Puerto Rico Faces Record Default: A Look at the $2 Billion Due

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Source: Bloomberg Markets

Puerto Rico Governor Alejandro Garcia Padilla says the island won’t pay general-obligation debt coming due on Friday even with President Obama poised to sign a bill that enables the commonwealth to restructure its $70 billion debt load.

Puerto Rico and its agencies owe $2 billion of principal and interest. It may mark the island’s biggest default yet and the first time it’s skipped payments on general-obligation bonds, which are given the first claim on the island’s funds. The federal bill, called Promesa, enables the commonwealth to restructure its debt through a control board that will also weigh in on its spending plans. The measure also shields Puerto Rico from creditor lawsuits seeking repayment.

Following is a breakdown of what’s coming due on July 1, according to data compiled by Bloomberg:

General-obligations: About $816 million of principal and interest. Puerto Rico’s constitution stipulates that the government must repay general obligations before other expenses. Garcia Padilla said on Wednesday that the island won’t pay general obligations because there isn’t enough money to cover essential services and pay investors. The commonwealth has $13 billion of general obligations and a default on the securities would be the first payment failure from a state-level borrower on its direct debt since Arkansas in 1933.

Puerto Rico Electric Power Authority: $420 million of principal and interest. The island’s main electricity provider, called Prepa, its bondholders and insurance companies are negotiating on a deal to avoid a default. If so, creditors would lend cash to Prepa to free up funds so the agency can pay investors.

Puerto Rico Highways & Transportation Authority: $220 million of principal and interest. The highway agency repays its debt with gas-tax receipts and toll revenue. The authority is expected to pay investors on July 1 from reserve funds already held by the bond trustee, according to S&P Global Ratings. Future payment are uncertain because Puerto Rico has redirected a portion of the agency’s revenue to the general fund. HTA has $6.4 billion of bonds and notes outstanding.

Puerto Rico Public Buildings Authority: $207 million of principal and interest. The bonds are repaid with rents that public agencies pay for their office buildings and are guaranteed by the commonwealth. The authority has about $4 billion of bonds outstanding.

Puerto Rico Aqueduct and Sewer Authority: $135 million of principal and interest. Island lawmakers are working on legislation intended to allow the water agency to raise money by issuing debt through a newly created entity. If it can’t, the authority has said it may redirect funds used to pay debt to cover overdue bills to contractors and suppliers. It has $4 billion of bonds outstanding.

Puerto Rico Infrastructure Financing Authority: $78 million of principal and interest. Called Prifa, the agency has sold the island’s rum-tax bonds. Bond anticipation notes maturing July 1 are expected to default after Puerto Rico said it would instead use the revenue that normally repays Prifa debt to cover essential services instead. Prifa also defaulted on a Jan. 1 interest payment. It has $1.9 billion of bonds outstanding.

Puerto Rico Convention Center District Authority: $20.8 million of principal and interest. The authority has reserve funds with its bond trustee to make the July 1 payment, but those funds could dry up for the next payment due Jan. 1 because Puerto Rico is redirecting its revenue, according to S&P. The agency uses hotel-room tax receipts to repay debt. It has $397.7 million of bonds outstanding.

Puerto Rico Pension-Obligation Bonds: $13.9 million of interest. The taxable debt was sold to bolster the island’s nearly depleted pension fund. The bonds are repaid from contributions that the commonwealth and municipalities make to the retirement system. It has $2.9 billion of bonds outstanding.

Government Development Bank for Puerto Rico: $9.1 million of interest. The bank has restricted withdrawals unless they are used for essential services. The bank defaulted May 1 on nearly $400 million that was due. It has $5.1 billion of debt outstanding.

Puerto Rico Public Finance Corp.: $4 million of principal. Since August the agency has failed to pay investors and was the first Puerto Rico agency to default after the legislature failed to appropriate needed funds. It has $1.1 billion of debt outstanding.

Source: Bloomberg Markets

Bowie Tribute and 28 Other Hamptons Benefits to Hit This Summer

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Source: Bloomberg Markets

The beautiful, lazy beach life doesn’t last long in the Hamptons. Those lobster rolls and pies must be burned off by (fill in your resort sport here). Sandy toes will be scrubbed. And plans for nights in, grilling and playing board games are going to be disrupted by a benefit or two.

“I collect these invitations — there are so many,” said venture capitalist and East Hamptonite Alan Patricof, noting recent mail from the Choral Society of the Hamptons, South Fork Natural History Museum and Guild Hall.

The five towns on the tip of Long Island are home to more than 1,000 nonprofits, according to All for the East End, which supports them through a fund at the Long Island Community Foundation. Not all of them host a benefit: Karen Testa of Turtle Rescue of the Hamptons said she’s too busy taking care of 200 patients with hard shells — but many charities use the summer for their biggest fundraising events.

Add in New York-based nonprofits and politicians seeking to tap wallets, and those trucks filled with chairs, linens and refrigerated canapes need to get rolling.

“These parties punctuate the season,” said Dianne Benson, president of the LongHouse Reserve, the sculpture garden and home of textile artist Jack Lenor Larsen. “Sure, people like to stay home, but they don’t always like to stay home.”

Here are 29 events to lure you out of the hammock and into the Hamptons traffic:

July 1: Nothing says you’ve arrived like an invitation to the Southampton Fresh Air Home’s American Picnic on Meadow Lane. The event, capped by Grucci fireworks, supports a residential camp with specialized activities for physically challenged youth.

July 4: Pianofest classes up Independence Day, with a $20 concert benefiting its musician residencies. The performers are young winners of international competitions who come to practice in a house full of Steinways — beach breaks allowed.

July 8: Clams for Clams at the Stony Brook Marine Sciences Center may be the best-named benefit in the Hamptons. The raw bar is located steps away from clam spawner sanctuaries. Higher-level donors end the night with a sunset cruise.

July 9: Thomas Halsey landed in Southampton in 1640 and built a house guests can visit during a benefit for the Southampton Historical Museum. The Halsey House Gala is a “neighborly lawn party,” according to the invitation. “Neckties and high heels are not encouraged!”

July 9: The Parrish Art Museum’s Midsummer Party features dinner on the patio, a captivating part of the Herzog & de Meuron-designed structure that’s so much homier than a tent. As for nature: “One year we had a supermoon, one year we had fog,” said Terrie Sultan, the museum’s director. “We always have nice breezes that keep the bugs away.”

July 9: Sag Harbor snags Alec Baldwin, Richard Kind, and Jason Alexander to support its Bay Street Theater, which this season has a big focus on comedy acts.

July 15: Goldman Sachs Chief Strategy Officer Stephen Scherr offers up his home for a reception for the New York Stem Cell Foundation, whose board he recently joined. E-mail akean@nyscf.org for details.

July 16: See wildlife dioramas at the South Fork Natural History Museum’s benefit, then watch Hamptons humans in their cocktail habitat. Ann Liguori and LibreMax Capital’s Greg Lippmann are event chairs and Tracy Anderson and Katie Lee host.

July 16: Russell and Danny Simmons are the forces behind the Art for Life benefit for the Rush Philanthropic Arts Foundation. The theme is Back to the Future, and Aussie Alex Waislitz, chairman of Thorney Opportunities Ltd., is among the honorees.

July 22: You may see Martha Stewart checking out the merchandise at East Hampton Historical Society’s Antiques Show preview, offering cocktails and first dibs on beach-house necessities like a rattan cocktail caddy.

July 23: LongHouse Reserve’s Serious Moonlight, named after a line in David Bowie’s “Let’s Dance,” will feature a tribute to the late pop icon by Nona Hendryx — but alas, there won’t be a repeat of the synchronized-swimming performance in the lap pool (two members of the Brooklyn Peaches, which performed the past two years, are pregnant). Alice Waters is consulting on the menu.

July 23: Children’s Museum of the East End holds a Family Fair. The event enables children who live in the Hamptons to access educational programs year-round. The thoughtful party organizers provide sunscreen and bug repellent, and even healthy snacks like fresh fruit, in case you don’t want to wait in line for ice cream from Joe & Liza’s.

July 30: The Bruce High Quality Foundation is one group of artists tasked with making a spectacle at the Watermill Center’s benefit, supporting all-around visionary Robert Wilson’s compound in Water Mill. This year’s theme: House of Madness.

July 30: The Cooper Oven Dinner series at Amber Waves Farm features Christopher Miller of Hometown Bar-B-Que in Brooklyn preparing local tuna and black bass alongside wood-roasted zucchini flowers and smashed potatoes. The farm uses the proceeds to bring children to the fields and train new farmers.

July 31: Hoping to gain better access to tables at Nick & Toni’s? No guarantees, but it couldn’t hurt to attend the Hayground School’s Chefs Dinner honoring the restaurant’s co-owner, Toni Ross, and Claudia Fleming of North Fork Table & Inn. The $1,200 ticket supports Jeff’s Kitchen, a cooking classroom at the school named for Ross’s late husband; the couple were founding parents of the school.

Aug. 6: The tents are air conditioned for Southampton Hospital’s dinner dance, an amenity that last year made it easy for one of the East End’s busiest builders, Kenneth Wright, to arrive by bicycle. Later in the evening, an ice cream truck pulls up next to the valet parking stand.

Aug. 6: As she did last year, Gwyneth Paltrow will host the party portion of the Paddle and Party for Pink. The festivities will be held under a giant tent at Fairview on Mecox Bay, because the backyards of donors like Gary Cohn and Richard Perry aren’t big enough for this crowd.

Aug. 6: A hot ticket as Trombone Shorty headlines the Montauk Playhouse benefit to finish building an aquatic and cultural center within the historic building.

Aug. 6: The Bridgehampton Chamber Music Festival supports its 33rd season of concerts with dinner and some music at the Atlantic Golf Club.

Aug. 7: The Piaget Hamptons Cup, a polo match and asado, benefits the Robin Hood Foundation. To request an invitation, e-mail noel@ngkglobal.com.

Aug. 7: Through Farms and Fields supports the Peconic Land Trust. Dinner is al fresco at Quail Hill Farm.

Aug. 12: Guild Hall’s benefit “is relaxed, we’re very informal,” said Marty Cohen, chairman of the visual and performing arts center in East Hampton. The volunteer job has changed his outlook on life out east. “I feel I have a community here that I don’t have in the city,” Cohen said. “I go to a party and I see the local car dealer, the local florist.”

Aug. 13: East Hampton Library’s Authors Night features book signings under a tent. Paltrow will be back with her book “It’s All Easy: Delicious Weekday Recipes for the Super-Busy Home Cook.”

Aug. 20: Not the most important question of the election season: Will Bill Clinton make it out to the artists and writers softball game? This daytime gathering puts notables at bat to support local charities including the Retreat, serving victims of domestic violence, and East End Hospice.

Aug. 20: Tails and tongues wag at the Bow Wow Meow Ball for the Animal Rescue Fund of the Hamptons.

Aug. 20: Lionel Richie plays at Ronald Perelman’s estate to benefit the Apollo Theater.

Aug. 27: Mike Milken presides at a Prostate Cancer Foundation benefit during the Hamptons leg of the Charles Evans PCF Pro-Am tennis tournament.

Aug. 28-Sept. 4: Personal and corporate tables, creatively decorated, are the prime social spots during the Hampton Classic, an equestrian show. Maybe you’ll get an invite from that posh real estate broker you met at a cocktail party earlier in the summer.

Sept. 1: The Southampton Arts Center’s SummerFest features tastings from local restaurants. The center’s eclectic program during the season includes outdoor yoga and a presentation of Internet cat videos.

Source: Bloomberg Markets

Repo Rates Surge to Post-Crisis High as Bank Dealers Pare Back

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Source: Bloomberg Markets

The rate for borrowing and lending government debt surged Thursday to the highest since the financial crisis as banks reined in collateral lending to shore up balance sheets ahead of the quarter-end.

With fewer dealers borrowing cash and posting government debt as collateral, money funds — the key lenders of cash in the repurchase agreement market — gravitated to buying Treasury bills and parking cash with the Fed via their RRPs during quarter-end, driving overnight rates higher.

General collateral repo rates opened Thursday at 0.85 percent and reached 1.1 percent by 12 p.m. in New York, twice Wednesday’s close, according to ICAP Plc, the world’s largest inter-dealer broker. The average level of overnight general collateral repo traded with ICAP was 0.847 percent Thursday morning, the highest since October 2008. The one-month bill rate fell to 0.17 percent, down from 0.18 percent a day earlier and 0.20 percent Tuesday.

The extremes swings in short-term money market rates typically seen at quarter-end surfaced earlier than normal this month amid funding pressures following the U.K.’s decision to exit the European Union. Higher repo rates makes it more costly for dealers, which use the market as a key short-term funding tool, to finance positions and take on leverage.

“What we are seeing in repo is something we typically see at quarter-end with dealers paring back balance sheets,” said Mark Cabana, a New York-based interest-rate strategist at Bank of America Corp. “Repo rates have tended also to be quite high since the Brexit vote. They will settle back into a more typical range” in the days ahead.

Securities dealers use repo to finance investments and increase leverage. They typically involve the sale of U.S. government securities in exchange for cash, with the debt held as collateral for the loan. In a general collateral repo transaction, the lender of funds is willing to accept a variety of Treasury, mortgage-backed or agency collateral.

Usage of the Fed’s reverse repurchase agreements, a tool the central bank uses to engineer monetary policy changes, has been rising ahead of quarter-end. More cash lenders have invested in the Fed’s RRPs during the final days of the three-month period, when repo becomes more scarce. The Fed’s RRPs amounted to $143 billion on Wednesday, three times the daily average this quarter.

“The quarter-end spike in volume happens as investors would rather have the Fed as a counterparty,” said Scott Skyrm, New York-based managing director of fixed-income financing at Wedbush Securities Inc. “The more that is put into the Fed’s RRPs means less investors cash put into the repo market — which adds to funding pressures.”

Source: Bloomberg Markets

Illinois Bonds Gain as State Moves to Temporarily Halt Impasse

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Source: Bloomberg Markets

Illinois bonds rallied to a three-week high as the state’s leaders moved toward temporarily halting a record yearlong budget impasse and avoiding a massive shutdown of government services.

Taxable pension bonds maturing in June 2033, the state’s most actively traded debt, sold for an average of 95.1 cents on the dollar, according to data compiled by Bloomberg. That pushed the yield down to 5.55 percent, about 3.7 percentage points more than benchmark debt.

With the fiscal year about to end, the House and Senate are expected to vote on a plan that would fund the government for the next six months based on a compromise reached by Republican Governor Bruce Rauner and top legislative leaders.

“It’s clearly a temporary positive for bondholders,” said Adam Buchanan, senior vice president of sales and trading at Ziegler, a broker-dealer in Chicago. “Everybody wants a long-term solution. We just haven’t gotten there yet.”

The stopgap budget, if approved by lawmakers, would provide a temporary reprieve for Illinois, which is facing shuttered essential services, a halt to road construction, and the delayed opening of schools. Stuck in gridlock for the last 12 months, Illinois’s backlog of unpaid bills has soared to $7.8 billion. Even if the fix is approved, the state still lacks a full-year spending plan, and the consequences of the yearlong impasse have already wreaked havoc on its finances.

This month Moody’s Investors Service and S&P Global Ratings downgraded Illinois to the lowest level for a state in over a decade, and investors are still demanding the highest spread from Illinois out of all 20 states tracked by Bloomberg. The state’s 10-year bonds yield 3.2 percent, or 1.9 percentage points above benchmark, according to data compiled by Bloomberg.

Source: Bloomberg Markets

One World Trade Center Gets $30 Million for Pre-Built Offices

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Source: Bloomberg Markets

The Port Authority of New York and New Jersey approved $30 million to reconfigure office space at lower Manhattan’s One World Trade Center in a bid to draw smaller tenants to the nation’s tallest skyscraper.

The Durst Organization, the agency’s equity partner on the tower, plans to construct three floors of pre-built offices, which will be fitted out and furnished by the developer. The authority on Thursday also authorized $1.5 million for a “media wall,” furniture, artwork and finishes in lobby of the 104-story skyscraper.

The vote is the fourth time the agency has extended Durst’s pre-built program in the 3 million-square-foot (279,000-square-meter) tower since mid-2013. The program was developed to meet the demand for offices smaller than the skyscraper’s standard floors, which range from 32,000 to 48,000 square feet, the authority said in a statement. For tenants, the advantage is that they don’t have to pay to custom-design their offices, but they have to accept how the landlord builds them.

One World Trade Center, which opened in November 2014, was about 70 percent occupied as of early this month, according to the building’s website. Its anchor tenant, the publishing company Conde Nast, leases about 1.2 million square feet. In the most recently announced deal, Ameriprise Financial Inc. agreed to rent the entire 37,704-square-foot 78th floor. It was the second financial-services firm in nine months to take space in the tower, following a lease to Moody’s Corp. in September.

To date, about 166,000 square feet of pre-built space in the tower is leased.

Source: Bloomberg Markets

Brexit Turns Profit Into Dust for Junk-Bond Investors in Europe

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Source: Bloomberg Markets

Euro junk bonds are set for the first loss in four months after a post-Brexit selloff wiped out profits from central bank stimulus.

Investors have lost 0.5 percent in June, mainly because of a two-day rout following the U.K vote to leave the European Union, based on Bank of America Merrill Lynch index data. Investors in sterling high-yield notes have suffered the biggest losses since September 2014.

The surprise referendum result ignited global economic uncertainty, causing investors to flee high-yield assets including junk bonds and the riskiest type of bank debt. The euro and sterling also tumbled against the dollar and yen, while yields on U.K., U.S. and German government debt fell toward record lows as investors sought the safest assets.

“There is a shock effect,” said Colm D’Rosario, a money manager in London at Pioneer Investment Management Ltd., which oversees about 219 billion euros ($243 billion). “The event was not really expected or priced in by the market.”

High-yield bonds in euros returned 0.5 percent this month up to the June 23 vote, as the European Central Bank’s asset-purchase program pushed investors into risky assets. That meant they were on course for a fourth straight monthly gain, or the longest stretch in two years, based on Bank of America Merrill Lynch index data. The notes have still returned 3.4 percent this year, compared with 4 percent for investment grade, the data show.

The Brexit result sparked a selloff that pushed the average yields on euro junk bonds above 5 percent for the first time since April, based on the index data. It has since edged back down to 4.86 percent. The riskiest bank bonds have lost about 2.8 percent since the referendum, wiping out a year-to-date gain, based on a Bank of America Merrill Lynch index.

Numericable-SFR SA is the worst performer this month among the 50 biggest issuers in Bank of America Merrill Lynch’s euro high-yield index, with a 2.6 percent loss. The French telecom company’s 1 billion euros of notes maturing in May 2022 dropped to 99 cents on the euro, to the lowest since February, on Monday, according to data compiled by Bloomberg.

Non-investment grade sterling bonds have lost 1.8 percent since the referendum, and 1.3 percent this month, based on a Bank of America Merrill Lynch index. Matalan Plc bonds have suffered the biggest loss since the poll at 8.3 percent, the data show. The U.K. clothing retailer’s 342 million pounds ($454 million) of June 2019 bonds fell to a record-low 76 pence this week.

“We are worried about a recession in the U.K. and contagion effect within Europe,” said Pierre Beniguel, a fixed-income investor at TwentyFour Asset Management in London, which oversees 6.7 billion pounds. “It is difficult to have a clear view on how things will unravel in the long term, but clearly things look more difficult for risky assets in the short term.”

Source: Bloomberg Markets

UPS Rolls Out 300 Delivery Lockers in U.S. After Chicago Test

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Source: Bloomberg Markets

United Parcel Service Inc. will install lockers outside 300 retailers in the U.S. as the shipping giant expands it use of alternate delivery sites.

The move expands UPS’s experiment with outdoor lockers at nine Chicago-area locations, which were typically placed outside of retailers and accessible around the clock. The company is working with the 7-Eleven convenience-store chain and independent stores to offer the new lockers.

The program lets customers pick up packages at their own convenience while eliminating the need for UPS to make costly second and third home-delivery attempts. The rollout marks an expansion of UPS’s Access Point program, which until now generally recruited local retailers and pharmacies to receive packages and store them indoors. The company now has 8,000 such locations in the U.S. and 16,000 in Europe.

“UPS Access Point lockers can be easily accessed when it fits the shopper’s schedule, giving an online retailer added value to present at checkout,” Kalin Robinson, director of the locker program, said in a statement Thursday. “The lockers enable more shoppers to enjoy the ease and simplicity of buying online.”

Source: Bloomberg Markets

ECB Said to Weigh Looser QE Rules as Brexit Cuts Asset Pool

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Source: Bloomberg Markets

The European Central Bank is considering loosening the rules for its bond purchases to ensure enough debt is available to buy in the aftermath of the Brexit vote, according to euro-area officials familiar with the discussions.

Policy makers are concerned that the pool of securities eligible for quantitative easing has shrunk after investors piled into the region’s safest assets and pushed down yields on some sovereign debt too far to meet current criteria, said the people, who asked not to be identified because the matter is confidential. Some Governing Council members now favor changing the allocation of bond purchases away from the size of a nation’s economy toward one more in line with outstanding debt, one of the people said.

Such a move risks controversy because securities issued by highly leveraged governments such as Italy — the world’s third-largest debtor after the U.S. and Japan — would benefit. Questions over the legality of ECB bond-purchase programs have occupied some of the region’s highest courts recently because of opponents’ claims that operations conducted in the name of monetary policy might prop up profligate nations.

The Bundesbank would probably be concerned that the character of QE would be put into question if bond purchases deviated from the so-called capital key structure of purchases, one person said. Spokesmen at the ECB and the Bundesbank declined to comment on the prospect of a loosening of the rules for QE.

“It’s been a likely destination for some time and eventually they will have to do this,” said Richard Barwell, senior economist at BNP Paribas Investment Partners in London. “Brexit may have accelerated the discussion.”

The euro weakened 0.8 percent after the report and traded at $1.1073 at 6:52 p.m. Frankfurt time. Italian and Spanish bonds rose.

One irony is that Germany is contributing to the rethink at the ECB. Bonds maturing in the next 15 years are yielding less than zero after the U.K. unexpectedly voted to leave the EU on June 23, and benchmark securities due in seven years or less are ineligible for purchases under QE after investors hoovered them up amid market turmoil similar to that in the 2008-2009 financial crisis.

Under the guidance of the ECB, central banks in the euro area are currently spending 80 billion euros ($89 billion) a month, the vast majority on sovereign bonds, to drive up an inflation rate that hasn’t reached the institution’s goal of just under 2 percent for more than three years. Officials currently predict consumer-price growth will accelerate to 1.6 percent in 2018 from 0.2 percent this year.

Present rules stipulate that euro-area central banks can buy bonds sold by governments, agencies and European institutions in the secondary market that yield more than the ECB’s deposit rate, currently at minus 0.4 percent, respecting issue and issuer limits of as much as 33 percent. Purchases of covered bonds, asset-backed securities and corporate debt follow slightly different standards.

Source: Bloomberg Markets

Stem Cell Clinics Selling Risky Treatments Explode Across the U.S.

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Source: Bloomberg Markets

Unproven stem cell therapies have been scorned as “medicine’s Wild West.” Patients have died while undergoing treatment. Yet others have called them “miraculous.” Hundreds of NFL players have sought them out.

A study published today in the journal Cell Stem Cell finds that there are 570 clinics operated by 351 companies selling stem-cell procedures directly to consumers in the U.S., raising concerns that unapproved treatments could cost patients thousands of dollars and threaten their health.

“The big question for me is, how did this happen in the United States?” said Leigh Turner, an associate professor at the University of Minnesota’s Center for Bioethics and School of Public Health, who co-authored the study. “It’s often framed as a story about stem cell tourism, that these businesses don’t exist in the United States, they exist elsewhere around the world in Ukraine, Mexico, China, and India. Our findings clearly show that this is a widespread problem here.”

Stem cells are undifferentiated human cells that can be made to grow into different types of tissue. Scientists hope they can one day be used to treat disease or repair injured tissue. But few therapies have been proved in rigorous trials, and unapproved treatments have been linked to harm. The only stem cell treatments approved by the Food and Drug Administration use cells taken from bone marrow, and even those are restricted to specific transplants.

Researchers worry that the legitimate field of stem cell science, which holds great if early promise for medical advances, could be tainted if the public associates it with complications from unapproved treatments.

“We found a subset of businesses that are marketing just an astonishing number of interventions—neurological diseases, spinal cord injuries, immunological diseases, orthopedic injuries and conditions, and cardiac problems,” Turner said. “When I see businesses like that making claims that they can use stem cell interventions for 20, 30, 40 different diseases, that to me raises some pretty obvious questions.”

The FDA has issued draft guidelines for stem cell therapies and is planning a public hearing in September on regulating procedures. The agency is “concerned that the hope patients have for treatments not yet proven to be safe and effective may leave them vulnerable to unscrupulous providers of stem cell treatments that are illegal and potentially harmful,” said Andrea Fischer, a spokeswoman.

Turner and co-author Paul Knoepfler, an associate professor at the UC Davis School of Medicine who runs a stem cell blog called The Niche, identified the businesses using Internet searches, text mining, and analysis of company websites. They turned up several that were marketing treatments for multiple diseases and injuries and weren’t being investigated by regulators. They found hot spots: more than 100 companies or clinics in both Florida and California. Beverly Hills and Los Angeles had 30 clinics between them. Texas came in third, with 71 clinics.

Cassandra Hockenson, public affairs manager for the Medical Board of California, said the board doesn’t oversee clinics and that the state’s Department of Public Health was tasked with regulating them. Representatives of the department, as well as the Florida Board of Medicine and the Texas Medical Board, didn’t respond to requests for comment.

More than half of the clinics the study examined involve fat-based treatments that work like “mini-liposuctions,” Knoepfler said. Clinics extract fat cells, treat the removed fat with an enzyme to liquefy it, spin it to separate cells from fat, then reinject the cells in various locations to treat injuries and diseases. Of the businesses Knoepfler and Turner identified, 61 percent offered fat-based treatments and 48 percent bone-marrow treatments.

“I was shocked,” said Larry Goldstein, director of the UC San Diego Stem Cell Program and a member of the International Society for Stem Cell Research, who wasn’t involved in the study. “I knew that the number of problem clinics was growing, but I hadn’t realized it had grown to this extent.” Goldstein said he would have predicted there were about 100 clinics in the U.S. In February, STAT News estimated as many as 200.

The clinics operate in a regulatory gray area. A substance derived from a patient’s own cells isn’t considered a drug subject to approval by the FDA. It wasn’t until October 2014 that the FDA issued the first of four sets of draft guidelines to clarify which treatments would be considered drugs and subjected to more scrutiny. The agency has since issued a handful of warning letters or other censures to clinics.

Knoepfler said the clinics might have proliferated in places where people are more accepting of alternative medicine that doesn’t require FDA approval, including states such as California. Turner said clinic operators may have noticed state medical boards that aren’t as active in regulating physicians. And existing plastic surgery clinics could repackage their offerings to market stem cell procedures, he said.

“Why is it that some companies are getting these warning letters and other ones, doing similar kinds of things, don’t seem to be attracting the attention of regulators—the FDA, the FTC, state medical boards?” Turner said. He cited limited resources at the FDA, the Federal Trade Commission, and state medical boards that license physicians as a possibility.

The FTC can act against companies engaging in deceptive advertising and has fought the misleading marketing of dietary supplements and clinics making claims about other alternative treatments. It hasn’t yet acted on stem cell treatments, said Mitch Katz, a senior public affairs specialist at the agency.

Tim Caulfield, research director of the Health Law Institute at the University of Alberta, helped write guidelines that the International Society for Stem Cell Research published last month urging caution in discussing the promise of stem cell medicine. He said the lack of clear rules on what treatments are prohibited allowed clinics to flourish.

“Regulatory uncertainty,” Caulfield said, “created a market opportunity.”

Source: Bloomberg Markets

U.S. Farmers Surprise With Bigger Corn Acres as Prices Slump

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Source: Bloomberg Markets

U.S. farmers planted more corn than they intended in March, sowing the third-highest crop since World War II and surprising analysts who had expected a decline. Prices fell to the lowest since April.

Corn, the country’s largest crop, was sown on 94.148 million acres, the third-most since 1944, the U.S. Department of Agriculture said Thursday in Washington. That’s more than the agency’s March forecast, based on a survey of farmers before planting season, for 93.601 million. The average estimate of analysts surveyed by Bloomberg was for 92.781 million. Farmers increased plantings 7 percent from the 88 million sown in 2015.

The latest data may reignite concerns about the global glut of grains. Corn inventories as of June 1 rose to the most for the date since 1988 and topped analyst expectations. A rebound for crop prices in recent months prompted farmers to plant more across the board, with soybean and wheat sowings also coming in bigger than the March estimate.

“The acreage number for corn is a big surprise to the trade,” Brian Hoops, president of Midwest Market Solutions in Springfield, Missouri, said in a telephone interview. “Crop ratings are very high. We don’t have this drought that was promised.”

On the Chicago Board of Trade, corn futures for September delivery fell 2.9 percent to $3.6675 a bushel at 12:01 p.m. local time, after touching $3.6025, the lowest for the contract since April 5.

Corn entered a bull market earlier this month as traders worried about production potential in the U.S. and Brazil, the world’s biggest exporters. But more recently, prices have fallen with futures heading for a second straight weekly loss, the longest streak for the September contract since early March. Rains have alleviated concerns over U.S. output as crop conditions held stable throughout June. The North American grain is beginning its reproduction phase, a key period in yield development.

Corn inventories from last year’s crop rose 6 percent to 4.722 billion bushels as of June 1, the most for the date since 1988. Use from March to May was estimated at 3.1 billion, down from 3.3 billion a year earlier and pushing reserves above the 4.52 billion expected by analysts surveyed by Bloomberg.

Soybean acreage will rise to a record 83.688 million acres, up from the 82.65 million sown last year and exceeding the March forecast of 82.236 million, the USDA also said in the report. The average estimate of analysts surveyed by Bloomberg was 83.947 million. The USDA report is based on a survey of about 70,500 farmers and more than 11,000 field samples collected in the first two weeks of June as the planting season neared completion.

On the CBOT, soybean futures for November delivery rose 4.1 percent to $11.58 a bushel, heading for the biggest gain for the contract since May 10. September wheat futures also climbed in Chicago.

Stockpiles of the oilseed on June 1 rose to 870 million bushels from 627 million a year earlier. Inventories are the most since 2007 and topped analysts’ expectations for a gain to 831 million.

Even though stockpiles climbed, stronger demand for U.S. exports will help to soak up the supply, said Arlan Suderman, chief economist at INFL FCStone Financial Inc. in Kansas City, Missouri.

“The bottom line to today’s data is that the safety net just became bigger for corn, while it grew even tighter for soybeans,” Suderman said in a report.

Source: Bloomberg Markets