German, Italian Banks Versus US Banks And Their Central Banks Balance Sheets (Deutsche Bank’s 6% CoCo Bond Now Yielding 14%)

The German banks Deutshe Bank and Commerzbank along with the Italian bank Banca Monte dei Paschi di Siena crashed after the global financial crisis in 2008 despite an enormous spike in European Central Bank asset purchases.

On the other hand, US banks benefited from The Federal Reserve’s massive balance sheet expansion, at least until Covid hit in 2020.

Deutsche Bank’s 6% CoCo (Contingent Convertible) bond was issued in 2014. Contingent convertibles work in a fashion similar to traditional convertible bonds. They have a specific strike price that once breached, can convert the bond into equity or stock. The primary investors for CoCos are individual investors in Europe and Asia and private banks.

The yield on DB’s 6% CoCo bond is now 14%.

Deutsche Bank’s price is sinking like the battleship Bismarck along with its earnings per share.

Then there is the gold spoofing scandal at DB.

A photo of Deutsche Bank’s headquarters from 2005 before the financial crisis and after the financial crisis in 2008.

Hispanic Homeownership Rate Soars To Highest Level EVER (Black Homeownership Rate Soars To Highest Since Great Recession)

The good news keeps rolling on!

Hispanic homeowership rate have soared to the highest level EVER.

At the same time, the black homeownership rate has soared to the highest level since The Great Recession.

Housing Boom in U.S. Threatened by Shortage of Available Homes

I have been saying this for several years, so I am glad the Bloomberg News finally acknowledge it.

(Bloomberg) — The U.S. housing market, which has been a bright spot in the pandemic-battered economy, is running out of fuel.

With buyers eager to take advantage of low mortgage rates, the inventory of homes to buy is scarce. That’s driving up prices and threatening to derail the boom by pushing homeownership out of reach for many Americans.

For homebuilders, the huge demand for housing is an opportunity to crank up construction and solve the inventory crisis. Instead, some are deliberately slowing things down as they grapple with supply shortages, surging lumber costs and intense competition for labor and land.

Yes, available new home sales have generally increased since the great slump of 2012, but are slumping again. Note the recovery in new homes for sale when The Fed expanded their balance sheet in 2012-2013 with QE3.

The Fed helped set a fire in housing.

Cryptocurrencies, Gold, Silver Moving Together Since Covid Correction In March (Cry Havoc!)

The Covid-19 wreaked havoc in market in March … and it hasn’t been the same.

The Bloomberg Galaxy Cryptocurrency index, gold and silver, have all moved in near lock-step since the Covid Crash (particularly in speculative cryptocurrencies).

What caused the change in relative pricing before and after the Covid Correction in March?

Cry havoc and let slip the dogs of … The Federal Reserve.

US AUG.NEW HOME SALES AT 1.011M ANNUAL RATE AS Q3 GDP FORECAST SOARS TO 28.9% QoQ

As I have been saying for a while now, Q3 GDP is rebounding strongly and that is driving new home sales through the roof (coupled with historic low interest rates).

As the supply of new home sales got eaten-up.

The South led the wave with 1) aging population and 2) people escaping high taxes of in northern cities (e.g., New York, Chicago, etc).

Will Powell and The Fed take their foot off the accelerator?

US Mortgage Purchase Applications Surge 13.41% (Refi Apps Surge 20.92%)

It is difficult to keep an economy down with Covid-related shutdowns.

According to the Mortgage Bankers Association applications index, unadjusted purchase applications rose 13.41% for the week ending 09/18. Unadjusted refinancing applications rose 20.92%.

Mortgage purchase applications usually peak in late April or early May, but due to Covid, they peaked this year in late June and had another boost in the latest week.

Mortgage rates, according to Freddie Mac’s latest loan committement data, is at 2.87%.

You can see the impact of easy credit standards on mortgage purchase applications, …

Elliott wave for mortgage refinancing?

Give Me A V! U.S. Existing Home Sales Increase to Fastest Pace Since 2006 (Median Price Highest Ever On Still-Low Available Inventory)

Another sign of a v-shape recovery!

US Existing Home Sales rose by 2.4% in August to 6 million units sold, up from 5.86 million units sold in July.

The median price of existing home sales rose to 310.6 in August while the available inventory of EHS remains near the lowest level since 2000.

Lastly, Q3 GDP is forecast to be 31.954%.

Bollinger Band Points To Mean Reversion In Gold (AAPL Near Lower Band)

Spot gold fell more than 3% Monday to its lowest intraday level since August, breaching its lower Bollinger band for the first time since June. That suggests its drop may have been too much, too soon, and that a reversion to the mean lies ahead.

Apple (AAPL) is near the lower band.

A Bollinger Band is a technical analysis tool defined by a set of trendlines plotted two standard deviations (positively and negatively) away from a simple moving average (SMA) of a security’s price.

Ichimoku cloud? The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, is a versatile indicator that defines support and resistance, identifies trend direction, gauges momentum and provides trading signals. Ichimoku Kinko Hyo translates into “one look equilibrium chart”.

Elliott waves? The Elliott Wave Theory was developed by Ralph Nelson Elliott to describe price movements in financial markets, in which he observed and identified recurring, fractal wave patterns. Waves can be identified in stock price movements and in consumer behavior. Investors trying to profit from a market trend could be described as “riding a wave.”

Sea Of Red! Gold, Banks, Tech Plunge On Monday Opening (US Covid Deaths Reach 200K)

What a morning!

Banks are being investigated (a new investigation by the International Consortium of Investigative Journalists says JPMorgan, Deutsche Bank AG and HSBC Holdings Plc were among the global banks who “kept profiting from powerful and dangerous players” in the past two decades even after the U.S. imposed penalties on these financial institutions) and Covid deaths hit 200K (not 200 MILLION like Joe Biden stated).

It’s a sea of red out there.

A note on Covid. The  US Center for Disease and Control Prevention  (CDC)  estimated that 150, 000 to 575,000 people died from (H1N1) pandemic virus infection in the first year of the outbreak.

  • 80% of the virus-related deaths were estimated to occur in those < 65 years of age.

So, Covid, the elderly killer, is near the lower end of the CDC’s range on US deaths.