Monday October 31 20916 Housing and Economic stories

TOP STORIES:

“Tech” Malaise Pricks San Francisco Office Space Bubble - (www.wolfstreet.com) The rumored second round of layoffs at Twitter – which in 2011 was granted by the befuddled city of San Francisco the “Twitter tax break” on employment taxes – comes at a very inopportune moment for the glory of commercial real estate. These layoffs would amount to 8% to Twitter’s workforce, or about 300 people, according to Bloomberg. Already, Twitter has thrown 183,642 square feet of vacant office space at its two-building Mid-Market headquarters on the sublease market, thus bringing it to 1.51 million square feet (msf). This comes at a time when, according to the “snapshot” from Cushman & Wakefield, leasing activity nearly ground to a halt in the third quarter, with only 875,000 sf leased – the lowest since 2001!

 

Chinese Bank Liabilities Rise Above 200 Trillion Yuan For The First Time - (www.zerohedge.com) By now it is widely accepted that the biggest credit risk facing the global financial system is not so much among western banks, which have been closely scrutinized, and their balance sheets are largely exposed to both regulators and the public (perhaps with a few notable exceptions), but are arising from China. And while China's total leverage, by most counts, is somewhere in the 300% range, according to the IFF... ... and modestly lower according to other sources, the real worry is not so much the sovereign or corporate non-financial debt within China, but the leverage within its opaque, murky financial system. What we do know about China's banks is what the government discloses, which is not much, however overnight China's Banking Regulatory Commission reported on its website the latest amount of total domestic assets on China's bank books: as of September the number is a stunning CNY217.3 trillion, or just over $32 trillion. 

Ratings Inflation Is Back, Subprime Style - (www.bloomberg.com) A decade after the triple-A failures of the subprime era, grade inflation is back on Wall Street. This time, Moody’s Investors Service and S&P Global Ratings Inc. are cutting companies slack on mergers and acquisitions, an analysis of credit-ratings data by Bloomberg News found. Over the past year and a half, both have bumped up their ratings by two, three or even six levels on a majority of the biggest deals, the analysis found. Moody’s and S&P don’t dispute those findings, which are based on ratings guidelines posted on their websites. But the firms say a by-the-numbers approach overlooks one of their most valuable assets: human judgment. Both make clear that their analysts have leeway to nudge ratings up or down, based on a company’s track record and their confidence in management’s commitment to reduce indebtedness.

EXCLUSIVE: 2/3 Of Doctors Say Obamacare Hurts Quality And Cost Of Healthcare - (www.dailycaller.com) The nation’s doctors have spoken, and they say Obamacare must go, according to a new survey. Nearly two-thirds — 65.98 percent — of the 587 physicians surveyed say Congress should repeal and replace Obamacare, according to a survey by Jackson & Coker. Just over 60 percent of physicians surveyed were opposed to Obamacare when the bill passed in 2010. After six years of Obamacare, that percentage has raised to 62.42 percent. The overwhelming majority of physicians said that Obamacare has negatively impacted their “compensation, workload, treatment decision-making ability, and practice.” Over 50 percent of physicians said that the Obamacare system has had a negative impact on both the quality and cost of care patients receive nationwide.

Subprime Early Payment Defaults Are Back... in Credit Cards  - (www.wsj.com) Credit-card lending to subprime borrowers is starting to backfire. Missed payments on credit cards that lenders issued recently are higher than on older cards, according to new data from credit bureau TransUnion. Nearly 3% of outstanding balances on credit cards issued in 2015 were at least 90 days behind on payments six months after they were originated. That compares with 2.2% for cards that were given out in 2014 and 1.5% for cards in 2013. The poorer performance on newer cards pushed up the 90-day or more delinquency rate for all credit cards to 1.53% on average nationwide in the third quarter. That’s the highest level since 2012.

OTHER STORIES:

Schaeuble says monetary policy has reached its limits
Uneasy Calm Grips Markets Suddenly Silent Before U.S. Elections - (www.bloomberg.com)
Draghi in Berlin Asks for Action to Reverse Long-Term Rate Slide - (www.bloomberg.com)

China's Banks Are Running Out of Ways to Keep Profits Growing - (www.bloomberg.com)
Xi’s Agents of Fear Keep Party On Edge as Graft Fight Ploughs On - (www.bloomberg.com)
Mayor of Turkey’s Largest Kurdish City Detained by Terror Police - (www.bloomberg.com)