KeNo's Housing and Economic Portal: Monday March 13 2017 Housing and Economic stories

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Oil Slumps to Lowest This Year as Traders Focus on Record Supply - (www.bloomberg.com) Investors are finally taking record U.S. oil stockpiles seriously. Oil slumped the most in more than a year after government data showed production cuts from OPEC and other exporters have not been enough to reduce U.S. supplies. Saudi Arabia’s Oil Minister Khalid Al-Falih said in Houston Tuesday that global supplies have been slower to decline than OPEC and its partners expected, leaving the door open for an extension of cuts that started in January. "The crude market is losing patience," Mike Wittner, head of commodities research at Societe Generale SA in New York, said by telephone. "The big rally in December after the OPEC agreement was based on expectations that the cuts would balance the market. While it looks like OPEC has cut more than 1 million barrels a day of output it’s difficult to see any impact on U.S. stockpiles." West Texas Intermediate for April delivery dropped $2.86, or 5.4 percent, to settle at $50.28 a barrel on the New York Mercantile Exchange, the lowest close since Dec. 7. It was the biggest decline since Feb. 9, 2016. Total volume traded was about 55 percent above the 100-day average.

Bill Gross: "Our Financial System Is A Truckload Of Nitroglycerin On A Bumpy Road" – (www.zerohedge.com) While the recovery has been weak by historical standards, banks and corporations have recapitalized, job growth has been steady and importantly – at least to the Fed – markets are in record territory, suggesting happier days ahead. But our highly levered financial system is like a truckload of nitro glycerin on a bumpy road. One mistake can set off a credit implosion where holders of stocks, high yield bonds, and yes, subprime mortgages all rush to the bank to claim its one and only dollar in the vault. It happened in 2008, and central banks were in a position to drastically lower yields and buy trillions of dollars via Quantitative Easing (QE) to prevent a run on the system. Today, central bank flexibility is not what it was back then. Yields globally are near zero and in many cases, negative. Continuing QE programs by central banks are approaching limits as they buy up more and more existing debt, threatening repo markets and the day to day functioning of financial commerce. I'm with Will Rogers. Don't be allured by the Trump mirage of 3-4% growth and the magical benefits of tax cuts and deregulation. The U.S. and indeed the global economy is walking a fine line due to increasing leverage and the potential for too high (or too low) interest rates to wreak havoc on an increasingly stressed financial system. Be more concerned about the return of your money than the return on your money in 2017 and beyond.

A Freakish Calm Surrounds the Eight-Year Bull Market - (www.bloomberg.com) If the bull market is worried about dying, it’s not letting on. Eight years along and no existential crisis plagues this advance, whose unbroken march from the depths of the Great Recession is the second longest ever. Valuations are stretched and going by its age the rally is in rarefied air. But volatility, the ticker tape of investor anxiety, is nowhere to be found. So profound is the market’s peace that a debate is raging over whether it’s healthy: are investors willfully blinding themselves to danger in the era of Donald Trump? Whether they are, the result has been manna for anyone who’s held on. Almost $3 trillion has been added to equity values since November. “Investors should now be on the lookout for a fear-of-missing-out mindset that could signal overconfidence and sound the final lap,” said Sam Stovall, chief investment strategist at CFRA in New York. “Volatility will remain a potential challenge to the intestinal fortitude of many investors and cause their emotions to become their portfolio’s worst enemy.”

Doctor, Hospital Groups Line Up Against GOP Health Proposal - (www.bloomberg.com) The Republican plan to replace Obamacare has a health problem. On Wednesday, the U.S.’s biggest advocacy group for doctors came out against House Republicans’ legislation, while the insurance lobby expressed concerns with the bill, adding to growing opposition from the country’s top trade groups for physicians and hospitals who worry that it will leave more people uninsured or with limited coverage. In a letter to Congress, the American Medical Association said it “cannot support the AHCA as it is currently written,” referring to the American Health Care Act, as the Republican proposal to repeal and replace the Affordable Care Act is named. The association calls itself the largest physician advocacy group in the country, and backed the nomination of Tom Price as President Donald Trump’s Health and Human Services secretary and point person on the health law.

After Years of Price Gouging, Mylan’s EpiPen Gets Crushed – (www.wolfstreet.com) Mylan’s EpiPen – the center of one of the many blistering scandals on Big Pharma price gouging – is getting hammered in the market, as competitors have burst on the scene, and as health insurers and prescribing physicians have gotten the memo. Its market share plunged from 95% to 71% in just two months! Mylan had acquired the rights to the decades-old product in 2007. At the time, pharmacies were charged less than $100 for a two-pen set. By 2009, pharmacies were charged $103.50 for a set. Then the annual price hikes set in – “peaking every year in August, when parents of children with severe allergies typically stock up on the life-saving devices for use in schools.” In 2016, the price spike hit $608.61 – an increase of over 500% in a decade. And this finally kicked off the uproar that landed Mylan CEO Heather Bresch on the hot seat before the House oversight committee hearing on EpiPen price increases.

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