Global manufacturing has stalled

• David Scutt, Business Insider Australia

• 12h
• 519
 
• 1

REUTERS/StringerBystanders look at a car that has partially fallen into a small sinkhole along a street in Beijing, China, September 6, 2015.

Activity levels across factories the world over stalled last month, according to the latest JP Morgan-Markit global manufacturing purchasing managers’ index (PMI) released on Wednesday.

The PMI came in at 50.0, down from 50.1 in April, continuing the underwhelming start to the year for the global manufacturing sector.

Like PMI readings for individual nations, the survey measures changes in activity levels from one month to the next, with a reading of 50 signaling that activity levels neither expanded nor contracted during any given month.

It takes in responses from over 10,000 firms from 30 individual nations, providing the closest thing to a comprehensive report card for the global manufacturing sector as one can get.

And based on the tepid reading for May, the news on that front is not good.

JP Morgan

Markit notes that levels of expansion slowed in the Eurozone and US, the latter at the slowest pace since October 2009, while activity levels in Asia and South America continued to contract.

“The two largest Asian manufacturing economies – China and Japan – both contracted in May. PMI readings indicated that rates of decline were the sharpest since February 2016 and January 2013 respectively,” said Markit.

“The Brazil PMI sank to its weakest level in over seven years, placing it at the bottom of the global rankings.”

Like the headline index, the survey’s individual components were weak with readings on output and news orders, although continuing to expand, edging lower during May.

New exports, a gauge on global demand, contracted at a faster pace, slipping to 48.9 from 49.2, the lowest level seen in three years.

There was some slightly better news on employment with staff numbers being shed at a slightly slower pace than what was seen in April.

Input and output prices also continued to increase, offering some hope that disinflationary forces may be easing, at least in the industrial sector.

The table below, supplied by Markit, has all the details.

Markit

David Hensley, director of global economic coordination at JP Morgan, suggests that the global manufacturing sector remains in “a low gear”.

“Indices for output, new orders and the headline PMI were all at, or barely above, the stagnation mark. The move up in the finished goods inventory index suggests manufacturers are still working to realign stocks with demand,” he said.

Attention will now turn to the release of the global services PMI report on Friday, particularly as this sector dominates the economic composition of many advanced economies such as the US, Japan and throughout the Eurozone.

Read the original article on Business Insider Australia. Copyright 2016. Follow Business Insider Australia on Twitter.

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Oil prices fall as OPEC seen unlikely to agree output restraint

• Reuters

• 13h
• 299

Thomson ReutersAn oil pump jack can be seen in Cisco, Texas

By Henning Gloystein

SINGAPORE (Reuters) - Oil prices fell early on Thursday as a row between Saudi Arabia and Iran made it unlikely that the OPEC would agree any output constraints during a meeting in Vienna, just as demand worries from China resurfaced.

International Brent crude oil futureswere trading at $49.58 per barrel at 0053 GMT, down 14 cents from their last settlement, while U.S. West Texas Intermediate (WTI) crude was down 26 cents at $48.75 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC) is set for another showdown between rivals Saudi Arabia and Iran when it meets on Thursday in the Austrian capital, with Riyadh trying to revive coordinated action or a formal oil output target, but Tehran rejecting both ideas.

"An output ceiling has no benefit to us," said Iranian Oil Minister Bijan Zanganeh upon arriving in Vienna ahead of OPEC's regular meeting on Thursday.

Driven largely by rising output from the Middle East, OPEC's output is near record highs of over 32.5 million barrels per day (bpd), although there have been some disruptions, especially in Nigeria and Libya.

The spat between leading Saudi Arabia and Iran comes just as concerns have resurfaced over China's demand.

"OPEC members will be keeping a close eye on China, with the low factory activity data that has been released possibly signaling a diminishing demand for oil – something that could do real damage to oil prices," said Mihir Kapadia, CEO at Sun Global Investments.

Car sales in China, an important gauge for gasoline and, by extension, crude oil demand, have also fallen by almost a quarter since the end of 2015 to 2.12 million new registered vehicles in April.

Despite the price falls, low cost producers, especially in the Middle East, are feeling less inclined to restrain output as overall market conditions have improved significantly for exporters this year.

"With oil prices having rallied considerably since the abysmal start to the year ... (OPEC) delegates are unlikely to be forced into extreme action," Kapadia said.

Although prices are resisting a break above $50 per barrel, Brent is still 80 percent above a more than a decade low it hit in January.

(Reporting by Henning Gloystein; Editing by Joseph Radford and Richard Pullin)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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Jose Cuervo is planning a $1 billion IPO

• Akin Oyedele
 
•  

• 18h
• 5,101
 
• 2

Edgard Garrido/Reuters

Jose Cuervo is thinking about going public.

According to Bloomberg, the world's largest tequila producer wants to raise as much as $1 billion in an initial public offering slated for the third quarter. 

Like the US, Mexico hasn't seen much IPO action this year.

Citing people familiar with the matter, Bloomberg reported that Morgan Stanley, JP Morgan and Spain-based Banco Santander are working with the company as it preps to go public. 

Jose Cuervo's revenues spiked 41% to 10.25 billion pesos ($557 million) in the first quarter of 2016 compared to last year.

Bloomberg reported in March that the company was seeking a share sale of up to $750 million or more. It could end up raising just $500 million, although much of the fine print has not been finalized. 

Head over to Bloomberg for the full story »

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The CEO of Staples is stepping down after the company's failed merger with Office Depot

• Bob Bryan
 
•  

• 12h
• 3,760

Mike Mozart/flickr

Ron Sargent, CEO of office-supply giant Staples, has agreed to step down from his position, according to a release from the company.

The move comes a little more than two weeks after the company was forced to scrap its proposed merger with rival Office Depot because of pushback from regulators.

"He also worked diligently on the acquisition of Office Depot and the Board appreciates the strong effort he made to secure governmental approval," said Robert E. Sulentic, lead director of Staples' board, in a release."With the termination of the merger, we mutually agreed that now is the right time to transition to new management to lead Staples through its next phase of growth."

Antitrust concerns led to an injunction by a federal judge, causing the firms to toss out the merger on May 11.

"It has been an incredible honor to have worked with the talented and dedicated team atStaples for the past 27 years through a dynamic and ground-breaking time for the Company, our customers and the retail industry overall," said Sargent in the release.

He continued: "I want to sincerely thank our associates and partners, every one of whom helped to deliver value for our customers."

Shira Goodman, president of North American operations, will replace Sargent as interim CEO.

The stock is unchanged in after-hours trading following the announcement.

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This is about to be the best reason to switch from iPhone to Android

• Rafi Letzter
 

• May 26, 2016, 5:41 PM
• 48,845
 
• 6

Antonio Villas-Boas/Tech Insider

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Probably the hottest point of contention in the Tech Insider newsroom is whether Android or iOS is the better ecosystem.

I tend to come down on team Droid. The affordability and openness of Google's ecosystem offers huge advantages over Apple's closed iOS. But I understand the case for iPhones: They're reliable, always up to date, and (mostly) just work.

Ask the average iPhone user why they stick with Apple'sincreasingly boring, expensive lineup though and the answer is simple: They're used to iOS. It's simple, beautiful, familiar, and easy to use. Trying to convince one to switch to Android is almost like trying to convince a Windows or OS X user to switch to Linux (the niche, techy PC operating system on which Android is in fact based).

But Google is on the verge of striking a major blow in the ease-of-use wars: Project Abacus, Google's plan to do away with smartphone passwords almost entirely.

With Abacus, due to release in the next several months, Android devices will keep track of biometric markers like walking gate, typing patterns, the look of your face, your location and other things to build an up-to-the moment "trust score"  — a degree of certainty that the person holding your phone is in fact you. Different apps will be able to set different trust score thresholds at which you can use them.

This plan could largely kill the lock screen, finger presses, and other obstacles built into the current every day experience of phone use. In other words, it will make the average Android much more simple and easy to use than the average iPhone.

Do I think that will be enough to unseat Apple's throne atop the luxury phone mountain? No. But a huge majority of the world's smartphone users already use Android devices. And as iPhones get less and less interesting compared to premium Galaxies and HTCs, Abacus is exactly the kind of standout feature that could cause buyers on the fence to flip.

Fed, China fears force investors to check out of Asia

• Reuters

• 15h
• 429

Thomson ReutersA businessman walks in Tokyo's business district, Japan

By Nichola Saminather and Vidya Ranganathan

SINGAPORE (Reuters) - Having dumped Asian shares on resurgent worries about China's economy, the specter of more aggressive U.S. interest rate rises is now forcing global investors to sell the region's bonds and currencies.

A net $3.2 billion left Asian equity markets, excluding Japan, during the period May 1 to 24, the largest outflow since January, data from HSBC showed. Indonesia's and South Korea's bond markets, heavy recipients of foreign investment until March, are now seeing chunks of inflows reverse while Asia's currencies have also fallen quite sharply.

Some market participants see foreign investment outflows across Asian asset classes as an overreaction, given the strides policymakers have made in shoring up capital flight defenses since the "Fed taper tantrum" in 2013.

But for others, the unease around the Fed's policy deliberations twins increasing concerns around currency volatility with broader worries about the health of the China's real economy.

"If the Fed hikes rates in June, it might come at a time when the Chinese economy weakens, and that could also mean that the Chinese currency starts to weaken again," said Herald van der Linde, head of Asia-Pacific equity strategy at HSBC in Hong Kong.

"And that could lead to a scenario where everybody's up and down and markets fall five to 10 percent."

MSCI's Asia Pacific ex-Japan index <.miapj0000pus> rose 19 percent between late January and end-April on the tailwinds of a dovish Fed, stabilization in commodity prices and hopes China's economy will recover.

The fall - the index is down 5 percent since and touched a 12-week low on May 24 - is reminiscent of the selloff that followed the Fed's first rate rise in a decade in December.

It also comes as a surprise for some, given the relative health of Asia's economies compared with other emerging market blocs, such as Latin America.

And the downside could be limited given the broad dollar trade-weighted index <.dxy> has climbed 20 percent over the past two years, suggesting Asian currencies may have already priced in higher U.S. rates.

Despite this, plenty of asset managers expect further weakness in emerging markets and are positioned accordingly.

Deutsche Asset Management, for instance, expects another dip in emerging markets in the second half of the year and is holding off buying Asia.

"The market is split between those who think it's time to buy emerging markets and those who think the China data is not sustainable and U.S. rates will go up and emerging markets are overvalued," said Sean Taylor, chief investment officer at Deutsche Asset Management. Deutsche had $846 billion of assets under management at the end of December.

Soft Chinese economic data in April has raised doubts about the effectiveness and sustainability of the fiscal stimulus being doled out in the world's second-largest economy.

Chinese stocks <.ssec>, the region's worst performers, are down almost 20 percent this year.

For bond investors, Asia's weakening currencies aren't the only concern: subdued inflation and already low central bank rates mean the scope for gains is more limited than it is in other emerging markets.

Indonesia's rupiah government bond market, for example, received about $5 billion of foreign investment in the year to April, but about $670 million has left so far in May.

While investors expect Indonesia's central bank could cut rates by a further 125 basis points, the currency's 3 percent swift decline since last week may give authorities reason to pause and investors a reason to hold back.

"There's still quite a lot of fear out there," said Oliver Lee, investment director at Old Mutual Global Investors, which has $37.3 billion of assets under management.

"The renewed U.S. dollar strength and concerns around slowing stimulus in China could potentially be short-term headwinds."

(Reporting By Nichola Saminather; Editing by Sam Holmes)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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'Remain' 5 points ahead of 'Leave' in Brexit ORB poll: Daily Telegraph

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Thomson ReutersUnion flags and the Big Ben clocktower cover notebooks are seen on sale in London, Britain

(Reuters) - Support for Britain to stay in the European Union stood at 51 percent, 5 points ahead of support for a withdrawal from the 28-member bloc, an ORB poll for the Telegraph said on Monday.

Support to leave the union grew by 4 points to 46 percent according to the poll published Monday.

Britons will vote on June 23 on whether to remain in the 28-member bloc.

(Reporting by Ismail Shakil in Bengaluru; Editing by Diane Craft)

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter.

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Investors around the world are ditching stocks in favour of bonds

• David Scutt, Business Insider Australia

• May 27, 2016, 6:20 AM
• 668

Investors globally continued to ditch stocks last week, creating a seven-week run in demonstrating a preference to invest in fixed income assets instead.

According to research from Kenneth Chan, a quantitative strategist at Jefferies in Hong Kong, global equity funds recorded net outflows of US$8.9 billion, taking cumulative outflows over the past seven weeks to US$58.37 billion.

“Entering the last week of May and approaching major central bank meetings in June, investors remained cautious towards global equities,” said Chan.

As shown in the chart below, supplied by Jefferies, having seen fund inflows from the middle of 2015, investors have turned cold on stocks since the beginning of April.

EPFR, Jefferies

Over the week Chan notes that investors were indiscriminate in their selling, with outflow broad-based whether measured geographically or by sector.

“Geographically, US equities witnessed a marginal outflow of US$1.7 billion,” says Chan, noting that “investors withdrew more significantly from large caps and invested into small caps”.

It was a similar story for Europe, with outflows continuing for the 13th week in succession, somewhat ominously the longest stretch seen since 2007.

In Europe, the US$3.2 billion withdrawal extended its current outflow run to 13 weeks, the longest since 2007,” says Chan. “While equity outflows remained broad-based by country, Germany (-US$797mn) and UK (-US$733mn) topped the region in net outflow terms for the week.”

Luke MacGregor / Reuters

“The former also topped in net outflow terms year-to-date,” he added.

Fitting with the bullish price action in financial stocks, something that coincided with a lift in expectations for a near-term US interest rate hike, investors were net buyers for a third consecutive week.

Though funds continued to flow out of stocks, it was a very different story for bond funds which saw net inflows for an eighth straight week.

“Global bond funds extended their current inflow streak to eight weeks, with an inflow of US$2.6 billion of late,” says Chan.

“Government bonds recorded a rare return of inflow while corporate bonds continued to attract investors’ interest.”

On the other hand, Chan notes that “high yield bonds saw a net withdrawal of US$2.1 billion, the heaviest in 15 weeks” citing “the fact that more than 70 corporate borrowers have defaulted globally so far this year, the fastest pace since 2009”.

This “has put high yield bonds under pressure again for the past four weeks”, he said.

Read the original article on Business Insider Australia. Copyright 2016. Follow Business Insider Australia on Twitter.

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