econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



>> Click Here for Historical Wall Post Listing <<

What We Read Today 29 December 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

Japan govt approves $29 billion stimulus spending, impact in doubt (ReutersJapan's government approved on Saturday stimulus spending worth $29 billion aimed at helping the country's lagging regions and households with subsidies, merchandise vouchers and other steps, but analysts are skeptical about how much it can spur growth.

Families, relatives tense after AirAsia plane carrying 162 disappears (Associated Press, Fox News)  Another airplane from Malaysia has mysteriously gone missing during a flight over Indonesia.  AirAsia Flight 8501 from Surabaya, Indonesia to Singapore lost contact with air traffic controllers at 6:24 am local time Saturday 27 December 2014.  A total of 162 (155 passengers) were aboard the Airbus A320-200.  More on the reading list below.


What Professional Investors Expect in 2015 (Lindsey Gellman, The Wall Street Journal)  "Experts" quoted question the progression of global deflation and expect the opposite, with a stronger dollar and rising interest rates, although there is a disagreement about whether in 2015 or 2016.  The opinions mostly expect modest equity returns in 2015 although there is a lot of enthusiasm for energy stocks.  There is little doom and gloom here, but also no "back up the truck" sentiment either.


Big questions for markets for 2015 (Sinead Carew, Reuters) Rather disappointing on substantial information, but there are a few items worth mentioning.  First, some may not be aware that the NASDAQ Composite is only 7% below its all-time high of 5,132.52 (10 March 2000).  Sources used expect Apple to have another up year but gains should be modest.  The article suggests that Apple, now valued at $663 billion, could be the first company to achieve a $1 trillion valuation (although presumably not in 2015).  The article mentions the expectation that technology glitches will produce more flash crash events and sources are warning investors to be wary of the biotech sector which they think is overvalued.


Articles about events, conflicts and disease around the world

AsiaAir Flight 8501

Race Relations and Related News

NSA / CIA

Ebola

Turkey

Syria

Russia

North Korea

Cuba

The road to American serfdom via the housing market: The trend towards renter households will continue deep into 2015. (Dr. Housing Bubble)  This is a data rich analysis of what is happening in U.S. housing markets.  Five astounding data points:

  • In California alone there are 2.3 million adults living at home (we interpret this to mean parents' homes).
  • Rental income received by "persons" has increased from less than $200 billion in 2007 to more than $650 billion in 2014.
  • There have been 7 million completed foreclosures resulting from the housing crisis.
  • Renter occupied housing units has grown by more than 7 million between 2004 and 2014.  See first graph below.  Note:   The same number of rental increases as former owner foreclosures.  Not likely a 1:1 correspondence but almost certainly a relationship.
  • Over the last 50 years there has been a dramatic decrease in young adult mobility.  See second graph below.

See also next article.

renter-occ-housing-growth-1990-2014-dr-housing-bubble-2014-dec-28

young-adult-mobility-1963-2013-dr-husing-bubble-2014-dec-28


Housing 2015: The return of first-time home buyers (Les Christie, WGAL News)  This article says:

With rents rising faster than incomes, many Millennials are expected to start looking to buy homes of their own.

What they will find are much more favorable conditions than they have seen in years, including lower down payment mortgages, looser lending standards and a bigger selection of homes to choose from
.

Now go back and read the previous article again.


Today's Renter? Tomorrow's Homebuyer? Get the Facts from Our New Survey (Freddie Mac Blog)  A survey has found that 61% of renters have no plans to buy a home in the next three years.  So why do most renters think they'll keep renting?  The top three answers:

  • Can't afford downpayment (50%)
  • Don't want responsibility of owning a home (39%)
  • Can't afford mortgage payment (38%)

Many renters say they tend to live paycheck to paycheck. 45% say that they have just enough money to get by. And 17% say that they don’t have enough money for basics, like food and housing, until the next payday. Yet only 38% of homeowners indicated a financial hardship.

If the current 25-44 year old cohort does not buy a home before their 45th birthday they are almost certain never to do so.  So an entire generation of x-generation folks may be largely life-long renters unless things change.


Property speculation to boom in 2015 (Cameron Murray and Philip Soos, Macro Business) Forecast for the Australian housing market is for speculation to drive Australian housing prices higher in 2015, following a cyclical pattern which has has established levels of interest rate ratios that have produced increased buying over the last 40+ years.  See When to Buy and Sell Houses (Cameron Murray, Fresh Economic Thinking).

housing-australia-cameron-murray-specul-index-2014-dec-26


What’s Next for World Oil as Lower Prices Extend Into ‘15 (Isaac Armsdorf, Bloomberg)  The five big questions are:

  1. Will OPEC hold together?
  2. Will the shale boom suffer?
  3. Will Global Demand Recover?
  4. Will the U.S. allow more exports?  (See graph below.)
  5. Will political instability disrupt supply?

So far there is much uncertainty about just what will happen to new drilling in U.S. shale.  Right now only modest reduction of spending (about 4%, according to Bloomberg) is expected.  Perhaps the most interesting graph shown is U.S. oil exports which are higher than some may have realized.

oil-exports-us-armsdorf,bloomberg-2014-dec-28


Oil Jobs Squeezed as Prices Plummet (Jeffrey Sparshott, The Wall Street Journal)  The energy sector has been an important component of job growth following the Great Recession.  But now a host of companies associated with the oil patch are cutting back as a result of the sharp decline in energy prices over the past year.  Just how deep will a drilling slowdown impact employment?  Based on the data for the past five years there could be a quite noticeable affect.  One estimate is that 9% of oil service sector jobs (40,000) could be lost if oil stays at $56 a barrel for all of 2015.

Click for large image.
oil-jobs-2009-2014-600x400


Russell 2,000 (Smallcaps) Finally Breaks Out (Think B.I.G.)  Strength in small cap stocks is considered to be an early bull market move while large caps outperform late in the market up-cycle.  Well large caps have outperformed but now small caps have moved above a double top previously formed earlier this year.  So does the breakout mean anything?  Smallcaps are still underperforming large caps for the year by a 2:1 margin (Dow up nearly 10%, R2000 up less than 4.5%).

r2000-2013-2014


Why it’s time for investors to move out of Canada — and stay out (Jonathan Ratner, Financial Post)  The author says that the Canadian stock market is simply too cyclical, with 2/3 of stocks in natural resources and financials.  In addition the loonie (Canadian dollar) has declined about 20% against the U.S. dollar in the last six months.  While the Toronto stock exchange is up 7.2% for the year, it has been weakening as the year wound down, losing 6% since the beginning of September.  Unless energy and mining turns around 2015 doesn't look that attractive.  However, by the time you get to the end of the article with all its grim pronouncements we found these two terse statements:  "Don’t just sell Canada blindly. Be selective when paring back your exposure."  

SX-index-weightings-fin-post-2014-dec-28


Other Economics and Business Items of Note and Miscellanea

To Discuss Labour Economics and The Minimum Wage For A Moment (Forbes)

Lefty Blogger: Republican Economics Based On ‘False’ Theory, But That Doesn’t Matter to Conservatives (MRC NewsBusters)

Why ‘life will go on’ thesis about global economy might not pass muster in 2015 (The Guardian)

Charles Koch’s views on criminal justice system just may surprise you (The Witchita Eagle)

Sioux chef revives Native American tastes of yesteryear (Al Jazeera)

A Look Into The 'Double Lives' Of America's Homeless College Students (Huffington Post)


Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.






Econintersect Behind the Wall









search_box
Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.







Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government





























 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved