Wednesday March 2 2016 Housing and Economic stories

TOP STORIES:

As U.S. shale sinks, pipeline fight sends woes downstream - (www.reuters.com) Within weeks, two low-profile legal disputes may determine whether an unprecedented wave of bankruptcies expected to hit U.S. oil and gas producers this year will imperil the $500 billion pipeline sector as well. In the two court fights, U.S. energy producers are trying to use Chapter 11 bankruptcy protection to shed long-term contracts with the pipeline operators that gather and process shale gas before it is delivered to consumer markets. The attempts to shed the contracts by Sabine Oil & Gas (SOGCQ.PK) and Quicksilver Resources (KWKAQ.PK) are viewed by executives and lawyers as a litmus test for deals worth billions of dollars annually for the so-called midstream sector.

Toys ‘R’ Us Poses a Test for Junk-Bond Markets - (online.wsj.com) Wall Street has long wondered what would happen if a wave of refinancing meets with a weakened junk-bond market. Toys “R” Us Inc. will be an early test case. The 68-year-old toy retailer is trying to replace $1.6 billion in junk-rated bonds coming due through 2018. But the cratering high-yield market is complicating its efforts. Turmoil in the energy industry and fears of slowing economic growth have crimped demand for high-yield bonds, especially for companies like Toys “R” Us, whose debt Fitch Ratings grades deep in junk territory at triple-C. Companies with junk credit ratings have issued just $11.8 billion in bonds so far this year, down sharply from the $45.1 billion issued over the same period last year, according to Dealogic.

Investment banks' trading revenue declined 9 percent in 2015: survey  - (www.reuters.com) Revenue at the world's 12 largest investment banks from trading fixed income, currencies and commodities, known as FICC, fell 9 percent in 2015 compared with a year before, a survey showed on Monday, dragged down by regulatory changes and retrenchment. Eight years after the global financial crash, banks are still struggling to adjust to reforms compelling them to hold more capital and liquidity, while litigation costs and market volatility have forced them to restructure, shed staff and exit some business lines. Such trends have reduced the FICC activities which had been their most profitable business.

Sovereign wealth funds pull at least $46.5bn from asset managers - (www.ft.com)  Asset managers suffered record outflows from sovereign wealth funds in 2015 and have been warned to expect even greater redemptions this year as the oil price collapse drives governments to raid their state-owned investment vehicles. State funds pulled at least $46.5bn from asset managers in 2015 — far greater than the sovereign outflows recorded at the height of the financial crisis — in a bid to prop up their economies, according to figures given exclusively to FTfm by eVestment, the data provider. The outflows have dented profitability at many of the world’s largest investment companies, including BlackRock , Aberdeen Asset Management, State Street and Franklin Templeton.

The Mood In Silicon Valley Is Like The "Moment After The Titanic Hit An Iceberg" - (www.zerohedge.com) For the longest time it was Wall Street's best kept secret: keep Unicorns - companies with valuations over $1 billion - hidden in their gilded stables (aka private) for as long as possible, and allow Silicon Valley billionaires and venture capitalists to overbid each other by investing modest amounts at ever more ridiculous valuations, permitting book-marking based on a handful private investment rounds to hit stratospheric levels and allowing the investors to take out loans backed by sky-high valuations as collateral. But eventually the moment to cash out would arrive, and when one after another unicorn went public, the market finally got a detailed look at the financials and true price discovery was finally allowed to begin. What happened next is summarized by JPM's Michael Cembalest:

OTHER STORIES:

As U.S. shale sinks, pipeline fight sends woes downstream - (www.reuters.com)
Investment banks' trading revenue declined 9 percent in 2015: survey - (www.reuters.com)
Toys ‘R’ Us Poses a Test for Junk-Bond Markets - (www.nytimes.com)
Europe’s Economy Strains as Global Slowdown Takes its Toll  - (www.bloomberg.com)
Sovereign wealth funds pull at least $46.5bn from asset managers - (www.ft.com)

China Tensions Fuel Acceleration in Military Spending in Asia - (www.bloomberg.com)
Truce Unravels as Fighting Picks Up in Ukraine - (www.nytimes.com)
China signals no South China Sea backdown as foreign minister goes to U.S. - (www.reuters.com)
U.S. urges wider challenge to China's claims in South China Sea - (www.reuters.com)