Thursday 30th October 2014
slib33
THURSDAY TICKER: OCTOBER 30TH 2014: - In ConvergEx’s survey of financial market professional, released today, uust 17% of respondents say they approve of the job Barack Obama is doing as president, while 73% said they disapprove. (This compares with a 41% approval/54% disapproval rating for the President in the RealClearPolitics average, 10/8-10/23/2014) Half (50%) of those surveyed give the President a “D” or “F” grade on handling issues of concern to the financial services industry. Opinions of Congress are even lower, with just 8% approving of the job being done by Congress and 81% disapproving. (This compares with a 13% approval/79% disapproval rating for Congress in the RealClearPolitics average, 10/3-10/20/2014. Almost half (46%) give Congress a “D” or “F” grade on handling issues of concern to the financial services industry. 69% of respondents say they would like Republicans to be in control of the Senate following the elections, a figure above even the 65% who say they plan to vote Republican in their own House districts. By 61% to 14%, Republicans are trusted over Democrats on issues impacting the financial services industry. For 8 of 9 market sectors, a higher percentage of respondents said equities would respond positively to a GOP win than to a Democratic win. Only for the Heath Care sector do more investors expect a positive outcome in response to Democrats holding the Senate - The Commercial Bank of Qatar (CBQ) posted a net profit (before deducting minority interest) of QAR503m in 3Q2014, flat QoQ, but 79% higher than a particularly weak 3Q2013. CBQ’s operating income in 3Q2014 increased 16% YoY but dropped 10% QoQ, driven by lower-than-expected results at subsidiary ABank. ABank’s operating income tumbled around 23% QoQ as non-interest income plummeted. For CBQ excluding ABank, operating income stood at around QR 764 million in 3Q2014, up 12% YoY, down 6% QoQ - Moody's has today assigned a provisional (P)B1 corporate family rating (CFR) to Kompania Weglowa SA, the parent company of the group. This provisional rating is subject to the successful completion of the issuance of new notes as currently contemplated by management. Concurrently, Moody's has assigned a provisional (P)B1 rating with a loss-given default (LGD) assessment of 3 (46%) to the senior unsecured notes to be issued by Kompania Weglowa Finance AB (publ), a financing vehicle owned by the company. The outlook on all ratings is stable - ING Group will release its 3Q 2014 results on Wednesday November 5th around 7:00 am CET - AIMCo, Allianz Capital Partners, EDF Invest andHastings have closed its buy of Porterbrook, a UK-based rolling stock leasing company. orterbrook is one of three main rolling stock companies (ROSCOs) in the UK that owns and leases a fleet of passenger and freight rolling stock to Train Operating Companies and Freight Operating Companies under long term contracts. It owns 32 per cent of total passenger rolling stock in the UK. No financial terms were disclosed - Fixed-income markets remain volatile: Europe is challenged, Brazil might struggle, and China is dealing with a potential property bubble. Opportunities nonetheless remain rife for savvy investors, particularly in the high-yield markets. Western Asset believes high-yield should be a key component of any successfully diversified bond portfolio. "We are pretty bullish on credit in general, and high-yield in particular," says Michael Buchanan, head of Global Credit at Western Asset. "Credit is less about the overall economic environment and more about strong corporate fundamentals. Corporations can do well in a mediocre economy, and that seems to be what's happening. Three factors are important right now: the overall economic environment is supportive; strong active management allows us to identify the right opportunities; and valuations are as compelling as they have been in months. This is a good time to take a fresh look at high-yield." Western Asset also believes high-yield products will offer price appreciation as spreads should tighten. On the global economic environment, Mr. Buchanan echoed Western Asset views that interest rates are poised to rise – albeit slowly, and via a process that will be carefully measured. Rates will not be meaningfully higher in the near future, or at least the moves will be gradual – According to Moody’s while the US government's current fiscal position remains relatively healthy, mandatory social spending will begin weakening the current fiscal profile of the US government at the end of the decade. For the next few years, barring another shock like the global financial crisis, the US budget deficit is expected to remain well within historical norms with Federal government debt ratios stable. However, the fiscal implications of the US government's healthcare-related programs likely will put pressure on its credit profile before the end of the decade, absent unexpected and sustained growth in revenue due to higher than expected GDP growth, additional tax increases, or reductions in planned expenditures, says Moody’s.

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...

Tweets by @DataLend

DataLend is a global securities finance market data provider covering 42,000+ unique securities globally with a total on-loan value of more than $1.8 trillion.

What do our tweets mean? See: http://bit.ly/18YlGjP

White Paper

Seeking Optimal ETF Execution in Electronic Markets

Seeking Optimal ETF Execution in Electronic Markets

 
pdf Download PDF View all Whitepapers

Related News

Related Articles

Related Blogs

Related Videos