via thetrader.se
FT.com
The volume of bonds sold to finance leveraged buy-outs has reached $16.6bn this year, four times the amount raised over the same period in 2010, as constrained loan markets force private equity firms to rely increasingly on capital markets to fund acquisitions. The FT says shift from loan to bond LBO financing has been particularly sharp in Europe, http://ftalphaville.ft.com/thecut/2011/07/27/635641/buy-out-bond-deals-at-europe-high/
Overseas lending to eurozone countries fell in the first quarter of this year amid worries about the health of Greece and other peripheral countries, reports Reuters, in contrast to a rebound in bank lending across the rest of the world. Lending to eurozone countries dipped by $77 billion, http://ftalphaville.ft.com/thecut/2011/07/27/635621/foreign-banks-cut-lending-to-eurozone/
The family behind Thomson Reuters is pushing for faster results from the three-year-old merger of Thomson Corporation and Reuters, the FT says. The company initially exceeded promises of integration benefits,http://ftalphaville.ft.com/thecut/2011/07/27/635561/thomsons-grow-restless-over-reuters-venture/
US money market funds are stockpiling cash in case Congress fails to raise the debt ceiling, distorting the short-term market for US government debt and raising borrowing costs for banks and other financial institutions http://ftalphaville.ft.com/thecut/2011/07/27/635486/us-money-market-funds-build-liquidity/
Regulators probing alleged manipulation of interbank lending rates have expanded their investigation into yen rates in London and a separate rate-setting process in Tokyo, the FT reports. In the finehttp://ftalphaville.ft.com/thecut/2011/07/27/635491/interbank-loan-probe-widens-to-yen-rates/
At first glance, it looks like the market has become bored with the US debt ceiling game of chicken, with underlying hopes for a busy and positive week of corporate earnings from global companies helping to stabilise equity benchmarks and support commodities http://ftalphaville.ft.com/thecut/2011/07/26/635456/dollar-takes-brunt-of-washington-debt-deal-battle/
The president of the Boston Fed has outlined potential reforms to the money market fund industry in new detail, Reuters reports. ”While several proposals have been suggested, some combination of capital buffershttp://ftalphaville.ft.com/thecut/2011/07/26/634771/fed-signals-money-market-fund-reform/
Fresh foreign investment in Brazilian stocks plunged 70 per cent in the first half of 2011, dragging down a market that had been one of the hottest last year. Rising inflation, political interference in key sectors and measures to slow credit growth have all damped foreign investor sentiment towards Brazil’s equity market, forcing some companies to scrap public offerings despite the strength of the country’s economy.http://www.ft.com/intl/cms/s/0/b00e9644-b79f-11e0-8523-00144feabdc0.html#axzz1TBR7mQo3
The latest eurozone rescue deal will save Ireland almost a billion euros a year in interest payments, but analysts and politicians say the greatest impact may in fact be psychological – providing a battered economy with a much-needed shot of optimism. Eurozone leaders, who met last week to discuss the Greek crisis, cut the interest rate on European bail-out funds, thereby easing the fiscal plight of Ireland which – before its bank and housing market crises forced it last year to accept a €85bn international bail-out – was among the eurozone’s top economic performers. http://www.ft.com/intl/cms/s/0/60589b6e-b799-11e0-8523-00144feabdc0.html?ftcamp=rss#axzz1TBR7mQo3
WSJ.com
Asian shares were down Wednesday, tracking Wall Street’s declines Tuesday, weighed by the continuing stalemate over raising the U.S. debt ceiling, while earnings reports swayed Tokyo shares. “While markets have drifted lower, people do think that sanity will prevail in regard to the U.S. debt ceiling. That said, there seems to be more concern each day that the U.S. could do something completely stupid,” said Justin Gallagher, RBS head of domestic sales trading in Australia. Japan’s Nikkei Stock Average fell 0.7%, Australia’s S&P/ASX 200 edged down 0.1%, South Korea’s Kospi Composite fell 0.2% and New Zealand’s NZX-50 shed 0.4%. Dow Jones Industrial Average futures were down 12 points in screen trade. http://online.wsj.com/article/SB10001424053111903591104576470892199103126.html?mod=WSJ_hp_LEFTWhatsNewsCollection
House Speaker John Boehner, facing a rebellion among conservative Republicans and questions about the amount of spending cuts in his plan for raising the borrowing limit, abruptly postponed a vote on the measure scheduled for Wednesday. The delay added further confusion less than a week before a possible government default. It was a setback for GOP leaders who had promoted Mr. Boehner’s plan as the best way to raise the debt ceiling while cutting the deficit. http://online.wsj.com/article/SB10001424053111903999904576470083852743922.html?mod=WSJ_hp_LEFTTopStories
Iran’s Islamist government may be public enemy No. 1 at the White House. But in the halls of the International Monetary Fund a few blocks away, President Mahmoud Ahmadinejad is being hailed as an economic reformer. In the face of mounting international sanctions, his government has embraced over the past seven months what the IMF calls one of the boldest economic makeovers ever attempted in the oil-rich Middle East. http://online.wsj.com/article/SB10001424052702304223804576448203609699930.html?mod=WSJ_hp_LEFTTopStories
Over the past 10 years: - The U.S. economy’s output of goods and services has expanded 19%. - Nonfinancial corporate profits have risen 85%. - The labor force has grown by 10.1 million. - But the number of private-sector jobs has fallen by nearly two million. - And the percentage of American adults at work has dropped to 58.2%, a low not seen since 1983. What’s wrong with the American job engine? As United Technologies Corp. Chief Financial Officer Greg Hayes put it recently: “Sales have come back, but people have not.” That’s largely because the economy is growing much too slowly to absorb the available work force, and industries that usually hire early in a recovery—construction and small businesses—were crippled by the credit bust. http://online.wsj.com/article/SB10001424053111904772304576468820582615858.html?mod=WSJ_hp_LEFTWhatsNewsCollection
George Soros is turning his legendary hedge-fund firm into a $24.5 billion “family office,” a move that allows it to avoid a new level of regulatory oversight facing many hedge funds. Mr. Soros helped pioneer the modern hedge fund and became one of the world’s best known investors. His firm, Soros Fund Management LLC, told clients it will no longer manage outside investors’ money. It will return less than $1 billion to investors and manage the remaining approximately $24.5 billion—including funds owned by Mr. Soros, his family and their foundations—through a family office.http://online.wsj.com/article/SB10001424053111903999904576469761599552864.html?mod=WSJ_hp_LEFTWhatsNewsCollection
European banks are cutting jobs to save on costs, as weaker earnings in key business lines and coming regulations bite into their profits. UBS AG on Tuesday said it would reduce its workforce by an undisclosed amount as part of a plan to reduce costs by up to 2 billion Swiss francs ($2.48billion). The move came as it reported a near-halving in second-quarter net profit, to 1.02 billion francs, in part from a sharp drop in fixed-income revenue. Rival Credit Suisse Group is likely to announce that it is laying off as many as 1,600 people when it reports on http://online.wsj.com/article/SB10001424053111903591104576469843142732536.html?mod=WSJASIA_hpp_LEFTTopWhatNews
Australia continued to have an inflation problem in the second quarter as prices jumped for a broad range of basic items such as food, clothing, health and household services, sharply increasing the probability of a near-term interest rate rise and driving the Australian dollar to a 30-year high. Financial markets were stunned by the data, with many saying recent signs of a cooling in key sectors of the economy like retail sales were a clear signal that momentum had slowed over recent months, giving the central bank more time to ponder its next move. The http://online.wsj.com/article/SB10001424053111903999904576471021557733848.html?mod=WSJASIA_hpp_LEFTTopWhatNews
Marketwatch.com
Gold futures continued to rise Wednesday as a prolonged standoff in Washington over hiking the U.S. debt ceiling continued. Gold for August delivery , the contract with the most volume, rose $5.30, or 0.3% to $1,622.00 an ounce in electronic trading. The December contract, which has the most open interest, was at $1,623.90 an ounce, up $4.50, or 0.3%, after earlier rising to a fresh peak of $1,626.90. http://www.marketwatch.com/story/gold-rises-as-us-debt-impasse-continues-2011-07-27
South Korea’s second-quarter gross domestic product growth eased to 0.8% from the previous quarter, the Bank of Korea reported Wednesday. It compared with a 1.3% expansion in the first-quarter, and a 0.9% consensus estimate from economists surveyed by Dow Jones Newswires. Export growth slowed to 1.8% during the period, against 3.3% in the previous quarter. Imports rose to 2.8%, compared to 1.2% in the previous quarter, the Bank of Korea reported. Private consumption increased to 1.0%, from 0.4%, the report said. http://www.marketwatch.com/story/south-koreas-second-quarter-gdp-expands-08-2011-07-26
China is unlikely to hike banks’ reserve requirement ratio this month or in August, partly because speculative fund flows have fallen, a reporter for the state-run China Securities Journal wrote in an opinion piece published Wednesday. China raised banks’ reserve requirement ratio in each month between January and June this year as part of its efforts to mop up excess liquidity amid concerns over inflation.http://www.marketwatch.com/story/china-unlikely-to-hike-reserve-ratio-soon-report-2011-07-27
Reuters.com
Oil fell on Wednesday as a stalemate in the United States over raising the debt ceiling dragged on, with analysts saying the wrangling had already damaged the economy. Lawmakers have one week left to hash out a deficit-cutting plan without which Republicans in Congress have said they will not raise the legal $14.3 trillion debt limit. That uncertainty helped drive gold to an all-time high for the sixth time in two weeks on Wednesday, while stock markets and base metals fell. Brent slipped 4 cents to $118.24 a barrel by 0238 GMT, after settling 34 cents higher on Tuesday. U.S. oil slumped 33 cents to $99.25, as an industry report showed crude stocks in the country rose unexpectedly. http://www.reuters.com/article/2011/07/27/businesspro-us-markets-oil-idUSTRE7592LE20110727
Greece wants a voluntary swap of government bonds for longer maturity paper to start in August and be completed fast to emerge rapidly from an expected default rating, its deputy finance minister said on Tuesday. Greece’s private sector creditors will take a 21 percent loss on their bond holdings as part of a 37 billion euro ($53 billion) contribution to the country’s latest bailout plan, agreed at a euro zone summit last week.http://www.reuters.com/article/2011/07/26/us-greece-debt-idUSTRE76P0XQ20110726
New single-family home sales unexpectedly fell in June, but a sharp rise in prices and declining supply suggested the market for new houses was starting to stabilize, a government report showed on Tuesday. The Commerce Department said sales fell 1.0 percent to a seasonally adjusted 312,000-unit annual rate as sales in the Northeast tumbled to a record low. Sales were also pulled down by a sharp drop in the West. May’s sales pace was revised down to 315,000 units from the previously reported 319,000 units. http://www.reuters.com/article/2011/07/26/us-usa-economy-home-idUSTRE76P3N420110726
Bloomberg.com
Political wrangling over a plan to reduce the deficit may cost the U.S. its AAA rating, adding $100 billion a year to government costs while dragging down economic growth, according to Wall Street bond dealers. A U.S. credit-rating cut would likely raise the nation’s borrowing costs by increasing Treasury yields by 60 to 70 basis points over the “medium term,” JPMorgan Chase & Co.’s Terry Belton said today on a conference call hosted by the Securities Industry and Financial Markets Association. Standard & Poor’s, which has given the U.S. a top ranking since 1941, reiterated on July 21 that the chance of a downgrade is 50 percent in the next three months and may cut the nation as soon as August. http://www.bloomberg.com/news/2011-07-26/u-s-downgrade-may-raise-interest-cost-by-100-billion-jpmorgan-says.html
Shanghai’s government will step up inspections on the pricing of new homes to ensure that they aren’t set at “unreasonably” high prices, as part of a nationwide effort to curb excessive gains. The city will seek out developers which violate the rules and withhold the approvals for them to sell homes, the Shanghai Municipal Housing Support and Building Administration Bureau said in a statement on its website late yesterday.http://www.bloomberg.com/news/2011-07-27/shanghai-to-step-up-probe-of-home-prices.html
Chinese industrial companies’ profits grew at a faster pace even after the government raised interest rates and tightened credit to counter inflation. Net income climbed 28.7 percent in the first six months to 2.41 trillion yuan ($374 billion) from a year earlier, the National Bureau of Statistics said today. That compares with a 27.9 percent gain in January through May. Climbing profits for companies such as Anhui Conch Cement Co., the nation’s biggest cement producer, fuel investment that is underpinning the expansion of the fastest-growing major economy. http://www.bloomberg.com/news/2011-07-27/china-s-29-jump-in-industrial-profit-to-spur-growth-by-fueling-investment.html
Spain and Italy paid a high price to sell short-term debt on Tuesday, compounding investors’ concern that last week’s bailout package for Greece left the euro zone’s debt crisis unresolved. Spain’s short-term cost of borrowing hit three-year highs and demand fell at its Treasury bills auction while yields at a sale of six-month Italian paper hit their highest since November 2008. http://uk.reuters.com/article/2011/07/26/uk-eurozone-idUKTRE76P30A20110726
CNBC.com
Japan’s policymakers, alarmed that the yen’s persistent climb could derail the nation’s economic recovery, see solo market intervention as an increasingly viable option, sources familiar with the matter said. Finance Minister Yoshihiko Noda on Tuesday repeated his mantra about closely watching “one-sided” moves, and other ministers chimed in with warnings about the risk of the currency rising too far and too fast.http://www.cnbc.com/id/43903102
A U.S. debt default could send the derivatives market designed to protect bond investors into confusion because a missed Treasury payment may have been deemed too unlikely to be fully planned for in the contracts. If the United States does default, investors that sold protection in the form of credit default swaps would theoretically need to pay out around $4.77 billion to buyers, based on outstanding net volumes from the Depository Trust & Clearing. http://www.cnbc.com/id/43895173
NYTimes.com
The wave of relief in European markets that accompanied a new rescue plan for embattled euro zone governments appears to have mostly run its course, suggesting that investors are becoming more skeptical about the plan’s prospects for success. http://www.nytimes.com/2011/07/27/business/global/euro-zone-rescue-effect-appears-to-peter-out.html?_r=1&ref=global
Foxbusiness.com
A new and bigger restructuring of Greek debt is likely within the next two years, an official from credit ratings agency Standard & Poor’s said on Tuesday, adding a further downgrade of Greece’s sovereign debt rating was “pretty certain.” Greece became the lowest-rated country in the world by Standard & Poor’s, which downgraded it 8 notches June 13. “We’ve also expressed the opinion before that we think that any near-term restructuring is probably not the end of the story. There may be another bigger restructuring down the road,” Beers said in an interview. Asked when the new restructuring might occur, Beers said: “That’s partly in the hands of Greek politics. But it wouldn’t surprise us if a second restructuring had to be looked at over the next couple of years.” http://www.foxbusiness.com/markets/2011/07/27/sp-sees-2nd-greek-debt-haircut-new-downgrade-report/#ixzz1THNsEP1V
CNN.com
California secured a $5.4 billion loan to see it through the financial market turbulence that could hit if federal policymakers don’t solve the debt ceiling impasse by Aug. 2. Eight major financial institutions, including Goldman Sachs (GS, Fortune 500) and Wells Fargo (WFC, Fortune 500), put up the funds, which will help the state with its daily cash flow needs. Also, the money will cover California in case the federal government delays payments for services such as health care and transportation. (States brace for U.S. default) http://money.cnn.com/2011/07/26/news/economy/debt_ceiling_california/index.htm?cnn=yes
BBC.co.uk
Growth in the UK economy slowed in the three months to 30 June, partly because of the extra bank holiday in April. Gross Domestic Product (GDP) grew by 0.2% in the second quarter, according to the Office for National Statistics, down from 0.5% in the previous quarter. The ONS said growth had also been slowed by some other one-off factors, including the Japanese tsunami. Chancellor George Osborne said the growth was good news, but Ed Balls accused him of choking the recovery. http://www.bbc.co.uk/news/business-14288348
LVMH has reported a big jump in profits as demand for luxury goods shows no signs of slowing despite concerns over the strength of the global economy. Net profit for the first half of the year came in at 1.31bn euros ($1.9bn; £1.16bn), up 25% on a year earlier. Revenue rose 13% to 10.3bn euros. The owner of Louis Vuitton and Moet & Chandon said it was approaching the second half year “with confidence”. LVMH agreed a deal in March to take over Bulgari for 3.7bn euros. http://www.bbc.co.uk/news/business-14301013
Telegraph.co.uk
George Osborne has vowed to stay the course and deliver the Government’s £110bn of austerity measures, despite claims he is “in total denial” over the economy’s failure to gather momentum. Speaking to the BBC, the Chancellor stressed there would be no compromise and no tax giveaways. “The absolutely fundamental requirement is economic stability. Without that you have nothing,” he said. “Would we really take the risk of yet more debt? Would we risk the sky-high interest rates, the economic instability? I think most people would think that is an absolutely mad course for us to head down. “Abandoning that now would only risk British jobs and growth.” http://www.telegraph.co.uk/finance/economics/8663991/Chancellor-vows-no-compromise-on-cuts-despite-weak-growth.html
It is just over a year since the Coalition’s emergency Budget outlined £110bn of austerity cuts and began reshaping Britain’s debt-fuelled economy. But the recovery has since slowed as both the consumer and the UK’s production industries slipped into technical recessions. Employment has continued to rise and the deficit reduction plan is largely on target. So just how healthy is the UK recovery?http://www.telegraph.co.uk/finance/economics/8663795/Is-austerity-working-for-Britain.html
Guardian.co.uk
Foreign direct investment into Britain halved to £46bn in 2010. Britain has lost its status as the investment capital of Europe with flows of capital into and out of the country plunging since the crash of 2007, it was revealed on Tuesday. Data published by the United Nations showed that foreign direct investment into the UK has fallen by more than three quarters since the financial crisis began. At its peak in 2007, the boom in the City meant foreign direct investment into Britain stood at just over £196bn, but this halved in 2008 when the global banking teetered on the brink of collapse and has since halved again to stand at £46bn in 2010. http://www.guardian.co.uk/business/2011/jul/26/unctad-world-investment-report
Smh.com.au
THE risk of a break-up in the euro area is lower than a year ago, says Nouriel Roubini, the economist who predicted the global financial crisis. The risk of deflation in advanced economies has also fallen, Professor Roubini, the co-founder and chairman of New York-based Roubini Global Economics, told a conference in Shanghai yesterday http://www.smh.com.au/business/less-risk-of-euro-area-breakup-20110726-1hyh1.html#ixzz1THQivYyf
Theglobeandmail.com
Finance Minister Jim Flaherty says he is “relatively confident” that the United States will reach a debt ceiling solution in the next few days. Mr. Flaherty called the U.S. debt situation “very worrisome” but he remained tight-lipped about any contingency plans for Canada in the case of a U.S. default. He was in the picturesque city to host a roundtable with a number of small-business leaders to gauge their views on the economy http://www.theglobeandmail.com/report-on-business/economy/us-debt-situation-very-worrisome-flaherty/article2110241/
CS.com.cn
Brazilian Finance Minister Guido Mantega said Tuesday that the country’s annual inflation target of 4.5 percent won’t be exceeded. “The inflation rate is under control, and the government will remain vigilant,” he said, denying previous worries that the South American country’s economy is overheating. The inflation rate was 3.87 percent for the first half of the year, according to the minister.http://www.cs.com.cn/english/ei/201107/t20110727_2982006.html
Global foreign direct investment (FDI) rose 5 percent to 1.24 trillion U.S. dollars in 2010, while those to developing economies and transition economies- – for the first time — surpassed the 50 percent mark of global FDI flows, United Nations Conference on Trade and Development (UNCTAD)’s annual report said on Tuesday. The World Investment Report 2011, subtitled “Non-equity modes of international production and development”, was released in Johannesburg, the economic center of South Africa. http://www.cs.com.cn/english/ei/201107/t20110727_2982001.html
China’s fiscal revenue will increase at a slower pace in the second half of this year, following an array of tax cuts, the Ministry of Finance (MOF) said on Tuesday. Reductions in personal income tax, value-added tax, sales tax, and small business tax will lead to slowing growth, the ministry said in a statement on its website. Fiscal revenue rose 31.2 percent year-on-year to 5.69 trillion yuan (875.5 billion U.S. dollars) in the first half of this year, boosted by the country’s fast economic growth and rising consumer prices, it said. http://www.cs.com.cn/english/ei/201107/t20110727_2981997.html
Russia’s gross domestic product (GDP) has grown 3.9 percent in the first half of 2011, the Economic Development Ministry said on Tuesday. According to the ministry, Russia’s foreign trade enlarged by 35.2 percent in the first six months to 397.3 U.S. billion dollars compared with the same period last year. Russia’s exports grew by 31.4 percent year-on-year to 249.5 billion dollars, while imports grew by 42.3 percent to 147.8 billion dollars. http://www.cs.com.cn/english/ei/201107/t20110727_2981994.html
China’s fiscal revenue will increase at a slower pace in the second half of this year, following an array of tax cuts, the Ministry of Finance (MOF) said on Tuesday. Reductions in personal income tax, value-added tax, sales tax, and small business tax will lead to slowing growth, the ministry said in a statement on its website. Fiscal revenue rose 31.2 percent year-on-year to 5.69 trillion yuan (875.5 billion U.S. dollars) in the first half of this year, boosted by the country’s fast economic growth and rising consumer prices, it said. http://www.cs.com.cn/english/ei/201107/t20110727_2981971.html
China`s economy would not see hard landing before 2013, it is mostly possible to soft landing at 85 percent, Nouriel Roubini, the economist who predicted the global financial crisis, said at a conference in Shanghai yesterday. Anyway, Nouriel Roubini showed his worry about hard landing concerning China economy after 2013. He said, China should alter the prevailing economy growth model to avoid the potential risks of hard landing. China should not rely on the fixed assets investment to drive the economy, and should improve the domestic consumption, reduce excessive saving, Roubini, the co-founder and chairman of New York-based Roubini Global Economics LLC. http://www.cs.com.cn/english/ei/201107/t20110727_2981968.html
TheHindu.com
India and U.K. on Tuesday expressed commitment to conclude the broadbased India-EU Free Trade Agreement (FTA) by the end of the year. “Both economies are sharing the gains from increased trade and investment flows. Both sides are fully committed to ensure the conclusion of an ambitious and balanced broad-based EU-India FTA by the end of the year,” said the joint communique issued after a meeting between Finance Minister Pranab Mukherjee and Britain’s Chancellor of Exchequer George Osborne. http://www.thehindu.com/business/Economy/article2296389.ece
Economictimes.com
TheReserve Bank of India shocked markets with a higher-than-expected increase in interest rates. But the central bank, which was blamed in the past for falling behind the curve, justifies the policy action by saying thatinflation is still a threat that could destroy the long-term potential of the economy if allowed to persist. Subir Gokarn , deputy governor, explains why RBI did what it did in an interview with ET . Excerpts: http://economictimes.indiatimes.com/opinion/interviews/containing-inflation-is-critical-to-growth-subir-gokarn-rbi-deputy-governor/articleshow/9378321.cms
Fin24.com
Harare – Zimbabwe’s economy is on course to grow by 9.3% in 2011, up from 8.1% percent last year, mainly due to a recovery in the impoverished state’s key mining and agriculture sectors, Finance Minister Tendai Biti said on Tuesday. “We are still on course to achieve our GDP growth rate of 9.3%. Agriculture and mining, with 19.3% and 44% growth respectively, are at the epicentre of this growth,” Biti said in a half-year budget review statement. http://www.fin24.com/Economy/Zimbabwe-expects-93-growth-20110726
