Thursday, February 11, 2016

Friday February 12 2016 Housing and Economic stories

The "Unintended Consequences" Have Arrived: Japan Cancels 10Y Auction For First Time Ever Due To Sub-Zero Rates - ( The planned March sale of 10-year Japanese government bonds through banks to retail investors, municipalities and others will be canceled amid expected below-zero yields following the Bank of Japan's recent move to adopt negative interest rates. The Ministry of Finance is expected to announce Wednesday the first-ever decision to call off sales of 10-year JGBs. The JGBs in question are sold through Japan Post Bank and regional banks in 50,000 yen ($415) units. The holder can cash out this new type of bond ahead of maturity. With the ministry already having suspended sales of two- and five-year instruments, all sales will end. But variable-rate 10-year JGBs for retail investors will still be offered.

Latin American ETF Posts Biggest Outflow in Year Amid Turmoil - ( Latin America’s largest region-wide exchange-traded fund posted the biggest outflow in a year as a selloff in commodities and heightened political turmoil dim the outlook for an economic recovery. The $495 million iShares Latin American 40 ETF had $33.8 million in withdrawals last month, according to data compiled by Bloomberg. That’s the largest outflow since January 2015. It has tumbled 32 percent in the past 12 months, compared with a 22 percent drop for the iShares MSCI Emerging Markets ETF for developing nations.

China Will Probably Have to Impose Capital Controls, SocGen Says - ( China will probably have to step up capital controls as even the world’s biggest foreign-exchange stockpile won’t be sufficient to defend the yuan, according to Societe Generale SA. If 65 million residents, or about 5 percent of the population, each took the maximum allowed $50,000 out of China that would wipe out the $3.3 trillion of reserves, Jason Daw, head of Asian currency strategy at the French lender, said in an interview in Singapore. China needs a stockpile of at least $2.8 trillion to cope with a balance-of-payments crisis, Societe Generale estimates based on the International Monetary Fund’s methodology.

Yuan Derivatives Blowup Curses Taiwan Businesses With Defaults - ( On Aug. 7, Kevin Kuo was having his fortune told at a Kyoto shrine in the Japanese tradition of picking out bamboo sticks. He got two that read "curse." For the 39-year-old home appliance importer, calamity came in the form of a shock yuan devaluation four days later. Kuo’s Taipei-based firm was holding two Target Redemption Forward contracts, a structured product used to bet on yuan appreciation. By the time both matured in early January, he had lost a net NT$11.6 million ($347,200). Kuo is among TRF investors hit by the yuan’s 8 percent plunge from the end of 2013, following four straight years of steady gains. The risk that holders of the leveraged derivatives will default have fueled an 8.5 percent loss in Taiwan’s local financial stock index this year, compared with a 2.5 percent drop in the overall benchmark.

Mortgage Forgiveness Debt Relief Act Extended Again... and Again... and Again | Mandelman Matters - ( Apparently, President Obama signed this latest extension on December 18, 2015... which is typical of the sort of decisiveness endemic to the current administration. It's almost like they're thinking... I know, let's scare the crap out of everyone hoping to do a short sale by waiting until the very last moment to extend the Act in question... that should cause an entertaining level of unnecessary confusion and insecurity. ' I’m talking about the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire again at the end of 2015, but has been extended again… this time until the end of 2016, after which time I’d bet almost anything it will be extended until 2017.  After that, I’ll be looking for the 2018 extension, and I’m forecasting that extension will remain in place until it’s extended through 2019. And that should about do it… at least until it’s extended through 2020, which is sure to occur the year before it’s extended until 2021.  Beyond that, I’d have to predict that the next extension will take it through 2022, and after that until the end of 2023, all before it’s extended through 2024. And why do I think it will continue to be extended for the foreseeable future?  Because the foreclosure crisis won’t end until we do something to end it… and we’re certainly not doing anything that might lead to that.

Wednesday, February 10, 2016

Thursday February 11 2016 Housing and Economic stories

Puerto Rico Proposes 46% Reduction of Debt in Restructuring - ( Puerto Rico is seeking to cut its debt load by 46 percent in its first offer to investors, a proposal that may face revisions as bondholders fight to get the most repayment. The commonwealth unveiled its plan on Monday to reduce the island’s obligations and help restart an economy that’s failed to grow in the past decade. The proposal for a voluntary exchange would cut the island’s debt to $26.5 billion from $49.2 billion, put off all interest payments until the 2018 fiscal year and affect even general-obligation bonds, which have the strongest repayment pledge, according to a restructuring proposal posted on the Government Development Bank website. The plan may pit the commonwealth’s investor groups against each other. In the proposal, general-obligation bonds get more money back than sales-tax debt, called Cofinas by their Spanish acronym. Cofina investors may take issue with that, said Lyle Fitterer, head of tax-exempt debt in Menomonee Falls, Wisconsin, at Wells Capital Management, which oversees $39 billion of municipal bonds, including Puerto Rico securities.

Puerto Rico Proposes Plan to Delay Its Debt Payments to Free Up Cash - ( Puerto Rican officials, meeting with creditors on Friday, proposed a broad debt exchange program meant to ease the island’s painful cash crisis by slowing down the payments it owes on its $72 billion debt. But as much as the plan had a financial purpose, it also had a political one: It was intended at least in part to help persuade skeptical members of Congress that the island’s government was working in good faith to resolve its financial crisis and deserved Washington’s help. Puerto Rico, which has already defaulted on some bonds, has large bond payments due this spring — payments it says it will not be able to meet without a reprieve from bondholders and some assistance from Washington, ideally in the form of access to bankruptcy court that the island, as a United States commonwealth, does not now have. 

Hong Kong January Home Sales Hit 25-Year Low, Centaline Says - ( Hong Kong home sales slumped to the lowest in at least a quarter-century last month, Centaline Property Agency Ltd. estimated, adding to evidence that prices have further to fall. Centaline estimated January sales of new and secondary homes would reach 3,000 units, the lowest monthly figure since it started tracking data in January 1991. The previous low was 3,786 units in November 2008, according to a Jan. 31 release. "The Hong Kong residential market is all about sentiment," Joanne Lee, senior manager of the Hong Kong research and advisory team at Colliers International Group Inc., said. "Falling stock-market prices, the economy weakening, China’s economy weakening and increases in the interest rate will all have an impact."

China police arrest 21 over $7.6 bln online financial scam - ( Chinese police have arrested 21 people involved in the operation of peer-to-peer (P2P) lender Ezubao, the official Xinhua news agency said on Monday, over an online scam it said took in some 50 billion yuan ($7.6 billion) from about 900,000 investors. Ezubao was a Ponzi scheme, the Xinhua report said, and more than 95 percent of the projects on the online financing platform were fake. Among those arrested were Ding Ning, the chairman of Yucheng Group, which launched Ezubao in July 2014.

Mid-tier Chinese banks piling up trillions of dollars in shadow loans - ( Mid-tier Chinese banks are increasingly using complex instruments to make new loans and restructure existing loans that are then shown as low-risk investments on their balance sheets, masking the scale and risks of their lending to China's slowing economy. The size of this 'shadow loan' book rose by a third in the first half of 2015 to an estimated $1.8 trillion, equivalent to 16.5 percent of all commercial loans in China, a UBS analysis shows. For smaller banks, the rate is much faster.

Tuesday, February 9, 2016

Wednesday February 10 2016 Housing and Economic stories

Small Business Confidence in Canada Plunges, Worst since March 2009, Alberta Falls off the Chart - (  Owners of small businesses in Canada have been feeling the blues for months. And in January, their optimism dropped to the lowest level since March 2009, the trough of the Financial Crisis. That’s what the Canadian Federation of Independent Business (CFIB) reported. Its Business Barometer has a scale between 0 and 100. A level above 50 indicates that owners who expect their businesses to be stronger over the next 12 months outnumber those who expect their businesses to be weaker. But: “One normally sees an index level of between 65 and 70 when the economy is growing at its potential.” That’s what the CFIB calls “normal economic growth.”

China’s Stocks Head for Steepest Monthly Loss in Two Decades - ( China’s stocks rose for the first time in four days amid speculation the steepest monthly selloff since the global financial crisis was overdone, while the central bank injected more liquidity into the financial system to avert a cash crunch before next month’s holidays. The Shanghai Composite Index rallied 3.1 percent to 2,737.60 at the close, trimming the January decline to 23 percent, the most since October 2008. Gains were led by industrial and financial companies. China Cosco Holdings Co. halted a three-day, 25 percent slide, while Citic Securities Co. led an advance for brokerages after reporting a surge in earnings. Hang Seng China Enterprises Index jumped 2.7 percent in Hong Kong as regional markets rose after the Bank of Japan adopted negative interest rates to boost the economy.

German Exporters Shudder as China Economy Slows - ( German exports to the important Chinese market are suffering their sharpest drop in a quarter of a century, casting a shadow over Europe’s biggest economy and showing the global impact of China’s slowdown. With new orders from China and other emerging economies sagging, German businesses fear the bad news is only beginning, data and surveys released in recent days suggest. German exports to the U.S. and many other markets are still growing, cushioning the impact of China’s troubles. But with much of Europe still licking its wounds from the long eurozone debt crisis, business confidence in Germany is vulnerable to continued cooling in Asia. “The overall situation in China is depressed,” said Ulrich Reifenhäuser, a management-board member at machinery maker Reifenhäuser Group in North Rhine-Westphalia. “I see very few orders in the near future.”

$5.5 Trillion In Government Bonds Now Have Negative Yields, Covering 23% Of Global GDP - (  "Never before have so many central banks explored sub-zero territory at the same time." First thing this morning, after the BOJ's announcement of negative rates which promptly pulled all treasury yields around the globle lower, we asked a simple question: how big large the global negative rate bond universe grow to? Promptly thereafter the FT was kind enough to do the math: the answer - a record $5.5 trilion in government bonds are now trading at negative yields.
This means that about about one quarter of all global bondholders will end up paying their government custodians for the pleasure of parking their cash in the "safety" of government bonds.

Is a market storm coming? Ask a Wall Street escort - ( My first stop was to check back in on the escort indicator. Back in May, the escorts I spoke to said that business was bouncing back since the financial crisis. But with the market being so tumultuous lately, are they seeing a slowdown? "Chelsea," a high-end escort in Manhattan who is originally from Canada, said business has only dropped off slightly into this year. "I still gotta hustle," Chelsea said. "But I haven't really seen a dropoff."

Monday, February 8, 2016

Tuesday February 9 2016 Housing and Economic stories

Who Gets to Pay for the Italian Banking Crisis? - (  Six years after Europe’s sovereign debt crisis began, the Eurozone’s third largest economy, Italy, has finally decided to do what just about every other country has done when facing a full-blown, almost out-of-control banking crisis: to set up a bad bank to hide its worst debt. It was only a matter of time: in the last six years, Europe’s economies have been drowning in an ever-expanding vitrine of bad debt — and none more so than Italy, where non-performing loans have soared to more than 350 billion euros, a fourfold increase since the end of 2008. At 18%, Italy’s ratio of nonperforming loans is more than four times the European average (and Europe’s banks are in worse shape than America’s). It’s the equivalent of 21% of GDP in a country that boasts Europe’s second highest public debt-to-GDP ratio (130%), just behind Greece, and where the banks hold over 70% of the country’s debt.

Goldman Sachs Calls Brazil a ‘Mess’ After Warning on Depression - ( Goldman Sachs Group Inc. said the crisis in Brazil will get worse before it gets better after the bank last year warned that Latin America’s largest economy was being dragged into a depression. “Brazil is a mess,” Alberto Ramos, the chief Latin America economist at Goldman Sachs, said at an event organized by the Brazilian-American Chamber of Commerce in New York on Wednesday. “Number 10 used to mean Pele. Now it’s inflation rate, unemployment rate and the popularity rate of the president." President Dilma Rousseff’s popularity is among the lowest of any Brazilian president on record as her party fights corruption allegations while inflation above 10 percent erodes purchasing power and the sinking economy sheds jobs. The nation is headed toward the deepest recession in a century amid the threat of further credit-rating downgrades after Brazil was cut to junk last year.

Capital controls no longer taboo as emerging markets battle flight - (  Faced with big outflows more policymakers are suggesting unorthodox methods.  When Haruhiko Kuroda, governor of the Bank of Japan, suggested last week that China should use capital controls to support its currency, it was as if he had broken a taboo. Asked if she approved, Christine Lagarde, managing director of the International Monetary Fund, sitting with Mr Kuroda on a panel at the World Economic Forum in Davos, dodged the question — although she did agree that it would be unwise for Beijing to burn through its foreign exchange reserves to support the renminbi.

Another Town Just Got Caught Covering Up Lead Contamination In Its Water Supply - ( Residents in Sebring, Ohio, can commiserate with those in Flint, Michigan, considering their water supply has also been contaminated with lead that “exceeds the action level,” according to the state’s EPA. Like Flint, the case of Sebring — involving some 8,100 water customers in Sebring, Beloit, Maple Ridge, and parts of Smith Township —already has the appearance of criminal negligence and a possible cover-up. “The first the notifications were discussed with the EPA and my staff was [Thursday] morning [January 21],” said Village of Sebring Manager Richard Giroux, as reported by WKYC. This statement is virtually inexplicable, as evidenced by an Ohio EPA notice posted by WKBN, dated the same day, that the village was in violation for its failure to inform residents back in November of elevated lead levels in the drinking water supply.

US energy M&A hits 5-year low as oil patch enters 'survival mode': Report - ( Dealmaking in America's oil patch plunged to a five-year low in the fourth quarter as corporations preserved cash in the face of falling crude prices and tight capital markets. The U.S. energy sector announced 42 deals worth $50 million or more for a total of $31.6 billion in mergers and acquisitions in the closing months of 2015, according to PricewaterhouseCoopers. For the full year, 179 deals worth a combined $196.1 billion were announced, down from 278 deals worth $304.4 billion in 2014. The declines in energy M&A came as global dealmaking across industries surpassed $5 trillion in 2015 for the first time on record.

Sunday, February 7, 2016

Monday February 8 2016 Housing and Economic stories

Tim Cook: We're Seeing 'Extreme Conditions Unlike Anything We've Experienced Before' in the Global Economy - ( What’s keeping the CEO of a company that just reported the most profitable quarter in history up at night? For Apple Inc.'s Tim Cook, it’s the “economic challenges all over the world.” “This is a huge accomplishment for our company especially given the turbulent world around us,” said Cook, immediately after running through the company’s quarterly financial highlights on a conference call. Ever since the surprise devaluation of the Chinese yuan in August, the potential for a hard landing in the world’s second-largest economy has been front-of-mind for investors.

DeVry Plunges As FTC Says School Lied About How Many Of Its Students Become Waiters And Bartenders - ( You can add DeVry students to the list of those who will very shortly be sending the Education Department a mountain of discharge requests because the FTC has now accused the school of deceiving prospective students about the employment success of graduates. “In a suit filed in a California federal court, the FTC is asking a judge to provide monetary remedies to allegedly deceived students, including refunds and restitution," WSJ reports.

Brazil Said to Announce $12.3 Bln in Credit to Boost Economy - ( Brazil’s Finance Minister Nelson Barbosa is expected to announce as much as 50 billion reais ($12.3 billion) in loans as the government seeks to revive growth amid the worst economic downturn in over a century. Barbosa will make the announcement Thursday with President Dilma Rousseff as she presides over a meeting of the Council for Economic Development, said a person familiar with the discussions. Even as he unveils the credit plan, Barbosa will also reaffirm a commitment to fiscal adjustment, the person added, asking not to be named because the speech is not public yet.

Kinder Defends $3 Billion Dividend Cut That `Shocked' Investors - ( Almost two months after Kinder Morgan Inc. slashed investor payouts by 74 percent to avoid a credit downgrade to junk status, the pipeline operator’s chairman and biggest shareholder defended the move as beneficial in the long term. The $3.19 billion dividend cut coincided with an increase in the profit threshold new projects must meet before Kinder Morgan will greenlight them, Executive Chairman Rich Kinder told analysts and investors during a presentation in Houston on Wednesday. The company is also choosing investments that will pay off quickly over projects with longer timelines, he said.

A Whole New Level Of Moral Hazard: China Will Use Public Funds To Cover Venture Capital Losses - ( It should surprise nobody that when it comes to perpetuating the global central bank "put", China - which is at daily danger of having its house of trillions in non-performing loan card collapse at any moment - has perfected moral hazard better than any western central banker. However, even the staunchest cynics will be stunned by the latest development out of the Shanghai government where starting next month, venture capital firms which invested in high-tech startups since the beginning of 2015 can apply for government compensation if their investment loses money.

Thursday, February 4, 2016

Friday February 5 2016 Housing and Economic stories

Hedge Funds Had Worst Year Since 2008 Betting on Commodities - ( Hedge funds betting on raw materials had the worst performance since the global financial crisis of 2008 as everything went wrong for commodities. The funds lost 5.2 percent in 2015 and recorded losses in 10 out of 12 months, based on an index compiled by Societe Generale SA that tracks the performance of commodity trading strategies including equities and physical products. Managers lost money and commodity funds from Trafigura Pte Ltd. to Cargill Inc. closed last year as China’s slowing economy added to the global glut in most raw materials. Losses from poor performance and investor withdrawals left assets at the top 10 commodities hedge funds at less than $10 billion, compared with more than $50 billion in 2008, Trafigura said last month.

Azerbaijan Shuts 4 Banks in Week After Imposing Capital Controls - ( Azerbaijan shuttered almost a tenth of the nation’s lenders in the past week as authorities struggle to restore trust in the national currency after imposing capital controls and devaluing the manat twice last year. The regulator in the capital, Baku, said there’ll be more closures to come after revoking the licenses of privately owned United Credit Bank and NBC Bank for failing to comply with a minimum capital requirement of 50 million manat ($30.7 million). The lenders couldn’t meet their obligations to creditors and their management wasn’t “reliable or prudential,” the central bank said Tuesday in an e-mailed statement. The cleanup has left Azerbaijan with 39 banks. “Banks that don’t meet requirements and have major shortcomings can’t operate in Azerbaijan,” President Ilham Aliyev was cited as saying by the news service APA. He urged banks to invest in the real economy to help create new jobs and develop the non-oil industry.

Sprint Said to Cut 2,500 Jobs, 7% of Staff, to Lower Costs - ( Sprint Corp., the nation’s fourth-largest wireless carrier, is eliminating 2,500 jobs, or about 7 percent of its total workforce, and closing several call centers as part of a plan to cut $2.5 billion in costs, according to a person familiar with the situation. Most of the job cuts are coming from the closing call centers, said the person, who requested anonymity because the cuts haven’t been disclosed publicly. Employees were informed of the cuts in an e-mail Friday, the person said. Jan. 30 is the deadline to qualify for better severance benefits.

Junk Bonds in Europe Find Greater Losses From Brazil Than China - ( European investors focused on risks from China to the east should also be looking west. More than half of the region’s worst-performing junk bonds in euros over the past year were sold by companies with operations in Brazil, exceeding those with even indirect exposure to China, according to data compiled by Bloomberg. Bonds sold by French retailer Casino Guichard-Perrachon SA and Spanish engineering firm Grupo Isolux Corsan SA, both with links to Latin America’s largest economy, are among 10 billion euros ($11 billion) of securities with the biggest losses. European firms piled into emerging markets as they sought to mitigate the sovereign debt crisis at home. Brazil is now heading toward its deepest two-year recession in more than a century and a widening corruption scandal involving state-run oil producer Petroleo Brasileiro SA is undermining any political effort to revive growth.

Emerging Stocks Fall as China Rout Deepens; Ruble Swings on Oil  - ( Emerging-market stocks snapped a two-day advance as Chinese shares tumbled to a 13-month low on concern outflows will accelerate as the economy slows. Russia’s ruble swung between gains and losses. The Shanghai Composite Index slid more than 6 percent after data showed outflows from China reached a record $1 trillion last year, more than seven times higher than in 2014. Russia’s ruble erased losses as oil rebounded while South Korea’s won and Brazil’s real weakened. The premium investors demand to own developing-nation debt rather than U.S. Treasuries rose for a second day. “The inability to control capital outflows is the typical sign of crisis in emerging markets,” said Nathan Griffiths, a senior emerging-market equities manager who helps oversee $1.2 billion at NN Investment Partners in The Hague, who prefers Indian and Mexican shares. “Given the importance of China to both emerging markets and the global economy, a China crisis would be pretty horrible.”