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“Bad Bank” to IPO in Spain, after 2 Prior IPOs Imploded - (www.wolfstreet.com) “There
will be no Bad Bank in Spain, and we will establish procedures that will not be
burdensome for taxpayers.” Those were the infamous words of Spanish PM Mariano Rajoy during the
first few months of 2012. Months later Spain’s bad bank, Sareb, was born, and
Spanish taxpayers were left holding the tab for the biggest bank bailout in
Spanish history. When Sareb was created, its creators assured Spain’s taxpayers
that their money would be returned; some even claimed that the State would make
a tidy profit from the operation. Since then, the losses have kept piling up.
It is estimated that over €2.1 billion of public funds have been poured into
the bank so far and a further €2 billion was provisioned for this year’s
accounts alone.
Twitter
to slash 9% of its workforce and kill Vine as it tries to eke out a profit - (www.latimes.com) Twitter
Inc. plans to lay off a few hundred employees, mostly in sales and marketing,
and shut down its Vine video app as the social media service strives to
produce an annual profit for the first time next year. Initiatives such as
streaming live video of NFL games are helping boost ad sales at Twitter, but
not quickly enough to justify what investors and analysts have complained is a
bloated workforce out of sync with the company's prospects. Several other
firms, including Salesforce.com Inc. and Walt Disney Co., have considered and
then rejected the opportunity to acquire Twitter in recent weeks.
Half
of Obamacare customers cut back on care to manage costs - (www.cnbc.com) Obamacare
customers are acting more cost-conscious than other people with insurance — and
it could be affecting their health. A new survey finds that 50 percent of
people who buy health plans through government-run Obamacare marketplaces say
they cut back on getting health care services as they try to manage costs. That
can include not going to the doctor as often when they're sick, skipping
preventative care visits and lab tests, and delaying elective surgeries. In
contrast, just 33 percent of all people with any form of insurance report
cutting back on health care to manage costs, according to the survey by GfK, a
marketing and customer research firm. The same survey found that Obamacare
marketplace customers with lower incomes, less than $25,000 annually, are much
more likely to use what are often lower-cost urgent care facilities and
"minute clinics" to get health services than Obamacare customers with
higher earnings.
Deutsche Bank warns of tough times ahead as
braces for U.S. fine - (www.reuters.com) Deutsche
Bank chief John Cryan pledged to redouble restructuring efforts on Thursday,
warning that the bank faces tough times ahead as it finalizes talks with U.S.
justice authorities over a multi-billion dollar fine. Germany's biggest lender
earlier posted an unexpected quarterly profit, benefiting from a modest rebound
in bond trading, but failed to dispel the cloud of uncertainty that drove
clients to withdraw billions of euros. Cryan said on a conference call that the
quarter had been overshadowed by talks over the U.S. Department of Justice’s
settlement proposal relating to sales of RMBS (residential mortgage-backed
securities) which had caused uncertainty.
ECB's Nowotny says December meet will decide on QE, what assets
to buy if prolonged
China September industrial profit growth slows, signals fragile
recovery - (www.reuters.com)
BOJ won't try to push down super-long yields: Kuroda - (www.reuters.com)
“Tech”
Malaise Pricks San Francisco Office Space Bubble - (www.wolfstreet.com) The
rumored second round of layoffs at Twitter – which in 2011 was granted by the
befuddled city of San Francisco the “Twitter tax break” on employment taxes –
comes at a very inopportune moment for the glory of commercial real estate.
These layoffs would amount to 8% to Twitter’s workforce, or about 300 people,
according to Bloomberg. Already, Twitter has thrown 183,642 square
feet of vacant office space at its two-building Mid-Market headquarters on the
sublease market, thus bringing it to 1.51 million square feet (msf). This comes
at a time when, according to the “snapshot” from Cushman & Wakefield, leasing
activity nearly ground to a halt in the third quarter, with only 875,000 sf
leased – the lowest since 2001!
Chinese
Bank Liabilities Rise Above 200 Trillion Yuan For The First Time - (www.zerohedge.com) By
now it is widely accepted that the biggest credit risk facing the global
financial system is not so much among western banks, which have been closely
scrutinized, and their balance sheets are largely exposed to both regulators
and the public (perhaps with a few notable exceptions), but are arising from
China. And while China's total leverage, by most counts, is somewhere in the
300% range, according to the IFF... ... and modestly lower according to other
sources, the real worry is not so much the sovereign or corporate non-financial
debt within China, but the leverage within its opaque, murky financial system. What
we do know about China's banks is what the government discloses, which is not
much, however overnight China's
Banking Regulatory Commission reported on its website the latest amount of
total domestic assets on China's bank books: as of September the number is a
stunning CNY217.3 trillion, or just over $32 trillion.
Ratings Inflation Is Back, Subprime Style - (www.bloomberg.com) A
decade after the triple-A failures of the subprime era,
grade inflation is back on Wall Street. This time, Moody’s Investors Service
and S&P Global Ratings Inc. are cutting companies slack on mergers and
acquisitions, an analysis of credit-ratings data by Bloomberg News found. Over
the past year and a half, both have bumped up their ratings by two, three or
even six levels on a majority of the biggest deals, the analysis found. Moody’s
and S&P don’t dispute those findings, which are based on ratings guidelines
posted on their websites. But the firms say a by-the-numbers approach overlooks
one of their most valuable assets: human judgment.
Both make clear that their analysts have leeway to nudge ratings up or down,
based on a company’s track record and their confidence in management’s
commitment to reduce indebtedness.
EXCLUSIVE:
2/3 Of Doctors Say Obamacare Hurts Quality And Cost Of Healthcare - (www.dailycaller.com)
The nation’s doctors have spoken, and they say Obamacare must go, according to
a new survey. Nearly two-thirds — 65.98 percent — of the 587 physicians
surveyed say Congress should repeal and replace Obamacare, according to a survey by Jackson & Coker. Just over 60
percent of physicians surveyed were opposed to Obamacare when the bill passed
in 2010. After six years of Obamacare, that percentage has raised to 62.42
percent. The overwhelming majority of physicians said that Obamacare has
negatively impacted their “compensation, workload, treatment decision-making
ability, and practice.” Over 50 percent of physicians said that the Obamacare
system has had a negative impact on both the quality and cost of care patients
receive nationwide.
Subprime
Early Payment Defaults Are Back... in Credit Cards - (www.wsj.com) Credit-card
lending to subprime borrowers is starting to backfire. Missed payments on
credit cards that lenders issued recently are higher than on older cards,
according to new data from credit bureau TransUnion. Nearly 3% of outstanding
balances on credit cards issued in 2015 were at least 90 days behind on
payments six months after they were originated. That compares with 2.2% for
cards that were given out in 2014 and 1.5% for cards in 2013. The poorer
performance on newer cards pushed up the 90-day or more delinquency rate for
all credit cards to 1.53% on average nationwide in the third quarter. That’s
the highest level since 2012.
Venezuela
Escapes Bankruptcy for Now… But Oil Production Continues To Plunge - (www.wolfstreet.com) Venezuela
just dodged a bullet, pulling off a last minute bond swap with creditors. The
deal only buys Venezuela a little bit of breathing room, and a default at some
point next year or the year after is not out of the question. Either way, the
South American OPEC nation’s oil production is falling and will only continue
on a downward trajectory. Venezuela’s state-owned PDVSA avoided default at the
eleventh hour, getting enough creditors onboard for a debt swap. The oil
company had repeatedly offered creditors to exchange debt set to mature this
year and in 2017 for payments spread out over the rest of the decade, a
proposal that would allow the company – and the sovereign government – to
technically avoid default.
Most Crowded Trade in Bonds Is a Powder Keg
Ready to Blow - (www.bloomberg.com) The
hottest craze in fixed income is at risk of overheating. A headlong rush into
higher-yielding, long-term bonds in recent years has created one of the
most crowded trades in financial markets. Investors seeking relief from central
banks’ zero-interest-rate policies have poured into government debt due in
a decade or more, swelling the amount worldwide by a record $733 billion
this year. It’s more than doubled since 2009 to about $6 trillion, data
compiled by Bloomberg and Bank of America Corp. show. Now money managers
overseeing more than $1 trillion say the case for owning longer maturities -- stellar performers for most of 2016 -- is crumbling.
US govt says benchmark 2017 Healthcare.gov
premiums up 25 pct - (www.reuters.com) The
average premium for benchmark 2017 Obamacare insurance plans sold on
Healthcare.gov rose 25 percent compared with 2016, the U.S. government said on
Monday, the biggest increase since the insurance first went on sale in 2013 for
the following year. The average monthly premium for the benchmark plan is
rising to $302 from $242 in 2016, the Department of Health and Human Services
said. The agency attributed the large increase to insurers adjusting their
premiums to reflect two years of cost data that became available. Large
national insurers, including Aetna Inc, UnitedHealth Group Inc and Anthem Inc,
have said they are losing money on the exchanges, created under President
Barack Obama's national healthcare reform law, because patient costs are higher
than anticipated. Both UnitedHealth and Aetna have pulled out of the exchanges
for 2017.
More
Bad News For Phiadelphia: Obamacare Premiums Set To Soar More Than 50% - (www.zerohedge.com) When
the Affordable Care Act open enrollment period begins next week customers will
see some changes, including fewer choices and higher prices. In Pennsylvania,
the number of insurers in the marketplace has gone from 13 to eight. But the
worst fate is set to befall the city that famously booed Santa Claus,
Philadelphia, where CBS reports that just two insurers are left and
premiums are expected to rise 53%.
China orders regulators to curb property
lending - (www.ft.com) China
is introducing a slew of new restrictions on property-related lending, as the
central government takes the lead in efforts to head off a housing bubble.
Property developers are facing curbs on their ability to raise financing by
issuing debt or equity, after two government regulators were instructed to step
in, it has emerged. The China Securities Regulatory Commission and the National
Development and Reform Commission — China’s economic planner — have been
instructed by high-level officials to restrict developers’ issuances in the
Hong Kong stock market, in the Hong Kong bond market and in the Chinese
interbank bond market, according to local news magazine Caixin. The news comes
less than a week after the Shanghai Stock Exchange froze all bond issuances by
property developers. Securities dealers told local media last Wednesday that
they have been told to await tighter rules on which companies can issue debt.
The exchange is drawing up the new rules under the supervision of the national
securities regulator.
Euro Gripes Threaten Economic Recovery as Populism Advances
- (www.bloomberg.com)
Subprime Credit Card Surge Pushing Up Missed
Payments - (www.wsj.com) Credit-card
lending to subprime borrowers is starting to backfire. Missed payments on
credit cards that lenders issued recently are higher than on older cards,
according to new data from credit bureau TransUnion. Nearly 3% of outstanding
balances on credit cards issued in 2015 were at least 90 days behind on
payments six months after they were originated. That compares with 2.2% for
cards that were given out in 2014 and 1.5% for cards in 2013. The poorer
performance on newer cards pushed up the 90-day or more delinquency rate for
all credit cards to 1.53% on average nationwide in the third quarter. That’s
the highest level since 2012.
Sputtering Startups Weigh on U.S. Economic
Growth - (www.wsj.com) The
U.S. economy is inching along, productivity is flagging and millions of
Americans appear locked out of the labor market. One key factor intertwined
with this loss of dynamism: The U.S. is creating startup businesses at
historically low rates. The American economy has long relied on fast-growing
young companies to fuel job growth and spread the latest innovations. As
recently as the 1980s and 1990s, a small number of young firms
disproportionately contributed to U.S. employment growth, helping allocate
workers and resources to burgeoning segments of the economy. But government
data shows a decadeslong slowdown in entrepreneurship.
Fake Divorce Is Path to Riches in China’s Hot
Real Estate Market - (www.bloomberg.com) Earlier
this year, Mr. and Mrs. Cai, a couple from Shanghai, decided to end their
marriage. The rationale wasn’t irreconcilable differences; rather, it was a
property market bubble. The pair, who operate a clothing shop, wanted to buy an
apartment for 3.6 million yuan ($532,583), adding to three places they already
own. But the local government had begun, among other bubble-fighting measures, to limit purchases by existing property
holders. So in February, the couple divorced. “Why would we worry about
divorce? We’ve been married for so long,” said Cai, the husband, who requested
that the couple’s full names not be used to avoid potential legal trouble. “If
we don’t buy this apartment, we’ll miss the chance to get rich.”
Santoli: Overcrowded ETF market headed for a
shakeout - (www.cnbc.com) ETFs
are the smartphone apps of the investing world. It's hard to imagine how we
used to get by without them. They are remarkably cheap to create and own. A
small handful of the most popular ones dominate usage. There are new ones
arriving weekly targeting every narrow interest. And there are far, far too
many of them. In a bit more than 20 years, exchange-traded funds have gone
from an innovation no one was asking for ("Why would anyone want to trade
a mutual fund in the middle of the day?") to the dominant new-product category
in retail investment management.
Smartwatch
is Dead, Market Implodes, Apple Watch Shipments Collapse - (www.wolfstreet.com) We
have pooh-poohed the media love story about Apple Watch and similar devices
when they first came out. We were particularly amused by how Apple was able to
dominate entire front pages of the fawning financial press when it introduced
the watch. At the time, nothing else mattered or happened. That was March
9, 2015. I took some screenshots, showing how great Apple really is in
wrapping the media around its cordless Magic Trackpad… Apple Comes Out with a Watch,
and Look What Happens:
But even with all our cynicism about this sort of hype, we did not expect the
market to just implode like this, and for Apple Watch shipments to just totally
collapse. But they did. In the third quarter, according to International Data Corporation (IDC), global smartwatch shipments
plunged 51.6% year-over-year. “A round of growing pains,” as IDC put it. Just
2.7 million of these devices were shipped, down from 5.6 million a year ago.
How
the Ballooning “Pension Crisis” Will Impact the Economy - (www.wolfstreet.com) In
the very simplest terms, the Dallas Police & Fire Pension Fund is going
broke, and the police who are counting on it for their retirement are beginning
to panic. Police involved are retiring as early as possible and taking cash
payouts because they fear that the fund will run dry and future checks may not
be forthcoming. The whole thing is beginning to look like a run on a bank and
it is just making matters worse. It’s not that the DPFP is all that different
from most of the public and private retirement funds; it’s just that what is
happening has been noticed and made the headlines. When you consider the number
of people involved and the amount of money involved, the Dallas Police
Retirement Fund is pretty insignificant considering that retirement funds in
places like Chicago and the State of
Illinois are probably in as bad a shape. Then there is the big daddy of all retirement
funds, the Social Security Trust Fund.
Bankruptcy Bust: How Zombie Companies Are
Killing the Oil Rally - (www.nasdaq.com) Their
owners may be bankrupt, but the sprawling mines of Wyoming's Powder River Basin
are still churning out coal. It is the same story in oil fields along the Gulf
Coast and with shale-gas wells in the Rocky Mountains. Energy investors have
long hoped that falling prices would solve themselves by driving producers into
bankruptcy and stanching the flood of excess supply. It turns out that while
bankruptcy filings are up, they have barely impacted fossil-fuel markets. The
theory that bankruptcies would help balance the market "was misguided to
begin with," says Roy Martin, a research analyst at energy consultancy
Wood Mackenzie. "And people are starting to come around to that now."
Banks preparing to leave UK over Brexit, says
banking body chief executive - (www.reuters.com) Big
international banks are preparing to move some of their operations out of
Britain in early 2017 due to the uncertainty over the country's future
relationship with the European Union, a top banking official said. Writing in
the Observer newspaper, Anthony Browne, the chief executive of lobby group the
British Bankers' Association, said the public and political debate was
"taking us in the wrong direction" and businesses could not wait
until the last minute. "Most international banks now have project teams
working out which operations they need to move to ensure they can continue
serving customers, the date by which this must happen, and how best to do
it," said Browne.
Texas
hospital reaches settlement with nurse infected with Ebola - (www.bloomberg.com) A
nurse who contracted the Ebola virus while treating the first person diagnosed
with the deadly disease in the United States has reached a settlement with the
Dallas hospital where she was in a team caring for the man, a statement on
Monday said. Terms of the deal between the hospital's owner, Texas Health
Resources, and nurse Nina Pham, the first person infected with Ebola in the
United States, were not disclosed. Pham sued last year, saying that Texas
Health Presbyterian Hospital did not do enough to prevent her from contracting
the deadly virus and invaded her privacy after she was diagnosed with it.
German Momentum Grows for Curbs on Chinese
Overseas Investment - (www.bloomberg.com) Germany
is seeking tighter control over foreign investment in European companies, in a
sign of a growing protectionist reaction to China’s appetite for overseas
acquisitions. Economy Minister Sigmar Gabriel on Monday reopened a review of the
takeover of Aixtron SE, which supplies equipment to the semiconductor industry,
by China’s Grand Chip Investment GmbH. That follows calls by Gabriel, who is
also Chancellor Angela Merkel’s deputy, for European Union measures to give
national governments more powers to block or impose conditions on shareholdings
of non-EU companies.
China
House Price Bubble Soars Most Ever, Government Freaks out, Preannounces Plunge - (www.wolfstreet.com) As
a consequence of a dizzying buying frenzy in September, the average price of
new homes in China soared 11.2% from a year ago, after a 9.2% jump in August,
the National Bureau of Statistics reported today. It was the 12th month in a
row of year-over-year gains, and the largest increase on record. The average
price of new homes rose in 63 of the 70 cities in the index. It dropped in six
cities and remained flat in one. But all heck broke lose in tier-one cities: In
Beijing, the average price skyrocketed 27.8%, in Shanghai 32.7%. This comes
after authorities have unleashed a tsunami of liquidity that triggered a record
borrowing binge. In response to the prior deflation of China’s house price
bubble, and the social unrest it began to entail as folks saw their life
savings evaporate, the People’s Bank of China cut interest rates six times in
the eleven months leading up to October 2015. The benchmark mortgage rate
dropped to a historic low of 4.9%. Last month, the medium- and long-term loans
to households, mostly mortgages, ballooned by 571 billion yuan, as the total
value of new homes sold (a function of price and volume), according to Bloomberg calculations, soared 61% year-over-year,
nearly double the increase in August.
In an email to Clinton campaign chair John Podesta from February
2016, released Friday by WikiLeaks... Donna
Brazile (who has had a tough week trying to
defend her cheating allegations for giving Hillary debate questions) admits... “I think people are
more in despair about how things are - yes new jobs but they
are low wage jobs... HOUSING is a huge issue. Most people pay half
of what they make to rent,” Such honesty from such a vocal
and public cheerleader for the Obama administration is sure to embarrass the
White House, and, as Lifezette notes, contradicts
the official Democratic Party line that Obama is some sort of economy-saving
superhero.
Germany’s Long-Suffering Savers Have Real Cause
to Complain – (www.bloomberg.com) In
Germany, fretting about inflation is a political currency that never seems to
lose its value. In the past week, for example, at least three national
newspapers have run prominent articles telling the populace that their savings
-- denied the magic of compound interest by the European Central Bank’s
low-rate policies -- are in for a renewed onslaught from accelerating consumer
prices. The Bundesbank forecasts average inflation of 1.5 percent next year,
whereas rates will likely be around zero. Business daily Handelsblatt, which in
March ran a mocked-up front-page picture of ECB President Mario Draghi burning
up a 100-euro note with a cigar wedged in his mouth, published a cover
headline on Friday proclaiming that Germany is about to get caught in an
“inflation trap.”
Is
Chicago’s Housing Market Next? - (www.wolfstreet.com) Is
Chicago’s Housing Market Next? The smart money tries to cash out at the peak,
no? Does it always start at the top? Because there’s just no letup in dismal
tidbits piling up about big-city high-end condo market: Manhattan, San
Francisco, Miami – and now Chicago too? Just last year, things were still so
good on the Magnificent Mile, those tony 13 blocks of Michigan Avenue from the
Chicago River north to Oak Street, of landmark towers, shops and restaurants –
rents rank among the most expensive in the country – museums, hotels, and
high-end condos. April last year, the 65th-floor penthouse at the Park Tower on
800 N. Michigan Ave sold for $18.75 million, “to a firm with ties to ‘Star
Wars’ creator George Lucas and wife Mellody Hobson, president of a Chicago
investment firm,” the Chicago Tribune speculated. It was an all-time record.
The real estate business was ecstatic. But it might have marked the peak. Now
another penthouse at the Park Tower – a 4,000 sq. ft. two-bedroom – is for
sale, asking $12 million, according to the Financial Times. A $7.5 million four-bedroom three-bathroom
condo is for sale at the Art Deco Palmolive Building at the north end of the
Mag Mile. Other lesser condos are for sale galore in the area.
WikiLeaks:
Hillary Wants ObamaCare to 'Unravel' - Fox Nation - (www.foxnews.com) An
email leaked by WikiLeaks Tuesday appears to suggest that Hillary Clinton wants
the Affordable Care Act to fail — presumably as a pretense for implementing
single-payer, government-controlled health care. In a chain between Clinton and
her senior policy adviser Ann O’Leary titled “Memo on Cadillac Tax for HRC,”
Clinton said she’s open to changing her position on the Cadillac Tax — but that
the Republican plan to repeal it must pass.
