Secret HQ set up in London to fight cyber crime: "Britain's security services are to open a new unit in London to work with business to protect UK companies from the growing threat of cyber attacks by China, Russia and Iran. The new initiative – formally called the Cyber Security Information Sharing partnership – will be established at an undisclosed location in London, where around a dozen officers from the Government Communications Headquarters and MI5 will work with business representatives to monitor potential threats." (Financial Times)
The world's pool of Aaa-rated government debt has fallen 60 per cent since the start of the financial crisis. The loss of top ratings by the US, UK, and France have helped shrink the stock of debt deemed Aaa by Fitch, Moody's and Standard & Poor's from almost $11tn at the start of 2007 to $4tn in 2013 (Financial Times).
European regulators to charge banks over derivatives: "European antitrust authorities are moving soon to bring a case against some of the world's largest banks alleging collusion in the $27 trillion dollar market for credit derivatives, people familiar with the investigation said. The probe by the European Commission involves 16 financial groups. It focuses on whether they sought to stifle competition from exchanges in the market for credit-default swaps, which pay out when a country or a company defaults on its debts." (Wall Street Journal)
Warren Buffett will become one of Goldman's largest shareholders, after a deal to convert billions of dollars of warrants into common stock. Berkshire Hathaway was originally issued the warrants as part of investing $5bn in the bank during the crisis, giving it the right to purchase about 9 per cent of the bank for $115 per share before October 1 this year. Tuesday's revised deal will see Goldman issue Berkshire stock equivalent to the company's paper profit on the position (Financial Times,Goldman statement). Buffett's gain of a 2 per cent stake from the deal will making him a top 10 Goldman shareholder (Wall Street Journal, Bloomberg).
Bank of Spain sees deeper gloom in 2013: "The Spanish economy will shrink by 1.5 per cent this year and unemployment is set to rise above 27 per cent, the Bank of Spain has predicted. The central bank's latest annual forecast leaves little doubt that 2013 will be an even tougher year for Spaniards than last year, with housing prices also heading for yet another sharp fall. The economy will again be marked by weak domestic demand, a fragile labour market and tight financial conditions, the bank said." (Financial Times)
Poland opens way to euro referendum: "Donald Tusk, Poland's prime minister, took a big political gamble on Tuesday when he opened the door to a referendum on joining the euro, in the face of strong public opposition to the common currency. The move is part of a campaign to prepared Poland to begin the final stages of accession to the single currency by 2015. Mr Tusk had previously opposed a public vote, arguing that Poles had already bound themselves to the euro when they voted in 2003 to join the EU." (Financial Times)
US crackdown on Citi laundering laws: "The US Federal Reserve has ordered Citigroup to improve its compliance with anti-money laundering rules, citing deficiencies at an affiliate of Banamex, its prized Mexican banking arm. Citi is required to develop plans to strengthen its anti-money laundering procedures and adequately fund its risk-management programmes. There were no fines as part of the Fed order." (Financial Times)
Commodities trading rule call rejected: "Switzerland has sought to protect its central role in the commodities trading industry, rejecting calls for stringent regulation in the sector and opting instead to launch a consultation over a set of voluntary principles for the industry. The Swiss government will publish on Wednesday a long-awaited report on the commodities industry, which includes groups such as Glencore, Vitol and Cargill with big offices in cities such as Geneva, Zug and Lugano. The report will stop short of calling for strict mandatory regulation, as campaigners have demanded, instead proposing a wide-ranging consultation about transparency and human rights, according to three people familiar with the discussions." (Financial Times)
COMMENT AND CURIOS
- Tax havens are the biggest source of foreign investment in the Brics.
- Walt Mossberg reviews the new Flipboard. (Wall Street Journal)
- On Calpers and the efficient allocation of capital. (Dealbreaker)
- Exchange controls, barter, and Cunning plans. (Nick Rowe)
- Foreign investment in US dwarfs money going abroad. (Real Time Economics)
- Twitter as the ultimate dopamine dispensary. (Abnormal Returns)
OVERNIGHT MARKETS: MIXED
Asian markets
Nikkei 225 down -5.52 (-0.04%) at 12,466
Topix up +1.12 (+0.11%) at 1,046
Hang Seng up +143.92 (+0.65%) at 22,455
US markets
S&P 500 up +12.08 (+0.78%) at 1,564
DJIA up +111.90 (+0.77%) at 14,560
Nasdaq up +17.18 (+0.53%) at 3,252
European markets
Eurofirst 300 up +2.12 (+0.18%) at 1,189
FTSE100 up +20.99 (+0.33%) at 6,399
CAC 40 up +20.66 (+0.55%) at 3,749
Dax up +8.77 (+0.11%) at 7,880
Currencies
€/$ 1.29 (1.29)
$/¥ 94.73 (94.41)
£/$ 1.52 (1.52)
Commodities ($)
Brent Crude (ICE) down -0.09 at 109.27
Light Crude (Nymex) down -0.21 at 96.13
100 Oz Gold (Comex) up +2.20 at 1,598
Copper (Comex) unchanged 0.00 at 343.35
10-year government bond yields (%)
US 1.91%
UK 1.80%
Germany 1.34%
CDS (closing levels)
Markit iTraxx SovX Western Europe +1.21bps at 102.71bp
Markit iTraxx Europe +0.81bps at 123.12bp
Markit iTraxx Xover +1.24bps at 482.07bp
Markit CDX IG -0.72bps at 90.41bp
Sources: FT, Bloomberg, Markit
