Bloomberg Business and Finance Summary
2014-09-17 07:05:00.761 GMT
The following are today's top stories from Business and Finance:
1. China Joins ECB in Adding Stimulus as Fed Scales Back: Economy
2. Europe Car Sales Set Record Growth Streak on VW, Ford Compacts
3. Europe Index Futures Pace Asia Gain as China Easing Spurs Metals
4. Sony Widens Loss Forecast Amid Rising Smartphone Competition
5. Bill Gross Used $45 Billion Derivatives to Lift Pimco Fund Gains
6. Citigroup Embraces Derivatives Risk as Deals Surge After Crisis
7. Russia Places Billionaire Under House Arrest Over Oil Assets
8. Scotland Without Pound Seen as Threat to Housing: Mortgages
9. Airbus to Keep A380 Build Rate as Deals Remain Elusive
10. Asya Sukuk World’s Worst as Erdogan Fuels Feud: Islamic Finance
11. Fed Decision Day Guide: Considerable Debate on Forward Guidance
12. Food Babe’s Starbucks Attacks Draw ‘Quackmail’ Backlash: Retail
1) China Joins ECB in Adding Stimulus as Fed Scales Back: Economy
(Bloomberg) -- China’s central bank joined its European counterpart in boosting liquidity to address weakening growth, underscoring a divergence in direction among the world’s biggest economies as the U.S. reduces stimulus.
The People’s Bank of China is injecting 500 billion yuan
($81 billion) into the nation’s largest banks, according to a government official familiar with the matter, signaling the deepest concern yet with an economic slowdown. Federal Reserve Chair Janet Yellen will announce another $10 billion cut to its monthly bond purchases after this week’s meeting, economists forecast, as she steers toward gradual interest-rate increases.
China’s credit expansion builds on targeted measures to shore up growth while stopping short of broad-based stimulus seen in the U.S. in the wake of the global financial crisis and still being pushed in Europe and Japan. By attaching a three- month term to its injection, China is taking a step down that path ...
Full story: {FIFW NSN NC17606JIJUU <GO>}
2) Europe Car Sales Set Record Growth Streak on VW, Ford Compacts
(Bloomberg) -- European car sales rose a 12th consecutive month as compact models from Ford Motor Co. and Volkswagen AG and price cuts by automakers led to the longest stretch of growth on record.
Registrations increased 1.8 percent in August to 701,118 vehicles from 688,464 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Sales in the eight months through August jumped 5.8 percent to 8.64 million cars.
Demand for cars in Europe is reviving from a two-decade low last year that stemmed from a sovereign-debt crisis and recession in the countries sharing the euro. The VW Polo and Ford’s competing Fiesta helped propel sales jumps last month exceeding 14 percent for those brands. Manufacturers tried to win buyers with discounts that Barclays Plc estimated averaged
20 percent in Germany and 18 percent in France.
“A slowdown in year-on-year industry growth during the third quarter is a ...
Full story: {FIFW NSN NC179K6TTDS2 <GO>}
3) Europe Index Futures Pace Asia Gain as China Easing Spurs Metals
(Bloomberg) -- European equity-index futures climbed as Asian stocks snapped their longest slump in 12 years and industrial metals rallied with Chinese bonds as the country’s central bank boosted stimulus. The dollar strengthened before the Federal Reserve reviews interest rates.
The MSCI Asia Pacific Index added 0.3 percent by 7:15 a.m.
in London, rising for the first time in 10 days, and contracts on the Euro Stoxx 50 Index rose 0.4 percent. A gauge of Chinese shares in Hong Kong jumped 1.5 percent, while China’s five-year bonds gained the most in three months. Copper and nickel advanced at least 0.4 percent in London. Standard & Poor’s 500 Index futures retreated 0.1 percent and the Bloomberg Dollar Spot Index climbed 0.1 percent after its biggest drop in three months yesterday.
China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks, according to a government official familiar with the matter, signaling the ...
Full story: {FIFW NSN NC189L6TTDSO <GO>}
4) Sony Widens Loss Forecast Amid Rising Smartphone Competition
(Bloomberg) -- Sony Corp. widened its full year net loss forecast to 230 billion yen from a 50 billion yen loss and suspended its dividend after writing down the value of its smartphone business. Shares fell in German trading.
The Tokyo-based company said its loss for the year would be bigger than previously forecast because of a writedown of 180 billion yen in the value of its phone business due to competition in the market, the company said in a statement today.
Chief Executive Officer Kazuo Hirai is struggling to revive Sony through content, consoles and mobile devices. The company has lost money in five of the last six years amid declining demand for televisions and compact cameras.
“The size of it is larger than expected, but the movement they’re taking is largely in-line in the last two or three months this year,” said Damian Thong, a Tokyo-based analyst at Macquarie ...
Full story: {FIFW NSN NC190A6TTDS8 <GO>}
5) Bill Gross Used $45 Billion Derivatives to Lift Pimco Fund Gains
(Bloomberg) -- Bill Gross is relying on derivatives rather than Janet Yellen to raise his returns on government bonds.
The co-founder of Pacific Investment Management Co. sold most of the $48 billion of U.S. Treasuries held by his $221.6 billion Pimco Total Return Fund in the second quarter, replacing them with about $45 billion of futures, according to an August filing. The contracts require small up-front payments, freeing up money for Gross to invest in higher-yielding securities including Brazilian, Spanish and Italian debt.
“They are taking the cash and buying all these peripheral bonds that have a lot of spread on them relative to Treasuries,” said Erik Schiller, a Newark, New Jersey-based senior money manager at Prudential Fixed Income, referring to bonds issued by European countries other than France and Germany. “It is levering their fund.”
Pimco in May said that interest rates in the U.S. will remain lower than they had been ...
Full story: {FIFW NSN NC0RH86K50XX <GO>}
6) Citigroup Embraces Derivatives Risk as Deals Surge After Crisis
(Bloomberg) -- Citigroup Inc. is diving deeper into derivatives.
In the past five years, the firm that took the largest U.S.
bank bailout of the financial crisis increased the total amount of derivatives on its books by 69 percent, surpassing most U.S.
peers and closing the gap with the market leader, JPMorgan Chase & Co. At the end of June, Citigroup had $62 trillion of open contracts, up from $37 trillion in June 2009, company filings show. JPMorgan trimmed its holdings 14 percent to $68 trillion.
Citigroup is expanding as regulators try to rein in instruments that helped fuel the 2008 credit contraction. The third-largest U.S. lender has amassed the largest stockpile of interest-rate swaps, a type of derivative that can swing in value when central banks raise rates. More than 92 percent of the bank’s derivatives don’t trade on exchanges, making it harder for regulators to spot dangers in the market.
“Risk-taking is in their DNA,” said Arthur ...
Full story: {FIFW NSN NC0QX46JIJUX <GO>}
7) Russia Places Billionaire Under House Arrest Over Oil Assets
(Bloomberg) -- Billionaire Vladimir Evtushenkov, the richest Russian to face criminal charges since Mikhail Khodorkovsky, was placed under house arrest yesterday on suspicion of money laundering.
The accusations stem from a probe into the alleged theft of shares in oil assets in Russia’s Bashkortostan region in which Evtushenkov’s AFK Sistema acquired full control in 2009, according to the Investigative Committee. Sistema said the accusations were “completely groundless” and vowed to use all possible legal means to make their case.
Khodorkovsky, released in December after a decade in prison, said OAO Rosneft Chief Executive Officer Igor Sechin, a long-time ally of President Vladimir Putin, may have engineered the arrest to pressure Evtushenkov into selling his oil company, OAO Bashneft, Vedomosti newspaper reported. Rosneft isn’t interested in Bashneft, and Khodorkovsky’s ...
Full story: {FIFW NSN NC19856JTSEA <GO>}
8) Scotland Without Pound Seen as Threat to Housing: Mortgages
(Bloomberg) -- A vote in favor of Scottish independence tomorrow threatens to weigh down a booming housing market should thousands of homeowners become debtors of foreign lenders.
Political leaders in the U.K. are sparring over whether an independent Scotland would keep the pound, with the outcome having major consequences for the economy and housing. If Scottish homeowners eventually have to repay pound-denominated loans in a foreign currency, they would face the risk of higher costs and possible default.
Prime Minister David Cameron warned on Sept. 14 the breakup would be akin to a “painful divorce,” and said the U.K. won’t share its currency with an independent Scotland. Independence leaders dismiss the government’s threat, insisting that Scotland and the rest of the U.K. would form a currency union to benefit both nations.
“A Scotland outside the U.K. would open ...
Full story: {FIFW NSN NC0K1K6TTDSU <GO>}
9) Airbus to Keep A380 Build Rate as Deals Remain Elusive
(Bloomberg) -- Airbus Chief Executive Officer Fabrice Bregier said the company can maintain a production rate of almost 30 A380 a year even amid slack demand, and will seek to build fresh interest with superjumbos coming off lease.
Bregier, speaking at the Airbus factory in Hamburg, where Qatar Airways Ltd. took delivery of its first A380, acknowledged that interest in the largest commercial airliner has been “soft,” with no deals from airlines so far this year. Still, the planemaker has enough double-deckers on order to keep production at close to 30 annually, he said.
The flagship Airbus has proven increasingly tough to sell, and some operators are struggling to put it to use or are canceling orders outright. Airbus has sought to broaden the appeal of the A380 by selling 20 units to a leasing company that has pledged to find buyers that don’t yet have the A380 in ...
Full story: {FIFW NSN NC1A2P6KLVR4 <GO>}
10) Asya Sukuk World’s Worst as Erdogan Fuels Feud: Islamic Finance
(Bloomberg) -- A feud between Turkish President Recep Tayyip Erdogan and a U.S.-based Islamic cleric has made sukuk from Asya Katilim Bankasi AS the worst-performing in the world.
Debt from the Shariah-compliant lender known as Bank Asya, which was founded by followers of Fethullah Gulen, has lost 29 percent this year, compared with an average 4.5 percent return for dollar-denominated sukuk globally, according to data compiled by Bloomberg.
“Only 10 months ago, the leader of the banking sector had a strong record in growth and expansion, but with this political trouble the bank started to suffer,” Montasser Khelifi, a senior manager for global markets at Quantum Investment Bank Ltd. in Dubai, said by phone yesterday. The government must be clear about what the “problem” with Bank Asya is and decide whether it will take over the lender or impose ...
Full story: {FIFW NSN NC19AS6S9729 <GO>}
11) Fed Decision Day Guide: Considerable Debate on Forward Guidance
(Bloomberg) -- Here’s what to look for when the Federal Open Market Committee releases its policy statement and new economic projections at 2 p.m. today in Washington and Federal Reserve Chair Janet Yellen holds a press conference at
2:30 p.m.
-- Still “considerable”? It’s shaping up as a close call.
Thirty-two of 60 economists in a Bloomberg survey said the FOMC will stick to its pledge to keep its benchmark interest rate near zero for a “considerable time” after it finishes bond purchases.
Cutting that language could spook investors, said Lindsey Piegza, chief economist at Sterne Agee & Leach Inc. in Chicago.
“One of the biggest concerns with removing that is that the markets will read it as a hawkish tilt,” she said.
The committee doesn’t need to drop the phrase immediately, because the end of bond purchases probably won’t come for at least another month. The FOMC today will probably announce that monthly ...
Full story: {FIFW NSN NC0M4E6KLVR6 <GO>}
12) Food Babe’s Starbucks Attacks Draw ‘Quackmail’ Backlash: Retail
(Bloomberg) -- Food Babe breezes into a public radio station in Charlotte, North Carolina, clutching a $10 jar of raw juice and dressed from her morning workout -- Lululemon tank, sequined black Uggs and a charm necklace blessed in India.
Food Babe is the nom de blog for Vani Hari, a 35-year-old banking consultant turned food activist, who has built a loyal online audience by calling out companies from Starbucks Corp. to Chick-fil-A Inc. for ingredients she deems harmful. Hari has tapped into Americans’ growing disquiet about processed food with a simple overarching question: What if all the small amounts of artificial and synthetic ingredients we ingest add up to something that harms us? If it’s true that the dose makes the poison, “we don’t know the dose,” she says.
On this day in early February, Hari is savoring her latest coup, shaming the Subway sandwich chain over a chemical in its bread that’s also found in yoga mats. With her blog ...
Full story: {FIFW NSN NC0U8K6K50Y3 <GO>}
2014-09-17 07:05:00.761 GMT
The following are today's top stories from Business and Finance:
1. China Joins ECB in Adding Stimulus as Fed Scales Back: Economy
2. Europe Car Sales Set Record Growth Streak on VW, Ford Compacts
3. Europe Index Futures Pace Asia Gain as China Easing Spurs Metals
4. Sony Widens Loss Forecast Amid Rising Smartphone Competition
5. Bill Gross Used $45 Billion Derivatives to Lift Pimco Fund Gains
6. Citigroup Embraces Derivatives Risk as Deals Surge After Crisis
7. Russia Places Billionaire Under House Arrest Over Oil Assets
8. Scotland Without Pound Seen as Threat to Housing: Mortgages
9. Airbus to Keep A380 Build Rate as Deals Remain Elusive
10. Asya Sukuk World’s Worst as Erdogan Fuels Feud: Islamic Finance
11. Fed Decision Day Guide: Considerable Debate on Forward Guidance
12. Food Babe’s Starbucks Attacks Draw ‘Quackmail’ Backlash: Retail
1) China Joins ECB in Adding Stimulus as Fed Scales Back: Economy
(Bloomberg) -- China’s central bank joined its European counterpart in boosting liquidity to address weakening growth, underscoring a divergence in direction among the world’s biggest economies as the U.S. reduces stimulus.
The People’s Bank of China is injecting 500 billion yuan
($81 billion) into the nation’s largest banks, according to a government official familiar with the matter, signaling the deepest concern yet with an economic slowdown. Federal Reserve Chair Janet Yellen will announce another $10 billion cut to its monthly bond purchases after this week’s meeting, economists forecast, as she steers toward gradual interest-rate increases.
China’s credit expansion builds on targeted measures to shore up growth while stopping short of broad-based stimulus seen in the U.S. in the wake of the global financial crisis and still being pushed in Europe and Japan. By attaching a three- month term to its injection, China is taking a step down that path ...
Full story: {FIFW NSN NC17606JIJUU <GO>}
2) Europe Car Sales Set Record Growth Streak on VW, Ford Compacts
(Bloomberg) -- European car sales rose a 12th consecutive month as compact models from Ford Motor Co. and Volkswagen AG and price cuts by automakers led to the longest stretch of growth on record.
Registrations increased 1.8 percent in August to 701,118 vehicles from 688,464 a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today in a statement. Sales in the eight months through August jumped 5.8 percent to 8.64 million cars.
Demand for cars in Europe is reviving from a two-decade low last year that stemmed from a sovereign-debt crisis and recession in the countries sharing the euro. The VW Polo and Ford’s competing Fiesta helped propel sales jumps last month exceeding 14 percent for those brands. Manufacturers tried to win buyers with discounts that Barclays Plc estimated averaged
20 percent in Germany and 18 percent in France.
“A slowdown in year-on-year industry growth during the third quarter is a ...
Full story: {FIFW NSN NC179K6TTDS2 <GO>}
3) Europe Index Futures Pace Asia Gain as China Easing Spurs Metals
(Bloomberg) -- European equity-index futures climbed as Asian stocks snapped their longest slump in 12 years and industrial metals rallied with Chinese bonds as the country’s central bank boosted stimulus. The dollar strengthened before the Federal Reserve reviews interest rates.
The MSCI Asia Pacific Index added 0.3 percent by 7:15 a.m.
in London, rising for the first time in 10 days, and contracts on the Euro Stoxx 50 Index rose 0.4 percent. A gauge of Chinese shares in Hong Kong jumped 1.5 percent, while China’s five-year bonds gained the most in three months. Copper and nickel advanced at least 0.4 percent in London. Standard & Poor’s 500 Index futures retreated 0.1 percent and the Bloomberg Dollar Spot Index climbed 0.1 percent after its biggest drop in three months yesterday.
China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks, according to a government official familiar with the matter, signaling the ...
Full story: {FIFW NSN NC189L6TTDSO <GO>}
4) Sony Widens Loss Forecast Amid Rising Smartphone Competition
(Bloomberg) -- Sony Corp. widened its full year net loss forecast to 230 billion yen from a 50 billion yen loss and suspended its dividend after writing down the value of its smartphone business. Shares fell in German trading.
The Tokyo-based company said its loss for the year would be bigger than previously forecast because of a writedown of 180 billion yen in the value of its phone business due to competition in the market, the company said in a statement today.
Chief Executive Officer Kazuo Hirai is struggling to revive Sony through content, consoles and mobile devices. The company has lost money in five of the last six years amid declining demand for televisions and compact cameras.
“The size of it is larger than expected, but the movement they’re taking is largely in-line in the last two or three months this year,” said Damian Thong, a Tokyo-based analyst at Macquarie ...
Full story: {FIFW NSN NC190A6TTDS8 <GO>}
5) Bill Gross Used $45 Billion Derivatives to Lift Pimco Fund Gains
(Bloomberg) -- Bill Gross is relying on derivatives rather than Janet Yellen to raise his returns on government bonds.
The co-founder of Pacific Investment Management Co. sold most of the $48 billion of U.S. Treasuries held by his $221.6 billion Pimco Total Return Fund in the second quarter, replacing them with about $45 billion of futures, according to an August filing. The contracts require small up-front payments, freeing up money for Gross to invest in higher-yielding securities including Brazilian, Spanish and Italian debt.
“They are taking the cash and buying all these peripheral bonds that have a lot of spread on them relative to Treasuries,” said Erik Schiller, a Newark, New Jersey-based senior money manager at Prudential Fixed Income, referring to bonds issued by European countries other than France and Germany. “It is levering their fund.”
Pimco in May said that interest rates in the U.S. will remain lower than they had been ...
Full story: {FIFW NSN NC0RH86K50XX <GO>}
6) Citigroup Embraces Derivatives Risk as Deals Surge After Crisis
(Bloomberg) -- Citigroup Inc. is diving deeper into derivatives.
In the past five years, the firm that took the largest U.S.
bank bailout of the financial crisis increased the total amount of derivatives on its books by 69 percent, surpassing most U.S.
peers and closing the gap with the market leader, JPMorgan Chase & Co. At the end of June, Citigroup had $62 trillion of open contracts, up from $37 trillion in June 2009, company filings show. JPMorgan trimmed its holdings 14 percent to $68 trillion.
Citigroup is expanding as regulators try to rein in instruments that helped fuel the 2008 credit contraction. The third-largest U.S. lender has amassed the largest stockpile of interest-rate swaps, a type of derivative that can swing in value when central banks raise rates. More than 92 percent of the bank’s derivatives don’t trade on exchanges, making it harder for regulators to spot dangers in the market.
“Risk-taking is in their DNA,” said Arthur ...
Full story: {FIFW NSN NC0QX46JIJUX <GO>}
7) Russia Places Billionaire Under House Arrest Over Oil Assets
(Bloomberg) -- Billionaire Vladimir Evtushenkov, the richest Russian to face criminal charges since Mikhail Khodorkovsky, was placed under house arrest yesterday on suspicion of money laundering.
The accusations stem from a probe into the alleged theft of shares in oil assets in Russia’s Bashkortostan region in which Evtushenkov’s AFK Sistema acquired full control in 2009, according to the Investigative Committee. Sistema said the accusations were “completely groundless” and vowed to use all possible legal means to make their case.
Khodorkovsky, released in December after a decade in prison, said OAO Rosneft Chief Executive Officer Igor Sechin, a long-time ally of President Vladimir Putin, may have engineered the arrest to pressure Evtushenkov into selling his oil company, OAO Bashneft, Vedomosti newspaper reported. Rosneft isn’t interested in Bashneft, and Khodorkovsky’s ...
Full story: {FIFW NSN NC19856JTSEA <GO>}
8) Scotland Without Pound Seen as Threat to Housing: Mortgages
(Bloomberg) -- A vote in favor of Scottish independence tomorrow threatens to weigh down a booming housing market should thousands of homeowners become debtors of foreign lenders.
Political leaders in the U.K. are sparring over whether an independent Scotland would keep the pound, with the outcome having major consequences for the economy and housing. If Scottish homeowners eventually have to repay pound-denominated loans in a foreign currency, they would face the risk of higher costs and possible default.
Prime Minister David Cameron warned on Sept. 14 the breakup would be akin to a “painful divorce,” and said the U.K. won’t share its currency with an independent Scotland. Independence leaders dismiss the government’s threat, insisting that Scotland and the rest of the U.K. would form a currency union to benefit both nations.
“A Scotland outside the U.K. would open ...
Full story: {FIFW NSN NC0K1K6TTDSU <GO>}
9) Airbus to Keep A380 Build Rate as Deals Remain Elusive
(Bloomberg) -- Airbus Chief Executive Officer Fabrice Bregier said the company can maintain a production rate of almost 30 A380 a year even amid slack demand, and will seek to build fresh interest with superjumbos coming off lease.
Bregier, speaking at the Airbus factory in Hamburg, where Qatar Airways Ltd. took delivery of its first A380, acknowledged that interest in the largest commercial airliner has been “soft,” with no deals from airlines so far this year. Still, the planemaker has enough double-deckers on order to keep production at close to 30 annually, he said.
The flagship Airbus has proven increasingly tough to sell, and some operators are struggling to put it to use or are canceling orders outright. Airbus has sought to broaden the appeal of the A380 by selling 20 units to a leasing company that has pledged to find buyers that don’t yet have the A380 in ...
Full story: {FIFW NSN NC1A2P6KLVR4 <GO>}
10) Asya Sukuk World’s Worst as Erdogan Fuels Feud: Islamic Finance
(Bloomberg) -- A feud between Turkish President Recep Tayyip Erdogan and a U.S.-based Islamic cleric has made sukuk from Asya Katilim Bankasi AS the worst-performing in the world.
Debt from the Shariah-compliant lender known as Bank Asya, which was founded by followers of Fethullah Gulen, has lost 29 percent this year, compared with an average 4.5 percent return for dollar-denominated sukuk globally, according to data compiled by Bloomberg.
“Only 10 months ago, the leader of the banking sector had a strong record in growth and expansion, but with this political trouble the bank started to suffer,” Montasser Khelifi, a senior manager for global markets at Quantum Investment Bank Ltd. in Dubai, said by phone yesterday. The government must be clear about what the “problem” with Bank Asya is and decide whether it will take over the lender or impose ...
Full story: {FIFW NSN NC19AS6S9729 <GO>}
11) Fed Decision Day Guide: Considerable Debate on Forward Guidance
(Bloomberg) -- Here’s what to look for when the Federal Open Market Committee releases its policy statement and new economic projections at 2 p.m. today in Washington and Federal Reserve Chair Janet Yellen holds a press conference at
2:30 p.m.
-- Still “considerable”? It’s shaping up as a close call.
Thirty-two of 60 economists in a Bloomberg survey said the FOMC will stick to its pledge to keep its benchmark interest rate near zero for a “considerable time” after it finishes bond purchases.
Cutting that language could spook investors, said Lindsey Piegza, chief economist at Sterne Agee & Leach Inc. in Chicago.
“One of the biggest concerns with removing that is that the markets will read it as a hawkish tilt,” she said.
The committee doesn’t need to drop the phrase immediately, because the end of bond purchases probably won’t come for at least another month. The FOMC today will probably announce that monthly ...
Full story: {FIFW NSN NC0M4E6KLVR6 <GO>}
12) Food Babe’s Starbucks Attacks Draw ‘Quackmail’ Backlash: Retail
(Bloomberg) -- Food Babe breezes into a public radio station in Charlotte, North Carolina, clutching a $10 jar of raw juice and dressed from her morning workout -- Lululemon tank, sequined black Uggs and a charm necklace blessed in India.
Food Babe is the nom de blog for Vani Hari, a 35-year-old banking consultant turned food activist, who has built a loyal online audience by calling out companies from Starbucks Corp. to Chick-fil-A Inc. for ingredients she deems harmful. Hari has tapped into Americans’ growing disquiet about processed food with a simple overarching question: What if all the small amounts of artificial and synthetic ingredients we ingest add up to something that harms us? If it’s true that the dose makes the poison, “we don’t know the dose,” she says.
On this day in early February, Hari is savoring her latest coup, shaming the Subway sandwich chain over a chemical in its bread that’s also found in yoga mats. With her blog ...
Full story: {FIFW NSN NC0U8K6K50Y3 <GO>}
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