Saturday, May 07, 2016

Today's Headlines

  • Italian Bonds Seen Pressured as Focus Turns to Peripheral Woes. Government bonds from the euro region’s so-called peripheral nations may further underperform German securities with a banking crisis in Italy and political gridlock in Spain far from being resolved. While euro-area sovereign bonds are supported by the European Central Bank’s 80 billion euros ($91 billion) a month asset-purchase program, domestic solvency worries are back in focus. Even as Italian 10-year bonds were little changed this week, the yield spread versus similar-maturity German debt widened to the most in more than two months Friday as Italy’s troubled banking sector threatened to hurt its still weak economy. The gap between Spanish and German 10-year bond yields widened to the most in a month as Spain heads to its second election in six months after missing a deadline to form a government in May. Falling oil prices and faltering equity markets this week prompted investors to seek the relative safety of German debt, the region’s benchmark sovereign securities. “We now have the Spanish general election back on the table,” said Owen Callan, a Dublin-based fixed-income strategist at Cantor Fitzgerald LP. “So political risk in the peripherals will start to become an issue again. We still have issues around the Italian banking sector in the background. That’s going to bring a bit of volatility into the peripheral bonds.”
  • Saudi Arabia Replaces Oil Minister Amid Shuffle, Al Arabiya Says. Saudi Arabia replaced its longstanding oil minister as it reorganizes ministries, Al Arabiya reported. Ali Al-Naimi, who has held the position since 1995, will be replaced by Khalid Al-Falih, chairman of state-owned Saudi Arabian Oil Co., known as Aramco, the state-owned broadcaster said. The ministry will be renamed the Ministry of Energy, Industry and Mineral Wealth
  • Alberta Wildfires Approach Suncor Oil Site as Blaze Spreads. Wildfires ravaging the center of Canada’s oil patch in northern Alberta may double in size as warm temperatures and swirling winds push the inferno close to several major oil-sands operations, forcing a shutdown at one of the province’s biggest producers. The blaze, which expanded by half to 1,500 square kilometers (580 square miles) overnight, made an “unexpected” move to the north of Fort McMurray, rapidly approaching bitumen mining operations run by Suncor Energy Inc. and others, Travis Fairweather, a forestry spokesman, said in phone interview. “It is a dangerous and unpredictable and vicious fire that is feeding off an extremely dry Boreal forest,” federal Public Safety Minister Ralph Goodale told reporters Saturday in Regina, Saskatchewan. He said the swirling fire is not a threat to any additional communities.
  • London's New Muslim Mayor Vows to Serve `Every Single Community'. Sadiq Khan of Britain’s main opposition Labour Party took over as London’s first Muslim mayor on Saturday, facing down critics who used his religion against him by vowing to “represent every single community” in the capital. Khan’s election is a challenge to the rise of anti-Muslim rhetoric by right-wing politicians including French National Front leader Marine Le Pen and presumptive U.S. Republican presidential nominee Donald Trump, who promises to ban Muslims from entering the country. London is a city “that not only tolerates but celebrates diversity,” campaigner Doreen Lawrence said as Khan was sworn in Saturday. Lawrence, mother of Stephen Lawrence, a British teenager who was murdered in a racist attack in South East London in 1993, said the city had “chosen hope over fear.”
  • Business-Jet Sales Drop Most Since 2011 Amid Oil Price Collapse. Sales of new private aircraft fell 16 percent in the first quarter from a year ago as demand weakened for the largest planes. Jet airplane billings were about $3.53 billion in the first quarter, down from $4.2 billion a year earlier, according to the General Aviation Manufacturers Association. That was the biggest decline in almost five years. Demand for large-cabin business jets has deteriorated amid a dearth of spending from the oil industry, a strengthening dollar and low commodity prices that are sapping purchases in some emerging-market countries.
  • Warren Buffett's Berkshire(BRK/A) Discloses Subsidiary's Iran Ties, Opens Internal Probe. Warren Buffett’s Berkshire Hathaway Inc. notified overseers including the U.S. Treasury Department that a foreign subsidiary made sales through a third-party distributor to customers in Iran. The customers may “meet the definition of the ‘Government of Iran,”’ under U.S. law, according to a regulatory filing Friday from Omaha, Nebraska-based Berkshire. Iran is among nations that were slapped with trade sanctions under a U.S. blacklist for countries with terrorism ties.
Wall Street Journal:
  • Had bullish commentary on (EPC), (EWA) and (VC).
  • China’s debt problem is bigger than you think. Bad loans are 10 times as large as official Chinese data suggest, research firm says. China’s bad loans are many times worse than what the official data are claiming, and the Chinese authorities do not have a strategy to tackle the problem, according to the latest research from CLSA. “Nonperforming loans will worsen with the slowing economy, but the government does not have a comprehensive plan,” Francis Cheung, head of CLSA’s China and Hong Kong strategy, said during a presentation Friday.
Zero Hedge:
Business Insider:
The Telegraph:

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