Source:
http://creditbubblebulletin.blogspot.com/2021/10/weekly-commentary-losing-control.html
Credit Bubble Bulletin
by Doug Noland
My edited easy to read summary follows.
Ye Editor
For the Week Ending October 29, 2021:
FINANCIAL DATA:
S&P500 rose 1.3% (up 22.6% y-t-d)
Dow Industrials added 0.4% (up 17.0%)
Utilities slipped 0.3% (up 7.1%)
Banks dropped 2.8% (up 41.6%)
Transports gained 0.9% (up 27.2%)
S&P 400 Midcaps were little changed (up 21.1%)
Small cap Russell 2000 increased 0.3% (up 16.3%)
Nasdaq100 advanced 3.2% (up 23.0%)
Semiconductors rose 2.4% (up 23.5%)
Biotechs gained 1.1% (down 1.1%).
With gold bullion down $9,
the HUI gold stock index sank 4.2%
(down 16.9%).
U.K.'s FTSE added 0.5%
(up 12.0% y-t-d).
Japan's Nikkei increased 0.3%
(up 5.3% y-t-d)
France's CAC40 rose 1.4%
(up 23.0%).
German DAX gained 0.9%
(up 14.4%).
Spain's IBEX 35 rallied 1.7%
(up 12.2%).
Italy's FTSE MIB rose 1.1%
(up 20.9%).
Brazil's Bovespa dropped 2.6%
(down 13.0%)
Mexico's Bolsa fell 1.1%
(up 16.4%).
South Korea's Kospi declined 1.2%
(up 3.4%).
India's Sensex sank 2.5%
(up 24.2%).
China's Shanghai fell 1.0%
(up 2.1%).
Russia's MICEX slumped 1.1%
(up 26.2%).
US BONDS:
Three-month Treasury bill rates
ended the week at 0.0475%.
Two-year government yields
rose four bps to 0.50% (up 38bps y-t-d).
Five-year T-note yields
dipped one basis point to 1.19% (up 82bps).
Ten-year Treasury yields
fell eight bps to 1.56% (up 64bps).
Long bond yields
sank 14 bps to 1.93% (up 29bps).
Benchmark Fannie Mae MBS yields
dropped 11 bps to 2.00% (up 66bps).
Federal Reserve Credit last week
expanded $21bn to a record $8.538 TN.
Over the past 111 weeks,
Fed Credit expanded $4.812 TN, or 129%.
US MORTGAGES:
Freddie Mac 30-year fixed mortgage rates
rose another five bps to a six-month high 3.14%
(up 33bps y-o-y).
Fifteen-year rates
gained four bps to 2.37%
(up 5bps).
Five-year hybrid ARM rates
added two bps to 2.56%
(down 32bps).
Jumbo mortgage 30-year fixed rates
down five bps to 3.13%
(up 10bps).
COMMODITIES:
October 26
– Bloomberg
(Marcy Nicholson and
Jen Skerritt):
“On Tuesday, lumber futures were trading around $735.70 per 1,000 board feet in Chicago, more than double the pre-pandemic five-year average around $356.”
Bloomberg Commodities Index slipped 0.4%
(up 32.4% y-t-d).
Spot Gold declined $9 to $1,783
(down 6.1%).
Silver fell 1.7% to $23.90
(down 9.5%).
WTI crude oil slipped 19 cents to $83.57
(up 72%).
Gasoline dropped 4.5%
(up 68%)
Natural Gas rallied 2.8%
(up 114%).
Copper dropped 2.9%
(up 24%).
Wheat rose 2.2%
(up 21%)
Corn surged 5.6%
(up 17%).
Bitcoin gained $1,790,
or 3.0%, this week
to $62,411
(up 115%).
WEEKLY COMMENTARY:
Tesla’s market capitalization surpassed $1.1 TN this week, the first junk-rated company with a trillion-dollar valuation. Now the richest individual in the world, Elon Musk’s wealth this week reached a staggering $300 billion. Microsoft retook the top spot as the world’s most valuable company.
October 27
– Financial Times
(Matthew Rocco, Kate Duguid
and Tommy Stubbington):
“The Bank of Canada surprised investors by abruptly ending its bond-buying programme on Wednesday and pulling forward its expected timeline for interest rate rises, triggering a heavy sell-off in Canadian government debt. The announcement puts the BoC at the head of a growing number of central banks that have responded to surging inflation by signalling a shift towards tighter monetary policy… The main forces pushing up prices — higher energy prices and pandemic-related supply bottlenecks — now appear to be stronger and more persistent than expected,’ the bank said… ‘Higher-than-expected inflation prints and the expected rise in prices from consumers and businesses has put the fear of God into them,’ said Karl Schamotta, chief market strategist at Cambridge Global Payments. ‘I don’t think anyone was expecting this.’”
Meanwhile, Brazilian 10-year yields traded Thursday
to a near five-year high 12.43%
NEWS FROM LAST WEEK:
Coronavirus Watch:
October 25
http://creditbubblebulletin.blogspot.com/2021/10/weekly-commentary-losing-control.html
Credit Bubble Bulletin
by Doug Noland
My edited easy to read summary follows.
Ye Editor
For the Week Ending October 29, 2021:
FINANCIAL DATA:
S&P500 rose 1.3% (up 22.6% y-t-d)
Dow Industrials added 0.4% (up 17.0%)
Utilities slipped 0.3% (up 7.1%)
Banks dropped 2.8% (up 41.6%)
Transports gained 0.9% (up 27.2%)
S&P 400 Midcaps were little changed (up 21.1%)
Small cap Russell 2000 increased 0.3% (up 16.3%)
Nasdaq100 advanced 3.2% (up 23.0%)
Semiconductors rose 2.4% (up 23.5%)
Biotechs gained 1.1% (down 1.1%).
With gold bullion down $9,
the HUI gold stock index sank 4.2%
(down 16.9%).
U.K.'s FTSE added 0.5%
(up 12.0% y-t-d).
Japan's Nikkei increased 0.3%
(up 5.3% y-t-d)
France's CAC40 rose 1.4%
(up 23.0%).
German DAX gained 0.9%
(up 14.4%).
Spain's IBEX 35 rallied 1.7%
(up 12.2%).
Italy's FTSE MIB rose 1.1%
(up 20.9%).
Brazil's Bovespa dropped 2.6%
(down 13.0%)
Mexico's Bolsa fell 1.1%
(up 16.4%).
South Korea's Kospi declined 1.2%
(up 3.4%).
India's Sensex sank 2.5%
(up 24.2%).
China's Shanghai fell 1.0%
(up 2.1%).
Russia's MICEX slumped 1.1%
(up 26.2%).
US BONDS:
Three-month Treasury bill rates
ended the week at 0.0475%.
Two-year government yields
rose four bps to 0.50% (up 38bps y-t-d).
Five-year T-note yields
dipped one basis point to 1.19% (up 82bps).
Ten-year Treasury yields
fell eight bps to 1.56% (up 64bps).
Long bond yields
sank 14 bps to 1.93% (up 29bps).
Benchmark Fannie Mae MBS yields
dropped 11 bps to 2.00% (up 66bps).
Federal Reserve Credit last week
expanded $21bn to a record $8.538 TN.
Over the past 111 weeks,
Fed Credit expanded $4.812 TN, or 129%.
US MORTGAGES:
Freddie Mac 30-year fixed mortgage rates
rose another five bps to a six-month high 3.14%
(up 33bps y-o-y).
Fifteen-year rates
gained four bps to 2.37%
(up 5bps).
Five-year hybrid ARM rates
added two bps to 2.56%
(down 32bps).
Jumbo mortgage 30-year fixed rates
down five bps to 3.13%
(up 10bps).
COMMODITIES:
October 26
– Bloomberg
(Marcy Nicholson and
Jen Skerritt):
“On Tuesday, lumber futures were trading around $735.70 per 1,000 board feet in Chicago, more than double the pre-pandemic five-year average around $356.”
Bloomberg Commodities Index slipped 0.4%
(up 32.4% y-t-d).
Spot Gold declined $9 to $1,783
(down 6.1%).
Silver fell 1.7% to $23.90
(down 9.5%).
WTI crude oil slipped 19 cents to $83.57
(up 72%).
Gasoline dropped 4.5%
(up 68%)
Natural Gas rallied 2.8%
(up 114%).
Copper dropped 2.9%
(up 24%).
Wheat rose 2.2%
(up 21%)
Corn surged 5.6%
(up 17%).
Bitcoin gained $1,790,
or 3.0%, this week
to $62,411
(up 115%).
WEEKLY COMMENTARY:
Tesla’s market capitalization surpassed $1.1 TN this week, the first junk-rated company with a trillion-dollar valuation. Now the richest individual in the world, Elon Musk’s wealth this week reached a staggering $300 billion. Microsoft retook the top spot as the world’s most valuable company.
October 27
– Financial Times
(Matthew Rocco, Kate Duguid
and Tommy Stubbington):
“The Bank of Canada surprised investors by abruptly ending its bond-buying programme on Wednesday and pulling forward its expected timeline for interest rate rises, triggering a heavy sell-off in Canadian government debt. The announcement puts the BoC at the head of a growing number of central banks that have responded to surging inflation by signalling a shift towards tighter monetary policy… The main forces pushing up prices — higher energy prices and pandemic-related supply bottlenecks — now appear to be stronger and more persistent than expected,’ the bank said… ‘Higher-than-expected inflation prints and the expected rise in prices from consumers and businesses has put the fear of God into them,’ said Karl Schamotta, chief market strategist at Cambridge Global Payments. ‘I don’t think anyone was expecting this.’”
Meanwhile, Brazilian 10-year yields traded Thursday
to a near five-year high 12.43%
NEWS FROM LAST WEEK:
Coronavirus Watch:
October 25
– Associated Press
(Lindsay Whitehurst):
“The U.S. is averaging about 73,000 new cases per day, dramatically lower than the 173,000 recorded on Sept. 13. And the number of Americans in the hospital with COVID-19 has plummeted by about half to around 47,000 since early September.”
Inflation Watch:
October 29
– Bloomberg
(Reade Pickert):
“U.S. employment costs rose at the fastest pace on record in the third quarter as companies across a variety of sectors raised wages against a backdrop of labor shortages. The employment cost index, a broad gauge of wages and benefits, rose 1.3% from the prior quarter… The gauge increased 3.7% from a year earlier. Compensation gains were broad-based across sectors, underscoring how a tight labor market has put pressure on many different types of firms to raise wages. Wages and salaries for civilian workers also rose at a record pace, surging 1.5% in the quarter.”
October 25
– CNN
(Anneken Tappe):
“The National Association of Business Economics (NABE) found that nearly half — 47% — of respondents to its Business Conditions Survey reported a shortage of skilled workers... That's up from 32% reporting shortages in the second quarter of the year, which already was too high for comfort"
October 25
– Wall Street Journal
(Ryan Dezember):
“Propane prices haven’t been so high heading into winter in a decade, which is bad news for the millions of rural Americans who rely on the fuel to stay warm. At $1.41 a gallon at the Mont Belvieu trading hub in Texas, on-the-spot prices are about triple those of the past two Octobers. Of the two main U.S. propane futures contracts, one hit a high earlier this month and the other doesn’t have far to climb to eclipse the record it set during the blizzard of 2014. The average residential price tracked by the U.S. Energy Information Administration has jumped by 50% from a year ago, to $2.69 a gallon."
October 25
– Wall Street Journal
(Jinjoo Lee):
“In Europe, where natural gas is almost six times as expensive as it was a year earlier, fertilizer companies—including Norwegian company Yara, as well as BASF and Borealis—have announced curtailments as a result of expensive gas. Fertilizer production in the region has dropped as much as 40%... Natural gas can account for up to 85% of the production cost of ammonia, a key ingredient for many fertilizers…”
October 26
– New York Times
(Matt Phillips):
“A key measure of the bond market’s expectations for inflation over the next five years — known as a break even — rose to a new high Friday, briefly topping 3%. That meant investors expected inflation to average about 3% a year for the next five years, far higher than any time in the decade before the pandemic hit. Measures of inflation expectations over longer periods, such as over the next 10 years, also rose to multiyear highs.”
October 24
– Bloomberg
(Jen Skerritt and
Kim Chipman):
“Pasta is poised to become the latest staple consumers are forced to pay more for after drought scorched North American production of durum wheat, the high-protein grain that’s milled into semolina flour for spaghetti. Output of durum in Canada, a top exporter, shrunk by nearly half this year and the U.S. harvest is the smallest in 60 years. Durum prices in the western Canadian province of Alberta have risen more than 60% since August and are currently trading near the highest since at least 2015…”
Biden Administration Watch:
October 26
– CNBC
(Christina Wilkie and
Thomas Franck):
“New details of a Democratic plan to enact a 15% minimum corporate tax on declared income of large corporations were released… by three senators, Elizabeth Warren, D-Mass., Angus King, I-Maine, and Senate Finance Committee Chair Ron Wyden, D-Ore. The senators will propose the tax be included as a source of revenue to help fund the massive ‘Build Back Better’ bill that Democrats are currently negotiating.”
U.S. Bubble Watch:
October 22
– Associated Press
(Martin Crutsinger):
“The U.S. budget deficit totaled $2.77 trillion for 2021, the second highest on record but an improvement from the all-time high of $3.13 trillion reached in 2020 … As a percentage of the overall economy, as measured by the gross domestic product, the 2021 deficit represents 12.4% of GDP, down from the 2020 deficit, which was 15% of GDP.”
October 28
– CNBC
(Jeff Cox):
“The U.S. economy grew at a 2% rate in the third quarter, its slowest gain of the pandemic-era recovery, as supply chain issues and a marked deceleration in consumer spending stunted the expansion… Gross domestic product… grew at a 2.0% annualized pace in the third quarter… Economists… had been looking for a 2.8% reading. That marked the slowest GDP gain since the 31.2% plunge in the second quarter of 2020…”
October 26
– Wall Street Journal
(Xavier Fontdegloria):
“Consumer confidence in the U.S. increased in October following three months of declines as concerns over the spread of the Covid-19 Delta variant faded amid falling case counts. The consumer confidence index increased to 113.8 in October from a revised 109.8 in September, according to… The Conference Board... The indicator came in above the 108.0 forecast from economists… Short-term inflation concerns rose to a 13-year high, but the impact on confidence was muted, Ms. Franco said.”
October 26
– CNBC
(Diana Olick):
“Home prices rose 19.8% year over year in August, which was the same as the previous month, according to the S&P CoreLogic Case-Shiller Indices. That is the first time the annual gain hasn’t increased since early 2020. The 10-city composite annual increase was 18.6%, down from 19.2% in July. The 20-city composite rose 19.7% year over year, down from 20% in the previous month. Prices in all cities covered are at an all-time high… Phoenix led the way with a 33.3% year-over-year price increase, followed by San Diego with a 26.2% rise and Tampa with a 25.9% increase.”
October 26
– Reuters:
“Sales of new U.S. single-family homes surged to a six-month high in September, but higher house price are making homeownership less affordable for some first-time buyers. New home sales jumped 14.0% to a seasonally adjusted annual rate of 800,000 units last month… August's sales pace was revised down to 702,000 units from the previously reported 740,000 units… The median new house price accelerated 18.7% in September to $408,800 from a year ago. Sales continued to be concentrated in the $200,000-$749,000 price range. Sales in the under-$200,000 price bracket, the sought-after segment of the market, accounted for only 2% of transactions. About 74% of homes sold last month were either under construction or yet to be built.”
October 28
– Wall Street Journal
(E.B. Solomont):
“Fashion mogul Serge Azria has sold an oceanfront estate in Malibu, Calif., for $177 million. The deal sets a record in the state of California, and it is the second-highest priced home sold in the U.S., following billionaire Ken Griffin’s roughly $238 million purchase of a New York City penthouse in 2019. Previously, the highest-priced deal in California was set by Amazon founder Jeff Bezos, who purchased the Warner Estate from media mogul David Geffen for $165 million last year… Located in the Paradise Cove section of Malibu, the property spans about 7 acres... Mr. Azria and his wife, Florence Azria, bought it for $41 million in 2013…”
China Watch:
October 28
– Reuters
(Clare Jim and
Andrew Galbraith):
“Chinese developers took a drubbing on Thursday, with shares and bonds falling, creditors seizing assets and rating agencies distributing more downgrades, ahead of a final debt payment deadline for China Evergrande Group on Friday. Shares of Kaisa Group were hardest-hit… after rating agency downgrades that highlighted the company's limited access to funding and significant U.S. dollar debt obligations.”
October 26
– Bloomberg:
“China’s economy is showing signs of a further slowdown with car and housing sales dropping again this month even as exports continue their strong performance and the government seeks to allay concerns over growth. That’s the outlook from Bloomberg’s aggregate index of eight early indicators for October… Real-estate sales dropped again, as buyers hold back due to concerns about which companies will survive the current debt crisis facing China Evergrande Group and other developers. Car sales also fell in the first three weeks of the month, continuing the slump of the past five months.”
October 28
– Wall Street Journal
(Frances Yoon):
“Junk-bond issuance by China’s riskier companies has nearly ground to a halt, creating more challenges for the country’s real-estate developers that need to roll over more than $40 billion in dollar debt by the end of next year. Sales of new junk bonds in dollars by Chinese borrowers this month have fallen by about 90% from their five-year average to $352 million… With investors rattled by China Evergrande Group’s difficulties and a string of defaults by smaller property developers, Chinese junk bonds in dollars were yielding about 21.6% as of Wednesday…”
October 29
– Bloomberg
(Ameya Karve):
“China’s junk dollar bonds had their steepest two-month decline in a decade as stress builds in the battered real estate sector and defaults mount to a record. Average prices of the notes plunged more than 13 cents on the dollar in September-October, the worst two-month decline since the period ended September 2011…”
October 27
– Bloomberg:
“Vegetable prices have soared in China in recent weeks, costing more than meat in some cases, and creating another headache for consumers already hit by power shortages and strict virus curbs. Wholesale vegetable prices surged 28% in the four weeks through Oct. 22, and is now at the highest level since February… Heavy rainfall in major growing regions this year damaged crops and soaring coal prices has also made greenhouse farming more expensive. Cauliflower and broccoli costs about 50% more, while spinach surged 157% in the four-week period.”
October 29
– Bloomberg:
“Investors in China are faced with the highest number of stocks falling on their first trading day in over nine years this week, shaking a long-held faith in fat gains on debuts as regulators step up reforms of initial public offerings.”
Global Bubble Watch:
October 29
– Wall Street Journal
(Stephanie Yang and
Jiyoung Sohn):
“Almost a year into a global chip shortage, the problems are increasing for many customers as delays get even longer and sales are lost. Manuel Schoenfeld placed an order in May for transmission chips for the utility-monitoring devices made by his… company PowerX. He was told the chips would arrive by summer, then fall, then winter and now doesn’t expect to get them until May 2022. ‘This is far from over,’ Mr. Schoenfeld said. The global semiconductor shortage is worsening, with wait times lengthening, buyers hoarding products and the potential end looking less likely to materialize by next year. Demand didn’t moderate as expected. Supply routes got clogged. Unpredictable production hiccups slammed factories already running at full capacity.”
Europe Watch:
October 29
– Bloomberg
(Alexander Weber and
James Hirai):
“Euro-area inflation accelerated more than expected to breach 4% for only the second time ever, adding to the European Central Bank’s challenge in battling increasingly aggressive market bets for interest-rate hikes. Consumer prices rose 4.1% in October, compared with the median of economist estimates at 3.7%... A measure stripping out volatile components such as food and energy climbed to 2.1%, a rate not seen in nearly two decades.”
Environmental Watch:
October 24
– Bloomberg:
“A weather phenomenon that typically delivers harsher winters is on the way and expected to add to Asia’s energy crisis. The La Nina pattern, which forms when equatorial trade winds strengthen to bring colder, deep water up from the bottom of the sea, has emerged in the Pacific. That typically spells below-normal temperatures in the northern hemisphere and has prompted regional weather agencies to issue warnings about a frigid winter.”
“The U.S. is averaging about 73,000 new cases per day, dramatically lower than the 173,000 recorded on Sept. 13. And the number of Americans in the hospital with COVID-19 has plummeted by about half to around 47,000 since early September.”
Inflation Watch:
October 29
– Bloomberg
(Reade Pickert):
“U.S. employment costs rose at the fastest pace on record in the third quarter as companies across a variety of sectors raised wages against a backdrop of labor shortages. The employment cost index, a broad gauge of wages and benefits, rose 1.3% from the prior quarter… The gauge increased 3.7% from a year earlier. Compensation gains were broad-based across sectors, underscoring how a tight labor market has put pressure on many different types of firms to raise wages. Wages and salaries for civilian workers also rose at a record pace, surging 1.5% in the quarter.”
October 25
– CNN
(Anneken Tappe):
“The National Association of Business Economics (NABE) found that nearly half — 47% — of respondents to its Business Conditions Survey reported a shortage of skilled workers... That's up from 32% reporting shortages in the second quarter of the year, which already was too high for comfort"
October 25
– Wall Street Journal
(Ryan Dezember):
“Propane prices haven’t been so high heading into winter in a decade, which is bad news for the millions of rural Americans who rely on the fuel to stay warm. At $1.41 a gallon at the Mont Belvieu trading hub in Texas, on-the-spot prices are about triple those of the past two Octobers. Of the two main U.S. propane futures contracts, one hit a high earlier this month and the other doesn’t have far to climb to eclipse the record it set during the blizzard of 2014. The average residential price tracked by the U.S. Energy Information Administration has jumped by 50% from a year ago, to $2.69 a gallon."
October 25
– Wall Street Journal
(Jinjoo Lee):
“In Europe, where natural gas is almost six times as expensive as it was a year earlier, fertilizer companies—including Norwegian company Yara, as well as BASF and Borealis—have announced curtailments as a result of expensive gas. Fertilizer production in the region has dropped as much as 40%... Natural gas can account for up to 85% of the production cost of ammonia, a key ingredient for many fertilizers…”
October 26
– New York Times
(Matt Phillips):
“A key measure of the bond market’s expectations for inflation over the next five years — known as a break even — rose to a new high Friday, briefly topping 3%. That meant investors expected inflation to average about 3% a year for the next five years, far higher than any time in the decade before the pandemic hit. Measures of inflation expectations over longer periods, such as over the next 10 years, also rose to multiyear highs.”
October 24
– Bloomberg
(Jen Skerritt and
Kim Chipman):
“Pasta is poised to become the latest staple consumers are forced to pay more for after drought scorched North American production of durum wheat, the high-protein grain that’s milled into semolina flour for spaghetti. Output of durum in Canada, a top exporter, shrunk by nearly half this year and the U.S. harvest is the smallest in 60 years. Durum prices in the western Canadian province of Alberta have risen more than 60% since August and are currently trading near the highest since at least 2015…”
Biden Administration Watch:
October 26
– CNBC
(Christina Wilkie and
Thomas Franck):
“New details of a Democratic plan to enact a 15% minimum corporate tax on declared income of large corporations were released… by three senators, Elizabeth Warren, D-Mass., Angus King, I-Maine, and Senate Finance Committee Chair Ron Wyden, D-Ore. The senators will propose the tax be included as a source of revenue to help fund the massive ‘Build Back Better’ bill that Democrats are currently negotiating.”
U.S. Bubble Watch:
October 22
– Associated Press
(Martin Crutsinger):
“The U.S. budget deficit totaled $2.77 trillion for 2021, the second highest on record but an improvement from the all-time high of $3.13 trillion reached in 2020 … As a percentage of the overall economy, as measured by the gross domestic product, the 2021 deficit represents 12.4% of GDP, down from the 2020 deficit, which was 15% of GDP.”
October 28
– CNBC
(Jeff Cox):
“The U.S. economy grew at a 2% rate in the third quarter, its slowest gain of the pandemic-era recovery, as supply chain issues and a marked deceleration in consumer spending stunted the expansion… Gross domestic product… grew at a 2.0% annualized pace in the third quarter… Economists… had been looking for a 2.8% reading. That marked the slowest GDP gain since the 31.2% plunge in the second quarter of 2020…”
October 26
– Wall Street Journal
(Xavier Fontdegloria):
“Consumer confidence in the U.S. increased in October following three months of declines as concerns over the spread of the Covid-19 Delta variant faded amid falling case counts. The consumer confidence index increased to 113.8 in October from a revised 109.8 in September, according to… The Conference Board... The indicator came in above the 108.0 forecast from economists… Short-term inflation concerns rose to a 13-year high, but the impact on confidence was muted, Ms. Franco said.”
October 26
– CNBC
(Diana Olick):
“Home prices rose 19.8% year over year in August, which was the same as the previous month, according to the S&P CoreLogic Case-Shiller Indices. That is the first time the annual gain hasn’t increased since early 2020. The 10-city composite annual increase was 18.6%, down from 19.2% in July. The 20-city composite rose 19.7% year over year, down from 20% in the previous month. Prices in all cities covered are at an all-time high… Phoenix led the way with a 33.3% year-over-year price increase, followed by San Diego with a 26.2% rise and Tampa with a 25.9% increase.”
October 26
– Reuters:
“Sales of new U.S. single-family homes surged to a six-month high in September, but higher house price are making homeownership less affordable for some first-time buyers. New home sales jumped 14.0% to a seasonally adjusted annual rate of 800,000 units last month… August's sales pace was revised down to 702,000 units from the previously reported 740,000 units… The median new house price accelerated 18.7% in September to $408,800 from a year ago. Sales continued to be concentrated in the $200,000-$749,000 price range. Sales in the under-$200,000 price bracket, the sought-after segment of the market, accounted for only 2% of transactions. About 74% of homes sold last month were either under construction or yet to be built.”
October 28
– Wall Street Journal
(E.B. Solomont):
“Fashion mogul Serge Azria has sold an oceanfront estate in Malibu, Calif., for $177 million. The deal sets a record in the state of California, and it is the second-highest priced home sold in the U.S., following billionaire Ken Griffin’s roughly $238 million purchase of a New York City penthouse in 2019. Previously, the highest-priced deal in California was set by Amazon founder Jeff Bezos, who purchased the Warner Estate from media mogul David Geffen for $165 million last year… Located in the Paradise Cove section of Malibu, the property spans about 7 acres... Mr. Azria and his wife, Florence Azria, bought it for $41 million in 2013…”
China Watch:
October 28
– Reuters
(Clare Jim and
Andrew Galbraith):
“Chinese developers took a drubbing on Thursday, with shares and bonds falling, creditors seizing assets and rating agencies distributing more downgrades, ahead of a final debt payment deadline for China Evergrande Group on Friday. Shares of Kaisa Group were hardest-hit… after rating agency downgrades that highlighted the company's limited access to funding and significant U.S. dollar debt obligations.”
October 26
– Bloomberg:
“China’s economy is showing signs of a further slowdown with car and housing sales dropping again this month even as exports continue their strong performance and the government seeks to allay concerns over growth. That’s the outlook from Bloomberg’s aggregate index of eight early indicators for October… Real-estate sales dropped again, as buyers hold back due to concerns about which companies will survive the current debt crisis facing China Evergrande Group and other developers. Car sales also fell in the first three weeks of the month, continuing the slump of the past five months.”
October 28
– Wall Street Journal
(Frances Yoon):
“Junk-bond issuance by China’s riskier companies has nearly ground to a halt, creating more challenges for the country’s real-estate developers that need to roll over more than $40 billion in dollar debt by the end of next year. Sales of new junk bonds in dollars by Chinese borrowers this month have fallen by about 90% from their five-year average to $352 million… With investors rattled by China Evergrande Group’s difficulties and a string of defaults by smaller property developers, Chinese junk bonds in dollars were yielding about 21.6% as of Wednesday…”
October 29
– Bloomberg
(Ameya Karve):
“China’s junk dollar bonds had their steepest two-month decline in a decade as stress builds in the battered real estate sector and defaults mount to a record. Average prices of the notes plunged more than 13 cents on the dollar in September-October, the worst two-month decline since the period ended September 2011…”
October 27
– Bloomberg:
“Vegetable prices have soared in China in recent weeks, costing more than meat in some cases, and creating another headache for consumers already hit by power shortages and strict virus curbs. Wholesale vegetable prices surged 28% in the four weeks through Oct. 22, and is now at the highest level since February… Heavy rainfall in major growing regions this year damaged crops and soaring coal prices has also made greenhouse farming more expensive. Cauliflower and broccoli costs about 50% more, while spinach surged 157% in the four-week period.”
October 29
– Bloomberg:
“Investors in China are faced with the highest number of stocks falling on their first trading day in over nine years this week, shaking a long-held faith in fat gains on debuts as regulators step up reforms of initial public offerings.”
Global Bubble Watch:
October 29
– Wall Street Journal
(Stephanie Yang and
Jiyoung Sohn):
“Almost a year into a global chip shortage, the problems are increasing for many customers as delays get even longer and sales are lost. Manuel Schoenfeld placed an order in May for transmission chips for the utility-monitoring devices made by his… company PowerX. He was told the chips would arrive by summer, then fall, then winter and now doesn’t expect to get them until May 2022. ‘This is far from over,’ Mr. Schoenfeld said. The global semiconductor shortage is worsening, with wait times lengthening, buyers hoarding products and the potential end looking less likely to materialize by next year. Demand didn’t moderate as expected. Supply routes got clogged. Unpredictable production hiccups slammed factories already running at full capacity.”
Europe Watch:
October 29
– Bloomberg
(Alexander Weber and
James Hirai):
“Euro-area inflation accelerated more than expected to breach 4% for only the second time ever, adding to the European Central Bank’s challenge in battling increasingly aggressive market bets for interest-rate hikes. Consumer prices rose 4.1% in October, compared with the median of economist estimates at 3.7%... A measure stripping out volatile components such as food and energy climbed to 2.1%, a rate not seen in nearly two decades.”
Environmental Watch:
October 24
– Bloomberg:
“A weather phenomenon that typically delivers harsher winters is on the way and expected to add to Asia’s energy crisis. The La Nina pattern, which forms when equatorial trade winds strengthen to bring colder, deep water up from the bottom of the sea, has emerged in the Pacific. That typically spells below-normal temperatures in the northern hemisphere and has prompted regional weather agencies to issue warnings about a frigid winter.”
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