Thursday, April 3, 2014

Friday April 4 Housing and Economic stories


'Summer of discontent' brewing for market: Pro - (www.cnbc.com) This winter-into-spring of geopolitical disturbance could generate a "summer of grumbling discontent" for the global economy, according to one Wall Street forecast. Though markets Monday mostly cheered Crimea's decision to end the uncertainty and align itself with Russia, the saga in that part of the world is likely only taking a breather. As political unrest continues and Russia deals with sanctions from the West, an economic recovery expected to be led by the U.S. and other developing markets could morph into a significant letdown that dampens the spirits of risk-embracing investors. "All-in-all, it feels as if we may be heading into a summer of grumbling discontent, rather than the steady and progressive U.S.-led recovery that had become the consensus view around the start of the year," Mark Schofield, head of interest rate strategy at Citigroup, said in a note.

'A controlled explosion' is happening in China - (finance.yahoo.com) The Chinese yuan took one of its biggest hits in a decade Monday, falling 0.5% per dollar on the first trading after the country announced a policy change. On Saturday the People's Bank of China widened the trading band for the yuan from 1% to 2% a day. "They want to tell speculators that the one-way bet is over," says David Pilling, Financial Times Asia Editor, referring to the billions of dollars in leveraged bets made on the assumption that China's currency could only keep rising. China's new currency policy is also an example of incorporating more market discipline as the country tries to rebalance its economy away from an investment-and export-led model to one more tied to domestic consumption.

U.S. Banks’ $75 Billion Payout at Stake in Fed Tests - (www.bloomberg.com) The biggest U.S. banks are about to learn whether they can pay out more than $75 billion in excess capital to investors as the Federal Reserve completes stress tests of their ability to survive new economic calamities. Wells Fargo & Co. and JPMorgan Chase & Co. would lead a 69 percent increase in dividends and stock buybacks over the next 12 months after the central bank releases results of its annual tests on March 20 and March 26, according to analysts’ estimates compiled by Bloomberg. That’s assuming the companies pass, which some of the analysts say is less than assured. “We know the banks have enough capital, that’s not the question,” Todd Hagerman, an analyst at Sterne Agee & Leach Inc. in New York, said in an interview. “It’s more about whether there is something in the capital-planning process that the Federal Reserve might object to.”

Looming property default in China raises fears of broader crisis - (www.telegraph.co.uk) Nomura said the number of ghost towns has spread beyond the well-known disaster stories of Ordos and Wenzhou to at least eight other sites. China faces the biggest property default on record as credit curbs threaten to break the housing boom, leaving a string of “ghost towns” across the country. The Chinese newspaper Economic Daily News said Xingrun Properties, in the coastal city of Ningbo, is on the brink of collapse with debts of $570m, mostly owed to banks. The local government has set up a working group to contain the crisis. “As far as we know, this is the largest property developer in recent years at risk of bankruptcy,” said Zhiwei Zhang, from Nomura. “We believe that a sharp property market correction could lead to a systemic crisis in China, and is the biggest risk China faces in 2014. The risk is particularly high in third and fourth-tier cities, which accounted for 67pc of housing under construction in 2013,” he said.

New doomsday poll: 99.9% risk of 2014 crash - (www.marketwatch.com)  But long term? What’s really ahead for America in 2014? Warning, something bigger is hiding in the deep shadows of our collective brain. At a recent lunch with an old friend, one of the world’s more successful commodities traders, he confirmed that “something” was dead ahead. But not just another brief statistical shift in sentiment. Not a medium-term volatility shift. America, the world, are in a historic transition, a paradigm shift, a mysterious upheaval that few will grasp till it moves further along. More losses? How bad? Worse than 2000 and 2008? Yes. Wall Street, Main Street, Washington, the global economy, will all be knocked off-center. Traders are focusing on St. Patrick’s Day for guidance, below S&P 1,850, Dow 16,400, with a downturn accelerating after a macroeconomic news event in mid-April. For Wall Street’s short-term thinkers, all easy to dismiss, they make money on the action, up or down. But this trader’s track-record says listen. His predictions fit our polls. The underlying reason is simple: Yellen’s policy is to keep printing cheap money. Remember last summer: Bernanke still in power? Wall Street feared Summers would hurt bonuses. Gross screamed, “QE must end.” Yet market kept rising. Pimco lost. Gross was off-center. His partner Mohamed El Erian left. Gross’s confusion was just one of many signs of a fundamentally flawed monetary policy dating back to Greenspan and Reagano.






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