Record highs in U.S. stock market not enough to attract fund investors


FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 24, 2019. REUTERS/Brendan McDermid/File Photo

NEW YORK (Reuters) – Investors retreated from the U.S. stock market last week despite the benchmark S&P 500 reaching new record highs, pulling nearly $9.1 billion from mutual funds and exchange-traded funds that hold domestic stocks, according to data released Wednesday by the Investment Company Institute.

The move away from the U.S. market came on the heels of $1.1 billon in inflows the week before, continuing a pattern in which the outsized gains in S&P 500 have been unable to attract investors en masse. The benchmark index is up more than 20% for the year to date, thanks in part to expectations of at least one equity-friendly interest rate cut by the Federal Reserve this year. Over the same time, investors have pulled nearly $67 billion out of domestic stock funds.

Instead, investors continued to pile into fixed income by sending $10.4 billion into taxable and municipal bond funds, extending a streak of positive inflows over every full week of the year that has brought more than $255 billion into the category.

World stock funds, meanwhile, continued a 9-week losing streak by dropping slightly more than $1 billion in assets. Investors have pulled approximately $20.5 billion from the category since the start of the year.

Reporting by David Randall; Editing by Jennifer Ablan and Nick Zieminski



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GE lifts forecast but warns Boeing grounding may cost $1.4 billion


(Reuters) – General Electric Co (GE.N) raised its 2019 forecast on Wednesday, but disclosed more than $1 billion in potential costs from Boeing’s grounded 737 MAX jetliner, puncturing an early share rally.

The General Electric Co. logo is seen on the company’s corporate headquarters building in Boston, Massachusetts, U.S. July 23, 2019. Picture taken July 23, 2019. REUTERS/Alwyn Scott

Boston-based GE, which makes 737 MAX engines in a joint venture, also said Chief Financial Officer Jamie Miller, who was appointed in October 2017, plans to step down after a successor is hired. The company which also makes power plants and medical devices did not specify a time frame.

GE appeared to cheer investors by saying it might generate as much as $1 billion in free cash flow this year, compared with a potential outflow of $2 billion that it forecast in May. GE also raised its profit outlook by 5 cents a share.

“There should be some relief from the raised EPS and free cash flow” forecast, Barclays analyst Julian Mitchell said.

But GE’s portfolio of low-margin industrial businesses remains a concern. GE posted red ink again after two profitable quarters, due mainly to a $744-million goodwill charge for its power grid business. GE spent less on restructuring than analysts expected, which underpinned its performance.

GE also received a tax benefit worth 6 cents a share that more than accounted for its increased profit forecast.

“The EPS increase of 5 cents … is less than this quarter’s 6-cent tax benefit,” Gordon Haskett analyst John Inch said in a note. The cash flow increase “appears to be heavily driven by … reduced cash restructuring drag,” he added.

After surging 4% in premarket trading, GE shares fell less than 1% to $10.45.

Graphic: GE shares under CEO Culp – tmsnrt.rs/2yqnVjR

GE’s industrial businesses suffered another tough three months, with margins falling by as much as 8 percentage points at renewable energy. But they generated more cash than expected, in part because it has become more aggressive in billing customers, collecting payments and reducing inventory, Chief Executive Larry Culp said on a conference call.

GE’s power business, which has long been a drag on earnings, posted a $117-million profit. But its relatively strong aviation business suffered as problems stretched on with Boeing’s 737 MAX jetliner, which regulators grounded in March.

CFM International, a joint venture between GE and France’s Safran SA (SAF.PA), supplies engines for the 737 MAX.

The MAX could cost GE $1.4 billion in cash if the plane remains grounded all year, as now appears possible, GE said.

“That was not in the previous guidance,” said RBC Capital Markets analyst Deane Dray, who added that investors reacted by selling GE after the conference call.

But airlines will fly older planes in place of the MAX and those use more spare parts, a lucrative product line for GE, Dray said. “We have to believe GE has ample contingency in their free cash flow outlook to have taken a bold, unexpected step to increase guidance,” Dray said. “No one was expecting them to.”

Investors have watched GE’s cash generation as it has failed to keep pace with earnings in recent years, raising concerns that GE’s actual financial performance was falling short of stated results. But in May Culp said he would focus on generating cash and let earnings be “almost like a byproduct,” Dray said.

GE said it now expects higher industrial revenue growth and bumped up earnings per share by 5 cents to between 55 cents and 65 cents. It shifted its forecast for industrial free cash flow to between negative $1 billion and positive $1 billion, from $0 to negative $2 billion.

Loss per share from continuing operations was 3 cents, down from a profit of 8 cents a year ago. On an adjusted basis, GE earned 17 cents per share, including the tax gain, compared with analysts estimates of 12 cents, on average, according to IBES data from Refinitiv. Revenue fell 1.1% to $28.8 billion.

Reporting by Alwyn Scott in New York and Rachit Vats and Sanjana Shivdas in Bengaluru; editing by Patrick Graham, Nick Zieminski and Tom Brown



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Muhyiddin: No such thing as ‘back door’ citizenship applications


KUCHING: There is no “back door” in approving citizenship applications as alleged by some, says Tan Sri Muhyiddin Yassin.

The Home Minister said every application, along with its supporting documents, are considered in detail by ministry officials before being recommended to him for a decision.

“In deciding whether or not to approve an application, I am assisted by officers who professionally carrying out their duties.

“I do not make decisions arbitrarily without recommendations from officers who have studied and assessed each application, ” Muhyiddin said when presenting citizenship certificates to 31 recipients here on Monday (July 29).

He advised those who had made such allegations not to make baseless accusations or to stir up racial sentiments.

Last Thursday (July 25), PAS demanded investigations into the possibility of “back door” applications for citizenship for migrants in Sarawak, with the support of DAP leaders.

Its information chief, Kamaruzaman Mohamad, asked why the recently set up Backbenchers Citizenship Committee was comprised only of 10 DAP MPs, following Lanang MP Alice Lau’s announcement on July 18.

A day earlier, Lau reportedly announced there would be a closed-door meeting with Muhyiddin.

“If there is no hidden agenda, why is only DAP involved؟ This has raised suspicion because such matters should be openly discussed, and such, a committee should comprise all races, ” Kamaruzaman had said.

Muhyiddin also said the Pakatan Harapan government would be fair in considering citizenship applications.

“Whoever is eligible to obtain citizenship under the Federal Constitution and relevant laws will be given fair consideration, regardless of race or religion, ” he said.



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US Security Token Platform Adds New Policies to Comply with FinCEN By Cointelegraph


US Security Token Platform Adds New Policies to Comply with FinCEN

Security tokens platform TokenSoft has officially added Know Your Business (KYB) services following a successful alpha test in 2018.

The San Francisco-based token issuance platform said in a press release on July 31 that the KYB feature was added in order to enhance customer due diligence (CDD) requirements in compliance with an amendment to the Bank Secrecy Act.

Continue Reading on Coin Telegraph

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Sterling Rebounds as Dollar Flat Ahead of Expected Rate Cut  By Investing.com


© Reuters.

Investing.com – The pound rebounded slightly on Wednesday after falling to a two-year low, while the U.S. dollar was flat ahead of an expected Federal Reserve rate cut.

A reduction of at least a quarter-point at 2:00 PM ET (18:00 GMT) from the Fed is priced in, with investors focused on Chairman Jerome Powell’s press conference a half-hour later for clues on further easing in the light of slowing global growth, notably caused by fallout from the trade conflict with China.

The , which measures the greenback’s strength against a basket of six major currencies, was flat at 97.838 by 10:18 AM ET (14:18 GMT).

The dollar was unmoved against the Japanese yen, with flat at 108.54.The Bank of Japan left rates steady on Tuesday but could ease monetary policy if global developments drag on the economy.

Sterling recovered, with up 0.5% to 1.2211, in a move that had no obvious triggers but which followed two days of sharp losses that made it ripe for a technical correction.

The pound had fallen to a two-year low of 1.2158 after newly elected Prime Minister Boris Johnson and his new cabinet of die-hard Brexiteers stepped up their rhetoric and their preparations for taking the U.K. out of the European Union by October 31, a timeframe that leaves little or no time to renegotiate a transitional deal to guarantee continued smooth trade between the two.

The currency is expected by many to fall further as Johnson’s plan to leave the EU is widely seen as likely to hurt the U.K. economy. While the Bank of England is expected to keep interest rates steady at its meeting on Thursday, the implied odds of a rate cut later have risen in recent days.

Elsewhere, was down 0.2% to $1.1136 after data showed that the euro zone’s gross domestic product grew only 0.2% in the second quarter. The third quarter has also started weakly, with the core consumer price index falling to 0.9% in July, barely half the European Central Bank’s target for headline inflation.

lost 0.2% to 1.3120.

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Brazil kicks off complex U.S. trade deal talks By Reuters



By Anthony Boadle

BRASILIA (Reuters) – Brazil has begun negotiating a trade agreement with the United States, the South American country’s economy minister said on Wednesday, kicking off knotty talks between longstanding competitors whose leaders want closer commercial ties.

Speaking in Brasilia after meeting with U.S. Commerce Secretary Wilbur Ross, Economy Minister Paulo Guedes said the United States was eager for a deal and the chance to sell Latin America’s largest economy more goods, including ethanol.

Brazil and the United States compete in key areas like agriculture, making it likely the trade talks will be fraught and long-lasting. Brazil is also part of South America’s Mercosur customs union, which would have to be involved in any tariff reductions.

Yet far-right President Jair Bolsonaro, along with Guedes and his team, have pledged to bring down trade barriers, open up the economy and make Brazilian business more competitive.

Since his election last year, Bolsonaro has sought to build close ties with U.S. leader Donald Trump, an ideological ally who favors bilateral commercial pacts over multilateral deals.

After meeting with Ross, Bolsonaro echoed his concerns over potential “pitfalls” in a trade deal recently struck between the European Union and the Mercosur bloc that includes Argentina, Uruguay and Paraguay.

On Tuesday, Ross said the trade deal between Mercosur and the European Union, reached in principle last month, should avoid “poison pills” that would obstruct a possible U.S. accord.

Marcos Troyjo, Brazil’s deputy economy minister for foreign trade, said it would be possible to negotiate a trade accord with the United States that does not include changes to tariffs, adding that negotiations will begin with non-tariff areas.

Brazil is considering renewing in September a zero-tariff quota for 600,000 tonnes of ethanol imports per year that has been filled almost entirely by U.S. supplies, Troyjo said.

Brazil is also committed to establishing an import quota for 750,000 tonnes of U.S. wheat a year without tariffs, he said.

Ross on Tuesday reaffirmed U.S. support for Brazil to join the Paris-based Organisation for Economic Cooperation and Development, a club of the world’s leading market economies. Membership in the OECD would give Brazil a seal of approval that many institutional investors need to invest in the country, Troyjo said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Brazil central bank cuts rate sharply to record low 6.00% By Reuters



By Jamie McGeever

BRASILIA (Reuters) – Brazil’s central bank cut its benchmark interest rate to a record low 6.00% on Wednesday, making an aggressive move with the first reduction in borrowing costs since March 2018, citing subdued inflation and looser policy in major economies.

The bank’s nine-member monetary policy committee, known as Copom, voted unanimously to lower the Selic rate by 50 basis points. Fourteen out of 27 economists in a Reuters poll predicted a 25-basis point cut to 6.25%, while 10 expected a more aggressive move to 6.00%. BR/INT

In a statement accompanying its decision, Copom cited data showing underlying inflation at “comfortable levels” amid a “possible resumption” of a gradual economic recovery.

Soon after the U.S. Federal Reserve cut interest rates for the first time in more than a decade, Brazilian policymakers also highlighted a dovish global backdrop.

“The global outlook has become benign, owing to changes in monetary policy in major economies,” Copom’s statement said. “Nevertheless, the risks associated with a slowdown in global growth remain.”

Analysts had said in the run up to Wednesday’s decision that recent progress on fiscal reforms, which should boost investor sentiment and bring down long-term inflationary pressures, would also give the central bank cover to cut interest rates.

Central bank President Roberto Campos Neto had previously sought to play down a direct link between a major social security overhaul and a rate cut. But Copom’s last policy statement in June made clear that uncertainty over the reform was the biggest single obstacle to lower rates.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



The Top 3 Things to Watch By Investing.com


© Reuters.

Investing.com – Here are the top 3 things that could rock markets tomorrow.

1. Fed Fallout to Continue?

Following the late selloff in markets Wednesday, Fed Chairman Jay Powell’s are likely to continue to have an impact Thursday as traders rein in expectations for future rate cuts.

Powell said the Fed’s decision to cut rates was not the beginning of a long series of rate cuts, throwing into doubt investor expectations that more easing would follow. He clarified that Wednesday’s cut was not a one-time move.

Particular attention will be on the bond market, where expectations of future easing dissipated.

And investors will also be wary of President Donald Trump, who tweeted Wednesday afternoon, “As usual, Powell let us down.” What the President wanted, he said in his tweet, was a signal the Fed was starting “a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world.”

Trump has suggested in the past he might replace Powell. Powell has said he can’t be fired and plans to serve out his four-year term as Fed chairman.

2. General Motors Earnings Pull In

General Motors (NYSE:) is set to report earnings before markets open on Thursday.

Ahead of the earnings, the automaker provided a dour update that put the brakes on performance expectations for the quarter, reporting a 1.5% decline in deliveries amid weaker sales of its volume-selling Chevrolet brand.

GM is expected to report of $1.43 a share on revenue of $36.11 billion.

Guidance will also come into focus, with GM in April saying it was on track to deliver full-year adjusted earnings per share between $6.50 and $7.

GM was off a modest 0.2% on Wednesday. It finished July with a 4.7% gain and is up 20.6% on the year.

3. U.S. Manufacturing, Labor, Construction Data on Watch

At 8:30 AM ET, the Labor Department releases its weekly jobless claims report: the estimate of the number of individuals who filed for unemployment insurance for the week ended July 27.

Economists forecast that increased to 212,000 from 206,000 the week before.

The data comes ahead of the all-important nonfarm payrolls report due Friday.

At 10:00 AM ET, the Institute of Supply Management will release its measure of manufacturing activity for July.

The ISM is predicted to have increased to a reading of 52 from 51.7 in its June report.

Construction spending data will follow on the heels of the manufacturing data, with economists forecasting rebounded 0.8% in June from the prior month.

As usual, Powell let us down,

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Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Fed Lowers Interest Rates by Quarter Point, First Cut Since ‘08 By Investing.com


© Reuters.

Investing.com – The Federal Reserve cut interest rates for the first time since 2008 as inflation continued to track below target and signs of slowing global growth persisted. But Fed Chairman Jay Powell dashed hopes that aggressive cuts may follow, saying that the cut does not represent the start of a lengthy easing cycle.

The Federal Reserve cut its benchmark rate by 25 basis points to a range of 2.0% to 2.25% from

The rate cut was fully priced in, according to Investing.com’s , though some had been holding out hope for a more aggressive 50-basis-point cut as inflation continues to undershoot the Fed’s target.

“In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2 to 2-1/4 percent,” the Fed said.

But at his press conference, Powell said the the move was “a mid-cycle policy adjustment,” indicating that the market’s idea of continual rate cuts in the future was off base.

The most recent measure of core personal consumption expenditures (PCE), the Fed’s preferred measure of inflation, came in at 1.7%, below the central bank’s 2% target.

President Donald Trump, a day earlier, had called on the Fed to make a “large cut” to offset a series of hikes last year.

“I’m very disappointed in the Fed,” Trump told reporters Tuesday morning. “I would like to see a large cut, and I’d like to see immediately the quantitative tightening stop.”

In a move to further ease financial conditions, the central bank pledged to end its balance sheet shrinking program, which many argue counters rate cuts, at the end of the month, two months earlier than initially anticipated.

“The Committee will conclude the reduction of its aggregate securities holdings in the System Open Market Account in August, two months earlier than previously indicated,” the Fed said.

The last time the Fed cut rates was Dec. 16, 2008, the heart of the Financial Crisis and three months after the collapse of Lehman Bros., which had brought series of emergency cuts in the interim.

The Fed capitulated to cutting rates to 0% that day, but established a target range of 0% to 0.25%, saying “weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.”

Rates had been at 4.25% at the end of 2007. The FOMC wouldn’t hike until Dec. 16, 2015.

The Fed’s path of hiking rates to the current level, which has drawn the ire of the president, began on March 15, 2017, where it noted that the FOMC “expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



What a Fed rate cut means for your wallet


NEW YORK/WASHINGTON (Reuters) – A decision by the Federal Reserve to cut interest rates may do little at this point to cut some of the costs that matter to many U.S. consumers.

FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File Photo

From mortgages to credit cards, banks and other lenders may resist offering substantially lower rates to consumers, analysts said, even if the central bank makes a widely expected cut to its policy rate, currently targeted between 2.25% and 2.50%.

For one thing, some borrowing costs are already low and markets have already priced in expectations the Fed would support the economy. Mortgage rates have also dropped, with rates on the average 30-year U.S. home loan falling under 4.1%, near a 22-month low, more than half a point below the average since the global financial crisis more than a decade ago, according to the Mortgage Bankers Association.

“If we drive down into the mid-3.7%, mid-3.8% range, you’re talking about historic affordability from a purchasing power standpoint,” said Mark Fleming, chief economist for First American Financial Corp, which provides insurance related to real estate transactions. “There’s not a lot of wiggle room here in the first place. I think we established five or six years ago that a mortgage rate around 3.5% or 3.6% is a floor. That’s about as low as you can go.”

That low mortgage level was when the Fed’s rates were near zero and the central bank was buying mortgage bonds in the aftermath of the financial crisis to drive longer-term rates even lower – a far cry from where policy is now.

At the same time, one of the Fed’s main goals in cutting rates is to bring inflation up to the 2% level policymakers consider healthy, and maybe even higher to make up for long periods of missing that target. If the Fed succeeds, longer-term bonds most sensitive to inflation could fall in price, causing their yields to rise. Because U.S. mortgages are benchmarked to those longer-term bonds, rates could rise again.

For many consumers, the obstacle to buying a house has not been mortgage rates, but stricter lending standards that reduced access to mortgages in the first place. Big price increases and limited supply have also made housing less affordable. Lower rates could make housing even more out of reach by spurring demand, driving prices even higher.

Financing for new cars might be a different story, though, especially given the large role of automakers themselves in the car loan business. Those businesses have an incentive to increase lending to support the auto market.

Savers, meanwhile, have been rewarded in recent months for shopping around for higher-yielding savings accounts and certificates of deposit. Thanks to increased competition, some online banks have been pushing yields up for those products even with the expected rate cut.

That could change if the Fed is embarking on a prolonged series of rate cuts, as some investors are betting. But the biggest factor could still be overall competition between financial institutions for savers’ money, said Morningstar Inc analyst Eric Compton.

Consumers, however, are in a much better place than they have been in years, by some measures. They have higher take-home pay, lower debt and better credit scores than during the financial crisis. “You’ve got consumers that are pretty healthy, savings rates are pretty good,” said Neal Van Zutphen, president of Intrinsic Wealth Counsel Inc, a financial planner. “They’re taking advantage of this anticipatory drop in rates.”

Reporting by Trevor Hunnicutt in New York and Jason Lange in Washington; Editing by Leslie Adler



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