KeNo's Housing and Economic Portal: Friday October 21 20916 Housing and Economic stories

Thursday, October 20, 2016

Friday October 21 20916 Housing and Economic stories

It Starts: Shutdowns, Production Cuts, Layoffs at Auto Plants - (www.wolfstreet.com) It’s been years since we’ve heard about production cuts by automakers, but here they come. After a record-breaking 2015, the hot air is audibly hissing out of the auto industry. September sales were down 0.5% from a year ago. Year-to-date sales were about flat. Some individual models got clobbered. Inventories are piling up on dealer lots. Automakers lavished incentives on the market. Nothing worked. Yet, auto production in September had jumped 7.3% year-over-year, according to the industrial production report this morning. In my article earlier today on this phenomenon [Is this Why US Industrial Companies Don’t Invest?], I explained: “Something has to give: either a miraculous jump in sales or a cut in production.”

Hedge Fund Startups Plummet in Asia Amid Low Returns, High Fees - (www.bloomberg.com) Asia hedge funds are opening at the slowest pace since the turn of the century. Just 27 new funds started trading in Asia in the first nine months of this year, the fewest since 2000 when 56 funds opened, according to Eurekahedge. It’s the third straight year of declines, and down from 83 new funds last year. Lackluster returns and high fees in the $2.9 trillion global hedge fund industry have discouraged investors from allocating money to new funds, said Mohammad Hassan, senior analyst at the Singapore-based data provider. Investors have chosen to go with larger, more established managers, typically with assets of at least $500 million, which has hurt newcomers, he said.

How One Goldman Sachs Trader Made More Than $100 Million - (www.wsj.com) One junk-bond trader at Goldman Sachs Group Inc. earned more than $100 million in trading profits for the firm earlier this year, an unusual gain at a time when new regulations have pushed Wall Street to take fewer risks. The gains were the work of Tom Malafronte, a managing director on the bank’s high-yield-bond desk in New York. The 34-year-old trader bought billions of dollars in junk corporate debt on the cheapstarting in January, then locked in profits as prices recovered, according to people familiar with the matter. The windfall is a throwback to a previous era on Wall Street, when big banks were more eager to step in as markets turned and bond traders took bigger risks. Those bets have become less common since the crisis. Hoping to make the financial system safer, Congress passed rules that curbed banks’ ability to wager with their own money and required them to hold more capital.

FHA Rumored to Cut Insurance Premiums by 25 Basis Points – (www.thetruthaboutmortgage.com) There’s been speculation pretty much ever since the last cut that the FHA would lower insurance premiums once more. And the rumor mill has been really busy the past few weeks, signaling a possible cut in the next month or so. The latest rumor comes via a bulletin from Inside Mortgage Finance, which revealed that industry chatter points to a 25 basis point cut in FHA premiums after the presidential election in early November. That means the typical FHA borrower who puts down 3.5% and takes out a 30-year fixed mortgage will pay an annual MIP of 0.60%. The decrease would return annual premiums to just above their pre-crisis levels of 0.55%, which would make perfect sense given the fact that we are now well beyond the most recent crisis and back to square one for the most part.

10-Trillion-Dollar Bye-Bye - The Calm Before The Storm - (www.zerohedge.com) "We don’t expect the current situation to end well for investors who insist on taking larger investment exposures than they’re actually willing to hold, with discipline, through a period of severe market losses. From present valuation extremes, a 40-55% market loss would represent a fairly run-of-the-mill resolution to the current market cycle... By the completion of the current cycle, I expect over $10 trillion of what investors count as paper “wealth” in U.S. equities to disappear without a trace."

OTHER STORIES:

The Economy is Cracking under Too Much Debt - (www.wolfstreet.com)