|Bid||0.00 x 29200|
|Ask||0.00 x 36900|
|Day's Range||8.59 - 8.74|
|52 Week Range||6.54 - 8.97|
|Beta (3Y Monthly)||0.81|
|PE Ratio (TTM)||77.23|
|Forward Dividend & Yield||0.29 (3.37%)|
|1y Target Est||8.52|
(Bloomberg) -- A former JPMorgan Chase & Co. banker was convicted of conspiring with traders at other banks to rig bids and fix prices in currency markets -- a victory for prosecutors in their campaign against collusion in foreign exchange.A federal jury in New York on Wednesday took less than four hours to find Akshay Aiyer guilty of a single count of conspiracy to violate antitrust laws, following a trial that lasted more than two weeks.He’s the second person to be convicted in a crackdown on dubious practices used by currency traders and faces as long as a decade in prison and a $1 million fine when he is sentenced on April 3.Prosecutors had relied on testimony from two alleged conspirators, former Citigroup trader Christopher Cummins and ex-Barclays banker Jason Katz, who pleaded guilty and agreed to cooperate with prosecutors. Cummins and Katz testified that the traders plotted in chat rooms, on the phone and at social gatherings to rig trades while leading customers to believe that they were actually competing with each other.Conviction a Reminder“This conviction serves as a reminder of our commitment to hold individuals responsible for their involvement in complex financial schemes which violate the integrity of the global financial markets,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division said in a statement. Aiyer and his lawyers declined to comment after the verdict.The conviction shows that antitrust prosecutors can successfully pursue currency-market cases despite previous acquittals, said Philip A. Giordano, a partner with Hughes Hubbard & Reed LLP and a former prosecutor in the Justice Department’s Antitrust Division.The verdict also underscores the importance of the role that victims play in these types of trials, as the government called representatives of asset management firms who testified that they were harmed by the traders’ collusion, he said.“That helps to put the other evidence, the evidence from the co-conspirators, in perspective,” Giordano said. “It shows that the alleged conduct did not occur in a vacuum. The conduct is less susceptible to interpretation when it is connected to a negative impact on a customer. It makes it easier for the jurors to accept the prosecutors’ assessment of the facts.”Read more on judge throwing out a related caseDefense lawyers argued that all three of the traders made their decisions independently. They argued that Cummins and Katz had been colluding with other foreign-exchange traders for years before they even met Aiyer and were simply trying to save themselves by implicating him to avoid prison.Aiyer is a native of India who came to the U.S. in 2002 to attend college. He joined JPMorgan in 2006 and worked there until 2015, first as a foreign-exchange analyst and later as a trader.The first person charged in the crackdown, Mark Johnson, a former global head of foreign exchange at HSBC Holdings Plc, was found guilty in 2017 of front-running a $3.5 billion client order. But a U.K. court refused to extradite Johnson’s underling, Stuart Scott, and three British traders accused of similar conduct were acquitted by a jury in New York last year. U.K. investigators dropped a criminal probe into individual traders, finding there wasn’t enough evidence to prosecute.Banks around the world have paid more than $10 billion in penalties for misconduct in the currency markets since the crackdown began. Citigroup Inc., Barclays Plc, Royal Bank of Scotland Group Plc and JPMorgan Chase pleaded guilty in 2015 to rigging currency rates and agreed to pay about $2.5 billion to the Justice Department as part of an overall $5.8 billion settlement with multiple regulators.The case is U.S. v. Aiyer, 18-cr-333, U.S. District Court, Southern District of New York (Manhattan).(Updates with sentencing date in third paragraph)To contact the reporter on this story: Chris Dolmetsch in Federal Court in Manhattan at email@example.comTo contact the editors responsible for this story: David Glovin at firstname.lastname@example.org, Joe Schneider, Steve StrothFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Moody's Investors Service ("Moody's") has affirmed the ratings of Nuveen AMT-Free Quality Municipal Income Fund (NYSE:NEA) following its acquisition of Nuveen North Carolina Quality Municipal Income Fund (NYSE:NNC).
A scheme for entrepreneurs founded by Prince Andrew has taken down the logos of its corporate sponsors from its website, as firms and charities distance themselves from the British royal over a sex scandal. Andrew, Queen Elizabeth's second son, denies an allegation that he had sex with a 17-year-old girl procured for him by his friend Jeffrey Epstein, who killed himself in a U.S. prison in August while awaiting trial on sex trafficking charges. The scandal has escalated since Andrew's rambling denials and explanations in a disastrous TV interview aired on Saturday left many viewers incredulous, and his apparent lack of compassion for Epstein's victims drew widespread condemnation.
(Bloomberg) -- Emerging-market currencies had the first weekly decline in seven last week as positive developments on a “phase one deal” between the U.S. and China failed to reverse days of largely risk-off sentiment. President Donald Trump’s administration signaled late Thursday that talks with China over the first phase of a broad trade agreement are entering the final stages, though added caveats a day later that a deal is close but not completed. Stocks in developing nations halted a month of weekly gains, falling the most since late September.The following is a roundup of emerging-markets news and highlights for the week ending Nov. 18.Read here our emerging-market weekly preview, and listen to our weekly podcast here.Highlights:U.S. and Chinese trade negotiators held “constructive discussions” in a phone call on Saturday to address each side’s core concerns of phase one of the trade deal.White House economic adviser Larry Kudlow said negotiations over the first phase of a trade agreement with China were coming down to the final stages. Kudlow said a deal is close though “not done yet”President Donald Trump said the U.S. will increase tariffs on China in case the first step of a broader agreement isn’t reached. He also said China is devaluing its currency, supply chains are cracking and they are “dying to make a deal”Trump said trade talks are moving “rapidly”A U.S. demand that China spell out how it plans to reach as much as $50 billion in agricultural imports annually has become a sticking point in negotiations, according to people familiar with the matterChina lowered the cost it charges on open-market operations for the first time since October 2015. The People’s Bank of China cut the interest rate on its seven-day reverse repurchase agreements to 2.5% from 2.55%The country’s economy slowed further in October, signaling that policy makers’ piecemeal stimulus is failing to boost output and investmentFederal Reserve Chairman Jerome Powell stuck to his view that interest rates are probably on hold after three straight reductions, while signaling that the U.S. central bank could resume cutting if the growth outlook faltersTrump renewed his assault against the Fed, saying it was hurting the U.S. by not copying other central banks in deploying negative interest ratesTrump said Wednesday that Turkey’s purchase of a Russian anti-aircraft missile system presents “some very serious challenges” for the U.S., and directed Secretary of State Michael Pompeo to work on resolving the impasseThe Lebanese army was deployed heavily across the country on Wednesday and banks and schools remained shut for a second day as protesters incensed by a call to go home began to converge on the presidential palaceS&P downgraded Lebanon’s long-term foreign currency debt rating to CCC from B-Major political parties agreed to name businessman and ex-finance minister Mohammad Safadi as the country’s new premier, local media reported, a choice that was immediately rejected by anti-government demonstrators pressing for deeper change. Mohammed Safadi put an end to his bid just two days after winning the backing of Lebanon’s major political partiesThe central bank has no plans to impose formal restrictions on the movement of money or force depositors to accept losses, its governor said, but will offer “unlimited” dollars for commercial lenders to finance trade and meet customer demandBanks agreed to lift a restriction on new money coming from abroad and set a withdrawal limit of $1,000 a week for accounts denominated in foreign currency, according to a statement issued Sunday by the Association of Banks in LebanonPresident Michel Aoun appealed to Arab neighbors on Tuesday for help to revive his country’s economyFranklin Templeton said the government will have to renegotiate its debt to stave off an economic collapseEgypt cut its main interest rates by a full percentage point with inflation at the lowest in almost a decade. The deposit rate was reduced to 12.25% and the lending rate to 13.25%Mexico cut the benchmark rate for a third consecutive meeting after inflation slowed to target and economic growth stumbledTwo German citizens were detained by Hong Kong police amid the continuing protests, Deutsche Welle reported, citing an official at Germany’s foreign ministry. The two Germans are receiving assistance from the country’s consulate in Hong Kong, according to the report.Chinese President Xi Jinping called an end to violence Hong Kong’s “most urgent task,” as a scuffle involving the city’s justice minister and the second protest-related death in a week heightened tensions in the paralyzed financial centerHong Kong officials and Chinese state media warned of consequences if violence continuedChilean stocks and the peso rallied the most in a decade on optimism an agreement over a new constitution will help end protests and riots that threatened to upend the country’s economyThe Chilean peso slumped to a record low amid a wave of social unrest and investor concern about a new constitutionCentral bank announced a $4 billion swap program to ease liquidityChile’s government is willing to increase the minimum pension by more than a proposed 20% in response to the biggest civil unrest in a generation, President Sebastian Pinera said in a televised address late SundayOptimism about a trade deal between the U.S. and China encouraged investors to add $1 billion to emerging-market exchange-traded funds in the week ended Nov. 8, the biggest weekly inflow since Feb.Asia:China wants to balance functionality with concerns about anonymity as it works toward launching a digital version of the yuan, according to an official from the People’s Bank of ChinaForeign companies continue to invest more in China even after Trump called on U.S. firms to look elsewhere, as the rising spending power of 1.4 billion people proves too hard to resistSouth Korea will try to achieve economic growth of more than 2.2%-2.3% next year by providing momentum for an economic rebound, Finance Minister Hong Nam-ki saidBank of Korea board member Lim Ji-won said global data in the past few months show the manufacturing slump is easing slightlyHoldings of overseas alternative assets such as real estate, infrastructure, private equity and debt, and hedge funds by investors rose to at least about 201 trillion won ($172 billion) this year, a record, according to data compiled by Samsung Securities Co. and Korea Investors Service Inc.The U.S. and key allies are seeking to hold a United Nations Security Council debate on North Korea’s human rights record after failing to do so last year, according to diplomats familiar with the discussionsIndia’s trade deficit widened less than estimated last month, as a third-straight month of decline in exports offset a sharp plunge in imports amid weak global demand conditions.The country’s retail inflation quickened for the third straight month in October, breaching the central bank’s 4% medium-term target and possibly slowing the pace of monetary policy easingThe nation is considering changes to its dividend distribution tax that will raise returns for investors, according to people familiar with the matter, as authorities try to revive foreign fund inflowsFactory output shrank to the lowest level in eight years, as a sharp fall in capital goods production underlined weak demand in Asia’s third-largest economyIndia plans to reduce its stake in Indian Oil Corp. to below 51% while ensuring the government and state-run companies retain control of the nation’s largest oil refiner, people with knowledge of the matter saidArcelorMittal won approval from India’s top court to complete its $5.8 billion purchase of a bankrupt steel mill, clearing the way for tycoon Lakshmi Mittal to enter the world’s second-biggest marketIndonesia’s customs cleared nine firms to export nickel ore after briefly suspending shipments for inspection, according to Heru Pambudi, director general of Customs and ExciseExports fell 6.1% in October from a year earlier, while trade balance came in at surplus of $161 millionSoutheast Asia’s largest economy may post higher-than-expected budget deficit next year as govt seeks to maintain growth momentum amid lower revenue, according to Finance Minister Sri Mulyani IndrawatiThai Finance Minister Uttama Savanayana said he plans to issue measures to help boost the economy, while adding past steps didn’t do enough for small businesses. The economy will continue to face high risks next year, so the government needs to be well-prepared, he also saidThailand will try to find new markets for products affected by the suspension of some trade preferences under the U.S.’s Generalized System of Preferences, Commerce Minister Jurin Laksanawisit said. The two nations will speak on the issue in late NovemberMalaysia’s economic growth eased in the third quarter to its slowest pace in a year amid declining exports and weaker factory outputA Malaysian judge ordered ex-premier Najib Razak to defend himself against all charges in the trial involving a former unit of troubled state-owned fund 1MDBThe Philippines central bank kept its key rate unchanged at 4%, opting for what it described as a “prudent pause” to monitor how previous easing steps are filtering through to the economy. It trimmed its 2019 inflation forecast to 2.4% from 2.5%Business process outsourcing may grow between 3.5%-7.5% annually from 2020 to 2022, IT and Business Process Association of the Philippines President Rey Untal saidThe candidate representing Taiwan’s China-friendly opposition party in January’s presidential race called for free elections in Hong KongPresident Tsai Ing-wen on Sunday named former premier Lai Ching-te as her running mate in January’s electionEMEA:Istanbul may sell at least $500 million of bonds to fund six metropolitan projects, people with direct knowledge of the plan said, in what would be Turkey’s first municipal debt issuance in 27 yearsTurkish industrial output expanded on an annual basis for the first time in 13 months in September, a sign that the economy is finding its footing after a recession last yearPresident Recep Tayyip Erdogan said interest rates will fall further and again boasted that his firing of the central bank governor has permitted a sharp drop in borrowing costs since JulyPoland’s Premier Mateusz Morawiecki picked Tadeusz Koscinski, a former banker, to become the country’s fifth finance minister in as many months as the ruling Law & Justice party shuffles its cabinet after last month’s electionTens of thousands of Czechs thronged the streets of Prague in one of the largest anti-government protests in the country since the fall of communism, calling on their billionaire prime minister to step downRussian economic growth accelerated to 1.7% in the third quarter, the fastest pace this year, after the central bank delivered four consecutive rate cutsRussia is planning to cut the dollar’s share in its $125 billion sovereign-wealth fund, following a major move last year out of U.S. assets by the central bankThe nation skipped a weekly sale of fixed-coupon bonds for the first time since December, citing rising market volatility as bond yields climbedEgypt sold its longest Eurobond on record, part of a $2 billion deal, as it seized on appetite for riskier assets and spread out the burden of servicing its debtMorocco hired a consortium to arrange a euro-denominated bond offering of 12- or 20-year maturity to investors, according to a person familiar with the matterSaudi Aramco’s gigantic initial public offering could see retail investors returning to the Riyadh stock exchange as local individuals snap up shares in the world’s most profitable companySaudi Arabia put a preliminary valuation on its state-owned oil giant Aramco of between $1.6 trillion and $1.71 trillion, short of the $2 trillion target set by Crown Prince Mohammed bin Salman in 2016Efforts to resolve the standoff between Qatar and a Saudi-led bloc are gathering momentum, with an upcoming soccer tournament in Doha helping to pave the way for a possible breakthrough, according to a Gulf official with knowledge of the matterIsrael’s economy accelerated thanks to both public and private spending, overcoming disruptions in world trade that have threatened local growthSouth African retail sales climbed at the weakest pace in six months in SeptemberGhana will ramp up spending by a fifth next year and plans to raise as much as $3 billion in international markets as it prepares for an election in 13 monthsYields on Nigeria’s one-year Treasury bills fell on Thursday to the lowest since April 2016, while demand for three-month debt surged to a record as local funds pile into the debt after the central bank restricted their access to its higher-yielding securitiesKenya’s 47 counties can begin raising state-guaranteed debt next year, potentially heaping more liabilities on the over-leveraged East African economyLatin America:Chile took a major step toward solving the social crisis that has convulsed the nation for the past month when lawmakers from almost all the parties agreed early on Friday to a mechanism to rewrite the constitutionChile’s government said that it backed plans to rewrite the constitution, weakening the peso by almost 4% in the week, the worst performance among all currencies in emerging marketsGovernment has also said it would pull $1 billion from its sovereign wealth fund in the next few days to help finance increased spendingThe $4 billion credit line opened by Chile’s central bank Thursday fueled a rise in the peso forward marketBrazil launched an employment program that could generate 1.8 million new jobs by 2022, according to an estimate by the Economy MinistryPresident Jair Bolsonaro confirmed he will leave the PSL party and create a new one called “Aliança pelo Brasil,” meaning “Alliance for Brazil”After a pension reform became law this month, Bolsonaro’s administration is now prioritizing measures that increase control over the federal budgetBrazil’s economy likely grew in the third quarter according to a key gauge, indicating a record-low policy rate and government measures are buttressing demandRetail sales notched the fifth straight monthly increase in SeptemberFormer President Luiz Inacio Lula da Silva, who left jail earlier this month after a Supreme Court decision, used a more radical tone in his speechesThe hacker behind a cyberattack that has crippled Petroleos Mexicanos’s computer systems is hoping to squeeze almost $5 million out of the company and appears to have set a deadline of Nov. 30Bolivia’s Evo Morales accepted Mexico’s offer of political asylum, thrusting leftist President Andres Manuel Lopez Obrador’s government into the center of a crisis that has split Latin America’s government allegiancesOpposition lawmaker Jeanine Anez declared herself interim president as the ouster of Morales plunged the nation into a constitutional crisis, triggering a clash between the police and Morales supporters in La PazNew finance minister Jose Parada ruled out changes in the level of the currencyArgentine President-elect Alberto Fernandez is preparing to task the country’s central bank with trying to boost the crisis-torn economy through a weak exchange rate, according to two people with direct knowledge of the strategyFernandez said he will probably announce the economic team on Dec. 10 when he takes officeFernandez said he’ll review the government’s spending plans for 2020 and suggested his predecessor’s draft budget was faultyArgentina bondholders are so worried that the country’s new leader may default that they’ve pushed yields on local notes due two days after his Dec. 10 inauguration to an ear-popping 100%Three hedge funds are demanding more than 384 million euros ($425 million) from Argentina in a U.K. lawsuit that alleges the country restated economic figures to avoid paying out on securities tied to its growthArgentina is lifting controls on crude oil and fuel prices, leaving drillers and refiners to work out how to get back to market levels, according to two people familiar with the matterColombia’s economy grew at its fastest pace in four years as migration from Venezuela and accelerating credit growth boost consumer demandParaguay plans to issue a global bond for approximately $500 million in the first quarter of next year, according to Finance Minister Benigno Lopez\--With assistance from Selcuk Gokoluk, Colleen Goko and Carolina Wilson.To contact Bloomberg News staff for this story: Yumi Teso in Bangkok at email@example.com;Netty Ismail in Dubai at firstname.lastname@example.org;Aline Oyamada in Sao Paulo at email@example.comTo contact the editors responsible for this story: Tomoko Yamazaki at firstname.lastname@example.org, Karl Lester M. Yap, Joanna OssingerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Barclays Bank PLC and other ratings that are associated with the same analytical unit. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
(Bloomberg) -- Goldman Sachs Group Inc. agreed to pay $20 million to settle an investor lawsuit accusing traders at the bank, along with 15 other financial institutions, of rigging prices for bonds issued by Fannie Mae and Freddie Mac.As part of the settlement, disclosed Friday in a court filing, Goldman Sachs will cooperate with investors in their case against the other banks. The firm also agreed to make changes to its antitrust-compliance policies related to bond trading. A federal judge in Manhattan must approve the settlement before it can take effect.Investors sued after Bloomberg reported in 2018 that the U.S. Department of Justice was investigating some of the world’s largest banks for conspiring to rig trading in unsecured government bonds.Goldman Sachs has turned over 71,000 pages of potential evidence, including four transcripts of chat-room conversations among its traders and some from Deutsche Bank AG, BNP Paribas SA, Morgan Stanley and Merrill Lynch & Co., according to court papers filed Friday. The bank agreed to provide additional help, including deposition and court testimony, documents and data related to the bond market.Goldman Sachs isn’t the first to resolve the civil claims. In September, Deutsche Bank agreed to settle for $15 million. First Tennessee Bank and FTN Financial Securities Corp. agreed to a $14.5 million settlement later in September.Among the firms remaining as defendants in the case are Credit Suisse AG, Barclays PLC and Citigroup Inc.The case is In re GSE Bonds Antitrust Litigation, 19-01704, U.S. District Court, Southern District of New York (Manhattan).To contact the reporter on this story: Bob Van Voris in federal court in Manhattan at email@example.comTo contact the editors responsible for this story: David Glovin at firstname.lastname@example.org, Steve StrothFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
(Bloomberg Opinion) -- The global bond market rallied for a second consecutive day on Thursday in an awkward development for the growing chorus of voices that have cropped up the last few weeks contending that the synchronized global slowdown was over. From China to Germany, and from Cisco Systems Inc. to freight shipments, the latest data show it’s too soon to turn optimistic.In China, industrial output rose 4.7% in October from a year earlier, below the median estimate of 5.4%. Germany did post a surprise expansion in its gross domestic product for the third quarter, but that came with plenty of caveats. For one, the increase was only 0.1%, and the contraction for the second quarter was deeper than initially reported — negative 0.2% versus negative 0.1%. In the U.S., economists were passing around the latest Cass Freight Index for October, which fell 5.9% to mark its 11th consecutive year-over-year decline. This gauge has been around since 1995 and tracks freight volumes and expenditures by hundreds of companies in North America conducting $28 billion of transactions annually. More important, the compilers of the index noted in the latest survey that the index “has gone from ‘warning of a potential slowdown’ to ‘signaling an economic contraction.’” Cisco is not in the freight business, but comments by Chief Executive Officer Chuck Robbins late Wednesday after the computer company released fiscal second-quarter results echoed the sentiment in the freight industry. “Just go around the world and you see what’s happening in Hong Kong, you look at China, what’s happening in D.C., you’ve got Brexit, uncertainty in Latin America,” he said on a conference call with investors and analysts. “Business confidence suffers when there’s a lack of clarity, and there’s been a lack of clarity for so long that it’s finally come into play.”Maybe the global economy isn’t worsening, but it’s too soon to say an upswing is underway. Despite the sell-off in the bond market since September, yields are still showing caution. Yields on bonds worldwide as measured by the Bloomberg Barclays Global Aggregate Index stand at 1.45%, which is closer to its all-time low of 1.07% in 2016 than last year’s high of 2.27% in November.AWASH IN MORE DEBTThe Institute of International Finance came out with its quarterly look at the mountain of global debt, concluding that it rose by about $7 trillion in the first half of the year to a record of just more than $250 trillion. That increase is more double the $3.3 trillion expansion for all of last year. It pegs global debt, which it sees expanding to $255 trillion by the end of the year, at a lofty 320% of global GDP. It’s no surprise that the world is awash in debt, but yields show there seems to be a dearth of it for the public because of massive purchases by central banks. As of October, the collective balance-sheet assets of the Federal Reserve, European Central Bank, Bank of Japan and Bank of England stood at 35.7% of their countries’ total GDP, up from about 10% in 2008. Still, this is no time to be complacent. The IIF points out that much of the growth in debt has come in emerging markets, which is generally considered riskier than that of developed economies and where central banks are not doing things like quantitative easing. This could become an issue relatively quickly; the IIF pointed out that $9.4 trillion of bonds and syndicated loans from emerging markets come due by the end of 2021.CORPORATE CASH SHRINKSThe latest doubts about the strength of the economy kept the S&P 500 Index little changed for a second consecutive day. Perhaps that’s for the better because falling interest rates and bond yields are perhaps the single-biggest reason equities are up 23.4% this year in the absence of earnings growth. The second is probably share repurchases. But a new report from Societe General SA raises concern that the cash companies use to fund those buybacks is being depleted. “A boon for U.S. share buybacks” has left companies with less cash in their coffers, Societe Generale strategists Sophie Huynh and Alain Bokobza wrote in a report. Cash and money-market investments held by companies in the S&P 500 peaked in 2018’s first quarter on a per-share basis before falling 5.3% through the third quarter of this year, according to Bloomberg News’s David Wilson. S&P 500 companies have bought back the equivalent of 22% of their market value since 2010, the Societe Generale strategists noted in their report.CHILEAN CRISIS ENTERS NEW PHASEThe chaos in Chile, long known as the safest bet in Latin America, has become so bad that not even direct intervention by the nation’s central bank was able to reverse the slide in the peso. The currency fell about 1% Thursday, bringing its slide to 11.4% since mid-October. That’s the worst of the 31 major currencies tracked by Bloomberg and more than five times the next biggest loser, the Hungarian forint. What should have investors worried is that the peso depreciated even after the central bank announced a $4 billion currency swap program to ease liquidity in the market amid the worst civil unrest in a generation. “I don’t think it will help stop the sell-off in any way,” Brendan McKenna, a currency strategist at Wells Fargo, told Bloomberg News in reference to the swaps program. “There has to be some breakthrough on the political front for the currency to stabilize.” Foreign investors have been especially rattled since the government said Sunday that it backed plans to rewrite the constitution in response to four weeks of riots and protests in support of better pensions, wages, education and health care. If that were to happen, it’s possible the government would swing too far to the populist left to the detriment of the economy. FOLLOW THE CLIMATE CHANGE MONEYDespite the overwhelming evidence about climate change, there is still an alarming number of deniers. But if it was really all a big hoax or overblown, then why are the world’s biggest, most influential investment firms steering away from areas that are likely to be hit the hardest, such as the coasts? Goldman Sachs Group Inc. is considering real estate markets including Denver; Austin, Texas; and Nashville, Jeffrey Fine, a managing director at the firm’s merchant-banking division, said Thursday at a conference hosted by the NYU School of Professional Studies. Fine may not have specifically cited climate change, but according to Bloomberg News’s Gillian Tan, he did note that more companies and young people are moving away from the coasts. The Fed held its first conference on climate change last week in San Francisco, with one central bank official saying it has the potential to “displace people permanently” amid damaging wildfires in California and storms punishing the Eastern Seaboard. About 3 billion people — or some 40 percent of the world’s population — live within 200 kilometers (124 miles) of a coastline, according to Bloomberg News. It’s projected that by 2050 more than 1 billion will live directly at the water’s edge.TEA LEAVESThe idea that the U.S. consumer was strong and carrying the economy took a hit a month ago when Commerce Department data showed that retail sales in September fell unexpectedly. The 0.3% decline from August was directly opposite the 0.3% advance expected based on the median estimate of economists surveyed by Bloomberg. That’s why Friday’s update from the government on October retail sales is so critical, especially heading into the holiday sales season. Economists are calling for a 0.2% rebound. Bloomberg Economics isn’t so optimistic, saying that decelerating wage growth suggests household demand will moderate. It is forecasting no change in spending. Although the headline number will get the attention, the smart money will be looking at sales among a control group that are used to calculate GDP and exclude food services, auto dealers, building-material stores and gas stations. By that measure, sales are seen rising 0.3% from no change in September.DON’T MISS Stock Investors Could Use a Refresher on the Basics: Nir Kaissar You Care About Earnings? The Stock Market Doesn’t: John Authers Too Many Young American Men Still Aren’t Working: Justin Fox Brazil’s Politics and Economics Are Growing Apart: Mac Margolis Matt Levine's Money Stuff: You Can Buy Almost All the StocksTo contact the author of this story: Robert Burgess at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis 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) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple Podcast, Spotify or Pocket Cast.Mexico’s central bank cut the benchmark interest rate in a split vote among board members after inflation slowed to target and growth stumbled.The central bank, led by Governor Alejandro Diaz de Leon, voted 3-2 to reduce the key rate by a quarter point to 7.50%, in line with the estimate of 17 of 26 economists surveyed by Bloomberg. The other two board members sought a half-point cut to 7.25%, in line with nine economists’ forecasts.Banxico, as the central bank is known, has every reason to extend its easing cycle, according to economists, amid very subdued inflation and growth and a stable peso. The only debate is over how quickly and how extensively it will cut, and today’s quarter-point reduction points to a more conservative stance.“They’re being prudent,” said Marco Oviedo, chief Latin America economist at Barclays. “The discussion isn’t about whether to cut but by how quickly.” Oviedo sees another rate reduction in December.Banxico said in the statement accompanying its decision that both inflation and growth for this year and next will likely be below previous forecasts, although core inflation has remained persistent.Interest rate cuts may be more important than ever now, as Mexican growth continues to disappoint both investors and the nation’s president. Andres Manuel Lopez Obrador has brandished the strong peso as a weapon against critics who worry he’s scaring investors. But an easing cycle that weakens the exchange rate and makes exports more attractive could help Mexico’s economy even more.“Banxico is being relatively dovish and signaling it will keep cutting rates, but in a cautious manner,” Delia Paredes, an economist at Grupo Financiero Banorte, said before the decision.In the previous decision, board members Gerardo Esquivel and Jonathan Heath, both nominated by Lopez Obrador, had voted for a deeper half-point cut than the majority.(Updates with analyst comment starting in fourth paragraph.)To contact the reporter on this story: Nacha Cattan in Mexico City at email@example.comTo contact the editors responsible for this story: Daniel Cancel at firstname.lastname@example.org, ;Juan Pablo Spinetto at email@example.com, Robert JamesonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Mitsubishi UFJ (MUFG) reports disappointing earnings for first-half fiscal 2019 (Sep 30, 2019), mainly negatively impacted by lower net gains on equity securities and higher expenses.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Apple Podcast, Spotify or Pocket Cast.Federal Reserve Chairman Jerome Powell stuck to his view that interest rates are probably on hold after three straight reductions, while signaling that the U.S. central bank could resume cutting if the growth outlook falters.“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook,” Powell told the congressional Joint Economic Committee Wednesday in Washington. “However, noteworthy risks to this outlook remain.”Powell, whose comments largely echoed his message on Oct. 30 after the Fed’s third rate cut this year, said slowing global growth and trade developments pose “ongoing risks.” He added that persistently low inflation could lead to an “unwelcome” slide in the public’s longer-run expectations of inflation.Powell said the Federal Open Market Committee cut the policy rate, which is now in a range of 1.5% to 1.75%, to support growth and move inflation back to the 2% target. He said the committee was prepared to respond to a “material reassessment” of its outlook, and the tone of his remarks suggest that downside risks for now outweigh the possibility of economic overheating.Explaining why wages haven’t moved up with the unemployment rate at 3.6%, Powell said it could be a sign that there is still slack in the labor market. “It also may be that the neutral rate of interest is lower than we have been thinking and that therefore our policy is less accommodative than we have been thinking. We are letting the data speak to us.”The comments suggest that the rate cuts this year weren’t entirely about insuring against a global slowdown, but also recalibrating interest costs to an economy where inflation has remained stubbornly low.High Bar“We continue to hear from him that they can run the economy with lower rates of unemployment than they thought they could,” said Michael Gapen, chief U.S. economist at Barclays Plc. “That underscores that they expect there to be a high bar to raising rates.”Asked if he meant to signal that policy was on hold through next year, Powell responded “I wouldn’t say that at all” before repeating the line from his opening remarks on policy likely to remain appropriate as long as the economy stays on track.“We do think monetary policy is in a good place, but we’re going to be watching very carefully incoming data,” he said.Yields on 10-year Treasury notes were steady around 1.87% following the testimony while U.S. stocks were higher in New York trading.Powell and the Fed have been relentlessly criticized by President Donald Trump, who has blamed the central bank’s policies, rather than the U.S.-China trade war, for a slowdown in the U.S. economy as he ramps up his 2020 re-election campaign.“We’re paying actually high interest. We should be paying by far the lowest interest,” Trump said Tuesday in New York, complaining that by shunning the negative interest rates deployed by other central banks, the Fed “puts us at a competitive disadvantage.”Negative RatesPowell told lawmakers that politics played no role whatsoever in the Fed’s policy decisions, which were based on the analysis of the data, adding that negative rates “would certainly not be appropriate in the current environment.”U.S. economic data have continued to show strength among households and financial conditions have eased with stocks touching record highs on Wall Street this month. Consumer sentiment improved for a third month in November, according to the University of Michigan’s preliminary sentiment index, while employers added 128,000 new jobs in October. Powell said the Fed expected some easing in the pace of job gains after last year’s strong pace.Manufacturing and business investment continue to lag. A gauge of U.S. manufacturing signaled the sector contracted for a third straight month with the weakest production level since the last recession.“The outlook is still a positive one. There is no reason this expansion can’t continue,” Powell said. “There is a lot to like about this rare place of the 11th year of an expansion and we’re certainly committed to doing what we can to extend it.”\--With assistance from William Edwards and Christopher Condon.To contact the reporter on this story: Craig Torres in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Alister Bull at email@example.com, Vince GolleFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Barclays is out Neutral on U.S. specialty retail, apparel and e-commerce stocks on the basis of an an improving tariff backdrop that's offset by sector-wide inventory build, negative mall traffic and general ...
(Bloomberg Opinion) -- A crown jewel of President Xi Jinping’s Made in China 2025 plan is faltering.Tsinghua Unigroup Co. is the business arm of the prestigious Tsinghua University, Xi’s alma mater. The company has been trying to establish itself as a leader in China’s nascent memory-chip industry since 2015, when it famously tried to acquire stakes in U.S. rivals Micron Technology Inc. and Western Digital Corp. Both advances were rejected amid concerns that U.S. regulators wouldn’t approve the deals on national-security grounds. Rebuffed abroad, Unigroup resolved to become a domestic champion and poured its resources into developing flash-memory technology. One of its subsidiaries, three-year-old Yangtze Memory Technologies Co., is already bringing its know-how to production. It’s impressive how fast the unit has developed despite lagging behind rivals in efficiency, Bernstein Research notes.Yet credit investors are getting nervous: Unigroup’s dollar bond due in 2023 has tumbled in recent days, and is now yielding more than 10%. Last week, the chipmaker hurriedly arranged a conference call to reassure investors that its finances were in good order. Surely an asset of such national strategic importance shouldn’t be trading like a junk-rated firm bordering on bankruptcy, management reasoned. A big question hanging over Unigroup is: Who’s its real daddy? As part of China’s university reform, which aims to separate academic institutions from business endeavors, Unigroup’s controlling shareholder Tsinghua Holdings Corp. has attempted to disentangle itself from the company multiple times. The latest rout comes amid a protracted custody battle.Naturally, debtholders shudder every time speculation swirls about Unigroup’s ownership. Last year, its bonds tanked after Tsinghua agreed to sell its shares to an obscure state-owned entity in the second-tier city of Suzhou, only to recover a month later when the university opted for the cash-rich Shenzhen government instead. The bonds plummeted yet again in recent months when Tsinghua abandoned the Shenzhen deal. Then in a conference call last week, Zhao Weiguo, the holding company’s chairman, said Unigroup should remain under the Tsinghua University umbrella, making multiple references to the wishes of the “paramount leader.” For anyone in doubt, that’s Xi.Figuring out who’s holding the purse strings is particularly important for Unigroup, because like all chipmakers it needs billions of dollars in capital outlays. Industry leader Samsung Electronics Co., for example, splashed out about $25 billion annually in capital expenditure over the past five years. Yangtze Memory, Unigroup’s flash-memory business, has already spent more than 20 billion yuan ($2.86 billion) on a new plant in Wuhan and earmarked $30 billion in total spending there. The key difference is that, unlike Samsung, the Yangtze subsidiary is behind on technology and unlikely to break even until 2022 at the earliest, estimates Barclays Plc. Money has to come from the outside. Sure, Unigroup is getting financial support from China’s various venture-capital-like guidance funds and has a big credit line from China Development Bank. But investors worry that’s not enough. Obscure state-owned entities, and even Tsinghua University itself, don’t have pockets deep enough to bankroll Unigroup as it ramps up production, they wager. Revenue at Unigroup rose 7.5% from a year earlier in the first half, but its Ebitda earnings tumbled 27% to a peanut-sized 1.5 billion yuan, driven by a sharp increase in research expenses. As of June, the company sat on 39 billion yuan of cash but had 58 billion yuan of interest-bearing debt due in the year ahead. By now, conspiracy theories abound explaining Tsinghua's decision to scrap its deal with Shenzhen, often considered China’s Silicon Valley. One explanation could be ego: Why would Xi allow his alma mater’s prized asset to be controlled by a mere local state-owned entity?Investors also question whether geopolitics is at play. If Tsinghua offloaded its stake to Shenzhen, Unigroup would become a bona fide state owned enterprise, making it vulnerable to operations restrictions — from intellectual property transfer to preferential taxation — if China strikes a broader trade deal with the U.S. If Unigroup remains under the umbrella of a non-profit university, on the other hand, it could still develop its chip capacity within a gray zone. The naive might argue that Beijing can’t possibly let Unigroup go under. That may well be the case; but as I’ve written, an unhealthy undercurrent is forming in China’s bond market. Increasingly, distressed companies are pushing for quiet deals with institutional investors to delay repayment dates. This is perhaps why investors got even more nervous when news surfaced that Unigroup had asked Credit Suisse Group AG for its help to amend and extend some bank loans. Pinched by the trade war, China is now eager to become self-sufficient, and semiconductors are certainly a good place to start. Last year, China’s trade deficit in chips continued to widen to $228 billion, more than double levels from a decade earlier. But if you think Tsinghua Unigroup will emerge a clear winner from this, think again. As we’ve seen in the past, national service doesn’t necessarily get you a glittering credit score, with local government financing vehicles and regional banks alike now languishing with junk ratings. Unigroup investors would do well to remember that they can't take Xi’s school spirit to the bank. To contact the author of this story: Shuli Ren at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Barclays (BCS) has been upgraded to a Zacks Rank 1 (Strong Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.
(Bloomberg Opinion) -- The global stock market drifted lower on Monday, posting its biggest decline in more than three weeks. Yes, there’s still plenty of time for equities to recover and gain for a sixth consecutive week, which would match their longest winning streak since they advanced for 10 consecutive weeks over the course of late 2017 and early 2018. But doing so may hinge on a critical event Tuesday. Even with the modest decline, the MSCI All-Country World Index is still up 19% this year. The surge in recent weeks is due largely to optimism that the U.S. and China are close to reaching an agreement on “phase one” of a broad trade deal. It doesn’t matter that the details are likely to be modest; what matters is that it would signal that the trade war isn’t worsening. That’s why President Donald Trump’s address to the Economic Club of New York on Tuesday is so critical. No one is quite sure which Trump will show up. Will it be the one who in recent weeks has trumpeted progress in trade talks, or will it be the one who has said that the U.S. hasn’t agreed to a rollback of tariffs on China, which is what the markets truly want? This is no small matter for investors. Various surveys have shown that trade uncertainty is the primary risk facing markets. In that sense, whatever Trump says on Tuesday has the potential to either ratify the rally or bolster the case that it’s built on little more than hope. And as everyone in markets learns on their first day in the business, hope isn’t a strategy. “Markets have been skittish waiting for any concrete information about the trade talks,” Matt Forester, the chief investment officer at BNY Mellon’s Lockwood Advisors, told Bloomberg News. At 15 times forecast earnings for the following year, the MSCI is trading at its most expensive level since the start of 2018.Trump’s talk is not the only big event for markets this week. Federal Reserve Chairman Jerome Powell will address the Joint Economic Committee of Congress on Wednesday, the same day as the start of public impeachment hearings against Trump. The U.S. Labor Department will also provide an update on inflation for October. The week ends with data on U.S. retail sales for October, which economists hope will be a reversal from September’s big miss to the downside. But as already stated, hope has no place in markets.THE BOND GAME ISN’T OVER YETThe bad news for the bond market is that November isn’t even halfway over and it’s already the worst month for fixed-income investors since April 2018, with the Bloomberg Barclays Global Aggregate Index down 1.40% as of Friday. The good news is that there’s plenty of time for the bond market to rebound. And just as with the stock market, Trump’s appearance at Economic Club of New York — along with Powell’s testimony — may determine whether the recent sell-off in fixed-income assets is overdone. That’s the short-run prognosis. In a nod to John Maynard Keynes, bonds are dead in the long run anyway. Well, at least according to Moody’s Investors Service they are. The credit ratings company put out a research report Monday saying the rising tide of populism spreading round the world has caused it to turn “negative” on global sovereign credit for 2020. Unpredictable domestic and geopolitical risks along with a push for populist policies that weaken institutions, help slow growth and boost the risk of economic and financial shocks means governments will struggle to address credit challenges, Moody’s wrote. That’s scary, but the major ratings companies aren’t known for their astute political science observations. Yields on 10-year Treasury notes are lower now than when S&P Global Ratings stripped the U.S. of its AAA rating in August 2011.GO BIG OR GO HOMEThe thing about bond sell-offs in recent years is that have tended to be short-lived, thanks largely to central banks. The collective balance sheet assets of the Fed, European Central Bank, Bank of Japan and Bank of England rose to 35.7% of their countries’ total gross domestic product in October from about 10% before the financial crisis, according to data compiled by Bloomberg. And judging by some of the latest moves made by the ECB, bond traders can be a little less worried about a lack of buyers. The ECB started its second round of corporate bond purchases by acquiring in a week an amount that analysts expected it to buy in a month, according to Bloomberg News’s Tasos Vossos. The central bank bought almost 2.8 billion euros ($3 billion) of company debt securities in the week to Nov. 8, according to data released Monday. It was the second-largest weekly purchase figure since the ECB first adopted the strategy, known as quantitative easing, in June 2016. The bank suspended the program last December and restarted it at the beginning of this month as growth flagged across the euro area. It’s unknown whether the faster pace of purchases is in response to the big drop in bond prices and corresponding jump in yields, but it should be comforting to know that the ECB is doing its part to stem the weakness.CHILE GIVES INIt’s becoming routine to see the Chilean peso leading the list of biggest losers in the foreign-exchange market on any given day, and Monday was no exception. The peso weakened 1.72% to a record low, bringing its depreciation since Oct. 18 to 6.39%. To put that into context, the next biggest loser among the 31 major currencies tracked by Bloomberg, the Argentine peso, has dropped just 2.48%. It’s well known by now that the populist movement that Moody’s warned about on Monday has erupted in Chile, where a wave of protests has disrupted the economy and government. The latest move lower in the peso came as the administration of President Sebastian Pinera said it would overhaul the constitution drawn up during the dictatorship of Augusto Pinochet to calm three weeks of mass protests. So why did the peso and Chile’s equity market, which fell 1.52%, take it so harshly? Many people regard the constitution, drawn up under the dictatorship of Pinochet, as the foundation of an economic system that privatized pensions and much of health care and education, a chief grievance of protesters, according to Bloomberg News’s Javiera Baeza and Eduardo Thomson. It also enshrined the strict legal safeguards to private property that are behind Chile’s water privatization, a controversial subject in a country struggling with severe droughts.NATURAL GAS STUMBLESThe natural gas market cares little about trade wars or populism. To traders there, it’s all about the weather. Natural gas futures slid the most since January as forecasts showed that a cold snap descending on the U.S. would peter out by the end of the month, curbing demand at the time of year when consumption of the heating gas usually surges, according to Bloomberg News’s Christine Buurma and Naureen S. Malik. Gas was the worst-performing major commodity Monday, tumbling as much as 6.1%. Temperatures will probably be mostly normal in the eastern half of the country Nov. 21 through Nov. 25 as an autumn chill fades, according to Commodity Weather Group LLC. Beyond the weather, the slide in natural gas underscores how record production from shale basins continues to weigh on the market even as exports soar and the power industry becomes more reliant on the fuel. Without a sustained Arctic chill this winter, stockpiles will remain above normal for the time of year, pressuring prices lower, according to Buurma and Malik. As they point out, hedge funds are adding to the bearish momentum, holding the largest short position since 2015 for the time of year.TEA LEAVESWhen the National Federation of Independent Business said a month ago that its small-business sentiment index for September fell to near the lowest level of Trump’s presidency, it noted that the part of the gauge measuring “uncertainty” plunged to its lowest since February 2016. “More owners are unable to make a statement confidently, good or bad, about the future of economic conditions,” the group said, with 30% of respondents reporting “negative effects” from tariffs. Don’t expect much improvement when the group provides an update on Tuesday. The median estimate of economists surveyed by Bloomberg is for a reading of 102 for October, little changed from 101.8 in September. Bloomberg Economics points out that small-business activity has been moderating since the last report. Most notably, the ADP private employment survey indicated recently that net hiring has shrunk to half the pace that prevailed last year, to the slowest since 2011.DON’T MISS Buying Stocks at Records Works Until It Doesn’t: Robert Burgess Investors’ Global Turn Depends on Policy Hopes: Mohamed El-Erian Delaying the IPO Process Weakens Capitalism: Stacey Cunningham U.S. Economy Has Recovered, But Labor Market Hasn’t: Karl Smith The 2020 Economy Should Feel a Lot Better Than 2019: Conor SenTo contact the author of this story: Robert Burgess at firstname.lastname@example.orgTo contact the editor responsible for this story: Daniel Niemi at email@example.comThis 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.
Rating Action: Moody's assigns provisional ratings to four classes of SME Notes to be issued by Small Business Origination Loan Trust 2019-3 DAC. Global Credit Research- 11 Nov 2019. GBP million of securities ...
Banks are lobbying the Treasury for guarantees that they will not be forced to subsidise the Post Office’s branch network, while the company has reached out to regulators to see if “a more regulated service” would allay their concerns, according to multiple people involved in the discussions. to pull out of a deal that lets its customers withdraw cash from Post Office branches after the Post Office raised its charges, but climbed down after being convinced its participation was crucial to the network.
(Bloomberg) -- Recent losses in Treasuries, which crescendoed Thursday into one of the worst days since Donald Trump was elected president, look like a buying opportunity for many investors who have a grim view of the economy’s prospects.And it appears some are pouncing, with traders cashing out bearish wagers and buy-the-dip buyers rushing in. The rekindled interest in the safety of bonds nudged yields on the 10-year, which had climbed to a three-month high of 1.97% on Thursday, down to as low as 1.89% in early European trading Friday before bouncing back to around 1.94%. European bonds rebounded after French and Belgian yields had climbed above 0% Thursday.Signs of progress in U.S.-China trade talks have thrashed bonds for days, and the two countries agreed Thursday to roll back tariffs on each other’s goods if a deal is reached. The Treasury market has seen a huge turnaround since August, when fears that global growth is slowing prompted the biggest monthly rally since 2008.“Sentiment factors have shifted the needle quite quickly from, ‘Oh, it’s the end of the world,’ to ‘Wow, there are no problems,’ and that’s a massive overreaction,” Aberdeen Asset Management’s James Athey said in an interview this week with Bloomberg Television. The sell-off has “absolutely, without question” created a buying opportunity, particularly if the 10-year yield hits 2%, he said.The U.S. is the most attractive government-bond market to own, given that the dollar remains the world’s reserve currency and the Federal Reserve has the most room to cut rates before it gets to zero, “if you believe like I do that we’re headed to a recession,” Athey said.Athey was joined by Barclays Plc, which recommended investors enter long positions in five-year Treasuries, and JPMorgan, who said traders should bank the profits made by shorting their three-year counterparts.Money manager Raymond Lee at Kapstream Capital also expects the sell-off to be contained, saying there’s value in developed markets with positive bond yields such as the U.S.“I don’t expect to see two or three years of rates backing up in a sustained way,” he said in an interview in Singapore. “Yields may bounce around on headlines a bit, but inflation is still contained and rates are likely to stay low.”Option TradersFor some Treasury options traders, the sell-off was reason to scoop up profits on lucrative one-week bets that called the recent climb in yields. The trades were struck last week when the 10-year yield was around 1.70% and netted a profit of more than $40 million as the level breached 1.90% on Thursday.Diminished appetite for government debt is pushing the 10-year yield toward 2%, a level it hasn’t surpassed since Aug. 1. It’s also sent yields on French and Belgian 10-year securities above zero for the first time in months.Some are suggesting the sell-off hasn’t gone far enough. Bond valuations “still look rich,” particularly in Europe where negative yields are pervasive, said Scott Thiel, chief fixed-income strategist for BlackRock Investment Institute.As Athey sees it, trade policy wasn’t the biggest factor behind broader worldwide weakness in the past 12 to 18 months. Instead, China is undergoing a secular shift in the pace and make up of its growth that leaves the country “less impactful” on the global economy. There’s “really not much left in the engine of global economic growth at this stage,” he said.(Updates yield levels.)\--With assistance from Ruth Carson and John Ainger.To contact the reporters on this story: Vivien Lou Chen in San Francisco at firstname.lastname@example.org;Edward Bolingbroke in New York at email@example.comTo contact the editors responsible for this story: Benjamin Purvis at firstname.lastname@example.org, Nick Baker, Boris KorbyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Treasuries tumbled Thursday as optimism about the prospect of a trade deal dented demand for bonds globally and led investors to trim bets on further Federal Reserve rate cuts.Signs of progress in U.S.-China trade talks helped push the 10-year Treasury yield up as much as 14 basis points, at one stage putting it on track for its biggest daily jump since Nov. 9, 2016. The yield reached 1.97%, a level unseen since early August, before paring its climb to around 1.92%. The 30-year rate topped 2.44%, also a three-month high, as the government auctioned $19 billion of the maturity.At the short-end, traders now doubt that the Fed will ease again at any point in the next two years. Policy makers have been signaling a pause after cutting rates for the third straight meeting in October, but traders had still been factoring some degree of easing as trade friction festered.Now, with apparent relief on that front, “we have a big shift in the 2020 outlook,” said Tom Simons, a money-market economist at Jefferies. “Long-end yields are blowing up, but look at fed funds futures too -- cuts aren’t in the picture any more.”In Europe, rates on benchmark 10-year French and Belgian securities climbed back above 0% for the first time in months, while globally the stock of bonds with sub-zero yields has shrunk to around $12.5 trillion, from about $17 trillion in August.The current mood is a stark contrast to a few months ago, when investors were willing to accept negative yields to insulate their portfolios from the economic harm of the trade war.With yield curves steepening of late, the market is signaling optimism that progress on the trade front and this year’s Fed rate cuts may have helped stave off a U.S. recession.The cheerier economic outlook is a threat to the Treasury market’s top-performing trade. U.S. government debt due in a decade or more has returned about 16% this year through Nov. 6, on pace for its biggest annual gain since 2014, according to a Bloomberg Barclays index. But the performance is now faltering, with the measure extending declines to a third straight month.\--With assistance from Tasos Vossos, James Hirai and Benjamin Purvis.To contact the reporters on this story: John Ainger in London at email@example.com;Katherine Greifeld in New York at firstname.lastname@example.org;Vivien Lou Chen in San Francisco at email@example.comTo contact the editors responsible for this story: Paul Dobson at firstname.lastname@example.org, William Shaw, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.Lebanon received some of the starkest warnings yet that a default and a deeper recession are increasingly a possibility as protests rock the nation.Moody’s Investors Service on Tuesday downgraded Lebanon deeper into junk for a second time this year, reflecting “the increased likelihood” of what may constitute a default under its definition. The World Bank, which earlier projected a small recession in 2019, now expects it “to be even more significant due to increasing economic and financial pressures.”Lebanon is in dire financial straits just as it succumbs to political paralysis and protests grip the country for a third week. The outcry already prompted the resignation last month of Prime Minister Saad Hariri. But the president has yet to set a date for the start of binding parliamentary consultations to name a new premier, raising concerns the country will be unable to implement measures urgently needed to avert economic meltdown.“The politics has the most attention, but economy has the most risks,” Saroj Kumar Jha, the World Bank’s regional director, said after a meeting with Lebanese President Michel Aoun on Wednesday. “With every passing day, the situation is becoming more acute and this would make recovery extremely challenging.”Lebanon has never defaulted on its obligations despite straining under one of the world’s biggest debt burdens, but the country has seen its credit risk soar as confidence crumbles in the government’s ability to cope with distress.Investors have turned away from Lebanon’s debt despite a package of emergency measures rolled out in October. Its Eurobonds are the world’s worst performers this year after those of Argentina. Their average yield has doubled to 21% since the start of 2019, according to a Bloomberg Barclays index.The nation’s currency peg, in place for more than two decades, is also coming under pressure as local businesses struggle to access dollars from banks at the official rate. After reopening last Friday following two weeks of closures, banks tightened informal restrictions on money transfers that were in place prior to the unrest, in an effort to curtail capital flight.Moody’s lowered Lebanon’s credit rating one level to Caa2 -- the fourth-lowest junk grade -- and said it remains on review for downgrade. Lebanon’s central bank retains a “usable foreign exchange buffer” of only about $5 billion to $10 billion, according to Moody’s. Just over a month ago, the rating company said its usable holdings were no less than $6 billion.Without new net inflows, the stockpile is now likely to be depleted by the government’s looming payments on external debt, estimated at $6.5 billion this year and next, Moody’s said.In an effort to boost liquidity and stave off possible downgrades, Lebanon’s central bank this week instructed local lenders to raise their capital by 20% by next June.Earlier, it also agreed to slash $2.9 billion in interest payments on its holdings of local currency-denominated government debt by waiving coupon payments. The proposal was part of a sweeping package of reforms that aimed to lower the budget deficit to 0.6% of gross domestic productProtesters are meanwhile keeping up the pressure on government officials as students led the demonstrations Wednesday, especially in the capital and outside state entities including the Education Ministry, the Judicial Palace and the electricity company. Thousands have been on the streets, demanding the resignation of a political class that they say has left the country on the verge of bankruptcy.The World Bank warned of the steep cost the crisis could inflict, saying poverty could rise to 50% should there be no immediate solution and if the economic predicament worsens. A third of the Lebanese were estimated to have been in poverty in 2018.“In the absence of rapid and significant policy change, a rapidly deteriorating balance of payments and deposit outflows will bring GDP growth to or below zero, further stoking social discontent, undermining debt sustainability and increasingly threatening the viability of the peg,” Moody’s analyst Elisa Parisi-Capone said.\--With assistance from Paul Wallace and Dana El Baltaji.To contact the reporters on this story: Justin Villamil in Mexico City at email@example.com;Dana Khraiche in Beirut at firstname.lastname@example.orgTo contact the editors responsible for this story: Carolina Wilson at email@example.com, Paul Abelsky, Amy TeibelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Rating Action: Moody's affirms the Ratings of the Five Largest South African Banks following action on the South African sovereign and changes the outlook to negative. Global Credit Research- 05 Nov 2019. ...