Tuesday April 12 2016 Housing and Economic stories

TOP STORIES:

Global bond default tally hits highest since 2009 - (www.ft.com)  The global bond default rate by companies is running at its highest since 2009 with the US accounting for the vast majority, according to rating agency Standard & Poor’s. A further four defaults this week, with three coming from the troubled oil and gas sector, pushed the overall tally to 40 with a little over a quarter of 2016 done. The total so far is just over a third higher than the same period in 2015, reflecting to a large degree the extra pain that a still weak oil price is inflicting on smaller production companies that invested aggressively in capacity when crude was trading above $100 a barrel. A breakdown of the 40 defaults underlines the concentration of the distress within the energy sector, which accounted for 14 of them. The metals and mining sector, which has been adjusting to the much lower commodity prices, had the next largest tally of defaults with eight.

Exclusive – Norway’s high-yield bond market becomes latest casualty of oil turmoil  - (www.euronews.com) Norway’s multi-billion-dollar high-yield bond market has become the latest casualty of the oil industry slump, with looming debt defaults for firms that operate supply ships and drilling rigs set to hammer investors who bet on the once-booming business. Shunned by new investors, bond issuances by companies that provide services to the global oil industry have dried up. This has effectively shut down a part of the corporate bond market that is worth around $10 billion (£7.1 billion) and is a crucial hub for debt financing for many small and mid-size companies from Norway and overseas. “For the moment it is closed for small to mid-cap companies. It’s a wipeout of value,” said Paddy Rodgers, chief executive of oil tanker company Euronav , adding that investors had been left taking extra risks without any significant improvement in returns.

Colombia Pays the Steep Cost of So-Called “Free” Trade - (www.wolfstreet.com)  International arbitration lawyers have a soft spot for Latin America, for a reason: over the last ten years, the region has been one of the primary sources of their exorbitant fees, which can range from $375 to $700 per hour depending on where the arbitration takes place. By 2008, more than half of all registered claims at the International Centre for Settlement of Investment Disputes (ICSID) were pending against Latin American countries. In 2012, around one-quarter of all new ICSID disputes involved a Latin American state. Today the region faces a fresh deluge of ISDS claims. The countries most affected include Uruguay, whose anti-tobacco legislation has been challenged by Philip Morris at an international arbitration panel; Argentina, Ecuador and Colombia, which until a few years ago had never been on the receiving end of an investor-state dispute settlement (ISDS). Now it is the target of multiple suits that could end up setting its government back billions of dollars.

The end of short covering and 'Fed put' spells market trouble - (www.cnbc.com) Two important trends that have helped propel the stock market are coming to an end, posing significant challenges for investors, according to Wall Street experts. One is a near-term pattern — namely the rush to cover short positions that has driven the S&P 500 more than 13 percent off its Feb. 11 intraday low. JPMorgan Chase's models show that short covering is running out of gas. The other is longer term — namely the oft-cited "Fed put," or the backstop traders believe has come from the U.S. central bank's easy monetary policy. Strategists at Bank of America Merrill Lynch see a pattern in which the riskiest stocks that benefit the most from Fed policy are now underperforming their higher-quality peers.

Getting Money Out of China, One Swipe at a Time - (www.bloomberg.com) Hong Kong insurance agent Raymond Ng sold HK$28 million ($3.6 million) in insurance policies to a mainland Chinese client in March. It took more than 800 credit card swipes to complete the transaction. Ng is one of dozens of Hong Kong agents—and maybe more—using this and similar tactics to get around new limits on mainlanders using credit cards to buy insurance, according to interviews with five agents working for four different insurance companies. Making multiple swipes can defeat a cap of about $5,000 per transaction set by Chinese authorities in February. The country is trying to slow the steady stream of cash going abroad and into foreign currency assets. “There are always ways around new restrictions,” says Ng, who spoke on the condition his company’s name not be used. “Chinese customers are accelerating the pace of moving assets outside China, especially through insurance products.”

OTHER STORIES:

U.S. Stocks Tumble After Rally Amid Renewed Worries on Growth - (www.bloomberg.com)
Dollar continues slump against yen as BOJ seen unlikely to act - (www.reuters.com)
Yellen: Positive about progress in ending 'too big to fail' - (www.cnbc.com)
Support for Germany's ruling parties sinks: poll - (www.reuters.com)

Emerging Markets Pare Weekly Loss as Energy Shares Gain With Oil - (www.bloomberg.com)
Yen stalls as finance minister warns on intervention - (www.reuters.com)
Bank of America: The Biggest Part of the U.S. Economy Might Be Rolling Over - (www.bloomberg.com)
Shenzhen, Shanghai home sales plunge after rules tightened - (www.reuters.com)