Friday, July 31, 2015

Today's Headlines

Posted by Gary .....at 1:56 PM
Bloomberg: 
  • Greek Financial Markets Will Reopen Monday With Restrictions. Greece’s financial markets will reopen with some limitations to trading, the nation’s Finance Ministry said. Greek traders will be able buy stocks only if they use new money such as funds transferred from abroad, cash-only deposits or from money earned from the future sale of stocks, the Finance Ministry said in a decree on Friday. Foreign investors will be excluded from all restrictions, provided that they were already active in trading before the imposition of capital controls last month. The Athens Stock Exchange will reopen on Aug. 3, according to a separate e-mail statement from the bourse. That will follow a five-week shutdown, the longest since a stretch of almost six weeks that ended in January 1973.
  • Junk Bond Rally Loses Steam in Europe as Global Sell-Off Deepens. Europe, the only positive area for the global high-yield market this month, is succumbing to a global sell-off. Junk bonds in Europe lost 0.44 percent since July 21, according to Bank of America Merrill Lynch index data. The securities returned about 1 percent this month, the most since February, as comparable global benchmarks suffered losses. Slumping oil prices, wild gyrations in Chinese equities and concerns that the U.S. Federal Reserve is moving closer to raising interest rates reversed a European rally that had been triggered by improvements in the Greek debt crisis. Investors withdrew $1.4 billion from high-yield bond funds globally in the week through July 29, the most in four weeks, Bank of America Corp. said in a report on Friday.
  • China Auto Sales Will Tank if Stocks Enter Bear Market. China’s vehicle sales may post its first annual decline in more than 17 years if the stock market continues to slide, according to the China Automobile Dealers Association. Vehicle sales will tank if an equity rout continues, and expand 1 percent to 2 percent this year if stock prices stabilize and the economy recovers, said Luo Lei, deputy secretary-general of industry trade group. “A stock market plunge hurts consumer confidence,” Luo said in a phone interview Friday. “People wouldn’t want to spend on cars when the market keeps on declining. Dealers are sacrificing their margins and giving out big incentives to help attract buyers.”
  • Brazil Real Extends Worst Monthly Drop Since March on Fiscal Woe. The real fell to a 12-year low and extended its biggest monthly decline since March as budget reports added to concern that Brazil will be lowered to junk. Standard & Poor’s cited a slowing economy and fiscal turmoil Tuesday when it changed its outlook to negative on the nation’s credit rating, already at the lowest level of investment grade. The central bank’s decision the next day to avoid further increases in interest rates limited the desirability of the nation’s assets to global investors looking for higher yields. The real dropped 1.3 to 3.4155 per dollar at 11:53 a.m. in Sao Paulo, the weakest level on a closing basis since March 2003. It has fallen 9 percent in July, the worst performance among 31 major currencies after the ruble.
  • Asian Currencies in Steepest Drop in 10 Months as Growth Slows. Asian currencies weakened the most in 10 months in July as slowing economic growth and the prospect of higher U.S. interest rates spurred outflows. South Korea’s won led declines, falling 4.7 percent in its biggest monthly drop since 2011. Thailand’s baht lost 4.2 percent and Taiwan’s dollar depreciated 1.9 percent. The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 major currencies excluding Japan’s yen, fell 1.4 percent. Taiwanese gross domestic product increased by the least since 2012 last quarter, a report showed on Friday, and expansion in South Korea was the slowest in more than two years. A gauge of Chinese manufacturing fell to a 15-month low in July, fueling concern a slowdown in Asia’s largest economy hasn’t bottomed out yet.
  • Russian Ruble, Oil Double Down on Economic Drag. (video)
  • Why Latin America's Economy Won't Grow This Year. (video)
  • Puerto Rico Muni Index Falls to Six-Year Low as Default Looms. An index that tracks the performance of Puerto Rico’s municipal debt fell to a six-year low with the commonwealth on the verge of defaulting on some of its obligations for the first time. The Standard & Poor’s Municipal Bond Puerto Rico index closed at 151.97 Thursday, the least since the wake of the global financial crisis in July 2009. The commonwealth’s Public Finance Corp. will likely fail to make $58 million in bond payments due Aug. 1, the first default since Puerto Rico was ceded to the U.S. following the Spanish-American War. Government officials say they can’t make the payment because the legislature didn’t appropriate the funds last month for the current fiscal year.
  • European Stocks Cap Best Monthly Advance in Five Amid Earnings. European stocks were little changed amid earnings reports, completing their biggest monthly rally since February. Miners and energy companies fell as commodities extended a monthly plunge. Spain’s CaixaBank SA dropped 2.4 percent after cutting its net interest income growth forecast for 2015. BNP Paribas SA climbed 2.9 percent as France’s largest bank swung to its biggest quarterly profit in more than three years. The Stoxx Europe 600 Index gained less than 0.1 percent to 396.37 at the close of trading.
  • The U.S. Economy Is on Track to Finish a Decade Without Significant Growth. It would take a miracle for growth to reach 3 percent this year, marking a decade without it. The U.S. economy keeps chugging ahead, more like a tortoise than a hare. At this rate, it won't be anywhere near where economists expect it to be at the end of the year.  Gross domestic product expanded at a 2.3 percent annualized rate in the second quarter, according to Commerce Department figures published Thursday. While that was an improvement over the 0.6 percent pace in the first three months of the year, it was less than economists had forecast. The new figures all but assure GDP for the year yet again will fail to reach the 3-percent mark, the pace economists generally say is needed in order for the average American to really feel it. ``This has been a uniquely slow period of growth that's delivered very little for low- and middle-income households,'' said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities in Washington and former chief economist for Vice President Joe Biden. ``We need to grow faster and more equitably.''   
  • Exit From Leveraged-Credit Funds Seen as Sign of Things to Come. When you use borrowed money to make a bet, you can win big and you can lose big, as some investors in closed-end debt funds are finding out right now. Shares of such funds are plunging way below the value of their underlying assets, with the biggest discounts since the U.S. financial crisis. Traders seem to just want to get this stuff off their books, even at a painful price. At best, these funds are just a small corner of the $39 trillion U.S. debt market and their suffering is perhaps a temporary phenomenon that doesn’t reflect broader problems. At worst, it’s a harbinger of a more significant selloff ahead in debt markets that have swelled to unprecedented sizes on the heels of the Federal Reserve’s stimulus.
Telegraph:

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