Monday, December 16, 2013

Today's Headlines

  • EU Banks Shrink Assets by $1.1 Trillion as Capital Ratios Rise. European Union banks have shed more than $1.1 trillion of assets since the end of 2011 in a shift away from risky investments such as asset-backed debt as regulators push lenders to shore up their balance sheets. Lenders reduced assets weighted for risk by 817 billion euros ($1.1 trillion) between December 2011 and June 2013, the European Banking Authority, the bloc’s top banking regulator, said in a report today. Banks’ core Tier 1 capital ratios, a measure of how well they can absorb losses, rose to 11.7 percent from 10 percent over the time period. The quality of EU retail and corporate debt on banks’ books has worsened since 2011, during a period of government cutbacks and an economic contraction of 0.4 percent in 2012. Defaulted assets as a percentage of total holdings rose to 3.8 percent from 3 percent overall, the EBA said, with private companies hitting a bad debt ratio of 6.9 percent.
  • Draghi Says European Bank Resolution Plan May Be Too Complex. European Central Bank President Mario Draghi criticized plans by euro-area governments on how to deal with failing banks, saying current proposals might be too complicated to work properly. “I am concerned that decision-making may become overly complex and financing arrangements may not be adequate,” Draghi said during a hearing at the European Parliament in Brussels today. “We should not create a Single Resolution Mechanism that is single in name only.”
  • European Stocks Rise Most in Two Months on Manufacturing. European stocks climbed the most in two months after a gauge of manufacturing in the euro area rose more than forecast and as investors awaited a Federal Reserve meeting starting tomorrow to gauge the timing of stimulus cuts. Aggreko Plc (AGK) rallied the most since March after saying net debt will decline. Deutsche Telekom AG advanced 3.8 percent after a report said Sprint Corp. is considering a bid for T-Mobile US Inc. Moncler SpA surged 47 percent on the first trading day for the Italian luxury skiwear maker. UBM Plc (UBM) fell 3.7 percent after Kepler Cheuvreux said its 2014 margin forecast for the events business fell below some analysts’ estimates. The Stoxx Europe 600 Index advanced 1.3 percent to 313.64 at the close of trading in London.    
  • Euro Increases as Manufacturing Expands; Dollar Falls Before Fed. The euro rose 0.1 percent to $1.3759 at 2:07 p.m. New York time. The 17-nation common currency slipped 0.1 percent to 141.69 yen, while the dollar dropped 0.2 percent to 102.98 yen after rising to 103.92 yen on Dec. 13, the strongest level since October 2008.
  • China Money Rates Climb as PBOC Predicts Higher Borrowing Costs. China’s benchmark money-market rate rose from near a one-month low on concern demand for cash will increase as year-end approaches and as the central bank forecast market reforms will lead to higher borrowing costs. The seven-day repo rate, a gauge of funding availability in the banking system, increased 14 basis points, or 0.14 percentage point, to 4.45 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.
  • Attack on Police in Western China Kills 16, Tianshan Reports. Sixteen people were killed when rioters attacked police as they were detaining suspects in China’s restive northwest province of Xinjiang, according to a news portal controlled by the local government. Two police and 14 rioters were killed, the article on said without citing anyone. Two suspects were detained in the attack, which occurred in Shufu county of Xinjiang’s Kashgar region, according to the article.
  • India Inflation Exceeding Estimates Adds Rate-Rise Pressure. India’s wholesale inflation was faster than economists estimated in November, reaching a 14-month high and adding pressure for a further increase in the benchmark interest rate this week to quell price pressures. The wholesale-price index rose 7.52 percent from a year earlier, compared with 7 percent in October, the Commerce Ministry said in New Delhi today. The median estimate in a Bloomberg News survey of 37 analysts was 7 percent.
  • Mexico Ending Monopoly Seen Drowning North America in Crude. The flood of North American crude oil is set to become a deluge as Mexico dismantles a 75-year-old barrier to foreign investment in its oil fields. Plagued by almost a decade of slumping output that has degraded Mexico’s take from a $100-a-barrel oil market, President Enrique Pena Nieto is seeking an end to the state monopoly over one of the biggest crude resources in the Western Hemisphere. The doubling in Mexican oil output that Citigroup Inc. said may result from inviting international explorers to drill would be equivalent to adding another Nigeria to world supply, or about 2.5 million barrels a day.
  • Freight-Drone Dream Has U.S. States Vying for Test Sites. The idea of drones buzzing the skies, delivering packages and spreading seeds, has set off a race among 24 U.S. states to win permission to open testing facilities to see whether unmanned aircraft can co-exist with passenger jets. States from Massachusetts to California are seeking to build and run centers where private researchers will study how to operate drones without crashing into planes or houses.
Business Insider:
  • Italy could be racked by violent unrest, president warns. President Giorgio Napolitano warned on Monday that Italy could be plunged into violent social unrest unless the government swiftly introduced reforms to help struggling citizens, following a week of protests in cities across the country. 

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