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28Nov2017 Pre-Market Commentary: UK Banking Can Withstand A Disorderly Brexit

Written by Gary

At time of posting, world markets are little changed - and the USA markets are scheduled to open flat. Oil prices have been slipping throughout the night whilst gold and silver have been creeping up.


Here is the current market situation from CNN Money

European markets are higher today with shares in London leading the region. The FTSE 100 is up 0.56% while France's CAC 40 is up 0.45% and Germany's DAX is up 0.22%.

What Is Moving the Markets

Here are the headlines moving the markets.

Emerson Electric pulls Rockwell Automation bid off table

(Reuters) - Factory automation maker Emerson Electric Co on Tuesday withdrew its offer to buy Rockwell Automation Inc after the smaller rival rebuffed its buyout offer twice.

SoftBank offers to buy Uber shares at 30 percent discount

SAN FRANCISCO (Reuters) - Japan's SoftBank Group Corp is offering to purchase shares of Uber Technologies Inc at a valuation of $48 billion, a 30 percent discount to its most recent valuation of $68.5 billion, a person familiar with the matter said on Monday.

Global crypto-currency crackdown sparks search for safe havens

NEW YORK (Reuters) - When U.S. entrepreneur Bharath Rao looked around for the best place to raise money for his crypto-currency derivatives trading business, the United States did not make his list. Instead he chose the East African island nation Seychelles to sell the trading platform's tokens.

Europe cheers Brexit bank verdict, on tenterhooks over Ireland

LONDON (Reuters) - European shares opened slightly higher on Tuesday as the Bank of England deemed that UK lenders could deal with a "disorderly" Brexit, while the dollar held steady ahead of a confirmation hearing for Federal Reserve chair nominee Jerome Powell.

Roark Capital to buy Buffalo Wild Wings for $2.9 billion

(Reuters) - Private equity firm Roark Capital Group's majority-owned Arby's Restaurant Group will buy Buffalo Wild Wings Inc in a deal valued at about $2.9 billion.

Pressured for profit, oil majors bet big on shale technology

HOUSTON (Reuters) - Shale oil engineer Oscar Portillo spends his days drilling as many as five wells at once - without ever setting foot on a rig.

Shell signals return to pure cash dividend, focus on renewables

LONDON (Reuters) - Royal Dutch Shell will return to paying pure cash dividends and step up its investment in cleaner energy as it turns a corner after more than two years of cost cuts and disposals prompted by weak oil prices.

Anglo-Dutch Unilever favors single home, but delays choice

LONDON (Reuters) - Unilever favours creating a single corporate structure, but is delaying a choice between its British and Dutch bases, the consumer goods group said on Tuesday, in part because of the heightened political sensitivity of the decision due to Brexit.

Activist White Tale to take demands to Clariant shareholders

ZURICH (Reuters) - Activist investor White Tale said it would take its demands directly to Clariant's shareholders after the chemicals maker snubbed its request for an independent strategic review and three seats on its board of directors.

Russian Fighter Jet Flies Within 50 Feet Of US Spy Plane Causing "Violent Turbulence"

Russia scrambled a Su-30 fighter jet after detecting an American P8a Poseidon reconnaissance aircraft over the Black Sea, according to a Defense Ministry statement. The US spy plane was approaching at high speed to the Russian border, the ministry said. The Russian fighter jet buzzed the US Navy reconnaissance plane at around 1pm local time (10:00 GMT) as it was flying over the neutral waters of the Black Sea, the ministry said.

"After moving closer, the Russian [Su-30] fighter jet flew over the object and visually identified it as an American reconnaissance aircraft ?8? Poseidon," the statement reads. After the spy plane was intercepted by the Russian Air Force, the US aircraft changed course and flew away.

Reporting on the incident, the Pentagon said on Monday that the Russian jet made "unsafe" contact with the Navy reconnaissance aircraft. The Russian Su-30 fighter jet reportedly flew right around 50 feet in front of the P-8A Poseidon, resulting in the American craft experiencing "a 15-degree roll and violent turbulence," CNN reported.

The U.S. aircraft was operating in international airspace and did nothing to provoke this Russian behavior," Pentagon spokesperson Lt. Col. Michelle Baldanza said of the Saturday incident, which took place over the Black Sea. "Unsafe actions‎ have the potential to cause serious harm and injury to all air crews involved," he added on Monday.

"Make Or Break": Senators Push For Sweeping Changes To Tax Bill As GOP Leaders Struggle To Vote It Out Of Committee

With roughly 14 sessions of Congress left before the New Year break, the GOP's chances of passing comprehensive tax reform by the end of the year - as the White House has promised to do - are looking increasingly remote. So far, the biggest obstacle - as with the Republicans disastrous failure to repeal and replace Obamacare - is the Senate, where disparate groups of lawmakers are opposing the bill for different, and sometimes contradictory, reasons.

In what has been called a "make or break" marathon negotiating session, at least two Senators have come out against the bill in its current form, sending the administration scrambling to hammer out a compromise on the pass-through rate that would entice Wisconsin's Ron Johnson and Montana's Steve Daines to vote 'yes'.

Japan, Inc. Rocked Again: Toray Admits To Falsifying Data After Internet Post Exposes Fraud

Corporate Japan's credibility, already teetering after a barrage of corporate fraud and falsification scandals in recent months, hit another low after Toray Industries, one of Japan's biggest materials manufacturers, joined a list of companies admitting to falsifying data. On Tuesdaty, Toray announced it had uncovered 149 cases of data fabrication at its subsidiary, Toray Hybrid Cord, in three products sold to tire companies and autoparts makers: tire cords, cords for car hose belts and cords for paper making. According to Nikkei Asian Review, the subsidiary made the products look as though they met customer requirements. The company admitted that 13 domestic and overseas companies, including at least one South Korean company, are affected.

In a statement issued roughly around the time president Akihiro Nikkaku was bowing to news reporters as Japanese management tends to do when caught engaging in criminal activity, Toray maintained that the "amount by which the data was adjusted to fit customer contract standards was insignificant." The company believed there were no safety issues involved. Toray Hybrid Cord discovered the problem during a July 2016 internal compliance check, with Toray president Akihiro Nikkaku being informed of the matter the following October.


Toray President Akihiro Nikkaku bows at a news conference in Tokyo on Nov. 28

UK Banks Can Withstand "Disorderly Brexit" But Need Additional £6BN; $35 Trillion In Derivatives Affected

For the first time since it (belatedly) began conducting stress tests in 2014, none of the UK's major banks need to raise additional capital. More importantly, the Bank of England and the system could withstand a disorderly Brexit. As Bloomberg recaps, "the stress-test scenario therefore encompasses a wide range of U.K. macroeconomic risks that could be associated with Brexit," the BoE said. As a result, it "judges the U.K. banking system could continue to support the real economy through a disorderly Brexit."

This year's stress tests, described as the toughest ever, were outlined by the Financial Times as follows:

In the stressed scenario, which the BoE said included a 50 per cent drop in US equity markets, a rise in UK unemployment to 9.5 per cent and a 33 per cent fall in British house prices, the capital levels of the country's seven biggest banks fell from 13.4 to 8.3 per cent of risk-weighted assets. But the BoE said that since the start of the year, the banks have increased their average capital levels to 14.4 per cent. It added that capital levels have more than trebled since the 2008 financial crisis.

Barclays at the Back of the Class in U.K. Stress Tests

Even though all seven banks passed, some will still face higher capital demands to counter a consumer credit boom in which they are systematically underestimating the risk of losses.

Trump Is Ignoring a Healthy Opportunity in China

What's the highest-margin, protected growth industry in China? Hint: It isn't energy, finance or beef.

Julius Baer Loses CEO and Some of Its Luster

When a chief executive jumps ship suddenly it is a cause for concern. When that CEO had led an aggressive, acquisitive expansion, investors may worry even more. So it is with Boris Collardi's departure from Julius Baer.

Trucking Growth Improves In October 2017

Written by Steven Hansen

Headline data for truck shipments show improved growth in October.

UPAVAHANA: A Journey Of Hope - A Shortfilm On Rohingyan Refugee Crisis

Upavahana, Pali means 'washing away', traces the response of India and Bangladesh to the Rohingyan refugee crisis, enveloping South East Asia. The recent cases of military repression by the Myanmar state on the Rohingyan community, following the violence in August, has seen the Rohingyan people flee burning villages in their state of Rakhine, where they are not even considered as Myanmarese citizens.

Need to Know: Count on these stock stars to surge into the year's end — 2 reasons why

There's nothing much standing in the way of bitcoin at $10,000, but then again stock markets aren't looking so shabby either. The rest of the year may be a nice glide higher. Here's how to play it.

The Ratings Game: Evoqua Water draws mixed reviews from Wall Street

Evoqua is one of a few ways to invest in water supply-and-demand dynamics, but some believe shares are already fairly valued since IPO.

Teva shares surge 7% on corporate shake-up

The struggling generic drugmaker has announced a slate of new changes, including the departures of three top executives.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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