23-Jul-2010

Euro

10 Second Headlines of the Week – July 23 2010

European Stress Test (results)

+ 84 of 91 European banks have enough capital to withstand a recession and sovereign debt crisis with a Tier 1 capital floor of 6%.

+ Cost of insuring Europe’s largest banks dropped by 1-4 bps after the stress test results were announced.

Global Highlights

+ Bank of Canada:

  1. Raised the bank rate by 25 bps to 0.75% and expect the economy to return to full capacity by end of 2011, 2 quarters later than anticipated.
  2. 2nd Qtr expansion est. of 3% vs April’s est. 4%, 3rd Qtr 2.8% vs est. of 3.5%
  3. Sees 2010 ‘world’ growth at 4.2% and US growth at 2.9%

+ China: The S&P believes that the Chinese banks need to raise funds to cope with tighter capital requirements. China’s 5 largest banks est. that they need as much as $53.5 billion after lending $1.4 trillion last year alone.

+ Europe:

  1. The British economy grew at the fastest pace in 4 years; 1.1% of GDP in the 2nd Qtr, twice the market consensus.
  2. Germany’s business confidence surged to a 3 year high in July, the highest level since July 2007.

Auto Industry

+ Ford ‘smashed’ their 2nd Qtr earnings at $2.6 billion; $4.7 billion for the first half, best half since 1998.

+ Profitability was improved by the increase in extras like heated seats, voice command and improved quality

+ Ford has increased their market share to 17.5% vs 16.1% a year ago.

Farnborough Airshow

+ Orders for 2010 are in excess of $47 billion, beating 2006, but not 2008