Those who received the polio vaccine in the first few years, were likely infected with SV40.
2019 experimental mRNA COCVID vaccines are also first of their kind.
Those who received the polio vaccine in the first few years, were likely infected with SV40.
2019 experimental mRNA COCVID vaccines are also first of their kind.
Federal Reserve governor Lael Brainard on Tuesday became the first top official at the central bank to express unease about last week’s sharp rise in longer-term U.S. Treasury yields.
“Some of those moves last week and the speed of the moves caught my eye,” Brainard said.
The Tell: Why the stock market’s big rotation can continue even if bond yields stop rising
The Los Angeles Unified School District is launching a Microsoft-developed COVID-tracking app for children, which allows students to schedule and view the results of weekly COVID tests, post the results of off-campus COVID tests, and schedule vaccinations.
Shortly after Gov. Abbott’s decision to follow the science and allow the people of his state to be ‘free’ to judge their own risks once again, none other than California Gov. Newsom – desperate to virtue-signal as he fights for political survival amid an imminent recall vote – had a two word response: “Absolutely reckless”
We have two words for Mr. Newsom… can you guess?
Is that really what you want to spend your time doing, paying higher taxes?
“No matter how much money I make, they will always print more. I can’t print anymore time.”
During the debate last week over the Equality Act, a measure that would create a right to kill babies in abortions and force Americans to fund abortions, Republicans accused Democrats of ignoring Biblical values. And a surprising comment from pro-abortion Democrat Congressman Jerry Nadler confirmed that to be true.
Yes, the rushed-to-market Covid “spike protein” vaccine means an unpredictable, genetically engineered and mutated virus fragment is being injected into your blood
(Natural News) Clinical trial geeks posing as journalists manipulate the language around the dirty and experimental methods used today to manufacture vaccines. Online, all the vaccine hucksters are trying to convince everyone that this sped-up hustle to produce a Covid-19 vaccine is still ‘safe and efficacious,’ and not to worry your little head a bit about the fact that it takes 7 to 10 years to even come close to developing a vaccine that works (even though they still have horrific side effects).
This is as close to a failed auction as we have ever come…
Ahead of today’s closely watched 7Y treasury auction, where the bulk of the recent Treasury rout has been concentrated as traders hammered the belly of the curve, we said that “If the 7Y tails a lot, watch out below” as that would only add insult to today’s furious selloff injury. Well, that’s precisely what happened, because with the 7Y pricing at 1.195%, this was a whopping 4.1bps tail to the 1.151% When Issued.
If the 7Y tails a lot, watch out below
— zerohedge (@zerohedge) February 25, 2021
The auction was, in a word, catastrophic.
Starting at the top, the bid to cover tumbled from 2.305 to 2.045, the lowest on record, and far, far below the 2.35 recent average.
(Tyler Durden) The Fed’s most frequent lament is that no matter how many trillions in bonds (and stocks and ETFs) it buys or how much liquidity it forehoses into the market, it just can’t push inflation higher.
Well, here’s an idea: maybe all the central-planning megabrains at the Marriner Eccles building and 33 Liberty Street can take a break from whatever circle jerk they are engaged in right now, and look at the latest Case Shiller numbers which showed not only that home prices surged at the fastest pace in seven years, rising at a double-digit pace for the first time since 2014…
(Michael Maharrey) A bill introduced in the Kansas House would recognize gold and silver specie as legal tender and repeal all taxes levied on it. The legislation would pave the way for Kansans to use gold and silver in everyday transactions, a foundational step for the people to undermine the Federal Reserve’s monopoly on money.
Trying to live the American dream but can’t pay $15 an hour minimum wage? Democratic Rep. Ro Khanna of California doesn’t think your business should exist.
During a Sunday discussion on CNN‘s “Inside Politics,” Khanna said that “low-wage businesses” who can’t pay $15 an hour are “underpaying employees” and suggested that “If workers were actually getting paid for the value they were creating, it would be up to $23.”
Former Assistant Secretary of Housing And Urban Development, HUD and investment advisor Catherine Austin Fitts says you have to be careful and fully understand Bitcoin. Fitts explains, ‘We do know they want to go to an all-digital system with central bank cryptos. The easiest way to build the prison is to get freedom lovers everywhere to build our prison for them. To me, Bitcoin has always been the prototype on the way to building an all-digital, omnipresent crypto control system that they would love to put into place.’
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Catherine Austin Fitts, publisher of The Solari Report.
With the worst of the Texas power crisis now behind us, the blame and finger pointing begins, and while the jury is still out whose actions (or lack thereof) may have led to the deadly and widespread blackouts that shocked Texas this week, Cascend Strategy writes that “in case there was any doubt why the Texas grid collapsed, the data is clear”
‘The Dementia is Transparently Obvious’
(Sundance) It appears the bloom is off the ruse, at least with Sky News. In one of the first admissions to what is transparently obvious, an Australian news pundit finally points out that Joe Biden has cognitive issues. The vast majority of Americans already know this, but the U.S. media have been pretending not to know for well over a year. WATCH:
He may not have lost all his marbles, but there’s definitely a hole in the bag…
(Diana Olick) Consumers want more newly built, affordable homes, but builders are finding that hard to deliver, especially as prices for framing lumber spike ever higher.
Lumber prices inched above $1,000 per 1,000 board feet Thursday morning before falling back below that milestone, according to Random Length Lumber Futures for March. The high of $1,004.90 is double the price from just three months ago and a record.
By abusing the powers of Federal regulators, Operation Choke Point 2.0 would stifle the bipartisanship, unity, and healing President Biden claims to desire.
(Kelsey Bolar) Among the record-breaking number of executive actions taken by President Joe Biden was one related to a little-known, frightening Obama-era program called Operation Choke Point. The program, dubbed so under former Attorney General Eric Holder, used the power of the federal government to target legal yet leftist-disfavored businesses. Those included gun sellers, pawnshops, and short-term money lenders.
The Trump administration did its best to end this blatantly unconstitutional program that sought to discriminate against legal industries. In 2017, the Justice Department declared the program “formally over.” At the end of Trump’s term, the Office of the Comptroller of the Currency established the Fair Access rule to solidify its culmination.
But on Jan. 28, the Office of the Comptroller of the Currency under President Biden announced it would pause the Trump-era rule intended to prevent another Operation Choke Point from happening again.
(National File) During a recent television appearance on MSNBC, White House Senior COVID Response Advisor Andy Slavitt, who does not possess a medical background admitted the fact that California and other blue states under lockdown cannot record better infection numbers than comparatively free Florida is “just a little beyond our explanation.”
(National Addiction News) A 28-year-old healthcare worker from the Swedish American Hospital, in Beloit, Wisconsin was recently admitted to the ICU just five days after receiving a second dose of Pfizer’s experimental mRNA vaccine. The previously healthy young woman was pronounced brain dead after cerebral angiography confirmed a severe hemorrhage stroke in her brain stem.
(Ramishah Maruf) After committing one of the “biggest blunders in banking history,” Citibank won’t be allowed to recover the almost half a billion dollars it accidentally wired to Revlon’s lenders, a US District Court judge ruled.
Citibank, which was acting as Revlon’s loan agent, meant to send about $8 million in interest payments to the cosmetic company’s lenders. Instead, Citibank accidentally wired almost 100 times that amount, including $175 million to a hedge fund. In all, Citi ( ) accidentally sent $900 million to Revlon’s lenders.
(Chris Black) Health officials have stopped administering the Pfizer vaccine after 46 residents of a nursing home in Spain have died after being inoculated with the Covid vaccine. The residents who died just received the first dose of the Pfizer-BioNTech vaccine against COVID-19 in early January, according to the Spanish press, via LifeSiteNews.
Medical Disclaimer: Content in this re-posted controversial opinion piece is not intended to be a substitute for professional medical advice, diagnosis, or treatment. Always seek the advice of your physician or other qualified health providers with any questions you may have regarding a medical condition. Never disregard professional medical advice or delay in seeking it because of something you read on this blog. OK?
“As things stand at the moment, it is hard to deny the possibility of a correlation between mass vaccination and a sharp spike in Covid-19 cases in both Israel and Britain.”
– Gilad Atzmon
The false gospel of collectivism and the True Gospel of Jesus Christ cannot coexist.
Let’s skip the whole bloody Civil War thing and instead jump to the Reconstruction Era. The Cultural and Spiritual Civil War has been going on for decades. We are standing in the ashes of it now. Time to reconstruct, reform, and rebuild for the Glory of God.
(by Dave Hodges) This is a time of unprecedented evil on planet earth. Many Americans are looking for refuge and direction with regard to dealing with unprecedented tyranny in our present lifetimes. Historically, Americans look to their church for salvation and direction. However, most of today’s churches have been taken over from within by the very evil we fear. Many of your religious leaders have become the newest version of Benedict Arnold with regard to their faith. In short, most 501(c)(3) churches do NOT represent God. Judas sold out the savior of humanity, Jesus Christ, for a mere thirty pieces of silver. Today, many religious leaders are selling out their congregations for even less. This is not meant to imply that there are not religious leaders who hold steadfastly to the word of God and stand as a beacon of spiritual and moral courage before their congregations. However, an increasing number of clergy are more interested in serving the dictates of Homeland Security than they are in accurately espousing and exemplifying the word of God. This betrayal by the “earthly” pastors towards the word of God, is precisely what is keeping the church from launching a massive Christian revival that would turn back the evil that has taken over our country.
(Neils Christensen) The debate between gold and bitcoin, as to which is the ultimate safe-haven and inflation hedge, continued to rage this past week. However, I feel that the longer this debate goes on, the more investors are missing the bigger picture.
The stark reality is that there is more than $16 trillion worth of negative-yielding debt floating around the world right now. The U.S. government continues to move forward with its proposed $1.9 trillion stimulus package to support the U.S. economy. The Federal Reserve’s balance sheeting grows from record high to record high, pushing above $7.4 trillion.
The U.S. also isn’t in this boat alone; central banks around the world are maintaining extremely accommodative monetary policies and growing their balance sheets to record levels.
The Beehive State joins 16 other states that have adopted permitless constitutional concealed carry
(Frank Salvato) As the nation’s gun sales soar, the State of Utah has is set to adopt a permitless concealed carry system in which anyone legally permitted to own a firearm – from any state in the Union – can carry a firearm under his or her clothing while in the state.
(Austrolib) Gold and silver bugs are understandably frustrated with the lack of movement on the silver price while Bitcoin goes beyond the moon. Demand for physical silver has skyrocketed, and physical shortages at coin dealers are acute internationally. New American Silver Eagles from the US Mint are out of stock at even the largest US-based dealers like Apmex, and are only selling in pre-sales at near 50% premiums. ATS Bullion, a London-based precious metals retailer, is completely out of silver coins.
(Tom Pappert) A 24-year-old man who says he graduated from college just before COVID-19 provoked massive lockdowns and a stagnant economy, now says that the cost of his insulin and other diabetic supplies have skyrocketed to $2,000. This comes after Joe Biden rescinded an executive order, signed by President Donald Trump, that lowered the cost of life sustaining insulin for low income Americans.
(Ronan Manley) With the ongoing #SilverSqueeze and huge associated dollar inflows into silver-backed Exchange Traded Funds (ETFs), it is now time to look at which of these ETFs store their silver in the LBMA vaults in London, England, and to calculate how much physical silver these combined funds store in those London vaults.
(Diana Olick) Communities are desperate for more affordable housing, but the cost for developers is just too high. Land, labor and materials were pricey before the pandemic, and they are even more so now.
That is why some creative developers are now turning to hotels – and it appears to be a match made in real estate heaven.
The Keystone pipeline. Cancelled by executive order on Biden’s on first day in office.
Warren Buffett owns BNSF railroad that is now transporting all that oil. BNSF would lose billions in transport fees if the pipeline is completed.
Officially, China has no specific policy for vaccinated travelers, according to Reuters.
China is reportedly denying entry to individuals who have taken the Pfizer and Moderna vaccines, Adam Curry of the “No Agenda” podcast claimed.
Physicians’ white paper says injection prohibited for the young and at least discouraged for healthy individuals under 70 years of age. ‘Unethical’ to advocate vaccine for persons under 50.
(Patrick Delaney) In an extraordinary recent presentation exposing “the serious and life-threatening disinformation campaign” being waged against the American people and the world, Dr. Simone Gold of the American Frontline Doctors (AFLD) laid out the facts on the Wuhan Virus, safe highly-effective treatments, and particularly what she calls “experimental biological agents,” otherwise referred to as the COVID-19 vaccines.
While all eyes have been focused on GameStop and a handful of other heavily-shorted stocks as they exploded higher under continuous fire from WallStreetBets traders igniting a short-squeeze coinciding with a gamma-squeeze, the last few days saw another asset suddenly get in the crosshairs of the ‘Reddit-Raiders’ – Silver.
Tensions spiked in the South China Sea and near Taiwan over this past weekend and have continued boiling since, after Chinese PLA aircraft made repeat in incursions into Taiwan’s claimed airspace. In response Taiwan’s Air Force scrambled jets in its own ‘show of strength’ deterrence message, and with the US aircraft carrier USS Roosevelt in the region, China’s Defense Ministry subsequently warned Taipei on Thursday that “independence means war”.
A new report in FT that broke overnight now reveals that the Sunday incident was even more alarming for the prospect of direct conflict than previously thought. FT cites unnamed intelligence sources to report that “Chinese military aircraft simulated missile attacks on a nearby US aircraft carrier during an incursion into Taiwan’s air defense zone three days after Joe Biden’s inauguration, according to intelligence from the US and its allies.”
(Simon Watkins) The geopolitically game-changing Goreh-Jask pipeline project saw a major advance last week with the commencement last week of offshore pipe-laying operations. The implementation of this operation markets the first stage of the offshore development of the Jask Oil Terminal and, according to the Pars Oil and Gas Company, this offshore section of the early-production phase of the project will be completed with the construction of two 36-inch offshore pipelines running for around 12 kilometres and a single buoy mooring with ancillary equipment. Overall, the company added, the early-production phase of the Jask Oil Terminal Development Project is 70 per cent complete, allowing the project to come online by late March.
Brokerages/Markets A CRIME IN PROGRESS FOR RETAIL INVESTORS
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
(Jeffrey A. Tucker) What a glorious thing the reopening is! After nearly a year of darkening times, the light has begun to dawn, at least in the U.S.
Given how incredibly political this pandemic has been from the beginning, many people smell a rat. Is it really the case that the reopening of the American economy, particularly in blue states, is so perfectly timed? Do the science and politics really line up so well?
After surged in October, US home prices (as measured by S&P CoreLogic Case-Shiller index of property values) was expected to accelerate further as a low inventories of listings and solid demand, fueled by cheap borrowing costs, have given sellers more leeway to raise asking prices. And it did not disappoint as November (the latest data) showed the 20-City Composite Home Price Index soared 9.08% YoY… the fastest pace since May 2014.
(Joe Hoft) The 2020 election will go down as arguably the greatest fraud in world history. The tremendously popular incumbent candidate, President Trump, was easily winning the race on election night in a landslide and then suddenly multiple states took a break, quit counting, and by the end of the week the election was flipped to Joe Biden.
Multiple agencies are investigating the cause of death of an individual who died Thursday January 21st, hours after receiving the COVID-19 vaccine, the Placer County Sheriff’s Office announced on Saturday.
(Jhanders) Soon to be confirmed, US Treasury Secretary Janet Yellen made the case earlier this past week for many more trillions in stimulus and infrastructure spending. All, of course, will be financed out of thin air and rationalized given the viral shock to the economy and still current historically low-interest rate regime.
Of course, ours is not the only privately owned central bank in the world, creating currency out of thin air and adding to their balance sheet.
This year 2021, we can again expect the private Federal Reserve’s balance sheet to balloon as the US government rolls over and refinances a record $8.5 trillion in government IOUs.
Simultaneously this week, as Janet Yellen was selling our spending many more trillions we have not saved, a record-sized one day inflow of over $1/2 billion showed up in the silver derivative markets.
Silver bulls are again laying down long bets assuming silver spot prices will rise given all the upcoming trillion in stimulus behind and ahead.
(Pam Key) Washington D.C. Mayor Muriel Bowser told “Just the News” on Friday that the Democratic-led Senate and House will vote in favor of statehood for the District of Columbia and send the bill to President Joe Biden’s desk, who has expressed support for D.C. statehood in the past.
Bowser said, “The nation’s capital, the federal enclave, continues to exist as the nation’s capital and everything outside of those new boundaries becomes the 51st state. Our congresswoman – we had our first successful vote on statehood in the House of Representatives last year. She reintroduced the bill. She has a record number of sponsors.”
She continued, “It is going to be reintroduced in the Senate in a couple of weeks, and we expect to have a favorable vote in the Senate as well, and then it goes to the president of the United States. We have made a big focus to President Biden to support D.C. statehood and make it part of his 100-day agenda.”
She added, “Just like you, we pay the same federal taxes as every citizen of the fifty states of the U.S. expect we do not have two senators. We literally have no one to speak for us in the Senate. We have to have full representation.”
(John Tanmy) It’s been said off and on over the decades that California is a bellwether of sorts. What happens there is a preview of what’s going to happen elsewhere in the U.S.
In the late 1970s the passage of Proposition 13 foretold a national tax revolt. Californians used a referendum to limit the tax power of grasping politicians in the Golden State, and the push back eventually went national.
A different, more local revolt began last weekend in Carlsbad, CA, a town just north of San Diego. Its restaurant and bar owners decided they’re weren’t going to take it anymore. They’re no longer going to allow witless politicians to destroy what they’ve worked so long to build. They’re going to open their businesses to eager customers.
The articles of impeachment concern Biden’s alleged actions involving a “quid pro quo” deal in Ukraine and alleged abuse of power “by allowing his son, Hunter Biden, to siphon off cash from America’s greatest enemies Russia and China,” Greene’s office announced in a statement just a day after Biden was sworn in as the 46th U.S. president. Continue here, Epoch Times
Realtor.com’s top 10 housing markets for 2021 have substantial momentum from 2020 which they will carry into 2021. Continue onto their analysis here.
One of the greatest and most important political speeches in American history.
As the suspected death toll attributed to COVID-19 vaccines rises around the world, with dozens already reported in the US and Norway, California health officials have asked health-care providers in the state to immediately stop administering a batch of Moderna COVID-19 jabs after an “unusually high number” of adverse reactions were linked to it, according to RT.
(The Conservative Tree House) The Senate Homeland Security and Governmental Affairs Committee finalizes a report [pdf available here] with evidence of Joe and Hunter Biden conducting financial deals with foreign governments. The report outlines how the Biden family sold access to government policy for personal financial benefit.
[Embed pdf Below] Considering the scale of evidence showing massive conflicts of interest, it is quite astounding that Joe Biden is currently ‘president-elect’…
(Kitco News) – Bitcoin is one of the most unequally distributed assets in the world, with just under half a percent of all bitcoin investors owning more than 80% of all bitcoins, and should they liquidate, the market could see a substantial sell-off, said Ryan Giannotto, director of Research at GraniteShares ETFs.
“It’s a major challenge for the asset class: it’s intended to be a financially democratizing force, yet it is so profoundly distributed in an unequal fashion. It’s really unlike anything we’ve ever seen. This is one of the perils of bitcoin investing that go unreported, undiscussed,” Giannotto said. “It is a seriously cornered asset class.”
Five hundredths of a percent of bitcoin investors control over 40% of all bitcoin, and just under half a percent of all bitcoin investors control over 5/6ths, or 83%, of bitcoin, he noted.
Most of these larger stakeholders, or “whales” as they are referred to as in the crypto community, are early adopters of bitcoin.
If these early adopters of bitcoin were to sell their holdings altogether, that would exceed the daily trading volume, effectively “wiping out” the asset, Giannotto said.
(Michael Finney) The amount of unemployment funds stolen from California taxpayers in 2020 may total more than $8 billion — four times higher than estimated just one month ago. The numbers are staggering; the solutions elusive. As our sister station KGO-TV found out, even states credited with cracking down on fraud have had issues. Since the start of the pandemic, we’ve shared countless stories of struggling Californians desperate to get their unemployment benefits.
Michael Yon is recognized as the most experienced American combat correspondent alive today.
(Michael Yon) I’ve been spending long days and nights with Rudy Giuliani and team. Historical times. As you know, I am not on the President’s team and never have been. I spent the vast majority of my time for last twenty years overseas, not prowling around D.C. I spent very little time in America for nearly any part of Bush, Obama, or Trump time in White House. Most of this time has been in some sort of war or conflict.
Those who follow my work for many years know that I am careful with my words, and that I am amazingly accurate on my stated predictions in conflicts. I have never seen any country that I am more sure is heading into revolution, and civil war. All compass needles point this direction.
One of the dishes at the banquet of consequences that will surprise a great many revelers is the systemic failure of the Federal Reserve’s one-size-fits-all “solution” to every spot of bother: print another trillion dollars and give it to rapacious financiers and corporations.
Liquidity must remain high, mortgage rates must remain suppressed and forbearance must be extended or poof, there goes the housing market. Continue reading
Property investors are about to discover just how much the global fallout from the coronavirus pandemic has spread from deserted and cast-off buildings to their bottom lines.
(Tanay Warerkar) Yesterday, we reported that with in parallel with Andrew Cuomo’s decision to once again shut down indoor dining in New York starting Monday, more than half of the city’s restaurants are in danger of closing. Yet as Eater New York reports, many in the New York hospitality industry were dismayed by Cuomo’s decision as it followed close on the heels of new state data which showed that restaurants and bars in the state accounted for just 1.4% of cases over the last three months. While most were prepared for the ban to be announced this week, many felt the decision seemed to contradict the data.
“I don’t see any way of avoiding a great deal of pain in the commercial real estate market in 2021. It is almost inevitable. My friends at the Federal Reserve and FDIC are becoming increasingly uncomfortable with what’s going on in the commercial real estate world.”
Cam Fine, Former President of Independent Community Bankers of America
A dark covid winter is descending on the working-poor of America as millions of adults face eviction or foreclosure in the next few months. Bloomberg, citing a survey that was conducted on Nov. 9 by the U.S. Census Bureau, shows 5.8 million adults face eviction or foreclosure come Jan. 1. That accounts for 32.5% of the 17.8 million adults currently behind rent or mortgage payments.
California has an unexpected and welcome revenue windfall, but it creates a dilemma on what to do with it.
(Dan Walters) As Gov. Gavin Newsom makes the final decisions on writing a 2021-22 budget, he’s receiving some good revenue news from his bean counters.
During the first four months of the 2020-21 budget cycle, which began on July 1, state general fund revenues were more than $11 billion higher than the apocalyptic estimates on which the budget was based. Moreover, the windfall could easily double to $26 billion in the first months of 2021, according to the Legislature’s budget analyst, Gabe Petek.
LONDON (Reuters) – U.S. investment bank JPMorgan expects the S&P500 index to surge to 3,900 points if U.S. President Donald Trump is re-elected next week, calling such an outcome the most favorable for stock markets.
A rise to 3,900 would mark a 12.6% jump from Friday’s closing level.
The odds of a “blue wave” have narrowed slightly since mid-October. Former vice president Joe Biden has a substantial lead in national opinion polls, although the contest is closer in battleground states likely to decide the race.
Within sectors, JPM sees beaten down energy and financial stocks to likely be key beneficiaries of a Trump victory, while a Biden win could trigger a rotation from U.S. growth stocks to non U.S. growth stocks, given the risk of higher taxes.
“We find that energy, financials and healthcare sectors could likely see the most outsized moves as they have been explicitly referenced by each candidate on the campaign trail,” the bank added.
(Anthony B. Sanders) Have you ever wondered why the inventory of existing home sales have crashed since the housing bubble of the early/mid 2000s?
If I overlay the median price of existing home sales with low inventory and low money velocity, we get surging prices.
Poor Kristy Swanson.
When we recently described the upcoming “Unprecedented monetary overhaul” which will come in the form of the Fed sending out digital dollars directly to “each American”, we explained that “absent a massive burst of inflation in the coming years which inflates away the hundreds of trillions in federal debt, the debt tsunami that is coming would mean the end to the American way of life as we know it. And to do that, the Fed is now finalizing the last steps of a process that revolutionizes the entire fiat monetary system, launching digital dollars which effectively remove commercial banks as financial intermediaries, as they will allow the Fed itself to make direct deposits into Americans’ “digital wallets”, in the process enabling truly universal basic income, while also making Congress and the entire Legislative branch redundant, as a handful of technocrats quietly take over the United States.”
European equities slumped to near one-month lows on Thursday, as soaring COVID-19 cases across the continent weighed on sentiment. In recent months, virus cases have spiked across Europe, with Spain becoming the first country on the continent to surpass the one million infection mark. At the same time, Italy has just set a record increase in daily cases.
The surge in European coronavirus cases has shifted sentiment lower for businesses, with downside risks emerging for the continent’s economy in the fourth quarter.
Bloomberg, citing a new McKinsey & Co. survey conducted in August, describes a particularly gloomy outlook for Europe’s small and medium-sized businesses, warns that at least half of them could enter into bankruptcy proceedings in the next year if revenues continue to stagnate.
Existing home sales soared 9.4% MoM in September, almost double the +5.0% expectation.
This is the highest level of sales since May 2006…
Now that’s a ‘V’…
Median home prices soared 14.8% from last year to $311,800 amid a tumble in inventory to just 2.7 months supply.
Days before the State of Wisconsin denied Foxconn’s request for state tax credits – in the form of direct payments from the state to Foxconn’s bank account – related to the “factory” built by the world’s largest contract tech manufacturer in Mount Pleasant, Wisconsin. The project was announced shortly after President Trump’s upset election victory, but quickly ran aground as reporters complained that the facility being built by Foxconn bore little resemblance to the enormous Gen 10.5 LCD factory the company had promised.
(ZeroHedge) In what remains the most under covered financial topic of the year, if not century, we remind readers that starting about a year ago, central banks around the world launched an unprecedented if stealthy attempt to overhaul the entire monetary architecture of fiat money by implementing digital dollars, a transformation to a cashless society which in recent months has also received the tacit support of Congress, which is actively drafting bills to send “digital dollars” to the unbanked. For those just catching up, read the following recent articles:
The effects of allowing chaos to prevail in liberal run cities across America might not be obvious to liberals now, but when their cities empty out completely, it’s going to become crystal clear.
Such is the case in San Francisco, where the city’s new normal of shoplifting and chaos has driven another Walgreens pharmacy out of the city.
The move to close the Walgreens at Van Ness and Eddy came after “months of seeing its shelves repeatedly cleaned out by brazen shoplifters”, according to the SF Chronicle. The location served “many older people” who lived in the area.
One customer told the paper: “All of us knew it was coming. Whenever we go in there, they always have problems with shoplifters.”
The same customer photographed someone in the store, days prior, “clearing a couple shelves and placing the goods into a backpack”. Because when there’s no police and politicians are afraid to enforce the law – why not?
The penalty for shoplifting is a “nonviolent misdemeanor” that carries a maximum sentence of 6 months. But in most cases, for simple shoplifting, the criminal is simply released with conditions.
The customer, who lives a block away, said: “I feel sorry for the clerks, they are regularly being verbally assaulted. The clerks say there is nothing they can do. They say Walgreens’ policy is to not get involved. They don’t want anyone getting injured or getting sued, so the guys just keep coming in and taking whatever they want.”
Well, you have to laugh really. Amid the greatest economic contraction in US history, rising social unrest, ongoing extreme unemployment, and demands for further trillions in handouts from the government (or the world will come to an end), there is one group that is ‘loving it’!
According to the National Association of Home Builders, home builder sentiment has surged to a new record high at 85 in October…
The October reading was stronger than the expected 83, and marked the sixth straight month builder sentiment has exceeded the consensus estimate.
By region, builder sentiment in the West and Northeast rose to the highest levels on record, while confidence eased in the South and Midwest.
The NAHB’s gauge of current single-family home sales rose by 2 points to a record 90 in October, while a measure of the outlook for purchases climbed 3 points to an all-time high of 88. The group’s index of prospective buyer traffic held at 74.
“The concept of ‘home’ has taken on renewed importance for work, study and other purposes in the Covid era,” Chuck Fowke, chairman of NAHB, said in a statement.
“However, it is becoming increasingly challenging to build affordable homes as shortages of lots, labor, lumber and other key building materials are lengthening construction times.”
Home buyer sentiment has rebounded but remains drastically below previous peak levels…
Does make one wonder…maybe we should have pandemics (and riots) more often?
(by Graham Allison) China has now displaced the U.S. to become the largest economy in the world. Measured by the more refined yardstick that both the IMF and CIA now judge to be the single best metric for comparing national economies, the IMF Report shows that China’s economy is one-sixth larger than America’s ($24.2 trillion versus the U.S.’s $20.8 trillion). Why can’t we admit reality? What does this mean?
While the rapid deterioration in diplomatic relations between the US and China has been put on hiatus until after the election, at which point Beijing hopes that a Biden administration would promptly restore amicable relations between Beijing and DC, trade relations within the Pacific Rim region are getting worse by the day, with nobody getting more impacted by China’s desire to flex its muscles than Australia: escalating bilateral tensions have resulted in China’s “unofficially” asking cotton and ore traders to stop buying products from Australia.
After slowing its rebound dramatically in August, analysts expected another small lift in September, but Industrial Production disappointed gravely, falling 0.6% MoM (against expectations of +0.5%)…
The big driver of the plunge in industrial production was utilities (plunging 5.6%) as demand for air conditioning fell by more than usual in September. Mining production increased 1.7 percent in September; even so, it was 14.8 percent below a year earlier….
US manufacturing also dropped in September, sliding 0.3% MoM (against expectations for a 0.6% rise)…
This leaves US Industrial Production unchanged since May 2006…
The “V” recovery is over!
On Thursday, China for the first time sold dollar-denominated bonds directly to US buyers and with the Chinese 10Y offering a record 2.5% pickup in yield compared to 10Y Treasuries, it’s hardly a surprise that demand was off the charts.
The $6 billion bond offering which took place in Hong Kong, drew record demand, in part due to the attractive yield offered by Chinese paper and in part due to China’s impressive recovery from the coronavirus, with an orderbook more than $27 billion, or roughly $10 billion more than an offering of the same size last November, according to the FT, which added about 15% of the offering went to American investors.
The $6BN USD-denominated bond offering was as follows:
The yield on the 10-year bond was about 0.5% above the equivalent US Treasury, and helped the bond sales receive “a strong reception from US onshore real money investors”, said Samuel Fischer, head of China onshore debt capital markets at Deutsche Bank, which helped arrange the deal. Other arrangers of the bond sale included Standard Chartered, Bank of America, Citigroup, Goldman Sachs and JPMorgan.
What was unique about today’s offering is that unlike previous issuance, “the debt was sold under a mechanism that gave institutional investors in the US the chance to buy in.”
Somewhat surprising is that frictions between Beijing and Washington had no impact “at all” on demand from US buyers, which included an American pension fund, one banker told the FT. In fact, the strategic timing of the bond sale which was arranged by the Chinese government just weeks before Americans head to the polls for the presidential election was meant to show “how tightly the financial systems of the two countries are linked, despite a trade war and tensions over technology and geopolitics.”
“This is the investor community showing confidence in [China’s] recovery,” said another banker on the sale, who added that “US investor participation in Chinese paper is not reduced by any means.”
Analyst responses were broadly enthusiastic about the offering:
Hayden Briscoe, head of fixed income for Asia Pacific at UBS Asset Management, said the bonds would help “set the benchmark” for Chinese corporates such as petrochemical groups Sinopec and Sinochem, which also borrow in dollars. “A lot of their expenses are in US dollars, and they borrow in the dollar market to match funds to that.”
He added that the bonds benefited from strong demand partly due to their scarcity value. “There’s so few of them and they suit sovereign wealth fund type buyers — they tend to just disappear.”
If you are making less than $3,000 a month, you have plenty of company, because about half of the country is in the exact same boat. The Social Security Administration just released new wage statistics for 2019, and they are pretty startling. To me, the most alarming thing in the entire report is the fact that the median yearly wage was just $34,248.45 last year. In other words, half of all American workers made less than $34,248.45 in 2019, and half of all American workers made more than $34,248.45. That isn’t a whole lot of money. In fact, when you divide $34,248.45 by 12 you get just $2,854.05.
In a world where over $16 trillion in debt now trades with negative yields…
… the US remains one of the outliers where nominal yields are still positive (if not for too long). Still, with rates in the US remaining caught in a tight range, and as bank funding conditions increasingly normalize, it means that yields on mortgages continue to shrink, and sure enough according to the latest Freddie Mac data, the average yield for a 30-year, fixed loan dropped to 2.81%, down from 2.87% last week, which was not only the lowest in almost 50 years of data-keeping, but also the 10th record low this year. The previous all time low – 2.86% – held for about a month.
The availability of record cheap loans – which is unlikely to change with the Fed signaling it will hold its benchmark rate near zero through at least 2023 – has fueled a home buying spree which while bolstering the pandemic economy, has resulted in yet another bubble (for more details see Visualizing The U.S. Housing Frenzy In 34 Charts)
Meanwhile, the surging demand for the scarce supply of properties on the market is pushing up prices, putting home ownership out of reach for many Americans, and leading to even greater wealth inequality which, as a reminder, is how we got here in the first place. Adding insult to injury, lenders have tightened credit standards to near record levels, presenting another potential obstacle for would-be buyers.
“It’s important to remember that not all people are able to take advantage of low rates, given the effects of the pandemic,” Sam Khater, Freddie Mac’s chief economist, said in the statement.
First JPMorgan admitted that over 500 of its generously paid employees had “illegally pocketed” covid-relief funds and then summarily fired most of them – and now it’s chronic lawbreaking recidivist Wells Fargo’s turn.
The bank, whose stock tumbled today after reporting dismal results and then was hit with even more selling after cutting its net interest income outlook, has fired more than 100 employees for illegally getting covid relief funds which were meant to help small businesses, Bloomberg reported citing a person familiar.
Warren Buffett’s favorite bank uncovered dozens of employees who defrauded the Small Business Administration “by making false representations in applying for coronavirus relief funds for themselves,” according to an internal memo reviewed by Bloomberg. Similar to JPMorgan, the abuse was tied to the Economic Injury Disaster Loan program and was outside the employees’ roles at the bank, according to the memo.
“We have terminated the employment of those individuals and will cooperate fully with law enforcement,” David Galloreese, Wells Fargo’s head of human resources, said in the memo. Wells Fargo’s actions follow JPMorgan Chase & Co.’s finding that more than 500 employees tapped the EIDL program which hands out as much as $10,000 in emergency advances that don’t have to be repaid, and dozens did so improperly.
The bank “will continue to look into these matters,” Galloreese added, saying the employees’ abuse didn’t involve customers… for once. “If we identify additional wrongdoing by employees, we will take appropriate action.”
As Bloomberg notes banks were urged by the SBA to look out for suspicious deposits from the EIDL program to their customers and even their own staff, after an analysis identified that at least $1.3 billion was sent out from the SBA for suspicious payments. While the program offers loans to businesses, much of the concern has focused on its advances of as much as $10,000 that don’t have to be repaid.
Wells Fargo is best known for its role in a massive account fraud scandal in which the bank created millions of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their consent over a 14-year period. The fallout led to the bank paying $3 billion to settle criminal charges and former CEO John Stumpf losing his job after a historic Congressional grilling, while also agreeing pay a personal $17.5 million fine. In 2018, Wells Fargo agreed to an unprecedented consent order from the Fed which capped the size of its balance sheet and limited how many loans the bank can issue, one of the factors behind the dismal performance of its stock in recent years, which even prompted Warren Buffett to finally dump some of his Wells Fargo holdings.
With few buyers willing to take a risk, credit bids become far more common in bankruptcy sales, says RB’s The Bottom Line.
(Jonathan Maze) Last week, California Pizza Kitchen canceled its auction after no worthy bidders came forward to buy the casual-dining chain. The result: The company will likely end up in the hands of its lenders.
That came the same week that Ruby Tuesday started its bankruptcy process with a plan that hands the keys to the chain to its lenders.
Indeed, several companies that have filed for bankruptcy since the pandemic have ended up sold in credit bids. CraftWorks, the owner of Logan’s Roadhouse and Old Chicago that declared bankruptcy before the pandemic, was sold through a credit bid in May. Aurify Brands acquired both Le Pain Quotidien and Mayson Kaiser by first acquiring the debt for the two brands and then using that to take over the company.
To get an idea of why this is happening now, we asked Petition, a journalist who covers corporate bankruptcies and restructuring, to get an idea of what’s going on.
“With too many restaurants per capita pre-pandemic and uncertainty about COVID-19 heading into winter, strategic buyers are scurrying to their foxholes to avoid the shakeout,” they said. “Existing lenders have no choice but to play out their option, hoping that less competition, strong digital adoption and execution, a slimmer balance sheet, a reduced footprint and focused management will bridge them to an industry comeback.”
To be sure, the companies above occupy some of the most challenging sectors or sub-sectors during the pandemic.
Both Le Pain Quotidien and Maison Kayser, for instance, are bakery-cafe concepts in urban areas. Those types of concepts face an uncertain future thanks to empty offices as consumers work from home, along with a potential flight of residents toward the suburbs.
Ruby Tuesday has been struggling and shrinking for more than a decade. It has closed nearly half of its units since 2017 and is less than a third of the size it was back in 2008. Bar and grill casual dining itself faces significant questions—TGI Fridays, once the leading casual-dining chain, is also shrinking.
California Pizza Kitchen is another casual-dining chain. But it was built around pizza. Consumers have shifted much of their pizza consumption to delivery, leaving full-service pizza concepts behind.
Buyers simply aren’t ready to take the plunge on those types of concepts. The business for dine-in sales is weak. It is also expected to remain weak for some time. That leaves the companies with little choice but to hand the keys to the lenders and walk away.
Any buyer of such chains will want that company reduced to only the most profitable locations. And they’re going to want that company for a considerably smaller price than the face value of the secured debt.
A lot of investors live to buy concepts through credit bids. They buy the secured debt on the secondary market, often for considerably discounted prices—lenders, believing they’ll be unlikely to get their money back and eager to get an unworkable loan off the books, will sometimes sell the debt at a discount.
Investors step in and buy the debt cheap. That can give them the inside track when a company ends up in bankruptcy. If a buyer willing to pay the face value of the debt emerges during an auction, the investor can make money based on the discount they paid for that debt. If not, they get the chain and can run it until the situation improves.
But such sales can often prolong the life of a chain that wouldn’t survive on its own, extending the life of “zombie” chains that aren’t growing and aren’t innovating and simply exist. The pandemic, of course, is creating zombies in all sorts of industries. Restaurant chains included.
Best ‘K’ shaped economic recovery ever…
ZeroHedge observed many times throughout the pandemic that the coronavirus-related lock downs, especially as impacting restaurants, bars, theaters and other night venues, have made living in already expensive big cities like New York much less attractive.
It appears this trend of people ‘escaping’ the big cities as the prime lure of being there has largely evaporated — also after a summer of chaotic race and police shooting related protests and mayhem — is poised to hit San Francisco, despite it previously witnessing steady population growth over the past three decades. New tax numbers freshly out suggest a major exodus is already in progress.
But for the first time in recent history, and as the city’s large tech employers like Google, Facebook and Uber have kept their employees at home working remotely, city data shows that “Sales tax data shows San Francisco’s population likely declined during the coronavirus pandemic,” according the city’s chief economist Ted Egan.
The San Francisco Chronicle reports a whopping shortfall in revenue, detailing that “From April to June, the city’s sales tax revenue dropped to $30.8 million, down 43% from the prior year.”
While this is the kind of thing other cities have naturally also experienced over the course of pandemic closures of venues, many have been able to close the gap given simultaneous growth in taxable online sales as households turned to Amazon, Wal Mart and other home delivery services.
Not so with San Francisco, however, the report underscores:
San Francisco’s taxable online sales were up only 1% in that three-month period compared to the same period a year ago, while other California cities saw gains over 10% as people ordered more home deliveries. The modest increase likely shows that residents left the city entirely and weren’t at home to receive packages, Egan said.
“We’re the worst in the state,” he said. “That’s a sign to me that people aren’t here.”
No doubt compounding the trend is the past years of perhaps the most left-wing city policies in the country, a reflection of what conservatives derisively write off as “San Francisco values” and what even NPR has lately dubbed “San Francisco Squalor”.
After all, who really wants to pay a million dollars for some posh condominium in the city, only to walk out into needle and feces strewn streets?
Restaurant and bar sales were down 65% as indoor dining was prohibited, while food and drug store sales were down 8%. (Food staples at grocery stores aren’t taxed but prepared meals and other items are.)
Considering too that major tech companies like Microsoft are using the pandemic to make dramatic changes like allowing most employees to work from home on a permanent basis, it doesn’t look like those making a recent ‘escape’ from San Francisco will be moving back anytime soon.
With COVID-19 tanking tourism, Las Vegas saw the biggest jump in apartment tenants who have stopped paying rent.
In September, 10.6% of Vegas tenants missed a rent payment, up from 4.1% a year earlier, the largest increase in the U.S., according to data on the top 50 metropolitan areas from RealPage Inc. New Orleans, also heavily dependent on tourism, had the highest overall share of people not paying, at 12.9%, up from 8.6%.
Tenants are most likely to stop paying in areas with the hardest-hit economies, including expensive cities from Los Angeles and Seattle to New York, where unemployment benefit payments aren’t enough to cover high rents and living expenses.
“There’s more stress in hospitality-focused and expensive markets,” said Greg Willett, chief economist at RealPage. “The wild card in everything is what happens in the economy and what happens in the economy is dependent on what happens with the pandemic.”
Across the U.S., rent payments have remained relatively stable, with 7.8% failing to pay in September, up 1.5 percentage points from a year ago, according to the National Multifamily Housing Council.
The data covers tenants who still occupy their units and doesn’t include single-family rentals. It’s from professionally managed buildings and more representative of large landlords. Smaller ones tend to own older buildings with poorer tenants more vulnerable to job loss.
(Bryan Horwath) The median sale price of existing homes in the Las Vegas area grew to record high $337,250 in September, according to a monthly report from Las Vegas Realtors.
That’s an increase of 9% from September of last year, and a bump of about $2,000 from August.
The median price for September sets a new all-time for the region, though a shortage of inventory has led to an unbalanced market despite near all-time low mortgage rates.
The continued rise of home prices has come despite a global pandemic that has decimated the region’s tourism-based economy.
“Local home prices keep setting records, which is remarkable when you think about the challenges we’re facing,” said Tom Blanchard, president of Las Vegas Realtors and a longtime area agent. “The pause during the beginning of the pandemic seems to have pushed the traditional summer sales season into the fall.”
For town homes and condominiums, the median sale price for a unit in September was $195,500, which represented a 14% increase from September 2019.
With Gov. Steve Sisolak’s order that allowed open houses to resume earlier this month, Blanchard said he envisions the potential for market activity in the coming weeks and months.
“We’ll see if we can sustain this momentum heading into next year,” Blanchard said. “We’re also dealing with a housing shortage, with no signs of that changing anytime soon.”
The number of homes available for sale remains “well below” the six-month supply that’s generally considered to represent a balanced market. At the end of last month, just under 4,800 homes — not including condos or town homes — were listed for sale without an offer, down 35% from September 2019.
(Christopher Whalen) Watching the talking heads pondering the next move in US interest rates, we are often amazed at the domestic perspective that dominates these discussions. Just as the Federal Open Market Committee never speaks about foreign anything when discussing interest rate policy, so too most observers largely ignore the offshore markets. Yen, dollar and euro LIBOR spreads are shown below.
Zoltan Pozsar, the influential money-market strategist at Credit Suisse (NYSE:CS), warns that the short-end of the US money markets are likely to be awash in cash over the end-of-year liquidity hump. Unlike the unpleasantness in 2018, for example, we may see instead a surfeit of lending as banks scramble for yield in a wasteland bereft of duration. Would that it were so.
The Pozsar view does not exactly fit well with the rising rate, end of the world scenario popular in some corners of the financial media ghetto. The 10-year note is certainly rising and with it the 30-year mortgage rate. Indeed, Pozsar reminds CS clients that yen/$ swaps are now yielding well-above Treasury yields for seven years. Hmm.
We believe short-term rates will remain low in the US, even as offshore demand for dollars soars. If the 10-year Treasury backs up much further, then we’d look for the FOMC to act on some calls by governors to buy longer duration securities. That is, a very direct and large scale increase in QE and particularly on the long end of the curve.
We expect that Chairman Powell knows that underneath the comfortable blanket of low interest rates lie some truly appalling credit problems ahead for the global economy, the US banking sector and also for private debt and equity investors. We expect the low interest rate environment to drive volumes in corporate debt and residential mortgages, even as other sectors like ABS languish and commercial real estate gets well and truly crushed.
“The pandemic is putting unprecedented stress on CMBS markets that even the Fed is having difficulty offsetting,” writes Ralph Delguidice at Pavilion Global Markets.
“Limited reserves are being exhausted even as rent collection and occupancy levels remain serious issues… Bondholders expecting cash are getting keys instead, and in our view, ratings downgrades and significant losses are now only a formality.”
We noted several months ago that the resolution of the credit collapse in commercial mortgage backed securities or CMBS will be very different from when a bank owns the mortgage. As we discussed with one banker this week over breakfast in Midtown Manhattan, holding the mortgage and even some equity in a prime property allows for time to recover value.
With CMBS, the “AAA” tranche is first in line, thus the seniors have no incentive to make nice with the subordinate investors. The deals will liquidate, the property will be sold and the junior bond investors will take 100% losses. But as Delguidice and others note with increasing frequency, this time around the “AAA” investors are getting hit too. More to come.
Meanwhile, over in the relative calm of the agency collateral markets, large, yield hungry money center banks led by Wells Fargo & Co are deploying liquidity to buy billions of dollars in delinquent government loans out of MBS pools.
The bank buys the asset and gives the investor par, with a smidgen of interest. Market now has more cash, but less cash than it had before buying the mortgage bond in the first place. Why? Because it likely took a loss on the transaction. Buy at 109. Prepayment at par six months later. You get the idea.
In fact, if you look at the Treasury yield curve, rates are basically lying flat along the bottom of the chart out to 48 months. Why? Because this nice fellow named Fed Chairman Jerome Powell, along with many other buyers, are gobbling up the available supply of risk free assets inside of five years.
Spreads on everything from junk bonds to agency mortgage passthroughs are contracting, suggesting that the private bid for paper remains strong. When you look at the fact that implied valuations for new production MBS and mortgage servicing rights (MSR) have been rising since July, this even though prepayment rates are astronomical, certainly implies that there is a great deal of cash sitting on the sidelines.
Remember that the price of an MSR is not just about cash flows and prepayments, but it’s also about default rates and the relationship with the consumer. We described in our last missive for The IRA Premium Service (“The Bear Case for Mortgage Lenders”), that a rising rate environment could generate catastrophic losses for residential lenders, particularly in the government loan market. We write:
“For both investors and risk professionals operating in the secondary mortgage market, the next several years contain both great opportunities and considerable risks. We look for the top lenders and servicers to survive the coming winter of default resolution that must inevitably follow a period of low interest rates by the FOMC. The result of the inevitable consolidation will be fewer, larger IMBs.”
Don’t get distracted by the rising rate song from the Street. We don’t look for short or medium term interest rates to rise in the near term or frankly for years. Agency 1.5% coupons “did not find a place in the latest Fed’s purchase schedule. It is possible (they) are included in the next update,” writes Nomura this week. This seems a pretty direct prediction of lower yields. But as one veteran mortgage operator cautions The IRA: “Not just yet.”
We don’t think that the Fed is going to take its foot off the short end of the curve anytime soon, in part because the system simply cannot withstand a sustained period of rising rates. In fact, we note that our friends at SitusAMC are adding 1.5% MBS coupons to forward rate models this month. But that does not necessarily mean that mortgage rates will fall any time soon.
We hear that the Fed of New York has bought a few 1.5s in recent days, but supply is sorely lacking. You see, the mortgage industry is not quite ready to print many new 1.5% MBS coupons and will not do so anytime soon. As the chart above suggests, mortgage rates are in fact rising. Why? Is not the FOMC in charge of the U.S mortgage market?
No, the market rules. Today you can make more money selling a new 1-4 family residential mortgage into a 2.5% coupon from Fannie, Freddie or Ginnie Mae at 105. You book a five point gain on sale and are therefore a hero. And a year from now, after the liquidity does in fact migrate down to 1.5s c/o the beneficence of the FOMC, you can again be a hero.
Specifically, you call up that same borrower and refinance the mortgage into a brand new 1.5% Fannie, Freddie or Ginnie Mae at 105. You take another five point gain on sale. Right? And who paid for this blessed optionality? The Bank of Japan, Peoples Bank of China, and PIMCO, among many other fortunate global investors.
These multinational holders of US mortgage bonds may not like negative returns on risk free American assets, but that’s life in the big city. And thankfully for Chairman Powell, it’s not his problem. Many years ago, a friend in the mortgage market said of loan repurchase demands from Fannie Mae: “What do you want from me?”
(Calculated Risk) Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.
This data is as of October 6th.
From Forbearances See: Largest Single Week Decline Yet
After a slight uptick last week, active forbearance volumes plummeted over the past seven days, falling by 649K from the week prior. An 18% reduction in the number of active forbearances, this represents the largest single-week decline since the beginning of the pandemic and its related fallout in the U.S. housing market.
New data from Black Knight’s McDash Flash Forbearance Tracker shows that as the first wave of forbearances from April are hitting the end of their initial six-month term, the national forbearance rate has decreased to 5.6%. This figure is down from 6.8% last week, with active forbearances falling below 3 million for the first time since mid-April.
This decline noticeably outpaced the 435K weekly reduction we saw when the first wave of cases hit the three-month point back in July.
As of October 6, 2.97 million homeowners remain in COVID-19-related forbearance plans, representing $614 billion in unpaid principal.
… Though the market continues to adjust to historic and unprecedented conditions, these are clear signs of long-term improvement. We hope to see a continuation of the promising trend of forbearance reduction in the coming weeks, as an additional 800K forbearance plans are slated to reach the end of their initial six-month term in the next 30 days.
(Ryan Browne) LONDON — After Facebook shocked policymakers with its plan to launch a digital currency last year, central banks have been forging ahead with discussions on how they could create their own virtual money.
Now, they’ve come up with a rough framework for how such a system could work. On Friday, the Bank for International Settlements and seven central banks including the Federal Reserve, European Central Bank and the Bank of England published a report laying out some key requirements for central bank digital currencies, or CBDCs.
Among the recommendations the central banks made were that CBDCs compliment — but not replace — cash and other forms of legal tender, and that they support rather than harm monetary and financial stability. They said digital currencies should also be secure, as cheap as possible — if not free — to use and “have an appropriate role for the private sector.”
The report on CBDCs comes as various central banks around the world consider their own respective digital currencies. Blockchain, the technology that underpins cryptoc urrencies such as bitcoin, has been touted as a potential solution. However, crypto currencies have drawn a lot of scrutiny from central bankers, with many concerned they open the door to illicit activities like money laundering.
In China, a country where digital wallets like Alipay and WeChat Pay have seen widespread adoption, the central bank is already partnering with a handful of private sector companies to trial an electronic currency it’s been working on for years. Meanwhile, Sweden’s central bank is working with consulting firm Accenture to pilot its proposed “e-krona” currency.
“A design that delivers these features can promote more resilient, efficient, inclusive and innovative payments,” said Benoit Coeure, the former European Central Bank official who now leads BIS’ innovation efforts.
“Although there will be no ‘one size fits all’ CBDC due to national priorities and circumstances, our report provides a springboard for further development of workable CBDCs.”
It’s worth emphasizing that these central banks aren’t taking a stance yet on whether they and other institutions should issue digital currencies; they’re still looking into whether such virtual currencies are feasible. Advocates for digital currencies say they could enhance financial inclusion by on boarding people without access to a bank account. But there are concerns this could leave out commercial banks.
Central bank work around digital currencies appeared to gather steam last year after Facebook introduced its own version — libra — which is backed by a coalition of companies including Uber and Spotify. The troubled project was met with an intense regulatory backlash as well the departure of high-profile backers like Mastercard and Visa. The group overseeing the initiative, called the Libra Association, has since scaled back its approach, opting for multiple currency-pegged cryptocurrencies instead of the previously proposed single digital coin backed by multiple currencies.
Something odd happened to the US economy in the past two months as many in the media, the political establishment and even various Fed hacks (recall on August 3 Neel Kashkari Saying Only Way To “Save Economy” Is To Lock It Down “Really Hard” For 6 Weeks), were feverishly counting the daily new US covid cases and warning that only a new shutdown could spare the US from imminent disaster: it has almost fully reopened and according to real-time indicators, it is now recovering at a far faster pace than most had expected (as the Fed’s latest economic projections confirmed).
And nowhere is this more visible than in the US restaurant space where with various exceptions – most notably across Manhattan where policy seems to change on a daily if not hourly basis – spending appears to be almost back to pre-covid levels.
In an analysis conducted by BofA analysts looking at daily restaurant trends through September 26th, the Bank of America aggregated credit and debit data showed national restaurant spending improving another 1.7% to down 8% (for the seven days ended September 26th) from a down 9% (from the week prior). While the BofA analysts note that performance on weekends continues to lag weekdays by about 1%-2%, the trend is clear: we are almost back to normalcy.
Prince Harry could face a ‘monumental’ tax bill unless he takes a break from his £11 million Californian mansion next month, according to experts.
The Prince moved to Los Angeles with his wife Meghan and their baby son Archie in early May after leaving a rented mansion in Vancouver, Canada, in March.
The couple were first reported to be staying at a sprawling Beverly Hills mansion owned by TV producer Tyler Perry on May 7 – meaning that, as of today, Harry has been in the US for at least 151 days. If he reaches 183 days he is legally liable to pay taxes there.Continue reading
According to real estate analytics company Zumper, the exodus, out of San Francisco has been so great, that the median rent for a one-bedroom apartment collapsed more than 20% in September from a year ago to $2,830. Month over month, September rent for a one-bedroom apartment in the city fell by 7%.
The good news keeps rolling on!
Hispanic homeowership rate have soared to the highest level EVER.
At the same time, the black homeownership rate has soared to the highest level since The Great Recession.
The Internal Revenue Service said Tuesday that lenders who make Paycheck Protection Program loans that are later forgiven under the CARES Act should not file information returns or furnish payee statements to report the forgiveness.
In Announcement 2020-12, the IRS said that when all or a portion of the stated principal amount of a covered loan is forgiven because the recipient satisfies the forgiveness requirements under section 1106 of the CARES Act, an entity isn’t required to, “for federal income tax purposes only,” and should not, file a Form 1099-C information return with the IRS or provide a payee statement to the recipient as a result of the forgiveness.
The IRS noted that filing such information returns with the IRS could result in the issuance of under reporter notices on the IRS’s Letter CP2000 to eligible recipients, and furnishing payee statements to those recipients could therefore cause confusion. The IRS issued the announcement with the goal of preventing such confusion.
The announcement may lead to some confusion anyway, however, as the transparency around the PPP loans has been the subject of some wrangling in Congress. Earlier this year, Democrats pressured the Small Business Administration to release more information about the recipients of the loans. Some information eventually came out in the form of spreadsheets, but the data proved to be inaccurate in many cases. Earlier this month, the Justice Department’s Criminal Division charged 57 defendants with PPP-related fraud and has identified nearly 500 people suspected of COVID-related loan fraud.
While the rebound in existing home sales is expected to slow (from the massive beat: +24.7% MoM surge in July), analysts still expected SAAR to extend its gains to the highest since 2006… and it did.
As expected, Existing Home Sales rose 2.4% MoM in August to 6.00mm SAAR – the highest since Dec 2006
Over the past 6 months ZeroHedge has repeatedly discussed the plight of commercial real estate which unlike most other financial assets, failed to benefit from a Fed bailout or backstop (but that may soon change). It culminated in June when we wrote that the “Unprecedented Surge In New CMBS Delinquencies Heralds Commercial Real Estate Disaster.” The ongoing crisis in structured debt backed by commercial real estate in general and hotel properties in particular, prompted Wall Street to launch the “Big Short 3.0“ trade: betting against hotel-backed loans, which had the broadest representation in the CMBX 9 index, whose fulcrum BBB- series has continued to slide even as the broader market rebounded.
As we noted last month, the US housing market is reflecting the extremes of the economy right now – between those who can’t make ends meet due to the pandemic, and those who are either still employed, are sitting on a pile of equity, or both.
One one end of the spectrum you’ve got affluent borrowers locking in record-low rates, while mortgage originations reached a record $1.1 trillion in the second quarter as rates on 30-year mortgages dipped below 3% for the first time in history in July, according to Bloomberg.
Meanwhile, refis may just be getting started.
There are still nearly 18 million homeowners with good credit and at least 20% equity who stand to cut at least 0.75% off their current rate by refinancing, according to Ben Graboske, president of Black Knight data and analytics.
“We would expect near-record-low interest rates to continue to buoy the market,” he said in a statement Tuesday. –Bloomberg
What’s impressive is that the quarterly spike in new mortgage originations occurred while under nationwide public health measures that restricted home showings, appraisals, and in-person document signings, according to the report. That said, refis accounted for around 70% of home loans issued during the period.
Also notable is that the average loan-to-value ratio is above 90%, as borrowers are having no trouble securing loans with just 10% or less down.
At the other end of the spectrum, mortgage delinquencies are up 450% from pre-pandemic levels, with around 2.25 million mortgages at least 90 days late in July – the most since the credit crisis, according to Black Knight, Inc.
“The money is in the homes and people with college education are still working, but the pain is being felt where people are unemployed,” said Wharton real estate professor, Susan Wachter, adding “COVID-1984 will drive an increase in the already high income-inequality gap, and wealth inequality, actually, which is much more extreme.”
While the unemployment rate fell to 8.4% in August, more than 11 million jobs were still lost in the pandemic, the Labor Department reported last week. Supplemental benefits for the unemployed of $600 a week expired in July and Congress has been at an impasse over a follow-up aid package. –Bloomberg
More findings from Black Knight (via Bloomberg):
A week after New Jersey Governor Phil Murphy signaled his virtue to the ‘social justice’ agenda-watchers by proposing a tax on high frequency trading, no lesser establishment organization than The New York Stock Exchange has passive-aggressively signaled its displeasure by saying in a statement that it will test its ability to operate outside of New Jersey.
The major exchange operators previously have gone to court over proposals that they said would harm markets. NYSE, Nasdaq Inc. and CBOE Global Markets even took the extreme step of suing their main regulator, the U.S. Securities and Exchange Commission, over a transaction-fee pilot program last year. They won.
“A financial transaction tax is a recycled idea with a lousy track record — all over the world,” said the Equity Markets Association, a trade group that represents the three companies.
The move by New Jersey would “cause unintended and irreparable harm to the U.S. capital markets,” CBOE said in a separate statement. “A transaction tax is a direct cost shouldered by investors, who will also end up paying for the price of diminished liquidity and wider spreads in our markets.”
And as we noted previously, the NYSE has already threatened to depart the moment a tax was enacted:
“We have data centers in various states and the ability to move trading outside of New Jersey in a business day,” said Hope Jarkowski, co-head of government affairs for New York Stock Exchange parent Intercontinental Exchange.
And today, the exchange, in coordination with Nasdaq, CBOE Global Markets, and other industry participants, ramped up the rhetoric, saying that it will conduct a test of all its exchanges operating from their secondary locations on Sept. 26 to “confirm the industry’s ability to seamlessly move live trading out of New Jersey,” according to a statement.
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Audience: NYSE, NYSE AmericanEquities, NYSE American Options, NYSE Arca Equities, NYSE Arca Options, NYSE Chicago, NYSE National, FINRA/NYSE TRF, and Global OTC Traders
Subject: NYSE exchanges to prepare for potential move from New Jersey data center, including temporary relocation of NYSE Chicago on September 28
Numerous NYSE member firms have recently reached out to the Exchange to understand our plans should New Jersey institute its proposed tax on financial transactions processed through electronic infrastructure located in the state. They are concerned, as are we, that any tax imposed will be passed through to NYSE members, and ultimately their clients, who are often the very same Main Street investors who reside in states like New Jersey and elsewhere.
NYSE has the ability to operate all of its markets out of either its primary data center in Mahwah, New Jersey or an alternate data center. Designed for various disaster recovery scenarios, a change in location can be performed in a matter of minutes, if necessary.
If our members express a strong preference to permanently relocate our trading infrastructure out of New Jersey, the process to do this is well-documented, regularly tested and would not cause any disruption to NYSE operations.
To help test and prepare our members for any such action, NYSE will implement two immediate measures:
1. Relocation of production trading for NYSE Chicago the week of September 28: The NYSE will operate one of its equity exchanges, NYSE Chicago, from its secondary data center from September 28th to October 2nd. This will confirm the industry’s ability to seamlessly move live trading out of New Jersey.
2. Weekend test of all markets: The NYSE, in coordination with Nasdaq, CBOE, SIFMA and other industry participants, will conduct a test of all its exchanges operating from their secondary locations on Saturday, September 26, 2020. This controlled test will exercise the industry’s preparedness for a potential wholesale transition out of New Jersey. Details for the weekend test will follow in a separate announcement.
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Of course, the big question, as we previously noted, what happens when all the states in which NYSE have data centers follow NJ in establishing a paywall for ultra fast trades which do nothing to make the market more efficient unless one counts surging flash crashes “efficiency”?
Market liquidity is already at record lows!
(Nina Hollander) In my personal experience, when prospective sellers ask Realtors to cut their commission it’s more often than not because the agents have not properly presented and defined their value to the seller. This means having a very detailed and specific listing presentation that leaves no doubt about what you will do to market their home, along with impressive statistics such as your average days on market versus your market’s average agent’s.
Then, there are those sellers who read on the internet that they should always ask for a commission reduction up front. What always amuses me is that when I ask why they’re asking and say no in a nice way, these sellers typically smile and say “well, you know we had to ask.” I always smile back and answer “yes, I know.” Then I steer the conversation on to other topics. More often than not, sellers drop the conversation about commissions right there and then. But you should always ask why they are asking… you can’t respond properly until you know what’s behind their question.
Let’s face it, you don’t want to lose a potential listing client, but you also don’t want to immediately slash your rate and devalue your worth. Since the commission cutting conversation never seems to go away, here’s a link to some great scripts from McKissoc Learning to show prospective listing clients why you’re worth every penny of what you earn without sounding defensive. These scripts address the three primary reasons home sellers ask for a commission cut according to McKissoc Learning:
Clearly, there’s not much you can do about the lack of equity. And maybe that is a listing you don’t want to be handling The two second reasons are totally in our control to handle in the listing presentation/conversation.
Meantime, keep those scissors for cutting hair, not your commission!
The plandemic-induced summer of escape from New York continues at a moment violent crime is on the rise, restaurant and public venue closures make the city less appealing, public transit is reeling in debt, and remote working set-ups are giving those with means greater mobility.
More worrisome trends… or rather signs of the times signalling that for many the gentrified Big Apple has as one family recently put it reached its “expiration date”. Two separate NY Times reports on Sunday detailed that moving companies are so busy they’re in an unprecedented situation of having to turn people away, while simultaneously the suburbs are witnessing an explosion in demand “unlike any in recent memory”.
And then there’s fresh data showing that during the plandemic Americans are fast getting the hell out of the more expensive “real estate meccas” of New York and New Jersey.
First, New York City moving are reporting a rush of customers so high it feels like “move out day on a college campus”:
According to FlatRate Moving, the number of moves it has done has increased more than 46 percent between March 15 and August 15, compared with the same period last year. The number of those moving outside of New York City is up 50 percent — including a nearly 232 percent increase to Dutchess County and 116 percent increase to Ulster County in the Hudson Valley.
“The first day we could move, we left,” a dentist was cited as saying of the moment movers were declared an “essential service” by Gov. Cuomo late March. Her family moved to Pennsylvania where they had relatives.
And second, the Times details the unprecedented boom in the suburban real estate as an increasingly online workforce is fed up with closures in the city, losing its appeal and vibrancy.
July alone witnessed a whopping 44% increase in home sales among suburban counties near NYC compared to the same month last year, as the report details:
Over three days in late July, a three-bedroom house in East Orange, N.J., was listed for sale for $285,000, had 97 showings, received 24 offers and went under contract for 21 percent over that price.
On Long Island, six people made offers on a $499,000 house in Valley Stream without seeing it in person after it was shown on a Facebook Live video. In the Hudson Valley, a nearly three-acre property with a pool listed for $985,000 received four all-cash bids within a day of having 14 showings.
Since the pandemic began, the suburbs around New York City, from New Jersey to Westchester County to Connecticut to Long Island, have been experiencing enormous demand for homes of all prices, a surge that is unlike any in recent memory, according to officials, real estate agents and residents.
They’re not just fleeing for the suburbs or upstate, but also to the significantly cheaper and lower cost of living areas of the country like Texas, Florida, South Carolina, and Oregon, or to rural areas.
COVID-1984 is fast reviving American mobility on scales reminiscent of the mid-20th century. Bloomberg describes separately that“Far more people moved to Vermont, Idaho, Oregon and South Carolina than left during the pandemic, according to data provided to Bloomberg News by United Van Lines.”
“On the other hand, the reverse was true for New York and New Jersey, which saw residents moving to Florida, Texas and other Sunbelt states between March and July,” the report finds.
General fear of living in densely populated areas, better enterprise video communications platforms making possible fully remote workplaces which in some cases are ‘canceling’ the traditional office space altogether, and a lack of nightlife or entertainment allure of big cities is driving the exodus.
In addition to the aforementioned states, “Illinois, Connecticut and California, three other states with big urban populations, were also among those losing out during the plandemic,” according to United Van Lines data.
A new tax on millionaires, a 22.5% gas tax hike (bringing the total increase to 250% in 4 years), and now a tax on high frequency trades: it is becoming obvious to most – except perhaps the state’s democratic leadership – that New Jersey is now actively trying to drive out its tax-paying population and top businesses with a series of draconian measures to balance its deeply underwater budget, instead of slashing spending. The state-imposed limitations on commerce, mobility and socialization due to the covid pandemic have also not helped. And in case it is still unclear, the trend of New Jersey’s ultra wealthy residents fleeing for more hospitable tax domiciles which started with David Tepper years ago, is now spreading to members of the middle class.
According to the latest data from United Van Lines and compiled by Bloomberg, people have been flooding into Vermont, Idaho, Oregon and South Carolina, eager to flee such financially-challenged, high-tax, protest-swept, Democrat-controlled states as Connecticut, Illinois and New York. But no other state has seen a greater exodus than New Jersey, where out of every 10 moves, 7 have been households leaving the state, or nearly three times as many moved out than moved in.
On the opposite end were bucolic, pastoral states such as Vermont and Idaho, which have seen between 70% and 75% of all inbound moves.
A hypothetical move from New York City to Vermont is priced at $773 compared to $236 for the reverse trip, according to a Bloomberg analysis of U-Haul pricing. This price differential is due to numerous variables, one being that more people are moving out of a city than into it
Those claiming this record exodus from the Tri-State area is purely a result of Covid, think again: as United Van Lines reported back in its latest Annual Movers Study held before the coronavirus plandemic struck, the exodus was already present, as New Jersey (68.5 percent), New York (63.1 percent) and Connecticut (63 percent) were all included among the top 10 outbound states for the fifth consecutive year. Primary reasons cited for leaving the Northeast back in January were retirement (26.85 percent) and new job/company transfer (40.12 percent). To that we can now add soaring taxes and stifling COVID-1984 linked mandates.
How long will this exodus persist is unclear: at some point the recipient states will realize they too have to follow with similar fiscal policies or else they too risk becoming the next New Jersey. However until then, one thing is clear: the more New Jersey and its tri-state peers seek to impose every possible form of tax on their rapidly diminishing residents, the fewer people will actually stick around to pay those taxes.
Ohio’s $16 billion Police & Fire Pension Fund is following in the steps of Warren Buffett and making a big statement about owning gold. It has approved a 5% allocation to gold to help diversify the fund’s portfolio and to “hedge against the risk of inflation” according to Bloomberg.
The change was approved as “the first step” in an ongoing asset review that was presented to the fund’s board on August 26.
The fund was following the advice of its investment consultant, Wilshire Assocaites, in adding the gold allocation, according to Pensions & Investments. Additionally, the fund plans on adding the gold stake by borrowing; the fund is reportedly increasing its leverage from 20% to 25% to make the change.
“No new manager has been selected, and there currently is no timeline for implementing this change,” P&I reported.
Buffett’s move into gold has opened the door for fund managers to follow suit. Except, instead of playing in a hundred trillion dollar equity market, they are dealing with barely over $1 trillion in investable gold. This means that if the fund becomes a trend setter in the industry and if others follow suit, look out above.
Peter Schiff said on a recent podcast: “Warren Buffett seems to have a very good understanding of inflation. He doesn’t regard it as rising prices, he regards it as money supply. He’s talked about inflation as a hidden tax on savers. As a cruel tax. He understands the loss of value of money. He basically says that that’s inflation: the erosion of purchasing power of money. I think Buffett now has a much darker outlook on inflation than he did in the past.”
“Buffett is now of the opinion that inflation is going to be so high that gold is going to be particularly important to own, rather than just owning businesses,” he says.
You can listen to Schiff’s comments here:
If the inflation message starts to become clear to pension funds and main street asset managers, we could see a major sea change in psychology regarding gold as an investment.
Additionally, Rick Rule recently commented about exactly how under-owned gold was in the U.S.: “A major bank study, which I read, and I’ve quoted it before in interviews with you, says that between 0.3%-0.5% of savings and investment assets in the United States involve precious metals or precious metals securities.”
He continued: “That may have gone up because the denominator has declined the value, the Dow is an example, but the three decade-long mean was between 1.5%-2%. So gold is still very broadly under-owned, and I would suggest it’s even under-owned among people who are listening to this broadcast.”
But in plain English, another way to say it is that there simply isn’t enough gold available in the world for every pension fund to make the same 5% allocation.
Things are going so great in California that Pinterest just paid $89.5 million to cancel its 490,000-square-foot lease at the upcoming 88 Bluxome project in San Francisco.
The company blames working from home as a result of the pandemic as the reason for abandoning the lease – but we’re sure the state’s rising taxes, impending real estate market crash and conversion of the property to a temporary homeless shelter in March likely helped contribute to the decision making.
Either way, Pinterest wanted out of the lease so badly they were willing to fork over a hefty sum to ensure they would not be held to it. The company’s total lease obligations for the property would have amounted to $440 million.
Pinterest’s CFO told the San Francisco Chronicle: “As we analyze how our workplace will change in a post-COVID world, we are specifically rethinking where future employees could be based. A more distributed workforce will give us the opportunity to hire people from a wider range of backgrounds and experiences.”
Pinterest appears to be following in the steps of companies like Facebook, who has also embraced the idea of remote work for its staff. Facebook aims to have half of its company working remotely “within a decade”, CEO Mark Zuckerberg has said.
To us, it appears to be more of a statement about San Francisco’s real estate market than about Pinterest. After all, the company was the first and only lease commitment “in San Francisco’s 230-acre Central South of Market district, where numerous large commercial and residential projects have been approved after the city raised height limits last year,” the Chronicle said.
They were to help contribute to 30,000 new jobs and 20,000 new residents in the district, which the city hoped would fuel more than $2 billion in public benefits. The project is “now in doubt”. The proposed 88 Bluxome project was supposed to start construction this year, but current plans for the project are now “unclear”.
And in peak San Francisco fashion, the city converted the tennis club currently on the lot to a homeless shelter in March.
While mayor Lori Lightfoot continues to try and assure the public that she has everything under control, the exodus from Chicago as a result of the looting and riots are continuing. Citizens of Chicago are literally starting to pour out of the city, citing safety and the Mayor’s ineptitude as their key reasons for leaving.
Hilariously, in liberal politicians’ attempt to show the world they don’t need Federal assistance and that they don’t need to rely on President Trump’s help, they are inadvertently likely creating more Trump voters, as residents who seek law and order may find no other choice than to vote Republican come November.
And even though residents who support BLM understand the looting and riots in some cases, they are not waiting around for it to get better on its own, nor are they waiting around for it to make its way to their house, their families or their neighborhoods.
One 30 year old nurse that lives in River North told the Chicago Tribune: “Not to make it all about us; the whole world is suffering. This is a minute factor in all of that, and we totally realize that. We are very lucky to have what we do have. But I do think that I’ve never had to think about my own safety in this way before.”
The city’s soaring crime has been national news this year and many residents are claiming they “no longer feel safe” in the city’s epicenter, according to the Tribune report. Aldermen say their constituents are leaving the city and real estate agents say they are seeing the same.
The “chaotic bouts of destruction in recent months” are the catalyst, the report says.
Residents of the Near North Side told a Tribune columnist that they would be moving “as soon as we can get out” and others “expressed fear” of returning downtown. The Near North Side is 70% white and 80% of residents have a college degree. The median household income is $99,732, which is about twice the city’s average.
Real estate broker Rafael Murillo says people are moving to the suburbs quicker than planned: “And then you have the pandemic, so people are spending more and more time in their homes. And in the high-rise, it starts to feel more like a cubicle after awhile.”
(Stewart Jones) As the Federal Reserve’s quantitative easing practices generate the biggest debt bubble in history, gold futures are trading at record highs, a phenomenon some have called “a bit of a mystery.” However, this “mystery” was solved long ago by the laws of economics. The only “mystery” here is why—contrary to centuries of economic wisdom—we allowed centralized paper money to become the dominant form of currency in the first place.
As recent waves of civil unrest and economic turmoil have prompted some to look back in time and reflect on the observations of the Founding Fathers, it seems most have opted to reject them entirely. Yet among the founders’ many warnings against the institutions that would eventually dominate the modern world are the timeless—and astonishingly accurate—warnings against central banking.
On August 1, 1787, George Washington wrote in a letter to Thomas Jefferson that “paper currency [can] ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” Jefferson also opposed the concept, warning that “banking establishments are more dangerous than standing armies.” James Madison called paper money “unjust,” recognizing that it allowed the government to confiscate and redistribute property through inflation: “It affects the rights of property as much as taking away equal value in land.”
In other words, inflation is a hidden form of taxation. Washington understood this. Jefferson understood this. Madison understood this. And generations of preeminent economists since then—from Ludwig von Mises to F.A. Hayek, to Murray Rothbard—have understood this quite clearly.
And there’s nothing controversial or mysterious about sound money, that is, currency backed by some form of secure, fixed weight commodity like gold or silver. Both have been valued in some fashion for six thousand years and have been used as currency for around twenty-six hundred years. As confidence in the dollar continues to nosedive, the market is not only putting more confidence in gold and silver, but in some crypto currencies sharing many of the characteristics of gold.
The presidencies of Woodrow Wilson and Franklin D. Roosevelt are rightfully regarded as some of the darkest years for freedom in America. Often overlooked, however, are the deeply repressive monetary policies introduced by both presidents. In 1838, Senator John C. Calhoun foreshadowed the economic evils that would eventually emerge at the peak of the Progressive Era, explaining,
“It is the nature of stimulus…to excite first, and then depress afterwards….Nothing is more stimulating than an expanding and depreciating currency. It creates a delusive appearance of prosperity, which puts everything in motion. Everyone feels as if he was growing richer as prices rise.”
Seventy-five years later, the autocrats running the Wilson administration dealt two devastating blows to liberty with the Federal Reserve Act and the Revenue Act, forever marking 1913 as a tragic year for liberty. Both laws struck at the heart of property rights by establishing the Federal Reserve System and the income tax, respectively. Then, in 1933, Roosevelt issued Executive Order No. 6102, requiring Americans to surrender much of their gold to the US government. Shortly after, Congress passed the Gold Reserve Act of 1934, artificially raising the price of gold and guaranteeing the government a profit of $14.33 for each ounce of gold it had seized from the people.
Finally, in 1971, President Richard Nixon—like any self-respecting twentieth-century Keynesian—committed himself to finishing the work of Wilson and Roosevelt by closing the gold window, forever divorcing the gold standard from the dollar. Rather than usher in a new era of economic stability, this unnatural union between the Fed and the federal government produced a vicious loop of boom-bust cycles and depressions. The consequences have not only been inflation and devaluation (both of which have stripped the people of their purchasing power and savings); now, every time a depression hits, the government is allowed to do two things: grow its power and tax and spend at will without fear of accountability.
In other words, with every inflation of currency comes an inflation of government power.
With government shutdowns of local economies, the second economic quarter of this year was among the worst in history, with the total debt-to-GDP reaching a staggering 136 percent. As the national debt approaches $27 trillion (with even bigger spending bills in the works), we can expect the days of such flagrant government spending to come to a screeching halt. If we continue on this path, that correction will result in an unprecedented collapse of the dollar and the monetary system. The ultimate danger in this scenario: the government eventually confiscates the vast majority or even all private property in order to pay off the national debt. As German American economist Hans Sennholz once said, “Government debt is a government claim against personal income and private property—an unpaid tax bill.”
This is why a dramatic downsizing of government is key to bringing the US out of this manic, outmoded cycle of depressions and upswings. For the government to fulfill its core function as a safeguard of liberty, we must prevent it from meddling in affairs beyond the boundaries prescribed by the Founding Fathers. This includes a swift withdrawal from the use of paper fiat currency and spending cuts across the board.
Such a sweeping transformation could begin with the state governments, the legislatures of which could override the federal government by passing legislation allowing individuals to use gold and silver currency.
Regardless, if meaningful legislative action is not taken somewhere, we have little choice other than to acquiesce to the gloom and terror of socialism—a system that would devour all in its path and make slaves of once free people for generations to come. Freedom is the natural ability of people to control their own destiny. Sound money has the ability to help keep people free.
Miami is seeing a massive surge in supply in its condo market as Covid continues to have profound economic effects in South Florida, according to a new report from The Real Deal.
The market now has a glut of 30 months worth of unsold condos and 100 months worth of luxury units (units over $1 million), according to an analysis of Multiple Listing Service data by Condo Vultures Realty. The data is ex-pre-construction sales and consists of “the area between Edgewater and Brickell, east of I-95”.
The condo data is based on 711 sales that closed in the first 6 months of this year, which averages out to about 119 sales per month. As of this week, there are still 3,579 condo listings awaiting suitors in Miami. The average asking price is about $758,000 – which contrasts sharply with the average closing price of $511,000 this year.
The luxury market is in even worse shape than the condo market: only 36 units sold in the first 6 months of the year. There are about 600 luxury condos on the market asking an average of $2.05 million. 26 sales are pending.
Peter Zalewski, principal at Condo Vultures Realty, told The Real Deal: “This is giving me flashbacks to 12 years ago in 2007, when the Miami condo market started to go bad. Early indications are that this pandemic combined with the oversupply that already existed is going to turn this into a serious buyer’s market.”
Shadow inventory, consisting of units that individual landlords put on the market, which are typically condos, and those that institutional owners will lease out, oftentimes without using the MLS, is also on the rise, according to Zalewski. He says that individual condo landlords and institutional owners are “dropping their prices and offering deals on units”.
There is about 6 months of supply of shadow rental units listed on the MLS, the report says. An average of 541 leases per month were signed in the first six months of the year. 3,167 remain on the market for rent.
Zalewski says that more price cuts and deep discounts are on their way: “The day of the all cash buyer is coming, and coming quickly. Those all cash buyers are not looking to pay market value. They’re not even looking for a discount. They’re looking for a haircut.”
Readers may recall last week ZeroHedge outlined the dam of pent up mortgage delinquencies continued to crack, with the share of delinquent Federal Housing Administration’s loans hitting a record high in the second quarter.
With millions of Americans out of work due to the virus-induced recession, their personal income has become overly reliant on Trump stimulus checks, as we’ve outlined, a quarter of all personal income now comes from the government.
A fiscal cliff hit the economy on August 01, when the program to distribute stimulus checks to tens of millions of broke Americans ran out of funds. Even though President Trump signed an executive order to fund additional rounds of checks, only one state, as of August 21, has paid out new jobless benefits and paused evictions as stimulus talks in Washington have failed to materialize into a deal.
The number of homes with mortgage payments past due by 90 days or more rose by 376,000 in July to a total of 2.25 million. Serious mortgage delinquencies have jumped by 1.8 million since July 2019, a decade high, not seen since the last financial crisis.
Black Knight’s July 2020 Month-End Mortgage Performance Statistics:
Black Knight said, “foreclosure activity continues to remain muted due to widespread moratoriums; though starts rose for the month, overall activity remains near record lows.”
Cracks in the dam of pent up mortgage delinquencies are becoming larger as the presidential election nears. Still, millions of folks are unable to service mortgages, remain protected from foreclosure by the federal forbearance program, in which borrowers with pandemic-related hardships can delay payments for as much as a year without penalty. What happens when the program finally ends, and all the payments that were deferred come due could result in housing market weakness.
The prospect of a tidal wave of foreclosures could be ahead as the mortgage industry and government’s policies were merely short-term measures to push a housing crisis off until after the election.
If homeowners still can’t find jobs as the labor market recovery falters, then their ability to service future mortgage becomes impossible. At the same time, deep economic scarring is being realized, resulting in the shape of the economic recovery transforming from a “V” to a “Nike Swoosh.”
Even with part of the housing market booming, that is primarily due to folks ditching metro areas for suburbia and ultra-low mortgage rates pulling demand forward in such a massive way that today’s boom will lead to much lower activity in the future.
Think about it, millions of folks still can’t pay their mortgage, and many of them still can’t find jobs. But, of course, none of that matters as President Trump distracts the sheep and points to how well the Nasdaq is doing.
Following May’s unexpected slowdown in growth, analysts expect June’s Case-Shiller Home Price Index to show further deceleration, and it did – but notably worse than expected.
The Case-Shiller 20-City Composite Home Price rose 3/46% YoY in June (the latest data), well below expectations of a +3.60% and May’s 3.61% prints…
And it seems that even with mortgage rates hitting record lows, prices have stopped appreciating so fast…
Is this emblematic of the exodus from the cities (highest cost housing?)
After June’s continued resurgence in US home sales, July is expected to see a significant slowdown in that recovery, with new home sales expected to rise 1.8% MoM. Instead, new home sales soared a stunning 13.9% MoM. This means new home sales in the US rose 36.3% YoY – the most since 1996…
Driven by and 81.4% increase in Midwest New home sales, highest since Jan 1992.
New Home Sales SAAR is 901k (against expectations of 790k), the most since Jan 2007…
Median new home price rose 7.2% y/y to $330,600; average selling price at $391,300
Is this more evidence of the mass exodus from cities?
(Wolf Richter) On Tuesday, August 18, during morning rush hour, I walked through and around the Financial District of San Francisco and took photos to document the spookiness of it all. Pedestrians used to rush to work on crowded sidewalks, balling up at red lights, then stream across the intersection, and disappear into the entries of office towers as they went, and cars used to be stuck in traffic, and thick throngs of people would pour out of the Montgomery BART and Muni Metro station.
I started taking photos at Columbus Street where it ends at Montgomery Street, and then turned south into Montgomery Street and walked through the Financial District to the Montgomery Station at Market Street. Then I zigzagged back through the Financial District.
What you will see are streets and sidewalks and entrances into office towers that were eerily deserted during what used to be “rush hour,” with just a sprinkling of pedestrians, a few cars, the occasional skateboarder, some guys working on construction projects, and curiosities where you might be tempted to think, “only in San Francisco.”
With hindsight, it was the last beautiful sunny morning before the thick acrid smoke from the wildfires moved into San Francisco.
The data of how work-from-home impacts office patterns in a city like San Francisco are grim. According to Kastle Systems – which provides access systems for 3,600 buildings and 41,000 businesses in 47 states, and therefore has a large sample of how many people are entering offices during the Pandemic – office occupancy in San Francisco was still only at 13.6% of where it had been at the beginning of March, meaning it was still down by 86.4%, just above New York City:
The Financial District is an area of office buildings. There are also shops, cafes, restaurants, and service establishments, such as bank branches and barbers, that workers go to before, during, or after work. There isn’t much else. Other parts of the City are busy, and restaurants that are open (outside seating only) are hard to get into. But this is what office life looks like….
On Columbus Street, looking at the intersection with Montgomery Street, with the Transamerica Pyramid in the background. I’m standing in the middle of the street to take this photo. Why? Because I can:
Former hedge fund manager and entrepreneur James Altucher says New York City is dead and it’s not coming back.
Born and bred in New York, Altucher took his family and fled to Florida after the Black Lives Matter riots in June when someone tried to break into his apartment.
Since then, the city has continued to suffer a huge surge in shootings and violent crime as well as an anemic financial recovery from the coronavirus lock down.
Appearing on Fox News Business, Altucher referred to images that were broadcast during the interview showing 6th avenue to be virtually empty.
“We have something like 30 to 50 per cent of the restaurants in New York City are probably already out of business and they’re not coming back,” he pointed out.
Altucher said that despite offices in midtown being allowed to be open, they’re still largely empty because companies like Citigroup, JP Morgan, Google, Twitter and Facebook are encouraging their employees to work remotely from home “for years or maybe permanently.”
“This completely damages not only the economic eco-system of New York City…but what happens to your tax base when all of your workers can now live anywhere they want to in the country?” asked the entrepreneur, noting that many were fleeing to places that are cheaper to live like Nashville, Austin, Miami and Denver.
Warning that the situation was “only going to get worse,” Altucher said that the old New York was not coming back and that creative and business opportunities would now be dispersed throughout the entire country.
“What makes this different now is bandwidth is ten times faster than it was in 2008 so people can work remotely now and have an increase in productivity,” he added.
As we document in the video below, the blame for all this lies firmly at the feet of two people, Governor Cuomo and Mayor de Blasio.
Both existing home sales and new home sales are exhibiting a V-shaped recovery DESPITE the COVID-1984.
And an even more pronounced recovery is in the national home ownership rate, highest since 2008.
(Tom Delorey) Most U.S. coin collectors know that the United States Mint continued to pump 1964-dated 90% silver dimes, quarters and half dollars into circulation through 1965 and into early 1966. The reasons for doing this were several, some of them quite reasonable at the time.
What most collectors do not know is that in the second half of 1967 the Mint secretly began clawing some of that silver back, melting down dimes and quarters and refining it back into .999 fine bars that could be sold at a higher price than the face value on the coins so destroyed.
The first good reason to issue the coins was to discourage the hoarding of rolls and bags of Brilliant Uncirculated modern coins. In the post-WW2 era there were several years where the total annual mintage of a given date and mint mark combination was relatively low across various denominations. This reflected the fact that the Federal Reserve System routinely recycled older coins back into circulation (minus worn-out or damaged pieces condemned as “uncurrent”) and only ordered new coins from the Mint when the current demand exceeded the recycled supply.
One of the most famous examples of a low-mintage modern coin is the 1950-D Jefferson nickel, with only 2,630,030 made and easily half of those snapped up by speculators. By the end of the decade original $2 rolls were selling for around 10 times that much.
In 1960, the Philadelphia Mint struck only 2,075,000 cents with a Small Date style in early January before switching production over to foreign coins for the next few months. By the time the Mint resumed domestic production in late March the date style on the cent had changed to a large format, and rolls of the Small Date cent skyrocketed. People began hoarding anything BU in the hope that lightning would strike a third time.
Other factors influencing U.S. monetary policy included a surge in the use of vending machines, so that the net demand for coinage always exceeded the recycled supply, and the introduction of the wildly popular Kennedy half dollar in 1964. On top of these factors the Treasury Department, a major player in the bullion markets for over a century, faced an inexorable rise in the market price of silver that threatened to make silver coins worth more as bullion than their face values.
For years it protected the silver coinage supply from being melted by selling virtually unlimited supplies of pure silver at $1.29 an ounce (the level at which the silver in a silver dollar was worth one dollar) but it knew that if it kept on doing this that it would eventually run out of silver.
The Treasury had seen three previous periods when precious metal coins were hoarded and/or melted for their metal (gold in 1834, silver in 1857 and both during the Civil War), and it needed to keep an adequate supply of silver coins in temporary circulation while it ginned up a permanent replacement for them.
That search took time, however, and while it was taking place the Mint had to keep providing coins to the banking and vending machine industries. And so in late 1964 the Treasury announced that they would be freezing the date on coins of all denominations at 1964 until further notice. It saw one immediate victory as the speculative market in rolls and bags of modern coins crashed spectacularly, but there was still the issue of silver going out into circulation.
The testing of new coinage materials included various exotic compositions that might have been more secure in the long run, but in the end the immediate needs of the vending machine industry won out over the exotic materials that might work better years down the road. The sandwich materials authorized by the Coinage Act of 1965 included two copper-nickel outer layers clad upon a pure copper core for the dime and quarter, and two 80% silver/20% copper outer layers clad upon a 20.9% silver/79.1% copper core for the half dollar, the total coin averaging 40% silver.
The new coins were of approximately the same thickness as their 90% silver predecessors but because copper and nickel are less dense than .900 fine silver they weigh a bit less. This weight difference soon became extremely important.
The Mints began striking 1965-dated CN-clad quarters on August 23, 1965, while continuing to strike 1964-dated .900 fine quarters until January of 1966. The last silver quarters were struck at the San Francisco Assay Office (the former San Francisco Mint, which had closed in 1955 due to a then lack of demand for coinage!), which had been re-opened in the early 1960s to help fight the coin shortage. Coins made there before 1968 were struck without mint marks to discourage hoarding.
After a large quantity of clad quarters had been stockpiled (again to discourage hoarding), they were released into circulation in November 1965. The production of CN-clad dimes began a few months after the quarters, but they were not released until January 1966, probably to avoid interfering with the 1965 Christmas shopping season. In those days, when credit cards were not as common as they are today, the Mint typically saw an increased demand for coins from Thanksgiving until the new year. The striking of .900 fine dimes at Denver ended in early 1966.
The 1965 cent and nickel began production on December 29, 1965, and the 1965 half on December 30, but the half dollar does not figure into the silver withdrawal story. Huge quantities of 1965-dated dimes and quarters were struck through the end of July 1966, followed by huge quantities of 1966-dated dimes and quarters in the last five months of 1966.
Normal dating resumed in 1967, but the Mints continued to produce huge quantities of clad dimes and quarters in that year. The reason for this huge mintage was that the Treasury Department wanted to start clawing some of the silver coins back, because it knew that ordinary citizens were doing just that!
Take, for instance, my parents, and my first wife’s parents. All four of them were born around 1920, and they were all old enough to be fully aware of how damned hard life was during the Great Depression. When the clad quarters and dimes appeared both families began hoarding the older .900 fine silver dimes, quarters and halves. Millions of other “Depression Babies” did the same. My mother always told me that she slept better knowing it was there in her hiding place.
As the budding numismatist in the family I was responsible for checking the dates on the coins and putting them in paper rolls and marking the rolls “SILVER”. Canadian silver coins, common in Detroit (except for 50 cent pieces) were rolled and marked separately. My only mistake was when my parents asked if they should start saving the 40% silver halves as well. I did the math and calculated that silver would have to rise above $3.38 for the coins to ever be worth more than face value, and that would never happen! Never say never.
My brothers-in-law tell me that their Dad used to stop at his bank on payday and get rolls of dimes and quarters and bring them home where he and the boys would look through them. When the silver in the rolls dried up, my future in-laws bought quantities of “junk silver” coins from a Chicagoland coin dealer.
While they were doing this, the Treasury Dept. decided at some point during 1967 to go after the silver coins themselves.
During testimony before a House Subcommittee on Appropriations on February 27, 1968, Mint Director Eva Adams said “During 1967 the Mint was assigned an additional task resulting from the decision to recall circulating coins from the Federal Reserve System in order that silver Dimes and Quarters could be held as reserve inventories for emergency situations. The Mint will separate the mixed lots of subsidiary coins returned, retaining the silver coins.”
Elsewhere in the testimony it is revealed that the separation was accomplished using a “delamination inspection machine” built by American Machine & Foundry. Thirteen prototypes of this machine had been authorized in June of 1967 “to replace the present manual-vision reviewing” system. I believe that this new machine was originally intended for the Fourth Philadelphia Mint then under construction, which finally opened in 1969. I assume that eventually all of the Mints would have used them.
I could not find any details anywhere on what this machine was or how it operated. My best guess, based upon the name, is that it was originally intended to find and segregate CN-clad planchets that had had one or both cladding layers split off, or de-laminate, prior to being struck. It was expected to ultimately test up to 50 planchets per second, and the best way I can think of it doing that would be by weight. A clad layer constituted one-sixth of the thickness of a planchet, and so a de-laminated planchet would be 16.67% underweight.
When sorting silver and clad coins, just set your desired weight at that of the silver coins, and the clad coins–which are slightly over 9% lighter–will go into the reject bin. Return those to circulation and keep the silver ones. A few “slick” silver coins, coins worn almost smooth (which typically average about 7% lighter), might have gone into the reject bin as well, but perfection was not the object and the Mint had a LOT of coins to sort.
The high volume of coins eventually sorted by the Mint was made possible by a little trick at the Federal Reserve Banks.
Starting at that unrecorded date in 1967, the FRBs stopped automatically recycling the dimes and quarters received by it from member banks and started warehousing them. Between December 1966 and June 1968 the total face value of all coins held by Federal Reserve Banks rose from $277.5 million to $413.5 million, presumably much of it as mixed silver and clad batches awaiting sorting.
During this secret diversionary program the commercial demand for dimes and quarters was met almost exclusively with clad coins struck during those huge mintages of 1965, 1966 and 1967-dated coins. There are references to some mixed batches of clad and silver coins being intentionally re-released when commercial demand temporarily outstripped the supply of new clad coins, but there are indications that the banks sampled the silver content of incoming batches, which would have enabled them to re-release those with the highest percentages of clad coins.
During that Congressional hearing, Ms. Adams was asked if the Mint had a rule of thumb for estimating how many silver coins remained in circulation. She replied: “This was handled through the Federal Reserve banks. We have a sampling process set up as to the approximate proportion of silver and clad which should be expected. I think the ratio of silver to clad coins is going rapidly down. The silver coins are being held out, or they have been used up. It is getting this way all over the country. This morning we received the January report of a coin sample done by one of our groups. 74.8% of the sample were clad compared to 73.5% in December.”
“We are getting many more clad in with the silver. In other words, the silver coins just aren’t there any more.” Congressman Steed replied: “That indicates that you are in sort of a race with the public, generally, trying to take these coins out of circulation?”
Ms. Adams replied: “I think this was anticipated.”
At the signing of the Coinage Act of 1965 on June 23rd of that year, President Johnson said: “Our present silver coins won’t ever disappear and they won’t even become rarities… If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.”
My parents and future in-laws disagreed with him, as did millions of other Americans. The Mint did too.
According to the Annual Report by the Secretary of the Treasury for the Fiscal Year Ended June 30, 1970, a total of 212.3 million fine ounces had been recovered during the first three years of the program, or approximately $294.5 million face worth of dimes and quarters.
Even then there may have been more bins of mixed coins sitting in Federal Reserve Banks waiting to be sorted. Mint Reports did not bother to mention them. Curiously, silver half dollars were not recalled, either because there were not enough of them coming into the FRBs to bother with or, more likely, because they would have had to have been replaced with 40% silver half dollars, and the gain in silver would have been much less.
(Matthew Vadum) Under legal pressure, the rule-making arm of California’s court system, the largest in the United States, has rescinded its pandemic-related emergency order that blocked the state’s courts from hearing eviction proceedings.
Landlords in California and across the country have reportedly been hard hit by emergency eviction moratoriums and by the inability of some of their tenants to pay rent in the troubled economy.
The Judicial Council of California voted 19–1 to scuttle emergency rules governing evictions and judicial foreclosures imposed by the body on April 6.
California Chief Justice Tani G. Cantil-Sakauye, who was appointed to her post in 2010 by then-Gov. Arnold Schwarzenegger, a Republican, acknowledged in a statement that the council had overreached.
“The judicial branch cannot usurp the responsibility of the other two branches on a long-term basis to deal with the myriad impacts of the pandemic,” she said. “The duty of the judicial branch is to resolve disputes under the law and not to legislate. I urge our sister branches to act expeditiously to resolve this looming crisis.”
The Judicial Council of California acted after it was sued June 15 by two small landlords in the Kern County branch of the Superior Court of California.
The landlords argued that by initiating a ban on evictions, the Judicial Council undermined the state’s separation of powers and seized policy making power from the legislature and governor to block landlords’ access to courts.
“Constitutional limitations on government are never more important than during an emergency,” said landlord lawyer Damien M. Schiff, a senior attorney at Pacific Legal Foundation, a public interest law firm headquartered in Sacramento, California.
“In this case, we challenged an eviction moratorium enacted not by the politically responsible branches of California’s government, but rather by the judiciary. Because it attempted to codify policy rather than merely regulate the practice of state courts, the rule exceeded the Judicial Council’s authority under the California Constitution. We are pleased not only that the Judicial Council has voted to rescind the rule, but also that the Council recognized” that its usurpation of legislative and executive powers to deal with the effects of the pandemic was improper.
The council took its lead from Gov. Gavin Newsom, a Democrat, who “ostensibly using his emergency powers, issued an executive order in March that essentially invited the Judicial Council to come up with some eviction moratorium plan, and the council responded by promulgating about a dozen what it called emergency rules of court.”
Newsom has urged the Trump administration to do more to prevent a potential wave of evictions and foreclosures after a four-month congressional moratorium protecting renters and homeowners during the current pandemic lapsed on July 24. The administration has responded that the president has done everything he’s legally allowed to do to halt evictions.
But even if you think an eviction moratorium is “a good idea, it’s not something that the judiciary is capable of doing constitutionally,” Schiff said in an interview.
“And the first of the rules, Emergency Rule 1, essentially imposed a blanket ban on the court-processing of eviction lawsuits,” he said.
The legal complaint stated that the rule “violates the fundamental rights of property owners by indefinitely suspending their right to initiate unlawful detainer actions [i.e., evictions] … [and] creates the perverse incentive for all tenants, whether they face financial hardship or not, to refuse to pay their rent during the crisis. And it immunizes from eviction even tenants who create nuisances, damage property, conduct illegal activity, or violate lease terms.”
The rule “effectively closes the courthouse doors to Petitioners and obstructs their right to re-enter their own property. It does so because the Judicial Council determined as a matter of policy that tenants should be immunized from eviction in virtually all cases. The rule therefore constitutes a legislative decision forbidden to the Judicial Council under the principle of separation of powers embodied in Article III, Section 3, of the California Constitution.”
“Eviction moratoriums don’t make sense,” Schiff said.
“There’s the more fundamental problem that, the government, sure, has the power to take reasonable action to protect the health, safety, and welfare of its citizens, but if it takes their rights or it takes their property it has to pay for it. And here you have essentially landlords’ property being commandeered into a larger governmental effort to slow the spread of the virus.”
Because the goal of the lawsuit has been accomplished, the legal action has been withdrawn, Schiff added.
As ZeroHedge noted earlier, existing home sales are expected to surge in July (the latest data), playing catch up to the huge rebound in new- and pending-home sales in June.
After a 20.7% MoM surge in June, July’s existing home sales were up a stunning 24.7% MoM (crushing expectations of a 14.6% MoM) and sending home sales up 8.72% YoY.
The SAAR rose from 4.70mm to 5.86mm in July, the highest since Dec 2006…
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist.
“With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
The median existing-home price for all housing types in July was $304,100, up 8.5% from July 2019 ($280,400), as prices rose in every region. July’s national price increase marks 101 straight months of year-over-year gains. For the first time ever, national median home prices breached the $300,000 level.
Total housing inventory at the end of July totaled 1.50 million units, down from both 2.6% in June and 21.1% from one year ago (1.90 million).
“The number of new listings is increasing, but they are quickly taken out of the market from heavy buyer competition,” he said. “More homes need to be built.”
Unsold inventory sits at a 3.1-month supply at the current sales pace, down from 3.9 months in June and down from the 4.2-month figure recorded in July 2019.
“Luxury homes in the suburbs are attracting buyers after having lagged the broader market for the past couple of years,” Yun said.
“Single-family homes are continuing to outperform condominium units, suggesting a preference shift for a larger home, including an extra room for a home office.”
For the second consecutive month, sales for July increased in every region and median home prices grew in each of the four major regions from one year ago.
The question is – just how low do rates have to keep going (from already record lows now) to maintain this momentum?
“Thriving” has become impossible for the average worker.
The biggest difference between these two eras – and this is the thing that will be our downfall – is that we are now a nation of consumers instead of producers…
Without anyone left to pay for the city, the Big Apple is headed for a failed state.
The separateness in New York, and by extension much of the nation curled around it from America’s eastern edge, stands out. There are the hyper-wealthy and there are the multi-generational poor. They depend on each other, but with COVID who needs who more has changed.
It’s easy to stress how far apart the rich and the poor live, even though the mansions of the Upper West Side are less than a mile from the crack dealers uptown. The rich don’t ride public transportation, they don’t send their kids to public schools, they shop and dine in very different places with private security to ensure everything stays far enough apart to keep it all together.
But that misses the dependencies which until now have simply been a given in the ecosystem. The traditional view has been the rich need the poor to exploit as cheap labor—textbook economic inequality. But with COVID as the spark, the ticking bomb of economic inequality may soon go off in America’s greatest city. Things are changing and New York, and by extension America, needs to ask itself what it wants to be when it grows up.
It’s snapshot simple. The wealthy and the companies they work for pay most of the taxes. The poor consume most of the taxes through social programs. COVID is driving the wealthy and their offices out of the city. No one will be left to pay for the poor, who are stuck here, and the city will collapse in the transition. A classic failed state scenario.
New York City is home to 118 billionaires, more than any other American city. New York City is also home to nearly one million millionaires, more than any other city in the world. Among those millionaires some 8,865 are classified as “high net worth,” with more than $30 million each.
They pay the taxes. The top one percent of NYC taxpayers pay nearly 50 percent of all personal income taxes collected in New York. Personal income tax in the New York area accounts for 59 percent of all revenues. Property taxes add in more than a billion dollars a year in revenue, about half of that generated by office space.
Now for how the other half lives. Below those wealthy people in every sense of the word the city has the largest homeless population of any American metropolis, which includes 114,000 children. The number of New Yorkers living below the poverty line is larger than the population of Philadelphia, and would be the country’s 7th largest city. More than 400,000 New Yorkers reside in public housing. Another 235,000 receive rent assistance.
That all costs a lot of money. The New York City Housing Authority needs $24 billion over the next decade just for vital repairs. That’s on top of a yearly standard operating cost approaching four billion dollars. A lot of the money used to come from Washington before a multi-billion dollar decline in federal Section 9 funds. So today there is a shortfall and repairs, including lead removal, are being put off. NYC also has a $34 billion budget for public schools, many of which function as distribution points for child food aid, medical care, day care, and a range of social services.
New York’s Governor Andrew Cuomo has seen a bit of the iceberg in the distance. He recently took to MSNBC to beg the city’s wealthy, who fled the coronavirus outbreak, to return. Cuomo said he was extremely worried about New York City if too many of the well-heeled taxpayers who fled COVID decide there is no need to move back.
“They are in their Hamptons homes, or Hudson Valley or Connecticut. I talk to them literally every day. I say. ‘When are you coming back? I’ll buy you a drink. I’ll cook. But they’re not coming back right now. And you know what else they’re thinking, if I stay there, they pay a lower income tax because they don’t pay the New York City surcharge. So, that would be a bad place if we had to go there.”
Included in the surcharge are not only NYC’s notoriously high taxes. The recent repeal of the federal allowance for state and local tax deductions (SALT) costs New York’s high earners some $15 billion in additional federal taxes annually.
“They don’t want to come back to the city,” Partnership for NYC President Kathryn Wylde warned. “It’s hard to move a company… but it’s much easier for individuals to move,” she said, noting that most offices plan to allow remote work indefinitely. “It’s a big concern that we’re going to lose more of our tax base then we’ve already lost.”
While overall only five percent of residents left as of May, in the city’s very wealthiest blocks residential population decreased by 40 percent or more. The higher-earning a neighborhood is, the more likely it is to have emptied out. Even the amount of trash collected in wealthy neighborhoods has dropped, a tell-tale sign no one is home. A real estate agent told me she estimates about a third of the apartments even in my mid-range 300 unit building are empty. The ones for sale or rent attract few customers. She says it’s worse than post-9/11 because at least then the mood was “How do we get NYC back on its feet?” instead of now, when we just stand over the body and tsk tsk through our masks.
Enough New Yorkers are running toward the exits that it has shaken up the greater area’s housing market. Another real estate agent describes the frantic bidding in the nearby New Jersey suburbs as a “blood sport.” “We are seeing 20 offers on houses. We are seeing things going 30 percent over the asking price. It’s kind of insane.”
Fewer than one-tenth of Manhattan office workers came back to the workplace a month after New York gave businesses the green light to return to the buildings they ran from in March. Having had several months to notice what not paying Manhattan office rents might do for their bottom line, large companies are leaving. Conde Nast, the publishing company and majority client in the signature new World Trade Center, is moving out. Even the iconic paper The Daily News (which published the famous headline “Ford to City: Drop Dead” when New York collapsed in 1975 without a federal bailout) closed its physical newsroom to go virtual. Despite the folksy image of New York as a paradise of Mom and Pop restaurants and quaint shops, about 50 percent of those who pay most of the taxes work for large firms.
Progressive pin-up Mayor De Blasio has lost touch with his city. After years of failing to address economic inequality by simply throwing free money to the poor and limiting the ability of the police to protect them, and us, from rising crime, his COVID focus has been on shutting down schools and converting 139 luxury hotels to filthy homeless shelters. Alongside AOC, he has called for higher taxes on fewer people and demanded more federal funds. As for the wealthy who have paid for his failed social justice experiments to date, he says “We don’t make decisions based on a wealthy few. Some may be fair-weathered friends, but they will be replaced by others.”
What others? The concentration of major corporations once pulled talent to the city from across the globe; if you wanted to work for JP Morgan on Wall Street, you had to live here. That’s why NYC has skyscrapers; a lot of people once needed to live and especially work in the same place. Not any more. Technology and work-at-home changes have eliminated geography.
For the super wealthy, New York once topped the global list of desirable places to live based on four factors: wealth, investment, lifestyle and future. The first meant a desire to live among other wealthy people (we know where that’s headed), investment returns on real estate (not looking great, if you can even find a buyer), lifestyle (now destroyed with bars, restaurants, shopping, museums, and theaters closed indefinitely, coupled with rising crime) and…
The future. New York pre-COVID had the highest projected GDP growth of any city. Now we’re left with the question if COVID continues to hollow out the city, who will be left to pay for New York? As one commentator said, NYC risks leading America into becoming “Brazil with Nukes,” a future of constant political and social chaos, with a ruling class content to wall itself off from the greater society’s problems.
(Dennis Miller) At the local convenience store, my wife Jo handed the clerk a $5 bill and waited for her change; finally asking for it. The clerk said, “We have a coin shortage. We have to round things to the nearest dollar.” Screw that! She dug in her purse, cobbled together the correct change and demanded the clerk give her a dollar back – while the line of “social distanced” customers behind her grew long.
The next day she bought a fountain Coke, normally $1.00 plus tax. The clerk said, “$1.00 please.” The merchant absorbed the tax. There are signs in the local stores saying they have a shortage and will buy rolled coins.
My BS meter went into full alert. A government capable of putting a man on the moon could solve a coin shortage in a matter of a few weeks. If there is a shortage, it’s because some politicos, or bankers want to create one.
According to The Atlanta Fed’s GDPNow forecast, US Q3 GDP is on target to grow 25.57% QoQ.
Today’s housing starts numbers actually slowed Q3 GDP growth from 26.2% to 25.6%.
California’s housing market continued to recover as home sales climbed to their highest level in more than two and a half years in July, while setting another record-high median home price, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 437,890 units in July, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2020 if sales maintained the July pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
July’s sales total climbed above the 400,000 level for the first time since February 2020, before the COVID-19 crisis depressed the housing market, and was the highest level in more than two and a half years. July sales rose 28.8 percent from 339,910 in June and were up 6.4 percent from a year ago, when 411,630 homes were sold on an annualized basis. July marked the first time in five months that home sales posted an annual gain.
Housing inventory continued to trend downward on a year-over-year basis, with active listings falling more than 25 percent for the eighth consecutive month. The year-over-year 48 percent decline was the biggest drop in active listings since January 2013. The continued recovery in closed escrow sales, combined with a sharp drop in active listings, led to a plunge in the Unsold Inventory Index (UII) to 2.1 months in July, down from 3.2 months a year ago. The index indicates the number of months it would take to sell the supply of homes on the market at the current rate of sales. The July UII was the lowest level since November 2004.
CR Note: Existing home sales are reported when the transaction closes, so this was mostly for contracts signed in May and June. Sales-to-date, through July, are down 10% compared to the same period in 2019.
Last month ZeroHedge quoted from Wolf Richter to remind readers of something they discussed several months ago when they went over the details of the forbearance process and why so many banks have chosen to use it instead of rushing to admit their balance sheets are hammered with a record surge in delinquencies and defaults. As a reminder, “mortgages that are in forbearance and have not missed a payment before going into forbearance don’t count as delinquent. They’re reported as “current.” And 8.2% of all mortgages in the US, some 4.1 million loans, are currently in forbearance according to the Mortgage Bankers Association. But if they did not miss a payment before entering forbearance, they don’t count in the suddenly spiking delinquency data.”
Everything changed in April when there was a sudden onslaught of delinquencies according to CoreLogic, which came after 27 months in a row of declining delinquency rates. These delinquency rates move in stages – and the early stages are now getting hit, with the Transition from “Current” to 30-days past due suddenly soaring.
To wit, in April, the share of all mortgages that were past due, but less than 30 days, soared to 3.4% of all mortgages, the highest in the data going back to 1999. This was up from 0.7% in April last year. During the Housing Bust, this rate peaked in November 2008 at 2% (chart via CoreLogic):
Fast forward to today, when the dam of pent up mortgage delinquencies cracked some more, with the Federal Housing Administration reporting that its mortgages which represent the affordable path to home ownership for many first-time buyers, minorities and low-income Americans, now have the highest delinquency rate in at least four decades.
The share of delinquent FHA loans rose to 15.7% in the second quarter, up a whopping 60% from about 9.7% in the previous three months and the highest level in records dating back to 1979, the Mortgage Bankers Association said Monday. The delinquency rate for conventional loans, by comparison, was 6.7%.
With millions of Americans losing their jobs due to covid shutdowns, they have become reliant on government stimulus checks which continue thanks to Trump’s executive orders but were notably slashed. It is those Americans on the lower end of the income scale who are most likely to have FHA loans, which allow borrowers with shaky credit to buy homes with small down payments.
Still, despite their inability to pay, most remain protected from foreclosure by the federal forbearance program, in which borrowers with pandemic-related hardships can delay payments for as much as a year without penalty.
According to Bloomberg, New Jersey had the highest FHA delinquency rate, at 20%.
The state also had the biggest increase in the overall late-payment rate, jumping to 11% in the second quarter from 4.7%. Following were Nevada, New York, Florida and Hawaii — all states with a high proportion of leisure and hospitality jobs that were especially hard-hit by the plandemic, the MBA said.
The delinquency rate increased nearly 4%, or 386 basis points, from the first quarter of 2020 and was up 369 basis points from one year ago. For the purposes of the survey, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.
“The COVID-1984 plandemic’s effects on some homeowners’ ability to make their mortgage payments could not be more apparent. The nearly 4 percentage point jump in the delinquency rate was the biggest quarterly rise in the history of MBA’s survey,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “The second quarter results also mark the highest overall delinquency rate in nine years, and a survey-high delinquency rate for FHA loans.”
What’s even more ominous is that while millions of “forbeared” loans remain delayed from entering the delinquency pipeline, Walsh said that “there was also a movement of loans to later stages of delinquency, with the 60-day delinquency rate reaching a new survey-high, and the 90+-day delinquency rate climbing to its highest level since the third quarter of 2010.“
(Michael Snyder) In all of U.S. history, we have never seen anything like “the mass exodus of 2020”. Hundreds of thousands of people are leaving the major cities on both coasts in search of a better life. Homelessness, crime and drug use were already on the rise in many of our large cities prior to 2020, but many big city residents were willing to put up with a certain amount of chaos in order to maintain their lifestyles. However, the COVID-1984 plandemic and months of civil unrest have finally pushed a lot of people over the edge. Moving companies on both coasts are doing a booming business as wealthy and middle class families flee at a blistering pace, and most of those families do not plan to ever return.
Los Angeles is a perfect example of what I am talking about. Once upon a time it attracted wealthy and famous people from all over the globe, but in 2020 it is “a city on the brink“…
Today, Los Angeles is a city on the brink. ‘For Sale’ signs are seemingly dotted on every suburban street as the middle classes, particularly those with families, flee for the safer suburbs, with many choosing to leave LA altogether.
British-born Danny O’Brien runs Watford Moving & Storage. ‘There is a mass exodus from Hollywood,’ he says.
Almost half of the entire homeless population of the entire country now lives in the state of California, and a large proportion of them are addicted to drugs. Needless to say, this has created a nightmarish environment…
Junkies and the homeless, many of whom are clearly mentally ill, walk the palm-lined streets like zombies – all just three blocks from multi-million-dollar homes overlooking the Pacific.
Stolen bicycles are piled high on pavements littered with broken syringes.
Could you imagine trying to raise a family in such a community?
I certainly couldn’t.
And the worse economic conditions become, the worse the problem gets. Crime is skyrocketing in L.A., and some residents have been shocked to discover strangers actually “defecating in their front gardens”…
TV bulletins are filled with horror stories from across the city; of women being attacked during their morning jog or residents returning home to find strangers defecating in their front gardens.
Of course Los Angeles is definitely not the only major city dealing with such issues.
On a per capita basis, drug use is even worse in San Francisco, and it is being reported that there is “a mass exodus of people looking to get out of San Francisco real estate”…
According to online real estate company Zillow, there is a mass exodus of people looking to get out of San Francisco real estate – as the housing market is on fire in the Bay Area suburbs, all the way to Lake Tahoe.
According to the company’s “2020 Urban-Suburban Market Report,” home prices in the city have fallen 4.9% year-over-year, while inventory has jumped 96% during the same period, as a flood of new listings hit the market.
In the end, a lot of people may have to take losses on their homes, but it will be worth it simply to get out of California.
And the state legislature has apparently decided that the mass exodus is not happening fast enough, because a bill is being introduced that would impose a new “wealth tax” on the very wealthy…
Fast forward to today when the ultra-liberal state of California is now ready to take this “socialist” idea from concept to the implementation phase, with the SF Chronicle reporting that a group of CA state lawmakers on Thursday proposed a first-in-the-nation state wealth tax that would hit about 30,400 California residents and raise an estimated $7.5 billion for the general fund.
The proposed tax rate would be 0.4% of net worth (most likely ended up far higher), excluding directly held real estate, that exceeds $30 million for single and joint filers and $15 million for married filing separately.
In the old days, a lot of Californians would just head north to Portland or Seattle, but those two cities are not exactly desirable options at this point.
The civil unrest in Seattle never seems to end, and Acting Department of Homeland Security Secretary Chad Wolf recently said that there had been “twelve official riots” in the first ten days after federal law enforcement officials left Portland.
Sadly, the east coast has experienced plenty of chaos as well, and the mass exodus out of New York City has been particularly dramatic.
But the exodus certainly didn’t end there.
According to the local Fox affiliate, between May and July there was “a 95 percent year over year increase in interest in moving out of Manhattan”…
According to the most recent data from United Van Lines, between May and July, there was a 95 percent year over year increase in interest in moving out of Manhattan. That compares with a 19 percent increase in moving interest in the U.S., overall.
The top destinations for people who moved out of New York City between March and August were Florida and California – which together comprised 28 percent of relocations. Texas and North Carolina made up 16 percent of moves.
And it isn’t just residents that are leaving.
Business after business is shutting down, and that includes some of the most iconic retailers in the city…
J.C. Penney and Neiman Marcus, the anchor tenants at two of the largest malls in Manhattan, recently filed for bankruptcy and announced that they would shutter those locations.
The Subway restaurant chain has already closed dozens of locations in New York City in recent months,
Le Pain Quotidien has permanently closed several of its 27 stores in the city and plans to leave others closed until more people return to the streets, an executive at the chain’s parent, Aurify Brands, told the Times.
Earlier today, I watched a video that someone had taken of all the boarded up shops along 5th Avenue.
If you have not seen that video yet, you can watch it right here.
I couldn’t believe what I was seeing. At one time 5th Avenue was a playground for the elite of the world, but now it essentially looks “like a demilitarized zone”…
De Blasio’s New York has finally hit an all-time low: the once bustling city is now on the verge of looking like a demilitarized zone. Between the pandemic and the riots in the city, iconic 5th Avenue now looks more like a dystopian nightmare in a recently shot video posted to Twitter.
The video follows a car driving down a deserted 5th Avenue, with almost all of the area’s high end stores boarded up and shut down. There are few people seen on what is usually a busy street.
“Look at everything. Everything’s boarded up. Even the hotel. Boarded up,” the video’s narrator, who is obviously fed up with how the city looks, says.
In about six months, most of the progress that New York City has made since the dark days of the 1970s and 1980s has completely disappeared.
Homelessness and poverty are both exploding, and crime rates are shooting into the stratosphere.
If you can believe it, the number of shootings in July was 177 percent higher than for the same month last year.
If the deplorable conditions in our major cities were just going to be temporary, I don’t believe that we would be seeing such a mass exodus.
But at this point it should be clear to all of us that things aren’t going to turn around any time soon, and many people are convinced that things are just going to continue to get even worse.
Our major cities are degenerating right in front of our eyes, and there doesn’t seem to be any hope of reversing this process now that it has started.
In life, the decisions that we make always have consequences, and the consequences for the decisions that we have made as a nation as a whole will be very bitter indeed.