Wednesday, March 16, 2016

Today's Headlines

  • China Traders Hold Noses at Plan to Repackage Bad Loans as Bonds. Bond traders at Chinese banks say they’ll avoid notes backed by the nation’s highest non-performing loans in a decade. Regulators will allow domestic banks to issue up to 50 billion yuan ($7.7 billion) of such asset-backed securities and Bank of China Ltd. plans its first sale since 2008, people familiar with the matter said last month. Guangzhou Rural Commercial Bank Co. said it wouldn’t be interested in buying debt underpinned by NPLs due to lack of transparency. Guangdong Shunde Rural Commercial Bank Co. said probably only wealth-management departments of lenders would want to add exposure to soured loans. “It would be too risky for us to invest,” said Lin Yijian, a bond trader at Guangzhou Rural Commercial Bank in the southern city of Guangzhou. "We wouldn’t know what exactly would be in the bundled assets and it would take a long time for us to do due diligence on them."
  • European Stocks Little Changed as Oil Jump Offsets Bank Slide. (video) European shares were little changed as a surge in oil helped offset sliding banks, while investors speculated on the Federal Reserve’s latest policy meeting. Energy stocks jumped as crude rallied after Qatar’s energy minister said some OPEC members will meet with other producers in April to resume talks on capping output. Prudential Plc led insurers higher after an industry levy was raised less than expected in the U.K. budget. UBS Group AG paced lenders lower, sliding 4.8 percent after saying its wealth-management and investment-banking units didn’t recover in the first quarter. The Stoxx Europe 600 Index added less than 0.1 percent at the close of trading, after falling as much as 0.6 percent and rising 0.5 percent.
  • Moving Average Math Is Firing Bearish Signals at S&P 500: Chart. (graph) The Standard & Poor’s 500 Index is up against two technical resistance levels and a bearish indicator that may halt its rise after one of the fastest rallies in recent years. Up as much as 12 percent in the past four weeks, the index is testing its 200-day moving average and a short-term trend line of lower highs that began in November. More troubling: About 90 percent of the index’s members are trading above their 50-day moving averages, a level that has repeatedly preceded dips.
  • Oil Freeze Won't Dent Global Glut Even With Wider Support: Chart. (video) If Saudi Arabia and Russia were to pull off a diplomatic coup and persuade producers all over the world to join their oil-output freeze, it would have little impact on the global surplus. That’s because Iran and Brazil, the two countries the International Energy Agency predicts will add most supply this year, have shown little interest in participating. Even if other suppliers as diverse as Argentina and Equatorial Guinea agreed to cap output, their combined efforts would curb supply this year by just 50,000 barrels a day, or 5 percent of the global production surplus, IEA data show.  
  • Fed Scales Back Rate-Rise Forecasts as Global Outlook Weakens. (video) Federal Reserve officials held off from raising borrowing costs and scaled back forecasts for how high interest rates will rise this year, citing the potential impact from weaker global growth and financial-market turmoil on the U.S. economy. The Federal Open Market Committee kept the target range for the benchmark federal funds rate at 0.25 percent to 0.5 percent, the central bank said in a statement Wednesday following a two-day meeting in Washington. The median of policy makers’ updated quarterly projections saw the rate at 0.875 percent at the end of 2016, implying two quarter-point increases this year, down from four forecast in December.
  • Treasuries Surge as Fed Lowers Forecast for 2016 Rate Increases. Treasuries surged, with two-year note yields falling by the most in more than a month, after the Federal Reserve left interest rates unchanged and lowered its projected path for increases this year. Yields fell after Federal Open Market Committee officials cited the potential impact from weaker global growth and financial-market turmoil on the U.S. economy in a statement at the conclusion of their two-day meeting. After weeks of financial-market volatility at the start of 2016, traders had wagered that there was almost no chance of a rate increase at this meeting.
  • Peabody Energy(BTU) Raises ‘Going Concern’ Doubts in Filing. Peabody Energy Corp. may not have enough liquidity to continue operating and said it may need to seek bankruptcy protection if it can’t raise additional capital. “We may not have sufficient liquidity to sustain operations and to continue as a going concern,” the largest U.S. coal miner said in a 10-K filing on Wednesday. The current plan to find other sources of capital and improve operating performance may not be successful and St. Louis, Missouri-based company said it may need to seek protection under Chapter 11 of the U.S. bankruptcy code.
  • Valeant(VRX) Shatters Creditor Calm as Debt Casts Bigger Shadow. (video) Valeant Pharmaceuticals International Inc. is losing the confidence of its biggest investor base: debt markets that lent the drugmaker more than $30 billion to fund its rapid expansion. The company’s bonds plunged Tuesday by the most ever, pushing the yield on its most actively traded securities above 10 percent for the first time after it slashed its forecast for the year and warned that it may breach debt agreements. Credit analysts at Barclays Plc lowered their outlook on the debt, and Moody’s Investors Service cut its credit rating on the company deeper into junk.
  • Trump Causes Fox to Scuttle Debate, Warns of Possible Convention Riots. (video) Ohio Governor John Kasich said that if Trump skipped the debate, he would, too—and the network pulled the plug. Fresh off three more primary victories, Donald Trump vowed Wednesday to blow off the next Republican presidential debate and warned of “riots” if power-brokers deny him the nomination at the convention even if he's leading in the delegate count. The billionaire New York developer, who held a narrow lead in Missouri and lost Ohio on Tuesday, is faced with the prospect of a floor fight at the party convention in July if he's leading in delegates but falls short of a majority, 1,237. “I think we’ll win before getting to the convention, but I can tell you, if we didn’t and if we’re 20 votes short or if we’re 100 short and we’re at 1,100 and somebody else is at 500 or 400 cause we’re way ahead of everybody, I don’t think you can say that we don’t get it automatically,” Trump said on CNN on Wednesday. “I think you’d have riots.”
Fox News:
  • North Korea sentences American tourist to 15 years in prison with hard labor. (video) North Korea's highest court sentenced an American tourist to 15 years in prison with hard labor on Wednesday for subversion. Otto Warmbier, a University of Virginia undergraduate, was convicted and sentenced in a one-hour trial in North Korea's Supreme Court. He was charged with subversion under Article 60 of North Korea's criminal code. The court held that he had committed a crime "pursuant to the U.S. government's hostile policy toward (the North), in a bid to impair the unity of its people after entering it as a tourist."
Zero Hedge:

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