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ECONOMICS – FINANCE – WORLD NEWS – GREEK DEBT

OMG, Japan is actually growing

Yesterday…
US jobless claims came in higher than expected and housing data disappointed as well, raining on the American recovery 2013 parade and adding to the uncertainty over the future of the Fed‘s asset purchasing program. read New York Times
At the same time, those with disposable income seem to be working on a new housing bubble of sorts. read Bloomberg

Japan reported its economy grew in the first quarter of the year, leading to a 3.5% annualized growth leap and supporting Shinzo Abe’s approach since his inauguration in September. Most of the growth is attributed to private consumption. read Bloomberg

Meanwhile, Japanese companies prefer to look for opportunities elsewhere, for example the US, where a handful of corporates bought into the US shale gas market for several billion dollar. read Financial Times

Following the Bloomberg user data debacle, Citigroup has banned its fixed income traders from participating in Bloomberg chat groups to shield the banks from any security breaches. read Financial Times

This morning…
Lloyds Banking Group might just be short of fully returning into private sector hands, as the bank’s shares rose higher than the government’s cut-off point for a sale of 61.2 pence per share. Over the past weeks, David Cameron had reiterated that bailed out and partly nationalized institution shouldn’t stay government owned for longer than needed. read Reuters

Word got out that Qatar spent up to $3bn on supporting the Syrian opposition since 2011, the same year in which Libya’s rebels also received support, fueling rivalry over political influence between Arab countries. read Financial Times

Other than that, there is not much going on, time to get on the below.

Weekend reading…

Bangladesh, globalization and the price of your t-shirts, read New York Times
– from pork bellies to ruling the world – a brief history of the Chicago Mercantile Exchange, read Economist
gold bulls vs bears, read Alphaville
– Super Abe and the fight for a prosperous Japan, read Economist leader
– on the uselessness of asset management, read Harvard Business Review

Have a good one.

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US budget deficit decreases; ECB rate cut likely

Yesterday…
The IMF warned of the Asian bubble, saying too much FDI was leading to explosive credit growth and property prices, and it was to get even worse if Japan’s monetary policy was to have the intended effect on the Japanese economy (hold your horses, Christine). read FT

Deutsche Bank is issuing €2.8bn of new stock to improve its capital base. According to WSJ, Deutsche Bank has one of the lowest capital ratios among European banks. read WSJ

This morning…
The Dutch Queen Beatrix abdicated, to be replaced by her son Willem-Alexander. She will be demoted to Princess Beatrix. read BBC

The US Treasury is expecting the first lowering of the budget deficit since 2007 between April and June 2013, when it is looking to repay $35bn, against the February estimate of shouldering another $103bn in debt. The deficit cut is due to tax increases, spending cuts and tax revenues recoveries. read FT

There was a whole flood of data out of Europe this morning: both Eurozone and German inflation came in at 1.2%, lower than expected, making a rate cut by the ECB on Thursday more likely. German unemployment added to its rise in March, but the adjusted rate is still only marginally above the two-decade low of 6.8%. Eurozone unemployment climbed to 12.1%. No surprise there, when has it not been rising… read Alphaville

Spain reported GDP growth for the first quarter – keyword ‘growth’ – at -0.5%, leading the Bank of Spain to lower it 2013 growth expectations from -0.5% to -1.3%. read CNBC

So long.

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Portugal could need second bailout (to pay for the first)

This morning…

the Eurogroup is meeting in Dublin; on the menu: stop messing around with bank stress tests (i.e. tighten measures) and the bailout schemes of Portugal and Ireland. Some say even if Portugal was granted an extension of its bailout repayment, it could potentially face a second collapse and thus a second bailout. Ireland is looking in the same gloomy direction. According to the FT:

Lisbon’s bailout is due to come to an end in July 2014 and the extension of maturities of its bailout loans is intended to smooth its full return to markets. But it has to raise €14,1bn next year and €15bn in 2015, whereas before the crisis it was typically raising €10-€12bn a year. Ireland is also facing a big financing challenge. It needs to refinance €20bn per year from 2016-20, which is about 12 per cent of the country’s projected economic output for this year.

Thus, the world is quiet in anticipation of next week’s news country of choice. It might be early days for Slovenia, so maybe it’ll drift back to Cyprus or Italy.

Meanwhile, Japan will officially enter the Asia-Pacific trade talks this summer, which are currently held between Canada, Mexico, Australia, Chile, Peru, Singapore, Malaysia, Vietnam, Brunei and the US. read article

Weekend reading…
– The Economist on Margaret Thatcher‘s legacy, read article

– William Cohan on the revolving door between Wall Street and the White House, read article

Climate change may double turbulence on transatlantic flights, read article

– The Winklevoss twins are all over bitcoin, read article

JPMorgan explains why you should avoid investment banks, read article

Have a good one.

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US to be world’s #1 oil producer; Japan back in recession

The International Energy Agency, IEA, has announced that the US will overtake Saudi Arabia in terms of annual oil production as early as 2017. Older reports had seen Saudi Arabia up on top until at least 2035. According to the report, US daily output will amount to 11.1 million barrels, while Saudi Arabia will only achieve 10.6 million barrels. On the same terms, the US will surpass Russia by 2015. By 2035, when the report estimates the US production to fall and the Saudi production to rise again, 90% of Middle Eastern energy exports will go to Asiaread article read report

It is one thing if a natural disaster destroys a country’s growth prospects, it is another if it just happens. Japan’s Q3 GDP fell more than expectedslumping 3.5% instead of the expected 3.4% on an annualized basis. Back in recession, this is the worst performance of Japanese GDP since the 2011 earthquake and mostly attributed to poor export performance and declining consumer spending. The former, of course, is related to the crisis between Japan and ChinaChina’s exports, on the other hand, rose in October, adding to the positive trade balance. This could be Japan’s fifth recession over the past 15 years. read article

In post-election America, where corporate profits have hit lowest levels since 2009, and the politicized fiscal cliff issue is looming [and wasn’t there going to be a food crisis coming as well?], banks have been victorious. After a lot of back and forth, Wall Street’s lobbyists in Washington succeeded in postponing the implementation date of Basel III – indefinitely. The regulation that prescribes higher capital requirements was meant to come into action on January 1, 2013, but now the timeframe was deemed inappropriateJamie Dimon is dancing. To him, Basel III was “un-American” to begin with. In Germany, Basel III will indeed come into effect on New Year’s Day. The German Finance Ministry expects the US to phase Basel III into law over the course of 2013.

Greece beat budget targets for the first ten months of 2012! Now, that’s quite some news. The State Budget deficit totalled €12.3bn, instead of €13.6bn as targeted. Except.. well… this doesn’t include money spent (or lost) by government-owned enterprises. The full report the troika demands prior to the payment of the next bailout tranche, is also still in the making, while the €5bn debt repayment due date comes closer. Officials in Brussels have already announced that we shouldn’t hold our breath for a solution in today’s Eurogroup meetingIn sum:

…the endless Greek “will it be bailed out, won’t it” saga, which today enters yet another irrelevant phase with the latest Eurogroup summit where nothing is expected to be resolved (everyone is still waiting for the Troika report). The final outcome will likely be the much delayed funding of the €31.5bn tranche, but only after Germany pretends to kick and scream loudly and obstinantely, only to comply behind the scenes. After all remember: the Greek “bailout” is really just a bailout of Deutsche Bank.

I guess it is fair to say that some have finally and ultimately become disenchanted with the Greek crisis and will only use it to channel frustration over the rest of the ailing world economy. Fair enough, I’ve been doing that for months.

So long.

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“The ECB is by and large done [trying to help you]”

The moment when it’s not the Greeks who don’t live up to their promises: the troika wants to delay the next debt tranche despite the deal on austerity measures, to wait for a full report on compliance with the bailout terms. At the core of the issue is the €5bn repayment due next week, but the next bailout tranche is also connected to a two-year extension to 2016 for Greek aid. So far, so bad. While the EU seems to be mainly concerned with the restructuring of debt that will never be repaid, the IMF worries whether Greece will ever return to growthread article

Mario Draghi, fed up, announced the ECB was done supporting Greece. And you can’t blame the man who has been waiting for Spain to make one, just one, phone call for the past two months, and who is being chased by German lawmakers scared of inflation. As a last act of kindness, he said the  €12-15bn profits the ECB made on the €55bn of Greek debt it owns should go back to the country itself.

Meanwhile, France is expected to slip into recession by the time the year comes to an end. In SpainIberia, which is owned by IAG, just as British Airways, will cut the airline’s 21,000-people workforce by a quarter in an effort to turn the loss-making business around. That’s just what Spain ordered. read article

The Telegraph broke a story saying that UK tax authorities got a hold of the details of every British HSBC client in Jersey. Mind you, Jersey is a tax-haven, population 98,000 (and most of them are accountants). The list of names was obtained from a whistle-blower, who didn’t get the memo that the EU whistle-blower-incentive is not actually in place yet. It features drug lords, weapon smugglers and fraudstersHSBC, of course, will have to pay between $1.5-2bn for breaching anti-money laundering rules in the US and Mexico. For those that remain sceptical of a whistle-blower from Jersey or the journalistic standards of the Telegraph:

Early viewers of what promises to be a trashy little mini-series with a stale mix of guns, drugs, sun-soaked beaches and tax cops, were left with one stand-out question on Friday: Does HSBC have just 4,388 Brits holding offshore accounts on this Channel island?

Weekend reading

– Interactive infographic for real GDP, unemployment and inflation developments in Europe, read article

– El-Erian’s 4-point plan to save the US economyread article

– The Asian way: economic stability in the 21st century, read article

– Democrats and Wall Street, version 2.0 read article

– From law to oil to Paris to … the new archbishop of Canterburyread article

Have a good one.

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Greece contracts in a good way, Japan grows in a bad way

GDP digest:

The advanced reading of Greek Q2 GDP shows a 6.2% year-on-year contraction – and that’s the good news. The general consensus had been around -7%, so this is not only beating expectations but also the Q1 reading. Go Greece. Hm.

The other GDP announcement came from Japan, where economic growth slowed down to 1.4%. That is 4.1% less than the revised GDP growth of Q1 and around 1% below various forecast. Collectively, Asian indices went tumblingread article

Meanwhile, Spanish 10-year yields hit 6.91% and Mariano Rajoy is presumably busy preparing for that bailout request phone call. Also, the Philadelphia Fed has lowered its prediction of Q3 US GDP from 2.5% to 1.6%.

Otherwise, Francois Hollande is celebrating 100 days in office, though the celebration is somewhat tainted by all the sentiment polls showing that he’s doing pretty mauvaisread article

Google-owned Motorola Mobility is looking to cut 20% of its workforce, which amounts to about 4,000 employees, including 40% of its vice presidents.

Earlier the New York Times reported Google’s plan and said it was looking to shrink operations in Asia and India, by not just exiting unprofitable markets but also stopping asking low-end devices and focusing on a few cellphones instead of dozens. read article

Mitt Romney announced Ayn Rand-fanatic Paul Ryan as his choice of vice president on Sunday morning; Jerry Seib, bureau chief of the Wall Street Journal in DC, looks into his economic beliefsread article

So long.

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Tuesday, #11

You know, in high school I majored in literature and spent some time studying theatre of the absurd… funny how that reminds me of what’s going down all around us these days.

Last night, Greece’s PM Papandreou and the opposition leader Antonis Samaris, who were roommates at Amherst during their undergrad (how awkward is THAT?), came to the conclusion that it might be time to get someone else to take care of business. MarketBeat called this the best case scenario last week, so YAY!
Not a lot of detail has been revealed so far, but there will be a coalition government and a new temporary PM, before new elections around February. Thank god, they’re considering getting an economist into the driver’s seat. read article

Meanwhile in Italy, the next in line to dominate the news, the markets and the future of the eurozone, is going crazy. Bloomberg reported a rumor that Berlusconi is going to step down, after his party started hating on him late last week and the markets went up. Then Berlusconi’s people denied it and market went down again. This might continue for a while…

On other news, a massive asteroid is passing earth in the period between today and Wednesday. No need to worry, the rock with the catchy name asteroid 2005yu55 will probably not hit us (201,000 miles away), but it’s usually only every 25 years that something flies by so close.

Because nobody is left with money, as the economy is shit and some of us (Greece, Greece, Greece, Italy, Greece) are so bad at managing their pocket money [and tax systems], the architecture industry is looking towards Asia now. Fair enough, if only wages weren’t so much lower there that people like Frank Ghery (known for having designed the Bilbao Guggenheim, jewelry and the Ghery tower in the very city I grew up in) are worried about their shrinking commissions. read article

Way cooler however, is this slideshow (image #5! yes, please!)

Finally, I posted this article on facebook last week, but its fantastic and you should all read it in case you haven’t yet. It’s part of Joris Luyendijk’s exploration of the world of finance and discusses women, prejudices and gender inequlality or even equality in the least annoying, most authentic way that I’ve ever seen. read article

So long, have a good week.

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