Unfortunately, the Fed is fallible, just like stock market investors. If inflation -- i.e., the rising price of goods and services -- begins to heat up, the nation’s central bank could choose to get considerably more hawkish with its monetary policy. Or, in plainer English, it could get more aggressive with hiking its benchmark short-term interest rate between banks. Should that happen, interest rates for variable rate loans and mortgages would be expected to rise. This, in turn, could put the brakes on economic growth, as well as increase delinquency rates tied to variable rate loans.
Currently, the U.S. stock market is in the midst of one of the longest bull markets in its history. Since bottoming out in March 2009, the broad-based S&P 500 (INDEX: ^GSPC), led by a strong rally in technology stocks and other growth industries, has surged by more than 325%! Mind you, the stock market has historically returned 7% a year, inclusive of dividend reinvestment and adjusted for inflation. So, to say that things are going well right now would be an understatement.
The heads of the SEC and CFTC often point out that they are running an IT museum. They have photographic evidence to prove it—the highest-tech background that The New York Times (on September 21, 2010) could find for a photo of Gregg Berman, the SEC’s point man on the Flash, was a corner with five PCs, a Bloomberg, a printer, a fax, and three TVs on the wall with several large clocks.
These volumes of trading activity in 2011, to some degree, were regarded as more natural levels than during the financial crisis and its aftermath. Some argued that those lofty levels of trading activity were never an accurate picture of demand among investors. It was a reflection of computer-driven traders passing securities back and forth between day-trading hedge funds. The flash crash exposed this phantom liquidity. In 2011 high-frequency trading firms became increasingly active in markets like futures and currencies, where volatility remains high.
Mathematicians have studied housing bubbles, such as The University of Pennsylvania, and their HOUSING BUBBLE STRUCTURAL MODEL AND HYPOTHESES models couldn’t figure it out. The factors they studied do play a role, but housing bubbles and crashes are likely a cultural phenomenon (outside of major recessions). It comes down to values, attitudes, dreams and panic emotions.
If we, in short order, enter into a recession it will be directly related to the bail outs and QE put in place under Obama’s watch. They did what they thought was best, but much of the benefit of all this asset inflation has not gone to the average person and it has put us in uncharted territory as we begin to embark on an unwinding journey in the Fall.
Hi Tamara, a vacation rental property owner in San Diego County I knew did well during the recession. Prices are much higher now and you’ll need to be a very good rental property manager. Take a look at the San Diego Housing market report if you didn’t read it. San Diego’s fantastic and the shortage there will never ease. My opinion is that you need to be a good marketer to keep it rented. If you build up a good database of returning renters, you should be okay. With VRBO and Airbnb, you’ll have extra reach too. With Trump bringing jobs and investment money back home, I can’t see a recession, just volatility and maybe some trade wars!
Nifty and the Sensex saw a sharp correction on Friday, the last trading day of the week as financials rocked the Nifty boat. The Sensex at one point of time was down by over 1000 points and the Nifty had plunged below the 11,000 mark before semblance of sanity returned to the markets. There were 5 principal factors behind the sharp crash in the market on Friday.
Yes, he’s applying national stats only to local markets. It’s difficult to deny the severe housing shortage in most markets inlcuding Los Angeles, New York, San Jose, San Francisco, Dallas, Seattle, detc. He takes aim at Millennials, whose dreams he doesn’t regard as worthy. There are a lot of people who would like to stifle new housing growth as a way to increse the value of their own property investments. As long as they control politics, housing shortages will continue.
PropertyUpdate.com.au is Australia's leading property investment wealth creation website with tips, advice and strategies from leading real estate investment experts. Featuring topics like property investment, property development (helping you understand the process), negative gearing and finance (so you can borrow more from the banks), property tax (allowing you to structure for legal tax deductions and asset protections), negotiation, property management (assisting landlords and tenants understand their right responsibilities), commercial property (for experienced property investment individuals), personal development and the psychology of property investment success.
“Big surprise and a shock to me. Sitting on strong liquidity position. We have been extremely conservative in maintenance of liquidity. There is no default whatsoever. The repayments are not even due yet. There is ample liquidity lying with us in the system to take care of interest as well as the principle payouts over the next couple of quarters. All this what we are seeing is panic-stricken market reaction. Total liability position till 31 March is just Rs 4,800 crore; obviously there is some amount of CP that is there in the system, but it’s not a very big amount. At the same time there is close to Rs 10,000 crore of liquidity available with us in the system other than collections that we accrue on a monthly basis. Those collections are anywhere between 2500-3000 crore. Not to go on a pledge shares; no loan against shares NPA position is strong; asset quality is top notch,” Kapil Wadhawan, MD, DHFL told CNBC TV 18.
Hi Kesh. You’re welcome. I can’t advise you however if you check the Toronto condo market during February, you’re giving the market time to bottom out. Anything under $500k will in extreme demand because of the stress test rules. $900 a square foot is scary, especially for a 1 bedroom. However, immigration is rising fast, there’s not much inventory, and there is a lot of reason to consider the possibility of a housing boom rather than a housing crash. The government doesn’t want to sincerely increase supply, so they’re going to try to kill demand. That’s where they run the risk of killing an economy that’s still dependent on real estate. But Millennials need somewhere to live as do all these new immigrants. The question you should consider before buying is will Trudeau and Wynne get routed out of office before they create a recession? Are you investing or do you need to live in the unit?
BMO’s senior economist Benjamin Tal said in a Toronto Star report on October 14th, the Ontario Government’s Places to Grow program was primarily responsible for the fast rising prices in the GTA market. He also suggests other red tape factors worsened the situation. Prices in Newmarket, Markham, Mississauga, Richmond Hill, Bradford East Gwillimbury and Aurora have definitly crashed.
However, if China’s economy falters it might. Geopolitical turmoil concerning North Korea, Iran, Syria or Russia could also become a catalyst if things escalate enough. It’s most likely that the next market crash, whenever it occurs, will be the result of a perfect storm caused by several factors. But, since it’s not something anyone can predict, it’s best to concentrate on being prepared for a crash whenever it may occur.
Not only has subprime lending seen a major decline, but mortgages have also become much harder to attain due to stringent lending standards. According to CoreLogic’s Housing Credit Index, loans originated in 2016 were among the highest quality originated in the last 15 years. This is greatly due to the type of borrowers able to qualify for loans. The current average credit score for borrowers being granted mortgages is 739. In October 2009, the average FICO score was 686, according to Fair Isaac. The lowest one percent of mortgages issued have credit scores averaging 622-624. Compared to the average range in 2001 of 490-510, the standard to get financing has risen substantially, and as a result, the likelihood of default has dropped. Lenders have done this to ensure the economy doesn’t again become propped on bad loans like it was leading up to the Great Recession.
hcks, we’ve been looking all over Houston for you. We have reserved a seat for you on Niburu when it gets close enough to board via the secret mind control surf boards we’ve stashed away for those of us in the ” know.” We’re making sure you’ll be sitting next to Dave Hodges and your scientist friend, you know, the one whose name can never be mentioned lest the Earth be ravaged by brain eating dreadlock zombies, you know, THAT scientist friend. By the way, we have been able to confirm that Ted Turner is indeed and has been a cannibal for years now, so he’s looking forward to some fine dinning once the shtf next April. Stay on your normal frequency as we may need to transmit additional instructions to you without delay.
Statistically, September is the worst month of the year for stocks, and while the S&P 500 is up about 8.5 percent so far this year, strategists say what's ahead this fall could challenge those gains, including the U.S. midterm elections. August is often wobbly too, but this year's 3 percent S&P gain was the best performance for the month in four years.
In 1987, you had an economy that was slowing from a rapid recovery, Treasury yields that were huge and falling, and an inflation rate that was running around 4%. Today, you have an economy that is just starting to boom, Treasury yields that are low and rising, and an inflation rate running around 2%. In other words, the economic conditions are starkly different.
The release of so many new games in 1982 flooded the market. Most stores had insufficient space to carry new games and consoles. As stores tried to return the surplus games to the new publishers, the publishers had neither new products nor cash to issue refunds to the retailers. Many publishers, including Games by Apollo and US Games, quickly folded. Unable to return the unsold games to defunct publishers, stores marked down the titles and placed them in discount bins and sale tables. Recently released games which initially sold for US $35 (equivalent to $92 in 2018) were in bins for $5 ($13 in 2018). Crane said that "those awful games flooded the market at huge discounts, and ruined the video game business". By June 1983, the market for the more expensive games had shrunk dramatically and was replaced by a new market of rushed-to-market, low-budget games.
Slingshot, you have me laughing, thats a good one. Hopefully i am not responsible for run on the ammo. Me like everyone else, has heard it from the horses mouth. No one knows the exact date when it will hit in September. I was told by my scientist that by Novermber, people will literally be on the streets in mass, raising hell on earth, and he is not sure why, its just what he was told. Food and water shortage, civil war, revolution, uprising? etc. Who knows. All that crap i am tryping up, its what i am being told is likely to commense.
Be prepared for the potential of civil unrest. If the banks put a limit on withdrawals (or close like they did in Greece) you can look for some panic to occur. If the stores dramatically increase prices or close..more panic. Be armed and be prepared to stay safely at home. (Although this article was written during the Ferguson race riots, civil unrest follows a similar pattern regardless of the cause.)
Panic of 1901 Panic of 1907 Depression of 1920–21 Wall Street Crash of 1929 Recession of 1937–38 1971 Brazilian markets crash 1973–74 stock market crash Souk Al-Manakh stock market crash (1982) Japanese asset price bubble (1986–1991) Black Monday (1987) Rio de Janeiro Stock Exchange collapse Friday the 13th mini-crash (1989) 1990s Japanese stock market crash Dot-com bubble (1995–2000) 1997 Asian financial crisis October 27, 1997, mini-crash 1998 Russian financial crisis
For example, he quotes the very low average household net worth?s of households. Households 45 to 54 have less than $200,000 mean net worth. But when median net worth is taken into account for the same group, the number is closer to $700,000. Doesn't this support current home prices while at the same time highlighting a bigger issue, the widening diversity of haves and have-nots in America? Also, San Diego is presented as the least affordable housing, $379,000 average home vs. $60,000 average income. That's a great fact but does it take into account the large military population that is generally lowly paid but highly transient that may be more renter than buyer in that area? I theorize that these many people are lowering average household income while substantially not trying to purchase homes.
According to estimates from JPMorgan Chase in June 2017, just 10% of all stock-trading volume is the result of investors picking stocks to buy and sell. The remainder of trading volume primarily derives from quantitative-based computer trading. Essentially, we’re talking about computer programs that aim to secure small profits via high-frequency trading (HFT) hundreds or thousands of times a day.
i would completely disagree with you on the lending to people who should not have gotten loans part. I was a person who got a loan during that time. I made all my payments, but it was a stated income loan with almost no verification of income. I basically said I want to buy a house for this much and they said okay. Things are so much different now.
Lana, a lot of people are talking housing crash in many markets, but that could take the whole economy down. Even with a crash, it would still be tough for buyers. The right approach to bring prices down is more housing supply. The governments should provide tax breaks and other incentives for housing development and legislation which promotes new housing projects. Good finding a place you can afford.
While some areas such as the 905 have seen big drops, (houses are sitting and have to be rented now) areas in Toronto have maintained prices. These neighbourhoods offer a more reliable bet for sustainable property investment value. Many property investors have discovered the hard way, what the word sustainable means in bottom line dollar terms. Because of demand, two hot areas right now are rental property investment and student housing investment.
Perhaps the likeliest reason for the next stock market crash could be an escalating trade spat between the United States and China. After the U.S. initially placed tariffs on $34 billion worth of Chinese goods, China retaliated with tariffs of its own on an equal value of imported U.S. goods. Now the two sides are threatening to one-up the other with tariffs.
The Toronto situation is similar to Vancouver’s housing market where prices have really plummeted (43%). With the resolution of trade with the US, it appears no Toronto housing crash is imminent, and prices will return to their upward climb. Inevitably, high interest rates and Canada’s lack of competitiveness will create a new crisis. New listings will likely drop as homeowners feel more comfortable with their employment outlook, and enjoy the housing price rise.
Asian stock markets rose on Friday after Wall Street hit a new high and a survey showed Japanese manufacturing accelerating, an AP report said. Tokyo's Nikkei 225 rose 0.5% to 23,793.35, Hong Kong's Hang Seng added 0.9% to 27,712.47, China's Shanghai Composite Index climbed 0.3%, erasing earlier losses, to 2,737.27 while Seoul's Kospi was up 0.2% at 2,327.87.
Usually, HFT programs and computer trading works without a hitch. But once in a while problems do crop up. Back on Aug. 24, 2015, the United States’ three major stock indexes plunged on the open, but would recover much of their losses by midday. Among the reasons blamed for the dip were market makers and HFT traders. With so many stocks within the S&P 500 failing to open on time, and a number of exchange-traded funds under trading halts, HFTs and other high-speed traders shut down their systems, removing much-needed liquidity from the marketplace and exacerbating the early-day decline.
Personally, I believe that the S&P 500 will bounce back on Friday, but that doesn’t mean that the crisis is over. Remember, some of the best days in stock market history happened right in the middle of the financial crisis of 2008. During market panics, we should expect to see dramatic ups and downs. When markets are calm, that is good news for stocks, but when markets start swinging wildly that is usually a sign to start heading for the exits.
Fast forward thirty years. I’ve discovered an analog chart model that correlates the markets of the 1980s to the markets of the 2010s. Specifically, it correlates the S&P 500 from 1978 to 1987 to the S&P 500 from 2010 to 2018. The correlation rate? 94%. In other words, this model shows that the stock market of the past eight years is trading similar to the stock market of the 1980s.