Monday, November 3, 2014

Tuesday November 4 Housing and Economic stories


Wyly Widow Was Insolvent After Billionaire’s Death - (www.bloomberg.com) Texas businessman Charles Wyly had “no significant life insurance” when he died in a 2011 car crash, leaving his widow insolvent and dependent on family in the midst of a U.S. regulator’s fraud lawsuit against her husband’s estate, bankruptcy records show. Caroline “Dee” Wyly, 81, exhausted the liquid assets in the estate and can no longer tap the remaining funds to pay for living expenses or litigation, her lawyer said in a filing two days ago in U.S. Bankruptcy Court in Dallas. The investor’s widow, known in Texas for her philanthropy in education and performing arts, filed a Chapter 11 petition on Oct. 23, citing financial fallout from the Securities and Exchange Commission case against her husband in Manhattan. She isn’t accused of wrongdoing. “Dee’s income following the death of Charles -- while substantial -- was completely inadequate to pay the costs of maintaining the assets she now was responsible for,” her lawyer said in the filing. “Dee has managed to continue to pay her expenses only through the kindness of family.”

Funds buckle up for redemption surge - (www.ft.com) In Hollywood’s classic All About Eve, Margo Channing, played by Bette Davis, tells guests at a dinner party to “fasten your seat belts, it’s going to be a bumpy night”, as she begins to load up on drinks. Bumpy times have returned to global capital markets, but cautious investors are wise to steer clear of the liquor, and instead are loading up on US Treasuries. Extolled for their liquidity and haven status, a renewed rush into government bonds this past month has come at the expense of money flowing into equities as investors wait for calmer conditions and greater clarity over the global economy and central bank policy. As fund managers owning corporate bonds also increase their Treasury holdings, analysts question whether this is a strategic bet or simply an indication investors are preparing for periods of market volatility that could lead to large redemptions.

U.S. Banks See Worst Outflow of Money in ETF Since 2009- (www.bloomberg.com) The Financial Select Sector SPDR (XLF), an exchange-traded fund targeting banks and investment firms, had the biggestwithdrawal last week since 2009 amid concern that low interest rates and market swings will hurt profits. Investors pulled $913.4 million from the $17.5 billion ETF, whose top holdings include Berkshire Hathaway Inc. (BRK/B), Wells Fargo & Co. and JPMorgan Chase & Co. (JPM), a shift that turned its flow of funds negative for the year. About 143 million shares of the ETF have been borrowed and sold to speculate on declines, the most since June 2012, according to exchange data compiled by Bloomberg. Banks have waited for years for higher rates and more robust trading to boost revenue from lending and market-making. Weaker-than-expected global growth could prompt the U.S. central bank to slow the pace of eventual interest-rate increases, Federal Reserve Vice Chairman Stanley Fischer said Oct. 11. The severity of market swings this month also boosts the risk that banks will incur losses while facilitating client bets, and it may slow mergers and acquisitions.

Sales slowing at New York’s top condo tower – (www.cnbc.com) The building known as One57 has ruled over New York real estate when it comes to height, price and public relations. But now, sales at One57 may be coming back down to earth. The 1,004-foot tower looming over the southern edge of Central Park held the title as the highest residential tower in New York until this month, when it was eclipsed by the 1,396-foot luxe tower 432 Park Avenue. Some of the buzz around One57 sprung from reports that its two penthouses each sold for $90 million—said to be a record. Bill Ackman, the billionaire hedge funder, told The New York Times that he and a group of friends bought one of the penthouses "just for fun"—and for flipping. But the reality of One57's sales may be a little less stratospheric than its image. According to public filings from One57's developer, the building only sold two units in the entire first half of 2014. Yes, about 75 percent of the building's 92 units are sold, but at the current sales rate, it would take more than six years to sell the remaining units, according to Jonathan Miller, president and CEO of appraisal company Miller Samuel.

Chinese developers roll out gimmicks as sales slump - (www.cnbc.com) Chinese developers are turning to offbeat marketing gimmicks and give-aways as they battle to shift massive inventories of unsold homes and survive the country's biggest economic slowdown since the global financial crisis. Discounts can still run into the hundreds of thousands of dollars but instead of smashing competitors on price, the emerging trend for Chinese property marketing is simply to create a buzz around new projects, analysts said. "Consumers are too used to price cuts and promotions like 'buy one get one free', so they want new gimmicks," real estate consultancy Knight Frank senior director Thomas Lam said. The strategy leaves developers' already squeezed margins largely intact, while making buyers feel like winners. "Although there are many innovative promotions in the market, they translate to an average discount of 10 percent; it's not that big," industry consultant China Real Estate Information Corp analyst Fang Ling said.





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