@thehill ‘ Pelosi pushes for $15-minimum wage @AceNewsServices


#AceFinanceNews – WASHINGTON:July.28: House Minority Leader Nancy Pelosi (D-Calif.) on Tuesday endorsed a $15 minimum wage, joining a growing chorus of liberals on and off Capitol Hill pushing to more than double the current $7.25 rate.

“Twelve dollars may be what can pass, but I’m for $15 per hour,” Pelosi said as she headed into the weekly Democratic Caucus meeting in the Capitol, according to her office.

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CAIRO: ‘ Egypt to pay $1.1-billion to purchase 4-Naval Corvettes from France ‘


#AceFinanceReport – CAIRO:Egypt will buy four naval corvettes from France for one billion Euros ($1.1 billion), an anonymous French official told AFP Saturday.

In 2014, the French shipbuilder DCNS has signed contracts with Egypt to sell the four Gowind-class corvettes, the official added.

President Abdel Fatah al-Sisi met Saturday with French Minister of Defense Jean-Yves Le Drian and discussed bilateral relations and …

Read more.

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German ‘Wisemen’ Say Euro Zone States Should Be Able To Go Bankrupt


#AceFinanceNews – July.28: BERLIN (Reuters) – The German government’s panel of independent economic advisers favors the creation of a sovereign insolvency mechanism for euro zone states to prevent future crises and says countries should be able to leave the currency bloc as a last resort. In a special report published on Tuesday, the council of five experts known as the “wisemen”, said the Greek debt crisis had underscored the urgent need for further reforms to make the euro zone more stable.

Original Article: http://www.ibtimes.com/german-wisemen-say-euro-zone-states-should-be-able-go-bankrupt-2027151

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Article: China’s stock market remains jittery after greatest losses since 2007


#AceFinanceNews – July.28: China’s stock market remains jittery after greatest losses since 2007:

http://www.theguardian.com/business/2015/jul/28/beijing-prop-up-china-stock-market-losses

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Oil price and Gulf of Mexico spill causes BP to miss second-quarter profit forecast on spill charge


#AceFinanceNews – July.28: Lower oil price and Gulf of Mexico spill still haunt profitability of BP.

As LONDON (Reuters) reports today that BP’s second-quarter profits missed expectations on Tuesday after the British oil and gas company took a $9.8 billion (6.30 billion pounds) pretax charge related to a settlement of the 2010 Gulf of Mexico spill.

The company also lowered its expected full-year organic capital spending to below $20 billion after cutting it by 13 percent earlier this year as the industry continues to grapple with low oil prices.

BP maintained its dividend at 10 cents per ordinary share.

BP’s underlying replacement cost profit, the company’s definition of net income, was $1.3 billion, lower than analysts expectations of $1.64 billion.

This month, BP reached an $18.7 billion settlement with the U.S. government and five states to resolve most claims from the deadly Gulf of Mexico oil spill five years ago in the largest corporate settlement in U.S. history.

The April 20, 2010, rig explosion and spill killed 11 workers and spewed oil for nearly three months on to the shorelines of several states.

Oil prices averaged $60 a barrel in the second quarter, up around $5 a barrel from the first quarter but down from $110 a year earlier.

In a repeat of first-quarter trends, BP’s refining and trading division, known as downstream, performed strongly while production delivered weak results amid falling oil prices.

Downstream generated $1.63 billion in replacement cost profit for BP, up from $933 million a year earlier but down from an exceptionally strong $2.08 billion in the first quarter.

For the third quarter, BP said it expected “reduced refining margins and lower levels of turnaround activity. ”

BP’s upstream operations delivered a replacement cost profit of just $228 million versus $4.05 billion a year earlier and $372 million in the first quarter.

BP’s global refining margin benchmark rose in the second quarter to $19.4 a barrel from $15.55 a year earlier and from $15.3 in the first quarter.

As a rule of thumb, each $1 in refining margins equates to around $500 million in BP’s pretax replacement cost operating profit, according to the company.

“Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the Group and we continue with capital discipline and divestments,” Chief Executive Officer Bob Dudley said in a statement.

BP said that besides the U.S. settlement the second-quarter result reflected the impact of continued low oil and gas prices, a reduced contribution from Russia’s Rosneft, and one-off charges arising from unrest in Libya.

Also on Tuesday, Norwegian oil major Statoil posted higher-than-forecast earnings while lowering its capital spending outlook for the year.

(Reporting by Ron Bousso and Dmitry Zhdannikov; editing by Jason Neely)

BP misses second-quarter profit forecast on spill charge

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Oil price and Gulf of Mexico spill causes BP to miss second-quarter profit forecast on spill charge


#AceFinanceNews – July.28: Lower oil price and Gulf of Mexico spill still haunt profitability of BP.

As LONDON (Reuters) reports today that BP’s second-quarter profits missed expectations on Tuesday after the British oil and gas company took a $9.8 billion (6.30 billion pounds) pretax charge related to a settlement of the 2010 Gulf of Mexico spill.

The company also lowered its expected full-year organic capital spending to below $20 billion after cutting it by 13 percent earlier this year as the industry continues to grapple with low oil prices.

BP maintained its dividend at 10 cents per ordinary share.

BP’s underlying replacement cost profit, the company’s definition of net income, was $1.3 billion, lower than analysts expectations of $1.64 billion.

This month, BP reached an $18.7 billion settlement with the U.S. government and five states to resolve most claims from the deadly Gulf of Mexico oil spill five years ago in the largest corporate settlement in U.S. history.

The April 20, 2010, rig explosion and spill killed 11 workers and spewed oil for nearly three months on to the shorelines of several states.

Oil prices averaged $60 a barrel in the second quarter, up around $5 a barrel from the first quarter but down from $110 a year earlier.

In a repeat of first-quarter trends, BP’s refining and trading division, known as downstream, performed strongly while production delivered weak results amid falling oil prices.

Downstream generated $1.63 billion in replacement cost profit for BP, up from $933 million a year earlier but down from an exceptionally strong $2.08 billion in the first quarter.

For the third quarter, BP said it expected “reduced refining margins and lower levels of turnaround activity. ”

BP’s upstream operations delivered a replacement cost profit of just $228 million versus $4.05 billion a year earlier and $372 million in the first quarter.

BP’s global refining margin benchmark rose in the second quarter to $19.4 a barrel from $15.55 a year earlier and from $15.3 in the first quarter.

As a rule of thumb, each $1 in refining margins equates to around $500 million in BP’s pretax replacement cost operating profit, according to the company.

“Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the Group and we continue with capital discipline and divestments,” Chief Executive Officer Bob Dudley said in a statement.

BP said that besides the U.S. settlement the second-quarter result reflected the impact of continued low oil and gas prices, a reduced contribution from Russia’s Rosneft, and one-off charges arising from unrest in Libya.

Also on Tuesday, Norwegian oil major Statoil posted higher-than-forecast earnings while lowering its capital spending outlook for the year.

(Reporting by Ron Bousso and Dmitry Zhdannikov; editing by Jason Neely)

BP misses second-quarter profit forecast on spill charge

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BRITAIN: Ofcom says Royal Mail price changes breach competition law


#AceFinanceNews – July.28: The recent privatisation of Royal Mail under the sell off to institutional investors, falls foul of competition law.

According to LONDON (Reuters): Britain’s postal regulator Ofcom said Royal Mail has breached competition law by proposing wholesale prices that were designed to be more expensive for any firm looking to run a rival mail delivery service.

The dispute is the latest in a line of headaches for Royal Mail. Last month Ofcom announced it would also review the regulation of Royal Mail, while it faces declining volumes in its letters business and slower than expected growth in parcels.

Shares in the firm fell 2.9 percent in early trade, the biggest fall on the FTSE 100 Index.

The price changes for bulk mail delivery services, whereby other postal firms pass letters collected from large businesses to Royal Mail for sorting and delivery, were set out in January 2014, but claimed to be anti-competitive by Whistl — a company looking to rival Royal Mail by delivering some mail itself.

The price changes were never implemented after being suspended following Whistl’s complaint and later withdrawn. Whistl, owned by Dutch-based PostNL, has since ended plans to launch a delivery network after funding issues.

Ofcom said on Tuesday it was of the view that the price changes included unlawful price discrimination, whereby higher amounts would have been charged to customers that competed with Royal Mail in delivery than to those that did not, thereby posing a deterrent to competition.

Ofcom said its initial view had been sent to Royal Mail in a statement of objections and that the postal firm could now make representations to it before it takes a final decision.

The regulator has the power to fine Royal Mail up to 10 percent of its 9.4 billion pound ($14.62 billion) group revenue.

Royal Mail said the pricing changes were fully compliant with competition law and that it would submit a robust defence to Ofcom in due course.

Ofcom said in June it would review the regulation of Royal Mail after the recent withdrawal of rival Whistl from the direct delivery letter market left it with no national competition.

(Editing by Louise Heavens)

Ofcom says Royal Mail price changes breach competition law

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MARKETS: China shares slip again as Beijing scrambles to calm markets


#AceMarketsNews – July.28: Chinese shares fell on Tuesday, as Beijing scrambled once again to prop up a stock market whose wild gyrations have heightened fears about the financial stability of the world’s second biggest economy.

China shares slip again as Beijing scrambles to calm markets

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LONDON: Britain’s FTSE falls, lead lower by Pearson and Merlin Entertainments


#AceMarketsNews – LONDON (Reuters) July.28: Britain’s top share index edged lower on Monday after falls in Merlin Entertainments and Pearson and ahead of GDP data due later in the week, but outperformed broader European equities as battered miners staged a rebound.

Britain’s FTSE falls, lead lower by Pearson and Merlin Entertainments

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UBS Exposes The “Scary Reality” Of High Yield Energy


#AceNewsReport – July.28: UBS Exposes The “Scary Reality” Of High Yield Energy
Zero Hedge / Tyler Durden

20150727_HYENRG.jpg

To be sure, we’ve written plenty on the rough road ahead for HY energy.

The darkening outlook for the sector not only reflects a decisively bearish forecast for crude (see Morgan Stanley’s “far worse than 1986” call), but also the fact that time appears to be running out on the various lifelines that have kept heavily indebted producers afloat over the course of the crude downturn.

For instance, the hedges which accounted for some 15% of Q1 revenues for nearly half of North American O&G companies are set to roll off which, along with persistently low commodity prices, should weigh heavily on banks’ reassessments of credit lines due in October. Meanwhile, investors’ appetite for HY issuance and equity offerings may soon wane as even the retail crowd gets wise to the fact that this is one dip that most assuredly should not be bought.

For an in depth review of the above, see the following:

Here with more on the coming carnage and why HY investors may be profoundly unaware of just what’s in store, is UBS.

* * *

From UBS

High yield: The scary reality

The current sell-off in US high yield bond market appears controlled based on the consistent but moderate declines in daily cash bond index prices, but underneath the hood several participants are characterizing the price action as carnage. At an index level the average HY bond has fallen about 2 points week-over-week, but index data is notoriously stale and lagging; there are numerous examples of issues down 5, 7 or 10 points on light volumes despite no direct exposure to commodity prices and no material firm specific news. In our view, recent market behavior has exposed several hidden fragilities in the market ecosystem.

First, too many investors were overweight heading into the sell-off, in particular in the energy complex. The plunge in oil and commodity prices following the Iran deal and Chinese demand fears has intensified the potential fundamental stress in resource related sectors, and this outcome was not anticipated by the consensus. Anecdotally we’ve heard several credit funds have raised cash balances, but there are two problems with this thesis: one, the rise is arguably structural as outflow risks rise in an environment of tighter monetary policy, rising credit risks and lackluster performance. Two, many of those who raised cash we believe added beta to continue producing above-benchmark returns and limit tracking error. This strategy fails in a decompression scenario where low quality and illiquid credit underperforms.

Second, the sensitivity of energy firms to oil prices is not linear anymore- at depressed levels what would be considered ‘normal’ levels of commodity price volatility can have outsized effects on fundamentals and market prices. Simply put, the risk symmetry in stressed sectors is to the downside for bondholders. The rub is central bank quantitative easing drove traditional investors seeking mid-to-high single digit yields out of investment grade/ crossover credit into high yield, loan and emerging market debt to satisfy yield bogeys. The problem, however, is some of the tourists underappreciate the exponential loss and mark-to-market functions for low quality high yield assets. As we have noted previously when the credit cycle turns annual triple C default rates can surge from 5% to 30% while average triple C prices can fall into the $40 – $50 range (versus $83 currently) – especially given expected recoveries average in the $20 – $25 context1. The scary reality is those investors in triple Cs are seeking high single digit returns when they are likely to end up with negative total returns over the next several years (if our view of the credit cycle proves correct).

Third, the perceived illiquidity in the marketplace at present is due not only to seasonal and month-end effects as well as regulation; the phenomenon also has its roots in uncertainty bred on information gaps and asymmetry. It is well known that the overall HY market has doubled in size; sectors that witnessed more buoyant issuance in recent years like energy and metals mining have seen debt outstanding triple or quadruple. And the number of new names and issues has grown a commensurate amount. The reality is that resources in many segments of the market have not kept up.

20150727_HYENRG_0.jpg

Chart: Bloomberg

* * *

Of course when the retail crowd finally does head for the exits en masse, fund managers will be forced to come face to face with illiquid secondary corporate credit markets where a lack of market depth means transacting in size has the potential to spark a fire sale. As for what comes next, we’ll close with what we said on Sunday in “The Junk Bond Heatmap Has Not Been This Red In A Long Time“:

At some point, investors will tire of throwing good money after bad hoping to time the bottom tick in oil just right, at which point the commodity capitulation which we noted previously will spread away from just commodities and junk bonds, and spread to all sectors and products, including stocks. We can only hope this does not coincide with the Fed’s increasingly more amusing desire to hike rates imminently.

Original Article: http://www.zerohedge.com/news/2015-07-27/ubs-exposes-scary-reality-high-yield-energy

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