- Greece reneges on commitments to EU, ECB and IMF
- USA: FOMC Monetary Policy Statement
- Facebook Q4/2014 earnings – Q4/2014
Greece reneges on commitments to EU, ECB and IMF
Back in Oct 2012 Greece was failing to meet conditions it had agreed with IMF-EU-ECB troika inspectors in order to qualify for release of a tranche of bailout funding. 16 Oct 2012 These included fiscal cuts, public sector pay structure, pensions and severance pay, and sales (privatisation) of some infrastructure assets. Yannis Emiris, CEO of the Hellenic Republic Assets Development Fund (HRADF), had announced that new asset sales and privatisations weare expected to include Hellenic Petroleum, the country’s two biggest ports in Piraeus (OLP) and Thessaloniki (OLTH), its second-biggest water company Thessaloniki Water (EYATH), and Larco, one of the world’s biggest nickel producers. However the HRADF has consistently failed to meet its performance targets. More
Yesterday new Greek Prime Minister Alexis Tsipras announced a halt to the privatization of the port of Piraeus on Tuesday, for which China’s Cosco Group [COSCO.UL] and four others had been short-listed, and a halt the sale of stakes in the Public Power Corporation of Greece (DEHr.AT), Greece’s biggest utility, and refiner Hellenic Petroleum (HEPr.AT) and put other planned asset sales of motorways, airports and the power grid on ice.
Germany’s Economy Minister Sigmar Gabriel said Athens should have discussed the halt to privatizations with its partners before making an announcement: “Citizens of other euro states have a right to see that the deals linked to their acts of solidarity are upheld.“.More
Last Monday Dijsselbloem said “I expect from (Greece) that they will work with us to strengthen the Greek economy, which is crucial of course. We fully understand that a lot of work has to be done and we stand ready to support them. Of course membership of the euro zone also means that you comply to all that we have agreed with each other, but on that basis we stand ready to work with them … We have already done a lot to lift the debt burden for Greece over the last couple of years in terms of interest and maturity, the length of the loans. We have always said that we continue to work with them if the Greeks commit to what we have agreed with them, and if necessary. Now these words if necessary refer to the debt sustainability. It is too early to say, we have always said that we will come back to debt sustainability issues after the completion of the fifth review and that is still pending, so it is too early.” More
The next meeting of the Eurogroup is scheduled for 16 Feb 2015 in Brussels More
USA: Federal Open Market Committee Monetary Policy Statement
“Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to decline further in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. The Committee continues to monitor inflation developments closely.
To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy. However, if incoming information indicates faster progress toward the Committee’s employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.
The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”
Federal Reserve, “FOMC Monetary Policy Statement“, 28 Jan 2015 More
“On balance, I viewed it as slightly hawkish. The equity markets view it as a June hike still being a potential outcome. It’s basically interpreting that the Fed will plow ahead with rate hikes despite low inflation and international woes.”
Anthony Valeri, Market Strategist, LPL Financial Corp (San Diego, CA) More
Facebook Q4/2014 and full year 2014 earnings
Facebook produced a 58% gain in revenue in Q4/2014 and 49% for the full year. However analysts focused on an increase in Facebook’s costs, and Facebook was sold down.
“Full Year 2014 Business Highlights:
Fourth Quarter 2014 Financial Highlights:
Revenue – Revenue for the fourth quarter of 2014 totaled $3.85 billion, an increase of 49%, compared with $2.59 billion in the fourth quarter of 2013. Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 53%.
- Revenue from advertising was $3.59 billion, a 53% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, revenue from advertising would have increased by 58%.
- Mobile advertising revenue represented approximately 69% of advertising revenue for the fourth quarter of 2014, up from approximately 53% of advertising revenue in the fourth quarter of 2013.
- Payments and other fees revenue was $257 million, a 7% increase from the same quarter last year.“
PR Newswire, “Facebook Reports Fourth Quarter and Full Year 2014 Results, 28 Jan 2015 (16:00) More
Oil and Gas Futures
- NYMEX West Texas Intermediate (WTI) (Mar 2015): $44.38/barrel as at 16:30
- ICE (London) Brent North Sea Crude (Mar 2015) $48.53/barrel as at 16:30
- NYMEX Natural gas futures (Feb 2015): $2.87/MMBTU as at 14:30
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The shape of the day
“The Fed continued to emphasize that any rate hike decisions will be very data-dependent, which has been the norm for quite some time. People are looking closely at earnings, which has been the story of the volatility in the past week or two. Oil and the strong U.S. dollar are also creating a drag on large multinational companies.”
Joe Bell, Senior Equity Analyst, Schaeffer’s Investment Research Inc (Cincinnati, OH) More
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Stock price movements
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