BARC.L - Barclays PLC

LSE - LSE Delayed price. Currency in GBp
156.48
+0.16 (+0.10%)
As of 8:48AM BST. Market open.
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Previous close156.32
Open156.88
Bid156.62 x 0
Ask156.70 x 0
Day's range156.36 - 157.32
52-week range145.00 - 197.50
Volume1,078,859
Avg. volume33,596,751
Market cap26.985B
Beta (3Y monthly)0.54
PE ratio (TTM)8.11
EPS (TTM)19.30
Earnings date1 Aug 2019
Forward dividend & yield0.07 (4.17%)
Ex-dividend date2019-02-28
1y target est221.84
  • Oil Pares Steep Weekly Loss as U.S. Warship Downs Iranian Drone
    Bloomberg1 hour ago

    Oil Pares Steep Weekly Loss as U.S. Warship Downs Iranian Drone

    (Bloomberg) -- Oil snapped four days of losses after an American warship downed an Iranian drone near the Strait of Hormuz, stoking concerns crude flows from the Middle East may be disrupted.Futures rose as much as 1.9% in New York, paring its steepest weekly decline since the end of May. The U.S. “immediately destroyed” the drone that approached the USS Boxer, President Donald Trump said on Thursday at the White House. Iran could close the Strait of Hormuz but doesn’t want to do it because the waterway and the Persian Gulf are its lifeline, Foreign Minister Mohammad Javad Zarif said in an interview Wednesday.Oil is still down about 7% this week as concerns about global demand eclipse fears about a cut to Middle East crude flows. Trump on Tuesday reiterated that he could impose additional tariffs on Beijing, while China’s economic growth slowed to the weakest pace in almost three decades in the second quarter and American fuel stockpiles unexpectedly expanded.“The fresh reminder of tensions in the Middle East is propping crude back up,” said Vandana Hari, founder of Vanda Insights in Singapore. “I expect prices to recover only a fraction. The bearish grip on the market is too strong.”West Texas Intermediate for August delivery increased 55 cents, or 0.8%, to $55.75 a barrel on the New York Mercantile Exchange as of 7:41 a.m. in London after gaining as much as $1.06 earlier. The contract lost $1.48 to $55.30 on Thursday, the lowest close since June 19.Brent for September settlement rose 81 cents to $62.74 a barrel on the ICE Futures Europe Exchange. It fell 2.7% to $61.93 on Thursday and is also set for the biggest weekly loss since the end of May. The global benchmark crude traded at a premium of $6.84 to WTI for the same month.See also: U.S. Demands Iran Release Foreign Ship, Crew Seized This WeekThe Iranian drone was a threat to the ship and its crew, Trump said, as he called on other nations to protect their vessels as they go through the Strait. The confrontation comes as tensions between Washington and Tehran remain high over a spate of attacks on cargo ships, the downing of an American drone and the British seizure of a tanker carrying Iranian oil.Trump last week complained that China wasn’t living up to its promise of increased purchases of American agricultural goods. Disagreements on key initial demands from Trump and his counterpart Xi Jinping is raising doubts about whether the two nations will actually return to the negotiating table.To contact the reporter on this story: Sharon Cho in Singapore at ccho28@bloomberg.netTo contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Ben Sharples, Andrew JanesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Oil Prices Continue Lower Despite U.S. Downing of Iranian Drone
    Bloomberg12 hours ago

    Oil Prices Continue Lower Despite U.S. Downing of Iranian Drone

    (Bloomberg) -- The downing of an Iranian drone in the Strait of Hormuz wasn’t enough to lift oil prices, which slid to the lowest in almost a month amid pessimism about the global economy.Futures tumbled 2.6% on Thursday in New York, the fourth consecutive daily loss. Prices managed to climb about 60 cents after President Donald Trump said the U.S. had downed an Iranian drone in the Persian Gulf, but even that wasn’t enough to push the market up. Instead, crude joined a decline for tech and consumer stocks amid a spate of disappointing corporate earnings, alongside signs that Beijing and Washington are making little progress on a trade deal.Russian pipeline operator Transneft PJSC, meanwhile, said it resumed full flows from the country’s largest crude producer, Rosneft PJSC, after imposing restrictions due to contamination concerns.“The market is waking up to the fact that global oil demand is wilting and the possible prompt that could improve the situation is still remote,” said Judith Dwarkin, chief economist at Calgary-based consultant RS Energy. “There’s been no improvement in the U.S.-China trade dispute even though they say they are coming back to the table.”Oil has fallen about 8% since Monday, on track for its worst weekly performance since late May. The specter of a renewed U.S.-China conflict dented the demand outlook, while American fuel stockpiles jumped. That’s overshadowed worries that Iran may shut down the Strait of Hormuz, a key chokepoint for much of the world’s oil shipments.West Texas Intermediate for August delivery closed down $1.48 to $55.30 on the New York Mercantile Exchange, falling to the lowest since June 19. It was at $55.63 at 4:05 p.m., after Trump announced the drone incident.September Brent lost $1.73 to close at $61.93 a barrel on the ICE Futures Europe Exchange, before rebounding to $62.44.In an interview with Bloomberg Wednesday, Iran’s Foreign Minister Javad Zarif said the U.S. “shot itself in the foot” by pulling out of its nuclear accord with his nation. Crude briefly rallied on Thursday after Iran confirmed the seizure of an oil tanker in the Persian Gulf this week.Iran’s state-run Press TV news channel later aired footage of a tanker that disappeared from global satellite tracking systems four days ago. The ship was smuggling fuel out of the country, the Iranian Revolutionary Guard Corps said.(An earlier version of this story misspelled the name of RS Energy’s chief economist.)\--With assistance from Sharon Cho and James Thornhill.To contact the reporters on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net;Alex Longley in London at alongley@bloomberg.netTo contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Carlos Caminada, Christine BuurmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters - UK Focus13 hours ago

    MOVES-Bank of America hires Vitols as head of asset management investment banking -memo

    Bank of America Corp has appointed Janis Vitols to be its new head of global asset management investment banking, according to an internal memo seen by Reuters on Thursday. "A 20-year veteran in investment banking, Janis joins us from Barclays, where he was most recently managing director and head of global asset management investment banking," Bank of America Vice Chairman and Americas head of its financial institutions group Will Addas wrote in the memo to staff.

  • Oil Near $57 as U.S. Fuel Stockpile Gain Feeds Demand Fears
    Bloomberg22 hours ago

    Oil Near $57 as U.S. Fuel Stockpile Gain Feeds Demand Fears

    (Bloomberg) -- Oil traded near a two-week low as an increase in U.S. fuel stockpiles heightened fears that demand is waning in the world’s biggest crude consumer.Futures were up 0.2% in New York after dropping 1.5% on Wednesday. American gasoline and distillates inventories rose by a combined 9.25 million barrels last week, according to government data, well above expectations of analysts surveyed by Bloomberg. Crude supplies did fall more than forecast, driven in part by output halts in the Gulf of Mexico due to storm Barry.Oil has lost 5% this week as the specter of a renewed U.S-China trade conflict and stuttering American consumption dent the demand outlook. Still, the possibility of crude flows being disrupted from the Middle East remains after Iran’s Foreign Minister Mohammad Javad Zarif damped the prospect of the OPEC producer opening talks with the Trump administration. Washington “shot itself in the foot” by pulling out of the nuclear accord, he said.“Although the lows seen in June in the oil market are still far away the sentiment has firmly soured in the past few days,” PVM Oil Associates analyst Tamas Varga wrote in a report. “If you take the three main product categories – distillates, gasoline and ‘other products’- you will end up with a brutal combined build.”West Texas Intermediate for August delivery rose 10 cents to $56.88 on the New York Mercantile Exchange as of 10:35 a.m. in London, after its lowest close since July 2 on Wednesday. September Brent rose 23 cents to $63.89 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $6.86 to WTI for the same month.U.S. gasoline stockpiles increased by 3.57 million barrels last week, rising for the first time in five weeks, according to Energy Information Administration data Wednesday. The median estimate in the survey forecast a 2.4 million-barrel drop. Distillate inventories rose by 5.69 million barrels, while crude supplies fell by 3.12 million barrels.Iran is capable of shutting the Strait of Hormuz -- a crucial choke-point for oil flows -- but doesn’t want to do it because the waterway and the Persian Gulf are its lifeline, Zarif said Wednesday in an interview with Bloomberg Television in New York.\--With assistance from James Thornhill.To contact the reporters on this story: Sharon Cho in Singapore at ccho28@bloomberg.net;Alex Longley in London at alongley@bloomberg.netTo contact the editors responsible for this story: Serene Cheong at scheong20@bloomberg.net, Christopher Sell, Amanda JordanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters - UK Focusyesterday

    UPDATE 3-UK's Slug and Lettuce owner to buy pub chain Ei for 1.3 bln pounds

    Slug and Lettuce pub chain owner Stonegate on Thursday said it agreed to buy larger rival Ei Group for 1.27 billion pounds ($1.58 billion), taking control of some 4,000 additional pubs to become Britain's biggest pub operator. The deal seals a major turnaround for Ei, which fetched a price tag of 285 pence per share - more than tenfold its value in 2012, when it traded as low as 27 pence a share.

  • U.S. Retail Sales Post Broad Gains in June
    Bloomberg3 days ago

    U.S. Retail Sales Post Broad Gains in June

    (Bloomberg) -- U.S. retail sales and factory output in June exceeded expectations and underscored steady economic growth even as Federal Reserve officials signal they’re prepared to reduce interest rates.The value of retail purchases rose 0.4% for a second month, more than the 0.2% median projection in a Bloomberg survey of economists, Commerce Department data showed Tuesday. Production at the nation’s manufacturers also advanced 0.4%, the most this year, according to a separate report from the Fed.Yields on the 10-year Treasury note rose and the dollar advanced after the reports, though traders maintained bets that the central bank will lower borrowing costs at least a quarter point later this month.Sales in the “control group” retail subset, a key gauge which excludes food services, car dealers, building-materials stores and gasoline stations, increased 0.7%, also exceeding projections. In the second quarter, the measure jumped an annualized 7.5%, the strongest quarterly performance since the final three months of 2005. Some analysts view the measure as a more accurate gauge of underlying consumer demand.Even with the June gain in factory output, the measure fell during the second quarter at a 2.2% annual rate for the first back-to-back declines since 2016 -- evidence of weakness that the central bank could potentially cite as one of the reasons for an interest-rate cut.The retail figures show the biggest part of the economy -- consumer spending -- continues to drive economic growth, while business spending and manufacturing remain the weak links due to tepid global demand and trade policy concerns. The latter, along with muted inflation, help explain why Fed policy makers have indicated they are open to reducing their benchmark interest rate as “insurance” against external risks to the economy.“The retail sales data today gives you comfort that the domestic economy is in good shape and the consumer is in a good spot," said Michael Gapen, chief U.S. economist at Barclays Plc. “Business spending, business confidence and manufacturing production are where the economy is slowing and if the Fed is looking to insulate the economy, some cuts to support financial market conditions and keep the domestic economy strong is still a reasonable response.”Another report Tuesday showed sentiment among U.S. homebuilders crept higher in July after falling the previous month, indicating lower mortgage rates are helping shore up demand.Powell ViewThe retail gain underscores Fed Chairman Jerome Powell’s view that consumer spending and finances remain healthy amid a tight labor market that’s been supporting the expansion. Strength at retailers may also complicate the debate for policy makers as they gather July 30-31 to chart their course amid growing headwinds from slowing global growth to trade tensions.Eleven of 13 major retail categories increased, led by a 1.7% increase in nonstore retailers, which include online vendors.The retail sales gain “feeds into the narrative we’ve been seeing which is consumer strength continuing to support the economy with a strong labor market and wage growth,” said Scott Brown, chief economist at Raymond James Financial Inc. “It’s consistent with consumer spending supporting the overall economy, but part of the strength we’re seeing in the second-quarter numbers is payback because the first quarter was so soft.”Powell in congressional testimony last week left it all but certain that the Fed is poised to cut rates for the first time in a decade. Still, he told lawmakers that consumer spending has reliably driven growth and rebounded to a solid pace after first-quarter weakness.The initial reading of second-quarter gross domestic product is due July 26. A survey this month showed growth probably slowed to a 1.8% annualized pace from 3.1%, though consumption was seen picking up.The Fed’s industrial production report showed manufacturing was bolstered by a solid gain in motor vehicle output. Total industrial production, which includes mines and utilities, was unchanged as milder-than-usual weather reduced demand for air conditioning.(Updates with homebuilder sentiment in eighth paragraph.)\--With assistance from Kristy Scheuble.To contact the reporters on this story: Reade Pickert in Washington at epickert@bloomberg.net;Katia Dmitrieva in Washington at edmitrieva1@bloomberg.netTo contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Vince GolleFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg3 days ago

    Goldman, Bain Back $371 Million Loan to U.K. Fintech Startup

    (Bloomberg) -- SumUp Inc., a six-year-old electronic payments startup, secured a 330 million-euro ($371 million) loan, backed by Bain Capital Credit, Goldman Sachs Private Capital and others to fuel its expansion.The London-based company plans to boost its customer base across 31 markets and develop its range of products, including via acquisitions. The startup makes credit-card readers to help businesses of all size receive payments faster, both in-store and online, and is working to improve contactless payments.“This cash injection will significantly accelerate the growth of our customer base, enhance SumUp’s technology leadership position, and drive the development of new services,” said Marc-Alexander Christ, co-founder of SumUp.The six-year-old startup currently has more than 1.5 million active users, such as DHL Worldwide Express and the U.K.’s black-cab drivers, and more than 4,000 new business join every day, the company said. It expects to generate more than 200 million euros in revenue this year, and seeks to maintain its 120% year-on-year growth in 2019, according to a statement.Goldman Sachs International acted as lead structuring agent, Barclays Bank PLC as structuring agent, and Weil, Gotshal & Manges acted as legal adviser to SumUp on the financing. HPS Investment Partners, and TPG Sixth Street Partners also participated in the loan, which has a five-year term, the company said.To contact the reporter on this story: Nour Al Ali in Dubai at nalali1@bloomberg.netTo contact the editors responsible for this story: Katerina Petroff at kpetroff@bloomberg.net, ;Giles Turner at gturner35@bloomberg.net, Molly Schuetz, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • What Wall Street Banks Say About Fed Rate Cuts This Year
    Bloomberg4 days ago

    What Wall Street Banks Say About Fed Rate Cuts This Year

    (Bloomberg) -- Federal Reserve Chairman Jerome Powell left it all but certain that the U.S. central bank will reduce interest rates this month for the first time in a decade.The debate now is how deep they will cut and what will they do afterward. As the July 30-31 meeting nears, here’s the outlook of some of the world’s biggest banks based on recent research reports.Forecasts range from JPMorgan Chase & Co. and Citigroup predicting a 25 basis point cut to Morgan Stanley forecasting double that amount.Goldman Sachs Group Inc.25 basis point reduction in July25 basis points of cuts in rest of 2019Powell offered a somewhat upbeat baseline view of growth, but nonetheless argued that uncertainty “continues to weigh” on the outlook. In our view, this was a strong signal that the trade truce with China and the strong June jobs reports have not derailed the case for a July rate cut. We increased our odds of a rate cut; for the July meeting, we place the subjective odds of a 25 basis point cut at 75%, a 50 basis point cut at 15% and unchanged policy at 10%. Our modal expectation remains a 25 basis point cut at both the July and September meetings.JPMorgan Chase & Co.25 basis point reduction in July25 basis points of cuts in rest of 2019It is understandable that Chair Powell remained committed to the storyline supporting action in July. The global backdrop remains concerning, as business sentiment continues to deteriorate and the disinflationary headwinds from slowing producer price index growth will weigh on corporate profits through the current quarter at least. Combined, this is damping global capex growth and feeding back to weakness in global industry. While the case for a 50 basis point cut has been undermined, the case for 25 basis point remains firmly in place and we stick with our call. Whether this is followed by 25 basis point in September will be highly data dependent.Morgan Stanley50 basis point reduction in JulyNo further cuts in rest of 2019The global economy has lost significant momentum in the past 12 months and trade tensions linger. This is now filtering through more prominently to the U.S. economy. Risks to the outlook remain skewed to the downside. A non-linear impact to growth could materialize if financial conditions tighten, bringing corporate credit risks to the fore. We therefore see a need to act decisively to protect against uncertainty and downside risks. Hence, we continue to expect a quick and front-loaded adjustment, i.e. 50 basis points cut by the Fed in July.Citigroup Inc.25 basis point reduction in JulyAnother 25 basis point cut expected this year, most likely in SeptemberEvents and data played out as we had expected – particularly the above-consensus June jobs number and benign G-20 outcome. While in our view this has decreased downside risk, that view is clearly not shared by Chair Powell. We are consequently falling in line with consensus and expect a 25 basis point rate cut in July. A 50 basis point cut is a real possibility, but given that even a 25 basis point cut is likely to provoke two or more dissents, 25 basis points may be the compromise policy outcome. Following the July cut we expect one additional 25 basis point cut, most likely in September.Bank of America Corp.25 basis point reduction in July50 basis points of cuts in rest of 2019Fed Chair Powell all but promised that a cut is coming in July. He is unfazed by the recent strong data in the U.S. The challenge is that this may not be a consensus view, making it difficult but not impossible to deliver a 50 basis point cut. For the time being, we should focus nearly as much on key global data as on U.S. indicators.Barclays Plc25 basis points cut in July50 basis points of cuts in rest of 2019Chair Powell’s testimony before the House Financial Service committee was surprisingly dovish. (The) congressional testimony increases our confidence in our forecast for at least a 25 basis point cut in the funds rate at the July Federal Open Market Committee meeting, followed by another 50 basis points in cuts by year end.UBS Group AG50 basis point reduction in JulyNo further cuts in rest of 2019At the June FOMC, Chair Powell was clearly looking to cut rates 50 b.p. at the July meeting. Doing so, in his view, would offset a confidence shock and manage the risks to the outlook. We will receive more data between now and the July 31 policy decision. Those data could mean the chair is not able to sway enough of the committee to a cut. But if Powell remains strongly inclined to cut, the FOMC is likely to show some deference. In light of the strong data, however, a negotiated 25 b.p. cut could be the compromise that emerges.Deutsche Bank AG25 basis point cut in July50 basis points of cuts in rest of 2019Chair Powell’s testimony and the minutes to the June FOMC meeting largely confirmed the Fed’s intention to ease monetary policy at their July 31 meeting. While we continue to expect the Fed to cut 75 bps by year end, we remain of the view that the Fed will ease 25 bps in July, and proceed on a meeting-by-meeting basis as they evaluate the incoming growth and inflation data.(Adds forecast from Deutsche Bank.)To contact the reporters on this story: Simon Kennedy in London at skennedy4@bloomberg.net;Reade Pickert in Washington at epickert@bloomberg.netTo contact the editors responsible for this story: Stephanie Flanders at flanders@bloomberg.net, Alister BullFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters - UK Focus4 days ago

    UK banks say business investment slowing further ahead of Brexit

    Britain's major banks have seen a growing number of business customers delay decisions on investments and borrowing in recent weeks, as the probability of a disorderly exit from the European Union inches higher. Britain's banks have largely played up the resilience of businesses since the June 2016 referendum decision to leave the EU, but senior executives speaking to Reuters say that in recent weeks they have seen a dip in firms' activity levels.

  • Barclays and Royal Bank of Scotland: two FTSE 100 horrors that could sink in August?
    Fool.co.uk5 days ago

    Barclays and Royal Bank of Scotland: two FTSE 100 horrors that could sink in August?

    Royston Wild thinks shareholders should avoid FTSE 100 (INDEXFTSE: UKX) stocks Barclays plc (LON: BARC) and Royal Bank of Scotland Group plc (LON: RBS).

  • How China Can Create Its Own Goldman Sachs
    Bloomberg7 days ago

    How China Can Create Its Own Goldman Sachs

    (Bloomberg Opinion) -- An age-old question has reared its head again: Why can’t China create a globally competitive investment bank in the mold of Goldman Sachs Group Inc. or Morgan Stanley?It’s not like the country hasn’t tried. China International Capital Corp., a venture formed in 1995 with New York-based Morgan Stanley, foundered amid disputes between the local and U.S. partners and slipped behind newer rivals without ever becoming a global heavyweight.(1) Citic Securities Co. made an unsuccessful attempt to buy into Bear Stearns Cos. in 2007 (which was probably a lucky escape). Now add CLSA Ltd. to the list of failures.A common theme running through the exodus of foreign executives from Citic’s CLSA, detailed by Cathy Chan of Bloomberg News this week, and the earlier strains at CICC is the clash of cultures between Wall Street’s freewheeling practices and the more staid, hierarchical approach of Chinese state-controlled financial institutions. U.S. investment banks are highly competitive and individualistic, studded with rainmakers, big-hitting traders and star analysts who may earn vast pay packages and hold power that’s disproportionate to their place in the management structure. It’s a way of working that doesn’t gel easily with China’s top-down state industrial model.When one senior CLSA executive had concerns about the direction of his unit, “colleagues from Citic advised him to steer clear of conversations with the boss that didn’t involve flattery,” Chan wrote. Compare that with this profile of CICC from 2005: “Morgan Stanley's Western bankers were used to disagreeing openly with colleagues. CICC's Chinese employees preferred to resolve differences without confrontation, and in private.” Not much seems to have changed.These tensions took a toll on CLSA, a Hong Kong-based outfit with a reputation for independent-minded research that was acquired in 2013 by Citic Securities. The Chinese brokerage is an arm of Citic Group, a state-owned pioneer of the country’s economic reforms set up under the direction of Deng Xiaoping in the late 1970s. Before the takeover, CLSA was ranked in the top three for Asian research by institutional investors, along with Morgan Stanley and Deutsche Bank AG. By last year, it had dropped out of the top six, according to Greenwich Associates.As a group, Chinese investment banks and securities firms have failed to make much impact on international markets. The combined overseas revenue of the country’s 11 largest brokerages was just $3.5 billion last year, according to Bloomberg Intelligence analyst Sharnie Wong. That’s roughly on a par with the Asian revenue of BNP Paribas SA, which doesn’t rank among the biggest global investment banks. Chinese brokerages are relatively unsophisticated beside their Wall Street rivals, focusing mostly on equities trading – a business that Deutsche Bank AG said this week it’s exiting amid increased automation and low margins. Mainland firms have less of a presence in bond trading and structured products, which remain driven by humans and are the bread and butter of international banks. It could be argued that China doesn’t need a world-class investment bank, given the dominance of local firms in its increasingly important domestic market. The inclusion of the country’s shares in the MSCI Emerging Markets Index and its bonds in the Bloomberg Barclays index has driven billions of dollars of foreign money into Chinese capital markets. Chinese firms have also made headway in IPO underwriting in Hong Kong, dislodging Wall Street rivals in the league tables.Besides, global investment banking revenues have been sliding since the financial crisis, amid low interest rates and the trend toward automated trading. That would be a short-sighted view, though. If China is serious about modernizing its capital markets, it needs the expertise developed by leading international investment banks to provide better fundraising options for its companies. It may be no coincidence that Beijing has finally relented and allowed overseas banks to control their Chinese ventures, among them UBS Group AG, Nomura Holdings Inc., JPMorgan Chase & Co., Morgan Stanley and Credit Suisse Group AG. A slowing economy means efficient allocation of capital has become more more important than ever. Exposing local brokerages to overseas competition may spur them to raise their game.Chinese firms operating in Hong Kong are already moving up the curve in research as they try to make their way in the city’s more robust environment. An example is CGS-CIMB Securities, a venture between China Galaxy Securities Co. and Malaysia’s CIMB Group Holdings Bhd.A world-class investment banking operation needs more than research, though. Much of the competitive advantage for bulge-bracket firms derives from networks of relationships with companies and investors that have been cultivated over decades. Building such capabilities will take time.It’s hard to see this happening until China stops using financial firms as tools of the state. In 2015, the government leaned on brokerages to rescue a crashing stock market. Last month, it asked large securities firms to take over the role of providing financing to small and medium-size enterprises. If China is to produce its own Goldman Sachs, it’s unlikely to come from the sclerotic state economy. Look instead to the wellspring of Chinese innovation: the private sector. For that to happen, though, the state has to get out of the way.Ultimately, the biggest block to Beijing’s ambitions is Beijing itself.  (Updates the eighth paragraph with Chinese firms dislodging rivals in Hong Kong IPO underwriting. An earlier version of this column corrected the spelling of Bear Stearns in the second paragraph.)(1) Morgan Stanley sold its CICC stake in 2010.To contact the author of this story: Nisha Gopalan at ngopalan3@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Powell and the Fed Have Zero Control Over the Long Bond
    Bloomberg8 days ago

    Powell and the Fed Have Zero Control Over the Long Bond

    (Bloomberg Opinion) -- Day two of Federal Reserve Chairman Jerome Powell’s congressional testimony was much like the first. He reiterated Thursday that the economy is “in a very good place,” but that the central bank has room to lower interest rates to keep the expansion on track. As dovish as that may sound, the comments didn’t offer much comfort to bond traders – they had other things on their minds.For the second time this week, the U.S. Treasury held a bond auction that met with less than stellar demand, triggering losses across all maturities and pushing yields on longer-dated debt to their highest since May. Investors submitted bids for just 2.13 times the $16 billion of 30-year bonds offered. To put that in perspective, consider than in the almost 50 auctions of that maturity since mid-2015, the bid-to-cover ratio has been lower just three times. Not only that, the yield of 2.644% was higher than the 2.618% the securities were trading at just before the auction, generating the highest so-called tail since early 2016 and confirming the weak demand. “Friendless long bonds abandoned at sale,” is how FTN Financial interest-rate strategist Jim Vogel titled his report on the auction. While short-term debt is highly influenced by the direction of monetary policy, longer-term securities are more sensitive to things like inflation and perceived creditworthiness. And in that regard, bond investors have plenty to worry about. The government said just a few hours before the auction that the core consumer price index, which excludes food and energy, rose 0.3% from the prior month, the most since January 2018 and enough to raise doubts about the notion that inflation really is dead.There other good reasons for bond investors to be cautious on longer-term U.S. debt. The Trump administration is openly talking about how it would desire a weaker greenback, which for many is a sign that the U.S. is abandoning its long-held strong-dollar policy. Put another way, who wants to hold long-term, dollar denominated assets while the U.S. government is doing everything it can short of actually intervening to weaken the dollar? As for the creditworthiness of the U.S., the Treasury Department said after the auction that the budget deficit widened by 23% to $747.1 billion in the first nine months of the fiscal year. Prospects for faster inflation, a falling dollar and more borrowing isn’t a recipe for a bull market in bonds.STOCKS SURPRISEAlthough the Dow Jones Industrial Average closed on Thursday above the 27,000 market for the first time, the more important S&P 500 Index rose above 3,000 for the second straight day only to fall back to just below that level to 2,999.91 by the end of trading. Given how important falling bond yields have been to the rally in stocks, it was impressive that equities didn’t fall out of bed along with the Treasury market. The reason may be found in the CPI report. The thinking here is that if inflation really is accelerating, then perhaps companies will finally be able to pass on price increases to their customers, reversing the trend toward narrower profit margins. “The June CPI report vindicates Chair Powell's earlier assessment that some of the recent slowdown in inflation was at least partially due to transitory factors,” Bloomberg Economics’s Yelena Shulyatyeva wrote in a report. Profit margins for S&P 500 companies have narrowed from 12.6% in last year’s third quarter to a likely 11.7% for the second quarter, according to Bloomberg Intelligence. “The forecast for double-digit net income growth by this time next year won't happen without margin gains,” the strategists with Bloomberg Intelligence wrote in a report Wednesday.DOLLAR POLICYTrump will get a weaker dollar, just probably not as weak or as soon as he wants. Although the U.S. Dollar Index has fallen to 97.064 on Wednesday from this year’s high of 98.203 in April, the median estimate of currency strategists surveyed by Bloomberg is for it to drop to 95 by year-end. That would only put the gauge at its lowest since October – not enough to do a lot for exporters, considering it was below 90 in early 2018 and around 80 in mid-2014. As such, the new favorite parlor game in the currency market is speculating on whether the U.S. might intervene to weaken the dollar, and if so, how it might accomplish that feat. It wouldn’t be easy. The U.S. would likely need the help of other nations, because the $5 trillion-per-day market is too deep for unilateral U.S. action to have any impact. And given how quickly the global economy is weakening, the U.S. would be hard-pressed to get any other nation to help it push the dollar lower, as that would have the effect of strengthening their own currencies. The most effective move might be the simplest. All the U.S. would have to do is officially abandon the strong-dollar policy introduced in 1995, according to the strategists at Bank of America Merrill Lynch. Such a shift could be a “game-changer,” the strategists wrote in report Thursday. But that brings up another set of problems, such as international investors potentially shunning dollar-based assets and causing U.S. borrowing costs to rise. Was the 30-year bond auction Thursday a glimpse of the future?EMERGING MARKETS PREFER EUROSThe euro zone economy is worse off than the U.S. and the Bloomberg Euro Index is down about 5.50% since April 2018. And yet, emerging-market borrowers are issuing debt in euros at a record pace to meet demand, another sign that perhaps investors might be shunning the dollar. Emerging-market sovereigns have collected 33.5 billion euros ($37.7 billion) from new bonds his year, more than the amount raised in any full year previously, according to Bloomberg News’s Srinivasan Sivabalan. Togo, the tiny West African nation with a gross domestic product that’s less than the annual revenue of 70% of the companies in the S&P 500 Index, was the latest to borrow in euros, joining countries including Saudi Arabia and Turkey. The dollar’s share of global currency reserves dropped to 61.8% as of the end of March from 65.4% at the start of the Trump administration, according to the International Monetary Fund. The euro’s share has risen to 20.2% from 19.1% in the same period. To be sure, emerging-market borrowers tapping the euro market to raise funds isn’t solely a currency play; it’s also about interest rates. The average yield on a Bloomberg Barclays gauge for emerging-market euro bonds is 1.67%, more than 3 percentage points lower than the rate on a comparable index of dollar bonds, according to Sivabalan.RUSSIA ROILS THE WHEAT MARKETThe cost of bread may soon rise, and it’s all Russia’s fault. Wheat futures climbed the most in a month on Thursday after the U.S. Department of Agriculture delivered a bigger-than-expected cut to its production estimate for Russia, the top exporter, according to Bloomberg News. Scorching temperatures are signaling fewer exports out of Russia and Ukraine, which should also result in more U.S. shipments, the USDA said in its monthly World Agricultural Supply and Demand Estimates report. The agency lowered its forecast for Russian production to 74.2 million metric tons for the 2019-20 season, down from a previous outlook of 78 million. As a result, Russian wheat exports are expected to fall for a second year, the first back-to-back drop in at least three decades, Bloomberg News’s Megan Durisin reports. Fewer shipments from Russia is a boon for rivals. The USDA boosted estimates for sales from the U.S. and European Union.TEA LEAVESAfter the mild surprise in the consumer price index on Thursday, the producer price index set be released on Friday suddenly becomes much more interesting. It’s not that the report will have any bearing on whether the Fed will or won’t raise rates; but it could have implications for equities. For one, profit margins won’t benefit even if companies can sell their goods and services for higher prices if the prices they are paying for materials to make those goods and services are also rising by the same or greater amount, broadly speaking. The median estimate of economists surveyed by Bloomberg is for the government to say that that producer prices were flat in June from a month earlier, but increased 0.2% when stripping out volatile food and energy costs. They are expected to increase 1.6% from a year earlier, or 2.1% excluding food and energy. Both readings would be 0.2% below the readings for May.DON’T MISS Fed Satisfies Fewer and Fewer These Days: Mohamed A. El-Erian Europe's Leaders Must Learn From the Greek Tragedy: Mervyn King Here Come the Earnings Disappointments: Brooke Sutherland Lagarde's ECB Is Running Out of Economists: Ferdinando Giugliano A $15 National Minimum Wage Isn’t So Scary After All: Noah SmithTo contact the author of this story: Robert Burgess at bburgess@bloomberg.netTo contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Robert Burgess is an editor for Bloomberg Opinion. He is the former global executive editor in charge of financial markets for Bloomberg News. As managing editor, he led the company’s news coverage of credit markets during the global financial crisis.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Reuters - UK Focus8 days ago

    UPDATE 1-BoE says British banks ready for no-deal Brexit, trade war

    * UK lenders well-capitalised for whatever comes - BoE * No-deal Brexit risks economic/market shock * Open-ended investment funds, Facebook's Libra scrutinised (Adds Carney comments from news conference) By David Milliken and Huw Jones LONDON, July 11 (Reuters) - British banks hold enough capital to cope with a no-deal Brexit and a global trade war simultaneously, the Bank of England said on Thursday, although a disruptive Brexit would still cause major turbulence for financial markets and the economy. Bank of England Governor Mark Carney also flagged ongoing concerns about illiquid investment funds, liquidity shocks, crypto-currencies and environmental dangers at a half-yearly update on the risks facing Britain's banking system.

  • Fed Easing Bets Firm After Jerome Powell Flags Downside Economic Risks
    Bloomberg9 days ago

    Fed Easing Bets Firm After Jerome Powell Flags Downside Economic Risks

    (Bloomberg) -- Traders boosted the amount of easing they expect from the Federal Reserve this month and beyond as Chairman Jerome Powell emphasized persistent risks to the economy.The market firmed in its conviction that a quarter-point cut is coming at the end of this month. Traders also dialed up bets on an even bigger July shift as Powell responded to questions from U.S. lawmakers in Washington, including one directly on the possibility of such a move. The market is now pricing in almost three quarters of a point of easing by the end of 2019 and short-dated Treasury rates have fallen sharply, taking the two-year yield as low as 1.82%. The dollar also weakened, while U.S. stocks are firmer on the day.Powell’s testimony appears to have reassured traders that the rebound in payrolls reported last week won’t deter policy makers from a July move. The Fed chairman himself said Wednesday that the strength of hiring in June had not changed the central bank’s thinking.“Powell fully endorsed the July rate cut and did absolutely nothing to pull the markets back from that expectation,” Peter Boockvar, chief investment officer at Bleakley Financial Group, said in a note.While Powell appears to have removed doubts about whether a rate cut is on the way, market debate over the size of this month’s move is heating up. Columbia Threadneedle senior strategist Ed Al-Hussainy said after Powell’s initial statement that traders might be getting ahead of themselves pricing in more than a quarter-point move this month, as there’s no evidence so far of broad support for more-aggressive action among the members of the Federal Open Market Committee.“The case for a 50 basis points cut in July is very strong, but there isn’t a strong base for it on the FOMC,” he said. “Even on the more dovish side of the spectrum, the voices have been lukewarm.”Morgan Stanley and UBS are among those market watchers still looking for a half-point cut, while Barclays pared its July call back to 25 basis points.Pressed during his Congressional testimony on what would justify a larger move, Powell stuck to general references about a “broad range of data” informing the Fed’s decision, along with the “extent to which trade and global growth are weighing on the outlook,” and the path of inflation.Ben Emons at Medley Global Advisors said Powell’s emphasis on the risks to global growth are a tilt in the direction of more action, and noted the market has raised the odds of a half-point cut.“Powell’s statement reopens the door to the possibility of a 50 basis point cut. The market definitely had that wrong by being too single-data-point minded,” the strategist wrote in a note.The implied rate on fed funds futures for August -- which indicates where the market reckons the central bank’s key rate will be after its July 31 decision -- has fallen to 2.09%. That suggests around 32 basis points of easing from the most recent effective fed funds rate of 2.41%, or more than the usual quarter-point sized move that the central bank tends to make.The implied rate for August had been around 2.16% just before the release of Powell’s remarks. Meanwhile, the yield on the January contract -- an indicator for year-end rates -- slid to 1.70% from 1.80% before the testimony, and the U.S. dollar slipped as much as 0.4% against the yen.Treasury YieldsAs rate cut wagers strengthened, the decline in yields across the Treasuries market also pulled the 10-year benchmark down roughly five basis points from where it was just before Powell’s testimony, to around 2.05%. The sharper drop in two-year rates drove the yield curve steeper to around 22 basis points, reversing its recent flattening trend.The U.S. dollar’s decline, meanwhile, was consistent with Powell’s testimony, according to Bipan Rai, North American head of foreign-exchange strategy at Canadian Imperial Bank of Commerce. But he also said the market’s reluctance to price in a half-point Fed cut for July should keep the currency supported.(Adds comments, updates prices.)\--With assistance from Benjamin Purvis, Alyce Andres and David Wilson.To contact the reporters on this story: Emily Barrett in New York at ebarrett25@bloomberg.net;Liz Capo McCormick in New York at emccormick7@bloomberg.netTo contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Mark TannenbaumFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • AMLO Hits Turbulence as Finance Chief’s Exit Sends Shock Waves
    Bloomberg10 days ago

    AMLO Hits Turbulence as Finance Chief’s Exit Sends Shock Waves

    (Bloomberg) -- The decision by a top adviser to the Mexican president to resign while denouncing conflicts of interest in the government stunned the nation and its financial markets.Finance Minister Carlos Urzua’s abrupt decision to quit on Tuesday was the first major cabinet loss since Andres Manuel Lopez Obrador took office in December. The scorching tone of his resignation letter, from a public official known for extreme politeness and addressed to a president who made fighting corruption his central campaign issue, made the departure all the more surprising.“I’m convinced economic policy should be based on evidence, considering the various effects it may have and free from all extremism, whether from the right or left,” Urzua wrote in the letter posted on his Twitter account, adding that decisions by Lopez Obrador’s government on matters of public administration have lacked foundation. “However, during my term, these convictions weren’t shared.”Within an hour, AMLO, as the leftist leader is known, nominated Arturo Herrera, Urzua’s deputy, to replace him. That helped to limit a tumble in the peso, which fell 1.2% at 3:23 pm local time, paring losses of as much as 2.3% that had followed the publication Urzua’s letter. The nation’s main stock index fell as much as 2%.“He is not happy with the decisions we are taking,” Lopez Obrador said of Urzua in a video posted on Facebook, standing alongside Herrera after the minister’s resignation. “As this is a change, a transformation, sometimes people don’t understand we can’t continue with the same strategy. We can’t put new wine in old bottles.”Urzua has been a long-standing ally of Lopez Obrador, having been his finance secretary when AMLO was mayor of Mexico City at the start of the last decade. Herrera is also a former finance minister of AMLO’s in the nation’s capital.Blatant ConflictIn his letter, Urzua also argues that members of AMLO’s administration had forced the finance ministry to employ people without the necessary knowledge for their jobs.“This was motivated by influential personalities from the current government in a blatant conflict of interest,” Urzua wrote, without providing details.Herrera has been the friendly face of AMLO with international investors in the first months of government, often traveling to New York and London to meet them and promote the plans of the administration. He has also been at times overruled by the president: in March, he told the Financial Times that Mexico had put a controversial $8 billion refinery project on hold, only for AMLO to say hours later that was a “misunderstanding” and that the work would continue.Read More: Mexico Peso Falls as Investors Fret Over Finance Minister’s ExitUrzua’s departure is negative because it suggests significant frictions within the AMLO administration and also the possibility that economic decisions may be done by policy makers without the required credentials, according to Alberto Ramos, chief Latin America economist at Goldman Sachs Group Inc. in New York.“In light of the unusual content and suggestions made in Urzua’s resignation letter, there will likely remain the question of who in the AMLO administration will ultimately be in charge of defining economic policy," he wrote in a research note.Calling the ShotsThe nomination of Herrera won’t change economic policy in a significant way, according to Barclays Plc.“AMLO was calling the shots and will continue to do so,” said Marco Oviedo, chief Latin America economist for Barclays. “The letter is showing that the administration is not as clean as it is intended to be.”\--With assistance from Cyntia Barrera Diaz and Michael O'Boyle.To contact the reporters on this story: Eric Martin in Mexico City at emartin21@bloomberg.net;Nacha Cattan in Mexico City at ncattan@bloomberg.netTo contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Walter BrandimarteFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Ocado Copes With Disaster, But It's All Noise
    Bloomberg10 days ago

    Ocado Copes With Disaster, But It's All Noise

    (Bloomberg Opinion) -- Ocado Group Plc is fond of making excuses for disappointing grocery sales growth. In the past, it has blamed everything from a shortage of drivers in the run up to Christmas to its health-conscious customers ordering less juice.So it was reassuring that the company was able to cope with a devastating fire that destroyed a distribution center in Andover, England in February better than the market had feared. If it had needed an excuse for any of its recent results this disaster would have provided a legitimate one, so the company has done well to minimize the impact.It said Tuesday the incident shaved 2 percentage points off of retail sales growth in the first half of the financial year to June 2, even though it lost 10% of its delivery capacity.Ocado maintained its outlook for full-year expansion in its retail sales of between 10% to 15%, and the shares duly rose 10% on the news. This deserves credit because the fire has created a heavy financial toll.The company took a 99 million pound exceptional charge in the period, primarily from writing off the value of the destroyed assets. Though this will be offset by insurance recoveries, as rebuilding the warehouse will be fully covered, Ocado’s first-half loss rose from 13.6 million pounds to 142.8 million pounds. It also cautioned that the fire would reduce its full-year Ebitda by 15 million pounds, while the cost of management incentive plans would cut it by 10 million pounds.Analysts at Barclays said this implied full-year Ebitda of about 20 million pounds, compared with estimates of about 45 million pounds previously.This financial impact of the fire is unhelpful, but hardly surprising, given the loss of a state-of-the-art warehouse. Tuesday’s report has presented investors with a lot to chew over, but it adds up to a lot of noise. None of it changes the fundamental investment case for Ocado.This depends on two things. First, it must also make a success of its new deal with Marks & Spencer Group Plc. That means a seamless replacement of Waitrose, its current partner, with M&S, and migrating customers used to Waitrose products to the new arrangement. This is challenging, though not insurmountable. Second, it must continue to win contracts to run the online grocery arms of other retailers around the world and convert these into profit. It has certainly racked up the deals over the past year or so. But that is yet to translate into meaningful earnings growth. It will soon receive a 562.5 million pound cash payment from M&S, and this should ease worries about whether it has adequate capital to invest in the new partnerships. While Ocado’s technology arm is potentially lucrative, it is work in progress. The group is also facing competition from rivals including Today Development Partners, a company co-headed by one of Ocado’s original founders, which has signed a deal with Waitrose.The shares are up about 45% since confirmation of the M&S partnership. On an enterprise value to forward sales basis, they trade on 4.3 times, putting it ahead of Amazon.com Inc.Investors are clearly assuming a smooth delivery of its future plans. But as any long-time follower of Ocado knows, with the online supermarket turned tech titan, that is far from guaranteed. Progress is just as likely to get stuck in the warehouse.To contact the author of this story: Andrea Felsted at afelsted@bloomberg.netTo contact the editor responsible for this story: Jennifer Ryan at jryan13@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Japan’s Wages Fall Again, Adding to Concerns Over Tax Hike
    Bloomberg10 days ago

    Japan’s Wages Fall Again, Adding to Concerns Over Tax Hike

    (Bloomberg) -- Japan’s wages dropped for a fifth month, adding to concerns over the resilience of consumer spending as a sales tax increase approaches in October.Labor cash earnings fell 0.2% in May to extend the longest monthly falling streak since 2013, according to a report by the labor ministry Tuesday. Economists had predicted a drop of 0.6% in a Bloomberg survey.Key InsightsThe importance of household spending fueled by higher pay is rising as slowing global growth and the U.S.-China trade battle weaken Japan’s exports. Domestic consumption accounts for about 60 percent of Japan’s economy. Wage growth has so far failed to accelerate at the pace expected despite a jobless rate that is well below 3%.Falling wages can partly be explained by the higher proportion of lower paid part-time workers. Still, even with a slightly better-than-expected result for May, the weakness of wage gains suggests little impetus for household spending and price gains.Lower wages will drag on consumption and there’s plenty of scope for spending weakening further after the sales tax, said Kazuma Maeda, economist at Barclays Securities. "The outlook for consumption is unclear as a rise in the sales tax is undoubtedly going to create the sense of a negative burden."Japan’s big companies trimmed their summer bonuses for the first time in two years, according to a business lobby Keidanren last month. Uncertainties over the global economic outlook have cooled optimism among Japan’s biggest manufacturers. Some economists are cautious about taking today’s figures at face value as the data has had sampling issues that prompted a recalculation of some GDP figures earlier this year. Bank of Japan Governor Haruhiko Kuroda has repeatedly said that wage growth is needed to secure sustainable inflation. The pay falls this year support the need to continue the bank’s stimulus program.Get moreReal wages, adjusted for inflation, dropped 1% in May, compared with analysts’ estimate of -1.5%.Scheduled working hours dropped 4.6% in May, the most on record for data going back to 1991, according to the labor ministry. Economists said it was still too early to say whether new nationwide workplace rules implemented in April also reduced hours.(Adds economist comments.)\--With assistance from Emi Urabe.To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.netTo contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Paul JacksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Business Wire11 days ago

    Barclays Confirms the Quarterly Composition of the CIBC Atlas Select MLP Index

    Barclays Bank PLC announced today that during the next quarterly CIBC Atlas Select MLP Index (the “Index”) rebalancing period, which will commence following the close of business on Friday, July 12, 2019 (the “Rebalancing Date”), there will be no changes to the constituents in the Index. The Barclays ETN+ Select MLP ETNs (the “ETNs”) are linked to the performance of the Volume-Weighted Average Price (“VWAP”) level of the Index.

  • Deutsche Bank 'buried their head in the sand': Analyst
    Yahoo Finance11 days ago

    Deutsche Bank 'buried their head in the sand': Analyst

    As Deutsche Bank begins a major restructuring effort, Kevin Doran, CIO at AJ Bell, says the bank has "very much buried their head in the sand for easily a decade now."

  • Reuters - UK Focus11 days ago

    UPDATE 2-DP World hires Citi, StanChart for new 10-year Islamic bond

    Port operator DP World has hired banks to arrange a series of investor meetings ahead of a potential issue of 10-year U.S. dollar-denominated sukuk, or Islamic bonds, a document issued by one of the banks leading the deal showed on Monday. DP World, majority owned by the Dubai government, mandated Citi, Dubai Islamic Bank and Standard Chartered to arrange the meetings to be held in Hong Kong, Singapore and London, starting on Wednesday July 10. DP World said last week it plans to buy Topaz Energy and Marine Limited, a provider of marine logistics to the global energy industry, for $1 billion from Standard Chartered and Renaissance Services.

  • Lira Traders Brace for Impact After Erdogan Ousts Central Banker
    Bloomberg12 days ago

    Lira Traders Brace for Impact After Erdogan Ousts Central Banker

    (Bloomberg) -- A rally that had turned the lira into the world’s best-performing currency since early May is probably over after President Recep Tayyip Erdogan reignited concerns about his influence over monetary policy.Turkish stocks and bonds are also set to decline as investors digest Erdogan’s decision to use his executive powers to dismiss central bank Governor Murat Cetinkaya over the weekend, about a year before his term was due to end. He was replaced with deputy Governor Murat Uysal.“No one will be satisfied after this change,” said Hasnain Malik, a Dubai-based strategist at Tellimer. “If the central bank cuts rates, it will further hit credibility, undermining confidence in the economy.”Before the weekend, Turkish assets had been rallying after a dovish turn in central banks across developed markets triggered a desperate search for yield. The advance was given a big boost after U.S. President Donald Trump softened his threats of sanctions over the purchase of a Russian missile system and Erdogan accepted an opposition victory in last month’s mayoral elections in Istanbul.Goldman Sachs Group Inc. and Barclays Bank Plc both said last week that conditions were turning in the lira’s favor, especially with Turkish real rates among the highest in the world.If the lira plummets on Monday, it would give bears the justification they needed for keeping bets against the currency at the highest level in emerging markets, according to risk-reversal contracts. They’ve been waiting patiently on the sidelines as the lira advanced about 10% against the dollar since May 9.Here’s what analysts said:Malik at Tellimer:“Turkey risks squandering the gains from its narrowing current-account deficit and the wider berth given to the lira following the change to more benign expectations on U.S. rates and dollar.”Nigel Rendell, a London-based senior analyst at Medley:“It’s undoubtedly bad news for Turkish assets. Once again Erdogan is interfering in the operation of the central bank because he thinks he knows best, which he doesn’t!”“It further dents central bank and policy credibility just at the point when inflation was beginning to decline”“The likelihood of a sell-off in the lira brings any near-term rate cut into question. The markets are likely to mark the lira lower.”Cristian Maggio, the head of emerging-market strategy at TD Securities in London:“We will almost definitely see a negative lira reaction on Monday”“Clearly this is an attempt to have rates lowered. Otherwise Erdogan would not be replacing Cetinkaya a year ahead of time. Front-end rates may fall to price in more easing than already expected. But longer-term rates may move in the opposite direction. It will also be a negative for equities”“If the lira sell-off causes panic in the market like August of last year, the answer is yes,” he said in response to a question about whether the fallout of Erdogan’s decision to replace Cetinkaya will impact Turkish -- or other -- banking systems“However it should be short term and reversible for most other EM assets. As far as Turkish banks are concerned, any lira sell-off will add pressure on local lenders. Especially the state-owned” banks“Domestically we’re looking at a recession this year and potential re-acceleration ‎in CPI. Also the Central Bank of the Republic of Turkey may be forced to hike at a later stage.”Piotr Matys, a London-based strategist at Rabobank:“By abruptly dismissing Cetinkaya, Erdogan reminded everyone who is in charge of monetary policy. The decision is set to undermine credibility of the central bank, which may start unwinding the emergency rate hike announced in September much faster than previously anticipated, starting with a large cut at the upcoming meeting”“If there is anything positive about it, it’s that investors will have the entire weekend to calmly assess potential implications and perhaps the sell-off on Monday when the markets reopen will not be as substantial as it would have been if the decision was announced on a weekday.”Inan Demir, an economist at Nomura International in London:“With his experience as deputy governor and before then as head of treasury of a large bank, there’s no question the new governor is well prepared”“However, the ease with which the former governor was removed sets a dangerous precedent, which is bound to have an impact on monetary policy conduct going forward”“Consequently, I think the markets will move to price in a larger cut at the next MPC meeting.”Timothy Ash, a strategist at BlueBay in London:“This was an opportunity to refresh and renew the CBRT with someone from outside with real monetary policy gravitas. And that opportunity has been wasted”“Cetinkaya was fired in the end because he didn’t cut rates fast enough -- ironically recent TRY stability was likely due to Cetinkaya’s mea culpa on rates since September last year. The assumption is the new guy was hired because he will cut rates on demand from the presidential palace.”Ironically, replacing Cetinkaya “likely makes it more difficult for the CBRT to cut rates as the risk now is that the market reacts badly to this HR change at the central bank.”Ziad Daoud, Bloomberg’s Dubai-based chief Middle East economist:“If Erdogan’s aim was to get lower interest rates, then the decision to replace the governor could backfire. The economic conditions were set for a rate cut later this month: inflation is dropping, growth is weak, the lira is stabilizing, and expected cuts from the Federal Reserve mean the global environment is supportive. Now there’s an additional credibility constraint, with financial markets certain to scrutinize the motivation and magnitude of any easing”“Investors will question whether it was really warranted by economic data, or if it was delivered under pressure from the government”“The decision adds a new economic unknown to existing geopolitical risks facing Turkey”“The delivery of the S-400 Russian missile system, expected soon, has strained the relationship with the U.S. and could lead to sanctions. This may result in a repeat of last summer, when the combination of U.S. sanctions and the lack of credibility from the central bank sent the lira into a free fall.”\--With assistance from Netty Ismail, James Ludden and Claudia Maedler.To contact the reporters on this story: John Glover in London at johnglover@bloomberg.net;Cagan Koc in Istanbul at ckoc2@bloomberg.net;Paul Wallace in Lagos at pwallace25@bloomberg.netTo contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Michael GunnFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Reuters - UK Focus15 days ago

    UPDATE 2-Former Deutsche Bank manager acquitted in London Euribor rigging trial

    A former Deutsche Bank managing director, who was extradited from Italy to face criminal charges that he helped to manipulate global Euribor interest rates, has been cleared by a London jury. Andreas Hauschild, a 54-year-old German who ran Deutsche Bank's Frankfurt team responsible for rate submissions, was promptly and unanimously acquitted by a jury at Southwark Crown Court. The seventh benchmark manipulation case brought by the UK Serious Fraud Office (SFO) brings to a close a string of prosecutions drawn from a seven-year criminal investigation into allegations that bankers rigged two key interest rate benchmarks, Libor and Euribor, for profit.

  • UK's competition watchdog raps Barclays over treatment of small businesses
    Reuters15 days ago

    UK's competition watchdog raps Barclays over treatment of small businesses

    The rules were designed to make it easier for small businesses to switch bank accounts and access particular financial products. The Competition and Markets Authority (CMA) said Barclays had admitted that it had not complied with the rules but has since taken steps to fix the issue, such as changing terms and conditions and allowing businesses to switch.

  • Reuters - UK Focus15 days ago

    UPDATE 2-UK's competition watchdog raps Barclays over treatment of small businesses

    Britain's competition watchdog said it has directed Barclays Plc to improve the way its treats small businesses after the bank broke the rules by forcing some to open current accounts to access other services like loans. The rules were designed to make it easier for small businesses to switch bank accounts and access particular financial products.

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