Lack of affordable housing is a serious policy concern in many countries. In large prosperous cities such as London, New York, Beijing, or Tokyo, the affordability crisis is particularly acute. In these cities, households often live in excessively expensive and crammed spaces. Homeownership remains an unachievable dream for many.
For years, the World Bank has represented the only serious player on the block when it comes to raising national level finance needs. However, the World Bank now has a rival in the form of a Chinese organization known as the Asian Infrastructure Investment Bank (AIIB). The new bank’s headquarters is in Beijing, China, and is considered by many to be little more than a direct challenge by China to the supremacy of the World Bank and the economic clout currently held by the United States.
The market is trying to get its bearings today. The large decline in the US equities before the weekend has had modest spillover effects elsewhere. Equity markets, barring the Shanghai and Shenzhen Composites, are mostly modestly lower. The MSCI Asia-Pacific Index is off about 1% while the Dow Jones Stoxx 600 is less than 0.5% lower in late-London morning turnover.
Two weeks into the year and most investors are nursing sizable drawdowns. The recovery in the US equities on January 14 looked like a potential turning point. However, the coattails proved non-existent, and the bull trap sprung with new downside momentum established before the weekend.
The obvious takeaway is that the current driver is not in New York. In addition, to be sure, we are not just talking about equities, but during this market meltdown, correlations between various asset classes and instruments have increased (or become more inverse).
There are three developments today, which while not driving the market, are important for many investors. The first are comments from German Finance Minister Schaeuble and EC President Juncker. The second is an important development in Poland. The third are growing problems in Greece.
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The Organization for Economic Cooperation and Development (OECD) released a report this week pertaining to poverty levels among member nations. According to the report, a few surprising nations ranked high on the list, with Israel at number one and the United States at number four.
The recovery of US shares and oil yesterday provided short-lived. Asian shares ended lower with the help of Chinese equities. The 3.5% fall in the Shanghai Composite today brings the year-to-date decline to a little more than 18%. Taiwan, which goes to the polls this weekend (the opposition that has been critical of the government’s pro-China policy is ahead) bucked the trend to post minor gains.
All eyes have been on North Korea since it made the announcement on 6 January that it possesses hydrogen bombs. The possibility of conflict with a nuclear North Korea means that it is more important than ever for Japan and South Korea to find a common position. World observers are therefore looking back with a sigh of relief at the recent agreement between South Korea and Japan on the issue of ‘comfort women’, which had divided the two countries for nearly three decades.
Speculation is mounting that the Bank of Canada will be the first major central bank to cut rates this year. It meets on January 20. The combination of the drop in oil prices (40% since mid-October) and the erosion of the business outlook have boosted the risk of a cut next week. The bitumen from Canada’s oil sands, which is a type of crude oil, reached a low of nearly $8 earlier this week, which is a tenth of its from two years ago.
Investors still have not found solid footing this year. Equity markets have continued to sink, even though China’s equities advanced. Bond markets are mostly firmer, with the US 10-year yield seemingly being drawn back toward 2.0%. Oil prices are little changed, after Brent slipped to marginal new lows. There is much talk about the Iranian sanctions being lifted as early as Monday.
The US dollar itself is mixed. The yuan weakened about 0.25%. The renewed pressure so new widening of the onshore and offshore yuan.
