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    Daily Digest 12/9 – Emerging-Markets Debt Binge Ends, Greece’s 5 Ticking Time Bombs

    by saxplayer00o1

    Wednesday, December 9, 2015, 1:33 PM

Economy

Rio Tinto Cuts Capital Spending Forecast to $5 Billion Next Year

The biggest mining companies, including Rio and BHP Billiton Ltd. are slashing spending and cutting costs in an attempt to protect profits as commodities prices slide. China’s slowest pace of economic growth in a quarter of a century is weighing on metals to energy prices and eroding profits for producers.

CBO projects 2M fewer jobs under ObamaCare

The total workforce will shrink by just under 1 percent as a result of the new coverage expansions, mandates and changes in tax rates, according to a 22-page report released by the Congressional Budget Office (CBO).

Editorial L.A. rolls back pension reform

L.A. is paying down a nearly $9-billion unfunded liability for the city's civilian and fire and police pension systems. And there is increasing concern that the city's pension fund, like others around the country, relies on overly optimistic assumptions about how much its investments will earn, and that taxpayers will, again, have to make up the difference when the projections fall short.

Anglo American to Cut 85,000 Jobs Amid Commodity Slump

Anglo American is far from alone, as scores of oil, natural gas, and mining companies are feeling the pain from low prices. A number of commodity-related businesses have either declared bankruptcy or fallen behind in their debt payments. Even more frequent have been layoffs — more than 250,000 workers in the oil and gas industry worldwide, with more than a third coming in the United States.

Rio Olympics budget shrinking amid turmoil in Brazil

The president is facing impeachment proceedings. The economy is in free fall. The country is reeling from a wide-ranging corruption scandal. Such is the grim backdrop in Brazil as organizers of next year's Olympics in Rio de Janeiro prepare to make their latest progress report to the International Olympic committee in Lausanne, Switzerland.

Bank of Canada Has Tools Beyond Zero Rate If Needed, Poloz Says

While the central bank doesn’t expect it will need to resort to unconventional policies, a number of tools are still available, Poloz said, including charging banks for deposits, forward guidance and asset purchases. Fiscal stimulus could be even more effective than monetary policy in extreme circumstances, he said.

Malaysia Bonds, Ringgit Drop as Najib Flags $7 Billion Shortfall

Malaysian bonds fell and the ringgit’s three-day gain petered out after the New Straits Times cited Prime Minister Najib Razak as saying the government faced a 30 billion-ringgit ($7 billion) shortfall in 2016 due to a slump in oil prices.

U.K. corporate pension fund deficit increases 2% in November

Asset growth in November was unable to offset increased liabilities for the defined benefit funds covered by the Pension Protection Fund's 7800 index, with the total deficit increasing 2% to £249.4 billion ($374.9 billion.)

Canada tax hike leaves hole, higher budget deficit eyed

Canada is a major oil exporter and the crash in the oil price led to an economic contraction in the first half of 2015. Crude has fallen further recently, with the WTI benchmark settling below $38 a barrel, its lowest close since February 2009. That has driven Canada's dollar to an 11-year low.

New report on Illinois budgeting: Yes, it really is that bad

Illinois has the lowest credit ratings and worst-funded pensions among all 50 states. An impasse between the Republican governor and Democrats who control the legislature has left Illinois without a budget halfway through fiscal 2016. The state's unpaid bill backlog, a barometer of its chronic structural budget deficit, is projected to hit $8.5 billion by the end of this month.

Year of Distress for Debt-Burdened Oil Firms Just Got Even Worse

As crude plunged to the lowest in more than six years, the average yield on the debt of speculative-grade oil and gas borrowers climbed to 13.4 percent, the highest since the waning days of the global financial crisis in 2009 and the widest divergence ever relative to the broader U.S. junk bond market, Bank of America Merrill Lynch index data show. That’s likely to push more companies to ask their bondholders to restructure debt to avoid bankruptcy, according to corporate-turnaround adviser Stroock & Stroock & Lavan LLP.

Wary of debt cliff, Australia seeks soft landing for housing

Adding to the stakes are record levels of household debt, whose ratio against disposable income is even higher than that of the United States when the market there collapsed in 2007. This has left policy makers in an uncomfortable bind.

Emerging-Markets Debt Binge Ends

This shift is significant and signals the beginning of a new era, one in which struggling, developed nations must face the trillions of dollars of international debt they’ve sold, with some painful results. Some debt issuers will default. Investors will take losses. And growth in many fragile economies will slow as money is diverted toward debt payments and away from projects that could bolster local businesses.

Greece's five ticking time bombs Mark Gilbert

2. Pension reform :Everyone agrees that with Greek unemployment averaging more than 25 percent this year, the current pensions system is unsustainable. There aren't enough people paying in, and a jobless rate that's been above 20 percent for more than four years risks creating an underclass of people who've never contributed and will never qualify. Many households are currently dependent on the pension income of a single family member to stay financially afloat.

Japan firms see yen weakening to at least 13-year lows next year: Reuters poll

The yen has lost over a third of its value since late 2012, due in large part to bold monetary stimulus since Prime Minister Shinzo Abe returned to power. But at the same time, the country's sensitivity to yen weakness has jumped since the 2011 Fukushima disaster led to the shutdown of nuclear reactors, costing the country some $24 billion in extra fuel imports annually.

Brazil's Caixa to cut mortgage lending amid funding dry-up, source says

Rising urban joblessness is forcing Brazilians to draw on their savings, which has in turn led to a drastic reduction in the pool of funds available for mortgage financing. Savings account withdrawals surpassed deposits by 58.4 billion reais ($15.5 billion) in the first 11 months, according to central bank data.

China gold reserves rise to 56.05 mln fine troy ounces at end-Nov – c.bank

China's gold reserves stood at 56.05 million fine troy ounces at the end of November, up from 55.38 million at end-October, the central bank said on Tuesday.

China forex reserves plunge to lowest level since Feb 2013

China's foreign exchange reserves, the world's largest, fell by $87.2 billion in November to $3.44 trillion, central bank data showed on Monday, the lowest level since February 2013 and the third largest monthly drop on record.

Bank of France Sees Weaker Fourth-Quarter Growth After Attacks

France’s gross domestic product will grow 0.3 percent in the final three months of the year, the Paris-based central bank said in a release on Tuesday. While that’s the same pace as in the third quarter, it falls short of the bank’s original estimate of 0.4 percent growth for the following period. Sentiment among manufacturers unexpectedly fell to 98 in November from 99 in October, while a service industry index dropped to 96 from 97.

Rand Drop Pushes South African Assets Abroad at Record Pace

South African investors are moving their money out of the country at the fastest pace ever. Portfolio investment abroad jumped to the biggest quarterly outflow on record, the South African Reserve Bank said on Tuesday in its third-quarter report. Investors more than doubled the amount sent overseas to 24.2 billion rand ($1.65 billion) in the period from 10 billion rand in the previous three months, the central bank said.

Economists Lower Economic Outlook for Brazil for 2015, 2016 — Survey

Brazil's gross domestic product is expected to shrink 3.50% this year, according to a weekly central-bank survey of 100 economists, compared with expectations a week ago of a 3.19% contraction. For 2016, economists said they expect Brazil's GDP to contract by 2.31% instead of 2.04% previously.

Rail cargo decline points to weak spots in economy

Union Pacific, Warren Buffett's BNSF Railway Co. and other large U.S. railroads have posted a 5.1 percent drop in carloads since the beginning of October, topping decreases of 1.6 percent in the third quarter and 1.8 percent in the second.

Euro-Area Economy Grows 0.3% in Third Quarter on Consumption

Against the backdrop of steady, if slow, economic growth in the euro area, policy makers agreed last week on additional stimulus including an extension of quantitative easing by six months until at least March 2017, a broadening of asset eligibility to local and regional debt, and a cut in the deposit rate to minus 0.3 percent.

China's economic slowdown slams California exports

The latest evidence came in October 2015 figures released by Beacon Economics, the consulting firm that breaks down California’s export totals from U.S. Commerce Department figures. Beacon said in-state businesses shipped merchandise valued at about $14.7 billion in October, down 5.4 percent from $15.53 billion sent abroad in October 2014.

China exports fall for fifth straight month

On Tuesday, China's General Administration of Customs reported that exports fell 6.8% in November in dollar terms from a year earlier, compared with a decline of 6.9% in October.

Gold & Silver

Click to read the PM Daily Market Commentary: 12/8/15

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