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Shadow margin loans make a sly return as China stocks sizzle

FILE PHOTO: FILE PHOTO: An investor looks at an electronic board showing stock information at a brokerage house in Shanghai
FILE PHOTO: FILE PHOTO: An investor looks at an electronic board showing stock information at a brokerage house in Shanghai, China September 7, 2018. REUTERS/Aly Song/File Photo/File Photo

March 22, 2019

By Shu Zhang and Samuel Shen

SINGAPORE/SHANGHAI (Reuters) – On a cloudy March morning in Shanghai’s glitzy financial district of Lujiazui, Ye Lixia was knocking on the doors of potential clients, offering loans to bet on a surging stock market.

“We provide money to investors who need quick funding to capitalize on the market rally,” Ye told Reuters.

Ye, in her 30s and a general director at Bo Ying Asset Management, is one of the thousands of gray market lenders operating in the shadows of China’s colossal capital markets.

A stock market that shot up 25 percent in the last three months has revived the undercover margin lending business that was notoriously responsible for China’s 2015 boom-bust market volatility.

In defiance of warnings from the China Securities Regulatory Commission (CSRC), shadow lenders pitch their business via cold telephone calls and social media advertisements, dangling the prospects of a reversal of fortune.

“In China, speculators adopt very aggressive trading strategies, gaming the rules… and pushing policy-makers’ tolerance to the limit,” said Stephen Huang, vice president of Shanghai See Truth Investment Management Co.

The Shanghai index’s swift recovery from last year’s heavy losses has been primarily driven by signs of an end to the long-running Sino-U.S. trade war.

Beijing’s efforts to lower the cost of lending in a slowing economy, and foreign investment inflows after the inclusion of Chinese A-shares in global equity benchmarks encouraged the rally.

Shenzhen’s start-up board ChiNext, traditionally a hotbed for speculation, has surged more than 30 percent this year.

In the official margin financing market, in which stock investors borrow money from brokerages, outstanding loans have jumped nearly 30 percent since the end of January to 911.6 billion yuan ($136.08 billion). That is just a third of the 2.27 trillion yuan record hit in June 2015.

But unofficial margin financing, in which small investors borrow from grey market lenders, is thriving.

Hui Ju Ying, a margin lending platform, lures clients with suggestions of “returns of 100 percent.” Another platform, www.zfpz.com, says: “young people shouldn’t resign to mediocrity; margin financing can change your fate.”

The CSRC said in late February that it was closely monitoring the situation. But regulators have so far taken a soft approach towards such lending.

“Last year, the government was talking about reducing leverage. Now, the government is talking about steadying leverage, which is good for us,” said Ye, whose company borrows money from banks and lends it to investors.

NO DEJA VU?

Managers at five margin lenders said they began aggressively marketing loans over the past few weeks to investors eager to make outsized stock market bets.

Such lending helped the Shanghai stock index double between 2014 and mid-2015, forcing the authorities to crack down on shadow lending and causing a 40 percent decline in stocks over six months.

Some of the lenders this time around are newcomers. Others are survivors of the last crackdown, emboldened by the belief that regulators, focused on enabling funding for struggling private firms, will look the other way.

“The loans we make are deals between us and investors and are none of brokerages’ business,” said Xiao Xiao, a saleswoman at shadow financing platform xianniuwang.com.

The financing has been a boon to risk takers like Zhang, who more than doubled his investment capital via shadow margin loans through leveraged bets on 5G-related China tech stocks.

With 50,000 yuan in hand, Zhang, who was willing to disclose only his family name, borrowed 500,000 yuan from a gray-market lender named Gu Zhang Gui six months ago. He has earned 56,000 yuan in net returns so far, he told Reuters.

Zhang pays a daily interest rate of 0.06 percent, which translates to an annualized cost of funding of 22 to 24 percent.

“Stocks are rallying so we investors are making money. And then we want to make even more money, so we are turning to those lenders who can leverage our funding,” he said.

Individual investors account for about 80 percent of total stock market turnover. Many are day-traders, frequently churning their holdings for quick returns.

Regular broker financing is regulated and limited at 1:1 leverage – the maximum amount they can borrow is equal to their principal. Shadow margin loans allow for a leverage of up to 10 times the capital the investor provides, and lenders do not dictate what stocks investors can buy.

“No qualification is needed,” said an executive who used to work for Beijing-based Yueda Investment, a gray-market lender. “Investors just come to our office to take a look and then we sign loan contracts.”

Operating in the shadows carries risks, he said, notably that they cannot use the courts to recover losses.

A director at another Shanghai-based margin lender said his company charges interest of 11.5 to 15.5 percent on money that cost them about 9.5 percent.

(For a graphic on ‘China margin lending rises sharply as market jumps’ click https://tmsnrt.rs/2HD8Jqa)

BANK INVOLVEMENTTwo of the gray-market margin financiers interviewed by Reuters said their initial funding came from banks. Banks are prohibited from directly financing stock market investment but use complex product structures to bypass regulations.

Both declined to be named because of the sensitivity of the matter. The names of banks lending to trust companies are never revealed on shadow margin loan contracts.

On March 15, the Taizhou branch of China’s banking watchdog fined two lenders for allowing bank money to flow illegally into the stock market. The Guangdong branch of the CSRC has banned brokerages from cooperating with shadow lenders.

That caused a 4 percent drop in China stocks, their worst day in five months.

Domestic brokerage Shenwan Hongyuan Securities estimated there were about 10,000 grey market lenders running 1-1.5 trillion yuan in margin financing in 2015. Volumes are much lower this time, which is why analysts expect regulators look away for a while longer.

“I think regulators want to see more active trading… Investors or speculators are all welcome,” said a senior manager at domestic brokerage Industrial Securities.

(Reporting By Shu Zhang in SINGAPORE and Samuel Shen in SHANGHAI; Editing by Vidya Ranganathan and Gerry Doyle)

Source: OANN

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Wealthy in Pelosi’s District Trying to Stop Homeless Shelter

Wealthy residents in House Speaker Nancy Pelosi’s San Francisco district have launched a GoFundMe campaign to help cover the legal costs of fighting a proposed homeless shelter, The Washington Free Beacon is reporting.

Residents of the wealthy waterfront neighborhoods near the proposed 200-bed Homeless Navigation Center already have raised $60,952 of their $100,000 goal.

Dubbing themselves, “Safe Embarcadero for All,” the group noted on its GoFundMe page: “South Beach, Rincon Hill, Bayside Village, East Cut & Mission Bay residents, businesses and other interested parties are organizing to oppose the Navigation Center proposed for Seawall Lot 330. 
“Given the multiple interested parties, potential legal costs and restrictions on the boards of our HOAs from taking independent action, our new group, Safe Embarcadero for All, invites you to join us.”

The Free Beacon noted the proposed location of the homeless shelter and the nearby neighborhoods are in Pelosi’s 12th Congressional District. It pointed to a Business Insider report that listed San Francisco’s average household income as $141,000.

One of the donors to the site appears to be Jerome Dodson, chairman of Parnassus Investments, according to the Free Beacon. His firm’s offices are less than a mile from the proposed shelter site.  The website said Dodson has contributed in the past to Democratic candidates.

Source: NewsMax Politics

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Serbs and Montenegrins protest against autocratic rulers

Thousands of people have rallied in Serbia and Montenegro to demand the resignations of their autocratic leaders over allegations of corruption and the lack of democratic freedoms.

Some 10,000 demonstrated Saturday against long-serving Montenegrin President Milo Djukanovic in the Montenegrin capital of Podgorica, and several thousand others marched in Belgrade against Serbian President Aleksandar Vucic.

Djukanovic and his party have ruled Montenegro virtually unchallenged for three decades. He led the country to independence from much larger Serbia in 2006 and defied Russia to join NATO in 2017.

In Serbia, the protesters have for months been urging more democracy in the country that is firmly under control of populist leader Vucic, a former nationalist who says he wants to lead the country into the European Union.

Both Vucic and Djukanovic have rejected calls to resign.

Source: Fox News World

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New Costner movie features men who chased Bonnie & Clyde

Actor Costner waves during a photocall to promote his latest film
Actor Kevin Costner waves during a photocall to promote his latest film "The Highwaymen" in Madrid, Spain, March 25, 2019. Picture taken March 25, 2019. REUTERS/Sergio Perez

March 26, 2019

By Silvio Castellanos

MADRID (Reuters) – A new film starring Kevin Costner and Woody Harrelson takes a fresh angle on the bloody tale of outlaw duo Bonnie and Clyde, focusing instead on the two detectives who ended the lovers’ criminal rampage across the United States.

In “The Highwaymen”, directed by John Lee Hancock, Costner plays former Texas Ranger Frank Hamer, one of a posse of officers who shot the pair dead in a dawn ambush in Louisiana in 1934. Harrelson plays his partner Maney Gault.

“We’ve chosen this one story about Bonnie and Clyde, and rather than tell their story, we’ve told the story of the men who hunted them down and risked their lives to bring a murder spree in America to an end,” Costner told Reuters.

The 1967 move “Bonnie & Clyde” starred Warren Beatty and Faye Dunaway as the gangster pair believed to have murdered 13 people, robbed banks, and staged kidnaps and car thefts.

But the new flick takes a very different path, Costner said in Madrid during a promotional tour.

“They were made heroic in the 1967 movie and that’s too bad. But that’s how it was made. The men that chased (them) were just average men doing their job,” the veteran U.S. actor said.

“The Highwaymen” will premiere on streaming service Netflix on March 29.

Asked whether movies that go straight to streaming services have the same cache as those released in cinemas, Costner noted that film and television producers were increasingly experimenting with releasing their work online.

With their high-quality long-form programs, Netflix and others are raising the bar for traditional TV production, he said. “Television didn’t (have) a very big hold over me until you started having extended stories,” he added.

(Reporting by Silvio Castellanos; Writing by Isla Binnie; Editing by Andrew Cawthorne)

Source: OANN

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2 arrested for vandalizing U. of North Carolina memorial

Police at North Carolina's flagship public university say they've arrested two people accused of vandalizing a monument to enslaved and free black workers who built the school.

University of North Carolina police say 31-year-old Ryan Francis Barnett of Sanford and 50-year-old Nancy Rushton McCorkle of Newberry, South Carolina, were arrested Monday. They face misdemeanor charges of damaging property and ethnic intimidation.

Neither had listed phone numbers.

They're accused of marking the Unsung Founders Memorial last month with what the Chapel Hill campus's interim chancellor said was "racist language."

The memorial is in a central plaza that also featured a statue of a Confederate soldier before protesters tore it down in August.

Source: Fox News National

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California governor to put moratorium on death penalty: source

FILE PHOTO: Democratic gubernatorial candidate Gavin Newsom elected governor of California
FILE PHOTO: California Democratic gubernatorial candidate Gavin Newsom speaks after being elected governor of the state during an election night party in Los Angeles, California, U.S. November 6, 2018. REUTERS/Mike Blake/File Photo

March 13, 2019

SACRAMENTO, Calif. (Reuters) – California Governor Gavin Newsom will impose a moratorium on the state’s death penalty on Wednesday, granting reprieves to all 737 inmates on death row and closing the state’s execution chamber, an administration source said.

Newsom, who Tuesday night hinted at a “major policy announcement,” plans to sign an executive order setting the changes in place on Wednesday morning at the state capitol, the source said. No death row inmates will be released, the source said.

(Reporting by Sharon Bernstein; Editing by Robert Birsel)

Source: OANN

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The Reparations Scam Is Back – and Dems Are Falling For It

I have lived long enough to be embarrassed for politicians and others who don't know history. Such ignorance is especially galling when presidential hopefuls go to kiss the ring of the ignominious Al Sharpton to seek either his blessing or neutrality as they pursue their party's nomination at the top of its 2020 ticket.

Read Full Article »

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Avengers fans gather at the TCL Chinese Theatre in Hollywood to attend the opening screening of
Avengers fans gather at the TCL Chinese Theatre in Hollywood to attend the opening screening of “Avengers: Endgame” in Los Angeles, California, U.S., April 25, 2019. REUTERS/Mike Blake

April 26, 2019

LOS ANGELES (Reuters) – Marvel Studios superhero spectacle “Avengers: Endgame” hauled in a record $60 million at U.S. and Canadian box offices during its Thursday night debut, distributor Walt Disney Co said.

Global ticket sales for the film about Iron Man, Hulk and other popular characters reached $305 million for the first two days, Disney said.

(Reporting by Lisa Richwine; Editing by Chizu Nomiyama)

Source: OANN

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Funeral of journalist Lyra McKee in Belfast
Labour Party leader Jeremy Corbyn attends the funeral service for murdered journalist Lyra McKee at St Anne’s Cathedral in Belfast, Northern Ireland April 24, 2019. Brian Lawless/Pool via REUTERS

April 26, 2019

LONDON (Reuters) – The leader of Britain’s opposition Labour Party, Jeremy Corbyn, said on Friday he had turned down an invitation to a state dinner which will be part of U.S. President Donald Trump’s visit to Britain in June.

“Theresa May should not be rolling out the red carpet for a state visit to honor a president who rips up vital international treaties, backs climate change denial and uses racist and misogynist rhetoric,” Corbyn said in a statement.

He said maintaining the relationship with the United States did not require “the pomp and ceremony of a state visit” and he said he would welcome a meeting with Trump “to discuss all matters of interest.”

(Reporting by Andy Bruce; Writing by William Schomberg)

Source: OANN

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Libyan Minister of Economy Ali Abdulaziz Issawi speaks during an interview with Reuters in Tripoli
Libyan Minister of Economy Ali Abdulaziz Issawi speaks during an interview with Reuters in Tripoli, Libya April 25, 2019. REUTERS/Hani Amara

April 26, 2019

By Ulf Laessing

TRIPOLI (Reuters) – Libya’s U.N.-recognized government has budgeted up to 2 billion dinars ($1.43 billion) to cover costs of a three-week-old war for control of the capital, such as treatment for the wounded, to be funded without new borrowing, the economy minister said.

Ali Abdulaziz Issawi suggested the government hoped for business to continue more or less as usual despite the assault on Tripoli, in the country’s northwest, by forces tied to a parallel administration based in the eastern city of Benghazi.

Once Africa’s third largest producer of oil, Libya has been riven by factional conflict since the fall of Muammar Gaddafi in 2011, with the country now broadly split between eastern-based forces under Khalifa Haftar and the U.N.-backed government in Tripoli, in the west, under Prime Minister Fayez al-Serraj.

Still, with Haftar’s Libyan National Army forces unable so far to pierce defenses in Tripoli’s southern suburbs, normal life and business activities continue in much of the capital and western coastal towns.

Issawi, in an interview with Reuters in his Tripoli office, also said Libya’s commercial ports and wheat imports were still functioning normally, although some roads have been blocked.

He said the Serraj government estimates it will spend up to 2 billion dinars extra on medical treatment for wounded, aid for displaced people and other “emergency” war costs.

He said this was not military spending but analysts believe that the sum will also cover expenditures such as pay for allied armed groups or food for fighters.

“We could actually spend less,” he added, in comments that gave the first insight into the economic impact of the fighting.

Issawi said the Tripoli government, which controls little territory beyond the greater capital region, would not incur new debt to fund the war costs, sticking to a plan to post a 2019 budget without a deficit.

Tripoli derives revenue largely from oil and natural gas production, interest-free loans from local banks to the central bank, and a 183 percent surcharge on foreign exchange transactions conducted at official rates.

But with centralized tax collection greatly diminished, public debt has piled up – to 68 billion dinars in the west, including unpaid state obligations such as social insurance.

Some analysts expect Serraj’s government will be forced to raise new debt if the war for control of Tripoli drags on.

With much of Libya dominated by armed factions that also act as security forces, the public wage bill for both the western and eastern administrations has soared as fighters have been made public employees in efforts to buy their loyalty.

The east has sold bonds worth 35 billion dinars outside the official financial system as the Tripoli central bank does not fund the parallel government apart from some wages.

Despite its limited reach, the Tripoli government still runs an annual budget of around 46.8 billion dinars, mainly for public salaries and fuel subsidies.

“This year we cannot finance via debt…we will not borrow (by agreement with the central bank),” Issawi said.

According to International Monetary Fund data, Libya’s central government debt-to-GDP ratio is 143 percent, making it one of the most heavily indebted in the world on that measure.

Issawi declined to say what parts of the budget would be trimmed to support the extra outlay for war costs.

However, with some 70 percent of the budget allocated to public wages, fuel subsidies and other welfare benefits, a portion devoted to infrastructure is most likely to be axed.

Widespread lawlessness has meant there have been no major infrastructural projects since 2011, when a NATO-backed uprising overthrew dictator Muammar Gaddafi, leaving schools, hospitals and roads in acute need of restoration.

FOREX SURCHARGE

Issawi said the government planned to raise as much as 30 billion dinars by the end of 2019 from hard currency deals after imposing in September a 183 percent surcharge on commercial and private transactions done on the official rate of 1.4 to the U.S. dollar. That fee has effectively devalued the official rate to 3.9, much closer to the black market equivalent.

Some 17 billion dinars have been raised since then, with hard currency allocated for import credit letters now issued without delays, Issawi said. The forex fee has helped the government forecast a budget in the black for 2019.

Despite the narrowing spread between the two rates, the black market continues to thrive. Dozens of traders remained at their favorite spot behind the central bank headquarters in Tripoli when Reuters reporters visited it last week.

But traders said it could take time for the Serraj government to register the extra forex receipts as official banking channels were taking up to six months to approve import financing, keeping the black market in play for dealers.

Issawi said authorities planned to lower the forex fee from 183 percent, without saying when. The black market rate has dropped from 6 to around 4.1 since September but it has hardly moved of late as demand for black market cash remains high.

The Tripoli government has stopped subsidizing food and bread, which used to be cheaper than drinking water in Libya. Wheat imports are now being arranged by private traders and there are surplus stocks of flour at the moment, Issawi said.

(Reporting by Ulf Laessing in Tripoli with additional reporting by Karin Strohecker in London; Editing by Mark Heinrich)

Source: OANN

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Rep. Gerry Connolly, D-Va., threatened possible jail time for White House officials refusing to comply with subpoenas to testify before the House Oversight Committee.

Connolly, a member of the House panel, made his comments during an interview on CNN on Thursday. He said that “if a subpoena is issued and you’re told you must testify, we will back that up.”

He added: “And we will use any and all power in our command to make sure it’s backed up — whether that’s a contempt citation, whether that’s going to court and getting that citation enforced, whether it’s fines, whether it’s possible incarceration.”

“We will go to the max to enforce the constitutional role of the legislative branch of government.”

His comments came after three officials have refused to comply with congressional requests to testify, CNN noted.

Trump told The Washington Post that his staff should not testify on Capitol Hill, explaining that the White House cooperated fully with special counsel Robert Mueller and “there is no reason to go any further, especially in Congress where it’s very partisan.”

Source: NewsMax Politics

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“Outdated laws” need fixing to deal with the surge in illegal immigrant families crossing the U.S. border with Mexico, a top Border Patrol official said Friday.

Migrant families face no consequences if apprehended trying to cross the border illegally under present law, Border Patrol chief of Operations Brian Hastings claimed during an appearance on “Fox & Friends.”

“We need a change in the current outdated laws that we’re dealing with for this current demographic and this crisis that we have,” he said.

Hastings said as of Thursday there have been 440,000 apprehensions along the southwest border. There were 396,000 apprehensions all of last year.

SOUTHERN BORDER AT ‘BREAKING POINT’ AFTER MORE THAN 76,000 ILLEGAL IMMIGRANTS TRIED CROSSING IN FEBRUARY, OFFICIALS SAY

And those numbers continue to rise, he said.

Historically 70 to 90 percent of apprehensions at the border were quickly returned to Mexico, Hastings said.

Now, 83 percent of those apprehended have come from the Central American northern triangle which includes Guatemala, El Salvador, and Honduras, and of those 63 percent are “family units” and children who cannot be returned, he said.

“There are no consequences that we can apply to this group currently,” Hastings said. “We’re overwhelmed. If you look at agents there doing a tremendous job trying to deal with the flow.”

The law dictates children have to be released after 20 days of detention.

FLORIDA SHERIFF ON BORDER CRISIS AFTER MAJOR DRUG BUST: ‘IT MAKES ME ABSOLUTELY CRAZY’

Sen. Lindsey Graham, R-S.C., says that has forced immigration officials to release entire families because “you don’t want to separate families.”

Recently, he said he is drafting legislation that would allow children to be detained for more than 20 days.

Hastings said agents are frustrated with the situation but are doing the best they can with the resources they have.

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“Up to 40 percent of our agents are processing at any given time,” he said. “That should say that in and of itself is pulling from those border security resources.”

Source: Fox News National

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