KeNo's Housing and Economic Portal: Thursday December 11 Housing and Economic stories

TOP STORIES:

Shale Liquidations Begin? Sub-$50 Oil Appears In North Dakota - (www.zerohedge.com) When ISIS dared to steal and sell oil at below market rates, they were dire pirates that needed to be destroyed (and anyone who dared to buy it was pariah). So when, as Bloomberg reports, crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28 (according to the marketing arm of Plains All American Pipeline), you know there is an issue in the US Shale industry. As one analyst notes, "to a producer in Wyoming, if Brent’s $70 then I’m at $50, then I have to start asking does it economically make sense to keep drilling, they might start reallocating capital, you might see projects slowed or shut down." So with every expert in financial media clinging to some hope that oil prices can't go down any more surely right? The answer is yes... and have already broken below $50... something that may indicate not just transportation issues, but desparation for crucial liquidity needs.

Five reasons why markets are heading for a crash - (www.telegraph.co.uk) Many stock markets are close to their all-time highs, the oil price is plummeting, delivering a significant boost to Western and Asian economies, the European Central Bank is getting ready for full-scale sovereign QE – or so everyone seems to believe - the American recovery is gaining momentum, Britain is experiencing the highest rate of growth in the G7, God is in his heaven and all’s right with the world. All good, then? No, not good at all. I don’t want to put a dampener on the festive cheer, but here are five reasons to think things are not quite the unadulterated picture of harmony and advancement many stock market pundits would have you believe. The first reason to worry is the curiously juxtaposed state of asset prices, with generally buoyant equities but falling sovereign bond yields and commodity prices. They cannot both be right. High equity prices are – or at least, should be – indicative of investor confidence and optimism. Low bond yields and falling commodity prices point to the very reverse; they are basically a sign of emerging deflationary pressures and a slowing economy. If demand was really about to roar away, both would be rising along with equities, not falling. The markets have become a kind of push-me-pull-you construct. They look both ways at the same time.

Shipping Chokepoint Strangles Ukraine Hopes for U.S. LNG - (www.bloomberg.com) Ukraine’s plan to diminish its energy dependence on Russia is adrift in the Bosporus Strait. The nation, which gets half its gas from Russia, wants to build a liquefied natural gas terminal on the Black Sea and held talks withCheniere Energy Inc. (LNG) to import U.S. cargoes. The only path to the terminal is through Istanbul’s 17-mile waterway. Turkey doesn’t allow LNG shipments through the Bosporus because of safety concerns and congestion. The strait is about half a mile wide at its narrowest point and classified as a maritime chokepoint, among the most difficult to navigate. “If Turkey were to agree to LNG ships transiting the Bosporus to deliver fuel to Ukraine, other states in the Black Sea would also want to invest in their own terminals,” Michelle Berman, the head of shipping and freight research at Business Monitor International in London, wrote in an e-mail Nov. 27. “This would lead to a considerable ramp up in the volume of traffic passing through the already congested Bosporus.”

Sub-$50 Oil Surfaces in North Dakota Amid Regional Discounts - (www.bloomberg.com) Oil market analysts are debating if oil will fall to $50. In North Dakota, prices are already there. Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28, according to the marketing arm of Plains All American (PAA) Pipeline LP. That’s down 47 percent from this year’s peak in June, and 29 percent less than the $70.15 paid for Brent, the global benchmark. The cheaper price for North Dakota crude underscores how geographic and logistical hurdles can amplify the stress that plunging futures prices have put on drillers in new shale plays that have helped push U.S. oil production to the highest level in 31 years. Other booming areas such as the Niobrara in Colorado and the Permian in Texas have also seen large discounts to Brent and U.S. benchmark West Texas Intermediate.

Troubled US homeowners get more government relief - (www.cnbc.com) Homeowners whose mortgages were modified to stave off foreclosure could next year receive an additional $5,000 reduction in their loans from the government, the Treasury and Housing and Urban Development departments said Thursday. The payments would impact roughly 1 million borrowers who received reduced mortgage rates through the Home Affordable Modification Program during the Great Recession. The discounted 2 percent mortgage rates are scheduled to rise by a percentage point for many of these borrowers entering the sixth year of the program. That would increase monthly payments for those who might still be struggling to find work or additional income. The plan announced Thursday is designed to mute the shock from higher interest rates—and thus higher monthly payments—on HAMP borrowers. Nearly two-thirds of the program's borrowers have less than 20 percent equity or owe more on their mortgages than their homes are worth, putting them in a fragile financial situation.

OTHER STORIES:

Black Friday Fizzles With Consumers as Sales Tumble 11% - (www.bloomberg.com)

U.S. factory activity growth slows in November: ISM - (www.reuters.com)

Deflation Is Going To Cause A Scary New Kind of Debt Crisis - (www.businessinsider.com)

The Chinese Economy Is Facing A $6.8 Trillion Nightmare That Could Get Worse - (www.businessinsider.com)