Monthly Archives: December 2014

Fannie, Freddie Officially Lower Mortgage Down Payment to 3 Percent

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“Following months of talk and speculation, both Fannie Mae and Freddie Mac announced on Monday they will begin allowing qualifying first-time borrowers to purchase homes with just a 3 percent down payment.  By lowering the down payment down to 3 percent, leaders from the GSEs and the Federal Housing Finance Administration (FHFA) hope to increase homeownership and particularly household formation by offering loans to those who can afford mortgages but lack resources to make a 20 percent down payment plus closing costs.”

http://dsnews.com/news/12-08-2014/gses-officially-lower-down-payment-to-3-percent-for-qualifying-first-time-homebuyers

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US Navy’s first laser weapon cleared for combat, blows up boat and plane

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“Earlier in the year, the US Navy deployed its first combat-ready laser weapon system in the Persian Gulf — and now, after some field testing, we have a glorious video of the laser being used to blow up (unmanned) boats and drones. I’m happy to report that laser weapons are as awesome as you may have hoped — even if they don’t look quite like the beam weapons from Star Wars or Star Trek.  Laser weapons can be fired very quickly, and the cost per shot is very low (something like $1, as opposed to thousands of dollars for a small missile).  The Office of Naval Research (ONR) is already looking at developing a 150-kilowatt laser system, for testing in 2016 or 2017.”

http://www.extremetech.com/extreme/195747-us-navys-first-laser-weapon-cleared-for-combat-blows-up-a-boat-a-small-plane-video

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Doug Casey on Russia and Russian Stocks

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“The examples of extreme opportunity I like to bring up are from the mid-1980s, when stock markets in Belgium, Hong Kong, and Spain were all selling at two to three times earnings, half of book value, and with dividend yields on the order of 12-15%. That shows how cheap things can actually get. Today, markets around the world are overpriced because interest rates are so low. At this point, I think Russia is a place you ought to be watching from the long side a lot more than, say, the US. [..] It’s incredible what you can get in dividends alone when a market is at a bottom—something a lot of people have forgotten.”

http://www.internationalman.com/articles/doug-casey-on-russia-and-russian-stocks

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Chinese loan to Argentina was expected in November

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“A multibillion-dollar currency swap between Argentina and China will launch in November, bolstering the South American country’s diminished foreign reserves, the central bank chief was quoted as saying in a local paper on Sunday.  The swap will permit Argentina to either pay for Chinese imports with the yuan currency or reinforce its hard currency reserves, which have fallen by more than 30 percent this year.  It is part of a loan worth a total $11 billion signed by Argentina’s President Cristina Fernandez and her Chinese counterpart in July, shortly before the Latin American nation defaulted on its debt for the second time in 12 years.”

http://www.reuters.com/article/2014/10/19/argentina-reserves-idUSL2N0SE0JS20141019

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Argentina Is Getting Clobbered

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“A lot of investors were betting that 2015 would come around, and Argentina and the holdouts — led by Elliott Management founder Paul Singer — would sit down and sing Kumbaya. Instead Argentina is coming up with more creative ways to raise cash, like a recent debt swap plan the government has announced to raise $3 billion locally.  Argentina’s relies heavily on commodity exports like soybeans for revenue, and commodities are getting crushed.  It’s clear that the country’s 40% inflation rate is putting Argentines on guard. They’re carrying lots of cash around, and because they carry around all that cash, Argentina has become the robbery capital of Latin America.”

http://www.businessinsider.com/argentina-is-getting-clobbered-2014-12

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Venezuela mortgaged another $4 billion of its oil exports to China

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“The agreement will raise Caracas’s existing debts to Beijing by almost 25%, to over $20 billion—money that the country may find it increasingly difficult to repay.  China has lent its South American partner more than $40 billion since 2008 to help Caracas shore up its ailing economy, which is expected to slip into a recession this year and has suffered from shortages ranging from medicine to toilet paper. Venezuela has been paying that money back mostly with oil, but that is getting harder to do.  Every day, about 500,000 barrels of Venezuelan oil are exported to China, half of which go to pay off the country’s loans from Beijing.”

http://qz.com/239106/venezuela-just-mortgaged-another-4-billion-of-its-oil-exports-to-china/

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Nigerian Currency Touches Record Low After Official Devaluation

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“Nigeria’s currency touched a record low against the dollar on Wednesday, a day after the central bank devalued it by 8 percent.  Falling world oil prices and a retreat from emerging markets have put pressure on the currencies of several oil exporters, including Angola, where the Kwanza also hit a record low, as well as that of Nigeria — Africa’s top producer.  The country grows most of its own food but imports a number of staples such as wheat and rice, making currency weakness extremely sensitive for a poor population — around 60% of whom were living on less than a dollar a day in 2010.  Falls in the naira have spooked bond investors who had been wooed by Nigeria’s high yields.”

http://www.voanews.com/content/nigeria-naira-touches-record-low-after-official-devaluation/2535204.html

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Venezuela’s poor sour on Maduro as prices, shortages sting

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“Increasing numbers of low-income Venezuelans are souring on Maduro as they suffer a declining economy, the highest inflation in the Americas, chronic shortages of basic goods and one of the world’s highest murder rates.  Swelling frustration in the tough slums dotting Caracas’s rolling hills means Maduro is much more vulnerable, especially as oil prices fall to around five-year lows.  Currency controls have fomented a black market where dollars now fetch over 27 times the strongest official exchange rate, hitting imports of basic goods.  Wealthier Venezuelans dodge the long waits by hiring people to shop for them, buying goods abroad, turning to high-end stores or simply leaving the country.”

 

http://www.reuters.com/article/2014/12/10/us-venezuela-chavistas-idUSKBN0JO1C820141210

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Japan economy shrinks more than expected in face of sales tax hike

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“The hit from an April sales tax hike turned out to be bigger than expected, the revised gross domestic product data indicated, underscoring the challenges Abe and the Bank of Japan face in pulling the world’s third-largest economy sustainably out of deflation.  An increase in Japan’s sales tax to 8 percent from 5 percent in April hit household spending and clouded the outlook for ‘Abenomics,’ a mix of aggressive monetary expansion, fiscal stimulus and structural reforms aimed at ending economic stagnation.  The BOJ’s massive stimulus, adopted in April last year and expanded in October, relies heavily on psychology to accelerate inflation to the bank’s 2 percent target.”

 

http://www.reuters.com/article/2014/12/08/us-japan-economy-gdp-idUSKBN0JL0ZH20141208

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So It Begins: Congress to Cut Pension Plans

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“A measure that would for the first time allow the benefits of current retirees to be severely cut is set to be attached to a massive spending bill, part of an effort to save some of the nation’s most distressed pension plans.  The rule would alter 40 years of federal law and could affect millions of workers, many of them part of a shrinking corps of middle-income employees in businesses such as trucking, construction and supermarkets.  The measure is now before the House Rules Committee and is likely to be moved as an amendment to a massive $1.01 trillion spending bill, perhaps by late Wednesday. It is expected to pass the Senate by Thursday.”

http://www.thedailybell.com/news-analysis/35903/So-It-Begins-Congress-to-Cut-Pension-Plans/

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