KeNo's Housing and Economic Portal: Monday September 22 Housing and Economic stories

Sunday, September 21, 2014

Monday September 22 Housing and Economic stories

Emerging-Market Distressed Bonds Have Worst Month in Year (www.bloomberg.com) Emerging-market distressed debt had its worst month in more than a year in August amid banking turmoil in South Africa and Turkey, a coal-industry rout and the conflict in Ukraine. The bonds tumbled 5 percent, the biggest decline since a 6.54 percent loss in June 2013, according to Bank of America Merrill Lynch’s Distressed Emerging Markets Corporate Plus index. That leaves the gauge, which was little changed in July, poised for its first quarterly retreat since the April-to-June period last year. African Bank Investments Ltd., South Africa’s biggest provider of unsecured loans, was rescued by the central bank on Aug. 10, while Islamic lender Asya Katilim Bankasi AS (ASYAB) of Turkey faces more rating cuts as depositors pulled their money. Notes sold by the two lenders were among the biggest losers that included Czech coal producer New World Resources Plc and Ukraine farm group Mriya Agro Holding AG. The emergency support given to African Bank “was a big shock because it was the first investment-grade credit event we had in South Africa,” said Bronwyn Blood, a Newlands, South Africa-based money manager at Cadiz Asset Management Pty.

From Chocolate to Beer, Shrinkflation Is Unseen Pressure - (www.bloomberg.com) “Shrinking the size of goods is exactly what happened in the 1970s just before inflation proper set in,” she writes in her new book, “Signals: The Breakdown of the Social Contract and the Rise of Geopolitics.” It also explains why people are so agitated by a higher cost of living, writes Malmgren, who founded London-based DRPM Group, a consulting firm. Take the Dairy Milk bar produced by Kraft Foods (KRFT)Group Inc.’s Cadbury unit. In 2011, the company lopped two squares of chocolate from the snack, holding the price unchanged. At the time, the company cited rising costs. Last year, it made the corners of the bar more rounded, reducing the weight. The U.K. consumer group Which? turned up other examples in a study it conducted last year. It found boxes of Nestle SA (NESN)’s Shredded Wheat cereal had shrunk to 470 grams from 525 grams yet still cost 2.68 pounds ($4.45).

Trader Who Scored $100 Million Payday Bets Shale Is Dud - (www.bloomberg.com) Andrew John Hall - known as the God of Crude Oil Trading to some of his peers -- has built his success on a simple creed: Everyone who disagrees with him is wrong. For most of the past 30 years, that has been a killer strategy. Like a poker player on an endless hot streak, Hall has made billions for the companies for which he’s traded by placing one aggressive bet after another. He was one of the few traders who anticipated both the run-up in and the eventual crash of oil prices in 2008. Hall was so good that he bagged a $98 million payday in 2008, when he ran Citigroup Inc.’s Phibro LLC trading unit, and was up for about $100 million more in 2009. In the end, Bloomberg Markets will report in its October 2014 issue, he couldn’t collect the 2009 payout from Citi because an anti–Wall Street backlash against the bank -- which had just received a $45 billion U.S. government bailout -- led regulators to block it. No such bonuses have awaited Hall of late. He’s racked up losses in two of the past three years.

Bank Liquidity Rules Excluding Munis Set for Approval - (www.bloomberg.com) U.S. regulators adopted requirements for the level of high-quality, liquid assets banks must stockpile to survive a 30-day liquidity drought, a major step in efforts to prevent a repeat of the 2008 credit crisis. Big banks are said by the Federal Reserve to be about $100 billion short of $2.5 trillion in easy-to-sell assets they need to meet the standards approved today by the Fed and Office of the Comptroller of the Currency, and set for a Federal Deposit Insurance Corp. vote. Municipal bonds are excluded from the category of assets banks can use to reach the target. The agencies also will propose a rule on collateral for swaps traded outside of clearinghouses and wrap up rules on how much loss-absorbing capital must be held against total assets.

France Folds; Suspends Shipment Of Russian Warship - NATO Allies Pleased - (www.zerohedge.com) France is suspending the delivery of the 1st of 2 hulking Mistral warships to Russia amid security concerns about Moscow's actions in neighboring Ukraine, AP reports President Francois Hollande's office said Wednesday. Hollande's change of mind - as he begs Draghi to devalue the EUR and Schaeuble to lift the deficit limits in Europe - comes at a time when the French economy can hardly cope with losing a few billion (which he previously said was too costly to cancel) but as he explains, Russia's recent actions harm "the foundations of security in Europe." We will see what Hollande got for this... or how he was blackmailed - but for now NATO allies have commented that they "welcome the French Mistral sale suspension."

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