Comment and analysis from Tuesday’s FT,
View of the Day: Teun Draaisma, Morgan Stanley
It is time to dip a toe back in to European stock markets, says Draaisma, equity strategist at Morgan Stanley, who has shifted to an “overweight” position in the region for the first time in three months. But, he adds, “Let’s not forget to sell later on. This is still a bear market, and fundamentals are bad.”
Comment: Felix Rohatyn, Everett Ehrlich on avoiding a recession
Ben Bernanke this week alluded to an economy facing “numerous difficulties”. In fact there are just two problems, say Rohatyn senior adviser to Lehman Brothers and former chairman of New York’s Municipal Assistance Corporation, and Ehrlich, president of ESC Company, the economics consulting firm. But each alone is cause for genuine concern over the US economy’s prospects: first, an implosion of the financial system triggered by the teetering housing market; and, second, record prices for oil and other commodities that are largely driven by events abroad.
The Short View, video: Time for optimism on oil?
Did last week’s 12 per cent fall mark the top for the oil price? Many believe so. This reflects wishful thinking but also some decent reasons for optimism on lower oil prices. Such optimism, if sustained, should help equities to continue to enjoy a temporary respite.Text version here
View from the Markets, video: CSAM’s Bob Parker
Credit conditions remain fraught, as reflected in equity falls. But “outright recession” may be avoided in the UK and US if oil prices ease, says the vice chair of Credit Suisse Asset Management
Analysis: Ratings agencies and their uncertain future
The global credit collapse has prompted regulators to shine an increasingly harsh light on ratings agency practice, write FT reporters. A damning report this month from America’s SEC uncovered “serious shortcomings” in the rating of securities related to subprime mortgages. Such findings have cranked up the regulatory pressure on both sides of the Atlantic and the ratings agencies face a very uncertain future. Another issue dogging the industry is how to ensure that resources keep pace with banking innovation – as the current US regulations require.
News analysis: Private equity woes disrupt M&A plans
Corporate acquirers and their takeover targets are finding it harder to step down the aisle these days, as they are tailed by spurned rival suitors and disapproving shareholders, writes the FT’s Julie MacIntosh. This is in part due to diminished competition from buy-out firms. Corporate buyers, suddenly seeing an opportunity in the private equity drought, have started to target industry rivals that they see as ideal complements to their businesses.
Insight: The end of China’s ‘miracle’ story
Liquidity injections by central banks can only postpone the day of reckoning when the real problem is bad assets and the insolvency of financial institutions, says David Roche, president of Independent Strategy, a UK-based investment consultancy. With bank credit now contracting in the US, and soon to do so in the eurozone, bank credit is set to fall and, with it, global growth. Vast swathes of emerging market manufacturing capacity will lie idle. This is possibly the next big shock to the system: the end of the great China miracle story.
____