KeNo's Housing and Economic Portal: Friday February 12 2016 Housing and Economic stories

Thursday, February 11, 2016

Friday February 12 2016 Housing and Economic stories

The "Unintended Consequences" Have Arrived: Japan Cancels 10Y Auction For First Time Ever Due To Sub-Zero Rates - (www.zerohedge.com) The planned March sale of 10-year Japanese government bonds through banks to retail investors, municipalities and others will be canceled amid expected below-zero yields following the Bank of Japan's recent move to adopt negative interest rates. The Ministry of Finance is expected to announce Wednesday the first-ever decision to call off sales of 10-year JGBs. The JGBs in question are sold through Japan Post Bank and regional banks in 50,000 yen ($415) units. The holder can cash out this new type of bond ahead of maturity. With the ministry already having suspended sales of two- and five-year instruments, all sales will end. But variable-rate 10-year JGBs for retail investors will still be offered.

Latin American ETF Posts Biggest Outflow in Year Amid Turmoil - (www.bloomberg.com) Latin America’s largest region-wide exchange-traded fund posted the biggest outflow in a year as a selloff in commodities and heightened political turmoil dim the outlook for an economic recovery. The $495 million iShares Latin American 40 ETF had $33.8 million in withdrawals last month, according to data compiled by Bloomberg. That’s the largest outflow since January 2015. It has tumbled 32 percent in the past 12 months, compared with a 22 percent drop for the iShares MSCI Emerging Markets ETF for developing nations.

China Will Probably Have to Impose Capital Controls, SocGen Says - (www.bloomberg.com) China will probably have to step up capital controls as even the world’s biggest foreign-exchange stockpile won’t be sufficient to defend the yuan, according to Societe Generale SA. If 65 million residents, or about 5 percent of the population, each took the maximum allowed $50,000 out of China that would wipe out the $3.3 trillion of reserves, Jason Daw, head of Asian currency strategy at the French lender, said in an interview in Singapore. China needs a stockpile of at least $2.8 trillion to cope with a balance-of-payments crisis, Societe Generale estimates based on the International Monetary Fund’s methodology.

Yuan Derivatives Blowup Curses Taiwan Businesses With Defaults - (www.bloomberg.com) On Aug. 7, Kevin Kuo was having his fortune told at a Kyoto shrine in the Japanese tradition of picking out bamboo sticks. He got two that read "curse." For the 39-year-old home appliance importer, calamity came in the form of a shock yuan devaluation four days later. Kuo’s Taipei-based firm was holding two Target Redemption Forward contracts, a structured product used to bet on yuan appreciation. By the time both matured in early January, he had lost a net NT$11.6 million ($347,200). Kuo is among TRF investors hit by the yuan’s 8 percent plunge from the end of 2013, following four straight years of steady gains. The risk that holders of the leveraged derivatives will default have fueled an 8.5 percent loss in Taiwan’s local financial stock index this year, compared with a 2.5 percent drop in the overall benchmark.

Mortgage Forgiveness Debt Relief Act Extended Again... and Again... and Again | Mandelman Matters - (mandelman.ml-implode.com) Apparently, President Obama signed this latest extension on December 18, 2015... which is typical of the sort of decisiveness endemic to the current administration. It's almost like they're thinking... I know, let's scare the crap out of everyone hoping to do a short sale by waiting until the very last moment to extend the Act in question... that should cause an entertaining level of unnecessary confusion and insecurity. ' I’m talking about the Mortgage Forgiveness Debt Relief Act of 2007, which was set to expire again at the end of 2015, but has been extended again… this time until the end of 2016, after which time I’d bet almost anything it will be extended until 2017. After that, I’ll be looking for the 2018 extension, and I’m forecasting that extension will remain in place until it’s extended through 2019. And that should about do it… at least until it’s extended through 2020, which is sure to occur the year before it’s extended until 2021. Beyond that, I’d have to predict that the next extension will take it through 2022, and after that until the end of 2023, all before it’s extended through 2024. And why do I think it will continue to be extended for the foreseeable future? Because the foreclosure crisis won’t end until we do something to end it… and we’re certainly not doing anything that might lead to that.

OTHER STORIES: