Chicago Mayor Emanuel Pushes Moody’s To Rescind Junk Rating Ahead Of $1.2 Billion New Issue

One week before Chicago is set to sale $1.2 billion in new debt, it has been revealed that Mayor Rahm Emanuel has been putting pressure on Moody’s, the only rating agency to have a junk-rating on the city’s general obligation debt, to rescind their rating.  According to a letter Emanuel sent to the CEO of Moody’s, the Chicago Mayor has grown concerned that the “Moody’s rating methodology and agenda are far from objective and independent.”  Per Bloomberg:

Mayor Rahm Emanuel, a Democrat who pushed through a record tax increase to shore up the city’s finances, asked the company to pull its junk rating on Chicago’s debt, saying it’s exaggerating the risks to bondholders and failing to recognize steps he’s taken. Chicago has already stopped hiring Moody’s to rate new bond deals, relying instead on rivals S&P Global Ratings and Fitch Ratings that continue to consider its debt investment grade.

 

“It has become increasingly clear that Moody’s rating methodology and agenda are far from objective and independent,” Emanuel said in a Dec. 8 letter to Moody’s Chief Executive Officer Raymond McDaniel that was released by the city. “Your current rating does not accurately reflect the city’s credit or our ability to pay debt service when due.”

 

Chicago became the only major U.S. city outside of Detroit with a junk rating in 2015, when Moody’s downgraded it because of the escalating pension bills triggered by years of failing to set aside enough money to cover promised benefits.

Moody’s is currently the only rating agency with a junk rating on Chicago’s G.O. debt, Fitch is only 1 notch away with a BBB- rating, while S&P remains at BBB+.

Chicago Ratings

 

And while Emanuel would like for everyone to believe that Moody’s “flawed” rating methodology is the only thing pushing Chicago’s debt spreads higher…

Chicago GO

 

…we suspect that the city’s massive budget deficits and underfunded pension liabilities may have a little more to do with it. 

And while we would never dare challenge the financial literacy of Chicago’s esteemed mayor, a $5.4 billion deficit, when the city only generates $8.9 billion of annual tax revenue, would seem, at least to us, to be a slight problem.  Of course, we acknowledge that Democrats are known for their ability to raise taxes, but somehow we suspect they may object to the 60% across-the-board increase that would be required to close that budget gap.  Per the City Of Chicago:

Chicago IS

 

Moreover, we suspect that Moody’s may have also been concerned with this lovely chart from the City of Chicago’s Investor Presentation.  Certainly, a pension funding ratio that has declined pretty much every year for the past 15 years is not the sort of thing that inspires an investment grade rating.  And, while a mere $22.5 billion underfunding may not seem like such a big deal to Rahm, we doubt that Chicago’s 1mm households are anxious to fork over $22,500 each to fill that gap.

Chicago Pension

 

And not to beat a dead horse, but nearly $1 billion of G.O. fixed charges every year, or 11% of your annual revenue, is also not stellar. 

Chicago Debt Services

 

But sure, Rahm, Moody’s probably just has a personal vendetta against you.  We’re sure that the 1 resident your state is losing every 4.6 minutes also has absolutely nothing to do with the fact that your city is on the verge of bankruptcy.

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To “Prevent Public Panic”, Beijing Orders Banks To Keep Capital Outflow Curbs Secret

China is so concerned about the ongoing surge in capital outflows that its forex regulator, SAFE, has taken the unprecedented step of ordering banks to keep its instructions about curbing capital outflows secret and also to ensure that research analysts do not publish any negative views about the yuan according to Reuters.  According to bankers from local and foreign banks, both demands are seen as an attempt by the authorities to prevent alarm that could trigger further declines in the yuan. 

With the yuan devaluaing by 6% against the dollar last year as a result of hundreds of billions in official outflows (and as much as $1.1 trillion in unofficial since August of 2015 according to Goldman calculations), Beijing has unleashed a flurry of restrictive measures on capital outflows from the State Administration of Foreign Exchange (SAFE), including setting limits on banks’ currency volumes in some cities or provinces and requiring approval for ever smaller transactions. Overnight, the PBOC even unveiled probed into bitcoin exchanges, sending the digital currency plunging over 20%.

Reuters reports that SAFE, which is part of the People’s Bank of China, is insisting in oral instructions to dozens of banks that they don’t reveal its role in such restrictions, six bankers said, which was damaging their relationships with clients since they were unable to explain why they were turning away business. SAFE and the PBOC have yet to respond to requests for comment.

SAFE’s reticence began at least as far back as August, when its Shanghai branch called at least 20 of the major foreign and domestic banks operating in the city to a meeting with the regional heads of several SAFE departments.

A representative from an international bank attending the meeting said there were no written instructions, but a high-ranking SAFE official told them explicitly what was expected of them.

“You must control your forex deficit, but you can’t say that SAFE is controlling capital outflows,” the official told the bankers. The banks were told to “manage sentiment” to prevent public panic, the banker said, and the banks’ research analysts should not broadcast any negative views on the yuan.

As a reminder, while in the US, the real  Fake News is anything having to do with relations between Trump and Russia; in China fake news mostly focus on the economy and the currency (as well as virtually everything else).

“They told us not to publish bad house views – analyst house views – on the yuan”, the person said. A second banker on the forex team of an international bank said his bank had received the same instructions. 

 

Where a bank has exceeded the SAFE-set limits for forex transactions in a month, they have to turn business away, but are unable to explain the real reason why, several bankers complained. “We’re not going to tell our customers that (our forex business) has stopped; we just have to find ways to turn down the business we’re not allowed to do,” said a banker at Chinese Commercial Bank Ping An who had received SAFE instructions from seniors.

 

“It’s not good for client relationships,” he added, explaining that he had told his clients to go to other banks.

Additionally, SAFE had told banks to interview clients to make sure the forex deals were not for fake transactions, or else face punishment, according to two bankers at separate listed banks. In response to those orders, one of the banks sent an internal notice to employees, seen by Reuters, to alert them to SAFE’s requirements, explaining that the regulator’s penalties could include “cancelling business qualifications” needed for the lender to conduct forex business.

The notice passed on SAFE’s instructions that staff should not mention the regulator, i.e., it was to be kept secret. 

“Please do not reply to clients using wording such as SAFE controls, or SAFE doesn’t allow or strictly controls FX purchases,” it read. Instead, they should adhere to the line provided by SAFE, that the purpose of the changes was to “promote healthy development of outbound direct investment” and “crack down on fake deals”, the notice added.

* * *

While China’s foreign exchange reserves fell to $3.05 trillion in November from $3.3 trillion in the first 11 months of 2016, and many traders are betting there will be further outflows as U.S. interest rates rises make dollar assets more attractive, SAFE wants banks to advise clients to buy yuan and sell dollars, the international bank representative said, a play that is likely to lose clients money. “If a person doesn’t ave this need, how am I supposed to encourage it?” the banker said.

At the same time, SAFE is quietly choking programmes designed to open overseas markets to Chinese investors. Even where institutional investors have been granted quotas to invest overseas, they are finding it increasingly difficult to exchange yuan into another currency.

“SAFE would tell you that you still need to stand in the queue, and the waiting period is ‘uncertain’,” said an executive at Shanghai-based China equity fund house Greenwoods. An investment programme set up so global funds can raise Chinese cash to invest overseas has ground to a halt without explanation. “The application process seems to be in a state of suspension,” Michael Lu, managing director of Greater China Business Development of Dutch money manager Robeco told reporters in November.

* * *

In short, China has implemented full blown capital controls, without wanting its population to know it has done so, which is understandable: fear of the unknown would lead to panic, would lead to more selling, and more panic and so on. But what we find delightfully ironic is that China is cracking down on the internationalization of its currency, just months after the IMF made the Yuan a fully “respected” member of the SDR – a token of how “liberalized” the currency is. As usual, trust Christine Lagarde to get it dead wrong.

The post To “Prevent Public Panic”, Beijing Orders Banks To Keep Capital Outflow Curbs Secret appeared first on crude-oil.top.

To “Prevent Public Panic”, Beijing Orders Banks To Keep Capital Outflow Curbs Secret

China is so concerned about the ongoing surge in capital outflows that its forex regulator, SAFE, has taken the unprecedented step of ordering banks to keep its instructions about curbing capital outflows secret and also to ensure that research analysts do not publish any negative views about the yuan according to Reuters.  According to bankers from local and foreign banks, both demands are seen as an attempt by the authorities to prevent alarm that could trigger further declines in the yuan. 

With the yuan devaluaing by 6% against the dollar last year as a result of hundreds of billions in official outflows (and as much as $1.1 trillion in unofficial since August of 2015 according to Goldman calculations), Beijing has unleashed a flurry of restrictive measures on capital outflows from the State Administration of Foreign Exchange (SAFE), including setting limits on banks’ currency volumes in some cities or provinces and requiring approval for ever smaller transactions. Overnight, the PBOC even unveiled probed into bitcoin exchanges, sending the digital currency plunging over 20%.

Reuters reports that SAFE, which is part of the People’s Bank of China, is insisting in oral instructions to dozens of banks that they don’t reveal its role in such restrictions, six bankers said, which was damaging their relationships with clients since they were unable to explain why they were turning away business. SAFE and the PBOC have yet to respond to requests for comment.

SAFE’s reticence began at least as far back as August, when its Shanghai branch called at least 20 of the major foreign and domestic banks operating in the city to a meeting with the regional heads of several SAFE departments.

A representative from an international bank attending the meeting said there were no written instructions, but a high-ranking SAFE official told them explicitly what was expected of them.

“You must control your forex deficit, but you can’t say that SAFE is controlling capital outflows,” the official told the bankers. The banks were told to “manage sentiment” to prevent public panic, the banker said, and the banks’ research analysts should not broadcast any negative views on the yuan.

As a reminder, while in the US, the real  Fake News is anything having to do with relations between Trump and Russia; in China fake news mostly focus on the economy and the currency (as well as virtually everything else).

“They told us not to publish bad house views – analyst house views – on the yuan”, the person said. A second banker on the forex team of an international bank said his bank had received the same instructions. 

 

Where a bank has exceeded the SAFE-set limits for forex transactions in a month, they have to turn business away, but are unable to explain the real reason why, several bankers complained. “We’re not going to tell our customers that (our forex business) has stopped; we just have to find ways to turn down the business we’re not allowed to do,” said a banker at Chinese Commercial Bank Ping An who had received SAFE instructions from seniors.

 

“It’s not good for client relationships,” he added, explaining that he had told his clients to go to other banks.

Additionally, SAFE had told banks to interview clients to make sure the forex deals were not for fake transactions, or else face punishment, according to two bankers at separate listed banks. In response to those orders, one of the banks sent an internal notice to employees, seen by Reuters, to alert them to SAFE’s requirements, explaining that the regulator’s penalties could include “cancelling business qualifications” needed for the lender to conduct forex business.

The notice passed on SAFE’s instructions that staff should not mention the regulator, i.e., it was to be kept secret. 

“Please do not reply to clients using wording such as SAFE controls, or SAFE doesn’t allow or strictly controls FX purchases,” it read. Instead, they should adhere to the line provided by SAFE, that the purpose of the changes was to “promote healthy development of outbound direct investment” and “crack down on fake deals”, the notice added.

* * *

While China’s foreign exchange reserves fell to $3.05 trillion in November from $3.3 trillion in the first 11 months of 2016, and many traders are betting there will be further outflows as U.S. interest rates rises make dollar assets more attractive, SAFE wants banks to advise clients to buy yuan and sell dollars, the international bank representative said, a play that is likely to lose clients money. “If a person doesn’t ave this need, how am I supposed to encourage it?” the banker said.

At the same time, SAFE is quietly choking programmes designed to open overseas markets to Chinese investors. Even where institutional investors have been granted quotas to invest overseas, they are finding it increasingly difficult to exchange yuan into another currency.

“SAFE would tell you that you still need to stand in the queue, and the waiting period is ‘uncertain’,” said an executive at Shanghai-based China equity fund house Greenwoods. An investment programme set up so global funds can raise Chinese cash to invest overseas has ground to a halt without explanation. “The application process seems to be in a state of suspension,” Michael Lu, managing director of Greater China Business Development of Dutch money manager Robeco told reporters in November.

* * *

In short, China has implemented full blown capital controls, without wanting its population to know it has done so, which is understandable: fear of the unknown would lead to panic, would lead to more selling, and more panic and so on. But what we find delightfully ironic is that China is cracking down on the internationalization of its currency, just months after the IMF made the Yuan a fully “respected” member of the SDR – a token of how “liberalized” the currency is. As usual, trust Christine Lagarde to get it dead wrong.

The post To “Prevent Public Panic”, Beijing Orders Banks To Keep Capital Outflow Curbs Secret appeared first on crude-oil.top.

Dead Giveaway The 35 Page Dossier Was A Hoax? The British Don’t Use “Confidential,” They use “Official”

The identity of the British intelligence officer responsible for preparing and delivering the now infamous 35 page hoax has been revealed as Christopher Steele, courtesy of the Wall St. Journal. If you want to dig into his profile, click here.

As people piece together this rapidly unfolding quagmire – which will be in the history books, it’s important to address as many facets as possible in order to avoid perpetuating #FakeNews. As Oliver Stone said, more or less, the MSM is biased – and alternative news has the real deal, so let’s discuss.

 

A friend pointed this out earlier:

——————–

It has come out that the dossier and supporting documentation were fabricated by an anonymous 4Chan user, who sent the hoax to a RINO named Rick Wilson back in the Fall of last year.  Rick Wilson is (in)famous for his description of Trump supporters as “single white males who masturbate to anime”.  The 4Chan user wanted to embarrass Rick Wilson, who apparently tried to shop the fabrication to MSM without success (cuz they couldn’t “source” it, given that the entire documentation is a fake).

The alleged origination of a British agent as the source can be considered a “trap for the unwary,” which would easily demonstrate the documentation was an obvious forgery because the UK does not use the “Confidential” designation, although US intelligence agencies do.  In the US, classified information is designated as “Confidential”, “Secret” and “Top Secret” (along with a whole host of other designations for more highly sensitive information such as nuclear weapons designs).  The British use “Official”, “Secret” and “Top Secret”.   Anyone who checked on the story would instantly recognize this defect if they knew (or discovered) anything about British classification schemes, but if someone didn’t check they’d simply assume the British uses the same classification designations as the US.

[let’s take a look]

US Designations:

usaclass

UK Designations

ukdesignations

HOAX Dossier:

report

Apparently, Wilson also sent the falsified documentation to the CIA and they may, or may not have, bought it. The CIA subsequently “leaked” it to various news agencies, and both CNN and Buzz Feed bought the CIA leak. The CIA also admitted to briefing both Obama & Trump on the false documentation, but now claim they only cited it as an example of “disinformation” that’s floating around out there.  Seemingly, whomever at the CIA leaked this story and its documentation to CNN and Buzz Feed didn’t identify it as “disinformation”.  For extra brownie points McCain claims he received a classified briefing on the bed wetting episode in December and asked FBI’s head Comey to investigate!  It should be obvious McCain would not have done so had the CIA had told him the information was known to be fake.

——————–

Now, it’s possible that Steele – an ex-UK intelligence officer in private practice, simply used the US designation for the convenience of US intel (or to mask the origination) – BUT, we’re also talking about the same guy who bought the #GoldenShower story that several journalists and news outlets wouldn’t touch.

So, by the transitive properties of “the guy who bought the 4chan hoax,” I think we can assume Steele would have defaulted to a career-long habit of using the UK designation on this 35 page dossier he cobbled together. 

On the other side of the pond, what are we left to assume? Let’s ignore the classification thing for a moment. For one, the CIA could have easily looked into Michael Cohen’s travel records (the Trump lawyer the dossier accuses of going to Prague to meet with Russians) and ruled that out – immediately discrediting the document. Second, Trump is apparently a bit of a germaphobe. I don’t blame him, people are filthy. Shouldn’t the CIA know something that obvious about such a well known figure?

germo

We are left to conclude:

– The CIA figured out this was a hoax and just let McCain, CNN, and Buzzfeed make McAss. That’s an interesting conversation, if so.

– The CIA didn’t know – as in, nobody who handled this document knew or checked into why a doc from a Brit would have US classification markings, or the Prague visit, or Golden Showers. A frightening thought.

– Steele didn’t prepare the report.

What say you?

87IErSe

 

Content originally generated at iBankCoin.com * Follow on Twitter @ZeroPointNow

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Nigeria To Track Oil Output, Sales To Prevent Theft

In a bid to prevent oil thefts and curb revenue losses, Nigeria will start tracking this year the volume of its crude oil output and sales volumes and destinations, oil minister Emmanuel Ibe Kachikwu said in an address on the 2017 outlook for Nigeria’s petroleum sector. “This year, we are going to commit to try tracking our oil so that from the moment one molecule is produced to the time it is sold and where it is sold, we will be able to track that and if we do that, we envisage billions of dollars in savings for the federal government,”…

The Siberian Winter That’s Helping Russia Comply With OPEC Cuts

Russia cut 100,000 bpd of its crude oil production as early as in the first few days of the New Year, but it wasn’t the agreement between OPEC and non-OPEC producers that was Moscow’s biggest incentive to start cutting output beginning January 1, it was the unusually cold temperatures—cold even for Siberia. At least part of the 100,000-bpd cut was the result of the freezing, as low as minus 76 degrees Fahrenheit, temperatures across Siberia, Reuters reports, quoting industry sources. In the deal with OPEC to curtail global crude…