Daily Digest

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Daily Digest 1/6 - World Economy's Labor Pains, Greek Gov't Defends Pension Cuts

Wednesday, January 6, 2016, 10:38 AM

Economy

Saudi Arabia faces 'economic bomb'

"Part of the leverage the regime has had on their people is that they don't impose taxes and therefore people don't expect representation," Jordan says. "But once they pay taxes, you're likely to see an increase in political unrest."

Updated model hints Fed staff sees much lower inflation in 2016

An update of an economic model used by the Federal Reserve suggests the staff of the U.S. central bank has sharply lowered its forecast for inflation over the next six months, economists from Barclays said Tuesday.

Chicago School Bonds Drop to 14-Week Low as Governor Denies Help

The state’s income tax increase expired last year, and Illinois is projected to end the year as much as $5 billion in the red.

Mayor Ed Lee instructs city departments to cut budgets (San Francisco)

City department heads have begun discussing how to implement the budget cut for the fiscal year beginning July 1. The mayor has also asked department heads to cut an additional 1.5 percent for the following fiscal year which has a projected $240 million deficit. The City uses a two-year budgeting model.

Alaska Wants to Sell $2.6 Billion in Pension Obligation Bonds

The state’s pension system was in bad shape long before oil prices fell. As of 2013, Alaska had the fourth-worst funded pension among U.S. states, reporting it had 52.3 percent of the money needed to pay retirees, better than only Illinois, Connecticut and Kentucky, data compiled by Bloomberg shows.

Government debt set to hit $1.3 trillion in 2016: study (Canada)

According to the right-leaning think-tank, the combined total debt is equivalent to every Canadian man, woman and child owing $35,827.

Government regarded as No.1 problem for U.S. in 2015: Gallup

For the second consecutive year, Americans' dissatisfaction with U.S. government edged out economy as the country's top problem in 2015, a poll analysis issued Monday by the Gallup showed.

UN sees moderate global growth for 2016-2017 due to major ‘headwinds’

“Growth in developing and transition economies has slowed to its weakest pace since the global financial crisis of 2008-2009,” said the United Nations World Economic Situation and Prospects (WESP) 2016 report. The UN projects the world economy to grow by 2.9 percent in 2016 and 3.2 percent in 2017. T

The world economy’s labor pains

These changes are captured by a remarkable statistical trend in high- and middle-income countries. Total labor income as a percentage of GDP is declining across the board and at rates rarely witnessed. From 1995 to 2015, labor income dropped from 61% to 57% of GDP in the US; from 66% to 54% in Australia; from 61% to 55% in Canada; from 77% to 60% in Japan; and from 43% to 34% in Turkey.

Canada, loonie lose footing in global economy

A decade ago, Canada set out to become an energy superpower. Now, it enters 2016 riding down one of the world’s most battered petro-currencies. When the clock struck midnight on Dec. 31, the loonie, so- called for the bird engraved on the dollar coin, officially recorded its longest and deepest downturn since it became a floating currency in 1970. And there’s no relief in sight.

Puerto Ricans Are Fleeing The Island's Economic Woes

The island's population shrunk by nearly 61,000 people from July 2014 to July 2015, mostly due to migration, according to estimates released by the Census Bureau last month. Departures from Puerto Rico have increased as jobs have become scarce, and the government has cut back on salaries, benefits and services in order to make payments on its $70 billion in debt.

Puerto Rico misses second major debt payment as economy struggles

"This is not political rhetoric, this is mathematic," Mr Padilla said. "It's very simple, we don't have the money to pay".

Eurozone Inflation Remains Stubbornly Low

Policy makers and economists had expected the annual rate of inflation to pick up from late 2015, since oil prices were thought unlikely to repeat their late 2014 falls. But with oil prices once again on the slide as 2015 drew to a close, those hopes have been dashed for now, making it possible that the ECB will again add to its stimulus measures this year.

Factory figures make for grim reading as global stock markets fall

Figures from China showing that factory output contracted for a 10th straight month in December pointed to a continuation of 2015’s global economic slowdown and the likelihood of worse to come.

Greek government defends pension cuts

Speaking on the ERT public television station on Tuesday morning, government spokeswoman Olga Gerovasili said: “The proposal, which Athens sent to creditors on Monday foresees no reductions for those who have already retired though those retiring from 2016 onward face cuts of between 15 and 30 percent.”

Fears mount over rise of sovereign-backed corporate debt

Almost $1tn of debt linked to emerging market governments is being camouflaged by the growing use of bonds that offer implicit state backing without always appearing on government balance sheets.

Labor force participation quirks cloud Federal Reserve's outlook

Here's what the bureau found, broadly: Thirty-five percent of the population was not in the labor force in 2014, up from 31.3 percent a decade earlier. (You're considered out of the workforce if you don't have a job and are not looking for one. That's distinct from the official unemployment rate, which tracks those out of work who are actively job hunting.)

India weighs fiscal stimulus in new budget despite fast economic growth

"The economy is still suffering from slack demand," said the finance ministry official. "It needs a conducive fiscal and monetary policy."

BOJ's Kuroda: willing to take bold steps if needed for price target

Bank of Japan Governor Haruhiko Kuroda said on Tuesday he is willing to take bold steps if needed to ensure that inflation reaches the central bank's 2 percent price target.

Brazil heads for worst recession since 1901, economists forecast

Brazil’s economy will contract more than previously forecast and is heading for the deepest recession since at least 1901 as economic activity and confidence sink amid a political crisis, a survey of analysts showed.

Fischer worries Fed can't head off, contain financial crises

The ratio of U.S. stock prices to earnings is well above its historical average, he said, while the yield on the 10-year Treasury note is about half of what it should be if monetary policy was more normal.

Sweden hands central bank governor new powers to boost inflation

In a bid to push up inflation, Sweden’s central bank has handed its governor and deputy increased powers to intervene in foreign exchange markets. The governor, Stefan Ingves, will have the ability to devalue the Swedish krona, should he deem it necessary to boost inflation.

Japan central bank turns activist investor to revive economy

Losing patience, Kuroda said last month the bank would buy 300 billion yen ($2.5 billion) a year of ETFs, in addition to 3 trillion yen it already assigns each year to ETFs. It said the extra purchases would target funds whose underlying firms were "proactively making investment in physical and human capital".

China central bank injects billions to ease liquidity strain

China's central bank on Tuesday pumped the biggest amount of funds since September into the financial system in open market operations in an effort to ease a liquidity strain.

Smith & Wesson Jumps to Highest Since 1999 as Gun Sales Soar

The maker of handguns said sales for the quarter ending Jan. 31 may be as high as $180 million, a 16 percent increase from its forecast given in December. Gun sales surged last month as discussion of weapons restrictions heated up after a terrorist shooting in San Bernardino, California, left 14 dead.

Gold & Silver

Click to read the PM Daily Market Commentary: 1/5/16

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."

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saxplayer00o1's picture
saxplayer00o1
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Posts: 4061
Yuan Sinks to Five-Year Low as PBOC Surprises With Weaker Fixing

Yuan Sinks to Five-Year Low as PBOC Surprises With Weaker Fixing

Bloomberg-2 hours ago
The People's Bank of China set the yuan's daily reference rate at the lowest level .... The yen reached its strongest level since October and Treasuries rose for a ...

Bank of America Merrill Lynch: The Shanghai Composite Will Plummet by Nearly ...

Bloomberg - ‎15 hours ago‎
"We believe that the most vulnerable is [the renminbi], followed by A-share market, debt default and possibly housing price," wrote Cui. "Any break of these 'promises' may be contagious." BofAML's David Woo has separately detailed how this year will be ...

Emerging Currencies Slide to Record on Yuan Shock as Ruble Drops

Bloomberg-2 hours ago
China may be headed for a “hard landing” as borrowers are taking on record ... to own emerging-market debt rather than U.S. Treasuries widened five basis ...

Marc Faber: We Have Colossal Credit Bubble in China

Bloomberg-5 hours ago
... the investment opportunity in 10-Year and 30-Year U.S. Treasuries, troubles in the Chinese economy, and his preference for emerging markets. He speaks on ...

Venezuela central bank curbs fuel fears over hyperinflation

Financial Times - ‎22 hours ago‎
A decision by Venezuela's president to curb legislative oversight of the central bank has increased the embattled country's prospects of sliding into hyperinflation, according to analysts. The tactic is the latest in a power struggle between the ...
 

British shop prices fall in December, more retail deflation seen

Reuters UK - ‎15 hours ago‎
"We can expect the current levels of deflation across the retail industry to continue for the first half of 2016," Mike Watkins, head of retail and business insight at data company Nielsen, which collates the survey, said. "After the unseasonably mild ...

Alberta's debt-to-GDP ratio set to skyrocket, warns Fraser Institute

Calgary Herald - ‎21 hours ago‎
The Fraser Institute study by Charles Lammam and three others, says combined federal and provincial debt has increased from $834 billion in 2007 to a projected $1.3 trillion in 2015-16. The combined debt amounts to $35,827 for every Canadian, the study ...

Interest payments exceed $60 billion as Canadian governments continue racking ...

The Nelson Daily - ‎18 hours ago‎
The study, The Cost of Government Debt in Canada, finds that Canadian governments (federal, provincial and local) spent $60.8 billion on debt interest payments in 2014/15—virtually equivalent to total public spending on K-12 education in Canada ($62.2 ...

Alaska governor pushes back against S&P ratings downgrades

Reuters - ‎19 hours ago‎
Standard and Poor's on Tuesday lowered Alaska's general obligation (GO) debt to AA+ from AAA due to its belief that the oil-producing state's credit quality has continued to slide amid sustained low oil prices. S&P also lowered its rating to A+ from AA ...

S&P warns further downgrades may be on horizon

Alaska Public Radio Network-13 hours ago
With oil prices showing no sign of rallying, the state is facing a deficit of about $3.5 billion for the foreseeable future. That puts the burden on policymakers to ...

Pressure Grows on Saudi Arabia to Ditch Dollar Peg

Wall Street Journal-22 hours ago
What's more, to hold the peg, Saudi Arabia spends billions of its dollars buying ... Households and businesses have debt in foreign currencies, and payments ...

Rio Olympic track stadium goes dark due to unpaid bills

ESPN - ‎Jan 5, 2016‎
"We have to find out who is responsible for the debt," the club said. The Brazilian website Globo Esporte, ... Organizers are trying to chop about $500 million in expenditures to keep the operating budget at $1.9 billion. The cuts are reaching all ...
 

Illinois Ending Exile From Bond Market Amid Record Budget Fight

Bloomberg - ‎4 hours ago‎
Since it last sold general-obligation bonds in April 2014, the Illinois Supreme Court threw out the state's effort to cut workers' benefits to help close a $111 billion pension-fund deficit. Its credit rating has been cut. And temporary tax increases ...

S&P downgrades Puerto Rican bonds after default

The Hill - ‎21 hours ago‎

Y.) last month giving Puerto Rico access to bankruptcy courts, which would have allowed the commonwealth to restructure its debt. Schumer warned of widespread problems if Puerto Rico's crisis isn't solved, but Hatch, the Senate Finance Committee ..

Puerto Rico shows more evidence of January 1 default with PRIFA ...

Reuters-18 hours ago

It also warned that it would default on $1.4 million debt due to its Public Finance Corp while i

 

Sovereign risk sees 2008 crisis level swing

CNBC-2 hours ago
This is still above speculative grade or junk debt which refers to bonds that ... They have a higher risk of default compared to investment-grade debt but give a ...

Report: DPS owes $3.5B; out of cash in April?

Detroit Free Press-4 hours ago
The report says DPS has $1.9 billion in operating liabilities, which are mostly employee legacy costs — such as unfunded pension benefits — and also include ...

 

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
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Posts: 4061
China to extend temporary share-sale ban to calm markets

China to extend temporary share-sale ban to calm markets

Financial Times - ‎13 hours ago‎
China is to extend a ban on stock sales by large shareholders until permanent rules to restrict such sales take effect, as authorities seek to calm market fears over the lock-up that was due to expire on Friday. China's blue-chip stock index, the CSI ...
 
 

China stocks bounce on hopes for extended ban on big share sales

Reuters - ‎10 hours ago‎
SHANGHAI Jan 6 China stocks bounced on Wednesday, led by a surge in resources shares, on hopes that regulators will extend a ban on share sales by major stakeholders as Beijing scrambled to avert a potential repeat of last summer's market crash.
Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 3936
Thor's day.

Glancing through the headlines I get the impression that it is not good news Friday. 

So I went looking for S&P ratings. Here is a treasure trove of data. Whether you believe it or not is up you. 

 

https://en.m.wikipedia.org/wiki/List_of_countries_by_credit_rating

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
the New Saudi Budget

in which i explain the Saudi's financial situation and how long they can survive by drawing down on their sovereign wealth fund:

 New Saudi Budget Warns American Oilmen to Get Outta Dodge

 

rjs's picture
rjs
Status: Gold Member (Offline)
Joined: Aug 8 2009
Posts: 445
Thor's day?
Arthur Robey wrote:

Glancing through the headlines I get the impression that it is not good news Friday. 

actually, Arthur, it is Woden's day here...you're on the other side of the international date line from the rest of us...

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4061
China stock trading halted for the rest of the day after CSI 300

China stock trading halted for the rest of the day after CSI 300 plunges 7% »

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