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Europe Haggles Over New Rules Aimed at Saving Fish Stocks; A Ban on Discarding Unwanted Fish Overboard Raises Questions of Cost and Enforceability

August 27, 2013, 9:29 p.m. ET

Europe Haggles Over New Rules Aimed at Saving Fish Stocks

A Ban on Discarding Unwanted Fish Overboard Raises Questions of Cost and Enforceability

ASHLEY DALTON

ZEEBRUGGE, Belgium—Less than five months before a landmark overhaul of Europe’s fishing industry starts to take effect, policy makers and industry groups are haggling over how to replenish depleted fish stocks without crippling the business. A ban on discarding unwanted fish overboard is the most contentious new rule agreed to in late May after years of negotiation. Fishermen currently discard nearly a quarter of Europe’s total catch on average, and as much as 70% of the hauls in some areas, European Commission data show. Scientists and environmental groups blame the practice for speeding the decline of fish stocks. Read more of this post

Lorillard Isn’t Backing Away From Menthol or E-Cigarettes

August 27, 2013, 7:35 p.m. ET

Lorillard Isn’t Backing Away From Menthol or E-Cigarettes

MIKE ESTERL

Murray Kessler, the CEO of Lorillard, America’s third-largest tobacco company, discusses what’s ahead in alternative tobacco products and managing regulatory risk.

Big Tobacco has always faced strong regulatory scrutiny, but no tobacco maker is more exposed right now than Lorillard Inc. LO -0.71% The Food and Drug Administration said last month that menthol-flavored cigarettes likely pose more public health risk than regular cigarettes, a potential precursor to tighter restrictions on minty smokes. The federal agency also plans to propose regulations for battery-powered electronic cigarettes that turn nicotine-laced liquid into a vapor. That makes things tricky for Lorillard, which brings in about 90% of sales from its Newport menthol cigarettes and which paid $135 million last year to acquire blu, a top-selling e-cigarette brand. Read more of this post

SocGen’s Shocking Oil Forecast: $150 Upside; $125 Base Case Following Syrian Attack “Within A Week”

Brent Crude May Spike to $150 on Syria Spillover, SocGen Says

By Ramsey Al-Rikabi – Aug 27, 2013

Brent crude may “spike briefly” to $150 a barrel if a U.S.-led attack on Syria sparks further conflict in the Middle East and leads to supply disruptions, Societe Generale SA (GLE) said in a report e-mailed today. Military action against the regime of Syrian President Bashar al-Assad is likely within the next week, Michael Wittner, the bank’s New York-based head of oil market research, said in the report. Brent, the price benchmark for more than half the world’s crude, may rise to as much as $125 a barrel “in the coming days” in anticipation or event of a strike, the bank said. A spike to $150 is possible if a widening conflict halts output in Iraq or other Mideast producers.

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Investors Prove More Selective in Latest Emerging-Market Selloff

Updated August 27, 2013, 8:43 p.m. ET

Investors Prove More Selective in Latest Emerging-Market Selloff

ERIC BELLMAN and THOMAS CATAN

Even as currencies in India, Turkey, the Philippines and Malaysia plummet against the U.S. dollar, other developing countries have managed to avoid the selloff, showing that investors are differentiating among them. Mexico and South Korea, which were at the locus of past emerging-market meltdowns, have been relatively unscathed this time around, and a number of Eastern European economies also are holding up well. Investors have been punishing countries with large trade imbalances and foreign borrowings instead. Read more of this post

RICHARD KOO: Emerging Markets Are In For A ‘Tumultuous New Era’

RICHARD KOO: Emerging Markets Are In For A ‘Tumultuous New Era’

JOE WEISENTHAL AUG. 27, 2013, 8:25 PM 4,745 8

Great stuff here from Richard Koo of Nomura, who weighs in on the recent selling in emerging market currencies (and equities and debt). His take: This is the price emerging markets are paying for not being more vigilant about hot money rushing into their economies after the Fed announced QE after the U.S. crisis. The emerging market, he argues, could have prevented the big rush of foreign cash through prudent measures, but that they opted not to take any pain, and now they’re paying the price for going the easy route. He concludes that we’re now in for a “tumultuous new era” for emerging markets as QE gets unwound. Read more of this post

Thai Pension Fund Buying Stocks After Bear Market Plunge; The benchmark SET Index (SET) has fallen for 10 days, the longest losing streak since 1998

Thai Pension Fund Buying Stocks After Bear Market Plunge

Thailand’s Government Pension Fund is boosting holdings of local equities after a bear market in the benchmark index sent valuations to the lowest levels in more than a year. “This is a great buying opportunity,” Yingyong Nilasena, chief investment officer of the fund, which manages about $19 billion of assets, said by phone from Bangkok. “We have increased positions in some stocks recently. We plan to buy some more.” Yingyong declined to name specific companies. Read more of this post

Rule Change Brings IPOs in Thailand

Aug 27, 2013

Rule Change Brings IPOs in Thailand

By P.R. Venkat And Nopparat Chaichalearmmongkol

Investors may be fleeing from emerging markets, but Thailand’s tycoons are gearing up for more than $4 billion in initial public offerings before the year is out, capitalizing on ample domestic liquidity and racing against time in the face of imminent regulatory changes. Some of the country’s richest families, whose businesses range from banks to telecommunications to properties, plan to list a series of property funds before new rules, fees and taxes on real-estate investment trusts kick in as early as next year. Others are counting on strong demand for trust listings to raise cash. Read more of this post

Property Stocks Decline on Latest Housing Curbs to cut the maximum tenure for new loans to purchase homes built by the state to 25 years from 30 years; Mortgage payments capped at 30% of their gross monthly income, down from 35%

Property Stocks Decline on Latest Housing Curbs: Singapore Mover

Singapore’s property stocks fell, driving an index tracking developers to a one-year low, after the government tightened its public housing policy by reducing tenures for new loans and restricting purchases by foreigners. The Singapore property index tracking 43 stocks fell 1.2 percent to 694.15 as of 9:13 a.m. local time, set for the lowest since Sept. 11. Singapore will cut the maximum tenure for new loans to purchase homes built by the state to 25 years from 30 years, the Housing & Development Board said in a statement on its website. Mortgage payments are capped at 30 percent of their gross monthly income, down from 35 percent. Read more of this post

Maidless in Malaysia because fees are rising and Indonesian recruitment firms are shunning Malaysia to find jobs for their better trained workers in more lucrative markets like Singapore and Hong Kong

Maidless in Malaysia

Wednesday, August 28, 2013 – 04:00

Lester Kong

The Straits Times

MALAYSIA – Ms Belinda Kuan gave up a promising career after a long and “frustrating” hunt for a maid ended in failure. “We got an Indonesian maid in February after applying non-stop for nearly two years,” said the 29-year-old mother of two pre-school children. “Then she quit after two months for no reason.” It is a dilemma facing more and more middle-income Malaysian families whose parents both work. They are finding it harder to hire foreign maids because fees are rising and Indonesian recruitment firms are shunning Malaysia to find jobs for their better trained workers in more lucrative markets like Singapore and Hong Kong. Others like Ms Joy Yap, the manager of an IT firm, is upset with having to pay “search” fees of up to RM2,000 (S$775) to agencies to find a maid. “In short, lots of Malaysians are being cheated due to desperation,” she said. Read more of this post

The Fed and the Emerging Markets Peril

The Fed and the Emerging Markets Peril

U.S. officials have taken to the airwaves over the last few days to absolve the Federal Reserve of blame for the recent turmoil in emerging markets, a response to some of the debate that arose from the Federal Reserve Bank of Kansas City’s annual meeting last week in Jackson Hole, Wyoming. The most common argument — that the Fed’s dual mandate of price stability and maximum employment is limited by law to domestic objectives — is correct. But that line of reasoning is too narrow given the feedback loops between emerging markets, corporate earnings and the U.S. economy. Read more of this post

Roach: The Global QE Exit Crisis

The Global QE Exit Crisis

Stephen S. Roach

26 August 2013

NEW HAVEN – The global economy could be in the early stages of another crisis. Once again, the US Federal Reserve is in the eye of the storm. As the Fed attempts to exit from so-called quantitative easing (QE) – its unprecedented policy of massive purchases of long-term assets – many high-flying emerging economies suddenly find themselves in a vise. Currency and stock markets in India and Indonesia are plunging, with collateral damage evident in Brazil, South Africa, and Turkey. Read more of this post

Nothing screams shadow banking quite like a leveraged loan ETF

Nothing screams shadow banking quite like a leveraged loan ETF

Tracy Alloway

| Aug 27 09:15 | 2 comments | Share

They are billed as a quick and easy way for investors to gain access to higher-yielding assets while still providing some protection if interest rates start to rise. They are ETFs which track portfolios of (floating-rate) bank loans. And they are on fire. USA Today reported in May that the PowerShares Senior Loan Portfolio (BKLN), for instance, has become one of the best-selling ETFs this year, ballooning to $4.2bn in size “after raking in about $2.7bn of fresh assets so far this year.” Read more of this post

M&A: A new bottleneck; Dealmaking is growing more complex, with companies needing to win approval from regulators in up to 100 countries

August 27, 2013 8:12 pm

M&A: A new bottleneck

By Anousha Sakoui and David Gelles

Dealmaking is growing more complex, with companies needing to win approval from regulators in up to 100 countries

Hands clasped tightly, Warren Buffett and Wang Yang posed for the classic picture portrait, framed against a backdrop of a Chinese mountain scene. Few foreign dignitaries, let alone businesspeople, make it into the Zhongnanhai leadership compound next to Beijing’s Forbidden City. It is a mark of Mr Buffett’sinternational influence that China’s vice-premier welcomed him there in mid-May. It was only the fourth visit the 82-year-old chairman and chief executive of Berkshire Hathaway had made to Beijing. The conversation with Mr Wang covered not only the billionaire’s view of China but also the future of one of America’s most recognisable brands. One reason for the visit, people familiar with the agenda said, was to help secure China’s support for the $28bn bid for Heinz, the ketchup maker that Mr Buffett had announced he was backing earlier this year. Read more of this post

Kickstarter Lures Startups Seeking Guinea Pigs Over Cash

Kickstarter Lures Startups Seeking Guinea Pigs Over Cash

Most entrepreneurs go to Kickstarter Inc. seeking money to turn an idea into a viable product. Already flush with cash, Alex Gizis looked to the crowdfunding site in search of enthusiastic testers. Gizis’s technology startup, Connectify Inc., raised capital in 2011 from a strategic investor to develop technology that improves wireless-Web connections. Gizis then needed to figure out whether anyone would buy a product that he had based on the breakthrough. That’s where crowdfunding came in.

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Keep clients in the dark at your own peril; Advisers should be warning clients about rising rates

Take Five: Keep clients in the dark at your own peril, Robert Isbitts says

Advisers should be warning clients about rising rates, he contends

By Jeff Benjamin

Aug 27, 2013 @ 12:01 am (Updated 9:36 am) EST

As the Federal Reserve prepares to start dialing down its five-year-long quantitative-easing program, interest rates are fully expected to start climbing, which should be an issue of major focus for financial advisers. But, Robert Isbitts, founder and chief investment strategist at Sungarden Investment Research, thinks that too many in the advice business are ignoring the impact of rising rates, or worse, missing the point entirely. “There is a herd mentality among advisers that the clients don’t care to know the dangers because the adviser has their back, he said. “If that’s the case then why does every portfolio I see from an investor seeking to change advisers have bond funds and individual bonds up and down the monthly statement?” Read more of this post

JPMorgan woes deepen as US demands $6bn penalty

August 27, 2013 7:23 pm

JPMorgan woes deepen as US demands $6bn penalty

By Kara Scannell and Tom Braithwaite in New York

US authorities are demanding JPMorgan Chase pay more than $6bn to settle allegations it mis-sold securities to government-backed mortgage companies in the run-up to the financial crisis, according to people familiar with the discussions. The bank is resisting the payment, which would be its single biggest penalty in a catalogue of expensive run-ins with US authorities and one of the largest post-crisis settlements by any bank, these people said. Read more of this post

High time to abandon the spurious case for a high-speed railway; The UK project is using bogus modelling and sham consultation

August 27, 2013 4:48 pm

High time to abandon the spurious case for a high-speed railway

By John Kay

The UK project is using bogus modelling and sham consultation

More and more people have beenexpressing doubts about Britain’sHigh Speed 2 project, which would build superfast railway links from London to the three largest conurbations in the rest of the UK – Birmingham, Leeds and Manchester – by 2033. I have been struggling through the arguments. They are as follows, in increasing order of strength. First, since other European nations have lots of high-speed connections, Britain should spend £40bn doing the same. This observation does not merit a response. Read more of this post

Geneva Mansions Sell at Discount as Tax Scares Expats

Geneva Mansions Sell at Discount as Tax Scares Expats

Real estate broker Alexander Koch de Gooreynd relayed a difficult message to a client last June: the 39.5 million Swiss-franc ($43 million) asking price for his eight-bedroom lakefront villa in Geneva was too high. The 8,600 square-foot (800 square-meter) home with yacht mooring, wine cellar and kennels in Collonge-Bellerive, where Saudi Arabia’s King Fahd built a summer palace in the 1970s, had been on the market for nine months. The seller took his advice and the house sold for 31.5 million francs in December. Read more of this post

Europe’s Single Bank Rule Book Falls Apart as North Races Ahead

Europe’s Single Bank Rule Book Falls Apart as North Races Ahead

The goal of a single rule book for Europe’s banks is splintering even before it’s implemented as northern countries move ahead with tougher requirements to ward off the next boom-to-bust cycle. Sweden’s too-big-to-fail banks, which already face stricter capital rules than their competitors elsewhere, may be told to hold even larger reserves, Financial Markets Minister Peter Norman said yesterday. In Denmark, Business Minister Henrik Sass Larsen said he can’t wait for southern Europe to regulate its systemically important financial institutions. He backs the swift passage of national capital laws to curb bank risks. Read more of this post

EMs suffer the unintended consequences of QE; Hot money flows made it easy to put off structural reforms

August 27, 2013 2:56 pm

EMs suffer the unintended consequences of QE

By John Plender

Hot money flows made it easy to put off structural reforms

Turmoil in the emerging markets prompts an uncomfortable thought. Has the Federal Reserve’s quantitative easing programme done more to damage emerging markets than to boost the US recovery? It would be ironic indeed if the chief impact of the Fed’s unconventional measures turned out in hindsight to have been outside the US. Maybe the implication is a little harsh. We cannot be certain where the US economy would be if the Fed’s asset purchasing programmes had not taken place, but I suspect the recovery would have been more feeble or non-existent without this central bank activism, even if the impact of more recent purchases has been minimal. Its chief effect was to offset deleveraging that would otherwise have caused deflation. What we know for sure, though, is that interest rate repression in the US was designed to increase risk appetite and in this the Fed has been outstandingly successful. A notable consequence was a huge flow of hot money from the US into emerging markets. Read more of this post

Currency Spikes at 4 P.M. in London Provide Rigging Clues

Currency Spikes at 4 P.M. in London Provide Rigging Clues

In the space of 20 minutes on the last Friday in June, the value of the U.S. dollar jumped 0.57 percent against its Canadian counterpart, the biggest move in a month. Within an hour, two-thirds of that gain had melted away. The same pattern — a sudden surge minutes before 4 p.m. in London on the last trading day of the month, followed by a quick reversal — occurred 31 percent of the time across 14 currency pairs over two years, according to data compiled by Bloomberg. For the most frequently traded pairs, such as euro-dollar, it happened about half the time, the data show. Read more of this post

Central bankers have given up on fixing global finance

August 27, 2013 8:55 pm

Central bankers have given up on fixing global finance

By Robin Harding

We desperately need to regain our appetite for a new kind of financial system, says Robin Harding

The world is doomed to an endless cycle of bubble, financial crisis and currency collapse. Get used to it. At least, that is what the world’s central bankers – who gathered in all their wonky majesty last week for the Federal Reserve Bank of Kansas City’s annual conference in Jackson Hole, Wyoming – seem to expect. All their discussion of the international financial system was marked by a fatalist acceptance of the status quo. Despite the success of unconventional monetary policy and recent big upgrades to financial regulation, we still have no way to tackle imbalances in the global economy, and that means new crises in the future. Read more of this post

Bank CEO Admits To Using Bailout Money To Buy A Luxury Condo In Florida

Bank CEO Admits To Using Bailout Money To Buy A Luxury Condo In Florida

JULIA LA ROCHE AUG. 27, 2013, 3:19 PM 14,030 25

Darryl Layne Woods, the former CEO of a Missouri bank, admitted in court yesterday to using financial crisis bailout funds to purchase a luxury waterfront condo in Florida, Dealbook’s Peter Lattman reports. In November 2008, Woods, 48, who was the head of Mainstreet Bank and the bank’s holding company Calvert Financial Corporation, applied for TARP money on behalf of his bank, a press release states. Read more of this post

Activist investment is no mere niche; All shareholders and managers need to act as stewards

August 27, 2013 7:08 pm

Activist investment is no mere niche

All shareholders and managers need to act as stewards

The listed company is one of the great inventions of the 19th century. When James Cash Penney floated his department stores business on the New York Stock Exchange in 1927, he joined a generation of entrepreneurs whose grand visions might never have been realised had the public markets not existed to provide capital on a matching scale. The fortunes of the company he left behind are not all that is at stake in the struggle now unfolding inside its boardroom. It is being seen as a test of whether activist investors, who take stakes in public companies and expect a say in how they are run, can breathe new life into what some say has become a moribund corporate form. Read more of this post

Tighter regulations on undue cross-affiliate deals to ignite backlash in Korea

2013.08.28 11:32:51

The South Korean government decided to regulate unjust transactions among units of conglomerates that benefit families who own them. The Fair Trade Commission (FTC) is mulling targeting subsidiaries where conglomerates’ owner or his/her families have a 20 percent or more stake. The percentage is lower than the previously known 30 percent, suggesting more companies will be put under scrutiny. Consequently, it is expected to trigger backlash from businesses. A revision to the “monopoly and fair trade act,” which has incorporated such regulation, was approved during a regular session of the National Assembly on July 2, and the government will soon have a public feedback period, said senior government officials Tuesday. The revised legislation added a new provision which prohibits providing fraudulent profits to conglomerate owner or his/her families. Under the current law, companies can be punished for intra-subsidiary transactions only when the deals involve trading goods or services at a price or in quantity far more favorable than market conditions, or an act of ‘competition restriction.’  But the revised law bypasses the requirement to prove the “competition restriction” in penalizing any intra-subsidiary transaction from which conglomerate owners’ families earned unfair gains at the expense of hurting companies or shareholders.

Tepco Faces 132 Olympic Pools Worth of Radioactive Water

Tepco Faces 132 Olympic Pools Worth of Radioactive Water

Tokyo Electric Power Co. (9501) has accumulated the largest pool of radioactive water in the history of nuclear accidents. The utility must now decide what to do with it: dump in the ocean, evaporate into the air, or both. The more than 330,000 metric tons of water with varying levels of toxicity is stored in pits, basements and hundreds of tanks at the wrecked Fukushima nuclear plant. The government said this week it will take a bigger role in staunching the toxic outflow that’s grown to 40 times the volume accumulated in the atomic disaster at Three Mile Island in the U.S. Read more of this post