Monday, June 7, 2010

Weekend Update: Top stories from the weekend: G20 Summit, Gulf Oil Spill $SPX

Weekend Update: Top stories from the weekend:

· G20 Summit: The main takeaway from the meeting was a reduction in the emphasis on pushing for fiscal stimulus and a shift towards urging countries with fiscal challenges to accelerate the pace of consolidation. Tim Geithner said the U.S. cannot be depended on to drive consumer growth, while the ECB’s Jean – Claude Trichet said the fiscal tightening in “old industrialized economies” would help expansion by shoring up investor confidence. [Bloomberg] On Bank TaxG20 finance ministers have abandoned their pledge to only introduce bank taxes if a consistent plan could be applied unilaterally on the world’s banks. [London Telegraph] On currency - There was no specific mentions in the official G20 statement - however, Geithner and IMF officials both persisted in calling for China to strengthen its Yuan; the IMF went further than Geithner: "The IMF still believes that the renminbi is still substantially undervalued...even a revaluation of 20-25 percent doesn't solve all the imbalances  [Reuters]

· International: European leaders are close to an agreement on the details of their recently announced bank bailout plan; an official announcement may come as early as tomorrow. [WSJ]  On the Euro – a  survey was conducted where out of 25 of London’s leading economists, 12 predicted that the euro would not survive in its current form this Parliamentary term vs. 8 who suspected it would; 5 were undecided. [London Telegraph]

· Gulf Oil Spill: BP’s CEO claims to have made substantial progress in stemming flow; the recently installed containment cap is said to be capturing 10.5K barrels per day, about half the well’s flow of 19K barrels (the initial forecast was that the well was capturing 6K BPD but that number was raised steadily throughout the weekend). [The Guardian]

· Washington/US: Couple of points: 1) A article in the WSJ about expired home tax credit possibly causing home sales to fall 2) US debt is getting close to 88% of US economic output, a level at which experts think it starts to subtract from growth [WSJ] 

· M&A: 1) There is speculation that Goldman is getting ready to fend off possible takeover attempts for BP [Nasdaq/The Independent]   2) STDappears to be front runner to buy 318 UK bank branches being sold by RBS  [London Independent]  3) BBVA is considering a GBP2B bid for National Australia Bank’s UK units [Bloomberg/London Times] 4) China’s Bank of Communications intends to raise ~$4.8B through a rights offering (~20% less than originally announced) [Bloomberg]

· Bank Failures: Three were announced on Friday, bringing YTD total to 81. They were: 1) TierOne Bank, Lincoln, NE (GreatWesternBank assumes deposits and certain assets; $1.9B in assets); 2) Arcola Homestead Savings Bank, Arcola, IL; 3) First National Bank, Rosedale, MS

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