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Month: July 2018

As China Suffers Its Biggest Bankruptcy Of 2018, The PBOC Finally Panics

One month ago, when discussing the recent surge in Chinese corporate bankruptcies, we asked “Is It Time To Start Worrying About China’s Debt Default Avalanche.” Just a few weeks later, the answer appears to have been yes, and not only because of the new quasi-QE policy unveiled by a suddenly concerned PBOC last night, which “encourages” Chinese banks to buy AA- rated, i.e. stressed corporate bonds, those which have seen their spreads blow out in recent months on fears of growing defaults… … but because just one month later, one of China’s biggest corporate-debt defaults hit, with the collapse of a coal mining giant that had taken advantage of China’s wave of cheap and easily accessible credit until Beijing once again changed the game with their aggressive deleveraging campaign, which sent shadow credit creation crashing to record lows just last month. But before we go into the details, a reminder what we wrote in October 2015, when we showed that when credit was easily available, more than half of China’s commodity companies were unable to pay the interest on their debt as their EBIT/Interest ratio was As we noted at the time, all it would take is another down cycle in commodity prices for mass defaults to become a staple in China’s massively overleveraged economy. And for investors in China’s Wintime Energy, that time is now. To be sure,...

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Democratic Candidate’s Husband Received $700,000 From Firms Tied to Ukrainian Contract Killing Sponsor

The husband of Debbie Mucarsel-Powell, a Democratic congressional candidate in Florida, has received at least $700,000 from firms connected to a Ukrainian believed to sponsor contract killings. “Ihor Kolomoisky has been accused of sponsoring contract killings. Why has the spouse of a prominent Florida politico taken so much money from his companies?” the Daily Beast asks in a new report. Robert Powell was hired as a lawyer for several different businesses that have ties to Kolomoisky, who the Daily Beast reports has been accused of many illegal actions. Kolomoisky has been dogged by eye-popping allegations, including that he ordered the killing of a Ukrainian lawyer, and, subsequently, the killing of gang members involved in the effort. Those allegations came in court proceedings in the U.K. Kolomoisky denied the allegations, and the litigation was ultimately settled out of court. Kolomoisky’s financial dealings are also troubled. In 2016, the Ukrainian government nationalized PrivatBank, which he partially controlled. Ukrainian authorities allege that Kolomoisky and Bogolyubov, who co-owned the bank, engaged in a fraudulent scheme that cost the bank $5.5 billion over ten years, as EuroMoney has detailed. The bank is currently suing Kolomoisky and Bogolyubov. And last December, a British court ordered the freezing of more than $2.5 billion of the pair’s assets, according to the Kyiv Post. In 2016 and 2017, Powell was paid $700,000 by Feldman Trading, which is believed to...

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Democrats Chant ‘USA’ on House Floor After Hoyer Speech Blasting ‘the Russian Bear’

House Democrats chanted “USA!” on the floor on Thursday in response to a speech by House Minority Whip Steny Hoyer (D., Md.) about protecting the integrity of American elections against foreign meddling. Rep. Mike Quigley (D., Ill.) introduced the Democratic Motion to Recommit on election security funding, saying the American people were watching at a pivotal moment and slamming President Donald Trump for not challenging Russian President Vladimir Putin to his face over 2016 election meddling. He yielded to Hoyer, who said the vote was about “substance” and calling Quigley’s amendment about one of the most pressing issues facing the U.S. “This amendment responds by providing for us to partner with our states to slam the door in the face of the Russian bear or any other adversary who seeks to steal the integrity of our elections,” Hoyer said. “Surely, we can rise above pandering to party and Putin to act on behalf of our freedom and our security!” Democrats loudly cheered and applauded the remarks. .@WhipHoyer on motion to recommit to spending bill for more election security funds: “Surely we can rise above pandering to party and Putin to act on behalf of our freedom and our security.” House Democrats chant USA on House floor. Full video: — CSPAN (@cspan) July 19, 2018 Told his time was expired, Hoyer encouraged a “yes” vote on the amendment,...

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EU Ready To Retaliate If US Slaps Tariffs On Autos, Trade Commissioner Says

Update: We wish Malmstrom well but suspect, given President Trump’s most recent tweet, that she will receive anything but a warm welcome… I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long! — Donald J. Trump (@realDonaldTrump) July 19, 2018 *  *  * European Union Trade Commissioner Cecilia Malmstrom will travel to Washington later this month alongside European Commission President Jean-Claude Juncker to try and hash out a new trade agreement with the Trump administration and ease the transatlantic trade dispute. But just in case the talks fall apart and the US moves ahead with Section 301 tariffs on European cars – President Trump has threatened a 20% tariff) – Malmstrom said the EU is preparing a list of US imports to hit with tariffs in response, per Reuters. The retaliatory “rebalancing” would target the US car sector, which she said is “healthy” and that no one involved in the sector had called for tariffs.  “We are preparing together with our member states a list of rebalancing measures there as well. And this we have made that clear to our American partners,” Malmstrom told a conference hosted by the German Marshall Fund of the United States in Brussels. Those tariffs would be in addition to the...

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Wells Fargo Caught In Yet Another Scandal

Given the seemingly unceasing stream of scandal that has flowed out of Warren Buffett’s favorite bank, Wells Fargo, it’s hardly surprising that after doing everything from illegally repossessing the cars of American soldiers to fraudulently “cross-selling” credit cards and other products to millions of customers, the bank is now being called out for adding opaque products to the accounts of hundreds of thousands of customers – for services like pet insurance and legal services – without first explaining how to use them. Wells Fargo CEO Tim Sloan And in the latest sign that Trump appointee Mick Mulvaney is keeping the pressure on, the CFPB is investigating how Wells collected fees for these so-called “add-on products”, and recently prompted it to refund millions of dollars to customers. News of the bank’s latest scandal comes just days after Wells took a $619 million charge in the second quarter to refund customers for overcharging in its foreign-exchange, wealth management and auto- and mortgage-lending units. The bank also agreed to a $1 billion settlement with the CFPB in April – the largest ever levied by the agency – over its failure to manage risk. Unsurprisingly, the bank has been aware of these issues for some time: Wells Fargo has known there could be problems with add-on products for some time. The bank received a consent order from the OCC focusing on add-on products...

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