Post-Election Aftermath: Stock Market Boom, Bond Market Bust Overshadowed by all the political fallout the last week is the election’s effect on interest rates: up, quickly. According to Edina Mortgage’s Steve Mohabir, subsequent to the election, interest rates for a 30-year mortgage for well-qualified borrowers jumped a huge (“Yuge??“) 50 basis points, from 3.5% to over...Read More
WSJ: “European Firms Borrow at Subzero Rates” “Capitalism, almost commonsensically, cannot function well at the zero bound or with a minus sign as a yield. $11 trillion of negative yielding bonds are not assets ” they are liabilities. Factor that, Ms. Yellen into your asset price objective. You and your contemporaries have flipped $11 trillion...Read More
(Even) Lower Interest Rates vs. Weaker Economy “It’s too soon to tell.” –Chinese leader Mao Tse-tung, when asked — in 1948(!) — about the historical significance of the French Revolution. To accurately assess the potential effect of Brexit on the housing market, one must first identify and analyze the biggest variables. Here’s my take: Positives...Read More
The “X Factor”: Exposure to China Me-thinks an instant investing line has popped up in the wake of unprecedented stock market volatility the last 2 weeks: the way to play this market going forward is to suss out individual companies’ China exposure. In a nutshell, here’s the thesis: Lots of China exposure = bad. Minimal...Read More
Beleaguered Shareholders: “Stop the Merry Go Round, I Want to Get Off!” Are gyrating, crashing stocks good or bad for the housing market? Both. In fact, I see three positives and negatives apiece emerging from the recent market carnage. Positives Here are the pluses (yes, pluses): Weak equity markets forestall the Federal Reserve’s plan to...Read More
China’s Chickens Come Home to Roost** or, Is the Opposite of the “Wealth Effect” the “Poverty Effect??” Normally, I tell prospective home Buyers and Sellers to tune out “macro” factors like the broader economy, (un)employment, etc. and instead focus on “micro” factors affecting the specific property they want to buy or sell. So, forget about...Read More
