(New York)

If you are worried that much higher rates will cause an exodus from the stock market, you are not alone. Many advisors across the country are closely watching the markets to see signs of a mass departure. The big worry is that even three-year Treasury bills now have yields which exceed the dividend yield of the S&P 500. So while for the last several years the theme was “there is no alternative”, now there are some very good ones, which could scuttle the market.

FINSUM: The good news here is that the so-called “Great Rotation” into stocks never really materialized, so there is not going to be a great rotation the other way, or at least everyone hopes so.

(Washington)

You know that Mercedes or BMW you have sitting in your driveway? Kiss it goodbye, maybe. In a move that seems likely to cause as much consternation at home as abroad, President Trump is planning a broad ban on German luxury cars. Trump’s proposals have ranged from a 25% tariff on German cars (extremely heavy) to outright bans. He reportedly told French leader Emmanuel Macron that he would maintain his trade policy until “no Mercedes models rolled on Fifth Avenue in New York”.

FINSUM: BMW alone makes $8-9 bn in annual revenue from sales of cars in the US. If Trump wanted to start a bitter trade war, this would be a good first step. Americans aren’t going to like this one either.

(Rome)

Well it just happened. The two alternative Italian parties—the Five Star movement and the League have just formed a coalition government to govern Italy. The new PM of the country will be Conte, a very inexperienced politician who comes from a legal and academic background. According to the WSJ, “Matteo Salvini, the 45-year-old leader of the League who pledged to deport hundreds of thousands of illegal immigrants, will become interior minister”.

FINSUM: There is now a strongly anti-Euro and anti-EU government in power in Italy. A default and a devolution to the old Lira are entirely within the realm of possibility.

(Madrid)

In what seems to be a spread of European unrest, Spain’s Parliament voted today to remove the country’s PM, Mariano Rajoy, who has been in power for seven years. While the reasons for his ouster are very different than in Italy, the move will add pressure to a European continent that is plagued by political unrest. Rajoy’s party was plagued by a corruption scandal, which seems to have ultimately undone the PM. He will be replaced by a PM from the Socialist party.

FINSUM: The worry we have here is that the socialist party may undo a lot of the budgetary gains that have been made during austerity—not totally dissimilar to Italy in effect. Then again, at least they are not Euro sceptics.

(New York)

If we were to tell you that median sales price per square foot was down 18% from a year ago in New York City, would that make you worry about the real estate market? Well, that is exactly what has happened, all alongside sales volume hitting its lowest level in six years in the Big Apple. The developments have brokers and real estate developers worried there, but perhaps the whole country should be paying attention. New York has experienced a great deal of new apartment inventory over the last few years as developers have pushed through many new projects, all of which seems to have conspired to oversupply the market.

FINSUM: The boom in real estate since the Crisis was always urban-driven, and so the downfall may be an urban-led one too. New York’s real estate woes are not unique, so we would not be shocked to see prime urban property fall in value across the country, especially with mortgage rates on the rise.