Fannie
Mae, Freddie Mac Plunge After Court Ruling on Profit - (www.bloomberg.com) Fannie
Mae and Freddie Mac (FMCC) plunged in New York trading after investors including Bruce
Berkowitz’s
Fairholme Capital Management LLC lost a legal bid yesterday to force the
bailed-out companies to share profits with private shareholders. Fannie Mae
fell 29 percent to $1.92 at 11:10 a.m. Freddie Mac dropped 26 percent. Their preferred
shares, which drew investments from private-equity and hedge funds, also
tumbled, with one series plummeting 54 percent. The mortgage giants had surged
for more than two years on speculation that shareholder rights to the earnings could be
restored. The investors sued for breach of contract over allegedly promised
dividends and liquidation preferences, and what they called an illegal “taking”
under the U.S. Constitution. U.S. District Judge Royce Lamberth rejected their
claims, finding that the government is allowed under a 2012 amendment to the
companies’ bailout agreements to sweep “nearly all” profits from Fannie Mae and Freddie Mac to the U.S.
Treasury.
France
defies EU partners with 'no austerity' budget - (www.reuters.com) France laid
down the gauntlet to EU partners on Wednesday with a 2015 budget setting out
how it would bring its borrowing back to within EU limits two years later than
promised, a retreat it blamed on a fragile economy. Without specifically naming France,
German Chancellor Angela Merkel quickly stressed that rebuilding sound public
finances could not be taken lightly. The announcement from Paris came hours
after news that Italy too planned to ease the pace of painful
deficit reduction to try to counter another year of recession. "We have
taken the decision to adapt the pace of deficit reduction to the economic
situation of the country," French Finance Minister Michel Sapin told a
news conference.
Analysis
- Financial market storm brewing as 2014 winds down - (www.reuters.com) After
a year in which world markets have sailed effortlessly through wars, invasions
and geopolitical ferment, a storm of their own making may well be brewing. Investors
have mostly held their nerve as headlines lurched from a new 'Cold War' in
eastern Europe to conflict and Western intervention in the Middle East, the
threatened breakup of the United Kingdom and secessionist risks in Europe. More
prosaic 'shocks' - a weather-related first-quarter slump in the United States,
grinding deflationary angst in Europe and China's
spluttering, unnerving slowdown - have largely been shrugged off too. With the
exception of commodities,
the swollen sea of liquidity pumped out by central banks has
once again buoyed all boats. Ultra-safe U.S. and German government bonds
compete favourably with riskier Wall St, Shanghai or frontier stocks for
best performing
asset of the year so far.
Brazil
Market Rout Deepens as Rousseff Surges in Polls - (www.bloomberg.com) Brazilian stocks plunged
for a third day, pushing the benchmark gauge down 7.6 percent this week, and
the real sank to a five-year low as investors abandoned wagers that elections
will bring a new government into office capable of turning around the slumping
economy. Petroleo Brasileiro SA, the state-controlled oil company, and
government-run lender Banco do Brasil SA both tumbled to 12-week lows. The real
lost 1.4 percent to the weakest since December 2008 as HSBC Holdings Plc
predicted the currency may extend losses by year-end if there’s no policy
change after the vote. The first round is scheduled for Oct. 5. Investors who
bid up the prices of Brazilian stocks, bonds and the real earlier this year as polls
showed a surge in support for opposition candidates are reversing course after
the most recent surveys signaled President Dilma Rousseff is likely to win a
second four-year term. Under her watch, inflation has quickened beyond the
government’s target even as Brazil fell into a recession, while government
policies that limit the prices Petrobras can charge for fuel brought about four
consecutive quarters of falling profit.
Steve Wynn: I'm 'more scared' about US than
China - (www.cnbc.com) To
rephrase a purported Chinese proverb: Steve Wynn lives in interesting times. The
casino magnate behind Wynn Resorts makes most of his money in Macau, China, and he's worked closely with the Chinese
government for a dozen years. However, gambling revenue across Macau has softened as the government has
cracked down on what it calls illegal lending practices there, and as potential
new anti-smoking rules threaten to turn off gamblers. Now, new tensions are
rising on the heels of massive
protests
in Hong Kong by
residents who oppose Beijing's efforts to dictate the candidates they're
allowed to vote for.
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