News That Matters
Ft.com
The French government and two state-controlled entities are in the home stretch to create a new municipal lender from the remains of troubled Franco-Belgian bank Dexia, but they have yet to agree on the price of a key asset, http://ftalphaville.ft.com/thecut/2012/02/06/868871/resolution-on-dexia-nears/
The European Banking Authority is to challenge a significant proportion of the capital restructuring plans put forward by the continent’s leading banks to meet tough new capital requirements, the FT reports http://ftalphaville.ft.com/thecut/2012/02/06/868711/eba-to-challenge-banks-capital-plans/
Carlyle Group has installed a leadership pairing at its Middle East and north African arm as the private equity group reframes its investment strategy, focusing on the region’s main growth markets in Turkey and the Gulf, http://ftalphaville.ft.com/thecut/2012/02/06/868721/carlyle-to-focus-on-turkey-and-saudi-arabia/
Banco Sabadell, the Spanish lender, has begun sounding out investors about a rights issue worth up to €1.2bn and has met investors in London ahead of finalising the rights issue launch, reports the FT, http://ftalphaville.ft.com/thecut/2012/02/06/868671/sabadell-poised-for-e1-2bn-rights-issue/
News That Matters
Ft.com
IBM and Procter & Gamble have sold bonds with the lowest interest payments on record for US marketed corporate issues, as investors accept low returns for the safety of owning debt from secure companies, http://ftalphaville.ft.com/thecut/2012/02/02/864831/highly-rated-us-industrial-bonds-set-records/
Britain faces spending cuts “almost without historical or international precedent” over the next few years and, painful as the squeeze has been so far, it amounts to less than a 10th of what is planned by the 2016/17 fiscal year, http://ftalphaville.ft.com/thecut/2012/02/02/864861/ifs-warns-on-scale-of-spending-cuts/
The bill to revamp City regulation includes a “gaping hole” that could prevent important warnings from reaching the chancellor of the exchequer , Ed Balls, Labour’s shadow chancellor, has told the FT. Mr Balls – an architect of the current regulatory system which dispersed power between the Treasury,http://ftalphaville.ft.com/thecut/2012/02/02/864631/balls-sees-gaping-hole-in-city-revamp/
Foreign first-time-buyers are clambering to get into the London office market as sovereign wealth funds and cash-rich individuals seek stable assets amid the uncertainty in the global financial markets. http://ftalphaville.ft.com/thecut/2012/02/02/864611/foreign-buyers-snap-up-london-office-space/
News That Matters
Ft.com
Bondholders negotiating a debt swap with Greece may get a sweetener tied to a revival in economic growth that would ease the impact of accepting a lower interest rate on the new bonds, Bloomberg says, http://ftalphaville.ft.com/thecut/2012/02/01/861911/growth-linked-sweetener-for-greek-bondholders/
Paul Volcker has defended proposed trading rules for US banks that are being criticised by foreign governments as likely to disrupt the operation of their national bond markets. Japanese, UK and Canadian regulators, http://ftalphaville.ft.com/thecut/2012/02/01/861901/volcker-says-bond-markets-are-not-at-risk/
The Chinese manufacturing sector has made a surprisingly strong start to the year, the FT says, with domestic orders cushioning the impact of Europe’s debt woes, according to an official survey. The purchasing managers’ index, http://ftalphaville.ft.com/thecut/2012/02/01/861981/chinas-official-pmis-gain-ground-in-january/
News That Matters
Ft.com
US state attorneys general have until Friday to join a potential national settlement of alleged foreclosure abuses, the WSJ says, citing a document. The deadline, set by negotiators trying to pull together an agreement with the federal government, http://ftalphaville.ft.com/thecut/2012/01/31/859291/friday-deadline-for-states-on-mortgage-settlement/
RBS is scrambling to overhaul its pay systems to head off a repeat of its executive pay fiasco, says the FT. Sir Philip Hampton, RBS’s chairman, and Penny Hughes, head of the board’s remuneration committee,http://ftalphaville.ft.com/thecut/2012/01/31/859251/rbs-in-talks-to-revise-bonus-system/
European banks are preparing to tap the ECB’s emergency funding scheme for up to twice as much as the ECB supplied in its debut €489bn auction last month, the FT says, citing three chief executives of unidentified eurozone banks who said they would increase their participation two- or threefold in the auction on February 29.http://ftalphaville.ft.com/thecut/2012/01/31/859091/banks-preparing-to-tap-ltro-more-on-second-round/
Twenty-five of the EU’s 27 countries have signed up to a German-inspired treaty enshrining tougher fiscal rules to help underpin the euro, with the Czech Republic announcing it would join the UK by not agreeing to the pact.http://ftalphaville.ft.com/thecut/2012/01/31/859031/merkel-victorious-on-fiscal-treaty/
News That Matters
Ft.com
Italian 10-year bond yields briefly dropped below 6 per cent for the first time since the European Central Bank announced plans for emergency three-year loans in December to stave off a credit crunch in the eurozone. http://ftalphaville.ft.com/thecut/2012/01/27/854741/italian-yields-briefly-fall-below-6/
Greece and its private creditors made progress on Thursday in talks on restructuring its debt, reports Reuters, with both sides saying they will continue negotiating on Friday with the aim of sealing an agreement within a few days. http://ftalphaville.ft.com/thecut/2012/01/27/854721/greek-deal-edges-closer/
Samsung Electronics posted a record $4.7bn quarterly operating profit, driven by booming smartphone sales, and will spend $22bn this year to boost production of chips and flat screens, reports Reuters. http://ftalphaville.ft.com/thecut/2012/01/27/854701/smartphones-help-samsung-to-record-profits/
The world’s biggest banks are set to have a new voice on the global regulatory stage as a little known body that acts as an umbrella group for three regional trade associations beefs up its profile and changes its top management, http://ftalphaville.ft.com/thecut/2012/01/27/854611/global-body-to-represent-big-banks/
News That Matters
Ft.com
The European Union approved a ban on oil imports from Iran, overcoming misgivings about the economic hardship of its members to take its strongest measures yet to press Tehran into concessions on its nuclear programme, http://ftalphaville.ft.com/thecut/2012/01/24/847101/eus-iran-embargo-sends-oil-up-rial-down/
Japan will probably miss its goal of balancing the budget by fiscal 2020 even if it doubles the nation’s sales tax, according to government estimates, reports Bloomberg. The country will have a primary deficit of 3.1 per cent of GDP in the year, http://ftalphaville.ft.com/thecut/2012/01/24/847031/japan-to-miss-budget-goal-and-record-trade-deficit/
Orange juice prices hit an all-time high as worries over a possible US ban on Brazilian imports after the discovery of fungicide traces at the end of last year fuelled more speculative buying, the FT reports. http://ftalphaville.ft.com/thecut/2012/01/24/847021/orange-juice-hits-all-time-high/
Eurozone finance ministers on Monday night rebuffed a deal presented by private owners of Greek debt as a “maximum” offer for the losses they are willing to sustain, opening a fresh round of brinkmanship in tortuous negotiations to ease the country’s debt load, http://ftalphaville.ft.com/thecut/2012/01/24/846801/santer-to-head-efsf-spiv/
News That Matters
Ft.com
Italian Prime Minister Mario Monti on Sunday sought to reassure his government was taking austerity plans forward, the WSJ reports, saying on state television that plans to spin off Eni’s regulated natural gas business were going ahead. http://ftalphaville.ft.com/thecut/2012/01/23/844471/monti-emphasises-progress-on-fiscal-measures/
Nearly half of Asia’s larger companies are planning to make a significant acquisition in Europe over the next year, drawn by the availability of cheap assets amid the eurozone crisis, according to a survey by FTI Consulting, http://ftalphaville.ft.com/thecut/2012/01/23/844331/larger-asian-companies-eye-european-acquisitions/
The European Central Bank has removed almost a third of the bank debt it added three weeks ago to the list of assets against which it would lend, the FT says, after discovering that many of the instruments may not meet its requirements. http://ftalphaville.ft.com/thecut/2012/01/23/844441/ecb-slashes-list-of-acceptable-assets/
Eurozone finance ministers will on Monday decide what terms they will accept on a Greek debt restructuring after talks going into the weekend failed to reach agreement, reports Reuters. The mood in Athens was tense on Sunday night, http://ftalphaville.ft.com/thecut/2012/01/23/844181/greek-bondholders-draw-line-in-the-sand-on-haircuts/
News That Matters
Ft.com
Federal Reserve officials are waiting to see how the economy performs before deciding whether to launch another bond-buying program, the WSJ says. The Fed meets again next Tuesday and Wednesday, and officials are preparing to roll out a new communications strategy that is on track to include two key elements: http://ftalphaville.ft.com/thecut/2012/01/20/842161/fed-holds-off-on-new-bond-buying/
The International Monetary Fund has slashed its global growth forecast for this year and exhorted the European Central Bank to boost liquidity to stave off a deeper eurozone crisis, The Telegraph says, http://ftalphaville.ft.com/thecut/2012/01/20/842011/imf-cuts-world-growth-forecast/
Italy’s banks, led by UniCredit, were the biggest users of the special three-year funding mechanism launched by the European Central Bank in December, according to a new research report, writes the FT. http://ftalphaville.ft.com/thecut/2012/01/20/842021/italy%e2%80%99s-banks-tap-ltro-for-e50bn/
Bank of America pledged to accelerate the pace of building capital buffers to absorb future shocks as its fourth-quarter results helped drive its battered share price to the best level since October, the FT reports. The bank reported improved fourth-quarter net income of $2bn, http://ftalphaville.ft.com/thecut/2012/01/20/841981/bofa-swings-to-2bn-profit-in-fourth-quarter/
News That Matters
Ft.com
Developing countries should take steps to plan for a global economic meltdown on a par with 2008-09 if the European sovereign debt crisis escalates, the World Bank warned on Wednesday. The FT reports the World Bank is forecasting significantly slower global growth in 2012 than it expected last summer even if the eurozone muddles through its crisis,http://ftalphaville.ft.com/thecut/2012/01/18/838161/world-bank-warns-emerging-nations/
An administrator of MF Global’s UK arm has warned some customers of the failed futures broker might not see all their money returned. Richard Heis, joint special administrator at KPMG, told the FT that his firm had recovered some £594m or 82 per cent of customer funds held in so-called segregated accounts, http://ftalphaville.ft.com/thecut/2012/01/18/838301/warning-on-returns-from-mf-global-uk/
Central banks increased the amount of gold they lent for the first time in a decade in 2011, as they used their bullion reserves to help commercial banks raise US dollars, says the FT. Thomson Reuters GFMS, http://ftalphaville.ft.com/thecut/2012/01/18/838491/central-banks-increase-gold-lending/
Spain’s new government is pressing for Bankia, a group of savings banks listed last year, to seek a merger with another Spanish bank in a deal that would create the country’s largest domestic lender by assets if it materialised, http://ftalphaville.ft.com/thecut/2012/01/18/838561/spain-pushes-for-domestic-bankia-merger/
Financial System is a Farce
The markets and the world could be facing “anything” this year. January 2012 thoughts by Sprott Asset Management;
2011 was a merry-go-round of more bailouts, more deferrals and more denial. Everyone is tired of the Eurozone. It’s not fixable. There’s too much debt. The politicians don’t know what’s going on. Nothing has structurally changed. We’re still on the wrong path. There’s more global debt than there was a year ago, and it’s the same old song: extend and pretend, extend and pretend,… around and around we go,… and it isn’t fun anymore.
Just as we wrote back in October 2007, and again in September 2008, we feel compelled to state the obvious: that the financial system is a farce. It’s a complete, cyclical farce that defies all efforts to right itself. This past year continued the farcical tradition with some notable scandals, deferrals and interventions that underscored the system’s continuing addiction to government interference. With the glaring exception of US Treasuries and the US dollar (which are admittedly two of our least favourite asset classes), it was not a year that rewarded stock picking or safe-haven assets. Many developments during the year bordered on the ridiculous, and despite some positive news out of the US, we saw little to test our bearish view. If anything, our view was continually re-affirmed.
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