Friday, May 17, 2013

Austrian Banks balk at Bad Bank Bailout .... Overnight news from Asia and Europe .. May 17 , 2013 !

http://www.zerohedge.com/news/2013-05-16/austrian-good-banks-baulk-bad-bank-bailout


Austrian "Good" Banks Balk At Bad-Bank Bailout

Tyler Durden's picture
Submitted by Tyler Durden on 05/16/2013 21:18 -0400



Since 2009, when Hypo Alpe Adria was 'nationalized', the Austrian government has dumped more than EUR2 billion into the troubled bank. It remains on life-support but this time the government-proposed 'aid' being offered is running into a wall. The rest of Austria's banks (as creditors as well as forced levy-payers from other bailouts) dismiss the government's plan for a "bad-bank" model a la Ireland adding that they "will not allow themselves to be put under pressure by politicians." Reuters notes that the 'bad-bank' plan is up against a deadline at the end of May from the European Commission, and among others Unicredit Austria is clear on its role, "decidedly rule out a commitment on our part." The increasing tension between Vienna and Brussels is evident as a quick sale of the bank will lead to a EUR5-6 billion loss for taxpayers (hurting the government's budget plans) but it seems the rest of Austria's banks are unwilling to throw more good money after bad, "if we go this way, some persuasion will be needed".
Austria's banks are giving a thumbs down to supporting the creation of a "bad bank" for Hypo Alpe Adria to relieve pressure on state finances from the nationalised lender.

...

But such a plan would need backing from private investors, most likely the country's banking sector, which is already paying a levy that was increased last yearto help finance the rescue of another troubled bank, Volksbanken AG.

"I decidedly rule out a commitment on our part,"Unicredit Bank Austria Chief Executive Willibald Cernko said

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"We will not let ourselves be put under pressure by politicians," he said.

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Brussels and Vienna are at loggerheads over the pace of overhauling Hypo, with the Commission keen for its operating assets to be sold by the end of the year while Austria is fearful rushed sales could hurt state finances ahead of elections due by late September.

Hypo Alpe Adria has said a quick sale of its businesses in Austria, Italy and the Balkans could saddle taxpayers with losses of between 5 billion and 6 billion euros.

The attraction of Ireland's approach is that its bad bank - the National Asset Management Agency - has a special investment vehicle in which three private investors held the majority, thus allowing Ireland not to count NAMA debts as state debt.

Former Austrian central bank chief Klaus Liebscher, ... "I cannot expect that the initial reaction from banks that are approached will be glowingly positive," he said. "If we go this way, some persuasion will be needed."

Finance Minister Maria Fekter has in the past opposed creating a bad bank for nationalised lenders, partly because it could undermine plans to generate a budget surplus by 2017 and get state debt under 60 percent of GDP by the end of the decade.

...
Is it time for more non-templates?


http://www.zerohedge.com/news/2013-05-17/dull-overnight-session-set-become-even-duller-day-session

Dull Overnight Session Set To Become Even Duller Day Session

Tyler Durden's picture
Submitted by Tyler Durden on 05/17/2013 07:01 -0400



Those hoping for a slew of negative news to push stocks much higher today will be disappointed in this largely catalyst-free day. So far today we have gotten only the ECB's weekly 3y LTRO announcement whereby seven banks will repay a total of €1.1 billion from both LTRO issues, as repayments slow to a trickle because the last thing the ECB, which was rumored to be inquiring banks if they can handle negative deposit rates earlier in the session, needs is even more balance sheet contraction. The biggest economic European economic data point was the EU construction output which contracted for a fifth consecutive month, dropping -1.7% compared to -0.3% previously, and tumbled 7.9% from a year before.
Elsewhere, Spain announced trade data for March, which printed at yet another surplus of €0.63 billion, prompted not so much by soaring exports which rose a tiny 2% from a year ago to €20.3 billion but due to a collapse in imports of 15% to €19.7 billion - a further sign that the Spanish economy is truly contracting even if the ultimate accounting entry will be GDP positive. More importantly for Spain, the country reported a March bad loan ratio - which has been persistently underreported - at 10.5% up from 10.4% in February. We will have more to say on why this is the latest and greatest ticking timebomb for the Eurozone shortly.
Perhaps the most amusing news of the day was Japan's report of a surge in machine orders in March, up 14.2% on estimates of 3.5% - the biggest one month rise since January 2003. We say amusing because preliminary data from a CapIQ run on capex spending by Japanese firms indicates some very, very different. If we have time we will present that after China, Japan appears to be the next major sovereign fabricator of data.
And so we look to the US trading session, where volumes are on par to be absolutely abysmal once again with traders starting to leave early for the Hamptons, and with the only data point later is the UMich confidence print (consensus 78.0).
Other key overnight headlines in bulletin format from Bloomberg:
  • Treasuries rise amid gains for global bond markets; gold fell for 7th straight day in worst slump since 2009
  • San Francisco Fed President John Williams said quickening  economic growth and gains in the job market may prompt the Fed in the next few months to start reducing its $85 billion in monthly bond-buying
  • Abe said he will increase private investment and infrastructure exports as he seeks to overcome deflation and build on an economic expansion fueled by rising consumer spending
  • Investors are more confident in a Japanese leader than any time since at least September 2010, with optimism about Prime Minister Shinzo Abe’s policies exceeding that for counterparts in the U.S., Europe and China
  • China cuts red tape, allowing 117 investment projects, including those for airports, paper pulp factories and gas fields, to go ahead without pre-approval from the  nation’s economic planning agency. Move is part of government’s pledge to reduce role in economy
  • ECB is set to take center stage as the euro area’s chief banking supervisor, after the European Banking Authority ditched this year’s stress test in favor of an ECB-led review of lenders’ asset quality; stress tests to take place next year
  • European car sales rose 1.8% from a year earlier, the first rise in 19 months, led by German and Spanish car registrations; 4-mo. sales -7%
  • Turkey’s bonds rallied, sending yields to all-time lows, after Moody’s Investors Service raised the country to investment grade for the first time in two decades,  fueling expectation of capital inflows. The lira weakened on speculation the central bank will cut rates
  • Sovereign yields lower. Asian stocks higher, with Nikkei +0.6%, Shanghai Composite +1.4%. European stocks and U.S. stock-index futures higher; WTI crude,  copper rise; gold lower
Key daily catalysts from SocGen:
The collapse in base and precious metals stands out, but soft commodities have been pretty badly hit too. Losses were trimmed somewhat late yesterday from the worst levels of the week following a disappointing set of US data, including a very intriguing weekly claims number (up 30k over the past week, no distortions) and  a weak Philly Fed survey. The USD did take a brief knock, but the subsequent bounce back suggests market participants are in no mood to desert the greenback. Having said that, the dollar index failed to close above 84.0 and another failure to do so at the weekly close tonight will have  bears wringing their hands over a potential repeat of July last year. Then, the failure to closeabove 84.0 heralded a 6.5% drop over the next six weeks.
Separately, the drop in US CPI to 1.1% yoy in April came before the USD breakout in May and thus suggests that a further softening in price pressure is possible in the months to come, in particular with petrol prices falling back. The decline in core yields (and swaps) that started on Wednesday accelerated yesterday and occurred independently from stocks, which have done extremely well all week to shrug off a mixed set of macro data. The 9bp collapse in 2y bund yields of the last 48 hours (back into negative territory) is nothing short of spectacular and shows investors’ still conflicting views about stocks and bonds. Technically, the equity market is looking toppy, with for example the divergence between the S&P and the put/call open interest suggesting that a retracement in the major equity indices lies ahead.
The ECB will today publish the weekly LTRO repayment amounts and no less than four members of the governing council are scheduled to speak. We also get Canadian CPI and BoE member Weale may rein in his dovish position following this week’s more upbeat Inflation Report. The correction in metals and talk of central bank/fund switches out of AUD and into CAD saw AUD/CAD drop below 1.0050. This was followed by a break below parity overnight. A break of 0.9942 would bring 0.9683 in play.
Full event recap from DB's Jim Reid:
An interesting day for the S&P500 which found support at the mid-1650s level for much of the trading session despite a raft of disappointing economic data in the US. Indeed, it wasn’t until the final hour of the session that the index broke out of its tight intra-day range to close near the day’s lows of -0.5%. The weak close coincided with some hawkish sounding comments from the San Francisco Fed President John Williams who said that the Fed could reduce somewhat the pace of securities purchases perhaps as early as this summer. He added that the Fed “could end the purchase program sometime late this year”. What was less reported was that Williams qualified his statement with a “if all goes as hoped” caveat. He also added that it will take further (labour market) gains to convince him that the “substantial improvement” test for ending asset purchases had been met.
There were also hawkish comments from the Fed’s Fisher, Plosser and Lacker earlier in the session who advocated for a slowing of MBS purchases.
More on the data flow, yesterday’s batch of US data showed weakness in jobs, housing and inflation. Initial jobless claims came in at 360k (vs 330k expected) which took the 4week average on claims to 339k. Housing starts printed at 853k (vs 970k expected) but building permits of 1017k beat expectations of 941k. In terms of the business outlook, the Philly Fed index disappointed at -5.2 (vs 2.0 expected) which was consistent with a soft Empire manufacturing survey earlier this week. The US CPI was also below forecasts across the headline (-0.4% vs - 0.3%) and core (0.1% vs 0.2%).
Fedspeak and data aside, below-consensus earnings from consumer companies such as Walmart, Dell and JC Penney also weighed on equities. Nine out of 10 S&P500 industry sectors finished in the red led by declines in consumer services (-1.2%), health (-1.1%) and utilities (-0.8%). Only the technology sector finished
higher – helped by a 13% gain in Cisco after they reported consensus-beating quarterly earnings. The USD index finished the day 0.3% lower, but the comments from Williams saw the USD retrace much of its losses towards the end of the day.
In the fixed income space it also was interesting to see the outperformance of the CDX IG index relative to equities, which helped unwind some of credit’s recent underperformance. The investment grade index finished basically unchanged at 71.5bp despite the negative day for US equities. In the govvies space, core bond yields were around 5-6bp firmer across the board reflecting weaker risk sentiment. Moving to the overnight markets, Asian equities are trading with a stronger tone even with the negative lead-in from the US. Most indices are up a quarter to half a percent including the Nikkei, ASX200 and Shanghai Composite. Volumes are subdued with Korean and Hong Kong markets shut for Buddha’s Birthday holidays.
The Australian dollar slipped below US98c in the Asian session to reach a near 12-month low, and gold continues to lose ground (-0.5%) as it inches lower to the recent lows seen in April.
JGBs remains in focus amid reports that the Bank of Japan will discuss the related risks and potential effects of its 2% inflation target and a surge in long-term  rates at its two-day policy meeting next week (Nikkei). Prime Minister Shinzo Abe acknowledged that sharp increases in long-term interest rates could increase the national debt burden. He declined to comment on the recent rise in JGB yields saying that doing so "could risk causing the markets unnecessary confusion”(Dow Jones). 10yr JGB yields are unchanged overnight at 0.81%. In the EM space, Moody’s upgraded Turkey’s ratings to investment grade (Baa3 from Ba1) overnight, in a decision that was somewhat long-awaited. The rating is equivalent to that of Fitch who upgraded Turkey to investment grade last November. Moodys last rated Turkey investment grade in 1992. In its commentary, Moody’s said that progress on structural and institutional reforms that Moody's expects will reduce existing vulnerabilities to shocks and improving financial metrics.
Turning to the day ahead, the University of Michigan’s consumer confidence survey is the main data point on the calendar. In terms of central bank speakers, The Fed’s Kocherlakota and the the ECB’s Coeure and Asmussen are scheduled to speak today. On Saturday, Bernanke will deliver a commencement speech at Bard College in Massachusetts titled “Economic Prospects for the Long Run”.

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