Saturday, January 11, 2014

Today's Links

1---Government Stimulus Lifts Japan, NYT
(Hmmm. Not really)

2---Equities stretched?, across the curve

Zero Hedge is carrying a piece of Goldman Sachs equity research which says that the S and P 500 is at fair value and that earnings growth is a prerequisite condition for additional equity market upside rather than multiple expansion. It is a worthwhile read.

3--Job's report: Big miss, sober look

LA Times: - Analysts were shocked by Friday's Labor Department report that the economy added just 74,000 net new jobs in December, about one-third what many had forecast. The bad weather in parts of the country last month apparently played a role, and there were unusually big payroll drops in the movie industry and at accounting firms.

Still, that doesn't fully explain why the hiring was so weak. The healthcare sector was flat, as was transportation and warehousing, for example. On the whole, job growth was not only the lowest in almost three years, it was incongruous with the latest string of positive economic data -- on exports, homebuilding, consumer spending -- indicating an economy and job market gathering steam.Is this a wake-up call on more weakness in the US labor markets or simply an aberration? Thoughts, comments?

4--Job creation crashes and burns, HW
Twice as many left the workforce than joined in 2013

5---Mortgage Boom Ends, WSJ

A sharp slowdown in mortgage refinancing is forcing banks to cut jobs, fight harder for a smaller pool of home-purchase loans and employ new tactics to drum up business.
The end of a three-decade period of falling mortgage rates has slammed the brakes on a huge wave of refinancing by U.S. households. The drop-off has deprived lenders of a key source of income at a time when the growth in loans for home purchases remains weak.
The Mortgage Bankers Association next week plans to cut its 2014 forecast for loan originations, which include loans for home purchases and refinancing. The current forecast of $1.2 trillion would represent the lowest level in 14 years. The trade group Wednesday reported that mortgage applications in the two weeks ending Jan. 3 touched a 13-year low

6---Bubble 90% Reflated in 1/3 of Major Metros, MReport

More than 35 percent of the more than 350 metro markets tracked in the National Association of Home Builders’ and First American’s Leading Markets Index are performing at 90 percent or higher of their pre-housing crisis norms, according to the latest Leading Markets Index.
Previously, NAHB and First American tracked markets based on their rate of growth in the Improving Markets Index. Instead, the Leading Markets Index compares each market to its pre-crisis norms in terms of current permits, prices, and employment.

Currently, 56 markets have returned to normal, up from 54 last month.
“More markets are slowly returning to normal levels and we expect this upward trend to continue as an improving economy and pent-up demand brings more home buyers back into the marketplace,” said Rick Judson, chairman of the NAHB.

7---Ability-to-repay rule: The good, the bad and the ugly, HW

Discover Home Loans economist: 10% to 12% of loans won’t qualify under QM

The driving force behind the rising danger of war is the deepening global crisis of capitalism. Five years after the 2008–09 financial meltdown, the world economy remains mired in slump and the policy of “quantitative easing” has set the stage for a new financial crisis. Global capitalism remains ensnared in the same fundamental contractions—between private ownership of the means of production and socially organised production; and between world economy and the outmoded nation state system—that fuelled the eruption of World War I.

The Obama administration’s “pivot” reflects the rise of Asia, above all China, as the prime cheap labour platform for the globalised production that has emerged over the past three decades. Those commentators who claim that the close international economic integration make war impossible ignore the fact that the same integration has greatly heightened geo-political rivalry.

The most explosive factor in world politics is US imperialism’s attempt to offset its relative decline through the use of military might. The US “pivot” is above all aimed at ensuring continued American dominance over the Asian economic powerhouse in order to dictate terms not only to China, but to its European and Asian rivals. If China is the chief target, it is not because China has become an imperialist power akin to 20th century Germany, but because its rapid economic expansion and demands for energy and raw materials are disrupting a long-established imperialist order dominated by the US.

In arguing for the overriding importance of the “pivot” for American imperialism, former US Secretary of State Hillary Clinton explained in Foreign Policy in 2011 that “the Asia-Pacific has become a key driver of global politics.” She insisted that “just as our post-World War II commitment to building a comprehensive and lasting transatlantic network of institutions has paid off many times over ... the time has come for the United States to make similar investments as a Pacific power.” In other words, the maintenance of US dominance in Asia is as imperative for American imperialism today as US interventions in post-war Europe, such as the Marshall Plan, were more than half a century ago.
American diplomacy and economic initiatives in Asia are underwritten by a rapid military build-up and restructuring of US forces and bases in preparation for a war against China.

10---Worst US jobs report in three years shatters claims of economic recovery, wsws

The fact that the Democrats have agreed to reduce jobless benefits under these conditions exposes the fraud of their rhetorical campaign against inequality. Between cutting food stamps, slashing jobless pay, and extending the “sequester” cuts, the White House is working in lockstep with the Republicans to further impoverish the working class....

According to a survey by the Economic Policy Institute, 5.99 million “missing workers” have dropped out of the labor force over the past five years for economic, not demographic, reasons. If these missing workers were counted as unemployed, the unemployment rate would be 10.2 percent.
The labor force participation rate fell to 62.8 percent in December from 63.0 percent the month before, hitting the lowest level since 1978. Over the past year, the labor force participation rate has dropped by 0.8 percentage points.

This is the depressed economic context in which the Obama administration and the Republicans allowed long-term unemployment benefits to expire for over a million people last month, a social crime that highlights the class war policy being carried out against working people.
In a statement posted Friday, Jason Furman, chairman of the president's Council of Economic Advisers, cynically called on Congress to extend federal benefits for the long-term unemployed, writing that “now is not the time to abruptly remove such a widely-used lifeline and make an unprecedented cut to support for the unemployed.”

In fact, it was the White House that guaranteed the expiration of long-term jobless benefits by not including an extension of the program in the budget deal worked out with congressional Republicans in December.

Now, the White House and congressional Democrats are attempting to pose as champions of the unemployed and opponents of social inequality, and improve their chances in this year’s midterm elections by blaming the Republicans for the cutoff. They are playing down the fact that their plan for a ten-month extension of long-term jobless benefits includes a sharp reduction in the duration of benefits as well as a cut in payments to unemployed workers who also receive disability benefits. The Democrats are also proposing to offset the $18 billion cost of their proposed extension of long-term unemployment benefits by keeping the automatic “sequester” cuts going for an additional year, until the end of 2024.

At the same time, congressional Democrats have reportedly agreed to cut $9 billion in food stamp benefits on top of the $5 billion cut that was implemented last November.

11--48% of Foreclosures Deeply Underwater, DS News

12---Owner-Occupant Demand Continues to Wither, DS News

13---Homebuyer Demand Plummets in December, DS News

Homebuyer demand experienced a sharp downturn as the book closed on 2013, according to Redfin’s numbers.
The company’s statistics show the number of customers requesting tours falling 14.8 percent month-over-month in December—more than double the 7.1 percent drop recorded at the same time last year.
Meanwhile, the number of Redfin customers making offers on homes fell 20.2 percent, a steeper decline than last year’s 16.7 percent drop.

“While it is normal for homebuyer activity to fall during the holiday season, the worsening shortage of homes for sale in December was likely a key factor in the sharper-than-expected drop in demand,” said Redfin analyst Ellen Haberle. “Across Redfin’s 22 markets, the number of new homes listed for sale dropped 27 percent from November to December, compared to 24 percent in 2012 and 19 percent in 2011.”

Meanwhile, Haberle added, rising mortgage rates have set off alarms for budget-minded homebuyers.
“Homebuyer anxiety is starting to rise,” reported Redfin agent Wayne Olson, who operates in Oregon. “Now, with mortgage rates rising, they are increasingly concerned about their budget. They’re also nervous about facing stiff competition in the coming months as more buyers enter the market.”

14---Mortgage Applications Fall as Rates Rise, MReport

15---1 in 5 homeowners drowning, HW

RealtyTrac released its U.S. Home Equity & Underwater Report for December 2013, which shows that 9.3 million U.S. residential properties were deeply underwater, or about 1 in 5 of every property with a mortgage.

“Deeply underwater” is defined as worth at least 25% less than the combined loans secured by the property.


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