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Mar 21, 2019

Latest News | IMF Executive Board Completes the Last Review of Extended Credit Facility for Ghana

4-5 minutes

March 20, 2019
  • Ghana is concluding its four-year ECF-supported program.
  • Executive Board decision allows to disburse the last tranche of SDR132.84 million (about US$185.2 million) to Ghana.
  • ECF-supported program paved the way for a significant improvement of Ghana’s macroeconomic performance, though challenges remain.
On March 20, 2019, the Executive Board of the International Monetary Fund (IMF) completed the seventh and eight reviews under the Extended Credit Facility (ECF)[1] supported arrangement. This will make available to Ghana the cumulative amount of SDR132.84 million (about US$185.2 million).
Considering the authorities’ resolved to tackle difficult reforms, the Executive Board also approved the authorities’ request for a waiver of the nonobservance of a few program targets.
Ghana’s three-year arrangement was approved on April 3, 2015 (see Press Release No.15/159) for SDR 664.20 million (about US$925.9 million or 180 percent of quota at the time of approval of the arrangement). It was extended for additional year on August 30, 2017 and is to end on April 2, 2019. The arrangement aimed to restore debt sustainability and macroeconomic stability in the country to foster a return to high growth and job creation, while protecting social spending.
Following the Executive Board’s discussion, Mr. Tao Zhang, Deputy Managing Director and Acting Chair, issued the following statement:
“The authorities have achieved significant macroeconomic gains over the course of the ECF-supported program, with rising growth, single digit inflation, fiscal consolidation, and banking sector clean-up. Continued macroeconomic adjustment should underpin these improvements, as the 2020 elections approach.
“In a sign of the authorities’ commitment to fiscal consolidation, the end-2018 fiscal targets were met. Sustained fiscal discipline is needed to reduce financing needs and anchor debt dynamics. As stronger revenue mobilization is critical, the submission of the tax exemption bill is welcome, but needs to be complemented by efforts to strengthen tax compliance. Fiscal space is needed to support priority programs, while off-budget expenditures should be avoided.
“Progress on structural reforms needs to be intensified. Plans to improve public financial management and supervision of state-owned enterprises (SOEs), the establishment of a fiscal council, and the fiscal rule are welcome. Stronger monitoring of fiscal operations, including for SOEs, will help mitigate fiscal risks.
“Debt management has improved, though reliance on foreign investors has increased Ghana’s exposure to market sentiment and exchange rate risk. Debt collateralization and revenue monetization should be limited to avoid encumbering revenues. Planned infrastructure projects should be transparently managed, be consistent with debt sustainability, and ensure value for money.
“While achieving single-digit inflation is commendable, monetary policy should remain vigilant to guard against upside risks to inflation, also stemming from exchange rate developments. Rebuilding international reserve buffers, including through careful foreign exchange liquidity management, is welcome and critical to support greater resilience to external shocks.
“The authorities deserve praise for strengthening the banking sector and for resolving nine banks. Completing the financial sector clean-up, as planned, will support the provision of adequate and affordable credit to the economy.
“The Fund congratulates the authorities for successfully completing the ECF supported program and stands ready to support Ghana in its quest for economic prosperity.”

[1] The ECF is a lending arrangement that provides sustained program engagement over the medium to long term in case of protracted balance of payments problems.

IMF Communications Department
Phone: +1 202 623-7100Email:

Press Release | CFTC’s Energy and Environmental Markets Advisory Committee to Meet April 17

4-5 minutes

March 21, 2019
Washington, DC — The Commodity Futures Trading Commission’s (CFTC) Energy and Environmental Markets Advisory Committee (EEMAC) announced today that it will hold a public meeting on April 17, 2019 at CFTC’s Washington, DC headquarters.
CFTC Commissioner Dan M. Berkovitz, who is the sponsor of EEMAC, also announced the agenda for the meeting. This meeting will focus on the following three topics:
  • derivatives markets’ responses to physical markets’ developments;
  • exchange-traded energy derivatives markets; and
  • the availability of clearing and other services in the energy derivatives markets.
The meeting agenda may change to accommodate other EEMAC priorities. For agenda updates, please visit EEMAC at       
The meeting is open to the public with seating on a first-come, first-served basis. Members of the public may also watch a live webcast or listen to the meeting via conference call using a domestic toll-free telephone or international toll or toll-free number to connect to a live, listen-only audio feed. Persons requiring special accommodations to attend the meeting because of a disability should notify Abigail Knauff, the EEMAC Secretary, at (202) 418–5123. 
Energy and Environmental Markets Advisory Committee
CFTC Headquarters Lobby-level Conference Room
1155 21st Street, NW, Washington, DC 20581
Wednesday, April 17, 2019
10:00 a.m. to 4:00 p.m. 
Viewing/Listening Instructions: Watch the live webcast at  To listen to the live audio feed, call the toll or toll-free numbers under Related Links. Call-in participants should be prepared to provide their first name, last name and affiliation.
Conference call information:
Domestic Toll Free:
International Toll Numbers:
International Numbers
Conference Passcode:
Public comments can be submitted, identified by ‘‘Energy and Environmental Markets Advisory Committee,’’ by any of the following methods: CFTC website:; mail to: Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, Attention: Office of the Secretary; electronic mail to:; or hand delivered/courier service at the address above.
Members of the public can submit written statements by April 24, 2019. Statements submitted in connection with the committee meeting will be made available to the public, including publication on the CFTC website, Use the title " Energy and Environmental Markets Advisory Committee” on the statement submitted. 
CFTC’s Advisory Committees were created to seek input and make recommendations to the Commission on a variety of regulatory and market issues that affect the integrity and competitiveness of U.S. markets. The committees facilitate communication among the Commission and U.S. markets, trading firms, market participants, advocates and commercial end-users.

Source: CFTC

Press Release | CFTC’s Global Markets Advisory Committee to Meet on April 15

4 minutes

March 21, 2019
Washington, DC - The Commodity Futures Trading Commission’s (CFTC) Global Markets Advisory Committee (GMAC) announced today that it will hold a public meeting on Monday, April 15, 2019, at CFTC’s Washington, DC headquarters.
CFTC Commissioner Dawn D. Stump, who sponsors the GMAC, also announced the new members of GMAC. In addition, Commissioner Stump appointed Angie Karna, a managing director at Nomura Securities International, Inc., as the GMAC Chair for a one-year term. Andrée Goldsmith, special counsel in CFTC’s Division of Clearing and Risk, was also named the Designated Federal Officer for the GMAC.
At this meeting, the GMAC will hear presentations on how regulators are fulfilling the 2009 G20 directive regarding the OTC derivatives market. Specifically, the GMAC will examine the status of the four key pillars of the original G20 directive:
  • trading on exchanges or electronic trading platforms
  • clearing through central counterparties
  • margin requirements for non-centrally cleared derivatives
  • data reporting to trade repositories
The meeting is open to the public with seating on a first-come, first-served basis. Members of the public may also listen to the meeting via conference call using a domestic toll-free telephone or international toll or toll-free number to connect to a live, listen-only audio feed. Persons requiring special accommodations to attend the meeting because of a disability should notify Andrée Goldsmith at (202) 418-6624.

Global Markets Advisory Committee
CFTC Headquarters Lobby-level Conference Room
1155 21st Street, NW, Washington, DC 20581
Monday, April 15, 2019
10:00 a.m. to 4:00 p.m. 
Viewing/Listening Instructions: Watch the live webcast at  To listen to the live audio feed, call the toll or toll-free numbers under Related Links. Call-in participants should be prepared to provide their first name, last name and affiliation.
Conference call information:
Domestic Toll Free:
International Toll Numbers:
International Numbers
Conference Passcode:
Public comments can be submitted, identified by ‘‘Global Markets Advisory Committee,” by any of the following methods: CFTC website:; mail to: Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, Attention: Office of the Secretary; electronic mail to:; or hand delivered/courier service at the address above.
Members of the public can submit written statements by April 22, 2019. Statements submitted in connection with the committee meeting will be made available to the public, including publication on the CFTC website, Use the title "Global Markets Advisory Committee" on the statement submitted.
CFTC’s Advisory Committees were created to seek input and make recommendations to the Commission on a variety of regulatory and market issues that affect the integrity and competitiveness of U.S. markets. The committees facilitate communication among the Commission and U.S. markets, trading firms, market participants, advocates and commercial end-users.

Source: CFTC

Press Release | BSDR LLC Voluntarily Withdraws from Swap Data Repository Registration with the CFTC

Washington, DC

March 21, 2019
— The Commodity Futures Trading Commission (CFTC) announced today that BSDR LLC (BSDR) has voluntarily withdrawn from registration with the CFTC as a swap data repository (SDR), effective today.  BSDR initiated the withdrawal from SDR registration pursuant to CFTC Regulation 49.4(a), and the withdrawal became effective pursuant to CFTC Regulation 49.4(b).
The CFTC granted BSDR provisional registration as an SDR on January 17, 2014.  Upon BSDR’s withdrawal from such provisional registration today there are now three SDRs provisionally registered with the CFTC.

Source: CFTC

FX | Currencies | Dollar recovers from Fed blow; Brexit woes hound pound

3 minutes

RT: 100 dollar bills cash dollars 180508
Antara Foto | Hafidz Mubarak via Reuters
The U.S. dollar rebounded on Thursday, recouping most of the ground lost in the previous session after the Federal Reserve jolted markets by abandoning all plans to raise rates this year, a signal its three-year campaign to normalize policy might be at an end.
The dollar index, which measures the greenback against six major currencies, was up 0.86 percent at 96.58.
The index fell 0.6 percent on Wednesday, closing below its 200-day moving average for the first time in more than 10 months.
On Wednesday, the Fed took a dovish stance, signaling it will not hike interest rates this year in the face of a slowing economy, while announcing a plan to end its balance sheet reduction program by September.
“It makes sense for the U.S. dollar to have fallen after the Fed meeting, but similar to what occurred with the euro after the March 7 meeting, the reaction may have been overdone,” said Juan Perez, senior currency trader at Tempus Inc in Washington.
The euro tumbled earlier this month after the European Central Bank postponed the timing of its first post-crisis rate hike to 2020 at the earliest and launched a new round of cheap loans to banks. The common currency has gained nearly 2 percent against the dollar since then.
“The reality is the economy of no country can really handle further increments to borrowing costs, and we may see more scrutiny over cuts than hikes from now on,” said Perez.
Despite the rebound on Thursday, Perez said he expects the dollar to remain pressured for the rest of 2019.
FX strategists at Morgan Stanley also see the Fed’s move as spelling trouble for the dollar.
“We see the FOMC decision as a meaningfully USD-negative signal and anticipate further declines,” they wrote in a client note.
Norway’s central bank raised its main interest rate on Thursday, as expected, and said its next hike may come earlier then previously planned, boosting the crown currency against the euro and the dollar.
The Swiss franc was up slightly against the greenback after Swiss National Bank Chairman Thomas Jordan said increasing global economic risks meant the central bank would stick to its ultra-loose monetary policy for the foreseeable future.
The pound extended losses amid fears of a catastrophic “no-deal” Brexit should lawmakers hold firm in their rejection of Prime Minister Theresa May’s divorce deal with the EU. Sterling was last down 1.17 percent at $1.3042.
The Bank of England kept interest rates steady on Thursday.

Source: CNBC

Bond Yields Report | 10-year Treasury yield falls to 14-month low, signaling possible trouble with economy

Thomas Franck

The yield on the benchmark 10-year Treasury note fell to its lowest level since January 2018 on Thursday, a day after the Federal Reserve held interest rates steady and suggested it will keep rates the same for the rest of the year.
The Fed also downgraded its economic forecast for the U.S. economy and said it plans to end its program of reducing the bonds and mortgage-backed securities it holds on its balance sheet. Investors viewed the move — and subsequent comments from Chair Jerome Powell — as more restrained than expected.
The 10-year yield held lower at 2.519 percent after sinking 8 basis points in the prior session, while the yield on the 30-year Treasury bond was also lower at 2.957 percent. The yield on the 3-month Treasury bill, more sensitive to changes in Fed policy, was up at 2.478 percent, higher than the rate of return on both the 2-year Treasury note and the 5-year Treasury note.
“I think that it’s a mistake to characterize this as the Fed chickening out, or bowing to political pressure, or being spooked by the market. The story is that the Fed is rethinking their medium-term goal,” said Ethan Harris, head of global economics research at Bank of America Merrill Lynch. “The latest move confirms that [the market] wasn’t the No. 1 thing because it has recovered and the Fed is still dovish.”
The two-day move in Treasury yields signals both just how much inflation expectations have receded and how the Fed’s thinking on their 2 percent average inflation goal has changed in recent months.
“They’ve had an internal debate about their inflation target and its now moving into the public eye. They’re seriously thinking about revising the way they think about the target,” Harris added. “If you’re going to average inflation targets, you’re going to have to overshoot in good economic times.”
The more temperate Fed outlook sent Treasury yields, which fall as bond prices rise, plummeting to multiyear lows Wednesday afternoon. The motion exacerbated the flattening of the so-called Treasury yield curve, the plot of interest rates at a set point in time of bonds having equal credit quality but differing maturity dates.
Under normal conditions, the yield curve slopes upward: those that agree to take an IOU from the U.S. government for years are compensated with higher interest rates than those who agree to loan money for a just a few months. This can change, however, when market expectations for economic growth decline.
If investors believe that the U.S. economy will produce fewer goods and services in three years than it will in three months, for example, the curve can invert, or slope downward. That rise of short-term yields above longer-term yields is often viewed as a recession predictor, though technical analysts view inversion of certain sections of the curve as more critical than others.

The 2-year Treasury yield first rose above the 5-year Treasury yield on December 3 and remains at its flattest level since May 2007. However, many market participants have long heralded the spread between the 2-year yield and the 10-year yield as the more important difference. That curve remains upward sloping, though at a flat 11 basis points.
Still others, like White House economic advisor Larry Kudlow, look to a different segment of the curve. Last year, he told CNBC that both he and the New York Federal Reserve view the spread between the 3-month Treasury yield and the 10-year yield as most important.
“It’s actually not 10s to 2s; it’s 10s to 3-month Treasury bills,” Kudlow said in May. “Very important. And I actually went and got the model. The New York Fed is still publishing the model. The spread is flatter, but it’s 100 basis points or so. It’s not 20 or 30.”
The spread between the 3-month yield and the 10-year yield is now at 4 basis points; the spread between the 3-month yield and 5-year yield is already inverted.
The new comments on Wednesday came just months after central bankers suggested that two hikes to the overnight lending rate could be appropriate in 2019. The Fed’s committee hiked the overnight lending rate four times in 2018; it is currently in a range between 225 and 250 basis points.

Source: CNBC

Wall Street Closing Report | Dow rallies more than 200 points, biggest gain in a month as Apple surges

Fred Imbert

Stocks rose on Thursday as Apple and Micron surged to lead the tech sector higher. Investor sentiment was also boosted by the Federal Reserve’s updated outlook on interest-rate hikes.
The Dow Jones Industrial Average closed 216.84 points higher at 25,962.51 as a 3.7 percent gain in Apple offset a decline of 1.6 percent in J.P. Morgan Chase. The S&P 500 closed 1.1 percent higher at 2,854.88 while the Nasdaq Composite outperformed, rising 1.4 percent to 7,838.96.
Apple rose after Needham upgraded the stock to strong buy from buy, citing “value upside ” in the firm’s ecosystem. Thursday’s gains led the stock to break above its 200-day moving average for the first time since November.
Micron shares jumped 9.6 percent after reporting quarterly earnings that beat analyst expectations. Those gains lifted the VanEck Vectors Semiconductor ETF (SMH) by 3.5 percent.
“There’s been a lot of buying in the tech sector after some good news,” said Ilya Feygin, senior strategist at WallachBeth Capital. “Tech has definitely been the leader. There’s been a lot of strength coming from there; I think a lot of that is deployment of cash.”
Equities also got a lift as investors largely cheered the latest policy announcement from the Fed.
On Wednesday, the Fed said it does not expect to raise rates at all in 2019. The central bank had forecast at least two rate hikes for this year back in December. The Fed added it expects to end its balance-sheet reduction process by the end of September.
Treasury yields fell sharply on Wednesday, with the benchmark 10-year rate hitting its lowest level in a year. The yield traded at 2.53 percent on Thursday while the short-term 2-year rate held at 2.41 percent. Yields move inversely to prices.
“Some people assume, rightly or wrongly, that if the Fed is assuring low rates for the foreseeable future, then that is going to force everything else to trade richer from a valuation basis,” WallachBeth’s Feygin said. “That caused some inflows today.”
However, it also lowered its economic growth forecast for 2019, raising concern over a possible slowdown in the economy.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York.
Michael Nagle | Bloomberg | Getty Images
“Fed Chair Powell is causing anguish amongst global investors even though the initial reaction was an instant grab for equities,” said Jeff Kilburg, CEO of KKM Financial.
These moves come after a slew of negative commentary from companies like FedEx, BMW and UBS. Earlier this week, FedEx CFO Alan Graf said: “Slowing international macroeconomic conditions and weaker global trade growth trends continue.” Meanwhile, BMW said it is looking to cut $13.6 billion in costs this year while UBS noted the first quarter could be one of its worst ever.
Economic data have also been largely disappointing. The Citi Economic Surprise Index recently hit its lowest level since August 2017 and is still deep in negative territory. A negative print on the index shows data are underperforming economist expectations.
Still, the U.S. economy is on solid ground compared to the rest of the world, said Charlie Ripley, senior investment strategist at Allianz Investment Management. He also said: “While the Fed continues with the wait-and-see policy stance, we think it would require a material deterioration in growth or some exogenous shock to the markets for the Fed to be completely done raising rates in the current cycle.”
On top of digesting the Fed’s announcement, investors are also grappling with mixed news on the trade front. President Donald Trump said Wednesday that Washington’s tariffs on Beijing could stay on for a “substantial period of time.”
Biogen tanked more than 29 percent after discontinuing trials for a drug aimed at treating Alzheimer’s Disease. The move sent the iShares MSCI Nasdaq Biotechnolgy ETF (IBB) down 1.1 percent.
—CNBC’s Silvia Amaro contributed to this report.

Source: CNBC

Oil Price Report | Oil prices slip but hold near 2019 peak as supplies tighten

Tom DiChristopher

Reusable Oil Texas
Oil pumpjacks in the Permian Basin oil field are getting to work as crude oil prices gain.
Spencer Platt | Getty Images
Oil edged lower on Thursday but held near 2019 highs, supported by a sharp tightening of global stocks, OPEC production cuts and U.S. sanctions on key producers Iran and Venezuela.
International Brent crude oil futures were down 57 cents, or nearly 1 percent, at $67.93 a barrel around 12:10 p.m. ET (1610) GMT, having hit their highest since Nov. 13 at $68.69 earlier in the session.
U.S. West Texas Intermediate crude futures were down 36 cents at $59.87 per barrel. WTI reached its highest since Nov. 12 earlier in the day, at $60.39.
Crude prices have been pushed up by almost a third since the start of 2019 by supply cuts led by OPEC, as well as sanctions enacted against Iran and Venezuela by the United States.

The drop in production has led to a tightening in global inventories. Vienna-based consultancy JBC Energy estimated stocks had run down by a “solid” 40 million barrels since mid-January.
That followed a nearly 10-million-barrel fall in U.S. crude stocks last week, the largest drop since last July, boosted by strong export and refining demand, according to the U.S. government’s Energy Information Administration.
The rapid decline in inventories comes despite many refineries undergoing seasonal maintenance work ahead of peak summer demand.
However, global trade tensions remain a worry.
“Why are oil prices not rallying through the roof? We suspect the sword of Damocles hanging over the market is currently called U.S.-Chinese trade talks,” Tamas Varga, analyst at brokerage PVM, said in a note.
“Cautious bulls will become unreservedly bullish if or when an agreement is struck.”
Meanwhile, OPEC’s crude output slumped from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February. The U.S. sanctions are disrupting supply.
“With the driver of the OPEC bus, Saudi Arabia, showing no signs of wavering in the face of renewed pressure from Washington, we believe that OPEC is likely to extend the deal for the duration of 2019,” RBC said.
OPEC’s crude output fell from a mid-2018 peak of 32.8 million barrels per day (bpd) to 30.7 million bpd in February. U.S. sanctions are disrupting supply.
“Venezuelan exports to the U.S. have finally dried up, after the sanctions were placed on them by the U.S. administration earlier this year,” ANZ bank said.
Iranian oil shipments have slumped. The United States aims to cut Iran’s crude exports by about 20 percent to below 1 million bpd from May by requiring importing countries to reduce purchases to avoid U.S. sanctions.
The OPEC cuts and sanctions have also tightened supply within the United States.
U.S. crude production returned to its record of 12.1 million bpd last week, making America the world’s biggest producer.

Source: CNBC

Gold Price Report on March 21, 2019 | Gold off 3-week highs as US data lifts dollar; palladium peaks

Tom DiChristopher

Reusable: Gold coins 001
Gold prices pared gains on Thursday after hitting three-week highs earlier in the session as a set of better than expected U.S data lifted the dollar, while palladium notched a record peak on supply concerns.
Spot gold slipped 0.1 percent to $1,311.59 per ounce, having earlier hit $1,320.22, its highest since Feb. 28. The metal was set to snap five consecutive sessions of gains.
However, U.S. gold futures were trading 0.8 percent higher at $1,311.40 an ounce.
The number of Americans filing applications for unemployment benefits fell more than expected last week, and other data showed a measure of factory activity in the mid-Atlantic region rebounding sharply this month after heavy falls.
“The data was decent today with Philly Fed noticeably more robust and positive jobs data for the payrolls survey week,” said Tai Wong, head of base and precious metals derivatives trading at BMO, adding that caused a momentary dip in gold prices.
“Gold’s failure to extend gains above $1,320 has triggered some liquidation from long options positions and also fueled algorithms sensing short term weakness.”
Against a basket of currencies, the dollar index rose to 96.32, up 0.6 percent on the day, making dollar-denominated gold more expensive for investors of other currencies.
“Overall trend in gold is higher, they (Fed) scaled down interest rates and thats been helping,” said Bill O’Neill, partner at Logic Advisors said, adding that bullion would likely work its way up to $1,350 an ounce.
The U.S. central bank on Wednesday stunned markets by abandoning all plans to raise rates this year, a signal its three-year campaign to normalize policy might be at an end.
Higher interest rates raise the opportunity costs of holding gold, which earns nothing and costs money to store and insure.
Palladium touched an all-time high of $1,620.5 an ounce in the session, and was currently down 0.1 percent at$1,601.25.
Analysts attribute this to concerns of a supply crunch in the autocatalyst metal. A possible temporary export ban on precious metal scrap from Russia and hopes of economic stimulus from China has also helped lift prices.
“There is a big deficit of palladium production this year. Until auto-companies switch over to platinum, palladium prices are going to be pretty strong,” Logic Advisors’ O’Neill said.
Meanwhile, platinum prices rose 1.4 percent to $871.17 per ounce, and touched a three-week high of $875.15. Silver inched up 0.1 percent to $15.47.

Source: CNBC

Europe Markets Closing Report | European stocks mixed amid Fed, BOE rate decisions; Deutsche Bank slips over 3%

Sam Meredith ,Ryan Browne

European stocks are enjoying mixed fortunes Thursday, after the U.S. Federal Reserve’s abandonment of all plans to raise interest rates this year.
The pan-European Stoxx 600 was barely below the flatline during late afternoon deals, with sectors and major bourses pointing in different directions. London’s FTSE 100 was among the standout indexes in the black, rising over 0.8 percent amid a slide in the British pound.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE7353.1862.170.85440363785
Stocks initially turned south on the back of the Fed’s decision to pause rate hikes for the year amid signs of an economic downturn. The U.S. central bank also said it would halt the decline of its balance sheet in September. But equities began to pare losses as markets stateside rose, buoyed by an uptick in Apple shares.
In the U.K., the Bank of England (BOE) held interest rates steady on Thursday, as widely expected. The decision comes amid intensifying uncertainty over Britain’s departure date from the European Union.
In terms of sectors, Europe’s banking index slipped more than 1 percent. Germany’s two largest banks were among the worst performers, amid concerns a Deutsche Bank and Commerzbank merger could pressure Deutsche to further shrink or even dispose of its U.S. business. Shares of both banks were down over 3 percent.
Looking at individual stocks, Britain’s Merlin Entertainments tumbled close to the bottom of the index. Shares of the company fell more than 6 percent after Berenberg cut its stock recommendation to “sell” from “hold.”
Brexit chaos
British Prime Minister Theresa May told the public on Wednesday that she is “on their side” amid Brexit negotiations, laying the blame for the country’s delayed exit squarely with Parliament.
The embattled prime minister said British citizens were “tired of infighting and political games” and it was “high time” U.K. lawmakers decided on the next steps.
Earlier on Wednesday, May had written to European Council President Donald Tusk to formally request to delay Brexit until June 30. Until the law is changed, Britain is scheduled to leave the EU next Friday.
President Donald Trump warned on Wednesday that Washington would be prepared to leave tariffs on Chinese goods for a “substantial period ” to ensure Beijing’s compliance with any trade deal. Trade talks between the world’s two largest economies are expected to resume next week.

Source: CNBC

CNN Video | What 2020 candidate said that led to this moment...

Market Insider | Stocks making the biggest moves premarket: Biogen, Boeing, Walmart, Apple, Clorox & more

Peter Schacknow

Check out the companies making headlines before the bell:

Biogen — Biogen shares are tumbling after the drugmaker and Japanese partner Eisai discontinued late-stage trials of an Alzheimer’s treatment. That came after an independent data monitoring committee said the treatment was unlikely to meet its primary goal.
Conagra — The food producer beat estimates by 2 cents a share, with adjusted quarterly profit of 51 cents per share. Revenue was slightly below Street forecasts, however, and the company lowered its full-year organic sale outlook.
Darden Restaurants — The parent of Olive Garden, Longhorn Steakhouse, and other restaurant chains reported quarterly profit of $1.80 per share, 5 cents a share above estimates. Revenue and same-restaurant sales also beat forecasts, and Darden also increased its full-year outlook.
Lands’ End — The apparel retailer reported adjusted quarterly profit of 50 cents per share, above the 41 cents a share consensus estimate. Revenue also beat Wall Street forecasts. Comparable-store sales rose 9.1 percent, compared to a Refinitiv consensus estimate of a 2.0 percent increase.
Boeing — Boeing remains under pressure in the aftermath of the most recent 737 MAX crash, with NBC News confirming that the FBI has joined the investigation into the certification process for the jet. Boeing’s vice president for commercial plane marketing, Randy Tinseth, told a Bank of America/Merrill Lynch conference in London on Thursday that he expected the Federal Aviation Administration to certify updates to the jet’s flight control software, on board displays, flight manual, and training.
Levi Strauss — Levi Strauss will begin trading Thursday after the jeans maker’s initial public offering priced at $17 per share, above the expected range of $14 to $16. That gives the company a market value of $6.6 billion.
Micron Technology — Micron reported adjusted quarterly profit of $1.71 per share, 4 cents a share above estimates. The chipmaker’s revenue also topped Street forecasts. Micron’s revenue forecast for the current quarter was below estimates, however, and the company is also trimming its capital expenditures as well as idling some production lines amid what it calls a challenging market environment.
Walmart — Chief Technology Officer Jeremy King is leaving the retail giant, after leading a revamp of Walmart’s e-commerce platform. King had been with Walmart since 2011.
Williams-Sonoma — Williams-Sonoma earned an adjusted $2.10 per share for its latest quarter, beating the consensus estimate of $1.96 a share. The housewares retailer’s revenue also beat forecasts, although its same-store sales increase of 2.4 percent was slightly below analysts’ projections. The company announced a 5 cents a share dividend hike to 48 cents per share, and increased its stock buyback program by $500 million.
Guess — Guess missed estimates by 5 cents a share with adjusted quarterly profit of 70 cents per share, though the apparel maker’s revenue beat forecasts. Guess gave a weaker-than-expected forecast for the current quarter and full year.
Apple — The Wall Street Journal will be part of Apple’s new subscription news service, but The New York Times and Washington Post will not. That’s according to the Times, which said Apple has been asking publishers for about half the subscription revenue that the service generates.
Clorox — Clorox is suing rival household products maker Reckitt Benckiser, saying the British company is falsely claiming in ads that its Lysol products are superior to those made by Clorox.
Tootsie Roll Industries — The candy maker was ordered by a judge to temporarily stop using its packaging for its new Charms Mini Pops. Spangler Candy Co. had sued Tootsie Roll, saying that the Mini Pops packaging too closely resembles the packaging for its Dum Dums lollipops.
Herman Miller — Herman Miller reported adjusted quarterly profit of 64 cents per share, beating the consensus estimate of 60 cents a share. The office furniture maker’s revenue came in below forecasts. The company also gave a better-than-expected current-quarter and full-year earnings forecast.

Source: CNBC

Company News | Bear Market Rally’ Running Out of Steam as Insiders Sell Shares

By Matthew Johnston Updated Mar 21, 2019

It’s time to buy gold and dump stocks as the current stock market bubble is about to burst. That’s the view of Crescat Capital LLC, a Denver-based firm with a strong track record of outperforming the S&P 500 and whose Global Macro Fund returned 41% last year. The firm points to corporate insiders’ frenzied stock selling over the past two years as one of the major warning signs. These insiders heavily sold in 2017, in 2018, and now, “the third time should be the charm for the stubborn U.S. market,” predicts Crescat, according to Bloomberg.
The firm’s current hedge fund strategy is overwhelmingly long gold while shorting global stocks. “There is so much more ahead to profit from the short side of the market,” the firm wrote to clients. “The bear-market rally is running out of steam!”
Crescent Capital’s Bear Market Strategy
  • Buy gold, dump stocks
  • 75% of firm’s strategy
  • Sees recession looming
  • Warning signs are insider selling in 2017, 2018 and early 2019
Source: Bloomberg

What It Means for Investors

Calling the 13% rebound in the equities market just a bear-market rally is a clear indication that Crescat thinks economic fundamentals are pointing to the downside. Along with corporate insiders selling stocks, Crescat cites deteriorating economic data and the inversion of the yield curve as reasons to be concerned.
The current consensus is that the economy will enter into recession in either 2020 or 2021, Tavi Costa, global macro analyst at Crescat told Bloomberg. Among that consensus view are Nobel prize-winning economists Paul Krugmann and Robert Schiller, as well as financial commentator Gary Shilling and at least three-quarters of business economists. Tavi, however, thinks the downturn will happen even sooner. “We think [a recession] is a lot closer than that,” he said.
If and when a recession does occur, equities are likely to get hammered on falling earnings. Goldman Sachs, in a recent “Where to Invest Now” report, outlined the average peak-to-trough change in earnings per share (EPS) over the past seven recessions since 1970. The materials sector saw a 56% decline, while consumer discretionary, industrials, and energy all declined by 33%, 20%, and 19% respectively. Those declines were far worse than the S&P 500’s average EPS decline of 13%.

Looking Ahead

While the bulls are currently taking advantage of the market rebound, economic data that continues to deteriorate may affirm the bearish view and deflate the bubble. In that case, investors will want to be short. “Soon the buy-the-dip mentality and bull-market greed will turn to fear. Selling will beget more selling. That’s how bear markets work,” Crescat wrote to their clients.

Source: Investopedia

Company News | Investopedia | 9 High-Margin Stocks Seen Leading in Fed's New Dovish Era

By Shoshanna Delventhal Updated Mar 21, 2019

Analysts at Goldman Sachs expect the Fed's dovish policy eventually could to lead to a gradual increase in inflation, favoring high-margin stocks with “pricing power.” In its policy statement today, the Fed said it expected 2% inflation in main and core indexes over the next 2 years, in line with its targets. Per a recent report from the investment firm’s research group, a basket of stocks that has posted well above average performance in the past year is even better positioned to outperform in the upcoming period. Analysts add that this group of high-margin stocks is particularly well equipped to perform in 2019 as rising material costs, labor costs and slowing economic growth weighs on corporate profits this year and during an economic downturn.
"Growing margin pressures have driven the outperformance of stocks with high pricing power," wrote Goldman. "Our screen of stocks with high and stable gross margins has outperformed low pricing power stocks by 20 percentage points during the past year."
Goldman screened for stocks with high and stable margins, implying high pricing power. The basket includes Penumbra Inc. (PEN), Amgen Inc. (AMGN), Monolithic Power Systems Inc. (MPWR), National Instruments Corp. (NATI), Citrix Systems Inc. (CTXS), VMWare Inc. (VMW), Eli Lilly & Co. (LLY), Expedia Group Inc. (EXPE) and Xilinx Inc. (XLNX). This is part two of two Investopedia articles covering this particular Goldman research report dated March 15, 2019.
9 Stocks With Pricing Power
(5-Year Average Margin)
  • Penumbra Inc. (PEN); 66%
  • Amgen (AMGN); 81%
  • Monolithic Power Systems Inc. (MPWR); 54%
  • National Instruments Corp. (NATI); 74%
  • Citrix Systems Inc. (CTXS); 83%
  • VMWare Inc. (VMW); 85%
  • Eli Lilly & Co. (LLY); 75%
  • Expedia Group Inc. (EXPE); 74%
  • Xilinx Inc. (XLNX); 69%
Source: Goldman Sachs

Rising Input Costs Put Firms at Risk

Goldman Sachs points out that corporations' profit margins - recently at record levels - are already under increasing pricing pressure.
"Profit margins have experienced substantial negative revisions in recent months, driving a decline in equity EPS estimates," wrote Goldman. "Even with the Fed’s current policy stance, raising prices enough to offset rising input costs has been a challenge for U.S. corporates.”
As margin pressures increase, the equity market is now starting to reward firms with ample pricing power available to maintain their profits. Others that are less capable of passing through costs, either via higher prices or accepting lower profit margins, are beginning to fall out of favor among investors and will continue to do so, per Goldman.
“The outperformance dynamic of stocks with high pricing power has accelerated this year, possibly boosted by the rising probability of Fed pivot in favor of higher inflation and the risks such a shift would pose to corporate profit margins,” read the report.
This movement to favor high pricing power stocks has led Goldman’s list of high-margin picks to beat its list of stocks with low pricing power by 17 percentage points (+13% vs. -4%) since the firm published the list in May 2018. Analysts note that the recent trend follows the historical pattern during periods of profit margin pressure. Since at least 1985, stocks with higher pricing power have typically outperformed when the market perceived an imminent decline in corporate profit margins. On the other hand, during periods of expanding profit margins, such as through 2012 to 2017, investors removed the scarcity premium assigned to strong pricing power firms and stock with more cyclical profit margins outperformed, per the Goldman report.

Cloud Computing Company

Shares of software provider VMware have already significantly beaten the broader market in 2019, up 33.7% year-to-date (YTD) and 47.4% in 12 months, compared to the S&P 500’s 12.4% and 3.9% return over the same respective periods. VMware’s average 5-year margin stands at a whopping 85%, compared to the Russell 1000’s 35% average margin over the period and the basket’s median at 56%.
Last month, the tech firm posted Q4 results in which revenue grew 16% over last year to reach 2.59 billion. Earnings on a per share basis came in at $1.87 for the quarter, also surpassing estimates for EPS of $1.68.

Looking Ahead

While these companies could continue to rally as investors applaud firms more capable of combating higher costs, a severe downturn would likely weigh on many of these companies. Given the list is sector-neutral, any industry-specific headwinds could also drag down shares.

Source: Investopedia

Analysis | The Cybersecurity 202 | Michael Cohen investigators relied on controversial cell-tracking device

By Joseph Marks


The StingRay II, a cellular site simulator used for surveillance purposes manufactured by Harris Corporation, of Melbourne, Fla. (U.S. Patent and Trademark Office/AP)
FBI agents wanted to search Michael Cohen’s hotel room, but didn’t know which room he was in. So, they used a controversial device that captured his cellphone’s location.
The revelation — included in a trove of search warrant documents released Tuesday in the case of President Trump’s former personal lawyer — sheds some light on how police are using the suitcase-sized devices, which mimic cellphone towers and can scoop up data from any phone that bounces off them.
Federal law enforcement has long used the devices — known as “cell site simulators,” StingRays, or by various other brand names -- to pinpoint suspects’ locations. And, before a 2015 policy shift, they may have also used them to gather other information such as text messages and emails.
Foreign adversaries may also be using StingRays in Washington to spy on Americans.
The Cohen case presents a relatively uncontroversial use of the tools, but it also highlights the concerns many privacy advocates have about them — that they’re far more intrusive than other options and more prone to scoop up information about innocent bystanders.
“It’s like taking a baseball bat to a mosquito,” Faiza Patel, co-director of the Liberty and National Security Program at New York University Law School’s Brennan Center for Justice, told me.
The 2015 Justice Department policy came after privacy and civil liberties activists protested what they said were abuses of the devices.
The U.S. Marshals Service, for example, used the devices to track 6,000 cellphones, according to a USA Today report. In some cases, the service even took them on airplanes and scooped up information from tens of thousands of people on the ground below to locate a few criminal suspects, the Wall Street Journal reported.
Under the new ground rules, federal law enforcement officers are required to get a warrant before using the devices — with a few exceptions — and to use them only to access location information, not phone content such as emails and texts. Officers must also delete any unnecessary information they gather from bystanders within a matter of days. 
But that hasn’t quelled advocates’ concerns, Patel said.
One major problem is that federal law enforcement is allowed to skip getting a warrant in certain “exigent circumstances.” But the policy doesn’t outline what those circumstances might be — and there’s very little public information  showing police aren’t abusing the loophole, she said.
In the Cohen case, the FBI did get a warrant to use the simulators — they used a particular brand called TriggerFish, But most of their justification for using it is redacted in the documents produced Tuesday.
That doesn’t give the public much information about whether the simulators were really necessary or if the FBI could have used a less invasive technique to learn which hotel room Cohen was in.
Different versions of the simulators have different ranges, but it’s likely the device the FBI used captured information from most or all of the cellphones in the Manhattan hotel where Cohen and his family were staying while their apartment was being renovated, Patel told me.
An FBI spokeswoman declined to comment on the warrant or the broader Cohen case.
When warrant requests for StingRays do become public, they frequently suggest police and judges aren’t taking seriously enough how invasive the technology can be and how it can affect bystanders’ privacy, Stephanie Lacambra, a criminal defense staff attorney with the Electronic Frontier Foundation, told me.
Another concern is that the federal policy doesn’t apply to state and local law enforcement agencies, many of which are still using StingRays with few restrictions and little or no oversight, according to studies by the American Civil Liberties Union.
That can cause major problems, especially in places where police and judges granting their warrants don’t have a good sense of all the privacy issues the devices create, Lacambra said.
“Some jurisdictional offices aren’t as familiar with the technology and will sometimes hand these warrants out without really understanding what they’re doing,” she said. “Digital tools are different, and they need to be treated differently.”
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European Commission President Jean-Claude Juncker, left, greets European Council President Donald Tusk. (Virginia Mayo/AP)
PINGED: European Union leaders plan to sound an alarm this week about possible Russian efforts to interfere in E.U. elections in May, Reuters’s Alissa de Carbonnel, Alastair Macdonald and Jean-Baptiste Vey reported.
Officials plan to “urge governments to share information on threats via a new warning system” and to “call for online platforms, such as Facebook and Google, to do more to remove misleading or illegal content,” according to a draft statement obtained by Reuters that’s scheduled to be released at an E.U. Leaders Summit this week in Brussels.
“Many of our nations, including France, have already been targeted by campaigns, attacks or manipulation,” an Elysee official told Reuters. “We have to increase our efforts at the European level.”

Rep. Frank Pallone (D-N.J.). (Julio Cortez/AP)
PATCHED: Democratic leaders on the House Energy and Commerce Committee want to know how much more the Federal Trade Commission could do to protect data security and consumer privacy if it got a major funding boost.
In a letter Wednesday, Committee Chairman Frank Pallone Jr. (D-N.J.) and Jan Schakowsky (D-Ill), chair of the committee’s consumer protection panel, float three possibilities — if the commission got a $50 million, $75 million or $100 million funding boost — and ask how it would ramp up its efforts under each scenario.
The letter also asks how the commission would go about hiring a staff of technologists if Congress directed it to and what the commission would do if it had the power to create new privacy and security regulations. Right now, the FTC has the power only to enforce rules and to hold companies accountable for breaking them.

Israeli Prime Minister Benjamin Netanyahu. (Sebastian Scheiner/AP)
PWNED: Israeli Prime Minister Benjamin Netanyahu, who’s in a tight race for reelection, blamed Iran for hacking his challenger Benny Gantz’s cellphone — without citing evidence — and warned that could leave Gantz open to blackmail, Reuters’s Dan Williams reported.
“[Netanyahu’s] comments, in a brief speech broadcast online from his official residence, brought a new level of vitriol to the election race,” according to the report.
Gantz, who leads Israel’s centrist Blue and White party, has confirmed Israeli intelligence told him his phone was hacked, but neither Gantz nor the intelligence agency has revealed who did the hacking. Iran has denied culpability, Reuters reported.
“What do the Iranians know about you that you are hiding from us? And … how would you, as prime minister, face up to Iran, our number one enemy, when Iran has sensitive information about you?” Netanyahu asked, according to Reuters.
Cybersecurity news from the public sector:

A recently filed criminal indictment offers a surprising snapshot of the Islamic State’s online “e-jihad” operation.
Kyle Swenson

The new Science and Technology Assessment and Analytics group aims to prep lawmakers for big decisions on artificial intelligence, privacy and 5G.
Cybersecurity news from the private sector:

There's a lot of concern from the Trump administration and policymakers about America's ability to compete with China on building the next generation of wireless networks, but AT&T chief Randall Stephenson said Wednesday that China isn't beating the United States on 5G — yet.

Older Android devices—of which there are over 100 million still in use—will remain exposed.
Cybersecurity news from abroad:

MEXICO CITY (AP) — The widow of a renowned Mexican journalist murdered two years ago was the target of an attempted spyware attack 10 days after his death, an internet watchdog group reported...
Associated Press

Markets | Investors Keep High-Yielding Puerto Rico Bonds

The Wall Street Journal.
Markets Bull logo.
Greetings. I'm Jessica Menton, walking you through today's premarket action. 
Stock futures are mildly lower as investors weighed the Fed's signal of no more interest-rate increases this year and a lower forecast for U.S. growth. Meanwhile, Dow component Nike is set to post earnings after the bell.
Plus, some investors are holding on to Puerto Rico bonds. Markets reporter Gunjan Banerji and bankruptcy reporter Andrew Scurria weigh in on what could help further expand the buyer base.

Markets in a Minute

Markets Data

Overnight Developments

  • Global stocks were mixed as markets continued to parse the Fed's latest rate decision and waited for more news on U.S.-China trade negotiations.
  • Read our full market wrap here

Investors Are Still Keeping Puerto Rico Bonds

By Gunjan Banerji and Andrew Scurria
Investors are hanging on to bonds issued as part of Puerto Rico’s massive restructuring effort, a sign of confidence in the fiscally troubled island’s prospects.
Prices have edged higher for $12 billion in new debt backed by sales taxes that Puerto Rico issued several weeks ago. The bonds, known by their Spanish acronym as Cofinas, were issued to investors including hedge funds as part of the U.S. territory’s financial restructuring, marking the first settlement in ongoing negotiations to fix its broken finances.
Although the bonds’ prices have pared some of their earlier gains, one slice of newly-issued sales tax bonds recently traded with an average price of about $94.62, up from $93.00 last month, according to Refinitiv's Municipal Market Data.
The climb defied expectations that investors would immediately dump the debt, dragging down prices. Some analysts attributed the gain to increased faith that the financial restructuring would help Puerto Rico rebound from years of economic stagnation, helping convince mutual funds, ordinary investors and other traditional municipal bondholders that fled the island’s debt years ago to buy the bonds from hedge funds.
In one boost to Puerto Rico’s new bonds, they recently re-entered the Bloomberg Barclays Municipal Bond High Yield Index, where they now make up 12% of the gauge, according to a Bloomberg spokeswoman. The reappearance could propel further gains, analysts said, since some fund managers will need to buy the bonds to continue tracking the benchmark.
Demand for municipal debt has been robust. The market got off to the hottest start in more than a decade in 2019. In recent months, investors have welcomed higher-yielding borrowers like the formerly-bankrupt Detroit as well as riskier sectors in the muni market with higher default rates.
And higher-yielding municipal debt has climbed since the beginning of the year after a strong 2018. It has returned 2.2%, counting price changes and interest changes, outpacing other munis and Treasurys, Bloomberg Barclays data via FactSet show.
Cofinas maturing in more than 30 years recently traded with a 5.3% yield, according to Refinitiv’s Municipal Market Data, more than two percentage points above longer-dated debt rated triple-A, and higher than the 4.85% yield recently offered on the Bloomberg Barclays Municipal Bond High Yield Index.
Resolving issues around the sales-tax bonds was key to Puerto Rico’s restructuring because it needed access to some of the money pledged to them to repay other public debts. The Cofina settlement marked a cautionary example for some municipal investors, showing how even complex security structures may not be as safe as many believed.

Market Facts

  • The yield on the benchmark 10-year U.S. Treasury note settled at 2.537% Wednesday, down from 2.614% Tuesday, after the Federal Reserve signaled it was unlikely to raise interest rates at all in 2019. That marked its lowest close since January 2018.
  • The KBW Nasdaq Bank Index of large commercial lenders and the SPDR S&P Regional Banking exchange-traded fund on Wednesday dropped 3% and 3.4%, respectively, each posting their biggest one-day percentage loss since Dec. 4.
  • On this day in 1924, the Massachusetts Investors Trust, the first open-end mutual fund—a type of fund that doesn't have restrictions on the amount of shares the fund can issue—was founded in Boston by Edward G. Leffler, a former aluminum cookware salesman, and investment bankers Hatherly Foster, Jr. and Charles H. Learoyd. The minimum initial purchase of five shares cost $262.50, or $2.50 less than the price of a new Ford Model T runabout.

Key Events

The Bank of England releases a policy statement at 8:00 a.m. ET.
U.S. jobless claims are expected to fall to 225,000 from 229,000. The figures are scheduled for 8:30 a.m. 
The Philadelphia Fed's manufacturing survey for March is expected to rise to 5.0 from -4.1 a month earlier. It is also slated for 8:30 a.m.
The Conference Board's leading economic index for February, due at 10 a.m., is expected to rise 0.1%. 
Natural-gas inventories will be out at 10:30 a.m. Stockpiles are expected to have fallen 48 billion cubic feet last week, more than average for this time of year, according to the average target of 10 analysts and traders surveyed by the Journal.
President Trump joins CEOs from America's biggest companies at the Business Roundtable's quarterly meeting at 11 a.m. 

Must Reads

While high-dollar loans have been a bright spot for banks, recent trends have hit the market disproportionately. PHOTO: THE WASHINGTON POST/GETTY IMAGES
Jumbo mortgages are slowing down. High-end home buyers are turning cautious, a blow to banks that refocused their mortgage businesses around wealthy borrowers in the years after the financial crisis. Originations for jumbo mortgages—loans too big to be sold to Fannie Mae and Freddie Mac—dropped 12% last year by dollar volume.
Levi Strauss will go public today for the second time. The stock will begin trading on the New York Stock Exchange under the ticker LEVI. The denim company is selling shares at $17 apiece, it said Wednesday, for a valuation of roughly $6.6 billion.
The Fed left interest rates unchanged. Officials indicated Wednesday they are unlikely to raise borrowing costs this year and may be nearly finished with the series of increases they began more than three years ago now that U.S. economic growth is slowing.
Trump signaled tariffs on Chinese goods will stay. With the U.S. and China preparing for a fresh round of face-to-face negotiations, the president said the U.S. expected to keep tariffs on Chinese goods in place for a “substantial period of time,” even after a deal.
The U.K. requested a three-month Brexit extension. Ahead of a summit with European Union members this week, the U.K. has asked to delay its departure from the bloc until June 30. But EU leaders are only likely to grant such a short extension if British Prime Minister Theresa May can win backing next week from the U.K. Parliament for her Brexit deal.
U.S. oil prices hit a four-month high Wednesday. Crude was boosted by government data showing an unexpected decline in U.S. supplies. The oil market overall is being supported by production cuts from OPEC and its allies.

What We've Heard on the Street

“The economy will probably climb out of the funk it fell into in the first quarter, and [the] Federal Reserve knows it. But there is a difference between probably and certainly.”
—Heard on the Street columnist Justin Lahart

Stocks to Watch

Micron Technology: The chip maker delivered stronger-than-expected quarterly earnings.
Guess: The retailer's fourth-quarter profit missed analysts' estimates. 
Williams-SonomaThe home-goods retailer raised its dividend by nearly 12% to 48 cents a share and increased its share-buyback program.