KeNo's Housing and Economic Portal: Thursday September 3 Housing and Economic stories

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Stock Rout Snowballs in Asia After U.S. Dethroned; Crude Tumbles - (www.bloomberg.com) The weakest Chinese manufacturing data since the global financial crisis accelerated a selloff in riskier assets, sending the Standard & Poor’s 500 Index toward the worst week since 2012. European shares entered a correction while emerging-markets stocks faced the biggest weekly drop in more than three years. Equities in Hong Kong, Indonesia and Taiwan entered bear markets and junk bond yields globally rose to the highest since October 2012. Oil was set for its longest weekly losing streak since 1986 and copper extended a rout that has sent it to the lowest price in more than six years. Investors sought safety in the yen. The S&P 500 dropped 1.5 percent at 12:01 p.m. in New York, after briefly dropping below 2,000 for the first time since February. With the steepest decline in 18 months yesterday, the index’s two-day loss is the biggest since June 2013. The S&P 500 is down more than 5 percent from a record for the first time this year, after sinking below a trading range that has supported it for most of the year.

Feels like 1986: Oil on track for longest weekly losing streak in 29 years - (www.reuters.com) U.S. oil prices dived again on Friday, threatening to dip below $40 a barrel for the first time since the financial crisis and notching their longest weekly losing streak since 1986, as a drop in Chinese manufacturing rattled global markets. World stock and currency markets joined an extended rout across raw materials this week, a slump accelerated on Friday by data showing activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August. With deepening gloom over demand growth from the world's second-biggest oil user, and expectations for a significant build-up in surplus oil stocks this autumn, dealers said most oil traders were unwilling to fight the tide. "The market is stuck in a relentless downtrend," said Robin Bieber, a director at London brokerage PVM Oil Associates. "The trend is down - stick with it."

Outflows from EM bond funds hit 86 week high - (www.ft.com) Large slides in emerging market currencies and stocks mean these markets are hardly the most alluring, and investors continued to flee them this week as outflows from EM bond funds surged to an 86 week high. Outflows from EM equity funds hit a five week high of $6bn and have now lost more than $40bn this year, according to data from fund flow specialists EPFR and Bank of America Merrill Lynch. The outflows are further evidence of a mass exodus from emerging market assets that has driven capital outflows past the $1tn mark in the last 13 months, roughly double the amount that left during the financial crisis, writes Joel Lewin. Around $4bn poured out of Asian equity funds excluding Japan, with Chinese funds the biggest loser in a week that saw the Shanghai Composite slide 11.5 per cent, its worst week since the start of July. Redemptions from Chinese bond funds set a new weekly record, and outflows from EM bond funds surged to an 86 week high.

Puerto Rico Finds Waning Demand for Water Bonds Amid Debt Talks - (www.bloomberg.com) Puerto Rico is running into resistance as the commonwealth tries to sell $750 million in bonds while crafting a debt-restructuring plan that would likely leave some investors with deep losses. After aiming to price the Puerto Rico Aqueduct & Sewer Authority issue as early as Tuesday, the bond sale is now listed as day-to-day. That’s even after adding bondholder protections and raising the preliminary yield levels to more than three times the level of benchmark securities. “It’s a pretty difficult thing to try to raise money when out of the other side of your mouth you’re talking default and trying to pass laws that allow you to default,” said Matt Dalton, chief executive officer of Rye Brook, New York-based Belle Haven Investments, which manages $3 billion of municipal securities, including Puerto Rico debt. He doesn’t plan to buy any of the water bonds.

What "Smart" Money? Hedge Funds Underperform Market For Seventh Straight Year – (www.zerohedge.com) Every year we point out that under central planning, alpha no longer matters since it is all about how much liquidity, er beta - smart or otherwise - central bankers can inject. And every year we tell those who have a burning itch to be in the rigged market to just buy the SPY - with the Fed as your chief risk officer, there is no need to hedge, and when the Fed finally loses control, no covering of shorts will be allowed anyway. This overarching philosophy was confirmed overnight when Goldman reported that "hedge funds are on pace to lag the market index for the seventh straight year in 2015." But... but... one should compare hedge funds to their benchmark not the S&P, underperforming hedge fund managers will scream. Hey, whatever lets you sleep at night, just don't tell that to Claren Road which was outperforming its benchmark, but was down a measly 5.6% until mid-August when it got 50% of its AUM redeemed. Petulant pleadings aside, this is how the "average" hedge fund is busy earning its 2 and 20, or 0.5% and 10% as the case is increasingly becoming.

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