Tuesday June 13 2017 Housing and Economic stories

TOP STORIES:            

Wall Street Wakes Up to #Carmageddon - (www.wolfstreet.com) Auto industry faces “Unprecedented Buyer’s Strike”. After five months in a row of year-over-year declines in auto sales, and therefore after five months in a row of sales that fell below already lowered expectations, the big guns on Wall Street are now seeing the writing on the wall, and are trying to come to grips with it. “A stretched auto consumer, falling used [vehicle] prices, and technological obsolescence of current cars are ingredients for an unprecedented buyer’s strike,” wrote Morgan Stanley’s auto analyst Adam Jonas in a note to clients. He now sees a “multiyear cyclical decline.” In this environment, he sees an impaired ability by these stretched consumers to buy new vehicles. He sees a declining “willingness of financial institutions to lend as aggressively as in the past.” He’s particularly worried that even the automakers’ captive finance operations – such as Ford Motor Credit, GM Financial, Mercedes-Benz Financial Services, and Toyota Financial Services – which have been doing everything they could to get people into new cars, are at the end of their wits:

"It's A Perfect Storm": List Of Retailers In Danger Of Bankruptcy Hits Record 22 - (www.zerohedge.com) This is a "perfect storm... you're on the Andrea Gail right now, and the water's starting to get very choppy." The US retail sector continues to sink at an alarming rate, and according to the latest iteration of Moody's list of retailers who are in danger of filing for bankruptcy, there are now 22 distressed retailers whose troubled financials the rating agency believes could make them potential bankruptcy candidates in the near future, up substantially from just two months ago, and topping the 19 recorded at the peak of the Great Recession. According to Moody's analyst Charles O'Shea, legacy retailers such as Sears, Neiman Marcus and others on the rating agency's retail distress list, face a "perfect storm" and warned that "you're on the Andrea Gail right now, and the water's starting to get very choppy." The worst could be yet to come as the Moody's analyst writes that "the ranks of distressed retailers is set to keep growing over the next 12 to 18 months amid a secular shift in the industry." Moody's list consists of all retailers which have ratings of Caa or lower. That number has grown to 22, or approximately 15%, of the firm's retail and apparel universe. "When you're down there in C-a land, bankruptcy is a real possibility," O'Shea said.

"Ultra Luxury" Rentals Feel The Pain in NYC  - (www.therealdeal.com) Thanks to the recent condo boom that's turned scores of investors into landlords, there's an abundance of ultrahigh-end units on the rental market. And just like the rest of the rental market -- where landlords have been throwing out concessions for the better part of a year -- tenants in the uberluxe market are scoring fat discounts. Browne estimated the high-end rental market is down 10 to 15 percent since late 2015. He said that one of his clients, who'd been getting $19,000 to $20,000 a month for his two-bedroom at 40 East 66th Street, agreed to discount the condo to $18,000 . It's also taking longer to do deals. Douglas Elliman's Tal Alexander recently used "light staging" on a $20,000-a-month rental at One57, which still took about 60 days to rent. Alexander said he's telling clients that overpricing is a waste of time. "If [renters] see the apartment linger, they think it's more negotiable."

Bill Gross Says Market Risk Is Highest Since Pre-2008 Crisis - (www.bloomberg.com) U.S. markets are at their highest risk levels since before the 2008 financial crisis because investors are paying a high price for the chances they’re taking, according to Bill Gross, manager of the $2 billion Janus Henderson Global Unconstrained Bond Fund. “Instead of buying low and selling high, you’re buying high and crossing your fingers,” Gross, 73, said Wednesday at the Bloomberg Invest New York summit. Central bank policies for low-and negative-interest rates are artificially driving up asset prices while creating little growth in the real economy and punishing individual savers, banks and insurance companies, according to Gross. The U.S. economy is expected to grow 2.2 percent this year and 2.3 percent in 2018, according to forecasts compiled by Bloomberg. Trump administration officials have said their policies will boost annual growth to 3 percent.

$16tn US retirement sector faces radical overhaul - (www.ft.com) The US’s $16tn retirement industry faces a radical shake-up from Friday, when sweeping new rules requiring financial advisers to put clients’ interests ahead of their own come into force. The landmark “fiduciary rule”, drawn up by the Obama administration in 2015, has been opposed by many asset managers and financial advisers over concerns that it will hit profits and lead to weaker outcomes for savers. But despite being put under review by Donald Trump, the US president, in February, most of the new regulations will be rolled out from Friday, prompting cheers from consumer advocates. The rules, which apply to retirement investments, are expected to spell the end of financial advisers recommending expensive funds to clients in return for large commissions. The regulations are also likely to bolster cheaper passive fund managers that track market indices.

OTHER STORIES:

An Unusually Packed Thursday Will Test Markets - (www.bloomberg.com)
Oil dives 5 percent on surprise build in U.S. crude, gasoline stocks - (www.reuters.com)
Qatar debt rating downgraded by S&P as riyal hits 11-year low - (www.reuters.com)

Exclusive: EU in stronger position to tackle Italy after Spain bank rescue - source - (www.reuters.com)
5 Big Tech Stocks Build Market Euphoria, and Jitters - (www.nytimes.com)
Revolutionary Guards blame Saudi Arabia for Tehran terror attack - (www.ft.com)