Tuesday April 18 2017 Housing and Economic stories

TOP STORIES:            

Appeals Court Rules Against San Diego Unions: First of Many Taxpayer Victories To Come - (www.zerohedge.com) In 2012, San Diego voters gave Landslide Approval to Proposition B, which eliminated defined-benefit pensions for newly hired city workers except for police. In December of 2015, the state Public Employment Relations Board, a bastion of Union sympathizers, ordered the city to make millions of dollars of retroactive payments to workers hired since the law took effect. The city appealed. Today we have a very welcome ruling for taxpayers: An Appeals Court overturned the PERB Ruling.

“This is a victory for the citizens of San Diego and the state of California,” said taxpayer advocate April Boling, one of three who filed court appeals. “The court agreed citizens can take matters into their own hands through the initiative process and support of elected officials does not somehow trigger the requirement for union negotiations.” Since the provisions of the ballot measure were implemented, most new employees have been offered 401k-style plans. The proposition was opposed by organized labor groups, which took their case to the PERB.

Banks Gear up for “Hacienda Hedge,” World’s Biggest Oil Deal - (www.wolfstreet.com) International banks are preparing for the Hacienda Hedge – the secretive oil deal that has seen Mexico earn billions from successful bets on future oil prices. Detailed in an analysis by Javier Blas for Bloomberg, the history of the Hacienda Hedge is certainly impressive and might incite other countries to try their hand at betting on future oil prices. Or then again, it might not, as Mexico’s success story seems to be kind of unique. Blas interviewed Mexican government officials, traders, brokers, and bankers, and reviewed thousands of documents to compile the history of the bet that bankers await every year and that, contrary to what the Mexican authorities say, could swing the oil market. The story began in 1990, when Iraq’s invasion of Kuwait took one-tenth of the global oil supply off the market, raising prices. The government then accurately predicted that the high prices wouldn’t last, betting on a decline. This accuracy has been remarkably consistent through the years, with Mexico making money most of the time when it has placed the bet. And it hasn’t been alone.

Huishan Says HSBC Claims Loan Default as Court Freezes Assets - (www.bloomberg.com) HSBC Holdings Plc said no “enforcement actions” have been taken against China Huishan Dairy Holdings Co., responding to an earlier statement from the embattled dairy producer that suggested it was in default on a $200 million loan agreement. HSBC, acting on behalf of a group of banks, sent Huishan Dairy a letter to call “events of default,” alleging that the company had failed to comply with covenants on the dual-tranche loan, the Chinese firm said in a statement late Monday, without being more specific. Huishan Dairy shares in Hong Kong have been suspended from trading since March 24, when a record stock plunge wiped $4.1 billion off the firm’s market value. The company said four days later it has been late on some payments to banks. “It is standard practice in such circumstances to remind borrowers of their obligations under the terms of the loan agreement,” a HSBC spokesman said in a statement to Bloomberg. “The letter does not indicate the commencement of enforcement actions against the company at this point in time.”

Secret Recording Implicates Bank of England in Libor Rigging – (www.mishtalk.com) In the financial crisis, LIBOR rates soared due to payment uncertainty (recall Bear Stearns, Lehman, etc). Banks lowballed their borrowing rates so as to make their financial conditions look better than they were. LIBOR stands for London Interbank Offered Rate, the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow overnight from other banks. In June 2012, multiple criminal settlements by Barclays Bank revealed significant fraud and collusion by member banks connected to the rate submissions. The LIBOR rigging admission cost Barclays’ CEO, Bob Diamond, his job. Two traders went to jail.

China's $1.4 Trillion Debt Wall Seen Forcing Issuance Rise - (www.bloomberg.com) China’s bond issuers, faced with 9.7 trillion yuan ($1.4 trillion) of maturing debt this year, are stepping on the gas. Companies and governments sold 1.3 trillion yuan of onshore notes in March, about as much as in the first two months of the year combined, according to data compiled by Bloomberg that excludes certificates of deposit. Fitch Ratings expects refinancing needs to drive issuance in the coming months, with corporate debt sales for the year forecast to match or even exceed last year’s total. Chinese companies issued a record 9.8 trillion yuan of bonds in 2016.

OTHER STORIES:

Asia Stocks Mixed as Haven Bids Ease; Yen Steadies: Markets Wrap - (www.bloomberg.com)
Gold, Yen Climb to 5-Month Highs as Refuges Sought: Markets Wrap - (www.bloomberg.com)
Yen Gains Against All G-10 Peers as Geopolitical Tensions Rise - (www.bloomberg.com)

The 2017 Short Trade That’s Getting Pummelled This Week - (www.wsj.com)
Gold miners jump as jitters prompt haven buying - (www.ft.com)
White House Says Russia Tried to Cover Up Syrian Chemical Attack - (www.wsj.com)