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While it may not be quite the Vancouver-type feeding frenzy for Chinese money launderers, the US existing home sales market (at least until its inevitable downward revision courtesy of the permabullish NAR) continued to chug higher in January, when the number of existing homes sold rose to a 5.47MM annual rate, up 0.4% from the 5.45MM in December, and the strongest pace since the 5.48MM sold last July, beating expectations of a -2.5% drop; in fact the print was higher than the top estimate in the range. This follows the torrid December surge when existing homes sales soared 12.1%.

On a year over year basis, sales rose 11.0% – the largest year-over-year gain since July 2013 (16.3 percent).

Suggesting that the majority of buyers are anyone but ordinary middle class Americans was the the jump in the median existing-home price which in January was $213,800, up 8.2% from January 2015 when it was $197,600. Last month’s price increase was the largest since April 2015 (8.5%) and marks the 47th consecutive month of year-over-year gains. With the pace of appreciation rising at more than 4 times the average US wage growth, one wonders at what point will ordinary Americans be able to afford housing in their native country.

NAR’s Larry Yun was as always on hand to provide his cheerful spin:

“Lawrence Yun, NAR chief economist, says existing sales kicked off 2016 on solid footing, rising slightly to the strongest pace since July 2015 (5.48 million). “The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints,” he said. “Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession.”

That remains to be seen, however, especially since it is a function of how porous Chinese capital controls remain considering that a large number of existing home sales, especially on the high end is driven by Chinese buyers seeking to park hot money in US real estate.

Total housing inventory at the end of January increased 3.4% to 1.82 million existing homes available for sale, but is still 2.2% lower than a year ago (1.86 million). Unsold inventory is at a 4.0-month supply at the current sales pace, up slightly from 3.9 months in December 2015.

Curiously, even Yun is starting to get worried about the bubbly nature of the existing housing market:

“The spring buying season is right around the corner and current supply levels aren’t even close to what’s needed to accommodate the subsequent growth in housing demand,” says Yun. “Home prices ascending near or above double-digit appreciation aren’t healthy – especially considering the fact that household income and wages are barely rising.” 

Some more statistics:

• The share of first-time buyers remained at 32 percent in January for the second consecutive month and is up from 28 percent a year ago.
• First-time buyers in all of 2015 represented an average of 30 percent, up from 29 percent in both 2014 and 2013.
• All-cash sales were 26 percent of transactions in January (24 percent in December 2015) and are down from 27 percent a year ago.
• Individual investors, who account for many cash sales, purchased 17 percent of homes in January (15 percent in December 2015), matching the highest share since last January. Sixty-seven percent of investors paid cash in January.
• Properties typically stayed on the market for 64 days in January, an increase from 58 days in December but below the 69 days in January 2015.
• Short sales were on the market the longest at a median of 77 days in January, while foreclosures sold in 57 days and non-distressed homes took 61 days.
• Thirty-two percent of homes sold in January were on the market for less than a month.
• Distressed sales – foreclosures and short sales – rose slightly to 9 percent in January, up from 8 percent in December but down from 11 percent a year ago.
• Seven percent of January sales were foreclosures and 2 percent were short sales. Foreclosures sold for an average discount of 13 percent below market value in January (16 percent in December), while short sales were discounted 12 percent (15 percent in December).
• Single-family home sales increased 1.0 percent to a seasonally adjusted annual rate of 4.86 million in January from 4.81 million in December, and are now 11.2 percent higher than the 4.37 million pace a year ago. The median existing single-family home price was $215,000 in January, up 8.3 percent from January 2015.

The regional breakdown:

• January existing-home sales in the Northeast increased 2.7 percent to an annual rate of 760,000, and are now 20.6 percent above a year ago. The median price in the Northeast was $247,500, which is 0.9 percent above January 2015.
• In the Midwest, existing-home sales rose 4.0 percent to an annual rate of 1.30 million in January, and are now 18.2 percent above January 2015. The median price in the Midwest was $164,300, up 8.7 percent from a year ago.
• Existing-home sales in the South were at an annual rate of 2.24 million in January (unchanged from December) and are 5.7 percent above January 2015. The median price in the South was $184,800, up 8.5 percent from a year ago.
• Existing-home sales in the West decreased 4.1 percent to an annual rate of 1.17 million in January, but are still 8.3 percent higher than a year ago. The median price in the West was $309,400, which is 7.4 percent above January 2015.

 

via Zero Hedge http://ift.tt/1TD9PkL Tyler Durden

With the biggest drop in New Orders since September, Richmond Fed Manufacturing survey dropped to -4 (missing expectations of +2), hovering at its weakest in over 3 years. Across the board the components were weaker with order backlogs and shipments plunging, average workweek and wages dropping, and capacity utilization worst since October. Prices (paid and received) dropped notably as future expectations for wages, workweek, and employees all fell.

Richmond Fed hovers near 3-year lows

 

As Shipments (and New Orders) collapse…

 

An ugly picture across the board…

 

and future expectations were just as bad – especially for employment.

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Driven by a collapse in ‘hope’ – future expectations dropped to 78.9, the lowest since Feb 2014 – The Conference Board’s Consumer Confidence headline dropped from 97.8 to 92.2, the weakest since July 2015. Amid the so-called best jobs market in decades, near-record low gas prices, and a resurging stock market, it appears the ‘everyday American’ is not amused as all the ‘increases in animal spirits’ since QE3 have evaporated.

Consumer Confidence is hovering near 3 year lows… erasing all the gains since QE3 was initiated

 

As hope collapses…

 

Unde rthe surface things are beaking down as “labor differentials” tumble to the most negative in 7 months, and home-buying appetite drops to 8 month lows.

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Back on January 14, we noted that JPMorgan did something they haven’t done in 22 quarters: the bank increased its loan loss provisions.

The “reserve build of ~$100mm [is] driven by $60mm in Oil & Gas and $26mm in Metals & Mining within the commercial banking group,” the bank said.

That led us to ask of JPMorgan the same thing we’ve asked of Wells Fargo, BofA, and every other TBTF that’s gotten itself overextended in America’s soon-to-be bankrupt O&G space: “if a regional bank like BOK Financial was slammed by just one loan (to what we can only assume was a smaller energy firm), where does the buck stop, and how many other regional, or even big, banks, are woefully underreserved in their exposure to energy loans?”

Most importantly, we said, are these follow up questions:

“How long before the impairments and charges currently targeting smaller firms finally shift to the bigger ones? And how underreserved is JPM for that eventuality?”

Today, just over a month later, we got the answer ahead of JPM’s investor day, when JPMorgan said it will increase its reserves for oil and gas loans by 60% in Q1.

As you can see from the following slide, provisions will rise by $500 million from $815 million the bank had set aside as of the end of last year. Metals and mining reserves will also rise, by $100 million.

Note also that the bank says it may be forced to provision another $1.5 billion should crude prices stay at or near $25 for an extended period of time. 

As is apparent from the chart, Dimon’s “fortress” balance sheet includes some $19 billion in HY O&G exposure. We’re anxious to see if the vaunted billionaire will dismiss the enormous writedowns that are invariably coming in the next few quarters as a “tempest in a teapot.” 

We also wonder which bulge bracket bank will be the next to admit that it’s woefully underreserved for 2016’s inevitable crude carnage.

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

After making waves last week for daring to suggest that big bank regulation has failed and that the TBTF problem has not been addressed, a problem which Kashkari himself launched with his bailout of the banks in 2008, moments ago the new president of the Minneapolis Fed started a live conversation in which he will once again address the TBTF problem, which he just repeated “has not been solved” much to the chagrin of the Fed’s largest stakeholders.

Watch it live below.

Broadcast live streaming video on Ustream

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Authored by Rob May, originally posted at Medium.com,

I agree with Bernie Sanders. The economy is rigged. In fact, it’s what my father, who is very conservative, taught me about life. Some find it surprising because the general position of liberals seems to be that conservatives don’t realize, or won’t acknowledge, this rigged economy. But my Dad’s advice to me time and time again was that the world was rigged and the only way I could make it was to work harder than the people who were in charge of the rigging.

A few years ago I was walking through Harvard Square when a woman holding flyers for Elizabeth Warren stepped in front of me. She asked me if I thought the government should pay off student’s debts. I don’t think the government should, but, then again I never had student loans. No, it wasn’t because I was from a wealthy family. I never had student loans because I worked every semester I was in college, and during some summers, I worked two jobs. I did this because I thought the world was rigged against me.

I missed out on a lot, because I worked so much. I didn’t have the life like many of the college students I’ve hired in the last few years. They study what they love?—?philosophy, political science, art, regardless of whether or not they have good job prospects. They travel. Mostly they seem to go to Vietnam and Cambodia. They eat out a lot more than I did at their age. They know all the trendy restaurants and hot bars.

When I got out of college, I lived well below my means, saving $25,000 so I could start my first business. That business failed miserably. I ended up losing over $50,000 total. It took three years to pay off the credit card debt I wracked up.

Over the next decade, I started 3 more businesses. Two of which failed. For one of them, a video yellow pages product I built with a friend in 2007, I used to take my vacation days from my “real” job and go door to door, selling video listings to small businesses. I lost a lot of my own money, as my disposable income never went to travel or luxury goods of any kind. It went to business ideas.

I kept at it because I believe, much like Bernie, that the world was rigged against me. I spent every evening after my day job working on side projects, learning new skills, reading. I didn’t own a tv for a long time and, even to this day, I’ve never seen any of the classic shows people like to discuss: The Sopranos, Breaking Bad, Mad Men, Game Of Thrones. I was working while they were on.

When I finally had a company that was successful, the experience of running it was more stressful than you could ever imagine. I had to deal with some really rough things. There was the time when, on the day we were supposed to close our Series C funding round, the lead investor called and said they weren’t going to wire the money. We had 6 weeks of cash left, and now I had to figure out what to do. There was the time when 2 of my executives quit within 10 days of each other, making my board and employees all wonder what was going on, and if there was something detrimental going on at the company that I wasn’t telling them.

There was a board meeting where, I took so many rapid fire shots from board members that one of my executives told me afterwards that he would never want to be a CEO and go through something like that. There were things that I can’t write about publicly, but that, if you have ever run a company, you know what I’m talking about. It really sucks to be in charge sometimes.

Despite the strain that entrepreneurship put on my finances, my health, and my personal relationships, I kept at it because I wanted to be successful. And eventually, yes, I became a millionaire. It only took 15 years.

Along the way, I learned a lot. I created over 100 jobs. And in the end I helped build something useful for thousands of companies around the world. But when I hear Bernie speak, I feel like I’m the problem with America. I’m one of those millionaires he mentions who should pay more taxes. I’m the bad guy. I’m the white male who is only successful because everything was handed to me. I don’t deserve the money I made. All the things I sacrificed don’t matter. The additional stress I was under doesn’t matter. The risks I took don’t matter.

According to Bernie, the world needs fewer people like me, and more people like the smart Yale student who majors in something useless, travels the world, and then graduates with $100,000 in debt that people like me should pay off via higher taxes.

Yes, the economy is rigged. Any economic structure will favor some at the expense of others. But the wonderful thing about America is that if you are willing to make the right sacrifices, you can achieve whatever you want. Unfortunately, we’ve come to believe that achievement should be easy. Changing that attitude is the first step towards making yourself more successful.

 

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