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Tuesday, May 26, 2015 5:29 PM


$500 Million LA Home - Built on Spec


To highlight the enormous and growing income inequality issue, please consider California Dreaming: Record $500 Million Tag on L.A. Home.

Nile Niami, a film producer and speculative residential developer, is pouring concrete in L.A.’s Bel Air neighborhood for a compound with a 74,000-square-foot (6,900-square-meter) main residence and three smaller homes, according to city records. The project, which will take at least 20 more months to complete, will exceed 100,000 square feet, including a 5,000-square-foot master bedroom, a 30-car garage and a “Monaco-style casino,” Niami said.



“The house will have almost every amenity available in the world,” he wrote in an e-mail. “The asking price will be $500 million.”

The priciest home ever sold was a $221 million London penthouse purchased in 2011, according to Christie’s. The most expensive properties on the market include a $425 million estate in France’s Cote d’Azur, a $400 million penthouse in Monaco and a $365 million London manor.

Whether Niami can get more than double the previous record for his mansion remains to be seen.
Under Construction



Nile Niami House at 944 Airole Way stands in Bel Air, California, U.S., on Monday, May 18, 2015.
Photographer: David Paul Morris/Bloomberg

Questions of the Day

  1. What is the estimated profit on this monstrosity?
  2. What are the construction carrying costs if this thing goes unsold?
  3. What about insurance?
  4. Who wants to lay $500 million to live in LA?
  5. How many people in the world can afford a half-billion dollar home?
  6. Does anyone who can afford such a home, want one?
  7. Could a single California mudslide wipe the entire property off the map?

I don't have any answers, I am just asking.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

2:49 PM


Regional Manufacturing Comparative Wrap-Up: Empire State, Philly, Kansas City, Richmond, Dallas


Two more regional manufacturing reports came out today, from Dallas and Richmond.

The Dallas region was the weakest in six years thanks to oil. For details, please see Dallas Fed Manufacturing Index Collapses: Lowest Production Reading in 6 Years, Orders Contract 7th Month, New Orders 5th Month.

Comparative Wrap-Up

ComponentRichmondKansas CityPhilllyEmpire StateDallas
Date26-May21-May15-May5-May26-May
Index1.0-13.06.73.1-20.8
ProductionN/A-13.0N/AN/A-13.5
Shipments-1.0-9.01.014.9-11.6
New Orders2.0-19.04.03.9-14.1
Order Backlog-10.0-21.0-1.1-11.5-10.6
Employees3.0-17.06.75.2-8.2
Workweek6.0-14.0-5.6-2.1-11.6
Prices ReceivedN/A-4.0-5.41.0-8.7
Prices PaidN/A-6.0-14.29.4-1.7

Reports

May 05: Empire State
May 15: Philly
May 21: Kansas City
May 26: Richmond
May 26: Dallas

Notes:

  • Some regions use the term "order backlog" others "unfilled orders"
  • Some regions had a production index component, others not.
  • Richmond discussed prices paid and received on an annualized basis, not an index component that could be directly compared to the others.

Significant Points

  • The Dallas and Kansas City regions were both hammered by collapse in oil prices and oil related services.
  • Order Backlog was negative across the board.
  • Employee Workweek was down in four of five regions.
  • Prices Received was down in three of four regions.

In aggregate, these are weak to very weak reports.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

12:13 PM


Dallas Fed Manufacturing Index Collapses: Lowest Production Reading in 6 Years, Orders Contract 7th Month, New Orders 5th Month


Dallas Fed Manufacturing Index Plunges Below Any Economist's Estimate

Fed manufacturing surveys remain weak at best. Today the Dallas Fed Business Activity Index fell to negative 20.8, well below the bottom end of any Bloomberg  Estimate.




Contraction in the energy sector continues to pull the Dallas Fed report into deeply negative ground, to a headline minus 20.8 vs minus 16.0 and minus 17.4 in the prior two months. Production shows a turn for the worse, at minus 13.5 vs April's minus 4.7, as does employment, at minus 8.2 vs plus 1.8. New orders remain deeply negative, at minus 14.1 vs minus 14.0. Prices paid also fell further though the decline is easing, to minus 1.7 from minus 11.2.

The regional Fed reports all point to another slow month for the manufacturing sector which is struggling with energy contraction, especially evident in this report, as well as weakness in exports.
Dallas Fed Production Index Lowest in 6 Years



Orders Contract 7th Month, New Orders 5th Month

For additional details, let's dive into the Dallas Fed Texas Manufacturing Outlook Survey.
Texas factory activity declined again in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell to -13.5, its lowest reading in six years.

Other measures of current manufacturing activity reflected continued contraction in May. The new orders index held steady at -14.1, and the growth rate of orders index held steady at -15.2, marking the fifth and seventh negative reading in a row for these indexes. The capacity utilization index edged down to -11.6. The shipments index fell nearly 8 points to -13.2, with more than 30 percent of firms noting lower shipment volumes in May than in April.

Perceptions of broader business conditions worsened further this month. The general business activity index fell to -20.8 in May, its lowest reading since June 2009. The company outlook index moved down to -10.5, also hitting a low not seen since summer 2009.

Labor market indicators reflected employment declines and shorter workweeks. The May employment index declined 10 points to -8.2, after rebounding slightly above zero last month. Twelve percent of firms reported net hiring, compared with 21 percent reporting net layoffs. The hours worked index fell from -5 to -11.6.

Changes in prices and wages were mixed in May. Downward pressure on input costs abated, as the raw materials prices index pushed up toward zero, coming in at -1.7. The finished goods prices index edged down to -8.7, its fifth negative reading in a row and suggestive of falling selling prices. Meanwhile, the wages and benefits index remained positive and little changed at 14.7.
As I suggested last month, the jobs rebound in April was an outlier.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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