Asian stocks rose for a second day after ECB president Mario Draghi reiterated the bank’s readiness to cut interest rates further. The MSCI Asia Pacific was about 1% higher and the Nikkei, which was closed yesterday for a holiday, rose more than 3%, breaching 14,000 for the first time since June 2008. (Bloomberg)(Financial Times)
China wants to water down key World Bank report: “According to people close to the matter, China wants to eliminate the ranking of countries in the Doing Business report, which compares business regulations – such as the difficulty of starting a company – in 185 different nations.” China and other critics, including trade unions, international aid charities and some other developing countries, last year successfully pushed for an independent review of the report. “But a number of people involved in the process complain” that two longstanding critics of the report are advisers to the panel, which is due to report by the end of May. This year the report ranked China 91st out of 185 economies. (Financial Times)
The IMF warned that Greece’s debt remains “much too high” and European commitments to lighten it are welcome. The report highlights the need for future “official sector involvement” in Greece’s bailout. (Wall Street Journal)
Draghi talked up ECB’s readiness to act in a speech yesterday: “”We will watch all the incoming data on the euro-area economy in the next weeks and if necessary we’ll be ready to take further action,” Draghi said, departing from a prepared speech at LUISS university in Rome to emphasize a point made last week at the ECB’s monthly news conference.” (Wall Street Journal)
Australia’s central bank cut rates to a record low. The RBA cut by 25bps to 2.75%. (Statement)
“Microsoft is preparing to reverse course over key elements of its Windows 8 operating system, marking one of the most prominent admissions of failure for a new mass-market consumer product since Coca-Cola’s New Coke fiasco nearly 30 years ago.” (Financial Times)
Rio Tinto plans to press ahead with a multibillion-dollar expansion of its iron ore mines in Western Australia barring a significant change to the supply-demand balance for the steelmaking commodity or a further increase in production costs. Sam Walsh, Rio chief executive, told institutional investors at meetings in Sydney this week that a $5bn plan to increase annual output from its Pilbara mines to 360m tonnes by 2015 would be put before the board of the Anglo-Australian resources group for approval later this year, according to two people present at the briefing. (Financial Times)
Former KPMG auditor friend agrees to plead guilty: “The California jeweler who gave a former KPMG auditor cash, an expensive watch and concert tickets in exchange for inside information about public companies agreed on Monday to plead guilty to one count of conspiracy to commit securities fraud, according to court papers. Bryan Shaw, the jeweler who took tips on Herbalife, Skechers and other companies from his one-time golfing buddy Scott London, agreed to pay around $1.3 million in restitution and will continue to cooperate with the government as part of a plea deal with federal prosecutors, according to the documents.” (Reuters)
Protests mount on use of BP Gulf compensation money: Out of $1bn promised in 2011 for early restoration of the Gulf of Mexico coast after the Deepwater Horizon disaster, $85.5m was allocated to building a convention centre in Alabama to replace a lodge that was wrecked by Hurricane Ivan in 2004. Several other projects are not directly related to damage caused by the spill. (Financial Times)
Three JP Morgan investors are yet to be persuaded on backing the company in a vote on whether Jamie Dimon should retain his dual role of chairman and chief exectuive. BlackRock, Vanguard and Fidelity Investments, who together hold more than 12% of the company’s shares, all remain undecided, said people close to the firms. The votes will be tallied on May 21. (Wall Street Journal)
New York attorney general Eric Schneiderman plans to sue Bank of America and Wells Fargo over claims they violated terms of the National Mortgage Settlement, a sweeping $26bn pact brokered last year between five of the nation’s biggest banks and 49 state attorneys general. He said the two banks didn’t follow guidelines on how banks field and process requests from homeowners trying to modify their mortgages, which formed part of the settlement’s terms. (NYT DealBook)
US regulators eyeing Bitcoin supervision: The currency “is for sure something we need to explore”, Bart Chilton, one of the five commissioners at the CFTC told the Financial Times. A person familiar with the CFTC’s thinking said that the regulator is “seriously” examining the issue. (Financial Times)
Biggest EU economies back moves to support carbon prices: “Ministers from Germany, France and the UK, along with those from four other countries, have issued a joint statement, seen by the Financial Times, declaring that it is time to end “myths over the potential costs and risks” of bolstering the EU’s battered emissions trading system.” However confusion remains over Germany’s position. (Financial Times)
US pension fund sues big banks over CDS ‘dominance’: The class action antitrust suit filed by the Sheet Metal Workers Local No. 33 Cleveland District Pension Plan pension fund accuses banks including Citigroup, Deutsche Bank and JPMorgan of engaging in “anti-competitive conduct” when it comes to CDS contracts. The fund said it had entered into CDS deals with Citigroup. It claims buy-side CDS market participants must “participate in an inefficient market” due to the dominance of large financial institutions. (Financial Times)
COMMENT AND CURIOS:
- European banks’ losses must be recognised. (Financial Times)
- Gideon Rachman: China’s dream smothered in toxic smog. (Financial Times)
- Andrew Hill: Graduates are still lining up to become bankers. (Financial Times)
- Shortage of able-bodied men in quake zone illustrates China’s demographic threat. (Bloomberg)
- US mortgage lenders have eased standards – slightly – for prime borrowers. (Wall Street Journal)
- How an Indian ponzi scheme won a political bailout. (Bloomberg)
- Creepy but useful Google Now. (BusinessWeek)
OVERNIGHT MARKETS: UP
Asian markets
Nikkei 225 up +440.41 (+3.22%) at 14,134
Topix up +31.86 (+2.76%) at 1,185
Hang Seng up +31.13 (+0.14%) at 22,946
US markets
S&P 500 up +3.08 (+0.19%) at 1,618
DJIA down -5.07 (-0.03%) at 14,969
Nasdaq up +14.34 (+0.42%) at 3,393
European markets
Eurofirst 300 down -0.97 (-0.08%) at 1,218
FTSE100 up +60.75 (+0.94%) at 6,521
CAC 40 down -5.91 (-0.15%) at 3,907
Dax down -10.21 (-0.13%) at 8,112
Currencies
€/$ 1.31 (1.31)
$/¥ 99.03 (99.33)
£/$ 1.55 (1.55)
Commodities ($)
Brent Crude (ICE) down -0.39 at 105.07
Light Crude (Nymex) down -0.68 at 95.48
100 Oz Gold (Comex) down -3.80 at 1,464
Copper (Comex) unchanged 0.00 at 331.00
10-year government bond yields (%)
US 1.75%
UK 1.73%
Germany 1.25%
CDS (closing levels)
Markit iTraxx SovX Western Europe -3.16bps at 90.47bp
Markit iTraxx Europe -4.03bps at 91.52bp
Markit iTraxx Xover -9.67bps at 377.71bp
Markit CDX IG -0.86bps at 70.62bp
Sources: FT, Bloomberg, Markit