Wednesday, September 07, 2016

Today's Headlines

Posted by Gary .....at 2:58 PM
Bloomberg: 
  • Four Fresh Worries About China's Shadow Banking System. (video) Draft rules seeking to shore up the $3.9 trillion market for wealth management products underscore a bunch of new worries. The tangled web of Chinese banks and the investment products they sell is growing more muddled as analysts attempt to gauge the impact of new rules unveiled by the country's authorities. The proposed new rules would require some banks to provision for losses against wealth management products (WMPs), which funnel money from retail investors into securities ranging from stocks to corporate bonds and real estate, in an effort to insulate the lenders from future losses. The 26.3 trillion yuan ($3.9 trillion) worth of WMPs outstanding have emerged as key cog in China's so-called shadow banking system as investors often expect to be reimbursed for on any losses on the WMPs banks manage — an expectation that could weigh on the lenders if the products begin to sour. But with analysts scrambling to digest the impact of the draft rules on banks, fresh concerns are emerging including: the degree to which banks have been using WMPs to repackage and invest in other such products, their use as a way for to gain exposure to riskier corporate securities, banks' tendency to borrow money to boost returns on WMPs, and the potential for the new WMP rules to impact other assets. 
  • China Reserves at Lowest Since 2011 as PBOC Supports Yuan. China’s foreign-exchange reserves, the world’s largest foreign currency hoard, slipped to the lowest level since 2011 as the central bank continued its defense of the currency. The reserves fell by $15.9 billion to $3.19 trillion in August, the People’s Bank of China said in a statement Wednesday. That level, down slightly but still in line with most of the readings this year, matched the median estimate in a Bloomberg survey of economists.
  • German Industrial Output Unexpectedly Falls Most Since 2014. German industrial production fell by the most in almost two years in July as manufacturing suffered from subdued global trade. Production, adjusted for seasonal swings, fell 1.5 percent from the previous month, when it rose a revised 1.1 percent, data from the Economy Ministry in Berlin showed on Wednesday. That’s the lowest since August 2014. The reading, which is typically volatile, compares with a median estimate for a 0.1 percent gain in a Bloomberg survey. Output was down 1.2 percent from a year earlier.
  • Automakers Lead Europe Stocks Higher as DAX Erases Annual Drop. (video) A rally among exporters amid a weaker euro pushed European equities near their highest prices since April, while Germany’s DAX Index erased its annual decline. Automakers led the advance in the Stoxx Europe 600 Index, which gained 0.3 percent at the close, rising for a fourth time in five days. The DAX climbed 0.6 percent, with steelmaker ThyssenKrupp AG, chemical company BASF SE and Daimler AG advancing the most. The German index came close to erasing its 2016 loss last month, though it failed to hold its gain through the close.
  • OPEC Risks ‘Crying Wolf’ as Oil Trader Gunvor Doubts Accord. (video) One of the world’s biggest commodities traders doubts oil producers will be able to agree on curbing output to pull up prices. While it’s “easier” to have talks on freezing supplies now than it was at a meeting in Doha earlier this year, a deal is unlikely at a gathering in Algiers later this month, said David Fyfe, Gunvor Group Ltd.’s head of market research and analysis. Producers have pledged to discuss measures to help the market, but Saudi Arabia has said it sees no need to limit oil output and Russia expressed doubt that a cap is needed. “There won’t be an agreement but it does no harm to keep talking about this because that itself is price supportive,” Fyfe said at the Asia Pacific Petroleum Conference in Singapore on Wednesday. “Of course, there’s a risk of crying wolf. But at some stage it’s the law of diminishing returns when you keep talking about a production agreement and not actually reach one.”
  • Manhattan's Luxury Real Estate Slowdown Is Spreading to Other Price Tiers. There are more signs of a slowdown in New York City real estate. According to new data from listings website StreetEasy.com, the luxury market still has some adjusting to do with price cuts now spreading from just the most expensive apartments to other price tiers. "Most of the increase in price cuts for the luxury tier is in the smaller price cuts bucket (5 percent)," said Krishna Rao, StreetEasy's economist. "While sellers aren’t going for aspirational prices, they haven’t fully adjusted to reality at the top end of the market." 
  • Live Now: Apple Product Event in San Francisco.
Zero Hedge:
Reuters:
  • Iraq sees steady growth in oil output, exports in 2017: official. Iraq's crude oil production and exports are expected to grow at a steady pace in 2017 from current levels, a senior Iraqi oil official said on Wednesday‎, adding the OPEC member supports a global freeze initiative if it will help stabilize the market. "There will be a steady growth in production and exports next year," Falah Alamri, the head of Iraq's State Oil Marketing Co. (SOMO) told ‎Reuters in Singapore, adding "it was not clear by how much."Iraq's production was at 4.638 million barrels per day in August, the highest since January.

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