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Indonesia crash revelations raise pressure on Ethiopia probe

Ethiopian Red Cross workers carry a body bag with the remains of Ethiopian Airlines Flight ET 302 plane crash victims at the scene of a plane crash, near the town of Bishoftu, southeast of Addis Ababa
Ethiopian Red Cross workers carry a body bag with the remains of Ethiopian Airlines Flight ET 302 plane crash victims at the scene of a plane crash, near the town of Bishoftu, southeast of Addis Ababa, Ethiopia March 12, 2019. REUTERS/Baz Ratner

March 20, 2019

By Maggie Fick and Cindy Silviana

ADDIS ABABA/JAKARTA (Reuters) – The world’s biggest planemaker Boeing faced growing obstacles to returning its grounded 737 MAX fleet to the skies on Wednesday, while chilling details emerged of an Indonesian crash with similarities to the Ethiopian disaster.

Experts suspect an automated system, meant to stop stalling by dipping the nose, may be involved in both cases, with pilots unable to override it as their jets plunged downwards.

The March 10 Ethiopian Airlines crash has shaken the global aviation industry and cast a shadow over the flagship Boeing model intended to be a standard for decades to come, given parallels with the Lion Air calamity off Jakarta in October.

The twin crashes killed 346 people.

(GRAPHIC: Ethiopian Airlines crash – https://tmsnrt.rs/2Hn6V4k)

Chicago-headquartered Boeing has promised a swift update of the automatic flight software for the craft but major regulators in Europe and Canada want to be sure themselves, rather than rely on U.S. vetting.

As Ethiopian investigators pored over black box data from their crash, sources with knowledge of the doomed Lion Air cockpit voice recorder revealed how pilots scoured a manual in a losing battle to figure out why they were hurtling down to sea.

Investigators examining the Indonesian crash want to know how a computer ordered the plane to dive in response to data from a faulty sensor and whether pilots had enough training to respond appropriately to the emergency.

Communications showed that in the final moments, the captain tried in vain to find the right procedure in the handbook, while the first officer was unable to control the plane.

“It is like a test where there are 100 questions and when the time is up you have only answered 75,” said one of the sources with knowledge of the cockpit recording that has not been made public. “So you panic. It is a time-out condition.”

At the end, the sources told Reuters, the Indian-born captain, 31, was quiet, while the Indonesian officer, 41, said “Allahu Akbar” (“God is greatest”) – an Arabic phrase to express excitement, shock, praise or distress. The plane then hit water.

U.S. “CREDIBILITY DAMAGED”

Boeing has said there was a documented procedure to handle the situation. A different crew on the same plane the evening before had the same problem but solved it after running through three checklists, though they did not pass on all that information to the doomed crew, the preliminary report by investigators released in November said.

Rowing back from previous reliance on U.S. Federal Aviation Administration (FAA) vetting, Canada and the European Union will now seek their own guarantees over the MAX planes, complicating Boeing’s hopes to get them flying worldwide again.

Regulators want to be absolutely sure of Boeing’s new automated flight control system, known as MCAS (Maneuvering Characteristics Augmentation System), and that pilots are fully trained to handle it.

“Our credibility as leaders in aviation is being damaged,” wrote Chesley Sullenberger, a U.S. pilot famed for landing a jet on the Hudson River saving all 155 people on board a decade ago.

“Boeing and the FAA have been found wanting in this ugly saga that began years ago but has come home to roost with two terrible fatal crashes, with no survivors, in less than five months, on a new airplane type, the Boeing 737 Max 8, something that is unprecedented in modern aviation history,” he added in a scathing article on marketwatch.com.

(GRAPHIC: The grounded 737 Max fleet – https://tmsnrt.rs/2u5sZYI)

Facing such high-profile scrutiny, Boeing, one of the United States’ most prestigious exporters, reshuffled executives in its commercial airplanes unit to focus on the crash fallout.

(GRAPHIC: Boeing 737 Max deliveries in question – https://tmsnrt.rs/2Hv2btC)

VOICE RECORDINGS

The FAA noted in a statement that its “robust processes” and “full collaboration with the aviation community” were key to safety worldwide. The regulator is due to have a new head soon, likely to be former Delta Air Lines executive Steve Dickson.

U.S. President Donald Trump had apparently been considering his longtime personal pilot, John Dunkin, before leaning toward Dickson who had a 27-year career at Delta.

In Ethiopia, which is leading the investigation, experts were poring over the in-flight recording of Captain Yared Getachew and First Officer Ahmednur Mohammed’s voices.

As with the Indonesia flight, they radioed control problems shortly after take-off and sought to turn back, struggling to get their plane on track before it hit a field. However, there is no proven link and experts emphasize that every accident is a unique chain of human and technical factors.

For now, though, more than 300 MAX aircraft are grounded round the world, and deliveries of nearly 5,000 more – worth well over $500 billion – are on hold.

Development of the 737 MAX, which offers cost savings of about 15 percent on fuel, began in 2011 after the successful launch by its main rival of the Airbus A320neo. The 737 MAX entered service in 2017 after six years of preparation.

(Reporting by Maggie Fick and Jason Neely in Addis Ababa, Tim Hepher in Paris, David Shepardson in Washington, David Ljunggren in Ottawa, Jamie Freed in Singapore, Cindy Silviana in Jakarta; Writing by Andrew Cawthorne; Editing by Jon Boyle)

Source: OANN

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Lancaster County Amish population thrives despite sprawl

The Amish population in Pennsylvania's Lancaster County is continuing to grow each year, despite the encroachment of urban sprawl on their communities.

The U.S. Census Bureau says the county added about 2,500 people in 2018. LNP reports that about 1,000 of them were Amish.

Elizabethtown College researchers say Lancaster County's Amish population reached 33,143 in 2018, up 3.2% from the previous year.

The Amish accounted for about 41% of the county's overall population growth last year.

Some experts are concerned that a planned 75-acre (30-hectare) housing and commercial project will make it more difficult for the county to accommodate the Amish.

Donald Kraybill, an authority on Amish culture, told Manheim Township commissioners this week that some in the community are worried about the development and the increased traffic it would bring.

___

Information from: LNP, http://lancasteronline.com

Source: Fox News National

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Cash, demand concerns overshadow Tesla’s SUV launch

Undated handout photo of Tesla Inc's Model Y electric sports utility vehicle
Tesla Inc's Model Y electric sports utility vehicle is pictured in this undated handout photo released on March 14, 2019. Tesla Motors/Handout via Reuters

March 15, 2019

(Reuters) – Shares of Tesla Inc fell nearly 5 percent on Friday, as investors wondered if its unveiling of an electric sports utility vehicle would add to pressure on cash flow, while analysts worried the carmaker was not addressing slowing demand for other models.

Tesla, which introduced a cheap $35,000 version of its Model 3 sedan last month and is struggling to convince backers its business model works, on Thursday launched the “Model Y” compact SUV – built on the same platform as the Model 3.

“It seems to be another distraction tactic presenting a new model and (to) divert from the problems with the other cars, the production and the profitability,” NORD/LB analyst Frank Schwope said.

None of the 30 analysts who cover Tesla cut their price targets or recommendations for its shares, but the slightly bleak response to the new launch underlines the ambivalence of some on Wall Street to the company after months of legal wrangling and social media outbursts by Chief Executive Officer Elon Musk.

Some Wall Street analysts had raised concerns that demand for the higher-priced Model 3 was slowing down in the United States, especially after a reduction in the federal tax credit this year.

“We believe that Tesla’s original business model for the production and profitability of the ‘affordable’ $35,000 version of the Model 3 is proving to be very difficult to achieve,” ratings firm Moody’s wrote in a research note.

The launch of the Model Y also reignited worries that Tesla would need to raise cash sooner than later.

Two Tesla analysts, both known as Tesla bulls – Gene Munster from Loup Ventures and Ivan Fienseth from Tigress Financial Partners – said the company would likely need to raise money later this year.

Cowen & Co’s Jeffrey Osborne, who has an “underperform” rating on the stock, also agreed.

“We believe the event was more of a capital raising effort and branding exercise,” Osborne said in a client note. “We do not see the new Model Y igniting elevated demand or enthusiasm for the Tesla brand.”

Tesla said it would debut a long-range Model Y next year with a range of 300 miles (482 km), priced at $47,000, as well as a standard version, priced at $39,000, in 2021.

Tesla has been cutting jobs and closing stores in a bid to make profits and expects a loss in the first quarter.

Shares of the company were down at $276.06 in afternoon trading.

(Reporting by Sonam Rai in Bengaluru; editing by Patrick Graham and Arun Koyyur)

Source: OANN

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VW brand to cut up to 7,000 jobs for 5.9 billion euro annual savings goal

FILE PHOTO: A Volkswagen badge on a production line at the VW plant in Wolfsburg, Germany
FILE PHOTO: A Volkswagen badge on a production line at the Volkswagen plant in Wolfsburg, Germany, March 1, 2019. REUTERS/Fabian Bimmer/File Photo

March 13, 2019

WOLFSBURG, Germany (Reuters) – Volkswagen <VOWG_p.DE> on Wednesday said it will shrink its workforce by up to 7,000 staff, raise productivity and eke out 5.9 billion euros worth of annual savings at its core VW brand by 2023 in a bid to raise VW’s operating margin to 6 percent.

Volkswagen has ruled out compulsory layoffs until 2025, but early retirement will help the Wolfsburg, Germany-based carmaker to reduce its workforce between 5,000 and 7,000 positions, the carmaker said.

“The measures from the earnings improvement program will enable our brand to achieve a competitive return level of six percent in 2022,” Arno Antlitz, Volkswagen brand’s board member for controlling, said in a statement.

(Reporting by Edward Taylor; Editing by Riham Alkousaa)

Source: OANN

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Gov Debt to Trigger Next Great Recession

Last week we reported that the yield curve on US Treasurys had inverted after the yield on the 10-year fell below the yield on 3-year bonds for the first time since 2007 – the cusp of the Great Recession. This has historically been an early-warning sign signaling a recession.

Now we have some more bad news for bond markets – this time on a global scale. The amount of government debt with negative yields has vaulted back above the $10 trillion mark and now makes up a full one-fifth of the global bond market.

According to Bloomberg, the amount of debt trading at nominal yields below zero has hit $10.7 trillion. That’s nearly double from a low of $5.7 trillion in early 2018.

The Federal Reserve’s sudden policy reversal and the “Powell Pause” has pushed yields lower worldwide. According to the Financial Times, “The Federal Reserve’s unexpectedly downbeat outlook exacerbated concerns over the health of the global economy and sent investors scurrying for the apparent safety of sovereign bonds.”

“Bond yields have sagged lower for much of 2019, as fixed-income investors have remained skeptical that growth will pick up again. With economic data still weak and inflation at bay, central banks have been forced to abandon moves to tighten monetary policy.”

It’s basically a function of supply and demand. As more people seek the “safety” of government bonds fearing economic turmoil, bond prices rise. Inversely, yields fall.


Gerald Celente breaks down what’s ahead as the Federal Reserve crashes the debt & real estate bubble it created worldwide.

Bank of America Merrill Lynch senior strategist told the FT he found it puzzling that the Fed went even more dovish during the March FOMC meeting than it had been in January.

“Investors are starting to ask what the Fed might know about the economy that the market does not?”

The Fed is not alone in its dovishness. In March, the European Central Bank relaunched a crisis-era bank lending program. Meanwhile, the yield on the German 10-year bond dropped below zero as the country’s economy appears to be on the cusp of a recession.

(Photo by Chris Dlugosz, Flickr)

Late last year, the ECB announced the end of its QE program. The central bank’s QE purchases totaled somewhere in the neighborhood of  2.6 trillion euros. The bank also pushed interest rates below zero. So, what did the EU get for all this stimulus? Not a whole lot. We highlighted the “successes” of ECB QE. And now that the European Central Bank is winding down the stimulus, it already looks like Germany – and a lot of other EU countries – is slipping toward an economic downturn.

Here’s the $64,000 question: why are people pouring money into negative yielding bonds? At some point they are going to figure out losing money over time isn’t a great investing strategy. Perhaps at that point, they will turn to precious metals.

Pundits often knock gold because it is a “non-yielding” asset. And yet, gold actually outperformed the S&P 500 in 2018. Holding a “yielding” asset that is yielding a loss isn’t helping your portfolio.

The growing pile of negative yielding debt is yet another sign we are hurtling toward a crisis. At some point, people will figure it out.

As Peter Schiff has pointed out, given the enormity of the budget deficits and the ever-upward spiraling debt, the Fed had no choice but to call off the tightening. You can’t raise interest rates in an economy built on piles of debt. But the Fed can’t tell the markets that. They will have to figure it out on their own. So far, they seem pretty clueless. But eventually, they will and that’s when the bottom is really going to fall out of the dollar.

“When the Fed has to go back to zero, which it will be doing relatively soon, when the Fed has to go back to quantitative easing, nobody is going to believe that it is temporary again. Nobody is going to buy the Fed’s BS about how interest rates are going to stay low only temporarily and then we’re going to normalize them, and we’re going to shrink our balance sheet. We’re not monetizing the debt. After the recession is over we’re going to shrink our balance sheet back down to where it was before the recession. No one’s going to believe that. They couldn’t shrink a $4 trillion balance sheet. They won’t be able to shrink an $8 trillion balance sheet. If they couldn’t raise rates when the national debt was $22 trillion, they sure as hell can’t raise them when the national debt is $30 trillion.”


Colorado’s Senate passed the so-called ‘red flag bill’ that allows law enforcement to seize people’s guns if a court rules them at risk to themselves or others.

Source: InfoWars

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Stock futures flat amid Brexit uncertainty; Boeing falls again

FILE PHOTO: Traders work on the floor of the NYSE in New York
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., March 7, 2019. REUTERS/Brendan McDermid/File Photo

March 13, 2019

By Amy Caren Daniel

(Reuters) – U.S. stock index futures treaded water on Wednesday, as investors took a cautious stance ahead of a clutch of domestic economic data and another make-or-break parliamentary vote on Brexit, which could send a shock through global markets.

British lawmakers crushed Prime Minister Theresa May’s European Union divorce deal on Tuesday, forcing parliament to decide within days whether to back a no-deal Brexit or seek a last-minute delay.

Lawmakers will now vote at 3:00 p.m. ET (1900 GMT) on whether Britain should quit the world’s biggest trading bloc without a deal, a scenario that business leaders warn would bring chaos to markets and supply chains.

The S&P 500 and Nasdaq rose on Tuesday after tame inflation data underscored the Federal Reserve’s dovish stance on rate hikes, but the Dow ended down as Boeing Co’s shares sank for a second day after one of its planes crashed in Ethiopia.

Boeing was down more than 2 percent in premarket trading on Wednesday after more countries grounded the company’s best-selling line of jets following the crash.

On the trade front, U.S. Trade Representative Robert Lighthizer said the United States and China may be in the final weeks of discussions to hammer out a deal to ease their tit-for-tat tariffs dispute.

At 6:51 a.m. ET, Dow e-minis were down 2 points, or 0.01 percent. S&P 500 e-minis were up 4 points, or 0.14 percent and Nasdaq 100 e-minis were up 10.75 points, or 0.15 percent.

Rite Aid Corp jumped 19.4 percent after the drug store chain operator said its chief executive officer would exit as part of a revamp of its leadership and that it would slash about 400 jobs.

A report on durable goods orders is expected to show a 0.5 percent drop in January from a 1.2 percent rise the month before, while Labor Department data is expected to show producer prices edged up 0.2 percent in February from prior month’s 0.1 percent dip. Both sets of data are due at 8:30 a.m. ET.

(Reporting by Amy Caren Daniel and Medha Singh in Bengaluru; Editing by Anil D’Silva)

Source: OANN

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RBS aims to wind down 1 billion pounds in local council loans: The Guardian

FILE PHOTO: Royal Bank of Scotland signs are seen at a branch of the bank, in London
FILE PHOTO: Royal Bank of Scotland signs are seen at a branch of the bank, in London, Britain December 1, 2017. REUTERS/Peter Nicholls/File Photo

March 23, 2019

(Reuters) – Britain’s Royal Bank of Scotland Group Plc is aiming to wind down 1 billion pounds ($1.3 billion) of bank loans held by local councils across the country, The Guardian http://bit.ly/2Oijrmm newspaper reported on Saturday.

The development follows criticism from activists and John McDonnell, finance spokesman of Britain’s opposition Labour Party, that high payments have led to diversion of cash from council services.

RBS is aiming to wind down the loan portfolio by the end of the year, the newspaper report said, adding that the main method of executing the winding down is through loan redemptions.

Such redemptions will allow clients including local authorities to pay back the loans earlier than their original contracts allowed.

RBS did not immediately respond to a Reuters request for comment early on Saturday.

(Reporting by Aishwarya Nair and Kanishka Singh in BENGALURU; Editing by Tom Hogue)

Source: OANN

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FILE PHOTO: An aerial photo looking north shows shipping containers at the Port of Seattle and the Elliott Bay waterfront in Seattle
FILE PHOTO: An aerial photo looking north shows shipping containers at the Port of Seattle and the Elliott Bay waterfront in Seattle, Washington, U.S. March 21, 2019. REUTERS/Lindsey Wasson/File Photo

April 26, 2019

NEW YORK (Reuters) – U.S. economic growth is running at a 1.1% pace in the second quarter as the gains in exports and inventories recorded in the first quarter are expected to reverse, Morgan Stanley economists said on Friday.

“Our preliminary expectations for growth in the second quarter sees large drags from net exports and inventories after their contributions in 1Q,” they wrote in a research note.

Gross domestic product increased at a 3.2% annualized rate in the first three months of the year, driven by a smaller trade deficit and the largest accumulation of unsold merchandise since 2015, the Commerce Department said earlier Friday.

(Reporting by Richard Leong)

Source: OANN

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FILE PHOTO: The Deutsche Bank headquarters are pictured in Frankfurt
FILE PHOTO: The Deutsche Bank headquarters are pictured in Frankfurt, Germany, April 25, 2019. REUTERS/Ralph Orlowski/File Photo

April 26, 2019

By Tom Sims

FRANKFURT (Reuters) – Within hours of the collapse of merger talks with Commerzbank, Christian Sewing scrambled to convince investors and employees that Deutsche Bank can stand on its own two feet.

The Deutsche Bank chief executive told staff, many of whom opposed a merger because of significant job losses, that while he had not been “skeptical” about the Commerzbank talks, he was cautious about the chances of success from the start.

And another top Deutsche Bank executive said on Friday that it had been Commerzbank that initiated the talks, suggesting there was no desperation on their part for a deal.

Commerzbank denied that version of events, ending the apparent truce between the normally highly competitive cross-town Frankfurt rivals over the past six weeks.

German hopes of creating a national banking champion able to challenge global competitors were finally dashed on Thursday when Deutsche Bank and Commerzbank ended their talks due to the risks of doing a deal, restructuring costs and capital demands.

For Sewing, the failure to clinch a deal has left the 49-year-old chief executive of Germany’s largest bank, who took over just over a year ago, with his back to the wall.

Credit ratings agency Standard & Poor’s, which downgraded Deutsche Bank last year, said on Friday that Deutsche Bank “will remain under strain”, adding that it “seems to have acknowledged the need to adjust its strategy”.

Under Sewing, a new leadership has tried to revive Deutsche Bank’s fortunes, but it has faced money laundering allegations and failed stress tests, as well as ratings downgrades.

At the heart of the debate over its future is whether it should focus its business on Germany and draw a line under its costly global ambitions to take on Wall Street’s big guns.

“MARKET PLAY”

Without a deal, Deutsche Bank now finds itself back at the mercy of equity and debt markets, with UBS analysts warning that in a “stress scenario” it could again “be forced into a ‘debt-driven capital increase’ even with solid capital ratios”.

“Deutsche remains a levered market play vulnerable to external events,” the UBS analysts said in a note.

Sewing, along with many analysts, believes Deutsche Bank can go it alone in the short-term, but will be counting on a turnaround in market conditions to do so in the long-run given its dependence on volatile investment bank earnings.

“To reach our return objective, we also need to see a revenue recovery in our more market-sensitive business,” Sewing said on Friday after reporting results.

“These revenues are available to us in better market conditions given our leading positions in many of these businesses, but we need to capture them,” he added.

Revenue at Deutsche Bank’s bond trading division fell 19 percent in the first quarter, it said on Friday, underscoring weakness at its investment bank.

If those earnings do not improve, Berlin’s desire to keep its biggest bank out of foreign hands may start to wane.

“Germany’s globally active companies need competitive financial institutions that can support them around the world,” German finance minister Olaf Scholz said on Thursday.

(Writing by Alexander Smith; Editing by Keith Weir)

Source: OANN

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Panama's former president Ricardo Martinelli yells to the media while arriving to the Electoral Court in Panama City
Panama’s former president Ricardo Martinelli reacts to the media while arriving to the Electoral Court in Panama City, Panama April 26, 2019. REUTERS/Erick Marciscano

April 26, 2019

PANAMA CITY (Reuters) – Panama’s electoral tribunal has ruled that former President Ricardo Martinelli, who is awaiting trial on wiretapping charges, cannot take part in elections on May 5 in which he was running for mayor of Panama City and a seat in Congress, a spokesman for Martinelli said on Friday.

“The ruling of the electoral tribunal has disqualified him as candidate,” said the spokesman, Eduardo Camacho, calling the court’s ruling a “political decision.”

Officials at the tribunal did not immediately confirm the ruling, which also was reported in local media in Panama.

Martinelli, a supermarket tycoon who ran the Central American country from 2009 to 2014, was extradited to Panama last June from the United States and charged with spying on 150 people, including politicians, union leaders and journalists.

A judge had previously cleared Martinelli to run for mayor of the capital. His critics vowed to appeal that decision.

(Reporting by Elida Moreno and Stefanie Eschenbacher; Editing by Bill Trott)

Source: OANN

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FILE PHOTO: Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City
FILE PHOTO: Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016. REUTERS/Mike Segar/File Photo

April 26, 2019

(Reuters) – Shares of Walmart, Target and other U.S. retailers fell on Friday as Amazon.com Inc unveiled a one-day delivery plan for its Prime members in a move to further disrupt the fiercely competitive retail landscape.

The e-commerce giant’s announcement on Thursday could cause other brands, manufacturers, retailers, and logistics companies to have to invest more aggressively to compete with Amazon and its delivery, analysts said.

Retailers in recent years have poured billions into ecommerce and faster shipping options and are trying to close the gap with Amazon.

“This is about making it more expensive to catch up and affirms our world view that only the largest and smartest will survive,” Bernstein analyst Brandon Fletcher said.

The move is expected to heighten consumer expectations on e-commerce delivery just like Amazon did with its two-day shipping option for members of its loyalty club Prime, noted analysts.

“The faster you ship, the more people buy,” RBC Capital Markets analyst Mark Mahaney said.

The challenge for non-Amazon players was that very few of the existing logistics and parcel delivery players now have the ability to do nationwide one-day delivery, Morgan Stanley analyst Brian Nowak said.

“And even fewer can do it at the vast scale and reasonable cost that AMZN would need for Prime delivery,” Nowak said in a note.

Walmart Inc’s shares fell about 3 percent, while Target Corp dropped about 5 percent in morning trade.

Shares of Kohl’s Corp, Macy’s Inc and Nordstrom Inc fell about 1 percent. Grocer Kroger Co was nearly 3 percent lower, while consumer electronics retailer Best Buy Inc dropped 2.1 percent.

(Reporting by Soundarya J and Akanksha Rana in Bengaluru; Editing by Maju Samuel)

Source: OANN

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A Chinese woman adjusts a Chinese national flag next to U.S. national flags before a Strategic Dialogue expanded meeting, part of the U.S.-China Strategic and Economic Dialogue (S&ED) in Beijing
A Chinese woman adjusts a Chinese national flag next to U.S. national flags before a Strategic Dialogue expanded meeting, part of the U.S.-China Strategic and Economic Dialogue (S&ED) held at the Diaoyutai State Guesthouse in Beijing, July 10, 2014. REUTERS/Ng Han Guan/Pool (CHINA – Tags: POLITICS BUSINESS)

April 26, 2019

By April Joyner

NEW YORK (Reuters) – Even as the lift from optimism over prospects for U.S.-China trade detente shows signs of wearing off for the wider U.S. stock market, upbeat sentiment around China’s economy could bolster shares of materials companies.

Shares of S&P 500 industrial and technology companies, which were buffeted by last year’s tit-for-tat tariffs as well as slowing global demand, have been very responsive to progress in U.S.-China trade relations and a strengthening Chinese economy. This year, those sectors have outpaced the ascent in the S&P 500, which reached a record closing high on Tuesday.

Materials stocks have not been as sensitive, however, even though they also stand to benefit as a stronger Chinese economy lifts global consumption and industrial output. As China has taken measures to stimulate its economy, its economic data have turned more upbeat. That in turn could aid global growth, which has flagged as a result of China’s cooldown.

“What we’re seeing is China spending more on stimulus: fiscal stimulus and monetary stimulus,” said Kristina Hooper, chief global market strategist at Invesco in New York. “That’s likely to be a positive for materials.”

The People’s Bank of China has cut banks’ reserve requirement ratio five times over the past year and is widely expected to ease policy further to spur lending and reduce borrowing costs. The stimulus appears to have boosted Chinese economic data, with factory activity growing in March for the first time in four months.

Yet so far in 2019, the S&P 500 materials index has underperformed the S&P 500 at large, rising just 11.9% compared with 16.7% for the benchmark index. Moreover, it is among the biggest decliners in the period since the S&P’s previous record closing level on Sept. 20. The materials index has fallen 7% over those seven months, versus a 5.2% gain for technology and a 3% loss for industrials. Only the energy index has dropped more over that period.

A trade agreement could serve as a catalyst for a bump in materials shares as a drag on China’s economy is lifted, some market strategists say. Some commodity prices, including those for copper and oil, have ascended this year as the prospects for the global economy have somewhat brightened.

“It all goes back to the global growth outlook,” said Andrea DiCenso, portfolio manager for alpha strategies at Loomis Sayles in Boston. “With the front run in hard data, we’re beginning to see a pretty significant rally.”

Additionally, a trade agreement is expected to include commitments from China to purchase higher quantities of U.S. products such as soybeans, which could benefit companies that make agricultural chemicals, including DowDuPont Inc and CF Industries Holdings Inc.

CF Industries is scheduled to report quarterly results after the bell on Wednesday, and DowDuPont is scheduled to report before the market open on Thursday.

To be sure, even with a trade agreement, some materials companies could face price pressures. Shares of Freeport-McMoRan Inc fell 10.1% on Thursday after the copper mining company posted a lower-than-expected profit as its production slipped and its costs rose.

A rollback of tariffs on Chinese imports, particularly aluminum and steel, would likely prompt a fall in some commodity prices, which could hurt prospects for certain materials companies, said Gene Goldman, chief investment officer at Cetera Investment Management in El Segundo, California.

Even so, those drawbacks may be outweighed by the support for global demand fostered by a U.S.-China trade agreement.

“You could see a number of companies with lowered expectations bring them back up as they talk favorably about the impact that a trade deal would have on them,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

(Reporting by April Joyner; additional reporting by Sinéad Carew; editing by Jonathan Oatis)

Source: OANN

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