PPCC: Pisitófilos Creditófagos. Invierno 2025

[Derby]

https://www.reuters.com/world/asia-pacific/china-dropping-red-lines-policy-that-sent-property-sector-into-crisis-report-2026-01-29/

China reportedly drops rules that sparked property crisis, developer shares surge


Real estate projects under construction are seen in the Shekou area of Shenzhen, Guangdong province, China November 19, 2021. REUTERS/David Kirton Purchase Licensing Rights

HONG KONG, Jan 29 (Reuters) - China has done away with borrowing limits on property developers known as its "three red lines" policy, local media said on Thursday, an apparent end to rules that triggered a debt crisis which continues to weigh on the world's second-largest economy.
In a separate new measure to help relieve financing pressure on the sector, authorities are also allowing banks to grant extensions of up to five years for loans to certain property projects, two sources with knowledge of the matter said.

China Real Estate Business, a media outlet managed by the Ministry of Housing and Urban-Rural Development, reported that the "three red lines" policy has basically ended. A spokesperson for the ministry could not immediately be reached for comment.

In some ways, China's abandonment of the red lines - caps on debt-to-cash, debt-to-assets and debt-to-equity ratios imposed in 2020 that developers could not exceed if they wanted fresh loans - is symbolic.

The rules were seemingly relaxed before this year, developer sources said, declining to be named. Analysts also said that funding challenges for a still deeply troubled industry would continue to persist even without the limits.

RED LINES CAUSED LIQUIDITY CRUNCH

Nevertheless, real estate developers surged on the news with China Overseas Land (0688.HK), opens new tab and Longfor (0960.HK), opens new tab both gaining 6% and the CSI 300 Real Estate Index (.CSI000952), opens new tab in mainland China climbing 5% to its highest level in two months.

The idea behind the "three red lines" was to rein in the sector's appetite for unbridled borrowing, but the policy backfired spectacularly by causing a liquidity crunch from mid-2021, and many developers have since defaulted on their debt.

For example, China Evergrande, once the country's biggest developer, is now in liquidation, while Country Garden (2007.HK), opens new tab recently completed a restructuring of its offshore debt. China Vanke (000002.SZ), opens new tab, another embattled top-ranked developer, recently gained creditor approval to defer some repayments, staving off a potential default.

The downturn in the sector, which used to account for about a quarter of China's GDP, has hit the economy hard with homebuyer and investor confidence slumping as swathes of apartments went unfinished.

Liu Shui, an analyst at China Index Holdings, a real estate analytical firm, said that the rules no longer served their intended purpose given changes in the industry.

Developers have "abandoned the debt-driven expansion model and no longer prioritize scale above all else, instead focusing on high-quality development," he said, adding that aggressive companies in the sector have already defaulted.

Analysts at Citi said in a research note that the removal of the policy is unlikely to bring an influx of new funds to the sector because most private developers are still grappling with debt extension or restructuring. State-owned firms still need to comply with other regulatory requirements to take on more borrowing, they added.

"That said, we see this move as a possible signal, indicating that the deleveraging and de-capacity of the property sector have been accomplished, sentiment wise," it added.

LOAN EXTENSIONS FOR 'WHITELIST' PROJECTS

Certain property projects are eligible for loan extensions from their original lending banks without additional collateral requirements, said the two sources, who declined to be identified as they were not permitted to speak about the matter publicly.

Those projects belong to a so-called "whitelist" launched in January 2024 aimed at ensuring the completion of residential projects. Local governments nominate eligible projects and banks are encouraged to provide financing.

Many of those loans are expiring after two years. The extension will offer breathing room for developers to complete unfinished projects and stabilize their operations, the sources said.

Chinese authorities have over the years taken a raft of measures aimed at supporting the property market, but new home prices extended declines in December, underscoring persistent strains in the sector.

An official Communist Party journal said on January 1 that the country's property sector remained a pillar of the economy but was "undergoing a profound adjustment". The article called for "strong policy actions" to stabilise expectations.

[Derby]

https://www.ft.com/content/0d6c67f6-37ef-4973-ade1-2f8e7610fb39

Kevin Warsh’s desire to shrink Fed’s balance sheet sets up clash with Trump, say investors

Long-term yields ticked up after president nominated former governor to lead US central bank


Longer-dated Treasury yields rose on Friday as investors bet that Warsh’s nomination could push up borrowing costs © FT montage/Bloomberg

Kevin Warsh’s long-held desire to slash the Federal Reserve’s balance sheet is likely to clash with Donald Trump’s relentless calls for the central bank to depress long-term borrowing costs, big fund managers have said.

Longer-dated Treasury yields rose on Friday as investors bet Trump’s nomination of Warsh to lead the world’s most influential central bank could push up borrowing costs. The move pushed the difference between 30-year and two-year debt yields — a measure that is closely watched on Wall Street — to 1.35 percentage points, close to the biggest gap since 2021.

The market fluctuations are an early sign of how traders are assessing Warsh’s statements in recent years, in which he has criticised the central bank for the scale of its bond purchases during the 2008 financial crisis — when he was a Fed governor — and later during the 2020 pandemic.

“You have an anti-balance sheet expansion guy against a backdrop of wanting lower interest rates. It’s a tension point. That’s what the market is focused on. That’s why the curve is steepening out,” said Greg Peters, co-chief investment officer of PGIM fixed income.  

Warsh served as Fed governor from 2006 to 2011 and has since become a prominent critic of some of the central bank’s flagship policies, particularly the multiple rounds of quantitative easing that left it holding almost $9tn of US Treasuries and other assets at its peak.

He has argued that the persistence of a vast balance sheet distorts asset prices and could risk entrenching inflationary pressure, even as he has argued that the US economy faces downside risks that justify a lower policy rate.

“The Fed has been the most important buyer of US Treasury debt — and other liabilities backed by the US government — since 2008,” Warsh said in a widely followed speech in April, adding that, “it’s a proxy for the Fed’s growing imprimatur on the economy”.

Stanley Druckenmiller, the billionaire investor and long-time mentor of Warsh, told the FT on Friday that the policymaker was not a permanent “hawk” and that “I’ve seen him go both ways” on monetary policy.

Some investors think he could push for lower short-term interest rates in the hope that advances in productivity caused by the AI boom would allow the economy to grow quickly without producing much inflation.

The Fed cut interest rates by 0.75 percentage points last year, but it signalled earlier this week that it would hold off on cuts for some time since growth has been strong and the jobs market appears to be stabilising after a period in which it was showing signs of weakness.

After Trump nominated Warsh, markets continued to price in two quarter-point rate cuts beginning this summer, indicating that traders’ short-term views on the Fed remain intact.

Bill Campbell, a portfolio manager at DoubleLine, noted that there would be tension if Warsh agitated for lower short-term rates while also pursuing a smaller balance sheet at a time of growing government debt and persistently high inflation. 

“Until you get fiscal under control and inflation under control, you are not going to be able to aggressively reduce interest rates and shrink the [Fed’s] balance sheet,” he said, adding: “I believe Kevin Warsh fully understands this.” 

The Fed ended its quantitative tightening programme to reduce its balance sheet late last year amid concerns over shrinking liquidity in short-term funding markets — easing some concerns over demand for sovereign debt issuance as analysts forecast an expansion in the central bank’s bond-buying.

“The issue is if you justify rate cuts by cutting the balance sheet, this does nothing to help lower long-term rates and improve mortgage affordability, which is what Trump wants,” said Mark Dowding, head of active fixed income at RBC BlueBay Asset Management.

[Derby]

https://www.reuters.com/world/asia-pacific/nvidia-ceo-huang-denies-he-is-unhappy-with-openai-says-huge-investment-planned-2026-01-31/

Nvidia CEO Huang denies he is unhappy with OpenAI, says 'huge' investment planned

TAIPEI, Jan 31 (Reuters) - Nvidia (NVDA.O), opens new tab plans to make a "huge" investment into OpenAI, probably its largest ever, CEO Jensen Huang said on Saturday, denying he was unhappy with the ChatGPT maker.

The chipmaker in September announced plans to invest up to $100 billion in OpenAI, a deal that would give OpenAI the cash and access it needs to buy advanced chips that are key to maintaining its dominance in an increasingly competitive landscape.

The Wall Street Journal reported on Friday that the plan had stalled after some inside the chip giant expressed doubts about the deal.

The report said Huang had privately underlined to industry associates in recent months that the original $100 billion agreement was non-binding and not finalised.

Huang has also privately criticised what he has described as a lack of discipline in OpenAI's business approach and expressed concern about the competition it faces from the likes of Alphabet's GOOGL.O Google and Anthropic, the WSJ said.

Speaking to reporters in Taipei, Huang said it was "nonsense" to say he was unhappy with OpenAI.

"We are going to make a huge investment in OpenAI. I believe in OpenAI, the work that they do is incredible, they are one of the most consequential companies of our time and I really love working with Sam," he said, referring to OpenAI CEO Sam Altman.

"Sam is closing the round (of investment) and we will absolutely be involved," Huang added. "We will invest a great deal of money, probably the largest investment we've ever made."

Asked whether it would be over $100 billion, he said: "No, no, nothing like that".

It was up to Altman to announce how much he wanted to raise, Huang added.

Amazon (AMZN.O), opens new tab is in talks to invest dozens of billions in OpenAI and the figure could be as high as $50 billion, Reuters reported on Thursday.

OpenAI is looking to raise up to $100 billion in funding, valuing it at about $830 billion, Reuters has previously reported.

Huang was speaking outside a Taipei restaurant having hosted all Nvidia's key suppliers in Taiwan, including the world's largest contract chipmaker TSMC (2330.TW), opens new tab, in what Taiwanese media called the "trillion-dollar dinner" because of the combined market capitalisation of those attending.

[Derby]

https://www.msn.com/en-us/money/companies/illinois-shuts-down-metropolitan-capital-bank-trust-in-first-us-bank-failure-of-2026/ar-AA1VnPBv

Illinois shuts down Metropolitan Capital Bank & Trust in first US bank failure of 2026


Illinois shuts down Metropolitan Capital Bank & Trust in first U.S. bank failure of 2026

The Illinois Department of Financial and Professional Regulation (IDFPR) closed Chicago’s Metropolitan Capital Bank & Trust on Friday due to unsafe and unsound conditions and an impaired capital position. The bank is the first U.S. financial institution to fail this year.

[Derby]

https://www.ft.com/content/f353376f-695c-4053-9c2d-5cbc58904d34

Chart of the Week: Will metals lose their lustre?

Unpacking the dramatic rallies in gold, silver and copper



Gold has long been the go-to diversification and safety trade for investors during times of chaos. But the sheer scale of the recent gold rally — silver and copper along for the ride — indicates that the price action has taken on a life of its own.

Friday gave a sign that investors have started to get more in touch with reality. The reduction in macro uncertainty following Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair triggered extreme profit-taking. Gold prices fell around 9 per cent, while silver prices plummeted about 26 per cent.

Macro uncertainty has been a big driver of prices over the past few months, and traditionally, metals prices have moved higher with a weaker dollar. However, the dramatic scale of the price rises and falls is historic. Retail investors flooding into precious metals-backed ETFs have turbocharged the price moves — particularly for gold and silver, and to a lesser extent copper, according to Hamad Hussain at Capital Economics. “This is [the] recent money which came into the market the last few months, but by nature is volatile,” said James Steel of HSBC.

As Unhedged has noted before, gold has become a momentum trade, and the risk for investors is global sanity. But even if gold prices retreated below $4,000, they would still be just at their levels about five months ago and still historically high. Gold also has a safety net in the form of central bank purchases. Meanwhile, silver and copper, which are mostly used for industrial purposes, are sensitive to cyclical booms and busts. Are Friday’s events enough to convince investors macro fears have been overdone and a fading of the momentum trade, or is the speculative rally just catching its next breath? Let us know your thoughts: unhedged@ft.com.

[Derby]

https://www.thebignewsletter.com/p/the-boomcession-why-everyone-but

[Currobena]

Nuestro primer mes de era zero.

Síii.