- China Money Rates Surge as Banks Struggle to Meet Demand. China’s benchmark money-market rate climbed for a seventh day and interest-rate swaps increased as banks hoarded cash to meet year-end regulatory requirements. The seven-day repurchase rate, a gauge of funding availability in the banking system, jumped 124 basis points today to 8.84 percent, the highest level since June 20, according to a daily fixing from the National Interbank Funding Center. The rate, which has more than doubled from 4.37 percent in the past week, touched a record 10.77 percent in June.
- China Steps Up Graft Crackdown Targeting Ministers to Chiefs. Chinese authorities are stepping up a crackdown on corruption, including confiscating the passports of some local leaders, in moves that underscore President Xi Jinping’s determination to root out graft. Vice Minister of Public Security Li Dongsheng became the second member of the Communist Party’s central committee to be probed this year for suspected corruption. The capital of southern Guangdong province told 2,014 village chiefs to hand in their passports to prevent corrupt local officials from fleeing abroad, the Guangzhou Daily reported. Targeting those Xi has described as both “tigers and flies” -- cadres at the top and bottom of the power ladder -- may help bolster the party’s image as economic expansion slows and public discontent over corruption increases.
- Central Bank Chiefs to Weigh Debt Rule Changes Amid Bank Outcry. Central bankers from around the world will meet next month to discuss whether to scale back their plans for a debt limit that banks say will force them to rein in lending. Bank of England Governor Mark Carney has said that central bank and regulatory chiefs will meet in Basel in January “to come to an agreement, an international agreement, on the definition” of the debt-limit rule, known as a leverage ratio. The meeting will take place on Jan. 12, according to three people with knowledge of the plans. Banks such as BNP Paribas SA (BNP), Bank of America Corp. and Citigroup Inc. (C) have called for a rewrite of the draft leverage rule published in June, saying it would adversely affect economic growth and job creation, make it more expensive for governments to sell their debt and give banks incentives to invest in riskier assets.
- Italy Approves ‘Google(GOOG) Tax’ on Internet Companies. Italy’s Parliament today passed a new tax on web advertising, the so-called “Google tax,” which will require Internet companies to sell ads from locally-registered companies, instead of from units based in havens such as Ireland, Luxembourg and Bermuda. The tax has stirred controversy, with some lawyers saying it probably violates European Union laws regarding non-discrimination over commercial activity and could be subject to legal challenges.
- European Stocks Climb on IMF Outlook. European stocks advanced, posting the biggest four-day rally since April, after the International Monetary Fund said it will raise its U.S. growth outlook. ARM Holdings Plc, which designs chips for Apple Inc. (AAPL)’s iPhones, increased 3.9 percent as the U.S. company struck a deal to sell the smartphone through China Mobile Ltd. Lanxess AG rose 4.4 percent after its chief executive officer said the chemical maker will reach its full-year earnings forecast. Orell Fuessli Holding AG declined 2.2 percent after predicting “clearly negative” earnings for 2013. The Stoxx Europe 600 Index climbed 0.7 percent to 323.40 at the close of trading in London.
- Junk Loans Top ’08 Record as Safeguards Stripped: Credit Markets. “The worst deals are made in the best of times is a phrase we hear often,” Frank Ossino, a money manager in Hartford, Connecticut, who oversees $2.5 billion of loans at Newfleet Asset Management LLC, said in a telephone interview. “While the default environment will remain low, ever more aggressive transactions become the seeds of the next default cycle.”
- Margin Debt Hits Yet Another New High. Investors borrowed another record amount against their brokerage accounts in November, as so-called margin debt rose for a sixth straight month. Last month, investors borrowed $423.7 billion against their portfolios, exceeding October’s record of $412.4 billion, according to the New York Stock Exchange. The Big Board’s member brokerage firms report the level of borrowing, known as margin debt, held against client accounts monthly. Margin-debt levels rose 2.7% from the prior month.
- Obamacare raising health costs for most, poll finds. A survey of 18,000 MarketWatch readers on the impact of health reform.
- Chart of the Day: Obamacare's middle class burden. As the New York Times reported on Saturday, those who just barely qualify for subsidies under the Affordable Care Act pay a small fraction of those who just barely do not qualify. In some cases that difference can be a few hundreds of dollars, but in others — like Polk County, Wisconsin — the gap can be thousands of dollars.
- US Savings Rate Slides As Personal Incomes Below Expectations; Real Disposable Income Growth Tumbles. (graph)
CNN:
- CNN Poll: Health care law support drops to all-time low. Only 35% of those questioned in the poll say they support the health care law, a 5-point drop in less than a month. Sixty-two percent say they oppose the law, up four points from November. Nearly all of the newfound opposition is coming from women.
Reuters:
- Italian, Spanish bond yields rise on talk local banks may sell. Spanish and Italian bond yields rose on Monday amid speculation that banks in both countries may reduce their holdings before the European Central Bank reviews their balance sheets next year.
- Europe banks overexposed to domestic debt. The economic fates of European governments and financial institutions are set to become ever more intertwined next year despite concerns about the rise of a potentially destabilising “sovereign-bank” nexus.
- China's cash crunch threatens Shadow Banking shock. The credit squeeze in China is no longer a local issue and any misjudgment by the central bank will have global ramifications.
- Bank of England warning on housing bubble as prices rise. Andrew Bailey says Bank of England is watching the housing market carefully and will not allow a 'free-for-all’ in mortgage provision.
- Chinese Bankers Pay Close Attention to Local Debt Issues. Chinese bankers are paying close attention to protection of lender's rights and government intervention as local government liabilities come due, citing a survey result from the China Banking Association.
- China Academy Sees Risks From Property Loan, Local Debt. Major risks that China faces in the near term are in property lending, local debt and banks' bad loans, citing a report by the Chinese Academy of Social Sciences. Longer-term risks include overseas assets and corporate debt.
- China to Halt Some New Projects to Curb Overcapacity. China will ban new construction projects in the steel, electrolytic aluminum and cement industries in the next few years to curb overcapacity, citing Miao Wei, Minister of Industry and Information Technology.
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