Tesla mulling two theories to explain 'Autopilot' crash: source

Technology

Business, Investing

Tesla Motors Inc (NASDAQ:TSLA) told U.S. Senate Commerce Committee staff it is considering two theories that may explain what led to the May 7 fatal crash that killed a Florida man who was using car's "Autopilot" system, a person familiar with the meeting told Reuters on Friday.

Tesla staff members told congressional aides at a briefing Thursday they are still trying to understand the "system failure" that led to the crash, the source said.

Tesla is considering whether the radar and camera input for the vehicle’s automatic emergency braking system failed to detect the trailer or the automatic braking system’s radar may have detected the trailer but discounted this input as part of a design to “tune out” structures such as bridges to avoid triggering false braking events, the source said.

A Tesla spokeswoman declined to comment on the meeting, referring questions to the company's recent statements.

Source Reuters

DoubleLine's Gundlach says investors in a 'world of uber complacency'

Stock market

Business, Investing

Jeffrey Gundlach, the chief executive of DoubleLine Capital, said on Friday that many asset classes look frothy and the firm continues to hold gold and gold miner stocks.

Stock investors have entered a “world of uber complacency” against a backdrop of low gross domestic product and stagnant earnings growth.

“The artist Christopher Wool has a word painting, "Sell the house, sell the car, sell the kids." That’s exactly how I feel – sell everything. Nothing here looks good,” Gundlach said.

Source Reuters

Tech shares and flaccid GDP growth push S&P 500 to record

Stock market

Business, Investing

Wall Street rose on Friday, with the S&P 500 index hitting a record intraday high for the seventh time this month as gains in technology heavyweights Alphabet and Amazon more than made up for losses in energy shares.

The benchmark index rose as much as 0.3 percent, touching an all-time high of 2,177.09, and was on track for its fifth straight month of gains.

Shares of Google parent Alphabet (O:GOOGL) jumped 4.3 percent a day after the Internet company posted strong quarterly revenue growth, while online retailer Amazon.com (O:AMZN) touched a record high after giving an upbeat forecast for the current quarter.

Those stocks gave the biggest boost to the Nasdaq, while Alphabet contributed the most to the S&P 500's gain.

However, the Dow was dragged down by a 1.81 percent fall in Exxon (N:XOM), which reported a lower-than-expected quarterly profit. The stock was the top percentage loser on that index.

U.S. gross domestic product in the second quarter grew at a 1.2 percent rate, coming in below expectations for a rise of 2.6 percent and fueling arguments the U.S. Federal Reserve may not need to raise interest rates anytime soon.

"Investors are still willing to play chicken with the Fed, thus the S&P 500 has hit a new intraday all-time high," said Sam Stovall, U.S. equity strategist at S&P Global Market Intelligence in New York.

At 2:38 pm, the Dow Jones industrial average (DJI) was down 0.16 percent at 18,426.73 points and the S&P 500 (SPX) had gained 0.14 percent to 2,173.15.

The Nasdaq Composite (IXIC) added 0.1 percent to 5,160.08.

Seven of the 10 major S&P 500 indexes were higher, led by a 1.3 percent rise in the telecoms services index (SPLRCL).

Baidu (O:BIDU) dropped 3.7 percent after the Chinese Internet search engine posted its biggest quarterly profit decline since going public. The stock weighed the most on the Nasdaq.

Health insurer Cigna (N:CI) dropped 4.9 percent after reporting a lower-than-expected quarterly profit.

Advancing issues outnumbered declining ones on the NYSE by a 1.72-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored advancers.

The S&P 500 posted 41 new 52-week highs and one new low; the Nasdaq Composite recorded 94 new highs and 34 new lows.

Source Investing.com

Italy's Monte dei Paschi says rescue plan backed by underwriters

Economy

Business, Investing

Italian bank Monte dei Paschi di Siena has secured underwriters to back a turnaround plan involving the sale of 9.2 billion euros ($10.3 billion) in bad loans and a 5 billion euros capital increase, the lender said in a statement on Friday.

The country's third-largest lender said it had signed a pre-underwriting agreement with a consortium of Italian and international banks for the capital raising, and that a state-backed banking bailout fund, Atlante, had agreed to underwrite the sale of a portion of the bank's riskier bad debts.

Source Reuters

Oil rout erodes second-quarter profits for U.S. majors Exxon, Chevron

Business

Commodities, Investing

Chevron Corp (N:CVX) posted its worst quarterly loss since 2001 on Friday and Exxon Mobil Corp (N:XOM) reported a 59 percent slide in profit, as the long crude price rout (CLc1) (LCOc1) and tumbling refining income inflicted pain across the energy sector.

The weak results from two of the world's largest oil producers come as the energy industry is at a crossroads, trying to survive in an era of low prices, which many analysts see as the new status quo, while funding expensive growth projects crucial for long-term survival.

"It's a challenging environment for the integrated" oil producers, said Brian Youngberg, an energy analyst with Edward Jones. "The key is to manage the cash flow as best they can and continue to execute on projects, which they do appear to be doing."

Exxon, the world's largest publicly traded oil producer, shocked Wall Street as its quarterly profit missed expectations, sending its shares down as much as 4.5 percent on Friday.

Its profit from producing oil and gas fell about 85 percent to $294 million. In the United States, where Exxon is the largest natural gas producer and a major oil producer, the company lost money.

Exxon executives defended their business model, saying they have the financial flexibility to do many things, including large acquisitions, while maintaining their dividend. The company did cut most of its share buyback program earlier this year.

Standard & Poor's downgraded the company's vaunted "AAA" credit rating to "AA+" earlier this year, as dividends and capital expenditures were exceeding cash flow.

This month Exxon said it would pay more than $2.5 billion in stock for InterOil Corp (N:IOC), expanding its push into the Asian liquefied natural gas market.

Chevron, the second-largest U.S.-based oil producer, reported its largest quarterly loss in 15 years, with Chief Executive Officer John Watson acknowledging the company is in the midst of an "ongoing adjustment to a lower oil price world."

The company lost $1.47 billion in the quarter, compared with a net profit of $571 million in the year-ago period.

Still, Chevron's results beat expectations, with analysts confident in the company's ability to cut costs as it brings several large projects online in the next few years.

The results from both companies came after disappointing results from European peers Shell (LON:RDSa) and BP (LON:BP) earlier this week.

'RESOLUTE' ON DIVIDENDS

The weak results could force the companies to reconsider their long-held policies of maintaining and growing their quarterly dividends, especially after ConocoPhillips (N:COP),Marathon Oil Corp (N:MRO) and others cut their payouts earlier this year.

So far during this two-year downturn Exxon and Chevron have held their dividends as sacrosanct, while curbing stock repurchases.

Chevron Chief Financial Officer Pat Yarrington sidestepped questions about a potential dividend increase later this year on the company's quarterly conference call, saying only the board of directors "fully understands the value of a dividend increase."

Jeff Woodbury, Exxon's head of investor relations, said on a call with investors that the company was "resolute in our commitment to pay a reliable and growing dividend."

After providing bumper profits early in the downturn as cheap crude slashed their costs, refiners saw the income erode this quarter on fuel oversupply. The refining industry has been hammered of late by growing fuel inventories and weak demand, denting its profitability.

The oversupply has led to so-called run cuts, in which refiners trim the amount of crude they process. Exxon processed 4 percent less crude in the quarter than a year ago and produced less gasoline.

"Once the product tanks are full, as they are now, and you even have floating product storage in places like New York harbor, then you know that the situation is bad. You have to cut runs," said Oystein Berentsen, managing director for crude oil trading firm Strong Petroleum in Singapore.

Exxon shares dropped 1.7 percent to $88.64 while Chevron eased 0.3 percent to $102.15.

Source Investing.com

Allegiant Air's pilots ratify new contract

Business

Stock market, Investing

Allegiant Air said its pilots represented by the Teamsters union ratified a new five-year contract, ending labor issues at the Las Vegas-based budget carrier at a time the U.S. airline industry is grappling with a shortage of pilots.

The contract, effective Monday, offers pilots a pay hike of up to 31 percent, paid vacation of up to four weeks, an improved scheduling system and a massive increase jump in the company's 401(k) contributions.

More than 86 percent of the votes from pilots were in favor of the contract, the airline said on Thursday.

Allegiant Air, owned by Allegiant Travel Co (O:ALGT), had 625 full-time pilots at the end of 2015.

The U.S. airline industry has been facing a pilot crunch after the Federal Aviation Administration ruled in 2013 that co-pilots must train for a minimum of 1,500 hours to qualify to fly a passenger or cargo plane.

The previous requirement was 250 hours.

This has significantly pushed up the cost of training for aspiring pilots at a time of slow salary growth.

Regional carrier Republic Airways Holdings Inc (PK:RJETQ) filed for bankruptcy in February, blaming several quarters of falling revenue after having to ground aircraft amid a pilot shortage.

Allegiant Air had been in unsuccessful talks with its pilots for years.

The pilots had accused the airline of failing to abide by a 2014 federal court injunction directing it to restore their benefits and work-rule protections to levels negotiated earlier.

Last year, the pilots even threatened to go on a strike but a U.S. court blocked them from taking action.

United Continental Holdings Inc's (N:UAL) pilots voted in January to approve a two-year contract extension, paving the way for a 22 percent wage hike by 2018.

Source Investing.com

U.S. crude ends 4-day skid amid weaker dollar, but ends July down 13%

Commodities

Crude futures inched up on Friday after hitting a $40 handle for the first time since April, ending the month sharply lower one day after entering a bear market due to renewed concerns of global oversupply.

On the New York Mercantile Exchange, WTI crude for September delivery traded between $40.58 and $41.66 a barrel before closing at $41.52, up 0.38 or 0.92% on the session. Despite halting a four-day losing streak, WTI crude still ended July down roughly 13% on the month. On the Intercontinental Exchange (ICE), brent crude for October delivery wavered between $42.52 and $43.60 a barrel, before settling at $43.47, up 0.24 or 0.56% on the day.

Oil futures bounced off three-month lows on Friday, as the U.S. Dollar fell sharply amid weak GDP data and a soaring Yen. It came after the Bank of Japan rattled markets by approving only modest easing measures at a highly-anticipated meeting in Tokyo. Heading into the monetary policy meeting, the BOJ was widely expected to cut interest rates and expand Quantitative Easing in an effort to boost persistently sluggish inflation. The BOJ also ignored calls from the Japanese government to use all the tools necessary to lower the Yen in order to jumpstart soft exports. As a result, the Dollar plunged more than 2.5% against the Yen to an intraday-low of 102.12, its lowest level in nearly three weeks.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 1% on Friday to an intraday low of 95.67. The index is on pace for its fifth straight losing session after hitting four-month highs at 97.62 on Monday. Dollar-denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates.

Elsewhere, oil services firm Baker Hughes said in its Weekly Rig Count report that U.S. oil rigs last week rose by three to 374. It marked the fifth consecutive week of weekly increases among oil rigs nationwide. At the same time, the overall rig count ticked up by one to 463, as gas rigs fell by two to 89.

Crude prices have come under pressure in recent weeks, as oil companies in Canada, Nigeria and Libya continue to return online. Over the spring, a wave of production disruptions in the aforementioned countries cushioned oil from further losses after a comprehensive Doha agreement in April abruptly collapsed. Despite reports from the International Energy Agency (IEA) that the imbalance in the global supply-demand could be on the verge of leveling off, data released this week has shown otherwise. On Wednesday, the U.S. Department of Energy reported an unexpected inventory build of 1.7 million barrels last week pushing stockpiles to 521.1 million barrels, near record-highs for this time of the year. U.S. production, meanwhile, moved higher for a third consecutive week.

Crude futures have been enmeshed in a two-year downturn since OPEC roiled markets in November, 2014 by maintaining its production ceiling above 30 million barrels per day. The strategic decision triggered a prolonged battle for market share between the U.S. and producers in the Middle East, saturating global markets with a glut of oversupply. Since peaking at $115 a barrel two years ago, oil prices have tumbled by more than 60%.

Source Investing.com

Indonesia central bank sees 2016 GDP growth at 5.09 percent: governor

Economy

Business, Investing

Indonesia's central bank governor said the economy may grow by 5.09 percent in 2016, with growth in the third quarter sen at 5.2 percent.

Bank Indonesia's outlook for growth in the April-June quarter, due to be announced on Aug. 5, remains 4.94 percent, Governor Agus Martowardojo said.

A successful tax amnesty program will improve economic growth in 2017, he said, adding that if the program attracts enough capital flows, "we will use the room we have for monetary easing."

Source Reuters

Oil prices fall to fresh April lows as oversupply bites

Commodities

Oil prices fell to fresh April lows on Friday as slowing economic growth threatened to worsen ongoing oversupply of crude and refined products.

International Brent crude oil futures (LCOc1) were trading at $42.51 at 0617 GMT, down 19 cents, or 0.4 percent, from their previous close, the lowest since April.

U.S. West Texas Intermediate (WTI) crude (CLc1) fell 26 cents, or 0.6 percent, to $40.88 a barrel, slipping below $41 for the first time since April.

Both crude benchmarks are now down around 20 percent since their last peak in June.

Because refiners produced too much fuel from cheap crude, margins in the Americas, Europe and Asia have fallen sharply this year, eroding revenues for oil producers and refiners like Royal Dutch Shell (L:RDSa), which this week reported poor results.

"Margins remain on a negative trajectory ... This seems a clear signal that Atlantic Basin refined product markets are currently oversupplied," Jason Gammel of U.S. investment bank Jefferies said on Friday.

Benchmark Singapore refinery margins are down 60 percent from their January highs to $4.28 per barrel, with stocks of product brimming near historic highs.

"We expect that the upcoming maintenance season combined with economic run cuts will correct the refined product markets... (and) the corresponding reduction in crude oil demand could weigh on Brent prices in the near term," he added.

On the supply side, Iranian exports to Asia's main buyers - China, India, Japan and South Korea - jumped 47.1 percent in June from a year ago to 1.72 million barrels per day, the highest levels in over four years.

The sales jump is the latest sign that Tehran's aggressive moves to recoup market share, lost under international sanctions, are paying off.

Because of ongoing oversupply, U.S. bank Goldman Sachs (N:GS) said this week that it did not expect a big recovery in prices any time soon.

"We continue to expect that oil prices will remain in a $45 per barrel to $50 per barrel trading range through mid-2017 with near-term risks skewed to the downside," the bank said.

Despite this, some analysts said recent price falls in oil had been overdone, especially as demand remains strong despite concerns over future economic growth.

"Investors have become overly bearish on oil as U.S. production and gasoline inventories continue to rise. We think those concerns are unwarranted. Underlying demand in the U.S. remains robust," ANZ bank said.

Source Reuters

Forex - USD/JPY tumbles over 1% after BoJ stimulus disappoints

Forex

Business, Investing

The U.S. dollar tumbled over 1% to three-week lows against the yen on Friday, after the stimulus measures announced by the Bank of Japan disappointed markets and as investors now awaited the release of U.S. economic growth data due later in the day.

USD/JPY hit 102.72 during late Asian trade, the pair’s lowest since July 12; the pair subsequently consolidated at 103.69, down 1.50%.

The pair was likely to find support at 102.41, the low of July 12 and resistance at 106.54, the high of July 27.

At the conclusion of its monthly policy meeting on Friday, the BoJ announced a modest increase in purchases of exchange-traded funds (ETFs), but maintained its base money target at 80 trillion yen as well as the pace of purchases for other assets.

The central bank also kept negative interest rates unchanged at -0.1%.

The move disappointed expectations for a stimulus package of nearly 28 trillion yen promised by Prime Minister Shinzo Abe earlier in the week to boost the economy.

The policy statement came after data showed that Japan’s household spending dropped 1.1% in June, compared to expectations for an uptick of 0.4% and after a 1.% decline the previous month.

A separate report showed that Japan’s retail sales declined by an annualized rate of 1.4% in June, compared to expectations for a 1.5% drop.

Investors were now eyeing the release of second quarter U.S. economic growth data, due later Friday, after the Federal Reserve shared a rather optimistic outlook this week.

In its monthly policy statement on Wednesday, the Fed said that “near-term risks to the economic outlook have diminished” and that the labor market has “strengthened”.

The yen was also higher against the euro, with EUR/JPY losing 1.56% to trade at 114.79.

Source Investing.com

Yen jumps after BOJ easing falls short of expectations

Forex

Business, Investing

The safe-haven yen jumped against the dollar on Friday after the Bank of Japan's modest monetary policy easing disappointed investors who had been hoping for more radical stimulus measures.

The dollar last traded at 103.46 yen , down 1.7 percent. The dollar initially rose to 105.75 yen right after the BOJ's announcement but later tumbled to a 2-1/2 week low of 102.705 yen.

The BOJ announced a modest increase in purchases of ETFs, but maintained its base money target at 80 trillion yen ($775 billion) as well as the pace of purchases for other assets including Japanese government bonds.

The BOJ also kept negative interest rates unchanged at minus 0.1 percent.

"The BOJ clearly disappointed by merely expanding on its ETF purchases, leaving the annual pace of its monetary base increase and policy rate unchanged," said Heng Koon How, senior FX investment strategist for Credit Suisse (SIX:CSGN).

"We can continue to expect elevated volatility and possible short-term risk of yen strength back towards possibly 100."

Trading conditions in the dollar versus the yen had been very illiquid going into the BOJ's announcement, with the bid to ask spread widening to 0.40 yen at one point, although they later narrowed back to around 0.02 yen or so as trading conditions normalized.

The market reaction to the BOJ's decision was exacerbated by a recent build up in expectations for the central bank to unveil significant monetary easing, in lockstep with the government's plans for increased fiscal spending.

"There had been pretty strong hopes for combined measures. There is strong appreciation pressure on the yen now that such hopes have dissipated," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

The euro slid 1.6 percent to 114.69 yen (EUR/JPY), while the Australian dollar shed 1.5 percent to 77.93 yen (AUD/JPY).

On Wednesday, the Japanese government unveiled a surprisingly large 28 trillion yen ($267.58 billion) stimulus package, firmly placing the stimulus ball in the central bank's court.

Sources told Reuters on Thursday that the government package contains direct fiscal spending of only 7 trillion yen, which is likely to disappoint investors hoping for bigger outlays given the large headline figure.

The dollar index, which measures the U.S. unit against six major peers, was down 0.4 percent at 96.384 (DXY) and set a 2-week low at 96.216.

Investors will await the U.S. government's initial reading on second quarter gross domestic product later on Friday. The economy was expected to expand at an annualized 1.8 percent, the Atlanta Federal Reserve's GDP Now forecast model showed on Thursday.

Against the dollar, the euro edged up 0.1 percent to $1.1083 .

Source Investing.com