Thursday, August 29, 2013

Friday August 30 Housing and Economic stories


European Recovery Means Little for Jobless Generation - (www.bloomberg.com) Francisco Justicia Carrasco has been sending off 50 resumes every Monday for more than three years. He doesn’t expect a job for a long time to come yet. “The situation is screwed up,” said the 28-year-old who lives in Ripollet, close to Barcelona, and has worked in a range of jobs from shop cashier to packaging over the past decade. “I don’t see any improvement at all from last year or even the year before.” Carrasco is one of the legion of unemployed across Europe’s southern periphery who are seeing little benefit from an economic recovery that pulled the euro region out of its longest-ever recession in the second quarter. More than a third of the bloc’s jobless are in Greece and Spain. In Greece, 64.9 percent of those aged between 15 and 24 are without work.

Egypt imposes state of emergency after 95 people killed - (www.reuters.com) Egyptian security forces crushed the protest camps of thousands of supporters of the deposed Islamist president on Wednesday, shooting almost 200 of them dead in the bloodiest day in decades and polarizing the Arab world's most populous nation. At least 235 people were killed in all, including at least 43 police, and 2,000 wounded, a health official said, in fierce clashes that spread beyond Cairo to towns and cities around Egypt. Deposed president Mohamed Mursi's Muslim Brotherhood said the death toll of what it called a "massacre" was far higher.

Wal-Mart sales disappoint as shoppers worldwide curb spending - (www.reuters.com) Wal-Mart Stores Inc. reported a surprise decline in quarterly same-store sales in the United States, its biggest market, after shoppers came in less often because higher taxes and gasoline prices were leaving them with less spending money. The world's largest retailer also cut its revenue and profit forecasts for its fiscal year, raising concerns about retail spending as the all-important holiday season nears. It cited weak results from the United States, as well as Canada, MexicoJapan and other international markets that it is relying on for long-term growth. Shares of Wal-Mart were down 2.4 percent at $74.59 in midday trading. U.S. sales at stores open at least a year at the company's main Walmart chain fell 0.3 percent in the second quarter ended in late July, the company said on Thursday. Wall Street analysts were expecting a 1 percent gain, according to Thomson Reuters I/B/E/S.

U.S. Net Outflow of Long-Term Securities Rises to $66.9 Billion - (www.bloomberg.com) Foreign selling of U.S. long-term portfolio assets rose for a second straight month in June as investors abroad sold equities and a record amount of Treasury notes and bonds, a government report showed. The net long-term portfolio investment outflow was $66.9 billion after a $27 billion net decline in May, the Treasury Department said in a statement today in Washington. Net selling of long-term Treasuries by private foreign investors increased to $40.1 billion from $29 billion the prior month, the department said. Private foreign investors were net sellers of all categories of U.S. long-term portfolio assets -- government debt, agency securities, corporate bonds and stocks in June, the report showed. As U.S. growth strengthens and the world economy improves, investors may be more willing to take on risks elsewhere before the Federal Reserve starts reining in monetary stimulus, economists said.

Fitch and Fed warn on risks from ETFs - (www.ft.com) Parts of the booming market for exchange traded funds risk worsening broader market sell-offs or triggering crashes, according to two studies released this week. The reports, from the Federal Reserve and Fitch Ratings, come weeks after a sharp sell-off in fixed income sparked scrutiny of certain ETFs and the structure of the industry, which has grown to a market worth more than $2tn. ETFs allow investors quick and easy exposure to a range of assets that might otherwise be difficult to access. But the two reports warn that certain of the investment tools – corporate bond ETFs and so-called “leveraged ETFs” – could destabilise broader markets. ETFs that seek to replicate the performance of corporate bonds risk intensifying a sell-off in the underlying debt, according to rating agency Fitch.






Wednesday, August 28, 2013

Thursday August 29 Housing and Economic stories


Spanish skyscraper run by "Bad Bank" missing elevators in monster goof - (www.nydailynews.com) What goes up must walk down. In what will surely go down in history as one the greatest architectural blunders, the town of Benidorm in Alicante, Spain, had almost completed its 47-story skyscraper when it realized it excluded plans for elevator shafts.... The bizarre nature of the practices put in place in the construction of InTempo doesn't stop at bad banks and missing elevator shafts. The initial backer of the project, Caixa Galicia, stopped paying workers for four months around the time it realized -- after about 23 floors had been completed -- that a service elevator hadn't been installed for the 41 workers who had been hauling materials up 23 flights of stairs.

China Banks’ Bad Loans Rise for Seventh Quarter as Economy Slows - (www.bloomberg.com) Chinese banks’ bad loans rose for a seventh straight quarter, extending the longest streak in at least nine years as the world’s second-largest economy continued slowing. Non-performing loans climbed by 13 billion yuan ($2.1 billion) in the second quarter from the end of March, reaching 539.5 billion yuan, the China Banking Regulatory Commission said in a statement on its website today. Soured debt increased across all lender categories, including state-owned and regional banks. China’s economy slowed for a second straight quarter during the period, as growth in factory output and fixed-asset investment weakened. A June crackdown on off-balance-sheet lending and other credit outside the banking system caused a cash squeeze, driving money-market rates to a record.

The Hindenburg Omen is Back! Will it Stick This Time? - (www.ispyetf.com) The Hindenburg Omen had its glory days (2007), but more recently it’s become famous for notorious misfires. Despite many hyped up Omen sightings in recent years, the Dow Jones (DJI: ^DJI) and S&P 500 (SNP: ^GSPC) are trading near all-time highs while the VIX (Chicago Options: ^VIX) is hovering near historic lows. But (and this could turn out to be a big but), I stumbled upon a statistical nuance that may restore the bruised indicator’s image. Hindenburg Omen is Back: The latest rally leg has brought a whole cluster of Omens in its wake. Omen clusters (not just scattered signals) appear to be the key to the signal’s reliability (or lack thereof). An Omen here or there may get the media’s attention, but it doesn’t consistently phase stocks. However – this observation may restore the Omen’s credibility - a cluster of a dozen or so Omens in a 50-day period, tends to be bearish for stocks.  We are seeing such an Omen cluster right now. The chart below plots the S&P 500 (NYSEArca: SPY) against the most recent ‘Dozen-Omen-Cluster’ sightings. They occurred in January/February 2000, March/April 2006 and July/August 2013.

India Restricts Foreign-Exchange Outflows - (www.bloomberg.com) India increased efforts to stem the rupee’s plunge and stop capital outflows that are pushing the economy towards its biggest crisis in more than two decades. The Reserve Bank of India, whose Governor Duvvuri Subbarao steps down next month, cut the amount local companies can invest overseas without seeking approval to 100 percent of their net worth, from 400 percent, according to a statement late yesterday. Residents can remit $75,000 a year versus the previous $200,000 limit. Rupee forwards rose for the first time in three days. Policy makers’ moves since July to tighten cash supply, restrict currency derivatives and curb gold imports have failed to arrest the rupee’s slump to record lows as they struggle to attract capital to fund a record current account deficit. The rupee has weakened 28 percent in the past two years, the biggest tumble since the government pledged gold reserves in exchange for loans from the International Monetary Fund in 1991.

Your mortgage documents are fake - (www.salon.com) Prepare to be outraged. Newly obtained filings from this Florida woman's lawsuit uncover horrifying scheme. If you know about foreclosure fraud, the mass fabrication of mortgage documents in state courts by banks attempting to foreclose on homeowners, you may have one nagging question: Why did banks have to resort to this illegal scheme? Was it just cheaper to mock up the documents than to provide the real ones? Did banks figure they simply had enough power over regulators, politicians and the courts to get away with it? (They were probably right about that one.) A newly unsealed lawsuit, which banks settled in 2012 for $95 million, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose. This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us.





Tuesday, August 27, 2013

Wednesday August 28 Housing and Economic stories


Greek youth unemployment soars to 64.9pc  - (www.telegraph.co.uk) Greek youth unemployment soared to a fresh high of almost 65pc in May, underscoring the dire state of the recession-hit economy. Repeated doses of austerity under international bailouts have almost tripled Greece's jobless rate since its debt crisis began in 2009, weighing on an economy in its sixth year of recession. Unemployment rose to 27.6pc in May from an upwardly revised 27pc in April, according to data from statistics agency ELSTAT. This is more than twice the average rate in the eurozone, which stood at 12.1pc in June, and is the highest reading since Greece's statistics office began publishing monthly jobless data in 2006. This means there are now almost 1.4m people out of work in Greece, and 3.3m people who are considered economically inactive. Joblessness in the 15-to-24 age group jumped to 64.9pc, from 57.5pc in April.

Can Booze Save the U.S. Postal Service? - (danville.patch.com) With the U.S. Postal Service reporting a $740 million loss for the third quarter of 2013, mail officials are scrambling to figure out how to make the agency profitable.  A ingredient to the recovery could be alcohol. According to the Huffington Post, U.S. Postmaster General Patrick Donahoe recently pitched an idea to allow the U.S. Postal Service to deliver beer, wine and spirits directly from wineries, breweries and distilleries straight to your doorstep.  "U.S. law currently prevents the Postal Service from mailing alcohol," the Huffington Post reported. "The Postal Service even asks customers to cover any alcohol-related logos or labels if they choose to use an alcoholic beverage box for shipping." Donahoe claims that adding alcohol delivery could raise $50 million per year. But while the plan could generate dollars in theory, many smaller businesses like craft and microbreweries would likely not have the staff, resources and inventory to meet the demand of alcohol delivery service.

So you think Europe's debt crisis is finally over? Time to think again  - (www.telegraph.co.uk) One of the factors underpinning renewed confidence in the UK economy is the belief that the crisis in Europe is now essentially over. The immediate threat of banking and fiscal meltdown in the southern periphery has receded, and after one of the longest recessions on record – six successive quarters of economic contraction – there are even tentative signs of recovery. Among eurozone policymakers, the relief is palpable. Mario Draghi, president of the European Central Bank, has waved his magic wand and apparently succeeded in calming the economic maelstrom. This is small thanks to the German core, which fought his actions tooth and nail but now seems more than happy to take credit. In any case, with the fear of financial Armageddon removed, European economies can begin the long march back to health. For Britain too, a key uncertainty for the banking and business sectors has been answered.

'Hindenburg Omen' hovering over Wall Street again - (www.cnbc.com) Jittery Wall Street traders are looking up in the sky and seeing Hindenburgs. That can be a bad thing for markets, which have suffered in the past when the tripwires associated with the "Hindenburg Omen" get activated. Market veteran Art Cashin said Monday that the market phenomenon is looming again. "There have been multiple occurrences of the Hindenburg Omen in the last several weeks," Cashin, the director of floor operations at UBS, said in his morning note.

Easy Money Policy Will Lead to World’s Greatest Credit Collapse - (finance.yahoo.com) With home prices rising, consumer confidence at levels not seen since 2008, and record high stock prices, what's not to love about the economic comeback? A lot, according to Steve Hochberg, the chief market analyst at Elliott Wave International, who says the warning signs are mounting that another, even worse, credit crisis is coming and a deep bear market will join it. "There's an age-old cycle that happens, where you have periods ofeasy money, and certain sectors of our economy gorge on the easy credit, and then invariably, when rates start to rise and the economy slows, whoever has been gorging on that easy credit gets into trouble, the economy falters and markets go down," Hochberg says in the attached video. Of particular concern to him are emerging markets, sovereign debt, municipal bonds and student loans, the latter of which is increasingly in the spotlight as recent college graduates face huge debt and weak jobs prospects. "We have $1 trillion worth of student loans out there, and recent studies show that only about 40% of them are actually being paid right now," he warns. "We think this is a huge problem area because as students graduate, there aren't the jobs or the wages to sustain themselves to pay off these loans."






Monday, August 26, 2013

Tuesday August 27 Housing and Economic stories


Eric Holder Owes the American People an Apology  - (www.bloomberg.com) The Justice Department made a long-overdue disclosure late Friday: Last year when U.S. Attorney General Eric Holder boasted about the successes that a high-profile task force racked up pursuing mortgage fraud, the numbers he trumpeted were grossly overstated. We're not talking small differences here. Originally the Justice Department said 530 people were charged criminally as part of a year-long initiative by the multi-agency Mortgage Fraud Working Group. It now says the actual figure was 107 -- or 80 percent less. Holder originally said the defendants had victimized more than 73,000 American homeowners. That number was revised to 17,185, while estimates of homeowner losses associated with the frauds dropped to $95 million from $1 billion. The government restated the statistics because it got caught red-handed by a couple of nosy reporters. Last October, two days after Holder first publicized the numbers, Phil Mattingly and Tom Schoenberg of Bloomberg News broke the story that some of the cases included in the Justice Department's tally occurred before the initiative began in October 2011. At least one was filed more than two years before President Barack Obama took office.

Iron Ore Gluts Seen Through 2017 on Record Supply: Commodities - (www.bloomberg.com) The seaborne iron ore market is poised for at least four years of expanding gluts as producers from Rio Tinto Group to Vale SA increase supply to a record just as growth in China drops to the slowest pace in a generation. The surplus will reach 82 million metric tons in 2014, the most since at least 2008, and the glut will keep growing through 2017, according to Goldman Sachs Group Inc. Australia will account for about 66 percent of the supply gains next year, Morgan Stanley says. Iron ore will average $115 a ton in 2014, 19 percent less than now and the least since 2009, according to the median of 10 analyst estimates compiled by Bloomberg. Prices rose as much as eightfold in the past decade as China added $6.8 trillion to its gross domestic product. The nation now makes almost one in every two tons of steel produced globally. Ore supply failed to keep pace, with shortages in seven of the past eight years, spurring Rio, BHP Billiton Ltd. and Fortescue Metals Group Ltd. to boost output. 

In One Bundle of Mortgages, the Subprime Crisis Reverberates - (www.nytimes.com) A subprime deal came back to haunt Fabrice Tourre, a former Goldman Sachstrader, when a federal jury in Manhattan found him liable for civil securities fraud. He is not the only one feeling the pain of a subprime transaction six years on. Hundreds of thousands of subprime borrowers are still struggling. Some of their mortgages ended up in another Goldman deal that was done at the same time as Mr. Tourre was working on his own financial alchemy. In February 2007, just before everything fell apart, Goldman Sachs bundled thousands of subprime mortgages from across the country and sold them to investors. This bond became toxic as soon as it was completed. The mortgages slid into default at a speed that was staggering even for that era. Despite those losses, that bond still lives. It has undoubtedly left its mark on ordinary borrowers. But the impact of the deal spread ever further. It touched the bankers who sold the deal. It even landed on taxpayers, who ended up owning a large slice of the Goldman bond.

The homebuilding industry's increasingly desperate attempts to preserve HMID - (www.ochousingnews.com)  Like any industry that enjoys an undeserved government subsidy, the homebuilding industry is fighting to keep it. The home mortgage interest deduction does little to increase home ownership rates, particularly among low wage earners, but it does inflate housing prices, especially where high wage earners live. Homebuilders equate high house prices with greater profits and more homebuilding activity, so they are fighting to keep it despite the fact it is very costly to the US taxpayer and does little to boost home ownership rates. Supporters of the home mortgage interest deduction are very worried that Congress will curtail it in the debate over comprehensive tax reform. The National Association of Homebuilders is becoming increasingly vocal — and increasingly desperate — in their attempts to justify this subsidy.