"Successful investing is anticipating the anticipations of others." - John Maynard Keynes

Monday 28 July 2014

Posted 2014-07-28 05:48:32 by David Keohane
Markets: "Asian stocks rose, with a gauge of Chinese shares in Hong Kong heading toward a bull market, while Treasuries and oil slipped as investors await data on U.S. services before the Federal Reserve meets this week. Soybeans and corn rallied... U.S. reports on services activity and pending home sales are due before the Fed meets to discuss monetary policy, while Goldman Sachs Group Inc. said last week rising yields may spur a retreat in global stocks and bonds over the next three months." (Bloomberg)
And have a weekly calendar of events (click to enlarge) for what Citi are calling "a volatile week in a boring month":
Hopes for a quick end to the latest conflict in the Gaza Strip receded on Sunday as Israel and Hamas resumed heavy fighting that has so far left more than a thousand Palestinians dead in spite of UN and international calls for a ceasefire. Diplomatic efforts to agree a truce continued after a brief pause in the fighting broke down at the weekend. (Financial Times)
Republican Senate hope brighten: "With 100 days to go until the midterm election, unexpectedly strong bids by several Republican candidates and President Barack Obama's continued sagging approval ratings are boosting GOP chances of capturing a Senate majority. A battery of recent polling shows Republican candidates mounting competitive bids for at least 10 Senate seats now held by Democrats, including in Iowa and Colorado, states that have been leaning Democratic in recent years." (WSJ)
Boko Haram militants have kidnapped the wife of Cameroon’s vice-prime minister, one of the most audacious attacks by the Nigeria-based Islamist group since it launched an insurgency five years ago. Issa Tchiroma Bakary, Cameroon’s minister of information, told local media the attack occurred early on Sunday in Kolofata, a town in the north of the country and confirmed that the wife of Amadou Ali, Cameroon’s vice-prime minister, and a number of others had been kidnapped. (Financial Times)
Back to Karlsruhe: Europe’s banking union is set to face a challenge in Germany’s constitutional court, a development that threatens to generate renewed uncertainty over one of the main responses to the eurozone’s financial crisis. Five German academics have filed a case claiming that the EU’s banking union is illegal under German law because it was created without the necessary treaty changes. (Financial Times)
British-listed companies have issued more profit warnings this year than in any first-half since 2011 – highlighting the perils of a resurgent pound and the fragility of the country’s economy as it overtakes pre-crisis levels for the first time. Examples include Rolls-Royce, Europe’s largest aircraft engine-maker, which receives most of its money in foreign currencies and issued a profit warning this year after a decade of unimpeded growth. It is one of a string of companies including Diageo and GKN whose upcoming results are expected to show an adverse impact from exchange rates. (Financial Times)
"21st Century Fox is prepared to offer shareholders of Time Warner board representation as part of its bid to acquire the media company, according to a person familiar with the matter. Fox, which made a roughly $80 billion cash-and-stock offer that Time Warner rejected earlier this month, believes that giving Time Warner shareholders a voice on the board of the combined company would make the deal more appealing, the person said. It isn't clear how many seats Fox would offer." (WSJ)
GlaxoSmithKline’s chief exec has opened the possibility of the group being broken up in the future as he pushes through a sweeping overhaul of Britain’s biggest drugmaker. Sir Andrew Witty said GSK had the option to spin off its consumer healthcare business if a time came when it offered more value as a standalone company. (Financial Times)
Danone, the French consumer group, is in talks to sell its medical nutrition business to US rival Hospira in a deal that would allow the buyer move its tax base to Europe. The two companies have been in negotiations for several weeks and, according to people familiar with the situation, are discussing the terms of a potential cash and stock deal that would value the business at close to $5bn. The people cautioned that the talks were ongoing and no deal was certain, however. (Financial Times)
Airline insurers face biggest bill since 9/11 with annual losses set to pass $2bn. Senior insurance brokers have warned that some underwriters are demanding more than threefold increases in premiums in recent days for so-called “war” insurance policies. (Financial Times)
Sankaty Advisors, the credit arm of Bain Capital, is paying more than $1bn for the debt portfolio of JPMorgan’s principal investment group. The sale underscores the extent to which shadow banks are taking over lucrative parts of the operations of big commercial banks, which are under pressure to raise capital and play down certain activities to meet new Basel requirements and regulatory constraints. (Financial Times)
"Regulators have questioned J.P. Morgan Chase executives in recent months about whether the firm steers private-banking clients to its own investment products, according to people familiar with the matter. The queries helped prompt J.P. Morgan to spell out more clearly to private-banking clients the differences between its own products and outside offerings, and how much of clients' assets were invested in each, these people said." (WSJ)
"Italy's UniCredit is close to selling a new portion of its private equity holdings after a similar deal in 2013, a source close to the matter said on Sunday, as European banks shed non-core assets to strengthen their capital base... Daily Il Sole 24 Ore said on Sunday UniCredit was close to selling to a vehicle controlled by SwanCap Partners a significant part of its remaining 1.5 billion euro (1.1 billion pounds) private equity investment portfolio, along the lines of a similar 1 billion euro deal in 2013." (Reuters)
"The Permanent Court of Arbitration in The Hague will on Monday announce that Russia must pay $50 billion to former shareholders of the defunct oil company Yukos, Russian business daily Kommersant reported on its website, citing unnamed sources. The newspaper said Russia was expected to appeal against the ruling." (Reuters)
Diageo, the world’s biggest spirits maker, is to write down the value of its majority stake in its troubled premium Chinese baijiu brand, after plummeting sales of the 600-year-old white spirit which has suffered a prolonged hangover under the anti-extravagance drive of Chinese President Xi Jinping. An announcement will be made on Thursday when the UK-based company reports its full-year results. Diageo declined to comment. (Financial Times)
"OSI Group, a meat supplier to McDonald’s, said it would recall all products made by its Shanghai plant... Chinese authorities have shut down OSI’s Shanghai Husi Food Co. plant for allegedly selling expired products. The city’s police detained five people in connection with an investigation into the meat supplier, according to the Shanghai Municipal Food and Drug Administration." (Bloomberg)
Obama needs to play the honest broker in the Mideast (Financial Times, Luce)
Kaplan: China’s perilous tangle of military and economic fortunes (Financial Times)
Builder bonds return in China (Bloomberg)
NY Fed steps up pressure on bank ethics (Financial Times)
Even the Yakuza can't stop the yield hunt (Bloomberg)
More homes, but not in my backyard (Financial Times)
In the UK private prosecutions grow as state bodies retreat in face of dwindling resources (Financial Times)
Redrawing India's poverty line (WSJ)
Liberia: top doctor becomes latest Ebola victim (Guardian)
Asian markets
Nikkei 225 up +62.13 (+0.40%) at 15,520
Topix up +4.04 (+0.32%) at 1,285
Hang Seng up +221.53 (+0.91%) at 24,438
ASX 200 down -7.31 (-0.13%) at 5,576
US markets
S&P 500 down -9.64 (-0.48%) at 1,978
DJIA down -123.23 (-0.72%) at 16,961
Nasdaq down -22.54 (-0.50%) at 4,450
European markets
Eurofirst 300 down -9.86 (-0.71%) at 1,372
FTSE100 down -29.91 (-0.44%) at 6,792
CAC 40 down -80.10 (-1.82%) at 4,331
Dax down -150.05 (-1.53%) at 9,644
€/$ 1.34 (1.34)
$/¥ 101.78 (101.80)
£/$ 1.70 (1.70)
€/£ 0.791 (0.7912)
Commodities ($)
Brent Crude (ICE) down -0.54 at 107.85
Light Crude (Nymex) down -0.56 at 101.53
100 Oz Gold (Comex) up +4.90 at 1,308
Copper (Comex) at 3.23
10-year government bond yields (%)
US 2.48%
UK 2.57%
Germany 1.15%
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.08bps at 34.39bp
Markit iTraxx Europe +1.3bps at 61.45bp
Markit iTraxx Xover +6.05bps at 249.8bp
Markit CDX IG +0.8bps at 59.47bp
Sources: FT, Bloomberg, Markit


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