Focus: Equities versus fixed income

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Updated 08 May 2020
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Focus: Equities versus fixed income

What happened:

Stock markets turned risk-on after a positive conference call between US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer with Chinese Vice Premier Liu He to discuss the implementation of “Phase One” of the US-China trade agreement. Both countries expect to fulfill their obligations under the deal.

April trade statistics for China show a contraction of imports from the US, which could be a roadblock. Despite the harsh anti-China rhetoric regarding the spread of the coronavirus (COVID-19) pandemic, US Secretary of State Mike Pompeo was optimistic on the agreement as long as China made good on promises regarding trade, intellectual property and the opening of its investment markets.

China reported a current account deficit of $297 billion for the first quarter 2020. 

The earnings season continues:

Bristol Myers Squibb’s (BMS) revenues skyrocketed by 82 percent to $10.8 billion, which was attributed to the acquisition of Celgene in November 2019. Several BMS pre-acquisition drugs also performed well. The COVID-19 pandemic boosted revenue in the first quarter by around $500 million, with buyers stocking up inventories out of fear of supply chain interruptions. Earnings per share were $1.72, up 56 percent year over year.

ViacomCBS revenues came in at $6.1 billion, down 6 percent, while net earnings fell by 74 percent to $508 million. Advertising revenues were down 19 percent, while content licensing revenues were up 9 percent. Domestic streaming and digital video revenue rose 51 percent during the quarter.

Hilton net income was $18 million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $363 million for the first quarter. Currency-adjusted system-wide revenue decreased by 228 percent compared to the same quarter in 2019. The outlook for the second quarter is bleak as lockdowns in the major economies of Europe and North America will hit the company hard. Both IHG and Marriott reported similarly pessimistic outlooks, while all of them abandoned guidance.

Siemens posted an operating profit of €1.6 billion ($1.7 billion), down 18 percent compared to the same period last year. Revenues were stable at €14.2 billion. This did not include Siemens Gas and Power/Siemens Gamesa Renewable Energy, which are separated into Siemens Energy. CEO Joe Kaeser said that the entity's initial public offering would take place later this year as scheduled. The company abandoned guidance. Kaeser expects the next quarter to be the worst. He observed that his clients are attempting to regionalize supply chains and voiced particular concerns about India. Of the 24 currently closed factories, 20 are located in India.

ING’s net result came in at €1 billion, down 35.7 percent compared to a quarter ago. Lending was up by €12.3 billion and net deposits by earnings came in at €12.4 billion, reflecting liquidity provided last month. Net customer deposit inflow amounted to €9.2 billion. The bank will take guidance quarter by quarter going forward.

Background:

Equity markets recovered nicely from their March 24 lows. On Thursday, the Nasdaq recovered its losses for the year. The gains are partly fueled by monetary and fiscal rescue packages and do not reflect the situation in the real economy.

They are also in contrast to government bond markets. The yields for 2-year and 5-year treasury have reached new lows, giving rise to concerns about US interest rates turning negative. This could be a reflection of investors turning to safe assets rather than the Fed really envisaging negative interest rates, particularly when looking at Japan and Switzerland. In both cases, negative interest rates only had a temporary effect. The yen and the Swiss Franc (two classic safe haven currencies) kept appreciating each time after rates had been lowered.

The pandemic has clearly shown the safe haven status of both US treasuries and the US dollar, which means that it may be appropriate for the Federal Reserve to learn lessons from across the Pacific and the Atlantic.

Where we go from here:

US first-time jobless claims rose by 3.2 million in the week ending April 1. While increases declined since the week ending March 27, they still exceeded 3 million week after week.

The US department of labor released the non-farm payroll data earlier on Friday. Job losses amounted to 20.5 million for the month of April, bringing the unemployment rate up to 14.7 percent. This is the highest level since the 1940s, wiping out a decade of job gains in the US.

San Francisco Fed President Mary Daly expects the economy to contract in 2020 and recover in 2021 with the caveat that it depends on the spread of the virus as well as the development of a vaccine or medicine to keep the spread in check.

The question remains as to when and how the job market will recover. It will depend on the shape and speed of the economic recovery. We should focus on how many high-quality jobs will return and whether jobs in the less skilled and l ess compensated gig economy will grow disproportionately.

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.
Twitter: @MeyerResources


Pakistan confirms OIC participation as PM Sharif, Türkiye’s Erdogan discuss Iran crisis

Updated 14 June 2025
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Pakistan confirms OIC participation as PM Sharif, Türkiye’s Erdogan discuss Iran crisis

  • OIC’s Council of Foreign Ministers is scheduled to take place in Istanbul on June 21-22
  • Event comes as two OIC members have faced military standoffs with their regional rivals

ISLAMABAD: Prime Minister Shehbaz Sharif on Saturday assured Turkish President Recep Tayyip Erdogan of his country’s participation in the upcoming Organization of Islamic Cooperation (OIC) meeting in Istanbul, as both leaders expressed deep concern over Israel’s recent attack on Iran and pledged to coordinate peace efforts.

The telephone call came as the OIC’s Council of Foreign Ministers (CFM) prepares to convene in Türkiye on June 21–22 at a volatile moment for the bloc, with two of its member states — Pakistan and Iran — having faced military standoffs with their regional rivals.

While Pakistan’s border exchange with India lasted four days before a US-brokered ceasefire was reached last month, Iran remains in a state of heightened uncertainty following Israel’s strike on its military and nuclear facilities on Friday, as the war shows no signs of easing.

“Prime Minister Muhammad Shehbaz Sharif held a telephone conversation with President Recep Tayyip Erdogan of Türkiye, this evening,” Sharif’s office said in a statement after the call. “During their most warm and cordial conversation, both leaders discussed the deeply worrying situation in the region in the wake of Israel’s unprovoked and unjustified aggression against Iran.”

“The Prime Minister said that Pakistan would continue to play a constructive role for peace, both as member of the UN Security Council, as well as in other forums such as the OIC,” the statement added. “In this regard, the Prime Minister said that Deputy Prime Minister & Foreign Minister Mohammad Ishaq Dar would represent Pakistan at the upcoming OIC CFM meeting in Istanbul.”

Both leaders condemned Israel’s strikes, saying they violated Iran’s sovereignty and defied international law.

They also voiced solidarity with Palestine amid what they described as Israel’s “brazen military aggression,” which they said had continued “with complete impunity.”

The two leaders emphasized the international community and the United Nations must act collectively and urge Israel to immediately end its “aggressive posturing and illegal actions” against Iran, Palestine and other countries in the region.


‘Taste of Saudi Culture’ to delight London foodies

Guests will be welcomed with premium coffee — a timeless symbol of Saudi hospitality. (File photo/X: @MOCCulinary)
Updated 14 June 2025
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‘Taste of Saudi Culture’ to delight London foodies

  • From jareesh to rose-infused ice cream, the Kingdom serves up flavor, tradition, hospitality

RIYADH: For the third year in a row, Saudi Arabia’s Culinary Arts Commission will participate in the Taste of London food festival, held in Regent’s Park from June 18 to 22.

Through its “Taste of Saudi Culture” pavilion, the commission promotes cultural exchange, showcases the richness of Saudi culinary heritage, and highlights the Kingdom’s culinary excellence.

Guests will be welcomed with premium coffee — a timeless symbol of Saudi hospitality. (File photo/X: @MOCCulinary)

The pavilion will feature immersive activities celebrating the diversity of Saudi cuisine, including live cooking demonstrations by skilled Saudi chefs.

Visitors will have a rare chance to sample a variety of iconic traditional dishes, each with its own story and flavor — such as the national dish jareesh, the slow-cooked haneeth, and the savory street favorite mutabbaq.

HIGHLIGHT

Visitors will have a rare chance to sample a variety of iconic traditional dishes, each with its own story and flavor — such as the national dish jareesh, the slow-cooked haneeth, and the savory street favorite mutabbaq.

Beyond food, the pavilion will include interactive cultural elements reflecting Saudi heritage, such as traditional henna art and colorful Asiri rose headbands.

Guests will be welcomed with premium dates and Saudi coffee — timeless symbols of Saudi hospitality, according to the Saudi Press Agency.

Handcrafted ice cream infused with traditional Saudi ingredients like dates, Taif rose, and Jazan mango will also be served, offering authentic flavors with a modern twist.

A variety of refreshing cold drinks made from local ingredients will complement the experience, the SPA added.

A boutique section will feature signature Saudi products like maamoul (date-filled cookies) and unique Saudi coffee, blending retail, culture, and taste into an immersive journey.

This participation underscores the commission’s ongoing commitment to celebrating the depth of Saudi culinary arts and sharing the Kingdom’s vibrant food culture with global audiences.

 


Pakistan, Uzbekistan launch direct air link to deepen regional connectivity

Updated 14 June 2025
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Pakistan, Uzbekistan launch direct air link to deepen regional connectivity

  • Uzbekistan Airways flight departed Islamabad for Tashkent with 126 passengers Saturday afternoon
  • Pakistan is also advancing plans for a railway link connecting Peshawar with Kabul and Tashkent

KARACHI: Pakistan on Saturday hosted the inaugural direct flight by Uzbekistan Airways between Islamabad and Tashkent, marking yet another step toward enhanced regional connectivity and deeper economic ties with Central Asia.

Pakistan has been pushing to forge stronger trade links with landlocked Central Asian nations by offering access to its Arabian Sea ports. While several regional states border Afghanistan, Uzbekistan is seen as a strategic gateway due to its central location in the region and its larger economy.

“The Pakistan Airports Authority (PAA) proudly hosted the inaugural flight ceremony of Uzbekistan Airlines’ direct service from Islamabad to Tashkent (Flight HY466), marking a significant milestone in enhancing regional air connectivity and people-to-people ties between Pakistan and Central Asia,” said a PAA statement.

The flight, carrying 126 passengers, departed Islamabad at 1:09 p.m. on Saturday, following a festive check-in at Zone 1 of the international airport adorned with balloons, the statement said.

It informed that ambassadors from Uzbekistan, Tajikistan, Kazakhstan and Azerbaijan attended the ceremony, joined by airport officials, tourism executives and Uzbekistan Airlines’ country manager.

Pakistan is also advancing plans for a railway link connecting Uzbekistan to Pakistan through Afghanistan. Earlier this month, Foreign Minister Ishaq Dar spoke with Afghan counterpart Amir Khan Muttaqi and Uzbek officials about the proposed 573‑km Uzbekistan‑Afghanistan‑Pakistan (UAP) Railway Project.

The corridor aims to link Tashkent with Kabul and Peshawar, enhancing freight movement and reducing transit time by up to several days.

The overland route via Afghanistan connects Pakistan’s road and rail network through the mountainous frontier into Afghanistan and onward to Central Asia, offering an alternative to existing northbound trade routes.


Israel says attacks on Iran are ‘nothing’ compared with what is coming

Rescuers work at the site of a damaged building, in the aftermath of Israeli strikes, in a location given as Tehran, Iran.
Updated 14 June 2025
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Israel says attacks on Iran are ‘nothing’ compared with what is coming

  • Netanyahu said Israel’s strikes had set back Iran’s nuclear program possibly by years but rejected international calls for restraint

JERUSALEM/DUBAI: Iran and Israel traded missiles and airstrikes on Saturday, the day after Israel launched a sweeping air offensive against its old enemy, killing commanders and scientists and bombing nuclear sites in a stated bid to stop it building an atomic weapon.
Israeli Prime Minister Benjamin Netanyahu said Israel’s strikes had set back Iran’s nuclear program possibly by years but rejected international calls for restraint, saying the attack would be intensified.
“We will hit every site and every target of the Ayatollahs’ regime, and what they have felt so far is nothing compared with what they will be handed in the coming days,” he said in a video message.
In Tehran, Iranian state TV reported that around 60 people, including 20 children, had been killed in an attack on a housing complex, with more strikes reported across the country. Israel said it had attacked more than 150 targets.
In Israel, air raid sirens sent residents into shelters as waves of missiles streaked across the sky and interceptors rose to meet them. At least three people were killed overnight. An Israeli official said Iran had fired around 200 ballistic missiles in four waves.
US President Donald Trump has lauded Israel’s strikes and warned of much worse to come unless Iran quickly accepts the sharp downgrading of its nuclear program that the US has demanded in talks that had been due to resume on Sunday.
But with Israel saying its operation could last weeks, and urging Iran’s people to rise up against their Islamic clerical rulers, fears have grown of a regional conflagration dragging in outside powers.
The United States, Israel’s main ally, helped shoot down Iranian missiles, two US officials said.
“If (Supreme Leader Ayatollah Ali) Khamenei continues to fire missiles at the Israeli home front, Tehran will burn,” Israeli Defense Minister Israel Katz said.
Iran had vowed to avenge Friday’s Israeli onslaught, which gutted Iran’s nuclear and military leadership and damaged atomic plants and military bases.
Tehran warned Israel’s allies that their military bases in the region would come under fire too if they helped shoot down Iranian missiles, state television reported.
However, 20 months of war in Gaza and a conflict in Lebanon last year have decimated Tehran’s strongest regional proxies, Hamas in Gaza and Hezbollah in Lebanon, reducing its options for retaliation.
Lawmaker and military general Esmail Kosari said Iran was reviewing whether to close the Strait of Hormuz, the exit point for oil shipped from the Gulf.
Nights of blasts and fear in Israel and Iran
Iran’s overnight fusillade included hundreds of ballistic missiles and drones, an Israeli official said. Three people, including a man and a woman, were killed and dozens wounded, the ambulance service said.
In Rishon LeZion, south of Tel Aviv, emergency services rescued a baby girl trapped in a house hit by a missile, police said, but later on Saturday Tel Aviv beaches were busy with people enjoying the weekend.
In the western suburb of Ramat Gan, near Ben Gurion airport, Linda Grinfeld described her apartment being damaged: “We were sitting in the shelter, and then we heard such a boom. It was awful.”
The Israeli military said it had intercepted surface-to-surface Iranian missiles as well as drones, and that two rockets had been fired from Gaza.
In Iran, Israel’s two days of strikes destroyed residential apartment buildings, killing families and neighbors as apparent collateral damage in strikes targeting scientists and senior officials in their beds.
Iran said 78 people had been killed on the first day and scores more on the second day, many of them when a missile brought down a 14-story apartment block in Tehran.
State TV said 60 people were believed to have been killed there, though the figure was not officially confirmed.
It broadcast pictures of a building flattened into debris and the facade of several upper storys lying sideways in the street, while slabs of concrete dangled from a neighboring building.
“Smoke and dust were filling all the house and we couldn’t breathe,” 45-year-old Tehran resident Mohsen Salehi told Iranian news agency WANA after an overnight air strike woke his family.
Fars News agency said two projectiles had hit Mehrabad airport, located inside the capital, which is both civilian and military.
With Iran’s air defenses heavily damaged, Israeli Air Force chief Tomer Bar said “the road to Iran has been paved.”
In preparation for possible further escalation, reservists were being deployed across Israel. Army Radio reported units had been positioned along the Lebanese and Jordanian borders.
Iranian nuclear sites damaged
Israel sees Iran’s nuclear program as a threat to its existence, and said the bombardment was designed to avert the last steps to production of a nuclear weapon.
A military official on Saturday said Israel had caused significant damage to Iran’s nuclear facilities at Natanz and Isfahan, but had not so far taken on another uranium enrichment site, Fordow, dug into a mountain.
The official said Israel had “eliminated the highest commanders of their military leadership” and had killed nine nuclear scientists who were “main sources of knowledge, main forces driving forward the (nuclear) program.”
Tehran insists the program is entirely civilian in line with its obligations under the nuclear Non-Proliferation Treaty (NPT) and that it does not seek an atomic bomb.
However, it has repeatedly hidden some part from international inspectors, and the International Atomic Energy Agency on Thursday reported it in violation of the NPT.
Iranian talks with the United States to resolve the nuclear dispute have stuttered this year.
The next meeting was set for Sunday but Iranian Foreign Minister Abbas Araqchi said on Saturday that continuing the talks while Israel’s “barbarous” attacks lasted was unjustifiable.


Saudi crown prince discusses Israeli attack on Iran with British, Turkish leaders

Saudi Crown Prince Mohammed bin Salman, British Prime Minister Keir Starmer, and Turkish President Recep Tayyip Erdogan. (File)
Updated 14 June 2025
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Saudi crown prince discusses Israeli attack on Iran with British, Turkish leaders

  • Prince Mohammed and Starmer discussed latest developments in the region and the importance of resolving disputes through diplomatic means

RIYADH: Saudi Crown Prince Mohammed bin Salman discussed the repercussions of Israel’s military operations against Iran with British Prime Minister Keir Starmer during a phone call on Saturday.

The call comes a day after Israel launched a blistering surprise attack on Iranian nuclear and military sites, killing a number of top generals. The two countries continued to trade blows on Saturday.

Prince Mohammed and Starmer discussed the latest developments in the region and the importance of exerting all efforts to de-escalate and resolve disputes through diplomatic means, Saudi Press Agency reported.

Later on Saturday, Prince Mohammed spoke with Turkish President Recep Tayyip Erdogan. The two leaders reviewed developments in the region following Israeli strikes on Iran, SPA said.