Good morning New York,
Cardiff provided an update from Credit Suisse on the testing of the Fed's proposed fixed-rate full-allotment reverse repo facility and then rather thoroughly ran through some IOER cut scepticism.
NEWS
Oil prices tumbled on Monday after Iran agreed a historic agreement with world powers to halt its uranium enrichment programme, lifting hopes for a relaxation of geopolitical risk and a boost in supply. Meanwhile, US President Barack Obama and UK Prime Minister David Cameron sought to reassure Israel that the accord would not threaten its security after Benjamin Netanyahu called the accord a "historic mistake". (Financial Times) Analysts remain sceptical about the shorter term effect on oil prices. (FTAV)
Iran pact faces stiff opposition: "The leaders of both the Democratic and Republican parties are threatening to break with President Barack Obama's policy and enact new punitive sanctions on Iran, arguing that the interim deal reached in Geneva on Sunday yields too much to the Islamist regime while asking too little." (WSJ) A Q&A on the Iran nuclear agreement (Financial Times)
Asia refiners weigh impact of Iran oil insurance deal on imports: "Refiners in South Korea and Japan said they have no immediate plans to boost crude purchases from Iran while Indian processors intend to maintain contracted volumes after the EU lifted a ban on insuring tankers. "Insurance was an issue, but the key point is that there is no lifting of current restrictions on Iranian crude, they just remain the same," said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein. "We don't anticipate any change in crude exports." " (Bloomberg)
Shinzo Abe has challenged China to scrap a planned air defence zone that overlaps with one already operated by Japan as he warned of the dangers of "unexpected incidents" between aircraft patrolling the skies over islands claimed by both countries. (Financial Times)
Leading US banks have warned that they could start charging companies and consumers for deposits if the US Fed cuts the interest it pays on bank reserves. Minutes of the Fed's October meeting published last week showed "most" officials thought a cut in the interest on bank reserves was an option worth considering in order to add stimulus to counter a taper. Executives at two of the top five US banks said a cut in the 0.25 per cent rate of interest on the $2.4tn in reserves they hold at the Fed would lead them to pass on the cost to depositors. (Financial Times)
Some of the largest banks have tentatively agreed to create a new electronic bond trading venue in an attempt to improve liquidity in the $9tn market for US corporate debt while still retaining their control over the way the securities change hands. Five major banks have said they will stump up tens of millions of dollars to fund the new venue on Tradeweb, a company owned by Thomson Reuters and a consortium of banks, according to people familiar with the project. (Financial Times)
"PSA Peugeot Citroen is interviewing candidates to replace Chief Executive Philippe Varin, after Chinese partner Dongfeng said a deeper alliance under negotiation should be accompanied by management change, sources with knowledge of the matter said." (Reuters)
"China Cinda Asset Management has lined up 10 cornerstone investors to take up 44% of the funding it seeks to raise—up to $2.46 billion—in its initial public offering, people familiar with the deal said Sunday… The 10 cornerstone investors have together committed to buying $1.09 billion of the IPO." (WSJ) (Financial Times)
Trafigura has raised $500m from the sale of a 10 per cent stake in Puma Energy in a deal that makes a stock market flotation of its fast-growing petrol station and oil terminal unit less likely. Details of the deal, which places a value of almost $5bn on Puma, are contained in the prospectus to a €500m bond issue . The documents also reveal a sharp drop in profits as Trafigura battles tough trading conditions. (Financial Times)
Apple has acquired PrimeSense, an Israeli technology company best known for providing the motion-detection software in Microsoft's gaming sensor Kinect, in a deal that will spark fresh speculation about the iPhone maker's plans for the living room. Apple confirmed the deal on Sunday after reports in the Israeli press. One person familiar with the terms said it had paid $360m. (Financial Times)
Reshoring in the UK, modest in scale so far but may be gaining momentum: A survey of more than 500 small and medium-sized manufacturers, by the government's Manufacturing Advisory Service, found 15 per cent of companies were returning production, compared with only 4 per cent that offshored in the past year. (Financial Times)
"Commerce Minister Gao Hucheng denounced the United States as "irresponsible" on Sunday after Washington accused China of jeopardizing a deal that aims to cut tariffs on technology products, saying Washington had disappointed participants in the talks. U.S. Trade Representative Michael Froman said on Thursday that China's demands to exempt more than 100 products from a technology trade deal risked leading to a breakdown in the negotiations." (Reuters)
"Billionaire Anil Agarwal's Cairn India will spend about $1 billion to buy back shares giving him greater control over the company as environment rules derail his mining business, two people familiar with the plan said. The oil producer will offer to buy back shares, including Cairn Energy's 10.3 percent stake, and extinguish them, said one of the people, who asked not to be identified before an announcement." (Bloomberg)
"Pfizer Inc, the Indian unit of U.S. drug maker Pfizer Inc, is to take over local affiliate Wyeth Ltd, they said on Saturday after their boards approved the deal. Shareholders of Wyeth will get seven Pfizer Ltd shares for every 10 shares held, requiring the issue of approximately 15.9 million new Wyeth shares, it said. Wyeth Ltd has a market capitalization of about $294 million and is already owned 51.12 percent by Pfizer Inc, which in turn owns 63.57 percent of Pfizer Ltd, which has a market capitalization of $681 million." (Reuters) In the first minutes of Mumbai trading, shares of Pfizer India shot up 14.7 per cent and Wyeth climbed 20 per cent. (FastFT)
"China has launched a broad investigation into safety at oil and gas pipelines, state media reported on Monday, as the death toll from an explosion at a Sinopec pipeline last week rose to 52." (Reuters)
"Chinese property developers failed to pay at least 3.8 trillion yuan ($624 billion) in land taxes between 2005 and 2012, according to a China Central Television report." (Bloomberg)
Markets: Iran's nuclear deal is battering oil prices and giving a further lift to risk appetite as global stocks move to their best levels in nearly six years. Perceived havens such as the yen and US Treasuries are in retreat, while gold is flirting with multi-month lows. US equity futures suggest the S&P 500 will climb 3 points to 1,808. That would leave the Wall Street benchmark on course to close at another record, having been boosted of late by traders' acceptance that even though the Federal Reserve may soon trim its stimulus programme, the central bank will keep monetary policy very loose for a long while yet writes the FT.
