Wednesday, August 05, 2015

Today's Headlines

Posted by Gary .....at 3:04 PM
Bloomberg: 
  • Flight Debris Confirmed to Be From MH370. (video)
  • Iran Deal Risks Weakening Arms Embargo With Removal of Experts. As Congress mulls the Iran nuclear accord, one element emerging as a source of deep concern is how to enforce the ongoing embargo on Iran’s non-nuclear missiles. For the past five years, an independent panel of experts has monitored Iran’s arms shipments. But the panel will be disbanded as a concession to Iran, according to three United Nations Security Council diplomats who asked not to be named, citing sensitivity of the matter. While diplomats are searching for new mechanisms, it isn’t clear how violations will be tracked without the panel and whether punitive measures can be introduced on non-nuclear activities without derailing the nuclear deal, they said.
  • Brazil Real Falls With Bonds as SocGen Sees Drop to 4 per Dollar. Brazil’s real declined to a 12-year low after Societe Generale SA said the currency will tumble to 4 per dollar as the government’s struggle to pare deficits makes further credit rating downgrades unavoidable. A drop in local bonds pushed yields to the highest level since March. The worst economic contraction in 25 years, an escalating political scandal and a pledge by the Brazilian central bank to refrain from increasing interest rates have helped to push the real down 24 percent in 2015, the biggest decrease among 31 major currencies tracked by Bloomberg. The prospect of reduced demand for exports in China and an expected increase in U.S. borrowing costs by the Federal Reserve are also weighing on the local tender.
  • Citigroup(C) Sounding Alarm on $13 Billion of Bank Bonds in Brazil. To Citigroup Inc., traders in Brazil’s bank-bond market are being far too complacent. The country is in danger of having its rating cut to the cusp of junk by Moody’s Investors Service, and that means the nation’s biggest lenders are also in the crosshairs. That’s because banks’ credit grades typically are aligned with those of their home country, given the lenders’ importance to the local economy. A Brazil downgrade will be especially damaging for the riskiest corner of the market, says Citigroup’s Eric Ollom.
  • Indonesia’s Economic Risk Persists as Growth Slides Further. Indonesia’s growth slowed for a second straight quarter, underlining the challenge for President Joko Widodo as he struggles to revitalize an economy expanding at the weakest pace since 2009. Gross domestic product rose 4.67 percent in the three months ended June 30 from a year earlier, from a revised 4.72 percent the previous quarter, the statistics bureau said in Jakarta on Wednesday. That compares with the median estimate of 4.64 percent in a Bloomberg survey of 21 economists.
  • Emerging-Market Currencies Deepen Slump to Record on Fed Outlook. Emerging-market currencies deepened their slump to record lows and stocks retreated amid speculation that the Federal Reserve will increase U.S. interest rates as soon as next month, curbing demand for riskier assets. The real weakened for a fifth day as Societe Generale SA said the currency will continue to tumble as Brazil’s struggle to cut government budget deficits makes further credit rating downgrades unavoidable. South Korea’s won ended a two-day gain. A Bloomberg gauge of 20 currencies slipped 0.3 percent in its fifth straight decline.
  • Rebound in Miners Leads European Stocks Higher as SocGen Jumps. European stocks climbed the most in three weeks, led by a gain in commodity producers and a surge in Societe Generale SA after it reported its highest profit since the financial crisis. Shares of France’s second-largest bank by market value rallied 7.9 percent, the most in two years. Legal & General Group Plc climbed 2.8 percent after the biggest manager of U.K. pension assets posted first-half profit that beat analysts’ estimates amid a jump in inflows. BHP Billiton Ltd. and Rio Tinto Group advanced at least 3.5 percent. The Stoxx Europe 600 Index rose 1.3 percent to 403.93 at the close of trading in London, for a sixth gain in seven days.
  • Commodities Are Crashing Like It's 2008 All Over Again. (video) Dear commodities investors: Welcome back to 2008! The meltdown has pushed as many commodities into bear markets as there were in the month after the collapse of Lehman Brothers Holdings Inc., which spurred the worst financial crisis seven years ago since the Great Depression. Eighteen of the 22 components in the Bloomberg Commodity Index have dropped at least 20 percent from recent closing highs, meeting the common definition of a bear market. That’s the same number as at the end of October 2008, when deepening financial turmoil sent global markets into a swoon.
  • Shale Boom Propels Propane-Powered Trucks From Dream to Reality. For almost 80 years, Blue Star Gas distributed propane throughout the U.S. West Coast on trucks mostly powered by gasoline. Now the company is working to convert its 55 vehicles to run on the same stuff they deliver. They won’t be alone. United Parcel Service Inc. already has more than a thousand propane-powered delivery trucks on the street, with plans to buy more. The change is propelled by a glut of propane from shale wells. It comes as prices for the fuel trade close to a 13-year low and are 75 percent cheaper than diesel. 
  • The Odds of a September Rate Hike Have Surged in the Last Two Days. Likelihood of Fed September rate increase tops 50 percent. Traders have never been more convinced of a September rate hike by the Federal Reserve. The chances of an interest-rate increase next month reached 52 percent Wednesday,  up from just 38 percent just two days earlier. What's fueled the change of heart? Hawkish comments from Fed Bank of Atlanta President Dennis Lockhart on Tuesday, and a surprisingly strong report on U.S. service-sector growth Wednesday morning.
  • Corporate-Bond Overload: July’s Sales Deluge Leads to Buyer Fatigue. Bond buyers are getting exhausted after absorbing trillions of dollars of corporate debt in the past few years. While they still gobbled up a record-breaking $135 billion of U.S. investment-grade bond sales in July, they’re getting pickier. They’re now demanding the most extra yield to own the debt instead of government securities in two years. “The high-grade bond market feels satiated with paper,” Bank of America Corp. analysts led by Hans Mikkelsen wrote in an Aug. 3 report. “What this market needs is a break -– either in the form of a slowdown in supply volumes or some healthy inflows.” Dollar-denominated investment-grade bonds have been steadily losing value. Prices on the notes have fallen to an average 104.8 cents on the dollar from 110.4 cents in January, according to Bank of America Merrill Lynch index data.
  • SEC Backs Rule Forcing Companies to Compare CEO and Worker Pay. The U.S. Securities and Exchange Commission approved a rule Wednesday requiring companies to reveal the pay gap between the chief executive officer and their typical worker, handing a new weapon to groups protesting rising income inequality. The commission voted 3 to 2 to mandate the disclosure. The agency had delayed progress on the rule for years, with SEC Chair Mary Jo White facing attacks from unions and Democratic lawmakers in recent months for failing to get it done.
  • Bank of America Merrill Lynch Downgrades Apple(AAPL) for Six Key Reasons.
Zero Hedge: 
China Business News:
  • Some China Margin Lenders Boost Business as Market Warms Up. Six out of 10 margin lenders are persuading investors to open new financing accounts with leverage ratio of as much as 10:1, citing interviews with the cos. Some companies seek other software or to develop their own after crackdown by China's securities regulator on information-technology companies that offer share-leading facilities, according to the companies.

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