MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Tuesday, May 22
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11:50 AM It's the citizens of Macau who may hit the jackpot as gaming operators such as Las Vegas Sands (LVS +1.9%) and Wynn Resorts (WYNN +0.6%) face a labor shortage on the thinly-populated island with rules in place that allow only local citizens to work certain key roles. The inevitable result for the casinos setting up shop for 28M visitors amid 2% local unemployment will be wages that spike higher. Comment!
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11:47 AM European markets close sharply higher, a rare breather from a 2-month 17% rout (for the broad index). Stoxx 50 +2%, Germany +1.6%, France +1.9% Italy +3.2%, Spain +2.1%, U.K. +1.9%. Euro -0.6% to $1.2743 as pressure is sure to come on the ECB to ease policy further. Comment!
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11:46 AM The massive oil fields in the Santos Basin cluster found off Brazil's coast by Petrobras (PBR -1%) and its partners hold 15B-20B barrels of oil to be developed, CFO Almir Barbassa says. Oil from the region will start being produced in the next three to four years and "we will soon be cash-flow positive," Barbassa says. Comment!
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10:42 AM Despite the fiscal compact being "misguided and poorly conceived," it's clearly in Ireland's interest to vote for it, writes Megan Greene. Why? Because Ireland is going to need another bailout and can't draw funds from the ESM if it rejects the treaty. The treaty is moving forward with or without Ireland - voting "no" accomplishes nothing for the country. 1 Comment
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10:40 AM Nigeria's oil minister says it expects to renew onshore oil drilling licenses with Chevron (CVX) and Royal Dutch Shell (RDS.A, RDS.B) by June. Several licenses that expired as far back as 2008 have been in negotiations between foreign oil majors, Nigeria's state-oil firm and government for years. Comment!
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10:26 AM Germany will tomorrow auction bonds with a zero coupon for the first time, underscoring its status as the ultimate safe haven despite the chaos that surrounds it. Germany plans to sell €5B ($6.41B) of two-year notes as investors seek merely "the return of capital rather than the return on capital." 4 Comments
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10:06 AM The Conference Board's April leading index for China rises 0.8%, matching March, and down from 1% in February. However, Andrew Polk from the Board isn't yet comfortable calling for a pick-up in growth in H2, instead wanting to see if recent easing policies start to filter through to the economy. Isn't that what the leading indicator is supposed to indicate? 1 Comment
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9:51 AM It may not work, writes Jeremey Siegel, but the ECB's best hope of saving EMU is to trash the currency upon which it is built. A devalued euro will bring some relief to the periphery by boosting trade, while pumping a bit more inflation into the German economy - a small price to pay to save the union. Comment!
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9:46 AM The Hellenic Financial Stability Fund is reportedly scheduled to transfer €18B ($23B) of recapitalization money to Greek banks by Friday as part of the country's bailout. An FT report says the banks are being propped up by Greece's central bank. Comment!
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9:25 AM Speaking to reporters on the release of an IMF report urging the U.K. to print more money, agency head Lagarde pretty much makes an outright call for eurobonds. Such "fiscal-liability sharing" remains staunchly opposed to by Berlin (with Austria adding support today). Comment!
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8:44 AM Glencore (GLCNF.PK) indirectly boosts its stake in Congolese copper and cobalt company Mutanda Mining to 60% through two stake purchases for $340M. The deals move the commodities giant closer to merging its Congo mining operations into a combined entity able to produce 160K tons of copper cathode a year and 23K tons of cobalt in hydroxide by 2013. Comment!
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8:15 AM UN atomic inspectors and Iran reach agreement that will allow the IAEA to inspect suspected nuclear weapons sites, possibly opening the door to a deal to ease sanctions which could push crude oil prices down another $5/bbl or more. Iran's incentive: Its crude shipments are stalled, with ~40M bbls floating around in the Persian Gulf with nowhere to go. 4 Comments
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7:50 AM European markets are at session highs, bouncing from an ugly few weeks of trade. Stoxx 50 +1.3%, led by Italy +2.6%. Germany +1%, Spain +1.1%. S&P futures turn back to green, +0.3%. Interestingly, the euro is lower by 0.5%. Could the break in correlation suggest easier monetary policy is about to come to the continent? 1 Comment
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7:37 AM Financial discipline, not the "nonsense" put forth by France's Hollande will resolve the EU debt crisis, says Austrian finmin Maria Fekter, clearly placing her country in the German camp as a power battle shapes up in the eurozone. "Growth financed by debt? Those are the recipes ... (that) got us into this whole mess." 1 Comment
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6:00 AM Overseas: Japan +1.1%. Hong Kong +0.6%. China +1.1%. India -1.0%. London +0.8%. Paris +0.7%. Frankfurt +0.7%. Comment!
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5:15 AM The IMF says the U.K. should consider cutting interest rates and more quantitative easing. The country should prepare a Plan B for deficit reduction if those measures don't work. 2 Comments
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5:06 AM Fitch downgrades Japan to A+, outlook negative. "The country's fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk." Comment!
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4:30 AM Greece's banking system is being propped up by ~€100B of emergency liquidity provided by the country's central bank and quietly approved by the ECB, according to a report in the Financial Times. An ECB decision to pull the plug could potentially prompt a Greek exit from the eurozone. 1 Comment
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4:22 AM Coming from the OECD's live twitter stream, "we need decisive policy action now" but "we're aware of the political economy of some of these problems. The scope for macro-economic policy is virtually exhausted." The OECD released its revised economic outlook just moments ago, warning the recovery is both fragile and uneven. (more) 2 Comments
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4:15 AM The OECD cuts its 2012 eurozone GDP forecast to -0.1% from +0.2%; U.S. forecast raised to +2.4% from +2%; China to come in at +8.2% this year, +9.3% next year; Greece -5.3% this year, -1.3% next year; Japan +2% this year, +1.5% next year. Joins calls for eurozone bonds. (OECD economic outlook report) Comment!
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4:08 AM Not so much a Grexit as a Geuro, Deutsche Bank head of research Thomas Mayer says Greece's best chance of survival may be to stay in the eurozone but opt for its own parallel currency. The Geuro would help Greece balance its budget without Troika help, which means Greece could jettison the strict austerity conditions attached to the aid money. 2 Comments
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3:23 AM China plans to fast-track approvals for infrastructure projects to combat an economic slowdown, according to the state-backed China Securities Journal. The government is reportedly asking for project proposals by June 30, even for projects initially earmarked for year-end, and hasn't ruled out bringing forward next year's projects. (previously) Comment!
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2:52 AM Conditions are ripe to open up China's capital account, according to a front-page article in the PBOC-backed Financial News, which cited several government officials and scholars. The removal of many of the capital controls keeping the yuan from being fully convertible would mark a major milestone in China's reform program. Comment!
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