- America’s Fed left its monetary policies unchanged today. It also indicated that it would do more if needed to help continue the recovery and ensure that inflation continues on target. Those two conflicting targets make for a great tagline. But that’s about it really. An action-redundant phrasing of “when something happens, we’ll do something; but we’d really like everyone to know that we’re committed to doing something. My name is Ben Bernanke, and I’m a-addictaphone stuck on repeat”. So largely, not very interesting. On the other hand, don’t expect QE3 any time soon. Link: Bernanke says Fed prepared to do more if necessary.
- Japan is expected to announce further asset purchases tomorrow. Otherwise, it will “sow confusion”, according to a former Central Banker. But the part that I appreciated most was the comment on the Bank of Japan’s impact on its currency. Which is none at all, really – in the long term. I guess that’s the danger of being a giant exporter. Your economic health is intrinsically tied to that of your main customers; but it’s not like you can go play with their monetary policy. Link: BOJ to take it easy.
- Credit Suisse announces a 96% drop in profit. On the other hand, they still made a profit: which is better than what was expected. The profit drop is due to “accounting write-offs”, according to CEO Brady Dougan. You know when people talk about “Big Bath Behaviour” (an attitude of let’s get all the bad news out of the way now), I imagine that they have this type of announcement in mind. There were debt write-offs under Basel III requirements; the company repriced its own debt (as it’s now more expensive for them to borrow in the market); there’s been deleveraging and selling off of investment arms. Makes sense to me – the market is expecting poor financial results in the financial services industry. Part of me wants to buy shares in Credit Suisse. Link: Credit Suisse making 4% of what it made a year ago.
- Watson Pharmaceuticals agrees to buy Actavis Group for $5.6 billion. The purchase gives Watson presence in Eastern Europe and Asia. Actavis makes a generic version of Ritalin; which was as far as I got before I ironically stopped paying attention. Link: A Generic Deal.
- After six years, the US Housing Market is said to be bottoming out. Except that there is a host of foreclosures on the horizon, as some of those lawsuits against the banks (made by delinquent homeowners) have been recently settled… I recall a big brouhaha a few months ago about the states all signing this settlement agreement with the banks, which meant that the banks could go right ahead and restart seizing homes. Link: US Housing scrapes the barrel.
- French Presidential front-runner Francois Hollande says he won’t ratify the Euro fiscal pact, if elected. He keeps using the word “negotiation”, but it sounds a lot like petulance. The crux: if France wants to stay in the euro (and it should – too late and too expensive to back out now), there needs to be some fiscal accord between the nations to keep the currency stable. Getting all upset about it now is short-sighted. Link: Hollande says no.
- Coke announces its 11th Stock Split. But Mr Buffett is not a fan, as share splits make shares more liquid and easier to trade; and WB has warned in the past that splits can encourage short-term trading strategies which would be bad for the business. On the other hand, that came out of a Shareholders Letter that was written almost 30 years ago; and his son Howard voted in favour of the 2-to-1 split. Link: Coke and Buffett Split.
- Despite a mad cow, Canada, Mexico, Japan and South Korea (the four biggest customers) will continue to buy US beef. The future(s market) rebounded as everyone calmed down. But actually, the process for keeping the mad cows out of the human consumption system is quite interesting. Canada is ambivalent because they were the source of the original mad cow in December 2003 (the last major scare), and they’ve had 19 cases since then. South Korea plans to do more checks. Japan still operates under the assumption that all US cows might be mad, so only imports beef that’s come from young cows as cows over 20 years old are more at risk. But that sounds like a dud theory to me – surely 2 year old cows give the same amount of meat as a 20 year old ones? Why would anyone maintain them for that long then? I suppose that its the breeding cattle that could sneak in there. But frankly the chance of that small and infrequent set of carcasses being sent to Japan AND that they’ll be sick is probably a lot lower than the chance that a young cow could uncharacteristically act like an old one and go mad. But maybe that’s just me. Link: Cattle Futures Rebound.
- Iran may halt its nuclear program over sanctions. But the source of that comment is the Iranian envoy to Moscow. America has raised an eyebrow and suggested that the world listen to the key negotiators and not some envoy from Moscow. Link: EU trade embargo on Iranian Oil may be working.
- And the African Business News in brief. Link: ABN Briefs. The highlights:
- Namibia keeps its key lending rate constant at 6%.
- Malawi’s maize crop expected to fall by 7% this year. But more interestingly, new President Joyce Banda has fired the Central Bank governor in her latest round of house-cleaning.
- Nigeria’s United Bank for Africa is seeking to merge its Zambian unit with another local lender in order to meet minimum capital requirements; after the Zambian Government increased capital requirements for foreign banks from around $2.31 million to $100 million.
That’s all for now.
Have a good day.