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rffrydr
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 Posted: Sun Mar 11, 2012 8:07 am Post subject: |
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And the winner is:
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rffrydr
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| Posted: Tue Feb 21, 2012 11:21 am Post subject: |
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As Buffett says, there's always a currency play in your equity and nowhere is that stronger than Switzerland. On Nestle's (yes, europe's second biggest company) road to annuity--where all swiss stocks tend towards (even miners)--there is the question posed once again. Of course when bears reign, "adjustments" on one side are "unadjusted" on the other. Remember the shocked sputtering rejection when the market had to be told that european banks hold a lot of....wait for it.....german debt?!
BTW profits didn't fall into the sea--but I guess that's cause they're so far away from the shore?
Nestlé: peeling back the wrapper
| Quote: | A chocolate bar is never as big as it looks with the wrapper on. Nestlé knows this better than most. On Thursday, the foodmaker announced that annual organic growth in sales and underlying earnings per share both hit about 7.5 per cent. Impressed, shareholders boosted the shares in Europe’s second-biggest company by market capitalisation by 2 per cent.
The trouble with all these adjusted metrics, though, is that they exclude the effect of the strong Swiss franc. The raw numbers are more sobering. Sales fell 5 per cent, and, helped along by cost cuts, operating profits were flat. Even shareholders based overseas should be worried as despite the currency controls Switzerland implemented in September, the effect is not a one-off.
The weighted average exchange rates at which Nestlé reported its figures last year were 0.89 to the dollar and 1.23 to the euro. The dollar now is less than 5 per cent stronger, and the euro about 2 per cent weaker. So Nestlé’s future performance appears set to be similar to last year.
That leaves Nestlé with less in the bank. Cash from operations last year fell one-fifth excluding the effect of disposals. Nestlé’s insistence on raising its dividend means its pay-out now represents 60 per cent of operating cash flow, twice the level of four years ago. If it wants to keep its net debt at 31 per cent of equity, any significant acquisitions in the future may have to be funded by equity. But tapping shareholders for cash is the last thing Nestlé will do given it also is furiously buying back shares.
So with meaningful acquisitions out of the question, Nestlé may quickly turn into an income stock. That is fine, but investors may find its share price – 17 times this year’s earnings – resembles one of its own chocolate bars, a bit more disappointing than the shiny wrapper makes it appear. |
LEX
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rffrydr
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rffrydr
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rffrydr
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| Posted: Mon Oct 10, 2011 7:28 pm Post subject: |
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"Externalities." No, this one belongs posted right here:
Erste Group: laundry list of doom
| Quote: | It is time for others to count the cost of Hungary’s decision to force its banks to bear the costs of ill-advised Swiss franc-denominated mortgages. The charge for provisions and write-offs at Austria’s Erste Group alone comes to €762m. Erste’s announcement bounced Raiffeisen, another Austrian bank with big Hungarian operations, into saying that it will take a hit of €100m plus “additional significant provisioning” charges, to be announced soon. In response, Erste and Raiffeisen suffered falls of 13 and 5.9 per cent respectively on Monday.
Erste wrapped its Hungarian writedowns into a broad profits warning that will push it to an expected loss of up to €800m this year; previous forecasts called for profits of between €850m and €950m. The rest of the adjustments came from a laundry list of doom that ranged from a €627m goodwill writedown on its Romanian operations to accounting changes, including a €10m hit for changes in its effective interest rate methodology. That appears thorough. Some losses, including the take-up of the Hungarian government’s offer to switch Swiss-denominated mortgages for forint ones at exchange rates that punish the banks, cannot yet be fully known. Erste provisioned for a 20 per cent take-up and a 25 per cent forex hit. Raiffeisen estimates a 30 per cent take-up. The Hungarian government thinks the take-up will be more like 10 per cent. |
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rffrydr
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rffrydr
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| Posted: Tue Sep 06, 2011 6:58 am Post subject: |
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Swiss have no deficit so no place to put their money other than europe. They say Geneva is a ghost town on weekends as they all go shopping (french chalets a prime item). Finance for EFSF? The old ECU resurrected?--or, just exacerbating the divide?
| Quote: | FRANKFURT (Dow Jones)–The Swiss National Bank has begun buying government debt directly on the market as part of ongoing efforts to bring the country’s soaring currency in check, German newspaper Frankfurter Allgemeine Zeitung reports Saturday, citing banking sources in Frankfurt.
The Swiss National Bank will also only acquire German and French bonds, which it deems the most secure and liquid within the currency block, when buying euro-zone debt, the FAZ further reports, based on source information.
The Swiss National Bank has recently said it is only intervening in the currency markets through swap operations, through which it temporarily acquires euros and dollars in exchange for Swiss francs, thus boosting the overall supply of francs in the market. |
You have to remember that Switzerland, though proud and distinct through the centuries, is not so much a country, but the historic powers of europe buffer zone--the space created by agreeing to what is NOT french, german or italian. To that extent this little piggybank can become useful.
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rffrydr
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| Posted: Tue Sep 06, 2011 5:12 am Post subject: |
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By everything that they hold holy I can't believe it took them so long to do this:
http://www.reuters.com/article/2011/09/06/us-markets-global-idUSTRE77L0AE20110906
I guess it's the fact that one of those values is the "free" market. I don't think any support here from Ben would help...now, japan, that's a different story.
This IS QEIII.
[edit] just read this and probably accounts for the footdragging:
| Quote: | | In other words the SNB’s move had been in the pipeline. The SNB has been down this road in the past back in October 1978 when a floor for DEM-CHF was introduced. But this ultimately had undesirable consequences as inflation skyrocketed, reaching over 7.0% in 1981. Not great for a central bank that is meant to be focused on price stability. |
BTW, it's not a "floor" if it's your own currency. They won't be "defending" anything. They'll be attacking.
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rffrydr
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HenryTo
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rffrydr
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| Posted: Thu Jul 14, 2011 9:59 pm Post subject: |
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Too much buying power: "Market" tries to get a grip on what the SNB can't....the real economy.
http://www.bloomberg.com/news/2011-07-13/swiss-exporters-mull-euro-wages-to-ease-brutal-impact-from-franc-s-gains.html
| Quote: | | Banks, including UBS AG (UBSN) and EFG International AG (EFGN), are also seeking to lower costs as the franc hurts profit margins. Lonza agreed with unions this month to increase weekly work hours for 2,700 employees by about two hours for 18 months. The Basel- based company forecast last month that the currency’s “massive strength” will reduce 2011 earnings by as much as 70 million francs ($84 million). |
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rffrydr
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| Posted: Mon Jun 13, 2011 11:22 pm Post subject: |
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What goes around is starting to come around:
US demands tax tolerance of foreign financial groups
By Gillian Tett
Published: June 13 2011 20:02 | Last updated: June 13 2011 20:02
| Quote: | This summer, the senior management of one of Asia’s largest financial groups is quietly mulling a potentially explosive question: could it organise some of its subsidiaries so that they could stop handling all US Treasury bonds?
Their motive has nothing to do with the outlook for the dollar. Nor does it reflect fears about the US debt ceiling (or the risk that the US will soon default if it fails to raise the legal limit on bond issuance).
Instead, what is worrying this particular Asian financial group is tax. In January 2013, the US will implement a new law called the Foreign Account Tax Compliance Act (Fatca), that forces all global financial companies to report details to the IRS, the US tax authority, of any clients linked to the US with more than $50,000 in an account. These rules, quietly passed by Congress last year, would partly put the responsibility on the bank or asset manager – not just the individual – to make this filing.
The IRS insists that these measures are simple for banks and asset managers to implement; they just need to perform an electronic “sweep” of their clients to track those with more than $50,000 in an account and obvious connections with the US, such as an address, Treasury officials argue.
“The US interest is to have reporting on accounts to stem the tide of offshore tax evasion,” says Manal Corwin, a senior official at the US Treasury, which hopes the measures could net billions of dollars of badly needed new revenues.
While this logic might sound sensible, the new rules leave some financial officials fuming in places such as Australia, Canada, Germany, Hong Kong and Singapore. Little wonder. Never mind the fact that implementing these measures is likely to be costly; in jurisdictions such as Singapore or Hong Kong, the IRS rules appear to contravene local privacy laws. After all, as Terry Campbell, head of Canada’s banking association, points out, the rules are essentially akin to “conscripting financial institutions around the world to be arms of US tax authorities”.
What has left some financiers doubly angry is that Congress introduced the law with little overseas consultation – but the IRS is now threatening heavy penalties for non-compliance.
More specifically, the IRS is threatening to impose a withholding tax of up to 30 per cent on sales of US assets by groups that it deems to be “non-compliant” – and the assets could include US shares or US Treasury bonds.
Hence the fact that some non-US asset managers and banking groups are debating whether they could simply ignore Fatca by creating subsidiaries that never touch US assets at all.
“This is complete madness for the US – America needs global investors to buy its bonds,” fumes one bank manager. “But not holding US assets might turn out to be the easiest thing for us to do.”
Whether anybody follows through on this threat remains doubtful. In practice, banks in places such as Canada, Australia and Germany say that it would probably be impossible for them to not handle US Treasuries or stocks. Some are consequently considering whether they should shun US citizens as clients instead.
But others now hope that the US government itself will backtrack: although individual banks are reluctant to take a public lead (for fear of attracting more IRS scrutiny), groups such as Credit Suisse, Barclays and TD Bank of Canada have been actively lobbying to shape the bill via trade groups and their governments.
Faced with this, Tim Geithner, US Treasury secretary, is trying to strike a conciliatory tone. Last week in Atlanta he told senior global bankers that the Treasury was “absolutely aware of the concerns” about Fatca and was trying to translate the law into “workable” rules. “My sense from talking to our tax people [is] there are things we can do that will achieve the objectives of the law without too much risk of unintended consequences or too much collateral damage.”
Mr Geithner’s problem is that he has no direct power to revoke the law; that lies with Congress. The last thing any American politician wants to do right now is to help non-US banks; at least not in the current populist climate.
That, in turn, leaves some non-American financiers fearful, not just about the specific details of Fatca, but also about the wider patterns it reveals about Washington policy-making. After all, they mutter, if Washington could produce Fatca – and then impose it in an imperial manner on businesses across the world – what other capricious surprises loom next?
“Right now my board is probably as concerned about political risk in America as Indonesia, from a business perspective – perhaps more so,” says the head of one large global bank. It is a complaint that American politicians ignore at their peril. |
Gillian Tett is the FT’s US managing editor.
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rffrydr
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| Posted: Thu Feb 24, 2011 1:49 pm Post subject: |
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Switzerland freezes Qaddafi's money....after Mubarak....and the trend is in. Autocrat model breaking down. Better action than the U.N. at this point. Mining/finance interests may be flexing their political power.
This country is on a new trajectory.
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rffrydr
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