giovedì 29 novembre 2012

Global stocks and euro higher but pressured by Boehner

U.S. stocks and the euro rose on Thursday but remained pressured by comments from top Republican lawmaker John Boehner, who indicated no substantive progress in the last two weeks in talks to reach a U.S. budget deal.
Boehner, the speaker of the U.S. House of Representatives, said he had no idea what compromises President Barack Obama was prepared to make on spending cuts.
Boehner's comments rattled investors, who had earlier driven a leading world stock index to a three-week high alongside a rally in the euro and commodities. Major U.S. indexes went negative to little changed before investors began betting rhetoric will not prevent a deal.
Hopes remain high that U.S. political leaders will reach a deal to avert $600 billion in spending cuts and tax hikes that some economists believe could tip the world's biggest economy back into recession.
"When the sentiment is that nothing is going to get done, it does create a lot of anxiety and selling pressure. If there's any sense of progress, then the market seems to rally," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago. "I think we're hostage to this for the rest of the year."
The "fiscal cliff" is the biggest risk facing global markets in the final weeks of the year, following an agreement earlier this week on fresh aid forGreece.
The Dow Jones industrial average .DJI ended up 36.71 points, or 0.28 percent, at 13,021.82. The Standard & Poor's 500 Index .SPX was up 6.02 points, or 0.43 percent, at 1,415.95. The Nasdaq Composite Index .IXIC was up 20.25 points, or 0.68 percent, at 3,012.03.
The MSCI global equities index .MIWD00000PUS was up 0.9 percent at 332.34, after earlier touching its highest level since November 7.
The FTSE Eurofirst 300 index .FTEU3 finished up 1.1 percent, with the close of European stock markets almost coinciding with Boehner's comments. It was the highest close for the benchmark European index since July 2011. Mining stocks, which are seen as among the riskiest equity sectors because they are more sensitive to changes in economic sentiment, were the best performers.
Good demand at a bond sale by Italy, where yields fell to their lowest level in two years, added to signs the crisis in the euro area has begun to ease and helped bolster optimism early in the global day.
Traders said until a deal was reached in Washington, share markets were likely to remain skittish.
U.S. government debt prices rose on safe-haven demand from investors who were rattled about the progress of budget talks in Washington.
The benchmark 10-year U.S. Treasury note was up 4/32, the yield at 1.6182 percent.
"There is very little conviction with all the political headlines," said Carl Lantz, chief U.S. interest rate strategist at Credit Suisse in New York.
Safe-haven German government bonds fell as investors returned to riskier assets before Boehner's comments, leaving benchmark 10-year debt yields at 1.37 percent.
The better tone allowed Italy to auction successfully six billion euros ($7.75 billion) of new five- and 10-year debt, which was expected to complete its funding needs for the year. The yield on the 10-year bond was around the lowest since November 2010.
Spain announced it would sell more bonds at an auction on December 5, although it has completed raising all the money it needs for this year.
Italian and Spanish debt have benefited in recent months from the European Central Bank's pledge to buy sovereign debt if countries ask for aid first. Although that has not yet happened, the prospect of a central bank backstop has made investors reluctant to sell and has pushed them back into those markets.
A fall in Italian and Spanish yields helped lift the euro 0.2 percent against the dollar to $1.2974, with hopes for a U.S. fiscal deal adding to support for the common currency. <FRX/>
Commodity markets also got some support from the U.S. fiscal deal hopes, while mounting tension in the Middle East bolstered oil prices on supply concerns. U.S. crude oil futures rose $1.33 to $87.92 a barrel and Brent climbed $1.04 to $110.55 a barrel.
Spot gold was up 0.4 percent at $1,725.80 an ounce, after a 1.3 percent tumble on Wednesday, the biggest daily decline in nearly four weeks.

U.S. Stocks Settle Higher

A jump in telecommunications and health-care shares helped stocks settle in the black after major indexes were briefly whipped around by fiscal-cliff worries.
The Dow Jones Industrial Average advanced 36.71 points, or 0.3%, to 13021.82. The Standard & Poor's 500-stock index rose 6.02 points, or 0.4%, to 1415.95, as all 10 sectors rose. The Nasdaq Composite Index rose 20.25 points, or 0.7%, to 3012.03.
Major benchmarks were higher most of the morning, but markets reversed course after House Speaker John Boehner said in a news conference that there had been no substantive progress in talks on the so-called fiscal cliff. The blue chips lost more than 50 points in five minutes as he spoke.
"It's amazing how quick the reactions are. Two sentences come out and it moves the market 50 points," said Alan B. Lancz, president of Alan B. Lancz Associates, in Toledo, Ohio. "Europe is off the radar, and the economic numbers are kind of meaningless. It's all trumped now by the fiscal progress, or lack thereof."
The slide soon halted after comments from other lawmakers. Senate Majority Leader Harry Reid said that he thought Congress could finalize a deal this year, and Sen. Charles Schumer said that lawmakers are making progress on talks behind the scenes.
"I think we're going to have these markets that react to every single headline. I think an agreement will be reached, and we're likely to see a relief rally at the end of it. But until then, hold on to your seat," said Joseph Tanious, global market strategist with J.P. MorganJPM +0.96% Funds, which oversees $400 billion.
When stocks moved back into the black, the traditionally defensive telecom and health sectors were the biggest gainers.
On the economic front, pending home sales rose 5.2% in October from the prior month, above the 1% increase expected.
The number of Americans filing initial claims for unemployment benefits fell slightly more than expected last week, to 393,000. Meanwhile, U.S. gross domestic product rose 2.7% in the third quarter, the Commerce Department said. The reading represented an upward revision from the 2% gain the department initially reported—economists expected a revision to 2.8%.
In corporate news, shares of Kohl's KSS -11.98% slid after it said that same-store sales for November fell 5.6%, when a 1.9% rise was expected.
Research in Motion RIM.T +4.36% rallied after Goldman Sachs GS -0.50% analysts recommended buying the shares, citing a "positive" risk-versus-reward outlook as the company prepares to start selling its BlackBerry 10 smartphone. Research in Motion's shares had tumbled 23% this year through the latest close.
European markets were broadly higher. The Stoxx Europe 600 ended up 1.2%. In Asian markets, Japan's Nikkei Stock Average rose 1% and Australia's S&P ASX 200 gained 0.7%. China's Shanghai Composite continued to buck the trend, shedding 0.5% for a fourth-straight loss and the lowest close in nearly four years.
Front-month oil futures rallied 1.9% to settle at $88.07 a barrel, while December gold futures tacked on 0.6% to $1,727.20 a troy ounce. The dollar lost ground against the euro and the yen. Yields on the benchmark 10-year U.S. Treasury bond rose slightly to 1.620% as prices fell, snapping a three-day streak of yield losses.
Elsewhere in corporate news, Kroger KR +4.75% rose after the grocery-store operator reported better-than-expected earnings and raised its profit forecast for the year.
Tiffany slumped after the high-end jewelry retailer reported earnings that fell short of expectations, and lowered its full-year outlook.
Guess GES +1.94% gained after the apparel company said it would pay a special dividend of $1.20 a share, news that outweighed fiscal third-quarter results that missed analyst projections.
Aeropostale ARO -4.96% slid after the youth-focused apparel company reported earnings that were better than Wall Street expected, but gave a dour outlook for the current quarter.
Infoblox BLOX +29.53% soared after the data-center technology company reported a blowout fiscal first quarter with earnings and revenue that were well above expectations, and provided an upbeat second-quarter outlook.

martedì 27 novembre 2012

Swiss Growth to Quicken in 2013; Rates Seen On Hold -OECD

Swiss economic growth should pick up in the second half of next year as an expected recovery in global export markets drives demand for the Alpine country's goods, the Organization for Economic Cooperation and Development said Tuesday.
Swiss gross domestic product growth is forecast to slow to 0.8% in 2012, but then quicken to 1.1% next year and 2.3% the year after, although the outlook for the euro-zone economy, Switzerland's biggest market, remains highly uncertain, the OECD said in its latest report.
At present "a decline in global activity and the strength of the Swiss franc are restraining exports, though domestic demand, particularly consumption and construction investment, is holding firm," the OECD said.
The Swiss economy contracted 0.1% in the second quarter, and the economics ministry is due to release third-quarter GDP data on Thursday
The Swiss National Bank imposed a floor of CHF1.20 per euro in September last year and cut interest rates to head off the risks of recession and deflation, and the OECD said the central bank should persist with its zero interest-rate policy.
"Deflationary pressures remain, although Swiss consumer prices have been rising of late, driven by higher prices for fuel, but core inflation remains negative, reflecting the impact of the strong franc," it said.
The OECD expects Swiss consumer prices this year to decline 0.6%, in line with the SNB's projections, and increase 0.1% in 2013.
The boom in the Swiss housing market, driven largely by record-low mortgage rates and demand from cash-rich immigrants, remains a concern, the OECD said.
"Although there are some signs of a loss of momentum, mortgage lending and Swiss house prices continue to increase strongly, and targeted measures to slow credit growth should be envisaged," it said.

Greek debt deal sends world shares higher

European shares climbed to near a three-week high and safe haven German bonds fell on Tuesday, after global lenders agreed to reduce Greek debt and release loans to keep the economy afloat.
After 12 hours of talks, they decided steps to cut Greek debt to 124 percent of gross domestic product by 2020, and promised further measures to lower it below 110 percent in 2022.
Following months of jockeying, the deal was broadly expected by markets and clears the way for Greece's euro zone neighbors and the International Monetary Fund (IMF) to disburse almost 35 billion euros of aid next month.
European shares on the FTSEurofirst 300 index .FTEU3 rose 0.5 percent following the deal, with London's FTSE 100 .FTSE, Paris's CAC-40 .FCHIand Frankfurt's DAX .GDAXI between 0.4 and 0.6 percent higher. .L.EU.N.
The MSCI index of global stocks .MIWD00000PUS was up 0.2 percent and U.S. futures prices pointed to a higher open on Wall Street when trading resumes.
"After three meetings this months and a total of more than 24 hours of discussing and negotiating, the euro zone countries have put their money where their mouth is," said ING economist Carsten Brzeski.
"The political will to reward the Greek austerity and reform measures has already been there for a while. Now, this political will has finally been supplemented by financial support."
On the currency markets, the euro hit $1.3010, its highest level since October 31, during Asian trading but lost momentum and was 0.3 percent down at $1.29445 by mid-morning in Europe.
"While the EU/IMF agreement on Greece is EUR-supportive, it was widely expected and hence the market reaction is likely to remain muted. We maintain our buy on dips strategy," Morgan Stanley's FX strategy team wrote in a note to clients.
Elsewhere the dollar was broadly flat against a basket of key currencies .DXY, while the yen slipped after Japan's opposition leader and likely next prime minister reiterated calls for bolder monetary and fiscal stimulus.
The Greek deal also helped commodity markets with copper rising to a near one month high of $7,791.50 a tonne and oil inching up 11 cents to $111.05 a barrel.
After an initial post-deal jump, gold <GOL/> steadied back at around $1,750 an ounce.
On the euro zone bond market, safe haven German government bonds fell, with benchmark Bunds down over 40 ticks at 142.00 compared with 142.43 at Monday's settlement. Ten year Greek yields remained near lows last seen when the country's debt was restructured in March.
"Bunds are falling simply because the market is relieved we have a deal now and the tail risk of a Greek accident has been taken out," said Michael Leister, a senior rate strategist at Commerzbank.
With doubts about Greece being able to hit its growth and debt cutting targets, few analysts expect the latest agreement to be the final chapter in the euro zone's three-year crisis.
Underscoring the concerns, the OECD slashed its global growth forecasts on Tuesday, saying the euro zone's troubles were the greatest threat to the world economy.
"(The Greek deal) is not the green light for a sustained rally for risk assets across the board. As we've seen before, once the market starts scrutinizing some of the details some doubts may well arise," added Commerzbank's Leister.
In Asian trading, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.6 percent to a near three-week high, led by a 1 percent advance in Korean shares .KS11and a 0.7 percent rise in Australian shares .AXJO. Indian shares .BSESN also jumped 1.2 percent.
Shanghai shares .SSEC bucked the trend to fall 1 percent to their lowest since 2009, dragged by weakness in growth-sensitive companies.

venerdì 23 novembre 2012

Growth Returns to Factories in China

The Chinese manufacturing sector expanded in November for the first time in more than a year, according to the early reading of a business survey released Thursday, the latest sign that the Chinese economy might have skirted the sharp slowdown that many economists had earlier feared.
Greater demand for Chinese goods around the world and a series of domestic stimulus measures are trickling through the Chinese economy, breathing life into the giant factory sector. A monthly purchasing managers index published by the British bank HSBC rose from 49.5 in October to 50.4 in November, climbing above the threshold of 50 that separates expansion from contraction for the first time in 13 months.
The preliminary reading of the HSBC index is one of earliest indicators to shed light on the Chinese economy’s performance each month, and it is closely watched by economists and investors.
If confirmed by further economic data in the coming weeks, the improved performance would cement a picture that has been crystallizing for the past couple of months: that the slowdown in growth that buffeted China for much of the past year has now bottomed out.
Indeed, many analysts believe the Chinese economy has already put the worst behind it, and that the recovery is gaining traction.
The HSBC reading Thursday suggests that the “upswing in China — and by extension in the whole Asia-Pacific region — is gathering strength,” Klaus Baader, an economist at the French bank Société Générale in Hong Kong, commented in a note. The report, he added, “should further dispel fears of a hard landing.”
Relaxed restrictions on bank lending, accelerated infrastructure investment, and two small interest rate cuts over the summer have helped reinject some dynamism, analysts said. The housing sector has stabilized after suffering from government-mandated restrictions aimed at reining in soaring prices in recent years.
At the same time, overseas demand for exports also has improved somewhat in recent months and has led to a marked improvement in export orders, according to the survey published Thursday.
Analysts caution, however, against expecting a sharp bounce back to the double-digit annual growth rates seen before the global financial crisis.
The current recovery, Qu Hongbin, chief China economist at HSBC, said in a note accompanying the survey results Thursday, is still in its early stages. More policy easing is necessary to strengthen the recovery, especially given the still uncertain global environment, Mr. Qu commented.
The U.S. tax increases and spending cuts set to take effect in January and the euro zone debt crisis remain “a key risk factor in China’s road of economic recovery going into next year,” economists at J.P. Morgan said in a research note.
Many analysts expect the Chinese economy to grow at rates between 7 percent and 8 percent in the next few years.
The J.P. Morgan team, for example, forecasts 7.6 percent for this year, and 8 percent for 2013. Both the World Bank and the International Monetary Fund forecast that expansion will tick up to a little more than 8 percent next year, from slightly less than 8 percent this year.
While that is well above the growth rates seen in Europe, Japan and the United States, such figures are well below the 9.3 percent expansion in 2011, and the 10.4 percent growth rate in 2010.
With a new leadership now taking the helm in Beijing, attention has also shifted to the longer-term issues that many economists say need to be addressed to keep China on a path of rapid growth.
The incoming leadership has already signaled that combating rampant corruption and addressing the environmental degradation caused by the headlong economic expansion of the past years are important priorities.
On the economic front, analysts say the economy needs to be weaned from the reliance on exports and investment in large infrastructure and other projects that underpinned past growth and the current recovery, toward more domestic and consumption-driven growth. China’s demographics — an aging population will cause the proportion of nonearners to soar in the coming years — will also present major challenges in the coming decades.
The final November reading of the HSBC purchasing managers index will be published Dec. 3, while the Chinese authorities will publish a string of economic data starting in early December.

UBS faces large fine from Swiss and UK regulators after trial

Swiss bank braced for reprimand over jailing of Kweku Adoboli for fraud

The Swiss bank UBS is braced for a fine and reprimand fromregulators after its former trader Kweku Adoboli was jailed for fraud.
The UK's Financial Services Authority and the Swiss financial market supervisory authority (Finma) are also investigating the trading activities of Adoboli, who was jailed on Tuesday after a jury at Southwark crown court found him guilty of two counts of fraud, although he was cleared on four other charges.
Finma is expected to announce its findings within days but while it can make public statements and demand changes to operations it does not have the power to impose fines. The FSA is expected to fine UBS and can also has the powers to penalise individuals who were authorised to worked in the London arm of Adoboli's bank.
The FSA announced in February that its investigation had been passed to its enforcement arm, signalling that some form of reprimand was likely. Adoboli, who lost UBS £1.5bn, had used a secret account, known as his "umbrella",for some of his trading activities. Three colleagues told the court that they knew of the secret account.
The largest fine ever imposed by the FSA was the £59.5m slapped on Barclays for attempting to manipulate the Libor benchmark interest rates.

Draghi Says ECB Won’t Be Overburdened by Bank Supervision Role

European Central Bank President Mario Draghi said his institution has the competence to supervise the euro region’s banks and sought to lay to rest concerns that it may be overburdened by the task.
“Some observers have suggested that the presence in the same institution of monetary policy and supervisory decisions can lead to excessive burdens, a potential confusion of roles and/or distorted incentives,” Draghi said in a speech at a banking congress in Frankfurt today. While those concerns “must be taken seriously,” building a single supervisor around the ECB “is the only pragmatic” option “in the present circumstances,” he said.
A single supervisor for all 6,000 euro-area banks under the auspices of the ECB is a key plank in efforts to create a banking union and put the monetary union on a sounder footing.Germany’s Bundesbank has raised concerns about whether the ECB’s new role will compromise its ability to control inflation, and there have also been calls for the ECB to supervise only the biggest banks.
Draghi said “all banks established in participating member states would in principle fall within the remit of the single supervisor,” and he stressed the need for “rigorous separation of monetary and supervisory policies.”
“We are taking this issue very seriously and we have envisaged ways to address it,” he said. “The ECB has the advantage of having a very clear goal of price stability, expressed in a transparent and measurable way. This objective has never been compromised in the 14 years of the euro so far and it will not be compromised in the future.”
Working jointly with national supervisory authorities, “the ECB will have the legal authority and technical capability to carry out this complex task successfully,” Draghi said. A single supervisor is important to “ensure a level playing field” and will also “prevent fragmentation in the financial system, which is precisely what we are aiming to repair.”

venerdì 2 novembre 2012

Restoration Hardware Surges After Pricing IPO at Top of Range

Restoration Hardware Holdings Inc. (RH), the seller of leather couches and tables made of salvaged wood, rose as much as 38 percent in trading after pricing its initial public offering at the top of the proposed range.
The shares climbed 30 percent to $31.10 at 11:01 a.m. in New York after earlier advancing to $33.15. Corte Madera, California-based Restoration Hardware and shareholders yesterday raised $123.9 million selling 5.2 million shares for $24 each, according to a statement, after offering them for $22 to $24 apiece.
The IPO price valued Restoration Hardware at $887.3 million, or 27 times net income in the 12 months through July, making the stock about 64 percent more expensive than peers, according to data compiled by Bloomberg. The company commanded a premium to shares of home retailers Williams-Sonoma Inc. (WSM)Ethan Allen Interiors Inc. (ETH) and Bed Bath & Beyond Inc. (BBBY)after annual profit surged sixfold and U.S. housing starts climbed to the highest level in four years.
“If you look at our track record during the last few years where we looked at economic difficulties, our customer has responded tremendously well,” Gary Friedman, chairman emeritus and former co-chief executive officer, said in an interview today on Bloomberg Television. “We continue to believe that the customer will continue to respond in a very significant way.”

Rising Confidence

Restoration Hardware didn’t name competitors in its filings. It operates in a market “characterized by smaller, independent competitors” and targets consumers with household incomes of $200,000 or higher, according to regulatory filings.
Net income at Restoration Hardware jumped in the 12 months through July to $33.1 million from $4.9 million a year earlier as the company closed stores and sold more online and through catalogs, regulatory filings show. Sales increased 22 percent in the same period to $1.05 billion. Williams-Sonoma, Ethan Allen and Bed Bath & Beyond were valued at an average of 16 times net income in comparable periods in yesterday’s trading.
Consumer confidence rose to a five-year high in October, while housing starts in the U.S. surged 15 percent in September to the highest level in four years, adding to signs of a revival in the industry at the heart of the financial crisis. A net 171,000 workers were added to U.S. payrolls in October, according to Labor Department statistics. The increase was more than the median forecast of 125,000 in a Bloomberg survey.

Catterton Buyout

Restoration Hardware moved ahead with the offering after former Friedman announced in August he would step down as co- CEO. The 55-year-old, who has frequently appeared in the large catalogs for which the company is known, will stay on as an adviser and board observer, the filing shows. As of today, a letter from him was on the home page of the company’s website, citing Don Quixote and ending with the words “Carpe Diem.”
Friedman’s departure came after the company investigated a personal relationship between the former co-CEO and an employee, according to filings. Friedman, who didn’t plan to sell shares in the IPO, will own about a 16 percent stake after the offering, worth about $138 million at the IPO price, data compiled by Bloomberg show.
The shares offered represent a 14 percent stake in the Restoration Hardware, filings show. The company sold 4.8 million of the shares in the sale, while management and other holders sold about 382,000 shares, according to filings.
Restoration Hardware, previously listed on the Nasdaq Stock Market, was bought by a group including Friedman and private equity firm Catterton Partners in 2008. After the IPO, Catterton will have a 32 percent stake, filings show.
Restoration Hardware is listed on the New York Stock Exchange under the symbol RH. Bank of America Corp. and Goldman Sachs Group Inc. led the sale.