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You’ll See A Lot Of Complete Houses But No Curtains

A report from the Vancouver Sun. “‘Forget Canada. We’ll go somewhere else.’ That’s what West Vancouver realtor Nicole Lee says many rich clients from Asia are telling her now that B.C. has brought in a foreign-buyers tax on housing, along with a speculation and vacancy tax. The veteran realtor maintains Victoria’s ‘artificial measures’ are hurting the detached luxury housing market in West Van, where she says many investors from Asia, specifically China, had been busily buying properties and, to fit their trans-Pacific lifestyle, leaving them empty for much of the year.”

“Most of the 11 West Van neighbourhoods where the bubble has burst are rife with view mansions that remain valued in the $3-million-to-$8-million range; prices local realtors and a city councillor say have been fuelled by both foreign and domestic speculation. An interactive Postmedia News chart of B.C. Assessment valuations of detached homes across more than 160 Metro neighbourhoods (see above) shows that in one year average prices plummeted by up to 25 per cent in tony West Van communities such as Chartwell, Upper Caulfield, Queens, Dundarave and the British Properties.”

“Vancouver realtor David Hutchinson’ says it was ‘completely predictable’ that high-end neighbourhoods in West Vancouver, the west side of Vancouver and Richmond would see their bubbles burst. ‘That’s where all the speculation and flipping was occurring. There was a frenzy.’ Veteran city Coun. Craig Cameron said West Van’s housing prices had been driven up by a ‘massive speculation frenzy’ that began about five years ago, which has left an estimated 10 per cent of dwellings empty. With West Vancouver’s assessed prices falling by 16 per cent this year and 12 per cent last year, he is concerned about the financial well-being of homeowners who recently ‘stretched themselves’ to buy and now have large mortgages on properties that have declined in value.”

The South China Morning Post. “Homeowners are dumping their properties in Hong Kong for as much as HK$11.6 million (US$1.5 million) in losses to pack up their bags because of the city’s dire economic prospects, analysts said. More could be pressured to sell into a weak market to hasten their emigration plans. At Valais in Sheung Shui, a 1,588-square foot house changed hands at HK$21.3 million for a loss of HK$10 million in late January at the onset of the coronavirus outbreak, according to property agents who declined to be named because the transaction was private. Including taxes and expenses, the loss amounted to HK$11.6 million.”

“‘The losses reflect the urgency or desperation among some of the city’s homeowners, given the constant flow of bad news,’ said Martin Wong, a sales manager at Midland Realty. ‘Some of the home owners feel that the prospects are not good so they want to sell quickly, especially amid the current epidemic.'”

The Bangkok Post in Thailand. “SET-listed developer Origin Property Plc is reducing new condo launches from 16 last year to only four this year, mainly because of the enormous glut in the market. Chief executive Peerapong Jaroon-ek said supply has built up in the condo market from launches the past few years, leaving many unsold units. ‘If new condo projects have sales prices in the same range or higher than those launched earlier, they will be less attractive as existing supply offers lower or discounted prices,’ he said.”

From Forbes. “Malaysia’s slowing economy, now getting hit by the coronavirus outbreak, took a toll on its tycoons. Their collective net worth is $79 billion, down 7% from a year ago. Property developer Leong Kok Wah was affected by a glut of new property that depressed prices. An oversupply of unsold residential and commercial units across Malaysia also weighed on Berjaya Corp., causing a loss of 54 million ringgit ($13 million) on revenue of 2 billion ringgit for the quarter ended in September 2019.”

From Domain News in Australia. “A surge in the number of homes hitting the market in February — up over 60 per cent from January — pushed days on market down, said SQM Research managing director Louis Christopher, but properties are also being snapped up more quickly. However, SQM figures also show that 37.8 per cent of properties on the market last month, about 9990, had been listed for more than 90 days, with about one in five advertised for more than 180 days.”

“He warned unrealistic price expectations could cause a property listing to go stale, and prompt price cuts, both of which could deter buyers. ‘Agents will tell you that you generally find your best buyers in the first three to four weeks,’ Mr Christopher said. ‘If you haven’t sold in that [first 30 days] there’s something not quite right … nine out of 10 times, there is something wrong with the price.'”

The Indian Express. “As a liquidity crisis in the real estate sector deepens, the state government has stepped in to improve credit flow to developers. The real estate sector in India is grappling with a severe cash crunch with a downturn in both residential and commercial property segments, with several builders, including those in the financial capital, struggling to repay loans to non-banking financial companies and banks.”

“‘The sector is witnessing an unprecedented downward spiral. The funding has dried up and builders are grappling with a pile-up of unsold inventory,’ said Housing Minister Jitendra Awhad.”

From Cape Talk in South Africa. “For sale signs everywhere and 108% home loans – it’s an epic buyers’ market. Buyers – the few of them that are left – have all the power. Sell only if you must, says Huizemark’s Bryan Biehler. ‘Demand for property is a lot lower than the supply. It puts downward pressure on prices because buyers are spoiled for choice… The power is in the buyer’s hands… In a market like this, you only want to sell if you must sell. The market is depressed… buyers are spoilt for choice… There’s some good value out there now…’ said Biehler. ‘Price your property competitively… so that it’s attractive to buyers. If you don’t your property will become the market wallflower… For buyers… financial institutions are very aggressive in wanting to give out loans. Many first-time buyers are getting 105% and 108% bonds. The transfer duty threshold has been raised to R1 million.'”

From Standard Media on Kenya. “An analysis by Home & Away has revealed that of the hundreds of properties on auction – on the back of a slowing economy – only a handful have found buyers. The most affected are high-end properties. Together, auctioneers have tried to dispose of houses – both residential and commercial – whose value could be running into billions of shillings. Basically put, there is no shortage of houses that buyers can get for a bargain. This has seen phrases like ‘buyer’s market’ thrown around, yet many of the distressed owners are unable to offload their assets.”

“‘Banks have a lot of non-performing loans because of the status of the economy and go to foreclosure, they have to offload the collateral that had been secured,’ said Steve Ogada, an associate principal at finance advisory firm InVhestia, adding that high-end areas have been hit hardest. ‘There’s been a glut on the high-end segment. That’s why if you drive along Kilimani, and Lavington, (you’ll see) a lot of complete houses but no curtains. They aren’t occupied.'”

The Reading Chronicle in the UK. “More than 1,000 homes sit empty in Reading as figures reveal one has been abandoned for 23 years. Last year, the number of empty homes rose by 48 per cent across Reading – from 387 to 571. Reading Borough Council says the increase is largely due to ‘a glut of unsold/unoccupied new-build flats and slow rates of sales in the retirement leasehold sector.'”

“The most common way that empty homes come back into use is owners selling their spare home. One absentee owner, of a home in Battle ward out of action for two years, told the council: ‘I can’t begin to praise enough the sterling work the empty homes officer did in helping me. My home was out of control and like an anvil around my neck that was preventing me from leading a normal life.'”

This Post Has 138 Comments
  1. Lots a gluts out there.

    ‘one year average prices plummeted by up to 25 per cent in tony West Van communities such as Chartwell, Upper Caulfield, Queens, Dundarave and the British Properties’

    It’s just money laundering, so what if the price falls, we were told.

    ‘With West Vancouver’s assessed prices falling by 16 per cent this year and 12 per cent last year, he is concerned about the financial well-being of homeowners who recently ‘stretched themselves’ to buy and now have large mortgages on properties that have declined in value’

    Well there is that…

    1. BTW, Kenya, South Africa, Vancouver and Sydney all at one time or the other had the hottest residential real estate markets on the planet. Wa Happened?

      1. Given how South Africa is confiscating farm properties, why would anyone buy property there?

        1. to pay property taxes to government
          to pay interest to bank
          to bring misery in their own lives

          1. You’re completely right. But, I spent my 21st year in Cape Town and it is heaven on earth. As long as you avoid the crushing poverty all around you. It kills your buzz. I am tempted to buy the dip, but of course I can always just get a hotel there whenever I want.

    2. Vancouver realtor David Hutchinson

      “…he is concerned about the financial well-being of homeowners who recently ‘stretched themselves’ to buy and now have large mortgages on properties that have declined in value…”

      Really David Hutchinson?

      Your concerned? That’s a LOL

      Running out of suckers (er.. clients) to foist your REIC ‘Real Estate only goes up’ mantra?

      1. “Your concerned? That’s a LOL”

        Is there some sort of recourse?

        Did he leverage his own family members?

  2. Bradenton Beach, FL Housing Prices Crater 17% YOY As Retirement/Vacation Property Demand Plummets As Boomer Demographic Dies Off

    https://www.movoto.com/bradenton-beach-fl/market-trends/

    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.”

  3. ‘A surge in the number of homes hitting the market in February — up over 60 per cent from January — pushed days on market down, said SQM Research managing director Louis Christopher’

    The Australian REIC is the biggest pack of lying dogs that exist. Plus the people there are apparently Pavlovian shack gamblers eager to join in. I can find article about FBs, oversupply right next to quotes about multiple offers, etc. Their entire media is so compromised its hard to know what’s going on, like China. So I don’t waste a lot of time on it.

    1. True. So true. But I fear my countrymen are Pavlovian dogs as well. It seems we are in for the double-top.

  4. Any thoughts on whether or when the wicked volatility currently whipsawing Wall Street will show up in housing prices?

        1. Houses aren’t as overvalued as stocks, except in a few locations where they have already started to fall.

          The question in each case is whether the government will be able to keep asset prices inflated by low interest rates and other means.

          While stocks might crash if they can’t, aging Boomers might just refuse to “give away” their houses to Millennials at prices the latter can afford. It may take the Grim Reaper to housing prices to correct.

          1. It may take the Grim Reaper

            They don’t all have to give their houses away for price discovery, just a few. Job loss, divorce, retirement all do the same thing.

          2. Maybe. But a panic will probably cause the Boomers to sell stocks, but NOT sell houses.

            “Maybe we can’t afford to retire to The Villages after all.”

          3. Time will tell! You don’t actually need any change in seller behavior (the supply side). A desiccation of demand will do the trick.

          4. The radio told me I can sell my life insurance policy to fund my retirement. What a deal!

          5. It may take the Grim Reaper to housing prices to correct.

            I think I heard a scratching at the door…

    1. Considering that many housing markets have been puking for years now, while stocks peaked only 2 weeks ago, maybe the relationship is in reverse?

  5. “Vancouver realtor David Hutchinson’ says it was ‘completely predictable’ that high-end neighbourhoods in West Vancouver, the west side of Vancouver and Richmond would see their bubbles burst. ‘That’s where all the speculation and flipping was occurring. There was a frenzy.’ Veteran city Coun. Craig Cameron said West Van’s housing prices had been driven up by a ‘massive speculation frenzy’ that began about five years ago, which has left an estimated 10 per cent of dwellings empty. With West Vancouver’s assessed prices falling by 16 per cent this year and 12 per cent last year, he is concerned about the financial well-being of homeowners who recently ‘stretched themselves’ to buy and now have large mortgages on properties that have declined in value.”

    Hmmmm where did they get that idea???

    “‘The losses reflect the urgency or desperation among some of the city’s homeowners, given the constant flow of bad news,’ said Martin Wong, a sales manager at Midland Realty. ‘Some of the home owners feel that the prospects are not good so they want to sell quickly, especially amid the current epidemic.’”

    He who panic first, panic best!

    1. Who would have thought we’d ever see the B word (except for saying it doesn’t exist) in the Vancouver Sun?

    2. “…especially amid the current epidemic…”

      An epidemic of greed and stupidity is the real danger among these ‘homeowners’

    1. Here’s part of an email I received this morning…

      Save up to 86% on Unsold Cruise Cabins!
      VacationsToGo.com

      Mar 5 at 6:42 AM

      For today’s newsletter, we’ve negotiated fantastic offers with Princess, Norwegian, MSC, Seabourn and Paul Gauguin Cruises. In addition to deep discounts, these offers may include free amenities or shipboard credits, which are as good as cash on the ship and can be used toward onboard purchases not covered in the cruise fare, like shore excursions and Internet packages. Please note that some rates on our site may not be eligible for free amenities or shipboard credits.

      Princess is offering Vacations To Go customers big discounts, including exclusive pricing on a variety of voyages to Alaska, Europe and more — save up to 56%. Also receive shipboard credits of up to $385 per cabin on select departures. Book by March 17. See dates and prices.

      Norwegian is offering our customers huge discounts of up to 85%, as well as exclusive shipboard credits of up to $250 per cabin on select departures. Plus, on select sailings receive all of the following perks on cabins booked at eligible rates: 1) unlimited open bar for two, 2) a specialty dining package that includes up to five meals for two guests at select dining venues, 3) up to 250 minutes of Internet, 4) a shore excursion credit of $50 per cabin, per port (not including embarkation port), or 5) friends and family sail free as third/fourth passengers in the cabin on select departures (port fees and taxes are additional). Book by March 31. See dates and prices.

      MSC has slashed rates by up to 77% for our customers, with new discounts on a variety of last-minute sailings in the Caribbean and Europe. See dates and prices.

      Seabourn has provided discounts of up to 65% for our customers, as well as shipboard credits of up to $750 per suite on select sailings. The upfront price of a six-star Seabourn vacation includes open bars, fine wines at lunch and dinner and gratuities. See dates and prices.

      Paul Gauguin Cruises is offering Vacations To Go customers discounts of up to 50% on its cruises of South Pacific islands. Also get shipboard credits of up to $200 per cabin. See dates and prices.

      As always, these offers are for new bookings only and subject to availability. Restrictions may apply, and some free amenities and shipboard credits may apply only to eligible rates. Past guests of some cruise lines may see better rates on select sailings.

      1. When I was in Alaska in 2001, I drove to Seward one day.

        ‘Owing to its position at the southern terminus of the Alaska Railroad and well-developed road links to Anchorage and the rest of the Kenai Peninsula, Seward is both a major northern end-port for several major cruise ship lines that host Alaskan cruises, such as Norwegian, Royal Caribbean, Holland America, and Celebrity Cruises, and a common destination for general Alaskan tourism.’

        https://en.wikipedia.org/wiki/Seward,_Alaska

        Those cruise ships are freaking enormous. I’ve read some cost $500 millions to build.

        1. “Those cruise ships are freaking enormous.”

          $o i$ the $tate ferry’$, that provide cargo & $upplie$ (semi.trucks with good$) to the hamlet$ & village$ in the interior hinterland$.

          Amazing how many truck$ fit into to those floatin’ boat$!

          1. “They make the old “Love Boat” generation of cruise ships look tiny”

            I remember when Cathy Lee would take her girlz out for a walk and air the ship would start listing!

      2. Will they charge extra for the 14-21 day quarantine on the boat? Is the food included for that time?

  6. “No Worrie$!” + “Got Debt$ ?” = “$oft.landing$!”

    Global financial cri$is:

    The $eeds of the next debt crisi$
    With debt level$ already at a record high, coronaviru$ raises the risk of a credit crunch in a world of low intere$t rate$

    FT |March 4, 2020 | by John Plender, in London

    The shock that coronavirus has wrought on markets across the world coincides with a dangerous financial backdrop marked by spiralling global debt. According to the Institute of International Finance, a trade group, the ratio of global debt to gross domestic product hit an all-time high of over 322 per cent in the third quarter of 2019, with total debt reaching close to $253tn. The implication, if the virus continues to spread, is that any fragilities in the financial system have the potential to trigger a new debt crisis.

    Despite the decline in bond yields and borrowing costs since the markets took fright, financial conditions have tightened for weaker corporate borrowers. Their access to bond markets has become more difficult. After Tuesday’s 50 basis-point cut, the US Federal Reserve’s policy rate of 1.0-1.5 per cent is still higher than the 0.8 per cent yield on the policy-sensitive two-year Treasury note. This inversion of the yield curve could intensify the squeeze

    This is particularly important because much of the debt build-up since the global financial crisis of 2007-08 has been in the non-bank corporate sector where the current disruption to supply chains and reduced global growth imply lower earnings and greater difficulty in servicing debt. In effect, the coronavirus raises the extraordinary prospect of a credit crunch in a world of ultra-low and negative interest rates.

    Policymakers in advanced countries have over the past week made clear their readiness to pursue an active fiscal and monetary response to the disruption caused by the virus. Yet such policy activism carries a longer-term risk of entrenching the dysfunctional monetary policy that contributed to the original financial crisis, as well as exacerbating the dangerous debt overhang that the global economy now faces.

    The risks have been building in the financial system for decades. From the late 1980s, central banks — and especially the Fed — conducted what came to be known as “asymmetric monetary policy”, whereby they supported markets when they plunged but failed to damp them down when they were prone to bubbles. Excessive risk taking in banking was the natural consequence.

    The central banks’ quantitative easing since the crisis, which involves the purchase of government bonds and other assets, is, in effect, a continuation of this asymmetric approach. The resulting safety net placed under the banking system is unprecedented in scale and duration. Continuing loose policy has brought forward debt financed private expenditure, thereby elongating an already protracted cycle in which extraordinary low or negative interest rates appear to be less and less effective in stimulating demand.

    This, he argues, is because unconventional central bank policies may “simply set the stage for the next boom and bust cycle, fuelled by ever declining credit standards and ever expanding debt accumulation”.

    A comparison of today’s circumstances with the period before the financial crisis is instructive. As well as a big post-crisis increase in government debt, an important difference now is that the debt focus in the private sector is not on property and mortgage lending, but on loans to the corporate sector. A recent OECD report says that at the end of December 2019 the global outstanding stock of non-financial corporate bonds reached an all-time high of $13.5tn, double the level in real terms against December 2008.

    The rise is most striking in the US, where the Fed estimates that corporate debt has risen from $3.3tn before the financial crisis to $6.5tn last year.

    Given that Google parent Alphabet, Apple, Facebook and Microsoft alone held net cash at the end of last year of $328bn, this suggests that much of the debt is concentrated in old economy sectors where many companies are less cash generative than Big Tech. Debt servicing is thus more burdensome.

    History matters here. The one period in the last 200 years when banking was relatively free of crises was between the 1930s and early 1970s. This was because the regulatory response to the 1929 crash and the subsequent banking failures was so draconian that banking was turned into a low-risk, utility-like business. It was the progressive removal of this regulatory straitjacket, which began in the 1970s, that paved the way for the property based crises of the mid-1970s, the Latin American debt crisis of the 1980s, more property based crises of the early 1990s and the rest.

    While there has been a plethora of reforms since 2008 — though conspicuously not including the removal of the privileged tax status of debt relative to equity — the operations of the likes of Goldman Sachs, Barclays or Deutsche Bank could scarcely be called utility-like. And when very rapid changes in financial structure are taking place, as today, regulators are often left behind by the new reality and wrong footed by regulatory arbitrage.

    1. I heard what sounded like migrating Canada Geese yesterday, but then I realized they were just Black Swans.

  7. Your a lo$er!, & your a winner$!, … $o Ea$y!

    MAD MONEY:

    Cramer: This should be the beginning of the end for $ector ETF$

    CNBC | PUBLISHED WED, MAR 4 2020 | By Kevin Stankiewicz

    KEY POINT$:

    CNBC’s Jim Cramer said Wednesday the recent market volatility should serve as the beginning of the end for sector ETF$.

    “I know I’m early, but anyone who doesn’t see this index fund peak on the horizon is fooling themselves,”

    “Why own both the winner$ and loser$ in an indu$try when you can just pick the very obviou$ winner$?” Cramer said.

    (Tell’em Jimmy!)👊! … Big Booyha!

    “When everybody’s got that $ame darn $trategy, that strategy rarely works,” Cramer said. “And a down market like we had last week really validate$ stock picking, especially for those of us who had some ca$h on the sidelines to take advantage of the weakne$$.”

    “The drug ETFs have homogenized the un-homogenizable. We have some very good drug companies and some very bad ones,”

    “We’re now in an environment where, for many industries, more people trade the indices than individual stocks,” Cramer said. “That creates a lot of opportunities for those of you who are willing to manage your own money.”

  8. Oh Uncle Warren…don’t be such a Debbie Downer.

    In One Chart
    Warren Buffett’s ‘yardstick’ still points to ‘very elevated’ downside risk
    Published: March 5, 2020 at 12:42 p.m. ET
    By Shawn Langlois
    The Buffett ‘yardstick’ shows the market value of all publicly traded securities as a share of GNP
    CNBC NEWS– Pictured: Warren Buffett in his office in Omaha, Nebraska, on August 4, 2015 — (Photo by: David A. Grogan/CNBC/NBCU Photo Bank via Getty Images)

    The stock market broke new ground last week in terms of the breakneck speed of its selloff, with the S&P 500 dropping 10% from its record high in a mere six days, faster than any other time in history.

    Time for some bargain-hunting?

    Not so fast, says the Felder Report’s Jesse Felder, who pointed to “The Buffett Yardstick,” in reference to what the Berkshire Hathaway (BRK.A, -3.96%) boss calls “the best single measure of where valuations stand at any given moment”:

    “It’s important to put the recent action into some sort of context,” Felder wrote. “For long-term investors, it’s probably most important to understand that the decline we saw last week has in no way made the broad stock market look cheap, as some might suggest.”

    1. What happens when the FED’s already at zero and the stock market reaches levels last seen during the great financial crisis?

      1. 10-year Treasury note yield carves out fresh nadir below 0.90% in midday Thursday action, as stocks resume tumble
        Published: March 5, 2020 at 12:58 p.m. ET
        By Mark DeCambre

        The benchmark 10-year Treasury yield on Thursday fell below 0.9%, carving out a new historic low for the benchmark debt as investors continued to wrestle with the economic implications of the outbreak of COVID-19, the infectious disease that reportedly originated in Wuhan, China in December and has sickened more than 95,000 people world-wide. Bond yields fall as prices rise. The 10-year note yield fell as low as 0.898%, according to FactSet data.

        1. All yer Treasury bond capital gains are belongs to us.

          Key Words
          Bond guru Gundlach says ‘better to stay in cash’ than Treasurys as U.S. 10-year yield hits record low
          Published: March 5, 2020 at 2:08 p.m. ET
          By Sunny Oh
          He says investors are unlikely to make money from a further decline in yields

          Jeffrey Gundlach, founder of DoubleLine Capital
          — “I don’t think calling the direction of interest rates is all that meaningful. I think you are better staying in cash. Even if you are absolutely right and you get lower 10-year rates, you don’t make any money,”

          In a wide-ranging interview on CNBC, bond guru Jeffrey Gundlach of DoubleLine Capital said investors shouldn’t bother with betting on where the bond-market was headed if only because there wasn’t much money to be made from making an accurate forecast on long-dated Treasury yields.

          The founder of the Newport Beach-based bond fund manager says it could be more prudent for investors to stay in cash instead, given the overwhelming uncertainty around the COVID-19 outbreak and how it could dent U.S. economic growth.

          Gundlach felt the bond-market was getting close to reaching the low for the yield in the benchmark 10-year U.S Treasury note, but added that the 2-year note (TMUBMUSD02Y, 0.585%) yield was likely to see a steeper slide as it is more sensitive to Federal Reserve policy. His comments comes after the Fed cut its benchmark fed funds rate by 50 basis points on Tuesday, with some traders now expecting another cut at its scheduled policy meeting at March 17-18’.

          “I’m in the camp that the Fed will cut rates again, and perhaps in two weeks,” he said.

        2. The Financial Times
          Markets Briefing
          US stocks drop as US Treasury yields hit record lows
          S&P 500 closes down more than 3 per cent as traders await another Fed rate cut
          updated 31 minutes ago

          1. Deep Dive
            Opinion: Here’s how easy it is to buy U.S. Treasury bonds without fees or commissions
            Published: March 5, 2020 at 4:19 p.m. ET
            By Philip van Doorn
            U.S. Treasury securities are among the world’s hottest investments
            Everett Collection

            Investors are pouring money into U.S. bonds because of negative interest rates around the world and fears the new coronavirus will damage the economy and companies.

            For example, the share price of the Vanguard Extended Duration Treasury (ETF EDV, +3.03%) is up 19% this year. The exchange traded fund’s average effective maturity is 25.1 years, which means it has a relatively high yield of 2.13%. But it’s especially sensitive to the direction of interest rates.

            Investors who are looking for the least amount of risk can avoid fluctuating share prices by purchasing their own Treasury securities with no fees or commissions. See more on that below.

            U.S. rates could fall further

      2. What happens when the FED’s already at zero and the stock market reaches levels last seen during the great financial crisis?

        Go negative or go home. To the ranch in Paraguay.

      3. Bond yields are at a record low. What could this portend?

        OBVIOUSLY: There has never been a better time to buy stocks!

        Unless this is a market top, and not a bottom, that is…

        Opinion: The stock market’s big swings indicate a top or a bottom — here’s how to decide
        Published: March 5, 2020 at 3:41 p.m. ET
        By Nigam Arora
        Do you think bonds provide safety from the stock market? At this level, bond yields are so low, stocks look attractive in comparison
        Getty Images/iStockphoto

        I am receiving a large number of complaints about the stock market’s wild swings as the new coronavirus spreads across the U.S.

        My suggestion is to not complain. The reason is that there is nothing you can do. Investors ought to accept the swings, focus on making money from them with short-term trades while protecting their portfolios. For example, “Coronavirus brings opportunities in gold — just like in the good, old days.”

        Big swings in prices are an indication of a top or a bottom in the stock market. Which one is it? Here is how to decide, with the help of two charts.

        1. “At this level, bond yields are so low, stocks look attractive in comparison”

          Suppose that returns on stocks are expected to be negative for the next few months, due to a black swan event that hammers sales to below costs. Would you be better off taking a low, positive yield on Treasury bonds, or HODLing stocks through a period of negative returns?

      4. The Financial Times
        Coronavirus latest: Asia-Pacific ‘faces $211bn economic loss’

        Global equity fund outflows hit $23bn on coronavirus fears

    2. Somewhere it is written: “he who is in ca$h, shall bee 1$t.” … his 7+ Billion$ in “dividend$” is knot going to $tretch as far as it used too. … $ad.

  9. Non.$ynchronized Global “$oft.landing$” has to $tarts somewhere, the Un.united.Kingdom is a good a place as any eye reckon.

    Reuters$ | BUSINESS NEW$ | MARCH 4, 2020

    British airline Flybe collap$es as coronavirus$ deal$ final blow

    By Sarah Young, Kate Holton

    LONDON (Reuters) – Britain’s Flybe collapsed on Thursday after a plunge in travel demand, making the long-struggling regional airline one of the first big corporate casualties of the coronavirus outbreak.

    The failure of an airline that connects all corners of the United Kingdom with major European destinations not only puts around 2,400 jobs at risk but could also see some airports struggle and regional economies hit.

    “All flights have been grounded and the UK business has ceased trading with immediate effect,” Flybe said after the government walked away from a rescue package agreed in January

    Airlines around the world have been cancelling flights and warning of a hit to profitability after coronavirus first emerged in China, hitting flights across Asia, before it spread to Europe and beyond.

    British Airways (ICAG.L), easyJet (EZJ.L), Virgin Atlantic, Lufthansa (LHAG.DE), Norwegian Air (NWC.OL) and United Airlines (UAL.O) are among those warning on the impact of a virus that looks set to hit the industry harder than the 2003 SARS outbreak.

    Flybe’s collapse will also cause more problems for Prime Minister Boris Johnson who had promised to “level up” Britain by investing in regional transport links.

    His government had agreed a rescue deal for the 41-year-old airline in January, saying it was important to maintain connections across the country for its eight million passengers. It said on Thursday there was nothing more it could do.

      1. No, it looks like a hand-knit toilet seat cover with a red object knit into the pattern, possibly the bottom half of a red flower vase. The realtor put the cover on the seat upside down. What should be the top-facing part of the cover is facing downward, toward the bowl.

        1. I can see now, a couple of hours later, how what I posted there could have been interpreted seriously — sorry about that 🙂

    1. $1.5M for a shack that probably sold originally for $30K. And it’s east of Hwy 101. I can only imagine the price if it was west, or beachfront.

      1. that is Cardiff, its a beautiful area and that land is prime. I met a guy at the Cardiff farmers market who bought a 700 sq foot place there in 1986 who said it was appraised at 1.5M as well. He worked a low end job working a register and walks his dog around town and enjoys life not having to worry about money. Prop 13 has kept his tax rate to nothing.

        1. that is Cardiff, its a beautiful area and that land is prime

          I used to live in Solana Beach. I think the area is overrated.

  10. ‘A key barometer of the health of the global shipping market has sunk to its lowest level on record as the coronavirus adds pressure to an already struggling industry. The Baltic Exchange’s capesize index fell into negative territory for the first time last month and has gone lower this week. It fell by 7 points yesterday to -353.’

    1. Baltic Exchange’s capesize index

      The Hellenic Shipping News describes China as “closed”.

    2. I don’t really get negative prices. Except perhaps for the case of bond yields, where the market is artificially manipulated by monetary intervention.

  11. Ya reckon this “$it.u.ation” has improved $ince Jan 26th 2020? … ye$, no?

    Bank$ have returned to the pre-2008 world of automatic credit-limit increa$es for credit card$ used by already indebted people$

    BoingBoing / CORY DOCTOROW / SUN JAN 26, 2020

    “Proactive credit line increases” (PCLIs) are when your credit card company increases your credit limit without your asking for it; it was very common prior to the 2008 crisis, but the post-crisis rules largely put a stop to it. Now, banks have figured out regulatory loopholes that allow them to throw PCLIs at their most vulnerable customers, leading to record-high national levels of credit-card debt of $880b as of last September, higher than the pre-crisis high.

    Credit cards are the most profitable loans that the finance industry originates, and 2019 was the best-ever year for the banks’ profits from credit cards, with interest rates soaring to a 20-year peak. The US banks made $179b in credit card fees and interest in 2019, and 2020 is projected to be even better. Credit-card debt is the fastest-growing form of debt in the USA.

    Much of this PCLI activity is subprime — extending credit to people who are already overburdened by debt and who will likely miss payments, leading to high penalties, which are extremely profitable for banks.

    The number of people aged 19-29 in the USA who are more than 90 days late on their card payments just reached a ten-year high.

    But after the stock slipped in 2017, [Capital One] executives came under pressure to show they could meet growth targets. They eventually tweaked their models to offer increases to more customers, betting on a quirk in human behavior, according to the person with knowledge of the decision, who asked not to be named discussing the talks. The firm’sanalyses showed people tended to keep their card utilization steady, even after line increases. In other words, someone who used 80% of their credit line before the boost, would typically use the same percentage afterward, generating more revenue.

    Other researchers had come to similar conclusions. For consumers who carry balances on their cards, “nearly 100% of an increase in credit limits eventually becomes an increase in debts,” according to a working paper by Scott Fulford and Scott Schuh for the Federal Reserve Bank of Boston. About half of U.S. credit card accounts carry a balance each month

  12. “‘Forget Canada. We’ll go somewhere else.’

    Good riddance. Take your dirty money and fraudulent dealings with you.

  13. “Homeowners are dumping their properties in Hong Kong for as much as HK$11.6 million (US$1.5 million) in losses to pack up their bags because of the city’s dire economic prospects, analysts said.

    Their neighbors who are staying put must love what that’s doing to the comps.

  14. “‘The sector is witnessing an unprecedented downward spiral. The funding has dried up and builders are grappling with a pile-up of unsold inventory,’ said Housing Minister Jitendra Awhad.”

    As the central banks lose control, those two sentences will describe every former bubble market on the planet.

  15. Fauxcahontas is caught between a rock and a hard place: back Biden and prove herself a fraud; or, back Bernie and risk her career path.

      1. It would be funny if Creepy Joe offered here the VP position, then Bernie went on to crush him.

    1. I note they show the Johns Hopkins command center in the article. Had a very strange thing happen yesterday when I loaded that site on my phone. As it was loading, the number it showed for confirmed cases was something like 2,472,893. I about spit out the finely smoked bourbon I was enjoying. Not sure the exact number but it was over 2.4M.

      A few seconds later that number was replaced with “No Data” then reloaded with the expected 95K number. It’s possible the algorithm was being refined at around the same time or some other glitch occurred but I’m wondering if there’s a much higher confirmed case load than what is being reported and there is some other math happening to keep the freakout to a minimum.

    2. Casa Spiffy is prepared.

      Mrs Spiffy is now at 100% work from home for the foreseeable future. I’ve been 100% WFH since leaving HBO in 2016.

      Still making a trip to the grocery store ever few days, but that’s about it.

      but damn.. it’s gotta suck to have a job where you depend on people getting out and about – uber drivers, restaurants (though door dash orders may be up?), amazon delivery, retail workers, Realwhores(tm), etc, etc…

      A lot of people are going to get slammed income-wise as everything slows down but they still gotta pay rent. This could get really ugly soon.

        1. Or a…$600k mortgage!

          Same difference, though I suspect the more vulnerable workers are likely more renters than homeowners.

          Anyone who is highly leveraged or without much of a safety net has got to be sweating a bit. People whose ‘safety net’ was in the stock market. may be sweating a lot.

          Remember the surveys that some large percentage of people couldn’t afford a $400 or $1000 emergency? those people would be considering taking a job like this…

          https://old.reddit.com/r/SeattleWA/comments/fe23si/hmm_wonder_which_nursing_home_in_kirkland_they/

          1. “Remember the surveys that some large percentage of people couldn’t afford a $400 or $1000 emergency?”

            The direct end result of paying too much for a rapidly depreciating asset like a house….. then doubling down on it by financing.

            Oooph

            Longboat Key, FL Housing Prices Crater 16% YOY As Sarasota And Manatee County Housing Market Turns Radioactive

            https://www.zillow.com/longboat-key-fl/home-values/

            *Select price from dropdown menu on first chart

            A distinguished economist quipped, “Why buy a house when you can rent one for half the monthly cost. Buy it later after prices crater for 70% less.”

      1. “CNBC is Pravda”

        CNBC, DOWn : (-970.58)

        faux.New$: Kudlow: “… never a better time to travel to Italy!”

        Choo$e yer poi$on

    1. The Financial Times
      Oil
      Oil traders warn of ‘zero growth’ in 2020 demand due to coronavirus
      Outbreak expected to cut consumption increase to weakest levels since 2008 crisis
      3 hours ago

    2. Actually, i was thinking of the intro to Lord of the Rings with the voiceover by Galadriel; “The world is changing, I can feel it in the air…”

      One can almost sense everybody around starting to batten down the hatches.

      1. It’s a good time for home shopping, when rival prospective buyers are too scared to go out of their homes to attend open houses.

    1. Had to get over into Bellevue yesterday morning, left @ 9:30am and 405 north was still fully constipated.

    2. The seauhan homeless population might be at risk here… Read up that there are two strains of this flu “L“ and “S“ with S being the most severe. Not sure which one is Going around the states here.

  16. “streets are looking emptier each passing days.”

    ” … it’s just a cold!!! ” Ra$h limpbaugh$ … (Pay attention to the Truth.$layers!)

    1. “x2 teaspoons of “soda” in the mornin’!” … $alvations, it’$ a ” miracle! ”

      Thanks! (Hope this makes it to faux.news ASAP!)

  17. This is the guy, who could knot $tate what his bank teller$ in Irvine, CA are paid. “I’ll look in to it … ”

    JPMorgan says CEO Jamie Dimon recovering from emergency heart surgery
    MarketWatch | Published: March 5, 2020 |By Mike Murphy

    ‘Jamie experienced an acute aortic dissection this morning,’ bank says

    “… a$k knot what you can do for your employee, … a$k, what can your employee do for you!” … By Anonymou$

    Carnage Cometh! (Part ll)

    1. More LOL:

      “Rascoff is currently launching dot.LA, a news and events company that will cover the tech scene in Los Angeles.”

      “Last year, Rascoff stepped down from Zillow, which has pivoted to an ibuyer model with Rich Barton at the helm.”

    2. Please please please Chinese come over and pay the asking prices!!! Me love you long time!!!

  18. I heard this last night.

    Joe Biden has waited his whole life for success in a presidential-primary, too bad he’s not around to enjoy it.

    1. It would be comical if it weren’t so scary that he’s the best they could do. Listening to him talk…I can’t imagine him as the President. There is not a chance in hell I’d vote for him.

  19. Report from rural Ontario Canada. The chain grocery store Price Choppers has everything they think the prepper might be wanting on sale. People are definitely stocking up in the back country.

    1. A few days ago at the grocery store they had a huge display of bottled water in the middle of the aisle near the dairy. I have never seen a big display of water before. Hmmm.

    1. They would have you believe that it’s completely over in China. Their only problem now is people coming in from other countries. The cherry blossoms thing was an artistic relish.

  20. From the John Hopkins University Coronavirus GIS site:

    Confirmed Cases: 98,382
    Total Deaths: 3,383

    Total Deaths as a percentage of Confirmed Cases = (3,383/98,382)×100% = 3.4%.

    I’m sure it’s a pure coincidence that this exactly matches the WHO case fatality rate estimate.

    He who refuses to do arithmetic is doomed to talk nonsense.

    — John McCarthy

  21. Would this be a good time for a bear to go into coronavirus hibernation?

    The Financial Times
    Coronavirus
    Treasury yields hit new lows on coronavirus fears as stocks fall

    Asia-Pacific markets drop on investor flight to safety
    updated 42 minutes ago

    More on this topic
    Coronavirus latest: S Korea and Japan clash over quarantine; Asia stocks and US bond yields fall

    1. Treasury yields hit new lows on coronavirus fears as stocks fall

      TLT was up 6+% this morning when I checked.

  22. The Financial Times
    Markets News
    UK interest rates
    Markets shift to bet on UK interest rate cuts
    Easing now widely anticipated after emergency move from US Federal Reserve

    Property sector
    Coronavirus raises threat of China developer defaults
    Property companies face cash crunch on billions of US dollar bonds as sales dry up

    Coronavirus
    Government bonds hit new highs on coronavirus fears
    European and Asia-Pacific stocks fall as investors flee to haven assets
    updated 39 minutes ago

    Analysis US Treasury bonds
    US Treasury investors contemplate life near zero

    Capital markets
    Global equity outflows hit $23bn on coronavirus fears

    Equities
    Coronavirus fears leave investors huddling in utilities

    1. The FT article is behind a pay firewall but here is another article
      https://checkersaga.com/coronavirus-raises-threat-of-china-developer-defaults/21477/

      “The Covid-19 epidemic has shut down financial exercise throughout massive swaths of China, with tens of tens of millions of individuals unable to maneuver freely in cities and cities. In lots of locations meaning potential homebuyers can’t exit and seek for new flats.

      Whereas gross sales figures for February aren’t but out there, a report from property researcher E-Home confirmed that through the first week of February fewer than 4 properties a day had been bought in Beijing. Usually, lots of of properties change arms every day.”

      OH DEAR

  23. In several decades of market watching, I have never seen Treasurys behave as they are currently. It’s a little crazy…something like the financial markets equivalent of people buying water by the case at Costco.

    1. If we sink below 25k it could be the tipping point that even the PPT wont be able to save. Today might just be the day

      1. Someone got angry at gold at 10:15 this morning. It’s up $12 when I go take a shower, then come back and it’s down $20. Crazy volatility these days!

      2. Self-quarantine doesn’t inspire confidence especially when the discussion includes America’s homeless population.

  24. This herd is easily spooked.

    Market Extra
    Why stocks tanked despite the Fed’s emergency rate cut
    Published: March 3, 2020 at 10:32 p.m. ET
    By William Watts
    Intermeeting move ‘reignited investors’ worst fears’: State Street’s Arone

    “I think the Fed’s rate cut backfired in many ways. Instead of soothing the market, it’s reignited investors’ worst fears,” Michael Arone, chief investment strategist for State Street Global Advisors, told MarketWatch in a phone interview.

    Stocks initially jumped after the Fed announced a half-point cut, but gains proved short-lived. The Dow Jones Industrial Average (DJIA, -1.762%) fell nearly 1,000 points at its session low and ended the day down 785.91 points, or 2.9%, at 25,917.41, while the S&P 500 (SPX, -2.002%) dropped 2.8% and the Nasdaq Composite (COMP, -1.805%) lost 3%.

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