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ECONOMICS – FINANCE – WORLD NEWS – GREEK DEBT

Cypriot capital controls, EU templates and Japanese QE

Yesterday…
Cyprus‘ President Nicos Anastasiades announced that the country’s banks are going to stay closed until Thursday (again: which Thursday…) and that capital controls will be put in place until it all blows over. read article

The new head of the Eurogroup, Dutch Finance Minister Jeroen Dijsselbloem, threw everyone for a loop by saying the private sector contribution in Cyprus (i.e. the haircuts) would lead future EU bailouts by example. He retracted the comment later on. Thanks for that.

The MSCI Emerging Markets Index has had the worst first quarter since 2008, lagging behind industrial economies most since 1998. Ongoing QE programs (see below for Japan) are cited as a reason in favor of developed markets. read article

Presumably not for the same reason, the BRICS nations are planning their own version of the World Bank. read article

Meanwhile, China is finding itself in a public health crisis, with rotten ducks floating down rivers in the southwestern Sichuan province and 11,000 dead pigs being fished out of Shanghai’s water supply system. read article

Otherwise, a 17 year-old British kid has sold its bedroom-developed app Summly to Yahoo for $30m. read article

This morning…
there’s not a whole lot going on except digesting overnight news, because most people, including myself, got nothing but chocolate eggs on their minds.

New Bank of Japan Governor Haruhiko Kuroda is already warming up the printers, saying the BoJ will consider buying five-year+ bonds. The next policy meeting is next week, April 3-4.

So long.

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Italian elections: the morning after the morning after

As expected, center-left Pier Luigi Bersani is looking to form a minority government to lead Italy out of its post-election stalemate misery. A minority government with whom, you wonder? Well, Bersani asked for everyone’s support to curb austerity and promote job creation. Meanwhile, Mario Monti, who definitely lost the election, is considering leaving a €3.9bn bailout of Banca Monte dei Paschi di Siena be until the new administration is in place. Someone’s had enough. read article

Unfortunately for Italy, the country will try to sell €6.5bn worth of debt today.

Over in Brusselsnervous voices get louder with regard to the ECB, formerly known to do whatever it takes to save the euro for the Europeans through its OMT program. With Italy so obviously against austerity measures, future budget cuts that could be conditional for help from the ECB seem out of the questionread article

When addressing the Senate Banking Committee yesterday, Ben Bernanke advocated the Fed’s current course on monetary policy, saying the risks were clearly outweighed and investors should be encouraged by fair values and high corporate earnings. read article

J.P. Morgan is planning to fire up to 17,000 people, 6.5% of its staff, over the next two years in an effort to reduce costs by $1bn.annually. Most cuts will take place in 2014 in the bank’s mortgage groupread article

In other news, Visa and Samsung have struck a deal to advance mobile payments through Visa’s payWave software, and Chuck Hagel‘s nomination to US Secretary of Defense has been passed by the Senate. read article

So long.

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Across the board disappointing results: Japan’s deficit, Apple’s earnings, S Korea’s GDP

Over the past weeks, Japan has done a lot to try and convince the rest of the world of its [return to] well-being, but no distraction really did the job. And now this: Japan’s 2012 trade deficit hit JPY6.93tn ($78.27bn), the highest ever reported. Reasons are poor performance of its largest companies, rising fuel costs, the strength of its currency and the whole argument with China over the Senkaku Islands in the East China Sea. read article

South Korea’s 2012 GDP underperformed, recording the weakest growth figures since 2009. The country’s very own central bank had forecast the economy to grow 3% over the whole year – the actual number game in at 2%. To blame is the eurozone crisis, among other things, weakening demand for export products, which account for 50% of the South Korean economy. read article

The US House of Representatives approved a short-term extension on America’s borrowing spree, answering the question of whether the US will be able to pay its bills in the near future. This has bought some time to come up with a budget proposal to solve all problems – and without raising taxes, if you believe Paul Ryan, Chairman of the House Budget Committee. read article

The timing of the extension means the debt limit will be revisited after two other fiscal deadlines. Many members of both parties have said they want to revise of replace across-the-board spending cuts set for March 1, and they will need to renew funding by March 27 if they want to prevent a partial government shutdown. They are far apart on how to achieve both goals.

According to Reuters, the US Treasury will need the remaining $16.4tn the country is legally allowed to borrow until early March.

In Davos, Angela Merkel shows patience, saying that she was going to listen to David Cameron‘s complaints to work out the best possible solutions under which the UK would stay in the European Union. Wise words, after all, the UK’s vote would be helpful on her European budget proposal. Barack Obama also urged Britain to stop messing around and stay in the union. In the background economists polled by Reuters say that there is a 60% chance the UK will lose its AAA rating, which it has held since 1978, in the coming 12 months.

In other news, Apple announced earnings last night, showing the weakest increase in sales in 3.5 years, and the most disappointing profit growth since 2003. Since the shares of the world’s largest public company hit $700 in September, the price has fallen by 27%. Other technology companies like IBM, Google and Netflix did well and beat expectations in Q4 of the last year. Microsoft will report earnings tonight. read article

So long.

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