TOP STORIES:
Venezuelans
Throng Grocery Stores Under Military Protection - (www.bloomberg.com) Shoppers thronged grocery stores across Caracas
today as deepening shortages led the government to put Venezuela’s
food distribution under military protection. Long lines, some stretching for
blocks, formed outside grocery stores in the South American country’s capital
as residents search for scarce basic items such as detergent and chicken. “I’ve
visited six stores already today looking for detergent -- I can’t find it
anywhere,” said Lisbeth Elsa, a 27-year-old janitor, waiting in line outside a
supermarket in eastern Caracas. “We’re wearing our dirty clothes again because
we can’t find it. At this point I’ll buy whatever I can find.” A dearth of
foreign currency exacerbated by collapsing oil
prices has led to shortages of imports from toilet paper to car
batteries, and helped push annual inflation to 64 percent in
November. The lines will persist as long as price controls remain in place,
Luis Vicente Leon, director of Caracas-based polling firm Datanalisis, said
today in a telephone interview.
Russia
says Ukraine has violated loan terms: agencies - (www.reuters.com) Ukraine has violated the terms of a $3
billion Russian loan but Moscow has not yet decided whether to demand early
repayment, Russian Finance Minister Anton Siluanov was quoted on Saturday as
saying. Russia lent the money in December 2013 by buying Ukrainian Eurobonds,
two months before Ukraine's then-president, the pro-Moscow Viktor Yanukovich,
fled the country amid mass protests against his rule. The terms of the loan
deal included a condition that Ukraine's total state debt should not exceed 60
percent of its annual gross domestic product (GDP). Last month, rating agency Moody's estimated
that Ukraine's debt amounted to 72 percent of GDP in 2014 and would rise to 83
percent in 2015. It also said "the risk of default is rising". "Ukraine has
definitely violated the terms of the loan, and in particular (the condition)
not to increase its state debt above 60 percent of GDP," Russia's Siluanov
said, according to Interfax news agency.
Oil
Producers Betting on Price Drop With OPEC Not Curbing Output - (www.bloomberg.com) The oil industry was listening as OPEC talked
down crude prices to a more than five-year low. Drillers, refiners and other
merchantsincreased bets on lower prices to the
most in three years in the week ended Jan. 6, government data show. Producers
idled the most rigs since 1991, with some paying to break leases on drilling
equipment. Companies are hedging more and drilling less amid concern that the
biggest slump in prices since 2008 will continue. Oil dropped for a seventh
week after officials from Saudi Arabia, the United Arab Emirates and Kuwait reiterated
they won’t curb output to halt the decline. “Producers are desperately hedging
their production in a drastically falling market,” Phil Flynn, a senior market
analyst at the Price Futures Group in Chicago,
said by phone Jan. 9. “They’re trying to lock in prices because they are convinced
that the market will stay down for a while.” WTI slid $6.19, or 11 percent, to
$47.93 a barrel on the New York Mercantile Exchange on Jan. 6, settling below
$50 for the first time since April 2009. Futures for February delivery were
down 71 cents at $47.65 in electronic trading at 12:10 p.m. Singapore time
today.
Chinese
Stocks Give Up 2015 Gains, Plunge On Kaisa Default Fears - (www.zerohedge.com) The last session in China on Friday provided an
epic roller-coaster as exuberant retail BTFD'ers met their match with fading
inflation and surging default risk concerns. The Monday session has opened to
more of the same - with the Shanghai Composite opening down another 1.3%
and erasing all the year's gains. As Shanghaio Daily reports, the Chinese
property developer Kaisa Group Holdings (that we have discussed in detail here and who's next here) failed to repay a
US$26 million bond coupon, making it the first Chinese property firm to default
on dollar bonds. As Shanghai Daily reports, Chinese
property developer Kaisa Group Holdings Ltd failed to repay a US$26 million
bond coupon on Thursday, making it the first Chinese property firm to default
on dollar bonds. The market had speculated that Kaisa would likely default on
this 2020 HSBC bond coupon after it defaulted on an earlier HSBC facility in
December. A CreditSights report written on Wednesday said that Kaisa will
have a 30-day grace period to resolve the current situation if it were to
default. The resignation of Kaisa’s Chairman Kwok Ying Shing on December 31
triggered a default on the HK$400 million (US$51.6 million) facility from HSBC
Holdings Plc. Chief Financial Officer Cheung Hung Kwong and Vice Chairman Tam
Lai Ling had also quit earlier. Shenzhen-based Kaisa declined to comment on its
debt problem but warned last week in a statement that it may default again
after it failed to repay the HSBC debt. Meanwhile, authorities blocked
four projects of Kaisa in Shenzhen, Guangdong Province, on suspicions that Kwok
was related to a local corruption case. Kaisa has dealings totaling 14 billion
yuan (US$2.3 billion) with 11 financial institutions, and at least three of
them have applied to a court in Shenzhen yesterday to seize Kaisa properties,
said Wind Information Co.
John
Paulson Hit by 2014 Losses, Advantage Plus Fund Declines 36% - (www.bloomberg.com) Billionaire John
Paulson posted the second-worst trading year of his career in
2014 as a wrong-way energy bet added to declines tied to a failed merger and
investments in Fannie Mae and Freddie
Mac. The worst performance was in the Advantage Plus fund, which
plummeted 36 percent last year, two people with knowledge of the returns said.
The event-driven strategy, which uses leverage to make bets on companies
undergoing transformations such as spinoffs and bankruptcies, lost 3.1 percent in
December, said the people, who asked not to be identified because the
information is private. The 59-year-old manager also lost money in a credit
pool and barely broke even in a fund that bets on company mergers. Paulson
& Co.’s performance placed it near the bottom of the hedge fund pack last
year as the industry returned a meager 1.4 percent. The manager, who shot to
fame after making $15 billion on the housing crisis in 2007, has struggled to
regain its footing since 2011 when bets on the U.S. recovery went awry, losing
money in all of its main strategies -- including a 51 percent tumble in the
Advantage Plus fund. Paulson also lost money in investments tied to gold and Europe’s
economy, causing assets to dwindle to $19 billion, half the peak in 2011.
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