Sunday newspaper round-up: US Weakness, QE3 and Crabs

5th Jun 2011 11:45

Commenting on the recent string of poor economic indicators out in the United States David Rosenberg, of Gluskin Sheff, has said to the Financial Times´ weekend edition that, "Last year we saw what happens when the government withdraws its stimulus (...) Now, once again, we are seeing what the emperor looks like disrobed." In a nearby article, also in the Financial Times, John Authers writes that, "Crabs should be plentiful around the markets for the next few years - more so than bulls or bears. To keep scampering sideways, it may be wise to sidestep equities for a while, as the chances of a true correction, like last summer´s, look strong."Recent US economic weakness has provoked widespread debate. In its latest weekly edition The Economist weighs in with the following analysis, "Economists have found themselves repeatedly making excuses. First it was the snowstorms. Then it was Japan's earthquake, tsunami and nuclear disaster which crimped the supply of parts (...). Then, as the snow melted, floods ravaged Arkansas, Mississippi, Missouri and Tennessee, and tornadoes battered Alabama and Missouri. (...) Betsy Graseck of Morgan Stanley reckons they'll (house prices) fall another 10% to 12% over the next year. (...) "Families are tightening their belts and sticking to a budget?and Washington should too," said Eric Cantor, the Republican majority leader in the House. Maybe so, but spending less when households are in no shape to pick up the slack seems a sure-fire way to keep an anaemic recovery off-colour."The FT´s Weekend edition also cites Paul Ashworth, at Capital Economics, as having indicated that, "We will probably see growth (in the US) rebound in the second half of the year, as commodity prices drop back and any Japan-related disruption unwind. Nevertheless, the extent of this slowdown is becoming a big concern, particularly with a potentially big fiscal consolidation on the way, and we wouldn´t rule out a QE3 either later this year or in early 2012.""Barclays has emerged victorious in a long-running legal battle over its actions on the eve of the credit crisis (...) The New York Supreme Court approved the dismissal of a lawsuit from the French fund manager Oddo Asset Management, which said Barclays had used off-balance-sheet vehicles as a "dumping ground" for mortgage assets that the bank knew were about to plunge in value. (...) Supreme Court Justice Barbara Kapnick had ruled last year that there was no case for Barclays to answer. "As Barclays contends, Oddo is a sophisticated entity in the position of appreciating the inherent risks associated with debt securities, including the fact that, (...) And last week, a Supreme Court panel turned down Oddo's appeal, saying there was no evidence of a breach of fiduciary duty by Barclays or by Standard & Poor's," reports The Independent on Sunday."Scottish Widows is expected to be retained as a key part of Lloyds Banking Group when chief executive António Horta-Osório unveils his plans at the end of this month. It is understood the three-month, "no sacred cows" review of Lloyds' businesses has convinced him the life assurer is too valuable, given its strong cash flows and strategic balance, for the bank to sell. (...) It is also understood Horta-Osório has been influenced by expected changes in Basel III (...) It is set to allow banks to use up to 10 per cent of assets in non-banking subsidiaries to go towards their group capital ratios in the new European regulatory framework. Previously banks have not been allowed to put capital in their non-banking businesses towards their group capital buffers", according to Scotland on Sunday.Anglo American´s board is not happy with the markets´ valuation of some of its assets. For that reason, "the FTSE 100 giant is considering selling a stake in a major iron ore mine in Brazil to prove the value of the company's key assets. (...) By selling a minority stake of 25 to 49 per cent in Minas-Rio, Anglo can show, in effect, what the asset is worth. It is thought that Japanese commodities players have asked about purchasing the stake. Anglo is understood to be trying to decide whether it has impressed the market enough with its existing divestment programme. If not, Ms Carroll will press ahead with a stake sale. It is believed that Anglo's regular advisers, UBS and Goldman Sachs, are considering the merits of the sale (...)," according to The Independent on Sunday."Major retailers are bringing forward their summer sales in a dash for cash that has left some hard-pressed rivals anxious of a domino effect. Debenhams has accelerated its June sale by a week to next Thursday and rival department store House of Fraser is expected to join the fray. (...) are fears that the spending spree in April could have pulled forward purchases normally made later in the summer. Retailers have issued a string of profit warnings this year and many have revealed plans to close struggling stores to help improve returns," reports The Mail on Sunday. "The biggest shake-up of high street banks to come out of the credit crisis is set to begin with the sale of Northern Rock and 620 Lloyds Banking Group branches. Investment banks are putting the finishing touches to sale documents that will start the bidding process on £4.4bn worth of assets and could introduce a new name to mainstream high street banking. Sunday Telegraph understands that Citigroup and JP Morgan are putting the finishing touches to the information memorandum for the £3bn Lloyds estate, with delivery expected to potential bidders in the next seven days," informs the Sunday Telegraph.Southern Cross in the intensive care unit? "Sources close to the UK's largest care home group have revealed the company is working on a plan that could see it lose up to 180 of its 750 homes. The plan emerged after renewed criticism of former managers and owners who made millions from a company that is now close to collapse. Reports over the weekend suggested four former managers pocketed £35m by selling shares in the company at the top of the market. Former private equity owner Blackstone has also come under fire. It is estimated the company made £1bn from buying, growing and selling Southern Cross," says the Telegraph on Sunday.AB