Observation: business news headlines have slim pickings on a Monday morning. I guess the Superbowl Weekend really is a holiday.
As an aside, I think that the Giants won – but that’s mainly because Chaz né(e?) Chastity Bono kept tweeting “Go Giants” and “Yes Giants”. And, obviously, because, like, Madonna totally did the half-time show. L! U! V! MADONNA! My feed has been totally corrupted. Mostly by grown businessmen re-tweeting Perez Hilton’s shameless adoration of Her Majesty.
But back to business, the key points:
- Greek Prime Minister Lucas Papademos has secured an agreement. But it seems that it’s not the awaited-for agreement – just one of a series of much-needed agreements. The international lenders want some assurance that the newly-elected government (Greek elections are due to be held in April/May) will stick with the austerity program. Which typically has resulted in a weekend of much political posturing and egg-on-faces. Antonis Samaras, the head of one of the opposing parties, has been repeatedly redefining his position all weekend. First he’d never accept the agreement, then what he meant was that he’d never accept all the measures, then what he meant is…so on, so forth. Bored. So far, the agreement is in principle, not on paper. There is a deadline for the final agreement of 11am this morning CET. It all sounds a lot like not a lot has happened. But the papers are heralding a step forward. The analysts being interviewed, however, sound remarkably pessimistic. But rather be pessimistic and wrong, I say; than optimistic and right. Although, a tweet that amused me: “Dear Optimist, Pessimist & Realist. While you were arguing about the glass, I drank it. Regards, The Opportunist”. Thanks @IgorNaj. The news link: http://www.bloomberg.com/news/2012-02-05/papademos-greek-leaders-agree-to-cuts-equal-to-1-5-of-gdp-as-talks-set.html.
- Asian stocks continue to rally on every piece of news that gets released. That seems to be the general trend. Either that, or the journalists are desperate for the news in Europe and the US to explain any movement in Asian stocks. This week, the increase is on the back of the latest US job data, which was better than expected. More Americans employed means more endless consuming which means that China has more people to sell to. Bonus. The Euro, however, was less lucky this morning (see 1 above – the market participants don’t appear too be fooled). http://www.bloomberg.com/news/2012-02-06/asian-stocks-climb-on-u-s-jobs-growth-euro-drops-on-greek-debt-concern.html.
- Food Prices are set to rise, according to a new report issued by the UN’s Food and Agriculture Organization. Frankly, this is good news for Africa. Africa has some of the best yield-to-investment ratios per hectare in the world. http://www.bloomberg.com/news/2012-02-05/era-of-food-prices-always-falling-seen-at-end-on-population-cargill-says.html.
- Quite a few investors bought Greek bonds hoping to profit off the settlement deal: the idea being that if you bought the bond when it was trading at 100% yield (or trading at 50% of its face-value) – you would then make a solid return if the “haircut” on the bond was less than 50%. On January 25th, the Financial Times reported that the bonds were trading at 1,100% yields (or about 9% of face value) http://www.ft.com/intl/cms/s/0/71660f5e-4777-11e1-9a92-00144feabdc0.html#axzz1lZsv3vOF. This means that if you bought bonds then, and there is a 70% haircut, the investors will be receiving 30% of face-value, for a purchase price of 9% (roughly). That’s about a 200% return!! And that’s assuming that you accept the voluntary deal. Which just goes to show that people make the most money in a crisis. But there are some hedge funds that are concerned that the Greek Government will legislate the acceptance of the deal, and there is always the risk of future haircuts. http://www.bloomberg.com/news/2012-02-06/hedge-funds-underestimating-europe-s-will-to-force-greek-losses-on-them.html.
- In the Oil industry, the US seems to be considering blacklisting Iranian oil http://www.bloomberg.com/news/2012-02-06/iran-sanctions-plan-targets-oil-companies-tanker-fleet-to-slash-business.html. I think I’ve said it before – I think that oil is our economic life-blood. We use oil-related products everywhere, all the time. Much more often than we eat or drink. If the sanctions lead to an OPEC vs the US stand-off, I think that the US might get really concerned again about Iranian weapons of mass destruction. And we all know where that story ends. Especially with the Republicans looking set to remove Obama from office.
- This follows on from the continuing “I’m-embargoing-you – I’m-cutting-you-off” saga between Iran and the EU. Oi vey. Apparently Iran was just joking, though: http://www.cnbc.com/id/46272462.