Tuesday January 5 2016 Housing and Economic stories

TOP STORIES:

Commodity Funds Hemorrhage Cash as Investors Bail at Record Pace - (www.bloomberg.com) Investors can’t seem to get away from non-energy commodities fast enough. A record $857 million was pulled this year from U.S. exchange-traded funds backed by broad baskets of everything from grains to metals, according to data compiled by Bloomberg through Dec. 23. The value of the funds plunged 26 percent as raw materials tumbled to a 16-year low. Hedge funds are expecting more losses, betting on price declines for gold, copper, corn and natural gas. While energy-linked funds were the only commodity group to see net inflows this year, oil and gas didn’t escape an almost across-the-board decline in prices. Sentiment has turned negative after a decade-long bull market that was driven by China’s hunger for crops, metals and fuel. Producers rushed to meet that demand, resulting in expanded supplies that are now causing gluts as the country grapples with the weakest economic growth in a generation.

Which Puerto Rico Bond Defaults Next? 42% Yields Provide a Clue - (www.bloomberg.com) Opinions vary on how to fix Puerto Rico’s $70 billion debt crisis, but analysts, investors, credit-rating companies and even Governor Alejandro Garcia Padilla agree on one thing: the commonwealth will default in 2016. The question is, will it happen as soon as Jan. 1? Puerto Rico and its agencies owe nearly $1 billion in interest payments Friday, including $357 million on general-obligation debt that the Caribbean island’s constitution says must be paid before everything else. Officials have until late Monday night because of the New Year’s holiday. One agency that’s unlikely to default: The Puerto Rico Electric Power Authority, which plans to make good on its Jan. 1 payment as part of a debt-restructuring deal reached last week.

‘Safe’ Puerto Rican Debt Stirs Worries - (online.wsj.com) As Puerto Rico runs out of cash and approaches a Jan. 1 due date for about $1 billion in debt payments, investors increasingly are uneasy about the fate of bonds sold with a near guarantee. The bonds, backed by sales taxes and known by the Spanish acronym Cofina, were issued starting a decade ago to plug budget gaps and repay other lenders. The debt at the time was considered the island’s safest offering, and Cofina bonds soon became the biggest chunk of Puerto Rico’s debt outstanding. Now, as the struggling commonwealth redirects money intended for some debt to pay bonds with better legal protections, some analysts are predicting it will soon target Cofina bonds to avoid defaulting on its constitutionally protected general-obligation debt. Such a move would spark a showdown over its two most-sacrosanct obligations.

Obamacare Is Sucking Up To 10% Of Americans' Incomes - (www.zerohedge.com)  The latest dilemma facing economists is why "unequivocally good" low oil prices haven't sparked excuberant consumer spending across America. We have discussed the simple (though awkward for the establishment) answer many times - soaring costs for 'shelter' and healthcare have hoovered up every penny saved (and more); and now, a new study proves it- exposing the reality that many Obamacare customers pay more than 10 percent of their incomes toward coverage (and some paying considerably more).

Debt distress level at highest since recession  - (www.cnbc.com)  Higher interest rates are about to hit companies—just when many are ill prepared to handle them. The Federal Reserve this month took interest rates up for the first time in nearly a decade—ending the days of free money. It might take a few years for higher rates to hit companies—as they look to refinance debt. But the troubling part is many companies aren't in great shape to eat the higher costs. The number of companies with the lowest credit ratings and negative outlooks jumped to 195 in December, the highest level since March 2010, says Standard & Poor's. The biggest culprit for the jump in these so-called "weakest links" is the oil and gas sector, which accounts for 34 of them. But financial companies are close behind, representing 33 of the weakest links, says S&P.

OTHER STORIES:

Stocks Decline in Wake of China Selloff as Crude, Ruble Retreat - (www.bloomberg.com)
Brazilian Stocks Decline as Commodities Fall on China and Iran - (www.bloomberg.com)

Treasuries Draw Weakest Demand Since '09 as Central Banks Unload - (www.bloomberg.com)

China Shares Log Biggest Fall in a Month  - (online.wsj.com)
The Year Nothing Worked: Stocks, Bonds, Cash Go Nowhere - (www.bloomberg.com)

China Clamps Down on Online Lenders, Vowing to `Cleanse' Market - (www.bloomberg.com)