Are
American Debt Slaves Getting in Trouble Again? - (www.wolfstreet.com) American
consumers are holding $1 trillion in revolving credit, mostly in credit card
debt. So how well is this segment of consumer debt holding up? Synchrony
Financial – GE’s spin-off that issues credit cards for Walmart and Amazon –
disclosed on Friday that, despite assurances to the contrary just three months
ago, net charge-off would rise to at least 5% this year. Its shares plunged 16%
and are down 27% year-to-date. Credit-card specialist Capital One disclosed in
its Q1 earnings report last week that provisions for credit losses rose to $2
billion, with net charge-offs jumping 28% year-over-year to $1.5 billion. Other
worries about consumer debt in the US are piling up. The $1.4 trillion in
student loans are already in crisis, though the government backs them, and they
cannot be charged off in bankruptcy. Mortgage debt is still hanging in there,
given the surge in home prices that make defaults unlikely. But of the $1.1
trillion in auto loans, subprime loans packaged into asset backed securities
are getting crushed by net charge-off rates that are worse than during the
Financial Crisis.
Italian
Government Approves Alitalia Bankruptcy, Bonds Collapse - (www.zerohedge.com) Earlier
we reported that Italy's national carrier, Alitalia, did what many expected it to do
after last week's rescue plan, which would have cut 1,700 jobs and slashed pay,
failed and filed for bankruptcy. What was less expected is that just hours
after filing, the Italian government approved the bankruptcy process following
a short cabinet meeting, an outcome that will lead to either Alitalia’s sale or
liquidation, raising the possibility that Alitalia it will follow in the path
of KLM and Iberia in ending a storied history as one of Europe’s major
standalone airlines. The Italian government approved Alitalia's bankruptcy
process following a short cabinet meeting, an outcome that will lead to either
Alitalia’s sale or liquidation, raising the possibility that the carrier will
follow in the path of KLM and Iberia in ending a storied history as one of
Europe’s major standalone airlines. It may also result in 12,000 Italians
losing their jobs in the near future.
Global
Deal Making Falls to Slowest Pace in 20 Years - (www.wsj.com) Corporate
deal-making has hit a rough patch despite robust stock and bond markets that in
the past have led to a deluge of such activity. Mergers and acquisitions this
year have slid to their lowest level globally in nearly 20 years because
valuations as well as political and economic uncertainty are making potential
buyers wary. The number of deals world-wide involving publicly traded targets
this year fell to 793 as of April 28, according to Dealogic, down 20% from 991
in the comparable period last year and the lowest number since 1998. Meanwhile,
companies are paying higher multiples for acquisitions and investments. Buyers
paid an average of 12.8 times the target’s earnings before interest, taxes,
depreciation and amortization so far this year, up from 12.1 for the comparable
period in 2016 and the highest year-to-date multiple since 1997. The value of
deals globally, however, is up 13.9% year to date at $479.8 billion. Dealogic
figures exclude spinoffs, and include minority investments.
The
city of Philadelphia just gave Wells Fargo its walking papers - (www.cnbc.com) Efforts
by Wells Fargo to
move beyond its bogus accounts scandal have been set back by the loss of a big
government contract. The Philadelphia City Council voted Monday to change
handlers of its $2 billion payroll account, according to published reports.
Instead of continuing the arrangement with Wells, the city chose to hire Citizens
Bank for
the next fiscal year starting in July. The move comes under the dark cloud that
has enveloped Wells since the second-largest bank by assets in the U.S. agreed
to pay $185 million in fines for opening some 2 million accounts for customers
without their knowledge. More than 5,000 Wells Fargo employees lost their jobs,
and several top executives were sacked. The scandal emanated from aggressive cross-selling goals in which sales people were encouraged to
enroll customers in as many programs as possible.
Greece
reaches interim deal (again) with creditors to pave way for bailout talks – (www.theguardian.com) A
compromise is required to unblock a tranche of loans Greece needs for debt
repayments of €7bn ($7.6bn) in July.
Under pressure from its creditors -- the
European Union, European Central Bank and the International Monetary Fund --
the government agreed earlier this month to adopt another €3.6bn ($3.8bn) in
cuts in 2019 and 2020. Athens conceded fresh pension and tax break cuts in
return for permission to spend an equivalent sum on poverty relief measures.
Trump
Weighs Breaking Up Wall Street Banks, Raising U.S. Gas Tax - (www.bloomberg.com)
China's Markets and Economy Are Going in Different Directions - (www.bloomberg.com)
China’s Credit Slowdown Poses a Threat to Global Growth - (www.wsj.com)
U.S. Stocks Advance as Treasuries Fall With Gold: Markets Wrap - (www.bloomberg.com)
China's Markets and Economy Are Going in Different Directions - (www.bloomberg.com)
China’s Credit Slowdown Poses a Threat to Global Growth - (www.wsj.com)
U.S. Stocks Advance as Treasuries Fall With Gold: Markets Wrap - (www.bloomberg.com)
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