Morning Report – Chinese property prices 6/20/14

Vital Statistics:


Last Change Percent
S&P Futures 1953.3 3.0 0.15%
Eurostoxx Index 3314.6 -0.3 -0.01%
Oil (WTI) 107.1 0.6 0.58%
LIBOR 0.231 0.001 0.44%
US Dollar Index (DXY) 80.45 0.129 0.16%
10 Year Govt Bond Yield 2.65% 0.03%
Current Coupon Ginnie Mae TBA 106.2 -0.1
Current Coupon Fannie Mae TBA 105.4 0.0
BankRate 30 Year Fixed Rate Mortgage 4.22


Stocks are up on no real news this morning. Bonds and MBS are down.
No economic data this morning. Today has that “summer Friday doldrums” feel to it, where half the Street will be on the L.I.E. by noon.
The next big economic event will probably be the bursting of the Chinese property bubble. Small investment trusts in China are already going belly-up, and that is usually the first step in the process. The Chinese government is trying to manage the process of deflating the bubble, but as we have seen elsewhere these things take on a life of their own and are more or less uncontrollable. The knock on effects will certainly be felt here, which I imagine will be most evident in lower inflation and lower commodity prices. It may also keep interest rates lower here than people are expecting as the Fed will struggle to maintain inflation at its 2% target.
I suspect luxury real estate markets where Chines money is prevalent – Vancouver, San Francisco, etc will certainly see more supply come on the market. In fact, this could be the trigger that bursts the Canadian real estate bubble. The Canadian banking system and housing finance system is generally more sound than ours in that lending standards are strict, and the Canadian government doesn’t play all the social engineering games the US does when it comes to housing.
Low inventory will support housing prices, and overall home sales for 2014 will be around 5.4 million units, according to Freddie Mac in their latest U.S. Economic and Housing Market Outlook. Here are the salient economic forecasts:
  • GDP will be 3% for 2H of 2014, and full year GDP will be 2% – 2.5%
  • House prices will grow 5% for the year
  • Home sales will drop to 5.4 million units
  • The 30 year fixed rate mortgage will be 5% a year from now
  • The 10 year will be above 3% by Q115.

24 Responses

  1. Every time I think that Salon can’t hit a new low, it surprises me.

    Must be nice to be able to blame all of ones personal mental hangups on an external boogieman.


    • jnc:

      A myth? I was sure that somewhere in my family tree there just had to be an Asian lurking somewhere. I guess I’ll have to find a new explanation.


    • If the press [and I include ALL the media of all stripes] had any real men writing for them the only speculation would be why some women have small vaginal cavities while others have caverns and why some women can control their sphincters. Women who could hold empty coke bottles for sixty seconds by their labia would be stars. No one would ever write about “penis girth” or “penis length” except women in desperate need of post-partum surgical tightening, without sufficient means to afford it.

      Yes, this entire conversation must re-focus! Right, George?


      • While I was gone to St. Augustine, FL, I heard about the Redskins’ TM issue. From the reported evidence [NPR] I would guess it will ultimately be reversed. There are interesting cross currents here.

        The Supremes have said that TMs generally don’t raise 1st A issues because they are government monopolies meant to limit at least profit from speech to a first user. TMs are an infringement on the 1st A, taken literally, but the TM notion is built into the body of the Constitution, and is a necessity of commerce.
        So I don’t think any 1st A issue will be reached. Whichn is not to say it couldn’t be in a proper case. I think this one gets reversed b/c the usage was not considered scandalous or disparaging when it was granted so the showing that it is disparaging now would have to be overwhelming. I have seen some pretty raunchy TMs granted, over the years.

        Is there a rule of thumb for “disparaging”? Well, a Toyota TM that added “Detroit makes shit” probably would not be granted. I am guessing a football trademark for “The drunken Micks” would be opposed as disparaging and would not be granted. But suppose it was granted a long time ago, to a Rugby Club in Boston. Would PTO bow to pressure from Boston residents of Gaelic descent if the team liked the name?
        The courts would certainly defer to a PTO denial in the case of a new name – but why in the case of one granted before WW2?

        This came up because of organized complaints from the Indian nations council. That would be enough, again, to dissuade PTO from a first issue. But should it be enough 80 years later, after the TM recipient has built a business on the name?

        OTOH, the owner gets to sell new T-shirts and make the old ones valuable collectors’ items if the name is changed.


  2. I don’t get it. Why didn’t he buy a gun to compensate?


  3. I have a needle dick, always have. Meh.


  4. He just resents WPP.


  5. Worth a note

    “Cochran Asking Blacks to Rescue Him in Republican Primary

    JUNE 20, 2014”


  6. Mark, rather then waste time discussing women, this.


    • Rosie.

      Reminds me of Steve Martin on the Carson show years ago, George. Carson asked Martin when he first had sex and Martin said when he was 9. Carson then went on and on about it in amazement – and asked how old the girl was. Martin, as innocent as a newborn, answered “did you mean sex with another person?”


  7. That has got to be the funniest thing I have read in a while..


  8. “I heard about the Redskins’ TM issue. From the reported evidence [NPR] I would guess it will ultimately be reversed. There are interesting cross currents here.”

    I think what you mean is that it “should” ultimately be reversed. But in these times of political correctness—with judges making whatever rulings they find convenient and then grasping for straws to defend the most ludicrous decisions—I seriously doubt that it will.


    • National Review has an editorial on the whole Redskin Ruckus. NR opposes the grievance industry that has produced the current brouhaha, but in its editorial it says offhandeldly:

      “Redskin” may be used as a term of abuse in 2014, though it does not seem to be the case that teams with Indian mascots adopted them with a malicious agenda.

      Quite the contrary, I don’t think “Redskin” is ever used as a term of abuse in 2014, except, possibly, to indicate incompetence at playing football. (I can imagine a football coach screaming at his players “Get your head out of your ass. You look like you should be playing for the Redskins.”) Are there any contemporary examples in the last 25 or 50 years, much less the last 10, of the term being used to disparage Native Americans?


  9. Are there any contemporary examples in the last 25 or 50 years, much less the last 10, of the term being used to disparage Native Americans?

    One would actually have to live near a reservation to be aware of it, I suspect. I heard OU students disparage native American students with “redskin” and much worse in the early 90s. But my own sensibility is like yours…the name is laudatory or disparaging depending on the record of the Washington NFL team.

    Of course, keeping the name and substituting peanuts or potatoes for the image might work…ah, but no…


    • What a disappointing end to the US Portugal game. 30 seconds away from clinching a trip to the next round and they give up a tying goal. Now they need at least a tie vs Germany.


      • Behind the firewall, but….

        Exhibit one in why the unconstitutional regulatory state is so problematic. From Obama’s nominee to head the Federal Energy Regulatory Commission, and current head prosecutor of FERC’s enforcement office Norman Bay:

        the absence of a violation of market rules is not a defense to market manipulation.

        Only a truly committed federal bureaucrat could have come up with that one.

        The larger story is even more troubling than the quotation suggests.

        Lincoln Paper chose to participate in “demand response” on the New England electric grid, where large power users were paid for the electricity they didn’t use. Such energy efficiency incentives are a key feature of the anticarbon agenda at the Environmental Protection Agency and FERC.

        The problem is that no one knows how to value the cost of not buying something a customer might or might not otherwise buy over time. Establishing the “right” amount of electricity off which to measure savings is an inherent voodoo science.

        Lincoln Paper had an aging steam-powered generator on site that supplied a minority of the mill’s energy needs and took the remainder from the regular grid. Mr. Bay claims that Mr. Van Scotter intentionally ran this generator less than he normally would when the baseline was being created. Then he ramped the generator back up to make it seem as if he was drawing less energy off the meter and thus stealing the demand payments.

        Given the age and unreliability of the unit, Lincoln Paper made a good-faith effort to try to reflect “normal” operations, whatever that may be. In fact, Lincoln Paper reduced its consumption from the grid, i.e., conserved energy, by more than what was required by the program Lincoln is accused of manipulating.

        But more to the point, FERC never defined “baseline” and made no rules about the right way to set one or how equipment should be operated during the measurement period. As Mr. Bay recently told the Senate in a letter, “the absence of a violation of market rules is not a defense to market manipulation.”

        That’s Orwellian enough, but the D.C. Circuit Court of Appeals also tossed the demand-response programs last month as “arbitrary and capricious.” FERC is still trying to deny Mr. Van Scotter his day in court by asking a district judge to decline to hear the case de novo and simply rubber-stamp Mr. Bay’s punishment. Yet Lincoln Paper is entitled to no discovery during FERC investigations or even to know the identity of its accusers. Seven of the nine deposed witnesses remain anonymous under Mr. Bay’s rules. He wants to play prosecutor, jury and executioner.

        So Mr. Bay may ruin a small-business owner unsophisticated in the ways of Washington for running a machine at somewhat less than maximum capacity in a now defunct program that was extralegal because FERC lacked jurisdiction.


  10. @ScottC: “The problem is that no one knows how to value the cost of not buying something a customer might or might not otherwise buy over time.”

    The only thing you could possibly pay for both rationally, and with the end goal of reduction of energy consumption in mind, is for hitting target goals set below energy consumption for the same period the previous year, on an average of the past five years, or something like that. If you pay for energy consumed under a made-up figure based on what growth might be or what expansion might have otherwise demanded, energy wise, that leaves you open to just drain money with no real change in behavior.

    Of course, we’ve paid people for years not to farm property. You know, to keep food prices higher than they otherwise might be. Because that’s good for the country as a whole: to artificially increase the price of food. Wait, what?

    Using that logic, we should instead pay power producers not to produce energy at full capacity. That would be great.

    And Mr. Bay has learned that the hand that feeds you often turns around and bites you. Don’t be so quick to line up for that government largesse!


    • Kevin:

      And Mr. Bay has learned that the hand that feeds you often turns around and bites you. Don’t be so quick to line up for that government largesse!

      Actually Mr. Bay is the biter. Lincoln Paper is the bitee.


  11. @markinaustin: Could I get a TM for “Native American Potatoes”? I’m pretty sure a petition for “African-American Fried Chicken” would be denied, because of the common stereotype that black people like fried chicken when, in truth, everybody likes fried chicken.


    • KSW, TMs are cheap and do not require a lawyer to fill out the application. Please apply for “African-American Fried Chicken” and African-American Fried Chicken and Waffles” and “African-American Fried Chicken with Watermelon.” If you get any of them open a fast food franchise, immediately.


  12. Except for watching one Southpark episode with references to the topic, and that Salon article, I have never given any thought to the size of Asian penises, or, really, any penis. I’m apparently wasting my time thinking about large breasts and naked women. Always behind the curve.


  13. @ScottC: “Actually Mr. Bay is the biter. Lincoln Paper is the bitee.”

    Whoops. Wouldn’t be the first time I’ve reversed names. Good thing I’m not a lawyer!

    I have a hell of a time reading the Game of Thrones books. “Wait, wasn’t he dead? Hold on, I thought he was a bad guy. They are from Dorn? I thought they were from High Garden!”


  14. @markinaustin: Actually, a real African American should apply for those, one with a super-white sounding name, or maybe through a caucasian lawyer, but the point being to broadcast the impression that it’s some redneck cracker applying for those franchises. Then, when they get denied, immediately sue for discrimination. And denial of heritage.

    Mmm. Fried chicken and waffles.


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