Daily News Roundup 2012: Monday 21 May

Good morning

The headlines:

1. Mark Zuckerberg got married. Link: Improving Facebook Relations with China. His new wife is Priscilla Chan. MZ managed to wear a suit. He designed the ring himself. They got married in a garden. When you social highlights become a Bloomberg news item, you KNOW that you're IT royalty. 
2. Trade disorder caused some awkwardness with the $16 billion Facebook IPO. Sure. "Trade Disorder". Firstly, trading started half an hour late (apparently - the NASDAQ struggled to price the first transaction). Then it couldn't confirm the trades (ie. it couldn't allow a trade to be completed). Now they have to take appeals or something. But seeing as the share price opened at $42 and ended at $38 - anyone purchasing shares will have won by saving $4 a share. But still - when the eyes of the world and twitter are on you - being a fail is such a fail. Oh - and did I mention that other shares (ie. Zynga) had trading suspended? The NASDAQ comes with circuit breakers - if your share price falls by more than 10% in five minutes, the system cuts it. No one is sure what happened - but it seems that it was all part of the same problem. Oi vey. Link: Oh NASDAQ.
3. NASDAQ blames poor design. Link: But you designed it, surely? Something something "not designed to handle this kind of activity and/or cross trade". What they mean by "cross-trade" is that the share price being asked by sellers was higher than the share price being bid by buyers. When I want to buy for $42.50 and you want to sell for $42.99 - that creates some awkwardness on the price front. NASDAQ naturally concluded that the opening price would be $42.05. Which looks like nothing natural to me. Until the share price dropped almost immediately back to $38.01; at which point, vindication (see below). Nasdaq's CEO Robert Greifield admitted that this was not their "finest hour", but he "certainly hope[s]" that his job is safe. Bungling the biggest IPO, like, ever? Hope may be all you have. Because a technology fail for a technology IPO has poetic irony - an irony begs for a scapegoat's head on a platter. A silver platter that can be sold to pay off all the folk that are going to be suing this morning. Ha ha ha ha ha.
4. The Undertakers Underwriters step in to save Facebook IPO price. Link: Not as wonderful as hoped for. Which means that every time the share price dropped to $38.00, they stepped in to buy up shares, boost demand, and maintain the price. A meager gain of $38.23 by close of trade. Baited breath to see what happens when they let it all hang loose. My feeling is: "Drop it like it's hot". 
5. Alibaba is rebuying its shares from Yahoo. It's repurchasing Yahoo's 20% stake for $7 billion, which it's been trying to do for over a year; and the pressure really has been on since September. In that time, Yahoo has been through two CEOs and is now on its third. Some say that Three Point and/or Daniel Loeb are to blame. From what I recall, I think that DL is quite the fan of the Alibaba sale. So is Alibaba. Amazing how not even a week after Mr Thomson left the building, Alibaba is delighted to announce its repurchase. The Chinese are saying that Yahoo can use the cash to turn Yahoo around. That, or give all the cash back to its shareholders (which is exactly what Yahoo is planning on doing). I remember when Yahoo was awesome. Now? Now I'd rather buy Facebook shares at any price*. Link: Taking back China for the Chinese. 
6. Iranian minister expects oil prices to rise. Link: Oh yes! The Iranian oil sanction crisis. It's still ongoing. July 1 is D-day. Can you imagine an oil crisis on top of a Euro crisis on top of an American Debt crisis? Maybe the Mayans were a touch optimistic with their predictions. December 21st seems too far away.
7. Luxury homes bidding wars in California. Link: You just can't keep good Americans down. The sellers are surprised. 
8. China to speed up approval of qualified foreign investors. Link: Red tape? So not only are there quotas, it's also super painful to get onto them. It really makes you feel wanted. The Chinese always strike me as super-cautious. They'll help the Eurozone out with aid just as soon as the Eurozone has sorted itself (and no longer needs the aid). They won't change rates to boost the economy, they'll just change reserve ratios to allow people to borrow more at the current rate. They won't ease foreign investor restrictions, they'll just make the current restrictions easier to navigate. Maybe caution is not such a bad thing in the current climate...

That's all for now.

Have a good day.

*Yes, that's an ironic lie - because I'd rather buy Greek bonds. Which is also an ironic lie: actually, I'd rather be Robert Greifield this morning. But then, that's an ironic lie as well. No. If anything, this morning I'd like to be Priscilla Zuckerberg nee Chan - because she got in there just before MZ "created" the FB. She's put up with him for over 9 years. Respect. But mostly, can you imagine what her divorce settlement will look like? 

Daily News Roundup 2012: Thursday 26 April

Good morning

The headlines:

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

That's all for now.

Have a good day.

Daily News Roundup 2012: Wednesday 4 April

Good morning

The headlines:

1. US Stocks fall as Fed Minutes Damp Stimulus Expectation. The S&P 500 fell yesterday on signs of less stimulus, after rising to its highest level since 2008 on Monday based on news that US manufacturing was showing signs of better-than-expected growth. Because <insert sarcastic tone here> manufacturing, in and of itself, is always a good thing. Can I get a “not”? And here's why: if I were a manufacturer, I would hike production when there's lots of demand (probably a good thing), or when it's cheap to produce (probably not such a good thing). In the States situation, as a manufacturer, I would look at the deficit crisis; and I would think "Obama or Romney or Santorum - they're all going to cock it. Obviously - because the right decision here is an unpopular one, and these men are politicians. And then they're going to monetise the debt by getting Bernanke to toss more stimulus into the mix, and then we're going to hyperinflate". Do you know who wins in hyperinflation? Manufacturers. Because they get to constantly self-hedge. And now - now interest rates are really low (so cheap to produce on borrowed money), and the Fed is quantitatively stimulating (let's look forward to higher prices). Yes - I would certainly manufacture. And yes - if the Fed announced less stimulus, markets should be concerned that I made the wrong call. Which they are. Link: Stocks fall on Fed Minutes.
2. In more Petronas news (who was yesterday eying out Canada for a $5 billion purchase), its South African unit Engen has announced that it has suspended its purchases of oil from Iran. Engen normally sources about 80% of its fuel from Iran. And according to Petronas CEO Shamzul Azhar Abbas, Engen is yet to source alternative supplies! And this is after Sasol also stopped purchasing Iranian fuel (about 20% of its supply) last month. So to clarify: Engen imports raw crude from Iran and refines it at its Durban refinery; and the refinery is built/modified to process Iranian crude. So things will need to be re-modified once new supplies are sourced. All this sounds like the beginning of a series of fuel shortages in Johannesburg. And then I will not be happy. And then it will make me want to say some things about this US sanction business that would probably blacken my name on any and all future US Visa applications. How I hate to bite my tongue. Link: Engen suspends Iranian Oil imports.
3. China has increased the quotas for foreign investment on its capital markets. The quotas for qualified foreign institutional investors over their investments in stocks, bonds and bank deposits have been increased from $30 billion to $80 billion. This is seen as a shift in the current export-driven model that China employs. This is also meant to be part of China's commitment to liberalise the yuan. And take over the world. However, that said, since the China Securities Regulatory Commission (CSRC) first initiated the program in 2003, it has only granted $24.6 billion of the original quota. So this may not be a practical reality so much as a theoretical limit. And therefore: lip service. Link: China "opens" its capital markets.
4. An 11 year-old Dutch boy has won a €100 prize for his plan to fix the euro that involves describing money as a pizza. This suggestion was in pursuit of the Wolfson Economic Prize, the second highest honour in the field of Economics (after the Nobel Prize which isn't a real Nobel prize - because it only came about years after Nobel's death). The topic for this year's Wolfson is finding a way to let a country leave the Eurozone without ensuing economic chaos. The kid didn't make it into the top 5 (presumably, the moderators prefer pasta), but the top 5 do have some interesting theories. Link: The Ten Year Old Euro Exit Plan: Pizzare.
5. And the African Business News in brief. Link: ABN Briefs. The highlights:
• Ethiopia has purchased thirty-five thousand tonnes of Russian wheat. The purchase now hinges on the approval of the World Bank, which is financing the transaction.
• The JSE and FTSE are set to rebase the FTSE/JSE Africa General Industrials index (J272) on 26 April. 
• Despite fears, Sudan and South Sudan have begun peace talks. 
• South Africa's total new vehicle sales increased by almost 5% year-on-year in March, but exports declined by almost 20% over the same period. 

That's all for now.

Have a good day.

Daily News Roundup 2012: Friday 30 March

Good morning

The headlines:

1. Oh MTN... Turkcell is accusing the Ayoba folk at MTN of having far too Ayoba a time in Iran. The dispute is over the Iranian mobile-phone licence (apparently - there is/was only one on offer). Turkcell got granted it first in February 2004, at which point MTN allegedly began 'Project Snooker',  as it's termed in alleged internal memos. According to Turkcell, 'Project Snooker' included bribing officials (tsk), arranging meetings between Iranian and South African leaders (hardly a crime), and promising Iran weapons and United Nations votes in exchange for a licence (!!!). The UN votes weren't really votes so much as abstentions: South Africa abstained from three votes on Iran's nuclear program at the United Nations International Atomic Energy Agency (IAEA). Three days after abstaining from a vote held on 24 November 2005 - the licence was delivered to MTN. At the same time, MTN officials apparently used their influence with then Minister of Defence, Mosiuoa Lekota (of the Arms Deal fame), to secure the delivery of defence equipment to Iran. The case has been lodged in Washington. Turkcell is suing for $4.2 billion worth of damages. Observation: it sounds like a Dan Brown novel plot. Also - I keep getting random "please call me" smses that are proudly being brought to me by MTN. The elderly woman that I keep calling has no idea what I'm talking about. Link: When Ayoba Goes Too Far.
2. Iran has started accepting payment for its oil in kind. Barter transactions - gold, wheat, etc. China and India are apparently at the head of the list. Where there's a well, there's a way. Link: India and China skirt Iran sanctions. 
3. The Republican House of Representatives have passed another budget that is doomed to fail when it hits the Democrat Senate. All the usual spending cuts for Obamacare and no tax impacts on the rich. Frankly, I think they should just pass it. Better to start somewhere than to continually argue. Link: A New/Old Republican Budget. After all, there is this looming in the background: The Four Numbers that add up to an American Debt Disaster.
4. The South African Reserve Bank left the repo rate unchanged at 5.5% yesterday. Link: SARB leaves key lending rate unchanged.
5. And the African News in Brief. Link: ABN Briefs. The highlights:
• Ethiopia's privatisation is underway, with the government accepting bids worth $121 million for seven state-owned companies.
• South Africa's ABSA bank has repudiated union claims that it has undertaken large scale retrenchment.
• The IMF has approved the release of the final instalment of Angola's $1.4 billion loan agreement made in 2009. 

That's all for now.

Happy Friday.

Daily News Roundup 2012: Wednesday 28 March

Good morning

The headlines:

1. To return to the ongoing Iran sanction saga, India is supposedly going to start paying for its Iranian oil in rupees. The Iranians would prefer to be paid in forex (who doesn't?); and from what I can tell, current payments are taking place in Euros, with the majority of payments being transferred through Turkey (as the US banks are being awkward). However, when EU sanctions begin in July, Turkey says that it will no longer be able to process those payments (despite Turkey not being part of the EU as yet). When that happens: payments in rupees. Transfers are likely to take place through the state-run UCO Bank, which doesn't have US operations and therefore is unlikely to be impacted by the sanctions. Link: Iran and India.
2. In what sounds like a recycled news item, the Europeans say that the crisis is nearing its end, but Ben Bernanke warns that a US recovery isn't assured. Yawn. Link: the Europeans say that the crisis is nearing its end, but Ben Bernanke warns that a US recovery isn't assured.
3. The Magic Johnson group has won a bid to buy the bankrupt L.A. Dodgers for $2 billion. I'll be honest - each time I see someone buying a sports team, I wonder how much of that purchase makes economic sense, and how much of it is just "heart" (read: irrational bursts of stimulant chemicals in response to external stimuli). On the one hand: stadiums, merchandising, fans who "heart" the team and will pay for season passes and such. On the other hand: the L.A. Dodgers is bankrupt. And there's an ex-wife involved. And Fox TV making a noise about their television rights. How much magic do you need? Link: Magic Johnson Group to buy LA Dodgers.
4. South African Reserve Bank governor, Gill Marcus, is set to announce the results of the MPC meeting later today. According to all 18 economists surveyed by Bloomberg, the rate is expected to remain unchanged. Presumably, this is on the back of last month's inflation data, which showed inflation falling to 6.1%. Link: SARB may delay raising interest rates.
5. And the Africa Business News in brief. Link: ABN Briefs. The highlights:
• South Africa's Government Employees Pension Fund (GEPF), the country's largest retirement fund with a portfolio of around $150 billion, is set to expand its investments into Africa and global portfolios in order to diversify risk. Of course - their portfolio base may also be getting just a touch too big for the SA investment market. 
• Illiad Africa's headline earnings have dropped by 76%. Now that's awkward.
• Zambia's Central Bank is set to introduce a benchmark interest rate from the beginning of April to replace the money supply targeting that has been their principal policy tool up to this point.

And that's all for now.

Happy Wednesday.