Just a day after Governor Alejandro Garcia Padilla signed a law that enables him to temporary halt debt payments, dramatically raising the risk of widespread defaults, Puerto Rico securities had the biggest one-day drop in more than eight months.
So Called "Trusted Parties", Bank Collapse, the ECB and Blockchains: Watch as I Call the Next Bear Stearns, Again!Submitted by Reggie Middleton on 04/07/2016 12:20 -0400
I called it once in January 2008 (Bear). I called it 2x in March 2008 (Lehman), and I'm calling it again in 2016. Don't say you didn't know. These proclamations of trust will truly put my analysis - and your capital - to the test.
All the gains post-Draghi's bazooka-est efforts in March have gone as bank credit risk is spiking and the last 4 weeks have seen the biggest collapse in European banking stocks since April 2012. Having blown his wad in March and been front-run by every Tom, Dick, and Harry trader, "whatever it takes" appears to be failing hard and with nothing left up his sleeves, Mario may not be so super anymore.
More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay. Officials acknowledge that a large pool of borrowers have essentially fallen off the radar. The Education Department has assembled a “behavioral sciences unit” to study the psychology of borrowers and why they don’t repay. “We obviously have not cracked that nut but we want to keep working on it,” said Ted Mitchell, the Education Department’s under secretary. He said many defaulted borrowers dropped out of school and are underemployed.
Three days ago, the latest catalyst to weigh down Valeant stock was news that the company's lenders were pushing back on its demands to obtain a default waiver and to loosen restrictions on its negative debt covenants. It appears, however, that that issue has been resolved, and as the company reported moments ago in a press release on its website, VEX "has obtained the requisite lender approval for the amendment and waiver to its credit facility. The Company expects to close the amendment and waiver next week."
Two days after stocks slid in a coordinated risk-off session, and one day after a DOE estimate of US oil inventories sent US stocks surging while the failed Allergan-Pfizer deal unleashed torrential hopes of a biotech M&A spree leading to the single best day for the sector in 5 years, sentiment has again shifted, this time due to a violent surge in the Yen as the market keeps testing the resolve of the Japanese central bank to keep its currency weak, and so far finding it to be nonexistent.
The newly signed Puerto Rico Emergency Moratorium & Financial Rehabilitation Act also empowers the governor to order the financially battered Government Development Bank (GDB) to restrict the outflow of cash in a bid to stabilize its dwindling liquidity levels, which stood at roughly $560 million as of April 1, according to the bill. In other words, capital controls.
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place. Administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Unlike yesterday's overnight session, which saw some subtantial carry FX volatility and tumbling European yields in the aftermath of the TSY's anti-inversion decree, leading to a return of fears that the next leg down in markets is upon us, the overnight session has been far calmer, assisted in no small part by the latest China Caixin Services PMI, which rose from 51.2 to 52.2. Adding to the overnight rebound was crude, which saw a big bounce following yesterday's API inventory data, according to which crude had its biggest inventory draw in 2016, resulting in WTI rising as high as $37.15 overnight
Investors now acknowledge that fundamental analysis is merely an afterthought when compared to the far bigger influence of central bank buying. While this destroys free markets, fuels malinvestment bubbles and rewards cronyism, it doesn’t stop central planners — it merely emboldens them. The latest example of such hubris was on full display last month when the ECB’s Mario Draghi increased QE by a third. Here’s some of what’s happened since. So “investing” has morphed into simply front-running the decisions of unelected central planners. That’s all there is to it.
First it was Connecticut, now another state is in the crosshairs following the imminent "exstatiation" of another prominent hedge fund billionaire, David Tepper. The decision by billionaire hedge-fund manager David Tepper to quit New Jersey for tax-friendly Florida has put the Garden State in fiscal peril, and could complicate estimates of how much tax money the struggling state will collect, the head of the Legislature’s nonpartisan research branch warned lawmakers.
The ongoing feud between Puerto Rico and its mostly hedge fund creditors is promptly shaping up as the next "Argentina", where "vulture investors" may well end up holding the island commonwealth hostage for years, during which time, however, they won't get paid. This is shaping up as the latest development in the saga in which earlier today Puerto Rico’s Senate approved a bill calling for a moratorium on a wide range of debt payments, including general-obligation bonds, through January 2017 in what Bloomberg dubbed "the latest escalation of the Caribbean island’s fiscal crisis."
Valeant Pharmaceuticals International, Inc. (NYSE: VRX and TSX: VRX) today announced that the ad hoc committee of the board of directors (the "Ad Hoc Committee") believes that its review of various Philidor and related accounting matters is complete, and that it has not identified any additional items that would require restatements beyond those required by matters previously disclosed.
The market's slumberous levitation of the past month, in which yesterday's -0.3% drop was the second largest in 4 weeks and in which the market had gone for 15 consecutive days without a 1% S&P 500 move (in March 2015 the sasme streak ended at day 16) may be about to end, after an overnight session, the polar opposite of yesterday's smooth sailing, which has seen a sudden return of global risk off mood.
Moments ago the market got a harsh reminder that Valeant is effectively negotiating default compliance with a group of banks who realize they are dealing with a company that has a $9 billion market cap and can thus ask for anything and management and shareholders have no choice but to say yes unless that $9 billion to quickly go to $0. According to Bloomberg, Valeant, just as predicted, "is facing push back from some of its lenders as it seeks to waive a default and loosen restrictions on its debt, according to people with knowledge of the matter."