A U.K. house-price index rose to a 19-month high in February as first-time buyers moved to beat the expiration of a property-tax exemption, according to the Royal Institution of Chartered Surveyors.
The gauge based on a survey by London-based RICS increased 3 points from the previous month to minus 13, the strongest reading since July 2010, it said in a statement today. Still, with the measure below zero, that indicates more surveyors saw price declines than gains last month.
The figures partly reflect Britons looking to take advantage of a two-year stamp-duty exemption for first-time buyers purchasing a home for less than 250,000 pounds ($390,800) before it ends on March 24. While such
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India banned all cotton exports on Monday, causing U.S. cotton futures to surge and igniting fears of another jump in prices for cotton goods.
India decided to immediately impose the ban because it’s worried about a possible supply crunch in the country. One reason: India’s cotton exports may have overshot government targets last year, its Directorate General of Foreign Trade said in a statement.
U.S. cotton futures jumped 4.5% — the most allowed in a single day of trading — to 92.23 cents per pound following the news.
"This India development really caught the entire cotton industry and traders off guard because it came with no warning," said Phil Flynn, senior market and commodities analyst with PFG Best.
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Flynn said the market reaction to India’s move reflects concerns that it could start a new rise in cotton prices that mirrors last year’s rally.
Cotton prices hit an all-time high of $2.27 a pound last March due to a global supply crunch for the commodity.
Cotton clothing manufacturers responded to that steep price jump first by raising prices for consumers and eventually using less cotton and more blended fabrics such as poly-cotton.
Flynn said cotton prices cooled off toward the end of last year and reached as low as 84.35 cents a pound.
"We’re in March again. Could we potentially have another big rally like last March? Maybe," said Flynn. "A void in the supply chain from India’s action could cause a price spike."
It would be deja vu for consumers, too.
"Cotton clothing prices have been coming down since last year as supply caught up with demand. But that could change now," he said.
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You know that investing can be tough. Andrew Lo says it’s even tougher than you think.
Lo, an economist and finance professor at M.I.T.’s Sloan School of Management, challenges a core idea of financial theory: that markets are "efficient," meaning there’s no point in trying to time your moves in and out of stocks, since everything you could know about them is already baked into the price.
Plenty of smart people think that Lo knows what he’s talking about. In addition to teaching, he has advised the government on ways to limit the damage from future financial crises. He also runs a money-management firm that seeks to put his ideas to work.
Lo argues that the buy-and-hold method of investing (long considered gospel by index fund managers and this magazine) doesn’t effectively limit the risks of today’s markets. He explained his theories to contributor Charles P. Wallace; the conversation has been edited.
You reject the theory of efficient markets in favor of what you call adaptive markets. Meaning?
I don’t entirely reject the idea of efficient markets. It needs updating. The adaptive markets hypothesis says that all economic institutions, like our own species, develop and change over time, depending on the population of investors that are engaged with them.
So what does that mean for investors?
In a normal market, you get the independent valuations of millions of buyers and sellers trying to evaluate a given security.
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During periods of extreme fear or greed, you don’t have the proper balance between those two to generate market efficiency and you get extremes in behavior.
When there’s a strong trend upward, for example, the kind of skepticism that produces reasonable and accurate valuations of securities is not at work, and a bubble develops. It’s very exciting when you’re in the midst of it, but at some point the valuations aren’t justifiable.
It seems as if big market shifts are becoming more common.
Yes. If you rank the top 50 one-day moves in the S&P 500, a fair number of those happened within the last five or 10 years. That tells you that we’re in a different, riskier market now.
What’s going on?
A combination of a lot of smart guys and technology. People have the ability to enact a trade instantaneously. And they have a lot of complex new tools, such as hedge funds and derivatives, at their disposal.
Technological innovations often have unintended consequences. My analogy is someone clearing some brush using a handsaw. You can clear a lot more brush using a chainsaw, but you might lose a finger, or suffer other attendant consequences. We now have everybody with chainsaws going after all sorts of opportunities, and that’s really where the potential for crises can emerge.
Until we’ve learned how to develop better technologies, I think we’re going to keep seeing more crises. There’s a good chance we’ll see a pretty important shock wave coming out of Europe if they don’t get their act together with regard to European sovereign debt payday advance low fees.
But doesn’t a simple buy-and-hold strategy address a lot of these issues of risk?
Buy-and-hold doesn’t work anymore. The volatility is too significant. Almost any asset can suddenly become much more risky. Buying into a mutual fund and holding it for 10 years is no longer going to deliver the same kind of expected return that we saw over the course of the last seven decades, simply because of the nature of financial markets and how complex it’s gotten.
Okay, but even during the so-called lost decade (2000 to 2010) someone who regularly put money into a 60% stock/40% bond portfolio would have had about a 4% return. Why isn’t that good enough?
Think about how that person earned 4%. He lost 30%, saw a big bounce-back, and so on, and the compound rate of return over the period was 4%. But most investors did not wait for the dust to settle. After the first 25% loss, they probably reduced their holdings, and only got part way back in after the market somewhat recovered.
It’s human behavior. Ask actual individual investors what their net rate of return was over the last three years, and see if it’s the same rate returned by the market. I bet you it’s not.
So what choice do I have instead?
We’re in an awkward period of our industry where we haven’t developed good alternatives. Your best bet is to hold a variety of mutual funds that have relatively low fees and try to manage the volatility within a reasonable range. You should be diversified not just with stocks and bonds but across the entire spectrum of investment opportunities: stocks, bonds, currencies, commodities, and domestically and internationally.
Most of us didn’t sign up for the kind of volatility we’re seeing right now. So keep in mind that if you’re holding equities, you are probably taking more risk than you thought.
Does the government have a role in preventing these crises?
It’s not possible to prevent financial crises. But we can better understand what they are caused by, when they are likely to occur, and how we can prepare for them when they do happen.
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In the same way you cannot legislate away hurricanes, but you can do a lot to prepare for the worst of their effects. I believe we should have an independent agency to study crises, the way the National Transportation Safety Board looks at airline crashes.
Some 2,000 pages of regulations came out of the last crisis.
The Dodd-Frank Bill [which significantly strengthened financial regulations] was like a "Fire, ready, aim." It was a reaction. Now, some of that reaction was quite useful. But the laws that have been proposed, like the Volcker Rule [which would prevent banks from making some speculative investments], have hosts of unintended consequences that we won’t really understand for years until after those laws are actually implemented.
Oil prices rose slightly to near $107 a barrel Wednesday in Asia after a large drop the day before amid mixed signs about the strength of U.S. crude demand.
Benchmark oil for April delivery was up 42 cents to $106.97 midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell by $2.01 to $106.55 per barrel in New York on Tuesday.
Brent crude was up 60 cents to $122.15 per barrel in London.
U.S. crude and oil product inventories were mixed last week. The American Petroleum Institute said late Tuesday that crude inventories rose 521,000 barrels while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 1 million barrels.
Inventories of gasoline fell 916,000 barrels last week while distillates dropped 3.3 million barrels, the API said.
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An improvement in consumer sentiment helped bolster oil prices in Asia. The Conference Board, a private business research group, said Tuesday that consumer confidence rose to a one-year high in February. However, the government said orders for durable goods in the U.S. in January had the biggest fall in three years.
Crude has jumped from $96 earlier this month amid growing tension over Iran’s nuclear program. Investors will be closely watching the latest data on U.S gross domestic product and industrial production due to be released later Wednesday.
In other energy trading, heating oil rose 2.2 cents to $3.24 per gallon and gasoline futures gained 1 cent at $3.23 per gallon. Natural gas added 1.9 cents at $2.54 per 1,000 cubic feet.
Signed contracts for home resales rose to a nearly two-year high in January, an industry group said on Monday, further evidence of a budding recovery in the housing market.
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, increased 2 percent to 97.0 - the highest reading since April 2010.
December’s reading was revised down to 95.1 from a previously reported 96.6.
Economists polled by Reuters had expected signed contracts, which lead existing home sales by a month or two, to rebound 1.0 percent after a previously reported 3.5 percent fall. Contracts signed were up 8.0 percent in the 12 months to January.
A nascent recovery is under way in the housing market, with the supply of both new and previously owned homes on the market being whittled down in recent months.
But with the foreclosure tide yet to recede and continuing to depress prices, recovery will be a long, drawn-out affair.
Russia said Wednesday the world should not draw “hasty conclusions” over Iran’s most recent rebuff of U.N. attempts to investigate allegations the Islamic Republic hid secret work on atomic arms, but the U.S. and its allies accused Tehran of nuclear defiance.
Under international pressure to show restraint, Israel, which has warned repeatedly that it may strike Iran’s nuclear facilities, pointedly urged major world powers to mind their own business, saying it alone would decide what to do to protect the Jewish state’s security.
France said Iran’s continued stonewalling of the International Atomic Energy Agency “is contrary to the intentions” expressed by Tehran in its recent offer to restart talks over its nuclear activities.
In Washington, White House spokesman Jay Carney said while world powers have not yet reached a decision on those talks, Iran’s refusal to cooperate with the investigation “suggests that they have not changed their behavior when it comes to abiding by their international obligations.”
The IAEA’s acknowledgment of renewed failure came early Wednesday at the conclusion of the second trip in less then a month aimed at investigating suspicions of covert Iranian nuclear weapons work. The IAEA team had hoped to speak with key Iranian scientists suspected of working on the alleged weapons program, break down opposition to their plans to inspect documents related to nuclear work and secure commitments from Iranian authorities to allow future visits.
But mission head Herman Nackaerts acknowledged his team “could not find a way forward” in negotiations with Iranian officials. A separate IAEA communique clearly _ if indirectly _ blamed Tehran for the lack of progress.
“We engaged in a constructive spirit, but no agreement was reached,” it quoted IAEA chief Yukiya Amano as saying.
As on the previous visit that ended in early February, Iran did not grant requests by the IAEA mission to visit Parchin _ a military site thought to be used for explosives testing related to nuclear detonations, the statement said
The statement also said that no agreement was reached on how to begin “clarification of unresolved issues in connection with Iran’s nuclear program, particularly those relating to possible military dimensions.”
The Washington-based Institute for Science and International Security said Wednesday it had new indications of hidden weapons work by Iran.
ISIS said that a cache of telexes to Western high-tech companies from the Physics Research Center in Tehran shows that from about 1990 to 1993, the center sought to purchase equipment and materials that could have been used in weapons research and development.
Tehran has acknowledged that the Physics Research Center in Tehran conducted nuclear-related research, but said the center’s work was limited to efforts to prepare Iran’s military and civilian population for dealing with a nuclear strike.
Iran insists it is using nuclear energy only to generate power, and Supreme Leader Ayatollah Ali Khamenei proclaimed Wednesday that possession of atomic arms is a sin as well as “useless, harmful and dangerous.” Iran asserts that the allegations of secret work on developing nuclear arms are based on fabricated U.S. and Israeli intelligence.
But in a 13-page summary late last year, the IAEA listed clandestine activities that he said can either be used in civilian or military nuclear programs, or “are specific to nuclear weapons.”
Among these were indications that Iran has conducted high-explosives testing to set off a nuclear charge at Parchin.
Other suspicions include computer modeling of a core of a nuclear warhead and alleged preparatory work for a nuclear weapons test and development of a nuclear payload for Iran’s Shahab 3 intermediate range missile _ a weapon that could reach Israel.
The IAEA trip and its aftermath was accompanied by renewed saber-rattling by Iran and Israel.
Iranian Gen. Mohammed Hejazi, who heads the military’s logistical wing, warned that Iran will “not wait for enemies to take action against us.”
“We will use all our means to protect our national interests,” he told the semiofficial Fars news agency.
His comments followed Iran’s announcement of war games to practice protecting nuclear and other sensitive sites, the latest military maneuver viewed as a message to the U.S. and Israel that the Islamic Republic is ready both to defend itself and to retaliate against an armed strike.
Israel and the U.S. have said military force remains a last-ditch option to stop Iran from developing a nuclear weapon, but while Washington has recently tamped down its rhetoric _ and is thought to be urging Israel to practice restraint _ the Jewish state remains bellicose.
Russia, too, warned Israel against the consequences of attacking Iran, with Deputy Foreign Minister Gennyadi Gatilov telling the ITAR-Tass news agency Wednesday that such a strike “would be a catastrophe not only for the region but for the whole system of international relations.”
But Israeli Foreign Minister Avigdor Lieberman rebuffed both Washington and Moscow, telling Israel’s Channel 3 TV news the issue “is not their business.”
“The security of the citizens of Israel, the future of the state of Israel, this is the responsibility of the Israeli government,” he said. “We will make the best decision for the Israeli interest.”
Shannon Kile, head of the Nuclear Weapons Project at the Stockholm International Peace Research Institute, warned the risk of military conflict was rising _ and not necessarily through the threat of direct Israeli attack.
“There is an escalation dynamic under way, especially in the Persian Gulf, where you could have a conflict arising from an accident, a misunderstanding, from a local commander acting on his own initiative and I think that’s the problem,” Kile said.
In Paris, Foreign Ministry spokesman Romain Nadal said Tehran’s continued stonewalling of the probe, now in its fourth year, “is another missed opportunity for Iran” to ease suspicions about its nuclear goals and reconcile with the rest of the world. Nadal said Iran’s refusal to cooperate on the issue “is contrary to the intentions” of Iran’s recent offer to restart nuclear talks after a series of abortive meetings over the past two years.
German Foreign Minister Guido Westerwelle said Iran’s intransigence “is the path the leads to further international isolation.” But German officials were cautious when asked about the possibility of imposing yet more sanctions against Iran in response to the latest setback.
Britain, which would join the U.S., China, Russia, France and Germany in any nuclear negotiations with Iran, said it wasn’t yet clear what impact the IAEA visit’s failure might have on the international community’s response to Tehran’s recent offer of renewed talks.
“We share the IAEA’s disappointment. The IAEA genuinely wants to make progress and we want the Iranians to engage in meaningful talks,” a spokesman for Britain’s foreign ministry said on customary condition of anonymity in line with policy.
Russia urged renewed efforts to engage Iran on its suspected secret nuclear work.
“We must not make hasty conclusions,” Gatilov, Russia’s deputy foreign minister, told reporters, calling for the IAEA to “continue contacts” with Iran on the issue.
The IAEA said no further talks were planned for the moment. But Iran’s envoy to the IAEA, Ali Asghar Soltanieh also said “more time was needed” for final agreement on the issue.
A suicide bomber detonated his car Sunday as a group of police recruits left their academy in Baghdad, killing 20 in the latest strike on security officials that angry residents blamed on political feuding that is roiling Iraq.
Police said the suicide bomber was waiting on the street outside the fortified academy near the Interior Ministry headquarters in an eastern neighborhood in the Iraqi capital. As the crowd of recruits exited the compound’s security barriers around 1 p.m. and walked into the road, police said the bomber drove toward them and blew up his car.
“We heard a big explosion and the windows of the room shattered,” said Haider Mohammed, 44, an employee in the nearby Police Sports Club, about 100 yards (meters) from the academy’s gate. He described a horrific scene of burning cars, scattered pieces of burned flesh and wounded people flattened on the ground.
“Everybody here knows the time when the recruits come and go from the academy,” Mohammed said. “This is a breach of security.”
Five policemen were among the dead; the rest were recruits. Another 28 recruits and policemen were wounded.
Officials at three nearby hospitals confirmed the casualties.
All officials spoke on condition of anonymity because they were not authorized to release the information.
Iraq’s police are generally considered to be the weakest element of the country’s security forces, which are attacked in bombings and drive-by shooting almost every day. The last big assault on police came in October, when 25 people were killed in a string of attacks that included two bombers slamming explosives-packed cars into police stations.
Recruits, too, are a favorite target: Suicide bombers killed scores of young men lined up for security jobs or otherwise at training centers in Baghdad and the northern city of Tikrit in recent years. The public outcry that followed from lawmakers and residents after those attacks spurred the government to bolster training and recruiting centers with better protections.
But, as Sunday’s attacks showed, extremists are easily able to sidestep security measures. At Baghdad’s police academy, recruits generally are escorted out of the compound to ensure their safety. But once they get to the street outside, they are on their own.
It was at that point the bomber struck on Sunday. The group of recruits had left the compound’s barrier gates and were crossing the road to hail a taxi or bus ride home after finishing a two-week training course.
Shiite lawmaker Hakim al-Zamili, who sits on parliament’s security and defense committee, said the academy’s officials should have been more careful about letting the recruits go at the same time every day. He said that was a pattern that insurgents easily noted.
“This was negligence by security officials in charge of the academy security,” al-Zamili said.
Al-Zamili blamed al-Qaida for launching the attack but raised the possibility that it aimed to ramp up bitterness among Iraqis already exasperated with ongoing political fighting that has consumed the government for weeks. “The political feuds are contributing to such security violations because they are demoralizing the security members,” he said.
No group immediately claimed responsibility for the bombing, but suicide attacks are a hallmark of al-Qaida.
Al-Qaida’s potency in Iraq has thinned since its heyday five years ago, when the country teetered on the brink of civil war. But last week, Iraqi and U.S. officials acknowledged al-Qaida remains a viable threat, noting fears that local fighters in the Sunni-dominated insurgent network were shifting to Syria to aid forces opposing the regime of President Bashar Assad.
But some of Baghdad’s residents said Sunday’s attack likely was rooted in political turbulence that has shaken Iraq in recent weeks.
In findings that were expected to hike already-simmering sectarian tensions, a judicial panel last week said that at least 150 attacks and assassinations since 2005 were linked to Vice President Tariq al-Hashemi, Iraq’s highest-ranking Sunni official.
The charges against al-Hashemi, who has sought haven from arrest in the autonomous northern Kurdish region, were first brought in December by the Shiite-led government of Prime Minister Nouri al-Maliki. Al-Hashemi has denied the charges and is expected to give a speech in coming days to defend himself.
“The people were expecting such attacks because of the current tense political atmosphere in the country,” said Ali Rahim, 40, a government employee. “Those poor recruits were looking to send the salary to their families and now they are going to be sent as dead bodies to these families.”
Al-Hashemi is a member of the secular but Sunni-dominated Iraqiya political bloc, which on Sunday accused the government of rehashing the charges on state TV at the risk of inflaming current strains.
Repeating the accusations against al-Hashemi “will provoke the public and create more tension as political blocs are working to defuse the tension and end the crisis,” Iraqiya spokeswoman Maysoun al-Damluji said in a statement.
The judicial panel’s findings against al-Hashemi are not legally binding, and he is entitled to a trial. But it opened the door to let 15 relatives of those killed in the attacks linked to al-Hashemi file lawsuits against him on Sunday.
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