Wednesday April 19 2017 Housing and Economic stories

TOP STORIES:            

Restaurants in Worst Tailspin since 2009/2010 - (www.wolfstreet.com) This thermometer for discretionary spending is the first to react when consumers hit their limits. Foot traffic at chain restaurants in March dropped 3.4% from a year ago. Menu prices couldn’t be increased enough to make up for it, and same-store sales fell 1.1%. The least bad region was the Western US, where sales inched up 1.2% year-over-year and traffic fell only 1.7%, according to TDn2K’s Restaurant Industry Snapshot. The worst was the NY-NJ Region, where sales plunged 4.6% and foot traffic 6.3%. This comes after a dismal February, when foot traffic had dropped 5% year-over-year, and same-store sales 3.7%. 

Rise of private debt creates fears of a bubble - (www.ft.com) Nature is said to abhor a vacuum, but finance loves them. After all, they tend to be very profitable — at least for savvy early movers. Banks have in recent years been forced to retrench their operations, tamed by financial crisis losses, bridled by shareholders and tethered by more onerous regulation. Lending to smaller and mid-sized companies has been one of the biggest victims, as banks have focused on servicing their blue-chip clients. But a swelling array of investors have stepped into the resulting breach. So-called private debt funds act much like a bank, making loans to businesses too small to go to the bond market, but too big to simply rely on a loan facility from their neighbourhood credit union. It is an eminently sensible and useful business model, marrying the corporate need for funding with institutional investors’ desperation for higher returns at a time interest rates have plumbed historic lows.

“Secular Low in Bond Yields Remains in the Future” says Hoisington’s Lacy Hunt - (www.mishtalk.com) With the Fed having hiked thrice and calling for three more hikes still, the 2017 Hoisington First Quarter Review contains a call that will have many if not most analysts shaking their heads: “The secular low in bond yields remains in the future, not the past,” says Lacy Hunt. That’s a pretty bold call, but betting against Hunt or on alleged bond bubbles has been extremely unrewarding, to say the least. The Fed thinks three more rate hikes are baked in the cake over the rest of the year. I highly doubt the Fed gets in even one more hike. You can take this dot plot of expected rate hikes and throw it out the window.

Puerto Rico seen sliding toward bankruptcy as deadline nears - (www.reuters.com) Bankruptcy for Puerto Rico is looking ever more likely as the clock ticks down toward a May 1 deadline to restructure $70 billion in debt, ramping up uncertainty for anyone betting on returns from the island's widely held U.S. municipal bonds. When U.S. Congress last year passed the Puerto Rico rescue law dubbed PROMESA, it froze creditor lawsuits against the island so its federally appointed oversight board and creditors could negotiate out of court on the biggest debt restructuring in U.S. municipal history. The freeze expires on May 1, however, and an extension by Congress is "not going to happen," said a Republican aide to the House Committee on Natural Resources, which is in charge of territory matters.

13 Years Of No Profit Leads Tesla To Become Most Valuable Automaker - (www.dailycaller.com) Tesla became the most valuable car marker in the country Monday, even though the electric car company has yet to turn a profit in its 13 years of existence. The California-based automaker raised its market capitalization to $51 billion, a number that is valued at about $1.7 billion more than GM. The two companies wrestled for supremacy during early trading Monday. There is significant debate over whether Tesla’s recent surge is sustainable, given the company’s chronic inability to deliver products on deadline. Some analysts say the old metrics of valuation do not apply to Tesla, because investors and the public believe the company is upending the auto market.

OTHER STORIES:

Trump tanks the dollar after saying it's 'getting too strong' - (www.cnbc.com)
Trump Says He's Open to Renominating Yellen at Fed, WSJ Says - (www.bloomberg.com)
U.S. tax reform debate moves away from Ryan blueprint - (www.reuters.com)
U.S. government posts $176 billion deficit in March - (www.reuters.com)

Trump Drops Campaign Promise to Label China a Currency Manipulator - (www.bloomberg.com)
Brazil Slashes Key Rate by Most Since 2009 to Revive Economy - (www.bloomberg.com)
Tillerson Says U.S.-Russia Relations at ‘Low Point’ After Meeting With Putin - (www.wsj.com)