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Debenhams secures 40 million pounds in extra funding

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Debenhams has secured 40 million pounds ($51.45 million) in additional funding from some of its lenders as it strives to find a longer-term solution to its financial problems, the embattled UK retail chain said on Tuesday.

Once the country’s biggest department store chain, the firm has been struggling with net debts of almost 300 million pounds and has given a string of profit warnings as it failed to keep pace with consumers moving online and to cheaper outlets.

It said the new loan, agreed for a period of 12 months, would act as a bridge to “facilitate a broader refinancing and recapitalisation”, adding it was still talking to its stakeholders and would conclude a “comprehensive refinancing”.

Shares in the company were on course to rise around 10 percent at opening, according to traders in London.

“The support of our lenders for our turnaround plan is important to underpin a comprehensive solution that will take account of the interests of all stakeholders, and deliver a sustainable and profitable future for Debenhams,” Chief Executive Officer Sergio Bucher said.

The company also said in the same statement it had signed an agreement with Hong Kong-listed supply chain solutions firm Li & Fung to develop a strategic sourcing partnership.

The deal would cover a material part of its own-brand sourcing over time and would improve product quality and lead-times, helping margins and costs.

($1 = 0.7774 pounds)

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Dow plunges 600 points after bond market flashes a recession warning

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Stocks plunged on Wednesday, giving back Tuesday’s solid gains, after the U.S. bond market flashed a troubling signal about the U.S. economy.

Dow Jones Industrial Average dropped about 625 points, while the S&P 500 fell 2.3% and Nasdaq Composite declined 2.5%.

The yield on the benchmark 10-year Treasury note on Wednesday broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator for economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.

Bank stocks led the declines as it gets tougher for the group to make a profit lending money in such an environment. Bank of America and Citigroup fell 4.3% and 5.1% respectively, while J.P. Morgan also dropped 3.6%. The SPDR S&P Regional Banking ETF is down 2.65%.

“The U.S. equity market is on borrowed time after the yield curve inverts,” wrote Bank of America technical strategist Stephen Suttmeier.

There have been five inversions of the 2-year and 10-year yields since 1978 and all were precursors to a recession, but there is a significant lag, according to data from Credit Suisse. A recession occurred, on average, 22 months after the inversion, Credit Suisse shows. And the S&P 500 actually enjoyed average returns of 15% 18 months after an inversion before it eventually turns.

The last time this key part of the yield curve inverted was in December 2005, two years before the recession hit.

“Historically speaking the inversion of that benchmark yield curve measure means that we now must expect a recession anywhere from six-to-18 months from today which will drastically, and negatively, shift our medium-to-longer term outlook on the broader markets,” Tom Essaye, founder of The Sevens Report, said in a note on Wednesday.

Shares of Macy’s tanked nearly 17% after the retailer posted second-quarter earnings way below analysts’ expectations as heavy markdowns used in spring to clear unsold merchandise weighed on profits.

Global slowdown

Investors are increasingly worried about a global economic slowdown as weaker-than-expected data in China deepened the gloom in the world’s second-largest economy. Official data published Wednesday showed growth of China’s industrial output slowed to 4.8% in July from a year earlier, the weakest growth in 17 years.

Adding to the fears is Germany’s negative GDP print, which raised the risk that Europe’s largest economy is on the verge of falling into a recession. Euro zone GDP also grew by just 0.2% quarter on quarter, a significant slowdown from the 0.4% growth in the first quarter.

The U.S. decided to delay tariffs on certain Chinese goods while outright removing some items from the tariff list, the United States Trade Representative announced Tuesday. Wall Street cheered the news, with the Dow jumping as much as 529 points before settling to finish the day 372 points higher.

President Donald Trump said Tuesday that the move was designed to avoid any potential impact on holiday shopping ahead of Christmas season. He added China would very much like to make a trade deal.

There are still seven “structural issues” the U.S. needs to settle with China through negotiations, White House trade advisor Peter Navarro told Fox Business Network on Wednesday. These issues include cyber intrusion into U.S. business networks, forced technology transfer, intellectual property theft and currency manipulation, he added.

China’s Commerce Ministry said Vice Premier Liu He had spoken by phone with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Tuesday and they agreed to talk again in two weeks.

— CNBC’s Sam Meredith contributed reporting.

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From Apple to Walmart, these firms are embracing solar power in the US

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Usa Flag In Blue Sky

RomoloTavani | iStock | Getty Images

Around the world, companies are embracing renewable sources of energy as they look to “green up” operations and limit their impact on the environment.

U.S. firms are no different, with the Solar Energy Industries Association (SEIA) recently stating that corporate solar adoption had “surged” over the last few years.

CNBC’s “Sustainable Energy” looks at the businesses with the most installed solar capacity in the U.S., according to the SEIA’s Solar Means Business Report for 2018.

Fifth Third Bank 80.0 MW (Megawatts)

Luke Sharrett | Bloomberg | Getty Images

Ohio headquartered Fifth Third Bank places tenth in SEIA’s list.

In 2018, the business signed a power purchase agreement for 100% renewable power from an 80 MW solar project in North Carolina.

Solvay 81.4 MW

Jasper Juinen | Bloomberg | Getty Images

Solvay, which focuses on advanced materials and specialty chemicals, is ninth from top in the SEIA’s list with a little over 81 MW of solar.

One way the company is embracing solar is through an agreement to buy all the renewable energy certificates produced by a 71 MW solar farm in Jasper County, South Carolina, for a 15 year period.

Prologis 126.3 MW

Gina Ferazzi | Los Angeles Times | Getty Images

At number eight in the list is Prologis, with just under 127 MW of installed solar.

Commenting on the SEIA’s report, the company’s senior vice president, global energy, said Prologis “was among the first in the logistics real estate industry to invest in solar.”

Matt Singleton added that Prologis’ “future-focused approach to environmental, social and governance practices” had put the business “on pace to surpass our goal of 200 MW of solar capacity by 2020.”

Notably, if the list was restricted to onsite solar installations, the firm would place third in the SEIA’s rankings.

Kaiser Permanente 140.0 MW

Smith Collection/Gado | Archive Photos | Getty Images

In September 2018, health care provider Kaiser Permanente said it would be carbon neutral by 2020 thanks to a power purchase agreement (PPA) for 180 MW of renewable energy.

It added that the PPA would facilitate the construction of “utility scale” wind and solar farms, as well as a large battery storage system.

In August 2018, Kaiser Permanente said that a 250-kilowatt solar system had been installed on the garage roof of its Richmond Medical Center in California.

Google 142.9 MW

Steve Proehl | Corbis Documentary | Getty Images

In a blog post in June, Google’s director for operations, energy and location strategy, Neha Palmer, said the search giant’s “purchases of energy from sources like solar and wind once again matched our entire annual electricity consumption.”

Looking to the future, Google is getting involved with some large scale solar power projects.

In January 2019 the firm’s senior lead for energy and infrastructure, Amanda Corio, said it would buy the output of a number of new solar farms through a deal with the Tennessee Valley Authority.

This will amount to 413 MW of power from 1.6 million panels, Corio said.

Switch 179.0 MW

sbayram | iStock | Getty Images

In 2016, data center firm Switch commenced construction of two solar power plants in Nevada.

They have a combined capacity of 179 MW and can power all of its data centers with renewable energy.

Walmart 208.9 MW

Niloo138 | iStock Editorial | Getty Images

Walmart makes the SEIA’s top four with just under 209 MW of solar.

In October 2018, the retail giant announced it had entered into an agreement with SunPower that would see the renewable energy firm install solar power at two distribution centers and 19 stores in Illinois.

Target 242.4 MW

Florence, SC, USA – June 23, 2019: Target store Commons At Magnolia Florence SC USA

felixmizioznikov | iStock Editorial | Getty Images

Target wants to source all of its electricity from renewables by the year 2030. The company is aiming to install rooftop solar panels at 500 of its locations by 2020.

Additionally, Target is installing charging stations for electric vehicles at more than 100 sites.

Amazon 329.8 MW

Michael Duva | Photolibrary | Getty Images

Second in the SEIA’s list is Amazon. The Seattle headquartered technology giant says its solar installations in the U.S. have offset the carbon dioxide equivalent of over 200 million miles of truck deliveries. In total, the firm has 32 rooftop solar systems in the U.S.

Apple 393.3 MW

Steve Proehl | Corbis Unreleased | Getty Images

Top of the SEIA’s list is Apple. The company’s headquarters in Cupertino, California, is powered by 100% renewable energy from “multiple sources”. These include an on-site, 17 MW rooftop solar installation and 4 MW of biogas fuel cells.

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Germany’s economic resilience is crumbling and it’s time for stimulus, say economists

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Germany’s economic resilience is crumbling, fueling fears of a recession and increasing pressure on the government to deliver a fiscal stimulus package.

Economic data released Wednesday revealed that the German economy shrank by 0.1% in the second quarter of 2019, having grown by 0.4% in the first quarter. Manufacturers and the construction sector bore the brunt of a global slowdown amplified domestically by trade conflicts and Brexit uncertainty.

The shrinkage in GDP (gross domestic product) growth marks the end of a decade of expansion for the German economy, which has grown by an average of 0.5% quarter-on-quarter every quarter since the end of the 2008/9 recession, expanding in 35 of the last 40 quarters.

However, since the third quarter of 2018, the economy has been in de facto stagnation, with quarterly GDP growth averaging 0%.

Resistance is crumbling

In a note on Wednesday, ING Chief German Economist Carsten Brzeski said that while the industry slowdown is not particularly new, recent developments indicate that “the resilience of the domestic economy to external shocks is crumbling.”

“Profit warnings, first lay-offs, an increase in short-time work schemes, falling consumer confidence and weaker activity in the service sector have sounded the alarm bells,” Brzeski said.

Trade conflicts, Brexit uncertainty and global geopolitical crises, along with an ailing automotive sector, have all taken their toll. The German economy ministry said in its monthly report on Wednesday that the outlook “remains subdued for the time being.”

“Trade conflicts have recently worsened and the prospects for an orderly Brexit have not improved,” the report added.

Brzeski suggested that the weakening of the domestic economy is the most worrisome trend facing Germany, rather than wider economic stagnation.

Barclays vice president of macro research, Iaroslav Shelepko, also said that Wednesday’s GDP print confirmed the vulnerability of the German economy to external demand slowdown, amid heightened uncertainty over trade.

German industrial output posted a quarterly decline of 1.9%, its steepest quarter-on-quarter fall since the last technical recession observed amid the euro area debt crisis in 2012/13. However, Shelepko suggested that domestic demand has thus far demonstrated “remarkable resilience” due to the services sector offsetting much of Germany’s trade-related industrial weakness.

“Looking into Q3, the labor market will be key to watch for any emerging cracks amid the ongoing industrial recession,” Shelepko said.

“Disposable income growth and private consumption resilience might be at risk should the downturn in the industrial sector spread into services.”

Combined with continued external challenges, such as persistent trade-related weakness in global demand and elevated geopolitical uncertainty, Barclays expects the German economy to post another mild decline in the third quarter of 2019, therefore entering a technical recession even before Brexit and the risks to U.S.-EU trade are due to crystallize.

Time for stimulus

Brzeski said Germany needs a “two-pillar stimulus package” comprising a short-term stimulus and an increase in the “long-run growth potential.”

This stimulus will have to go beyond state measures such as “bank bailouts, scrapping and short-time working” which were successful in 2008/9 because the economy was fundamentally sound, and must instead address structural problems.

“The buzzwords are well-known: digitization, climate protection, energy transition, infrastructure and education,” Brzeski added.

He highlighted growing support to agree on climate change measures in September, to increase investment in digitization, and to reduce the so-called solidarity tax as indicators of long-term reform.

The solidarity tax, a government-imposed tax levied in a bid to fund theoretically unifying projects, was introduced at a flat rate of 7.5% on all personal income after the reunion of East and West Germany in 1991.

Brzeski also suggested that there is ample fiscal room for maneuver.

“The government’s interest payments have dropped from 2.7% of GDP in 2008 to some 0.8% of GDP this year,” he said.

“The government could run fiscal deficits of some 1.5% of GDP and the debt-to-GDP ratio would still stabilize at 60%.”

While running deficits instead of surpluses is currently “still more than one bridge too far” for the German government, some fiscal loosening looks “more likely than many might think,” he concluded. Without this, the outlook for the German economy will be beholden to external factors.

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