Wednesday August 31 2016 Housing and Economic stories

TOP STORIES:

Dear Congress: Have You Received Money From These Pharma Companies - (www.zerohedge.com)  We have been following the latest melodrama involving a "greedy" Mylan, and numerous "humanistic" US politicians, all the way up to the Democratic presidential candidate, exchange blows over the company's dramatic price increases of its EpiPen anti-allergy medication, with a healthy dose of amusement for one simple reason: if Congress wants to crack down on someone, it should crack down on itself. After all, the only reason Mylan has been able to pass the kinds of price increases that Congress is now blasting it for, is because of US laws and regulations; laws which incidentally, have been determined in Washington's backroom bribe parlor, i.e. the corner offices of thousands of local lobby organizations dispensing with billions of dollars in "client" funds. Clients such as the companies listed below. Which brings us to this question: dear Congress, have you received millions in lobby dollars from the US pharmaceutical industry.

The canary in the coal mine for China’s currency - (www.ft.com) The People’s Bank of China’s foreign reserves have stopped falling and the spread between China’s onshore and offshore exchange rates has almost vanished. The currency’s resilience, however, is unlikely to last. In particular, the amount of offshore renminbi deposits, having peaked last year when the currency was devalued, has continued to shrink this year despite the exchange rate becoming more stable again. The diminishing size of the offshore market is the canary in the mine, warning that renewed currency turbulence is likely in future. Holding the currency outside the mainland, however, allows investors to gain exposure to China’s economy without incurring its capital controls. The persistent decline in offshore deposits — down by nearly a third to $180bn over the past year — thus shows confidence in the currency remains fragile.

A Look at Some Companies Struggling With Rising Debt - (abcnews.go.com) U.S. companies are sitting on hundreds of billions of cash, so you might think they are in great financial shape. The reality is different, and worrisome. Most of the cash is held by precious few companies, a mere 1 percent of 2,000 tracked by S&P Global Ratings. At the remaining 99 percent, finances have generally gotten worse in recent years. Many have increased debt dramatically while their cash has barely risen, or even fallen, among other signs of potential trouble. Here is a look at five companies whose finances have weakened recently, according to Moody's Investors Service, a credit-rating firm that assigns grades to companies based on their likelihood of paying back what they owe. The companies are either one rating change away from receiving a "junk" grade, which would make them too risky for many investors, or have already achieved that status.

Money Market Dysfunction Helps Fuel U.S. Corporate Bond Bonanza - (www.bloomberg.com) U.S. companies feeling pain in short-term debt markets are seeking relief by borrowing longer term, pushing already-high levels of corporate bond issuance toward fresh records. Google parent Alphabet Inc. and food processor Archer-Daniels-Midland Co. are among the companies that have sold more than $5 billion of corporate bonds in the past two months to pay off at least part of their short-term debt known as commercial paper. They’re looking to tame their interest expenses after new regulations have lifted some issuers’ borrowing costs for near-term debt to seven-year highs. The changes underscore how money-market rules that take effect in October are distorting debt markets. Total sales for corporate bonds maturing in more than eighteen months are around $950 billion this year, above levels for this time in 2015 and on track to beat the full-year record of about $1.3 trillion, according to data compiled by Bloomberg. Commercial-paper markets, where debt typically matures in 270 days or less, have shrunk by $108 billion since May, according to Federal Reserve data.

Toxic Mix in Asset Bubble Nirvana Hits Hedge Funds - (www.wolfstreet.com) The toxic mix of crummy performance and high fees are having some impact. And it’s big money: The hedge fund industry has over $3 trillion under management. And some of this money is getting antsy. In July, hedge funds experienced net outflows of an estimated $25.2 billion, the largest monthly net redemption since February 2009 ($28.2 billion), according to an eVestment report cited by Bloomberg. In June, hedge funds got hit with net outflows of $23.5 billion. In March, redemptions had hit $7 billion, and in January $20 billion. With some inflows in the remaining three months, total outflows for 2016 so far amount to $55.9 billion. “Unless these pressures recede, 2016 will be the third year on record with net annual outflows,” according to eVestment’s report. The other two years were 2008 and 2009.

OTHER STORIES:

Stocks Decline on Emerging-Market Risk as U.S. Drugmakers Tumble - (www.bloomberg.com)
Hedge Funds See Biggest Redemptions Since ’09 as Returns Lag - (www.bloomberg.com)
These Nine Charts Show Just How Quiet the Market Is Right Now - (www.bloomberg.com)

Productivity in the U.S. Looks Bad, But It's Golden Compared With Global Peers - (www.bloomberg.com)
China’s Central Bank Moves to Clamp Down on Speculation - (www.wsj.com)
Top Currency Strategy of 2016 Turns Perilous on Political Risks - (www.bloomberg.com)
The Federal Reserve Needs New Thinking - (www.wsj.com)