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Ft.com
Mariano Rajoy, Spain’s embattled prime minister, on Sunday attempted to portray his country’s decision to seek as much as €100bn in European Union rescue funds for troubled domestic banks as a victory, saying his government’s budget prudence prevented a full-scale bailout that would have forced him to surrender sovereignty to Brussels. Spain has now became the fourth and largest eurozone economy to seek an international bailout. But Mr Rajoy, who had resisted any outside EU assistance since his centre-right government was voted into office in December, insisted the agreed loan from EU funds was solely to recapitalise banks. However, because Spain was able to take advantage of new provisions in the eurozone’s €440bn rescue system, it will avoid the kind of intrusive inspection of government books that came along with Irish, Greek and Portuguese bailouts. http://www.ft.com/intl/cms/s/0/4599be98-b2ed-11e1-83a9-00144feabdc0.html#axzz1xSNLBdRq
Alexis Tsipras, leader of Greece’s leftwing Syriza coalition, seized on news of the Spanish bailout to bolster his position ahead of next week’s crucial general election, which may determine whether the country stays in the euro. “The developments in Spain confirm the position we adopted from the start – that the crisis is a pan-European problem, and the way it has been handled so far has been socially catastrophic and completely ineffectual,” Mr Tsipras, who opposes the bailouts, told a newspaper. http://www.ft.com/intl/cms/s/0/c8e85ba6-b31a-11e1-83a9-00144feabdc0.html#axzz1xSNLBdRq
François Hollande was in sight of an all-important parliamentary majority following the first round of National Assembly elections on Sunday, vital to entrenching the authority of France’s new Socialist president a month after he was elected. If confirmed in the decisive second round next Sunday, Mr Hollande will be able to start implementing his growth plans, rejecting at least part of the austerity drive installed by his predecessor. http://www.ft.com/intl/cms/s/0/92dc223e-b317-11e1-83a9-00144feabdc0.html#axzz1xSNLBdRq
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Ft.com
Two of the best-known business dynasties in Europe and the US will come together after Lord Jacob Rothschild’s listed investment trust and Rockefeller Financial Services agreed to form a strategic partnership. RIT Capital Partners is to buy a 37 per cent stake in the Rockefeller’s wealth advisory and asset management group for an undisclosed sum, giving Lord Rothschild’s London-listed trust a much sought-after foothold in the US. The transatlantic union brings together David Rockefeller, 96, and Lord Rothschild, 76 – two family patriarchs whose personal relationship spans five decades. http://www.ft.com/intl/cms/s/0/efe93494-a9a3-11e1-a6a7-00144feabdc0.html#axzz1w8XyzKzt
A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the European Central Bank for cash, was bluntly rejected as unacceptable by the ECB, European officials said. News of the rejection came as Spain faces elevated borrowing costs in the bond markets, tries to persuade investors it can contain problems in a banking sector weighed down by €180bn of bad property loans and, on Tuesday, saw its central bank governor stand down early. Madrid had floated the unorthodox idea over the weekend of recapitalising Bankia by injecting €19bn of sovereign bonds into its parent company, which could then be swapped for cash at the ECB’s three-month refinancing window, avoiding the need to raise the money on bond markets. http://www.ft.com/intl/cms/s/0/7730ca10-a9b4-11e1-9772-00144feabdc0.html#axzz1w8XyzKzt
The decline in Facebook’s market value since its initial public offering earlier this month increased to 24 per cent as the social network’s shares dropped a further 9.6 per cent on Tuesday to a new low of $28.84. Facebook’s stock options, which traded for the first time on Tuesday, indicated that the stock’s volatility is expected to continue. The stock options were already among the most heavily traded in the US market, demonstrating the frenzy around the eight-year-old company and its May 18 IPO. http://www.ft.com/intl/cms/s/0/6769765c-a9a2-11e1-a6a7-00144feabdc0.html#axzz1w8XyzKzt
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Russian billionaire Mikhail Fridman has resigned as chief executive of BP’s Russian joint venture TNK-BP, plunging relations between the UK oil group and its local partners into fresh turmoil. A person close to Alfa-Access-Renova (AAR), the consortium of Russian shareholders that owns 50 per cent of the company, said Mr Fridman quit due to a “breakdown in governance at TNK-BP”. “The Russian shareholders have lost faith in BP as a partner,” the person close to AAR said. “This partnership appears to have run its course and we are most likely heading towards some kind of disengagement.” http://www.ft.com/intl/cms/s/0/f334b2e4-a8aa-11e1-a747-00144feabdc0.html#axzz1w8XyzKzt
Spain’s prime minister has insisted his country will not need an international rescue for its banks as investors recoiled at a €19bn rescue of Bankia, sending the country’s borrowing costs over Germany’s to the highest level since the start of the euro. Bankia, Spain’s second-biggest bank by local deposits, would have collapsed if Madrid had not agreed to the rescue last week, Mariano Rajoy warned, adding that this would have risked bringing down Spain itself. http://www.ft.com/intl/cms/s/0/27f29710-a8a3-11e1-a747-00144feabdc0.html#axzz1w8XyzKzt
Steep declines in the euro symbolise the woes of Europe’s monetary union but could have a silver lining: the boost to exporters may offer some much-needed support to economic growth across the 17-country region. Last year, even as the euro crisis escalated, the currency’s value remained remarkably steady. In recent weeks, however, financial market sentiment towards the euro has turned decisively for the worse. http://www.ft.com/intl/cms/s/0/269aa5b8-a7dd-11e1-b8a9-00144feabdc0.html#axzz1w8XyzKzt
Spain’s inverse inquisition
Europe in reality check mode today. Our readers know The Trader has been rather pessimistic on the Spanish economy and the Spanish markets for the past year. Ibex is currently trading down 3%. The low close in 2009 was at 6820. Are we taking out this level today? Still they tell you equities are good long term.
European dog charts below.
News That Matters
All you need to read and more below.
News That Matters
All you need to read and more below.
Essential Chart Update
Equity markets have been rather active over the past sessions. Further Eurozone troubles have absolutely crushed the Spanish and Italian markets. Both these markets are now at our projected short term target levels. Momentum is still weak, but we should be getting a slight bounce from these levels. Note how close the IBEX is to the 2009 “bottom” levels. We are not turning bullish, but see a possible short term bounce as these indices have reached support levels around here.
Both the Dax and the Eurostoxx are also reaching some short term support levels, while some risk off ratios are at extreme levels. Charts below.
Chart Update as the Med Indices have fallen sharply over the past weeks
Quick chart update. The Trader has been rather bearish on the Spanish and the Italian markets over the past weeks. Both indices have reached some short term suppot levels though. The long term picture is still ugly, but selling into these support levels is probably not wise.
The Eurostoxx 50 is not trading well, but has also reached some short term support levels.
Essential European charts below.
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Ft.com
The European Central Bank is falling behind on a €40bn asset purchase programme launched at the height of eurozone crisis, in a sign it could be dropped as a first step towards unwinding huge emergency support for the region’s financial system. Purchases of “covered bonds” – debt backed by pools of assets favoured by some institutional investors – have so far totalled less than €9bn. The scheme started last November and was originally intended to run until October at the latest. http://www.ft.com/intl/cms/s/0/bdb2c1ec-7367-11e1-9014-00144feab49a.html#axzz1pj9puJ70
WestLB held out little hope of finding buyers for most of its businesses as a deadline approaches for the bank to be wound down, raising the potential cost for German taxpayers of dealing with unwanted assets. The imminent break-up of the German public-sector bank will end a troubled chapter in the country’s banking history after WestLB needed frequent bailouts and sparked arguments with European competition authorities. http://www.ft.com/intl/cms/s/0/f822c96e-734c-11e1-9014-00144feab49a.html#axzz1pj9puJ70
Wsj.com
Asian stock markets were mixed Thursday as key manufacturing data out of China confirmed a slowdown in the world’s second-largest economy, triggering a selloff in risk-sensitive currencies such as the Australian and Singapore dollars. Japan’s Nikkei Stock Average slipped 0.1%, Australia’s S&P/ASX 200 added 0.5%, South Korea’s Kospi Composite dropped 0.3%, Hong Kong’s Hang Seng Index was flat, China’s Shanghai Composite Index fell 0.4%, and India’s Sensex dropped 0.1%. ow Jones Industrial Average futures were down 19 points in screen trade. Copper and oil prices also dropped after data showed the preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nation-wide manufacturing activity, fell to 48.1 in March compared with a final reading of 49.6 in February. The March reading marks the fifth-straight month the index has been in contractionary territory, signaling extended difficulties for the nation’s manufacturers. http://online.wsj.com/article/SB10001424052702304724404577296290472282610.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
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Saudi Arabia’s powerful oil minister, Ali Naimi, made a rare intervention into overheating oil markets on Tuesday, declaring that high oil prices were “unjustified” and vowing that the kingdom would boost its output by as much as 25 per cent if necessary. As the west’s nuclear stand-off with Iran escalates, oil prices have rallied this month to a post-2008 peak of $128 a barrel with markets bracing for European Union sanctions on Iranian crude that could knock out a chunk of global supply. http://www.ft.com/intl/cms/s/0/f9f8eb00-729e-11e1-9be9-00144feab49a.html#axzz1pj9puJ70
European banks are preparing a new type of securitised vehicle bundling together loans to commodity trading houses to try to resolve the credit crunch in the commodities industry. The banks, including BNP Paribas and Société Générale, are testing the appetite from European pension funds and insurance companies for the instruments and hope to launch the products before the end of the year, executives said. The move comes after French banks, the main financiers of trading houses, reined in their lending due to a shortage of US dollar liquidity. BNP Paribas and a handful of other European banks provide most of the credit lines that underpin the business of the Swiss-based traders that dominate global raw materials markets. Commodities bankers and industry executives said the securitisation would allow the industry to access fresh credit. http://www.ft.com/intl/cms/s/0/f8f4c83c-72b2-11e1-ae73-00144feab49a.html#axzz1pj9puJ70
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