Wednesday July 1 Housing and Economic stories

TOP STORIES:

Small U.S. frackers face extinction amid drilling drought - (www.reuters.com) Oil field work was coming in fast when GoFrac doubled its workforce and equipment fleet at the beginning of last year, just one of hundreds of small oil service companies thriving on the revival of U.S. drilling. Founded in November 2011 with a loan of around $35 million, the Fort Worth, Texas-based company was by 2014 making nearly that much in monthly revenues, providing the crews and machinery needed by companies including ExxonMobil (XOM.N) to frack oil and gas wells from North Dakota to Texas. Executives flew to meetings across the country in a Falcon 50 private jet, and entertained customers at their suite at the Texas Rangers baseball stadium in Arlington. The firm would soon move into a 22,000-square-foot office on the 12th floor of Burnett Plaza, one of Fort Worth's most prestigious office buildings. Eighteen months on, however, without work and unable to meet monthly loan payments, GoFrac has closed its doors, its ambitions gutted by a steep dive in oil prices. Of the 550-odd employees on the payroll at the beginning of this year, only six remain. 

Puerto Rico faces a 'bailout' problem - (www.cnbc.com)  Mired in $73 billion in debt, Puerto Rico has tried multiple avenues to get its financial affairs in order, including the introduction of HR 870, a U.S. congressional bill that would let its municipalities and public corporations declare bankruptcy under Chapter 9—as is allowed in the states. But some experts think it's unlikely Congress will pass the bill.  "The perception is that, if you give Puerto Rico the authority to file for bankruptcy, that's the equivalent of a federal bailout, and that taxpayers in Iowa, in Texas and Alaska are authorizing federal funds to be spent to bail out Puerto Rico," Frank Shafroth, a professor specializing in municipal bankruptcy at George Mason University, said at a conference this week. Shafroth added that the perception is wrong: Detroit, he noted, did not receive "a thin dime" when it declared bankruptcy in July 2013. Bankruptcy is the opposite of a bailout, he said at the Ravitch Puerto Rican Fiscal Crisis Session in New York. 

Authorities arrest 243 people in $712 million Medicare fraud - (www.reuters.com)  The U.S. Department of Justice said on Thursday that 243 people have been arrested across the country, charged with submitting fake billing for Medicare, a government healthcare program, that totaled $712 million. Attorney General Loretta Lynch described the arrests as the largest criminal health care fraud takedown in the history of the Justice Department. Those arrested included 46 doctors, nurses and other licensed medical professionals. The charges are based on a variety of alleged fraud schemes, the government said, including submitting claims to Medicare and Medicaid, the healthcare program for low-income individuals, for treatments that were medically unnecessary and often never provided. The nationwide sweep, led by the Medicare Fraud Strike Force and the U.S. Centers for Medicare and Medicaid Services, involved about 900 law enforcement officials. It's the largest both in terms of the number of those charged and the amount of money lost.

Greek Deal Won't Save the Country's Banks - (www.bloomberg.com)  Greek banks, which received two capital infusions in the past two years, may need a third one as a recession drives up losses from bad loans. The four biggest lenders, accounting for 91 percent of the country’s banking assets, could see their 12 billion euros ($14 billion) of tangible core capital wiped out by mounting provisions as overdue and restructured loans default. Even if Greece reaches an agreement with European creditors to free up additional money, its next bailout will need to include a new round of funding for the ailing banks. Bad loans rose last quarter as the economy slipped back into recession and Greeks delayed payments waiting for the new government to pardon debt. With the recovery stalled, the four banks -- National Bank of Greece SA, Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias SA -- could require 16 billion euros in additional provisions to cover losses if half of the 59 billion euros of overdue and restructured loans on their books sour.

Austrian ‘Bad Bank’ Heta Reports $7.9 Billion Shortfall - (www.bloomberg.com)  Heta Asset Resolution AG, the Austrian “bad bank” that unveiled a 7 billion-euro ($8 billion) capital hole Wednesday, said an insolvency may ultimately be the only way to shut down the company. Heta, the remnant of the failed, nationalized Hypo Alpe-Adria-Bank International AG, warned on Thursday that the insolvency remains on the table even as a debt moratorium imposed by regulators staved it off for now. Heta disclosed yesterday that 7.9 billion euros of writedowns depressed the value of its assets to 9.6 billion euros by the end of last year, 42 percent less than its total liabilities. “In the view of the management board, there are uncertainties about whether an orderly wind-down of Heta is possible outside of an insolvency, especially in the period outside of the debt moratorium currently in place,” Heta said in its annual report published on its website.

OTHER STORIES:

China’s Stocks Sink, Heading for Biggest Weekly Loss Since 2009 - (www.bloomberg.com)
Greek Exit From Euro Appears Increasingly Likely - (www.nytimes.com)
Lagarde Affirms Greece’s June 30 Deadline to Make IMF Payments - (www.bloomberg.com)
The latest on Greece: German central banker gives warning - (finance.yahoo.com)
Exclusive: Greece has not asked Russian finance ministry for aid - deputy minister - (www.reuters.com)

As the Rich Bounce Back, the Middle Class Stays Stagnant - (www.bloomberg.com)
China’s Churning Out Steel And the Rest of the World Isn’t Happy - (www.bloomberg.com)
Beijing Warns Hong Kong That Rejected Electoral Reform Plan Is Only Offer on Table - (www.time.com)
Three Ukrainian soldiers killed as fighting intensifies in east: Ukraine military - (www.reuters.com)
World's displaced hits record high of 60 mln, half of them children - UN - (www.reuters.com)

Tuesday June 30 Housing and Economic stories

TOP STORIES:

Judge Adds The Fed To List Of Financial-Crisis Lawbreakers In AIG Ruling - (www.forbes.com) It’s cold consolation for former AIG Chairman Hank Greenberg and his shareholders now, but a federal judge in Washington has ruled that the Federal Reserve broke the law when it seized almost 80% of AIG’s stock and charged it loan-shark rates for an $85 billion bailout in the depths of the financial crisis. The Fed’s behavior was all the more reprehensible because it gave other financial firms like Citigroup, Bank of America, Goldman Sachs and Morgan Stanley tens of billions of dollars in emergency loans on better terms. Many of those firms, Judge Thomas C. Wheeler noted in his 75-page decision, “engaged in much riskier and more culpable conduct than AIG, but received much more favorable loan treatment from the Government.”

Are junk bonds sending an early warning to markets? - (www.cnbc.com) While stocks are mildly higher over the past two months, high-yield bonds have fallen by more than 2 percent—and some say that presents an early warning for markets as a whole. To Larry McDonald, head of U.S. strategy with Societe Generale's macro group, the underperformance of high-yield bonds is a "systemic risk indicator," showing the possibility of instabilities within the financial system. After all, high-yield bonds tend to track stocks closely. Since they are much more sensitive to concerns about default than most fixed-income products—hence their high yields, and their more colorful "junk bond" moniker—they are much more levered to the business cycle and the state of the economy. That makes them similar to stocks. One theory is that "cracks" show in the high-yield market before they appear in the stock market, making divergence between junk bonds and stocks an indicator for where the market is going next. Since junk bonds have been underperforming, the concern would be that stocks are next to fall.

Greek central bank governor warns of 'uncontrollable crisis' - (www.theguardian.com) Greece’s radical Syriza government has confirmed that it will run out of money by the end of the month unless its creditors agree to release €7.2bn (£5.1bn) in bailout funds. As Athens prepared to meet its lenders on Thursday amid an increasingly sour atmosphere of claims and counter-claims, lead negotiator Euclid Tsakalotos conceded that the country does not have the funds to make a €1.6bn payment due to the International Monetary Fund due on 30 June. Athens delayed a payment to the IMF earlier this month, saying it would take advantage of a technical loophole, allowing it to “bundle” three tranches due this month into a single €1.6bn payment. But Tsakaolotos has now admitted that Greece simply does not have the money. He also underlined the fact that while Greece is still willing to make concessions to its lenders, it will not make pensions cuts — a key point of contention in the negotiations.

Even millionaires live paycheck to paycheck - (www.cnbc.com) It seems the rich are like the rest of us after all. One in five respondents with investable assets of $100,000 to $1 million, and 1 in 10 with investable assets of $1 million up to $10 million believe they have too much debt and are living paycheck to paycheck, according to a poll taken by MaritzCX. Among the 1,044 investors surveyed in November and December, 45% are worried they won't have enough income to last through retirement. And 30% believe they will have to work during that period of their lives. "What this is saying to me is even when you start looking at people who have managed to accumulate some wealth, they are also concerned about their future and about retirement,'' says Rich Brose, senior director strategic consulting for financial services at MaritzCX, which provides customer experience software and research services to help companies improve sales and customer retention. "They share a lot of the same concerns as ... the middle class and even people who might be struggling a little bit more.''

Govt lifts 'robosigning' restrictions on certain banks - (www.cnbc.com) Restrictions placed on certain banks for mortgage "robosigning" will lift as the firms have taken steps to fix their processes and pay restitution, the Office of the Comptroller of the Currency said Wednesday. The agency's consent orders against Bank of America, Citibank andPNC Bank will be terminated. Other banks will face additional servicing restrictions as they have not met all of the requirements of their consent orders. Institutions including EverBank, HSBC Bank, JPMorgan Chase, Santander, U.S. Bank and Wells Fargo have not reached the standards set in their agreements, the OCC said. However, it will not impede consumer access to mortgages as they will still be able to make loans.

OTHER STORIES:

Greek central bank issues 'Grexit' warning if aid talks fail - (www.reuters.com)
Tsipras: Greece Ready to Give ‘Big No’ to Bad Agreement - (www.bloomberg.com)
Will Greece leave the euro? A look at its options - (finance.yahoo.com)
Fed Decision Day Guide: Interest-Rate Projections, Gradual Pace - (www.bloomberg.com)

Why Everyone Will Be Looking for the Fed's New Dots Today - (www.bloomberg.com)
Meet the New Shadow Bank (It's a Lot Like the Old Shadow Bank) - (www.bloomberg.com)
LCH. Clearnet sounds alarm over declining use of repo - (www.ft.com)
Chinese Firms Put Cash to Work in Stocks - (www.online.wsj.com)

Monday June 29 Housing and Economic stories

TOP STORIES:

French Bonds Infected as Greek Crisis Swells Euro-Region Spreads - (www.bloomberg.com) Europe’s bond selloff is spreading to markets traditionally viewed as safer, with only Germany remaining unscathed by Greece’s impasse with creditors. The extra yield, or spread, that investors get for holding French or Belgian 10-year bonds rather than benchmark German debt surged above 50 basis points for the first time this year. Even bonds of the Netherlands and Finland, which have top AAA grades from at least two of the three major ratings companies, are suffering as the fallout from the Greek debacle spreads beyond the euro-zone periphery. “The semi-core is selling off,” said Piet Lammens, head of research at KBC Bank NV in Brussels. “On the other hand, the gains the bunds have made have also been rather disappointing. With the Greek story you could have expected the bund to make more ground.”

[Gilbert] Guy Who Manages $112 Billion Sees No Bond Buyers - (www.bloomberg.com) If you haven't realized by now that a lot of people are worried about bond-market liquidity, then I'm not sure why you're bothering to read me. (You're certainly not paying attention to my smarter and funnier colleague, Matt Levine.) But in the hope that you'll at least start taking an interest in where your pension fund is hanging out these days, maybe you'll listen when a guy who manages $112 billion tells you that if bad things happen in bond land, the fire doors might turn out to be locked. Martin Gilbert runs Aberdeen Asset Management which, as previously mentioned, manages rather a lot of money. Here's what he told Bloomberg Television’s Erik Schatzker and Olivia Sterns on Monday, explaining why he's lined up a $500 million overdraft facility and has a further $1 billion of cash: It will get ugly. You want bank lines in place in case you have to meet a redemption and there is no market.

Let's pause for a second to parse that sentence. Gilbert (no relation) was talking about the risk of either Greece leaving the euro or the U.S. starting to raise borrowing costs. Either or both could spook investors, who in turn might ask Aberdeen for their money back.

HSBC Chairman Flint Echoes Investor Worries Over Bond Liquidity - (www.bloomberg.com) HSBC Holdings Plc Chairman Douglas Flint said the clampdown on banks’ trading arms by regulators is contributing to concern by the world’s biggest investors that liquidity could vanish in a bond-market selloff. “We wanted banks to shrink their trading operations and they did,” Flint said at a conference organized by Swiss Re in Rueschlikon, Switzerland on Tuesday. “Now we’re worrying about how much more liquidity is available to long-term investors for their illiquid assets, and hence their appetite to take on such assets.” Flint echoed the concerns of Aberdeen Asset Management Plc Chief Executive Officer Martin Gilbert, who oversees $112 billion in fixed-income assets, and BlackRock Inc., the world’s largest asset manager, which have both set aside more money to meet requests from clients to pull their funds in the event of liquidity drying up. Global bond markets have lost about $640 billion since the end of April, driven by a surge in volatility linked to the worsening Greek turmoil.

Gap Is Closing A Quarter Of Its Stores And Cutting Jobs – (www.buzzfeed.com) The great reckoning in the retail world is, apparently, far from over. Gap, the biggest U.S. operator of specialty clothing stores, said today that it will close 140 North American locations this year while cutting about 250 jobs, mostly at its headquarters. It plans to close 175 stores in the region during the next few years, along with “a limited number” of stores in Europe, the company said in a statement. Significantly, the company said it will not be closing any outlet locations. After the closures — which represent 26% of all the regular Gap locations in North America — the company will have 500 full-price Gap stores and 300 Gap outlets. Gap anticipates saving $25 million a year from the moves starting in 2016, but will take a hit in the short term. “Customers are rapidly changing how they shop today, and these moves will help get Gap back to where we know it deserves to be in the eyes of consumers,” Gap CEO Art Peck said in a statement. The statement doesn’t impact Banana Republic, Old Navy, or Athleta.

Class of 2015 has highest student debt in history - (www.bloomberg.com) The class of 2015 will leave college with more than a degree. They're also shouldering the most student debt in U.S. history. On average, student borrowers who graduate this year will owe $35,051, according Mark Kantrowitz, a student financial aid policy expert and publisher of Edvisors.com. Rising tuition rates have made it tougher for families to cover the cost of college and forced a growing number of students to take on more loans. And graduates will be paying hefty interest rates on their debt. For the 2014-2015 graduating class, interest rates on federal student loans range from 4 percent to 7 percent and rates on private student loans can be even higher. But there strategies for repaying your loans that can help to ease the burden, and even save you money. Here are three ways to win in the game of student loans: See if any of your debt can be forgiven. "The first thing you should consider is taking a look at some government programs," said John O'Meara, a certified financial planner at InnerHarbor Advisors in New York City.

OTHER STORIES:

Global Stocks Fall on Greek Debt Impasse as Oil Rises With Bunds - (www.bloomberg.com)
Greek PM sticks to hard line as contagion hits euro zone bonds - (www.reuters.com)
Spanish 10-Year Bond Yield Rises Above 2.5% Amid Greece Impasse - (www.bloomberg.com)

Emerging Stocks Set for 11-Week Low as China Sinks; Ruble Gains - (www.bloomberg.com)
Greek Deadlock Has Leader Hoping for Miracle to Avoid Default - (www.bloomberg.com)
Greece, creditors dig in after debt talks founder - (www.reuters.com)
Eurozone officials discuss emergency summit on Greece - (www.ft.com)

Friday June 26 Housing and Economic stories

TOP STORIES:

Junk-Bond Defaults Growing as Pressure From Commodities Persists  - (www.bloomberg.com)  U.S. junk-bond defaults rose to the highest level since October 2009 as depressed prices plague energy, metal and mining issuers that represent the largest contingent of debt from the riskiest companies. There were nine defaults in May, including iron processor Magnetation LLC and Patriot Coal Corp., according to Fitch Ratings, with energy and metals and mining companies accounting for all of them. The two industries comprised 93 percent of defaults in the second quarter. The Bloomberg Commodity Index of 22 raw materials has lost 25 percent in the past year, with the price of a barrel of oil plummeting by nearly half and iron falling by as much as a third.

Platinum Prices Hit Six-Year Low - (online.wsj.com)  Platinum prices fell to a six-year low on Monday on concerns over growing supplies of the precious metal. Platinum for July delivery, the most actively traded contract, closed down 0.8% at $1,088.60 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since March 18, 2009. Investors are worried about platinum stockpiles, which are growing as miners in South Africa ramp up output following a five-month strike in 2014. South Africa is the world’s largest producer of the metal, and Barclays estimated platinum production from the country is on track to hit a five-year high in 2016.  At the same time, tougher government regulations in Europe are expected to shrink the share of diesel-powered vehicles and threaten demand for platinum, which is used as an emission filter in diesel cars.

EU preparing for 'state of emergency' after Greek talks collapse - (www.reuters.com) Greece and its creditors hardened their stances on Monday after the collapse of talks aimed at preventing a default and possible euro exit, prompting Germany's EU commissioner to say the time had come to prepare for a "state of emergency". Prime Minister Alexis Tsipras ignored pleas from European leaders to act fast. Instead he blamed creditors for Sunday's breakdown of the cash-for-reform talks, the biggest setback in long-running negotiations to unlock aid. He said his government had a responsibility to defend Greece's dignity and would resist demands for further pension cuts. "It is not a matter of ideological stubbornness. It has to do with democracy," said the 40-year-old leftist, who was elected on a pledge to end austerity. Athens now has just two weeks to find a way out of the impasse before it faces a 1.6 billion euro repayment due to the International Monetary Fund, potentially leaving it out of cash, unable to borrow and dangling on the edge of the currency area.

Ukraine in "General Collapse" - FortRuss – (www.fortruss.blogspot.com) So: there is no equipment, there is no money, no oxygen for firefighting suits, no money to repair or replace any of it. Therefore everything continues to burn, and people continue to die.  But that's the situation in Kiev and the Kiev District where traditionally things are better than in other places. So what is happening in the regions? It's frightening to even try to imagine. For example, there was recently a powerful explosion in Vinnitsa which was heard in the entire city. But none of the government representatives even tried to calm down the city population for two days after the event by explaining what actually blew up (as a result the city is full of panicky rumors about a mercury leak). The problems are not limited only to the firefighter management, the wear and tear of equipment, the lack of spare parts, they are evident in all the directorates. I'm sure everyone has heard of the story with Shkiryak's plane in Katmandu. The Ukrainian military is not an exception.

What Congress "Learned" From TARP is Causing the Foreclosure Crisis to Continue | Mandelman Matters- (www.ml-implode.com) First of all, let’s stop blaming the banks and servicers for whatever is going on.  It’s been seven years, so obviously they are doing whatever they can and will, based on the current rules and requirements.  HAMP is a government program, so if it needs to change to be better, it’s not up to banks and servicers… Congress, however could make improvements the moment they wanted to do so. No one elected banks or servicers to ensure fundamental fairness in this country, it’s Congress that’s supposed to represent constituents… voters in this democracy.  And they’re the group that has done nothing since 2009, when the chaos of HAMP and loan modifications first started as a government program, regaled by the Treasury Department. So, none of this is any sort of secret.  I think it’s safe to say that almost every homeowner, at least in most states has experienced, or at least heard of the difficulties associated with getting a loan modified.  We’ve lost roughly eight million homes to foreclosure to-date, and there have been something like six million loans modified during that same timeframe… and I don’t know how many short sales have been conducted.

OTHER STORIES:

Greek Stocks Lead Europe Markets Lower as Debt Talks Break Down - (www.bloomberg.com)
Spain’s Bonds Decline as Greek Impasse Fuels Contagion Selloff - (www.bloomberg.com)
Out of Options and Time, Tsipras Faces Greece’s Moment of Truth - (www.bloomberg.com)
Tsipras Hardens Greek Stance After Collapse of Talks - (www.bloomberg.com)
E.U. Urged to Plan for Greece to Default - (www.nytimes.com)

Russian central bank cuts key rate by 1 pct point - (www.reuters.com)
Draghi Faces EU Court Ruling on 2012 Bond Plan as Greece Teeters - (www.bloomberg.com)
China's hedge fund industry blooms as stocks boom - (www.ft.com)
Russia warns it would react should U.S. station arms in Baltics, eastern Europe - (www.reuters.com)
Two soldiers killed as Ukraine warns of escalating violence in east - (www.reuters.com)

Thursday June 25 Housing and Economic stories

TOP STORIES:

Euro slips, mood darkens as Greece fails to reach deal - (www.reuters.com) The euro slipped in early Asian trade on Monday, after Greece's talks with lenders to avert a default ended with no agreement and a downbeat day on Wall Street was also likely to pressure Asian shares. U.S. stock futures were down about 0.4 percent ESc1. European Union officials blamed the collapse of the talks on Athens, which it said had failed to offer any new concessions to secure funding it needs to repay 1.6 billion euros ($1.79 billion) to the International Monetary Fund by the end of this month. The euro skidded 0.4 percent on the day to $1.1215 EUR=, and was down 0.5 percent against the yen at 138.28 EURJPY=. The Japanese edged up against the dollar, with the U.S> unit falling about 0.1 percent on the day to 123.30 yen.

Geneva Whodunit Has Chinese Up in Arms Over $1.2 Billion Currency Scam - (www.bloomberg.com) Street protests in Beijing and Hong Kong. Chinese investors flying 5,000 miles to show up on doorsteps in Geneva and demand their money back. It’s the fallout so far from an alleged scam that its victims say robbed 29,000 Chinese investors of $1.2 billion. They were promised returns of as much as 10 percent a month from currency trading byAPI Premiere Swiss Trust AG and associated companies, according to interviews with six victims and documents they shared over the past three months. The money disappeared from their accounts in January, the investors said. “We wanted to know the truth,” said Chen Biya, 43, an advertising agency owner in Beijing who flew to Geneva in late March with two dozen fellow investors to try to recover their missing millions. They sought redress at API’s locked former offices, the public prosecutor and in meetings with lawyers, then went to Bern and Zurich to appeal to the Chinese embassy and Swiss Financial Market Supervisory Authority, known as Finma, he said. 

Greece says it will never accept wage, pension cuts - (finance.yahoo.com) Greece will never accept cuts in pensions and wages or extra taxes on necessities such as electricity, a government official says. The official says representatives of the International Monetary Fund insist on pension and wage savings worth about 1.8 billion euros ($2 billion) and an equal amount of extra revenue from Value Added Tax. "These measures concern the popular classes and employees," said the official, who spoke on condition of anonymity because of the ongoing talks in Brussels between Greece and its creditors. He added that Greece will no longer accept measures that undermine growth and has submitted proposals that cover creditors' demands for a primary budget surplus without doing so.

Pentagon poised to store heavy weapons in Baltic and Eastern Europe - NYT - (www.reuters.com) The Pentagon is poised to store battle tanks, infantry fighting vehicles and other heavy weapons for as many as 5,000 troops in several Baltic and Eastern European countries, to deter any possible further Russian aggression in Europe, the New York Times reported on Saturday. Citing U.S. and allied officials, the newspaper said that if approved the proposal would mark the first time since the Cold War that Washington has stationed heavy military equipment in the newer NATO member states in Eastern Europe that were once part of the Soviet sphere of influence. The proposal, which seeks to reassure European allies in the wake of Russia's annexation of Ukraine's Crimea in March 2014, is expected to be approved by U.S. Defense Secretary Ash Carter and the White House before a NATO defense ministers' meeting in Brussels this month, the paper said, quoting senior officials. Asked about the article, a Pentagon spokesman said no decision had been made about the equipment.

Auto sales plummet in Brazil - (finance.yahoo.com)    Plummeting auto sales in Brazil have battered an industry that is a key part of the nation's economy and has led tens of thousands of workers to be laid off or forced to take mandatory leave. At least 6,000 workers in auto factories have been laid off since January, officials say, and another 20,000 have put on furlough. The auto industry accounts for one-fourth of the nation's industrial gross domestic product. An association of auto dealers known as Fenabrave says that 250 of the country's 8,000 dealerships have gone out of business this year, resulting in 12,000 lost jobs.

OTHER STORIES:

Greece and creditors fail in 'last attempt' to reach deal - (www.reuters.com)
Greece Talks Crumble After 45 Minutes Setting Up Decisive Week - (www.bloomberg.com)
Greek default fears rise as ‘11th-hour’ talks collapse - (www.ft.com)

All ears tuned to Fed language, Greek debt talks - (www.reuters.com)
China Company Insiders Skim the Cream Off Frothy Stock Market - (www.nytimes.com)
Britain pulls out spies as Russia, China crack Snowden files: report - (www.reuters.com)
KKR’s Petraeus Calls Cyberattacks ‘Enormous’ Security Threat - (www.bloomberg.com)