BCS - Barclays PLC
| Previous Close | 7.36 |
| Open | 7.72 |
| Bid | 7.46 x 43500 |
| Ask | 7.77 x 41800 |
| Day's Range | 7.70 - 7.79 |
| 52 Week Range | 6.54 - 9.53 |
| Volume | 5,579,906 |
| Avg. Volume | 2,470,871 |
| Market Cap | 33.396B |
| Beta (3Y Monthly) | 0.85 |
| PE Ratio (TTM) | 69.38 |
| EPS (TTM) | N/A |
| Earnings Date | N/A |
| Forward Dividend & Yield | 0.29 (3.95%) |
| Ex-Dividend Date | 2019-08-08 |
| 1y Target Est | N/A |
- Bloomberg
EM Review: Trade Truce Hopes, ECB Bazooka Fueled Risk Appetite
(Bloomberg) -- Emerging-market currencies posted the longest streak of gains since January 2018 and stocks rose to a six-week high as global monetary easing and prospects of a trade truce -- even if a temporary one -- made investors more comfortable with riskier assets. As the European Central Bank cut rates and announced a new stimulus plan, markets are waiting for the Federal Reserve to confirm bets on additional easing.The following is a roundup of emerging-markets news and highlights for the week ending Sept. 13.Highlights:U.S. officials have discussed offering a limited trade agreement to China that would delay and even roll back some U.S. tariffs in exchange for Chinese commitments on intellectual property and agricultural purchases, according to five people familiar with the matterBefore that, President Donald Trump had said he was postponing the imposition of 5% extra tariffs on Chinese goods by two weeksEarlier, Treasury Secretary Steven Mnuchin said on Fox Business that Washington and Beijing made “a lot of progress” in trade negotiationsThe U.S. is considering an executive order to crack down on shipments of fentanyl and counterfeit goods, according to people familiar with the matter, a move aimed in part at pressuring China to help the U.S. combat its opioid epidemicChina announced a range of U.S. goods to be exempted from 25% extra tariffs put in place last year, as the government seeks to ease the impact from the trade war without lifting charges on major agricultural items like soybeans and porkThe Asian country is considering whether to permit renewed imports of American farm goods including soybeans and pork, according to people familiar with the situationSaudi Arabia’s oil production was cut by half after a swarm of explosive drones struck at the heart of the kingdom’s energy industry and set the world’s biggest crude-processing plant ablaze -- an attack blamed on Iran by the top U.S. diplomatSaudi Aramco has picked a slew of banks to work on its planned initial public offering following intense lobbying by some of the world’s top dealmakers, people with knowledge of the matter saidThe European Central Bank cut the deposit rate to a record-low minus 0.5% and said it’ll buy 20 billion euros ($22 billion) a month of debt for as long as neededNorth Korea delivered a pointed message to the Trump administration -- firing two “short-range projectiles” into its eastern seas hours after saying it was willing to restart nuclear talks with the U.S.Turkey’s new central bank governor delivered another interest-rate cut that exceeded forecasts as he balances calls for drastic easing from President Recep Tayyip Erdogan with the market’s fragile sentiment. The key rate was cut to 16.5% from 19.75% and the lira advancedTrump discussed easing sanctions on Iran to help secure a meeting with Iranian President Hassan Rouhani later this month, prompting then-National Security Advisor John Bolton to argue forcefully against such a step, according to three people familiar with the matterEmerging-market exchange-traded funds received inflows for a second straight week, led by Mexican stocksAsia:Global funds no longer need approval to purchase quotas to buy Chinese stocks and bonds, the State Administration of Foreign Exchange saidChina’s producer price index fell further into contraction, signaling a worsening economic slowdown that threatens to add deflationary pressures to the global economy. Credit growth rebounded faster than expected in AugustThe country is opening the door to soybean meal shipments from Argentina, the world’s biggest exporter of the animal feed, as Beijing looks to pivot away from U.S. agricultural products amid a trade war with WashingtonSouth Korea’s unemployment rate plummeted to the lowest level in nearly six years in August, a rare positive sign for an economy facing headwinds from weak global demandPresident Moon Jae-in appointed to the position of justice minister a close confidant who faced a grilling in the media and in parliament over allegations of corruption and nepotismIndia is making all efforts to boost the economy and create jobs, Finance Minister Nirmala Sitharaman saidInflation accelerated in August, reaching the highest level since October, while remaining within the central bank’s medium-term targetThe nation has called a meeting of state-run bank chiefs next week to review lenders passing on interest-rate cuts to customers, people with the knowledge of the matter saidBank of Thailand Governor Veerathai Santiprabhob said the baht’s appreciation is a big concern for the country’s exporters. Finance Minister Uttama Savanayana said the central bank closely monitors the currencyThe government is ready to take new economic steps if the ones already rolled out are insufficient, Uttama saidThe World Bank projects Indonesia’s economic growth will slow to below 5% next year and warned of “severe” outflows if global risks worsenThe country expects to complete $10.9 billion of strategic projects this year, according to a statement issued by Coordinating Ministry for Economic AffairsIndonesian sovereign bonds will extend a rally as foreign funds keep chasing high-yield securities amid a global slowdown and a low interest-rate environment, according to a government officialThe nation must speed up reforms aimed at boosting foreign investment and bolstering the economy to counter risks of a global recession, President Joko Widodo saidMalaysia’s central bank kept its benchmark interest rate unchanged at 3% for a second straight meeting as the economy posts steady growth despite mounting global risks. “Domestic drivers of growth, alongside stable labor market and wage growth, are expected to remain supportive of economic activity,” Bank Negara Malaysia said in a statementThe government will need to seek fiscal space in its 2020 state budget to prioritize sustainable economic growth, Finance Minister Lim Guan Eng saidTaiwan’s exports rebounded more than expected in August, as the protracted China-U.S. trade war accelerates manufacturing relocation and the new iPhone launch cycle lifts demandChina again urges the Taiwan’s Democratic Progressive Party to immediately withdraw their “black hands” in Hong Kong, spokesman from China’s Taiwan Affairs Office saidPhilippines’ trade deficit widened to $3.4 billion in July after narrowing in the previous two months, compared with a revised shortfall of $2.4 billion in JuneCurrent account deficit narrowed to $1.7b in 1H from shortfall of $3.8b the year earlierHouse of Representatives approved bill gradually reducing transaction tax rate on listed stocks from current 0.6% to 0.1% in 2024Philippine central bank Governor Benjamin Diokno said another policy rate cut of at least 25 basis points could come as early as this monthEMEA:South Africa’s longer-maturity debt and the low level of foreign-currency bonds is “more of a strength than a weakness” for the country’s credit rating, according to Moody’s Investors ServiceBusiness confidence slumped to the lowest level since disinvestment from the country over its apartheid policies more than three decades agoFactory output contracted for the second consecutive month in July as the output of petroleum and chemical products and basic iron and steel continued to shrinkTalks around restructuring Eskom Holdings SOC Ltd.’s bonds must be approached carefully to avoid spooking the market, according to S&P Global RatingsThe Nigerian government is holding on to its economic growth projection of 3% this year even after expansion missed forecasts in the second quarterA local court upheld President Muhammadu Buhari’s victory in February elections, dismissing a challenge by the main opposition candidate that sought to overturn the winTurkey’s 12-month rolling current-account surplus widened to the highest level since January 2002 as weak consumer demand continued to curb importsZimbabwean Finance Minister Mthuli Ncube established a Monetary Policy Committee in his latest attempt to stabilize an economy in freefallSerbia’s central bank kept interest rates unchanged at a record low, pausing after two unexpected cuts to assess the impact of looser monetary policy on below-target economic growth and slowing inflation. The benchmark rate was held at 2.5%Surging inflation and a government plan to nearly double the minimum wage weren’t enough to make Poland abandon its pledge to keep borrowing costs at a record-low for the foreseeable future. The central bank left its key rate at 1.5%Romanian inflation slowed for the second month in three, with the lack of sustained direction in prices bolstering the central bank’s stance to keep interest rates on holdCzech consumer prices rose 2.9% from a year earlier in August, exceeding the 2.8% median analysts’ estimate and the central bank’s own projection of 2.6%The Tadawul All Share Index almost wiped out this year’s gains after Saudi Arabia picked banks for the Aramco saleAramco is considering a structure for its initial public offering that would prevent it from marketing the deal directly to fund managers in the U.S., people with knowledge of the matter saidSaudi Arabia held discussions with some of the kingdom’s wealthiest families about becoming anchor investors in Aramco’s mammoth share sale, according to five people with knowledge of the talksLebanon’s government is unlikely to tap international bond markets at current market rates, an official said, days after the indebted country’s finance minister announced plans for a sale of up to $2 billion in NovemberEgypt will approach investment banks “very soon” to advise on a plan to raise between $3 billion and $7 billion from international debt markets by June, a Finance Ministry official saidInflation eased in August to its lowest level since the start of 2013, paving the way for what could be the second-biggest push to cut interest rates across emerging marketsZimbabwe’s central bank raised its main interest rate to 70% to stabilize a plummeting currency and rein in surging inflationLatin AmericaArgentina’s recently imposed capital controls are now creating impediments for bondholders looking to collect payments as their securities come dueThe International Monetary Fund is unlikely to grant a $5.4 billion disbursement to Argentina without knowing the economic policy plans of the government that takes over in December, according to people familiar with the situationCountry’s economy minister is headed to Washington this month for more talks on the country’s record International Monetary Fund loan, which has hit trouble after the government imposed capital controls and delayed debt payments amid a market slumpDollar reserves continue to shrink as businesses and savers move money out of banks, increasing the chances that the government will need to tighten capital controls in coming weeksPresidential front-runner Alberto Fernandez is expected to visit Mexico on Sept 19 to meet with President Andres Manuel Lopez ObradorInflation was little changed at 54.5% in August, less than the 55.4% forecast by analystsMexico’s inflation slowed sharply in August to very near the central bank’s target, bolstering the case for policy makers to lower borrowing costs furtherManufacturing production increased 3% from a year earlier, three times more than economists expected and partly offsetting a drop in the broader industrial sectorState-run oil producer Petroleos Mexicanos tapped the international bond market and announced cash tender offers for outstanding bondsPemex also to receive a $5 billion capital injection from the Mexican government to improve its debt profileLopez Obrador sent Congress a 2020 budget plan that assumes a growth scenario many economists see as too optimisticBrazil’s economy contracted in July after two months of gains, according to a key gauge of activity, as the central bank prepares to cut interest rates again in its efforts to boost growthBrazil-based funds significantly reduced bets on falling interest rates last month as the real slumped 8%Retail sales rose five times more than economists expected in JulyGovernment has announced the rules for an auction of oil drilling rights worth $26 billion, setting the stage for Latin America’s top crude producer to become an even bigger player in the global marketA senior Brazilian lawmaker expressed confidence that the pension reform bill currently in the Senate won’t have to return to the lower house for further scrutiny, a move that would delay the crucial legislation and unsettle investorsThe special secretary for the tax office has resigned amid a fierce debate over the possible introduction of a tax on financial transactionsPresident Jair Bolsonaro has flip-flopped on key appointments to Brazil’s antitrust regulator, leaving the respected body in a state of paralysis and subject to accusations of political interferenceChile will submit a bill to Congress within six months to make it more attractive for foreign companies to sell stocks and bonds in the local market, Finance Minister Felipe Larrain saidPeru’s central bank kept its reference rate unchanged at 2.5% while signaling it’s ready to consider increasing stimulus after the economy’s worst slump in almost decadeThe government’s plan to reduce its fiscal deficit by increasing revenue faces risks due to slower economic growth, Fitch Ratings saidColombia’s economic committees for the Senate and Lower House approved the amount of 271.7 trillion pesos ($81 billion) for the nation’s 2020 budgetGovernment will take on 19.2 trillion pesos in new debt to fund its 2020 budget, Finance Minister Alberto Carrasquilla said\--With assistance from Colleen Goko and Selcuk Gokoluk.To contact Bloomberg News staff for this story: Yumi Teso in Bangkok at yteso1@bloomberg.net;Netty Ismail in Dubai at nismail3@bloomberg.net;Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.netTo contact the editors responsible for this story: Tomoko Yamazaki at tyamazaki@bloomberg.net, Karl Lester M. YapFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Reuters
Deutsche Bank is first to settle bond-rigging lawsuit, amid federal probe
Deutsche Bank AG will pay $15 million to resolve claims it conspired to rig prices of bonds issued by Fannie Mae and Freddie Mac , becoming the first of 16 financial services companies to settle litigation by investors. The German bank did not admit wrongdoing in agreeing to the settlement, which also requires that it bolster its antitrust compliance procedures and cooperate with the investors. The settlement was disclosed in filings late Wednesday in Manhattan federal court.
- Bloomberg
Carrefour Bid for Casino Would Be a Big Roll of the Dice
(Bloomberg Opinion) -- Talk of a tie-up between the French hypermarket stalwart Carrefour SA and its arch-rival Casino Guichard Perrachon SA is back, almost a year after a first stab at exploring the idea ended in a public clash of egos and accusations of dishonesty.Carrefour has again denied an offer is in the works, but shares of the heavily-indebted, heavily-shorted Casino rose 3% on Monday after BFM reported that the grocery chain was thinking about an approach. While there would be obvious advantages for both sides in a deal, navigating the politics around potential job cuts and getting to an agreed price would be tough. A selective sale of assets looks more likely.The time passed since this combination was last considered has at least made a difference in how the big personalities involved – Carrefour boss Alexandre Bompard and Casino’s boss and lead shareholder Jean-Charles Naouri – might think about a move to create France’s biggest supermarket group. In late 2018, Naouri’s debt-laden empire was under attack from short-sellers, Casino shares were trading near 20-year lows and trust was at a minimum. Despite both men’s similar background in France’s elite schools and civil service corps, nothing clicked. Bompard, 24 years Naouri’s junior, reportedly enraged his rival by using the informal “tu” to address him.The pressure on Naouri has intensified since his investment vehicle Rallye SA (through which he controls Casino) entered creditor protection in May, but Casino is in a happier place. Its share price has jumped about 50% in a year, giving it a market value of 5 billion euros ($5.5 billion). It’s no longer being squeezed to help pay off Rallye’s debts and its Monoprix and Franprix stores give it a leading position in Paris. Online delivery deals with Amazon.com Inc. and Ocado Group Plc are another positive.This has left Naouri in a better position than some of his hedge fund antagonists were anticipating. He still controls Casino, even if his shares have been pledged to bank lenders as collateral, and the rebound in the company’s market value is a bonus. Daniel Kretinsky, a Czech billionaire, has backed his strategy by buying a Casino stake. While there’s still a need to sell assets to lighten Rallye’s debt load, Naouri has options to avoid a fire sale.On Carrefour’s side, Bompard would be foolish not to take a serious look at Casino given the intense competition in France’s supermarket sector. Carrefour’s 20% share of the French grocery market is in danger of being chipped away by its closure of hypermarkets and the threat from German discount chains such as Lidl. Adding Casino’s 11% market share would remove a rival and save money. Barclays estimates that the deal could deliver about 1 billion euros in gross synergies, or 1% of the companies’ combined annual revenues.Politics and price are, however, serious hurdles. Casino shares already trade at a premium to the sector, and the company would probably demand a sweetener to give up control. Carrefour has cash after selling a stake in a China business, but a higher value bid would force it to try to extract more savings. That might not be easy with regulators almost certainly demanding store disposals and France’s president Emmanuel Macron desperate to avoid layoffs.Asset sales might be better, or maybe a Brazil-only deal. Carrefour’s and Casino’s combined Brazil entities would have a market share of 54% in that country so some disposals would be necessary. But it might still be a way to free up some cash for Naouri and improve Carrefour’s profit margins in Latin America. Given the barbs being traded between Brazil’s President Jair Bolsonaro and Macron over trade and the environment, this might be one idea on which the leaders can agree.To contact the author of this story: Lionel Laurent at llaurent2@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
Markets Take a Trip to Normalcy as Traders Await the ECB
(Bloomberg Opinion) -- There are times when the fundamentals get thrown out the window and greater forces take over the market. The first part of this week was a prime example as investors decided en masse to do some rebalancing by shifting out of stocks that have outperformed largely because of sheer momentum into those that have lagged, namely deeply discounted value stocks. This shift did little to overall valuations, with the MSCI All-Country World Index gaining a grand total of 0.01% on both Monday and Tuesday. Markets returned to some sense of normalcy on Wednesday, with the MSCI surging as much as 0.72% to its highest since the start of August. The move may be a sign investors are confident the European Central Bank on Thursday will pull out the proverbial bazooka to spur the region’s flagging economy and encourage other major central banks to follow suit. That means not only cutting interest rates and turning dovish on the outlook for rates but also announcing a plan to resume quantitative easing by buying at least 40 billion euros ($44 billion) of bonds each month for a year. Such speculation was reinforced by a rally in euro zone government bonds Wednesday and the Bloomberg Euro Index touching its lowest since mid-2017. But it’s also likely the ECB stores the bazooka and pulls out the pellet gun instead. Bank of France Governor Francois Villeroy de Galhau is one of several ECB policy makers who have signaled skepticism over the need for renewed QE. In fact, some strategists including James Bianco of Bianco Research consider the ECB’s decision to be perhaps the most important central bank decision of the next few weeks, and that includes the Federal Reserve’s meeting on Sept. 18.According to Bianco, if ECB policy makers do not deliver the expected rate cut or a new QE program Thursday, they would be “sending a powerful signal that they have indeed reached their limit” of effectiveness. The alternative isn’t that great, either, because it would mean policy makers “don’t know what else to do,” Bianco wrote in a research note. “This will only further damage their financial system,” he added. So while equity markets have benefited greatly from extraordinary central bank stimulus since the financial crisis, the times may soon be changing.THE GREAT BOND ROTATIONThe bond market, of course, also has a vested interest in the ECB’s decision. At least some of the backup in government debt yields globally the last week or so can be attributed to some doubts that the ECB will resume its QE program in light of the push-back from Villeroy and other officials. But, as always, there is more going on in the bond market, which has also been caught up in the rotation from “momentum” to “value,” skewing the signals being sent by bond yields. That can be seen in this month’s best-performing bond markets, which happen to have been the biggest losers in August. And this month’s losers were last month’s winners. The Bloomberg Barclays China Aggregate Index tumbled 2.95% in August even as the broader market rallied. This month, it’s up 0.61% while the broader market is down. Another big turnaround is taking place in the global high-yield bond market, which has gained 0.74% this month after tumbling 1.56% in August in its largest slide since October 2018. Government bonds globally are down 1.18% this month after surging 2.59% in August to match their best monthly performance since June 2016. But as with equities, this rotational move may come to an end with the ECB meeting Thursday. “We live in an interconnected world and any adjustment in European rates will have an effect on” rates in the U.S. and elsewhere, Bianco added in his research note. But if the ECB decides not to cut rates or resume QE, “we could start the conversation” on whether rates globally have bottomed.CAREFUL WHAT YOU WISH FORPresident Donald Trump took another shot at the Fed on Wednesday, tweeting that it should “get our interest rates down to ZERO, or less.” He ended the missive by calling policy makers “boneheads.” On the surface, zero or even negative interest rates sound attractive, but there is a growing sense that they do more harm than good, especially to the banking system. And a healthy banking system is generally accepted as a key to a healthy economy. Consider Europe, where the Euro STOXX Bank Index has dropped 39% from last year’s peak in January. The banking industry makes a large chunk of its money by borrowing at low short-term rates and lending the proceeds at higher long-term ones, pocketing the difference. That becomes impossible when rates are zero or negative and yield curves flatten as a result. Lenders including Deutsche Bank AG and UBS Group AG have already complained about the hit to their profitability from the ECB’s policies, potentially hindering their ability to supply the credit that fuels the economy, according to Bloomberg News’s Yuko Takeo and Nicholas Comfort. They point out that the ECB’s deposit rate used to be the interest banks received for keeping their excess cash at the central bank overnight, but at minus 0.4%, it has become a charge, one that Deutsche Bank says could cost it hundreds of millions of euros this year. Scope Ratings figures that euro-area banks have incurred 23 billion euros of charges at the ECB since negative rates started in 2014 and are now paying almost 7 billion euros a year. MEXICO’S LOOKING UPInverted yield curves happen when long-term rates in the bond market fall below short-term ones. This phenomenon is generally believed to augur a recession, or at least a severe economic slowdown. In the current environment, there is no shortage of inverted yield curves around the world. One place where an inverted yield curve may be sending false signal is in Mexico. The peso is one of the world’s best performers this month, appreciating 2.77% against the dollar, as recession fears ease and the nation’s inverted yield curve looks poised to turn positive. The 2-year/10-year swap rate spread now stands at just minus 2 basis points, compared with a nadir of 23 basis points a month ago, when Mexico seemed headed for recession, according to Bloomberg News’s George Lei. As it turned out, the nation managed to skirt two consecutive quarters of contraction, and the central bank provided an extra boost by cutting interest rates in August. Banxico’s decision to cut rates by 25 basis points on Aug. 15 helped send the spread higher because it was sooner than most people expected, said Jens Nystedt, a senior portfolio manager at Emso Asset Management. Dovish remarks from Mexican policy makers and a slowdown in inflation toward the 3% target also helped, Nystedt said.NATURAL GAS IS GETTING INTERESTINGMany traders got burned when natural gas suddenly shot up some 41% last November before tumbling 36% in December. The wild swings were widely thought to be tied to a complicated trade set up by one or more big investors that in essence bet on a gain in oil and a drop in natural gas. When oil started moving opposite of the desired direction, the trader, traders or even a company in the energy industry had to quickly reverse their positions, exacerbating the moves in oil and natural gas. Now the natural gas market is setting up for some more wild volatility tied to what traders believe will we a winter supply crunch. The premium that gas for delivery next March is fetching over the April contract, a spread known as the widow-maker for its volatility, has jumped 60% in the past two weeks, according to Bloomberg News’s Naureen S. Malik. Though production from shale basins is at a record, the demand boost is poised to limit how much is added to underground stockpiles. That’s stoking concern about a potential supply squeeze in the winter, when consumption of the heating fuel peaks, Malik reports. While gas prices have climbed over the past two weeks, futures are still near the lowest levels since 2001 for the time of year, straining producers’ balance sheets. That means this winter could be make-or-break for some explorers, said Rich Redash, head of global gas planning with S&P Global Platts.TEA LEAVESFor all the talk about nonexistent inflation, the data seem to be showing something different. The core U.S. consumer price index rose 0.3 percent in both June and July, the first back-to-back increases of that size since 2001. The government on Thursday is forecast to say that the measure rose 0.2% in August. But any increase above that is sure to roil markets, where high prices for most all financial assets have been predicated on minuscule inflation. The increases in June and July “combined with upward surprises on average hourly earnings in July and August suggest that firmer inflation pressures are finally re-emerging, and that soft inflation earlier this year was, in fact, transitory,” the team at Bloomberg Economics wrote in a research note.DON’T MISSHow Presidents Should Talk About the Fed: Narayana KocherlakotaTrump, So-Called ‘King of Debt,’ Doesn't Get It: Brian ChappattaThe Hopes and Fears of Markets Are Left to Politics: Conor SenItaly Has a Golden Bond Market Opportunity: Marcus AshworthNewton Saw This Crash in Momentum Stocks Coming: John AuthersTo contact the author of this story: Robert Burgess at bburgess@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
Barclays Activist Bramson Slams British Bank’s ‘Destructive Strategy’
(Bloomberg) -- Barclays Plc’s activist investor Edward Bramson has taken a fresh swipe at the bank, telling his investors that its new chairman must address the lender’s “destructive strategy.”Bramson, who became one of Barclays’s top investors last year, said in a recent letter seen by Bloomberg News that the securities unit is still far from competitive. However, it’s too early to draw a conclusion on whether Nigel Higgins, who took over the chairmanship in May, is making the right changes, Bramson wrote. Barclays’s Chief Executive Officer Jes Staley has been the key defender of its investment bank since taking the reins in 2015.“For the time being we think it is the best course to wait to see whether or not Mr Higgins can address Barclays’ current value destructive strategy with a scalpel or if more comprehensive change will be required,” Bramson said in the letter sent Sept. 3, which made no mention of Staley by name.Spokesmen for both Bramson and Barclays declined to comment.Staley has tightened cost controls and cut jobs in the last few quarters in an effort to hit profitability targets. Bramson, meanwhile, has long argued that focusing on the corporate and investment bank (CIB) is a mistake. The activist, whose Sherborne Investors Management LP holds stock and derivatives worth about 5.5% of Barclays, tried and failed to get a board seat and revamp the bank’s strategy in May.“Markets activities consume so much of the company’s assets and management attention that, without addressing them, Barclays will be unable to fix the profitability issues that plague the CIB and the group as a whole,” Bramson wrote.The division posted a 4% fall in half-year income to 5.2 billion pounds ($6.4 billion) in August, hit by lower banking fees and a 6% decline in markets income. The bank eliminated 3,000 jobs in the second quarter and is offloading businesses including its automated options business in New York.The investment bank “is not self-sustaining and is structurally uncompetitive. This is not as a result of simplistic sound bites such as low volatility, Brexit, or having a headquarters outside of the USA, but rather because Barclays’ strategy misaligned with the modern CIB marketplace,” according to the activist.To contact the reporter on this story: Stefania Spezzati in London at sspezzati@bloomberg.netTo contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
PG&E’s Busy Week Offers More Heat Than Light
(Bloomberg Opinion) -- Ostensibly, a lot has happened with PG&E Corp. this week. It emerged that San Francisco Mayor London Breed had offered to buy the city’s power grid from the utility. Then, PG&E filed a reorganization plan to emerge from bankruptcy. This all seems pretty important.It hasn’t registered with the stock. Having had a day or so to absorb the late-Monday court filing and a couple of days to mull Mayor Breed’s offer, the stock trades around the $11 level it’s been at for a few weeks.That makes sense. San Francisco’s proposal is like someone showing up at your hospital bed and offering to buy the bed. The $2.5 billion being proposed wouldn’t even cover 10% of the high end of estimated liabilities PG&E faces. In return, the company would give up its network in the second-largest city (by population) in its service territory; a city that is also wealthy, growing and doesn’t face serious wildfire risk, making it relatively more valuable.Apart from the company, the bankruptcy court and PG&E’s claimants aren’t likely to be thrilled about this either. Labor isn’t. State regulators and politicians should also be wary, as removing San Francisco could leave the remaining PG&E with that delicious cocktail of higher risk premium and fewer resources (see this). If that buyout proposal looks DOA, PG&E’s reorganization plan looks more TBD. This proposes raising up to $14 billion in new equity mostly via a rights issue, with some existing shareholders attaching backstop commitments. In lieu of a detailed capital structure for the emerging entity, it came with a clutch of letters from major banks such as Barclays Plc and Goldman Sachs Group Inc. expressing confidence they could arrange tens of billions of dollars of debt and equity finance for PG&E’s exit.The most controversial aspect, and the one that renders it all a bit moot at this point, is the plan’s cap on wildfire victims’ liabilities at $17.9 billion. As it was, CreditSights analysts were estimating liabilities north of $20 billion – and that was before the bankruptcy judge ruled last month that victims of the Tubbs Fire in 2017 could seek a jury trial to determine PG&E’s potential liability. Prior to this, a finding by CalFire, the state’s Department of Forestry and Fire Protection, that PG&E’s equipment wasn’t responsible for that fire led many to assume the company was off the hook. Now it could face potentially billions more in liability.Suffice to say, with the equity backstop contingent on the $17.9 billion cap and no more big fires, and the banks’ letters expressing confidence rather than binding commitment, the current plan looks more like a placeholder.Of course, this is a negotiation, and PG&E has to signal progress with a first draft of some sort to keep control of the process. But the cap on liabilities has drawn the anger of victims’ lawyers already. This matters in particular because PG&E’s filing still expresses the possibility of gaining legislative approval early next year to issue so-called Wildfire Victim Recovery Bonds. These would securitize a portion of future profits to fund payouts, thereby enabling shareholders to take only a temporary hit to value rather than permanent dilution from straight equity issuance. However, PG&E has failed once already on this front in Sacramento. It will be all too easy for opponents to fight the next push if they can point to a plan that covers bondholders and shields equity holders to a degree but caps payouts to victims.All of which means that, for all the noise, the balance of risk hasn’t changed. PG&E still faces pressure from rival plans, especially the big equity check being dangled by the Ad-Hoc Committee of Unsecured Bondholders. The uncertainty attached to the Tubbs trial and the potential for dilution loom large. Plus, this will all play out against the backdrop of California’s current wildfire season, with the northern part of the state displaying “above normal significant fire potential” this month.Back in late June, PG&E’s stock hit a summer peak of almost $24 on hopes that a mixture of state help and securitization would shield investors. As I wrote then, however, the reality is that PG&E needs a lot of new capital, and equity tends to take the hit in that situation. Three months on, the exact path out of Chapter 11, and what that will mean for its shares – which have fallen by more than half – remains murky. Having bought the rumor over the summer, there seems little rationale for buying the news now. To contact the author of this story: Liam Denning at ldenning1@bloomberg.netTo contact the editor responsible for this story: Mark Gongloff at mgongloff1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Zacks
Barclays (BCS) Cuts Jobs in Tokyo Fixed-Income Trading Unit
Barclays' (BCS) latest job-cut move in its Japanese fixed-income trading arm comes in response to the challenging operating backdrop across the globe.
- Bloomberg
California Senate Passes Bill Set to Transform Gig Economy
(Bloomberg) -- The California Senate passed a bill that could force Uber and other gig economy giants to reclassify their workers as employees. Such a change would secure labor protections for thousands of people across the state and deal a significant blow to companies that built multi-billion dollar businesses on independent contractors.Under the new law, Assembly Bill 5, people in California could generally only be considered contractors if the work they’re doing is outside the usual course of a company’s business. Companies like Uber Technologies Inc. and Lyft Inc., which rely on armies of drivers to service their customers, would likely fail that test without transforming how they do business. Employees are entitled to a minimum wage and overtime pay, neither of which is a common protection within the gig economy.Governor Gavin Newsom, a Democrat who’s seen as friendly to both labor and technology, has said he supported the bill, a signal that it may soon become law without a special exception for the gig economy. The State Assembly has already approved a version of the bill and it’s expected to pass the same legislation in a later vote.The cost could be significant and comes at a delicate moment for the two largest companies in the industry. Lyft and Uber are struggling to staunch accelerating losses and cratering stock prices. Just hours before the bill passed, Uber Chief Executive Dara Khosrowshahi said he was cutting more than 400 technical employees after eliminating a similar number of jobs earlier in the summer.Shares in Uber were down about 1% in New York Wednesday morning while Lyft was up less than 1%.“The State Senate made it clear: your business cannot game the system by misclassifying its workers,” Assemblywoman Lorena Gonzalez, the Democrat who authored the bill, said in a statement. “As lawmakers, we will not in good conscience allow free-riding businesses to continue to pass their own business costs onto taxpayers and workers. It’s our job to look out for working men and women, not Wall Street and their get-rich-quick IPOs.”Read more: Uber Has Bigger Problems to Worry About Than the D.C. ShutdownGiving employee status and benefits to workers in California would cost Uber and Lyft an additional $2,000 to $3,600 per driver annually, according to research from Barclays Plc and Macquarie Capital. That would be as much as $500 million for Uber in the state each year. California often sets the legislative tone for other states to emulate, and the costs could quickly add up if more follow suit.The largest companies in the gig economy have been trying unsuccessfully since last year to secure concessions that would forestall a reclassification of their workers. The companies appealed to state lawmakers to shield them from the new standard and have held talks with union leaders and the governor’s office.“We are now witnessing the dashing of the American dream,” Senator Jim Nielsen, a Republican, said on the Senate floor.Read more: Uber Makes Further Cuts to Its Staff as Losses Pile Up (1)Corporate efforts to secure a legislative deal may continue past the current legislative session, which ends this week. Meanwhile, gig companies are also setting up a fallback. Uber, Lyft and DoorDash Inc. each committed $30 million last month to potentially put the issue before voters as a 2020 ballot referendum.The California showdown has become the leading battleground in the U.S. debate over the rights of gig workers. Several Democratic presidential candidates endorsed the California bill and are backing proposals that would replicate the approach on a national scale.“The passage of this legislation could be a watershed in the reduction of inequality in society and the workplace,” said William Gould, Stanford University law professor and former National Labor Relations Board chairman. “Some of this depends upon the willingness of organized labor, plaintiffs lawyers and government to stand up and protest. On this, we must wait and see.”(Updates with shares in fifth paragraph)To contact the reporters on this story: Josh Eidelson in Palo Alto at jeidelson@bloomberg.net;Lizette Chapman in San Francisco at lchapman19@bloomberg.netTo contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, ;Peter Elstrom at pelstrom@bloomberg.net, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Zacks
Lloyds, Barclays to Make Extra Provisions for PPI Claims
Lloyds (LYG) and Barclays (BCS) are making extra provisions to be able to compensate customers, after the surge in last-minute claims related to the PPI scandal.
- Bloomberg
WeWork Mystery: Who Owns 75% of Its Junk Bonds?
(Bloomberg Opinion) -- To get a sense of how the market feels about the day-to-day drama coming out of WeWork, investors have little choice but to turn to its bonds.After all, the company has no publicly traded shares — and, if the latest twist in its saga is to be believed, that might be the case for longer than anticipated. Executives of WeWork and its largest investor, SoftBank Group Corp., are discussing whether to shelve plans for an initial public offering, people with knowledge of the talks told Bloomberg News. On top of that, the office-rental company may rely on junk bonds for funding for the foreseeable future or even explore a whole-business securitization, a WeWork executive said, according to a person familiar with the matter.Not surprisingly, WeWork’s junk bonds are tumbling. They fell below 100 cents on the dollar on Tuesday for the first time since the company filed to go public last month, with both the number of trades and overall volume reaching the highest in about a month. While a dip below face value doesn’t inherently spell doom, it’s nevertheless a sign that the bad news is starting to take its toll on investors.But here’s the mystery: Who exactly are those investors?We know who holds about 25% of WeWork’s $669 million in high-yield debt due 2025 because Bloomberg aggregates data from the most recent public filings. So, for instance, Lord Abbett & Co. held about $43.8 million as of May 31, or about 6.5%. The second-largest holder is Allianz SE, which includes funds from Pacific Investment Management Co.; grouped together, it owns about $21 million, or a bit more than 3%. Three State Street Corp. exchange-traded funds hold a combined $9.6 million, or 1.44%. In the period through July 31, funds from TIAA-CREF and Ameriprise Financial Inc. pared back their exposure. Still, that’s far from a complete picture. Only knowing who owns 25% of a company’s bonds is minuscule, even for the high-yield market. WeWork makes up about 0.05% of the Bloomberg Barclays U.S. Corporate High Yield Index. Here’s a sampling of other debt with nearly identical weightings and comparable maturities, and how much of its ownership is public:Lamar Media Corp. bond maturing in 2026: 47% known Seven Generations Energy bond maturing in 2025: 72% known J2 Global bond maturing in 2025: 51% known Navient Corp. bond maturing in 2021: 57% known Antero Resources Corp. bond maturing in 2023: 67% known CVR Partners LP bond maturing in 2023: 64% knownSuffice it to say, bonds in the high-yield index with lower publicly reported ownership than WeWork are few and far between. So if active money managers, ETFs, pensions(1) and life insurers make up only a quarter of investors, who else is left? Hedge funds would be a likely place to start looking. WeWork’s bond matures in less than six years and offers a yield of more than 8%. (At the height of the rally last month, it yielded closer to 7%.) The Bloomberg Barclays high-yield index has a comparable average maturity of 5.76 years, but its yield is just 5.6%. There’s been no indication that SoftBank and its affiliates own any of the securities, but they do own about 29% of WeWork stock, which shows just how much the Japanese conglomerate has riding on the company’s success. Opportunistic investors appear to have jumped into WeWork’s bond at least twice this year. The bond soared after the company’s April 29 announcement that it filed paperwork confidentially with the Securities and Exchange Commission to hold an IPO and then again after it filed its S-1 prospectus in August. As I wrote in May, an IPO could give WeWork a cash injection that ought to cover interest for a while. It would also give bondholders a layer of protection in the capital structure because public shareholders would take the biggest hit if WeWork fizzles.These big investors, whoever they may be, can’t be feeling too comfortable right now, given the state of the IPO. As for We Co., the parent of WeWork, becoming a regular presence in the capital markets, I’ll just say this: It’s one thing to be Netflix Inc. — whose stock price has more than doubled since the start of 2017 — and tap the high-yield bond market again and again (its bonds maturing in 2026 have 73.5% public ownership). It’s quite another to be WeWork, given that its IPO range could wind up closer to $20 billion, compared with the $47 billion valuation it had earlier this year. There is no shortage of investors, analysts and commentators who see WeWork as the height of market folly. It’s a company with an unusual corporate structure and a business model that seems destined to implode when the economic cycle turns.So far, the bond market isn’t convinced that WeWork is about to crash and burn. That is, if anyone can trust trading among investors who are largely unknown.(1) The California Public Employees' Retirement System, or Calpers, held about $2.6 million of the bond as of June 30, data compiled by Bloomberg show. It's possible other pension funds don't disclose such precise figures.To contact the author of this story: Brian Chappatta at bchappatta1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Bloomberg
Barclays Joins Deutsche Bank in Fixed-Income Trading Cuts
(Bloomberg) -- Barclays Plc is making cuts to its Japanese fixed income business as Chief Executive Officer Jes Staley slashes costs globally to counter weak profits at its markets unit.The British bank is parting ways with several salespeople and traders in Tokyo, according to people familiar with the matter who asked not to be named discussing information that isn’t public. The reductions were made in the last week, the people said.Barclays joins Societe Generale SA and Deutsche Bank AG in cutting their fixed income divisions, which are in the business of trading bonds. Banks are contending with a decade of low and negative rates, eroding trading profits -- and with no end in sight as the European Central Bank remains in easing mode. Japan has been in a similar environment for years. Deutsche Bank moved to eliminate workers in high-yield trading last week, while SocGen has focused the deep cuts to its markets division in fixed income.Barclays’s corporate and investment bank posted a 4% fall in half-year income to 5.2 billion pounds ($6.4 billion) in August, hit by lower banking fees and a 6% decline in markets income. Operating expenses for the unit were stable at 3.6 billion pounds.Staley has faced criticism from some shareholders over the performance of the investment bank, which is a centerpiece of his strategy. The American-born CEO is fending off activist investor Edward Bramson, who wants to see the investment bank shrink, by keeping a tighter control on expenses. The bank eliminated 3,000 jobs in the second quarter and is offloading businesses including its automated options business in New York.A Barclays spokeswoman declined to comment on the Tokyo cuts.(Adds detail of other banks cutting jobs in third paragraph.)To contact the reporters on this story: Viren Vaghela in London at vvaghela1@bloomberg.net;Harry Wilson in London at hwilson57@bloomberg.netTo contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion DakersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Financial Times
Activist investor calls on AT&T to rein in its sprawling empire
One scoop to start: SoftBank, the biggest outside shareholder in WeWork, is urging the lossmaking property group to shelve its hotly anticipated initial public offering after it received a cool reception from investors. Elliott Management, the activist fund founded by Paul Singer, has taken one of its largest positions ever, adding to the onslaught of “super campaigns” in some of America’s largest companies. With a market capitalisation of more than $270bn, the US telecoms group represents one of Elliott’s largest targets in recent memory.
- Bloomberg
Relief Rallies Are Neither Long Nor Fulfilling
(Bloomberg Opinion) -- After posting the biggest back-to-back weekly advance since early June for a total gain of 4.58%, the rally in the S&P 500 Index stalled as a new week dawned. Perhaps it’s because the increases were more about things not getting any worse, rather than any new reason for optimism about such fundamentals as economic growth, earnings and U.S.-China trade relations. The fact is, the risks around all three of those things aren’t going away anytime soon, as traders realized Monday.The Federal Reserve Bank of Atlanta’s GDPNow index – which attempts to gauge economic growth in real time – took another leg lower, falling to a below-trend rate of 1.467%. On the geopolitical front, the U.S. appears no closer to reaching a trade agreement with China, with the two sides only agreeing to talks next month in an effort to set up the parameters for further discussions. “Will there be a deal between China and the U.S.? I have my doubts,” Steve Eisman, the Neuberger Berman Group money manager whose bets against the housing market before the financial crisis were chronicled in Michael Lewis’s 2010 book “The Big Short,” said Monday on Bloomberg TV. “My impression is that China is not backing down on anything,” so to get a deal “Trump basically has to give in.” And when it comes to earnings, strategists are quickly downgrading their forecasts. The latest to do so is LPL Financial Chief Investment Strategist John Lynch, Citing the escalating trade war, he cut his 2019 earnings-per-share forecast for the S&P 500 to $165 from a prior estimate of $170, representing a paltry 2% to 3% growth rate for the year. “Slower economic growth hampers revenue, while paying tariffs and dealing with supply chain disruptions hurt profit margins,” Lynch wrote in a research note. “In addition, business uncertainty around future trade actions weighs on capital investments, which limits opportunities for companies to grow revenue, particularly industrial and technology companies, and caps gains in productivity” that “could boost profit margin.”A MILE WIDE AND AN INCH DEEPThe upside - if there is one – to the recent “correction” in the global government bond market is that it has shrunk the universe of debt with negative yields pretty significantly, to $15.6 trillion as of Friday from a peak of just over $17 trillion on Aug. 29. For those readers without calculators, that amounts to $1.4 trillion. This is good news for two reasons. The first is that the rapidly expanding universe of negative-yielding debt has raised concern that it could pose a systemic risk to the global financial system. After all, getting paid to borrow money isn’t natural. So, any decrease is a positive. The second is that the recent move shows it doesn’t take much of a market move to turn negative-yielding bonds into positive-yielding ones, mainly because those negative yields are relatively slim at an average of minus 0.38%, according to the Bloomberg Barclays indexes. That compares with an average of 1.23% for the global bond market. Holding a bond – especially a government bond – with a yield below zero percent isn’t much different than paying a bank for a safe deposit box to hold one’s valuables. You might not make any money, but you know the money you do have is safe, and paying 38 basis point for that peace of mind doesn’t seem too onerous in today’s environment.OIL JOINS THE PARTYMany riskier assets such as equities have broken through the top end of their recent trading range in a sign of optimism. Oil, though, was conspicuous by its absence. That changed on Monday as West Texas Intermediate crude futures surged as much as $1.64, or 2.90%, to $58.16 a barrel, the highest since July 31 on a closing basis. The move in crude had nothing to do with rising demand eroding a glut of supply and ratifying the idea seen in equities that perhaps the broader economy isn’t as bad as envisioned. Instead, the surge higher was all about an attempt by OPEC and its allies to reassert their control over the global oil market. That was demonstrated in comments by newly-appointed Saudi Energy Minister Prince Abdulaziz bin Salman, who said there won’t be radical change in the policy of the group referred to OPEC+. The group, which includes Russia, has cut crude production this year to prevent a glut and shore up prices. Meanwhile, the United Arab Emirates energy minister promised a push to get all members committed to curbs, but said there’s no recommendation to make deeper reductions, according to Bloomberg News Sheela Tobben. The answer to the question of whether the global economy is strong enough to withstand higher prices for such key raw materials as oil may soon be answered.REVERSING, BUT IN A GOOD WAYNo list of the many risks confronting the global economy and markets would be complete without mentioning a strong dollar getting stronger and a collapsing British pound. But recent moves in the currency market are starting to alleviate some of those concerns. The Bloomberg Dollar Spot Index has fallen for five straight days, its longest slump since June and mitigating some of the pressure on big, U.S. multinational exporters. It’s probably no coincidence that the S&P 500 Index jumped 1.79% last week as the dollar fell. S&P Global Ratings figures that 30% of the revenue of S&P 500 companies comes from outside the U.S. The Bloomberg British Pound Index jumped on Monday to its highest since July 26, bringing its gain to 3.34% since closing at a low for the year on Aug. 9. The move higher in sterling is a reflection of growing speculation that the U.K. will avoid crashing out of the European Union at the end of October without an exit deal that would potentially throw the global economy and markets into turmoil. The latest bit of optimism comes with Prime Minister Boris Johnson seemingly softening his stance on leaving the EU on Oct. 31 with our without a deal. There’s also the latest data showing the U.K. economy is holding up, growing at its fastest pace in six months in July. At least to currency traders, the world is looking like a less dangerous place, with the JPMorgan Global FX Volatility Index posting its biggest four-day decline since August 2011.THE LURE OF EMERGING MARKETS The weakness in the dollar has given emerging markets a boost, with the MSCI Emerging Markets Index of equities rising on Monday to its highest level since Aug. 1. That’s because every time the greenback lurches higher, there are doubts that emerging-market borrowers will have the ability repay the trillions of dollar-denominated debt taken out in recent years. In a sign of confidence, investors have added money to exchange-traded funds that buy emerging-market stocks and bonds for two straight weeks. Inflows to U.S.-listed emerging-market ETFs that invest across developing nations as well as those that target specific countries totaled $74.9 million in the week ended Sept. 6, compared with gains of $69.4 million in the previous week, according to data compiled by Bloomberg. Inflows total $381.9 million this year, meaning the past two weeks accounted for large chunk, or 38%, of all money that have poured into these funds in 2019. Now, many investors are saying that further gains in emerging-market assets may depend on what the European Central Bank does at its monetary policy meeting Thursday. A dovish decision that includes further monetary stimulus would likely keep demand for emerging-market assets strong. “The ECB meeting on Thursday will be crucial for setting the tone of sentiment in emerging markets,” Paul Greer, a London-based money manager at Fidelity International, whose emerging-market debt fund has outperformed 97% of peers this year, told Bloomberg News.TEA LEAVESThe best word to describe sentiment among small U.S. business owners may be “sticky.” Despite evidence of a slowing economy, the National Federation of Independent Business’s monthly index of sentiment among this group has risen in five of the past six months. At a reading of 104.7 in July, the gauge is closer to its record high of 108.8 in August 2018 than its average of 98.3 since 1975. But could the report for August due to be released on Tuesday finally show that confidence is starting to wane? Unlikely, according to economists, who expect only a slight pullback to 103.5, which would still be higher than all but two others months this year. But as Bloomberg Economics points out, anecdotal evidence, such as respondents’ comments in the August non-manufacturing Institute for Supply Management survey, suggests that existing trade-war tariffs “are affecting companies’ costs, particularly in the accommodation, food services and construction sectors; many small businesses are concentrated in these industries. As such, the re-escalation of trade tensions could drive small-business sentiment down.”DON’T MISSFed and ECB Are Stuck in a Shrinking Corner: Mohamed A. El-ErianMario Draghi Is Breaking Out the Bazooka Again: Marcus AshworthA Stronger Yuan Is Manna for Emerging Markets: John AuthersThe World's Oil Glut Is Much Worse Than It Looks: Julian LeeFracking Is the Bridge to a Fully Renewable Future: Noah SmithTo contact the author of this story: Robert Burgess at bburgess@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
- Investopedia
U.S. Banks Dominate After 2008 Crisis Amid Uncertain Growth Outlook
The biggest U.S. banks have grown bigger since the 2008 financial crisis, and now analysts are downgrading their stocks as recessionary fears rise.
- Bloomberg
EM Review: Risk Wagers Returned as Trade Talks Set to Resume
(Bloomberg) -- Emerging-market equities and currencies posted their biggest weekly gains since June last week as the prospect of renewed U.S.-China trade talks, expectations of a September Fed rate cut and easing tensions in Hong Kong bolstered risk sentiment. Central banks in Chile, China and Russia eased monetary policies by cutting interest rates or the required reserve ratio.The following is a roundup of emerging-markets news and highlights for the week ending Sept. 8.Read here our emerging-market weekly preview, and listen to our weekly podcast here.Highlights:Federal Reserve Chairman Jerome Powell said policymakers will act “as appropriate” to sustain the U.S. expansion after August non-farm payrolls grew less than expected; the developments reinforced bets that the Fed will lower interest rate by 25bps at its Sept. 17-18 meetingFederal Reserve Bank of Boston President Eric Rosengren said the U.S. economy remains “relatively strong” despite clearly heightened risks, leaving him unconvinced the central bank needs to cut rates at its meeting this monthA key U.S. factory gauge unexpectedly contracted for the first time since 2016. The Institute for Supply Management’s purchasing managers index fell to 49.1 in AugustStill, data Thursday showed the services sector is expanding, hiring continues apace and durable goods are being boughtOn Friday, weak August job gains signaled the U.S. labor market’s slowdown is deepening as the trade war with China takes a toll on the economyPresident Donald Trump sought to prod China into doing a trade deal before the U.S. presidential election in November 2020, or face even more difficult negotiations during his potential second termChina and the U.S. announced that face-to-face negotiations aimed at ending their tariff war will be held in Washington in the coming weeks, amid skepticism on both sides that any substantive progress can be madeChina hasn’t requested a delay in tariffs set for Oct. 1 and there are no conditions ahead of upcoming trade talks, White House economic adviser Larry Kudlow told BloombergChina shrugged off Trump’s latest escalation of the tariff war, with state media signaling the government is ready to weather the economic turbulence as no progress to resolve the standoff is in sight. The Trump administration slapped tariffs on roughly $110 billion of Chinese imports on Sept. 1China’s central bank reduced the required reserve ratio by 50bps to the lowest level since 2007, injecting liquidity into an economy facing both a domestic slowdown and trade-war headwinds; the new ratio will take effect on Sept. 16China is filing a complaint at the WTO against U.S. tariffs under the dispute settlement mechanism, the Ministry of Commerce saidChina’s exports unexpectedly contracted in August, with sales to the U.S. tumblingExports decreased 1% in dollar terms from a year earlier, while imports declined 5.6%, leaving a trade surplus of $34.84 billion, the customs administration said Sept. 8. Economists had forecast that exports would grow 2.2%, while imports would shrink by 6.4%. Shipments to the U.S. fell 16% from a year earlierHong Kong’s embattled leader, Carrie Lam, formally withdrew legislation to allow extraditions to ChinaHong Kong cut to AA from AA+ as months of persistent conflict and violence are testing the perimeters and pliability of the “one country, two systems” framework that governs its relationship with China, Fitch says in statementSouth Africa averted a second recession in as many years after economic growth rebounded in the second quarterJPMorgan Chase & Co. will start a phased inclusion of Chinese government debt into its benchmark emerging-market indexes, potentially ushering in a fresh overseas influx into the world’s second-largest bond marketSaudi Arabia removed Energy Minister Khalid Al-Falih from his position as Chairman of Saudi Aramco, the second time his role has been scaled back in less than a week, as the government prepares to sell shares in the state-owned oil companyKing Salman replaced him with his son, Prince Abdulaziz bin Salman, a longtime top Energy Ministry officialAsia:China’s foreign-currency holdings rose in August, signaling the pressures from capital outflow remain muted despite the yuan’s rapid depreciationReserves climbed to $3.107 trillion from $3.104 trillion in July, the People’s Bank of ChinaThe outlook for China’s manufacturing sector deteriorated further in August, underlining the weakness in the domestic economy just as a new round of tariffs kicks in. Separate data showed Caixin manufacturing PMI came in at 50.4 in August, above estimate 49.8Economists are downgrading their forecasts for economic growth in China again, to below a level seen as necessary for the Communist Party to meet its own goals in time for its centenary in 2021More Chinese companies are defaulting on private bonds this year as the slowing economy weighs on weaker companiesSouth Korea’s inflation fell to zero for the first time ever and economic growth was revised slightly lower. But the Bank of Korea said inflation will rebound around the end of this year as base effect from agricultural and oil products continues for a whileExports extended their slump in August as an escalating feud with Japan adds to uncertainties for the economy already elevated amid the U.S.-China trade warIndonesia plans to cut the corporate tax rate and scrap a levy on dividends to help companies attract more foreign investment amid a global slowdownThe nation will promote its manufacturing sector to accelerate economic growth and rein in a persistently high current account deficitThere is room for interest-rate cuts aimed at fueling growth in key sectors of the economy, especially manufacturing, according to Bank Indonesia Deputy Governor Dody Budi WaluyoData showed inflation accelerated to a 20-month high of 3.49%, though still within the central bank’s 2.5%-4.5% targetThailand’s Cabinet approves 518.8 billion baht ($17 billion) central budget for fiscal year 2020, starting Oct. 1Finance Minister Uttama Savanayana said the government isn’t worried about the level of household debt but central bank and finance ministry are closely watching the situationThai inflation may fall below a target of 1%-4% this year on low energy prices, Bank of Thailand Assistant Governor Titanun Mallikamas said; August inflation slowed to seven-month low on oil pricesFinance Minister Nirmala Sitharaman is counting on a record $24 billion windfall from the Reserve Bank of India and a budgeted 1.05 trillion-rupee ($15 billion) income from asset sales to fund the fiscal deficit of 3.3% of gross domestic product in the year through March 2020India will gradually consider increasing access to foreign investors to the rupee debt market in the cash as well as derivative segments, Reserve Bank of India Deputy Governor Bibhu Prasad KanungoAn Indian state-owned refiner has swooped in to buy American oil that was en route to China but due to arrive after new tariffs kicked inEconomists cut their forecasts for India’s economic growth and predicted deeper interest-rate cuts after data showed a sharper-than-expected slump in outputIndia raised duty on Malaysia refined palm oil imports to 50%Malaysia’s exports unexpectedly increased in July, up 1.7% on the year compared with estimate 2.5% declinePhilippine’s inflation cooled to a near 3-year low in August and central bank Governor Benjamin Diokno said easing price-gains will be a factor at its rate meeting in SeptemberThe economy is likely to recover in the second half of the year, allowing the central bank to differentiate its policy from peers that are also cutting interest rates, a deputy governor saidTaiwan’s cabinet approved a special budget bill for purchase of new advanced fighter jets, with maximum limit set at NT$250 billion ($8 billion), Ministry of National Defense saidTaiwan continues anti-dumping tariff on China, Korea steelEMEA:The pieces are falling into place for Turkey’s central bank to follow its record interest-rate cut with more monetary easing as inflation heads for lows not seen since last year’s currency crashPresident Recep Tayyip Erdogan repeated his expectations that lower borrowing costs would give a boost to Turkey’s sluggish economy, a clear signal to the nation’s central bank a week before it decides on the level of the benchmark interest rateThe nation’s economy fared better than forecast in the second quarter, but growth will likely fall far short of the government’s expectations for the full yearFormer economy czar Ali Babacan is planning to establish his own political party by the end of this year to challenge Erdogan’s 16-year rule, a person close to Babacan saidSouth Africa’s central bank is “comfortable” with its forecast that the economy will grow 0.6% this year, Governor Lesetja Kganyago saidThe nation’s current-account deficit widened in the second quarter to the highest level in more than a year as the trade balance swung to a deficit for the first time since the first quarter of 2018Russia’s central bank lowered its key policy rate by 25bps to 7%, in line with market expectations; policymakers said more monetary easing is possible as inflation fell closer to a 4% targetRobert Mugabe, who ruled Zimbabwe for 37 years and plunged the southern African nation into political and economic chaos as he violently clung to power, has died. He was 95Nigeria wants to offer naira futures of as long as 10 years to help cushion against foreign-exchange risks and attract longer-term funding to Africa’s top oil producerGhana’s central bank has additional space to loosen policy thanks to the global move toward lower interest rates, as long as inflation slows, according to Governor Ernest AddisonLebanon bought itself some time with the market and won a reprieve from a downgrade deeper into junk by S&P Global RatingsA group of international funds including BlueBay Asset Management are clubbing together with Middle Eastern investors, seeking to force Etihad Airways into paying back bonds that funded its overseas affiliatesDubai will set up a committee to balance property supply and demand as a slump in prices weighs on developers in the Middle East’s business hubThe U.S. placed new sanctions on Iran, and a top American official signaled more measures are coming while deflecting questions about French diplomatic efforts meant to help Tehran restart oil salesA senior U.S. Treasury official is in the United Arab Emirates to meet with the chiefs of the country’s banks and shipping companies as the Trump administration seeks to further tighten sanctions against the Iranian regimeEgypt’s stock exchange aims to introduce short selling by December, part of a broader effort to boost liquidity in a market that’s also anticipating a wave of initial public offerings and stake sales by public-sector companiesThe Kuwait Capital Market Authority will start next month a public offering of its 50% stake in the local stock exchangeLatin AmericaArgentinians and investors alike are assessing the impact of President Mauricio Macri’s decision to impose capital controls -- a blunt policy reversal aimed at containing the country’s escalating financial crisisThe leftist front-runner for the the country’s presidency said that the country will honor its debts, “as it always has”; the debt problems needed to be resolved without hurting ordinary Argentinians, he saidInternational Monetary Fund is expected to distribute the next tranche of its loan accord after the country fulfilled all the lender’s requirements, Macri saidMSCI says it’s analyzing the impact of capital controls on the accessibility of Argentina’s equity marketsA $15 billion pile of provincial bonds is lurking below the surface of Argentina’s already imposing sovereign debt loadOil- and gas-rich Neuquen province won’t seek to restructure outstanding dollar debt, according to Daniel Marx, a financial adviser to the provinceEscalating financial crisis is prompting economists to replace forecasts for a rebound in growth in 2020 with predictions of a third year of contractionREAD: Here Are the Argentine Notes Affected by the Debt ReprofilingBrazil’s industrial production fell for the third consecutive month in July, frustrating an expected pickup in activity at the start of the third quarter; August inflation slowed from the month before, increasing the chances that the central bank will cut rates further at its Sept. 18 meetingLawmakers introduced a separate bill that will expand the reach of the pension reform proposal and ensure savings of up to 1.4 trillion reais ($340 billion) over a decadeSenate’s Constitution and Justice Committee approved the pension reform bill on WednesdayBrazil is worried that “setbacks” to the Mercosur trade bloc could harm its economic recovery should Argentina’s opposition win the presidency in October, according to Foreign Minister Ernesto AraujoPresident Jair Bolsonaro’s government saw its disapproval rating increase after a number of controversies, including the Amazon fires and the appointment of his son as ambassador to the U.S.Chile’s central bank lowered its benchmark interest rate by 50 basis points to 2%, a nine-year low, and hinted on more reductions to come as it looks to stimulate an economy that has been caught between a global trade war and weakening domestic demandPolicy makers cut their 2019 growth forecast and reiterated the dovish outlook for rates in its quarterly monetary policy reportMain fiscal risk to Mexico comes from state-owned oil company Pemex, which will require much more support than was reflected in government plans, according to Moody’s sovereign analyst Ariane OrtizMexico’s growth will be key for its credit rating, according to OrtizPresident Andres Manuel Lopez Obrador sent Congress a 2020 budget plan on Sunday that assumes a growth scenario many economists see as too optimistic. Mexico’s economy will expand 1.5% to 2.5% in 2020, according to the proposal submitted by Finance Minister Arturo Herrera\--With assistance from Philip Sanders.To contact Bloomberg News staff for this story: Yumi Teso in Bangkok at yteso1@bloomberg.net;Netty Ismail in Dubai at nismail3@bloomberg.net;Aline Oyamada in Sao Paulo at aoyamada3@bloomberg.net;George Lei in New York at glei3@bloomberg.netTo contact the editors responsible for this story: Tomoko Yamazaki at tyamazaki@bloomberg.net, Cormac MullenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Bloomberg
Japan’s Economy Grows at Slower Pace as Capex Proves Less Strong
(Bloomberg) -- Japan’s economy expanded at a slower pace in the second quarter than initially reported, as growth in business investment proved less robust than first thought.Gross domestic product grew at an annualized pace of 1.3% in the three months through June from the previous quarter, revised Cabinet Office data showed Monday, with strong consumer spending the main driver of the expansion. That compared with a preliminary reading of 1.8%. The revised figure matched analysts’ median estimate.Economists had expected overall growth to be smaller than first estimated after finance ministry figures released last week showed manufacturers cutting back on business investment as escalating trade tensions darken the global outlook. That contrasts with the stance of more domestic-oriented non-manufacturers, which are continuing to ramp up capital spending as they automate processes to cope with a labor shortage.Key InsightsConsumer spending has helped power growth this year as exports have fallen due to a slowing global economy and the U.S.-China trade war. Private spending is expected to continue showing strength through the third quarter, before taking a hit from a sales-tax increase in October.The U.S.-China trade war is casting a shadow over the global outlook, and by extension the prospects for continued growth in Japan’s trade-dependent economy. Japan is also keen to clinch a trade deal with the U.S. that would avert tariffs on auto imports.Still, Japan’s economy has continued to expand despite gloomy forecasts from economists expecting the global slowdown to buckle growth. While the export sector and manufacturers are showing signs of strain, domestic demand and investment by non-manufacturers remain solid for now.The latest growth data come ahead of a Bank of Japan policy meeting next week where some economists are expecting the central bank to take further easing action to ward off any rises in the yen that could hit companies’ profits and invite downward pressure on prices.The growth figures show the economy is holding up while financial markets and the yen remain relatively stable, said Kazuma Maeda, economist at Barclays Securities. “Even possible action by the European Central Bank and the Federal Reserve seems priced in to markets. Considering all these points I think the BOJ will choose not to waste any policy ammunition at the September meeting.”What Bloomberg’s Economists Say“In sum, these revisions don’t add up to anything that would challenge our view that the economy remains strong enough to weather a sales-tax hike in October...the main risk we see is the threat of U.S. protectionism hitting Japan’s all-important auto sector.”\--Yuki Masujima, senior economistClick here the view the piece.Get MoreBusiness investment rose 0.2% from the previous quarter. Economists forecast was for a 0.7% rise.Public investment was revised up to growth of 1.8% from 1.0%, another factor that supported the expansion.Private consumption increased 0.6% from the previous quarter in line with a median estimate.The current account balance for July was a surplus of 2.0 trillion yen, compared with a 2.05 trillion yen surplus estimated by economists.\--With assistance from Toru Fujioka and Tomoko Sato.To contact the reporter on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.netTo contact the editors responsible for this story: Paul Jackson at pjackson53@bloomberg.net, Henry HoenigFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Moody's
San Bernardino County Transportation Authority, CA, Subordinate Sales Tax Revenue Commercial Paper Notes (Limited Tax Bonds), Series A Notes, and Series B Notes, $100MM -- Moody's assigns P-1 to San Bernardino County Transportation Authority LOC-backed subordinate CP Notes Series A & B
Moody's Investors Service ("Moody's") has assigned P-1 letter of credit-backed ratings to San Bernardino County Transportation Authority Subordinate Sales Tax Revenue Commercial Paper Notes (Limited Tax Bonds) Series A and Series B (collectively, the Notes). Barclays Bank PLC (the Bank) will issue a letter of credit (LOC) to support the Notes. Upon the effective date of the LOC, the rating on the Notes will be based on (i) the LOC provided by the Bank, (ii) the structure and legal protections of the transaction which provide for timely payment of principal and interest to Note holders, and (iii) our evaluation of the credit quality of the Bank issuing the LOC.
- Bloomberg
Boris Johnson ‘Would Rather Be Dead’ Than Delay Split: Brexit Update
(Bloomberg) -- Follow @Brexit, sign up to our Brexit Bulletin, and tell us your Brexit story. Boris Johnson’s six-week-old premiership was thrown into yet more disarray after his brother quit the government in protest at his Brexit strategy. After three days of humiliation, the beleaguered prime minister launched a fightback in a speech in northern England, appealing directly to the public for an election to resolve Britain’s political crisis. He said he would “rather be dead in a ditch” than ask the European Union to delay Brexit again.Key Developments:Minister Jo Johnson resigns, citing tension between “family loyalty and the “national interest”Johnson making appeal for election Prime Minister will try again to persuade MPs to trigger an early general election on MondayHouse of Lords debating bill to block no-deal Brexit until FridaySplits appear in cabinet over Johnson’s tacticsThe pound rose 0.6%U.K. Said to Want to Unpick Deal (6:05 p.m.)Boris Johnson wants to remove several parts of the deal that was struck between the U.K. and EU in November, according to an official briefed on Wednesday’s negotiations in Brussels.David Frost, Johnson’s envoy, told the European Commission the U.K. wants to:Remove many articles of the contentious Irish border “backstop,” leaving only provisions on citizens’ rights, the common travel area and single electricity market on the island of Ireland. He didn’t say what the U.K. wanted in its place.Take out references in the political declaration on the future relationship to the “level playing field” which would keep the U.K. aligned to many of the EU’s standards. The EU says this is necessary for an ambitious free-trade agreementChange the way the agreement would be governed to take out references to the European Court of Justice. The EU said this would affect future police and judicial cooperation.Johnson Doubles Down on Push for Oct. 15 Election (6 p.m.)Boris Johnson pledged to hold a general election on Oct. 15, or even earlier, if opposition Labour Party leader Jeremy Corbyn wants that. The prime minister was responding to a question about whether he can be trusted not to shift the date of an election in order to take the U.K. out of the EU without a deal.“We want an election on October 15 and indeed earlier if he wants: :Let’s crack on with it,” Johnson said. “If he wants to avoid a no-deal Brexit, or if he wants to avoid a hard Brexit then he should believe in himself to go to Brussels on Oct. 17 to that crucial summit and sort it out.”The premier said the current situation is unsustainable. “I really don’t see how you can have a situation in which the British ability to negotiate is absolutely torpedoed by Parliament in this way, with powers of the British people handed over to Brussels so that we can be kept incarcerated in the EU without that actually being put to the people in the form of a vote,” he said.Johnson Glosses Over Split With Brother (5:35 p.m.)Johnson was asked about his brother Jo’s decision to quit the government earlier in the day, citing a conflict between family loyalties and the national interest (see 11:30 a.m.). He glossed over questions about whether he was acting in the national interest and said “people disagree about the EU.”“Jo doesn’t agree with me about the EU because it’s an issue obviously that divides families, that divides everybody,” said Johnson, before noting that his brother supports his wider agenda for the country.The premier also said he’d spoken to his brother earlier in the day, and praised his service as a minister for science and universities.Johnson: ‘Rather be Dead’ Than Delay Brexit (5:30 p.m.)Johnson said he would “rather be dead in a ditch” than ask for a delay in Brexit beyond Oct. 31.Answering questions after a speech in northern England, Johnson said he guaranteed that he wouldn’t ask for an extension from the EU while he is prime minister. But he dodged the question when he was asked if this meant he would resign rather than sign up to another delay.Johnson Makes Plea For Election (5:18 p.m.)Johnson is making a speech at a police academy in the north of England in which he is expected to make a plea for a general election.He will also reassert his pledge to recruit 20,000 police officers and trumpet his commitment to law and order as he gets a head start in the campaign for votes.But on a stage with dozens of police officers, his surroundings may be a gift to opponents who have accused him of staging a “coup” by suspending Parliament -- and to sketch writers likely to suggest he’s taking his commitment to “taking back control” to a new level.Johnson to Meet Varadkar on Monday (4:45 p.m.)Prime Minister Boris Johnson will travel to Dublin early on Monday to meet his Irish counterpart Leo Varadkar. He’ll return to London in time to be in the House of Commons for the key vote on a general election in the evening, his spokeswoman, Alison Donnelly, told reporters.U.K. Offers Banks $1.6b to Guarantee Brexit Loans (3:45 p.m.)Business Secretary Andrea Leadsom and other senior ministers met with lenders including HSBC, Lloyds and Barclays on Thursday to encourage them to support small and medium-sized companies through Brexit.The state-backed British Business Bank has 1.3 billion pounds ($1.6 billion) available to help banks lend money to businesses that need it, the Business Department said in an emailed statement. “Lenders must empower their SME customers to seize the huge variety of opportunities that lie ahead as we leave the EU on October 3,” Leadsom said.Leadsom was joined in the meeting by Michael Gove, the cabinet minister in charge of no-deal Brexit preparations, Economic Secretary to the Treasury John Glen and Small Business Minister Kelly Tolhurst. Other lenders included Bibby Financial Services, Virgin Money, Metro Bank, RBS, Santander and TSB.Johnson Calls Corbyn ‘Chlorinated Chicken’ Again (1:15 p.m.)Boris Johnson met U.S. Vice President Mike Pence in Downing Street, and used the opportunity -- while talking about a future free-trade deal -- to make the same joke as Wednesday when he called opposition Labour leader Jeremy Corbyn a chicken because he didn’t vote for an early general election .“We will make sure we do everything we can to increase free trade,’’ Johnson told Pence. “The National Health Service is not on the table as far as our negotiations go -- we’re not too keen on that chlorinated chicken either. We have a gigantic chlorinated chicken already here on the opposition bench.”Pence said the U.S. is “ready, willing and able” to offer the U.K. a trade deal.No-Deal Bill to Get Rapid Royal Assent (1:15 p.m.)Leader of the House of Commons Jacob Rees-Mogg said that the bill passed by MPs last night blocking a no-deal Brexit will get royal assent -- come into law -- “speedily” once it is debated for the final time in the Commons on Monday. The bill is currently in the House of Lords, and is due to return to the Commons, potentially with amendments, by Friday evening.Gove Sees Johnson Resignation as Unlikely (1:05 p.m.)Michael Gove, the Cabinet minister in charge of no-deal planning, is still speaking to the House of Commons committee on Brexit. Asked whether Boris Johnson would resign rather than ask for another delay, he said: “I don’t think the prime minister has any intention of resigning.”Under legislation working its way through Parliament, Johnson would be compelled to seek a delay to Brexit if by Oct. 19 he’s failed to secure a new Brexit deal or persuade MPs to back a departure without a deal. The premier said in reaction: “I refuse to do this.” Instead, he wants a general election before then -- but MPs refused to vote for one.That means if Johnson fails to secure an election, on Oct. 19 he’d be faced with the conundrum of either writing the letter or disobeying the law.Berger: Not Clear Where She’ll Stand for Lib Dems (1 p.m.)Luciana Berger, who joined the Liberal Democrats as an MP Thursday, said it was not yet clear if she will stand in the district of Liverpool Wavertree at the next election because of the party’s localized decision-making structure. It’s “not a decision for me,’’ she told Sky News. “I’d like to remain making a contribution to public life.’’Berger quit the Labour Party in February citing anti-Semitic bullying. She has remained as an independent candidate until today. The Liverpool Wavertree district has a strong Labour history and the Liberal Democrats have already selected a candidate for the area.MPs Will Vote Again on Early Election (12:50 p.m.)Leader of the House of Commons Jacob Rees-Mogg laid out a list of motions that will be debated in the House of Commons on Monday, culminating in a “motion relating to an early parliamentary general election.”It will be a second attempt by the government to force an early general election -- the next one currently isn’t due until 2022. Late on Wednesday, Johnson tried and failed to secure the 434 votes he needs -- two thirds of the House of Commons -- to call a ballot.Opposition parties declined to approve of an election because they want a bill to pass into law that would stave off a no-deal Brexit on Oct. 31. By Monday, that bill is likely to have passed into law, and the government’s calculation is that opposition parties may then swing behind his demand for a fresh election.Rees-Mogg also said that all bills needed for the U.K. to leave the European Union are in place.Gove Says New Brexit Deal Can Be Secured (12:35 p.m.)Cabinet Office Minister Michael Gove, who’s in charge of no-deal Brexit preparations, said the changes to the Brexit agreement being sought by Johnson are “eminently achievable.’’He said that while he would support former Prime Minister Theresa May’s deal if it came back to the house of Commons for another vote, the changes Johnson is seeking would mark a “material improvement” in the deal. They are to strip out the Irish backstop, and alter the political declaration to make clear Britain would be outside the customs union and single market. He also said the U.K. wants a free-trade agreement with the bloc.Gove was giving evidence to the House of Commons Exiting the European Union Committee. He earlier said that the Operation Yellowhammer document spelling out the potential impact of a no-deal exit that was leaked to the Sunday Times last month represented a “reasonable worst-case scenario,” and not a base-case prediction. He said there was no evidence to suggest former Chancellor of the Exchequer Philip Hammond could have been behind the leak.Business Secretary to Meet With Banks (11:40 a.m.)Business Secretary Andrea Leadsom will meet later Thursday with executives from the country’s main banks to discuss their support for small and medium-sized companies through Brexit, Prime Minister Boris Johnson’s spokesman, James Slack, told reporters in London.Johnson Wants Election Before Oct. 17 EU Council (11:35 a.m.)Prime Minister Boris Johnson will say in a speech this afternoon that he wants an election before the EU council meeting on Oct. 17, his spokesman James Slack said.“The prime minister believes we should have the election before the EU council and asks MPs to reflect on the sustainability of their position,’’ Slack told reporters. “Having chosen to introduce a bill that destroys our negotiating position,’’ he said, politicians “ must take responsibility for their actions.”Johnson’s Brother Quits Over Strategy (11:30 a.m.)Boris Johnson’s own brother, Jo Johnson, said he’s quitting the government and his seat in Parliament because of differences with the prime minister.“In recent weeks I’ve been torn between family loyalty and the national interest,” Jo Johnson said on Twitter. “It’s an unresolvable tension & time for others to take on my roles as MP & Minister. overandout.”The departure is a severe blow to the prime minister at a time when he’s alienated the moderate wing of his party by expelling 21 MPs on Tuesday because they voted against the government in order to stave off the risk of a no-deal Brexit on Oct. 31.Jo Johnson is a longstanding pro-European -- and had quit as a minister under former Prime Minister Theresa May because he believed the country needed a second referendum on Brexit. It raised eyebrows when he agreed to serve in his brother’s government -- because the premier was the figurehead of the Leave campaign in the 2016 referendum.Former Labour MP Berger Joins Liberal Democrats (11 a.m.)While Johnson has been expelling MPs from his party, Parliament’s fourth party, the Liberal Democrats keep growing. Luciana Berger, who quit Labour earlier in the year, said on Thursday she’s joined the Liberal Democrats.It’s the party’s second addition of the week, after Philip Lee’s defection from the Conservatives on Tuesday deprived Johnson of his majority. They now have 16 MPs.Javid Hopes Rebels Can Return (9:30 a.m.)Chancellor of the Exchequer Sajid Javid said he wants the 21 rebels expelled from the Conservative Party on Tuesday to be reinstated, though he also added Johnson had “no choice” but to fire them.Javid’s comments follow reports of an argument in cabinet this week in which a group of senior ministers, led by no-deal Brexit minister Michael Gove, demanded that Johnson should give the rebels a way back into the party. The prime minister refused.“I would like to see those colleagues come back at some point,” Javid told LBC radio. “They are not just my colleagues; these are my friends, they are good Conservatives.”Javid said it was right for Johnson to make Tuesday’s vote -- allowing Parliament to seize the legislative timetable in order to block a no-deal Brexit -- a matter of confidence in the government. Those who voted against it knew the “consequences,” he said.Swinson Wants Extension Before Election (9 a.m.)Liberal Democrat Leader Jo Swinson said she wants a general election only after an extension to Brexit has been agreed with Brussels.She said she believes Johnson wants an election before his exit deadline of Oct. 31 so he can take the U.K. out of the EU without a deal and blame Brussels for the failure to get an agreement.“He’s frightened of being found out,” she told Sky News. “He’s got an opportunity to go and get that great deal he said he could get and get it past Parliament, but he’s frightened to do that.”Caroline Nokes, one of the MPs expelled from the Tory Party on Tuesday, also said Johnson shouldn’t rush a national vote. “It’s really cynical to try to force through an election,” she said. “The tool we need in Parliament is time.”Labour ‘Consulting’ on Election Timing (Earlier)Labour Treasury Spokesman John McDonnell said the party is consulting with its own MPs and other parties over the best timing for a general election.While some want a national vote once a law against a no-deal Brexit is enacted, others want to wait until after a further delay to Jan. 31 has been secured before going to the country. None of the opposition parties have any confidence that Johnson will keep to his word, he said in media interviews on Thursday morning.“We have to be the adults in the room,” McDonnell said, after comparing Johnson to a toddler having a tantrum. Labour wants to keep “as much control as we possibly over the date of that election,” he told Sky News.Earlier:Johnson Boxed In Over Brexit as Bill Is Pushed Through LordsPound Rally Stalls After Lawmakers Reject Johnson’s Brexit PlansBrussels Edition: No Deal for Boris\--With assistance from Justin Sink, Ian Wishart and Thomas Penny.To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net;Kitty Donaldson in London at kdonaldson1@bloomberg.net;Jessica Shankleman in Wakefield at jshankleman@bloomberg.netTo contact the editors responsible for this story: Tim Ross at tross54@bloomberg.net, Stuart Biggs, Mark WilliamsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
- Financial Times
Virgin Group hit by sharp share price fall at CYBG
Shares in CYBG plunged 20 per cent on Thursday after the UK lender revealed the latest hit from the escalating payment protection insurance scandal, triggering more than £50m of paper losses for Richard Branson’s Virgin Group. CYBG, the UK’s sixth-largest bank, lost a fifth of its market value after it warned that a last-minute spike in customer complaints about mis-sold PPI would wipe £300m-£450m off its profits — more than 20 per cent of its previous market capitalisation. CYBG bought rival Virgin Money last year in a deal that was supposed to solidify its position as a serious challenger to the UK’s big five banks.
- Financial Times
Australian economy growth is slowest since global financial crisis
Australia’s economy grew at its slowest pace since the global financial crisis in the last quarter, as cautious consumers keep a lid on spending in spite of a surge in the nation’s exports. Data published ...
- Reuters
Barclays, Julius Baer bolster wealth business with ex-Credit Suisse bankers
Britain's Barclays and Switzerland's Julius Baer have targeted Credit Suisse's International Wealth Management business, which in July saw the departure of its head Iqbal Khan, to hire a total of 14 bankers. Barclays, which has set its sights on hiring and expanding its private banking business in Switzerland, announced six new Zurich hires on Tuesday, three of whom will help launch a new Israel desk out of the Swiss financial hub.
- Bloomberg
India May Have Entered ‘Quasi-Recession’ as Growth Plummets
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. India’s longest growth slump since 2012 is heightening concern that it may be tough for policy makers to reverse the slowdown.“Growth has now slipped below the long term trend of 6.6% for two consecutive quarters, which implies that India is effectively in a quasi-recession,” Teresa John, an economist at Nirmal Bang Equities Pvt. in Mumbai, said in a report published Tuesday. Early indicators suggest “growth remains elusive,” she added.While the standard macroeconomic definition of a recession is two consecutive quarters of shrinking GDP, a significant decline in economic activity spread across months is another often-used description. In India, which offers only year-on-year calculations of output, automobile sales have plunged the most in two decades and the chairman of Hindustan Unilever Ltd. warned that the consumer goods his company makes are “recession-resistant, but not recession-proof.”Official data on Friday showed that gross domestic product in Asia’s No. 3 economy grew 5% in April-June from a year earlier, below the weakest estimate of 39 economists polled by Bloomberg and the slowest pace in six years. The five straight quarters of slowing growth mark the longest slump since 2012. Under the hood, the numbers offer more cause for concern on whether output – once adjusted for inflation -- will increase fast enough to ensure borrowers cover their interest payments.A Bloomberg gauge of high-frequency indicators suggests that economic activity continued to weaken in July, with investment and consumption both falling. Economists at Nirmal Bang expect GDP growth to bottom out in the quarter ending September but believe that “a counter-cyclical government spending boost is required.”Room to do that is limited. The government is targeting a budget deficit of 3.3% of gross domestic product in the financial year through March 2020, but total public sector borrowing, which includes those by regional governments and state-owned companies, is estimated at more than 8% of GDP. Monetary policy may have to bear the burden. Goldman Sachs Group Inc. has joined other lenders in predicting deeper interest-rate cuts by India’s central bank to revive the pace of expansion. Elsewhere, Barclays Plc forecast an additional 65-basis-point decrease by the end of this year and Kotak Mahindra Bank estimated a 75-point reduction will come from the RBI.(Updates with economists’ interest-rate forecasts in final paragraph.)To contact the reporter on this story: Ronojoy Mazumdar in Mumbai at rmazumdar7@bloomberg.netTo contact the editors responsible for this story: Arijit Ghosh at aghosh@bloomberg.net, Jeanette Rodrigues, Karthikeyan SundaramFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
