Shale’s Lesson for Creditors and Debtors

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The heavy hand of past borrowings continues to hang over us.  China’s explosion of debt is worrisome.  The bad loans being carried by European banks may be a factor restraining the willingness to lend.   The IMF and the EU are still at odds over the sustainability of Greek debt. Meanwhile, data released yesterday showed that household debt in the US surpassed the pre-crisis peak in Q1 (to ~$12.7 trillion). Arrears sharply lower than before, with the notable exception of student loans.  Also, there has been some recent slippage on credit cards and vehicle loans.

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Drama In Washington Adds To Dollar Woes

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  • News from Washington escalates already rising concerns about the economic agenda 
  • There were two economic reports from Japan and UK today that ought to not be lost in the focus on US politics 
  • The North American session has a light economic diary  
  • Malaysia April CPI was lower than expected; South Africa March retail sales are expected at -1.0% y/y 
  • National Bank of Poland is expected to keep rates steady at 1.5% 

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Markozy, Merde, and now Meron

new franceGerman Chancellor Merkel is one of the outstanding leaders of our era. She leads the world’s fourth largest economy, which is still the locomotive for Europe.   Recent state elections and polls leave little doubt that barring some kind of shock; she will be re-elected as Chancellor in September.  It will be her fourth term.  


Macron is the youngest president in modern French history and has not held a public office until now.  He is his the fourth French president during Merkel’s tenure.  When Macron was born (1977), Angela Kasner married a physics student, Ulrich Merkel.  They were divorced in 1982 as Macron was getting ready to go to attend school.

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From the Securities Lending Trading Desk

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Merger news continues to drive Securities Lending demand in the U.S. Fee levels are spiking quickly for recent IPO, Snap Inc. as the share price tumbled after the company reported a $2.2 billion loss. The world’s second-largest shipbuilder, Hyundai Heavy Industries, has split into four companies as it seeks to navigate through one of the most prolonged slumps in the industry. In Europe, everyone is talking about TalkTalk Telecom’s dividend scale back.

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The Politics and Economics of the US-China Agreement

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Last week the US and China announced some details of a tentative trade agreement.  Many observers are scratching their heads.  Commerce Secretary Ross says the goal is to reduce the roughly $360 bln bilateral deficit.  There is little in the agreement that will achieve this.  

The beef and other agricultural goods that the US can begin selling China are not on favored terms, and US producers will be competing, for example, with Brazil.  Moreover, the amounts are too small to produce much of the trade imbalance.  The US has agreed to be more open to cooked poultry from China, but this too is not on favored terms, and will health concerns may limit US demand.  

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