Wednesday, November 14, 2018

Reuters News - British PM May tries to sell Brexit deal to ministers

LONDON (Reuters) - Prime Minister Theresa May will try to convince senior ministers on Wednesday to accept a draft European Union divorce deal that opponents say threatens both her government and the unity of the United Kingdom.

The weakest British leader in a generation, she has to try to get the deal approved by parliament before exiting the bloc on March 29, 2019.
Brexit campaigners in May’s Conservative Party accused her of surrendering to the EU and said they would vote down the deal. The Northern Irish Democratic Unionist Party (DUP) which props up May’s minority government questioned whether she would be able to get parliamentary approval.

Monday, November 12, 2018

BBC News - Volatile pound regains some ground

SterlingImage copyrightGETTY IMAGES
The pound has rebounded in afternoon trading in response to a report that the main elements of a Brexit treaty text are ready to present to the UK cabinet on Tuesday.
Sterling regained some ground after a Financial Times report cited the EU's main Brexit negotiator, Michel Barnier.
The pound turned positive against the euro, up 0.17% on the day at €1.1466.
Against the dollar, it recovered partially to stand 0.43% lower at $1.2918.
Mrs May is trying to rally support among cabinet ministers for her Brexit proposal in time for a hoped-for summit in Brussels later this month.
However, the pound sagged in morning trading amid indications that her efforts had been delayed by increasing disarray in her cabinet over the issue.
On Friday, Transport Minister Jo Johnson became the latest government figure to quit his post over Brexit, arguing that UK was "on the brink of the greatest crisis" since World War Two.
Simon Derrick, head of currency research at Bank of New York Mellon, told the BBC that the pound's weakness against the dollar was "obviously related to the uncertainty over the weekend", but added: "At least half of it is actually about dollar strength and the expectation that the Federal Reserve will hike interest rates in December."
The resurgent dollar also hit the euro, down 0.6% against the greenback on Monday to $1.1265, having earlier touched a 17-month low.
Monex Europe analyst Bart Hordijk blamed the euro's weakness on "the four apocalyptic horsemen" of "Brexit, Italy, slower growth and a cautious European Central Bank".
He forecast that the euro could fall further against the dollar.
"Signs are certainly dire for the euro and a drastic change of monetary policy signalling, the Italian budget stance, macroeconomic prospects, or Brexit is what the currency needs now to turn this momentum around," he said.

Thursday, November 8, 2018

Bloomberg News - War Tamed, South Sudan Faces New Hurdle: Luring Vital Investment

By Okech Francis
South Sudanese authorities, eager for investment after a five-year civil war, vowed to meet international companies’ needs for foreign exchange, shortages of which forced Anheuser-Busch Inbev SA’s unit to close.
The Investment Authority’s pledge comes as the oil-producing East African nation enacts a peace deal and pursues international financing to overcome an economic crisis that saw inflation exceed 200 percent. Units of both MTN Group Ltd. and Kuwait’s largest mobile-phone provider are among the few major remaining foreign companies -- and they’ve made cuts to survive.
“Our country has been closed for so long and now is the time to speak volumes -- loud and clear -- that our country is ready for investment,” Abraham Maliet Mamer, the authority’s secretary-general, said in an interview.
The world’s youngest nation will host the South Sudan Oil & Power 2018 conference in the capital, Juba, on Nov. 21-22. China National Petroleum Corp., Oil & Natural Gas Corp. of India and Petronas Bhd of Malaysia are the main operators of oil blocks in South Sudan, which has sub-Saharan Africa’s third-largest reserves and is counting on increased production to help fund the peace agreement.
Trade and investment conditions aren’t favorable to U.S. companies, according to the latest bulletin from the U.S.’s Bureau of Economic and Business Affairs. Among its concerns: the tight control of hard currency by the government, an ineffective legal system, limited physical infrastructure and high political risk.
South Sudan Beverages Ltd., a unit of what was then SABMiller Plc, closed its brewing operations about two years into the conflict as a currency shortage curtailed its ability to import raw materials.

Wednesday, November 7, 2018

BBC News -House prices 'to fall' next year if no Brexit deal

house in AutumnImage copyrightGETTY IMAGES
House prices in the UK could fall in 2019 if the government fails to reach a Brexit deal, one senior economist has said.
Howard Archer, chief economic adviser to the EY ITEM Club, said he expected prices to fall "modestly" if there is no agreement with Brussels.
However, a negotiated deal could see prices rise by around 2%, he said.
It comes as the UK's largest mortgage lender, the Halifax, said prices rose by just 1.5% in the year to October.
That is the lowest annual rise since March 2013.
Prices rose by 0.7% between September and October, following two successive months of price falls.
house price chart
The Halifax believes house prices will continue rising, by as much as 3%, over the coming months, pointing out that the supply of properties is still limited.
"Further house price support comes from an already high and improving employment rate and historically low mortgage rates which are creating higher rates of relative affordability," said Russell Galley, managing director of the Halifax.
"We see this continuing to be the case over the coming months and we remain supportive of our 0-3% forecast range."
The average UK house price is now £227,869, the Halifax said.

Tuesday, November 6, 2018

Reuters News - Two years in, Trump holds stock market bragging rights

by Noel Randewich
SAN FRANCISCO (Reuters) - U.S. President Donald Trump has taken credit for the stock market’s gains during his nearly two years in the White House, and those claims are reasonable given the impact of tax cuts and pro-business policies on investor sentiment.
The S&P 500 has risen 28 percent since Trump’s election in November 2016 to the eve of congressional midterm elections on Tuesday. This surpasses the market’s performance over the same time frame under any other president in the past 64 years. Under President Dwight Eisenhower, the S&P 500 rose 29 percent from his election in November 1952 through November 1954.
Sweeping corporate tax cuts, an initiative driven by Trump, supercharged U.S. companies’ earnings and helped lift the cash-rich technology sector. The Republican party last year passed the biggest overhaul of the U.S. tax code in over 30 years, boosting U.S. corporate earnings.
Still, other sectors that could have been expected to benefit strongly from a Trump presidency have lagged. Indeed, the individual stocks that have gained and lost the most during his reign have little discernable link to Trump’s presidency.
How the market shakes out in the final two years of Trump’s presidency will probably be influenced by Tuesday’s elections. Analysts expect pressure on stocks if Democrats gain control of the House of Representatives and a sharper downward reaction if they sweep the House and Senate.
On the contrary, if Republicans hold their ground, stocks could gain further, with hopes of more tax reform ahead.
The following graphics show how the Trump presidency has played out on a macro and micro level:

Reuters Graphic
Trump’s strong stock market record has been maintained even after a recent pullback on Wall Street as worries about trade battles, inflation and rising interest rates have increased caution among investors. Starting in 2010 under President Barack Obama as the world recovered from the financial crisis, the S&P 500 has enjoyed its longest bull market in history.
With more than half of Trump’s presidency still to come, how the market will perform over his whole term is unknown. Democratic President Bill Clinton saw the S&P 500 triple during his two terms in the White House.
Average S&P 500 company earnings per share are on track to rise 24 percent this year, the strongest annual gain in eight years, according to IBES data from Refinitiv.
Investor confidence stemming from the tax cuts and Trump’s other business-friendly policies so far have more than made up for ongoing worries on Wall Street that his trade conflict with China is hurting the U.S. economy, and that it could become worse.
The tax cuts also led Apple (AAPL.O) and other multinationals in the technology sector to repatriate billions of dollars in profits held overseas, some of which went toward buying back stock and sending Wall Street higher.
The S&P 500 information technology index .SPLRCT has gained 51 percent since Trump’s election. Financials .SPSY, which benefited from Trump’s deregulation of the banking industry, have climbed 34 percent since Nov 8, 2016.
Reuters Graphic
Still, some companies that had been expected to boom under Trump have fared poorly. The S&P 500 energy index .SPNY is flat since Trump’s election, even though crude prices LCOc1 rose over 50 percent during that time and despite Trump putting the brakes on Obama-era policies aimed at reducing the country’s reliance on oil.
Reuters Graphic
Semiconductors have fared better than any other industry group, even though they are highly exposed to China and could become casualties in Trump’s trade war with Beijing.
Along with telecommunications, food and tobacco companies, automakers on average have fared worst among 27 industry group’s since Trump’s election. General Motors Co (GM.N) and Ford Motor Co (F.N) have been wrestling for years with tepid global demand, with recent signs of a deep slowdown in China.
Industry groups are more detailed categories than the 11 sectors widely tracked on the stock market.
Reuters Graphic
Interest rates, economic growth, company earnings and inflation are widely viewed as strong influences on stock prices, making who holds power in Washington just one of many factors affecting investor sentiment.
Abiomed Inc (ABMD.O), the S&P 500’s top performer since Trump’s election, has jumped over 260 percent, helped in part by the success of its Impella heart pumps.
General Electric’s (GE.N) 68 percent loss makes it the S&P 500’s worst performer since Trump was elected. The former industrial powerhouse has foundered in several key markets in recent years and is aggressively cutting costs and selling businesses.
Reporting by Noel Randewich; Editing by Megan Davies and Cynthia Osterman

Monday, November 5, 2018

BBC News - Brexit uncertainty hits Brittany Ferries' bookings

by Chris Jontson
Brittany FerriesImage copyrightBF
UK holidaymakers are delaying booking Channel crossings for next summer amid concerns about the consequences of Brexit, Brittany Ferries has said.
Forward bookings were down between 4% and 5% from some of its regular customers, the company said.
Nigel Wonnacott from Brittany Ferries said people were worried about the impact on areas such as pet travel, health insurance and driving licences.
The decline was "raising the red flag", he told BBC 5 live's Wake Up to Money.
Falls in forward bookings was affecting Brittany Ferries' cashflow, Mr Wonnacott said, and raised concerns about whether it would be able to fill its 10 ferries.
It will take delivery next year of a new vessel for the Portsmouth to Caen route, which accounts for about 30% of its traffic, that has capacity for up to 1,700 passengers.
Christophe Mathieu, the company's chief executive, said: "Two more ships will follow as part of our €450m investment in the future. But we need to make sure we have passengers and freight to fill these new ships."
"We know that uncertainty and instability in the UK will have consequences on both sides of the channel," he said. "A poor [Brexit] deal, or perhaps no deal at all, could impact Brittany, Normandy and the Loire."
Research from Abta, the trade body for tour operators and travel agents, found that 43% of people are confused about how Brexit will affect travel arrangements, up from 36% last year, while almost half (48%) fear it will make it harder to travel to the continent.
"As we head towards the peak holiday booking period, there is still a lack of certainty about what will happen when we leave the EU ... we encourage both sides to take a pragmatic approach to getting a deal done," an Abta spokesperson said.
Despite the concerns about Brexit, package holiday bookings for European destinations next summer were 14% higher than at the same point last year, the association added.
A spokesperson for Eurotunnel, which operates Le Shuttle services between Folkestone and Calais, said "bookings are strong going forward".
Some holidaymakers have told the BBC that concerns over Brexit are affecting their plans.
Graeme Murphy said: "We normally have the following year's travel and accommodation booked by now as we are independent travellers, but are waiting to see what visas, travel permits etc we will need as we are afraid that we may not have the necessary documentation in time to travel. Seems that our annual holiday to Lindos, Rhodes is not going to happen in 2019."
Mervyn Hill said: "We're not booking a holiday until the situation becomes absolutely clear... we need specific insurance cover for existing health issues, but we suspect the risk of a no-deal Brexit will have a significant detrimental effect on insurance premiums."
Brittany Ferries was founded by Breton farmers in 1972. It operates services between the UK and Ireland to France and Spain, with Britons visiting France and northern Spain accounting for 85% of passengers.

    The company reported a 2% rise in passengers to almost 1.1 million for the three months to September compared with the same period last summer.

    Friday, November 2, 2018

    BBC News - Brexit deal could accelerate interest rate increases

    by Ben Morris
    Bank of England
    The Bank of England has indicated there could be a faster pace of interest rate increases if the UK manages a smooth exit from the European Union.
    Although the Bank kept rates unchanged at 0.75% this month, its latest forecasts suggest that rates could rise to 1.5% over the next three years.
    It said that Brexit uncertainty was preventing some firms from investing.
    However, Bank governor Mark Carney said a smooth Brexit could see a rebound in that investment.
    "We do expect a rebound in demand. Business is taking a cautious approach right now as we are at a point of maximum uncertainty, so we have some sense of what is being held back, so we will see a rebound in investment," Mr Carney said.
    Some economists think the Bank might have to be even more aggressive on interest rates.
    Ruth Gregory, UK economist at Capital Economics, believes that if the UK strikes a deal soon, rates could rise three times in 2019.
    Samuel Tombs at Pantheon Macroeconomics says two rate increases next year "remain a good bet".
    While the Bank sees a Brexit deal as the most likely scenario, in its Quarterly Inflation Report it also warned of damage to business if there was no deal.
    "An abrupt and disorderly withdrawal could result in delays at borders, disruptions to supply chains, and more rapid and costly shifts in patterns of production, severely impairing the productive capacity of UK business," the Bank said.
    It also thinks the pound would fall and there would be a "large" and "immediate" fall in economic activity.
    Interest rate graphic
    The Bank's comments came as its Monetary Policy Committee (MPC) voted 9-0to leave rates unchanged at 0.75%.
    Interest rates were last raised in August as the Bank reacted to stronger data on the economy.
    The latest decision to keep rates on hold will come as relief to the 3.5 million holders of mortgages that track interest rates, but savers will be disappointed.

    Analysis:

    Szu Ping Chan, BBC economics reporter
    With just a few months to go until the UK leaves the European Union, there was a clear message from the Bank of England today.
    The Brexit deal will determine the next move in interest rates.
    The Bank expects it to be a smooth one. In this scenario households are expected to keep on spending, with businesses unleashing the money they're currently holding back.
    But Mr Carney made it clear that if the UK crashed out of the EU without a deal, policymakers wouldn't automatically cut rates as they did in the wake of the Brexit vote.
    Back then, the outlook was uncertain and the UK's exit date was still far away.
    The no-deal scenario would have a more immediate and permanent impact on prices and the economy, Mr Carney said.
    So an interest rate cut might not be the appropriate response, although it would still be an option.

    The Bank's quarterly survey of business leaders indicated that Brexit had become a more important source of uncertainty for them in recent months.
    As a result, the Bank has slashed its forecast for growth in business investment this year to 0%.
    However, a smooth Brexit would release that brake on investment, and would come at a time when there is little slack in the economy.
    In addition, wages are rising, which is supporting consumer spending.
    All that could force the Bank to raise interest rates to curb inflation.
    The Bank is forecasting growth of 1.3% this year and 1.7% next year.