Monday July 25 2016 Housing and Economic stories

TOP STORIES:

HSBC Global Head Of FX Cash Trading Arrested At JFK Airport – (www.zerohedge.com) A historic event took place moments ago when Mark Johnson, the global head of cash FX at HSBC was arrested at JFK airport for his role in a "conspiracy to rig currency benchmarks", and specifically for frontrunning customer orders. He is the first person charged by the US in the ongoing FX rigging probe. As Bloomberg reports, a "senior manager at HSBC Holdings Plc was arrested in New York for his role in a conspiracy to rig currency benchmarks, according to two people familiar with the matter, becoming the first person to be charged in the Justice Department’s three-year investigation into foreign-exchange rigging at global banks." The DOJ adds that Mark Johnson, 50, a U.K. citizen and U.K. and U.S. resident, and Stuart Scott, 43, a U.K. citizen and resident, were charged by complaint with conspiracy to commit wire fraud.  Johnson was arrested last night at JFK International Airport in Queens, New York, and will be arraigned later today before U.S. Magistrate Judge Lois Bloom of the Eastern District of New York.

More and More Investors Think Central Banks and Governments Will Bring Out the Chopper - (www.bloomberg.com) Investors are awaiting unprecedented coordination from monetary and fiscal policymakers to kick-start their economies, with Japan seen as the most likely first actor. Nearly one-third of clients and colleagues surveyed by Citigroup Inc. think that so-called helicopter money could be on its way within a fortnight, as the Bank of Japan meets at the end of July. "Among respondents, only 31 percent personally thought helicopter money was coming, while 43 percent thought the market expected some form of helicopter money," wrote strategists led by Global Head of G10 FX Strategy Steven Englander.

Turkey Cuts Overnight Lending Rate Following Failed Coup - (www.bloomberg.com) Turkey’s central bank cut its overnight lending rate by a quarter point, slowing the pace of borrowing cost reductions after the weekend’s failed coup attempt that roiled markets. The bank lowered the rate to 8.75 percent -- the fifth reduction to one of its three key rates in as many months -- matching the median estimate in a Bloomberg survey. The one-week repurchase and overnight borrowing rates were kept at 7.5 percent and 7.25 percent, the bank said in a statement. Start your day with what’s moving markets. Several economists in the Bloomberg survey revised their predictions after a failed coup attempt last week triggered a sell-off in the currency and sovereign debt, taking the median forecast to a quarter-point cut in the overnight rate instead of 50 basis points previously. In an attempt to calm investors, the central bank has promised unlimited liquidity to lenders to mitigate the potential impact on financial markets.

Inside the High-Profile Downfall of a $8 Billion Hedge Fund - (www.bloomberg.com) Long before Jacob Gottlieb was forced to unwind his Visium Asset Management last month amid insider trading allegations, red flags were emerging at the once $8 billion hedge fund. In its early days, Visium employed Gottlieb’s younger brother as compliance chief, a potential conflict of interest. The founder at one point owned shares in a company that his hedge fund invested in. And in early 2013, Visium funneled money from its main healthcare fund to its struggling credit team just before their bond fund shut down. Interviews with a dozen investors and former employees portray a company that was built on the cheap, with tight limits on compensation, and compliance that was at times lacking. Gottlieb, who had ambitions to build a firm rivaling the biggest hedge funds, all but shuttered Visium last month when the federal government accused three traders of securities fraud. While neither the company nor its founder were accused of wrongdoing, the allegations raise questions about oversight, said Tamar Frankel, a professor at Boston University School of Law.

Companies could be sitting on a $75 trillion time bomb - (finance.yahoo.com) Corporate debt is projected to swell over the next several years, thanks to cheap money from global central banks, according to a report Wednesday that warns of a potential crisis from all that new, borrowed cash floating around. By 2020, business debt likely will climb to $75 trillion from its current $51 trillion level, according to S&P Global Ratings. Under normal conditions, that wouldn't be a major problem so long as credit quality stays high, interest rates and inflation remain low, and there are economic growth persists. However, the alternative is less pleasant should those conditions not persist. Should interest rates rise and economic conditions worsen, corporate America could be facing a major problem as it seeks to manage that debt. Rolling over bonds would become more difficult should inflation gain and rates raise, while a slowing economy would worsen business conditions and make paying off the debt more difficult.

OTHER STORIES:

Asia Stocks Set for Mixed Start After U.S., Europe Rallies Pause - (www.bloomberg.com)
BOJ Is Running Out of Room to Buy Bonds Amid Stimulus: Chart - (www.bloomberg.com)
Wall Street moves lower on mixed earnings rep - (www.reuters.com)
Erdogan targets more than 50,000 in purge after failed Turkish coup - (www.reuters.com)

S&P Lowers Deutsche Bank Outlook to Negative From Stable - (online.wsj.com)
Turkey bank pulls bond at last minute on investor aversion - (www.ft.com)
Fund managers expect radical new stimulus from central banks - (www.ft.com)
Ukraine fighting threatens to reignite full-scale conflict - (www.ft.com)