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Frontrunning: March 19

Tyler Durden's picture




 
  • There is no Spanish siesta for the eurozone (FT)
  • Greece over halfway to recovery, says PM (FT) - inspired comedy...
  • Sarkozy Trims Gap With Rival, Polls Show (WSJ) - Diebold speaks again
  • IMF’s Zhu Sees ‘Soft-Landing’ Even as Property Slides: Economy (Bloomberg)
  • Obama Uses Lincoln to Needle Republicans Battling in Illinois (Bloomberg)
  • Three shot dead outside Jewish school in France (Reuters)
  • Osborne Seeks to End 50% Tax Spat With Pledge to Aid U.K. Poor (Bloomberg)
  • Monti to Meet Labor Unions Amid Warning of Continued Euro Crisis (Bloomberg)
  • RBA’s Stevens Sees China Matching U.S. in Decade on 7.5% Growth (Bloomberg)
  • IMF Chief Praises China on Economy (WSJ)

Overnight press digest:

WSJ

*
Some of the biggest names on Wall Street are lining up to become
landlords to cash-strapped Americans by bidding on pools of foreclosed
properties being sold by Fannie Mae.

* The U.S. Treasury Department is expected to announce that taxpayers
reaped a $25 billion profit on mortgage bonds purchased at the height of
the financial crisis.

* GM and Peugeot aim to begin joint development of at least two cars by
this fall, under an alliance that Akerson says changes how GM does
business.

* United Parcel Service is close to a $6.8 billion deal to acquire Dutch
rival TNT Express, a tie-up that would create a dominant
package-shipping company in Europe.

* Biotech firms have seen venture financing decline amid the weak economy and poor returns on stock offerings.

* The outcome of the Greek credit-default swaps masks flaws in the
contracts that have rattled investors and are leading to calls to revamp
how the swaps are handled for defaulting sovereign nations.

* Dynegy Inc on Friday defended moving assets from a subsidiary to the
parent company before the subsidiary filed for bankruptcy protection,
fighting back against a bankruptcy examiner who called the transaction a
"fraudulent transfer."

FT

BUMI SHAREHOLDER LOOKS TO SIMPLIFY STRUCTURE

The Indonesian entrepreneur who bailed out the country's powerful Bakrie family by buying a $1 billion stake in coal miner Bumi is to implement a potentially major restructuring programme when he becomes the company's executive chairman.

ROYAL CARIBBEAN CHIEF SAYS BIG SHIPS ARE SAFE

The chief executive of Royal Caribbean Cruises has defended the use of big ships, claiming that they are safer and more popular with holidaymakers than smaller, older vessels.

UK'S OSBORNE PROMISES TAX CRACKDOWN

British finance minister George Osborne has promised to "aggressively" crack down on stamp duty avoidance in next week's Budget, as he attempts to reshape the way that the wealthy are taxed in Britain.

UPS AGREES TO BUY TNT EXPRESS IN $6.5 BILLION DEAL

UPS, the U.S. package delivery company, has agreed a deal to buy its European rival TNT Express in a takeover that is likely to value the Dutch delivery company at about 5 billion euros ($6.59 billion).

GREECE OVER HALFWAY TO RECOVERY, SAYS PM

Greece's caretaker prime minister insists that a "large, silent majority" of Greeks are willing to do whatever is needed to stay in the euro zone, despite near-daily anti-austerity demonstrations.

BANKING QUINTET UNITE FOR HEDGING TOOL

Five banks have joined forces to create a hedging tool designed to improve the health of their balance sheets and protect them against market sell-offs as international regulations force institutions to increase the quality of their assets.

GOLDMAN LOOKS TO MONOLINE INSURANCE MOVE

Goldman Sachs is considering offering so-called "monoline" insurance, as it explores new business areas ahead of incoming financial regulation expected to hit its lucrative trading operations.

LUKOIL CHIEF AIMS TO SHAKE UP ARCTIC OIL

Private resources companies will soon be allowed access to Russia's vast Arctic oil and gasfields, and the country's tax system will be changed to promote growth in the sector, according to the chief executive of Lukoil.

RBS BOOSTS PROPORTION OF SME LOAN APPROVALS

Royal Bank of Scotland has increased the proportion of small business loan applications that it approves, outstripping UK rivals, in a trend that will hearten government ministers but may concern shareholders.

TELECOMS ANTITRUST PROBE DETAILS REVEALED

Europe's top antitrust enforcer last month forged ahead with an investigation into whether the continent's five largest telecoms groups rigged mobile technology standards, in spite of their chief executives offering personal assurances to work through a pan-industry body.

INTEREST RATES SWAP MIS-SELLING PROBED

The UK financial services regulator has said it will look into the possibility that interest rate swaps may have been mis-sold by banks, including Barclays.

BLACKSTONE TO TAKE ON SOCIETE GENERALE PROPERTY LOANS

Blackstone is set to take control of 100 million euros worth of commercial property loans owned by Societe Generale as the French bank pushes to shed its exposure to global real estate.

DIAGEO STEPS UP PRESSURE ON TEQUILA BUSINESS

Diageo, the world's largest spirits company by sales, is stepping up the pressure on the family owners of tequila maker Jose Cuervo, demanding a resolution to year-long talks over an acquisition within the next few months.

NYT

* Many games developers have adopted a lucrative strategy known as freemium: giving away games and then charging for extra features. It is being adopted even by giant game makers like Electronic Arts Inc that might once have sneered at the idea because free games had the reputation of being low quality or full of annoying ads.

* As Apple Inc's cash balance has piled up, analysts and investors have begun to call more loudly for it to return some of the money to shareholders as dividends.

The company issued an unusual media alert on Sunday evening saying it planned to announce on Monday morning the long-awaited outcome to a discussion by its board about what to do with its cash balance of nearly $100 billion. It will announce its plans in a conference call at 9 a.m. Eastern time.

* Bond yields had their biggest move since October last week, with a sell-off that lifted the yield on 10-year Treasury bonds to 2.31 percent.

* Seventeen employees of oil group Chevron Corp and rig operator Transocean Ltd could face charges connected to an offshore oil spill, adding to Chevron's woes in Brazil.

* Brian Lamb will hand over management of C-Span, the public affairs cable network, to Rob Kennedy and Susan Swain, while remaining as executive chairman.

* Since being moved to several time slots from its Tuesday night position, "Independent Lens" has lost 39 percent of its average audience for new episodes this season, according to Nielsen ratings.

* United Parcel Service Inc is near a deal to buy TNT Express NV, a Dutch shipping company, for about $6.6 billion, people briefed on the matter said on Sunday.

Canadian Press

THE GLOBE AND MAIL

- Ontario is unveiling a radical change to the way it funds the province's hospitals, tailoring their budgets to the number of patients they treat as well as the quality of service they provide.

The new funding formula will reward better-performing hospitals by giving them more money for treating patients more efficiently, according to health-care sources. It will also match funding to the population of a community as well as the age of people within that area, the sources said.

- The odds that Thomas Mulcair will be Leader of the Official Opposition by this time next week border on the prohibitive. In the unlikely event the Montreal MP does fall short at this weekend's NDP leadership convention, the one to watch is B.C. MP Nathan Cullen.

Reports in the business section:

- Canadian businesses and governments are lagging several western nations in the "Internet economy" and are being warned that they risk falling even further behind unless they take immediate and more aggressive action.

- Aveos Fleet Performance Inc, which does aircraft repairs for Air Canada, is getting out of the heavy maintenance business in a move that will result in hundreds of layoffs, says a union leader.

- A surge in sick calls from Air Canada pilots, along with morning fog and a fire at the country's largest airport, led to snarled travel schedules on one of the busiest weekends of the year.

The inconvenience to thousands of travelers highlights Air Canada's difficulties establishing peace with its employees as it appeals to Ottawa for assistance once again, this time to address what the carrier claims is an illegal job action by pilots.

NATIONAL POST

- The Mayor of London, Ontario, is vowing to hold rioters accountable for their crimes after St. Patrick's Day revelry morphed into the city's worst-ever case of civil unrest.

In five chaotic hours centered around a student district at Fanshawe College, violent crowds of as many as 1000 people tore apart fences, showered police and firefighters with bricks and bottles and set fire to a CTV news vehicle, which later exploded.

- The Canadian Forces hope to save $90 million a year by pulling out of NATO programs operating unmanned aerial vehicles as well as airborne early warning planes, according to documents obtained by the Ottawa Citizen.

Hong Kong Press

SOUTH CHINA MORNING POST

-- Casino operator Galaxy Entertainment Group Ltd will double the size of its flagship casino resort, Galaxy Macau, on the Cotai Strip in Macau by adding more non-gaming elements, including convention and retail businesses, said vice-chairman Francis Lui.

-- Nanjing Guanya Power Equipment, which manufactures inverters for alternative-energy power stations, plans to raise 1 billion yuan ($158 million) through a mainland initial public offering in the second half of this year, according to Sun Bangwu, an executive director of Guanya.

-- China Development Bank (CDB) will sign a memorandum of understanding (MoU) with Brazilian, Russian, Indian and South African counterparts to make yuan loans available to them, a move to boost the currency's international status, according to two bank staff.

HONG KONG ECONOMIC TIMES

-- Home prices in 45 of 70 cities in China in February fell for a fifth consecutive month, while prices in 21 cities stayed the same, and four cities saw rising prices, according to National Statistics Bureau data.

MING PAO DAILY NEWS

-- Wonderful Sky Financial Group, a financial public relations firm, plans to raise up to HK$375 million ($48 million) in its public initial offering, aiming to become the first financial PR agency listed on the Hong Kong bourse on March 30.

TA KUNG PAO

-- Hong Kong International Airport (HKIA), the world's busiest air cargo hub, said cargo traffic reported an increase of 18.6 percent in February over the same period last year, to 287,000 tonnes.

European Economic Update:

  • Eurozone Current Account n.s.a. -12.3B. Previous 16.3B. Revised 18.3B.
  • ECB Eurozone Current Account s.a. 4.5B. Previous 2.0B. Revised 3.4B.
  • Italy Industrial Orders  -7.4% s.a. m/m -5.6% n.s.a y/y – lower than expected. Consensus -3.2% s.a. m/m -2.9% n.s.a y/y. Previous 5.5% s.a. m/m -4.3% n.s.a y/y. Revised 5.2% s.a. m/m.
  • Italy Industrial Sales -4.9% s.a. m/m -4.4% n.s.a y/y. Previous 3.4% s.a. m/m 5.6% n.s.a y/y. Revised 3.2% s.a. m/m 5.4% n.s.a y/y.
 

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Mon, 03/19/2012 - 07:51 | 2268922 Ghordius
Ghordius's picture

in the FT article above Papademos cites that some 70 to 80 per cent of Greeks support Greece's continuing partecipation in the euro area and that they are willing to do what has to be done in order for the country to remain in the EUR.

As much as I don't really like him this is quite factual... though a nice little referendum would be quite a thing, wouldn't it?

Mon, 03/19/2012 - 07:55 | 2268927 EconSammie
EconSammie's picture

The lack of logic in the interview given by the Greek Prime Minister is summed up well below.

"The Prime Minister Lucas Papademos was interviewed in the Financial Times and amidst the hyperbole we did get some confessions as well as some extraordinary claims. There were also two rather remarkable understatements!

However, in the short term we are still experiencing negative side effects

The weakening of economic activity and the increase in unemployment were greater than initially expected.

Later on he is kind enough to specify the side effects.

The country is in the fifth year of recession, unemployment is about 20 per cent, youth unemployment is close to 50 per cent,

“Side effects” does not really cover it, does it? If it was a drug it would deserve to lose its licence for sale. Another problem area in the interview was the lack of implementation of economic reform.

There have been implementation delays and gaps – there is no question about this.

One reason was that policies were not implemented in a timely manner.

provided the policies are implemented fully

Of course according to Prime Minister Papademos this time is different although I note he adds the rider “if implemented effectively”. "

http://www.mindfulmoney.co.uk/wp/shaun-richards/greece-needs-genuine-reform-and-a-devaluation-not-even-more-debt-and-wage-adjustments/

 

Mon, 03/19/2012 - 08:06 | 2268944 Ghordius
Ghordius's picture

great summary and interesting link

well, that's the problem, isn't it? a Drachma would have to be devalued by 30%-40% without wage increases and the Greeks know it.

politically, quite a hard thing to do. on the financial side, who is going to guarantee that the new Drachma would go down 40% only?

with this kind of free-money-for-speculative-purpuses sloshing around any small currency could face a very tough fate

no, certain things have to run their course

Mon, 03/19/2012 - 07:59 | 2268930 CPL
CPL's picture

Forgot the start of WW3 this week...

Mon, 03/19/2012 - 08:03 | 2268937 valley chick
valley chick's picture

thought there was going to be issues regarding the CDS trigger with Greece?  Or is everything now happy happy joy joy?

Mon, 03/19/2012 - 08:12 | 2268962 Catullus
Catullus's picture

From the Obama Bloomberg article:

“Lincoln, the first Republican president, knew that if we as a nation through our federal government didn’t act to facilitate these things, then they likely wouldn’t happen, and as a result, we’d all be worse off,” Obama said at the Palmer House Hilton Hotel in Chicago’s downtown.

Lincoln also had at murder 600,000 people, enslave thousands into the army, allow drunk lunatics to burn down half the country, and imprission anyone who disagreed with his administration to "facilitate" the spending programs that his home state of Illinois was already in default on.

 

Mon, 03/19/2012 - 08:59 | 2269155 Voltaire
Voltaire's picture

Why highlight the shooting in France? What has that got to do with the market and the economy? Is it because it involved jews? How come you didn't higlight the shooting of three french soldiers last week? It was in the very same city and it is probably the same gunman. But those soldiers weren't jews - so nobody cared. 

Mon, 03/19/2012 - 10:41 | 2269530 Bansters-in-my-...
Bansters-in-my- feces's picture

Greeces unelected caretaker is fucking delusional.

Fuck the Central Banksters.

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