Monday April 3 2017 Housing and Economic stories

TOP STORIES:            

Commercial Real-Estate Bubble “Can Breathe Easier” after Health Bill Collapsed in Congress - (www.wolfstreet.com) When the effort in Congress to pass a health-care bill – the American Health Care Act, designed to replace the much maligned Affordable Care Act – failed on Friday, the thing that wasn’t supposed to happen happened: The industry that had whined for years about this, that, and the other in the Obamacare law, breathed a huge sigh of relief. On Monday, despite the general unease in the stock market, heath care stocks rallied. Well, they didn’t exactly rally, they edged up. But it made them the best-performing sector among the 11 S&P 500 sectors. But no one apparently breathed a bigger sigh of relief than the over-indebted and teetering Commercial Real Estate sector. Investors, including the largest asset managers in the world, had experienced the rich benefits of a multi-year mega construction boom of hospitals, medical office buildings, and other health-care facilities to accommodate the ballooning industry that is taking over the US economy and provides 16% of its private-sector jobs.

St. Louis Just Hiked Minimum Wage By 43%; Guess What Happens Next - (www.zerohedge.com) Seemingly no amount of empirical evidence will ever convince progressives that raising minimum wages to artificially elevated levels is a bad idea.  Somehow the basic idea that raising the cost of a good ultimately results in lower consumption of that good just doesn't compute. And while roughly 50% of the country will promptly ignore it, below is yet another study, from Dr. David Macpherson of Trinity University and Dr. William Even or Miami University, pointing out the devastating consequences of minimum wage hikes. This study takes a look at the city of St. Louis and its decision to hike minimum wage rates 43% by 2018 from $7.70 per hour to $11.00.  Macpherson figures such a hike will cost the city roughly 1,000 jobs and, as usual, will hurt the "young and less-skilled" workers the most.

 

China’s growing corporate-bank nexus is toxic mix - (www.reuters.com) The ever-closer relationship between Chinese companies and banks can be a toxic mix. A growing number of companies in the People's Republic are buying into local lenders that need to raise capital. The interdependence is risky. One danger is that banks lend to their corporate shareholders on more lenient terms than to regular borrowers, regardless of credit risks. That concern sparked a selloff in Jilin Jiutai Rural Commercial Bank’s stock on Monday, the first trading day following an 85 percent plunge in the market value of shareholder China Huishan Dairy. The milk group’s chairman controls the company through an entity that also owns more than 15 percent of Jilin Jiutai's Hong Kong-listed stock. The lender in turn is Huishan’s second-largest creditor, with some $262 million on the line, according to Caixin.

US debt markets heat up after brief drought  - (www.ft.com) After a pause, US capital markets have fired back up. Companies returned to US debt markets on Tuesday to borrow more than $10bn as volatility retreated and the overall market tone improved, ending a brief drought when borrowers were sidelined. More than half a dozen groups issued debt on Tuesday to raise $10.9bn, including a $4.65bn bond offering from Rockwell Collins, the US manufacturer of electronics for aircraft cockpits, and a $2.2bn sale from semiconductor group Applied Materials. Investors placed orders of $15bn with underwriters for a piece of the Rockwell Collins deal, one investor briefed on the sale said. The US company will use the proceeds to fund its acquisition of B/E Aerospace.

Banks To London Employees: "Don't Panic" - (www.zerohedge.com) With Brexit officially a go, banks in Britain are scrambling to undo months of verbal damage, and reassure their London employees over possible Brexit disruptions, a potential shift in jobs to continental Europe, and also talking down warnings made in recent months about leaving the City, some in now dashed hopes of getting a Brexit revote. It now appears that many of those "threats" were hollow and as Reuters reports, investments banks such as Goldman and Nomura were among those who sent messages to employees in London as they work out how to keep serving clients across the European Union without spooking staffers, prompting employee defections to more hospitable employers. Richard Gnodde, CEO of the European arm of Goldman Sachs, stressed that no big changes were imminent even though he said last week that the Wall Street bank would begin by moving hundreds of staff as part of its "contingency plans" for Brexit. It seems a lot can change in one week.

OTHER STORIES:

U.S. Stocks Rebound With Banks as Crude Advances: Markets Wrap - (www.bloomberg.com)
Consumer confidence hits 16-year high; house prices rise - (www.reuters.com)
Americans Haven't Been This Optimistic About Stocks for Nearly Two Decades - (www.bloomberg.com)

U.S. House committee approves bill to increase scrutiny of Fed - (www.reuters.com)
Brexit Means Brexit: What the Key Players Said - (www.bloomberg.com)
5 Reasons Trump’s Promised Tax Overhaul Won’t Be So Easy - (www.nytimes.com)