The push for perpetual bonds, a type of security that doesn’t have a fixed maturity and can make interest payments to investors forever if needed, aims to help the “Big Four” state-owned lenders meet an international capital requirement. https://t.co/yNAryyip0r
– Weakening Economy, Driven by Fed Tightening, and FOMC Promises for Even More in 2019, Likely Were Proximal Triggers for the Recent Stock Market Rout
– Market Turmoil Likely Has Only Just Begun
– Attempts by Fed to Mollify Impact of Recent Tightening Could Trigger Flight from the U.S. Dollar and Even Greater Crises
Pretty sure Jim told us to expect this a few years ago?
China To Take Over Kenya’s Largest Port Over Unpaid Chinese Loan December 26, 2018
No more Mr. Nice Chinese Guy.
After years of “benevolent” handouts to various African countries by Beijing, all of which however came in the form of loans, of which few have led to viable, long-term projects and cash-flow generating assets, and led to accusations that China is pursuing a “new colonialism” of the African continent (and more recently, nations along the One Belt, One Road corridor), China is demonstrating to the world what happens when its debtors refuse to pay up.
But first a brief detour: readers will recall that China’s ambitions for Africa are hardly new, and were discussed here over 6 years ago for the first time in “The Beijing Conference”: See How China Quietly Took Over Africa”
I can still remember the days when we were called conspiracy theorists for suggesting the “plunge protection team” even existed. It of course was created in 1988 by President Ronald Reagan by Executive order…
Top Trump official calls bankers, will convene ‘Plunge Protection Team’ December 23, 2018
WASHINGTON (Reuters) – U.S. President Donald Trump’s Treasury secretary called top U.S. bankers on Sunday amid an ongoing rout on Wall Street and made plans to convene a group of officials known as the “Plunge Protection Team.”
U.S. stocks have fallen sharply in recent weeks on concerns over slowing economic growth, with the S&P 500 index .SPX on pace for its biggest percentage decline in December since the Great Depression.
“Today I convened individual calls with the CEOs of the nation’s six largest banks,” Treasury Secretary Steven Mnuchin said on Twitter shortly before financial markets were due to open in Asia.
“The real issue is in the corporate sector where leveraging up has been unprecedented, and they’ve got $800bn in that debt that rolls next year in a market that is seizing up already that is going to be a source of lots of entertainment next year.”https://t.co/thoGaZZz1M
Risk? What risk?…the same can be asked about markets?
“Public debt sustainability problems are arguably worse in the US than in Italy. Yet the markets have only punished Italy…. The markets appear to ignore the risk that the US might inflate away the real value of its public debt:” Citi’s Willem Buiter & Dana Peterson
– FOMC Fumbled, Boosting Rates and Promising Further Rate Hikes, While Liquidity-Starved Consumer Activity Already Suggests a New Recession
– Pace of November 2018 Payroll Jobs Growth Slowed to 155,000 (143,000 net of revisions), Against a downwardly revised monthly gain of 237,000 (previously 250,000) in October
– November U.3 Unemployment Dropped to a Record Low 3.67%, from 3.74% in October, While Broader U.6 Unemployment Rose to 7.57% from 7.43% and ShadowStats-Alternate Unemployment Notched Higher to 21.3% from 21.2%
– Intense Labor-Market Stress Remained Consistent with Headline Unemployment Near a Record High, Not a Record Low
– November Real Average Weekly Earnings Dropped With a Declining Work Week
– October 2018 U.S. Real Merchandise Trade Deficit Widened, and the Third-Quarter 2018 Worst-Ever Trade Deficit Deepened in Revision, with Negative Implications for the U.S. Dollar and for Fourth-Quarter GDP
– Strength in Recent Economic Headline Activity Commonly Was Boosted by Downside Revisions to Prior Reporting
– Collapsing Oil and Gasoline Prices Slowed November Headline CPI Inflation, Yet They Had the Net Effect of Boosting the Nonsensically Defined PPI Inflation
– Non-Seasonal, Extreme Monthly Swings in Gasoline Prices Have Disrupted any Consistent Trend in Monthly Year-to-Year CPI Inflation
“No. 979: November Labor Numbers, Consumer and Producer Price Indices, October Trade Deficit, FOMC”
This is Romania so don’t worry, it will never happen here in the U.S…
Romania Stocks Plunge 12% On Proposed Bank “Greed Tax” December 19, 2018
After the Romanian government unveiled a surprise plan to bring in about 10 billion lei ($2.5 billion US) in extra revenue, Romanian stocks plunged and bond yields spiked the most in over three years, according to Bloomberg. To fix a budget deficit that could push the country beyond critical EU thresholds, Finance Minister Eugen Teodorovici presented a package of changes targeting ways for the country to bring in more revenue. The changes are supposed to begin in 2019 and include a tax on the banking industry, which is dominated by foreign players.
It would also include new taxes on energy and telecommunications companies, in addition to capping natural gas prices. The plan also revamps a once proposed initiative to make massive changes to the retirement system in the country.
He is telling the truth a little bit late but rest assured it is all about his legacy…
Alan Greenspan Is Warning Investors To Run For Cover December 18, 2018
Alan Greenspan says the party’s over on Wall Street.
The former Federal Reserve chairman who famously warned more than two decades ago about “irrational exuberance” in the stock market doesn’t see equity prices going any higher than they are now.
“It would be very surprising to see it sort of stabilize here and then take off,” Greenspan said in an interview with CNN anchor Julia Chatterley.
He added that markets could still go up further but warned investors that the correction would be painful: “At the end of that run, run for cover.”
Markets have staggered in recent weeks, with spooked investors selling over mixed messages coming from the White House concerning the status of trade negotiations with China and growing fears of a global economic slowdown.
A wonderful Christmas present for you…”long dollar” is now the most crowded trade!
There Is A New “Most Crowded Trade” On Wall Street December 18, 2018
Step aside FAANGs: there is a new “most crowded trade” on Wall Street.
As part of this month’s Fund Managers Survey, which as we summarized earlier, was about the gloomiest since the financial crisis with more than half, or 53% of survey respondents now expecting growth to weaken over the next 12 months, the worst outlook on the global economy since Oct. 2008…
… the same Wall Street pros no longer see “Long FAANG+BAT” as the most crowded trade on Wall Street, and for good reason: after a dramatic drop in the tech leaders in the past 2 months, most hedge funds, who were massively long a handful of “growth” tech names – recall MSFT, AMZN, FB GOOGL and BABA were the 5 most popular hedge fund holdings as of Sept 30 – had gotten crushed and fled these names in bulk.