Week July 8 2011 – Weekly Recap & The Week Ahead
“Markets are constantly in a state of uncertainty and flux and money is make by discounting the obvious and betting on the unexpected” — George Soros
1. NY AG probes life insurers — New York AG Eric Schneiderman issued subpoenas to at least nine life insurers in an investigation into payouts for deceased customers, sources say, as the scrutiny of the industry grows. The insurers include MetLife (MET), Genworth Financial (GNW), Manulife Financial (MFC) and Prudential (PRU).
2. Moody’s: China’s bank ratings threatened on muni debt — Moody’s may go negative on its outlook for China’s banking system after it identified $540B of loan exposure to local governments beyond the $1.6T discovered by a national audit.
3. China raises interest rates — People’s Bank of China hikes lending and deposit rates by 0.25%, the third such tightening seen this year.
4. Portugal downgrade stokes contagion fears — a downgrade of Portugal’s credit rating to junk status put fears of another adverse turn in the euro-zone’s long-running debt crisis back on display.
5. ECB delivers rate hike — The European Central Bank delivered its second rate hike in three months, as expected, lifting its refi rate to 1.5% from 1.25% as investors seek clues on the pace of further moves and the central bank’s response to the euro zone’s ongoing debt crisis.
6. IMF to OK €3B tranche for Greece — the IMF is set to approve today transferring just over €3B ($4.3B) in loans to Greece to help it avoid a default, and is expected to discuss whether a second bailout should be dependent on private sector participation.
7. Deal could end ethanol tax break — a bipartisan trio of senators, including two from ethanol-producing states, agreed to repeal the $6B/year ethanol tax credit by the end of July. The deal, which must now be passed by Congress, could raise costs for ethanol blenders such as Valero Energy (VLO) and Marathon Oil (MRO), although it’s unlikely to reduce demand for corn.
The week ahead — Economic data from Econoday.com:
