Monday, January 26, 2015

Today's Headlines

  • Ukrainians Direct Fury at Russia as Mariupol Victims Mourned. Ukrainians gathered to mourn 30 civilians killed by rockets in Mariupol, blaming Russia after the deadliest attack yet on the strategic port city, as fighting between government forces and separatists spread. As President Petro Poroshenko called a day of mourning, dozens congregated Sunday to light candles on Kiev’s Independence Square, the area known as Maidan that was the epicenter of the revolt that overthrew the government last year. In the Black Sea city of Odessa and in Kharkiv, near the Russian border, people gathered at the Russian consulate.
  • EU Renews Push for Russia Sanctions as Clashes Sweep Ukraine. European Union nations edged closer to tightening sanctions against Russia as fighting between government troops and rebels consumed the front line in eastern Ukraine in the deadliest escalation since a September truce. The EU will add more individuals this week to a list of those facing visa bans and asset freezes over Russia’s involvement in the conflict, Latvian President Andris Berzins, whose country holds the 28-nation bloc’s rotating presidency, said in an interview Monday. The recent events in Ukraine are “more than worrying,” French Foreign Minister Laurent Fabius said, with his German counterpart Frank-Walter Steinmeier warning that more attacks would prompt an EU response.
  • Russia Credit Rating Cut to Junk by S&P First Time in Decade. Russia’s credit rating was cut to junk by Standard & Poor’s, putting it below investment grade for the first time in a decade. S&P, which last downgraded Russia in April, cut the sovereign one step to BB+, according to a statement. The grade, which is on par with Bulgaria and Indonesia, has a negative outlook. The world’s biggest energy exporter is on the brink of a recession after oil prices fell to the lowest since 2009 and the U.S. and its allies imposed sanctions over President Vladimir Putin’s actions in Ukraine. The penalties have locked Russian corporate borrowers out of international debt markets and curbed investor appetite for the ruble, stocks and bonds. “Russia’s monetary policy flexibility has become more limited and its economic growth prospects have weakened,” S&P said in a statement. “We also see a heightened risk that external and fiscal buffers will deteriorate due to rising external pressures and increased government support to the economy.”
  • Tsipras Win Draws French Congratulations, German Threat. France’s Francois Hollande congratulated Greek Prime Minister-elect Alexis Tsipras on his election victory while urging a new government to stay the reform course, as a top German official threatened a cut-off in aid. Hollande stressed Greco-French “friendship,” even as he called on Tsipras’s new administration to adhere to “growth and stability” in the euro area, according to a government statement in Paris late Sunday. While Chancellor Angela Merkel’s government didn’t comment on Tsipras, one of her top lieutenants said Germany could scrap financial assistance if a new anti-austerity Syriza government veers off course. 
  • Spain Deflation Risks Mount as Producer Prices Drop Annual 3.7%. Spanish producer prices plunged the most in more than five years last month, adding to concerns that the economy risks falling into a deflationary spiral. Prices of goods leaving factories, refineries and mines dropped 3.7 percent in December from a year earlier, the National Statistics Institute in Madrid said today. Economists forecast a fall of 3.5 percent, according to a Bloomberg News survey. Prices fell 1.1 percent from the previous month.
  • Boko Haram’s Attack on Nigerian State Capital Leaves 65 Dead. At least 65 people were killed in an attack Sunday by Islamist militants on Maiduguri, the capital of the northeastern Nigerian state of Borno, a local militia member said. Armed forces killed 56 militants, while nine soldiers died during the clashes as the military and local vigilante groups fended off an attempt by Boko Haram to capture Maiduguri, Hassan Ibrahim said by phone from the city. The assault was the first major fighting in the state capital since an attack on an army detention center in March. 
  • European Stocks Extend Seven-Year High on ECB After Greek Vote. European stocks rose for an eighth day amid optimism about central-bank stimulus, while Greek shares dropped as opposition party Syriza won the Sunday election. The Stoxx Europe 600 Index advanced 0.6 percent to 372.39 at the close of trading in London, after earlier losing as much as 0.5 percent.
  • Iron Ore Extends Rout as China Slows, Banks Reduce Forecasts. Iron ore retreated to the lowest level in more than five years as a slowdown in China hurt the outlook for demand in the world’s biggest user while the largest mining companies add to supply, boosting a surplus. Ore with 62 percent content delivered to Qingdao, China, tumbled 4.3 percent to $63.54 a dry metric ton, according to data by Metal Bulletin Ltd. That’s the lowest price on record going back to May 2009, and was the biggest one-day fall since Nov. 18. The commodity is 11 percent lower this year.
Wall Street Journal:
  • Medicare to Rework Billions in Payments. HHS Secretary Burwell Wants 50% of Payments Based on Performance by End of 2018. The Obama administration on Monday set an ambitious goal to rework hundreds of billions of dollars in Medicare payments to doctors and hospitals in an effort to reduce waste and make older Americans healthier.
  • European Regulators Pressure Big Banks to Increase Capital. Banks Encouraged to Raise Capital Well Above Formal Regulatory Limits. European regulators are turning up the pressure on large banks to further strengthen their balance sheets amid nagging concerns about Europe’s financial and economic health.
  • Return of the 3% down payment. It is getting easier for some buyers to land a house with less money up front. More lenders are lowering down-payment requirements, allowing borrowers to commit 3%—or even less—of a home’s purchase price to get a mortgage. Many had been requiring down payments of at least 20% since the recession began.
Business Insider: 
  • Shanghai Plans Stress Test at Banks Over Property Loans. Banks in Shanghai are asked to conduct stress texts over their property loans, citing notice issued by China Banking Regulatory Commission's Shanghai office. The city's banking regulator also asked for continued monitoring over risks stemming from loans borrowed by major property companies outside Shanghai, the report says.
  • Russian rouble weakens sharply after S&P downgrade. Russia's rouble weakened sharply late on Monday to trade around 5 percent lower against the U.S. dollar after ratings agency S&P downgraded Russia's sovereign credit rating to below investment grade. The rouble was trading at 67.56 at 1824 GMT, around 5 percent weaker than the previous close on the Moscow Exchange.
  • Weak retail business in Europe hits Seagate revenue. Hard-drive maker Seagate Technology Plc's revenue forecast for the current quarter fell well short of analyst estimates, largely due to weakness in Europe, sending the company's shares down as much as 12 percent.
  • Mega-funds start to beat retreat from emerging markets. Big pension, insurance and sovereign funds that kept faith with emerging markets during the massive selloffs of 2013 and 2014 may be starting to waver, potentially depriving the sector of a key source of support.
Financial Times:
  • Athens and creditors dig in on Greek debt. Greece and its international creditors dug in on opposite sides of Europe’s struggle over debt, austerity and economic reform on Monday as Alexis Tsipras, leader of the radical leftwing Syriza party, was sworn in as the new prime minister in Athens. Mr Tsipras dismayed EU governments that oppose extensive debt relief for Greece by moving swiftly to form a coalition with the Independent Greeks, a small, rightwing party that is as fiercely opposed as Syriza to the strict conditions attached to the nation’s €245bn bailout.
  • Merkel Ally Friedrich Says Germany May Scrap Greek Aid. Hans-Peter Friedrich, deputy caucus leader for Merkel's Christian Democratic-led bloc in lower house of parliament, warns Germany may scrap debt assistance to Greece. "The Greeks have the right to vote for whom they want," Friedrich tells Bild in interview. "We have the right to no longer finance Greek debt." "The Greeks now must take responsibility and cannot burden German taxpayers," Friedrich says.
Marbridge Daily:
  • Less Than 60% of Online Goods in China Are Genuine Products. China's State Administration for Industry and Commerce (SAIC) has tested 92 batches of products sold online in the second half of 2014 and found that only 54 were genuine articles, equating to 58.7%. The percentage of genuine items on Alibaba Group's (NYSE: BABA) C2C e-commerce site Taobao was the lowest at 37.25%.

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