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Daily Agenda: Last Straw for Greece, Puerto Rico

U.S. legislators approve White House-backed trade bill; Icahn wins on sale of Netflix stake; France and Saudi to ink defense contracts.

Greek leaders have failed yet again to reach an accord with creditors as the Eurogroup begins yet another emergency session to discuss options. Increasingly dependent on the European Central Bank for funding, Greek banks are experiences an old-fashioned run as savers in the nation withdraw deposits rapidly to avoid devaluation. If an accord is not reached with the Troika — the European Commission, ECB and the International Monetary Fund — the ECB may be forced to cease the emergency lending, thus triggering capital controls. Meanwhile, a game of brinkmanship is also in play in the U.S. as lawmakers in Puerto Rico debate options with only days left before a commonwealth-backed utility must make payments on outstanding bonds with insufficient reserves. Puerto Rico is staring at more than $70 billion in debt as tax revenues have dwindled in the face of a rapidly declining local economy.

Icahn liquidates Netflix holding. On the same day that the streaming movie platform announced a stock split, investor Carl Icahn announced yesterday that he is selling his remaining shares of Netflix. The famed activist investor purchased shares at $58 in 2012. Netflix closed at nearly $679 on Wednesday; Icahn made $993 million in his stock sale.

Senate approves trade bill. The Senate yesterday passed White House-backed legislation that would allow fast-track approval process for trade bills. The new bill paves the way for further debate as the Obama administration seeks approval for the controversial 12-nation Trans-Pacific Partnership.

J.P. Morgan to settle with SEC. Reports surfacing yesterday from unnamed sources indicate that J.P. Morgan Chase is close to reaching a settlement agreement with the Securities and Exchange Commission over allegations that the bank steered clients to unsuitable proprietary products. The case comes as the SEC considers rules that would redefine the fiduciary responsibilities of broker-dealers when advising customers.

France and Saudi Arabia sign deal. French Foreign Minister Laurent Fabius today revealed that France and Saudi Arabia will sign a series of deals worth in excess of $12 billion in defense contracts. The agreements will also include French contractors’ involvement in the kingdom’s investment in nuclear power.

Disney raises dividend. Yesterday Walt Disney Co. announced a new annual dividend of $1.32 per share to be distributed in two payments per year. The move marks a 15 percent increase in the entertainment giant’s cash payout to investors.

Portfolio Perspective: Latin America faces Uneven Recovery DynamicsPablo F.G. Bréard, Scotiabank

Latin America is prepared to benefit from a more balanced — and interdependent — global expansionary cycle. The recovery won’t be homogenous across the region, though. Brazil, which accounts for 34 percent of the GDP in the developing Americas, will only see a return to positive and sustainable economic growth in the latter part of 2016 following the implementation of a comprehensive and well-synchronized fiscal and external adjustment process. Mexico will be tied to U.S. growth dynamics with the potential to outperform its North American Free Trade Agreement partners as a result of improved competitiveness and structural reforms under implementation. China’s influence on global trade flows and commodity prices will remain a major driver of economic activity in Peru, Chile and Uruguay, yet it might also add risks to growth if China’s corporate indebtedness and/or decelerating growth lead to market tension and restrained policy actions.

Pablo F.G. Bréard is an economist for Scotiabank in Toronto.

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