Tuesday September 6 2016 Housing and Economic stories

TOP STORIES:

Global Supply Chains Paralyzed After World's 7th Largest Container Shipper Files Bankruptcy, Assets Frozen - (www.zerohedge.com) After years of relentless decline in the Baltic Dry index today the largest casualty finally emerged on Wednesday when South Korea's Hanjin Shipping, the country's largest shipping firm and the world's seventh-biggest container carrier, filed for court receivership on Wednesday after losing the support of its banks, leaving its assets frozen as ports from China to Spain denied access to its vessels. For those unfamiliar with the company, here is a brief overview from its website: Hanjin Shipping is Korea's largest and one of the world’s top ten container carriers that operates some 70 liner and tramper services around the globe transporting over 100 million tons of cargo annually. Its fleet consists of some 150 containerships and bulk carriers.

“If You Own a Home in Palo Alto, CA, Sell it Now” - (www.wolfstreet.com) In Palo Alto, a small town of about 67,000 souls, including Facebook CEO Mark Zuckerberg, about an hour south of San Francisco, in the middle of Silicon Valley, and part of the 9 million people in the vast Bay Area, the median home value in July, according to Zillow, fell to $2.486 million. That’s still up 103% from July 2011. These are not palaces. Median price means 50% cost more, 50% cost less. These are modest homes, in theory where the median household can settle down. Drop to $1 million, and you get the “million dollar shack.” But the median price is up only 1.6% from July last year, and down 0.5% from the peak in April of $2.5 million, a tiny fraction really – “tiny fraction” in Palo Alto means $14,000. The median listed price per square foot, at $1,357, is down 7% from June.

U.S. Farm Incomes to Hit Lowest Level Since 2009 - (www.wsj.com) U.S. farm incomes will hit their lowest point this year since 2009, the U.S. Department of Agriculture said Tuesday, deepening pain in the Farm Belt amid a multiyear downdraft in commodity prices. The forecast reflects a painful slump in the U.S. agricultural economy driven by bumper corn and soybean harvests, swelling grain inventories and tougher export competition. Farmers are expecting record corn and soybean harvests again this fall, potentially pushing prices for the nation’s two most common crops down even further. As a result, the USDA said, net farm income will drop 11.5% to $71.5 billion this year, from $80.7 billion in 2015. That would be the third straight annual pay cut for farmers since incomes soared to record levels in 2013.

Fear Spreads Of A Housing Crash In Canada – (www.zerohedge.com) In Vancouver’s once white-hot commercial real estate market, the hunt is now on for Chinese buyers as big institutional investors are trying to unload. More Canadians sour on their Magnificent Housing Bubble. Canadians have been gung-ho about their magnificent housing bubble, feeding it with an endless willingness to pay every higher prices, even as regulators and international institutions issued warnings, as short sellers began circling, as subprime liar-loan scandals made their reappearance, and as a generation was getting priced out of the hottest housing markets in Canada, the metros of Toronto and Vancouver, and as locals came up with an acronym to describe what has fired up the market: HAM – Hot Asian Money. But the Vancouver housing bubble, the hottest even in Canada, hit rough waters in early summer. By July the first serious troubles appeared.

This Is How Leverage in the Financial System Lives On  (www.bloomberg.com) Rumors of leverage's death have been greatly exaggerated. In the aftermath of the 2008 financial crisis an abundance of leverage — borrowed money used to amplify returns — was blamed for exacerbating losses on subprime mortgages and contaminating the banking system with catastrophic results. Since then a host of new rules have been enacted to reduce financial leverage, including penalizing certain derivatives positions, such as the credit default swaps (CDS) villainized in the crisis, as well as outright curbing the amount of borrowing allowed at big banks.  While such efforts have made substantial steps in derisking the financial system — especially at large lenders — they've also encouraged the creation of new types of leverage and its migration to different players. Today, much leverage appears to sit on the balance sheets of large and small investors, often fueled by the need to generate returns amidst ultra-low interest rates and high correlations that see asset classes move together and make it more difficult to produce outperformance, known as 'alpha.'

OTHER STORIES:

Dollar Advances as Treasuries Decline on Interest-Rate Outlook - (www.bloomberg.com)
Emerging Currencies Rebound With Shares After U.S. Stocks Rally  - (www.bloomberg.com)
Consumer Confidence in U.S. Climbs to an Almost One-Year High - (www.bloomberg.com)
Home Prices in 20 U.S. Cities Climbed 5.1%, Led by Northwest - (www.bloomberg.com)

Fed's Evans, citing slow growth, says low U.S. rates are here to stay - (www.reuters.com)
China P2P Industry ‘Basically’ a Scam, Billionaire Guo Says - (www.bloomberg.com)
This Is the Quietest Stock Market in Decades - (www.wsj.com)
Japan Defense Ministry Seeks Record Budget as China Threat Grows - (www.bloomberg.com)