MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Saturday, May 26, 2012
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11:50 AM IMF head Lagarde tells The Guardian her agency has no intention of easing the terms of Greece's bailout package. Greeks need to help themselves by paying their taxes, she says, adding she has more sympathy for poor African children than Greek ones - interesting sentiments from one who was part of the regime that oversaw hundreds of billions transferred to financial institutions in the aftermath of the GFC. 16 Comments
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9:45 AM The pro-bailout New Democracy (23.2%) party has overtaken Syriza (22%) in a new opinion poll in Greece. Election rules give the victorious party a 50-seat bonus in Parliament, so even a tiny victory margin is significant in determining who forms the next government. Markets are pricing in disaster. What if things continue to muddle along? 6 Comments
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Friday, May 25, 2012
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6:10 PM Is the “cult of the equity” dead? Institutional investors have slashed their equity holdings over the past decade. Stocks have not been this far out of favor in over a half a century. “Ultimately what is going on is that fundamental tenets of capitalist society are being questioned,” says Allianz's Andreas Utermann. This is stunning in light of overwhelming evidence that, in the long run, equities outperform. From 1900 to 2010, they beat inflation by 6.3% a year in the U.S., compared with only 1.8% for bonds. 16 Comments
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3:51 PM India's oil minister says a decision will be made on gasoline rates in a few days, as the country's government faces a barrage of criticism over an 11.5% increase in the price of the fuel. The minister doesn't specify whether prices will be cut, but says the recent increase was necessary due to a weak Indian rupee and higher global crude oil prices. Comment!
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3:37 PM Did S&P tip that Spain's Popular might be next in line for a bailout, asks the WSJ's David Enrich. He notes the bank is mentioned in the same breath as Bankia regarding government support in the S&P downgrade report. Enrich on the Bankia chronology: "Last summer, IPO. Last month, 'well capitalized.' Last week, €10B hole. Today, €19B bailout." 6 Comments
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2:47 PM A shareholder group led by NY State Comptroller Thomas DiNapoli urges Chevron (CVX) to settle a 20-year legal battle against indigenous people in the Ecuadorian rainforest. But the Ecuadorian court's damage award in the alleged dumping of oil waste - $18B - isn't chump change, and CVX says the case is fraught with fraud. 4 Comments
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2:44 PM Central bankers are keeping it low-key for now, writes Saxo Bank's Steen Jakobsen, but they're surely realizing they've fallen behind the curve. China is slowing precipitously, the rest of Asia is suffering from a cutoff in credit as EU banks pull back, and, of course, there's Europe. The central banks aren't going to sit on their hands forever. He's buying GLD, GDX, and HYG. 11 Comments
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2:18 PM "No decision has been taken" on whether Formula One will go through with a $10B listing on the Singapore stock exchange, says Chairman Peter Braback. The Facebook situation certainly weighs, and the sale of a 21% stake earlier this week to BlackRock and Norway's SWF may take pressure to list off of owners CVC Partners. Comment!
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2:17 PM Not much equivocation from Marc Faber, who sees a "100% certainty" of a global recession in 2013. Though global stocks are ready to rebound in the short term, and markets would launch a relief rally if Greece exits the euro, a recession is sure to come thanks less to Europe's travails but from a "meaningful slowdown" in India and China. 2 Comments
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1:02 PM S&P cuts its ratings on five Spanish banks, and affirms the ratings on another nine. Santander (STD) and BBVA aren't touched, but remain on "CreditWatch with negative implications." 3 Comments
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12:55 PM With credit conditions worsening abroad, Brazil makes it easier for three of the country's giant firms - VALE, Petrobas (PBR), and Electrobas - to tap the state development bank for funding. Together, the three make up 25% of the Bovespa index, which is +1.3% today. EWZ +2.2%. Comment!
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12:46 PM With the 0.88% yield on its 10-year paper apparently not doing the trick, Japan signs up super-popular all-girl band AKB48 to help hawk JGBs to the citizenry. The group will headline a summer campaign composed of a number of other Japanese celebrities. 1 Comment
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12:07 PM Spain looks set to inject another €19B into Bankia, giving the government about a 90% ownership stake in the troubled lender. This is in addition to €4.5B in preferred shares the government owned and flipped into common 2 weeks ago. The new capital will go towards upping provisions against losses in the bank's real estate portfolio. 3 Comments
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11:39 AM European shares close green for the 2nd consecutive session after a day of swings. Stoxx 50 +0.4% (gained about 1% on the week), Germany +0.4%, France +0.4%, Italy +0.4%, Spain +0.3%, U.K. flat. Euro flat at $1.2526 after earlier sliding to a $1.24 handle for the first time in 2 years. Comment!
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11:34 AM Mario Monti invites Germany's Merkel, France's Hollande, and Spain's Rajoy to Italy for a summit following the June 17 Greek elections. Merkel has reportedly accepted the offer. Its seems like the sort of news floated to show the leaders are unconcerned about much happening between now and then. Comment!
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11:10 AM Both the Canadian and Aussie dollars are considered (rightly or wrongly) commodity currencies, but traders - by a large margin - are placing bets the loonie will perform better than the aussie as China slows, the RBA cuts rates, and the BoC stands pat or even hikes. FXA vs. FXC this year. Comment!
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10:59 AM The EU escalates its fight with Argentina, filing a formal complaint with the WTO challenging the country's import regulations. EU officials say Argentina's decision to nationalize Repsol's local YPF unit was only the most recent in a series of moves by Cristina Kirchner's government that have harmed foreign investors and manufacturers. (earlier) 1 Comment
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10:18 AM The Treasury declines to name China a currency manipulator in its semi-annual exchange rate report to Congress (a report the Treasury usually waits until Happy Hour to release). 1 Comment
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10:02 AM "Another bazooka" may be necessary for Spanish banks facing deposit withdrawals, sitting on big losses on their government paper holdings, and having €85B of maturing debt in Q2 and Q3. The trouble is banks have little left in the way of collateral for further LTRO borrowing. They need QE, not another LTRO, writes Nomura. 1 Comment
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9:57 AM Internal devaluation (otherwise known in the EU as austerity) is far more painful than external devaluation (letting the currency go), finds Morgan Stanley after aggregating past results from these options. Sadly for the Club Med states, this hasn't yet been an option, but what happens if the voters get a gander at the data? 1 Comment
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