Key bank warns against 'uneasy calm' in global markets

ZURICH - The Bank for International Settlements (BIS) issued a warning Sunday over an "uneasy calm" within financial markets, noting that the global economy remains vulnerable to serious disruptions.

The BIS - known as the central bank of central banks - made the call in its quarterly report which is closely watched by investors.

In August and September, markets were shaken after serious concerns emerged about the health of leading emerging economies, especially China.

Interventions from monetary authorities succeeded in stabilizing markets to a degree, but the head of the monetary and economic division at the BIS, Claudio Borio, cautioned against being lulled into a false sense of security.

"The present calm is fragile," Borio said.

He pointed specifically to slowing capital flows and persistent signs of trouble in Brazil and Russia, even if China appears to have stabilized in part.

"In this context, it's hard to see the current calm as anything other than uneasy," Borio said.

Emphasizing the uncertainty that continues to affect financial markets, Borio noted that investors still remain extremely sensitive to even the slightest surprise in actions from central bankers.

A case in point is the reaction this week to European Central Bank chief Mario Draghi's latest stimulus package, which sparked a broad sell-off from disappointed investors who said the measures did not go far enough.

Senior ECB officials blamed the disappointment on investors who they say misjudged the ECB's expected actions.

source: interaksyon.com

Greece does about-face, pledges big privatization push

ATHENS — Work was supposed to begin next year on a 7 billion euros ($7.6 billion) waterfront urban renewal project almost twice the size of New York's Central Park that could have poured nearly a billion euros into Greece's depleted coffers. The plans stalled late last year after the far-left Syriza party took power and promised to halt attempts at putting the private sector in control of state assets, both on ideological grounds and because leaders believe rampant corruption must be addressed before any sell-off.

Now, in an attempt to get a third European bailout and prevent the Greek economy from collapsing, the ruling party has done an about-face. It has pledged to fast-track the waterfront project, plus sell government assets and allow for private development of state-owned property, all to generate cash that will help reduce Greece's 320-billion-euro national debt and pay back money lent by European nations to prop up ailing banks.

Experts say the goal set by Greece's European counterparts for the country to raise 50 billion euros in privatizations and private use of state property is probably impossible — but that Greece must make a better effort than it has in the past.

"There can be absolutely no backpedaling or unwinding with the privatization effort," said Mujtaba Rahman, European director for the Eurasia Group political and business risk consulting firm. "This is about testing the government's appetite to liberalize the economy and move forward with pro-market reforms."

Big money assets that Greece could sell include state-owned stakes in Athens' new airport, energy company Hellenic Petroleum and electrical utility Public Power Corp., plus offshore oil or natural gas drilling parcels. Greece also has stock in banks valued at 7.5 billion euros, but the true value of the stake is unknown because the Athens stock market stopped trading at the end of June as the country descended into financial chaos.

The Hellenic Republic Asset Development Fund, charged with matching state assets in deals with the private sector, also has parcels of land on beautiful islands available for long-term leases and a castle on the island of Corfu, plus buildings throughout Athens and across the country.


It was formed in 2011 following demands by Greece's creditors to embark on a privatization wave, but has collected only 3.5 billion euros so far. Efforts have been complicated by constantly changing laws for asset sales, court challenges, local opposition, financial upheaval that makes it difficult to value assets, and criticism that prices have dropped so much that assets aren't worth selling.

Proponents of privatization say it can help boost investment and the economy flourish by unleashing market forces. It was particularly popular in countries like the United Kingdom in the 1980s, when Margaret Thatcher sold state-owned assets including water and gas. Though privatizations have taken place elsewhere in Europe, they've been far less prevalent.

But over the past few years during Europe's debt crises, privatizing assets has been a key demand placed on countries being bailed out. Greece notably failed to meet initial targets.

The privatizations have met with varying degrees of resistance, with some arguing that stressed governments such as Greece's are selling assets at below-market prices. Opponents also say privatization reduces job security and transfers wealth to a rich elite.

Greece's development fund doesn't publicly disclose the estimated value of assets it has to offer, but the deal it negotiated for the waterfront renewal project would give Greece 950 million euros in return for a 99-year lease on the property.

A Greek company with backing from Chinese and Arab investors would then build a huge park, a shopping center, a marina, 1,000 hotel rooms and a skyscraper apartment building on what's billed as Europe's largest undeveloped waterfront tract. Multimillion-euro yachts dock at a marina within the parcel that was built for the 2004 Olympics, but a crumbling, two-block-long building with a leaky roof bakes in the sun. It was built for athletes but never used after the games.

The project has been held up by a delay in approval from Parliament, which angers Jiorgos Kourtelis, a boat captain who sees money lost every time he drives by the unused buildings where he'd like to open a coffee shop for marina workers and boat crews.

"Right now it's a waste," said Kourtelis, 45. "They've been trying to solve this and they haven't done very much."

Conflicts between local and state authorities frequently block privatization projects. The Hellenic fund has been unable to sell an 800-slip facility nearby, in part because local officials and a businessman raised objections.

The state-owned marina hadn't paid trash collection fees to the local government for decades, Kourtelis said, so the local government was allowed to build a public swimming pool on the marina's grounds. When the fund tried to sell the marina, local officials didn't want to give up the pool and a businessman with several nightclubs on the premises didn't want to leave either.

Even if Greece could resolve the conflicts that prevent assets from being privatized, the total amount revenue would probably be in the 15-20 billion euros range, said Manos Giakoumis, chief analyst at the Macropolis economic and political analysis website in Athens.

"You have to take into account that market conditions at the moment are very unfavorable," he said. "Even if you say the value of an asset was worth 300 million euros this does not mean this is the actual value of the asset. There are a lot of real estate properties that could be privatized but no one knows the amount that can be raised from this."

Giakoumis believes Greece's need for European financing is now so dire that it will be forced to step up privatizations and deals to allow the private sector use government land and assets.

"If you asked me the same question five months ago I said it would be difficult," he said. "Now I think there is no way for the current government to continue opposing these privatizations. They need to accelerate the final process of approval."

source: philstar.com

Greece submits fresh plan on eve of EU emergency summit

ATHENS, Greece - Greek Prime Minister Alexis Tsipras presented new proposals to European leaders Sunday aimed at ending his country's debt crisis, on the eve of a summit that could determine whether Greece crashes out of the eurozone.

In a telephone call with German Chancellor Angela Merkel, French President Francois Hollande and European Commission President Jean-Claude Juncker, Tsipras detailed a "mutually beneficial deal", the Greek premier's office said in a statement.

Italian Prime Minister Matteo Renzi urged the two sides to seize a "window of opportunity", saying all conditions were in place for them to reach a "win-win accord".

Athens said its new proposals were aimed at reaching a "definitive solution" to the five-month standoff between Athens and its creditors -- the European Commission, International Monetary Fund and European Central Bank -- as fears deepened over a potential "Grexit" from the eurozone.

The heads of the 19 eurozone countries will hold an emergency summit on the crisis in Brussels on Monday under pressure to prevent Greece from defaulting on its debt with a June 30 payment deadline fast approaching.

Sanity will prevail

The head of Greece's biggest bank said she thought "sanity will prevail" on Monday.

"To enter into such uncharted waters and take up all the risk both for the eurozone and for Greece for two or three billion (euro) difference, I think it's insane," National Bank of Greece chief Louka Katseli told BBC radio.

Greece's anti-austerity government met Sunday to refine its proposals, while a European source said Tsipras and Juncker "held talks Saturday and will again speak Sunday", adding that there were many exchanges and "informal work under way to find a solution".

Failing a deal, Greece is likely to default on an IMF debt payment of around 1.5 billion euros ($1.7 billion) due on June 30, setting up a potentially chaotic exit from the eurozone.

Last Wednesday the Greek central bank put the risk in stark terms saying: "Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and -– most likely -– from the European Union."

The IMF was called in to help rescue Greece at the end of 2009 when the debt-plagued country could no longer borrow on international markets.

The EU's involvement in the huge bailout, which was to provide 240 billion euros ($270 billion) in loans in exchange for drastic austerity measures and reforms, runs out at the end of this month, but IMF support was supposed to continue to March 2016.

Talks between Greece's radical-left government and its lenders have been deadlocked for five months over the payment of the final 7.2 billion euro tranche of the bailout, with talk also turning to an extension of the European help.

For the Greek government any extension of the bailout should be about kickstarting the country's devastated economy and not further austerity.

They also want an easing of the country's crippling debt burden, which officially stood at 312.7 billion euros, or 174.7 percent of gross domestic product, in March.

The international lenders have rejected a series of proposals from Athens, insisting on their own mixture of cuts and reforms.

Minister of state Nikos Pappas, who is close to Tsipras, said the counter-proposals would be "unacceptable to whichever Greek political party" was in power.

Bridging the gap

Alekos Flambouraris, another Tsipras minister, said Saturday that Athens would propose reworked measures that "bridge the gap", while also predicting that Greece's creditors would not be satisfied with the gestures, Greek media reported.

"You'll see they won't accept loosening budget (restrictions), or our proposal on the debt," he said of two main sticking points in the talks.

But the country's Finance Minister Yanis Varoufakis, whose flamboyant style has irked many of his European counterparts, turned the tables by putting the onus on the leader of paymaster Germany to do a deal.

"The German chancellor has a clear decision to make on Monday," he wrote in an op-ed for the Frankfurter Allgemeine Zeitung.

"On our side, we will come with determination to Brussels to agree to further compromises as long as we are not asked to do what the previous (Greek) governments have done: accept new debt under conditions that offer little hope for Greece to repay its debts," he wrote, without specifying the compromises.

Demonstrators around Europe on Saturday took to the streets to protest against spending cuts and austerity measures taken by their governments, and expressing solidarity with Greece.

source: interaksyon.com

Wall St falls as Greek deadline looms; indexes up for week

NEW YORK - U.S. stocks fell on Friday ahead of a summit next week that could decide whether Greece will need to print its own currency and ditch the euro.

Euro zone leaders are scheduled to meet on Monday night in a last-ditch effort to reach a deal with Athens. As bank withdrawals across Greece ballooned to about 4.2 billion euros this week, the European Central Bank boosted its emergency funding for Greek banks.

Friday's decline in stocks "has to do with the meeting on Monday," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco. "It's sort of the last lifeline they are going to throw out to Greece and people are selling ahead of that because of the uncertainty."

Lip said, however, that any sharp selling because of developments on Monday could be yet another buying opportunity for investors in U.S. stocks.

"If Greece leaves the union, that removes an uncertainty and is actually good for the markets over the long run; if there is a resolution, that is also good," said Lip. "In some way, whatever happens on Monday is a win-win and (a market selloff) is a buyable dip."

The Dow Jones industrial average fell 101.56 points, or 0.56 percent, to 18,014.28, the S&P 500 lost 11.48 points, or 0.54 percent, to 2,109.76 and the Nasdaq Composite dropped 15.95 points, or 0.31 percent, to 5,117.00.

For the week, the Dow gained 0.6 percent, the S&P added 0.7 percent and the Nasdaq, which had closed at a record high on Thursday, rose 1.3 percent.

Utilities led the S&P 500 decline in percentage terms, down 1 percent as a group after gaining 2.7 percent over the previous three sessions.

A market debut fizzled, with shares of 8point3 Energy Partners down 2.4 percent at $20.49. It offered 20 million shares that priced at $21, the top-end of the filed range.

ConAgra Foods' shares jumped 10.9 percent to $43.37 after activist hedge fund Jana Partners took a stake in the company. ConAgra's peer Pinnacle Foods rallied 8.6 percent to $46.81 after earlier hitting a record high of $47.21.

Macerich slumped 6.8 percent to $76.87. Sources told Reuters Simon Property Group was selling its ownership stake in the No. 3 U.S. mall operator. Simon fell 1.3 percent to $179.48.

KB Home rose 9.4 percent to $16.37 after the homebuilder's quarterly results beat estimates.

Declining issues outnumbered advancing ones on the NYSE by 1,788 to 1,257, for a 1.42-to-1 ratio on the downside; on the Nasdaq, 1,557 issues fell and 1,254 advanced for a 1.24-to-1 ratio favoring decliners. The S&P 500 posted 29 new 52-week highs and 2 new lows; the Nasdaq recorded 161 new highs and 40 new lows.

About 7.9 billion shares changed hands on U.S. exchanges, above the 6.03 billion daily average so far this month, according to BATS Global Markets.

source: interaksyon.com

Euro, stocks fall as anti-austerity party wins Greek election

TOKYO - The euro skidded to near an 11-year low and U.S. stock futures fell on Monday as Greece's Syriza party promised to roll back austerity measures after sweeping to victory in a snap election, putting Athens on a collision course with international lenders.

The euro fell to as low as $1.1135 on the vote outcome, not far off an 11-year low of $1.1115 touched on Friday when the common currency took a battering after the European Central Bank unveiled a bond-buying stimulus program last week.

U.S. stock futures fell 0.6 percent while the Nikkei futures also dropped about 0.5 percent from the local close on Friday on heightened concerns the Greek election results could lead to renewed instability in Europe.

Syriza leader Alexis Tsipras was set to become prime minister of the first euro zone government openly opposed to bailout conditions imposed by European Union and International Monetary Fund during the economic crisis.

"The euro will be sold on any rally. But such an outcome was already expected to a certain extent and I expect the pace of its decline is likely to slow," said Osao Iizuka, the head of FX trading at Sumitomo Mitsui Trust Bank.

Indeed, the broad consensus in the markets is that any renewed tensions over Greece is unlikely to hurt broader investor sentiment much beyond an initial shock.

Unlike at the height of the debt crisis in 2011-12, European banks now have limited exposure to Greece and European policymakers have frameworks to deal with indebted countries, analysts say.

"At the moment, the market believes that if there is any (debt) restructuring it would only involve the official sector and for now, the possibility of Greece leaving the euro zone even with the incoming government is small," Sebastien Galy, senior foreign exchange analyst at Societe Generale in New York also said.

The ECB's plan to pump more than a trillion euro to the banking system in the coming year and a half is underpinning risk sentiment, which boosted European share prices to seven-year highs on Friday.

In addition, investors also expect the U.S. Federal Reserve to steer clear of stating any firm date for it plans to raise rates after its two-day policy meeting from Tuesday.

Elsewhere, oil prices also started the week weaker, with U.S. crude futures falling 1.6 percent to $44.87 per barrel, near 5 1-2/year low of $44.20 hit earlier this month.

The death of Saudi Arabia's King Abdullah added to uncertainty over the plans of the world's biggest crude exporter.

source: interaksyon.com

Wall Street ends flat as hope for ECB move increases

NEW YORK - U.S. stocks closed little changed on Tuesday after the International Monetary Fund reduced its growth forecasts for 2015 and 2016, increasing speculation central banks would take more aggressive policy moves to spark economic improvement.

The lower forecasts implied less demand for fuel through 2016, contributing to another fall in crude oil, although some bullish results from major energy companies kept the sector afloat. The S&P energy index eked out a gain of 0.09 percent.

The IMF cut its forecasts for both years by 0.3 percentage points and advised advanced economies to maintain accommodative monetary policies to avoid increases in real interest rates as cheaper oil increases deflation risk.

The European Central Bank is expected to announce a bond buying program on Thursday to boost the region's flagging economy.

"Any sense at all that the ECB disappoints, you will see the markets correct rather harshly," said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.

"You can speculate all you want and investors can take the market higher all they want, but until the ECB comes out and says it, you are not really going to know."

The Dow Jones industrial average rose 3.66 points, or 0.02 percent, to 17,515.23, the S&P 500 gained 3.12 points, or 0.15 percent, to 2,022.54 and the Nasdaq Composite added 20.46 points, or 0.44 percent, to 4,654.85.

U.S. crude settled down 4.7 percent to $46.39 per barrel, after hitting an intraday low of $45.89, while Brent settled down 1.8 percent at $47.99.

Halliburton Co and Baker Hughes Inc warned that a fall in drilling activity would hurt 2015 results, though the companies also reported better-than-expected fourth-quarter profits. Halliburton rose 1.8 percent to $39.83 while Baker gained 1.2 percent to $57.26.

Johnson & Johnson fell 2.6 percent to $101.29 as the biggest drag on both the Dow and S&P 500 after adjusted earnings beat expectations but revenue missed forecasts.

Morgan Stanley reported a drop of 81 percent in revenue from trading fixed-income securities, currencies and commodities, though earnings rose on a sharp drop in legal costs. Shares dipped 0.4 percent to $34.75.

FXCM Inc plummeted 87.3 percent to $1.60 on volume of over 91 million shares, its most active day ever. The retail foreign exchange laid out details of a rescue loan after $200 million of losses on last week's shock removal of the cap on the Swiss franc.

After the closing bell, Netflix shares surged 12.1 percent to $391 after posting a quarterly revenue increase of 26.3 percent, while IBM lost 1.6 percent to $154.51 after its results.

NYSE declining issues outnumbered advancers 1,894 to 1,207, for a 1.57-to-1 ratio; on the Nasdaq, 1,639 issues fell and 1,128 advanced, for a 1.45-to-1 ratio favoring decliners.

The S&P 500 posted 47 new 52-week highs and 17 new lows; the Nasdaq Composite recorded 70 new highs and 109 lows.

Volume was moderate, with about 7.2 billion shares traded on U.S. exchanges, roughly in line with the 7.29 billion average so far this month, according to BATS Global Markets.

source: interaksyon.com

China rate cut, European stimulus hints lift markets

NEW YORK - World stock markets and oil prices rallied on Friday, fueled by hopes for global growth after China rolled out a surprise interest rate cut and the European Central Bank indicated it would step up asset purchases to boost the euro zone economy.

The jump in oil prices took beaten-down Brent back above $80 a barrel. U.S. interest rates eased as the dollar gained, and the euro declined.

Wall Street's Dow Jones industrial average and the S&P 500 ended at new record highs, with each rising more than 1 percent on the week in the fifth straight week of gains for U.S. equities.

"This is a one-two punch for global growth," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

The Dow Jones rose 91.06 points, or 0.5 percent, to close at 17,810.06 on Friday. The S&P 500 gained 0.52 percent to 2,063.50 and the Nasdaq Composite added 0.24 percent to 4,712.97. The Nasdaq rose 0.5 percent for the week.

European shares, oil and other growth-sensitive commodities all leapt on China's move to cut rates to 5.6 percent, following recent data that showed its huge economy was heading for its worst year in almost a quarter of a century.

China's rate reductions were its first in more than two years. They came as ECB head Mario Draghi spoke of his determination to use more aggressive measures, such as large scale asset purchases, to ensure the euro zone does not slump into a new crisis.

Both the euro zone and China have lagged the momentum of the United States, stimulus-driven Japan and faster-growing Britain over the last month, but a ramping up of the ECB's rhetoric and Beijing's actions will stoke hopes of a turnaround.

Germany's DAX and France's CAC rose nearly 3 percent. The FTSE Eurofirst 300 added 2.1 percent.

The MSCI world equity index, which tracks shares in 45 nations, was up 0.76 percent.

The dollar index was up 0.82 percent, as the euro gave up more than 1 percent and was last at $1.2385.

The yen was up against the dollar. Japanese Finance Minister Taro Aso said on Friday the yen's fall over the past week was "too rapid." It was one of the strongest warnings against a weak yen since the aggressive stimulus efforts began two years ago, and saw the currency leap off a 7-year low to 117.72.

Benchmark 10-year U.S. Treasury notes were up 6/32 in price to yield 2.31 percent from 2.34 percent late Thursday.

The rate cut by China added to a positive mood among oil traders, many of whom expect the Organization of the Petroleum Exporting Countries to trim production at what looks to be a landmark meeting in Vienna on Nov. 27. Brent traded above $80 a barrel and was last up $1 to $80.35.

Copper and gold also got a lift, with the red metal up 0.50 percent. Spot gold climbed back over $1,200 and was last traded at $1,200.80 an ounce, ahead nearly $7, as traders cheered the prospect of more global stimuli.

source: interaksyon.com

World equity indexes up on US data, gold slumps

NEW YORK - World equity markets rallied on Tuesday, with the S&P 500 ending at a new record following strong US economic data, while the euro softened against the dollar on expectations of more rate cuts from the European Central Bank.

Stronger-than-expected figures pressured safe-haven assets, including gold, which touched a 3-1/2 month low. Platinum also fell after South Africa's mining minister pledged to mediate in a long-running strike.

Wall Street was led by gains in financials, utilities and tech stocks. Data showed orders for long-lasting US manufactured goods unexpectedly rose in April while US single-family home prices also rose in March, beating expectations.

"People move out of one sector and into a different equity sector - there's always a sector picking up the slack, so that’s driving you higher," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas. "People don't want to be out of equities."

The Dow Jones industrial average rose 69.23 points, or 0.42 percent, to 16,675.5, the S&P 500 gained 11.38 points, or 0.6 percent, to 1,911.91 and the Nasdaq Composite added 51.26 points, or 1.22 percent, to 4,237.07.

ECB chief Mario Draghi on Monday bolstered views that the bank will cut euro zone interest rates again next week, boosting appetite for risky assets. Other policymakers, including Austrian ECB board member Ewald Nowotny, drove home the message on Tuesday.

MSCI's all-world share index rose 0.2 percent to within two percentage points of its 2007 record.

Investors kept a wary eye on Ukraine, which launched air strikes and a paratroop assault against pro-Russian rebels who seized an airport on Monday. The escalation was tempered by a decisive win for billionaire Petro Poroshenko in Ukraine's weekend presidential election, which many hope will help stabilise the situation.

U.S. Treasury prices inched lower. The 10-year note fell 3/32 in price to yield 2.522 percent. The 30-year bond rose 19/32 to drop its yield to 3.365 percent, but light volume and the presence of month-end buying reduced the significance of the move.

The euro lost ground against the greenback on the better-than-expected U.S. data. The euro fell 0.1 percent to $1.3635, nearly touching Monday's three-month low of $1.3614. The dollar index slipped 0.05 percent.

Gold slumps

Spot gold fell 1.9 percent at $1,264.80 an ounce, its worst daily loss in two months. U.S. gold futures dropped 2 percent to $1,265.40 an ounce.

Platinum fell 1 percent to $1,456.20 after South Africa's mining minister pledged to mediate in a strike now in its fifth month. The metal reached its highest since September at $1,493.90 last week.

Global oil prices fell. Brent was down 26 cents at $111.06 a barrel and U.S. light crude oil was down 22 cents at $104.13.

source: interaksyon.com

Asian shares hit four-month high on China data, Yellen

TOKYO - Asian shares hit four-month high on Tuesday after China's official PMI survey showed manufacturing managed to continue expanding in March, and dovish comments from Federal Reserve Chair Janet Yellen.

MSCI's broadest index of Asia-Pacific shares outside Japan rose by up to 0.3 percent to reach its highest level since early December.

China's official Purchasing Managers' Index increased to 50.3 in March from February's 50.2, in line with economists' forecasts. Above 50 indicates expansion, below 50 signifies contraction.

While the PMI figure alone is unlikely to dispel concerns of a slowdown in China, investor sentiment has improved on China in recent weeks as they expect Beijing will adopt a stimulus plan to achieve its growth target.

Shares were also supported after Fed chair Yellen reinforced the need for "extraordinary" commitment to support the U.S. economy, seemingly tempering expectations of a sooner-than-expected start to the rate-hike cycle.

Yellen gave a strong defense of the Fed's easy-money policies in her first public speech since becoming Fed chair two months ago, saying there remains "considerable" slack in the economy and job market.

"It seems like she expressed her own dovish ideas. There's nothing really new and the outlook of the Fed's policy has not changed that much but the markets like her remarks," Makoto Noji, senior strategist at SMBC Nikko Securities.

Emerging markets, which suffered a sharp selloff earlier this year on concerns about a turn in Fed policy, slowdown in China and political instability in some countries, appeared to have regained some stability.

MSCI emerging market index hit a three-month high on Monday, having outperformed S&P 500 since late March. Among them, Brazilian shares hit four-month high.

Rising risk appetite undermined low-return assets that had attracted safety bids last month at the height of the Ukrainian crisis.

Gold hit a seven-week low of $1,282.04 per ounce on Monday, despite Yellen's dovish comments while the yen also slipped to a three-week low against the dollar of 103.44 yen and a nine-month low against the risk-sensitive Australian dollar at 95.75.

The euro bounced back against the U.S. dollar to fetch $1.3773 even as softer-than-forecast inflation numbers put more pressure on the European Central Bank to act against the threat of deflation.

Euro zone inflation dropped to 0.5 percent in March, its lowest level since November 2009, having been in the ECB's "danger zone" of below 1 percent for six consecutive months.

However, not many market players expect the ECB to act at its policy meeting on Thursday, partly because of comments from ECB council member and Bundesbank President Jens Weidmann on Saturday.

Weidmann said that the euro zone is not in a deflationary cycle and that the ECB should not over-react to a slowdown in inflation caused largely by cyclical factors which should prove temporary.

Crude futures were off three-week highs following news Russia was withdrawing some troops on the Ukrainian border. U.S. crude futures stood at $101.41, off Friday's high of $102.24.

source: interaksyon.com

From robbers to vendors, Swedes brace for cashless future

STOCKHOLM — Peter, 55 years old and homeless, is standing at a Stockholm supermarket, carrying the two objects that help him make a living: a stack of magazines and a debit card reader.

The magazine, Situation Stockholm, is sold by the poor to bring in some income, but for Peter and many other vendors the problem in recent years has been that cash is falling out of use, and passers-by often don’t have 50 kronor (5.70 euros, $7.80) at the ready to buy a copy.

The card reader, provided by the magazine’s publishers, has come to the rescue, and Peter, who asked not to be identified by his last name, couldn’t be happier.

“Customers can follow every step so that they don’t feel cheated,” he said, showing the functions of the device. “I’m impressed by this thing. It’s cool.”

Mattias Stroemberg, a potential customer taking a look at Peter’s magazines, welcomed the opportunity to pay with cards: “I never carry cash around. No one does anymore.”

In Sweden, only 27 percent of retail sales are made with cash, according to a recent paper by the European Central Bank. If online sales were included, the figure would be even smaller.

All the Nordic countries are rapidly on the way towards a cashless society, deepening an existing divide between north and south in Europe. In Greece and Romania, for example, 95 percent of transactions are still in cash.

Not everyone in Sweden cheers the transition. In a celebrated case, a would-be robber entered a Stockholm bank, but had to leave empty-handed, discovering that he had picked a cashless bank.

Criminals are not the only ones affected. From Copenhagen to Reykjavik, the cashless society has profoundly changed the ways people live.

Everything from hot dogs to taxes is paid for online, with bank cards, or by SMS. Many buses refuse cash — confounding foreign tourists — and the newly opened ABBA Museum in the Swedish capital also only accepts credit and debit cards.

“Neither retailers nor banks have any obligation to accept cash,” according to the nation’s central bank, the Riksbank.

‘A society where cash is reduced to a minimum’

“We’ll probably not see a totally cashless society in the near future, but a society where cash is reduced to a minimum and used in very few situations, is probably quite realistic,” said Niklas Arvidsson, a researcher at the Royal Institute of Technology in Stockholm, who published a study on the topic earlier this year.

The big winners are the banks and card companies, but in the end, all of society could benefit as cash is more expensive to handle than electronic payments, he said.

But the elderly and rural citizens, as well as the socially marginalised with high credit risk such as the long-term unemployed, would have problems if cash disappeared completely, he argued.

“If our society goes in this direction, that you basically can’t do anything at all without access to debit or credit cards … it might even create further marginalisation and exclusion,” said Leif Oeberg, development director at the Swedish Salvation Army, which offers support to people in need.

“The absolute and almost immediate effect … is that you can’t travel by bus. What we see at the other end of the spectrum is that the most marginalised get around on foot … or travel (by metro) without a ticket, but you can’t do that on the bus. That is the stark reality for people today,” he added.

There exists an alternative — pre-paid debit cards that people can later recharge at convenience stores, but with a minimum of 200 kronor (22 euros, $30) even this can pose difficulties.

Arvidsson also warned that consumers’ rights might be at risk as the electronic trail every card user leaves behind could be misused for marketing purposes.

“There is a concern that today’s laws are insufficient,” said Arvidsson. “The authorities must ensure that the information is used correctly.”

Other losers in the cashless game are smaller shops struggling with high card fees, especially after Sweden implemented a new law in 2010 that banned imposing surcharges on customers for paying with cards.

That means the retailers themselves must deal with the fees to the card-issuing companies — up to 2.50 kronor per transaction, plus an additional percentage fee.

Since 70 percent of all retail transactions in Sweden are by card, both debit and credit, it adds up to a sizable sum.

Retailers include the fee in the prices of their products, but for smaller shops it’s a problem because they don’t have the economies of scale and thus have a hard time keeping prices low.

For reasons such as these, Swedish money is not about to go completely virtual.

The Riksbank, which having been founded in 1668 is one of the world’s oldest central banks, still plans to launch new banknotes and coins in 2015.

“We believe cash will continue to exist in the near future. We can’t foresee it disappearing completely,” said Christina Wejshammar, head of the banknotes and coins division at the Riksbank. “It all depends on how we act as consumers.”

source: interaksyon.com

Wall Street ends down as Caterpillar falls, Boeing rallies

NEW YORK - U.S. stocks fell on Wednesday as shares of heavy-equipment maker Caterpillar and semiconductor companies tumbled after they reported earnings, ending the S&P 500's four-session streak of record high finishes.



Results from Caterpillar Inc and Boeing Co, two Dow components, illustrated the quarter's mixed picture of corporate results and outlooks, which have some investors worried.



Caterpillar was one of the biggest decliners on the S&P, slumping 6.2 percent to $83.62 after the manufacturer cut its full-year outlook for a third time and its profit missed expectations. That sent shares tumbling by the most in a day since September 2011.



"There's not a lot of room for error as earnings are growing at such a slow pace, particularly for a globally focused company like Caterpillar, which has been a proxy for global GDP in global markets," said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank. "It's no secret the rest of the world has suffered, so therefore a company like Caterpillar is going to suffer."



On the upside, Boeing surged 5.3 percent to $129.02 after airplane maker reported a rise in adjusted profit and raising its full-year forecast.



After the market closed, both AT&T and TripAdvisor reported revenue that was slightly below Wall Street's estimates. AT&T's revenue grew from the previous quarter to $32.16 billion compared with Wall Street estimates for $32.19 billion, according to Thomson Reuters I/B/E/S data.



TripAdvisor's revenue rose 20 percent to $255.1 million in the third quarter, below analysts' expectations of $255.9 million. TripAdvisor shares in extended-hours trading were up 5 percent to $79.25 after closing down 0.3 percent at $75.21 in the regular session. AT&T shares were flat.



About one-third of S&P 500 companies have reported thus far, with 66.3 percent topping profit expectations, a rate that is slightly higher than the historical average. Roughly 54 percent have beaten on revenue, below the 61 percent long-term average. Investors worry that much of the growth in earnings has not been generated by revenue.



"Finally the markets are focused on earnings after having been focused on many other things," Davidson, who called third quarter results released so far "tepid."



The semiconductor sector .SOX dropped 3.4 percent a day after Broadcom, Altera and RF Micro Devices  joined Intel and Texas Instruments in lowering their forecasts.



Broadcom shares fell 2.9 percent to $26.36, Altera lost 13.5 percent to $32.30 and RF Micro lost 8.6 percent to $5.63.



The Dow Jones industrial average was down 54.40 points, or 0.35 percent, at 15,413.26. The Standard & Poor's 500 Index was down 8.31 points, or 0.47 percent, at 1,746.36. The Nasdaq Composite Index was down 22.49 points, or 0.57 percent, at 3,907.07.



The S&P 500 closed at an all-time high on Tuesday, its fourth-straight record finish. The index is up 22 percent for the year up to Tuesday, not far from the 23.5 percent advance in 2009.



On Wednesday, 53 percent of total shares traded were declining.



Global equity markets weakened as China's primary short-term money rates rose on concerns the People's Bank of China may tighten its cash supply to counter inflation risks, which could hurt growth in the world's second-largest economy.



Also weighing on sentiment, the European Central Bank said it would put major euro zone banks through rigorous tests next year to build confidence in the sector. Some analysts said that if the review reveals unexpected problems, investor confidence could be undermined.



Netflix shares were up 2.4 percent to $330.24 following a large selloff on Tuesday when billionaire investor Carl Icahn cut his stake in the company.

source: interaksyon.com

Eurozone sinks further into recession

BRUSSELS  - The 17-nation eurozone sank further into recession in the last three months of 2012 as the debt crisis continued to exact a heavy price, official data showed Wednesday.

The eurozone economy shrank 0.6 percent in the fourth quarter of 2012 compared with the third quarter when it contracted 0.1 percent, the Eurostat data agency said, confirming initial estimates given in February.

For the full 27-member European Union, the economy was 0.5 percent smaller in the fourth quarter after a marginal gain of 0.1 percent in the third, Eurostat said.

A recession is counted as two consecutive quarterly economic contractions.

Compared with fourth quarter 2011, the eurozone economy was down 0.9 percent and the EU 27 off 0.6 percent.

Among the major economies, European powerhouse Germany shrank 0.6 percent in the fourth quarter after a gain of 0.2 percent in the third and France slipped 0.3 percent after growth of 0.1 percent.

Non-euro Britain lost 0.3 percent after sharp growth of 1.0 percent in the third quarter, boosted by the London Olympics.

Among the fourth quarter best performers were Estonia, which grew 0.9 percent and Lithuania, up 0.7 percent, while bailed-out Portugal was the weakest, with its economy shrinking 1.8 percent.

Eurostat said that for 2012 as a whole, the eurozone economy contracted 0.6 percent and the EU 0.3 percent.

Data so far for 2013 suggests the European economy is stabilising after a very bad 2012 but the outlook remains weak and uncertain.

Howard Archer of IHS Global Insight said the eurozone recession may have deepened in the fourth quarter but it should mark the bottom of the slump.

"The good news is that the fourth quarter of 2012 almost certainly marked the low point for eurozone economic activity as a significant easing of eurozone sovereign debt tensions underpinned by the European Central Bank's policy actions" has boosted confidence and the markets, Archer said in a statement.

"The bad news is that real economic activity is yet to show major improvement in many countries and it looks highly likely that growth will remain a major struggle for the eurozone for some time to come."

source: interaksyon.com

Merkel: Euro debt crisis 'far from over'

The eurozone debt crisis is "far from over," even as reforms begin to show results, German Chancellor Angela Merkel said in remarks to be broadcast Monday.

"The reforms that we've agreed on are starting to be effective," Merkel said in her recorded New Year's address.

"Nevertheless, we still need a lot of patience. The crisis is far from over," she said in a transcript of her addressed released early Monday.

Her comments differed from those of Finance Minister Wolfgang Schaeuble, who was quoted Thursday as telling the Bild newspaper, "I think we have the worst behind us."


They also differed from those of European Central Bank President Mario Draghi, who told France's Europe 1 radio Nov. 30, "The recovery for the entire eurozone will no doubt begin in the second half of 2013."

Merkel, 58, who faces an election to a third term in September, pointed to Germany's lowest level of unemployment since 1990's reunification of East Germany and West Germany, while the number of people employed had risen to record highs.

She said this meant "many hundreds of thousands of families have a secure future."

Merkel urged Germans to resist laying blame on economically weaker countries for the 3-year-old financial crisis that has made it difficult or impossible for some eurozone governments to repay or re-finance their debt without assistance.

"For our prosperity and our solidarity, we need the right balance. We need the willingness to perform and social security for all," she said in the recorded remarks. "The European sovereign debt crisis shows how important this balance is."

source: upi.com

Wall Street Week Ahead: A nice rally while it lasted

NEW YORK - At the start of the historically weakest month for equities there are plenty of reasons to believe stocks may be just about reaching a top - at least in the short term.

The S&P 500 has surged 14 percent this year and is at its highest level in more than 4 years. Not counting 2009 when equities rebounded from their crisis lows, this could be the best year for stocks since 2003 - nearly a decade.

A report showing hiring in the United States in August was again much slower than expected and warnings of a slowdown at Intel and FedEx this week, which will likely foreshadow a very weak earnings season, have not been enough to deter investors buoyed by aggressive central bank action.

After the European Central Bank's pledge to buy the debt of troubled eurozone countries this week the Fed is widely expected to introduce new stimulus measure in the form of more bond buying when it closes its two-day meeting on Thursday.

"Good news in good news and bad news is good news, largely because of the Bernanke put," said Eric Kuby, chief investment officer, North Star Investment Management in Chicago.

The S&P 500 is now trading at 13.3 time its forward earnings estimates, meaning investors are willing to pay just over $13 for a dollar of expected earnings from S&P 500 companies.

Although that is below a median forward price-to-earnings ratio of 13.7 since 1976 - according to Morgan Stanley - it is close to the upper end of the range in the low-growth post crisis era of the last 5 years. During that time there has been a median price-to-earnings ratio of 12.9, according to Thomson Reuters data.

In fact, the recent price-to-earnings high was 13.5 in February 2011, just above current levels. If you are of the view that little has changed since then, there is no reason for the ratio to go much higher. That combined with a slowing earnings picture inevitably means lower prices.

"Our view is that the next double digit move in the market is down not up," said Morgan Stanley in a research note.

The analysts, led by equity strategist Adam Parker, believe the S&P 500 will finish the year at 1,214, 15 percent below where it is now.

At current levels the risk-reward skew is starting to look less attractive then it did. That is especially true given the uncertainty the November presidential elections are likely to generate, as well as the potential for more slip-ups in Europe.

"We put a 1,450 target on the S&P for year and so I'm encouraged," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "But I will say, if this trend continues, I'm inclined to declare victory and move to the sidelines (and) start taking profits."

The average analyst estimate for the S&P 500 this year is 1,383 according to a Reuters poll from the middle of the year. That shows Ablin is not alone. The S&P's performance has already outstripped most expectations.

Another negative factor is the rapidly declining earnings outlook for the remainder of the year, as well as for 2013. Analysts are now expecting a 2.1 percent drop in third quarter earnings year-on-year. About a year ago they were looking for growth of nearly 15 percent.

This week Jonathan Golub, UBS's chief U.S. equity strategist, cut his S&P 500 earnings outlook due to a weaker U.S. economic outlook, conversion distortions from a stronger dollar, as well as weaker oil prices.

For 2012 Golub cut his S&P earnings forecast to $102.50 from $103.50 and to $107.00 from $110 for next year.

Golub believes third quarter earnings will be just $25.10, 2 percent below the same period last year. On an annualized basis that would translate into an S&P 500 level of just over 1,300 given a price-to-earnings ratio of 13.

Signs are that those forecasts are already starting to come true.

On Tuesday, FedEx Corp, the world's second-largest package delivery company, cut its profit outlook for the current quarter, saying weakness in the global economy was hurting demand for overnight international shipments.

Three days later, Intel Corp cut its third-quarter revenue estimate due to a decline in demand for its chips, as customers reduce inventories and businesses buy fewer personal computers. A revision of Intel targets had been expected by some analysts after PC makers Hewlett Packard Co and Dell Inc warned of slow demand last month.

Golub is now talking about an earnings "drought" and even an earnings "recession."

"While investors are focused on monetary policy, we believe these weak earnings results will contain a market advance," he said in a research note.

Golub has a year end S&P target level of 1,375, 4.3 percent below Friday's closing level.

The latest leg of the rally was a 2 percent surge on Thursday that pushed the S&P 500 to its highest in more than four years and the Nasdaq to its highest in 12 years.

The move was courtesy of the European Central Bank and its pledge to act as an unlimited lender of last resort to troubled European nations. But it is not a done deal.

The German constitutional court will rule on Wednesday whether the European Union's new ESM rescue fund should come into being. If it vetoes it, the ECB's plans could be left in tatters since its intervention requires a country to seek help from the rescue fund first.

Dutch elections on the same day look to have been robbed of some of their potential drama, with the hard-left socialists now slipping in the polls. Instead, the fiscally conservative Liberals are set to win most seats with the center-left Labour party also polling strongly.

But there are no guarantees and Germany could yet be robbed of one of its staunchest pro-austerity allies in the debt crisis debate.

"While we got some monetary solutions we still need more answers (on) the underlying European economy," said Ablin. "I don't think bond buying solves the euro crisis."

Europe is not the only concern for investors. A slew of Chinese data on Sunday will provide an insight into how the world's second economy is faring amid concerns of a slowdown. The data includes inflation, retail sales and industrial production.

The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell for the eighth straight session on Friday. Some of the weakness is blamed on collapsing iron ore demand from China.

Shipments of iron ore account for about a third of sea-borne volumes. Spot iron ore prices just hit their weakest in nearly three years, extending a market rout that began in July, while Poor demand drove Shanghai steel futures to a record low this past week.

But even with the less than stellar fundamental picture, the old saying 'don't fight the Fed' has proven to be true once again.

The chances of the Federal Reserve embarking on another round of bond purchases next week have jumped after the disappointing August U.S. employment numbers on Friday, according to a Reuters poll of economists.

The median of forecasts from 59 economists gave a 60 percent chance the Fed will announce another round of quantitative easing, or QE3, on Thursday.

For the last 40 years the MSCI world index has lost 0.9 percent on average in September, making it the worst performing month for the stock market, according to data from Thomson Reuters. So far the index, a broad measure of global equities, is up 2.6 percent this month.

This year may well buck the trend.

source: interaksyon.com

EU's Rehn Welcomes ECB Bond Buying Plan

CERNOBBIO, Italy (Reuters) - The European Central Bank's plan to buy the bonds of euro zone countries whose debt yields are excessive is a major step towards stabilizing markets, European Commissioner for Economic and Monetary Affairs Olli Rehn said on Saturday.

"The ECB has done a major service for short term market stabilization," Rehn told Reuters in an interview, calling the ECB's decision "an essential element of crisis response of the euro area."

ECB President Mario Draghi unveiled plans on Thursday for potentially unlimited purchases of bonds of up to three years maturity issued by countries that request a European bailout and fulfill strict domestic policy conditions.

Rehn said the policy conditions would be based on existing country-specific recommendations and "would have to include very specific objectives and a time line on how to meet the objectives."

No countries have yet applied for help from the yield reduction plan, he said.

source: nytimes.com

Moody's changes EU rating outlook to negative

SYDNEY - Moody's Investors Service has changed its outlook on the Aaa rating of the European Union to negative, warning it might downgrade the bloc if it decides to cut the ratings on the EU's four biggest budget backers: Germany, France, UK and Netherlands.

The move will add to pressure on the European Central Bank to provide details of a new debt-buying scheme to help deeply indebted euro zone states at its policy meeting on Thursday.

Back in July, Moody's changed its outlook for Germany, the Netherlands and Luxembourg to negative as fallout from Europe's debt crisis cast a shadow over its top-rated countries. The outlook on France and the UK are also negative.

"The negative outlook on the EU's long-term ratings reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget: Germany, France, the UK and the Netherlands, which together account for around 45 percent of the EU's budget revenue," the ratings agency said.

Moody's said the EU's rating would be particularly sensitive to any changes in the ratings of these four Aaa member states, implying that if it downgraded these four it might also cut the EU's rating.

Likewise, Moody's said the outlook for the EU could go back to stable if the outlooks on the four key Aaa countries also returned to stable.

The agency also changed to negative the outlook the European Atomic Energy Community (Euratom), on whose behalf the European Commission is also empowered to borrow.

source: interaksyon.com

Asian markets higher despite eurozone uncertainty

HONG KONG - Asian shares edged higher in quiet trade Tuesday, shrugging off eurozone debt worries even after Germany and the European Central Bank dampened hopes for action to drive down borrowing costs.

Tokyo's Nikkei index added to the previous day's gains, rising 0.13 percent as the dollar held on to recent gains against the yen amid a continued shift away from the safe haven Japanese currency.

Hong Kong was flat, Sydney climbed 0.67 percent, Shanghai was up 0.55 percent, and Seoul gained 0.47 percent.

German news weekly Der Spiegel reported Sunday that the ECB was considering buying bonds issued by heavily-indebted eurozone countries in a move that would ensure borrowing costs did not rise beyond a pre-determined level.

But an ECB spokesman brushed aside the report as "absolutely misleading", while another at the German finance ministry said such an action would be "be very problematic."

Germany's central bank, the Bundesbank, said such bond purchases "should be viewed critically and entail, not least, substantial stability policy risks".

Borrowing costs for Spain and Italy have shot up towards levels that forced Greece, Portugal and Ireland to seek a bailout.

European markets had advanced in early trading on the Der Spiegel report but turned down after ECB and German officials dismissed the story.

US stocks closed flat in quiet trade that still had enough might to push Apple to become the world's most valuable company of all time with a total market value of $623.52 billion.

That surpassed the previous record of $619 billion set by software titan Microsoft in 1999, during the dot-com boom years.

The Dow Jones Industrial Average slipped 3.56 points to close at 13,271.64.

The S&P 500-stock index lost a bare 0.03 points at 1,418.13, while the tech-rich Nasdaq edged down 0.38 points to 3,076.21.

In oil markets, New York's main contract, West Texas Intermediate light sweet crude for September delivery, fell eight cents to $95.89 a barrel while Brent North Sea crude for delivery in October gained 19 cents to $113.89.

Gold was at $1,621.69 at 0310 GMT, compared to $1,615.20 on Monday.

In other markets:

-- Jakarta, Kuala Lumpur, and Manila were closed for public holidays.

source: interaksyon.com