KeNo's Housing and Economic Portal: Tuesday February 16 2016 Housing and Economic stories

Monday, February 15, 2016

Tuesday February 16 2016 Housing and Economic stories

Glencore Credit Rating Cut to Lowest Investment Grade at S&P - (www.bloomberg.com) Glencore Plc’s credit rating was cut to the lowest investment grade at Standard & Poor’s as the assessor downgrades a raft of commodities producers following a rout in prices. The company’s rating was cut to BBB- from BBB because of lower forecast prices for key commodities such as copper, S&P said in a statement. The downgrade reflects “the very challenging market outlook and the increased uncertainty about demand,” it said, adding that the outlook on Glencore’s rating was stable. A Glencore spokesman declined to comment. S&P’s move follows a decision by Moody’s Investor Service in December to cut the miner’s rating to the lowest investment level. S&P said Glencore’s financial profile in 2015 was well below its expectations.

Credit Suisse Drops as Investment Bank Slump Deepens Losses - (www.bloomberg.com) Credit Suisse Group AG shares slumped to a two-decade low as bigger-than-expected restructuring charges and trading losses prompted investors to question Chief Executive Officer Tidjane Thiam’s plan to turn around the company. The shares dropped as much as 13 percent on Thursday in Zurich after the bank posted a fourth-quarter loss of 5.8 billion Swiss francs ($5.8 billion), worse than analysts’ estimates. Global markets, which houses most of the Zurich-based firm’s trading business, had the biggest quarterly loss among the company’s divisions as Thiam cited “legacy positions” hurt by jittery markets.

Thanks to Banks, Italy Stocks Reverse Peer-Beating 2015 Gain - (www.bloomberg.com) Italian stock bulls who hung in there after the FTSE MIB Index’s stellar run in 2015 are now feeling the sting. The country’s benchmark gauge has suffered a whiplash-inducing reversal, going from one of the best to the absolute worst among developed markets in a little over a month. The biggest problem is the lenders, which represent almost a quarter of the index: worries about bad loans and European Central Bank scrutiny have sent Banca Monte dei Paschi di Siena SpA and Unione di Banche Italiane SpA down more than 40 percent this year.

Toxic Loans in China Weigh on Global Growth - (www.nytimes.com) Beneath the surface of the global financial system lurks a multitrillion-dollar problem that could sap the strength of large economies for years to come. The problem is the giant, stagnant pool of loans that companies and people around the world are struggling to pay back. Bad debts have been a drag on economic activity ever since the financial crisis of 2008, but in recent months, the threat posed by an overhang of bad loans appears to be rising. China is the biggest source of worry. Some analysts estimate that China’s troubled credit could exceed $5 trillion, a staggering number that is equivalent to half the size of the country’s annual economic output.

CCC-Rated Junk-Bond Yields hit 20%, Blow Past Lehman Moment, Consensual Hallucination Wanes - (www.wolfstreet.com) Late yesterday was a propitious moment. And today, when the index was updated, it became official: The average yield of junk bonds rated CCC or below, the bottom tier of the rating scale, hit 20%. Yields soar when bonds get crushed. The last time the average yield of those bonds jumped to 20%, on September 30, 2008, all heck had already broken loose. Lehman Brothers had gone bankrupt 15 days earlier. Liquidity had dried up. Banks were lining up to be toppled. Panic was breaking out. Today, there’s no panic.

Four Days After Predicting Oil Will Double, T. Boone Pickens Sells All Oil Holdings – (www.zerohedge.com) Just four days ago, on Monday afternoon, "legendary" oilman T Boone Pickens said that crude has hit bottom at $26 per barrel, and predicting that prices should double within 12 months. Pickens then doubled-down on his wrong call from last year, telling CNBC's "Squawk Box" that oil prices will rise to at least $52 per barrel by the end of the year. That said, he was at least honest enough to admit that his virtually identical call from last year, when he thought prices would strongly rebound, was wrong. Whether it's $50 or $70 by the end of 2016 will largely be determined by the global economy, he added reiterating the same flawed thesis he used to justify his bullishness a year ago: "We're still building inventories, and we will for the next several months. And then we'll start to draw," Pickens said. "Once you start to draw, you're not going to start back building again. The draw will come here in the next few months. It'll become pretty clear."

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