KeNo's Housing and Economic Portal: Thursday October 1 Housing and Economic stories

Wednesday, September 30, 2015

Thursday October 1 Housing and Economic stories

The Rent Crisis Is About to Get a Lot Worse - (www.bloomberg.com) How bad can rental affordability in the U.S. get? Even worse. That's pretty bad. The number of U.S. households that spend at least half their income on rent—the "severely cost-burdened," in the lingo of housing experts—could increase 25 percent to 14.8 million over the next decade. More than 1 million households headed by Hispanics and more than 1 million headed by the elderly could pass into those ranks. Households shouldn't spend more than 30 percent of income on housing, by the general rule of thumb. The grim figures come from a report out today from Enterprise Community Partners, an affordable-housing nonprofit group, and Harvard’s Joint Center on Housing Studies. To reach their conclusions, the researchers considered various scenarios for wage and rent growth over the next decade.

VW’s cheating is even worse than it looks - (www.businessinsider.com) Volkswagen is in deep trouble with the US government after the Environmental Protection Agency last week accused the automaker of using software to cheat on emissions tests. The EPA said nearly half a million of the automaker's cars were equipped with software designed to cheat on emissions tests. The company's stock has taken a big hit Monday morning, and the carmaker's CEO, Martin Winterkorn, has apologized for the deception and said VW will work to regain customer trust. In a research note Monday, Evercore auto analyst Arndt Ellinghorst called the violation a "move more worthy of a back-street garage looking to get a used car through a mandated vehicle inspection."

[Bloomberg] Hedge Funds Burned by Fed Set to Unwind Bearish Rate Positions - (www.bloomberg.com) Hedge funds and other speculators were ready to profit last week if the Federal Reserve lifted interest rates. Their bets proved wrong-footed, leaving traders poised to reverse course, according to TD Securities. The net aggregate short position in all interest-rate contracts traded through CME Group Inc. was the largest since February as of Sept. 15. The wagers would’ve proven prescient if yields had spiked following the Fed’s Sept. 17 announcement. Yet the positions went awry when the bond market rallied after the Federal Open Market Committee decided to keep its benchmark rate near zero and released a statement that put an unexpected emphasis on low inflation and an uncertain outlook for global growth.

Bankers Threaten Fed with Layoffs if it Doesn’t Raise Rates - (www.wolfstreet.com) “Let me assure you, if the revenue environment weakens or interest-rate structures don’t move up and the economy slows down, we’ll have to take out more costs,” Bank of America CEO Brian Moynihan said on Thursday at the Barclays Global Financial Services Conference. And that would mean more job cuts. BofA is famous for whittling down its headcount in recent years. In Moynihan’s 25-slide presentation, there was this chart that shows just how skillfully he has trimmed down his workforce, chopping it by 25% overall since the second quarter of 2011: So if, as he said, “interest-rate structures don’t move up,” there would be more of the same. These interest-rate structures are the result of the Fed’s zero-interest-rate policy. The purpose of this policy suddenly isn’t the wealth effect any longer – Bernanke’s stated purpose – but ironically, as Chair Yellen claimed today somewhat defensively, to “put people back to work.”

Low oil prices put $1.5 trillion worth of projects at risk - (money.cnn.com) New oil and gas production projects worth $1.5 trillion are at risk because of plunging prices. Research firm Wood Mackenzie said the planned projects are unlikely to go ahead because they're uneconomic at current prices of less than $50 a barrel. "In addition to reduced activity onshore North America, a total of 46 projects have been deferred as a result of the oil price fall," said James Webb, the firm's research manager for oil and gas exploration and production. Oil and gas groups have already cut investment for this year and next by $220 billion, compared to the firm's forecasts before prices started collapsing in 2014. But Wood Mackenzie warned the cuts do not go far enough, and many more investment plans will have to be scrapped.

OTHER STORIES:

Global Angst Lingers With Stock Futures Lower While Bonds Climb - (www.bloomberg.com)
China's ‘Sloppy’ Policy Irks Blankfein as Yellen Cites Xi Doubts - (www.bloomberg.com)
Greece's Year of Tumult Enters New Chapter as Tsipras Dominates - (www.bloomberg.com)

ECB chief economist declares 'Readiness and decisiveness' to act - paper - (www.reuters.com)