News That Matters

Bank of America is shaking up the leadership of its investment bank as it looks to find its footing in a difficult market environment, says Reuters, citing a memo sent to employees on Sunday by co-chief operating officer Tom Montag.


US banks fear that any recovery in the US housing market will be further delayed as a result of moves to remove credit ratings from American regulations, which will boost banks’ capital requirements by billions of dollars,


British and Swiss regulators are likely to begin enforcement proceedings against UBS for shortcomings that allowed a London trader to make unauthorised trades last year, the WSJ says, citing people familiar with the situation. In September,


Iran’s oil minister said on Sunday that oil sales to “some countries” would be halted soon, amid pressure from the parliament that the government should pre-empt a looming European embargo, the FT


Europe’s carmakers are crying foul over a proposed trade agreement between the European Union and India, which they say would restrict access to one of their most important but highly protected markets,



Greece’s finance minister angrily rejected a German plan for the eurozone to impose a budget overseer onto Athens in return for a new €130bn bail-out, saying it would improperly force his country to choose between “financial assistance” and “national dignity”,


Global bank bonds are enjoying their strongest monthly rally in nearly three years after the European Central Bank injected €489bn into the eurozone’s banking system, averting a liquidity crunch that could have undermined efforts to boost economic growth. The total return for the bonds of European financial companies is 3.5 per cent so far in January and it is about 3 per cent for US financial debt, both on track for the biggest monthly return since July 2009, according to indices from Barclays Capital.


French president Nicolas Sarkozy unveiled German-style labour market reforms on Sunday as part of a package of measures aimed at reinvigorating the economy and his re-election prospects, hours after German chancellor Angela Merkel promised to join him on the campaign trail in an unusual show of cross-border support. The announcement in Berlin that Ms Merkel would “actively support Nicolas Sarkozy with joint appearances in the election campaign in the spring” added a surprise twist to a much-heralded television appearance by the president, anxious to regain momentum after a week in which François Hollande, the opposition Socialist candidate and the principal challenger, reinforced his opinion poll lead with a series of strong public performances.

Greece on, off for the past year. People are getting rather fed up with the many conflicting news coming out of Greece, which must default (as The Trade mentioned a year ago). Southern Europe is in pain, but there might be one rising star, Serbia that today managed winning Gold in Waterpolo, Djoko dominating tenis and Silver in hand ball.


On those GDP figures. Guest Post by Macro Story. The release of Q4 2011 GDP highlighted just how close the US economy is to actual contraction as well as how vulnerable it is to the events in Europe. On the surface the 2.8% growth was a nice rebound from the 1.8% growth in Q3 2011.

Asian stock markets were mostly lower Monday, with cyclical stocks underperforming amid disappointment over a weak start to Shanghai’s first trading day after a weeklong Lunar New Year holiday and a below-view reading of U.S. economic growth.  Japan’s Nikkei Stock Average was off 0.6%, Australia’s S&P/ASX 200 was down 0.3% and South Korea’s Kospi Composite dropped 1.3%. China’s Shanghai Composite Index was off 0.3%, Hong Kong’s Hang Seng Index fell 0.5%, India’s Sensex lost 1.0% while the NZX-50 Index added 0.4%. Dow Jones Industrial Average futures were down 63 points in screen trade.


Germany’s finance minister issued an unusually blunt warning that the euro zone might refuse to grant Greece a fresh bailout, pushing Athens into default unless it persuades Europe it can overhaul its state and economy. “Greece needs to decide,” Wolfgang Schäuble said in an interview with The Wall Street Journal, when asked whether the euro zone would grant or withhold the second bailout package for the country since 2010, expected to be in excess of €130 billion ($172 billion).


Email-service providers Google Inc., Yahoo Inc., Microsoft Corp. and AOL Inc. are backing a new effort intended to dramatically reduce “phishing” emails—which attempt to trick recipients into thinking they come from a legitimate source. The companies—along with others such as financial-service companies Bank of America Corp., FMR LLC’s Fidelity Investments and eBay Inc.’s PayPal—are hoping to create an environment that allows the recipient of an email from, say, a bank, to feel secure that it isn’t a trick.


Jitters from Europe’s sovereign-debt crisis are now touching Japan, a country with a long-calm bond market despite fiscal deficits far larger than those of Greece or Italy. In recent weeks, the cost of insuring against default on Japanese government bonds—a measure of perceived credit risk—has increased sharply, nearing the historic peak at the height of the Greek debt crisis in October. The price for default insurance, through derivatives known as credit-default swaps, exceeds levels seen last March, immediately after natural disasters and a nuclear crisis darkened Japan’s outlook.


Economic growth in the Philippines gathered pace in the fourth quarter last year, with the stimulus package launched by the government in October helping counter weakness in exports and the adverse effect on farm output of recent typhoons.  The National Statistical Coordination Board said Monday gross domestic product grew 3.7% from a year earlier in the October-December quarter, up from expansions of 3.1% and a revised 3.6% in the second and third quarters, respectively. GDP rose 0.9% in the fourth quarter from the previous quarter, accelerating from the 0.8% quarter-to-quarter rise in the third quarter.


The International Monetary Fund is reviewing whether China’s currency should still be considered “substantially undervalued,” in light of its rapid rise in the past year. The review could take months, but if the IMF decides China’s yuan is just “undervalued,” that milder label could undercut U.S. efforts to challenge Beijing’s currency policy in an election year. On Monday, the People’s Daily newspaper quoted Chinese Premier Wen Jiabao as saying earlier this month that the country will keep the yuan at a “reasonable and equilibrium” level while boosting flexibility of the currency’s exchange rate.


Bank stocks have been driving this year’s market advance. But they also may be its weak link, say analysts and investors who warn that still-sickly finance-sector fundamentals belie rebounding stock prices. The Dow Jones Industrial Average pushed up to nearly a four-year high last week and has advanced 3.6% so far this year. The gain owes much to bank stocks, which have turned up after a miserable 2011. The KBW Bank Index, an index of 24 U.S. commercial lenders, has surged 8.9% this year after a 24% drop in 2011. Bank of America Corp., the worst-performing member of the Dow

Gold futures withstood a strengthened dollar to post modest gains during Asian trading hours Monday, supported by the precious metal’s safe-haven appeal ahead of a European Union summit began later in the day.  Gold Februaryfutures climbed $1, or 0.1%, to $1,733.20 an ounce, adding to its $5.50 increase Friday in the regular session on the Comex division of the New York Mercantile Exchange.


Crude-oil futures declined in electronic trading Monday as U.S. stock-index futures and most Asian share markets fell and the dollar strengthened amid lingering worries over Greece. The March contract for light, sweet crude-oil futures on the New York Mercantile Exchange fell 48 cents, or 0.5%, to $99.08 a barrel during Asian trading hours.

Republican Newt Gingrich struggled to halt surging rival Mitt Romney’s momentum on Sunday, accusing him of launching false attacks as polls showed Romney widening his lead two days before Florida’s presidential primary. Romney, who has battered Gingrich in a flood of television ads and two debates in Florida last week, opened a double-digit lead over the former U.S. House of Representatives speaker in four polls released on Sunday.

Greek Prime Minister Lucas Papademos said he has the backing of leaders from the three political parties supporting his interim government as international creditors increase the pressure on Greece to make deeper spending cuts to secure new funding. The party leaders are in “complete agreement” with the government on continuing talks with private and international creditors, the prime minister said in a statement today after meeting in Athens with George Papandreou of the socialist Pasok party, New Democracy party chief Antonis Samaras and George Karatzaferis, head of the Laos party. Talks “aren’t easy,” he said before flying to Brussels to meet European leaders.


China (CNGDPYOY) signaled caution toward more monetary loosening by holding off on a reduction in bank reserve requirements that some economists had predicted would come before a week-long holiday ending Jan. 28. Barclays Capital Asia Ltd., JPMorgan Chase & Co. and Industrial Bank Co. said this month that ratios were likely to fall ahead of the Lunar New Year festival, which boosts demand for cash. The central bank instead used reverse-repurchase


The brightening economy as the 2012 election year begins doesn’t yet match Ronald Reagan’s “Morning in America.” President Barack Obama presides over an economy that eluded the threat of a double-dip recession in mid-2011 and now is strengthening, with growth accelerating in the fourth quarter to a 2.8 percent rate, the fastest in 18 months, from 1.8 percent the previous quarter. Still, the pace remains well short of the recovery that helped propel the re-election of Reagan — who, like Obama, faced a contraction considered in its time to be the worst since the Great Depression and also lost congressional support in mid- term elections.

China’s Premier Wen Jiabao said the nation’s government debt is at an “overall safe and controllable” level, that funding for key projects would be ensured and that applying the brakes to the problem would be done in a way to avoid systemic risks. Investors have been worried by the scale of the debts built up by China’s local governments, which some fear could threaten the stability of the banking system.


China will make Shanghai the global center of yuan trading, clearing and pricing by 2015, according to a specific state plan laying out the city’s future as an international financial center. The detailed plan, published jointly by the country’s economic planning agency and the Shanghai government, shows the scale of China’s ambition in creating its own version of New York, London or Hong Kong.

Japanese retail sales rose in December, snapping back from November losses, but large retailers reported a fifth month of lower revenue. Last month’s overall retail sales rose 2.5% from a year earlier, the Ministry of Economy Trade and Industry reported Friday, while sales at large-scale retail stores slipped 0.4%. In November, overall sales fell 2.2%, while large retailers saw a 2.5% drop. Shares of large retailers were mixed following the data, with J. Front Retailing Co. and Fast Retailing Co. down 0.8% and 1.2%, respectively, while Takashimaya Co. rose 0.9% and Aeon Co. was flat.


Japan’s core consumer price index fell 0.1% in December from a year earlier, the Internal Affairs Ministry reported Friday, with the result matching the median expectations from separateDow Jones Newswires and Reuters surveys. The drop was the third straight year-on-year fall for core CPI, raising the specter of a return to sustained deflation in Japan. The core CPI, which excludes volatile fresh-food prices, was flat compared to the November reading, while total CPI was also flat month-on-month and was down 0.2% year-on-year.

More than half of the derivatives- trading business of Goldman Sachs Group Inc., Morgan Stanley and three other large banks could fall largely outside the Dodd- Frank Act if they succeed in lobbying regulators to exempt their overseas operations, government records show. The debate over the reach of Dodd-Frank has been among the most contentious aspects of the regulatory overhaul enacted by President Barack Obama after the 2008 credit crisis. The banks have met with regulators, testified to Congress and filed dozens of letters contending that they will suffer a competitive disadvantage if the regulations apply to their foreign arms.

French President Nicolas Sarkozy has announced plans to introduce a tax on financial transactions. The 0.1% levy will be introduced in August regardless of whether other European countries follow suit. The tax is part of a package of measures set out by the president to promote growth and create jobs. Mr Sarkozy faces a presidential election in April, but is currently trailing in the opinion polls behind his Socialist rival, Francois Hollande.


Bangladeshi and Indian electricity companies have signed a deal to build a $1.5bn (£950m) plant to help address Bangladesh’s chronic power shortages. The coal-fired plant will produce 1300 megawatts of electricity, about one fifth of the country’s daily needs. Bangladesh relies on old gas-fired plants for its power and experiences daily electricity shortfalls. However environmentalists say the proposed site for the plant is too close to famous Sundarbans forests.


Spain’s unemployment figure passed the five million mark in the last quarter of 2011, official figures show. The National Statistics Institute said 5.3 million people were out of work at the end of December, up from 4.9 million in the third quarter. The rate rose from 21.5% in the third quarter to 22.8% – the highest rate in nearly 17 years. The new figures show more than half of all 16-24 year-olds are jobless – 51.4% compared with 45.8% before.

Azim Premji, the billionaire boss of Indian software group Wipro, is close to signing a deal with the Government to train British students in IT, engineering and software development – in Bangalore. Mr Premji, the chairman of Wipro and India’s third richest man, has offered to take third-year students from British universities to the company’s headquarters in Bangalore for three months’ intensive study and nine months on-the-job training with a view to returning them fit for work in the UK.

The latest health check on Britain’s manufacturers, builders and services firms will be examined by the Bank of England this week, as it prepares to step up its money-printing efforts.  The batch of purchasing manager indices covering January from Markit, the financial-information firm, will be the Monetary Policy Committee’s most timely indicator of the country’s economic fortunes, ahead of a crucial February meeting.  If the slight signs of momentum seen in December continue into January, the committee may opt to go ahead with a smaller dose of quantitative easing than the £75bn currently pencilled in by most economists.

Imagine the world economy as a video game, one observer said. You have to complete a number of stages before you win, and the idea is to dodge all the bad stuff that can come at you at any moment. If you really get it wrong, you are zapped and you have to start all over again. The game being played by the policymakers who assembled in Davos last week should be called Global Apocalypse. It now even has its own Super Mario figure in the shape of the president of the European Central Bank, Mario Draghi.

Home prices will continue to weaken – but only because of subdued sentiment by buyers rather than fundamental problems in the market, according to a report on the health of the sector. ANZ analysis suggests that home prices should continue to drift ‘‘drift sideways to slightly lower through 2012’’ as buyers’ attitudes towards housing remain cautious in the year ahead. ‘‘Economic fundamentals suggest this weaker momentum is being driven mainly by a shift in market sentiment rather than any significant forced liquidation of housing due to financial stress,’’ according to ANZ senior economist David Cannington.–but-prices-will-slip-anz-says-20120130-1qpdz.html#ixzz1kv4q34me


WORLD leaders turned up the pressure on Europe on Saturday to erect a more formidable wall of money against the sovereign debt crisis, warning that the euro zone continued to pose a severe threat to the global economy. The Chancellor of the Exchequer in Britain, George Osborne, said a bigger firewall was ”a key to unlocking further confidence,” while the managing director of the International Monetary Fund, Christine Lagarde, said the fund should be big enough to eliminate any doubts about European resolve.

For oil sands companies, the pinch is on. Or at least, it’s starting. After several years of recovering from the beating they took at the hands of plunging crude prices and collapsed credit, the swarm of energy producers spending billions of dollars on the oil sands are at the cusp of a familiar problem: soaring prices.

DAVOS, Switzerland (AFP) – US trade chief Ron Kirk admitted on Saturday it was impossible to sell free trade to Americans in the current economic climate as the WTO’s Pascal Lamy put paid to hopes of a rapid global deal. ‘Frankly, more and more Americans of all persuasions believe that we have swapped jobs for cheaper T-shirts and iPads,’ Mr Kirk told the Davos meeting of financial and political elite.

Myanmar’s real gross domestic product (GDP) growth is expected to increase to 5.5 percent in the present fiscal year 2011-12 and to 6 percent in 2012-13, according to a latest estimation of the International Monetary Fund (IMF). The growth is possible for the fact that it is driven by commodity exports and higher investment supported by robust credit growth and improved business confidence, said a statement released after an IMF mission, led by Meral Karasulu, concluded its over- two-week-long 2011 Article-4 consultation trip in Myanmar.


South Korea’s current account surplus contracted to a 3-month low last month as the travel- related service deficit widened despite brisk exports of major export items, the central bank said Monday. The surplus reached 3.96 billion U.S. dollars in December, down from a revised 4.56 billion dollars tallied in the previous month, according to the Bank of Korea (BOK). For the whole year of 2011, the surplus amounted to a combined 27.65 billion dollars, down from 29.39 billion dollars a year earlier.


The head of New Zealand’s central bank, Dr. Alan Bollard, announced Monday that he is to retire later this year after a decade in the post. The governor of the Reserve Bank of New Zealand (RBNZ) said he would not be seeking another term when his current term ended on Sept. 25. Bollard was first appointed in September 2002 and has served two five-year terms. He said in a statement that he would be fully focused in his remaining eight months on “the serious economic and financial challenges facing New Zealand.”


Business confidence in India is declining due to uncertainty surrounding the global economy, rising input costs and high interest rates, said a report released by Confederation of Indian Industry (CII) on Sunday. The report said quarterly business outlook showed the business confidence index for the third quarter of 2011-12 had declined 5 percent and stood at 48.6, down from 53.6 in the previous quarter, according to Indo-Asian News Service.


Indonesia’s inflation rate in January may slow to 3.5 percent compared with 3.79 percent in December, the central bank has said. “The harvest season is coming. Food prices are rising, but just a little, not much,”governor Darmin Nasution was quoted by the Jakarta globe as saying on Saturday. On month, the inflation would rise by 0.6 percent to 0.7 percent in January from the previous month, Darmin said.

China’s fledgling real estate investment fund market could see a surge of activity in 2012, as property developers launch their own vehicles in a desperate bid to bridge an estimated $111 billion financing gap in the year ahead. A government-led clampdown on bank, bond, equity and trust market financing for real estate has left developers with little choice other than to set up their own funds, which have raised barely 10 percent of the sum in the past two years that needs to be found to refinance maturing debt in 2012.

Pitching for foreign investment in the infrastructure sector, which needs $1 trillion in the 12th Five Year Plan, Finance Minister Pranab Mukherjee on Sunday asked U.S. investors to access the Indian debt market through a mechanism of regulated entities with a sustained long-term interest rate. Meeting leaders of Fortune 500 companies here, Mr. Mukherjee assured them that India had evolved a transparent and stable regulatory regime in sectors such as electricity, telecommunications, ports, airports, petroleum and natural gas, and that a regulator for the coal sector was on the anvil.


India, which imports 12 per cent of its oil from Iran, will not scale down its petroleum imports from Tehran despite US and European sanctions against the Islamic republic, the Finance Minister, Mr Pranab Mukherjee, has said. “It is not possible for India to take any decision to reduce the imports from Iran drastically, because among the countries which can provide the requirement of the emerging economies, Iran is an important country among them,” he told reporters here.

Homes sales in Mumbai slipped over 30% in the quarter ended December from a year ago, making it the lowest in three years, says Liases Foras Real Estate Rating & Research. In this period, home prices have gone up 25% and interest rates too have headed north. “High prices are keeping buyers away in Mumbai. Weighted average prices have shot up 30% from the previous peak of Rs 8,100 per sq ft in June 2008, while it has moved up 97% from the bottom of Rs 5,353 a sq ft in June 2009,” said Pankaj Kapoor, managing director of Liases Foras.

South Korea will take “strong” measures to cope with uncertainty stemming from the eurozone debt crisis, higher raw material prices and other risk factors that could hurt the nation’s economy this year, the finance minister said Monday.  “The government will take strong measures in response to the domestic and external risks such as the European financial crisis, unease in prices of raw materials, and parliamentary and presidential elections,” Bahk Jae-wan told a meeting with foreign journalists in central Seoul. Though the U.S. economy is showing signs of improvement recently, Bahk still said that downside risks are growing in the global market and general external conditions are “worsening.”

Iran said on Sunday that oil prices could reach $150 per barrel as a result of the European Union’s ban on imports of oil from the country, deputy oil minister was quoted as saying by the official IRNA news agency.  “Although a precise prediction cannot be made on the oil prices, it seems we will witness $120 to $150 oil price per barrel for future,” said Deputy Oil Ministry Ahmad Qalebani.