Mainstream News

China halts stock market again after CSI 300 plunges more than 7%

"China's stocks were suspended from all trade on Thursday after theCSI300 tumbled more than 7 percent in early trade, triggering the market's circuit breaker for a second time this week. That drop-kicked stock markets across Asia, which were already wallowing after a weaker open amid concerns over China's swooning currency and economic slowdown as well as falling oil prices. China's securities regulator also issued new rules to restrict the percentage of shares major shareholders in listed companies can sell every three months, in an attempt to stabilize markets. Shareholders are not allowed to sell more than 1 percent of a company's share in that period." Continue reading →

Continue ReadingChina halts stock market again after CSI 300 plunges more than 7%

US auto loans hit $1 trillion for first time

"The loan balances have been driven up by a combination of three factors -- strong car sales, rising car prices and low interest rates. Interest rates are low. Borrowers with top credit scores can get loans for less than 3%. But the amount owed is up 11%, a sign of the increase in the size of car loans due to rising prices. The average amount borrowed is about $21,700, and buyers owe nearly $18,000 on average. The average new car purchase price now stands at $32,529, according to sales tracker TrueCar. The average car loan balance is rising faster than it is for mortgage loans, according to TransUnion. The average payment now stands at just under $400 a month." Continue reading →

Continue ReadingUS auto loans hit $1 trillion for first time

HK property developers push HK$1.3 billion in home loans to buyers

"Facing fierce competition amid a tightening of mortgage policies, a growing number of developers have been skirting bank regulations by providing home loans of up to 95 per cent of the purchase price through wholly owned financial institutions to lure buyers. They began offering mortgage loans after the maximum loan-to-value (LTV) ratio for bank mortgages for self-use residential properties with a value below HK$7 million was lowered from 70 per cent to 60 per cent in February last year. That meant home buyers needed to make a 40 per cent initial down payment, up from 30 per cent, when purchasing an apartment." Continue reading →

Continue ReadingHK property developers push HK$1.3 billion in home loans to buyers

China slaps cap on overseas UnionPay cash withdrawals

"The gatekeeper of China's foreign exchange has moved to plug a loophole in the capital account by capping the value of overseas withdrawals on bank cards, amid rising concerns over capital outflows and illicit money transfers. The State Administration of Foreign Exchange has slapped an annual cap on overseas cash withdrawals for UnionPay cardholders at 100,000 yuan or its equivalent per card. SAFE requires banks to add accounts that exceed the cap to a watch-list and forbid further cash withdrawals outside of China. Still, the withdrawal cap did not address another obvious escape route, the number of cards for which an individual can apply." Continue reading →

Continue ReadingChina slaps cap on overseas UnionPay cash withdrawals

Chinese state begins buying stocks after Monday’s rout

"China's stocks rose in volatile trade as state-backed funds were said to intervene after a plunge on Monday wiped out $590 billion of market value. Trading was halted on Monday after the gauge plunged 7 percent, triggering new market circuit breakers that some analysts said exacerbated the sell-off. State-controlled funds bought equities and the securities regulator signaled a selling ban on major investors will remain beyond this week's expiration date, according to people familiar with the matter. The China Securities Regulatory Commission also suggested it's open to tweaking the circuit breakers, while the central bank conducted the biggest reverse-repurchase operations since September." Continue reading →

Continue ReadingChinese state begins buying stocks after Monday’s rout

Puerto Rico Defaults On Bonds: Return Does Not Come Without Risk

"Many American investors bought Puerto Rican bonds over the past five years as we all searched desperately for yield in the face of the Federal Reserve pushing interest rates down to historic lows. Normally, investors understand that higher yields come with greater risks. However, during the past six years of extraordinary interventions by the Fed into all sorts of financial markets, many investors may have decided that those higher yield investments weren’t really all that risky. Puerto Rico’s problems may serve as a much-needed wake up call to investors. As rates rise, capital will move back toward safety and the risk premium demanded of higher risk projects is likely to increase." Continue reading →

Continue ReadingPuerto Rico Defaults On Bonds: Return Does Not Come Without Risk

IMF Approves Reserve-Currency Status for China’s Yuan

"The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan. It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc. It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010." Continue reading →

Continue ReadingIMF Approves Reserve-Currency Status for China’s Yuan

Bill Gross: Central bank ‘casinos’ to run out of luck

"Investors should cut risk heading into 2016 as central banks trying to pump up their respective economies make losing bets, bond guru Bill Gross says. Institutions like the Federal Reserve and the European Central Bank are like 'casinos' that create money instead of chips 'they'll never have to redeem,' said Gross, founder of bond giant Pimco who now runs the $1.4 billion Janus Global Unconstrained Fund. Furthering the gambling analogy, he said central bankers are using a familiar ploy — doubling down on losing bets until they break even. 'How long can this keep going on? Well, theoretically as long as there are financial assets (including stocks) to buy,' Gross said." Continue reading →

Continue ReadingBill Gross: Central bank ‘casinos’ to run out of luck

U.S. Banks to Face $120 Billion Shortfall in Fed Crisis Plan

"The largest U.S. banks would face a $120 billion total shortfall of long-term debt under a Federal Reserve proposal aimed at ensuring their failure wouldn’t hurt the broader financial system. Banks such as Wells Fargo & Co. and JPMorgan Chase & Co. will be required to hold enough debt that could be converted into equity if they were to falter, according to a Fed rule that was approved by a unanimous vote on Friday. The Fed’s proposal, which applies to eight of the biggest U.S. banks, requires debt and a capital cushion equal to at least 16 percent of risk-weighted assets by 2019 and 18 percent by 2022." Continue reading →

Continue ReadingU.S. Banks to Face $120 Billion Shortfall in Fed Crisis Plan

Who’s the Bear Driving Up the Price of U.S. Stock Options? Banks

"If you want to buy a put to protect against losses in the Standard & Poor’s 500 Index, often you’ll pay twice as much as you would for a bullish call betting on gains. New research suggests the divergence is a consequence of financial institutions hoarding insurance against declines in stocks. Deutsche Bank AG says in a Dec. 6 research report that the likeliest explanation may be that demand is being created for downside protection among banks that are subject to stress test evaluations by federal regulators. In short, financial institutions are either hoarding puts or leaving places for them in their models should markets turn turbulent." Continue reading →

Continue ReadingWho’s the Bear Driving Up the Price of U.S. Stock Options? Banks