Saturday, November 16, 2019

Weekly Commentary: China Update

We shouldn’t read too much into one month. With a holiday week, October is typically a sluggish period for lending in China. But at $88 billion, the growth in Aggregate Financing was about a third below estimates. It was also the weakest month in years – running about a third of September’s level and 16% below a slow October 2018. Even with a weak October, six-month growth in Aggregate Financing was 16% ahead of 2018 - with year-to-date growth up 20%. Principally, overheated Credit systems turn increasingly susceptible to trouble.

October Bank Loans increased $94 billion, 17% below forecasts and the weakest lending month since December 2017. Growth was down sharply from September’s $241 billion and ran 5% below October 2018. A slow October reduced one-year growth to 12.4%, matching the slowest growth rate since March 2017 (a decade low). Year-to-date, Bank Loan growth of $2.038 TN ran 3.3% ahead of comparable 2018. It’s worth noting Bank loans were up 27.2% in two years.

Consumer (chiefly mortgage) Loan growth dropped to $60 billion (from September’s $108bn), the weakest expansion since February and 25% below October 2018. At 15.4%, one-year growth slowed to the weakest pace since May 2015. At $870 billion, year-to-date Consumer lending was running 2.6% below comparable 2018. Notably, three-month growth was down 9.0% versus comparable 2018. Consumer Loans were, however, up 36% over two years, 68% in three and 138% over five years.

Beijing over recent years repeatedly responded to heightened economic and financial fragilities with serial stimulus. I have argued policymakers dangerously extended the “Terminal Phase” of a historic Credit Bubble. Importantly, policy stimulus pushed China’s mortgage finance Bubble into precarious late-cycle extremes. In my view, Chinese apartment markets demonstrated classic “blow-off” speculative dynamics – creating acute fragility in the process.

From about 5% annual inflation back in early 2018, the 70 Cities Newly Built Residential Buildings price index hit a high of 11.4% this past April. Year-over-year price increases have now slowed for six consecutive months (to 8.0%).

Of the 70 cities tabulated, 69 showed year-on-year increases in New Home (apartment) Prices, with 50 cities posting price gains during October. Still, momentum has clearly waned. Average New Home Prices increased 0.50% in October, the slowest price inflation since March 2018. Price gains peaked at 1.49% in August 2018 and have been trending downward ever since.

I tend to see Existing Home Sales data as more illuminating. Examining Existing Home Sales, half (35) of the cities reported price declines in October, up from September’s 28, August’s 20 and May’s 11. On a year-on-year basis, 13 cities have now posted price declines versus only two in June. And while average Existing Home Prices were up 4.24% y-o-y, this gain has been almost cut in half over the past six months.

Key (i.e. highly inflated) markets are much weaker than the average. October prices were down 0.60% in Beijing, that market’s fourth consecutive decline. Beijing prices have declined 1.5% over the past year. Prices in Guangzhou are down 2.4% y-o-y, with Shanghai prices up only 1.1%.

November 5 – Wall Street Journal (Bingyan Wang, Liyan Qi and Stephanie Yang): “Thirty floors above the showroom of a Chinese developer, a 29-year-old woman stood on a small rooftop ledge about 8 feet off the rooftop itself, threatening to jump and declaring that her recent home purchase had ruined her life. Ms. Hou… was one in a group of angry home buyers who had gathered at a real estate sales office in Tianjin… on Saturday, demanding their money back for half-constructed apartments that had now dropped in price. In recent years, Chinese officials have tightened financing to developers and rules on lending for home buyers in an effort to cool a buying frenzy and runaway prices. The government has delivered a consistent message: Apartments are for living, not for speculation.”

I’ve again highlighted the above WSJ extract to emphasize the point that the Chinese (borrowers, lenders, regulators and government officials) have no experience with collapsing mortgage finance and apartment Bubbles. It is president Xi who has championed housing “is for living in and not speculation.” Beijing for years has employed timid – and inevitably unsuccessful – measures to rein in housing-related excess. The upshot has been upwards of 60 million unoccupied apartment units, while mortgage-related Credit growth has become an increasingly prominent source of system liquidity and purchasing power. It’s worth noting Consumer (largely mortgage) borrowings that averaged $46 billion monthly during 2015 had more than doubled to $97 billion a month this year (March through September).

With a “phase 1” U.S./China trade deal supposedly imminent, global markets have turned more forgiving of disappointing Chinese data. Yet it’s worth noting October year-on-year Fixed Investment was weaker (5.2%) than expected (5.4%) at the lowest reading since at least 1998. Industrial Output (y-o-y) dropped to 4.7% from 5.8%, significantly trailing estimates (5.4%). Also missing estimates (7.8%), Retail Sales (y-o-y) declined from 7.8% to 7.2%, matching the lowest level since 2003. Meanwhile, Monetary Disorder is fostering instability in consumer and producer price dynamics. Consumer Prices surged to a 3.8% annual rate in October, the strongest rise in eight years.  Meanwhile, China’s Producer Prices declined at a 1.6% pace, the weakest reading since July 2016.  When I see a sharp slowdown in Credit expansion coupled with broad-based indications of economic deceleration and price instability – my analytical curiosity is piqued.

As I have written in the past, trade war escalation is a potential catalyst for near-term Chinese financial and economic instability. Yet, from the perspective of historic Credit and economic Bubbles, a trade truce would have only marginal impact on underlying fundamentals. I hold the view Chinese Credit is heading toward an inevitable crisis of confidence – with or without a trade pact. China’s Bubbles have inflated dangerously since 2016’s brush with Crisis Dynamics.

The S&P500, Dow and Nasdaq all traded to record highs this week. Perhaps Chinese market moves were more noteworthy. The Shanghai Composite dropped 2.5% this week to a 10-week low. The Hang Seng China Financials index sank 4.4%, while Hong Kong’s Hang Seng index fell 4.8%.  It appeared safe haven global sovereign bonds were more focused on China than Wall Street (yields down for the week).  The week also saw EM notably underperform.

November 13 – Bloomberg (Tian Chen and Claire Che): “Cracks are starting to emerge in Hong Kong’s currency and money markets, as traders speculate the local dollar’s resilience to increasingly violent protests won’t last. Hong Kong stocks were already showing signs of stress, losing more than 5% over the past week. Now, liquidity conditions in the foreign-exchange market are the tightest since the late 1990s, or the aftermath of the Asian financial crisis. Interbank rates are climbing -- making funding costs more expensive for banks -- while a gauge of expected swings in the Hong Kong dollar is near its highest in a month.”

In the near-term, China is facing a crisis of confidence in its small bank sector, rapidly rising corporate defaults and an increasingly fragile mortgage finance Bubble. Meanwhile, odds are rising for a run on the Hong Kong dollar, with an attendant crisis of confidence in Hong Kong as an international financial hub. Recalling the nineties, the breaking of currency pegs can be exceedingly disruptive.

China remains the marginal source of both global finance and economic growth. Despite all the hoopla of record high U.S. stock prices, the risk of global instability is rising. Again, I don’t want to read too much into October’s abrupt lending slowdown. Yet is does have the potential to be the beginning of something important. China – along with the world more generally – has never been as vulnerable to a sudden Credit slowdown. Bubbles don’t function well in reverse.

November 15 – Reuters (Marc Jones): “Global debt is on course to end 2019 at a record high of more than $255 trillion, the Institute of International Finance estimated on Friday — nearly $32,500 for each of the 7.7 billion people on planet. The amount, which is also more than three times the world’s annual economic output, has been driven by a $7.5 trillion surge in the first half of the year that shows no signs of slowing. Around 60% of that jump came from the United States and China. Government debt alone is set to top $70 trillion this year, as will overall debt (government, corporate and financial sector) of emerging-market countries. ‘With few signs of slowdown in the pace of debt accumulation, we estimate that global debt will surpass $255 trillion this year,’ the IIF said…”

November 14 – Bloomberg: “China’s central bank unexpectedly added liquidity to the banking system Friday to help lenders through the tax season, a move that analysts saw as a sign that larger-scale stimulus is unlikely in the near term. The People’s Bank of China offered 200 billion yuan ($29bn) of one-year loans to banks Friday. It kept the interest rate unchanged at 3.25%, showing restraint in monetary policy after this week’s worse-than-expected economic data. Liquidity in the banking system is at a ‘reasonable, sufficient’ level as the operation offsets companies’ need for funding to pay tax…”

Curious, isn’t it, that the world’s two great Credit engines are currently both requiring extraordinary central bank liquidity injections…


For the Week:

The S&P500 increased 0.9% (up 24.5% y-t-d), and the Dow gained 1.2% (up 20.1%). The Utilities rallied 1.4% (up 18.8%). The Banks gave back 1.1% (up 26.4%), while the Broker/Dealers added 0.8% (up 16.4%). The Transports fell 1.7% (up 18.6%). The S&P 400 Midcaps were little changed (up 20.3%), while the small cap Russell 2000 slipped 0.2% (up 18.4%). The Nasdaq100 added 0.7% (up 31.4%). The Semiconductors increased 0.4% (up 50.9%). The Biotechs jumped 1.9% (up 10.6%). With bullion rallying $9, the HUI gold index recovered 2.6% (up 30.8%).

Three-month Treasury bill rates ended the week at 1.53%. Two-year government yields fell seven bps to 1.61% (down 88bps y-t-d). Five-year T-note yields dropped 10 bps to 1.65% (down 86bps). Ten-year Treasury yields sank 11 bps to 1.83% (down 85bps). Long bond yields fell 12 bps to 2.31% (down 71bps). Benchmark Fannie Mae MBS yields declined nine bps to 2.72% (down 78bps).

Greek 10-year yields jumped 14 bps to 1.44% (down 296bps y-t-d). Ten-year Portuguese yields rose five bps to 0.37% (down 135bps). Italian 10-year yields gained four bps to 1.23% (down 151bps). Spain's 10-year yields increased five bps to 0.44% (down 98bps). German bund yields sank seven bps to negative 0.33% (down 58bps). French yields fell four bps to negative 0.02% (down 73bps). The French to German 10-year bond spread widened three to 31 bps. U.K. 10-year gilt yields dropped six bps to 0.73% (down 55bps). U.K.'s FTSE equities index declined 0.8% (up 8.5% y-t-d).

Japan's Nikkei Equities Index declined 0.4% (up 16.4% y-t-d). Japanese 10-year "JGB" yields slipped two bps to negative 0.07% (down 7bps y-t-d). France's CAC40 gained 0.8% (up 25.5%). The German DAX equities index was little changed (up 25.4%). Spain's IBEX 35 equities index fell 1.4% (up 8.4%). Italy's FTSE MIB index added 0.2% (up 28.7%). EM equities were mixed. Brazil's Bovespa index fell 1.0% (up 17.1%), and Mexico's Bolsa declined 0.7% (up 4.2%). South Korea's Kospi index rose 1.2% (up 5.9%). India's Sensex equities index was about unchanged (up 11.9%). China's Shanghai Exchange sank 2.5% (up 15.9%). Turkey's Borsa Istanbul National 100 index jumped 2.2% (up 15.5%). Russia's MICEX equities index fell 1.3% (up 23.9%).

Investment-grade bond funds saw inflows of $2.270 billion, while junk bond funds posted outflows of $254 million (from Lipper).

Freddie Mac 30-year fixed mortgage rates rose six bps to 3.75% (down 119bps y-o-y). Fifteen-year rates gained seven bps to 3.20% (down 116bps). Five-year hybrid ARM rates increased five bps to 3.44% (down 70bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates unchanged at 4.12% (down 60bps).

Federal Reserve Credit last week increased $6.6bn to $4.006 TN, with a nine-week gain of $280bn. Over the past year, Fed Credit contracted $98.6bn, or 2.4%. Fed Credit inflated $1.196 Trillion, or 43%, over the past 366 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt increased $1.6bn last week to $3.420 TN. "Custody holdings" were little changed y-o-y.

M2 (narrow) "money" supply jumped $25bn last week to a record $15.270 TN. "Narrow money" gained $1.029 TN, or 7.2%, over the past year. For the week, Currency increased $3.3bn. Total Checkable Deposits rose $34.9bn, while Savings Deposits declined $17.4bn. Small Time Deposits dipped $2.7bn. Retail Money Funds gained $6.5bn.

Total money market fund assets rose $16.6bn to $3.572 TN. Money Funds gained $688bn y-o-y, or 23.8%.

Total Commercial Paper added $11.0bn to $1.131 TN. CP was up $46.8bn, or 4.3% year-over-year.

Currency Watch:

The U.S. dollar index declined 0.4% to 97.999 (up 1.9% y-t-d). For the week on the upside, the New Zealand dollar increased 1.2%, the South African rand 1.0%, the British pound 1.0%, the Swiss franc 0.8%, the Swedish krona 0.6%, the Norwegian krone 0.4%, the Japanese yen 0.4%, and the euro 0.3%. On the downside, the South Korean won declined 0.8%, the Australian dollar 0.7%, the Brazilian real 0.5%, the Mexican peso 0.4%, and the Singapore dollar 0.1%. The Chinese renminbi declined 0.17% versus the dollar this week (down 1.85% y-t-d).

Commodities Watch:

The Bloomberg Commodities Index dropped 1.0% this week (up 2.7% y-t-d). Spot Gold increased 0.6% to $1,468 (up 14.5%). Silver added 0.7% to $16.948 (up 9.1%). WTI crude increased 48 cents to $57.72 (up 27.1%). Gasoline was little changed (up 24%), while Natural Gas sank 3.6% (down 9%). Copper fell 1.1% (up 1%). Wheat declined 0.8% (up 1%). Corn rallied 0.9% (up 2%).

Market Instability Watch:

November 9 – CNBC (Lizzy Gurdus): “Call it an ETF explosion. U.S.-based exchange-traded funds have racked up a record $4 trillion in assets under management as of this year, with 136 ETF providers offering 2,062 ETFs to investors… Overall, ETFs are seeing huge interest globally, and that’s unlikely to die down anytime soon, says Deborah Fuhr, founder of ETFGI… ‘I think we’re still in early days of adoption because I think ETFs are now moving to a level playing field,’ she said… With the Securities and Exchange Commission watering down its ‘exemptive relief’ rule, which often made the come-to-market process long and arduous for ETF issuers, ETFs are entering a new era that could expand their space even further, Fuhr said.”

November 12 – Bloomberg (Sarah Ponczek): “Some of the hottest trades of a tumultuous 2019 are falling out of favor as investors dip their toes into riskier waters. From low-volatility stocks to bonds and gold, the safety trade that reigned among exchange-traded fund investors is unraveling on signs of a rebounding economy and progress in U.S.-China talks. Traders are rushing to pockets of the market that should outperform in the event of an economic acceleration… After 16 straight months of inflows, the beloved low-volatility trade of 2019 is starting to show some cracks. In aggregate, ETFs tracking stocks that swing less than the broader market have taken in over $22 billion for a record year… But investors have pulled near $600 million from the funds in November, putting them on track for the biggest monthly outflows since February 2018.”

November 8 – Bloomberg (Liz McCormick): “A bond-market warning light that glowed green for years is suddenly flashing red. The bad news for bondholders is that the last time this happened, it was accompanied by the biggest sell-off since the aftermath of the global financial crisis. That indicator is the term premium, which, for both Treasuries and German bunds, has snapped back from last quarter’s record lows. The U.S. gauge is now on track for the biggest three-month increase since late 2016.”

November 10 – Wall Street Journal (Ira Iosebashvili and Amrith Ramkumar): “Investors are piling into beaten-up assets from commodities to emerging-market stocks, powering a broad rally that reflects a brightening outlook for the global economy. The British pound is up more than 6% from recent multiyear lows, while a rebound in China’s yuan has lifted a broad range of currencies. Emerging-market equities have also bounced back from a steep selloff earlier in the year, and a rise in oil is leading a rally in commodities that has buoyed everything from copper to coffee.”

November 11 – Reuters (Dhara Ranasinghe and Yoruk Bahceli): “A selloff in southern European bond markets gathered pace on Monday, pushing yields higher, with an inconclusive election in Spain adding to uncertainty in its bond market. Government bond markets across the single-currency bloc have been hurt in recent weeks by optimism over a U.S.-China trade deal and signs of stabilisation in economic data. But Italy’s bond market, in particular, and to a lesser extent Spanish and Portuguese ones have borne the brunt of selling in recent sessions.”

November 10 – Reuters (Rodrigo Campos): “Social unrest worldwide is alarming some global investors, who say protests from Hong Kong and Lebanon to Chile are forcing them to be more cautious even though the impact on financial markets has been spotty so far… ‘It is a risk that is with us and at these quite stretched financial market valuations it causes us pause and leads us to be more cautious in markets than we would be otherwise,’ said Dan Ivascyn, group chief investment officer at PIMCO…”

Trump Administration Watch:

November 14 – Wall Street Journal (Harriet Torry): “The U.S. and China are nearing a trade deal, but President Trump isn’t ready to sign off, White House economic adviser Lawrence Kudlow said Thursday. They are getting close to an agreement, Mr. Kudlow said… ‘The mood music is pretty good,’ he said, adding that Mr. Trump ‘likes what he sees, he’s not ready to make a commitment, he hasn’t signed off on a commitment for phase one, we have no agreement just yet for phase one.’”

November 14 – Bloomberg: “A U.S. demand that China spell out how it plans to reach as much as $50 billion in agricultural imports annually has become a sticking point in negotiations on a phase one trade deal, according to people familiar with the matter. Chinese negotiators are resisting a proposal from American officials that it provide monthly, quarterly and annual targets for purchases… China also insists that the two sides must agree to rollback tariffs in phases if a deal is reached, the people said.”

November 12 – Wall Street Journal (William Mauldin and Josh Zumbrun): “Tariffs are emerging as the main stumbling block in efforts by the U.S. and China to come to a limited trade deal, a month after the two countries called a truce in their trade war. The logjam centers on whether the U.S. has agreed to remove existing tariffs in the so-called ‘phase one’ deal that the two countries have been working toward—or whether the U.S. would only cancel tariffs set to take effect Dec. 15… ‘The U.S. negotiators will try to exact the maximum they can before doing anything’ on tariff relief, one of the people said. President Trump said Tuesday that a ‘significant phase-one trade deal with China could happen, could happen soon.’ But he added that he is prepared to increase pressure on China if the two sides can’t reach an agreement.”

November 12 – CNBC (Thomas Franck): “President Donald Trump used his pulpit before the Economic Club of New York… to bash the Federal Reserve, a marked diversion from what many on Wall Street had hoped would be a positive speech on the progress of trade relations between the U.S. and China. Instead of highlighting warmer relations with Beijing, Trump criticized the Fed for what he sees as its hesitation to lower interest rates and blamed the central bank for capping gains in the U.S. economy and stock market. The president noted that since his election, the S&P 500 is up more than 45%, the Dow Jones Industrial Average is up over 50% and the Nasdaq Composite is up 60%. But those numbers could be way higher, Trump said, if it weren’t for the reluctance of the Fed. ‘And if we had a Federal Reserve that worked with us, you could have added another 25% to each of those numbers, I guarantee you that,’ Trump said.”

November 12 – Reuters (Richard Cowan): “The U.S. House of Representatives, with just more than a week left before federal funds expire for a wide range of government programs, will attempt next week to pass a stopgap spending bill through Dec. 20, according to a senior aide… Without such funds, most federal agencies would have to furlough government workers except those needed for the most essential operations. Existing money expires on Nov. 21 and Congress is trying to pass a month-long funding bill before then to avoid the second government shutdown this year.”

Federal Reserve Watch:

November 13 – Reuters (Howard Schneider): “Federal Reserve Chair Jerome Powell likes to avoid any hint of politics in his public statements, but… he weighed in on one of the core issues in the political debate over how to manage the economy. Over the past year in particular, many mainstream economists have concluded that the current U.S. government debt level, north of $20 trillion and rising by $1 trillion a year, could grow much larger without crimping the economy - especially when the interest rate paid by the government is less than the economy’s growth rate… In answer to a question at a congressional hearing, Powell said that in his view, as long as debt grows faster than the economy, it is by definition unsustainable, leaving ‘our kids and grandkids ... servicing debt,’ instead of funding good schools and hospitals.’”

November 13 – Associated Press (Christopher Rugaber): “Federal Reserve Chairman Jerome Powell said… the Fed is likely to keep its benchmark short-term interest rate unchanged in the coming months, unless the economy shows signs of worsening. But for now… Powell expressed optimism about the U.S. economy and said he expects it will grow at a solid pace, though it still faces risks from slower growth overseas and trade tensions. ‘Looking ahead, my colleagues and I see a sustained expansion of economic activity, a strong labor market, and inflation near our symmetric 2% objective as most likely,’ Powell said before Congress’ Joint Economic Committee.”

November 12 – Wall Street Journal (Nick Timiraos): “The success of the Federal Reserve and other central banks in reducing inflation and holding it at low levels has limited the scope for monetary policy to combat future downturns, a top Fed official said… Fed Vice Chairman Richard Clarida highlighted how both lower global bond yields and the successful response of the U.S. central bank to combat the high inflation spells of the 1970s and early 1980s have laid the groundwork for new challenges. ‘These two phenomena, taken together, have resulted in sovereign bond yields that are substantially lower than the precrisis experience, and thus substantially closer to the effective lower bound for the policy rate than they were before the crisis,’ said Mr. Clarida…”

U.S. Bubble Watch:

November 13 – Reuters (Lucia Mutikani): “U.S. consumer prices rebounded more than expected in October and underlying inflation picked up, which together with abating trade tensions and fears of a recession, support the Federal Reserve’s signal for no further interest rate cuts in the near term. The… consumer price index increased 0.4% last month as households paid more for energy products, healthcare, food and a range of other goods. That was the largest gain in the CPI since March… In the 12 months through October, the CPI increased 1.8% after climbing 1.7% in September. Excluding the volatile food and energy components, the CPI rose 0.2% after edging up 0.1% in September. The so-called core CPI rose as healthcare costs jumped by the most in more than three years. There were also increases in prices of used cars and trucks and recreation and rents. In the 12 months through October, the core CPI increased 2.3% after rising 2.4% in September.”

November 9 – Bloomberg (Alexandre Tanzi and Michael Sasso): “The U.S.’s historic economic expansion has so enriched one-percenters they now hold almost as much wealth as the middle- and upper-middle classes combined. The top 1% of American households have enjoyed huge returns in the stock market in the past decade, to the point that they now control more than half of the equity in U.S. public and private companies, according to… the Federal Reserve. Those fat portfolios have America’s elite gobbling up an ever-bigger piece of the pie. The very richest had assets of about $35.4 trillion in the second quarter, or just shy of the $36.9 trillion held by the tens of millions of people who make up the 50th percentile to the 90th percentile of Americans -- much of the middle and upper-middle classes. Americans now need at Least $500,000 a Year to Enter Top 1%...”

November 13 – Reuters (Lindsay Dunsmuir): “The U.S. government recorded a $134 billion budget deficit in October, the first month of the new fiscal year… That compared to a budget deficit of $100 billion in the same month last year… Unadjusted receipts last month totaled $246 billion, down 3% from October 2018, while unadjusted outlays were $380 billion, a rise of 8% from the same month a year earlier. The U.S. government’s fiscal year ends in September each year. Fiscal year 2019 saw a widening in the deficit to $984 billion, the largest budget deficit in seven years…”

November 13 – Reuters (Lucia Mutikani): “U.S. consumer prices jumped by the most in seven months in October, which together with abating fears of a recession, support the Federal Reserve’s signal for no further interest rate cuts in the near term… The consumer price index increased 0.4% last month as households also paid more for energy products, food and other goods. That was the largest gain in the CPI since March and followed an unchanged reading in September. In the 12 months through October, the CPI increased 1.8% after climbing 1.7% in September.”

November 14 – Reuters (Lucia Mutikani): “U.S. producer prices increased by the most in six months in October, lifted by gains in the costs of goods and services, further bolstering the Federal Reserve’s stance that it will probably not cut interest rates again in the near term. The… producer price index for final demand rose 0.4% last month, the biggest increase since April, after falling 0.3% in September. In the 12 months through October the PPI climbed 1.1%, the smallest increase since October 2016, after advancing 1.4% in September.”

November 12 – MarketWatch (Kimberly Chin): “Small-business owners' confidence in the U.S. economy rose in October…, according to a survey by the National Federation of Independent Business. The NFIB Small Business Optimism Index had an October reading of 102.4, up 0.6 point from the prior month. The NFIB said optimism rose because business owners are still creating jobs, raising wages and expanding their businesses. Overall, eight of the 10 components in the index advanced in October.”

November 13 – Reuters (Alexandre Tanzi): “Americans increased their borrowing for the 21st straight quarter as more households took out loans to buy homes or refinance existing mortgages, according to… the Federal Reserve Bank of New York. Total U.S. household debt rose $92 billion, or 0.7%, to $13.95 trillion in the third quarter… That’s $1.3 trillion above the previous peak in 2008.”

November 13 – Wall Street Journal (Sarah Chaney): “Americans are borrowing more for cars, a sign lower interest rates and a decadelong economic expansion are supporting purchases of large household items. Auto-loan originations increased to $159 billion in the third quarter to the second highest level on record, according to… the Federal Reserve Bank of New York. Auto debt now accounts for nearly 10% of overall household debt, up from about 6% when the recession ended in mid-2009… Mortgage originations, which include mortgage refinances, logged in at $528 billion in the third quarter compared with $445 billion in the same period a year earlier…”

November 9 – Wall Street Journal (AnnaMaria Andriotis and Ben Eisen): “John Schricker took out a loan to buy a car in 2017. Then he took out another. And then another. In two years, the 40-year-old electrician signed up for four auto loans, each time trading in the previous car and rolling the unpaid balance into the next loan. He recently bought a $27,000 Jeep Cherokee with a $45,000 loan from Ally Financial Inc. Consumers, salespeople and lenders are treating cars a lot like houses during the last financial crisis: by piling on debt to such a degree that it often exceeds the car’s value. This phenomenon… can leave car owners trapped. Some 33% of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28% five years ago and 19% a decade ago…”

November 11 – Wall Street Journal (Rebecca Elliott and Christopher M. Matthews): “After pushing U.S. oil and natural-gas production to record levels, some shale companies plan to pump less. The pullback is sharpest among the country’s largest natural-gas drillers. Several producers… have said during third-quarter earnings that they may shrink output next year. But even more oil-focused shale companies are promising to rein in spending and forecasting slower growth…. Voluntarily restricting growth is a new dynamic for the industry and reflects a calculus that it is better to spend and produce less while hoping for higher commodity prices.”

November 10 – Wall Street Journal (Jacob Bunge and Kirk Maltais): “Financial stress is mounting in the Farm Belt, pushing more growers to take on high-interest loans outside traditional banks to stay in business. After his local farm bank wouldn’t lend him as much as he said he needed in 2017, Iowa farmer James Kron turned to Ag Resource Management LLC, a… financial-services firm. Now, when he takes his corn and soybeans to grain elevators near his farm, he signs the checks over to ARM until his loan is paid back in full. He is one of many farmers leaning on alternative lenders to make it through the steepest agricultural downturn in a generation. With crop prices stuck at low levels, traditional farm banks are placing stricter terms on farm loans and doling out less money, leaving cash-strapped farmers such as Mr. Kron to seek capital from more lightly regulated entities.”

November 12 – Bloomberg (Felice Maranz): “The road to the White House in 2020 may entail a war against Wall Street and wealth itself, as polling results encourage more candidates to cast a jaundiced eye toward the financial world, Citi warned… Some candidates are prioritizing greater accountability for big corporations, while others are concerned that ‘loosening the reins might foment another financial crisis,’ a Citi team led by economist Dana Peterson wrote. Still others believe ‘banks and their executives were not sufficiently penalized for the 2008-2009 crisis’ and that big companies are anti-competitive and ‘antagonistic towards consumer protection.’ Banks and wealthy individuals are viewed by others as a revenue source for ‘re-distributional policies, including further tax relief for low- and middle-income persons, and funding priorities from paid leave to jobs programs,’ Citi said.”

November 10 – Financial Times (Laura Noonan): “Jamie Dimon said bankers ‘let the American people down’ ahead of the 2008 financial crisis, calling out those who were ‘greedy, selfish, did the wrong stuff, overpaid themselves and couldn’t give a damn’. The chief executive of JPMorgan Chase is the only head of a big Wall Street institution whose tenure predates the 2007-2008 financial crisis, that is estimated to have led to 9m job losses in the US. Ten million homeowners also lost their homes. ‘I believe there were people . . . who were greedy, selfish, did the wrong stuff, overpaid themselves and couldn’t give a damn. Yes,’ Mr Dimon told CBS’s primetime 60 Minutes…”

November 10 – Bloomberg (Christopher Condon): “JPMorgan… billionaire Chief Executive Officer Jamie Dimon called U.S. income inequality a ‘huge problem,’ but he stopped short of saying America’s top executives were being paid too much. …Dimon said he is optimistic about the economy and admitted that his high-profile job made him a target of some criticism. But asked whether his compensation -- about $31 million in total for 2018 -- was too high, he said: ‘The board sets mine. I have nothing to do with it,’ referring to the bank’s directors.”

November 12 – Bloomberg (Catherine Bosley): “The value of the Swiss National Bank’s U.S. stock portfolio gained 1.5% in the third quarter to touch an all-time high of $94 billion. The holdings, which include Facebook Inc., Apple Inc. and Johnson & Johnson, are a result of the SNB’s huge currency interventions over the past decade to stem the franc’s rise.”

China Watch:

November 11 – Bloomberg: “China’s credit growth slowed more than expected in October to the weakest pace since at least 2017 as weak corporate demand for credit combined with seasonal effects, signaling that efforts to prop up the economy through bank lending still aren’t working. Aggregate financing was 618.9 billion yuan ($88bn)… That compares to about 2.27 trillion yuan in September and 737.4 billion yuan in the same month of 2018. The median estimate of economists was 950 billion yuan.”

November 14 – Associated Press: “China pressed Washington… to roll back punitive tariffs in a tentative trade deal. A tariff cut is an ‘important condition’ for the agreement that is part of talks on ending a costly trade war, said Commerce Ministry spokesman Gao Feng. Beijing said last week American negotiators agreed to roll back penalties imposed in September on $112 billion of Chinese imports if an agreement goes ahead. President Donald Trump dismissed that a day later, jolting global financial markets. Trump postponed a planned tariff hike on $250 billion of Chinese goods after announcing the ‘Phase 1’ agreement Oct. 12. Negotiators have been working on the details of the agreement since then.”

November 11 – Reuters (Andrew Galbraith): “Chinese policymakers should pursue a proactive fiscal policy and cut interest rates to support flagging economic growth, a financial magazine… quoted Sheng Songcheng, an adviser to the People’s Bank of China (PBOC), as saying. But as China does not face the same deflationary pressures that exist overseas, fiscal policy measures should be the first consideration, with monetary policy playing a supporting role, Yicai quoted Sheng as saying. The comments comes as debate grows in financial market circles over whether China is moving quickly and forcefully enough to prevent a sharper economic slowdown.”

November 13 – Bloomberg: “The engines of China’s economy are sputtering, with exports falling, factory output slowing, investment growth at a record low and consumption coming off the boil. Industrial output rose 4.7% from a year earlier, versus a median estimate of 5.4%... Retail sales expanded 7.2%, compared to a projected 7.8% increase. Fixed-asset investment slowed to 5.2% in the first ten months. That was the lowest reading in comparable data back to 1998.”

November 10 – Reuters (Yawen Chen and Huizhong Wu): “China’s producer prices fell the most in more than three years in October, as the manufacturing sector weakened on declining demand and a knock from the Sino-U.S. tariff war… The producer price index (PPI), seen as a key indicator of corporate profitability, fell 1.6% in October from a year earlier, marking the steepest decline since July 2016… In contrast, China’s consumer prices rose at their fastest pace in almost eight years, driven mostly by a surge in pork prices as African swine fever ravaged the country’s hog herds. Some analysts say the CPI rise could become a concern for policymakers looking to introduce measures to prop up demand.”

November 10 – Bloomberg: “China’s consumer inflation will continue rising and could peak at around 5% or even 6% in January before gradually falling back, according to economists. The consumer price index rose to a 7-year high of 3.8% in October due to soaring pork prices, and the demand from the Spring Festival in late January will push it higher to at least 5%, according to economists from Barclays Plc, Citigroup Inc., and Bank of China International Ltd. Huachuang Securities Co. said the headline number could even hit 6%.”

November 11 – Associated Press: “China’s auto sales fell 5.8% from a year earlier in October as demand for electric cars plunged…, extending a painful squeeze in the global industry’s biggest market. The Chinese auto market is on track to contract for second year… Drivers bought 1.9 million sedans, SUVs and minivans, according to the China Association of Automobile Manufacturers. Sales growth has been in negative territory every month since June 2018. Total vehicle sales, including trucks and buses, shrank 0.6% to 2.3 million.”

November 11 – Bloomberg: “China’s local governments are helping inject fresh capital into small lenders across the country, part of an expanding campaign to restore confidence in the world’s largest banking system. At least 10 small Chinese banks have raised money this year by selling shares packaged with non-performing loans, in several cases to buyers controlled by local authorities. In at least one deal, the NPLs were sold at above-market rates. The transactions, while modest in number given China has 3,000-plus small banks, show the determination of local authorities to shore up the linchpins of their district economies.”

November 12 – Reuters (Cheng Leng, Lusha Zhang and Ryan Woo): “China’s banking and insurance regulator said… it will tighten liquidity management for the country’s smaller banks and offer cross-region liquidity support for rural commercial banks if needed. A run on Yingkou Coastal Bank in the northeastern Liaoning province, China’s second bank run in less than two weeks, has revived worries about the health of the country’s smaller lenders. ‘The banking industry is a very sensitive industry, which requires us to improve the mechanism of liquidity risk management, and fend off systematic financial risks,’ Liu Rong, vice department chief of city commercial banking at China’s Banking and Insurance Regulatory Commission (CBIRC), told a media briefing…”

November 10 – Reuters (Cheng Leng and Shivani Singh): “China will take steps including management reshuffles and fund infusions to bolster the weakening profiles of its smaller banks, vice chairman of the banking and insurance regulator said, according to financial news outlet Caixin… As financial stability remains the top priority, the regulator will use reform and restructuring as the key approach to resolving banking risks, instead of doing ‘surgeries,’ said Zhou Liang, vice chairman of China’s Banking and Insurance Regulatory Commission (CBIRC)…”

November 13 – Reuters (Kevin Yao): “Annual profits at China’s Ningbo S-Power International Logistics Co are down a sharp 40% year-on-year, and export orders have also fallen at a similarly dizzying rate. The firm’s woes highlight a bigger problem for the world’s second-largest economy and its stability-obsessed leaders - the intensifying pressure on employment as a structural slowdown in the once-booming services sector is exacerbated by the protracted Sino-U.S. trade war. The simultaneous downturn in the services and manufacturing industries poses a daunting challenge for authorities seeking to keep a lid on unemployment and prevent social unrest… ‘The employment problem is rising as the services sector is slowing,’ said a policy insider…”

November 10 – Financial Times (Sun Yu): “China’s local governments face a record number of lawsuits for failing to pay their contractors as the country’s slowing economy puts a strain on public finances. The financial outlook has deteriorated so markedly that analysts have warned that there is a risk of social unrest. Chinese courts have listed 831 local governments as being in default in the first 10 months of this year, compared with 100 in the whole of 2018. The value of these local authorities’ overdue payments grew by more than 50% from Rmb4.1bn at the end of last year to Rmb6.9bn ($984m) at the end of October. The totals do not take into account the amount owed by local government finance vehicles and companies operated by municipal or provincial officials, more than 1,000 of which have been listed as defaulters over the past three years.”

November 14 – Wall Street Journal (Jing Yang): “China’s venture-capital boom, which spawned some of the world’s most valuable technology companies and dozens of rags-to-riches entrepreneur tales in recent years, has come to an end. A year after an abrupt turn in investor confidence in the growth and profit potential of Chinese tech startups, venture-capital fundraising in the world’s second-largest economy is on pace to touch its lowest level since 2013. Investors that bet on the rising fortunes of innovative startups are now finding it difficult to cash out at a profit, as the pace of Chinese startups going public has slowed… The worry is that investors in the public markets won’t pay high prices for companies whose outlooks have dimmed as China’s economic growth slows.”

November 10 – New York Times (Alexandra Stevenson and Cao Li): “When the call came for local doctors and nurses to step up for their troubled community, the emergency wasn’t medical. It was financial. Ruzhou, a city of one million people in central China, urgently needed a new hospital, their bosses said. To pay for it, the administrators were asking health care workers for loans. If employees didn’t have the money, they were pointed to banks where they could borrow it and then turn it over to the hospital. China’s doctors and nurses are paid a small fraction of what medical professionals make in the United States. On message boards online and in the local media, many complained that they felt pressured to pony up thousands of dollars they could not afford to give.”

November 9 – Bloomberg (Lulu Yilun Chen, Josie Wong, and Blake Schmidt): “Beijing will ensure only people loyal to it will become Hong Kong’s chief executive, damping the hopes of pro-democracy activists as tensions rise after five months of historic unrest in the city. The majority of representatives in Hong Kong’s cabinet, judiciary and legislative bodies should also support the central government, Zhang Xiaoming, China’s top official overseeing Hong Kong affairs, said…”

Central Banking Watch:

November 10 – Financial Times (Martin Arnold): “Christine Lagarde is to face calls for an overhaul of how the European Central Bank decides monetary policy as senior colleagues use the start of her presidency to argue for changes including formal votes on setting interest rates. Ms Lagarde… has invited the governing council, its top policymaking body, to present ideas on how to improve the central bank’s internal discussions. The issue is part of the agenda for her first council meeting on Wednesday. Officials at four of the national central banks represented on the governing council told the FT they would make proposals ranging from holding regular votes on monetary policy to requesting that the president does not pre-announce policy plans.”

November 14 – Bloomberg (Piotr Skolimowski, Yuko Takeo, and Jill Ward): “European Central Bank policy maker Francois Villeroy de Galhau suggested that euro-zone interest rates are unlikely to fall much further, though there’s also little chance they’ll rise soon unless governments such as Germany spend more. ‘The markets anticipate, reasonably in my view, that short-term rates are close to bottoming out,’ the French central bank governor said at an event in Frankfurt. But ‘these low short-term rates must and will remain in place -- it would undeniably be a mistake to raise ECB rates now.’”

EM Watch:

November 11 – Bloomberg (Sydney Maki): “A wave of social unrest -- from Chile and Ecuador to Lebanon -- has Moody’s… worried. The rating company said its 2020 outlook for global sovereign credit is negative, given unpredictable domestic and geopolitical risks and a push for populist policies that weaken institutions, help slow growth and boost the risk of economic and financial shocks. Governments will struggle to address further credit challenges in the coming year, analysts including Jaime Reusche, Calyn Lindquist and Marie Diron wrote… ‘‘Populist’ movements have emerged in recent years, either from the political fringe or from within established parties, often in reaction to years of stagnant incomes and rising income inequality,’ they wrote. ‘Escalating global and regional trade tensions increase the risk of financial or economic shocks, and the weakening of multilateral institutions dents policy makers’ ability to deal with those shocks.’”

November 12 – Bloomberg (Paul Wallace): “Spreading social and political unrest is taking a toll on Latin American assets. The region’s dollar bonds have lost 3.5% since early August, when Alberto Fernandez’s surprise victory in Argentina’s primary vote put the leftist on course for the presidency. That’s the worst performance among emerging markets, according to JPMorgan Chase & Co.’s indexes. The slump has been exacerbated over the past month by violent demonstrations that led Chile to declare a state of emergency and protests in Ecuador that forced the government out of the capital. Bolivia’s Eurobonds tumbled on Tuesday after President Evo Morales resigned and fled to Mexico in the wake of a disputed election that triggered weeks of unrest.”

November 12 – Bloomberg (Vrishti Beniwal): “India’s retail inflation quickened for the third straight month in October, breaching the central bank’s 4% medium-term target and possibly slowing the pace of monetary policy easing. Consumer prices rose 4.62% last month from a year earlier, the Statistics Ministry said... That is higher than the 4.35% median estimate…”

November 13 – Bloomberg (Rajesh Kumar Singh): “The biggest drop in India’s electricity demand in at least 12 years is hindering efforts of Indian lenders to recover a pile of loans to power producers that have soured. Banks had about 1.8 trillion rupees ($25bn) of stressed loans to India’s coal-fired power generators as of last year, according to the State Bank of India. Prospective bidders for these stressed generators are wary as demand from the country’s power distribution utilities contracted in three straight months to October.”

November 11 – Reuters (Aftab Ahmed and Nidhi Verma): “India’s industrial output fell at the fastest pace in over six years in September, adding to a series of weak indicators that suggests the country’s economic slowdown is deep-rooted… Annual industrial output contracted 4.3% in September… It was the worst performance since a 4.4% contraction in February 2013, according to Refinitiv data. Analysts polled by Reuters had forecast industrial output to fall 2%...”

November 12 – Bloomberg (Sydney Maki): “Argentina must repay $5 billion by the end of 2019. It doesn’t have much to work with. While the country’s foreign reserves total a still somewhat robust $43 billion, that figure shrinks markedly once untouchable assets such as dollar deposits of everyday Argentines and a credit line from China are stripped out. Analysts surveyed by Bloomberg News estimate that the amount that policy makers can actually freely spend is no more than $12.5 billion. One of the analysts, Siobhan Morden of Amherst Pierpont Securities, puts the figure at as little as $6.5 billion.”

November 9 – Reuters (Nadine Awadalla): “Lebanese bank deposits are safe and there is no need to panic, the head of the banking association said…, seeking to calm nerves about restrictions on some withdrawals imposed after nationwide protests. Already facing the worst economic crisis since the 1975-90 civil war, Lebanon has been pitched deeper into turmoil since Oct. 17 by a wave of rallies against the ruling elite that led Saad al-Hariri to resign as prime minister on Oct. 29.”

November 13 – Reuters (Tom Arnold): “Lebanese student Fatima Jaber’s family is struggling to pay off multiple loans with double-digit interest rates. Even before the start of protests that have forced out Lebanon’s prime minister, her confidence was fading in a financial system long regarded as a pillar of stability. But now, like many Lebanese, she thinks the system is broken. The loss of trust is eroding liquidity in the banking sector, increasing concerns that banks may not be able to help the government fund high budget and current account deficits. One of the world’s most indebted countries, Lebanon has a public debt equal to about 150% of its gross domestic product.”

Europe Watch:

November 9 – Reuters (Michael Nienaber): “Germany celebrated on Saturday the 30th anniversary of the fall of the Berlin Wall that divided East and West Germany, with President Frank-Walter Steinmeier thanking Eastern European neighbors for spurring on the peaceful revolution.”

Global Bubble Watch:

November 14 – Reuters (Craig Stirling): “The vulnerability of global growth to trade conflicts and dependence on U.S. momentum were exposed as Asia’s biggest economies faltered and Germany barely dodged a recession. A triple whammy of dreary data on Thursday began with sharp slowing in Japanese growth to a fraction of forecasts, before China reported the smallest increase in fixed-asset investment in at least two decades. In Europe, Germany posted surprise growth -- but only after a deeper contraction than previously estimated.”

November 15 – Bloomberg (Rich Miller): “The U.S., China and other leading economies confront a massive funding gap of $15.8 trillion in 2050 to ensure lifetime financial support for their aging populations. That’s according to a report spearheaded by former U.K. Financial Services Authority Chairman Adair Turner for the prestigious Group of 30, comprised of current and former policy makers. ‘If public policies and individual behaviors do not change, many countries’ pension systems will face a severe crisis, threatening either unaffordable public expenditure pressures or inadequate incomes for retirees,’ Turner said…”

November 11 – Financial Times (Hudson Lockett): “New debt and equity offerings often draw a crowd. But when investors last month placed more than $1tn worth of orders for a convertible bond issued by Shanghai Pudong Development Bank, about 140 times the $7bn raised, it was enough to shock even the most seasoned China investor. That $1tn is almost as large as the entire stock-market capitalisation of Apple or Microsoft… ‘It was a ridiculous amount,’ said Gerry Alfonso, head of research at Shenwan Hongyuan Securities…”

November 12 – Bloomberg (Jeremy Hodges and Jesper Starn): “Global greenhouse-gas pollution rose for a second year, ending a lull in emissions and putting the world on track for further increases through 2040 unless governments take radical action. The findings in the International Energy Agency’s annual report on energy paint a grim outlook for efforts to rein in climate change and mark a setback for the increasingly vocal environmental movement. It said emissions levels would have to start falling almost immediately to bring the world into line with ambitions in the Paris Agreement to limit temperature increases to well below 2 degrees Celsius (3.6 degrees Fahrenheit) since the industrial revolution.”

November 11 – Reuters (Colin Packham and Swati Pandey): “Fires raged across a swathe of Australia’s east coast on Tuesday, destroying more homes and shrouding Sydney in smoke from a blaze authorities fear they will be unable to control until next week.”

Japan Watch:

November 10 – Reuters (Daniel Leussink): “Bank of Japan policymakers debated whether extra easing measures were needed to hit the central bank’s inflation target at its last policy meeting, a summary of opinions showed…, as heightened risks threatened a fragile economic recovery.”

Fixed-Income Bubble Watch:

November 11 – Wall Street Journal (Matt Wirz): “Stocks rose to records in October. One corner of the debt market had a rougher time. Some securities in the $680 billion market for collateralized loan obligations, or CLOs, lost about 5% in October, reflecting worries about rising risk in the complex investment vehicles. The declines were a rare stumble for the CLO market, which has grown by about $350 billion in the past three years…, fueled by demand from government pensions, hedge funds and other yield-hungry investors. ‘We think there’s more volatility coming,’ said Maggie Wang, head of U.S. CLO strategy at Citigroup. ‘We recommend investors reduce risk and stay with cleaner portfolios and better managers.’ The trouble hitting CLOs could be a sign that the trillion-dollar market for high-yield bonds also is headed for a rough patch.”

Leveraged Speculation Watch:

November 11 – Bloomberg (Stephen Spratt): “Quantitative hedge funds are being blamed for the worst sell-off in Japanese government bonds since 2013 and the evidence is stacking up against them. Data comprising of open interest positions, fund flow and yields suggest that so-called Commodity Trading Advisors -- funds synonymous with trend-following quant strategies -- could have been cutting their large long positions in Japanese 10-year bond futures. ‘We see the recent sharp sell-off in JGBs as driven by CTAs’ substantial selling of JGB futures,’ said Koichi Sugisaki, a strategist at Morgan Stanley MUFG Securities…”

November 14 – Financial Times (Laurence Fletcher, Tommy Stubbington and Leo Lewis): “Hedge funds are taking the blame for a drop in Japanese government bond prices that has reverberated around global debt markets. Benchmark bonds in the US, Germany and the UK have all taken a tumble in recent weeks, driven by an unusual outbreak of optimism about the global economic outlook that has boosted equities.”

November 13 – Bloomberg (Heejin Kim): “South Korea’s $29 billion hedge-fund industry just saw its worst withdrawals ever, after its largest fund froze redemptions from investments on illiquid assets. Outflows from local hedge funds reached a record 700 billion won ($598 million) in the past two months, with the total assets under management falling to 34.2 trillion won, according to Gilbert Choi, an analyst at NH Investment & Securities. It is the first time since November 2017 that they suffer two straight months of outflows. The industry had rapidly grown in recent years amid the country’s record-low interest rates.”

Geopolitical Watch:

November 11 – Reuters (Jessie Pang and Josh Smith): “Police in Hong Kong battled pro-democracy protesters at several university campuses in sometimes savage clashes, as parts of the city were paralyzed including Hong Kong’s Central financial district that was tear-gassed for a second day running. The flare-ups occurred a day after police shot an unarmed protester at close range and a man was doused with petrol and set on fire in some of the worst violence since the protests began nearly five months ago in the China-ruled city.”

November 13 – Reuters (Kate Lamb and Jessie Pang): “Hong Kong pro-democracy protesters paralyzed parts of the city for a fourth successive day on Thursday, forcing schools to close and blocking highways, as students built campus barricades and the government dismissed rumors of a curfew.”

November 11 – Reuters (Jessie Pang and Josh Smith): “Police in Hong Kong battled pro-democracy protesters at several university campuses in sometimes savage clashes, as parts of the city were paralyzed including Hong Kong’s Central financial district that was tear-gassed for a second day running. The flare-ups occurred a day after police shot an unarmed protester at close range and a man was doused with petrol and set on fire in some of the worst violence since the protests began nearly five months ago in the China-ruled city.”

November 12 – Reuters (Kate Lamb and Jessie Pang): “China said… Taiwan was scaremongering with talk of a possible Chinese attack, after Taiwan’s foreign minister said Beijing could resort to military conflict to divert domestic pressure if an economic slowdown bites. As Taiwan’s presidential elections approach in January, China has stepped up a campaign to ‘reunify’ with what it considers a wayward province, wooing away the island’s few diplomatic allies and flying regular bomber patrols around it. And President Xi Jinping said in January that China reserves the right to use force to bring Taiwan under its control but will strive to achieve peaceful ‘reunification’.”

November 14 – Reuters (Ahmed Jadallah): “Wearing surgical masks, motorcycle helmets and clothes stained with blood and grime, they populate the protest barricades of Baghdad, chanting for the government to fall. Young Iraqis have been out in their thousands since mass anti-government protests kicked off on Oct. 1 in the capital and then quickly spread to the country’s south.”

November 11 – Reuters (Matt Spetalnick and Frank Jack Daniel): “Bolivia’s former president, Evo Morales, is flying to Mexico, where he has been granted asylum…, as unrest shook the South American nation. The Mexican government’s support has helped cement its emerging role as a bastion of diplomatic support for left-wing leaders in Latin America. ‘Evo Morales is now on the Mexican government’s plane, sent to ensure his safe journey to our country,’ Foreign Minister Marcelo Ebrard wrote…”