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| President Barack Obama walks into the Oval Office at the White House Wednesday morning, Jan. 21, 2009, for his first full day in office. His Personal Aide Reggie Love stands nearby. On Wednesday, he marked his 100th day in office.
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Bank of America's shareholders on Wednesday voted to oust Ken Lewis as the bank's chairman, in the aftermath of the contentious takeover of investment bank Merrill Lynch.
The Wall Street Journal reports a committee representing institutions owning General Motors bonds will present a counteroffer to the company's debt swap that will seek a majority stake in the car maker and ease fears about potential U.S. control of a major manufacturing company.
The bondholder committee, which represents about 20% of the debt outstanding, said its offer would save taxpayers $10 billion in cash. Under it, GM would issue new stock and give 41% of it to the UAW, 51% to the bondholders and 1% to common equity holders.
The counteroffer seeks to put bondholders on the same plane as the union, which is owed $7 billion less.
The government would not get equity under this scenario because it wouldn't need to reduce any of GM's loans. Unsecured bondholders would likely reduce their entire claim on the auto maker under this plan.
Davy analyst Stephens Lyons comments: Poor US figures and unchanged Fed policy stance fail to halt stock rally: "US stocks continued their rally yesterday (April 29th) despite worse-than-expected GDP figures and the announcement of an unchanged Fed policy. The Dow and the NASDAQ both finished up over 2%. The US contracted by an annualised 6.1% in Q1, which is a third quarterly decline and follows a fall of 6.3% in Q4. This brings the cumulative drop to 3.3% from mid 2007 and exceeds all previous downturns in the post-war period. However, the composition suggests signs of encouragement with consumer spending rising by an annual 2.2%. Inventories produced a record fall, but the hope is that the process of a reduction of inventories in line with a reduced level of sales is now well advanced.
The decision by the Fed to leave policy unchanged disappointed, with yields on US treasuries rising sharply. The key funds rate was left unchanged between 0% and 0.25%, and there was no increase in its plans to for buying long-term assets as the Fed believes that financial market conditions have eased somewhat. Yields on ten year US treasuries are now back to levels higher than when the Fed announced it would begin buying US debt a month ago.
The banks also rallied strongly on confidence over the stress tests being applied to the 19 largest banks, which are due to be published on Monday May 4th. Even Citigroup and Bank of America, the two banks believed to require more capital, recorded gains."
In New York on Wednesday, stocks rose on recovery hopes and the Federal Reserve's Federal Open Market Committee voted unanimously to keep the target federal-funds rate for interbank lending in a range near zero and reconfirmed their pledge to keep rates "exceptionally low" for an extended period.
The Dow Jones Industrial Average gained 168.78 points, or 2.1%, to 8185.73.
The Nasdaq Composite Index gained 2.3% and the S&P 500 added 2.2%.
Bloomberg says Asian stocks surged, with the MSCI World Index set for its best month since 1989, as better-than- expected Japanese production and US consumer spending fueled optimism the global economy is recovering.
The MSCI Asia Pacific Index rose 3.6% Thursday.
The Nikkei climbed 3.94%; India's BSE Sensex 30 rose 2.53% and China's CSI 300 added 0.67%.
Asia-Pacific -benchmarks
European stocks rose, erasing the Dow Jones Stoxx 600 Index’s loss for the year. The index has climbed 14% since March 31st -- the biggest monthly rally since data for the index started in 1987, according to Bloomberg.
The Stoxx index is up 1.6%.
UK consumer confidence climbed to the highest level in a year this month, adding to signs that the recession may be easing, GfK NOP said.
UK house prices fell in April less than economists forecast after a surprise increase in March, a report by Nationwide Building Society showed.
The average cost of a home fell 0.4% in April after a 0.9% jump the previous month
In Dublin, the ISEQ is up 3%.
IN&M has fallen 12% after announcing its 2008 results today - - see link in Box above.
AIB is up 7% and Aer Lingus has risen 5%.
Petrocelticthe independent oil & gas exploration company focussed on North Africa and the wider Mediterranean region,today reported 2008 losses for the year rose to $3.7 million. Revenues increased by 75% to $962,000 due to higher gas prices.
Petroceltic also announced that it has raised gross proceeds of up to US$40 million or £27.5 million by way of a conditional placing of up to 392,464,000 new ordinary shares at a price of Stg 7p (the ‘Placing’).
Brian O’Cathain, Chief Executive of Petroceltic commented: “The funds raised through this placing give the Company the financial flexibility to underpin the 2009 Algerian drilling programme and at the same time to put in place the financial commitments needed to secure the appraisal and drilling programme planned for Italy in 2010/2011. We were particularly pleased that the placing was oversubscribed, despite the difficult market conditions, and we would like to thank our existing and new shareholders for their continued support”
European Benchmarks
Irish Share Prices
Euribor Rates
AIB Daily Report
Bank of Ireland Daily Report
Currencies
The euro is trading at $1.3368 and at £0.8966.
For live currency updates, check the right-hand column of the Finfacts home page.
The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.
Commodities
Crude oil for June delivery is currently trading on the New York Mercantile Exchange (Nymex) at $51.81 per barrel up 84 cents from Wednesday's close. In London, Brent for June delivery is trading on the International Commodities Exchange at $51.16 up 38 cents.
Gold spot price
Gold is trading at $898.00 down 30 cents from Wednesday's spot price close in New York.
Davy analyst Emer Lang comments: Irish banks: haircuts not styled purely on property values: "Speculated haircuts of 'up to 50%' appear to be based on expectations of peak-to-trough property value declines in this cycle (and to some extent a populist desire to penalise the banks/developers as much as possible) rather than on any considered analysis. Gauging the appropriate haircut is a function not just of the asset value; rather, it also hinges on the original loan to value (LTV), the vintage of the loan and the provisions made. Our analysis suggests a range of mark to market haircuts: from as low as 5% for loans backed by UK commercial investment property to 44% in the case of loans backed solely by Irish development land. Our approach produces haircuts of 15% for Bank of Ireland and 20% for Allied Irish Banks assuming 'economic' as opposed to 'market' values.
Our analysis suggests that to restore our 'cleansed' banks to even modest profitability in 2010 will require some tough cost measures. Restoring the banks to more meaningful profits so that they can play a pivotal role in Ireland's economic recovery will require more far-reaching cost initiatives.
TNAV (total net asset value) estimates continue to hinge on a number of key assumptions: the loan haircut, the level of capital raised, government ownership and the 'cleansed' banks' earnings power, which can be driven by costs. Uncertainty over these issues may persist for some time, but our 'base' case implies price/TNAVs of around 0.5x for both banks."
Goodbody economist Dermot O’Leary comments on balancing the imbalances: "If it wasn’t coming from official sources, one would think that the incoming economic releases over recent months, both internationally and here in Ireland, were unfathomable. Yesterday provided further evidence of this in the form of US GDP, Irish labour market and Irish trade data. The former is documented extensively elsewhere, where GDP fell for the third consecutive quarter for the first time since the mid-1970s. On the Irish data front though, the Live Register revealed a further significant, albeit moderating, increase in the number of people registering as unemployed (+16,000 in April).
More informative though is the fact that the number on the Live Register has risen by 95% in the past year, indicating that the domestic environment continues to contract rapidly. While it is difficult to take a half-glass full interpretation from this development, the one positive that can be taken is that imbalances that had built up in the economy in the high-growth years - construction overdependence and rising current account deficit in particular - are disappearing fast. The latter issue is clearly illustrated in yesterday’s trade data, which reveals a substantial increase in the merchandise trade surplus over recent months, through a combination of relatively stable exports and collapsing imports; in the three months to February, exports from Ireland were flat, while imports declined by 23% yoy over the same period.
Given that trade has collapsed all over the world in this crisis, it is a commendable achievement, and has resulted in the trade surplus increasing by 40% relative to the same period a year earlier. The collapse in imports is easy to comprehend – a sharp fall-off in domestic demand will do that. The explanation for relatively solid exports is less easy to understand, but can probably be attributed to the fact that Ireland’s exports (the biggest being pharmaceutical goods) are relatively less susceptible to the economic cycle. This looks to be holding Ireland in good stead and means that the economy is moving towards a current account surplus, meaning that funding the government deficit can, in theory, increasingly come from domestic resources. Unfathomable? Maybe not."
Chemical exports from the foreign-owned sector increased by 6% in the first two months of the year, while the value of all other exports actually fell by 14%. Not really unfathomable!
Goodbody analyst Ian Hunter comments on Elan: "Yesterday, Novartis presented new Phase III data on FTY720 (Fingolimod), its oral compound for the treatment of MS, at the American Academy of Neurology (ANN) congress in Seattle. The data showed that in a one-year study, 80-83% of patients taking the drug remained free of relapses compared to 69% of those on Avonex. This reinforces data released in December which showed that the relapse rate at one year was 38% to 52% lower in patients taking FTY720 than with Avonex, depending on dose of drug taken. Longer term data has shown that relapse rates remain low after four years of treatment. Data on the efficacy of FTY720 is growing as is the amount of information on potential side effects.
The safety profile is one of the issues being monitored with the drug as it is known to reduce heart rate, increase blood pressure and elevate liver enzymes at the start of treatment. In general, the most common side effects were headaches. These latest data illustrate that FTY720 will represent a credible threat to all marketed MS medications, including Tysabri, if and when it reaches the market, not only because of its purported efficacy but also its mode of administration. In most cases, patients will accept a small reduction in efficacy for an oral drug over one administered by injection or infusion. Because of such threats, we have patient numbers on Tysabri peaking in Q410 and global revenue peaking in FY11 at $1.5bn.
Bapi ex-US trials now actively enrolling.
Wyeth, Elan's partner in the development of Bapineuzumab for the treatment of Alzheimer's, reported a mixed set of Q109 numbers yesterday where a qoq flat outturn at the earnings line ($0.89) was 6% ahead of market expectations from revenue of $5.4m, 3% behind consensus. The gain was principally driven by cost controls. Of direct relevance to Elan, Wyeth re-affirmed that the Phase III ApoE4 non-carrier Bapi studies have been modified with the highest (2mg/kg) dose discontinued. It also noted that it has completed a range of meetings with regulatory bodies and that they are "now actively enrolling subjects in our Phase III bapineuzumab trials in most of our international sites". When asked about its top three pipeline projects, management cited that "overwhelmingly the most significant" was Bapi and the Alzheimer's drug pipeline, illustrating the strength of commitment Wyeth has for the joint project. It is positive that the ex-US Phase III trials are actively recruiting, although no time line was given for completion of the process."
