Tuesday February 21 2017 Housing and Economic stories

TOP STORIES:            

Fed Frets about Commercial Real Estate Bubble & its $2 Trillion in Loans Mostly at “Smaller Banks” - (www.wolfstreet.com) The fear of what Fed Chair Janet Yellen on Tuesday – and other Fed governors earlier – called “waiting too long” before raising interest rates is increasingly inserting itself into Fed pronouncements. One of the aspects – and this is getting articulated with increasing intensity – is commercial real estate (CRE) and its impact on banks whose nearly $2 trillion in CRE loans are backed by collateral whose boom-prices are known to crash periodically in phenomenal busts. Or is it the fear of “having already waited too long?” Boom and bust: that’s the material CRE is made of. We had seven years of boom, and now the Fed is worried about the bust. Yellen didn’t mention CRE in her prepared testimony on Tuesday before the Senate Committee on Banking, Housing, and Urban Affairs. But it featured in the twice-yearly report that the Fed delivered to Congress in support of Yellen’s testimony.

Och Ziff In Trouble: AUM Plunges After A Record $4.8 Billion In January Redemptions - (www.zerohedge.com) One of the world's largest, public hedge funds, Och Ziff, gave active managers around the globel more reasons for concern this morning, when it reported results today which showed distributable earnings of $7.5 million, or one cent a share, in the quarter compared to a loss of $36.1 million, or 7 cents, a year earlier. For the full year, the company reported a loss of $121.3 million from a profit of $251.9 million in 2015. Revenue tumbled from $342.8mm to $281.3mm. However, the flashing red headline is just how much AUM the recent underperformance and legal problems by Daniel Och's investment vehicle have cost him.

Americans Just Broke the Psychologists’ Stress Record - (www.bloomberg.com) A national survey of anxiety finds a statistically significant increase for the first time since it was launched in 2007. If misery loves company, it should be thrilled: Americans left and right are under so much stress it's now registering on the American Psychological Association's anxiety meter.  For 10 years, the APA has been running its "Stress in America" survey, usually finding that stress is caused by three primary factors—money, work, and the economy. Those factors clearly play a role in the current national mood. Younger Americans are worried about college debt, older ones about retirement, and everyone, it seems, about the economic prospects of the next generation. In the study, respondents with incomes below $50,000 reported higher stress levels than those with higher incomes. 

A $30 Million Golden Parachute Courtesy of Junk-Bond Market - (www.bloomberg.com) When a silicon producer controlled by one-time Spanish finance minister Juan-Miguel Villar Mir came to the U.S. junk-bond market last week, the deal had one curious provision. Ferroglobe Plc earmarked a piece of the bond sale to help fund most of a roughly $30 million payment to Alan Kestenbaum, the former executive chairman who resigned a year after merging his North America-focused Globe Specialty Metals Inc. with billionaire Villar Mir’s Spanish conglomerate. Issuers typically don’t turn to debt investors to fund golden parachutes, and companies this size don’t often have a cash commitment this big for an executive headed out the door. In this case, the award is in addition to the 5 percent stake that Kestenbaum already owns in Ferroglobe. What’s more, the company is expected to post an annual loss for the calendar year.

Mortgage Delinquencies Rise Most In 7 Years As Rates Spike - (www.zerohedge.com) For the first time since Q1 2013, mortgage delinquencies rose QoQ in Q4. The jump from 4.52% (of total loans) to 4.80% is the largest since Q1 2010 and hit as mortgage rates spiked following President Trump's election and Fed Chair Yellen's jawboning and rate-hike. Of course, levels remain 'low' relative to the extreme highs of the financial crisis. One word springs to mind - "contained". For the first time since Q1 2013, mortgage delinquencies rose QoQ in Q4. The jump from 4.52% (of total loans) to 4.80% is the largest since Q1 2010 and hit as mortgage rates spiked following President Trump's election and Fed Chair Yellen's jawboning and rate-hike. Of course, levels remain 'low' relative to the extreme highs of the financial crisis. One word springs to mind - "contained"

OTHER STORIES:

Banks lift stocks, U.S. yields climb after data - (www.reuters.com)
March Fed Hike in Play for Traders After Inflation Surge: Chart - (www.bloomberg.com)
Markets Learn to Live With a More Hawkish Yellen - (www.bloomberg.com)

World stocks head towards record high on Yellen, U.S. outlook - (www.reuters.com)
Treasuries -Yields jump after data shows surging consumer prices - (www.reuters.com)
Consumer Prices in U.S. Increase by Most Since February 2013 - (www.bloomberg.com)
Retail Sales in U.S. Climb More Than Forecast in Broad Advance - (www.bloomberg.com)