Monday November 2 Housing and Economic stories

TOP STORIES:

Brazil Bet Burned Fortress Investment Group - (online.wsj.com) The smart money is having a hard time navigating global markets. Michael Novogratz, one of Wall Street’s most famous investors, recently decided to leave Fortress Investment Group LP and close his macro hedge fund after it lost about $100 million over the past two months from investments in Brazil, according to people familiar with the matter. Earlier this year, the fund lost $150 million in a single day from wagers placed by a different Fortress trader against the Swiss franc, the people said. The latest losses left the fund down 17.5% for the year through September, according to a regulatory filing. The gaffes at Fortress highlight the deep challenges some big-name hedge funds are facing. In recent years, many hedge funds blamed their poor performance on unusually placid global markets. But the long-awaited arrival of volatility hasn’t paid off as some firms that bet on global economic trends seem to be struggling to profit from recent swings in the U.S., China and elsewhere.

Puerto Rico Governor’s Fiscal Oversight Plan Raises Doubts - (www.nytimes.com) The governor of debt-burdened Puerto Rico gave lawmakers his proposal for creating a fiscal control board, setting up a debate over how best to rebuild credibility with the capital markets while still preserving the island’s sovereignty. Gov. Alejandro García Padilla’s bill would give the control board oversight over nearly all branches of the island’s central government, including agencies and authorities that have issued all but about $17 billion of the island’s $72 billion in debt. The island’s big public utilities that provide electricity and water were excluded from the board’s oversight. The governor’s bill was submitted to the legislature Thursday evening. On Friday, the island’s powerful Government Development Bank issued a summary, stating that the control board would help Puerto Rico “by seeking to restore public confidence in the Commonwealth, while also remaining in compliance with the Commonwealth’s constitution.”

Saudi Arabia Said to Delay Contractor Payments as Oil Slumps - (www.bloomberg.com) Saudi Arabia is delaying payments to government contractors as the slump in oil prices pushes the country into a deficit for the first time since 2009, according to three people with knowledge of the matter. Companies working on infrastructure projects have been waiting for six months or more for payments as the government seeks to preserve cash, the people said, asking not to be identified because the information is private. Delays have increased this year and the government has also been seeking to cut prices on contracts, the people said. Saudi Arabia is responding to the decline in crude, which accounts for about 80 percent of revenue, by tapping foreign reserves, cutting spending, delaying projects and selling bonds. Net foreign assets fell by about $82 billion at the end of August after reaching an all-time high last year. The country has raised 55 billion riyals ($15 billion) from debt issuance this year.

'Tensions are heightened': Germany struggles amid tide of Middle East refugees - (www.foxnews.com) German Chancellor Angela Merkel’s government faces a staggering challenge, with an estimated 800,000 refugees from Syria, Afghanistan and Eritrea expected to join by year’s end the half-million already there.   Merkel, who says she will not limit the flow, has been praised in some quarters for humanitarian leadership, but the huge wave of Muslim asylum seekers has also  engendered considerable controversy. Bavarian State leader Horst Seehofer has threatened to take the federal government to constitutional court if it does not turn back the refugees at the border as an emergency measure. Roughly 10,000 migrants pour into the southern Bavarian State from Austria each day. Seehofer is the head of the conservative Christian Social Union (CSU), the sister party to Merkel’s Christian Democratic Union (CDU). Merkel has said that it is not in her power to determine the number of people who come to Germany, a position one cabinet spokesman defended in an interview with Fox News.

Big Banks to America’s Firms: We Don’t Want Your Cash  - (online.wsj.com) U.S. banks are going to new lengths to ward off a surprising threat to their financial health: big cash deposits. State Street Corp., the Boston bank that manages assets for institutional investors, for the first time has begun charging some customers for large dollar deposits, people familiar with the matter said. J.P. Morgan Chase & Co., the nation’s largest bank by assets, has cut unwanted deposits by more than $150 billion this year, in part by charging fees. The developments underscore a deepening conflict over cash. Many businesses have large sums on hand and opportunities to profitably invest it appear scarce. But banks don’t want certain kinds of cash either, judging it costly to keep, and some are imposing fees after jawboning customers to move it.

OTHER STORIES:

China's Premier Li Says Achieving Growth of Around 7 Percent 'Not Easy' - (www.reuters.com)
Japan's Finance Minister Aso Voices Doubts on Bank of Japan Monetary Easing - (www.reuters.com)
A Path Out of the Middle East Collapse - (online.wsj.com)

China Ponders Weapon Deemed Too Risky Post 2008 to Cut Bad Loans - (www.bloomberg.com)
Saudi Arabian Stocks Lead Most Arab Markets Higher as Oil Rises - (www.bloomberg.com)

China's Premier Li calls for ongoing financial reform, as economy slows - (www.reuters.com)
Dwindling demand forces China’s manufacturing price cuts - (www.ft.com)