KeNo's Housing and Economic Portal: Tuesday June 9 Housing and Economic stories

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Margin Debt Breaks Out: Hits New Record 50% Higher Than Last Bubble Peak - (www.zerohedge.com) For a few months in mid/late 2014 there was some concern among those who still don't get that in this New Paranormal market the only real buyers are central banks, that while the stock market kept on rising, and rising, NYSE margin debt was flat, and in fact the total amount of purchases on margin at the end of 2014 was nearly the same to those in January. Meanwhile the S&P 500 had soared to recorder highs. A few things here: first, as we explained one year ago, in a world in which levered purchases take place via such shadow banking conduits as repo and primary broker arrangements, margin debt has become an anachronism from a bygone generation in which there wasn't $2.5 trillion in Fed reserves supporting the market, and is now almost entirely meaningless. But for those who still cling on to margin debt as indicative of anything, the latest NYSE report should provide some comfort: finally the long-awaited breakout in participation has arrived, and after stagnating for over a year, investors - mostly retail - are once again scrambling to buy stocks on margin, i.e., using debt, and as of April 30, the amount of margin debt just hit a new all time high of $507 billion, $30 billion more than the month before, and nearly 50% higher than the last bubble peak reached in October 2007.

Hanergy Relied on Chinese Backing in Solar Firm's Meteoric Rise - (www.bloomberg.com) Hanergy Thin Film Power Group Ltd., the Chinese solar maker under probe by Hong Kong regulators, rode a wave of government subsidies and support as it grew from a bit player into the world’s largest solar company by market value. Hanergy’s website features several pictures of Chairman Li Hejun meeting with government officials, and Li himself has been a member of the Chinese legislature’s top advisory body since 2008. In that role, he encouraged the government to cultivate innovative industries like his own. This industry will be a bonanza that could generate more billionaires along with the government’s policy to promote a cleaner China,” Hu Xingdou, an economics professor at the Beijing Institute of Technology, said in a phone interview. “As the leadership presses to protect the environment and tackle smog, there could be more beneficial policies to draw people into the new energy industry.”

Ukraine Creditors Said to Offer Coupon Cuts, Debt Extensions - (www.bloomberg.com) The first proposal by a group of Ukraine’s creditors to restructure about $20 billion of debt would extend maturities as much as 10 years and reduce interest payments, a person with knowledge of the committee’s thinking said. While the government in Kiev rejected the bid and stuck to a demand for principal reductions, analysts say it marks a productive start to meeting International Monetary Fund targets and clearing the way for aid to lift Ukraine’s economy out of a recession. Intensive talks between advisers will happen next week, another person with knowledge of the negotiations said. The nation’s debt rallied the most in five weeks. “It is a concrete proposal that will help Ukraine get through the coming years without the need for a de-facto default,” Simon Quijano-Evans, the head of emerging-market research at Commerzbank AG in London, said by e-mail. “A no-haircut scenario would enable Ukraine to access bond markets again this year.”

[Bloomberg] Emerging Stocks Head for Steepest Monthly Decline This Year - (www.bloomberg.com) Emerging-market stocks slumped for a fifth straight day as Asian shares sank amid volatility in China’s equity market, offsetting economic data that weakened the case for an increase in U.S. interest rates. The MSCI Emerging Markets Index dropped 0.4 percent to 1,005.19 at 11:25 a.m. in New York, bringing its retreat in May to 4.1 percent. Brazil’s real weakened 0.7 percent to a two-month low against the dollar as a Bloomberg gauge tracking 20 developing-nation currencies headed for a monthly decline. The Shanghai Composite Index slid 0.2 percent, after a 6.5 percent plunge Thursday, as volatility climbed to the highest since January. Chinese stocks slid as brokerages tightened lending restrictions and policy makers drained cash from the financial system. Revised data showed the U.S. economy contracted 0.7 percent in the first quarter, damping speculation that the Federal Reserve will move quickly to raise near-zero interest rates that have bolstered demand for riskier assets.

As Greece leads the news, Italy’s problems mount - (www.cnbc.com) While Greece has been hitting the headlines recently, Matteo Renzi has quietly had a tough few months. The Italian prime minister has had to tackle difficulties both abroad and at home – including a slow economic recovery. All this presents a difficult backdrop for Renzi as he faces 22 million voters with elections in 7 regions and over 1,000 municipalities this weekend. Corruption, the constitutional court and migrants: On the domestic front, we've seen protests over education reform and a court ruling that pension cuts were unconstitutional, a decision that will require 13 billion euros ($14.2 billion) in repayments. On top of that, there are accusations of political corruption and organised crime links within Renzi's Democratic Party (PD). When I spoke to Renzi earlier this year, he said he was declaring war on corruption. That war hasn't stopped criticism of how contracts were awarded at the Milan Expo, never mind the backlash over mounting costs and delayed completion.

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