Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61750 Thu, 23 Feb 2017 00:21:46 GMT U.S. home sales hit 10-year high, prices soar on low inventory http://implode-explode.com/viewnews/2017-02-22_UShomesaleshit10yearhighpricessoaronlowinventory.html U.S. home resales surged to a 10-year high in January as buyers shrugged off higher prices and mortgage rates, signaling rising confidence in the economy and bolstering expectations of a pickup in growth in the first quarter.

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Though the nation's housing inventory increased from December, it remained near a record low. As a result, the median house price vaulted 7.1 percent from a year ago to $228,900 in January. That was the biggest increase since January 2016.

Demand for housing is being underpinned by a strengthening labor market, which is improving employment opportunities for young adults and, in turn, boosting household formation... But a persistent shortage of properties available for sale, which is lifting house prices, remains an obstacle to a robust housing market. That is likely to put pressure on homebuilders to ramp up construction.

Last month, the number of homes on the market rose 2.4 percent to 1.69 million units, still remaining close to an all-time low of 1.65 million units in December. Housing inventory was down 7.1 percent from a year ago. It has declined for 20 straight months on a year-on-year basis.

Economists say homebuilders are struggling to plug the inventory gap because of difficulties securing funding as well as shortages of land and labor. The NAR estimates housing starts and completions should be in a range of 1.5 million to 1.6 million units to alleviate the chronic shortage.

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iehi-feed-61748 Wed, 22 Feb 2017 23:53:46 GMT A Simple Subpoena For Trump's Tax Returns Could Sink Him http://implode-explode.com/viewnews/2017-02-22_ASimpleSubpoenaForTrumpsTaxReturnsCouldSinkHim.html iehi-feed-61746 Wed, 22 Feb 2017 15:24:17 GMT Deutsche Bank Says Next Big Short Is on CMBS as Malls Suffer http://implode-explode.com/viewnews/2017-02-22_DeutscheBankSaysNextBigShortIsonCMBSasMallsSuffer.html iehi-feed-61744 Wed, 22 Feb 2017 15:03:42 GMT Banks Retreat From Apartment Market http://implode-explode.com/viewnews/2017-02-22_BanksRetreatFromApartmentMarket.html Swelling supplies of apartment units are prompting big banks to pull back from new projects, forcing developers to scramble for capital, in a sign that the U.S. apartment industry headed for a downturn.

The apartment sector, which contributes some $284 billion to the economy annually, has been a winning bet for investors since the housing crash, as the economy recovered and more renters sought out units. Since 2010, average U.S. apartment rents have increased by 26%, according to data tracker MPF Research, a division of RealPage.

But fresh supply is beginning to overwhelm demand. More than 378,000 new apartments are expected to be completed in 2017, a 30-year high, according to real estate researcher Axiometrics Inc. In the fourth quarter of last year, 88,000 units were completed but only 50,000 of those were rented by tenants, according to MPF.

"Our business has radically changed," said Toby Bozzuto, president and chief executive of the Bozzuto Group, which owns or manages 59,000 apartments in cities across the U.S. "I haven't seen anything this seismically different since 2008, when credit dried up."

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iehi-feed-61743 Wed, 22 Feb 2017 14:56:33 GMT Why Toronto (and Other Cities) Inflate Housing Bubbles to the Bitter End http://implode-explode.com/viewnews/2017-02-22_WhyTorontoandOtherCitiesInflateHousingBubblestotheBitterEnd.html ``Home prices in Greater Toronto have become "dangerously detached" from economic fundamentals and are soaring simply on the belief that they will continue to soar, he wrote. "The market is far too hot for comfort."...

... Toronto is just an a example. There are many jurisdictions in the US that face similar budget problems, and the only thing that keeps them from falling deeper into a financial and fiscal sinkhole is the rich tax revenue that the local property bubble extracts from the economy. Homeowners and investors might grumble, but they usually put up with it, mollified by soaring property prices. So this system works until suddenly, it doesn't.

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iehi-feed-61740 Tue, 21 Feb 2017 15:16:00 GMT Home Depot is Flying High Again http://implode-explode.com/viewnews/2017-02-21_HomeDepotisFlyingHighAgain.html The home improvement chain has benefited from a stronger economy and rising home values, which have encouraged shoppers to invest in their homes. Even as the company faced tough comparisons from the prior-year period, analysts expected it to perform better than the broader retail space due to this ongoing shift in consumer spending.

Indeed, the company's fourth-quarter comparable sales growth represented an acceleration from the prior quarter, even as it was up against a 7.1 percent increase from a year earlier. During fourth quarter 2015, the unseasonably warm weather allowed contractors and homeowners to continue working on outdoor projects through the winter.

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iehi-feed-61724 Sun, 19 Feb 2017 18:59:15 GMT Expert: Australia headed for ‘economic armageddon' http://implode-explode.com/viewnews/2017-02-19_ExpertAustraliaheadedforeconomicarmageddon.html iehi-feed-61722 Sun, 19 Feb 2017 16:29:23 GMT Jim Rickards: China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors http://implode-explode.com/viewnews/2017-02-19_JimRickardsChinaDisastertoTriggerGoldRunTrumptoAppoint5of7FedGov.html When you look at the Chinese banking system, private estimates are that the bad debts are 25% of total assets. Banks usually run with 5, maybe 7-8% capital. Even if you said 10% capital, well, if 25% of your assets are bad, that completely wipes out your capital, so the Chinese banking system is technically insolvent, even though they don't admit that. I mean, they cook the books, they take these bad loans.

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So, if you just say, "Well, I've got 900 billion in the kitty, it's going out the door at 50 to 100 billion a month," I'm going to be broke by the end of 2017. That's what I mean by going broke. You say, "Well, wait a second. Where did the 1.1 trillion, the first part we talked about that the reserve position went down, where did the money go? It didn't disappear." Well, no, it didn't disappear. What's happening is that everybody in China is getting their money out. They're scared to death that the yuan's going to devalue, so what are the Chinese doing? By hook or by crook, some of it's legitimate, some of it's corrupt, some of it involves bribery, some of it involves false invoicing.

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iehi-feed-61712 Fri, 17 Feb 2017 15:48:29 GMT Freddie Mac's Tough Spot: Turn Down a Loan to Trump's In-Laws? http://implode-explode.com/viewnews/2017-02-17_FreddieMacsToughSpotTurnDownaLoantoTrumpsInLaws.html Kushner Cos. has apartment buildings from New Jersey to Maryland with more than $500 million in government-backed mortgages financed by Fannie Mae and Freddie Mac. That could put officials at those agencies in an awkward spot: If Kushner Cos. applies for a new loan, or wants to refinance, would Freddie turn them down? If Kushner Cos. fails to comply with the terms of a loan, will Fannie seek to foreclose on a property owned by the president's in-laws?

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The FHFA is run by Mel Watt, appointed by former President Barack Obama. Watt's term ends in 2019, at which point Trump will pick a successor, though it's possible the president could try to remove Watt from office before then. FHFA spokesman Peter Garuccio declined to comment on potential conflicts, as did spokesmen for Fannie and Freddie.

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Before loans are issued for large or unusual deals, representatives of Fannie set interest rates and review borrowers' applications that are submitted to the lenders. They don't do that for smaller, routine loans.

Freddie, however, examines all applications submitted to the lender, including scrutinizing the appraisal and applicant's history of payments on other loans. Depending on the review, Freddie representatives could adjust the interest rate quoted by the lender.

If Kushner Cos. fails to make Fannie-backed loan payments on time or violate other terms, Fannie employees would determine whether to foreclose. Fannie backs about $142.3 million of the outstanding loans.

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iehi-feed-61707 Thu, 16 Feb 2017 18:46:25 GMT Deutsche Bank Comes Under Pressure on Trump-Russian Connection Search http://implode-explode.com/viewnews/2017-02-16_DeutscheBankComesUnderPressureonTrumpRussianConnectionSearch.html The international banking giant that Donald Trump and some of his family use is coming under pressure to appoint an independent auditor to examine its books for any suspicious links between Trump's accounts and Russia, according to a report in The Guardian.

Deutsche Bank has already conducted a "close internal examination" of President Trump's personal account and found no evidence of suspicious dealing, according to the London-based liberal-leaning publication. That investigation was a routine piece of compliance after Trump became what banks' internal money-laundering police call a "politically exposed person," or PEP, by announcing his run for the presidency. Banks typically subject PEPs to stricter compliance scrutiny. The bank "double-checked" its records after Trump's election victory in November, according to the paper's source.

That would normally be an end of the matter, but not everyone is inclined to take Deutsche's compliance department at its word after a string of governance scandals in recent years that culminated in a $630 million settlement for failing to police money-laundering by its Moscow office last month. As part of that settlement, the New York Department for Financial Services ordered it to hire an independent monitor to review its compliance operations.

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Deutsche's relationship with Trump goes back a long way. The German bank stepped in when Wall Street lenders stopped lending to him after his fourth bankruptcy filing. However, Deutsche's private bank now manages the relationship, after the commercial banking division also had a bust-up with him in 2009. According to Bloomberg, it has granted four loans, worth around $300 million in total, secured against Trump properties in Washington, Chicago and Miami. Trump's daughter Ivanka and son-in-law Jared Kushner are also clients, as is Kushner's mother Seryl Stadtmauer (according to The Guardian's sources).

Trump's family has made no secret in the past that they had received significant funding from individuals in Russia and the former Soviet Union to develop their projects. That strategy has sometimes attracted controversy, most notably in the case of the ill-fated Trump SoHo development, where the project's developers have faced allegations of financing it in part with laundered money. The developers, rather than Trump, were responsible for due diligence in that case, according to Trump Organization general counsel Alan Garten.

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iehi-feed-61687 Tue, 14 Feb 2017 16:32:57 GMT Made For Each Other - KUNSTLER http://implode-explode.com/viewnews/2017-02-14_MadeForEachOtherKUNSTLER.html iehi-feed-61684 Mon, 13 Feb 2017 21:26:37 GMT Senate expected to confirm Mnuchin for Treasury secretary -- then he'll have a lot of work to do http://implode-explode.com/viewnews/2017-02-13_SenateexpectedtoconfirmMnuchinforTreasurysecretarythenhellhaveal.html Once confirmed, he would face a packed agenda. A wealthy hedge fund manager and Hollywood movie producer, Mnuchin would be a key administration player on boosting economic growth. He would take office with some key looming deadlines, including a need to increase the debt limit next month and to decide by April 15 whether to label China a currency manipulator and possibly trigger a trade war.

"Under any objective standard, Mr. Mnuchin has ample experience, credentials and qualifications for this important position," Sen. Orrin Hatch (R-Utah) said Monday, decrying what he called "continual and pointless delays" of his confirmation by Democrats.

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By March 17, Mnuchin would need to persuade Congress to increase the nation's debt limit. If he can't, he would have to start using a series of so-called extraordinary measures to extend the deadline for several weeks to avoid a U.S. default on its debt.

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On the same day, he'd be scheduled to begin two days of meetings in Germany with finance ministers of the world's advanced economies at a G20 summit, amid a rocky start for Trump on international relations.

By April 15, Mnuchin would face a statutory deadline to inform Congress if the Treasury Department will label China a currency manipulator.

Trump promised during his campaign to direct his Treasury secretary to take that step, which would trigger negotiations to resolve the matter. If those talks fail, the U.S. could levy sanctions that might lead to a trade war.

Keeping currency exchange rates artificially low makes a country's products cheaper to buy abroad, boosting exports. China has faced allegations of manipulations in the past, but since 2014, financial markets have been pushing down the value of its currency and China has been trying to intervene to keep the value up.

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And by the first week of June, Mnuchin would have to report to the White House about changes needed to financial regulations under an executive order Trump signed Feb. 3. The order directed the Treasury secretary to consult with regulators and review the Dodd-Frank Wall Street Reform and Consumer Protection Act, which Trump has pledged to dismantle.

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iehi-feed-61679 Mon, 13 Feb 2017 17:38:21 GMT Bank For International Settlements Warns Of Looming Debt Bubble http://implode-explode.com/viewnews/2017-02-13_BankForInternationalSettlementsWarnsOfLoomingDebtBubble.html iehi-feed-61669 Thu, 09 Feb 2017 23:14:25 GMT NYC rents dip as concessions become the new normal http://implode-explode.com/viewnews/2017-02-09_NYCrentsdipasconcessionsbecomethenewnormal.html The use of concessions has been on the rise, particularly in Manhattan, where Douglas Elliman found that it hit an all-time high for the fourth consecutive month--now, more than 30 percent of leases include a concession. In short, it's a good time to sniff out reduced rent.

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In Manhattan, the median rent--including the cost of concessions--has been on the decline for six consecutive months, year over year, landing it at $3,259 for the month of January. (Without concessions, the median rent in Manhattan comes in at $3,369.)

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Like in Manhattan, the demand for two- and three-bedroom apartments in Brooklyn remained softer than studios and one-bedrooms, with rents falling nearly four percent from this time last year for two-bedrooms, and almost eight percent for three-plus-bedrooms. On the flip side, the median rent for studios has remained relatively stagnant from this time last year, clocking in at $2,300--way down from December's $2,409. The median rent for one-bedrooms has increased about four percent since last January, bringing it to $2,700.

Ruh-roh. And from this WSJ article:

The concessions and flattening of rents have been attributed to a surge of new rental buildings coming to market, as well as a slowdown in growth of higher-paid jobs in New York City.

Mr. Gavzie said the weakness was most pronounced in more expensive apartments. Tenants typically had less room to negotiate in lower-rent starter apartments, he said.

Gary Malin, president of brokerage Citi Habitats, said the rental market is now value-driven, with tenants willing to try new neighborhoods to get a better deal.

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iehi-feed-61666 Thu, 09 Feb 2017 17:00:49 GMT Surveying the NYC toxic sites owned by the Trump family http://implode-explode.com/viewnews/2017-02-09_SurveyingtheNYCtoxicsitesownedbytheTrumpfamily.html Ironically, several of the most toxic properties in New York City are currently under the control of Trump family members who stand to benefit from their remediation and development. In Brooklyn, two enormous brownfields in Dumbo and Gowanus were purchased by Jared Kushner, Trump's son-in-law and a senior advisor at the White House, and are now in the beginning phases of their New York State Department of Environmental Conservation (DEC) cleanups.

In the Bronx, the Trump Organization is raking in millions of dollars from a special rent-free arrangement to operate Trump Ferry Point, a city golf course built on top of a noxious garbage dump. As the current president continues in his quest to weaken environmental regulations, it is unclear what the future will be for these polluted sites, and for the many other brownfields, Superfund sites, and contaminated wastelands in New York City.

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iehi-feed-61651 Tue, 07 Feb 2017 02:34:24 GMT Is America in a Bubble & Will America Ever Return to "Normal"? http://implode-explode.com/viewnews/2017-02-06_IsAmericainaBubbleWillAmericaEverReturntoNormal.html iehi-feed-61646 Sun, 05 Feb 2017 21:55:39 GMT House flipping is back, with all its opportunities and risks http://implode-explode.com/viewnews/2017-02-05_Houseflippingisbackwithallitsopportunitiesandrisks.html More than 6 percent of home sales last year were "flips", according to a new report from Trulia. The real estate data website defines a flip as the selling of a home at least twice within a year.

That's the highest number in a decade, before the real estate bubble burst and the financial crisis of 2008. So could the housing market flip out again?

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Other flipping hot spots [besides Las Vegas] include three Florida cities, three Tennessee cities, plus Atlanta, GA. On the west coast, Fresno, CA and Tacoma, WA also made the top 10.

McLaughlin tells CNBC most of the flipping activity is among luxury properties, or "upper tier, this premium tier as we call it."

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iehi-feed-61642 Sun, 05 Feb 2017 15:29:32 GMT Theresa May abandons "homeownership democracy"; to offer more security for renters http://implode-explode.com/viewnews/2017-02-05_TheresaMayabandonshomeownershipdemocracytooffermoresecurityforre.html A major shift in Tory housing policy in favour of people who rent will be announced by ministers this week as Theresa May's government admits that home ownership is now out of reach for millions of families.

In a departure from her predecessor David Cameron, who focused on advancing Margaret Thatcher's ambition for a "home-owning democracy", a white paper will aim to deliver more affordable and secure rental deals, and threaten tougher action against rogue landlords, for the millions of families unable to buy because of sky-high property prices. Ministers will say they want to change planning and other rules to ensure developers provide a proportion of new homes for "affordable rent" instead of just insisting that they provide a quota of "affordable homes for sale".

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The proportion of people living in private rented accommodation has doubled since 2000 and ministers will accept that housing costs "are hurting ordinary, working people the most". The average couple in the private rented sector now hands over roughly half their salary to their landlord each month and 2.2 million working households with below-average incomes spend more than a third of their incomes on housing.

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iehi-feed-61636 Sat, 04 Feb 2017 00:22:45 GMT J. Crew sues lenders over capital restructuring plans (VULTURE CAPITAL STRIKES AGAIN) http://implode-explode.com/viewnews/2017-02-03_JCrewsueslendersovercapitalrestructuringplansVULTURECAPITALSTRIK.html iehi-feed-61589 Sun, 29 Jan 2017 01:06:47 GMT Tell the Senate: Oppose "foreclosure king" Steve Mnuchin http://implode-explode.com/viewnews/2017-01-28_TelltheSenateOpposeforeclosurekingSteveMnuchin.html