Good morning! Here’s what you need to know in markets on Wednesday.
The International Monetary Fund (IMF) wants Greece’s European partners to grant Athens substantial relief on its debt which it sees remaining “highly unsustainable”, according to a draft IMF memorandum seen by Reuters. “Despite generous concessional official financing and further reform plans … debt dynamics are projected to remain highly unsustainable,” the IMF draft said. “To restore debt sustainability, in addition to our reform efforts, decisive action by our European partners to grant further official debt relief will be essential.”
At least half of the US banks deemed “too big too fail” will reportedly have a key proposal rejected by federal regulators. According to a report by The Wall Street Journal, regulators are planning to reject the “living wills” submitted by four of the eight “systemically important” banks.
Asian stock markets are bouncing after strong trade data from China. According to China’s customs department, exports grew by 11.5% in US dollar denominated terms from March 2015, easily beating expectations for an increase of 2.5%. China’s benchmark Shanghai Composite Index is up 2.34% at the time of writing (6.15 a.m. GMT/1.15 a.m. ET), Japan’s Nikkei is up 2.75% and the Hong Kong Hang Seng is up 2.80%.
Crude oil prices jumped on Tuesday after an Interfax report that Saudi Arabia and Russia reached an agreement on an oil-production freeze. The Interfax report cited an anonymous source, and said Saudi Arabia and Russia made the decision whether Iran is in or not. At the time of writing (6.15 a.m. GMT/1.15 a.m. ET), UK Brent oil is up 0.34% at $44.39 (£31.15) a barrel and US West Texas Intermediate is down 0.95% to $41.77 (£29.31).
The US economy is facing a new “impossible trinity” that will most likely create major headaches for investors in stocks and bonds alike. In a note out Tuesday, Rineesh Bansal, an analyst at Deutsche Bank, wrote that the US economy was striving to achieve three outcomes: higher wages, more inflation, and higher profits.
Nurofen’s manufacturer Reckitt Benckiser should be fined $6 million (£4.2 million) for misleading consumers over a range of “targeted” pain products that cost twice as much as its standard painkillers despite having the same active ingredient and effect, the Australian Competition and Consumer Commission (ACCC) has found. The Guardian reports that in December the federal court found the British company had engaged in “misleading conduct” by representing that its Nurofen Specific Pain products targeted a type or area of pain despite being identical, and ordered they be removed from supermarket shelves within three months.
Volkswagen is moving toward a significant reduction in executive bonuses as the German carmaker grapples with the fallout from a diesel emissions scandal, people familiar with the matter said on Tuesday. Blueprints for executive compensation being discussed by Volkswagen’s supervisory and management boards represent an “appropriate and fair solution” for all parties involved, the sources said.
Amazon is in talks with British broadcasters to add their channel brands and programmes to its streaming service, as it gears up to use Jeremy Clarkson as the spearhead of an attack on the pay-TV market. The Telegraph reports that the giant is attempting to adapt its American Streaming Partners Programme to the UK media market and make its Prime Instant Video service and Fire TV set-top box hardware into a more credible alternative to Sky and Virgin Media, and give it an edge over Netflix.
US companies have a looming corporate debt problem of their own making, and it may soon come back to crush them. According to Andrew Lapthorne, head of quantitative analysis at Societe Generale, the amount of debt that businesses have accumulated over the last five to six years has put them on the verge of a serious crisis.
American Apparel is laying off hundreds of workers as it overhauls its production process, which could include outsourcing part of its production to another US manufacturer, the Los Angeles Times reported on Tuesday. “If we do decide to produce some pieces out-of-house, they will still be American-made,” Chief Executive Paula Schneider wrote in a letter obtained by the Times.
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