20-24 Is The New Black: The Decline In Homeownership Among Sub 44 Leading The Charge Downward!

The unemployment rate for Americans 20-24 years of age is eerily similar to the unemployment rate for blacks (African-Americans). Both are far higher than the unemployment rate for the entire population.

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High unemployment and snail-slow wage growth are contributing to the decline in the American homeownership rate

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The 35-44 age group are seeing a decline in the homeownership rate faster than the general population.

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65+ is the only GROWING homeownership segment of the age groupings.

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Welcome to the NEW American housing system!

ORANGE

October Surprise? Personal Income Growth Slows To 0.2% In September, Personal Spending Growth Goes Negative

According to the Bureau of Economic Analysis (BEA), personal income grew at a pace of 0.2% in September, down from 0.5% growth in June.

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Meanwhile, personal consumption expenditure growth fell to -0.2% in September after hitting +0.8% in March.

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Declining income and spending growth is reflected in the dismal mortgage purchase application index decline.

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As of 2012, real household income remain substantially below peak levels, for ALL income groups.

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And the purchasing “power” of the dollar continues to erode.

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October Surprise: we are all WORSE OFF!

SadPartygoerLR

Liquefied: Nikkei Jumps 5%, USD/JPY Cross Rises As Bank of Japan Pumps Additional Stimulus (QE)

The Bank of Japan on Friday “unexpectedly” announced additional stimulus measures, bolstering its asset purchases for the first time in over a year and a half, as its 2% inflation target looks increasingly untenable.

Tokyo, Muharram 7, 1436, Oct 31, 2014, SPA — The Bank of Japan said Friday it had decided to introduce additional monetary easing steps to prop up the world’s third-largest economy.

According to dpa, the bank said government boosts to the monetary base will increase from current levels by 10 trillion yen to 20 trillion (91 billion to 182 billion dollars) per year, to an annual pace of 80 trillion yen.

The bank’s nine-member policy board was split over the move, which was supported by five members including Governor Haruhiko Kuroda and his two deputies.
The central bank also said on Friday it would buy more government bonds from financial institutions, two days after the US Federal Reserve decided to end its bond-buying programme.
“Japan’s economy has continued to recover moderately,” the bank said in a statement.

Even before Japan’s central bank Friday ramped up its big monetary stimulus program, it was testing the boundaries of monetary policy. Under the easing plan launched a year and a half ago, its balance-sheet assets, as a percentage of Japan’s economy, were nearing 60%, considerably higher than anything ever attempted by the U.S. Federal Reserve, the Bank of England, and the European Central Bank
.
Japan’s inflation rate fell to its lowest in nearly a year and a measure of job creation worsened for the first time in more than three years, highlighting the divergence between developments in the economy and policy makers’ optimistic projections.

The Nikkei rose almost 5% at the thought of Bank of Japan liquefying it’s economy.

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The JUSD/JPY cross?

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All together now!

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Yes, the world is thrilled that Japan is stepping into the breach and liquefying their economy now that The Fed has announced the end of QE3.

Senator Kelly from “X-Men” imitating the Bank of Japan.

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Sweet and Sour Pork? Chinese Banks Sour As Home Prices Nosedive (Non-performing Loan Share > 100% Of Total Assets)

China has experienced a tremendous increase in GDP as well as house prices. Some of the exceptional growth is due to Central Government mandated construction goals to achieve GDP goals. The construction binge includes the numerous Chinese ghost cities like Ordos (which looks like a scene from the horror film “28 Days Later.”

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The massive, constructed construction bubble has a downside. Chinese banks are reporting that non-performing asset share has risen above 100% of total assets.

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And Chinese home prices are a tumbling down.

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Here is a replica of London’s Tower Bridge. I hope if doesn’t fall down like London Bridge in the nursery rhyme.

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Maybe a new nursery rhyme could be written! “Shanghai Houses Are Falling Down.”

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Fed Halts QE3, Gold Tumbles (Is Peter Schiff Wrong?)

Peter Schiff of Euro-Pacific Capital was on CNBC (many times) saying that gold prices will shoot through the roof once The Fed announces that QE3 has ended.

On the other hand, suppose that gold has been inflated by The Fed’s QE. That would lead to gold prices FALLING at the end of QE3.

Well, yesterday The Federal Reserve announced an end to QE3. The reaction?

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This does not seem to support Peter Schiff’s pro-gold argument. But then again, it is probably too early to tell.

Here is what technical analysis is telling us.

Ichimoku:

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Fibonacci Retracement:

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Elliott Wave:

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Bollinger Bands:

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Take your pick. Maybe Peter Schiff is correct, but the data so far does not bear his predictions out.

Perfect Timing! GDP Rises 3.5% Just Prior To Midterm Elections (Personal Consumption Declined, Government Spending Grows)

With the US midterm elections rapidly approaching, the Bureau of Economic Analysis provided a treat for Democrats: an increase in real GDP in Q3 of 3.5%! Is this the October Surprise Democrat Strategist Bob Beckel was talking about?

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While 3.5% sounds like a sold number, it has the distinct whiff of … China.

You see kids (as Clark Griswold used to say), the usual primary driver of GDP growth is personal consumption expenditures. Unfortunately, PCE fell to 1.8% after rising 2.5% in Q2.

Since PCE is usually about 70% of GDP, what drove up GDP growth to 3.5%?

It was PCE which only contributed 1.22% to GDP in Q3, nor was it Services which contributed only 0.52% to GDP. Nor was it Gross Private Domestic Investment which slumped to 0.17% in Q3.

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Nor was it Residential Investment which slumped to almost zero contribution. Nor anything else.

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So what grew? Federal spending which rose 0.67% in Q3, THE HIGHEST CONTRIBUTION SINCE 2011! National defense had the largest contribution since 2011 as well.

So, it was defense spending, not personal consumption expenditures, that grew the economy in Q3.

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Mortgage Conundrum: 3/1 ARM Rates Dip Below 30Y Fixed, Jumbo 30Y Fixed At 29 BPS Above 30Y Fixed

One of the problem facing lenders and mortgage insurers as well as The Federal Reserve is lack of mortgage purchase applications despite declining mortgage rates.

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With the increased interest rate volatility in recent weeks, we saw 3/1 adjustable-rate mortgage (ARM) rates rising above the 30 year fixed-rate. However, the 3/1 ARM rate is now slightly below the 30 year fixed-rate.

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Since March 2014, jumbo 30 year mortgage rates rose relative to the 30 year fixed-rate and the spread is now 29 basis points

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These rates are quite low by historic standards, yet are not sufficient to jumpstart mortgage purchase applications.