HALISTER: ECB Met Goldman, Barclays, Moore Capital Before December Meeting

ECB Met Goldman, Barclays, Moore Capital Before December Meeting

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
BARC LN (Barclays PLC)
2539Z GR (European Central Bank)
GS US (Goldman Sachs Group Inc/The)

People
Benoit Coeure (European Central Bank)
Carl Herndon (Jupiter Marine International Holdings)
Fritz Zurbruegg (Schweizerische Nationalbank)
Mario Draghi (European Central Bank)
Peter Praet (European Central Bank)

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UUID: 7947283

HALISTER1: Brazil Fiscal Deterioration May Crack Relative Stability: Garde

Brazil Fiscal Deterioration May Crack Relative Stability: Garde

(Bloomberg) -- After relative stability of BRL since last September’s rout, fiscal deterioration is potential trigger for future negative market reactions, Daniel Weeks, chief economist at Garde Asset Mgmt says in phone interview.
  • Weeks sees BRL at 4.20 per USD at yr-end, with bigger risk for USD to close above the estimate
  • Latest developments in fiscal policy, BCB refraining to hike and govt attempts to expand credit resembles the policies of Pres. Rousseff’s first mandate
  • Brazil economy is unbalanced; “the sustainability of the debt may start being discussed” should govt fail to approve reforms
    • Minister Rossetto’s remarks during recent interview suggest govt is not very interested in approving reforms: Weeks
  • NOTE: Brazil hasn’t yet set new minimum retirement age, the minister told Valor
  • NOTE: Govt proposal would allow greater fiscal deficit: Folha
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Daniel Weeks (Garde Asset Mgmt)
Miguel Rossetto (Federative Republic of Brazil)

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UUID: 7947283

HALISTER: Rolls-Royce Chief Reveals Repair-Costs Rethink Amid Airline Ire

Rolls-Royce Chief Reveals Repair-Costs Rethink Amid Airline Ire

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
GE US (General Electric Co)
RR/ LN (Rolls-Royce Holdings PLC)
BA US (Boeing Co/The)
UTX US (United Technologies Corp)

People
D East (Rolls-Royce Holdings PLC)
Carl Herndon (Jupiter Marine International Holdings)

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UUID: 7947283

HALISTER: HSBC CEO Says Pay Reversal Hits Senior Investment Bankers Most

HSBC CEO Says Pay Reversal Hits Senior Investment Bankers Most

(Bloomberg) -- HSBC’s most senior investment bankers have been hit the hardest by a decision to reverse a global salary freeze last week, CEO Stuart Gulliver says in interview Monday.
  • “What we actually did was effectively cutting the same amount of costs, but we are basically taking it out of variable compensation rather than taking it out of fixed pay”
  • “What we very quickly realized was that if we take it out of fixed pay, it impacts the more junior or the younger members of our staff” so “knocking it out of the pay pool hits the more senior people”
    • “We are hitting the people who arguably can afford it”
  • HSBC remains committed to cutting $5 billion in costs by the end of 2017, Gulliver says
  • NOTE: HSBC ends pay freeze after staff revolt
  • NOTE: HSBC Keeps London Base in Victory Over Asia
Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
HSBA LN (HSBC Holdings PLC)

People
Stuart Gulliver (Hongkong & Shanghai Banking Corp Ltd/The)

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UUID: 7947283

HALISTER1: ECB Has No Easy Options Left, Buying Credit Unlikely, Exane Says

ECB Has No Easy Options Left, Buying Credit Unlikely, Exane Says

(Bloomberg) -- While ECB looks set to ease further at the March meeting, it may require coordination among major central banks or regulators to provide comfort to investors about the future of the European banking sector, Exane BNP Paribas analysts, including Astrid Schilo, write in client note.
  • Low yields and regulation are the biggest factors weighing on banks and ECB may struggle to do much to address those; further action may be unhelpful
    • Buying sovereign bonds less of a benefit for banks as holdings are smaller, sovereign yields aren’t as high as in the past and the regulator talking about risk weighting changes means there will be incentives to hold fewer govvies in the future
  • Expect ECB to:
    • Increase monthly buying by EU10b at March meeting and may lift the purchase ceiling for bonds which pre-date collective action clauses
    • Cut deposit rate by 10bps to -0.4%, possibly more with a tiered system
    • Soften TLTRO conditions to improve eligibility among banks currently locked out because of loan level hurdles, extend maturity and offer more tenders
  • While buying CLOs is possible, any volumes would be small; unlikely to buy senior credit given credit yields remain under control
    • Could though announce it’s ’ready’ to purchase credit if certain other conditions are met, in line with the 2012 OMT announcement; a step in that direction would be supportive near term
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)
291187Z FP (Exane BNP Paribas)

People
Astrid Schilo (Exane Ltd)

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UUID: 7947283

HALISTER1: Cautious on PGBs; Concerns on Portugal Credit Rating Remain: MS

Cautious on PGBs; Concerns on Portugal Credit Rating Remain: MS

(Bloomberg) -- Portuguese markets are under severe stress, more than rest of periphery, as global risk aversion overlaps with challenging domestic policy outlook, write Morgan Stanley analysts including Daniele Antonucci in client note.
  • Remain cautious on PGBs given high volatility and illiquid market conditions
  • Portugal economy is expanding at subdued rate; reforms have some effect, though problem of high overall debt, low potential growth remain
  • Budget is within EU limits, though there’s risk of slippages; uncertainty on how long far-left support for minority govt will continue; unorthodox banking-sector policies (Novo Banco senior debt haircut) may have created uncertainty in the market
  • Funding situation is manageable, relatively strong cash position; issuance est. at just EU3b for 2016, small redemptions in 2017
  • Market gyrations are overdone, though remain cautious on PGBs; concerns about Portugal’s credit rating, implications for ECB QE buying will remain in focus until resolved
  • NOTE: DBRS Says High Level of Govt Debt Exposes Portugal to Shocks
  • NOTE: Portugal May Lose QE Eligibility on Downgrade Risk: Commerzbank
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
1174Z PL (Portuguese Republic)
MS US (Morgan Stanley)
2539Z GR (European Central Bank)

People
Daniele Antonucci (Morgan Stanley)

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UUID: 7947283