Treasury
Considers Radical Plan to Help Puerto Rico - (www.nytimes.com) The
proposal calls for the federal government to help Puerto Rico collect and
account for local tax revenues from the island's businesses and residents,
according to people briefed on the matter who spoke on the condition of
anonymity because they were not authorized to publicly discuss the proposal. An
inability to collect all the taxes owed is widely seen as contributing to
Puerto Rico's debt crisis. The tax proceeds would be placed in a
"lockbox" overseen by the Treasury and eventually paid out by the
Treasury to the holders of the new bonds that Puerto Rico would issue in the
proposed exchange. Since the Treasury would effectively become the paying agent
for the new bonds, they would be more attractive than the bonds that creditors
now hold.'' ... [But] ... "Right now, Puerto Ricans don't even like to pay
taxes to their own government," said one person with knowledge of the
discussions. If the I.R.S. were to suddenly replace the local tax authorities
and try to gather up the money for debt service, "people would say, `Go to
hell. I'm not paying the U.S. government.' "
How Banks Funded the U.S. Oil Boom and (So Far)
Escaped the Bust - (www.bloomberg.com) When
Whiting Petroleum needed cash earlier this year as oil prices plummeted,
JPMorgan Chase, its lead lender, found investors willing to step in. The bank
helped Whiting sell $3.1 billion in stocks and bonds in March. Whiting
used almost all the money to repay the $2.9 billion it owed JPMorgan and
its 25 other lenders. The proceeds also covered the $45 million in fees
Whiting paid to get the deal done, regulatory filings show. Analysts expect
Whiting, one of the largest producers in North Dakota’s Bakken shale basin, to
spend almost $1 billion more than it earns from oil and gas this year. The
company has sold $300 million in assets, reduced the number of rigs
drilling for oil to eight from a high of 24, and announced plans to cut
spending by $1 billion next year. Eric Hagen, a Whiting spokesman, says the
company has “demonstrated that it is taking appropriate steps to manage within
the current oil price environment.” Whiting has said it will be in a position
next year to have its capital spending of $1 billion equal its cash flows with
an oil price of $50 a barrel.
'Bear
claw' will strike the market again: Yamada - (www.cnbc.com) "What we are seeing now is leadership in a
lot of depressed stocks," said Yamada. Energy,
which has been the worst-performing sector on the year, has suddenly emerged as
a winner this quarter. The sector is up nearly 13 percent since Oct. 1 and is
the best performer in the S&P 500 during that period. "While we're
rallying we're seeing deterioration in some of the [former] leaders," she
added. "One would suggest those rallies are not sustainable." For
Yamada, it's only a matter of time before the S&P 500 hits the next level
of resistance, and investors should be prepared for what could be the start of
sharp selling. "A lot of these rallies tend to bring us to a place of
complacency before the bear claw may come out again to strike," she
warned. "We are skeptical of this rally."
Corporate
America's Epic Debt Binge Leaves $119 Billion Hangover - (www.bloomberg.com) The Federal
Reserve’s historically low borrowing rate isn’t benefiting corporate America
like it used to. It’s more expensive for even the most creditworthy companies
to borrow or refinance even as the Fed has kept its benchmark at near-zero
the last seven years. Companies have loaded up on debt. They owe more in
interest than they ever have, while their ability to service what they owe, a
metric called interest coverage, is at its lowest since 2009, according to data
compiled by Bloomberg. The deterioration of balance-sheet health is
“increasingly alarming” and will only worsen if earnings growth continues to
stall amid a global economic slowdown, according to Goldman Sachs Group
Inc. credit strategists led by Lotfi Karoui. Since corporate credit
contraction can lead to recession, high debt loads will be a drag on the
economy if investors rein in lending, said Deutsche Bank AG analysts led
by Oleg Melentyev, the bank’s U.S. credit strategy chief. “The benefit of
lower yields for corporate issuers is fading,” said Eric Beinstein,
JPMorgan Chase & Co.’s head of U.S. high-grade strategy.
Walmart's
entire business model is crumbling – (www.businessinsider.com) This
week, Walmart's shares crashed after the company reported a disappointing
profit outlook. Profits will fall 6%
to 12% next year, the company said. And the retailer's situation is likely to
get worse rather than better, according to many analysts. Until now, Walmart
has been able to make huge profits by keeping worker wages low and using its
size to negotiate cheaper prices than competitors, Brian Sozzi at The Street writes. But the retail landscape is
changing, and Walmart is increasingly irrelevant. "New guidance reflects
that Walmart's competitive edge — historically largely assortment and price —
has faded relative to purveyors of extreme value (warehouse clubs, hard
discounters) or extreme convenience (dollar stores, hard discounters), as
e-commerce has neutralized the impact of selection," Goldman Sachs analyst
Matthew Fassler wrote in a note to clients.
Chinese Firms Seen Dodging Defaults in Coming Days in
Turnaround - (www.bloomberg.com)
Bond Traders Face Incredible Shrinking Bonus as Revenue Tumbles- (www.bloomberg.com)
Emerging Nations Trimming $5 Trillion Debt Stokes Currency Risk - (www.bloomberg.com)
Bond Traders Face Incredible Shrinking Bonus as Revenue Tumbles- (www.bloomberg.com)
Emerging Nations Trimming $5 Trillion Debt Stokes Currency Risk - (www.bloomberg.com)
Poll Shows China's Exporters Downcast as Orders Slow, Costs Rise - (www.reuters.com)
Report: Turkey downs drone near Syrian border - (www.washingtonpost.com)
No comments:
Post a Comment