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MONEY MARKETS-ECB rate cut bets pared, still on the table - Reuters
* Short-term rates inch higher after Draghi speech
* Markets still discounting ECB rate cuts in 2012
* Bets may pile up again if Spanish, Greek worries remain
By Marius Zaharia
LONDON, June 6 (Reuters) - Short-term euro zone interest rates rose slightly on Wednesday after the European Central Bank failed to flag it was ready to ease monetary policy, but markets are still pricing in a large probability the bank will cut rates later this year.
The ECB kept its refinancing rate unchanged at a record low of 1 percent and the deposit facility at 0.25 percent and President Mario Draghi warned his bank cannot make up for other institutions' lack of action.
This disappointed markets, which had expected him to at least send out a signal that more easing was forthcoming.
"From the tone of it, as of today we cannot expect any significant measure in July because he looked very defiant and imperturbable - the ball is very much in the court of the politicians," BNP Paribas rate strategist Matteo Regesta said.
However, rate cut bets have not been taken off completely.
Regesta estimated that the forward overnight euro zone interbank EONIA rate markets - which moved 1-3 basis points higher across the 2012 curve after Draghi's speech - was still pricing in 24 percent probability that the deposit facility rate will be slashed in half in July.
For the end of the year, a December EONIA of just over 23 basis points discounted a 66 percent probability of that happening, compared to some 80 percent at the end of last week.
Euribor futures also sold off a few ticks after Draghi's speech, implying expectations for higher fixings of three-month Euribor rates in the future.
The December Euribor contact was 3 ticks lower on the day and also compared with levels seen earlier in the session at 99.43, implying a 0.57 percent Euribor fixing in the last month of the year versus Wednesday's 0.663 percent.
After May's ECB meeting, which also disappointed markets waiting for more central bank easing, the December contract sold off to as low as 99.29, but it was bought back in the past few days as rate cut bets have been put back on the table.
Analysts say the same thing could happen next month if the conditions that led to speculation the ECB could cut interest rates on Wednesday are still in place.
Tensions over Spain's stricken banking sector are rising and the risk that Greece could leave the euro zone after its June 17 election is perceived as high. This is hampering business sentiment and growth potential even in the euro zone's powerhouse Germany, as shown by recent data, strengthening the case for the ECB to act.
"(A rise in ECB easing bets) could happen again, it depends on developments in Spain - if they get help, how large recapitalisation needs for the banking system are," said Commerzbank rate strategist Benjamin Schroeder.
"Also there is no clear indication what the outcome (of the Greek election) would be."
"VERY DYSFUNCTIONAL"
Moody's cut the credit ratings of six German banking groups and Austria's three largest banks on Wednesday, giving a glimpse of how far the ramifications of a potential Greek exit from the euro zone might go.
Banks more than tripled their uptake of ECB dollar funding on Wednesday, the latest indication that some are finding it increasingly hard to source cash in the market.
Traders say three weeks is the longest period for which most banks are willing to lend in cash markets, and that's only to a select group of counterparties, also because they are dressing their books for the half-year turn.
In his post-meeting remarks, Draghi himself described interbank markets as "very dysfunctional".
US SMALL/MIDCAPS-Stocks jump 1 pct, led by cyclicals - Reuters
NEW YORK, June 6 |
NEW YORK, June 6 (Reuters) - Mid- and small-cap stocks rallied for a second straight day on Wednesday with cyclical shares advancing on signs that moves were being taken to rescue troubled banks in Spain.
The situation in Spain, along with the similarly troubled Greece and Italy, has pressured equities in recent weeks on concerns about how the crisis could spread and impact global economic growth.
Germany and European Union officials are urgently exploring ways to rescue Spain's banks, although Madrid has not yet requested assistance and is resisting political conditions, several EU sources said on Wednesday.
Despite the day's gains, many were skeptical that the advances would last.
Outside of the hope for additional help, "the macro picture still isn't looking great," said Joe Cogan, vice president of International Equities at Topeka Capital Markets in New York. We're setting ourselves up for a fall if we don't see follow through."
Sectors tied to the pace of expansion rallied, with energy leading the way on both the small and mid-cap indexes, followed by materials and industrial shares. The mid-cap energy sector soared 2.9 percent while small-cap shares climbed 3.4 percent. Crude oil gained 2 percent.
Among the most active names in the space, Forest Oil advanced 7.3 percent to $8.48 while Quicksilver Resources added 7.2 percent to $4.17. In the small-cap industrial space, power systems maker Vicor Corp climbed 5 percent to $6.32 and NCI Building rose 4.4 percent to $9.48.
The S&P MidCap 400 index gained 1.7 percent while the S&P SmallCap 600 index climbed 1.6 percent. Both indexes gained about 1 percent for the second day in a row. The benchmark S&P 500 rose 1.6 percent.
On the downside, mattress companies dropped after Tempur-Pedic International Inc slashed its full-year profit view. The stock plunged 46 percent to $23.40 on heavy volume.
Among its peers, Select Comfort dropped 18 percent to $21.15, Mattress Firm Holdings sank 21 percent to $27.87 and Sealy Corp was off 8.2 percent to $1.56.
Financial Planning Coalition Says Investment Adviser SRO Legislation Offers Wrong Solution to Increase Investor Protections - YAHOO!
To: BUSINESS AND NATIONAL EDITORS
Legislation would harm small businesses; better options available
WASHINGTON, June 6, 2012 /PRNewswire-USNewswire/ -- The Financial Planning Coalition today said in a prepared statement that the Investment Adviser Oversight Act of 2012 (H.R. 4624) would create a new regulatory structure that would lead to fewer investor choices for financial advice and impose a significant regulatory burden and higher costs on small advisory firms.
While the Coalition agrees that more frequent examinations of investment advisers by the Securities and Exchange Commission (SEC) are needed, it said that the proposed legislation "is the wrong solution for this problem," noting that should it become law the broker-dealer governed Financial Industry Regulatory Authority (FINRA) - which has no experience overseeing investment advisers - would most likely become the SRO.
The Coalition -- comprised of the Certified Financial Planner Board of Standards, Inc., the Financial Planning Association and the National Association of Personal Financial Advisors and representing more than 75,000 stakeholders - urged Members of Congress to reject the SRO approach in the legislation and put in place a solution that will work to "truly protect investors."
"H.R. 4624 is not the right solution for the narrow problem of increasing investment adviser examinations, and it would create many more problems than it purports to resolve," the Coalition wrote. "It would single out small business owners by imposing fees and regulatory burdens on mid- and small-sized advisory firms that are not imposed on large firms. It would impose increased layers of regulation and cost on state registered investment advisers. Finally, it would discourage investment advisers from serving retail clients. In sum, H.R. 4624 would create significant investor protection issues in its efforts to resolve a simple resource gap at the SEC."
Citing a study by The Boston Consulting Group, the Coalition noted that a FINRA SRO would cost an estimated $550 to $610 million a year. This amount includes an estimated $90 to 100 million annually for SEC oversight, which is required by current law. The cost to the SEC of overseeing the SRO alone is comparable to providing the SEC with the incremental resources it needs to increase its examinations of all investment advisers an average of every four years.
Saying it "supports the obvious, simple and much less expensive alternative, which is to enhance the SEC's existing oversight program so that it can examine all SEC-registered investment advisers at least once every four years," the Coalition would support Congress granting the SEC the "authority to assess user fees on all SEC-registered investment advisers."
The Coalition also encouraged Members of Congress to consider solutions that:
-- would address the SEC's lack of resources with no impact on taxpayers or the federal deficit, -- would increase examinations for all investment advisers to an acceptable level to protect investors, -- would be the most cost-effective and efficient solution, -- would not require establishing a whole new regulatory bureaucracy, -- would treat large, mid-sized and small investment advisers consistently, -- would be supported by investment advisers who have stated a strong preference for paying user fees to the SEC as an alternative to a FINRA-IA SRO, and -- would allow Congress to retain direct oversight and accountability over the SEC.
While the legislation is supported in part to protect the public from future Bernard Madoff Ponzi schemes, the Coalition notes in its testimony that Mr. Madoff's firm would likely not have been affected by the legislation because his firm would likely have been exempted from the SRO.
"H.R. 4624 leaves the SEC with examination responsibility for the largest advisory firms without additional resources to examine these firms every four years and with the additional unfunded responsibility to oversee a new SRO," wrote the Coalition. "Such a result would be perverse from a public policy perspective. Under H.R. 4624, smaller investment advisers subject to the new SRO would be examined once every four years. But the larger SEC-only investment advisers, who manage far more assets and affect the lives of far more investors, would be examined at a far lower frequency."
SOURCE Financial Planning Coalition
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South African stocks cheered by resource rebound - Reuters
JOHANNESBURG, June 6 |
JOHANNESBURG, June 6 (Reuters) - South African stocks closed firmer on Wednesday as battle-beaten platinum mining stocks regained some lustre and investors took cheer from an upbeat mood on global markets.
World number three platinum miner Lonmin jumped 6.8 percent to 100.39 rand while Impala Platinum climbed 5.6 percent to 141.39 rand.
Anglo American Platinum, the world's largest producer of the precious metal, gained 4 percent to 510.13 rand.
The JSE Top-40 blue-chip index closed up 1.7 percent at 29,677.48 and the broader All-share index gained 1.47 percent to 33,603.35.
Johannesburg's platinum index, which has fallen nearly 9 percent in the last four weeks, was 5 percent higher as investors dug for bargains among resources stocks that have clocked sharp losses over the last three months.
The world's biggest miners also gained, with BHP Billiton and Anglo American closing 3 percent higher.
"Commodities is the story of the day but it is from a heavily oversold position,' said PSG Securities trader Desmond Reilly.
Most commodity prices were up fairly strongly, with platinum rising 2 percent and silver 4 percent, fuelled by hopes of another stimulus package for the debt-ridden eurozone.
"There will be a bit of follow-through on this for the rest of the week barring any negative data," Reilly said.
Telkom rebounded from Tuesday's slump to its lowest in almost nine years. It added 2.5 percent to 20.50 rand.
The South African government might sell stock in Africa's biggest fixed line operator to facilitate a turnaround. On Monday the government blocked South Korean telecommunications giant KT Corp from buying a 20 percents stake in Telkom, saying the stake was going too cheap.
South Africa's largest retail bank Absa posted muted gains of 0.66 percent to close at 151.90 rand on its decision to pay $1.2 billion for the store credit card business of unlisted domestic retailer Edcon.
The move will see Absa, which is majority-owned by Britain's Barclays Plc, bulking up its presence in the high-margin but riskier unsecured lending market.
A total of 234 million shares changed hands, according to preliminary data from the exchange, just below a 200-day moving average of about 250 million shares.
Stocks post best day in 6 months, await action - The Guardian
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