KeNo's Housing and Economic Portal: Wednesday February 19 Housing and Economic stories

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Exclusive: U.S. banking regulator, fearing loan bubble, warns funds - (www.reuters.com) A U.S. bank regulator is warning about the dangers of banks and alternative asset managers working together to do risky deals and get around rules amid concerns about a possible bubble in junk-rated loans to companies. The Office of the Comptroller of the Currency has already told banks to avoid some of the riskiest junk loans to companies, but is alarmed that banks may still do such deals by sharing some of the risk with asset managers. "We do not see any benefit to banks working with alternative asset managers or shadow banks to skirt the regulation and continue to have weak deals flooding markets," said Martin Pfinsgraff, senior deputy comptroller for large bank supervision at the OCC, in a statement in response to questions from Reuters. Among the investors in alternative asset managers are pension funds that have funding issues of their own, he said.

Fleckenstein's warning: Stocks could plunge 30% - (www.cnbc.com) Bill Fleckenstein is not ready to call the top for the market just yet. But pointing to the S&P 500's valuation, he says that once stocks do start to fall, the decline could prove extremely painful. "The [price-to-earnings ratio] is 16, 17 times earnings," Fleckenstein said on Tuesday's episode of "Futures Now." "Why would you pay 16 times for an S&P company? I don't care about where rates are, because rates are artificially suppressed. Why isn't that worth 11 or 12 times? Just by that analysis, you'd be down by a quarter or 30 percent. So there's a huge amount of downside." Fleckenstein's comments came before Turkey's decision to raise interest rates and today's downturn for U.S. stocks. For Fleckenstein, a noted short seller who is famous for making money in the 2008 crash, the Federal Reserve's quantitative easing program has led investors to badly misprice stocks.

Ready to pop: $1.2 trillion student loan bubble - (www.cnbc.com) Obama's education focus overlooks next financial contagion. With the $1.2 trillion student loan crisis accelerating, President Barack Obama gave a nod in his State of the Union speech to the millions of young Americans starting their adult lives in crushing debt but offered no new proposals for relief. "We're shaking up our system of higher education to give parents more information, and colleges more incentives to offer better value, so that no middle-class kid is priced out of a college education," Obama said Tuesday night. "We're offering millions the opportunity to cap their monthly student loan payments to 10 percent of their income, and I want to work with Congress to see how we can help even more Americans who feel trapped by student loan debt."

Billionaires Fuming Over Market Selloff That Sinks Magnit - (www.bloomberg.com) Funny how when their stocks are going up, it is because of the CEOs. When their stock is tanking, it is not their fault, just the fault of the markets!! J

Two of Russia’s billionaires have had enough of this year’s stock market selloff. Sergey Galitskiy, the owner of grocery chain OAO Magnit, fumed over his stock’s 19 percent plunge this month, saying on a Jan. 27 conference call that “the market is so crazy that I have to apologize for the best results in history” in 2013. A day later, Oleg Tinkov, the founder of TCS Group Holding Plc, vented on Facebook Inc. that “irrational behavior” was behind the plunge that left the credit-card issuer down 36 percent since an October initial public offering. Magnit, Russia’s largest food retailer, is off to the worst start to a year since its 2008 listing in London while TCS has slid since a Nov. 15 report that Russia’s proposed ban on the sale of credit cards by mail would hurt its business. Analysts surveyed by Bloomberg predict record revenue for both companies even as Russia’s economy grows at the slowest pace since a 2009 recession. “It’s the markets, not CEOs, that make decisions on valuations and prices, and those guys are clearly upset about it,” Ian Hague, founding partner of New York-based Firebird Management LLC, which manages $1.3 billion of assets including Russian stocks, said by phone from Tbilisi, Georgia, yesterday.

Turkey More Than Doubles Main Interest Rate to Halt Lira Slump - (www.bloomberg.com) The lira swung between gains and losses as traders assessed whether a doubling of interest rates would be enough to stem capital outflows in the face of further reductions in U.S. monetary stimulus. Stocks fell. The Turkish currency strengthened more than 4 percent following the central bank’s midnight rates decision before depreciating as much as 2.4 percent. It climbed 0.5 percent to 2.2407 per dollar at 7:23 p.m. in Istanbul. Yields on two-year benchmark notes decreased 18 basis points to 10.88 percent and the Borsa Istanbul 100 Index (XU100) of shares slumped 2.3 percent.

Another way the NAr manipulates sales figures for positive spin - (www.ochousingnews.com) The National Association of realtors lies about market data; it doesn’t just exagerate or consistently repeat honest mistakes — it lies — knowingly and purposefully. Back in early 2011, I reported the National Association of realtors caught lying about home sales. Later, Reuter’s reported Existing home sales to be revised down from 2007, and ZeroHedge noted US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports. The NAr would like everyone to believe these were “honest” mistakes and that this corrupt trade organization intended to provide accurate data, but they merely made a small mistake; however, that characterization misses a deeply pathological flaw in the organization itself that renders it incapable of telling the truth. I exposed that problem in The real reason the NAr affordability index is completely worthless.

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