KeNo's Housing and Economic Portal: Friday August 22 Housing and Economic stories

Thursday, August 21, 2014

Friday August 22 Housing and Economic stories

Europe's tough new regime for banks fails first test in Portugal - (www.telegraph.co.uk) Controversial bailout of Banco Santo Espirito has left taxpayers on the hook for €4.9bn. Portugal’s rescue of Banco Santo Espirito has left taxpayers on the hook for large potential losses, sparing senior bondholders in the first serious test of the EU’s tougher rules for bank failures. The controversial €4.9bn (£3.9bn) bailout over the weekend set off a relief rally on the Lisbon bourse, with bank stocks soaring. It also set off a political furore as opposition parties accused premier Pedro Passos Coelho of bending to the banking elites. “We live in a democracy, not a bankocracy. It is unacceptable for the prime minister to take money from the salaries of workers and pensions, and funnel it to a private bank,” said Catarina Martins, leader of the Left Bloc.

Warning: That plunge in stocks is just the beginning - (www.marketwatch.com) If the ups and downs of the past week have taught investors anything, it’s that there are cracks in this 5 1/2-year-old bull market. The lesson for investors? Tread carefully. Stocks took a tumble as a raft of economic data sparked fears the Federal Reserve could speed up its timetable for raising interest rates. The S&P 500 index took its biggest weekly hit in more than two years, losing 2.7%. The Dow Jones Industrial Average, meanwhile, sliced through its 50-day moving average and erased the gains that had tenuously built up this year. “It reminded people that the stock market can actually go down. It seems like a lot of people had forgotten,” said Mike O’Rourke, chief market strategist at JonesTrading.

Espirito Santo Sets Benchmark for Creditor Pain in EU Bank Rules - (www.bloomberg.com) The decision shielding some creditors spurred a rally in bank stocks and Portuguese assets yesterday as it demonstrated authorities were able to shutter a bank without sparking a fresh bout of market tensions that have roiled Europe since 2009. Instead of forcing losses on unsecured depositors and other senior creditors, as was required of Cyprus, Portugal is following Spain’s gentler approach that focused losses on junior debt and stockholders. “This is bad for the bank’s shareholders and creditors, but it’s good for the wider banking industry,” said Stefan Bongardt, a European banking analyst at Independent Research GmbH in Frankfurt. “Everyone knows the rules of the game now and that draws uncertainty out of the market.”

China Services Index Falls to Record Low - (www.bloomberg.com) China’s service industries stagnated in July as a private index fell to a record low, suggesting the government’s stimulus measures are failing to gain traction outside of manufacturing. The services Purchasing Managers’ Index declined to 50.0, the dividing line between expansion and contraction, from June’s 53.1, HSBC Holdings Plc and Markit Economics said today. A similar official gauge released Aug. 3 dropped to a six-month low of 54.2.

IBM’s Chip-Making Business Is Doing So Poorly, It Wanted To Pay $1 Billion To Get Rid Of It - (www.businessinsider.com) IBM’s chip-manufacturing unit has been struggling so poorly in recent years that Big Blue was willing to pay up to $1 billion to get rid of it, Bloomberg reported Monday. According to the report, IBM had offered GlobalFoundries $1 billion in cash to take over its chip-making business, but the deal fell through when GlobalFoundries asked for $2 billion instead.

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