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MPC | Insider Buying Key To Beating Oil Crash | Oil and energy stocks are getting creamed Alternative energy shares are faring no better It s a wholesale rout
As oil prices crash through 65 per barrel levels not seen in years gasoline prices are dropping fast Most people are rejoicing and thanking their lucky stars that they re saving so much money at the pump
But for those of us in the energy patch it s not a pretty moment And that s precisely why as an energy investor you need to buck up and look for opportunity
This is the time to stay focused and watch what the energy companies are up to
By doing that I have discovered the insiders secret that might actually make you happy about the price of oil
Taking Stock
Unless you re sitting on really crappy stocks own shares on margin or had the misfortune of investing in an oil and gas play at much higher levels through a deal you have little to worry about besides paper losses really
Oil and gas aren t renewable obviously And when prices fall they get used up even faster This crash in prices will stimulate both demand and non oil dependent economies which make up most of the world
At a time when most global economies are barely on life support or just coming out of recessions this news couldn t be better It s like getting a super stimulus without having to go into debt to do it
That s the long term picture The short term picture on the other hand is pretty ugly and will stay that way for quite a few months
Thus you have a couple of choices 1 Stay put and do nothing but stare at your portfolio or 2 you can look at this as a major opportunity to wade into the market
We re choosing the latter Here s why
Following the Insiders
Some savvy investors may be seeing the similarities between the crash in gold prices a couple of years ago and this current crash in oil prices
But there s a huge difference
You see gold isn t a consumable asset like energy It s bought and stored or transferred into jewelry It also serves as a supply of wealth It s not needed for an economy to function like energy Oil and gas get used and must be replenished all the time
Energy insiders see this difference
Since the crash in oil prices major and minor energy companies a k a insiders are stepping up to the plate and buying back their own shares Remember insiders rarely buy unless they feel there is a strong profit motive
This did not happen in the precious metals space
In fact I can only think of three instances in the past three years when an insider at a major mining company has stepped up to the plate Yet over the past month alone a ton of insiders have bought into energy shares That s because they see this as a long term opportunity to buy cheap in an industry that s sure to improve
Here s a roster of some of the companies that have seen insider buying most of which occurred in the past couple of weeks
Chesapeake Energy NYSE CHK
Continental Resources NYSE CLR
Comstock Resources NYSE CRK
Transocean NYSE RIG
Energy XXI NASDAQ EXXI
Vivint Solar VSLR
C J Energy Services NYSE CJES
Peabody Energy NYSE BTU
Atlas Energy NYSE ATLS
Jones Energy NYSE JONE
Clayton Williams Energy NYSE CWEI
Marathon Petroleum NYSE MPC
Based on the current insider action I believe these companies will reward shareholders in the future
And these are just some of the significant buys in terms of size or notable companies There are many many more
In this case unlike the precious metals markets the insiders are betting that the downturn in prices won t be long lived
You may want to consider joining them if you have a longer term perspective
And the chase continues
BY Karim Rahemtulla |
MS | GLOBAL MARKETS Recovery doubts drive down stocks lift dollar | Investors load up on Treasuries first day of new quarter
Dollar up on safe haven bid EU s Almunia remarks
MSCI off 2 13 pct over doubts of solid U S recovery
Updates with U S markets close employment data on Friday
By Jennifer Ablan
NEW YORK Oct 1 Reuters Investors scrambled for safety
on Thursday driving U S stocks to their biggest loss in three
months and propelling safe haven bids for government bonds and
the dollar on fresh concerns about the strength of the U S
economic recovery
A disappointing reading on U S manufacturing activity and
and an unexpected rise in new claims for jobless benefits by
U S workers drove investor sentiment around the world sending
European shares to a three week closing low just one day after
recording the best quarterly gains in a decade
The Dow Jones industrial average was down 203 00
points or 2 09 percent at 9 509 28 and the Standard Poor s
500 Index was down 27 23 points or 2 58 percent at
1 029 85
The biggest loser was the Nasdaq Composite Index
which was down 64 94 points or 3 06 percent at 2 057 48
The MSCI world equity index slid 2 13
percent kicking off October on a sour note after soaring 17
percent in the third quarter which ended Wednesday
Money managers and hedge funds are bracing for more down
days
At the risk of being the boy who cried wolf I believe
that market participants have a false sense of security in
rising equity share prices said Doug Kass founder and
president at hedge fund Seabreeze Partners Management in Palm
Beach Florida
Kass said there continue to be tentative signs in
housing automobiles manufacturing surveys and other economic
indicators that September was weaker than generally expected
For story see ID nN01395512
U S Treasuries rallied sending yields on the 30 year bond
to five month lows as sinking stocks and the disappointing
economic data stoked a bid for safety
The U S Labor Department said initial claims for state
unemployment benefits rose to 551 000 last week from 534 000 in
the previous week more than economists expectations for
530 000 It was the first rise in three weeks
Separately the Institute for Supply Management said its
index of national factory activity eased to 52 6 in September
from 52 9 in August below expectations for a reading of 54
The labor markets remain the weak link in this recovery
process said Kevin Flanagan fixed income strategist for
Global Wealth Management at Morgan Stanley in Purchase New
York
The Labor Department will release the September U S
payrolls report on Friday with expectations payrolls were down
180 000
The U S data followed the release of disappointing numbers
on euro zone unemployment and UK manufacturing activity
The Reuters Jefferies CRB commodities index was down
3 84 points or 1 48 percent at 255 55
Oil prices however rose slightly as concerns over the
West s negotiations with Iran about the OPEC member s nuclear
program outweighed the demand worries on the lackluster U S
economic data
U S crude oil futures settled at 70 82 a barrel up 21
cents
Investors favorite safe havens Treasuries and the
greenback benefited from the global move away from stocks
The benchmark 10 year U S Treasury note was
up 30 32 with the yield at 3 1936 percent while the 2 year
U S Treasury note was up 4 32 with the yield at
0 8772 percent
At the longer end of the yield curve the 30 year U S
Treasury bond was up 51 32 with the yield at
3 9616 percent settling at five month lows
DOLLAR GAINS OVER DOUBTS ON RECOVERY
The dollar rose against a basket of major trading partner
currencies with the U S Dollar Index up 0 73 percent
at 77 21 from a previous session close of 76 653
The greenback got a whiff of the flight to quality bid on
doubts over the potency of the U S economic recovery
The main driver is a slow increase in risk aversion at a
time when data around the world are showing a slight
slowdown in the pace of manufacturing recovery said Andrew
Wilkinson senior market analyst at Interactive Brokers in
Greenwich Connecticut
Comments by a top European official about the euro s recent
gains hurt the single currency
Traders focused on remarks made by Joaquin Almunia the
European Union s economic and monetary affairs commissioner
who said euro strength would be discussed when Group of Seven
officials meet in Istanbul at the weekend ID nL1607718
The euro was down 0 71 percent at 1 4531 from a
previous session close of 1 4635 Against the Japanese yen
the dollar was down 0 04 percent at 89 71 from a
previous session close of 89 750
Additional reporting by Gertrude Chavez Dreyfuss in New York
and Natsuko Waki in London Editing by Leslie Adler |
JPM | JPMorgan eyes bigger investor payouts as it nears capital needs | By David Henry and Sweta Singh Reuters No 1 U S bank JPMorgan Chase Co N JPM may return more money to shareholders than it earns over the next few years it forecast on Tuesday an encouraging sign for investors who have been waiting for richer dividends and share repurchases The prediction came in documents posted on JPMorgan s website for its annual investor day where top executives offered their vision for the four major business lines and financial targets for the broader institution Although JPMorgan is sticking to its long term target of returning 55 percent to 75 percent of net income to shareholders the bank could pay out as much as 120 percent in the medium term according to a presentation That would mean JPMorgan is generating more than enough profit to invest in its businesses and meet regulatory capital requirements and can even reduce some of that capital The new prediction is up from a 65 percent medium term scenario that JPMorgan offered last year It does feel like we have reached an inflection point for capital Chief Financial Officer Marianne Lake said at the event There is no good reason why JPMorgan could not have a capital ratio at the lower end of a targeted range she added The bank aims to maintain enough high quality capital to cover 11 percent to 12 5 percent of its risk weighted assets Big U S banks have encountered a slew of new capital requirements in the aftermath of the 2008 financial crisis many of them implemented over a period of years They also must get their capital plans approved by the U S Federal Reserve through an annual stress test meaning that banks cannot unilaterally decide to increase dividends or share repurchases Prior to the crisis it was not unusual for big banks to distribute all of their earnings to shareholders JPMorgan the largest U S lender has managed to stay ahead of capital requirements while increasing earnings and boosting payouts but not to that level Last year it returned 15 billion to shareholders roughly 61 percent of earnings At Tuesday s confab at JPMorgan s headquarters in New York Chief Executive Officer Jamie Dimon and other top executives mingle with investors analysts and reporters It drew hundreds of besuited money managers who got a chance to press managers about a wide range of topics from geopolitics to expense ratios JPMorgan said it plans to spend more this year to grow its credit card business and stay competitive in an industry that has become increasingly technology focused But even with higher costs the bank maintained its long term targets for a cost to revenue ratio of 55 percent and for a return on tangible common equity of about 15 percent signaling management s belief that the investments will pay off Although executives say JPMorgan is focused on efficiency they have also pushed back against the idea that they should for instance cut branches to get a quick profit boost They have instead advocated for investing in key businesses like credit cards as well as technology that can help JPMorgan lure more customers and keep existing ones happy One of its slides characterized its approach to costs as Innovate automate and eliminate waste Innovation was a theme for the day with displays highlighting JPMorgan s technology bona fides in ATMs cybersecurity and trader experience among other things
JPMorgan s shares were down 0 2 percent at 90 25 They have risen about 29 percent since Donald Trump won the U S presidential election on Nov 8 |
JPM | U S economy slowed in fourth quarter despite robust consumer spending | By Lucia Mutikani WASHINGTON Reuters The U S economy expanded at a slower pace in the fourth quarter as previously reported and appeared to remain on a moderate growth path as President Donald Trump took office with a promise to reinvigorate manufacturing and protect jobs Trump has pledged to boost annual economic growth to 4 percent through a mix of infrastructure spending sweeping tax cuts and deregulation He is expected to outline part of his program in a speech to Congress on Tuesday night Gross domestic product rose at a 1 9 percent annual rate in the fourth quarter the Commerce Department said in its second estimate as downward revisions to business and government investment offset robust consumer spending The estimate matched what was published last month Output increased at a 3 5 percent rate in the third quarter The economy grew 1 6 percent for all of 2016 its worstperformance since 2011 after expanding 2 6 percent in 2015 The overall size and composition of the Trump economic stimulus is yet unknown However it is likely to contribute to further economic strength for the balance of this year and beyond said Sung Won Sohn an economics professor at California State University Channel Islands in Camarillo Trump who made his 4 percent GDP growth pledge during last year s election campaign has promised a phenomenal tax plan that the White House said would include tax cuts for businesses and individuals Details on the proposal remain vague though Treasury Secretary Steven Mnuchin said on Sunday that Trump would use his speech to Congress to preview some aspects of his tax reform plans Economists polled by Reuters had expected fourth quarter GDP would be revised up to a 2 1 percent rate on Tuesday In another report the Commerce Department said the goods trade deficit jumped 7 6 percent to 69 2 billion in January Inventories at wholesalers fell 0 1 percent last month while stocks at retailers increased 0 8 percent However retail inventories excluding automobiles which go into the GDP calculation were unchanged after increasing 0 3 percent in December Economists said the wider goods deficit and weak inventories posed a downside risk to first quarter GDP growth estimates which are currently around a 2 percent rate It now looks like trade will subtract over a half point from growth in the first quarter and inventories will be close to a neutral factor said Daniel Silver an economist at JPMorgan NYSE JPM in New York The trade deficit sliced off 1 70 percentage points from GDP growth in the fourth quarter while inventories contributed 0 94 percentage point Expectations of moderate growth in the first quarter suggest the Federal Reserve is likely to maintain its gradual pace of interest rate increases U S government bond prices were trading higher on Tuesday while the dollar DXY fell against a basket of currencies U S stocks were trading lower STRONG DOMESTIC DEMAND Consumer spending which accounts for more than two thirdsof U S economic activity was revised sharply higher to a 3 0 percent rate of growth in the fourth quarter It was previously reported to have risen at a 2 5 percent rate That left private domestic demand increasing at a brisk 3 0 percent rate Some of the rise in demand was met with imports which subtracted from GDP growth There is scope for consumer spending to rise further against the backdrop of a tightening labor market and surging confidence among households In a third report on Tuesday the Conference Board said its consumer confidence index jumped 3 2 percent to 114 8 the highest reading since July 2001 Consumers remained upbeat about the labor market amid expectations of income gains Business investment was not as strong as initially thought in the fourth quarter Spending on equipment increased at a 1 9 percent rate instead of the previously estimated 3 1 percent pace Business investment contributed 0 17 percentage point to GDP growth less than the 0 30 percentage reported last month Business spending has been partly hobbled by lower oil prices which have crimped demand for machinery but an acceleration is likely A fourth report on Tuesday from the Institute for Supply Management Chicago showed its business index surged 7 1 points to a reading of 57 4 in February the strongest level since January 2015 Companies in the Chicago area reported robust new order growth and production The ISM Chicago report mirrored other regional surveys that have offered an upbeat assessment of the manufacturing sector which had been stuck in a rut for more than a year The improvement has mostly been driven by rising oil prices which have translated into a strong rebound in investment on mining exploration wells and shafts Spending on mining exploration wells and shafts rose at a 23 6 percent rate in the fourth quarter after declining at a 30 0 percent pace in the prior period The increase in residential construction spending was lowered to a 9 6 percent rate from the 10 2 percent pace reported last month A fifth report on Tuesday showed house prices surged 5 6 percent in December from a year ago after advancing 5 2 percent in November House prices are being driven by a shortage of properties for sale
Government spending increased at a 0 4 percent rate in the fourth quarter rather than the previously reported 1 2 percent pace of growth There was no contribution to growth from government investment in the last quarter |
C | Argentina dealt setback by US judge over Citigroup bond payments | By Jonathan Stempel NEW YORK Reuters A federal judge on Thursday said Citigroup Inc N C cannot process interest payments by Argentina on some bonds issued under that country s law a defeat for the cash strapped nation as it tries to reenter international debt markets U S District Judge Thomas Griesa in Manhattan said letting Citigroup process the payments on so called dollar denominated exchange bonds would violate a requirement that Argentina treat bondholders equally Griesa s decision upheld his order on July 28 that blocked Citigroup from making the payments on an estimated 2 3 billion of bonds Another payment is scheduled for March 31 This is a major blow said Ignacio Labaqui an analyst for Medley Global Advisors in New York Argentine s dollar denominated bonds gave up early gains after the decision with debt maturing in 2023 down 1 23 percent at 4 p m 1900 GMT Reuters data show The country s economy ministry and Citigroup declined to provide immediate comment Griesa s decision is the latest setback for Argentina in a long running legal battle stemming from the country s roughly 100 billion sovereign debt default in 2001 Argentina subsequently restructured its bonds in 2005 and 2010 swapping existing bonds for new bonds worth less than one third as much But a group of bondholders known as holdouts including billionaire Paul Singer s Elliott Management LP hedge fund and the Aurelius Capital Management hedge fund refused to accept the terms and demanded to be paid in full UNAPPEALING OPTIONS Griesa has ruled that the holdouts must be paid before Argentina can make payments on the restructured bonds Argentina refused and defaulted last July after rejecting Griesa s order that it pay 1 33 billion plus interest to the holdouts Citigroup has portrayed itself as being in a legal no man s land forced to choose between processing payments in defiance of Griesa s order or not processing payments and putting its ability to do business in Argentina at risk Griesa acknowledged the predicament saying neither option is appealing but said it was the result of Argentina s having refused to observe the judgments of the court to whose jurisdiction it acceded Lawyers for the holdouts did not immediately respond to requests for comment It s bad news for Argentina bad news for holders of performing debt and local law debt said Alberto Bernal head of emerging markets at BullTick Capital Markets in Miami Debt is performing when payments are being made as scheduled Griesa said the vast majority of exchange bonds governed by Argentine law qualified as external indebtedness not domestic indebtedness triggering the equal treatment requirement He again urged that Argentina work with a court appointed mediator Daniel Pollack to end its disputes with the holdouts Pollack declined immediate comment VULTURES Argentine President Cristina Fernandez has long criticized the holdouts as vultures She is barred from running for a third term and the leading candidates to succeed her in December may choose a more conciliatory approach There is a lot of hope that economic policy will change but that s going to be a long term process said Roberto Drimer an analyst at Buenos Aires based consultancy VatNet David Rees emerging markets economist at Capital Economics Ltd in London this month said allowing the payments could have enabled Argentina to resume servicing some debt and perhaps issue new dollar denominated debt outside the United States Argentina tried in February to sell 2 billion of dollar denominated bonds through Deutsche Bank AG DE DBKGn and JPMorgan Chase Co N JPM It scrapped that plan after Griesa demanded that the banks turn over documents related to the proposed sale which had been the subject of a subpoena
The case is NML Capital Ltd v Argentina U S District Court Southern District of New York No 08 06978 |
C | Raytheon in talks to buy Websense Inc Bloomberg | Reuters U S arms maker Raytheon Co is in talks to buy network security company Websense Inc owned by private equity firm Vista Equity Partners LLC Bloomberg reported citing people familiar with the matter Vista has hired Citigroup Inc NYSE C to sell Austin based Websense for more than 1 billion according to the report The company bought Websense for about 900 million in 2013 Websense makes software that protects companies and their networks from cybercrime malware and data theft Raytheon also bought privately held Blackbird Technologies which provides cybersecurity surveillance and secure communications to spy agencies and special operations units for 420 million in November last year Spokeswoman Pam Erickson said Raytheon did not comment on rumors and speculation
Representatives for Vista and Websense were not immediately available for a comment |
C | Citigroup to stop Argentina bond payments amid turmoil | By Jonathan Stempel NEW YORK Reuters Citigroup Inc NYSE C said on Tuesday it plans to exit its custody business in Argentina as soon as possible after a U S judge refused to lift an injunction that blocked the bank from processing interest payments on 2 3 billion of Argentina bonds In a defeat for the bank clients and Argentina itself Citigroup said it made its decision in light of U S District Judge Thomas Griesa s March 12 order letting the injunction stand and Argentina s renewed threats to strip its banking license and impose criminal civil and administrative sanctions Citigroup may sell portions of the business or end some customer relationships according to a letter to Griesa from Citigroup s lawyer Karen Wagner The New York based bank also again asked Griesa to put his order which it hopes to overturn on hold as it prepares to exit the custody business Citigroup called itself the victim of an unprecedented international conflict of laws Argentina s economy ministry had no immediate comment Citigroup s decision may further complicate Argentina s efforts to pay bondholders and return to global debt markets more than 13 years after its 2001 default on roughly 100 billion of bonds Most investors holding Argentina bonds exchanged them for bonds worth much less but a group of bondholder holdouts rejected the swaps These holdouts including billionaire Paul Singer s Elliott Management LP hedge fund and its NML Capital affiliate as well as the Aurelius Capital Management hedge fund have insisted they be paid in full if holders of exchanged bonds are paid In his March 12 order Griesa ordered Citigroup not to process a 3 7 million interest payment due March 31 on bonds issued under Argentine law The judge had previously blocked payments on bonds governed by New York and English law His injunction last year set off another Argentina default on July 31 As custodian Citigroup is supposed to transfer interest payments to clearinghouses that in turn pay bondholders WAITING GAME Griesa s repeated rulings in favor of the holdouts have prompted defiance from Argentina and its president Cristina Fernandez who has labeled the holdouts as vultures bent on astronomical profits Fernandez cannot seek a third term and her successor will take office in December The March 12 order put an end to any serious thought for Argentina to issue foreign currency debt to foreign investors said Mark Weidemaier a University of North Carolina law professor specializing in sovereign debt disputes It now becomes a waiting game he said The decision gives holdouts more leverage but it might be that the current administration in Argentina is not interested in settling and will hand the problem to its successor In a letter late Tuesday Aurelius lawyers urged Griesa not to put the order on hold saying Citigroup neither committed to ending its role in making bond payments nor showed how exiting the custody business created an emergency need for a stay A spokesman for Elliott declined to comment The bank has portrayed itself as an innocent third party stuck with an untenable choice between ignoring Griesa or putting its Argentina banking license in jeopardy In his March 12 order Griesa expressed sympathy for Citigroup but said Argentina s recalcitrance caused Citigroup s predicament and that any third party that aids the country s payment process would violate his injunction Griesa also again urged Argentina to work with court appointed mediator Daniel Pollack to end its disputes with the holdouts Pollack declined to comment Citigroup tried to downplay its decision to quit the Argentina custody business saying that business has no meaningful connection with banking business in general and concerns only servicing assets belonging to clients Shares of Citigroup closed up 15 cents at 53 84
The case is NML Capital Ltd v Argentina U S District Court Southern District of New York No 08 06978 |
C | Citigroup cannot exit Argentine custody business government source | BUENOS AIRES Reuters Argentina will not allow Citigroup Inc N C to exit its local custody business a senior government source said on Wednesday a day after the bank said it planned to do so after a U S judge refused the bank permission to process some sovereign debt payments
There is no way we will let them exit their custody business a senior government source familiar with the president s view on the matter said |
C | Citigroup CEO affirms commitment to 2015 performance targets | NEW YORK Reuters Citigroup Inc N C is committed to meeting its 2015 performance targets for return on assets and efficiency Chief Executive Officer Mike Corbat said on Wednesday Corbat said in an annual letter to shareholders that the goals are within reach if market conditions remain stable Corbat announced the two goals for this year in March 2013 Last year he postponed a third goal for return on equity after the Federal Reserve rejected his request to buy back more stock The Fed faulted the bank s risk and capital management for its businesses around the world Citigroup executives met repeatedly with Federal Reserve officials after the defeat and won approval last week for a new buyback request
Regulators at the Federal Reserve who judge the company s capital plans had made clear that the bank will be held to the highest standard because of its global franchise Corbat said |
C | Why Is Etsy ETSY Stock Surging Over 16 Today | On Monday shares of online craft marketplace Etsy Inc NASDAQ ETSY are surging up over 16 in afternoon trading after Citigroup NYSE C gave the stock a Buy rating and a price target of 14 earlier today
Analyst Mark Kelley initiated coverage writing that Consensus revenue estimates are far too conservative particularly on the Seller Services business we re 4 and 7 above the Street here in 2017 2018
Citigroup believes that Etsy s Seller Services division will provide growth for the company this business chargers sellers extra fees for services like product promotion or expedited check out
Kelley also sees Etsy having total revenue of 365 million higher than the current consensus of 353 million For its Seller Services business Kelley projects revenues of 204 million above the current consensus of 196 8 million
The core Etsy offering simply listing an item for sale is what attracts a seller to the platform but Etsy s Seller Services offerings are additive and in some cases higher margin services which sellers can utilize in order to either make the handling of orders more efficient or that allow for effectively maintaining an online presence Citigroup continued
Etsy is set to report its Q2 fiscal 2016 results on Tuesday August 2 For EPS and revenue Zacks estimates EPS of a loss of three cents on revenues of 83 million
Etsy currently has a 3 Hold on the Zacks Rank |
MPC | Dollar Restraint While S P 500 Collapses What Does It Mean | Dollar Restraint While S P 500 Collapses What Does it Mean After four years of consistent speculative escalation behind risky assets like the S P 500 is faith in stimulus finally starting to crumble If so the bubble behind equity and other speculative assets presents a serious opportunity for safe havens like the US dollar Typically on the opposite ends of the spectrum the equity and FX market benchmarks have instead run on similar paths through 2013 leading many to believe that one or both had changed their fundamental bearings Yet this unusual relationship does not reflect a role change for either simply a lack of influence through that particular aspect risk on risk off Under that logic the extremely threatening move that the S P 500 made this past session a drop back to its 50 day moving average seven month trend floor and near 5 percent retracement threshold to 1 600 should inspire the greenback to revive its role as ultimate safe haven That said the Dow Jones FXCM Dollar Index USDollar was little changed this past session having actually slipped 0 1 percent This tells us that we are the verge of a seismic change but we aren t there yet There is a technical market condition and fundamental view of why the critical rebalancing of sentiment has yet to be made by the market For the highly visible S P 500 the painful slump has taken us to the brink trendline moving average retracement milestone but not officially broken support Through market conditions we have yet to see all those assets with either a definable risky or haven quality nearly all liquid securities fall back into the singular line of reasoning Fundamentals is the aspect where we can best derive the disconnect and establish a time frame for when it will present itself If the masses really wanted a reason to fall into line with risk trends there is plenty to rationalize it market yields are just off record lows leverage usage is at a record high participation is at a 15 year low financial futures asset prices are at a record highs etc However there is a well established trend and high level of confidence in the Fed and central banks to keep volatility under wraps And while sentiment can often generate its own momentum once engaged it may need a push to initiate the turn An overvalued market may simply be too vague to encourage many investors to abandon the market unless a deep technical correction presents significant enough losses The most effective means of breaking the speculative fever is to remove the infinite support taper stimulus This past session there was some modest speculation on the subject as the ISM service sector report the United States largest sector offset the manufacturing slump with a firm read that tempers the need for external support While notable this data is too far removed from the taper debate to provoke commitment Friday s NFP report is targeted Could the market wait for the jobs report Perhaps the Fed meet Euro at Risk of Breakout as ECB Policy Decision Approaches EUR USD has worked its way into an exceptionally tight trading range just before heavy event risk The probability of a breakout is exceptionally high In the upcoming session 11 45 GMT specifically the European Central Bank ECB will announce the most recent round of monetary policy The consensus heading into the event is that that the group will leave the benchmark and deposit rates unchanged while all additional exceptional policy moves are similarly left off the agenda For those that remember the last meeting where they cut rates it is reasonable to be ready for the unexpected Changing the rate is ineffectual for long term euro influence and financial recovery To truly hit both planes they would need to introduce something akin to an open ended and active stimulus program They have the OMT but it isn t used until a full blown crisis is upon us The probability is low but there has been talk of SMEs ABS quality assessments and structural recession risk Japanese Yen Suffering the Tension Between Stimulus and Sentiment The financial situation in Japan is set to only grow more not less complicated In an effort to beat deflation the BoJ and government are inadvertently eroding real rates of return for a market that is heavily invested in local assets Add to that the inherent battle that the authorities have to wage against risk trends A collapse in sentiment will spur a carry trade unwind on yen crosses with record low yield differentials that subsequently opposes exchange rate progress And then there is the growing currency war discontent Destined for trouble British Pound The Bank of England Has a Serious Chance to Surprise Though Will NotThere is even less credibility given to the Bank of England s capacity to change monetary policy than its Euro area counterpart and for good reason The Monetary Policy Committee MPC has held both rates and stimulus unchanged for months with a recent minority calling for more gilts purchases falling well short of the necessary vote This particular meet is Governor Mervyn King s last at the helm and it would be ungentlemanly to shock the system before Marc Carney steps in However we should always be open to the unexpected Australian Dollar Extends Plunge AUDUSD Down Over 1 000 Pips from April 11 AUD USD has made a provocative move below 0 9550 support at that dates back to October 2010 and that isn t the only Aussie dollar based cross that is showing the currency suffering A few other statistics to truly appreciate the scope of this move this is the fifth consecutive week of decline four other instances in the past decade and no six straight weeks and the two month loss for AUD USD is now over 1 100 pips Canadian Dollar Takes in Business Sentiment New BoC Governor Speech There is some notable event risk on the regular docket for the Canadian dollar tomorrow but it is unlikely to truly generate volatility The Ivey PMI is a business activity report that gives a good growth view of an important sector The real point of interest is the first formal speech for Stephen Poloz as the new head of the Bank of Canada Will he keep the same tightening mindset as his predecessor |
MPC | Australian Dollar Advances A Second Day As China Funding Crisis Eases | Dollar Steadies Even as S P 500 Rebounds Data Leading to Taper Both the Dow Jones FXCM Dollar Index USDollar and S P 500 closed the day higher Tuesday This counter fundamental positive correlation tells us something very important that the risk aversion drive that followed the Federal Reserve s Taper warning is losing its potency If risk aversion were truly intensifying an unwinding of the front run the Fed trades would evolve into a deleveraging of the exposure that was founded on the assumption of boundless support by the central bank Yet there is not enough momentum behind this fear to keep US equities which are arguably the most stubborn benefactor of the more hazard shedding the uncommitted investors as the benchmarks pull back from record highs This hesitance should not be taken to mean that the danger of a full scale bear market has been avoided however Leverage measured on the NYSE is at record highs and participation S P 500 futures open interest at 15 year lows Australian Dollar Advances a Second Day as China Funding Crisis Eases Funding pressure in the Chinese markets is a significant threat to financial stability globally but it is especially troublesome for the Aussie dollar which is exposed through its direct trade exposure as well as its position as the major s top investment currency The story out of China has developed around a few Chinese banks essentially defaulting on loans due to a severe shortage of short term funding This issue has evolved out of regulators cracking down on particular venues for financial institutions to continue to lend out short term credit at excessive rates in hopes of trying to curb a lending bubble in the economy The People s Bank of China PBoC voiced confidence that funding risks would be met individually but they wouldn t lax rules Shibor lending rates have eased today and the relief offers further Aussie reprieve Japanese Yen Asia Market Volatility Remains Stirs Yen Crosses The Tokyo session is proving to be the more active period for swing traders While the Nikkei 225 started Wednesday s session following in the wake of the US equity market s climb the Japanese benchmark suffered a severe jolt as trading wore on The more than 300 point intraday plunge from the stock index may be technically smaller than the near 450 poing tumble the previous session but it still represents serious volatility issues for the region And volatility begets volatility If the market s remain this reactive the proper catalyst to align investors concerns can generate a breakout to undermine the past few weeks worth of congestion A bearish break for shares would be a direct spark for yen buying spark for yen crosses to drop as it would rouse risk aversion that leads to carry trade deleveraging Yet general activity itself regardless of direction is also a problem for Asian markets as it volatility is elementally a measure of risk Canadian Dollar the Most Oversold Currency Short Term Over the past few months the Australian dollar may have shed more value than any other major currency but more immediate comparison performance of the past two weeks shows a different scale Through that period the FX market s worst performer has been the Canadian dollar While the USDCAD s 3 2 percent advance is most remarkable the rest of its pairings have delivered the loonie between 1 7 and 1 3 percent in losses Through that same period the Canadian data has held up relatively well Capital inflations home sales retail sales and inflation have improved Furthermore we have seen net speculative short interest on the Canadian currency via futures positioning on the COT drop 65 percent from a six year low set two months ago An eight day straight advance in USDCAD the longest since 2005 looks stretched Swiss Franc SNB s Zurbruegg EURCHF Cap Necessary Risks Can t be Hedged EURCHF hasn t returned to the Swiss National Bank s SNB imposed 1 2000 floor in nine months However that doesn t seem reason enough for the policy authority to lift its backstop on the critical pairing Governing Council member Fritz Zurbruegg remarked this past session that the barrier is especially necessary considering the stability of the Euro region is once again at risk Speaking to regional bankers group Zurbruegg also made note that the SNB s reserve levels are a result of FX exposure accumulated through monetary policy Furthermore he noted that the central bank couldn t hedge itself of these risks and volatility via the euro or dollar was felt immediately by the group This may be obvious but it breaks from the unflappable confidence we expect from central bankers Is that recognition of the possibility of failure British Pound Traders Take Note of King s Warning that Carney Limited When Bank of England Governor Mervyn King testified before the Treasury Committee for the last time as the leader of the central bank he said something sterling traders consider In a humorous quip King suggested that while his replacement may be more persuasive than he is Marc Carney would not likely gain more traction than his predecessor Each person has one vote under the current regime at the Monetary Policy Committee MPC and King has been outvoted in his call for stimulus in the past three policy meetings 3 to 6 The market would do well to remember that Carney can only accomplish so much in his new position without the support of the Committee Speculation that the BoE will materially upgrade its stimulus efforts to match that of the BoJ Fed or even ECB has added material weight to the pound We will see if this reality clears up slowly or all at once on July 4 when Carney casts his first vote Meanwhile we should read through the details on the upcoming BoE Financial Stability report Last week it was suggested that there is a 26 billion hole in bank financing Gold Extends its Plunge to Fresh Multi Year Lows Overnight Bulls were making a feigned attempt to keep gold above the 1 275 level following last week s FOMC route That line in the sand was crossed this morning as the precious metal dropped another 2 plus percent through Asia session trading The stability of the US dollar through the past session despite the firming of the US equity markets and thereby sentiment was one aspect of erosion for the alternative store of wealth asset Yet the real trigger for fresh lows for the metal seems to be the reduced tension in the Chinese funding markets Without a material and pressing financial stability threat the task of reviving the fundamental strength of a last resort and heavily pummeled asset like gold is even further out of reach Meanwhile volume behind the gold selling may be backing off but the CBOE s gold volatility index is still above 25 percent before April s market collapse it averaged around 13 percent and ETF holdings hit yet another multi year low In fact the 1 1 percent drop in the exposure was the second biggest in 22 months and ushered in a fresh 3 year low 66 46 million ounces |
MPC | Bank Of England Preview Welcome Mr Carney | We expect the Bank of England BoE to remain on hold at Thursday s Monetary Policy Committee MPC meeting 13 00 CET This is the first meeting of the MPC with Mark Carney at the head of the table Even though we think that some form of forward guidance is the most likely policy change in the near future we do not expect it to come until 7 August with the next Inflation Report If Thursday poses any change from the recent meeting routine we think a change away from the usual no change in policy no statement is more likely than any hard policy changes A more extensive statement might accompany the decision How does monetary activism look in action This Monday Mark Carney had his first day as governor of the Old Lady of Threadneedle Street and much attention has been drawn to his arrival In the presentation of the 2013 Budget Chancellor Osborne stressed three important cornerstones i fiscal responsibility ii supply side reforms and iii monetary activism The appointment of Mark Carney as the new governor and the review and update of the remit for the MPC are thus central elements on the Chancellor s mind Speculations of how the Osborne Carney partnership could change UK monetary policy was fuelled with Carney s endorsement of Nominal GDP level targeting a subject he lately back tracked somewhat from in his testimony before the Treasury Committee and his comments in Davos of monetary policy being far from maxed out and should continue to work until economies achieved escape velocity even if inflation was above target However we have little information of Carney s assessment of concrete policy actions in the UK as he until now has avoided to comment on this subject In the table below we list some of the possibilities there have been on the table regarding policy changes from MPC As the UK activity recently has showed positive tendencies we think that the Carney governorship is more likely to have communicative changes in the monetary policy than hard changes e g rate cut QE expansion To Read the Entire Report Please Click on the pdf File Below |
MPC | How Big Is The Carney Premium | Policy was held unchanged from the meeting at the Monetary Policy Committee MPC Against usual practise the MPC published a statement alongside the decision see here revealing two policy relevant surprises The MPC s comment on recent volatility in rates The significant upward movement in market interest rates would however weigh on that outlook in the Committee s view the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy The MPC is warming up to forward guidance being published after the August meeting The latest remit letter to the MPC from the Chancellor had requested that the Committee provide an assessment alongside its August Inflation Report of the case for adopting some form of forward guidance including the possible use of intermediate thresholds This analysis would have an important bearing on the Committee s policy discussions in August What form forward guidance might take if implemented at the BoE is the big question It could be a Fed type rule with thresholds on unemployment or similar it could be the old Fed type rule with a specific date before which no rate hike should be expected it could be a Japanese type rule with targets on money balance or something new like a NGDP type rule etc This uncertainty should be reflected in a market risk premium going forward The initial market reaction was a rally in the fixed income markets where the yield belly of the swap curve 3 6Y declined some 11 12bp and the money market curve 1m SONIA flattened Sterling also weakened significantly in the FX market In that sense the arrival of Carney has already had an effect and we are surprised that already he has been able to get acceptance for a change from the previous pattern four days into the job To Read the Entire Report Please Click on the pdf File Below |
MS | WRAPUP 2 Russia PM seeks investment pledges no capital control | Russia must attract investments
Seeks knowledge technology boost from investors
Morgan Stanley GE TPG say interested in Russia
Putin pledges no capital controls
Adds details background quotes
By Gleb Bryanski and Toni Vorobyova
SOCHI Russia Sept 18 Reuters Russia needs to boost
investment to ensure it emerges strong from the financial
crisis so it will not re introduce capital controls Prime
Minister Vladimir Putin said on Friday
Russia resisted calls for capital controls choosing instead
to spend 200 billion of reserves in late 2008 early 2009 on
keeping the rouble from weakening too quickly as it adjusted to
lower oil prices and the country s first recession in a decade
We will keep this liberal regime which is one of the
fundamental reasons for investment in Russia s economy Putin
told an economic forum in the Black Sea resort town of Sochi
Businessmen attending the forum were upbeat about prospects
in Russia s resource rich economy now that the worst of the
global slowdown seems to have passed and investors are looking
for fresh avenues for their cash
David Bonderman founding partner of one of the world s
largest private equity funds TPG TPG UL said he is looking
for opportunities for about 30 billion in uninvested capital
and is cautiously optimistic about Russia ID nLI351370
We have about 60 billion of capital half of it is
uninvested and we are looking for opportunities he said
General Electric Co the largest U S conglomerate
listed Russia among its priorities ID nLI179221 adding that
it is in talks about possible projects with Russian Railways and
gas export monopoly Gazprom ID MOS005538
John Mack outgoing CEO of Morgan Stanley told
Reuters he was confident about Russia ID nLH695446 and later
especially highlighted pharmaceuticals ID nMOS005538
Putin said he hoped the purchase of Germany s Opel by a
consortium including Russia s largest lender Sberbank
and carmaker Avtovaz would set a precedent
for fruitful partnerships with foreign companies
We are open to foreign investments of course We need not
so much the money and not just the money but first of all the
knowledge and the experience that key international players
have he said
The Russian economy has passed the worst of the crisis with
growth averaging 0 5 percent a month since June Putin said
The government should start thinking about how it will
unwind anti crisis stimulus measures and diversify the economy
from natural resources to cushion it from future turmoil he
added Investment will be key here
TRAFFIC JAMS
Avtovaz chief Igor Komarov told the forum that his company
plans to create a joint venture with Renault and its
Japanese alliance partner Nissan Motor Co 7201 T to produce
car parts ID nLI158779
Russia needs to fight for direct investment German Gref
Sberbank s chief executive said
Although Russia has been much harder hit by the global
crisis than other major emerging markets such as China or India
Putin said his country had some advantages over the others
One of the main advantages of China is stability A
possibility for financial authorities to make decisions without
looking back at political situations Some people like it some
don t but for investors it is an advantage But there are some
currency restrictions he said
In Russia there are some problems but some pluses
including the liberal financial regime
But some remained sceptical about how far Russia which in
the past had a chequered relationship with foreign investors
especially in strategic sectors would really open up
The suspicion will obviously linger that any attempt now to
woo foreign investment is a transitory move while Russia is in
need of capital funding RBS analyst Tim Ash said in a note
But once global markets and commodity markets pick up this
desire to really open up to foreign investment will again fall
by the wayside in favour of Russian and in particularly Russian
state interests
Russian businessmen including metals tycoon Vladimir
Potanin said they are also prepared to invest ID nLI255283
but some said they have no intention to share their profits with
foreign investors
There is not enough room here even for us Vladimir
Yevtushenkov CEO of Systema which holds stakes in a number of
technology companies told Vesti television
Foreign companies at the forum also noted ongoing problems
in Russia from a lack of transparency to more basic issues
Reduce traffic jams seriously Michael Calvey
co managing partner of private equity fund Baring Vostok Capital
Partners said when asked what would make investment easier
Additional reporting by Dmitry Sergeyev and Katya Golubkova
Writing by Toni Vorobyova Editing by Toby Chopra |
MS | UPDATE 1 Hochtief airports unit IPO possible this yr sources | Hochtief has picked shortlist of banks sources
Shares rise 2 percent
updates with shares background
FRANKFURT Sept 22 Reuters Hochtief is preparing an
initial public offering of its airports division
which it could launch by the end of this year several financial
sources told Reuters on Tuesday
The issue would be Germany s first major IPO since diesel
engine maker Tognum s 2 1 billion euro 3 1 billion listing in
2007 before markets were crimped by the global economic crisis
Hochtief said last month it was considering selling shares
in the division seen by analysts as a move that might shore up
the company s market value It values the unit which it calls
Hochtief Concessions at 1 54 billion euros
Hochtief shares closed up 2 percent at 53 70 euros while
the German midcap index rose 1 4 percent
Germany s largest builder has already picked a short list of
banks that could manage the IPO including Deutsche Bank
Commerzbank Morgan Stanley HSBC and WestLB the sources said
Hochtief could award a mandate within weeks they said The
firm declined to comment on mandates
Hochtief s airports division generated a pretax profit of
110 million euros in 2008 making it the second largest earnings
generator among Hochtief s six divisions
It holds stakes in airports in Athens Hamburg and Sydney
and operates roads in Austria and Greece as well as schools in
Germany
Its competitors include Ferrovial s British airports
operator BAA as well as Frankfurt operator Fraport and Vienna s
Flughafen Wien
IPO ICE BREAKERS
Investment bankers on Tuesday said the IPO pipeline in
Germany was filling up again ending a drought that started with
the onset of the financial crisis in 2007
We could see an outright wave of IPOs in the first half of
2010 said Joachim von der Goltz JP Morgan s head of equity
capital markets for German speaking regions adding that the
market was seeing considerable demand from investors
We expect one or two big deals with billion euro volumes
that will serve as ice breakers for others he said
Financial investor BC Partners plans to float part of German
chemical distributor Brenntag in the first half of 2010 several
sources familiar with the situation told Reuters on Tuesday
Reporting by Philipp Halstrick Kerstin Leitel and Matthias
Inverardi Writing by Maria Sheahan and Jonathan Gould editing
by John Stonestreet |
MS | Fed to note economic improvement may hint on exit | By Mark Felsenthal
WASHINGTON Sept 23 Reuters The U S Federal Reserve is
expected to take note of an improving economy at the close of a
meeting on Wednesday while cautioning that high unemployment
puts the recovery at risk
The Fed is widely expected to hold overnight lending rates
at close to zero percent and repeat its intention to keep rates
exceptionally low for an extended period in a statement the Fed
will issue around 2 15 p m 1815 GMT after the central
bank s two day policy meeting draws to a close
It is also expected to keep its massive financial support
for the economy in place although it may offer a suggestion of
how it plans to withdraw that underpinning
Officials think that recovery is far from assured that
inflation may still decline from current levels and that it s
early days yet for the healing in the financial system and
markets Morgan Stanley economist Richard Berner wrote in a
research note
The U S central bank may come to a decision on the fate of
a program under which it has pledged to buy up to 1 45
trillion of mortgage related securities by year end to drive
down mortgage costs and support the economy
While many analysts expect the Fed will stretch out these
purchases into next year to allow for a tapering off that could
ease financial market adjustments some think it has the luxury
of putting off any decision until later this year
At least one Fed official has raised the question of
whether the central bank should even move ahead with all the
planned purchases others believe the bar should be set high
for curtailing actions markets already expect
The Fed meets against a backdrop of an economy that is
returning to health more rapidly than most expected after a
wrenching recession and the most painful financial crisis since
the Great Depression
A slew of recent data points to turnarounds in
manufacturing housing markets and business and consumer
confidence putting the prospect of a sharp recovery back on
the table for policy makers seeking to forecast the outlook
Stock markets have rallied since hitting a trough in March
and the blue chip Dow Jones industrial average has gained
around 550 points or about 6 percent since the Fed s last
meeting in mid August
Still with unemployment at a 26 year high of 9 7 percent
and projected to go higher central bank officials have made
clear they aren t popping champagne corks
Even though from a technical perspective the recession is
very likely over at this point it s still going to feel like a
very weak economy for some time Fed Chairman Ben Bernanke
said last week
While the economy is widely expected to return to solid
growth in the current quarter the Fed and many private
economists warn that the recovery could falter as stimulative
government spending and tax cut measures wear off
The debate at the central bank will revolve around whether
inflation or deflation a widespread drop in prices that could
spawn a vicious cycle and hobble the economy is a greater risk
going forward
Some officials are deeply concerned that a more than
doubling of the Fed s balance sheet to over 2 trillion will be
dangerous tinder for inflation once the recovery heats up
Those officials want the Fed to begin paring the assets it has
accumulated sooner rather than later
Others worry a persistently high jobless rate will keep
consumers wary and threaten the recovery With so many out of
work and with factories operating well below capacity the
economy can gain steam for a while before inflation is a
threat those officials believe
The Fed will move gradually and cautiously in reducing its
balance sheet next year even as there are further signs of a
sustained economic recovery UBS Securities economist Maury
Harris wrote in a research note
Even so the Fed is likely to clearly signal that it has a
well thought out exit strategy in place from its unprecedented
monetary stimulus to reassure financial markets it is committed
to keeping inflation in check
Editing by Leslie Adler |
MS | Banks energy stocks drag on Europe stocks G20 eyed | FTSEurofirst 300 index down 1 3 percent
Banks energy pharmaceuticals lower
Autonomy Bureau Veritas gain
By Simon Falush
LONDON Sept 24 Reuters Banks and energy stocks led
broad weakness among European shares at mid session on Thursday
as caution ahead of the Group of 20 summit dented demand for
riskier assets such as equities and commodities
By 1047 GMT the pan European FTSEurofirst 300 index of top
shares was down 0 7 percent at 999 02 points
Banks took the most points off the index HSBC UBS and
Commerzbank were down 0 5 to 2 9 percent
The index has soared almost 55 percent since tumbling to a
record low last March but is still down 39 percent from a
multi year peak reached in mid 2007
The sharp rally has led many investors who were short of
equities to rush back into the market to avoid missing out on
further gains analysts said
Lately people have been buying equities for the wrong
reasons and at the same time a large number of people have
been expecting a pull back I think a pull back of 5 6 percent
would be healthy said Michael O Sullivan director and head of
UK Research Private Banking at Credit Suisse
U S equity futures were down 1 percent on
uncertainty ahead of the G20 summit which starts later on
Thursday Investors were concerned that tightening of financial
regulation a topic of discussion for the G20 leaders may hit
banks analysts said
Also weighing on banks was investor anxiety the U S Federal
Reserve and other central banks may be closer to withdrawing
stimulus measures
Deutsche Bank lost 0 8 percent The bank s chief executive
Josef Ackermann said in an article published in Swiss daily Neue
Zuercher Zeitung that heavier regulation would result in lower
profits for banks
DATA DISAPPOINTS
German business sentiment rose to its highest level in a
year in September but fell short of expectations The
Munich based Ifo think tank said its business climate index rose
to 91 3 from 90 5 in August but below a forecast of 92 0
Also reflecting a slight dip in sentiment Hennes Mauritz
dipped 2 7 percent after the Swedish retailer reported a
bigger than expected drop in August sales overshadowing a
forecast beating rise in third quarter profits
Search software firm Autonomy rose 3 8 percent with traders
citing talk of bid interest from Microsoft
Among other gainers French inspection and testing group
Bureau Veritas gained 3 1 percent after Morgan Stanley upgraded
its rating on the stock to overweight from underweight
saying it had become more positive on the outlook for the
subsector
Energy stocks were lower as crude extended losses and fell
towards 68 a barrel BG Group Repsol Cairn Energy and Total
slipped 0 7 to 1 5 percent
Losses were broad based if fairly shallow with defensive
pharmaceutical stocks mostly weaker AstraZeneca Roche fell
0 6 1 6 percent
Across Europe the FTSE 100 index Germany s DAX and
France s CAC 40 slipped 0 1 0 3 percent
Also weighing on the market was investor concern that the
U S Federal Reserve was closer to pulling back on extraordinary
measures to inject funding to shore up the economy
There is a fear that they will take back some stimulus
creeping in which is hurting financials said Credit Suisse s
O Sullivan
The Fed s policy setters met this week and kept interest
rates unchanged as expected but said the central bank would
slow purchases of mortgage debt to extend that programme until
the end of March
Investors will watch U S existing home sales for August at
1400 GMT with economists in a Reuters survey forecasting a 5 35
million annualized unit total versus 5 24 million annualized
units in July
Additional reporting by Joanne Frearson editing by Nigel
Stephenson |
MS | NEWSMAKER New EDF boss Proglio is passionate team player | By Dominique Vidalon and Marcel Michelson
PARIS Sept 27 Reuters Henri Proglio named boss of
French state owned power company EDF on Sunday takes
up a post that is strategically important for the future of
nuclear energy in France and abroad
As head of the world s largest utility with a market value
of 70 9 billion euros 104 1 billion he will also have to
juggle the state s conflicting demands as both shareholder and
regulator
Last but not least good relations with trade unions will be
important France has a near 85 percent stake in EDF and the
former monopoly operator s labour unions still pack a punch even
as the company modernises and expands internationally
Proglio 60 and a widower with two children had spent his
entire career at the water and waste management group which
became Veolia which he joined in 1973 after graduating
from HEC business school
He helped transform Veolia from a sleepy municipal utility
then Compagnie Generale des Eaux CGE into the world s biggest
water company with a market value of 13 billion euros and sales
of 36 billion
CGE became media group Vivendi during the stormy tenure of
Jean Marie Messier Industry observers say Proglio came into his
own during that time resisting Messier s ideas to dismantle the
water business to fund his media expansion dreams
Vivendi Water was eventually split off to become Veolia and
Proglio became chairman in 2003
In 2004 Proglio was offered the top job at EDF but turned
it down Some observers said he was reluctant to leave Veolia
others that did not want to take the job from his friend
Francois Roussely then head of EDF
EDF and Veolia have a joint venture for energy services
called Dalkia and Proglio already sat on the EDF supervisory
board
FOUQUET S AND L HUMANITE
Born in 1949 in Antibes southern France Proglio has a twin
brother Rene who is managing director of Morgan Stanley France
Our parents sold fruit and vegetables in Antibes Getting
into HEC was our first Parisian experience With our southern
accent we came straight from a Pagnol novel Rene Proglio told
French magazine l Expansion in a March 2009 interview referring
to Marcel Pagnol novels set in Marseilles
Proglio has made training a priority of Veolia s social
policy with the Campus Veolia training center accomodating 610
apprentices and 14 000 traineess each year
He was one of the few CAC 40 bosses to attend the Fete de
l Humanite this year the annual bash of the French Communist
newspaper
A friend of former French President Jacques Chirac Proglio
is also close to President Nicolas Sarkozy and was among guests
at a dinner at Fouquet s restaurant on the Champs Elysees where
Sarkozy and friends celebrated his election win in 2007
Proglio s track record at the helm of Veolia was mixed
Recently he has been busy rebuilding investor confidence
after two profit warnings a mounting debt pile an unexpected
management reshuffle and a 65 percent share slide in 2008
He did many acquisitions and not really the divestments
that were needed the cleaning up that was expected an
industry source said adding that tackling debt and expansion
abroad were the very issues Proglio will need to adress at EDF
In a March interview with Reuters Proglio who can be
short tempered joked that efforts to inform analysts about
group strategy sometimes made him feel he was evangelising
savages
Editing by David Holmes
1 0 6810 euro |
MS | MONEY MARKETS Australian short term rates edge up on cbank view | Aussie rates up on stimulus wind down remarks
China money rates ease as IPO cash returns to system
Dollar borrowing costs ease
By Umesh Desai
HONG KONG Sept 28 Reuters Australian short term rates
rose after the country s central bank chief said fiscal and
monetary policy stimulus would need to be unwound as private
demand picks up in the economy
But rate movements in the money markets which have been
expecting the Reserve Bank of Australia to increase interest
rates for some time now were not sharp as Govenor Glenn
Stevens remarks offered no indication of the timing of such a
move
Australian 1 year interest rate swaps rose to
as much as 4 1375 percent before quoting 2 basis points higher
at 4 1075 percent Overnight indexed swaps for one year
were 4 5 bps higher at 3 9275 percent
Stevens comments also brought down bill futures 0 YBA
with the December contract down 0 03 points at 96 31
Stevens has made clear the current cash rate is for an
emergency setting we are not in one now said Adam carr
senior economist at ICAP Australia
We know the RBA wants to tighten the question is when
He did not address the timing in his remarks he said
The RBA has cut the cash rate to an emergency level of
3 0 percent while the government has announced stimulus
packages worth A 52 billion 45 billion including generous
cash handouts and measures to boost the housing sector
Speaking at a parliamentary committee hearing Stevens
said In due course both fiscal and monetary support will
need to be unwound as private demand increases
Last month the RBA shifted away from its easing bias and
raised the country s growth forecasts making clear rates could
be expected to rise to normal levels over time
The RBA s cash rate is at a record low following cuts
totaling 425 basis points between September and April
Implied money market rates show local rates
are expected to climb 176 basis points over the next 12 months
The Credit Suisse index had factored in rate hikes of 173 bps
on Friday and was pricing in 156 bps of increases in
mid September
CHINA MONEY RATES EASE
Meanwhile China money market rates edged lower after China
International Travel Service Corp s major IPO which attracted
618 billion yuan 90 5 billion in subscriptions returned
cash to unsuccessful retail investor applicants
The weighted average seven day repo rate fell
to 1 5834 percent from 1 6097 percent and the 7 day Shanghai
interbank offered rate to 1 5717 percent from
1 6025 percent
But longer term yields continued to edge up as analysts
expect the build up of inflationary pressures to weigh
The 5 year bond yield rose to 2 9095 percent
from Friday s 2 9025 percent and one year bill
yields rose to 1 7720 percent from Friday s 1 7682 percent
Persistent asset price inflation pressures will likely
become the norm instead of an exception in Chinese economy
constituting the most important and a constant macroeconomic
challenge to policy makers said a note from Morgan Stanley
The note said keeping leverage in check would become a top
policy priority to minimise systematic risks in the event of a
bursting of asset price bubble
In Singapore 3 month dollars dipped to
0 29571 percent matching the record low from 0 29714 percent
This follows a decline in London interbank offered rates
LIBOR to record lows last Friday a trend which some analysts
expect to continue
Sean Keane of Triple T Consulting said the U S Federal
Reserve s daily effective rate of around 0 15 percent is
keeping the dollar funds market flush with liquidity and it is
likely to remain that way as the third quarter ends
With day to day rates so low some further downward
pressure will be applied to 1 month LIBOR which is currently
holding around 0 246 percent he said in a note
Reporting by Umesh Desai Editing by Kim Coghill |
JPM | The Fed won t hike rates in March but it still wants to keep Wall Street guessing | Federal Reserve officials always walk a fine line in telegraphing their intentions Being too specific about the future path of interest rates risks disappointing expectations being too vague threatens market complacency
Put another way if there s no possibility of the Fed taking away the proverbial punch bowl while the party is still jumping financial markets could get bubbly particularly with stock markets already hitting daily record highs
With that in mind some Fed officials have taken it upon themselves to revive expectations of a March interest rate hike just enough to sow some doubt in financial markets that are now pricing in a 38 chance of a May increase
I would not take March off the table at this point We ll have to see how it plays out in the next few weeks a voter this year on the policy setting Federal Open Market Committee told Market News International in an interview The Fed s next meeting will take place March 14 15
The problem with such hints when they often go unfulfilled is the Policymakers began 2016 arguing there would be room for four rate hikes but ended up delivering just one at the very last meeting of the year
Last week Fed Chair Janet Yellen was asked about the likely timing of the next Fed rate rise and
Precisely when we take an action March May or June I can t tell you Yellen testified before the Senate banking committee I would say every meeting is live
Minutes from the Fed s January meeting out later Wednesday should offer more clues into how policymakers are feeling
Economists at JPMorgan NYSE JPM think March is too early for them to hike particularly given their propensity to prepare markets for a move Instead they believe March would be a good meeting for them to prepare the markets for a hike at the subsequent meeting on May 3rd
That would be the Fed s first time taking action at a meeting not accompanied by a press conference Since 2012 the Fed chair has conducted a press conference after four of the Fed s eight yearly meetings the ones that include new quarterly releases of Fed officials economic projections Officials seem to prefer giving the Fed chair a chance to explain any policy moves in greater detail in front of reporters
Indeed the Fed has raised interest rates only twice since it began the tightening cycle in December 2015 It had left interest rates at zero since the end of 2008 during the depths of the Great Recession and the global financial crisis
Since then the economy has recovered but all too gradually with unemployment falling to a historically low 4 8 recently Inflation has struggled to hit the Fed s 2 target as wage growth remains anemic and underemployment remains high suggesting the economy is still running below its full potential
including rising retail sales and the biggest monthly gain in consumer prices in nearly four years reaffirmed market expectations that the Fed would likely raise rates again by June at the latest
At the same time the rise to power of President Donald Trump has that policymakers are still including the economic fallout from his |
JPM | Australia business investment slips again outlook uninspiring | By Swati Pandey
SYDNEY Reuters Australian business investment has fallen for the fourth straight quarter as miners continue to cut back but other sectors narrowly upgraded their spending plans for the year in tentative signs of recovery
Thursday s figures from the Australian Bureau of Statistics showed investment slipped 2 1 percent in the fourth quarter to A 27 6 billion 21 18 billion when analysts had looked for a fall of only 1 percent
The decline was entirely driven by the mining sector where spending fell over 9 percent even as new investment in manufacturing climbed 3 1 percent
Importantly spending on equipment plant and machinery did edge up in the fourth quarter which adds to expectations economic growth bounced after a shock contraction in the previous quarter
Figures due next week are generally expected to show the economy grew around 0 6 percent to 0 7 percent last quarter
While economists are convinced that Australia has dodged its first recession in 25 years the data are yet to show a meaningful recovery in the non mining economy
Indeed spending plans for 2017 18 came in at A 80 6 billion the lowest in a decade and under the A 84 billion many analysts had looked for
Again all the weakness was in mining with investment in other parts of the economy unable to offset the plunge
That shows the momentum is still down That s not what you want What you want to see is a rise in those estimates said Shane Oliver chief economist at AMP Capital
I think it keeps alive the prospect for another rate cut although the RBA has set a very high hurdle for taking rates lower
After cutting rates to a record low of 1 5 percent last year the Reserve Bank of Australia RBA has been on hold in the expectation that growth in the A 1 6 trillion economy will accelerate to around 3 percent
Just this week RBA Governor Philip Lowe argued the drag from mining was almost over and cutting rates again would only serve to inflate a debt driven bubble in the housing market
Businesses however do not seem keen to co operate
Even though the mining capex drag is fading away the recovery in non mining is really tepid at this point said Ben Jarman an economist at JPMorgan NYSE JPM
We are seeing global business sentiment surveys rally quite a bit but it doesn t appear like Australian firms are following suit with their capex plans at the moment |
JPM | U S labor housing markets data underscore economy s stamina | By Lucia Mutikani WASHINGTON Reuters The number of Americans filing for unemployment benefits rose slightly last week but the four week average of such claims considered a better gauge fell to a 43 1 2 year low in a sign of a strengthening labor market Other data on Thursday showed house prices increasing solidly in December amid strong demand for housing even as mortgage rates rose The reports highlighted strength in the economy that could allow the Federal Reserve to raise interest rates in the near term All indications are that job creation remains solid underscoring the resiliency of the nearly eight year economic recovery said Jim Baird chief investment officer at Plante Moran Financial Advisors in Kalamazoo Michigan A March rate hike cannot be ruled out Initial claims for state unemployment benefits increased 6 000 to a seasonally adjusted 244 000 for the week ended Feb 18 the Labor Department said It was the 103rd straight week that claims remained below 300 000 a threshold associated with a healthy labor market That is the longest stretch since 1970 when the labor market was much smaller The labor market is at or close to full employment with the unemployment rate at 4 8 percent Economists had forecast new claims for unemployment benefits rising to 241 000 in the latest week The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility fell 4 000 to 241 000 last week the lowest reading since July 1973 The economy could get a boost from a tax reform being mulled by the Trump administration Treasury Secretary Steven Mnuchin said on Thursday he wanted to see very significant tax reform passed before Congress August recess Mnuchin however said the government was still studying the merits of a proposed border tax system Hopes of tax cuts have boosted business and consumer confidence in recent months The dollar was trading lower against a basket of currencies hitting a two week low versus the yen Stocks on Wall Street slipped while prices for U S government debt rose Minutes of the Federal Reserve s Jan 31 Feb 1 monetary policy meeting published on Wednesday showed that many policymakers believed another interest rate hike might be appropriate fairly soon if labor market and inflation data meet or beat expectations The U S central bank raised its benchmark overnight interest rate last December It has forecast three rate increases this year TIGHT LABOR MARKET Last week s claims report covered the survey period for the Labor Department s nonfarm payrolls data for February The four week average of claims fell 6 500 between the January and February payrolls survey weeks This suggests another month of strong job gains after payrolls increased 227 000 in January The message of this report remains that layoffs rates are extremely subdued said John Ryding chief economist at RDQ Economics in New York We view subdued layoffs as a sign of labor market tightness with employers retaining the labor they have amid elevated job openings and a lack of available workers The tightening labor market is helping to underpin demand for housing In a report on Thursday the Federal Housing Finance Agency FHFA said its house price index rose a seasonally adjusted 6 2 percent in December from a year ago That followed a 6 1 percent gain in November The FHFA s index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac The higher home prices largely reflect tight housing inventories against the backdrop of strong demand This is despite the 30 year fixed mortgage rate rising more than 50 basis points since November to above 4 0 percent But with the home price increases outpacing wage growth economists expect demand for housing to slow this year
While appreciation has remained strong lately we look for some moderation in price increases over time along with some broader cooling in the housing data said Daniel Silver an economist at JPMorgan NYSE JPM in New York |
JPM | Acting SEC chair signals support for penalties in foreign bribery cases | By Sarah N Lynch WASHINGTON Reuters The top Republican at the U S Securities and Exchange Commission known for his critical views on corporate penalties expressed some support on Friday for imposing them in cases in which companies violate foreign bribery laws I am generally comfortable with assessing civil monetary penalties in Foreign Corrupt Practices Act cases Acting SEC Chairman Michael Piwowar said in remarks at the Practising Law Institute s SEC Speaks conference According to academic literature there is evidence that when such violations are revealed to the market the stock price does not always fall and may even increase he added Piwowar s comments come at a time when many on Wall Street have been questioning whether the Justice Department and the SEC will ease enforcement of the FCPA Prior to being elected President Donald Trump expressed concern about the FCPA calling it a horrible law that should be changed In addition Trump s pick to lead the SEC attorney Jay Clayton previously chaired a committee at the New York City Bar Association which drafted a paper that was somewhat critical of how the law was being enforced Clayton is still awaiting U S Senate confirmation Piwowar s comments suggest there is likely to be some support among SEC commissioners to continue pursuing foreign bribery cases given the impact FCPA disclosures have on share prices Piwowar is well known for being critical about how the SEC decides when to assess corporate penalties generally amid concerns that sizeable fines against public companies may in some cases unduly punish ordinary shareholders who are already victims of the alleged wrongdoing He previously voted against imposing penalties against JPMorgan Chase Co NYSE JPM over its London Whale trades The SEC did not win authority from Congress to seek penalties until 1990 and even then the agency was slow to embrace the practice until after the major accounting scandals at companies like Enron and Worldcom But in 2006 then SEC Chair Chris Cox shifted gears amid concerns from some SEC officials about corporate penalties and issued guidance that spells out factors the commission should consider when determining whether to levy them Piwowar said on Friday he closely follows those guidelines It is entirely appropriate to discipline and punish corporate malefactors who violate our laws he said
But the SEC must remember the innocent investors who are also victims he added |
C | Citigroup sells stake in Turkey s Akbank for 1 2 billion | ISTANBUL Reuters Citigroup N C has sold its nearly 10 percent stake in Turkey s Akbank IS AKBNK for 1 2 billion the U S lender said on Thursday its latest disposal of overseas assets to cut costs and boost profits New York based Citi has been paring back in international markets in recent years pulling out of retail banking in Turkey as well as long established businesses such as Japan Citi which had been the second largest shareholder in Akbank said the sale would not have a material impact on its finances It did not disclose the buyer Shares of Akbank Turkey s fourth largest listed bank by assets tumbled more than 5 percent at the start of trade in Istanbul Citi said in a statement it remained committed to Turkey where it aims to increase it corporate and commercial banking business and employs more than 500 people Still the sale comes at an inopportune time for Turkish banking as overseas investors worry about increased political interference in the sector Ratings agency Standard Poor s warned on Wednesday that regulatory actions against Islamic lender Bank Asya illustrated the potential for political risk or the perception of it to directly or indirectly spill over into the financial system Citigroup stall on the floor of the New York Stock Exchange alt Reuters A Citi sign is seen at the Citigroup stall on the floor of the New York Stock Exchange rel external image
Bank Asya founded by the followers of U S based Islamic scholar and cleric Fethullah Gulen has been battered by President Tayyip Erdogan s attempts to wipe out Gulen s religious movement which he accuses of attempting to build a parallel state |
C | U S banks buybacks dividends may be no reason for shareholder celebrations | By David Henry NEW YORK Reuters Big U S banks including JPMorgan Chase Co N JPM and Citigroup Inc N C are expected to win Federal Reserve backing on Wednesday to buy back more shares and increase their dividends in the coming year but the approvals may be as much about the institutions financial engineering as any improvement in their health Much of the money for buybacks and higher dividends is coming from the banks issuing securities known as preferred shares These shares are a type of equity that pays regular relatively high dividends To investors they look a lot like bonds that pay interest But for regulators preferred shares serve as a cushion against any future losses in part because they never have to be repaid Critics of the strategy question how sustainable it is as banks essentially take money from one set of investors and give it to another and at an added cost Issuing preferred shares to pay for common share dividends and buybacks is a symptom of a zombie banking system said veteran banking analyst David Hendler of independent research firm Viola Risk Advisors Banks should be building capital from normal lending and trading profits but their operating income is terrible he added Income has been falling or stagnant at the biggest Wall Street banks thanks in part to big legal settlements stemming from the financial crisis For the U S banking system as a whole operating income in 2014 was 151 15 billion down 0 4 percent from the year before according to the Federal Deposit Insurance Corp Spokesmen for Citigroup JPMorgan and the Federal Reserve declined to comment To be sure the steps banks are taking are within regulators rules The Federal Reserve allows banks to use preferred shares for at least part of their capital Citigroup for example issued 3 7 billion of preferred shares in 2014 and has publicly disclosed plans to issue 4 billion of preferred shares this year and another 4 billion to 6 billion before 2019 Veteran bank analyst Mike Mayo who is at brokerage CLSA estimates that the bank will ask to return roughly 7 billion of extra capital annually to shareholders in the coming year The preferred gives them an extra cushion over minimum capital requirements to make the payouts Mayo said Selling preferred shares to boost payouts to common shareholders can t go on forever without banks improving their results enough to boost their capital levels significantly Mayo expects that next year Citigroup will come up with additional excess capital from a planned sale of assets including its OneMain personal lending unit JPMorgan issued nearly 9 billion of preferred shares this past year and other banks have said they expect to issue more JPMorgan said in February that the sales will go toward satisfying pending requirements that big banks have enough capital to absorb losses in a financial crisis JPMorgan will likely win approval to increase its dividend by 10 percent and buy back stock at an annual rate of 7 3 billion a year up 25 percent from last year according to analyst John McDonald of Bernstein Research INVESTORS HOLD THEIR NOSES Bank executives started publicly toying with the idea of issuing preferred shares a few years ago as they looked for ways to meet higher capital requirements that are being phased in through 2019 In 2014 JPMorgan sold 8 9 billion of preferred shares over six different offerings The money wasn t cheap Dividends on five of the six issues topped 6 percent as of the end of December according to the company s annual filing with the U S Securities and Exchange Commission Dividend yields on bank preferreds have been about four percentage points higher than yields on 10 year bank debt according to Barclays LONDON BARC fixed income research Bank debt would though be paid out before preferred shares in the event of a bank liquidation making it a safer bet for investors Declared dividends for all of JPMorgan s preferreds amounted to 1 1 billion in 2014 compared with 6 1 billion in common dividends For common shareholders the preferred dividends were subtracted from the company s reported net income leaving 20 6 billion for common equity and reducing earnings per share by about 30 cents or 5 percent That in itself can hold back a bank s share price Buyers of preferred shares are attracted by the high dividends They take a sizeable risk because often the bank will never redeem the shares and they can only be sold to other investors Dividends may also be suspended on the securities
Out of necessity they hold their noses and buy it Viola s Hendler said The shares wouldn t have the same appeal if yields on bank debt weren t so low he added |
MS | REFILE UPDATE 6 Japan cabinet takes shape Fujii seen as finmin | Adds Fujii s dropped first name in paragraph 2
For more on Japan s new government click
Veteran Fujii for finance to soothe market concerns
Experience in key posts to balance novice team
Mastermind Ozawa s clout shadows next PM Hatoyama
Ozawa critics seen getting cabinet posts
Adds confirmation of banking minister paragraphs 18 19
By Tetsushi Kajimoto and Chisa Fujioka
TOKYO Sept 15 Reuters Japan s incoming prime minister
Yukio Hatoyama will pick a veteran lawmaker for finance
minister domestic media said on Tuesday adding experience and
fiscal caution to his untested party s line up
The expected appointment of Hirohisa Fujii who also served
as finance minister in 1993 1994 was welcomed by analysts
worried that new government spending plans will inflate Japan s
already huge public debt as it struggles to emerge from
recession
Hatoyama will take office as prime minister on Wednesday
after a stunning election win that brings to power a government
pledged to put more money in the hands of consumers cut waste
and reduce bureaucrats control over policy making
He has already chosen Naoto Kan an ex party leader and
former health minister known for scrapping with bureaucrats to
head a powerful new agency tasked with overseeing the budget
process and setting policy priorities
Hatoyama has also said Katsuya Okada another former party
leader would become foreign minister a post being closely
watched because of concerns about the U S Japan alliance
The Democrats have pledged to adopt a diplomatic course
more independent of close ally Washington a shift from the
LDP s stance that put U S ties at the core of its security
policies
The choices will give ballast to a cabinet that will
inevitably be composed mainly of novice ministers analysts
said
There is a lack of depth at the top but he is taking some
of the most talented and experienced people and putting them in
key posts said Jeffrey Kingston director of Asian studies at
Temple University s Japan campus
Japanese media had widely tipped Fujii for the finance
post but recent reports had said his appointment faced
opposition from former party leader Ichiro Ozawa a political
mastermind whose influence is raising concerns about a possible
rival power centre that could complicate policy decisions
RESET BUTTON
The party will have to try to live down the long shadow of
Ozawa style politics because for a party that has promised to
hit the reset button on politics as usual it doesn t look
that way Kingston said Hatoyama is more of a waverer than a
leader but power changes people he said
Japanese media said Democratic lawmakers known for keeping
their distance from Ozawa would likely get cabinet posts
It does look as if Hatoyama is trying to form a
star studded cabinet of all the big shots in the DPJ said
Sophia University professor Koichi Nakano
The ultimate fate of the government will depend on policy
coordination given these are fairly big figures in the DPJ
with commensurate policy preferences or even egos
Analysts welcomed the expected choice of Fujii for the
finance post given his reputation as a fiscal conservative
aware of the risks of Japan s ballooning public debt
The appointment is a positive move for the bond market as
Fujii has placed a strong emphasis on trying to tap sources of
financing so the government does not have to issue more debt
said Noriyuki Fukuda a Morgan Stanley fixed income strategist
Hatoyama s Democratic Party of Japan DPJ has promised not
to raise Japan s 5 percent sales tax for the next four years
while the government focuses on cutting waste
But Fujii has called for discussion of an increase to fund
the soaring social security costs of an ageing society
Hatoyama told reporters he would appoint Shizuka Kamei
leader of a small conservative coalition ally the People s New
Party to a post in charge of bank supervision and postal
services after earlier reports that he would get the defence
portfolio
A former LDP heavyweight Kamei left the party in 2005 over
then premier Junichiro Koizumi s postal privatisation plans
Hatoyama needs Kamei s cooperation in parliament s less
powerful upper house to pass bills smoothly Media reports said
Social Democratic Party leader Mizuho Fukushima 53 another
coalition ally would be put in charge of consumer affairs and
policies to boost the low birth rate
The Democrats have vowed to centralise decision making in
the cabinet and the new National Strategy Bureau will be
tasked with reforming what the Democrats say is a cumbersome
policy making system that relied heavily on recommendations
from bureaucrats
That means Fujii could have somewhat less influence over
the budget process than past finance ministers
Fujii a former finance bureaucrat has backed the Bank of
Japan s ultra loose monetary policy
But some analysts fear he may try to wean Japan too quickly
off its reliance on exports for growth and allow the yen to
rise since the Democrats have pledged to try to shift Japan to
a model of domestic led growth
He can let the yen rise after transforming the economy
into one led by domestic demand but there is risk of the yen
rising further before that happens said Kyohei Morita chief
economist at Barclays Capital
Additional reporting by Yoko Kubota Writing by Linda Sieg
Editing by Bill Tarrant |
MS | GLOBAL MARKETS Global stocks commodities jump on strong data | Global stocks jump as U S data underpins recovery hopes
Oil edges to near 72 a barrel as U S stockpiles fall
U S dollar slips to 1 year low against currency basket
Strong economic data kicks government bond prices lower
Updates with U S markets changes byline dateline previous
LONDON
By Herbert Lash
NEW YORK Sept 16 Reuters Global stock and commodity
prices jumped while the U S dollar slumped to a one year low
on Wednesday as fresh evidence of economic recovery boosted
investors appetite for risk
Most prices for U S and euro zone government debt fell
after the second day of surprisingly strong U S economic data
fueled expectations of a robust recovery from the worst global
downturn since World War Two For details see ID N16128088
Oil rose toward 72 a barrel after data showed U S crude
stockpiles fell more than expected last week but higher
inventories of gasoline and winter fuel capped gains
ID nN16128088
U S gold futures soared to highs last seen in July 2008
and copper climbed more than 3 percent helped by the sinking
dollar and strong U S economic news
The main FTSEurofirst 300 index closing above the 1 000
mark for the first time in more than 11 months and the euro
rallied to a one year high against the dollar an extension of
the negative sentiment toward the U S currency
The consensus is clearly bullish it s difficult to find
anyone bearish any more which is a danger sign said Jesper
Dannesboe senior commodity strategist at Societe Generale
An increase in U S industrial output and a pickup in
mergers and acquisitions activity added to a view that the
economy is on the road to recovery
U S and European stocks rose more than 1 percent as did
equity markets in Asia where stocks rose on Tuesday s U S
retail sales report and remarks by Federal Reserve Chairman Ben
Bernanke that the U S recession was probably over
U S industrial production rose for a second consecutive
month in August while higher gasoline costs pushed up U S
consumer prices last month Economists said the risk of
inflation in the United States remained low ID nN16118540
This is a shot in the arm for recovery This is what we re
looking for Jack Ablin chief investment officer at Harris
Private Bank in Chicago said about industrial production
We re looking for solid evidence not just stimulus
the economy is recovering and this is really the first piece
of evidence that needs to fall into place
Shortly after 1 p m 1700 GMT the Dow Jones industrial
average was up 76 55 points or 0 79 percent at
9 759 96 The Standard Poor s 500 Index was up 11 71
points or 1 11 percent at 1 064 34 The Nasdaq Composite
Index was up 20 23 points or 0 96 percent at
2 122 87
The FTSEurofirst 300 index led by heavyweight
banks and commodity stocks closed up 1 39 percent at 1 006 15
rising for the eighth session out of the past nine
Commodity stocks a beneficiary of economic recovery were
in favor Oil major BP added 0 7 percent while miner
BHP Billiton advanced 3 2 percent
The real question is what happens when we pull away
stimulus which we will at some point Short term we could
still see strong momentum in the equity market said Michala
Marcussen head of strategy and economic research at Societe
Generale Asset Management
The dollar fell as its attractiveness as a safe haven has
diminished as the view on the global economy improved That has
helped bolster most higher yielding currencies
The ICE Futures U S dollar index which tracks the
greenback versus a basket of six other major currencies slid
to a fresh low of almost one year at 76 151
The economic data cast some doubt on a widely held view
that the Fed would be able to keep interest rates low for a
long time as the economy recovers
These are all signs of the economy turning around This
takes away pressure to keep rates low said James Caron head
of global rates research at Morgan Stanley in New York
Two year notes which respond to changing views
on Fed monetary policy were down 2 32 in price to yield 0 97
percent Five year notes fell 3 32 to yield 2 42
percent
U S crude was 85 cents higher at 71 78 a barrel
The December gold contract firmed 11 20 to
1 017 50 an ounce in New York
Most major Asian equity markets gained 1 percent or more
after Tuesday s U S retail sales report The MSCI index of
Asia Pacific shares excluding Japan rose 2 6
percent to its highest this year
Japan s benchmark Nikkei rose 0 5 percent
Reporting by Edward Krudy Nick Olivari and Burton Frierson
in New York and Chris Baldwin Jessica Mortimer and Dominic Lau
in London Writing by Herbert Lash Editing by James
Dalgleish |
MS | Russian PM Putin to meet U S businessmen | MOSCOW Sept 17 Reuters Russian Prime Minister Vladimir
Putin will meet several top U S executives on Friday including
General Electric Co and Morgan Stanley the Russian government
said on Thursday
Putin s meetings with top Western executives are usually a
precursor of major business deals Earlier this year oil majors
Total and Royal Dutch Shell announced plans to expand in Russia
at meetings with Putin
Talks with the U S firms follow a U S government decision
to halt the deployment of a missile shield defence system in
Europe a move received positively by the Russian government
The press service said Putin would meet David Bonderman
founding partner of one of the world s largest private equity
firms TPG and the chief executive of General Electric Co Jeff
Immelt
Putin will meet the executives in Russia s Black Sea resort
of Sochi which is hosting an investment forum He will also
hold talks with John Mack who is to quit as CEO of Morgan
Stanley at the start of 2010
Last week sources told Reuters that TPG formerly known as
Texas Pacific Group and the private equity arm of Russian state
bank VTB bought a large stake in Russian hypermarket chain
Lenta
General Electric has announced plans to build new plants in
Russia while Morgan Stanley has had a continuous investment
banking presence in the country since 1994
Reporting by Gleb Bryanski writing by Vladimir Soldatkin
editing by Simon Jessop |
MS | UPDATE 1 ANALYSIS US firms others may gain from shield pullback | Better East West relations could see long term advantages
U S firms or Russia EU exporters could see benefits
Emboldened Kremlin hardliners could prove risk
adds Putin to meet US executives paragraph 8
By Peter Apps Political Risk Correspondent
LONDON Sept 17 Reuters Investors could see some
long term trade and other benefits if a U S move to back away
from a missile shield in Eastern Europe yields improvements in
relations with Russia
But it could raise other risks
U S President Barack Obama has told eastern European states
he is abandoning plans to place interceptor missiles in Poland
and a radar complex in the Czech Republic aimed at defending
against missile launches from rogue states ID nLH510988
While Washington might hope to gain Russian co operation on
everything from nuclear weapons cuts to efforts to curb Iranian
and North Korean weapons programmes the risk remains that the
move could also embolden Kremlin hardliners ID nLH448578
A more assertive Russia would unnerve investors taken aback
by war in Georgia last year but if relations do genuinely
improve potential benefits could include easier trade between
Russia and the eastern EU as well as a softer ride for U S
firms in Russia
U S companies have arguably lost out to some European
companies in joint ventures and better diplomacy will likely
improve the chances for investors in the strategic sectors of
the Russian economy said Carlo Gallo senior Russia analyst at
London based consultancy Control Risks
In the oil sector European companies such as BP and
Royal Dutch Shell are the dominant international
players even with all the problems they have faced and I would
not expect that to change although they could see more
competition from U S companies
Shortly after the pullback on the shield programme was
announced Russia s government said Prime Minister Vladimir
Putin would meet several U S executives on Friday from firms
including General Electric Morgan Stanley as well
as TPG one of the world s largest private equity firms
ID nLH503244
However foreign investors in Russia will remain wary of
government intervention and corruption watching Norwegian
telecom Telenor s ongoing battle to retain control of
its stake in mobile phone Vimpelcom as a bellwether for
security investment much more than diplomatic niceties
Regional markets the rouble zloty and Czech
crown were unaffected by the news with investors more
focused on oil prices in relation to Russia and attempts to rein
in budget deficits in central and eastern Europe
It is something people are looking at but it has had no
impact today said Nigel Rendell emerging markets strategist
at Royal Bank of Canada
In some ways it is negative because it means you will not
get the inflow of foreign direct investment that would have come
with building the missile shield but at the same time it is
positive because these places would have been first in the
firing line if anything happened
WAR RISK IMPACT
Rhetoric over the missile shield that coincided with the
Georgia war last year briefly boosted the cost of insuring
Polish and Czech debt in the credit default swap market but
there was no impact on Thursday
Few if any foreign investors will take out insurance against
war risk although many do for Georgia or Ukraine as well as
broader political risk insurance against interference or
expropriation of projects
I don t think it will have any impact on political risk
premiums across the region but it would affect war risk said
Joanna Gorska deputy head of the Eurasian desk for consultancy
Exclusive Analysis
I would say the war risk in Ukraine and Georgia is
marginally reduced by this The Russians are getting a lot from
this improvement in relations and I don t think they will want
to jeopardise that
She said she saw no direct impact on the prospect of another
gas dispute between Russia and Ukraine a risk she put at 50 50
driven mainly by Ukraine s ability to pay
For fixed income investors increasingly focused on central
and eastern European politics as they assess the ability of
governments to push through painful austerity measures the
biggest impact could come in domestic politics
Control Risks associate Europe analyst Zachary Rothstein
said the decision would likely dent the popularity of Poland s
centre right government which has staked much of its
credibility on a pro U S foreign policy
In the Czech Republic he said it would likely strengthen
the leftist Social Democrats who along with the majority of
the population had always opposed missile defence during a
crucial period ahead of elections initially scheduled for
October but now likely postponed until 2010
It could also affect regional sentiment towards the European
Union itself
If the U S sustains its current disregard for central and
eastern Europe it is likely that these governments will realise
they can no longer rely so much on the United States and will
reorientate themselves back towards the EU Rothstein said
But I do not believe this constitutes a fundamental shift
in the strategic orientation of Central and Eastern Europe
For an instant view of quotes from analysts and
policymakers click here ID nLH566552 |
MS | UPDATE 1 Songbird ups interest in C Wharf Gp to 69 pct | Buys 54 million shares in hub operating firm for 186
million
Plans to finance purchase by growing its own share issue
Adds detail
LONDON Sept 18 Reuters Songbird Estates the owner of
much of London s Canary Wharf business hub has bought 54
million shares in the district s operating company Canary Wharf
Group CWG for 112 5 million pounds 186 2 million
The shares which were sold by Germany s Commerzbank AG
represent 8 45 percent of CWG s outstanding ordinary share
capital and take Songbird s holdings in the company to 69 3
percent from 60 8 percent
Songbird intends to finance the share purchase by increasing
the size of a previously announced share issue it has planned to
repay an 880 million pounds loan from Citibank
This transaction significantly increases Songbird s
ownership interest in Canary Wharf and further demonstrates the
commitment to the Company by a core set of investors Songbird
Chairman David Pritchard said
It is an important development ahead of the formal launch
of the forthcoming equity raising process in which all our
shareholders will have the opportunity to participate he
added
Songbird said it expects the ordinary equity element of its
share issue to be 675 million pounds and the preference portion
to be 275 million pounds
The remaining balance will be funded by a debt facility
provided which may take the form of a shareholder loan from
Qatar Holding LLC China Investment Corporation Morgan Stanley
Real Estate Funds and GF Investments II
We fully support the management of Songbird in undertaking
this transaction which we believe is a good opportunity to
create value for all Songbird shareholders said Ahmad
Al Sayed Chief Executive Officer of Qatar Holding
We are therefore increasing our participation in the
planned fund raising to ensure its successful completion he
said
1 6041 Pound
Reporting by Sinead Cruise Editing by Jon Loades Carter
See for the global service for real
estate professionals from Reuters |
C | Citigroup consumer banking head Medina Mora to retire | By David Henry and Lauren Tara LaCapra Reuters Manuel Medina Mora who helped build Citigroup Inc NYSE C s Mexico business only to see it run into trouble after he stopped running it day to day will retire in June the bank said on Friday Medina Mora who heads global consumer banking at Citigroup was expected to retire before his 65th birthday in August people familiar with the matter said But the bank did not name successors for Medina Mora which spurred analysts to speculate that his departure came sooner than expected Citigroup said last year that Banamex had written off more than 500 million before taxes of bad loans after suffering from fraud It was an embarrassing and costly matter for Citigroup that also tainted the legacy of Medina Mora who was known internally as Mr Mexico and was once thought to be a candidate to become Citigroup s chief executive Mark Costiglio a spokesman for Citigroup declined to comment on the timing of Medina Mora s departure Medina Mora joined Banamex in 1971 and was CEO of the franchise when Citigroup bought it in 2001 He was promoted to head its Latin American region in 2004 and to lead its global consumer banking business in 2010 remaining as Banamex chairman In a bank memo to its employees Citigroup CEO Michael Corbat credited Medina Mora with turning a scattershot global consumer operation into a unified cohesive business He said he will name a replacement soon During Medina Mora s tenure as head of global consumer banking the unit s income from continuing operations rose 49 percent to 6 9 billion from 4 7 billion The figures exclude income or losses from Citigroup s bad bank known as Citi Holdings In a separate securities filing on Friday Citigroup indicated that Corbat s pay had been cut by about 10 percent in 2014 a year in which the company s profit fell by nearly half Since last year Citigroup has failed a crucial regulatory stress test needed to raise its dividend and had to deal with the loans scandal and other issues at Banamex BANAMEX UNDER A CLOUD In a separate memo announcing his retirement Medina Mora said he made the decision after careful consideration and with deep emotion He will keep a non executive chairman role at Banamex even after his retirement on June 1 according to the bank memorandum Although Medina Mora has not had direct day to day oversight of Banamex for years the scandal there was a setback Citigroup fired 11 employees linked to the fraudulent loans to oil services company Oceanografia and later replaced Banamex s CEO The matter has cost the bank more than 500 million before taxes In October Citigroup said a security services company that Banamex operated had engaged in fraud The Mexican unit also fired two bond traders after uncovering rogue trading in 2013 and took writedowns related to bad loans extended to Mexican homebuilders in the last few years Banamex s business in the United States is also facing a U S criminal investigation involving possible violations of money laundering laws according to company disclosures The bank last year cited control issue in Banamex USA as at least one reason for its cutting Medina Mora s annual compensation for 2013 to 9 5 million from 11 million
Citigroup said in the securities filing that Medina Mora s 2014 pay had risen |
C | Citigroup unit probed by more authorities over money laundering | NEW YORK Reuters Citigroup Inc N C said additional government authorities have started probes of possible breaches of anti money laundering laws at its Banamex USA unit The Financial Crimes Enforcement Network a unit of the U S Treasury and the California Department of Business Oversight have asked the company for information on its compliance with the Bank Secrecy Act and anti money laundering rules Citigroup disclosed in an annual filing with the U S Securities and Exchange Commission on Wednesday The disclosure comes one year after Citigroup revealed a criminal probe by a federal grand jury in Massachusetts and inquiries from the U S Federal Deposit Insurance Corp into the matter Citigroup said it is cooperating with the investigations Banamex USA is an affiliate ofMexico City based Banamex which Citigroup bought in 2001 and which operates a few branches in the United States
The filing on Wednesday also showed that Citigroup has reduced its estimate of possible unreserved legal costs to 4 billion from 5 billion at the end of September |
C | Citigroup to be latest to embrace proxy reform for shareholders | By Ross Kerber BOSTON Reuters Citigroup Inc N C said it will support a rule change to make it easier for shareholders to nominate directors making it the latest large company to embrace the controversial reform James McRitchie a private shareholder who often files corporate governance resolutions said on Wednesday that Citigroup officials told him they will back a proposal he submitted for a vote at the company s annual meeting in April It calls for including on Citigroup proxy statement and voting forms candidates nominated by shareholders who may not own much stock a change known as proxy access McRitchie said he expects other companies to make similar reforms soon It s the beginning of a huge wave he said A bank representative confirmed it will support the shareholder resolution Citi has always worked to stay at the forefront of good governance and we value robust engagement with our shareholders the bank said in an e mailed statement General Electric Co said on Feb 11 it had put a similar change in place with new bylaws Advocates say the change helps make boards less insular and more responsive to investor concerns But some business groups including the U S Chamber of Commerce worry such rules could advance the agendas of activist investors who buy stakes in companies and then lobby for strategic shifts or spinoffs The shareholder resolution that Citigroup will support would allow groups of up to 20 shareholders who together own at least 3 percent of company stock held for at least three years to nominate directors for up to 20 percent of its board seats terms similar to those GE put in place McRitchie said he hoped Citigroup would quickly adopt the changes if approved by a majority of shareholders The bank representative declined to comment on what would happen if the measure passes
The company s annual meeting is scheduled to take place on April 28 Citigroup said in a separate securities filing on Wednesday |
C | iFOREX Daily Analysis July 18 2016 | The dollar rallied against the Turkish lira late Friday while the safe haven yen turned higher following an attempted coup by a faction inside the Turkish military Segments of the military took over key bridges in Istanbul and attacked parliament buildings in Ankara
The dollar had gained ground against the other currencies earlier in the day as upbeat economic reports out of the U S and China bolstered risk appetite The Commerce Department reported that U S retail sales rose 0 6 in June the third straight monthly increase and easily outstripping gains of 0 1 forecast by economists Chinese data on industrial production and retail sales also beat expectations indicating that the world s second largest economy still has momentum
The pound fell sharply against the dollar on Friday after Andy Haldane the Bank of England s chief economist said the bank is poised to ease monetary policy in August to counteract the negative economic shock from the Brexit vote But sterling still ended the week with gains of 1 85 after the BoE kept interest rates on hold at the conclusion of its policy meeting on Thursday dashing expectations for a rate cut
In the week ahead market players will be focusing on the outcome of Thursday s European Central Bank meeting to see if policymakers will step up easing measures to offset the fallout from the Brexit vote The U K is to release what will be closely watched reports on employment inflation and manufacturing activity and the U S is to produce a pair of reports on the health of the housing sector
EUR USD
The euro fell sharply against the dollar and the safe haven yen late Friday as risk aversion spiked after Turkey s prime minister said an attempted military coup was under way
EUR USD fell 0 83 in late trade and EUR JPY was down 1 22 after segments of the military took over key bridges in Istanbul and attacked parliament buildings in Ankara
But the single currency rose against the pound with EUR GBP up 0 56 after the Bank of England s chief economist said it is poised to ease monetary policy in August to counteract the negative economic shock from the vote to leave the European Union
In the week ahead market players will be focusing on the outcome of Thursday s European Central Bank meeting to see if policymakers will step up easing measures to offset the fallout from the Brexit vote The ECB is not widely expected to implement any changes to monetary policy ahead of updated inflation forecasts at its September meeting
Pivot 1 11Support 1 1025 1 1 1 097Resistance 1 11 1 112 1 115Scenario 1 short positions below 1 1100 with targets 1 1025 1 1000 in extension Scenario 2 above 1 1100 look for further upside with 1 1120 1 1150 as targets Comment technically the RSI is below its neutrality area at 50
Gold
Gold prices declined on Friday after a number of upbeat U S economic reports suggested that economic growth regained speed in the second quarter
But prices of the yellow metal turned slightly higher in post settlement trade after news broke of an apparent military coup in Turkey But the coup attempt crumbled as President Recep Tayyip Erdogan rushed back to Istanbul from a Mediterranean holiday and urged people to take to the streets in support of his government against plotters he accused of trying to kill him
In the week ahead metal traders will be focusing on the outcome of Thursday s European Central Bank meeting but will also be looking to Friday s survey data on euro zone business activity as well as a report on German business confidence for fresh indications on the health of the region s economy in wake of Britain s vote to exit the European Union
Pivot 1337Support 1320 1312 1305Resistance 1337 1342 1350Scenario 1 short positions below 1337 00 with targets 1320 00 1312 00 in extension Scenario 2 above 1337 00 look for further upside with 1342 00 1350 00 as targets Comment the RSI lacks upward momentum
WTI Oil
Oil futures ended Friday s session higher as better than expected economic data from the U S and China bolstered the outlook for future energy demand Crude prices received a further boost in post settlement trade after news broke of an apparent military coup in Turkey
Gains were limited amid signs of an ongoing recovery in U S drilling activity Oilfield services provider Baker Hughes said late Friday that the number of rigs drilling for oil in the U S increased by six last week to 357 the third straight weekly gain and the sixth increase in seven weeks The renewed gain in U S drilling activity fueled speculation that domestic production could be on the verge of rebounding in the weeks ahead underlining worries over a supply glut
In the week ahead oil traders will be focusing on U S stockpile data on Tuesday and Wednesday for fresh supply and demand signals
Pivot 44 95Support 46 9 47 6 48 25Resistance 44 95 44 4 43 85Scenario 1 long positions above 44 95 with targets 46 90 47 60 in extension Scenario 2 below 44 95 look for further downside with 44 40 43 85 as targets Comment the RSI is mixed to bullish
US 500
U S stocks were mixed on Friday remaining in near record territory as a bevy of robust economic data in June offset subdued earnings from Wells Fargo NYSE WFC and Citigroup Inc NYSE C while travel stocks weighed in response to the Nice truck attack
The Dow Jones Industrial Average gained 0 05 closing at all time record highs for the fourth consecutive session while the S P 500 Composite index also set a fresh all time intra session high at 2 164 75 but the S P later on pared gains to close down 0 09 and the NASDAQ Composite index also fell slightly on Friday losing 0 09
This week investors will eye a pair of reports in the U S on the housing sector to gauge if the world s largest economy is strong enough to withstand further rate hikes in 2016
Pivot 2131 Support 2131 2115 2088 Resistance 2180 2190 2200 Scenario 1 long positions above 2131 00 with targets 2180 00 2190 00 in extension Scenario 2 below 2131 00 look for further downside with 2115 00 2088 00 as targets Comment the RSI is mixed with a bullish bias |
MPC | BOE And Fed Minutes Preview February 20 2013 | Bank of England Monetary Policy Committee Minutes Wednesday 20th February 09 30 GMT Description The minutes of the MPC meetings are published two weeks after the interest rate decision The minutes give a full account of the policy discussion including differences of view They also record the votes of the individual members of the Committee Expectations Last week s Quarterly Inflation Report QIR and rate decision statement potentially render this week s Monetary Policy Committee MPC minutes obsolete At best the minutes should reveal the level of uniformity within the committee on the current wait and see stance Looking past inflation The fact that the MPC is willing to see past the current level of inflation sent Sterling spinning lower The Sterling Dollar forex pair Cable now sits at near 7 month lows On current elevated prices BoE chief Mervyn King seemed relatively sanguine about the prospect of a persistently high rate of inflation at last week s QIR he preferred to concentrate on inflation expectations instead We are not saying there is no chance of hitting the target There is quite a good chance of hitting the target Inflation could go below the target It is very uncertain It s a success in anchoring inflation expectations that has given us the flexibility that we have been able to use King went on to say Common ground In terms of voting patterns it is possible we may get a unanimous decision 9 0 vote for both the rate decision and quantitative easing QE programme this month The outlier is whether board member David Miles continues to insist on further accommodation Lloyds team of economists believe that For now we look for the committee s policy prescription to be uniform expecting Miles to drop his call for further modest easing Carney impact On the topic of Nominal GDP targeting Martin Weale became the latest official to respond to incoming BoE chief Mark Carney s speculation about how best to re inflate the UK economy To change a target because inflation was above target would certainly be seen if not as giving up on inflation it would be seen as stopping taking it seriously and I can see that being a problem as well he said Federal Reserve Federal Open Market Committee Minutes Wednesday 20th February 19 00 GMT Description The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board s Annual Report Expectations Cleveland Federal Reserve President Sandra Pianalto seemed to best sum up the growing feeling of some on the Federal Open Market Committee FOMC members when speaking over the weekend While our policies have been effective our experience with our asset purchase programs is limited and as a result we must analyse their benefits and costs carefully Balancing costs and benefits Pianalto continued Over time the benefits of our asset purchases may be diminishing as she pointed to a number of concerns she has with the programme It is worth noting that she is a non voting member this year St Louis Federal Reserve President James Bullard voiced similar concerns saying that he favoured reducing central bank bond purchases by around 15 billion a month for every 0 1 percent drop in the rate of U S unemployment starting right away The Fed is buying against better economic data said Thomas Roth senior Treasury trader at Mitsubishi UFJ Securities in New York There s definitely somewhat of a change in thought going on in that the benefits are not outweighing the costs That s starting to weigh on them a bit and may get a little bit more emphasis in the minutes than in the statement Debate unsurprising Regarding this month s release of the FOMC minutes HSBC believes they are likely to show that a similar debate was held in January as in last month s meeting regarding the costs and benefits of asset purchases and should come as less of a surprise to market players Some see an outside chance that another member of the current panel may have sided with Kansas City Federal Reserve President Esther George who has in recent public appearances said While I share the objectives of the FOMC I dissented because of possible risks and the possible costs of these policies exceeding their benefits While I have agreed with keeping rates low to support this recovery I know keeping interest rates near zero has its own consequences |
MPC | EMEA Weekly Polish Domestic Demand Weakening | Hungarian central bank to continue easing We expect the Hungarian central bank s MNB Monetary Policy Council MPC meeting next week to form a decision to continue its monetary easing It is broadly expected that the central bank will ease monetary policy further and for the seventh consecutive month cut by 25bp to 5 25 We also expect a 25bp cut Looking ahead further easing is expected given the MPC is dominated by doves This said the case for further rate cuts has been strengthened by recent economic data Following the very bad Q4 12 GDP number the outlook for the Hungarian economy looks even gloomier The preliminary release of Q4 12 GDP revealed a deep contraction with GDP falling by 2 7 y y in Q4 down from a fall of 1 5 y y in Q3 12 It looks likely to us that the Hungarian economy will remain in recession this year This is the main argument for the MPC to ease monetary conditions further Additionally a new governor will soon be appointed and he is likely to be more dovish than the outgoing governor Andras Simor All indications are that there will be additional rate cuts despite inflation still being somewhat above the official target of 3 Polish economy continues to struggle Next week s data is not likely to bring much to cheer about in terms of the Polish economy It was a star performer in 2008 09 when major crisis hit the rest of the world the Polish economy kept growing However the Polish economy has slowed down significantly over the last year There has undoubtedly been some spillover from the euro crisis but it is notable that it is a relative sharp slowdown in domestic demand in particular as it has caused the GDP slowdown over the last 1 0 1 5 years Next week we are due to get Polish retail sales data which we believe is likely to confirm that the Polish consumer continues to hurt We expect retail sales to have fallen 3 4 y y in January up from a fall of 2 5 y y in December accompanied by weak income growth tight monetary and financial conditions and general worries about Polish growth prospects The weakening of Polish domestic demand is also likely to have weighed on Polish GDP growth in Q4 12 We expect it to have slowed to 1 0 y y in Q4 12 down from 1 4 y y in Q3 13 Looking ahead we expect growth to remain lacklustre in the coming quarters but expect a moderate recovery starting later in the year We believe European and global growth is likely to pickup and hope the Polish central bank steps up monetary easing To Read the Entire Report Please Click on the pdf File Below |
MPC | MPC To Look Beyond Above Target Inflation | We expect the Bank of England BoE to remain on hold at Thursday s Monetary Policy Committee MPC meeting 13 00 CET Since the February minutes revealed three members voting for an additional GBP25bn of asset purchases speculations have surfaced about the majority of the MPC shifting towards restarting the QE programme at this meeting Comments on a Bank Rate cut have also sparked a debate about the effectiveness of e g negative rates While acknowledging the existence of the case for more QE with the data coming out of the UK and the eurozone underlining a struggle in the recovery we do not see the majority of the MPC shifting at this meeting Nor do we think a Bank Rate cut is the most likely policy change the risks with the current aggressive pricing of the SONIA curve are skewed for the curve to steepen MPC will look beyond above target inflation Since July 2012 MPC policies have been unchanged with the last gilt bought in the Asset Purchase Facility APF in November Together with the publication of the unchanged policy decision at the last meeting the MPC sent out a statement communicating its view of the appropriate policy response which can be narrowed down to two points 1 The MPC thinks it is appropriate to look through the temporary albeit protracted period of above target inflation The forecasts from the Inflation Report show that the CPI is likely to stay above target until Q4 15 2 The MPC stands ready to provide additional monetary stimulus if warranted by the outlook for growth and inflation The latter point has been a mantra for most of the second half of 2012 but the newest MPC forecast of inflation above target until Q4 15 has forced the MPC to take a stand on whether it would attempt to bring inflation back sooner by removing the current policy stimulus faster than markets anticipate It has clearly chosen not to February Minutes surprised with Governor Mervyn King as a minority voter While the unchanged policy decisions at the last MPC meeting were widely expected it came as a surprise that three members voted for an additional GBP25bn of asset purchases Governor Mervyn King and Executive Director Paul Fisher both joined Prof David Miles in preferring to increase the size of the APF David Miles has been a proponent for increasing the APF since November 2012 and has been a minority voter for four meetings now To Read the Entire Report Please Click on the pdf File Below |
MPC | Dollar Is As Strong As EUR USD USD JPY Says It Is | Dollar is as Strong as EUR USD USD JPY Says it Is A growing voice of support is being made for the dollar as an investment currency on the rise While this may be the case months down the line for now the dollar s strength is a product of the euro and yen s weakness The short fall for the greenback is its exceptionally low benchmark yield that will be held at basement levels by the Fed until unemployment is seen back at 6 5 percent and or inflation crests 2 5 percent Furthermore market based rates based on low risk Treasury and Libor are also at lows and can drop further with the central bank s aggressive stimulus program This would be the issue that would hold the dollar back if there were indeed a strong drive behind risk and carry trade appetite On that point global yields rates are just off record lows and investor participation measured in volume and open interest shows little interest in chasing such thin returns when stimulus targeted assets are the only position showing capital gains What does this mean Speculation that the dollar will eventually enjoy higher rates than counterparts and local assets could outperform due to abundant stimulus is premature There are two things that can meaningfully drive the dollar materially higher in the near term strong risk aversion that short circuits investors appetite for yield and sends them fleeing to the safety of US markets or the greenback s counterparts lose significant fundamental ground of their own The Dow Jones Industrial Average nudged out a second record consecutive high this past session which some accept as evidence that the greenback is rising alongside risk appetite However looking at something like the Risk Reward Index we find sentiment is not as robust as equity indexes suggest Instead the side by side advance between stocks and the Dow Jones FXCM Dollar Index USDollar is sustained by acute dollar strength against the Euro Japanese yen and British pound And those are moves that more the responsibility of the counter currency rather than the benchmark dollar Euro Laying out the Scenarios for EUR USD EURJPY on ECB Of the heavy round of event risk through Thursday s session the European Central Bank ECB rate decision The shared currency has dropped this past month against the dollar and other major counterparts as the ongoing recession starts to overlap with a return of financial instability The latest bout of trouble for Europe s debt borne crisis is Italy s election which now finds Democratic Party leader Bersani threatening to abandon the deficit cutting agenda in order to win a workable government If stability starts to breakdown in the region there is little that can be done through the regular political channels to forestall the return to crisis One of the few variables the ECB Heading into the event there is considerable evidence in the euro s performance to suggest that the market has positioned for an expected softening of the central bank s policy bearing Though the Open Market Transactions OMT program is a standing threat of action it lacks action to offset the receding balance sheet on LTRO repayments which reduces banks access to liquidity and boosts market rates The most bearish scenario for the euro would be a rate cut as it lowers return for the currency and is unlikely to support financial stability should conditions continue to deteriorate The more prolific bearish move by the ECB would be to introduce a stimulus program that is intended to build with time competing with the Fed and the BoJ Joining the open ended program would present a mounting weight as the balance sheet bloats Most likely and least effective for volatility would be simple guidance that offered vague threats of chance in the near future And of course the ECB s refusal to adopt any additional stimulus policy would present a euro relief rally British Pound GBP USD His New Multi Year Low Before BoEWhile the euro has room to recover should the ECB not meet the market s expectations for easing the British pound has been forced to a far greater extreme on clear assumptions of stimulus We can point to the more than 1300 pip drop in the GBPUSD over the past few months as evidence that the market believes the Bank of England BoE will play catch up to its global counterparts via stimulus but we can look at more fundamental elements as well We have seen the 10 year Gilt government bond yield drop as much as 18 percent over the span of a few weeks while overnight index swaps are pricing in 19 bps of easing over the coming 12 months It is unlikely that the BoE cutsrates as it would be ineffective in spurring growth though if it does happen it could one of the few sparks that keeps the sterling diving Instead the more likely outcome from an expanded stimulus effort from the Monetary Policy Committee MPC is an increase in thebond purchasing program Of course the market is priced for much more than the standard 25 billion pound clip of yore A fixed small stimulus move could spark a recovery To really spur the pound s rally though no change in policy and impotent vows for more would likely see a tremendous retracement Japanese Yen Slow Depreciation Will Continue Unless This Happens The Bank of Japan maintained its steady course as expected this morning This was the last policy meeting to be helmed by outgoing Governor Shirawaka and he didn t want to rock the boat Now we move on to a new regime However the next BoJ meeting isn t until April 4 In the meantime all we have is threatens by the new central bankers We have seen a modest advance in yen crosses on the heightened jawboning but we have lacked for a full blown return to rally This is a steady trend unless risk appetite collapses and takes carry with it Canadian Dollar as Bank of Canada Moves Further Away from Rate Hike There was considerable opportunity for the Bank of Canada to spark volatility this past session as the fundamentally inclined FX traders were weighing the possibility that the group would abandon its quest for an eventual rate hike This is no doubt a contributing factor to the USDCAD s advance through recent weeks However when the statement hit the wires Governor Carney maintained that higher rates would likely be needed after a pause Yet the language would still subtly eased the hawkish rhetoric enough to satisfy to justify the loonie s recent decline |
MPC | Dollar Outlook Tarnished By ECB NFPs Offers A Risk Reprieve | Dollar Outlook Tarnished by ECB NFPs Offers a Risk Reprieve The Dow Jones FXCM Dollar Index USDollar retreated from its two and a half year high but the slip failed once again to turn the persistent bull trend of the past months However the fundamental backdrop speaks to a deterioration in the greenback s potential forward momentum while the label of over extended is looking more and more appropriate for the benchmark s lofty heights Doubt arises via multiple angles for the dollar most notably through stimulus Amongst the world s largest central banks the Federal Reserve is by far the most liberal group when it comes to supporting its system The 85 billion per month stimulus regime the Fed has maintained since the beginning of the year upgraded from the 45 billion per month mortgage backed securities and 40 billion Treasuries recycling is expected to remain in place through the end of the year Setting that effort in an even deeper relief we learned this past session that the ECB would allow its own balance sheet to shrink and the BoE was holding its small holdings steady more on that below We have seen periods in the past where the Federal Reserve and Treasury s stimulus efforts were overlooked by the market and demand for the dollar and dollar denominated assets continued to outperform its counterparts However that strength was supported by a secondary influence risk aversion Where policy easing leaves the market awash in dollars global fear ensures there is plenty of demand for the safe haven to mop up the supply And while there is reason to be skeptical it is hard to deny that speculators still have their appetite With the Dow Jones Industrial Average hitting record highs and the VIX hovering just above a five year low that flight to quality isn t a factor So excessive stimulus and limited risk paints a troubling picture for a safe haven at multi year highs On the other hand it is easy enough to offer the dollar another strong thrust forward through a strong risk aversion move Optimism can decay to fear easily enough in a market based on external support but a catalyst is the best way to make the transition Perhaps the upcoming NFPs can offer a spark Euro Rallies Sharply after ECB Scoffs at Stimulus Expectations The European Central Bank ECB has solidified the euro s very unique position amongst the major currencies With the policy authority s decision to keep thing status quo this past session Europe sports one of the very few economies actually drawing stimulus out of the system and seeing its market rates rise because of it That is a significant appeal to FX traders that are looking for higher yields and more importantly a rising yield which offers further capital gains and the alternatives are either holding rates extremely low like the Fed or readying to ramp their efforts even further like the BoJ Heading into the group s meeting there was a definite expectation that ECB President Mario Draghi and crew would be more sympathetic to the ongoing recession and growing fiscal threat found in developments like the complicated Italian election The statement and President s Q A revealed that discussion of a cut was easily overruled and even the concerns of the euro s influence were tempered As long as competitive stimulus currency manipulation is the primary concern and risk trends are stable the euro is in a strong position Of course ignoring the region s future growth and financial risks could come back to bite the ECB and euro later on British Pound Shows Mixed Reaction to Mum BoE Don t Look AwayAs with the ECB policy gathering there was considerable speculation heading into the Bank of England rate decision that the Monetary Policy Committee MPC would move to offer further stimulus At the previous BoE meeting it was revealed that Governor Mervyn King and two other MPC members called for an increase to the bond purchase program but were overruled by the majority Yet despite the risk of a triple dip recession the government s vow to keep to austerity and Europe s withdrawal of support the central bank passed up on the opportunity to ease What is most surprising about this event though is that the sterling didn t recover lost ground Expectations can hold for only so long Japanese Yen Now on to an Era of Unprecedented BoJ Stimulus Most of the focus Thursday was on the ECB and BoE policy decisions but the Bank of Japan BoJ had a meeting of its own As the last official gathering headed by Governor Masaaki Shirakawa and given his clear disdain for government pressures it was the running consensus that the 101 trillion yen stimulus effort would be left untouched and no additional easing would be introduced before the new regime was installed That expectation was well founded It is interesting to note however that two members Shirai and Miyao both voted for more easing at meeting Considering nominees Kuroda Governor Nakaso and Iwata Deputy Governors are easing bound that s spells a majority in April Canadian Dollar Ready for Volatility on Employment Data Trends are hard to come by in the FX market but volatility can be found with the right fuel source and ignition Congestion for USD CAD after a strong climb to multi month highs sets the scene for the combination of the US nonfarm payrolls NFP and Canadian labor data for February The US data has offered few misses serious enough to stock risk aversion so the most likely outcome is to support or at least leave the loonie to define the reaction The Canadian jobless rate is seen ticking up and a 8 000 net increase in jobs sets the bar relatively low Swiss Franc SNB May not be Buying More Euros but It Isn t Selling We know that the Swiss National Bank SNB hasn t had to defend its 1 2000 defined EUR CHF floor for a number of months thanks to the perceived reduced Euro area tail risks However the central bank clearly thinks that fear can quickly return Aside from warnings about reinforcing stimulus we also find they have refused to unwind their Forex reserves for a fifth month afraid of driving the franc higher |
MPC | Dollar Eases Off Multi Year High S P 500 Marches Higher | Dollar Eases Off Multi Year High as S P 500 Marches Higher The dollar opened with some pep Monday enough to post a fresh intraday two and a half year high but the threshold for bullish momentum is significantly more difficult to achieve For the Dow Jones FXCM Dollar Index USDollar the 520 pip or 5 2 percent advance since the beginning of the year has contradicted a very prominent fundamental theme a rise in risk appetite trends The sustenance of this unusual correlation has been made possible by a questionable level of conviction behind the sentiment push as well as well timed troubles for the benchmark s most liquid counterparts That fortunate combination of factors can only last for so long however The glow from the four year low unemployment rate specifically its marginal implication for an early withdrawal of stimulus in the second half of the year from this past Friday has no doubt worn off So we move on the next round of event risk On the docket the House Budget Committee s 2014 budget proposal is due in the upcoming session but its supposed 10 year return to a balanced budget seems ambitious Meanwhile always keep an eye on risk trends Euro Steady After Italy Downgrade Talk of German Voter Discontent Expectations were set high for the euro heading into the open of the new trading week Credit rating agency Fitch s downgrade of Italy crossed the wires after most European traders were offline Friday meaning this was the first opportunity for the new round of regional financial pressure to play through speculators assessments Yet the euro s reaction to the Italian downgrade to BBB with a Negative outlook was much like the pound s reaction to Moody s downgrade of the United Kingdom just two weeks before absent EUR USD and EUR JPY the two most liquid pairings for the yen were both higher through the opening session Furthermore a survey released in a German magazine that reported 29 percent of respondents said they would vote for a party that was anti Euro in the September election was similar rendered impotent In the absence of these fears we could always fall back on the fact that the ECB is actually reducing its balance sheet a serious euro booster but EURUSD instead remains range bound between 1 3125 and 1 2965 Perhaps risk trends or the EU meeting later this week can tip the scales Japanese Yen Decline Restrained Despite Intensified Stimulus ExpectationsThe Japanese yen dropped across the board Monday and continues to do so this morning However the pace with which the selling pressure was expressed was far more reserved than we would imagine given the intensity of speculation surrounding yen traders favorite topic stimulus We have been moving from rumor to rumor first sustaining the yen crosses climb and then simply trying to hold back a reversal The game now is to upgrade the threats as actual policy cannot be taken until key members of a content Bank of Japan regime retires March 19 BoJ Governor nominee Kuroda tried his best to intone a vow of action when he said derivatives longer dated debt and more risk asset purchases were all possible under his watch But none of this is particularly new What was novel was speculation emanating from a Nikkei report that suggested Kuroda may hold a meeting before the official April 4 meeting to implement a stimulus upgrade Time and belief are running thin British Pound to Find Guidance in Data Real Interest in BoE s Plans A new week opens to a familiar trend the sterling under pressure across the board The only major pairing that the pound was able to gain traction with Monday was in GBP JPY hardly a pair for fundamental inspection of anything but the yen Once again the market s open fears of a Bank of England that is prepared to leverage its stimulus efforts through the proximate future seems to be the culprit for speculative interests Of course unless the Monetary Policy Committee MPC under Governor King s guidance moves to adopt something more than a 25 billion pound increase in stimulus in the near future it will be a long wait until July to see what income Mark Carney will adopt Our interest should turn to the immediate future On the economic docket we have scheduled updates on factory activity external trade and a general GDP estimate This is a good round of data to keep us occupied until Thursday s BoE Q1 Bulletin Australian Dollar Rallies as Yields Hit 10 Month High Rate Outlook Improves There was standard Aussie based event in the morning hours of the Tuesday trading session but it seemed to carry limited weight in terms of trend development That said AUDUSD managed to hold and retreat after a tentative push above 1 0300 suggesting there was at least some influence to the event risk On tap we were watching the NAB business sentiment survey for February which slipped both on current and forecast measures Coupled with the weekend release of the Chinese manufacturing retail sales and funding data this seems a credible concern for regional investors That said this is limited risk against a rising potential for return The most hawkish outlook for the RBA pricing in only 18 bp of easing since August 2011 and a 10 month high 3 62 percent 10 year bond yield pair nicely for a cheap carry currency New Zealand Dollar Outpaces All Counterparts Bond Auction Shows Demand Top billing through Monday s session goes to the New Zealand dollar with an advance of 0 3 versus the Swiss franc to 1 0 percent against the Japanese yen The collective strength certainly found support in stable speculative appetite trends measured by steady equity performance through the three sessions but there was hardly the even distribution of influence across the FX markets In other words there was something more than basic carry trade going on for the kiwi Additional support for the currency would come through the impressive 8 bp jump in the 10 year bond yield on the session Further a short term debt auction showed exceptional demand 5 17 times the offer on one year paper |
MPC | BoJ Has To Leverage Stimulus Or Face Yen Reversal | Dollar Traders More Reactive To S P 500 NFPs Or BoJ Despite the constant expansion of the Fed s balance sheet and a fresh record high from the risky benchmark S P 500 the dollar managed to close the week in the green This was a passive advance however just as the equities move was founded on a deficient fundamental backing which was manifest in the tepid volume levels Yet where traders had to scrounge for a driver the past week the greenback will be overwhelmed for catalysts moving forward And considering the positioning of the greenback against its most liquid counterparts a dedicated driver is needed From the Dow Jones FXCM Dollar Index the 10 463 close on Friday marks the sixth consecutive monthly advance for the benchmark the longest run on record We see this same strength in EUR USD s 6 5 percent rally the past two months GBP USD s nearly 10 percent tumble since the year open and USD JPY s 25 percent rally in the past six months After an exceptional run to multi month highs the stress for a correction will be high especially if risk positioning continues to climb and slowly leach capital from U S assets that are undercut by yields that have been dehydrated by stimulus Looking ahead the most recognizable catalyst is Friday s nonfarm payrolls NFPS The February employment figures are indeed important as they will eventually turn the tide on QE3 Yet this end of week release is less pressing after the past week s FOMC hold The market will judge the dollar on its stimulus but they will do so by way of comparison to other central banks efforts The Bank of Japan BoJ Bank of England BoE and European Central Bank ECB are all looking at some degree of possible balance sheet expansion Can they offset the Fed and leverage the dollar Japanese Yen BoJ Has To Leverage Stimulus Or Face Yen Reversal In the flood of event risk this coming week the BoJ rate decision on Thursday morning carries the greatest potential for generating volatility and consistent trend It also arguably carries the most clearly defined scenarios for traders to work with Ever since Shinzo Abe began his run to the Prime Minister seat on the vow of ending deflation and stabilizing the economy expectations of extraordinary and external support has soared At this point expectations have far outpaced actual policy a realization that has seen USD JPY and other yen crosses level off over the past few months The fact that the yen hasn t extended its aggressive decline over the past two months despite the change of leadership at the BoJ and the vague vows made by new Governor Kuroda and his Deputy Governors tells us that the bar is set very high For the past five years as global central banks have expanded their stimulus programs in order to fend off liquidity crises financial disarray and recession we have seen a strong inverse correlation between the size of the support program and the currency s strength This connection is what makes the yen s fundamental discrepancy so evident USD JPY rallied as much as another 12 percent since the beginning of the year even as the Fed bought 85 billion in assets a month and the BoJ held steady If the central bank does not at least move forward its 13 trillion per month program to May as bulls expectation the yen crosses could be set for an abrupt correction British Pound Ready To Run If Bank Of England Holds Steady The sterling BoE fundamental scheme is like a scaled down version of the yen BoJ setup Since the beginning of the year GBP USD has tumbled over 1 300 pips from 1 6400 on the growing expectation that the Monetary Policy Committee MPC will ramp up its stimulus program to compete with the Fed s QE 3 laden and ECB s LTRO padded regimes There is certainly argument to be made with Marc Carney coming onboard in July and Chancellor Osborne recently offering a remit greater allowances to deviate from CPI but this may just be community stimulus expectation There was no change to the vote in the minutes at the last meeting What if the BoE is mum despite its allowances Euro Crisis Shifts To Italy Slovenia ECB And Systemic IssuesCyprus can still cause problems for the broader euro zone but the imminent risk is far reduced from where has been over the past two weeks However that doesn t mean the Euro is looking at an immediate return to bullish form Systemic fears have been stirred and there are new threats within view Greece and Spain are lingering threats under the new bank levy option which investors will try to escape at any sign of risk but we also have more active threats We ll find a financial outlook for Slovenia and Italy will have to decide a government path next week Australian Dollar At The End Of Its Rate Cut Regime RBA on Tap There are four major central bank rate decisions scheduled for the coming week and the Reserve Bank of Australia s RBA meeting carries the least short term market moving potential Yet it will still be critical for shaping the Aussie dollar s bearings In the past six months we have seen the 12 month rate forecast price in nearly 5 25 bp rate cuts to serious debate over whether there will be even one The language from Governor Stevens and crew hasn t shifted much But given the market s bearings if he were to shift it would make the currency a resilient carry option Canadian Dollar Gaining Central Bank Favor Ready for Jobs Volatility Last year the IMF noted that it was examining whether the Canadian and Aussie dollar would be giving the distinction of reserve currency This potential honor comes as central banks increase their holdings of the loonie and the IMF s quarterly report shows that share continues to grow Meanwhile volatility traders will be watching the March employment figures Friday But beware of the cross influence from U S data |
MS | Morgan Stanley ups oil price f cast to 105 in 2012 | SINGAPORE Sept 14 Reuters Morgan Stanley has raised
its forecast of U S crude oil price to 105 a barrel in 2012
from 95 due to tightening spare capacity the U S bank said
in a research note seen on Monday
It expected global spare production capacity to stay ample
through end 2010 before declining in 2011 and reaching
2007 08 like tightness by 2012
Assuming that demand returns to growth we see global
spare capacity back to 2007 08 levels by 2012 and getting even
tighter thereafter Morgan Stanley said
We believe that prices will need to move higher to ration
demand as the world struggles to find enough supply it said
adding that the research was based on the bank s proprietary
database of more than 460 fields expected to come online
through 2015
International benchmark U S crude peaked above 147
in July 2008 on strong demand from emerging economies such as
China
But the global economic recession has curtailed energy
demand and slashed oil prices which have traded around 68 to
71 a barrel over the last week O R
Morgan Stanley assumes oil demand to fall by 2 million
barrels per day bpd this year rebound by 1 million bpd in
2010 and then grow by just 1 percent thereafter it said
Post 2012 global liquids production shows the potential to
increase to what the bank believes will be a maximum achievable
level of roughly 92 million bpd it said
Even if this record level is achievable global demand
growth at 1 percent annually would still leave the market
tight it added
There was considerable downside to much of the post 2013
production schedule the report said citing political
wrangling over Project Kuwait oil laws in Brazil militant
attacks in Nigeria and an array of issues with Iraq Iran and
Venezuela that will put global spare capacity at risk
Reporting by Judy Hua Editing by Alex Richardson and Ramthan
Hussain |
JPM | New witness delays trial over bitcoin exchange tied to JPMorgan hack | By Nate Raymond NEW YORK Reuters The trial of two men was delayed on Monday in a case stemming from a probe into a bitcoin exchange and a data breach at JPMorgan Chase Co NYSE JPM after prosecutors revealed a new witness Jury selection was set to begin in Manhattan federal court in the case of Yuri Lebedev whom authorities call the architect of bitcoin exchange Coin mx s platform and Trevon Gross a pastor and ex chairman of a now defunct credit union But U S District Judge Alison Nathan delayed jury selection until Tuesday after prosecutors said they had secured a new witness The witness Philip Burgess was represented by the law firm of one of Gross lawyers in an unrelated tax case in which he was sentenced in 2010 to eight months in prison Assistant U S Attorney Daniel Noble said Burgess while reporting another potential fraud to prosecutors on Wednesday revealed he had incriminating information stemming from his time as a potential investor in the credit union Gross headed But after spending the day discussing how to resolve the conflict of Gross and Burgess sharing the same law firm Nathan ruled prosecutors could not call their eve of trial new witness It is my conclusion that we will proceed tomorrow and the government may not call Mr Burgess she said Gross 52 and Lebedev 39 are among nine people who have been charged following an investigation connected to a breach JPMorgan disclosed in 2014 that exposed over 83 million accounts While Gross and Lebedev were not accused of hacking they came under scrutiny in connection with Coin mx which authorities said was operated by Florida resident Anthony Murgio and owned by an Israeli behind the JPMorgan breach Gery Shalon Shalon has pleaded not guilty to charges that he orchestrated cyber attacks that resulted in the theft of over 100 million people s information Prosecutors said Coin mx operated through a front called Collectables Club to trick financial institutions into believing it was a memorabilia club while it converted with no license millions of dollars into bitcoin To further evade scrutiny in 2014 Murgio with Lebedev s help tried to take over Helping Other People Excel Federal Credit Union of Jackson New Jersey which was linked to HOPE Cathedral To do so they and others paid 150 000 in bribes via the church to Gross its pastor in exchange for facilitating Murgio s takeover and arranging for Lebedev and others to be put on the credit union s board prosecutors said
Federal regulators took the credit union into conservatorship in 2015 Murgio pleaded guilty in January |
JPM | Chinese panda bond sales to rise again in 2017 after 2016 jump JPM | LONDON Reuters Sales of panda bonds yuan denominated debt sold in China by foreign firms or governments soared to 130 billion yuan 19 billion last year and could increase another 50 percent in 2017 according to JPMorgan NYSE JPM data
The bank s emerging market strategist Ying Gu said on Tuesday that last year s sales were close to nine times 2015 levels though tighter money transfer rules weighed on issuance by foreign borrowers
The size of the panda bond market has been growing very quickly Gu told Reuters adding growth was driven mostly by banks real estate companies and other non financial corporates
Other than Daimler HSBC and Standard Chartered LON STAN however few issuers were foreign If you look at the issuer profile most of them are overseas subsidiaries of Chinese companies
he said
Regulators did not encourage issuers to repatriate panda proceeds from China which could be a concern for some foreign issuers he said
The progress in relaxing institutional barriers has been slower than I had expected but in the second half of 2016 the fact remained that the capital outflow situation deteriorated and that s why we did not see a big bang opening
Beijing is grappling to stem an exodus of capital which may have amounted to a record 725 billion last year according to the Institute of International Finance
This is the latest hurdle for the panda market which was pioneered more than a decade ago but has only taken off over the last couple of years as Chinese policymakers finally allowed foreign issuers into domestic bond markets
It still comprises only a tiny fraction of China s total onshore bond market the world s third biggest
Last year Poland raised 3 billion yuan in panda bonds while the National Bank of Canada became the first North American financial institution to tap that market Aluminum firm Rusal is planning Russia s first panda issue
We won t see a lot of foreign issuers this year but the growth in overall issuance will also slow down Gu said noting that the spike in domestic yields toward the end of 2016 had also curbed local demand for bonds
The panda market s recent popularity has coincided with a decline in sales of dim sum bonds yuan debt sold offshore in markets such as Hong Kong or London
Gu did not provide figures for dim sum bond issuance but ThomsonReuters data shows sales worth 22 6 billion last year less than half 2014 volumes |
JPM | U S takes pastor software developer to trial over bitcoin exchange | By Nate Raymond NEW YORK Reuters A Florida software engineer and a New Jersey pastor engaged in lies and corruption to facilitate an illegal bitcoin exchange business whose operators wanted to take over a small credit union to evade scrutiny a federal prosecutor said on Wednesday At the start of a trial in Manhattan federal court Assistant U S Attorney Won Shin told jurors that programmer Yuri Lebedev schemed with others to bribe Trevor Gross the pastor and head of a Jackson New Jersey based credit union housed in his church Shin said Gross accepted bribes including a 150 000 church donation in exchange for helping unlicensed bitcoin exchange Coin mx s operator take over Helping Other People Excel Federal Credit Union Coin mx which employed Lebedev while running through a front called Collectables Club in exchange could use the credit union to evade scrutiny of banks wary of processing payments by individuals buying the virtual currency The bribes and lies had a simple shared purpose For the defendants Lebedev and Gross and their co conspirators to make money Shin said But lawyers for Lebedev 39 and Gross 52 said they did nothing wrong and were being blamed due to actions by Anthony Murgio who ran Coin mx and who they said manipulated people while trying to illegally grow the business Yuri was in the wrong place at the wrong time with the wrong people said Eric Creizman Lebedev s lawyer Kristen Santillo Gross lawyer said he was tricked into believing Coin mx was a memorabilia club and thought there was nothing wrong about a donation to the church and which did not benefit him personally He didn t know anything about what they were up to she said The trial followed an investigation rooted in a data breach that JPMorgan Chase Co N JPM disclosed in 2014 that exposed over 83 million accounts leading to charges against nine individuals Gross Lebedev and Murgio were not accused of hacking But prosecutors said Coin mx was owned by an Israeli behind the breach Gery Shalon Prosecutors say Shalon together with Maryland born Joshua Samuel Aaron orchestrated cyber attacks that resulted in the theft of over 100 million peoples information Prosecutors said they carried out the hackings to further other schemes with another Israeli Ziv Orenstein including pumping up stock prices with promotional emails Shalon Aaron and Orenstein have pleaded not guilty Regulators took the credit union into conservatorship in 2015 Murgio pleaded guilty to charges related to Coin mx in January |
JPM | JPMorgan DRW others back fintech company OpenFin | By Anna Irrera
NEW YORK Reuters Financial services software developer OpenFin has raised 15 million in a funding round that included JPMorgan Chase Co NYSE JPM and the venture capital arms of high speed trading firm DRW Trading Group and interdealer broker NEX Group Plc the company said on Thursday
Other investors include venture capital firms Bain Capital Ventures Nyca Partners and a group of financial industry executives OpenFin said in a statement NEX and DRW invested through their respective venture capital arms Euclid Opportunities and DRW Venture Capital
OpenFin s software helps financial institutions create and upgrade trading applications using programming language HTML5 as quickly and frequently as technology companies update apps on smartphones
It currently takes between six to 18 months for new applications or even updates to existing programs to reach a trader s computer at major banks OpenFin said
HTML5 has become popular on Wall Street because it allows software to run on different devices It is also popular with fresh computer science graduates who banks are finding harder to attract away from technology firms
OpenFin s software also allows different applications such as those for real time market data news and research to interact Firms can also use it to redesign more complex applications in phases as it allows newer parts of the applications to work with the components that have yet to be redesigned
OpenFin whose clients include Tullett Prebon Group Holdings Plc TLPRH UL Citadel LLC NEX and JPMorgan said it planned to use the new funding to expand its New York and London teams to a total of 50 people over the year
The latest funding round brings the total raised by the seven year old company to 22 million |
C | DoJ seeks felony pleas by big banks in foreign currency inquiry NYT | Reuters The U S Department of Justice is pushing some big banks to plead guilty to criminal charges that they manipulated the prices of foreign currencies the New York Times reported citing lawyers briefed on the matter In the final stages of a long running investigation into corruption in the world s largest financial market federal prosecutors have recently informed Barclays JPMorgan Chase the Royal Bank of Scotland and Citigroup that they must enter guilty pleas to settle the cases the newspaper reported The pleas would be likely to carry a symbolic stigma if limited actual fallout in handing felony convictions to some of the world s biggest banks the newspaper said Representatives of Citigroup JP Morgan RBS and Barclays did not respond to emails seeking comment on the report Reuters could not immediately reach the DoJ for comment outside regular U S business hours Last November regulators fined six major banks a total of 4 3 billion for failing to stop traders from trying to manipulate the foreign exchange market following a yearlong global investigation
Authorities accused dealers of sharing confidential information about client orders and coordinating trades to boost their own profits The foreign exchange benchmark they allegedly manipulated is used by asset managers and corporate treasurers to value their holdings |
C | Citibank To Release Q2 Earnings | Citigroup Inc NYSE C is set to announce second quarter results before the opening bell on Friday with analysts anticipating earnings per share to drop from last year for a second consecutive quarter
The firm s quarterly results come as the general financial sector is facing a third straight quarter of plunging earnings as the industry encounters headwinds from declining long term Treasury yields regulatory inspection and global economic volatility
On a brighter note market analysts have reduced the target for the banking giant with estimates for earnings revenue and net interest margin diving significantly over the past several months Although financial stocks were hurt in the immediate aftermath of Britain s vote to leave the European Union some analysts said it could help push the third quarter outlook for huge banks
Near term we expect Brexit will benefit earnings due to increase in trading volumes following the surprise results and hence spike in volatility a market analyst said
Analysts expect Citigroup to post earnings of 1 10 per share down from the earnings estimate of 1 45 per share in the same period last year The consensus estimate has declined sharply from 1 26 at the end of the previous quarter Citigroup has beaten consensus EPS forecasts for the last five quarters
Net interest income which is the revenue generated from assets less the cost from liabilities is assumed to slip to 11 21 billion from 11 82 billion from the previous year Meanwhile total revenue is seen to drop to 17 52 billion from 19 47 billion last year
Revenues continued to be pressured by investments in card international consumer weakness and suboptimal trading performances an analyst wrote in a research note
The bank has missed the net interest income consensus for the past two quarters but exceeded the total revenue consensus for the last four quarters
Shares of Citigroup rose 1 5 percent during the second quarter Since then the stock has climbed 2 2 percent since Wednesday
The stock was given an overweight rating by 31 analysts while the average price target of 54 87 is 27 percent higher than current levels
Out of all the huge banks Citigroup trades at the biggest discount to tangible book value Based on tangible book value metric the bank could settle to make a strong run In addition the Federal Reserve recently approved the bank s plan to increase its dividend Considering a strong earnings report Citigroup s could make a run to justify the discount it trades to adjust for the dividend yield
Citigroup Aims at High growth Companies
Citigroup seeks to target a bigger share of businesses from rising market champions in Asia such as abruptly growing Internet firms as part of its plan to expand corporate banking revenue
The bank which considers Asia as its fastest growing region handles over 600 people in its corporate banking sector in the region and would conduct select hirings to boost its presence
Newly assigned head of Asia Pacific corporate banking Gerald Keefe said These companies have achieved scale quickly and now increasingly are growing in developed markets
Citigroup disclosed the appointment of Keefe as Asia Pacific corporate banking head in April bringing together bankers working for clients from financial organizations public sector entities corporates and local units of international companies
One of the priorities in the new role is to deliver stable top line growth for corporate banking in Asia in an efficient and responsible manner Keefe stated |
C | Stocks Move Up Down And Around The Flatline | U S stocks oscillated near the unchanged mark for most of Friday s session before ultimately finishing mixed The pause from the recent equity run developed despite a plethora of upbeat domestic economic data which was highlighted by an upbeat June retail sales report Treasuries and gold were lower while the U S dollar and crude oil prices were higher In earnings news results from Citigroup and Wells Fargo NYSE WFC fostered some mixed reactions and the FTC settled its multi year investigation into Herbalife NYSE HLF
The Dow Jones Industrial Average DJIA rose 10 points 0 1 to 18 516 the S P 500 Index decreased 2 points 0 1 to 2 162 and the Nasdaq Composite shed 4 points 0 1 to 5 030 In moderate volume 843 million shares were traded on the NYSE and 1 6 billion shares changed hands on the Nasdaq WTI crude oil was 0 27 higher at 45 95 per barrel wholesale gasoline gained 0 01 to 1 42 per gallon and the Bloomberg gold spot price decreased 6 27 to 1 328 96 per ounce Elsewhere the Dollar Index a comparison of the U S dollar to six major world currencies was 0 4 higher at 96 50 Markets were higher for the week as the DJIA gained 2 0 while the S P 500 Index and the Nasdaq Composite gained 1 5
Citigroup Inc NYSE C 44 reported 2Q earnings per share EPS of 1 24 above the 1 10 FactSet estimate with revenues declining 10 0 year over year y y to 17 6 billion just above the forecasted 17 5 billion Fixed income trading rebounded and the amount of money set aside for loan loss provisions was favorable Shares gave up early gains and finished slightly lower
Wells Fargo Company NYSE WFC WFC 48 posted 2Q profits of 1 01 per share roughly in line with expectations as revenues rose 4 0 y y to 22 2 billion mostly matching projections Shares closed lower as analysts expressed concerns about its revenue growth and its smaller than expected net interest margin
Herbalife LTD NYSE HLF HLF 65 rallied after the company and the Federal Trade Commission FTC reached a 200 million settlement resolving the FTC s multi year investigation of the company HLF will have to prove its retail sales but the company said the settlement does not change its business model as a direct selling company
Retail sales top forecasts to headline heavy docket of data
Advance retail sales for June rose 0 6 month over month m m versus the Bloomberg forecast of a 0 1 gain and May s downwardly revised 0 2 rise Also last month s sales ex autos were higher by 0 7 m m above expectations of a 0 4 increase and compared to the unrevised 0 4 rise in the previous month Sales ex autos and gas grew 0 7 m m topping estimates of a 0 3 rise while May s 0 3 increase was unadjusted Finally the retail sales control group a figure used to help calculate GDP increased 0 5 compared to the projected 0 3 rise and the prior month s upwardly revised 0 5 increase
The Consumer Price Index CPI was up 0 2 m m in June below forecasts of a 0 3 increase while May s 0 2 rise was unrevised The core rate which strips out food and energy gained 0 2 m m in line with expectations and May s unrevised increase Y Y prices were 1 0 higher for the headline rate below forecasts of a 1 1 rise while the core rate was up 2 3 exceeding projections of a 2 2 increase May y y figures showed an unrevised 1 0 rise and an unadjusted 2 2 increase for the headline and core rates respectively
The preliminary University of Michigan Consumer Sentiment Index dropped to 89 5 this month from June s 93 5 level where economists had expected it to remain Both the economic conditions and outlook portions components of the survey deteriorated The 1 year inflation outlook rose to 2 8 from 2 6 while the 5 10 year inflation estimate remained at 2 6 The survey s Director Richard Curtin noted that the Brexit vote s outcome was cited by a number of consumers especially high income consumers
Industrial production rose 0 6 m m in June versus estimates of a 0 3 increase and following May s upwardly revised 0 3 decrease Manufacturing and mining production rose while utilities output jumped Capacity utilization rose to 75 4 from May s unrevised 74 9 and compared to projections for a 75 1 rate Capacity utilization is 4 6 percentage points below its long run average
The Empire Manufacturing Index showed output from the New York region fell but slightly held onto expansion territory a reading above zero for July The index dropped to 0 6 from June s unrevised 6 0 level with forecasts calling for a dip to 5 0
Business inventories increased 0 2 m m in May above forecasts of a 0 1 rise and versus April s unrevised 0 1 gain Sales rose 0 2 m m and the inventory to sales ratio the time it would take to deplete inventories at the current sales pace remained at 1 40 months pace
Treasuries were lower with the yield on the 2 Year note rising 2 basis points bps to 0 70 the yield on the 10 Year note gaining 5 bps to 1 58 and the 30 Year bond rate advancing 4 bps to 2 29
Europe mostly lower but sees solid weekly gains Asia widely higher
European equities traded mostly lower amid a somber mood in the aftermath of the deadly attack in France which the nation said was undeniably of a terrorist nature Travel and leisure issues saw some pressure to weigh on the markets though the Stoxx Europe 600 Index held onto a solid weekly gain as U K Brexit concerns subsided and political uncertainty was cleared up by the appointment of the nation s new prime minister The upbeat U S and Chinese economic data today may have helped limit losses while the euro and British pound fell versus the U S dollar and bond yields traded mostly higher
Stocks in Asia finished mostly to the upside with the U S markets posting all time highs yesterday capping off a weekly jump in the region while the markets digested a plethora of Chinese economic data An advance for Japanese equities was aided by the continued drop in the yen Stocks trading on the island nation surged over 9 0 this week with the weakness in the yen and increased conviction being fostered by expectations that the nation could be close to announcing coordinated fiscal and monetary stimulus measures China reported stronger than expected June retail sales industrial production new yuan loans and aggregate financing a measure of total credit issued However the highlight was China s 2Q GDP report which showed y y growth remained at 1Q s 6 7 pace compared to forecasts calling for a dip to a 6 6 rate Meanwhile stocks in Australia and South Korea moved higher while securities trading in India declined
Stocks ride late last week s momentum The Dow and S P 500 rallied back to all time highs this week as the momentum from last Friday s stronger than expected labor report carried over courtesy of a plethora of upbeat U S economic reports that suggested the economy may be picking up steam The global markets also rallied on the week led by a surge in Japan on hopes the nation s government will deploy more aggressive stimulus measures while eased Brexit concerns and a sooner than expected new prime minster in the U K aided conviction The global markets shrugged off the surprising decision to not cut rates from the Bank of England though the central bank signaled it may make a move in August
Earnings and housing data set to come into focus
The ramp up of 2Q earnings season is likely to garner attention next week particularly guidance and commentary surrounding the impact of the Brexit vote in the U K while the U S economic calendar will be tilted toward the housing sector The NAHB Housing Market Index will get the ball rolling and will be followed by housing starts and building permits and existing home sales Other reports worth noting on next week s economic docket include the Leading Index and Markit s preliminary Manufacturing PMI Index
International reports due out next week include Australia Reserve Bank of Australia July meeting minutes China property prices Eurozone European Central Bank monetary policy decision trade balance CPI Markit s business activity reports and German investor confidence U K inflation figures employment change retail sales and Markit s business activity reports |
C | SL Green SLG Likely To Beat Q2 Earnings Stock To Gain | SL Green Realty Corp NYSE SLG is slated to report second quarter 2016 results after the market closes on Jul 20 Last quarter this real estate investment trust REIT had delivered a positive surprise of 12 1 In fact SL Green beat estimates in all of the four trailing quarters with a positive average earnings surprise of 7 The Zacks Consensus Estimate for second quarter funds from operations FFO per share is currently 3 18 Let s see how things are shaping up for this announcement Why a Likely Positive Surprise Our proven model shows that SL Green is likely to beat estimates because it has the right combination of two key ingredients A stock needs to have both a positive and a Zacks Rank 1 Strong Buy 2 Buy or 3 Hold to beat estimates and SL Green has the right mix Zacks ESP The Earnings ESP which represents the percentage difference between the Most Accurate Estimate of 3 37 and the Zacks Consensus Estimate of 3 18 is 5 98 This is a meaningful and leading indicator of a likely positive surprise Zacks Rank SL Green carries a Zacks Rank 3 The combination of SL Green s Zacks Rank 3 and positive ESP makes us reasonably confident of a positive surprise this season Conversely we caution against stocks with Zacks Rank 4 or 5 Sell rated stocks going into the earnings announcement especially when the company is seeing negative estimate revisions What s Driving the Better than Expected Earnings SL Green is pursuing an opportunistic investment policy to enhance its overall portfolio This includes investment in long term core properties opportunistic assets and debt preferred equities Also in order to facilitate such investments SL Green continues to divest non core assets In sync with this strategy the company completed several transactions in the second quarter Notably in June SL Green announced the inking of a 10 year renewal and expansion lease deal with New York Life Insurance Company at the Graybar Building Also in May the company disclosed the acquisition of a 20 stake in Manhattan s luxury residential tower Sky Earlier in Apr 2016 SL Green inked a deal to sell 500 West Putnam Avenue In the same month the company also inked a deal with an affiliate of Citigroup NYSE C for the accelerated sale of 388 390 Greenwich Street for 2 billion However a large chunk of SL Green s revenues is derived from its office portfolio demand for which is highly correlated with job growth Apart from this intense competition from owners developers and operators of other office properties and commercial real estate limits its ability to retain tenants Moreover any further rise in interest rate would negatively impact the REIT s financials and hurt its dividend payout capability SL GREEN REALTY Price and EPS Surprise Stocks to ConsiderHere are three other REITs that you may want to consider as our model shows that they also have the right combination of elements to post an earnings beat this quarter American Campus Communities Inc NYSE ACC slated to release earnings results on Jul 25 has an Earnings ESP of 1 89 and a Zacks Rank 2 CoreSite Realty Corporation NYSE COR slated to release earnings results on Jul 28 has an Earnings ESP of 1 18 and a Zacks Rank 2 Gramercy Property Trust Inc NYSE GPT slated to release earnings results on Aug 4 has an Earnings ESP of 11 77 and a Zacks Rank 3 Note All EPS numbers presented in this write up represent funds from operations FFO per share FFO a widely used metric to gauge the performance of REITs is obtained after adding depreciation and amortization and other non cash expenses to net income |
MPC | MNB s Doves Remain In Charge | The Hungarian central bank MNB is broadly expected to continue its easing cycle with yet another 25bp rate cut which should bring the key policy rate to 5 75 at next week s Monetary Policy Council MPC meeting It seems apparent that the doves on the MPC are more or less in full control of monetary policy Consequently we expect the MNB to continue the easing of monetary policy in coming months despite inflation being well above the level of the MNB s official target of 3 CNB getting ready to take action on the korunaAt the latest monetary policy setting meeting of the Czech central bank s CNB the board decided to cut the key policy rate to a technical zero of 0 05 The CNB is therefore now effectively stuck at the Zero Lower Bound and further monetary easing through interest rate cuts is simply not possible As a consequence the CNB needs to utilise other monetary policy tools if it needs to ease monetary policy The most obvious instrument is to use the exchange rate to ease monetary policy The CNB has been very reluctant about moving in that direction but the reluctance has been costly and in our view the CNB s lack of action no doubt strongly contributed to the further downturn in the Czech economy recently witnessed Lower inflation and slower growth to trigger Turkish rate cutNext week the Turkish central bank TCMB will announce its key policy rate in connection with the meeting of the TCMB s Monetary Policy Committee MPC Turkish macroeconomic data has certainly not been encouraging recently It is very clear that the Turkish economy is continuing to slow down and inflation is inching further down towards the TCMB s 5 inflation target This is opening the door for rate cuts and we in line with consensus expect the TCMB to cut its key policy rate by 25bp to 5 50 next week To Read the Entire Report Please Click on the pdf File Below |
MPC | EMEA Weekly SARB Watch | SARB stays On Hold On Increased Inflation RiskEven though there is always some uncertainty regarding the outcome of rate decisions in South Africa this time we are somewhat more confident that the South African central bank SARB will not surprise the markets and that the decision will be in line with expectations It is broadly expected by us too that the SARB will stay on hold maintaining the key policy rate at 5 0 at next week s Monetary Policy Council MPC meeting Considering our inflation outlook and the increased risk to the ZAR due to ongoing labour conflicts and the widening of the current account deficit we no longer expect the SARB to ease monetary policy further as the door for further easing has been closed Hence we expect the SARB to stay on hold throughout 2013 maintaining the key policy rate at 5 0 Furthermore we remain bearish on the rand in 2013 with our current USD ZAR forecasts 8 80 8 90 and 9 10 in three six and 12 months respectively TCMB To Cut AgainThere is no getting away from it the Turkish economy is clearly not doing as well as it used to growth is weak and inflation has been inching down As a consequence at its regular monetary policy meeting next week the Turkish central bank TCMB is likely to cut its key interest rate by 25bp for the second month in a row to 5 25 Furthermore a fairly stable lira and fairly benign global environment should mean the risk of rate cuts is fairly low Looking forward we believe the TCMB is likely to continue cutting rates as the outlook for inflation is benign and positive global risk sentiment is likely to contribute to making the lira fairly stable To Read the Entire Report Please Click on the pdf File Below |
MPC | Another Surprise From The Central Bank Of Turkey | The Central Bank of Turkey will be holding its monthly rate setting Monetary Policy Committee MPC meeting tomorrow Of the twelve economists polled by business channel CNBC e four expect a cut in the floor of the Bank s interest rate corridor Of these four only one expects the ceiling of the corridor to be lowered as well All the economists believe the Bank will not change its policy rate In sum there is quite a bit of consensus that the Bank will not do much While I find using daily U S inflation that the real exchange rate has already passed the Central Bank s threshold level of 120 that doesn t necessarily mean that they will act That s because the Bank has been burned by preemptive easing before I only have a couple of extra remarks this time First note that I calculate the real exchange rate RER using only U S data whereas the Central Bank uses 30 or so countries there s a hyperlink to their methodological note in the column That s why I have to look at the relationship between my index and the Central Bank s to extrapolate the official index My friend Ozlem Derici of Ekspres Invest does something slightly different She calculates RER with EUR and USD using Euro Area and U S inflation forecasts She told me her own RER is 121 122 which is not far off from mine Here s the official Finally I should tell you that I really feel like an idiot calculating real exchange rate on a daily basis But that s the Central Bank s fault not mine After all they are the ones targeting the real exchange rate P S Note that I will edit this post tomorrow right after the MPC or do a separate post and let you what the Central Bank did so stay tuned |
MPC | South Africa SARB Sticks To Wait And See Approach | The South African central bank SARB announced that the Monetary Policy Committee MPC decided at Thursday s MPC meeting to leave the key policy rate unchanged at 5 00 Such a decision was broadly expected Even though the statement from the SARB on Thursday was perhaps squeezed slightly more on the dovish side in our view we see the room for further monetary easing as very limited The increasing violent labour protests and strikes seem to be weighing more and more on investors perception of South Africa s creditworthiness The rand has been under strong selling pressure this week mainly on the back of negative newsflow regarding another violent riot Furthermore the risk of further rand weakness is quite high Hence given the risks to the rand posing clear upside risks to inflation and the widening of the current account deficit we believe the door for further monetary easing has been closed We therefore expect the SARB to remain on hold throughout 2013 Assessment and outlookThe statement was overall fairly balanced or perhaps skewed somewhat on the dovish side Nonetheless that the decision was unanimous and the MPC did not discuss a further rate cut means that the MPC finds current interest rate setting appropriate in the current environment The Governor Gill Marcus expressed worries about the growth prospects for the South African economy with the mining and farm labour protests posing clear downside risks to the South African economy While the economy remains fragile the inflation outlook is squeezed on the upside The SARB seems to be clearly concerned about wage settlements and the possibility of a wage price spiral which together with the rand represents the main upside inflation risk Even though the statement from the SARB today was perhaps squeezed slightly more on the dovish side in our view we see the room for further monetary easing as very limited The increasing violent labour protests and strikes seem to be weighing more and more on investors perceptions of South Africa s creditworthiness The rand has been under strong selling pressure this week mainly on the back of negative newsflow regarding another violent riot Furthermore the risk of further rand weakness is quite high Hence given the risks to the rand posing clear upside risks to inflation and the widening of the current account deficit we believe the door for further monetary easing has been closed We therefore expect the SARB to remain on hold throughout 2013 To Read the Entire Report Please Click on the pdf File Below |
MPC | Bank Of England Preview Waiting For Carney | We expect the Bank of England BoE to remain on hold at Thursday s Monetary Policy Committee MPC meeting 13 00 CET Any policy changes on Thursday would be a surprise All analysts surveyed by Bloomberg expect both unchanged rates and the Asset Purchase Facility APF to be kept on hold at GBP375bn Recent statements from MPC members as well as the latest minutes suggest that the MPC in general has less confidence in additional quantitative easing We do not expect any policy changes for the remaining period of Mervyn King s governorship More interesting is that on Thursday Mark Carney will appear before the Treasury Committee 10 45 CET Mr Carney has recently promoted nominal GDP NGDP targeting as a way to communicate and manage monetary policy expectations Here we review his comments as well as the possible implications of NGDP targeting No changes on Thursday s MPC meeting The MPC minutes from the January meeting were largely as expected with David Miles continuing to vote for an immediate expansion of gilts purchases he has done it for three meetings now The minutes indicated some concerns about the potential for inflation persistence and uncertainty of the effectiveness of additional asset purchases There remained uncertainty about their asset purchases impact on nominal demand and they might prove less effective in boosting real output had strengthened the belief of some of these members that no further asset purchases were required at the current juncture More colours of this view was given in recent comments from MPC members In his final regional speech in Northern Ireland Governor King stated his view that monetary policy cannot solve all economic problems generalised monetary stimulus is not a panacea But he did not rule out further asset purchases should the economy deteriorate further This was also the essence of external MPC members Ian McCafferty s first public speech a couple of weeks ago He expressed concerns about the marginal efficiency of asset purchases and fears of such demand stimulus would have inflationary consequences Without over interpreting his wording we would classify McCafferty as a median voter with a hawkish bias Hence we think the MPC view the economy developing in line with the November Inflation Report with GDP slow recovering and inflation to be above target until mid 2014 We do not see the MPC to impose any material policy changes before Mark Carney takes over the chair as governor One possible change could though be a reinvestment of the redeemed gilts currently in the APF GBP 6 1bn in March 1 6bn in September But such a change should merely be viewed as a technical adjustment to maintain the current policy Note that BoE will publish the next Inflation Report next week 13 Feb and new forecasts will be available on this week s MPC meeting To Read the Entire Report Please Click on the pdf File Below |
MPC | Draghi Spikes Euro As Carney Impresses MPC | Good UK data was followed by an impressive showing by Mark Carney the next governor of the Bank of England at the Monetary Policy Committee MPC We here at Littlefish FX tend to be overly sceptical with people but we were all pretty impressed with the incoming BoE Governor Carney who pushed back and gave a good account of himself at the MPC meeting That said BoE kept rates and QE on hold as expected and the initial optimism in the Pound was somewhat reversed as the day progressed leaving a rather Bearish looking candlestick Meanwhile in Europe Draghi gave a rather lack luster Q A which result in an initial down turn in the Euro his laboured answer to the question we highlighted last night on Euro strength in particular where he highlighted the need for the Euro to reflect fundamentals Unsurprisingly the Euro promptly plummeted to the nearest support level Key here is not to jump the gun to early on entering a Euro trade it could get quite choppy and it is better to stay on teh sidelines and wait for a clear signal potentially early next week We could easily see a deeper retracement and bounce to new highs or an immediate reversal higher only to completely change direction to new lows Watch for Chinese data overnight could have an impact on the Aussie which has been in free fall lately We also have Canadian Data up later in the day EUR USDSuper Mario seriously knocked the Euro today and it retraced down to the 1 3400 level Although I remain Bullish on the Euro this could push lower to the 1 3300 mark before finding support If we break the 1 33 level we could see a move lower from there Personal Bias BullishSupport 1 3400 1 3300Resistance 1 3650 1 3710My Strategy Look for buying opportunities on a retracement and rejections off of support to the 1 33 Daily width 500 height 374 EUR USD Weekly width 500 height 390 GBP USDAs we highlighted last night 6th Feb Pound pushed higher today then retraced back towards lows Pair didn t quite retrace as much as I had hoped but still gave signs of a strong rejection If we close the weekly slightly lower from here it will create a very Bearish looking candlestick for the week I still like this pair lower for a test of the 1 53 handle but want to see a break of the weekly low before adding to my short position Personal Bias BearishSupport 1 5680 1 5630Resistance 1 5750 1 5800My Strategy Will look to add to short positions on a break of the weekly low having added to my short position Daily width 500 height 374 GBP USD Weekly width 500 height 390 AUD USDAussie continued its push lower today breaking the 200 day SMA I remain Bearish the pair and will look to sell on any failed tests of resistance I am aiming for a test of the 1 0150 mark Personal Bias BearishSupport 1 0250Resistance 1 0300 1 0350My Strategy Look for sell signals on a failed test of the previous support level now turned Daily width 500 height 374 AUD USD Weekly width 500 height 390 USD JPYI will keep my eye on this pair for any signs of a Bearish reversal following our in house sentiment system closing out long positions However for now I remain on the sidelines Personal Bias NeutralSupport 92 00 91 00Resistance My Strategy Stand aside await clear signalsUSD JPY Daily width 500 height 374 USD JPY Weekly width 500 height 390 |
MS | UPDATE 3 Obama to make case for big U S healthcare changes | Obama promises to unveil more detailed plan
Speech at 8 p m 0000 GMT on Wednesday
Senator says bipartisan compromise plan still alive
Updates with Baucus Conrad Gibbs remarks
By Patricia Zengerle
WASHINGTON Sept 9 Reuters President Barack Obama makes
a high stakes pitch for healthcare reform to the U S Congress
on Wednesday trying to bridge bitter differences over his top
domestic priority by offering his own vision for change
Faced with falling public approval ratings Obama said his
televised address at 8 p m EDT 0000 GMT would provide
Americans with a much more detailed plan for overhauling the
2 5 trillion U S healthcare system
They will have a lot of clarity about what I think is the
best way to move forward Obama told ABC network s Good
Morning America show
His fellow Democrats who have solid majorities in both
houses of Congress have struggled to craft a reform bill they
can agree on while most Republicans have fought it arguing
that it amounts to a government takeover of healthcare
The revamp of the healthcare industry seeks to make
affordable health insurance available to most of the estimated
46 million uninsured Americans and curb runaway medical costs
Senator Max Baucus a key Democrat negotiating for a
bipartisan deal indicated it may be time for Democrats to go
it alone according to a source familiar with the situation
Obama s speech marks a new approach in the White House s
effort to rebuild support for the overhaul after Republicans
took control of the healthcare debate during the summer with a
volley of attacks on the Democrat proposals
The Republican criticism resonated with many Americans
worried that the 1 trillion cost of the overhaul would add to
the country s mountain of debt despite White House assertions
that it would be fully paid for and mark a big step toward
expanding coverage to the uninsured
White House spokesman Robert Gibbs said Obama would discuss
reforming medical malpractice lawsuits which Republicans blame
for raising medical costs and the need for a government run
public insurance option alongside private insurers to provide
choice and competition
The president will talk about meaningful malpractice
reform tonight What I hope that does is cause Republicans to
understand that we re close to getting something truly
significant done for the American people truly significant for
those struggling with the high cost of health insurance Gibbs
said on Fox Morning News
But Gibbs would not say whether Obama would propose capping
malpractice claims as many Republicans want
Shares of top health insurers which have been volatile as
the healthcare debate gathers steam were mixed in midday trade
on Wednesday ahead of Obama s speech Shares of the S P Managed
Health Care stock index were near flat while the Morgan Stanley
Healthcare Payor stock index was up about 1 percent
DEFINE HIS PRESIDENCY
Obama s success or failure in getting Congress to pass
comprehensive healthcare reform this year could help define the
rest of his presidency If he fails to push through change on
an issue that was a centerpiece of his election campaign last
year he would be politically weakened and would likely
struggle to get the rest of his ambitious legislative agenda
through Congress
Past failed attempts at healthcare reform include one
spearheaded by President Bill Clinton in the 1990s
Legislators have offered a variety of proposals but appear
divided over most of them
Baucus leads a group of six senators still trying to craft
a bipartisan compromise healthcare bill He told fellow
Democrats that he would put forward his own healthcare bill
next week with or without Republican support
He is making clear it is time for action and time to
move forward to get a bill done by the end of the year the
source told Reuters
Senator Ken Conrad a member of the group of six told
reporters on his way into a healthcare meeting the idea of a
bipartisan compromise was not dead Other Democrats attending
the session said they still favored a public insurance option
and wanted to see the Finance panel s full proposal before
deciding
The plan includes sweeping insurance market changes and a
fee on companies that will help pay to cover the uninsured
said a source familiar with the proposal
It also calls for non profit cooperatives to compete with
insurance companies but does not contain the public option
sought by many liberal Democrats and backed by Obama the
source said
Obama told ABC he would use his speech to make sure that
Democrats and Republicans understand that I m open to new
ideas that we re not being rigid and ideological about this
thing but we do intend to get something done this year
He dodged repeated questions on whether he would veto a
healthcare bill that did not include a public plan
There are principles that if they are not embodied in the
bill I will not sign it he said
The bill should not increase the deficit should expand
healthcare coverage to the uninsured and include insurance
reforms he said
One administration official said the president would use
his speech on Wednesday to articulate his vision as central to
the long term economic well being of the country
His plan will bring reforms that will reduce the
unsustainable growth in the cost of healthcare which has
doubled in the last decade and will again unless we act said
the official who requested anonymity
Insurance companies pharmaceutical manufacturers hospital
managers and average American patients all have huge
stakes in how the battle plays out
We re at the point in the legislative debate where he
needs to put some things on the table and take some other
things off said Darrell West director of governance studies
at the Brookings Institution think tank in Washington
Additional reporting by Ross Colvin editing by Eric Beech
and Vicki Allen |
MS | Rising oils autos help Europe stocks extend rally | FTSEurofirst 300 up 0 2 pct rises for fourth straight day
Auto stocks up as Ghosn says financial crisis behind us
Energy shares rise as oil prices around 71 a barrel
For up to the minute market news click on
By Blaise Robinson
PARIS Sept 9 Reuters European stocks were up 0 2
percent at midday on Wednesday gaining ground for a fourth
consecutive session with shares of automakers rallying after
Renault s CEO said the financial crisis was over
Energy shares advanced as oil prices hovered above 71 a
barrel after surging more than 3 on Tuesday with OPEC
ministers meeting in Vienna expected to keep official output
unchanged
At 1055 GMT the FTSEurofirst 300 index of top European
shares was up 0 2 percent at 979 40 points just a few points
shy of an 11 month high of 986 59 reached in late August
The index which has surged 52 percent since reaching a
floor in early March is still down 16 percent from its level
just before the collapse of Wall Street firm Lehman Brothers a
year ago accelerated the global credit crisis
There is clearly a resistance zone on the upside for the
European indices if there is a break out it will be a strong
positive signal said Romain Roclore technical analyst at
Aurel BGC
But for now markets are range bound and it s wait and
see from a technical point of view
Shares of pharmaceutical and food companies seen as
defensive plays were on the downside with Nestle down 1 1
percent GlaxoSmithKline down 1 1 percent and Sanofi Aventis
down 1 6 percent
The VDAX NEW volatility index a measure of investor risk
appetite was down 0 8 percent reaching its lowest level since
August 28
The lower the volatility index which is based on sell and
buy options on Frankfurt s top 30 stocks the higher is
investors appetite for risky assets such as cyclical stocks
Oil shares were on the rise with BP up 0 9 percent and
Total up 0 6 percent
Repsol rose 1 4 percent and BG Group added 2 9 percent
after an oil and gas find at the Guara oil field off the coast
of Brazil Both companies have significant stakes in the field
BG says the site has recoverable reserves of 1 1 2 0 billion
barrels of light oil and gas
Auto stocks climbed after Renault CEO Carlos Ghosn told
daily Le Figaro the financial crisis is clearly behind us
Ghosn also chief executive of Japanese carmaker Nissan
Motor told the newspaper he expected to see a pick up in
activity in the United States and emerging markets in the first
quarter of 2010 with an improvement in Europe coming towards
the end of 2010 or the start of 2011 adding the recovery would
be gradual and take several years
This is quite a change in tone from Ghosn who has been
very cautious recently one trader said
Renault rose 6 6 percent and Peugeot added 4 7 percent
while BMW also boosted by a rating upgrade to overweight from
underweight from Morgan Stanley and an upgrade to buy from
hold from RBS soared 5 9 percent
Around Europe Britain s FTSE 100 index was up 0 4 percent
Germany s DAX index up 0 4 percent and France s CAC 40 up 0 2
percent
So far this year the FTSEurofirst 300 has gained 18
percent the FTSE 100 is up 12 percent while both the DAX and
the CAC are up 14 percent
Reporting by Blaise Robinson Editing by Dan Lalor |
MS | UPDATE 3 Daiwa to buy out SMFG from venture for 2 2 bln | Daiwa to buy SMFG s 40 pct stake in Daiwa Securities SMBC
Daiwa says purchase price of stake around 200 bln yen
SMFG to provide Y100 bln loan for Daiwa to buy stake
Split triggered by SMFG s acquisition of Citigroup assets
Adds Daiwa CEO comments
By Junko Fujita
TOKYO Sept 10 Reuters Daiwa Securities Group said it
would pay about 2 2 billion to buy out Sumitomo Mitsui Financial
Group from their investment banking joint venture leaving Daiwa
vulnerable amid intensifying competition for deals in Japan
Daiwa Japan s second largest brokerage said it would likely
pay about 200 billion yen 2 2 billion to buy SMFG s 40 percent
stake in their 10 year old venture Daiwa Securities SMBC making
it a wholly owned subsidiary
The deal was widely expected after reports by Thomson Reuters
and other media last week
The fate of the partnership had been in doubt since SMFG
agreed earlier this year to buy Citigroup s brokerage and
securities underwriting operations in Japan for about 6 billion
some of which overlapped with the Daiwa venture
SMFG had been in talks with Daiwa to take a majority stake in
the venture with the aim of then merging its operations with the
wholesale businesses bought from Citigroup but Daiwa resisted
losing control and the negotiations fell apart
Daiwa Securities CEO Shigeharu Suzuki told a new conference
the impact on earnings of cutting ties with SMFG would be
limited
We were doing business alone until 11 years ago before we
made the tie up and it was Daiwa Securities that was leading
this venture Suzuki said
So I m sure we will do well in our business in the future
I m confident about it
Daiwa is the main relationship broker for 800 companies
while SMFG has over 200 Suzuki said
In that sense we will be able to achieve what we have done
in the future with our expertise he said
SHARES DROP
Daiwa s decision to cut its ties with SMFG has raised
concerns among investors about whether the broker will lose
sales Daiwa had frequently touted its alliance with SMFG as key
to winning mandates for investment banking deals
Analysts predict Daiwa s revenues from investment banking
will likely fall sharply without the SMFG tie up Daiwa s stock
slid 6 percent on Friday when media reports of the deal first
surfaced though it has since regained some of that ground
If Daiwa which has not been aggressive in restructuring
hammers out solid steps to strengthen its earnings structure the
excess pessimism in the stock market about the company s earnings
outlook will go away said Credit Suisse analyst Azuma Ohno
Suzuki said he had no plans at present to seek another
partner even as its rivals make acquisitions and forge ties to
strengthen their positions in the market
Nomura Holdings Inc Japan s biggest broker last year
acquired the Asia Europe and Middle East operations of Lehman
Brothers while Mitsubishi UFJ Financial Group plans to merge its
investment banking business in Japan with that of Morgan Stanley
Credit rating agencies have also raised concern about the
potential risk of Daiwa losing ties with SMFG
Moody s Investors Service which this week cut ratings for
Daiwa Securities Group and Daiwa SMBC said it may downgrade
Daiwa SMBC s rating further because its strategic importance to
the Sumitomo Mitsui Banking Corp may decline substantially in
view of SMFG s plans to buy Nikko Cordial
Japan Credit Rating Agency also said on Thursday the
cancellation of the joint venture would have a negative impact on
earnings of Daiwa Securities and Daiwa SMBC
1 92 14 Yen
Additional reporting by Yumiko Nishitani Editing by Michael
Watson |
MS | UPDATE 2 MCC prices Shanghai IPO at top of range sources | Could raise as much as 5 3 bln
Would be world s second largest IPO this year
Funds for overseas expansion and technology upgrade
Adds analyst comments and details
By Carolyn Qu and Shen Yan
SHANGHAI Sept 10 Reuters Metallurgical Corp of China
MCC priced its Shanghai IPO at the top end of an indicated
range a move that could raise up to 5 3 billion in the world s
second largest public offering this year three sources briefed
on the pricing results on Thursday
MCC will sell 3 5 billion A shares or 21 percent of its
expanded capital at 5 42 yuan 0 79 each ahead of a dual
listing in Shanghai and Hong Kong said the sources
It has been offering the A shares at between 5 yuan and 5 42
yuan in Shanghai and up to 2 87 billion H shares in Hong Kong at
a range of HK 6 16 to HK 6 81
If both the A and H shares are priced at the top of the
range MCC could raise as much as 5 3 billion second only to
China State Construction Engineering Corp s 7 3 billion IPO in
July
The company is expected to announce the A share pricing on
Thursday evening and H share pricing next Thursday according to
a sales document with trading to start on Sept 21 in Shanghai
and on Sept 24 in Hong Kong
Book runners for the deal include Morgan Stanley Citigroup
and CICC
MCC is one of a slew of firms that the China Securities
Regulatory Commission has pushed into the market since the
regulator resumed IPOs in June after a 10 month suspension
The benchmark Shanghai Composite Index ended 0 7 percent
lower at 2 924 883 on Thursday
Investor concern over a surge in equity supply and fears of
lending curbs hit the benchmark Shanghai Composite Index last
month but the market has stabilised in the past week partly due
to government reassurance it will not tighten monetary policies
The negative impact of MCC s IPO has already been digested
by investors said Gao Lingzhi analyst at Great Wall
Securities
We expect to see fewer major IPOs in the coming months as
regulators may slow approvals to stabilize the market
MCC has said it needs funds to develop overseas projects
including a copper mine project in Afghanistan It also needs
funds for technical upgrades equipment purchases property
development and supplemental working capital
MCC s Shanghai IPO was priced at around 42 times its 2008
earnings That is slightly more expensive than the average
price earnings ratio of 39 for China s 15 listed construction
and engineering firms according to Reuters Research
The average PE ratio of Shanghai s A shares is about 25
times 2008 earnings which is already almost double Hong Kong s
16 times in spite of the A share market s recent slump
CITIC Securities was the IPO s sole lead underwriter MCC
has said
1 6 83 yuan
Additional reporting by Samuel Shen Editing by Jacqueline
Wong and Simon Jessop |
MS | Wynn Resorts to raise up to 1 bln in HK IPO on Oct 9 sources | HONG KONG Sept 11 Reuters Las Vegas casino operator Wynn
Resorts plans to raise up to 1 billion by listing its Macau
assets on the Hong Kong stock exchange two sources with direct
knowledge of the deal said on Friday
The listed unit Wynn Macau Ltd will sell 20 percent of its
enlarged share capital said a source who declined to be
identified The tentative listing date for the IPO is set for Oct
9 the source added
Hong Kong s stock regulator on Thursday approved Wynn s
application to launch its initial public offering in Hong Kong
according to a second source
JP Morgan UBS AG and Morgan Stanley have been designated to
handle Wynn s Hong Kong listing
Reporting by Donny Kwok and Fion Li Writing by Sui Lee Wee
Editing by Ken Wills |
JPM | U S jobless claims near 43 year low wholesale inventories surge | By Lucia Mutikani WASHINGTON Reuters The number of Americans filing for unemployment benefits unexpectedly fell last week to near a 43 year low amid a further tightening of the labor market that could eventually spur faster wage growth Other data on Thursday showed inventories at wholesalers surged in December for a second straight month and sales recorded their biggest increase since 2011 signs of confidence in the economy as domestic demand strengthens Initial claims for state unemployment benefits dropped by 12 000 to a seasonally adjusted 234 000 for the week ended Feb 4 the Labor Department said That left claims just shy of the 43 year low of 233 000 touched in early November Claims have now remained below 300 000 a threshold associated with a strong labor market for 101 straight weeks That is the longest stretch since 1970 when the labor market was much smaller There is no sign of a pickup in layoff activity We continue to view the signal of extremely subdued layoffs from the jobless claims data as evidence of companies attempting to retain their workers in a tight labor market said John Ryding chief economist at RDQ Economics in New York Prices of U S Treasuries fell with yields rising to session highs while the dollar rose against a basket of currencies The labor market is at or close to full employment with the unemployment rate at 4 8 percent after hitting a more than nine year low of 4 6 percent in November The economy created 227 000 jobs in January Further tightening in labor market conditions could boost wage growth which has remained stubbornly sluggish despite anecdotal evidence of more companies struggling to find qualified workers PRETTY UPBEAT SIGNAL Lackluster wage growth if sustained could hurt consumer spending and crimp economic growth Economists polled by Reuters had forecast first time applications for jobless benefits rising to 250 000 in the latest week Today s report sent a pretty upbeat signal about conditions in the job market said Daniel Silver an economist at JPMorgan NYSE JPM in New York It looks like conditions in the job market have remained solid in the few weeks since the reference period for the January payroll report The four week moving average of claims considered a better measure of labor market trends as it irons out week to week volatility fell 3 750 to 244 250 last week the lowest level since November 1973 The claims report also showed the number of people still receiving benefits after an initial week of aid increased 15 000 to 2 08 million in the week ended Jan 28 The four week average of the so called continuing claims fell 3 750 to 2 08 million In a separate report on Thursday the Commerce Department said wholesale inventories increased 1 0 percent after a similar jump in November The back to back strong increases of stock accumulation however suggest a moderation in the pace of inventory investment in the months ahead Wholesale stocks excluding autos the component of wholesale inventories that goes into the calculation of gross domestic product increased 0 9 percent in December Inventory investment contributed one percentage point to the economy s 1 9 percent annualized growth rate in the fourth quarter That was the second straight quarterly contribution to GDP growth Inventories had been a drag on GDP growth since the second quarter of 2015 Sales at wholesalers jumped 2 6 percent in December the largest increase since March 2011 after increasing 0 5 percent in November
At December s sales pace it would take wholesalers 1 29 months to clear shelves the smallest since December 2014 and down from 1 31 months in November The ratio has declined from the 1 37 months touched in January of last year which was the highest since March 2009 |
JPM | Exclusive Bain to seek 1 billion for its first Asia focused credit fund sources | By Elzio Barreto HONG KONG Reuters Bain Capital is planning its first Asia focused credit fund seeking to raise 1 billion to capitalize on distressed debt and direct lending opportunities as banks dispose of those assets and operations people familiar with the plans told Reuters The move would double the private equity firm s presence in credit related investments in the region as it also has about 1 billion in distressed debt and so called special situations transactions done through its global funds Indian and Chinese banks in particular are looking to dispose of billions of dollars in soured loans to real estate and mining projects manufacturing plants and industrial conglomerates Bain is one of the world s largest private managers of credit and fixed income instruments with about 30 billion invested in those assets The planned doubling of its Asia credit exposure underscores what Bain and other distressed debt players like Oaktree Capital Group LLC N OAK see as huge opportunity to expand in the region The Boston based firm plans to launch the new fund in the first half of 2017 and will focus mostly on special situations the people said Special situations refer to event driven investments such as bets on companies that are distressed the target of a takeover or whose assets will be spun off Bain is laying the groundwork for the fund given the size of the opportunities and the pipeline of potential deals said one of the people who declined to be identified because details of the fund have not been made public Bain declined to comment Bain s investments in the region include buying loan books from JPMorgan Chase Co N JPM Lloyds Banking Group L LLOY and Standard Chartered L STAN in Asia The firm last May completed the purchase of GE Capital s commercial lending and leasing portfolios in Australia and New Zealand in a deal valued at about 1 2 billion Bain also has a partnership with Indian conglomerate Piramal Enterprises Ltd NS PIRA that is looking to invest more than 1 billion in distressed assets in India over the next few years Any private equity firm in the world that has a credit franchise is growing that part of the business is investing in the theme is creating different products in credit and is trying to become much more global said a large investor in private equity firms who has invested in Bain s funds The investor declined to be identified Asia focused private debt funds raised about 2 billion in 2016 a fraction of the 76 billion raised globally according to data provider Preqin The previous year was a record for private debt fundraising globally with 96 billion with Asia focused funds taking in 7 1 billion Credit not just in China but regionally is an area that seems to have a huge tailwind The factors that are in play in China which is that banks are increasingly unwilling to lend to small and medium sized enterprises are at play elsewhere said one of the people familiar with Bain s plans |
JPM | Turkish hacker behind cyber heists gets 8 years in U S prison | By Nate Raymond NEW YORK Reuters A Turkish hacker was sentenced to eight years in a U S prison on Friday for his role as one the masterminds behind three cyber attacks that enabled 55 million to be siphoned from automated teller machines globally Ercan Findikoglu who went by the online nicknames Segate Predator and Oreon was sentenced by U S District Judge Kiyo Matsumoto in Brooklyn after pleading guilty in March to computer intrusion conspiracy and other charges Findikoglu 35 is expected to get credit for the time he spent in custody since his arrest in Germany in 2013 Findikoglu apologized for the damage he had caused and wiped away tears as he said he had not seen his wife and son since his arrest I could have used my skills for good he said Instead I wasted them Prosecutors said Findikoglu was a leader in a series of cyber heists which allowed for the simultaneous withdrawal of millions of dollars after hackers infiltrated credit and debit card processing companies In what were called unlimited operations hackers targeted databases those companies maintained for prepaid debit cards and effectively eliminated the card accounts withdrawal limits prosecutors said The processing companies included Fidelity National Information Services Inc ElectraCard Services now owned by MasterCard Inc and enStage Findikoglu and others then distributed the data to teams of cashers worldwide who encoded the data onto magnetic stripe cards to conduct thousands of fraudulent ATM withdrawals prosecutors said The biggest heist in which 40 million was withdrawn targeted cards issued by Bank Muscat in Oman and involved thieves in 24 countries in 2013 executing 36 000 transactions prosecutors said They said two other heists in 2011 and 2012 resulted in 15 million in losses and targeted cards issued by JPMorgan Chase Co NYSE JPM and National Bank of Ras Al Khaimah in the United Arab Emirates Thirteen members of a New York cashing crew that prosecutors say withdrew 2 8 million in two operations have pleaded guilty In court papers defense lawyer Christopher Madiou said Findikoglu s crimes occurred while he was facing Turkish charges that he conspired to produce fake debit and credit cards In that case Findikoglu was convicted in 2012 and sentenced to 19 1 2 years in prison While out on bail he was arrested in 2013 in Germany which extradited him in 2015 After completing his U S sentence Findikoglu will be deported and is expected to serve that Turkish sentence Madiou said |
C | Hyundai Motor family succeeds at Glovis stake sale on second attempt | By Hyunjoo Jin and Joyce Lee SEOUL Reuters Hyundai Motor Co s chairman and his son sold 1 1 billion worth of shares in logistics firm Hyundai Glovis Co Ltd finding success in their second attempt at a sale after committing to a long lock up period for their remaining stakes and slashing the price Chairman Chung Mong koo and son Chung Eui sun had sought to sell 13 percent of the affiliate to comply with new antitrust rules But investors walked away from an initial sale attempt last month worried that the family may be pulling out from Hyundai Glovis and uncertain if the stake sale was key to the group s efforts to hand over control to the younger Chung To soothe investors concerns the Chungs committed to a lock up period of just under two years for their remaining combined stake of nearly 30 percent Advisors tapped the market ahead of the rebooted deal and asked investors what conditions they would prefer people familiar with the deal told Reuters They declined to be identified as they were not authorized to speak to the media The lock up period cleared up uncertainty about what the family would do with Glovis and offered investors a chance to maximize value in the meantime said Kim Min ji a logistics analyst at E Trade Korea The collapse of the sale last month had also sparked a 21 percent decline in Hyundai Glovis shares and the final price came in 17 percent below the high end of the initial sale s indicative range Some 5 million shares in Hyundai Glovis were sold at 230 500 won each a discount of 2 7 percent to Thursday s close That compares with a marketing range of 227 500 232 500 won Shares in Hyundai Glovis rose 2 3 percent in morning trade outperforming a flat broader market The lock up however has lowered expectations that the founding family would sell Hyundai Glovis shares to increase holdings in key affiliates such as auto parts maker Hyundai Mobis Shares in Hyundai Mobis fell as much as 5 percent The deal s managers were Citigroup and NH Investment Securities unlike last month when Citigroup was the sole manager
1 1 085 7500 won |
C | Citigroup C Beats On Q2 Earnings Estimates Revenues Down | Have you been eager to see how Citigroup Inc NYSE C performed in Q2 in comparison with the market expectations Let s quickly scan through the key facts from this New York based money center bank s earnings release this morning An Earnings BeatCitigroup came out with earnings from continuing operations per share of 1 25 handily beating the Zacks Consensus Estimate of 1 09 Results were primarily aided by lower expenses partially offset by reduced revenues How Was the Estimate Revision Trend You should note that the earnings estimate for Citigroup depicted pessimism prior to the earnings release The Zacks Consensus Estimate has moved south 2 7 to 1 09 over the last 7days However Citigroup has a decent earnings surprise history Before posting an earnings beat in Q2 the company also delivered positive surprises in the prior four quarters CITIGROUP INC Price and EPS Surprise
Overall the company surpassed the Zacks Consensus Estimate by an average of 4 4 in the trailing four quarters
Revenue Came in Slightly Lower Than ExpectedCitigroup s adjusted revenues of 17 55 billion lagged the Zacks Consensus Estimate of 17 57 billion Also revenues declined 8 year over year Key TakeawayAdjusted Net Income stood at 4 0 billion down 14 from the prior year quarter Operating expenses declined 5 year over year to 10 4 billion Revenues from fixed income markets and equity markets increased 14 and 21 on a year over year basis respectively Net interest margin fell 9 basis points from the prior year quarter to 2 86 What Zacks Rank SaysThe estimate revisions that we discussed earlier have driven a Zacks Rank 4 Sell for Citigroup However since the latest earnings performance is yet to be reflected in the estimate revisions the rank is subject to change Now it all depends on what sense the just released report makes to the analysts Check back later for our full write up on this Citigroup earnings report |
C | It s Looking Gloomy For Citigroup As Earnings Near | Citigroup Inc NYSE C Financials Diversified Financial Services Reports July 15 Before Market Opens
Key Takeaways
The Estimize consensus is looking for earnings per share of 1 12 on 17 65 billion in revenue 3 cents higher than Wall Street on the bottom line and 80 million on the top
Citigroup has been amongst the weakest performing banks in the struggling financial sector
Citigroup like its peers have struggled due to low interest rates and currency headwinds with Brexit now posing a new problem
What are you expecting for
The banking industry has been on a roller coaster ride for some time now and things are only getting worse This year the financial sector was expecting a number of rate hikes to provide earnings with a much need boost
On top of the Fed s delayed decision has been the Brexit vote which sent shockwaves through the financial sector Since the Financial Crisis it seems like nothing has worked out for the banking industry with little possibility of changing anytime soon
Amongst those most affected are Citigroup Citigroup like its peers is scheduled to report Q2 later this week with tepid expectations The Estimize consensus is looking for earnings per share of 1 12 on 17 65 billion in revenue 3 cents higher than Wall Street on the bottom line and 80 million on the top
Compared to a year earlier this reflects a 22 decline in earnings and 7 in sales Both per share and revenue estimates have come down in the past 3 months reflecting analysts pessimism towards earnings this quarter Shares of Citigroup are down 22 in the past 12 months
In a recent report fellow bank Wells Fargo NYSE WFC downgraded Citi stock suggesting that bank s extensive overseas exposure puts them at an elevated risk The impact from Brexit won t likely affect Q2 earnings but might be mentioned in its guidance as a limited factor moving forward The biggest concerns this quarter will be the performance of trading revenue M A activity and its credit portfolio
Last quarter Citigroup saw declines across the board Revenue and net income were reported significantly lower than the year prior as currency headwinds and a higher cost of credit took its toll Citi has very low expectations heading into Q2 as do many of the banks so any small win could be the boost shareholders need Do you think C can beat estimates |
MPC | Moody s Lowers UK GDP Growth Forecast | GBP USD title GBP USD width 1541 height 1061 For the 24 hours to 23 00 GMT GBP fell 0 26 against the USD and closed at 1 5669 The Moody s Investors Service lowered gross domestic product GDP forecast for UK to 0 4 in 2012 and 1 8 in 2013 However it retained its negative outlook and triple A credit rating on the nation Meanwhile the market participants continued to focus primarily on events in the Euro zone and the US looking for signs from policymakers of further quantitative easing Traders speculated that Pound could be vulnerable if a steady stream of poor UK economic data pushed the Bank of England closer to more quantitative easing or even a 25 basis point rate cut Consensus however remained that the Bank of England s Monetary Policy Committee MPC to leave both policy stances unaltered when it meets on Thursday In the Asian session at GMT0300 the pair is trading at 1 5674 with the GBP trading marginally higher from yesterday s close This morning in the UK BRC shop price index rose 1 0 YoY in July in line with the market expectation The pair is expected to find support at 1 5624 and a fall through could take it to the next support level of 1 5574 The pair is expected to find its first resistance at 1 5726 and a rise through could take it to the next resistance level of 1 5778 Trading trends in the pair today are expected to be determined by the release of Purchasing Manager Index PMI manufacturing and Nationwide house price data in the UK |
MPC | BOE Minutes Policy Makers Unanimously Vote To Leave Policy Unchanged | GBP USD title GBP USD width 514 height 471 For the 24 hours to 23 00 GMT GBP fell 0 10 against the USD and closed at 1 6226 Yesterday the minutes of the Bank of England s BoE latest monetary policy meeting revealed that the policymakers unanimously voted in favour of leaving the benchmark interest rate and asset purchase target unchanged at current levels Additionally the minutes revealed that some Monetary Policy Committee MPC members saw stimulus more likely than not to be needed in the near term while only one MPC member saw good case for more quantitative easing despite the unanimous vote In the Asian session at 03 00 GMT the pair is trading at 1 6219 with the GBP trading marginally lower from yesterday s close The pair is expected to find support at 1 6179 and a fall through could take it to the next support level of 1 6139 The pair is expected to find its first resistance at 1 6265 and a rise through could take it to the next resistance level of 1 6311 In the day ahead on an annual basis retail sale in the UK is expected to rise in August |
MPC | Bank Of England Preview On Hold For Now | We expect the Bank of England to remain on hold at Thursday s Monetary Policy Committee MPC meeting and believe the Bank of England BoE will remain in wait and see mode going forward As this is in line with consensus we expect a muted market reaction following the MPC s decision BoE likely to hold its current policy unchanged On Wednesday the members of the MPC will gather for their monthly two day meeting to set BoE policy As the BoE last week announced that it had reached the current target for bond buying now holding 34 of total outstanding gilts all eyes are on this month s MPC decision The big question is what the MPC will do as the July increase of GBP 50bn of the APF has reached the limit We will have the answer at 13 00 CET on Thursday The split within the MPC has been clear as the minutes from the October meeting revealed Some members felt that there was still considerable scope for asset purchases to provide further stimulus Other members questioned the magnitude of the impact that lower long term yields on corporate debt and equity would have on the broader economy at the present juncture Recent communications from MPC members have added more colour to the discussion from the October Minutes David Miles has expressed concerns about the weak growth and expressed views consistently with his previous dovish stance This view is opposed by for example Marvin Whale and his concerns that inflation expectations could rise with the apparent stickiness of inflation Variations of this view together with questions of further effectiveness of additional QE have also been raised by BoE Deputy Governor Charles Bean and BoE Chief Economist Spencer Dale both MPC members Furthermore governor Mervyn King said in a speech two weeks ago that the MPC s next policy decision hangs in the balance MPC will think long and hard before it decides whether or not to make further asset purchases But in his speech he seemed to take the stand that MPC would do more QE only if things got even worse than the current situation but should those signs referring to positive signs such as labour market job creation falling inflation and strong retail sales fade the MPC does stand ready to inject more money into the economy To Read the Entire Report Please Click on the pdf File Below |
MS | UPDATE 2 China backs state firms on oil options losses | SASAC confirms some SOEs sent letters to their banks
Letters say SOEs to reserve rights of recourse on trades
SASAC also says SOEs reserve rights to launch lawsuits
Lawyers say devil is in details of trading contracts
Adds analysts comments market reactions
By Eadie Chen and Tom Miles
BEIJING Sept 7 Reuters Beijing has publicly put its
weight behind some state owned firms struggling with oil
derivatives losses saying it will back them in any legal
action against the foreign banks that sold the products
In a statement on Monday the State owned Assets
Supervision and Administration Commission said that some
state owned enterprises had sent letters to their trading
partners about oil structured options trades confirming a
report in Caijing magazine last week that had sent shudders
through the banking community
SASAC will support companies to minimise losses and
protect rights through negotiations and holdings management We
also reserve the right to launch legal suits the agency said
The move is the latest by SASAC to curb the
over the counter derivatives business after a series of
corporate commodity and forex hedging deals went spectacularly
bad over the past 10 months costing Chinese state firms
billions of dollars
Bankers were unhappy with the latest developments
If they declare bankruptcy it is different But if these
companies are still in business it is not acceptable for them
to just walk away from the losses said a Singapore based
banker
who like others declined to be named due to the sensitive
nature of the matter
The agency did not specify the names of state firms and
their trading partners involved in the issue
A Singapore based bank source told Reuters last week that
Air China 60111 SS 0753 HK China Eastern 600115 SS and
shipping giant COSCO 1919 HK had issued almost identical
notices to
their foreign investment banks
Major global providers of commodity risk management such as
Goldman Sachs UBS Morgan Stanley and
JPMorgan were not immediately available for comment
DEVIL IN DETAILS
Lawyers said that the details of the contracts will be key
in deciding whether Chinese state firms can just walk away from
their loss making commodity derivative trades
As far as I know many of the contracts signed between
foreign investment banks and Chinese state firms follow the
International Swaps and Derivatives Association ISDA format
a Beijing based derivatives lawyers said
Usually the ISDA format allows the product selling banks
to choose the region and types of law their contract should be
subject to said the lawyer who declined to be named due to
the sensitive nature of the issue
That means that the investment banks can choose regions
other than China to resolve their disputes with Chinese firms
and usually these contracts will be regarded as legal in other
regions the lawyer said
The lesson for Chinese firms is that they have to increase
their expertise about derivatives and make sure they have the
right to choose Chinese law to settle their dispute with their
banks the lawyer added
OIL OPTIONS PROBES
SASAC said in the statement that it was also investigating
some state firms oil option trades and repeated that it would
ban state firms from making speculative derivatives trades
It also warned that state firms should choose trading
partners carefully to steer clear of complex products
Suffering big losses some state firms have been
complaining that their foreign investment banks sometimes did
not reveal sufficient information about the potential risks of
the products they are touting
The word is that these new directives from China are
directed more towards exotic hedging instruments such as
structured options among others than plain vanilla swaps
said an oil derivatives trader with a bank
It would seem that some Chinese companies lost a lot of
money on exotics without really understanding how the
instruments work
Starting from January SASAC has sent a series of warnings
to crack down on the sale of derivative products by foreign
banks to Chinese enterprises who bought protection against
higher prices last year only to watch the market collapse
In July it ordered state companies to report their
holdings of futures options forwards and swaps and
investment performances to the watchdog within 10 working days
of the end of each quarter
For more details on derivatives regulation ID nPEK207347
For a timeline ID nSP481422
For an analysis ID nSP508234
Additional reporting by Yaw Yan Chong and Judy Hua in
Singapore Editing by Michael Urquhart |
MS | DEALTALK Asia awaits rash of life insurer IPOs | AIA China Pacific biggest deals in region
South Korea s 350 mln Tong Yang IPO may start trend
Reliance Life seen first in line for IPO in India
By Tony Munroe and Marie France Han
MUMBAI SEOUL Sept 7 Reuters Investors in Asia who
currently have few options among insurance stocks may soon be
spoiled for choice as several life underwriters prepare initial
public offerings that could raise billions of dollars
The IPO hopefuls include what would be the first listed
life insurers in India and South Korea
Looming largest in the pipeline is AIA the Asian arm of
American International Group which plans a Hong Kong IPO in
the first half of 2010 to raise roughly 4 billion after its
troubled parent failed to find a buyer for the unit
Shanghai listed China Pacific Insurance meanwhile aims to
raise 3 5 billion in Hong Kong by early 2010
The potential wave of issuance comes as IPOs make a
comeback around Asia and as rising stock markets lift earnings
for life insurers for whom investment returns are a key source
of income The need for capital to fund expansion is another
driver
There s a lot of pent up demand for capital as insurers
need to raise capital to fund growth and meet new risk based
capital requirements said Chin Yee Png co head of the Asia
financial institutions group at UBS
UBS is among the investment banks along with China
International Capital Corp CICC Credit Suisse and Goldman
Sachs helping China Pacific the country s No 3 life insurer
to revive an overseas share sale that had been shelved earlier
due to weak markets
SCARCITY GROWTH
Scarcity value is expected to drive investor interest in a
sector that is a proxy for the growth of the middle class
Asia is home to just a handful of big listed insurers led
by China Life Insurance and rival Ping An Insurance the
world s two most valuable life insurers and Taiwan s Cathay
Financial Holdings
There s no way of playing the Indian insurance story
today so I think there s going to be very strong demand This
is part of a broader regional trend said Rob Jesudason Asia
head of the financial institutions group at Credit Suisse
There are potentially 5 10 very large insurance IPOs
across the region approaching the market he said
Esther Chwei a portfolio analyst covering insurance and
banking at fund manager RCM a unit of Allianz Global
Investors said China and India with fast growing economies
and low insurance penetration rates are especially attractive
Life insurance penetration in India is about 4 percent of
GDP in terms of total premiums underwritten in a year
compared with 2 4 percent in China and about 13 5 percent in
the UK
For China and India once people get wealthier and have
financial obligations the demand for protection policies will
increase said Chwei whose firm manages 11 billion in the
Asia Pacific region
SOUTH KOREA S FIRST
Tong Yang Life Insurance Co Ltd is on track to be the first
to test public appetite for the sector in South Korea with
plans to raise up to 440 billion won 353 million in an IPO
this month Credit Suisse and Morgan Stanley are among several
firms managing the deal
Demand for fresh capital to bolster insolvency margins had
spurred market talk of a string of Korean life insurer IPOs
But many are units of the country s industrial conglomerates
and have secured new capital from their parents so are in no
rush to offer new shares especially if they might struggle to
get the price they want
South Korea s 73 trillion won 59 25 billion life
insurance landscape by premium income is divided between three
market leaders Samsung Life Korea Life and Kyobo Life and
19 smaller companies such as Tong Yang Kumho and Mirae Asset
Korea Life which has annual premium income of about 10 5
trillion won is the likeliest to follow Tong Yang with an IPO
There is a high likelihood we would proceed for an IPO in
the first or second quarter of next year if market conditions
allow said a spokesman for Hanwha Group the securities to
chemicals conglomerate that owns Korea Life
Kyobo Life s chief said last year it could take 2 3 years
before it goes to the market citing poor market conditions
INDIA SOON
India s young and fragmented private life insurance sector
is ripe for listings given the capital needed to fund growth
though regulatory issues need to be resolved including the
question of when foreign partners can lift their holdings to 49
percent from 26 percent
India s private insurers which were growing rapidly until
last year s market meltdown are all less than 10 years old and
prevented from listing until they have been in business for at
least a decade
Reliance Life Insurance has asked for a waiver so it can
list and industry insiders say an IPO is possible within a
year
India s first foreign backed joint ventures between ICICI
Bank and Prudential Plc Max India and New York Life and
Housing Development Finance Corp and Standard Life all will
have their 10th birthdays next year and are said by insiders to
be eyeing IPOs
Editing by Ian Geoghegan |
MS | GLOBAL MARKETS Stocks up on G20 stimulus M A eyed | World stocks up sharply near high for 2009
Japan gains 1 3 percent Europe up 1 4 percent
Two year euro debt yield hits historic low
Dollar generally weaker
U S markets closed for Labor Day holiday
Final report for Monday as U S market closed for holiday
By Harpreet Bhal
LONDON Sept 7 Reuters Investors jumped into equities on
Monday sending world stocks close to their highest level for
the year while the dollar weakened across the board as demand
for riskier assets took hold
A weekend agreement by the G20 to keep economic stimuli
running helped drive risk appetite The meeting bolstered the
view that interest rates will remain low sending two year euro
zone government bond yields to historic lows
The MSCI s all country world stock index a
benchmark for professional investors rebounded 1 percent after
a rare week of losses and is only a few points off a year high
reached in late August
The pan European FTSEurofirst 300 index added 1 4
percent reversing losses from the previous week on
expectations of mergers and acquisitions after Kraft
made a 16 7 billion bid for Cadbury
Japan s Nikkei closed 1 3 percent higher while
emerging market equities were up about the same Wall
Street was closed for the Labor day holiday
The current equity rally has further to go Morgan Stanley
said in a note A growth cycle is starting we intend to buy on
weakness
The Group of 20 finance ministers and central bankers said
over the weekend they would not remove economic stimulus until
the global recovery was well entrenched ID nL5327479
Notwithstanding Monday s gains equity markets have been
pulling back somewhat from the sharp rally that began in March
The world index lost nearly 1 5 percent last week the first
decline in eight week and only the fifth since the rally began
Some degree of risk aversion and a weaker dollar was
evident on the gold market
Spot gold gained 4 percent last week and is currently
trading around 995 an ounce
HISTORIC LOWS
Two year euro zone government bond yields slipped to
historic lows on the view that interest rates will stay low for
longer than some had expected following comments from the
weekend s G20 meeting
The two year Schatz yield slipped to a euro
lifetime low of 1 064 percent while the 10 year yield was at
3 228 percent
The dollar and yen were generally weaker with the former
down 0 2 percent against a basket of major currencies
The Australian dollar hit its strongest level against the
dollar in a year as shares gained after a G20 pledge to keep
economic stimulus packages in place
The G20 was positive for risk appetite you can see that
from the yen and dollar s performance At the same time people
are still a bit cautious as we are approaching the end of this
policy cycle said Geoffrey Yu a currency strategist at UBS
Against the yen the dollar was flat to slightly stronger at
93 00 yen
The euro gained 0 3 percent to 1 4336 near a one
week high but still below August s eight month high at 1 4448
Additional reporting by Emelia Sithole Matarise and Jeremy
Gaunt
Editing by Andy Bruce |
MS | POLL Chinese export decline eased in August | For more stories on the Chinese economy click ID nECONCN
What China s August trade figures
When Due on Friday Sept 11 may come earlier
Annual drop in exports to ease may rise month on month
BEIJING Sept 8 Reuters Chinese exports and imports
probably fell less markedly year on year in August than they
did in July amid some signs of stabilisation in global demand
The median forecast of 31 economists polled by Reuters is
for a 19 6 percent annual drop in exports in August easing
from July s 23 0 percent decline
Economists projected a 10 0 percent annual drop in imports
in August compared with a decline of 14 9 percent in July
The median of the Reuters poll is for a trade surplus of
12 9 billion up from 10 6 billion in July
The figures are scheduled to be released on Friday but the
customs administration might issue them earlier
Beijing has introduced a slew of measures including tax
refunds and credit support to help its export sector after it
was battered by the global financial crisis
Tentative signs that exports are beginning to improve have
come from China s pair of purchasing managers indexes both of
which have shown new export orders picking up for at least the
past three months
Li Kenong vice head of the General Administration of
Customs told Reuters on Monday that the annual drop in exports
did in fact ease in August from July and that exports grew in
month on month terms in August but he did not give details
ID nPEK37351
China s economy probably made solid strides over the past
month with strong industrial growth signs of improving
exports and the end of deflation in sight a related Reuters
poll showed
In addition to the trade figures a slew of other data late
this week is expected to show the world s third largest economy
is well on the road to recovery after a burst of government
spending and bank lending ID nPEK13371
FORECASTS
Trade surplus is in billions of dollars exports and
imports are percent change from a year earlier
Surplus Export
Import
Action Economics 15 5 16 0
8 0
ANZ 19 0
11 0
Bank of Communications 16 3 21 0
15 0
Barclays Capital 18 0
11 0
BNP Paribas 13 5 19 6
10 5
Bohai Securities 13 4 23 0
15 0
Capital Economics 12 9 18 0
8 0
China Construction Bank 9 5 22 0
10 0
China Jianyin Investment Secur 17 1 20 0
14 0
CICC 10 0 20 0
10 0
CITIC Securities 11 4 17 4
5 1
Citigroup 11 5 20 6
9 8
Deutsche Bank 13 7 19 0
10 0
Essence Securities 10 2 17 8
5 2
Fortune Trust 12 0 17 5
6 0
Goldman Sachs 13 5 23 0
14 9
Guotai Junan Securities 13 6 19 0
9 7
Hang Seng Bank 15 5 20 0
13 0
Industrial Bank 11 5 22 3
14 5
Industrial Securities 12 7 19 7
9 9
ING 12 5 19 0
9 5
JPMorgan 10 7 20 8
9 3
Merrill Lynch 14 5 20 7
12 7
Morgan Stanley 13 7 19 0
10 0
Nomura 10 0 18 0
5 0
Royal Bank of Scotland 11 4 22 3
12 0
Shenyin Wanguo Securities 13 1 19 6
11 0
Shanghai Securities 12 0 18 8
7 5
SJS Markets 14 0 18 4
9 6
Standard Chartered 12 8 22 0
13 0
UBS 15 7 18 0
10 0
Median 12 9 19 6 10 0
Previous Month 10 6 23 0
14 9
Previous Year 28 7 21 1
23 1
For the full August data poll double click ID nPEK13371
For the China indicators fixed page click
For historical data click on CN DATA
Reporting by Beijing Newsroom Editing by Ken Wills |
JPM | Trump banking review raises fears for global standards talks | By Huw Jones LONDON Reuters President Donald Trump s review of post crisis banking rules could sound the death knell for new global standards now being finalised and rip apart a common approach to regulating international lenders bankers and regulators said Central banks and watchdogs around the world have spent the past eight years drawing up regulation aimed at preventing a repeat of the 2007 2009 financial crisis but there are fears that project could unravel after Trump said he wants the U S to row back on capital rules Trump s order for a regulatory review to overcome what he sees as obstacles to lending came as banking watchdogs were trying to complete the final piece of global capital requirements known as Basel III Given that the United States wants to shrink the banking rule book there are doubts over whether the Basel rules can make it over the finishing line next month if they don t have backing from the United States Without support from the world s biggest capital market other countries would be less willing to commit too The core aim of the outstanding part of Basel III that regulators are working on dubbed Basel IV by critical banks who worry about more stringent capital requirements is to impose more consistency into how banks calculate the amount of capital they hold against risky assets like loans JPMorgan NYSE JPM chief executive Jamie Dimon said in the aftermath of the financial crisis that European rivals had been a lot more aggressive than American banks in calculating capital meaning they were holding less European policymakers have rejected that criticism but their region s banks have been lobbying against the remaining Basel rules saying they would force them to increase significantly the amount of capital they need to hold If the United States fails to approve the completion of Basel III the perceived problem that European banks get away with holding less capital than U S lenders may not be properly tackled a source involved in the negotiations said It s in the interests of American banks to get this done the source said Others are less optimistic that a deal can now be done after Trump s intervention It s going to delay completing Basel III and perhaps lead to it not being concluded an adviser to banks said on condition of anonymity I do fear that Basel IV is doomed a banking industry official added There are headwinds from elsewhere too Patrick McHenry Republican vice chairman of the House financial services committee fired a warning shot at Federal Reserve Governor Janet Yellen about the Basel talks in a letter dated Jan 31 ahead of Trump s executive order The Fed must cease all attempts to negotiate binding standards burdening American business until the Trump Administration has had the opportunity to nominate officials that prioritize America s best interests McHenry said While lawmakers often call on regulators to ease pressure on firms regulators said Trump s intervention in banking rules gives more clout to McHenry s warning The Basel Committee declined to comment GLOBAL COOPERATION Trump s decision to review existing post crisis banking rules has rung alarm bells among regulators outside the country Mario Draghi president of the European Central Bank which regulates the euro zone s main lenders said on Monday that easing banking rules could threaten financial stability Draghi was chairman of the Group of 20 Economies G20 regulatory task force the Financial Stability Board which during the financial crisis was instrumental in building up a global approach to reinforcing banking standards A former regulator said the United States would be scoring an own goal by withdrawing from multilateral bodies like Basel as it would no longer be shaping rules that impinge on U S banking competitiveness globally It s early days but what we have seen in language and rhetoric from Washington is worrying said David Wright a former top EU official who was part of crisis era efforts to create the global regulatory consensus If you break international consensus you are effectively opening up a regulatory race and heaven knows where it will end said Wright now at Flint Global which advises companies on regulatory matters Wright was referring to what was seen in the run up to the financial crisis when countries like Britain resorted to a light touch approach to banks to make London a more attractive financial center Valdis Dombrovskis the EU s financial services chief said last week that international regulatory cooperation had been vital in tackling the financial crisis and must continue Much will hinge on how much regulatory change Trump can actually push through Former Democratic Congressman Barney Frank who jointly sponsored the Dodd Frank Act that Trump wants to review told the BBC last week he does not expect Congress to approve the wholesale rolling back of rules but the Trump administration could pressure U S regulators to ease up on applying existing requirements Anil Kashyap a Bank of England policymaker said last month that Trump s nomination for the powerful role of Fed Vice Chair in charge of banking supervision would shape the U S approach to international rule making It will have a huge impact a regulatory source added The fear among global regulators is that multilateral bodies like the Basel Committee and the Financial Stability Board could be abandoned by the United States under Trump Jose Ignacio Goirigolzarri chairman of Spain s Bankia told Spanish television on Tuesday he would be concerned if Trump was questioning the usefulness of international banking rules
It would worry me very much because I think it s very important very relevant that there have been advances in the homogenization of regulation amongst developed countries he said |
JPM | Deutsche Bank investment banking head Urwin in talks to leave WSJ | Reuters Deutsche Bank AG s DE DBKGn investment banking chief Jeffrey Urwin is in talks to leave the role and the bank is in discussions to name finance chief Marcus Schenck to run the unit the Wall Street Journal reported citing people familiar with the matter
The bank hired Urwin a Briton in February 2015 from JP Morgan N JPM where he co headed the global banking division
Deutsche Bank declined to comment on the report |
C | Citi lost more than 150 million on currency swings Bloomberg | Reuters Citigroup Inc N C the world s biggest currencies dealer lost more than 150 million after the Swiss central bank decided to let the franc trade freely against the euro Bloomberg reported The losses took place on Citi s trading desks and are not tied to its relationships with currency trading services provider FXCM Inc N FXCM and other retail trading platforms Bloomberg said citing a person briefed on the matter Citi declined to comment The Swiss National Bank shocked financial markets on Thursday by scrapping a three year old cap on the franc sending the currency soaring against the euro and stocks plunging on fears for the export reliant Swiss economy
Citibank s head of European investor sales foreign exchange and local markets Alex Jackson left the company this week Bloomberg reported earlier on Friday citing a source |
MS | UPDATE 1 Forex com parent seeks 125 mln in IPO | NEW YORK Aug 31 Reuters Gain Capital Holdings Inc an
online provider of retail foreign exchange trading services is
planning to raise up to 125 million in the public markets
according to a regulatory filing on Monday
Gain Capital based in Bedminster New Jersey operates the
forex com website which for the six months ended June 30
averaged 1 3 million unique visitors per month according to an
initial public offering prospectus filed with the U S Securities
and Exchange Commission
Gain Capital which was founded in 1999 by Wall Street
traders said in the filing that 56 7 percent of its clients were
based outside the United States including until last year China
which in December 2008 represented 26 8 percent of its clients and
about 11 6 percent of total trading volume
But the company abruptly abandoned the Chinese market in
December after a regulatory review by the government there and
its revenues fell
For the six months ended in June 2009 Gain Capital s net
revenues fell 12 2 percent from a year earlier to 77 8 million
with a net loss of 48 7 million The company had net income of
135 3 million in the year ago period
According to the filing Gain Capital had to leave the Chinese
market after regulators in 2008 found it did not have a license to
provide retail foreign exchange trading services to Chinese
residents through the Internet The company said in the filing it
did not know such a permit to exist
All of the IPO s proceeds will go to Gain Capital s existing
shareholders a potential impediment to investor interest in the
offering given a preference to see IPOs used at least partially
to fund company growth
The foreign exchange company has arrangements with three prime
brokers Deutsche Bank Royal Bank of Scotland PLC and UBS AG
to provide liquidity to its clients it said
The IPO will be led by Morgan Stanley and Deutsche Bank
Securities
Gain Capital plans to list its shares on Nasdaq
Reporting by Phil Wahba Editing by Richard Chang Phil
Berlowitz |
MS | Reuters Summit UPDATE 1 Lujiazui eyes new revenue flow in 5 yrs | For other news from the Reuters China Investment Summit click
on
Aims to transform into a full property developer in 5 yrs
To increase land for rent to 2 mln sq metres in 5 yrs
Not planning REIT banks to be main source of funding
Adds details and quotes
By Tony Zhou and Melanie Lee
SHANGHAI Sept 2 Reuters China property firm Shanghai
Lujiazui Group 600663 SS said it aims to generate half its
revenue from land sales and half from rent within five years as
it moves toward becoming a full fledged property developer
Shanghai Lujiazui Finance and Trade Development Zone which
sells and manages land parcels in the city s financial district
said the switch will help it capitalise on China s booming
property market as land parcels available for sale in the area
dwindle
Our short term goal is to reduce the amount of revenue from
land sales and to increase our revenue gotten from rent we
hope to balance it in 5 years Jiang Ping a senior executive
said at the Reuters China Investment Summit
In the first half of 2009 Shanghai Lujiazui Finance and
Trade Development Zone reported 2 6 billion yuan 381 million
in land sales revenue or more than 90 percent versus 190
million yuan in rental revenue
China s real estate market has rebounded sharply this year
after China unveiled a huge stimulus plan and boosted lending
But some analysts have said some of that stimulus money has
helped create a risky asset bubble in the real estate market
Lujiazui Finance hopes to increase the amount of land
available for rent to 2 million square metres from 460 000
squares currently in five years Jiang said
The firm which does 90 percent of its business in Shanghai
also plans to buy office buildings as investments
A rival property developer SOHO China 0410 HK agreed last
month to acquire its first Shanghai property an office building
owned by the real estate arm of Morgan Stanley for 2 45
billion yuan ID nHKG335934
Money is not an issue for us if we see a good project we
will be keen to take it up Jiang said adding that the firm s
preferred source of funding if needed was bank borrowing
Jiang said the firm has no plans to launch a real estate
investment trust despite talk that China may soon allow fund
houses and brokerages to launch REITs that can be publicly traded
on the Shanghai and Shenzhen stock exchanges ID nSHA221983
1 6 830 Yuan
Editing by Ken Wills |
MS | Q A How closed are China s commodity futures market | Sept 3 Reuters China currently maintains tight control
over its futures market opening only a small window to foreign
participation Financial institutions are barred from
participating and brokers cannot take positions
Following are some questions and answers about the issue
HOW CAN FOREIGN COMPANIES TRADE COMMODITY FUTURES IN CHINA
All China registered non financial companies can apply for
membership at the three futures exchanges in Shanghai Dalian
and Zhengzhou to trade for themselves as long as they also meet
other criteria such as capital size and sound trading records
A non financial foreign firm can do so by setting up a
locally registered company
Some international trading firms such as Louis Dreyfus and
BP Plc are futures bourse members through their local
entities Louis Dreyfus joined the Dalian and Zhengzhou
exchanges in 2006 and BP joined in May 2007 the Shanghai
exchange which runs China s only oil futures contract fuel
oil
Foreign companies with physical trading operations in China
are also able to trade on the exchanges and agricultural
giants like Wilmar Cargill Bunge Louis Dreyfus and
Toepfer are very active on the Dalian exchange
Due to cumbersome red tape procedures many global trading
firms choose to open trading accounts at futures brokerages
instead of applying for bourse membership
Brokerage clients have to pay brokerage service fees and
sometimes are subject to smaller holding ceilings than members
ARE FOREIGN BANKS PERMITTED TO TRADE COMMODITY FUTURES
DIRECTLY
As China still has a segregated regulatory framework for
its financial industry the securities banking and futures
operations are separated by strict firewalls
That means financial institutions such as banks securities
firms mutual funds and insurance companies are banned from
entering the commodity futures market without special
regulatory approval
The only exception granted thus far was in April when four
domestic commercial banks got approval to trade gold futures in
Shanghai as authorities moved to inject more liquidity into the
newly launched product
Banks and other financial institutions domestic and
foreign are not allowed to become members at futures bourses
or clients of futures firms
SO CAN BANKS ACCESS THESE MARKETS INDIRECTLY
Yes A few banks especially those with multiple business
types set up local non financial firms in China through which
they become futures firms clients
For example Wall Street bank Morgan Stanley which
runs a Shanghai office set up about two years ago a
wholly owned foreign enterprise WOFE under a non financial
umbrella to trade metals and agricultural products bank
sources said
A handful of foreign banks such as HSBC Holdings Plc
0005 HK Scotiabank Australia and New Zealand
Banking Group Ltd and Standard Chartered Bank
2888 HK trade cash gold in the Shanghai Gold
Exchange
WHAT OTHER AVENUES EXIST FOR BANKS TO GET A FOOTHOLD
Chinese regulators are reluctant to open the domestic
futures market to foreign players Only since August 2005 when
Beijing worked to cement business relationships with Hong Kong
and Macau have foreign firms had a chance to enter China s
futures market to offer brokerage services
Under the Cooperative Economic Partnership Agreement CEPA
between the mainland and the two regions a Hong Kong or
Macau registered firm can buy no more than a 49 percent stake
in a Chinese futures brokerage Foreign banks and futures firms
can do so through their Hong Kong or Macau subsidies
Since then three joint venture futures firms have been
launched JPMorgan Chase teamed up with Zhongshan Futures in
January 2008 France s Credit Agricole Indosuez teamed up with
Citic Futures in April 2007 and Dutch bank ABN Amro joined
with Galaxy Futures in December 2006
Since January 2008 the process has been frozen and no more
new joint ventures approved
WHAT S THE TIMELINE FOR OPENING UP THIS MARKET FURTHER
China is under no pressure at all to open its futures
markets as unlike its securities banking and insurance
sectors Beijing made no specific commitment to open its
futures market when it entered into the World Trade
Organisation in 2001
The year old global financial crisis as well as numerous
scandals of Chinese firms suffering huge losses from trading
derivatives overseas will make Chinese regulators more
cautious than ever
Reporting by Eadie Chen and Chen Aizhu Editing by Jonathan
Leff
eadie chen reuters com 8610 6627 1268 Reuters Messaging
eadie chen reuters com reuters net |
MS | UPDATE 5 Kraft primed to sweeten 16 7 bln Cadbury bid | Cadbury rejects 745 pence per share cash and shares bid
Kraft still hopes to agree deal higher offer seen
Cadbury shares up 38 percent peak near record high
News raises supports hope of M A revival
Adds shareholder comment
By Paul Hoskins and Victoria Bryan
LONDON Sept 7 Reuters Kraft Foods said it was intent on
pursuing Britain s Cadbury which soared in value after it
snubbed a premium rich bid from the U S group reinforcing
hopes of a broader based pick up in merger activity
Analysts said North America s biggest food group might have
to raise its 10 2 billion pound 16 7 billion offer by up to
40 percent after shares in the world s No 2 candy and chocolate
maker increased by almost half on news of the approach
The company s biggest institutional shareholder Legal
General Investment Management said in a statement that it
thought the approach materially undervalued Cadbury and
supported management in opposing the deal
According to Reuters Estimates Legal General has a 5 4
percent stake in the company
Cadbury s stock closed up 38 percent at 783 pence having
peaked close to its all time high at 808p and well ahead of
Kraft s 745 pence per share pitch
The price spike reflected analysts views the combination
would be a success chances of a counterbid and bankers hopes
that rallying equity markets and a brighter economic outlook
were encouraging companies to view mergers and acquisitions
M A prospects with greater confidence
If the deal gets done it sends a positive signal about the
M A market There is not that much more consolidation to be done
in confectionery but a successful outcome would make global
consumer companies more likely to pursue their own M A targets
said a senior banking source
The two firms product portfolios are largely complementary
Top brands at Cadbury which had sales of 5 4 billion pounds
8 8 billion last year include Bassett s Liquorice Allsorts
Maynards Wine Gums and its trademark chocolate bars while
Kraft which had turnover of 42 billion is known for Maxwell
House coffee Oreo cookies and Ritz crackers
Kraft s cash and shares offer outlined in a letter on Aug
28 represented a 31 percent premium to Cadbury s closing share
price from last Friday
OPENING SALVO
Our initial view is that this represents a competitively
pitched offer but something less than a knockout blow said
Investec analyst Martin Deboo
For a useful comparison we think that investors need to
look as far back as Nestle s acquisition of Rowntree in 1988
where we recall that the exit premium was in excess of 100
percent of Rowntree s pre speculation share price
Panmure Gordon Co recommended investors hold out for at
least 800 pence a share and Bernstein Research suggested between
855 and 1 070p
One top 20 Cadbury investor who declined to be named said
benchmarks set by other deals indicated Kraft would need to
offer at least 10 percent more and you could be looking at 20
to 30 percent higher
Kraft offered 300 pence in cash and 0 2589 new Kraft shares
per Cadbury share in the hope it can create a global powerhouse
in snacks confectionery and quick meals
Evolution Securities which sees fair value for Cadbury in
any takeover of at least 1 000 pence a share said a tie up
would put the group neck and neck with Mars Wrigley with each
boasting about 15 percent of the global confectionery market
It would still be half the size of Nestle which reported
revenues last year of 109 9 billion Swiss francs 104 billion
Consolidation hopes helped drive shares in the food and
drink sector as a whole up 2 35 percent outperforming a 1 3
percent rise for European blue chips
M A REVIVAL
Cazenove analysts said Nestle might make a counterbid for
Cadbury perhaps in a joint approach with U S chocolate group
Hershey Co Nestle CEO Paul Bulcke declined to comment directly
but said the company had no major acquisitions planned but was
always open to opportunities
Cadbury said it believed Kraft s approach fundamentally
undervalued the company
Kraft headquartered in Northfield Illinois said it was
not ready to throw in the towel however describing itself as
committed to working toward a recommended transaction and to
maintaining a constructive dialogue
We think a deal makes perfect sense subject to the
right price for both parties Bernstein analysts wrote
A debt market source said Kraft was most likely to finance a
bid with a bridge loan via the bond markets We ve seen
sizeable acquisitions this year for Merck and Pfizer done this
way the banker said
Global merger and acquisition activity fell 44 5 percent to
872 5 billion in the first half of 2009 according to Reuters
data the lowest first half volume since 2003 and the steepest
decline since 2001
Lazard is acting as lead financial adviser to Kraft with
Centerview Partners Citigroup and Deutsche Bank also advising
Goldman Sachs Morgan Stanley and UBS are working with
Cadbury banking sources said |
MS | GLOBAL MARKETS Stocks jump on G20 stimulus and U S jobs | World stocks up sharply on G20 jobs data
Japan gains 1 3 percent Europe up 1 4 percent
Two year euro debt yield hits historic low
Dollar generally weaker
By Harpreet Bhal
LONDON Sept 7 Reuters Investors jumped back into
equities on Monday sending world stocks close to their highest
level for the year while the dollar weakened against a basket
of currencies as demand for risky assets rose across the board
U S jobs data and a weekend agreement by the G20 to keep
economic stimuli running helped drive risk appetite The meeting
bolstered the view that interest rates will remain low sending
two year euro zone government bond yields to historic lows
The MSCI s all country world stock index a
benchmark for professional investors rebounded 1 percent after
a rare week of losses and is only a few points off a year high
reached in late August
The pan European FTSEurofirst 300 index added 1 4
percent reversing losses from the previous week on
expectations of mergers and acquisitions Japan s Nikkei
closed 1 3 percent higher while emerging market equities
were up about the same
Wall Street was closed for the Labor day holiday
The current equity rally has further to go Morgan Stanley
said in a note A growth cycle is starting we intend to buy
on weakness
The Group of 20 finance ministers and central bankers said
over the weekend they would not remove economic stimulus until
the global recovery was well entrenched ID nL5327479
U S jobs data on Friday was mixed but showed
smaller than expected job losses
Notwithstanding Monday s gains equity markets have been
pulling back somewhat from the sharp rally that began in March
The world index lost nearly 1 5 percent last week the first
decline in eight week and only the fifth since the rally began
Some degree of risk aversion and a weaker dollar was
evident on the gold market
Spot gold gained 4 percent last week and is currently
trading around 994 an ounce
HISTORIC LOWS
Two year euro zone government bond yields slipped to
historic lows on the view that interest rates will stay low for
longer than some had expected following comments from the
weekend s G20 meeting
The two year Schatz yield briefly slipped to a
euro lifetime low of 1 069 percent It was later at 1 096
percent
The 10 year yield was at 3 244 percent
The dollar and yen were generally weaker with the former
down close to a third of a percent against a basket of major
currencies
The Australian dollar hit its strongest level against the
dollar in a year as shares gained after a G20 pledge to keep
economic stimulus packages in place
The G20 was positive for risk appetite you can see that
from the yen and dollar s performance At the same time people
are still a bit cautious as we are approaching the end of this
policy cycle said Geoffrey Yu a currency strategist at UBS
Against the yen the dollar was flat to slightly weaker at
92 94 yen
The euro gained 0 4 percent to 1 4344 near a one
week high but still below August s eight month high at 1 4448
Additional reporting by Emelia Sithole Matarise and Jeremy
Gaunt Editing by Andy Bruce |
JPM | Ecuador election may be Latin America s next big score investors | By Dion Rabouin
NEW YORK Reuters After seeing big payoffs in Brazil and Argentina following market friendly leadership changes some fixed income investors are betting on a similar bonanza in Ecuador where a presidential election takes place this month
Outgoing President Rafael Correa is one of the few remaining left wing leaders in South America after Brazil s Dilma Rousseff was ousted in August and Argentina s powerful Peronist bloc was voted out of the Casa Rosada in 2015
Both countries while still struggling economically turned to leaders who championed the private sector and have worked to undo the policies of their predecessors backing austerity measures favored by investors
Ecuador has the potential to be a breakout story depending on how the elections go said Arif Joshi emerging markets debt portfolio manager at Lazard Asset Management who said Ecuador was one of his top picks for 2017
If the opposition wins you will likely see the same type of spread compression that you saw in Argentina and Brazil Joshi said
The spread between yields on U S Treasury bonds and Argentinian and Brazilian sovereign bonds both narrowed by more than 100 basis points ahead of the election of Mauricio Macri in Argentina and Rousseff s removal in Brazil
Correa s former vice president Lenin Moreno leads the field but probably lacks enough support to win in the Feb 19 election without having to compete in a second round runoff
Guillermo Lasso a conservative former economy minister who served as executive president of Banco de Guayaquil GQ GYL is second in current polling But some analysts think Lasso is poised to win the backing of other opposition contenders and go on to beat Moreno in a second round
Combined support for the three main opposition candidates is greater than Moreno s nationwide polls show
Should Lasso win as expected he will move quickly to improve the policy outlook Eurasia Group analysts Risa Grais Targow and Agata Ciesielska said in a note to clients this week This includes going to the IMF for a full program and aggressively looking to attract foreign direct investment
Ecuador s deteriorating economy it fell into recession last year after posting more than 5 percent growth multiple times during Correa s period in office is expected to play to Lasso s favor
For Ecuador s widely held bonds maturing in 2022 the spread over U S five year Treasuries has narrowed by more than 300 basis points since spiking on Nov 14
During that time Ecuador s JPMorgan NYSE JPM EMBI bond has risen 13 3 percent while the JPMorgan EMBI plus which tracks its overall emerging market index has gained 4 5 percent
Edwin Gutierrez head of emerging market sovereign debt at Aberdeen said expectations for Ecuador s bonds are binary when it comes to the election
If one of the opposition candidates wins Ecuador s bonds will definitely get that positive knee jerk reaction Gutierrez said
In addition to several of Ecuador s sovereign bonds Gutierrez holds debt positions in state owned oil company EP Petroecuador
Ecuador s bonds are already attractive to investors on a relative return basis Those maturing in 2022 offer a coupon of 10 75 percent compared with 6 875 percent for example on Argentina s recently issued five year sovereign bonds
The Andean nation has a speculative grade B credit rating average however and Fitch Ratings Agency which holds a negative outlook on Ecuador warned late last year about the negative effects of a buildup of its debt which has roughly doubled in the past four years
The country s economy is also highly dependent on oil prices
It s really an oil story said Rahmila Nadi co head of Deutsche Bank DE DBKGn s Enhanced Emerging Markets Fixed Income Fund But when you re talking about 8 plus percent yields it s hard to not be excited about
Click for graphic comparing Equador s 2022 bonds against the 5 year U S Treasury |
C | Citigroup quietly scales back in consumer banking | By David Henry NEW YORK Reuters Citigroup Inc has been quietly scaling back its consumer banking presence in some of the world s major cities pulling out from markets where it does not have enough branches to be competitive In 2014 Citi retail executives went from targeting 120 of the world s top 150 cities to homing in on 100 cities where the company has the greatest scale and potential As a result it is withdrawing from Tokyo Lima Panama City and Houston for example In the United States it is now focused on six cities down from 14 And while the bank has no specific plans to cut more branches in the near term it will continue to re evaluate its holdings Jonathan Larsen who oversees Citigroup s overseas retail branch business told Reuters in an interview We have to make sure that we are not subsidizing marginal operations for long periods Larsen said The bank s strategy will work with fewer cities he added Cutting back in consumer banking will eat into the group s earnings at least in the near term The bank is expected to book some 800 million of restructuring charges in the fourth quarter when it posts results on Thursday Chief Executive Michael Corbat has announced 2 4 billion of additional restructuring costs in the last two years The bank hopes the spending will eventually save it some 3 4 billion annually The charge in addition to an expected 2 7 billion charge for litigation largely involving other businesses is expected to all but wipe out Citigroup s profits for the fourth quarter Analysts on average expect Citi to earn about 10 cents a share down from 77 cents a year earlier according to Thomson Reuters surveys The shift underscores Citigroup s challenge how to shrink in locations where it lacks critical mass and yet prevent its global network from becoming less valuable to customers while it focuses on fewer cities Citigroup prides itself on being the most international of U S banks and closings could hurt the visibility it needs as it continues to seek business with companies institutional investors and governments in more than 100 countries The latest cuts came after the company raised its minimum thresholds for performance and prospects in consumer markets in the past year Higher targets are necessary because of increased costs of holding more capital and complying with additional regulatory requirements including anti money laundering rules Larsen said LOOSE CONFEDERATION The company s global consumer business which includes branch banking and credit cards accounts for half of the company s revenue from its core operations But Citigroup has struggled for years to make its consumer business more efficient The group has long operated as a loose confederation of local franchises many of which are not big enough in their individual markets to really be profitable A set of consumer assets that the bank marked for disposal last October produced a return on assets that was one eighth the return of the bank s main assets according to Citigroup disclosures In the United States the bank decided to quit Dallas and Houston where it ranked 24th and 33rd respectively by deposits That decision was not easy when the bank sold Texas branches in December 2013 it held onto Dallas and Houston but last year it changed its mind The bank is instead focusing on Miami Washington New York Chicago San Francisco and Los Angeles
Larsen said the closings around the world will allow Citigroup to put its resources where they can be more productive He said however that Citigroup will keep branches in Korea where it has struggled with regulations on consumer lending and where other foreign banks such as HSBC have given up Citigroup took a restructuring charge in mid 2014 last year to close some Korean branches and now has 127 outlets there He said Citigroup s share of the overall market in Korea is small but is larger among more affluent individuals |
C | Citigroup loses appeal over Abu Dhabi fund s arbitration | By Nate Raymond NEW YORK Reuters Citigroup Inc on Wednesday lost an appeal aiming to block Abu Dhabi Investment Authority from pursuing a second arbitration over the sovereign wealth fund s 7 5 billion investment in late 2007 to shore up the then struggling bank The 2nd U S Circuit Court of Appeals in New York ruled that Citigroup had not demonstrated a basis for an injunction based on its argument that the case was precluded after a federal court confirmed the results of an earlier arbitration it won U S Circuit Judge Peter Hall wrote that it is the arbitrators not the federal courts who ordinarily should determine the claim preclusive effect of a federal judgment that confirms an arbitration award Sanford Weisburst a lawyer for the fund at Quinn Emanuel Urquhart Sullivan said the fund was pleased with the ruling A Citigroup spokeswoman declined comment The case arose from Citigroup s efforts to shore up its capital base in the wake of billions of dollars of writedowns tied to subprime mortgages Citigroup ultimately required three federal bailouts which it has since repaid In November 2007 the ADIA invested the 7 5 billion in exchange for a 4 9 percent stake in Citigroup surpassing Saudi Prince Alwaleed bin Talal as the New York based bank s largest individual shareholder Two years later the fund began arbitration proceedings in which it accused Citigroup of fraudulently inducing its investment in part by issuing preferred shares to other investors that diluted its stake An arbitration panel rejected the ADIA s claims in October 2011 and U S District Judge George Daniels in Manhattan confirmed that ruling in 2013 Daniels ruling was upheld by the 2nd Circuit in February But the ADIA in August 2013 sought a second arbitration raising two claims it had raised in the first breach of contract and breach of an implied covenant of good faith and fair dealing Citigroup sued to block ADIA s case which sought 2 billion of damages or to rescind its investment But U S District Judge Kevin Castel in Manhattan rejected its bid in November 2013 As part of its investment the ADIA received securities from Citigroup that could be converted to common stock at prices between 31 83 and 37 24 from March 2010 to September 2011 Citigroup shares trade at a little over one tenth of their level when the Abu Dhabi fund made its investment after accounting for a reverse stock split On Wednesday morning the stock was trading at 48 83 a share
The case is Citigroup Inc v Abu Dhabi Investment Authority 2nd U S Circuit Court of Appeals No 13 4825 |
C | Citigroup shares slump 1 9 on weak Q4 earnings | Investing com Banking conglomerate Citigroup NYSE C reported worse than expected fourth quarter earnings and revenue on Thursday sending its shares lower in pre market trade Citigroup said adjusted earnings per share came in at 0 06 cents in the three months ending December below expectations for earnings of 0 09 cents per share and down from 0 77 cents in the year ago period Net income in the fourth quarter was 350 million compared to net income of 2 5 billion in the same period a year earlier Legal and related expenses and repositioning charges totaled 3 5 billion in the current quarter compared to 1 0 billion in the prior year period The bank s fourth quarter revenue totaled 17 81 billion below forecasts for revenue of 18 61 billion and compared to revenues of 17 8 billion for the third quarter 2013 Michael Corbat Citigroup s Chief Executive Officer said While the overall results for 2014 fell short of our expectations we did make significant progress on our top priorities Immediately after the earnings announcement Citigroup Inc NYSE C shares fell 1 9 in trading prior to the opening bell Meanwhile U S stock futures pointed to a modestly lower open The Dow futures pointed to a loss of 0 15 at the open the S P 500 indicated a decline of 0 25 while the Nasdaq 100 signaled a fall 0 35 at the open |
JPM | Barclays to overhaul back office operations to cope with ring fencing | By Lawrence White
LONDON Reuters Barclays Plc L BARC is about to overhaul its back office operations under a restructuring to help it comply with new post crisis rules forcing British banks to ring fence their retail operations from their riskier business
It has formed a new company that will operate as a standalone unit providing support services to both of its two main operations when they are formally separated retail and investment banking the bank said
The ring fencing rules seek to avoid a repeat of the 2008 crisis when banks bad bets threatened depositors cash While Barclays was not among those that needed a UK taxpayer funded bailout the new rules apply to all lenders in Britain that have retail and commercial or investment banking activities
At Barclays the aim is that critical support functions could continue to operate smoothly if either of its two main businesses were to run into trouble while also keeping costs down by not having several separate back office units sources involved in the project said
The overhaul including the creation of the new company known internally as ServCo will affect most of the more than 10 000 people who work in Barclays back offices operations in 17 countries around the world
It will group together the bank s huge operations in India and South Africa that provide technology support and data management along with functions such as compliance with regulatory requirements corporate relations legal affairs and human resources
While for some staff this will simply involve a change in the name of the legal entity they work for the sources said it was also likely to lead to some job losses
Barclays declined to comment on the possible staff cuts or the cost of the restructuring
However sources with direct knowledge of the project said it would soak up much of the 1 billion pounds 1 25 billion that Barclays has said it will cost to comply with the ring fencing rules
UPHEAVAL
The structural change shows the upheaval that British banks face to meet the rules that come into force in 2019
Other British lenders are working on similar models HSBC transferred 18 000 employees to a UK based service company in 2015 according to a company filing as part of a move to insulate its back office functions to comply with the new regulations
HSBC plans to base its ring fenced British retail and commercial banking business in Birmingham shifting about 1 000 staff to the central English city from London Barclays however will keep both main operations headquartered at its building in the capital s Canary Wharf district
Paul Compton Barclays chief operating officer is overseeing the creation of the new company which will formally be called Barclays Services Ltd
From the outset we ve been keen to use the incoming ringfencing regulations to enhance the banking experience for our customers and clients and the establishment of the service company is a great example of how we can put this into practice Compton told Reuters in an email He declined to comment on how many people will work in the new unit
Some back office workers are confused about which entity they will end up working for and concerned about losing their jobs two of the sources said ServCo s management structure will be formalized by April with a view to it beginning operations by September they added
Compton joined the bank in May 2016 one of many high profile former JPMorgan N JPM bankers recruited by Barclays Chief Executive Jes Staley who himself ran the U S lender s investment banking division until 2013
editing by David Stamp |
JPM | JPMorgan gets China corporate bond underwriting license | HONG KONG Reuters JPMorgan Chase Co N JPM said on Monday it had received approval and license to underwrite corporate bonds in China s interbank bond market making it the first U S headquartered bank to do so The license enables JPMorgan to underwrite debt financing instruments issued by non financial entities including commercial papers medium term notes and other instruments approved by regulators it said The license was granted by the National Association of Financial Market Institutional Investors NAFMII which oversees the Chinese interbank bond market said a statement issued by JPMorgan China is the third largest bond market in the world with 43 7 trillion yuan 6 37 trillion outstanding at the end of 2016 with the interbank bond market accounting for over 90 percent according to China Central Depository Clearing Co In September last year JPMorgan was granted a business license to operate a fully owned fund management business in China allowing it to set up an office in Shanghai free trade zone |
C | Citigroup profit falls on legal and restructuring charges | Reuters Citigroup Inc in the midst of a pullback from consumer banking in a number of international markets eked out a slim fourth quarter profit after taking charges of 3 5 billion to settle legal claims and overhaul operations The charges matched the figure foreshadowed by Chief Executive Mike Corbat in December but the earnings fell short of the average market estimate Adjusted net income fell to 346 million or 6 cents per share from 2 60 billion or 82 cents per share a year earlier the No 3 U S bank by assets said Analysts on average had expected earnings of 9 cents per share including charges according to Thomson Reuters I B E S Citi s shares were down 0 9 percent at 48 63 in premarket trading on Thursday Adjusted revenue fell 0 8 percent largely due to the strong U S dollar and weaker results from fixed income trading Citi is the most international of the big U S banks with about half of its business coming from abroad Fixed income markets remained tough and the bank s earlier forecast of a 5 percent decline in markets revenue for the quarter turned into a 16 percent drop JPMorgan Chase Co reported a 14 percent decline in revenue from its fixed income business Bond trading turned volatile in December as the dollar strengthened discouraging many investors from taking positions Consumer banking revenue rose 3 percent on a constant dollar basis reflecting strength in Citi s North American business as well as one time gains from the sale mortgage loans Citi has taken nearly 3 4 billion in repositioning charges since Corbat became CEO in October 2012 including costs for shutting down or selling retail businesses in 16 countries Adjusted operating expenses increased 21 percent Citi has had to plow much of the savings from its cost cutting back into spending to tighten risk controls and meet stricter capital standards The bank s most recent legal woes stem from government probes into alleged manipulation of currency markets and Libor interest rates as well as lax compliance with money laundering rules The company still faces other possible actions by the U S Department of Justice and Federal Reserve
Citigroup made further progress with what is left from the financial crisis of its portfolio of troubled assets The portfolio known as Citi Holdings generated revenue of 1 31 billion in the quarter compared with 1 59 billion in the previous quarter because of smaller gains from asset sales |
C | Is Citigroup C Divesting Analytics Business Yield Book | Wall Street banking giant Citigroup Inc NYSE C continued with its strategy of divesting parts of its consumer and investment banking operations to free up capital reduce expenses and in turn increase profits The firm is planning to sell its fixed income analytics business named Yield Book according to Bloomberg Though financial terms of the transaction remain undisclosed as per sources Yield Book accounts for around 100 million in revenue annually Yield Book relates to books about bond data which began publishing in the 1960s by Wall Street firm Salomon Brothers Yield Book was initiated in 1989 by Salomon Brothers It is a software tool which helps customers in calculating bond yields The unit provides various analytical tools to investors and traders in corporate government and mortgage bonds along with derivatives and other securities According to the source providers of trading information services include S P Global Ratings Inc Intercontinental Exchange Inc and MSCI Inc with all being potential bidders Spokesperson for Citigroup and Intercontinental Exchange refrained from making any comments while the spokesperson of S P Global and MSCI were not available for comments In Feb 2016 Citigroup revealed the plan of decreasing its presence in Brazil Argentina and Colombia in line with the company s strategy of minimizing its international operations In June Citigroup sold its prepaid card services unit to Wirecard AG while in May completed the sale of its stock trading business to Citadel Securities ConclusionRegulatory pressure over Citigroup s global operations and the concerns of weak returns were the primary reasons behind the restructuring Aimed at increasing the efficiency of the company s overall business the initiatives include streamlining operations and optimizing its presence globally Amid the troubled financial currents Citigroup is likely to gain some financial flexibility from such moves We believe the company is poised well to address its internal inefficiencies and setbacks Further we believe that the company s streamlining initiatives will boost its capital position reduce expenses and drive operational efficiency Citigroup currently carries a Zacks Rank 4 Sell Some better ranked stocks in the same space are First Midwest Bancorp Inc NASDAQ FMBI Hercules Capital Inc NYSE C and Gladstone Capital Corp NASDAQ GLAD All three stocks carry a Zacks Rank 2 Buy Want the latest recommendations from Zacks Investment Research Today you can download 7 Best Stocks for the Next 30 Days |
MS | INTERVIEW Origo CEO says investment sentiment on the up | Corrects paragraph 9 to show company invested in an Australian
agriculture business not invested 300 million in an
agricultural fund
Emerging mkt investors better insulated than western
Sees opportunities in Chinese consumer goods clean energy
Says UK investor confidence at 6 mo high
By Rhys Jones
LONDON Aug 20 Reuters Origo Sino India an Asia focused
private equity group believes investor sentiment is at its best
level for six months and that emerging market investors are
more sheltered from the downturn than those backing western
firms
I sense the confidence of UK investors especially hedge
funds is much better than it was six months ago Origo
Sino India s Chief Executive Chris Rynning told Reuters in an
interview on Wednesday
Investors in China and India have been better insulated
from the financial crisis than those backing western firms
because the gearing of emerging market investments is much lower
so we have seen an improvement in our return potential
The AIM listed fund which has around 200 million pounds
329 3 million worth of investments in 25 pre IPO Asia focused
companies has interests in consumer goods related firms but
sees the best returns are coming from Chinese renewable energy
agriculture and cleantech companies
With rising retail and consumer consumption there are
plenty of opportunities in China in terms of consumer goods
said Rynning
But resources are quite constrained there so if you can
take a long term look at the strategic resources needed to
fulfil China s demand and invest in those specific sectors
which have been largely unexplored by western investors then
you will have a very good return potential
Origo which also manages Origo Resource Partners a listed
natural resources investment fund sees China as its biggest
growth opportunity
I see China as the most attractive investment destination
right now It has plenty of local liquidity an attractive IPO
market with a growth enterprise market due to open in Shenzhen
in October and plenty of exit opportunities said Rynning
Origo recently invested in an Australian farming business to
manufacture and export food such as chicken and beef to China
Morgan Stanley Private Equity Asia Blackstone Group and
Rabobank have all set up Asia focused agriculture investment
funds in the last year
With urbanisation at the rate it is in China it has left
farmland and water as constrained resources so we will export
food there from Australia because the Chinese diet is changing
and they want to eat safer and better said Rynning
Origo plans to maintain its focus on China and India but has
recently widened its mandate to invest in companies outside of
its two main markets whose demand are driven by the Chinese and
Indian economies
China and India have a combined population of 2 3 billion
people and with consumer demand still rising we see a huge
spectrum of opportunity for us said Rynning
Shares in Origo which have risen in value by 7 percent so
far this year were flat at 15 5 pence by 1235 GMT
1 6073 Pound
Editing by Matt Scuffham and Rupert Winchester |
MS | European shares slip back from 10 month high | FTSEurofirst 300 falls 0 4 percent
Natixis suspended on report of assets guarantee
For up to the minute stocks news click on
By Brian Gorman
LONDON Aug 25 Reuters European shares fell back in
early trade on Tuesday from the 10 month closing highs they hit
in the previous session as investors took profits and after
declines in Asia
At 0832 GMT the FTSEurofirst 300 index of top European
shares was down 0 4 percent at 971 54 points
The European benchmark index is still up 50 percent from its
lifetime low of March 9 as investors have become more confident
on the prospects for worldwide economic recovery Data on
Tuesday confirmed that Germany the region s biggest economy
exited recession in the second quarter
We ve enjoyed the euphoria The fall in shares is
profit taking and worries about China said David Buik senior
partner at BGC Partners And the U S Budget deficit has reared
its ugly head again But I don t see it as a serious correction
which won t happen till people get back from holiday
The sell off was across the board but the heavyweight
banking sector took most points off the index
BNP Paribas Banco Santander UBS and UniCredit fell between
1 and 1 7 percent
Shares in France s Natixis which reports on Thursday have
been suspended from trading for the day following a report that
majority owner BPCE will guarantee some of its toxic assets
Miners fell as metals prices retreated from recent highs
Anglo American Antofagasta BHP Billiton Lonmin Rio Tinto and
Xstrata fell between 1 5 and 3 7 percent
Crude prices slipped 0 8 percent to less than 74 a barrel
impacting oil shares Total ENI BP Royal Dutch Shell and
StatoilHydro fell between 0 7 and 1 2 percent
British oil explorer Cairn Energy fell 2 7 percent after
warning that meeting targets for the next stages of the
development was becoming increasingly challenging as it
reported a first half loss after tax
Across Europe Britain s FTSE 100 Germany s DAX and
France s CAC 40 were down between 0 4 and 0 5 percent
DEFENSIVES GAIN
Defensive sectors notably pharmaceuticals and telecoms
were among the small number of risers
Mobile telecoms firm Vodafone gained 1 4 percent after
JPMorgan upgraded the telecoms sector to overweight and
advised exposure to the stock
The broker said the telecoms sector is favoured by cheap
valuations and seasonal trading patterns that have led the
sector to consistently outperform in the final months of most
years since 1995 It was also overweight in France Telecom
which rose 1 8 percent and KPN up 1 6 percent
Among drugmakers GlaxoSmithKline and Sanofi Aventis rose
0 6 and 0 7 percent respectively
Beauty products giant L Oreal which reports results on
Thursday rose 1 5 percent after Jefferies upgraded it to buy
from hold
In other broker inspired moves German tourism group TUI
surged 7 5 percent after Morgan Stanley upgraded it to
overweight from equal weight
Irish building materials group CRH fell 1 4 percent after
posting a sharp drop in first half pretax profit and saying the
rate of decline would ease in the second half due to
cost cutting and improvements in its core U S market
Japan s Nikkei 225 closed 0 8 percent lower China s
benchmark Shanghai Composite was down 2 6 percent having been
down more than 5 percent earlier
Analysts pointed to the volatility in the Chinese market
which has enjoyed a strong run and said that in the longer
term it is not correlated to other markets
Later in the session investors attention will switch to
key macroeconomic data from the United States on house prices
and consumer confidence
Editing by Jon Loades Carter |
MS | UPDATE 1 RBS talks on Asian assets in full swing sources | Talks still on for China India Malaysia assets
Some obstacles remain including valuation source
FT report says chances of deal only 3 out of 10
Rewrites with sources details background
By Clara Ferreira Marques and Saeed Azhar
LONDON SYDNEY Aug 25 Reuters Royal Bank of Scotland s
talks to sell some of its Asian assets to Standard Chartered
remain in full swing sources familiar with the matter said on
Tuesday after a report they were on the rocks
Asia focused Standard Chartered has said it is in talks
about small acquisitions in China and India likely to cost up
to 200 million Sources familiar with the matter have said the
talks involve the retail and small business operations that
state controlled RBS hopes to sell as part of a turnaround plan
The two sides are at this stage fully engaged and
discussions regarding sales in all three locations China India
and Malaysia remain in full swing one source with direct
knowledge of the deal told Reuters on Tuesday
Another source familiar with the matter said there were some
obstacles in the complex negotiations particularly over
valuation but said it was too soon to say whether they would
derail the process
In any negotiation there are issues that need to be solved
and they will take time the source said
The Financial Times had reported on Tuesday that the sale of
RBS s retail and commercial assets in China hit a critical
obstacle with chances of a deal with StanChart falling to
around three out of 10
The paper said StanChart was disappointed to discover that
far more RBS customers than it had envisaged were locked in to
specific products limiting any acquirer s ability to move them
As a result StanChart is struggling to make the numbers in
China the newspaper quoted a person familiar with the matter
Standard Chartered declined to comment on progress in the
talks RBS said on Tuesday it was in ongoing discussions with
bidders for the remaining assets it had decided to sell in Asia
and would make announcements in due course
RBS is selling the Asian assets as it pulls back to core
markets after it was bailed out by the UK government Industry
sources have long said the sales could prove complex with
possible corporate customer defections slowing growth in Asia
and unpredictable regulation among the key risks
Morgan Stanley which is advising RBS declined to comment
Additional reporting by Humeyra Pamuk and Victoria Howley
editing by Will Waterman |
MS | FTSE down 0 3 percent oils miners retreat | Oils down as crude falls from 10 month peak on U S data
Miners weak Antofagasta results below forecast
WPP Group drops as first half results disappoint
By David Brett
LONDON Aug 26 Reuters Britain s leading share index was
down 0 3 percent at noon on Wednesday as risk appetite wavered
in a choppy session with weakness amongst oil and mining issues
offseting strength in pharmaceuticals beverages and banks
By 1105 GMT the FTSE was off 15 65 points at 4 901 15 after
hitting a near 11 month closing high at 4 916 80 on Tuesday
after reassuring economic data from the United States
The blue chip index has gained 6 5 percent so far this month
and is up 11 percent this year after rebounding 42 percent from
an all time low in March
Oil majors weighed as crude prices hovered around 72 a
barrel after sliding 3 percent from 10 month highs on Tuesday as
industry data showed an unexpectedly large increase in crude
inventories last week
BG Group BP Royal Dutch Shell and Cairn Energy fell
0 8 2 9 percent
Tullow Oil sank 3 percent after the British based oil
explorer reported an 83 percent drop in first half profit on
lower crude prices and production
It s been a lacklustre trading session The market s coming
off the boil given the recent impressive rally with profit
taking amongst the mining sector which has been a tremendous
outperformer over the last few months said Henk Potts
strategist at Barclays StockBrokers
Miners were weak with Rio Tinto BHP Billiton Kazakhmys
and Xstrata losing 0 9 3 1 percent
Antofagasta was 3 9 percent lower as the Chilean copper
miner posted lower than expected first half earnings and said
copper prices were likely to remain volatile in the second half
Citigroup noted that Antofagasta s share price has advanced
sharply recently and said it was likely due for a breather
Rio Tinto said it was likely to open a mine in Serbia in
five or six years to exploit jadarite a mineral used to produce
mobile phone batteries
Amongst individual fallers WPP dropped 3 5 percent after
the advertising group s 8 3 percent decline in first half
revenues disappointed investors prompting Citigroup to repeat
its sell rating on the stock
Meanwhile ex dividend factors clipped 0 17 point off the
FTSE 100 index with Eurasian Natural Resources Fresnillo and
InterContinental Hotels losing their dividend attractions on
Wednesday
BANKS BEVERAGES PHARMAS WANTED
Banks were higher with Royal Bank of Scotland performing
strongly up 4 2 percent
The state backed lender is poised to slash retirement
benefits for staff in an attempt to save 1 million pounds in
annual costs and cut future liabilities by 500 million pounds
Oriel Securities also raised its rating for RBS to add
from reduce in a British banking review The broker cut its
stance on Lloyds Banking Group to reduce from add
Lloyds Banking Group and Standard Chartered added 3 3 and
1 4 percent respectively
Diageo the world s biggest spirits group was up 2 5
percent ahead of results on Thursday with Morgan Stanley upping
its stance to overweight late on Tuesday with Bernstein also
having hiked its stance on the firm
Brewing giant SAB Miller rose 1 4 percent supported by
strong first half results from Dutch peer Heineken
Traders went in search of the more defensively perceived
stocks with drugs forms AstraZeneca and GlaxoSmithKline
climbing 1 0 and 0 9 percent respectively
Among individual gainers support services group Serco
climbed 5 9 percent as it beat market expectations for
first half profit and said it was confident of meeting full year
guidance after a strong start to the second half
Investors were focused on U S durable goods data due out
later in the session with futures indexes pointing to a firmer
start on Wall Street with the Dow Jones S P 500 and Nasdaq 100
all set to rise 0 1 0 4 percent
Editing by Dan Lalor |
MS | FTSE backtracks as commodities sag | Miners weak Antofagasta results below forecast oils slip
Data supportive but investors pause for breath
Defensive stocks make modest gains
By Simon Falush
LONDON Aug 26 Reuters Retreating mining and energy
stocks outweighed modest gains from defensive pharmaceuticals
pushing Britain s top share index down 0 5 percent by close on
Wednesday
The FTSE closed down 26 22 points at 4 890 58 after hitting
a near 11 month closing high at 4 916 80 on Tuesday after
reassuring economic data from the United States
Mining stocks were the biggest drag on the index retreating
for a second day pressured as Chilean copper miner Antofagasta
posted lower than expected first half earnings
Antofagasta slipped 4 8 percent while Rio Tinto Xstrata
Lonmin Anglo American Kazakhmys and Fresnillo lost between 2 3
and 5 2 percent
However data on both sides of the Atlantic helped to sustain
a sense that the global economy is rapidly emerging from
recession
Sales of U S single family homes rose for a fourth straight
month in July to set their fastest pace of growth since last
September while German business morale rose to its highest level
in nearly a year
The FTSE 100 has gained 6 1 percent so far this month and is
up 10 3 percent this year after rebounding 42 percent from an
all time low in March
But these strong gains seem to have sated market appetite
for further stock purchases despite the strong data and
investors paused for breath
There s a reluctance to chase prices up because everyone is
hoping that they are going to come back said Jim Wood Smith
head of research at Williams de Broe
But there are a lot of reasons why stocks have risen with
data getting better on an almost exponential basis today the
market is just a little tired
OIL SLIPS
Oil majors weighed as crude prices slipped to 71 a barrel
after sliding 3 percent from 10 month highs on Tuesday as
industry data showed an unexpectedly large increase in crude
inventories last week
BG Group BP Royal Dutch Shell and Cairn Energy fell
0 5 4 1 percent
Tullow Oil sank 3 percent after the British based oil
explorer reported an 83 percent drop in first half profit on
lower crude prices and production
Banks were mixed with Royal Bank of Scotland performing
strongly up 5 3 percent
The state backed lender is poised to slash retirement
benefits for staff in an attempt to save 1 million pounds 1 64
million in annual costs and cut future liabilities by 500
million pounds
Standard Chartered added 1 1 percent but heavyweight HSBC
fell 0 4 percent
Diageo the world s biggest spirits group was up 2 6
percent ahead of results on Thursday with Morgan Stanley upping
its stance to overweight late on Tuesday with Bernstein also
having hiked its stance on the firm
Brewing giant SAB Miller rose 1 3 percent supported by
strong first half results from Dutch peer Heineken
Other stocks perceived as defensive were also in favour
with drugs firms AstraZeneca and GlaxoSmithKline climbing 0 2
and 0 5 percent respectively
Serco was the strongest performing company on the index up
6 percent after the support service firm s profits came in ahead
of forecast and it predicted double digit revenue growth in
coming years
Meanwhile ex dividend factors clipped 0 17 point off the
FTSE 100 index with Eurasian Natural Resources Fresnillo and
InterContinental Hotels losing their dividend attractions on
Wednesday
Reporting by Simon Falush Editing by Rupert Winchester |
MS | HK shares drop on earnings disappointments China stocks slip | China Vanke share sale weighs down China shares
Esprit CNOOC drop in HK after weak earnings
Sino Gold surges on 1 8 billion Eldorado bid
Updates to midday
By Parvathy Ullatil Claire Zhang
HONG KONG SHANGHAI Aug 27 Reuters Hong Kong shares
retreated in waning turnover and a weak showing from blue chips
including CNOOC and Esprit after their earnings reports made
investors wary ahead of another flurry of results on Thursday
China s benchmark stock index fell 0 4 percent after a big
share offer announced by the country s second biggest listed
property developer China Vanke kept the focus on a hefty supply
of new shares in the near future
But China stocks outperformed most major markets in the
region where Japan s Nikkei average had shed 1 7 percent and
Seoul s KOSPI dropped 1 1 percent with technically driven buying
helping to partially offset the impact of Vanke s share sale
Among outperformers Sino Gold Mining Ltd 1862 HK surged 12
percent to HK 42 55 in Hong Kong after Canada s Eldorado Gold
Corp launched a 1 8 billion bid for the company
ID nSYD445243
Its Australia listed shares jumped 12 2 percent to A 6 70
with Eldorado s all share bid equating to around A 7 24 per
share based on Tuesday close
EARNINGS DISAPPOINTMENT WEIGHS
By 0410 GMT the benchmark Hang Seng Index was 1 2 percent
lower at 20 213 07 with shares worth HK 29 3 billion changing
hands
There is really no positive news to drive gains in markets
in the region Futures traders are using this as an excuse to
sell down the market ahead of the August futures expiry
tomorrow said Conita Hung head of equity markets at Delta Asia
Financial Group
The China Enterprises Index which represents top
locally listed mainland Chinese stocks was down 1 4 percent at
11 495 20
Esprit tanked 14 1 percent to HK 51 45 after the world s No 6
fashion retailer by market value posted a 40 percent fall in
second half profit as global economic woes took a bite out of its
core European market
Morgan Stanley cut its rating on the stock to equal weight
from overweight as its expects to see further weakening in
Esprit s business particularly on the wholesale side over the
next six months
Property conglomerate Wharf Holdings was the best
performer on the main index rising 6 8 percent after its
better than expected 44 percent increase in core earnings were
met with brokerage upgrades
Citigroup and Deutsche Bank raised their rating on the stock
to buy citing solid growth in its China business and its
relatively attractive valuation
China s top offshore oil producer CNOOC fell 3 2 percent
after it reported a 55 percent drop in first half earnings its
lowest half year profit since early 2005
Oil fell towards 71 per barrel on Thursday extending losses
by more than 3 after touching a 10 month high this week as
rising crude and diesel stocks eclipsed healthy economic data
SHARE SUPPLY STILL IN SPOTLIGHT
The Shanghai Composite Index was down 12 688 points at
2 954 907 at midday It opened down 0 67 percent but rose as much
as 0 7 percent during the morning session It had closed up 1 8
percent on Wednesday on a technical rebound
The market is struggling to stabilise following a two week
20 percent slide earlier in the month
The rebound is not over yet The index may head above
3 000 said analyst Zhang Yanbing at Zheshang Securities in
Shanghai
Analysts have said the market now seems to be driven by
technical factors concerns over share supply and other domestic
factors rather than worries about China s economic recovery
which is seen on track
Vanke dropped 0 2 percent to 10 79 yuan after falling as
much as 4 1 percent It announced plans for a new public share
offer to raise up to 11 2 billion yuan 1 6 billion in net
proceeds equivalent to a major initial public offering of stock
The Vanke plan has investors worried about more possible
fund raising and the pace of IPOs isn t letting up so confidence
is waning in the short term said Wu Nan analyst at Xiangcai
Securities in Shanghai
China s stock regulator approved on Wednesday an application
by Metallurgical Corp of China MCC to launch an initial public
offer in Shanghai aiming to raise around 16 85 billion yuan in
part to fund overseas projects
Four small cap shares will also list in Shenzhen on Friday
Property shares were mixed with the Shenzhen real estate
index edging down 0 7 percent to 1744 976 points
China s cabinet said on Wednesday that it would take steps to
curb overcapacity and redundant investment in industries ranging
from steel to cement the official Xinhua news agency reported
Oil refiners underperformed the market as domestic oil prices
remained unchanged despite surging global prices disappointing
market expectations that they would be raised
Sinopec Corp slid 3 2 percent to 13 01 yuan while
PetroChina the most heavily weighted stock in the index sagged
2 2 percent to 14 08 yuan ahead of its first half earnings later
on Thursday
Editing by Edmund Klamann and Chris Lewis |
MS | China stock drop on share supply concern HK shars fall 1 pct | China Vanke share sale weighs down China shares
Esprit CNOOC drop in Hong Kong after weak earnings
Sino Gold surges on 1 8 billion Eldorado bid
Updates to close
By Parvathy Ullatil Claire Zhang
HONG KONG SHANGHAI Aug 27 Reuters Hong Kong shares shed
1 percent in slim turnover on Thursday as disappointing earnings
from blue chips including CNOOC and Esprit made investors wary
ahead of a flurry of results in the coming days
China s benchmark stock index fell 0 7 percent after a big
share offer announced by the country s second biggest listed
property developer China Vanke kept the focus on a hefty supply
of new shares in the near future
But China stocks outperformed most major markets in the
region where Japan s Nikkei average had shed 1 6 percent and
Seoul s KOSPI dropped 0 9 percent with technically driven buying
helping to partially offset the impact of Vanke s share sale
Esprit tanked 15 percent to a six week low of HK 50 90 after
the world s No 6 fashion retailer by market value posted a 40
percent fall in second half profit as global economic woes took a
bite out of its core European market as warned of a weak outlook
Morgan Stanley cut its rating on the stock to equal weight
from overweight as its expects to see further weakening in
Esprit s business particularly on the wholesale side over the
next six months
EARNINGS DISAPPOINTMENT WEIGHS
The benchmark Hang Seng Index finished 213 57 points lower at
20 242 75 with shares worth HK 58 9 billion changing hands
The China Enterprises Index which represents top locally
listed mainland Chinese stocks was down 0 7 percent at 11 570 67
Weak results are mostly an excuse there are no real
surprises there Futures traders are selling down the market
ahead of the August futures expiry tomorrow said Conita Hung
head of equity markets at Delta Asia Financial Group
Property conglomerate Wharf Holdings was the best
performer on the main index rising 6 5 percent after its
better than expected 44 percent increase in core earnings was met
with brokerage upgrades
Citigroup and Deutsche Bank raised their rating on the stock
to buy citing solid growth in its China business and its
relatively attractive valuation
China s top offshore oil producer CNOOC fell 3 percent after
it reported a 55 percent drop in first half earnings its lowest
half year profit since early 2005
Oil fell towards 71 per barrel on Thursday extending losses
by more than 3 after touching a 10 month high this week as
rising crude and diesel stocks eclipsed healthy economic data
Among outperformers Sino Gold Mining Ltd surged 11 6 percent
to HK 42 40 in Hong Kong after Canada s Eldorado Gold Corp
launched a 1 8 billion bid for the company
Its Australia listed shares jumped 12 2 percent to A 6 70
with Eldorado s all share bid equating to around A 7 24 per
share based on Tuesday close
SHARE SUPPLY WORRIES HOUND
The Shanghai Composite Index finished down 21 2 points at
2 946 395 after rising 1 8 percent on Wednesday in a technical
rebound
Despite the index s fall gaining Shanghai A shares
outnumbered losers by 576 to 296 as investors turned their
interest to small cap shares Turnover for Shanghai A shares rose
to 145 billion yuan 21 billion from Wednesday s 143 billion
yuan
As the market is still in a consolidation period investors
are testing the waters in various sectors pushing the index up
and down in intervals said analyst Zhou Lin at Huatai
Securities in Nanjing
Analysts have said that although the market is still under
pressure from concerns over share supplies and other domestic
factors the index appears to be finding support around the
five day moving average now at about 2 950 points
China Vanke ended down 2 28 percent at 10 70 yuan after
saying it planned a new public share offer to raise up to 11 2
billion yuan in net proceeds a move analysts said could deal
another blow to the vulnerable domestic stock market
China s stock regulator also said late on Wednesday that it
had approved an application by Metallurgical Corp of China MCC
to launch an initial public offer in Shanghai aiming to raise
around 16 85 billion yuan in part to fund overseas projects
Four small cap shares will also list in Shenzhen on Friday
Telecom shares outperformed with China United Network
Communications the day s most active stock jumping 4 75 percent
to 6 61 yuan on speculation that a related company China Unicom
would announce a deal to sell Apple s iPhone in China as soon as
Friday
The market is struggling to stabilise following a two week
20 percent slide earlier in the month
The rebound is not over yet The index may head above
3 000 said analyst Zhang Yanbing at Zheshang Securities in
Shanghai
Oil refiners underperformed the market as domestic fuel
prices remained unchanged despite surging global prices
disappointing market expectations that they would be raised
Sinopec Corp slid 2 9 percent to 13 05 yuan while
PetroChina the most heavily weighted stock in the index sagged
2 71 percent to 14 00 yuan ahead of its first half earnings due
on Friday
Editing by Edmund Klamann and Chris Lewis |
JPM | U S appeals court revives JPMorgan silver futures rigging lawsuits | By Jonathan Stempel NEW YORK Reuters A U S appeals court on Wednesday revived three private antitrust lawsuits accusing JPMorgan Chase Co N JPM of rigging a market for silver futures contracts traded on COMEX The 2nd U S Circuit Court of Appeals in New York said a lower court judge held hedge fund manager Daniel Shak and two other traders to an excessively high legal standard when deciding last June 29 to dismiss their complaints Shak Mark Grumet and Thomas Wacker accused the largest U S bank of having in late 2010 and early 2011 placed artificial bids on the trading floor harangued staff at metals market COMEX to obtain prices it wanted and made misrepresentations to a committee that set settlement prices The traders said this forced them to post more capital to support their positions in silver futures spreads and ultimately to liquidate them at heavy losses Shak is also known for playing high stakes poker In Wednesday s unsigned decision a three judge panel rejected U S District Judge Paul Engelmayer s finding that the traders did not adequately show that JPMorgan made uneconomic bids or intended to rig the market The panel said Engelmayer demanded too much detail including specific transaction terms and the identities of JPMorgan s counterparties It also said Engelmayer engaged in impermissible fact finding by objecting to the plaintiffs use of the 12 month Silver Indicative Forward Mid Rates as a benchmark for determining proper spread levels We hold that plaintiffs adequately pleaded willful acquisition or maintenance of monopoly power to sustain an antitrust claim the appeals court panel said JPMorgan spokesman Brian Marchiony declined to comment on the ruling A lawyer for the traders David Kovel said We are happy with the decision and look forward to having the claims heard JPMorgan has prevailed in other silver litigation including in 2014 when the 2nd Circuit rejected class action claims that the New York based bank intended to drive prices down
The case is Wacker et al v JPMorgan Chase Co et al 2nd U S Circuit Court of Appeals Nos 16 2482 16 2484 16 2530 |
JPM | JPMorgan to pay Lehman 797 5 million to end litigation over collapse | By Jonathan Stempel NEW YORK Reuters JPMorgan Chase Co N JPM will pay 797 5 million in cash to end all litigation brought on behalf the former Lehman Brothers Holdings Inc whose September 2008 collapse triggered a global financial crisis The settlement made public on Wednesday requires approval by U S Bankruptcy Judge Shelley Chapman in Manhattan It follows JPMorgan s agreement last January to pay 1 42 billion in cash to resolve most other claims in what had been an 8 6 billion lawsuit against the largest U S bank to recoup money for Lehman creditors JPMorgan which had been Lehman s largest secured creditor was accused of exploiting its leverage as Lehman s main clearing bank to siphon critical liquidity in the last few days before Lehman went bankrupt on Sept 15 2008 Lehman creditors have maintained that JPMorgan unnecessarily extracted billions of dollars of collateral and by doing so obtained a windfall at their expense In a court filing lawyers for Lehman said the settlement avoids the uncertainty of continued litigation and millions of dollars of additional legal fees and is in the best interests of the Lehman estate and its creditors No one admitted wrongdoing the settlement agreement said JPMorgan has already set aside money for the accord according to a regulatory filing A hearing to consider approval is scheduled for Feb 16 Once Wall Street s fourth largest bank Lehman reported 639 billion of assets when it filed for Chapter 11 protection making its bankruptcy by far the largest in U S history Lehman emerged from bankruptcy in March 2012 and has since been winding down
Creditors have recouped more than 110 billion and bondholders once projected to receive just 21 cents on the dollar have recovered close to twice that sum |
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