US stocks joined in a global, Europe-led sell-off. The Dow Jones Industrial Average dropped 0.79 per cent to 12,926. The Nasdaq fell one per cent to 2,970 (Reuters). The 10-year Treasury yield fell as low as 1.909 per cent, its lowest since February (Wall Street Journal). Read more
Behold — what could be the largest natural catastrophe bond ever:
That’s S&P’s ratings doc for Everglades Re Ltd. It’s a bond to transfer some of the hurricane risk that a state-backed Florida insurer will face from writing policies for coastal homeowners. Losses from a Hurricane Andrew-level storm would wipe out the principal, according to modelling in the ratings doc. Read more
It’s all about stock-flow adjustments, or SFAs — the curious cases when a government’s stock of debt increases without a corresponding change in its deficit to explain it.
Attached to its most recent release on EU debt and deficit numbers, Eurostat has penned quite an interesting note on how these SFAs work (while pointing out that SFAs “have legitimate accounting explanations”). Hat-tip the WSJ’s Charles Forelle. Read more
We’re still trying to get our heads round this at pixel time (Yahoo killer?) but here’s the release:
In the initial AOL auction, Microsoft secured the ability to own or assign approximately 925 U.S. patents and patent applications plus a license to AOL’s remaining patent portfolio, which contains approximately 300 additional patents that were not for sale. Read more
God, but Ireland must simply hate Eurostat. The pesky statistics agency keeps forcing it to recognise all of those expenses it would otherwise prefer to ignore.
And the agency is at it again. In a report released Monday Eurostat announced that Ireland was the proud owner of the biggest budget deficit in the euro area in 2011 – a deficit inflated by capital injections into the country’s broken banks. Read more
Only two weeks until the runoff between The Adversary of Finance and the The Adversary of the Financial Times (handy catch-up chart via RBC):
Sometimes they are also enough to knock $10bn off your market cap six years after taking place.
Walmart shares were down as much as 4.9 per cent on Monday after the NYT’s investigation into the silencing of a bribery probe in Mexico, before recovering a bit. They were down 4.3 per cent at pixel time, while shares of Walmart Mexico were off 11.4 per cent. Read more
Professor Lew Spellman, from the McCombs School of Business at the University of Texas at Austin, has posted on on what he calls gold’s changing role in the global economic landscape.
Amongst other things, he says the epic hunt for “safe collateral” — which has driven down yields on traditional fixed-income investments in the process — is the direct result of there being too many debt liabilities/obligations relative to safe collateral in the system. Read more
On Friday, FT Alphaville discussed the process of de-euroisation that is currently underway as foreign investors continue to withdraw from the sovereign bond markets of peripheral countries. For Spain and Italy, the issue is of particular concern, as the ability and willingness of remaining investors to fund them will, in large part, determine whether the or not countries will need to be bailed out.
According to research analysts at Credit Suisse though, the recent focus on Spain, rather than Italy, is misplaced: Read more
Live markets commentary from FT.com
The good: the closely-watched index components of new orders and new export orders were only just below the 50 mark, as the below chart from Markit Economics shows.
Some of the answers are a little flippant, but it’s not a bad overview from JP Morgan’s global asset allocation team:
• Why has neither Greece nor Germany left EMU, yet? Or even, why did they ever get in? The crisis has revealed the cost of giving up one’s currency. Resolution requires massive deflation in the periphery and massive funding from the core. The reason countries joined into EMU and have not (yet) left is that monetary union was planned as the first step towards a political union –– a US of E. The cost of abandoning EMU is not merely related to capital flight and creation of a new currency, but is paramount to ditching European integration, and moving back to the bad old days of a divided and quarrelsome Europe. EMU members will likely do everything they can to keep the union together, even as they will need more crises to push them that way.
Just a quick shout-out for Bloomberg News reporters’ exhaustive dive into the wealth (some $136m accounted for) of the clan of Bo Xilai, the fallen Chongqing politician:
Bo Xilai’s relatives built their assets in a nation where per-capita income ranks 121st out of 215 countries, according to the World Bank. They set up offshore companies and used multiple names, making it more difficult to track their titles and business dealings. Companies in Dalian and Chongqing, where Bo Xilai held office, were among the beneficiaries of their investments, corporate filings in Hong Kong and the U.S. show… Read more
Elsewhere on Monday,
- Managing risk across multiple dimensions. Read more
To the tune of 38p a share (the shares closed 2p lower at 32p on Friday):
Ÿ Vodafone Europe B.V. (“Vodafone”) and Cable & Wireless Worldwide plc (“CWW” or the “Company”) are pleased to announce that they have reached agreement on the terms of a recommended cash offer pursuant to which Vodafone will acquire the entire issued and to be issued ordinary share capital of CWW. It is intended that the Offer will be effected by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. Read more
The IMF’s “bigger firewall” has been agreed, with commitments totalling an extra $430bn of lending capacity as meetings in Washington finished on Sunday, but questions remain over how any eurozone country would actually obtain access to the funds, says the New York Times.
François Hollande has taken a narrow lead in the first round of France’s presidential elections, setting up a run-off with Nicolas Sarkozy after a vote that saw one in five ballots go to the far right National Front, reports the FT. Those far right voters may decide the presidential election, says Reuters. Read more
Asian stocks fell after several companiesposted weaker earnings and a manufacturing survey signaled China’s economic slowdown is deepening, says Bloomberg.
Daewoo Engineering dropped 4.3 per cent in Seoul after the construction company posted a 38 per cent drop in first-quarter operating profit. Tokyo Steel slumped 8.1 percent as the steelmaker’s full-year loss widened on increased production costs. China Mobile, the world’s biggest carrier by subscribers, fell 1.8 per cent in Hong Kong after posting first- quarter net income that missed analysts’ estimates. Read more
Weekend headlines from the FT and other UK media:*
From The FT,
- Centrica threatens nuclear pull-out due to uncertainty over the government’s energy policy – a move that could imperil the country’s nuclear renaissance.
- Prudential is eyeing a $500m bid for the insurance operations of Thailand’s Thanachart Bank in the latest sign of the UK Group’s Asian expansion ambitions
- A US bankruptcy court judge has dismissed some of Lehman Brothers’ claims in its $8.6bn lawsuit against JPMorgan Chase for allegedly pushing it toward bankruptcy, but has said that other parts of the suit may still go forward
- Manufacturing businesses showed the greatest resilience as the number of companies reporting financial strain fell year on year, according to Begbies Traynor, the insolvency specialist
- Apollo wins bidding battle for Great Wolf Resorts
- Moody’s downgrades Tesco Plc, as retailer’s £1bn recovery plan seen to weigh on earnings Read more