So, It Seems Like That Andreesen Dude Might Actually Know What He’s Talking About, But I’ll Still Spill His Secrets

I got into a Twitter debate with Marc Andreesen of Netscape (the inventor of the commercial web browser) and Andreesen Horowitz (the VC fund that financed Facebook, Twitter, Skype & Zynga) fame.

He spit out what was mostly common sense, yet still flew in the face of what is taught in school, most text books and by most B school teachers. Here’s how it went down…

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




via Zero Hedge http://ift.tt/1eEgHLT Reggie Middleton

Full Geneva Statement On Ukraine “De-escalation”

From the European Union:

Geneva Statement on Ukraine

 

Representatives of the European Union, the United States, Ukraine and the Russian Federation issued today the following statement:

 

“The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de?escalate tensions and restore security for all citizens.

 

All sides must refrain from any violence, intimidation or provocative actions. The participants strongly condemned and rejected all expressions of extremism,  racism  and religious intolerance, including anti?semitism.

 

All illegal armed groups must be disarmed; all illegally seized buildings must be returned to legitimate owners; all illegally occupied streets, squares and other public places in Ukrainian cities and towns must be vacated.

 

Amnesty will be granted to protestors and to those who have left buildings and other public places and surrendered weapons, with the exception of those found guilty of capital crimes.

 

It was agreed that the OSCE Special Monitoring Mission should play a leading role in assisting Ukrainian authorities and local communities in the immediate implementation of these deescalation measures wherever they are needed most, beginning in the coming days. The US, EU and Russia commit to support this mission, including by providing monitors.

 

The announced constitutional process will be inclusive, transparent and accountable. It will include the immediate establishment of a broad national dialogue, with outreach to all of Ukraine’s regions and political constituencies, and allow for the consideration of public comments and proposed amendments.

 

The participants underlined the importance of economic and financial stability in Ukraine and would be ready to discuss additional support as the above steps are implemented.”

And a take from the WSJ:

The U.S., Russia and European Union agreed to a framework of steps to de-escalate tensions in Ukraine, including demobilizing militias, vacating seized Ukrainian government buildings, and establishing a political reform program, U.S. and Russian officials said Thursday.

 

The agreement was reached during more than six hours of talks in Geneva and marked the first tangible step to defuse the political and security crisis in Ukraine since Russia annexed the Crimean region last month, said U.S. and Russian officials.

 

“The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens,” the participants in the talks said in a joint-statement. “All sides must refrain from any violence, intimidation or provocative actions.”

In other words, virtually a carbon copy replica of the diplomatic coup that was achieved… just before Russia annexed Crima.


via Zero Hedge http://ift.tt/1eEgHvo Tyler Durden

Krugman, Who Is Paid $25,000/Month To Study Inequality, Says “Nobody Wants Us To Become Cuba”

When it comes to Krugman’s views on any particular topic, he may be right and he may be wrong, but whatever his opinion he always has a much to say about it (even if the factual backing is of secondary importance or outright missing). Today, his chosen topic is inequality, and in an interview with Bloomberg’s Tom Keene, shown and transcribed below, he certainly says much, encapsulated perhaps by the following gem:

“There’s zero evidence that the kind of extreme inequality that we have is good for economic growth. In fact, there’s a lot of evidence that it is actually bad for economic growth. Nobody wants us to become Cuba. The question is, do we have to have levels of inequality that are getting close to being the highest levels ever anywhere. We’re really starting to set new records here. Is that a good thing for anybody? If you look at our own history, it’s not true. The fact of the matter is since inequality began soaring around 1980, the bottom half of America has been pretty much left behind. It has not been a rising tide that raised all boats.”

Ah yes, inequality, the same inequality that the Fed – Krugman’s favorite monetary stimulus machine, after all it was none other than Krugman who suggested that in order to offset the bursting of the tech bubble the Fed should create the housing bubble – has been creating at an unprecedented pace since it launched QE. Just recall: “The “Massive Gift” That Keeps On Giving: How QE Boosted Inequality To Levels Surpassing The Great Depression.”

So while Krugman is right in lamenting the record surge in class divide between the 1% haves and the 99% have nots, you certainly won’t find him touching with a ten foot pole the root cause of America’s current surge in inequality.

And, tangentially, another thing you won’t find him touching, is yesterday’s revelation by Gawker that the Nobel laureate is the proud recipient of $25,000 per month from CUNY to… study inequality.

From Gawker:

According to a formal offer letter obtained under New York’s Freedom of Information Law, CUNY intends to pay Krugman $225,000, or $25,000 per month (over two semesters), to “play a modest role in our public events” and “contribute to the build-up” of a new “inequality initiative.” It is not clear, and neither CUNY nor Krugman was able to explain, what “contribute to the build-up” entails.

 

It’s certainly not teaching. “You will not be expected to teach or supervise students,” the letter informs Professor Krugman, who replies: “I admit that I had to read it several times to be clear … it’s remarkably generous.” (After his first year, Krugman will be required to host a single seminar.)

 

 

CUNY, which is publicly funded, pays adjunct professors approximately $3,000 per course. The annual salaries of tenured (but undistinguished) professors, meanwhile, top out at $116,364, according to the most recent salary schedule negotiated by the university system’s faculty union. And those professors are expected to teach and publish. Even David Petraeus, whom CUNY initially offered $150,000, conducted a weekly 3-hour seminar.

 

Along with the offer letter, CUNY released dozens of emails between Krugman and university officials. “Perhaps I’m being premature or forward,” the Graduate Center’s President, Chase Robinson, tells Krugman in one of them, “but I wanted you to have no doubt that we can provide not just a platform for public interventions and a stimulating academic community­—especially, as you will know, because of our investments in the study of inequality—but also a relatively comfortable perch.”

 

Which is undeniably true: $225,000 is more than quadruple New York City’s median household income.

Surely, and in keeping with this very vocal beliefs, the good professor
will promptly donate the $225,000 in annual income reserved to help the problem of inequality to a needy charty
catering to the poor, at the first opportunity.

Or not. After all, nobody wants us to become like Cuba, eh?

The full Bloomberg interview below:

And the transcript of the key highlights:

Krugman on dangerous slack in Economy:

“If people are unemployed for long enough, they may never get back into the workforce. If investment is depressed long enough, we never build the capacity. So if you think there is a lot of slack or even if you think that there might be a lot of slack in the US economy, then that should be a tremendous preoccupation. We’ve got to get rid of that. We need to get this economy back to something like full employment. It becomes the most urgent priority we have right now.”

Krugman on Japan vs. Europe:

“I have to say, when the Europeans say we’re not Japan, I agree. Japan was never in as dire straits as Europe is right now. They never had the mass unemployment. There was never a part of Japan that looked like Spain or Greece does in Europe right now. So their notion that they are somehow doing better than Japan, they are doing worse than Japan ever did.”

Krugman on current economic conditions:

“We should be vastly impatient. This has gone on. If you had said in 2007, that more than 6 years after a recession begins, we would still be talking about an economy with high unemployment, sluggish job growth, there hasn’t been a single month, that I can remember, where we’ve created as many jobs as we did during an average year during the Clinton administration. This is crazy. The idea that this should be regarded as an acceptable pace of progress is just really, really wrong.”

Krugman on inequality:

“There’s zero evidence that the kind of extreme inequality that we have is good for economic growth. In fact, there’s a lot of evidence that it is actually bad for economic growth. Nobody wants us to become Cuba. The question is, do we have to have levels of inequality that are getting close to being the highest levels ever anywhere. We’re really starting to set new records here. Is that a good thing for anybody? If you look at our own history, it’s not true. The fact of the matter is since inequality began soaring around 1980, the bottom half of America has been pretty much left behind. It has not been a rising tide that raised all boats.”

Krugman on how income inequality gets solved:

“American history is actually very encouraging because in America, we often had leadership, we had often people from the affluent classes themselves who said this is too much. If we could have modern politicians speaking as forthrightly about the danger of high concentration of wealth as Teddy Roosevelt did in 1910, we would be a long way towards having a good solution to this. I guess I believe that America has a tremendous redemptive capacity, an ability to take a look and say, in the end, what our ideals, what do we want society to look like, an ability to step back. We don’t have to become this oligarchy that unfortunately we are drifting towards.”

Krugman on whether we are living in a gilded age:

“It’s more than that. We’re at gilded age level of inequality and beyond. It’s a belle epoque as Pikkety says. It’s an era not just of great inequality but increasingly of inherited inequality and I think if people understand that they’ll say nope, we don’t want that to happen and we can do things that are not Draconian, that are not socialist in the American tradition to limit that rise in inequality.”

Krugman on Obamacare and Obama:

“At this point, Obamacare looks like it is a success. It’s not the program anyone would have designed from scratch but it is a huge improvement for American lives and just having that legacy plus the somewhat weaker but still important legacy of financial reform, Obama is one of our most consequential presidents. You have FDR, LBJ, Ronald Reagan and Barack Obama as presidents who left America quite a different place once they were done.”

Krugman on the basic problem with the US Economy:

“The basic problem with the US economy is that there are not enough jobs. And then, given that, employers get to be picky. Who would they want to offer a job? Preferably somebody who already has one or who lost a job only recently so the long-term unemployed get ruled out.”

Krugman on whether he has seen long term unemployment like this ever in his career:

“No, we know that there’s been nothing like this since the 1930s. This is a completely new thing for almost everybody. People who remember this were children when they saw it…There are many things I’m angry about but that’s certainly one of them. We have millions of people who have just been ruled out of the discussion but we can try to do things to make them more employable but we really just need more jobs. So that employers have an incentive to go out and look for qualified people even if they aren’t people who already have jobs.”

Krugman on proper level of growth that we need to begin solving our labor challenges:

“Well I’m of the belief that we have slack in the economy. Best guess, and we don’t know this for sure but I think we still have 5 or 6% slack in the economy and we should be taking it up fast. We should be growing — we are that deep in the whole that we should be growing several points above the long run growth rate. So we should be having 4 or 5% economic growth at this point. So when we look and we say oh great, we’re doing 2.5%, that’s just showing how far we’ve become accustomed to — how used to really dismal economic conditions.”

Krugman on Government and Wall Street:

“Government has shaped the form of markets all the time. There’s no law of nature that says that people have to be free to build a new fiber optic cable that allows them to be 3 milliseconds ahead of the rest of the market. This is stuff that certainly could be regulated. There’s actually two things. One is, the market being too perfect is actually undermining the work of discovering useful knowledge and the other is, you are spending a lot of your sources on stuff that is of zero social benefit.”

Krugman on whether there is a lack of confidence in our financial system because ‘the smart guys have too much information’:

“I think there’s not enough skepticism. Our financial sector has gotten way bigger and more concentrated. It has grown from 4% to 8% of GDP and it is not at all clear what society is gaining from that. I think if anything, the general public is too willing to take Wall Street at face value as actually performing a useful service.”




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Big Blue: Stock Buyback Machine On Steroids

Submitted by David Stockman of Contra Corner

Big Blue: Stock Buyback Machine On Steroids

The Fed’s financial repression policies destroy price discovery and honest capital markets. In the process these deformations turn financial markets into casinos and corporate executives into prevaricating gamblers. To be specific, most CEOs of the Fortune 500 are no longer running commercial businesses; they are in the stock-rigging game, harvesting a mother lode of stock option winnings as the go along.

Those munificently rising stock prices and options cash-outs owe much to the Fed’s campaign to suppress interest rates and fuel stock market based ”wealth effects”, but the CEOs are doing their part, too. They have become full-time financial engineers who use the Fed’s flood of liquidity, cheap debt and soaring stock prices to perform a giant strip-mining operation on their own companies.  That is, through endless stock buybacks and M&A maneuvers they create the appearance of “growth” while actually liquidating the balance sheet equity and future asset base on which legitimate earnings growth depends.

The poster boy for this deformation is IBM which for all intents and purposes has become a stock buyback machine on steroids. It had a bad hair day yesterday, reporting still another year/year decline in sales, but that goes right to the heart of the matter. During the last seven years IBM has been a stock traders dream, climbing an almost picture perfect chart from $94 per share in March 2007 to a recent peak of $212.

But as shown below, those gains had nothing to do with what has been a historic ingredient of stock appreciation—-namely, expansion of its asset base and revenues. In fact, sales revenues in Q1 2014 clocked in at virtually the same number as Q1 2007:

So how has IBM and its ilk achieved revenue-less earnings growth? After all, reported EPS has gone from about $7 per share to $15 during the period. The short answer is that its executives and board have utilized every accounting and financial engineering short-cut in the book to disguise an equity liquidation campaign as a splendid strategy for “growth”.

During the 7-years ending in 2013 IBM booked about $100 billion in net income, and spent virtually every single penny on share buy backs. So the once and former king of the global high-tech industry had nothing better to do with its cash than shrink it equity base. Accordingly, its share count dropped by 20% over the period, thereby accounting for about 45% of its EPS growth.

Moreover, it also distributed another $20 billion in dividends over the 7-year period. In all, it delivered cash into the maws of the fast money and hedge fund complex that amounted to 120% of its net income for 2007-2013. Needless to say, the robo traders can never get enough of this kind of “shareholder friendly” action at any given moment in time–no matter that it amounts to corporate liquidation eventually.

Coughing up rivers of cash was only one arrow in the quiver of  IBM’s shareholder value enhancement strategy, however. Its lawyers and  accountants weighed in smartly, too. During fiscal 2007 Big Blue’s tax rate was already low at 28%, but by dint of the best tax maneuvers money can buy, IBM’s tax provision dropped to just 15.5% last year. So if you hold constant IBM’s tax rate and share count at the 2007 level, EPS would have been about $9.50/share in 2013, not the $15 reported.

Yet even that modest 5% growth rate since 2007 isn’t all that. IBM also spent nearly $25 billion on “acquisitions” during the period—financing these deals with the kind of ultra-cheap blue chip corporate debt issues that has been on fire sale since the Fed lowered the boom on the government benchmark rate under QE. Consequently, IBM’s acquisitions are inherently and prodigiously “accretive” to per share earnings not because they make any economic sense, but because its after-tax cost of debt capital is nearly zero.

It might wondered, however, why a globe spanning company with $100 billion in revenues, top-drawer facilities, limitless professional  talent and a huge legacy of intellectual capital needs to shuffle around Wall Street making two-bit M&A deals on a continuous basis—that is, why it doesn’t build rather than “buy”.

But then just check out the “cookie jar” of accounting reserves it establishes on each deal completion along with its near zero-cost of debt capital. It becomes quickly evident that EPS “accretion” on an accounting basis may have virtually no relationship whatsoever to genuine corporate value creation–the ostensible point of the mindless M&As that preoccupy the C-Suites of corporate America.

Indeed, IBM’s financials make it self evident that its stock rigging strategy is not about value creation thru “investment”. Thus, during the past seven years IBM has consumed about $35 billion in DD&A charges, but invested less than $30 billion in Capex. Even if IBM has gone the “services and software” route, it might by questioned how a technology giant can prosper over time by consuming 15% of its capital assets each and every year.

And that’s especially true since its R&D expense line is going south even faster. In 2007 it spent about $6.2 billion generating new products, processes and intellectual capital; last year in inflation-adjusted dollars it spent $5.5 billion or nearly 15% less.

In short, IBM is a poster boy for the deformation of American capitalism that has resulted from monetary manipulation and central planning. Today it carries nearly $40 billion of super-cheap debt—up by nearly 21% from 2007. It has used that gift from the Eccles Building to make ends meet—that is, carry on operations while it steady liquidates its capital and feeds prodigious amounts of cash into the Wall Street casino.

Yes, IBM is a buy back machine on steroids that has been a huge stock market winner by virtue of massaging, medicating and manipulating its EPS. But eliminate the accounting razzmatazz, M&A tricks and under-investment— and IBM’s true earnings might be fairly estimated at $8/adjusted share.

That means that even after today’s hit Big Blue is valued at nearly 24X. And that’s for a company that has not grown in 7 years; which has had a weak-dollar tail-wind inflating its earnings; and has now become personae non-grata in much of the BRIC world due to its service to the Spy State in Washington.

Under those circumstances,  the next “M” may stand for monkey-hammered.

Below is an excerpt from ”The Great Deformation: The Corruption Of Capitalism In America” where this baleful tale of corporate self-liquidation was first exposed(pp 563-565)

BIG BLUE: STOCK BUYBACK CONTRAPTION ON STEROIDS

 

IBM’s huge share buyback program, by contrast, shows that financial engi- neering does not always produce such immediate untoward results. Yet it is nonetheless a dramatic illustration of how the Fed’s bubble finance régime enables companies to literally “buy” themselves a higher stock price, at least temporarily, by plowing massive amounts of cash into share repurchases, thereby creating the false impression of robust earnings growth.

 

Big Blue’s reported earnings thus surged 16 percent annually from $7 per share in 2007 to $13 in 2011, but those results were not apples to apples by any stretch of the imagination. The company’s stock buyback program re- duced its net share count by 22 percent, and profits on its massive overseas operations had been artificially boosted by a double-digit decline in the dollar. IBM’s reported results also reflected a 12 percent reduction in its tax rate and $16 billion of acquisitions, all highly accretive mainly because they were financed with ultra-cheap long-term debt.

In the absence of these one-timers and financial engineering maneu- vers, however, the picture was not so buoyant. Based on organic revenues, constant exchange rates, and no reduction in tax rates and share counts, earnings per share grew by about 5 percent annually, not 16 percent, over the past five years. It is far from evident, therefore, that IBM’s true mid- single-digit growth rate justified the doubling of its share price during the period.

 

Upon closer examination, in fact, IBM was not the born-again growth machine trumpeted by the mob of Wall Street momo traders. It was actu- ally a stock buyback contraption on steroids. During the five years ending in fiscal 2011, the company spent a staggering $67 billion repurchasing its own shares, a figure that was equal to 100 percent of its net income.

 

This massive and continuous stock-buying program brought approxi- mately 550 million, or 36 percent, of the company’s 1.5 billion of outstand- ing shares into its treasury, but needless to say, they did not all stay there. Nearly two-fifths of these shares reentered the float, mainly to refresh the management stock option kitty.

 

It goes without saying that in this instance the interests of stock traders and top management were aligned—perversely. The steady, deep shrink- age of the IBM float kept a bid under the stock and thereby delivered a “perfect” price chart, rising almost continuously from $100 to $200 per share over the past five years. It was a carry trader’s dream.

 

Likewise, top executives got big-time pay packages they may or may not have deserved, but in any event they were dispensed in envelopes marked “tax once over lightly.” Former CEO Sam Palmisano, for example, cashed out $110 million worth of stock options a few weeks after his retirement party.

 

This rinse-and-repeat shuffle of stock buybacks and options grants is undoubtedly a significant source of left-wing jeremiads about executive pay having gone to three hundred times the average worker’s compensa- tion when, once upon a time, allegedly, the ratio was more like 30 to 1. But the issue is not simply whether this kind of financial engineering has con- tributed to the sharp tilt of income flows to the top 1 percent in recent years. There can be little doubt, on the math alone, that it has.

 

The more crucial question, in this instance, is whether the massive CEW evident in IBM’s numbers is setting up another of the great iconic American companies for a fall sometime down the road, similar to Hewlett-Packard. The data on this score are not encouraging. Total shareholder distributions, including dividends, amounted to $82 billion, or 122 percent, of net income over this five-year period. Likewise, during the last five years IBM spent less on capital investment than its depreciation and amortization charges, and also shrank its constant dollar spending for research and development by nearly 2 percent annually. Neither of these trends is compatible with stay- ing on top in the fiercely competitive global technology industry.

 

Most especially, however, IBM’s earnings—like nearly all the big cap global companies—could not be flattered permanently by the Fed’s bubble finance. Already, the plunge of the euro has taken a toll on the company’s reported results, causing the artificial translation gains it booked on its huge European businesses during the weak dollar cycle through 2011 to now unwind. Indeed, with nearly two-thirds of its sales outside the United States, the company’s sales are now actually falling in dollar terms, and will likely continue to do so for the indefinite future.




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Russian Foreign Minister Announces Four Party Agreement On Steps To De-escalate Ukraine Crisis

Considering how successful diplomatic “solutions” to the Ukraine crisis have been in the past, it is no wonder almost nobody was paying attention to Geneva where today the four parties were holding talks to resolve the Ukraine situation, and moments ago they released, via Russia’s Lavrov, a joint statement on “de-escalating the situation.” From Bloomberg:

  • LAVROV SAYS DOCUMENT APPROVED ON UKRAINE
  • LAVROV SAYS DOCUMENT ON INITIAL STEPS TO DE-ESCALATE SITUATION
  • 4 PARTIES CALL FOR ILLEGAL ARMED GROUPS TO BE DISARMED: LAVROV
  • UKRAINIANS MUST RESOLVE CRISIS THEMSELVES, LAVROV SAYS
  • PARTIES URGE WIDE-RANGING NATIONAL DIALOG IN UKRAINE: LAVROV
  • PARTIES URGE AMNESTY FOR PROTESTERS IN UKRAINE’S EAST: LAVROV
  • UKRAINE NEEDS TO BOLSTER STATUS OF RUSSIAN LANGUAGE: LAVROV

And, approrpiately enough, the Easter Egg:

  • UKRAINE NEEDS DECENTRALIZATION, MORE REGIONAL POWERS: LAVROV

In other words, more referendums? For now stocks aren’t reacting bullishly (perhaps because as UBS recently suggested, war may be bullish for US stocks), however, oil is lower on the news.

We wonder how long until this too “diplomatic” solution is promptly ignored and forgotten: days or hours?




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Housing Bubble 2.0 Veers Elegantly Toward Housing Bust 2.0

Wolf Richter   http://ift.tt/NCxwUy   http://ift.tt/Wz5XCn

They’re not even trying to blame the weather this time. “Housing affordability is really taking a bite out of the market,” is how Leslie Appleton-Young, chief economist for the California Association of Realtors explained the March home sales fiasco. “We haven’t seen this issue since 2007.”

In Southern California, the median price soared to a six-year high of $400,000, up 15.8% from a year ago, as San Diego-based DataQuick reported. It was the 24th month in a row of price increases, 20 of them in the double digits, maxing out at 28.3%. Ironically, prices per square foot are increasing fasted at the bottom third of the market (up 21%), versus the middle third (up 15.9%) and the top third (up 14.3%).

Ironically, because at the bottom 65%, sales have collapsed.

People, wheezing under the weight of their student loans and struggling in a tough economy where real wages have declined for years, hit a wall. Private equity firms and REITs, prime beneficiaries of the Fed’s nearly free money, gobbled up vacant homes sight unseen in order to convert them into rental housing, and in the process pushed up prices – exactly what the Fed wanted. But now high prices torpedoed their business model, and they’re backing off. So sales of homes priced below $500,000 plunged 26.4%, and sales of homes below $200,000 collapsed by 45.7%.

These aren’t poor people who stopped buying them but two-income middle-class families who’ve been priced out of the market. Thanks to the Fed’s glorious wealth effect, however, sales of homes ranging from $500,000 to $800,000, increased by 2.9% from a year ago, and sales of homes above $800,000 increased by 5.4%. In total, 35% of the homes sold for $500,000 or more. But combined sales, due to the collapse at the low end, dropped 14.3% from a year ago to 17,638, the worst March in six years, and the second-worst in nearly two decades.

“Southland home buying got off to a very slow start this year,” said DataQuick analyst Andrew LePage. Among the culprits: the suddenly absent large-scale investors, the jump in home prices, and the increase in mortgage rates [read…. Hot Air Hisses Out Of Housing Bubble 2.0: Even Two Middle-Class Incomes Aren’t Enough Anymore To Buy A Median Home].

And he put his finger on a new culprit: potential move-up buyers were stymied because they’d refinanced their current home at a “phenomenally low” interest rate. They can’t afford to abandon their relatively low payment, which they already stretched to reach, and buy a much more expensive home – a move-up home during a pandemic of inflated home prices financed at a higher mortgage rate. They’re trapped by the consequences of the Fed’s policies:

They could sell, but they can’t afford to buy!

“Lately on Saturdays and Sundays, you see open house signs everywhere,” Carey Chenoski, a real estate agent in Redlands, told the LA Times. “The houses that last spring would be gone in the first day are sitting maybe 60 days.” That’s at the low end. At the high end, at prime beachfront locations in Manhattan Beach, the wealth effect runs the show. Agents are getting “multiple offers on just about everything,” said Barry Sulpor, with Shorewood Realtors. “The market is really on fire.”

In the nine-county Bay Area, the median price paid for a home in March jumped  to $579,000, up a bubblelicious 23.2% from a year ago, the highest since December 2007, according to DataQuick. In my beloved San Francisco, the median price jumped 14.6% to $937,500. In Solano County, the “cheapest” county in the Bay Area, the median price soared 30.4% to $300,000.

Alas, sales plummeted 12.9% to 6,308 houses and condos in the Bay Area, the worst March since 2008, and the second-worst in the history of the data series going back to 1988. And the debacle was concentrated at the lower end: while sales of homes over $500,000 rose 5.2%, sales of those under $500,000 collapsed by 32.9%.

The same phenomenon is playing out across the nation.

Redfin, an electronic real-estate broker that covers 19 large metro areas around the country, saw year-over-year price gains of 9.9% in March, after 17 months in a row of double-digit gains. Las Vegas topped the list with an annual gain of 20.8%.

But home sales in these 19 markets dropped 11.6% year over year, the fifth month in a row of sales declines. Beyond California, where sales fell off a cliff, sales in Washington DC tumbled 13.5%, in Las Vegas 15.8%, and in Phoenix 17.3%. It's tough out there.

Some analysts, tired of looking silly blaming the weather, started blaming low inventories. So inventories were flat in the 19 markets overall compared to March last year; no reason for plunging sales. In Boston, Portland, and Austin inventories dropped. But in the cities where the sales plunge has been particularly nasty, inventories skyrocketed: up 41.9% in Phoenix, 28.9% in Ventura, 25.7% in Riverside, 24.8% in Los Angeles, 23.1% in Sacramento, 21.3% in San Diego.

And the number of new listings across the 19 markets rose by 6.3%, the first year-over-year growth in March in three years. The usual suspects in California saw the largest jump, with listings in Ventura up 13.1%. But they were up elsewhere too: in Long Island 12.7%, in Las Vegas 11.9%, in Chicago 10.6%, in Phoenix 7.8%, etc.

You get the idea: rising inventories, rising new listings, soaring prices, and plunging sales. Something has to give.

Unlike stocks, housing is subject to the real economy. When the price at the bottom half of the spectrum soars beyond what people can afford even with today’s still extraordinarily low interest rates, and beyond what makes sense for speculators that fix them up and rent them out, then demand stalls. Homes sit. Sellers get frustrated. People who need to move can’t move because they can’t sell their house for the price they want. People who want to move up can’t. Pressure builds. And eventually, the prices that the Fed conspired to inflate into the stratosphere, well…. This is like so 2006.

A report from the asset management and investment banking division of Groupe BPCE, the second largest bank in France, predicts what daredevil voices at the maligned margin of financial analysis have worried about for a while: another global financial panic. Read… What Happens When ‘All Assets Have Become Too Expensive?’




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Weibo Opens Way Below IPO Price

Moments ago Weibo opened at a price that shocked pretty much everyone following the story of China’s twitter, which had already cut overnight the number of shares it was taking public:

  • WEIBO CORP OPENS AT $16.27, IPO AT $17.00

However, within moments of opening the underwriters did everything they can to avoid another Facebook and defended the IPO price, promptly sending the stock above $17.00 where it was trading as of this second.

Will they succeed in keeping the most watched social network IPO of the week above its IPO price, or will the Chinese social networking craze also be Candy Crushed? The next few hours should give the answer.




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Obama To Provide More Non-Lethal Aid To Ukraine Such As Helmets And Sleeping Bags

Moments ago, in a show of continued solidarity with the people of (West) Ukraine, US Defense Secretary Chuck Hagel announced the latest batch of “non-lethal” aid to Ukraine. Among the items that would be shipped are:

  • Sleeping mats;
  • Water purification systems;
  • Medial supplies; and of course
  • Helmets

What, no healthcare plans? Also, one wonders: is the procurement price billed to US taxpayers for every helmet shipped to Ukraine above $5,000 or above $10,000?

Hagel added that while US actions are “provocative” and “heighten tensions”, the US supply of equipment to non-NATO member Ukraine is not meant to “provoke or threaten Russia” and will review providing Ukraine with more support, also saying that the US is offering “planners” to help NATO update plans. The same NATO which as we reported yesterday, is preparing to expand its air and water presence around Russia… also obviously in a way that is not meant to threaten provoke Russia.

And while the US is providing helmets and sleeping bags, Canada, which has a substantial Ukraine population, is also jumping in, this time by providing 6 F-18 Hornet fighter jets to the NATO “reassurance mission” in Poland:

Or this:

This delivery of lethal “reassurance” support to a country in immediate proximity to Russia is surely also meant to neither threaten nor provoke Russia. That said, any response by Russia to this clear NATO escalation will promptly be branded as both threatening and provoactive. Stay tuned.




via Zero Hedge http://ift.tt/1teBpWR Tyler Durden

And The Highest Returning “Asset” Class In CNBC’s 25 Years Is…

Today, in celebrating its 25th birthday, CNBC will have you know that stocks, which have generated returns of over 500% in the past 25 years, are the best asset because, well, “where else are you going to put your money.” So if you said the S&P500 is the best performing “asset” class in the past 25 years you would be… wrong.




via Zero Hedge http://ift.tt/1l83rSy Tyler Durden