KeNo's Housing and Economic Portal: Monday January 27 Housing and Economic stories

TOP STORIES:

Congress Makes NASA Finish Useless $350 Million Structure - (www.bloomberg.com) NASA will complete a $350 million structure to test rocket engines at Stennis Space Center in Mississippi early this year. Then, it plans to mothball the 300-foot-high, steel-frame tower for the foreseeable future. The reason: Congress ordered the National Aeronautics and Space Administration to finish building the facility even though the agency doesn’t need it. The tower was designed to test aGenCorp Inc. (GY) engine for a rocket program canceled in 2010. Its funding survived thanks to Mississippi Republican senators led by Roger Wicker, who crafted a provision requiring the agency to complete the work. The test stand is an example of how U.S. lawmakers thwart efforts to cut costs and eliminate government waste, even as they criticize agencies for failing to do so. Attempts to close military bases, mail-processing plants and other NASA facilities also have been fought by congressional members whose districts benefit from the operations.

Toys ‘R’ Us Investors Show Doubt of Repayment - (www.bloomberg.com) Toys “R” Us Inc. is paying the highest yields among 16 issuers of CCC+ rated bonds as investors grow dubious the retailer with three years of falling profit will repay or refinance $2.85 billion of debt due through 2016. The company’s $450 million of 10.375 percent notes maturing in August 2017 yield 15.9 percent, 9.69 percentage points more than the average for the top tier of CCC bonds in the Bank of America Corp. U.S. High Yield Super Retail Index. A 15 percent yield indicates a 33 percent risk of default within one year, according to Martin Fridson, chief executive officer of FridsonVision LLC, a New York research firm specializing in high-yield debt. Toys “R” Us stands at the brink almost nine years after KKR & Co., Bain Capital LLC and Vornado Realty Trust (VNO) took it over in a $6.6 billion 2005 leveraged buyout as competition intensifies from more diversified retailers such as Wal-Mart Stores Inc. and online vendors including Amazon.com Inc. The yield on the 2017 notes rose from 7.44 percent in May as net income at the world’s largest toy-store chain turned negative on a trailing 12-month basis in each of the last two quarters, making it harder to service $5.6 billion of debt.

Hunt for Food Sends Venezuelans to Colombian Border Towns - (www.bloomberg.com) Socialist principals at work!! Venezuelan taxi driver Jose Sotomayor drives four hours through army checkpoints every week from the city of Maracaibo to buy rice in Colombia for his family at 10 times the government-set price back home. “You can’t get anything in the shops here, I don’t even bother going to them for basics anymore,” Sotomayor, 39, said in a phone interview. “All of our food is taken to Colombia, it’s like a locust plague.” Sotomayor hasn’t seen rice for sale in the shops of Venezuela’s second-largest city since July, as smugglers snap up the staple for a maximum of 7.2 bolivars ($1.14) per kilogram, just $0.11 at theblack market exchange rate. While many Venezuelan shelves go bare, the country’s rice exports to Colombia have doubled this year and now represent 11 percent of the market, according to the U.S. Foreign Agricultural Service and Colombian rice growers association Fedearroz.

E-Mails Link Christie Deputy to Request for Closed New Jersey Bridge Lanes - (www.bloomberg.com) A top aide to Chris Christie told a Port Authority of New Yorkand New Jersey executive that it was “time for some traffic problems” a few weeks before unannounced lane closings on the George Washington Bridge backed up miles of road in a town whose mayor didn’t endorse the governor. Bridget Anne Kelly, deputy chief of staff for legislative and intergovernmental affairs, sent the message to David Wildstein, a Christie authority appointee on Aug. 13, according to e-mails obtained today. Wildstein, who ordered the closings, replied: “Got it.”

The Most Reliable Indicator Of An Approaching Market Top - (www.forbes.com) I have pointed out in the past that if you remove the earnings of financial firms in the S&P 500, there would have been no earnings growth in 2013. Furthermore, much of the rise in the indices has been produced by stock buybacks (see Why Are Stocks Rising?). That’s when companies buy their own stock in the market place. It reduces the number of shares outstanding, and thus boosts the earnings per share. It also boosts the stock price, which benefits management that has stock options. Therefore, could we say that the stock market rise is based on false assumptions and a foundation of quicksand? The “distribution” process seems to have already started. That’s when the big, smart money managers, which includes the proprietary trading of the large Wall Street firms, sell even while the stock indices are rising. They can’t sell large amounts in a declining market. We detect that with our indicators.

OTHER STORIES:

200 Years of American Financial Crises - (www.nytimes.com)

Eurozone fails to shake off record high unemployment - (www.telegraph.co.uk)

Low Inflation Worries the Euro Zone - (www.nytimes.com)

Here's how bad China's bad loan problem could get - (finance.yahoo.com)

Eurozone losing 'safety margin' against deflation trap - (www.telegraph.co.uk)