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30 December. Round up on market news:

  • Asia’s Largest Commodity Trader Was Just Downgraded To Junk: Collateral Calls Next?    Even before Glencore made a dramatic appearance on the world’s distressed commodity trader stage in late August, some of us were familiar with its Asian cousin, Noble Group, also known as Asia’s largest commodity trader. As a result of the ongoing deterioration in the company’s fundamentals as well as various market-traded securities, notably its stocks and default swaps.The downgrade of Noble’s ratings reflects Moody’s concerns over the company’s liquidity,” says Joe Morrison, a Moody’s Vice President and Senior Credit Officer.

    The Ba1 ratings also reflect low levels of profitability and consistent negative free cash flow from core operating activities, which exclude proceeds from asset sales.

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  • Paul Craig Roberts: Why World War III Is On The Horizon

    At this point in time, nuclear war can only be avoided in two ways. One way is for Russia and China to surrender and accept Washington’s hegemony. The other way is for an independent leader in Germany, the UK, or France to rise to office and withdraw from NATO. That would begin a stampede to leave NATO, which is Washington’s prime tool for causing conflict with Russia and, thereby, is the most dangerous force on earth to every European country and to the entire world. If NATO continues to exist, NATO together with the neoconservative ideology of American hegemony will make nuclear war inevitable.

  • Brazil’s finances worsen in November 

New finance chief Barbosa inherits ballooning primary  fiscal              deficit  

A key gauge of Brazil’s public finances, the primary fiscal deficit, ballooned in November to one of the worst levels since records began.

In a stark illustration of the challenges facing the country’s new finance minister, Nelson Barbosa, the government’s primary fiscal deficit — the budget balance before interest payments — during the month rose to R$19.6bn, the central bank said.

This brought the 12-month primary fiscal deficit as of November to 0.89 per cent of gross domestic product compared with 0.7 per cent a month earlier. With the addition of interest payments, the level was 9.3 per cent

 

  • China Suspends Foreign Banks‘ FX Trading As Offshore Yuan Spread Signals Massive Outflows .

For the first time since the August collapse, Offshore Yuan is trading over 1000 pips weaker (relative to the US Dollar) than onshore Yuan, signalling outflows are once again escalating. Following the chaos in HIBOR money-markets, Offshore Yuan has crashed to 6.5970 (below August spike lows) to the weakest since Dec 2010. On the heels of this recent divergence between on- and off-shore Yuan, China has suspended some foreign banks from FX trading, we suppose to try and stem the capital outflows.

  • Warren Buffett faces worst year on stock market since 2009

Berkshire Hathaway shares fall 11% as commodities downturn hits star investor’s company. Investment guru Warren Buffett is headed for his worst year relative to the rest of the US stock market since 2009, with shares in his conglomerate Berkshire Hathaway down 11 per cent with two more trading days to go.

  • Outlook for oil hit by Saudi Arabia budget cuts

Riyadh signals it is prepared for long-term pain amid prospect of increased output from Iran.

The outlook for the oil price next year is under renewed pressure following strong signals from Saudi Arabia that the world’s largest crude exporter is preparing for a long period of low returns and amid expectations that Iran will further flood the global market when sanctions are lifted.

  • $35bn Treasuries auction draws low demand

Yield on 2-year US note at highest level in more than 5 years

The rise in oil prices was a boon to US equities on Tuesday as investors shifted out of Treasuries. The S&P 500 climbed more than 1 per cent

  • Italy’s Five Star Movement wants to be taken seriously

    Protest group has come a long way since its eccentric start and is now the country’s second party.That the Five Star Movement even has a shot at threatening Mr Renzi says much about the waning political momentum suffered by the 40-year former mayor of Florence, who took office in February 2014 amid high hopes that he could transform Italy.

    • Global economic growth will be “disappointing and uneven” next year, the head of the International Monetary Fund said in a guest article for German newspaper Handelsblatt.
    • “In many countries the financial sector still has weaknesses and in emerging markets the financial risks are increasing,” IMF Managing Director Christine Lagarde declared.
    • She added that low productivity, aging populations, a decline in raw materials, and the effects of the global financial crisis were putting the brakes on growth, which has weakened the medium-term prospects.

     Julius Baer earmarks additional provisions to resolve tax prove

    • Julius Baer (OTCPK:JBAXY), one of a dozen Swiss banks to come under U.S. investigation for helping American clients dodge taxes, has set aside another $200M tosettle the case, bringing the total amount earmarked to cover potential penalties to $547M.
    • Despite the charge, Julius Baer said it expects to report an adjusted net profit for the current year.

     

    • Running out of both time and money, debt-laden Puerto Rico appears headed for default on at least some of the roughly $1B in bond payments that are due on Jan. 1.
    • The island has suggested in official filings, that enough cash can be found to pay about $330M due on general obligation bonds (which are constitutionally guaranteed), but only by diverting cash from other types of bonds.
    • A failure to make payments due on those would leave a mysterious hierarchy of creditors wondering whether to sue now or hope for some payment, even a lower one, down the road.

  • After months of holding out, the Philippines has announced it will join the China-led Asian Infrastructure Investment Bank before a year-end deadline for founding members.
  • Its indicative paid-in capital will be $196M, payable over five years.
  • The Philippines membership to the AIIB was previously seen as shaky, as the country is among several nations involved in territorial disputes with Beijing in the South China Sea

 

 

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