Good morning New York,
FT ALPHAVILLE
Kuroding yields: The daily attempts of Bank of Japan and Japanese government officials to calm volatile equities/yields/yen is becoming dizzying. For Kuroda in particular it must be exhausting. The poor guy is everywhere. Despite his best efforts, Japan's 10 and 5 year yields headed back above 0.9 per cent and 0.4 per cent respectively. Although not too dramatic, the risk of VaR shock and evolving US yields will keep everyone watching.
Finland still had a few secrets: Jan Hurri, a journalist for Taloussanomat, noticed that a number of documents were missing from the Finnish government's recent, court-ordered disclosure about the 'collateral' for its Greek bailout loans… As Joseph notes, on Monday, the government finally published those ones too. Oops. Careless.
Reinhart & Rogoff is still ongoing, meme status inevitable: Carmen Reinhart and Ken Rogoff wrote a letter to Paul Krugman. He responded, and so did some others. (DeLong for Krugman; Hamilton for R&R.) On it goes. And why not? Austerity is an important subject, the empirical data or lack of it deserves a great deal of attention. Economists calling each other names, probably less so. But, as Kate correctly observes, it's so very entertaining…
NEWS
China targeting 7% growth, says Li: Chinese Premier Li Keqiang told German business leaders his country faces "huge challenges" as it pursues an average annual growth rate of 7% this decade. The country's leadership appears increasingly willing to tolerate lower growth. At a press conference in March, Li referred to a target of 7.5% average growth through 2020; however state-media transcripts that day said Li gave a 7% figure. (Bloomberg)
Five Star Movement flops in Italy's local polls: Local elections across Italy have witnessed a collapse in support for the anti-establishment Five Star Movement, with the centre-left Democratic party led by Prime Minister Enrico Letta performing better than expected. The Five Star Movement failed to make the second round run-off, to be held in two weeks, in any of the 16 major towns and cities holding elections among more than 500 local councils. (Financial Times)
Investors pour big sums into US biotech: In a quest to find the next big medical breakthrough, stock market investors have poured $725m into 10 biotechnology flotations that are attempting to create drugs for illnesses including multiple scelorsis and hepatitis C. The result has been that small biotechs, which struggle to generate interest from credit investors since they lack cash flow, are pursuing US initial public offerings at the fastest pace in nearly a decade. (Financial Times)
"The American energy boom is deepening splits within the Organization of the Petroleum Exporting Countries, threatening to drive a wedge between African and Arab members as OPEC grapples with a revolution in the global oil trade [...] African OPEC members such as Algeria and Nigeria—which produce oil of similar grade to shale oil—are suffering the worst effects from the North American oil boom. Nigeria Oil Minister Diezani Alison-Madueke deemed U.S. shale oil a "grave concern." (Wall Street Journal)
China solar fight: "Trade negotiations between the European Union and China ended on Monday with mutual recriminations. China called on the European Union to refrain from imposing tariffs on solar panels, and the European trade commissioner complained that China was pressuring individual countries to prevent Europe from reaching a consensus." (New York Times) Germany led a majority of EU members on Monday to oppose punitive duties on imported Chinese solar panels, undermining an aggressive attempt by the bloc's trade commissioner to combat allegedly unfair competition from China. (Financial Times)
European lenders draw down on central bank reserves: 'Cash hoards' stashed at central banks by the 12 biggest European lenders have fallen 19% from their peak. (Wall Street Journal)
Osborne agrees spending cuts with seven departments: George Osborne has agreed spending cuts of up to 10 per cent with seven government departments, but the chancellor still needs to find savings of £8bn to shrink the national budget deficit. Energy, justice and communities are among those which have agreed to substantial savings as part of Mr Osborne's goal to cut £11.5bn from public spending for the 2015-16 financial year, as part of a review due in June. (Financial Times)
New Co-op Bank chief warns of 'no quick fixes' to capital black hole.The Co-operative Group has turned to Niall Booker, a former 30-year veteran of HSBC to lead efforts to resuscitate its banking arm. Booker is due to join within days and the Co-op's directors are set to meet formally this week for the first time since the bank's credit ratings were slashed to junk status. (Financial Times)
Valeant in $8.7bn Bausch & Lomb deal: "Valeant, the Bermuda-domiciled speciality pharmaceuticals group, has launched its most ambitious takeover yet with the agreed $8.7bn purchase of Bausch & Lomb, the privately held ophthalmology business." (Financial Times)
Club Méditerranée is to be taken over by its biggest shareholders, Axa Private Equity and Chinese conglomerate Fosun, in a friendly deal that values the French holiday resort group at €556m. News of the deal saw Club Med's shares rise 22%. The offer, which was made with the company's management, is a €17 a share– a 23% premium to the Friday closing price. (Financial Times)
Cov-lite loans rise: More than half of new leveraged loans issues this year were without covenants, more than double the level of 2007. (Financial Times)
Markets: Stocks are firmer after last week's wobbles, sparked by a rally in Tokyo as the yen slides, and with Wall Street looking to return from a day off in chipper mood. Treasury yields are moving higher as bond prices dip, and strength in commodities points to traders overcoming initial concerns over the pace of resource demand in the face of meek global growth and adequate supply. he FTSE All-World equity index is up 0.3 per cent after the Asia-Pacific region rose 0.4 per cent and as the FTSE Eurofirst 300 advances 1.3 per cent. London's FTSE 100 has returned from Monday's holiday with a gain of 1.7 per cent and US index futures suggest New York's S&P 500 will come back from its own day off with a 15-point bounce to 1,664 writes the FT's Global Markets shogun Jamie Chisholm.
