According to S&P all sectors performed poorly in 2008. The least worst sector was consumer staples which was down 18%. Biggest winner on S&P in 2008 was consumer staples firm Family Dollar Stores (NYSE: FDO). This was the worst year for the S&P since 1931, the middle of the Great Depression.
Citi's bosses said top execs won't take bonuses. They also sold off their Global Services Business to TCS for $512m. KBC announced it would not pay any bonuses in 2010 for earnings in 2009. KBC received 3.5bn EUR government aid in October, together with Fortis, Dexia and ING.
FTSE Trading closed at 12:30 GMT for Wednesday 31 Dec 2008. Its value was 4,434 points, down from 6,457. HBOS and RBOS have lost roughly 90% of their value. Whittard of Chelsea (formerly owned by Iceland's Baugur investors) has been sold over the Christmas period for an undisclosed sum to EPIC private equity partners (who are into MBOs and MBIs). They have 130 stores selling tea, coffee and crockery. Overexpansion? Bad outlets? You decide.
Showing posts with label eur. Show all posts
Showing posts with label eur. Show all posts
Wednesday, 31 December 2008
Tuesday, 30 December 2008
Public Sector Borrowing and its impact on FX rates and CDS prices
GBPEUR
In the FX markets, December saw the GBP trading at parity with the EUR, its worst performance yet this year but a price target predicted by analysts in a self-fulfilling prophecy. Alastair Darling's remarks earlier in the year accelerate the sell-off.
GBPUSD
In July sterling was trading at $2, then dwindled to $1.50. Why? Partly Britain's public finances - the Treasury's pre-Budget report forecast UK public borrowing will rise to £78bn for 2008-09 and then to £118bn in 2009-10 (8% of GDP). These figures though are not consistent with data from the ONS.
Analysts point out a high level of government borrowing tends to spell trouble for sterling. A post-war high was reached in 1974-75 (6.9% of GDP), which led to Britain asking the IMF for emergency funding in 1976. The Treasury's counter is that it believes the recession will be shallow and brief. The UK has been running a deficit since 2002/2003.
The CDS market for sovereign debt has indicated the cost of insuring default by the Treasury on its gilts over 5 years has reached 100bps over Libor (7.2 bps a year ago). Analysts CEBR announced (speaking about the recession across Europe): "The United Kingdom economy is likely to be the hardest hit by the credit crunch due to its reliance on consumer borrowing and the financial sector for growth".
But who is trading in the sovereign CDS market and why? BoA research provides some answers.
In the FX markets, December saw the GBP trading at parity with the EUR, its worst performance yet this year but a price target predicted by analysts in a self-fulfilling prophecy. Alastair Darling's remarks earlier in the year accelerate the sell-off.
GBPUSD
In July sterling was trading at $2, then dwindled to $1.50. Why? Partly Britain's public finances - the Treasury's pre-Budget report forecast UK public borrowing will rise to £78bn for 2008-09 and then to £118bn in 2009-10 (8% of GDP). These figures though are not consistent with data from the ONS.
Analysts point out a high level of government borrowing tends to spell trouble for sterling. A post-war high was reached in 1974-75 (6.9% of GDP), which led to Britain asking the IMF for emergency funding in 1976. The Treasury's counter is that it believes the recession will be shallow and brief. The UK has been running a deficit since 2002/2003.
The CDS market for sovereign debt has indicated the cost of insuring default by the Treasury on its gilts over 5 years has reached 100bps over Libor (7.2 bps a year ago). Analysts CEBR announced (speaking about the recession across Europe): "The United Kingdom economy is likely to be the hardest hit by the credit crunch due to its reliance on consumer borrowing and the financial sector for growth".
But who is trading in the sovereign CDS market and why? BoA research provides some answers.
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