Monday, September 27, 2010

Economist: China Property Bubble Leaks Slowly

It’s Shanghai hairy-crab season.

To cook them, you put them in a container with cold water. They feel like they’re back in a lake and get comfortable. You then cover it with a heavy top and light a fire below. You can hear scratching sounds. They start faintly, then furiously, then faintly again, then nothing. When it’s quiet for a few minutes, you lift the top and see the crabs all golden brown. Dip them in vinegar and ginger for a delicious meal.

China’s property speculators are like crabs in cold water already. They feel good, kicking their legs once in a while. They don’t see any danger. Little do they know the heavy top has been lowered over their heads and a fire is lit below. They will be cooked, but they just don’t know it yet.

In April, I told readers I would let them know when China’s property bubble was about to burst. The market has now peaked. It will trend down gradually for the rest of the year. When expectations of a yuan revaluation reverse and capital outflows ensue, probably in 2012, the market will deflate faster. (more)

Where is the Bottom for Housing? We May Not Know for Years Housing

How far are we from a bottom in U.S. home prices? There are many estimates that there could be another 10% or more for the national average and median prices to decline. This author estimated that 2010 had a most probable decline around 11% from December 2009, with further declines possible in 2011. Little decline has actually been seen as prices are quite near where they were nine months ago. However, in the past couple of months predictions of further price declines have increased. Two weeks ago I pointed out that the outlook for home prices may be degrading.

20% Price Decline to the Bottom? (more)

Power Up Your Portfolio With Uranium

The world is demanding more energy, at lower costs, with a smaller environmental footprint. The need is great, and with an increasing portion of the population moving from agrarian communities to developed cities, the global consumption of electricity is rising sharply.

In the past, emerging markets like China and India have been able to meet this rising demand by building coal-fired electricity plants, with the obvious byproducts being pollution and poor health. But emerging markets are increasingly turning to alternative sources of energy – generating power through cleaner processes and using renewable sources.

Grid parity” or renewable energy at a comparable price to traditional measures is still not possible for technologies such as wind and solar, but nuclear energy costs are very close to matching coal and natural gas with much less fallout in the way of carbon emissions.

Of course, the term “nuclear” brings up images of Chernobyl and Three-Mile-Island, but over the past few decades the technology of nuclear power generation has become much safer and the threat of a nuclear accident is now very small. Even staunch environmentalists often concede that the risks associated with reactors (and the disposal of nuclear waste) is less of a danger than the harmful gases typically emitted from traditional energy sources.

The bottom line is that, for the next several decades, nuclear energy production is likely to increase as developed and emerging markets alike seek to meet rising energy demands in a responsible and efficient manner. (more)

AMEX Gold BUGS Index Update

Sorry for the delay in posting this article...the amount of time for deducing the Elliott Wave count has occupied an inordinate amount of time. The present behaviour of the HUI leaves only the presented Elliott Wave count as being plausible at the moment. There are many undercurrents in the market at present and often how they blend to create sudden vortexes or expansions in strength of flow are impossible to predict. If the HUI were to take out 450 in the coming correction, then I would have to revise my thinking...however, analysis on gold, and the broad stock market indices support the presented ideas of this article (at least for the moment). With today's analysis, keep in mind that risk capital should have extremely tight stops to preserve money. As mentioned for the past 5 months or so, any move above 505 for two consecutive closes places termination of the next upward move somewhere between 900 to 1000. One important thing to consider is that stock dividend yields are outperforming bonds for the first time in awhile...generally under such circumstances, smart money rotates into stocks, which provides a hand to the market. Under such conditions, expect the stock market to exhibit strength. (more)

The Ten Things You Should Be Doing NOW and Everyday

“Must Do” #1: Stay Alert and in the Know.

For the last fourteen weeks, we’ve examined the new economic realities that confront us on a daily basis. Our discussions have centered on a groundbreaking documentary, “The Fall of America and the Western World” which let us in on the thoughts, principles and policies of right wing, left wing, centrist and independent economic and political thinkers.

Each week we’ve offered practical advice on things you can do to prepare for further economic deterioration and ultimately, your survival. This marks the last of our articles — we thought it would be advantageous to summarize our previous tips on what you should be doing starting right now and going forward to best position yourself to keep your head above water…

TIP ONE: Get Real. You must realize you are being lied to by the media, the politicians and the experts. If you don’t accept this reality, then you will not be serious in your efforts to change your situation.

TIP TWO: Be Prepared. Figure out what you’ll need to survive and examine what you have. This will tell you what you don’t have. Start a plan so you can get what you need, but don’t yet have. (more)

Technically Precious With Merv

FREE weekly precious metals investment newsletter, click here

Average property-price gap in US cities varies by more than $1m

As America's depressed housing market bumps along the bottom, a yawning chasm has opened between the haves and the have-nots in the world's biggest economy, with average house prices in US cities varying from $68,000 (£43,000) to $1.8m (£1.12m).

A study of typical prices for four-bedroom homes has concluded that you could buy 26 houses in the motor city of Detroit for the cost of one in the Californian enclave of Newport Beach, which is the wealthiest housing market in the US and is known to television viewers as the setting for the stylish teen drama The OC.

New research by the estate agency Coldwell Banker found that the average house price in Newport Beach was $1.83m in the six months to August. Second in the rich league was the Silicon Valley enclave of Palo Alto, home to Hewlett-Packard and Facebook, where property changes hands for $1.48m; followed by the New York commuter town of Rye, with an average price of $1.33m. (more)

US Economic Calendar

DateTime (ET)StatisticForActualBriefing ForecastMarket ExpectsPriorRevised From
Sep 289:00 AMCase-Shiller 20-city IndexJul-3.1%3.4%4.23%-
Sep 2810:00 AMConsumer ConfidenceSep-54.052.953.5-
Sep 2910:30 AMCrude Inventories09/25-NANA0.970M-
Sep 308:30 AMGDP - Third EstimateQ2-1.6%1.6%1.6%-
Sep 308:30 AMGDP - DeflatorQ2-1.9%1.9%1.9%-
Sep 308:30 AMInitial Claims09/25-450K457K465K-
Sep 308:30 AMContinuing Claims09/18-4450K4450K4489K-
Sep 309:45 AMChicago PMISep-
Oct 18:30 AMPersonal IncomeAug-0.3%0.3%0.2%-
Oct 18:30 AMPersonal SpendingAug-0.3%0.3%0.4%-
Oct 18:30 AMPCE Prices - CoreAug-0.1%0.1%0.1%-
Oct 19:55 AMU Michigan Consumer Sentiment - FinalSep-
Oct 110:00 AMConstruction SpendingAug--0.7%-0.5%-1.0%-
Oct 110:00 AMISM IndexSep-55.054.556.3-
Oct 12:00 PMAuto SalesSep-NA3.8M3.7M-
Oct 12:00 PMTruck SalesSep-NA4.9M4.96M-