Thursday February 23 2017 Housing and Economic stories

TOP STORIES:            

Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs - (www.zerohedge.com) When Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, one month ago, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since  PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75. Two months into Philadelphia's soda tax, supermarkets and distributors are reporting a 30% to 50% plunge in beverage sales, preparing for a legal fight with city hall, and are planning for mass layoffs.

Is the US Restaurant Recession Becoming Structural? - (www.wolfstreet.com) National restaurant data and anecdotal evidence has been piling up. “T Vogel,” a commenter on WOLF STREET, put it this way: My wife and I make almost 30k more than the median family income in my town (northern CA) with no kids. Our rent just went up by 1k a month – landlord selling – starter houses are selling at 500k. We are not spending a dime more than needed. I plan to skip our weekly night eating out now. They’re not the only ones to skip restaurants. Costs are going up, not just of restaurant meals, but of life in general. Incomes are lagging behind. And consumers are adjusting…. That’s what a Reuters/Ipsos opinion poll of more than 4,200 U.S. adults confirmed today.

Chinese Banks' Off-Book Wealth Products Exceed $3.8 Trillion - (www.bloomberg.com) Chinese banks had more than 26 trillion yuan ($3.8 trillion) of wealth-management products held off their balance sheets at the end of December, a 30 percent increase from a year earlier, according to the central bank. The expansion of this form of shadow banking, with money eventually being diverted to quasi-loans and bonds, outpaced the 10 percent growth for normal lending during the same period, raising risks for the broader economy and undermining the country’s “deleveraging” efforts, the People’s Bank of China said Friday in its quarterly monetary policy report.

Greek Bond Drama Meets Realpolitik - (www.bloomberg.com) Monday’s meeting of European finance ministers looks like the last chance for some form of agreement on the next leg of Greece's 86 billion euro ($91.4 billion) bailout, before Dutch and French election complicate negotiations. Anything can still go wrong with seemingly unsolvable differences between the European authorities, the International Monetary Fund, and the Greeks. The worries are certainly reflected in the sharp selloff of Greece's 2 billion euro bond maturing July 2017. As befits a serious credit event, Greece's yield curve has inverted, where soon-to-mature debt yields rise above those for longer-dated bonds, reflecting the view that if Greece can make it past the next couple of years it is more likely to make it in the longer term.

Schaeuble denies 'Grexit' threat, says Greece on right path - (www.bloomberg.com) German Finance Minister Wolfgang Schaeuble denied on Sunday that he had said Greece would have to leave the euro zone if it failed to implement economic reforms. Schaeuble said in an ARD television interview that Greece would not have problems if it implemented agreed reforms, but would if it fails to carry these out. "I never made any ('Grexit') threats," Schaeuble told ARD's Bericht aus Berlin program just before the network played recent comments in which he said Greece was "not yet over the hill" and the "pressure needed to stay on" Greece or it "couldn't stay in the currency union".

OTHER STORIES:

Unilever Dents Europe Stock Advance as Pound Rises: Markets Wrap - (www.bloomberg.com)
French Bonds Slump as Political Campaign Still Seen Wide Open - (www.bloomberg.com)
Bond Traders Are Placing Euro-Breakup Bets Again - (www.bloomberg.com)

Fed’s Mester Says She’s ‘Comfortable’ With Rates Moving Higher - (www.bloomberg.com)
Le Pen poll lead pushes Franco-German yield gap to new 2012 high - (www.ft.com)