Monday, April 14, 2014

Today's Headlines

  • EU Weighs Tougher Russian Sanctions Amid Ukraine Unrest. European officials weighed expanding sanctions against Russia over Ukraine, where they say the government in Moscow is stoking deadly separatist unrest with the same methods it used to destabilize and annex Crimea. European Union foreign ministers, meeting today in Luxembourg, said the bloc should be prepared to impose a third round of sanctions, including economic measures, as armed separatists in eastern Ukraine ignored a deadline to free official buildings they’ve occupied. Russian Foreign Minister Sergei Lavrov denied his nation is involved. 
  • China Tightens Oversight of Trusts as Default Risk Rises. China’s banking regulator ordered owners of the nation’s 68 trust companies to be prepared to provide funding or sell their stakes as the risk of defaults rises in the $1.9 trillion industry for high-yield investment. The China Banking Regulatory Commission told trust companies to either restrict their businesses and reduce net assets or have shareholders replenish capital when the firms suffer losses, according to an April 8 notice that was seen by Bloomberg News. The regulator will also impose a “strict” approval process on trust firms’ entry into new businesses and products starting this year, according to the document.
  • Emerging-Market Stocks Fall on EU Threat as Ruble Tumbles. Emerging-market stocks fell, following a four-week advance, as the European Union weighed expanding sanctions against Russia amid mounting tension in Ukraine. The ruble led declines among major currencies. The MSCI Emerging Markets Index retreated 0.4 percent to 1,011.61 at 1:45 p.m. in New York. Russia’s Micex index decreased to a two-week low, while the ruble extended this year’s slide to 8.6 percent. Ukraine’s bond yields climbed to a three-week high. Yuan forwards declined to the lowest level in eight months on concern growth is faltering. Brazil’s real led gains among 31 global currencies on speculation policy makers will keep raising interest rates to control inflation. 
  • Europe Stocks Rise After Worst Week in Month; Miners Gain. European stocks pared earlier losses and rebounded from their worst week in a month, led by a rally in miners, while investors weighed violence in Ukraine. A gauge of basic-resources companies in the region climbed 1.9 percent, with Polymetal International Plc gaining 4.7 percent and Randgold Resources Ltd. adding 3.6 percent. ThromboGenics NV surged 17 percent after people familiar with the matter said Novartis AG and Shire Plc are among drugmakers weighing offers for the Belgian eye-medicine company. PSA Peugeot Citroen slid 6.3 percent after saying it will cut its model lineup by almost half. The Stoxx Europe 600 Index gained 0.3 percent to 329.79 at the close in London, paring earlier declines of as much as 1 percent. The gauge lost 3.1 percent last week. “The crisis in Ukraine is adding some volatility to the market, especially considering that there is a real economic risk if the situation escalates further,” Francois Savary, who helps oversee about $9.7 billion as chief investment officer at Reyl & Cie, said by phone from Geneva.
  • GM(GM) Faces More Tests as Documents Show Culture of Denial. The hundreds of pages of documents released by lawmakers last week shed new light on General Motors Co. (GM)’s more than decade-long failure to respond to auto-safety complaints, underscoring the struggle ahead for Chief Executive Officer Mary Barra as she seeks to refocus on the company’s new fleet of cars.
Wall Street Journal:
Business Insider:
Financial Times:
  • China engineers ‘Potemkin defaults’ to mask debt reality. Beijing wants market discipline without halting growth. The risks have ballooned as China has added new credit roughly equal to the size of the entire US banking system in just the past five years. Total debt as a percentage of GDP has increased from 130 per cent in 2008 to about 220 per cent at the end of last year, according to estimates from Fitch Ratings. An increase of that speed and scale has almost always been succeeded by a crisis in other economies.

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