- Yatsenyuk Resigns as Ukraine’s Premier After Coalition Dissolves. Ukrainian Prime Minister Arseniy Yatsenyuk resigned after two parties quit the ruling coalition and President Petro Poroshenko signaled his support for early elections. Yatsenyuk told the parliament in Kiev today that he’s stepping down after losing his allies’ backing and failing to pass legislation. Former world boxing champion Vitali Klitschko’s UDAR and Svoboda, a nationalist group, said they’d leave the coalition and seek a snap parliamentary ballot, according to statements today on their websites.
- EU May Target Putin’s Spy Chiefs as U.S. Calls for MH17 Response. The European Union is preparing to sanction Russia’s most senior spies and security officials, some of whom served alongside President Vladimir Putin in the Cold War, as it seeks to step up its response to the conflict in Ukraine, according to a draft document obtained by Bloomberg. Alexander Bortnikov, director of the Federal Security Service which replaced the Soviet-era KGB, and Mikhail Fradkov, the head of the Foreign Intelligence Service, are on the provisional list of sanctioned Russian officials, along with the head of the Security Council, Nikolai Patrushev, and Kremlin-backed Chechen leader Ramzan Kadyrov.
- IMF Cuts 2014 Global Forecast After Slowdowns in China, U.S. The International Monetary Fund lowered its outlook for global growth this year as expansions weaken from China to the U.S. and military conflicts raise the risk of a surge in oil prices.
- Air Algerie-Operated Plane Disappears en Route to Algiers. An Air Algerie MD-83 carrying 116 people crashed in the desolate Sahel region of north Africa as it approached Algier en route from Burkina Faso, marking the third major civil-aviation disaster in the space of a week. Flight AH5017, which took off in the west African country shortly after midnight carrying 110 passengers and six Spanish crew, was scheduled to land at 5:10 a.m. local time, according to Swiftair, a charter company based in Spain. The jet crashed about three hours earlier, 80 kilometers (50 miles) from the town of Gossi, Mali, according to Burkinabe authorities.
- European Stocks Rise on Euro-Area Manufacturing, Services. European stocks rose for a third day as manufacturing gains in China and the euro area boosted investors’ confidence that the economic recovery is on track. Nokia Oyj jumped to a three-year high after it posted second-quarter earnings that topped estimates. Danske Bank A/S rallied the most since August after raising its annual earnings projection. BASF SE fell 1.5 percent as earnings trailed analysts’ predictions. EasyJet Plc dropped 5 percent after saying fares out of London are under pressure. The Stoxx Europe 600 Index climbed 0.4 percent to 344.33 at the close of trading.
- Iron Ore Drops to One-Month Low as Goldman Keeps Bearish View. Iron ore extended losses to the lowest level in a month after Goldman Sachs Group Inc. said increasing production from Australia and Brazil will deepen a global glut every year through 2018. Ore with 62 percent iron content at the Chinese port of Tianjin fell 0.7 percent to $93.60 a dry ton today, the lowest since June 24, according to data from The Steel Index Ltd. The raw material will average $80 in 2015 from $107 this year, Goldman said in a report, reiterating previous forecasts. Prices tumbled 30 percent in 2014 as companies from Rio Tinto Group to BHP Billiton Ltd. (BHP) increased output.
- Wall Street Junk Euphoria Backs Ackman’s Allergan Dreams. While hedge-fund manager Bill Ackman has repeatedly failed to persuade Allergan Inc. (AGN) to sell itself, that hasn’t stopped Wall Street bankers from lining up to fund a potential deal with more than $20 billion of junk debt. Banks including Barclays Plc and Royal Bank of Canada raised loan commitments to $8 billion from $7 billion and pledged to arrange $12.4 billion of high-yield bonds to finance Valeant Pharmaceuticals International Inc. (VRX)’s unsolicited $54 billion bid, a filing showed yesterday. The bank debt includes a $5 billion term loan, which would be the biggest of its kind backing a takeover this year, data compiled by Bloomberg show. The commitments reflect how unprecedented demand for high-yield, high-risk debt has made it easy for a junk-rated borrower such as Valeant (VRX) to finance an acquisition that exceeds the combined value of all other takeovers it’s ever attempted.
- Shorting Junk Loans Just Got Easier as New Derivatives Unveiled. Wall Street has turned to financial engineering to solve one of junk-debt investors’ biggest problems: They can’t make wagers quickly enough in these illiquid markets where trades are completed over the phone. Banks are again resorting to derivatives to make it easier to place bullish and bearish bets amid a credit boom, allowing traders to amplify their profits or losses on debt rated below investment grade. In the latest innovation in this push, the biggest lenders are creating total-return swaps that seek to mimic the risk and reward tied to high-yield loans. JPMorgan Chase & Co. created a total-return swap based on Markit Group Ltd.’s iBoxx USD Liquid Leveraged Loan Index in March, the first of its kind, according to Markit. Translation: There are a lot of investors out there who are considering going short.
- A key gauge of global shipping costs is plunging and you should pay attention. (graph) A harbinger of global economic slowdown or simply an oversupply of big ships? That’s the debate surrounding the big drop in the Baltic Dry Index, a closely-watched gauge of global shipping costs, since the beginning of the year. The index has dropped 68% since the start of the year.
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