Month: June 2015

Asia stocks mixed ahead of Fed, ECB decisions

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Jeb Bush announces bid for 2016 presidential run

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Former Florida Governor Jeb Bush officially kicked off his presidential campaign Monday afternoon.

Jeb Bush, 62, the son and brother of former US presidents, joins 10 other Republicans who have announced their intention to run. “I’m ready to lead,” Bush said in a video at the Miami event.

“We will take command of our future once again in this country,” Bush said, later adding, he “will take nothing and no one for granted. I will run with heart.”

Bush took a shot at Democrats in his speech, charging that party with planning “a no-suspense primary, for a no-change election.”

“They have offered a progressive agenda that includes everything but progress,” he said. “They are responsible for the slowest economic recovery ever, the biggest debt increases ever, a massive tax increase on the middle class, the relentless buildup of the regulatory state, and the swift, mindless drawdown of a military that was generations in the making.”

Read More: Paul Ryan: Don’t let Obama run amok like on Iran

Bush said he was prepared to “fix” America, touting his work as Florida’s governor, and saying he’ll “show Congress” how he’s prepared to use a veto against “needless” spending.
He pledged to change the “self-serving attitude” in Washington, saying he served as a “reforming governor.”

“I was a governor who refused to accept that as the normal or right way of conducting the people’s business,” he said. “I will not accept it as the standard in Washington.”

As president, Bush said, he would set a goal of 4 percent economic growth and 19 million new jobs.

Bush’s speech also addressed what he called a “phone-it-in foreign policy” from President Barack Obama and former Secretary of State Hillary Clinton. In addition to the administration’s treatment of the military, Bush called out its attempts at normalizing relations with Cuba.

“We don’t need a glorified tourist to go to Havana in support of a failed Cuba. We need an American president to go to Havana in solidarity with a free Cuban people, and I am ready to be that president,” he said.

Iraq will be one of the issues Jeb looks to distance himself from, as he has before stressed that he is different from his older brother, George W. Bush. But winning the nomination will mean winning over Republican voters who might have preconceived notions stemming from his brother’s or George H.W. Bush’s prior presidencies.

Read More: USD 100 million? Jeb Bush’s high expectations problem

The Republican hopeful addressed the issue of his last name during his Monday speech.

“I know that there are good people running for president. Quite a few, in fact. And not a one of us deserves the job by right of resume, party, seniority, family, or family narrative,” he said. “It’s nobody’s turn. It’s everybody’s test, and it’s wide open—exactly as a contest for president should be.”

One competitor, Florida Senator Marco Rubio, was among the first to extend a welcome to Bush ahead of his official entrance into the Republican field.

“In politics, people throw around the word ‘friend’ so much it often has little real meaning. This is not one of those times. When I call Jeb Bush my friend, I mean he is someone I like, care for and respect,” Rubio said in a statement. “He is a passionate advocate for what he believes, and I welcome him to the race.”

Bush had been the front runner for Republican voters when he floated the idea of a presidential bid, but as others have announced their own candidacy Bush’s advantage in the polls has slowly dwindled. His muddled response to a question about the Iraq war didn’t help things either, as Jeb now finds himself tied with a handful of other candidates.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Greece defiant, accused of ‘breaking all the rules’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As Greece remains defiant, despite talks with its international creditors stuck in deadlock, anger and concern is mounting in Europe about the finale to this Greek crisis.

Following an emergency meeting of the government on Monday — ostensibly to discuss the failure of talks at the weekend — Greek Prime Minister Alexis Tsipras blamed creditors for the deadlock, although this was swiftly rebuffed by Europe.

Michael Fuchs, vice chairman of Germany’s CDU/CSU – the ruling conservative coalition, led by German Chancellor Angela Merkel — told CNBC Tuesday that Greece needed to decide whether to stay in or get out of the euro zone.

“It’s not a question of whether we are ready (for Greece to leave the euro zone), it’s for Greece to decide what they want to do,” he told CNBC Europe’s “Squawk Box.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Cramer: How to use a Grexit to your advantage

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Jim Cramer flipped through his tweets this morning, and saw an investor asking what the heck Rite Aid has to do with Greece. The answer? Everything, because this tiny country has managed to drive all stocks lower.

“Greece the country has a huge impact on Rite Aid the stock,” Cramer explained. “That’s because stocks trade together in line with Europe. No hedge fund manager can resist making a bet that if Greece decides to default on its obligations, there will be severe repercussions all over the world.”

Basically, it all boils down to the fact that if Greece blows up and the hedge funds missed it, they will look like idiots.

Cramer knows that hedge funds are aware that the European economy will face a severe slowdown if Greece goes under. He also suspects that the Greek government has no idea the amount of pain it will inflict on its people if it gets kicked out of the Eurozone.

And if a so-called Grexit were to occur, those holding debt will be hurt and European business will slow down or freeze, which will pinch US-based companies that do business overseas. Ultimately, this will trigger investors to sell S&P futures in the US, and earnings estimates will come down both due to the strong dollar and weak orders.

Of the 30 stocks in the Dow Jones industrial average, 27 have a business that is affected by Europe; a huge percentage of the S&P 500 is also involved.

So, while Rite Aid isn’t a part of the S&P 500 and it has no business overseas, its competitors do. Walgreens Boots Alliance does have overseas sales, and both it and CVS are members of the S&P 500. That means they will both be taken down by the Greece debacle.

Would it really make sense for Rite Aid stock to go higher, if its two biggest competitors are getting a beat down from Greece? Cramer thinks that is completely inconceivable.

“So, back to the original query, what does Greece have to do with Rite Aid the stock? The answer, sadly, is everything. I say sadly because it sure wasn’t like this 30 years ago before we had futures,” Cramer added.

But that doesn’t mean you cannot turn this mess into your own opportunity.

If Greece defaults, that is a one-day event. It won’t keep defaulting the next day or the day after that. So while the market would take a hit on the first day that the country defaulted, Cramer anticipates it would also bleed into the second day, causing a selloff.

Then, the third day will only impact those highly leveraged hedge funds that played the wrong side of the trade. Basically, they would sell good stocks that had nothing to do with Greece in order to fund the stocks that were hurt by Greece.

“My conclusion? The irrational collateral damage to stocks that are unrelated to Greece but are pulled down in its vortex should be bought near the end of day two, after the debacle occurs, and then doubled down on day three,” Cramer said.

That means if you want to buy 200 shares of Rite Aid—buy 100 on day two of the selloff, and 100 shares on day three. It couldn’t hurt to wait to see if a Greek-induced sale happens. Otherwise, you have an opportunity to buy a good stock into weakness.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil supply to cause a pullback in short run: Expert

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil prices will rise in the long run, but in the short run there will be a pullback, Sun Life Global Investments` chief investment officer, Sadiq S. Adatia, said Monday.

Adatia said oil supply, contrarily to popular belief, has been increasing therefore putting pressure on oil prices in the short term.

“What I would say is longer term, oil prices are going to continue to rise up but I think in the shorter term we have to worry a little bit about more of a pullback given that there is still a significant amount of supply, and contrary to probably a lot of people, supply really hasn`t diminished a lot,” he said on CNBC`s “Power Lunch .”

Read More: Fracking: On its way to the UK?

Adatia explained that oil prices would range between USD 60 and USD 80, which is the break-even point for many oil producers.

“I don`t think we`re back to USD 100,” he said. “I think we`re more close to USD 60 or USD 80.”

Read More: Nigeria starts investigating crude oil swap contracts 

For importing countries, those prices are good news.

“I think the key here is that it`s going to be good for people who are again importing oil to their economies, tougher for those who are exporting oil,” said Adatia.

“Canada happens to be one of those areas. We`re a big exporter of oil. This is definitely going to impact areas like Alberta, Saskatchewan and Newfoundland and Labrador where there is a lot of demand tied to high oil prices.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This would be scary enough to give Fed pause

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Wall Street believes the Fed is likely to start raising interest rates in September-unless financial markets, soothed by seven years of easy money, turn violent enough to derail it.

While the odds are not viewed as high, there is some talk that if a looming Fed rate hike coincides with already anxious markets, the reaction could become jarring enough to give the central bank pause.

Fingers are pointing at Greeceas one such event that could trigger a negative reaction to slow the Fed`s move away zero interest rates.

Deutsche Bank`s chief US economist, Joseph LaVorgna, said that a negative ending for the Greek debt drama could be a catalyst for market turbulence, as could an unexpected geopolitical event.

LaVorgna said he expects the Fed to raise interest rates for the first time in nine years in September, but the very idea of action by the US central bank could also unhinge markets in just the right environment, and that could also delay its move.

“The markets could react, and the Fed could get cold feet,” he said. “I would say it`s a 1 in 3 chance.”

Read More: Greece on ‘brink of disaster,’ calls emergency meeting

“It`s complicated by the fact that the last eight years August has been a month where you`ve had a lot of market turbulence, perhaps exasperated by the fact dealer desks aren`t as fully staffed globally,” LaVorgna said.

The VIX, the CBOE`s volatility index on the S&P 500, saw double digit percentage gains or losses during four of those past six Augusts. The S&P 500, meanwhile, has been negative for August in six of the last 10 years, with an average loss of 0.2 percent.

Wall Street doesn`t give a Greece-related market meltdown very high odds.

“As the Federal Reserve moves towards raising rates, it expects turbulence,” said Marc Chandler, chief foreign exchange strategist at Brown Brothers Harriman. He said the US central bank has been signaling it will raise rates and has commented on the fact markets could react. “This has to be one of the least kept surprises.”

But if there is a global market meltdown, depending on the cause, it would slow the Fed`s move to raise rates.

“If you were to tell me they kick Greece out (of the euro), and peripheral bond spreads over Germany suddenly widen, and that nascent recovery in the euro zone gets squashed then I think so. I don`t think it`s likely but we really won`t know until after the EU summit on the 25th and 26th,” Chandler said.

Chandler said the important date for Greece will be June 30 when the extension for its current assistance program runs out, and its payment of USD 1.6 billion to the IMF is due. That also is just ahead of much bigger payments due to the European Central Bank.

“Out of all the things that could stay the Fed`s hand, I would put those as possible but unlikely. The more likely would be domestic problems. The economy rolls over, or we have another month like March with weak jobs,” he said.

The Federal Reserve meets this Tuesday and Wednesday, and while the meeting is “live,” there are no expectations it will hike rates until September.

The Fed, however, could give some nod to international concerns, putting a marker on the Greek situation.

RBS economist Michelle Girard said the Fed will not specifically mention Greece in its statement Wednesday, but it is watching the situation. It will become a concern only “to the extent, Greece impacts financial conditions and that could feed back to the US”

“They`re not going to talk about it. I don think they really can,” she said. Market focus, however, will immediately shift to Greece, after the Fed meeting.

Stocks sold off Monday, as Greece`s talks with creditors collapsed over the weekend. The euro weakened and money moved into the German bund and US Treasurys, in a flight-to-safety. European stocks sold off sharply and the spreads on peripheral debt widened.

LaVorgna said it`s unclear how much reaction in financial markets would make the US central bank hold off.

“The Fed previously highlighted the backup in mortgage rates, and they were worried about the debt ceiling crisis,” in 2013, LaVorgna said. “Financial conditions hadn`t really tightened.”

Read More: Fed moves closer to policy change

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Dollar hit to emerging stocks ‘a big deal’: Expert

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Emerging market stocks have “lukewarm” prospects if the US dollar sustains its rally, an emerging markets analyst said Monday.

“Unfortunately, we do not believe the dollar rally is over which means the headwind is still there. But we think we`re more than two-thirds of the way for that dollar rally to be over,” said Andres Garcia-Amaya, a macro research analyst for emerging market equities at JPMorgan Asset Management, which has more than $1.7 trillion in assets under management.

The dollar has climbed nearly 18 percent against a basket of trade-weighted global currencies in the last year. Many US corporations with a large global footprint have blamed disappointing earnings on the US dollar`s strength.

Read More The cost of a strong dollar: Billions in corporate damage

That trend has also been “a big deal” in weighing down emerging markets, Garcia-Amaya said in a CNBC “Power Lunch” interview.

Investors have cooled on their prospects, as $9.3 billion flowed out of emerging market funds in the week to June 11, according to funds tracker EPFR. That sum was the highest since 2008 at the height of the global financial crisis.

Read More EM exodus: More pain ahead?

But “lots of opportunities” to make money in the asset class remain. Stocks in countries wracked by geopolitical uncertainty, in particular, have upside. He noted that JPMorgan has taken an overweight position in Russia and Turkey.

Amid a tumultuous oil industry and tough sanctions from Europe and the United States, many Russian stocks have jumped this year. The Market Vectors Russia ETF, for instance, has climbed more than 26 percent this year.

Read More Gartman: Emerging market flows will go straight to US

On the other hand, the iShares MSCI Turkey ETF has fallen nearly 20 percent this year.

– CNBC’s Ansunya Harjani contributed to this report

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Greece weighs while traders await Fed

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Fresh data on housing – one of the brighter spots in the economy – is expected Tuesday, as the Federal Reserve starts a two-day meeting where its first interest rate hike in nine years could be on the table.

While the Fed is not expected to move on interest rates yet, it has cleared the path for a rate hike at its future meetings, and economists now expect it to move away from its zero interest rate policy in September. The Fed meeting is “live,“ or one where the Fed could take action. The Fed is expected to adjust its economic and interest rate forecasts and possibly tweak its statement, while continuing to emphasize that rate hikes are dependent on economic data.

Some Fed watchers say the Fed`s path could be derailed if financial conditions deteriorate due to Greece, or some other geopolitical event. Greece`s troubled debt discussions weighed on markets Monday, and the SandP 500 declined 9 to 2084. Treasury yields were lower, with the 10-year at 2.35 percent in late trading.

Housing starts are expected at 1.08 million, following April`s 20 percent jump to 1.14 million. Also, building permits, reported at 8:30 a.m. ET, are expected at 1.1 million.

“Everybody should be excited about housing,” said Michelle Girard, chief U.S. economist at RBS. “Last year, it didn`t really come out of the winter doldrums…This year it could and I think psychologically for the Fed that would be an important development. The performance we`ve seen in a bunch of housing data this spring makes me think housing is going to be better this year.”

That`s despite rising Treasury yields resulting in higher mortgage rates recently. “I think it`s going to take more than 25 or 50 basis points. I think they`ll need to see levels noticeably higher than what we`ve seen, or will see, to really snuff out housing activity,” Girard said, adding firming home prices and an improved market help bump consumer confidence. “With every passing month, you do get some easing of credit conditions and that`s moving in the right direction as well, and that`s part of the story too.”

Read More: Fed’s worst nightmare: The ‘ghost of 1937’

The housing starts follow Monday`s National Association of Home Builders sentiment survey, which showed confidence rising to its highest level in nine months.

Michael Gapen, chief U.S. economist at Barclays, said he expects 1.06 million starts, a decline of 7 percent. “Housing is okay. It`s not excellent. It`s somewhere between okay and good…We just think there are some headwinds. Mortgage rates have bounced up a bit, and are likely to move higher over time if the Fed is going to raise rates, and home price appreciation means affordability has declined for first time home buyers.“

As for the Fed, economists expect it to wait several months before raising rates, as it watches for consistent improvement in employment data, and signs that the weakness in the first quarter really was temporary.

Read More: This would be scary enough to give Fed pause

“Expect the Fed to downgrade its expectations for growth this year, but largely keep intact its 2016 projection at 2.3percent to 2.7percent,” wrote Tony Crescenzi, executive vice president, strategist and portfolio manager at Pimco. The Fed is likely to downgrade its 2015 target due to the weak first quarter, though it may also note in its statement that the economy has improved lately.

Traders will be closely monitoring the comments of Fed Chair Janet Yellen, who speaks after Wednesday`s 2 p.m. Fed statement.

Fed watchers are also waiting to see how the Fed moves its “dots“ or the points on its chart that represent Fed officials` projections for where they think future interest rates should be.

“The Fed`s `dots` will likely indicate FOMC participants have lowered their policy-rate projections, but they will likely continue to reflect an expectation for 50 basis points in hikes this year and about 100 basis points in 2016. The Fed`s longer-term neutral rate may fall to 3.5 percent from 3.75 percent,” Crescenzi added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow