– Oil Warning: The Crash Could Be Worst in More Than 45 Years. Morgan Stanley has been pretty pessimistic about oil prices in 2015, drawing comparisons to the some of the worst oil slumps of the past three decades. The current downturn could even rival the iconic price crash of 1986, analysts had warned—but definitely no worse.
Until recently, confidence in a strong recovery for oil prices—and oil companies—had been pretty high (…) that confidence was based on four premises, they said, and only three have proven true.
1. Demand will rise: Check.
2. Spending on new oil will fall: Check.
3. Stock prices remain low: Check.
4. Oil supply will drop: Uh-oh. In theory: With strong demand for oil and less money for drilling and exploration, the global oil glut should diminish. Let the recovery commence.
In practice: The opposite has happened. While U.S. production has leveled off since June, OPEC has taken up the role of market spoiler.
– Big day for European earnings. Credit Suisse, Roche and Unilever posted better-than-expected quarterly results today, triggering a rally in their shares. A weaker euro and a turnaround in the economy could send earnings growth in the region up to 20 percent higher in the second quarter, said HSBC in a note.
– New Zealand cuts rates again. New Zealand’s central bank cut interest rates for the second time in six weeks and said further easing will likely be needed to stoke inflation as growth slows. But the New Zealand dollar surged — thanks to the central bank’s call to drop its assessment that the currency is overvalued. The New Zealand dollar had tumbled 13 percent against the U.S. dollar in the past three months, the worst performance among the 16 major currencies.
– Greece clears second set of reforms. Parliament in Athens voted 230 to 63 for a bill that will simplify court decisions and transpose European rules on Greece’s failing banks. Prime Minister Alexis Tsipras is trying to hold together his ad hoc majority as he advances toward the 86 billion euro bailout program the country needs to stave off financial collapse. Greece is aiming to wrap up talks with creditors before August 20 so that it can access funds to cover a payment to the European Central Bank.
The New York Times
– Banamex USA Fined for Lack of Safeguards Against Money Laundering. The unit, Banamex USA, a small California bank that specializes in wiring money between Mexico and the United States, must pay $140 million to the Federal Deposit Insurance Corporation, of which $40 million will go to the California Department of Business Oversight, the state and federal regulators announced on Wednesday.
In a statement, the F.D.I.C. said that Banamex USA, which Citigroup purchased in 2001, failed to retain staff that was “qualified and knowledgeable” about the Bank Secrecy Act. Banamex USA also lacked adequate controls that could detect illicit financial transactions and suspicious activity, the F.D.I.C. said (…) The bank plans to close its branches in Houston and San Antonio in October. The Los Angeles branch will remain open through the closing process.
– Nikkei to Buy Financial Times in $1.3 Billion Deal. Nikkei, the Japanese media group, is paying about $1.3 billion to acquire the FT Group, which includes The Financial Times, the companies said on Thursday, as the pink broadsheet’s British parent company, Pearson, exits the newspaper business to focus on its core educational publishing.
The Financial Times has combined paid print and digital circulation of 690,000, according to the company. The FT Group also holds a 50 percent stake in The Economist magazine. Other group properties include FTChinese, Medley Global Advisors, Financial Publishing, FT Labs, New York Institute of Finance and ExecSense.
Pearson describes itself as “the world’s largest education company.” It employs 40,000 people in more than 70 countries, and it had sales last year of 4.9 billion pounds, or about $7.64 billion.
– Wariness as Auto Industry Eyes Mexico for Growth. The rapid growth of the Mexican auto industry has been a growing source of concern for the union, particularly because many of the products built south of the border are destined to be sold in American showrooms.
Auto plants in Mexico are on track to export about 70 percent of their production this year to the United States, according to the Mexican Automobile Industry Association trade group. And automakers are stepping up their investments further to take better advantage of cheaper labor costs and Mexico’s attractive trade environment, made possible by pacts like the North American Free Trade Agreement.
Companies like Toyota and Volkswagen are constructing new plants in Mexico, and Ford and G.M. have announced big new investments in existing facilities there. At the same time, the number of unionized manufacturing plants in the United States has remained largely static.