Empiric Student Property Share Discussion Threads

[briarberry] 27/8/2009 17:38

EU, The real economy (the non bailout economy) is showing signs of deflation...

EU loans fell 0.4 percent, the biggest decline ever recorded...


Aug. 27 (Bloomberg) -- Loans to households and companies in Europe grew at the slowest pace on record in July, suggesting the economy may struggle to recover from its worst recession since World War II.

Loans to the private sector rose 0.6 percent from a year earlier, the slowest growth since records began in 1991, after increasing an annual 1.5 percent in June, the European Central Bank said today. On the month, loans fell 0.4 percent, the biggest decline ever recorded.

[briarberry] 26/8/2009 03:37

Japan's July imports down 40,8% on year
Japan's July exports down 36.5% on year
Toyota reportedly to slash production by 10%
Japan's July trade surplus quadruples on year

[briarberry] 26/8/2009 01:31

EU

Industrial new orders in the EU fell 0.4% MoM and down 24% YoY
Construction output in the EU fell 3.3% MoM and down 14.1% YoY.

[briarberry] 25/8/2009 12:17

Occupancy rates for luxury hotels worldwide fell to 57 percent in the year through July from 71 percent in the same period a year earlier, a bigger drop than for other types of accommodation, according to Smith Travel Research.

[briarberry] 25/8/2009 10:10

The Federal Reserve must for the first time identify the companies in its emergency lending programs after losing a Freedom of Information Act lawsuit.

[briarberry] 24/8/2009 22:07

Future of Food, according to the Beeb the UK imports 40% of it's food...


watch on iPlayer

1/3. George Alagiah reveals a global food crisis related to climate change and people's diets.

2/3. George Alagiah travels the world to reveal a growing global food crisis.

3/3. George Alagiah travels the world in search of solutions to the growing global food crisis.

[briarberry] 24/8/2009 21:26

Bank health, we get to see if there's any truth to these rumours tomorrow...


Bank of Montreal next quarterly report is due on August 25

Amoss says this bank won't be able to pay the promised $1.5 billion dividend scheduled later this year, which will precipitate a crash in BMO's stock by December



America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks.

[briarberry] 24/8/2009 01:13

Doug Noland still gives global reflation the strong benefit of the doubt...


Doug Noland - Prudent Bear - August 21, 2009

The Depressed U.S. Consumer and Global Reflation:

The global reflation thesis has been somewhat under fire of late. Chinese stocks dropped about 25% from trading highs set earlier this month. An abrupt slowdown in bank lending – and even discussion of more stringent bank capital requirements - has many now questioning the underpinnings of Chinese recovery. Here at home, a bevy of data on household spending, confidence, and job losses point to stubborn consumer frugality. Can global reflation make headway without a recovery in U.S. consumption?

As the year has progressed, optimistic adherents to the global reflation/recovery thesis have multiplied. Of late, however, the reflation protagonists have been roused. Many hold the view that the Chinese situation is much more tenuous than advertised. Moreover, this camp views global recovery as impossible in the era of the stingy American consumer. Talk of deflation risk has turned more boisterous.

My view differs from both the bullish consensus reflation viewpoint and that of the protagonists/ "deflationists." And, to cut to the chase, I do believe a period of global reflation can evolve in the face of weak U.S. consumption. And while a troubled bond market would likely halt reflation in it tracks, a downtrodden American consumer is an impediment to be hurdled with a powerful boost from ultra-easy global "money." Indeed, deep underlying U.S. fragility – and resulting market assurance that the Fed is indefinitely wedded to ultra-loose policy – is a critical facet of my global reflation thesis.

Fundamentally, it is my view that the nexus of global reflation emanates from irreparable structural impairment to the international dollar reserve system. The global dollar monetary "regime" some time back stopped functioning as a disciplining or restraining force for Credit systems around the world. Today, even in this nervous post-crisis landscape, the prospect of an unending expansion of dollar reserves works to foment synchronized Credit and speculative excesses. And the deeply maladjusted U.S. "Bubble" economy ensures heavy ongoing non-productive U.S. debt issuance that manifests as enormous trade and speculative dollar financial flows - to further inundate the saturated world. The unfolding breakdown in this dollar "system" is the genesis of global inflationary forces.

I've read and listened to the view that an imminent dollar rally will rejuvenate global deflation. And while the dollar and currency markets will surely fluctuate, I view nothing on the horizon that will alter the fundamental issue of massive outgoing dollar flows. Policymaking is now trapped in a scheme of promoting excess in the name of system stabilization. The Fed is poised to again retain a loose policy stance for a far too extended period, and there will be no let up in the massive issuance of federal (Treasury, agency, and GSE MBS) debt.

A central aspect of my global reflation thesis holds that China, Asia and the "emerging" economies are this cycle's "asset class" with the strongest inflationary biases – hence the areas most prone to immediate and spectacular inflationary manifestations. These "hot money" magnets then work to rejuvenate animal spirits throughout the global leveraged speculating community, with rapidly recovering Credit systems and economies spurring a more general rebound in global activity. The more commodity-oriented and manufacturing-driven economies are the first to benefit. The "services" and housing-centric U.S. economy badly lags in this reflationary scenario.

Many analysts that do recognize U.S. vulnerability also see troubling aspects to the Chinese economy and financial system. I see them also; they just don't alter my fear that China has likely entered a precarious period where Credit, speculation, and spending excesses tend to really run amuck.

Expect increasing concern from China's policymakers – and lots of tinkering (bank capital requirements, lending restraint pronouncements, warnings against speculation, interest-rate adjustments, etc.). And expect markets in China and around the world to grapple mightily with the course of Chinese policy responses. Keep in mind that the "terminal phase" of Credit Bubble excess is notorious for outflanking fainthearted policymaking. And it is indeed acute financial, economic and social vulnerabilities that I suspect will restrain Chinese policymakers from applying the type of tough measures necessary to rein in (traditionally unwieldy) late-cycle excesses.

It is the combination of deep structural issues/vulnerabilities in the U.S. and China that have the reflation antagonists and deflationists energized. They see confirmation in their view from recent U.S. economic data and Chinese developments. Yet it remains a preeminent challenge of Credit Bubble analysis to recognize that fundamental issues can inhibit, repress and check excess – but there are circumstances when system maladjustment and fragility instead tend to cultivate a backdrop of policymaking and market tolerance.

As I've written over the years, major Credit Bubbles invariably evolve from some underlying source of Monetary Disorder. Stable and sound Credit systems are simply not breeding grounds for Bubbles. And the greatest Bubbles are fashioned when profound money and Credit distortions meld with policymaker confusion and acquiescence. As we've witnessed – at home, in China and around the world – acute financial and economic fragility has engendered a backdrop of unprecedented global policymaking accommodation. And predictably accommodating policymakers have cultivated an environment of synchronized global marketplace reflation accommodation.

It is with this analysis in mind that I am analytically forced to give global reflation the strong benefit of the doubt. I will be dismissive of deflation chatter as long as the markets readily accommodate Trillions of U.S. debt issuance here at home and tolerate excesses within domestic Credit systems across the globe. Today, the dollar index traded below 78 and crude traded above $74. The bond market is understandably unsettled. Ten-year yields traded at 3.72% on July 27, dropped to 3.48% on July 31, jumped to 3.85% on August 7, sank to 3.43% yesterday and closed today at 3.57%.

I'll posit that artificially low interest rates everywhere are global reflation's greatest champion. It is the nature of Bubbles that the longer markets misprice risk the greater the pain when the Bubble eventually bursts. Credit and market analysis could not be more challenging or fascinating.

[briarberry] 24/8/2009 01:08

Andy Xie putting the economic improvement down to government stimulus/bailouts and inventory replenishment...


What we are seeing now in the global economy is a pure liquidity bubble. It's been manifested in several asset classes. The most prominent are commodities, stocks and government bonds. The story that supports this bubble is that fiscal stimulus would lead to quick economic recovery, and the output gap could keep inflation down. Hence, central banks can keep interest rates low for a couple more years. And following this story line, investors can look forward to strong corporate earnings and low interest rates at the same time, a sort of a goldilocks scenario for the stock market.

What occurred in China in the second quarter and started happening in the United States in the third quarter seems to lend support to this view. I think the market is being misled. The driving forces for the current bounce are inventory cycle and government stimulus. The follow-through from corporate capex and consumption are severely constrained by structural challenges. These challenges have origins in the bubble that led to a misallocation of resources. After the bubble burst, a mismatch of supply and demand limited the effectiveness of either stimulus or a bubble in creating demand.

[briarberry] 24/8/2009 01:00

I thought this was interesting, about bankrupt countries (link taken from the gold fred)...

Neither Britain nor Holland, neither the EU nor IMF have provided a scenario for just how Iceland is supposed to pay the debts that are being claimed.

...
The problem for the post-Soviet economies such as Latvia is that independence in 1991 did not bring the hoped-for Western living standards. Like Iceland, these countries remain dependent on imports for their consumer goods and capital equipment. Their trade deficits have been financed by the global property bubble – borrowing in foreign currency against property that was free of debt at the time of independence. Now these assets are fully "loaned up," the bubble has burst and payback time has arrived. No more credit is flowing to the Baltics from Swedish banks, to Hungary from Austrian banks, or to Iceland from Britain and the Netherlands. Unemployment is rising and governments are slashing healthcare and education budgets. The resulting economic shrinkage is leaving large swaths of real estate with negative equity.

[briarberry] 24/8/2009 00:39

August 20 – Bloomberg (Caroline Hyde and Paul Armstrong): "Corporate defaults worldwide rose in 2009, surpassing the number for the whole of 2008, Standard & Poor's said... A total of 201 issuers defaulted through Aug. 12, affecting $453.1 billion of debt, S&P said. That's up from 126 defaults totaling $433 billion for all of last year..."

[briarberry] 24/8/2009 00:14

John Law, at the time of the Mississippi bubble in the early 18th century. (la bulle)

From The Economist print edition

A 300-year-old example of quantitative easing

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So a vicious circle was created, in which a growing money supply was needed to bolster the share price of the Mississippi company and a rising share price was needed to maintain confidence in the system of paper money. You can see parallels with recent times, in which money was lent on the back of rising asset prices, and higher prices gave banks the confidence to lend more money.

When the scheme faltered Law resorted to a number of rescue packages, many of which have their echoes 300 years later. One was for the bank to guarantee to buy shares in the Mississippi company at a set price (think of the various government asset-purchase schemes today). Then the company took over the bank (a rescue along the lines of Fannie Mae and Freddie Mac). Finally there were restrictions on the amount of gold and silver that could be owned (something America tried in the 1930s).

All these rules failed and the scheme collapsed. Law was exiled and died in poverty. The French state's finances stayed weak, helping trigger the 1789 revolution. The idea of a "fiat" currency was perceived to be the essence of recklessness for another two centuries and the link between money and gold was not fully abandoned until the 1970s, when the Bretton Woods system expired.

Of course, the parallels with today are not exact. Law's system took just four years to collapse; today's fiat money regime has been running for nearly 40 years. The growth in money supply has been less excessive this time. Technological change and the entry of China into the world economy have generated growth rates beyond the dreams of 18th-century man. But one lesson from Law's sorry tale endures: attempts to maintain asset prices above their fundamental value are eventually doomed to failure.

[briarberry] 21/8/2009 15:56

PE ratio chart

[briarberry] 20/8/2009 22:44

MBA: Record 13.2 Percent of Mortgage Loans in Foreclosure or Delinquent in Q2



The Moody's/REAL Commercial Property Price Indices fell 1 percent in June and are down 36 percent from their October 2007 peak, Moody's Investors Service said in a report today.

[briarberry] 20/8/2009 21:32

Mexico GDP 2009Q2: -10.3%
Norway GDP 2009Q2: -1.3%
Taiwan GDP 2009Q2: -7.5%
Venezuela GDP 2009Q2: -2.4%

[briarberry] 20/8/2009 19:58

bailout bubble, cash for consumers...


US Program Will Offer Rebates For Household Appliances

CHICAGO (Dow Jones)--Appliance manufacturers are counting on a "cash for clunkers"-type rebate program to revive slumping sales of refrigerators, washing machines and dishwashers.

Beginning late this fall, federal rebates will be available for purchasers of high-efficiency household appliances, furnaces and air-conditioning systems. Congress authorized $300 million for the program earlier this year as part of the federal economic-stimulus bill.

[jasonrogers] 19/8/2009 19:44

Shanghai Composite dropped another 4.3% today as well

[briarberry] 17/8/2009 16:01

Treasury International Capital, China didn't buy but Japan stepped up and bought more...


A key negative in the report shows an unwanted dip in Chinese Treasury holdings, at $776.4 billion vs. May's $801.5 billion. But Japan more than made up the difference, now at $711.8 billion vs. $677.2 billion in May.

[briarberry] 17/8/2009 13:04

Shanghai Composite down another 5%