Wednesday, March 22, 2017

Thursday March 23 2017 Housing and Economic stories

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Used Car Prices Crash Most Since 2008 - (www.zerohedge.com) According to NADA Used Car Guide, wholesale prices on used vehicles are getting crushed. Used Market Update: In a reversal of what typically occurs in February, wholesale prices of used vehicles up to eight years old fell substantially last month, dropping 1.6% compared to January. The drop was counter to the 1% increase expected for the month and marked just the second time in the past 20 years prices fell in February (last years’ scant 0.2% being the other instance). NADA Used Car Guide’s seasonally adjusted used vehicle price index fell for the eighth straight month, declining 3.8% from January to 110.1. The drop was by far the worst recorded for any month since November 2008 as the result of a recession-related 5.6% tumble. February’s index figure was also 8% below February 2016’s 119.4 result and marked the index’s lowest level since September 2010. Incentives Jump by 18.1%: Automakers grew incentive spending once again in February, making it the 23rd month in a row where spending was increased. On average, spending reached $3,594 per unit versus $3,043 per unit in February 2016 according to Autodata.

Say Hello to $3 Trillion in Forgotten Debt - (www.bloomberg.com) Companies have been on a borrowing binge, but you wouldn't always know the full scale of their liabilities by looking at the balance sheet. This makes it hard for investors to compare businesses that fund their activities in different ways. Happily though, that's about to change. How come? The answer is buried in the notes to financial statements (you know, the ones you don't bother reading). It's here that companies have parked about $3 trillion in operating lease obligations, according to Bloomberg data. For non-financial companies, those obligations equate to more than one quarter of their long-term (on-balance sheet) debt. 

Greece Edges Toward Another Crisis as Bailout Quarrel Persists - (www.bloomberg.com)  Greece is set to miss yet another deadline for unlocking bailout funds this week, edging closer to a repeat of the 2015 drama that pushed Europe's most indebted state to the edge of economic collapse.... While Tsipras had promised the long delayed review of the latest bailout would be completed by March 20, a European official said last week that reaching an agreement even in April is now considered a long shot. ... The two sides are still far apart on reforms demanded by creditors in the Greek energy market and the government in Athens is resisting calls for additional pension cuts. And while discussions continue on how to overhaul the labor market, a finance ministry official said in an email to reporters on Friday that the issue can't be solved in talks with technocrats.

Why raising interest rates this week may have been a bad idea - (www.washingtonpost.com) One of the big surprises over the past 18 months is that the job market continues to be so strong, able to pull people back into the labor force who gave up looking for work altogether, Kashkari wrote. The United States added 235,000 jobs in February, official data show, far above the level needed to keep up with population growth. "This surprised us a bit because it suggests that there were many more people who were interested in working than historical patterns predicted," he said. ... "Today's hike seems to signal that Fed policymakers think that we're currently at or very near full employment, and that failing to slow the pace of economic growth in coming months would soon lead to accelerating wage and price inflation. They could be right, of course, but it is important to note that there is little in actual economic data to indicate this," Bivens wrote.

The Four Biggest U.S. Banks Top $1 Trillion - (www.bloomberg.com) The four biggest U.S. banks were worth the most on record versus China’s "Big Four" this month, as JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp. and Citigroup Inc. rallied 30 percent since Donald Trump was elected president. The American quartet’s combined market value closed above $1 trillion for the first time last month, a milestone Industrial & Commercial Bank Ltd., China Construction Bank Corp., Bank of China Ltd. and Agricultural Bank of China Ltd. surpassed in 2015. The four Chinese banks, the world’s most profitable, were worth about the same as the U.S. foursome as recently as June.



U.S. Stocks Fluctuate, Bonds Rise as Dollar Slips: Markets Wrap - (www.bloomberg.com)
Dollar Hits Fresh Four-Month Low as Traders Follow Recent Trends
- (www.bloomberg.com)
UK PM May to trigger Brexit on March 29: spokesman
- (www.reuters.com)

Tuesday, March 21, 2017

Wednesday March 22 2017 Housing and Economic stories

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Retail Store ‘Bubble’ Has Burst and CEOs Search for Answers - (www.wsj.com) Multiple U.S. retailer executives will be gathering this Sunday at “Shoptalk,” a conference in Las Vegas for retailers to discuss challenges in the market. A huge issue awaits discussion at this year’s conference, one that some executives are comparing to the housing crisis of 2008: there are too many stores. In decades past, opening stores meant corporate growth, and retail companies on the boom were opening as many as they could. In today’s world of online shopping, too many stores is a problem. Department stores are closing doors across the country and companies are scrambling to transform in a modern world of online retail. The Wall Street Journal reports: Declining foot traffic and falling profit margins have forced many chains to scale back. Limited Stores Co., RadioShack owner General Wireless Operations Inc. and Gander Mountain Co. have filed for bankruptcy protection this year. Department stores including Macy’s Inc.,Sears Holdings Corp. and J.C. Penney Co. are closing hundreds of locations. Some retailers intend to use the savings to increase their efforts to capture more e-commerce spending.

Too Poor To Fine? Town Forced To Pay $680K For "Running Debtor's Prison" - (www.zerohedge.com) The state has turned its people into serfs once again, and, as SHTFplan.com's Mac Slavo points out, through petty fines and regulations, everyone has once again come under the thumb. For the corporeally liberated, it is primarily a form of debt servitude, but for the poorest, who have nothing left to lose, it can mean jail time, sometimes for literally nothing more than getting caught up in a system of bureaucracy and unable to fork over more and more money for the process. The Southern Poverty Law Center has reached a $680,000 settlement in its lawsuit against the Alabama city of Alexander and its police chief Willie Robinson. The settlement was for depriving 190 of its residents their rights to due process (6th Amendment) and the unlawful seizure of their property (4th Amendment). Sheriff Robinson has even been asked to resign by lawyers representing their client. Each one of the 190 individuals will receive $500 cash from the city for jailing them for being too poor to pay the fines imposed on them by the town. As reported by AL.com, “Hundreds of impoverished residents have faced unconstitutional and unjust treatment in Alexander City simply because they were too poor to pay fines and fees,” said Sam Brooke, in a press release. Brooke is the SPLC’s deputy legal director.  He added, “The shuttering of this modern-day debtors’ prison, along with the monetary award, brings justice to many of the people who were unfairly targeted for being poor.”

Central Bank Shell Game: What Sweden’s Negative Interest Rates Do to Consumers - (www.wolfstreet.com) Sweden’s welfare state supposedly allows for success while providing a safety net for those unable to keep up with the market. In principle, it is an ideal, utopian-like state. However, Sweden’s touted economic success has come at the expense of its currency, the Krone (SEK), and long-term sustainability. Riksbank, the Swedish Central Bank, like its European contemporaries, has undertaken experimental policy, driving real and nominal interest rates below zero. Since 2014, Swedish deposit rates have been negative. Not only has overall negative real interest rate policy affected housing, but it also drove Swedish consumers deeper into debt. Embarking on the dual mandate policy may have staved off recession, but it created greater problems for the future. Although current deposit rates are at a record low of -1.25%, the latest GDP print came in at 2.3%, and the growth rate has been tapering since 2015. Sweden’s “hot” GDP growth – hot relative to the region – could be attributed, not to industrial growth, but rather increased government spending, funding social programs.

Shadow Lending Threatens China’s Economy, Officials Warn - (www.nytimes.com) The chairman of China’s biggest bank and a senior Chinese insurance regulator issued strong warnings on Saturday about the dangers of shadow banking to the Chinese economy, in the latest signs of growing top-level concern here about a rise in highly speculative, poorly regulated lending. Shadow banking, or lending that takes place outside official banking channels, plays a major role in the Chinese economy, where big government-controlled banks are often slow to lend to private businesses and entrepreneurs. But experts worry that untrammeled shadow lending could lead to ticking time bombs that could threaten the financial system of the world’s second-largest economy.

Hedge Fund Titan’s Surefire Bet Turns Into a $4 Billion Loss - (www.nytimes.com) A little over two years ago, William A. Ackman, one of Wall Street’s brashest and most self-assured hedge fund managers, was on top of the world. A billionaire before he hit 50, he was generating double-digit gains for his investors and raking in hundreds of millions in fees for his firm and himself. Hailed as a master investor, he clinched his highflier status in the fall of 2014 by paying $90 million with some friends to buy the penthouse at One57, a 13,500-square-foot aerie in Midtown Manhattan overlooking Central Park. He didn’t plan to live there — it was an investment property — but until he sold it, the apartment would make a good party space, he told The New York Times.



Monday, March 20, 2017

Tuesday March 21 2017 Housing and Economic stories

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Canadian households owed $2 trillion at the end of 2016 - (www.cnbc.com) Debt levels continue to hit record highs in this country, but Canadians' net worth is also rising as the value of assets increases. The information is contained in a Statistics Canada report released Wednesday on how much Canadians owe, and what they're buying with their borrowed money. The much publicized debt-to-income ratio — how much we owe, compared to how much we earn — inched up to 167.3 per cent in the fourth quarter of 2016, a new high. That means for every dollar of Canadians' disposable income, they owe almost $1.67 in debt. "The debt-to-income ratio was up 2.4 percentage points in 2016 overall, marking the fastest annual growth since 2010," TD Bank economist Diana Petramala observed after the numbers came out. "Gains in real estate asset values, however, helped keep most other ratios of indebtedness stable."

The Bloodletting among Retailers Simply Doesn’t Let Up - (www.wolfstreet.com) Neiman Marcus, the Texas-based luxury retailer with 42 stores around the country and two Bergdorf Goodman stores in Manhattan, is in no immediate risk of bankruptcy, the sources told Reuters on Friday, though it has hired investment bank Lazard Ltd to help restructuring its nearly $5 billion in debt. When this news emerged, Neiman Marcus unsecured bonds due in 2021 plunged 7% to 54 cents on the dollar, according to Thomson Reuters, and its $3 billion term loan fell 5% to 77 cents on the dollar. Earlier this year, Neiman Marcus scrapped its IPO entirely, after having delayed it in 2015 when its difficulties could no longer be swept under the rug. In December that year, it reported its first quarterly sales decline since 2009, with same-store sales dropping 5.6%. There was plenty of red ink. And layoffs commenced.

As Venezuelan "Bread War" Escalates, Maduro Warns Bakers "You Will Pay, I Swear" - (www.zerohedge.com) With its people resorting to eating flamingoes, the Venezuelan government has decided to find yet another thing to blame for the collapse of the socialist utopia - the bakers! As The BBC reports, the Venezuelan government says it will expropriate bakeries which fail to abide by new government regulations aimed at tackling bread shortages. In a growing row between the government and bakers, officials said that bakeries could face fines if people had to queue to get their bread. Severe shortages of basic goods mean that Venezuelans often have to queue for hours to buy essential items. The government says the shortages are caused by an "economic war".  They're going to pay, I swear. Those responsible for the bread war are going to pay and they better not complain that it was a political persecution.. bakeries which do not follow [the rules] will be occupied by the government."

Where’s Citizenship for Sale? Huddled Masses Need Not Apply - (www.wolfstreet.com) Most countries offer citizenship (passports) the hard way. But 7 sell them outright, and 3 have “powerful” passports. “Citizenship Planning” is a thing. For people who need a second citizenship and passport to dodge the long arm of their government, there is something called “citizenship planning,” similar to “financial planning.” But when it comes to just outright buying a citizenship and passport without having to languish for years as mere non-citizen resident, the Huddled Masses need not apply. And not any passport will do. In fact, there are only three for sale that are really good. Then there’s the direct way: Buy a citizenship and the passport that comes along with it. These citizenship-by-investment programs are not for folks on a tight budget. According to Henley & Partners, only seven countries offer this convenient route, only three have powerful passports, and only one is in the top of the heap above. Passports from EU countries are the best. If you’re from Russia or China or Iraq and become a citizen of one of the 28 EU countries, you’ll get a country-specific EU passport that allows you to live and do business anywhere in the EU. There are all sorts of offshore benefits. And travel around the world is a breeze.

NY AG Still Refuses To Fork Over Emails Related To Exxon Climate Probe - (www.dailycaller.com) The attorney general who revealed Rex Tillerson used a pseudonym while with ExxonMobil continues to block requests to review the Democrat’s connections to groups bankrolling the anti-Exxon probe. New York AG Eric Schneiderman told a judge earlier this week that Tillerson used the alias “Wayne Tracker” for years during email exchanges with company executives. The Democrat made his revelation while hiding the names of donors behind a nearly two-year investigation into Exxon’s climate research. Schneiderman refuses to fork over emails between his office and wealthy donors such as Rockefeller Brothers Fund, Rockefeller Family Fund, and billionaire activist Tom Steyer. He uses a Freedom of Information Law (FOIL) “law enforcement” exemption to justify blocking the requests, and claims his communication with the donors is part of the Exxon investigation.

The Gold Party's Back on After Yellen Reassures the Market - (www.bloomberg.com)
The Market Is Acting Like the Fed Cut Rates Yesterday - (www.bloomberg.com)
Low VIX Got You Down? These Fear Gauges May Do the Trick - (www.bloomberg.com)

Mounting Costs, Not PBOC, Could Slow China's Bank Debt Binge - (www.bloomberg.com)
China treads closer to a day of debt reckoning - (www.ft.com)

Sunday, March 19, 2017

Monday March 20 2017 Housing and Economic stories

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How Auto Sales Are Getting Crushed in Houston - (www.wolfstreet.com) But now the office sector is drowning in empty space on the sublease market even as new towers are being completed. The chemical-plant construction boom peaked in early 2015. Construction projects are being cancelled and put on hold, and the entire construction sector has collapsed. In January, nonresidential construction starts plunged 44.7%, from $1.05 billion to $580 million, according to data cited by Greater Houston Partnership. While residential construction starts rose over the 12 months through January, total construction starts – residential and nonresidential – are down 23.6% for the 12-month period, compared to a year earlier, to $14 billion. Within a year, the construction business went from blistering boom to collapse. Construction booms of the magnificent kind that Houston experienced after the Financial Crisis boost the local economy in many ways, from raw materials to labor, and they support a wide variety of other sectors, such as the retail and restaurant sectors – and auto sales.

Are Collapsing Pensions "About To Bring Hell To America"? – (www.zerohedge.com) The toxic dollar is bringing hell in a handbasket. Along with the student loan debt bubble and other major financial factors, the looming pensions crisis is bound to be the death of us all. Because it’s based on a future promise to pay, it has long been a benefit dangled to solve strikes and union disputes – because, in the end, it is just more debt, whether private or public. With tens of trillions in unfunded liabilities, the weight of an avalanche remains dangling over our heads. An aging population is cashing in on needed retirement benefits while the younger generations must support multiples that are unsustainable financially. Somewhere between the retiree that needs clothing, food and lodging, and the bankruptcy of cities and state governments is the makings of the next economic crisis. via AgainstCronyCapitalism.org: This is one of those things that few will pay attention to until it’s a 5 alarm fire. Then the policymakers will run around with their hands in the air saying they didn’t see it coming. Of course they did. But addressing the problem is hard and will make people unhappy in the short term. This blog pointed out the sad, and quiet fact that entities like the government of South Carolina are deep in debt over pensions. Everywhere there are failing social systems.

A Mountain of Bad Debt Looms Over Modi - (www.bloomberg.com) With a resounding domestic political victory behind him, Indian Prime Minister Narendra Modi turns attention back to policies this week. One area key to watch for investors: progress on resolving a mountain of bad debt that’s restraining the private economy. Modi, who swept to power in federal elections in 2014 and this weekend notched a decisive win in India’s largest state, has championed reforms for businesses yet overseen an expansion that’s been propelled by the public sector. Key to that shortfall has been a decline in credit exacerbated by the lack of a national plan to clean out non-performing loans. “Loan growth has been falling and remains anemic by historical standards as a result of the banks’ asset-quality challenges,” said Swee-Ching Lim, a portfolio manager at Western Asset Management in Singapore who’s been analyzing credit markets for almost two decades. “This lack of credit growth will likely continue to be a headwind” for India’s economy, he said.

How to Lose $4 Billion: Bill Ackman's Long Ride Down on Valeant - (www.bloomberg.com) Bill Ackman was used to the question: how could he stick with a loser like Valeant? But here it was again, this time over lunch with investors and bankers in London on Feb. 28. And there was Ackman, defending a signature investment that, on paper, had cost his clients billions. Yes, Valeant’s share price had cratered. But he insisted to attendees that the drug company’s turnaround prospects were bright, according to people with knowledge of the meeting. So much for that. Ackman had spent the better half of two years trying to convince just about anyone he was right about Valeant. On Monday evening, just two weeks after that bullish lunch arranged by investment bank Jefferies Group, he conceded what most on Wall Street already believed: In fact, he’d been spectacularly wrong. News that his Pershing Square Capital Management fund had sold its entire stake at a monumental loss was greeted with equal parts shock and relish. 

Trump budget would slice domestic programs, foreign aid - (www.reuters.com) President Donald Trump asked the U.S. Congress on Thursday to approve a 2018 budget that would bolster military programs and begin building a wall on the southern border with Mexico while drastically cutting many federal agencies. Trump's plan, showcasing his administration's priorities, is just the first volley in what will likely be an intense battle over spending in coming months. Although both the Senate and House of Representatives are controlled by Trump's fellow Republicans, Congress holds the federal purse strings and seldom approves presidents' budget plans. Trump's plan took a big swipe at some federal institutions, envisaging a more than 31 percent cut, or $2.6 billion, for the Environmental Protection Agency and a 28 percent reduction, or $10.9 billion, for the State Department and other international programs.



Thursday, March 16, 2017

Friday March 17 2017 Housing and Economic stories

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The Great Corporate Bond Rush of 2017 Persists as Fed Mulls Hike - (www.bloomberg.com) Companies are issuing bonds in the U.S. at the fastest pace ever. And investors say the Federal Reserve’s next rate hike may do little to change that. Investment-grade firms are on track to complete the busiest first quarter for debt sales since at least 1999. Firms from Apple Inc. to Morgan Stanley have pushed new issues to more than $360 billion so far in 2017, closing in on the previous record of $381 billion from 2009, according to data compiled by Bloomberg. That puts bond sales 14 percent ahead of last year’s record pace. Low borrowing costs, rising stock prices, positive economic data and strong quarterly earnings results have all helped fuel the boom, said Dominic Pappalardo, a money manager at McDonnell Investment Management in Oakbrook Terrace, Illinois, which manages $11.5 billion. The extra yield over Treasuries investors demand to purchase the bonds has reached multi-year lows in recent weeks, even as companies such as Delta Air Lines Inc. to Walt Disney Co. have sold more than $78 billion of bonds to investors in so far March.

Inflation Hits Consumers, Mortgage Rates Take Off, “Financial Repression” for Bondholders and Savers - (www.wolfstreet.com) Retail sales in February were lousy, and even lousier after inflation, though it was reportedly the warmest February in 100 years, without a big winter storm keeping the all-important consumers cooped up at home instead of shopping. Total retail sales, including online and food services, edged up 0.1% to $474 billion in February, from January, the slowest increase in 6 months, the Commerce Department reported today. This came after an upwardly revised 0.8% jump in January. General merchandise sales and auto sales showed negative “growth.” These numbers are adjusted for seasonal and calendar factors, but not for inflation. We’ll get to that in a moment. On a year-over-year basis, not seasonally adjusted, total retail sales in February rose by $9.5 billion, or 2.2%. Gasoline sales alone soared by $7.2 billion, or 22%, on a juicy 30.7% price increase (more in a moment). And sales at non-store retailers jumped by $3.4 billion, or 8%.

"Rotating Carousel Of Prostitutes" For Defense Contracts; 9 Navy Officers Charged In Bribery Scandal - (www.zerohedge.com) 9 senior Navy officials have been charged in a bribery scandal after allegedly accepting, among other things, "a raging multi-day party, with a rotating carousel of prostitutes" in exchange for defense contracts awarded to a Singapore-based contractor, Leonard Glenn Francis (a.k.a. "Fat Leonard"). The ironically named Rear Admiral Bruce Loveless (so many potential one-liners here but we'll let you create your own), along with 8 other senior Navy officials, including four retired captains and a retired marine colonel, have been arrested today in the so-called 'Fat Leonard' bribery scandal and charged with bribery, conspiracy to commit bribery, honest services fraud, obstruction of justice and making false statements to federal investigators. According to a federal grand jury indictment unsealed today, the Navy officers worked together to help Singapore-based defense contractor Leonard Glenn Francis (a.k.a. "Fat Leonard") and his company, Glenn Defense Marine Asia (GDMA), pull off a 'colossal fraud' that cost the Navy – and ultimately U.S. taxpayers – tens of millions of dollars. The indictment alleges that, among other things, 'Fat Leonard' and his associates repeatedly bribed Navy officials with "meals, entertainment, travel and hotel expenses, gifts, cash, and the services of prostitutes." Per RT: The indictment also alleges that Francis frequently sponsored sex parties for many officers assigned to the ‘USS Blue Ridge’ and other warships.

The US Is About To Hit $20 Trillion In Debt: Here's How It Affects You - (www.zerohedge.com) As the vulture pundits in the mainstream media pick apart hollow political scandals, the essential bankruptcy of the federal government looms just ahead. The national debt is creeping toward 20 trillion dollars, and the United State’s largest problem is once again staring the world in the face. Just before the government was slated to shut down in 2015 (as it did in 2013), Congress was able to pass a delay on the debt ceiling decision until March 15th of this year — Wednesday of this week. Recurring uncertainty caused by events like this has implications that extend far beyond our own borders. The amount of leverage in the current system has already forced foreign holders of U.S. debt to question the real value of America’s full faith and credit. 2016 was a record-setting year for the liquidation of foreign-held U.S. bonds, topping out at nearly $405 billion. The selling was led by China, America’s second-biggest creditor, which currently holds over $1 trillion of U.S. debt, almost 28% of the total held by foreign central banks. They weren’t alone, though, and even the U.S.’ number one lender, Japan, has rolled back their positions to protect themselves as the reality of U.S. insolvency comes into focus. A gradual change has been set in motion, and the global superpower status of the United States may be systematically eroded — not militarily, but economically.

China property sales surge despite gov't efforts to cool market - (www.reuters.com) China's property sales surged in the first two months of the year despite government measures to cool the market, though growth in real estate investment showed signs of easing, according to official data on Tuesday. Property sales by area rose 25.1 percent year-on-year in January and February. That was above the 22.5 percent annual gain in 2016, which was the strongest annual growth in seven years thanks to a property boom in top-tier cities. It was also a marked surge from December, when property sales by area rose 11.8 percent from a year earlier, according to Reuters' calculations. After sharp home price rises last year, China's policymakers have started to worry about overheating in the property market and the risk of a sudden and sharp correction that would knock the economy.