Thursday, June 23, 2016

Today's Headlines

  • Bookies Place About 90% Chance on Brexit Rejection, Odds Show. (video) Bookmakers and gamblers strengthened again in their conviction that the U.K. will opt to remain in the European Union, as Britain began voting Thursday on whether to remain a member or split from the 28-nation bloc. Paddy Power Betfair Plc, Ireland’s largest bookmaker, said Thursday that the odds on a “Remain” vote had shortened to a 1/12 chance, indicating a 92 percent probability. Yesterday, odds showed a 77 percent chance. That pattern was mirrored across gambling firms. “Remain has been backed hard again this morning with the price coming in on the back of 4 million pounds traded,” said Naomi Totten of Betfair, in a note. “There was nearly 10 million pounds traded on the day of the Scottish referendum so the market will be worth watching closely as polling day continues.”
  • French Output Declined for First Time in Four Months in June. France’s private-sector economy shrank for the first time in four months in June, with manufacturing slumping the most in more than a year. A composite Purchasing Managers’ Index fell to 49.4 from 50.9 in May, London-based Markit Economics said Thursday. That’s below the 50-point mark that divides expansion from contraction. A gauge for manufacturing dropped to 47.9, while a measure for services fell to 49.9. “A renewed fall in new business was behind the decline, with respondents highlighting the difficulty of securing work amid a fragile demand environment,” said Jack Kennedy, senior economist at Markit. “A flagging manufacturing sector was again the main source of weakness.”
  • China Stocks in U.S. Approach Death Cross as Losses Widen: Chart.
  • China's Early Data Show Smaller Firms Hurting. China’s fragile economic stabilization looks to be largely intact in June, though strains are showing for small companies, according to the earliest batch of private indicators. Minxin’s small and medium-sized business manufacturing indexes declined this month. That’s in contrast to a separate survey of executives at bigger, listed companies that showed improving conditions. Rounding out a mixed bag of readings, a measure of sales managers’ sentiment was stable, while a manufacturing gauge that’s based on satellite images showed an improvement for a third month. As a credit surge from earlier this year wanes, the government is boosting investment to pick up the slack from an indebted private sector that’s proving reluctant to spend. Judging by the indications emerging so far for June, that strategy risks favoring larger, state-owned corporations while private ones miss out on the benefits of government support. The first official reading for the month comes July 1, with the government’s manufacturing purchasing manager index at this stage forecast to remain steady at 50.1, according to economists surveyed by Bloomberg. Here’s what the earliest private indicators show:
  • Global Steel Frictions Rise as China Hits Back at U.S. Mills. China has pushed back after the U.S. boosted anti-dumping and anti-subsidy duties on some of its steel products, saying mills in the world’s biggest economy lack competitiveness because they are over-protected.
  • Europe Stocks Rise for 5th Day as Britons Vote on EU Membership. (video) European equities extended their rally into a fifth day as U.K. voters headed to polls to decide whether to stay or leave the European Union. The Stoxx Europe 600 Index rose 1.5 percent at the close of trading, as two polls conducted before Thursday showed a lead for the campaign to keep Britain in the European Union. Bookmaker Paddy Power Betfair Plc said Thursday that the odds on a “Remain” vote had shortened to a 1/12 chance, indicating a 92 percent probability. All industry groups in the Stoxx 600 climbed. The gauge is set for its best week since 2011. Britain’s benchmark FTSE 100 Index advanced 1.2 percent.
  • Giving Up on Oil Recovery, European Banks Head for Exit on Loans. After hanging on for two years of depressed energy prices, some European banks that lent to the oil and gas industry are starting to scale down their exposure. Lenders including UniCredit SpA, HSBC Holdings Plc and ING Groep NV have either sold some of the loans they made to energy companies in the past two months or held discussions with potential buyers, according to people familiar with the situations, who asked not to be identified because they weren’t authorized to discuss them publicly. New loans to energy companies in the region have also fallen by more than 50 percent this year, data compiled by Bloomberg show. Banks are losing hope that a recent pickup in crude will be enough for them to dodge losses on energy-industry loans originally made when oil was at double today’s prices. That’s making them rethink whether maintaining corporate-banking relationships is worth the potential credit risks. “European banks have been extending the debt for one or two years thinking that the market would repair itself, just like it did in 2009-10,” said Alex Brooks, an analyst at Canaccord Genuity Group Inc. in London. “It’s clear that it’s not going to happen. 
  • Tesla(TSLA) Bull Adam Jonas Cuts Rating Due to SolarCity(SCTY) Deal Risk. (video) Morgan Stanley’s Adam Jonas, one of the most bullish analysts on Tesla Motors Inc., joined the ranks of those who have panned Elon Musk’s $2.86 billion proposal to combine the automaker with solar-panel provider SolarCity Corp. Jonas, whose firm has underwritten securities offerings for Tesla, lowered his recommendation on the stock Thursday to equal-weight from overweight and reduced his 12-month target for the stock price to $245 from $333.
Wall Street Journal:

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