Daily Digest

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Daily Digest 4/20 - Puerto Rico's Bondholders Divided, What Will The BoJ Think Of Next?

Wednesday, April 20, 2016, 10:47 AM

Economy

UnitedHealth to Trim ACA Exchanges to 'Handful' of States

CEO Stephen Hemsley said Tuesday that the company expects losses from its exchange business to total more than $1 billion for this year and last. He added that the company cannot continue to broadly serve the market created by the Affordable Care Act's coverage expansion due partly to the higher risk that comes with its customers.

Spain to overshoot deficit target... for 8th year running

Spain has raised its public deficit target this year from 2.8 percent of GDP to 3.6 percent, the economy ministry said Tuesday, meaning it will once again overshoot the limit demanded by Brussels.

Sweden's Currency Plight Fans Speculation More Stimulus to Come

While all 20 analysts surveyed by Bloomberg predict that the the main rate will be kept unchanged at a record low of minus 0.5 percent on Thursday, the Riksbank may extend its government bond buying program.

Puerto Rico's Bondholders Divided in Fight Over Federal Rescue

Hedge funds that own about $5 billion of Puerto Rico’s general-obligation bonds, which are guaranteed under the island’s constitution, are fighting the House measure that would give the U.S. territory ability to write off some of its $70 billion in debt. Firms that own securities backed by sales taxes are working to ensure its passage, seeing it as a way to protect their investment from a cascading series of defaults.

Debt payments sinking Detroit Public Schools: transition manager

Nearly $64 million in debt payments are sinking the Detroit Public Schools (DPS), underscoring the need for a long-term state legislative fix, according to a report released on Monday by the district's state-appointed transition manager.

Report: Illinois Public School Districts Have Amassed Nearly $20 Billion In Debt

The $19.7 billion in debt amassed by the state's 857 public school districts breaks down to be $10,000 for each Illinois public school student in pre-K through 12th grade.

Buying Insurers Shows China Builders Straining in Debt Load

Developers’ cash flows are coming under pressure as rising leverage has overshadowed income from home sales. The combined net debt of 82 Chinese developers tracked by Bloomberg Intelligence rose to 5.1 times earnings last year, a seven-year high, from 4.7 times in 2014, even as a property-market recovery buoyed sales at many firms.

What Will the Bank of Japan Think of Next?

For the Bank of Japan, it is no longer if, but how. Bank of Japan Governor Haruhiko Kuroda all but promised more easing in an interview with The Wall Street Journal Monday, saying, “without hesitation we would adopt additional monetary easing” if deemed necessary.

It's All Suddenly Going Wrong in China's $3 Trillion Bond Market

Spooked by a fresh wave of defaults at state-owned enterprises, investors in China’s yuan-denominated company notes have driven up yields for nine of the past 10 days and triggered the biggest selloff in onshore junk debt since 2014. Local issuers have canceled 61.9 billion yuan ($9.6 billion) of bond sales in April alone, and Standard & Poor’s is cutting its assessment of Chinese firms at a pace unseen since 2003.

The Sub-Zero Club: Getting Used to the Upside-Down World Economy

Welcome to the upside-down world of modern monetary policy. In this new reality, borrowers get paid and savers penalized. Almost 500 million people in a quarter of the global economy now live in countries where interest rates measure less than zero. That would’ve been an almost unthinkable phenomenon before the 2008 financial crisis, and one major economies didn’t seriously consider until two years ago, when the European Central Bank first partook in the experiment. Now the ECB and the Bank of Japan are diving deeper into the sub-zero world as they seek more ways to spark inflation.

South Korea's Central Bank Cuts Growth Forecast

South Korea's central bank lowered its growth forecast for Asia's fourth-largest economy on Tuesday, citing the country's weak first-quarter economic performance and a downgrade in the global economic outlook.

Negative Rates Seen Pushing Japanese Farmers Into U.K. Mortgages

Japanese investors are moving into higher risk assets abroad as negative yields erode the appeal of domestic government bonds. Eight of 11 Japanese regional banks surveyed by Bloomberg last month said they’ve begun or are considering asset reallocation, with foreign bonds and real estate investments among the most popular products.

Negative rates put pressure on central banks to take risks

A poll of reserve managers from 77 central banks, entrusted with reserves worth $6tn last August, found a clear majority were changing their portfolio management strategy as a result — including taking steps such as buying riskier assets.

Gold & Silver

Click to read the PM Daily Market Commentary: 4/19/16

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."

9 Comments

Tall's picture
Tall
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
The "American Dream" vs. Reality

We can't have it all anymore

http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/

 

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1892
Who Empties Their 401(k) To Pay For Their Daughter's Wedding?

The author, Neal Gabler, chose to live in a very rich neighborhood, had his film executive wife quit her lucrative job to take care of the kids, made multiple poor decisions, didn't save, and to top it off, he and is wife "have no retirement savings, because we emptied a small 401(k) to pay for our younger daughter’s wedding".

No one can have it all. Choose wisely.

Poet

Tall's picture
Tall
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
Entitlement

My take away from the "Secret shame" article was that many in America's middle class have grown to expect certain events- home ownership, college for the kids, nice weddings and funerals, health and dental care, vacations, a retirement. 

However, to realistically get these things, people need to live well below their means on a daily basis. The widespread lack of financial literacy and the deep rooted expectation of this "American Dream" lifestyle is putting families at risk of significant debt in today's low wage, high cost environment.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5971
When shame is deserved
Poet wrote:

The author, Neal Gabler, chose to live in a very rich neighborhood, had his film executive wife quit her lucrative job to take care of the kids, made multiple poor decisions, didn't save, and to top it off, he and is wife "have no retirement savings, because we emptied a small 401(k) to pay for our younger daughter’s wedding".

No one can have it all. Choose wisely.

Poet

Well, the author of that article should be ashamed.  That's the natural reaction to repeatedly making stupid decisions.

He bought into the Great Credit Swindle and borrowed just like everybody else was doing mainly, it seems from his descriptions, to fit in and live like everybody else.

His appearances were all fine, but his bank balances were a shambles.

Imagine choosing to live with all of that constant stress and worry just to have a few temporary indulgences and for the sake of appearances...when the alternative was to simply live differently, more modestly, and more in alignment with one's income.

I wonder if this is a new phenomenon?

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

     ~ Charles Dickens in David Copperfield

I guess not.  And I guess that writer in the article ought to do some more reading?

Yoxa's picture
Yoxa
Status: Gold Member (Offline)
Joined: Dec 21 2011
Posts: 306
Living within our means
Quote:

 However, to realistically get these things, people need to live well below their means on a daily basis

Yes. YES.

An uncle of mine who used to be a credit union manager always preached to his nieces and nephews that it would be easier to become rich if we eschewed trying to look rich.

His advice was that whatever our income level, we should be systematic about putting a percentage of our earnings into long-term savings and investments. Set up some automatic withdrawals to stash the cash before we even saw it. He recommended ten percent, but consistency mattered as much as the amount.

Then, once that was covered, live however we wanted on what was left.

 

thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1714
We have met the enemy, and he is us.

Neal Gabler is a perfect illustration of my claim that "we the people" are the crux of the problem. With a nation of citizens and dependents like him no wonder we're broke, up to our eyeballs in unpayable debt, and absolutely uninterested in addressing the three E's in an adult conversation. And no wonder we have a government and financial system like we do: we're mirror images of each other. A people like us could end up no where else than right where we are.

I am aware that the the influence goes both ways between "we the people" and govt/financial system/elites. However, I believe the solutions will only come from a chastened and reformed citizenry. I hold out no hope that just the right leader(s) will come along and lead us to the promised land (at least not until after we hit the wall and come to see the errors of our ways).

"Welcome to the Hunger Games. And may the odds be ever in your favor."

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5687
harvard

When private schools and Harvard is a must-have, I gotta say, everything else pretty much flows from that.

What do they call it - champagne taste on a beer budget?

I went to public schools, and a public state university, and it worked out pretty well for me.  Ok, so the public schools were boring, but the university was pretty decent.

But its also education.  Were any of us taught about basic survival economics during our "education"?  The stunning lack of practical life skills as curriculum is mind-blowing.  And possibly deliberate.  If everyone is educated about the cost of debt and interest payments from a young age, how would you get everyone into debt slavery?

We imagine slavery is outlawed in the modern age.  Nope - it just changed form.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2391
Thanks Dave...

Decidedly not the words of a banker shill;

If everyone is educated about the cost of debt and interest payments from a young age, how would you get everyone into debt slavery?

Now if we could just get you to understand about how the metals markets are manipulated  : )

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 338
Disney

Many years ago we took a trip to Disney.I was resting and began a conversation with an incredible family.Both mother and grandma worked in the school lunchroom.The father worked two jobs.It took that family 8 years to save up for that trip.They timed it so that the kids would have a memory to cherish.They were all in new outfits and enjoying snacks that grandma placed in plastic bags.It was a true celebration.As I walked away,I burst into tears never being more proud of a group of human beings.We forget that median income is in the neighborhood of 50 grand for a family of four in this country.I no longer have time for entitled white people problems...

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