but sort of incognito.

          2. “I’ve been reading and supporting this blog since 2005, and I’d like to continue.”

            I’m 05 vintage myself and I’m sure you will be here for many years to come. As an old and incredibly knowledgeable superintendent I knew used to say… You’ll be here in the morning if Gods willing and the creek don’t rise.

      2. The outbreak in Iran sounds much more serious than “olds with colds.” (Man, that’s a worse insult than OK boomer.)

        And H1N1 didn’t spread asymptomatically.

      3. See the article from yesterday. Could covid 19 be a passenger virus with the danger being a TB outbreak? Could it be related to the massive numbers of pigs slaughtered and burned recently?

  8. One has to wonder how Chinese can even buy real estate in the USA without breaking relevant PRC laws given capital restrictions. For example, in the past few years individuals are only allowed maximum $50,000USD in currency exchange.

    Houses in markets like Irvine are much more expensive than that amount.

    This means they are either corrupt VIPs that are allowed to ignore bank regulations or they are committing fraud likely using multiple family members or “mules” of sorts to transfer the funds.

    Either way, I do have to question the logic of allowing bank fraud or corrupt foreign businesspeople to distort the domestic shack market.

    1. Some say that breaking, ignoring and working around the law in China is the way of life.

      1. Some say that breaking, ignoring and working around the law in China is the way of life.’

        You are seen as weak and stupid if you don’t .

        1. Was it Lenin who said “the capitalists will sell us the rope, we can hang them with.”?

          And I am a capitalist, damn it!

  9. The big US banks are the biggest money launderers for the narco cartels. Need I say more?

  10. “They wanted to avoid twitter bombs from the orange man, but instead they shoot themselves in the foot. ”

    Who’s the Fed, Alex?

    1. For the long time readers of this blog, it is great to know Ms. Hansen is doing well. She was a regular contributor from years ago, and I always enjoyed her commentary.
      May you succeed in your struggles, Ms. Hansen.

    2. Allena’s face wouldn’t look half that good if the surgeries were done by low wage social doctors in Europe or the UK. A social dentist put sloppy fillings in my wife’s teeth along the biting surfaces that were not needed; prick needed to generate some income. I spent a tidy sum to restore her teeth to a beautiful pearlescent white.

      1. To be fair, I paid good money for some bad dental work from a dentist 7 or so years ago. I’m still dealing with the ramifications of her substandard work.

        1. Wife has Delta Dental from work, but our dentist is not a member, so we only get 30% reimbursement. He is very expensive, but they do top-notch work. I have dropped $78k over 20-yrs with him, and another $15k with an orthodontist when my kids needed braces; my wife was not working then, so no dental insurance, all out of pocket!

    1. Yow.

      Was just about to post that it seemed today that there was a gag order on COVID-19 news. Seemed much less news about it than in days past.

      1. Is it still considered “winter” in Iran? The temperature in Tehran is reaching the mid-60s now. If we don’t get a summer break like we do with other flu viruses, then we may as well say goodbye to the economy for a year. And probably bid farewell to Trump too.

        This may all come down to Biden’s VP pick.

          1. Think about it. The FED’s at 1%, and we’ve been in an expansion for more than 10 years. We are so overdue for a recession we’re on borrowed time. Debt loads are at their highest ever, no matter if we’re talking corporate or private. The FED has no tools left in its toolbox to combat this. Whoever is unlucky enough to be in charge when the entire house of cards folds is not going to look good, no matter what happens.

          2. A second term is needed. Iran’s nuclear facilities need to be buried forever courtesy of Sandia National Laboratory’s deep penetrating bunker busters so that Israel can relax, and the U.S. can reduce its middle-east combat operations.

          3. I wouldn’t object to a Dem, except for the OPEN BORDERS.

            Then again, nothing curbs illegal immigration like a long hard recession.

          4. I wouldn’t object to a Dem, except for the OPEN BORDERS.

            My biggest problem is guns. If one of them would simply agree to disagree and credibly commit to leaving them alone during their term no matter what happens, I think they would win. I think there are a lot of rednecks who would prefer more safety net, especially on the medical side, if all else were equal. But with the anti-self-defense idiocy that comes out of most of the D candidates most of those Biden states will stay reliably red for a long time to come.

  11. Looks like Creepy Joe is surging, having won 3 states to Bernie’s 1. He’s also holding his own in the northeast.

  12. Well prime areas in Sacramento are selling like hotcakes due to low inventory, low interest rates and wealthy buyers fleeing the bay area. What are your thoughts on that?

    I looked at places in Sacramento and they all went pending in under 2 weeks.

    1. Rates are in the cellar at 1%. Of course prices will be the highest, which is the worst possible time to buy real estate. You can always refinance the rate, you can never refinance the purchase price – you’re locked in for life.

      1. True, but rates will never rise in any significant way in our lifetime. ZIRP forever, that is all the Fed has. Punishing savers, printing money and inflating bubbles are the Fed’s permanent policies.

        1. … until they ramp up to double digit levels. It happens and occurs quickly.

          Buckle up.

          1. “until they ramp up to double digit levels. It happens and occurs quickly.”

            Interest rates? Never, ever will happen. Fed has bricked itself into a corner, the Gov has borrowed so much money that servicing the debt at normal interest rates would not be possible.

            You will never see a 30 year mortgage rate above 6% again in this lifetime. And you will never see a CD/Money Rate above 3%

          2. the Gov has borrowed so much money that servicing the debt at normal interest rates would not be possible.

            Ditto for other countries; they’re all up to their eyeballs in debt.

          3. You will never see a 30 year mortgage rate above 6% again in this lifetime. And you will never see a CD/Money Rate above 3%

            If you are correct, and I suspect you are, then I also suspect the dollar as we know it will be replaced well before most of our lives are over. I would expect to see above those rates again in whatever the replacement turns out to be.

        2. printing money and inflating bubbles are the Fed’s permanent policies

          I tried explaining this to someone yesterday and she had no clue what I was talking about.

          1. I tried explaining this to someone yesterday and she had no clue what I was talking about.

            Most people have no clue. They think house prices have soared into the stratosphere because it makes sense, plus since they see their own shack appreciating absurdly, it makes them feel rich, so it must be good.

          2. Harbor Bluffs, FL Housing Prices Crater 14% YOY As Gulf Coast Housing Prices Drop Like A Rock


            *Select price from dropdown menu on first chart

            As a noted economist said, “I can ask $50k for my run down 10 year old Chevy truck but where is the buyer at that price? So it is with all depreciating asset like houses and cars.”

    2. “I looked at places in Sacramento…”

      Sac is such a schitt-hole. Davis; no flooding, no gangstas!

      1. “Sac is such a schitt-hole. Davis; no flooding, no gangstas!”

        Um you sir are wrong. Sacramento county is HUGE area. There are nice areas better than Davis like Granite Bay, East Sacramento, and Fair Oaks that have sky high real estate prices like Davis. Even downtown and midtown are super overpriced now and lack of inventory.

      2. “Um you sir are wrong.”

        Okay sure, I also like the Folsom area and Shingle Springs too. But Sac (city) is a schitt-hole.

  13. The Financial Times
    Markets tumble as Fed rate cut fails to ease fears
    Benchmark 10-year Treasury yield falls below 1% for first time while stocks drop nearly 3%

    Coronavirus latest: Hong Kong PMI plunges to record low

    Live Analysis Coronavirus
    China’s stranded workers drag down virus-hit economy
    Beijing’s aim to kick-start factory operations stymied by labour and transport woes
    3 hours ago
    Amazon battles sharp price rises of coronavirus products
    Masks and hand sanitisers sold at 2,000% mark-ups as health crisis widens

    1. The Financial Times
      Opinion Markets Insight
      Federal Reserve should not try to fight the coronavirus
      Intervention would confirm moral hazard as defining market principle of post-crisis era

      A specialist rests his head in his hand as he works on the floor of the New York Stock Exchange, Tuesday, Feb. 25, 2020. U.S. stocks fell in midday trading Tuesday, a day after the market’s biggest drop in two years, as traders worry that the spreading coronavirus will threaten global economic growth.
      (AP Photo/Richard Drew)
      The reason a central-bank rate cut as a restorative for markets will not work is that central banks have financial-market weaponry and coronavirus risk is not financial
      © AP
      Karen Petrou
      March 1 2020

      At the end of last week, Federal Reserve chairman Jay Powell cryptically assured markets that the US central bank would do the “appropriate” thing to counter Covid-19’s plague on equity prices. This is a carefully crafted promise of nothing specific, ensuring that the Fed can do anything it wants.

      Even so, investors have taken it not only as assurance that US short-term interest rates will drop at least a full percentage point, but also that the Fed will expand its “whatever it takes” promise for financial markets into a no-holds-barred backstop for stocks.

      If the Fed does step in, the aptly named dead-cat bounce in which prices recover only for a short while, should not be mistaken for resurrected animal spirits. No amount of rate cuts will cure a single coronavirus patient, nor will anyone frightened of illness decide to buy a new house, a car, or even a night out at a restaurant. Markets that are priced for a rescue ignore reality at great peril, and central banks that encourage them to do so run even greater risks.

      The first problem with a central-bank rate cut as a restorative for markets is that it will not work.

      The reason for this is simple: central banks have financial-market weaponry and coronavirus risk is not financial: it is, of course, an initially biomedical risk that is followed by risks of contagion — literally — for the entire supply side of the manufacturing and service sectors.

      1. Federal Reserve should not try to fight the coronavirus

        When you’re in rough shape and the next thing you catch is going to kill you, what choice do you have?

    2. Opinion: If the economy is in ‘a good place,’ then why are interest rates so low?
      By Caroline Baum
      Published: Mar 3, 2020 2:35 p.m. ET
      Could 0% interest rates be just around the corner?
      Getty Images
      Federal Reserve Chair Jerome Powell explains the Fed’s half-point cut in interest rates.

      Two hours after the Group of Seven finance ministers and central bank governors issued a joint statement declaring their readiness to take action to support the economy in the face of risks from the coronavirus, the Federal Reserve pulled the trigger, lowering its benchmark rate by 50 basis points.

      It was the Fed’s first inter-meeting move since 2008.

      “The fundamentals of the U.S. economy remain strong,” the Fed said in a 10 a.m. statement Tuesday announcing its decision that had unanimous support. “However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target rate for the federal funds rate by ½ percentage point, to 1-1 ¼ percent.”

      All of a sudden, the reality of revisiting the zero lower bound, which the Fed now refers to as the effective lower bound, is no longer off in the distance. It could be right around the corner.

      And this at a time when Fed officials are still saying that the economy and monetary policy are “in a good place” and the fundamentals are sound.

      So what do policy makers do when the good place deteriorates into something mediocre and the fundamentals turn sour?

      Forward guidance, which I like to call talk therapy? Large-scale asset purchases? Unfortunately, the Fed goes to war with the tools it has, not the tools it might want or wish to have.

      The market has already determined that interest rates will be lower for longer, which is why the yield on the 10-year Treasury note (TMUBMUSD10Y, -2.36%) dipped below 1%. It doesn’t need the Fed’s guidance.

  14. Did anyone see Biden grab his wife, look at her and say this is my little sister then grab his sister and say this is my wife to start his victory speech?

    1. Corrupt,old and mindless Joe Biden is getting votes. What the hell is wrong with voters. Unreal.

      1. votes

        It doesn’t matter how defective he is if people are focused on voting against something.

        1. It doesn’t matter how defective he is if people are focused on voting against something.

          To a point I think that’s true and important. But I think even die hard anti-Trumpers might eventually get rattled watching him completely fall apart every time he appears in public. And that’s before anybody even unleashes the provably true negative ads that make him look like a bad choice even when he can think clearly. At this point he seems like Hillary without the competence…which to me was the only thing she had going for her.

      2. Corrupt,old and mindless Joe Biden

        If Creepy, Sleepy Uncle Joe gets the nomination, the presidential debates are going to be highly entertaining. DJT will easily trigger and trip him up.

        1. The DNC doesn’t even care if Biden is to old and can’t even think This would be a National Security problem having a moron in that seat.

    2. I watched the clip… sounds like he was kidding. Either that or he really mixed it up and recovered very quickly. The two ladies really need to stop sharing the same bottle of Clairol.

      1. This is becoming reminiscent of everyone In the media and entertainment industry obsessing over Gerald Ford’s supposed clumsiness.

        1. I guess it is one way to goose stock prices when the coronavirus has scared everyone to hide money under their mattresses.

  15. Last night was a resounding victory for the corporate DNC and their billionaire pedophile donor base.

    Should I register to vote for Trump in Florida or in Ohio? My vote in Colorado won’t matter.

    1. My vote in Colorado won’t matter.

      Then vote where is does. Wish I had that option.

    2. Bloomberg just dropped out and he’s endorsing Biden.

      This must be a joke that a man who is totally unfit for office is the frontrunner now, being Biden.

    3. You could go over “brokeback” mtn. & vote with lizzy.Cheney in WY. (best leave yer mary.jane gummies @ home)

    4. My vote in Colorado won’t matter.

      Didn’t Colorado pass a bill to give its electoral votes to the nationwide popular vote winner? Trump may take the Centennial State, while every Colorado Dem face palms.

  16. Coronavirus
    Published 7 hours ago
    Coronavirus global death rate at 3.4 percent, Olympics delay a possibility
    By David Aaro | Fox News

    Fox News Flash top headlines for March 4Video
    Fox News Flash top headlines for March 4

    Fox News Flash top headlines are here. Check out what’s clicking on

    World health officials confirmed on Tuesday the fatality rate for the new coronavirus is at 3.4 percent globally, as Japan’s Olympics minister said there’s a possibility the 2020 Summer Games in Tokyo could be delayed.

    Tedros Adhanom Ghebreyesus, the head of the World Health Organization, announced the mortality increase during a media briefing, which differed from the previously estimated rate of around 2 percent globally. In comparison, the death rate for the seasonal flu is “far fewer than 1 percent,” he said.

    “While many people globally have built up immunity to seasonal flu strains, COVID-19 is a new virus to which no one has immunity; that means more people are susceptible to infection, and some will suffer severe disease,” Tedros said. “Globally, about 3.4 percent of reported COVID-19 cases have died; by comparison, seasonal flu generally kills far fewer than 1 percent of those infected.”

    1. Japan’s Olympics minister said there’s a possibility the 2020 Summer Games in Tokyo could be delayed.

      Talk about a financial kick in the gut. Even if the all clear is sounded in time for the games, I’m sure a lot of people might not show up.

      FWIW, I wasn’t planning on watching the games. They’re a snoozefest.

  17. Perhaps fewer all cash Chinese buyers will provide more inventory and lower real estate prices. One can hope, right?

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