Sunday, January 31, 2016

Monday February 1 2016 Housing and Economic stories


IPOs Crash, Startup Valuations Plunge, Era Ends - (www.wolfstreet.com)   Box, which tries to fight it out with the big boys in the “cloud” collaboration and file-sharing environment, plunged 7.7% on Tuesday and 3.5% this morning, to $9.07. It had gone public a year ago at an IPO price of $14, jumped to $24.73, and went downhill. It’s down 63% from its instant peak and down 35% from its IPO price. It has been that kind of hell for startup companies. The Renaissance US IPO Index, which tracks newly public companies for two years, peaked in April 2015 and has since plunged 29% as of Tuesday’s close. Behind the scenes, it doesn’t look any better. There have been a spate of startups that recently raised money in a “down round,” where the high-flying “valuations,” negotiated by a handful of people and leaked to the media to create the requisite hype for future rounds of funding, were cut in half.

Europe on the verge of collapse: Soros - (www.bloomberg.com) Billionaire financier George Soros has warned that the European Union is on the "verge of collapse" over the migrant crisis and is in "danger of kicking the ball further up the hill" in its management of the issue which has seen more than a million migrants and refugees arrive in the region in 2015. In an interview with the New York Review of Books, Soros added that the German Chancellor Angela Merkel is key to solving the crisis. Merkel led Europe's response to the migrant crisis, opening Germany to the refugees that had travelled from the Middle East, in particular Syria, to try and find a new home in Europe. The decision by the German leader marked a sea-change in her policy. In the interview, Soros said he welcomed Merkel's move.

Italian banks' bad loans continue to mount - (www.marketwatch.com) The increased levels of bad loans confronting the Italian banking system is raising investors' concerns about the health of the sector, prompting another selloff in local banking stocks on Tuesday. According to data published Tuesday by Italy's banking lobby ABI, Italian banks' gross bad loans, measured at their face value, stood at EUR201 billion in November, 11% higher than the same period a year prior. Gross bad loans were 10.4% of total loans in November, the highest percentage figure since 1996. "The stock of bad loans is only bound to grow in the near future," said Giuseppe Lusignani, vice chairman of risk-management consultancy Prometeia SpA, which estimates that total bad loans will start to decline between the end of this year and the beginning of 2017.

Junk-Bond Risk Gauge Set for Biggest Year-Start Jump Since 2009 - (www.bloomberg.com) A measure of investors’ fear of junk-bond defaults has staged its biggest jump at the start of a year since 2009, when the world was in the midst of a financial crisis, as investors have globally rushed out of riskier assets.  The risk premium on the Markit CDX North American High Yield Index, a credit-default swaps benchmark tied to the debt of 100 speculative-grade companies, surged 87 basis points between Dec. 31 and Wednesday, reaching 564 basis points, the highest level since 2012. That jump was the biggest since the start of 2009, when it rose 227 basis points. A similar index for investment-grade debt also rose to a three-year high. Weakness in North American corporate-bond prices was one piece of larger market turmoil on Wednesday as investors brace for slower growth in China. Global shares are at the verge of entering a bear market, with the Dow Jones Industrial Average sinking nearly 250 points, and oil prices fell to their lowest levels since 2003.  

Ruble Plunges 26% in 90 days, 6% in Two Days, Hits New Low, Government Says to Heck with it - (www.wolfstreet.com)  The ruble plunged 3.8% on Wednesday and another 2.8 on Thursday to a new all-time low of 83.85 to the dollar, at 5:30 PM Moscow time, blowing through the previous catastrophic panic low of December 2014. At the time, the Ministry of Finance and the Central Bank deployed desperate, and ultimately very costly shock-and-awe measures to stop the ruble from spiraling out of control. And it triggered all kinds of drama. On December 16, 2014, the Central Bank announced that it increased its benchmark rate by a brutal 6.5 percentage points to a dizzying 17%, after having already jacked up rates in the prior week to 10.5%. And the Ministry of Finance announced it would begin selling Russia’s crown jewels, its dwindling foreign currency reserves, and with the proceeds mop up rubles.



PBOC Injects Most Cash in Three Years in Open-Market Operations - (www.bloomberg.com)
Asian Stocks Gain as Rebound in Oil Eases Global Equities Rout
- (www.bloomberg.com)
SoftBank's Drop Deepens on Sprint Shares, Debt at Multiyear Lows
- (www.bloomberg.com)
U.S. Stocks Close Lower After Late-Day Rally
- (www.bloomberg.com)

Oil Tumbling Most in Four Months Deepens Gloom for Producers
- (www.bloomberg.com)
Global Bond Downgrades Climb to Highest in Six Years, S&P Says
- (www.bloomberg.com)
These Favorite Hedge Fund Holdings Are Among 2016's Worst Stocks
- (www.bloomberg.com)
Why China Can't Keep a Stock Rally Going
- (www.bloomberg.com)
Gross Says Global Selloff Shows Failure of Central Bank Efforts
- (www.bloomberg.com)

Thursday, January 28, 2016

Friday January 29 2016 Housing and Economic stories


[Evans-Pritchard] World faces wave of epic debt defaults, fears central bank veteran - (www.telegraph.co.uk) The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned. "The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up," said William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS). "Emerging markets were part of the solution after the Lehman crisis. Now they are part of the problem, too." William White, OECD.  "Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he said. "It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something," he told The Telegraph on the eve of the World Economic Forum in Davos.

Here's Why International Business Machines Corp. Stock Dropped To A 6-Year Low - (www.bidnessetc.com)  International Business Machines Corp. (NYSE:IBM) has putting a considerable amount of effort into its cloud and software business units for some time now. Its core business unit has recently been taking a turn for the worse. After a series of bad ratings by analysts, and below par revenue numbers, the company finally had an instance of optimism, when it reported a higher than expected earnings per share (EPS) figure, and revenue, for 4QFY15. The company reported $22.1 billion in revenue, while Street analysts had expected the same to come in at $22.02 billion. EPS was recorded at $4.84, compared to the consensus of $4.81.

Shrinking Sovereign Wealth Funds Are Ducking Davos - (www.bloomberg.com) In the days of the commodity boom a few years ago, oil-rich nations and their petrodollar wealth were the darlings of the World Economic Forum. A panel that included Kuwaiti, Saudi and Russian sovereign-wealth fund officials was one the hottest tickets at Davos in January 2008, just before oil prices surged to $150 a barrel. It was a time when crude producers were accumulating billions of dollars in debt and equities, plus real estate, sports teams and other trophy assets. So influential were the fund managers that a group of bank chiefs told them behind closed doors at the Swiss resort to become more transparent, or risk antagonizing American legislators. Now, with oil below $30 a barrel, the situation has reversed. Instead of buying U.S. Treasuries, British department stores and French soccer teams, producing countries are selling, helping depress already-spooked markets. Only a handful of wealth-fund heads are scheduled to appear at the 2016 annual forum of the rich and powerful. And not one panel is devoted to the topic.

Saudi Arabia Said to Ban Betting Against Its Currency - (www.bloomberg.com) Pressured by plunging oil prices and costly wars in the Middle East, Saudi Arabia moved to stamp out speculation that it might be forced to break the link between its currency and the dollar. Authorities this week ordered banks to limit traders’ ability to bet against against the riyal, whose peg to the dollar has been a bulwark of the kingdom’s economic and financial stability since its introduction three decades ago. Officials aimed “to kill this speculative activity over the sustainability of the riyal peg," Apostolos Bantis, a credit analyst at Commerzbank AG, said by phone from Dubai. "Over time, this measure will lead to an easing of the forwards because it will make it far more risky for investors to do this trade."

Fannie Mae Plunges Below $1, Tumbling 70% From 2015 Peak: Chart - (www.bloomberg.com) Fannie Mae plunged below $1 a share, falling for a seventh straight trading day. The mortgage-finance company, which operates under U.S. conservatorship, declined 10 percent to 99 cents at 9:33 a.m. in New York, compared with a peak closing price last year of $3.31.




Wednesday, January 27, 2016

Thursday January 28 2016 Housing and Economic stories


Exclusive: Dallas Fed Quietly Suspends Energy Mark-To-Market On Default Contagion Fears - (www.zerohedge.com) We can now make it official, because moments ago we got confirmation from a second source who reports that according to an energy analyst who had recently met Houston funds to give his 1H16e update, one of his clients indicated that his firm was invited to a lunch attended by the Dallas Fed, which had previously instructed lenders to open up their entire loan books for Fed oversight; the Fed was shocked by with it had found in the non-public facing records. The lunch was also confirmed by employees at a reputable Swiss investment bank operating in Houston. This is what took place: the Dallas Fed met with the banks a week ago and effectively suspended mark-to-market on energy debts and as a result no impairments are being written down. Furthermore, as we reported earlier this week, the Fed indicated "under the table" that banks were to work with the energy companies on delivering without a markdown on worry that a backstop, or bail-in, was needed after reviewing loan losses which would exceed the current tier 1 capital tranches. In other words, the Fed has advised banks to cover up major energy-related losses.

Indebted Chinese Companies Increase Pressures on Government - (www.nytimes.com) Sainty Marine Corporation started small, buying and selling a few ships in the 1980s. But the state-owned Chinese company went on a debt-fueled binge over the last few years, opening its own shipyards and signing orders worth hundreds of millions of dollars apiece. Now, heavily indebted companies like Sainty Marine are at the center of the economic troubles in China that have unsettled currency, commodity and stock markets of late. Sainty Marine just found itself in court, as one of China’s biggest banks asked to dismantle the company to recoup overdue loans. Government regulators are investigating the accuracy of the company’s financial reports, its bank accounts have recently been frozen and its shares have not traded on the Shenzhen stock market since August.

Mideast Stocks Plummet as Iran Plans to Boost Crude Exports  - (www.bloomberg.com) Stocks across the Middle East tumbled as the easing of sanctions against Iran raised the prospect of a surge in oil supplies to a market already reeling from the lowest prices in more than a decade. Shares in Tehran gained. Saudi Arabia’s Tadawul All Share Index dropped 5.4 percent to its lowest level since March 2011. Abu Dhabi’s ADX General Index fell into a so-called bear market. The Bloomberg GCC 200 Index, which tracks 200 of the six-nation Gulf Cooperation Council’s biggest companies, traded at 9.5 times estimated 12-month earnings, the lowest in almost seven years. Iran’s TEDPIX Index climbed 0.9 percent, according to data on the bourse’s website, extending Saturday’s 2.1 percent advance. 

Blame, anger, frustration as China's stock rescue effort looks defeated - (www.reuters.com) A Chinese government campaign to restore confidence in the country's volatile stock markets appeared to be in tatters on Friday as the benchmark Shanghai index wiped out all the gains made since the depths of last year's crash. Among a flurry of measures, a so-called national team of institutional investors had promised last summer to buy and hold stocks on the index until it returned to 4,500 points - a level which at the time was considered in reach. However, the Shanghai Composite Index .SSEC - the most closely watched by Chinese investors - fell through the lows seen during the depths of last year's crash and closed on Friday at 2,900 points - its weakest level since December 2014.

Oil Plunges To $28 Cycle Lows As Iran Supply Looms, Stocks Slide - (www.zerohedge.com)  February WTI Crude futures have plunged to new cycle lows at $28.60 (down 2.7%) as Iran supply looms over an already over-glutted global crude market. Brent is down even more (-3.7%). Dow futures are down 60 points at the open. Feb futures (which have just rolled) are under $29...




Tuesday, January 26, 2016

Wednesday January 27 2016 Housing and Economic stories


BHP Billiton books $7.2 billion writedown US shale assets - (www.reuters.com) Top global miner BHP Billiton said on Friday it would book a $7.2 billion writedown on the value of its U.S. shale assets, reflecting a slump in oil and gas prices and a bleak near-term outlook. The hefty impairment is the third spawned by BHP's badly timed push into U.S. shale in 2011, when it spent $20.6 billion, including assumed debt, on two acquisitions at a time when oil and gas prices were much higher than they are now. "Oil and gas markets have been significantly weaker than the industry expected," BHP Chief Executive Andrew Mackenzie said in a statement. In the wake of the collapse in oil prices over the past year, BHP has sharply cut its operating costs and capital spending at its U.S. onshore operations, reducing the number of rigs from 26 to five.

Investors pull $9 billion from stock funds during weekly period: Lipper - (www.reuters.com) Fund investors continued to sour on U.S. stocks and corporate debt during the weekly period that ended Jan 13, Lipper data showed on Thursday, as risk appetite waned in the wake of global market turmoil. U.S.-based stock mutual funds and exchange-traded funds lost $9.0 billion to withdrawals during a week that saw U.S. stocks continue one of their worst starts to a new year amid fears of a further fall in oil prices. "We had another rocky week for equities," said Lipper analyst Jeff Tjornehoj, referencing losses logged by the Dow Jones industrial average, a widely cited market benchmark. "We had three triple-digit loss days. It's really hard to build any momentum when that's your headwind, so naturally mutual-fund investors withdrew money out of equities overall."

Asia shares hit 3-1/2-year lows as oil resumes fall - (www.bloomberg.com) Oil prices dove below $30 a barrel on Friday, dragging major equity indices around the world sharply lower, as fears of a global slowdown amid a crude supply glut roiled markets and unsettled investors who snapped up gold and other safe-haven assets. Major stock indices in Europe and on Wall Street tumbled more than 2 percent while crude prices slid on expectations Iran will increase oil exports once international sanctions are lifted, possibly within days. Yields on the benchmark 10-year U.S. Treasury note were poised to fall below 2 percent and gold rose as retreating oil prices and equity markets underpinned demand for assets perceived as safer. The December futures contract on the federal funds rate surged to its highest since October, implying the Federal Reserve will raise rates only one more time this year.

French drug trial disaster leaves one brain dead, five injured – (www.reuters.comOne person has been left brain dead and five others have been hospitalized after taking part in a clinical trial in France of an experimental drug made by Portuguese drug company Bial, French Health Minister Marisol Touraine said on Friday. In total, 90 people have taken part in the trial, taking some dosage of the drug aimed at tackling mood and anxiety issues, as well as movement coordination disorders linked to neurological issues, Touraine said. The six men aged 28 to 49 had been in good health until taking the oral medication at the Biotrial private facility that specializes in clinical trials, she said.

[Bloomberg] Oil Slides, Deepening Gloom in Stocks as Bond Buyers Celebrate - (www.bloomberg.com) Crude’s drop to a 12-year low is sending shock waves around the world at the same time concern is mounting that China’s policy interventions will fall short of stoking growth in the world’s second-largest economy. Figures on retail sales and manufacturing Friday showed the U.S. economy ended the year on a weak note, and the start of 2016 wasn’t any better. Energy firms are laying off workers and currency markets from commodity-producing countries are in turmoil. The slump is also denting the outlook for inflation, causing traders to curb bets on how far the Fed will raise rates this year. “Markets have to go through several stages and right now they’re just holding their head and crying,” Krishna Memani, chief investment officer at Oppenheimer Funds Inc. in New York, said by phone. “The drama and issue overnight is more related to oil prices not finding a floor. If it was just China and everything else was OK, we’d see through that. But when China is down and oil drops everyday, the market recognizes it has substantial issues.”




Monday, January 25, 2016

Tuesday January 26 2016 Housing and Economic stories


Deutsche Bank Said to Probe Sales of Subprime Auto Securities - (www.bloomberg.com) Deutsche Bank AG officials are reviewing whether some employees exaggerated demand as they marketed new securities backed by risky auto loans, potentially suppressing yields for investors, according to a person with knowledge of the matter. The bank has looked at communications between the employees and investors to determine whether such marketing practices were normal salesmanship or if they crossed a line, said the person, who asked not to be named because the matter is private. The lender has also looked at whether preferential treatment in the allocation of the bonds may have improperly given the biggest investors a leg up over smaller firms, the person said. The bank’s inquiry comes as the U.S. Securities and Exchange Commission expands an industrywide crackdown on trading and sales practices in markets where mortgages, auto loans and other debt are bundled into securities.

Credit-Fear Gauge Jumps Above 100 for First Time in Three Years - (www.bloomberg.com) The cost to protect against defaults by North American investment-grade companies soared to a three-year high as concern lingered over falling commodity prices and financial-market turmoil triggered by China. The Standard & Poor’s 500 Index was poised for its lowest close since September, halting a global equities rally. The Bloomberg Commodities Index on Tuesday fell to the lowest level since at least 1991 on sluggish demand from developing nations. The benchmark rebounded by 0.3 percent at 3:16 p.m. on Wednesday in New York. While Chinese exports unexpectedly expanded in December in local-currency terms, the world’s second-largest economy is expected to report the slowest annual expansion since 1990 next week.

Goldman Sachs to shed up to 10 percent of its sales, fixed income team: WSJ - (www.reuters.com) Goldman Sachs Group Inc. is planning to shed up to 10 percent of its sales and fixed income trading jobs later in the quarter, the Wall Street Journal reported on Wednesday, citing sources. This workforce reduction, which is higher than the bank's usual 5 percent annual cuts, is expected to affect not more than 250 people, the Journal said on Wednesday. The bank, which is set to report its fourth-quarter results next week, is preparing for steeper cuts this year within its debt, currencies and commodities division, the newspaper added.

Creditors Accuse Portugal Of "Unfair, Populist Short-Cut" In €2 Billion Bank Bail-In - (www.zerohedge.com) Two weeks ago, The Bank of Portugal shocked markets by bailing in senior Novo Banco bondholders. Novo Banco was the “good” bank forged from the ashes of Banco Espirito Santo which had to be bailed out by the state in August of 2014. The idea was to sell Novo Banco to pay for the cost of the bailout, but the auction process eventually floundered amid turmoil in Chinese markets (at least two of the potential bidders were Chinese) and uncertainty about whether this “good” bank would in fact need more capital given the elevated level of NPLs already on its books. In November, the ECB told Novo it woudl indeed need to raise some €1.4 billion in fresh capital which the bank initially said would come from asset sales. A little over a month later, Portugal’s central bank essentially just gave up. On December 29, the bank announced it was transferring €2 billion in NB senior notes back to Banco Espirito Santo which, like a ghost skyscraper in China, is set for demolition. In other words, Novo Banco plugged the €1.4 billion hole by essentially declaring €2 billion in bonds null and void. 

Shandong Shanshui Says Bond Payment Unlikely as Dispute Deepens - (www.bloomberg.com) Shandong Shanshui Cement Group Ltd., the main operating arm of China Shanshui Cement Group Ltd., said it’s unlikely to make payment on a three-year yuan bond due Jan. 21 amid a cash shortage and escalating management dispute that threaten more defaults. The company is due to repay almost 1.9 billion yuan ($290 million) of bond principal and interest, according to a statement Thursday. The announcement comes days after its parent, China Shanshui, filed legal actions against Shandong Shanshui’s former directors. They have also filed suit this month, alleging that China Shanshui released "false and illegal statements." "The root reason for Shandong Shanshui debt issues is the unresolved fight for control for the company, the company’s financing has consequently been limited," the operating unit said in the statement.