Sunday 24th May 2015
NEWS TICKER: FRIDAY, MAY 22ND: The California Public Employees' Retirement System (CalPERS) has named Beliz Chappuie as CalPERS' Chief Auditor, effective July 31, 2015 - Saudi Arabia's oil minister has said the country will switch its energy focus to solar power as the nation envisages an end to fossil fuels, possibly around 2040-2050, Reuters reports. "In Saudi Arabia, we recognise that eventually, one of these days, we are not going to need fossil fuels, I don't know when, in 2040, 2050... we have embarked on a program to develop solar energy," Ali Al-Naimi told a business and climate conference in Paris, the news service reports. "Hopefully, one of these days, instead of exporting fossil fuels, we will be exporting gigawatts, electric ones. Does that sound good?" The minster is also reported to say he still expects the world's energy mix to be dominated by fossil fuels in the near future - Barclays has appointed Steve Rickards as head of offshore funds. He will lead the creation and implementation of the bank’s offshore funds strategy and report directly to Paul Savery, managing director of personal and corporate banking in the Channel Islands. For the last four years Mr Rickards has been heading up the Guernsey Funds team providing debt solutions for private equity and working with locally based fund administrators. Savery says: “Barclays’ funds segment has seen some terrific cross functional success over the past year or so. Specifically, the offshore business has worked hand in hand with the funds team in London to bring the very best of Barclays to our clients, and Steve has been a real catalyst to driving this relationship from a Guernsey perspective.” - Moody's has downgraded Uzbekistan based Qishloq Qurilish Bank's (QQB’s) local-currency deposit rating to B2, and downgraded BCA to b3 and assigned a Counterparty Risk Assessment of B1(cr)/Not prime(cr) to the bank. The agency says the impact on QQB of the publication of Moody's revised bank methodology and QQB's weak asset quality and moderate loss-absorption capacity are the reasons for the downgrades. Concurrently, Moody's has confirmed QQB's long-term B2 foreign-currency deposit rating and assigned stable outlooks to all of the affected long-term ratings. The short-term deposit ratings of Not-prime were unaffected - Delinquencies of the Dutch residential mortgage-backed securities (RMBS) market fell during the three-month period ended March 2015, according to Moody's. The 60+ day delinquencies of Dutch RMBS, including Dutch mortgage loans benefitting from a Nationale Hypotheek Garantie, decreased to 0.85% in March 2015 from 0.92% in December 2014. The 90+ day delinquencies also decreased to 0.66% in March 2015 from 0.71% in December 2014.Nevertheless, cumulative defaults increased to 0.65% of the original balance, plus additions (in the case of master issuers) and replenishments, in March 2015 from 0.56% in December 2014. Cumulative losses increased slightly to 0.13% in March 2015 from 0.11% in December 2014 – Asset manager Jupiter has recruited fund manager Jason Pidcock to build Asian Income strategy at the firm. Pidcock J has built a strong reputation at Newton Investment Management for the management of income-orientated assets in Asian markets and, in particular the £4.4bn Newton Asian Income Fund, which he has managed since its launch in 2005. The fund has delivered a return of 64.0% over the past five years compared with 35.9% for the IA Asia Pacific Ex Japan sector average, placing it 4th in the sector. Since launch it has returned 191.4 against 154.1% for the sector average. Before joining Newton in 2004, Jason was responsible for stock selection and asset allocation in the Asia ex-Japan region for the BP Pension Fund.

The push and pull of willpower & politics

Friday, 25 May 2012
The push and pull of willpower & politics June will be a battle between political will and economics. While European leaders continue to insist that they want Greece to remain in the eurozone, they are continually being reminded of the economic reality that a break-up of the single currency is almost certain. What is becoming more apparent day by day is that the markets will simply not allow the likes of Greece to have their cake and eat it without paying for it too. Whether Europe’s politicians will listen to those market siren calls for change has yet to be determined. http://www.ftseglobalmarkets.com/

June will be a battle between political will and economics. While European leaders continue to insist that they want Greece to remain in the eurozone, they are continually being reminded of the economic reality that a break-up of the single currency is almost certain. What is becoming more apparent day by day is that the markets will simply not allow the likes of Greece to have their cake and eat it without paying for it too. Whether Europe’s politicians will listen to those market siren calls for change has yet to be determined.

If the Germans and French remain reluctant to put their money in the pockets by either using the ECB’s potential firepower or create a special eurobond then they could themselves become the very nemesis of the single currency that they tell us they are so desperate to keep. Even so, risk aversion continues to whittle down the markets; at the time of writing the index is at 5380, down some 25 points. Traders are watching term support trends at 5335, 5300 and 5275; hopeful bulls out there will be looking for resistance at 5490, 5615/45. This near term downward trend sees the index capped by a downward trend line that also puts some resistance at 5450. Over the longer term now that the index has broken below its 200 day moving average and its upward trend line a close below 5400 could been seen as very negative and we’re now in the ­territory of people not wanting to catch a falling knife.

While immediate market focus will remain on Europe and its affect on the macro picture, there are a couple of important pieces of data that UK investors should note. First, following a surprising improvement in April, unemployment numbers are likely to show a weakening labour market.  There’s little in the way of encouraging data from the UK at the moment, but last month’s data was the first ­indication that unemployment is ­starting to peak. Job creation has come largely from part time rather than ­permanent work and the tick downwards to 8.3% in the rate of unemployment is expected to rise back to 8.4%. Second, it will be interesting to see whether the upcoming Bank of England’s inflation report will encourage the central bank to stick to their hawkish guns or whether the ­confirmation of the double dip recession and a further downgrading of growth projections will result in a more dove-ish tone.



Other European indicators are not great either: Italian ten year yields have crossed back above 6% and for Spain back above 6.5%, meanwhile risk adverse investors piled into German bunds driving their cost of borrowing even lower. This is classic fear gripping the markets once again as the vicissitudes of 2012 look to be playing out in a very similar fashion to 2011. Financial markets detest uncertainty and at the moment they are riddled with them since Greece has been unable to form a government and has had to call for a new round of  elections on 17th June. Up until that point we can expect volatility to remain high and continued pressure to the downside.

The euro made a low of $1.2720 as the situation in Greece continues to deteriorate. Bears sold the single ­currency heavily after socialist leader Evangelos Venizelos announced that talks to form a coalition government had failed and that the public would have to go back to the polls next month. Gold continued to fall as traders dumped risky assets and piled into the safety of the US dollar. Spot gold traded as low as $1541 an ounce.  With little technical support seen until $1531 and no turn around in Greece on the horizon, the down trend looks set to stay firmly in place.

On top of all the European woes there’s also the growing concern that China is slowing down quicker than was previously thought. Add any downturn to the euro crisis and it has negative connotations for global growth.

As ever, ladies and gentlemen, place your bets...

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