Wednesday May 24 2017 Housing and Economic stories

TOP STORIES:            

The Pillage of Pemex Turns Bloody - (www.wolfstreet.com) Mexico’s state-owned oil giant, Petróleos de Mexico, AKA Pemex, has spent the last few decades being pillaged and plundered from the inside-out. The state-owned giant has been financially bled to the verge of collapse by its swollen ranks of senior managers and administrators, corrupt politicians, shady contractors, and the untouchable, unsackable leaders of the oil workers’ union. Now, Pemex is being bled dry from the outside-in. Those doing the plundering this time include armies of amateur opportunists who live close to the major pipelines that crisscross the country as well as some of Mexico’s most ruthless and organized drug gangs. Thanks to these groups’ immunity, bought with bribes and death threats, Pemex is estimated to be losing 20,000 barrels of gasoline daily, with a market value of around $4 million. That’s about $1.4 billion a year.

"This Is Probably Just The Beginning" - Chinese Banks Are In Big Trouble – (www.zerohedge.com) That's not supposed to happen... With the crackdown on financial system leverage underway, Chinese banks (and securities firms) are in big trouble. As we noted previously, China's bond curve is inverted, yields are surging, and Chinese regulatory decisions shutting down various shadow-banking pipelines has crushed securities firms' stocks. However, as Bloomberg points out, as China’s deleveraging efforts cut into banks’ profit margins, rising base funding costs and interbank credit risk concerns have pushed banks' cost of borrowing beyond the rate they charge customers for loans for the first time in history.

Jared Kushner's Slumlord Empire - (www.propublica.org) Tenants in more than a dozen Baltimore-area rental complexes complain about a property owner who they say leaves their homes in disrepair, humiliates late-paying renters and often sues them when they try to move out. Few of them know that their landlord is the president's son-in-law. The Townhouse on High Seas Court in the Cove Village development, in the Baltimore suburb of Essex, was not exactly the Cape Cod retreat that its address implied: It was a small unit looking onto a parking lot, the windows of its two bedrooms so high and narrow that a child would have had to stand on a chair to see out of them. But to Kamiia Warren, who moved into the townhouse in 2004, it was a refuge, and a far cry from the East Baltimore neighborhood where she grew up. “I mean, there were bunny rabbits all hopping around,” she told me recently.

Commodity Traders Have a Really Big Problem - (www.bloomberg.com) Unlike the stock market in which transactions are typically based on information that's public, firms that buy and sell raw materials thrived for decades in an opaque world where their metier relied on knowledge privy only to a few. Now, technological development, expanding sources of data, more sophisticated producers and consumers as well as transparency surrounding deals are eroding their advantage. As market participants' access to information increases, the traders highlighted the need to more than simply buy and sell commodities as profits from arbitrage -- or gains made from a differential in prices -- shrinks. That means getting involved in the supply chain by potentially buying into infrastructure that's key to the production and distribution of raw materials, and also providing financing for the development of such assets.

Illinois Democrats In Senate Pass 33% Hike Of Personal And Corporate Income Taxes - (www.zerohedge.com) Senate Democrats in Illinois, with a final vote of 32-26, have just passed a new budget proposal that includes a massive personal and corporate income tax hike and an expansion of the state's sales tax, after saying they are no longer willing to wait for a broader deal with Republicans. As the Chicago Tribune noted earlier this morning, the Democrats' budget proposal includes a ~33% hike in both the the personal and corporate income tax rates and an expansion of the state's share of sales tax revenue.  In all, the package would cost Illinois taxpayers an incremental $5 billion. Democrats spent the weekend tweaking the spending plan, and unveiled an updated proposal late Monday. It calls for spending $37.3 billion after raising about $5 billion through the tax hikes; a floor vote is expected Tuesday, said Sen. Heather Steans, a Chicago Democrat and key budget negotiator. The blueprint relies on the passage of companion legislation that would raise the personal income tax rate from 3.75 percent to 4.95 percent, which is just below the 5 percent rate in place before Rauner took office. The corporate income tax rate would be hiked from 5.25 percent to 7 percent. Meanwhile, the state's share of the 6.25 percent sales tax would be extended to various services not currently covered, such as dry cleaning. The proposal also calls for ending three corporate tax breaks, including requiring companies that drill on the outer continental shelf and do business in Illinois to pay income taxes.

OTHER STORIES:

Asian Stocks May Rise, Oil Extends Gains Above $50: Markets Wrap - (www.bloomberg.com)
U.S. and Pacific Rim countries at odds in heated trade meeting
Ghost of the 1997 Crisis Stalks Hong Kong's Economy - (www.bloomberg.com)

Egypt Unexpectedly Raises Rates as IMF Urges Action on Inflation - (www.bloomberg.com)
The Quants Run Wall Street Now - (www.wsj.com)
Here’s Why the Fed Will Stay Central to Markets - (www.wsj.com)