Tuesday February 2 2016 Housing and Economic stories

TOP STORIES:

Schlumberger Loses $1 Billion, Raises Layoffs to 30,000, Doubles Share Buybacks to $20 Billion - (www.wolfstreet.com)  The warning came on December 1, 2015 in an SEC filing in which Schlumberger, the world’s largest oil-field services company, disclosed a charge of $350 million for the fourth quarter. It would cover the costs of an unspecified number of new job cuts in 2016 – as the filing said, “in light of expected reduced activity for 2016 and to streamline its support structure.” At the time, Patrick Schorn, president of operations, explained in a speech that “it has become clear that any recovery in activity has been pushed out in time,” and that therefore, those job cuts would “further right-size the organization based on the activity outlook for 2016,”

Investors pull billions from stock funds for 3rd straight week: Lipper - (www.reuters.com) Investors yanked $5.2 billion from stock mutual funds in the United States during the sharply volatile week that ended Jan. 20, Lipper data showed on Thursday, marking three consecutive weeks of outflows. World stocks and corporate credits came under severe selling pressure as oil sank below $27 a barrel to its lowest level since 2003. High-yield junk bond funds were at the epicenter of the market anxiety, and they posted $2 billion in outflows, their third straight week not taking in net new money, according to Lipper. "It's been a bad start to the year across the board," said Lipper research analyst Pat Keon. "With that type of volatility it seemed to be a lot of emotion-based trading out there that's causing these swings."

In Emerging Markets, Capital Controls Are Ratcheted Up to Stem Outflow of Funds - (online.wsj.com)  A number of emerging markets are taking a risky approach to dealing with growing pressure on their currencies: They’re trying to ban it. Oil-dependent Azerbaijan said this week it would slap a 20% tax on any transaction that takes money out of the country. Saudi Arabia told banks with branches there to stop allowing traders to make certain bets on further depreciation of its currency, the riyal. Nigeria recently halted imports of goods including rice and toothpicks and imposed spending limits on credit and debit cards denominated in foreign currency. The capital controls are aimed at deterring or slowing the outflow of money and reducing the downward pressure on currencies that traders are betting have farther to fall. But they also risk exacerbating the problem by driving away foreign investors who bristle at limitations on the flow of capital and hurting businesses that need to hedge.

Leaky lifeboat: Weak U.S. corporate profits offer no rescue to sinking stocks - (www.reuters.com) Investors who hoped U.S. corporate earnings could dig stocks out of their deep hole may find themselves sorely disappointed. The outlook for corporate profits continues to deteriorate, and earnings growth is now unlikely to revive before the summer. Thanks to rapidly dimming forecasts for energy, materials, finance and technology sectors, year-over-year profit declines for Standard & Poor's 500 companies are now expected until the second quarter of 2016 at the earliest, according to data from Thomson Reuters Proprietary Research. That would make three straight quarters of profit declines, the longest streak in the red for earnings since the Great Recession.

Junk Bond Market Braces for What Could Be a $117 Billion Logjam - (www.bloomberg.com) When credit markets were booming, investors snatched up longer-term bonds from energy and mining companies, among others. They may have made a big mistake. Some $117 billion of the securities maturing in 10 years or more could be cut to junk by the end of 2017, strategists at UBS Group AG estimate, more than twice the amount currently outstanding in that market. Holding a bond that loses its investment-grade rating is not usually fun. Owning long-term bonds that get cut to junk could be especially painful for investors -- many of the current holders will have to sell them, and few junk bond portfolio managers want to take the risk of lending to speculative-grade borrowers for more than a decade.

OTHER STORIES:

Soros: China Hard Landing Is Practically Unavoidable - (www.bloomberg.com)

As Chinese defaults rise, private placements sweep risks under mat - (www.reuters.com)
Investors sour on Abenomics as global gloom deepens - (www.reuters.com)

Who’s afraid of cheap oil? - (www.economist.com)
Economic Unease Puts Top Central Bankers Under Renewed Pressure - (online.wsj.com)
The tiny shifts that can signal huge changes - (www.ft.com)