The Greek people vote resoundingly to reject being Germany's debt serf in perpetuity. Debt servicing on hundreds of billions of dollars in Euro denominated bonds is at extreme risk.
The Communist Party of China is taking complete control of the tanking Chinese stock market. A toxic combination of QE, price/market controls and other totalitarian measures are likely to come as the PROC attempts to forestall deflation.
Microsoft terminated over 20,000 employees in the last year. The tech company which makes products that are actually used to enhance business productivity at one time took pride in never having laid off a single employee.
Meanwhile a relatively modest 4 bedroom 3 bath home in Upland, CA sold for $685,000. Assuming a modest 10% down payment the monthly nut is over $3700. That's before likely PMI. Now I'm aware that this could be a move up buyer with some equity rollover, but let's assume if not this property there's another that someone is just squeezing into with similar math. Assuming $600 in additional monthly debt, say a car payment plus credit card, a 50% DTI requires over $100k household income. Being that most households have an uneven distribution of income your likely looking at a $60k to $70k earner in the equation. Here is where the aforementioned "Panics" come into play.
Entrepreneurship has been on the decline in this country for decades. Where once we had small business owners who were savvy and prudently prepared for downturns, we now have high earning W2 employees in administrative positions that are one bad quarter away from pink slips. If our hypothetical Upland 70k earner works in the logistics hubs near Ontario he is EXTREMELY vulnerable to world macro events. Bulls who opine over the "special" real estate market in SoCal completely ignore that the high earners of the region are really no more secure than their minimum wage counter parts. In fact they are even less so because in an environment where labor has already been stripped to the bone, administrative and IT are all that's left to cut. Unlike the entrepreneurs of old who could whether a percentage drop in their business, the high income administrative worker loses 100% of his income in a downturn. His skills may not be obsolete, but they are completely unnecessary when there are multiple BA degrees applying for every opening.
Do cuts in high earning positions in California and other bubble areas happen this year? In 2016? 2017??? None of us can say for sure. However with VIX still at historic lows (though the NYSE shoutdown today led to a 16% jump) complacency rules the economics of the day. History has shown that when the consensus is "Nothing can go wrong" it rarely doesn't.
One more thought on our hypothetical Upland buyer. Interest only short term loans are still quite accessible for the credit worthy and income verifiable through banks and private financing. A $100K household could very easily find it in their interests to lock in a low interest only payment on a 5 year term. After all, they can now lease that new Mercedes and that next raise and promotion is surely right around the corner. Just look at the stock and RE markets ascent. What could go wrong?