KeNo's Housing and Economic Portal: Monday December 14 Housing and Economic stories

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Billionaire Kinder's Pipeline Giant Plunges as Junk Status Looms - (www.bloomberg.com) Billionaire Rich Kinder owned about 11 percent of Kinder Morgan Inc. valued at more than $10 billion in June when he stepped down as chief executive of the company he co-founded. Now his stake is worth about $5 billion less, and the company that has his name on the door has become the worst-performing pipeline stock in the S&P 500. Kinder, who remains as board chairman, thought he was giving a boost to his oil and gas shipping empire last year when he consolidated his collection of companies to form the largest pipeline operator in North America. Instead, Kinder Morgan has lost half its value this year as growth-hungry investors sour on what they see as a slow-moving, debt-laden behemoth that will have difficulty expanding during an industry downturn that’s dragging down most energy companies.

What BTG Pactual's Mounting Crisis Means for Brazil and Beyond - (www.bloomberg.com) In the ranks of global financial institutions, Grupo BTG Pactual SA is a minnow with a balance sheet smaller than Cleveland-based KeyCorp’s. To a Brazilian economy already in peril, it seems much bigger. The firm’s charismatic founder was arrested last week and ceded control Wednesday of the nation’s largest independent investment bank. As its leaders began selling assets to stave off liquidity concerns, the bank’s shares and bonds continued to slide, bringing those of rivals down with it. Markets already are unnerved by an economy that has slumped into what Goldman Sachs Group Inc. declared an “outright depression” and by President Dilma Rousseff’s battle against attempts to oust her. The Nov. 25 arrest of BTG founder Andre Esteves in a nationwide corruption probe and the subsequent downgrade of the firm to junk are giving investors more to worry about. “A bank is obviously very entrenched in all financial sectors so we don’t know where this is going to go,” Pablo Goldberg, a money manager and strategist for BlackRock Inc.’s emerging-market debt team, said in an interview in New York. “From an investor point of view, that is a factor that you need to have in mind. It has balance-sheet implications for some of the credits we follow. It also has business-sentiment implications for the country.”

Templeton Bond Guru Sees Pain Coming for Complacent Debt Traders - (www.bloomberg.com) Franklin Templeton’s Michael Hasenstab says his bond-market peers aren’t prepared for higher U.S. interest rates. “A lot of investors have gotten very complacent and comfortable with the idea that there’s global deflation and you can go long rates forever,” Hasenstab, whose flagship Templeton Global Bond Fund sits atop Morningstar Inc.’s 10-year performance ranking, said in an interview on Bloomberg Television. “When that reverses, there will be a lot of pain in many of the bond markets.” Hasenstab, whose contrarian investment approach has delivered annualized returns of about 8 percent over the past decade, said his portfolio has a negative duration in the U.S., meaning that he’s positioned to make money from rising interest rates. He’s bullish on emerging markets, including Malaysia and Mexico, where he sees currencies that have been unfairly punished this year. The ringgit is Asia’s worst performer of 2015 with a 17 percent drop against the dollar, while the Mexican peso has weakened 11 percent.

Gross Says `De-Risk' Portfolios as Wile E. Coyote Time Nears - (www.bloomberg.com) Bill Gross says investors should move to protect their money in 2016 rather than reach for higher returns as central bank efforts to stimulate the global economy set the stage for markets to ultimately fall. Gross, the former manager of the world’s largest bond fund who joined Janus Capital Group Inc. last year, said central bankers have been doing the equivalent of printing money and acting like gamblers who keep doubling bets to recoup losses. “One day the negative feedback loop on the real economy will halt the ascent of stock and bond prices and investors will look around like Wile E. Coyote wondering how far is down,” Gross wrote in an investment outlook Thursday for Denver-based Janus. Wile E. Coyote is a cartoon character who unsuccessfully hunts the fleet bird Road Runner, injuring and humiliating himself through his ineptitude.

More woes for Brazil bonds after impeachment report - (www.reuters.com) Investors were keeping a cautious eye on Brazil again Wednesday after the local press reported that impeachment proceedings had been opened against embattled President Dilma Rousseff. While the news broke late in the day, the sovereign's 2025s inched about a 1/4 point lower to hit around 85.50-85.75, while five-year CDS was being quoted at around 453bp. "The news has still got to sink in," one broker told IFR. The move is likely to complicate the Brazilian credit story at a time when the arrest and resignation of BTG Pactual CEO Andre Esteves last week has sent its bond prices reeling. "In the short term this will increase uncertainty," said Pablo Cisilino, a portfolio manager at Stone Harbor.

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