Monday Digest #111

Weekly summary of finance, economic and tech news. Vision from DreamTeam. With 💜

Libor is 1,1 now.

Federal Reserve Chair Janet Yellen left little doubt on Friday that the central bank will raise interest rates this month. More importantly, she dropped hints that it might end up having to increase them this year more than planned.

In a speech to The Executives’ Club of Chicago, Yellen singled out the danger of the central bank being too slow in boosting rates:

“We realize that waiting too long to scale back some of our support could potentially require us to raise rates rapidly sometime down the road, which in turn could risk disrupting financial markets and pushing the economy into recession.”

Morgan Stanley economists: the Federal Reserve will raise U.S. interest rates by a quarter point to a range of 0.75–1.00 percent at its upcoming policy meeting in less than two weeks. The U.S. central bank would increase its interest rate target range two more times later in 2017 after a possible hike later this month. Also, we forecast four rate hikes in 2018.

Snap, the parent company of Snapchat, priced its initial public offering at $17 a share on Wednesday. It had previously proposed a range of $14 to $16 a share. That will reportedly give Snap a market value of nearly $24 billion, making it the largest U.S. tech IPO since Facebook (FB, Tech30). At 11:20 a.m. on Thursday, Snap Inc. (SNAP) opened at $24 a share, 40% higher than its initial IPO price.

#macro #finance

Bloomberg: Emerging-market issuance in dollars and euros this year has already exceeded $100 billion. That’s the fastest pace ever and almost 20 percent more than the previous record for the period in 2014.

Raising capital has become cheaper for developing-market borrowers since the immediate aftermath of the U.S. presidential election, with emerging bond yields easing about 50 basis points. That’s unlikely to last, however, as Fed officials want to increase interest rates and two policy makers signaled this week that the case for hiking in March has strengthened.

Samad Sirohey, head of debt capital markets for central and eastern Europe, the Middle East and Africa at Citigroup Inc., the bank that’s managed the most bond sales in the region this year:

“Yields are attractive and outlook on rates and downside risks are prompting issuers to consider funding early this year.”

Sentix Euro Break-up Contagion Index — a market measure of the contagion risk from one or more countries leaving the euro area within the next 12 months period — has hit its post-2012 record recently, reaching 47.6 marker, up on 25 trough in 2Q 2016:

Key drivers: Greece, Italy and France.

Reuters: Feb 28 Greek private sector bank deposits declined in January for the second month in a row, central bank data showed on Tuesday, as worries over the country’s drawn out bailout review led to withdrawals. Business and household deposits fell by 1.63 billion euros, or 1.34 percent month-on-month to 119.75 billion euros ($126.8 billion), their lowest level since November 2001.


Libya’s crude output dropped after clashes forced two of the country’s biggest oil ports to shut down, threatening the OPEC member’s efforts to revive the production of its most important commodity. The North African country’s production fell to 650,000 barrels a day from about 700,000 barrels a few days ago, according to a person with knowledge of the matter, who asked not to be identified because the person isn’t authorized to speak to media. Crude shipments from Es Sider, the nation’s largest oil port, and Ras Lanuf, its third-biggest, have been suspended until security improves and workers return to the facilities, said Jadalla Alaokali, a board member of Libya’s National Oil Corp. Production from fields feeding the ports has declined and may be cut further if the two terminals remain shut and the situation doesn’t improve soon, he said.

HSBC’s equities metals and mining team: Iron ore spot prices have been on a tear in 2017, rallying more than 17% on top of a 80% gain in 2016. From the lows of mid-December 2015, the price for benchmark 62% fines has now jumped by 140%. It’s been massive, underpinned by restocking, strength in steel prices, weather-related disruptions, strong China imports and an overly optimistic view for demand from the Donald Trump’s infrastructure stimulus plans, among other factors. However, it’s not going to last. We believe that these factors will eventually fade however due to the lack of fundamental support. We believe there is significant potential for a collapse in iron ore prices: its long term price forecast is for a return to $52 a tonne, some 44% below the current spot price of $92.36.

This chart shows how HSBC expects the iron ore spot price to evolve over the course of 2017.


Blockchain Capital LLC, which backs startups that use the technology best known for supporting bitcoin, plans to raise a new $50 million fund partly by issuing its own digital tokens, becoming the first venture fund to do so. The San Francisco-based company seeks to raise a portion of its third blockchain fund through an initial coin offering, or ICO, of tokens and the larger part from traditional venture-capital investors who typically contribute a minimum, Managing Partner Brock Pierce, who is also chairman of the Bitcoin Foundation, said in an interview. The ICO could take place “in the next month or two,” he said. Up to now, ICOs have been limited to startup entrepreneurs, who raised about $270 million last year from coin offerings and crowdfunding, according to blockchain researcher Smith & Crown.

In the streets of Mogadishu, the future has arrived: cash is disappearing, credit cards are unnecessary, and daily shopping is speedy and digital. Somali businesses line the streets of the city center. Mobile-phone wielding consumers buy groceries at the supermarket, oranges from market stalls, shoe shines on the street, cups of sweet milky tea at open-air cafés, and even an afternoon’s worth of khat, a herbal drug favored by many Somalis.

Hormuud chief Executive Ahmed Mohamed Yusuf said the Somali diaspora, which sends an estimated $1.6 billion annually into Somalia, helped get mobile banking get off the ground. To put that figure in context, Somalia’s GDP was $5.7 billion in 2014, according to World Bank. “The main reason why the service was adopted is because the banking systems in the country are very limited,” said Yusuf. “It’s also because it is much risk carrying cash here since the country is still politically unstable and recovering from more than two decades of chaos and civil war.”

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