Markets: Global equities hit fresh cyclical highs but commodity prices and the dollar fell back as weak US and eurozone economic data fueled concerns over the outlook for global growth. The FTSE All-World equity index climbed 0.5 per cent to its highest since June 2008, while the S&P 500 rose 0.3 per cent to a fresh record closing and intra-day peak. However, the FTSE Eurofirst 300 eased back 0.2 per cent even as eurozone inflation and labour market figures heightened expectations that the European Central Bank would cut interest rates this week. Consumer price inflation in the region fell to a 38-month low in April while the unemployment rate rose to a record 12.1 per cent in March says the FT’s Global Markets Overview.
Fed weighs tighter cap on bank leverage: Fed officials are weighing a stricter cap on bank leverage , a move that would respond to increasing demands to constrain the riskiness of large lenders. According to people familiar with the matter, Fed officials have discussed increasing the amount of equity capital banks are required to hold, setting the bar higher than the 3 per cent of assets level agreed internationally. The move is being considered amid growing scepticism about the Basel III capital accords, which impose higher capital requirements on banks around the world but allow them to vary the amount depending on the riskiness of individual assets. Officials are concerned that some banks are gaming the system. However, critics of a higher leverage ratio argue that it is a blunt tool that makes no distinction between safe securities, such as US Treasuries, and risky assets such as leveraged loans, and could result in banks taking on more risk. (Financial Times)
Apple in record $17bn US bond issue: Apple set a record for the global bond market with a blockbuster $17bn debt sale on Tuesday as the iPhone maker raised capital to fund its plan to return $100bn to shareholders. Demand for Apple’s inaugural bond sale built steadily on Tuesday afternoon and reached $50bn as investors lined up for the offering, according to people close to the deal. (Financial Times)
US home ownership rate at near 18-year low: The share of the country’s population that owned their homes fell to 65 per cent in the first quarter, down from 65.4 per cent in the same period in 2012 and the lowest since the third quarter of 1995, commerce department data showed on Tuesday. Home ownership is still far below the 2005 peak of 69.1 per cent. (Financial Times)
Detroit’s renaissance: “For the first time in two decades, General Motors Co., Ford Motor Co. and Chrysler Group pulled off a sweep in the first three months of a year, with all three gaining U.S. market share in 2013’s first quarter.” (Bloomberg)
Obama to name Wheeler to head FCC: “Tom Wheeler, a venture capitalist and longtime industry operative, will be tapped to lead the agency that governs the nation’s scarce wireless airwaves and regulates telephone networks and indecency on television. Mr. Obama is expected to make the announcement as soon as Wednesday, an industry official and a person familiar with Mr. Wheeler’s situation said.” (Wall Street Journal)
Slovenia downgraded to junk by Moody’s which made its planned debt sale a little awkward: Slovenia’s credit rating was on Tuesday downgraded to junk by Moody’s rating agency, forcing the tiny eurozone state, which is battling to avoid an emergency bail out, to stall plans for raising debt in US dollar markets. Moody’s said it was lowering the Alpine country’s rating from Baa2 to Ba1 because of the weak state of its banking system, deteriorating public finances and increased chance of requiring an international rescue. It kept the country on “negative outlook”. (Financial Times)
UK regulator probes ENRC for potential breaches of takeover rules: The UK listings regulator has launched a probe into potential breaches of its takeover rules by FTSE 100 miner Eurasian Natural Resources that could result in a fine or public censure. The transactions under the spotlight include the Kazakhstan-based miner’s controversial 2010 purchase of a stake in the Camrose business in the strife-torn Democratic Republic of Congo. The irony of the move is that the UK Listings Authority has been criticised for permitting ENRC to list in the UK in the first place. (Financial Times)
FURTHER FURTHER READING
- Europe bleeds out.
- Why the Baltic states are no model.
- Austerity reaches France’s presidential wine cellar.
- Krugman reaches back in time to deliver a core lesson. It was catching.
- *cough* FT rang the closing bell *cough*
- The evolving deadening grey market.
- That’s it. We’re doomed.
- The mother of invention.