2019-12-10

Checkup on DJIA yo 30-year Bond Price Ratio

Chinese Headline CPI Spikes on Porkflation, PPI Still Deflating

The spike in pork prices finally made it into the headline CPI in November. It's very likely the CPI will crack 5 percent for all of 2019.

NBS: 2019年11月份居民消费价格同比上涨4.5%

NBS: 2019年11月份工业生产者出厂价格同比下降1.4%

Talent War Could Cause Housing Shortages in Some Cities

No wonder the CCP is happy with the current state of the real estate market. Between tight controls and talent wars, some markets may experience housing shortages.

The grab war referenced below is the talent war, grabbing people.

Aside from being a real estate issue, it again highlights the big difference between Chinese and American development policy. The "demographic deficit" is driving up the value of native workers in China and driving it down in the USA. Wages are up and relative housing costs down in China. Cities offer rent subsidies and even pay worker's taxes for them! In the USA, mass immigration drives down wages and drives up real estate costs, in addition to creating all manner of externalities that are costs for natives. In both cases, there is a "haves and have nots" situation. The best run cities win in China and those left behind don't benefit. But there are areas of the USA left behind as well, and unlike in China, young people who move to the city aren't given a basket of goodies for doing so, instead they have to move into a slightly less worse situation. Clearly, China's policy will run into some issues, but on the whole, it is a far more intelligent development strategy for the long-term, for social stability alone.


iFeng: 百城加入“抢人大战”行列 多城或面临“房荒”困局
From the first-tier and second-tier cities to the third-tier and fourth-tier cities, the "talent battle" has intensified in all cities across the country in recent years. According to the latest “Personnel Policies and Anju Employment Report 2019” (hereinafter referred to as the “Report”) released by 58 cities and Anjuke, more than 100 cities including Tianjin, Shenzhen, Guangzhou, and Nanjing have introduced talent policies throughout the country this year. New settlement policies have been introduced in 30 cities.

"Daily Economic News" reporters noticed that in this "grabbing war", Xi'an, Ningbo, Ma'anshan, Changsha and other cities have made regulations on talent policies, housing purchase and sales behavior. Obviously, these cities are trying to attract talents by lowering their entry thresholds, raising housing purchases, and renting subsidies.

However, will this "talent battle" be transmitted to the real estate market? Are the purchase restriction gates in various places being opened in disguise? With the influx of new populations, will these cities face the problem of “housing shortage”?
"Grab the War" to further upgrade

The most direct impact of the implementation of talent policy is the growth of the population.

Around 2010, with the rapid economic growth, the population of large domestic cities has grown rapidly, and the average annual growth of the permanent population has almost exceeded 100,000. From 2012 to 2016, the population growth of large cities has slowed down relatively, including Hangzhou, Nanjing, Suzhou, Xi'an, Hefei and other cities. The average annual net population growth of only tens of thousands of people, close to the natural population growth rate.

Since 2017, many large cities have introduced talent settlement policies, which has led to rapid population growth. For example, in Xi'an, the relaxation of college graduate registration policies in 2017 increased the household registration population by the end of the year. At the beginning of 2018, Xi'an again relaxed the settlement requirements and allowed immediate family members to move with their families. The population growth of household registration accelerated again, and the household registration population increased by 70 at the end of 2018. More than 10,000 people. Wuhan, Hangzhou, Nanjing and other cities also introduced a large population through talent policies in 2017 and 2018.
Some cities are even paying taxes for younger workers:
The "Report" shows that in addition to regular settlement and subsidies, some cities have introduced more personalized policies. Take Guangzhou as an example. For overseas high-end talents and talents in short supply who work in the Greater Bay Area, the portion of the personal income tax paid in the nine cities of the Pearl River Delta that has paid more than 15% of their taxable income is calculated by The People's Government of the Nine Triangle Areas provides financial subsidies that are exempt from personal income tax.
Some cities may face "housing shortage"

The entry of a large number of new people will inevitably stimulate the supply and demand of the local property market.

According to incomplete statistics, there are currently nearly 40 cities that have introduced talent purchase policies. Hot cities are in full swing, and more cities have yet to wake up. The urban population battle has just begun and is far from over.

The "Report" shows that many cities have made special provisions on talent purchase policies this year. For example, Hainan has introduced policies to reduce the number of years of social security or individual taxation for housing purchases to one year from the original two or five years for all kinds of talents actually introduced and working in Hainan but not yet settled.

When these cities open their arms to people, their attention has naturally increased. From the aspect of living, according to the data of 58 city and Anjuke platform, from January to October 2019, the number of new house visits in Xi'an, Chongqing, Wuhan, Chengdu and other cities is much higher than that of first-tier cities. , Wuhan, Shenyang, and Ningbo all visited more than 20% of the heat.

2019-12-09

No Mention of Real Estate Signals CCP Content With Current Situation

iFeng: 政治局会议未提房地产是何信号?楼市数据不支持调控放松
The Political Bureau of the CPC Central Committee held a meeting on December 6 to analyze and study economic work in 2020. This meeting did not mention real estate related content, what signals did this reveal?

From July 24, 2017 to December 6, 2019, nine sessions of the Central Political Bureau focusing on the economy have been held. During this period, six meetings made important statements on the real estate market. The three meetings on October 31, 2018, December 13, 2018 and December 6, 2019 did not mention real estate.

From this year's perspective, the Politburo meetings held in April and July 2019 both emphasized "adhere to the positioning of houses for living, not for speculation." The July meeting even emphasized "not using real estate as a short-term Means to stimulate the economy. "
While the central govt wants the real estate market contained, local govts do not:
Reducing the economy's dependence on real estate, and not using real estate to stimulate the economy in the short term, does not mean that local governments do not want to develop the real estate industry. The real estate industry itself is connected to finance, and even to the physical industries such as building materials. The volume is large, and local governments at any level will not neglect the industry.
Keeping prices in check requires scientific central planning:
Under this principle, whether the real estate policy needs to be adjusted depends on what actually happened in the local real estate market. Overheating will be tightened, and overcooling will need to be relaxed. If the market is stable, the policy will also need to be stable. These adjustment costs This is the due meaning of the property market regulation, and it is also where the powers granted by the central government to the locality lie.

However, if local governments adjust real estate regulation and control policies, they must still grasp the timing and scale. Otherwise, the market will fluctuate sharply. It will obviously deviate from the "three stability" goal and the possibility of being stopped by the central government will be very high.
The government is in the Goldilocks planning zone for now:
Under such circumstances, there is no basis and necessity for directional adjustment of real estate regulation and control policies, and overall stability is still the main focus. The December Politburo meeting didn't mention real estate at all, but it also shows that the industry itself does not currently have a significant need for policy adjustments, that is, the entire real estate regulation and control policy has no turning requirements.

Shenzhen Rents Plummet 40pc

A crackdown on P2P lenders has hit the real estate market and it should last into 2020, but analysts see growth in the long-term as the government promotes the development of a megacity linking Guangdong, Shenzhen, Hong Kong and Macau.

iFeng: 火爆的深圳楼市 部分写字楼租金却暴跌40%
Compared with Shenzhen's fiery second-hand homes, Shenzhen office buildings with rising vacancy rates and falling rents are in a "cold array."

A reporter from China Securities News (ID: xhszzb) recently visited the office buildings in the central areas of Futian and Nanshan and learned that the rental prices of some office buildings have fallen by more than 40%.

Industry insiders pointed out that the "cold winter" of the Shenzhen office market was related to previous P2P thunderstorms. After the exit of related financial companies, the vacancy rate increased; after the increase in office supply in new areas such as Qianhai, office rents in the central area could not rise significantly in the short term.

Industry insiders predict that the Shenzhen office market will hardly show signs of improvement in 2020; however, in the medium and long term, under the effect of the policies of the Guangdong-Hong Kong-Macao Greater Bay Area and the Pilot Demonstration Area, Shenzhen office buildings may continue to grow and are expected to enter a stage of steady development.

2019-12-06

Is It May Again?

Back in May:

Today:

Doesn't feel as clean a moment as in May, but maybe Kudlow or Trump will come out cheerleading later today.

Globalism Can Work With a Global Totalitarian Govt

Caixin: Opinion: Time for a Global Rethink on Taxation
If you are a citizen of a country, should you only pay taxes on the income you earn within that country’s geographical limits, or on all the money you earn, independent of location? The United States, Mexico, India, China, and Chile tax global income. Western Europe, Japan, Canada, Peru and Colombia tax territorial income. If the world moved toward global taxation and enhanced some incipient information-sharing mechanisms, the impact on inclusive growth, especially in the developing world, would be very positive.
Globalism creates a new set of problems, the solutions to which involve destroying nations, whether they care about liberty or not.

2019-12-05

Social Mood 2020: White Van Terror and Tyranny

CNN: A Facebook rumor about white vans is spreading fear across America
Terrifying rumors initially propelled by Facebook's algorithms have sparked fears that men driving white vans are kidnapping women all across the United States for sex trafficking and to sell their body parts. While there is no evidence to suggest this is happening, much less on a national, coordinated scale, a series of viral Facebook (FB) posts created a domino effect that led to the mayor of a major American city issuing a warning based on the unsubstantiated claims.

The latest online-induced panic shows how viral Facebook posts can stoke paranoia and make people believe that spotting something as common as a white van, can be deemed suspicious and connected to a nationwide cabal.
As a signal of social mood, the factual content of a rumor doesn't matter. If this is an organic rumor zooming around the Internet, it speaks to what I've been covering here for years: the negative and declining social mood amid a depression masked by central bank intervention.

However, that the media jumped on the algorithm angle opens up the possibility that this is a "false flag" part of a broader government/media regulation effort. Tyrants do not like objective algorithms on Facebook and YouTube because they recommend popular content, even if that content is politically incorrect, dissident, or even completely fake (such as flat Earth). Facebook and YouTube seek increased engagement of users. They want users spending more time on their platforms, to sell them more ads. Their algorithms achieve this by serving up videos based on what works.

Rumors were around long before the Internet because there are many ways of transmitting information through society. Many in American society, mainly those who sit in positions of power in media, education, government and technology, want to use this tech to censor and eliminate competing information channels. This will turn America into something similar to China under the CCP.