Friday March 25 2016 Housing and Economic stories

TOP STORIES:

Valeant CEO Pearson Will Step Down, Ackman Added to Board - (www.bloomberg.com) Open warfare has broken out at Valeant Pharmaceuticals International Inc.  After a series of conference calls over the weekend, the drugmaker’s directors came out swinging.  They blamed former Chief Financial Officer Howard Schiller for “improper conduct” that contributed to financial misstatements and asked him to resign his seat on the board. He refused, saying he did nothing wrong. Chief Executive Officer Mike Pearson will step down and Bill Ackman, the billionaire investor whose hedge fund has lost hundreds of millions betting on Valeant, will join the board.

This Is What's Going On Beneath the Subprime Auto-Loan Turmoil - (www.bloomberg.com) Never underestimate the creativity of business people in need of new business and investors in need of something in which to invest. After the financial crisis decimated the market for bundled home loans that weren't backed by the U.S. government, bankers and lenders seized on a host of alternative assets that could be sliced and diced and served up to investors. Sales of commercial mortgage-backed securities (CMBS), along with collateralized loan obligations (CLOs) consisting of loans made to junk-rated companies, subsequently surged past their precrisis highs. Bonds backed by auto loans made to riskier borrowers also proved to be a sweet spot for yield-seeking investors and the companies and bankers that sold such debt to them. People might walk away from their homes, so the bull case went, but in the driving culture that is America, very few would ever willingly choose to fall behind on their car payments.

Desperate Chinese Investors Flood US, Canadian Housing Markets, But Real Numbers Are Taboo – (www.wolfstreet.com)  Buying a home in the US or Canada has been an effective way for foreign residents to launder some money and get their wealth out of harm’s way. In the trophy markets on the US West Coast and in the Canadian cities of Vancouver and Toronto, rumors of a massive influx of Chinese money have swirled with growing intensity for years. The Chinese economic elite are worried about a devaluation of the yuan. They’re worried about getting rolled up by their own government. They’re worried about markets collapsing. They’re worried about pollution. They’re worried about a million things. They have one foot out the door. If push comes to shove, they’re ready to make the move. So capital flight from China has turned into a tsunami. And this money has to go somewhere.

Wall Street's Pile of Unwanted Treasuries Exposes Market Cracks - (www.bloomberg.com) The world’s biggest bond dealers are getting saddled with Treasuries they can’t seem to easily get rid of, adding to evidence of cracks in the $13.3 trillion market for U.S. government debt. The 22 primary dealers held more Treasuries last month than any time in the last two years, Federal Reserve Bank of New York data show. While at first glance that may suggest a bullish stance, the surge in holdings is more likely the result of investors including central banks dumping the debt on the firms, said JPMorgan Chase & Co. strategist Jay Barry. Foreign official accounts sold a net $105 billion of the securities in December and January, an unprecedented liquidation, Treasury Department data show.

Petrobras Posts Surprise Loss on Writedowns Amid Oil Rout - (www.bloomberg.com) Petroleo Brasileiro SA, the oil producer at the center of Brazil’s largest corruption scandal, reported a record loss that surprised analysts and sent shares lower. The fourth quarter net loss of 36.9 billion reais ($10.2 billion), caused by unprecedented asset writedowns linked to falling oil prices, compared with an average profit forecast of 3.48 billion reais from six analysts surveyed by Bloomberg. At 46.4 billion reais, the impairments equated to more than a third of Petrobras’s market capitalization and exceeded the equity value of 97 percent of publicly-traded firms in Brazil.

OTHER STORIES:

Deutsche Bank: This Indicator Is Sending Warning Signs for Household Incomes - (www.bloomberg.com)
Corporate profit ride turning into a train wreck - (www.cnbc.com)
Accounting measures helping to boost weak U.S. results: analysts - (www.reuters.com)

ECB, BOJ Seeking to Push Down Exchange Rates, Mervyn King Says - (www.bloomberg.com)
PBOC Sought Information From Fed as Chinese Stock Market Plunged - (www.bloomberg.com)
Moody’s warns bond managers over Valeant - (www.ft.com)