- G-7 Leaders Agree to Act Against Russia as Deal Falters. The Group of Seven nations are preparing new measures against Russia, German Chancellor Angela Merkel said, after U.S. Secretary of State John Kerry accused Russia of trying to impose its will at “the barrel of a gun.” President Barack Obama discussed deepening sanctions against Russia with Merkel and leaders from France, the U.K. and Italy in a conference call today, a day after Kerry said Russia is running out of time to ease tensions in Ukraine. They spoke after Russia began new military exercises on its neighbor’s border and explosions in two Ukrainian cities wounded eight people. U.S. and European officials said Russia hasn’t fulfilled its part of an April 17 accord signed in Geneva aimed at calming the crisis.
- Russia Unexpectedly Raises Main Rate as S&P Lowers Rating. Russia’s central bank sprung a surprise by raising its benchmark interest rate after Standard & Poor’s downgraded the world’s biggest energy exporter for the first time in six years as capital outflows threaten growth. The central bank, whose scheduled decisions have been correctly predicted by the majority of economists every month since September 2012, increased the one-week auction rate to 7.5 percent from 7 percent today, according to a website statement. Hours earlier, S&P cut the nation’s sovereign rating to one level above junk, the lowest investment grade on par with Morocco and Uruguay which Russia last had in 2005.
- Obama’s Vow to Aid a Drowning Putin Hints at Reserve of Goodwill. U.S. President Barack Obama said that he’d save Vladimir Putin’s life given the chance, playing down reports of personal animosity with the Russian leader. “I absolutely would save Mr. Putin if he were drowning,” Obama told reporters at a news briefing in Seoul today. “I used to be a pretty good swimmer. I grew up in Hawaii.”
- EU Said to Stress Test Banks on Worst Recession Scenario Yet. European Union officials are preparing to pit the bloc’s banks against the toughest simulated recession that they have ever faced in a stress test, three people briefed on the matter said.
- Yuan Weakens for Sixth Day on Signs China’s Slowdown Deepening. China’s yuan fell for a sixth day, touching a 16-month low, on signs a slowdown in the world’s second-largest economy is deepening. The country’s growth will weaken further, Credit Suisse Group AG’s Chief Regional Economist Dong Tao said at a conference in Hong Kong yesterday, adding that he’s pessimistic on the short-and medium-term outlooks. The current-account surplus was $7.2 billion in the first quarter, compared with $47.6 billion in the first three months in 2013, according to a statement on the State Administration of Foreign Exchange website today. HSBC Holdings Plc cut its yuan estimate today. The yuan dropped 0.08 percent to close at 6.2536 per dollar in Shanghai, China Foreign Exchange Trading System prices show. It touched 6.2583 earlier today, the weakest level since Dec. 12, 2012, and has declined 0.47 percent since April 18. The yuan has fallen 3.2 percent this year, the worst performance among Asia’s 11 most-traded currencies.
- Emerging-Market Stocks Decline as S&P Cut Sinks Ruble. Emerging-market stocks retreated, set for the longest weekly slide since January, after a surprise interest-rate increase in Russia failed to prop up the ruble as Standard & Poor’s cut the nation’s credit rating. The MSCI Emerging Markets Index dropped 1.2 percent to 992.78 at 12:04 p.m. in New York, poised for a second week of losses. The ruble extended this year’s plunge to 8.9 percent while the Micex Index slumped to a six-week low on concern that higher rates will hamper growth. Commodity producers including Vale SA (VALE5) and Petroleo Brasileiro SA led declines in Brazil’s Ibovespa and the real fell the most among 31 major currencies.
- European Stocks Decline Amid Earnings Shortfalls. European stocks fell, trimming their fifth weekly gain in six weeks, as companies from Neste Oil (NES1V) Oyj to Sandvik AB posted quarterly earnings that missed estimates and tensions escalated between the U.S. and Russia over Ukraine. Neste Oil slid 5.1 percent after also lowering its 2014 profit forecast. Sandvik lost 3 percent. Deutsche Bank AG declined 2 percent after a report that it may announce a capital increase. Electrolux AB rallied the most in five years after posting earnings that beat estimates and increasing its forecast for European demand growth. Meda AB jumped to a record after the Financial Times said Mylan Inc. raised its offer for the Swedish drugmaker. The Stoxx Europe 600 Index slipped 0.8 percent to 333.5 at the close of trading.
- Gold Advances as Ukraine Tension Fuels Haven Demand. Gold futures for June delivery rose 0.9 percent to $1,301.70 an ounce at 11:27 a.m. on the Comex in New York, heading for a third straight gain that would mark the longest rally since March 14. Prices climbed 0.7 percent in the previous two sessions.
- Investors Exit ETFs as Commodities Seen Fading. Canadian investors are pulling money out of exchange-traded funds for a second year as concern grows that a rally in energy and mining that helped drive equities to the best performance among the world’s largest markets has run its course.
- Treasuries Rise With 30-Year Yield at 9-Month Low on Ukraine. Treasuries rose, with 30-year bond yields reaching the lowest level in nine months, as the simmering conflict between Russia and Ukraine led investors to seek a haven in government securities. Thirty-year yields fell two basis points, or 0.02 percentage point, to 3.43 percent at 11:51 a.m. New York time, based on Bloomberg Bond Trader prices. The yield reached the lowest level since July 3 and has fallen from this year’s high of 3.97 percent in January.
- Housing in U.S. Cools as Rate Rise Hits Sales. After a roller-coaster decade of boom-bust-boom, the U.S. housing market is going downhill just when many economists thought annual sales would be heading up. The housing market’s underlying fragility is emerging as outside influences that fueled a two-year rebound are receding. Mortgage interest rates are rising from record lows as the central bank withdraws its stimulus, and investors, who had helped drive national prices up more than 20 percent as they went on a buying spree, are now retreating.
- BofA(BAC) Risks Posting Loss on Mortgage Accord, Portales Says. Bank of America Corp. could post a second-quarter loss because of costs tied to resolving federal and state probes into the sale of mortgage bonds, according to Portales Partners LLC. The lender may incur as much as $5 billion in litigation expenses in the period ending June 30, wiping out a previous earnings-per-share estimate of 25 cents, Charles Peabody, a Portales analyst in New York, wrote today in a research note. Peabody cited a Bloomberg News report that U.S. prosecutors are seeking more than $13 billion from the company.
- Ford(F) Reports Surprising 39% Profit Drop. Auto Maker Cites Costs to Fix Older Vehicles, Currency Issues in South America.
CNBC:
ZeroHedge:
- Goldman's Q&A On "Where We Go From Here For Equities" (And Why The Peripheral Europe Party Is Over).
- MOMO Massacre Accelerates. (graph)
BGR:
- The Amazon(AMZN) smartphone’s secret weapon: Prime Data. 3D effects and unique gesture controls aren't the only big selling points for Amazon's upcoming phones.
- Honda, Mazda profit growth slows as era of weakening yen ends. Japanese carmakers Honda Motor Co and Mazda Motor Corp are forecasting a sharp slowdown in profit growth as a fall in the yen that has boosted earnings in recent years comes to an end and some emerging market currencies weaken.
- Yen and Swiss franc gain as Ukraine worries feed safety bid. Investors moved to the safety of the yen and Swiss franc on Friday, unnerved by escalating tensions between the West and Russia over Ukraine, and also took advantage of higher yielding Pacific currencies.
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