Tuesday March 7 2017 Housing and Economic stories

TOP STORIES:            

Ukraine Tax Chief Gets Heart Attack After Arrest Over $75 Million Theft - (www.zerohedge.com) While much of the media attention remains glued to Russia for various reasons, a more notable development took place in neighboring Ukraine overnight, where on Friday Ukrainian state agencies tried to arrest the head of the tax and customs service Roman Nasirov, i.e., the equivalent to the head of the IRS, over the embezzlement of around $75 million. However, their efforts were hindered when the man, Roman Nasirov, was allegedly struck by a heart attack during the detention attempt and was shown stretchered into an ambulance and taken to Kiev's Feofania hospital late on Thursday. Anti-corruption prosecutor Nazar Kholodnytsky said investigators believe 38-year-old Nasirov helped exiled lawmaker Oleksandr Onishchenko deprive the state of 2 billion hryvnias ($75 million) in tax revenue linked to a gas deal, Reuters reports. The crackdown was seen as a landmark case following patchy anti-graft efforts from the Western-backed authorities.

Peak Rent? – (www.wolfstreet.com) In February, rents in nine of the 12 most expensive US rental markets dropped – or plunged. In San Francisco, the most ludicrously expensive rental market in the country, the median asking rent for a one-bedroom apartment dropped 8.9% from a year ago to $3,270 a month, and 10.9% from the crazy peak in October 2015. Two-bedroom rents dropped 7.6% year-over-year to $4,500, and 10% from the peak, according to Zumper’s National Rent Report. The last time rents declined year-over-year in San Francisco was in April 2010 as the housing bust was hitting bottom. But these asking rents do not include incentives, such as “1 month free” or “2 months free.” Incentives are rare in the generally overheated San Francisco market – except during times of stress. Now, with new apartments and condos flooding the market due to a historic construction boom, incentives have become common. With “1 month free,” first-year rent of a one-bedroom plunged 18% compared to a year ago!

US share buybacks punch below their weight - (www.ft.com) President Donald Trump wants corporate America to invest more in factories, but since the financial crisis more companies have preferred to hoover up their own shares. Yet have buybacks provided bang for their buck? There have been many critics of the recent corporate buyback bonanza, with figures from former US vice-president Joe Biden to BlackRock founder Larry Fink contending companies have eschewed growth-boosting investments in favour of short-term share repurchases, increasingly financing them with cheap debt rather than earnings. But perhaps the most notable thing about the buyback spree — more than $2tn of shares have been repurchased in the past five years — is how it has arguably provided only a modest boost to equity prices, at least compared to the scale of the purchases.

New Risks Loom for China Local Debt, This Time in Dollars - (www.bloomberg.com) The vehicles that grew to gargantuan size during the previous Communist leadership team’s all-out drive for growth have been steadily addressed by current President Xi Jinping’s lieutenants, largely through a Beijing-led bond swap program. Now, units set up by local authorities to fund construction projects are selling debt outside the country -- in dollars. While issuance is still small, it’s surging. A record $12.3 billion in such dollar bonds was sold last year, with more on tap in 2017, making local financing vehicles a rival for property developers as top Chinese issuers of U.S. currency debt. The obvious problem: the funding vehicles don’t typically have dollar revenue to draw on for debt servicing, which raises repayment dangers if China’s yuan keeps depreciating -- a risk highlighted by the potential for accelerated Federal Reserve tightening.

Record Warmth Could Turn Into a Disaster for U.S Fruit Growers - (www.bloomberg.com) February’s record warmth across the U.S. means several weeks of worry for fruit growers in the Midwest and Northeast as trees flower early, leaving them vulnerable to a hard freeze that could sweep in and kill them all. Spring-like temperatures have come early to the eastern U.S., restricting maple syrup sap harvests and waking up apple, cherry and peach trees from Michigan to New Jersey and New York. But there’s still a lot of cold air in Canada and northern New England lingering not far from many orchards. Long-term averages show flower-destroying freezing temperatures can still strike from late April to mid-May in most areas. And without the flowers, the trees bear no fruit.

OTHER STORIES:

Two Percent Inflation Not Enough for Draghi to Shift Policy - (www.bloomberg.com)
China February factory growth faster than expected as exports rebound - Caixin PMI - (www.reuters.com)
China's New Bank Watchdog Vows to Crack Down on Shadow Lending - (www.bloomberg.com)

Yuan's Calm Faces Test With Dollar Rally as Fed Rate Bets Surge - (www.bloomberg.com)
Nationalists and Economic Growth: The Bad and the Good - (www.wsj.com)
China’s Xi Positions Allies for Transition Battle - (www.wsj.com)