Wednesday December 16 Housing and Economic stories

TOP STORIES:

BIS argues for tighter monetary policy in spite of ‘uneasy calm’ - (www.ft.com)  Central banks must not let market volatility halt their plans to retreat from crisis-fighting monetary policies, the Bank for International Settlements has warned ahead of the expected first rate rise by the US Federal Reserve in nine years. While the current “uneasy calm” in financial markets threatened to blow up into bouts of financial turmoil, with clear tensions between markets’ behaviour and underlying economic conditions, such a threat should not dissuade monetary policymakers from taking the first steps towards tighter monetary policy, the BIS argued in its latest quarterly review. “At some point, [the tension] will have to be resolved,” said Claudio Borio, head of the BIS’s monetary and economic department. “Markets can remain calm for much longer than we think. Until they no longer can.”

'Uneasy' market calm masks debt timebomb, BIS warns - (www.telegraph.co.uk)  Bank for International Settlements (BIS) warns of emerging market vulnerabilities as investors remain hooked on "every word and deed" of central banks. The "uneasy calm" in financial markets could rapidly reverse as the US Federal Reserve's first tightening cycle in a decade exposes fragilities in the new world order, according to the Bank for International Settlements (BIS). The central bank watchdog said emerging market households and businesses reliant on cheap debt faced a credit crunch that could trigger panic in a world of evaporating liquidity and fewer market makers. It warned that the "potential for spillovers" to emerging markets from higher US interest rates was larger now than it was during the so-called "taper tantrum" in 2013. BIS data show the stock of dollar denominated debt rose to $9.8 trillion (£6.5 trillion) in the second quarter of 2015, with dollar credit to borrowers in emerging markets doubling since 2009 to more than $3 trillion.

 

Oil Tumbles to Six-Year Low as OPEC Abandons Production Target - (www.bloomberg.com) Oil fell to the lowest level in more than six years amid speculation that a record global glut will be prolonged after OPEC effectively abandoned its longtime strategy of limiting output to control prices. The Organization of Petroleum Exporting Countries will keep pumping about 31.5 million barrels a day, President Emmanuel Ibe Kachikwu said Friday after a meeting in Vienna. OPEC is setting aside its output quota of 30 million barrels a day, a target it’s breached the past 18 months, until members gather again in June. Declines accelerated as the dollar rose on prospects for higher U.S. interest rates. Gasoline and diesel also closed at the lowest levels since the financial crisis of 2008 that sent the country into a recession.

US Air Force Running Out Of Bombs To Drop On ISIS - (www.zerohedge.com) Things must be going well in the "war on terror," as the US Air Force just admitted that it is fast running out of bombs to drop on ISIS after"B-1s have dropped bombs in record numbers." As ZeeNews reports, Air Force chief of staff General Mark Welsh said as America ramps up its military campaign against the Islamist terror group, the Air Force is now "expending munitions faster than we can replenish them."

Toxic Mix Hits Trucking, Orders for New Trucks Totally Collapse, Pummel Manufacturers - (www.wolfstreet.com)  When diesel-engine maker Cummins announced its third-quarter earnings debacle on October 28, chief operating officer Rich Freeland had a special word about future production and sales of heavy trucks: “It’s evident now that retail sales [of trucks] and production will be down going forward.” He wasn’t kidding. But it’s a lot worse than imagined at the time. Demand for Class 8 trucks, the largest trucks on US highways, had been strong in 2014, and orders were expected to reach a decade high in 2015. Last year, the trucking industry was roaring, and there was talk of shortages of trucks and drivers, a capacity squeeze caused by vibrant order books around the country. Companies were stocking up for the great year 2015. Optimism was boiling over. Interest rates were at zero. Money was nearly free. The economy would hit escape velocity. Stocks hit new all-time highs. And carriers ordered trucks from truck makers to be able to meet this demand coming down the pike, and truck makers ordered engines from engine makers such as Cummins. And the whole industry was cooking. Then summer 2015 came around.

OTHER STORIES:

Mexico's Central Bank Steps in as Peso Tumbles Amid Fed Hopes - (www.bloomberg.com)
Colombian Peso Falls to Record Low as Bonds Drop on CPI Surprise - (www.bloomberg.com)
Brazil's Real Joins Global Selloff on Fed Wagers, Commodity Rout - (www.bloomberg.com)

Bond Trader Hubris Reaches Inflection Point as Fed Liftoff Looms - (www.bloomberg.com)

Brazil Goes From Crisis to Crisis as Impeachment Bid Moves Ahead - (www.bloomberg.com)
China's all-important services sector weakens in November - (www.cnbc.com)
Saudi Arabia's big welfare spending faces the oil abyss - (www.cnbc.com)