Sunday, May 24, 2015

Monday May 25 Housing and Economic stories


U.S. companies rush to insulate themselves against Venezuela's currency, economic woes - (  A growing number of U.S. companies say they can't cope with Venezuela's sinking bolivar currency, prompting some of them to remove their operations in the South American nation from their consolidated financial reports. In other cases, they have exited the country altogether through a sale or by simply shuttering their businesses there. Many of those recently taking such action are medium-sized or small companies, which means that the tumbling currency and a deeply troubled Venezuelan economy have tended to have a disproportionately greater impact on their results than suffered by bigger entities with business in the country. The restructuring moves can shield the financial results of parent companies such as batteries and razors maker Energizer Holdings, automated teller machine and bank vault provider Diebold Inc and printing and publishing company RR Donnelley & Sons from Venezuela's economic troubles. But they can also signal that the Venezuelan business is no longer regarded as worth fighting for, and support from the American headquarters cannot be counted on.

Dollar Bulls Stunned by What Went Wrong in Drop to 4-Month Low - (  Dollar bulls are pondering what’s left of the rally that had pundits talking of dollar hegemony just months ago. The U.S. currency slid toward the lowest in almost four months a day after stagnant retail sales became the latest data to undermine prospects for Federal Reserve interest-rate increases. The greenback climbed nine straight months through March on speculation the first hike in almost a decade was looming. The dollar’s decline brought it to the lowest level in almost three months against the euro. “It’s not surprising that we’ve seen a healthy retracement,” Robert Sinche, a strategist at Amherst Pierpont Securities LLC in Stamford, Connecticut, said in a phone interview. Sluggish economic growth isn’t “consistent with early Fed tightening that we think is probably needed to support the next leg up for the dollar.”

Vermont House Votes To Remove Philosophical Vaccine Exemption - (  After a prolonged debate over legislation that would make it harder for parents to exempt their children from the state's mandatory immunization law, the Vermont House voted 85 to 57 Tuesday evening to remove the philosophical exemption to the law. Jericho Rep. George Till strongly supported the elimination of the exemption. He argued that parents still had other options if they didn't want to vaccinate their children, including the religious exemption. "Nothing in this amendment forces a parent to vaccinate their child,” Till said. “I vote to protect children and adults in our schools who are especially vulnerable to these dangerous vaccine preventable diseases."

Greece's Varoufakis says debt swap fills Draghi's 'soul with fear' - ( Repayment of what Greece owes to the European Central Bank should be pushed into the future, but it is not an option because it fills ECB chief Mario Draghi's "soul with fear", Greece's finance minister said on Thursday. Yanis Varoufakis said Draghi, president of the European Central Bank, cannot risk irritating Germany with such a debt swap because of Berlin's objection to his bond-buying program. Varoufakis first raised the idea of swapping Greek debt for growth-linked or perpetual bonds when his leftist government came to power earlier this year, But Athens has since dropped the proposal after it got a cool reception from euro zone partners. The outspoken minister, who has been sidelined in talks with European Union and International Monetary Fund lenders, brought it up again on Thursday, saying 27 billion euros of bonds owed to the ECB after 6.7 billion euros worth are repaid in July and August should be pushed back.

Exposed: GeorgeStephanopoulos Hid $50K Clinton Foundation Donation From Viewers - ( While reporting on, and aggressively defending the Clinton Foundation from numerous scandals and ethical issues, George Stephanopoulos, the star and poster boy of ABC News, hid his own conflict of interest from viewers. According to Politico, Bill Clinton’s former war room soldier and press secretary, the current anchor of “Good Morning America” and “This Week,” has donated at least $50,000 to the Clinton Foundation. This is a bombshell of a black eye for ABC News. Since ABC News hired Stephanopoulos as its chief anchor and chief political correspondent, many questioned how a former-Democrat operative could remain neutral in the role of a news anchor. Even before Hillary Clinton entered the 2016 presidential race, on numerous occasions Stephanopoulos exposed himself as a Democrat operative working as a news man.

Thursday, May 21, 2015

Friday May 22 Housing and Economic stories

Chicago Faces $2.2 Billion Bank Payout After Rating Cut to Junk - ( Chicago may have to pay banks as much as $2.2 billion after Moody’s Investors Service dropped its credit rating to junk, deepening the fiscal crisis in the third-largest U.S. city. The company’s decision Tuesday to cut Chicago’s $8.1 billion of general obligations two ranks to Ba1, one step below investment grade, allows banks to demand that the city repay debt early and exposes it to fees to end swaps contracts, Moody’s said in a statement. Mayor Rahm Emanuel plans to refinance $900 million of debt to reduce the penalties. The downgrade adds to the financial pressure on Chicago, which was already the lowest-rated of any big U.S. city except Detroit. It follows an Illinois Supreme Court ruling last week that safeguards retirement benefits, casting doubt on Chicago’s ability to curb its $20 billion pension-fund shortfall.

US shale has 'blinked' in battle against OPEC: IEA - (  U.S. oil producers appear to have lost their battle with OPEC (Organization of the Petroleum Exporting Countries) over market share, but the war is only just beginning, the International Energy Agency (IEA) warned Wednesday. "In the supposed standoff between OPEC and U.S. light tight oil (LTO), LTO appears to have blinked," the Paris-based energy think tank said in its new monthly report. "Following months of cost cutting and a 60 percent plunge in the U.S. rig count, the relentless rise in U.S. supply seems to be finally abating." The price of oil has collapsed from near $120 a barrel in June last year to lows of around $45 a barrel in January, although it has since bounced back to around the $60-a-barrel level. This dramatic fall in prices was due to weak demand, a strong dollar and booming U.S. oil production, according to the International Energy Agency (IEA). 

The Middle Class Has a Debt Problem - ( Of all the burdens weighing on the American middle class, one has grown immensely in recent years: debt. Absent reform, it presents one of the gravest threats to the prosperity of the typical family. For much of the past century, easier access to credit benefited most Americans. It helped them buy what many see as the necessities of a middle-class life -- a home, a car, an education. Those assets, in turn, gave them the stability and earning power they needed to build wealth. Regular mortgage payments acted as a form of saving, making home ownership almost synonymous with financial security. More recently, though, borrowing has taken on a very different character. During the housing boom of the early 2000s, it became a way to bet on house prices, or to turn home equity into the spending money needed to compensate for stagnant incomes. After the housing bust, the excesses shifted into other areas, such as auto loans designed to end in repossession, and student loans that leave graduates too indebted to move out of their parents' home.

Greenspan: Get ready for another taper tantrum - (  Another market disruption from higher interest rates is virtually certain, according to former Federal Reserve Chairman Alan Greenspan. "Just remember we had the 'taper tantrum.' And we're going to get another one," Greenspan said Wednesday at the Global Private Equity Conference in Washington, DC. "This is a very tough period to get through," he added about the Fedincreasing interest rates. "Normalization is great, but the process of getting there is going to be very rocky." Greenspan said there was no way to get around bond market volatility but said it was necessary to help the Fed and other central banks reduce overall debt. He did not give specifics on how fast Fed Chair Janet Yellen should increase rates, currently predicted to be a highly gradual process from near-zero.

No Bubble Here: In SF, $1.5 Million for 750 Sq. Ft. Flat, Rent a Bed for $1,000/Month - ( The incredible luxury of having a bedroom to yourself is out of reach for all but the very well-paid. Having an apartment to yourself requires serious money. Those who say there are only two sure things in life, death and taxes, should add a third sure thing: realtors and stock market mavens will deny there's a bubble even when it's obvious to everyone the bubble has already reached insane levels of overvaluation. And so here we are yet again, with housing and stocks both hitting price levels that make no sense in terms of traditional measures of value. And since these pesky metrics make it impossible to claim there's no bubble, those benefiting from the bubble have to claim that this time it's different: not only is the current bubble rational, there's no reason it can't keep expanding indefinitely. In a zero-yield world, it's perfectly reasonable for corporations to borrow trillions of dollars to pump up their own stocks with buy-backs. Profits may be sagging but thanks to the miracles of Cargo-Cult mumbo-jumbo such as margin expansion, profits don't really matter that much. What counts is the central banks have our back: to guarantee a profit, just buy stocks now before the central banks push valuations even higher.

Wednesday, May 20, 2015

Wednesday May 20 Housing and Economic stories

America's Future Got $7 Trillion Worse Since the Financial Crisis - ( Still feeling uncomfortable about that tax bill you owed last month? Think about it this way: If you didn't pay it, America's fiscal future would look even worse than it does now, six years out from the financial crisis. Driven by higher interest costs, Social Security and Medicare for baby boomers, as well as tax cuts made permanent in 2012, the federal debt held by the public is expected to hit $40 trillion in 2035, according to calculations by the Committee for a Responsible Federal Budget based on Congressional Budget Office estimates. Back in 2009, soon after President Barack Obama took office, the forecast for the 2035 burden was at least $7 trillion lower.

Case of the Vanishing Worker - WSJ - ( Unemployment rate is falling in industrial Midwest as residents move away, retire or give up on finding a job. By one key gauge of economic health, this industrial city three hours south of Chicago is well on the way to recovery. Hit hard by the recession, when its unemployment rate topped 14%, Decatur over the past year has seen one of the swiftest declines in joblessness in the country, with the rate dropping to 7% in March from 10.2% a year earlier. But look closer, and this city of 75,000 resembles many communities across the industrial Midwest, where the unemployment rate is falling fast in part because workers are disappearing: moving away, retiring or no longer looking for a job. “In cases like that, the unemployment rate makes things look better than they really are,” said Karl Kuykendall, U.S. regional economist at IHS Global Insight. In terms of overall economic growth, he said, “a decline in population and workforce is devastating.”

New fears in the Canadian oil patch - (  Swift political change is bringing uncertainty to Canada's largest oil producing province. Rachel Notley, the Alberta leader of the New Democratic Party, was elected last week as premier of the province, putting a halt to 44 years of rule by the more business-friendly Progressive Conservative Association of Alberta. Throughout her campaign, Notley vowed to increase corporate taxes to 12 percent from 10 percent and to review Alberta's "royalty fees" for the energy industry—the cut of revenue that Alberta and the central Canadian government take in exchange for giving oil companies the right to extract oil. (Tweet This). Most of Alberta's mineral rights—81 percent—are claimed by the province, rather than the government in Ottawa. Large oil companies in Alberta are more worried about a royalty review than a corporate tax increase at this point, said Andrew Leach, an associate professor at the University of Alberta School of Business. "I think right now probably the royalty review (is the bigger concern), because the risk is higher," he said. "The uncertainty is much greater."

The $900 Billion Influx That’s Wreaking Havoc in U.S. Bills - ( For all the anxiety over the global selloff in bonds, the big worry in money markets is the havoc being created by a dearth of U.S. Treasury bills. The magnitude of the problem was on display last week, when not even the Treasury Department’s surprise announcement to boost sales could do much to lift bill rates. Over the past two weeks, some of those rates have turned negative, reaching levels last seen during the financial crisis. With supply at multi-decade lows, investors are signaling alarm as regulations intended to shore up banks and prevent a run on money-market funds exacerbate the bill shortfall. JPMorgan Chase & Co. expects an extra $900 billion of demand for government securities during the next 18 months, putting pressure on a sizable chunk of the $1.4 trillion bill market.

Spanish Bonds Fall With Italy’s as Greece Fights Default Risk - ( Spanish and Italian government bonds fell for the first time in three days as concern Greece’s negotiations with its creditors will fail to prevent it running out of money prompted a flight out of euro-area debt markets. The region’s finance ministers met in Brussels Monday and welcomed the progress Greece has made while demanding more work before funds can be released, according to two officials who asked not to be named because the talks were private. On Tuesday, Greece must pay about 750 million euros ($836 million) to the International Monetary Fund. Italy is set to auction as much as 7 billion euros of debt due between 2018 and 2046 on May 13. Germany’s bonds declined. “Tomorrow there’s the IMF payments, with some officials saying we will make the deadline and some others saying it will be tough,” said Mathias Van Der Jeugt, a fixed-income strategist at KBC Bank NV in Brussels. “For the periphery, some spread-widening is possible. There’s also some supply coming up for Italy and that’s also a factor that could weigh on BTPs,” he said, referring to Italian government bonds.

Thursday May 21 Housing and Economic stories

These Asian Bankers Face $43 Billion Dead Deals After Oil Plunge - ( It’s a tough time to be an investment banker in Southeast Asia. Singapore, the region’s biggest stock market, is having its driest spell in six years with no initial public offering bigger than $25 million in 2015. Mergers involving Southeast Asian companies have dropped 45 percent this year to the lowest level since 2009, bucking a 39 percent rise in the broader Asia Pacific. Adding to the woes, more than a fifth of all acquisitions, or $43 billion worth, announced in the past 12 months were scrapped, data compiled by Bloomberg show. The dearth of mergers, down to $20 billion, is taking a toll on bankers. Goldman Sachs Group Inc. has reduced its investment-banking team in Singapore about 30 percent, while HSBC Holdings Plc’s top equity capital markets banker in the region and the merger headsat Bank of America Corp. and UBS Group AG are departing. Companies are reluctant to do deals or go public in the wake of low commodity prices that have curtailed growth in Southeast Asian economies including Malaysia and Indonesia. “The mood on the street is very dismal,” said Nicholas Teo, a Singapore-based strategist at CMC Markets. “In Southeast Asia, the big companies and tycoons have been sitting on the sidelines.”

Almost Half Of US States Are Officially Broke - (  At least 22 states are facing budget shortfalls thanks to a combination of fiscal mismanagement and falling oil prices. The negative impact on the public sector has been dramatic suggesting that in the event of a sustained economic downturn, citizens' patience for austerity could wear thin leading to political instability and social unrest.  Last month, we documented the case of Louisiana State University, the large, well-known public institution whose 2014 enrollment totaled nearly 31,000 students. LSU, it turns out, is facing funding cuts of as much as 82% which, if realized, would likely force the school into financial exigency, the college equivalent of bankruptcy. The reason for the cuts: the sharp decline in oil prices and fiscal mismanagement have conspired to blow a $1.6 billion hole in the state’s budget.  Bloomberg has more: With tax revenue from the oil industry falling short of projections, the deficit has swelled to $1.6 billion for the fiscal year that starts July 1. Moody’s Investors Service and Standard & Poor’s say they may lower Louisiana’s credit rating if officials don’t come up with sustainable budget solutions. Louisiana paid the price when it sold $335 million of general obligations Wednesday, its first deal this year. Borrowing costs jumped compared with an issue in November, with the yield spread more than doubling on some maturities.

It’s Not Just Greece, China’s Retreat Threatens European Bonds - (  European policy makers will be focused on Greek aid talks in Brussels on Monday. Investors may need to look further afield to fully explain the sell-off in the continent’s sovereign debt market. China’s foreign-currency reserves had their biggest quarterly drop on record in the first three months of the year and the yuan is trading at the closest to fair value since 2010, according Goldman Sachs Group Inc. That means less demand for assets in dollars and euros from the world’s biggest creditor. The Chinese central bank has amassed $3.73 trillion in currency reserves over the past decade in a bid to hold down the value of the yuan and underpin the competitiveness of its exporters. As the government in Beijing changes gear, cultivating domestic demand to sustain economic growth, it may affect European bond markets just as much as the Greek efforts to win better terms from creditors.

I.M.F. and Central Bank Loom Large Over Greece’s Debt Talks - ( Greek leaders have fought fiercely in recent months with politicians from other European countries over relief on Greece’s vast debt load. Yet the power to decide the fate of Greece lies not just in the hands of these national governments, but also with unelected officials at two powerful institutions: the European Central Bank and the International Monetary Fund. Each is a creditor to Greece, and each is expecting the country to repay it billions of dollars of debt in the coming weeks. The influence of the E.C.B. and the I.M.F. will be felt behind the scenes on Monday, when finance ministers from Greece and other European nations meet in their latest effort to break an impasse that is paralyzing the Greek economy and frightening global markets.

Angry Greeks Occupy Siemens Office; "Won't Become German Colony" - (  Earlier today we reported that German FinMin Wolfgang Shaeuble has now suggested that the best alternative for Greece’s embattled socialist ‘savior’ government may be to put euro membership to a referendum. In Shaeuble’s words, Tsipras should “ask the Greek people to decide whether it’s ready to accept what is necessary or whether it wants the alternative.”  What is “necessary” of course, is the implementation of more austerity measures, as the country’s current fiscal reform efforts have fallen well short of what’s necessary for creditors to unlock the next tranche of much needed financial assistance. The “alternative” to which Schaeuble refers, is redenomination risk or, more simply, the introduction of a parallel currency which will promptly collapse in value and wreak havoc across the country’s already beleaguered economy.  Greeks, of course, aren’t even the slightest bit interested in subjecting themselves to further belt-tightening and as the following from Reuters makes clear, Greek citizens are at their breaking point not only with austerity, but with the Germans as well: A small group of demonstrators occupied the Athens headquarters of German industrial group Siemens on Monday, police and company officials said, in a protest against the austerity policies imposed on Greece by its lenders. About 30 people entered the building in a northern Athens suburb, occupying the Siemens offices and hanging a banner outside the main entrance ahead of a scheduled rally to the German embassy planned for later this month

Thursday May 21 Housing and Economic stories

Greece raids emergency account to repay debt  - ( Greece admitted Tuesday it was scraping the bottom of the barrel for cash as another huge debt repayment loomed, adding pressure to reach a rescue deal with its EU-IMF creditors to avoid default and crashing out of the eurozone. Athens only managed to repay 750 million euros ($845 million) due Tuesday to the International Monetary Fund after tapping into an emergency account, a central bank source told AFP as alarm grew over Greece's dire finances. But billions more in loan repayments are due over the next three months, and Greece's Finance Minister Yanis Varoufakis warned that his country risked running out of cash within two weeks if no deal was reached by then with its international creditors to unlock the last tranche of aid funds. The crisis sent European stocks sinking Tuesday, mirroring sentiments across Asia and on Wall Street.

Second Largest Coal Miner East Of The Mississippi Files For Bankruptcy: 4000 Patriot Coal Jobs In Peril - ( At last check Patriot Coal had around 4000 employees. Those soon to be former employees will soon require yet another massive seasonal adjustment by the BLS to be "adjusted" out, because moments ago the second largest coal miner east of the Mississippi and the second largest producer of thermal coal in the eastern US filed Chapter 11 bankruptcy. As part of its filing, the Peabody spinoff announced it had obtained a $100 million DIP, which will be used to fund the company until it finds a "strategic buyer" or otherwise restructures its balance sheet. Alas, with the price of coal being where it is these days, the most likely outcome for ticker formerly known as PCX is an outright liquidation and another 4000 people in the rest belt left without jobs who, just like the case of Denny Ryder of Decatur, IL, will promptly disappear from the labor force so as not to spoil the US "recovery" propaganda.

Greece's 'war cabinet' prepares to battle EU creditors as anger mounts - (  The country's radical-Left leaders have concluded that there is little to be gained from any further concessions to EMU creditors. Greece's "war cabinet" has resolved to defy the European creditor powers after a nine-hour meeting on Sunday, ensuring a crescendo of brinkmanship as the increasingly bitter fight comes to a head this month. Premier Alexis Tsipras and the leading figures of his Syriza movement agreed to defend their "red lines" on pensions and collective bargaining and prepare for battle whatever the consequences, deeming the olive-branch policy of recent weeks to have reached a dead end. "We have agreed on a tougher strategy to stop making compromises. We were unified and we have a spring our step once again," said one participant. The Syriza government knows that this an extremely high-risk strategy. The Greek treasury is already empty and emergency funds seized from local authorities and state entities will soon run out.

Greece Effectively Defaults To IMF Using SDR Reserves To "Repay" Fund; 1 Month Countdown Begins - ( When Monday’s Eurogroup meeting concluded without an agreement between Greece and its creditors, it should have been game over for Athens. With pensioners at their breaking point and with local governments reluctant to comply with a decree mandating a sweep of excess cash reserves, the idea that Greece would somehow be able to scrape together €750 million euros to make a scheduled payment to the IMF today seemed far-fetched at best which is whywe asked the following question Monday afternoon: Where, if not from local governments who have been extremely reluctant to comply with Athens' cash sweep decree, and if not from the IMF which will apparently not be paying itself tomorrow after all, is Greece going to get three quarters of a billion euros in the next 12 hours? We now know the answer to that question. As Bloomberg reports, citing Kathimerini, Greece tapped IMF reserves to pay .. well, to pay the IMF: Greece used up ~EU650m reserves from its SDR IMF holdings account to meet loan payment of ~EU750m due to Fund today, Kathimerini newspaper reports, without citing anyone.

Greece avoids default with IMF payment but warns of imminent crisis - ( Greece narrowly averted a default Tuesday that could have seen it crashing out of the euro, but warned it faced another cash crunch within two weeks without a bailout deal with its EU financiers. Athens's radical new government managed to scrape enough cash together Monday to place the order for the repayment of 750 million euros ($840 million) of IMF loans, the finance ministry said, pledging to honour both its international and domestic debt obligations. Greece won some support in the latest round of debt talks as it battles to keep itself solvent, but eurozone finance ministers demanded more key reforms before they agree to release the final 7.2-billion-euro tranche of its EU-IMF bailout.