Article: EU publishes Greece assessment, sees debt reprofiling

#AceFinanceNews – July.15: #Greece EU publishes Greece assessment, sees debt reprofiling:
https://trove.com/a/EU-publishes-Greece-assessment-sees-debt-reprofiling

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Article: Fed must raise rates or face being stuck behind the curve, warns Janet Yellen

Fed must raise rates or face being stuck behind the curve, warns Janet Yellen:

http://www.telegraph.co.uk/finance/economics/11740589/Fed-must-raise-rates-or-face-being-stuck-behind-the-curve-warns-Janet-Yellen.html

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#VENEZUELA ‘ Perilous Economy & Borrowing Structure of IMF ‘

#AceFinanceNews – Venezuela:July.15: I received this post a PDF download a few days ago on the 10.July and before the Greek crisis had concluded and waited until now before publishing. It is about the perilous economy of Venezuela and their IMF borrowing structure. Says it all about slow death for #Greece in my opinion.

In Plato’s Republic, Socrates and Plato’s brother Glaucon discuss the plight of people chained in a cave as the prisoners try to make sense of the shadows passing on the wall before them. We often reflect on the Allegory of the Cave with Greece in the news and as we undergo the Herculean task of trying to tease out accurate data from Venezuela’s economic shadows while statistics continue to go unreported by the Central Bank.

After the close yesterday, we got an important piece of Venezuela economic data – not from Venezuela, of course. The IMF released accounts for June that show that Venezuela has borrowed another $1.5 billion from the IMF.

Venz IMF SDR Holding 2015 History to 30 June 2015 closeup crop.jpg

Specifically, Venezuela borrowed over 1 billion SDRs from the IMF in June. One SDR had a valuation of around US$1.41 last month (an SDR is made up of four floating currencies: the US dollar, the euro, the UK pound sterling, and the Japanese yen) – meaning that the amount that Venezuela borrowed is approximately US$1.5 billion.

As the chart above indicates, this comes on top of the US$385 that Venezuela quietly borrowed from the IMF in April — as we noted in our Latinvest Venezuela Weekly Report on May 26. That means that Venezuela has now borrowed US$2.3 billion from the IMF.

As we explained in that May report, the IMF created SDRs as an international reserve asset in 1969 to supplement members’ reserves. IMF members are allowed to count the SDRs as part of their reserves and Venezuela does, and is able to borrow those assets at an extremely favorable rate of interest (currently 0.05%, which frankly is much better than the over 30% that Venezuela is paying on some of its bonds).

In 2009 as countries around the world were reeling from the worldwide economic crisis, the IMF decided to provide member nations a total of US$250 billion in SDRs to shore up international liquidity. At that time, the IMF made 2.543 billion SDRs available to Venezuela, which works out to about $3.578 billion in US dollars, which Venezuela is now borrowing 7 years later (You can find out more about SDRs in LAHT’s online library here).

Of course, on Sunday, Venezuela President Nicolas Maduro took to the airwaves in cadena (literally “chain” — a mandatory broadcast that all channels must carry), lauding the Greek referendum results, saying “Today Greece has told the financial terrorists of the International Monetary Fund, the European Central Bank and the European elite that they don’t kneel down to anyone. The Greek people have their right to life and they are going to conquer and build their own economic and political life. Long live the people of Greece.”
and this:

Today Greece has taken a historic step with their victory in the referendum called by Prime Minister Alexis Tsipras. Congratulations Prime Minister Tsipras, congratulations to the people of Greece that have said NO to the International Monetary Fund and the vampires of the international banking system.”
Those would be the same “Vampires” and “financial terrorists” that Maduro is also quietly borrowing billions from — loans which are saving Venezuela’s culo — but then that doesn’t play as well on TV.

TUMBLING RESERVES

Venz Reserves 7 July 2015 15 828 closeup.jpg

half-aSadly, Venezuela’s reserves are still being depleted rapidly and have now fallen below $16 billion, closing at $15.828 billion on Tuesday, July 7. As the following graph indicates, Venezuela’s reserves have now fallen $8.426 billion since March 1, averaging half a billion dollar burn rate per week.

Worse – at least from a bondholder’s point-of-view — Venezuela’s reserves are continuing to fall even when Venezuela and PDVSA do not have heavy payments on their $70 billon of international dollar bond debt (interest payments are less than $100 million per month in June and July). However, in August interest payments ramp up to $750 million, and in October and November, Venezuela will face $5.2 billion in maturities, amortizations, and interest payments.

Venz Reserves Graph 7 July 2015 under 16 crop web.jpg

RAPIDLY FALLING CURRENCY

At the same time, Venezuela’s currency continues tumbling in the black market, closing at 569 yesterday.

Venz Dollar 8 July 2015 569 web.jpg

Venezuela’s currency continues to decay rapidly, and as the following graph indicates, the bolivar has gone parabolic in its collapse.

On April 28, the currency was at 285, so the US dollar is now doubling against the bolivar in less than 2.5 months. On November 27, 2014, the bolivar was at 143, meaning that it previously took 5 months for the dollar to double against the bolivar — from 143 to 285 — but only 2.5 months now to double from 285 to today’s 569. To put that in a 1 year perspective, last year on July 8, the bolivar was trading at 71it now takes 8 times more bolivars to purchase a dollar than it did just one year ago.

Venz Dollar Graph 8 July 2015 web.jpg

Two things are happening – less dollars are coming into the economy from the falling price of oil (which is tumbling again this week) and the Venezuela Central Bank is printing money like there is no tomorrow. As the graph below shows, Venezuela’s money supply is increasing rapidly now, with M2 up 81% in one year. That pace is up rapidly from the 69% twelve month increase we clocked for you in our May 26 report.

.Venz Money Supply M2 Graph 26 June 2015 web.jpg

The resulting pass-through of inflation is devastating. With a currency that is worth just 12.5% of what it was only one year ago, the prices of uncontrolled items are skyrocketing. At the same time, shortages of dollars are worsening widespread shortages of all sorts of goods, parts and medicines. We clock inflation at 185% and increasing, with prices of many goods doubling in just one month.

The Venezuelan government’s response has not been to correct M2, or to get its economic house in order, but instead to increase salaries in a lagging way. On July 1, the second part of a 30% salary increase announced in May came into effect. Salaries went up 10%, meaning the minimum monthly salary is now Bs7,421,67.

Venezuela’s minimum salary has now gone up 45% so far this year, after an earlier February increase. At today’s exchange rate of 569 bolivars per dollar, that monthly salary of 7,422 – that the majority of Venezuela lives on – is just $13.04 dollars per month, the lowest in Latin America, including Cuba.

Plato’s parable about the cave ends badly, with many of the ignorant, enchained subjects screaming in terror and murdering when exposed to reality. It is not difficult to foresee a similar conclusion in Venezuela.
Prefer to download:
The full Report is available in
LAHT‘s online library here:
https://www.scribd.com/doc/271004472/Latinvest-Venezuela-Report-9-July-2015

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NEW DELPHI: ‘ Lifting of Iran’s Sanctions Could Boost India’s Exports to Iran by over $6-Billion ‘

#AceFinanceNews – NEW DELHI:July.15: India’s exports to Iran could jump by over a third to $6 billion this fiscal year as an easing of sanctions against Tehran would help boost sales of agricultural commodities though competition for non-farm items would rise, a leading trade body said.

Iran has bought most of its basmati rice and sugar from India in the past few years using rupees for its oil due to restrictions on its dollar trades. On Tuesday, Iran and six major world powers reached a deal that will see the Islamic nation curbing its nuclear programme that the West has suspected was aimed at a nuclear bomb.

“It’s true that some of our exports, especially non-agricultural ones, will suffer but our farm exports will more than compensate for any loss,” said Ajay Sahai, director general of the Federation of Indian Export Organisations (FIEO).

Iran’s trade with India will no longer be governed entirely by how much oil it sells to the South Asian country, giving it more leeway to expand purchases of food items which India produces in abundance, such as rice, sugar and soybeans.

Rupee-denominated trade with Iran – India is its biggest oil buyer after China – started in 2012. India’s oil refiners settled 45 percent of Iranian oil payments by depositing rupees in Tehran’s commercial banks’ account with India’s UCO Bank.

Iran used funds in the account to import other goods.

“Now, both Indian and Iranian traders can look forward to conventional deals,” said Vijay Sethia, former president of the All India Rice Exporters’ Association.

India is Iran’s top rice supplier, accounting for the bulk of its annual requirement of 1-1.2 million tonnes, mainly basmati. Iran imported nearly 1 million tonnes of basmati in 2014/15, with 930,000 tonnes coming from India.

Sethia expects India’s basmati exports to rise 10-15 per cent this fiscal year.

“Of late there has been some slowdown in India’s rice exports to Iran which has built a buffer to avoid any shortage due to the sanctions. But volumes will pick up,” he said.

India and Pakistan exclusively grow the long-grain, aromatic basmati in the foothills of the Himalayas. The deal between Iran and the West could also cut freight rates, helping some Indian food exporters.

However, a 20 per cent drop in the euro in over past year will help European firms win market share from India in automobile parts and machinery tools, among other things.

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WALL STREET: ‘ Wells Fargo Match 2nd Quarter Profit ‘

​#AceFinanceNews – July.15: ​
The nation’s fourth-largest bank by assets revealed adjusted second-quarter profits per share of $1.03, matching Wall Street estimates.

Revenue, meanwhile, came in at $21.3 billion, missing expectations for $21.7 billion.

Wells Fargo shares fell nearly 1% in pre-market action.

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#BREAKING WALL STREET: ‘ Bank of America Tops Profit Estimates in Second Quarter ‘

#Ace​Finance​
News​ – NEW YORK:July.15: The nation’s second-biggest bank by assets revealed adjusted earnings per share of 45 cents a share, topping analysts’ estimates for 36 cents a share.

Revenue net of interest expense and on a fully-taxable-equivalent basis came in at $22.36 billion. It was not immediately clear whether that figure was comparable to the $21.32 billion estimate.

Bank of America shares were marginally higher in pre-market trading



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NEW YORK: ‘ Manufacturing Rises & Employment Rises & Prices Rise – Prediction Rate Rise Anyone?

#Ace​Finance​
News​ – NEW YORK:July.15: The New York Federal Reserve’s gauge of manufacturing activity in the region rose to 3.86 in July, surpassing Wall Street’s expectation for a gain to 3 from a June reading of -1.98. Readings above 0 point to expansion, while those below indicate contraction.

The number of Americans filing for first-time unemployment benefits rose last week to 297,000 from an upwardly revised 282,000. Wall Street expected claims to fall to 275,000 from an initially reported 281,000.

The Labor Department reports prices at the wholesale level rose 0.4% in June from the month prior, higher than the 0.2% rise expected. Excluding the food and energy components, prices rose 0.3%, compared to the 0.1% gain expected.

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#BANKING:Knocking them down like 9-pins as Barclays deputy chairman Sir Mike Rake quits

#AceFinanceNews – Britain:July.15: Sir Mike Rake, the deputy chairman of Barclays since 2012, is quitting the bank, the BBC understands.

The news comes just a week after Antony Jenkins, Barclays’ chief executive, was fired after falling out with the board.

Sir Mike – who has been on the board since 2008 – is a “highly respected figure in the business world”, said BBC business editor Kamal Ahmed.

His decision to leave “may well raise questions in investors’ minds” at a time of transition, our reporter added.

He is taking up a job as the new chairman of payments processing firm Worldpay, our business editor says, the firm formerly owned by Royal Bank of Scotland.

Sir Mike was not believed to have been a huge supporter of Mr Jenkins, he adds.

Sir Mike was a firm ally of Bob Diamond, the previous chief executive of Barclays, who came from the investment bank side of the business.

Sir Mike is also chairman of BT Group and served as the chairman of the CBI, the British business organisation, from June 2013 until this year.

Barclays deputy chairman Sir Mike Rake quits_84280513_84280512.jpgSir Mike Rake, the deputy chairman of Barclays since 2012, is quitting the bank a week after its chief executive was fired.

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#ENERGY British Gas lowers gas prices by ONLY 5%

#AceFinanceNews – Britain:July.15: Having put prices up 4 times – they now think reducing prices by 5% will justify themselves.

British Gas lowers gas prices_80201000_breaking_image_large-3.pngBritish Gas says it will cut household gas prices by 5%, in second gas price reduction in six months

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#JOBLESSUK figures rise – ONS

UK jobless figures rise – ONS_80201000_breaking_image_large-3.pngUK unemployment rose 15,000 between March and May, the first rise in two years, official figures show

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