Thursday February 20 Housing and Economic stories

TOP STORIES:

Wall Street's new housing bonanza - (www.cnbc.com) Wall Street's latest trillion-dollar idea involves slicing and dicing debt tied to single-family homes and selling the bonds to investors around the world. That might sound a lot like the activities that at one point set off a global financial crisis. But there is a twist this time. Investment bankers and lawyers are now lining up to finance investors, from big private equity firms to plumbers and dentists moonlighting as landlords, who are buying up foreclosed houses and renting them out. The latest company to test this emerging frontier in securitization is American Homes 4 Rent. The company talked to prospective investors at a conference in Las Vegas last week about selling securities tied to $500 million of debt, according to people briefed on the matter.

Russia to await new Ukraine government before fully implementing rescue: Putin - (www.reuters.com) President Vladimir Putin raised the pressure on Ukraine on Wednesday, saying Russia would wait until it forms a new government before fully implementing a $15 billion bailout deal that Kiev urgently needs. Putin repeated a promise to honor the lifeline agreement with Ukraine in full, but left open the timing of the next aid installment as Kiev struggles to calm more than two months of turmoil since President Victor Yanukovich walked away from a treaty with the European Union. A day after Prime Minister Mykola Azarov resigned on Tuesday, hoping to appease the opposition and street protesters, Russia tightened border checks on imports from Ukraine in what looked like a reminder to Yanukovich not to install a government that tilts policy back towards the West.

Record Cash Leaves Emerging Market ETFs on Lira Drop - (www.bloomberg.com) Investors are pulling money from exchange-traded funds that track emerging markets at the fastest rate on record, as China’s slowing growth and cuts to central-bank stimulus sink currencies from Turkey to Brazil. More than $7 billion flowed from ETFs investing in developing-nation assets in January, the most since the securities were created, data compiled by Bloomberg show. The iShares MSCI Emerging Markets ETF has seen its assets shrink by 11 percent, while the Vanguard FTSE Emerging Markets ETF is poised for the biggest monthly redemption since the fund was started in 2005. The WisdomTree Emerging Markets Local Debt Fund is on track for an eighth straight month of withdrawals.

Rating agencies criticise China's bailout of failed $500m trust - (www.ft.com) Global rating agencies – often among the more sanguine voices on China – have warned that this week’s bailout of a soured $500m trust loan was a wasted chance to address rising moral hazard in the country’s shadow banking sector. The words of caution follow a last-minute deal to avert the default of a Rmb3bn trust product backed by loans to a now-defunct coal mining company. The product’s issuer, China Credit Trust, on Monday said it had raised the cash needed to pay back investors from three unnamed backers. Though such products have failed in the past, a full or partial default of the “Credit Equals Gold No. 1” trust would have been the most high-profile case in which investors were left nursing losses. Instead their investments were made good, with only the third year of interest payments held back – something ratings agencies have billed as a missed opportunity to address skewed risk perceptions within the shadow banking sector.

World risks deflationary shocks as BRICs puncture credit bubbles - (www.telegraph.co.uk) Half the world economy is one accident away from a deflation trap. The International Monetary Fund says the probability may now be as high as 20pc. It is a remarkable state of affairs that the G2 monetary superpowers - the US and China - should both be tightening into such a 20pc risk, though no doubt they have concluded that asset bubbles are becoming an even bigger danger. "We need to be extremely vigilant," said the IMF's Christine Lagarde in Davos. "The deflation risk is what would occur if there was a shock to those economies now at low inflation rates, way below target. I don't think anyone can dispute that in the eurozone, inflation is way below target." It is not hard to imagine what that shock might be. It is already before us as Turkey, India and South Africa all slam on the brakes, forced to defend their currencies as global liquidity drains away. The World Bank warns in its latest report - Capital Flows and Risks in Developing Countries - that the withdrawal of stimulus by the US Federal Reserve could throw a "curve ball" at the international system.

OTHER STORIES:

Finally Someone Has The Guts To Tell The Truth About Detroit’s Dirt Cheap Homes - (www.mfi-miami.com)

Thai army to deploy more troops amid warning of poll violence - (www.bloomberg.com)
Ukraine President Fails to Quell Unrest After Azarov Exit - (www.bloomberg.com)

Erdogan to Give Rate Rise Time Before Trying Plan B - (www.bloomberg.com)
Putin Uses Oil Giant Rosneft to Tighten Grip on Economy - (www.bloomberg.com)

China Manufacturing Index Shows Contraction - (www.bloomberg.com)