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(Bloomberg) -- Mark Hurd was in his element at Indian Wells.The tennis tournament–more formally known as the BNP Paribas Open at Indian Wells, California— provided him with the perfect backdrop to flex his passions: tennis and selling stuff. Hurd turned the event, which Oracle Corp. co-founder Larry Ellison bought in 2009, into a two-week database and software sales extravaganza. He could be seen strolling the grounds or at nearby hotels constantly schmoozing with customers and using his connections with tennis legends like Chris Evert and Rafael Nadal to win people over and help close a deal. Along the way, Hurd, Oracle’s co-CEO, would sneak in a hit–he had a big serve and liked to flaunt it–or check on the American college players he was mentoring and the young pros he was quietly helping with financial aid. For Hurd, business and pleasure were one and the same and almost always intermixed in his life.This is what I’ll remember most about Hurd, who passed away Friday morning after a protracted illness: he was a relentless hustler and loved the art of doing business more than just about any other executive I’ve ever run across. In a statement issued after Hurd’s death, Ellison pointed to his friend’s business acumen. “Oracle has lost a brilliant and beloved leader who personally touched the lives of so many of us during his decade at Oracle,” Ellison said. “All of us will miss Mark’s keen mind and rare ability to analyze, simplify and solve problems quickly.” Hurd arrived at Oracle in 2010 under tumultuous conditions. He’d resigned as CEO of Hewlett-Packard after being investigated by the company’s board for a relationship Hurd had with a marketing contractor. The board argued that Hurd had tried to cover up the relationship and misused his expense account, and Hurd argued that they were wrong and making much ado about nothing. The squabble was acrimonious enough to end Hurd’s time at HP, even though he had revived the company’s fortunes and turned it into a lean, mean maker of corporate technology products, printers and personal computers.At Oracle, Hurd applied his trademark skills at analyzing balance sheets and streamlining operations to try and improve the software maker’s bottom line. He could recite from memory the financial minutiae of every division and be blunt about what was working and what needed to be fixed. During his years at Oracle, the company’s share price more than doubled, and Hurd was a constant presence at the company’s events, sales meetings and customer sites. In many ways, he became the public face of Oracle, enjoying the limelight while Ellison made the occasional appearance and co-CEO Safra Catz preferred to operate in the background.Though Oracle remains the dominant database company, it still has much work to do to catch up in the booming market for cloud-based software and services. Oracle was late to the game modernizing its products. Hurd tried his best to paper over Oracle’s weaknesses through salesmanship and often succeeded. One of the biggest weaknesses throughout his career, though, was favoring bottom line performance over investing in research and development and revolutionary new products. Hurd often seemed to focus on the here and now, rather than plotting for what lay ahead. Oracle’s dual-CEO structure was unusual and not always to Hurd’s liking, as he reveled in controlling a business and overseeing all of its operations. He took on sales, marketing and press and investor relations, and Catz handled finances and legal. Last month Oracle said that Hurd was taking a leave of absence for an unspecified illness and that Ellison and Catz would assume his responsibilities. Ellison has said that Catz will stay in place and that he would like to keep the two-CEO structure. He cited Don Johnson, head of Oracle’s cloud infrastructure division, and Steve Miranda, head of Oracle’s applications unit, as possible partners to Catz in the future.What’s clear is that Hurd will not be easy to replace. On a personal note, he shared a tight bond with Ellison around tennis. The two men have been pumping money into American tournaments and players for years, hoping to spark a revival of U.S. male pros. And, when Hurd was at his lowest moment after the HP fiasco, it was Ellison who came to the rescue, championing Hurd in the press and offering him a high-profile gig at Oracle. These actions–along with massive annual pay packages-made Hurd very loyal to Ellison and left Hurd as eager as ever to prove Ellison right and his critics wrong.Not short on ego, Hurd saw business as a battlefield and perceived himself as a master general. On his worst days, he was short of temper and combative. But, on his best days–of which there seemed to be many–he was a numbers and strategy savant with a rare ability to inspire those under him to work incredibly hard. Hurd himself was a workaholic and considered Oracle’s performance as a reflection on his character. Very few people are as committed to their work or as passionate in their pursuit of it.Vance covered Hurd for 15 years in his roles as CEO of NCR, HP and Oracle and even played tennis with him once. To contact the author of this story: Ashlee Vance in Palo Alto at email@example.comTo contact the editor responsible for this story: Molly Schuetz at firstname.lastname@example.org, Robin AjelloFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
BNP Paribas is the frontrunner to take over Deutsche Bank's business that sells certificates and warrants to retail investors, a German newspaper reported on Friday. Boersen-Zeitung, which cited no sources, said analysts had estimated the unit's value at 400-500 million euros ($445-$556 million). BNP declined to comment.
HSBC Holdings has hired U.S. investment bank Lazard Ltd to sell its French retail business, a source close to the matter told Reuters, as part of a plan by new interim chief executive Noel Quinn to reduce costs across the banking group. HSBC, Europe's biggest bank by assets, has carried out a strategic review of the French retail business, which has around 270 branches and employs up to 3,000 staff out of 8,000 in France overall. Lazard declined to comment.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.Egypt’s real interest rates are again with few equals among emerging economies after inflation plummeted to the lowest in almost seven years, offering a fresh incentive to investors in local debt looking to maximize returns.Decelerating for the fourth consecutive month, price growth in urban parts of the country slipped to an annual 4.8% in September from 7.5% in August, the state-run CAPMAS statistics agency said Thursday. Adjusted for inflation, Egypt’s policy rate is now near 8.5%, leapfrogging peers including Turkey and Ukraine to become among the world’s highest.With the central bank’s easing cycle in full throttle, the price letup is ensuring that Egypt’s pound stays a favorite carry trade, in which investors borrow in currencies where rates are low and invest in the local assets of countries where they are high. Inflation is now below the lower bound of the target range policy makers set for the end of 2020.The pound on Thursday had the biggest gain since mid-September, extending a rally that’s made it the world’s best performer against the dollar this year after Ukraine’s hryvnia. Finance Minister Mohamed Maait has said a return of 3%, plus or minus 1 percentage point, would be “a reasonable real interest rate that keeps Egypt attractive.”Food ReliefHelped by the statistical effect of a high base last year and seasonal factors, a sharp slowdown in the cost of food is among key reasons for the faster-than-forecast deceleration. Prices for food and beverages grew only 0.3% in September from a year earlier. Core inflation, the gauge used by the central bank and which strips out volatile and regulated items, slowed to 2.6% in September -- a more than 13-year-low, according to data compiled by Bloomberg.“This is a key success factor in controlling inflation and reaching low levels,” said Radwa El-Swaify, head of research at Cairo-based Pharos Holding. “The government focused efforts this year on the supply of food in the market to control any volatility in its price, and that is why inflation has continued to be lower than expectations for several months.”Egypt’s central bank has embarked on rate cuts that could be second only to Turkey among emerging markets this year and next, according to BNP Paribas SA. After reducing official borrowing costs by 250 basis points in the past two months, it’s likely to deliver 100 basis points of easing at its next meeting in November, said Mohamed Abu Basha, head of research at Cairo-based investment bank EFG Hermes.Still, inflation may pick up after a few months and end the year between 8% and 9%, according to Abu Basha.“The real interest rate will be inflated in the next three months due to the base effect,” he said. “However, investors should pay attention to the December inflation figure to assess the sustainable real rate.”To contact the reporter on this story: Mirette Magdy in Cairo at email@example.comTo contact the editors responsible for this story: Alaa Shahine at firstname.lastname@example.org, Paul Abelsky, Michael GunnFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Trade war-hardened emerging-market investors aren’t counting on any breakthrough in trade negotiations as talks between the U.S. and China are set to resume Thursday in Washington.BNP Paribas Asset Management has been reducing its exposure in junk-rated debt, while Union Investments Privatfonds GmbH is favoring investment-grade rated bonds over high-yield debt. And in case any breakdown in discussions triggers a flight to safety, Aviva Investors has been been buying the yen.“We expect another empty-handshake meeting,” said Bryan Carter, London-based head of emerging-market fixed-income at BNP Paribas Asset. Ultimately, no substantive agreement will be reached, he said.Emerging-market stocks rebounded 2.2% since an early September low, when China and the U.S. announced they would hold face-to-face negotiations once again. The rally has since petered out after President Donald Trump said he won’t seek an interim agreement and global growth showed further signs of deterioration as the year-long trade war dragged on. Impeachment proceedings have also spurred concern that it may hinder Trump’s hand in the negotiations.Below are comments from investors and analysts:Maddi Dessner, multi-asset strategist at JP Morgan Asset Management in New York, tells Bloomberg Television:Bar is much lower for U.S.-China trade talks this week than it has been in previous negotiations“Investors are much more conservatively positioned than they were even six months ago,” so there’s not as much of a negative riskTo have exposure to equities, investors can buy futures, stocks or upside calls, which allow them to gain upside in rallies and lose equity risk in their portfolio when market draws downBrendan McKenna, a currency strategist at Wells Fargo in New York:“Trade relations between the U.S. and China will probably get worse before they get better”No trade truce or breakthrough this week, and Trump will probably move forward with plans to increase and impose more tariffsEscalations will hurt EM currencies broadly, especially emerging Asia’s IDR, INR and PHP; High-beta currencies TRY, ZAR, MXN and BRL likely to also come under pressureExpect more downside in the renminbi and more risk-sensitive currencies such as the AUD, NZD, KRWJim Caron, global head of macro strategies at Morgan Stanley Investment Management in New York:Trade tensions put a damper on global growth, and expectations are for continued talks“I don’t think that anybody really expected there to be a grand bargain this week with China”Alejandro Cuadrado, a senior BBVA strategist in New York:Likes being “defensive (USD biased) with a preference for hedging through CLP” ahead of trade talks“Our expectations are low as we don’t see the incentives fully lined up”Prefers hedging through options in LatAm crosses given region’s sensitivity to global trade, lower levels and higher costsSergey Dergachev, senior portfolio manager at Union Investment in Frankfurt:Expectations for a breakthrough are “very low,” though it will be important to see how the meeting will end and the mood during the meetingFuture steps are also crucial, such as when the next round of talks will beDergachev said he’s positioned “mildly defensive,” and is focusing on the credit quality of his holdingsWerner Gey van Pittius, co-head of emerging-market fixed income at Investec Asset Management in London:The trade war will last longer than what the market is hoping because it’s not just about trade. There’s an element in the U.S. that is afraid of “the geopolitical rise of China” and that is much bigger than just trade right nowChina is preparing for the next decade and trying to reduce the impact of the trade war by opening up their markets, attracting capital, and moving away from U.S. influence by selling Treasuries and buying gold. Their time horizon is beyond the U.S. electionsHe is taking a long duration strategy in his bond portfolio as the trade war raises the risk of a recessionCarter at BNP Paribas Asset:Politics are driving the negotiations, and not economicsThe upcoming 2020 presidential election, and impeachment investigations in the House, are the dominant context for the trade meetingCarter said he plans to continue cutting exposure to junk-rated bonds even if there was a positive outcome from the meeting. That’s because the firm doesn’t expect any comprehensive agreement will be reached that would reverse the negative economic effects of the trade warMark Haefele, global chief investment officer at UBS Global Wealth Management in Zurich, tells Bloomberg Television:Base case is for tensions to neither worsen or improve much, with the U.S. to go ahead with the announced additional tariffsUBS Global is underweight equities globally at this time; the trade impact will be felt hardest in Europe and emerging markets, while the S&P will probably be range-boundStuart Ritson, emerging-market bond fund manager at Aviva Investors in Singapore:It is hard to be too optimistic on the outcome of trade talks given the narrow scope of the discussionsThe firm’s local-currency bond portfolio is “relatively defensive” at the moment, given the weak global growth backdrop. It is also positioned for further easing by EM policy makers and has increased exposure to the yen, given its anti-cyclical properties, and still attractive valuationsRobert Carnell, chief economist for Asia Pacific at ING Groep NV in Singapore, writes in a note:China may see it as advantageous to keep the trade war alive, but under control, pending political developments in the U.S.For the U.S., the benefits of fighting China on trade may now be outweighed by the short-term hit to the economy, in terms of popular support and potential votes for Trump at next year’s presidential electionStephen Innes, an Asia-Pacific market strategist at AxiTrader, writes in a report:In the absence of a significant catalyst, Asian currencies will continue to track the yuan, which remains the best global barometer for trade war riskHeadline risk will continue to influence trading flows in the Chinese currency(Updates with analyst comments throughout)\--With assistance from Sydney Maki, Aline Oyamada, Chester Yung, Netty Ismail and Carolina Wilson.To contact the reporter on this story: Lilian Karunungan in Singapore at email@example.comTo contact the editors responsible for this story: Tomoko Yamazaki at firstname.lastname@example.org, Karl Lester M. YapFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Explore what’s moving the global economy in the new season of the Stephanomics podcast. Subscribe via Pocket Cast or iTunes.Going against a central bank is an investment strategy fraught with peril, but some bond market analysts think the Bank of Japan will fail to steepen the yield curve.The analysts argue that the BOJ’s toolkit is designed to push down yields, rather than lift them. And even if the central bank succeeds for a time, as it did this week, a tide of money seeking yields in a slowing global economy will prove stronger.“We usually say, ‘Don’t fight the BOJ!’, but this time I think it works to go against them,” said Koichi Sugisaki, a strategist at Morgan Stanley MUFG Securities Co. in Tokyo. Sugisaki points to how Japanese institutions are waiting to snap up bonds with maturities of 20 years or more whenever yields climb.The BOJ may be the only major central bank trying to actively fight a global collapse in bond yields that has already seen benchmark Treasury rates more than halve in the past year. It signaled deep cuts in bond purchases for October, and indicated it may even stop buying debt of more than 25 years -- a big step for a central bank that pioneered ultra-loose monetary policy.Read more: BOJ Signals Deep Cuts to to Steepen Yield CurveIn the six-and-a-half years since Governor Haruhiko Kuroda launched his monetary campaign, the central bank has boosted its holdings of JGBs five-fold to about 470 trillion yen ($4.4 trillion). It has drained almost half of the supply in the market, creating what the BOJ calls a “stock effect” that acts to suppress yields. Cutting weekly purchases, which is about affecting “flows”, may have less impact on how yields behave, according to Nomura Securities Co.“The stock impact has been strengthening,” said Takenobu Nakashima, a senior rates strategist at Nomura in Tokyo, who pointed to a 2018 research paper from the BOJ that indicated its massive JGB holdings accounted for 90% of the move in yields during a period it studied.In the past month, as the central bank steadily cut bond purchases, the 10-year yield has climbed about 7 basis points. The impact has been more pronounced for debt maturing in 30 years, with an advance of about 24 basis points.Yusuke Ikawa, Japan strategist at BNP Paribas Securities in Tokyo, is also skeptical that the steepening will last. “It will be difficult to halt a bull-flattening if overseas yields resume their decline,” said Ikawa.The BOJ’s seeming success has taken place amid a pause in the global bond rally, with Treasury yields rebounding in September. History may be against the Japanese central bank, too. For all the money it has spent, it hasn’t engineered significant change in rates since shifting its policy emphasis to yield-curve control on 2016.To be sure, analysts agree that yields would be even lower if the BOJ didn’t slow the pace of purchases.Its October bond market plan announced earlier this week slashed the purchase ranges for four major maturities zones and indicated it could skip some buying operations.Investors got their first taste on Friday of how the plan plays out, with the central bank announcing purchases of 350 billion yen of the 5-10 year maturities zone. The amount was unchanged from the previous operation on Sept. 26 but well below 480 billion yen just two months ago.The BOJ is scheduled to buy bonds on Monday in maturity ranges covering 1-3 years, 3-5 years, 10-25 years and over 25 years. Future monthly bond plans could be tweaked to adjust the boundaries of the maturities zones and the BOJ could also state that it won’t accept offers below certain yield levels, according to analysts.Click here to see a comparison of the October and September plansThe elephant in the room for the BOJ is what it will ultimately do with its huge hoard of JGBs.Analysts see the outright sale of bonds by the central bank as unrealistic for now, because it would contradict the broader policy of expanding the monetary base -- and could spur a rally in the yen, which would hurt exporters and efforts to boost inflation.Market speculation is also rife that the BOJ may cut its short-term policy interest rate -- currently set at minus 0.1% -- even further into negative territory at its next board gathering on Oct. 30-31.One big risk of doing this, according to analysts, is that instead of steepening the yield curve, it could pull down rates in general.“It would be contradictory to lower the negative rate and want to prevent long- and super-long yields from falling too much,” said Nakashima.(Updates with details of Monday’s scheduled bond operation)\--With assistance from Paul Jackson.To contact the reporters on this story: Chikako Mogi in TOKYO at email@example.com;Masahiro Hidaka in Tokyo at firstname.lastname@example.orgTo contact the editors responsible for this story: Tan Hwee Ann at email@example.com, Brett MillerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Asian dollar-bond investors have more of an appetite recently, and are favoring the safest fare amid the U.S.-China trade tensions.Orders for dollar bonds in the region outside Japan returned to July’s level of 4.7 times their issuance sizes last month, after August saw the weakest demand this year, according to data compiled by Bloomberg. September orders for high-grade debt rose to the highest in three months and 67% of sales were in this category, the biggest proportion this year, the data show.Corporate fundamentals in Asia remain on solid footing and valuations for Asian dollar bonds are particularly compelling at the moment versus the U.S. and the negative yields in Europe, said Paul Lukaszewski, head of corporate debt for Asia and Australia at Aberdeen Standard Investments.Emerging-market bond funds saw five consecutive weeks of inflows and hard-currency funds were the main beneficiaries, according to a Barclays note citing EPFR data.After suffering their first loss in a year on high yield bets, Asian bond investors took a measured approach toward adding risk. Demand for investment-grade bonds rose to 5.7 times last month, compared to 4.2 times for junk peers.“Investors have pocketed generally decent return year-to-date in the Asia dollar bond market,” said Jenny Zeng, co-head of Asia-Pacific fixed income at AllianceBernstein. “Hence we are also turning more conservative for the rest of the year and going up the credit curve,” she added.Some investors are shrugging off concern toward riskier debt and see the junk bonds sell-off in August as a buying opportunity.“People overreacted to U.S.-China tensions and growth uncertainty in China,” said Jean-Charles Sambor, deputy head of emerging market debt at BNP Paribas Asset Management. “China high-yield names tend to be under-researched by global investors as access to information is overall more difficult which creates some mispricing opportunities.”Thu Ha Chow, a portfolio manager at Loomis Sayles Investments Asia, said she has increased allocation to more defensive and higher quality BB and BBB-rated bonds. “We believe weaker credits attacked by idiosyncratic factors will be an on-going theme going into next year as growth slows,” she said.Earlier stories:Asia Dollar-Bond Sales Hit Record as Issuers Lock in Cash: ChartChina Helps Asia G3 Bond Bookrunners Quadruple Since 2009: Chart(Adds story link in the last bullet point)\--With assistance from Shawn Qiu and Rebecca Choong Wilkins.To contact the reporter on this story: Annie Lee in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Neha D'silva at email@example.com;Matt Turner at firstname.lastname@example.org;Andrew Monahan at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The Federal Reserve’s daily interventions appear to have calmed U.S. money markets and prevented repo contagion from infecting other key areas of finance.But to create a lasting peace, the central bank needs to take much grander action in late October or sooner, according to a growing list of experts.On Monday, which was the last day of the third quarter, overnight repo rates were slightly elevated, but it was nothing like two weeks ago or even other recent quarter-ends, when rates skyrocketed as banks traded to tidy up their balance sheets. Tuesday was also uneventful.This represents a success for the Fed, which has offered to inject at least $75 billion into the repo market every day since Sept. 17. But observers want to hear more -- in some cases much more -- from the Federal Open Market Committee after it meets Oct. 29-30.Wall Street analysts estimate the Fed needs to buy roughly $200 billion to $500 billion of Treasuries, and some want a standing repo facility -- a permanent liquidity conduit, as opposed to the ad-hoc actions the Fed has taken for two weeks -- as a backstop against unusual spikes in money-market rates.Risk Still Looms“The lesson is that money markets were more fragile than many people expected, and the situation calls for some more-permanent solution,” said Brian Sack, former head of the New York Fed’s market group, who warned five years ago that the central bank needed a standing repo facility put in place. “Temporary operations definitely helped, but to truly calm markets, the FOMC should implement one of these policy steps in the near term. Otherwise, we could continue to see strains in money markets in the fourth quarter.”Two of the three major U.S. credit ratings agencies weighed in on Tuesday. Fitch Ratings Ltd. said in a report that any further volatility in the U.S. repo market could extend to other asset classes and players, with global ramifications. S&P Global Ratings’s base-case assumption is that the Fed will do what’s needed to avoid any extended period of turmoil, senior director Brendan Browne said in a phone interview.It was the now-more-than-$2 trillion repo market where some of the first signs of trouble emerged ahead of the 2008 financial crisis, though analysts caution against drawing direct comparisons. The reasons for mid-September’s tumult, they say, were entirely different: The episode boils down to a liquidity squeeze and not deeper, widespread concerns about the quality of collateral or credit in the market.Many initially viewed the Fed’s injections as falling short because they didn’t address the root of the problem: insufficient reserves in the banking system. In hindsight, though, those actions “quickly and decisively stopped repo rates from rising further and ensured that repo stress in Treasury collateral did not spread,” said Shahid Ladha, head of G-10 rates strategy at BNP Paribas in New York.Systemic Problem“The Fed needs to add more permanent liquidity in October or the funding issues could become more systemic,” he said.Had the New York Fed not stepped in to offer a $75 billion injection on Sept. 17 and repeated its operations daily since then, trouble in repo could’ve spread and caused tighter credit conditions elsewhere, said TD Securities senior rates strategist Gennadiy Goldberg.“All these markets are tied together and are interconnected,” he said by phone Monday. “Banks can last several days without a squeeze impacting their operations. But a prolonged period of uncertainty and higher repo rates at the front-end would have made it harder for banks to finance their daily operations, made them unwilling to lend, led to a freeze on credit, and forced them to sell assets like Treasuries and corporate bonds. That’s where the contagion happens.”Stresses SpreadWithin a day of the sudden surge in the overnight rate on Treasury repurchase agreements that began on Sept. 16, the repo squeeze began to show up in currency markets and dollar funding. For instance, the cost to borrow greenbacks for one week while lending euros almost doubled. In addition, swap rates from euros, pounds, the yen and the Australian dollar began to shift.When the Fed didn’t put in place a standing repo facility at its Sept. 17-18 meeting, dollar swap spreads with a two-year tenor cratered to a record low.Repo Squeeze Has Upset Funding Markets. It’s About to Get Worse.It wasn’t until Sept. 23, almost a week after the New York Fed’s first intervention, that dollar funding pressures began to show signs of easing, as reflected in cross-currency spreads.In a Sept. 26 blog post for the Peterson Institute for International Economics, Sack and Joseph Gagnon, another ex-Fed official, wrote that the recent events underscored how unexpected developments could put pressure on money-market rates.Reached by phone Monday, Sack, now director of global economics for money manager D.E. Shaw, said the Fed needs to adopt one of the fixes he and Gagnon proposed. Buying Treasuries would be the easiest to implement, he said.(Adds S&P in seventh paragraph.)\--With assistance from Mark Tannenbaum.To contact the reporter on this story: Vivien Lou Chen in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Benjamin Purvis at email@example.com, Nick Baker, David ScheerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
* European end higher after choppy, low-volumes session * STOXX 600 +3.6% in Sept, marks 3rd positive quarter in a row * JPM raises euro-zone stocks to "overweight" * ECB's Draghi emphasises need for fiscal push - FT * Wall Street opens higher Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to share your thoughts on market moves: rm://firstname.lastname@example.org EUROPE ENDS ANOTHER POSITIVE QUARTER ON A HIGH (1559 GMT) The last day of September and Q3 saw choppy trading and low volumes but a JPMorgan upgrade of euro-zone stocks to overweight on ECB stimulus expectations gave another boost to sentiment, helping offset concerns over the slowing economy and an earnings recession.
(Bloomberg) -- The myriad of global risks this year is keeping yen bulls happy and encouraging bets on a world-beating rally in coming months.The Japanese currency is predicted to outperform its Group-of-10 peers by the end of 2019 and gain nearly 3% to 105 per dollar, according to Bloomberg’s survey of currency analysts. With the bullish tone also reflected in the options market, Morgan Stanley and BNP Paribas SA expect tense geopolitics to drive it to a three-year high of 100 by early next year.“The global environment is in what we describe as an ‘unstable equilibrium’ and we think this is going to cause volatility and a setback in risk assets,” said Hans Redeker, the global head of currency strategy at Morgan Stanley. “All that is going to lead to yen strength.”The yen is only lagging the Canadian dollar in gains against the greenback this year, as growing trade conflicts drive investors into havens. While large Japanese bond redemptions in coming months could act as a transient drag on the currency, the Bank of Japan isn’t seen having the firepower to curb its ascent as global peers ease policy faster.Morgan Stanley is among the most bullish, predicting the yen to rally more than 6% from current levels to end 2019 at 101 per dollar, while BNP Paribas predicts 102. Options traders are also betting on gains. Three-month dollar-yen risk reversals, a gauge of options sentiment and positioning, are at 182 basis points in favor of yen calls, more than average this year.Allianz Global Investors’ Mike Riddell is one fund manager overweight the yen, which he sees as “an excellent portfolio diversifier.”“The risk of a global recession in the next 12-18 months is greater than 50-50,” said Riddell, whose firm oversees 543 billion euros ($594 billion). “Within our funds, we think ‘what is going to be your risk-off hedge’. This is where you really need to have some currencies -- things like the Japanese yen will have a very large rally in a crisis and or a global recession.”Bond FlowsThere is some caution among analysts given seasonal trends that often mean the currency weakens into the end of the year. The yen has slipped this month to trade around 108 per dollar.With 24.3 trillion yen ($226 billion) of Japanese government bonds due to mature during the rest of 2019, much of this money is expected to be reinvested in assets overseas, leading to selling of the yen.“While redemptions do impact the yen, you have to think about how international development will look in the first quarter of 2020,” London-based Redeker said. “Is this going to be an environment where investments are looking good, where you will reallocate it abroad, or is it an environment where potentially volatility is coming into the market.”The policy outlook at the Bank of Japan is another doubt, given the prospect that it could ramp up stimulus in October after standing pat this month. A strong yen could hamper the BOJ’s efforts to reach its inflation goal by pushing down prices for imports. Yen money markets are pricing a 10 basis points rate cut from the BOJ by the end of 2019, with a second cut by the end of 2020.Still, the BOJ looks like the most constrained Group-of-10 central bank for BNP Paribas SA’s European head of currency research Sam Lynton-Brown, certainly compared to the Federal Reserve’s rate-cutting cycle. Japanese policy rates are already negative and the central bank’s high bond ownership means it has even less space for asset purchases than the European Central Bank.“We think the BOJ are unlikely to use up any of their limited ammunition currently,” said Lynton-Brown. “On quantitative easing they already own 45% of the domestic bond market and their easing program has been going on for longer than elsewhere in the world, which mechanically means they have less room to do more. The yen should outperform as the BOJ struggles to match easing elsewhere in the world.”If Fed easing continues to drive 10-year U.S. Treasury yields below 1%, that could send the yen surging to 90 per dollar, according to RBC Capital Markets. However, more limited easing and elevated Japanese hedging costs for overseas assets could instead weaken the yen, said chief currency strategist Adam Cole.Ultimately domestic factors will be dwarfed by the global outlook for BNP’s Lynton-Brown, given the risk of a deterioration in the U.S.-China trade relationship and also between the U.S. and the European Union.“This would weigh on global risk sentiment, global equity markets, causing an appreciation in the yen,” he said.(Updates prices throughout.)\--With assistance from Stephen Spratt.To contact the reporter on this story: Anooja Debnath in London at email@example.comTo contact the editors responsible for this story: Paul Dobson at firstname.lastname@example.org, Neil Chatterjee, Michael HunterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Emerging markets are heading into the fourth quarter in the shadow of one of the most perilous phases in the U.S.-China trade dispute.Bloomberg’s report last week that the Trump administration is said to be considering choking off portfolio flows to China has posed a fresh riddle for traders at the start of a week that includes an Indian interest-rate decision and a key Turkish inflation reading. And U.S. payrolls numbers come Friday.Read: China Markets to Test Risk of Most Extreme U.S. Threat Yet“It is not yet clear how serious the proposal is, but if it happens it would open up a brand new front in the war with China,” James McCormick, global head of strategy at NatWest Markets Plc in London, wrote in a report. “Having already significantly disrupted the global trading system, doing the same to global capital markets would be a huge risk.”Developing-nation currencies are headed for their weakest quarter since the three months ended June 2018 as the U.S-China trade skirmish threatens to derail already fragile global growth. The yuan, poised for its worst September since 2012, will probably continue to set the tone for traders as its correlation with other emerging-market currencies remains near the record high reached in July.BNP Paribas Asset Management expects “a lot of volatility” in developing-nation currencies as it remains focused on Argentina ahead of the country’s Oct. 27 election, trade tensions and central bank policy decisions, said Jean-Charles Sambor, the firm’s London-based deputy head of emerging-market fixed income.China Celebrations and TradeInvestors will be on the lookout for hints of change in policy direction by President Xi Jinping on Tuesday as he marks the 70th anniversary of the People’s Republic of China with a speech outlining his vision for the futureOnshore Chinese markets will be closed for the annual Golden Week holidays, to reopen on Oct. 8President Donald Trump earlier delayed the increase of tariffs on $250 billion of Chinese imports from Oct. 1 to Oct. 15, citing the anniversary celebrations, but is also probably holding out ahead of the high-level U.S.-China trade negotiations that begin in the second week of October.Manufacturing OutlookThe official and Caixin manufacturing PMIs for September both beat economists estimates, rebounding from August prints, although the official estimates at 49.8 is narrowly below the 50 threshold which divides expansion from contractionRead more: CHINA REACT: Sub-50 PMI Shows Headwinds to Industry PersistWith Chinese PMI rebounding, manufacturing PMIs due Tuesday from Taiwan, South Korea, India, Indonesia and other South East Asian countries will come in focusCentral banksThe majority of economists surveyed are expecting the Reserve Bank of India to trim repo rates by 25 basis points to 5.15% on Friday, following the 110 basis points of cuts enacted so far this year. The nation’s economy is running below its potential, with the responsibility of closing the negative output gap largely falling on the central bank, according to Abhishek Gupta, Bloomberg’s Mumbai-based economist for India.The rupee is the Asia’s best-performing currency this monthInvestors will be eyeing the release of the Bank of Thailand’s minutes from the September review on Wednesday. Policy makers voted unanimously to leave rates unchanged then, following the surprise cut in AugustIn Colombia, official minutes on Monday are expected to support expectations that the central bank will maintain interest rates for now. Unemployment numbers coming earlier that day are forecast to show the urban unemployment rate rising in August on a year-on-year basisPolicy makers in Poland and Romania set to keep rates unchanged on Wednesday and Thursday, respectivelyData and EventsTurkey’s inflation probably fell to 9.8% in September from 15% in August, reflecting base effects linked to the currencyInflation is likely to bottom out in October as base effects become inflationary thereafter, according to Bloomberg Economics, which sees room for interest rates to fall by a further 50 basis points this yearThe lira is the best performer in emerging markets this month after the Argentine peso and Russian rubleRussia’s inflation likely slowed further to 4% from 4.3%, giving the central bank more score to keep easingSouth Korea’s September inflation year-on-year print due Tuesday is expected to dip into negative territory for the first time, after the previous low of 0% in AugustOn the same day, Indonesia and Thailand’s CPI readings are to be released, with the latter forecast to come in below 1% for a fourth consecutive month, below the Bank of Thailand’s inflation target of 1%-4%Philippine price levels are due on Friday, with previous month’s inflation the lowest in around three years, while Taiwan’s CPI is due on SaturdayInvestors will be eyeing the impact of existing tariffs on export numbers from Thailand, Malaysia and South KoreaBrazil’s landmark pension overhaul bill, the subject of investor speculation for months, takes another step toward approval when the Senate’s constitution committee is expected to approve it before it moves to a first plenary round of voting. Meanwhile, industrial production data for August will be scoured for clues on the economy’s health when it’s released Tuesday. The real was among the biggest losers among Latin American currencies in the third quarterMexico’s Finance Ministry will release its August budget balance on Monday as investors and economists look for signs spending is finally kicking in to jump-start the economy. The peso ranked among the best performers in emerging markets this monthAugust unemployment and copper output data in Chile will also be released Monday as investors search for clues about what the central bank will decide at its next meeting in October. Economic activity data on Tuesday could also provide more clarity.\--With assistance from Andres Guerra Luz, Tomoko Yamazaki, Alec D.B. McCabe and Karl Lester M. Yap.To contact the reporters on this story: Netty Ismail in Dubai at email@example.com;Marcus Wong in Singapore at firstname.lastname@example.org;Sydney Maki in New York at email@example.comTo contact the editors responsible for this story: Dana El Baltaji at firstname.lastname@example.org, Justin CarriganFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- When Christine Lagarde takes charge of the European Central Bank, she’ll inherit the policy disputes of her predecessors -- now with even deeper scars.The new president will have to confront the aftermath of an unprecedented revolt among officials over Mario Draghi’s plan to reactivate quantitative easing. In a move probably linked to that, Germany’s Sabine Lautenschlaeger unexpectedly quit the Executive Board.While such discord is reminiscent of when Draghi became president in 2011 after resignations by other German policy makers, the cumulative bruises from years of arguments present a challenge to Lagarde. She’ll need to determine how to lead the Governing Council while broaching inevitable disagreements, and to look at how to accommodate discord when it arises.“The differences between the majority group and the hawkish group seems quite stark,” said Nick Kounis, an economist at ABN Amro in Amsterdam. “I don’t think she has a magic wand to make people who fundamentally disagree agree.”Draghi has encountered dissent before, but never to such a degree. Bundesbank President Jens Weidmann and Klaas Knot of the Netherlands immediately criticized the Sept. 12 QE decision. Last week, Bank of France Governor Francois Villeroy de Galhau publicly declared his own disagreement, and Lautenschlaeger resigned.The president was left relying on support mainly from southern Europe and the euro’s smallest economies, at a meeting described by one participant as the most tense he can remember. He spoke on condition of anonymity, because such discussions are private.Lagarde can survey the wreckage first hand when she starts work in November.She has already faced a call from Austrian policy maker Robert Holzmann to allow the views of individuals to be cited in accounts of meetings to acknowledge differences. That would be a step toward the openness of the Bank of England and U.S. Federal Reserve, which publish votes.Such moves could go some way toward accommodating dissent while ensuring that, as Draghi said last week, disagreements don’t undermine policy decisions.Even a safety valve to vent views might not be enough. Lagarde may also need to find a different way of initiating policy moves from Draghi, who often signaled major measures publicly without formal discussions with his colleagues first.“It would probably be a mistake to try and emulate Draghi’s approach,” said Richard Barwell, an economist at BNP Paribas Asset Management.While Lagarde signaled in an interview last week that she’ll seek “teamwork” from her colleagues, she may also need to embrace more engagement than Draghi did -- and maybe share responsibility with her chief economist, Philip Lane.That might help accommodate those who think their experience means they know better. She has never been a central banker, having served as French finance minister and led the International Monetary Fund.Lowering the temperature will surely assist Lagarde if she wants to unveil further timely stimulus. More bond purchases could require the ECB to scrap self-imposed limits intended to safeguard against monetary financing -- a key principle for the Germans.However, more discussion could slow down policy making in the already unwieldy group of 25 policy makers, including the six-member Executive Board.“She will try to build a consensus,” said Barwell. “The center of gravity within the Council should therefore shift back toward the governors, away from the board -- dragging the reaction function of the ECB with it.”Here’s how the current backdrop compares with those faced by previous presidents.Founding FatherEstablished two decades ago under Wim Duisenberg, the ECB was modeled on the Bundesbank and governed by a mantra of price stability. Policy makers established a convention of decision by consensus, papering over disagreements. The founders of a fledgling institution managing an experimental currency wanted to protect nationally appointed policy makers from pressure to speak up for local interests.Trichet TransitionJean-Claude Trichet’s term began in 2003 with benign economic conditions. When the financial crisis struck, the ECB was initially swift to recognize the dangers, though subsequently twice abortively raised interest rates.Consensus unraveled as German board member Juergen Stark and Bundesbank President Axel Weber disagreed with Trichet’s strategy for fighting the region’s debt crisis. Both resigned in 2011.Draghi’s DominanceThe current president pushed the Governing Council into creating a crisis-fighting tool in 2012 to match his public commitment -- an unexpected pledge made six weeks earlier -- to do “whatever it takes” to save the euro. That was opposed by Weber’s successor, Weidmann.In 2014, Draghi declared the need to start QE, months before the decision was actually taken, and Weidmann again objected. The current spat is a more dramatic version of that disagreement.To contact the reporters on this story: Craig Stirling in Frankfurt at email@example.com;Catherine Bosley in Zurich at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Kennedy at email@example.com, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Go inside the global economy with Stephanie Flanders in her new podcast, Stephanomics. Subscribe via Pocket Cast or iTunes.Bank of England policy maker Michael Saunders’s shift from hawk to dove resembles the Federal Reserve’s turnaround on the need for interest-rate cuts, according to BNP Paribas SA.In a speech on Friday, Saunders, who helped lead the charge for the BOE’s last two rate hikes, changed tack and said the institution may have to cut interest rates even if the U.K. avoids a no-deal Brexit. He also stressed that the uncertainty shouldn’t be a “recipe for policy inertia,” and officials should be nimble in their response to Brexit, even if it requires a reversal once the outlook changes.Saunders previously said that the bar for a rate cut was higher in the U.K. than elsewhere. The U.S. central bank has called its recent cuts insurance against risks, rather than the start of a deep easing cycle.Saying that “the risk of acting and having to reverse course may be lower than the cost of inaction” is similar to the Fed, said Paul Hollingsworth, a U.K. economist at BNP. “The need to be ‘nimble’ also sounded Fed-like.”Saunders’s comments sent the pound lower, and prompted money markets to bring forward bets on a rate cut. Investors are now fully pricing a quarter-point rate cut in August 2020, from December 2020 on Thursday.However, in the near term markets see the Monetary Policy Committee holding fire. Prime Minister Boris Johnson says the U.K. will leave the EU with or without a deal on a transition on Oct. 31, even though Parliament has legislated to force a delay if no deal is reached.“The fact a more hawkish member has shifted, tilts more toward the easing side,” Hollingsworth said. “The market is pricing in only slightly more than a 30% cut in December, so it seems at the moment, markets are either optimistic that a Brexit deal will be struck in the near term, or they don’t think that the MPC are quite ready to ease.”Saunders’ shift will be welcomed by some traders, who have been loading up on bets on aggressive easing by the BOE. While the options buying may be an effective hedge against a no-deal exit that pushes the central bank to cut interest rates, the comments Friday suggest they could pay out even if Brexit is delayed or a last-minute agreement is reached.To contact the reporters on this story: James Hirai in London at firstname.lastname@example.org;David Goodman in London at email@example.comTo contact the editors responsible for this story: Paul Gordon at firstname.lastname@example.org, Brian Swint, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Go inside the global economy with Stephanie Flanders in her new podcast, Stephanomics. Subscribe via Pocket Cast or iTunes.Germany, a founding member of the euro area and by far its biggest economy, is hunting for someone who can stick with a top job at the European Central Bank.After Sabine Lautenschlaeger became the third consecutive German to leave the ECB’s Executive Board before her term was finished -- stunning almost all her colleagues, who hadn’t been forewarned -- Angela Merkel’s government is pressing its case to fill the vacancy. Germany, France and Italy have always had a seat on the six-member body that designs monetary policy.Key lawmakers from Merkel’s Christian Democrats, speaking on condition of anonymity, said a female candidate is likely, and mentioned Isabel Schnabel, an economic adviser to the government, or Bundesbank Vice President Claudia Buch. Lautenschlaeger is the only woman on the ECB’s 25-person Governing Council.But hovering over the whole process are questions of political affiliation and German frustration with years of negative interest rates. The administration must decide whether it wants a traditional central banker, a politician with economic heft, or maybe an academic steeped in policy.Bundesbank BulwarkThe Bundesbank, just 5 kilometers (3 miles) from the ECB in Frankfurt, is the traditional place to start. It was the blueprint for the euro zone’s currency guardian and provided the institution’s first two chief economists in Otmar Issing and Juergen Stark. Lautenschlaeger was the Bundesbank’s vice president.It’s also a hotbed of discontent with loose policy though. Stark quit in 2011 after disagreeing with the institution’s bond-buying program. On the ECB’s Governing Council, made up of the board and the national central-bank chiefs, Bundesbank President Axel Weber resigned the same year. Current head Jens Weidmann has been a persistent critic of ECB President Mario Draghi’s policies, leading to friction between the two men.“The natural breeding ground has changed and it doesn’t necessarily need to be the Bundesbank this time,” said Carsten Brzeski, chief economist at ING-DiBa AG in Frankfurt. “I’d definitely go for someone with a strong economic background, but also if you want to have influence on the next ECB, it’s important to have a person who’s less of a hawk and more cooperative in his or her approach to policy.”Should Germany decide to nominate a woman, the Bundesbank does present an option in Buch, who’s been there five years. The 53-year-old economist already attends ECB Governing Council meetings and is responsible for overseeing financial stability in Germany.Political PrioritiesAnother option is to look among Germany’s political classes. That was the route taken with Joerg Asmussen, a finance ministry official at the time who joined the ECB board in 2012 and took on the role of international cooperation. He also left early, serving just two years of his eight-year term to return to government.That precedent could cast the spotlight on someone like Jakob von Weizsaecker, the finance ministry’s chief economist and a former European Parliament lawmaker. Party politics would need to be overcome as he’s affiliated with the Social Democrats, who run the ministry in Germany’s coalition.Academic AdvisersAlternatively, the government could consider tapping one of the experts from its council of economic advisers. Schnabel is a University of Bonn economist and an expert on financial supervision and banking regulation.Volker Wieland, a colleague of Schnabel’s on the council and a professor at Goethe University in Frankfurt, could be in the running. His resume includes a PhD from Stanford and five years at the Federal Reserve. He’s the host of an annual conference called the ECB and Its Watchers, which draws the central bank’s big hitters.Economic research centers such as the Ifo institute in Munich or ZEW in Mannheim, headed by Clemens Fuest and Achim Wambach respectively, might get a cursory consideration.Another name is Marcel Fratzscher, who runs the DIW Berlin think tank and was previously the head of International Policy Analysis at the ECB. His hurdle might be his frequent criticism of the German economic model and his defense of Draghi’s policies -- stances unlikely to win him plaudits in conservative German circles.In the private sector, Elga Bartsch is head of macro research at BlackRock Inc., with a long career of covering the euro-area economy and markets. A paper she co-wrote recently with two former central bankers argued for more explicitly coordinated monetary and fiscal policy, a radical version of what both Draghi and his successor from Nov. 1, Christine Lagarde, are advocating.It’s not clear how such a world view would go down with the German government, which has so far resisted calls to step up its own spending and has a deep culture of separating monetary and fiscal policy. A different approach may be to put someone forward who will continue to push the German line that excessive monetary stimulus is counterproductive.“A year from now there could be a debate within the council over stopping QE,” said Richard Barwell, head of macro research at BNP Paribas Asset Management in London. “Parachuting in a highly respected and persuasive expert on monetary policy who is able to challenge the dovish arguments of colleagues could tip the balance in that discussion.”\--With assistance from Samuel Dodge.To contact the reporters on this story: Piotr Skolimowski in Frankfurt at email@example.com;Birgit Jennen in Berlin at firstname.lastname@example.orgTo contact the editors responsible for this story: Paul Gordon at email@example.com, Fergal O'BrienFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Mexico’s central bank cut borrowing costs costs by a quarter point for the second straight month amid moribund economic growth, with two members voting for a faster pace of monetary easing.The board, led by Governor Alejandro Diaz de Leon, lowered the benchmark rate to 7.75%, as forecast by 22 of 25 economists surveyed by Bloomberg, after cutting it for the first time in five years in August. Two projected a larger half-point cut, and one expected no change.The central bank said that the risks for the economy remain biased toward slower-than-expected growth after Mexico narrowly escaped recession in the first half of year. Still, policy makers said that the inflation outlook is hard to predict. The board stopped short of declaring an easing cycle, saying it will be focused on the currency’s impact on inflation, the Federal Reserve, economic slack and cost pressures.The decision and split vote “support expectations for policy makers to continue cutting interest rates,” said Felipe Hernandez, an economist at Bloomberg Economics. “However, lingering uncertainty about risks to inflation imply that the majority of the board would remain inclined for cuts of only 25 basis points.”It was the first 3-2 split vote for Banco de Mexico since June 2014, when only one of the current members, Javier Guzman, was on the board. The participants voting for a half-point cut probably were Jonathan Heath and Gerardo Esquivel, the two appointed by leftist President Andres Manuel Lopez Obrador, and the market debate will focus on the speed of easing in future decisions, said Alonso Cervera, the chief Latin America economist at Credit Suisse Group AG.The peso maintained its loss following the decision, dropping 0.4% to 19.6479 per dollar at 2:23 p.m. local time.Monetary policy remains restrictive after Thursday’s cut, with the key rate not far from a recent 10-year high. At more than 4%, Mexico still has the second-highest real interest rate, that is borrowing costs minus inflation, among the world’s biggest economies, trailing only crisis-stricken Argentina. Consumer prices rose an annual 2.99% in early September, the least in three years and just below the central bank’s 3% goal.MEXICO REACT: Banxico Follows Gradual Easing Path, More to ComeThe Fed last week lowered its main interest rate for a second time this year. Futures traders expect another 25 basis-point cut in the U.S. before the end of the year. Mexico joins central banks in Latin America from Brazil to Chile in cutting borrowing costs.At their August meeting, some central bank members warned about the weakness of investor confidence in Mexico. One highlighted the impact from the cancellation of an airport for Mexico City, suspension of private partnerships for state-owned oil company Petroleos Mexicanos and a dispute with natural gas pipeline firms.Mexico’s economy is forecast to grow 0.5% this year, the least in a decade, according to the median estimate in a Bloomberg survey.Analysts from BNP Paribas to Goldman Sachs Group Inc. said prior to the decision that policy makers might be more aggressive and cut by a half percentage point. But one factor of recent concern for the central bank has been core inflation, which excludes food and energy. That hasn’t come down as much as headline prices, and the central bank highlighted it again in Thursday’s statement. It was one of the reasons that deputy Governor Javier Guzman dissented from the August cut.(Updates with vote history in fifth paragraph.)\--With assistance from Rafael Gayol and Nacha Cattan.To contact the reporter on this story: Eric Martin in Mexico City at firstname.lastname@example.orgTo contact the editors responsible for this story: Juan Pablo Spinetto at email@example.com, Robert JamesonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Marex Spectron Group Ltd. has hired Scott Shellady, known in the trading pits of Chicago for his trademark “cow jacket,” as part of an expansion of its over-the-counter business to the U.S.The London-based brokerage, which already has a presence in the U.S. futures and options market, has now started its American OTC hedging entity, Marex Spectron USA LLC, the company said in a statement. Shellady, whose jacket has earned him the moniker ‘The Cow Guy’, is joining the business, which will start with a focus on agriculture.Marex Spectron is expanding at a time when banks are retrenching. The firm has hired former Societe Generale SA staff after the lender said in April it was shutting its OTC commodities business and its proprietary trading unit as part of a move to cut about 1,600 jobs globally. BNP Paribas SA also closed its U.S. commodities derivatives desk earlier this year.“Given the existing coverage of agricultural commodities, it made sense to start there,” Eugene Faller, head of commodities at Marex Solutions, as the OTC business is known, said in emailed response to Bloomberg questions. “We plan to add metals and energy expertise at a slightly later stage.”Shellady, who has almost 30 years of experience in U.S. agriculture markets and was previously managing director for TJM Europe, will be based in Chicago and focus on grains and proteins, according to Faller. He will focus on producers and work alongside Nick Burke, who joined Marex’s OTC business from SocGen earlier this year and deals with corporate and institutional clients. He began wearing his jacket as an homage to his father, who was also a trader and owned a dairy farm in Illinois, according to Business Insider.Marex Spectron has been boosting its presence in the U.S. In February, the company acquired Chicago-based Rosenthal Collins Group, adding to its U.S. broking business Marex North America LLC. Establishing an U.S. OTC entity is “a natural progression” for the business and broadens the services available for the group’s American customers, according to the statement.To contact the reporter on this story: Isis Almeida in Chicago at firstname.lastname@example.orgTo contact the editors responsible for this story: Tina Davis at email@example.com, Pratish Narayanan, Patrick McKiernanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- After years of maintaining some of the world’s tightest money, Mexico’s central bank is a late arrival at the global easing party. Now investors want to know how enthusiastically it will join in.Most forecasters say the bank will stick with incremental steps Thursday -- lowering the benchmark interest rate by a quarter-point for a second straight month, to 7.75%.But with inflation at a three-year low, the economy near recession and real rates among the world’s highest, analysts from BNP Paribas and Goldman Sachs Group Inc. are among those who suggest a more aggressive move is possible.“The discussion is around what type of cuts they’re going to do -- gradually by 25 points at a time, or a more front-loaded approach,” said Joel Virgen, chief Mexico economist at BNP, who expects a half-point reduction.Inflation slowed to meet the bank’s 3% target this month. It’s likely to stay around that level for a while before picking up again in 2020, Virgen said, “so the window is open for the rest of this year.”MEXICO INSIGHT: Global Uncertainty, Domestic Demand Limit GrowthMexico’s policy makers may also give some guidance Thursday as to whether they see themselves in a cutting cycle, language the central bank avoided when it lowered interest rates last month for the first time in five years. Economists expect the rate to be 7% by the end of next year.Even with a half-point cut, the benchmark would still be near a 10-year high -- and Mexico would still be a global outlier.It currently has the second-highest real interest rate (the gap between the policy rate and inflation) among the world’s biggest economies, exceeded only by crisis-stricken Argentina.If Banxico does surprise with a bigger-than-expected cut, it would mark a departure from the past several years.The bank raised interest rates more than any of its G-20 peers after the Federal Reserve began hiking in 2015 –- worried that the peso could plunge without a generous cushion.Even so, the currency took a hit of some 15%, driving inflation to the highest level in years, as newly elected President Donald Trump’s belligerence toward Mexico alarmed investors.Concern about the peso’s fragility hasn’t disappeared, but the case for tight money is weakening as the economy slows. Analysts expect growth of just 0.5% this year, the lowest in a decade.One reason the central bank may be hesitant about a bigger cut is core inflation, which excludes food and energy. That hasn’t come down as much as headline prices.There are also uncertainties stemming from trade tensions abroad, and President Andres Manuel Lopez Obrador’s policies at home. Banxico has blamed both for holding back investment.Still, low growth, slowing inflation and an easing Fed -- as well as rate cuts in regional countries like Brazil and Chile -- are aligning to allow for a half-point reduction, according to BBVA Bancomer analysts including Ociel Hernandez.“Banxico has room to deliver a bolder cut,” they wrote. “The question is whether the board is ready to speed up the cycle or not.”To contact the reporter on this story: Eric Martin in Mexico City at firstname.lastname@example.orgTo contact the editors responsible for this story: Juan Pablo Spinetto at email@example.com, Ben Holland, Robert JamesonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Bahrain raised $2 billion with its first issue of U.S. dollar bonds since it obtained a $10 billion bailout from its Gulf allies last year to avert a credit crunch. BNP Paribas, Citi, Gulf International Bank, JPMorgan, National Bank of Bahrain and Standard Chartered were hired to arrange the issue. Since the bailout, its existing bonds have jumped back, as investors know Bahrain can count on support from its wealthier allies while it seeks to repair its debt-ridden finances, even though it has a junk credit rating.
(Bloomberg) -- A surprise corporate tax cut will lay groundwork for “second order benefits” for India’s economy over the next several months or even years, while providing a favorable backdrop for broader stock selection, according to BNP Paribas Securities India Pvt.The brokerage has re-balanced its “quality list” of stocks again after having made adjustments a day before the Indian government reduced corporate tax rates on Sept. 20. This time around it added companies ranging from large-cap stocks such as Britannia Industries Ltd. to smaller names including Manappuram Finance Ltd., Abhiram Eleswarapu, head of equity research at BNP Paribas Securities, wrote in a note published on Sept. 24.“The rally in stocks after the tax reduction has provided immediate money in the hands of investors,” he said by phone. “It provides confidence that the government is willing to do whatever it takes and will provide equity investors a chance to broaden the basket of stocks.”READ: BNP Paribas Bets on Rain to Lift Pall Over India Consumer StocksIndia’s surprise tax cut came after economic growth in the April-June quarter slumped to its lowest level in six years, hitting the nation’s smaller stocks the hardest. While the implied valuations of 10-15 Nifty stocks are still at a premium to historical averages, the medium and smallcap indexes are still below their means, according to the BNP report.Since the tax cut, mid cap stocks have jumped 9% while small cap names gained 7%. The benchmark S&P BSE Sensex has climbed 8.3% in the last three sessions.The gains show that the “first round impact” of the tax cut on company earnings has been factored in, according to Eleswarapu.Here are the key insights from the reportOverweight India; retain Sensex target of 40,500 by December which is 3.6% above Tuesday’s closeTax cut to widen fiscal deficit by about 0.75% of GDP though it could be partly recovered through higher collections, divestmentQuality list additions: Britannia Industries, UltraTech Cement, GAIL, Hero MotoCorp, AU Small Finance Bank, Nestle India, Manappuram Finance, Repco Home Finance, Symphony, Power Grid, GlaxoSmithkline ConsumerDeletions from list: Sun Pharma, HDFC Ltd., Cipla, JSW Steel, L&T Infotech, Sun TV, TeamLease Services, Can Fin Homes, Eris Lifesciences, Adani Ports, Reliance Industries, Crompton Greaves, InterGlobe AviationTo contact the reporter on this story: Nupur Acharya in MUMBAI at firstname.lastname@example.orgTo contact the editors responsible for this story: Lianting Tu at email@example.com, Naoto HosodaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Bahrain sold $2 billion of bonds in a two-part deal about a year after it secured a bailout package from its wealthier neighbors.The island kingdom sold dollar-denominated Sharia-compliant securities due 2027 and a conventional bond maturing in 2031, according to a person familiar with the matter, who isn’t authorized to speak publicly and asked not to be identified.The issuance comes amid a sudden surge in debt sales by frontier and emerging sovereigns after the cost of borrowing declined. On Monday, Abu Dhabi raised $10 billion and South Africa finalized its biggest-ever debt deal.Bahrain’s debt sale is the first since Gulf Arab allies pledged $10 billion in aid in October to help stabilize the nation’s fragile finances. It delayed an offering earlier this year.BNP Paribas SA, Citigroup Inc., Gulf International Bank BSC, JPMorgan Chase & Co., National Bank of Bahrain BSC and Standard Chartered Plc managed the offering.Bahrain is rated B+ by S&P Global Ratings, four notches below investment grade.(Updates pricing information for bonds throughout)\--With assistance from Netty Ismail, Arif Sharif and Carolina Wilson.To contact the reporters on this story: Archana Narayanan in Dubai at firstname.lastname@example.org;Dana El Baltaji in Dubai at email@example.com;Sydney Maki in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Justin Carrigan at email@example.com, Constantine Courcoulas, Claudia MaedlerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
PARIS , July 31, 2019 /PRNewswire/ -- BNP Paribas, one of Europe's largest banks, reports 2019 second quarter results. CEO Jean-Laurent Bonnafé comments on the Group's results. Watch video interview and ...
PARIS , May 2, 2019 /PRNewswire/ -- BNP Paribas, one of Europe's largest banks, reports 2019 first quarter results. CEO Jean-Laurent Bonnafé comments on the Group's results. Watch video interview and read ...
Crude prices rose more than 1 percent on Wednesday to their highest level this year on hopes that oil markets will balance later this year, helped by output cuts from top producers as well as U.S. sanctions on OPEC members Iran and Venezuela. U.S. President Donald Trump said negotiations with China were going well and suggested he was open to extending the deadline to complete them beyond March 1, when tariffs on $200 billion worth of Chinese imports are scheduled to rise to 25 percent from 10 percent. "We're in a market waiting for the next headline to drive us higher or lower," said Phil Flynn, analyst at Price Futures Group in Chicago, adding U.S.-China trade talks are among the issues that market participants have focused on the most.