First and Second Tier Madness! Seller Regrets Lost Million! Fed Worried! The End is Nigh

First- and second-tier housing markets are still in a frenzy. 我爱我家 said Beijing existing home sales increased 200% yoy last week. I've previously covered the long wait times and scaplers charging thousands of yuan for a reservation ticket cut in line at the registry in Beijing. The story is the same in Shanghai, Nanjing and other cities. Where reservations used to cost about 500 yuan, now the price is regularly 2,500 to 3,000 yuan (this is an increase of 25% to 50% from reports a week ago) and scalpers say they're selling 95% to 100% of the reservations.

In Jiangbei District of Nanjing, currently the hottest market in the city, a man waited in line from 1 PM in the afternoon, taking with him some fried rice and a sleeping bag. He spent the night sleeping in line and managed to get number 48 the next day. All told more than 1000 people showed up for 500 reservation numbers.

In Beijing, a home seller laments his decision to sell at the end of 2015. Had he waited two months, until after Spring Festival, he would have pocketed another 1 million yuan as prices soared to 60,000 yuan per square meter.

The oft quoted Zhang Dawei of Centaline says the run-up in prices is started to dull sales and there's emergent evidence of a slowdown in existing home sales. Shenzhen home prices and sales have fallen over the past two weeks.

iFeng: 一二线楼市疯狂卖房者:后悔!亏了100多万

Within Beijing's 5th ring there is low housing supply as prices cross over the 60,000 yuan per sqm threshold. According to Centaline, there's only around 10,000 homes for sale within the 5th ring presently, down from around 20,000 in years past. Inventory within the 5th ring accounts for only 15% of Beijing's housing supply. Zhang Dawei goes further and says some of the inventory is phantom. Since the start of 2015, there's only about 3000 homes for sale within the core of the city at any given time. In a normal year, sales within the 5th ring are about 5000 homes, so inventory is barely more than 7 months. Thanks to the tight supply, there are many properties selling for more than 100,000 yuan per sqm ($15,300), including 60 new projects inside the 5th ring, all selling/planned for more than 100,000 yuan.

iFeng: 京五环内住宅库存去化不足1年 开启6万+时代

Earlier I posted Evergrade Cuts Home Prices As Buying Restrictions Anticipated. Developers expect buying restrictions will be introduced and it appears Evergrande is rushing to clear its inventory.

Only a few months ago, Chinese governments were frantically trying to spur real estate sales. Now the Shenzhen market may already be cooling as a result of government efforts and more action is likely on the way from first-tier and top second-tier cities. This sudden change of heart is happening in the United States as well, where the Fed may already be changing its tune from last week's dovish policy statement.

ZeroHedge: When "Mother's Milk" Runs Dry
For the third time in six months, US equity markets have exuberantly decoupled from earnings expectations thanks, in large part, to jawboning and coordination from Central Banks. With stocks near record highs despite the earnings "mother's milk" expectations tumbling, one can't help but wonder, as CNBC's Bob Pisani did this morning, given the comments from Evans, Lockhart, and Bullard, "It's possible the Fed has seen the market reaction and become alarmed by the complacency."
The central bankers are powerless. They cannot print borrowers, only monetize the debt. While endless streams of liquidity are produced, they cannot print houses, or corporate equity shares, or real capital. Rapidly rising Chinese home prices in top tier cities, elevated equity and junk bond prices in the U.S., and a rising short position on real U.S. dollars as global trade and credit slowdown, all spell trouble for the interventionists.

The Fed is in bizarro world due in part to local housing issues, Chinese demand and the Affordable Care Act, which have anchored core inflation in the Fed's target zone. If the Fed signals any easing, oil prices rise and inflation becomes a serious concern. The Fed must tighten if only to save its credibility.

The more China eases credit, the faster top-tier home prices rise as housing becomes the outlet for hot money. Meanwhile, rising money supply in China exacerbates the shortage of U.S. dollars in the offshore market as Chinese moving cash abroad soak up dollars. The PBoC cannot stem the bleeding of USD.

In Japan, the 3 month bond yields less than the 8 year bond, and the 40-year bond yields less than the 30-year bond. Mish:

I frequently post the ChiNext analog. In the last post I wrote:
If the ChiNext doesn't correct in the next 30 trading days, the analog is busted. Ideally, a correction would commence in the next few days.
30 trading days from now is early May. Some traders have noticed the U.S. market is repeating the Aug-Nov 2015 sell-off and rally. If this analog continues to hold, it would also signal a sell-off in May.

I like the risk/reward of getting short at this juncture.

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