The Mess That Greenspan Made - Part 2

Skip to about about the 40 second mark of the CNBC video below to hear Peter Boockvar, Chief Market Analyst for the Lindsey Group, talking about nascent signs of higher inflation in the latest U.S. economic data (that might, someday, be noticed by somebody) following years of central bank money printing (a.k.a. “QE Fluff”).

About half-way through, Boockvar talks about how inflation can increase rapidly and of the Federal Reserve’s multi-year forecast for very tame consumer prices.

One of the consequences of a more open Fed is that they publish a huge number of economic forecasts, inflation being one of them. It will surely be fun to recall this period in 2014 if, sometime in the years ahead, sharply higher inflation rates finally arrive.

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Tyler Cowen of Marginal Revolution notoriety points readers to two CBC News stories about the listing of the cheapest house for sale in the Vancouver market at just under $600,000 and its subsequent sale just two weeks later at almost $50,000 more than the sellers asked.

From the latter, we learn the following:

Vancouver’s cheapest listed single family home attracted large numbers to open houses, with two written offers pushing the final purchase price seven per cent over asking.

The house was the cheapest listing in Vancouver last week.

The price of the 100-year-old, 1,951-square-foot, three-bedroom, detached house at 2622 Clark Dr. was set low initially due to its smaller size and half lot site.

“It’s very rare, and that’s why all the excitement,” said RE/MAX realtor Mary Cleaver.

“I believe this house was, potentially, saved because it is on a different kind of lot, one that isn’t necessarily appealing to builders. So this has been a lovely family home for 100 years and, if well taken care of, could house a family 100 years from today,” she said.

Looking at the house and that lot, the excitement really is perfectly understandable.

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The latest Gallup survey on investment preferences in the U.S. puts real estate ahead of gold and stocks for the first time in at least a few years in yet another example of how most people (at least in the U.S.) simply follow established trends.

Interestingly, those favoring real estate as the best long-term investment rose to as high as 50 percent a decade ago when the prior housing bubble was inflating.

There’s also a breakdown of preferences by income, age, and political party affiliation. Not surprisingly, those with higher incomes favor stocks and real estate over other investment choices and the appeal of gold goes up as income goes down.

By a wide margin, younger Americans think more highly of Savings accounts/CDs than do other age groups, but the most interesting part of this survey (at least to me) was how views toward equity markets change  based on party affiliation. Some 30 percent of Democrats think stocks are the best investment, but only 26 percent of Republicans agree, yet just 19 percent of independents also see it this way.

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Thursday Morning Links

MUST READS
Putin warns of ‘abyss’ – Reuters
Putin calls Ukraine push-back a ‘crime’, ahead of talks – MarketWatch
US-Russia financial showdown more dangerous than it looks – Telegraph
Is Media Coverage of Ukraine/Syria WORSE than Iraq – Washington’s Blog
The real economy is finally doing better than the money economy – Fortune
Income Inequality Institute Will Pay Paul Krugman $25,000 Per Month – Gawker
Consumer Spending on Health Care Jumps as Obamacare Takes Hold – Bloomberg
How did the government get into an armed standoff with a Nevada rancher? – Vox
Signs of Hope in Detroit’s Historic Bankruptcy Case – Fiscal Times
The End of Our Financial Illusions – Johnson, NY Times
Rogoff talks financial crisis – Yale Daily News
Antitrust in the New Gilded Age – Robert Reich
Helping the Fellow Out – aucontrarian

MARKETS/INVESTING
Stocks flat as traders weigh mixed earnings – MarketWatch
Is the Financial Media Warding Off a Bubble? – Barron’s
Stock Rally: Will Third Time Be A Charm For Dow? – Short Takes
That Pesky Indicator Still Saying U.S. Stocks Are Cheap – Bloomberg
Investors warming up to equities a little late in the game – Investment News
Dovish Sign? Janet Yellen Says Nothing About Asset Bubbles – Businessweek
Treasury Five-Year Notes Near Cheapest Since 2010 on Fed – Bloomberg
Gold steadies as lower dollar offsets China worries – Reuters
Little comfort for gold bulls in latest GFMS report – Mineweb
Gold trades below $1,300 an ounce; Physical buying picks up – BullionStreet
China Gold Demand “Solid, On-going and for the Long Term” – Gold Investing News

ECONOMY/WORLD/HOUSING/BANKING
Is America giving up? – CNBC
‘Censusgate’ e-mails fail the smell test – NY Post
The Sad State of the Economics Profession – Mises
Japan government cuts econ view after sales tax – Economic Times
China eases monetary policy with reserve cut for rural banks – CNA
Why China Needs to Let More Companies Go Bankrupt – WSJ
U.S. urged to ‘understand’ yuan issue – China Daily
The Cheapest House in Vancouver Sold for $643K – Marginal Revolution
Nearly 2 million homeowners no longer ’seriously’ underwater – CNN/Money
Housing Bubble 2.0 Veers Elegantly Toward Housing Bust 2.0 – Testosterone Pit
Yellen: Fed’s Rate Policy Hinges on 3 ‘Big Questions’ – WSJ
ECB moving closer to unconventional policy – Bloomberg

 
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