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European Recovery Means Little for Jobless
Generation - (www.bloomberg.com) Francisco
Justicia Carrasco has been sending off 50 resumes every Monday for more than
three years. He doesn’t expect a job for a long time to come yet. “The
situation is screwed up,” said the 28-year-old who lives in Ripollet, close to
Barcelona, and has worked in a range of jobs from shop cashier to packaging
over the past decade. “I don’t see any improvement at all from last year or
even the year before.” Carrasco is one of the legion of unemployed across Europe’s southern periphery who are seeing little
benefit from an economic recovery that pulled the euro region out of its longest-ever recession in the second quarter. More than a third
of the bloc’s jobless are in Greece and Spain. In Greece, 64.9 percent of
those aged between 15 and 24 are without work.
Egypt
imposes state of emergency after 95 people killed - (www.reuters.com) Egyptian
security forces crushed the protest camps of thousands of supporters of the
deposed Islamist president on Wednesday, shooting almost 200 of them dead in
the bloodiest day in decades and polarizing the Arab world's most populous
nation. At least 235 people were killed in all, including at least 43 police,
and 2,000 wounded, a health official said, in fierce clashes that spread beyond
Cairo to towns and cities around Egypt.
Deposed president Mohamed Mursi's Muslim Brotherhood said the death toll of
what it called a "massacre" was far higher.
Wal-Mart
sales disappoint as shoppers worldwide curb spending - (www.reuters.com) Wal-Mart Stores Inc.
reported a surprise decline in quarterly same-store sales in the United States,
its biggest market, after shoppers came in less often because higher taxes and
gasoline prices were leaving them with less spending money. The world's largest
retailer also cut its revenue and profit forecasts for its fiscal year, raising
concerns about retail spending
as the all-important holiday season nears. It cited weak results from the
United States, as well as Canada, Mexico, Japan and
other international markets that
it is relying on for long-term growth. Shares of Wal-Mart were down 2.4 percent
at $74.59 in midday trading. U.S. sales at stores open at least a year at the
company's main Walmart
chain fell 0.3 percent in the second quarter ended in late July, the company
said on Thursday. Wall Street analysts were expecting a 1 percent gain,
according to Thomson Reuters I/B/E/S.
U.S.
Net Outflow of Long-Term Securities Rises to $66.9 Billion - (www.bloomberg.com) Foreign
selling of U.S. long-term portfolio assets rose for a second straight month in
June as investors abroad sold equities and a record amount of Treasury notes
and bonds, a government report showed. The net long-term portfolio investment outflow was
$66.9 billion after a $27 billion net decline in May, the Treasury Department
said in a statement today in Washington. Net selling of long-term Treasuries by
private foreign investors increased to $40.1 billion from $29 billion the prior
month, the department said. Private foreign investors were net sellers of all
categories of U.S. long-term portfolio assets -- government debt, agency
securities, corporate bonds and stocks in June, the report showed. As U.S.
growth strengthens and the world economy improves, investors may be more
willing to take on risks elsewhere before the Federal
Reserve starts
reining in monetary stimulus, economists said.
Fitch
and Fed warn on risks from ETFs - (www.ft.com) Parts
of the booming market for exchange traded funds risk worsening broader market
sell-offs or triggering crashes, according to two studies released this week. The
reports, from the Federal Reserve and Fitch Ratings, come weeks after a sharp
sell-off in fixed income sparked scrutiny of certain ETFs and
the structure of
the industry, which has grown to a market worth more than $2tn. ETFs allow
investors quick and easy exposure to a range of assets that might otherwise be
difficult to access. But the two reports warn that certain of the investment
tools – corporate bond ETFs and so-called “leveraged ETFs” – could destabilise
broader markets. ETFs that seek to replicate the performance of corporate bonds
risk intensifying a sell-off in the underlying debt, according to rating agency
Fitch.
Spanish
skyscraper run by "Bad Bank" missing elevators in monster goof - (www.nydailynews.com) What
goes up must walk down. In what will surely go down in history as one the
greatest architectural blunders, the town of Benidorm in Alicante, Spain, had
almost completed its 47-story skyscraper when it realized it excluded plans for
elevator shafts.... The bizarre nature of the practices put in place in the
construction of InTempo doesn't stop at bad banks and missing elevator shafts.
The initial backer of the project, Caixa Galicia, stopped paying workers for
four months around the time it realized -- after about 23 floors had been
completed -- that a service elevator hadn't been installed for the 41 workers
who had been hauling materials up 23 flights of stairs.
China Banks’ Bad Loans Rise for Seventh Quarter
as Economy Slows - (www.bloomberg.com) Chinese
banks’ bad loans rose for a seventh straight quarter, extending the longest
streak in at least nine years as the world’s second-largest economy continued
slowing. Non-performing loans climbed by 13 billion yuan ($2.1 billion) in the
second quarter from the end of March, reaching 539.5 billion yuan, the China
Banking Regulatory Commission said in a statement on its website today. Soured debt
increased across all lender categories, including state-owned and regional
banks. China’s economy slowed for a second straight quarter during the period,
as growth in factory output and fixed-asset investment weakened. A June
crackdown on off-balance-sheet lending and other credit outside the banking
system caused a cash squeeze, driving money-market rates to a record.
The Hindenburg Omen is Back! Will it Stick This
Time? - (www.ispyetf.com) The
Hindenburg Omen had its glory days (2007), but more recently it’s become famous
for notorious misfires. Despite many hyped up Omen sightings in recent years,
the Dow Jones (DJI: ^DJI) and S&P 500 (SNP: ^GSPC) are trading near
all-time highs while the VIX (Chicago Options: ^VIX) is hovering near historic
lows. But (and this could turn out to be a big but), I stumbled upon a
statistical nuance that may restore the bruised indicator’s image. Hindenburg Omen is Back: The latest
rally leg has brought a whole cluster of Omens in its wake. Omen clusters (not
just scattered signals) appear to be the key to the signal’s reliability (or
lack thereof). An Omen here or there may get the media’s attention, but it
doesn’t consistently phase stocks. However – this observation may restore the
Omen’s credibility - a cluster of a dozen or so Omens in a 50-day period, tends
to be bearish for stocks. We are seeing such an Omen cluster right now.
The chart below plots the S&P 500 (NYSEArca: SPY) against the most recent
‘Dozen-Omen-Cluster’ sightings. They occurred in January/February 2000,
March/April 2006 and July/August 2013.
India
Restricts Foreign-Exchange Outflows - (www.bloomberg.com) India increased efforts to stem the rupee’s
plunge and stop capital outflows that are pushing the economy towards its
biggest crisis in more than two decades. The Reserve Bank of India, whose Governor Duvvuri Subbarao steps down
next month, cut the amount local companies can invest overseas without seeking
approval to 100 percent of their net worth, from 400 percent, according to a
statement late yesterday. Residents can remit $75,000 a year versus the
previous $200,000 limit. Rupee forwards rose for the first time in three days. Policy
makers’ moves since July to tighten cash supply, restrict currency derivatives
and curb gold imports have failed to arrest the rupee’s slump to record lows as
they struggle to attract capital to fund a record current account deficit. The
rupee has weakened 28 percent in the past two years, the biggest tumble since
the government pledged gold reserves in exchange for loans from the International Monetary Fund in 1991.
Your
mortgage documents are fake - (www.salon.com) Prepare
to be outraged. Newly obtained filings from this Florida woman's lawsuit
uncover horrifying scheme. If you know about foreclosure fraud, the mass
fabrication of mortgage documents in state courts by banks attempting to
foreclose on homeowners, you may have one nagging question: Why did banks have
to resort to this illegal scheme? Was it just cheaper to mock up the documents
than to provide the real ones? Did banks figure they simply had enough power
over regulators, politicians and the courts to get away with it? (They were
probably right about that one.) A newly unsealed lawsuit, which banks settled
in 2012 for $95 million, actually offers a different reason, providing a key
answer to one of the persistent riddles of the financial crisis and its
aftermath. The lawsuit states that banks resorted to fake documents because
they could not legally establish true ownership of the loans when trying to
foreclose. This reality, which banks did not contest but instead settled out of
court, means that tens of millions of mortgages in America still lack
a legitimate chain of ownership, with implications far into the future. And if
Congress, supported by the Obama administration, goes back to the same housing
finance system, with the same corrupt private entities who broke the nation’s
private property system back in business packaging mortgages, then shame on all
of us.
Greek youth unemployment soars to 64.9pc - (www.telegraph.co.uk) Greek
youth unemployment soared to a fresh high of almost 65pc in May, underscoring
the dire state of the recession-hit economy. Repeated doses of austerity under
international bailouts have almost tripled Greece's jobless rate since its debt
crisis began in 2009, weighing on an economy in its sixth year of recession. Unemployment
rose to 27.6pc in May from an upwardly revised 27pc in April, according to data
from statistics agency ELSTAT. This is more than twice the average rate in the
eurozone, which stood at 12.1pc in June, and is the highest reading since
Greece's statistics office began publishing monthly jobless data in 2006. This
means there are now almost 1.4m people out of work in Greece, and 3.3m people
who are considered economically inactive. Joblessness in the 15-to-24 age group
jumped to 64.9pc, from 57.5pc in April.
Can
Booze Save the U.S. Postal Service? - (danville.patch.com) With
the U.S. Postal Service reporting a $740 million loss for the third quarter of
2013, mail officials are scrambling to figure out how to make the agency
profitable. A ingredient to the recovery could be alcohol. According to
the Huffington Post,
U.S. Postmaster General Patrick Donahoe recently pitched an idea to allow the
U.S. Postal Service to deliver beer, wine and spirits directly from
wineries, breweries and distilleries straight to your doorstep. "U.S.
law currently prevents the Postal Service from mailing alcohol," the
Huffington Post reported. "The Postal Service even asks customers to
cover any alcohol-related logos or labels if they choose to use an alcoholic
beverage box for shipping." Donahoe claims that adding alcohol delivery
could raise $50 million per year. But while the plan could generate dollars in
theory, many smaller businesses like craft and microbreweries would
likely not have the staff, resources and inventory to meet the demand of
alcohol delivery service.
So you think Europe's debt crisis is finally
over? Time to think again - (www.telegraph.co.uk) One
of the factors underpinning renewed confidence in the UK economy is the belief
that the crisis in Europe is now essentially over. The immediate threat of banking
and fiscal meltdown in the southern periphery has receded, and after one of the
longest recessions on record – six successive quarters of economic contraction
– there are even tentative signs of recovery. Among eurozone policymakers, the
relief is palpable. Mario Draghi, president of the European Central Bank, has
waved his magic wand and apparently succeeded in calming the economic
maelstrom. This is small thanks to the German core, which fought his actions
tooth and nail but now seems more than happy to take credit. In any case, with
the fear of financial Armageddon removed, European economies can begin the long
march back to health. For Britain too, a key uncertainty for the banking and
business sectors has been answered.
'Hindenburg Omen' hovering
over Wall Street again - (www.cnbc.com) Jittery
Wall Street traders are looking up in the sky and seeing Hindenburgs. That can
be a bad thing for markets, which have suffered in the past when the tripwires
associated with the "Hindenburg Omen"
get activated. Market veteran Art Cashin said Monday that the market phenomenon
is looming again. "There have been multiple occurrences of the Hindenburg
Omen in the last several weeks," Cashin, the director of floor operations
at UBS, said in his morning note.
Easy Money Policy Will Lead to World’s Greatest
Credit Collapse - (finance.yahoo.com) With
home prices rising, consumer confidence at levels not seen since 2008, and
record high stock prices, what's not to love about the economic comeback? A
lot, according to Steve Hochberg, the chief market analyst at Elliott Wave International, who says the warning signs are mounting that
another, even worse, credit crisis is coming and a deep bear market will join
it. "There's an age-old cycle that happens, where you have periods ofeasy
money, and certain sectors of our economy gorge on the easy credit, and
then invariably, when rates start to rise and the economy slows, whoever has
been gorging on that easy credit gets into trouble, the economy falters and
markets go down," Hochberg says in the attached video. Of particular concern
to him are emerging markets, sovereign debt, municipal bonds and student loans,
the latter of which is increasingly in the spotlight as recent college
graduates face huge debt and weak jobs prospects. "We have $1 trillion
worth of student loans out there, and recent studies show that only about 40%
of them are actually being paid right now," he warns. "We think this
is a huge problem area because as students graduate, there aren't the jobs or
the wages to sustain themselves to pay off these loans."
Eric
Holder Owes the American People an Apology - (www.bloomberg.com) The
Justice Department made a long-overdue disclosure late Friday: Last year when
U.S. Attorney General Eric Holder boasted about the successes that a
high-profile task force racked up pursuing mortgage fraud, the numbers he
trumpeted were grossly overstated. We're not talking small differences here.
Originally the Justice Department said 530 people were charged criminally as
part of a year-long initiative by the multi-agency Mortgage Fraud Working
Group. It now says the actual figure was 107 -- or 80 percent less. Holder
originally said the defendants had victimized more than 73,000 American
homeowners. That number was revised to
17,185, while estimates of homeowner losses associated with the frauds dropped
to $95 million from $1 billion. The government restated the statistics because
it got caught red-handed by a couple of nosy reporters. Last October, two days
after Holder first publicized the numbers, Phil Mattingly and Tom Schoenberg of
Bloomberg News broke the story that
some of the cases included in the Justice Department's tally occurred before
the initiative began in October 2011. At least one was filed more than two
years before President Barack Obama took office.
Iron Ore Gluts Seen Through 2017 on Record
Supply: Commodities - (www.bloomberg.com) The
seaborne iron ore market is poised for at least four years of expanding gluts
as producers from Rio Tinto Group to Vale SA increase supply to a record just
as growth in China drops to the slowest pace in a generation. The surplus will
reach 82 million metric tons in 2014, the most since at least 2008, and the
glut will keep growing through 2017, according to Goldman Sachs Group Inc.
Australia will account for about 66 percent of the supply gains next year,
Morgan Stanley says. Iron ore will average $115 a ton in 2014, 19 percent less
than now and the least since 2009, according to the median of 10 analyst
estimates compiled by Bloomberg. Prices rose as much as eightfold in the past
decade as China added $6.8 trillion to its gross domestic product. The nation
now makes almost one in every two tons of steel produced globally. Ore supply
failed to keep pace, with shortages in seven of the past eight years, spurring
Rio, BHP Billiton Ltd. and Fortescue Metals Group Ltd. to boost output.
In
One Bundle of Mortgages, the Subprime Crisis Reverberates - (www.nytimes.com) A
subprime deal came back to haunt Fabrice Tourre, a former Goldman
Sachstrader,
when a federal jury in Manhattan found him liable for civil securities fraud. He
is not the only one feeling the pain of a subprime transaction six years on. Hundreds
of thousands of subprime borrowers are still struggling. Some of their
mortgages ended up in another Goldman deal that was done at the same time as
Mr. Tourre was working on his own financial alchemy. In February 2007, just
before everything fell apart, Goldman Sachs bundled thousands of subprime
mortgages from across the country and sold them to investors. This bond became
toxic as soon as it was completed. The mortgages slid into default at a speed that
was staggering even for that era. Despite those losses, that bond still lives.
It has undoubtedly left its mark on ordinary borrowers. But the impact of the
deal spread ever further. It touched the bankers who sold the deal. It even
landed on taxpayers, who ended up owning a large slice of the Goldman bond.
The
homebuilding industry's increasingly desperate attempts to preserve HMID - (www.ochousingnews.com) Like
any industry that enjoys an undeserved government subsidy, the homebuilding
industry is fighting to keep it. The home mortgage interest deduction does
little to increase home ownership rates, particularly among low wage earners,
but it does inflate housing prices, especially where high wage earners live.
Homebuilders equate high house prices with greater profits and more
homebuilding activity, so they are fighting to keep it despite the fact it is
very costly to the US taxpayer and does little to boost home ownership rates. Supporters
of the home mortgage interest deduction are very worried that Congress will
curtail it in the debate over comprehensive tax reform. The National
Association of Homebuilders is becoming increasingly vocal — and increasingly
desperate — in their attempts to justify this subsidy.
