Wednesday, March 29, 2017

Today's links

1---U.S. Home Prices Rise at Fastest Pace in 31 Months-- Job growth, demographics and limited supply drove 5.9% increase in 12 months ended in January, Case-Shiller says

Inventory manipulation and cheap money fuel latest housing bubble

U.S. home prices rose in January at their fastest rate since mid-2014, a trend that bodes well for sellers but could start to eat into demand as buyers get priced out of the market.

The S&P CoreLogic Case-Shiller Indices, which cover the entire nation, rose 5.9% in the 12 months ended in January, the strongest increase in 31 months, up from a 5.7% year-over-year increase in December....

Limited supply is a big driver of the price gains. Inventory in December hit its lowest level since 1999, when the National Association of Realtors started tracking the data. The number of homes for sale was down 7.1% in January compared with a year earlier, the Realtors said. It has since ticked up slightly, but inventory in February remained 6.4% below a year earlier...

Existing-home sales declined 3.7% in February, the National Association of Realtors said....

Even today, price growth in the hottest markets remains comparatively muted. Seattle led the way in January with a 11.3% home-price increase, while Portland reported a 9.7% year-over-year gain and Denver had a 9.2% annual increase.

Nonetheless, Mr. Berson said some markets, such as Denver, Dallas and parts of coastal California, are showing signs of overheating and may experience a correction...

Still, economists said mortgage rates remain near historic lows, which is keeping homes affordable even as prices climb. The rate for a 30-year mortgage averaged 4.23% last week, up from about 3.5% in November but still near the lowest level in decades

2--Are house prices really too high?, OC Housing

3--Solving the foreclosure crisis created the problems with lack of MLS inventory today

4--Trump administration ratchets up pressure on Venezuela

5--The American Opioid Epidemic

According to the Centers for Disease Control and Prevention, 91 Americans die every day from an opioid overdose. From 2000 to 2015, more than half a million people died from drug overdoses. Overdoses from prescription opioids are a driving force: since 1999, the amount of prescription opioids sold in the U.S. nearly quadrupled, and deaths from prescription opioids – drugs like oxycodone, hydrocodone, and methadone – have more than quadrupled. Some of the largest concentrations of overdose deaths were in Appalachia and the Southwest (Figure 1), with West Virginia, New Mexico, New Hampshire, Kentucky and Ohio being top-5 States. CNN has a historical overview of how opioids turned from “wonder drug” to abuse epidemics....

The opioid epidemic is also central to recent political events. Shannon Monnat at Penn State University examines the relationship between county-level rates of mortality from drugs, alcohol and suicide (2006-2014) and voting patterns in the 2016 Presidential election. She finds that Trump over-performed the most in counties with the highest drug, alcohol and suicide mortality rates, and that much of this relationship is accounted for by economic distress and the proportion of working-class residents. Many of the counties with high mortality rates where Trump did the best have also experienced significant employment losses in manufacturing over the past several decades.

Possible economic drivers of the opioid epidemics

Hollingsworth, Ruhm and Simon have a NBER paper on macroeconomic conditions and opioid abuse. They examine how deaths and emergency department (ED) visits related to use of opioids and other drugs vary with macroeconomic conditions. They find that as the county unemployment rate increases by one percentage point, the opioid death rate per 100,000 rises by 0.19 (3.6%) and the opioid overdose ED visit rate per 100,000 increases by 0.95 (7.0%). Macroeconomic shocks also increase the overall drug death rate, but this increase is driven by rising opioid deaths. The findings are primarily driven by adverse events among whites.

A previous study by Carpenter, McClellan and Rees found strong evidence that economic downturns lead to increases in substance use disorders involving hallucinogens and prescription pain relievers. These effects are robust to a variety of specification choices and are concentrated among prime-age white males with low educational attainment. Based on these findings, they conclude that the returns to spending on the treatment of substance use disorders are particularly high during economic downturns...

Smith refers to a recent paper by economist Alan Krueger, who looks at the decline in the labour force participation rate, and finds that about half of prime-age men who are not in the labour force (NLF) take pain medication on a daily basis, and in nearly two-thirds of cases they take prescription pain medication.

Colleen Rowley


In a report from the scene of the devastation, the Times described “a panorama of destruction in the neighborhood of Jadida so vast one resident compared the destruction to that of Hiroshima, Japan, where the United States dropped an atomic bomb in World War II. There was a charred arm, wrapped in a piece of red fabric, poking from the rubble; rescue workers in red jump suits who wore face masks to avoid the stench, some with rifles slung over their shoulders, searched the wreckage for bodies.”

The newspaper reported that “One of the survivors, Omar Adnan, stood near his destroyed home on Sunday and held up a white sheet of paper with 27 names of his extended family members, either dead or missing, written in blue ink.”...

9--Russia to enhance oil and gas industry cooperation with Iran — Putin

10-- Russian Gazprom to Begin Turkish Stream Offshore Pipe-Laying in 2nd Half of 2017

11--Russia Prepares For Split With International Banking System

12--US Has Interfered in More Elections Than Any Other Nation

13--Erdogan wants safe zones in North Syria

14--"The US missile defense system already has the potential to intercept Chinese and Russian ballistic missiles and poses a threat to the strategic nuclear forces of Russia and China, and these capabilities will only grow," Poznikhir said.

He also emphasized that Washington’s actions serve only to stimulate a new arms race and that Moscow has to respond with adequate countermeasures. "But this will not make the world safer," Poznikhir concluded.

Speaking to Radio Sputnik, retired Colonel Andrei Golovatyuk, a military observer and senior member of the Russian Officers Union, said that there is every reason to suppose that the US missile shield deployed to Europe may be directed against Russia.

"If we take a look back, the story began when the Americans imposed their missile defenses in Romania and Poland, citing the Iranian threat. But even after the Iranian nuclear issue had been resolved, the deployment did not stop. A Tomahawk missile launched from Romania can reach Moscow within an hour. Of course, Russia has concerns about the real target of those missiles," Golovatyuk said

15-- Internet privacy rules removed by Congress

16--Bond Buyers Return With a Vengeance

U.S. government bonds rally as traders become skeptical the Trump administration will boost the pace of U.S. growth

Government bonds are back in fashion, as the “Trump trade” on higher growth and inflation begins to unravel.
The yield on the benchmark 10-year Treasury note tumbled to 2.373% Monday from a two-year high of 2.609% on March 13 and 2.446% at the end of last year. Yields fall as bond prices rise...

Another big factor boosting Treasury holdings by central banks, analysts said, is the U.S. dollar’s break from its multiyear bull run. On Monday, the ICE dollar index, a measure of the dollar’s value against a number of its main rivals, hit the lowest since November. At the start of this year, it had jumped to the highest since 2002.

A weakening dollar has been pushing up the value of many emerging-market currencies including the Chinese yuan, which eases the burden of central banks in these countries to sell Treasurys to curtail local currencies’ weakness and capital outflows. The dollar was down about 2% against the yuan traded outside mainland China.
China’s central bank has been at the forefront in selling Treasurys after a large one-off devaluation of the Chinese yuan in August 2015 raised market expectations of a weakening yuan

17--Former Fed Official Warns Politics Poses Threat to Recovery

18--Rate Increases Should Be Done Gradually And Patiently, Fed’s Kaplan Says

Federal Reserve Bank of Dallas President Robert Kaplan said Monday he will likely support more interest rate increases as long as the economy continues to see job market gains and a continued move back toward a 2% inflation rise.
“We would be wise to move gradually and patiently” with increases in short-term interest rates, Mr. Kaplan said, while offering no specifics on the timing of future monetary policy actions.
The central banker said the economy continues to make progress in terms of the Fed’s official mandates of maximum growth and sustainable inflation. He added it is prudent for the central bank to keep policy supportive of growth, while at the same time moving it toward a level that is less stimulative of economic activity...

Mr. Kaplan’s remarks were broad-based and the official warned that the U.S. government budget outlook is bleak with some pain now obscured by low borrowing costs tied to low Fed-determined rates. But that environment won't persist forever and steps need to be taken to deal with debt and massive government spending obligations in an economy that is currently facing challenges to growing more swiftly.

19--Fed’s Evans: Three 2017 Rate Rises Plausible, Four Possible if Inflation Picks Up-- Chicago Fed leader says at the moment he doesn’t have the confidence for four rate increases this year

Federal Reserve Bank of Chicago President Charles Evans said the U.S. central bank could raise short-term interest rates four times this year if inflation picks up, but suggested three increases remain more plausible.
“At the moment, I don’t see the data, I don’t have the confidence” for four rate increases in 2017, he said at an event held in Madrid by the Global Interdependence Center. “If I thought that I was inclined to four rate hikes for 2017, I would presumably be seeing a much stronger lift in inflation.”
Mr. Evans said long-term inflation expectations in the U.S. are running below the central bank’s 2% target, even though short-term prices are nearing that objective.

Fed officials have signaled more rate increases are likely as the year progresses given the current vigor of the economy and their expectation that inflation will continue to tick back up toward the official target of 2%, amid more gains in hiring.

Mr. Evans was once on the side of those who are skeptical of the push to raise rates when inflation is under the central bank’s desired level. But lately Mr. Evans has said the Fed’s projected path of rate rises, which holds for about two more increases this year after the recent boost, looks appropriate to him.

A week ago, in a television interview, Mr. Evans said that “if the growth outlook solidifies and I have more confidence inflation is going up, three [rate increases] for the entire year is entirely reasonable. It could be less if there’s more inflation uncertainty or it could be more if things are stronger than that.”

The Chicago central banker is the first official to speak in a busy week for public commentary by Fed officials. Fed Chairwoman Janet Yellen is due to speak Tuesday, and many regional Fed bank leaders also will be weighing in.
Almost all central-bank commentary recently has been in support of rate rises, although the Minneapolis Fed chief Neel Kashkari has served as a voice of opposition, saying economic data suggest no urgency to act now

--1984 is now.

Here is an excerpt from the Passports page of the State Department of January 12, 2016:

The Department of Homeland Security (DHS) announced Friday that Real ID-compliant identification, such as a passport or a driver’s license from a Real ID-compliant state, will not be required to fly domestically until 2018.


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