Economic Theory has it that when people have confidence, and when they have low interest rates available, they will form family units and buy housing.
So naturally when we read this morning’s housing data, that’s the kind ofs thing that rolls through the back of the mind. What’s missing?
HOME PRICE GAINS IN JUNE CONCENTRATED IN SOUTH AND WEST ACCORDING TO THE S&P CORELOGIC CASE-SHILLER INDICES
NEW YORK, August 30, 2016 – S&P Dow Jones Indices today released the latest results for the S&P CoreLogic Case-Shiller Indices, the leading measure of U.S. home prices. Data released today for June 2016 shows that home prices continued their rise across the country over the last 12 months. More than 27 years of history for these data series is available, and can be accessed in full by going to www.homeprice.spdji.com. Additional content on the housing market can also be found on S&P Dow Jones Indices’ housing blog: www.housingviews.com.
YEAR-OVER-YEAR The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.1% annual gain in June, unchanged from last month. The 10-City Composite posted a 4.3% annual increase, down from 4.4% the previous month. The 20-City Composite reported a year-over-year gain of 5.1%, down from 5.3% in May.
MONTH-OVER-MONTH Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% while both the 10-City Composite and the 20-City Composite posted a 0.8% increase in June. After seasonal adjustment, the National Index recorded a 0.2% month-over-month increase, and both the 10-City Composite and 20-City Composite posted 0.1% month-over-month decreases. After seasonal adjustment, nine cities saw prices rise, two cities were unchanged, and nine cities experienced negative monthly prices changes.
Key thing to watch: Next couple of months.
Apple: Once Bitten…
Apple has a €13-billion/US$14.5-billion problem with the European Union over tax breaks granted by Ireland. Here’s the press handout on it:
“State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion
Brussels, 30 August 2016
The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”
Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a “head office”. The Commission’s assessment showed that these “head offices” existed only on paper and could not have generated such profits. These profits allocated to the “head offices” were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.
This selective tax treatment of Apple in Ireland is illegal under EU state aid rules, because it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules. The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission’s first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest.
In fact, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold. This structure is however outside the remit of EU state aid control. If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland.”
Now for our two cents worth of analysis:
Point #1: In the pre-market, Apple was down 1.3%.
Yes, $14.5-billion is a lot of money. But for the year ending last September Apple was reporting Gross Profits of $93-billion and net income available to common shares of $53.3 billion. While $14.5 billion hurts, it’s not like a silver stake through the heart.
Android is doing that.
Point #2 (and this is huge): It shows that the EU is going to rain holy hell down on member states who tax evade.
Which opens the way for additional countries – like Ireland – to look at a BREXIT type move. If there’s no EU membership, there’s no law requiring Ireland to recover bupkis.
Point #3 (the biggest of all): If this can happen to a big outfit like Apple, what will this do to other cash-hiding, tax avoiding companies that are playing the same game in the EU?
And what company – just for example – that was recently in the news (hint: they make EpiPens) is using the EU to shield some dough…Netherlands for them.
And does this mean that “inversions” are something you need to Wiki and grok:
“Tax inversion, or corporate inversion, is the practice of relocating a corporation’s legal domicile to a lower-tax nation, or tax haven, usually while retaining its material operations in its higher-tax country of origin.
The first inversion in the United States took place in 1982, but the practice became common only in the late 1990s, with U.S. corporations seeking to relocate to tax havens such as Bermuda. More recently, because of changes in U.S. law, a second wave of corporate inversions took place by way of merger with companies in lower-tax foreign countries such as Ireland. The issue drew public attention in 2014 when Pfizer proposed to invert to the UK through a takeover of AstraZeneca.”
I’m not going to kick a company when it’s down…but if the EU is going headhunting to help the USA with a crumby balance of payments deficit due in part to tax-dodging corporations, maybe there are a whole bunch of Milan-like companies that have used inversions to keep their name in the US and their money out of IRS’s reach.
The message from the Apple case is pretty clear: Corporate profit-stashing in lowest tax domains is no longer acceptable.
Thar She Blows
From the National Weather Service:
The National Hurricane Center has issued a Tropical Storm Warning for parts of the North Carolina coast. NHC is also monitoring a system in the Gulf of Mexico that could bring impacts to the eastern Gulf Coast later this week. Meanwhile, a strong hurricane in the Pacific is on a path towards Hawaii. A Hurricane Watch is in effect for the Big Island. Read More >
Meanwhile, we have had rains in ther afternoon here in East Texas: Another ¾ of an inch Monday.
Breitbart is out with more today on how “Google hides popular Hillary Clinton Health Searches.” We’ve moved a lot of our searches to Bing lately…due to more even (honest?) results.
In Roger Simon’s Diary of a Mad Voter, we read how the Huma-Weiner Scan dal is more than just casual “Sext”.
More on point to me is what kind of ethics do the people around Hil have? Seems to me this is telling us something that no one wants to say…but there’s the data and there’s the entourage.
Really crazy left wing nonsense? VIDEO – Bill Clinton: Rebuild Detroit with Syrian Refugees. Yee gads…Wait! Let’s Rebuild Washington with Americans, Bill! Hil want’s five times as many as Obama brought in? OMFG.
Great article in the Observer this morning definitely worth the time: “Media Orgs Donate to Clinton Foundation then Downplay the Clinton Foundation Scandal.” Duh.
Emperor Obama At Work
Now he’s hatched a plan to implement the Paris Climate Accord without it going through the Senate in order for it to become law/applicable to U.S. entities. Well, except making up powers isn’t legal, but it will be when Hil appoints a few more Justices to the Supremes who can’t go back to founding law so they make up stuff.
Further Misadventures of President Useless
Still MORE Misadventures of P.U.
Well, except it’s not really a strategy. It’s more like a wet dream.
In it, buxom energy-hungry Europe is taught to suckle a pipeline from the KSA through Turkey to the EU…something the Shi’ites of Syria want nothing to do with. And that’s why Russia is in Syria, because such a pipeline would hammer their oil exports (did I mention Natural Gas too and how this ties in to the Leviathan Field off Lebanon/Syria?).
Back with an update when the Housing data crosses…
I keep looking for the perfect moment to short this pig (of a market) and my darts keep landing on Mylan and Apple….
All Enemies, Foreign And Dept….
Go read “George Soros’ quiet overhaul of the U.S. justice system:…Progressives have zeroed in on electing prosecutors as an avenue for criminal justice reform, and the billionaire financier is providing the cash to make it happen.”
So where is the Just Us Department?
If Soros wants to govern here, why isn’t he paying more taxes here? Or running for office. He might want to try to run against Sheriff Joe, for example.
Big money always swamps regular people, doesn’t it?
We should triple or quadruple-tax all income that is flipped into politics to lower the buyout of policy that has been up for high bids. Soros outbids the voter turnout of most medium-sized cities and that’s not right.
That is the key trend to watch: Elections are now just BIDS.
One person, one vote? You must be reading fiction.
Dow Futures are about flat ahead of the open…such goes pre-holiday euphoria.