Daily Digest

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Daily Digest 1/20 - Euro Bonds At ‘Recession Levels,' Global Growth at Risk of Going Off Track

Wednesday, January 20, 2016, 10:44 AM


Retirement liabilities remain despite California budget surplus

But even as the governor and lawmakers debate how to spend a budget surplus, there's a looming financial hurdle: Unfunded pension and health care liabilities of $220 billion for future retirees who work for the state and the University of California system.

Alaska Faces Budget Deficit As Crude Oil Prices Slide

For decades, Alaska has relied on oil to pay its bills. In recent years, up to 90 percent of state spending came from oil revenue. With crude prices at a 12-year low, the state faces at least a $3.5 billion deficit — or two-thirds of its budget.

CBO raises 2016 deficit estimate by $130 billion

The Congressional Budget Office raised its estimate of the budget deficit for fiscal 2016 to $544 billion from $414 billion. The nonpartisan CBO said the bigger estimate was mostly due to the retroactive extension of several corporate and individual tax provisions. As a percentage of gross domestic product the deficit would be 2.9%, versus the previously estimated 2.2%. The government's budget year runs from October through September.

Japan government forecasts to show fiscal discipline targets more distant: paper

The forecasts could deal a blow to the credibility of Abe's fiscal policy and fuel lingering concerns that Japan is not using a recent increase in tax revenue to pare its debt burden, which is the largest among industrialized nations.

European bonds at ‘recession levels’

A wave of selling has taken Europe’s corporate-bond market to levels typically seen during recessions, another indication that the turmoil in global markets could spread into the wider economy.

Puerto Rico Says Shortfall to Increase to $23.9 Billion

Puerto Rico said the island’s financial situation is worsening and increased estimates of how much the commonwealth will fall short of being able to make debt payments over the next decade to $23.9 billion.

South Korea's economic growth to miss gov't goal: think tank

"It is inevitable that the local economy, which is highly dependent on exports, will see its growth slow down this year with weakening global trade," the LGERI said.

As leaders chill in Davos, emerging economies going downhill fast

More than a trillion dollars of investment flows has fled emerging markets over the past 18 months but the exodus may not even be halfway done, as once-booming economies appear trapped in a slow-bleeding cycle of weak growth and investment.

Oil nation wealth funds seen unloading risky assets

Oil producers' sovereign wealth funds, hedge funds and other major investors are thought to be stepping up sales of risky assets. Middle Eastern investors linked to oil interests have been cashing out of mutual funds composed of Japanese stocks, a major fund management company said. "Markets have long feared that oil money could flee," an executive at the fund manager said. "That's finally coming to pass."

Nigeria’s oil fields face shutdown amid price slump

“When oil price drops, we are all in serious trouble, because if the oil price and your unit operating cost are almost the same, it means that when you sell the oil, there is little profit or you are at a loss. Many companies are not far from there,” the Project Director for the Uquo gas field development, a joint venture project by Frontier Oil Limited and Seven Energy, Alhaji Abdullahi Bukar, told our correspondent.

Alarm bells ring louder on US inflation

Last week James Bullard, the head of the St Louis Federal Reserve, said falling inflation expectations were “becoming worrisome”, while Charles Evans of the Chicago Fed, said the situation was “troubling”.

Govt to revise 2016 state budget because of falling oil prices (Indonesia)

In the 2016 state budget, the government has set an ICP assumption of $50 barrel, while state revenues from the oil and gas sector was expected to reach $11.65 billion.

Canada PM says weak C$, oil hurt large parts of the economy

The Canadian dollar's speedy plunge to a 12-year low has fueled calls from some market and industry players for the country's central bank to hold interest rates steady, even as traders increase bets on a cut this week.

Reserve Bank of India and banks brainstorm on how to stem the rising levels of bad loans

The RBI has asked banks to clean up their balance sheets by March 2017. Many lenders could report a steep fall in profit in the second half of the current financial year because of higher levels of provisioning after the RBI issued a list of 150 truant accounts in the first week of December and asked banks to downgrade the loans because they were showing signs of weakness.

Safe German bonds lag as China's decline firms stimulus bets

Further evidence of a slowdown in the world's second largest economy not only firmed bets of a policy response from Beijing, but also upped the pressure on the European Central Bank to protect the euro zone's fledgling recovery from China's malaise.

MIDEAST DEBT-Gulf sovereign bond issues to surge as governments plug deficits

GCC sovereign supply could jump eight-fold this year

5 reasons why Venezuela's economy is in a 'meltdown'

Inflation in Venezuela skyrocketed 141% over the year ending in September, the central bank reported. Incredibly, some experts believe even that figure is understating the problem. The IMF projects inflation in Venezuela will increase 204% this year.

IMF Cuts Global Growth Forecast to 3.4% in Year of ‘Great Challenges’

The International Monetary Fund cut its world growth outlook, as the commodities slump and political gridlock push Brazil deeper into recession, plunging oil prices hobble Mideast crude producers, and the rising dollar curbs U.S. prospects.

Fed's $216 Billion Treasuries Rollover Recalls Crisis Era Buying

While the central bank won’t be expanding its balance sheet, about $216 billion of Treasuries in its portfolio mature in 2016, up from negligible amounts the past few years. Last week, New York Fed President William C. Dudley reiterated policy makers’ plan to keep reinvesting the proceeds for the time being, giving bondholders and Wall Street dealers reason to cheer.

Global Growth at Risk of Going Off Track

“The old model of Keynesian economics no longer works for China,” said a senior official close to China’s top leadership.

Italian bank shares plunge, sparking ban on short-selling

The slump, which also hurt the bank's riskier junior debt , prompted Italian market regulator Consob to introduce a temporary ban on short-selling.

Italian banks say ECB is reviewing their bad loans

Local lenders have been struggling in recent years to digest the sheer volume of bad loans, which total around 200 billion euros ($217 billion) and have kept on growing for more than two years.

We have room for more rate cuts: Bank Indonesia

Indonesia could follow last week's interest rate cut with additional monetary stimulus, the deputy governor of the central bank said Tuesday.

Kuroda: BOJ will do whatever it can to achieve inflation target (Japan)

Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the central bank would do "whatever it can" if necessary in order to achieve its 2 percent inflation target.

Shekel currency ‘markedly over-valued’ – Bank of Israel official

Israel’s central bank will remain aggressive in battling the strong shekel , which is trading at its highest level in 15 years, the Bank of Israel’s head of market operations said.

Bank of England’s Mark Carney Signals Rates to Stay Low

Bank of England Governor Mark Carney signaled Tuesday that central-bank officials are unlikely to raise interest rates in the U.K. soon, citing weaker-than-expected inflation and a slowdown in the global economy.

Bank of Canada to cut key rate to zero in 2016, Barclays says

“In our view, risks are tilted toward further easing, which would imply negative rates,” the strategists said. “The experience of countries like Switzerland, Sweden, Denmark and the euro area has taught central banks that zero is not the lower bound.”

China c.bank to inject $91 bln to ease liquidity strains

The central bank has already cut interest rates six times since November 2014, and reduced the amount of cash that banks must hold as reserves, but such steps have had limited impact on growth due to high debt levels in the economy. More easing steps are widely expected in the coming months.

Gold & Silver

Click to read the PM Daily Market Commentary: 1/19/16

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."


saxplayer00o1's picture
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Posts: 4260
IIF: Emerging markets set for US$448b outflows in 2016

IIF: Emerging markets set for US$448b outflows in 2016

Malay Mail Online - ‎6 hours ago‎
Emerging markets had net capital outflows of US$735 billion (RM3.2 trillion) in 2015, up from US$111 billion in 2014. — Reuters picNEW YORK, Jan 20 ― After a thorny few years, emerging market bonds and equities are on track for another year of ...

Bond-Market Darlings Falter as Riskiest Bank Debt Joins Selloff

Bloomberg-9 hours ago
Banks laden with bad loans, such as Banco Popular Espanol SA and UniCredit SpA, have led the selloff. That's because the European Central Bank's rule ...

Fears of global liquidity crunch haunt Davos elites

Telegraph.co.uk-2 hours ago
World faces wave of epic debt defaults, fears central bank veteran. "What is driving this is that the central banks are not coming to the rescue," he said, speaking ...

Rupee Weakens Toward Record Low as India Outflows Accelerate

Bloomberg-4 hours ago

The rupee weakened past 68 per dollar for the first time since September 2013, falling toward its record low, as the selloff in emerging markets saps demand for ..

MarketsGloom watch: “Black Wednesday for EMs”

Financial Times-4 hours ago
Emerging market currencies enjoyed a brief bounce yesterday, but as Brown ... The Institute of International Finance has already said that EM outflows in 2015 ...

Hong Kong Dollar Forwards Sink to Weakest Since '99 on Peg Bets

Bloomberg-11 hours ago
... low in the first week of January triggered weakness in emerging Asian currencies ... “There's a lot of focus on the peg amid weaker market sentiment but we don't ... ($38.4 billion) of outflows before a significant increase in borrowing costs.

Oil rout raises fears of Venezuela debt default

Reuters-55 minutes ago
NEW YORK, Jan 20 (IFR) - Slumping crude prices have investors bracing for a messy default in Venezuela, where the sovereign and state-owned oil company ...

Brazil's Central Bank to Consider IMF's Sharply Downgraded Growth View

Wall Street Journal - ‎21 hours ago‎
BRASÍLIA—A 107-word statement by Brazil's monetary authority effectively has scrambled market expectations on Tuesday, ahead of one of the toughest decisions the central bank will have to make in years— whether to raise rates as it battles high ...

Saudi central bank warns banks against riyal speculation

Reuters-8 hours ago
"SAMA has ordered banks to stop giving structures for FX swaps. I mean ... They said the central bank's action had so far succeeded in supporting the riyal in the ...

Mexico central bank says sells $200 mln after peso slide

Reuters-1 hour ago
The central bank sold the dollars at an average weighted price of 18.4399 pesos per dollar. An auction is triggered when the currency is trading 1 percent ...

Russian presidential aide says Central Bank should take steps to ...

TASS-6 hours ago

MOSCOW, January 20. /TASS/. The current situation as it is, Russia's Central Bank should take steps to support the exchange rate of the na

Russian inflation seen around 8.0-8.6oya in 2Q-3Q16 on weaker RUB

EconoTimes-6 hours ago
Trend inflation fell to 11.5%oya in June, before rising to 11.9% in August-November and the central bank expects a gradual drop in the trend inflation in the ...

Russian currency slides to record low

Financial Times-7 hours ago
It has finally surpassed the previous low of Rbs79.9125 it hit in December 2014 amid a currency rout that forced the Central Bank of Russia into an emergency ...

Russia's recession woes deepen amid oil slump

Deutsche Welle - ‎19 hours ago‎
According to this calculation, the budget deficit - the difference between what the government spends and what it takes in - should amount to about 2.3 trillion ruble(26.7 billion euros, $29.2billion), or three percent of the country's GDP. In order to ...

Italy's Lending Recovery at Risk as Renzi Bad Bank Plan Stalls

Bloomberg - ‎7 hours ago‎
With non-performing loans touching a record high of 201 billion euros ($219 billion) in November and delays in creating a bad bank even as the European Central Bank ups its scrutiny, lenders may be reluctant to make new loans. “The lending recovery is ...

Exclusive: BOJ likely to cut coming fiscal year's CPI forecast below 1 ...

Reuters-7 hours ago
A lower forecast to reflect a fresh slide in oil prices would be a sharp downgrade from the central bank's current forecast of 1.4 percent for the year beginning in ...

Japan manufacturers' mood down amid worry on China: Reuters ...

Reuters-17 hours ago
The monthly Reuters Tankan, which closely tracks the Bank of Japan's tankan ... The BOJ tankan, one of the major indicators the central bank scrutinizes in ...

Taiwan 2015 export orders in worst slide in 6 years ...

Reuters-6 hours ago
Economists expect Taiwan's central bank to cut interest rates again after slashing them in September and December as global demand remained fragile and ...

Why Some Economies Are Experimenting With Negative Interest ...

Nasdaq-21 hours ago
Since the economy has been perceived to have stabilized, Central Banks around the world have begun the process of normalizing interest rates.

Canada watchdog sees household debt ratio climbing in 2016

Reuters - ‎Jan 19, 2016‎
OTTAWA Jan 19 Canada's record-high household debt levels, which have been a source of concern for the central bank and other policymakers, will only get worse this year, the country's parliamentary budget watchdog warned on Tuesday. The ratio of total ...

Rising Debt in Emerging Markets Poses Global Threat

Wall Street Journal-19 hours ago
Corporate-debt downgrades in the five largest emerging economies outside of ... off its 19.9% stake in the company at a loss of 39.5 billion yen ($336.6 million).

Emerging Distress Spreads as 60-Cents-a-Dollar Debt Triples

Bloomberg-11 hours ago

Investor sentiment is deteriorating as developing-nation companies brace for $115 billion of dollar-bond redemptions in 2016 after loading up on debt at lower .

Oil below $30 fans wipeout fears among US shale survival artists

Reuters-10 hours ago
Barclays estimates cuts will reach $73 billion by the end of 2016 and most ... Investors are also balking at companies' efforts to swap short-dated debt for longer ...

Some Bankrupt Oil and Gas Drillers Can't Give Their Assets Away

Bloomberg-14 hours ago
have set aside at least $2.5 billion combined to cover souring energy loans and ... high oil prices, outspending its income and relying on debt to keep drilling.

Trudeau government considering immediate $1-billion stimulus for ...

Financial Post-Jan 19, 2016
THE CANADIAN PRESS/ Patrick DoyleTrudeau campaigned in last fall's federal election on a deficit of no more than $10 billion in his first year, a pledge he and ...

Pension funding fight at crescendo in deficit-stung New Jersey

Chicago Tribune - ‎3 hours ago‎
The fight in New Jersey over funding government workers' pensions is coming to a head -- and no one disputes that it'll be costly to taxpayers. With the retirement system facing an $83 billion shortfall, Democrats who control the legislature are ...

Kuwait's emir urges management of spending, budget cut over oil price drop

Reuters - ‎3 hours ago‎
Kuwait's parliament last July approved a state budget for the current fiscal year that began on April 1 that envisages a deficit of 8.18 billion dinars ($27.0 billion) - nearly half total spending - because of low oil prices. The budget assumed an ...

Fitch drops Chicago Board of Education rating to B-plus

Reuters - ‎18 hours ago‎
A recently posted online investor presentation for the bond sale indicated that CPS continues to push for more funding from the state of Illinois and aims to eliminate a more than $1 billion structural budget deficit by fiscal 2018. With a financial ...

China's High Debt Is Now a Problem: Moody's - Presented by: The ...

Nasdaq-13 hours ago
Atsi Sheth, sovereign risk group associate MD at Moody's Investors Service, explains that China's high corporate leverage is on the rise while profitability is ...

Petrobras's Tumble to 16-Year Low Leads Drop in Ibovespa Stocks

Bloomberg-3 hours ago
The risk premium on the Markit CDX North American Investment Grade Yield Index, a credit-default swaps benchmark tied to the debt of 100 of the safest ...

Cities with high unfunded pension liabilities

Pensions & Investments - ‎20 hours ago‎
The Center for State and Local Government Excellence measured 92 cities that participate in cost-sharing plans that are affected by GASB 68. The center estimates that the following cities will see the largest increase in unfunded liability as a ...

Another wave of teacher sickouts closes 86 DPS schools

Detroit Free Press-5 hours ago
The district's total debt, including unfunded pension liabilities, is estimated to be as high as $3.5 billion. A new grassroots group called DPS Teachers Fight Back ...

Illinois GOP Sees State Takeover, Bankruptcy for Chicago Schools

Bloomberg-48 minutes ago
Illinois GOP Sees State Takeover, Bankruptcy for Chicago Schools ... even push the system, charged with educating almost 400,000 students, into Chapter 9.

Republican lawmakers pitch state takeover of CPS as 'lifeline,' not ...

Chicago Tribune-1 hour ago
CPS instead gets more state money in other education areas as Chicago homeowners pay property taxes that cover teacher pension costs. Durkin and ...

Report: N.C. pension fund faces a shortfall 10 times current estimates

Charlotte Business Journal-4 hours ago
The 900,000 state employees in the North Carolina pension fund might face a bleaker ... Health-care costs are another area where North Carolina stands apart.

Illinois Budget Crisis: Big Banks Aren't Sharing Chicago's Municipal Debt Woes

International Business Times - ‎20 hours ago‎
RTR4CVD6 Illinois Governor Bruce Rauner has faced demands to renegotiate interest rate swap agreements that have cost the state more than $600 million since 2003. ... Labor leaders, who fear the state's fiscal difficulties will imperil their members ...

Christie Vetoes Atlantic City Rescue Package

Wall Street Journal-16 hours ago
Atlantic City, which is facing a $30.5 million budget deficit, is expected to run out of cash by April, according to a report by Atlantic City's state-appointed ...

Atlantic City Considering Bankruptcy Filing, Mayor Says

Bloomberg-1 hour ago
New Jersey, which has some of the most aggressive policies among states to steer local government from financial disaster, hasn't had a municipal bankruptcy ...

Treasury's Lew Urges Congress to Grant Puerto Rico Bankruptcy

Bloomberg - ‎2 hours ago‎
Island officials are working on a debt-restructuring proposal to offer creditors such as hedge funds, municipal mutual-funds and insurance companies that guarantee repayment of commonwealth's $70 billion debt burden. That plan may involve a debt ...

Johnson & Johnson to cut 3000 jobs

USA TODAY - ‎Jan 19, 2016‎
Global health giant Johnson & Johnson plans to shed about 3,000 jobs as the strong U.S. dollar takes a toll on the company's medical devices division. J&J said Tuesday that it would record pre-tax charges of $2 billion to $2.4 billion in connection ...


saxplayer00o1's picture
Status: Diamond Member (Offline)
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Posts: 4260
On the bright side.....Maybe a new Hitler video soon

Just for humor.

He didn't do well when the housing bubble popped. From 2008:

Maybe soon we'll see how he did as the current bubble pops. Hopefully he didn't invest in shale oil companies and bonds from Puerto Rico.

Tall's picture
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
Thousands Apply to U.S. to Forgive Their Student Loans

Borrowers owing $164 million have stepped forward in the past 6 months, citing a previously obscure federal law.

The clamoring for forgiveness represents the fallout of a college-enrollment boom—driven by a surge in students attending for-profit colleges—that caused student debt to nearly triple in the past decade to $1.2 trillion, New York Federal Reserve figures show. Seven million Americans have defaulted, government data show.

So far, almost all of the borrowers applying for forgiveness under the 1994 program attended for-profit schools.


KugsCheese's picture
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
I Was Just Following Orders
saxplayer00o1 wrote:

Just for humor.

He didn't do well when the housing bubble popped. From 2008:

Maybe soon we'll see how he did as the current bubble pops. Hopefully he didn't invest in shale oil companies and bonds from Puerto Rico.

Great ending.  Realtors are shameless.

Cornelius999's picture
Status: Gold Member (Offline)
Joined: Oct 17 2008
Posts: 381
Hitler was responsible for a

Hitler was responsible for a great deal of goood.  What about all these great documentaries about the Nazis I get to watch when I'm depressed !!


Great fun Saxplayer!

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