Good morning New York…
The good (political) times are over for risk assets: Morgan Stanley cross-asset strategist Gerard Minack has been looking over a long horizon, and observes that risk assets have had a good run from policymakers for several decades. But that time is probably over. Kate’s post looks at why investors should expect lots more of political uncertainty in the coming years.
Draghi, one for the birds: Mario Draghi speech at Università Bocconi is a charming read, as the policymaker reviews the eurozone crisis in pleasantly digestible terms even by Friday morning standards. Lisa’s post picks up on his curious comparison of the European monetary union to an ostrich.
Treating bonos as Treasuries, with MF Global: Over to the House Financial Services Committee’s report into the collapse of the broker-dealer. Cardiff’s post explains why Finra’s not being convinced that Spanish bonds are in fact US Treasuries, as MF Global argued, led to the bankruptcy.
SFO: “Truly out of the norm”: Not a good week for the UK’s financial cops. Hot on the heels of the FSA losing what it probably thought was a slam-dunk insider dealing case, the SFO has now received a withering ‘judgement on costs’ over its toe-curling execution of the Tchenguiz case. Maybe the dawn raids with 135 policemen was overkill. Paul’s post has more.
Japanese PM dissolves parliament: The move clears the way for a general election next month that is expected to redraw the political map of the world’s third-largest economy, the FT reports. Yoshihiko Noda, the prime minister, dissolved the Diet’s lower chamber following approval by its upper house of legislation intended to reform an electoral system that the Supreme Court has declared constitutionally problematic.
Warning on £66bn public bank stakes: Taxpayers may never see the return of the £66bn spent on shares in Royal Bank of Scotland and Lloyds Banking Group four years ago, an influential group of MPs warns on Friday. The Public Accounts Committee, the spending watchdog for parliament, says it is not convinced that the government will be able to sell its stakes in the banks for the price it paid “any time soon”, reports the FT.
France ‘not sick man of Europe’, says Paris: The country’s socialist government seized on better than expected economic growth figures to reject concern that France could become the next focus of the eurozone crisis, insisting it is acting to reform the flagging economy. “France is not the sick man of Europe. France remains the world’s fifth largest economic power that has all its resources but which needs to recover its competitiveness,” Pierre Moscovici, the finance minister told the FT.
Walmart extends corruption inquiries: Walmart revealed that its internal probe into potential violations of anti-corruption law had extended to Brazil, China and India as it reported quarterly sales growth short of expectations and profits that matched them, the FT reports. The world’s biggest retailer by sales said Thursday that investigations into allegations of bribes paid to secure new store permits in Mexico had been extended to three other emerging markets.
Dell suffers in shift away from laptops: The company’s consumer business contracted by almost a quarter as it lost market share to Asian PC makers and people bought smartphones and tablets in preference to its laptops, the FT reports. The Texas-based computer maker reported revenues and profits below Wall Street’s already lowered expectations for its third quarter ending November 2, but blamed a difficult macroeconomic environment for its troubles. The company fell short of its own expectations – revenues of $13.7bn were down 5.3 per cent on the previous quarter and 11 per cent year-on-year.
Israel and Hamas intensify bombardment: Israel’s escalating offensive against the Gaza Strip was met by an unprecedented barrage of missiles and rockets from Hamas and other militant groups on Thursday, as the death toll rose on both sides and neighbouring Egypt stepped up its effort to halt the violence, the FT reports. The strike was part of a barrage of more than 380 missiles and rockets fired by Hamas and other militant groups since the initial Israeli strike on Wednesday that killed the leader of the Hamas military wing. Elsewhere, the NYT reports that Hamas is testing alliances in a shifting Arab world.
Markets: European stock markets held steady amid lingering concerns over global economic growth, holding around two-month lows as traders paused for breath at the end of a choppy weak during which the eurozone returned to recession. In the UK, the FTSE 100 is down 0.15 per cent, while the FTSE Eurofirst 300 is trading 0.04 per cent lower. The CAC 40 is flat, the Xetra Dax is slightly higher, the FT’s global market’s overview writes. At the start of European trade, US futures indicate that there will be marginal losses on Wall Street. Copper, seen as a development bellwether, is on course to record its first week of gains in six weeks on the back of hopes that China’s economic growth slide may have levelled out. China will this weekend release its latest update on property prices in the country.