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Wednesday, October 14, 2015

KTFA CHAT WITH BACKDOC, 14 OCT

KTFA:

Backdoc:
  SO AS WE SEE AT THIS LATE HOUR, THE WORLD HAS NOT YET FOUND ITS NEW GLOBAL REALITY YET!

IT APPEARS THERE WILL BE MORE PAIN FOR THE THIRD ROUT ON THIS GLOBAL ECONOMY!

WITH PRESSURE ON COMPANIES TO DOWNSIZE DUE TO REDUCED DEMAND, LAYOFFS ARE STARTING TO HAPPEN!

COMMODITIES APPEAR TO HAVE MORE DOWNSIDE FROM HERE! AS PEOPLE LOOK FOR PROFITS IN A DEFLATIONARY ENVIRONMENT THEY ARE TURNING TO HIGH RISK HIGH YEILD BOND FUNDS TO MAKE A PROFIT!

I'M AFRAID WE WILL SEE THIS BE A DISASTER AS THE IMF WARNS!
....
I THINK WE ARE ENTERING A WINDOW OF TIME WHEN THE MARKET CHALLENGES COULD BRING SEVERE PAIN TO MOST FOLKS OUT THERE.

 THIS COULD BE A MEDIA FRENZY IF AND WHEN THE APPLE CART GETS TURNED OVER.

THIS WOULD BE A WONDERFUL TIME TO ACTIVATE THE NEW IRAQI DINAR ALONG WITH SEVERAL OTHER EM CURRENCIES!   DOC

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Thunderhawk:   Backdoc Alert

I.M.F. Cautions on Concentrated Positions in U.S. Mutual Funds

The International Monetary Fund warned on Tuesday of the large positions that mutual funds in the United States have built in high-yielding bonds issued by risky companies in America and in emerging markets around the world.

The warning comes at a time of increased nervousness about China and other emerging markets like Brazil. And it highlights a growing concern on the part of regulators and economists that mutual funds, in their hunger to load up on high-risk, high-yield securities in an environment of low interest rates, will be hard pressed to sell them during a market reversal.

http://www.nytimes.com/2015/09/30/business/dealbook/imf-cautions-on-concentrated-positions-in-us-mutual-funds.html?partner=rss&emc=rss&_r=1

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Thunderhawk:  Citi: The Most Important People in Finance Are Concerned About These Four Things
This is what policymakers and investors talked about in Lima.

There was plenty for global policy makers to discuss at the most recent International Monetary Fund-World Bank Meetings in Lima.

From lackluster corporate investment to a Federal Reserve inching toward its first interest rate hike in nearly a decade, central bankers and international finance chiefs could take their pick of topics to digest. Citigroup Chief Economist Willem Buiter was one of the attendees, and he has published a note outlining the four main topics of discussion among policy makers and hist clients. Here they are.

1. China's economy. The consensus among people Buiter spoke with was for stabilization in China in the near term, with little risk of a drastic turn for the worse before the end of the year. Observers were a little less optimistic when looking farther out.

The perception that policy has been somewhat ineffective and hard to comprehend in some recent episodes has meant that some of our counterparts saw increasing risks that China would at some point in coming years suffer a sharper slowdown as it confronts its many policy challenges.

2. Risk of an emerging-market crisis. Slowing growth in emerging markets has been a big theme lately, and it was no different at the meetings in Lima. The vast majority of people Buiter talked with believed that these countries are looking at a growth crisis, not a financial crisis.

Most agreed that structural reforms are needed in a large number of EM countries to allow them to return [to] anything like the growth rates of previous years. But with the exception of a few countries (most notably India), there was little expectation that meaningful growth-enhancing structural reforms were on the cards in EMs.

3. Effects of an EM crisis on developed markets. Because growth in emerging markets has been a driver of world gross domestic product since the financial crisis, many have expressed concern about the broad impact of slowing growth in EMs. There seemed to be a good sense of optimism at the meetings.

There was an uneasy, but fairly general, sense that developed markets would only be moderately affected by the EM slowdown and that, with the partial exception of the major DM-commodity producers (Australia, Canada, New Zealand, Norway), they would be ‘OK’.

4. Exchange rates and capital flows. As China devalued its currency and talk of so-called currency wars has emerged, exchange rates were bound to come up. Most of the people Buiter talked with were "comfortable" with the moves we have seen so far, though there was concern over capital flows:

There was less concern about the potential negative effects of exchange rate volatility than we would have expected. Somewhat in contrast, there was also a fairly widely shared sense that international capital flows were a source of vulnerability for the world economy and some individual countries. Many participants thought that China would be well advised to prioritize the correction of major domestic imbalances before attempting further capital account liberalization.

And what, you might ask, did Buiter himself think of the discussions?

"Most assessments of the prospect of the world economy were more optimistic than our own expectations," the economist deadpanned.

http://www.bloomberg.com/news/articles/2015-10-13/citi-the-most-important-people-in-finance-are-concerned-about-these-four-things

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Backdoc:  WITH ONE EYE ON THE IRANIAN RIAL AND THE OTHER ON THE IRAQI DINAR WE SEE A LITTLE MORE CONFIRMATION THAT THE DEAL IS ALIVE AND WELL!

NO WONDER OPEC COUNTRIES WERE OVERSTATING DEMAND NUMBERS ON BLACK GOLD!

WITH MORE FACTUAL DATA WE CLEARLY SEE NOW THAT A ROUGH ROAD MAY LIE AHEAD IN FINDING THE BOTTOM EVEN THOUGH AGREEMENTS ARE IN PLACE.
 IT MAY TAKE A FEW MONTHS TO STABILIZE AN AGREED PRICE ON THE UNIVERSAL CURRENCY!

POLITICAL AGREEMENTS PUT INTO ACTION WILL EVENTUALLY FIND A STABLE VALUE THAT WORKS FOR THE WORLD!

WITH NO NEWS FROM THE U.S. SENATE WE HAVE TO ASSUME THE PROCESS OF SANCTION RELEASE FOR IRAN IS STARTING TO TAKE SHAPE.  DOC    IMO

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Thunderhawk:   Thunderhawk:    Backdoc Alert

Iran parliament approves nuclear deal bill in victory for Rouhani

Iran's conservative-dominated parliament passed a bill on Tuesday approving its nuclear deal with world powers, signaling victory for the government over hardline opponents who worry the accord opens a door to wider rapprochement with the West.

Many conservative lawmakers opposed the Joint Comprehensive Plan of Action (JCPOA) that President Hassan Rouhani's government agreed with the six powers on July 14, and the vote -- which followed a bad-tempered, rowdy debate on Sunday -- lifts a significant hurdle to putting the deal into effect.

With strong parliamentary backing, the bill is likely to be ratified by a clerical body called the Guardian Council.

The exact stance of Supreme Leader Ayatollah Ali Khamenei, who has the last word on all matters of state, is not known. To date, he has neither approved nor rejected the agreement, but has commended the work of Rouhani's negotiating team.

http://www.reuters.com/article/2015/10/13/us-iran-nuclear-parliament-idUSKCN0S70F220151013

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Backdoc:   YOU HAVE TO WONDER WHY A MAJOR BACKBONE COMPANY LIKE GE IS BACKING AWAY FROM THE CREDIT MARKET?

WE SEE A VERY HEALTHY BANK, WELLS FARGO IS BUYING THE DIVESTITURE. WHY?

WELL, I'M SURE THERE ARE MANY GOOD REASONS AS THEY DESCRIBE BUT I ALSO BELIEVE GE WANTS TO REDUCE ITS EXPOSURE TO THE CREDIT MARKETS AT A TIME WHEN THEY ARE BECOMING RISKIER BY THE DAY!   DOC   IMO

Thunderhawk:    Backdoc Alert

Wells Fargo to Buy $32 Billion GE Assets, Add 3,000 Workers

Wells Fargo & Co. agreed to buy $32 billion in assets from General Electric Co. and take on about 3,000 employees as the industrial giant retreats from financial services.

The sale includes commercial-distribution and vendor-finance units, and a portion of the corporate-finance business, from GE Capital, San Francisco-based Wells Fargo said Tuesday in a statement that didn’t include additional terms. The transaction is expected to be completed in the first quarter of 2016 and would allow the finance unit to return about $4.2 billion of capital to its parent, GE said in a separate statement.

Wells Fargo has been one of the biggest buyers of GE assets. In September, the lender agreed to purchase the bulk of a railcar- and locomotive-leasing unit from the company, and earlier this year, Wells Fargo said it would acquire GE real estate assets.

“This acquisition is an outstanding opportunity for Wells Fargo to deepen relationships and strengthen our presence in key commercial lending markets,” Tim Sloan, head of the wholesale banking division, said in the statement.

About 90 percent of the loan and lease portfolios are based in the U.S. or Canada, Wells Fargo said.
Last Piece

GE said the agreement marks its largest divestiture since it announced a plan in April to unload about $200 billion in financial assets. Chief Executive Officer Jeffrey Immelt is exiting most of the lending operations while expanding units making products such as jet engines and oilfield equipment.

GE has now sold most of its U.S. financial operations, including deals for an $8.7 billion transportation-finance division, an $8.5 billion health-care lender and an online bank with $16 billion of deposits. The one significant piece still to be sold is the franchise-finance unit, which has about $5.5 billion of assets, Keith Sherin, CEO of GE Capital, said in the statement.

“Since our April 10 announcement, we’ve signed more than $126 billion in transactions, which is over 60 percent of our overall plan,” Sherin said. GE will be mostly done with the financial overhaul by the end of next year, he said.

Goldman Sachs Group Inc. and Credit Suisse Group AG were the bankers for GE, which got legal advice from Weil Gotshal & Manges LLP. Wells Fargo Securities served as financial adviser for the acquirer and Mayer Brown offered legal advice.

http://www.bloomberg.com/news/articles/2015-10-13/wells-fargo-to-buy-32-billion-in-ge-assets-add-3-000-workers
GE $126 Billion Asset Sales Set Up Too-Big-to-Fail Exit

General Electric Co.’s sweeping plan to divest its U.S. finance operations neared completion Tuesday, putting the industrial giant on the verge of ending its status as a too-big-to-fail lender.

GE intends to apply in the first quarter to drop its federal designation as a systemically important financial institution, said Keith Sherin, chief executive officer of the GE Capital unit. A deal Tuesday with Wells Fargo & Co. to sell $32 billion in assets brings the agreed-upon disposals to $126 billion and leaves just one sizable U.S. division left to unload.

http://www.bloomberg.com/news/articles/2015-10-13/ge-126-billion-asset-sales-set-up-exit-from-too-big-to-fail

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