COMMENT AND CURIOS
- "The Purest Political Economist of Them All: Albert Hirschman's Legacy", by Dan Drezner.
- What the sharp rise in real interest rates means for the US economy.
- Should Japan default?
- Overt monetary financing and crisis management.
- The biggest economic mystery of 2013: What's up with inflation?
- Google offers some detail about how it transfers data to the US government.
ROUND-UP
Stephen Hester will step down as RBS chief executive at the end of the year. Hester parted ways with the bank after the UK government, its part-owner, and the RBS board decided that a fresh face should lead a five-year transition to normal commercial banking again. "Having brought RBS back from the brink, now is the time to move on from the rescue phase," Chancellor George Osborne said (Financial Times). Hester is the sixth chief executive to leave a British bank since the financial crisis began, including his predecessor at RBS, Fred Goodwin. The RBS board will launch a formal search for a successor (Wall Street Journal).
Yen's rise through Y95 hits Japanese shares hard: "Japanese stocks fell sharply after the yen rose to its strongest level against the US dollar since the first week of April. The Nikkei 225 sank 5.6 per cent in morning trading, while the Japanese currency broke through Y95 per dollar for the first time in two months. Fast Retailing, the largest weighted stock on the Japanese index, dropped 6.9 per cent, while Softbank lost 8.7 per cent. The broader Topix index fell 4.2 per cent"
North Dakota's fields helped spur the biggest annual jump in oil production in US history last year. The 14 per cent increase to 8.9 million barrels per day was also the largest around the world in 2012, according to BP's statistical review (Wall Street Journal).
The EU abandoned data-privacy safeguards that would have limited US spying on European citizens after lobbying by the Obama administration. The 'anti-Fisa clause' was removed from legislation in January 2012. It would have nullified US requests to hand over data, but was also opposed by many commissioners from EU member-states who did not want to antagonise the US as an ally (Financial Times).
Apollo Tyres will pay $2.5bn for Cooper Tire, the biggest-ever US acquisition by an Indian company. The $35 per share all-cash offer is a 43 per cent premium to Cooper's closing price on Tuesday, and will allow Apollo Tyres to diversify away from a slowdown in India's car market (Financial Times).
UK MPs demand Google tax revamp: "MPs have demanded urgent changes to Google's "highly contrived" tax arrangements in a hard-hitting report that said the internet giant's tax avoidance had damaged its reputation and that of HM Revenue & Customs. The public accounts committee said Google put the "enormous profit" derived from the UK out of reach of its tax system. It said Google's defence of its tax position by claiming that its sales of advertising space to UK clients take place in Ireland was "deeply unconvincing"." (Financial Times)
UK regulator investigates FX rates trade: "The UK markets watchdog has launched a preliminary investigation into the foreign exchange market after receiving complaints alleging that banks traded ahead of customer orders and attempted to manipulate benchmarks. The Financial Conduct Authority requested information from several banks with large London foreign exchange businesses about their trading, people familiar with the matter said. " (Financial Times)
OVERNIGHT MARKETS
Asian markets
Nikkei 225 down -579.30 (-4.36%) at 12,710
Topix down -40.11 (-3.66%) at 1,056
Hang Seng down -572.49 (-2.68%) at 20,782
US markets
S&P 500 down -13.61 (-0.84%) at 1,613
DJIA down -126.79 (-0.84%) at 14,995
Nasdaq down -36.52 (-1.06%) at 3,400
European markets
Eurofirst 300 down -4.78 (-0.41%) at 1,175
FTSE100 down -40.63 (-0.64%) at 6,299
CAC 40 down -16.86 (-0.44%) at 3,794
Dax down -79.19 (-0.96%) at 8,143
Currencies
€/$ 1.34 (1.33)
$/¥ 94.77 (96.00)
£/$ 1.57 (1.57)
Commodities ($)
Brent Crude (ICE) down -0.38 at 103.11
Light Crude (Nymex) down -0.50 at 95.38
100 Oz Gold (Comex) down -0.90 at 1,391
Copper (Comex) unchanged 0.00 at 3.23
10-year government bond yields (%)
US 2.20%
UK 2.18%
Germany 1.60%
CDS (closing levels)
Markit iTraxx SovX Western Europe +0.33bps at 89.55bp
Markit iTraxx Europe +1.31bps at 112.21bp
Markit iTraxx Xover +7.95bps at 471.03bp
Markit CDX IG +1.9bps at 87.36bp
Sources: FT, Bloomberg, Markit
