Good morning New York,
FT ALPHAVILLE
Fobor on film: David points to Deutsche’s Jim Reid comment in Thursday’s Authur’s note on junk bonds — where both defaults and yields are now far lower than they were in the 1980s. The general idea is that the incredibly low default rate over the last decade has been driven by trickle down from the exceptional demand for fixed income that has rolled on from one marginal buyer to another over the last 10 years or so.
Inflation is falling everywhere: Cardiff notes that the falling inflation trend is consistent with what appears to be a spring slowdown in global growth. It’s probably worth noting that the wild fluctuations in the headline rate have had only a muted impact on core inflation in the past decade. Just something to keep in mind when you start hearing calls for policy action at the first hint of commodity price gyrations.
The Ira Sohn Investment conference is on: As a believer in the weak-form EMH, FT Alphaville isn’t really into this kind of thing. But we recognise that this conference can be fun to follow for other reasons. So if you’re into it, Cardiff directs you to some of the key coverage.
NEWS
Tesla Q1 profits tops forecast and lifts sales outlook: The electric car maker reported its first-ever quarterly profit on Wednesday, defying market estimates. The company, led by billionaire Elon Musk, delivered nearly 5,000 Model S electric cars during the first three months of the year and said it expects to deliver 21,000 Model S cars worldwide, up 5 per cent from its earlier target of 20,000. (Reuters)
Sony swings to profit: The Japanese electronic maker swung back to a profit in Q4, lifted by one-time gains from the sale of office buildings and shareholdings. The quarterly profit, reversing a massive loss from a year earlier, propelled the slumping Japanese electronics maker to its first annual profit in five years. Sony said it posted a net profit of ¥93.91bn ($948.5m) in the January-March quarter, compared with a loss of ¥255.21bn a year earlier. (WSJ)
Nokia Unveils $99 Asha Smartphone: The struggling mobile phone maker has unveiled a $99 touch-screen smartphone for India and other emerging markets to help drive sales. Chief Executive Stephen Elop said the smartphone was built on the design inspired by the company’s higher-end Lumia smartphone and is targeted at “young, socially inspired” people. (WSJ)
FCC to consider using satellite airwaves to facilitate inflight internet: Qualcomm is pushing the Federal Communications Commission to free up airwaves used by the satellite industry. Such a system could be years away, but commissioners are likely to vote Thursday in favor of opening the issue to public comment, agency officials said. (WSJ)
EU gets protectionist over cheap Chinese solar panels: Chinese solar-panel manufacturers will face import tariffs of up to 67.9 per cent at European Union borders under a plan from the 27-nation bloc’s executive body, according to a copy of the plan viewed by The Wall Street Journal. European manufacturers say Chinese firms are selling their products well below fair-market prices in a bid to dominate the world market for solar panels. (WSJ)
Chinese inflation nudged higher in April on the back of soaring vegetable prices but the data also pointed to industrial overcapacity and a fragile economic recovery.” The CPI for April was 2.4% higher, year-on-year, after slowing to 2.1% in March. However core inflation remained subdued with the non-food index rising just 1.6%, and producer prices fell deeper into inflationary territory, declining 2.6%, a six-month low. (Financial Times)
Yields on junk bonds reach new low: The Barclays US Corporate High Yield index fell to a record low of 4.96 per cent, marking the first time the benchmark tracking debt issued by weaker US companies dropped below 5 per cent. The yield on the index has lost more than a percentage point this year, in a sign of hefty demand for income-producing securities. Bond yields fall when prices rise. (WSJ)
Energy watchdog warns JPMorgan: JPMorgan Chase has been warned of a probable enforcement action by the Federal Energy Regulatory Commission, the bank acknowledged on Wednesday, the latest in a litany of legal woes for the Wall Street firm. The disclosure in a quarterly filing was made after Jamie Dimon, chief executive, met about 100 officials from the Office of Comptroller of the Currency and Federal Reserve, when he pledged to iron out a string of compliance problems and force his staff to co-operate with regulators. (Financial Times)
Former Enron CEO Jeffrey Skilling’s jail term could be shortened to 14 years from 24, under a deal reached with the Department of Justice. (Financial Times)
Dubai Group agrees $6bn debt deal with bank committees: The investment company owned by the emirate’s ruler agreed on final terms to restructure $6bn of bank debt in the city’s latest step toward recovering from the 2009 debt crisis. Dubai Group agreed to the “restructuring documentation, incorporating the final economic terms with the coordinating committees” and their advisers, it said in an e-mailed statement today. (Bloomberg)
Markets: Encouraging macro data releases from China and Germany offered further support to equity bulls as global stock indices climbed to fresh cyclical highs, the FT’s Global Market Overview reports. Chinese export growth picked up to 14.7 per cent in the year to April from 10 per cent in the previous month, while imports rose 16.8 per cent last month from a year earlier. Some analysts cautioned that exporters might have used over-invoicing on their sales bills to evade capital controls. Meanwhile, German industrial production rose 1.2 per cent in March – much stronger than economists had expected – a further sign that the eurozone’s powerhouse economy was returning to growth. The data – along with some robust domestic corporate earnings – helped lift the German Xetra Dax equity index up 0.8 per cent to a fresh record high, while the pan-European FTSE Eurofirst 300 ended 0.7 per cent stronger at its best level since mid-2008. And there was no stopping Wall Street’s march to fresh peaks, as the S&P 500 rose 0.4 per cent – its fifth successive advance.
