Week of Aug 8 2014- Weekly Recap & The Week Ahead
Monday, August 11th, 2014“Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell. If you want to have a better performance than the crowd, you must do things differently from the crowd.” – Sir John Templeton
1. Portugal Spent $6.6B to Rescue Banco Espirito Santo — Portugal is splitting Banco Espirito Santo Bank into a “good bank”, to be renamed Novo Banco, and a “bad bank”, which will house Banco Espirito’s exposures to the troubled Espirito Santo business empire. The bad bank’s losses will be borne by the bank’s shareholders, including the Espirito Santo Financial Group (OTC:ESFHF), one of the holding companies of the Espirito Santo family, and Credit Agricole (OTCPK:CRARY) which owns a 14.6% stake.
2. GM Financial Says DOJ is Examining Subprime Loan Records — Bloomberg, the Dep. of Justice (DOJ) is subpoenaing GM in the midst of a resurgence in U.S. auto sales fueled partly by a subprime lending boom. The Justice Department is seeking documents on underwriting criteria, origination, warranties and securitization of subprime loans since 2007, GM Financial said in a filing last week.
3. China Suspends Work at Hundreds of Aluminium and Magnesium Factories After Deadly Blast — Reuters, China has suspended work at more than 200 aluminium and magnesium processing factories in an eastern province for safety checks as part of a nationwide review following an explosion at an auto parts plant that killed 75 people. The Zhongrong factory supplied auto parts to GM (NYSE:GM) and many other companies, and the new closure will greatly affect international supply chains.
4. Cameron LNG Project Gets Final Investment Approval-Japanese Partners — Reuters, Japanese partners in the Cameron LNG terminal say the project has secured its last investment approval by obtaining $7.4B in financing. The move brings Japan a step closer to importing significant amounts of LNG from the U.S.’s abundant supply of shale gas. The Cameron project is owned by Sempra Energy (NYSE:SRE), GDF Suez (OTCPK:GDFZY), Mitsui & Co. (OTCPK:MITSY), and a joint venture between Mitsubishi Corp. (OTCPK:MSBHY) and Nippon Yusen KK (OTCPK:NPNYY).
4. World Health Organization (WHO) Declares Ebola Outbreak An International Health Emergency — The World Health Organization has declared the “extraordinary” outbreak of Ebola in West Africa an international public-health emergency. Late last week, it called for a “coordinated international response” to the outbreak, the largest ever, which has claimed 932 lives and spread from Guinea to Liberia, Nigeria and Sierra Leone since it began in December. Ebola is known to be incurable. Currently, there are a few pharma companies working on vaccines, drugs and other treatments for Ebola. These are Tekmira (TKMR), BioCryst (BCRX) and Sarepta (SRPT).
5. U.S. military strikes ISIL artillery in Iraq — MarketWatch, The U.S. military has entered the conflict in Irag and struck an ISIL artillery that had been used against Kurdish forces defending Erbil, the Pentagon reported. Reports said two Navy F-18s dropped laser-guided missiles on the mobile artillery sites.
The week ahead — Economic data from Econoday.com:
