Instead of suspending trading and implicitly disallowing redemptions, giant fund manager Aberdeen has forced investors in its UK Property fund to take a 17% haircut wiping hundreds of millions of dollars off its value. The fund stated that shareholders wishing to redeem will do so at a reduced price in order to reflect the current market environment and the fact that short term trading in the property market has "relatively penal consequences." Which makes us wonder - is all this post-Brexit selling because UK property prices are 20% over valued?
In its first official easing act, the Financial Policy Committee lowered the countercyclical-capital buffer rate for UK exposures to zero from .5% of risk-weighted assets in a move that it said would raise the capacity for bank lending to households and businesses by as much as £150 billion. "This action reinforces the FPC’s view that all elements of the substantial capital and liquidity buffers that have been built up by banks are to be drawn on, as necessary" the committee said in a statement.
The supposedly dovish April FOMC statement - as global fears fell and turned domestically - has left bonds and bullion the winners and stocks the losers as investors lose faith in The Fed's forecast and economic promises. Today's FOMC meeting minutes suggest an increasingly cornered Fed will pull the trigger iun June with member disagreements brewing: MOST FED OFFICIALS SAW JUNE HIKE `LIKELY' IF ECONOMY WARRANTED; FED: RANGE OF VIEWS ON WHETHER DATA WOULD SUPPORT JUNE HIKE. Of course, no matter what narrative the market perceives from these minutes, tomorrow's speeches by Dudley and Fischer (who has been conspicuously quiet recently) will likely give the biggest hint as to what happens next...
If it looks like a crash, smells like a crash, acts like a crash, is it a recovery? Here's the hard hitting evidence that you just won't find anywhere else. Just don't shoot the messenger! BoomBustBlog style research is back with a vengence.
Moments ago S&P continued its downgrade cycle, this time taking the axe to the regional banks with the highest energy exposure due to "expectations for higher loan losses." Specifically, its lowered its long-term issuer credit ratings on four U.S. regional banks by one notch: BOK Financial Corp., Comerica Inc., Cullen/Frost Bankers Inc., and Texas Capital Bancshares. The outlooks on these banks are negative.
While there may not be another 'energy' sector this cycle, our proverbial list of candidates includes lower quality high yield (ex-commodities) and commercial real estate (CRE). More broadly, the OCC's own examiners would also likely add asset-backed and auto loans to the list.
For many years now, it’s been clear that China would soon be pulling the strings in the U.S. financial system. In 2015, the American people owe the Chinese government nearly $1.5 trillion. Of course, the Chinese aren’t stupid. They realize we are both trapped.China has recently put into place a covert plan to get back as much of its money as possible - by extracting colossal sums from both the United States government and ordinary citizens, like you and me.
While the economy is showing some signs of impact from falling oil prices, a port strike in California, weak global demand for exports and an exceptionally cold winter; the markets are pushing all-time highs. There is much hype being placed on the ECB's plans for launching QE in March, however, much remains to be seen as to just how effective it will be in a negative interest rate/deflationary enviroment. But then again...there is always "hope."
"The staff report noted valuation pressures in some asset markets. Such pressures were most notable in corporate debt markets, despite some easing in recent months. In addition, valuation pressures appear to be building in the CRE sector, as indicated by rising prices and the easing in lending standards on CRE loans. Finally, the increased role of bond and loan mutual funds, in conjunction with other factors, may have increased the risk that liquidity pressures could emerge in related markets if investor appetite for such assets wanes. The effects on the largest banking firms of the sharp decline in oil prices and developments in foreign exchange markets appeared limited, although other institutions with more concentrated exposures could face strains if oil prices remain at current levels for a prolonged period."
"... members considered the advantages and disadvantages of adding language to the statement to acknowledge recent developments in financial markets. On the one hand, including a reference would show that the Committee was monitoring financial developments while also providing an opportunity to note that financial conditions remained highly supportive of growth. On the other hand, including a reference risked the possibility of suggesting greater concern on the part of the Committee than was actually the case, perhaps leading to the misimpression that monetary policy was likely to respond to increases in volatility."