Wednesday, December 07, 2016

Today's Headlines

  • China's Yuan Pessimists Are Multiplying. (video) China is tightening capital controls as the imminent renewal of a foreign-exchange conversion quota adds to depreciation pressure on the yuan. Chinese citizens are allowed to convert $50,000 worth of yuan annually, and with the new year less than a month away, the potential for capital flight is building. Individuals and households are the biggest threat to the yuan now, because they can easily be influenced by short-term volatility, according to Xia Le, a Hong Kong-based economist at Banco Bilbao Vizcaya Argentaria SA. The yuan has weakened 3.1 percent this quarter amid concern the Federal Reserve will raise borrowing costs, strengthening the dollar.
  • German Industrial Production Rose Less Than Forecast in October. German industrial production rose less than analysts forecast in October, signaling that Europe’s largest economy took a slow start to the final quarter of the year. Production, adjusted for seasonal swings, gained 0.3 percent from the previous month, when it declined a revised 1.6 percent, data from the Economy Ministry in Berlin showed on Wednesday. The reading, which is typically volatile, compares with a median estimate for a 0.8 percent increase in a Bloomberg survey. Output was up 1.2 percent from a year earlier.
  • European Stocks Rise for a Third Straight Day. (video)
  • AAA Ratings Return for Securities Backed by Riskier Home Loans. Two ratings firms are assigning AAA ratings to bonds backed by new riskier home loans, one of the few times such securities have won top grades since the financial crisis, according to documents obtained by Bloomberg. Fitch Ratings and DBRS Inc. are giving the ratings to more than $210 million of bonds backed by loans made by Caliber Home Loans, a unit of Lone Star Funds, and by loans from Sterling Bank & Trust and LendSure Mortgage Corp. The bonds are partially backed by mortgages in which the lender verified a borrower’s income with bank statements rather than tax returns. Another ratings firm, Moody’s Investors Service, recently called out those types of mortgages as risky.
Wall Street Journal:
  • Senate Clears Bill to Ease FDA Drug and Device Approvals. Measure includes money for NIH, cancer moonshot, precision medicine initiative. Passage of legislation aimed at speeding up Food and Drug Administration approvals, combined with an incoming president who has pledged to “cut red tape” at the agency, is expected to usher in a new, more industry-friendly era of drug and device regulation.
  • China’s Banks Are Hiding More Than $2 Trillion in Loans. Accounting sleight of hand means banks don’t have to set aside capital for potential losses, sowing fears of a crisis; new apartments with no residents.
Zero Hedge:

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