Housing Bubble Bursting?

[Randolph Kinney]

O.C. Register owner files for bankruptcy

Freedom Communications Inc., owner of the Orange County Register, filed for bankruptcy protection Sunday, and its chief executive said he plans to lead a bid to acquire the troubled newspaper company.

The Santa Ana-based newspaper firm, which also owns the Riverside Press-Enterprise, filed for Chapter 11 reorganization in U.S. Bankruptcy Court’s Central District of California.

The move is the latest episode in the turmoil that has beset the newspaper market in Southern California, where civic leaders have urged a return to local control at the Los Angeles Times after its Chicago-based owner fired Times publisher Austin Beutner in September.

In announcing the bankruptcy filing Sunday, Freedom said its chief executive and Register Publisher Rich Mirman, along with other local investors, plan to reorganize the company's finances and assume ownership.

http://www.sandiegouniontribune.com/news/2015/nov/01/orange-county-register-bankruptcy/

 

[Randolph Kinney]

Haggen: Layoffs will begin Nov. 24

SAN DIEGO -- Haggen -- the embattled grocery chain that is closing up shop in California, Nevada and Arizona -- announced Friday that layoffs would begin just before Thanksgiving.

More than 3,400 Haggen employees across the board will be laid off between Nov. 24 and Dec. 8. LAYOFF NOTICE (pdf)

http://www.10news.com/news/haggen-to-lay-off-3000-in-california

 

[Randolph Kinney]

Foreign competitors in the next cubicle

San Diegans already know full well that foreigners are competing for their jobs. They don’t need national politicians from Donald Trump to Bernie Sanders telling them to worry.

Consider the recent blowback from layoff decisions of two prominent regional companies, Qualcomm and Southern California Edison.

The layoffs highlighted a controversial corner of immigration policy occupied by H-1B visas, which allow companies to hire foreign workers for up to six years in “specialty” occupations such as software, engineering, biotech or even fashion modeling.

Early this year, Edison began displacing about 500 information technology workers, about 100 voluntarily and 400 through layoffs. But their functions were outsourced to Infosys and Tata Consultancy Services, two giant firms based in India.

Before they left, some workers were compelled to train their replacements, and some of them were foreign nationals working in the U.S.

The H-1B program “was supposed to be for projects and jobs that American workers could not fill,” one Edison worker told Computerworld, an IT news magazine. “But we’re doing our job. It’s not like they are bringing in these guys for new positions that nobody can fill. Not one of these jobs being filled by India was a job that an Edison employee wasn’t already performing.”

Last month, Qualcomm said it would cut roughly 15 percent of its global workforce, about 4,700 workers (it employs 15,000 in San Diego; 31,000 worldwide). Executives haven’t released any details, yet the news lit up social media.

“There are large, multistory apartment complexes in Kearny Mesa and Clairemont Mesa full of Qualcomm engineers from India,” said Gail Anderson, a commentator on the Union-Tribune’s digital editions. “I’d say send them all back.”

Led by Microsoft (which recently cut 7,800 jobs), they’ve lobbied Congress to permit far more H-1B visas. Legislation caps tech visas at 85,000 a year, but exemptions for nurses, university researchers and others boost the true annual figure to 120,000 or so.

http://www.sandiegouniontribune.com/news/2015/aug/23/h1b-visa-foreign-competitors-next-cubicle/

 

[Randolph Kinney]

Arena Pharmaceuticals to lay off 35 percent of U.S. workers

Arena Pharmaceuticals Inc will shelve some trials related to its weight-loss drug and lay off about 80 employees, or 35 percent of its U.S. workforce, to cut costs and focus on other drugs under development.

http://www.reuters.com/article/2015/10/27/us-arena-pharma-redundancies-idUSKCN0SL2WC20151027

 

[Randolph Kinney]

Microsoft to lay off 6% of its workforce, scale back cellphone business


Microsoft maintains big ambitions for Office, Bing, Skype and its other apps, but it's minimizing a once heady quest to get vast numbers of people to use the software on Windows smartphones.

The Redmond, Wash., technology giant announced Wednesday that it would fire up to 7,800 people in the coming months.

http://www.latimes.com/business/technology/la-fi-tn-microsoft-layoffs-20150708-story.html

 

[Meandering]

This Is the Worst U.S. Earnings Season Since 2009
November 4, 2015

This U.S. earnings season is on track to be the worst since 2009 as profits from oil & gas and commodity-related companies plummet.

So far, about three-quarters of the S&P 500 have reported results, with profits down 3.1 percent on a share-weighted basis, data compiled by Bloomberg shows. This would be the biggest quarterly drop in earnings since the third quarter 2009, and the second straight quarter of profit declines. Earnings growth turned negative for the first time in six years in the second quarter this year.

The damage is the biggest in commodity-related industries, with the energy sector showing a 54 percent drop in quarterly earnings per share so far in the quarter, with profits in the materials sector falling 15 percent.


The picture is brighter for the telecom services and consumer discretionary sectors, with EPS growth of 23 percent and 19 percent respectively so far this quarter.

When compared with analyst expectations, about 72 percent of companies have beaten profit forecasts. That's only because the consensus has been sharply cut in the past few months, Jeanne Asseraf-Bitton, head of global cross-asset research at Lyxor Asset Management says in a telephone interview.

For the year as a whole, S&P 500 earnings are expected to fall 0.5 percent, data compiled by Bloomberg shows. For 2016, earnings growth is now seen at 7.9 percent, down from 10.9 percent in late July.

Next year's consensus is “still very optimistic,” Asseraf-Bitton says, citing the lack of positive catalyst seen for U.S. stocks in 2016 as well as the negative impact from the sharp slowdown in the U.S. energy sector.


By contrast, the euro-zone is the only region worldwide where earnings are expected to “grow significantly” in 2015, according to a note from Societe Generale Head of European Equity Strategy Roland Kaloyan.

Euro Stoxx 50 earnings are expected to rise 10 percent in 2015 and 5.7 percent in 2016, data compiled by Bloomberg shows.
http://www.bloomberg.com/news/articles/2015-11-04/this-is-the-worst-u-s-earnings-season-since-2009

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[Meandering]

U.S. Posts a Record Deficit in Manufacturing Trade
Imports from China also set a record in September.
November 4, 2015

The U.S. trade deficit in manufacturing hit a record $74.7 billion in September, according to an analysis of new Census Bureau data by RealityChek, a reliable blog on manufacturing and trade. That could become fodder for debate in the presidential election, where candidates have been arguing over the plight of American factory workers.

The record was spotted by Alan Tonelson, founder of RealityChek. Spotting records involves searching through historical trade data, since the Census Bureau doesn't make comparisons in its news releases.

The swelling of the manufacturing trade deficit is more evidence that while the overall U.S. economy has recovered from the 2007-09 recession, the manufacturing sector continues to lag. While overall employment is up 3 percent since the start of the recession, in December 2007, manufacturing employment is down 10 percent.


According to Tonelson, the previous high for the manufacturing trade deficit was $73 billion in August. He says the U.S. appears headed for an annual record deficit in manufacturing.

The Alliance for American Manufacturing noted that U.S. imports from China hit a record of $45.7 billion in September, and President Scott Paul said the inflow is "killing America's manufacturing recovery."

Thanks to the lowest oil imports in a decade, the overall U.S. trade deficit shrank in September to $40.8 billion from $48 billion in August, according to the Census Bureau (pdf). But the one-month dip masks a rising trend. "A weakening global economy, soaring dollar, and global petro-recession with an associated inventory overhang are hurting exports and widening the deficit despite the improvement once expected with the big drop in oil prices," Action Economics of Boulder, Colo., said in a statement.
http://www.bloomberg.com/news/articles/2015-11-04/u-s-posts-a-record-deficit-in-manufacturing-trade

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[Randolph Kinney]

Gun Sales Hit Record High For Six Consecutive Months

Two things happened after the most recent widely publicized US mass shootings: i) Obama once again made a concerted effort to pass anti-gun legislation, and ii) gun sales soared most likely in response to i).

People feel less secure and every time the president threatens gun control as a result from shootings ... gun sales go up.

 

[Randolph Kinney]

The Last Two Times The US Jobs Market Was This Bifurcated, Things Ended Badly

 

[Meandering]

Buying apartment buildings in the U.S. has been a winning bet for the past several years as rents rise amid a shift away from homeownership. That’s attracting investors such as Starwood, which on Oct. 26 said it agreed to purchase 72 rental communities across the country from Equity Residential for $5.4 billion. The announcement came just days after Blackstone reached a $5.3 billion deal to buy Stuyvesant Town-Peter Cooper Village, Manhattan’s largest apartment complex.

Barry Sternlicht’s Starwood Capital Group and Stephen Schwarzman’s Blackstone Group LP are in talks with Freddie Mac to finance two transactions totaling more than $10 billion, according to people with knowledge of the negotiations. Those discussions come after the government-owned mortgage giant already agreed to back Lone Star Funds’ $7.6 billion deal to buy Home Properties Inc. and Brookfield Asset Management Inc.’s $2.5 billion takeover of Associated Estates Realty Corp.

The mortgage guarantor -- which along with its larger counterpart Fannie Mae was rescued in a $187.5 billion taxpayer bailout in 2008 -- is boosting its multifamily lending as their regulator eases restrictions on that part of their business. Cheap debt from the U.S.-backed companies is helping sustain a five-year surge in values for apartment buildings and fueling some of the biggest real estate deals since the financial crisis.

Freddie Mac granted its largest apartment loan ever to Lone Star, a $5 billion mortgage to fund the private equity firm’s takeover of Home Properties. More than 30 percent of that deal met the FHFA’s guidelines for affordable housing, Brickman said.

U.S. multifamily-building prices are 33 percent higher than they were at the prior peak in 2007, according to Moody’s Investors Service and Real Capital Analytics Inc., a jump stoked partly by the abundant financing from Fannie Mae and Freddie Mac. That’s raised concerns that a bubble is forming that might pop when interest rates rise, according to Levy, the investment banker. Taxpayers could be on the hook for losses incurred by the mortgage companies if apartment values were to fall sharply.

Detractors argue that providing subsidized loans to deep-pocketed real estate investors isn’t in line with the mandate of the government-sponsored entities.

“If the purpose of the GSEs is to provide liquidity to the secondary mortgage market, in an effort to promote homeownership, a focus on funding multifamily rental properties seems inappropriate,” Josh Rosner, an analyst at research firm Graham Fisher & Co., said in an e-mail. “This approach only serves to deliver a public subsidy to private players.”

Brickman said Freddie Mac doesn’t view its business through the prism of the institutions it lends to.

“Our focus in on supporting middle-income and workforce housing,” he said. “Who owns it is somewhat irrelevant.”

The real power of Fannie Mae and Freddie Mac is that they continue to lend in times of difficulty, according to Warren Friend, executive managing director at Situs, a commercial real estate consulting firm. They kept the multifamily market humming in the depths of the recession in 2009, he said.

“What they provide is that stability when everybody else shuts down,” he said.
http://finance.yahoo.com/news/taxpayers-may-funding-billionaires-biggest-100000876.html

Unaffordable rents?? Naw, can't happen.


Almost makes you wonder if they are using CU to value those rental units and market rents?

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