• Tag Archives Italy
  • 2 troubled Italian banks failing, to face insolvency

    The European Central Bank has pulled the plug on two troubled Italian banks, sending them into insolvency proceedings as it pushes ahead with efforts to clean up weak banks holding back the economy.
    The two banks, Veneto Banca and Banca Popolare di Vicenza, have struggled to overcome high levels of loans that were not being paid back.
    The ECB said Friday it had given the banks time to raise more capital but the banks had not been able to offer credible solutions. It ruled they were “failing or about to fail,” and they will now face insolvency proceedings in Italy.
    The Italian Economy and Finance Ministry said the government would meet over the weekend to “adopt the necessary measures to keep the banks fully operative, protecting all account holders, depositors and senior creditors.”
    Shareholders and holders of the bank’s junior bonds, however, face being wiped out.

    This post was published at ABC News


  • Italy’s newest bank bailout cost as much as its annual defense budget

    Two more Italian banks failed over the weekend – Banco Popolare di Vicenza and Veneto Banca.
    (In other news, the sky is blue.)
    The Italian Prime Minister himself stated that depositors’ funds were at risk, so the government stepped in with a bailout and guarantee package that could cost taxpayers as much as 17 billion euros.
    That’s a lot of money in Italy – around 1% of GDP. In fact it’s basically as much as the 17.1 billion euros they spent on national defense last year (according to an estimate by Italian think tank IAI).
    You don’t have to have a PhD in economics to figure out that NO government can afford to spend its entire defense budget every time a couple of medium-sized banks need a bailout.
    That goes especially for Italy, whose public debt level is already 132% of GDP… and rising. They simply don’t have the money.
    Moreover, the European Union actually has a series of new rules collectively known as the ‘Bank Recovery and Resolution Directive’ which is supposed to prevent failing banks from being bailed out with taxpayer funds.
    Here’s the thing – Italy has LOTS of banks that are on the ropes.

    This post was published at Sovereign Man on June 26, 2017.


  • Italy Bank Bailouts Send European, Global Stocks Higher; Gold Flash Crashes

    S&P futures point to a higher open following gains in Asian markets supported by stronger commodities but mostly European bourses, which are sharply higher following the 17 billion bailout of the two Veneto banks in Italy, the biggest taxpayer funded bank rescue in modern Italian history, as well as Dan Loeb’s activist campaign of the world’s biggest food company, Nestle which sent the stock up 5%, and finally Germany’s Ifo business climate index which hit new all time highs.
    Risk sentiment is broadly higher thanks to European equity markets which have rallied strongly from the open led by the Italian banking sector following the Veneto banks resolution. As shown in the chart below, EutoStoxx banks are about 2% higher as markets celebrate the return of taxpayer bailouts and the apparent death of Europe’s bail-in regime.

    This post was published at Zero Hedge on Jun 26, 2017.


  • Italian Taxpayers To Foot 17 Billion Bill As Rome Bails Out Another Two Insolvent Banks

    Two weeks after the first, and biggest, European bank bail-in took place under the relatively new European bank resolution mechanism, the EBRD, when Spain’s Banco Popular wiped out the holders of its most risky securities, including equity and AT bonds, and then selling what was left of the bank to Santander for 1 – a process that took place without a glitch – Italy may have just killed any hope of a European banking union, when the bailout of two small banks made a “mockery” of Europe’s new regulation.
    Late on Sunday, Italy passed a decree that will effectively sell the good part of the two banks to Intesa, Italy’s second-largest and best-capitalized bank. Intesa said last week that it would be willing to buy the best assets for a token price of 1 as long as the government assumed responsibility for liquidating the banks’ large portfolio of sour loans. As a result, Italy said it would commit as much as 17 billion in taxpayer funds to clean up the two failed “Veneto” banks in one of Italy’s wealthiest regions and support the takeover of their good assets by Intesa Sanpaolo SpA for a token amount. After an emergency cabinet meeting on Sunday, Finance Minister Pier Carlo Padoan said the Italian government will provide Milan-based Intesa with about 5.2 billion euros to allow it to take on Banca Popolare di Vicenza SpA and Veneto Banca SpA assets without hurting capital ratios, The European Commission, in a separate statement, said it approved the plan for the two banks and that it is in-line with state-aid rules.
    Unlike the Banco Popular bail-in by Santander, however, Intesa would only take on the good assets. PM Gentiloni said the lenders will be split into good and bad banks and that the firms, with taxpayers on the hook for the bad banks. The process was rushed to allow the failed banks to reopen on Monday and avoid a depositor panic and bank run. The intervention is necessary because depositors and savers were at risk, Gentiloni said. The northern region where they operate ‘is one of the most important for our economy, above all for small- and medium-size businesses.’

    This post was published at Zero Hedge on Jun 25, 2017.


  • Draghi Doesn’t See ‘Bubbles’ – Let Me Show You Some

    Mario Draghi has again missed an exceptional opportunity to adjust monetary policy. By ignoring the huge risks that are being created from the brutal inflation of financial assets, saying that ‘there are no signs of a bubble,’ the European Central Bank (ECB) remains adamantly focused on creating inflation by decree, denying the effects of technology, demography, and overcapacity.
    ‘No signs of bubble’? I’ll show you some of them myself.
    The percentage of debt of major countries ‘bought’ by the ECB: Germany, 17%, France 14%, Italy 12%, and Spain 16%. In all cases, in 2016 and 2015 the ECB was the largest buyer of said countries’ net emissions. Ask yourself a question: On the day the ECB stops buying, which of you would buy peripheral or European bonds at these prices? Clearly, the first sign of a bubble is the absence of demand in the secondary that offsets the impact of the ECB. It indicates that the current price is simply unacceptable in an open market, even if the recovery is confirmed, especially because rates do not even reflect a minimum real return, being below inflation.

    This post was published at Ludwig von Mises Institute on June 24, 2017.


  • Suicide Over European Banking Crisis

    The European ‘bail-in’ rules have been cheered claiming taxpayer money will be spared. However, many seniors bought bank bonds for their retirement. In the rescue of the small Banca Popolare d’Etruria, a retiree who had lost more than 100,000 euros worth of bonds lost everything and committed suicide. There have been many such events that do not always make the press. In Italy, the death of a pensioner who also committed suicide after losing his life savings as a result of a controversial move by the government to rescue four banks. The 68-year-old hung himself at his home in Civitavecchia, a port town near Rome, after the so-called ‘save banks’ plan wiped out 100,000 in savings held at Banca Etruria, one of the four lenders included in the government rescue deal announced on November 22nd, 2015. There was the 23-year old who committed suicide over 8000 in debts for student loans. A Greek pensioner who was 77-years old committed suicide in central Athens shooting himself with a handgun just several hundred meters from the Greek parliament building in apparent despair over his financial debts.

    This post was published at Armstrong Economics on Jun 19, 2017.


  • Fear of Contagion Feeds the Italian Banking Crisis

    At first, deny, deny, deny. Then taxpayers get to bail out bondholders.
    By Don Quijones, Spain & Mexico, editor at WOLF STREET.
    Spain’s Banco Popular had the dubious honor of being the first financial institution to be resolved under the EU’s Bank Recovery and Resolution Directive, passed in January 2016. As a result, shareholders and subordinate bondholders were ‘bailed in’ before the bank was sold to Santander for the princely sum of one euro.
    At first the operation was proclaimed a roaring success. As European banking crises go, this was an orderly one, reported The Economist. Taxpayers were not left on the hook, as long as you ignore the 5 billion of deferred tax credits Santander obtained from the operation. Depositors and senior bondholders were spared any of the fallout.
    But it may not last for long, for the chances of a similar approach being adopted to Italy’s banking crisis appear to be razor slim. The ECB has already awarded Italy’s Monte dei Paschi di Siena (MPS) a last-minute reprieve, on the grounds that while it did not pass certain parts of the ECB’s last stress test, the bank is perfectly solvent, albeit with serious liquidity problems.

    This post was published at Wolf Street by Don Quijones ‘ Jun 16, 2017.


  • A Replacement Of Population Is Taking Place In Europe

    Authored by Giulio Meotti via The Gatestone Institute,
    People-smugglers bring the migrants to the NGOs’ ships, which then reach Italian seaports. Another legal enquiry has been opened about the mafia’s economic interests in managing the migrants after their arrival. One cannot compare the migrants to the Jews fleeing Nazism. Pope Francis, for example, recently compared the migrants’ centers to Nazi “concentration camps”. Where are the gas chambers, medical “experiments,” crematoria, slave labor, forced marches and firing squads? These comparisons are spread by the media for a precise reason: shutting down the debate. By 2065, it is expected that 14.4 million migrants will arrive. Added to the more than five million immigrants currently in Italy, 37% of the population is expected to be foreigners: more than one out of every three inhabitants. First, it was the Hungarian route. Then it was the Balkan route. Now Italy is the epicenter of this demographic earthquake, and it has become Europe’s soft underbelly as hundreds of thousands of migrants arrive.
    With nearly 10,000 arrivals in one recent three-day period, the number of migrants in 2017 exceeded 60,000 — 48% more than the same period last year, when they were 40,000. Over Easter weekend a record 8,000 migrants were rescued in the Mediterranean and brought t

    This post was published at Zero Hedge on Jun 15, 2017.


  • Key Events In The Coming Busy Week: Fed, BOJ, BOE, SNB, US Inflation And Retail Sales

    After a tumultous week in the world of politics, with non-stop Trump drama in the US, a disastrous for Theresa May general election in the UK, and pro-establishment results in France and Italy, this is shaping up as another busy week ahead with multiple CB meetings, a full data calendar and even another important Eurogroup meeting for Greece. Wednesday’s FOMC will be the main event, with the Fed expected to hike 25bp (see full Goldman preview here), while the BOJ, BOE and SNB all remain on hold.
    Courtesy of BofA, here is the breakdown of key events:
    FOMC the star in a G10 Central Bank week After the eventful UK election, and less than eventful ECB meeting, the week ahead is a busy one, opening with the first round of the French parliamentary elections and with a plethora of data releases and central bank decisions to keep markets occupied. Another important Eurogroup meeting for Greece rounds out a full schedule.
    The FOMC meeting will be the main event of the week, where the Fed will deliver a 25 bps rate hike, in line with market expectations. While very weak retail sales or CPI could dissuade the Fed, this remains a very unlikely scenario absent a collapse in Wednesday’s CPI print. BofA expects lower inflation and growth forecasts, while the dots will show 3 hikes in 2018 and 3.25 hikes in 2019. The press conference will likely be focused on balance sheet normalization and implementation timing.
    No change from BoJ, BOE or SNB

    This post was published at Zero Hedge on Jun 12, 2017.


  • JPM: More “Tech Wreck” Pain Coming As “A Lot Of Lazy Money Was Chasing Momentum”

    Over the weekend, Goldman – whose “FAAMG” report was one of the catalysts to the Friday “tech wreck” rotation out of tech/growth/momentum and into value/energy – warned that the pain may not be over, simply because the outperformance of strong balance sheet companies – usually tech-linked names that have little or no debt and substantial cash flow – in a 10%+ equity market rally is rare; occurring in only 5% of six-month stretches in the last 30 years, and warning that “the last such notable episode was in 2000, at the Tech Bubble peak.”
    This morning it was JPM’s turn to opine on Friday’s events, only not on the cause of the mauling, but why we got to where we are. As JPM’s macro strategist Adam Crisafuli writes, “tech will remain under pressure – the space has become overcrowded w/a lot of lazy/complacent money chasing momentum and these weak hands can be quick to exit – that departure process usually takes longer than just a few days.”
    Here is his full note.
    What’s happening this morning? Stocks fell pretty much throughout Asia and prices are weak in Europe too. The US futures are down ~6 points. US TSY yields are flattish while 10yr yields are down in France and Italy following weekend political developments (the UK political situation remains very fluid although this really isn’t impacting anything beyond the shores of that country). Crude has a small bid following some encouraging news out of Qatar (Qatar remains committed to the production agreement and Kuwait is hopeful on a resolution to the current regional friction).

    This post was published at Zero Hedge on Jun 12, 2017.


  • It’s Confirmed: Without Government Subsidies, Tesla Sales Implode

    According to the latest data from the European Automobile Manufacturers Association (ACEA), sales of Electrically Chargeable Vehicles (which include plug-in hybrids) in Q1 of 2017 were brisk across much of Europe: they rose by 80% Y/Y in eco-friendly Sweden, 78% in Germany, just over 40% in Belgium and grew by roughly 30% across the European Union… but not in Denmark: here sales cratered by over 60% for one simple reason: the government phased out taxpayer subsidies.
    ***
    As Bloomberg writes, and as Elon Musk knows all too well, the results confirm that “clean-energy vehicles aren’t attractive enough to compete without some form of taxpayer-backed subsidy.”
    The Denmark case study is emblematic of where the tech/cost curve for clean energy vehicles currently stands, and why for “green” pioneers the continued generosity of governments around the globe is of absolutely critical importance, and also why Trump’s recent withdrawal from the Paris Climate Treaty is nothing short of a business model death threat.
    To be sure, Denmark’s infatuation with green cars is well-known: the country’s bicycle-loving people bought 5,298 of them in 2015, more than double the amount sold that year in Italy, which has a population more than 10 times the size of Denmark’s. However, those phenomenal sales figures had as much to do with price and convenience as with environmental concerns: electric car dealers were for a long time spared the jaw-dropping import tax of 180 percent that Denmark applies on vehicles fueled by a traditional combustion engine.

    This post was published at Zero Hedge on Jun 11, 2017.


  • Italy’s 5-Star Party Demands Immediate Elections After Failure Of Electoral Reform

    Not everyone is satisfied with today’s news that Italy’s early elections will likely be pushed back. Italy’s anti-establishment 5-Star Movement called on Thursday for immediate national elections after the previously reported deal on electoral reform – which would have resulted in the next Italian elections taking place in September, at the same time as Germany’s – among the major parties unraveled.
    “There is no chance of starting all over again. The legislature should end here and we should hold immediate elections,” said Luigi Di Maio, who is widely expected to be the 5-Star’s candidate for prime minister. He spoke shortly after the lower house voted to send the electoral reform bill back to a cross-party commission for further discussion.

    This post was published at Zero Hedge on Jun 8, 2017.


  • ‘Bail-In’ Era for Europe’s Banking Crisis Begins

    Many Banco Popular investors wiped out. Taxpayers off the hook. What it means for Italy. Banco Popular, until today Spain’s sixth biggest bank, is no more. Its assets, including a massive portfolio of small-business clients, now belong to Banco Santander, Spain’s biggest bank. The global giant now has 17 million customers in Spain, a country of just 45 million people. The price was 1.
    Spain’s Ministry of the Economy revealed that by 3 pm Tuesday, Popular was no longer able to contain the deposit outflow. ‘It had exhausted all its lines of liquidity, both ordinary and extraordinary.’ It had run out of collateral to cover any further lines of emergency liquidity.
    This apparently triggered the intervention by the ECB’s Single Resolution Board (SRB), which decided on Tuesday that the bank ‘was failing or likely to fail’ and would have to be wound down, unless a buyer could be found.

    This post was published at Wolf Street on Jun 7, 2017.


  • Geopolitical Risks in Retreat. Will Gold Drown?

    In the previous edition of the Market Overview we wrote that ‘geopolitical risks clearly won with a hawkish Fed in a tug of war in the gold market’ at the turn of March and April, as the yellow metal gained about 7 percent from mid-March to mid-April. However, the price of gold declined about 4.8 percent until May 9 when it started its rebound. As the chart below shows, at the beginning of July, the price of gold came close to the level of mid-April.
    Chart 1: The price of gold from January 2016 to June 2017.
    As one can see, the first round of the French presidential election was a clear turning point, as it became obvious that neither far-right Marine Le Pen nor far-left Jean-Luc Mlenchon would be elected. Hence, gold lost some of safe-haven bids, as investor appetites increased for risky assets. Does it mean that the yellow metal is doomed to oblivion?
    On the one hand, it might seem so. You see, the geopolitical concerns definitely eased in the last month, as radical and anti-EU candidates did not win the French presidency, which reduced one of the biggest geopolitical risks for this year, i.e. the threat of further disintegration of the Eurozone.
    Surely, the night remains dark and full of terrors. A snap general election in the UK is scheduled for June. In September, the German federal election is held. Brexit is still unfolding. There is a possibility of early elections in Italy. The leader of North Korea continues his nuclear frenzy (as well as hairstyle madness), launching ballistic missiles one after another. Russia continuously plots how to rebuild the USSR. And there is of course the unpredictable Donald Trump who just fired FBI Director James Comey, triggering political turmoil in Washington.

    This post was published at GoldSeek on 7 June 2017.


  • Monte Paschi Wins E.U. Backing on Revamp, Paving Way to Rescue

    European Union and Italian officials agreed on a plan to restructure Banca Monte dei Paschi di Siena SpA, allowing Italy to inject capital to rescue the world’s oldest bank.
    Competition Commissioner Margrethe Vestager and Italian Finance Minister Pier Carlo Padoan reached ‘an agreement in principle’ on a deal that paves the way for a precautionary recapitalization of the lender, according to a statement on Thursday. The deal, following ‘intensive’ talks between Italy, the E.U. and the ECB, still requires formal approval.
    Monte Paschi was forced to turn to Italy for aid after it failed to raise extra capital from investors in December. The European Central Bank said then it needed to secure 8.8 billion ($9.9 billion) to bolster its balance sheet. The government would contribute about 6.6 billion euros, according to a Bank of Italy calculation, with the rest covered by creditors.
    ‘This is a crucial agreement that marks a turning point for the bank granting its survival,’ said Mario Russo, an analyst at North Square Blue Oak Ltd. ‘The decision to bring forward the deal may allow the bank to revamp and return to profit and it’s also a positive signal for the country’s banking sector.’

    This post was published at bloomberg


  • ABOUT JUNE 2/HORRENDOUS JOBS REPORT SENDS GOLD AND SILVER MUCH HIGHER/GOLD SHARES HOWEVER MUCH SUBDUED/TWO BANKING CRISIS MOMENTS TODAY: ONE FROM ITALY AND ONE FROM SPAIN/GYMBOREE IN THE USA READ…

    GOLD: $1276.20 up $9.80
    Silver: $17.49 up 25 cent(s)
    Closing access prices:
    Gold $1279.00
    silver: $17.57
    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
    SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $127073 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: 1262.90
    PREMIUM FIRST FIX: $7.83

    This post was published at Harvey Organ Blog on June 2, 2017.


  • Spain’s Sixth Largest Bank Crashes Most In 28 Years On Liquidation Fears

    Even as attention has turned once again to Italy as the next possible source of European financial contagion, Spain’s sixth largest bank has found itself in freefall over the past few days as concerns grow that the bank may be liquidated unless a last-minute buyer, or source of capital, emerges. In addition to the shares of Banco Popular crashing as much as 27%, the biggest intraday drop since 1989, its perpetual bonds have likewise been in freefall mode as investors liquidate securities which “they do not want to hold going into the weekend”, according to Ignacio Cantos, of ATL Capital in Madrid, quoted by Bloomberg.

    This post was published at Zero Hedge on Jun 2, 2017.


  • Critical UK and French Elections Approach, Timing for Italy Advances

    The election in the UK is now less than two weeks ahead, on June 8th, followed three days later by the first round of the French parliamentary election on June 11th, with the second and final round on June 18th. An election in Italy, which many did not expect to occur until early 2018, now may well happen as early as September-October this year. Each of these elections has important implications for markets.
    The UK election had looked like a sure thing for Prime Minister Theresa May and the Conservatives, who at one point enjoyed a huge lead in the polls. May called for this ‘snap election’ to strengthen her hand in the Brexit negotiations and enhance the position of the Conservative Party. However, the polls have narrowed considerably in recent days, with measures of the Conservatives’ lead over the Labour Party and its leader Jeremy Corbyn varying between 5 and 14 percentage points. May had to make a U-turn on a central element of the Party’s manifesto: a poorly constructed and insufficiently vetted proposed reform of the funding system for social care for the elderly, which quickly came to be known as the ‘dementia tax.’ Labour seems to be getting some traction from its proposals to substantially increase government spending, raise taxes on companies and the rich, and renationalize the railroads, the Royal Mail, and water companies. Also, there has been increased attention on the prime minister’s weak understanding of economic and business matters. While the Conservatives still have a lead and may well still achieve a strong victory, investors now have to consider a wider range of possible outcomes, including a weak victory by the Conservatives that does not strengthen the party’s present 12-seat majority, a result in which neither main party wins a clear majority, or an upset victory by Labour.

    This post was published at FinancialSense on 06/02/2017.


  • European shares fall on political worries over Greece and Italy, as JP Morgan says hung parliament could be positive for pound

    A hung parliament could be positive for the pound, strategists at U.S. investment bank JP Morgan argued, as investors braced for a volatile run in to the general election next week.
    The pound has risen by almost 4pc since Prime Minister Theresa May called a snap election on the assumption a landslide victory for the Conservatives would strengthen the party’s hand in Brexit negotiations.
    But opinion polls showed that the Conservatives’ lead over the Labour opposition narrowed to just 5 percentage points on Friday, prompting the pound steepest daily fall since January.
    However, the U.S. bank, the world’s second biggest trader of currencies, thinks these last-minute political jitters are misplaced. Strategists at the bank believe the prospect of a ‘less disruptive Brexit’ under a Labour-led government might see the pound react positively to a defeat for the Conservatives.

    This post was published at The Telegraph


  • Markets Wrap: Stocks Flat In Quiet Session With US, UK And China Closed For Holiday

    U. S. markets are closed for the Memorial Day holiday, and with UK and Chinese markets also closed for various holidays, it has been a quiet start to the week, with S&P futures essentially unchanged, trading at 2,415, up 0.06%, a new all time high.
    European stocks opened marginally lower in quiet trading but have since erased the dip to trade little changed, while shares in British Airways owner IAG dipped in early Spanish trading as the airline pushed to recover from a massive technology failure that disrupted hundreds of flights. The Stoxx Europe 600 Index was flat at 391.24, down 0.03%. Italian assets underperformed after Renzi comments on early elections, with banks selling off and bund/BTP spread widening. BTP futures have extended their slide in thin liquidity, with the 10y yield now higher by 7bps fueled by Renzi comments and supply concession. The Italian FTSE MIB fell 2% with traders citing rising risks that the euro zone’s third largest economy could head to early elections in the autumn. “The latest news out of Italy seems to suggest that a new electoral law is indeed in the making,” LC Macro Advisers’ founder Lorenzo Codogno says. “The four major parties appear to converge towards the so-called German system, i.e. a purely proportional system with a 5 percent entry threshold.”
    In Asia, South Korea’s Kospi fell for the first time in seven sessions, slipping from an all time high. North Korea tested another missile although the launch had little impact on risk assets. Australian bonds pared opening gains and slip into negative after sluggish 20-year auction; 10-year yield rises two basis points; ASX 200 down. Nikkei little changed; Chinese developers surge in Hong Kong. Chinese developers lifted the Hang Seng Index, with China Evergrande Group surging to a record in Hong Kong. Bunds have meandered through the session with a speech from the ECB president Mario Draghi at 2:00pm BST in focus, but volumes are also especially light.

    This post was published at Zero Hedge on May 29, 2017.