Wednesday January 7 Housing and Economic stories

TOP STORIES:

Petrobras says probe may implicate pension fund; cuts off contractors - (www.reuters.com)  Brazil's state-run oil company Petrobras on Monday said a growing corruption scandal may implicate its employee pension fund and has led to a freeze on payments to 23 contractors allegedly involved in the scheme. Petros, the 66 billion real ($24 billion) employee-pension fund of Petroleo Brasileiro SA, as Petrobras is formally known, was singled out by an internal investigation, Petrobras said in a statement. The law firms that are conducting the internal investigation "have found possible links to the facts that have been investigated" regarding the pension fund, according to the statement. It did not give details of any possible links. The investigation was launched after Brazilian prosecutors alleged that Petrobras executives conspired with construction companies to inflate the cost of contracts and then kick back proceeds to executives, politicians and political parties as bribes and campaign contributions.

AirAsia CEO Dumped Shares Days Before Flight Disappeared - (www.infowars.com)  AirAsia CEO Tony Fernandes dumped 944,800 shares in Tune Insurance Holdings Bhd, the organization that provides travel insurance for AirAsia passengers, just days before the disappearance of Flight QZ8501. On December 26, the Malaysian Insider reported that Fernandes, the founder of Tune Group Sdn Bhd which owns AirAsia, had sold a total of 944,800 shares in Tune Insurance Holdings Bhd, with 850,000 shares being dumped on December 22, and the other 94,800 being sold the day after. According to its official website, Tune Insurance Holdings Bhd is “an insurance product manager” for AirAsia in which “insurance products are sold to (AirAsia) customers as part of their online booking process.” The share prices of AirAsia and Tune Insurance Holdings both fell on the first day of trading after the disappearance of Flight QZ8501, with the former shedding 12.9 percent at one point. Tune Insurance Holdings lost 0.6%. Fernandes decision to dump the shares less than a week before AirAsia Flight QZ8501 disappeared over the Java Sea prompted some to speculate that he may have had prior knowledge of the incident. “Did Fernandes know his company stock was about to take a hit? The timing is suspicious,” asks Heavy.com, adding, “If so, it indicates knowledge of an impending attack on AirAsia.”

Alaska Governor Warns State's Fiscal Situation "Critical" As Oil Price Drops - (www.zerohedge.com) Narrative, we have a problem. What is billed day after day as 'unequivocally good' is entirely not good for Alaska (oh and Texas and Pennsylvania and...) as with oil prices dropping, AP reports Alaska Gov. Bill Walker has halted new spending on six high-profile projects, pending further review. With oil taxes and royalties expected to represent nearly 90% of Alaska's unrestricted general fund revenue this year, officials warned, "the state's fiscal situation demands a critical look." As AP reports,

Alaska Gov. Bill Walker issued an order Friday putting the new spending on hold. He cited the state's $3.5 billion budget deficit, which has increased as oil prices have dropped sharply. With oil prices now around a five-year low, officials in Alaska and about a half-dozen other states already have begun paring back projections for a continued gusher of revenues. Spending cuts have started in some places, and more could be necessary if oil prices stay at lower levels. How well the oil-rich states survive the downturn may hinge on how much they saved during the good times, and how much they depend on oil revenues. Some states, such as Texas, have diversified their economies since oil prices crashed in the mid-1980s. Others, such as Alaska, remain heavily dependent on oil and will have to tap into sizeable savings to get by.

The Cartel: How BP Got Insider Tips Through a Secret Chat Room - (www.bloomberg.com) Halfway down a muddy, secluded road on marshland in suburban Essex sits Wharf Pool, a lake stocked with some of the biggest freshwater fish you will ever see. A white sign with red lettering reads: “Private Syndicate: Strictly Members Only.” A metal gate, a barbed-wire fence and two CCTV cameras bar the way. Anglers hoping to spend time on the lake’s carefully tended banks must join a waiting list. Those who make it to the top pay a membership fee that buys them the chance to catch a carp that weighs more than a Jack Russell. There are hundreds of them swimming beneath the surface. It’s close to shooting fish in a barrel. An hour away by train, in London’s financial district, the lake’s owners ply their trade. Wharf Pool was purchased for about 250,000 pounds ($388,000) in 2012 by Richard Usher, the former JPMorgan Chase & Co. (JPM) trader at the center of a global investigation into corruption in the foreign-exchange market, and Andrew White, a currency trader at oil company BP Plc. (BP/)

Emerging-Market Distressed Debt Loss Is Worst Since 2008  - (www.bloomberg.com) Emerging-market distressed debt losses are the worst this month since the global financial crisis. Bank of America Merrill Lynch’s Distressed Emerging Markets Corporate Plus Index fell 13.4 percent through Dec. 26, set for its worst performance since October 2008, as a tumble in the price of oil sparked a currency crisis in Russia. That brought this year’s decline to 19.7 percent, the most in six years. High-yield distressed securities in the U.S. lost 8 percent, the indexes show. Emerging markets accounted for 14 of the 56 global defaults this year in Standard & Poor’s coverage.

OTHER STORIES:

AirAsia CEO Sold 944800 Shares In Tune Insurance Before Flight Vanished - (www.undergroundworldnews.com)

Ruble Sees Worst Annual Drop Since 1998 as Oil, Sanctions Weigh - (www.bloomberg.com)

Russian company debt contaminates sovereign dollar bonds  - (www.reuters.com)

Fitch: Snap Greek Elections Add to Credit Risk - (www.reuters.com)

[Bloomberg] Iron-Ore Slump Fails to End Glut as Australia Mines Grow - (www.bloomberg.com)

The Junk Bond Market Is Signalling Bad News For The Stock Market  - (www.businessinsider.com)

David Tepper Is Worried We're About to Relive 1999 - (www.businessinsider.com)

Opinion: The Fed is heading for another catastrophe - (www.marketwatch.com)

Tuesday January 6 Housing and Economic stories

TOP STORIES:

Emerging-Market Distressed Debt Loss Is Worst Since 2008 - (www.bloomberg.com) Emerging-market distressed debt losses are the worst this month since the global financial crisis. Bank of America Merrill Lynch’s Distressed Emerging Markets Corporate Plus Index fell 13.4 percent through Dec. 26, set for its worst performance since October 2008, as a tumble in the price of oil sparked a currency crisis in Russia. That brought this year’s decline to 19.7 percent, the most in six years. High-yield distressed securities in the U.S. lost 8 percent, the indexes show. Emerging markets accounted for 14 of the 56 global defaults this year in Standard & Poor’s coverage. Crude reached the lowest in five years earlier this month and is heading for its largest annual decline since 2008 as members of the Organization of Petroleum Exporting Countries resist production cuts to defend market share. A supply glut has also pushed metal and coal prices deeper into a bear market. “With many moving parts to the equation, could there be a point where investors begin to interpret the circumstances as contagion?” said David Tawil, co-founder of New York-based Maglan Capital LP. “What happens if we need to addVenezuela and Russia to the mix? Contagion is good for no one.”

Snap Election Risks Greek Lifeline; Nation's Stocks and Bonds Plunge on Government Defeat - (www.bloomberg.com)  Stocks and bonds plunged in Athens after the government defeat, recalling the height of the Greek financial crisis in 2012, with investors concerned a victory by the opposition Syriza party would jeopardize the terms of Greece’s rescue struck with international creditors. Syriza, which opposes austerity measures imposed in return for the outside aid, leads Samaras’s New Democracy movement in opinion polls. “These elections will be a struggle between fear for euro exit and anger against austerity,” George Pagoulatos, professor of European politics and economy at the Athens University of Economics and Business, said by phone. “The government will be emphasizing the risks associated with Syriza’s anti-bailout stance and Syriza will try to convince voters that it can offer a viable alternative, without endangering the country’s euro membership.”

Mexico Bond Meltdown Erases What Little Was Left in 2014 - (www.bloomberg.com) The biggest selloff in 20 months has tipped Mexico’s peso-denominated bonds to a loss for the year after falling oil prices undermined optimism that an energy-fueled investment boom would propel the securities. The government’s local-currency debt fell 6 percent in December in dollar terms, the most since May 2013, according to Bank of America Corp. That left the bonds, known as Mbonos, with a 2.5 percent loss heading into the last week of the year. Local-currency debt in other emerging markets held up better this month and has returned 7.8 percent in dollars in 2014. Projections that Mexico’s decision to end a 75-year oil monopoly would fuel a surge in investment -- the government estimated as much as $50 billion by 2018 -- were damped as oil prices headed for their biggest yearly decline since 2008. That caused the peso to weaken, eroding returns on local debt for dollar-based investors. Signs that U.S. interest rates are headed higher next year are also sapping demand for higher-yielding, higher-risk assets from emerging markets.

There "Is" Blood: Energy Services Firm Civeo Cuts Headcount 45% & Guidance By 30%, Suspends Dividend - (www.zerohedge.com) In what we suspect will be the first of many, Houston-based Civeo (which provides workforce accomodation to the oil industry) has crashed over 20% after-hours (after being down over 65% since September already) following the total carnage of its earnings report.

• CIVEO HAS CUT U.S., CANADA HEADCOUNT BY 45%, 30% FROM EARLY '14
• CIVEO SEES 2015 REV $540M-$600M, EST. $817.3M

Apparently having not only (Jana) but two (Einhorn) activist hedge funds is not nearly sufficient to send a stock soaring to all-time highs, especially when said stock can no longer afford to buy back its own stock. And in what is likely the death knell for this irrational bubble, Civeo has suspended the dividend and will use excess cash flow to cut debt in 2015 (wait what).

Rise in Loans Linked to Cars Is Hurting Poor - (www.nytimes.com) The rusting 1994 Oldsmobile sitting in a driveway just outside St. Louis was an unlikely cash machine. That was until the car’s owner, a 30-year-old hospital lab technician, saw a television commercial describing how to get cash from just such a car, in the form of a short-term loan. The lab technician, Caroline O’Connor, who needed about $1,000 to cover her rent and electricity bills, believed she had found a financial lifeline. “It was a relief,” she said. “I did not have to beg everyone for the money.” Her loan carried an annual interest rate of 171 percent. More than two years and $992.78 in debt later, her car was repossessed. “These companies put people in a hole that they can’t get out of,” Ms. O’Connor said. The automobile is at the center of the biggest boom in subprime lending since the mortgage crisis. The market for loans to buy used cars is growing rapidly. And similar to how a red-hot mortgage market once coaxed millions of borrowers into recklessly tapping the equity in their homes, the new boom is also leading people to take out risky lines of credit known as title loans.

OTHER STORIES:

The Junk Bond Market Is Signalling Bad News For The Stock Market  - (www.businessinsider.com)

David Tepper Is Worried We're About to Relive 1999 - (www.businessinsider.com)

Opinion: The Fed is heading for another catastrophe - (www.marketwatch.com)

U.S. existing home sales hit six month low in November - (www.reuters.com)

Kocherlakota, in strong Fed rebuke, says FOMC taking 'unacceptable' inflation risks - (www.cnbc.com)

Greek Vote Puts ECB Funds at Risk as Crisis Memories Revived - (www.bloomberg.com)
Ruble Dives as Russian GDP Contracts First Time in 5 Years - (www.bloomberg.com)

Greek Bonds Slump on Election Risk Fueling Gains in German Bunds - (www.bloomberg.com)

Monday January 5 Housing and Economic stories

TOP STORIES:

New Jersey to bail out Atlantic City with short-term loan - (www.reuters.com) Atlantic City, New Jersey's struggling gambling hub, will get a short-term $40 million loan from the state rather than try to borrow the money in the capital markets this year, a city official said on Tuesday. Even the city's originally planned $40 million note sale, now squashed, was itself a scaled back version of a larger bond issuance that was delayed amid uncertainty over the city's next financial steps. The city must repay the loan by March 31 at a 0.75 percent interest rate, according to the loan agreement, signed on Dec. 18 by Mayor Don Guardian and the state. Atlantic City still hopes to issue at least $140 million of bonds in the first quarter of 2015, revenue director Michael Stinson told Reuters. That will help pay down property tax appeals won by casinos.

Michigan board votes to send state money to Detroit pension funds - (www.reuters.com) A Michigan board on Monday agreed to send nearly $195 million in state funds to Detroit's two retirement systems on Feb. 9 as part of a pivotal deal that helped to end the city's historic bankruptcy, a state spokesman said. Jeremy Sampson, a spokesman for Michigan's Treasury Department, said the three-member Michigan Settlement Administration Authority took the action after the city's bankruptcy reached certain triggers, including the dismissal of legal claims against the state that were related to the bankruptcy. The state funds are part of the so-called grand bargain, which includes $366 million from philanthropic foundations and $100 million from the Detroit Institute of Arts pledged over 20 years to ease cuts to pensions for Detroit retirees and save artwork from being sold to pay city creditors. The first payments by the foundations and the museum to the retirement systems totaling $23.3 million were made on Dec. 10, the effective date that marked Detroit's exit from the biggest-ever U.S. municipal bankruptcy.

Oil Crash Wipes $11.7 Billion From Buyout Firms’ Holdings  - (www.bloomberg.com) Oil’s plunge makes energy a great investment for the coming years, according to Blackstone Group LP (BX)’s Stephen Schwarzman and Carlyle (CG) Group LP’s David Rubenstein. For private equity firms, it’s also been painful. More than a dozen firms -- including Apollo Global Management LLC (APO), Carlyle, Warburg Pincus and Blackstone -- have lost a combined $11.7 billion in 27 publicly traded oil producers since June, when crude prices reached this year’s peak before beginning their six-month slide, according to data compiled by Bloomberg. Stocks of buyout firms with exposure to energy have slumped, and bond prices suggest some closely held oil producers may struggle to pay for their debt. “It’s been a really volatile period, and frankly that’s how Saudi Arabia wants it,” said Francisco Blanch, head of global commodity research at Bank of America Corp. “This is a battle of endurance.”

Canadian Oil Surge to U.S. Gulf Puts Mexico on Defensive - (www.bloomberg.com) A price war is brewing between Canada and Latin America over who will satisfy U.S. Gulf Coast refiners’ hunger for heavy oil. The new Seaway Twin pipeline will almost double the amount of heavy Canadian crude coming to Gulf terminals and plants to about 400,000 barrels a day starting in January, according to Calgary-based ARC Financial Corp. The shipments are growing even without the Keystone XL pipeline, which has been delayed for six years because of environmental opposition. The Canadian supply will square off against crudes from Mexico and Venezuela that have traditionally fed refineries along the Texas and Louisiana coasts. State-owned Petroleos Mexicanos widened its discount for U.S. buyers in December by the most since August 2013. Valero Energy Corp. and Marathon Petroleum Corp., which invested in special equipment to refine heavy crude, stand to gain the most from the Canadian supply.

U.S. Bond Sentiment Is Worst Since Disastrous ’09  - (www.bloomberg.com) Get ready for a disastrous year for U.S. government bonds. That’s the message forecasters on Wall Street are sending. With Federal Reserve Chair Janet Yellen poised to raise interest rates in 2015 for the first time in almost a decade, prognosticators are convinced Treasury yields have nowhere to go except up. Their calls for higher yields next year are the most aggressive since 2009, when U.S. debt securities suffered record losses, according to data compiled by Bloomberg. Getting it right hasn’t been easy. Almost everyone who foresaw a selloff this year as the Fed ended its bond buying was caught off-guard as lackluster U.S. wage growth and turmoil in emerging markets propelled Treasuries to the biggest returns since 2011. Now, even as the bond market’s inflation outlook tumbles, forecasters are sticking to the view that Treasuries are a losing proposition as the economy strengthens.

OTHER STORIES:

Brazil Central Government Primary Deficit Wider Than Forecast - (www.bloomberg.com)
Russian Economy Contracted in November for First Time Since 2009 - (www.bloomberg.com)
Greece facing election after lawmakers fail to elect president - (www.bloomberg.com)
China Tackles First-World Quandary as $800 Billion Lending Freed - (www.bloomberg.com)
Samaras Makes Last-Ditch Effort to Avert Early Greek Elections - (www.bloomberg.com)

Oil Falls to 5-Year Low as Supply Glut Seen Lingering - (www.bloomberg.com)

Texans Discover Oil Grows on Olive Trees as Crude Drops - (www.bloomberg.com)

Snap Election Risks Greek Lifeline; Nation's Stocks and Bonds Plunge on Government Defeat - (www.bloomberg.com)

Soldiers Relocate Wedding to Accommodate Obama's Golf Game - (www.bloomberg.com)

Canadian Oil Surge to U.S. Gulf Puts Mexico on Defensive - (www.bloomberg.com)

Friday January 2 Housing and Economic stories

TOP STORIES:

Exclusive - U.S. airlines confront cheap oil's flip side: costly hedges - (www.reuters.com) Some major U.S. airlines including Delta and Southwest are rushing to finance losing bets on oil and revamp fuel hedges as tumbling crude prices leave them with billions of dollars in losses, according to people familiar with the hedging schemes. In theory, airlines are among the top beneficiaries of a six-month slump that halved crude prices to five-year lows. Oil is the biggest variable cost for airlines, often representing a third or more of their total operating expenses. But now, carriers such as Delta Air Lines and even Southwest Airlines, known for a successful hedging program that locked in cheap fuel prices before they rose a decade ago, see some of the benefits of cheap fuel eaten away by hedging costs.

Outlook Sours for Europe’s Oil Titans on Crude Slump: S&P - (www.bloomberg.com) The U.S. shale-oil industry has made another enemy: Europe’s largest crude explorers. Standard & Poor’s Ratings Services revised its outlook to negative for Royal Dutch Shell Plc (RDSA), Total SA (FP) and BP Plc (BP/) as the oil-market rout driven by weakening demand and a flood of supply from American shale fields threatens cash flow into 2016. The credit-rating company also cast a dim eye on Houston-based ConocoPhillips, saying it’s facing similar cash flow pressure, and said it may cut the ratings on Eni SpA (ENI) and BG Group Plc’s BG Energy Holdings. S&P cited “the dramatic deterioration in the oil price outlook” and the 50 percent increase in debt loads for the biggest European oil producers since the end of 2008. BP, down 7.3 percent in the past month in London, pared losses today with a 0.5 percent gain to 415.65 pence by 8:55 a.m. local time. Shell, down 3.5 percent in the four weeks, edged 0.4 percent higher to 27.84 euros in Amsterdam. Total, down 11 percent for the month, rose 0.5 percent to 43.06 euros in Paris. Eni today slid 0.3 percent to 14.65 euros in Milan.

Russia Moves to Stave Off Panic Among Depositors After Rescuing Bank - (www.bloomberg.com) After arresting a decline in the ruble, Russia is now trying to avert a banking crisis. Lawmakers rushed legislation through the lower house of parliament today allowing the Deposit Insurance Agency to buy stakes in banks before they face bankruptcy proceedings to keep the system stable. While the ruble strengthened for a third day as the government told state-run exporters to sell foreign currency, it’s still down 30 percent in three months. Standard & Poor’s said today it may cut Russia’s credit rating to junk in part because of concern about the banking system. “Urgent measures are needed for the stabilization of the banking system to avoid a panic among the population and a run on banks,” Vitaly Isakov, a money manager at Otkritie Asset Management in Moscow, said by e-mail. “There are fears about certain banks’ ability to survive in the current situation.”

Ruble Swap Shows China Challenging IMF as Emergency Lender - (www.bloomberg.com) China is stepping up its role as the lender of last resort to some of the world’s most financially strapped countries. Chinese officials signaled on the weekend they are willing to expand a $24 billion currency swap program to help Russia weather the worst economic crisis since the 1998 default. China has provided $2.3 billion in funds to Argentina since October as part of a currency swap, and last month it lent $4 billion to Venezuela, whose reserves cover just two years of debt payments. By lending to nations shut out of overseas capital markets, Chinese President Xi Jinping is bolstering the country’s influence in the global economy and cutting into the International Monetary Fund’s status as the go-to financier for governments in financial distress. While the IMF tends to demand reforms aimed at stabilizing a country’s economy in exchange for loans, analysts speculate that China’s terms are more focused on securing its interests in the resource-rich countries.

US Government Admits $2.4 Billion Food-Stamps "Mis-Spent" – (www.zerohedge.com) According to the most recent report from the US Department of Agriculture's Office of Inspector General, government "mis-spent" $2.4 billion on food stamps. While $2.4bn may feel like small amount in the present day of trillion-dollar debts, as The Daily Signal's Alexandra Gourdikan notes, the fact itself should raise concerns adding that the food stamps program is in need of reform. First and foremost, policymakers should focus on promoting work. Americans are willing to help those in need, but they also believe that people must do what they can for themselves. As The Daily Signal reports, This year the U.S. Department of Agriculture misspent $2.4 billion on food stamps, according to a November report from the USDA Office of Inspector General. “Misspending” means the USDA gave a household either more or less food stamp benefits than it should have received. Historical data shows most misspending results in overpayments. Although $2.4 billion may be a relatively small portion of overall food stamp spending, that fact itself should raise concerns. Food stamps is a massive program costing roughly $80 billion in fiscal year 2013, up from approximately $40 billion in fiscal year 2008 and less than $20 billion in  fiscal year 2000.

OTHER STORIES:

Exclusive - U.S. airlines confront cheap oil's flip side: costly hedges - (www.reuters.com)
Oil Crash Wipes $11.7 Billion From Buyout Firms’ Holdings - (www.bloomberg.com)
Citigroup Was Wary of Metals-Backed Loans - (online.wsj.com)

What’s Next for World Oil as Lower Prices Extend Into ‘15 - (www.bloomberg.com)

Cheap Oil Is Dragging Down the Price of Gold - (www.bloomberg.com)

Biggest Arctic Gas Project Seeks Route Around U.S. Sanctions - (www.bloomberg.com)

Oil Bust Gets ‘I Will Survive’ Rewrite From Analyst - (www.bloomberg.com)