Bernie
Sanders Slams the US Bailout of Puerto Rico - (www.fortune.com) Ryan,
R-Wis., has said the bill would avoid an eventual taxpayer bailout and Treasury
Secretary Jack Lew has called it a “tough bipartisan compromise.” House
Democratic leader Nancy Pelosi also supports the agreement. Puerto Rico, which
has struggled to overcome a lengthy recession, has missed several payments to
creditors and faces a $2 billion installment, the largest yet, on July 1. The
island has been under a state of emergency and many businesses have closed,
schools have lacked sufficient resources like electricity and some hospitals
are limiting treatment.
‘Massive Bailout’ Needed in Debt-Saddled China,
Analyst Chu Says - (www.bloomberg.com) Charlene Chu, a banking analyst who made her
name warning of the risks from China’s credit binge, said a bailout in the
trillions of dollars is needed to tackle the bad-debt burden dragging down the
nation’s economy. Speaking eight days after a Communist Party newspaper
highlighted dangers from the build-up of debt, Chu, a partner at Autonomous
Research, said she was yet to be convinced the government is serious about
deleveraging and eliminating industry overcapacity. She also argued that
lenders’ off-balance-sheet portfolios of wealth-management products are
the biggest immediate threat to the nation’s financial system, with
similarities to Western bank exposures in 2008 that helped to trigger a global
meltdown.
Brazil’s Budget Minister Takes Leave of Absence
During Probe - (www.bloomberg.com) Brazil’s
newly-appointed Budget Minister Romero Juca said he will take a leave of
absence after allegations surfaced that he wanted to obstruct the sweeping
corruption probe known as Carwash. Juca, the leader of Acting President Michel
Temer’s political party, will return to his former job as senator and make room
for Dyogo Oliveira to take the helm of the Budget Ministry on Tuesday. The
surprise announcement on Monday afternoon capped a day of speculation about
Juca’s future in the cabinet after he initially refused to step down. The
dramatic departure highlights the challenges facing Temer, who with less than
two weeks on the job was forced into damage-control mode as the corruption
scandal encroached on his government. The allegations emboldened Temer’s
critics, who heckled the acting president and allies when they visited
Congress, accusing them of orchestrating a coup against Dilma Rousseff.
Iron Ore’s Pivot From Boom to Gloom Puts $50
Level Back in View - (www.bloomberg.com) Iron
ore has pivoted from boom to gloom in a few short weeks. Benchmark prices
are near $50 a metric ton as spectacular losses this month driven by rising
supplies and a more cautious approach from mills in China have eviscerated
April’s speculation-driven rally. “Seaborne supply is rising while the Chinese
steel mills will reduce purchases,” Ren Jiaojiao, an analyst at Maike Futures
Co., said by phone from Xi’an on Tuesday before the price
data. Inventories at China’s ports -- which topped 100 million tons last
week -- may increase further, according to Ren. The raw material has been on a
tumultuous ride this year after tentative signs of a demand revival in China,
including widening profit margins for steelmakers in the top producer, ignited
a firestorm of speculation. The frenzy led to a clampdown from regulators and
exchanges, weakening prices once more, including iron ore and steel. Brazil’s
Vale SA, the largest iron ore producer, warned last week there was a need to
prepare for tougher times.
ECB Warns Against Rise of Populism – (online.wsj.com) The
European Central Bank warned Tuesday that the rise of populist political forces
in Europe could slow the implementation of needed economic reforms, leading to
market pressure on vulnerable countries. The comments in the ECB’s Financial
Stability Review, which it issues twice a year, come as Europe faces a wave of
populist revolts that threaten to undermine much of the political order
established on the continent since the end of the World War II. In the report,
the ECB said that rising political risks “as well as the increasing support for
populist political parties which are seen to be less reform-oriented, may
potentially lead to the delay of much needed fiscal and structural reforms and
cause renewed pressures on more vulnerable sovereigns.”
Asian Stocks Decline as Yen Weighs on Japan, Fed Hawks Speak
- (www.bloomberg.com)
U.S. Stocks Retreat on Fed Rate Uncertainty as Crude, Gold Drop - (www.bloomberg.com)
Deutsche Bank Credit Rating Cut by Moody’s on Overhaul Struggle - (www.bloomberg.com)
Chinese State Fund Taps WMPs in Financing Shift, Merchants Says
- (www.bloomberg.com)U.S. Stocks Retreat on Fed Rate Uncertainty as Crude, Gold Drop - (www.bloomberg.com)
Deutsche Bank Credit Rating Cut by Moody’s on Overhaul Struggle - (www.bloomberg.com)
Investment banks suffer worst first quarter since financial crisis: survey - (www.reuters.com)
Emerging Markets-Brazil currency drops on local political woes - (www.reuters.com)
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