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September 23, 2016 Update


timingcube_cartoon09302016

Snapshots

We found Blaine Rollins’ blog, always a great read, to have a particularly eclectic and interesting panoply of items this week. Here is the string of items we found of interest:

The last real estate down cycle had Stockton as its poster child. This time it may be Greenwich…

“You can’t give away a house in Greenwich,” Sternlicht said Tuesday at the CNBC Institutional Investor Delivering Alpha Conference in New York.

The town – about 30 miles (48 kilometers) northeast of midtown Manhattan and home to some of the country’s largest hedge funds – is seeing a pile-up of houses on the market and prices that are faltering as properties linger. Home sales in the second quarter fell 18 percent from a year earlier to 169 deals, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

At the same time, new listings surged 27 percent. The absorption period, or the time it would take to sell all the homes on the market at the current pace, was 12 months, compared with 7.7 months a year earlier, Miller Samuel and Douglas Elliman said.

(Bloomberg)

Canada’s broken real estate poster child will be easier to locate…

Nine students with no apparent source of income bought $57-million worth of single-family homes in Vancouver’s tony Point Grey neighbourhood over the past two years, according to records compiled by British Columbia’s Opposition New Democrats.

The NDP said the purchases are more evidence that authorities have let the region’s housing market overheat beyond the reach of most locals

The properties include a $31-million mansion that Canaccord Genuity founder Peter Brown sold earlier this year to a buyer whose occupation was listed on the title document as “student.”

Four of the sales to student buyers were covered by mortgages from three major banks – a fact that underscores how Canada’s banks are inflating the region’s housing market, said NDP housing critic David Eby, who provided data from his provincial riding.

(The Globe and Mail)

And if you are looking for the next Epi-Pen, the insulin pricing practices of Sanofi and Novo Nordisk might have some explaining to do so…

Rising Insulin Prices
(Business Insider)

Finally, a good pen by the co-founder of Lyft. So many investment implications as car ownership evaporates in the next 10 years…

As a country, we’ve long celebrated cars as symbols of freedom and identity. But for many people — especially millennials — this doesn’t ring true. We see car ownership as a burden that is costing the average American $9,000 every year. The car has actually become more like a $9,000 ball and chain that gets dragged through our daily life. Owning a car means monthly car payments, searching for parking, buying fuel, and dealing with repairs.

Ridesharing has already begun to empower many people to live without owning a car. The age of young people with driver’s licenses has been steadily decreasing ever since right around when I was born. In 1983, 92% of 20 to 24-year-olds had driver’s licenses. In 2014 it was just 77%. In 1983, 46% of 16-year-olds had licenses. Today it’s just 24%. All told, a millennial today is 30% less likely to buy a car than someone from the previous generation.

Every year, more and more people are concluding that it is simpler and more affordable to live without a car. And when networked, autonomous vehicles come onto the scene, below the cost of car ownership, most city-dwellers will stop using a personal car altogether.

(Medium)

Source: 361capital.com


Seasonal goodness

Also from that blog we highlight this chart showing just how prevalent good stock market returns in the last quarter of the year. From where we are today in the S&P 500 year-to-date, there has been a 90% chance of adding to those gains.

Performance of S&P 500


Market Update

This week was all about the long-awaited Federal Reserve meeting. Investors had gone back and forth throughout the year on whether a hike in interest rates would show up at this September meeting. Recently, markets had put the chance of a hike at only 15%, figuring that the Fed would wait until the December meeting to make a move. Nevertheless, investors carried some nervousness into the week about the timing of the hike. Monday’s session was dead flat though a housing report provided some optimism. Tuesday likewise saw participants on the sidelines ahead of the overnight Bank of Japan meeting. Thus, it was as if markets really got started Wednesday this week.

And they did so with a bullish bang rising +1.0% after reading both the Bank of Japan and U.S. Federal Reserve statements as supportive of continued accomodative policies. Adding to the fervor was a strong earnings report from shipping bellwether FedEx (FDX) which rose +7%. Higher risk and interest rate sensitive sectors all performed exceedingly well. Thursday saw a bit of follow-through on the positive market with another +0.7% added on and every sector closing with a gain. Friday saw a bit of a retracement in the gains as oil prices softened and technical resistance put a lid on the S&P 500.

Warm wishes and until next week.