Tag: markets

AMAZON TO ACQUIRE WHOLE FOODS

AMAZON TO ACQUIRE WHOLE FOODS

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.

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ALARM BELLS GO OFF AS 11 CRITICAL INDICATORS SCREAM THE GLOBAL ECONOMIC CRISIS IS GETTING DEEPER

ALARM BELLS GO OFF AS 11 CRITICAL INDICATORS SCREAM THE GLOBAL ECONOMIC CRISIS IS GETTING DEEPER

alarm-clock-public-domain-460x306By 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” →

Sundown in America – David Stockman

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.

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Storm Clouds on the Horizon

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….

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Towery: Prepare for an Economic Meltdown

Prepare for an Economic Meltdown

By:  Matt Towery

In 2006, I examined a series of surveys we conducted nationwide and then predicted a collapse of the housing market. Plenty others followed with similar forecasts and postmortems over the following months and years. But my column was among the first.

I’ve made predictions about other slowdowns in the American economy. I’ve been mostly correct, although in 2010, I suggested that the stock market ultimately would plunge. Turned out that it climbed instead of descending. The fact is that it’s easier to predict the weather next month than to get an accurate read on the future of the stock market.

My timing was off in predicting a plummeting of the stock market, my but theory still stands. But the sobering news may extend beyond just that. A more immediate happening could be the sudden and silent rise in the cost of living for average Americans, thanks to continuing stagnant wages, plus unemployment that is higher than the official numbers. These numbers don’t take into account the many who have fallen off the unemployment rolls or have simply given up looking for work.

It’s true enough that some of those who predict oil prices may be overstating the severity and the extent of the unrest in the Middle East and North Africa. There is little question that the outcome of this broad geopolitical conflict probably won’t be decided for at least months.

Observers should recall that when the pro-American monarch in Iran was overthrown in 1979, most foreign policy experts in the Jimmy Carter White House believed that university students, bureaucrats and the educated classes in Iran would form a loose coalition that would transform that country into some kind of democracy. Then the Islamist Ayatollah Khomeini entered the stage. Within a year, Americans had been taken hostage in the U.S. embassy in Iran.

Although jobless claims were down this week and some other economic indicators now look a bit better than they have, we now face the possibility of inflation spiking, and of a lack of quality jobs being created.

Until we see corporations and especially small businesses enjoying sustained expansions, we’re going to keep chasing our tails in an ongoing circle of weak and weaker economic growth.

Now for a truly troublesome economic cocktail, throw in the instability in the Arab world. We can’t know yet who will be in control of some of the region’s immense oil reserves a year from now. The existence alone of this political instability may keep both the oil and stock markets in flux.

But the biggest economic moment of truth will be stateside. Corporations have squeezed their employees, their vendors and every other possible resource, all just to keep upping their profits year after year.

But all the blood already has been squeezed out of this ever-hardening rock. We are now seeing indications that, except for military outlays, capital expenditures are still lagging.

The big banks that enjoyed public bailouts are now recovering, but they are still hoarding too much cash. The result is a cutoff of capital flow. At some point, there will be an end to the benefits corporations have enjoyed from their rounds of cost-savings.

What this likely means is that in 2012, unemployment likely will stay above 8 percent. And that number won’t include all those who have given up looking for a job. Some economic demographic groups may see overall job gains, especially the college-educated and women.

But even as they and maybe some others start to climb out of the misery of the past few years, corporations probably won’t be able to keep pulling the white rabbits of continuing profits gains out of their hats. Profits will level off as quarters are compared to quarters a year previous. Fear and reflexive stinginess will again grip corporations and banks, and they will keep on with their boycotts of expansion. That could kick the economy back into another tailspin.

What to do? We could start by not taxing at high rates those who create jobs. The best temporary solution would be to eliminate capital gains taxes, or at least cut them drastically. That would free up capital and thus motivate corporations to use the new capital to expand their businesses and employ more people. Perhaps the only companies to get this tax break should be those that use the savings to expand.

Just a thought.

Matt Towery is author of the new book, “Paranoid Nation: The Real Story of the 2008 Fight for the Presidency.” He heads the polling and political information firm InsiderAdvantage. 

The Central Economic Fallacy of the Century

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.

Are Buyers Overpaying For Investment Properties?

Robert Knakal in his StreetWise blog asks the question.

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.