Thursday 7th May 2015
NEWS TICKER: WEDNESDAY, MAY 6TH 2015: According to Mineweb, silver prices on average will decline 14% this year as speculation over US interest rates spurs a shift to alternative assets. Silver will drop to $16.50 an ounce from the average fixing price of $19.08 in 2014, Andrew Leyland, manager of precious- metal demand at Thomson Reuters GFMS, told Mineweb in advance of Thomson Reuters'World Silver Survey 2015 on behalf of the Washington-based Silver Institute. Silver futures fell 2.7% last month - The Federal Reserve Bank of New York will release its Q1 2015 Household Debt and Credit Report Tuesday, May 12 at 11:00 am. The Household Debt and Credit Report offers an updated snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. In conjunction with the report, the New York Fed will also release a blog post that details the change in debt by credit score and age group - Moody's has assigned a limited default (/LD) designation to DTEK ENERGY BV's (DTEK) Ca-PD probability of default rating (PDR). At the same time, Moody's has affirmed DTEK's Ca corporate family rating (CFR), as well as the Ca rating of DTEK Finance Plc's $750m 7.875% notes due April 4th 2018. The change of the PDR to Ca-PD/LD follows the completion of the exchange of DTEK Finance BV's $200m 9.5% notes on the notes' maturity date April 28th. The transaction was effected pursuant to a UK Scheme of Arrangement. The notes were exchanged into new $160m 10.375% notes due 28 March 2018, issued by DTEK Finance Plc for this purpose, and $44.9m of cash, including an early exchange offer acceptance fee, which was paid to note holders on April 28th. The Ca rating of DTEK Finance B.V.'s exchanged notes was withdrawn. Moody's expects to remove the "/LD" suffix after approximately three business days. The outlook on all ratings remains negative - A major new campaign ‘World of Talent in Ireland’ was today launched by the American Chamber of Commerce Ireland and IDA Ireland. The campaign will initially target Ireland’s global graduate community, highlighting abroad the career opportunities that now exist in Ireland, with a view to attracting talent here. Speaking on the launch of the campaign Mark Redmond, Chief Executive of the American Chamber said “For Ireland to continue to grow its economy it will be essential that we attract the best and the brightest talent from across the world. This campaign is about reaching out to anyone who attended college here and therefore has an affinity with Ireland but is currently living and working elsewhere. We want to ensure that they know the great career opportunities that now exist here and how they can avail of them” - Idinvest Partners, the European private equity firm specialising in SMEs, has announced the final closing of its Idinvest Digital Fund II at €140m. The fund is entirely dedicated to financing the growth of developing businesses in the digital and new technology segments (web-based, media, mobile, e-commerce services and software) in France and across Europe. The fund has invested in ten companies so far, including Sigfox, Synthesio and Twenga; 30% of the capital has been called in and the fund is already delivering positive returns. The fund has also gathered prominent investors, such as Bpifrance and Idinvest’s historical partner, Allianz France, who are topping the list. Besides these, there is also a large number of insurance companies, banks, family offices and leading industry players and corporates, such as Lagardère and Up groups - According to local press reports, Botswana’s largest retailer Choppies plans to cross-list its shares at the Johannesburg Stock Exchange by the end of May, as it expand its business in sub-Saharan Africa. The multinational grocery and general merchandise retailer has stores in three Southern Africa countries and is reportedly looking to expand into Zambia and Tanzania this year. The firm will list 10% of its shares and plans to raise about $50m. Choppies commands a market capitalization of about $535mon the Botswana Stock Exchange and has a 32% share of Botswana’s retail market and plans to add five more stores, taking the total to 77 retail outlets, by December, followed by another 20 in the medium term - Credit Agricole Egypt (CAE) reports net profit of EGP236m (+60% YoY and +8% QoQ) in 1Q2015 and net interest income of EGP371m in (+30% YoY and +7% QoQ)over the period, higher than analyst forecasts. No other income statement component was disclosed, with the exception of taxes (around EGP104m for the period, signifying an effective tax rate of around 31%). Full financial statements are not available yet - The European Union is reported to be investigating McDonald's over claims its structure allowed it to avoid more than €1bn (£730m) in tax. It is alleged that the fast food purveyor exploited loophole concerning royalties through Luxembourg, allowing it to pay just €16m of tax on royalties worth €3.7bn between 2009 and 2013. Unions claim McDonald's Luxembourg subsidiary employs just 13 people, yet booked €834m of revenue in 2013 - roughly around €64m per worker - Smith Cooper accountancy and business advisory firm today announced the appointment of Catherine Desmond as partner to enhance the firm's private client services across the Midlands. Desmond joins the firm from the Private Client department of Saffery Champness where she specialised in advising clients across a range of sectors, including predominantly family businesses and landed estates. In her new role at Smith Cooper, Catherine will be concentrating on further developing the range of tax planning services the firm offer their private clients. Her work will focus particularly on the agricultural sector and landed estates, an area Desmond has extensive experience in - Nomis Solutions has appointed Michael DeGusta to lead the architecture and development of the company’s next-generation pricing platform. Working with progressive technology companies such as Apple, eCoverage, and ChoicePoint, DeGusta brings 20 years of experience to Nomis. “Retail banks face unprecedented challenges, and Michael is the ideal leader to architect our future and to bring Nomis and our client banks to the next level of price optimization and profitability management,” says Frank Rohde, Nomis CEO. “The bankers we meet with relate a growing awakening to the opportunities provided by innovative technology and how it can help them thrive in the face of mediocre economies, changing customers, disruptive competitors, and challenging regulators.” -

BlackRock's 2013 market outlook predicts improving investment prospects

Sunday, 23 December 2012
BlackRock's 2013 market outlook predicts improving investment prospects Prospects are improving for a positive albeit gradual turn next year in global economic and investment conditions, according to the BlackRock Investment Institute’s 2013 investment outlook.  The report, entitled ‘Slow Turn Ahead?’ urges investors to keep a close eye on the impact of government policy – first and foremost, the urgent effort to avoid the fiscal cliff in the US, which will drive the direction of both the US and global economies in the New Year. http://www.ftseglobalmarkets.com/

Prospects are improving for a positive albeit gradual turn next year in global economic and investment conditions, according to the BlackRock Investment Institute’s 2013 investment outlook.  The report, entitled ‘Slow Turn Ahead?’ urges investors to keep a close eye on the impact of government policy – first and foremost, the urgent effort to avoid the fiscal cliff in the US, which will drive the direction of both the US and global economies in the New Year.

“Our big questions for 2013 are whether the wave of ultra-loose monetary policies and quantitative easing has crested and if private sector credit can stage a modest recovery,” says Ewen Cameron Watt, BII’s chief investment strategist. “Trillions of dollars in monetary stimulus and record low interest rates have failed to spur much credit growth and economic activity so far. But what if this changes? Policy - fiscal, monetary and regulatory - drove markets in 2012 and will remain central to 2013 outcomes,” adds Cameron Watt.

With central banks apparently refocusing monetary stimulus away from preventing a financial sector collapse and towards targeting economic growth, next steps by the US Federal Reserve will merit particularly close attention, according to the report.



“We do not expect the Fed to raise rates any time soon. But it could take its foot off the monetary accelerator on signs of quickening job growth in the second half of 2013,”says Cameron Wat. “Markets need only a whiff of a Fed preparing to slow its QE programmes because of improving employment to empty some of the vast store of investor money in cash and low-yielding fixed income assets, and put it into equities.”

In the US, much hinges on efforts to avoid the fiscal cliff, a set of tax hikes and spending cuts set to go into effect on 1 January. "The United States may turn the corner on growth – if Washington can avoid falling off the fiscal cliff and negotiate a long-term budget reduction plan,” according to the report. Regulation remains an important focus too, whether it be financial sector reform in the developed world or social security and welfare reforms in emerging economies. Politics also will play a role again in 2013 with elections in, among other nations, Italy, Germany and Israel, alongside US budget reform.

BII’s Five-Point Summary for 2013

  1. We have become more upbeat about the prospects for risk assets and stabilising economic growth (albeit at low levels). Low expectations = potential upside surprises.
  2. The US economy should gain momentum and help boost global growth – IF Washington can avoid the “fiscal cliff” and compromise on a sustainable budget.
  3. Many investors lack conviction in markets where risk taking is often punished and trends last a skinny minute. Rome – and confidence – was not built in a day.
  4. The era of ultra-loose monetary policy may draw to a close, challenging “safe” fixed income assets and heralding a shift toward equities. Safety = new tail risk.
  5. Income investing works in a zero-rate world – but the hunt for yield has narrowed valuations between top-quality and not-so great income assets. Take out the garbage. 

So What Do I Do With My Money?

Here is a summary of the BII’s investment recommendations for 2013:

Fixed Income: Danger in Safety

Prices of safe-haven government bonds and similar assets could plunge when yields start to rise. Low yield = high price risk.  We like global high yield and US munis for income – but do not expect much capital appreciation. We favour emerging market debt.  In Europe, we prefer Italian and Spanish bonds over debt of weaker core countries. We are bullish on commercial mortgage-backed securities and collaterised loan obligations.

Equities: Global Smorgasbord

We like global companies with strong balance sheets, steady cash flows and growing dividends. We favour high-quality US stocks, global energy and emerging markets.  We are bullish on domestic consumption plays in Brazil and China, North Asian cyclical stocks, and Mexican banks and industrials. We like discounted exporters on Europe’s periphery and small “self-help” UK companies.

Commodities: Long View

We like metals with long-term supply gaps and agricultural commodities.  China’s appetite is huge.

Currencies: Dollar Bulls

We are bullish on the US dollar due to the country’s energy boom and long-term growth prospects.

Good and Bad Income

Income investing remains our strategy of choice in a zero-rate world. The hunt for yield has created pockets of overheating and narrowed valuations between top-quality and less desirable income assets. The report details the state of play in fixed income, high yield, emerging market debt, municipal bonds, dividends, and real estate investment trusts.

 

Pain Trades

Our biggest contrarian idea is buying Japanese exporters while selling the yen. Other pain trades include selling “safe” tobacco stocks, buying US companies with cash piles abroad, and buying securities of European and US financials. We have warmed up to Indian equities after the country’s reforms on foreign investment.

The Gift of Insurance

Short-term implied volatility is eerily low whereas policy uncertainties are near financial crisis levels. Consider options to hedge downside and upside risks.

Volatility Reversal?

The fire hose of monetary liquidity and investor hunger for yield has depressed short-term volatility, so maybe a reversal will have the opposite effect.

 

 

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