World Stocks and Oil Prices Rise Before Fed Meeting

For the first time in four days, the world stocks rose on Tuesday and the weaker dollar resulted to a gain in oil prices, as investors set their expectations for monetary policy meetings in Japan and the United States.

European stocks have also benefited from the less than expected 80% fall of the first quarter profits and the unchanged dividend from BP. They also encouraged results from UPM.

Quarterly Earnings Report

Since it is the season for reporting quarterly earnings, investors are waiting for updates from the biggest company in the world, Apple (AAPL.O). The pan-European FTSEurofirst 300 .FTEU4 stock index rose about half percent. Meanwhile, Britain’s FTSE 100 increased by 0.4 percent .FTSE.

These gains have aided the world equity index of MSCI .MIWD00000PUS, which monitors stocks in 45 countries, increase by 0.1 percent after 3 consecutive days of losing, taking it back to an almost-five-month high last week.

“European equity markets are trading moderately higher on positive corporate earnings surprises from several companies,” said Markus Huber, the trader from the City of London Markets.

Before the two-day meeting of the Federal Reserve on Tuesday, Markus Huber said, “many traders are at least temporarily moving their overall exposure to more neutral from previous negative, consequently closing some of their short positions.”

Markets don’t predict chances of the US interest rate to increase and are expecting a 20 percent chance of a move during the next meeting on June 14-15. A surprise drop in the home sales data of the US for March has shown evidence of anemic growth of the US economy.

Nonetheless, officials from the Federal Reserve said that there might be a hike in June.

“Even dovish policy makers such as (Boston Fed President Eric) Rosengren are saying market expectations are too low,” said Tomoaki Shishido, a fixed income strategist at Nomura Securities in Tokyo. “So the Fed may try to urge markets to price in higher rates. On balance, we are more likely to have a hawkish surprise than a dovish surprise.”

Qatar First Bank is the Best Up-and-Coming Islamic Financial Institution

Qatar First Bank (QFB), the leading Shari’ah bank in Qatar, is reaping the benefits of a strategy they introduced last year as they are named as 2016’s Best Up-and-Coming Islamic Financial Institution during the 9th annual awards of Global Finance magazine’s World’s Best Islamic Financial Institutions.

They won this prestigious award as Global Finance received extensive consultations with bankers, corporate finance executives, and analysts throughout the world.

When it comes to selecting the top Islamic Financial Institutions in the world, Global Finance took a variety of quantitative factors into consideration. This includes growth in assets, geographic reach, profitability, strategic relationships, new business development, and product innovation. They also factored in informed subjective criteria, including customer satisfaction, reputation, and opinions of certain analysts and experts in the industry.

The global award served as a milestone achievement of QFB across their business lines as they reported continued profitability for their 7th full year of operation, according to the data they released in March.

Mr. Ziad Makkawi, the Chief Executive Officer of QFB, said in a statement, “We are honored to be named 2016’s Best Up-and-Coming Islamic Financial Institution by the renowned authoritative Global Finance magazine. The prized global award is a translation of QFB’s winning strategy and innovative approach to Islamic Finance.”

Qatar First bank
Our Dynamic Team. Image by www.linkedin.com

“Our strategy focuses on the bank’s role as a trusted advisor, a gateway for investors who wish to tap into innovative, Shari’ah-compliant, financial solutions and investment opportunities in local, regional and global markets. We are at the beginning of a new era for our bank and have already started reaping the benefits of our ambitious strategy, as each area of the Bank performed well, bringing growth and generating new recurring income. This celebrated global award is a confirmation that QFB is on the right path, as it continues to identify and seize new, attractive opportunities, deliver excellence for both private and corporate clients, build a strong brand, and provide shareholders with robust returns,” he added.

2015 has been a milestone for QFB. They confirmed their strategy and streamlined their businesses to offer compliant services to Shari’ah, which includes alternative investments that focuses on private equity and real estate, as well as corporate and institutional banking, treasury and investments, and private banking and wealth management.

The winners of the Global Finance World’s Best Islamic Financial Institutions, including QFB, will be honored at an Awards Ceremony in October during the annual meetings of IMF and World Bank in Washington, DC.

Put Your Bitcoins to Good Use, Invest in Forex

For those who want to trade in a safe environment with limited volatility, Forex might just be the best option. This is primarily the reason why those who have Bitcoin are investing their coins to the Forex market. Because Bitcoin is very volatile, many traders are considering other investment options of their Bitcoins.

SimpleFX, a brokerage company founded in 2014, offers traders an opportunity to utilize Bitcoins or Litecoins for investment in the Forex Market. What makes this company great is that they offer leverage to the traders, allowing them to trade small amounts with high volumes. They feature a wide variety of trading instruments that you can choose from and more than 60 currency pairs, oil, metals, stock indices, Litecoins, and Bitcoins.

SimpleFX allows traders to use Anonymous accounts with no minimum deposit required and no trading commission. They feature a wide range of important and useful information, as well as other tools to help traders achieve their goals.

With leverage, traders are able to make use of their benefits. They don’t need the entire capital to trade because only a small portion of the entire amount is enough. SimpleFX offers traders the opportunity to set their leverage levels, allowing adjustment of their plan and trading strategies. You can set the leverage level from 1:2 up to 1:500.

Aside from all that, the company also features an affiliate program that has multi-level connections and marketing tools. They also offer community features like Shoutbox, which allows traders to discuss anything pertinent.

SimpleFX trading is made through MetaTrader 4. A demo account can be opened by a broker’s client that will allow them to practice their skills before joining the real trading arena. Thus, if you are looking to put your Bitcoins to good use, you might as well consider looking into SimpleFX and open a demo account to test its platform and your skills.

Morgan Stanley First Quarter Profits Beats Wall Street Estimates

The first-quarter profit of Morgan Stanley beat the estimates of Wall Street as they cut costs and revenue from trading stocks and bonds decreased less than some analysts have predicted. Their shares increased.

The New York-based company issued a report stating that their net income dropped 53 percent to $1.3 billion, or 55 cents per share, from 2.39 billion or $1.18, a year earlier.

Although Chief Executive Officer James Gorman has been reducing the fixed-income trading division of the firm to emphasize the less volatile wealth management business, they are still exposed to slumping markets that can hurt results in Wall Street. Aside from Morgan Stanley, JPMorgan Chase & Company, Bank of America Corporation, and Citigroup Incorporated also reduced their expenses in order to compensate for their declining revenues. Meanwhile, Goldman Sachs Incorporated, which reported results on Tuesday, is going for the biggest cost-cutting effort in years, according to some people who are aware of this plan.

Revenue of Morgan Stanley

The revenue declined 21 percent to $7.9 billion in comparison to the $7.76 billion estimate of 18 analysts on the Bloomberg survey. Meanwhile, non-interest expenses dropped 14 percent to $6.05 billion, which is below the estimate of $6.42 billion. Compensation expenses were also reduced by 19 percent to $3.68 billion and non-compensation costs were down by 6.2 percent to $2.37 billion.

“The first quarter was characterized by challenging market conditions and muted client activity. While we see some signs of market recovery, global uncertainties continue to weigh on investor activity,” says Gorman in a statement.

Shares Increase

On the other hand, the shares of Morgan Stanley, which dropped 19 percent this year through Friday, have increased by 3.1 percent to $26.55. The firm generated $873 million in first-quarter fixed income revenue; that is 54 percent less than the previous year — the weakest start to the year since 2010.

Global Finance Leaders Meet in Washington

Global finance leaders are recently facing a shaky world economy and political attacks on free trade. They are looking for ways to increase cooperation to battle various economic threats during their meeting in Washington.

The International Monetary Fund (IMF) is encouraging countries to introduce a new round of public work projects that help improve roads and other types of infrastructures in the hopes of generating higher government spending to boost growth. But in the time of high deficits in budget, that call wasn’t met with strong support.

The discussions are part of the spring meetings of the 189-nation IMF and the World Bank, the sister lending organization. The leaders of both these institutions are giving cautions and warning about the need for greater efforts that will improve growth to ensure that the world economy won’t go back into recession.

The Group of 20, which represents the biggest economies in the world, recently wrapped up two-days of talks last Friday with Jacob Lew, the Treasury Secretary, and Janet Yellen, the Federal Reserve Chair, representing the United States. Meanwhile, meetings of the policy-setting panels of the IMF and World Bank were held last Saturday.

Mr. Lew met with his counterparts from Japan and China on Thursday. In a statement, the US side said that both Lew and Chinese Finance Minister Lou Jiwei discussed about the importance of China going towards a market-determined exchanged rate in an orderly and transparent manner, while communicating their policies and actions to the market clearly.

International Monetary Fund
International Monetary Fund (IMF) Managing Director Christine Lagarde speaks at a news conference during the the G5 Ministers of Finance meeting during the World Bank/IMF Spring Meetings in Washington, Thursday, April 14, 2016. ( AP Photo/Jose Luis Magana)

Take note that the government of China has roiled markets in August and January with actions that caused great concerns that the second largest economy of the world was slowing rapidly than predicted, a development that worried the economic fallout on other nations.

During the opening news conferences on Thursday, Christine Lagarde, the IMF Managing Director, and Jim Yong Kim, the President of the World Bank, emphasized the need for stronger policies that would help fight the growing risks. They both sought to address the political attacks on globalization, which helped propel the presidential campaign of Donald Trump in the US and triggered an upcoming election on whether or not Britain should exit the European Union.

Lagarde and KIim both agree that the answer to stagnant wages in a number of industrial nations and complaints of job loss to trade competition was to pursue policies that are growth-oriented, like boosting government infrastructure spending.

Singapore Affected by the Recent Movement of World Stocks

For over four months, world stocks yet again rose to their highest level on Thursday. The dollar also gained for the third day as markets were viewed positively ahead of the meetings between the top policymaker and oil producer.

At the IMF’s spring meeting, Singapore set the tone as their central bank eased their policies. Meanwhile, Europe was looking at the meeting of the Bank of England since sterling was continually having troubles over the vote on EU membership in June.

Oil prices have dropped again as OPEC advised of slowing demand and Russia suggested that there may only be a loose agreement on outputs at the exporter meeting in Doha this weekend.

The fall came when dollar — the currency most commodities were priced in — had yet again rose up to its highest one-day gain in a month. It was valued at $1.246 per euro, which is well above its 6-month low of $1.146, on Tuesday. It was also up by 0.1 percent against the yen to 109.42 yen from the 17-month low of 107.63 yen.

“The dollar has been doing well over recent days particularly against Asian currencies today after the MAS (Singapore central bank) eased policy,” says Societe Generale FX strategist Alvin Tan. “We have the IMF meetings coming and we also have the Doha meeting which actually for the markets could be more important considering how bulled u the oil market has been recently.”

European stocks, on the other hand, was subdued for the first few hours as the traders cashed in after they’ve gained 2.6 percent on Wednesday and as miners dropped on lower prices of oil.

The overnight big gains in Asia, however, implied that the MSCI’s 46-country All World stocks index has been its highest since mid-December, being up for 5 straight days. Since Friday, Asian shares have continually gained 5 percent.

The central bank of Singapore has set the Singaporean dollar policy band’s appreciation rate at zero after data showed economic growth has stalled in the first quarter this year. This caused the biggest fall for the Singaporean dollar in 9 months, which resulted to a drop in other Asian currencies. The Korean won declined as much as the Singaporean dollar, sinking by 1 percent against the USD.

“It’s very interesting, and eye-catching, that the MAS has gone back to post-global financial crisis settings, and sends as strong message about the weak external environment,” said the senior currency strategist of Westpac in Sydney, Sean Callow. “As one of the world’s most trade-sensitive economies, Singapore’s concern over a less favorable external environment should be noted by the likes of South Korea, Australia, and New Zealand.”

The IRS Allows Illegal Immigrants to Steal Social Security Numbers for Tax Credits

The IRS Commissioner, John Koskinen, admitted that there’s a problem with taxes and illegal immigrants. He suggested that illegal immigrants should “illegally” use Social Security numbers. He made this surprising statement in reply to the question of Senator Dan Coats, R-Ind., during the Senate Finance Committee meeting. Did the IRS collaborate with taxpayers who pay taxes using fraudulent information? Well, it wasn’t exactly like that.

According to Senator Coats, “What we learned is that… the IRS continues to process tax returns with false W-2 information and issue refunds as if they were routine tax returns, and say that’s not really our job. We also learned the IRS ignores notifications from Social Security Administration that a name does not match a Social Security number, and you use your own system to determine whether a number is valid.”

Why does IRS tolerate this?

Commissioner Koskinen suggested that as long as information is being utilized to obtain jobs, the IRS was fine with it. As a matter of fact, according to him, the IRS actually helps illegal immigrants to crook their rules. Maybe this might be the problem of the IRS, but it’s very odd how an agency chief encourages illegal immigrants to steal SSNs.

The IRS chief tried to differentiate between bad uses and misuses of another person’s personal information. According to Mr. Trump, illegal immigrants get about $4.2 billion in tax credits. The 2011 audit by the Treasury Inspector General for Tax Administration shows that those who are unauthorized to work in the US were being paid $4.2 billion tax credits refundable.

Although illegal immigrants cannot really get Social Security Numbers, the IRS doesn’t seem to care.  Besides, taxes can be filed using an Individual Taxpayer Identification Number (ITIN). While they couldn’t get the Earned Income Tax Credit, they can meanwhile receive the additional child tax credit. If the President’s plan on legitimizing illegal immigrants will succeed, they could be given the Earned Income Tax Credit that is said to be responsible for the billions in fraudulent refunds.

How the Earned Income Tax Credit work?

First and foremost, you need to have a Social Security Number before you can claim your Earned Income Tax Credit for the last 3 years. And then you have to wait ‘til the IRS sends you your three years of tax refunds. This actually works even if you have never filed and paid your taxes at all, or if you ever filed a tax return, and work illegally. According to the IRS, this is how Earned Income Tax Credit works.

The IRS Commissioner Koskinen explained this to Senator Charles Grassley (R-Iowa) in 2015. Illegal immigrants who were covered by the amnesty deal given by the President can actually claim tax credits that they’ve earned for work they did illegally, even though they haven’t filed tax returns during those years.

It can be noted that last year, IRS Commissioner Koskinen said that illegal immigrants may claim a refund if they have previously filed tax returns. However, the chief corrected himself saying that they can claim the refunds without filing tax returns. Per the IRS, illegal immigrants who were given amnesty and Social Security numbers may claim up to 3 years of tax credits.

Indian Rupee Sets a Record High

The foreign exchange reserves of India recently jumped $4.2 billion, touching what seemed to be their record high of $360 billion for the week ended last April 1, 2016; this is according to the weekly statistical report made by the Reserve Bank of India.

“The Reserve Bank of India has been buying dollars taking advantage of the fact that the rupee has appreciated almost 3%, giving an opportunity for the central bank to buy cheaper dollars in the currency market,” said the founder of the foreign risk solutions firm IFA Global, Abishek Goenka.

The Appreciation of the Indian Rupee

The value of the Indian rupee has been increasing while there have been improving dollar inflows to the country into the equity and debt markets. During the entire month of March, Rs 21,143 crore came to the equity markets. By the first week of April, Rs 7,625 crore was going into the debt and equity markets through several foreign institutional investors.

What High Dollar Reserves mean for India

High dollar reserves means that India has improved and improving capabilities for paying import products. It gives the Reserve Bank of India an opportunity to intervene in cases where there is currency rundown, as well as facilitate better rating all over the world.

“We have plenty of reserves to ensure that there is no undue volatility. We are preparing for the worst,” says Raghuram Rajan, the governor of the Reserve Bank of India, during a teleconference after the central bank cut the policy report rate by 25 basis points.

The Reserve Bank of India have been buying dollars since last week even as rupee continues to strengthen, thereby hitting an over four-month high of 66.07 against the dollar on Tuesday.

“In the wake of modest current account gap and healthy appetite for India, capital flows are likely to remain strong and this would prompt RBI to continue to absorb dollars and build reserves,” says Shubhada Rao, the chief economist for Yes Bank in Mumbai.

How Yuan Depreciation Affected Chinese Companies

The effect of the devaluation of yuan in August can be seen in the annual results of publicly trading Chinese companies — and investors are expecting for more pain.

About 980 Chinese companies listed were reported to have approximately 48.7 billion yuan ($7.5 billion) combination of foreign exchange losses for 2015; that is almost 13 times the amount reported in 2014, according to the data gathered by Bloomberg. Profits at those companies decreased by 11 percent in 2015 to 789.2 billion yuan; meanwhile, the China Petroleum Chemical Corporation, or Sinopec, reported that they’ve lost net 3.9 billion yuan in forex, which increased from only 179 million yuan in 2014.

Yuan’s 4.5 percent devaluation in 2015, which is the largest since 1994, caused an increase in financing costs for Chinese companies — the biggest dollar borrowers in Asia. As it continued to drop in January, it triggered a global stock rout, contributing to a 31 percent drop in Chinese dollar bond sales in the first quarter of 2016. Although the renminbi has rallied against the US dollar for 2 months, it still is depreciating against a basket of currencies.

“Continued yuan depreciation will definitely impact Chinese companies’ bottom line. In some cases, the impact is severe. Although one can argue FX impact is non-cash, it does impact the company’s credit ratios and debt servicing ability,” says Raymond Chia, the head of credit research for Asia (excluding Japan) at Schroder Investment Management Ltd., which is based in Singapore.

The airline sector was affected the most with yuan’s devaluation, having a combined forex loss of 17.9 billion yuan for 2015; as compared to only 951.7 million yuan in 2014, according to the data collected by Bloomberg. Three state-owned airlines (China Southern Airlines Co., Eastern Airlines Corp., and Air China Ltd.) were affected the most, with an equivalent of $2.5 billion FX losses.

Among all airline companies, China Southern Airlines had the biggest forex loss with 5.7 billion yuan in 2015. According to an official at the airline’s investor relations department, the carrier has been planning to cut their dollar debt to 50% of the sum by this year’s end from 61% that is currently refinanced through onshore yuan bonds.

“Chinese companies have been under downward economic pressure, which is exacerbated by FX losses. There are high chances for the yuan to depreciate this year with rising volatility. Companies should be more aware of FX risk,” says the co-head of research at ICBC International Research Ltd., Cheng Shi.

European Stocks Fell, US Feds to Raise Rates

After strong gains during the previous sessions, European shares fell on Thursday after the dovish comments made by the head of the US Federal Reserve.

The index of the pan-European FTSEurofirst 300 index dropped to 0.9 percent from 1.3 in the previous session. Janet Yellen, the chair of the US Federal Reserve, had warned on increasing US interest rates that sustained stock markets around the world.

French Telecom was deemed to be among the worst performers in the stocks after Orange and Bouygues had extended their negotiations until Sunday on a possible sale of the Bouygues Telecom, stating that there is little progress ahead of their Thursday deadline.

Bouygues shares fell 3.9 percent, while Orange shares dropped 2 percent. The stocks of their rival French telecom also lost ground as they declined 2.4 percent. Numericable-SFR is also down 3.9 percent, and Altice dropped by 1 percent as well.

Rupert Baker, a European equity sales executive at Mirabaud Securities, said, “I was selling Bouygues yesterday. These bid talks often take longer than expected, and the longer they go on, there’s always a chance it could unravel.”

Stocks in Italian banks have also declined sharply. According to Reuters, guarantor UniCredit is thinking of whether to delay the Banca Popolare di Vicenza’s 1.76 billion euro rights issue if the conditions won’t improve by April.

The fund-raising is said to be an important test of investor confidence in Italian banks, whose stocks have been sold off strongly this year due to the growing concern about the 360 billion euros in bad loans that are seen on the balance sheets.

Luca Comi, an analyst at the ICBPI, said, “Investors fear that the recapitalization of Popolare di Vicenza may end up with a large portion of unsubscribed rights, forcing UniCredit to take up a great part of it.”