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☆ These states will be hit the hardest if the US debt ceiling standoff isn’t resolved
▼ + stars: | 2023-05-10 | by ( Matt Egan | ) edition.cnn.com time to read: +3 min

While most states would be “hit hard” by a debt limit breach, the economic pain would vary from state to state, according to projections released on Wednesday by Moody’s. Florida, Ohio and Pennsylvania would also likely lose hundreds of thousands of jobs apiece if there is a breach of the debt ceiling lasting several months, Moody’s found. In the event of a prolonged breach of the debt ceiling, Moody’s estimates some large states would each lose hundreds of thousands of jobs. ‘A real threat’In its report, Moody’s assigns a 10% probability to a breach of the debt ceiling, up from 5% previously. “What once seemed unimaginable now seems a real threat,” Moody’s Analytics chief economist Mark Zandi wrote in the report.

☆ Premarket stocks: Wall Street is strangely calm about the debt ceiling. That could change this month
▼ + stars: | 2023-05-10 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +7 min

New York CNN —Dire warnings about the economic chaos and catastrophe that will ensue if the US debt ceiling isn’t lifted soon abound. The debt ceiling crisis of 2011 caused Standard and Poor’s to downgrade US debt for the first time in history. Schwenkler says to expect “a lot more volatility” if debt ceiling issues don’t appear resolved by the last week of the month. By contrast, recovery from a debt-default crisis would likely start the day Congress, belatedly, suspended the debt ceiling,” he added. “A misstep over the debt ceiling would subject businesses and consumers to an economic shockwave,” he added.

☆ Debt ceiling standoff doesn't show clear path to agreement, says James Pethokoukis
▼ + stars: | 2023-05-09 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailDebt ceiling standoff doesn't show clear path to agreement, says James PethokoukisJames Pethokoukis, American Enterprise Institute economic policy analyst, and Mark Zandi, Moody’s chief economist, joins 'Squawk on the Street' to discuss any upcoming compromise in the debt ceiling debate, the economic impact of the debt limit stall and more.

☆ EU debt’s credibility problem is worsening
▼ + stars: | 2023-05-09 | by ( Rebecca Christie | ) www.reuters.com time to read: +4 min

BRUSSELS, May 9 (Reuters Breakingviews) - The European Union’s debt credibility is suffering from rising doubts, as well as rising rates. Relative to initial projections, EU borrowing costs are on course to go up by tens of billions of euros. Even so, as of Tuesday, two-year EU bonds were yielding 3.02% compared to 2.79% for France and 2.94% for Spain , with five-year EU bonds at 2.87% against 2.63% for France . EU debt trades as a supranational institution, not a country. Financially, the EU general budget will be able to manage the increase in debt costs using existing measures.

☆ Fed survey: Banks are tightening up their lending standards after rate hikes, turmoil
▼ + stars: | 2023-05-08 | by ( Alicia Wallace | ) edition.cnn.com time to read: +7 min

Survey respondents attributed the changes in lending standards to economic uncertainty, a reduced appetite for risk, deterioration in collateral values and broader concerns about banks’ funding costs and liquidity positions, according to the Fed report. At the time, banks expected that trend of tightening credit, waning demand and deteriorating loan quality would continue. Fed president: Central bank should weigh effectsFederal Reserve Bank of Chicago President Austan Goolsbee said in an interview with Yahoo! Fed officials, including Chair Powell, have previously noted that credit tightening could act similarly to a rate hike. A ‘salient risk’Separately on Monday, the Fed released its semi-annual Financial Stability Report, which assesses the resilience of the US financial system.

☆ Premarket stocks: Why these bank stocks aren't getting crushed
▼ + stars: | 2023-05-04 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

First Horizon (FHN) and TD Bank (TD)also called off a $13 billion deal Thursday that would have formed America’s sixth-largest bank. The Stoxx Europe 600 Banks Index, which tracks big EU and UK banks, has shed 14% over the same period. Year-to-date, European banks are up more than 3%, while US lenders are down 26%. Broader market dynamics have also helped European bank stocks. The European Central Bank, which meets Thursday, has also been slower than the US Federal Reserve to hike interest rates.

☆ Movie theaters are most at risk if the writers’ strike drags on, Moody’s says
▼ + stars: | 2023-05-04 | by ( Vanessa Yurkevich | ) edition.cnn.com time to read: +3 min

New York CNN —Already strained movie theater companies could be hurt most from the Writers Guild of America strike, according to an analysis released Thursday. “New big-budget tent-pole releases tend to fill theaters,” said Moody’s in its new analysis. But in terms of the volume of content produced, television (networks and streamers) has more exposure,” said Moody’s. “Television will bear the brunt of a long strike as the implications of the writers’ strike will play out more noticeably for TV networks, stations, cable channels, and streamers. TV networks, particularly broadcast networks, consistently schedule new prime-time shows to begin in the fall,” the Moody’s analysis said.

[1/2] Workers and supporters of the Writers Guild of America picket outside Sunset Bronson Studios and Netflix Studios, after union negotiators called a strike for film and television writers, in Los Angeles, California, U.S., May 3, 2023. REUTERS/Mario AnzuoniLOS ANGELES, May 4 (Reuters) - The Hollywood writers' strike that kicked off this week could last well into the summer and likely beyond, top executives close to the discussions told Reuters this week. Moody’s estimates a three-year contract with writers ultimately will cost the media industry $250 million to $350 million per year, a more modest estimate than the guild's projections of about $429 million per year. Television writers say their pay has suffered, as studios squeeze writers into smaller rooms for fewer weeks at minimum pay, despite financing lavishly produced streaming series. Hollywood writers must pay their agents and managers out of their wages -- and, unlike staff writers, can go long periods between gigs.

☆ White House warns debt default could wipe out 8 million jobs, plunge stock market
▼ + stars: | 2023-05-03 | by ( Matt Egan | ) edition.cnn.com time to read: +1 min

CNN —White House economists warned on Wednesday that a protracted debt default would cause the loss of more than 8 million jobs and cut the stock market in half. The new projections, published in a blog post by the White House Council of Economic Advisers, make clear the enormous stakes behind a potential breach of the debt ceiling. The report estimates the impact under three scenarios: brinksmanship, a short default and a protracted default. The White House economists say the worst-case scenario is a “protracted” default that wipes out 8.3 million jobs, plunges GDP by 6.1 percentage points and sends the stock market crashing nearly in half. That estimate is similar to one by Moody’s Analytics, which warned in March that a lengthy default could cost more than 7 million jobs.

☆ A Timeline of How the Banking Crisis Has Unfolded
▼ + stars: | 2023-05-01 | by ( Madeleine Ngo | ) www.nytimes.com time to read: +9 min

March 9Gregory Becker, the chief executive of Silicon Valley Bank, urged venture capital firms to remain calm on a conference call. March 10In the biggest bank failure since the 2008 financial crisis, Silicon Valley Bank collapsed after a run on deposits . Regional bank stocks plunged after the unexpected seizure of Silicon Valley Bank and Signature Bank , with shares of First Republic tumbling 60 percent. The Treasury secretary believed the actions by the private sector would help underscore confidence in the stability of the banking system. April 28The Fed released a report faulting itself for failing to “take forceful enough action” ahead of Silicon Valley Bank’s collapse.

☆ Bank of Japan had 'lots of reasons' to keep monetary policy unchanged, says Moody’s
▼ + stars: | 2023-04-28 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailBank of Japan had 'lots of reasons' to keep monetary policy unchanged, says Moody’sStefan Angrick of Moody's Analytics cites "choppy" economic data as one of the reasons.

☆ Nomura shares drop more than 7% after quarterly profit tanks
▼ + stars: | 2023-04-27 | by ( ) www.reuters.com time to read: +1 min

TOKYO, April 27 (Reuters) - Nomura Holdings Inc (8604.T) shares dropped more than 7% early on Thursday after Japan's biggest brokerage posted a sharp fall in quarterly net profit as worries about a global banking crisis roiled markets and hit its investment banking business. Moody's Japan senior analyst Tomoya Suzuki also blamed rapidly rising interest rates around the world and geopolitical tensions for dampened investor sentiment. "Moody’s has a negative outlook on Nomura Holdings’ rating, reflecting structural challenges to the company's profitability in the domestic retail segment," Suzuki wrong in a report. Nomura's wholesale division, which houses its investment banking and trading businesses, sank into the red for the second consecutive quarter with a pre-tax loss of 14.2 billion yen ($106.24 million). Its shares were down 7.5% in early trade, marking the biggest daily fall since March 2021.

☆ Analysis: American living standards are on the line in the debt ceiling drama
▼ + stars: | 2023-04-27 | by ( Christine Romans | ) edition.cnn.com time to read: +6 min

New York CNN —Inside the Beltway, jockeying over raising the debt ceiling has become a partisan ritual to gain political points. But marching toward a debt ceiling default puts American living standards on the line. For most of that time, the debt ceiling was raised with little fuss, until 2011 brought the debt ceiling into a new dangerous realm of political brinksmanship. Deciding later not to pay the bills by not raising the debt ceiling is not sound fiscal policy. Roger Ferguson, economist and former vice chair of the Fed, said the debt ceiling is out of date.

☆ Record High Manhattan Apartment Rents May Not Save Blackstone From Default
▼ + stars: | 2023-04-26 | by ( Will Parker | ) www.wsj.com time to read: 1 min

Blackstone is in danger of defaulting on a $270 million loan backed by 11 apartment buildings in New York’s most expensive borough. Photo: Michael Nagle/Bloomberg NewsApartment rents in Manhattan are soaring to new highs this year, even as rents plateau or fall in most of the rest of the country. Blackstone Inc. risks losing a portfolio of Manhattan apartments anyway. The real-estate and private-equity firm is in danger of defaulting on a $270 million loan backed by 11 apartment buildings in New York’s most expensive borough. Cash flow from the properties isn’t enough to cover the cost of all the debt, according to a report from Moody’s Investors Service.

☆ Debt crisis is a scary white swan for US economy
▼ + stars: | 2023-04-25 | by ( Ben Winck | ) www.reuters.com time to read: +8 min

If Democrats and Republicans can’t agree to lift the government’s borrowing limit, the country could suffer an unprecedented and catastrophic default on its debt. The standoff over the debt ceiling is a white swan, or an entirely predictable, very frequent event that has the potential to be as catastrophic as its darker sibling. That is why, in all past scuffles over government borrowing, Congress ended up raising or suspending the debt ceiling. Uncertainty over the timing of the agreement led to the most volatile week for financial markets since the 2008 financial crisis. Failure to lift the debt ceiling soon can spark a vicious cycle of market anxiety, rising borrowing costs and bank stress.

☆ Banks ‘aren’t out of the woods’ after the collapse of SVB and Signature
▼ + stars: | 2023-04-25 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +4 min

New York CNN —A month ago, code blue sirens went off at banks across the globe after the collapse of Silicon Valley Bank and Signature Bank. For now, looking at banks’ deposits may lead you to believe that banks are in better shape than they are, but they “are not out of the woods just yet,” said Ana Arsov, managing director at Moody’s. After the collapse of SVB and Signature Bank, record levels of deposits poured into Bank of America, JPMorgan Chase and Citibank from mid-size and regional banks. A sign is posted on the exterior of a First Republic Bank office on March 16, 2023 in San Francisco. And the Fed’s likely rate hikes at its upcoming meetings will lead to more deposit outflows, said Wolfe.

☆ Smaller U.S. Banks Say the Crisis Is Contained but Fears Persist
▼ + stars: | 2023-04-24 | by ( Jason Karaian | Stacy Cowley | ) www.nytimes.com time to read: +1 min

The abrupt collapse of Silicon Valley Bank and Signature Bank threw the entire industry into turmoil and exposed fissures in the financial foundations of some smaller banks. A month later, the nation’s biggest banks are raking in billions and will likely keep doing so even if the economy softens. Deposits are falling and the cost of keeping customers is rising, eating into profits. And fears remain about the value of investments and loans, especially ones backed by real estate. One of the banks attracting the most concern among investors, First Republic, is set to report its results on Monday after the markets close.

The challenges of saving a troubled lenderFirst Republic will report quarterly earnings on Monday, its first since the collapse of Silicon Valley Bank sparked a regional banking crisis. And despite a $30 billion lifeline provided by some of the country’s largest banks, First Republic’s shares have fallen nearly 90 percent over the past six months. So why hasn’t there been a deal to raise more cash or sell assets — or itself? First Republic is not expected to announce a deal alongside its earnings. Assuming those have moderated, First Republic has time to solve its problem.

☆ Moody’s Downgrades 11 Regional Banks, Including Zions, U.S. Bank, Western Alliance
▼ + stars: | 2023-04-22 | by ( Ben Eisen | ) www.wsj.com time to read: 1 min

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. https://www.wsj.com/articles/moodys-downgrades-11-regional-banks-including-zions-u-s-bank-western-alliance-174e4d7f

☆ Premarket stocks: Is Big Oil running out of gas?
▼ + stars: | 2023-04-21 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +7 min

New York CNN —Oil and gas stocks have been on a two-year tear, ripping ahead as natural gas prices surged due to supply chain kinks, a strong economy, and Russia’s invasion of Ukraine. What’s happening: Brutally high oil and gas prices were the talk of the town last year and one of the largest contributing factors to sky-high inflation. That’s bad news for automobile drivers, but ended up being great for the energy industry as oil prices and energy stocks are closely interlinked. Blackstone is feeling the commercial real estate slumpThe ongoing commercial real estate slowdown has a new victim: Blackstone. Profits from the sale of commercial real estate assets fell 54% to $4.4 billion, down from $9.5 billion last year.

☆ Markets are starting to get worried about US debt default
▼ + stars: | 2023-04-20 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +3 min

But that’s starting to change, in what is shaping up to be a nail-biting game of debt ceiling squabbling as the shot clock is winding down. When the debt ceiling was breached in January, five-year CDS spreads hovered around 35 basis points. How does this compare to the 2011 debt ceiling debacle? In 2011 a debt ceiling standoff led to credit-rating agency Standard and Poor’s downgrade of US debt from the highest possible status, AAA, to AA+. After that occurred, the cost of insuring against US debt for a year jumped to 63 basis points.

☆ Copper Shortage Threatens Green Transition
▼ + stars: | 2023-04-18 | by ( Yusuf Khan | ) www.wsj.com time to read: +5 min

In 2021, refined copper demand stood at 25.3 million tons, according to the International Copper Study Group. Mined output globally in 2022 was 21.8 million tons according to the International Copper Study Group, rising only 1 million tons over the previous three years. According to Congo’s Ministry of Mines, copper metal exports totaled 2.3 million metric tons in 2022, up from 1.8 million metric tons in 2021, less than half of Chile’s output. According to analysts it is more of a “when” not an “if” copper demand is likely to surge. Changes in technology should ease some copper demand pressures.

☆ Global corporate defaults highest since the pandemic in 2020
▼ + stars: | 2023-04-18 | by ( Anna Cooban | ) edition.cnn.com time to read: +3 min

In a report Tuesday, credit rating agency Moody’s said 33 of the corporations it rates defaulted on their debts in the first quarter, the highest level since the last quarter of 2020 when 47 companies defaulted. Almost half, or 15 companies, defaulted last month — the highest monthly count since December 2020. In a sign of a tougher global environment for corporate borrowers, investors went sour on corporate bonds last year. Moody’s expects that a combination of higher borrowing costs and slowing global growth will push up defaults on speculative-grade corporate debt to 4.6% by the end of this year, up from 2.9% in March. By the end of the first quarter next year, the global default rate on this type of debt will likely rise to 4.9%, Moody’s said.

☆ Four out of the five US metro areas with the lowest unemployment are in Florida. Here’s why
▼ + stars: | 2023-04-16 | by ( Bryan Mena | ) edition.cnn.com time to read: +3 min

Washington, DC CNN —Four out of the five US metropolitan areas with the lowest unemployment rates are in Florida, thanks to the state’s growing population, robust tourism activity and increased business investment. Jacksonville, Tampa and Orlando all had unemployment rates below 2.7% that month. Florida was also the fastest growing state as a percentage during that period, the first time it has notched that top spot since 1957. “Florida is pro-cyclical, so when unemployment is low, it’s going to be even lower in Florida and vice versa,” Pintea said. Some studies have argued that generous unemployment programs keep unemployment higher for longer by disincentivizing workers from searching for a new job.

☆ Only the big will crack the $1 trln LBO code
▼ + stars: | 2023-04-12 | by ( Jonathan Guilford | ) www.reuters.com time to read: +9 min

Lenders will only tiptoe back, meaning deals need the big checks and extra elbow grease in credit markets that favor the largest private equity firms. Private equity firms depend on borrowed money to reduce how much of their own they use in any single deal and to magnify returns as a percentage of their initial investment. Imagine a private equity firm acquires a company for $1 billion, then flips it five years later for $1.5 billion. Though the private equity industry is awash in so-called dry powder, fundraising is increasingly tilting to the largest fund managers. Buyout firms are apt to keep their plans more conservative to garner higher ratings – meaning, again, less leverage and more upfront cash.

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