Month: February 2014

If the most disturbing, if underreported, news from yesterday, was Obama’s “modification” of NSA capabilities, which contrary to his earlier promises, was just granted even greater powers as phone recording will now be stored for even longer than previously, then this latest development from the Supreme Court – one which some could argue just voided the Fourth amendment – is even more shocking. RT reports that the US Supreme Court has ruled that police may search a home without obtaining a warrant despite the objection of one occupant if that occupant has been removed from the premises. With its 6 to 3 decision in Fernandez v. California on Tuesday, the Court sided with law enforcement’s ability to conduct warrantless searches after restricting police powers with its 2006 decision on a similar case.

From RT:

In 2009, the Los Angeles Police Department sought suspect Walter Fernandez, believed to have stabbed someone in a violent gang robbery. When police first arrived at the suspect’s home, they heard yelling and screaming before Fernandez’s live-in girlfriend Roxanne Rojas answered the door, appearing “freshly bruised and bloody,” and with an infant in hand, according to argument recap by SCOTUSblog.

 

Fernandez was spotted by police, and said, “Get out. I know my rights. You can’t come in.” Yet police arrested him on charges of domestic violence. Later, once Fernandez was out of the home, police asked Rojas for permission to conduct a search, which yielded evidence implicating Fernandez in the robbery.

Probable cause or probable loss of all civil rights?

The Court’s decision justified the police actions, with Justice Samuel Alito writing the majority’s position.

 

“A warrantless consent search is reasonable and thus consistent with the Fourth Amendment irrespective of the availability of a warrant,” Alito wrote. He added that “denying someone in Rojas’ position the right to allow the police to enter her home would also show disrespect for her independence.”

 

Alito was joined in the majority by Justices Breyer, Kennedy, Roberts, Scalia, and Thomas.

 

Justice Ruth Bader Ginsburg – joined in the minority by Justices Kagan and Sotomayor, marking a gender divide among the Justices in the case – wrote the dissenting opinion, calling the decision a blow to the Fourth Amendment, which prohibits “unreasonable searches and seizures.”

 

“Instead of adhering to the warrant requirement,” Ginsburg wrote, “today’s decision tells the police they may dodge it, nevermind ample time to secure the approval of a neutral magistrate.” Tuesday’s ruling, she added, “shrinks to petite size our holding in Georgia v. Randolph.”

 

Georgia v. Randolph was a similar case the Supreme Court addressed in 2006, in which a domestic violence suspect would not allow police to enter his home, though his wife did offer police consent. The police ultimately entered the home. The Court ruled in the case that the man’s refusal while being present in the home should have kept authorizes from entering.

 

“A physically present inhabitant’s express refusal of consent to a police search [of his home] is dispositive as to him, regardless of the consent of a fellow occupant,” the majority ruled in that case.

 

In addressing Randolph in the majority opinion, Alito wrote that the difference between that case and Fernandez was the physical presence of the suspect.

 

“Our opinion in Randolph took great pains to emphasize that its holding was limited to situations in which the objecting occupant is physically present,” he wrote.

 

“We therefore refuse to extend Randolph to the very different situation in this case, where consent was provided by an abused woman well after her male partner had been removed from the apartment they shared.”

 

Prior to Randolph and Fernandez, the Court ruled in the 1974 case United States v. Matlock that any one of the co-tenants in a home can consent to a police search of the premises.

Well there goes the fourth amen… oh look, over there: it’s another all time high in the S&P 500. On paper, those who hold stocks have never been richer. Everyone else, barricade your doors, and the police come knocking, don’t even bother answering – they will come in anyway. And also prepare your guns for return to the government: that particular “constitutional” amendment is the next to go.

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The lucky number for the S&P500 was four, which after three aborted attempts to take out the January 15 all time high, finally succeeded on the fourth try materializing in a furious buying panic in Spoos in the last minutes of trading. However, in terms of catalyst, there was absolutely nothing to push the market to new highs: durable goods were a disappointment as we explained earlier (and led banks such as Barclays to further lower their GDP forecast for the year), while initial claims rose to the highest of the year. Which leaves only Yellen as the factor, although as can be seen on the chart below, one can just as easily say once US traders walked in today, the channel lift algo was activated, and with Spoos meandering all day in a straight line within the channel, finally burst through to highs with the closing print.

 

Of course, in a catalyst free world, it meant that something else was driving equities higher, and that something as usual was a carry funding pair, only today it was not so much the USDJPY as it was the AUDJPY shown below.

 

Not everyone bought it, however, with bonds trading in a tight range and closing at a lower yield once again, and now back to early 2013 levels. Then again, in the New Normal all that matters is the wealth effect, aka stocks. And what do bonds know anyway.

So with conflict in the Crimea, economic data continuing to deteriorate far beyond simply “weather”, emerging markets still unsettled and likely to get worse as the taper continues and the US current account deficit shrinking, and the Chinese economy set for a “volatile year” in its own words what can one say but… it’s all priced in.

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It is by now well understood that the US housing market over the past year has not benefited from broad consumer participation, exhibited best by the unprecedented, 13 year low collapse in mortgage applications. And since bond yields which recently “soared” to 3.00% only to drop right back have not resulted in a spike in applicants for home mortgages, it is clear that the problem is far more broad and systemic and has to do more with affordability than any other aspect of the market. And yet one thing that did support the elevated, or as some call them, bubble prices, of US houses, was the bid from institutional investors: those “house flippers” who buy a home with the intent of either renting it out or selling it to a greater fool.

Alas, just like the rental bubble whose bursting we chronicled here just last week, so the institutional bubble has just popped, which we know courtesy of RealtyTrac data reporting that institutional investors — defined as entities purchasing at least 10 properties in a calendar year — accounted for 5.2 percent of all U.S. residential property sales in January, down from 7.9 percent in December and down from 8.2 percent in January 2013. This was the biggest one month plunge in history. It gets worse: the January share of institutional investor purchases represented the lowest monthly level since March 2012 — a 22-month low.

 

Some other RealtyTrac findings:

Metro areas with big drops in institutional investor share from a year ago included Cape Coral-Fort Myers Fla. (down 70 percent), Memphis, Tenn., (down 64 percent), Tucson, Ariz., (down 59 percent), Tampa, Fla., (down 48 percent), and Jacksonville, Fla., (down 21 percent).

Yet, unwilling to give up on this latest bubble craze, institutional investors are still hoping there is some last minute cash to be made in some remaining markets.

Counter to the national trend, 23 of the 101 metros analyzed in the report posted year-over-year gains in institutional investor share, including Atlanta (up 9 percent), Austin, Texas, (up 162 percent), Denver (up 21 percent), Cincinnati (up 83 percent), Dallas (up 30 percent), and Raleigh, N.C. (up 15 percent).

The rotation from one set of markets to another is shown on the chart below:

 

The following quote summarizes the situation best, and it also refutes the entire “harsh weather” excuse that has become so popular in recent months:

“Many have anticipated that the large institutional investors backed by private equity would start winding down their purchases of homes to rent, and the January sales numbers provide early evidence this is happening,” said Daren Blomquist. “It’s unlikely that this pullback in purchasing is weather-related given that there were increases in the institutional investor share of purchases in colder-weather markets such as Denver and Cincinnati, even while many warmer-weather markets in Florida and Arizona saw substantial decreases in the share of institutional investors from a year ago.”

So with retail buyers long out, and cash buyers and institutional investors – which as readers know amount to about 60% of all purchases – on their way out, just what will be the next myth be that will be disseminated to percent the general public from realizing that the artificial housing market “recovery”, which was entirely driven by hot money, speculation, and hope of a quick profit? Because with QE also fading, and with it the MBS bid, not to mention the surge in foreclosure exits and the flood of foreclosed properties about to hit the market as we wrote yesterday, things for the US housing market are about to get very messy.

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