Week of June 21 2014- Weekly Recap & The Week Ahead
Monday, June 23rd, 2014“Success if getting what you want. Happiness is wanting what you get.” — Dale Carnegie
1. China Surpasses U.S. as Largest Corporate Debt Issuer — NYTimes, China has overtaken the United States as the world’s biggest issuer of corporate debt, despite worsening cash flow at Chinese companies since the financial crisis, according to a latest report Standard & Poor’s.
Standard & Poor’s, the ratings agency, found that China’s nonfinancial companies had total outstanding bank loans and bonds worth $14.2 trillion at the end of last year, compared with $13.1 trillion in the United States. S.&P. estimated that one-quarter to one-third of China’s corporate debt is sourced from the country’s shadow banking sector, a murky world of nonbank lending that caters to borrowers who would otherwise struggle to secure financing.
2. Argentina May Faces Fresh Default — FT, FT reported that Argentinian sovereign default have been raised after President Cristina Fernandez said the country cannot pay the $1.5B it owes to a group mostly consisting of hedge funds by June 30. The statement follows a U.S. Supreme Court ruling that orders the country to repay its holdout investors before restructuring its debt. Also, Standard & Poor’s Ratings Services lowered its long-term foreign currency rating on Argentina to “CCC-” from “CCC+”, citing a higher risk of default on the country’s foreign currency debt.
3. The International Monetary Fund (IMF) cuts US growth from 2.8% to 2.0% — the IMF has reduced its 2014 U.S economic growth forecast to 2% from the 2.8% it predicted in April, due to a weak first quarter, although the fund has maintained its 3% growth outlook for 2015. Markets are predicting the Fed to start raising rates in the middle of next year, although the IMF related that it is not certain about the expected increase. Rates have been near zero since late 2008.
4. PayPal Expanding Into 10 New Countries in Sub-Saharan Africa, Eastern Europe and Latin America — Ebay expansion brings the total amount of territories PayPal serves to 203. Customers that have web access and a bank card authorized for Internet transactions in the new regions will now be able to sign up for accounts. PayPal (EBAY) reported revenue of $1.8B for the first quarter of 2014, and 148M active accounts worldwide.
5. June 2014 FOMC Meeting — Fed officials stated that that starting next year interest rates would rise from zero faster than previously expected. The Fed cut purchases by another $10 billion, to $35 billion, keeping it on pace to stop the program late this year.
6. NATO Says Russian Troops Massing Again Near Ukraine Border — WSJ, NATO has announced that Russia has begun increasing troops again on its border with Ukraine. Threats of new Western sanctions have been voiced, but while the U.S. can institute them at any time, the EU will have to wait until a meeting of EU leaders in Brussels on June 26-27.
The week ahead — Economic data from Econoday.com:
