Mish's Global Economic Trend Analysis

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• Reflections on "A Moral Obscenity": How Long Ago Was a War Against Syria Decided?
• American Homes 4 Rent Update
• Second Biggest US Landlord, Owner of 20,000 Homes, Terminates 15% of Staff Following Loss
• Durable Goods Orders Plunge 7.3%, Nondefense New Orders for Capital Goods Plunge 15.4%; Plunge to Accelerate?

Reflections on "A Moral Obscenity": How Long Ago Was a War Against Syria Decided? Posted: 26 Aug 2013 08:11 PM PDT Secretary of State John Kerry says the use of chemical weapons in Syria is "a moral obscenity". With that clue (and many others), note that Obama prepares wary US public for war with Syria. The White House has begun to prepare a wary US public for military action in Syria, with a flurry of well-publicised meetings of the administration's national security team, backed by a statement by secretary of state, John Kerry, calling the regime's use of chemical weapons "a moral obscenity". Mr Kerry said on Monday President Bashar al-Assad's forces' responsibility for the use of chemical weapons in an attack which left hundreds dead last week was "undeniable", cementing a sharp about-turn in Washington's response to the issue. Mr Obama said last year the use of chemical weapons would cross a "red line" in a conflict which the US has stayed out of, apart from promising to funnel weapons to some anti-Assad forces. Subsequently, however, when faced with allegations that chemical weapons had been used, administration officials had suggested they could not be conclusively traced back to Mr Assad's military. The US is now moving quickly, and together with its Nato allies, could launch air strikes as early as Thursday or Friday this week, said individuals familiar with internal administration deliberations. Chemical Weapons Questions Q: Were chemical weapons used in Syria? A: Highly likely Q: By Assad, the rebels, or both? A: Good question (and no one knows the answer for sure) Q: Does it matter? A: Apparently not. The US is headed for war anyway. We Know Where They Are Reflect back on the inane war in Iraq. Recall Donald Rumsfeld's statement regarding Weapons of Mass Destruction: "we know where they are". We didn't know then. Do we know now? Does it matter? Apparently not. Iraq War Quotes Please consider a few Iraq War Quotes. 11/15/1999, Dick Cheney, CEO of Halliburton (later, Vice President) "Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow." (at the  London Institute of Petroleum) 10/11/2000, George W. Bush, Candidate for President "I don't think our troops ought to be used for what's called nation building." 10/29/2001, Michael Leeden, American Enterprise Institute "Just wage a total war against these tyrants; I think we will do very well and our children will sing great songs about us years from now." 02/13/2002, Kenneth Adelman, a member of the Pentagon's Defense Policy Board "Liberating Iraq would be a cakewalk." 09/18/2002,  Donald Rumsfeld, Secretary of Defense (before Congress) "We do know that the Iraqi regime has chemical and biological weapons. His regime has amassed large, clandestine stockpiles of chemical weapons -- including VX, sarin, cyclosarin and mustard gas. ... His regime has amassed large, clandestine stockpiles of biological weapons—including anthrax and botulism toxin, and possibly smallpox." (presentation to Congress) 10/7/2002, George W. Bush, President "The Iraqi regime . . . possesses and produces chemical and biological weapons. It is seeking nuclear weapons. We know that the regime has produced thousands of tons of chemical agents, including mustard gas, sarin nerve gas, VX nerve gas." Curiously, every statement except the first one by Dick Cheney was a blatant lie or blatant stupidity (take your pick). Pentagon Had Plan in 2001 to Attack Seven Countries in Five Years, Including Syria Want proof? Fair enough. I would too. Please consider this 2007 article Gen. Wesley Clark Says Pentagon Had Plan in 2001 to Attack Seven Countries in Five Years. Better yet, please play the video: General Wesley Clark: Wars Were Planned – Seven Countries In Five Years (Syria Included) 15 Signs Via ZeroHedge here are 15 Signs That Obama Has Already Made The Decision To Go To War With Syria What Do US Citizens Want? I am glad you asked. As Syria war escalates, Americans cool to U.S. intervention. Americans strongly oppose U.S. intervention in Syria's civil war and believe Washington should stay out of the conflict even if reports that Syria's government used deadly chemicals to attack civilians are confirmed, a Reuters/Ipsos poll says. About 60 percent of Americans surveyed said the United States should not intervene in Syria's civil war, while just 9 percent thought President Barack Obama should act. The Reuters/Ipsos poll, taken August 19-23, found that 25 percent of Americans would support U.S. intervention if Syrian President Bashar al-Assad's forces used chemicals to attack civilians, while 46 percent would oppose it. That represented a decline in backing for U.S. action since August 13, when Reuters/Ipsos tracking polls found that 30.2 percent of Americans supported intervention in Syria if chemicals had been used, while 41.6 percent did not. Taken together, the polls suggest that so far, the growing crisis in Syria, and the emotionally wrenching pictures from an alleged chemical attack in a Damascus suburb this week, may actually be hardening many Americans' resolve not to get involved in another conflict in the Middle East. "A Moral Obscenity" Those looking for "A Moral Obscenity" now have it. I am willing to define the term as follows:  A pre-ordained war, on inconclusive evidence, with only 9% support (24% even IF chemicals were used by Assad). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

American Homes 4 Rent Update Posted: 26 Aug 2013 06:00 PM PDT In Second Biggest US Landlord, Owner of 20,000 Homes, Terminates 15% of Staff Following Loss I inadvertently made this comment about American Homes 4 Rent: "56% of their properties are not rented and the group still wants to spend $100 million a month to buy 800-1000 more homes." A careful reader noted that it is 56% of the homes rented, and thus 44% not rented. Apologies offered. I posted this correction. Addendum: I originally posted "56% of their properties are not rented". The person who caught my typo, said "I would be worried silly if only 56% of my properties were rented". Not to worry, this is OPM (Other People's Money) American Homes 4 Rent is playing with. I am sure the CEO and executive staff of AMH will do quite well no matter what happens, even if AMH goes bust and takes down all the investors in the process. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Second Biggest US Landlord, Owner of 20,000 Homes, Terminates 15% of Staff Following Loss Posted: 26 Aug 2013 12:27 PM PDT Steen Jakobsen, chief economist at Saxo bank pinged me with a few comments this morning. 1. The 2nd biggest employer in the US is a TEMP AGENCY –   Kelly Services (with more than 550,000 people working for them in the average year). GE is 3rd largest with 300,000. Wal-Mart is first with over a million employees. 2. American Homes 4 Rent, the 2nd biggest landlord following Blackrock shed 15% of staff following a second quarter loss. Please consider American Homes 4 Rent Said to Fire Employees After Loss. American Homes 4 Rent (AMH) yesterday fired a group of workers, with a focus on acquisition and construction staff, after the housing landlord reported a fiscal second-quarter loss, according to a person with knowledge of the terminations. The company, owner of almost 20,000 single-family homes, has cut about 15 percent of its workforce this year, including an earlier round of terminations before its initial public offering last month, said the person, who asked not to be identified because the information is private. The Malibu, California-based company, which raised $705.9 million in the IPO, had a net loss of $14 million, or 15 cents a share, on revenue of $18.1 million in the quarter ended June 30, according to a statement this week. Single-family landlords have struggled to turn a profit while acquiring homes faster than they can fill them with tenants. Hedge funds, private-equity firms and real estate investment trusts have raised more than $18 billion to purchase more than 100,000 rental houses in the past two years. American Homes 4 Rent, founded by B. Wayne Hughes, is the largest single-family landlord after Blackstone Group LP's Invitation Homes, which has spent more than $5 billion on 32,000 homes. American Homes 4 Rent executives Peter Nelson, Jack Corrigan, Sara Vogt-Lowell and Janice Stack didn't respond to e-mails and telephone messages seeking comment on the firings. The landlord is slowing its property purchases, with plans to spend as much as $100 million a month on 800 to 1,000 additional homes, Corrigan, the company's chief operating officer, said on an Aug. 21 earnings conference call. "As far as being able to put money to work, I mean we could easily ramp back up to $300 million-a-month pace if we have clarity that we would have that capital available," he said. "But we don't want to get too far out over our skis." American Homes 4 Rent owned 19,825 properties for an investment of $3.4 billion as of July 31, according to its earnings statement. About 56 percent of the company's homes were leased as of June 30. Only 56% of their properties are rented and the group still wants to spend $100 million a month to buy 800-1000 more homes. Don't  worry! They could triple that "but they don't want to get too far out over their skis". Really?! What if they already are? Such silliness explains why existing home sales are relatively robust compared to new home sales. The latter is now slumping because of higher mortgages rates. Any downturn in the property market will sink this group. And such a downturn may easily be at hand. For further discussion, please see New Home Sales Plunge 13.4% in July, June Revised Lower; Blame Rising Mortgage Rates Addendum: I originally posted "56% of their properties are not rented". The person who caught my typo, said "I would be worried silly if only 56% of my properties were rented". Not to worry, this is OPM (Other People's Money)  American Homes 4 Rent is playing with.  I am sure the CEO and executive staff of AMH will do quite well no matter what happens, even if AMH goes bust and takes down all the investors in the process. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Durable Goods Orders Plunge 7.3%, Nondefense New Orders for Capital Goods Plunge 15.4%; Plunge to Accelerate? Posted: 26 Aug 2013 10:18 AM PDT US treasuries rallied a bit again today, with the 10-Year yield down 12 basis points in two days to 2.80% in the wake of a huge plunge in durable goods orders as reported by the commerce department. New Orders New orders for manufactured durable goods in July decreased $17.8 billion or 7.3 percent to $226.6 billion Transportation equipment, down following three consecutive monthly increases, led the decrease, $16.7 billion or 19.4 percent to $69.7 billion. This was led by nondefense aircraft and parts, which decreased $14.5 billion. Shipments Shipments of manufactured durable goods in July, down three of the last four months, decreased $0.8 billion or 0.3 percent to $228.8 billion. This followed a 0.1 percent June decrease. Computers and electronic products, also down three of the last four months, drove the decrease, $0.9 billion or 3.2 percent to $26.6 billion. This followed a 1.1 percent June increase. Inventories Inventories of manufactured durable goods in July, up three of the last four months, increased $1.3 billion or 0.4 percent to $379.1 billion. This was at the highest level since the series was first published on a NAICS basis, and followed a 0.2 percent June increase. Transportation equipment, up fourteen of the last fifteen months, led the increase, $0.7 billion or 0.6 percent to $117.1 billion. Capital Goods Nondefense new orders for capital goods in July decreased $14.2 billion or 15.4 percent to $78.0 billion. Shipments decreased $1.0 billion or 1.4 percent to $73.6 billion. Unfilled orders increased $4.4 billion or 0.7 percent to $610.2 billion. Inventories increased $0.6 billion or 0.3 percent to $171.3 billion. New Durable Goods Orders New Durable Goods Orders Excluding Transportation New Durable Goods Orders - Nondefense Capital Goods Plunge to Accelerate?  Is this the plunge that accelerates or is another bounce coming? Given the "unexpected" plunge in new housing and the rise in mortgage rates, I suggest an acceleration to the downside. For further discussion, please see New Home Sales Plunge 13.4% in July, June Revised Lower; Blame Rising Mortgage Rates; Starts 896,000 - Sales 394,000 - Hmmm. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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