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Night owls at higher risk for diabetes, study says

It’s long been said that the early bird gets the worm, and new research shows they may have other advantages as well. According to a study published in Experimental Physiology, our activity patterns and sleep cycles can impact our risk for Type 2 diabetes and heart disease.

Researchers out of Rutgers University in New Jersey found that “night owls,” defined as people who prefer to be active later in the day and night, have a reduced ability to use fat for energy compared to “early birds,” or people who prefer to be active in the morning. As a result, this fat buildup can increase risk of diseases. 

Study participants were split into two groups based on their chronotype, or inclination to sleep at certain times of the day, and advanced imaging was used to measure body mass, body composition and insulin sensitivity, while breath samples were used to determine fat and carbohydrate metabolism, according to a press release about the study. Participants’ daily activity patterns were monitored and they were given a controlled diet to lessen dietary influence on the results.  

Early birds were found to use “more fat for energy at both rest and during exercise than night owls, the study says” They were also found to be more sensitive to insulin, whereas night owls were found to be insulin resistant, which means “their bodies require more insulin to lower blood glucose levels, and their bodies favored carbohydrates as an energy source over fats.” Meanwhile, the cause for the shift in metabolic preference is unknown at this time and requires further research.

“The differences in fat metabolism between ‘early birds’ and ‘night owls’ shows that our body’s circadian rhythm (wake/sleep cycle) could affect how our bodies use insulin. A sensitive or impaired ability to respond to the insulin hormone has major implications for our health,” study author and Rutgers professor Steven Malin says in the release. “This observation advances our understanding of how our body’s circadian rhythms impact our health. Because chronotype appears to impact our metabolism and hormone action, we suggest that chronotype could be used as a factor to predict an individual’s disease risk.”

Research also found that early birds are “more physically active and have higher fitness levels than night owls who are more sedentary throughout the day,” says Malin. However, additional research is needed to determine whether exercising earlier in the day has greater health benefits than working out at night.

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Santos gets $1.4B offer for PNG LNG stake from Papua’s state oil company (OTCMKTS:STOSF)

posteriori

Santos (OTCPK:STOSF) said it received a binding conditional offer from Kumul Petroleum Holdings, Papua New Guinea’s national oil and gas company, to buy a 5% interest in the PNG LNG liquefied natural gas project for US$1.4B plus ~$300M in project finance debt.

Santos (OTCPK:STOSF) said Kumul paid $55M to be held in escrow to secure the offer, which will remain open for acceptance until December 31 and is conditional on Kumul obtaining waivers on some pre-emptive rights by other PNG LNG project partners.

With the sale of a 5% stake, Santos (OTCPK:STOSF) would own 37.5% of the project, still ahead of operator Exxon Mobil (NYSE:XOM) with 33.2%, while Kumul Petroleum would own 21.8%, with the remaining shared between Japan’s JX Holdings and Papua New Guinea’s state-owned Mineral Resources Development Co.

Santos (OTCPK:STOSF) became the largest shareholder in PNG LNG, Papua New Guinea’s largest resource project, with its takeover of Oil Search Ltd. last year.

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Falling home prices shouldn’t collapse the financial system, says hedge funder who made $4 billion betting on the 2008 housing crash

The U.S. housing market is experiencing one of the most rapid and dramatic shifts in its history.

The reason is pretty simple: Spiked mortgage rates are sidelining buyers across the country. 

And it’s far from over. Last week, Fed Chair Jerome Powell even went as far as to call it a “difficult correction.”

While the speed and breadth of the slowdown have some Americans worried about a repeat of the 2008 housing bust and subsequent global financial crisis, others aren’t as concerned. John Paulson, the hedge funder who famously pocketed $4 billion betting against the U.S. housing market in 2008, is among those who believe history isn’t repeating itself.

“We’re not at risk of a collapse today in the financial system like we were before,” Paulson told Bloomberg on Sunday. “Yeah, it’s true, housing may be a little frothy. So housing prices may come down or they may plateau, but not to the extent it happened [in 2008].”

A tale of two Wall Street oracles

Paulson, who started his hedge fund (which has since been converted to a family office), Paulson & Co., in 1994 and boasts a net worth of $3 billion, believes that the housing market is on stronger footing than it was at the start of the Great Financial Crisis.

“The underlying quality of the mortgages today is far superior. You don’t even have any subprime mortgages in the market,” he said. “In that period [2008], there was no down payments, no credit checks, very high leverage. And it’s just the opposite of what’s happening today. So you don’t have the degree of poor credit quality in mortgages that you did at that time.”

After the blow-up of the 2008 housing bubble and subsequent global financial crisis, senators passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in order to ensure the stability of the U.S. financial system and improve the quality of U.S. mortgages.

The act created the Consumer Financial Protection Bureau (CFPB), which is tasked with preventing predatory mortgage lending. In the years since the CFPB’s creation, the average credit rating of homebuyers has improved dramatically. Leading up to the 2008 housing bust, U.S. homebuyers’ average credit rating was 707. In the first quarter of this year, it was 776, according to data from Bankrate.

Bank of America Research analysts led by Thomas Thornton also found that the portion of buyers with so-called “superprime” FICO scores of 720 or above hit 75% this summer. During the years preceding the 2008 housing bust, just 25% of buyers boasted similarly strong credit.

The Dodd-Frank Act also established the Financial Stability Oversight Council which monitors the health of major U.S. financial firms and sets reserve requirements for banks, and the Securities and Exchange Commission (SEC) Office of Credit Ratings which verifies the credit ratings of major firms after critics argued private agencies gave misleading ratings during the financial crisis. Both of these regulatory bodies have helped to improve the resiliency of the U.S. financial system and banks during times of economic stress.

Paulson noted on Sunday that banks were highly leveraged during the financial crisis and took risks that would be seen as unacceptable in today’s markets after the Dodd-Frank act established the Volcker Rule, which prevents banks from making some specific types of risky investments.

“The problem, in that period of time, was the banks were very speculative about what they were investing in. They had a lot of risky subprime, high-yield, levered loans. And when the market started to fall, the equity quickly came under pressure,” he said, noting that the average bank now has three to four times as much equity as they did during the Great Financial Crisis of 2008, which makes them less susceptible to default.

While Paulson isn’t worried about a repeat of 2008, hedge funder Michael Burry, who also rose to fame predicting and profiting from the Great Financial Crisis, as depicted in the book and movie “The Big Short,” has warned for years that he believes the global economy is in the “greatest speculative bubble of all time in all things.”

Burry argues that central banks created a bubble in everything from stocks to real estate with loose monetary policies after the Great Financial Crisis, and pandemic-era spending meant to boost the economy only made things worse.

Now, as central bank officials around the world shift stances to fight inflation and continue raising interest rates in unison, the hedge fund chief argues asset prices will fall dramatically.

“There is risk growing in many sectors. The unfettered narrative feeding itself until the absurdity explodes, revealing the folly to all and easily starting a revolution,” Burry said in a cryptic, since-deleted Sept. 21 tweet.

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The U.S. housing market stares down an even bigger economic shock—mortgage rates near 7%

Unbeknownst to buyers lining the sidewalks outside of frenzied open houses this spring, the Pandemic Housing Boom was already in its final inning. In March, Fortune published a pair of articles titled “The housing market enters uncharted waters“ and “An economic shock just hit the housing market“ arguing just that: The red-hot housing market would quickly shift in the face of spiked mortgage rates, which had jumped from 3.2% in January to over 4% by late March.

Not only did higher mortgage rates help to cause the Pandemic Housing Boom fizzle out, but it was replaced by what Federal Reserve Chair Jerome Powell now calls a “difficult correction.”

“For the longer term what we need is supply and demand to get better aligned so that housing prices go up at a reasonable level and at a reasonable pace and that people can afford houses again. We probably in the housing market have to go through a correction to get back to that place,” Powell told reporters last week. “This difficult [housing] correction should put the housing market back into better balance.”

The bad news for mortgage brokers and builders? This housing correction is far from over.

In fact, the shock hitting the U.S. housing market continues to grow: On Monday, the average 30-year fixed mortgage rate jumped to 6.87%. That marks both the highest mortgage rate since 2002 and the biggest 12-month jump (see chart below) since 1981.

Anytime the Federal Reserve flips into inflation-fighting mode, things get challenging for rate sensitive industries like real estate. Higher mortgage rates lead to some borrowers—who must meet lenders’ strict debt-to-ratios—losing their mortgage eligibility. It also prices some buyers out of the market altogether. A borrower in January who took out a $500,000 mortgage at a 3.2% rate would be on the hook for a $2,162 monthly principal and interest payment over the course of the 30-year loan. At a 6.8% rate, that monthly payment would be $3,260.

The economic shock caused by elevated mortgage rates, of course, underpins the ongoing housing correction. The housing correction is the U.S. housing market—which had been based on 3% mortgage rates—working towards equilibrium. As buyers pull back, the housing correction will cause inventory levels to rise and home sales volumes to fall. It’s also putting much of the nation at risk of falling home prices.

We’re already starting to see home price declines in bubbly housing markets like Austin, Boise, and Las Vegas. However, home price declines have yet to hit the whole country. According to Zillow, just 117 housing markets saw home price declines between May and August. In another 500 plus housing markets, prices were either flat or prices rose.

But more markets could soon move into the falling home price camp. As long as mortgage rates remain near 7%, housing analysts tell Fortune we’ll see downward pressure on home prices in the near term.

“The longer that [mortgage] rates stay elevated, our view is that housing is going to continue to feel it and have this reset mode. And the affordability resetting mechanism right now that has to happen is on [home] prices,” Rick Palacios Jr., head of research at John Burns Real Estate Consulting, tells Fortune.

The big question: How much can “pressurized affordability”—a 3 percentage point jump in mortgage rates coupled with frothy home prices—push home prices lower? Unlike the 2008 housing crash, this time around we don’t have a housing supply glut nor a subprime crisis.

Want to stay updated on the housing correction? Follow me on Twitter at @NewsLambert.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.



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