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Venezuela
Is On Borrowed Time - (www.businessinsider.com) As
birthdays go, it could have been a happier one. Venezuela’s president, Nicolás
Maduro, celebrated his 52nd on November 23rd with a hand-picked crowd of
supporters and public employees in a cramped square in the centre of Caracas.
His birthday wish was to live (and presumably to govern) for another 50 years
to see “Bolivarian socialism” come to fruition. In fact, time may be running
out for the revolution. The price of Venezuelan oil, source of 96% of
Venezuela’s foreign-exchange earnings, has dropped from $99 to $69 a barrel
since June. The economy is in a deep recession and inflation is headed for
triple-digit rates. Basic goods like flour and cooking oil are in short supply
and queues to obtain them are common.
Oil
Heads to Biggest Weekly Drop Since 2011 as OPEC Holds - (www.bloomberg.com) Brent
and West Texas Intermediate crudes fell to the lowest level in more than four
years after OPEC failed to cut its output in response to a glut. Both grades
capped the biggest monthly drops since 2008. OPEC will maintain its collective
output target at 30 million barrels a day, Saudi Arabia’s Oil Minister Ali Al-Naimi said after discussions in Vienna
yesterday. The group’s policy will ensure a crash in the U.S. shale industry,
predicted Leonid Fedun,
the vice president of Russia’s OAO Lukoil. “We have a situation where OPEC
is prepared to live with low oil prices,” said Harry Tchilinguirian, BNP Paribas SA’s London-based head of
commodity markets strategy. “OPEC is forfeiting its role as a swing supplier to
balance the market, and is giving back the role to market mechanism.” Brent for
January settlement fell $2.43, or 3.3 percent, to $70.15 a barrel on the
London-based ICE Futures Europe exchange, the lowest close since May 2010.
Prices are down 13 percent this week, the biggest weekly loss since May 2011. Brent
has decreased 18 percent this month, the worst performance since October 2008
and is down 37 percent in 2014.
Oil
Price Slump Kills Greenland Independence Hopes Amid Election - (www.bloomberg.com) Less
than half a decade ago, Greenlanders were imagining the riches that would
follow an oil bonanza as the price of crude approached $150 a barrel. That
wealth was supposed to buy the island independence from Denmark. Yesterday, with oil trading at less than $75,
well below levels that would make exploration off the world’s largest island
profitable, Greenlanders cast their votes for a new home-rule government after
the previous administration collapsed amid an expenses scandal. “People in
Greenland always ponder how to achieve economic independence from Denmark,” Ulrik Pram Gad,
a post doctoral political scientist at the University of Copenhagen, said in an
interview.
CEOs
Could Be Getting Ready To Revolt Against Obamacare - (www.businessinsider.com) Leading
U.S. CEOs, angered by the Obama administration's challenge to certain
"workplace wellness" programs, are threatening to side with
anti-Obamacare forces unless the government backs off, according to people
familiar with the matter. Major U.S. corporations have broadly supported
President Barack Obama's healthcare reform despite concerns over several of its
elements, largely because it included provisions encouraging the wellness
programs. The programs aim to control healthcare costs by reducing smoking,
obesity, hypertension and other risk factors that can lead to expensive
illnesses.
Ferguson
Protests Stall Shopping as 120-Mile March Set - (www.bloomberg.com) Police
arrested 16 people in Ferguson, Missouri, as demonstrators across the U.S. shut
down shopping malls and planned a 120-mile march to protest the killing of an
unarmed black teenager by a white police officer. Police in riot gear moved in
on a crowd of about 150 protesters in Ferguson around 10 p.m. yesterday, making
arrests for disturbing the peace, according to the St. Louis County Police
Department. One person was charged with assault on a police officer in a
scuffle that left the officer injured, the department said. Only one of the
protesters arrested was from the St. Louis area, police said. Groups from cities
including New York and Chicago had traveled to demonstrate in front of the
Ferguson police station after a grand jury declined to bring charges against
the officer.
'When
All Of A Sudden The Most Liquid Market Out There Isn't Liquid, It's Worrisome' – (www.businessinsider.com) US
fund firms are taking extra measures to make sure they don't get stuck holding
hard-to-sell bonds in the event that fixed income markets see a massive race to
the exits when interest rates start to rise. Over the past few months a growing
number of asset managers, including Neuberger Berman, Natixis Global
Management, and T. Rowe Price have been testing their funds against various
market scenarios, building cushions of cash, shorter-duration bonds, and other
liquid securities, and regularly discussing risks with their boards. The
concern is this: As the Federal Reserve begins to raise rates, which many
expect will begin to happen next year, investors will rush to sell bonds as
their value drops in a rising interest rate environment. Historically Wall
Street banks have been the buyers of these bonds, but regulations and capital
requirements imposed since the financial crisis have forced these firms to
slash their inventories. "I look around and ask, 'At the end of the day
how easy would it be to sell what I own?', and the answer is it is much more
challenging," said Jason Brady, a fixed income portfolio manager at Sante
Fe, New Mexico-based Thornburg Investment Management, which has $70 billion in
assets under management, $17 billion of which is in fixed income.
Loan
‘Guarantee Chains’ in China Prove Flimsy - (online.wsj.com) When
a fabric company called Jiangyin Xueyuan Textile Co. collapsed, the troubles
soon cascaded through other firms in this mill town. A machinery maker, paper
producer, manufacturer of faux-wood flooring and textile maker had one thing in
common. They had promised, in the event of default, to repay the loans taken on
by Xueyuan. Court documents say the fabric company can’t pay what it owes. With China’s economic growth
flagging,
businesses such as Xueyuan are foundering. And these chains of guarantees, in
which companies back loans to other firms, are causing pain for the wider
Chinese economy. The central bank cut benchmark lending and
deposit rates on
Friday to reduce financing costs for companies and help revive growth. Places
like Jiangyin, in the prosperous Yangtze River delta, have been a point of
concern for the government.
Auto Loan Delinquencies Surge 18% Among Young Americans - (www.zerohedge.com) Auto
loan delinquency rates jumped nearly 13% in the last year, according to a new report by Transunion, withyoung (under-30) Americans seeing a 17.8%
surge in 60+ day delinquency rates, as auto loan debt rose for the 14th
straight quarter to $17,352. While these are notable rises, the overall levels
remain low for now, but subprime-loan-delinquencies rose notably to 5.31%.
However, in a somewhat stunningly blinkered conclusion, Transunion's Peter
Terek notes "the uptick in delinquency reflects a healthy and
thriving auto finance industry where credit is more broadly available to all
consumers." So delinquencies are great news...
The
Last Time Gas Prices Fell This Far ... - (www.businessinsider.com) The
last time gas prices fell this far, this fast, we were in a recession. Or
actually, closer to a depression. According to a tweet sent out this
afternoon by Bespoke Investment Group, the average price of gas in the US
hasn't risen in 60 days. This is the second longest streak in a decade,
and the longest since an 87-day streak in late 2008. In late 2008, you may
recall, the economy was reeling from the Lehman Brothers bankruptcy and the
bursting of the housing bubble, with the stock market in the midst of a huge
sell off and the economy plunging into a recession that would last through most
of 2009. This year's decline in the price of gas comes as crude oil has fallen
about 30% since its highs in June as a glut of supply comes to the global
market and concerns abound about a global economic slowdown. Later this week,
OPEC is set to hold its annual meeting, with some on Wall Street expecting the
cartel to announce a production cut this year to reduce global supply and
bolster prices. Here's the chart of gas prices over the last three years.
[Eavis]
New York Fed Is Criticized on Oversight - (www.nytimes.com) The
government agency that watches over Wall Street came in for repeated rounds of
criticism on Friday at a Senate hearing into its regulatory track record. Many
of the senators at the hearing were expected to be critical of the Federal Reserve Bank of New York, after recent reports cast doubt on the
agency’s ability to rein in large banks. William C. Dudley, the president of
the New York Fed, defended the agency, but Senator Elizabeth Warren, Democrat of Massachusetts, at one point told
him, “You need to fix it, Mr. Dudley, or we need to get someone who will.” The
president of the New York Fed is not chosen by Congress. And much of the stern
questioning could be seen as the sort of grandstanding that plays well with
those who want to limit Wall Street’s power or were harmed in the financial
crisis of 2008. Even so, it will be hard for the Fed to ignore the anger directed at Mr.
Dudley. The New York Fed is the public’s first line of defense against Wall
Street’s excesses and abuses, and the discontent in Congress could build if
more evidence emerges that suggests the New York Fed is not tough enough with
the large banks it oversees.
Russia
puts losses at up to $140 billion from Western sanctions, oil price fall:
minister - (www.gmanetwork.com) Lower
oil prices and Western financial sanctions imposed over the Ukraine crisis will
cost Russia around $130-140 billion a year - equivalent to around 7 percent of
its economy - Finance Minister Anton Siluanov said on Monday. His comments are
the latest acknowledgement by Russian policymakers that sanctions restricting
borrowing abroad by major Russian companies are imposing heavy economic costs.
But in Siluanov's view, the fall in oil prices is the bigger worry. "We're
losing around $40 billion a year because of geopolitical sanctions, and about
$90 billion to $100 billion from oil prices falling by 30 percent," he
told a news conference. "The main issue that affects the budget and economy
and financial system, this is the price of oil and the fall in monetary flows
from the sale of energy resources."
Budweiser
Is In Huge Trouble – (www.businessinsider.com)
Budweiser is quickly losing its status as the most iconic beer brand in
America. A recent company study found that 44% of drinkers aged 21 to 27
have never tried the brand, reports Tripp Mickle at The Wall Street Journal. Budweiser is
the third-most-popular beer brand in America, behind Bud Light and Coors Light.
It has recently also been challenged by craft beer, which is hugely popular
with the millennial set. At the brand's peak in 1988, it was selling 50
million barrels of beer a year. That number has declined to 16 million
barrels. To "stop the free fall," the company has decided to
double down and advertise only to millennials, The Journal reports. "It means February’s Super Bowl ads
will feature something more current than last year’s Fleetwood Mac,"
Mickle writes. "It means less baseball and more raves with DJ group Cash
Cash."
Brazil
Bribery Probe Threatens Petrobras’s Debt Financing - (www.bloomberg.com) The
widening corruption probe at Petroleo Brasileiro SA (PETR4) is threatening to impair its ability to
finance the world’s biggest oil investment plan. The state-controlled producer,
which delayed releasing third-quarter earnings because of an investigation into
alleged bribery involving contracts, said Nov. 13 it plans to publish unaudited
statements within a month. Bank of America Corp. said Petrobras may have
difficulties borrowing in international debt markets until it provides results
that have been audited. The producer’s funding costs based on its benchmark
bonds reached a 14-month high last week after police arrested officials at
construction companies that allegedly formed a cartel to win contracts,
including 59 billion reais ($23 billion) from Petrobras. While the company can
turn to state development bank BNDES in the short term, it won’t be enough to
cover the $12 billion a year in financing that Petrobras says it needs,
Oppenheimer & Co. said.
How
the EU Plans to Turn $26 Billion Into $390 Billion - (www.bloomberg.com) The European Union is planning a 21
billion-euro ($26 billion) fund to share the risks of new projects with private
investors, two EU officials said. The new entity is designed to have an impact
of about 15 times its size, making it the anchor of the EU’s 300 billion-euro
investment program, according to the officials, who asked not to be named
because the plans aren’t final. European Commission President Jean-Claude Juncker is due to announce the three-year
initiative this week. The commission will pledge as much as 16 billion euros in
guarantees for the vehicle, which will also include 5 billion euros from the European Investment Bank, the officials said. Loans, lending guarantees
and stakes in equity and debt will be part of its toolbox, with the goal to
jumpstart private risk-taking so that stalled projects can get off the ground.
Twitter "Hedge Fund Manager" Anthony Davian Sentenced To 4 Years 9
Months In Federal Prison - (www.zerohedge.com) Over
a year ago we reported that one of Twitter early and most aggressive
self-promoters, Anthony Davian, was busted for what was at the time financial
Twitters' the first Ponzi Scheme. Today, we can close the case on Athony
Davian. As SIRF reports,
"Anthony Davian, a once-prolific presence on social media who held himself
out as a iconoclastic hedge fund manager prior to his August 2013 indictment on
a series of fraud charges, was sentenced several hours ago in a Cleveland
courtroom to four years and nine months in federal prison."
Fed
Warning Sends Small Caps Red For 2014 - (www.zerohedge.com) The
word "volatile" comes to mind when reflecting on today's cross-asset
class action. US equities dumped into and beyond the US open, decoupling
entirely from JPY carry, only to reverse perfectly at the European close and
recover all the way back to USDJPY right as the FOMC minutes hit. A kneejerk
sent stocks higher but that quickly decoupled also and stocks fell. Small
Caps underperformed and are back in the negative year-to-date. Treasury yields
were volatile, ramping higher into the US open, rallying post, then whipsawing
on FOMC minutes to close 3-4bps higher on the day.The USD was flat on the
day despite the surge in USDJPY back above 118. Commodities were a mess
with a big dump on Swiss Gold polls, rip higher on Russian buying rumors and
dropped again on FOMC (oil and copper followed suit). HY Credit was
"bidless" and continues to decouple from stocks (along with VIX).
Seven
big U.S. companies paid CEOs more than Uncle Sam in 2013: study - (www.reuters.com) Seven
of the 30 largest U.S. corporations paid more money to their chief executive
officers last year than they paid in U.S. federal income taxes, according to a
study released on Tuesday that was disputed by at least one of the companies. Amid
talk in Washington about corporate tax reform, the study said the seven
companies, which in 2013 reported more than $74 billion in combined U.S.
pre-tax profits, came out ahead on their taxes, gaining $1.9 billion more than
they owed. At the same time, the CEOs at each of the seven companies last year
was paid an average of $17.3 million, said the study, compiled by two
Washington think tanks. The seven companies cited were Boeing Co (BA.N), Ford Motor Co (F.N), Chevron Corp(CVX.N), Citigroup Inc (C.N), Verizon Communications Inc (VZ.N), JPMorgan Chase & Co(JPM.N)
and General Motors Co (GM.N).
Obama
poised to announce go-it-alone plan on immigration Thursday
- (www.reuters.com) President Barack Obama is
set on Thursday to outline a controversial plan to relax U.S. immigration
policy and grant relief from deportation to as many as 5 million undocumented
immigrants in a go-it-alone move that will deepen a partisan divide with
Republicans. Sources close to the administration said the rollout would include
a televised speech by Obama on Thursday night laying out the plan followed by a
trip to Las Vegas on Friday to build support. Nevada is home to the highest
proportion of undocumented immigrants in the country. The White House declined
to comment on the specific timing of the announcement but officials have made
clear Obama was planning to take executive action soon. Some conservative
Republicans have threatened to try to thwart the immigration move by imposing
funding restrictions in a must-pass spending bill, which could conceivably
raise the possibility of a government shutdown.
Obama
Says Illegal Immigration HURTS ‘Blue-Collar Americans,’ STRAINS Welfare [VIDEO] - (www.dailycaller.com) President Barack Obama once declared that an
influx of illegal immigrants will harm “the wages of blue-collar Americans” and
“put strains on an already overburdened safety net.” “[T]here’s no denying that
many blacks share the same anxieties as many whites about the wave of
illegal immigration flooding our Southern border—a sense that what’s
happening now is fundamentally different from what has gone on before,”
then-Senator Obama wrote in his 2006 autobiography, “The Audacity of Hope:
Thoughts on Reclaiming the American Dream.” ”Not all these fears are
irrational,” he wrote. “The number of immigrants added to the labor force every
year is of a magnitude not seen in this country for over a century,” Obama
noted. “If this huge influx of mostly low-skill workers provides some
benefits to the economy as a whole—especially by keeping our workforce
young, in contrast to an increasingly geriatric Europe and Japan—it also
threatens to depress further the wages of blue-collar Americans and
put strains on an already overburdened safety net.”
Fed Hints It Won't Bail Out Stocks Next Time - (www.zerohedge.com) Curious
why, even as many were expecting at the time, the Fed decided against
commenting on the October market swoon? Here is the answer, in the Fed's own
words: "... members considered the advantages and disadvantages of adding
language to the statement to acknowledge recent developments in financial
markets. On the one hand, including a reference would show that the Committee
was monitoring financial developments while also providing an opportunity to
note that financial conditions remained highly supportive of growth. On the
other hand, including a reference risked the possibility of suggesting greater
concern on the part of the Committee than was actually the case, perhaps
leading to the misimpression that monetary policy was likely to respond to
increases in volatility."
