Economy

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Brazil's Economy Minister Paulo Guedes speaks during a seminar about pension reform bill in Brasilia
Brazil’s Economy Minister Paulo Guedes speaks during a seminar about pension reform bill in Brasilia, Brazil May 22, 2019. REUTERS/Adriano Machado/File Photo

May 23, 2019

SAO PAULO (Reuters) – Brazil’s Economy Minister Paulo Guedes said on Thursday he is confident pension reform will be approved in the next 60-90 days, and that it will pack a sufficient fiscal punch.

Speaking at an event in Sao Paulo, Guedes did not specify if he meant passage in the lower house or final approval in the Senate. But he also said he believed there would be a favorable surprise in the Senate regarding social security reform within the next 60 days.

(Reporting by Lais Martins; Writing by Jamie McGeever; Editing by Tom Brown)

Source: OANN

FILE PHOTO: Duomo's cathedral and Porta Nuova's financial district are seen in Milan
FILE PHOTO: Duomo’s cathedral and Porta Nuova’s financial district are seen in Milan, Italy, May 16, 2018. REUTERS/Stefano Rellandini/File Photo

May 23, 2019

By Pamela Barbaglia and Stephen Jewkes

LONDON/MILAN(Reuters) – Investment firms, including buyout fund EQT, are flocking to Milan to develop closer ties with Italy Inc, where cash-starved family-owned companies are increasingly seeking foreign capital to boost growth.

The search for real estate in the financial capital of the euro zone’s third largest economy comes as uncertainty around Britain’s departure from the European Union and lucrative tax incentives tempt Italian dealmakers living abroad to pack up and head home.

EQT, the Nordic region’s biggest private equity firm, will open an office in June in the heart of Milan, near the Duomo cathedral, sources familiar with the matter told Reuters.

Similarly, London-based private equity firm THCP, which manages more than 1 billion euros of assets, is finalising plans to open a base in the city after the summer, to be led by partner Michele Prencipe, the sources said.

Alternative asset manager Hayfin Capital Management has also agreed to lease an office from June in the Brera district, boosting its European network which already includes London, Frankfurt and Paris among others, another source said.

EQT declined to comment while spokesmen at THCP and Hayfin confirmed the plans.

Milan started to emerge as a destination of choice for major private equity firms in the late Nineties, but after the boom years of 2005-2007 local teams were dramatically downsized, under pressure to cut costs during the financial crisis and with scarce opportunities for multi-billion euro deals.

“Italy is one of our leading markets thanks to its large number of family-owned companies,” said Astorg partner Lorenzo Zamboni who launched the fund’s Italian office in September.

Paris-based Astorg – which focuses on mid-market investments and manages more than 8 billion euros of assets – clinched its first Italian deal in 2014 when it bought power transmission belts manufacturer Megadyne.

THCP – another mid-market investment firm which provides growth capital in exchange for minority stakes – has so far invested about 300 million euros in Italy and wants to use its Milan base to deploy more capital in the country.

Founder and managing partner Mauro Moretti pointed to the large number of Italian companies which generate the bulk of their revenues abroad as a sweetspot for international investors.

“Their export-driven strategy is a unique and attractive feature,” he said.

SILICON VALLEY OF BAD LOANS

Despite being active in Italy since 2015 when it announced plans to buy medical device firm Lima, EQT has so far managed its investments in the country from its Zurich and Munich offices.

Now the Swedish firm, which is backed by the Wallenberg family via Investor AB, is looking to move three of its dealmakers to Milan this year, including managing director Federico Quitadamo who will oversee the Italian rollout, the sources said.

Credit-focused investors are also circling the Italian market, where local banks hold about 189 billion euros of soured loans.

“There is growing appetite for distressed deals in the country and no wonder investors are flocking to Milan,” said a banker based in the city. “Italy is the Silicon Valley of bad loans.”

Founded in 2009, Hayfin is one of Europe’s leading alternative asset managers, investing in anything from non-performing loans and structured credit to real estate debt. It is actively growing its presence in Italy, eyeing a wide range of deals.

“We see attractive investment opportunities in both primary and secondary transactions and a growing role for private credit investors with patient and flexible capital,” said managing director Stefano Questa.

“Our focus on Italy is not driven by near-term considerations, but instead is part of Hayfin’s approach of building a sustainable, long-term presence in the major European markets.”

Italian banks have accelerated the sale of bad loans in the past two years, offloading debt with a gross value of 140 billion euros since 2017. Their focus is now shifting to ‘unlikely to pay loans’, which had a gross value of 83 billion euros in December.

Most credit investors in Italy tend to partner or take control of local debt servicing firms. U.S. hedge fund Elliott, for example, relies on its majority-owned Italian bank Credito Fondiario to manage the recovery of the non-performing loans it has bought.

But competition is fierce and investors want to stay close to local clients to prevail in auctions.

TAX PERKS

Generous tax incentives are also encouraging Italian investors to return to their homeland.

An annual flat tax of 100,000 euros on all income from foreign investments, known as the non-domiciled tax regime, appeals to general partners of private equity and hedge funds whose compensation includes so-called carried interest (carry), which is a share of the funds’ profits.

Algebris Chief Executive Davide Serra, who founded the London-based hedge fund in 2006, is among those who took advantage of the flat tax rate and moved back to Milan, a source familiar with the matter said.

Serra did not respond to requests for comment.

An existing 50% tax break for Italian workers returning from abroad has been hiked to 70% as part of the government’s Growth Bill or Decreto Crescita.

The bill, which Parliament needs to approve by June 29, grants a more generous 90% tax break for five years to those moving to some Southern regions. All incentives will be extended for a total of 10 years to those who buy properties in Italy or have children.

“If it goes through, this will be Europe’s most attractive tax bill for country nationals living abroad,” said Marco Cerrato, a partner at law firm Maisto e Associati which specialises in tax law from offices in Milan and London.

“Most people relocating from cities like London are highly-skilled professionals who tend to bring business to Italy, open offices and recruit locally.”

(Reporting By Pamela Barbaglia and Stephen Jewkes; Editing by Kirsten Donovan)

Source: OANN

FILE PHOTO: Dallas Federal Reserve Bank President Robert Kaplan poses at a luncheon in El Paso
FILE PHOTO: Dallas Federal Reserve Bank President Robert Kaplan poses at a luncheon in El Paso, Texas, U.S., October 2, 2018. REUTERS/Ann Saphir/File Photo

May 23, 2019

DALLAS (Reuters) – U.S. interest-rates are “for the moment” at the correct setting for the economy, Dallas Fed President Robert Kaplan said on Thursday, but rising trade tensions and mounting inflationary pressures make it difficult to know whether the Fed’s next move will be a rate hike or a rate cut.

“I’m agnostic at this point about whether the next move is up or down,” Kaplan told reporters after a conference here. “I’m watching very carefully how these trade tensions unfold,” he said, adding that he was concerned uncertainties over U.S.-China trade could slow growth, though it was too soon to know. At the same time, he said, inflationary pressures are “intensifying” as the labor market has tightened.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

Source: OANN

FILE PHOTO: Dallas Federal Reserve Bank President Robert Kaplan poses at a luncheon in El Paso
FILE PHOTO: Dallas Federal Reserve Bank President Robert Kaplan poses at a luncheon in El Paso, Texas, U.S., October 2, 2018. REUTERS/Ann Saphir/File Photo

May 23, 2019

DALLAS (Reuters) – U.S. interest-rates are “for the moment” at the correct setting for the economy, Dallas Fed President Robert Kaplan said on Thursday, but rising trade tensions and mounting inflationary pressures make it difficult to know whether the Fed’s next move will be a rate hike or a rate cut.

“I’m agnostic at this point about whether the next move is up or down,” Kaplan told reporters after a conference here. “I’m watching very carefully how these trade tensions unfold,” he said, adding that he was concerned uncertainties over U.S.-China trade could slow growth, though it was too soon to know. At the same time, he said, inflationary pressures are “intensifying” as the labor market has tightened.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

Source: OANN

FILE PHOTO: The Federal Reserve building is pictured in Washington, DC
FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File Photo

May 23, 2019

WASHINGTON (Reuters) – Major U.S. banks as of January said they wanted to hold at least $700 billion in reserves, versus their existing holdings of $1.2 trillion at that point, the Federal Reserve said Thursday.

The Fed’s latest survey of senior finance officers at 75 banks, representing about three-fourths of reserve holdings, showed the central bank might still be able to shave perhaps half a trillion dollars from its balance sheet and still meet bank reserve demand.

(Reporting by Howard Schneider; Editing by Andrea Ricci)

Source: OANN

U.S. Agriculture Secretary Perdue and Rep. Davis of Illinois take farmers' questions at a farm in Champaign Illinois
FILE PHOTO: U.S. Agriculture Secretary Sonny Perdue (L) and U.S. Representative Rodney Davis of Illinois take farmers’ questions at a farm in Champaign, Illinois, U.S., October 24, 2018. REUTERS/Mark Weinraub

May 23, 2019

By Humeyra Pamuk

WASHINGTON (Reuters) – The Trump administration on Thursday unveiled a $16 billion farm aid package to offset losses from a 10-month trade war with China and said payment rates to farmers would be determined by where they farm rather than what crops they grow.

The package, the bulk of which will be spent on direct payments, surprised growers and traders who had expected to learn separate payment rates for soybeans, hogs, corn and other crops in the Department of Agriculture (USDA) briefing.

Farmers, a key constituency that helped carry U.S. President Donald Trump to his 2016 electoral win, have been among the hardest hit from a trade dispute with China, once a destination for more than 60 percent of U.S. soybean exports.

The trade dispute, which escalated this month after Washington and Beijing hiked tariffs on imports of each other’s goods, has left U.S. farmers sitting on record volumes of soybeans with China halting purchases.

USDA officials said on Thursday they will roll out $14.5 billion in direct payments in three separate tranches with the first one planned for late July.

“The package we are announcing today ensures that farmers will not bear the brunt of those trade practices by China or any other nations,” Secretary of Agriculture Sonny Perdue said. “While farmers would tell you they’d rather have trade not aid, without the trade … they’re going to need some support.”

China, the world’s top soybean importer, curbed purchases of U.S. soy last year when Trump imposed tariffs on Chinese goods, prompting China to retaliate with tariffs on U.S. soy, pork, corn and other products.

An imminent trade deal between Washington and Beijing seems unlikely as the trade tensions between the world’s top two economies rose after U.S. placed China’s Huawei Technologies on a trade blacklist last week, triggering sharp protest from China.

Perdue also said the second and third tranches, with exact amounts yet to be decided, will be dependant on the progress in the trade talks and whether the U.S. will get a deal with China. The total package also includes $1.4 billion of support through food purchases and $100 million allocated to development of foreign markets.

PLANTING DECISIONS

Perdue said the USDA has redesigned last year’s aid program of up to $12 billion based on feedback. The new package therefore will have a single payment rate per county, calculated by the damages in that area, instead of a rate for every commodity across the nation.

“Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions,” USDA said in a statement.

Chicago Board of Trade corn futures turned lower and soybean futures extended earlier losses after the announcement. Some analysts said the trade aid package could encourage farmers to try to seed their crops in order to qualify for the relief despite overly wet fields that have stalled planting this spring.

Jim Hefner, an Ohio farmer who has not been able to start planting due to heavy rain, said the plan could cause him to alter his initial acreage plans, however.

“I guess we would make more of an effort to get something planted,” Hefner said. “We may forgo corn and plant soybeans.”

Trump is expected to deliver remarks on the farm aid package on Thursday afternoon after a meeting at the White House with farmers and ranchers. 

Some farmers remain skeptical.

Dan Henebry, a corn and soybean farmer in Buffalo, Illinois, said the payments are directed at rural areas that helped propel Trump into office. Henebry, who voted for a third-party candidate in 2016, said he wants the president to end the trade war with China.

“If we solve the issue, we wouldn’t need this,” he said about the aid package.

(Additional reporting by Susan Heavey and Tom Polansek, Mark Weinraub, P.J. Huffstutter, Karl Plume in Chicago, Editing by Chizu Nomiyama, Jeffrey Benkoe and Susan Thomas)

Source: OANN

FILE PHOTO: Ex-Goldman Sachs banker Roger Ng (center) and his lawyer leave the federal court in New York
FILE PHOTO: Ex-Goldman Sachs banker Roger Ng (center) and his lawyer Marc Agnifilo leave the federal court in New York, U.S., May 6, 2019. REUTERS/Jeenah Moon/File Photo

May 23, 2019

By Suzanne Barlyn

NEW YORK (Reuters) – U.S. prosecutors on Thursday handed over the first of 1 million evidentiary documents to the lawyers of Roger Ng, a former Goldman Sachs banker facing criminal charges linked to a multibillion-dollar scandal at the Malaysian state investment fund 1MDB.

The U.S. Department of Justice handed over to Ng’s lawyers a “small subset” of more than 1 million documents the government is relying on to prosecute the case, said Assistant United States Attorney Drew Rolle during a hearing at a Brooklyn federal court.

The U.S. accused 46-year-old Ng last year of conspiring to launder money and bribe government officials in Malaysia and Abu Dhabi through bond offerings that Goldman Sachs Group Inc handled. He was extradited on May 3 to New York from Kuala Lumpur, where he had been jailed since November.

Ng pleaded not guilty to the charges on May 6 and was released in exchange for a $20 million bond.

Government lawyers have said they hope to avoid a trial by reaching a plea deal, though Ng’s attorney, Marc Agnifilo, said this month it was too early to tell.

Ng, who left Goldman Sachs in 2014, faces up to 30 years in prison if convicted of the three charges based on alleged violations of the U.S. Foreign Corrupt Practices Act.

Malaysia’s home minister wanted Ng to face criminal charges there first, but agreed to temporarily surrender him to the United States for 10 months, Malaysia’s attorney general, Tommy Thomas, said in a statement.

The period may be extended, Thomas has said.

The 1MDB case has shaken Goldman Sachs, which is also being probed by the Justice Department for its role as underwriter and arranger for some $6.5 billion worth of 1MDB bond offerings.

Prosecutors have estimated that high-level 1MDB fund officials and their associates misappropriated $4.5 billion between 2009 and 2014, including some of the funds that Goldman Sachs helped raise.

Goldman Sachs has consistently denied wrongdoing and said certain members of the former Malaysian government and 1MDB lied to it about how the bond proceeds would be used.

Ng was charged in Kuala Lumpur with four counts of abetting the bank to provide misleading statements in the offering prospectus for 1MDB bond sales.

Tim Leissner, another former Goldman Sachs banker, and Malaysian financier Low Taek Jho have also been charged in the United States over 1MDB. Leissner has pleaded guilty.

Low, whose whereabouts are unknown, has consistently denied wrongdoing through spokesmen.

Malaysia has said it was seeking up to $7.5 billion in reparations from Goldman over its dealings with 1MDB, set up in 2009 by then-Prime Minister Najib Razak.

Najib, who lost a general election last year, faces 42 criminal charges related to losses at 1MDB and other state entities. He has pleaded not guilty.

(Reporting by Suzanne Barlyn in New York; Additional reporting by Rozanna Latiff in Kuala Lumpur; Editing by Lauren LaCapra and Phil Berlowitz)

Source: OANN

San Francisco Federal Reserve President Mary Daly poses for a photo after a speech at the Commonwealth Club in San Franciso
San Francisco Federal Reserve President Mary Daly poses for a photo after a speech at the Commonwealth Club in San Franciso, California, U.S., March 26, 2019. REUTERS/Ann Saphir

May 23, 2019

(Reuters) – A series of U.S. tariff hikes on Chinese imports could help the Federal Reserve get inflation closer to its 2% target, San Francisco Federal Reserve President Mary Daly said on Thursday.

“It will affect it in the way we hope which is to move it back up to 2% … but not above,” Daly said in an interview with Fox Business News.

(Reporting by Jason Lange in Washington; Editing by Chizu Nomiyama)

Source: OANN

Last week we highlighted the rising level of auto loan delinquencies and the growing number of student loan borrowers who can’t make their payments.

This week, we got some more bad news for lenders. Subprime credit card charge-offs remain at levels reminiscent of the Great Recession.

In the first quarter of this year, credit card charge-off rates at all but the largest 100 banks remained above 7% for the sixth quarter in a row. During the peak of the recession, the charge-off rate at these banks was above 7% for just four quarters, and not consecutively.

The Q1 charge-off rate ticked down slightly to 7.37%, but that wasn’t a big enough drop to push it below that 7% level.

The credit-card charge-off rate at the largest 100 banks rose to 3.78%, according to the latest data released by the Federal Reserve. That’s the highest level since the first quarter of 2013. For all commercial banks combined, the charge-off rate rose to 3.83%, the highest since Q4 2012.

Mike Adams exposes the agenda of the private Fed as a war against the prosperity of Americans that simply want to make America great.

Smaller banks hold much of the subprime credit card debt. In order to compete with the bigger banks, small financial institutions need to take on greater risk to build their credit base. As a result, delinquency rates and charge-offs tend to run higher for these small-bank credit cards.

Delinquency rates at all but the 100 smallest banks declined to 5.43%, after having spiked to 6.2% in the third quarter. This is a function of banks cleaning up their books and charging off bad accounts. But at 5.43%, the delinquency rate is still historically high. It topped out at 5.9% at the peak of the Great Recession.

As WolfStreet put it, “Some smaller banks that have gone way out on the subprime limb are now getting bogged down in losses on their credit-card loan books.”

America’s small banks hold only a small fraction of credit card balances, so the rising delinquency rates don’t pose any real threat to the banking system. But they should still raise concern.

Currently, Americans carry over $1 trillion of credit card debt, and total consumer debt rose $10.3 billion in March, hitting a record-setting total of $4.05 trillion.

(Photo by Chris Potter, Flickr)

In other words, Americans are loaded up on debt. And it looks like this economic “boom” was built on credit. What happens when the credit cards are completely maxed out? Consider that the last time subprime credit card delinquency rates were this high, the economy was in the midst of a massive recession with unemployment spiraling toward 10%. Today, we’re supposedly enjoying a robust economy with unemployment near historic lows.

WolfStreet gave a pretty good overview of what will likely happen as Americans begin to hit their credit limits.

“Credit card losses already have an impact on the economy, on retail sales, and on the most vulnerable consumers – and this is just the beginning. As banks tighten their lending standards in response to the rising losses, and as more credit-card accounts become delinquent and prevent their holders from buying on credit, the credit flow to the most vulnerable consumers gets throttled. And they have less money to spend. And so they will spend less. This is already the case with subprime auto loans that are now blowing out and that have forced lenders to tighten their lending standards, which is causing a decline in new vehicle sales that is now in its third year.”

This is the proverbial tip of the iceberg. Riskier borrowers with less stable financial positions feel the pain first. Then the problems climb up the ladder. The growing number of people struggling to pay their bills could be a canary in the coal mine.

Alex explains he has seen many globalists make the same face behind the scenes.

Source: InfoWars

FILE PHOTO: Hungarian Foreign Minister Szijjarto attends a news conference with U.S. Secretary of State Pompeo in Budapest.
FILE PHOTO: Hungarian Foreign Minister Peter Szijjarto attends a news conference with U.S. Secretary of State Mike Pompeo in Budapest, Hungary, February 11, 2019. REUTERS/Tamas Kaszas

May 23, 2019

By John Irish

PARIS (Reuters) – Hungary’s foreign minister on Thursday accused major Western European nations of “hypocrisy” and “hysteria” for criticizing central European countries’ business dealings with China, and defended Hungary’s use of Huawei 5G mobile phone technology.

Sixteen central and eastern European countries, including 11 European Union members, held a summit with China in April during which it pledged to increase trade and provide more support for big cross-border infrastructure projects.

The area is part of China’s Belt and Road Initiative, which aims to link China by sea and land with Southeast and Central Asia, the Middle East, Europe and Africa.

France and Germany oppose such independent moves, which they fear might make Europe appear disunited at a time when the EU is trying to forge a more defensive strategy towards China.

On Tuesday, speaking to reporters in Paris, France’s Finance Minister Bruno Le Maire criticized “negotiations of 16 states from the east with China in parallel to negotiations that the EU is leading with China”.

But Hungarian Foreign Minister Peter Szijjarto rejected such criticism, saying Germany and France do far more business with China than the central European states, and often negotiate directly with Beijing.

“There is such a bad hypocrisy in the European Union when it comes to China,” Szijjarto told Reuters on the sidelines of an OECD meeting in Paris. “The 11 central and eastern European member states … represent 9.9 percent of EU trade with China.”

“When the German chancellor and French president meet China’s leadership nobody thinks that’s a problem,” he said. “Nobody raises a question about how it is possible that they sell 300 aircraft to China, which is a bigger deal than the (entire) trade represented by the 11 central European countries.”

He said it was also unfair for Western European states to criticize Hungary for using technology from Chinese firm Huawei in its 5G mobile phone networks, when those networks were being built under license by German and British companies, Deutsche Telekom and Vodafone.

The United States and some of its European allies are pushing countries to exclude Huawei technology from their infrastructure, arguing that the world’s biggest telecoms equipment maker could pose a security threat. Huawei denies that its technology could be misused by the Chinese state.

The Hungarian mobile phone licenses were “signed by the biggest German and British telecommunications companies, and then the Germans, British and French accuse us of opening up our market to Huawei,” Szijjarto said.

“When it comes to China it’s a matter of competition. Instead of crying, instead of making hysteria and accusing central European countries, we should strengthen ourselves and be ready for the competition.”

(Reporting by John Irish; Editing by Leigh Thomas)

Source: OANN


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