morning
>>91639 pb
This was Pelosi bailing on Tuesday night (election day in CA) from SFO
BOXER41 USAF C-40C on ground at Warton Aerodrome, Warton Village-Lancashire from London-Stansted Airport depart
Landed about 40 minutes ago
Pelosi said the Republican Party has been hijacked by a 'cult' and slammed Trump's 'disdain for governance'
House Speaker Nancy Pelosi said the GOP had been hijacked by a "cult" and urged Republicans to "take your party back" while discussing the threat to US democracy posed by extremists in the wake of the Capitol rot. She was addressing challenges faced by the US after the January 6 assault on the Capitol by supporters of former President Donald Trump at a Friday event at London's Chatham House, which Insider attended.
https://www.msn.com/en-us/news/world/pelosi-said-the-republican-party-has-been-hijacked-by-a-cult-and-slammed-trumps-disdain-for-governance/ar-AAOxWJS
This AC bailed from San Francisco Int'l on Tuesday evening as BOXER42 and headed to Stansted wif a fuel stop at Keflavik AB Iceland-cap #2
yep...longish one this week.
China Injects Most Liquidity Since February To Stem Evergrande Panic
With China finally realizing that it has drunkenly staggered into its own Lehman moment, complacently ignoring the risks until now amid hopes that Beijing would step in and make everything wonderful and instead Evergrande management finding itself held hostage in company offices by furious wealth product investors who just got the memo that the money is all gone, overnight Beijing finally showed the first signs of cracking when the stingy PBOC- which until now had merely been rolling existing liquidity keeping the overall total unchanged - injected the most cash cash into its banking system since February, in a clear sign authorities are seeking to avert the funding squeeze amid the intensifying debt crisis at China Evergrande which earlier this week sent funding conditions to the tightest levels in 4 years.
The People’s Bank of China added 90 billion yuan ($14 billion) of funds on a net basis through 50 billion in seven-day and 50 billion in 14-day reverse repurchase agreements on Friday offsetting 10 billion in maturities, the biggest one-day injection since February; it marked the first time this month it added more than 10 billion yuan short-term liquidity into the banking system on a single day.
While Evergrande's insolvency is clearly the big catalyst, not helping the funding stress is a seasonal spike in demand for cash as banks are hesitant to lend toward the end of the quarter ahead of regulatory checks. Liquidity also tends to diminish at this time of year ahead of a one-week holiday at the start of October.
“Avoiding a systemic liquidity squeeze is the absolute priority for the PBOC and it has means to do so,” SocGen economists led by Wei Yao wrote in a research note. “A Lehman-style financial-market meltdown is not our top concern, but an extended and severe economic slowdown seems more probable."
We bet to differ: we understand that SocGen would want to maintain its China business, and as such describing what is going on there as a "Lehman event" would surely close the doors for future business, which is why one has to read between the lines, and the message there is catastrophic as we explained last night.
It's also why despite the one-time liquidity boost, the PBOC is still keeping the bulk of its powder dry, and the central bank has yet to push money-market and overall interest rates lower. However, it's just a matter of when, not if and the market knows it, which is why it has started to tighten monetary conditions ahead of the PBOC's intervention, by sending the seven-day repo rate, an indicator for interbank borrowing costs, higher by 14 basis points to 2.4% on Friday, the highest since June 30.
In many ways, China's hands are tied because in addition to (N)evergrande, the broader economy is already seeing the wheels come off as strict movement controls put in place to curb Covid-19 outbreaks have hammered retail spending and travel, while steps to cool property prices have sent property sales plunging. On Wednesday, the country reported a sharper-than-expected slowdown in retail sales in August, along with weaker growth in industrial production and fixed-asset investment. Meanwhile, new property sales collapsed by 90%! “It’s fair to say that the Evergrande situation and its repercussions on the broader property market will have a far greater direct impact on Chinese growth than any of the other regulatory crackdowns,” said Alvin Tan, head of Asia foreign-exchange strategy at Royal Bank of Canada in Hong Kong. “I would not be surprised that the PBOC is acting to contain the fallout in the money markets.” As discussed last night, the confusion over the Evergrande is endgame has prompted China experts to game out potential worst-case scenarios - including a "nightmare" chaotic bankruptcy one - as they contemplate how much pain the Communist Party is willing to tolerate.
Of course, in China where social stability is paramount, investors realize that they need to generate just enough disconent for Beijing to step in, and sure enough as signs of financial contagion increase and as the tens of thousands of angry protesters take to the streets to either besiege Evergrande offices or take management hostage, the pressure to intervene gets higher by the day. Should Beijing turn a cold shoulder and should a worst case scenario materialize, numerous industries would be exposed to credit risks in a "freefall" Evergrande default, Fitch Ratings warned.
https://www.zerohedge.com/markets/china-injects-most-liquidity-february-stem-evergrande-panic
kek
RBC unit resolves U.S. SEC charges over bond abuses, is fined
A Royal Bank of Canada unit was censured and will pay more than $863,000 to resolve U.S. regulatory charges it broke rules meant to give retail and institutional investors priority in buying new municipal bonds.
In a civil settlement announced on Friday, the U.S. Securities and Exchange Commission said RBC Capital Markets LLC improperly allocated bonds to investors known as “flippers” who quickly resold their bonds to other broker-dealers at a profit. Municipal bonds are typically issued by states, cities and school districts to fund operations and projects, and contain tax advantages over corporate and U.S. government bonds. The SEC said RBC knew or should have known that giving priority to flippers violated its rules on bond offerings it underwrote.
It also said RBC also improperly bought new bonds it had not underwritten from flippers, rather than wait in line to buy those bonds from the underwriters. The alleged violations occurred from 2014 to 2017. RBC’s payout includes a $150,000 civil fine, plus disgorgement and interest. Two RBC officials, head of municipal syndication Jaime Durando and former head of municipal sales Kenneth Friedrich, were also censured by the SEC and fined a respective $30,000 and $25,000. None of the defendants admitted or denied wrongdoing. RBC had no immediate comment. Lawyers for the other defendants did not immediately respond to requests for comment.
The SEC has reached several settlements over flipping abuses in municipal bonds, including a $10 million accord with Switzerland’s UBS AG in July 2020.
https://www.reuters.com/article/rbc-sec/update-1-rbc-unit-resolves-u-s-sec-charges-over-bond-abuses-is-fined-idUSL1N2QJ11Z
>>92075 pb Powell Orders Review Of Fed Ethics Rules After Trading Disclosures Spark Mass Outrage
Fed officials owned securities it was buying during pandemic, raising more questions about conflicts
Amid an outcry about Federal Reserve officials owning and trading individual securities, an in-depth look by CNBC at officials’ financial disclosures found three who last year held assets of the same type the Fed itself was buying.
*Boston Fed President Eric Rosengren held between $151,000 and $800,000 worth of real estate investment trusts that owned mortgage backed securities. He made as many as 37 separate trades in the four REITS while the Fed purchased almost $700 billion in MBS.
*Fed Chair Jerome Powell held between $1.25 million and $2.5 million of municipal bonds in family trusts over which he is said to have no control. They were just a small portion of his total reported assets. While the bonds were purchased prior to 2019, they were held while the Fed last year bought $21.3 billion in munis, including one from the state of Illinois purchased by his family trust in 2016. Among the very few bonds the Fed bought last year was one from the State of Illinois.
*Richmond Fed President Thomas Barkin held $1.35 million to $3 million in individual corporate bonds purchased before 2020. They include bonds of Pepsi, Home Depot and Eli Lilly. The Fed last year opened a corporate bond buying facility and bought $46.5 billion of corporate bonds.
None of these holdings or transactions appeared to violate the Fed’s code of conduct. But they raise questions about the Fed’s conflict of interest policies and the oversight of central bank officials. Among those questions: Should the Fed have banned officials from holding, buying and selling the same assets the Fed itself was buying last year when it dramatically widened the types of assets it would purchase in response to the pandemic? The Fed’s own code of conduct says officials “should be careful to avoid any dealings or other conduct that might convey even an appearance of conflict between their personal interests, the interests of the system, and the public interest.” A Fed spokesperson told CNBC that Powell had no say over the Fed’s individual municipal bond purchases and no say over the investments in his family’s trusts. A Fed ethics officer determined that the holdings did not violate government rules. Barkin declined to comment.
Rosengren has announced he would sell his individual positions and stop trading while he is president. Dallas Fed President Robert Kaplan, who actively traded millions of dollars of individual stocks, also said he would no longer trade and would sell his individual positions. But he said his trade did not violate Fed ethics rules. A spokesman for Rosengren told CNBC that he “made sure his personal saving and investment transactions complied with what was permissible under Fed ethics rules.”
But Dennis Kelleher, CEO of the non-profit Better Markets, said if some of these Fed actions are not against the rules, the rules need to change. “To think that such trading is acceptable because it is supposedly allowed by Fed’s current policies only highlights that the Fed’s policies are woefully deficient,” Kelleher told CNBC. While trading by Rosengren and Kaplan was conducted during the so-called black-out period, when Fed officials are not allowed to talk publicly about monetary policy or trade, Kelleher said during a crisis like last year, “the whole year should be considered a blackout period” because Fed officials are constantly talking and crafting policy in response to fast-moving events.
In response to CNBC questions asked in the process of our research, a Fed spokesperson released a statement Thursday saying Powell ordered a review last week of the Fed’s ethics rules surrounding “permissible financial holdings and activities by senior Fed officials.”
https://www.cnbc.com/2021/09/17/fed-officials-owned-securities-it-was-buying-during-pandemic-raising-more-questions-about-conflicts.html
done it for years and shouldn't be ANYWHERE near the markets in that capacity.
But muh rules allow....
Evergrande Bondholders Find No Takers in Efforts to Hedge Risk
Investors in China Evergrande Group’s bonds are struggling to find a hedge to cushion their losses as the troubled real estate giant nears what could be one of China’s biggest debt restructurings.
Banks’ trading desks are reluctant to offer hedging tools after some of them suffered losses earlier in the year, and due to the sparse trading of Evergrande’s CDS, according to people familiar with the matter who were not authorized to speak publicly about the matter. Owners of Evergrande’s $19 billion in dollar bonds are currently watching their investment shrivel as they wait to find out if Beijing will step in to halt its downward spiral. For money managers used to relying on the $10 trillion swaps market to hedge downside risks, it’s an extraordinary situation. “Absolutely no bank is willing to provide a hedge, at least not in size,” Jochen Felsenheimer, a managing director at XAIA Investment in Munich who trades CDS and bonds, said in a phone interview. Both speculators and bondholders are failing to find counterparties to hedge their liabilities, he added.
Credit default swaps are a tried and tested way for investors and hedge funds to profit in the event of a default or government bail-out. While China’s offshore CDS market is illiquid and rarely used, holders of Evergrande’s debt are global, and not being able to hedge for the downside is unusual. “Banks just don’t want to risk selling protection in case they can’t buy it themselves and they’re left with an open position on their books - and they take the hit,” Felsenheimer added. Rather than allow a chaotic collapse into bankruptcy, market participants predict regulators will come up with a restructuring of Evergrande’s $300 billion pile of liabilities to stem systemic risk. Any deal would be complicated by the company’s large and multi-layered indebtedness, as well as the ensuing social impact, according to Daniel Fan, credit analyst at Bloomberg Intelligence.
https://www.bnnbloomberg.ca/evergrande-bondholders-find-no-takers-in-efforts-to-hedge-risk-1.1653649
and this is the early result of only $20B of these bonds.
Mark it ZERO!!!
Wynn Is Borrowing $1.5 Billion as Macau Concerns Intensify
Wynn Resorts said in a filing it obtained a $1.5 billion credit facility from Bank of China Ltd. as it and other casinos that operate in the Chinese enclave of Macau face tighter government control over the industry.
Wynn (ticker: WYNN) said the credit line will be used to refinance debt of Wynn Macau and its subsidiaries, and also to “fund ongoing working capital needs and for general corporate purposes.” Earlier this week, Macau authorities announced the “healthy and sustainable development” of the gambling industry through regulatory improvements. Macau also laid out plans to increase local ownership in gaming companies.
Shares of Wynn Resorts and other casino companies with operations in Macau, such as Las Vegas Sands (LVS) and Melco Resorts & Entertainment (MLCO), have fallen sharply this week following the launch of a 45-day consultation on a reform of the territory’s gaming laws.
https://www.barrons.com/articles/wynn-macau-china-casino-stocks-51631872800