TOP STORIES:
China’s
credit reckoning draws closer - (www.marketwatch.com) Friday saw China’s first-ever onshore corporate default on a 1
billion yuan ($163 million) bond, which was followed by the weekend release of an unexpected trade deficit in
February — the first since April 2013. Both these events point to risks the
market will enforce tighter monetary conditions going forward. The failure of
Chinese solar-equipment maker Shanghai Chaori Solar Energy to make a deadline
on interest payments last Friday came after it warned it was struggling to
raise funds. The significance of this default is that it ends the belief
Chinese corporate debt came with a de-facto government guarantee. The
glass-half-full view is that this will be a positive development, as it helps
to inject risk and proper pricing into a $1.5 trillion domestic bond market.
The less sanguine take is that introducing market pricing at this stage in
China’s cycle comes a bit late to instill real discipline. Instead, prepare for
an ugly unraveling, as the removal of the ‘Beijing put’ opens the floodgates on
credit defaults.
Is
Con-Edison Igniting A New Housing Crisis In New York? - (www.mfi-miami.com) “It’s clear that now is not the time for Con
Edison to demand that its customers pay more,” -New York Governor Andrew
Cuomo. As people in the New York metropolitan area began breathing a sigh of
relief from brutal winter that has plagued most of the U.S. for the past five
months, they were thrown into shock when they opened their Con-Ed bills this
week to find that their bill increased by 200-300%. From the Hudson Valley to
Long Island, people were talking about the increase of their Con-Ed bills.
Homeowners were streaming into MFI-Miami’s New York office scared of what would
happen if they paid their Con-Ed bills over their mortgage payment. Many New
York homeowners saw their bills double from $300 to over $650. Wives and single
mothers in mortgage modifications fear they will be homeless because they can’t
afford to pay both. One restaurant owner in Warwick, New York, almost collapsed
when he opened his bill which had jumped from $1500 to $2500.
Stock
caution urged as margin debt levels hit new highs – (www.marketwatch.com) A number of warning signals are flashing in the
stock market, and while not indicative of an imminent crash, they’re telling
investors to exercise caution, say market strategists. Stocks finished higher
last week, ending on a choppy Friday highlighted by the release of a
better-than-expected job report. The Dow Jones Industrial Average advanced
0.8%, the S&P 500 Index rose 1% to close at another record high of 1,878.04, and the Nasdaq Composite Index finished
up 0.7% for the week. All except the Dow are higher for the year, which is
still down 0.8% in 2014. The gains haven’t come without a share of fretting
that the good times can’t last. Among the warnings signs: The indexes’ string
of record highs; high levels of margin debt, or borrowings to finance stock
buys; the slim number of prior bull markets that have lasted past this point;
and valuations that are close to levels when stocks last peaked. Margin debt,
which tends to spike alongside stock rallies and pullbacks, has been rattling investors for months. “As that
debt goes up, the market’s foundation gets shakier and shakier,” said Brad
McMillan, chief investment officer for Commonwealth Financial. “The correction
could be deeper.”
CREDIT
SUISSE: 'We've Just Lost A Quarter' - (www.businessinsider.com) Economically speaking, 2014 hasn’t gone exactly
as expected, particularly in the United States. At the end of 2013, the
prevailing wisdom was that the U.S. economy would finally break out of its
post-recession holding pattern and start to grow in earnest. The euro crisis
had stabilized, removing a key source of global risk, and a Congressional
budget deal struck in December reduced federal spending cuts made earlier in
2013. An important labor market indicator was flashing green, too: The
unemployment rate had fallen from 7.9 percent at the end of 2012 to just 6.7
percent in December. But the once-upbeat narrative had a few plot twists in
store.
Pizza
chain Sbarro files for bankruptcy protection - (www.reuters.com) Pizza chain Sbarro LLC has filed for bankruptcy
protection for the second time in three years after struggling with too much
debt and fewer customers in malls that house many of its restaurants. Lenders
would take control of the Melville, New York-based company under a
"pre-packaged" Chapter 11 reorganization, which Sbarro on Monday said
could allow it to made a "quick exit" from bankruptcy before May 7. Sbarro
expects to cut its debt load by more than 80 percent, and said nearly all its
lenders support its restructuring, which requires court approval. The company
will invite other buyers to submit better offers. Founded in 1956, Sbarro had
tried to boost sales by revamping its recipes to entice diners who increasingly
favor "fast casual" chains such as Chipotle and Panera Bread.
Boeing
reports wing cracks on 787 Dreamliners in production - (www.reuters.com)
Banks Enriched by Junk Resist U.S. Regulator Standards - (www.bloomberg.com)
Banks Enriched by Junk Resist U.S. Regulator Standards - (www.bloomberg.com)
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