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(Bloomberg) -- Having suffered the worst economic performance in a decade last year, Mexican Finance Minister Arturo Herrera sees reasons to be more optimistic about Latin America’s second-largest economy in 2020.In his first sit-down interview with English-language media this year, Herrera says that after almost a decade of expansion since the global financial crisis, last year’s 0.1% contraction was more natural and in line with disappointing economic activity worldwide. Now, things are looking better.His argument goes: inflation and debt levels are in check, the peso is stable, and the troubled state oil company known as Pemex has halted a production decline. The main boost for the country comes from the ratification of the reworked North American free trade agreement.“The Mexican economy’s performance is very different with this agreement,” he told Bloomberg News at the National Palace in Mexico City on Monday. “This is one of the great advantages we have now.”Production chains may invest more in North America based on the certainty created by the treaty, known as USMCA, especially as competitors in Asia are beset by trade wars and a health crisis, he said.Read More: USMCA Ratification More Relief Than Opportunity For MexicoHerrera’s ministry has even kept its 2% growth forecast for the year, although he won’t say whether that will change when it reports a preliminary budget proposal to congress in April.His optimism isn’t fully shared by Mexico watchers. Economists have been steadily reducing the country’s 2020 growth estimates to an average of just 1% from 1.7% six months ago, with Bank of America Corp. even forecasting an expansion as little as 0.5%.Inflation, RatesAn area that is likely to provide more stimulus is monetary policy. Subdued inflation and peso stability mean Mexico “clearly” has room to keep cutting interest rates, the minister said.“I’m not the only one saying it. It’s something that’s said by the Western Hemisphere director of the International Monetary Fund,” Herrera said.Banco de Mexico has been lowering its policy rate since August as declining oil output and uncertainty over President Andres Manuel Lopez Obrador’s policies stalled the economy. Even after reducing the key rate by 1.25 percentage point since August, Mexico has one of the highest inflation-adjusted interest rates in the world.Analysts expect the bank to cut borrowing costs by another half percentage point in the rest of 2020, ending the year at 6.5%.Alejandro Werner, the Western Hemisphere director of the IMF, said last month that Mexico has “significant space” to keep cutting interest rates to bolster growth, noting that other Latin American countries have reduced borrowing costs recently.Read More: Zero-Growth Year Is Price AMLO Pays for Mexican ‘Transformation’Inflation ended 2019 at 2.83%, the second-lowest December rate in the 2000s. It has rebounded slightly to 3.24% last month, but is still within the central bank’s target range of 3%, plus or minus one percentage point.The strength of the Mexican peso, which on Monday reached its highest intraday level in almost a year and a half, is explained by factors including the government’s fiscal responsibility and the nation’s relatively high interest rates, Herrera said. The peso ended Monday trading with a 0.1% loss to 18.5561 per dollar at 4 p.m.He also reiterated the government’s commitment to a “stable” and “flexible” currency.“It’s very risky for somebody to start playing with the exchange rate policy,” he said. “It has cost Mexico a lot of work to understand this and we’re very respectful.”To contact the reporters on this story: Nacha Cattan in Mexico City at email@example.com;Eric Martin in Mexico City at firstname.lastname@example.orgTo contact the editors responsible for this story: Daniel Cancel at email@example.com, ;Juan Pablo Spinetto at firstname.lastname@example.org, Matthew Bristow, Jiyeun LeeFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The future of Australia's Supercars series is under a cloud following the decision by U.S. auto maker General Motors to scrap the iconic Holden brand that has underpinned the touring car championship for decades. General Motors Co said on Monday it would retire the Holden brand by 2021 as it winds down Australian and New Zealand operations in the latest restructuring of its global business. The move has rocked the V8 Supercars series in which eight of the 13 teams race Holden's Commodore model cars.
(Bloomberg) -- Oil steadied around $57 a barrel in London as China and others in Asia promised economic stimulus to offset the impact of the coronavirus, buoying the outlook for fuel demand.Prices recovered more than 5% last week, the biggest gain since September, as some of the fears over how far the infection will hurt the global economy abated. China, Hong Kong and Singapore have pledged extra fiscal stimulus to counter the economic hit from the disease, with Beijing considering measures such as lowering corporate taxes.“Oil appears to have finally shaken off its bearish malaise,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. “Investors cheered a salvo of stimulus measures from China’s central bank aimed at mitigating the economic impact.”Brent for April settlement rose 35 cents to $57.67 a barrel on the London-based ICE Futures Europe exchange. West Texas Intermediate for March delivery increased 28 cents to $52.33 a barrel on the New York Mercantile Exchange, after last week gaining by the most since December. There was no WTI settlement on Monday because of Presidents Day holiday.China on Monday offered more funding to banks and cut the interest rate it charges for the money. Singapore has also promised a “strong” package of budget measures and central banks in the Philippines, Thailand and Malaysia have cut interest rates as Asian economies grapple with the virus-induced slowdown.That’s offsetting any disappointment from OPEC and its partners apparently dropping plans for an emergency meeting to respond to the crisis. Russia, a pivotal member of the alliance known as OPEC+, has so far resisted a push by Saudi Arabia to launch fresh production cuts in response to the loss of demand.Traders are now likely to focus on whether the coalition announces new cutbacks at its scheduled meeting on March 5 and 6. A technical committee recommended earlier this month that the group reduce supply by a further 600,000 barrels a day, on top of current curbs.Concerns over the impact of the virus remain strong with Hubei, the Chinese province at the epicenter of the outbreak, reporting new cases and additional deaths. This is seeping into the oil market with the International Energy Agency forecasting global oil demand will decline this quarter for the first time in more than a decade. Goldman Sachs Group Inc. slashed its 2020 crude-consumption forecast almost in half and lowered its first-quarter price estimate by $10 a barrel.(Updates Brent and WTI price in fourth paragraph.)\--With assistance from James Thornhill, Serene Cheong, Saket Sundria and Amy Stillman.To contact the reporter on this story: Grant Smith in London at email@example.comTo contact the editors responsible for this story: James Herron at firstname.lastname@example.org, Rakteem Katakey, Christopher SellFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
While STORE Capital's (STOR) Q4 results will likely reflect gain from increase in the size of the real estate investment portfolio, a tepid retail real estate environment might have played spoilsport.
(Bloomberg Opinion) -- Beijing is throwing all it’s got at the coronavirus. Less visible than the drama of quarantining communities, however, is the new pressure that the outbreak is bringing on China Inc.’s hard-up borrowers.They face $944 billion of debt maturities onshore and $90 billion offshore this year. Authorities are going back to their old playbook of spewing handouts to get them through. The costs will add billions of dollars of debt and cripple an already-weakened financial system. It may be doing more harm than good.Workers are stranded and factories remain widely shut. There is no imminent sign of that changing, even if the increase in infections has trended downward in recent days. The resulting economic slowdown will bite into earnings by 10% to 20% for months and hamper the ability of companies to pay their debts. As asset quality deteriorates, Goldman Sachs Group Inc. estimates that Chinese banks’ implied ratio of bad-to-total loans will jump to 8.1% from an earlier prediction of 5.4%.China has responded with all-too-familiar palliatives. Regulators and local governments have laid out measures that include billions of dollars for tax cuts, borrowings at cheaper rates, and incentives to keep workers employed. Banks are being asked to push off repayments and to roll over debts. They’re allowing companies to add more working capital loans before they have paid down existing ones.Trouble is, China Inc. was already struggling before the virus hit, especially the private sector. A stimulus campaign to pull manufacturers out of the trade-war doldrums didn’t do much for their balance sheets last year. Private companies’ accounts receivables remain elevated and have been increasing for the likes of large machinery makers. Short-term funding and average average payback periods are also rising. Financing for capital expenditures and working capital slowed into the end of last year. A recent survey of 995 small- and medium-size companies showed that a just over a third could survive for a month with their current savings. Another third could hang on for two months, while just under 18% could last three. All this as large banks reported a more than 30% increase in loans to smaller borrowers in the first half of 2019.Beijing’s latest round of financial forbearance will only worsen the situation. Lending more with looser terms may help tide over some companies and refinance their debt for now, but does little to flush out the ones that just aren’t financially viable. That many cannot support themselves without the state for even three months shows China’s vulnerabilities. Lenders, the pillars of the financial system, are weaker than the numbers betray. The central bank’s stress tests show as much. Before the virus, they were contending with a bank failure and a deleveraging campaign that unearthed billions of dollars of bad credit assets. Government coffers, meanwhile, are shrinking. All of the state’s largesse has meant fiscal revenue growth slowed to 3.8% last year, well under its 5% target and down almost half from 6.8% in 2018.In theory, Beijing has the tools and a vast number of financial institutions aside from banks to lean on. In times of crises, financial forbearance isn’t unheard of. But repeated use of banks this way multiplies the dangers to unsustainable levels. Small and medium enterprises facing funding issues have to reach for more shadowy financing. The private sector is cash-starved and debt piles up. That debt, as the deleveraging campaign has shown, clogs the system and makes every yuan of credit even more ineffective. Companies can’t grow and lenders start to fail. The state is left holding the bag.A more prudent approach this time might be call into service insurance companies with huge balance sheets, and asset management companies, with their experience in dealing with stressed companies. Insurers have been big buyers of bonds, stocks and private equity deals for years. As operators in a marketplace, they understand credit risk better than banks. They could be more effective in managing small and medium companies’ debts.It’s time to let weak companies that have high operating leverage and short-term debts close down. But that might be too risky for President Xi Jinping, who continues to voice support for them. After all, they account for around 80% of urban employment.When China dealt with Severe Acute Respiratory Syndrome in 2003, an era of supercharged growth was beginning. It had recently joined the World Trade Organization and even indebted companies had cash flowing in and the prospect of a lot more coming. That’s no longer the case. Even if Beijing manages to rein in the coronavirus, debt will keep sickening China Inc.To contact the author of this story: Anjani Trivedi at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
NEW YORK/BEIJING (Reuters) - General Motors Co is retreating from more markets outside of the United States and China, saying on Sunday that it will wind down sales, design and engineering operations in Australia and New Zealand and retire the Holden brand by 2021. It also said China's Great Wall Motor Co Ltd had agreed to buy GM's Thailand car manufacturing plant and an engine factory, a transaction expected to be completed by the end of 2020. In rearranging its global operations, GM is accelerating its retreat from unprofitable markets, becoming more dependent on the United States, China, Latin America and South Korea.
NEW YORK/BEIJING (Reuters) - General Motors Co said it would wind down its Australian and New Zealand operations and sell a Thai plant in the latest restructuring of its global business, costing the U.S. auto maker $1.1 billion. The moves will accelerate GM's retreat from unprofitable markets, making it more dependent on the United States, China, Latin America and South Korea, and give up an opening to expand in Southeast Asia. GM has forecast a flat profit for 2020 after a difficult 2019, and is facing ballooning interest in electric car rival Tesla Inc .
(Bloomberg) -- Oil clinched the best weekly gain for the year on signs the worst economic impacts of the lethal viral outbreak have been accounted for, easing concern about free-falling demand for crude.Futures advanced 1.2% in New York on Friday, settling above $52 for the first time this month. Investor confidence was lifted after China reassured the international community that a huge spike in new coronavirus cases was a one-off event. The optimism outweighed Goldman Sachs Group Inc. slashing its 2020 crude-demand growth forecast almost in half and lowering its first-quarter oil-price estimate by 16%.“There’s no doubt this rally will inspire more confidence for oil markets,” said Leo Mariani, an analyst at KeyBanc Capital Markets.The Organization of Petroleum Exporting Countries and its allies have signaled a desire to stabilize the oil market that has tumbled almost 15% this year as the coronavirus wreaked havoc on the world’s second-largest economy and beyond.The past two weeks have been rife with uncertainty for oil markets as Riyadh’s push for an early meeting in February and fresh production cuts face an impasse with Russia.OPEC and its allies were close to abandoning any plans for an emergency meeting though Saudi Arabia had not given up on the proposal outright, several delegates from the group said on Friday. The outbreak has intensified concerns about crude demand, prompting technical experts from the coalition to propose deepening the current supply cuts by 600,000 barrels a day to relieve excess inventories.“Expectations are low but markets still expect some incremental action from OPEC,” Mariani said.Chinese independent refiners have seized on the recent slump in oil prices to bulk up on cheap cargoes in a sign that they may be positioning for an eventual rebound in demand.West Texas Intermediate crude for March delivery gained 63 cents to settle at $52.05 a barrel on the New York Mercantile Exchange.Brent for April settlement rose 1.7% to settle at $57.32 on the ICE Futures Europe exchange.The structure of the Brent futures market also flipped into a backwardation, signaling that some of the oversupply may have eased.See also: Coronavirus Will Hit Oil Hard. That’s Where the Consensus EndsMeanwhile, Kuwait and Saudi Arabia will resume oil production from their shared fields this month, more than five years after a dispute halted supply. The projects will bring additional production capacity to an oil market that’s already dealing with excess supply.\--With assistance from James Thornhill, Grant Smith, Elizabeth Low and Alex Longley.To contact the reporter on this story: Jackie Davalos in New York at email@example.comTo contact the editors responsible for this story: David Marino at firstname.lastname@example.org, Christine BuurmaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Bank of America (BAC) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
The Zacks Analyst Blog Highlights: Mastercard, Comcast, Honeywell International, QUALCOMM and Dominion Energy
Restructuring efforts and use of technology to enhance revenues have been the main themes for banks over the last five trading days amid concerns related to impact of Covid-19 virus globally.
(Bloomberg) -- Mike Blum was supposed to revolutionize the way Goldman Sachs did business with the fastest-trading hedge funds. He ended up leaving for a marijuana startup.Blum -- one of several senior technology executives who departed the bank in recent days -- is joining cannabis provider PharmaCann as its tech chief. It’s a bit of a departure from his previous role overseeing Goldman Sachs Group Inc.’s ambitious overhaul of an electronic-trading platform that the Wall Street firm hopes will win more business with quant hedge funds.Blum had joined the bank in 2017 as a partner, a rare exception at a firm where the normal path to its highest rank is to spend years toiling away at the company. At PharmaCann, he will reunite with some of his former colleagues from electronic-trading firm KCG Holdings. The marijuana venture started a half-decade ago and says it provides “top-quality cannabis products to improve people’s lives.”“We’re excited for Mike to be joining the PharmaCann team as our company continues to attract top-tier talent,” Brett Novey, PharmaCann’s chief executive officer, said in a statement.The hire solves part of a mystery that unfolded last week inside Goldman’s biggest division. Blum and two more senior tech executives quit in the midst of overseeing projects key to the firm’s strategy, raising questions about what prompted the departures and what they might do instead. For Blum, the answer is that he’s leaving the industry.Separately, the bank also lost Jeff Winner, the chief technology officer in its consumer-banking business, which the firm is looking to as a new frontier for growth. That unit includes Goldman’s credit-card partnership with Apple Inc. and its Marcus online-loan platform.Winner was with Goldman for only two years after stints as a senior engineering executive at Silicon Valley heavyweights Stripe Inc. and Uber Technologies Inc.Winner didn’t respond to a request for comment. Goldman Sachs declined to comment.To contact the reporters on this story: Sridhar Natarajan in New York at email@example.com;Julie Verhage in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Michael J. Moore at email@example.com, David Scheer, Dan ReichlFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Sign up to our Next Africa newsletter and follow Bloomberg Africa on TwitterThe rand strengthened the most among emerging-market currencies on Friday as investors assessed President Cyril Ramaphosa’s pledges to overhaul South Africa’s electricity industry and curb government spending.While offering little that is new on the planned restructuring of Eskom Holdings SOC Ltd., Ramaphosa announced sweeping measures Thursday to address power shortages and reduce dependence on the debt-stricken utility. He warned that the nation’s debt trajectory is unsustainable and said Finance Minister Tito Mboweni will announce spending cuts in the budget on Feb. 26, with the government and labor unions in talks to reduce the state wage bill.The rand climbed 0.7% to 14.8511 per dollar by 1:40 p.m. in Johannesburg, heading for its best weekly performance this year. The MSCI EM Currency Index fell less than 0.1%.Yields on government 10-year rand bonds dropped five basis points to 8.85%, while the cost of insuring South Africa’s debt using credit-default swaps fell three basis points to 169, the lowest in a month on a closing basis.“The speech touched on a broad range of domestic concerns, ranging from electricity supply, state-owned enterprises, youth unemployment, climate change and access to education,” said Siobhan Redford, a Johannesburg-based analyst at FirstRand Bank Ltd. “It is fair to say the president hit all the right notes in his annual song to the people of the South Africa, but many will want to see action before buying into the promises.”Ramaphosa is running out of time to convince Moody’s Investors Service to hold the country’s credit rating at investment level. The company is reviewing the assessment in March, shortly after Mboweni’s budget speech. Fitch Ratings, which already has South Africa at junk level, said Friday Ramaphosa’s address highlighted the government’s credit challenges.Investors will now focus on the budget presentation for reassurance that the the government has a credible plan to turn the economy around, said Piotr Matys, a London-based senior emerging-market strategist at Rabobank.“President Ramaphosa said exactly what investors would like to hear, and this, perhaps, is the issue – we have heard all that before and yet the economy is barely growing,” Matys said in a note to clients. “To avoid a downgrade to junk – and substantial capital outflows that would follow – the pace of economic reforms must accelerate markedly.”(Updates prices; adds analyst’s comment in final two paragraphs)To contact the reporter on this story: Robert Brand in Cape Town at firstname.lastname@example.orgTo contact the editors responsible for this story: Alex Nicholson at email@example.com, Paul Richardson, Hilton ShoneFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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