News That Matters

“It takes a genius to whine appealingly.”

— F. Scott Fitzgerald
Ft.com
Mitt Romney has won the crucial Michigan primary, reports the FT, fending off a strong challenge from Rick Santorum after a bitter contest that has left Republicans anxious about damage to the party from the prolonged presidential nomination race. http://ftalphaville.ft.com/thecut/2012/02/29/902901/romney-wins-crucial-michigan-primary/

JPMorgan Chase executives have told investors the bank will prosper even after the implementation of new regulations as they maintained profit targets and dismissed talk of a historic threat to Wall Street’s business model, http://ftalphaville.ft.com/thecut/2012/02/29/902761/dimon-dismisses-regulatory-threat/

The US investigation into insider dealing on Wall Street has broadened to include trading of biotechnology and pharmaceutical stocks, says the FT, citing a person familiar with the matter. The FBI and the US attorney’s office in Manhattan are honing in on trades by hedge funds in biotech and pharmaceutical stocks around important drug approval announcements and corporate takeovers, http://ftalphaville.ft.com/thecut/2012/02/29/902721/insider-trading-probe-broadens-to-pharma-stocks/

Taxpayers will have to wait up to 15 years to recoup the money spent on rescuing Northern Rock, according to the first official analysis of potential returns from the bail-out. The FT says a report published on Tuesday by UK Financial Investments, http://ftalphaville.ft.com/thecut/2012/02/29/902681/taxpayers-face-15-year-northern-rock-wait/

Dublin will hold a referendum on the eurozone fiscal pact, plunging Europe into months of uncertainty and potentially placing a question mark over Ireland’s membership of the euro, reports the FT. Enda Kenny, http://ftalphaville.ft.com/thecut/2012/02/29/902481/ireland-calls-vote-on-european-fiscal-pact-2/

The European Investment Bank, the development lender for the 27-member bloc, is getting a similar exemption from Greek debt writedowns to the ECB, says Bloomberg, citing two regional officials familiar with the matter. http://ftalphaville.ft.com/thecut/2012/02/29/902591/eib-reportedly-gets-greek-writedown-exemption/

The Justice Department is conducting a criminal probe into whether the world’s biggest banks manipulated a global benchmark rate, says Reuters, citing a person familiar with the situation. The criminal nature of the inquiry underscores the serious nature of a worldwide investigation that includes regulators and law-enforcement agencies in the United States, Japan, http://ftalphaville.ft.com/thecut/2012/02/29/902511/us-libor-probe-has-criminal-focus/

Greece’s Parliament ratified a 3.2bn package of spending cuts to the 2012 budget on Tuesday night, Bloomberg reports. A total of 202 politicians voted in favour of the law and 80 against, according http://ftalphaville.ft.com/thecut/2012/02/29/902501/greece-ratifies-spending-cuts/

Japan and South Korea reported larger-than-forecast industrial production in January, reports Bloomberg. Japanese output rose 2 per cent from the previous month, the Trade Ministry said in Tokyo on Tuesday. http://ftalphaville.ft.com/thecut/2012/02/29/902461/japan-korean-production-rose-in-january/

Apple has joined an elite group of companies to reach a $500bn equity valuation amid expectations it is to launch the new version of the iPad next week, the FT reports. Shares in the iPhone maker rose to $532.35 in morning trading in New York on Wednesday, http://ftalphaville.ft.com/thecut/2012/02/28/902211/apple-joins-the-500bn-club/

It has been likened to a sugar rush for markets, especially for government bonds issued by heavily indebted eurozone nations. But will the European Central Bank’s second offer of cheap three-year loans to banks on Wednesday inject new life into the rally? The answer to one of the most important questions for markets is expected by analysts shortly after 10am London time on Wednesday. The reaction will be closely watched. Mario Draghi’s ECB has been credited with the improved sentiment this year, not just in eurozone sovereign debt but in other risky assets too. http://www.ft.com/intl/cms/s/0/73ba02f4-6204-11e1-807f-00144feabdc0.html#axzz1nkNpHEL1

François Hollande, the Socialist challenger for the French presidency, has launched a surprise offensive against top earners, proposing a marginal tax rate of 75 per cent on incomes above €1m a year – a level far in excess of top rates elsewhere in Europe. Quickly condemned by President Nicolas Sarkozy, who he aims to unseat in the election in May, Mr Hollande said the rising level of executive pay at top companies, which he said averaged €2m a year, was unacceptable. http://www.ft.com/intl/cms/s/0/30177568-61fa-11e1-807f-00144feabdc0.html#axzz1nkNpHEL1

Belarus expelled the ambassador of the European Union and that of Poland on Tuesday, marking a fresh low in the strained relationship between Minsk and the 27-member bloc. The move by the Belarusian foreign ministry followed a decision by the EU to expand the number of people affected by sanctions for helping repress opposition in the former Soviet republic. http://www.ft.com/intl/cms/s/0/8496ea5c-6235-11e1-872e-00144feabdc0.html#axzz1nkNpHEL1

Wsj.com
Asian shares rose Wednesday, led by the Australian and Japanese bourses at multimonth highs. Japan’s Nikkei Stock Average advanced 1.2% to 9840.21, Australia’s S&P/ASX 200 was up 1.1% at 4308.1, South Korea’s Kospi Composite gained 1.4% and New Zealand’s NZX-50 rose 0.4%. Hong Kong’s Hang Seng Index added 0.5%, while the Shanghai Composite Index bucked the region and fell 0.5%. Dow Jones Industrial Average futures were up 12 points in screen trade.http://online.wsj.com/article/SB10001424052970204520204577252120428195402.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

An unidentified market participant has asked a committee of the International Swaps and Derivatives Association to rule on whether the passage of legislation approving collective-action clauses for Greek debt should trigger payouts on credit-default swaps tied to Greek sovereign bonds.  The move comes after Standard & Poor’s cut Greece’s long-term credit rating to selective default from double-C, making Greece the first euro-zone member officially to be rated in default, 13 years after the euro was adopted to strengthen the European Union. http://online.wsj.com/article/SB10001424052970204653604577250703365099614.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

The European Central Bank said it would no longer accept Greece’s bonds as collateral for loans after the country was downgraded to a default rating, but added that the move was a temporary one that could be reversed once the new bailout package goes into effect.  Until then, the ECB said it would be up to national central banks to decide whether to accept the bonds as collateral for their own emergency lending facilities. Greek banks, which would collapse without the support, would still be able to access loans directly from the Greek central bank, albeit at higher interest rates. http://online.wsj.com/article/SB10001424052970204520204577250771606659952.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Home prices fell to fresh lows in December, but economists say that a drop in the number of homes listed for sale could help stabilize prices in parts of the country this year. Home prices fell by 4% last year, according to the Standard & Poor’s/Case-Shiller index that tracks 20 metro areas. Prices dropped by 1.1% for the three-month period ending in December compared with the same period ending in November.That was slightly better than November’s reading, when prices were down 1.3% from October.http://online.wsj.com/article/SB10001424052970204520204577251090065551210.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Standard Chartered PLC said it posted a record net profit for the ninth consecutive year in 2011, as strong revenue growth in both wholesale banking and consumer banking as well as tight cost controls boosted its earnings by 12%. The lender’s net profit for the 12 months ended Dec. 31 rose to US$4.75 billion from US$4.23 billion in 2010. The result matched the average forecast of US$4.75 billion from eight analysts polled earlier by Dow Jones Newswires.http://online.wsj.com/article/SB10001424052970204653604577252342204932220.html?mod=WSJASIA_hpp_LEFTTopWhatNews

South Korea’s industrial production in January unexpectedly rose after three months of declines, adding a modest 3.3% from the month earlier, helped by healthy machinery and automobile sectors. Government data released Wednesday eased concerns over a possible hard landing for the Asia’s fourth-largest economy, and made it less likely the Bank of Korea will cut its policy rate.  Economists were surprised by the latest readings, saying South Korea seems to have weathered the typically slow-performing month better than expected, despite weak exports and sluggish domestic demand stemming from high consumer prices.http://online.wsj.com/article/SB10001424052970204653604577252222539242922.html?mod=WSJASIA_hpp_LEFTTopWhatNews

Marketwatch.com
Chinese real-estate developers traded weaker Wednesday after an apparent housing-policy reversal in Shanghai, where officials suspended plans to lift a restriction on long-term residents seeking multiple property investments in the city. Shanghai’s housing bureau said late Tuesday no concessions will be made to its existing rules that apply to those who have lived in the city for a long time but lack formal permanent resident permits, reports said. http://www.marketwatch.com/story/china-real-estate-stocks-down-on-shanghai-policy-2012-02-28

Japan’s industrial production rose a seasonally adjusted 2.0% during January, the government reported Wednesday. The result beat expectations for a 1.5% gain, according to a Dow Jones Newswires survey, but was a slower improvement than December’s 3.8% month-on-month advance. Shipments sank 0.7% during the month, while inventories rose 3.1%, according to the Ministry of Economy, Trade and Industry data. http://www.marketwatch.com/story/japans-industrial-production-rise-beats-forecasts-2012-02-28

Orders for long-lasting U.S. goods fell a bigger-than-expected 4.0% in January, as demand for a broad array of products declined, the government reported Tuesday.  Economists surveyed by MarketWatch had expected durable-goods orders to fall a seasonally adjusted 1.3%, largely because of lower aircraft orders and the year-end expiration of a temporary business tax credit. http://www.marketwatch.com/story/orders-for-big-ticket-items-fall-4-in-january-2012-02-28

Consumer confidence is the highest in a year, with more optimism about jobs, the Conference Board reported Tuesday. The research group’s gauge of U.S. consumer confidence rose to 70.8 in February from 61.5 in January. A prior estimate for January pegged the level at 61.1. “Consumers are considerably less pessimistic about current business and labor market conditions,” said Lynn Franco, director of the Conference Board’s consumer research center. “Despite further increases in gas prices, they are more optimistic about the short-term outlook.” http://www.marketwatch.com/story/consumer-confidence-highest-in-a-year-2012-02-28

Reuters.com
Gold edged higher on Wednesday, after rallying 1 percent in the previous session, supported by expectations for more cheap loans to be offered by the European Central Bank later in the day. Spot gold inched up 0.1 percent to $1,786.06 an ounce by 0315 GMT, after hitting $1,789.40 on Tuesday, its highest level since mid-November. U.S. gold was little changed at $1,787.80. http://www.reuters.com/article/2012/02/29/us-markets-precious-idUSTRE80T1QZ20120229

Bloomberg.com
India’s economy grew at the slowest pace in more than two years last quarter as domestic demand weakened and the global recovery faltered, adding pressure on the central bank to lower interest rates. Gross domestic product rose 6.1 percent in the three months through December following the previous quarter’s 6.9 percent climb, the Central Statistical Office said in a statement in New Delhi today. The median of 29 estimates in a Bloomberg News survey was for a 6.3 percent advance.http://www.bloomberg.com/news/2012-02-29/india-s-gdp-grows-least-since-2009.html

Australian Prime Minister Julia Gillard, who won a leadership ballot on Feb. 27, said she’s working on changing her cabinet lineup, without giving an indication when it may be announced. “My door is open to talk to people as I work my way through the reshuffle,” Gillard told reporters in Canberra today. “The decisions are mine and I’ll make them.” http://www.bloomberg.com/news/2012-02-29/gillard-working-on-australian-cabinet-reshuffle.html

Goldman Sachs Group Inc. (GS), the Wall Street bank that generated 60 percent of its revenue from trading last year, recorded losses from that business on 17 days in the fourth quarter, down from 21 days in the prior period. The firm’s traders lost more than $100 million on two of those days, the New York-based company said yesterday in an annual filing with the Securities and Exchange Commission. They produced more than $100 million on nine out of 63 total days in the quarter that ended Dec. 31, the filing showed. http://www.bloomberg.com/news/2012-02-28/goldman-s-traders-lost-money-on-17-days-in-fourth-quarter-down-from-21.html

Cnbc.com
The U.S. economic recovery is “frustratingly slow” and it could take four to five years to ratchet the unemployment rate down to about 6 percent, from more than 8 percent now, a top Federal Reserve official said on Tuesday. The recovery is held back by the housing market and Europe’s debt crisis among other headwinds, but monetary policy is now appropriately positioned to eventually achieve this “maximum employment” level, said Cleveland Fed President Sandra Pianalto. http://www.cnbc.com/id/46564660

Cnn.com
Remember those pesky mortgage-backed securities the Federal Reserve had to take off AIG’s hands at the worst of the financial crisis? The Fed just finished selling all of them, and their return on investment isn’t too shabby. The sales of the $19.5 billion portfolio turned a $2.8 billion profit for taxpayers.  “The completion of the sale of the Maiden Lane II portfolio has resulted in significant gains for the public and marks an important milestone in the wind-down of the extraordinary interventions necessitated by the financial crisis,” William Dudley, president of the New York Fed, said in a statement. http://money.cnn.com/2012/02/28/news/economy/fed_maiden_lane_aig/index.htm?cnn=yes

Foxbusiness.com
Australian retail sales rose 0.3% on an adjusted basis in January, the Australian Bureau of Statistics reported Wednesday. That was in line with economist expectations, according to data compiled by Dow Jones Newswires. Retail sales fell 0.1% in December, the ABS data showed. January’s increase was driven by higher sales for cafes, restaurants and takeaway-food services. http://www.foxbusiness.com/markets/2012/02/28/australian-retail-sales-up-03-in-january/#ixzz1nkSaxxT3

Washingtonpost.com
Oil & Natural Gas Corp., India’s biggest energy exploration company, was set to climb to a nine- month high after the government approved a plan to raise 124 billion rupees ($2.5 billion) by selling shares at a premium. ONGC shares rose as much as 4.8 percent to 297.05 rupees and traded at 294.20 rupees as of 10:08 a.m., poised for the highest level since May 16. The stock has climbed 15 percent this year compared with a 16 percent increase in the benchmark Sensitive Index. http://washpost.bloomberg.com/story?docId=1376-M04WGR0UQVI901-54QT9FS0FNBFIP3TOBNOCNV2GP

BBC.co.uk
US President Barack Obama has created a new trade task force to investigate and crack down on unfair practices by American trading partners. The move comes amid concerns that unfair trading practices, especially by China, were harming US businesses. Policymakers have accused Beijing of keeping its currency artificially low in a bid to help China’s exporters. http://www.bbc.co.uk/news/business-17200621

Europe is in the midst of “prolonged agony” of housing market decline with no obvious end in sight, a report by surveyors has claimed. The downturn began five years ago, so had lasted longer than a typical 12 or 18-month dip, the Royal Institution of Chartered Surveyors (Rics) said. The Irish Republic and Spain saw house price falls of 17% and 10% respectively in 2011, compared with 2010. http://www.bbc.co.uk/news/business-17191691

Telegraph.co.uk
HSBC has admitted for the first time it may face criminal charges that could see it hit with “significant” penalties stemming from a US investigation into alleged money-laundering by Britain’s biggest bank.  The bank is being investigated over possible violations of the US Bank Secrecy Act. HSBC also said that it is co-operating with another investigation by the Department of Justice and the Office of Foreign Asset Control (OFAC) “regarding historical transactions involving Iranian parties and other parties subject to OFAC sanctions”. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9111850/HSBC-could-face-US-criminal-charges-and-significant-fines-over-money-laundering.html

Ireland has shocked Europe with plans for a referendum on the EU’s fiscal treaty, a move that risks an unprecedented fragmentation of the eurozone and a major clash with Germany. Premier Enda Kenny said Dublin was acting on legal advice from Ireland’s attorney-general that “on balance” the fiscal compact requires a vote under the country’s constitution. “It gives the Irish people the opportunity to reaffirm Ireland’s commitment to membership of the euro,” he told ashen-faced members of the Dail.http://www.telegraph.co.uk/finance/financialcrisis/9112155/Irish-EU-treaty-vote-threatens-chaos.html

Guardian.co.uk
Tesco‘s share of the supermarket trade has slipped to 29.7%, its lowest level for almost seven years. Britain’s biggest retailer has seen shoppers increasingly defect to upmarket rivals as well as discount specialists such as Aldi and Lidl. Tesco remains Britain’s leading supermarket, taking £7.53bn at UK checkouts for the 12 weeks to 20 February – almost 70% more than closest competitor, Asda – but it lost ground to a range of smaller players which have a stronger focus on either value ranges or premium quality. http://www.guardian.co.uk/business/2012/feb/28/tesco-market-share-aldi-lidl

Smh.com.au
New home sales slumped in January, posting their biggest ever monthly fall since records began in October 2000, a survey of Australia’s 100 largest builders shows. Sales of new homes fell 7.3 per cent in seasonally adjusted terms in January this year, dragged lower by a slowdown in Victoria, HIA-JELD-WEN new home sales figures show. New home sales in Victoria fell in January to 1675, their lowest level since November 2006. http://www.smh.com.au/business/new-home-sales-in-record-slump-20120229-1u25y.html#ixzz1nkUEmjjn

Cs.com.cn
China`s commercial banks issued new loans about 738.1 billion in first three weeks in February, and the biggest four state-owned lenders cover about 75 billion yuan, according to the data compiled by China Securities Journal yesterday. the biggest four state-owned lenders include the Industrial & Commercial Bank of China Ltd, which is the nation’s biggest listed lender, China Construction Bank Corp；second-largest, the Bank of China, and Agricultural Bank of China Ltd., （AgriBank） the fourth-biggest.http://www.cs.com.cn/english/ei/201202/t20120229_3262634.html

Portuguese economic reforms remained on track, but its economy still faced challenges, the International Monetary Fund said Tuesday in a joint statement with the European Commission and European Central Bank. Teams from the “troika” visited Lisbon on Feb. 15-27 for the third quarterly review of Portugal’s economic program, and reported good progress in adjusting the economic imbalances. “Policies are generally being implemented as planned and economic adjustment is underway. Financial sector reforms and de-leveraging efforts are advancing, while steps are being taken to ensure that credit needs of companies with sound growth prospects are met,” the statement said. http://www.cs.com.cn/english/ei/201202/t20120229_3262493.html

Thehindu.com
In a grim prologue to the level of industrial and overall economic growth that can be expected during the fourth quarter of the current fiscal, the core sector put up a dismal show in January 2012, with its output expanding by a mere 0.5 per cent as compared to a healthy 6.4 per cent growth a year ago. After a slight improvement in December 2011 with a growth of 3.1 per cent, the January data on the key infrastructure industries reveal clear signs of a slowdown, considering that the eight segments constitute the core of the manufacturing sector and account for a weight of 37.90 per cent in the IIP (index of industrial production). http://www.thehindu.com/business/article2943086.ece

The US Secretary of State, Ms Hillary Clinton, and lawmakers has expressed concern over diversion of its aide money by Pakistan for other purposes, even as the United States has tried to build a fire wall in this regard. “Well, we certainly have constructed one,” Ms Clinton told lawmakers at a Congressional hearing yesterday when Senator Jim Webb asked if the United States has developed a firewall in the financial aid going into Pakistan, so that they do not directly or indirectly assist in expansion of their nuclear programme. http://www.thehindubusinessline.com/industry-and-economy/economy/article2945065.ece

Economictimes.com
China may resort to territorial grabs, including through a “major military offensive”, especially in Arunachal Pradesh or Ladakh in Jammu and Kashmir, and India should respond with “a strategy of quid pro quo”, says a report by an independent group of Indian analysts. “Our frontiers with China have been mostly stable for some years now. However, China could assert its territorial claims (especially in the Arunachal sector or Ladakh) by the use of force,” says the report that seeks to outline a foreign and strategic policy for India in the 21st century. http://economictimes.indiatimes.com/news/politics/nation/china-may-resort-to-indian-territory-grab-says-expert-report/articleshow/12080550.cms
Yonhapnews.co.kr
The number of millionaires in Hong Kong dropped last year due to unfavorable market conditions for investors, a report showed Wednesday. In 2011, 527,000 people had liquid assets of more than HK$1 million (US$129,000), down 5.5 percent from 558,000 a year earlier, according to the latest Hong Kong Consumer Wealth Review released by Citibank. “The drop was related to the undesirable investment environment as the Hang Seng Index fell a lot last year,” Christine Lam, deputy country business manager and head of retail banking at Citibank Global Consumer Group, said, referring to a stock market index which is the main indicator of overall market performance in Hong Kong. http://english.yonhapnews.co.kr/business/2012/02/29/85/0503000000AEN20120229004500320F.HTML
Fin24.com
Growth in credit demand by South Africa’s private sector quickened to 7.33% year-on-year in January compared with a downwardly revised 6.14% rise in December, central bank data showed on Wednesday. Growth in the broadly defined M3 measure of money supply slowed to 6.58% year-on-year from 8.27% in December. Economists surveyed by Reuters forecast year-on-year private sector credit growth of 6.99% in January while M3 was seen expanding by 8.6%. http://www.fin24.com/Economy/Credit-growth-demand-quickens-20120229

Tehrantimes.com
Iran does not feel the pain of Western sanctions on its oil revenues, as the 17% gain in crude prices since December has largely offset the decline in exports, according to the Gulf Times. Ian Taylor, the head of the world’s top oil trader Vitol, said the Iranians are “probably quite close to winning” based on the current numbers. Iran has so far lost about 500,000 bpd of exports, roughly a fifth of its total, based on information from refiners and other officials. http://www.tehrantimes.com/economy-and-business/95932-iran-unfazed-by-oil-sanctions

India is considering providing sovereign guarantee to domestic shipping lines for import of crude oil from Iran which is facing sanctions from the U.S. and Europe. The sanctions prohibit EU-based entities from providing insurance and guarantees for transportation of oil from Iran. Most of the Indian shipping lines take protection and indemnity cover (P&I) mainly from them. “The government is exploring options like sovereign guarantee and Cost&Freight (C&F) for importing crude from Iran in the wake of European sanctions…A decision will be taken in the next two-three months,” Shipping Secretary K Mohandas told reporters here . http://www.tehrantimes.com/economy-and-business/95910-india-mulls-to-insure-iran-oil-cargoes-

Thetrader.se
Regular readers of The Trader know our negative view on the Spanish Economy. The desperate situation of many Spanish towns and municipalities, has not been in focus, as investors have been focusing on the chaotic Greek financial situation. Maybe it is time to start focusing on the possibly much bigger problems Spain faces. Jerez, a beautiful town in southern Spain, famous for it’s Jerez wine and proximity to the Atlantic Ocean is practically bust. Expect the Zapatero blame game to intensify, while the “cheap” property market goes into free falling mood soon. From El Pais; http://www.thetrader.se/2012/02/28/spanish-town-jerez-on-the-verge-of-a-financial-collapse-expect-more-to-follow/