Wednesday, May 25, 2016

Today's Headlines

  • Greece Wins Pledge for Debt Relief as IMF Bows to Euro Plan. (video) Greece’s creditors reached a preliminary accord to ease the country’s debt burden but left the important details to be hammered out after Germany’s federal election next year. At a meeting of euro-area finance ministers in Brussels that ended early Wednesday, and paved the way for a 10.3 billion-euro ($11.5 billion) aid payout, the International Monetary Fund retreated from its hard-line stance for concrete and generous measures on Greece’s debt, allowing creditors to announce a “breakthrough” despite giving no figures or real commitments.
  • China Weakens Yuan Fixing to Lowest Since 2011 as Dollar Climbs. (video)
  • Macau Economy Seen at Risk as Moody’s Downgrades Gambling Hub. Moody’s Investors Service downgraded the Macau government’s credit rating, reflecting concerns the Chinese city that’s home to units of Las Vegas Sands Corp. and Wynn Resorts Ltd. will suffer volatile growth amid slumping gaming revenue. The world’s largest casino hub was cut by one grade to Aa3 and assigned a negative outlook, the rating agency said in a statement Wednesday. Moody’s also lowered Macau’s long-term foreign currency bond ceiling to Aa2 from Aaa and its long-term foreign currency deposit ceiling to Aa3 from Aa2.
  • Traders’ Hopes Dim as Brazil Dream Team Faces Fiscal Nightmare. Brazil bond investors are dialing back their optimism after newly appointed Finance Minister Henrique Meirelles acknowledged that the country’s fiscal problems are much worse than anyone had imagined. Yields on government notes due in 2025 have jumped 0.55 percentage point from an almost 12-month low on May 12, when the minister took office. Since then, Meirelles -- part of a group of cabinet officials that Goldman Sachs Group Inc. dubbed a “dream team” -- has said the economy is in worse shape than he anticipated. Brazil will also face a budget deficit excluding interest payments that’s 75 percent greater than the one forecast by the previous government.
  • Burned Indian Bankers Turn Scrooges After Bad Loans Swell Losses. It’s back to square one. Loan growth at Indian banks is slowing again, proving that a rebound seen in February was just a blip. Credit grew 9.16 percent in the 12 months through April 29, the least since October, and compared with an average of about 14 percent over the last five years, fortnightly central bank data compiled by Bloomberg show. Growth reached as high as 11.6 percent in the period through Feb. 19. A lending revival has eluded Prime Minister Narendra Modi, hindering efforts to spur investment as he completes two years in office this week. Twelve Indian state-run banks reported combined losses of 206 billion rupees ($3.1 billion) for the March quarter, hurt by surging bad debts. That’s made banks unwilling to part with funds, just as falling short-term commercial paper rates drive borrowers to the money markets, according to Sundaram Asset Management Co.
  • European Stocks Cap Best 2-Day Gain in 3 Months on U.S. Optimism. European equities posted their biggest back-to-back advance since February as optimism grew the U.S. economy is strong enough to withstand higher interest rates. The Stoxx Europe 600 Index added 1.3 percent at the close of trading. Banks posted the biggest gains among industry groups, followed by energy shares and miners as commodities rose. Europe’s benchmark jumped yesterday after better-than-forecast U.S. housing data signaled economic strength before a potential Federal Reserve rate hike next month.
  • Pre-OPEC Meeting Said to Have No Discussion of Oil-Output Limits. (video) The final preparatory gathering of officials from the Organization of Petroleum Exporting Countries before the ministerial meeting on June 2 didn’t discuss any limits on crude output, the latest signal that the group will stick to its current strategy of letting low prices eradicate a supply glut. Discussions at the Economic Commission Board in Vienna, at which representatives of OPEC members review the market, focused on technical matters, said two people familiar with the matter, who asked not to be identified because the talks were private.
  • Shell Cuts 2,200 More Jobs to Withstand Lower-for-Longer Oil. (video) Royal Dutch Shell Plc will cut 2,200 more jobs, taking the tally of losses to 12,500 from 2015 to 2016 as Europe’s biggest oil producer continues to adjust to the slump in prices. At least 5,000 jobs will be cut this year, the company said in an e-mailed statement. These reductions are in response to oil prices staying “lower for longer,” and a result of the acquisition of BG Group Plc earlier this year, said Paul Goodfellow, Shell’s vice president for the U.K. and Ireland. Shell and BG employed about 94,600 people at the end of 2015. “These are tough times for our industry,” Goodfellow said in the statement. “We have to take further difficult decisions to ensure Shell remains competitive through the current prolonged downturn.”
  • Tiffany(TIF) Sales Trail Estimates on Weaker Demand From Tourists. (video) Tiffany & Co., the luxury jewelry retailer, posted first-quarter sales that missed analysts’ estimates, hurt by weak demand from tourists and domestic U.S. consumers. Revenue fell 7.4 percent to $891.3 million in the quarter through April 30, the New York-based company said Wednesday in a statement. Analysts had estimated $915 million, on average. Profit, which fell for a sixth straight quarter, was 69 cents a share, or 64 cents, excluding a tax benefit. Analysts projected 68 cents. The shares slipped as much as 3.1 percent to $61.89 in New York. Tiffany already had slid 16 percent this year through Tuesday.
  • Alibaba(BABA) Undergoing SEC Investigation Over Accounting Practices. Alibaba Group Holding Ltd. said it’s being investigated by the U.S. Securities and Exchange Commission over its accounting practices and whether they violate federal laws. The company is providing documents and cooperating with the probe, according to the Hangzhou, China-based company’s annual report. The investigation is looking at consolidation practices, related party transactions and data reported from its Singles’ Day promotion.

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