KeNo's Housing and Economic Portal: Monday August 1 2016 Housing and Economic stories

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Contagion from Italy’s Bank Meltdown Spreads - (www.wolfstreet.com) Without a taxpayer-funded bailout that directly contravenes the Eurozone’s new bail-in rules, the world’s oldest surviving bank, Monte Dei Paschi, could soon be out of business. Shares of the decrepit financial entity have long been reduced to a penny stock. So far this year, they’ve lost 78% to close on Tuesday at an inconsequential €0.28. The closer it comes to its end, the louder the calls for its rescue. Last week saw two out of three of the members of the institutional triad formerly known as the Troika — the ECB and the IMF — lend their support to a taxpayer funded bailout of Italy’s banking system. So, too, did the biggest U.S. bank by assets, JP Morgan Chase. All that was needed was for Europe’s most influential bank, New York-based Goldman Sachs, to give its blessing. That came on Monday in a report whose conclusion is fittingly Goldman-esque: saving Italy’s banks is not just necessary; it would be a bargain for all concerned.

IRS Launches Investigation Of Clinton Foundation – (www.zerohedge.com) IRS Commissioner John Koskinen referred congressional charges of corrupt Clinton Foundation “pay-to-play” activities to his tax agency’s exempt operations office for investigation, The Daily Caller News Foundation has learned. The request to investigate the Bill, Hillary and Chelsea Clinton Foundation on charges of “public corruption” was made in a July 15 letter by 64 House Republicans to the IRS, FBI and Federal Trade Commission (FTC). They charged the foundation is “lawless.” The initiative is being led by Rep. Marsha Blackburn, a Tennessee Republican who serves as the vice chairwoman of the House Committee on Energy and Commerce, which oversees FTC. The FTC regulates public charities alongside the IRS. The lawmakers charged the Clinton Foundation is a “lawless ‘pay-to-play’ enterprise that has been operating under a cloak of philanthropy for years and should be investigated.”

Hedge funds suffer $20.7bn net outflows in June - (www.ft.com) Global hedge funds suffered net outflows of $20.7bn in June, as investors pulled more of their money out despite improved performance from most managers. After inflows in April and May, the withdrawals took total aggregate net redemptions for the second quarter to $10.7bn, according to data from eVestment, marking the third consecutive quarter in which money has left the sector. This represents the longest sequence of quarterly outflows since the second quarter of 2009, suggesting that investor dissatisfaction with managers’ performance and fees may be intensifying. In the first three months of 2016, hedge fund redemptions were the worst seen in any quarter for seven years, as investors withdrew more than $15bn, according to data from Hedge Fund Research. Large insurers such as AIG and MetLife and pension funds including the New York City Employees’ Retirement System have all recently cut or reduced their hedge fund allocations.

Japan to double fiscal stimulus to 6tn yen - (www.nikkei.com) Japan looks to inject 6 trillion yen ($56.7 billion) in direct fiscal outlays into the economy over the next few years, double the amount initially planned. The fiscal stimulus package, to be funded through a supplementary budget, the fiscal 2017 spending plan and other lending facilities, will be announced as early as Aug. 2. The Ministry of Finance firmed up the plan on Monday. An earlier draft presented to Prime Minister Shinzo Abe included 3 trillion yen in central and local government spending, but the amount was doubled in light of calls for more generous spending from the government and ruling party lawmakers. Funding will come in several stages. The supplementary budget for fiscal 2016 will likely provide around 2 trillion yen, including 1.3 trillion yen or so for public works. The fiscal 2017 national budget will set aside more. The overall package, including loans to businesses, could exceed 20 trillion yen.

Oil Majors Lost One Engine; Now the Second One Is Sputtering - (www.bloomberg.com) If Big Oil was a two-engine airplane, you could say it’s been flying on a single engine since energy prices crashed in 2014. Now, the second motor is sputtering. The major integrated oil companies, including Exxon Mobil Corp., Total SA and BP Plc, have relied on their so-called downstream businesses, which include refining crude into gasoline, oil trading and gas stations, to cushion the losses on their upstream units, which pump crude and natural gas. “The crash in oil prices in late 2014 brought refineries worldwide a pleasant surprise: booming margins,” said Amrita Sen, chief oil analyst at consulting firm Energy Aspects Ltd. in London. “But now, the market is changing.” BP, the first major to report second-quarter results, showed the impact on Tuesday. The British company said its downstream earnings fell to $1.51 billion from $1.81 billion in the first quarter and $1.87 billion a year ago. Refining margins were the weakest for the April-to-June period in six years, BP said.

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