Friday, November 15, 2013

Man Who Predicted Gold Smash Tells Investors What’s Next

from KingWorldNews:
Right now I am focused on the manipulation that is ongoing. As you know, I had warned KWN readers around the world that the powers that be were in fact going to conduct one more downside attack. We are in the midst of that attack right now. We have now gone past levels that most people would have expected.
We are attempting to retest the lows made in the last couple of weeks, but a lot of gold is getting lost by the West in the process.
The thing for investors to focus on here is the battle between paper and physical. As I said, a lot of physical gold is getting lost in the prosecution of this down-move.
William Kaye continues @
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Is A Real Estate Crash Canada’s Next Black Swan?

Robert MacFarlane, a long-time crane operator, surveys his empire from the top of one of Toronto’s flashy new apartment buildings.

“I can see more than 50 tower cranes,” said Mr MacFarlane, whose bird's-eye photography from the country’s tallest crane has gained him online notoriety as interest in Toronto’s property sector escalates.

These cranes – which can offer clues to bubble-like conditions – emerged in response to lofty demand for condominiums from investors and homebuyers taking advantage of Canada’s ultra-low interest rates.

“I’m even considering a condo investment myself,” Mr MacFarlane added.

But as home prices rally and construction projects proliferate – particularly in Toronto, Montreal and Vancouver – industry analysts say the country’s property sector is perched precariously at its peak.

David Madani, economist at Capital Economics, believes the nation is on the verge “of what will prove to be a prolonged correction”.

“Canada’s housing market exhibits many of the symptoms that preceded disruptive housing downturns in other developed economies, namely overbuilding, overvaluation and excessive household debt,” he adds.

Mr Madani’s comments chime with a chorus of policy makers, rating agencies and hedge fund managers who have warned of the risks posed by Canada’s overheated housing market.

Alongside Norway and New Zealand, Canada’s overvalued property sector is most vulnerable to a price correction, according to a recent OECD report. It is especially at risk if borrowing costs rise or income growth slows.

In its latest monetary policy report, the Bank of Canada, the nation’s central bank, noted: “The elevated level of household debt and stretched valuations in some segments of the housing market remain an important downside risk to the Canadian economy.”

The riskiest mortgages are guaranteed by taxpayers through the Canada Mortgage and Housing Corporation, somewhat insulating the financial sector from the sort of meltdown endured by Wall Street in 2007 and 2008. But a collapse in home sales and prices would be a serious blow to consumer spending and the construction industry that employs 7 per cent of Canada’s workforce.

Under the watch of Mark Carney, the former Bank of Canada governor who now holds the same job at the Bank of England, the country weathered the global financial crisis better than many industrialised peers. It was helped by a resilient housing sector, a strong banking system and tighter lending standards.

But the flipside of a low interest rate policy designed to buttress the economy has meant that household debt levels have hit record highs as homebuyers stretched themselves to jump into the housing market. That in turn propelled demand and prices.

The government tightened mortgage rules last year in an attempt to cool demand, but while momentum slowed a little, debt accumulation did not.

Household debt has risen to 163 per cent of disposable income, according to Statistics Canada, while separate data show a quarter of Canadian households spend at least 30 per cent of their income on housing. This is close to the 1996 record when mortgage rates were substantially higher.

On a price-to-rent basis, which measures the profitability of owning a house, Canada’s house prices are more than 60 per cent higher than their long-term average, the OECD says.

Although Canada has so far defied a US-style property crash, recent surveys have raised alarm about parts of the market.

Year-to-date new home sales in the Greater Toronto Area – an area accounting for a fifth of Canada’s home building activity – are down by half from two years ago, according to the Building Industry and Land Development Association.

As existing construction projects in Toronto and elsewhere are completed, the pool of unsold properties will widen. Inventory levels are already above average in two-thirds of Canada’s housing markets, the Canadian Real Estate Association said.

Mr Madani forecasts a market correction in home prices over the next few years, predicting a 25 per cent drop.

But those that are bullish on the market point to resilient regional data. October sales of existing homes rose 38 per cent in Vancouver and 19 per cent in Toronto.

“It’s a mistake to think that what happened in the US will happen in Canada,” said Gregory Klump, CREA’s chief economist said. “There was a lowering of credit quality in the US that has not happened in Canada. If anything, over the past four years tightened mortgage regulations have successfully prevented a housing bubble.”

Mr MacFarlane too has yet to be convinced of an imminent slowdown. “In the past when things have slowed down, there has been a distinct ‘feeling’ from the boots on the ground perspective. I don’t really sense that right now.”

Even so, any strength now is not expected to last. The central bank says any continued upward momentum will exacerbate the problem, setting up the housing market for an even harder fall.

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Thom Hartmann predicts America Economic Crash in 2016

Thom Hartmann promotes his new book with the suggestion that another great depression looms over the United States in 2016, because of all the economic fraud and corruption by the 1%, the mega corporation, and politicians all buying laws to enrich themselves, and bankrupting the rest of the economy.
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November Comeback: 3 Unexpected Stocks That Are Soaring This Month: JCP, RIG, FSLR

Historically, November is one of the best months of the year for the S&P 500. When you combine it with December, the two deliver a year-end punch that's even stronger. As we approach the half-way mark of the month, with the benchmark index up 0.6% month to date and less than half a percent off of its all-time high, a trio of out-performers has emerged that are having a November to remember.

1) J.C. Penney (JCP)

That's right. The beleaguered department store chain from Dallas has the dubious honor of being able to claim the top and bottom spots in the S&P 500. Clearly, it's worst-in-class 57% year to date decline was overdone and intrepid investors have been moving back in since late October. A better than expected earnings report and guidance last week also helped keep the rally alive in a stock that has only two buy ratings from the twenty-three analysts who cover it.

Since bottoming out at $6.24 on October 22nd, the embattled chain has gained 34%, with about a third of that, or 11.6%, coming in November. That's good enough to earn J.C.

Penney the third spot.  (more)

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Why Twitter is overvalued

It was the most anticipated IPO since Facebook. And, at first glance, Twitter appears to be suffering the same result as Facebook. According to one expert, it's about to get worse.

Eric Jackson, founder of Ironfire Capital, says Twitter's relative valuation is right now too high, even using a metric that was a favorite in the dot-com bubble at the turn of the millennium – the price-to-sales ratio.

Investors and analysts use compare the price of shares to the revenue per share when there's not enough earnings history for a company or when forecasts are difficult to determine. While this measure is less volatile than the more popular price-to-earnings ratio, its biggest drawback is that it doesn't give a sense of a company's costs relative to others.  (more)

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