KeNo's Housing and Economic Portal: Monday August 15 Housing and Economic stories

Sunday, August 14, 2011

Monday August 15 Housing and Economic stories

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HSBC to cut 30,000 jobs in global overhaul - (finance.yahoo.com) British banking group HSBC said Monday it will cut 30,000 jobs worldwide by 2013 and sell almost half its retail bank branches in the U.S., part of a new strategy to focus on fast-growing emerging markets. The bank, which reported a better-than-expected 3 percent increase in pretax profits to $11.5 billion in the six months to June, has already shed 5,000 jobs this year. Another 25,000 will be cut by 2013, spokesman Patrick Humphris said. HSBC currently employs around 296,000 people worldwide. Humphris declined to give details of where the job cuts would be but said the group is still hiring in emerging economies such as Brazil and Mexico.

Chicago’s Budget Deficit Widens $50 million to $635.7 Million, Mayor Says - (www.bloomberg.com) Chicago’s budget deficit for fiscal 2012 is projected to be $635.7 million, Mayor Rahm Emanuel said today, and could approach $800 million by 2014. The gap is almost $50 million wider than the city’s estimate of $587 million when Emanuel became mayor of the nation’s third-largest city in May. “We have a structural problem, and the moment of truth has arrived,” Emanuel said at a City Hall news conference. “An economic recovery will not solve this problem for us.” Chicago’s budget for the current year is $3.2 billion. Emanuel is scheduled to present his fiscal plan for 2012 in October. The city has projected a budget deficit every year since 2001, reflecting a “structural” problem with city finances, he said. The mayor said that while he won’t reduce the city’s police force, he will seek work-rule change from employees. He again ruled out tax increases for people who “feel nickeled and dimed.”

Ratings blow for mortgage securities - (www.ft.com) It’s the last thing players in America’s fragile mortgage debt market needed. Plagued by macroeconomic uncertainty, rising default rates and apprehension over the quality of some new deals, they now have to contend with a ruckus over ratings. Standard & Poor’s added to the headaches of the market in commercial mortgage-backed securities last week by pulling the preliminary ratings that it had given to two new transactions worth a collective $2.7bn. At the same time, the ratings agency announced a review into the way it rates the securitisations after discovering a discrepancy in its methodologies, which may impact both new and old CMBS deals. “It’s not just one bug in the system, it looks like there’s something more global going on,” said Julia Tcherkassova, mortgage-debt analyst at Barclays Capital in New York. “It’s very likely that CMBS issuance this year will now be lower than anticipated.” The securities, which pool together mortgage loans to companies, are an important source of credit for the wider US economy.

Debt deal brings relief, now downgrade awaited - (www.reuters.com) Investors boosted stocks and sold safe-haven assets on Monday, betting that a last-minute deal in Washington meant the U.S. economy would avoid default. There remained a widespread assumption, however, that credit ratings agencies could downgrade U.S. Treasuries from their vaunted triple-A status, a move that would impact the valuation of numerous other assets. After a tense weekend spent in search of a compromise to allow the U.S. borrowing limit to be lifted, U.S. President Barack Obama said leaders from both parties reached a deal to cut the budget deficit by $1 trillion over 10 years, with additional savings of $1.4 trillion possible. The plan must be passed by both houses of Congress and will still face some opposition. But it is expected to allow the debt ceiling to be raised, avoiding the prospect of Washington not being able to pay its bills and defaulting.

REVEALED: The First Industry To Lose Big In The Debt Ceiling Fight - (www.businessinsider.com) Defense! As part of the debt ceiling fight, there's a "trigger" mechanism that will induce automatic cuts if lawmakers can't agree to other cuts come December. Those cuts: largely focused on Medicare and defense. Hence, defense stocks are among the big losers today. Here's PPA, the ProShares Aerospace And Defense Portfolio ETF. That big red bar (via StockCharts.com) tells you all you need to know.