Chillin' out till it needs to be funded
Citi added to the big pile of bank settlements, Banks comfortable with some penalties and not others and the Attorney general’s office quick to capitalize on that with big penalties for regulatory infarctions not yielding banks any expected leeway in mortgage settlements. Citi’s $7 Bln settlement however seems to have engendered a happy reaction from the markets, Q2 results posting a $7 Bln penalty with the DoJ lost in a couple of quarters earnings and an EPS beating expectations by 20% . The company is burning up goodwill with a stunted topline after the refi market broke down last year yet Mortgage loan loss reserves in North America providing
Meanwhile the deal world is abuzz again with Shire approaching Abbvie with a counter offer 42% beyond the initial offer posted by Abbvie at GBP 38 per share. The new offer counts to GBP 53 per share and makes Shire 25% owners of the merged business if Abbvie indeed makes such an offer proposed by Shire as acceptable to its board. The cash position of the bid is a substantial 45% of the bid.
CIMB in Asia in the meanwhile (Malaysian leading Financial Services conglomerate trying to go international better with RBS investment Bank advisory business) is still confessing to its cost crimes from the RBS acquisition but is going ahead with another proposal for a 3 way merger with RHB Capital and another Building Society locally in KL. Apparently ( hat tip: FT/UOB Asia) the Building Society model ensures a low 20s for Cost income efficiencies that will be posted into the combined entity buying CIMB a better consolidated balance sheet
In Europe, the Structured Finance deals opening up for renewals have been helped along by new issuance of green bonds or climate bonds, that have reached a good $16.6 Bln value , at least a good volume of business within the category of green bonds. The Euro meanwhile has tracked up to 1.36 again ahead of another non event from ECB/Mario Draghi even as Oil continues down to good lows , just $107 on Brent and still headed south , mostly all said and done looking for another fundamental repricing of its trend with USA counted as a net exporter of the commodity ( US trades WTI prices) However, the Portugese sovereign debt yields have managed to shake up PIIGS yields again, confidence in the sector shaken soon after Ireland and Portugal navigated to exiting the ECB administration mechanism. If the ECB is indeed serious about adding a $1 T in TLTRO offers to the banks, then the hot speculative frenzy on the Euro is likely to run big circles around trend based sellers expecting Euro to again respond to 1.34. I guess that a little chart gazing will get you thru that worry by the post confirmation , Euro trade break down below 1.3575 or at best 1.3550
In Economy related releases the week sees Housing data in the middle of the week with the Housing Market index on Wednesday and another expected high on the Housing starts on Thursday, while the retail sales buoyed up in April May may give a nice surprise after a subdued May June contrasting with a usually buoyant export import related inflation (PPI) read both on Tuesday. The TIC report on Wednesday will be a big one with the index having tracked well in the month and the US IIP and Consumer sentiment data coming off highs contrasting with Atlanta Fed and Philly indices tracking up after a good start in Chicago
Chinese GDP reports Tuesday while BOJ posts its new policy holding low rates later tonight.