Mish's Global Economic Trend Analysis |
- Five Housing Headwinds; Mortgage Originations Lowest Since 2010; Refinancible Loan Percentage Collapses; Payment Shock
- France Collective Depression; Growing Demand for Protection from Immigrants; Only 35% Think EU is Good for France
- Gold Manipulation: Is it Illegal? Risk Free? What About JP Morgan?
| Posted: 13 Jan 2014 09:01 PM PST Black Knight Financial Services, formerly LPS, released its latest Mortgage Monitor Forecast. Key Highlights
Here are some charts. Anecdotes in red are mine. Click on any chart for sharper image. Origination Volume Lowest Since 2010  Refi Activity Collapses with Rising Rates  2013 Best Vintage on Record  Home Equity Loans Up  Refinancible Loan Percentage Collapses  Payment Shock on HELOCs  Key Takeaways Performance on 2013 origination is at record highs because of record low interest rates coupled with rising home values. If home prices stagnate or rates continue to rise, this could be as good as it gets. The Fed is fighting major headwind battles. Five Headwinds
Some may dispute point number 2. Regardless, I think this is as good as it gets. If the economy does not slow (extremely doubtful in my opinion), rates will rise, further collapsing values. If the economy slows, demand for housing will slow with it. This may seem circular, and it is. But it all depends on where we are in the cycle. A "recovery" since 2009 is pretty long in the tooth, historically speaking. Even with the alleged recovery, originations are back to 2010 levels. What happens if the recovery falters? Values are already extremely distorted by Fed activity and all-cash purchases by the likes of Blackrock and equity funds. Home equity extraction is likely to decline as is the stock market. Those are my opinions, but they are backed up by valuation metrics and extreme sentiment including a bubble belief the Fed can do no wrong. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Posted: 13 Jan 2014 06:49 PM PST Les Echos reports "the distrust of politics has never been so high in France. This is one of the great lessons of the latest CEVIPOF annual poll". Distrust of politics is extremely high everywhere, but at least the US is not in a depression. Collective Depression Via translation, please consider The French fall into a "collective depression" The situation was already not good. And it gets worse again.Key Stats
That is one heck of a change in sentiment since president Francois Hollande was elected. Once again I repeat my thesis Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the "bail out" debt foisted on their country to be null and void. That person will be elected. Outrageous Predictions Points 1-3 in the above "key stats" speak volumes about Saxo Bank 10 Outrageous Predictions for 2014 - Steen Jakobsen. Here is Saxo Bank prediction number 2. Anti-EU alliance will become the largest group in parliament: Following the May elections, a pan-European, anti-EU alliance, whose members will include the UK Independence Party, euro-currency sceptic Alternative for Germany, the National Front in France and Party for Freedom in the Netherlands, will become the largest group in parliament with a majority of more than 275 seats.Unconventional Thinking Steen Jakobsen, chief economist at Saxo Bank, is not afraid to speak his mind about trading ideas and back them up with sound logic that many would say is "unconventional thinking". I am very pleased that he is speaking at this year's conference. Wine Country Conference II The second annual Wine Country Conference will be held May 1st & 2nd, 2014. We have an exciting lineup of speakers for this year's conference.
In addition, we expect confirmation from a number of other highly respected fund managers and speakers. This year's event is two days and will include additional "break-out" groups. For speaker bios, please check out Wine Country Conference Speakers. This Year's Cause: Autism $100,000 of the money raised last year came from a generous matching grant from the John P. Hussman Foundation. Some of us in the industry who have done well are making an effort to make a difference. John Hussman is at the very top of that list. One of John's kids has severe autism. This year, all net proceeds will go to support autism programs. Conference Details For further details about the 2014 conference, please see Wine Country Conference May 1st & 2nd, 2014 Nothing Like It! This event is not just another "come and hear someone talk" kind of thing. Attendees and their significant others can expect an educational, fun, and relaxed time. Last conference, we arranged wine tours. They were a big hit. We will do so again. One of the wine estates we visited had a Bocce Ball court. On a couple of miracle shots, I won both games I played. Stay an extra day and golf or travel. I did. The conference hotel is a fun place in and of itself. Unlike many other conferences, you will have easy access to speakers. Want to chat with me, Steen, John, or anyone else at the conference? You will have an easy chance. Not only do we have an excellent lineup of speakers, you will have an opportunity to meet with them, have intimate discussions on important investment topics, with a lot of fun on the side, including wine tours and great wine. There's nothing like it in the investment business. And your money goes to a great cause! What can be better? Please Register Now!  Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Gold Manipulation: Is it Illegal? Risk Free? What About JP Morgan? Posted: 13 Jan 2014 11:29 AM PST In the wake of the Gold Flash Crash six days ago in which prices suddenly plunged then recovered, numerous people have been wondering "who is the culprit". Will the Real Manipulator Please Stand Up? At the top of the heap in demanding an investigation is a guest post article on ZeroHedge, written by Russ Winter, Open Letter to Gold Investors: Will the Real Manipulator Please Stand Up. Winter maintains "The real debate should center on who is really conducting this gold attack activity. Financial journalists should be looking at this as well." I am amused by this kind of waste of time, but even more amused by the details that Winter disclosed. The Commodity Futures Trading Commission's most recent banker participation report on positions as of Dec. 1 shows the U.S. banks as four participants. They are not identified by name, but historically and deductively, JP Morgan is the largest and most dominant participant. Over the last quarter this report has shown that the four big banks have continued to build a net-long position, now at 57,408 futures contracts, or 5.741 million ounces."When Shorts Cover For years we heard from GATA and others "JPMorgan and the gold shorts will be blown out of the water and eventually forced to cover their shorts at higher and higher prices. Gold will go to the moon". What happened? Somewhere along the line, JPMorgan became net long as the price of gold plunged. Now we are in search of a different elusive force allegedly suppressing the price of gold. It's always someone. And the same ridiculous articles appear over and over, with fingers occasionally changing the direction of the "big point". What Happened? Clearly the JPMorgan conspiracy crowd was wrong about what would happen when JPMorgan covered. And with JPMorgan now net long where are the cries for JPMorgan to dump its now-concentrated net-long hoard of gold? Futures Math Market Makers (of which JPMorgan is one of the biggest), must take the opposite side of the trades of others. When big players are net long gold futures, then JPMorgan will be short. If someone else is massively short, then JPMorgan or another market maker will be long. In the futures game for every short future someone else is long. That is a simple mathematical statement of fact. Futures Math Corollary If market makers must (and they must take the other side of positions) then position statements and market-maker analysis as to who is long or short cannot and do not offer proof of manipulation. Yes, it is that simple. I propose the big players don't care one iota what direction something is headed. They are happy to make a profit in any direction. Finally, it is realistic to assume the entire time JPMorgan was net short, that it was hedged in some fashion (otherwise it would have been blown out of the water when gold hit $1900). Manipulation Risk Does manipulation occur? I am sure it does, in both directions. Is it illegal? I am not so sure. It depends on what one means by "manipulation". I asked my friend Pater Tenebrarum at the Acting Man Blog for his thoughts on the subject. Via email he replied ... Are there occasional attempts to influence prices in the short term by 'bombing' the market during periods of low volume? Yes, it happens.Illegal? In a followup question on the legality of dumping or buying contracts at illiquid times Pater responded ... It may be a slightly dubious practice, but it is definitely not illegal. The people doing it take a pretty big risk actually.GATA Hype There is no credible evidence of a constant force by any big players to suppress the price of gold. Every time I make such a statement I get sent a mass of GATA-hype, none of which amounts to proof of anything. Invariably, the alleged proof is nothing more than GATA allegations trumped up as facts. Looking for GATA hype? You can find it here: Where are the insider admissions about gold? Right here Looking for a detailed point-by-point rebuttal? You can find it here: Systemic Distrust and GATA Hype Once again, I am NOT saying manipulations Don't occur. Nor do I suggest JPMorgan is lily-white. Instead I repeat something I have said all along "There is no reason for the banks involved to continuously and purposely want to suppress the price of gold. Nor is there any real evidence they do so." And humorously, JPMorgan is now net long! Gold Fundamentals I suggest you throw these manipulation allegations in the ashcan where they belong and focus on something more important such as the fundamental driver for the price of gold. The fundamental case for owning gold has not changed. For details, please see Plague of Gold Bears Now Say "Gold Unsafe at Any Price"; What's the Real Long-Term Driver for Gold? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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