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EC Official Denies Greek Government Statement That a Deal Is Close

EC Official Denies Greek Government Statement That a Deal Is Close

EC Official Denies Greek Government Statement That a Deal Is Close 

This article by Nikos Chrysoloras, Eleni Chrepa, Rebecca Christie for Bloomberg may be of interest to subscribers. Here is a section:  The euro gained 0.2 percent to $1.0889 as of 4:58 p.m. London time. Greek two-year notes rose, pushing the yield 114 basis points lower to 23.77 percent. Greek shares also climbed, with the benchmark Athens Stock Exchange gaining 3.6 percent at the close of trading.

“Everyone was scared Greece was close to leaving the euro zone,” said John Plassard, vice president at Mirabaud Securities LLP in Geneva. “Just some hope is pushing the market up. They seem to be trying to do anything possible to keep Greece in the euro zone.”

U.S. Treasury Secretary Jacob J. Lew, who spoke Wednesday with Tsipras for the second time in less than a week, said he’ll push for movement in the standoff at a Group of Seven gathering of finance ministers and central bank governors in Germany.

“It’s time for everyone to park the rhetoric on the side and look for that sensible place where accommodation can be found,” Lew said at an event in London. “No doubt the worst and deepest consequence would be to Greece. But it’s profoundly in the interest of the European and global economy for the accident to be avoided.”

Eoin Treacy's view 

How the Europeans are going to resolve the Greek tragedy is still weighing on sentiment. Since they have patched over disputes at the last minute on every other occasion the market is beginning to price in the potential that this time will be no different.

Greece’s ability to make the next payment to the IMF is contingent on funds being released from their bailout package to fund it. This is a robbing Peter to pay Paul strategy but is unfortunately the reality of the Eurozone’s approach to the crisis. It means that the reforms demanded of Greece are where the crux of the argument lies and they will have to deliver if they are to expect leniency. 

Yen slides to lowest level in nearly 8 years 

This article from the Nikkei News service may be of interest to subscribers. Here is a section A weak yen used to provide a shot in the arm when Japan's economy depended heavily on exports. With production shifted offshore, the country has moved to an investment-driven growth model. Yet the weak currency still serves as a tail wind for exporters. Heavy machinery maker IHI assumes a rate of 115 yen to the dollar for the year through March 2016. If the yen remains weaker than this, operating profit will likely end up higher than the projected record high of 90 billion yen ($733 million).

But Honda Motor offers a contrast. Exports at the automaker accounted for a measly 3% in fiscal 2014, making currency fluctuations a small matter. Panasonic also has moved manufacturing overseas, particularly for products marketed there, shrinking the impact of foreign exchange rates to less than one-fifth the company's previous level.

"Exports are having a hard time growing in terms of volume, while its effects on capital investment and jobs are weak," said Masaaki Kanno at JPMorgan Securities Japan, referring to the yen's recent slide.

Nonetheless, publicly traded companies here expect combined pretax profit to grow 9% for fiscal 2015 to a second-straight all-time high. A weaker yen may even send profit growth into double digits.

Eoin Treacy's view 

The US Dollar completed a six-month range yesterday to break out to new recovery highs against the Yen, unwinding just about all of the credit crisis devaluation in the process. This remains a consistent trend and a sustained move below ¥120 would be required to begin to question medium-term scope for continued outperformance. 


Barrick deal fulfills Thornton aim of forging China link 

This article by Simon Casey for Bloomberg may be of interest to subscribers. Here is a section Barrick said Tuesday that Zijin will buy 50 percent of its interest in a Papua New Guinea mine for $298 million. Looking ahead, Toronto-based Barrick and Zijin will evaluate opportunities for future cooperation, including the potential to jointly construct mines. Barrick said it may take advantage of Zijin’s access to “low-cost capital from Chinese institutions.”

“A twenty-first century mining company with global reach and the intention to become an industry leader must, by definition, have a distinctive relationship with China,” Thornton said Tuesday in a statement.

Even before Thornton took over as chairman last year, succeeding Barrick founder Peter Munk, he was looking to build links with China. That’s a recognition of the nation’s growing importance not just as a user of key commodities but also as a producer. While Barrick has long been the world’s largest gold producer ranked by sales, Zijin is catching up fast and is now the second-biggest, according to data compiled by Bloomberg.

Eoin Treacy's view 

China is among both the largest consumers and producers of gold so it makes sense for Western companies to wish to gain access. They have an added incentive as access to additional capital for either acquisitions or expansion dwindles. Meanwhile Chinese companies are well capitalised and have access to attractive borrowing terms.

Barrick Gold needed this deal more than Zijin and the response of the respective share prices bears this out. Barrick has been ranging between $10 and $13.30 since November and pulled back from the region of the 200-day MA last week. It will need to sustain a move above that level in order to signal a return to demand dominance beyond the short-term  


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Eoin Treacy's view 

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The Markets Now 

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view 

Here is the new brochure listing some of our topics and the important questions most investors face.  I think all investors will benefit from guest speaker David Brown’s new presentation. I learned from it, not least how to assess some familiar data more clinically.  In other words, he shows us how to think a little more clearly, particularly in terms of identifying bear markets near their tops.  This is never easy given all the emotions involved.  Many people jump the gun, as you will have seen over the last few years, which can leave them susceptible to overstaying when the important and often overlooked warning signs are flashing.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  

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