Opening Bell: 2.11.16
Kyle Bass Steps Up Attack on China’s Currency (WSJ)
Investor Kyle Bass said Wednesday that China’s liquid foreign reserves are “already below a critical level,” intensifying a debate over China’s ability to keep its currency from falling. Mr. Bass, whose Hayman Capital Management LP has a multibillion-dollar bet that the yuan and the Hong Kong dollar will fall, told clients in a letter Wednesday that his firm estimates that China’s liquid foreign reserves are $2.2 trillion at most. That is roughly $1 trillion less than the $3.23 trillion reported by the People’s Bank of China for the end of January.
As Economy Suffers, Economic Theory Flourishes (WSJ)
Like Mr. Piketty, Mr. Gordon uses exhaustive historic data to buttress his thesis: Americans’ standard of living advanced impressively during the “special century” of 1870 to 1970, thanks to a series of revolutionary innovations—from indoor plumbing, the internal-combustion engine and electricity to municipal water systems and antibiotics—that, once complete, could never be repeated...Mr. Gordon also credits government for nurturing labor unions and the eight-hour workday, which spurred rapid growth in wages and productivity after the 1930s. He attributes rising inequality not to the inexorable workings of capitalism but societal shifts: the growing wage premium for skills, single parenthood and incarceration that prevent poor children from acquiring jobs and skills, and declining unions.
Wall Street's nightmare candidates leading race (CNBC)
t's early days, but the victories in New Hampshire's primary by Donald Trump and Bernie Sanders puts two of the candidates most likely to spook Wall Street in the lead. Trump has been unnerving Wall Streeters with his unpredicatability and off-the-cuff remarks, but analysts say the financial community — and markets — would ultimately back a Trump run, particularly if it is against Bernie Sanders. The Vermont U.S. senator is a self-proclaimed socialist who wants to create new social programs by taxing banks, financial transactions and wealthier Americans. Sanders took 60 percent of the vote in New Hampshire Tuesday over Hillary Clinton, who barely won Iowa last week but is still viewed as the front-runner nationally.
Lagarde Set for Second IMF Term as No Challengers Emerge (Bloomberg)
IMF governors and executive directors had until 11:59 p.m. New York time Wednesday to nominate candidates to replace Lagarde, whose five-year term expires July 5. The fund’s executive board, which represents the institution’s 188 member nations, plans to complete the selection process as soon as possible.
SocGen Signals It May Miss Profitability Targets, Shares Plunge (Bloomberg)
France’s second-largest bank, led by Chief Executive Officer Frederic Oudea, indicated the bank may have difficulty reaching its profitability target in 2016, citing “headwinds” including regulatory pressures, record-low interest rates and volatile markets. While the lender announced a series of cost-cutting measures last year, it has stopped short from deeper investment-banking reductions like those underway at Deutsche Bank AG and Credit Suisse Group AG.
Europe’s Battered Banks Are Far From Crisis (WSJ)
Bewilderingly, the world is once again asking whether the European banking system is on the brink of meltdown, heading for a repeat of 2008 or 2011. Yet the truth is that no one knows for sure what lies behind the falls, which began in earnest between Christmas and New Year on the back of no obvious news. Initially, it was assumed the market was reacting to concerns over a possible hard-landing in China and emerging markets, although these fears had been well-flagged and have so far proved wide of the mark.
Man Blames 10th Drunk Driving Charge On Beer-Battered Fish (HP)
A Wisconsin man convicted on Monday for his 10th Operating a Vehicle While Intoxicated charge (OWI) blamed his high BAC on beer-battered fish, according to the Milwaukee Journal-Sentinel. John Przybyla, 76, was arrested in October 2014, after a deputy noticed his truck cross the center line of a state highway. The deputy said Przbyla’s breath smelled like alcohol and administered a field sobriety test that the suspect failed, according to local news station WISC. Przybyla denied drinking alcohol, but said he had eaten beer-battered fish earlier in the evening. He made the same statements in court on Monday.
