Friday January 6 2016 Housing and Economic stories

TOP STORIES:

Trump Tweets, Ford & GM Counter, their Shares Jump, the Peso Plunges, but the Jobs Won’t “Come Back” to the USA - (www.wolfstreet.com) Reality is this: Demand for GM cars has been swooning, and inventories on dealer lots have been ballooning. For example, at the end of November, dealers sat on 127 days’ supply of Cruze models, more than double a healthy level, after sales had plunged 18%. In November, GM had announced the first wave of layoffs. In December, it followed up by announcing 10,000 layoffs and five plant closings [read…  “Car Recession” Bites GM: Inventory Glut, Layoffs, Plant Shutdowns]. And it was Ford’s turn today to counter. It had been targeted by Trump last year for its plans to shift production of the Focus from Michigan to Mexico. Ford, which employs 85,000 workers in the US and 8,800 in Mexico, announced today that it cancelled building a $1.6-billion plant in Mexico and won’t create the 2,800 jobs that would have come with it.

Bank Of England Blog Warns Of Devastating Bond Market Rout, "Worse Than 1994 Massacre" - (www.zerohedge.com) First it was Goldman Sachs, which accurately warned last summer that a sharp spike in interest rates would lead to trillions in bond market losses, as observed over the past two months after the Trump election. Then it was Ray Dalio's turn to warn NY Fed staffers that "it would only take a 100 basis point rise in Treasury bond yields to trigger the worst price decline in bonds since the 1981 bond market crash." Now, it's the turn of the Bank of England, which writes in its blog, Bank Underground, that once the latest bond market bubble bursts, "it leave investors worse off than the 1994 'bond massacre'," when global bonds suffered the biggest annual loss on record.

3M LIBOR Tops 1.00% For First Time Since 2009 - (www.zerohedge.com) While US equity prices push ebulliently towards their next level of Nirvana, financial conditions continue to tighten for American businesses. For the first time since April 2009, 3-month LIBOR - one of the most important reference rates for business financing - topped 1.00% today. We documented the real world implications of this in "Forget The Fed’s 0.25%, Short-Term Rates Have Already Risen By 1% For The Real World" While blowing out unsecured funding rates may no longer be a flashing red flag, a question has emerged as a lot of debt references Libor, debt ranging from household debt to non-financial business debt: some $28 trillion of it, to be specific, and just in the US. The question is just how concerned will the borrowers of said debt be once they get their next due balance. 

China Has Too Many Shopping Malls - (www.wsj.com) On the day after Christmas, the MixC luxury shopping mall in this city’s Jiulongpo district was packed with colorful trees and other holiday decorations but not many people. With dozens of new shopping centers being added in Chongqing, the MixC’s five-story Parkson department store was recently boarded up. Along the mall’s grounds was a football field’s length of empty shop space covered in red posters that read, “Coming soon.” Zou Ying, one of the few visitors, was there that day just for a stroll. The 27-year-old urban planner said she buys most things online—shoes, clothes, even a new toilet lid—making a purchase nearly every day and often through Taobao, an Amazon-like e-commerce giant.

Asia’s Richest Families Are Abandoning ‘Complacent’ Hedge Funds - (www.bloomberg.com) For Michael Preiss, whose firm oversees $1.9 billion mainly for wealthy Asian families, adding hedge funds to his clients’ portfolios was an easy sell some years ago. Not anymore. The executive director at the Singapore-based Taurus Wealth Advisors Pte multi-family office said his clients are disappointed with mediocre hedge fund returns and are balking at high fees, prompting them to shift to private equity. With redemptions already at a four-year high, Asia’s richest people comprise an investor group regional hedge funds can ill afford to lose. Family offices representing billionaires and multi-millionaires are a key source of capital in Asia, where global pension funds and university endowments haven’t made large inroads. Managers seeking money for new hedge funds are likely to be the hardest hit.

OTHER STORIES:

China’s Credit Engine Is Running Out of Gas - (www.bloomberg.com)
New Year’s Money Curbs May Prompt More Use of China Outflow Pipe - (www.bloomberg.com)
Fed Tightening Eases Stimulus Pressure Globally, Rajan Says - (www.bloomberg.com)

That Bubbling Sound Coming From U.S. Factories May Be Inflation - (www.bloomberg.com)
China Inc.’s Large Dollar Debts Fuel Beijing’s Efforts to Curb Yuan Plunge - (www.wsj.com)
Cities offer a glimpse of China’s economic future - (www.ft.com)