- China Watchdog Said to Tell Small Banks to Set Aside Fund. China’s banking regulator ordered some of the nation’s smaller lenders to set aside more funds to avoid a cash shortfall, three people with knowledge of the matter said, signaling rising concern that defaults may climb. China Banking Regulatory Commission branches asked some city commercial banks and rural lenders to strengthen liquidity management this year, the people said, asking not to be identified because the matter is confidential. Different requirements are being instituted by province, such as quarterly stress tests, after CBRC studies last year showed increasing risks at those lenders, the people said.
- Junk Yield Premiums Soar on China’s Looming First Default. The extra cost to borrow for China’s riskiest companies is at the highest in 20 months as soaring interest rates heighten concern the nation will experience its first onshore bond default. The yield gap on five-year AA- notes over AAA debt jumped 27 basis points last month to 224, the most since June 2012, Chinabond indexes show. Ratings of AA- or below are equivalent to non-investment grades globally, according to Haitong Securities Co., the nation’s second-biggest brokerage. The similar spread in the U.S. is 403 basis points, Bank of America Merrill Lynch data show.
- EU Struggles With One Ukraine Policy Amid Default Warning. European Union leaders are struggling to come up with a united policy toward Ukraine as anti-government protesters warn that President Viktor Yanukovych is leading the nation toward default.
- European Stocks Are Little Changed as L’Oreal, Nokia Rise. European stocks were little changed as L’Oreal SA and Nokia Oyj rallied, offsetting worse-than-forecast reports on industrial production in France and Italy. L’Oreal jumped the most since May 2010 as Nestle SA (NESN) was said to explore ways to reduce its 29 percent stake in the biggest cosmetics maker. Nokia advanced 2.8 percent after HTC Corp. agreed to pay it royalties as part of a patent-row settlement. Securitas (SECUB) AB fell 1.5 percent after reporting quarterly profit that missed projections. The Stoxx Europe 600 Index gained less than 0.1 percent to 325.3 at the close in London.
- Gold, Silver Futures Head for Longest Rally Since August. Gold has climbed 6 percent this year amid currency turmoil in emerging markets, while about $1.63 trillion has been erased from the value of global equity markets. The metal rose 70 percent from December 2008 to June 2011 as the Fed pumped more than $2 trillion into the financial system. Janet Yellen, the new chairman, will deliver her first testimony to Congress tomorrow. “The safe-haven premium is back with growth concerns re-emerging,” Bart Melek, an analyst at TD Securities in Toronto, said in a telephone interview. “Tomorrow, people will be watching Yellen’s determination to continue with tapering.” Gold futures for April delivery rose 1 percent to $1,275 an ounce at 11:30 a.m. on the Comex in New York. The price has climbed for the fourth straight session, the longest rally since Aug. 12. Silver futures March delivery advanced 0.8 percent to $20.095 an ounce. The metal climbed for the sixth straight session, the longest rally since Aug. 16.
- U.S. Winter Storm Seen Spreading Snow, Sleet Across South. Georgia’s governor declared a state of emergency for 45 counties and Atlanta canceled classes for tomorrow and the next day as a winter storm neared, less than two weeks after a system stranded thousands of people in cars, buses and schools. The region may get 1 to 3 inches (2.5 to 7.5 centimeters) of snow and ice over the next three days as the storm moves from Texas to the Atlantic Ocean, according to the U.S. National Weather Service. Sleet and snow will begin falling late today or early tomorrow, the agency said.
- VIX Traders Pile Into S&P 500 Rebound Bets as Puts Jump: Options. Traders are making unprecedented use of the options market to bet on a rebound in U.S. stocks. Ownership of puts on the Chicago Board Options Exchange Volatility Index reached a record 3.2 million on Feb. 6, according to data compiled by Bloomberg. Money poured into the bets against the VIX (VIX) after the gauge, used by investors as insurance against share losses because it rises when equities fall, climbed to a 13-month high of 21.44 last week before collapsing to 15.29 by Feb. 7. The trading shows some investors have been unconvinced that turmoil in emerging markets and signs of slowing growth in the U.S. and China would spur lasting declines in the Standard & Poor’s 500 Index.
- 'Doc Shock' Reaches the Masses. In December, I predicted that “doc shock” was going to be a major problem for the U.S. health-care overhaul, as people found out that the narrow networks insurers use to keep premiums low often don’t cover the top-notch doctors you’d like to see if you get really sick:
- Rising Borrowing Costs Pose Risks in China. Borrowing costs for Chinese companies are rising strongly, a shift that could herald weaker corporate profits, slower economic growth and even the first defaults by increasingly indebted corporations on the mainland. Driven by a surge in borrowing in recent years, Chinese companies amassed an estimated $12.1 trillion worth of debt at the end of last year, according to Standard & Poor's. That compares with an estimated $12.9 trillion for U.S. businesses, now the world's most indebted. The ratings company estimates that debt at Chinese companies is poised to exceed the U.S. total this year or next. "The leverage in the corporate sector is already very high and does pose a latent risk to the entire economy," said Shuang Ding, an economist at Citigroup Inc. C -0.18% Challenges for companies are mounting as the government tightens credit and investors demand higher yields to fund borrowers.
CNBC:
- US takes India to task—and court—over solar subsidies. The United States plans to take India to the World Trade Organisation over subsidies New Delhi gives to its solar power industry, an Indian government source said on Monday, a step that could further strain relations between the countries.
Business Insider:
CNN:
- Source: U.S. debating targeted killing of American terror suspect overseas. The Obama administration is in high-level discussions about staging an operation to kill an American citizen involved with al Qaeda and suspected of plotting attacks against the United States, a senior U.S. official tells CNN.
- Mexico auto production rose 2.7 pct in Jan, exports down 0.4 pct. Mexican auto production rose while exports fell in January, the Mexican Auto Industry Association (AMIA) said on Monday. Production rose 2.7 percent to 249,400 vehicles while exports dropped 0.4 percent to reach 177,928 units during the month, AMIA said.
- Europe, China help McDonald's offset soft U.S. sales in January. McDonald's Corp on Monday reported better-than-expected global sales at established restaurants for January as gains in Europe and China helped the company offset weak numbers in United States, where customers remained cautious in their spending.
- China CBRC to Curb LGFV Non-Standardized Loans. China Banking Regulatory Commission told lenders to rein in "non-standardized loans" to local government financing vehicles this year at a regulatory meeting after Chinese lunar New Year, citing a person familiar with the matter.
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