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- What the weather can do.
Link: America shuts down.
The US Securities industry has cancelled all equity trading today, which gives American traders a chance to sit back, take a breath, and evacuate to higher ground.
Here is Hurricane Sandy approaching the East Coast at pace:
And here is a ridiculously beautiful, albeit terrifying, video:
And finally, this is what She did in Cuba, whilst still in the teenage angst period of being only a Category 2:
Many of the banks and financial institutions will also be closed. And as usual, gasoline prices have started their increase as the refineries start to close in anticipation of the storm.
A small reminder that weather is the grand equivocator. It floods on the rich and the poor alike…
- Hong Kong’s property tax.
The city has imposed a 15% tax on the purchase of property by foreigners. This is the third time in two months that Hong Kong has stepped in to do something about the rising property prices.
In the last three years, Hong Kong housing prices have doubled. And the strengthening of the Hong Kong dollar (see here) would suggest that the incoming capital flows are coming from foreign investors looking for safe havens for their cash.
That said – this is unlikely to impact housing prices. It’s a supply of housing versus the local demand for housing that’s the issue. Based on a quick wikipedia search, Hong Kong comes 4th on the list of “most densely populated regions“. And given that most of Hong Kong is uninhabitable mountain…
But that’s not really a bubble situation – that’s an equilibrium position. The real issue is foreign investment for a short-term sheltering of capital.
- Spanish bond yields.
Spanish bond yields had a bad week last week, cruising back toward the dangerous 6% territory. And this is because Mr Rajoy won some weekend elections, so the markets think that he now has more political capital to delay a bailout request.
That said – I recently listened to a lecture given by the Spanish-equivalent of a Minister of Finance*. And the Rajoy-government position seems to be that the market has over-estimated the need for a Spanish bailout, and argues that Spain has sufficient capital to do it herself.
But I find it strangely confusing that the apparent reason for avoiding a bailout request is in order to avoid the austerity conditions that the ECB would impose. Because, well, the Spanish government is already imposing those austerity conditions by herself.
So where is the problem?
*The awesomeness that is iTunes U and its downloadable lectures from the LSE.
That’s all for now.
Have a good day.