Tag: news

Inside the battle for control of the Federal Reserve

[Editor’s note: This letter was penned by Tim Price, London-based wealth manager and author of Price Value International.]

A Shandong 5000 electroglide flatbed currency printing machine named ‘Ted’ has edged ahead in a fiercely competitive fight for the chairmanship of the US Federal Reserve, narrowly in front of its major rival, the Heidelberger Druckmaschinen high speed sheet fed rotary offset press, christened ‘Heidi’.

In an ominous sign for supporters of the Heidelberger Druckmaschinen candidacy, a number of US Senate Republicans are circulating a letter supporting the Shandong 5000 model in its quest to replace Janet Yellen at the head of the world’s most important central bank.

The Shandong 5000 is a six colour high speed flexo letterpress printing machine which can churn out up to $200 trillion in high denomination bills in less than 60 seconds.

In a subtle technical innovation, these bills can then be immediately declared illegal and holders of them instantaneously vaporized.

The only other serious contender, a 70 ton Komori Super Orlof Intaglio based in Tokyo, melted after recent deployment by the Bank of Japan.

Senate Democrats rounded on the nomination of a Chinese printing machine in what critics interpreted as a thinly veiled racial slur that ran the risk of igniting an international trade war.

Supporters of the Shandong 5000 electroglide pointed out that the only domestic US manufacturer of high speed, sheet fed rotary 1-10 Intaglio currency printing machines filed for insolvency 60 years ago after using Alan Greenspan for consulting services.

Some Wall Street analysts were skeptical that a flatbed currency printing machine was really the best fit for the task at hand.

Marti Venal at SalesWeasel GoldFelon pointed out that in the 21st century, digital central bank reserves could be created effortlessly electronically without any resort to the printing press whatever.

His colleague Dwight Craven added that three staffers at the Federal Reserve had recently been crushed to death by the accidental toppling of a two mile high mountain of hundred dollar bills following the January 14th 11:02 a.m. Part 57 iteration of the Fed’s latest 8,000-stage quantitative easing programme.

“The Heidelberger Druckmaschinen boomlet is now looking like a Heidelberger Druckmaschinen backlash,” added Venal.

Republicans seem more welcoming of the Shandong 5000 candidacy, despite some disagreements over the machine’s reliability.

The Shandong 4000 series was prone to overheating, occasional power outages, and sometimes exploding spectacularly showering shards of molten steel at supersonic speed over its support workforce.

This made the Shandong 4000 only slightly less dangerous than a full service investment bank.

The Heidelberger printer has long been a bogeyman for some liberals.

They regard the machine as a close colleague of former Treasury Secretary Robert Rubin whose backing for the financial sector and appetite for unrestrained deregulation has been widely blamed for the banking crisis.

There has also been criticism as to the robustness of the Heidelberger currency printer in light of the near-constant requirement to print money 24/7, 365 days a year, and concern as to whether components of the printer have been ethically sourced.

“It used to take 5,000 Chinese workers to make the cylinder of one of our machines,” said a company spokesman.

“We have since found out that titanium is more hard-wearing.”

Over in Europe, monetary authorities have commissioned 14,000 Wolf-Krugman ultra-speed printing machines in order to prepare for March’s looming currency offensive.

The Bank of England, meanwhile, is preparing to unveil its new currency bazooka, a QE-969 Howitzer railgun capable of shooting money at 5,800 MPH into the economy, rendering it instantly inert.

In other news: The last remaining skeptic of the effectiveness of money printing was fired from the ECB. By a giant cannon. Into Switzerland.

from Sovereign Man http://ift.tt/1Q50LEG
via IFTTT

Bill Clinton Attacks Bernie Sanders on Campaign Trail, Star Wars Movie Hits $2 Billion, Broncos Defeat Panthers: A.M. Links

  • Bill Clinton launched an attack on Bernie Sanders during a campaign stop in New Hampshire, calling his plans disconnected from reality and his campaign a dishonest one.
  • Security services in Russia say they have arrested seven people on suspicion of plotting a terrorist attack.
  • The new Star Wars movie hit the $2 billion mark worldwide.
  • Apollo 14 astronaut Edgar Mitchell died aged 85.
  • The Denver Broncos defeated the Carolina Panthers 24-10 in Super Bowl 50.
  • A leopard wandered into a school in southern India, injuring three before it was caught.

from Hit & Run http://ift.tt/1Q53UEJ
via IFTTT

European Bank Bloodbath Crashes Bond, Stock Markets

Just as we warned, not only is it time to panic but the panic is 'contagion'-ing over into the sovereign risk market. European banks are in freefall, down over 4.3% broadly, crashing to 2012's "whatever it takes" lows.

European bank risk has gone vertical… Today's spike is the largest since April 2010

 

TBTF banks are all seeing credit risk explode – to 52-week highs and beyond…

 

Slamming European bank stocks back to near "whatever it takes" lows…

 

Dragging the entire European stock market down 24% from its highs to 16-month lows…

 

And that risk is syetmically crushing peripheral sovereign bond markets…

 

Time to panic? You betcha! All eyes are focused on the synthetic run on Deutsche Bank…

 

So since Europe unleashed their "Bail-In" regulations, European banks have utterly imploded with Deustche most systemically affected as it seems more than one person is betting that Deutsche will be unable to raise enough capital and will be forced to haircut depositors on up in the capital structure.

Finally – for those desperate dip-buyers hoping for another move from Draghi – don't hold your breath… As Deutsche Bank itself warned, any more easing by The ECB or BOJ will only hurt banks (and certainly Deutsche). In other words, they are all officially trapped now.


via Zero Hedge http://ift.tt/1QmJml3 Tyler Durden

Momo Bad News: JPM’s Quant Guru Kolanovic Confirms Tech Bubble Has Burst… Again

Just over two weeks ago, JPM’s Marko Kolanovic, whose unprecedented ability to predict short-term market moves is starting to seem a little bizarre, warned that the next “significant risk for the S&P500” was the bursting of the “macro momentum bubble.” Specifically, he said that there is an emerging negative feedback loop that is “becoming a significant risk for the S&P 500” adding that “as some assets are near the top and others near the bottom of their historical ranges, we are obviously not experiencing an asset bubble of all risky assets, but rather a bubble in relative performance: we call it a Macro-Momentum bubble.”

In retrospect, following tremendous valuation repricings of several tech stocks, last week’s LinkedIn devastation being the most notable, he was once again right. And over the weekend, he did what he has every right to do: take another well-deserved victory lap.

This is what he said in his February Market Commentary: “Tech Bubble Burst?”

In our 2016 outlook and recent reports, we identified a macro momentum bubble that developed over the past years. We explained its drivers (central banks, passive assets/momentum strategies, etc.) and called for value to outperform momentum assets. We also highlighted the risk of a bear market and recommended increasing exposure to gold and cash as well as increasing exposure to nondollar assets relative to the S&P 500 (EM Equities, Commodities, Value Stocks, etc.). Our view was that a likely catalyst would be the Fed converging toward ECB/BOJ (rather than proceed with planned ~12 rate hikes by end of 2018). In line with these published forecasts, the best performing assets YTD have been Gold (+9%) and VIX (+20%) while S&P 500 and DXY are down (-7%, and -2%, respectively). Momentum stocks are down more than 10% with an acceleration of the selloff in last days. Emerging Market and Energy stocks are starting to outperform the S&P 500 (MSCI Latin America by +5% and Energy by +1% vs. S&P 500 YTD). This specific pattern of asset moves is consistent with a Value-Momentum convergence. We think the outperformance of value assets over momentum assets is likely to continue.

Investors often ask us how significant are distortions and risks in equity sectors that are related to a “macro momentum bubble.” Specifically, the question is that of valuations in the Technology sector, i.e., “is there a Tech bubble”? Before we share our views, let’s first review how passive investing and momentum strategies may have impacted performance of various equity sectors.

Imagine a world in which most of the assets are passively managed and investors are focused on liquidity and short-term risk/reward. Companies that increased in size recently would keep on increasing, and those that got smaller would see further outflows. Past winners would also be considered low-risk holdings compared to past losers. The most successful managers would be those that replace fundamental valuation with a simple rule: buy what went up yesterday and sell what went down. Passive funds would do the same. It is hard to imagine this makes economic sense long term, but it is close to what equity markets experienced over the past several years. In 2013, the Sharpe ratio of the S&P 500 was ~2.7. Assuming a normal distribution of active asset returns, one could (incorrectly) conclude that being just an average (passive) investor one will outperform ~95% of all active investors. In 2014 and 2015, various momentum strategies delivered Sharpe ratios >2. The winning strategy was not just to go with the crowd, but to do what the crowd did yesterday. This type of trend following does not only apply to extrapolating price trends, but also extrapolating trends in fundamental stock data such as growth and earnings. Beyond a certain point, passive investing and trend following are bound to result in distorted equity valuations and misallocation of capital.

While some parts of the Technology sector certainly have reasonable and even low valuations (see our US equity strategy outlook), segments of the Tech sector disproportionally benefited from momentum investing as well as investing based on extrapolation of past growth rates. For instance, a popular group of stocks held by investors is known by the abbreviation “FANG” (Facebook, Amazon, Netflix, Google). We use these stocks as an illustration for a broader group of similar stocks that have the highest rankings according to momentum and growth metrics (and surprisingly in some cases even low volatility metrics). Given that traditional value metrics look expensive when applied to this group, one can compare these momentum/growth companies on a new set of metrics. For instance, one  can look at the ratio of current price to earnings that the company delivered over all of its lifetime (instead of just the past year). Another metric could be a ratio of CEO or founder’s net worth to total company earnings delivered during its lifetime (see below):

Aggregating all FANG earnings since these companies were listed, one arrives at a ratio of current price to all earnings since inception of ~16x. This can be contrasted to a ratio of price to last years’ earnings for all other S&P 500 companies also at ~16x. We think this is extraordinary given that FANGs are neither small nor new companies. In fact, these are some of the largest companies in the S&P 500 and among the largest holdings of US retirees. Given that the three largest FANG stocks are now twice more valuable than the entire US S&P small-cap universe (600 companies), a legitimate question to ask would be “is such a high allocation by long-term investors to these stocks prudent?” Statistically, over a long period of time smaller companies outperform mega-caps ~75% of times. Note also that the current size ratio of mega-cap stocks to small-cap stocks is at highest level since the tech bubble of 2000. Furthermore, such allocation is also questionable from a risk angle. For example, the idiosyncratic risk of holding three stocks in one sector is certainly much higher than the risk of owning, e.g., ~1,000 medium- or small-cap companies diversified across all sectors and industries.

Investors in high-growth stocks expect innovations to drive growth and sustain high valuation. They may even put their hopes in moonshot projects such as cars built by electronics makers, car makers building spaceships, or internet companies building drones. While many of these could result in important technological breakthroughs, they may also be signs of excess and destruction of shareholders’ capital in the future. Recent examples of capital impairment in the tech sector are illustrated here and here, and more peculiar examples of past excess can be found here and here. In addition to extrapolated and often optimistic growth forecasts, some of the tech sub-industries have high idiosyncratic risks that are likely underappreciated by the market. Standard valuations models incorporate revenue, growth, and profit forecasts but often do not discount for the lifecycle risk of a business. To illustrate: while we are still traveling in aircraft designed over 40 years ago, social network users’ preferences have changed drastically over the past decade (e.g., Friendster and Myspace). A shorter lifecycle is related to low barriers to entry and rapid changes in what is deemed fashionable by young generations (e.g., one cannot build a jetliner in a dorm room, and they don’t go out of fashion as apps do).

In summary, we think that the biases of momentum investing and passive indexation have resulted in valuation distortions across assets as well as equity segments including Technology. Over the past years this trend has picked winning assets, sectors, and stocks often with less regard to fundamental valuation and more regard to momentum and extrapolated growth. We believe that 2016 may result in a reversion of this trend that will give an opportunity to active and value investors to outperform passive indices and momentum investors. Even if this rebalancing comes as a result of market volatility and broader equity declines, long term it will benefit capital markets and the efficient allocation of capital.

* * *

Only problem is that this capital reallocation will means countless momentum chasers ‘smart money managers’ will be out of a job in very short notice.

Then again, judging by some initial reactions, even formerly steadfast believers in the FANGs are starting to bail: moments ago CNBC reported that Mark Cuban announced that he purchased options to sell against his entire stake in Netflix, to wit: “For those of following my stock moves, I just bought puts against my entire Netflix position.“

Cuban posted comments on Cyber Dust social media platform on Friday. Result: NFLX already down -4%, with FB and other tech momos hot on its heels.


via Zero Hedge http://ift.tt/1okMXJS Tyler Durden

Gold Surges To 4-Month Highs

Gold is now up over 13% from its pre-Fed rate-hike lows, having surged through its 200-day moving average by the most in 2 years. As bank risk spikes globally, it appears bonds & bullion are the investment of choice once again in the face of systemic fragility concerns. At 4-month highs, gold is nearing a crucial breakout point…

After the heavy volume puke in gold after the jobs data, buyers have stepped back in size…

 

Pushing the precious metal furthest above it 200DMA in 2 years to 4-month highs..


via Zero Hedge http://ift.tt/1TO0Nk6 Tyler Durden

Free-Market Education Radical Andrew J. Coulson, RIP

I’m sorry to share news of the death of Andrew J.Coulson, the Cato Institute scholar whose 1999 book, Market Education: The Unknown History, is essential reading for anyone interested in education reform, school choice, and human flourishing.

From a posting yesterday by his wife to his Facebook page:

This is Andrew’s wife Kay. Andrew passed-away early this morning after a 15-month battle with brain cancer. He specifically requested a celebratory wake rather than a funeral or memorial service, which we will be holding in the next couple of months when “celebratory” seems possible.

Throughout his illness, Andrew radiated the same cheer and optimism he brought to his work and the cause of creating more and different ways for kids (and all of us) to learn and engage the world. For more on his work, go to his biography page at the Cato Institute, where he was a senior fellow in education policy.

Milton Friedman wrote of Market Education: “Encyclopedic in its coverage of the arguments for and against alternative modes of organizing schooling, readers will find this excellent book instructive whether they agree or disagree with his conclusion.” That captures Andrew’s intellectual contribution and his personality. He was provocative, learned, and engaging (even or especially to those with whom he disagreed). At the core of Andrew’s reform ideas were two basic concept. First, education has always been far more varied in its forms than we’ve come to appreciate and second, that parental and student choice should be front and center in all discussions. It’s a testament to his influence that each of these insights is becoming more popular and influential with every passing year. They allow us to create more varied and individualized forms of education while also minimizing social conflicts and anxieties over learning.

Lisa Snell, Reason’s director of education policy, sums it up:

It was my great fortune to work in education policy with Andrew toward a better education for all kids and to know he always held the line and set the pace for true markets in education. Market Education: The Unknown History is the book I tell everyone interested in education to start with.

Reason extends condolences to his family, loved ones, and colleagues. We will always have a deep appreciation for the way his scholarship, collegiality, and good humor (read his Facebook feed, which is full of cheer even as he knew he was facing death) will continue to inspire us.

Here’s a 2011 interview Reason TV did with Andrew about expanding school choice through tax credits:

from Hit & Run http://ift.tt/1PK3K3q
via IFTTT

Is This The Reason For Europe’s Sudden Bloodbath

While the ongoing slaughter in European bank credit, and mostly counterparty risk, is troubling, it is nothing new: we have been showing it for over a month, most recently on Friday in “European Bank Risk Soars To 3 Year Highs, US Risk Rising.”

 

And yet there is a new element to the latest European selloff, one which turned vicious just minutes after Europe opened for trading this morning with not just commercial banks (who are now all subject to bail-ins courtesy of the BRRD) being dumped with the Deutsche Bank water, but peripheral spreads and equity markets have all joined in.

Case in point: Spanish, Portuguese and Italian yields and spreads to Germany are blowing out…

 

… while the Athens stock market just dropped to the lowest level since 1990, as the Greek banking index just crashed over 21% to a new all time low.

Why the sudden and broad revulsion to everything European? Isn’t China’s devaluation and capital outflow enough worries for the shaky stock market? Or does China being offline for the next week demand that the market find something else to obsess over?

Perhaps the reason for the shift in market sentiment, which appears to have realized once more that Europe is not at all fixed, had to do with the following note out of Morgan Stanely’s equity strategist, Graham Secker, which we highlighted yesterday, and which admitted that in addition to everything else, it is time to once again panic about Europe.

One noteworthy aspect in the current risk-off environment is the lack of peripheral spread widening in Europe; this is unusual based on performance patterns during this cycle and most likely reflects the ECB’s substantial QE programme. While the region is often perceived as a relative consensus overweight among equity investors, we are more downbeat and prefer the US and Japan instead. Our European caution primarily reflects the prospect of further earnings disappointment across the region, but we are also wary of any resumption of geopolitical concerns.

 

Recent investor caution tends to focus on fears of excess USD strength, low oil prices and/or China, but we think it is quite plausible that Europe moves back up the pecking order (to its more usual place some would say!) as we move through 2016. The UK’s forthcoming referendum on EU membership, likely to take place in June, may appear the most plausible catalyst in the short term to raise regional risk premia, but the ongoing migrant issue risks eroding political cohesion over the medium term and political uncertainty is rising in the periphery. Greece has a daunting debt repayment due this summer, Spain is currently without a government, new European regulations are preventing Italy from adopting an effective ‘bad bank’ solution and the recently elected socialist government in Portugal is reversing course on prior austerity and competitiveness improvements. During a cyclical upswing, markets are prone to overlook such concerns, but the opposite would be true if growth starts to relapse.

Yesterday, we promptly thanked Mr. Secker for the reminder…

… and, judging by today’s action where Europe is once again not only not fixed, but suddenly very much broken once more, so are all other capital markets.


via Zero Hedge http://ift.tt/1QQjyka Tyler Durden

Can Ted Cruz Inherit the Libertarian Vote? New at Reason

Ted CruzAs he moved from evangelical Iowa to fiscally conservative New Hampshire, Sen. Ted Cruz didn’t waste a minute in changing his tune.

In his Iowa victory speech Cruz gave a shout-out to libertarians, who are thick on the ground in New Hampshire. He declared, “That old Reagan coalition is coming back together, … conservatives and evangelicals and libertarian and Reagan Democrats all coming together as one and that terrifies Washington, D.C.”

But are they actually coming together behind Cruz? The Cato Institute’s David Boaz takes a close look at the Iowa caucus-winner’s actual positions and behavior.

View this article.

from Hit & Run http://ift.tt/1K7Gxry
via IFTTT

Germany Shuts Down Canadian Bank Tied To Money Laundering

For the first time since 2012, Bafin – Germany’s banking regulator, which for a minute looked like it might actually accuse Anshu Jain of lying about LIBOR – has closed a bank.

All financial transactions by Maple Bank of Canada’s German subsidiary have been halted on the grounds the operation has too much debt or, as BaFin put it, there’s “a prohibition on transfer of ownership and payment, due to imminent over indebtedness.”

Maple – which describes itself as having expertise in “equity and fixed income trading, repos and securities lending, deposits, structured products and institutional sale” – has obligations of around €2.6 billion and assets of €5 billion meaning it “has no systemic relevance” – to quote BaFin again.

It is however, “relevant” for National Bank – Canada’s sixth largest financial institution which has a 24.9% stake in Maple. National will now take a full reserve against that stake, the carrying value of which is CAD165 million. “That means National Bank’s CET 1 capital ratio will take a 13-basis-point hit,” WSJ notes, adding that “this isn’t the first time that National Bank has seen its regulatory capital level dented in recent months.”

No, it’s not, and this “isn’t the first time” that Maple Bank has been under the microscope.

As The New York Times reminds us, Maple “played a prominent role in attempts by the Porsche family to take over Volkswagen several years ago [by] helping Porsche lock up Volkswagen shares using a complex combination of derivatives.”

Former Porsche CEO Wendelin Wiedeking and former CFO Holger Härter are on trial in Stuttgart, where the pair face allegations that they purposefully lied to investors in 2008 to inflate VW shares. “Porsche was threatened financially at the time, according to prosecutors, because a sharp decline in Volkswagen shares forced it to post cash to protect Maple Bank from losses,” The Times adds.

In other words, Maple Bank was the institution at the center of the infamous short squeeze that caused VW shares to soar in October of 2008 when the automaker briefly became the most valuable company on the planet. At the time, the company’s market cap was greater than Apple, Philip Morris, and Intel combined.

Maple Bank is also under investigation for tax “irregularities.” Last September, German prosecutors raided the bank’s offices and homes tied to its employees in what Reuters called “a probe of serious tax evasion and money laundering connected to dividend stripping.” Prosecutors alleged that at least 11 people illegally claimed some €100 million in tax paid using an illegal dividend arb. “Previous cases of dividend stripping in Germany have involved buying a stock just before losing rights to a dividend, then selling it, taking advantage of a now-closed legal loophole that allowed both buyer and seller to reclaim capital gains tax,” Reuters said, outlining the circumstances behind the infraction.

Apparently, once Maple Bank made the government mandated provisions for taxes, its financial situation deteriorated meaningfuly. In other words, Germany effectively put the bank out of business. “Frankfurt prosecutors allege that Maple Bank and its business partners have bilked the taxpayer of some 450 million euros,” Reuters added on Sunday. “The bank has an equity capital of just 300 million euros.”

As for National Bank, the lender said on Sunday that it “has advised the German authorities that if it is determined portions of dividends received from Maple Financial Group Inc. could be reasonably attributable to tax fraud by Maple Bank, arrangements will be made to repay those amounts to the relevant authority.” CEO Louis Vachon is “surprised” at the developments, but says his bank’s results will not be materially affected by developments in Germany. 

Now if only BaFin would get serious about investigating Europe’s largest bank which, unlike Maple, has quite a bit of “systemic relevance,” we might be able to take the regulator seriously. 


via Zero Hedge http://ift.tt/1Q4XKEz Tyler Durden

Frontrunning: February 8

  • European stocks plunge as Lunar New Year offers no cheer (Reuters)
  • European Stocks Fall, Credit Weakens as Signs of Distress Abound (BBG)
  • Management trouble at world’s biggest hedge fund: Bridgewater succession plan in flux as heir Greg Jensen steps back (FT)
  • U.S. athletes should consider not attending Olympics if fear Zika – officials (Reuters)
  • Geithner Gets JPMorgan Credit Line to Invest With Warburg Pincus (BBG)
  • Top Clinton Donor Wants a Law Against $1 Million Gifts Like His (BBG)
  • Private equity groups under pressure to buy own stock (FT)
  • Before New Hampshire primary, Trump campaign shows mellower side (Reuters)
  • Big Companies Pull Back After Rough Quarter (WSJ)
  • A Dying Breed: Currency Traders Are Left Out of New Wall Street (BBG)
  • Bill Clinton Launches Attack on Bernie Sanders in New Hampshire (NBC)
  • Consumption Seen Dropping as Japan’s Workers Eke Out 0.1% Rise (BBG)
  • Peyton Manning handed Budweiser $3.2 million in free ads after the Super Bowl (MarketWatch)
  • Guggenheim’s $240 Billion Man Says Nasdaq to Tumble Below 3,800 (BBG)
  • Some Australian asylum seekers to be deported have cancer, terminal illnesses (Reuters)
  • High-Value Banknotes Should Be Binned to Fight Crime, Sands Says (BBG)
  • Job Site Hired Raises $40 Million and Forecasts Profit by 2017 (BBG)

 

Overnight Media Digest

WSJ

– Turkey’s growing hostility towards Syrian Kurdish fighters on charges of professed smuggling of weapons to members of the Kurdistan Workers’ Party in Syria, has strained U.S.-Turkish relations.(http://on.wsj.com/1mmyjAm)

– North Korea’s launch of a long-range rocket triggered condemnation and prompted Washington and Seoul to formalize talks over deploying an advanced missile shield to South Korea, a move China strongly opposes.(http://on.wsj.com/1nQ4aKG)

– National Bank of Canada warned that its regulatory-capital level would take a hit after Germany’s financial watchdog BaFin effectively shuttered one of its foreign investments, the German unit of Maple Financial Group.(http://on.wsj.com/1ojfxeV)

– After a tough end to 2015, big companies like Johnson & Johnson and Yahoo Inc are starting the new year with a tight rein on capital spending including layoffs, as they seek to cope with sluggish industrial demand and uncertainties about the continued resilience of the American consumer. (http://on.wsj.com/1SXLYL8)

– China’s foreign-exchange reserves fell to the lowest level in more than three years in January, raising questions about how long Beijing can keep burning through the rainy-day funds to defend the yuan without triggering a huge flight of capital.(http://on.wsj.com/1L7fdEG)

– Hedge funds are betting the next bond sector to crack will be the $4.5 trillion market for the safest U.S. corporate debt and it won’t be confined only to energy and junk bonds. (http://on.wsj.com/1Q2paVg)

 

FT

* French banks are now under increased investor pressure reduce branches and push customers to digital platforms to cut costs. “Shareholders are asking for a commitment to slim down branches and cut costs,” David Benamou, head of investment at France’s Axiom Alternative Investments said.

* Network Rail is urging ministers not to privatise the company and sell off large sections of Britain’s rail infrastructure. Network Rail, which is publicly owned, says that breaking it up would make train travel more expensive, because it would undermine its ability to buy material in bulk at a lower price.

* UK government and regulators have initiated a push to change key aspects of the new Solvency II regime for insurers, citing concerns it is making some companies less competitive. The Treasury and the Bank of England highlighted areas that they would want to be altered as the government calls for wide and earlier review of the rules.

* PSA Peugeot Citroen is to give over 400 million euros ($445.60 million) worth of compensation to Iran’s biggest carmaker for losses it incurred when the French carmaker left the country. Iran Khodro said that Peugeot had agreed to the arrangement to make up for problems caused in 2012, when it withdrew from Iran to comply with international sanctions against Tehran over its nuclear programme

 

NYT

– European officials knew that Volkswagen diesels fell short of pollution limits years before the company became engulfed in an emissions cheating scandal, records show. (http://nyti.ms/1Q4pqcI)

– Tidjane Thiam, chief executive of Credit Suisse, has asked the company’s board to reduce his bonus, days after the Swiss bank reported a multi billion dollar loss in the fourth quarter. (http://nyti.ms/1Q4puZV)

– German banking regulator, known as Bafin, said on Sunday that it ordered a halt to financial transactions by Maple Bank, the German subsidiary of Maple Financial Group of Canada, that played a prominent role in attempts by the Porsche family to take over Volkswagen several years ago. (http://nyti.ms/1KAif9E)

– The infighting among lawyers for the plaintiffs suing General Motors over a flawed ignition switch intensified after one who helped uncover the defect, Lance Cooper, sharpened his attacks against another who is heading the case, Robert C Hilliard. (http://nyti.ms/1XcNysZ)

 

Britain

The Times

– The SFO accused Pinsent Masons yesterday of “deliberately” misinterpreting data showing that while the number of whistleblowing reports to the agency had risen last year by 324 to 2,832, only 16 new investigations had been opened. (http://thetim.es/1nRIT3q)

– A partial break-up and privatisation of Network Rail is back on the agenda under a plan being drawn up by Nicola Shaw, the boss of HS1. The chief executive of the high-speed route is considering proposals to spin off individual lines to investors and introduce an agency to oversee the industry at arm’s length from government. (http://thetim.es/1nRIZrP)

The Guardian

– Next has been criticised by a group of heavyweight investors who say the company failed to act on a warning that could have prevented it from breaking company law, forcing the retail group to hold an expensive shareholder meeting this week. (http://bit.ly/1nRIJJr)

– Workers at Google Ireland, the search group’s European sales hub, earn less than half the 160,000 pound average wage of colleagues in London despite the British sales team only providing a supporting role to their Irish counterparts. (http://bit.ly/1nRIQo4)

The Telegraph

– HSBC Holdings Plc’s board is expected to come to a decision on the location of its headquarters in the coming days after an unexpectedly long-running review of the future of the British-based bank. A review was launched last year and initially was expected to reach a conclusion by the end of 2015. Investors are increasingly convinced that the bank will not quit the UK. (http://bit.ly/1nRIAph)

– Business Growth Fund, the nearly five year old equity fund, has reported a record month for investments, backing UK firms with 50 million pounds worth of capital in January alone. The fund, which has a 2.5 billion pound warchest of capital from Barclays Plc, HSBC Holdings, Lloyds Banking Group Plc , Royal Bank of Scotland Group Plc and Standard Chartered Plc, has disclosed two of the investments made during that month. (http://bit.ly/1nRIFJI)

Sky News

– Ministers should sanction the construction of a new runway at Gatwick Airport and end dithering over the crucial issue of aviation capacity, billionaire hedge fund manager Crispin Odey and chief executive of Legal & General Nigel Wilson said. (http://bit.ly/1nRIduS)

– The long-serving finance director of BT Groupm Plc, Tony Chanmugam, is preparing to step down within months of the telecommunications regulator delivering its verdict on the company’s structure. (http://bit.ly/1nRIePk)

 


via Zero Hedge http://ift.tt/1K7EbZT Tyler Durden