Tuesday, August 04, 2015

Today's Headlines

Bloomberg:
  • Lenders at Record Low Drag Greek Equities Down for Second Day. Greek lenders fell to their lowest levels since at least 1995, sending the nation’s stocks lower for a second day. Piraeus Bank SA slumped 30 percent, the daily maximum allowed by the Athens Stock Exchange. Eurobank Ergasias SA and Alpha Bank AE also tumbled that much, while National Bank of Greece SA fell 28 percent. The benchmark ASE Index lost 1.2 percent to 659.94 at the close of trading in Athens, paring a retreat of as much as 4.9 percent.
  • Puerto Rico Debt-Crisis Grows as Payments Halt, Bond Prices Fall. Puerto Rico’s debt crisis escalated as it suspended deposits into a fund that pays its general-obligation bonds and one of its agencies defaulted for the first time, jeopardizing the cash-strapped government’s ability to raise money. The price of the commonwealth’s newest general-obligation bonds fell near a record low, with the island pushed to the brink from years of borrowing to cover budget deficits. Governor Alejandro Garcia Padilla is seeking to restructure Puerto Rico’s $72 billion of debt, saying bondholders need to share in the commonwealth’s sacrifices.
  • BMW Says Chinese Slowdown May Force It to Revise Forecast. (video) BMW AG said slowing sales in China may force it to revise this year’s profitability goals, challenging new Chief Executive Officer Harald Krueger as he seeks to defend his lead in the global luxury-car industry. Earnings before interest and taxes from automaking are still expected at 8 percent to 10 percent of sales, though “if conditions on the Chinese market become more challenging, we cannot rule out a possible effect” on the forecast, the Munich-based manufacturer said Tuesday.
  • The Devastation in Global Commodity Currencies Is Far From Over. Canada, Australia, New Zealand currencies set to plunge, OppenheimerFunds says. A bounce in crude oil and other commodity prices Tuesday halted a plunge in currencies of countries linked to natural-resource exports. The respite will be short-lived, according to OppenheimerFunds Inc. The Canadian, Australian and New Zealand dollars are off to the worst start to a year since the financial crisis. The nations are grappling with a 29 percent drop in raw-material prices amid swelling supplies and slowing demand in China. Next up, they'll have to contend with the Federal Reserve's plan to raise interest rates this year, which is forecast to boost the U.S. dollar.
  • Bank Shares Lead European Stock Drop as Greece Falls for 2nd Day. European stocks snapped a five-day winning streak as declines in banks outweighed a surge in miners. Greek shares slid for a second day. Credit Agricole SA dragged lenders to the worst performance on the Stoxx Europe 600 Index, tumbling 10 percent after signaling it failed to win backing from regulators for a reorganization that may free up capital to repay investors. Total SA and Eni SpA pulled oil-and-gas companies down, as crude traded in a bear market. BHP Billiton Ltd and Rio Tinto Group rose at least 1.6 percent, pushing commodity producers to the biggest gain on the equity gauge as some metal prices rebounded. The Stoxx 600 retreated 0.2 percent to 398.75 at the close of trading, after earlier losing as much as 0.6 percent. Italy’s FTSE MIB Index and Spain’s IBEX 35 Index dropped 1 percent.
  • Oil’s Below $50 and About to Get Worse. (video) The slump may have further to go. U.S. refineries, which turned a record amount of crude into gasoline during July, typically slow down from August through October for maintenance.  
  • The Oil Crash Has Caused a $1.3 Trillion Wipeout. It’s the oil crash few saw coming, and few have been spared as it erased $1.3 trillion, the equivalent of Mexico’s annual GDP, in little more than a year. Take billionaire Carl Icahn. When crude was at its peak in June 2014, the activist investor’s stake in Chesapeake Energy Corp. was worth almost $2 billion. Today, oil has lost more than half its value, Chesapeake is the worst performer in the Standard & Poor’s 500 Index and Icahn has a paper loss of $1.3 billion. 
  • Milk Powder Prices Plunge to New Low at Auction. Whole milk powder plunged to the lowest in at least seven years at an international auction, the latest indication yet of chronic oversupply in the global daily industry. The average price in the auction fell 14 percent, GlobalDairyTrade, the organizer, said Tuesday on its website.
  • The Painful Lesson of Selling Risky, Esoteric Debt in a Downturn. There’s a big difference between investors who have the luxury of keeping their money in risky debt for the long haul versus those who are forced to sell. An example: the first-loss piece of collateralized loan obligations, which bundle junk-rated loans and slice them into pieces of varying risk and return. These were popular with credit hedge funds in the past few years as one of the few debt investments offering potential returns above 10 percent in an era of historically low yields. That changed in the first six months of this year as oil plunged.
  • BofA(BAC) Governance Worst Since Pre-Crisis Citigroup, Mayo Says. Bank of America Corp., which overruled a shareholder vote mandating an independent chairman, has the worst corporate governance of any big bank since Citigroup Inc. before the financial crisis, CLSA Ltd. analyst Mike Mayo said. Bank of America shareholders as of Aug. 10 will be allowed to vote on last year’s change that enabled Chief Executive Officer Brian Moynihan to add the chairman title, the Charlotte, North Carolina-based lender said last week in a regulatory filing.
 Zero Hedge:
Telegraph:

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