Good morning New York,
FT ALPHAVILLE
China's liquidity crunch, and what it means for everyone: The PBoC is so far projecting an air of intent about China's liquidity squeeze. But after years of overseeing mostly expansionist policy, it's facing largely uncharted territory as it attempts to guide credit growth to be lower, and more sustainable. Kate's post runs through the dangers.
Irish banking, blood will boil edition: Paul brings you tape recordings of conference calls held inside Anglo Irish Bank as it sought taxpayer funds to stave off collapse in September 2008. The mix of frivolity and cynicism here is astonishing.
About those mid-tier Weapons of Mass Ponzi in China: We're chasingthose pesky Wealth Management Products again. Think is, the fact there are more than Y1.5tn in WMPs maturing in the last 10 days of June might provide a very decent clue as to why China's PBoC is squeezing the interbank market. Which makes Kate's spot all the more sensible: PBoC says banks can just deal with it.
NEWS
PBoC breaks silence over China cash crunch: The Chinese central bank has finally broken its silence over the country's cash crunch, telling banks the onus is on them to manage their own balance sheets better. The People's Bank of China said liquidity was at a "reasonable level" and called on big lenders to do more to help restore calm to the country's anxious markets. "Commercials banks must pay close attention to the liquidity situation in the market and must strengthen their analysis and forecasts of factors affecting liquidity," the central bank said. "Financial institutions, especially large commercial banks, must at the same time as strengthening themselves, play an active role in using their advantages to support the central bank in stabilising the market," it added. (Financial Times) China's stock markets weren't too impressed.
BIS tells central banks to stop trying to spur a recovery and re-focus on inflation: In its annual report, the "central bankers' bank" said the global economy was "past the height of the crisis" and central banks "cannot do more without compounding the risks they have already created". It said central banks couldn't repair balance sheets of households or financial institutions, and railed against critics of eurozone austerity, saying there were "reasons to be sceptical" about arguments that the fiscal multiplier had been underestimated. (Financial Times)(BIS report)
Vodafone agrees Kabel Deutschland offer: Vodafone, the mobile phone group, has launched an agreed €7.7bn cash offer for Kabel Deutschland in a move by the UK group to go beyond its traditional mobile telephony business into consumer broadband and television services. The offer values each Kabel Deutschland share at €87 and includes a €2.50 a share dividend announced by the German company earlier this year. It represents a small premium to Friday's closing price, and an increase of 37 per cent on the share price before takeover speculation began in February. (Financial Times)
Rio Tinto has abandoned plans to sell or float its precious gems business, saying it is "the best path to generate maximum value". Analysts expect Rio to dispose of several businesses and assets over the next 18 months, including Iron Ore Company (IOC) of Canada, Pacific Aluminium and the North Parks copper-gold mine. The company has also put several Australian coal assets up for sale. (Financial Times)(Rio statement)
Suntory Holdings' food and soft drinks unit is set to price an IPO today that could raise as much as $4.8bn, in a test of investor appetite for new listings at a time of high volatility in Japanese stock markets. (Reuters)
ENRC founders win backing of Kazakhmys for delisting move: The attempt by the founders of Eurasian Natural Resources Corporation to take the Kazakh miner private and end its turbulent five-year London listing took a step forward on Monday after the bid secured the backing of rival shareholder Kazakhmys. The board of Kazakhmys, listed on the FTSE 250, said the bid "may undervalue ENRC and its assets but after seeking to engage with the ENRC consortium and its constituent members, [we have] concluded that there is no prospect of obtaining improved terms". consortium consisting of Alexander Mashkevich, Alijan Ibragimov, Patokh Chodiev and the Kazakh government has offered $2.65, or about 172p in cash, along with 0.23 Kazakhmys share for each ENRC share. The consortium owns about 54 per cent of the FTSE 100 miner and Kazakhmys owns about 26 per cent. The terms are little different to an approach of 175p a share and 0.231 of a Kazakhmys share put forward by the consortium on May 16. (Financial Times) (FT Alphaville)
Top bankers' pay falls 10%: "Average pay of top bankers in the US and Europe including JPMorgan's Jamie Dimon and Royal Bank of Scotland's Stephen Hester dropped by a 10th last year after banks bowed to investor and regulatory pressure, Financial Times research shows." (Financial Times)
Japan's biggest pension fund doubts 2% inflation target: "History is against the Bank of Japan as it undertakes unprecedented asset purchases in pursuit of a pledge to overcome 15 years of deflation, Mitani, the 64-year-old head of the 112 trillion yen ($1.14 trillion) Government Pension Investment Fund, said in a Tokyo interview June 21." (Bloomberg)
Edward Snowden applies for Ecuador asylum: The former US intelligence official who has acknowledged disclosing classified documents about US government surveillance around the world, has left Hong Kong and applied for asylum in Ecuador. (Financial Times)
Banks present own crisis plan to Fed: "Under the proposal, the largest financial-services holding companies would be willing to hold a certain amount of debt and equity that would be used to prop up any failed bank subsidiary seized by regulators. Some banks might be forced to issue expensive long-term debt. The plan is a concession to regulators, who increasingly have been calling for banks to hold a minimum amount of long-term debt. Regulators haven't responded to the idea and could reject it in favor of their own plan. But in general, they have favored banks' issuing more debt because it can provide liquidity for a failing bank while government officials replace senior management and fix problems." (Wall Street Journal)
Markets: US government bond yields are at 22-month highs while growth-focused products like stocks and commodities are again under pressure as traders contemplate a market with less central bank support. In addition, sensitivity over the cost of borrowing can also be seen in China, where the mainland stock market has dropped sharply as worries about a spike in short-term money market rates adds to concerns about the world's second-biggest economy. The FTSE All-World equity index is down 0.5 per cent as the FTSE Eurofirst 300 dips 0.2 per cent and US index futures suggest the S&P 500 will drop 9 points to trade at 1,584. That will leave the Wall Street benchmark 5.1 per cent below its record high hit a month ago, a retracement primarily based on the prospect of the Federal Reserve tapering its massive stimulus. The fear of less Fed largesse helped remove $2tn from the value of global equities last week, according to Bloomberg calculations writes the FT's Global Markets walkabout-returnee Jamie Chisholm.
