Tuesday November 17 Housing and Economic stories

TOP STORIES:

Puerto Rico Debt Tragedy's Second Act Is Close. Here Is the Cast - (www.bloomberg.com) The second act of Puerto Rico’s long-building debt drama is about to begin, and waiting in the wings is a veteran cast. It includes an embattled politician, his foe, the former executive of a failed bank, and those with roles in the Wall Street bailout, Argentina’s default and America’s biggest municipal bankruptcies. Locked out of the capital markets as it edges toward a record-setting default, the Caribbean island of 3.5 million people may run out of cash as soon as this month. With $354 million of debt payments due on Dec. 1, Governor Alejandro Garcia Padilla would have to decide whether to pay bondholders or conserve whatever funds he can find to keep the government running. While Puerto Rico has already defaulted on securities backed by legislative appropriations, it may mark the first time the government has failed to make good on obligations guaranteed by its full faith and credit -- a pivotal moment that could haunt it for years.

10-year yields surge above 2.3% on jobs report – (www.cnbc.com)  U.S. sovereign bond yields surged Friday after the October jobs report handily beat expectations. The U.S. economy added 271,000 jobs last month, the Labor Department said, with the unemployment rate falling to 5 percent. Economists polled by Reuters forecast about 180,000 new jobs were added in October, with unemployment holding at September's 5.1 percent rate. "It's very encouraging to see a solid monthly job gain at the same time better wage growth but perspective is always important. ADP on Wednesday said the average job gains over the past three months for the private sector was 185,000," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

The Most Surprising Thing About Today's Jobs Report - (www.zerohedge.com)  

- Workers aged 55 and over: +378,000
- Workers aged 25-54: -35,000

After several months of weak and deteriorating payrolls prints, perhaps the biggest tell today's job number would surprise massively to the upside came yesterday from Goldman, which aswe noted earlier, just yesterday hiked its forecast from 175K to 190K. And while as Brown Brothers said after the reported that it is "difficult to find the cloud in the silver lining" one clear cloud emerges when looking just a little deeper below the surface. That cloud emerges when looking at the age breakdown of the October job gains as released by the BLS' Household Survey. What it shows is that while total jobs soared, that was certainly not the case in the most important for wage growth purposes age group, those aged 25-54. As the chart below shows, in October the age group that accounted for virtually all total job gains was workers aged 55 and over. They added some 378K jobs in the past month, representing virtually the entire increase in payrolls. And more troubling: workers aged 25-54 actually declined by 35,000, with males in this age group tumbling by 119,000!

Global Investors Threatened as China Shanshui Faces Debt Woe - (www.bloomberg.com) International investors in Chinese corporate debt face fresh risks after a cement producer said it may default on onshore notes, which could lead to nonpayment on its dollar securities. China Shanshui Cement Group Ltd. isn’t sure it can repay 2 billion yuan ($315 million) of local securities due Nov. 12 after a shareholder tussle stymied financing, it said in a filing Thursday. Failure to repay those notes would trigger a default on its $500 million 7.5 percent bonds due 2020, according to the statement. The dollar debentures dropped to a more than three-month low of 87.7 cents as of 3:57 p.m. in Hong Kong. Global investors have been scarred by defaults from Chinese companies this year in industries including property and commodities as economic growth slows and anti-corruption investigations continue. Kaisa Group Holdings Ltd. reneged on obligations in April amid a probe. Coal trader Winsway Enterprises Holdings Ltd. failed to pay interest on dollar bonds for a second time this year in October, and Hidili Industry International Development Ltd. didn’t repay its dollar notes due Wednesday. 

Banks Still Struggling to Make Money in the Bond Market - (www.reuters.com) Banks struggled again to make money trading bonds, currencies and commodities in the third quarter, as regulatory changes squeezed liquidity and intensified the pressure to cut costs, staff and activity. Revenue and profit fell for most of the world's major trading banks in the three months to September, and the outlook for next year points to further declines, especially in Europe. Revenue plunged at some major U.S. institutions, too, but most are in better shape than their European counterparts. They are expected to continue gaining market share in fixed income, currency and commodities (FICC). FICC trading revenue at 13 of the world's biggest banks was $16.8 billion in the third quarter, according to data analysis firm Tricumen. That was down almost 20 percent from $20.86 billion the same period a year ago.

OTHER STORIES:

Feeling ignored, Fed jolts markets to prime them for lift-off - (www.reuters.com)
Goldman Learned Four Things From Third-Quarter Earnings Calls - (www.bloomberg.com)
Skeptical ECB Governors Deepen Rift on Need for December Action - (www.bloomberg.com)

China's Bonds Set for Worst Week Since May as PBOC Seen on Hold - (www.bloomberg.com)
China October Auto Sales Up 11% After Tax Cut Boosts Demand - (www.bloomberg.com)
Asia shares falter as markets await Fed policy clues from job data - (www.reuters.com)
New York Fed Chief Calls for Improved Wall Street Culture - (www.nytimes.com)