Monday February 27 2017 Housing and Economic stories

TOP STORIES:            

Dallas Police Pension Board Approves Benefit Cuts; Asks For More Taxpayer Money To Avoid Collapse - (www.zerohedge.com) For the past several months we've warned that the taxpayers of the City of Dallas, despite all of the tough talk coming out of their elected city council members, would ultimately be forced to bail out the failing Dallas Police and Fire Pension (DPFP) system.  And just last night the DPFP board voted 9-0 to approve a plan that would do just that.  The plan to save the DPFP was proposed by Dan Flynn, chair of the pensions committee in the Texas House of Representatives, and calls for Dallas taxpayers to contribute 34.5% of police and firefighter salaries each year into the failing pension system, up from 27% in 2015, plus an incremental $11 million per year.  In total, the adopted plan will cost Dallas taxpayers an extra $22 million per year.

So Who’s Pumping Up this “New Normal” Housing Market? - (www.wolfstreet.com) “A housing recovery that is highly dependent on real estate investors is a bit of a double-edged sword,” explained Daren Blomquist, senior VP at ATTOM Data Solutions. “Rapidly rising home values have been good for homeowner equity, but also have caused an affordability crunch for the first-time homebuyers the housing market typically relies on for sustained, long-term growth.” So the housing market is “starkly different than a decade ago,” said Alex Villacorta, VP of research and analytics at Clear Capital. “As such, it’s imperative for all market participants to understand the nuances of the New Normal Real Estate Market.”

Bundesbank Prepares For Record Losses Once ECB Starts Hiking Rates – (www.zerohedge.com) Germany's central bank reported its smallest profit in more than a decade in 2016 after setting aside a record amount of provisions against future losses on the bonds it is buying as part of the ECB's stimulus program, its annual report showed on Thursday. "It is fair to ask ... when we can take our foot off the monetary policy pedal," Bundesbank President Jens Weidmann said while presenting the report. The Bundesbank recorded a net profit of 399 million euros (£337 million), the lowest since 2004 and far below the the €3.2 billion profit it booked in 2015. The fall was largely due to higher provisions against paper bought as part of the ECB's asset buying, which since June includes corporate bonds, and against cheap loans extended to banks.

As an Age of Nationalism Dawns, a Multinational Deal Collapses - (www.nytimes.com) Kraft Heinz’s $143 billion bid for Unilever would have been the biggest cross-border deal in nearly two decades. But instead of being a triumph of global capitalism, it induced only whiplash as the offer was withdrawn just days after its disclosure. The short life span of the deal can be blamed in large part on national barriers — which are likely to rise even further as a new mercantilism emerges. Kraft Heinz is controlled by the crafty Brazilian deal makers of 3G Capital. There’s no doubt the company and its advisers were well aware that it would be forced to come out with a public statement if word of its approach to Unilever got out.

It’s Like the Financial Crisis Never Happened...  - (www.wsj.com) It’s 10 years since the U.S. subprime crisis began, and everything’s wonderful on Wall Street. A decade after the world began to notice the losses on derivatives linked to the toxic waste of structured subprime mortgages, American stocks have produced such big returns that the biggest crash in generations barely registers. The 10-year average compound return on U.S. shares was 4.9% a year above inflation at the start of 2016, only slightly below the average for world stocks since the end of the Gilded Age in 1900, according to calculations for Credit Suisse by Elroy Dimson, Paul Marsh and Mike Staunton of London Business School. The same isn’t true for the rest of the world. British stocks made only 3% above inflation, including dividends, in the past decade, while real Japanese returns were barely positive and French shares delivered less than 2%. German stocks weren’t quite so bad thanks to its export powerhouses, and their 4.3% return over inflation is in line with the very long-term return from the world outside the U.S.

OTHER STORIES:

Hedge Funds Continue to Chase the Herd With Record Momentum Bets - (www.bloomberg.com)
Cashin skeptical of record highs: 'We're really vulnerable' - (www.cnbc.com)
The Fed and the market are having a hard time getting on the same page - (www.cnbc.com)

ETF Investors Miss Out on the Best Commodity Trade of the Year - (www.bloomberg.com)
Dallas Police and Fire Pension Backs Cutbacks to Avoid Collapse - (www.bloomberg.com)
Hedge Funds Can't Sue Over Investments in Fannie and Freddie - (www.bloomberg.com)