Pertamina finds new oil, gas reserves in Q1 exploration

Indonesia

Indonesia State-owned oil and gas holding company Pertamina announced that it had found new oil and gas reserves in intensive explorations conducted in the first quarter of 2019.

According to Pertamina upstream director Dharmawan H. Samsu, one new oil reserve was found in Benewangi Well #J-01 in Riau province, with a projection rate of 540 barrels of oil per day (bopd).

The new oil reserve was found in a joint operation by PT Pertamina Hulu Energy, a Pertamina subsidiary, and PT Bumi Siak Pusako-Pertamina Hulu, Darmawan said in a statement received on Wednesday.

“Pertamina Hulu Energy has identified a number of basement plays in the area surrounding Benewangi, with projected resources of 500 million barrels of oil [MMBO]” he said.

Meanwhile, in February, PT Pertamina EP, another Pertamina subsidiary, also found oil and gas reserves in Randuwangi well in Subang, West Java, with projected prospective resources of 15 million barrels of oil equivalent (MMBOE).

“In the [first] quarter, Pertamina EP also found gas and condensate reserves at Pertamina EP Asset 4 areas in Toili subdistrict, Banggai regency, Central Sulawesi,” Darmawan added.

This year, Pertamina is strengthening its upstream business by drilling 346 wells, 27 of which are exploration wells, double from last year, he said.

He added that Pertamina had allocated US$200 million for a seismic program to assure that the found reserves could be turned into production. (bbn)

via Pertamina finds new oil, gas reserves in Q1 exploration – Business – The Jakarta Post

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ASEAN local currency deals – Editorial – The Jakarta Post

Indonesia and Philippines

The Philippines agreed last week to join the local currency settlement (LCS) framework — which Indonesia, Thailand and Malaysia have operated over the past two years — in a bid to expand intra-ASEAN trade and investment as well as to strengthen the region’s economic integration.

The agreement between Bangko Sentral ng Pilipinas (BSP), Bank Indonesia (BI), Bank Negara Malaysia (BNM), and the Bank of Thailand (BOT) was signed on the sidelines of the ASEAN finance ministers and central bank governors meetings in Thailand last Friday. These initiatives are part of continuous efforts to promote the wider use of local currencies to facilitate and boost trade as well as investment in these countries.

But BSP has yet to appoint banks from the Philippines to join the six others in Indonesia, including three state-owned banks, as well as five each in Malaysia and Thailand to facilitate the easier implementation of trade transactions through the LCS framework.

Deep Markets

It is worth pointing out that promoting the use of local currencies will only work if the transaction costs involved in changing one local currency to another are low enough to be worthwhile. This involves setting up direct exchange markets between various major currencies, as well as ensuring that there is sufficient liquidity and turnover.

Most importantly is that an efficient currency exchange market among the four currencies has to be developed to encourage businesses to use the LCS framework.

The 10 ASEAN countries have been integrating more in terms of trade and as the share of inter regional trade has steadily increased the region is, however, still heavily reliant on the US dollar for trade and investment transactions. It is the dominant currency not only for invoicing and settlements in inter regional transactions, but also as the reference currency for exchange rate policies and as a reserve currency. This is because ASEAN does not have a common currency such as the euro.

Which is fantastic -Ed

But the dominance of the dollar is not because people are forced to denominate their transactions in the greenback, but because it has lower risks and low transaction costs. Yet more noteworthy are the much lower exchange rate spreads for bank transfers between the dollar and most local currencies in the region.

But recent financial crises, however, have highlighted the risks of such an over dependence on the US dollar, because a sudden shortage in its liquidity can affect ASEAN economies irrespective of their creditworthiness. In addition, ASEAN currencies’ asymmetric response to dollar fluctuations, which has been observed during crisis periods in the past, can have a negative impact on production networks looking to expand in the region.

Therefore, promoting the use of local currencies can be a first step in enhancing the role of ASEAN currencies and in reducing the risks of over reliance on the dollar.

The availability and reliability of data related to invoice/settlement currencies in the region also need to be improved. Such data disclosures make for good information, particularly for small and medium enterprises, which are starting to participate in cross-border transactions.

via ASEAN local currency deals – Editorial – The Jakarta Post

Asia doesn’t need a common currency like the Euro as it could lead to the same problems like in the European Union with debtor nations being held hostage like Greece was during its financial turmoil, just, a reliable way to benchmark rates of exchange with each others currency based on real world economics and capital flows outside of USD settlement .

However, I cant help but think the IMF and the World Bank will come out with an Instrument based on a basket of ASEAN currency’s under the BASIL 3. This hypothetical instrument could then be used not only as reserve for central banks but also facilitate the deepening of the existing markets through external participation  

I did have a look at a research paper which tackles BASIL 3 and ASEAN capital requirements from moodys but its from way back in 2014. It is interesting how they view the different countries and worth a read if your that way inclined. 

https://www.moodys.com/research/Moodys-Basel-III-capital-requirements-in-ASEAN-and-India-are–PR_296108

 

Boeing sued by shareholders over 737 MAX crashes, disclosure | Reuters

Reuters

Boeing Co’s legal troubles grew on Tuesday as a new lawsuit accused the company of defrauding shareholders by concealing safety deficiencies in its 737 MAX planes before two fatal crashes led to their worldwide grounding.

The proposed class action filed in Chicago federal court seeks damages for alleged securities fraud violations, after Boeing’s market value tumbled by $34 billion within two weeks of the March 10 crash of an Ethiopian Airlines 737 MAX.

Chief Executive Dennis Muilenburg and Chief Financial Officer Gregory Smith were also named as defendants.

Boeing spokesman Charles Bickers had no immediate comment.

According to the complaint, Boeing “effectively put profitability and growth ahead of airplane safety and honesty” by rushing the 737 MAX to market to compete with Airbus SE , while leaving out “extra” or “optional” features designed to prevent the Ethiopian Airlines and Lion Air crashes.

It also said Boeing’s statements about its growth prospects and the 737 MAX were undermined by its alleged conflict of interest from retaining broad authority from federal regulators to assess the plane’s safety.

Richard Seeks, the lead plaintiff, said Boeing’s compromises began to emerge after the Ethiopian Airlines crash killed all 157 onboard, five months after the Lion Air crash killed 189.

Seeks said he bought 300 Boeing shares in early March, and sold them at a loss within the last two weeks. The lawsuit seeks damages for Boeing stock investors from Jan. 8 to March 21.

Shareholders often file lawsuits accusing companies of securities fraud for concealing material negative information that causes the stock price to decline upon becoming public.

Chicago-based Boeing faces many other lawsuits over the crashes, including by victims’ families and by participants in its employee retirement plans.

Boeing said on Tuesday that aircraft orders in the first quarter fell to 95 from 180 a year earlier, with no orders for the 737 MAX following the worldwide grounding.

On April 5, it said it planned to cut monthly 737 production to 42 planes from 52, and was making progress on a 737 MAX software update to prevent further accidents.

The case is Seeks v Boeing Co et al, US District Court, Northern District of Illinois, No. 19-02394.

via Boeing shareholders sue over 737 MAX crashes, disclosures – Business – The Jakarta Post

Sony shares surge after Reuters reports Third Point building stake again – Reuters

TOKYO

Sony Corp shares surged more than 7 percent on Tuesday after a Reuters report saying Third Point LLC was again raising its stake in the Japanese conglomerate stoked speculation that fund owner Daniel Loeb was preparing to agitate for more change.

Third Point, which has about $14.5 billion in assets under management, is raising a dedicated investment vehicle targeting $500 million to $1 billion in capital to buy Sony shares, people familiar with the matter said.

A Sony spokesman declined to comment on the report.

Sony shares rallied to a three-week high at the start of Tokyo trade, recovering from a slump last month triggered by concern that its turnaround of recent years had lost momentum.

The electronics and entertainment conglomerate had a market value of 6.1 trillion yen ($55 billion) at Tokyo’s Monday close.

The move would be Third Point’s second campaign for change at Sony in six years, coming as investors look for the company’s next profit pillar amid signs its gaming business is slowing and as its PlayStation 4 console nears the end of its lifecycle.

Third Point wants Sony to explore options for some of its business units, including its movie studio, which the fund believes has attracted takeover interest, the sources said.

Sony Chief Executive Kenichiro Yoshida sees movies, music and other intellectual property as central to stable revenue growth, having battled years of losses in consumer goods such as television sets that are more susceptible to price competition.

pexels-photo-687811.jpeg
Photo by Jaroslav Nymburský on Pexels.com

“I don’t think a sale of the pictures business is an option for Sony now because entertainment content is becoming crucial for the company,” Ace Securities analyst Hideki Yasuda said, pointing out synergies seen in the success of action game Marvel’s Spider-Man and the related movie series.

“The profit margin at Sony’s pictures business is thinner than rivals, but that’s a result of past management decisions, including the sale of rights to Spider-Man merchandise.”

The business is on track to recover from a series of short-term measures that cost the company long-term profit, Yasuda said.

Sony forecasts its pictures segment to report 50 billion yen ($450 million) in operating profit for the year ended March, less than a tenth of the estimated 870 billion yen profit for the entire company.

Sony has recently downsized or exited several television channels within the pictures segment to cut costs, while scoring blockbuster hits such as ‘Jumanji: Welcome to the Jungle’ and ‘Venom’.

Third Point last exited a stake in Sony in 2014 with a roughly 20 percent gain on its investment after spending a year and a half pushing for Sony to spin off its entertainment division, a call rejected by Yoshida’s predecessor, Kazuo Hirai.

Reporting by Makiko Yamazaki; Editing by Stephen Coates and Christopher Cushing

via Sony shares surge after Reuters reports Third Point building stake again – Reuters

Title Photo by Matthew Hamilton on Unsplash

China says it wants to eliminate bitcoin mining – Reuters

SHANGHAI

(Reuters) – China’s state planner wants to ban bitcoin mining, according to a draft list of industrial activities the agency is seeking to stop in a sign of growing government pressure on the cryptocurrency sector.

The National Development and Reform Commission (NDRC) said on Monday it was seeking public opinions on a revised list of industries it wants to encourage, restrict or eliminate. The list was first published in 2011.

The draft for a revised list added cryptocurrency mining, including that of bitcoin, to over 450 activities the NDRC said should be phased out as they did not adhere to relevant laws and regulations, were unsafe, wasted resources or polluted the environment.

Ie If the government cant control it and poses a threat to the existing power structure then it should be banned -Ed

It did not stipulate a target date or plan for how to eliminate bitcoin mining, meaning that such activities should be phased out immediately, the document said. The public has have until May 7 to comment on the draft.

The only currency with any kind of track record over the long term is Gold. Government oppression, state sponsored money debasement, world wars, you name it gold is still valued today as it has no counter party risk and cant be synthesized in a Lab unlike say diamonds.. If you can hold onto it its yours. -ed 

State-owned newspaper Securities Times said on Tuesday that the draft list “distinctly reflects the attitude of the country’s industrial policy” toward the cryptocurrency industry.

Cryptocurrency Sector

The cryptocurrency sector has been under heavy scrutiny in China since 2017, when regulators started to ban initial coin offerings and shut local cryptocurrency trading exchanges.

China also began to limit cryptocurrency mining, forcing many firms – among them some of the world’s largest – to find bases elsewhere.

Chinese companies are also among the biggest manufacturers of bitcoin mining gear. Reuters reported last year that at least three were looking to raise billions of dollars with initial public offerings in Hong Kong. But at least one, Canaan Inc, let its application lapse.

via China says it wants to eliminate bitcoin mining – Reuters

Title Photo by Dmitry Moraine on Unsplash

BOJ offers bleakest view in six years on Japan’s regional economies – Reuters

TOKYO

(Reuters) – The Bank of Japan on Monday cut its assessment for three of the country’s nine regions, the biggest number of downgrades in six years, suggesting that the hit to exports and factory output from slowing overseas demand was broadening.

BOJ Governor Haruhiko Kuroda said the economy was expected to continue expanding moderately with robust domestic demand offsetting some of the weaknesses in exports.

“Core consumer inflation is expected to gradually accelerate toward 2 percent as the output gap remains positive, and medium- to long-term inflation expectations heighten,” Kuroda told a quarterly meeting of the BOJ’s regional branch managers.

But the central bank warned that weakening global growth and simmering Sino-U.S. trade tensions were taking a toll on some Japanese regions reliant on overseas demand.

“We have had to cut our assessments on exports and output for some regions because we’re hearing more complaints about the impact of the global economic slowdown than three months ago,” said a BOJ official briefing reports on the quarterly report.

The report cited several companies that put off investment in new equipment due to uncertainty over the global outlook.

“We decided to forgo a plan to build a new semi-conductor equipment plant as Sino-U.S. trade frictions heighten uncertainty over the global economy,” a machinery maker in Kumamoto, southern Japan, was quoted as saying.

The BOJ raised its assessment for one region, while it maintained its view for five regions.

Under a policy dubbed yield curve control, the BOJ guides short-term interest rates at minus 0.1 percent and the 10-year government bond yield around zero percent in an effort to achieve its 2 percent inflation target…

Like every other activist central bank, the BOJ faces a dilemma as years of heavy money printing has dried up market liquidity and hurt commercial banks’ profits,  thus you can expect POMO forever…  He even said as much in Febuary

We will continue our ETF buying while taking into account market moves and the impact on financial institutions, as well as economic and price developments,” Kuroda said.

In other words, nothing will change until one day market forces cause the BOJ to act.

What did you expect was going to happen?  – Ed

via BOJ offers bleakest view in six years on Japan’s regional economies – Reuters

Exclusive: Grab targets another $2 billion funding this year: CEO – Reuters

SINGAPORE (Reuters)

Grab expects to raise another $2 billion from strategic investors this year, the CEO of Southeast Asia’s biggest ride-hailing firm said, just weeks after it announced funding of over $4.5 billion in the region’s largest private financing round.

“We expect to raise $6.5 billion of total capital this year,” Anthony Tan told Reuters in an interview on Monday.

The funding will be a mix of debt and equity, the co-founder said, adding that Grab is looking to rapidly expand its business in financial services and food delivery.

Grab is also looking to make at least six investments or acquisitions this year, said Tan, adding that the Singapore-headquartered company had no need for a stock market listing.

Grab’s massive financing round started shortly after it bought Uber’s Southeast Asian operations in March 2018 and, in return, Uber acquired a 27.5 percent stake in Grab’s business.

via Exclusive: Grab targets another $2 billion funding this year: CEO – Reuters

Not sure why this is good.  At some stage Grab will actually have to make a profit and reward shareholders. -Ed

China-U.S. Trade Pact Will Happen and Be Good for Exporters, Kevin Rudd

Bloomberg Interviews Kevin Rudd on International Trade

Former Australian Prime Minister Kevin Rudd, president of the Asia Society Policy Institute, discusses the outlook for U.S.-China trade negotiations. He speaks with Bloomberg’s David Westin on “Bloomberg Markets: Balance of Power.”

Samsung Electronics sees lowest quarterly profit in more than two years

SEOUL (Reuters) – Samsung Electronics Co Ltd said on Friday it was heading for its lowest quarterly profit in more than two years as a glut in memory chips, slowing panel sales and rising competition in smartphones hit margins.

The South Korean tech giant said first-quarter operating profit likely slid 60 percent from a year earlier, missing market expectations and putting it on track for its weakest quarterly profit since late 2016.

Shares in Samsung rose briefly before paring gains to trade flat following the guidance, as many investors are already looking ahead to an earnings recovery on the back an improvement in chip prices in the second half of the year.

Samsung supplies memory chips and screens for its own smartphones and Apple Inc, and server chips for cloud companies such as Amazon. Its semiconductor business is the main profit driver.

“In the second half, memory chip prices will have a soft landing, so falls will slow, and the release of new iPhones later seems like a good sign for Samsung’s display and memory chips,” said Kim Yang-jae, an analyst at KTB Investment and Securities.

The world’s biggest maker of smartphones and memory chips said in a filing January-March profit was likely 6.2 trillion won ($5.5 billion), missing the 6.8 trillion won estimate from analysts according to Refinitiv SmartEstimate.

Revenue likely fell 14 percent from a year earlier to 52 trillion won. The firm will disclose detailed earnings in late April.

Samsung shares were flat as of 0120 GMT, while the broader market up 0.2 percent.

The firm earlier had warned the quarter could be disappointing due to falls in memory prices, and slowing demand for display panels used in Apple’s iPhones.

Samsung’s premium Galaxy smartphones meanwhile are struggling to be profitable due to rising costs of innovation, competition from Chinese rivals and the reluctance of consumers to upgrade, analysts have said.

HIT BOTTOM

Samsung’s share price has leapt more than 25 percent since sinking to a two-year low in early January as some investors bet on a recovery in chip demand.

SK Hynix Inc, Micron Technology Inc and Samsung – which dominate the global market for dynamic random access memory, or DRAM, chips used in personal computers, smartphones and servers – recently have issued upbeat assessments of the prospects for a recovery in chip prices.

Hopes were buoyed further when data showed the manufacturing sector in China, the world’s biggest smartphone market, unexpectedly returned to growth for the first time in four months in March.

Samsung is betting a new line-up of smartphones including a foldable handset and a 5G-enabled model will help boost its market share in China, which crashed with the advent of cheaper Chinese rivals like Huawei Technologies Co Ltd.

But its latest phones are expensive to make, weighing on profitability even as its sells faster than its predecessor, analysts say.

“New smartphones coming out in the second half won’t necessarily help its smartphone business, but will be a plus for Samsung’s chip side as those phones require high density chip adoptions,” said Park Sung-soon, an analyst at BNK Securities.

Reporting by Ju-min Park and Heekyong Yang; Editing by Stephen Coates

Shenzhen-listed textile firm’s Indonesia investment fuels hopes of silver lining in US-China trade war | South China Morning Post

  • Jiangsu Lianfa Textile is pumping at least US$350 million in a Central Java factory, sparking optimism that Chinese firms will choose Indonesia as they shift their production centres to avoid trade tariffs
  • Textile exports contributed US$13.8 billion last year, and the government is aiming to grow exports to US$15 billion for the US, Japanese and European markets

A China company’s bid to set up a textile manufacturing plant in Indonesia’s Central Java province is raising hopes the Southeast Asian country can benefit from Chinese firms seeking to shift their production centres amid the ongoing US-China trade war.
Jiangsu Lianfa Textile, listed on the Shenzhen Stock Exchange, will launch its factory next year with an investment of between 5 and 6 trillion rupiah (US$350 million and US$422 million), said Ade Sudrajat, chairman of the Indonesian Textile Association (API).

The factory will produce yarn for shirt-making, reducing the cost of yarn imports by US$1 billion for Indonesian shirtmakers and helping them produce final goods such as fabrics and shirts more speedily for the US market, he said.

“There isn’t a single Chinese investor that has pumped money into Indonesia in the last one to two year … and we hope this planned shift by the Chinese textile company is a sign that more will come to Indonesia,” Sudrajat said. “Our buyers in the US will benefit because the shipment processes for materials will be shorter and faster.”

Textile exports contributed US$13.8 billion last year, or about 2 per cent of Indonesia’s GDP, and the Industry Ministry said close to 3 million new jobs were created. Its aim is to grow textiles exports this year to US$15 billion for the US, Japanese and European markets.

Sudrajat said he spoke with Jiangsu Lianfa officials last year, and talks centred on the challenges posed by Southeast Asia’s largest economy’s complicated industrial and labour regulations, compared to other lower-cost manufacturing hubs in neighbours Malaysia and Vietnam.

Among other things, companies in Indonesia must pay a high minimum wage and commit to high severance payments. Lagging infrastructure, such as poor roads and power shortages, have turned away investors.

Indonesia wants to increase its slumping exports amid a record trade deficit, and is seeking to sign trade pacts to look for new markets, Bloomberg reported last month. It recently signed a comprehensive

economic partnership

with Australia that removed duties on some of its exports.

Industry Minister Airlangga Hartarto told local media in January that several textile and shoemaking companies were considering moving operations from China to Indonesia to avoid trade tariffs. The size of Chinese investments last year – US$2.4 billion – ranked third behind those from Singapore and Japan, according to the Indonesia’s Investment Coordinating Board in February.

Indonesia had about US$27 billion worth of foreign investments last year.

PT Bank Permata economist Josua Pardede urged the government to smoothen the path for domestic and international investors to grow Indonesia’s textile industry, which has been prioritised as a key sector.

“The government should capitalise on the US-China trade war and urge investors to relocate their plants, so that Indonesia can sell more products to overseas markets,” Pardede said.

 

photo-1517840545241-b491010a8af4

A China company’s bid to set up a textile manufacturing plant in Indonesia’s Central Java province is raising hopes the Southeast Asian country can benefit from Chinese firms seeking to shift their production centres amid the ongoing US-China trade war

Jiangsu Lianfa Textile, listed on the Shenzhen Stock Exchange, will launch its factory next year with an investment of between 5 and 6 trillion rupiah (US$350 million and US$422 million), said Ade Sudrajat, chairman of the Indonesian Textile Association (API).

The factory will produce yarn for shirt-making, reducing the cost of yarn imports by US$1 billion for Indonesian shirtmakers and helping them produce final goods such as fabrics and shirts more speedily for the US market, he said.

“There isn’t a single Chinese investor that has pumped money into Indonesia in the last one to two year … and we hope this planned shift by the Chinese textile company is a sign that more will come to Indonesia,” Sudrajat said. “Our buyers in the US will benefit because the shipment processes for materials will be shorter and faster.”

Textile exports contributed US$13.8 billion last year, or about 2 per cent of Indonesia’s GDP. Textile exports contributed US$13.8 billion last year, or about 2 per cent of Indonesia’s GDP, and the Industry Ministry said close to 3 million new jobs were created. Its aim is to grow textiles exports this year to US$15 billion for the US, Japanese and European markets.

Sudrajat said he spoke with Jiangsu Lianfa officials last year, and talks centred on the challenges posed by Southeast Asia’s largest economy’s complicated industrial and labour regulations, compared to other lower-cost manufacturing hubs in neighbours Malaysia and Vietnam.

Among other things, companies in Indonesia must pay a high minimum wage and commit to high severance payments. Lagging infrastructure, such as poor roads and power shortages, have turned away investors.

Trade war means it’s ‘too soon to predict’ regional manufacturing boom

Indonesia wants to increase its slumping exports amid a record trade deficit, and is seeking to sign trade pacts to look for new markets, Bloomberg reported last month. It recently signed a comprehensive

economic partnershipwith Australia that removed duties on some of its exports.

Industry Minister Airlangga Hartarto told local media in January that several textile and shoemaking companies were considering moving operations from China to Indonesia to avoid trade tariffs. The size of Chinese investments last year – US$2.4 billion – ranked third behind those from Singapore and Japan, according to the Indonesia’s Investment Coordinating Board in February.

Indonesia had about US$27 billion worth of foreign investments last year.

Indonesia’s textile industry has been prioritised as a key sector.PT Bank Permata economist Josua Pardede urged the government to smoothen the path for domestic and international investors to grow Indonesia’s textile industry, which has been prioritised as a key sector.

“The government should capitalize on the US-China trade war and urge investors to relocate their plants, so that Indonesia can sell more products to overseas markets,” Pardede said.

China and the US have started a fresh round of talks to end the

trade war but it is unclear how much of the US tariffs – currently imposed on US$250 billion worth of Chinese goods such as chemical products and textiles – will be eliminated.

Jiangsu Lianfa’s factory in Kendal will be in an industrial estate jointly set up by Indonesia’s PT Jababeka, an Indonesian industrial estate operator, and Singapore’s Sembcorp Development.

Brent oil resumes climb to $70 on tightening global supply

TOKYO/LONDON (Reuters) – Brent oil prices resumed their climb towards $70 per barrel on Thursday as expectations of tight global supply outweighed pressure from rising U.S. inventories and production.

International benchmark Brent futures rose 16 cents to $69.47 by 1346 GMT. Brent touched $69.96 on Wednesday – the highest since Nov. 12, when it last traded above $70.

U.S. West Texas Intermediate (WTI) crude slipped 13 cents to $62.33 a barrel. The contract hit $62.99 on Wednesday, also the highest since November.

Brent has gained nearly 30 percent this year, while WTI has risen nearly 40 percent. Prices have been underpinned by U.S. sanctions on Iranian and Venezuelan crude, along with OPEC production cuts and rising global demand.

“There is a clear bias to the upside with the supply restrictions,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“And there’s a much better than expected demand picture after the recent China and U.S. PMI numbers, along with a potential kicker from any U.S.-China trade agreement,” McCarthy said.

The Caixin/Markit services purchasing managers’ index (PMI) rose to 54.4, the highest since January 2018 and up from February’s 51.1, a private business survey of China’s service sector showed on Wednesday.

Trade talks between the United States and China made good headway last week in Beijing and the two sides aim to bridge differences during further talks, White House economic adviser Larry Kudlow said on Wednesday.

The refinery maintenance season is also drawing to a close and that will provide further demand for crude, said Virendra Chauhan, oil analyst at Energy Aspects in Singapore.

“The physical market is very strong and we are now starting to trade post-turnaround barrels, which should mean physical markets strengthen and flat prices should follow,” Chauhan said.

Crude oil inventories in the United States rose by 7.2 million barrels last week, whereas analysts had forecast a decrease. [EIA/S]

U.S. crude production climbed by 100,000 barrels per day to a record 12.2 million bpd, government data showed.

Indonesia to invest $115m in Batam port – The Straits Times

Indonesia is further upgrading Batam port with a 1.2 trillion rupiah (S$115 million) injection from state port operator Pelindo I.

The investment, announced by Pelindo I president director Bambang Eka Cahyana on Tuesday (April 2), follows a visit by Vice President Jusuf Kalla to Batam earlier in the day.

News of the Pelindo I investment follows hot on the heels of Malaysia’s plan to develop a multi-million-dollar project off Johor’s Port of Tanjung Pelepas to enable ships to transfer their cargo to other vessels without having to dock at the berths, in a bid to enhance shipping flexibility and cut costs for shippers.

The Batam investment plan aims to enhance cargo handling at the port of Batu Ampar, in order to raise its competitiveness.

The port, located on the northern tip of Batam, and facing the Singapore Strait, will soon take delivery of three new mobile harbour cranes and 12 terminal tractors, paid for by part of the investment from Pelindo I, Mr Bambang told reporters.

Over the medium-term, Pelindo I will procure container cranes capable of loading and unloading goods for larger ships and he is optimistic that the additional equipment will increase productivity at the port as well as reduce operating costs.

“We are following shipping standards that demand efficiency at Batu Ampar port. This begins this April,” he added.

The move by Pelindo I comes hot on the heels of Malaysia’s plan to develop a multimillion-dollar project at Johor’s Tanjung Pelepas port to enable ships to transfer their cargo to other vessels without having to dock at the berths.

The new collaboration between Malaysia’s maritime services company KA Petra and Hong Kong-based port operator Hutchison Ports Holdings is aimed at enhancing shipping flexibility and cutting costs for shippers.

The project, which could cost up to US$180 million (S$244 million), will cover an area of 1,200ha, and will be built in the Strait of Johor near Tuas.

It is also poised to be the world’s biggest ship-to-ship transfer hub, able to accommodate up to 30 vessels at one time, as well as store 9 million tonnes of petroleum products, when completed in two years.

The Pelindo I announcement followed a meeting called by Vice-President Jusuf Kalla with Mr Bambang, Economic Affairs Coordinating Minister Darmin Nasution, Riau Islands governor Nurdin Basirun, free trade zone agency BP Batam chief Edy Putra Irawady and Batam mayor Muhammad Rudi on Tuesday.

The Vice-President was visiting Batam earlier in the day for an event organised by the Association of Indonesian Entrepreneurs.

Mr Kalla, speaking to reporters that the meeting, which lasted more than an hour at BP Batam’s headquarters, was called to discuss how Batu Ampar port can improve its efficiency and that its operational costs are not higher than those at other ports in the region.

He added that the port currently incurs many unnecessary costs, including having to pay for container inspection fees carried out in Singapore, which adds to the high logistics costs in Batu Ampar.

Indonesia wants Batam as an alternative shipping and manufacturing hub to Singapore with a potential to draw US$60 billion in new investment, reported Bloomberg news in February this year.

Located less than 30km south of Singapore, Batam has attracted about US$20 billion of investment since Jakarta began promoting it as an industrial zone in the 1970s.

The Joko Widodo administration has plans to expand benefits to businesses by reclaiming about 8,000ha of idle or confiscated land to offer to exporters or producers of import substitutes.

Mr Joko, who is running for re-election without Mr Kalla on April 17, caused a stir last December when he ordered BP Batam to be placed under the control of the Batam city administration to fix its problem of “leadership dualism”.

Since then, BP Batam, the state agency overseeing free trade on the island, has proposed developing two special economic zones, offering bigger tax breaks for businesses including those from Singapore and income tax relief for workers.

Mr Edy told The Straits Times in an interview in February that the plans will be approved by Mr Joko as early as June, if the President wins a second term.

via Indonesia to invest $115m in Batam port , SE Asia News & Top Stories – The Straits Times

Title Photo by Lisanto 李奕良 on Unsplash

Futures Jump, World Stocks Hit 6 Month High On Trade Deal Optimism | Zero Hedge

US futures jumped and world stocks rallied to a six-month high following the latest dose of daily “trade deal optimism” when the FT reported what everyone already knows (but algos, who have a 10 millisecond memory, have forgotten), namely that the US and China have already resolved most of the easy issues standing in the way of a deal to end their long-running trade dispute but are still haggling over the difficult parts, namely how to implement and enforce the agreement.

That, coupled with some more reassuring economic data, helped S&P futures jump 14 points, fast approaching their Sept all time highs, pushed Germany’s 10-year bond yield back above zero percent, hit the dollar as the euro strengthened for the first time in seven sessions as oil neared the key $70 per barrel mark — a multi-month high — on supply concerns.

“We’re being told that we’re 90 percent of the way there which is obviously encouraging but the final 10 percent — which apparently includes the enforcement mechanism and the removal of tariffs — could take some time to iron out,” said Craig Erlam, senior market analyst at Oanda in London. “Investors are happy to be patient here in the hope that the two sides get this right and put an end to a trade war that has clearly taken its toll on markets.”

And since algos quickly calculated that 10% is less than 90% and ignored the actual politics behind the calculus, they promptly activated buy programs and U.S. equity-index futures rose and the Stoxx Europe 600 index jumped, led by miners, as the latest batch of Service PMI data from Italy to Germany also helped ease some of the concern over the euro area’s growth outlook.

Europe’s Stoxx 600 index rose almost 0.8% to their highest since August. German stocks rose 1 percent to its highest level since October, while in Paris, French stocks scaled a similar high.

Europe’s strong session followed overnight gains in Asia where MSCI’s broadest index of Asia-Pacific shares outside Japan climbed to a seven-month peak, buoyed by stronger-than-expected Chinese services data as China’s Caixin Services PMI printed stronly in March, at 54.4 vs. Exp. 52.3 (Prev. 51.1), the highest since January 2018.

Hopes for a deal to end the trade war between the world’s two largest economies were also prompted by fresh comments from White House economic adviser Larry Kudlow that Washington expects “to make more headway” in talks this week. To be sure, analysts were giddy at the prospect of an imminent deal:

  • “What we’re seeing is that markets have climbed a world of worry but there is progress on trade, a recession is unlikely, central banks have made nods to more dovish policy,” said Chris Bailey, European Strategist at Raymond James. “If you put that into the mix I’m not surprised risk assets have moved up.”
  • “We are going to get a deal done in China and the U.S.,” said Luke Hickmore, senior investment manager at Aberdeen Standard Investments. “That, with the stimulus China has put in place, and a slightly calmer tone in the U.K. as well, I think is stoking a market that’s wanted to run hotter than it has done for a while.”

Not only have they moved up, but the MSCI World index is now just shy of a bull market from its December lows.

Generally strong world stocks and hopes of a softer Brexit sparked a sell-off in safe-haven government bonds, pushing yields off recent lows. U.S. 10-year Treasury yields rose almost 4 basis points to 2.52%. Germany’s benchmark 10-year German Bund yield rose back above 0, printing at 0.005%. A week ago it hit a 2-1/2 year low at around minus 0.09 percent on concern about the weak economic growth backdrop.

One fly in the Fed’s “rate hike pause” ointment is that oil prices stood near multi-month highs amid concerns about supply. Brent crude rose to as high as $69.92 per barrel, its highest since November and near the psychologically important level of $70 per barrel. It was last up 0.6 percent at $69.80. U.S. West Texas Intermediate (WTI) crude rose 0.34% to $62.79 per barrel. As Reuters noted, news that the US is considering more sanctions against Iran, the fourth-largest producer of the Organization of the Petroleum Exporting Countries (OPEC), and the halting of production at a crude terminal in Venezuela threatened to squeeze supply and pushed oil prices up on Tuesday.

As oil prices surge, the Fed will be hard pressed to explain why it is ignoring what is arguably the biggest cause of consumer anger aimed at higher prices and instead focusing solely on boosting stock rices.

Elsewhere, as the Brexit chaos continues, UK Tory Lawmaker Letwin said the process of seeking an Article 50 extension will go ahead as planned, adding that we can work with the government now; adds that Labour leader Corbyn is ‘someone we can do business with’ regarding Brexit. If negotiations with Labor collapse, PM May is said to consider asking lawmakers to rank Brexit outcomes. Separately, the EU is preparing to offer PM May a long Brexit extension with strict conditions including taking part in European Parliament elections and a possible “gentleman’s agreement” regarding Britain’s conduct (e.g. potentially abstaining from taking part in important decisions over the EU’s future), according to FT. Finally, French President Macron has led other EU leaders in warning that UK PM May’s apparent move to take no-deal Brexit off the table offers no guarantees UK will not crash out of the EU on April 12th. In any case, this shitshow isn’t ending any time soon, and certainly won’t end by fulfilling the will of the majority as May will do everything in her power to prevent or delay an actual Brexit.

In FX, the dollar was pressured as risk sentiment improved amid fresh hope for progress in U.S.-China trade talks and better-than-expected services PMI data in all four of the euro-area’s largest economies. The euro rose as stops were triggered. Sterling extended its gains after British Prime Minister Theresa May said late on Tuesday she would seek another Brexit delay to agree an EU divorce deal with the opposition Labour Party leader, raising hopes of a “softer” Brexit.  The Australian dollar led a risk-on rally, boosted by expectations for a U.S.-China trade deal; New Zealand dollar and Scandinavian currencies followed suit while the allure of traditional havens, such as Treasuries and the yen, faded.

Bitcoin, which inexplicably surged 18.7 percent on Tuesday following a major order by an anonymous buyer, extended its gains by another 1.6 percent to $4,977.48. Spot gold dipped 0.08 percent to trade at $1,291.31 per ounce.

On the macro side, data includes ADP employment change as well as Markit services and composite PMIs.

Market Snapshot

  • S&P 500 futures up 0.5% to 2,882.25
  • STOXX Europe 600 up 0.7% to 387.70
  • MXAP up 0.8% to 162.76
  • MXAPJ up 1% to 541.18
  • Nikkei up 1% to 21,713.21
  • Topix up 0.6% to 1,621.77
  • Hang Seng Index up 1.2% to 29,986.39
  • Shanghai Composite up 1.2% to 3,216.30
  • Sensex up 0.3% to 39,170.16
  • Australia S&P/ASX 200 up 0.7% to 6,285.05
  • Kospi up 1.2% to 2,203.27
  • German 10Y yield rose 4.5 bps to -0.004%
  • Euro up 0.3% to $1.1235
  • Brent Futures up 0.7% to $69.84/bbl
  • Italian 10Y yield rose 1.8 bps to 2.171%
  • Spanish 10Y yield rose 1.8 bps to 1.134%
  • Brent Futures up 0.7% to $69.84/bbl
  • Gold spot down 0.06% to $1,291.66
  • U.S. Dollar Index down 0.3% to 97.10

Top Overnight News from Bloomberg

  • U.S. and China officials have resolved most of the issues surrounding the deal though they have yet to agree on what happens to existing U.S. duties on Chinese goods and the terms of an enforcement mechanism to ensure China keeps to the trade deal, Financial Times said, citing people briefed on the talks
  • China’s Vice Premier Liu He will resume negotiations with his U.S. counterparts in Washington Wednesday as both governments push towards an agreement to end their trade dispute
  • A woman carrying two Chinese passports illegally entered President Trump’s Mar-a-Lago resort in Palm Beach, Florida, Saturday and lied to a Secret Service agent, according to court documents filed in West Palm Beach
  • Larry Kudlow said the president stands by his choice of Stephen Moore for an open seat on the Fed Board despite recent reports about the possible nominee’s failure to fully pay taxes and alimony
  • U.K. Prime Minister Theresa May on Tuesday abandoned her strategy of making Brexit a project of her Conservative Party and Democratic Unionists and asked Jeremy Corbyn, leader of the opposition Labour Party, to rescue her
  • Crude advanced to the highest this year after a further reduction in supply from OPEC signaled that global markets are tightening
  • Prime Minister Scott Morrison’s government pledged sweeping tax cuts and forecast Australia’s first surplus in more than a decade in a budget aimed at engineering a come-from- behind election victory
  • China is drafting rules for overseas investments to be considered part of President Xi Jinping’s Belt and Road Initiative, according to people familiar with the matter, marking the first attempt to better define his signature policy
  • Attorney General William Barr hasn’t discussed any part of Mueller’s report with the White House, according to a Justice Department official, but plans to rely instead on his own judgment in deciding whether some details in the report should be withheld under executive privilege
  • Cryptocurrency traders may not know what caused the abrupt surge in Bitcoin on Tuesday, but they’re going along for the ride anyway; the virtual currency climbed to a fresh 2019 high on Wednesday, building on a spike yesterday that many market participants struggled to explain

Asian equity markets were mostly higher as trade optimism and Chinese PMI data helped the region shrug-off the indecisive lead from the US, where the global stock rally had stalled amid thin volumes, weak durable goods data and ahead of upcoming risk events. ASX 200 (+0.6%) and Nikkei 225 (+1.0%) were positive with Australia led by miners amid strength in iron ore prices which hit record levels in China and as participants also digested the budget which included an upward revision to the first projected surplus in over a decade and proposed AUD 158bln in tax cuts. Japanese stocks were lifted as risk appetite was stimulated by reports US and China are nearing a final trade agreement with most issues resolved but continue to haggle on enforcement and implementation. Hang Seng (+1.2%) and Shanghai Comp. (+1.2%) also benefitted from the trade hopes and after further encouraging data from China in which Caixin Services PMI topped estimates and printed its highest since January 2018. However, the performance of the mainland was somewhat fatigued after its recent bullish streak and with Bank of Communications underperforming on reports China National Council for Social Security Fund plans to sell 1.49bln of Bocom’s A-shares. Finally, 10yr JGBs were lower as trade hopes ensured a lack of safe-haven demand and with selling exacerbated as prices ran through stops at 153.00. SMBC also suggested the BoJ may reduce its purchases today, although this failed to materialize as the BoJ maintained its Rinban amounts which totalled JPY 1.23tln in 1yr-10yr JGBs and which helped alleviate some of the pressure.

Top Asian News

  • RBI Has Scope to Cut India Rate by 50Bps on Thursday: Quantum
  • Brookfield Said to Consider $2 Billion China Property Deal
  • Trio of Troubles Has Malaysia’s IHH Losing $800 Million in Value
  • Pound Volatility Curve Retains Inversion Before May-Corbyn Talks

Major European indices are firmer [Euro Stoxx 50 +0.7%] as the positivity continues from overnight where sentiment was driven by US-China trade optimism and positive Chinese PMI data, although the FTSE 100 (Unch) is the exception to this with the index weighed on by the Brexit-related Sterling strength. Sector wise, material names (sector +1.5%) lead the gains as copper and iron prices are bolstered by the seemingly positive trade news alongside supply-side woes. On the flip side, healthcare names lag (sector -0.8%) with heavyweights Novartis (-1.0%) and Roche (-0.9%) weighed on by Walgreen’s cut in guidance yesterday. Elsewhere, the tech sector (+1.3%) is supported by advances in AMD yesterday (+3% pre-market) alongside Taiwan Semiconductor stating that they expect chip orders to pick up.

Top European News

  • Lira Drop Helps Dubai Bank Save $400 Million in Turkey Deal
  • Euro Extends Advance on Italy PMI Data, Renewed Trade Optimism
  • Euro- Area Services Resilience Softens Manufacturing Blow for Now
  • Istanbul Vote Recount Outcome ‘Must Be Accepted by All’: Guven
  • Suddenly Inflation Isn’t Turkish Central Bank’s Only Worry

In FX, this week’s risk roller-coaster continues, and the latest turn of the ride has lifted stocks and high beta currencies to the detriment of so-called safe havens, like the Dollar and core bonds. Hence, the Greenback has handed back gains made on Tuesday vs most G10 counterparts and EMs, with the index retreating towards 97.000 again from just over 97.500. The catalysts, another strong Chinese PMI and similar beats across the Eurozone/Europe, bar the UK, reports that the US and China are getting close to a trade agreement and Brexit developments raising prospects of some kind of deal as opposed to no deal.

  • AUD/NZD – The Aussie and Kiwi have benefited most from the resurgence in broad risk appetite, with the former also deriving independent impetus from data in the form of retail sales and trade overnight. Aud/Usd has recovered from near 2019 lows to 0.7100+, but may be hampered by more hefty option expiry interest as 1.6 bn runs off between 0.7100-10 at the NY cut. Meanwhile, Nzd/Usd is hovering just below 0.6800 compared to sub-0.6750 at worst as the Aud/Nzd cross holds close to the upper end of a 1.0495-50 range.
  • EUR/GBP/CAD/CHF – All firmer vs the Usd following underperformance yesterday, with the single currency boosted by better than expected Eurozone services PMIs across the board and marginally topping Tuesday’s 1.1250 peak, but capped by layered off said to be sitting up to 1.1270. Cable tested the water and resistance into 1.3200 on the back of the aforementioned Brexit manoeuvres aimed at reaching a pact to trigger an extension from April 12 that could lead to a softer withdrawal agreement or terms. However, the Pound was derailed to a degree by a significantly weaker than forecast UK services PMI as the headline recoiled below 50 and IHS predicted this means Q1 GDP stagnation before a downturn in H2. The Loonie continues to recoup losses vs its US peer post-contrasting manufacturing PMIs/ISM on Monday with the aid of firmer crude prices and the overall rebound in risk sentiment to probe over 1.3300, while the Franc is back up around 0.9960 from parity at one stage on Tuesday, but softer vs the Eur within 1.1177-1.1208 trading parameters after more dovish/intervention talk from the SNB.
  • SEK/NOK – The Scandi Crowns are still tracking broader swings in risk, along with technical and fundamental impulses, as Eur/Sek and Eur/Nok retreat towards recent lows and chart support levels circa 10.4100 and 9.6000 respectively.
  • EM – The Lira remains embroiled in political uncertainty as the main parties wrangle over regional election results against the backdrop of renewed diplomatic angst between Turkey and the US, while latest inflation data has piled more pressure on the Try and CBRT given a firmer than forecast CPI rate. Unsurprisingly, Usd/Try is holding above 5.6100 vs other Usd/regional pairings that are reversing recent rallies, and even the Rand in wake of a weak SA services PMI.

In commodities, prices are on the front foot amidst the overall risk appetite couple with a falling buck. WTI (+0.1%) and Brent (+0.6%) futures have been grinding higher since last night, shrugging off the surprise build in API crude stocks (+3.0mln vs. Exp. -0.4mln) with the former residing just above USD 62.60/bbl having hit resistance at USD 63.00/bbl. The support the oil complex has seen has mostly been due to supply disruptions rather than demand improvement. Traders will be eyeing the DoE release today, although price action may be muted as Iranian and Venezuelan supply woes/ market risk appetite hold onto the spotlight. Elsewhere, metals across the board are benefiting from the easing buck with spot gold (+0.1%) remaining below USD 1300/oz (for now), whilst copper (+1.2%) surges on trade optimism after reports that US and China are inching closer to a deal, with the Chinese trade delegation heading to Washington today for another round of talks. Furthermore, Barclays noted that copper supply-side disruptions have the potential to boost the red metal to USD 7000/tonne. Finally, Dalian iron ore prices were bolstered to record highs, also hit by supply issues, as damage is calculated from the cyclones in Western Australia. Barclays also raised its 2019 iron ore price forecast to USD 75/tonne (Prev. USD 69/tonne).

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 8.9%
  • 8:15am: ADP Employment Change, est. 175,000, prior 183,000
  • 9:45am: Markit US Services PMI, est. 54.8, prior 54.8; Markit US Composite PMI, prior 54.3
  • 10am: ISM Non-Manufacturing Index, est. 58, prior 59.7

DB’s Jim Reid concludes the overnight wrap

I visited our new house last night to see how it was progressing with less than three weeks to go of a 9-month renovation project. To say I was blown away was an understatement….. blown away by how much work was needed to be done in 2 and a half weeks! I would say there’s more chance of a Brexit plan being agreed by all parties than it being ready on time but as you’ll see below hopes have been raised on that front last night. Back to the house and the builder told me not to worry and said that it all “usually” comes together at the last minute. Between you and me, the thing I’m most looking forward to is our greatest extravagance. A hot tub? a sauna room? aircon? A wrapping room? No we have none of those… instead the luxury is having designed the kitchen so as to have two dishwashers! Who needs extra cupboard space! Since we’ve had three kids I’ve done more washing up than the rest of my time on this planet. I don’t understand how they can need so many eating and cooking implements and how messy it can get. Life is too short for this so I’m looking forward to opening both doors and shovelling it all in and heading down the golf course instead!

So what will come first, Brexit or me moving in? The chances of the former went up last night as PM May’s press conference after Europe closed was more constructive than expected. Following her marathon cabinet session, May said that she will seek another short Article 50 extension from the EU, will engage with Jeremy Corbyn on an alternative Brexit solution, and will agree to implement whatever solution Parliament passes if these talks break down. This is huge news. She is seemingly now prepared to back down on her prior red lines and also prepared to let Parliament decide on the outcome if she and Mr Corbyn can’t. Recall that the customs union option came within 3 votes of passage on Monday. If parliament could muster the votes to pass that plan or an even softer outcome, PM May has now, for the first time, implied that she would negotiate that with the EU without calling for elections. The removal of that risk and that of hopes of a compromise supported the pound as it rallied +0.88% off its intraday lows after her words. In theory this is very positive news for the pound assuming the Conservative government survives the shrapnel from the internal party in-fighting that this will bring.

In total, the main risks now hinge on the reaction from Labour, the ERG within her own party, from May’s coalition partners the DUP, and from the EU. On the first, opposition leader Corbyn said that he is “very happy” to meet with May, so that’s a positive start. On the ERG, there have been a number of negative comments from members of the group but the worst is probably to come. In a statement, the DUP criticised May’s “lamentable handling” of the negotiations, but said that they will continue to “judge all Brexit outcomes against our clear unionist principles”. That at least leaves open the possibility that the DUP would accept a solution that avoids a border between Northern Ireland and the rest of the UK. Finally, the EU may be unwilling to grant another extension without forcing the UK to participate in EU elections, though we may learn more when Juncker speaks to the European Parliament later today. Donald Tusk seemed to be encouraging patience from his own side.

Prior to last night we learned that there would be no indicative votes today and instead we’re supposed to see MPs debate the new Cooper/Letwin bill, which is designed to prevent a no-deal Brexit next week. We will see if that still occurs given the latest developments. We have until next Wednesday before the emergency EU summit.

Over in markets, it hasn’t quite been so one way in the last 24 hours as it was on Monday with a bit of a lull in newsflow to blame although the Asia session has seen new news. In addition, today’s global non-manufacturing PMIs, tomorrow’s ECB minutes and Friday’s payrolls will also provide us with fresh impetus. We’d expect trade headlines to pick up as China Vice Premier Liu He is scheduled to travel to Washington today to lead a delegation of trade negotiators.

Indeed overnight, the FT has reported that the US and Chinese officials have resolved most of the issues surrounding the deal. The only issues which are yet to be agreed on are what happens to the existing US duties on Chinese goods and the terms of an enforcement mechanism to ensure China keeps to the trade deal. This news, along with better than expected Chinese March Caixin services (at 54.4 vs. 52.3 expected – the highest since January 2018) and composite (52.9 vs. 50.7 last month, highest since June 2018) PMIs, sent Asian markets higher. The Nikkei (+0.83%), Hang Seng (+0.86%), Shanghai Comp (+0.23%) and Kospi (+0.52%) are all up. China’s onshore yuan is up +0.17% to 6.7119. Elsewhere, futures on the S&P 500 are up +0.42%. We also saw Japan’s March services and composite PMIs overnight at 52.0 (vs. 52.3 last month) and 50.4 (vs. 50.7 last month), respectively.

Back to yesterday and after European equity markets marched higher, with the STOXX 600 (+0.35%) closing at its highest level since late September, US equities traded in a bit more of a holding pattern yesterday following the decent three-day run prior to this. The S&P 500 was flat and the DOW -0.30% – the latter hurt by a profit warning from Walgreens Boots, which saw shares fall -12.81%. The NASDAQ (+0.25%) outperformed a bit, mostly thanks to a strong session by Facebook (+3.26%). DB’s Lloyd Walmsley published a bullish report on the stock early yesterday morning (link here ).

Over in rates, Treasuries partially retraced Monday’s steep rise, with 10y yields back down -3.2bps to 2.469% after Monday’s +9.6bps rise. The 2s10s curve steepened slightly to 17bps as two-year yields slid -3.4bps. That came despite a +3.2bps rise in 2y inflation breakevens, partially driven by the oil rally (more below), as the move was driven solely by declining real yields. This morning, yields on 2-year and 10-year treasuries are up 2.1bps and 2.7bps, respectively, thereby further steepening the 2s10s curve to 17.8bps. EM currencies retraced a bit of Monday’s rally as well, with an EM FX index down -0.10%. The Turkish lira remains the most volatile currency in EM space, weakening -1.93% yesterday to within 3% of its 6-month lows.

Bunds also fell -2.2bps and are back down to -0.052% again while Gilts fell -4.3bps in tandem with the Sterling move. BTPs (+2bps) underperformed after Juncker warned that the Italian economy “hasn’t stopped regressing”. In credit, HY spreads were -9bps tighter in Europe but +3bps wider in the US, while WTI oil rose +1.64% following the latest OPEC estimates, which suggested production was down in March. Plus, a regulatory filing by Saudi Aramco showed that the Ghawar oil field – the world’s largest – can pump an estimated 3.8mn barrels per day, notably less than prior estimates of almost 6mn. Oil prices are now up to their highest levels in 5 months, with WTI at $62.60 per barrel and Brent at $69.43.

Moving on. Yesterday’s data in the US proved to be mostly a non-event. Headline durable goods orders in February declined less than expected (-1.6% mom vs. -1.8% expected), however, these were offset by a downward revision to January. The opposite was true for core capex orders, which were down -0.1% mom (vs. +0.1% expected) but offset by an upward revision to January. So net-net a bit of a wash. Last night we also got the March vehicle sales data from several major carmakers. For Fiat Chrysler, Toyota, Honda, and Nissan in aggregate, sales fell -5.5% yoy, modestly better than the -6.2% yoy expected, but still consistent with a slight deceleration in economic activity this year compared to last year. GM reported its Q1 aggregate figures and also showed a drop yoy, while Ford will report tomorrow.

Finally to the day ahead where the data highlight is likely to be the remaining services and composite PMI revisions for March in Europe this morning. We’ll also get February retail sales data for the Euro Area while in the US this afternoon we kick off with the March ADP employment change print (175k expected), followed then by the PMIs and March ISM non-manufacturing (58.0 expected). We’ve also got Fed speakers scheduled with Bostic, George and Barkin speaking in the afternoon at an ABA event (I wanted to put an extra “B” in) while Kashkari then speaks this evening. China Vice Premier Liu He is also scheduled to travel to Washington to lead a delegation of trade negotiators while NATO foreign ministers are due to gather in Washington.

 

via Futures Jump, World Stocks Hit 6 Month High On Trade Deal Optimism | Zero Hedge

Title Photo by David Calderón on Unsplash

Integrated resorts to build new world-class attractions, allowed to expand casinos; levies to go up from Thursday, Singapore News & Top Stories – The Straits Times

SINGAPORE – The operators of the two integrated resorts (IR) will pump in $9 billion to build world-class attractions, which will include a fourth tower to the iconic Marina Bay Sands (MBS) development, three new hotels, a 15,000-seat entertainment arena and extensions to Universal Studios Singapore (USS).

Meanwhile, MBS and Resorts World Sentosa (RWS) will be allowed to expand their casino operations, with their exclusive rights to run a casino here extended until the end of 2030. But their gambling revenue will be further taxed by the Government. In order to rein in problem gambling, casino levies on Singapore residents will be increased. The daily levy will go up from $100 to $150 from Thursday (April 4), while the annual levy is being increased from $2,000 to $3,000.

In a joint statement on Wednesday evening (April 3), the authorities, which include the Ministry of Trade and Industry, said that the $9 billion investment is almost two-thirds of the IRs’ initial investment of about $15 billion in 2006.

“In view of the substantial investment and to provide business certainty, the Government has agreed to extend the exclusivity period for the two casinos to end-2030,” they said.

They added that IR operators have been allowed to expand their casinos in order for the new attractions to remain commercially viable, but that any additions will be targeted at “higher-tier non-mass market players, who are mainly tourists”.

If the IRs do expand their casinos to the maximum allowed, it will increase the current gaming space from 30,000 sq m to 32,500 sq m. But with the even bigger expansion of the non-gaming areas, the space taken up by gambling operations at the IRs will fall from the existing 3.1 per cent to 2.3 per cent. RWS is planning to add two new immersive environments at USS – Minion Park and Super Nintendo World – and enlarge the S.E.A aquarium.

A new two-tiered tax system will also kick in from March 2022.

Under the new system, the first $2.4 billion of gross gaming revenue from premium gaming is taxed at 8 per cent, while the rest is taxed at 12 per cent. Similarly, the first $3.1 billion from mass gaming is taxed at 18 per cent, while anything over that is taxed at 22 per cent. If the IRs fail to meet their investment commitments, they will have to pay the higher tax rate on all gross gaming revenue.

On the concerns that the increase casino space may lead to more problem gambling, Trade and Industry Minister Chan Chun Sing said that although the problem has not worsened, the Government is nevertheless wary of the dangers.

“While the IRs have been successful on the economic front, we have also been closely monitoring the potential social impact of the gaming segment,” he said.

According to a survey from the National Council on Problem Gambling, the probable problem and pathological gambling rate has decreased from 2.6 per cent when the IRs first opened in 2010 to 0.9 per cent in 2017.

Beyond the higher levies, the two IR operators have also agreed to work with the Ministry of Social and Family Development to study how to help gamblers make more informed decisions on how much to gamble.

IR employees will also be trained to spot gamblers at risk of developing a problem, and refer them to help.

via Integrated resorts to build new world-class attractions, allowed to expand casinos; levies to go up from Thursday, Singapore News & Top Stories – The Straits Times

Title Photo by Zhu Hongzhi on Unsplash