Thursday, January 19, 2017

Friday January 20 2016 Housing and Economic stories


Social Security's looming $11 trillion shortfall - (www.cnbc.com) President-elect Donald Trump has said he will preserve Social Security, though if he and Congress do nothing to fix the funding, the financial reckoning will be huge — as much as $11.4 trillion down the road. The last time Congress changed Social Security in a significant way with a series of benefit cuts and payroll tax increases was in 1983 under President Ronald Reagan. Back then, the federal government needed to fill a funding gap of about 1 percent of taxable workers' wages. By the time Social Security's trust funds are projected to run out in the early 2030s, the federal government will have to plug a hole of more than 3 percent, according to estimates by Charles Blahous, a senior research fellow at George Mason University's Mercatus Center.

Portugal Bonds Falter as ECB Running Out of Eligible Debt to Buy - (www.bloomberg.com) The European Central Bank is running out of Portuguese bonds to buy. The central bank’s holdings of Portugal’s debt are already pushing the limit set by its own guidelines, leaving it likely to buy less this year to avoid breaking those rules. That prospect has led to a selloff in Portuguese government bonds, with 10-year yields having risen almost 40 basis points since the ECB’s December meeting to hit an 11-month high last week. The ECB will have to scale back Portuguese purchases by around a half, according to Commerzbank AG, while ABN AMRO Group NV sees it stopping or suspending them by June. 

European leaders shocked as Trump slams NATO and E.U., raising fears of transatlantic split - (www.washingtonpost.com) European leaders grappled with the jolting reality of President-elect Donald Trump’s skepticism of the European Union on Monday, saying they might have to stand without the United States at their side during the Trump presidency. The possibility of an unprecedented breach in transatlantic relations came after Trump — who embraced anti-E.U. insurgents during his campaign and following his victory — said in weekend remarks that the 28-nation European Union was bound for a breakup and that he was indifferent to its fate. He also said NATO’s current configuration is “obsolete,” even as he professed commitment to Europe’s defense. 

China Shares Head for Longest Losing Streak Since August 2015 - (www.bloomberg.com) Stocks in China’s second-largest equity market plunged the most in 10 months, underscoring the increasing fragility of the nation’s financial assets. The Shenzhen Composite Index sank as much as 6.1 percent, the biggest loss since Feb. 29. Traders pointed to concern that regulators will accelerate the pace of initial public offerings, already at a 19-year high, diverting liquidity from existing shares. The Shanghai Composite Index dropped as much as 2.2 percent in minutes before paring losses amid speculated buying by state-backed funds.

Davos elite faces evaporating trust of populace - (www.reuters.com) Trust in governments, companies and the media plunged last year as ballots from the United States to Britain to the Philippines rocked political establishments and scandals hit business. The majority of people now believe the economic and political system is failing them, according to the annual Edelman Trust Barometer, released on Monday ahead of the Jan. 17-20 World Economic Forum (WEF). "There's a sense that the system is broken," Richard Edelman, head of the communications marketing firm that commissioned the research, told Reuters. "The most shocking statistic of this whole study is that half the people who are high-income, college-educated and well-informed also believe the system doesn't work." The 3,000 business, political and academic leaders meeting in the Swiss Alps this week find themselves increasingly out of step with many voters and populist leaders around the world who distrust elites.


Brexit Plans Rattle Pound and Stocks as Gold Rises: Markets Wrap - (www.bloomberg.com)
Emerging Markets Drop on Trade Jitters as Mozambique Bonds Slide
- (www.bloomberg.com)
Investors turn wary as Brexit, Trump uncertainty grows
- (www.reuters.com)

South Korea Prosecutor Seeks Arrest of Samsung’s Jay Y. Lee
- (www.bloomberg.com)
Exclusive: China to target around 6.5 percent growth in 2017 - sources
- (www.reuters.com)
Trump's offer to Putin: an end to sanctions for nuclear arms cut - London Times
- (www.reuters.com)

Wednesday, January 18, 2017

Thursday January 19 2016 Housing and Economic stories

TOP STORIES:

New York Times Warns "Budget Cuts Are Coming", Will Invest $5 Million To Cover Trump - (www.zerohedge.com) And yet not all was good news, because in the report was a warning that budget cuts are coming, a notice which followed the newspaper's announcement several weeks ago that it would rent out floors in its headquarters to other companies to beef up its cash flow. To wit: Some of these initiatives stem directly from consultations with the 2020 group; others result from the realities of the media business in a period of rapid change. Nothing can disguise the fact that the continued shift from print to digital demands a somewhat smaller and more focused newsroom. There will be budget cuts this year. We will lay out the specifics in the coming weeks and months. We cannot pretend to be immune from financial pressures but we view this moment as a necessary repositioning of The Times’s newsroom, not as a diminishment.

Nuclear Energy Sector Turns in Taxpayer-Sinkhole - (www.wolfstreet.com) When a utility stock pays a dividend that yields 11 percent it is either an overlooked steal or the equity of a company with big problems–and a dividend that’s soon to be either eliminated or reduced. EDF, France’s state controlled nuclear energy giant, looks more the latter than the former. But never underestimate the determination of French politicians–right, left and center to protect and subsidize their civilian nuclear power establishment. To understand this byzantine story of French public and private partnerships, let’s start with EDF’s current stock price. It’s priced in Paris this morning at about €9.60, slightly above the 52 week low. And down from a high of €28.78 more than two years ago.

US companies rush to reprice debt as higher rates loom - (www.ft.com) US companies have rushed to renegotiate their loans at the start of the year, taking advantage of strong investor demand for debt that is more insulated against an expected rise in interest rates. January’s re-pricing volume has already reached $41.6bn — the highest monthly volume since January 2013 with a further two weeks before the month ends, according to data from LCD, an offering of S&P Global Market Intelligence. The robust activity reflects investors anticipating higher interest rates in the coming year in light of forecasts of a stronger US economy under the incoming administration of Donald Trump. That sets the stage for policy tightenings from the Federal Reserve during 2017, which is likely to hurt holders of fixed income debt.

Why Obamacare's "20 Million" Number Is Fake - (www.zerohedge.com)  The next time a defender of Obamacare tries to take the moral high ground about the millions of people the law has helped, ask them to define what “help” looks like. The Obama administration claims 20 million more Americans today have health care due to Obamacare. The reality is that when you look at the actual net gains over the past two years since the program was fully implemented, the number is 14 million, and of that, 11.8 million (84 percent) were people given the “gift” of Medicaid. And new research shows that even fewer people will be left without insurance after the repeal of Obamacare. Numbers are still being crunched, but between statistics released by the Congressional Budget Office and one of the infamous architects of Obamacare, the Massachusetts Institute of Technology’s Jonathan Gruber, it’s estimated that anywhere from 2 to 7 million people now on Medicaid would have qualified for the program even without Obamacare. That further discredits the administration’s claim of 20 million more Americans having health insurance because of Obamacare.

Britain's May to call for national unity in major Brexit speech - (www.cnbc.com) Prime Minister Theresa May will call on Britons to reject the acrimony of the Brexit referendum in a speech this week that some newspapers have billed as setting the stage for a "hard" exit from the European Union. Investors will scrutinize May's speech on Tuesday for clues on whether she plans to prioritize immigration controls and bilateral trade deals in a "hard Brexit" that would see Britain leave the EU's single market and customs union. May intends to launch by the end of March the formal process of negotiating the terms of Britain's exit from the EU, but has so far given very little away about what deal she will be seeking, frustrating some investors, businesses and lawmakers.

Pound Slides at Much as 1.6% as May Reported to Seek Hard Brexit - (www.bloomberg.com)
Pound Drops on EU Concern, Australian Shares Gain: Markets Wrap
- (www.bloomberg.com)
Trump says Brexit to be 'a great thing', wants quick trade deal with UK
- (www.reuters.com)

World's eight richest as wealthy as half humanity, Oxfam tells Davos
- (www.reuters.com)
Trump will soon be begging the Fed for QE4: Marc Faber
- (www.cnbc.com)
Trump Slams NATO, Floats Russia Nuke Deal in European Interview
- (www.bloomberg.com)

Tuesday, January 17, 2017

Wednesday January 18 2016 Housing and Economic stories


From One Scam to Another: How Banks in Spain Intend to “Compensate” 1.4 Million Fleeced Homeowners - (www.wolfstreet.com) Spain’s biggest banks, it seems, will never learn — not even when the highest court of the land, the European Court of Justice (ECJ), rules against their dodgy practices. The ECJ ruled just before Christmas that Spain’s major banks would have to refund all the billions of euros they had surreptitiously overcharged borrowers as a result of the so-called “mortgage floor-clauses” that were unleashed across the whole home mortgage sector in 2009 [A Nightmare Before Christmas for Spanish Banks]. These floor clauses set a minimum interest rate, typically of between 3% and 4.5%, for variable-rate mortgages, which are a very common mortgage in Spain, even if the Euribor dropped far below that figure. In other words, the mortgages were only really variable in one direction: upwards! While this is not illegal, most banks failed to properly inform their customers that the mortgage contract included such a clause.

U.S. Shale's Great Reawakening - (www.bloomberg.com) Given that we now know that U.S. output was rising at a rate of 50,000 barrels a day each month in the last quarter of 2016, the warming price environment created by the OPEC deal and the benign impact of reduced regulation have set the stage for signs of life in shale to gather pace. And if prices go further above $55, that could provide further impetus to its return. It was always going to be a matter of when and not if OPEC would have to start grappling with the return of shale, and it looks like that time had already come even before it started supporting oil prices again. The big question is to what degree will the group and its members comply with what they said they'll do, and how much extra boost that will give to the U.S. shale oil industry.

Portugal Bonds Falter as ECB Running Out of Eligible Debt to Buy  - (www.bloomberg.com) The European Central Bank is running out of Portuguese bonds to buy. The central bank’s holdings of Portugal’s debt are already pushing the limit set by its own guidelines, leaving it likely to buy less this year to avoid breaking those rules. That prospect has led to a selloff in Portuguese government bonds, with 10-year yields having risen almost 40 basis points since the ECB’s December meeting to hit an 11-month high last week. The ECB will have to scale back Portuguese purchases by around a half, according to Commerzbank AG, while ABN AMRO Group NV sees it stopping or suspending them by June. To make up the shortfall, the ECB may continue to buy more bonds from other countries with a greater pool of eligible securities, such as Germany and France.

While Davos Elites Address Populism, Just "Eight Men Own Same Wealth As Half The World" - (www.zerohedge.com) “From Brexit to the success of Donald Trump’s presidential campaign, a worrying rise in racism and the widespread disillusionment with mainstream politics, there are increasing signs that more and more people in rich countries are no longer willing to tolerate the status quo,” Oxfam said in its new report. “It is obscene for so much wealth to be held in the hands of so few when 1 in 10 people survive on less than $2 a day,” said Winnie Byanyima, executive director of Oxfam International, who is attending the exclusive meeting in Davos. “Inequality is trapping hundreds of millions in poverty; it is fracturing our societies and undermining democracy.” The same Oxfam report last year showed that it was 62 people holding as much wealth as the bottom half of the population. This year’s report was revised using the Forbes’ billionaires list published in March 2016 which shows that Microsoft founder Gates is the richest individual with a net worth of $75 billion.


American Apparel moves to Canada — where will its hoodies be made now? – (www.salon.com) Gildan's purchase agreement covers American Apparel's assets, including most of its manufacturing and distribution equipment. Gildan bought American Apparel's existing inventory in a separate deal. But the company has declined the option to assume the leases of two Los Angeles manufacturing facilities that employ nearly 1,300 factory workers. Gildan also declined the lease on American Apparel's headquarters, which employs nearly 2,200 people. The downtown offices will continue to manage the company's retail operations and website, but in December American Apparel warned all its Los Angeles-area employees that they may lose their jobs. 



Monday, January 16, 2017

Tuesday January 17 2016 Housing and Economic stories


Bitcoin Collapses, Chinese Latecomers Get Fleeced - (www.wolfstreet.com) The People’s Bank of China announced on Wednesday that it is probing the major bitcoin exchanges in Beijing and Shanghai – BTCC, Huobi, and OKCoin – for a list of violations, including market manipulation, money laundering, and unauthorized financing. This is part of the PBOC’s efforts to crack down on capital flight, a major escalation from last week, when Chinese officials warned investors – if you can call them “investors” – to be careful with bitcoin. That warning came at the peak of the spike and tipped the whole thing over. Ironically, China’s many other crackdowns on capital flight have pushed the hapless Chinese, who want their capital to flee, into bitcoin. It was seen as a way of converting their yuan into something other than yuan, which they fear will depreciate relentlessly.

Millennials are falling behind their boomer parents - (www.cnbc.com) Baby Boomers: your millennial children are worse off than you. With a median household income of $40,581, millennials earn 20 percent less than boomers did at the same stage of life, despite being better educated, according to a new analysis of Federal Reserve data by the advocacy group Young Invincibles. The analysis being released Friday gives concrete details about a troubling generational divide that helps to explain much of the anxiety that defined the 2016 election. Millennials have half the net worth of boomers. Their home ownership rate is lower, while their student debt is drastically higher.

China Commodities Juggernaut Rolls Into 2017 as Records Tumble - (www.bloomberg.com) The appetite for raw materials in the world’s biggest consumer keeps getting bigger. China’s imports of crude oil and iron ore rose to records in 2016, while coal buying expanded for the first time in three years, according to government data released Friday. Growing domestic demand sent steel and aluminum exports down, while outbound shipments of oil products soared as the country sought to reform its refining industry and fuel specifications. Iron ore imports surged to a record above 1 billion metric tons on unexpectedly strong steel production and lower local mine output. Meanwhile, exports of steel and aluminum ended years of expansion, with producers selling more at home as government stimulus sparked a surprise rebound in buildings, infrastructure and manufacturing.

Not pocket change: Man delivers 298,745 pennies to DMV – (www.foxnews.com) A Virginia man who had a beef with the Department of Motor Vehicles settled his sales tax bill with 298,745 pennies. Workers at the DMV office in Lebanon, in rural southwestern Virginia, had to spend hours counting the pennies by hand when the coin-counting machine jammed. Nick Stafford carted the pennies into the DMV in five wheelbarrows Wednesday. The coins weighed 1,600 pounds. “If they were going to inconvenience me, then I was going to inconvenience them,” he told the Bristol Herald Courier. The paper reported that Stafford became incensed in September when he attempted to call the Lebanon DMV and was routed to a call center in faraway Richmond.

Multi-Billionaire Hugo Salinas Price Just Issued A Dire Warning To The World - (www.kingworldnews.com) With so many people around the globe worried about what the planet faces in 2017, multi-billionaire Hugo Salinas Price just issued this dire warning to the world. Multi-billionaire Hugo Salinas Price:  The president elect of the US, Mr. Trump, does not know what he is doing when he proposes protectionist measures to encourage the reindustrialization of the US and bring home again, the American industry that emigrated to foreign lands. The US lost their industry as a result of the Bretton Woods Agreements, which were signed (under pressure) by representatives of the allied countries and of the countries conquered by the US in World War II. Those Agreements established the world’s monetary system for the post-war world, after the victory of the Allies, which was already in sight in 1944.


Sunday, January 15, 2017

Monday January 16 2016 Housing and Economic stories


For How Long Did Fiat-Chrysler Hide its EPA Diesel Fiasco? Investors Found out the Hard Way Today - (www.wolfstreet.com) Today, the EPA disclosed that Fiat-Chrysler was neck-deep in the diesel-gate fiasco pioneered by Volkswagen. When Volkswagen settled claims in a Canadian court in December for C$2.1 billion, it brought total costs so far to $18 billion, and it’s still not over. So these things can get expensive. Volkswagen’s strategy at the outset had been to keep investors in the dark, and deny, deny, deny, until it finally buckled. Fiat-Chrysler (FCA) appears to follow the same time-honored corporate strategy.

DBRS Downgrades Italy, Stripping It Of Its Last "A Rating" And Raising ECB Collateral Haircuts - (www.zerohedge.com) When previewing the key events of the week, we noted that today Canadian DBRS rating agency is scheduled to review Italy's credit rating after putting its credit worthiness on negative watch on 5 August. On 5 December, DBRS issued a press release declaring that they would wait for the impact of the Italian referendum result on the continuation of the reform push before making the final decision. In case of a downgrade, the haircut for a 5y BTP used as collateral for ECB operations, as an example, would rise from 2% to 10%. Moments ago DBRS did just that when it downgraded italy from A (low) to BBB (high), stripping the sovereign of its final A credit rating.
               
Extreme Bets on Higher Yields Inflict a New Kind of Pain Trade - (www.bloomberg.com) In the rush to price in firming economic data and the seemingly inflationary policies of President-elect Donald Trump, bond bears might have gotten ahead of themselves. That's how analysts are reading the most recent report of trader commitments, which shows investors are making record bets on higher yields. In the first week of the year, futures positioning for U.S. Treasuries was at an all-time high of 1.2 million ten-year Treasury-contract equivalents, according to Macro Risk Advisors head derivatives strategist Pravit  Chintawongnavich. Based on past episodes when shorts swelled to extremes, Bespoke Investment Group says the rally in Treasuries since Dec. 16 may be poised to accelerate. "Historically, large duration shorts have typically led to bond rallies," the analysts write in a Jan. 11 note, referring to the pessimistic positioning on longer-maturity debt. "In our view, the pain trade in bonds is no longer higher yields."

Edwards: ‘Waste of time' to save Italian bank; Get Italy Out of Euro - (www.marketwatch.com) It's a waste of time and effort to recapitalize the Italian banks, while Italy remains in the eurozone," Edwards said. The idea is that by leaving the currency union, Italy alone would be able to control interest rates and its currency, which could make it more competitive on the world stage. Some economists argue that the euro's current trading level only benefits Germany, while putting a squeeze on other nations that would benefit from a weaker exchange rate. By returning to the lira and devaluing it, Italy would make its products much cheaper for foreign buyers... Italy in my view will never grow within the euro. It's as simple as that.

U.S. property foreclosures at 10-year low in 2016 - (www.reuters.com) Foreclosure proceedings affected nearly a million U.S. homes and other real estate last year, down 14 percent from 2015 and down 70 percent from the worst of the housing crisis in 2009, a report released Thursday shows. Foreclosures hit a 10-year low and property owners in all but 15 states experienced fewer of the early stages of foreclosure, usually begun after owners have missed four mortgage payments, according to the report by ATTOM Data Solutions, formerly called RealtyTrac. Final repossessions of properties also dropped overall, but did increase in 21 states and the District of Columbia, including Massachusetts, Alabama, New York, Virginia and New Jersey.



Thursday, January 12, 2017

Friday January 13 2016 Housing and Economic stories


Boeing: Three More Waves of Layoffs in 2017, as Orders Collapse to 7-Year Low. Shares Near All-Time High - (www.wolfstreet.com) “As we enter 2017, our plan calls for us to reduce our Engineering staff. I realize some of this news is unpleasant. But I wanted to respect your right to know what is occurring this year.” But that’s what happened on Tuesday at Boeing. Hammered by slowing aircraft sales and a declining order book, Boeing warned on Tuesday in an internal memo that it would conduct involuntary and voluntary layoffs of engineers in Washington state, southern California, and South Carolina, according to The Seattle Times. The memo did not mention the size of the staff cuts.

S&P Downgrades City Of Dallas On "Continued Deterioration" Of Police Pension - (www.zerohedge.com)  “S&P’s actions today are not a surprise," Dallas Chief Financial Officer Elizabeth Reich said in a statement. "The more the rating agencies learn about the crisis facing Dallas as a result of the police and fire pension, the more they understand what the City has been saying for some time – the pension is a significant risk to the fiscal health of the City." As we noted last week, this most recent downgrade for Dallas comes after the City Council floated a proposal to inject $1 billion of incremental taxpayer funding into the DPFP, over the course of 30 years, if retirees would agree to a $1 billion "clawback" of what city officials referred to a ill-gotten interest guarantees (see "City Of Dallas Looks To "Clawback" Ill-Gotten Pension Gains From Police").

Mexico's peso hits record low on Trump talk of wall, auto tax - (www.reuters.com) The Mexican peso MXN= weakened to a historic low of 22.04 per dollar and the country's stock index fell on Wednesday, after U.S. President-elect Donald Trump warned U.S. auto companies would face a high tax for products made south of the border. Speaking at a news conference in New York, Trump also reiterated that the United States would start building a southern border wall after he took office next week. He said Mexico would reimburse the cost either through a tax or a payment. The Mexican currency regained some ground after passing the psychological 22 peso barrier to trade at 21.77 per dollar at 13:09 a.m. eastern (1709 GMT).

Suddenly, Home Sale Agreements Are Falling Apart Across the U.S. - (www.bloomberg.com) Spending months to find the perfect home in your price range, only to have your mortgage application rejected, or a home inspection turn up expensive repairs, is a nightmare—one that is coming true with increasing frequency, according to a new report from real estate listings website Trulia. A Trulia analysis of U.S. listings shows that 3.9 percent of homes that moved from for-sale to pending moved back to for-sale again, nearly double the rate in 2015. Such “failed sales” increased in 96 of the 100 biggest U.S. metros, with big swings in areas large and small, rich and poor. That includes Los Angeles and Charleston, S.C., as well as San Jose and Akron, Ohio.

China's S$5.5 trillion wealth products reel as bond binge unwinds - (www.bloomberg.com) China's bond market is facing more turbulence as banks scramble to avoid losses on wealth management products that raised US$3.8 trillion (S$5.46 trillion) from the nation's savers. The investment plans typically use leverage to boost returns on the 56 per cent of their holdings parked in fixed-income securities. That model is under threat after Chinese corporate notes plunged the most in nine years in the fourth quarter. Banks may have to use their own money to repay holders of maturing WMPs because it will be hard to sell bond holdings during an extended rout or to raise cash by issuing new products, Citigroup wrote in a Dec 21 note.