For the commute home,
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It’s also central bank run, of sorts.
Belarus news specialist The Telegraf reports that the nation’s central bank has stopped exchanging gold for Belarusian rubles. That’s after the National Bank of Belarus said the volume of gold and foreign exchange reserves dropped by $68m to $5,512m last month ahead of a widely-expected devaluation. Read more
Live markets commentary from FT.com
As usual, we’ll be kicking off promptly at three minutes late, or 10:03am EST, 3:03pm GMT.
Topics du jour will include the slew of economic data out of the US, BofA earnings, Chinese GDP, Google’s miss, Greek debt, the latest from MENA and Japan — and whatever happens to break in real-time, of course. Read more
But CreditSights analysts reckon regulators may have grabbed the wrong end of the securitisation stick, so to speak, when they proposed the rules. The structured finance meltdown, they argue, didn’t come about because of misalignment of incentives — but alignment. The securitisation mindmeld, so to speak. Read more
Olivier Jakob, at Petromatrix (who we know we quote a lot, but only because he really does constantly come up with interesting points) alerts us to the fact that from Monday onwards investors will be able to trade euro-denominated contracts on certain Nymex energy products.
As he points out: Read more
Thursday’s Greek debt restructuring panic — an enigma inside a riddle, wrapped in a mystery, inside an enigma. And, as BNP Paribas puts it, maybe tied with a Gordion knot to boot.
A Die Welt interview with Wolfgang Schäuble kicked things off. According to the FT, Germany’s finance minister is quoted saying if a study currently under way showed that Greece’s debt levels were unsustainable, “further measures” would have to be taken. When asked what those could be, he ruled out any involuntary restructuring before 2013, warning investors could face losses after then, presumably when the restructuring-focused European Stability Mechamism comes into effect. Read more
Live markets commentary from FT.com
Ireland’s credit rating was cut two levels by Moody’s Investors Service to the lowest investment grade as the government struggles to lower the budget deficit and restore economic growth, Bloomberg reports. Moody’s reduced the rating to Baa3 from Baa1, leaving the country’s outlook on negative. FT Alphaville notes that the level is one step away from junk and is likely to boost market fears of a debt restructuring.
US securities regulators are in talks with several major Wall Street banks to settle fraud allegations related to mortgage-bond deals that helped unleash the financial crisis, the Wall Street Journal says, citing people familiar with the matter. The settlements are expected to vary significantly among banks — but few, if any, are expected to surpass the $550m penalty that Goldman Sachs paid last year to settle allegations that it misled investors in a mortgage-bond investment called Abacus. The agency’s decision not to try to adopt a common industry template for the settlements reflects substantial differences in the nature of the civil fraud allegations faced by each bank, the people familiar said.
Moody’s has cut Ireland’s sovereign rating by two notches to Baa3 on Friday and with the outlook on negative the Irish find themselves one step from junk.
From Moody’s: Read more
Markets are finishing a difficult week on a downbeat note as investors remain perturbed that monetary policy responses to burgeoning inflation could crimp global growth, the FT reports in its rolling global market overview. The FTSE All-World equity index is down 0.1 per cent, many industrial and agricultural commodity prices are softer, US Treasury yields are fractionally lower and the yen is attracting “haven” flows. US stock futures are down 0.1 per cent and the FTSE Eurofirst 300 has opened up 0.1 per cent as Reckitt Benckiser shares pare some of the previous session’s heavy losses. Meanwhile, gold has hit a new record of $1,479 an ounce, and is now up 0.2 per cent at $1,476.
The dollar fell to a 16-month low on Thursday, with Asian currencies leading the charge higher after Singapore let its currency trade to a record high, the FT says. Analysts said the dollar was suffering from the perception that, in spite of an improving economy, the Federal Reserve was likely to stick to its ultra-loose monetary policy stance as other central banks raised rates. On Friday, MarketWatch reports that the dollar is up versus the euro after Moody’s cut Ireland’s debt rating by two notches. The dollar index has also risen to 74.791 from its Thursday low of 74.617.
Greek borrowing costs reached a record high compared with those of Germany, the FT reports. The euro tumbled on Thursday and premiums charged on Greek debt over Germany’s hit euro-era highs after the countries’ respective finance ministers talked of Greece needing more time to attract investors and raised the prospect of debt restructuring. George Papaconstantinou told the FT that Greece needed more time to convince international investors of its commitment to reform its finances. Separately, Wolfgang Schäuble, Germany’s finance minister, told Die Welt newspaper that, if a study already under way showed that Greece’s debt levels were unsustainable, “further measures” would have to be taken. FT Alphaville notes the ministers’ talk also sent Greek CDS shooting up on the day.
Senior JPMorgan Chase executives were aware of suspicions that Bernard Madoff was running a Ponzi scheme, according to an updated court filing from the trustee charged with recovering money for Mr Madoff’s victims, the FT says. John Hogan, a senior risk officer at JPMorgan’s investment bank and a member of the company’s executive committee, voiced concerns about Mr Madoff’s firm to colleagues in 2007, according to a new version of the 114-page complaint. The allegation is part of a $6.4bn lawsuit filed against the bank by the trustee, Irving Picard. Forbes says only JPMorgan’s Michael Cembalest refused to do business with convicted Ponzi schemer Bernard Madoff, according to legal papers filed in court today.
Back in February, the People’s Bank of China’s Sheng Songcheng was busy arguing that “society-wide financing” could act as a better guide for monetary policy than new bank loans. Just two months later and the first step towards that process — creating a new financing measure — is here.
It’s called, as you might expect, the ‘society-wide financing’ measure, or SWF. Read more
A record hiring binge and big spending on marketing pushed Google’s costs up sharply in the first quarter, overshadowing a revival of growth in its advertising revenues, the FT reports. Shares in the internet search group slipped by 5 per cent in after-market trading on Thursday as investors worried that it was facing a deterioration in its underlying cost structure as it tried to maintain growth. Operating costs jumped to $2.84bn in the first quarter of this year, an increase of 54 per cent from the year before, with higher employee expenses making up a big part of the increase. Reuters adds that analysts expect the company’s CEO to keep spending despite the first-quarter 54 per cent surge in expenses.
The commodities world knew Glencore was the biggest market participant, but few were aware until now of the true scale of the Switzerland-based company’s operations, according to the FT. As Glencore announced on Thursday its intention to become a public company, it revealed some of its most closely guarded secrets: the dominant market share of its vast trading activities. In some cases, including zinc and copper, Glencore told investors it controls more than half of the so-called third party market. Glencore disclosed that it controls 45 per cent of the third-party lead market, 38 per cent in alumina, and between 30 and 20 per cent for aluminium, cobalt and thermal coal. It has a smaller market share for nickel, ferrochrome, oil and grains. The sheer dominance of raw materials trading is set to play into Glencore’s favour as it pushes for a 15-20 per cent stake sale worth $9bn-$11bn in London and Hong Kong.
The Chinese economy grew faster than expected in the first quarter and inflation rose to its highest level in almost three years despite months of government attempts to slow surging growth, the FT says. China’s GDP increased 9.7 per cent in the first quarter from a year earlier, the government said on Friday, down slightly from 9.8 per cent growth in the fourth quarter of 2010, but still faster than most economists had predicted. Meanwhile, benchmark consumer prices rose 5.4 per cent from the same period a year earlier in March, a big increase over February’s 4.9 per cent and the highest reading in 32 months. The Wall Street Journal points out that China has recently tweaked the way it reports GDP figures.
Senior US officials sought to allay concerns about a future debt crisis in the world’s largest economy, saying the country had taken a leap towards fiscal discipline with President Barack Obama’s new deficit plan, the FT reports. In separate comments on Thursday, Jack Lew, White House budget director, and Tim Geithner, Treasury secretary, played down the political tensionsover fiscal policy, expressing confidence that Republicans and Democrats would quickly reach a deal to repair the US’s long-term finances. Bloomberg adds that Geithner also said Congress needs to raise the debt limit to prevent markets from losing confidence in the US economy and avert a global financial crisis.
Comment, analysis and other offerings from Friday’s FT,
Gillian Tett: Can we believe Geithner’s patter on debt?
Don’t panic. That, in a nutshell, was the soothing message of Tim Geithner, US Treasury secretary, as he did the rounds of Washington on Thursday, the day after President Barack Obama called for a fiscal reform deal, together with $4,000bn cuts, writes the FT’s Tett. Never mind that President Obama’s plan sparked a furious response from Republicans; this could further rile Tea Party politicians who are so opposed to letting the US government raise its debt ceiling that they are threatening to force a US bond default this summer. Read more
Senior US officials sought to allay concerns about a future debt crisis in the world’s largest economy, saying the country had taken a leap towards fiscal discipline with President Barack Obama’s new deficit plan, the FT reports. In separate comments on Thursday, Jack Lew, White House budget director, and Tim Geithner, Treasury secretary, played down the political tensionsover fiscal policy, expressing confidence that Republicans and Democrats would quickly reach a deal to repair the US’s long-term finances.
Greek borrowing costs reached a euro-era high compared with those of Germany, the FT reports. The euro tumbled on Thursday and premiums charged on Greek debt over Germany’s hit euro-era highs after the countries’ respective finance ministers talked of Greece needing more time to attract investors and raised the prospect of debt restructuring. George Papaconstantinou told the Financial Times that Greece needed more time to convince international investors of its commitment to reform its finances. Separately, Wolfgang Schäuble, Germany’s finance minister, told Die Welt newspaper that, if a study already under way showed that Greece’s debt levels were unsustainable, “further measures” would have to be taken. When asked what those could be, he ruled out any involuntary restructuring before 2013, but warned that investors could face losses after that point.
Nikkei 225 down -64.46 (-0.67%) at 9,589
Topix down -5.07 (-0.60%) at 841.65
Hang Seng down -84.68 (-0.35%) at 23,929
S&P 500 up +0.11 (+0.01%) at 1,315
DJIA up +14.16 (+0.12%) at 12,285
Nasdaq down -1.30 (-0.05%) at 2,760 Read more
Britain and France were rebuffed by a number of Nato states on Thursday as the two nations pleaded with alliance members to supply more combat aircraft for attack missions against Colonel Muammer Gaddafi’s ground forces, the FT reports. At a meeting of Nato foreign ministers in Berlin, the UK and France implored a range of countries – including Italy, Spain, the Netherlands, Sweden, Greece and Turkey – to provide aircraft that could conduct precision strikes on Col Gaddafi’s tanks and artillery. But in a development that triggered dismay at Britain’s Ministry of Defence, it emerged that none of these countries seemed likely to provide jets for these kinds of attacks on Col Gaddafi’s forces in the near future. Instead, the bulk of ground attacks on Col Gaddafi’s forces will continue to be conducted by the UK and France, with four other Nato members – Belgium, Canada, Denmark and Norway – carrying out a similar role.
Madrid has been forced to make an embarrassing clarification after claims that Spain had secured from China up to €9bn in investment in its troubled savings banks were denied by Beijing, the FT reports. Spanish officials said an “error of communication” had led to reports that China Investment Corporation – one of the country’s sovereign wealth funds – was considering a €9bn investment after José Luis Rodríguez Zapatero, Spain’s prime minister, met Chinese leaders this week.