Monday, August 08, 2016

Today's Headlines

  • China’s Great River of Steel Swells as Trade Tensions Build. There’s a river of steel flooding from China despite the best efforts of governments around the world to dam the flow from the top producer, with data on Monday showing that overseas shipments held above 10 million tons in July. Sales increased 5.8 percent on-year to 10.3 million metric tons last month, compared with 10.9 million tons in June, according to China’s customs administration. Exports in the first seven months expanded 8.5 percent to 67.4 million tons, a record volume for the period. That’s in line with what South Korea, the world’s sixth-largest producer in 2015, makes in an entire year.
  • China’s Exports Remained Sluggish Last Month. (video)
  • China Sees Second Shipbuilder Default This Year as Economy Slows. A Chinese shipbuilder failed to make a bond payment due Monday, becoming the second such company to default in the onshore market this year. Wuhan Guoyu Logistics Industry Group Co., which is based in the central province of Hubei, didn’t transfer funds for interest and principal payment to the Shanghai Clearing House before the due time, according to a statement Monday. The firm issued the 400 million yuan ($60 million) of one-year bonds at 7 percent in 2015.
  • Hong Kong Property Stocks Are Hottest Since Eve of 1997 Collapse. Hong Kong real estate shares haven’t been this hot since the city’s last housing bubble burst almost two decades ago. The industry’s benchmark equity gauge has surged 37 percent from this year’s low in January, climbing to the highest level versus Hong Kong’s Hang Seng Index in 19 years on July 29. The last time property companies performed that well relative to the broader market was October 1997, just before the Asian financial crisis sparked a collapse in Hong Kong’s real estate market.
  • China Crude Imports Fall to 6-Month Low as Teapot Demand Slows. China’s crude imports fell to the lowest level in six months as demand from independent refineries eased. Net fuel exports surged to a record. The world’s biggest energy user imported 31.07 million metric tons of crude in July, according to data released by the General Administration of Customs on Monday. That’s about 7.35 million barrels a day, the slowest pace since January. Meanwhile, net fuel exports jumped to 2.49 million tons last month.
  • Goldman Sachs Says Buy Dollar as Traders Play Catch Up With Fed. (video) Goldman Sachs Group Inc. is telling clients to buy the dollar as the market underprices the odds of a Federal Reserve interest-rate increase this year. In a note, Robin Brooks, Goldman Sachs’s chief currency strategist, said the likelihood of a rate hike by year-end is 75 percent after the U.S. Labor Department released stronger-than-forecast payroll data on Aug. 5, up from 65 percent. The futures market is pricing in about a 50 percent chance, up from 36 percent the week before.
  • Don’t Count on Trump or Clinton to Fix Your Bridges and Potholes. The U.S. presidential candidates are trying to outdo each other in pledging federal money for the country’s crumbling infrastructure. Bank of America Merrill Lynch says they have the wrong approach. It’s best that states and cities finance their projects through the municipal-bond market because federal taxation isn’t effective and lacks accountability, according to a report led by Philip Fischer, head of municipal research at the unit of Bank of America Corp.
  • Fannie, Freddie Could Need $126 Billion in Crisis, Test Shows. Fannie Mae and Freddie Mac could need as much as $125.8 billion in bailout money from taxpayers in a severe economic downturn, according to stress test results released Monday by their regulator. The Federal Housing Finance Agency said that the government-controlled companies, which back nearly half of new mortgages, would need at least $49.2 billion.
  • Delta(DAL) Struggles to Restart Flights After Power-System Failure. (video) Delta Air Lines Inc. struggled to restart its worldwide operations after a computer failure halted flights for hours and grounded thousands of passengers. 
Wall Street Journal:
  • Are Negative Rates Backfiring? Here’s Some Early Evidence. Economists worry that people and businesses are saving more, instead of spending. Two years ago, the European Central Bank cut interest rates below zero to encourage people such as Heike Hofmann, who sells fruits and vegetables in this small city, to spend more.
Zero Hedge:

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