Markets: “Asian shares eased and the dollar firmed on Tuesday as unexpectedly strong U.S. factory activity bolstered expectations the Federal Reserve will soon trim its stimulus, while the yen tumbled on speculation of further central bank easing.” (Reuters) (Financial Times)
And could it be a job for the special one? A republic since 1910, Portugal elects its President every five years and the next election is not until 2016. But EconoMonitor floats an interesting idea, while considering the possibility of a monarch for the former kingdom.
Democrats take ‘nuclear option’ on filibusters || Negotiators are poised to seal the first global trade deal for more than a decade || Loeb builds $1bn-plus stake in Japan’s SoftBank ||Spotify has raised about $250m in new financing from an early backer of Netflix || Tullow strikes oil in northern Kenya || The UK’s Co-op Bank is preparing for multiple investigations || Goldman defends currency trading performance || Cinda’s IPO prospectus due on Friday || China Mobile vice president sentenced to life || Sony will cut $250m in costs at its entertainment units || Nokia to remove obstacle to $7bn sale to Microsoft || Dublin has a 50/50 chance of missing budget deficit targets in 2015 || Markets
Markets: Led by Japan, most Asian equity markets were recovering from Thursday’s poor performance after the Dow Jones Industrial Average in the US closed above 16,000 for the first time. The yen fell after Bank of Japan governor Haruhiko Kuroda said after the closing bell on Thursday that he wouldn’t hesitate to adjust policy if risks to the economy materialise. (Financial Times)
By Dr. Guy Standing, professor of development studies at the School of Oriental and African Studies and author of The Precariat: The New Dangerous Class, in which he argues that society must share the rental income gained by finance and capital investment in the global economy. All over Europe, the precariat has grown sharply since 2008, although this emerging class, which has education but only intermittent, unstable labour, has been growing since the beginning of globalisation. The precariat faces chronic uncertainty, about what to do, about what incomes to expect, about state benefits that might be their due, about their relationships, their homes and about the occupations they can realistically expect.
Obama to halt attack if Syria destroys chemical weapons || Glencore Xstrata lifts cost-cutting target to $2bn || UK chancellor Osborne claims austerity victory || Twitter makes its largest acquisition to date || Deutsche Bank in Tokyo anti-bribery probe || Verizon to sell a combination of fixed and floating-rate debt || Mining group Bumi’s split from Indonesia’s Bakrie family delayed again || Interdealer broker ICAP closes in on settlement over Libor claims || Foreign firms turn to FX swaps to fund Chinese operations || Nine of Europe’s biggest utilities joined forces in warning to EU || Hybrid cars boost Toyota || Koch Industries to buy Molex || Markets
Markets: Asian stocks rose, extending the longest rally in the benchmark equity gauge this year, and the Thai baht and Malaysian ringgit climbed before Chinese factory output and retail sales data expected to show growth in August. Crude oil slipped for a second day and credit risk fell. (Bloomberg) (Financial Times)
América Móvil in €7.2bn KPN bid || China’s consumer inflation steady || News Corp Australia chief resigns after less than two years || Lending to UK landlords is surging to a near five-year high || JPMorgan in talks with the SEC over a rare admission of wrongdoing over the London Whale losses || Norway’s $760bn SWF is stepping up its efforts to be a more active investor and increased its equity holdings by 4pps || Tesco is in talks with China Resources Enterprise to form a joint venture in China || Italy plans more austerity, lower company tax || Dutch turning against austerity || Australia’s central bank cuts its forecast for this year’s growth || US DoJ has stepped up a probe in recent weeks into Bear Stearns mortgage dealings || Bberry warming up to the possibility of going private || Mark Carney played down scepticism on rates || Vale says Chinese steel output will grow 10% this year || Markets wrap
Asian stocks were mixed as investors await Chinese industrial production data, with the Nikkei flat despite a 15% fall in Nikon’s shares as it lowered its full-year operating profit guidance from ¥85bn to ¥65bn. (Bloomberg)(FastFT) China’s consumer inflation steady. CPI rose 2.7% in July from a year earlier, the same pace as in June and still well below Beijing’s 3.5% upper annual limit. Producer price inflation declined for the 17th consecutive month, at -2.3% year-on-year compared to -2.7% in June. The rates were close to consensus forecasts from Reuters survey, of 2.8% for CPI and -2.2% for producer prices. “The latest figures will add weight to calls from some economists and officials for China to cut interest rates to help boost slowing growth in the world’s second-largest economy.” (Financial Times)(Reuters)
Asian stocks higher after new US benchmark records || Berlusconi definitively convicted || Indonesia’s Q2 growth misses || BAML’s newest legal problem, jumbo mortgage securitisations || Brazil actually does support Greek IMF aid || NIESR raises British growth forecast on consumer spending || Most new US jobs are extra-low-wage
Samsung earnings disappoint despite strong smartphone sales || Central banks send clear signal on interest rates || Morsi loyalists set to protest in Egypt || Japan banks step up interbank lending controls || China’s Rongsheng warns on profits || SAC Capital’s Steven Cohen expected to avoid criminal charges || Rupert Murdoch remarks secretly recorded || Markets
Here’s Portugal’s 10 year benchmark punching through 8 per cent to start your morning. We’d note it was sitting at 6.4 per cent on the 1st of this month… To lose one cabinet minister is bad luck, to lose two in two days… means… time for another eurozone peripheral crisis? The resignation of Portugal’s foreign minister Paulo Portas yesterday has everyone worried, because of his role as leader of the CDS-PP, the junior partner in the governing coalition. If CDS-PP withdrew their support, the government would be left with 108 seats in a 230-seat parliament and uncertain prospects for scraping together a majority. And all this less than two weeks before a troika delegation is due to start their next review of the economy as the lenders consider whether Portugal will get an easing of terms on its 2011 €78bn bailout, and receive the next €2bn instalment.
The Bank for International Settlements says there’s a problem. Governments, by and large, haven’t done enough to address the issues that have emerged during/since the financial crisis. Some monetary policymakers have done rather a lot, but much of it is in unchartered territory and carries risks. So, says BIS, monetary policymakers should just stop it henceforth. From the latest BIS annual report:
ECB and Draghi day || France is threatening to upstage talks on the EU-US trade pact || The ESM will likely have a €50bn-€70bn limit on direct investments in banks || London should hand Libor supervision to EU, says Brussels || Pro-austerity Finland falls into triple-dip recession || Gabon seeks to reclaim Chinese oil assets || IMF admits to errors in international bailout of Greece || NSA collecting Verizon customer data, Guardian says || FBI and Microsoft take down botnet criminal network || SAC Capital told employees it expects to stay open following a wave of client redemptions || Finra in the US has increased its scrutiny of dark pools || Markets roundup || FTAV’s latest
Asian shares were muted. The Nikkei rose 1 per cent following Monday’s weak ISM manufacturing number in the US. (Reuters) Topix fact du jour: analysts expect its earnings to rise 57 per cent this year, compared to a global average of 19 per cent. (Bloomberg) Japan’s public pension funds are to be recruited to buy stocks and real assets in the Abe government’s latest move to mobilise the country’s savings for growth. A panel will be set up to review investment guidelines for the public funds, which have previously piled into Japanese sovereign bonds, including the mighty Government Pension Investment Fund. The guidelines would come into force by April 2015 under the draft plan. (Reuters)
China targeting 7% growth, says Li || Five Star Movement flops in Italy’s local polls || Investors pour big sums into US biotech || The American energy boom is deepening splits within the Organization of the Petroleum Exporting Countries || China solar fight || European lenders draw down on central bank reserves || Osborne agrees spending cuts with seven departments || New Co-op Bank chief warns of ‘no quick fixes’ to capital black hole || Valeant in $8.7bn Bausch & Lomb deal || Club Méditerranée is to be taken over by its biggest shareholders || Cov-lite loans rise || Markets roundup || FTAV’s latest
FT Alphaville is hiring! || Meet Bloomberg TradeBook || China GDP forecast revisions || Bloomberg withdrawal || US budget deficit declines faster than expected || France falls back into recession || HSBC announces more cost-cutting || China to surpass US corporate debt market in next two years || Latest on JPM shareholder vote || Walmart won’t join other retailers in factory safety deal || German court rules against Google search suggestions || Flowers to acquire Cabot Credit || Market Update
Dual-track Libor replacement lined up || Top hedge funds bet on Greek banks || Schäuble warns EU bank rescue agency needs treaty changes || U.S. companies are on track to raise the most money through IPOs since before the financial crisis || G7 reaffirms commitment on currency depreciation || Mittal urges EU to protect itself against China imports || Bischoff to take his leave from Lloyds || Esure hit by fallout over ex-HBOS director || Markets roundup || FTAV’s latest
Dual-track Libor replacement lined up: “The scandal-plagued Libor benchmark is likely to be replaced by a dual-track system with survey-based lending rates running alongside transaction-linked indices as soon as next year. Martin Wheatley, the UK regulator leading efforts to reform the London Interbank Offered Rate, told the Financial Times that a parallel system would provide continuity for holders of $350tn in existing contracts that reference Libor while also paving the way for a new benchmark tied more closely to objective data.” (Financial Times) Top hedge funds bet on Greek banks: “Some of the world’s leading hedge funds are pouring money into the Greek banking sector in expectation of huge potential returns, even as the country struggles to right its economy in the face of deep government spending cuts.” (Financial Times)
The chart above shows the decline in Spanish bond yields “occurring at a time that Spain has announced that it had not hit its deficit targets and would not hit next year’s,” as David Watts of CreditSights points out.
Asian markets rise || China services PMI fall sharply || Brussels to clamp down on tax avoidance by individuals and funds || Obama signals support for more US gas exports || Study finds banks benefit from forex flow information || Berkshire Hathaway meeting || Don’t expect austerity shift in Europe
From Reuters: LONDON, May 3 (Reuters) 13.04 – The euro pared gains while German Bund futures edged up on Friday after European Central Bank policymaker Ewald Nowotny said the central bank was open-minded about taking deposit rates into negative territory. Nowotny said he was “astonished” by the market’s reaction to his comments earlier in the day, when he said negative deposit rates were not relevant in the near term.
ROUND-UP FT markets round-up: “Fresh evidence of slowing global growth prompted further falls for industrial commodities, US stocks and the dollar, and gains for Treasury bonds, even as the Federal Reserve backed away from previous hints that the pace of its asset purchase programme might be curbed. Copper fell 3.7 per cent in London to $6,795 a tonne while Brent crude oil settled $2.42 lower at $99.95 a barrel. Gold, meanwhile, fell $20 to $1,456 as it suffered a significant interruption to its rebound from a recent two-year low. Equity trading, was thinned by holiday-related closures in many financial centres, including much of Europe. There also appeared a general reluctance to take on new positions before the European Central Bank announces its decision on interest rates on Thursday. The S&P 500 fell 0.9 per cent from Tuesday’s record high. while the FTSE 100 in London rose 0.3 per cent. The caution on growth triggered a strong session for US government bonds with the yield on the 10-year Treasury down 4 basis points at 1.63 per cent, having earlier touched a six-month low of 1.61 per cent.” (Financial Times)
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.
US expects first debt cut since 2007 || Federal prosecutors launched a new criminal investigation focused on corp boards || Luxembourg to share company bank details || BP beats expectations despite post-Deepwater disposals || Japan manufacturing PMIs grow faster and consumer spending rises || Letta’s push in Italy || Cyprus announces plans to cut down on graft and reform its political system || Greek firms dip back into bonds || France plans to cut its armed forces headcount || Alfredo Sáenz resigns as Santander chief ahead of legal ruling || Abu Dhabi-UK clean energy investment talks || Deutsche Bank bites bullet on stock || Kodak’s UK pension fund gets old film assets || Markets || FTAV’s latest including dour EU unemployment stats
Hans-Werner Sinn — he of Target2 imbalance fame — had a piece on Project Syndicate last week in which he stood firm against George Soros and his demands for Germany to leave the euro if it continues to block the introduction of Eurobonds. Though not because he thinks Germany is wrong to oppose Eurobonds, but rather because he believes there is no legal basis for such demands. Article 125 of the Treaty on the Functioning of the European Union, he says, expressly forbids the mutualization of debt.
Asian stocks set for highest close since 2008: The MSCI Asia Pacific Index was 0.7% higher at 3am UK time, with almost three shares rising for each that fell. The measure has advanced 4.4% this month, poised for the biggest monthly gain since June. Japanese shares were mixed after Honda shares fell 3.4% when a profit forecast missed analysts’ estimates. Earlier, the S&P 500 closed at a fresh all-time high. (Bloomberg)(Financial Times) Luxembourg to share company bank details: Luc Frieden, finance minister, said Luxembourg was willing to expand the number of accounts covered by new information-sharing agreements with the US and the EU to include global companies. The accords, agreed this month, currently only cover individual taxpayers. (Financial Times)