- South Korea proposed resuming military and humanitarian exchanges with North Korea.
- The European Union may sanction Poland over its controversial judicial overhaul.
- Turkish Prime Minister Yildirim announced a cabinet shuffle after meeting with President Erdogan.
- Turkey’s worsening relations with Germany will come with economic costs.
- South African Reserve Bank surprised markets by starting the easing cycle with a 25 bp cut to 7.0%.
- Brazil will raise fuel taxes and freeze spending in an effort to meet its fiscal targets
- S&P raised the outlook on Mexico’s BBB+ rating from negative to stable.
Dennis Rodman will be disappointed to learn that the US is set to ban all citizens from traveling to North Korea, according to two agencies that operate tours there. Koryo Tours and Young Pioneer Tours said the ban would be announced on 27 July to come into effect 30 days later, the BBC reported. “After the 30-day grace period any US national that travels to North Korea will have their passport invalidated by their government.” The ban comes one month after US student Otto Warmbier died following his imprisonment by the Kim regime.
China-based Young Pioneer Tours, which had taken Warmbier to North Korea, and Koryo Tours said the ban will come into force on July 27 – the anniversary of the end of the Korean War – with a 30-day grace period. Koryo Tours added that the Swedish embassy in Pyongyang, which handles consular affairs for the United States in the North, informed it of the ban, but did not say how long it would last. The U.S. embassy in the South Korean capital, Seoul, did not immediately respond to a request for comment.
Rowan Beard said that the 30-day grace period would “give leeway for any [Americans] currently in the country as tourists or on humanitarian work”. Simon Cockerill, of Koryo Tours, said: “It remains to be seen what the exact text is, but the indication is it’s just a straight up ban on Americans going.” Mr Cockerill told the BBC the agency would still conduct tours and take Americans until the ban came into effect.
S&P small loss. Dow down a bit
The Unemployment Rate in Greece is down to 21.7% in April from a record 27.9% in July of 2013 and a record low of 7.3% in May of 2008.
Despite the falling rate, the percentage of those unemployed seeking jobs abroad has risen from 11% in 2015 to 33% this year.
The message seems to be “get me the hell out of here”.
The Greek Reporter notes Brain Drain Gathers Pace as One in Three Greeks Looks for a Job Abroad.
According to the annual survey by the firm Adecco titled “Employability in Greece,” the brain drain phenomenon has been increasing over the last three years.
In 2015 only about 11% of unemployed respondents said that they were actively looking for a job abroad. This figure increased to 28% in 2016 and reached 33% this year.
The responses show that the unemployed have different reasons to seek work abroad. Whereas in 2005, the main reason was the prospect of a better wage, in 2016 and 2017 the main reason given were better career opportunities.
The study conducted for the third year running, in collaboration with polling company LMG, was based on a sample of 903 people from the age of 18 to 67.
According to other findings, 37% of respondents say that they have been out of the labor market for at least 12 months.
In a desperate bid to survive its economic meltdown, Venezuela is lobbying other OPEC members to agree to steeper oil production cuts, a move that would likely lead to higher oil prices.
Venezuelan officials have reached out to their counterparts in Iran, Russia and Saudi Arabia to press them on more collective action, according to Argus Media. If there was enough interest, the next step would be an “extraordinary meeting,” which would weigh the option of cutting deeper.
But the behind-the-scenes effort from Venezuelan officials is notable, if only because the South American OPEC members was one of the earliest and most aggressive supporters of the original deal to reduce output. In 2016, for months the more powerful members of the cartel rebuffed Venezuelan pleas, but in the end they agreed to reductions in November after oil prices continued to wallow below $50 per barrel.
The deal pushed prices above $50 for a period of time, but after six months of restraint, the market is back in sub-$50 territory.
However, the urgency for higher prices is more acute now for Venezuela. Protests have spread nationwide in the South American nation as the economy contracts at a torrid rate. Violence is becoming more widespread, and the nation is suffering from political gridlock and economic and social disaster.
Over the weekend, the opposition organized an informal referendum, which attracted more than 7 million votes, to oppose anti-democratic moves by the government. The vote demonstrated widespread anger and opposition towards the government’s upcoming effort to consolidate power in a July 30 vote to rewrite the constitution, a move that would weaken competing institutions like the National Assembly. The referendum opposing the July 30 vote was not recognized by the government, but it was a show of force for the opposition.
There is no way out of the downward economic spiral for Venezuela in the short run without significantly higher oil prices.
The earnings reporting season continues with US bank Morgan Stanley 19 July
- revenue $9.5bln vs $9.13bln exp
- EPS $0.87 vs 0.76 exp vs 0.75 prev
- FICC sales and trading revenue $1.24bln vs 1.20 exp
- investment banking revenue rose 25% to $1.53bln
MS are the 6th largest US bank by assets and performing well it would appear.
US Bancorp also reporting:
- adj EPS $0.85 vs 0.84 exp
- revenue $5.49bln vs 5.47bln prev
China’s holdings of US Treasuries climbed to the highest level since the country ceded its status as America’s largest creditor nation to Japan last year.
China’s ownership of US government bills, notes and bonds rose by $10bn from a month prior to $1.1tn in May, according to new figures released by the Treasury Department in Washington on Tuesday. The figure nonetheless remains more than $140bn below year ago levels.
The rise helped close the gap with Japan as the largest US creditor to $9.1bn, its lowest since September 2016. Japan’s holdings of Treasuries increased by $4.4bn from a month earlier to $1.11tn.
The country’s reserves have been closely scrutinised after the renminbi weakened last year. China has worked to curtail capital outflows and along with a drop in the US dollar, the renminbi touched an eight-month high on Monday.
WTI has roller-coastered higher since last week’s ‘bullish’ API report and rose today for the 6th of the last 7 days (on Saudi cut hype). While many eyes are on record high shale production, the recent trend in inventory draws remains key but API upset that dream briefly as Crude saw an unexpected build (+1.628mm vs -3.5mm exp). Gasoline and Distillates saw major draws (much bigger than expected) and Cushing saw its first build in 8 weeks.
- Crude +1.628mm (-3.5mm exp)
- Cushing +608k
- Gasoline -5.448mm (-1.3mm exp)
- Distillates -2.888mm
US investment bank Goldman Sachs out with Q2 earnings report 18 July
- revenue $7.89bln vs 7.97bln exp
- EPS adjusted $3.95 vs $3.51 exp
Revenue not matching expectations but EPS better
Q2 earnings also out for:
Bank of America:
- revenue $23.07bln vs 22.7bln exp
- EPS adj $0.46 vs $0.4 exp
- revenue $12.7bln vs 12.4bln exp
- EPA adj $3.23 vs $3.11 exp
Data better overall.
Meanwhile GBPUSD survives a test of 1.3000 as EURGBP fails to hold above the 0.8880 area I’ve been highlighting