Big banks brace for oil loans to implode

Big banks are cringing as crude oil is crumbling.

Now that the oil glut has caused prices to crash below $30 a barrel, turmoil is rippling through the energy industry and souring many of those loans. Dozens of oil companies have gone bankrupt and the ones that haven’t are feeling enough financial stress to slash spending and cut tens of thousands of jobs.

Three of America’s biggest banks warned last week that oil prices will continue to create headaches on Wall Street — especially if doomsday scenarios of $20 or even $10 oil play out. Continue reading

China ‘Stealth’ Devaluation Continues – Yuan Plunges For 6th Day, Default Risk Soars, Fosun Bonds Crash

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USDCNY broke above 6.4500 for the first time since the August devaluation, extending its post-IMF plunge to 6 days. This is the largest and longest streak of weakness since March 2014 as China seems to have taken the SDR-inclusion as blessing to devalue its currency drip by drip. Default risk is once again stomping higher as CDS surge from 94bps to 112bps (2-month highs). The biggest news in China tonight is the disappearance of Fosun International’s Chairman, China’s 17th richest man (and the collapse in the company’s bonds, since stocks are suspended). Continue reading

China Buying Up Latin American Oil

As the world’s number one energy consumer China is enjoying the low prices while they last. Never one to settle however, China is finding still more ways to take advantage of the dire straits gripping several oil producers.

China’s slowdown is real – preliminary data suggests 2014 will mark the weakest GDP growth in 24 years – but the country still has plenty of money to play with that is taking it places the World Bank and the International Monetary Fund (IMF) wouldn’t dare. Their reward? More oil of course. With tough conditions and greater access to raw commodities, China looks to turn the high risk into equal or greater returns. Continue reading

US default risk is real, Washington warns Wall Street

Money lenders trust America so implicitly that they generally dismiss the risk it won’t pay its debts. But in the US capital, fears are growing that political dysfunction might trigger the unthinkable.

A few years ago one would have said, ‘Don’t be silly. Of course they will raise the debt ceiling.’ But one can’t say that any more.  

Government veterans from both political parties are aghast that lawmakers openly speak of managing a default that could be triggered next month if they don’t authorise more borrowing. Continue reading