KeNo's Housing and Economic Portal: Tuesday October 20 Housing and Economic stories

TOP STORIES:

Total Collapse In Interest For Oil Assets: Brazil Oil Auction Is Near Complete Failure - (www.zerohedge.com) Brazil, which is caught in a vicious recessionary spiral which is only set to get much worse before it gets better, tried to obtain some much needed cash when earlier today it conducted an auction to sell exploration rights for of its oil and gas. It was, in short, a disaster. According to Reuters, by midday Brazil had only sold 17 of 119 blocks offered. Companies made no bids at all for blocks offered in four of six basins, including areas in the prolific Campos Basin, Brazil's top producing region, and the offshore Camamu-Almada and Espirito Santo basins. Worse, the auction sold just 2 of the 10 blocks for sale in the Sergipe-Alagaos basin, which had been expected to be one of the most fiercely contested. The winning bidders had no competition.

Hedge funds suffer worst month since October 2008 - (www.ft.com) Hedge funds have suffered their biggest monthly monetary loss since the 2008 financial crisis in the wake of market turbulence that battered the portfolios of some of the industry’s best-known investors. The sector as a whole lost $78bn due to its performance in August, the worst monthly absolute fall in assets since October 2008 — the month following the collapse of Lehman Brothers — according to research by Citi. “The only thing that seemed to work was cash. Of course that’s the one thing they [the hedge funds] don’t have,” said Paul Brain, head of fixed income for Newton Investment Management and a former credit hedge fund manager. Some of the worst hit were funds that specialised in stock picking, with David Einhorn’s $11bn Greenlight Capital having lost 17 per cent up to the end of September, Daniel Loeb’s $17bn Third Point down about 4 per cent and Bill Ackman’s Pershing Square Holding vehicle down double digits over the summer.

Banks' Glencore Exposure Is a $100 Billion `Gorilla,' BofA Says - (www.bloomberg.com) Global financial firms’ estimated $100 billion or more exposure to Glencore Plc may draw more scrutiny as regulatory stress tests approach after the commodity giant’s stock plunge this year, according to Bank of America Corp. Bank shareholders and regulators may be concerned that Glencore’s debt and trade finance deals, of which a “significant majority” are unsecured, will reveal higher-than-expected risk and require more capital once the lenders are put through U.S. and U.K. stress tests, BofA analysts said Wednesday. Adding an estimated $50 billion of committed lines to the company’s own reported gross debt, the analysts say financial firms’ exposure may be three times larger than Glencore’s reported adjusted net debt of less than $30 billion. “The banking industry may have significantly more exposure to Glencore than is generally appreciated in the market,” analysts including Alastair Ryan and Michael Helsby said in a note titled “The $100 Billion Gorilla In the Room.” The commodity-price bust and “stress in Glencore’s share price and debt spreads may spur a review by investors, supervisors and bank management,” while “bank shareholders may pressure managements to reduce exposures,” they said.

Oil Drillers Hunker Down for More Pain One Year Into Bear Market - (www.bloomberg.com) A year after oil sank into a bear market, the industry is still hunkering down for a long period of low prices, with Europe’s biggest producer seeing only the first glimpses of a recovery. In the past five months, U.S. production sank by 590,000 barrels a day, or more than 6 percent. The bad news: Drillers are cutting costs with a speed and brutality not seen in decades, enabling many oil producers to maintain output even as prices remain low. Goldman Sachs Group Inc. sees crude falling a further $10 a barrel as storage tanks fill up in the coming months. Royal Dutch Shell Plc is planning for a long stretch of low prices, Chief Executive OfficerBen Van Beurden said at the Oil & Money conference in London. While he sees “the first mixed signs for recovery,” the resilience of the U.S. shale industry and ample stockpiles suggest it’ll take more time to rebalance demand and supply, the CEO said.

Putin Has Just Put An End to the Wolfowitz Doctrine - (www.zerohedge.com) In 1991, [powerful neocon and Iraq war architect Paul Wolfowitz] was the Undersecretary of Defense for Policy – the number 3 position at the Pentagon. And I had gone to see him when I was a 1-Star General commanding the National Training Center. And I said, “Mr. Secretary, you must be pretty happy with the performance of the troops in Desert Storm.” And he said: “Yeah, but not really, because the truth is we should have gotten rid of Saddam Hussein, and we didn’t … But one thing we did learn [from the Persian Gulf War] is that we can use our military in the region – in the Middle East – and the Soviets won’t stop us. And we’ve got about 5 or 10 years to clean up those old Soviet client regimes – Syria, Iran, Iraq – before the next great superpower comes on to challenge us.”

OTHER STORIES: