Wednesday, January 13, 2016

Today's Headlines

Posted by Gary .....at 3:05 PM
Bloomberg:
  • Iranian Detention of U.S. Sailors Clouds Obama Address. Just hours before President Barack Obama was set to deliver his final State of the Union address, reports that 10 U.S. sailors had been detained by Iran were threatening to overshadow the prime time address  to the nation. Senior administration officials worked quickly to quell concerns over the incident, saying they had assurances from the Iranian government that the sailors were being treated well and would be released soon. But questions over how long they had been detained -- and when they would be freed -- spurred Republicans criticism of Obama’s handling of foreign policy.
  • Iran Sanctions Seen Lifted by Monday Once Nuclear Deal Verified. A decade of sanctions imposed on Iran’s nuclear program may come to an end by Monday, unlocking billions of dollars in frozen accounts and paving the way for a surge in oil exports from the Islamic Republic. The International Atomic Energy Agency is expected to report on Friday that Iran has fulfilled its commitments under July’s nuclear accord with world powers, Iran’s Deputy Foreign Minister Abbas Araghchi said in Tehran. That would enable a joint announcement by Sunday implementing the deal and lifting sanctions, he said. Iran’s foreign ministry on Tuesday sent its director of political and international affairs, Hamid Baeedinejad, to Vienna, where the IAEA is based.
  • China's Stocks Tumble to Lowest Levels Since Last Year's Rout. Chinese stocks dropped to the lowest levels since the depths of last year’s rout in a late-day selloff as an unexpected rebound in exports and government efforts to stabilize the yuan failed to ease investor concerns about the world’s second-biggest economy. The Shanghai Composite Index slid 2.4 percent to 2,949.60 at the close, the lowest level since Aug. 26. PetroChina Co., long suspected to be a target of state-backed fund buying because of its large weighting in the gauge, tumbled by the most in 14 months. All 10 industry groups in the CSI 300 Index declined. “Investors have no confidence in this market and they are worried that the economy is still in bad shape in spite of data showing exports rebounded a bit,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. “They are competing to sell ahead of each other.” The Shanghai gauge fell below the 3,000 level for the first time since the peak of the selloff in August, when $5 trillion was wiped out during a selling frenzy triggered by concern about the record use of leverage to buy stocks. After rebounding in the fourth quarter as the government took measures to prop up equities, shares have resumed declines. The index has tumbled 17 percent this year, the most among 93 global benchmark measures tracked by Bloomberg, and almost three times the pace of the MSCI All-Country World Index.
  • Russia Weighs Spending Cuts as Siluanov Warns Oil May Fall More. (video) The Russian government is preparing to cut its 2016 spending, with policy makers considering a 10 percent reduction in non-priority expenditures to adjust to a "new reality” as oil prices are set to keep declining, Finance Minister Anton Siluanov said. The budget situation is “difficult” and “it is impossible not to adjust” spending to the new terms, Siluanov said at Gaidar forum in Moscow on Wednesday. The deficit was 2.6 percent last year and this year’s cuts would spare priority areas such as the military and agriculture, he added. The government should revisit the idea of privatizing Sberbank PJSC and VTB Group, the nation’s two largest lenders, Economy Minister Alexei Ulyukayev said at the same conference.
  • Russia's $59 Billion Budget Cushion May Not Last the Year: Chart. Russia’s Reserve Fund, which it uses to plug gaps in the budget, has slumped 30 percent since the start of last year. Finance Minister Anton Siluanov warned Wednesday that the buffer may be depleted entirely in 2016 if the government doesn’t enact bold spending cuts.
  • Little Love for Emerging-Market Rally as Analysts See Risks. It’s not turning out to be a popular rally in emerging markets. As developing-nation currencies surged the most in three months, Morgan Stanley recommended investors cut their holdings and Commerzbank AG predicted the comeback will be short-lived. “We fade the bounce in emerging-market currencies and look for renewed weakness,” Morgan Stanley strategists led by Gordian Kemen in New York, said in an e-mailed report today. Fade traders sell when prices are rising and buy when they fall.
  • Record Low Loonie in Top Forecaster's Sights Amid Commodity Rout. The Canadian dollar is heading for a record low with the central bank poised to cut interest rates again as commodity prices collapse to the lowest since 1991, manufacturing stalls and consumers remain buried in debt, according to the currency’s top forecaster. The currency will fall to a record low 59 U.S. cents by the end of 2016, Macquarie Group Ltd.’s David Doyle, Bloomberg’s top-ranked forecaster for the Canadian dollar last year, said Tuesday. Doyle’s latest call came after the currency fulfilled his previous prediction from last February to fall below 70 U.S. cents. It briefly hit 69.9 U.S. cents for the first time in 13 years Tuesday as oil dipped below $30 per barrel for the first time in almost as long.
  • BTG, Quantitas Say Ibovespa at Decade Low Has Further to Fall. A rout in Brazil stocks has sent the Ibovespa to the lowest in a decade. That’s still too high for some investors. BTG Pactual SA and Quantitas Asset Management say political gridlock and the worst recession in more than a century threaten to deepen a selloff that has already sent the Ibovespa tumbling more than 9 percent in dollar terms in the first few days of the year. It follows five straight years of losses that wiped out 70 percent of the benchmark stock index’s value.
  • Europe Stocks Rise for 2nd Day as Miners, Energy Shares Rebound. (video) European stocks clung to their first back-to-back gains in almost a month, after giving up much of an earlier rally in the final two hours. Energy companies posted the best performance on the Stoxx Europe 600 Index, even after trimming some gains on a report showing an increase in crude inventories. Commodity producers rebounded from a 12-year low, with Rio Tinto Group and Randgold Resources Ltd. rising at least 1.5 percent. The Stoxx 600 added 0.4 percent at the close of trading. 
  • Cash Burn at Petrobras to Oi Looms as $7.9 Billion Bond Tab Due. Companies in Brazil are facing their biggest bond tab of 2016 at a time when they’re all but shut out of overseas debt markets. Borrowers from state oil producer Petroleo Brasileiro SA to telecom company Oi SA have $7.9 billion of foreign-currency notes coming due in the first three months of the year, the most for any quarter in 2016, data compiled by Bloomberg show. No Brazilian company has sold bonds abroad since June -- the longest drought since at least 1999 -- as a deepening recession, a corruption scandal and a political crisis send borrowing costs to a seven-year high. Unable to refinance that debt, a third of Brazil’s firms are now spending more than half of their earnings to pay down obligations, according to Fitch Ratings. That’s a record and up from 24 percent at the end 2013.
  • China's Iron Ore Imports Surge to Record as Prices Hammered. China’s iron ore imports jumped to a record last month, a sign that overseas miners are winning a greater share of the market in the world’s biggest consumer. Steel exports soared as the nation sells its glut overseas. Inbound iron ore shipments climbed 17 percent to 96.27 million metric tons from a month earlier, according to customs data Wednesday. Full-year imports were 2.2 percent higher at 952.72 million tons, also an all-time high. To compensate for shrinking demand at home, steelmakers in China are exporting at record levels. Outbound cargoes of steel products rose 11 percent to 10.66 million tons in December from the previous month, the second highest ever, according to customs data. For the full year, exports surged 20 percent to 112.4 million tons, an all-time high. “With prices dipping below $40 a ton early in December, there appears to have been some opportunistic buying,” Australia & New Zealand Banking Group Ltd. said in a note. “However, the fact that a lot of that iron ore was stockpiled suggests end use demand remains tepid.” Annual aluminum product exports and copper ore and concentrate imports were also at record highs. Shipments of aluminum products rose 9.8 percent to 4.76 million tons in 2015, while imports of copper ore and concentrate advanced 13 percent to 13.29 million tons, customs data show.
  • It's Not a Sign of Economic Health When Soapmakers Lead S&P 500. The best-performing U.S. stocks right now are ones that usually do well when the economy isn’t, makers of everything from household cleaning products to food. It’s yet another black cloud for investors fretting over a growth slowdown. Consumer staples stocks in the Standard & Poor’s 500 Index -- which include Procter & Gamble Co. and Coca-Cola Co. -- have outpaced the benchmark gauge for seven straight weeks, the longest stretch since November 2007, when the U.S. economy was on the brink of its last recession. Valuations have also jumped, with the group’s price-earnings ratio 14 percent above the five-year average, Bloomberg data show.
  • U.S. Steps Up Scrutiny of Cash Real Estate Deals in N.Y., Miami. President Barack Obama’s administration, citing concern about the origin of funds used for all-cash purchases of luxury real estate, said it is stepping up scrutiny of transactions in New York City and Miami. The Financial Crimes Enforcement Network said on Wednesday that it will temporarily require title insurance companies to identify individuals behind companies that pay cash for high-end residential real estate in Manhattan and Miami-Dade County. FinCen, a unit of the U.S. Treasury Department, said it’s concerned that real estate purchases without bank financing “may be conducted by individuals attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other opaque structures.”
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