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Showing posts from July 7, 2014

PRESS DIGEST - Wall Street Journal - June 13

The following are the top stories in the Wall Street Journal. Reuters has not verified these stories and does not vouch for their accuracy. _0"> * Iraq's government girded to protect the capital from advancing insurgents, as Iranian security officials said their forces had joined the battle on Baghdad's side and the United States weighed military assistance. ( r.reuters.com/xyw99v ) * Iran has deployed Revolutionary Guard forces to fight militants that have overrun a string of Iraqi cities, and it has helped Iraqi troops win back control of most of Tikrit, Iranian security sources said. ( r.reuters.com/zyw99v ) * Alibaba Group Holding Ltd IPO-ALIB.N, responding to concerns from investors that it has been too tight-lipped, plans to give out more details about its Internet empire as it readies its potential $20 billion initial public offering. The Chinese e-commerce company, which plans to go public in the next few months, is preparing a new regulatory filing that

GLOBAL MARKETS-Asia stocks down, oil up as Iraq conflict sours mood

Asian stocks slid and crude oil scaled nine-month highs on Friday as escalating civil war in Iraq dulled risk appetite which had been buoyant just days before. Spreadbetters expected the sour mood to linger on in Europe, forecasting Britain's FTSE to open as much as 0.4 percent lower, Germany's DAX down 0.25 percent and France's CAC 0.26 percent lower. The yen, however, benefited from its safe-haven status and a decline in U.S. Treasury yields following soft U.S. data that dented economic optimism. Sunni Islamist militants have extended their advance south towards Baghdad and prompted President Barack Obama to warn of possible U.S. military intervention, while Iraqi Kurdish forces took control of the Kirkuk oil hub amid the chaos. Weaker-than-expected U.S. retail sales and jobless claims data published on Thursday further tempered economic optimism felt earlier in the week that had propelled Wall Street to record highs. Taking its cue from an overnight slide in U.S.

HIGHLIGHTS-BOJ Governor Kuroda comments at news conference

The Bank of Japan kept monetary policy steady on Friday and offered a slightly more upbeat view on overseas growth, signalling confidence the economy is on course to meet its inflation target next year without additional stimulus. _0"> Following are comments from BOJ Governor Haruhiko Kuroda at his post-meeting news conference: ON JAPAN'S ECONOMY: "The economy is moving roughly within our expectations. Household spending remains solid as a trend ... The positive cycle of the economy is firmly in place, accompanied by clear improvements in job conditions and income." "We expect Japan's economy to temporarily contract in the second quarter (due to the sales tax hike impact). But more companies have decided to raise regular pay and summer bonuses are set to rise, so job and income conditions will continue to clearly improve. "As such, we expect household spending to remain firm. The downturn in spending (in reaction to the rise ahead of the tax

FOREX-Dollar edges up vs yen, sterling drives higher

The dollar was up around a third of a percent against the yen as markets listened to the Bank of Japan's latest comments on policy on Friday while sterling soared on the back of a surprise hint from the Bank of England that interest rates could rise this year. The big action overnight was all on the pound. BoE Governor Mark Carney sent money market rates spinning higher by telling the annual Mansion House dinner that rates may rise sooner than markets currently expect. That sent sterling to a 19-month high against the euro and close to key resistance around $1.70, up around 1 percent since the close of play in London on Thursday. "For us this was a clear signal that the first hike will come this year," said Lee Hardman, a strategist with Bank of Tokyo Mitsubishi-UTJ in London. "We think the first month for the bank to move will be November. The move was all the more shocking given how little faith the market has shown in sterling's ability to rise further ag

Bunds struggle at open after UK rates rise worries

German bond yields edged up on Friday, tracking UK equivalents higher after Bank of England Governor Mark Carney said interest rates could rise sooner than financial markets expect. Bund futures fell as much as 43 ticks when markets opened, before recovering by the time cash markets opened. German 10-year bond yields rose 1 basis point to 1.4 percent. "The Bund opened very weak but it is starting to come back a bit, showing that this first reaction was maybe somewhat an exaggeration of the European investors," said Piet Lammens, strategist at KBC. "The euro area should be a bit immune to UK rates, given the stance of the European Central Bank." While the BoE is gearing up to raise rates to cool its buoyant housing market and support economic recovery, the ECB has cut rates negative in a desperate attempt to stimulate bank lending and stoke low inflation. While the connectedness of global economies could not prevent the euro zone debt benchmark from following i

RPT-Bunds struggle at open after UK rates rise worries

German bond yields edged up on Friday, tracking UK equivalents higher after Bank of England Governor Mark Carney said interest rates could rise sooner than financial markets expect. Bund futures fell as much as 43 ticks when markets opened, before recovering by the time cash markets opened. German 10-year bond yields rose 1 basis point to 1.4 percent. "The Bund opened very weak but it is starting to come back a bit, showing that this first reaction was maybe somewhat an exaggeration of the European investors," said Piet Lammens, strategist at KBC. "The euro area should be a bit immune to UK rates, given the stance of the European Central Bank." While the BoE is gearing up to raise rates to cool its buoyant housing market and support economic recovery, the ECB has cut rates negative in a desperate attempt to stimulate bank lending and stoke low inflation. While the connectedness of global economies could not prevent the euro zone debt benchmark from following i

PRESS DIGEST- Canada - June 13

The following are the top stories from selected Canadian newspapers. Reuters has not verified these stories and does not vouch for their accuracy. _0"> THE GLOBE AND MAIL * A crash of China's shadow banking system would send shock waves through the Canadian economy, depressing commodity prices and triggering a housing market correction, the Bank of Canada warned in a new report. Other major risks to the Canadian system remain largely unchanged, including the threat of a house price collapse at home, sharply higher interest rates or the euro crisis. ( r.reuters.com/daz99v ) * More than a million encoded BlackBerry messages have been viewed by police as part of a crackdown against Quebec organized crime. In arresting more than 30 people on Thursday, the Royal Canadian Mounted Police took the rare step of publicly highlighting its interception of BlackBerry Inc's supposedly secure "PIN-to-PIN" communications. ( r.reuters.com/haz99v ) Reports in the busi

Bunds shrug off UK rates worries to hit day's high

German bonds recovered after an earlier fall on Friday, as investors shrugged off worries that a rates rise in the UK would have a knock on effect for euro zone government borrowing costs. Bund futures, the most actively traded securities in euro zone bond markets, initially dropped as much as 43 ticks at Friday's open after Bank of England Governor Mark Carney said UK interest rates could rise sooner than financial markets expect. However, by mid-morning, Bund futures made a full reversal, climbing to daily highs of 145.63, 37 ticks up on the day. Strategists said data confirming the euro zone's alarmingly weak inflation served as a reminder that the path of ECB policy had completely diverged from its peer across the channel. "These deflation pressures show the ECB will keep rates low for a very long time, which is the most important thing for investors," said Christian Lenk, strategist at DZ Bank. Fears around low inflation in the euro zone have centered on th

FOREX-Dollar edges up vs yen, sterling drives higher

The dollar rose around a third of a percent against the yen as markets listened to the Bank of Japan's latest comments on policy on Friday while sterling soared on a surprise hint from the Bank of England that interest rates could rise this year. The big action overnight was all on the pound. BoE Governor Mark Carney sent money market rates spinning higher by telling London's financial community at Thursday's annual Mansion House dinner that rates may rise sooner than markets currently expect. That sent sterling to a 19-month high against the euro and close to key resistance around $1.70, up around 1 percent since the close of play in London on Thursday. "For us, this was a clear signal that the first hike will come this year," said Lee Hardman, a strategist with Bank of Tokyo Mitsubishi-UTJ in London. "We think the first month for the bank to move will be November." The move was all the more shocking given how little faith the market has shown in t

INVESTMENT FOCUS-Press here, Mr Carney, for lower volatility?

In the struggle to explain this year's collapse in volatility and volume in financial trading, one newly-nominated culprit is central banks' intent to use every tactic available short of raising interest rates too soon. It sounded like a deeply contrarian view on Friday after comments by Bank of England Governor Mark Carney, but a study by analysts from market heavyweights HSBC this week argued that the use of macroprudential steps will make central bank interest rates in general less volatile in future. Implicitly that may mean markets see less marked swings. The global economy is right at the point, as the economic fates of Japan, Europe and the United States diverge, when an upturn in trading action could be expected due to the growing chances for arbitrage between future interest rates. Yet volatility, which traders depend upon for profits, is at rock bottom. Trading in currencies on the biggest platforms has fallen by a third to half in the past year; options contract

China and UK to sign deals worth at least $30 bln next week

China and Britain will sign business deals worth at least $30 billion next week during a visit to London by China's Premier Li Keqiang, the Chinese ambassador to Britain said on Friday. _0"> "The total value may be record-breaking," Liu Xiaoming, China's ambassador to Britain, told a news conference in London, saying that over 40 separate agreements whose total value was at least $30 billion would be signed. The deals would cover a range of sectors, including energy, education and finance, he added. "This visit is a priority to China and the UK. Expectations are very high," he said, saying Li would be joined by over 200 Chinese business leaders. The two sides will discuss possible Chinese investment in Britain's planned HS2 high-speed rail network linking the north of England with London and in its nuclear sector, he said. There will also be banking deals. Li will meet with British Prime Minister David Cameron at his London residence on Jun

TIMELINE-The FX market "fixing" probe

Britain's finance minister George Osborne this week rejected European Union plans to outlaw currency market manipulation and instead set out his own proposals to make rigging exchange rates a criminal offence. A panel led by the Bank of England and including the Treasury and Financial Conduct Authority will recommend new criminal sanctions which meet the needs of London, where much of the largely unregulated FX market takes place. Osborne's announcement comes as regulators around the world investigate allegations of collusion and price-manipulation in the $5-trillion-a-day market, by far the world's largest. Since the allegations first surfaced last year, some 40 traders have been placed on leave, suspended or fired by some of the world's biggest banks. No individual or bank has been accused of wrongdoing and no evidence of wrongdoing has been found. All the banks involved are cooperating with the regulators. Below is a timeline on the scandal engulfing the FX m

FOREX-Dollar rises slightly on Iraq conflict, higher U.S. yields

The dollar edged higher against a basket of major currencies on Friday for the first time in three sessions after violence in Iraq triggered a safety bid for the U.S. currency, while higher U.S. bond yields underpinned the move. Escalating insurgent conflict in Iraq resulted in a cautious mood, while renewed focus on the potential for more monetary stimulus in Japan and higher U.S. Treasury yields drove demand for the dollar. "The dollar is enjoying a safety bid on renewed instability in Iraq," said senior analyst Joe Manimbo at Western Union Business Solutions in Washington. Traders dismissed data showing slightly weaker-than-expected U.S. consumer sentiment in June. The Thomson Reuters/University of Michigan's preliminary June reading on the overall index on consumer sentiment came in at 81.2, down from 81.9 the month before. The dollar also advanced against the Japanese yen after traders reconsidered the potential for more monetary stimulus from the Bank of Japan.

UPDATE 4-Carney signals earlier British rate rise, sterling soars

Britain could become the first major economy to tighten monetary policy since the 2008 financial crisis, Bank of England Governor Mark Carney has signalled, sending sterling shooting towards a five-year high against the dollar on Friday. British government bond yields soared, construction stocks tumbled and interest rate futures priced in a first hike by December after Carney said rates could rise sooner than markets had thought - his most hawkish comment to date. "There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced," Carney said in a speech late on Thursday alongside British finance minister George Osborne. "It could happen sooner than markets currently expect." Few economists had expected rates to increase until the second quarter of next year given the central bank's previous guidance that there was plenty of scope for Britain's economy to expand further without causing infla

Vontobel sees client inflows at same pace as in H1

Swiss bank Vontobel AG ( id="symbol_VONN.S_0"> VONN.S ) has seen private client inflows continuing at the same pace as in the first half of the year, private banking head Peter Fanconi said on Wednesday. _0"> "We have seen continuous stable inflows," he told the Reuters Wealth Management Summit in Geneva, adding that the rate was comparable to first-half net inflows of 700 million Swiss francs ($760.5 million), in line with an annual rate of increase in assets under management of 4-5 percent. Fanconi, who took over at the private bank in 2009, said he saw particularly good inflows in Switzerland and Germany, including in the onshore business Vontobel is building up as the Swiss offshore business model has come under fire. "If you are a fully transparent German client and you have the opportunity to book your assets in Zurich or Munich and you live in Munich that makes sense," he said. However, he admitted the bank would see outflows of a

Swiss banks tout stability and secrecy to lure rich

Switzerland's banking industry is relying on its stability and expertise to ensure it has a bright future as a leading center for managing the assets of the rich, despite a concerted global attack on its tradition of secrecy. "Swiss banking is in a transformational process. Still as Switzerland and as Swiss bankers we have a lot to offer," Ivan Adamovich, Geneva head of the country's oldest private bank, Wegelin, told the Reuters Wealth Management Summit. "There was too much talk about secrecy and taxes and not enough talk about what else is there. Service quality and so on," he said. Strict Swiss bank secrecy, which helped the country become the world's biggest offshore banking center, has come under heavy fire in recent years from cash-strapped governments clamping down on tax evasion, putting client confidentiality under threat. Switzerland has agreed to do more to help other countries hunt tax cheats, allowing UBS ( id="symbol_UBSN.VX_0&q

Swiss banks steer clear of consolidation

Swiss private bankers say a capital shortfall in the financial sector and a clampdown on tax evasion stand in the way of much-need consolidation in an industry battling rising costs and falling revenues. Smaller Swiss private banks and asset managers are suffering from lower fees as their clients sit on safer assets, as well as higher costs from investments in technology needed to comply with new capital, risk, and compliance rules. This should increase pressure for M&A activity, a trend that experts believe could take hold in Asia but has so far not got off the ground in the world's most established private banking market. "We have a lot of break-even to slightly-losing-money institutions that have no business being in the market," Louay Al-Doory, head of business development at Reyl & Cie told the Reuters wealth management summit in Geneva. "There are many institutions looking to sell, we have ample choice." While Reyl was looking to make selec

BlackRock launches first retail alternative funds

BlackRock Inc ( id="symbol_BLK.N_0"> BLK.N ) is launching its first alternative mutual funds for retail investors. Given the recent dramatic swings in the market, financial advisers are increasingly looking for investment products that do not correlate to the markets, Frank Porcelli, head of BlackRock's U.S. retail business, told the Reuters Global Wealth Management Summit on Wednesday. "There's never been a more difficult time to navigate financial markets than where we are today," Porcelli said. As a result, many broker-dealers are trying to increase their clients' use of alternative investments, which are not correlated to the markets. But they are having trouble doing so, he said. For example, one national broker-dealer with $1.7 trillion in assets recently came to BlackRock asking the firm to help increase clients' allocation to alternatives. While the firm wanted to see on average a 10 percent allocation to alternatives, the actual cl

Rivals see UBS holding on to clients after trading loss

Rich clients of Swiss bank UBS ( id="symbol_UBSN.VX_0"> UBSN.VX ) have not yet moved their millions to other banks after its $2.3 billion trading scandal last month, rival private bankers said. "They've been hit by everything. It's not going to make any difference," Louay Al-Doory, head of global business development at Swiss boutique wealth manager Reyl & Cie, told the Reuters Wealth Management Summit in Geneva. "UBS is still UBS. You may have a scratched Rolls Royce, but it's still a Rolls Royce," said Al-Doory, himself a former UBS banker. UBS Chief Financial Officer Tom Naratil said on Tuesday the bank had not seen any "material change" in client deposits since the trading scandal was made public on September 15. Clients pulled nearly 400 billion Swiss francs -- almost 20 percent of total client assets -- from UBS during the financial crisis as the once proud bank was battered by subprime losses and a prolonged dispu

Private bank clients urged to avoid U.S. securities

Some Swiss bankers are advising clients to steer clear of U.S. securities ahead of a new law that would tax people with over $50,000 invested in stocks or bonds of U.S. companies even if they have never set foot in the United States. FATCA, or the Foreign Account Tax Compliance Act, will require overseas banks to report U.S. clients to the Internal Revenue Service, but its loose definition of who is a U.S. citizen will create a huge administrative burden and could push non-residents to slash their U.S. exposure, some bankers say. "Wegelin believe this is a regulatory monster. It is an important regulatory burden not only on Swiss banks but all over the world," said Ivan Adamovich, head of the Geneva branch of Switzerland's oldest bank, Wegelin. "We decided to tell our clients not to invest in U.S. securities any more. If clients want exposure to U.S. securities we would buy an ETF which does not have a U.S. regulatory base," Adamovich said. Due to become

Bessemer goes on defense, on pace for best year

Portfolio managers at Bessemer Trust, financial adviser to ultra-wealthy U.S. families, took an extremely defensive posture a few weeks ago amid some of the most volatile financial markets in more than 80 years. A sluggish U.S. recovery, an expanding debt crisis in Europe and political deadlock are just some of the factors contributing to wild ups and downs in stock prices. As markets convulse with growing frequency, often for no apparent reason, many small investors are heading to the sidelines. Now, apparently, families with tens of millions of dollars at their disposal are also fleeing the market. "Right now, 50 percent of our balanced growth portfolio is in cash, bonds and foreign currency," Bessemer Chief Executive John Hilton said at the Reuters Global Wealth Management Summit on Wednesday. "Historically, we'd hold only 20 to 25 percent (of cash and bonds) in the portfolio." That change took place about two weeks ago, he said. August was the seventh

Private banker pay holds up in tough market

Stiff competition for top private bankers has kept a floor under pay even as low interest rates, flaccid client trading and tougher regulation squeeze industry profit margins. Sky-high pay and bonuses for investment bank counterparts may once have turned private bankers green with envy. But the drive to slash wage bills and rein in risk has made investment bankers expendable as many banks realign their business around more stable private banking. "Pay was never extreme in private banking -- it's not as subject to a correction as in investment banking," Deutsche Bank global head of private wealth management Pierre de Weck told the Reuters Wealth Summit this week. Stricter rules on capital have curbed profits in many areas of investment banking and a number of large integrated banks like UBS and Bank of America have pledged to cut back on capital guzzling businesses and shrink staff numbers, piling downward pressure on pay. But in private banking, competition remain

Brokerages cut down on novice hires, turn to experience

As brokerages search for ways to grow in a tight economy, many firms are cutting back on new adviser training programs and instead investing in experience. "We've consolidated a lot of the hiring," Morgan Stanley's ( id="symbol_MS.N_0"> MS.N ) president of global wealth, Greg Fleming, said at the Reuters Wealth Summit this week. He said that Morgan Stanley decided this year to cut the number of people it brings into its adviser training program by nearly 30 percent, to 1,250 adviser trainees per year, from 1,750 trainees. On average, about two out of 10 in a typical training program will be successful and start a career at a firm, said Danny Sarch, a financial services recruiter based in White Plains, New York. Brokerages facing tighter budgets are weighing that with the greater certainty that comes with hiring an experienced adviser, Sarch said. "Morgan Stanley, from their Dean Witter routes, had always been aggressive in hiring young trainee

Bankers warn of long crisis as rich seek comfort

Private banks are telling their clients financial volatility surrounding Europe's debt crisis will continue for at least a year as more of the continent's rich seek the comfort of household names or state backing when choosing where to bank. "We are telling (clients) very honestly nobody knows how this is going to evolve and you have to be extremely careful in terms of your exposure," said Alexandre Zeller, head of private banking for Europe, the Middle East and Africa at HSBC. Pierre de Weck, wealth management head at Deutsche Bank, said during the Reuters Global Wealth Management Summit that clients could expect at least another 18 months of volatility. "If you're short term oriented and you cannot take pain, reduce risk because we are going to have a bumpy road over the next 18 months until this European sovereign crisis is resolved," he said. The market volatility since the summer and fears over bank solvency have boosted the kind of instituti

U.S. small business borrowing slows in February

U.S. small businesses borrowing hit a five month low in February, in the latest indication of slower economic growth in the first quarter after an unusually harsh winter. _0"> The Thomson Reuters/PayNet Small Business Lending Index, which measures the volume of financing to small companies, fell to 110.5 in February from a reading of 116.5 in January, PayNet said on Tuesday. That was the lowest level since last September. The index continues to retreat from a near seven-year high touched in December. Still, it was 5 percent higher than it was in February 2013, an indication of underlying strength. "Small business investment expansion signals moderate GDP growth," said PayNet founder Bill Phelan. Unseasonably cold weather weighed on economic activity at the end of 2013 and the beginning of this year, setting the tone for a weak first quarter. Growth in the first three months of this year is expected to have slowed to an annualized pace below 2 percent after expa

BNP got high-level 2006 warnings on sanctions busting - report

French bank BNP Paribas was warned in 2006 by a high-ranking U.S. Treasury official and in three reports by legal experts that it risked being penalised for breaking U.S. sanctions, according to Le Monde newspaper. _0"> Since France's biggest bank flagged the risk of a big fine in February this year, sources close to the affair have said it ignored early warnings of the risks it faced. They pointed out that the alleged offending transactions being investigated by U.S. authorities continued until 2009. The French newspaper's report, written as talks accelerate towards a possible $10 billion fine and other penalties, said Stuart Levey, then the U.S. Treasury Under Secretary for Terrorism and Financial Intelligence, made a visit to Paris in September 2006. The paper, drawing on the findings of its own investigation, said Levey met the bank's top officials, including Baudoin Prot, who has since become chairman, in its boardroom. Levey was there not to talk about