Wednesday June 21 2017 Housing and Economic stories

TOP STORIES:            

Sears Canada Hires Bankruptcy Advisory Firm - (www.wolfstreet.com) The shares of Toronto-based Sears Canada plunged as much as 50% early today, from very little to even less, to C$0.50 at the low point before recovering some and ending down 24% for the day at C$0.87, on its bumpy ride to zero. The company announced in its first quarter results that there are “material uncertainties” about its “ability to continue to satisfy its obligations,” that it has doubts about its ability “to continue as a going concern,” and that lenders weren’t willing to keep it afloat for the next 12 months. It further announced that it hired one of Canada’s leading bankruptcy and insolvency advisory practices – the same law firm that is representing Target Canada in its insolvency proceedings.

Axel Merk's 'Best Bubble Indicator' Is Setting Up For "Major Shock" - (www.zerohedge.com) We increasingly see claims low volatility in the markets may be structural. Even as we agree that some of the analyses we see make good points, we are concerned we may be setting ourselves up for a major shock. "In my experience, complacency, with its cousin low volatility, is the best bubble indicator I am aware of. Perceived safety gets investors to pile into investments that they later regret. When it happens on a massive scale, major market distortions may be created that can lead to financial crises. And as the tech bubble that burst in 2000 shows, even if there is no systemic risk, the unwinding can be most painful to investors." Is the recent sell-off in the Nasdaq the canary in the coal mine? We think it is, but the buy-the-dip troopers may well prove us wrong. For a day. Or a week. Or longer. But maybe not. So while the banks may not need a bailout, I'm not so sure about pension funds or individual investors. Yet, "needing a bailout" and actually getting one are different stories.

Buy the FAANGS Baby! Slow Torture? - (www.mishtalk.com)  Here an amusing MarketWatch Opinion: Now that FAANG stocks are crashing, which are undervalued? That title, by Thomas H. Kee Jr., a former Morgan Stanley broker and founder of Stock Traders Daily, says quite a bit about market sentiment. Let’s Investigate. Central bank capital infusions dating back to 2013 are exactly what caused this asset bubble, and the liquidity injections have not stopped. This bubble will burst, but probably not today, and the recent selling in FAANG stocks does not appear to be a precursor to an impending market crash. Looking at the stocks as a group, their influence on the market is tangible, but they have very different relative valuation metrics. For example, Facebook has an immediate and relatively exceptional valuation while Amazon is at the other end, and has virtually no value at these prices.

The Mall of the Future Will Have No Stores - (www.wsj.com) Some landlords plug empty spaces with churches, for-profit schools and random enterprises while they figure out a long-term plan. Others see a future in mixed-use real estate, converting malls into streetscapes with restaurants, offices and housing. And some are razing properties altogether and turning them into entertainment or industrial parks. Ford's 10-year lease at Fairlane Town Center [in Michigan] "brought 1,800 to 2,000 employed people to our property, people with a paycheck," said Mr. Powers. The mall, which is still anchored by Macy's , J.C. Penney and Sears, is currently 91% leased, he said, and its food operators are doing better in the daytime than they did before, as Ford workers pile in for lunch. Ford liked the mall's proximity to its main facility in Dearborn, which is being rebuilt over the next 10 years, and its wide open spaces.

U.S. Companies Look Abroad to Sell Their Debt - (www.wsj.com) American companies sold $107.3 billion of bonds in other currencies in 2017, the most for any comparable period in a decade, according to data provider Dealogic. U.S. companies have done hefty issuance of euro-denominated debt but have also sold bonds in Canadian dollars and British pounds this year, Bank of America Merrill Lynch data show. The issuers are some of the best-known firms. General Electric Co. issued $8.7 billion worth of euro bonds last month, one of the largest sales in the market's history. And AT&T Inc. sold $7.9 billion of euro bonds last week, according to Dealogic. These so-called reverse Yankee bonds have become increasingly popular in recent years as companies look to diversify their portfolios of debt -- particularly if they have a lot of it or plan to take on a lot to do a deal. Issuance was especially strong in May. At the moment, companies are benefiting from a favorable set of market conditions, analysts say. One thing that's lubricated the euro-denominated debt market recently: The European Central Bank has continued to buy up corporate bonds as part of its stimulus policies. That has maintained a source of strong demand in the market for euro corporate bonds.

OTHER STORIES:

Stocks Close at Records, Dollar Slips as Fed Looms: Markets Wrap - (www.bloomberg.com)
Anbang Says Chairman Can't Perform Job for Personal Reasons - (www.bloomberg.com)
Jeff Gundlach sees trouble, says traders should raise cash 'literally today' - (www.bloomberg.com)

Here Are the Theories for Why Mega-Cap Tech Stocks Took a Bath - (www.bloomberg.com)
A Record Number of Investors Say Stocks Are Overvalued - (www.bloomberg.com)
Sinking Hong Kong Dollar Has Money Managers Unworried -- for Now - (www.bloomberg.com)