Daily Digest

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Daily Digest 11/18 - Russia In Banking Crisis, Wall Street Is Running the World's Central Banks

Wednesday, November 18, 2015, 9:56 AM

Economy

Morneau Says Responsible Deficits Will Aid Weak Canada Economy

The first fiscal update from Canada’s new government will be delivered soon with plans to press ahead with stimulus spending in a weak economy that’s already pushing the budget into deficit, according to Finance Minister Bill Morneau.

US Pension Insurer Posts Record Deficit for FY2015

The deficit racked up by the federal agency that insures pensions for about 40 million Americans has increased 23 percent to $76.4 billion. The agency's program for so-called multi-employer pension plans continues to account for a large share of the deficit, $52.3 billion.

Many Say High Deductibles Make Their Health Law Insurance All but Useless

But for many consumers, the sticker shock is coming not on the front end, when they purchase the plans, but on the back end when they get sick: sky-high deductibles that are leaving some newly insured feeling nearly as vulnerable as they were before they had coverage.

Colorado health care costs increase fourfold in 20 years, says report

The report ( download here) says that as of 2013, personal health care costs in Colorado stood at $36.3 billion, more than four times the level of two decades ago. Just since 2000, that spending is up 122.7 percent — 3.7 times the rate of inflation in the state.

90% of small businesses say Obamacare drove up health-care costs

The vast majority of small businesses are paying more for health insurance for their employees under the health-care law, and many expect their costs to keep going up next year, according to a survey by the advocacy group National Small Business Association.

France to miss deficit target amid boost to security

Manuel Valls told French radio station France Inter on Tuesday that the EU deficit target of 3 percent of gross domestic product (GDP) would "necessarily be exceeded" as extra spending on anti-terrorism measures would not be compensated by cuts elsewhere.

Puerto Rico News: Citizens Bracing For Funding Cuts to Federal Health Care Plans

Puerto Rico is readying to implement steep funding cuts to federal health care plans that cater to almost 70 percent of the island's 3.5 million population.

CalPERS may lower investment expectations, costing taxpayers billions

If calculated using an expected investment return of 6.5% instead, according to CalPERS documents, the taxpayer contribution would be $68,000 — an increase of more than 40%."It has understated pension debt dramatically," said Joe Nation, a professor at Stanford's Institute for Economic Policy Research, of CalPERS' current estimate. "They've been able to convince a lot of people things are OK when they aren't."

Decline in loans at China’s ‘big four’ banks shows asset-quality concerns

Total social financing, a gauge on credit activity, plummeted by 63 per cent on the mainland in October, hitting 477 billion yuan, the lowest credit watermark since July last year. Overall credit in September was 1.3 trillion yuan.

Treasurer Unveils Open Data Website Detailing $1.5 Trillion in Government Debt (California)

State Treasurer John Chiang unveiled a new open data website today, providing important details about $1.5 trillion in debt issued by state and local government entities as part of his ongoing efforts to promote transparency in government. The site, debtwatch.treasurer.ca.gov, makes it easier for taxpayers to track proposed and issued debt, cost of issuance, and bond and tax election results.

Rising household debt weighs down sputtering economy (Korea)

Figures released by the central bank a day before the announcement of the rate freeze showed that outstanding household loans extended by local lenders amounted to 624.8 trillion won ($539.3 billion) at the end of October, up 9 trillion won from the previous month. The on-month gain was the largest-ever in data going back to January 2008, surpassing the previous record of an 8.5 trillion won tallied in April.

The time bomb lurking in US corporate debt

Debt in corporate United States "has exploded" following seven years of virtually zero official interest rates, raising fears about the potential impact on the sector of the mooted hike by the US Federal Reserve in December.

Auto loan debt tops $1 trillion

Americans owe more on their cars than ever. U.S. car buyers are $1 trillion dollars in debt on car purchases. Analysts attribute that to low interest rates and strong car sales despite rising prices.

Debt Issuance Poised for Record Year: Fitch

Debt issuance is on the rise, even as ratings downgrades beset the speculative-grade, or junk, market. Meanwhile both investment-grade and junk issuers are paying higher interest on new debt than a year ago. The spread between those coupons and comparable Treasury debt is also widening, Fitch said.

Macau Sees Casino Revenue Slumping More Next Year as China Slows

Macau’s casino industry is going through its worst downturn on record as gross gaming revenue fell in October for the 17th straight month amid China’s slowing economy and crackdown on corruption, which deterred high-stakes VIP gamblers from visiting the city.

Chinese investment in Africa falls 40%

Chinese investment in Africa fell by more than 40 per cent year-on-year in the first half of 2015, officials say, as the Asian giant's slowing growth dents its commodity demand.

Dubai Banks Brace for Bad Debt as Borrowers Flee the Country

Dubai’s slowing economy, the rout in commodities and strict debt repayment laws are reviving a phenomenon that symbolized the emirate’s crash in 2009: “skips,” or business owners who quietly leave the country to avoid punishment for defaulting on loans.

China's Yunnan Coal Becomes Latest Miner to Struggle With Debts

China’s slowest growth since 1990 twinned with a global commodities slump is crimping cash flows in the nation’s coal industry, with two firms defaulting on offshore bonds in 2015. Coal trader Winsway Enterprises Holdings Ltd. failed to pay interest on dollar notes for a second time this year in October, and Hidili Industry International Development Ltd. didn’t repay securities due Nov. 4.

Gold slips as dollar strength, slowing economic growth weigh

"It seems all over the world, the economy is weak, also within China and India, so the potential market for consumers has also declined," said Dick Poon, general manager of Heraeus Precious Metals.

EU warns Italy, Lithuania, Austria on budget plans

The European Union warned Italy, Lithuania and Austria that their 2016 budget plans risk violating the bloc's spending rules and urged them to revise them to meet EU targets.

Missing Boom in Europe Profit Margins Flouts Strategists' Call

Dragged down by energy firms and miners, profit margins for companies in the Stoxx Europe 600 Index have slid since last year, halting two years of expansion. Analysts have been slashing their earnings and sales growth projections to keep up. While some industries have posted wider margins, most of them saw declines as the European Central Bank’s unprecedented stimulus didn’t give the push that was expected.

Wall Street Is Running the World's Central Banks

Last week’s appointment of Neel Kashkari to run the Federal Reserve Bank of Minneapolis as of January means a third of the Fed’s 12 district banks will soon be run by officials with past ties to Goldman Sachs Group Inc.

Swiss central bank head Roth says ECB easing has gone too far -SRF

Former Swiss National Bank Governor Jean-Pierre Roth has criticised the European Central Bank's monetary easing as excessive and said that only structural reforms could help the euro zone return to robust health.

Rents keep surging, as growth matches seven-year high

The cost of rent continued to climb in October, another sign of a housing market in which demand is fast outstripping supply. Rent rose 3.7% over the past 12 months, the Labor Department said, the same as in September. Yearly rent increases have accelerated steadily since 2010, and are outpacing annual wage growth, which was an inflation-adjusted 2.4% in October.

Russia in full blown banking crisis: Sberbank head

Russia's banking sector is the midst of a "wide-scale banking crisis," the head of Sberbank said Tuesday. German Gref said Russia's banking system is suffering from low profitability and the pace the Bank of Russia is purging the financial system of small lenders that appear to be in financial trouble.

Gold & Silver

Click to read the PM Daily Market Commentary: 11/17/15

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."

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China's Economy Faces Considerable Downward Pressure, Xi Says

China, Japan Shed US Treasury Holdings

Wall Street Journal-10 hours ago
Much of China's Treasury holdings are invested in its foreign-exchange reserves, analysts say, which fell dramatically in those two months as the People's Bank ...

Britain is in the longest period of deflation since records began

Daily Mail-14 hours ago
Economists described the current situation as 'mild deflation' and insisted the economy was likely to recover to its target level of 2 per cent within two years.

China's Economy Faces Considerable Downward Pressure, Xi Says

Bloomberg - ‎8 hours ago‎
Chinese President Xi Jinping acknowledged downside risks to growth while assuring fellow leaders that Asia's biggest economy is resilient and will remain on the path of reform. China is working to overcome the challenges of slowing global growth this ...
 

China makes new move to curb capital outflows and hold yuan stable, say sources

The Straits Times - ‎8 hours ago‎
SHANGHAI (REUTERS) - Offshore yuan clearing banks and related offshore participant banks have had their trading in bond repos and account finance suspended by the central bank, people with direct knowledge of the matter told Reuters. That move would ...
 

IMF cuts Mexico economic outlook as oil output falls

Reuters-18 hours ago
In its yearly analysis of Latin America's second-largest economy, the IMF also urged the central bank to taper foreign exchange intervention aimed at stemming ...

Japan 2-Year Yields Drop Below Zero to May Low on Foreign Buying

Bloomberg-10 hours ago
The Bank of Japan saidit would buy a total of 1.2 trillion yen ($9.7 billion) in government debt from the market Wednesday as part of its plan to expand the ...
 

Saudi facing 'a crisis in the next 3-5 years' if oil price remains low

ArabianBusiness.com-7 hours ago
But Ratto predicted emerging market dollar debt would return 3-4 percent in 2016 and local ... Lombard Odier's Ahmed reckons China's $3.5 trillion of reserves is ...

Brazil Tax Revenues Down 11 Percent from Last October

The Rio Times-3 hours ago
The text approved by the CMO establishes a primary deficit target of R$51.8 billion for the Brazilian public sector and allows for an additional R$68.1 billion in ...

Why Obamacare May End Up Raising Medicare Costs

TIME-4 hours ago
Lately the news about Medicare costs has been surprisingly good. ... Affordable Care Act (ACA), aka Obamacare, has helped slow the rise in health care costs.

Virginia slated to spend $1 billion more on Medicaid

Washington Times - ‎21 hours ago‎

Virginia faces a $1 billion increase in Medicaid spending through fiscal 2018, according to a two-year forecast Tuesday that state Republicans swiftly used as a cudgel against Gov. Terry McAuliffe's bid to embrace Obamacare and expand the government ..

Atlantic City rescue bills may not be enough, Moody's says

NJ.com-8 hours ago
Still, the agency said, the city would still be left with a $34 million budget shortfall in ... "The city will need to figure out a way to avoid the deficits," Josellyn Yousef, ...

Cadillac tax derails new wellness platform at CalPERS

Sacramento Business Journal-1 hour ago
Thirteen vendors responded to a request for interest issued in June, but CalPERS staff is worried that program costs could trigger the tax. The Pension and ...

Puerto Rico nears default as debt deadline looms

CNBC-35 minutes ago
Fear that Puerto Rico will default on some of its bonds builds as a major debt service deadline edges closer. Money managers, value investors, and analysts are ...

 

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Morgan Stanley's China Bear Puts Zero Odds on 6% Economic Growth

 

Economic growth in developed economies slows: OECD

MarketWatch-1 hour ago
Economic growth in developed countries slowed during the third quarter, ... The OECD initially reported a 0.4% growth rate in the second quarter, which was ...

Morgan Stanley's China Bear Puts Zero Odds on 6% Economic Growth

Bloomberg - ‎10 hours ago‎
History is not on China's side when it comes to the nation's economic growth goals for the next five years. No economy over the past half century has expanded at 6 percent or more as its labor force shrank, according to Ruchir Sharma, the head of ...

Petrobras's Dangerous Debt Math: $24 Billion Owed in 24 Months

Bloomberg-14 hours ago
The debt clock is ticking down at Brazil's troubled oil giant, Petrobras. Next up: $24 billion of repayments over 24 months. That's a towering hurdle for a company ...
 
Creditors line up for possible Arch bankruptcy
The State Journal-Register-18 hours ago
 

MarketsGermany snags record low yields for 2-yr debt sale

Financial Times - ‎Nov 18, 2015‎
Germany has sold two-year government debt with a yield of -0.38 per cent, a record low according to Bloomberg. The country's yields at this maturity have been negative (meaning that investors effectively pay to own it to maturity) in the post-issue ...
 

Draghi Put Pushes 40% of German Bond Yields Below Deposit Rate

Bloomberg - ‎1 hour ago‎
The amount of securities with yields below the deposit rate has climbed to $469 billion, reducing the range and amount of debt available to the central bank's 1.1-trillion-euro ($1.2 trillion) quantitative-easing plan. Some policy makers called for ...

Indonesia to require pension funds hold minimum percentage of govt bonds

Reuters - ‎9 hours ago‎
JAKARTA, Nov 19 Indonesia plans to require domestic pension funds and insurers to keep a minimum percentage of government bonds in their portfolios to help provide stability to the debt market, the country's financial services authority (OJK) said on ...
 

Six percent of Korean firms face insolvency

Korea JoongAng Daily-22 hours ago
The total debt of the 295 companies amounted to 270 trillion won, while total capital was only 70 trillion won. The average debt ratio stood at 384 percent.
 

China's Central Bank Cuts Rates for Its Standing Lending Facility

Wall Street Journal - ‎3 hours ago‎
BEIJING—China's central bank took another step to reduce the rates banks charge businesses and consumers in an attempt to counter the deflationary pressure that is weighing on growth in the world's second-largest economy. In a move characteristic of ...

 

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