Tuesday, November 18, 2014

Today's Headlines

  • Russia, Ukraine Dispute Truce Format as NATO Sees Buildup. Ukraine and Russia clashed over how to move toward a new cease-fire agreement, after President Petro Poroshenko said his country is ready for “total war” with Vladimir Putin’s forces. As NATO Secretary General Jens Stoltenberg criticized Russia for staging a “serious military buildup” and sending troops and weapons across its western border, Ukrainian Prime Minister Arseniy Yatsenyuk advocated new “Geneva format” talks including the U.S. to de-escalate the crisis. Russia said that framework, which followed April talks in the Swiss city that excluded pro-Russian separatists, would skirt a process that led to a Sept. 5 cease-fire in Minsk, Belarus. 
  • Russia Sees Recession Next Year If Oil Price Falls to $60. Russia’s economy will sink into a recession next year if the price of oil slumps to $60 a barrel and the U.S. and its allies tighten sanctions over the conflict in Ukraine, Finance Minister Anton Siluanov said. The economy of the world’s largest energy exporter won’t grow faster than 1 percent in 2015 even if oil prices hold steady and the severity of sanctions remains unchanged, Siluanov said in an interview in Singapore yesterday. The price of Brent has slumped by almost a third this year to below $80 a barrel.
  • Four Killed in Palestinian Attack at Jerusalem Synagogue. Palestinians armed with butcher’s cleavers and a gun killed four worshipers at a synagogue in Jerusalem in an attack that escalated months of violence in the city. Three of the victims had dual U.S. and Israeli citizenship, and the fourth was an Israeli and British citizen. The two assailants, both from east Jerusalem, were shot and killed, and a Palestinian group claimed responsibility. Public Security Minister Yitzhak Aharonovitch urged soldiers and security guards to start carrying their weapons even when off-duty.
  • ECB Plans ‘Intrusive’ Probe of Banks’ Risk-Weight Models. The European Central Bank plans to clamp down on the complex models lenders use to gauge the risk of their assets, as it works to restore trust in the euro area’s financial system. The ECB, newly installed as the euro area’s single supervisor, plans to scrutinize lenders’ models and eliminate variations across the currency bloc, top policy makers have said. The Frankfurt-based central bank didn’t look at the way banks calculate asset risk in its year-long balance-sheet probe, completed last month. 
  • ECB Must Weaken Euro to Aid France and Italy, Ex-BOE’s King Says. (video) Euro-area stagnation poses the largest threat to the global economy and Mario Draghi should weaken the euro to help boost the flagging economies of France and Italy, according to former Bank of England Governor Mervyn King. “The euro area is the biggest risk because I don’t think the leaders in the euro area actually have a true vision of how to cope with the problem,” King said in an interview yesterday with Bloomberg Television’s Olivia Sterns in Naples, Florida.
  • Europe Stocks Advance as German Investor Confidence Gains. European stocks rose for a second day as a report showed German investor confidence advanced for the first time this year. The Stoxx Europe 600 Index climbed 0.6 percent to 339.3 at the close of trading in London.
  • Iron Ore Bear Market Deepens as China Home Prices Add to Concern. Iron ore extended a tumble to the lowest level in more than five years as declining home prices in China added to concern that an economic slowdown in the biggest buyer will deepen, exacerbating an oversupply. Ore with 62 percent content delivered to Qingdao, China, retreated 4.4 percent to $71.80 a dry ton, the lowest level since June 2009, according to data from Metal Bulletin Ltd. yesterday. It’s 47 percent lower this year, heading for the biggest annual drop in data going back to 2009.
  • Oil Drops as Investors Weigh Likelihood of OPEC Cutback. WTI for December delivery fell $1.08, or 1.4 percent, to $74.56 a barrel at 12:58 p.m. on the New York Mercantile Exchange. The more-active January future slipped $1.12, or 1.5 percent, to $74.54. The volume of all contracts traded was 1.7 percent below the 100-day average for the time of day.
  • Moody’s Joins Fitch Slamming Subprime Auto Bonds. The booming market for securities backed by subprime car loans is riskier than their ratings imply, say two of the biggest assessors of bond credit quality. Moody’s Investors Service (MCO) and Fitch Ratings analysts said in interviews that the grades their competitors have assigned to a crop of new issuers -- most of which are backed by private-equity firms -- are too high. The lenders lack a track record in the bond market proving their underwriting acumen and ability to handle the specialized task of collecting on soured debt during a downturn, according to the analysts.
Business Insider: 
Susan Lund:
  • China credit bubble? It accounts for half of new private sector debt worldwide since 2007 - growth of $10T. (graph)

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