Alcoa Inc. reported adjusted earnings per share of $0.03 and revenues of $5.83 billion in the third quarter of 2012. That beat analysts’ predictions that the company would report earnings to be flat—$0.00—with revenues of $5.57 billion. They had attributed such poor predictions to the ongoing financial crisis in Europe and slowing growth in China and Russia.
British scientist John Gurdon, 79, of the Gurdon Institute in Cambridge, UK, won the Nobel Prize in Medicine on Oct. 8 for what the Nobel Assembly called “groundbreaking discoveries [that] have completely changed our view of the development and specialization of cells.” He shared the prize with Shinya Yamanaka, 50, of Kyoto University in Japan, who built on Gurdon’s findings.
Alcoa, one of the world’s largest producers of aluminum, will kick off the US quarterly earnings season today after 4 p.m. ET with what most analysts are expecting will be a lackluster third-quarter performance. Analysts polled by Factset believe that earnings will be completely flat—$0.00 per share—and revenue will fall to $5.57 billion from $5.96 billion last quarter.
In 2009, Spanish telecommunications giant Telefónica, boosted by exclusive contracts to sell the iPhone in several countries, issued bold predictions about its future earnings. And investors, expecting a strong recovery in Europe, drove the stock back up to near pre-crisis levels.
It’s a great year for investors in the S&P 500 and some of its component US shares, as the index is trading up more than 16% since the start of 2012. But a look behind the numbers shows that central bank decisions rather than great corporate fundamentals appear to be triggering the upward surge.
Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers
A top regulator says the US Securities and Exchange Commission (SEC) is in a poor position to adequately regulate markets. Commissioner Daniel Gallagher told a conference of investors, regulators, innovators, and traders today that new rules and a lack of resources are damaging the agency’s ability to oversee exchanges amid the constant stream of financial products coming out of Wall Street.
The European Central Bank left its interest rate target unchanged at 0.75% in its latest monetary policy decision this morning, surprising no one. ECB President Mario Draghi also gave few new details about the central bank’s new bond-buying program, though stressed that all European leaders would need to take action to avert the risk of “renewed intensification of financial market tensions” in the future.
Europe-watchers have been clamoring for new headlines about the prospect of a Spanish bailout and a centralized EU budget, but few realize that we’re just back where we were a few months ago. Once again, analysts are putting their faith in a summit of EU leaders due to take place on October 18 and 19. But if past EU summits are any indication, investors are setting themselves up for disappointment.
High frequency trading (HFT) has come in for much criticism during the last month, and today the Securities and Exchange Commission (SEC) is devoting a special roundtable meeting to it in Washington, DC. The upset isn’t merely over the unpredictable spikes and drops (“flash crashes”) that HFT is blamed for: it’s also about fairness. Investors are incensed that some HFT firms have been able to obtain information earlier than others, whether by submitting inconsistent orders they don’t intend to trade on or setting up their computers near an exchange to make transactions faster.
The Securities and Exchange Commission (SEC) has taken a new interest in the much-maligned high-frequency trading (HFT) during the last few months. Last year, former high frequency trader Haim Bodek contacted the SEC and described special kinds of trades—”orders”—which allowed HFT firms to cut the line and make trades ahead of others. Bodek’s account has become the rallying cry for regulation of HFT, and the SEC has been moving to eliminate practices that give one market player an unfair advantage over another. It went so far as to fine the New York Stock Exchange (NYSE) $5 million for allowing subscribers of two proprietary data feeds to access market data before non-subscribers. Even most of the SEC’s critics admit that the organization is at last attempting to level the playing field.
Revelations on Sept. 28 that Spanish banks need almost €60 billion ($77 billion) to avoid going bust in the event of a severe Spanish recession seemed, at first, like relatively good news: It was slightly less than previously thought. But investors are worried that the “stress tests” that produced this figure, like many others performed on European banks in the last two years, may actually be close to worthless.
A link from New York Times
Seven years ago, Lone Star Funds made a name for itself gobbling up the lion’s share of distressed real estate assets that German banks had been forced to put on the market. Now, the fund is back at it again, this time elsewhere in Europe. Data released from the CBRE Group last week showed that the private equity group had purchased €1.6 billion ($2.0 billion) in commercial real estate loan portfolios from European banks so far this year. Lone Star’s purchases accounted for 21% of the €7.5 billion in such real estate transactions that have taken place this year.
A highly anticipated stress test of Spanish banks showed they need close to €60 billion ($77 billion) (pdf) to bolster their balance sheets. “The results confirm that the Spanish banking sector is mostly solvent and viable, even in an extremely adverse and highly unlikely macroeconomic setting,” Spain’s central bank wrote in a statement.
The world’s most important financial benchmark—the London Interbank Offered Rate (LIBOR)—is about to undergo a facelift that could affect everything from the interest rate you pay on your mortgage to the rate at which complex derivatives like interest rate swaps are settled in the market. Over the last few months, regulators have discovered that bankers were attempting to deliberately influence LIBOR for their own benefit, leading to scandals, resignations, and criminal investigations. Today, the UK Financial Services Authority’s head, Martin Wheatley, set forth a series of proposals meant to revise—rather than completely replace—the rate. His suggestions present what is probably the best solution to a tricky problem.
France’s proposed 75% tax on millionaires affects only a few thousand people, at most.
France’s proposed 75% tax on millionaires affects only a few thousand people, at most.
Italian Prime Minister Mario Monti just appeared on Bloomberg TV to talk about the state of the euro zone. He told Erik Schatzker that his biggest fear for the monetary union was “non-economic”:
Italian Prime Minister Mario Monti just appeared on Bloomberg TV to talk about the state of the euro zone. He told Erik Schatzker that his biggest fear for the monetary union was “non-economic”:
Economic data from the US look nasty this morning, though the bark may be worse than the bite. Gross domestic product for the second quarter was revised down to 1.3% from previous estimates of 1.7%. Adding insult to injury, new orders for US durable goods fell a full 13.2% in August—the worst decline since January 2009, at the pinnacle of the recession.
Economic data from the US look nasty this morning, though the bark may be worse than the bite. Gross domestic product for the second quarter was revised down to 1.3% from previous estimates of 1.7%. Adding insult to injury, new orders for US durable goods fell a full 13.2% in August—the worst decline since January 2009, at the pinnacle of the recession.
LIBOR is an average of the rates at which banks report that they are borrowing from one another each day, and it determines the rates for some $360 trillion-worth of other financial transactions, from mortgages to complex derivatives. During the financial crisis, bankers began lying en masse about the rates at which they could borrow money, and the rate became unreliable. Since then, central banks have brought lending rates back down, perhaps too forcefully. But banks have to find some benchmark upon which to base their loans, and coming up with a new or improved one will be difficult.
How hard will China land? So far, the government has tried to assuage investors with strong steps to ease the effects of slowing growth. It passed a $585 billion stimulus plan four years ago and the People’s Bank of China (PBOC) has cut interest rates three times since the end of 2012. It has also offered bank refinancing operations to inject billions of yuan in liquidity into the banking system and keep banks lending money.
