KeNo's Housing and Economic Portal: Wednesday September 14 20916 Housing and Economic stories

Tuesday, September 13, 2016

Wednesday September 14 20916 Housing and Economic stories

Loan Stress: Missed Home-Equity Payments Spell Trouble for Mortgages, Credit Cards - (www.wsj.com) Borrowers who are falling behind on their home-equity lines of credit are also missing payments on other loans, new data show. At issue are the home-equity lines of credit, or Helocs, that are switching from requiring interest-only payments to principal as well. As more borrowers’ monthly payments spike, delinquencies on those Helocs are rising and resulting in a domino effect of missed payments on regular mortgages and credit cards. Some 1.9% of borrowers whose Helocs reset between December 2014 and March 2015 were at least 90 days behind on Heloc payments by the end of last year, according to a report Thursday from credit-reporting firm Experian. That’s up from a 0.1% delinquency rate as of December 2014.

Deutsche Bank: Bond Investors Are About to Get Crushed as a New Global Cycle Kicks Off - (www.bloomberg.com) Weak growth, higher inflation, and stagnant productivity in developed countries will roil bond investors in the decades to come, as the benign global forces that have buoyed returns on financial assets for the past 35 years stage a sharp reversal. That's the big-picture call from Deutsche Bank AG analysts who predict an oncoming lurch towards trade and financial protectionism — combined with aging populations and weak worker output — will intensify financial repression as a new multi-decade-long economic cycle kicks off this year. "In our opinion we're getting closer to a binary outcome for the global economy and financial markets," the strategists, led by Jim Reid, wrote in a report on Thursday. Now, there's an inflection point in the global economy that is poised to create a perfect storm for bond investors: higher inflation, and strengthening political incentives to erode high debt burdens by hitting bond holders with effective haircuts, the bank argues.

Dell-EMC to Lay Off 2,000 – 3,000 US Workers after Requesting 5,000 H-1B Visas & Green Cards to Import Foreign Workers – (www.wolfstreet.com) The ink was barely dry on Dell’s acquisition of EMC, the largest technology deal ever, valued at $67 billion when it was announced in October last year – and already the layoff rumors are oozing from the woodwork. “People familiar with the company’s plans” told Bloomberg that Dell will cut 2,000 to 3,000 jobs. Dell spokesman Dave Farmer refused to comment specifically on the report on Thursday but said instead, as sort of a confirmation: “As is common with deals of this size, there will be some overlaps we will need to manage and where some employee reduction will occur.”

North Dakota Governor Activates National Guard Against Pipeline Protest - (www.zerohedge.com) Previously peaceful protests at the construction site of the Dakota Access pipeline have officially been militarized. North Dakota Governor Jack Dalrymple has called on the state’s National Guard to reinforce law enforcement at the construction site where Native American protesters are currently blocking further development. Over the weekend, peaceful protests turned violent after security guards from G4S, a British mercenary group, unleashed dogs on the demonstrators, provoking a confrontation the media spun as violently aggressive on the part of those protesting. The scuffle ensued after construction workers allegedly destroyed sacred Native American burial sites. However, video from the scene tells a different story — one of provocation from proponents of pipeline security.

Canada's housing bubble is now a 'tale of 2 cities' - (www.businessinsider.com) The "two cities" in question are Vancouver and Toronto: the former saw home sales decline by 23% year-over-year in August, while the latter saw home sales surge by 23.5% year-over-year. This divergence "demonstrates that even though the Vancouver market may be softening, there is no sign of any weakness in the country's biggest city [Toronto]," wrote the Capital Economics team, led by chief North America economist Paul Ashworth. "A few commentators tried to link the surge in August specifically with the introduction of the foreign buyer tax in Vancouver, claiming that foreigners were now switching their focus to the GTA. [However,] Toronto home sales (again, seasonally adjusted by ourselves) have been on a steep upward trend since late 2012," they added. It's also worth noting that Vancouver's home sales peaked in February, and have fallen by a cumulative 40% since then, according to data from the Vancouver Real Estate Board, cited by Capital Economics. Moreover, the area's home sales fell by 27% year-over-year in July, which suggests that the recent tax implemented on foreign buyers might not be the primary catalyst in August's drop, according to the team.

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