|Bid||6.80 x 900|
|Ask||6.81 x 27000|
|Day's range||6.78 - 6.83|
|52-week range||6.58 - 9.77|
|Beta (3Y monthly)||0.76|
|PE ratio (TTM)||60.80|
|Forward dividend & yield||0.29 (4.32%)|
|1y target est||7.39|
(Bloomberg) -- After a brief respite at the end of last week, Argentina’s debt is getting hammered again.The nation’s offshore notes approached new lows on Monday, close to wiping out the small rebound from late last week, after the country was downgraded deeper into junk territory by two of the three biggest ratings companies and the Economy Minister Nicolas Dujovne resigned.The extra yield investors demand to own Argentine bonds over U.S. Treasuries widened 205 basis points to 18.58 percentage points, according to a JPMorgan index, while 100-year securities fell 4.7 cents to 47.4 cents on the dollar, approaching last week’s record low. The upfront cost to protect Argentina’s debt for five years using credit default swaps rose to 52% from 47% on Friday. Local markets are closed on Monday for a holiday.“You’re going to see plenty more volatility between now and the end of October,” said Graham Stock, a senior emerging-market sovereign strategist at BlueBay Asset Management in London. Measures taken by President Mauricio Macri last week “won’t be enough” to help him in the Oct. 27 election, and he risks pursuing “too populist an economic agenda” in the lead-up to the vote, Stock said.Macri’s measures to support the economy include freezing fuel prices for 90 days, increasing the minimum salary and modifying taxes paid by workers.Default RiskDespite a two-day respite at the end of last week, the nation’s credit default swaps still imply a 86% chance of a default in the next five years amid expectations the populist opposition will win October’s election. The brutal slump in the peso made the country’s large pile of debt much harder to repay. As of March 31, Argentina had $33.7 billion in foreign-currency debt payments due by year-end, the vast majority in short-term Treasury bills.In an interview on Bloomberg TV, Alejo Czerwonko, an emerging-markets strategist at UBS Wealth Management, said a surprise in the first round for Macri would bolster assets, but that it was very unlikely. Argentines vote in presidential elections on Oct. 27 and the next government would take over on Dec. 10.The sharp market sell-off was prompted by a surprise result in the Aug. 11 primary election showing opposition candidate Alberto Fernandez with a commanding lead over Macri.A delegation from the International Monetary Fund is expected to arrive in Buenos Aires this week for meetings with the government and the opposition ahead of a decision on whether to disburse about $5 billion of additional funds next month. The nation’s reserves fell $3.9 billion last week to $62.4 billion, the lowest since December, aggravating concerns about the country’s finances.Opposition LeaderIn several interviews with local newspapers on Sunday, Fernandez spoke about what he considered successful debt talks during his time as cabinet chief that led to a restructuring of bonds and the need to negotiate with bondholders. While he didn’t say he would necessarily push for a restructuring he said that “no one knows better than us the damage caused by default.” On Monday, his economic adviser, Guillermo Nielsen, said Fernandez has no plans to restructure the country’s debt.“While he added some clarity on his views, he did not shed any light on future cabinet members, which would be necessary to understand his economic policies more concretely,” Citigroup Inc. strategists led by Dirk Willer wrote on a report on Monday.Late last week, Fitch Ratings cut Argentina’s long-term issuer rating to CCC from B, putting the South American nation on par with Zambia and the Republic of Congo. S&P followed, lowering the country’s sovereign rating to B- from B and slapping a negative outlook on it.“Uncertainty continues on the private sector’s predisposition to roll over government debt and hold pesos while depreciation stresses the government’s high financing needs,” S&P analyst Lisa Schineller wrote in a statement accompanying the downgrade. Fitch’s said the deterioration in the macroeconomic environment “increases the likelihood of a sovereign default or restructuring of some kind.”(Adds Nielsen comment on 10th paragraph.)\--With assistance from Sydney Maki.To contact the reporter on this story: Aline Oyamada in Sao Paulo at firstname.lastname@example.orgTo contact the editors responsible for this story: Julia Leite at email@example.com, Daniel CancelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Emerging-market currencies and stocks fell for a fourth straight week last week, the longest losing streak for equities since October, amid mounting concern about a global slowdown. The inversion of the U.S. yield curve for the first time since 2007 fueled fears of a recession, outweighing relief over a pause in the U.S.-China trade war. Argentina led declines after market-friendly President Mauricio Macri was trounced in a primary election.The following is a roundup of emerging-markets news and highlights for the week ending Aug. 18.Read here our emerging-market weekly preview, and listen to our weekly podcast here.Highlights:On Wednesday, 10-year Treasury yields fell below the rate on 2-year notes for the first time since 2007. The yield-curve inversion sent ripples through financial markets amid concerns over a possible recession in the U.S.President Donald Trump delayed the imposition of new tariffs on a wide variety of Chinese consumer products including toys and laptops until December. The pause in his fight with China came as senior officials on both sides had their first phone conversation since Trump threatened the tariffs at the beginning of this monthTrump said Thursday he had a call coming soon with China’s President Xi JinpingChina called planned U.S. tariffs on an additional $300 billion of Chinese goods a violation of accords reached by the presidents, vowing retaliation as Beijing also pushed back on Trump’s efforts to link the trade war with the turmoil in Hong KongChinese officials are sticking to their plan to visit Washington in September for face-to-face trade meetings, people familiar with the matter saidChina posted the weakest industrial output growth since 2002 in July, as a cyclical slowdown and trade tensions add to the case to roll out more stimulusThe People’s Bank of China has responded to downward pressure on the renminbi exchange rate by communicating with the media and market participants to keep the rate “basically stable,” Deputy Governor Liu Guoqiang writes in a Financial Times opinion pieceYuan won’t see disorderly weakening despite external shocks, including trade frictions, according to an article written by PBOC Deputy Governor Pan GongshengChina’s central bank said it’ll start releasing a new reference rate for bank loansArgentine Economy Minister Nicolas Dujovne resigned Aug. 17, a day after Fitch Ratings cut Argentina’s long-term issuer rating by three notches to CCC and S&P lowered the country’s sovereign rating to B- from B and slapped a negative outlook on itMacri will meet new designated economy minister Hernan Lacunza and central bank President Guido Sandleris, according to a spokesman from the presidential palaceStocks, bonds and the currency all sold off ahead of the downgrade amid the prospect of market friendly Mauricio Macri losing power in October’s presidential electionAssets rebounded Thursday after a brutal three-day sell-offThe rout, that took sovereign bonds and the currency to a record low, hit big funds, including Pimco and star bond manager Michael HasenstabHong Kong’s airport halted check-ins for remaining departures for a second straight day on Tuesday as embattled local leader Carrie Lam warned that the city risked sliding into an “abyss”Investors are getting anxious about the impact of 10 weeks of anti-government demonstrations on Hong Kong’s banksChina ramped up the rhetoric against the protesters, with mainland officials in the city saying they “acted like terrorists” in swarming the main terminal buildingsBrazil’s central bank announced it will sell dollars from its foreign reserves for the first time in more than a decade to meet spot-market demandCentral bank will also offer reverse currency swaps -- the equivalent of buying dollars in the futures market -- to cancel out the impact selling dollars would have had on the realPlan was welcomed by traders who say the move will help meet market demand without disrupting the outlook for the currencyThe Moscow City Court released French investor Philippe Delpal from jail to house arrest after prosecutors unexpectedly dropped their opposition in a closely watched case that’s become a thorn in relations between Russia and FranceAsia:The People’s Bank of China is “close” to issuing its own cryptocurrency, according to a senior officialSouth Korea moved to downgrade Japan from its list of most trusted trading partners while also seeking talks to end a months-long spat that has hurt economic ties between the two American alliesSouth Korea is not considering curbs on DRAM supply to Japan as part of corresponding measures against Japan’s export restrictions, President Moon Jae-in’s spokeswoman Ko Min-jung saidBank Indonesia said there is still space for a policy rate cut, while the economy continues to perform well despite strong external headwindsIndonesia’s economy is set to expand at the fastest pace in seven years in 2020 with growth of 5.3%, President Joko Widodo said Friday in his annual budget speechWidodo sought parliament’s approval to relocate the nation’s capital to the island of Borneo, home to some of the world’s biggest coal reserves and orangutan habitats, as he seeks to ease pressure on congested and polluted JakartaWidodo said laws hindering the nation’s progress must be scrapped to boost economic growth, signaling his intention to push on with an ambitious nation-building agenda in his second termPresident proposed record government spending next year to drive the economy to its quickest projected growth in seven yearsThai Industry Minister Suriya Juangroongruangkit said he is satisfied with the Bank of Thailand’s currency management and that the baht strength reflects a high current-account surplus. He also said the central bank can’t intervene much as Thailand could then be criticized for being a currency manipulatorPrime Minister Prayuth Chan-Ocha wants the baht to be at the level that the country’s exports can compete, Narumon Pinyosinwat, the government’s spokeswoman, saidBank of Thailand Governor Veerathai Santiprabhob said a planned policy-coordination committee with the Ministry of Finance won’t affect the central bank’s rate decisionsThailand plans a 316-billion-baht ($10 billion) package of government spending and loans to counter an economic slowdown caused by the U.S.-China trade war and currency strengthIndia Prime Minister Narendra Modi has hit back at critics of his government’s decision to revoke Kashmir’s autonomy, saying its special status had only led to terrorism and corruptionHe also announced a new position of Chief of Defence Staff, saying the move will “sharpen coordination” between the army, navy and air force servicesIndia’s consumer prices rose 3.15% in July compared with 3.18% in June, while wholesale-price gains slowed more-than-expected to 1.1% from 2% the prior monthFurther reduction in Philippines lenders’ reserve requirement ratio is a live discussion in Monetary Board, central bank Deputy Governor Francis Dakila told ABS-CBN News ChannelForeign direct investments net inflow was at $242 million in May, down 85.1% from last yearMalaysia’s economic growth quickened in the second quarter, spurred by stronger domestic demand and a rebound in commodity prices; gross domestic product expanded better-than-expected 4.9% in the second quarter from a year ago, the strongest expansion since early last yearThe central bank announced further steps to increase market liquidity, ahead of an expected decision by FTSE Russell in September on whether to retain ringgit bonds in its indexInflation slowed to 1.4% in July on year from 1.5% in JuneThe European Union opened a probe into whether Chinese, Taiwanese and Indonesian exporters of flat-rolled stainless steel sell it in Europe below costTaiwan Premier Su Tseng-chang asked central bank governor Yang Chin-long to closely monitor global financial markets amid China-U.S. trade conflict and uncertainties surrounding Hong KongTaiwan plans to spend a record amount on national defense next year as President Tsai Ing-wen looks to bolster the island’s defenses in the face of threats from an increasingly assertive ChinaEMEA:Russia’s economy expanded 0.9% in the second quarter as consumer demand remained weak, but mining and manufacturing showed a modest pickup. The Economy Ministry said the pace will accelerate in the second half of the yearRussia’s credit score at Fitch Ratings is back to where it was before the crisis in Ukraine almost half a decade ago, but uncertainty over U.S. penalties still stifles the nation’s rankingThe European Union’s eastern economies downshifted last quarter along with the rest of the bloc, but a job boom and stimulus helped them withstand the brunt of global headwinds that sent the U.K. and Germany into contractionUkraine’s economic growth unexpectedly accelerated to the fastest pace since 2016, helped by a strong grain harvest and domestic consumptionThe Turkish government plugged its deteriorating finances in July with an outsized cash infusion from the central bank. The monetary authority transferred around 22 billion liras ($3.9 billion) to the Treasury last month, the biggest deposit since an annual dividend payment in January, according to data on its websiteSouth Africa’s rand was back as the world’s most-volatile major currency on Thursday, with options pricing suggesting it’s not going to lose that status any time soonRetail sales rose for the sixth straight month in JuneMozambique’s central bank cut its key rate for a second time this year as the inflation outlook improved following a new peace deal. The Monetary Policy Committee reduced the benchmark interbank rate to 12.75% from 13.25%, Banco de Mocambique said ThursdayLatin America:Argentina’s presidential front-runner Alberto Fernandez criticized Macri for increasing short-term debt to unsustainable levels, although he said he doesn’t want to default on the country’s obligationsMacri tweeted Wednesday that he had a long phone conversation with Fernandez, who committed to collaborate so that political uncertainty affects the economy as little as possibleThe drastic change in the political outlook had analysts and traders scrambling to re-calculate the fair value for Argentine assets. Bank of America Merrill Lynch calculated the recovery value for the sovereign bonds at around 40 cents on the dollar in case of a restructuring in 2020Macri announced measures to support the economy, including freezing fuel prices for 90 days, increasing the minimum salary and modifying taxes paid by workersInvestors now focusing on incoming T-bills rollovers, as government may struggle to find demand for new notesArgentine savers pulled more than $700 million from their dollar-denominated accounts on Monday and TuesdayBrazil’s economy likely fell into recession in the second quarter according to a key gauge of economic activityThe lower house of Congress approved the base text of a measure aimed at reducing bureaucracy and restrict the regulatory power of the state. Speaker Rodrigo Maia said the tax reform can be approved by the end of the yearBrazil will leave the South American trade bloc Mercosur if conflicts arise with the winner of Argentina’s election, President Jair Bolsonaro saidMexico’s central bank reduced borrowing costs for the first time in five years after inflation slowed, the economy faltered and the U.S. cut its own ratePresident Andres Manuel Lopez Obrador wants to upgrade ports and refineries to help trigger growth at the Isthmus regionLower revenue will drive a wider-than-anticipated fiscal deficit this year, despite underspending, according to Moody’s Investors ServicePemex’s business plan is expected to weaken its credit metrics, Fitch saidLopez Obrador ratcheted up his attacks against credit-rating companies on Friday, saying he hopes they act more objectively and noting that Mexico pays them as much as $300 million a yearA Mexican judge ordered the detention of a former cabinet minister facing corruption chargesColombia’s economy grew more than expected in the second quarter, as the retail, wholesale and transport sector expanded along with the financial industryPeru economic activity exceeded expectations in JuneCentral bank increased currency intervention, selling three times more foreign currency swaps than in previous time\--With assistance from Julia Leite, Yumi Teso, Alex Nicholson and Philip Sanders.To contact Bloomberg News staff for this story: Lilian Karunungan in Singapore at firstname.lastname@example.org;Aline Oyamada in Sao Paulo at email@example.com;Selcuk Gokoluk in London at firstname.lastname@example.org;Colleen Goko in Johannesburg 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) -- There’s a new owner of the Brooklyn Nets.Alibaba Group Holding Ltd. Executive Vice Chairman Joe Tsai exercised his option to buy the rest of the team that he didn’t already control -- along with the Barclays Center arena -- ending Mikhail Prokhorov’s ownership tenure and bringing another deep-pocketed international presence to the National Basketball Association’s ranks.Financial terms weren’t disclosed, but a person familiar with the deal said Tsai paid about $3.5 billion, including debt, for the team and building.Tsai -- who has a net worth of $10.3 billion, according to the Bloomberg Billionaires Index -- previously bought a 49% stake in the team at a $2.3 billion valuation, which is a record for a U.S. pro sports franchise. He had until 2021 to buy the remaining 51% of the franchise, which had its already-improved fortunes buoyed this off-season by the acquisition of star free agents Kyrie Irving and Kevin Durant.Excitement is surging around the team, which has spent most of its New York City tenure in the shadow of the Manhattan-based New York Knicks. The Nets made the playoffs last season for the first time in four years, and adding Durant and Irving could drive all business-related activity such as ticket and suite sales and sponsorship.A Yale Law School graduate, Taiwan-born Tsai is one of Alibaba’s 18 founding members. Before being recruited by Jack Ma, chairman of the Chinese e-commerce giant, in 1999, he worked as a tax lawyer at Sullivan & Cromwell LLP. Tsai also owns the WNBA’s New York Liberty, and moved to the U.S. in 1977 to attend an elite boarding school in New Jersey.The sale requires approval of NBA owners, which is considered a formality since Tsai has already been vetted. The transaction should close by the end of September.As part of the shake-up at Prokhorov’s BSE Global, the parent company of the Nets and arena, Chief Executive Officer Brett Yormark announced his resignation.As the point person for the Nets relocation and revamp, Yormark led the transformation of the team from a moribund brand to a hip and trendy one. The team finished its first season in Brooklyn in the top five in merchandise sales after coming last the previous year. And a spot on the squad, 42-40 last season, is now coveted by top players in the NBA.The $3.5 billion price tag represents a hefty profit for Prokhorov, whose Onexim Sports & Entertainment in 2010 paid $223 million for an 80% stake of the team and a 45% share of the arena. In 2015, he consolidated ownership of the Nets and the arena in a deal with real estate developer Bruce Ratner’s Forest City Enterprises Inc. that valued the assets at around $1.7 billion.The National Basketball Association prefers that one owner control the team and the arena where it plays.Prokhorov, the first non-North American owner of an NBA team, also controls the Nassau Coliseum on Long Island. That building isn’t part of the sale to Tsai, whose sports holdings also include the National Lacrosse League team in San Diego.Rich Asians have been plowing money into professional sports franchises in Europe and around the world, though buying an NBA team is rare. Indonesian Erick Thohir, chairman of the Mahaka Group, was part of the group that owned the league’s Philadelphia 76ers, but has sold his stake.Chinese investors have taken more stakes in European soccer teams, including Aston Villa, West Bromwich Albion, Wolverhampton Wanderers and Southampton in England, Italy’s A.C. Milan and Inter Milan, Spain’s Atletico Madrid, and Slavia Prague in the Czech Republic. Though some of the deals haven’t worked out. The Atletico Madrid stake was subsequently sold, and Chinese billionaire Tony Xia, chairman of the Recon Group logistics firm, has given up control of Aston Villa.To contact the reporter on this story: Scott Soshnick in New York at email@example.comTo contact the editors responsible for this story: Nick Turner at firstname.lastname@example.org, Cécile DauratFor 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. Malaysia’s economic growth quickened in the second quarter as strong domestic demand and a rebound in commodity prices helped it weather a regional slowdown.Gross domestic product expanded 4.9% in the second quarter from a year ago, up from 4.5% in the previous three months, according to figures from the central bank. That was the strongest expansion since early 2018 and beat economists’ median estimate of 4.7%.Bank Negara Malaysia Governor Nor Shamsiah Mohd Yunus said the central bank expects full-year GDP growth of 4.3%-4.8%, affirming the previous estimate.Malaysia’s strong showing bucks the trend across the region, where the U.S.-China trade war has taken a toll on trade-reliant economies. Earlier this week neighboring Singapore cut its full-year growth forecast to almost zero, and Thailand is expected to roll out a stimulus package later Friday. Goldman Sachs Group Inc. analysts on Thursday downgraded their forecasts for Asia’s four “Tiger” economies amid growing trade tensions.Weathering the StormIn addition to commodities strength, Malaysia’s manufacturing has also proven resilient, said Brian Tan, a regional economist at Barclays Bank Plc in Singapore. The question is how long Malaysia can skirt the headwinds."Our base scenario is that this is likely the peak for growth this year and we’ll see a slowdown in the second half," Tan said. "Headwinds from the trade war will grow ever harder, and on an aggregate level it won’t benefit anyone, not even Malaysia."Other key points from Friday’s data include: The economy grew 1% on a seasonally adjusted quarterly basis, slightly above the 0.9% estimate.All sectors expanded in the quarter but private consumption “remained as the main anchor to the economy,” growing 7.8%, chief statistician Mohd Uzir Mahidin said in a release. Net exports grew 22.9%, services gained 6.1% and manufacturing grew 4.3%.The current-account surplus stood at 14.3 billion ringgit in the second quarter, down slightly from 16.4 billion ringgit a quarter earlier but far above the 6.8 billion ringgit estimate.The mining sector expanded 2.9% on-year after shrinking in at least four previous quarters. Alex Holmes, an economist at Capital Economics, wrote in a research note that the economy would still struggle to pass the low end of the central bank’s target range, predicting it would come in at 4.2%. While consumer spending has surged since the government scrapped a goods and services tax last June, that boost will fade from the statistical base going forward."We doubt this is the start of a sustained rebound," Holmes said. "We are forecasting a renewed slowdown in the second half of this year, driven by weaker consumer spending and a challenging external environment."(Recasts lead, adds analyst comments from sixth paragraph.)To contact the reporter on this story: Anisah Shukry in Kuala Lumpur at email@example.comTo contact the editors responsible for this story: Nasreen Seria at firstname.lastname@example.org, Yudith Ho, Michael S. ArnoldFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- Is your company immune to Brexit? With the looming threat of the U.K. leaving the EU without a withdrawal deal and a slim but rising risk of the pound plunging to parity with the dollar, more chief executives are telling investors they can handle any eventuality – however messy.Unfortunately, having a fully fleshed out Brexit contingency plan is a luxury not all firms can afford. Nor does it solve the question of how any company will cope if a no-deal departure crashes the economy.A hunt through Bloomberg’s trove of filings of company financial results throws up six publicly-traded companies that have labeled themselves “Brexit-proof,” or close to it. These are: healthcare facilities provider Primary Health Properties Plc; wealth manager Rathbone Brothers Plc; food producer Cranswick Plc; industrial real estate firm Stenprop Ltd.; Lloyd’s of London and the payments technology provider Net 1 UEPS Technologies Inc.Their confidence stems either from the niche products that they sell, their domestic U.K. supply chains (meaning less exposure to a sudden rise in tariff barriers to trade), or the fact that they’ll keep EU-based hubs that remove the uncertainty of regulatory hurdles.They’re not alone in their messages of comfort. Much of the finance world has had to prepare for the worst, including the likes of Barclays Plc, HSBC Holdings Plc and Royal Bank of Scotland Group Plc. Other industries are joining the fray. “Leaving the EU without a deal is not corporate death for us, but it’s annoying,” the boss of the Volskwagen AG-owned luxury carmaker Bentley said this week. A no-deal scenario means only “mild disruption” for the retailer Next Plc, according to its CEO Simon Wolfson. Is this complacency or just sound planning?There are three big Brexit risks cited frequently by companies: Tariff barriers, non-tariff or regulatory hurdles, and logistical issues such as holdups at ports.On tariffs, the Confederation of British Industry lobby group has offered up some dire warnings, including textile imports from Turkey facing an average charge of 12% post-Brexit and vehicle exports to the EU getting whacked with a 10% levy. But some firms think they can take the pain. Next estimates 20 million pounds ($24 million) in additional input costs from import duties, equivalent to a 0.5% price increase on its clothing products. Chemicals producer Croda International Plc estimates a “mid-to-high single-digit million” impact from tariffs, a cost it would partly absorb and partly pass on to customers. Makers of higher end stuff, such as $200,000 Bentleys, will be confident of getting shoppers to fork out more if their costs go up.On the threat of more regulation and other non-tariff changes, some CEOs are equally sanguine. Croda’s management says it’s ready to re-register its products in the EU in the event of a no-deal departure. Next says there’s no reason why independent testing of its products would stop them being acceptable to Brussels regulators.On the fear about logistical snarl-ups in the immediate aftermath of a sudden U.K.-EU rupture, the more optimistic British bosses point to their stockpiling of goods and securing of alternative supply routes. Several say they’ve amassed six months’ worth of supply usually delivered from Europe. Bentley and Next say they can avoid the crowded Dover-Calais shipping route if it’s disrupted. “I’m much less frightened of no-deal,” says Wolfson.It’s important to remember, however, that all of this preparation costs money (and that Wolfson is a Conservative Party peer and leave voter). A look at Next’s 11-page Brexit contingency plan published last year shows an elaborate new structure to limit the pain. It has set up a German company through which it intends to shift more European sales and an Irish entity to handle orders there.Yet allocating millions to emergency plans means delaying investment or passing on the cost to suppliers or clients. Some companies can swallow this more easily than others. For Westley Group, a small foundry and engineering group, a loss of 2 million pounds in EU orders related to Brexit last year equated to 7% of its revenue. That’s significant.And managing to survive the worst ravages of a hard break with Europe won’t mean much if the U.K. economy is worse off. Investors are certainly betting that way by favoring the big, internationally diversified companies of the FTSE 100 over those that make most of their sales in Britain.The chart above shows a 13% performance gap over the past year between the shares of British exporters (which get most of their revenue overseas) and those of domestically-focused U.K. companies. It’s interesting that the latter group include companies that claim to be fully prepared such as Barclays.One thing CEOs can't control is investors’ own emergency plans.\--With assistance from Mark Gilbert .To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Barclays is no longer providing banking services to major cryptocurrency exchange Coinbase, sources familiar with the matter told Reuters, ending a relationship that started in March last year as the exchange expanded in Europe. The rare deal between the San Francisco-based exchange and the British bank made it easier for Coinbase users to buy cryptocurrencies with pounds and withdraw their funds.
Roland Head highlights two FTSE 100 (INDEXFTSE: UKX) income stocks he'd buy today and tuck away for retirement.
Barclays is no longer providing banking services to major cryptocurrency exchange Coinbase, sources familiar with the matter told Reuters, ending a relationship that started in March last year as the exchange expanded in Europe. The rare deal between the San Francisco-based exchange and the British bank made it easier for Coinbase users to buy cryptocurrencies with pounds and withdraw their funds. Barclays declined to comment, while Coinbase did not respond to repeated requests for comment.
Barclays is no longer providing banking services to major cryptocurrency exchange Coinbase, sources familiar with the matter told Reuters, ending a relationship that started in March last year as the exchange expanded in Europe. The rare deal between the San Francisco-based exchange and the British bank made it easier for Coinbase users to buy cryptocurrencies with pounds and withdraw their funds. Barclays declined to comment, while Coinbase did not respond to repeated requests for comment.
Barclays is no longer providing banking services to cryptocurrency exchange Coinbase, sources familiar with the matter told Reuters, ending a relationship that started in March last year as the exchange expanded in Europe. The rare deal between the San Francisco-based exchange and the British bank made it easier for Coinbase users to buy cryptocurrencies with pounds and withdraw their funds.
Investing.com - U.S. futures fell on Wednesday as data from China and Germany showed the continuing damage to the world economy from trade-related disputes.
(Bloomberg Opinion) -- When it comes to credit ratings in the bond markets, it’s perfectly rational to believe both of the following things:S&P Global Ratings, Moody’s Investors Service and Fitch Ratings played an important role in the financial crisis because no one challenged them as they awarded top grades to subprime mortgage investments. Adding more competition to S&P, Moody’s and Fitch in the credit-rating industry leads to inflated ratings because borrowers shop around for the best grades.This is something of a Catch-22, and primarily has to do with the business model of credit ratings. Because debt issuers are the ones that pay for these widely understood grades, there’s inherent pressure to give the best mark possible or risk losing a customer. Institutional investors are broadly aware of this, which is why they still employ their own team of dedicated credit analysts. It’s part of the reason concerns reached a fever pitch last year about the proliferation of highly leveraged triple-B rated companies. Bond buyers sensed that S&P, Moody’s and Fitch might be stretching their analysis to keep household brands from becoming junk.Triple-B bonds, by the way, have returned 13% so far this year, better than any other ratings tier among U.S. corporate debt, Bloomberg Barclays data show. So that fear seems to have dissipated, with investors betting that the Federal Reserve will continue to cut interest rates and these big borrowers will have no trouble refinancing their obligations at a lower cost.However, the lingering worry about Pollyannaish credit ratings hasn’t gone away entirely. The Wall Street Journal published a feature last week titled “Inflated Bond Ratings Helped Spur the Financial Crisis. They’re Back.” The reporters say they analyzed “about 30,000 ratings within a $3 trillion database of structured securities issued between 2008 and 2019.” They found that each of the biggest ratings companies changed their criteria in some way since 2012, and each time it led to an increase in their respective market share. The conclusion:“A key regulatory remedy to improve rating quality — promoting competition — has backfired. The challengers tended to rate bonds higher than the major firms. Across most structured-finance segments, DBRS, Kroll and Morningstar were more likely to give higher grades than Moody’s, S&P and Fitch on the same bonds.”Of course this is what happened. And it’s not just in structured finance. Five years ago, Jim Nadler, president of Kroll Bond Rating Agency, told me something I always recall: “That’s the curse of a new rating agency. No one is going to add a fourth rating that is lower. You’ll never see the ones that we turn away or gave lower ratings to.” Kroll and Morningstar Inc. made the same defense to the Journal, arguing that if unpublished grades were included in the analysis, they wouldn’t look as lenient.I more or less buy that argument. Are there incentives for the ratings companies, big or small, to alter their criteria to give higher scores and win more market share? Of course. The business model makes the appearance of conflicts of interest virtually unavoidable. Are there also perfectly valid reasons for these firms to update how they see markets evolving and react accordingly? You bet. If analysts did nothing to tweak their methodology, they’d probably be criticized anyway for not keeping up with the times.This continuing concern that ratings are too optimistic is unsolvable without wholesale change. But I’m not sure anyone truly cares enough to demand it. As I wrote in May, when Morningstar agreed to buy DBRS, the industry isn’t exactly ripe for disruption. For institutional buyers, potentially off-base credit grades are a feature of the system because they can use their own analysis to take advantage of any mispricing. The Securities and Exchange Commission certainly seems in no hurry to shake things up. And if the financial crisis couldn’t bring down the “Big Three” for failing investors, it stands to reason that nothing will.Some have said the solution is for bond buyers (not borrowers) to pay S&P, Moody’s or other firms for their ratings. This will almost surely never happen. For one, the credit-rating companies need to work with borrowers to gain timely access to crucial financial information. But just as important, the investment-management industry is already being transformed as it looks to cut fees to as little as possible. The last thing money managers need is another added cost of doing business. That leaves credit markets mired in the status quo. And that’s probably just fine. In general, my theory is that if all of Wall Street is worried about the same thing, then it’s unlikely to be the true flashpoint. I said as much in November, when large fund managers were warning of a “slide and collapse in investment-grade credit” precipitated by triple-B companies like General Electric Co. Fast-forward to the present, and GE’s perpetual bond is again trading closer to 100 cents on the dollar. Broadly, corporate credit spreads last month reached the narrowest level in about 10 months.The same reasoning applies for credit ratings. The system isn’t perfect by any stretch, but at least the structural flaws are transparent. For those who specialize in commercial mortgage-backed securities or collateralized loan obligations — the Journal highlighted both as having looser credit standards — it shouldn’t take an inordinate amount of effort to understand what’s under the hood of each company’s grades and price the securities accordingly.So, yes, seemingly inflated bond ratings are back. The truth is, they never left.To contact the author of this story: Brian Chappatta at email@example.comTo contact the editor responsible for this story: Daniel Niemi at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- With worries about a currency war growing and bond yields collapsing, investors have reached for their usual haven of gold. Only this time it has a friend (as my colleague Tim Culpan wrote this week): Bitcoin. Gold’s dollar price has risen 7% this month, Bitcoin’s by 18%. This apparent use of the two commodities as companion ports in a storm will be music to the ears of cryptocurrency boosters like Mike Novogratz, who has argued that “Bitcoin will be digital gold.” The self-justification of gold bugs and crypto fanboys are indeed starting to sound remarkably similar: That they both offer the prospect of sound and stable repositories of your cash at a time when central bankers are printing money like it’s going out of fashion.With Bitcoin, of course, it’s easy to laugh off any claims to stability given its wild west status and mad gyrations in value over the past few years. But gold, the “barbarous relic,” is hardly a guarantee of boring reliability.The creed of “sound money” as a safe haven paints commodities that have a fixed supply as good, and sovereign currencies with a potentially unlimited supply as bad. The past decade’s experiments in quantitative easing and negative interest rates have energized its inflation-obsessed disciples.“Gold is nobody’s liability and it can’t be printed,” Robert Mundell, an influential Columbia University economist said in 2011. Cryptocurrency evangelists sing the same tune. Bitcoin has no central bank, they point out, while its supply is capped by algorithms. However, the idea that these are stable stores of value doesn’t stand up.In 2018, Bitcoin lost almost two-thirds of its worth after a 15-fold price jump the year before. There’s no guarantee that the 220% price rise in 2019 won’t unravel. Demand for the digital currency ebbs and flows, largely driven by emotional factors like greed and fear, while its value is purely in the eye of the beholder as it’s still largely unused as a way of exchanging goods. The concentration of Bitcoin wealth among “whale” investors – about 1,000 addresses control 85% of its supply – means they can greatly influence the price by either taking their stash out of circulation by hoarding it, or by pouring more supply in by trading it.Gold isn’t much more rational. Adherents believe that its thousands of years of history as a means of exchange show it will always be in demand and retain value. But gold prices too depend on human psychology and herd-like investment behavior. The yellow metal’s prices hit a record of about $1,900 in 2011 but fell soon after despite market expectations of a longer boom driven by the first waves of monetary easing. They’re still about 20% below that level today. The Bloomberg Barclays Global Treasuries Index, which measures the performance of sovereign bonds, is up about 11% over the same period on a total return basis.Of course, even irrational markets can be exploited by shrewd investors. Adding gold or – god forbid – Bitcoin may somehow make sense in an investor’s portfolio as a way to add risk or diversification, or to exploit the madness of crowds. But don’t mistake the recent market moves as expressing some kind of proof of the “sound money” status of gold or crypto. This is all backed by faith. Not fact.To contact the author of this story: Lionel Laurent at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Broadcom Inc. said it agreed to buy Symantec Corp.’s division that serves business customers for $10.7 billion in cash, adding software designed to keep hackers out of corporate systems.The deal, which is expected to close in Broadcom’s fiscal first quarter ending in January, comes less than a month after the two companies’ discussions for a full merger fell apart over disagreements about the price. The transaction announced Thursday will refocus Symantec on its consumer-facing products, such as the LifeLock identity-protection brand and Norton antivirus software.The acquisition marks Broadcom’s second big bet in software, following its $19 billion takeover of CA Technologies last year. Chief Executive Officer Hock Tan is spreading the reach of the company he built through acquisitions in the chip industry, and is now using a similar playbook to extract value from software assets that are struggling to grow.Symantec has been grappling with major challenges in the past year, facing job cuts, an internal investigation that led to restated earnings and the sudden departure of its CEO in May. The 37-year-old company provides products and services to more than 300,000 businesses and 50 million consumers, according to its website.“This transaction represents the next logical step in our strategy following our acquisitions of Brocade and CA Technologies,” Tan said in a statement. Broadcom will use its sales channels to pitch Symantec products to its corporate customers.Broadcom said it expects $2 billion in sustainable revenue from the acquisition, which will deliver earnings before interest, tax, depreciation and amortization of $1.3 billion. The company will carve out “more than $1 billion of run-rate cost synergies within 12 months following close,” it said in the statement. The transaction doesn’t need approval in China, Chief Financial Officer Tom Krause said on a conference call.Broadcom is maintaining its fiscal year 2019 sales forecast of $22.5 billion. About $17.5 billion of that revenue will come from chips and $5 billion from infrastructure software, the company said in the statement.The chip market is still suffering from the impact of the trade dispute between China and the U.S., but business conditions haven’t worsened since the company gave its forecast in June.Broadcom is going to concentrate the use of its cash flow on paying down debt to make sure it retains its investment rating, Krause said.Symantec had been projected to report overall sales growth of just 1% in its current fiscal year, according to analysts’ estimates. That would follow a 2% decline in the previous 12 months. Symantec’s lackluster outlook mirrors the performance of previous targets for Tan and his team. So far he’s been successful in turning them around.The enterprise business generated about $2.3 billion in sales in the last fiscal year for the Mountain View, California-based company. While Symantec’s revenue may not be growing, the purchase of a piece of the company will bring with it wider profit margins -- higher than those typically achieved in the chip industry, which historically requires greater levels of investment and higher costs to build products. Symantec’s gross margin, the percentage of sales remaining after deducting costs of production, will reach 83% this year, according to estimates. Broadcom’s margin is predicted to be a full 10 percentage points lower than that.Symantec said the sale is expected to generate $8.2 billion after taxes, which it will provide to shareholders after the completion of the deal in the form of a special dividend of $12 a share. It plans to cut jobs, reducing its headcount by about 7%. It’ll also close some facilities incurring charges of about $100 million.Tan’s strategy has been to acquire “franchises,” groups or businesses within companies that have sustainable market positions through technology leadership. He then invests in them to maintain that leadership, running the purchased units as distinct parts of Broadcom, rather than integrating them.The discipline he’s brought to his acquisitions and the spinoff or sale of other assets has created a more profitable company. Broadcom’s estimated gross margin for fiscal 2019 is more than 10 points wider than what the company reported in 2016.Symantec was advised by Goldman Sachs Group Inc. and its legal adviser was Fenwick & West LLP. Broadcom was working with banks including JPMorgan Chase & Co., Bank of America Corp, Barclays Plc, Bank of Montreal, Wells Fargo & Co., Citigroup Inc., HSBC Holdings Plc, Royal Bank of Canada and Morgan Stanley, while Wachtell, Lipton, Rosen & Katz was its legal adviser.(Updates advisers in the final paragraph.)\--With assistance from Nabila Ahmed.To contact the reporter on this story: Ian King in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Andrew Pollack, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- For Goldman Sachs Group Inc. analysts, gold’s rally above $1,500 is just the beginning.Analysts at the bank predict that prices already at six-year highs will climb to $1,600 an ounce over the next six months as investors seek havens. The dimming global economic outlook, fueled by heightening trade tensions between the U.S. and China are boosting gold’s appeal as a hedge against financial turmoil.“If growth worries persist, possibly due to a trade war escalation, gold could go even higher, driven by a larger ETF gold allocation from portfolio managers who still continue to under-own gold,” Goldman analysts including Sabine Schels said in a note Wednesday. “Gold ETFs have recently built momentum almost as strong as in 2016, and we believe that can be maintained in the short-term.”Bullion holdings in ETFs climbed to the highest since April 2013 amid a financial market meltdown that saw more than $700 billion wiped from the value of U.S. equities on Monday. The argument for owning gold as protection to one’s wealth got louder after the market value of the Bloomberg Barclays Global Negative Yielding Debt Index closed at a record $15 trillion at the start of the week.Industrial production in Germany posted its biggest annual decline in almost a decade, adding to fears that the world economy could be moving closer to its first recession in a decade. In the Asia-Pacific region, central banks in New Zealand, India and Thailand made surprise interest-rate cuts as they sought to shield their economies from global headwinds. The moves came just a week after the Federal Reserve lowered U.S. borrowing costs for the first time in more than a decade.Last week, Bank of America Merrill Lynch analyst Michael Widmer said the metal could climb toward $2,000 in the next two years, as “the recent dovish tilt by central banks, accompanied by increases of negative yielding assets” provide a good backdrop that could sustain the rally. The metal reached a record $1,921.17 in the spot market in 2011.“We believe that there are further cuts coming,” Widmer said Wednesday in a Bloomberg TV interview. “Talk about easing in other parts of the world as well, that drowns out everything else on the dollar, for instance.” Increased volatility could see gold prices spike above the bank’s base case forecast of $1,500, fueling the rally.The precious metal climbed as much as 2.4% in the spot market on Wednesday to $1,510.46 an ounce, the highest since April 2013. On the Comex in New York, futures touched $1,522.70, before settling at $1,519.60 at 1:30 p.m.Goldman said Wednesday it raised its 2019 outlook for ETF demand to 600 metric tons this year, from 300 tons, and boosted its six-month price forecast after the metal surpassed the bank’s previous target of $1,475.UBS Group AG and Citigroup Inc. are also bullish on gold, forecasting prices could rise to as high as $1,600.\--With assistance from Scarlet Fu.To contact the reporters on this story: Luzi Ann Javier in New York at email@example.com;Justina Vasquez in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Luzi Ann Javier at email@example.com, Steven FrankFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Gold futures rallied above $1,500 an ounce on sustained demand for the traditional haven as the U.S.-China trade war festers, global growth slows and central banks around the world ease monetary policy.The metal advanced as much as 2.6% an ounce on the Comex to the highest since 2013. The move extends this year’s climb to 19%, with gains underpinned by inflows into exchange-traded funds and central bank purchases. China’s central bank expanded its gold reserves for an eighth straight month in July.Gold has been one of the chief beneficiaries of the turmoil in global financial markets as Washington and Beijing spar over trade. In recent days, the Trump administration threatened fresh tariffs against Chinese goods, the yuan was allowed to sink, and the U.S. branded China a currency manipulator. The stand-off has boosted the odds of more easing from the Federal Reserve. Mounting “growth worries,” prompted Goldman Sachs Group Inc. to predict prices will climb to $1,600 an ounce over the next six months.“Gold is serving its traditional role as a safe-haven asset,” said Wayne Gordon, executive director for commodities and foreign exchange at UBS Group AG’s wealth management unit. Under the bank’s risk case, marked by a further escalation of the trade fight, prices could go as high as $1,600, he said.Futures for December delivery rose 2.4% to settle at $1,519.60 an ounce at 1:30 p.m. in New York, gaining for a fourth day. Silver also surged, with futures climbing above $17 for the first time since June 2018.Miners also benefited from the rally, with AngloGold Ashanti Ltd. rising 4.8% to its highest price in more than seven years. Kinross Gold Corp., Barrick Gold Corp. and Newmont Goldcorp Corp. also soared.Lower RatesLast month, the Fed reduced borrowing costs for the first time in more than a decade, responding in part to the impact of the trade war. Lower rates boost the appeal of non-interest-bearing bullion.On Wednesday, New Zealand’s Reserve Bank shocked markets with a half-percentage point interest-rate reduction, while India’s central bank also delivered a bigger-than-expected move. Those cuts were followed by the Bank of Thailand unexpectedly lowering its benchmark interest rate for the first time in more than four years.The latest ructions have sent investors rushing to havens, pushing the world’s stockpile of negative-yielding bonds to a record, with the market value of the Bloomberg Barclays Global Negative Yielding Debt Index closing at $15.01 trillion Monday. The yield on 10-year Treasuries has tumbled.Bullion has plenty of fans among veteran investors. Mark Mobius said in July prices were poised to top $1,500 as interest rates headed lower, declaring: “I love gold.” Billionaire hedge-fund manager Ray Dalio has suggested the market may just be at the start of a period that would be very positive for gold.In addition to the challenges thrown up by the trade war, there are other risks. In Europe, investors are tracking the chances of a no-deal Brexit later this year, while there are tensions in the Middle East between Iran and the U.S.Further support for the rally has come from central-bank buying, with authorities in China, Russia, Poland and Kazakhstan all boosting holdings. That trend shows no sign of slowing, with the People’s Bank of China adding almost 10 tons to reserves in July.“We see the ongoing steep rise in the gold price as an expression of the high risk aversion among market participants,” said Daniel Briesemann, an analyst at Commerzbank AG. “Gold is quite clearly still in demand as a safe haven in the current market environment, as reflected, among other things, in continuing ETF inflows. ”\--With assistance from Krystal Chia.To contact the reporters on this story: Ranjeetha Pakiam in Singapore at firstname.lastname@example.org;Rupert Rowling in London at email@example.com;Justina Vasquez in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Phoebe Sedgman at email@example.com, ;Luzi Ann Javier at firstname.lastname@example.org, Jake Lloyd-Smith, Steven FrankFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
* European stocks sell off again * STOXX 600 -2.3%, FTSE 100 down 2.5% * Miners, autos, chips, luxury stocks top fallers * HSBC ousts CEO after just 18 months in role * Some 96% of STOXX 600 constituents in red Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: rm://email@example.com SELL-OFF, DAY TWO: 96% OF STOXX IN THE RED (1600 GMT) The sell-off ran into a second day, sending the STOXX 600 down 2.3% and marking the biggest two-day loss for the region's equity market since Brexit. Star performers like LVMH, SAP and Nestle are among the top five negative weights to the STOXX 600, all down more than 2%, but year-to-date these stocks remain up between 22% and 33%.
* European stocks sell off again * STOXX 600 -2.2%, FTSE 100 down 2.4% * Miners, autos, chips, luxury stocks top fallers * HSBC ousts CEO after just 18 months in role * Some 96% of STOXX 600 constituents in red Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: rm://firstname.lastname@example.org SINKING YUAN: STIMULUS WITH POTENTIAL FOR FOREIGN INVESTORS (1517 GMT) As investors assess the far-reaching repercussions of the sinking Chinese yuan overnight, Janus Henderson portfolio manager for Chinese equities strategy Charlie Awdry cautions the extra volatility due to summer in the northern hemisphere and rising Hong Kong tensions make that job even harder.