…click on the above link to read the rest of the article…
Home » Posts tagged 'reuters' (Page 14)
Tag Archives: reuters
Stocks Slump After Saudis Threaten Nukes Against “Nefarious” Iran
Stocks Slump After Saudis Threaten Nukes Against “Nefarious” Iran
Earlier this month, a black swan landed in the Mid-East when Saudi Arabia executed prominent Shiite cleric Nimr al-Nimr along with 46 other “terrorists.”
Most of those executed were not Shiites but that didn’t matter. Al-Nimr was a key voice among Saudi Arabia’s dissident Shiite minority and his death reverberated across the Shiite community, sparking mass protests from Bahrain to Pakistan.
Al-Nimr was executed on a Saturday. By Sunday evening the Saudi embassy in Tehran was ransacked and burned and Riyadh had cut diplomatic ties with Iran. The other Gulf monarchies followed suit and by the end of the following week, the stage was set for widespread sectarian strife.
As we wrote in the aftermath of al-Nimr’s execution, the ordeal couldn’t have come at a worse time for the Obama administration. With the countdown to Implementation Day for the nuclear deal under two weeks, the last thing The White House needed was to be thrust into the middle of a dispute between a traditional ally (the Saudis) and a new “friend” (the Iranians).
The Sunni world (not to mention the Israelis) already feared that the lifting of international sanctions against Iran and the attendant cash windfall would strengthen Tehran just as the Ayatollah looks to preserve and expand the so-called Shiite crescent by consolidating his influence in Iraq and bolstering the Assad government in Syria. The money, some critics say, will invariably be channeled to Hezbollah and Iran’s Shiite militias which effectively function as Iraq’s only effective security force. Additionally, the nuclear deal’s opponents wonder if Iran will plow its newfound wealth into the country’s famous ballistic missile program, which is alive and well as demonstrated by the test-firing of the Emad in October.
…click on the above link to read the rest of the article…
Italian Banks Collapse, Short Sales Banned As Loan Loss Fears Mount
Italian Banks Collapse, Short Sales Banned As Loan Loss Fears Mount
Italian bank stocks are crashing (with BMPS down 40% year-to-date) as Reuters reports that investors are growing increasingly nervous about how the sector will cope with lower interest rates and a 200 billion euro ($218 billion) pile of loans that are unlikely to be repaid. The broad banking sector is down 4% with stocks suspended, and in light of this bloodbath, Italian regulators have decided in their wisdom, to ban short-selling of some bank stocks (which has driven hedgers into the CDS market, spking BMPS credit risk).
Italy’s banking index was down over 4 percent with shares in several lenders, including the country’s biggest retail bank Intesa Sanpaolo and the third biggest lender Banca Monte dei Paschi di Siena, suspended from trading after heavy losses.
Bloodbath for Italian financials in 2016…
But don’t worry:
- *MONTE PASCHI CEO CONFIRMS FINANCIAL STABILITY OF BANK
- *MONTE PASCHI CEO: STOCK DECLINE NOT JUSTIFIED BY FUNDAMENTALS
Investors are growing increasingly nervous about how the sector will cope with lower interest rates and a 200 billion euro ($218 billion) pile of loans that are unlikely to be repaid.Those concerns are trumping expectations about a wave of consolidation set to sweep the sector, with cooperative banks under pressure to merge following a government reform to reduce the number of lenders.
JP Morgan said this month Italian banks should be avoided because low rates are expected to put pressure on revenues more than in other countries and credit problems limit a recovery in provisions.
Traders have suggested exiting investments that have been particularly favoured, such as Popolare di Milano and Intesa, as the stocks have reached key supports.
“I think upside on cooperative banks this year is much more limited,” said a London-based equity sales person.
…click on the above link to read the rest of the article…
Weekly Commentary: Cracks at the Core of the Core
Weekly Commentary: Cracks at the Core of the Core
January 15 – Bloomberg (Matthew Boesler): “The U.S. economy should continue to grow faster than its potential this year, supporting further interest-rate increases by the Federal Reserve, New York Fed President William C. Dudley said. ‘In terms of the economic outlook, the situation does not appear to have changed much” since the Fed’s Dec. 15-16 meeting, Dudley said, in remarks prepared for a speech Friday… He added that he continues ‘to expect that the economy will expand at a pace slightly above its long-term trend in 2016,’ and said future rate increases would depend on incoming economic data.”
January 15 – Reuters (Ann Saphir): “The stock market’s swoon does not change the economic outlook and is merely market participants trying to make sense of global developments, San Francisco Federal Reserve Bank President John Williams told reporters… ‘As the Fed is moving gradually through a process of normalization it’s not surprising that we are not going to be at the peak stock prices’ of last year, Williams said. So far swings in stock market prices have not fundamentally changed his expectation for moderate economic growth, he said.”
The world has changed significantly – perhaps profoundly – over recent weeks. The Shanghai Composite has dropped 17.4% over the past month (Shenzhen down 21%). Hong Kong’s Hang Seng Index was down 8.2% over the past month, with Hang Seng Financials sinking 11.9%. WTI crude is down 26% since December 15th. Over this period, the GSCI Commodities Index sank 12.2%. The Mexican peso has declined almost 7% in a month, the Russian ruble 10% and the South African rand 12%. A Friday headline from the Financial Times: “Emerging market stocks retreat to lowest since 09.”
Trouble at the “Periphery” has definitely taken a troubling turn for the worse. Hope that things were on an uptrend has confronted the reality that things are rapidly getting much worse.
Nigerian Currency Collapses After Central Bank Halts Dollar Sales To Stall “Hyperinflation Monster”
Nigerian Currency Collapses After Central Bank Halts Dollar Sales To Stall “Hyperinflation Monster”
Having told banks and investors “don’t panic” in September, amid spiking interbank lending rates and surging default/devaluation risks, it appears the massive shortage of dollars that we warned about in December has washed tsunami-like ashore in oil-producing Nigeria. Following the Central bank’s decision this week to halt dollar sales to non-bank FX market operators, black market exchange rates spiked to 282/USD (vs 199 official) and CDS spiked to record highs implying drastic devaluations loom.
As Reuters reports, Nigeria’s central bank is halting dollar sales to non-bank foreign exchange operators and letting commercial banks accept dollar deposits with immediate effect, its governor said on Monday, in an effort to shore up dwindling foreign reserves.
Africa’s biggest economy, an OPEC member state that depends on oil sales for about 95 percent of its foreign reserves, has been hammered by a collapse in global oil prices, which has triggered a slide in its naira currency.Godwin Emefiele said the sale of foreign exchange to bureaux de change would be discontinued because they were using up the country’s foreign reserves for illegal transactions and selling the dollar at 250 naira compared to the official central bank rate of 197 naira.
The currency hit a record low of 282 per dollar on the unofficial market on Monday after the central bank’s announcement.
Emefiele said foreign reserves stood at around $28 billion compared with $37 billion in June 2014, and that the bureaux were depleting them at a rate of $28.4 million per week.
“This is a huge haemorrhage on our scarce foreign exchange reserves, and cannot continue,” Emefiele told a news conference in the capital Abuja.
To avoid devaluing the currency, a stance so far supported by President Muhammadu Buhari, the central bank adopted increasingly stringent foreign exchange rules last year and effectively banned dollar access for the purchase of 41 items, which has also been criticised at the World Trade Organisation by the United States and the European Union.
…click on the above link to read the rest of the article…
China’s Hard Landing To Trigger Meltdown In India: “We Will See Another Crisis”
China’s Hard Landing To Trigger Meltdown In India: “We Will See Another Crisis”
In late September, India “surprised” 51 out of 52 economists by cutting rates a larger than expected 50 bps.
Despite RBI Governor Raghuram Rajan’s penchant for catching markets off guard and despite the fact that exports had fallen for eight consecutive months, economists still failed to predict that anything more than 25 bps was in the cards.
“The weakness in India’s exports is striking, not only in terms of past trend, but also from a cross country perspective,” Deutsche Bank wrote at the time. “Indeed, India’s exports performance has been the weakest in the region in 2015.”
In short: in a world gone Keynesian crazy, you live and die by your willingness to engage in competitive easing and with China having just a month earlier moved to devalue the yuan, India had little choice but to cut lest the export picture should darken further.
Since then the malaise has deepened.
Exports have now fallen for 12 straight months and although some of the decline is probably attributable to slumping prices (as opposed to lower volumes), it’s worrisome nevertheless.
“India’s external trade likely fell for second consecutive year in FY16E, with both exports and imports contracting by 18.5%YoY and 17.2%YoY in the period Apr-Nov’15,” Citi notes, adding that “the meltdown in India’s exports and imports was even sharper than the global tradewhich contracted by 12- 13%YoY.”
On Friday, in the wake of China’s continued devaluation of the yuan, Indian Trade Minister Nirmala Sitharaman expressed concern about the effect a sharply weaker RMB will have on her country’s trade deficit with Beijing. “It’s worrying,” she said. “My deficit with China will widen.”
India is now looking at ways to prevent a flood of cheap imports from hitting domestic producers. “India steel companies such as JSW Ltd have asked the government to set a minimum import price to stop cheap imports undercutting them,” Reuters writes. “A similar measure was adopted in 1999.”
…click on the above link to read the rest of the article…
Yes, The ECB Chief Economist Really Said It: “If You Print Enough Money, You Always Get Inflation. Always.”
Yes, The ECB Chief Economist Really Said It: “If You Print Enough Money, You Always Get Inflation. Always.”
Once upon a time there was a cute, if amusing and terribly disingenuous debate among those who have never actually traded but pretend to know finance, about what QE and “unconventional policy” actually was. “It’s an asset swap” they said, “it’s not printing money” they said.
We are happy to close the chapter on all those sophist hacks once and for all, with a painfully obvious, if stunning in its honesty, declaration by none other than ECB Executive Board Member Peter Preat, who earlier today said the following: “If you print enough money, you always get inflation. Always.”
The full context from Reuters, which reports that “money-printing plan has so far failed to drive up inflation” and touches on Europe’s odd fascination with never having a backup plan: “the bank does not have an alternative “plan B”, ECB Executive Board member Peter Praet said in a magazine interview published on Wednesday.
More details:
“I accept that our policy has not yet been successful: inflation in Europe has for a long time been at a very low level of almost zero,” Praet, the ECB’s chief economist, told Belgian weekly magazine Knack.Praet said various factors, notably low oil prices and less buoyant emerging economies, meant it was taking longer to reach the goal of inflation of close to but below 2 percent.
“We need to be attentive that this shifting horizon does not damage the credibility of the ECB,” he added.
Too late, friend.
Inflation has missed the ECB’s target of close to but below 2 percent for almost 3 years and it will still take years at best to drive up price growth towards the target, the bank forecast earlier.
Praet said that, despite this shifting horizon, the ECB did not have an alternative to its policy of low interest rates and 1.5 trillion euro asset buying scheme.
…click on the above link to read the rest of the article…
Puerto Rico To Default On Some Bonds January 1 – Live Feed
Puerto Rico To Default On Some Bonds January 1 – Live Feed
Puerto Rico governor Alejandro Garcia Padilla is set to address the island’s debt problem at a press conference on Wednesday.
- PUERTO RICO SAYS IT WILL DEFAULT ON SOME DEBT DUE JAN. 1
- PUERTO RICO TO MISS $1.4 MILLION DUE ON PFC BONDS DUE JAN. 1
- PUERTO RICO TO MISS $35.9 MILLION DUE ON PRIFA BONDS
- PUERTO RICO TO MAKE JAN. 1 GENERAL OBLIGATION DEBT PAYMENT
Nearly $1 billion comes due on Friday, some $330 million of which is GO debt. Because a full payment is next to impossible, Padilla must decide who gets paid and who doesn’t. Live feed:
And the reaction in the monolines:
* * *
Background
In what’s starting to feel a bit like the Greek saga that unfolded over the summer, Puerto Rico is facing another “D-Day” on January 1 when nearly $1 billion is due to creditors.
For those unfamiliar with the story, the commonwealth is struggling to crawl from under a debt pile that sums to about $70 billion but has thus far been unable to wrench concessions from Congress on restructuring in bankruptcy.
Earlier this month, the island struck a deal with the monolines that will let a previously agreed restructuring for around $8 billion in PREPA debt go ahead, and while some hope that could serve as a kind of template for the rest of Puerto Rico’s obligations, analysts and government officials alike think that’s unlikely given the complexity involved.
On December 1, Governor Alejandro Garcia Padilla used a revenue clawback mechanism in order to make a $354 million payment. The end-around effectively allowed Padilla to divert funds from other agencies that have issued bonds in order ensure the government could make good on its GO debt. A default on the GO portion (around $330 million) of what comes due on Friday would trigger a wave of messy litigation and is a situation Padilla wants to avoid at all costs.
…click on the above link to read the rest of the article…
Chinese State Firms’ Debt Hits New All Time High, As Profits Tumble
Chinese State Firms’ Debt Hits New All Time High, As Profits Tumble
Overnight China’s finance ministry reported the latest data on state-owned firms profitability. At a cumulative CNY 2.04 trillion (or $316 billion) for the January-November period, this was another nearly double digit decline, or -9.5% from the year ago period, following a -9.8% drop for the 10 month period the month before.
State-backed financial companies, which in China is redundant as all financial companies are state-backed, were responsible for roughly a third of the cumulative profit decline: excluding financial firms, combined revenues of state-owned firms fell 6.1% in the first 11 months from a year earlier to 40.7 trillion yuan, the ministry said.
According to Reuters, companies in transportation, chemical and power sectors reported a rise in profit in the January-November period, while firms in oil, petrochemicals and building materials – or a vast majority of them – saw a drop in earnings. Firms in steel, coal and non-ferrous metal sectors continued to suffer losses.
“The downward pressure on economic operations remains relatively big, although there are signs of warming up in some indicators,” the ministry said.
This optimism is, however, entirely baseless and we are confident that Chinese corporate profitability is set to go from bad to even worse. The reason for that is that at current commodity prices and production, virtually all of China’s steel industry is loss-making, while over half of commodity companies with debt do not have the funds to make even one coupon payment.
While the logical response to plunging profits would be for the government to enforce a strict discipline for excess capacity reduction, Beijing has been unwilling to do this, afraid of the outcome from the resulting surge in corporate defaults.
…click on the above link to read the rest of the article…
“The Cost Is Very High”: Portugal Taxpayers Face €3 Billion Loss After Second Bank Bailout In 2 Years
“The Cost Is Very High”: Portugal Taxpayers Face €3 Billion Loss After Second Bank Bailout In 2 Years
Back in August of 2014, Portugal had an idea.
Lisbon would use some €5 billion from the country’s Resolution Fund to shore up (read: bailout) Portugal’s second largest bank by assets, Banco Espirito Santo. The idea, basically, was to sell off Novo Banco SA (the “good bank” that was spun out of BES) in relatively short order and use the proceeds to pay back the Resolution Fun. That way, the cost to taxpayers would be zero.
You didn’t have to be a financial wizard or a fortune teller to predict what was likely to happen next.
Unsurprisingly, the auction process didn’t go so well. As we recounted in September, there were any number of reasons why Portugal had trouble selling Novo, not the least of which was that two potential bidders – Anbang Insurance Group and Fosun International which, you’re reminded, is run by the recently “disappeared” Chinese Warren Buffett – suddenly became far more risk-averse in the wake of the financial market turmoil in China. Talks with US PE (Apollo specifically) also went south, presumably because no one knows if this “good” bank will actually turn out to need more capital going forward given that NPLs sit at something like 20% while the H1 loss totaled €250 million thanks to higher provisioning for said NPLs. Now, the auction process has been mothballed and will restart in January.
This matters because if the bank can’t be sold, the cost of the bailout ends up being tacked onto Lisbon’s budget. The impact is substantial. In September, when the effort to sell Novo collapsed, the government restated its 2014 deficit which, after accounting for the bailout, ballooned to 7.2% of GDP from 4.5%.
…click on the above link to read the rest of the article…
“I Know Of No One Who Predicted This”: Russian Oil Production Hits Record As Saudi Gambit Fails
“I Know Of No One Who Predicted This”: Russian Oil Production Hits Record As Saudi Gambit Fails
In late October, we noted that for the second time this year, Russia overtook Saudi Arabia as the biggest exporter of crude to China.
Russia also took the top spot in May, marking the first time in history that Moscow beat out Riyadh when it comes to crude exports to Beijing. “Moscow is wrestling with crippling Western economic sanctions and building closer ties with Beijing is key to mitigating the pain,” we said in October, on the way to explaining that closer ties between Russia and China as it relates to energy are part and parcel of a burgeoning relationship between the two countries who have voted together on the Security Council on matters of geopolitical significance. Here’s a look at the longer-term trend:
You may also recall that Gazprom Neft (which is the number three oil producer in Russia) began settling all sales to China in yuan starting in January. This, we said, is yet another sign of the petrodollar’s imminent demise.
On Monday, we learn that for the third time in 2015, Russia has once again bested the Saudis for the top spot on China’s crude suppliers list. “Russia overtook Saudi Arabia for the third time this year in November as China’s largest crude oil supplier,” Reuters writes, adding that “China brought in about 949,925 barrels per day (bpd) of Russian crude in November, compared with 886,950 bpd from Saudi Arabia.”
This is an annoyance for Riyadh. China was the world’s second-largest oil consumer in 2014 and closer ties between Moscow and Beijing not only represent a threat in terms of crude revenue, but also in terms of geopolitics as the last thing the Saudis need is for Xi to begin poking around militarily in the Arabian Peninsula on behalf of Moscow and Tehran.
…click on the above link to read the rest of the article…
World Leaders Just Agreed To A “Historic” Climate Accord… Which Is Non-Binding And Has No Enforcement Language
World Leaders Just Agreed To A “Historic” Climate Accord… Which Is Non-Binding And Has No Enforcement Language
Great news! The “greatest threat to future generations of the world” has apparently been solved. World leaders Saturday adopted an historic international climate accord in Paris, the first-ever agreement to commit almost every country to fight climate change. However, as we knew all along and just got confirmation, the 31-page pact does not have binding language or a mechanism to force countries to live up to the promises to cut greenhouse gases emissions or provide money for developing and poor nations to cope with the effects of global warming.
Basically, COP21 was a massive taxpayer-funded boondoggle, in which “leaders” enjoyed all the perks of Paris for two weeks, burned through hundreds of millions in public funding, and created millions of tons in greenhouse gases (what do you think to private jets and government 747s use to fly?) that has achieved absolutely nothing.
In other words…
Nonetheless, leaders and the environmental community hailed the United Nations agreement has a historic turning point that has the potential to stave off the worst expected effects of global warming.
And The UN reports a large round of mutual masturbation…
A joyful atmosphere fills the plenary hall at #COP21. #ParisAgreement
The Borg press is happy, clearly having no idea that absolutely nothing just took place:
Journo says she’s watching #ParisAgreement with press (https://twitter.com/MSLJeconomist/status/675732689102741504 …), tweets video of their reaction.
Oil Producer’s Currencies Are Collapsing As Brent Breaks Below $40
Oil Producer’s Currencies Are Collapsing As Brent Breaks Below $40
Not helped by weakness in China trade data, questions over global growth and inflation expectations are growing. Oil-exporting nations (and growth-linked currencies) are getting monkey-hammered…
Just when traders thought the bottom was in…
As Reuters notes, with lower oil prices likely to add to global deflationary concern and Chinese data doing little to improve sentiment, risk appetite remained fragile.
The Canadian currency fell 0.4 percent against the U.S. dollar, to C$1.3555. That was the U.S. dollar’s strongest level since mid-2004.Similarly the Norwegian crown fell a six-week low against the euro.
“If you are looking to play weak oil prices, you would want to sell the Canadian dollar and the Norwegian crown,” said Jeremy Stretch, head of currency strategy at CIBC World Markets. “With oil prices falling and some even talking about oil falling to $30 a barrel, revenues for these countries will take a beating and hence their currencies will remain under pressure.”
The Australian dollar fell 0.6 percent to $0.7220 AUD=D4 as this week’s tumble in iron ore and the latest Chinese data weighted on the currency’s woes.
Citi recommended that investors sell the Aussie through options. “The weakness in the Chinese economy will spill over to Australia through commodities demand as well as reduced demand for the Australian dollar via reserves and other channels. This should leave it vulnerable to an eventual leg higher in the dollar,” they said.
Charts: Bloomberg
With the oil price collapse accelerating (Brent just dropped below $40 for the first time since Feb 2009), the currencies of major oil-exporting nations – such as the Canadian dollar and Norwegian crown – are plunging…
Russia Threatens “Retaliatory Action” After NATO Expands Alliance For First Time In Six Years
Russia Threatens “Retaliatory Action” After NATO Expands Alliance For First Time In Six Years
As the war in Syria enters its fifth year with no end in site, it’s easy to forget about the world’s “other” proxy conflict, that which is still unfolding in Ukraine.
You might remember Ukraine as yet another example of US intervention gone horribly awry. Indeed, this was but another instance of Washington stepping in to support “democratic” protests on the way to bringing about regime change. Just three months after a dramatic visit to Maidan Square by the Senate’s favorite warhawk John McCain, Russian-backed President Viktor Yanukovych was unceremoniously ousted.
Unfortunately, the democratic utopia that America figured was inevitable didn’t take shape (just like it didn’t take shape after Gaddafi in Libya or after Saddam in Iraq) and now, Ukraine is mired in civil war as Russian-backed separatists battle Kiev’s US-backed regulars and a handful of nationalist militias.
The point is, that problem hasn’t gone away and in fact, reports indicate that the violence has accelerated this week. Ukraine, and before that, the Crimea “incident,” were the “original” Russia Vs. NATO proxy playgrounds and have only faded from memory because of just how dramatic the situation in Syria truly is. While tensions in Syria revolve primarily around the possibility of an “accident” that leads to a wider conflict, the Ukraine/Crimea issue was characterized by both sides’ fears of the other’s territorial ambitions. NATO insisted that Vladimir Putin intended to invade and annex other territory while The Kremlin contended that a series of snap drills, war games, and heavy weapons deployments telegraphed NATO’s desire to expand its capabilities and influence on the way to threatening Russia’s borders.
…click on the above link to read the rest of the article…
Russia Presents Detailed Evidence Of ISIS-Turkey Oil Trade
Russia Presents Detailed Evidence Of ISIS-Turkey Oil Trade
On Monday, Turkey’s sultan President Recep Tayyip Erdogan said something funny. In the wake of Vladimir Putin’s contention that Russia has additional proof of Turkey’s participation in Islamic State’s illicit crude trade, Erdogan said he would resign if anyone could prove the accusations.
Now obviously, conclusive evidence that Ankara is knowingly facilitating the sale of ISIS crude will probably be hard to come by, at least in the short-term, but the silly thing about Erdogan’s pronouncement is that we’re talking about a man who was willing to plunge his country into civil war over a few lost seats in Parliament. The idea that he would ever “step down” is patently absurd.
But that’s not what’s important. What’s critical is that the world gets the truth about who’s financing and facilitating “Raqqa’s Rockefellers.” If a NATO member is supporting this, and if the US has refrained from bombing ISIS oil trucks for 14 months as part of an understanding with Erdogan, well then we have a problem. For those who need a review, see the following four pieces:
- The Most Important Question About ISIS That Nobody Is Asking
- Meet The Man Who Funds ISIS: Bilal Erdogan, The Son Of Turkey’s President
- How Turkey Exports ISIS Oil To The World: The Scientific Evidence
- ISIS Oil Trade Full Frontal: “Raqqa’s Rockefellers”, Bilal Erdogan, KRG Crude, And The Israel Connection
Unfortunately for Ankara, The Kremlin is on a mission to blow this story wide open now that Turkey has apparently decided it’s ok to shoot down Russian fighter jets. On Wednesday, we get the latest from Russia, where the Defense Ministry has just finished a briefing on the Islamic State oil trade. Not to put too fine a point on it, but Turkey may be in trouble.
First, here’s the bullet point summary via Reuters:
…click on the above link to read the rest of the article…
