The Long Term Investor

HERE is the ACTUAL economic news of the day. As will continue tof the next couple of years.....the re-opening is still alive and well.
Jobless claims: Initial filings dipped to a new pandemic era low last week

https://finance.yahoo.com/news/weekly-jobless-claims-week-ended-may-8-2021-174616833.html

(BOLD is my opinion OR what I consider important content)
"Initial unemployment claims dropped more than expected to a fresh pandemic-era low, with new filings inching back toward pre-pandemic levels as more vaccinated Americans return to work and in-person activities.

The Department of Labor released its weekly report on new jobless claims Thursday at 8:30 a.m. ET. Here were the main metrics expected from the report, compared to consensus data compiled by Bloomberg:

• Initial jobless claims, week ended May 8: 473,000 vs. 490,000 expected and an upwardly revised 507,000 during prior week
  
• Continuing claims, week ended May 1: 3.655 million vs. 3.650 million expected and an upwardly revised 3.700 million during prior week
  

Weekly jobless claims have nearly halved since the start of 2021, and have fallen precipitously from their pandemic-era high of more than 6 million last year. The last several months' worth of marked improvements coincided with a fast-ramping vaccination program in the U.S., and widespread easing of social distancing restrictions across many states. Prior to the pandemic, new jobless claims averaged just over 200,000 per week throughout 2019.

"Net, claims fell more than expected last week. Filings are well below 796K, on average, in the first quarter. But the level remains higher than an average 218K in 2019," Rubeela Farooqi, chief U.S. economist for High Frequency Economics, wrote in an email Thursday morning. "The reopening is continuing, and businesses are less constrained by restrictions. We expect layoffs to ease further as the economy move closer towards normal capacity."

But improvements in the Labor Department's weekly jobless claims figures belie some ongoing strain in the labor market, even as more businesses reopen. Friday's jobs report showed a sharply disappointing 266,000 jobs returned in April, for a print well below the 1 million payroll additions expected. And the economy remains more than 8 million jobs short of pre-pandemic levels, the data showed.

Many businesses have now cited labor supply constraints, rather than a lack of demand for employees, as the key concern. A report earlier this week showed that job openings in the U.S. hit a record high of more than 8 million in March, far exceeding expectations. Some economists have pointed to enhanced unemployment benefits as a factor contributing to these shortages, especially in the service sector, as federal COVID-era jobless benefits make staying on the sidelines of the workforce a competitive alternative to working a lower-wage job.

"Labor supply appears to be tighter than the unemployment rate suggests, likely reflecting the impact of unusually generous unemployment benefits and lingering virus-related impediments to working," Goldman Sachs chief economist Jan Hatzius said in a note this week about the April jobs report. He added, however, that "it is hard to know how exactly much of the miss these factors account for."

Headline new claims aside, the Labor Department's weekly reports continue to show that an elevated, albeit improving, number of Americans are still unemployed. More than 16.8 million Americans were still receiving unemployment benefits across all programs during the week ended April 24, for an increase of nearly 700,000 compared to the prior week. That included more than 12 million Americans on the federal Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs.

State-by-state unemployment
By state, Michigan saw the largest drop in initial filings last week, coinciding with improving virus trends following a recent surge in COVID-19 cases. New filings in the state dropped by more than 14,500 on an unadjusted basis. Michigan was followed by a wide margin by New York, which saw new claims drop by 8,400 last week.

Other states saw notable increases in new jobless claims. Georgia saw 7,000 new claims filed last week, Washington state reported 5,600.

Meanwhile, some states posted insured unemployment rates well above the national average, signaling a elevated levels of claimants relative to the states' total populations. Nevada's insured unemployment rate totaled 6.4%, for the week ended April 24, rising from 6.2% during the prior week. Connecticut's insured unemployment rate came in at second-highest in the nation at 4.9%, for a decrease of 0.4 percentage points from the previous week. Rhode Island jumped to the third-highest in the country with an insured unemployment rate of 4.6%.

During the week ended April 24, the national insured unemployment rate was 2.7%."

MY COMMENT

We need to QUICKLY get these perverse disincentives to work off the books. People are not dumb...if they can make more NOT working they will simply not work. As usual.....this stuff is not particularly relevant to the markets....at least in the short term.

 

Yes....stocks are up so far today....as anyone would expect. It will be interesting to see if this can hold till the end of the day.

 

We tend to focus on what is going on in our own local area and our own country. BUT....the real estate boom is happening all over the world.

People are panic buying homes as prices skyrocket around the world

https://www.cnn.com/2021/05/13/business/global-real-estate-prices/index.html

(BOLD is my opinion OR what I consider important content)

It wasn't long ago that real estate experts were bracing for the worst.

The coronavirus pandemic had sent large parts of the world into lockdown, shuttering businesses, costing tens of millions of workers their jobs and putting the housing market into a deep freeze. The number of people asking lenders for more time on their mortgage payments surged as the global recession hit.

"This time last year we thought it was going to be 2008 all over again," said Kate Everett-Allen, the head of international residential research at real estate consultancy Knight Frank.

The fear was that house prices would collapse, as they reliably had done in past economic downturns. An increase in bankruptcies and unemployment would squeeze disposable incomes and make it difficult for highly indebted homeowners to keep up with their mortgages.

Those fortunate enough to own second homes would be forced to sell to build up cash reserves, putting even more downward pressure on prices.

"Actually, none of that happened," added Everett-Allen.
Instead, house prices soared even as the world suffered its worst slump since the Great Depression. From New Zealand to the United States, Germany, China and Peru, the same phenomenon has taken hold: home prices are skyrocketing, and many buyers are panicking.

Among the 37 wealthy countries that make up the Organization for Economic Cooperation and Development (OECD), real house prices rose by almost 7% between the fourth quarter of 2019 and the fourth quarter of 2020 — the fastest year-on-year growth in the past two decades.

So is this a bubble about to burst? No, according to Everett-Allen. Borrowing remains cheap and, once borders reopen, foreign investors will provide even further impetus to property markets, where purchasing activity has been largely driven by domestic buyers, she said.

"That will play out over the course of the rest of this year and next, and then there might be something of a lull," she added.

The Covid effect
In an unexpected twist, the pandemic has benefited house prices.
That's because governments around the world helped homeowners by temporarily banning repossessions and providing trillions of dollars of support for workers and businesses. Interest rate cuts kept mortgage repayments affordable in many places, while temporary reductions to purchase taxes in some markets spurred home buying.
These measures cushioned the housing market from the coronavirus recession. But the pandemic itself has actually turbocharged prices.

"If you lock up the vast majority of the population for months, they [rapidly reassess] what they want from their homes," said Richard Donnell, research director at UK property platform Zoopla.
As people were forced to transform houses into offices and classrooms, it didn't take long for a "race for space" to take hold.

Wealthier individuals in several countries have fled cities for larger suburban homes with more outdoor space in the anticipation that they won't need to commute into central offices as much even after the pandemic ends.
Many of them are financially in a better position than they were before the pandemic hit, since they've spent less on vacations and eating out, and can therefore spend more on house purchases.

For example, in the United Kingdom, commuter towns within easy reach of London, such as Bishop's Stortford and Winchester, have seen property values surge.

"Anything with a home office within an hour train ride of London is going for 10% above market value," according to Daniel Harrington, international head of growth at upmarket estate agent Fine & Country.

One trend Harrington has observed in capitals such as London and Paris sees wealthy executives trading their centrally located houses for something bigger but cheaper further out of the city, leaving them with enough cash to buy a small apartment downtown and a holiday home elsewhere.

That's heightened domestic demand for property in places such as the French Riviera, which is traditionally dominated by foreign buyers.

In the seaside resort town of Ilfracombe in southwest England, Lee Hussell, the director of estate agency Webbers, has sold two properties in recent months for £100,000 ($139,000) above the asking prices.

"In 38 years of buying and selling homes I haven't witnessed a market like it," commented Henry Pryor, a UK buying agent. "There have been stories of buyers paying £10,000 ($14,100) plus just to be able to view a property."

With inventory levels in the United Kingdom some 30% below the norm, people are "panic-buying properties," Pryor added. Transactions have been tracking above average every month since November, with March notching 180,000 sales, almost double the average for the same month over the past 20 years.

"Twelve months ago, people were panic buying toilet paper for fear they might run out. That's very much the sensation we have today [in the housing market]," he said.

House prices in Britain surged 8.5% in 2020 despite the worst recession in more than three centuries. That's the highest annual growth rate since 2014, according to the Office for National Statistics.

And it's not just the United Kingdom. In the United States, the number of sales of existing homes reached the highest level in 2020 since 2006, according to the National Association of Realtors.

House prices rose 9% in 2020 and have continued to climb, with the median price of an existing home hitting a historic high of $329,100 in March.

In one staggering example of how frenzied the market has become, realtor Ellen Coleman received 76 all-cash offers on a $275,000 fixer-upper in suburban Washington D.C. within three days of listing the property. The four-bedroom, 1,800 square-foot home sold for $460,000, a 70% increase on the asking price.

From Auckland to Shanghai, Munich and Miami, house prices appear to be defying gravity.
In Germany, properties are selling within two weeks of being listed and brokers are struggling to secure listings, according to Michael Heming, master licensee for Fine & Country in Germany, Austria and Switzerland. "It's a very strong market and prices are going higher and higher," Heming told CNN Business.

In Portugal, foreigners have been snapping up houses despite not being able to view the properties they're buying. Prices there jumped 6% in the fourth quarter of 2020 compared with the same period a year earlier, according to Knight Frank data.

Despite having no visitors from traditionally strong buyer markets, such as Brazil, Britain, France and Belgium, the first three months of 2021 has already broken sales records, according to Charles Roberts, Fine & Country Portugal's managing partner. "We have sold quite a lot of that blind," Roberts said, adding that foreign buyers want fresh air, open space and a picturesque bolthole to escape to for the next pandemic. "When travel opens up, I think we're in for three months of pandemonium."

He recently sold an apartment in coastal Cascais, just west of Lisbon, for €3.5 million ($4.2 million) to a South African who has never visited the town.

In India, prices have declined following a 6.9% slump in GDP last year, but transactions surged following the end of the first lockdown.

"Covid led to activity coming back into the market," said Hitesh Oberoi, the CEO of Info Edge, which owns India's largest property portal, 99acres.com. "A lot of people want bigger homes," he added. "Many people felt that because the economy was tanking they would get good deals."

Oberoi said that falling interest rates and lower duties on transactions in some parts of the country have also helped, but that the market is slowing down once again as India battles a devastating second wave of the virus.

Governments move to cool markets
In several countries, governments are already looking at ways to prevent their housing markets from overheating.
In New Zealand — where median prices for residential property increased by more than 24% over the year to March to a record high — the government is under pressure to stabilize the market, according to Wendy Alexander, the acting CEO of the Real Estate Institute of New Zealand.

In March, the government announced a string of measures that they hope will "cool demand from investors" and slow the pace of price growth, Alexander said. For example, tax loopholes have been tightened and ministers are considering clamping down on interest-only loans to speculators.

In China, where house prices in "tier-1 cities" including Beijing, Shenzhen, Shanghai and Guangzhou rose by 12% on average year-on-year in March, "Beijing is more determined than ever to rein in property leverage," analysts at Societe Generale said in a note last week.

"Over 30 cities, accounting for one-fifth of national sales in 2019, have rolled out major tightening measures," said Michelle Lam, Societe Generale's greater China economist.

"These include buying and selling restrictions, credit restrictions, increasing the holding period for tax exemptions and fixing loopholes via fake divorces," she added. In the past, some couples have filed for divorce to get around caps that limit property ownership for families.

But even with greater curbs in place, Societe Generale analysts expect the correction in house prices in China to be modest given that lending conditions will remain favorable and because of sound demand for urban property, limited supply in top-tier cities and persistent interest in property investment.

Banking regulators elsewhere could also tighten mortgage lending rules in order to cool markets, according to Matthias Holzhey, head of Swiss real estate investments at UBS, who points to regulation more broadly as a possible threat to house price growth.

For example, policymakers could increase taxes on land and transactions, particularly as governments seek to repair public finances following the pandemic.

Why the boom is unlikely to bust
But even as governments train their sights on the housing market, analysts are not predicting a house price correction.
Global economic growth is projected to be much stronger this year, as vaccines are rolled out and lockdown restrictions ease, which will be supportive of housing markets.

Crucially, interest rates are expected to remain low. "Historically, periods of weak house prices have been triggered by rising interest rates," said Holzhey.

Rock bottom rates have been a key driver of prices, particularly in the United States and Europe, because they make borrowing more affordable. Mortgage rates across the 19 countries that use the euro averaged just 1.3% in March, according to official statistics.

Even with inflation edging higher, policymakers are expected to keep interest rates low to secure the recovery. They may have to change tack if prices keep rising and hold steady at higher levels, but major central bankers have been at pains to stress they're comfortable to let their economies run hotter than normal if it will help juice growth and create jobs.
"Mortgage rates will remain structurally low and supportive of market growth for the next couple of years," said Adam Challis, Jones Lang LaSalle's executive director for research and strategy across Europe, the Middle East and Africa.

In other words, don't expect this boom to bust any time soon.""

MY COMMENT

The housing boom is a world wide event.

I find the first paragraphs of this little article very interesting. As usual....the story-line from the experts.....and....in the media when this stuff started was all DOOM&GLOOM.....it was going to be a housing BUST.

As is usually the case:

"NONE of this happened"

Any time there is PANIC buying of anything.....there is danger......danger, danger. The reason to buy a home is either for long term investment as a rental or as a home to live in for the longer term. Panic buying simply leads to irrational buying.....and later.....REGRET.

We will see the REAL housing market when mortgage rates get back to a more realistic level in line with historic norms. BUT....till than....with the maturation of the LARGEST single generation in history.....the Millenial generation.....and the low rates....it is going to be a BOOMING housing market.

 

HERE is the other little general economic story of the day today. Yes...irrelevant....as usual.....especially to the longer term investors that are not trying to speculate on the day to day market moves.

Another inflation gauge comes in hot with producer prices jumping 6.2% in April from a year ago

https://www.cnbc.com/2021/05/13/producer-prices-april-2021.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• The Producer Price Index spiked 6.2% for the 12 months ended in April, the largest increase since the Bureau of Labor Statistics started tracking the data in 2010.
• It said the PPI rose 0.6% from March, twice the rate expected in a FactSet survey.

Companies paid much higher prices to producers in April for everything from steel to meat in another sign of inflation in an economy rapidly recovering from the pandemic. The new data comes a day after a sharp gain in consumer prices sent the stock market reeling.

The Producer Price Index rose 0.6% from March, according to the U.S. Bureau of Labor Statistics. Year over year, the PPI spiked 6.2%, the largest increase since the agency started tracking the data in 2010.

Economists polled by FactSet were expecting a 0.3% monthly increase in April and 3.8% year over year.

The core PPI, which excludes volatile items like foods, energy and trade services, rose 0.7% in April from the previous month and jumped 4.6% year over year. The increase from a year ago was the biggest jump since 2014 when the department first calculated the data.

The Producer Prices Index came into focus after Wednesday’s consumer prices report showed hotter-than-expected inflation and triggered a big sell-off in the stock market.

The Labor Department reported that the prices American consumers pay for goods and services accelerated at their fastest pace since 2008 last month with the Consumer Price Index spiking 4.2% from a year ago.

Producer prices measure the prices paid to producers as opposed to prices on the consumer level.

A sharp jump in steel mill products contributed to the leap in producer prices in April, the Labor Department said. Prices for beef and veal, pork, residential natural gas, plastic resins and materials and dairy products also moved higher last month.

Prices for steel products jumped 18.4% in April from a month earlier, while foods prices edged up 2.1%.

In addition to rising prices, one of the main reasons for the big annual pace was because of base effects, meaning inflation was very low at this time in 2020 as the Covid pandemic shut down big parts of the economy. Year-over-year comparisons are going to be distorted for the next few months, and the Federal Reserve has warned about these headline numbers, saying the spikes will be transitory.

Higher price pressures come as the country tries to recover from the pandemic-induced recession. While a pickup in inflation is normal as the economy reopens, investors fear it could squeeze companies’ margins and erode profits if lofty prices are sustained for a long period. Such a scenario could also force the central bank to start tapering easy monetary policies in place.

MY COMMENT

YES....this data is significantly DISTORTED by the shut down of the economy. I have no doubt that we are going to see transitory price increases by many companies. They have a clear field to do so right now.....and....they are going to do it now to prepare for higher corporate taxes that are sure to come soon. The bottom line.....companies are going to kick up the revenue and profits....on the backs of consumers.....regardless of whether inflation is real or not. The perception of inflation by the general public.......is giving business the EXCUSE to raise prices and make more money.

 

My little...local...take on the hot housing market. We are in PEAK selling season and here.......in my local area....there are 4200 homes.....AND.....five are for sale at the moment. The average time on market.....five days or less.

 

Thank you Ashwin. Nice to see you posting here. Feel free to share your thoughts and experiences.

 

Well we are nearing the end of a BIG day for stocks and funds. Today we will make up much of yesterdays losses. The markets are experiencing RAMPANT speculation by gamblers lately....along with much erratic activity by inexperienced buyers and sellers. I am sure the real "professionals" are loving it....since the trade off of this sort of activity.