Tuesday December 13 2016 Housing and Economic stories

TOP STORIES:

US Shale Set To Kill Oil-Price Rally - (www.wolfstreet.com) The resurgence of U.S. shale will undermine the OPEC-fueled price rally, capping oil prices at roughly $50 per barrel through 2017. That is the conclusion from the EIA’s latest Short-Term Energy Outlook, which forecasts WTI to average $50.66 per barrel and Brent to average just $51.66 per barrel next year. The agency also cast doubt on OPEC’s ability to follow through on its deal. The extent to which the announced plans will be carried out and actually reduce supply below levels that would have occurred in their absence remains uncertain. But even if they do, any price rally above $50 per barrel will merely spark a revival in U.S. shale drilling, which will “encourage a return to supply growth in U.S. tight oil more quickly than currently expected.” In other words, the OPEC deal won’t fuel the sustained rally that oil bulls have hoped for.

Portland "Orecrats" Target Income Inequality: Pass Massive 25% Tax On Corps With "Excessive CEO Pay" - (www.zerohedge.com)  Liberals in the city of Portland Oregon have put their foot down against income inequality. The “Orecrats” are not going after CEOs, but rather corporations that have CEO salaries the “Orecrats” deem excessive. The tax penalty on corporations is as much as 25%. Please consider Portland Adopts Surcharge on C.E.O. Pay in Move vs. Income Inequality. Moving to address income inequality on a local level, the City Council in Portland, Ore., voted on Wednesday to impose a surtax on companies whose chief executives earn more than 100 times the median pay of their rank-and-file workers.

AAA Ratings Return for Securities Backed by Riskier Home Loans - (www.bloomberg.com) Two ratings firms are assigning AAA grades to bonds backed by riskier, recently made home loans, one of the few times since the financial crisis that such securities have won top marks. Fitch Ratings and DBRS Inc. are giving ratings to more than $210 million of bonds backed by loans made by Caliber Home Loans, a unit of Lone Star Funds, and by mortgages from Sterling Bank & Trust and LendSure Mortgage Corp, according to documents obtained by Bloomberg. The bonds are partially backed by home loans in which a lender verified a borrower’s income with bank statements rather than tax returns. Another ratings firm, Moody’s Investors Service, recently called out those types of mortgages as risky.

China’s forex reserves drop $70bn as outflow accelerates - (www.ft.com) China’s foreign exchange reserves fell nearly $70bn last month as the country’s central bank burnt through more of its war chest in its battle to defend the renminbi from greater depreciation on the back of accelerating capital outflows. Reserves at the People’s Bank of China fell $69.1bn to $3.051tn in November, a decline of 2.2 per cent from the previous month and the largest drop since a 3 per cent fall in January. A survey of economists had forecast a decline of only 1.9 per cent from October. Analysts predict Beijing will continue tightening capital controls, measures that European and US businesses say have disrupted their operations.

Traders Caught Up in Wall Street Probes Switch to Shadow Banking - (www.bloomberg.com) Some mortgage bond traders tangled up in investigations are moving into the shadow banking system, where their new employers have greater latitude to hire people with blemishes on their records. More than 20 traders at big banks left their jobs, or were pushed out, amid a wave of U.S. government and internal bank probes into misconduct in the trading and pricing of mortgage bonds and other complex debt in recent years, according to a Bloomberg review of employment records. Many of those professionals caught in the dragnet since 2013 are finding their records tarnished even if they were never charged or left voluntarily. At least 10 have ended up at online lenders, privately held brokerages, and other less-regulated firms, interviews and documents show.  

OTHER STORIES:

There's a New Normal in China's Debt Market - (www.bloomberg.com)
JPMorgan Hit Hardest as EU Fines Euribor Trio $521 Million - (www.bloomberg.com)
China warns US on Taiwan leader's planned transit - (www.cnbc.com)
As Beijing Battles to Keep Yuan at Home, Chinese Prepare to Sell - (www.wsj.com)

China’s Yuan and the Trillion-Dollar Numbers Game - (www.wsj.com)
How ECB chiefs will be reading markets ahead of QE vote - (www.ft.com)
The pros and cons of a renminbi devaluation - (www.ft.com)