Wednesday, December 28, 2016

China's cabinet names Harvard graduate as central bank vice governor

China's cabinet names Harvard graduate as central bank vice governor

Reuters
  • Dec. 27, 2016, 4:00 AM
  • 157
A Chinese national flag flutters outside the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, April 3, 2014. REUTERS/Petar KujundzicA Chinese national flag flutters outside the headquarters of the People's Bank of China in Beijing Thomson Reuters
BEIJING (Reuters) - China appointed Yin Yong, a Harvard-educated official, on Tuesday as a vice governor of the People's Bank of China, replacing Guo Qingping.
The State Council announced the promotion of Yin, who has been an assistant governor at the central bank since August 2015, on its website.
Yin holds a PhD in engineering from Tsinghua University and a master's degree in public administration from Harvard University.
He had previously worked for the State Administration of Foreign Exchange - the foreign exchange regulator, and an arm of the central bank, responsible for managing the country's foreign exchange reserves.
His predecessor, Guo, became vice central governor in February 2015, and had been responsible for anti-money laundering operations.
Though no reason was given for his departure, Guo turned 60 this year - the normal retirement age for officials of his rank.
Central bank chief Zhou Xiaochuan has been promoting a number of influential scholars to senior positions to beef up the central bank's management.
Yi Gang, a renowned economist who has a PhD from the University of Illinois, is a deputy central bank governor.
The cabinet said on Tuesday it had appointed Liu Guoqiang as an assistant governor at the central bank, replacing Yang Ziqiang.
No reasons were given for Yang's removal, but the Central Commission for Discipline Inspection, the ruling Communist Party's anti-corruption watchdog, said in September Yang had violated rules by using public funds to cover some costs incurred during a private trip.
(Reporting by Beijing Monitoring Desk and Kevin Yao; Editing by Simon Cameron-Moore)
Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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Friday, December 23, 2016

GOLDMAN SACHS: 'Fallen angel' debt had its best year since 2003

GOLDMAN SACHS: 'Fallen angel' debt had its best year since 2003

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angels classicalJames A. Michener Art Museum
If you followed Warren Buffet's investing mantra – be greedy when others are fearful and fearful when others are greedy – then 2016 should have been a bumper year.
Debt traders that loaded up on newly downgraded bonds early on in 2016 made a lot more than their peers.
The so-called fallen angels – bonds issued by companies that were unexpectedly downgraded by credit rating agencies – had their best year since 2003, according to Goldman Sachs. 
The commodities crash around January and February led to sudden downgrades of mining and oil companies, allowing buyers to pick up bargains cheaply.
"The sizeable supply of downgraded bonds has been met with an equally strong investor demand, allowing fallen angels to deliver their best performance since 2003," Goldman Sachs credit analysts said in an end-of-year note to clients.
"As shown by Exhibit 10, the Citi Yield Book time-weighted fallen angel index, which assigns a higher weight to recently downgraded bonds, has generated a total return of 37%, more than double the total return in the broader HY market. Again, this solid performance reflects the heavy concentration of the supply of downgraded bonds in the Energy and Metals and Mining sectors."
Here is the chart:
GS1Goldman Sachs
The Goldman analysts said risk had shifted from the commodities sector to the retail industry. If bonds are downgraded in 2017, the recovery is unlikely to be swift.
"As we discussed in our 2017 Global Outlook, the biggest pocket of downgrade risk going forward is in the Retail sector, while the Energy and Metals and Mining issuers have no bonds outstanding on downgrade watch," Goldman Sachs said.
"Given the numerous secular decline challenges facing the Retail sector, we think the performance of fallen angels will likely be much more modest in 2017." 
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Bitcoin is still popping

Bitcoin is still popping

  • 8h
  • 1,563
Bitcoin's rally continues on Friday, with the digital currency breaking through the $900 per coin mark.
Bitcoin is up over 5% against the dollar at just after 8.00 a.m. GMT (3.00 a.m. ET) in London to reach $913.13. It follows similarly strong gains on Wednesday and Thursday.
Friday marks a fresh 2016 high for bitcoin against the dollar and the first time the cryptocurrency has been above $900 this year.
Here is how bitcoin looks against the dollar over the last three months — note the sharp uptick at the end:bitcoinMarkets Insider
It is unclear what's driving bitcoin's recent rally.
Bitcoin has behaved like a risk asset this year, spiking around the Brexit referendum in June and Trump's election in November. However, there has been no news trigger over the last few days to drive a fresh spike and other safe-haven risk assets, such as gold, aren't rising in-line.
Mati Greenspan, a senior market analyst at trading platform eToro, says in an email on Friday morning: "Nothing is moving at the moment like the digital currency which is blowing right through the roof.
"Many reasons have been given for the sudden surge. Some say that Chinese investors are expecting another devaluation in the Renminbi and are trying to get their assets offshore. Some cite increasing political uncertainty around the globe. No doubt, the growing momentum and the pop of the $775 level has caused a snowball effect. When you see something moving this fast it's difficult not to be a part of it."
But he cautions investors: "Please remember though that this is an incredibly high risk asset. We could easily see further jumps of $300 or more in either direction before the excitement fades."

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Thursday, December 22, 2016

Monte dei Paschi shares are swinging wildly as the bank's bailout crisis comes to a head

Monte dei Paschi shares are swinging wildly as the bank's bailout crisis comes to a head

  • 6h
  • 438
Shares in Banca Monte dei Paschi di Siena are swinging wildly in morning trade on Thursday as the ongoing crisis at the bank finally starts to come to a head, just before the Christmas break.
The bank's stock plunged by almost 9% as the markets opened for the day causing them to be briefly halted after reaching the so-called "limit down" — the point where stocks are electronically halted when they move too far either up or down — before fighting back and coming close to where they started the day. 
The stock then dropped again, and was down around 3%, before climbing to trade higher by 2.4% as of 9.40 a.m. GMT (4.40 a.m. ET).
Here is how that looks:
Screen Shot 2016 12 22 at 09.42.50Investing.com
On Wednesday, the bank said it would run out of liquidity in four months, rather than the 11 months that investors had previously thought, sending shares down massively.
It then emerged that the bank had failed to successfully secure an anchor investor for its offer of new shares. Reuters reports that two sources close to the matter said this had in turn dissuaded other institutional investors from supporting this part of the €5 billion rescue plan, essentially killing off any hopes of a private sector rescue.
That leaves just one realistic option open for the bank, a state bailout. While the move will help the lender, it could also see the Italian government fall foul of EU rules of bank bailouts, launching a fresh political crisis in a country. Italy has just appointed a new prime minister, Paolo Gentiloni, following the resignation of Matteo Renzi after his crushing defeat in the country's constitutional reform referendum.
Italy's financial sector is carrying more than €300 billion in nonperforming loans and may ultimately need an injection of about €52 billion, according to Deutsche Bank analyst Paola Sabbione.

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After meeting with Trump, Boeing CEO says Air Force One will cost less than $4 billion

After meeting with Trump, Boeing CEO says Air Force One will cost less than $4 billion

  • 19h
  • 20,167
obama air force oneWhite House Photo
BA Boeing Co
 156.84 -0.61 (-0.40 %)
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LMT Lockheed Martin
 251.31 -1.28 (-0.50 %)
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WASHINGTON, DC — US President-elect Donald Trump on Wednesday met the CEOs of defense contracting giants Boeing and Lockheed Martin, whose programs he has criticized in recent weeks.
Boeing CEO Dennis Muilenburg — whose company is under contract with the US Air Force to develop and manufacture the next presidential aircraft fleet — said the price will be less than a near-$4 billion estimate.
"We're going to get it done for less than that, and we're committed to working together to make sure that happens," Muilenburg said after meeting at Trump's Mar-a-Lago resort in Palm Beach, Florida.
"I was able to give the president-elect my personal commitment on behalf of the Boeing Company. This is a business that's important to us. We work on Air Force One because it's important to our country and we're going to make sure that he gets the best capability and that it's done affordably."
Trump described the cost for Boeing's Air Force contract to develop the next presidential fleet as "out of control" in a December 6 tweet.
"The $4 billion is a theoretical estimate of the life of the program, which is approximately 30 years," a Department of Defense spokesman told Business Insider.
Considering the US Air Force contract with Boeing is in very early stages, it is entirely possible for that figure to be adjusted, the spokesman added.
Trump also met with Lockheed Martin CEO Marillyn Hewson on Wednesday.
boeinglmtBoeing CEO Dennis Muilenburg and Lockheed Martin CEO Marillyn Hewson.Boeing, Lockheed Martin
On December 12, Trump said the cost for Lockheed Martin's fifth-generation stealth F-35 Lightning II jet was also "out of control."
The message sent Lockheed Martin's stock down from $251 at the opening bell to $245.50, before it rebounded to a little more than $253 a share.
"We're trying to get costs down ... primarily the F-35, we're trying to get the cost down. It's a program that is very, very expensive," Trump said after meeting with several generals and admirals on Wednesday.
Trump said the negotiations with Lockheed Martin were "just beginning" and described it as "a little bit of a dance."
The F-35, valued at an acquisition cost of $379 billion, has become one of the most challenged programs in the history of the Department of Defense. It has experienced setbacks that include faulty ejection seats, software delays, and helmet-display issues.
"This program is not out of control," Lt. Gen. Chris Bogdan, head of the F-35 Joint Program Office, said during a December 19 briefing with reporters, just days after Trump tweeted criticism of the program.
"If given the opportunity I would like to try and explain to the new administration that this is a vastly different program from 2011," Bogdan said. "I'll just lay the facts out on the table and I'll let them make their own judgments because I don't think the program cost wise is out of control nor do I think that it's out of control schedule wise."
f35aAn F-35A Lightning II team parks the aircraft for the first time at Mountain Home Air Force Base, Idaho, Feb. 8, 2016.US Air Force photo
On Monday, the F-35 Joint Program Office released the finalized price for the most recent production contract for America's fifth generation stealth fighter. The ninth Low Rate Initial Production (LRIP-9) contract for 57 F-35 jets was valued at $6.1 billion.
In LRIP-9, the price of the Air Force and Marine Corps' variants saw a reduction of $5.9 million and $2.4 million respectively, the Navy model saw an increase of $3.2 million.
Trump and his transition team were not briefed by the F-35 Joint Program prior to the December 12 tweet. Since then, Bogdan said Trump's team has asked for a briefing about the program, though nothing has been scheduled yet.

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Carl Icahn named a special adviser in the Trump administration

Carl Icahn named a special adviser in the Trump administration

  • 18h
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Carl IcahnCarl Icahn at The New York Times 2015 DealBook Conference.Neilson Barnard/Getty Images for New York Times
Carl Icahn, the hedge fund titan, will be a part of Donald Trump's administration.
Icahn will be a special adviser to the president-elect overseeing regulation specifically, according to the transition.
The investor has long been a critic of various government regulatory agencies, most notably the Environmental Protection Agency.
"Carl was with me from the beginning, and with his being one of the world's great businessmen, that was something I truly appreciated," Trump said in a release from the transition.
"He is not only a brilliant negotiator, but also someone who is innately able to predict the future, especially having to do with finances and economies. His help on the strangling regulations that our country is faced with will be invaluable."
According to a report from The Wall Street Journal, Icahn has already assisted the transition with vetting candidates for the EPA chief. The nomination eventually went to Scott Pruitt, the attorney general of Oklahoma. Icahn's experience with the EPA comes from several investments in oil and gas companies.
Icahn will also have a role in selecting the new head of the Securities and Exchange Commission, according to the report.
Icahn is a longtime friend and supporter of Trump, and an advocate for the president-elect since before the Republican primaries. The hedge fund legend has said Trump will bring economic growth back to America by rolling back regulation and giving companies the ability to invest again.
"I am proud to serve President-elect Trump as a special adviser on regulatory reform," Icahn said in a press release. "Under President Obama, America's business owners have been crippled by over $1 trillion in new regulations and over 750 billion hours dealing with paperwork. It's time to break free of excessive regulation and let our entrepreneurs do what they do best: create jobs and support communities."
The role, according to the Trump announcement, will not be an official government position and will not have any "specific duties."
Icahn is estimated to be worth about $16.7 billion, according to Forbes. Icahn's appointment adds another billionaire to Trump's top advisory team, a group that already has a net worth of well over $10 billion.
Icahn's investment fund fell 12.7% this year through the end of September, according to a regulatory filing.

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Bitcoin is surging

Bitcoin is surging

  • 5h
  • 2,780
The price of digital currency bitcoin continues to surge on Thursday, up over 5% against the dollar by mid-morning in London.
The digital currency broke through $800 a bitcoin on Wednesday and ended the day at $826.29. Bitcoin's rise is continuing on Thursday, up 5.7% at 10.10 a.m. GMT (5.10 a.m. ET) at $874.04.
Bitcoin is now at a fresh high for 2016, surpassing the peak's reached earlier in the week and the previous spike in mid-June, driven by Britain's vote to leave the European Union.
Bitcoin has behaved like a risk asset this year, with investors flocking to it in times of uncertainty. The price spiked around the Brexit referendum and Trump's shock election as US president.
But it's unclear what exactly is driving the sharp price spike this week. Other risk assets aren't spiking in line — gold, the traditional safe-haven asset, has fallen steadily since the start of November.
Mati Greenspan, a senior market analyst at eToro, says in an email on Thursday morning: "Seeing it move this far this fast brings up fresh memories of 2013 when it surged from less than $5 a coin to $1,241 in just a few months.
"With those kind of gigantic swings, this is the most risky asset ever conceived so I certainly would not recommend putting your life savings in it. However, if indeed we are headed to $1 Million per coin, like some believe even a small investment could go a long way IF it pans out."

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