Eye on Capitalism: China's Real-Estate Stimulus Package...

China continued its capitalist policy trend, announcing over the weekend more details on its proposed real estate stimulus package, which will solve the housing problem for 7.5 million low-income urban families and 2.4 million households in "shantytowns" in the next 3 years. In summary, the government will be dramatically lowering taxes on sales and encouraging broader home ownership.

Specifically, the package outlined five points: (1.) Building more homes for low-income families, (2.) Encouraging home buying, (3.) Supporting property developers to deal with the changing market, (4.) Enhancing the role of local governments in stabilizing the real estate market, and (5.) Improving surveillance on the property market.

The plan will help incentivize new buyers. Under the new package home owners for at least 2+ years can sell their homes without having to pay taxes. This is a change from the previous 5+ year rule. And if owners sell their homes within 2 years, they will only pay tax on profits from the sale, not the actual sales prices.

Further, the Chinese government said it will work with commercial banks to extend credit to developers based on property demand. Already the government has encouraged people with “smaller-than-average” apartments to buy a second one.

Property prices in 70 major cities in China rose 0.2% in November Y/Y, the lowest numbers since the government began publishing the figure in July, 2005. A total of 2.7 Trillion Yuan (387.5 Billion USD) was injected into real estate development in the first 11 months of 2008, up 22.7% Y/Y. Yet total sales were down 18.3% Y/Y, with residential sales down 18.8% Y/Y during this same period.

We continue to be long China’s ETF FXI and applaud the government's proactive capitalist policy making.

Matthew Hedrick

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more