By Lawrence Hurley
WASHINGTON (Reuters) - The U.S. Supreme Court on Thursday agreed to hear an appeal by President Donald Trump's administration seeking to avoid a lawsuit by shareholders of mortgage finance firms Fannie Mae and Freddie Mac (OTC:FMCC) relating to the government rescue of the companies following the 2008 housing crisis.
The justices will review a 2019 ruling by the New Orleans-based 5th U.S. Circuit Court of Appeals that shareholders in the two companies could pursue a challenge to the 2012 agreement between the Federal Housing Finance Agency and the Treasury Department. The deal eliminated dividend payouts to various shareholders and required the companies to pay the U.S. Treasury an amount equal to their quarterly net worth each quarter.
The court also took up a related appeal brought by the shareholders that challenges the constitutional structure of the agency.
The Supreme Court in a similar case concerning the Consumer Financial Protection Bureau ruled on June 29 that such a structure is unconstitutional, deciding that the president should be able to fire the director at any time.
The cases will be heard together in the court's next term, which starts in October.
In 2016, Fannie and Freddie shareholders Patrick Collins, Marcus Liotta and William Hitchcock sued in a federal court in Texas saying that the 2012 agreement, sometimes referred to as the "net worth sweep," exceeded FHFA's authority and that the structure of the agency was unconstitutional.
The government in 2008 seized Fannie Mae and Freddie Mac, both private enterprises set up by Congress, at the height of the financial crisis as they teetered on the brink of insolvency. The government took a majority stake in each and they were placed under the supervision of the FHFA, which was created at the same time.
The FHFA is headed by a director who is appointed to a five-year term by the president subject to confirmation by the U.S. Senate.
(Bloomberg) -- A triple-leveraged ETF that tracks some of the world’s biggest technology companies is poised for its worst week of outflows in a decade after soaring more than 200% from its March low.
The $6.8 billion ProShares UltraPro QQQ, which seeks investment results that correspond to three times the daily performance of the Nasdaq-100 Index, has already lost almost $500 million in the span, according to data compiled by Bloomberg. That puts the exchange-traded fund on pace for its largest weekly withdrawals since TQQQ started trading in February 2010.
The megacap tech trade has ruled stocks for months, with investors piling into companies with rock-solid balance sheets and that benefit from the stay-at-home economy. The Nasdaq 100, including Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL), is headed for an annual gain that ranks with its best of the last two decades, raising some concern whether the big-tech rally can continue.
“The outflows here look like classic profit-taking from an ETF that has been in money printing machine mode for about three months straight,” said Eric Balchunas, an ETF analyst for Bloomberg Intelligence. “These traders know not to push their luck, which is the key to not losing your shirt with exotic ETFs.”
The outflows may not persist, though. With more states slowing or reversing reopening measures, demand for the companies that can withstand another economic setback has been rising again. As of Thursday afternoon, the Nasdaq 100 was outperforming the other major equity benchmarks.
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ROME (Reuters) - Italy remains unsatisfied with Atlantia's proposals to settle a dispute over its motorway concession and has given the company until the weekend to come up with something better to avoid being stripped of its licence, a government source told Reuters.
Rome has been threatening to revoke the business licence of Atlantia's motorway unit Autostrade per l'Italia following the deadly collapse in 2018 of a bridge in Genoa that was run by the motorway operator.
Speaking after a Rome meeting between senior government officials and Autostrade chiefs, the source, asking not to be named, said the government had asked the company for better offers over tariffs, compensation and penalties for maintenance failings.
The issue will be on the table of the next cabinet meeting, the source added.
(Reuters) - Dakota Access, LLC asked a federal court to stay its order to shut and empty the largest oil pipeline out of North Dakota within 30 days pending an appeal of the ruling, court records showed on Thursday.
The U.S. District Court for the District of Columbia earlier this week denied an emergency request to reconsider its decision, which came after the court found fault with an environmental permit for the 570,000 barrel-per-day Dakota Access pipeline (DAPL).
Dakota Access, controlled by Energy Transfer (NYSE:ET) LP, asked the court in a filing late on Wednesday to decide on its request by July 14 so it could appeal to the U.S. Circuit Court for D.C. if denied. The lower court is holding a hearing on Thursday to discuss the schedule.
DAPL was ordered to shut and be emptied by Aug. 5 while an environmental review of the line was being completed. A portion of the pipeline runs under South Dakota's Lake Oahe, a drinking water source for the Standing Rock Sioux tribe, which long opposed the pipeline.
Dakota Access said shutting the line would cost companies and state economies billions of dollars and result in the loss of thousands of jobs.
Energy Transfer and Dakota Access say they would lose $2.8 million to $3.5 million each day the line is idled in 2020 and as much as $1.4 billion for the whole of next year.
Purging the line, which runs 1,172 miles from the Bakken shale region in North Dakota to Patoka, Illinois, would take about three months and cost roughly $27 million, it said.
The company told Reuters on Wednesday it had not yet taken measures to empty the line.
Israel stocks were lower after the close on Thursday, as losses in the Oil & Gas, Banking and Financials sectors led shares lower.
At the close in Tel Aviv, the TA 35 lost 0.55%.
The best performers of the session on the TA 35 were Paz Oil (TASE:PZOL), which rose 3.61% or 900 points to trade at 25800 at the close. Meanwhile, Ormat Technologies (TASE:ORA) added 3.17% or 670 points to end at 21790 and Teva Pharmaceutical Industries Ltd (TASE:TEVA) was up 2.15% or 83 points to 3940 in late trade.
The worst performers of the session were Israel Corp (TASE:ILCO), which fell 6.03% or 1830 points to trade at 28500 at the close. International Flavors & Fragrances Inc (TASE:IFF) declined 3.58% or 1560 points to end at 41960 and Harel (TASE:HARL) was down 3.48% or 73 points to 2027.
Falling stocks outnumbered advancing ones on the Tel Aviv Stock Exchange by 213 to 175 and 24 ended unchanged.
Crude oil for August delivery was down 3.01% or 1.23 to $39.67 a barrel. Elsewhere in commodities trading, Brent oil for delivery in September fell 2.29% or 0.99 to hit $42.30 a barrel, while the August Gold Futures contract fell 0.91% or 16.55 to trade at $1804.05 a troy ounce.
USD/ILS was up 0.03% to 3.4504, while EUR/ILS fell 0.29% to 3.8965.
The US Dollar Index Futures was up 0.33% at 96.690.
Germany stocks were mixed after the close on Thursday, as gains in the Software, Technology and Pharmaceuticals & Healthcare sectors led shares higher while losses in the Food & Beverages, Insurance and Utilities sectors led shares lower.
At the close in Frankfurt, the DAX declined 0.04%, while the MDAX index lost 0.76%, and the TecDAX index added 0.76%.
The best performers of the session on the DAX were SAP SE (DE:SAPG), which rose 4.74% or 6.090 points to trade at 134.630 at the close. Meanwhile, Infineon Technologies AG NA O.N. (DE:IFXGn) added 2.66% or 0.560 points to end at 21.650 and Merck KGaA (DE:MRCG) was up 1.86% or 2.02 points to 110.62 in late trade.
The worst performers of the session were Wirecard AG (DE:WDIG), which fell 10.74% or 0.298 points to trade at 2.480 at the close. Deutsche Lufthansa AG (DE:LHAG) declined 3.28% or 0.296 points to end at 8.722 and Daimler AG NA O.N. (DE:DAIGn) was down 2.91% or 1.085 points to 36.200.
The top performers on the MDAX were TeamViewer AG (DE:TMV) which rose 3.71% to 53.62, Gerresheimer AG (DE:GXIG) which was up 2.61% to settle at 92.400 and Software AG (DE:SOWGn) which gained 1.57% to close at 37.600.
The worst performers were Telefonica Deutschland Holding AG (DE:O2Dn) which was down 6.70% to 2.479 in late trade, Duerr AG (DE:DUEG) which lost 5.36% to settle at 21.880 and Commerzbank AG O.N. (DE:CBKG) which was down 4.42% to 4.350 at the close.
The top performers on the TecDAX were SAP SE (DE:SAPG) which rose 4.74% to 134.630, TeamViewer AG (DE:TMV) which was up 3.71% to settle at 53.62 and Infineon Technologies AG NA O.N. (DE:IFXGn) which gained 2.66% to close at 21.650.
The worst performers were Wirecard AG (DE:WDIG) which was down 10.74% to 2.480 in late trade, Telefonica Deutschland Holding AG (DE:O2Dn) which lost 6.70% to settle at 2.479 and Aixtron SE (DE:AIXGn) which was down 3.34% to 11.225 at the close.
Falling stocks outnumbered advancing ones on the Frankfurt Stock Exchange by 448 to 215 and 78 ended unchanged.
Shares in SAP SE (DE:SAPG) rose to all time highs; gaining 4.74% or 6.090 to 134.630. Shares in TeamViewer AG (DE:TMV) rose to all time highs; gaining 3.71% or 1.92 to 53.62. Shares in Gerresheimer AG (DE:GXIG) rose to all time highs; gaining 2.61% or 2.350 to 92.400. Shares in Software AG (DE:SOWGn) rose to 52-week highs; up 1.57% or 0.580 to 37.600. Shares in SAP SE (DE:SAPG) rose to all time highs; gaining 4.74% or 6.090 to 134.630. Shares in TeamViewer AG (DE:TMV) rose to all time highs; rising 3.71% or 1.92 to 53.62.
The DAX volatility index, which measures the implied volatility of DAX options, was up 2.77% to 32.66.
Gold Futures for August delivery was down 0.87% or 15.75 to $1804.85 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in August fell 2.67% or 1.09 to hit $39.81 a barrel, while the September Brent oil contract fell 1.94% or 0.84 to trade at $42.45 a barrel.
EUR/USD was down 0.32% to 1.1293, while EUR/GBP fell 0.33% to 0.8951.
The US Dollar Index Futures was up 0.33% at 96.688.
BEIJING (Reuters) - China's aviation industry sank further into the red, losing 34.25 billion yuan ($4.89 billion) in the second quarter, only slightly narrower than in the first quarter, underlining the colossal financial impact from the coronavirus pandemic.
In the first quarter the industry, which includes airlines, airports and other aviation companies, lost 38.1 billion yuan, according to data released by the Civil Aviation Administration of China (CAAC) on Friday.
China's aviation industry has been recovering faster than most countries emerging from the COVID lockdowns, underpinned by a steady recovery in the domestic travel market after the epidemic was largely brought under control.
But passenger numbers showed the sector is still way below pre-COVID-19 levels, according to the latest official data. June passenger numbers fell 42.4% from a year earlier to 30.74 million, the CAAC said, although that was better than a 52.6% decline in May.
In the first half this year, total passenger numbers dropped by 45.8% from a year ago.
To boost cashflows, a few Chinese airlines have recently rolled out discount passes that would allow passengers unlimited domestic travel with few restrictions. China Eastern Airlines (SS:600115) is the first in June to sell "fly at will" flight passes for unlimited weekend domestic travel until the end of the year.
The deal was met with great consumer enthusiasm and more airlines followed suit. Hainan Airlines (SS:600221) this month offered consumers flight passes that would enable them to make unlimited trips to or from Hainan island, a popular tropical tourist spot.
TOKYO (Reuters) - International Monetary Fund Chief Economist Gita Gopinath said on Friday governments must shift to "equity-like" support from one focused on liquidity provision as the coronavirus pandemic inflicts prolonged harm on companies.
Government support in the form of loans would saddle companies with huge debt, which would serve like a tax that makes it difficult for them to emerge from the crisis, she said.
"If the lending takes form more like equity ... then that's less onus on the firms. That will make it easier for firms to recover from the crisis," Gopinath said in a webinar co-hosted by the IMF and the University of Tokyo.
TOKYO (Reuters) - Japan is likely to revise its economic assessment up slightly at its monthly report for July, government officials said, nodding to growing signs the economy is gradually emerging from the impact of the coronavirus pandemic.
The change in assessment, which would be the second straight month of upgrade, would reflect a rebound in service-sector sentiment and signs of recovery in exports to China, the officials told Reuters on condition of anonymity as they were not authorised to speak publicly.
In June, the government said that the economy was in a severe state but that it was showing signs of bottoming out.
By Nate Raymond
BOSTON (Reuters) - A federal appeals court on Thursday cleared the way for prosecutors to seek longer prison sentences for a founder and supervisory pharmacist of a Massachusetts compounding pharmacy whose tainted drugs sparked a deadly fungal meningitis outbreak in 2012.
The 1st U.S. Circuit Court of Appeals in Boston upheld the racketeering and fraud convictions of Barry Cadden, New England Compounding Center's ex-president, and Glenn Chin, its former supervisory pharmacist.
But the three-judge panel said a trial judge erred in sentencing Cadden, 53, and Chin, 52, to nine and eight years in prison, respectively, when he declined to apply various federal sentencing guideline enhancements.
U.S. Circuit Judge David Barron said the judge, among other things, in calculating a sentence wrongly concluded only the hospitals that bought NECC's drugs could count as victims and not the patients who used them.
But the court also ruled the judge did not wrongly undercalculate the victims' financial losses, which posed "the greatest risk of substantially increasing our client's sentence," said Bruce Singal, Cadden's lawyer.
Prosecutors had cited larger losses in seeking 35-year prison terms.
Both men were indicted in 2014 after a fungal meningitis outbreak traced back to mold-tainted steroids that prosecutors say NECC produced in filthy and unsafe conditions and shipped to hospitals and clinics nationally.
The outbreak sickened 793 patients, more than 100 of whom have died, prosecutors said.
Jurors in separate trials in 2017 acquitted Cadden and Chin of second-degree murder charges related to the deaths of 25 patients but convicted them of racketeering and fraud over alleged misrepresentations made to NECC's customers.
Prosecutors argued hospitals would not have bought drugs from Framingham, Massachusetts-based NECC had they known about its quality control issues.
Cadden and Chin also face separate second-degree murder charges in Michigan, which was hit hard by the outbreak.
WASHINGTON (Reuters) - President Donald Trump will sign three executive orders on lowering prescription drug prices, White House Chief of Staff Mark Meadows said on Thursday.
"This president is going to do three different executive orders that will substantially make sure that the average American gets to pay less for their prescription drugs," Meadows said in an interview on Fox Business Network.
Meadows did not give details and did not say when the executive orders would be signed.
On Monday, Meadows told Fox News the White House was looking to get something done on prescription drug prices after Congress failed to act.
Trump is trailing Democratic presidential candidate Joe Biden in opinion polls ahead of the Nov. 3 election and the cost of healthcare is a major issue in the campaign.
The Democratic-controlled House of Representatives on Monday passed a healthcare bill that includes provisions to cut prescription drug prices. The legislation is expected to be blocked in the Republican-controlled Senate.