Bizness Lounge

Monday, 2 February 2015

Widodo to Decide This Week on Contentious Police-Chief Nominee

(Bloomberg) -- Indonesian President Joko Widodo will decide this week whether to install as police chief a three-star general who faces a corruption probe, as he seeks to end an episode that put his graft-fighting credentials in question.
“I hope this week I will decide,” Widodo, known as Jokowi, said Monday in an interview in his office at his Dutch-colonial era residence in Jakarta. Asked which way he was leaning, Jokowi laughed and replied “you’ll know after I decide.”
Just days after Jokowi, 53, announced Budi Gunawan as his pick for police chief, the anti-graft agency named Gunawan a corruption suspect. Jokowi said Jan. 16 he had “postponed but not canceled” the nomination while the agency investigated Gunawan, prompting criticism from anti-graft activists.

Jokowi, a former small businessman who rose through the ranks of local government without the support of the major parties, became president after a campaign pledging zero tolerance on corruption and staking his reputation as a reformer. Three months into his term the furor over his

Draghi Spurs Bulls to Ditch U.S. Equities for Europe: Options

Inyoung Hwang Sofia Horta E Costa

(Bloomberg) -- Equity investors are switching their allegiance to Mario Draghi from Janet Yellen.
Anticipation of more stimulus from the European Central Bank triggered a record amount of money into an exchange-traded fund that tracks the region’s stocks while hedging against currency moves. The Stoxx Europe 600 Index posted its best January since 1989, while the Standard & Poor’s 500 Index had its worst month in a year, with traders pulling more money than ever before from an ETF tracking it.
Optimism that the ECB will shower the financial system with cash has offset a rise in volatility stemming from a new Greek government and the Swiss National Bank’s surprise decision to scrap its currency cap. Now, after lagging behind U.S. shares for six years, it’s time for European equities to outperform, according to Michael Kapler of Mittelbrandenburgische Sparkasse.

“This is just the start,” said Kapler, a portfolio manager at the

U.S. Oil Workers Strike Enters Second Day as Crude Prices Slide

Lynn Doan Barbara Powell Jessica Summers

(Bloomberg) -- The strike by oil workers at plants accounting for 10 percent of U.S. refining capacity entered a second day Monday in the biggest walkout since 1980. Crude futures fell.
The United Steelworkers union that represents employees at more than 200 refineries, terminals, pipelines and chemical plants stopped work Sunday at nine sites after failing to agree on a renewed labor contract. The union rejected five offers made by Royal Dutch Shell Plc on behalf of companies including Exxon Mobil Corp. and Chevron Corp. since talks began Jan. 21.
The USW hasn’t called a strike nationally since 1980, when a stoppage lasted three months. While only one of the nine plants has curbed production amid the stoppage, a full walkout of USW workers would threaten to disrupt as much as 64 percent of U.S. fuel output. Shell and

Dutch Disease Spreads in Europe as Party Allegiances Break Down

by Corina Ruhe

(Bloomberg) -- For a glimpse at the future of European government, take a look at the Netherlands.
Eleven parties in Parliament; a history of shaky coalitions; and no party with the support of more than 20 percent of the electorate. The result: only one Dutch government has lasted a full term in the past two decades.
That makes the Netherlands a European pioneer when it comes to political instability, as traditional party loyalties fray from the North Sea to the Mediterranean and around the Baltic. It’s a trend that groups like Podemos of Spain and the U.K. Independence Party are turning to their advantage, as increased polarization and a proliferation of small parties render coalition-forming and policy making more difficult. It’s also a lesson Britain may learn after it votes on May 7.

“They’re just ahead of the curve” in the Netherlands, Simon Hix, a professor of European politics at the London School of Economics, said in a phone interview. “I think we’re all heading down that route.”
Just before Christmas, ministers in The Hague breathed a sigh of

Patriots Overcome Big-Catch Deflation to Capture Another Title

Scott Soshnick

Tom Brady of the New England Patriots celebrates after defeating the Seattle Seahawks 28-24 during Super Bowl XLIX at University of Phoenix Stadium on Feb. 1, 2015.

Photographer: Tom Pennington/Getty Images

(Bloomberg) -- Tom Brady looked, well, deflated.
The New England Patriots’ quarterback, who on this same patch of grass seven years ago lost his bid for a perfect season and a Super Bowl championship, stared at the giant video screen from the sideline and shook his helmet-less head in disbelief.
It was happening again. A miraculous catch, the kind that had Seattle’s players mouthing “Oh My God” and their boss, Microsoft Corp. co-founder Paul Allen, staring from his owner’s box with mouth agape -- David Tyree then and Jermaine Kearse now -- was going to keep the Patriots from winning it all. It was going to keep Brady from his fourth title in six tries. It was going to wreck everything.

“I couldn’t believe it,” said Brady, who was named the Super Bowl’s

ECB Bond-Buying Plan Has Investors Questioning How It Works

Alessandro Speciale David Goodman

(Bloomberg) -- Mario Draghi’s trillion-euro puzzle is missing some key pieces.
When the European Central Bank president announced a program on Jan. 22 to buy 60 billion euros ($68 billion) of assets a month for at least 19 months to avert deflation, he surprised investors with the size of the stimulus.
He also provided more details than anticipated. Yet analysts poring over the ECB’s statements are finding that several critical points remain unclear.

“The ECB had to present a lot of details right from the beginning as they wouldn’t have been credible without them,” said Johannes Gareis, an economist at Natixis in Frankfurt. “What is missing somewhat is the fine print, which might have quite an impact on the implementation.”
Here’s what the ECB has and hasn’t revealed about Europe-style quantitative easing.
What will the asset mix be?
The ECB’s monthly spending will include its existing programs to buy covered bonds and asset-backed securities. Of the added purchases, Draghi said 12 percent will be

Oil Companies Draw on Creative Financing to Stay Afloat After Prices Tumble

Dawn Kopecki Matthew Monks

February 1, 2015

U.S. shale oil production.

Photographer: Andrew Burton/Getty Images

(Bloomberg) -- North America’s small and mid-sized energy companies are searching for creative ways to stay afloat as investors smell blood in the water from the almost 60 percent fall in the price of oil since June.
Oil and natural gas companies are straining for solutions before cuts in credit lines and increases in lending rates hit home in April, when banks re-price the collateral used to secure revolving credit lines. Some are turning to more creative forms of financing as familiar sources of money dry up.
That financing is coming from hedge funds, private equity shops and mega-wealthy investors like billionaire Carl Icahn who have the cash to weather a prolonged downturn and are on the hunt for deals among the wounded, bankers and analysts say. Oil operators, meanwhile, are

Greek Leaders Hit the Road Hunting For Allies

Jonathan Stearns Mark Deen

(Bloomberg) -- Greek Prime Minister Alexis Tsipras began the hunt for allies against German demands for austerity as his week-old government appealed to the European Central Bank not to shut off the money tap.
Tsipras traveled to Cyprus on Monday before trips to Rome, Paris and Brussels, with Berlin not yet on the agenda. German Chancellor Angela Merkel wants to duck a direct confrontation and isolate him, a German government official said.
The Greek leader, who issued a statement Saturday promising to abide by financial obligations, is seeking to repair damage after a rocky first week. Bond yields spiraled and bank stocks plummeted after Finance Minister Yanis Varoufakis said the country won’t take more aid under its current bailout and wants a new deal with its official creditors by the end of May.

“We’re not going to ask for any more loans,” Varoufakis said after meeting his French counterpart, Michel Sapin. “During this period, it is perfectly possible in conjunction with

Obama’s $4 Trillion Budget Sets Up Fight with Congress

Jonathan Allen

The U.S. Capitol.

Photographer: Chip Somodevilla/Getty Images

(Bloomberg) -- President Barack Obama will send a $4 trillion budget blueprint to Congress today that would raise taxes on corporations and the nation’s top earners, fund major investments in infrastructure and education and stabilize, but not eliminate, the annual U.S. budget deficit.
The plan challenges Republicans to make politically thorny choices between defending current tax rates for the wealthy and Obama’s proposals to boost spending for the middle class, the Pentagon and companies that build domestic infrastructure.
That’s exactly the ground Democrats want to fight on heading into the 2016 elections. Addressing income inequality has become a mantra for Democrats from Obama to 2016 presidential nomination front-runner Hillary Clinton, and some of the Republican contenders have taken up the issue as well.

The budget plan for the fiscal year starting Oct. 1 backs up Obama’s recent talk about directing assistance to the middle class with tax breaks and programs for education, job training and child care, administration officials said. Rather than dialing back his goals after Republicans expanded

U.S. Stock-Index Futures Advance After S&P 500’s Monthly Decline

Alan Soughley Roxana Zega

(Bloomberg) -- U.S. stock-index futures advanced, indicating equities will rise, after the Standard & Poor’s 500 Index posted its biggest monthly decline in a year.
Contracts on the S&P 500 expiring in March gained 0.3 percent to 1,994 at 6:08 a.m. in New York. Dow Jones Industrial Average futures added 44 points, or 0.3 percent, to 17,141. The S&P 500 fell 2.8 percent last week, extending a monthly loss, as weaker-than-forecast economic growth outweighed a rally in energy shares and the highest consumer confidence reading in 11 years, amid continuing concern in Europe over the new Greek government’s challenge to an austerity program.
“There may be more volatility until we get some clarification on Greece negotiations, but once the earnings period is also over, I expect the market to stabilize,” Patrick Spencer, head of U.S. equity sales at Robert W. Baird & Co. said by phone from London. He expects the