Tuesday December 27 2016 Housing and Economic stories

TOP STORIES:

“Car Recession” Bites GM: Inventory Glut, Layoffs, Plant Shutdowns - (www.wolfstreet.com) GM has been reacting to its fabulously ballooning inventory glut by piling incentives on its vehicles. But that hasn’t worked all that well though it cost a lot of money. Now it’s time to get serious. It will temporarily close five assembly plants in January and lay off over 10,000 employees, spokeswoman Dayna Hart said today. Plants that assemble cars will be hit, according to the AP: The company’s Detroit-Hamtramck factory and Fairfax Assembly plant in Kansas City, Kansas, each will be shut down for three weeks, while a plant in Lansing, Michigan, will be down for two weeks. Factories in Lordstown, Ohio, and Bowling Green, Kentucky, each will be idled for one week.

Brace Yourself For Italy's Bankruptcy - (www.zerohedge.com) Then came the euro. Since 1999 Italian stocks have underperformed German stock by 65%, and since 2003 Italian factory output has lagged Germany’s by 40%. Thus, summarizes Charles, in this short essay,  "The diagnosis is simply that Italy has become woefully uncompetitive, and as a result, is not solvent. This much is clear from the perilous state of its banking system, which is always the outcome when banks lend to firms that have been rendered uncompetitive by some reckless central banker..., This has to be the most well-telegraphed, and now inevitable, national bankruptcy that I have seen in my 45-year career."

Housing Starts Dive 18.7 Percent: Mortgage Rates Soar - (www.mishtalk.com) The often volatile housing starts numbers took another dive this report, down 18.7% in November according to the Census Bureau New Residential Construction report for November 2016. Mortgage rates have risen 104 basis points (1.04 percentage points) since July 8. As I have pointed out, this is bound to affect the housing market sooner or later. Sooner means now. Each quarter-point hike will affect mortgage rates correspondingly until the long end of the curve refuses to rise further. At that point, we will be in recession. Still think three hikes are coming in 2017?

January 2017 Earnings Is Going To Be a Bloodbath – (www.zerohedge.com) With the run up in financials and energies for the last month we are going to experience big $5 chunks taken out of these stocks and massive after hours and pre-market gap downs that will cause entire sectors to sell off during earnings in January. It is just going to be brutal, expect 500 point down days in the Dow during this upcoming earnings period. ... Not to mention all the other broken companies that have been lifted up in this 4th quarter rally, and are going to be taken out to the woodshed for a red beating when they report. Throw in all those idiot investors who don`t take profits for tax reasons who will wish they did as everybody sells in the new year at the same time running for the tax exits together, and this January 2017 Earning`s period is going to be outright one of the worst we have seen since last January`s massive stock selloff.

Goldman Warns China Outflows Rising in Both Yuan Payments, Forex - (www.reuters.com) China’s capital outflows are accelerating and the central bank is selling larger amounts of foreign exchange, Goldman Sachs Group Inc warned as the yuan headed for its biggest annual decline in more than 20 years. A net $69.2 billion exited the nation in November, compared with a monthly pace of around $50 billion since June, Goldman economists led by Hong Kong-based MK Tang wrote in a note Friday. Money has been leaving in yuan payments for 14 consecutive months, while the central bank’s yuan positions have slumped the most since January. The situation could get worse, said Banny Lam, head of research at CEB International Investment Ltd.

OTHER STORIES:

Dispute could sink Italian bank Monte Paschi's rescue plan - (www.reuters.com)
China Home-Price Growth Slows as Property Curbs Dent Demand - (www.bloomberg.com)
Decision-Day Guide: Kuroda View on Yields in Focus as BOJ Meets - (www.bloomberg.com)
IMF Head Christine Lagarde Convicted in French Negligence Trial - (www.bloomberg.com)

As Trump Tweets, China Quietly Weighs Options to Retaliate - (www.bloomberg.com)
Four Years of Living Dangerously: CEOs Brace for the Trump Era - (www.bloomberg.com)
China Must Curb Speculation Amid Bubble, Top Official Says - (www.bloomberg.com)