Know The Laws, Know Your Rights: Forecast

MUMBAI, India — India’s economy is showing signs of a gradual recovery as gross domestic product increased at an annual rate of 4.8 percent in the three months that ended in September.

The growth surpassed the expectations of Reuters analysts, who projected a 4.6 percent rate, and was faster than the 4.4 percent pace seen in the previous quarter, which was the slowest growth in four years.

“The Indian economy has bottomed out on growth, and I think we are definitely seeing signs of a mild, moderate recovery — not just the gross domestic product numbers but in the results of individual companies,” said Saugata Bhattacharya, chief economist at Axis Bank. “However, in order to resuscitate growth, the government must improve investment channels, take measures towards fiscal consolidation, decontrol diesel prices and simplify the tax structure.”

The pickup in the September quarter was driven primarily by a good monsoon, which helped the agriculture sector expand at a 4.6 percent annual rate, according to the government figures released Friday. The sector that includes finance, insurance, real estate and business services also performed well, increasing by 10 percent; the sector for electricity, gas and water, increased 7.7 percent; and construction, 4.3 percent.

Industrial output, which rose 2 percent in the quarter from a year earlier, is also seen as one of the chief reasons for the improvement in the broader economy. A recovery in global demand and the depreciation of the rupee have helped Indian exports, which rose 13.5 percent to $27.27 billion in October.

“Strong export performance during the quarter has to a large extent aided in the pickup in demand-side G.D.P. growth,” said Bhupali Gursale, an economist at Angel Broking, a Mumbai brokerage firm. “We continue to believe that real G.D.P. growth during financial year 2014 as a whole is likely to range between 4.5 to 5 percent owing to near-term challenges in the macro environment, mainly from subdued domestic demand, fiscal constraints and the muted investment outlook.” India’s 2014 financial year begins in April.

Still, India faces significant challenges as it looks to revive its growth.

Hindered by an uncertain policy environment, subdued investor sentiment, red tape and inadequate infrastructure, the economy has decelerated from a high of 9 percent growth in 2010 to 5 percent growth in the fiscal year that ended last March. Although the central government has announced several policies since September that have eased the restrictions on foreign investment in India, they have yet to translate into real economic growth. Since July, a committee initiated by Prime Minister Manmohan Singh has removed the regulatory bottlenecks for $57 billion worth of infrastructure projects, but a majority of these projects have yet to get off the ground.

Difficulties also persist in certain segments of the economy, like the service sector, which makes up 80 percent of the Indian economy. And rising inflation remains a chief concern for Raghuram Rajan, the governor of India’s central bank, who has increased interest rates twice since he took office in September to battle price pressures. In October, wholesale inflation, the most closely watched price gauge in India, climbed to 7 percent, while consumer inflation hit 10 percent.

“The appointment of a new central bank governor in September has helped to stabilize the currency and financial markets, although this is unlikely to have had much of an impact on real economic activity,” wrote economists at Moody’s Analytics in a report last Monday.

Analysts do not foresee India’s return to high growth numbers in the short term.

“We don’t expect a serious uptick in growth in the near future as there are a lot of supply chain difficulties that have to be addressed, and monetary policy continues to remain quite tight because of severe inflation,” said Miguel Chanco, an economist who covers Asia at Capital Economics, a macroeconomic research company based in Singapore. “Growth is expected to pick up over the next few years, but very gradually, but we don’t think that growth will pick up back to its historical 8 percent growth rate any time soon.”

He added that he thought investor appetite would remain subdued until after the national elections next year. Investors, he said, are unsure whether Mr. Singh’s government will push through any politically unpopular decisions to reduce the deficit in the meantime.

Thursday, July 11, 2013

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Consolidation among publishers carries costs you won’t find on a price sticker.

Wednesday, May 15, 2013

Strategies: Forecast for a 20,000 Dow Still Holds

LAST July, when the Dow Jones industrial average was still stuck below 12,900 and investors were seeking safety in bonds, Seth J. Masters made a startling argument.

Mr. Masters, the chief investment officer of Bernstein Global Wealth Management, said that people were so traumatized by the financial crisis that they were seriously underestimating the stock market. In fact, the chances were quite good that by the end of the decade, the Dow would rise more than 7,000 points and reach 20,000, he said.

In some important ways, he said, stocks at that moment had become safer than bonds. “This argument may seem provocative,” he told me back then. “But that’s only because market conditions are so unusual, and so many people have become so pessimistic.”

Last week, Mr. Masters made essentially the same argument, but it sounded much less provocative. In fact, after months of soaring prices, new stock market records and minuscule bond yields, it may even be the Wall Street consensus.

“It seems we’re somewhat ahead of schedule but I think we’re still on track for Dow 20,000 by the end of the decade,” Mr. Masters said last week. “The odds have just gotten better.” And despite the stock market’s recent meteoric rise, he said, stocks still look relatively cheap, certainly compared with bonds.

“It’s not that the expected return on stock right now is really that high,” he said. “It’s that the return on government bonds is indubitably very low.”

That unfavorable verdict on bonds is no accident. In a sense, it’s the policy of the Federal Reserve. Ben S. Bernanke, the Fed chairman, says he is trying to make traditionally riskier assets like stocks relatively attractive, increasing investors’ wealth and in that way stimulating the economy.

As far as the bond market goes, the yield on a benchmark 10-year Treasury note was only 1.5 percent when I spoke to Mr. Masters in July, and it is about 1.9 percent now. To put those yields in perspective, the average for 10-year bonds since 1962 has been more than 6.5 percent, according to quarterly Bloomberg data. In other words, since last July, bond yields have risen by the tiniest bit, and they remain extraordinarily low, on a historical basis.

For bond investors, particularly retirees, these low yields pose a serious dilemma. “This situation creates great problems for people trying to live off the income they can get from bonds,” Mr. Masters said. (I’ll explore this issue further in a future column.)

For now, it’s worth noting that the problem for income-seekers will sort itself out eventually when bond yields rise and prices fall. But that shift is likely to inflict considerable harm on unwary investors.

That day of reckoning keeps receding, however, as global economic growth and inflation remain constrained. That alone tends to keep bond rates low. Furthermore, government spending cuts like the budget sequestration in the United States have reduced economic growth substantially, in the view of the International Monetary Fund and other forecasters.

And as long as unemployment is high and inflation is low, the Fed says it will continue to keep short-term interest rates near zero — and buy $85 billion a month in long-term bonds and other securities. Other central banks have made similar promises. At least for a while, then, historically low interest rates seem likely to persist, for short-term bills as well as for long-term bonds.

The likelihood of low bond yields helps explain the relatively high stock market returns expected by Mr. Masters. And a new study suggests that those yields are the main factor behind the bullish stock market consensus of financial analysts on Wall Street and in academia.

Fernando Duarte and Carlo Rosa, two economists at the Federal Reserve Bank of New York, described their study last week in “Are Stocks Cheap? A Review of the Evidence,” a posting on the New York Fed’s Liberty Street Economics blog. They analyzed 29 separate economic models and found that most predicted extremely high stock returns for the next five years. Why? There are many wonky reasons but in the end, they said, it is “mainly due to exceptionally low Treasury yields at all foreseeable horizons.”

Friday, May 3, 2013

Merck Posts Lower Profit and Cuts Forecast

Merck & Co. on Wednesday posted disappointing first-quarter results and cut its earnings forecast for the year. But the world's third-largest drugmaker predicted that things would soon improve.

Merck was slammed by two factors plaguing most of its rivals: growing competition from generic drugs and unfavorable exchange rates.

Major drugmakers in recent years have been hurt by an unprecedented wave of patent expirations on brand-name drugs that had brought in billions each year. This has enabled makers of generic drugs to grab customers with cheaper, copycat versions.

Additionally, pharmaceutical companies are being pinched by the dollar gaining ground overseas. Since drugs and other products are bought in local currencies, when the dollar's value rises, revenue from those countries falls.

Merck, which is based in Whitehouse Station, N.J., said its revenue was reduced by 2 percent because the dollar rose sharply against the yen in Japan — a key market — and against some other currencies.

That and all the generic competition combined to reduce Merck's revenue by 9 percent. Net income fell 8.3 percent.

CEO Kenneth Frazier said he expects better results in the second half of the year. And he noted that Merck has five drugs under review by regulators, including a promising insomnia medicine called suvorexant.

"We fell short of our expectations for the top line," Frazier told analysts on a conference call. "We knew that 2013 would be challenging, but we are confident in Merck's future."

This isn't the first time generic rivals have cut Merck's revenue, but it might be the worst.

In the first quarter, recent generic competition slashed sales of baldness treatment Propecia, allergy pill Clarinex, migraine drug Maxalt and, worst of all, Singulair. The asthma and allergy pill had been Merck's top seller for several years, but its U.S. patent expired last August. Most patients quickly defected to the slew of much-cheaper generic versions.

As a result, Singulair plunged 75 percent in the first quarter, down by $1 billion to $337 million.

"We haven't seen such rapid loss (in sales as) we've seen with Singulair," said Adam Schechter, Merck's head of prescription drug marketing.

Still, analysts seemed more concerned that sales of Type 2 diabetes pill Januvia declined by 4 percent to $884 million.

Januvia is now Merck's biggest seller and a crucial driver of growth. Revenue from Januvia had been growing rapidly, fed by the worsening global epidemic of obesity-related diabetes, but the company said wholesalers reduced inventory in the first quarter.

"The market is very competitive," Schechter added. "We are seeing rebate and pricing pressures as newer competitors seek to increase their market share" by offering health plans bigger discounts and rebates.

Merck said Wednesday that many sales representatives who promote multiple drugs to doctors now will focus solely on the Januvia franchise. Executives predicted mid-single-digit revenue growth in the U.S. and higher growth elsewhere for the rest of the year.

Merck on Monday announced a partnership with Pfizer Inc. to develop a diabetes drug that works differently than Januvia, as a solo treatment and in combination with other drugs. Management said Wednesday that the drug could complement Januvia, as most diabetes patients must add additional drugs over time to control blood sugar, before having to start insulin shots.

Overall, revenue in the first quarter was $10.67 billion, down from $11.73 billion. That's well below the $11.11 billion analysts anticipated.

Total prescription drug sales fell 12 percent to $8.89 billion. Sales of veterinary medicines rose 2 percent to $840 million and sales of consumer health products such as the Coppertone sun care line increased 3 percent to $571 million.

Despite the revenue declines, Merck noted strength in revenue from some of its drugs: Simponi and Remicade for immune disorders, HIV drug Isentress and vaccines, particularly Gardasil for preventing sexually transmitted diseases. Revenue from emerging markets such as China also was strong.

Merck earned $1.59 billion, or 52 cents per share, down from $1.74 billion, or 56 cents per share, a year earlier. Excluding $992 million in one-time items, mostly acquisition and restructuring charges, profit was down 15 percent to $3.59 billion, or 85 cents per share. That was a nickel better than analysts expected.

Frazier said the company's stepped-up cost cutting kept the bottom line from sagging even more during the quarter.

Meanwhile, Merck said it now expects 2013 earnings per share of $3.45 to $3.55, excluding one-time items. In February, it forecast $3.60 to $3.70 per share.

Merck also announced plans to buy back up to $15 billion in shares, half in the next 12 months. That's on top of $772 million in share repurchases from January through April under a prior buyback that has another $1.1 billion to spend.

Frazier said the timing of the buyback was coincidental. Other drugmakers likewise have been buying back shares, although drug stocks have had a significant run-up in the last year or so after languishing for several years. Merck shares climbed from just under $30 in August 2011 to a high of $48.79 last month — barely half the October 2000 all-time high of nearly $94.

A huge sell off cut Merck's stock price by 5.1 percent in premarket trading before bargain seekers pushed it back up somewhat. Shares closed down $1.32, or 2.8 percent, at $45.68. More than 37 billion shares changed hands, more than double the average daily volume.

___

Friday, April 26, 2013

Procter & Gamble Profit Up 6% but Its Forecast Disappoints

But its fourth-quarter forecast fell short of Wall Street’s expectations as a result of a mixed response to new products and what the company called “choppy” market conditions that led to modest revenue gains.

Shares of the company, which makes products like Tide detergent and Crest toothpaste, fell $4.82, or 5.9 percent, to $77.12 on the weak outlook.

The company is in the middle of a turnaround plan introduced in February 2012. That plan is an attempt to regain market share that the company lost during its aggressive bid to expand in emerging markets like China and India, where P.& G. gets about 40 percent of its revenue. The company’s operations suffered during the expansion.

The company’s plan focuses on its 20 biggest new products, like Tide Pods liquid detergent capsules, and its 10 most profitable emerging markets. P.& G. has also been conducting a major cost-cutting effort aimed at saving $10 billion by 2016. The company is also focusing on introducing new products

P.& G. said its net income for the third quarter rose to $2.57 billion, or 88 cents a share. That compares with net income of $2.41 billion, or 82 cents a share, last year.

Excluding one-time charges, earnings were 99 cents a share. Analysts expected 96 cents, according to FactSet.

Revenue rose 2 percent to $20.6 billion, falling short of analysts’ expectations of $20.72 billion.

The company said it expected fourth-quarter profit of 69 to 77 cents a share, excluding one-time items. Analysts expected 82 cents a share. For the year, the company raised the low end of its guidance by 2 cents. It now expects net income of $3.96 to $4.04 a share. Analysts expected $4.37 a share.

P&G Shares Fall After Forecast Misses Expectations

The news spooked investors who do not want to wait until 2014 for better sales increases. Shares of the world's largest household products maker fell as much as 6 percent after closing at an all-time high of $82.54 on Tuesday.

"There's a lot of frustration that they've been talking about a lot of actions they've been taking but we haven't really seen an acceleration in the sales growth," said David Blount, co-portfolio manager of the Growth & Income Fund at Eagle Asset Management, which includes P&G shares.

The company, maker of Pampers diapers, Gillette razors and many other products, has been under greater scrutiny to improve after cutting profit expectations in the past and learning that activist investor Bill Ackman invested in the stock.

Cincinnati-based P&G also posted a fiscal third-quarter profit on Wednesday that topped estimates despite sales that were weaker than both the company and analysts had anticipated.

Chief Executive Bob McDonald was roasted by analysts on a conference call a year ago when P&G gave a profit warning. While Wednesday's call was not as tense, analysts wanted to know why the company has not yet posted better sales growth more than a year into its turnaround.

P&G, which announced a $10 billion restructuring in February 2012, said that its push for more innovation means that several products such as new Iams pet foods and Olay skin creams will soon hit stores. After cutting billions of dollars in costs, along with eliminating hundreds of more jobs than anticipated, it will now spend more to promote those new goods and even to build the plants to produce them around the world.

FOURTH-QUARTER FORECAST

For the current fourth quarter ending in June, P&G said profit should fall to 69 cents to 77 cents per share, while analysts expected it to earn 81 cents per share, according to Thomson Reuters I/B/E/S. P&G earned 82 cents per share in the fourth quarter of fiscal 2012.

The company cited factors including weak market growth, higher marketing and other costs and volatility in Venezuela, Argentina, Egypt, Syria and South Korea.

Wednesday's fiscal third-quarter results were a sharp departure from the fiscal second quarter, when P&G raised its annual profit forecast and its shares jumped. On Wednesday, on the heels of the better-than-expected third quarter profit, it raised only the bottom end of its annual forecast range by 2 cents per share.

"They're still making progress, they're still on the right track, it is just going to be a little more slowly than what people expected," said Edward Jones analyst Jack Russo.

P&G insists that its forecast is "realistic, not conservative," especially given the headwinds it faces such as volatility in Venezuela and elsewhere, Chief Financial Officer Jon Moeller told analysts.

Along with spending on marketing to promote its new products, P&G is dealing with what it calls a "choppy" economic recovery, and sees a 1 to 2 percent impact on its sales this year from foreign exchange rates.

Its shares slid as low as $77.48 on Wednesday and were last trading down 4.7 percent at $78.05, wiping out nearly all of this month's gains. Shares of rivals such as Colgate-Palmolive Co and Kimberly-Clark Corp were down less than 2 percent.

JOB CUTS EXCEED GOAL

While products such as single-dose Tide Pods laundry detergent have boosted U.S. sales, P&G said it still needs to figure out the formula for getting products such as Pantene shampoo and Olay skin creams to stand out among competitors. Net sales decreased in the hair care and skin care business in the latest quarter.

P&G is taking the right steps by cutting costs, bringing out new products and growing in developing markets, but it is important for it to show progress in the beauty unit in the next quarter or two, said Russo.

P&G said it earned 99 cents per share on a core basis in the quarter ended in March, topping analysts' target of 96 cents. Core earnings exclude items such as restructuring charges.

Overall sales rose 2 percent to $20.598 billion while analysts were looking for sales of $20.73 billion. The company had forecast 3 to 4 percent in sales growth.

P&G's organic sales, which strip out the impact of divestitures and foreign exchange changes, grew 3 percent - at the low end of its forecast of 3 to 4 percent.

On a net basis, the company earned $2.57 billion, or 88 cents per share, in the fiscal third quarter. That was up from $2.41 billion, or 82 cents per share, a year earlier.

McDonald declined to comment on any discussions he may have been having with Ackman, who is known to push for change at companies in which he invests. Ackman's Pershing Square had a 1.02 percent stake in P&G, or 27.95 million shares, as of December, making it P&G's eighth-largest shareholder, according to Thomson Reuters data.

P&G said it now plans to repurchase $6 billion of its stock this year, at the high end of its prior forecast for $5 billion to $6 billion in buybacks. Last June, P&G decided to hold off on buybacks, but in August quickly reverted back to its usual plan.

P&G also said it had cut 6,250 jobs as of March 31, ahead of its goal to cut 5,700 jobs by the end of June.

(Reporting by Jessica Wohl; in Chicago; editing by Jeffrey Benkoe and Matthew Lewis)

Thursday, December 13, 2012

PaLaw 2012: The State of the Profession: Analysis: The Forecast for 2013

Four years after Lehman Brothers died and the national economy plunged into a deep crisis, the legal marketplace remains splintered, uncertain and likely to stay that way. The Great Recession hasn't sunk all boats, nor lifted them. The health of practices varies by lawyer and practice group; within the same firm we find corridors never busier and others filled with lawyers who have little to do but pray for the patience of their partners.

Thursday, October 11, 2012

I.M.F. Lowers Its Forecast for Global Growth

It foresees global growth of 3.3 percent in 2012 and 3.6 percent in 2013, down from 3.5 percent this year and 3.9 percent next year when it made its last report in July. New estimates suggest a 15 percent chance of recession in the United States next year, 25 percent in Japan and above 80 percent in the euro area.

Financial market stress, government spending cuts, stubbornly high unemployment and political uncertainty continue to dampen growth in high-income countries, the fund said. At the same time, the emerging-market countries that fueled much of the recovery from the global recession, like China and India, have continued to cool off, with global trade slowing.

“The recovery has suffered new setbacks, and uncertainty weighs heavily on the outlook,” the fund said, warning that its forecasts might be overly optimistic if policy makers in Europe and the United States fail to carry out pro-growth policies. “Downside risks have increased and are considerable.”

The fund, which is based in Washington, will officially issue its report Tuesday at the start of a major meeting with the World Bank in Tokyo. The forecasts are part of the fund’s World Economic Outlook report, released four times a year.

The latest report focused on the higher-income countries whose political and economic troubles are posing significant risks to the rest of the world. The fund estimated that these advanced economies, including the United States and Germany, would grow about 1.3 percent this year, down from 3 percent in 2010.

The fund does not expect growth to pick up much next year, either, forecasting growth of just 1.5 percent, in those countries.

“Low growth and uncertainty in advanced economies are affecting emerging market and developing economies through both trade and financial channels, adding to homegrown weaknesses,” Olivier Blanchard, the fund’s chief economist, said.

The fund has praised central banks for doing more to support the recovery in recent months. The European Central Bank, the United States Federal Reserve and the Bank of Japan have all enacted new policies to help economic growth and fight financial distress. That has helped to quiet the markets in Europe and bolster them elsewhere.

Still, political uncertainty and high unemployment have held the recovery back, the fund said. For Europe, the hard work of building a mechanism to aid countries having trouble accessing financing on the debt markets at reasonable rates and enacting new cross-Continent policies remains, the fund cautioned.

“The European Central Bank has recently done its part,” the fund said. “It is now up to national policy makers to move and activate the European Stability Mechanism, while articulating a credible path and beginning to implement measures to achieve a banking union and greater fiscal integration.”

The fund has also had stern words for the United States. After the presidential and Congressional elections next month, policy makers will have just weeks to avoid the “fiscal cliff,” a combination of tax increases and mandatory federal spending cuts that could throw the country back into recession — and drag down global growth with it.

“It’s not a threat just for the United States of America, it’s a threat for the global economy,” Christine Lagarde, the managing director of the fund, said last month in a speech at the Peterson Institute for International Economics in Washington.

“We all hope that despite political calendars, which anywhere in the world entail a degree of uncertainty and unpredictability, there will soon be enough political clarity and no political games in order to actually focus on removing this uncertainty,” she said.

In the economic forecast report, the fund also cut its growth estimates for emerging economies, whose strength has helped pull the world out of the global recession. It now foresees growth of 5.3 percent this year and 5.6 percent next year, down from its July estimates.

The fund knocked a full percentage point off its 2012 growth estimate for Brazil, and 1.3 percentage points off its growth estimate for India.

Earlier this month, the World Bank released a major development report focusing on the importance of employment to growth and stability — a concern given high rates of youth unemployment around the world after the recession.

The report found that more than half a billion young people are neither working nor studying, and estimated that the world would need to create about 600 million new jobs in the next 15 years just to keep the unemployment rate constant.

“Governments need to move jobs to center stage to promote prosperity and fight poverty,” Jim Yong Kim, the World Bank president, said.“Jobs equal hope. Jobs equal peace. Jobs can make fragile countries become stable.”

Expectations for progress are low heading into the I.M.F. and World Bank meetings. The major political transitions in China, the United States and other countries have put issues like quota reform on the back burner.

Saturday, September 29, 2012

Euro Watch: Europe Forecast Uncertain as Business and Consumer Confidence Fall Again

The European Commission reported that its economic sentiment indicator for the 17 European Union members that use the euro fell by 1.1 points, to 85.0, the seventh consecutive month of decline.

For the 27-member European Union, confidence fell by 0.9 points in September, to 86.1. An indicator of more than 100 shows more confidence than not about the economy in five sectors surveyed.

The commission attributed the weakening to declining confidence in the services, retailing, industrial and consumer sectors. It cited increased optimism in the fifth sector, construction, as a promising sign.

The data is “another warning that the euro zone economy is sinking further into recession,” Jonathan Loynes, chief European economist at Capital Economics, wrote in an analysis, adding that the results dashed hopes that the European Central Bank’s pledge on Sept. 6 “to take more decisive policy action might have improved sentiment towards the broader economy.”

Mr. Loynes said the confidence results were consistent with an annual contraction in the euro zone economy of about 2.5 percent.

Figures from the core euro zone economies were mixed.

In Germany, the Federal Labor Agency said the number of unemployed rose for the sixth consecutive month. Although the seasonally adjusted unemployment rate held steady at 6.8 percent in September, there were 9,000 more people out of work than in August.

As a result of structural changes in the early 2000s, the German labor market has remained resilient during the crisis in much of Europe. But the Labor Agency predicted the German job market would cool in the rest of 2012 as growth slowed and the impact of the euro zone crisis began to take a toll.

Germany’s labor market has been one of the main drivers of its growth this year, Carsten Brzeski, an economist with ING in Brussels, wrote, and the data Thursday suggests that the slowdown of recent months “seems to have come to at least a temporary halt.” Nonetheless, he added, hiring is losing momentum and manufacturers will probably begin to shed jobs soon. He estimated that the German unemployment rate would return to 7 percent by the end of 2012.

On Wednesday, the Labor Ministry in France said the number of jobless there rose for a 16th consecutive month in August to reach more than three million, its highest level since June 1999.

On Friday, President François Hollande’s government will present its proposed 2013 budget. The finance minister, Pierre Moscovici, has said that the government will cut the deficit to 3 percent of gross domestic product, in line with European rules, from the 4.5 percent expected this year.

Data from the European Central Bank showed that growth in M3 money supply, a measure of lending activity, decelerated significantly in the euro zone in August, to 2.9 percent, from 3.6 percent in July. That was well below market expectations, according to Michael Schubert, an economist at Commerzbank in Frankfurt.

More important, Mr. Schubert wrote in a note, was the decline in lending to nonfinancial companies, which dropped 0.8 percent from a year earlier, while loans to households rose 0.2 percent.

“The E.C.B. probably sees fragmented financial markets as one reason for the low loan momentum,” he wrote, and it therefore believes the new bond purchase program announced by the bank’s president, Mario Draghi, is justified.

Mr. Draghi said on Sept. 6 that the European Central Bank was prepared to buy the bonds of embattled euro zone countries in “unlimited” quantities to quell the crisis, which has driven some members’ financing costs to levels seen as unsustainable.

Melissa Eddy contributed reporting from Berlin.