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STOCK MARKET WATCH -- Friday, 2 January 2015
[font size=3]STOCK MARKET WATCH, Friday, 2 January 2015[font color=black][/font]
SMW for 31 December 2014
AT THE CLOSING BELL ON 31 December 2014
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Dow Jones 17,823.07 -160.00 (-0.89%)
S&P 500 2,058.90 -21.45 (-1.03%)
Nasdaq 4,736.05 -41.39 (-0.87%)
[font color=green]10 Year 2.17% -0.01 (-0.46%)
[font color=black]30 Year 2.75% 0.00 (0.00%) [font color=black]
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[font size=2]Market Conditions During Trading Hours[/font]
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(click on link for latest updates)
http://tools.investing.com/market_quotes.php?
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]
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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
[/center]
[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
[center]
The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
Wall Street on Parade
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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout
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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
[center]
LegitGov
Open Government
Earmark Database
USA spending.gov
[/center][font color=black][font size=2]Handy Links - Videos:[/font][/font]
[center]
Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
[/center]
[div]
[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts
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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]
36 replies
= new reply since forum marked as read
= new reply since forum marked as read
Saudi Arabia to pressure Russia, Iran with price of oil - from October
Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center.
Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.
To pressure Iran to limit its nuclear program, and to change Russia's position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center. The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy.
With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.
The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won't be able to affect Saudi Arabia's decision, Abanmy maintained.
The organization's decisions are only recommendations and are not binding for the member oil producing countries, he explained.
http://oilprice.com/Energy/Oil-Prices/Did-The-Saudis-And-The-US-Collude-In-Dropping-Oil-Prices.html
And then there's this...
Saudi Arabia and Qatar are the #8 and #5 producers of natural gas and would love to get a part of the EU market. The cheapest way to get it to the EU is overland pipelines, which would necessitate a Saudi Arabia to Iraq to Turkey pipeline (Iraq is likely too unstable) or a Saudi Arabia to Jordan to Syria to Turkey pipeline. The second would be preferable no doubt because they thought overthrowing Assad would be a cakewalk. However, Syria is too friendly with Russia and will likely block attempts to build a pipeline. Russia doesn't want the competition. The USA is not working hard enough to get Assad out. Not only do the Saudis kill fracking by lowering prices (harming the USA) but they harm Russia who are blocking their attempts to build a pipeline to the EU that would compete with Russian natural gas.
But Russia may have just killed any possible future land based pipeline from the Middle East to the EU by re-routing Russia's proposed South Stream pipeline from a route across the Black Sea, routing it through Turkey instead. Turkey's always been a bridesmaid but never a bride for the EU and will likely see Russia giving them the respect that the EU never did. Plus hundreds of millions of dollars in transit fees once the pipeline is finished. Soon, Russia will have a formidable southern flank of protection of Iran, Syria, and Turkey, plus if the sh*t hits the fan someday Russia will be in a position that they could more easily convince Turkey to cut off transit of US warships to the Black Sea via the Bosphorus.
Saudi Arabia will force the price of oil down, in an effort to put political pressure on Iran and Russia, according to the President of Saudi Arabia Oil Policies and Strategic Expectations Center.
Saudi Arabia plans to sell oil cheap for political reasons, one analyst says.
To pressure Iran to limit its nuclear program, and to change Russia's position on Syria, Riyadh will sell oil below the average spot price at $50 to $60 per barrel in the Asian markets and North America, says Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center. The marked decrease in the price of oil in the last three months, to $92 from $115 per barrel, was caused by Saudi Arabia, according to Abanmy.
With oil demand declining, the ostensible reason for the price drop is to attract new clients, Abanmy said, but the real reason is political. Saudi Arabia wants to get Iran to limit its nuclear energy expansion, and to make Russia change its position of support for the Assad Regime in Syria. Both countries depend heavily on petroleum exports for revenue, and a lower oil price means less money coming in, Abanmy pointed out. The Gulf states will be less affected by the price drop, he added.
The Organization of the Petroleum Exporting Countries, which is the technical arbiter of the price of oil for Saudi Arabia and the 11 other countries that make up the group, won't be able to affect Saudi Arabia's decision, Abanmy maintained.
The organization's decisions are only recommendations and are not binding for the member oil producing countries, he explained.
http://oilprice.com/Energy/Oil-Prices/Did-The-Saudis-And-The-US-Collude-In-Dropping-Oil-Prices.html
And then there's this...
Saudi Arabia and Qatar are the #8 and #5 producers of natural gas and would love to get a part of the EU market. The cheapest way to get it to the EU is overland pipelines, which would necessitate a Saudi Arabia to Iraq to Turkey pipeline (Iraq is likely too unstable) or a Saudi Arabia to Jordan to Syria to Turkey pipeline. The second would be preferable no doubt because they thought overthrowing Assad would be a cakewalk. However, Syria is too friendly with Russia and will likely block attempts to build a pipeline. Russia doesn't want the competition. The USA is not working hard enough to get Assad out. Not only do the Saudis kill fracking by lowering prices (harming the USA) but they harm Russia who are blocking their attempts to build a pipeline to the EU that would compete with Russian natural gas.
But Russia may have just killed any possible future land based pipeline from the Middle East to the EU by re-routing Russia's proposed South Stream pipeline from a route across the Black Sea, routing it through Turkey instead. Turkey's always been a bridesmaid but never a bride for the EU and will likely see Russia giving them the respect that the EU never did. Plus hundreds of millions of dollars in transit fees once the pipeline is finished. Soon, Russia will have a formidable southern flank of protection of Iran, Syria, and Turkey, plus if the sh*t hits the fan someday Russia will be in a position that they could more easily convince Turkey to cut off transit of US warships to the Black Sea via the Bosphorus.
http://www.businessinsider.com/europes-industry-just-had-a-terrible-quarter-2015-1
The eurozone's manufacturers hinted at extremely weak growth in December, with a score of 50.6 in Markit's purchasing manager's index. Anything above 50 for the business survey signals growth, but Europe's second- and third-largest economies are in negative territory.
The score was slightly above November's 50.1, but the fourth quarter overall was the worst for European industry since the third quarter of 2013, when the currency union was just emerging from a technical recession.
Germany's expected improvement was the only bright spot this month. Figures from Italy, Spain, and France all came in worse than expected.
Here's how that looks in context:
And here's the scorecard for the major economies:
France: 47.5 in December (48.4 in November, 47.9 expected)
Italy: 48.4 in December, 19-month low (49 in November, 49.6 expected)
Germany: 51.2 in December (49.5 in November, 51.2 expected)
Spain: 53.8 in December (54.7 in November, 54.9 expected)
Read more: http://www.businessinsider.com/europes-industry-just-had-a-terrible-quarter-2015-1#ixzz3NfBaOqiD
Read more: http://www.businessinsider.com/europes-industry-just-had-a-terrible-quarter-2015-1#ixzz3NfBMUneA
The eurozone's manufacturers hinted at extremely weak growth in December, with a score of 50.6 in Markit's purchasing manager's index. Anything above 50 for the business survey signals growth, but Europe's second- and third-largest economies are in negative territory.
The score was slightly above November's 50.1, but the fourth quarter overall was the worst for European industry since the third quarter of 2013, when the currency union was just emerging from a technical recession.
Germany's expected improvement was the only bright spot this month. Figures from Italy, Spain, and France all came in worse than expected.
Here's how that looks in context:
And here's the scorecard for the major economies:
France: 47.5 in December (48.4 in November, 47.9 expected)
Italy: 48.4 in December, 19-month low (49 in November, 49.6 expected)
Germany: 51.2 in December (49.5 in November, 51.2 expected)
Spain: 53.8 in December (54.7 in November, 54.9 expected)
Read more: http://www.businessinsider.com/europes-industry-just-had-a-terrible-quarter-2015-1#ixzz3NfBaOqiD
Read more: http://www.businessinsider.com/europes-industry-just-had-a-terrible-quarter-2015-1#ixzz3NfBMUneA
http://www.businessinsider.com/this-image-perfectly-captures-the-skyrocketing-fortunes-of-americas-super-rich-2015-1
The door just shut on 2014, so I wanted to take this last opportunity to fulfill my solemn obligation as an econ blogger and nominate my favorite graph of the year. No other image, in my opinion, so succinctly captures the skyrocketing fortunes of America's super-rich than the chart below, included in an October working paper by economists Emmanuel Saez, of the University of California Berkeley, and Gabriel Zucman, of the London School of Economics and Political Science (who you may know as some of Thomas Piketty's favorite academic bandmates).
In 2012, the top 0.1 percent of households lay claim to 22 percent of U.S. wealth, up from about 7 percent in 1979. Or, as I put it when I wrote about a rough draft of their findings in April, one-thousandth of the country now owns more than one-fifth of its wealth.
What does this graph tell us that we didn't already know? A lot. For a long while, there was something puzzling about our statistics on economic inequality. The data showed that the top 1 percent of earners were gobbling up a larger and larger share of U.S. income over the past three decades, yet had not vastly increased their share of U.S. wealth. How could that be? Well, it was possible that America's moderately rich were blowing away their paychecks trying to keep pace with the super rich. Also, it takes a while to accumulate assets, even if you're earning money hand-over-fist—so another answer was that the wealth gap might just be a lagging indicator of our economic polarization.
Read more: http://www.slate.com/blogs/moneybox/2014/12/31/best_graph_of_2014_the_rise_and_rise_of_top_0_1.html#ixzz3NfNi7Wcz
Read more: http://www.slate.com/blogs/moneybox/2014/12/31/best_graph_of_2014_the_rise_and_rise_of_top_0_1.html#ixzz3NfNX4967
The door just shut on 2014, so I wanted to take this last opportunity to fulfill my solemn obligation as an econ blogger and nominate my favorite graph of the year. No other image, in my opinion, so succinctly captures the skyrocketing fortunes of America's super-rich than the chart below, included in an October working paper by economists Emmanuel Saez, of the University of California Berkeley, and Gabriel Zucman, of the London School of Economics and Political Science (who you may know as some of Thomas Piketty's favorite academic bandmates).
In 2012, the top 0.1 percent of households lay claim to 22 percent of U.S. wealth, up from about 7 percent in 1979. Or, as I put it when I wrote about a rough draft of their findings in April, one-thousandth of the country now owns more than one-fifth of its wealth.
What does this graph tell us that we didn't already know? A lot. For a long while, there was something puzzling about our statistics on economic inequality. The data showed that the top 1 percent of earners were gobbling up a larger and larger share of U.S. income over the past three decades, yet had not vastly increased their share of U.S. wealth. How could that be? Well, it was possible that America's moderately rich were blowing away their paychecks trying to keep pace with the super rich. Also, it takes a while to accumulate assets, even if you're earning money hand-over-fist—so another answer was that the wealth gap might just be a lagging indicator of our economic polarization.
Read more: http://www.slate.com/blogs/moneybox/2014/12/31/best_graph_of_2014_the_rise_and_rise_of_top_0_1.html#ixzz3NfNi7Wcz
Read more: http://www.slate.com/blogs/moneybox/2014/12/31/best_graph_of_2014_the_rise_and_rise_of_top_0_1.html#ixzz3NfNX4967
http://www.nakedcapitalism.com/2014/11/after-messing-up-the-housing-market-the-smart-money-bails-out.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
In real estate, particularly in housing, national averages elegantly paper over the gritty details on the ground in specific metro areas and neighborhoods. When a new trend starts in some locations, it’s neutered by data from other locations. Blips and squiggles are averaged out of the picture. But by the time changes consistently show up in national averages, they’ve taken on serious weight on the ground. And now the “smart money” – smart because it has access to the Fed’s free moolah – is abandoning the housing market.
Wall Street money entered the housing market gingerly in 2010 and 2011, then piled helter-skelter into select metro areas over the next two years, grabbing vacant single-family homes out of foreclosure with the goal of first renting them out, then selling to yield-desperate investors and unsuspecting mutual-fund holders their latest toxic concoction: rent-backed structured securities that are even worse than the mortgage-backed structured securities that helped take down the financial system only a few years ago. It worked. Each wave of buying ratcheted up prices via the multiplier effect, not only in the neighborhood but beyond. It created instant and juicy paper gains on all prior purchases. In this way, the same companies, now mega-landlords, were able to push up the value of their own holdings with new waves of purchases. It was a wonderful game while it lasted. And it was funded with nearly free money the Fed graciously made available to the largest players. Housing Bubble 2 came into full bloom.
But these billions of dollars being pumped into the housing market had the effect of pushing prices out of reach for many potential homeowners who’d actually live in these homes. And first-time buyers, the bedrock of the housing market? Well, forget it. Their share of purchases dropped to 33%, the lowest since 1987. These inflated prices had another effect: the buy-to-rent business model collapsed. Rents were rising, but people are strung out, and so rents couldn’t rise fast enough to keep up with soaring home prices. At some point, depending on the dynamics of the metro area, the buy-to-rent equation stopped working. And now institutional investors have massively thrown in the towel:
Sales to institutional investors in the third quarter plunged to 4.3% of all sales, RealtyTrac reported. It was the lowest level since Q4 2010. The big unwind. This is how the “smart money,” coddled by the Fed and encouraged to do just these sorts of things, has reacted to the recent home prices that it so strenuously inflated: It bailed out.
This chart shows that the peak of institutional frenzy occurred in Q1 of 2013. After that, institutional investors – defined by RealtyTrac as entities that purchase at least 10 properties per year – started having second thoughts about the new price levels in some of the hottest markets. But other markets hadn’t caught up, and investors shifted their focus to them. The national averages initially covered up much of the drama on the ground.
Institutional investors are still active, but much less so on a national basis, and they “continue to gravitate toward markets where lower-end inventory is still available,” said RealtyTrac VP Daren Blomquist. And when they’ve pushed this lower-end inventory out of reach for the strung-out American middle class, they’ll throw in the towel there too.
While the hottest markets for institutional investors in the early stages of Housing Bubble 2 used to be Las Vegas and Phoenix, the money guns are now trained on markets that they originally neglected. These are the latest hotspots:
While Memphis was number one in the third quarter, its institutional investor share of 16.4% was actually down from 20.3% a year ago. But some metro areas had year-over-year increases, including most notably Miami from 6.3% to 8.6%, Tampa from 7.5% to 8.6%, and Knoxville from 4.5% to 7.0%. These ups and downs by metro area indicate how the “smart money” comes and goes in waves, focusing on specific markets to ratchet up prices that will provide them with instant paper gains. And not much later, they’ll collect a pile of cash from the securitization of rents.
They did exactly what the Fed in its genius wanted them to do. In the process, they turned homes into an asset class for Wall Street firms and further deflated the American Dream of homeownership The American Dream Going Bust – in One Chart.
But now what eventually had to happen has started to happen: as investors bailed out of the housing market due to prices that are too high for their business models, and as potential first-time buyers can’t get in due to those prices, sales have swooned for over a year. Initially, prices were still skyrocketing, but earlier this year, price increases started dissipating. And now, prices of new homes have turned south as Housing Bubble 2 pops in its full glory. Read… New Home Prices Plunge the Worst EVER (in One Ugly Chart)
By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.
In real estate, particularly in housing, national averages elegantly paper over the gritty details on the ground in specific metro areas and neighborhoods. When a new trend starts in some locations, it’s neutered by data from other locations. Blips and squiggles are averaged out of the picture. But by the time changes consistently show up in national averages, they’ve taken on serious weight on the ground. And now the “smart money” – smart because it has access to the Fed’s free moolah – is abandoning the housing market.
Wall Street money entered the housing market gingerly in 2010 and 2011, then piled helter-skelter into select metro areas over the next two years, grabbing vacant single-family homes out of foreclosure with the goal of first renting them out, then selling to yield-desperate investors and unsuspecting mutual-fund holders their latest toxic concoction: rent-backed structured securities that are even worse than the mortgage-backed structured securities that helped take down the financial system only a few years ago. It worked. Each wave of buying ratcheted up prices via the multiplier effect, not only in the neighborhood but beyond. It created instant and juicy paper gains on all prior purchases. In this way, the same companies, now mega-landlords, were able to push up the value of their own holdings with new waves of purchases. It was a wonderful game while it lasted. And it was funded with nearly free money the Fed graciously made available to the largest players. Housing Bubble 2 came into full bloom.
But these billions of dollars being pumped into the housing market had the effect of pushing prices out of reach for many potential homeowners who’d actually live in these homes. And first-time buyers, the bedrock of the housing market? Well, forget it. Their share of purchases dropped to 33%, the lowest since 1987. These inflated prices had another effect: the buy-to-rent business model collapsed. Rents were rising, but people are strung out, and so rents couldn’t rise fast enough to keep up with soaring home prices. At some point, depending on the dynamics of the metro area, the buy-to-rent equation stopped working. And now institutional investors have massively thrown in the towel:
Sales to institutional investors in the third quarter plunged to 4.3% of all sales, RealtyTrac reported. It was the lowest level since Q4 2010. The big unwind. This is how the “smart money,” coddled by the Fed and encouraged to do just these sorts of things, has reacted to the recent home prices that it so strenuously inflated: It bailed out.
This chart shows that the peak of institutional frenzy occurred in Q1 of 2013. After that, institutional investors – defined by RealtyTrac as entities that purchase at least 10 properties per year – started having second thoughts about the new price levels in some of the hottest markets. But other markets hadn’t caught up, and investors shifted their focus to them. The national averages initially covered up much of the drama on the ground.
Institutional investors are still active, but much less so on a national basis, and they “continue to gravitate toward markets where lower-end inventory is still available,” said RealtyTrac VP Daren Blomquist. And when they’ve pushed this lower-end inventory out of reach for the strung-out American middle class, they’ll throw in the towel there too.
While the hottest markets for institutional investors in the early stages of Housing Bubble 2 used to be Las Vegas and Phoenix, the money guns are now trained on markets that they originally neglected. These are the latest hotspots:
While Memphis was number one in the third quarter, its institutional investor share of 16.4% was actually down from 20.3% a year ago. But some metro areas had year-over-year increases, including most notably Miami from 6.3% to 8.6%, Tampa from 7.5% to 8.6%, and Knoxville from 4.5% to 7.0%. These ups and downs by metro area indicate how the “smart money” comes and goes in waves, focusing on specific markets to ratchet up prices that will provide them with instant paper gains. And not much later, they’ll collect a pile of cash from the securitization of rents.
They did exactly what the Fed in its genius wanted them to do. In the process, they turned homes into an asset class for Wall Street firms and further deflated the American Dream of homeownership The American Dream Going Bust – in One Chart.
But now what eventually had to happen has started to happen: as investors bailed out of the housing market due to prices that are too high for their business models, and as potential first-time buyers can’t get in due to those prices, sales have swooned for over a year. Initially, prices were still skyrocketing, but earlier this year, price increases started dissipating. And now, prices of new homes have turned south as Housing Bubble 2 pops in its full glory. Read… New Home Prices Plunge the Worst EVER (in One Ugly Chart)
