Azure Global

Friday, 24 May 2013

Stock markets lose nerve on fears of end to quantitative easing

Britain's top companies lose £36bn in value as stock markets react to US warnings on QE and drop in Chinese manufacturing

A day after the FTSE 100 came within 90 points of its December 1999 all-time high, the index slumped 143 points yesterday to 6696, wiping £36bn off the value of Britain's top companies.

The 2.1% fall was the index's worst in one day since it lost just over 2.5% a year ago to the day, on fears that Greece could leave the eurozone. But after its recent strong surge this latest fall in the blue-chip index merely wipes out the gains made since last Friday.

Stock markets around the world tumbled from their recent highs as investors took fright at weak Chinese manufacturing data and signs that the US Federal Reserve might end its bond-buying programme sooner than expected.

A trader on the floor of the New York Stock Exchange reacts as markets fall around the world

Markets have been buoyed in recent months by the various measures taken by central banks to stimulate the global economy by flooding it with cash. Measures include printing money, buying up mortgage-backed bonds and keeping interest rates at historic lows. Much of the recent economic data indicated the policy was having the desired effect, while the long-running eurozone crisis seemed to have entered a period of relative calm.

But analysts have been warning that any signs the money taps were about to be turned off or that the global economy was not recovering as expected would be taken badly by the markets.

Thursday's rout began with comments late on Wednesday from the Federal Reserve suggesting that America could end its quantitative easing, or QE, programme in the near future, and accelerated after a Chinese survey showed factory activity had fallen for the first time in seven months in May. The Nikkei 225 dropped more than 7% overnight on Wednesday to 14,483, its biggest one-day fall for two years. However, analysts pointed out that the Japanese index had almost doubled in value since November, so was still well ahead for the year.

European stock markets fell, with Germany's Dax and France's Cac both closing around 2.1% lower, while Italy's FTSE MIB fell 3% and Spain's Ibex was down 1.4%.

On Wall Street the Dow Jones industrial average, which had reached an all-time high this week, fell sharply when trading opened on Thursdaybefore staging a recovery. By lunchtime the US index was down just 15 points following stronger than expected weekly jobless claims and home sales.

Rupert Osborne, futures dealer at City broker IG, said: "The stronger home sales and jobless claims … fit with the idea that the US economy is approaching a point where a reduction in stimulus is appropriate. This neatly illustrates the irony of the position; traders across the world are openly hoping for poor US data since this keeps the Fed involved."

Ben Bernanke, chairman of the Federal Reserve, had hinted on Wednesday about a possible easing of its $85bn-a-month bond-buying programme, in a testimony to Congress. These comments were later compounded by the minutes of the Fed's last policy-making meeting, which showed that some members thought such a move could come as soon as June, much earlier than any analysts had been expecting.

Michael Hewson, senior market analyst at financial spread-betting company CMC Markets UK, said: "There was an expectation after Bernanke's testimony on Capitol Hill that the latest Fed minutes wouldn't add too much to overall market expectations around the prospects for further easing against expectations of possible tapering.

"The release of the latest Fed minutes completely changed that dynamic with a single line, 'a number of participants express a willingness to reduce QE in June'.

"The disappointing Chinese manufacturing data gave markets the extra nudge over the edge that was needed and persuaded investors with money in the game to cash in."

In China the HSBC purchasing managers index fell to 49.6 points in May, from 50.4 the previous month. Any level below 50 produced by the survey of industry indicates a contracting sector. China is a major consumer of commodities, so the signs of a slowdown in the country put metal prices under pressure, with copper down more than 3%. Oil prices also slid lower, Brent crude falling nearly 1% to $102 a barrel.

But gold and silver edged higher as investors searched out safer assets amid the sell-off.

Azure Global’s vision is to be widely recognized as a reputed firm of financial business advisors, achieving real growth for ambitious companies and to become the first choice for F&A outsourcing for accountancy practices and businesses alike and if u want to Setup ur business in United Kingdom then its not difficult in this modern age for more info visit our site Azure Global and join us also On Facebook

Article source : http://www.guardian.co.uk

HSBC faces court threat as deal on money laundering charges stalls

Judge may take action that could leave HSBC facing a criminal prosecution and threat to its ability to do business in the US

HSBC's controversial $1.9bn (£1.6bn) settlement deal with the US authorities over money laundering charges has stalled after a row between the justice department and the judge overseeing the case.

The deal – known as a deferred prosecution agreement (DPA) – meant HSBC was exempt from prosecution and triggered a storm of criticism. Judge John Gleeson is now believed to be considering rejecting the deal, a move that could leave HSBC facing a criminal prosecution and the threat that its charter to do business in the US could be revoked.

The bank will hold its annual meeting in London on Friday and is expected to be asked for an update on the agreement.

US authorities reached the deal with HSBC last December after uncovering evidence that the bank had illegally conducted transactions on behalf of Mexican drug lords, terrorists and customers in Cuba, Iran, Libya, Sudan and Burma – all countries that were subject to US sanctions.

Gleeson, a former assistant attorney general, made his name prosecuting drug rings and organised crime, most notably securing the conviction of John Gotti, the Gambino crime family boss. The justice department is believed to be challenging the need for Gleeson's approval after failing to get a quick signature while the judge is upholding his opinion that he must sign off on the DPA.

Court officials would not comment on the case. The judge last referred to the case on 15 February, noting solely that he had not yet approved or disapproved of the settlement. Last December Gleeson said there had been "much publicised criticism" of judges rubber-stamping DPAs.

The agreements are an increasingly common settlement which allow a company to pay a fine to stop a criminal prosecution.

John Coffee, Adolf A Berle professor of law at Columbia University, said judges were increasingly unhappy with DPAs.

"There is a serious disconnect between judges and prosecutors about whether prosecutors are doing anything meaningful," he said.

Senator Chuck Grassley lambasted the justice department over the settlement last year and said it was "inexcusable" that they had not brought a criminal prosecution against the bank. "What I have seen from the department is an inexplicable unwillingness to prosecute and convict those responsible for aiding and abetting drug lords and terrorists. I cannot help but agree with an editorial in the New York Times that 'the government has bought into the notion that too big to fail is too big to jail'," he wrote in a letter to attorney general Eric Holder.

At the time of the deal's announcement Stuart Gulliver, HSBC chief executive, said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again."

HSBC has been seeking a deferred prosecution agreement.

HSBC has undergone a drastic management overhaul since the issues came to light and has strengthened its compliance policies and procedures. It is continuing to implement those changes as the US authorities work on a resolution to the DPA disagreement.

Stuart McWilliam, senior campaigner with lobby group Global Witness, said: "News that the DPA hasn't yet been signed off gives the justice department a clear opportunity to reconsider the penalties HSBC should face for its widespread money laundering failures.

"Given that over 35,000 people were brutally slain in Mexico at the hands of drug traffickers while HSBC laundered at least $880m of their money, it's shocking that the current system of sanctions does not include senior executives being held personally responsible for the actions of their institutions. Is HSBC too big to jail?"

Gleeson would not be the first judge to challenge a DPA in recent months. Last year Jed Rakoff refused to sign off on an agreement between Citigroup and the Securities and Exchange Commission over the sale of "toxic" mortgage bonds. In his opinion the $285m settlement was "neither reasonable, nor fair, nor adequate, nor in the public interest". That dispute is ongoing.

Article source : http://www.guardian.co.u

Thursday, 23 May 2013

'Investment calculator' offers investors transparency on fees

A new tool launched on Wednesday promises British investors a way to cut through what its authors call the "smoke and mirrors" used by investment firms to charge hidden fees and get a more realistic valuation of their investments.

The True and Fair Calculator works out the cost of investments in pounds and as a percentage, giving an estimate of returns after all costs and fees.

It is based on data streams from investment research firm Morningstar and was devised by True and Fair, a campaign to boost transparency in the industry spearheaded by Alan and Gina Miller, founders of wealth management boutique SCM Private.

It builds on a similar tool created by the United States' Securities and Exchange Commission in 2005, which was used by more than a million consumers in its first three years.

The investment industry has come under mounting scrutiny in recent months as the public and regulatory backlash since the 2008 financial crisis spreads beyond the banking industry.

Britain's financial watchdog has already called for an end to hidden fees levied by asset managers.

"We hope this drives new levels of cost transparency which results in greater competition among product providers, gives information to aid better decision making by consumers and their advisers and provides a foundation for more realistic investment expectations," said Gina Miller.

Profits raised by the Calculator will be donated to charities for financial education and care for the elderly, True and Fair said.

Article source: http://uk.reuters.com

US Fed's Ben Bernanke hails benefits of stimulus

US Federal Reserve chairman Ben Bernanke has told Congress that it is too soon to end the central bank's monetary stimulus programme or raise interest rates.

He said the Fed's policies were "providing significant benefits" and changing course now could harm growth.

He warned that a "premature tightening of monetary policy" would risk "slowing or ending the economic recovery".

US rates have been between 0% and 0.25% since December 2008.

However, later on Wednesday the minutes of the Fed's last meeting were released, highlighting divisions on the policy-setting Federal Open Market Committee over when the Fed should start to wind down its $85bn-a-month asset purchasing programme.

"A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth," the minutes said.

Mr Bernanke said the recovery could slow if the Fed changed its policie

"However, views differed about what evidence would be necessary and the likelihood of that outcome.

"One participant preferred to begin decreasing the rate of purchases immediately, while another participant preferred to add more monetary accommodation at the current meeting and mentioned that the Committee had several other tools it could potentially use to do so."

Deflation risk

US stocks turned negative after the minutes were released, with the Dow Jones down 25.84 points at 15,361.74.

Shares have been hitting record levels in recent weeks, held up by the prospect that monetary policy would remain generous to help strengthen the weak economy.

At the same time, the Fed's willingness to continue its support underlines the weakness of the US economy and is causing some investors to fear company profits may be held back by tepid growth.

Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisors, said the minutes had been "largely superseded" by Mr Bernanke's testimony "but they do reinforce the idea that the doves - who are the ones making policy - will need a great deal of persuading to change their stance".

The Fed has pledged to keep US interest rates at their record low level until the US unemployment rate falls below 6.5%.

In his latest testimony to the Joint Economic Committee, Mr Bernanke noted that unemployment had now fallen to a four-year low of 7.5%, but the job market was still weak.

He added that inflation was running below the Fed's long-term target of 2% and said current monetary policy was helping to counter "incipient deflationary pressures".

The Fed's purchases of US government securities had "kept inflation from falling even further", he said.

The Federal Reserve buys bonds as a way of increasing the money supply and improving liquidity in the financial system, in the hope of sparking economic growth and supporting employment.

Article source: http://www.bbc.co.uk

Osborne prepares ground for RBS and Lloyds sell-off

IMF calls on chancellor to devise a 'clear strategy' for bailed-out banks and pour more taxpayer funds into them if necessary

George Osborne is preparing to set out his plans to return bailed-outLloyds Banking Group and Royal Bank of Scotland to the private sector after the International Monetary Fund called on him to devise a "clear strategy" for the two banks.

The Washington-based body, in London to present its annual health check on the UK economy, also told the chancellor that if the two banks needed more capital to bolster their financial strength he should pour in more taxpayer funds, as it would prove beneficial to the economy.

Some £65bn of taxpayer money is already locked up in shares in RBS and Lloyds, which both issued stock market announcements to insist they did not need to tap investors – particularly taxpayers – for fresh funds to plug capital shortfalls, estimated to be about £10bn.

There is mounting speculation the government is preparing to kickstart a sell-off of part of its 39% Lloyds stake

The intervention of the IMF forced Osborne to give the clearest indication yet he will outline his strategy for the two banks next month, with speculation focusing on his Mansion house speech in June.

More generally, the IMF said banks should be required to raise equity, cut dividends and show restraint on remuneration rather than cut back on lending.

Osborne said he would reveal his decision on Lloyds and RBS after the crucial report by the Parliamentary Commission on Banking Standards, which is expected to report next month . The report may call for full nationalisation of RBS, already 81% state owned. Lloyds is 39% owned by the taxpayer.

"Having refocused their business, now is the time for a clear strategy on how to return RBS and Lloyds to the private sector in a way that protects value for the taxpayer," Osborne said.

Shares in the two banks rose after they said their long-running discussions with the new City regulator, the Prudential Regulation Authority (PRA), over capital requirements ended. The banks said they could sell off businesses and cut down on risks rather than raise fresh funds to fill the shortfall.

Lloyds ended nearly 2p higher at 62.96p – above the 61p level the government now sees as break-even – and RBS ended 7.4p up at 349.6p.

The IMF presented a dilemma for Osborne by making clear that value to taxpayers should be central in any sell-off. Shares in both banks are firmly below levels the City regards as break-even: 73.6p for Lloyds and 502p for RBS, levels leaving taxpayers with £17bn of losses..

"Any strategy should seek to return the banks to private hands in a way that maximises the value for taxpayers, strengthens confidence and competition in the sector, and minimises outward spillovers," the IMF said as it indicated a strategy should be outlined by the end of the year. "In this context, if a sovereign backstop is required to meet a capital shortfall, it should be provided, as this would have a high multiplier."

The IMF did not indicate when stakes should be sold off and noted that "challenges remain" as the banks had failed to sell the branches which the European Union had demanded should be disposed of in return for £65bn of state aid.

The specific capital shortfalls of Lloyds and RBS were not disclosed but are thought to make up a large part of the £25bn hole identified by the the Bank of England's financial policy committee in March.

The IMF said the new stress tests by the PRA planned for 2014, following this year's exercise for the financial policy committee, should provide more detail about the methodology, results and bank-by-bank capital plans.

Lloyds, which analysts estimate has a £3bn shortfall, said it could plug its gap by generating profits and continuing to sell non-core assets, such as problem loans – ensuring taxpayers and other investors would not need to buy new shares or other types of financial instruments.

To underline the point, Lloyds raised £500m just after the stock market closed by selling another tranche of its stake in wealth manager St James's Place. Since March, Lloyds' stake in the firm has fallen from 57% to 21%.

RBS said it could fill its capital shortfall by selling off part of its US business, Citizens, and scaling back its investment bank.

The PRA said that further announcements would come from other banks once discussions over capital had been concluded. The City is most concerned about the outcome of discussion with Co-operative Bank.

Article source : http://www.guardian.co.uk

Wednesday, 22 May 2013

UK retail sales slump as shoppers balk at higher prices and cold weather

ONS said food shops were the worst affected as retailers reported a 1.3% decline in the amount of goods sold

Retail sales slumped in April after shoppers balked at rising prices and were reluctant to venture out to the high street in one of the coldest springs on record.

The Office for National Statistics said retailers reported a 1.3% decline in the amount of goods sold, with food shops the worst affected. Sales of food plunged 4.1% on the month, the weakest showing in almost two years. Shops also suffered a 0.2% contraction in the amount of money spent on the same month a year ago, which was the biggest year-on-year fall in retail spending since the turn of the century.

The cold weather was the biggest factor as the sale of barbecue food, garden furniture and summer dresses was put on hold. April was also a terrible month for garden centres following the big chill that effectively delayed spring by a month.

Cold weather was the biggest factor as the sale of barbecue food, garden furniture and summer dresses was put on hold

Several major stores have announced a significant bounce back in May, with garden centre sales reportedly up 70% in the first three months of the year, but the overall contraction, and especially the deterrent of rising food inflation, will concern the Treasury.

Ministers are hopeful of a bounce back in consumer confidence during 2013 to increase high-street sales and boost economic growth.

The ONS said consumer prices data showed that food prices had steadily been increasing and that a wide variety of food types contributed to the rise, including staple goods.

"This rise in prices will have squeezed consumers' disposable income, possibly resulting in them buying less or substituting cheaper goods for their normal purchases," it said.

Chris Williamson, chief economist at financial data provider Markit, said the weather-related drop in sales was a reminder that the economy remains in a fragile state.

"It is likely that spending will revive again in coming months, helping keep the country out of another downturn, though recovery will be only gradual as incomes continue to be squeezed," he said.

He pointed out that the underlying picture was more likely one of modest growth of sales following a 0.7% rise in the latest three months sales on the previous three-month period, which was the strongest rate of increase since last September.

"Households' views on their finances are the brightest for three years, according to Markit's household finance index for May. Being busier at work, rising house prices, news of the country having avoided another recession and buoyant equity markets have all helped generate more of a 'feel-good factor'."

Article source : http://www.guardian.co.uk

Apple chief calls on US government to slash US corporate tax

Tim Cook warns Congress that he would refuse to repatriate $100bn stashed offshore unless US severely reduced its 35% tax rate

Apple has called for US corporate tax rates to be slashed after it admitted sheltering at least $30bn (£20bn) of international profits in Irish subsidiaries that pay no tax at all.

In a dramatic display of how threats from multinational corporations are driving down taxes across the world, chief executive Tim Cook warned Congress that he would refuse to repatriate a total of $100bn stashed offshore unless it acted to slash the 35% US rate.

Cook said the tax rate for repatriated money should be set "in single digits" to persuade companies to bring it back. Standard tax for US profits should be, he said, in the "mid 20s".

He also revealed that Apple had struck a secret deal with the Irish government in 1980 to limit its domestic taxes there to 2%.

Three subsidiaries based in Ireland are also used to shelter profits made in the rest of Europe and Asia but are not classed as resident in any country for tax purposes – a tactic dubbed the "iCompany" by critics.

Cook's testimony to a Senate sub-committee investigating multinational tax practices largely confirmed its findings that Apple had taken tax avoidance to a new extreme by structuring these companies so they did not incur tax liabilities anywhere.

Phillip Bullock, the California company's head of tax, estimated that just one of these subsidiaries – Apple Operations International – had channelled $30bn in global profits over the last five years without filing a single income tax return.

Lower, lower: Apple CEO Tim Cook testifies before senators about his company's tax affairs.

The only taxes paid were on the interest earned by the cash pile and small sums in local markets. Senate investigators allege a total of $70bn has been sheltered this way in four years.

Despite heated exchanges with committee chairman Carl Levin, Apple largely shrugged off criticism of the practice, insisting it was acting "in the letter and the spirit of the law".

An independent tax professor, Richard Harvey, testified that its tax avoidance was "probably legal" and could have been much more aggressive.

The Apple chief used his appearance to renew lobbying for Congress to cut a deal with multinationals to encourage them to bring back, or repatriate, the billions of dollars kept offshore to avoid tax.

Cook said he had no plan to bring back the $102bn built up by Apple at current tax rates, and recently opted to return money to shareholders by borrowing money instead. "I have no current plan to do so at the current tax rates.

"Unlike some technology companies, I am not proposing a zero rate," he said. "My proposal is that we have a reasonable tax for bringing back money from overseas.

"A permanent change is materially better than a short term tax holiday."

Cook said he "personally doesn't understand the difference between a tax presence and a tax residence".

He was even defended by some members of the committee who accused Levin and Republican John McCain of "bullying" Apple. "I am offended by the tone and tenor of this hearing," said fellow Republican and presidential hopeful Rand Paul.

The hearing was seen as a watershed in the increasing tense clashes between governments and multinationals, particularly technology groups such as Apple, Amazon and Google.

Edward Kleinbard, professor of law at USC Gould School of Law, said: "Apple is not an outlier in its efforts to produce 'stateless income' – income that is taxed neither in the United States nor in the countries where its foreign customers are located – but it is an outlier in the baldness of its strategies. Apple shifted tens of billions of dollars of income without even breaking into a sweat.

"The hearing will forcefully remind policymakers that international tax reform will require the implementation of really thoughtful anti-abuse rules, ideally developed in conjunction with other OECD member states.

Every country is the worse off when they facilitate multinationals aggressively pursuing stateless income strategies, just as every country is worse off when they all engage in trade wars."

Corporate tax expert Jennifer Blouin at University of Pennsylvania's Wharton business school said the Apple revelations were "extraordinary but not surprising".

"We have seen versions of this with Microsoft and with Google," she said. "I hope it gooses the notion that we need to fix the worldwide system."

She said Apple was working within the law but that the law was written before huge profits could be made by companies that trade not in goods and manufacturing but in ideas.

"I have worked in this area for years and it's been largely an obscurity. But it's at the forefront now, and it needs to get fixed."

Article source : http://www.guardian.co.uk