KeNo's Housing and Economic Portal: Friday April 29 2016 Housing and Economic stories

Thursday, April 28, 2016

Friday April 29 2016 Housing and Economic stories

Alarm over corporate debt and stalled earnings – (www.ft.com) Such popularity for companies that pay out dividends is generally sign of bearishness and lack of trust. If investors want to be shown the money in this way, it suggests very low confidence in companies' ability to use the cash wisely. At this point, according to Mr Santschi, investors are eschewing buyback stocks because they fear that the buybacks will only be funded with further debt. Companies can of course afford to stay highly levered without too much difficulty, while they enjoy fixed low rates. The problem, and the reason that investors have now started to focus on the problem, is producing the earnings and cash flows needed to pay their debt. That is why earnings are being watched with such anxiety.

China imposes fresh curbs on commodities as iron ore, steel slide - (www.reuters.com) Chinese commodities exchanges stepped up efforts on Tuesday to curb surging prices that some say have been driven by speculators, raising fears of another derivatives bubble after last year's stock market collapse. Transaction fees for iron ore futures were hiked for a second time in as many days, after the original increase led to a sharp drop in iron ore and steel futures in China that helped cool a week-long surge in local commodities markets. Base metals futures also fell on Tuesday, while other commodities, including coking coal and cotton, surrendered most of their early gains to end nearly flat. China's top commodity exchanges in Dalian, Shanghai and Zhengzhou increased trading margins and fees in response to last week's spike in prices and volumes, which some analysts said were not matched by fundamentals for the underlying commodities.

We are in the 'first inning' of a 'wash out' in hedge funds, says top hedge fund - (www.cnbc.com) Hedge funds are getting killed, says hedge fund manager Dan Loeb. Loeb's Third Point Capital put out its quarterly letter to investors on Tuesday, calling the first three months of 2016 "one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund." Third Point was down 2.3 percent during the first quarter, which compares with a 1.3 percent gain for the S&P 500 over the same period. (As bad as that may be, though, it could have been worse — Bill Ackman's Pershing Square was down more than 25 percent in the quarter.)

Consumers, Small-Business Owners Souring on This Economy - (www.wolfstreet.com) Consumer optimism about the economy is waning, and small-business-owner sentiment is giving off recession vibes. That’s how different surveys are now mucking up the rosy scenario. Gallup’s Economic Confidence Index, released today, added another dimension. It dropped four points in the week ending April 24, to -16, the lowest since August 2015, and down from positive territory in January 2015. It left Gallup groping for answers: Pessimism has increased despite a strong stock market in recent weeks and a persistent low unemployment rate. However, there have been reports of weak retail sales and expectations of low first quarter economic growth. Gas prices have also started to rise, although they remain well below where they were for most of the past decade.

Business "Subsidies" Plummet 70% As Government Support Evaporates - (www.zerohedge.com) In order to attract and retain small and big business alike, it has long been a tactic by states and local governments to offer tax breaks - just ask Elon Musk who has been a happy recipient of taxpayer generosity over the years. However, as times have got touch in Obama's "recovery", government subsidies of at least $50 million have plummeted by 70% Bloomberg reports. As an example, tax breaks for companies such as Boeing, IBM, and Toyota were part of $17 billion from state and local governments in 2013. In 2014 that number dropped to $7 billion, and last year plummeted to just $4.8 billion. The reasoning may be twofold. The first, is that new accounting rules will force state and local budgets to account for tax incentives given to business as lost income in order to stay compliant with GAAP. This could upset the public, knowing just how much each business in their area didn't have to pay in taxes, and thus potentially increasing property taxes.

OTHER STORIES:

Emerging Markets Halt Declines as Oil's Gain Offsets Fed Jitters - (www.bloomberg.com)
Haruhiko Kuroda’s Embattled Hedge Fund - (www.barrons.com)