Tuesday, August 26, 2014

Wednesday August 27 Housing and Economic stories

European Bond Traders Suffer High-Yield Anxiety on Losses - (www.bloomberg.com) Warning signals are starting to flash for Europe’s biggest money managers as a selloff in the U.S. high-yield bond market shows signs of crossing the Atlantic. Investors in London and Edinburgh say they’re either cutting holdings of junk notes, buying credit derivatives to insure against losses or moving into high-yielding debt backed by collateral, such as oil rigs and cable networks. “We are treading very carefully in the high yield space,” said Ariel Bezalel, who oversees the $3.8 billion Jupiter Strategic Bond (JUPSTII) fund in London. “We have had to say no to the vast majority of transactions this year.” While the change in sentiment isn’t as marked as in the U.S., where a record $7.1 billion was pulled out of funds buying junk bonds in the week ended Aug. 6, bondholders that snapped up a record $115 billion of high-yield securities in Europe this year are growing wary.

German Handelsblatt Releases Stunning Anti-West Op-Ed, Asks If "West Rabble-Rousers Are On The Payroll Of The KGB" - (www.zerohedge.com) Up until this point Angela Merkel, and German media in general, had been staunchly on the side of the west when it comes to dealing with Russia, Putin and realpolitik in broader terms. That changed dramatically today when Gabor Steingart, the chief editor of Handelsblatt, Germany's leading economic newspaper, came out with a stunning op-ed, in German,English and Russian, titled simply that "The West on the wrong path" in which the editor comes out very vocally against the autopilot mode German media has been on for the past several months and calls for an end to a strategy of sanctions and Russian confrontation that ultimately "harms German interests" and is a dead end.

Obamacare a windfall for insurers: Ex-Obama advisor  - (www.cnbc.com) Don't believe the hype that insurance companies are getting squeezed on Obamacare. That's the message from one of the architects of the president's health-care law. "All of these companies are expanding greatly in the exchanges," Dr. Ezekiel Emanuel, former special advisor on health policy, told CNBC's "Squawk Box" on Friday. "Their revenues are up. Their profits are up. Their stocks are up. They're not suffering because of" Obamacare. Last week, Aetna Chairman and CEO Mark Bertolini appeared on the program, saying the insurer priced its 600,000 Obamacare customers who tend to be older and sicker at lower margins.

US May Introduce New Sanctions Against Russia Over Iran Oil Deal - (www.en.ria.ru) The United States may introduce new sanctions against Russian companies due to the recently signed oil deal between Moscow and Tehran, the US Treasury’s Under Secretary for Terrorism and Financial Intelligence David Cohen said Thursday, as reported by Reuters. Although it was still unclear whether Russia and Iran had agreed on an oil-for-goods swap, Cohen said Washington had warned Russia against such a deal under the threat of additional US sanctions, according to Reuters. Moscow and Tehran signed a five-year memorandum of understanding on Monday aimed at boosting bilateral economic cooperation. The agreement also envisions Russia taking an active role in the construction and overhaul of Iran’s energy production facilities and electric grids. The next high-profile meeting between the countries' delegations is scheduled to take place in Tehran on September 9-10.

Draghi Takes Aim at Italy as Recession Scars Euro Area - (www.bloomberg.com) Mario Draghi says Italy can only blame itself for its third recession since 2008. The European Central Bank president singled out his country’s lack of structural reform after data showed the euro-area’s third-biggest economy unexpectedly contracted last quarter. The comments in Draghi’s monthly press conference came a day before Italian Prime Minister Matteo Renzi won a key vote in his drive to remake the country’s political system. “I keep on saying the same thing, really -- I mean, of reforms in the labor market, in the product markets, in the competition, in the judiciary, and so on and so forth,” Draghi, the former Bank of Italy governor, said in Frankfurt yesterday after keeping ECB interest rates unchanged at record lows. 

Monday, August 25, 2014

Tuesday August 26 Housing and Economic stories

China Home Glut May Worsen as Developers Avoid Price Drop - (www.bloomberg.com) The biggest immediate risk facingChina’s economy is about to get worse. A reluctance among some developers to sell units at prices lower than they could fetch just months ago threatens to cause a swelling in unsold properties. The worsening glut would extend a slide in construction that’s already put a drag on the world’s second-largest economy, and counter policy makers’ efforts to stimulate the real-estate industry with loosened rules. In Nanjing, eastern China, nine housing projects originally planned for sale in the first half of 2014 were held for later this year, consulting firm Everyday Network Co. says. The number of homes added to the market in July in 21 major cities dropped 25 percent from June, according to Centaline Group, parent of China’s biggest real-estate brokerage.

Putin Ban Hits Cold War Foes as Developing Nations Gain - (www.bloomberg.com) President Vladimir Putin countered U.S. and European sanctions over Ukraine with a ban on a range of food products, opening the door for developing nations such as Brazil to fill the $9.5 billion hole created by the curbs. The restrictions include all cheese, fish, beef, pork, fruit, vegetables and dairy products, Prime Minister Dmitry Medvedev told ministers today in Moscow, fulfilling a presidential decree issued yesterday. The curbs hit nations that have penalized or supported measures against Russia, including Canada, Australia and Norway. Russia may also introduce “supportive measures” for the car, shipping and aerospace industries, Medvedev said.

Robert Redford is an eco-hypocrite - (www.independent.co.uk) For years, they've preached green living while travelling the world in SUVs, limousines and private jets. But now Hollywood's foremost tree-huggers face the prospect of being exposed as eco-hypocrites – in the very medium that finances their extravagant carbon footprints in the first place…..Redford recently sold a dozen plots of land near to the Sundance ski resort in Utah, which he owns, to developers seeking to build luxury homes there. The revelation is especially contentious because each of the sites sits on an undeveloped ridge, in what was previously wilderness. Ironically, Redford recently stuck his head above the parapet to lobby against a similar project in California's Napa Valley, where he keeps a home. Mind you, the film points out, the nimby-ish actor did not stand to profit from the Napa development. The plots of land near Sundance, by contrast, fetched him around $2m each.

Germany's DAX Slumps Into "Correction" - Down 10.25% From Highs - (www.zerohedge.com) Germany's DAX stock index has plunged once again, to the same level as in October 2013 as European economic realities (coupled with sanctions retaliation fears) miss expectations drastically. The DAX is now in "correction", down 10.235% from its June record highs as it appears the more the US sanctions Russia, the more Europe crumbles...

James Cameron labelled climate change 'hypocrite' - (www.independent.co.uk)  It proceeds to quote a recent newspaper interview in which he discussed global warming, telling a reporter that "we are going to have to live with less". The camera then cuts to aerial footage of the three adjacent homes that Cameron inhabits in the hills of Malibu. Although they each have heated swimming pools, and together boast more than 24,000 sq ft of living space, the properties have not a single energy-saving solar panel or windmill between them. "He also owns a 100-acre ranch in Santa Barbara, a JetRanger helicopter, three Harleys, a Corvette, a Ducati, a Ford GT, a collection of dirt bikes, a yacht, a Humvee fire truck, and a fleet of submarines," continues the narrator. " And yet he demands WE live with less?

Sunday, August 24, 2014

Monday August 25 Housing and Economic stories

Actor Robert Redford sues NY over $1.6 million tax bill - (www.lohud.com) Legendary actor Robert Redford is suing the state of New York over a $1.6 million tax bill related to the 2005 sale of a television channel. Redford, who starred in such films as "All the President's Men" and "Butch Cassidy and the Sundance Kid," sold a 20 percent stake in the Sundance Channel in 2005. Later, the state Department of Taxation and Finance audited the channel's filings and claimed Redford owed $845,000 in state taxes and $723,404 in interest. In the lawsuit filed last week, Redford's attorney claims the actor paid the proper taxes in his home state of Utah. The Sundance Channel is a limited liability company registered in New York, but Redford's stake in the company was through what is known as an "S corporation," which requires shareholders to claim losses or gains on their income-tax returns.

Donald Trump Sues To Have His Name Stripped From 2 Casinos, Says They're Not Fancy Enough To Bear His Name - (www.businessinsider.com) Donald Trump has a message for the two Atlantic City casinos that still bear his name, five years after he gave up anything to do with running them: You're fired. The real estate mogul and reality TV star, who presided over a casino empire in the glory days of Atlantic City, filed a lawsuit on Tuesday demanding that his name be stripped from the remaining two. He told The Associated Press he sued Trump Entertainment Resorts, a descendant of a corporate entity he once controlled, because it has allowed its two Atlantic City casinos, the Trump Plaza and the Trump Taj Mahal, to fall into disrepair, tarnishing his personal brand and confusing customers.

What junk bonds are saying about the stock market - (www.cnbc.com) Junk bonds have fallen about 3 percent since their peak in late June, and some traders expect the broader stock market, which traded flat since then, to follow suit—perhaps imminently. "Equities are unlikely to rally in the midst of substantial a high-yield selloff," said one hedge-fund manager who focuses on the credit markets, referring to the junk bond market by its industry name. "There will be a correction at some point," he added, "whether it just started, or in the next six months." Indeed, certain hedge-fund managers have spent recent months decrying what they see as an overzealous stock market, fueled by misguided easy-money policies in the U.S. and beyond.

Italy’s Bonds Decline With Spain’s as Economic Recovery Falters - (www.bloomberg.com) Italy’s 10-year government bonds fell for a second day as signs that the euro-area’s economic recovery is losing momentum damped demand for the region’s higher-yielding assets. The Italian securities slumped to their first back-to-back drop in almost four weeks as a report showed the nation unexpectedly slipped into a recession. The yield on German 10-year bunds fell to a record after a report showed factory orders in Europe’s largest economy dropped the most in over 2 1/2 years, adding to evidence that tension with Russia over Ukraine is leaving its mark. Greek bonds had their longest stretch of declines since January.

Russia bans all U.S. food, EU fruit and veg in sanctions response; NATO fears invasion - (www.reuters.com) Russia will ban all imports of food from the United States and all fruit and vegetables from Europe, the state news agency reported on Wednesday, a sweeping response to Western sanctions imposed over its support for rebels in Ukraine. The measures will hit consumers at home who rely on cheap imports, and on farmers in the West for whom Russia is a big market. Moscow is by far the biggest buyer of European fruit and vegetables and the second biggest importer of U.S. poultry. RIA quoted the spokesman for Russia's food safety watchdog VPSS, Alexei Alexeenko, as saying all European fruit and vegetables and all produce from the United States would be included in a ban drawn up on the orders of President Vladimir Putin to punish countries that imposed sanctions on Russia.

Thursday, August 21, 2014

Friday August 22 Housing and Economic stories

Europe's tough new regime for banks fails first test in Portugal - (www.telegraph.co.uk)  Controversial bailout of Banco Santo Espirito has left taxpayers on the hook for €4.9bn. Portugal’s rescue of Banco Santo Espirito has left taxpayers on the hook for large potential losses, sparing senior bondholders in the first serious test of the EU’s tougher rules for bank failures. The controversial €4.9bn (£3.9bn) bailout over the weekend set off a relief rally on the Lisbon bourse, with bank stocks soaring. It also set off a political furore as opposition parties accused premier Pedro Passos Coelho of bending to the banking elites. “We live in a democracy, not a bankocracy. It is unacceptable for the prime minister to take money from the salaries of workers and pensions, and funnel it to a private bank,” said Catarina Martins, leader of the Left Bloc.

Warning: That plunge in stocks is just the beginning - (www.marketwatch.com)  If the ups and downs of the past week have taught investors anything, it’s that there are cracks in this 5 1/2-year-old bull market. The lesson for investors? Tread carefully. Stocks took a tumble as a raft of economic data sparked fears the Federal Reserve could speed up its timetable for raising interest rates. The S&P 500 index took its biggest weekly hit in more than two years, losing 2.7%. The Dow Jones Industrial Average, meanwhile, sliced through its 50-day moving average and erased the gains that had tenuously built up this year. “It reminded people that the stock market can actually go down. It seems like a lot of people had forgotten,” said Mike O’Rourke, chief market strategist at JonesTrading.

Espirito Santo Sets Benchmark for Creditor Pain in EU Bank Rules - (www.bloomberg.com) The decision shielding some creditors spurred a rally in bank stocks and Portuguese assets yesterday as it demonstrated authorities were able to shutter a bank without sparking a fresh bout of market tensions that have roiled Europe since 2009. Instead of forcing losses on unsecured depositors and other senior creditors, as was required of Cyprus, Portugal is following Spain’s gentler approach that focused losses on junior debt and stockholders. “This is bad for the bank’s shareholders and creditors, but it’s good for the wider banking industry,” said Stefan Bongardt, a European banking analyst at Independent Research GmbH in Frankfurt. “Everyone knows the rules of the game now and that draws uncertainty out of the market.”

China Services Index Falls to Record Low - (www.bloomberg.com) China’s service industries stagnated in July as a private index fell to a record low, suggesting the government’s stimulus measures are failing to gain traction outside of manufacturing. The services Purchasing Managers’ Index declined to 50.0, the dividing line between expansion and contraction, from June’s 53.1, HSBC Holdings Plc and Markit Economics said today. A similar official gauge released Aug. 3 dropped to a six-month low of 54.2.

IBM’s Chip-Making Business Is Doing So Poorly, It Wanted To Pay $1 Billion To Get Rid Of It
- (www.businessinsider.com)  IBM’s chip-manufacturing unit has been struggling so poorly in recent years that Big Blue was willing to pay up to $1 billion to get rid of it, Bloomberg reported Monday. According to the report, IBM had offered GlobalFoundries $1 billion in cash to take over its chip-making business, but the deal fell through when GlobalFoundries asked for $2 billion instead.

Wednesday, August 20, 2014

Thursday August 21 Housing and Economic stories

Markets tense after Portugal bank bailout - (www.theguardian.com) European investors have woken up to another bank rescue this morning, after troubled Portuguese lender Banco Espírito Santo received an emergency bailout over the weekend. Portugal is putting almost €5bn into Banco Espírito Santo as part of a bailout plan that will see the bank divided into a good bank for its healthy business and a bad bank for its toxic assets. So far, so familiar, but Carlos Costa, the governor of Portugal’s central bank (pictured), has said that taxpayers’ money is not at risk. The plan carries no risk to public finances or taxpayers. The rescue is mostly funded using leftover funds from Portugal’s EU- IMF bailout. The bailout plan was agreed in rapid negotiations over the weekend, triggered by the bank’s report of a bigger than expected loss of €3.5bn (£2.8bn) that wiped out its capital buffers and sent its shares falling by more than 75% before the stock was suspended on Friday.

Ghana Turns to IMF for Emergency Help as Currency Crisis Deepens - (www.bloomberg.com) Ghana will seek immediate talks with the International Monetary Fund to help stem the world’s worst currency slide, ending four months of contradictory statements from the government about whether it needs emergency aid. Yields on the nation’s Eurobonds due August 2023 fell the most in more than two weeks after President John Dramani Mahama instructed his economic advisers to “open discussions” with the Washington-based lender. Ghana’s programs with the IMF are typically two to three years and the government must still decide how much funding it needs, Finance Minister Seth Terkper said by phone from Washington today.

Tap Water Ban for Toledo Residents - (www.nytimes.com) Residents of Toledo, Ohio’s fourth-largest city, spent the weekend under a water advisory after tests revealed toxins in the city’s water supply, likely caused by algae growing in Lake Erie. Tens of thousands of people kept faucets turned off and left their homes in search of clean water. They waited in lines at fire stations for bottled water, crossed state lines in search of stores with supplies after local outlets ran dry, and drove to friends’ homes miles away to fill containers. Early on Saturday, municipal officials asked the 500,000 residents served by the city’s water system to stop using tap water after the toxins were found at a city water treatment plant. The orders were clear: Do not drink the water, do not brush your teeth or prepare food with it, and do not give it to your pets. Health officials also advised that children and people with weak immune systems refrain from using the water to bathe.

Half-Trillion-Dollar Exodus Magnifies Treasury Bill Shortage - (www.bloomberg.com) One of the biggest winners in the push to make money-market funds safer for investors is turning out to be none other than the U.S. government. Rules adopted by regulators last month will require money funds that invest in riskier assets to abandon their traditional $1 share-price floor and disclose daily changes in value. For companies that use the funds like bank accounts, the prospect of prices falling below $1 may prompt them to shift their cash into the shortest-term Treasuries, creating as much as $500 billion of demand in two years, according to Bank of America Corp.

Millennials End Up in Stocks for Head Start on Retirement  - (www.bloomberg.com) Are they getting in at the wrong time?? Concern that the future of the federal safety net for seniors is precarious and the ubiquity of 401(k)s are prompting those born from 1979 to 1996 to get an earlier start on saving than prior generations, according to a report from the Transamerica Center for Retirement Studies. Millennial workers began building nest eggs at a median age of 22, younger than both Generation X, which started at 27, and the baby boomers, who started at 35. Though many millennial workers say they’re risk-averse and stock-shy as a result of the most severe recession in the post-World War II era, their deeds are telling a different story. That bodes well in the long run for a generation that may have to bear a greater share of retirement costs on its own, even if it means the economy will get a little less consumer spending in the short term.