Greece
back in crisis mode on state TV shutdown, downgrade - (www.reuters.com) Greek
Prime Minister Antonis Samaras faced a political revolt on Wednesday from his
ruling coalition partners after the government abruptly switched the state
broadcaster off the air in the middle of the night. Screens went black on state
broadcaster ERT, cutting newscasters off mid-sentence only hours after the
decision was announced, in what the government said was a temporary measure to
staunch a waste of taxpayers' money. Unions called a 24-hour nationwide general
strike in protest, and journalists across all media called an indefinite
strike. Some newspapers were shut and private TV stations broadcast reruns of
soap operas and sitcoms instead of the news.
Oil
product glut coming as refineries mushroom: IEA - (www.reuters.com) The
world is heading for a glut of refined products as new Asian and Middle East
refineries increase oil processing in a move likely to force less advanced
competitors in developed countries to close, the West's energy agency said on
Wednesday. The International Energy Agency said in its monthly report it
expected 9.5 million barrels per day (bpd) of new crude distillation capacity,
representing more than a 10th of global demand, to come on stream in 2013‐2018,
substantially more than the forecast increase in crude production capacity and
global demand growth.
Metacapital
in Worst Slide as Bloodbath Roils Funds - (www.bloomberg.com) Deepak
Narula rose to fame as manager of the best-performing hedge fund last year by
navigating the government’s stimulus efforts. He’s having a harder time as the Federal
Reserve
moves closer to an exit. Metacapital Management LP’s flagship $1.5 billion fund
lost an estimated 6.4 percent last month, the worst decline since it started in
2008, according to a letter to investors obtained by Bloomberg
News.
That followed drops of 0.5 percent in April and 0.1 percent in March, after 17
months of consecutive gains including a 41 percent return last year. Narula,
like other investors in government-backed mortgage bonds, is being punished by
speculation the Fed will scale back its debt-buying program. That has caused
the securities to underperform Treasuries by the most since 2008. Rising home prices,
President Barack Obama’s
nomination of Democratic congressman Mel Watt to oversee Fannie Mae and Freddie
Mac, and other issues have further roiled the market.
Analysis:
After emerging corporate bond boom, default risks on rise - (www.reuters.com) The
$1 trillion market in emerging corporate bonds could
be headed for a surge in defaults if company earnings in
swiftly depreciating roubles or pesos fail to keep pace with dollar-based debt
repayments. As the U.S. Federal Reserve considers when to turn off its printing
presses, emerging currencies have crashed to multi-year lows against
the dollar. That rout is a big risk for corporate debt, which has gone from
being a sideshow of the sovereign bond market to an asset class that surpasses
U.S. junk debt in size.
The long-term negative impact of temporary mortgage interest rate stimulus - (www.ochousingwire.com) Banks are in survival mode. They must reflate the housing bubble, or the losses on their non-performing single-family residential loans will wipe them out. In order to reflate the bubble, the banks must keep these properties off the MLS, a task they are currently succeeding at, and mortgage interest rates must remain low so buyers can bid up prices to peak levels so banks can liquidate without a loss. The chart above shows the $144.75 billion exposure they have just on their non-performing loans. Since these non-performing loans only represent 9% of the total number of underwater borrowers, the total potential exposure is more than 10 times larger. As I noted, banks are still exposed to $1 trillion in unsecured mortgage debt.
ECB
Court Probe Focuses on Limits to Monetary Policy - (www.bloomberg.com)
Indonesia Raises Fasbi Rate as Martowardojo Acts on Rupiah Drop - (www.bloomberg.com)
Indonesia Raises Fasbi Rate as Martowardojo Acts on Rupiah Drop - (www.bloomberg.com)
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