Steve Biggar, Director of Financial Institutions Research, Argus Research, discusses what's driving the recent pullback in US bank stocks and which names Argus has "buy" opinions on.

According to new research released this week by Dreyfus, a pioneer in US investing, half of individual investors (49%) have indicated they have yet to take any action to reevaluate their investment approach in light of the possibility of a shifting investment landscape, as we head into the eighth year of the economic recovery.

"As long-term risk/return expectations have shifted with an increase in inflation, the rise of US nationalism and record-low volatility, investors would be well-served to reevaluate their portfolios in light of changed circumstances to determine if they will continue to meet their investment objectives," said Mark Santero, Chief Executive Officer, The Dreyfus Corporation, a BNY Mellon company.

The "Helping Meet Investor Challenges Study" surveyed 1,250 investors with $50,000 or more in investable assets on their approach to investing. This is the first release of survey data that explores all elements of the group's investing lives, including engagement with investment professionals, portfolio allocations and appetite for risk. The study also surveyed 200 independent and institutionally-based advisors regarding the investing relationship between advisors and clients.

Older Investors Ignoring Past Market Precedents in Adjusting Portfolios

Older investors have had an opportunity to weather a variety of stock market highs, such as the bull markets from 1987-2000 and 2009 to the present, and lows, such as the savings and loan crisis in the 1980s, the stock market crash in 1987 and most recently the financial crisis of 2008. Yet, even with this past knowledge in the rearview mirror, the survey reveals:

• Sixty-one percent of investors aged 55+ indicated they have not or will not reevaluate their investment approach in today's existing investing environment.

In comparison, younger investors who experienced the 2008 market meltdown and who began their savings efforts in the earlier part of their careers demonstrated a forward-thinking approach to reevaluating their portfolios. This generation of investors between the ages of 21 and 34 indicated the following:

• Sixty-five percent had already evaluated their investment approach, compared to just 51% of those aged 35-54 and 39% of those aged 55+.
• A greater percentage of younger investors between 21-34 (63%) also indicated they had worked with an advisor in reevaluating their investments, while only a third (38%) of those 55+ had evaluated their investments with an advisor.

"Our survey revealed that younger investors have demonstrated in greater numbers a more proactive approach to reassessing their portfolios and seeking out their advisors for counsel, some of whom might lack the historical market experience and accumulated wealth of older investors," said Mark Santero.

Mass Affluent Investors Slow to Take Action on Their Portfolios

The survey also looked at the investment actions taken by mass affluent investors, those who had investable income between $250k and $2.5 million. The survey found nearly half of this audience had work to do in reviewing their portfolios and how more than a third had decided to do nothing with their portfolios:

• Forty-three percent of the total mass affluent investor audience had not reevaluated their investment approach in this new investment environment.
• Thirty-nine percent of mass affluent investors working with an advisor had not reevaluated their investment approach.

Investors Look to Advisors in Navigating the Way

Despite the last eight years of a US bull market, uncertainty is very much a reality in U.S. and global markets.

Yet a majority of investors remained on the sidelines, the survey found:

• Six in ten investors (60%) without a financial advisor are most likely to put off their plans to address today's market challenges, with only one-quarter (24%) saying that they plan to address challenges they face at some point in 2017.
• Seventeen percent said they don't have any plans to reevaluate their investment approach.

Santero added, "We believe investors who don't work with a professional advisor could greatly benefit from the insights an advisor can provide in tailoring a goals-based approach for their individual circumstances against today's investing environment of uneven economic growth. Options might include diversifying their US exposure with global fixed income and equities or considering dividend or alternative investing strategies."

Those individual investors who worked with an advisor had a greater likelihood of adjusting their portfolios. The findings revealed that:

• Almost three-quarters (65%) indicated they had reevaluated their investment approach, compared to two in five (40%) who had not worked with an advisor.
• Nearly three-quarters (73%) of advisors' clients changed their approach as a result of advice.

(Source: Dreyfus)

The global trend of the past few years towards a "low-rate, broad-base" business tax environment continues, as worldwide economic growth shows no signs of improving and countries introduce new or improved incentives to compete for business investment that will stimulate growth.

Canada isn't immune to global trends, but its tax policy direction is hard to predict at the moment due to the uncertainty around tax policy reforms being considered in the US. This is according to the EY Outlook for global tax policy in 2017, which combines insights and forecasts from EY tax policy professionals in 50 countries worldwide.

"Tax reforms emerging in Europe and the U.S. are putting pressure on governments to find creative ways to compete for business investment," says Fred O'Riordan, EY Canada's National Advisor, Tax Services. "Canada has improved its international tax competitiveness over a number of years, but it's at risk of losing some of this ground, in particular if the United States goes ahead with a tax reform package that includes significant rate reductions."

Competition for investment globally

With the implementation of the G20/Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) recommendations, governments are now more compelled to compete with each other and attract investment through different tax changes. According to EY's report, of the 50 countries surveyed, 30% intend to invest in broader business incentives to stimulate or sustain investment, and 22% plan to introduce more generous research and development (R&D) incentives in 2017.

But Canada is bucking the global trend of investment-stimulating policy. Here, the government has been more focused on the personal income tax side and redistributing the tax burden so the highest income earners bear more and middle income earners bear less.

Tax reform in the United States may impact Canada

An increased likelihood of tax policy reform in the US is strongly influencing both the Canadian and global tax policy outlook. With a Republican President and Republican control of both houses of Congress, the probability of a reform package being implemented is higher than in previous years. As a result, Canada and many other countries are taking a "wait and see" approach until new legislation is adopted in the US before they commit to any reforms themselves.

"A "border tax adjustment mechanism" is currently proposed as part of the tax reform package in the US," says O'Riordan. "Because our two economies are so closely integrated, this could have a significant impact on cross-border trade in both goods and services with our closest neighbour. Any Canadian company doing business with the US definitely ought to pay attention to upcoming changes in the US."

Corporate income tax rates

Of the 50 country respondents, 40 report no change or anticipated change to their national headline corporate income tax (CIT) rate in 2017, but rates continue to decline in a number of jurisdictions, particularly in Europe. Canada is one of only two countries where the rate actually increased (the average combined federal/provincial rate increased marginally -- by 0.2 percentage points). This in itself is unlikely to deter investment, but is still slightly out of step with global peers.

(Source: EY)

British entrepreneurs are being offered the chance to develop financial services ideas in one of the top financial regions in the US, with a $100,000 (£77,000) equity-based grant and a package of support for growing businesses.

The initiative aims to bring up to twelve of the most promising emerging financial companies in the world to Ohio and help them boost their growth beyond the start-up stage. Equity-based grants of $100,000 per firm plus coaching, office space, visa support and a strong business network are all being provided through the accelerator Fintech71.

Valentina Isakina, Managing Director for Financial Services and Select HQ Operations at JobsOhio, said: “Ohio looks ahead to the future by investing in technologies of the next generation. Our financial services sector is one of the strongest in the world, and it is always actively seeking innovative ideas and partnerships. Here people are more approachable and doing business is easier, so these innovative companies will have a better chance to blossom into the financial stars of tomorrow. JobsOhio is happy to support this innovative industry effort.

“Getting beyond the start-up phase is always difficult even when entrepreneurs have a great idea and have managed to get their business going, so the financial services industry wants to give them a helping hand by creating Fintech71. By bringing them here to enjoy Ohio’s support and hospitality, they will make contacts that will last a lifetime and benefit everyone.”

Fintech71 is aimed at start-up and scale-up businesses from all over the world which have matured enough to present a well-thought-out concept to test with a corporate partner or a market-ready business model. The application deadline is July 17 via www.fintech71.com.

The accelerator has a not-for-profit model and will negotiate a customised, entrepreneur-friendly equity-based participation in exchange for a grant of US $100,000 and access to the accelerator program for each of the selected companies. The finalists will be invited to the state capital Columbus to receive coaching from leading experts of the industry from mid-September to mid-November, in order to further develop their business ideas.

Additionally, the selected start-ups will get the opportunity to build relationships with the sponsor businesses, which are well established in Ohio and throughout the USA, and to network with mentors, partners, and customers. The selected start-ups will have access to free office space in the city centre of Columbus, with foreign businesses will be supported with their visa application.

Some 270.000 people, nearly the size of NYC’s workforce, work in the financial industry in Ohio, one of the largest in the USA. Ohio is also an innovative and successful hub for a large number of other industries, including automotive, aerospace, mechanical engineering, and chemicals. The state is among the top five US states for Fortune 500 and Fortune 1000 headquarters.

Fintech71, named as a nod to the cross-state highway I-71 connecting Ohio via its three largest cities, is backed by leading enterprises, banks and insurers from Ohio, like KeyBank, Huntington Bank, Grange Insurance, Progressive Insurance and Kroger, the largest food chain in the USA. JPMChase is also supporting the program, leveraging its large technology presence in Ohio. JobsOhio, the innovative non-profit economic development corporation, is supporting Fintech71’s operations along with its industry expertise, state and national contacts.

“Fintech71 and Ohio are ready to compete on a global scale given the alignment of the state, the private sector and its entrepreneurial ecosystem,” added Matt Armstead, the executive director for the accelerator.

(Source: JobsOhio and Fintech71)

Androulla Soteri, tax development manager at MHA MacIntyre Hudson below discusses the consequences of the US President’s potential implementation of tax reform in the country, and the impact it could have on UK business.

Corporation Tax (CT) has been an important part of the election manifestos, and we now find ourselves in a coalition of two parties supporting a move towards lower CT rates. This makes it clear which direction the new government will decide to go in.

The main argument for dropping CT rates is to make the UK a more attractive place for multinationals to locate business. This in turn increases the job-pool which raises further tax revenue in the form of National Insurance contributions, and consequently VAT as consumers have more disposable income to play with. In over a decade, CT has never made up more than 11% of total tax take. Given its relative lack of significance, there’s a strong argument to suggest an overall benefit in reducing it.

One of the arguments against a reduction is that if big multinational companies were forced to pay their fair share of CT, this would help reduce the budget deficit and national debt, and also contribute to public services such as the NHS, schools and policing.

But it’s also worth taking a look at the US, which has one of the highest rates of CT in the world at 35%. One of Trump’s intentions is to drop the rate to 15%, to bring US companies back home. If this happens, US businesses could lose interest in investing in the UK, especially with Brexit looming on the horizon. Instead, they could look to repatriate headquarters, increasing employment of US citizens and consequent tax revenues associated with it.

If Trump’s plan is a success, the UK could be shaken hard over the next few years, especially in light of ongoing Brexit uncertainties. Lowering CT rates in the UK may therefore be an incentive for companies to remain within a benign competitive UK tax system.

The task of running the UK over the next two years is unenviable. But if the Government sticks to its plan of lower CT rates, we’ll certainly see clear evidence within the next few years of whether this is good or bad for the economy.

Below, Tamara Lashchyk, a Wall Street Executive and Business Coach, talks to Finance Monthly about the current state of markets in the US and the impact that Trump's Presidency will have on the strength of America’s economy. Tamara has 25 years of experience working at multiple Wall Street investment banks including JP Morgan, Bank of America and Merrill Lynch just to name a few. She also recently authored the book “Lose the Gum: A Survival Guide for Women on Wall Street.”

Over the last 12 months the US Equity Markets have shown steady signs of growth until last November when the US elections sent the stock market soaring into another stratosphere. A 16% market surge over the last six months could have an intoxicating effect on investors, but one should heed a word of warning about using market performance as the sole barometer of economic health. With GDP growth hovering just below two%, the stock market has fast outpaced the growth of the real economy.

Although corporate profits are a contributing factor to this bull-run, much of the current market rally has been fueled by the economic optimism generated by the Trump campaign and his promise to deliver a pro-business agenda. Any interference in Trump’s ability to deliver against that agenda could halt this market momentum and even send it towards a decline.

But in the wake of an administration riddled with controversy and scandal, the private sector sits anxiously awaiting, to see on how much of this promise Trump can actually deliver. Topping the heap of the Trump strategy is Tax-Reform and a reduction of the corporate tax rate which would stimulate profits; repeal of onerous government regulations particularly in the banking sector; and renegotiation of trade deals.

But the clock is ticking and Trump’s time horizon could be much shorter than the four year term of a presidency. If the all stars and planets align for Trump then he will have the full duration of his time in office to work with a Republican Congress. But with mid-term elections less than two years away, Trump’s opportunity to deliver may evaporate just as they did for President Obama when he lost both the Senate and the House.

At this point however, the mid-terms seem like a distant concern while the greater issue is the dark cloud of political smoke that engulfs this Administration. Whether or not there is actually fire remains to be seen, but in the meantime all the political noise creates an unproductive distraction that pulls Trump’s focus towards political warfare rather than delivering against his pro-business agenda. If any of the countless allegations are proven to have merit, a Trump impeachment could also be on the horizon.

To understand the impact that a disruption of Trump’s presidency may have from an economic standpoint, one should take a closer look at the current state of the economy. If you peel away the market enthusiasm and look at the economic fundamentals, the real economy is on solid ground and has been for quite some time. Unemployment continues to steadily decline although recent figures show signs that the decline is tapering off as underemployment and non-farm payrolls have reported softer than expected numbers. Caution regarding the slowing pace of growth is already priced into the market as seen by the return of the 10 Year Treasury yields back to their November levels. Inflation is under control eliminating the need for aggressive rate hikes by the Fed but a quest for normalization is still at the forefront of the Fed agenda as we balance against the danger of falling into a deflationary trap. Forcing a rate hike however, could send the economy into a tailspin so the Fed will likely play it safe by running the economy hot and dealing with the consequences of more money supply in the market.

So all in all, the fundamentals paint a solid economic picture, but they by no means match the gangbuster returns of the markets. Although the stock market is one of the leading indicators, in the past it has proven itself to be a cautionary tale, especially when considered in isolation. It is therefore important to look beyond the superficial gains of the recent market rally when evaluating the strength of the US economy.

Mortgage rates in the US fell for the third week in a row, with the benchmark 30-year fixed mortgage rate falling to the lowest level in more than six months, according to Bankrate.com's weekly national survey. The average 30-year fixed mortgage has a rate of 4.09%, the lowest since November 16th 2016, and an average of 0.25 discount and origination points.

The larger jumbo 30-year fixed slid to 4.02%, and the average 15-year fixed mortgage rate dropped to 3.31%, also the lowest since mid-November. Adjustable mortgage rates were mixed, with the 5-year ARM inching down to 3.41% while the 7-year ARM nosed higher to 3.60%.

Between inflation rates stalling out, consumer spending softening and ongoing questions about a White House scandal and its implications for policy initiatives, there is just enough uncertainty to keep bond yields and mortgage rates on a downward trajectory. Mortgage rates are closely related to yields on long-term government bonds, which appeal to investors any time uncertainty, or low inflation, is in the air. With a looming employment report for the month of May, investors will be looking for some confirmation of more robust economic activity in the current quarter than the anemic 1.2% annualized pace of growth in the first three months of the year.

At the current average 30-year fixed mortgage rate of 4.09%, the monthly payment for a $200,000 loan is $965.24.
30-year fixed: 4.09% -- down from 4.13% last week (avg. points: 0.23)
15-year fixed: 3.31% -- down from 3.32% last week (avg. points: 0.22)
5/1 ARM: 3.41% -- down from 3.42% last week (avg. points: 0.30)

(Source: Bankrate)

Things have been looking okay for the US’ overall economy, and with implementing change in Washington, who knows what’s to be of the economy in months to come. Samuel E. Rines, Senior Economist and Portfolio Strategist at Avalon Advisors LLC discusses for Finance Monthly below.

The US economy currently finds itself in a familiar position. Following a weak start affected by statistical anomalies and an absent consumer, the economy is beginning to find its footing. But this does not mean that the US economy is going to suddenly take-off. On the contrary, the US economic outlook is heavily reliant on decisions made in Washington.

Recently, manufacturing, employment, and personal consumption indictors have been generally positive. While headline job creation in May was disappointing, jobless claims and other indicators of labor market stress have been subdued. There are certainly areas of the US economy that are less encouraging. Inflation and lackluster wage growth remain conundrums of sorts given the extremely low unemployment rate. Most economic models would have wages and inflation accelerating at these levels.

Taken together, the current state of the US economy is much the same as it has been for the past several years: not too hot, not too cold. Slow and steady growth around the post-recession trend growth of around 2 to 2.5%. Nothing to become too excited about, but also fast enough to generate sustainable growth. There are reasons to suspect the US economy will significantly accelerate its pace of growth in the second half.

While little has changed for the US economy so far in 2017, numerous events and policies could alter the trajectory over the next year or so.  The most important are the Trump Administration’s promised tax breaks and fiscal policies, closely followed by the Federal Reserve’s policy decisions. And, in many ways, the two are related.

Following the election of President Trump, the markets cheered these pro-growth policies as yields on US government debt rose and equity markets made all-time highs. But some of this initial optimism—euphoria even—has dissipated. At least partially, this is due to the declining potential for timely fiscal policy changes. It has taken GOP members of Congress and the Senate far longer to come to agreement on what their version of the healthcare bill should be than markets anticipated.

The importance of the healthcare bill, and, the drawn out debate surrounding it, are difficult to overstate. To do meaningful tax reform, the healthcare reform must be completed first as there are taxes and costs embedded in the ACA law that the GOP deal with before it can fully rework the tax code. And reducing the costs within the ACA is critical to freeing up fiscal room to maneuver greater tax breaks than would otherwise be achievable. Until healthcare is completed, tax reform is on the backburner.

Further reducing prospects of growth boosting initiatives are the significant headwinds Trump Administration faces to implementing its agenda. Many of the headwinds are likely to pass over time, but that is precisely the problem—time. Unless there is a significant acceleration in the pace of legislation, tax reform now appears to be a late 2017 or early 2018 catalyst.

Because of this extended timeline, markets may be forced to refocus on the Fed’s policy trajectory. The Trump Administration’s fiscal policies are incorporated into economic projections used to recommend monetary policy changes. Simply, policy timing matters—not only for markets and the economy—but also for the evolution of the Fed’s monetary policy.

For markets, tax and infrastructure are imperative: the lower the taxes, the greater the after tax profits, and the higher the valuations. That dynamic is undeniably a positive for markets. Infrastructure spending would boost revenues for companies associated with building the nation’s infrastructure. Not only in the common sense of infrastructure, but communications, electrical grid, and other areas in need of national investment—again, a positive for markets. The only outstanding issue is when the positives might arrive.

One of the odd dynamics for US growth is that “good enough" growth is likely to prove "good enough" for a couple more Fed rate hikes this year. In the absence of fiscal policy, this could cause some issues for markets with growth and Fed tightening awkwardly out of sync. The evolution of politics in Washington will have a direct, and uncomfortable, influence on both. The US economy will be heavily, if not solely, reliant on Washington for its direction for the next couple of years.

The White House is on fire. Every day – almost every few hours – new scandals are breaking. From investigations about Russian collusion to alleged obstruction of justice, the blaze is white hot. But when it comes to the world of businesses and law, it's not the alleged criminal law bombshells that are causing the most panic. James Goodnow, talks to Finance Monthly.

On June 1^st, US President Donald Trump formally announced what everyone knew was coming: the US is out of the Paris Climate Accord. The announcement and its build up set off another explosion the likes of which Trump and his Twitter account aren't as accustomed to fighting: a neck-snapping backlash from the business community and the lawyers who represent them.

Trump Thumbs His Nose at Business

“Global warming is an expensive hoax!” Donald Trump famously — or infamously — tweeted in January 2014. With that shot across the bow at the global scientific community, Trump started his war against climate change. His claim served as a rallying cry for his base supporters — many of whom believed that rejecting limits on carbon emissions would lead to a resurgence of US jobs in the coal industry. And the strategy was largely successful, catapulting Trump into the White House.

Despite Trump's bluster, the business community largely took a wait-and-see approach following Trump's election. The reason: Trump engaged in plenty of campaign hyperbole that was ultimately dialed back once he assumed office. Obamacare "repeal and replace" is stalled, construction has not started on Trump's border wall with Mexico, and his travel ban has been blocked by the courts. Perhaps the withdrawal from the Paris Accord would end with the same fate: a promise that would be delayed or not fulfilled.

The business world miscalculated. What business leaders monitoring the situation failed to account for is the fact Trump was backed into a corner. He needed a win with his base. And withdrawal from the Paris Accord is one of the only "successes" he could accomplish unilaterally.

The Business World's Reaction

The response from the business and legal community has been swift. On June 1, 25 major US companies, including juggernauts Apple, Facebook, Google and PG&E signed an open letter to the president that appeared in the New York Times and Wall Street Journal. The letter makes the business case for the Paris Accord: "Climate change presents both business risks and business opportunities."

The day before the announcement, Tesla and SpaceX CEO Elon Musk gave Trump an informal ultimatum on Twitter, saying he will have "no choice but to depart" from Trump advisory councils if Trump pulled the plug on the Paris Accord. Musk's comments are not isolated. Since the election, over 1000 businesses signed the Business Backs Low-Carbon USA statement.

The chorus of voices coming from the business community is united by a common theme: US withdrawal from the Paris Accord is not only ethically questionable, but leads to dangerous instability for business. Every day, business leaders make difficult decisions about where to allocate resources. A stable and uniform framework allows businesses to confidently invest in technology that will last into the future. According to the Business Backs Low-Carbon USA statement: "Investment in the low carbon economy ... give[s] financial decision-makers clarity and boost[s] the confidence of investors worldwide."

Legal Community Reaction

Trump's decision has also put lawyers into hyper-drive. Within Washington, there is widespread disagreement about the legal implications of Trump's move. Last week, a group of 22 US lawmakers, including Senate majority leader Mitch McConnell, warned Trump in a letter that his failure to withdraw from the Paris Accord could open the litigation floodgates: “Because of existing provisions within the Clean Air Act and others embedded in the Paris Agreement, remaining in it would subject the United States to significant litigation risk." But it's far from clear that US withdrawal from the Paris Accord will immunize the White House from the courts – with groups that favor the agreement already having vowed to sue.

In-house lawyers are no doubt sweating, as well. Lawyers at large corporations with operations in the United States are tasked with providing recommendations to business leadership on what they can and can't do from a regulatory perspective. With Trump pulling the US out the Paris Accord, lawyers now have to look to domestic regulations — a scheme that itself could be turned upside down — and try to reconcile those with international protocols. All of this uncertainty may translate into lawyers feeling like they are walking on quicksand.

Trump's Political Miscalculation? 

Trump prides himself on operating on instinct. Prior to making his decision to pull out from the Paris Accord, he no doubt felt the rumblings of this business backlash coming. Why, then, did he move forward? Part of the answer may lie in his examining his base. Recent polls show that, for the first time, Trump's support among his core supporters is starting to erode. And that may spell danger for Trump, who relied on a mobilized and rock-solid base to ride into the White House. Trump thus decided that his need for a political victory and appeasing his base was worth the kickback from the business community.

But Trump may be missing something here. According to many reports, moderate conservatives and centrists who voted for Trump did so in part because they believed his rhetoric was nothing more than puffing that wouldn't ultimately be acted on. They were willing to throw their support behind him believing that he would revert to more traditional GOP, pro-business values.

But Trump's withdrawal from the Paris Accord demonstrates that Trump isn't all talk. When his back is against the wall, he is willing to act – even if it means acting against the interests of non-base voters who helped elect him. That realization may alienate the critical segment of the business electorate he needs to win again in 2020. More immediately, it may spell trouble for Republican members of Congress in 2018.

The White House is on fire. But it may not be heat from the blaze that stops Trump politically – but rather a cooling to Trump and his policies from moderate Republicans and the business world.

James Goodnow is an attorney and legal and political commentator based in the United States. He is a graduate of Harvard Law School and Santa Clara University. You can follow him on Twitter at @JamesGoodnow or email him directly at james@jamesgoodnow.com.

US real estate markets are increasingly becoming international, and changing demographics brought forth by immigration and growing interest from foreigners are positioned to bolster home sales activity and prices. That's according to speakers at an international real estate forum organized by the REALTOR University Richard J. Rosenthal Center for Real Estate Studies session here at the 2017 REALTORS^® Legislative Meetings & Trade Expo.

NAR's Danielle Hale, managing director of housing research, was joined by Alex Nowrasteh, immigration policy analyst at the Center for Global Liberty and Prosperity at the Cato Institute, to share insight on the current and future impact of foreign buyers and immigration on the US housing market.

According to Nowrasteh, the rising US population is being bolstered by a growing number of immigrant households, and their presence will continue to transform the housing market. Referring to data from the 2015 American Community Survey, Nowrasteh said of the roughly 321.4 million residents in the US, 278.1 million are born here (natives) and the remaining 43.3 million – made up of 20.7 million naturalized citizens and 22.6 million non-citizens – are foreign-born.

"Immigration affects rents and home prices far more than it affects the labor market," said Nowrasteh. "An expected 1% increase in a city's population produces a 1% uptick in rents, while an unexpected increase results in a 3.75% rise."

Nowrasteh, pointing to studies conducted on immigration and housing, explained that the effects of immigration on real estate are localized, with most of the impact felt where immigrants tend to reside: low-to-middle income counties. Each immigrant adds 11.6 cents to housing value within that county. In 2012, 40 million immigrants added roughly $3.7 trillion to US housing wealth.

Referencing the Legal Arizona Workers Act that went into effect on January 1st 2008, Nowrasteh said the decline in population resulting from the law likely exasperated the drop in home prices the state experienced during the downturn. Fewer households purchasing or renting property subsequently lead to higher vacancies and lower prices. "Immigration is the best way to increase population, housing supply and prices," he said.

Presenting some of the key findings from NAR's 2016 Profile of International Activity in US Residential Real Estate released last July, Hale said foreigners increasingly view the US as a great place to buy and invest in real estate. She noted the upward trend in sales activity from resident and non-resident foreign buyers¹ in the past seven years, with total foreign buyer transactions increasing from $65.9 billion in 2010 to $102.6 billion in the latest survey.

"A majority of foreign buyers in recent years are coming from China, which surpassed Canada as the top country by dollar volume of sales in 2013 and total sales 2015," said Hale. "Foreign buyers on average purchase more expensive homes than US residents and are more likely to pay in cash."

Perhaps foreshadowing where a bulk of future home purchases from immigrants will come from, Hale said that in NAR's latest survey roughly over half of all foreign buyers purchased property in Florida (22%), California (15%), Texas (10%), Arizona or New York (each at 4%). Latin Americans, Europeans and Canadians – who tend to buy for vacation purposes in warm climates – mostly sought properties in Florida and Arizona. Asian buyers were most attracted to California and New York, while Texas mostly saw sales activity from Latin American, Caribbean and Asian buyers.

NAR's 2017 Profile of International Activity in US Residential Real Estate survey is scheduled for release this summer. Looking at the past year, Hale said monthly data from the Realtors Confidence Index revealed a rise in responses from Realtors^® indicating they worked with an international buyer.

"Chinese buyers are once again expected to top all countries in both total dollar volume and overall sales," said Hale.

¹The term international or foreign client refers to two types of clients: non-resident foreigners (Type A) and resident foreigners (Type B).
Non-resident foreigners: Non-US citizens with permanent residences outside the United States. These clients typically purchase property as an investment, for vacations, or other visits of less than six months to the United States.
Resident foreigners: Non-US citizens who are recent immigrants (in the country less than two years at the time of the transaction) or temporary visa holders residing for more than six months in the United States for professional, educational, or other reasons.

(Source: National Association of Realtors)

With a flurry of news breaking in Washington, US mortgage rates moved to the downside with the benchmark 30-year fixed mortgage rate falling to a five-month low of 4.15%, according to Bankrate.com's weekly national survey. The 30-year fixed mortgage has an average of 0.25 discount and origination points.

The larger jumbo 30-year fixed slid to 4.08%, and the average 15-year fixed mortgage rate dropped to 3.35%. Adjustable mortgage rates were on the decline as well, with the 5-year ARM sinking to 3.42% and the 7-year ARM reverting to where it had been two weeks ago at 3.62%.

There's nothing like a good old fashioned political crisis to make investors nervous and bring mortgage rates lower. Mortgage rates are closely related to yields on long-term government bonds, which have been in high demand amid the turmoil in Washington. While the White House scandal was the catalyst for a measurable drop in the past couple days, mortgage rates had already moved a bit lower thanks to a slower than expected rise in consumer prices. Another factor helping keep long-term yields, and mortgage rates by extension, in check is that the Federal Reserve seems poised to raise short-term interest rates as soon as June. An increase in short-term rates can be seen as good news by long-term bond investors as it keeps the inflation genie in the bottle.

At the current average 30-year fixed mortgage rate of 4.15%, the monthly payment for a $200,000 loan is $972.21.

SURVEY RESULTS

30-year fixed: 4.15% -- down from 4.22% last week (avg. points: 0.25)
15-year fixed: 3.35% -- down from 3.44% last week (avg. points: 0.21)
5/1 ARM: 3.42% -- down from 3.48% last week (avg. points: 0.30)

(Source: Bankrate.com)

Commodities declined in April on weakening industrial demand expectations out of China and increasing US crude inventories, according to Credit Suisse Asset Management.

The Bloomberg Commodity Index Total Return performance was negative for the month, with 15 out of 22 Index constituents posting losses.

Credit Suisse Asset Management observed the following:

• Industrial Metals decreased 3.40%, led lower by Nickel, amid weakening demand expectations out of China as measures introduced to tighten property development and investment appear to have taken effect.
• Energy declined 2.99% as US inventories of crude remained well oversupplied relative to average historical levels despite the tightening of international crude inventories.
• Agriculture lost 1.23%. Coffee declined due to reports that US stockpiles of green coffee beans reached their highest level since the early 1990s, dampening near-term demand expectations for imports.
• Precious Metals declined 0.56% after the first round of voting in the French presidential election eased risks of the country's potential exit from the Euro.
• Livestock gained 7.42%. Live Cattle increased the most on higher exports versus a year prior along with heightened cattle headcount concerns from anticipated cold and snowy weather in the US Midwest.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: "Geo-politics continue to remain at the forefront of macroeconomic attention. Meanwhile, European economic data have been generally constructive as of late, and political stabilization may make it easier for the positive momentum to continue, which could be supportive of economically-sensitive commodities. Within the Energy sector, global crude oil and petroleum products inventories continue to tighten, partially due to the OPEC-coordinated production cuts, with a decision in May on the table as to whether or not to extend those cuts. The resulting higher prices has led to increased US crude oil production, though not enough to fully offset the production cuts or increased demand. Thus, there are some positive signs indicating the tightening may have begun as the fundamentals underlying these markets continue to slowly improve."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: "The National Oceanic and Atmospheric Administration signaled the possibility of a return to an El Niño phenomenon in late summer. Resulting weather events may affect the key production cycle for agricultural crops, particularly grains within the US, which may cause prices to rise.  Separately, the March Jobs Report indicated that the US unemployment rate fell to its lowest level in almost ten years while wages continued to gradually increase. These statistics are suggestive of a tightening labor market and possible progress towards the US Federal Reserve's goal of sustainable maximum employment. However, the Fed still maintains its forward guidance of only two additional rate hikes this year. This slow normalization of interest rates coupled with rising wage pressures may increase the probability that inflation overshoots expectations."

(Source: Credit Suisse AG)