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Welcome to Money Morning - Only the News You Can Profit From.


How to Rent a Fortune

With a 37% gain in The Blackstone Group LP (NYSE: BX) since late July, we’ve done really well with our targeted investment in real estate.

And with very quick gains of 9% in Brazilian-food processor BRF SA (NYSE ADR: BRFS), 5.2% in South American agricultural play Adecoagro SA (NYSE: AGRO) and 1.6% in high-tech agribusiness player  Neogen Corp. (NasdaqGS: NEOG), we’re doing well with our plays on (pockets of) accelerating U.S. inflation.

Today we’re going to combine the two concepts and employ a very simple formula we believe will add to your profits…

  • Featured Story

    This Echo of the Housing Market Bubble Is About to Triple Loan Payments

    House for sale with "For Sale" sign
    The housing market is bracing for another shock. Thousands of borrowers who took out home equity loans during the bubble years are now getting alarming news - their monthly payment will soon triple. And as more bubble-era home equity loans reach their 10th birthday, more homeowners will be affected. This 'wave of disaster' is just getting started...
  • Housing Market

  • New Rental Securitization Deal Likely Heralds Double Dip in Housing Today, in New York, investors will be pitched the first-ever REO-to-rental securitization deal. The $500 million deal bundles foreclosed single-family homes, "real-estate-owned" by Blackstone Group, into securities that pass-through rental payments to investors.
    The new securitization of rental properties comes at a time when home prices have rebounded dramatically across the country. But rather than confirming a bull market in housing, the "trade," as Reuters calls the transaction, likely heralds a coming double-dip.
    The upward trajectory of housing prices, fueled by private equity companies and hedge funds' cash purchases, now faces institutional liquidity demands - and their potential exit.
    Here's what the Blackstone deal is all about, why its structure is problematic, how the ratings agencies will view it, and what it portends for the future.
    This is a very big deal...
  • How to Buy Prime Manhattan Real Estate for Less Than $100 Unless you own a home in each of America's 20 biggest cities - or you're an economist - a 12.4% increase in the S&P/Case-Shiller Index doesn't mean much.
    You can't make money from a nationwide statistic. Not in real estate...
    Cleveland, for example, may have seen a 3.4% increase from July 2012 to July 2013. But that's nothing compared to Los Angeles, where prices jumped 20.8%. Or San Francisco, which posted a 24% year-over-year increase.
    Las Vegas prices jumped even higher, up more than 27%.
    And then there's New York, where you can make a killing on some prime Manhattan real estate right now...
    There's a hassle-free way to do it, too. So you'll never have to worry about tenants, taxes, insurance, maintenance...
    You won't need a million-dollar down payment, either.
    Thanks to one savvy New York firm, you can start building your own Manhattan real estate empire with less than $100...
  • The All-American "Short Squeeze" No One Else Sees Everyone knows the U.S. housing "recovery" has been resurrected on slippery ground. But now that we're finally about to slip - big time - no one sees it coming...

    Then again, how could they?

    The numbers are incredibly misleading...

    According to the Commerce Department, new residential home sales in July fell a whopping 13.4% from their June sales pace. And sales in April, May, and June were all revised significantly lower.

    Yet according to the National Association of Realtors, existing home sales (completed transactions that include single-family homes, townhomes, condominiums, and co-ops) increased 6.5%... to a seasonally adjusted annual rate of 5.39 million in July, from a downwardly revised 5.06 million in June.

    On the surface, the divergence is confusing. But not when you look below the surface, where the real money gets made.

    As you'll see (before anyone else), the housing "recovery" is just one giant "short squeeze."

    And you can make a flat-out killing the moment it ends...
  • The Rise in Home Prices Isn't Real… At All 08272013SG1

    Money Morning Capital Wave Strategist Shah Gilani talked with FOX Business' "Varney & Co." today (Tuesday) about a huge red flag in the housing recovery.

    Shah has found that we may be on the cusp of a double-dip in home prices.

    To continue reading, please click here...

  • How Higher Mortgage Rates Will Dent Housing's Recovery Housing Question

    How much do higher mortgage rates reduce home sales?

    That, of course, depends on how much rates rise and whom you ask. But there's no doubt higher mortgage rates hurt sales, experts say.

    Interest rates have been climbing since May. Rates on 30-year, fixed-rate mortgages averaged 4.37% for the week ending July 18, Freddie Mac's weekly survey of conforming mortgage rates said. That's up more than a percentage point from early May.

    And existing home sales fell 1.2% in June, to a seasonally adjusted annual rate of 5.08 million, from 5.14 million in May (but still 15.2% higher than in June 2012), the National Association of Realtors said Monday.

    Lawrence Yun, the NAR's chief economist, told Money Morning he expects interest rates to hit 5% to 5.5% within a year. And while he foresees existing home sales rising as much as 10% for 2013, he predicts only a single-digit percentage increase next year primarily because of higher mortgage rates.

    "There's no risk of any reversal of this housing recovery; it's just slowing the pace of this housing recovery," Yun said.

    He said robust demand and affordable prices would lessen the impact of the higher mortgage rates in much of the country, but pricier markets in New York, parts of California and Hawaii would be hit harder by the higher mortgage rates.

  • Big REIT Opportunities in the Housing Market Recovery Ultra-low interest rates have given an artificial advantage to regions with very high real estate prices, while artificially depressing rents. But that trend is shifting.
    And that means that a new opportunity in the real estate market is appearing.
    While the herd investors are chasing the real estate rally in all the wrong places, there's a handful of real estate investment trusts (REITs) that are well positioned to profit on this first wave of recovery -- and the second.
    Don't get stuck with REITs that will wash out…
  • How to Profit from the Housing Market Recovery House in palm

    Housing has rebounded in a big way.

    Sales of new, single-family homes surged from April to May at the highest rate since July 2008 and by 29% over the previous year, while existing home sales reached the highest level since November 2009.

    And home prices posted their biggest annual increase in more than seven years in May and are expected to continue rising, CoreLogic said Tuesday.

    How can you profit from the housing market recovery?

    Buying the homebuilders' stocks? Sure, but that's almost too easy, and after impressive gains, homebuilder stocks may have peaked for the short term.

    But savvy investors trying to figure out how to profit from the housing market recovery can look beyond the homebuilders to other companies benefiting from the recovery.

    Among them: construction materials suppliers, home improvement retailers, paint companies and those manufacturing and selling furniture and appliances.

    In fact, furniture and related products led all other manufacturing sectors in the latest Institute for Supply Management report for June.

    Here are five companies worth a look if you're seeking to profit from the housing market recovery.

    Playing the Housing Market Recovery

    To continue reading, please click here...

  • Why U.S. Home Prices Have Been on a Tear Coins and house key ring In another sign the housing recovery is genuine, home prices soared the most in more than seven years in April in 20 U.S. cities.

    The S&P/Case-Shiller index, released today, climbed 12.1% from April 2012, marking the biggest year-over-year increase since March 2006, and rose 2.5% from March to April.

    “The recovery is definitely broad-based," David M. Blitzer, chairman of the S&P's index committee, said in a news release. "Recent economic data on home sales and inventories confirm the housing recovery’s strength."

    Experts cited an improving job market, low mortgage rates, high demand and a shortage of housing on the market.

    Meanwhile, new home sales rose a bit less than expected in May but climbed a whopping 29% compared with May of last year.

    All 20 cities in the S&P/Case-Shillert index, which includes metropolitan areas, showed year-over-year increases in home prices.

    San Francisco posted the biggest gain, 23.9%, followed by Las Vegas, at 22.3%. Atlanta, Detroit, Los Angeles, Miami, Minneapolis, Phoenix, Portland, San Diego, Seattle and Tampa showed double-digit gains.

    Homebuyers in Bidding Wars

    Home prices in Dallas increased 7.4%; in Washington, D.C., 7.2%; and in Cleveland, 4.8%. The smallest increase was in New York, at 3.2%.

    Even with the increases, home prices aren’t rising fast enough to price buyers out of the market. Indeed, competition for homes has led to bidding wars in some places, including Los Angeles, Boston, San Francisco, Seattle, Washington, New York, Miami and Phoenix.

    And home prices haven’t even approached levels seen during the housing bubble.

    Celia Chen, an analyst with Moody's Analytics, told Money Morning that home prices still remain 26% below peak bubble levels.

    “The recovery’s alive and well,” Jed Kolko, chief economist at the real estate site, told Money Morning. “Prices continue to rise, new home sales are up and delinquencies and foreclosures are falling.”

    Higher prices have also rescued many underwater homeowners.

    Kolko noted an extraordinary statistic: It’s cheaper to buy than to rent in the top 100 U.S. housing markets.

    At the same time, the inventory of houses available for sale has begun increasing as higher prices have prompted more homeowners to list their homes and more homebuilders to construct new homes.

    And one of the nation’s largest homebuilders, Lennar Corp. (NYSE: LEN) reported today it beat analysts’ estimates for the three months through May as prices and sales increased.

    Lennar Chief Executive Officer Stuart Miller said on a conference call today he wasn’t too concerned about rising interest rates.

    “Interest rates are moving higher in the context of economic improvement,” Miller said. “We’re looking at a supply shortage, so that means that even in the context of rising rates and a better economy, we’re likely to see price increases and rental increases.”

    Last week, a new survey of homebuilder confidence from Wells Fargo Bank and the National Association of Home Builders reached its highest level since 2006, and housing starts climbed 6.8% in May and 28.1% year to date.

    To continue reading, please click here…

  • 7 Reasons This Housing Market Recovery is Genuine House on white background. See portfolio for similar Images

    The housing market recovery is for real this time. Coming after the housing market crash, the recovery is welcome news to those in the industry - and bodes well for the economy as a whole.

    "It almost seems too good to be true," Lawrence Yun, the chief economist at the National Association of Realtors, told Money Morning.

    The latest confirmation of the market's rebound is the new survey of home builder confidence from Wells Fargo Bank and the National Association of Home Builders, which climbed to its highest level since 2006.

    And housing starts were up 6.8% in May and 28.1% year to date, the U.S. Census Bureau said.

    To continue reading, please click here...

  • The Fight Club: Are "Dignity Mortgages" Essential or Insane? There's a new idea sweeping through the country. It's called dignity mortgages.
    Backers say this new financing idea will help millions of homeowners and get the middle class back to the heart of the American recovery.
    Opponents thinks it's a recipe for disaster that will make the first financial crisis look like a cakewalk.
    Today the Fight Club is taking on this growing issue, let's get ready to rumble...
  • Buy, Sell or Hold: Is Lennar's Big Move Just a Sign of Another Housing Bubble? Since January 2012, shares of Lennar Corp. (NYSE: LEN) have more than doubled. It could be a sign of another housing bubble. Read more... Read More...
  • The 10 Best U.S. Housing Markets 2013 House on white background. See portfolio for similar Images

    The percentage of Americans optimistic about the U.S. housing market has reached levels not seen since rumblings of the financial crisis began.

    A new Rasmussen Reports national survey found 37% of homeowners believe the value of their home will increase in the next year - thehighest since September 2008.

    And 58% of Americans believe their homes are worth more now than when they bought them. That's the highest percentage believing this since fall 2011.

    To continue reading, click here...

  • Here's Another Troubling Sign America is Circling the Drain Bath plug

    Don't blame yourself if you missed this tidbit last week...

    On Thursday, the Consumer Financial Protection Bureau hit the nation's four largest mortgage insurers with a total of $15.4 million in fines for "allegedly" paying kickbacks to lenders to steer business their way.

    Of course, they didn't have to admit they did it, and therefore, they didn't do what they were fined for.

    Back in the summer of 2009, the Inspector General of the Department of Housing and Urban Development handed the Justice Department evidence that laid bare a scheme by lenders (the usual suspects: Citigroup, Wells Fargo, Countrywide, and so on) to get kickbacks from mortgage insurers for making borrowers - who had to buy mortgage insurance - purchase coverage from those companies kicking back profits to lenders. In the industry, it's called "forced placement"

    Who did what here?

    To continue reading, please click here...

  • The Secret Behind the Housing Market "Recovery" Shah housing

    U.S. home prices climbed 10.2% in February, the biggest year-over-year gain since March 2006.

    The data seemed to support that a housing market recovery is alive and well - or, is it?

    Even though buying is up, banks aren't handing out mortgages at a high enough rate to support this climb.

    We asked Money Morning Capital Wave Strategist Shah Gilani to explain what was behind this major housing market change. You might be surprised to learn who's driving the home buying - and what it means for the housing market recovery.

    Watch his interview below for the answer.

    To continue reading, please click here...

  • Are "Wall Street Buyers" Like Blackstone Group Creating Another Housing Bubble? Where there’s smoke, there’s fire.
    When it comes to swiftly rising home prices, the question is whether the on-fire price increases are a healthy sign of a housing recovery... or a "smoke screen" masking another Wall Street-led real estate bubble.
    Here’s the answer and what it means for you. Read More...