Thursday July 21 2016 Housing and Economic stories

TOP STORIES:

Largest US Pension Fund Suffers Worst Annual Return Since Financial Crisis Due To Heavy Stock Losses - (www.zerohedge.com) While we have often documented the dramatic underperformance by the hedge fund industry over the past decade courtesy of a centrally-planned market in which it no longer pays to "hedge", culminating with countless hedge fund closures and substantial redemptions (mostly by now redundant Fund of Funds managers), today we learn that "vanilla" asset managers were also hurt over the past year in which the S&P went nowhere, and not just in Japan where the gargantuan, $1.4 trillion GPIF recently suffered major losses, but in the US as well. Case in point: Calpers, the largest U.S. public pension fund which as the WSJ reports posted its lowest annual gain since the last financial crisis due to heavy losses in stocks. The California Public Employees’ Retirement System, or Calpers, said it earned 0.6% on its investments for the fiscal year ended June 30, according to a Monday news release, barely turning a profit for the full year. The last time Calpers lost money was during fiscal 2009 when the fund’s holdings fell 24.8%.

As Rates Sink, Housing Bubbles Rise - (www.wsj.com) Canada, Australia and Sweden are among central banks caught between supporting their economies and addressing financial threats. Low interest rates around the world are fueling a familiar threat of housing bubbles, and central bankers in a number of key economies feel powerless to stop them. The problem is being acutely felt in Canada, where home prices are soaring even as the country’s energy- and mining-dependent economy slows. Sweden and Australia are dealing with similar surges in the value of homes, leading officials in all three countries to worry about the risk of a destabilizing bust. In Canada’s hottest market, Vancouver, British Columbia, the benchmark home price rose 32% over the 12 months ended in June, with a typical detached home now costing 1.56 million Canadian dollars (US$1.2 million), according to a Canadian Real Estate Association index. In Toronto, home prices were up 16% during the same period.

Why this Won’t Work out for Spain - (www.wolfstreet.com) No matter how fast Spain’s economy grows, its government cannot seem to get a grip on its spending habits. This year is going to be the eighth consecutive year that Spain has overshot its fiscal target. Originally, the Spanish government was supposed to get its deficit back below the EU’s sacred limit of 3% of GDP by 2013, from a staggering 11% in 2011. When it became clear during the darkest days of the crisis that it would be impossible, the deadline was extended by a year. A year later, Madrid had made so little progress that it got a further two-year extension, to 2016. Now, things are so serious that the EU is threatening to sanction Spain, as well as Portugal, up to 0.2% of GDP for failing to bring their deficit under the targets set by the Commission. It will be the first time that the EU has adopted such punitive measures, but for the biggest repeat offender of excess deficits, France, there is no punishment. Quelle surprise!

Bridgewater, World’s Biggest Hedge Fund, Is Said to Be Slowing Hiring - (www.nytimes.com) After years of rapid internal growth, the world’s biggest hedge fund appears to be slowing down. The $154 billion hedge fund, Bridgewater Associates, run by the billionaire Ray Dalio, is known for hiring hundreds of people every year. Yet it is now telling recruitment firms to cancel interviews with prospective employees, according to three people briefed on the matter. In recent weeks, dozens of interviews were canceled and advanced negotiations with prospective employees were cut short by the firm, those people said. And some of the firm’s external recruiters have been told Bridgewater will not use them for the time being, said the people, who were not authorized to discuss the matter publicly. Bridgewater emphasizes secrecy in its communication with investors and the external recruiting firms, and the people requested anonymity because they did not want their relationship with the firm to be affected.

Turkey Set for Market Turmoil as Coup Turns Investors ‘Ice-Cold’ - (www.bloomberg.com) Things were looking up for Turkey when investors went home on Friday afternoon. Markets were rallying around the world on speculation global monetary policy was going to remain loose, there was a lull in the country’s fractious politics and President Recep Tayyip Erdogan’s government was moving to normalize relations with Russia and Israel. Turkey's Continental Divide: Now, after an attempted military coup that erupted at about 10 p.m. that evening in Ankara and Istanbul, sending the lira into its sharpest nosedive in about eight years, those investors are waking to a very different world, steeling themselves for tumultuous trading as local markets open on Monday. The currency rebounded 2.2 percent to 2.9510 per dollar at 8:47 a.m. in Istanbul Monday, after closing last week at 3.0157 per dollar, about 2 percent away from a record low in September.

OTHER STORIES:

Turkish forces try to crush last remnants of coup after Erdogan returns - (www.reuters.com)
Turkey: Mass arrests after coup bid quashed, says PM - (www.bbc.com)
Turkey coup: Erdogan set to crush all opponents and purge army after surprise failed attempt - (www.independent.co.uk)
For Turkey's sake, Erdoğan should resist desire for revenge - (www.theguardian.com)

ECB Seen Supporting German Bonds After Biggest Selloff This Year - (www.bloomberg.com)
Turkish lira in steepest fall since 2008 - (www.ft.com)
Discord over South China Sea clouds Asia-Europe summit - (www.reuters.com)