Monday January 16 2017 Housing and Economic stories

TOP STORIES:

For How Long Did Fiat-Chrysler Hide its EPA Diesel Fiasco? Investors Found out the Hard Way Today - (www.wolfstreet.com) Today, the EPA disclosed that Fiat-Chrysler was neck-deep in the diesel-gate fiasco pioneered by Volkswagen. When Volkswagen settled claims in a Canadian court in December for C$2.1 billion, it brought total costs so far to $18 billion, and it’s still not over. So these things can get expensive. Volkswagen’s strategy at the outset had been to keep investors in the dark, and deny, deny, deny, until it finally buckled. Fiat-Chrysler (FCA) appears to follow the same time-honored corporate strategy.

DBRS Downgrades Italy, Stripping It Of Its Last "A Rating" And Raising ECB Collateral Haircuts - (www.zerohedge.com) When previewing the key events of the week, we noted that today Canadian DBRS rating agency is scheduled to review Italy's credit rating after putting its credit worthiness on negative watch on 5 August. On 5 December, DBRS issued a press release declaring that they would wait for the impact of the Italian referendum result on the continuation of the reform push before making the final decision. In case of a downgrade, the haircut for a 5y BTP used as collateral for ECB operations, as an example, would rise from 2% to 10%. Moments ago DBRS did just that when it downgraded italy from A (low) to BBB (high), stripping the sovereign of its final A credit rating.

               

Extreme Bets on Higher Yields Inflict a New Kind of Pain Trade - (www.bloomberg.com) In the rush to price in firming economic data and the seemingly inflationary policies of President-elect Donald Trump, bond bears might have gotten ahead of themselves. That's how analysts are reading the most recent report of trader commitments, which shows investors are making record bets on higher yields. In the first week of the year, futures positioning for U.S. Treasuries was at an all-time high of 1.2 million ten-year Treasury-contract equivalents, according to Macro Risk Advisors head derivatives strategist Pravit  Chintawongnavich. Based on past episodes when shorts swelled to extremes, Bespoke Investment Group says the rally in Treasuries since Dec. 16 may be poised to accelerate. "Historically, large duration shorts have typically led to bond rallies," the analysts write in a Jan. 11 note, referring to the pessimistic positioning on longer-maturity debt. "In our view, the pain trade in bonds is no longer higher yields."

Edwards: ‘Waste of time' to save Italian bank; Get Italy Out of Euro - (www.marketwatch.com) It's a waste of time and effort to recapitalize the Italian banks, while Italy remains in the eurozone," Edwards said. The idea is that by leaving the currency union, Italy alone would be able to control interest rates and its currency, which could make it more competitive on the world stage. Some economists argue that the euro's current trading level only benefits Germany, while putting a squeeze on other nations that would benefit from a weaker exchange rate. By returning to the lira and devaluing it, Italy would make its products much cheaper for foreign buyers... Italy in my view will never grow within the euro. It's as simple as that.

U.S. property foreclosures at 10-year low in 2016 - (www.reuters.com) Foreclosure proceedings affected nearly a million U.S. homes and other real estate last year, down 14 percent from 2015 and down 70 percent from the worst of the housing crisis in 2009, a report released Thursday shows. Foreclosures hit a 10-year low and property owners in all but 15 states experienced fewer of the early stages of foreclosure, usually begun after owners have missed four mortgage payments, according to the report by ATTOM Data Solutions, formerly called RealtyTrac. Final repossessions of properties also dropped overall, but did increase in 21 states and the District of Columbia, including Massachusetts, Alabama, New York, Virginia and New Jersey.

OTHER STORIES:

U.S. Stocks Slip With Dollar as Commodities Rally: Markets Wrap - (www.bloomberg.com)
Inside the Fed's Head: The 2011 Transcripts - (www.bloomberg.com)
Yellen had 'super risky' proposal for Fed's 2011 low-rate vow: transcripts - (www.reuters.com)
Stocks Are No Longer the Most Actively Traded Securities in Stock Markets - (www.bloomberg.com)

Collapsing Asset Correlations Have Active Managers Celebrating Trump Disruption - (www.bloomberg.com)
U.S. government posts $28 billion deficit in December - (www.reuters.com)
Trump's Pentagon choice says U.S. needs to be ready to confront Russia - (www.reuters.com)