Europe Stocks Addicted to Emerging Markets Stretching Valuations as European companies are relying on emerging markets for a third of all revenue for the first time ever

Europe Stocks Addicted to Emerging Markets Stretching Valuations

For the first time ever, European companies are relying on emerging markets for a third of all revenue, stretching equity valuations as Chinese growth slows and protests turn violent from Turkey to Brazil.

Led by Swatch (UHR) Group AG and SABMiller Plc (SAB), Europe will get 33 percent of sales from developing nations in 2013, almost three times as much as in 1997, according to data compiled by Morgan Stanley and Bloomberg. While U.S. enterprises make 70 percent of their revenue at home, businesses in Europe, mired in the longest recession on record, are forecast to obtain less than 50 percent from their own economies this year. Read more of this post

Pawnbrokers Thriving as Poorest Aussies Bear Brunt of Slowdown

Pawnbrokers Thriving as Poorest Aussies Bear Brunt of Slowdown

On a sidewalk in Sydney’s Bankstown neighborhood, where unemployment is more than double Australia’s average, Dave Cox pulls the starter cord of an edge trimmer to prove it works as he tries to sell it to pawnbroker Cash Converters International Ltd. (CCV)

“The economy is pretty crap right now,” 38-year-old truck driver Cox, who’s between jobs, said after he offloaded the snipper for A$30 ($28). In the past month, he sold an iPhone and got a loan at Cash Converters, whose sales last year grew faster than any other Australian retailer that didn’t make a major acquisition. “It just feels bad out there.” Read more of this post

Who Goes to Cash Reveals Extent Bonds Will Turn Into Bear Market

Who Goes to Cash Reveals Extent Bonds Will Turn Into Bear Market

Investors who poured $1.26 trillion into bond funds in the past six years pulled out record amounts of cash last month, leaving the world’s biggest fixed-income managers struggling to stem the flow.

The funds saw $61.7 billion of withdrawals as money market mutual fund assets rose $8.17 billion in the week ended June 25, according to TrimTabs Investment Research and the Money Fund Report. Bank of America Merrill Lynch’s Global Broad Market Index dropped 2.9 percent in the past two months, the most since the inception of the daily gauge in 1996, as Federal Reserve Chairman Ben S. Bernanke laid out possibilities for reducing the $85 billion in monthly bond purchases supporting the economy. Read more of this post

Mortgage Bond Prices Collapse By Most Since 1994 ‘Bond Market Massacre’

Mortgage Bond Prices Collapse By Most Since 1994 ‘Bond Market Massacre’

Tyler Durden on 06/30/2013 10:39 -0400

“What just occurred [in the mortgage-backed-securities (MBS) market] is indicative of just how important QE is,” as government backed US mortgage bonds suffer their largest quarterly decline in almost two decades. As Bloomberg reports, the $5 trillion market lost 2% in Q2, the most since the ‘bond market massacre’ in 1994 (when the Fed unexpectedly raised rates) as wholesale mortgage rates spiked by the most on record in the last two months. The reason these bonds have been hardest hit – simple – fear that the Fed’s buying program is moving closer to an end. “The Fed, at times during this period, was the only outlet in terms of demand for securities,” explains one head-trader, as the Fed’s current buying provided demand as other investors retreated and has grown as a percentage of forward sales by originators tied to new issuance, which is set to fall as higher rates reduce refinancing. With Fed heads talking back what Bernanke hinted at, there was a modest recovery in the last 2 days in MBS but the potential vicious cycle remains a fear especially now that “what was once deemed QE Infinity is no longer viewed that way.” Read more of this post

Bear market in gold pummels Einhorn’s Greenlight fund

Bear market in gold pummels Einhorn’s Greenlight fund

Sun, Jun 30 2013

By Jennifer Ablan

NEW YORK (Reuters) – Investors in David Einhorn’s Greenlight Capital Management’s offshore gold fund were down 11.8 percent in June, bringing their year-to-date losses in the fund to 20 percent, two sources close to the matter said on Sunday.

Einhorn, one of the most widely followed hedge fund managers and known for warning about Lehman Brothers’ precarious finances before it collapsed, has also seen his flagship $8 billion Greenlight Capital fund under recent pressure though it is still up for the year. Read more of this post

It was fun while it lasted. As Debt Boom Wanes, Firms in the U.S. have lost the luxury of being able to sell bonds at will

June 30, 2013, 7:07 p.m. ET

As Debt Boom Wanes, Firms Readjust

MATT WIRZ

It was fun while it lasted.

U.S. companies have borrowed unprecedented amounts in bond markets over the past four years, while the investors they sold the debt to have watched bond prices hit records courtesy of a wave of money from the Federal Reserve. All the while, borrowers and lenders have known this debt boom couldn’t last, and many responded with a paradoxical mix of angst and relief to the volatility triggered when Fed Chairman Ben Bernanke said in June that the central bank could start tapering its $85 billion-a-month bond-buying program by the end of 2013. Read more of this post

Defensive Stocks Won’t Shield Investors

June 30, 2013, 7:20 p.m. ET

Defensive Stocks Won’t Shield Investors

JUSTIN LAHART

A rising stock market has always been a sign investors are taking on more risk. What made the recently stalled rally odd are the types of stocks where that risk-taking was concentrated. From the start of the year to its peak on May 21—the day before Federal Reserve Chairman Ben Bernanke intimated that the central bank might begin to scale back its bond buying program this fall—the S&P 500 rose 17%. But stocks that traditionally have been regarded as safe did better. A market-weighted index of defensive sectors of the S&P 500—which include consumer staples, health care, telecommunications services, utility and real-estate investment trust shares—rose 19.2% over the same period. An index of the remaining, more cyclically sensitive companies rose by just 16.4%. Read more of this post

For Investors, Emerging Debt Rethink After Biggest Decline in Five Years

June 30, 2013, 4:58 p.m. ET

For Investors, Emerging Rethink

TOMMY STUBBINGTON

Emerging-market debt has experienced its biggest decline in nearly five years. Some investors said the selloff may not be over. And once the dust settles, money managers will have to become more discerning in figuring out which countries offer the best prospects. Prices on bonds issued in emerging economies have lost 9.5% of their value since an all-time record high hit in May, according to the J.P. MorganJPM -0.68% Emerging Market Bond Index. At their lowest point last week, they were down 12% from that peak. The pace of the selloff recalls late 2008, when emerging-market bonds fell almost 30% in less than two months. Bond prices move in the opposite direction of yields.

Read more of this post

Money Leaves Funds as Wary Investors Turn to Cash

Updated June 30, 2013, 7:22 p.m. ET

Money Leaves Funds as Wary Investors Turn to Cash

MIKE CHERNEY

Amid the recent turmoil in financial markets, investors are finding some refuge in cash, analysts say. Bond and stock mutual and exchange-traded funds saw outflows of $19.96 billion in the week ended Wednesday, according to Thomson Reuters unit Lipper. This data covers funds that report weekly. That’s the biggest outflow since August 2011, as the euro-zone debt crisis was intensifying and worries about the U.S. debt ceiling were coming to a head.

Read more of this post

Oil Benchmarks Go From Trusted to Tainted as EU Missed Warning

Oil Benchmarks Go From Trusted to Tainted as EU Missed Warning

The European Union’s top energy official ignored a warning delivered in 2009 about potential manipulation of Platts oil benchmarks “because markets trusted” them.

Andris Piebalgs, who was EU energy commissioner from 2004 to 2010, cited the confidence traders had in the pricing system when a lawmaker questioned the reliability of Platts’ prices more than three years ago. The warning went unheeded until May, when EU antitrust officials raided Platts, Royal Dutch Shell Plc (RDSA), BP Plc (BP/), and Statoil ASA (STL) as part of an investigation into the possible rigging of benchmark energy assessments. Read more of this post

Norway’s opposition consider oil fund split; Conservatives look at separating bonds and share funds

June 30, 2013 5:23 pm

Norway’s opposition mulls oil fund split

By Richard Milne in Oslo

The likely winner of Norway’s looming elections is floating the idea of splitting theworld’s largest sovereign wealth fund in two, as the $720bn oil fund grapples with the challenges of growing ever bigger. Such a move would be the most radical change to the oil fund since it was set up more than two decades ago to manage Norway’s oil and gas revenues. At the start, few expected the fund to receive much money but it has grown rapidly in the last few years on the back of rising oil revenues and is expected to reach $1tn by the end of the decade, making it by far the largest sovereign wealth fund in the world. Read more of this post

India’s jewellers become frontline in gold battle

June 30, 2013 12:48 pm

Singapore tightens tax evasion measures

By Jeremy Grant in Singapore

Singapore will from Monday make it a money-laundering offence for banks to assist tax-evaders stash their funds in the Asian city-state, in the latest move by the region’s fastest-growing wealth management hub to join the global crackdown on tax evasion and illicit funds.

The fight against tax evasion is playing out against a backdrop of rising wealth among the world’s richest people, creating a scramble by banks to offer services in tax-efficient jurisdictions such as Singapore. Read more of this post

Paid via Card, Workers Feel Sting of Fees; For many hourly workers, paper paychecks have been replaced by prepaid cards, which often involve fees that can quickly add up and take a bite out of their pay

June 30, 2013

Paid via Card, Workers Feel Sting of Fees

By JESSICA SILVER-GREENBERG and STEPHANIE CLIFFORD

A growing number of American workers are confronting a frustrating predicament on payday: to get their wages, they must first pay a fee.

For these largely hourly workers, paper paychecks and even direct deposit have been replaced by prepaid cards issued by their employers. Employees can use these cards, which work like debit cards, at an A.T.M. to withdraw their pay. Read more of this post

HK: A syndicate led by a woman earned at least HK$10 million over a two-year period by tampering with the electricity and gas meters of 112 restaurants

Gang collects $10m in meter-tamper racket
Staff reporter
Friday, June 28, 2013
A syndicate led by a woman earned at least HK$10 million over a two-year period by tampering with the electricity and gas meters of 112 restaurants, the District Court heard.

Between the middle of 2010 and August last year, the gang helped the restaurants save between HK$6,000 and HK$70,000 in charges each month.

CLP, Hongkong Electric and Towngas are said to have lost a total of HK$30 million, nearly a third of which went to the syndicate. Read more of this post

Exhausted Brazil; Brazilians are tired of being brutalized by public transport in the country’s metropolitan areas; tired of ghastly hospitals; tired of corruption scandals; and tired, especially, of inflation

Exhausted Brazil

Luiz Felipe Lampreia, a former foreign minister of Brazil (1995-2001), is now Vice Chairman of the Brazilian Center for International Relations (CEBRI) and Chairman of the Council on International Affairs of the Federation of Industries of Rio de Janeiro (FIRJAN).

30 June 2013

RIO DE JANIERO – The demonstrations that are shaking Brazil’s normally laid-back society are channeling a widespread sentiment: enough is enough! But, with the exception of professional agitators, there is no hatred in the street protests. Instead, there is a kind of impatient fatigue.

Brazilians are tired of being brutalized by public transport in the country’s metropolitan areas; tired of ghastly hospitals; tired of corruption scandals; and tired, especially, of inflation, which has returned like a dreaded disease, once again eroding people’s purchasing power and threatening to return millions to the poverty from which they only recently escaped. Read more of this post

Shale oil storm blows U.S. tanker trade out of doldrums

Shale oil storm blows U.S. tanker trade out of doldrums

2:18am EDT

By Anna Louie Sussman

(Reuters) – Thanks to the U.S. shale energy boom, the once-quiet niche of U.S.-flagged oil tankers is in unprecedented flux. A half-dozen vessels that typically carried gasoline to Florida are now rushing crude oil along the Texas coast. Major investment at the port of Corpus Christi, which now exports more than half of all Eagle Ford shale oil, suggests more to come even as new pipeline projects promise further market shifts. The shale oil revolution, now in its third year, has already scrambled the inland U.S. crude market, forcing pipelines to reverse direction and fuelling a revival in railway oil trade.

Read more of this post

Merck KGaA’s Oschmann Sees U.S. as New Emerging Market as competitors focus on emerging economies in Asia and South America

Merck KGaA’s Oschmann Sees U.S. as New Emerging Market

Merck KGaA (MRK), the German drugmaker whose U.S. unit was expropriated almost a century ago, is turning back to that market as competitors focus on emerging economies in Asia and South America.

“For us, the U.S. is an emerging market,” Stefan Oschmann, head of pharmaceuticals, said in an interview. “We have huge growth potential in the U.S.”

Merck KGaA is focusing on one of the world’s most profitable drug markets as sales of its best-selling medicines slow and as a late-stage drug pipeline dries up. The Darmstadt-based company hasn’t had a treatment approved since the go-ahead in 2003 for the cancer drug Erbitux, which it sells under license outside North America. Its next market candidate won’t be considered by regulators until 2016. Read more of this post

Private Banks Leave Switzerland as End of Secrecy Hurts Profits

Private Banks Leave Switzerland as End of Secrecy Hurts Profits

For European lenders with private-banking aspirations, a presence in Switzerland used to be a must. Now, with bank secrecy eroding and rising compliance costs chipping away at profits, more are saying adieu.

The number of foreign-owned Swiss banks fell to 129 by the end of May from 145 at the start of 2012, according to data from the Association of Foreign Banks in Switzerland. Assets under management slid by a quarter to 870.7 billion Swiss francs ($921 billion) in the five years through 2012 as clients withdrew money or paid taxes on undeclared accounts, the data show. Read more of this post

Brazil’s Rousseff May Skip Cup Final as Her Popularity Sinks

Brazil’s Rousseff May Skip Cup Final as Her Popularity Sinks

Brazil President Dilma Rousseff may sit out today’s Confederations Cup final match after the biggest plunge in popularity since ex-President Fernando Collor confiscated savings accounts in 1990, as protesters take to the streets for a fourth week.

Rousseff’s approval rating fell to 30 percent, down from 57 percent before protests began three weeks ago and a high of 65 percent in March, according to a survey by Datafolha published yesterday in the daily newspaper Folha. Read more of this post

FHA Swamped By Defaults; Congressional Report Shows FHA Could Suffer Losses as High as $115 Billion

FHA Swamped By Defaults; Congressional Report Shows FHA Could Suffer Losses as High as $115 Billion; Shut Down Fannie, Freddie, FHA

Posted: 28 Jun 2013 11:21 PM PDT

Mike “Mish” Shedlock

An alleged “worst case scenario” shows the FHA could lose as much as $115 Billion. Since these worst case scenarios are always famously optimistic, the best course of action would be to shut the agency down.
I was quoted as saying just that by the Heartland in Congressional Report Raises Spectre of FHA Bailout. Read more of this post

“What in the World is Going On?” DoubleLine’s Jeff Gundlach’s Presentation

Jim Rogers Warns “We’re All Going To Suffer From This Crazy, Crazy Money Printing”

Jim Rogers Warns “We’re All Going To Suffer From This Crazy, Crazy Money Printing”

Tyler Durden on 06/29/2013 20:34 -0400

Submitted by Tekoa Da Silva via Bull Market Thinking blog,

I was able to reconnect with Jim Rogers this morning out of Spain, legendary co-founder of the Quantum Fund with George Soros, author ofHot Commodities, and chairman of the private Beeland Holdings.

It was an especially powerful interview, as Jim spoke towards the relentless downward pressure on gold, the upward explosion in interest rates, central bank money printing, and how to protect yourself ahead of the disastrous times he sees coming. Read more of this post

Golden Parachutes Are Still Very Much in Style

June 29, 2013

Golden Parachutes Are Still Very Much in Style

By PRADNYA JOSHI

MOST employees who leave a company are typically offered modest severance — in some cases a corporate pension, and perhaps a retirement party hosted by co-workers. For many chief executives of corporations, the rewards are far, far richer. Executives who choose to retire — or are forced to retire — often receive millions when they leave. And despite years of public outcry against such deals, multimillion-dollar severance packages are still common.

Read more of this post

An Unstoppable Climb in C.E.O. Pay

June 29, 2013

An Unstoppable Climb in C.E.O. Pay

By GRETCHEN MORGENSON

WHEN we made our annual foray into the executive pay gold mine in April, chief executives’ earnings for 2012 showed what appeared to be muted growth on the year. The $14 million in median overall compensation received by the top 100 C.E.O.’s was just a 2.8 percent increase over 2011, the figures showed.

Well, what a difference a few months and a larger pool of C.E.O.’s make. According to an updated analysis, the top 200 chief executives at public companies with at least $1 billion in revenue actually got a big raise last year, over all. The research,conducted for Sunday Business by Equilar Inc., the executive compensation analysis firm, found that the median 2012 pay package came in at $15.1 million — a leap of 16 percent from 2011.  Read more of this post

Japanese Toilet Maker Lixil Buys 138-Year-Old Brand American Standard for $342 Million including $200 Million Debt

Updated June 28, 2013, 7:09 p.m. ET

Japanese Toilet Maker Lixil Buys American Standard

Lixil Gains Well-Known Brand as It Looks to Capitalize on U.S. Housing Market

JAMES R. HAGERTY

Though Japan’s economic might has faded, the country continues to enhance its status as a powerhouse in one realm: toilets.

Japan’s Lixil Corp. said on Friday it agreed to pay about $342 million for American Standard Brands, a 138-year-old U.S. maker of toilets and bathroom and kitchen fixtures. The purchase from Sun Capital Partners Inc., Boca Raton, Fla., includes the assumption of $200 million of debt. Read more of this post

Markets Brace for Post-Fed World; Air Goes Out of Emerging Stocks

June 28, 2013, 7:43 p.m. ET

Markets Brace for Post-Fed World

Despite Best Yearly Start Since 1999, Investors Spooked by Central Bank’s Signals See Turbulence Ahead

E.S. BROWNING

The U.S. stock market had its best start to a year since 1999, but by Friday—the halfway mark of 2013—investors had ditched their party hats and braced for the Federal Reserve to cut back on policies that helped send stocks soaring this year.

The Dow Jones Industrial Average ended the first six months of the year up 14%, but all the gains came in the first five months. The Dow fell 1.4% in June, including a 114.89 point, or 0.76%, drop on Friday to 14909.60. Read more of this post

Gold Drop Uncovers Miners’ Debt Woes; No gold miner took on more debt than the world’s largest, Barrick Gold

Updated June 28, 2013, 7:52 p.m. ET

Gold Drop Uncovers Miners’ Debt Woes

ALISTAIR MACDONALD

Barrick said it is postponing production at its Pascua Lama mine in Chile, where costs have ballooned to $8.5 billion from $5 billion.

The recent plunge in the price of gold is exposing the large debt loads that big gold miners, such as Barrick Gold Corp., ABX.T +6.62% took on during the boom years.

Gold miners are scrambling to cut costs, sell assets and shore up finances, as credit-rating services talk of debt downgrades that threaten to add to the already increasing costs of future borrowing.

In the second quarter, the price of gold posted its largest quarterly decline since the start of modern gold trading. Gold fell 23% in the period to close at $1,223.80 a troy ounce on Friday. Already, the price of gold doesn’t cover the overall costs of many gold miners. Plummeting share prices have made financing the shortfall through equity markets hard.

“If prices below $1,300 are sustained for more than two quarters, without significant changes to spending, I would expect we could see ratings downgrades,” said Donald Marleau, an analyst at Standard & Poor’s Ratings Services.

Gold miners had typically steered clear of leverage, but in recent years miners such as Barrick Gold and Newmont Mining Corp. NEM +8.08% took on debt to finance big new projects and takeovers at prices that have often proved overvalued.

In the past 10 years, the 55 gold and silver companies analyzed by BMO Capital Markets have increased their net debt, or debt minus cash, from less than $2 billion to a record of $21 billion. Interest rates were low, but rising costs amid a global commodities boom became a drag on share prices. That made debt, rather than equity, a more attractive option as these companies embarked on a massive industry consolidation drive. Read more of this post