RBC's Lori Calvasina on what to watch in markets this week
Lori Calvasina, RBC Capital Markets head of U.S. equity strategy, joins 'Squawk Box' to discuss the latest market trends, what to watch in markets this week, impact of Moody's downgrade,
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Yahoo
2 hours ago
- Yahoo
U.S.-China trade war on hold as talks reboot in London
Top trade officials from the U.S. and China were meeting in London on Monday, the second such meeting in the past month and one aiming to quell rising tensions between the two superpowers over tariffs and other trade policies. The meeting kicked off just days after President Donald Trump and Chinese President Xi Jinping engaged in an extended phone conversation, after which Trump offered an upbeat download on the conversation. 'I just concluded a very good phone call with President Xi, of China, discussing some of the intricacies of our recently made, and agreed to, Trade Deal,' Trump said on Truth Social last Friday. 'The call lasted approximately one and a half hours, and resulted in a very positive conclusion for both Countries. There should no longer be any questions respecting the complexity of Rare Earth products. Our respective teams will be meeting shortly at a location to be determined.' U.S. Treasury Secretary Scott Bessent, Secretary of Commerce Howard Lutnick and U.S. Trade Representative, Ambassador Jamieson Greer are leading the U.S. delegation and early reports on the talks were optimistic. National Economic Council Director Kevin Hassett on Monday told CNBC's 'Squawk Box' that the U.S. was seeking confirmation China would restore the flows of critical minerals. 'The purpose of the meeting today is to make sure that they're serious, but to literally get handshakes ... and get this thing behind us,' Hassett said. He added that he expected it 'to be a short meeting with a big, strong handshake.' While White House officials were signaling expectations for a positive outcome from the latest round of talks, some trade experts predicted the road to a new U.S.-China agreement could be a long one. Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, told CNBC that it could take months for trade tensions to be resolved. 'I don't really have very high expectations for these trade talks ... I doubt they will reach an agreement very soon,' he told CNBC on Monday. 'There could be some resolution on specific issues, like a rare earths, for instance, China already announced that they will give some permits to foreign firms applying for imports. Now, those kind of a temporary solution, we might see some of that come out. But I doubt we will have a complete solution coming from this dialogue in the U.K.,' Zhang added. In spite of a temporary U.S.-China trade agreement coming out of talks held on May 12 in Geneva, Switzerland, tensions arose earlier this month after Trump accused China of breaching terms of the deal. 'The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!' Trump wrote on Truth Social. Last week, ahead of the call between Trump and Xi, China hit back on Trump's claims the Asian country was in breach of a new trade agreement, countering that the U.S. itself was undermining the deal with new sanctions. A statement from China's Ministry of Commerce released last Monday said Trump administration actions 'seriously undermine the existing consensus reached at the Geneva economic and trade talks, and seriously damage China's legitimate rights and interests.' Chinese officials also pointed to recent signaling from the U.S. about potential new regulations for advanced microchips and the revocation of U.S. visas for Chinese students, per CBS News, as evidence that the U.S. was acting in bad faith following the trade deal. Trump's complaint stemmed from his concerns over China's export rules on rare earth minerals. China controls 90% of the world's rare earth elements production capacity and, according to the U.S. Department of Energy, the minerals play a critical role in U.S. national security, energy independence and economic growth. Many advanced technologies have components made from rare earth materials such as magnets, batteries, phosphors and catalysts.
Yahoo
5 hours ago
- Yahoo
Parts supplier FleetPride's debt rating cut by Moody's, outlook still negative
Aftermarket truck parts distributor FleetPride's debt rating has been downgraded by Moody's, and the accompanying commentary by the agency is both pessimistic and critical of the company's finances. The downward move Thursday in what Moody's (NYSE: MCO) calls its corporate family rating (CFR) took the company's rating to Caa1 from B3. That B3 rating had been in place since January 2019, when Moody's first rated FleetPride's basis for the downgrade was not all financial. Moody's also took a swipe at FleetPride's governance. In addition to reducing the debt rating, Moody's kept a negative outlook on the company. That outlook was put in place in August 2024.A downgrade in a company's rating often occurs after a previous move to a negative outlook. But the downgrade also more often than not is accompanied by a concurrent lifting of the negative outlook to stable. That did not occur with Moody's action on FleetPride. S&P Global Ratings (NYSE: SPGI) has a B- rating on FleetPride. On a comparative basis, that is considered one notch higher than the new Caa1 rating Moody's has on the parts provider. The S&P outlook on FleetPride is stable, creating a significant difference between the two agencies: S&P's rating is a notch above Moody's and the outlook is stable, contrasting with Moody's lower rating and negative outlook. Both ratings are deep into speculative territory. In the case of Moody's, Caa1 is seven notches less than the cutoff between speculative and investment-grade debt. For S&P, it's six notches. The Moody's downgrade also reduced the rating on a senior secured second-lien term loan to Caa3 from Caa2, further down the scale from the CFR.'The ratings downgrades reflect our expectations that despite efforts to improve operating results, the company will continue to operate with very high leverage, low interest coverage and weak liquidity attributed to ongoing negative free cash flow,' Moody's said in its report. 'Further, the company faces looming debt maturities that if not addressed timely will result in an untenable capital structure.' The governance issue raised by Moody's targets 'aggressive financial strategies and risk management practices' that have 'resulted in high financial leverage and weak liquidity.' That reduced a metric used by Moody's – the credit impact score – being reduced to CIS-5 from CIS-4. The reduction reflects 'these risks and a track record that has failed to adequately address the declining operating results that cannot support the existing capital structure.' FleetPride is owned by private equity company American Securities. A request for comment by FleetPride had not been responded to by publication time. The reports of the ratings agencies on their actions do not generally disclose a large amount of financial data. Moody's did disclose that revenue at FleetPride was $1.8 billion in the 12 months ended March 31. But the most important number in the reports is the ratio of debt to earnings before income, taxes, depreciation and amortization. Moody's described FleetPride's debt-to-EBITDA ratio as reflecting 'very high financial leverage and weak liquidity.' The ratings agency said it expects that ratio to decline from the 9.6X level it stood at following the close of the first quarter but that the decrease would be 'modest.' The ratio is 'unsustainably high,' the Moody's report said. FleetPride has 'ongoing' negative free cash flow and 'continued reliance' on its asset-backed revolving line of credit 'as the company works to improve operating results.'FleetPride is also facing a need to refinance the $225 million second-lien term loan before Nov. 5, 2026. That is the debt issue that received a downgrade to two notches less than the CFR rating. If the company cannot refinance that loan, according to Moody's, it will trigger maturity of a first-term loan and the asset-backed revolving credit line. The weak truck market did not go unremarked in the Moody's commentary. 'FleetPride is exposed to cyclical end markets and results are largely tied to trucking and freight activity in the US,' it said. 'The level of freight volume is a strong indicator of overall fleet usage and thus the need for fleet operators to purchase replacement parts. The extended downturn results in a reduced need for replacement parts and operators pulling back on maintenance spending.' But the Moody's report said FleetPride is performing somewhat better than the trucking market as a whole. 'The company continues to modestly outperform broader industry trends with growth driven by increasing smaller accounts, e-commerce and private label offerings,' it said. Moody's, in a description of the FleetPride business, said it 'distributes brand name heavy-duty vehicle parts and select private label brands through five distribution centers and over 300 branches nationwide.' It also supplies a 'limited range of remanufactured products' and some repair services. More articles by John Kingston BMO's Q2 earnings show no improvement in credit conditions for trucking One-day stock slide at Proficient may be tied to somewhat bearish investor presentation Truck transportation jobs up year over year for first time since 2023: BLS The post Parts supplier FleetPride's debt rating cut by Moody's, outlook still negative appeared first on FreightWaves. Sign in to access your portfolio
CNBC
6 hours ago
- CNBC
Fed Chair Powell has room to lower rates, says Wharton's Jeremy Siegel
Jeremy Siegel, professor emeritus of finance at University of Pennsylvania's Wharton School of Business and Wisdom Tree chief economist, joins 'Squawk Box' to discuss the latest market trends, state of the economy, impact of President Trump's tariff policy, the Fed's rate path outlook, and more.
