Daily Digest

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Daily Digest 8/3 - AU Cuts Interest Rates To Historic Low, Are Banks Closer To Dropping Helicopter Cash?

Wednesday, August 3, 2016, 7:48 AM

Economy

Central Bankers Float New Currency System, Safety Net at Confab

The gathering of central bankers came amid continuing uncertainty for the global economy as growth slows and market sentiment remains fragile.

Venezuelan Credit Dashboard: $726 Million Comes Due in August

Venezuela, which has the largest crude reserves on the planet, has defied predictions of default since the oil collapse started in 2014 and analysts are split as to how long the nation of 30 million can hold out. With that in mind, Bloomberg is taking a close look each month at some of the key components that may determine its fate.

PERS cost to increase by $885 million over 2 years (Oregon)

The cost of Oregon’s public pension system will increase about $885 million during the next two years, a higher increase than previously was expected. The new costs are 10 percent higher than previously forecast and 44 percent above the $2 billion per biennium that public employers are paying, The Oregonian/OregonLive reported.

MBTA facing $100 million deficit

“As we seek to close what’s a $100-plus million deficit this year, everything’s on the table. Seventy five percent of our costs are wages and benefits so that’s a core area of focus for us,” MBTA Chief Administrator Brian Shortsleeve told reporters on Monday.

Report: Most of Illinois universities' state funds go toward pensions

A 2014 analysis of higher education funding by the Illinois Department of Insurance revealed that all of the money public universities get from the state essentially goes toward funding university retiree pensions. The report said $6.9 billion in tax-based funding has subsidized university pensions over the past decade, with $1.51 billion spent in 2014 alone.

CalPERS grapples with low earnings

Twice in recent decades CalPERS fell below 100 percent of the funding needed for promised pensions, and twice CalPERS climbed back. But since a $100 billion investment loss in 2008, the CalPERS funding level has not recovered.

Chicago's bills will increase in 2017 as pension costs escalate

The junk-rated metropolis will pay at least $902 million in 2017 to its four retirement funds that are only 23 percent funded, meaning the pensions have 23 cents for every dollar owed, according to an annual financial analysis released Friday. That's down from 35 percent last year. The shortfall across the four funds ballooned to $33.8 billion from $20 billion a year earlier, mostly due to new accounting rules.

Emanuel eyes utility tax increase to save largest pension fund (Chicago)

Chief Financial Officer Carole Brown acknowledged that the city needs “in the ballpark” of $250 million to $300 million in new annual revenue to shore up a Municipal Employees Pension fund with 71,000 members and $18.6 billion in unfunded liabilities.

An $18 Billion Finnish Bond Fund Tells Why It’s Fleeing the ECB

Investors hold about 465 billion euros of corporate investment grade bonds at negative yields, which is 11 times as much as they owned in such securities at the start of the year, BofAML estimated last month.

U.S. Treasury to borrow $201 billion in July-September quarter

The U.S. Treasury Department said on Monday it expects to borrow $201 billion in net marketable debt in the July-September quarter, about $47 billion higher than its estimate in May, due to lower anticipated receipts and an increased cash balance on Sept. 30.

Saudi Arabia Seen Stepping Up Fight Against Bank Cash Crunch

Saudi Arabia is taking unprecedented steps to shore up its finances as the collapse in crude prices hobbles domestic banks, which hold 2.26 trillion riyals in assets, in a country that gets more than 70 percent of its revenue from oil. SAMA is seeking to stimulate borrowing and boost the financial industry. Liquidity has tightened since the government withdrew some of its deposits and sold local-currency debt to banks to fund the budget deficit.

IMF urges Japan to coordinate fiscal stimulus with further BOJ easing

The Fund's annual report on Japan's economy came as the country's government announced a new fiscal stimulus package of $13.5 trillion yen (about $132 billion) and the central bank announced a comprehensive review of monetary policy, keeping alive expectations for "helicopter money" - printing money for government debt.

Draghi’s Liquidity Drowns Out European Companies’ Brexit Woes

Many investors thought that, Brexit or not, you can’t fight the European Central Bank, which is buying more and more corporate and sovereign bonds and driving yields lower. Taking more risk may be the only way to earn higher returns.

Traders bet Bank of England will deliver ‘Super Thursday’ stimulus

“Even if they had not fully made up their minds at [the previous meeting], the weakness of the flash [purchasing managers indexes] since that meeting—as well as other evidence from business and consumer confidence surveys—is likely to have sealed the deal. We expect a 25 basis points cut to the bank rate to 0.25%, and measures to support credit to the real economy,” analysts at HSBC said in a note.

Australia cuts interest rates to historic low

Australia's central bank has reduced interest rates to a record low, cutting its cash rate from 1.75% to 1.5%. The decision by the Reserve Bank of Australia was widely expected after a recent run of weak inflation numbers.

Japan's cabinet approves stimulus package

The latest government stimulus comes just days after the Bank of Japan eased monetary policy slightly and announced a plan to review its monetary stimulus programme in September. That raised expectations for so-called "helicopter money", printing money to pay for government debt.

Helicopter money: Are central banks edging closer to dropping cash from the sky?

Cash could be transferred to people in the form of a government tax break, or even as crudely as simply sending everyone a cheque. The Bank's current £375bn quantitative easing programme has bought government debt from financial institutions, which are then encouraged to use this cash to lend for mortgages and business expansion. The problem is, it is very hard to measure what effect, if any, this move has had.

Big Spending Makes a Comeback While Austerity Starts to Fade

Around the world, governments are planning fresh spending to boost growth and support wages, heeding the advice of the Harvard University economist and others who have argued that economies need the jolt as society ages and productivity sags. That’s signaling the ascendancy of energizers like Japanese Prime Minister Shinzo Abe, and the firing of austerity advocates such as former U.K. Chancellor George Osborne.

Another Crisis Wasted, EU Banks Get a Pass From Policy Makers

As elections loom next year in France, Germany and the Netherlands, the prospects for political progress to shore up confidence in the single currency’s durability are diminishing, even with the added urgency of the U.K.’s divorce from the European Union. The 19-nation euro area still displays a fundamental split over the direction of its incomplete banking union and, beyond, how to create a common budget to complement monetary policy.

Gold & Silver

Click to read the PM Daily Market Commentary: 8/2/16

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

4 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
Markets beware as central banks begin to admit defeat

Markets beware as central banks begin to admit defeat

Financial Times - ‎9 hours ago‎
... ruling anything out, but essentially they have no bullets/arrows left — and know that some of their previous salvos proved to be the monetary equivalent of friendly fire, inflicting wounds on their nation's banks through the adoption of negative ...

Here's Goldman's List of Everything Else the Bank of Japan Can Buy

Bloomberg-2 hours ago
... the limits of sovereign debt purchases, and last week's call for a "comprehensive assessment" of its monetary policy has only served to rekindle that narrative.

One in five company bonds bought by ECB yielded less than zero

Reuters - ‎6 hours ago‎

FRANKFURT One in five company bonds bought by the European Central Bank since June yielded less than zero, the ECB said on Wednesday, raising questions about whether the bank risks fuelling a market bubble and will need to slow the pace of its ..

Rout Sends Every Japanese Company Bond Sold in July Under Water

Bloomberg - ‎9 hours ago‎
Prices for every Japanese corporate bond sold in July dropped below face value as a selloff in domestic government debt rippled through global fixed-income markets. All 63 bonds sold in yen by Japanese companies in July saw their prices fall below par ...

Japan's Worst Bond Rout Since 2013 Feeds Anxiety BOJ Near Limits

Bloomberg-19 hours ago

Finance Minister Taro Aso said he reconfirmed in a meeting with Kuroda that the central bank will use all its tools to help the economy. The BOJ Governor had
 

MIDEAST MONEY-Saudi central bank fights to curb money rate rise

Reuters-4 hours ago
Central bank made special provisions of funds to banks. * But money rates have resumed edging up. * Regulatory changes possible to free up banks' money.

China Builder Default Shakes Faith in $72 Billion Bond Enhancers

Bloomberg-4 hours ago
The faith that international investors have put in some credit sweeteners on Chinese debt is being tested with the latest default from one of the nation's builders.

Millions of Student Loan Defaulters Have Stopped Payments

Wall Street Journal-22 hours ago
The Obama administration is encountering a big challenge: Seven million Americans have collectively billions of dollars in federal student debt but aren't making ...

Weak crude drags Republic of Congo into default

RT-5 hours ago
“If and when the Republic of Congo cures the payment default on the notes, we will revise our ratings on the sovereign debt depending on our assessment of ...

Spain's Bankrupt Social Security System — Is This What Awaits US ...

Investor's Business Daily-18 hours ago

Well, so far this year there's a 12.24% deficit in social security contributions vs. the ... That means it will be forced to borrow even more for its bankrupt pension

Medicaid Safety Net Stretched To Pay For Seniors' Long-Term Care

NPR-1 hour ago

Such long-term care will cost an average of $91,100 for men and double that for ... can't afford that, so they turn to Medicaid, the nation's public health insurance .

Covered California 2017 Rate Hikes Will Hit State's Central Coast ...

California Healthline-2 hours ago
So Anguiano, who is 60, bought a health plan through Covered California, the ... What Anguiano does understand is that higher health care costs mean more ...

Venezuela zoo animals starve to death due to food shortages

TRT World - ‎Aug 1, 2016‎
Some 50 animals have starved to death in the last six months at one of Venezuela's main zoos due to chronic food shortages that have plagued the crisis-stricken South American nation. A union leader for the state parks agency, Inparques, says the ...
Tall's picture
Tall
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
Another reason to produce your own food

Food fraud

http://www.bbc.com/future/story/20160726-toxins-uncovered-at-a-food-frau...

 

pat the rat's picture
pat the rat
Status: Silver Member (Offline)
Joined: Nov 1 2011
Posts: 100
guess

The bank of England may raise interest rate by .25 %. Why when every thing is in retreat attack,by raising funds rate .25%. Just a guess.

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4066
UK 10-year gilt yield hits record low as BOE expands stimulus

 

UK 10-year gilt yield hits record low as BOE expands stimulus

MarketWatch-2 hours ago
The yield on the U.K.'s benchmark 10-year bond, or gilt, was driven to record lows Thursday after the Bank of England cut its benchmark interest rate and ...
 

BOE rate cut to widen pension fund shortfalls

The Latest: UK central bank chief: more stimulus possible

Columbus Ledger-Enquirer-1 hour ago
The Latest: UK central bank chief: more stimulus possible. The Latest on the U.K. central bank's stimulus measures to help the economy weather the Brexit ...

'Skyrocketing' interest rates would imperil banks – ECB's Weidmann

Financial Times-6 hours ago
Jens Weidmann, president of the German Bundesbank and a long-standing critic of negative interest rates, warned lenders would be hit hard “if interest rates ...

Cash handouts are best way to boost British growth, say economists

The Guardian-19 hours ago
While “helicopter money” is not on the Bank's agenda, one City economist said he could envisage public investment being financed by the Bank. David Owen ...

Italy's Shaky Bank-Rescue Plan

Wall Street Journal - ‎11 hours ago‎
The full scope of Italy's banking problems has been clear for years; nine out of 14 Italian banks failed the European Central Bank stress tests in 2014. The International Monetary Fund estimates that systemwide bad debts total €360 billion, equivalent ...

Goldman Sachs Joins Chorus Saying BOJ Easing Is Nearing Limits

Bloomberg-9 hours ago
Goldman estimates the BOJ will need to buy about 115 trillion yen ($1.14 trillion) ... The list includes municipal debt, corporate bonds and mortgages from banks.

The Student Loan Default Rate Is Way Worse Than You Think

Yahoo Finance-3 hours ago

At $125 billion in aggregate value, these defaulted loans represent roughly 10% of ... For all other forms of consumer debt — commercial debts as well, for that ..

Emanuel proposes water, sewer tax to shore up ailing pension fund

Chicago Tribune-17 hours ago
He told the Chicago Investors Conference that the city's budget deficit is at a ... produce an estimated $239 million a year to help reduce the $18.6 billion the city ...

Saudi Interest-Rate Swaps Climb to Highest Level Since 2009

Bloomberg-1 hour ago
The central bank offered domestic lenders about 15 billion riyals ($4 billion) in ... sells local-currency debt to fund a budget deficit after a slump in oil cut revenue.

Another warning sign on New York's growing pension disaster

New York Post-13 hours ago
Worse, the city's annual pension costs will hit $10 billion in two years — meaning almost $1 of every $6 in tax receipts will go for retirees. When Mike Bloomberg ...

 

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