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Greece
introduces tax on bank withdrawals as elitists seek to criminalize cash - (www.naturalnews.com) The
Greek financial crisis continues to escalate, as the government recently put in
place a controversial revenue-generating policy aimed at improving its economic
position at the expense of its citizens. The government will introduce a
"surcharge" -- really, just a tax on cash -- for all cash point
withdrawals, such as at banks or at ATMs, in what is proving to be a
last-ditch, desperate attempt to prevent citizens from taking their money out
of beleaguered financial institutions altogether. Greek leaders are hoping that
the controversial decision will raise as much as €180 million (about $203
million), which the government in Athens then hopes will assist in avoiding a
default on Greek debts owed to international creditors.
Things
Are Getting Serious in Mexico’s Corporate Debt Crisis - (www.wolfstreet.com) Since
central banks embarked on their madcap ZIRP and QE during the Financial Crisis,
emerging-market companies have not been able to resist the fatal allure of
cheap dollar debt. As the good times rolled, the risks were ignored. In
relative terms, dollar-denominated debt recently reached a record 17% of global
GDP excluding the US, a ratio that has doubled over the past 20 years. Some
countries are more exposed than others. In its latest report on Mexico, the IMF
pointed out that almost a quarter of all of the corporate debt in circulation
in the country is denominated in dollars. That’s roughly the equivalent of 25%
of Mexico’s GDP ($1.1 trillion in 2015). Foreign denominated liabilities jumped
83% over the past four years to 1.7 trillion pesos ($82 billion). During
the same period, Mexico’s non-petroleum exports increased by just 10%,
meaning that the ability of private companies to generate the dollars needed to
continue meeting their burgeoning dollar-denominated debt obligations has
weakened significantly.
Best
Emerging-Market Bonds Jolted as India’s RBI Drains Cash - (www.bloomberg.com) Indian
sovereign bonds slumped the most in 15 months on concern demand for debt will
wane after the central bank announced steps to drain funds from the financial
system. The Reserve Bank of India told lenders to set aside more deposits
as reserves as the government’s Nov. 8 move to ban high-denomination currency
notes saw citizens rushing to banks to submit or exchange the old bills,
flooding them with excess cash. That risked prompting
a slide in borrowing costs, threatening to hurt financial stability and stoke
inflation in Asia’s third-largest economy.
Italian
Lenders Slide on Vote Worries to Drag Down Europe Stocks - (www.bloomberg.com) Italian
lenders declined on rising concerns about risks to their financial stability
from the upcoming referendum, bringing an end to a three-week rally in European
shares. Banca Monte dei Paschi di Siena SpA, the lender burdened by bad loans
and under pressure to raise fresh
money, tumbled 14 percent. UniCredit SpA and Intesa Sanpaolo SpA fell at least
3.2 percent, dragging the FTSE MIB Index to one of the worst performances in
western-European markets. The Financial Times reported yesterday that as
many as eight Italian banks risk failing if Renzi loses the vote. “It’s a
nervous market at a time when liquidity isn’t great,” said Kevin Lilley, a
manager of euro-area equities at Old Mutual Global Investors in London. His
firm oversees the equivalent of $32 billion. “We have more political and
economic uncertainties that need resolving. People are getting worried about
the impact that a power vacuum in Italy could have on the refinancing needs of
its banks.”
Monte
Paschi Starts Crucial $4.6 Billion Bonds-to-Equity Swap - (www.bloomberg.com)
Banca Monte dei Paschi di Siena SpA started the
first crucial stage of its turnaround plan on Monday as fresh worries about the
future of Italy’s government rattled financial markets. The Italian lender is
asking bondholders to swap 4.3 billion euros ($4.6 billion) subordinated bonds
for equity, a step that would allow the bank to proceed with a share sale by
the end of the year. Bond investors have five days from Nov. 28 to sign up. The
board of directors at Assicurazioni Generali SpA, Italy’s biggest insurer and
an investor in the bonds, voted in favor of a conversion.
TOP STORIES:
Hit by Global Turmoil, Banks in Spain Get Jittery (Again) - (www.wolfstreet.com) Banking stocks in Europe continue to
benefit from the gravitational pull exerted by the so-called Trump
effect. But the effects have not been felt universally. Monte dei Paschi
di Siena, which is at the center of Italy’s banking crisis, has been reduced to
a penny stock. The shares of Italy’s other large banks continue to trend
downwards. And the problems in other national banking sectors have not gone
away; they’ve just been consigned to the background. Such is the case in Spain,
where the risks and challenges in the country’s banking system continue to
bloom.
Will
Italy's failing banks trigger financial collapse across Europe? - (www.theguardian.com) Established 125 years before Shakespeare penned
Romeo and Juliet, the Banca Monte dei Paschi di Siena was
founded in 1472 to help finance the city state of Siena, as well as its
artistic renaissance. For more than 500 years the world’s oldest bank has
operated successfully, through wars, revolutions and other political upheavals.
In the 1990s it was Europe’s most profitable bank. How things change. This week
the European Central Bank agreed the financial details of (another) bailout
package for the banca, which was previously rescued in 2013. Its financial
prospects, along with those of the Italian banking system, appear to be
deteriorating. One of the main credit rating agencies just put the country on
negative outlook – a warning of worsening economic prospects.
The
Hyperinflationary Endgame: Venezuela Currency Crashes 15% In One Day - (www.zerohedge.com) Just last week we were amazed to report that the
Venezuela currency, the Bolivar, had crashed below 2,000 for the first time
ever, losing 50% of its value in just two months as the Venezuela
hyperinflation had entered its terminal phase. As of this morning, the DolarToday.com website,
maintained by a person the WSJ dubbed "Public Enemy No. 1 of
Venezuela’s revolutionary government, Gustavo Díaz, a Home Depot Inc. employee
in central Alabama" reports that having crossed the psychological 2,000
level just one week ago, the Bolivar has just plunged to a new all-time low of
3,480.22 on the black market, dropping by 15% from its latest print of 2,972
reported on Friday of last week, and has lost 60% in its value just in the past
month. So for anyone still curious what hyperinflation in real time looks like,
here is the visual answer.
When
Having Insurance Still Leaves You Dangerously Uncovered – (www.nytimes.com) Plans on the Obamacare exchanges are all
subject to an out-of-pocket maximum. In 2016, for a family, it was $13,700, and
for an individual it was $6,850. Even the bronzest of bronze plans can't ask
you to pay any more, but they are more likely to let you hit the maximum. That's
a lot of money. This is true even in the employer-based insurance market. In
2016, almost 30 percent of workers were enrolled in a high-deductible health
care plan. More than half of employees with individual plans had deductibles of
at least $1,000. Two-thirds of covered workers had co-pays, and 25 percent had
co-insurance for primary care. Almost 20 percent of workers were in plans with
an out-of-pocket maximum of $6,000 or more.
Oil
Industry Anticipates Day of Reckoning - (www.wsj.com) This
month, European oil company MOL Group delivered a stark message to investors:
Demand for fuel in its key markets is bound to fall. So-called peak oil demand
is a mind-bending scenario that global producers such as Royal Dutch Shell PLC and state-owned Saudi Aramco are
beginning to quietly anticipate. But MOL has a transformation plan that is
among the most explicit responses to the trend, indicating how the landscape
may change for big energy providers over the next decade. The Hungarian company
is rethinking its traditional focus on fuel supply and shifting investment to
petrochemicals, the key ingredient of everyday plastic products and a sector
where MOL believes growth will continue even when its fuel business falters.
Shipbuilding
in Japan, Korea, China Collapses in Death Spiral of Orders - (www.wolfstreet.com) New
orders received by Chinese shipyards – now infamous for undercutting
competitors and sinking into bankruptcy – have plunged 58.5% so far this year
through October, compared to last year, according to shipping industry data
provider BIMCO, cited by the Nikkei. At South Korean shipyards, which include the
three largest in the world, orders have plunged 84.2%; at Japanese shipyards,
90%. They all focused on large dry-bulk vessels, tankers, and containerships.
But this year, orders for tankers globally plunged 80% and for container ships
84%. Global trade, which collapsed during the Financial Crisis but then
recovered in a V-shaped manner, was expected to continue soaring.
Indian
lenders forced to deposit cash deluge at central bank - (www.ft.com) Indian
banks will have to deposit as cash all the extra money they have been given as
a result of demonetisation with
the Reserve Bank of India, the central bank announced this weekend. The RBI made its sudden move after the
country’s banks, flush with cash, went on a bond-buying spree, bringing down interest rates and triggering
fears of both inflation and even a shortage of bonds. The central bank said on
Saturday evening it was putting in place the temporary restrictions on bond
buying to tackle “large excess liquidity in the system”. Since Narendra
Modi, India’s
prime minister, announced the withdrawal of 86 per cent of the country’s
banknotes on November 8, Indians have rushed to their banks to deposit the old
notes. In that time, around 6tn rupees have been put into the banks.
Fears
mount of multiple bank failures if Renzi loses referendum - (www.ft.com) Up
to eight lenders risk being wound up if No vote triggers prolonged market
mayhem. Up to eight of Italy’s troubled banks risk
failing if prime minister Matteo Renzi loses a constitutional referendum next weekend and ensuing market
turbulence deters investors from recapitalising them, officials and senior
bankers say. Mr Renzi, who says he will quit if he loses the referendum, had
championed a market solution to solve the problems of Italy’s €4tn banking
system and avoid a vote-losing “resolution” of Italian banks under new EU
rules. Resolution, a new regulatory mechanism, restructures and, if necessary,
winds up a bank by imposing losses on both equity and debt investors,
particularly controversial in Italy, where millions of individual investors
have bought bank bonds.
U.S.
shoppers spend less over holiday weekend amid discounting - (www.reuters.com) Early
holiday promotions and a belief that deals will always be available took a toll
on consumer spending over the Thanksgiving weekend as shoppers spent an average
of 3.5 percent less than a year ago, the National Retail Federation said on
Sunday. The NRF said its survey of 4,330 consumers, conducted on Friday and
Saturday by research firm Prosper Insights & Analytics, showed that
shoppers spent $289.19 over the four-day weekend through Sunday compared to
$299.60 over the same period a year earlier. The survey found that 154 million
people made purchases over the four days, up from 151 million a year ago.
However, there was a 4.2 percent rise in consumers who shopped online and a 3.7
percent drop in shoppers who purchased in a store.
China’s
Ball of Money Is Rolling Back to Commodities - (www.bloomberg.com)
China
Has Quietly Hiked Borrowing Costs Through PBOC Operations - (www.bloomberg.com)
US
Pension Crisis: This is How Families Get Squeezed to Bail Out Pension Funds in
Chicago - (www.wolfstreet.com) Chicago
is another trailblazer. But it’s not alone. Other cities are lining up behind
it. Bankruptcy may still be the route to go. But until then, homeowners,
renters, drivers, users of phones, etc. – in other words regular families
who’re just sitting ducks – are going to get squeezed dry, in order to slow the
momentum of the public-employee pension crisis eating up the city’s and the
school district’s finances. “Because of a new accounting rule, Chicago now has
to report its pension debt on its balance sheet,” explains Truth in Accounting. “As a result, the city’s reported
pension debt grew from $8.6 billion in 2014 to $33.8 billion in 2015.”
Fed
Rate Rise Could Come ‘Relatively Soon’ as Data Point to Stronger Economy - (www.wsj.com) Note: Odd,
only one rate raise in 9 years, so will be interesting to see if Yellen raises
rates on Trump in first Fed meeting. ***
The U.S. dollar steamed to a level not seen since 2003 and yields on the
10-year Treasury note reached a high for the year Thursday, as Federal Reserve
Chairwoman Janet Yellen confirmed investors’ view that the U.S.
economy is strong enough to withstand an interest-rate rise soon. Ms. Yellen
told lawmakers in testimony Thursday that the Fed could move “relatively soon,”
after the government released a grab bag of economic data all pointing to a
stronger economy: an improving housing market, rising consumer prices and a
more robust labor market. “At this stage, I do think that the economy is making
very good progress toward our goals, and that the judgment the [Fed policy]
committee reached in November still pertains,” she told Congress’s Joint
Economic Committee.
Mexico
Raises Overnight Rate After Trump’s Win Wallops Peso - (www.bloomberg.com) Mexico’s
central bank raised borrowing costs for the fourth time this year after Donald
Trump’s election dragged the peso to never-before-seen levels of more than 20
per dollar, boosting the risk of faster inflation. Policy makers increased the
key rate a half point to 5.25 percent Thursday, the highest level since 2009.
Most of the 23 economists surveyed by Bloomberg beforehand expected a
half-point increase, with the rest split between a hike of three quarters of a
point and a full-point. The peso fell 0.9 percent to 20.3859 per dollar at 3:18
p.m. in New York, signalling that the market may have expected a bigger
increase or more measures.
Rise
of Populism Tops Anxiety List at Frankfurt Banking Meeting - (www.bloomberg.com) The
rise of populism in developed nations is tearing at the political fabric of
Europe, unsettling markets and undermining growth prospects, top European
bankers said in Frankfurt on Friday. “The uncertainty in the market, especially
the political and economic instability, has never been as pronounced as it is
today,’’ Commerzbank AG Martin Zielke said at the annual European Banking
Congress. “We don’t want to go down the path of nationalism.’’ Britain’s vote
to leave the European Union and Donald Trump’s surprise victory in the U.S.
presidential elections have fueled concerns that nationalism and populism are
gaining a dimension that may turn anti-EU parties into a dominant force across
the continent. The Dec. 4 constitutional referendum in Italy and elections in
France and Germany next year will be a measure of how destabilizing the surge
may be, the bankers said.
U.S.
Supreme Court allows ATM fees lawsuits to proceed – (www.reuters.com) The
U.S. Supreme Court on Thursday gave the green light to class action lawsuits by
consumers accusing Visa Inc, Mastercard Inc and several U.S. banks of
conspiring to inflate the prices of ATM access fees in violation of antitrust
law. The appeals court ruled that a district court had erred when it concluded
that consumers had no legal standing to sue and had not adequately alleged
antitrust violations. It remanded the three consolidated lawsuits to the
district court for further proceedings. The lawsuits accused Visa and
MasterCard of adopting rules protecting themselves from competition with
lower-cost ATM networks. The rules blocked ATM operators from charging less
when ATM transactions were processed by networks competing with Visa and
Mastercard, the lawsuits said.
Asia
Stocks Set for More Gains Amid Stronger Dollar After Yellen - (www.bloomberg.com)
Treasury
Yields Reach Year’s High as Fed on Track for Rate Hike - (www.bloomberg.com)
Wall
street stocks lifted by data, earnings Yellen remarks - (www.reuters.com)
Mexico
central bank hikes rate after Trump win, peso still weakens - (www.reuters.com)
The
Air Has Come Out of One of 2016's Most Popular Trades - (www.bloomberg.com)
2017
May Be Japan's 'Year of the Taper' - (www.bloomberg.com)
Across
China, Walmart Faces Labor Unrest as Authorities Stand Aside - (www.nytimes.com)
Fannie
and Freddie’s Status Continues to Provoke Criticisms - (www.nytimes.com) There
is a growing sense among housing policy experts that it may take another crisis
— a recession or more big losses at the mortgage giants — to get the new
president and Congress to come up with a more permanent way to handle the
responsibilities now shouldered by Fannie and Freddie. Until then, it is very
likely that both agencies will go on in a state of limbo: run by their own
management teams, but with strict oversight by the relatively new Federal
Housing Finance Agency. A handful of plans have been proposed for reforming
Fannie and Freddie, the agencies whose prime responsibilities are to
effectively guarantee 30-year mortgages, which are packaged into bonds. But
none of those proposals have galvanized widespread support from legislators or
the financial community, so the current unpopular conservatorship has been
permitted to go on and on.
Growing
list lets workers snub traffic laws - (www.sandiegouniontribune.com) Seven
years ago, a newspaper investigation found that a little-known state program
designed to protect police and judges from the public disclosure of their home
addresses had expanded into a massive database of 1.5 million public employees
and their family members, few of whom face any on-the-job dangers to merit the
protection. Because of this Confidential Records Program, “Vehicles with
protected license plates can run through dozens of intersections controlled by
red light cameras and breeze along the 91 toll lanes with impunity,” according to the Orange County Register report.They evade parking citations and even get out
of speeding tickets because police officers realize “the drivers are ‘one of their
own’ or related to someone who is.” After the anger-inducing revelations, the
Legislature did worse than nothing. It killed a measure to force these plate
holders to provide their work addresses for the purpose of citations — and expanded the categories of government workers who qualify for special protections. This
session, the Legislature has decided to expand that list again, never mind the
consequences on local tax revenues, safety and fairness. AB 222 by
Assemblyman Katcho Achadjian, R-San Luis Obispo, would expand these “get
out of tickets for free” cards to 4,600 employees and family members who work
for the Department of State Hospitals and the Department of Corrections and
Rehabilitation. It passed the Assembly on a 77-0 vote.
Pay
more, get less: Americans have the worst health among 10 wealthy nations - (www.cnbc.com) Adults
in the United States — still — have the worst health compared with their
counterparts in 10 other wealthy nations despite the fact that America spends
far more on medical care than those countries, a new survey finds. The Commonwealth Fund report released
Wednesday also found that American adults are much more likely than people in
those other countries to go without health care because of cost. And U.S.
adults were more apt than their counterparts to be frequently stressed out
about being able to afford their rent or mortgage, or to pay for healthy meals.
"The U.S. spends more on health care than any other country, but what we
get for these significant resources falls short in terms of access to care,
affordability and coordination," said Dr. David Blumenthal, president of
The Commonwealth Fund.
Exclusive:
Central America to seek Mexico's support after Trump win - (www.reuters.com) Honduras,
Guatemala and El Salvador have agreed to join forces and seek support from
Mexico to forge a joint strategy in response to Donald Trump winning the U.S.
presidency, El Salvador's foreign minister told Reuters on Wednesday. Trump's
election upset has sent shockwaves through Mexico and Central America, which
rely heavily on U.S. remittances and bilateral trade. President-elect Trump
romped to victory in the Nov. 8 election by winning over voters with vows to
end illegal immigration and re-examine trade treaties that he said have led
U.S. firms to ship jobs south to lower-wage economies.
What Surging Interest Rates Mean for Your Credit Cards, Auto,
Student and Home Equity Loans
- (www.wsj.com) Mortgage rates have increased since Donald
Trump was elected president—but that doesn’t mean consumers will
immediately pay more for credit cards and other loans. So far, rates for much
shorter-term lending have risen at a far slower pace than those for
longer-dated debt. And, in many cases, the speed and amount of increases in
borrowing costs depends on the benchmark lending rate or index to which a loan
is pegged. The yield on the 10-year, U.S. Treasury, for example, was at 2.23%
early Tuesday, up 0.38 percentage point since election day, or about 20%. The
yield on the six-month Treasury bill has risen slightly more than 10%, to 0.62%
from 0.56%, over the same period.
Trouble
Brewing in Commercial Real Estate - (www.wsj.com) Defaults
are rising in a key corner of the commercial real-estate debt market just as
borrowing costs are set to jump, raising the likelihood of a slowdown of the
$11 trillion U.S. commercial property sector in 2017. A financial crisis-era
regulation is about to take effect that is expected to make some commercial
real-estate borrowing more expensive and complicated, analysts said. At the
same time, interest rates have increased since the election ofDonald Trump as
the nation’s 45th president last week and seem poised for a sustained rise from
recent historic lows, which would further squeeze an industry built on borrowed
money. “I can paint a picture that it could be disastrous, with runaway
inflation and high interest rates,” said Charlie Bendit, co-chief executive
of Taconic Investment Partners LLC, at a New York industry luncheon last week.
Germany
Threatens to Abandon Basel Talks If Demands Not Met - (www.bloomberg.com) Germany’s
Bundesbank delivered an ultimatum to other major banking powers including the
U.S. that it will walk away from talks on revamping global capital rules
unless its key demands are met. Andreas Dombret, a member of the Bundesbank
Executive Board, said on Tuesday that Germany won’t accept a deal “at any price.”
He laid out a series of demands, including two “essential areas of action” for
talks later this month in the Basel Committee on Banking Supervision, the
international standard-setter. Both will probably be met with skepticism in
Washington.
U.S.
panel says China state firms should be banned from buying U.S. companies - (www.reuters.com) A
U.S. congressional commission charged with monitoring security and trade links
between the United States and China has recommended that CFIUS, the body that
vets acquisitions from foreign firms, be required to block purchases from
Chinese state-owned companies. In its annual report to the U.S. Congress, the
U.S.-China Economic and Security Review Commission said on Wednesday the
Chinese Communist Party has used state-owned enterprises (SOEs) as the primary
economic tool to advance and achieve its national security objectives. "The
Commission recommends Congress amend the statute authorizing the Committee on
Foreign Investment in the United States (CFIUS) to bar Chinese state-owned
enterprises from acquiring or otherwise gaining effective control of U.S.
companies," the report said.
Who’ll
Get Hit by Fallout from the $11-Trillion Commercial Property Bubble in the US? - (www.wolfstreet.com) Warnings
about the loans, bonds, and commercial-mortgage-backed securities (CMBS) tied
to the vast $11-trillion commercial property sector in the US have been hailing
down for months. Moody’s Investor Services just warned about the rising
delinquency rate of some $360 billion in CMBS it rates. Delinquencies of 60+
days jumped from 4.6% last year to 5.6% in September. Fitch Ratings has been fretting about valuations in
the sector, and CMBS, for months.
“Valuation and lending trends are not sustainable in the medium term,” it said
most recently in its November report.
It pinpointed debt backed by apartment buildings as a particular trouble spot.
But now it’s also fretting about construction loans, which “experienced the
highest loss severity in the last crisis, and we expect a similar trend in the
next downturn,” it said.
