KeNo's Housing and Economic Portal: Monday February 6 Housing and Economic stories

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TOP STORIES:

Fears Mount That Portugal Will Need a Second Bailout - (online.wsj.com) Investors, economists and politicians are increasingly concerned that Portugal will need a second bailout as fears mount that it won't be able to return to markets for financing next year. While the Portuguese government's finances are covered this year as long as it abides by its bailout agreement, Portugal must regain full access to capital markets next year to help repay €9 billion ($11.64 billion) in debt coming due in September 2013. While that date is still far off, the International Monetary Fund could require Portugal to present its financing plans a full year ahead before releasing more aid, as it did with Greece. And as with Greece, the IMF may demand fresh bailout terms if it becomes clear the country won't be able to return to market in a year. Given the yields demanded by investors on Portugal's bonds, economists fear that may become the case.

Notorious Market Timer Joe Granville Predicts A 50% Plunge – (www.businessinsider.com) The man who sparked the crash in 1981. Notorious market timer Joe Granville predicted a 50% market plunge yesterday on Bloomberg Television: Joseph Granville, whose “sell everything” call in 1981 sparked a decline in U.S. stocks, said the Dow Jones Industrial Average (INDU) will drop toward 8,000 this year because of waning momentum and volume. “Volume precedes prices,” Granville, 88, a technical analyst who has been publishing the Granville Market Letter from Kansas City, Missouri for about 50 years, said in an interview on “Street Smart” on Bloomberg Television. “You are seeing much lower volume. That tells you that prices are going to go much lower, much lower than most people think possible and very few people have projected.” Art Cashin noted the significance of Granville's call (via Zero Hedge): Calamity Joe Is Back - Last week, we wrote that various cycles and technicians were pointing to a possible market top, on or about January 23rd. The “causes” ranged from sophisticated oscillators to the new moon to astrological confluences. Yesterday, one more “cause” was added and it came from a somewhat controversial Wall Street legend - Joe Granville.

Petroplus filing for insolvency, halts supplies - (www.reuters.com) Swiss-based oil refiner Petroplus (PPHN.S) is filing for insolvency, putting over 2,000 jobs across Europe at risk, after banks called in debts, triggering a $1.75 billion default. Europe's largest independent refiner by capacity has been teetering since its lenders restricted credit late last year, a victim of thin refining margins and high debt that was a result of its private equity-backed, acquisition-based business model. In an email to customers seen by Reuters on Tuesday, Petroplus said it has halted all supplies from its Coryton refinery in southern England. However, a spokesman for the Department of Energy and Climate Change said the Coryton refinery remains operational. The plant is a major fuel supplier to the South East.

Eurozone finance ministers reject Greek debt offer - (www.telegraph.co.uk) Talks to restructure Greece's debt hit a new impasse after eurozone finance ministers rejected an offer from private bondholders because the cost of sweeteners on new Greek bonds were too high. The blow came after a day in which European markets had risen on hopes that attempts to resolve the latest phase of the Greek debt crisis would be successful. Eurozone ministers have demanded that negotiations between the Greek government and Institute of International Finance (IIF) reach agreement on a lower average coupon, or interest rate, on new Greek bonds issued in return for a haircut on existing debt held by private investors. "The ministers have sent the offer back for negotiations," said an official last night. "The ministers want a lower coupon than presented in the offer."

Greek default is essentially a given: S&P - (money.cnn.com) Greece is facing an increasing likelihood of default, even if creditors reach an agreement on a deal aimed at reducing the nation's massive debt load. Even with the writedowns being discussed, Greece's debt burden would still be "very high" and the nation's credit rating will remain "very low," said John Chambers, head of sovereign ratings at S&P. Speaking at a Bloomberg sovereign debt conference in New York Tuesday, Chambers said any deal between Greece and private sector investors would "in all likelihood" qualify as a default. The aim of the deal is to slash the nation's debt load to 120% of gross domestic product by 2020 from its current 160%. Last week, officials from the European Union, International Monetary Fund and European Central Bank were in Athens to review Greece's finances and start negotiating a second bailout.