Bloomberg
“Draghi Ends ECB Bond-Buying Era Saying Economy Can Beat Risks.”
Mario Draghi said the euro-area economy is strong enough to overcome increased risk, justifying the European Central Bank’s decision to stop buying bonds and end an extraordinary chapter in the decade-long struggle with financial crises and recession.
Policy makers agreed to phase out the stimulus tool with 15 billion euros ($17.7 billion) of purchases in each of the final three months of the year, the ECB president said after his Governing Council met on Thursday in Latvia. The central bank also pledged to keep interest rates unchanged at current record lows at least through the summer of 2019.
In doing so, officials bet that the euro-area economy is robust enough to ride out an apparent slowdown amid risks including U.S. trade tariffs and nervousness that Italy’s populist government will spark another financial crisis. Almost half of economists in a Bloomberg survey had predicted the announcement would be put off until July.
The announcement came only hours after the Federal Reserve raised U.S. interest rates for the second time this year, highlighting how a decade of easy money in Europe and America is gradually coming to an end. Still, the People’s Bank of China opted not to follow the Fed in raising borrowing costs, and the Bank of Japan is expected to maintain its stimulus when it meets on Friday.
The euro fell on the outlook for interest rates, trading 1 percent lower at $1.1675 at 3:04 p.m. Frankfurt time. Economists before the decision had predicted borrowing costs would rise around the middle of next year.
Reuters
“U.S. energy firms chasing oil price rally stumble on old baggage.”
With oil price recovery taking hold, several U.S. oil and gas companies entered 2018 with a compelling plan – sell undeveloped or less essential fields and invest the money to boost returns from their sweetest, most productive spots.
There is a catch, though. The strategy assumes that with crude now up more than 150 percent from its February 2016 bottom enough firms are keen to crank up production, even if it means buying fields with higher extraction costs and lower margins.
So far, sale attempts suggest those buyers may be hard to come by. After a bruising downturn, shareholders are looking to get a cut of improved profits and asset sale proceeds rather than underwrite acquisitions, those involved in these deals say.
“Oil and gas companies are no longer rewarded for simply ‘grabbing land’ and public investors have become more discerning regarding acquisitions,” notes Jon Marinelli, head of U.S. energy investment and corporate banking at BMO Capital Markets.
Shares of Devon Energy Corp (DVN.N), QEP Resources Inc (QEP.N) and Southwestern Energy Co (SWN.N) and others have rallied after they floated plans to sell non-core acreage, reflecting hopes that some of the proceeds will return to investors.
But since shareholders across the industry in general favor shedding assets over acquisitions, the sentiment makes striking new deals tricky.
An informal poll of five investment bankers by Reuters put the share of sales that failed to close in the fourth quarter of 2017 and the first quarter of this year at between 50 percent and 80 percent, with Marinelli putting the figure at around two-thirds.
BBC News
“Argentina steps closer to legalising abortion.”
Catholic Argentina’s lower house has backed a bill legalising abortion in the first 14 weeks of pregnancy. After a divisive debate lasting more than 22 hours, 129 members of the Chamber of Deputies voted in favour and 125 against while one abstained. The bill will now have to go to the Senate.
President Mauricio Macri is strongly opposed to the bill but has said that he would not veto it if it was passed by both houses. Abortion is currently illegal in Argentina, except in cases of rape or when the life or health of the woman is at risk. Women seeking abortions also have to apply to a judge for permission, which critics say can unnecessarily delay the procedure.
Up until three hours before the vote, those against the bill seemed to be in the majority until a lawmaker in the province of La Pampa, Sergio Ziliotto, announced on Twitter that he and two colleagues had changed their minds and would vote «yes». The announcement invigorated pro-choice lawmakers at a time when despondency was beginning to set in after the night-long debate.
Supporters of the bill, many of whom had spent the entire night demonstrating outside of the Congress building in Buenos Aires, cheered and hugged when the result of the vote was announced. There was high drama even as the result came in. The electronic board inside the chamber initially showed 131 in favour and 123 against but two lawmakers immediately shouted that their vote had not been recorded accurately. The speaker then proceeded to ask a number of deputies to confirm how they had voted and after some tense minutes confirmed that the bill had been passed.
Reuters
“U.S. consumer spending accelerating; labor market robust.”
U.S. retail sales increased more than expected in May as consumers bought motor vehicles and a range of other goods even as they paid more for gasoline, the latest indication of an acceleration in economic growth in the second quarter.
Other data on Thursday showed a further tightening in labor market conditions, with first-time applications for unemployment benefits unexpectedly falling last week and the number of Americans on jobless rolls declining to a near 44-1/2-year low.
The reports came a day after the Federal Reserve raised interest rates for a second time this year and offered an upbeat assessment of the economy. The U.S. central bank described economic activity as “rising at a solid rate” and the labor market as continuing to “strengthen.” The Fed forecast two more rate hikes in the second half of 2018.
The Commerce Department said retail sales jumped 0.8 percent last month, the biggest advance since November 2017. Data for April was revised up to show sales rising 0.4 percent instead of the previously reported 0.2 percent gain.
Economists polled by Reuters had forecast retail sales rising 0.4 percent in May. Retail sales in May increased 5.9 percent from a year ago.
Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.5 percent last month after an upwardly revised 0.6 percent increase in April. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have risen 0.5 percent in April.
The strong retail sales report added to data ranging from the labor market to manufacturing and trade in suggesting the economy was regaining momentum in the second quarter after growth slowed at the start of the year amid a sharp step-down in consumer spending.