By Cardiff Garcia and John McDermott
© The Financial Times Ltd 2014 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Bourses were in good fettle on the lack of sentiment-sapping news emerged regarding the Fukushima nuclear power plant in Japan and as investors become increasingly inured to the fighting in Libya and civil unrest across the Middle East, reports the FT’s global market overview. The S&P 500 on Wall Street was sporting a 0.7 per cent gain, which left the benchmark just 1.2 per cent below February’s cyclical peak. A creeping bear market in US government bonds halted, though an auction of seven-year notes saw the highest yield since April, the same as two-year and five-year auctions earlier this week. 10-year yields were down 5 basis points to 3.44 per cent. West Texas Intermediate crude was down 0.5 per cent to $104.23 a barrel. Gold was dismissing a firmer dollar and is having one of its days when broader risk appetite is a support, gaining 0.3 per cent to $1,423 an ounce.
Jamie Dimon, chief executive of JPMorgan Chase, launched a broadside against financial regulation on Wednesday, warning that new capital rules could be “the nail in our coffin for big American banks”, reports the FT. Regulators are negotiating international capital standards for the biggest banks but Dimon warned that setting the new requirements too high, or allowing overseas banks to calculate their asset base differently, could disadvantage US banks and was already stifling economic growth.
March was an “extraordinary” month of macro shocks, the chief executive of the world’s second biggest hedge fund told investors on Tuesday, reports the FT. The urbane Peter Clarke – who heads the $68bn Man Group – pulled few punches in a statement to the market preceding his company’s results in May. Man Group’s huge flagship $22bn quant fund AHL, which dropped as much as 4 per cent, is far from being alone in getting caught out.
James Murdoch has been promoted to deputy chief operating officer at News Corp and chairman and chief executive of its international operations, confirming him as the family’s heir presumptive and setting the scene for a staggered handover of power at the $46bn (£29bn) media group, reports the FT. The move comes weeks after group run by 80-year-old Rupert Murdoch bought Shine, a TV production company run by his daughter Elisabeth, and amid signs that his eldest son Lachlan Murdoch becoming more involved in News Corp’s activities.
SK Telecom, South Korea’s largest wireless carrier, is considering bidding for bankrupt US video rental chain Blockbuster, in an effort to strengthen its content development, a person close to the company said, reports the FT. The unexpected move comes as the South Korean company is actively searching for opportunities to expand abroad to make up for stagnant growth at home. The country’s leading telecoms operator, which controls about 50 per cent of the domestic market, has been interested in developing software for mobile phones in recent years
US companies have returned to large strategic deal-making, helping to boost global mergers and acquisitions activity by 26 per cent in the first quarter, reports the FT. Thanks to a flurry of big deals, US M&A activity jumped 84 per cent to $267bn in the first three months of the year, compared to the same period in 2010. The US now accounts for almost half of global activity, up from about a third last year.
Google has pledged a raft of measures to improve the protection of the privacy of its users, including external audits of its handling of personal data for 20 years, under a landmark settlement with the US trade regulator, reports the FT. The internet company has also promised to obtain consumer consent for any increased sharing of data collected from its consumers and to study the protection of it.
The utility company at the centre of the worst nuclear accident in 25 years has said it would ask the Japanese government for financial support as it faced a prolonged battle to contain radiation leaks from the stricken Fukushima facility, reports the FT. It was the first time since the earthquake three weeks ago that Tokyo Electric Power had indicated it might not be able to fund the cost of the crisis on its own. Last week the company raised $25bn from three of Japan’s largest banks in emergency funding while saying that it had “sufficient liquidity”.
Do you want the good news or the bad news first?
Good news, really? Fine then. Read more
“I do think that our policies have contributed to a stronger stock market, just as they did in March of 2009,” he said, referring to the Fed’s initial round of quantitative easing.
He pointed out that since he signaled the Fed would likely unveil QE2 during a speech in Jackson Hole, Wy., that the Russell 2000 of small cap stocks is up 30%, even more than the 15% to 20% rise in blue chip indexes. Read more
Fresh from our inbox, a chart and some commentary from State Street Global Advisors:
Answer: We just don’t know.
But it’s all very intriguing nonetheless. Read more
Live markets commentary from FT.com
Why estimating the capital needs of Spain’s savings banks is so damn hard, in a single chart:
Higher prices at petrol stations and grocery stores pushed consumer spending up 0.7 per cent in February as households faced growing pressure on their budgets, the FT reports. The core personal consumption price index, a measure of inflation favoured by the Federal Reserve, increased 0.2 per cent in February, the same rise as in January. The overall personal consumption price index, which includes food and energy prices, gained 0.4 per cent, the fastest rise since June 2009 and above the previous month’s 0.3 per cent increase. Federal Reserve chairman Ben Bernanke is hoping that those prices will be controlled in the long term. History backs him, but the size of the price increases is sorely testing that assumption, Bloomberg says.
State and local governments have seen tax revenues return to almost their pre-crisis peak, the WSJ reports. Receipts in 2010 rose to $1.29 trillion, 2.3 per cent below 2008′s total. The figures were not adjusted for inflation. Tax increases account for $12.3bn of the rise in revenue during 2010. However, the data demonstrate a divergence in the tax profiles of state and local administrations — with revenue rising much more strongly in the former than the latter, which rely on property tax revenues that continue to fall. Other problems are yet to come. 2012′s fiscal year begins in July, and will see the removal of around $150bn in federal stimulus from state budgets.
The Department of Justice has filed criminal charges against a chemist working for the Food and Drug Administration over an alleged $2.27m scheme to trade on confidential information about drug approvals, says the FT. The criminal complaint, charged Cheng Yi Liang and his son, Andrew, with securities fraud, wire fraud and conspiracy charges relating to trades in shares of several pharmaceutical companies. The charges have hit the FDA in its most sensitive area, the WSJ observes. Pharmaceutical firms have long worried about the amount of secret corporate information shared with drug approval officials.
Stäfa (Switzerland), 30 March 2011 – In the run-up to the profit warning of 16 March 2011 the responsible persons at Sonova failed to issue a timely Sonova-internal black-out period for trading in Sonova shares and options. As a result of this failure, there were trades that should not have taken place during that period. In addition, Sonova has issued its profit warning too late.
These findings are the result of an investigation carried out by a law firm upon a mandate issued by the Board of Directors of Sonova. Read more
Canada’s Valeant, the acquisitive speciality pharmaceutical company, is turning its sights on US drugmaker Cephalon, with a $5.7bn hostile offer to acquire the biotech company, reports the FT. The $73-a-share bid represents a 24 per cent premium over Tuesday’s closing price and 29 per cent over Cephalon shares’ 30-day trading average, Reuters says. The offer comes after a month of failed takeover discussions with the Cephalon board, Valeant said, adding that it would begin talking to the company’s shareholders next week, and that the offer may be raised if due diligence is allowed. Cephalon sees its patent on a leading product run out in 2012, leading Valeant to argue it can wring value out of the company by cutting spending, the WSJ reports.
Engineers estimate that the Fukushima plant’s four stricken nuclear reactors will require three decades and $12bn to decommission, says Bloomberg. Shares in the plant owner, Tokyo Electric Power, plunged another 17 per cent overnight as the company revealed its CEO is now hospitalised, and speculation continued that government will nationalise it, the FT reports. Tepco’s stock is now at its lowest in five decades. The Japanese nuclear safety agency said on Wednesday that radioactive iodine levels in the sea outside the plant are now 3,355 times the legal limit, Reuters reports. Controlling leaks from the plant could take many months.
Nomura has replaced the head of its US investment banking business with a Deutsche Bank veteran, in a sign of its struggle to make inroads on Wall Street, the FT says. Jim DeNaut, a senior oil and gas banker who joined Nomura from Deutsche last August, is taking over with immediate effect from Glenn Schiffman, who is leaving the bank after just one year at the helm of its New York operations. Nomura’s push into business outside Japan since 2008 has seen its US arm turn into profit in the last two quarters, but its important US wholesale arm remains loss-making. The bank’s US staff has tripled within a year. Nomura’s expansion is favouring employees at the expense of its shareholders: the bank has a 1 per cent return on equity, Lex notes.