Wednesday June 8 2016 Housing and Economic stories

TOP STORIES:

This is how the Houston Office Market is Melting Down - (www.wolfstreet.com) ConocoPhillips lost $4.4 billion last year and $1.5 billion in Q1 this year. Last fall it announced that it would lay off 10% of its global workforce. Its stock has crashed nearly 50% since the oil bust began. And in February, it slashed its quarterly dividend from 74 cents to 25 cents a share. That’s the new reality. But before that reality set in, it was planning for endless growth. To accommodate the workforce required by this endless growth, it leased some office space in Houston years before it would need the space. The office market was tight, and leasing unneeded space was the thing to do. They all did it. Befuddled with optimism, oil and gas companies fought each other over leasing empty office space they might never need, and this created huge fake demand, price spikes, and a boom in development that created a flood of supply of office towers, particularly for the energy sector. They were all “warehousing” office space. With lease rates going up forever, it was hyped as the smart thing to do. But warehoused office space is the “shadow inventory” that appears on the market overnight, without warning, on top of a growing mountain of available space.

Italy's 5-Star protest party likely to seize Rome in setback for PM  - (www.reuters.com)  Italy's anti-establishment 5-Star Movement looked likely to take charge of Rome after country-wide municipal elections at the weekend, piling pressure on Prime Minister Matteo Renzi ahead of a vital constitutional referendum due in October. With the Rome count almost complete, 5-Star candidate Virginia Raggi, a 37-year-old lawyer running her first campaign, led with just over a third of the vote, ahead of the candidate from Renzi's center-left Democratic Party (PD) with a quarter. The race will be decided by a run-off vote on June 19. Renzi voiced disappointment on Monday at the results but cautioned against reading too much into local elections, where issues ranged from garbage collection to traffic congestion.

Pine River Shuttering $1.6 Billion Fixed Income Fund - (www.zerohedge.com) Following a brief surge of hedge fund closure announcements in late 2015 and early 2016, there had been a lull in hedge fund shutterings in recent months, as the smart money community had benefited from the dramatic jump in the S&P500 to just shy of all time highs. That changed moments ago when Reuters reported that hedge fund Pine River Capital Management is closing its Pine River Fixed Income fund and returning roughly $1.6 billion in assets to investors just two months after Steve Kuhn, one of the fund's co-managers, left the firm.

China's Debt Load Is (Much) Higher Than Previously Thought, Goldman Says – (www.bloomberg.com) Count total social financing (TSF) as another Chinese statistic of increasingly dubious value, according to analysts at Goldman Sachs Group Inc. With many investors grappling to understand the degree to which China's economic growth has been fueled by debt, efforts to get a grip on measures of new credit creation have gained fresh urgency. To date, many have relied on the TSF invented by the Chinese authorities in 2011 as a way of capturing a larger slice of the country's shadow banking activity, but Goldman analysts led by M.K. Tang cast fresh doubt, in a note published on Wednesday, on the measure's ability to gauge credit creation. They identify a discrepancy between China's official TSF and Goldman's new proprietary estimates of credit, describing the increasing difference as "an uncomfortable trend that has gotten more discomforting."

After the Lending Club Debacle, what’s Next for P2P Lending? - (www.wolfstreet.com) The New York Department of Financial Services sent a letter to 28 online lenders, requesting information about their online lending activities, “according to a person familiar with the matter,” Reuters reported on Saturday. The lucky recipients include Prosper, the second-largest online lender after beleaguered Lending Club, but also Avant, Funding Circle, and Upstart. Online lenders have been able to bypass banking regulations so far because they get their money for funding loans directly from retail and institutional investors, and/or from securitization of their loans, rather than from depositors. But now, after the Lending Club debacle, regulators have woken up. Reuters: The department demanded “immediate compliance” with New York licensing requirements for debt collection, money transmission, and mortgage lending activities, according to a copy of the letter reviewed by Reuters.

OTHER STORIES:

After grim payrolls, focus turns to economy - (www.reuters.com)
Fed's Mester says gradual rate hikes still appropriate after jobs report - (www.reuters.com)
U.S. flexes muscles as Asia worries about South China Sea row - (www.reuters.com)
Taiwan Calls on China to Heal Tiananmen Wounds, Seek Democracy - (www.bloomberg.com)

Gulf Stocks Mixed as Ramadan Heralds Trading’s ‘Empty Period’ - (www.bloomberg.com)
China’s Regional Funding Fix Leaves Questions for S&P, Moody’s - (www.bloomberg.com)
U.S., China Making ‘Great Progress’ in Currency Talks, Lew Says - (www.bloomberg.com)
Kerry warns Beijing over air defense zone for South China Sea - (www.reuters.com)
'We have no fear of trouble': China talks tough over South China Sea - (www.cnn.com)