SEATTLE — Online retail giant Amazon (NASDAQ: AMZN) has agreed to acquire high-end grocery chain Whole Foods Market Inc. (NASDAQ: WFM) for $13.7 billion. The all-cash transaction amounts to $42 per share and includes the Austin, Texas-based grocer’s net debt.
By Michael Snyder
Economic activity is slowing down all over the planet, and a whole host of signs are indicating that we are essentially exactly where we were just prior to the great stock market crash of 2008. Yesterday, I explained that the economies of Japan, Brazil, Canada and Russia are all in recession. Today, I am mainly going to focus on the United States. We are seeing so many things happen right now that we have not seen since 2008 and 2009. In so many ways, it is almost as if we are watching an eerie replay of what happened the last time around, and yet most of the “experts” still appear to be oblivious to what is going on. If you were to make up a checklist of all of the things that you would expect to see just before a major stock market crash, virtually all of them are happening right now. The following are 11 critical indicators that are absolutely screaming that the global economic crisis is getting deeper… Continue reading “ALARM BELLS GO OFF AS 11 CRITICAL INDICATORS SCREAM THE GLOBAL ECONOMIC CRISIS IS GETTING DEEPER”
There have been a lot of doom and gloom articles appearing lately. Should we be concerned? (GA)
By DAVID A. STOCKMAN
New York Times
Published: March 30, 2013
The Dow Jones and Standard & Poor’s 500 indexes reached record highs on Thursday, having completely erased the losses since the stock market’s last peak, in 2007. But instead of cheering, we should be very afraid.
Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.
Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.
So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.
When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.
THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.
The following is a report issued today on the economy by Curtis-Rosenthal, Inc., a well-respected real estate appraisal and consulting firm in Los Angeles.
STORM CLOUDS BREWING
This week our friends at Wells Fargo Securities (WFS) caution that storm clouds are brewing on the economic horizon. After some tough economic data reports, the Fed downgraded their economic outlook. We also have to watch out for the “fiscal cliff” that looms ahead of us in 2012. Read on for more specifics….
Prepare for an Economic Meltdown
By: Matt Towery
The late Murray N. Rothbard once published a major article titled “Ten Great Economic Myths.” Included on Rothbard’s hit list were the notions that deficits are the cause of inflation and that economists can accurately forecast the future.
One myth that he didn’t cite dominates Washington today: that the economy can be successfully “managed” from some central point. This idea underlies, directly or indirectly, all of the others Rothbard mentions.
Unfortunately, society’s intellectual, political, and economic “mainstream” still accepts what should be called the Central Economic Fallacy of the Twentieth Century. The “mainstream” just doesn’t get it. Thus, we continue to see a basic progression. First, government subsidizes x or regulates y to correct for some government-diagnosed problem z. Unwanted side effects result, and z, assuming it exists, often grows worse. Government intervenes again to fix the side effects and redouble its efforts to battle z. More undesirable side effects result. And the process continues, with government growing inexorably as interventions accumulate. More and more of the economy is micromanaged through increasing webs of subsidy, regulation, and quick fix. The logical end result, as Ludwig von Mises has shown in great detail, is socialism.
Read the whole article. The author makes a lot of sense.
The title of this piece makes you wonder what is meant by “they should sell for”. What, after all, is value? Many people (particularly appraisers) feel that value is a very different thing than the price someone is willing to pay for a property. There are all types of qualifiers such as “an arms length transaction” between a “willing buyer and willing seller”, etc. As a broker who only represents sellers, I see value as the highest price that the most aggressive buyer will pay for a property. Whether the property is “worth it” or not is completely dependent upon the perspective of the buyer.
Arguments about value versus price versus worth can go on for quite a while. This column will not attempt to define the differences between these terms, but will merely look at the relative price levels investment properties are selling for today and try to figure out why.
One of the most evident trends in the investment sales market today is the acute imbalance between supply and demand. While I spend all of my time selling in the New York Metro area, it appears that these imbalances exit nationwide. Whenever I attend conferences across the country or speak with brokers working in major cities in the U.S., the story seems to be the same: Buyers are plentiful, there is a ton of capital on the sidelines and there is not much available for sale. Forget the infamous “bid / ask spread”. There is just not enough product on the market to meet existing demand.
Read the whole article here.
It all comes down to supply and demand. Sellers are not putting properties on the market now because they have expectations of getting higher prices at some future point in time than they can get now, or they are pricing their property above what most buyers are willing to pay. Buyers have expectations of being able to buy properties at a lower price than they have to pay today.
There is such a disparity between what the expectation of sellers are at this time, and what the expectations of buyers are at this time, that it is very difficult to find a basis for agreement on price.
Buyers, particularly institutional buyers have been pretty much out of the market for 18 months. As a result they have a lot of accumulated cash that they must invest. This oversupply of cash along with the undersupply of property to buy is keeping prices up.
As an example, there is a high-rise class-A newly-completed condominium project in Los Angeles. The cost to build the property was about $360,000 per unit (which includes the subterranean garage and all amenities). The loan on the property was about $275,000 per unit. The lender foreclosed on the property and put it on the market about a month ago. Buyers thought they would be able to buy the property around $250,000 per unit, or, at most, $275,000 per unit, which would make the bank whole. There were over 30 bidders on the property, and it will most likely wind up being sold for close to the $360,000 per unit that it originally cost. A lot of capital chasing a small amount of available property.
It will be interesting to see if some stabilization sets into the market this year. Stabilization would mean that the gap between seller expectations and buyer expectations would be close enough to get some transactions completed.
I’ll keep you posted.