Daily Digest

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Daily Digest 5/4 - China's Coming Bank Bailout, Rising Health Care Costs Weigh On Voters

Wednesday, May 4, 2016, 8:36 AM

Economy

Report: County's Pension System Falls Below Previous Funding Levels (Riverside)

In fiscal year 2014-15, the pension fund behemoth earned a negligible 2.4 percent in returns, according to the PARC report. The value of CalPERS' holdings since the start of the Great Recession in 2008 is down 21.2 percent, despite double-digit returns in four of the last six fiscal years, documents show

Politics In Real Life: Rising Health Care Costs Weigh On Voters

Rising deductibles and copayments can mean people don't get much benefit from paying monthly premiums. A recent study from the Kaiser Family Foundation shows deductibles rose about eight times faster than wages in the past 10 years. That's taking a toll on people like Powell, even though they have insurance.

Oil town Americans late on car loan payments

Senior loan officers of nearly 100 banks acknowledged that credit quality has "deteriorated" on everything from auto loans and credit cards to commercial real estate mortgages. Translation: More people aren't paying and delinquencies are rising.

Australia's Central Bank Cuts Rates to Record Low

Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent Tuesday, a move predicted by just 12 of 27 economists surveyed by Bloomberg. The rest had seen no change. Data last week showed quarterly deflation in the consumer price index and the weakest annual pace on record for core inflation -- which the RBA aims to keep between 2 percent and 3 percent on average.

Saudi builder Binladin cuts 77,000 jobs, to lay off Saudis

The cuts have forced Binladin and other construction companies to delay paying some workers' salaries, in some cases for months. In response, some unpaid staff have stopped turning up for work, slowing work on some Binladin projects such as the King Abdullah Financial District in Riyadh.

Illinois's Record Budget Standoff Risks Getting More Entrenched

After the end of May, it will take a super-majority to approve a spending plan. Without one in place, the queue of unpaid bills is rising even as the state spends about $500 million a month more than it brings in.

The riskiest energy companies are defaulting at a record rate

Two companies have pushed the default rate on risky bonds in the energy sector to an all-time high.

With Clock Ticking, Atlantic City Avoids Default -- But How Much Time Did It Buy

Still, the city government remains on borrowed time thanks to its severe financial problems, with only enough money on hand to get through the rest of this month.

Detroit in a downward spiral as budget dries up

Detroit has been breaking down, bit by bit, before our eyes. On Monday, most of its students could not go to school and on Tuesday, the taps will go dry for thousands.

EU Cuts Euro-Area Inflation Forecast, Warns Nations on Debt

Even as the ECB uses a mix of low or negative interest rates in addition to 80 billion euros ($92 billion) per month in asset purchases, inflation is expected to be less than half the 0.5 percent the commission predicted in February when it last issued forecasts, and below the ECB’s goal of just under 2 percent. It will average 1.4 percent in 2017, the commission said.

Chinese cities dive back into debt to fuel growth even as defaults rise

The increased borrowing for an economy already swimming in debt adds to concerns about growing bubbles in certain major asset classes, such as real estate and commodities, and a bond market seeing a rise in corporate defaults.

Australia’s A$500 Billion Debt Pile to Test Bond Buyer Appetite

Australia’s debt pile could increase at a faster pace next fiscal year as the government struggles to rein in its budget deficit, testing the appetite of global investors for the country’s bonds.

Listed Chinese companies suffer first profit drop since 2008

Publicly traded companies in China saw net profit dip in 2015 for the first time since the global financial crisis hit in 2008, as a wide range of businesses from resources to home appliances struggled amid the country's economic slowdown.

China's Coming Bank Bailout

China's trend toward off-balance-sheet lending mirrors what many Western banks did before the 2008 crisis. Lenders created trusts that bought mortgages, which were then sliced and diced into tradable securities before being sold to investors. Moving the loans off their books enabled the banks to continue lending.

Puerto Rico warns of more defaults after missing May payment

Gov. Alejandro Garcia Padilla warned that Puerto Rico bond investors face a cascade of defaults starting in July unless Congress passes legislation that facilitates a restructuring of the commonwealth’s debt.

Corporate Brazil faces cash risks through 2017 -Moody's

A Moody's team of analysts led by Erick Rodrigues said in a report that the number of companies facing high funding risks rose to 33 percent last year, from 28 percent in 2014. More debt is maturing than companies can generate cash to make payments, while banks are refinancing fewer loans, the analysts said.

IMF cuts Africa growth forecast to 3% in 2016

Economic growth in sub-Saharan Africa will slow to 3 per cent in 2016 as much of the continent reels from low commodity prices, the International Monetary Fund has warned.

EU forecasts France, Italy, Spain, to miss budget targets

France, Italy and Spain are set to miss European Union budget targets this year and next without urgent government action, European Commission forecasts showed on Tuesday.

EU Sees Weaker Growth in Eurozone and Wider EU as China Slowdown Weighs

Growth in the eurozone and the wider European Union will be slightly weaker this year than previously forecast, the European Commission said Tuesday, warning that the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membership could weigh on the economy.

U.S. data is being leaked, ECB study suggests

Key U.S. economic information may have been leaked ahead of its release, judging from the price moves in key equity and bond futures contracts, according to a study released Monday.

Gold & Silver

Click to read the PM Daily Market Commentary: 5/3/16

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

saxplayer00o1's picture
saxplayer00o1
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Posts: 4239
Negative yielding bonds total near $10 trln, Japan leads -Fitch

Fitch: Widening Pool of Negative-Yielding Debt Squeezing ...

Reuters-32 minutes ago
(The following statement was released by the rating agency) NEW YORK, May 04 (Fitch) Growth in the amount of sovereign debt trading at negative yields is ...

Negative yielding bonds total near $10 trln, Japan leads -Fitch

Reuters-1 hour ago
The hefty amount of negative-yielding sovereign bonds in late April, due to ... Using 2011 yield levels, this amount of debt would have yielded 1.23 percent or ...

Emerging Markets Face Downgrades as Debt Cliff Nears, S&P Warns

Bloomberg-2 hours ago
Emerging markets from the Gulf to Russia are under threat of sovereign ratings downgrades as public companies struggle to meet rising debt loads, S&P Global ...

ECB expected to phase out 500-euro banknotes

Deutsche Welle - ‎3 hours ago‎
"It gives the impression that the main reason for the abolition is to push interest rates further into negative territory." The debate over the utility of the big bills comes as trust in the ECB plumbs all-time lows in Europe's largest economy. For ...

Janus's Bill Gross: 'Helicopter money' is coming in a year or so

Yahoo News - ‎3 hours ago‎
Gross may not be entirely serious about "helicopter money," but in his latest Investment Outlook note published Wednesday, he said the Federal Reserve and U.S. Treasury should engage in another round of quantitative easing (QE), printing trillions of ...

PBOC Opens Taps to China Policy Banks in Bid to Sharpen Stimulus

Bloomberg - ‎5 hours ago‎
"The pledge shows the PBOC is determined to support credit expansion to stabilize economic growth," said Ming Ming, head of fixed income research at Citic Securities Co. in Beijing, who previously worked in the central bank's monetary policy division.

China's Buildup of $26 Trillion in Public, Private Debt

Bloomberg-22 hours ago
In today's “QuickTake” Bloomberg's David Gura takes a look at China's $26 trillion debt load. He speaks on "Bloomberg Markets." (Source: Bloomberg) ...

The $571 Billion Debt Wall That Points to More Defaults in China

Bloomberg-22 hours ago
Chinese debt investors are turning bearish at just the wrong time for the nation's corporate borrowers, which face a record 3.7 trillion yuan ($571 billion) of local ...

US oil industry bankruptcy wave nears size of telecom bust

Reuters-3 hours ago
... mid-2014 erased as much as $1.02 trillion from the valuations of U.S. energy ... U.S. oil and gas companies sold about $350.7 billion in debt between 2010 ...

Asian Banks' $60 Billion Hole

Bloomberg-10 hours ago
... the amount earmarked to deal with souring debt and what banks would need if ... Asia's top 200 publicly traded banks had $16.7 trillion in assets last year, ...

Canada's debt map: How much governments have borrowed where ...

CBC.ca-6 hours ago
Provinces also run deficits, and build up big debts in the process. Ontario has a debt of $296 billion, or about $21,470 per person. Quebec's debt is $187 billion, ...

Canada March trade deficit widens to record as exports slump

Reuters - ‎2 hours ago‎
The deficit, far greater than a C$1.40 billion shortfall forecast by analysts in a Reuters poll, came as Canada is already struggling to deal with the prolonged effects of an oil price slump. Exports to the United States, which accounted for 74.2 ...
DennisC's picture
DennisC
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Posts: 342
Re: Illinois (and the rest)

"GET TO DA CHOPPA!"

Tall's picture
Tall
Status: Platinum Member (Offline)
Joined: Feb 18 2010
Posts: 564
Time to turn up the heat on those who are wrecking planet Earth
McKibben:
Global warming is the biggest problem we’ve ever faced as a civilisation — certainly you want to act to slow it down, but perhaps you’ve been waiting for just the right moment. 
 
The moment when, oh, marine biologists across the Pacific begin weeping in their scuba masks as they dive on reefs bleached of life in a matter of days. The moment when drought in India gets deep enough that there are armed guards on dams to prevent the theft of water. The moment when we record the hottest month ever measured on the planet, and then smash that record the next month, and then smash that record the next month? The moment when scientists reassessing the stability of the Antarctic ice sheet have what one calls an ‘OMG moment’ and start talking about massive sea level rise in the next 30 years? 
 
That would be this moment – the moment when 135 children have drowned in Thailand trying to cool off from the worst heatwave on record there. The moment when, in a matter of months, we’ve recorded the highest windspeeds ever measured in the western and southern hemispheres...
 
http://www.theguardian.com/environment/2016/may/03/the-time-has-come-to-turn-up-the-heat-on-those-who-are-wrecking-planet-earth
 
phecksel's picture
phecksel
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Posts: 204
Story on Detroit is another

Story on Detroit is another ridiculous piling on story.

Detroit has it's own problems.  

City's schools are a mess, many of which were self created.  Teachers are getting paid and expected to get paid through the rest of the school year.  Many of the building are dilapidated, but with several former school and district leaders now under investigation for criminal fraud, maybe if they had used that money to maintain buildings?  The total amount of waste and fraud is staggering.  With the city's residents becoming spread out further and further, it's putting a strain on maintaining "neighborhood" schools.  Charter schools have to turn away students, as the are very successfully running the business.

WRT water, of course people are getting their water turned off.  You don't pay your bills you lose your water.  Water dept fights to overcome the enterprising people that follow the shut off trucks and offer to turn the water on for people for a nominal charge.

Tall's picture
Tall
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Posts: 564
Florida Reefs Are Dissolving Much Sooner Than Expected
Some of the reefs around the Florida Keys are dissolving. They may have crossed a tipping point due to increasing ocean acidification, raising the alarm that climate change impacts in the ocean are continuing to happen at a much quicker pace than scientists previously suspected.
 
Rising carbon dioxide levels in the atmosphere are making seas more acidic. That makes it harder for coral to build up their skeletons.
 
Scientists expected that the rising tide of acidic waters would cross a tipping point and start dissolving reefs by mid-century. But some of Florida’s reefs appear to be getting a head start, according to research published in Global Biogeochemical Cycles on Monday.
 
http://www.climatecentral.org/news/florida-reefs-dissolve-much-sooner-than-expected-20309

 

 
 
Time2help's picture
Time2help
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Posts: 2890
April Marks 12th Straight Month of Record Gun Sales

April Marks 12th Straight Month of Record Gun Sales (Washington Free Beacon)

Quote:

This April saw the most gun-related background checks of any April on record, making it the 12th month in a row to achieve a high water mark for gun sales.

The FBI ran 2,145,865 checks through the National Instant Background Check System last month, according to the agency’s records. That represents more than a 400,000 increase over the previous record set in April 2014. Though the numbers represent the best April on record, the month also saw the fewest checks of any month thus far in 2016.

The trend of record-setting months began last May. In that period the background check system has seen records set for the most checks in a day, month, and year. Thus far 2016 is on pace to pass 2015 as the best year on record for gun-related background checks.

The number of background checks is considered a reliable barometer for gun sales as nearly all sales made through licensed firearms dealers must by law include such a check. Some states also require a background check for gun sales between private citizens.

Rector's picture
Rector
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Posts: 515
And That's Not All. . .

The NICS background checks numbers are increasing and maintaining record levels but that't not all of the sales.  In many states (Texas for one) anyone who holds a License To Carry doesn't need a NICS check when purchasing a firearm.  This group is large (almost 1 million licensees in Texas) and represent the most enthusiastic gun purchasing group.  I know from personal experience that folks in this category are buying weapons and ammunition with both hands.  

The other group of purchases not captured by the NICS process is anytime a gun is sold between two citizens and a Federal Firearm Licensee is NOT involved (person-to-person sale).  This market in used guns is enormous and growing as the total number of guns in the population increases.

Suffice to say that the total number of firearms in existence is unknowable but a 2012 Congressional Research Service report put the number of civilian firearms at 242 million in 1996, 259 million in 2000, and 310 million as of 2009.  

This is a good thing.

Rector

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4239
Alarm bells ring over negative interest rates

Alarm bells ring over negative interest rates

Financial Times-3 hours ago
As a result of low and sub-zero yielding sovereign debt in Japan and Europe, many investors are forced to buy riskier bonds with lower ratings, or longer-dated ...

Negative bond yields cost investors $24bn annually

Financial Times-19 hours ago
As a result of low and even negative yielding sovereign debt, many investors are forced to buy riskier bonds with lower ratings, or longer-dated bonds. But that is ...

 

Emerging markets face credit threat from ageing populations

Financial Times-6 hours ago
By 2050, S&P expects average debt in emerging markets to rise from 42 per cent ... “investment-grade” sovereign ratings, according to S&P, putting pressure on ...

Latin America's Only Net Creditor About to Rejoin Mere Mortals

Bloomberg-4 hours ago
Take into account last year's 14 percent slump in the peso, which pushed up the value of foreign assets held by the sovereign wealth funds, and the debt ...

Stan Druckenmiller: The Fed has no end game, and 'the chickens are now coming home to roost'

Yahoo Finance - ‎17 hours ago‎
It's traded for 5,000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates. Some regard it was a metal. We regard it was a currency, and it ...
 

Bill Gross: Helicopter money is coming -- or else

CNNMoney - ‎22 hours ago‎
Gross, a fund manager at Janus, wrote on Wednesday that he thinks global central banks -- including the U.S. Federal Reserve -- will be forced to do the economic equivalent of dropping money from helicopters. "The alternative is an immediate visit to ...

China's central bank pumps more money into market

Xinhua - ‎5 hours ago‎
The People's Bank of China (PBOC) conducted 130 billion yuan (20 billion U.S. dollars) in seven-day reverse repurchase agreements (repo), a process in which central banks purchase securities from banks with an agreement to resell them in the future.

Long list of China high-yield issuers due to make May debt payments

Reuters-15 hours ago
SHANGHAI A long list of high-yield bond issuers are due to make debt payments in May in the $8 trillion market, which is pricing in increasing risks following an ...

The Junk-Rated, JPMorgan-Owned China Bond Insurer Growing at ...

Bloomberg-7 hours ago
While China's insurers still cover a small fraction of the country's total debt, ... from the State Council on the size of credit guarantees in China -- 2.7 trillion yuan ...

China Fertilizer Maker to Default on Bonds Amid Debt Woes

Bloomberg-10 hours ago
A Chinese fertilizer maker said it will default on bonds Thursday, becoming at least the eighth company to renege on debt obligations in the nation this year as ...

China fertiliser default highlights rising credit risk
Financial Times-6 hours ago

Bankruptcies spread through oil patch, more than 175 companies are 'high risk'

Petro Global News - ‎21 hours ago‎
The number of U.S. oil firms filing for bankruptcies is swiftly approaching levels last seen during the telecom bust. According to Reuters, 59 U.S. oil firms have filed for bankruptcy since prices began falling in 2014, just nine filings shy of the 68 ...

Seven banks settle rate-rigging suit for $324 million

Business Insurance-21 hours ago
... accusing them of rigging an interest rate benchmark used in the $553 trillion ... swaps transactions, commercial real estate mortgages and structured debt ...

Michigan House passes $500M Detroit schools restructure plan

KFDA - ‎3 hours ago‎
They said the plan would ensure all teachers are paid and the district eliminates debt. The House measure did not include a ... "I have never had a more difficult time in providing half a billion dollars," Pscholka told fellow lawmakers. Republican ...

How Puerto Rico's $70 Billion Crisis Is About to Get Catastrophic

Bloomberg-1 hour ago
Puerto Rico missed a $400 million debt payment on Sunday, and bigger, more consequential defaults could follow. But how did things get so bad in the first ...

Moody's rating agency concerned by Australia's debt and deficit

The West Australian - ‎13 hours ago‎
In the Budget, Mr Morrison predicted a lift in economic activity and a lid on spending would drive down the Budget deficit which this year is tipped to hit $40 billion. The Budget predicts that by the end of this decade the deficit will be down to just ...

Russian FinMin spends over $5 bln from Reserve Fund in April to ...

Reuters-3 hours ago
MOSCOW May 5 Russia's Finance Ministry resumed depletion of its Reserve Fund in April, spending over $5 billion to finance the budget deficit, the ministry ...

Emanuel vows fiscal fix before muni audience

Crain's Chicago Business-21 hours ago
Chicago continues to struggle with a structural budget deficit and a $20 billion unfunded pension liability. Rulings by the Illinois Supreme Court both this year ...

Atlantic City Cut Deeper Into Junk by S&P Expecting Default

Bloomberg-18 hours ago
Atlantic City's credit rating was cut deeper into speculative grade by S&P Global Ratings, which said a default or a debt restructuring in the distressed New ...

South Africa Junk Rating a Matter of Time as Economy Falters

Bloomberg-9 hours ago
The cost of insuring against a default by the government for five years using ... There is a “real possibility” that the nation's debt assessment will be cut, S&P ...

US job cuts rise to 65141 in April; 2016 layoffs at 7-year high: Challenger

CNBC - ‎3 hours ago‎
"We continue to see large scale layoffs in the energy sector, where low oil prices are driving down profits. However, we are also seeing heavy downsizing activity in other areas, such as computers and retail, where changing consumer trends are creating ...

Venezuela faces economic melt-down (Video)

Deutsche Welle-22 hours ago
With inflation going through the roof, Venezuela seems on the brink of collapse. The country is also facing a dire power shortage, and the recent drastic ...

 

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1988
bucking the trend

Well, at least I have a new job. Part time, and lots of good challenges, but then if you can make 'em profitable they will pay for your work. 

People nowadays seem to forget that whole "profitability" thing. 

 

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