Friday September 30 20916 Housing and Economic stories

TOP STORIES:

Stocks Fall as Deutsche Bank Leads Rout in Lenders; Bonds Climb - (www.bloomberg.com) Stocks almost erased their monthly advance as Deutsche Bank AG sank on speculation it will need to raise capital. Bonds climbed as traders awaited a U.S. presidential debate tonight. Financial companies dragged down global equities after a media report said the German government wouldn’t step in to back the nation’s largest lender, fueling investor concern about its finances. Treasury yields declined to a two-week low, and the yen led gains among its Group-of-10 peers as investors sought safer assets. Emerging-market shares slumped after Turkey’s credit rating was cut to junk by Moody’s Investors Service. Oil surged as Saudi Arabia’s offer to cut output opened the door to a future OPEC deal.

In Miami Condo Glut, Preconstruction Resale Market Freezes up - (www.wolfstreet.com) But total existing residential sales fell 3.3% year-over-year to 2,389 units. Why? Condos! Existing condo sales – not including the new construction market – plunged 13.6% year-over-year to 1,150 units. Yet the median price, at $215,000, is still up 5.7% from last year. Cash transactions for all sales plunged by nearly 9 points, from 49.6% a year ago to 40.7% in August (national average = 22%); 25.7% of single-family home sales were cash, and 56.8% of condo sales. The report: Miami’s high percentage of cash sales reflects South Florida’s ability to attract a diverse number of international home buyers, who tend to purchase properties in all cash.

Saudi Arabia Bails Out Banking System After Interbank Rates Hit 2009 Highs – (www.zerohedge.com) As Bloomberg reports, The Saudi Arabian Monetary Agency, as the central bank is known, is giving banks about 20 billion riyals ($5.3 billion) of time deposits “on behalf of government entities.”It’s also introducing seven-day and 28-day repurchase agreements, as part of its “supportive monetary policy.” It didn’t provide further details. The announcement, which comes as the kingdom prepares for its first international bond sale, is the latest step by the central bank to ease a cash crunch in the banking system. The Saudi Interbank Offered Rate, a key benchmark for pricing loans, has surged to the highest in seven years after the plunge in oil prices forced the government to withdraw money from the country’s banking system, squeezing liquidity. The cash crunch risk undermining bank’s ability to lend to businesses, adding to the strain facing economic growth at a time when the government is cutting spending to shore up its public finances. The economy will likely expand 1.1 percent in 2016, according to a Bloomberg survey, the slowest pace since 2009.

Cost to taxpayers on loan forgiveness could skyrocket – (www.cnbc.com) A program to encourage student-loan borrowers to go into public service may come with a hefty price tag. If you take out a federal student loan, you may qualify for public service loan forgiveness. (If you borrow from a private lender, you are not eligible for the program.) Some qualified borrowers will be able to use this benefit starting next year. The ultimate cost of the program is difficult to determine. Since 2012, borrowers could certify with the Department of Education that their employment would qualify them for public service loan forgiveness. The number of borrowers who have been certified by the department has grown rapidly, to 431,853, as of June 30, 2016 (see chart below).

Deutsche Bank's Pain Is Germany's Too – (www.bloomberg.com) Berlin is trying to distance itself from Deutsche Bank and the threat of a $14 billion U.S. fine that would likely force the bank to raise capital. This makes sense politically ahead of an election year. It also, effectively, calls the U.S. authorities' bluff: if the fine is too big, German taxpayers won't step in to help. But the danger is that deepening investor concerns over the health of the country's No. 1 bank spiral out of control -- and circle right back to Berlin. As unpalatable as it may be politically, the market sees Germany and Deutsche as joined at the hip.

OTHER STORIES:

Merkel Rules out Assistance for Deutsche Bank, Focus Reports - (www.bloomberg.com)
Schaeuble Urges Lawmakers to Go Tough on Draghi, Bild Reports - (www.bloomberg.com)
U.S. presidential contest takes center stage for investors - (www.reuters.com)

In Australia, China’s Appetite Shifts From Rocks to Real Estate - (www.nytimes.com)
Tom Ridge: Cyber attacks are now worse than physical attacks - (finance.yahoo.com)

Mood hardens in Berlin over Brexit demands - (www.ft.com)
The global pivot towards fiscal policy - (www.ft.com)