On
This Day In History, The Baltic Dry Index Has Never Been Lower - (www.zerohedge.com) Must be over-supply too, right? Just like oil
prices... The Baltic Dry Index - which apparently is only relevant when it is
rising - has never been lower at this time of year. Perhaps GDP
expectations, bond yields, crude oil prices, and credit risk are on to
something about the global economy after all?
Perhaps GDP expectations, bond yields, crude
oil prices, and credit risk are on to something about the global economy after
all?
Obama
to reduce FHA mortgage premium rate to spur buying - (www.denverpost.com) First-time homebuyers who obtain
government-backed loans would benefit from an Obama administration move to
lower mortgage insurance premiums. Under the plan, the Federal Housing
Administration will reduce its annual mortgage insurance premiums by half a
percentage point, to 0.85 percent. The White House said Wednesday the reduction
means new homebuyers would pay $900 less a year than they would without the
change. The rate-drop announcement will be a centerpiece of President Barack
Obama's trip to Phoenix on Thursday. Obama is making stops in Michigan, Arizona
and Tennessee this week, drawing attention to the themes he intends to
highlight in his State of the Union address Jan. 20. The lower insurance fees
would have a modest impact on sales, with the administration forecasting an
increase of as much as 250,000 over the next three years. That pales in size to
the broader market, representing an increase of less than 2 percent a year in
projected sales. Homeowners who refinance into an FHA mortgage also would
benefit from the change. The White House estimated that more than 800,000
homeowners could save.
Too
Little Inflation Is A Bigger Risk Than Too Much Inflation Right Now - (www.businessinsider.com) The
highly anticipated post-meeting statement from the Federal Reserve (Fed) on
December 17 brought about an intense debate over the semantics of “considerable
time” and “patient,” but the central bank revealed no specific timeline for an
interest rate increase even as it prepares the financial markets for the
normalization of monetary policy. However, we take the Fed language to mean a
continuation of monetary accommodation, at least in the interim. But something
else stood out in the Fed’s statement: the many references to inflation, which
emphasized the central bank’s concerns about the lack of healthy price growth.
Inflation is a classic “Goldilocks” economic situation. You don’t want too
much, or too little, but just the right amount.
Renters'
paychecks hit hard in priciest cities - (www.cnbc.com) San Francisco may be the priciest U.S. city for
renters, but apartment dwellers in New York and Los Angeles pay an even bigger
share of their paychecks—more than half—to the landlord each month. Renters in
St Louis, meanwhile, spend less than a quarter of their paychecks on housing,
according to the latest data from real estate website Trulia. And most renters
in the priciest cities shell out an even bigger share of their paychecks, as
rent hikes continue to outpace salary increases. Last year, renters saw the
biggest hits in Denver (up 14 percent), Oakland (12 percent), San Francisco (11
percent) and New York (9 percent). The increase in rents are being fueled, in
part, by strong demand for apartments thanks to a stronger job market that is
helping millennials stranded by the Great Recession in their parents' basements
move out on their own, according to Trulia Chief Economist Jed Kolko.
Can
Sears be saved? CEO's REIT plan faces complications - (business.financialpost.com) Tax
rules and concerns about Sears Holdings Corp’s tenuous financial condition may
force CEO Eddie Lampert to do a complicated dance as he plans to spin off the
retailer’s best real estate into a separate trust. Last month, the troubled
retailer and its chief executive disclosed plans to form a real estate
investment trust (REIT) that would acquire as many as 300 Sears stores and
lease them back to the retailer. This, CreditSights estimated, could help Sears
raise US$2.6 billion, providing a critical cash injection. But based on a
Reuters analysis of the proposed REIT and interviews with commercial real
estate experts, potentially large ownership stakes held by Lampert and others
could conflict with U.S. tax rules designed to prevent small groups from having
voting control of a REIT. Sears’ financial woes might also create
complications, legal experts said. Sears has lost more than US$6 billion over
the past four years, and some credit analysts have warned of a possible
bankruptcy in the long run. Fitch Ratings, for example, warns the retailer
could run out of money in 2017. Given that risk, the spinoff must be structured
so it could stand up to scrutiny under federal provisions discouraging certain
transfers of major assets prior to any bankruptcy.
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