Europe - Stocks (General News)

[winston]

Deutsche Bank profit down 64pc

Deutsche Bank, Germany's largest bank, said second-quarter profit fell 64 percent as 2.3 billion euros (HK$27.96 billion) in writedowns led to a second straight loss at its securities unit.

Net income declined to 649 million euros, or 1.27 euros a share, from 1.78 billion euros, or 3.60 euros, a year ago, the Frankfurt-based bank said on its website.

BLOOMBERG

[millionairemind]

UBS to Split Investment Bank From Wealth Management (Update2)

By Elena Logutenkova

Aug. 12 (Bloomberg) -- UBS AG, Switzerland's biggest bank, plans to separate its investment banking and wealth management units after a fourth straight quarterly loss caused by subprime- related writedowns.

http://www.bloomberg.com/apps/news?pid= ... refer=home

[learn2win]

Can the U.S. learn any lessons from Sweden's banking bailout?

By Carter Dougherty
Published: September 22, 2008

A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?

It does to Sweden, which was so far in the hole in 1992 - after years of imprudent regulation, shortsighted macroeconomic policy and the end of its property boom - that its banking system was, for all practical purposes, insolvent.

But unlike the United States, whose Treasury has made a proposal to deal with a similar situation, Sweden did not just bail out its financial institutions by having the government take over the bad debts. It also clawed its way back by pugnaciously extracting equity from bank shareholders before the state started writing checks.

That strategy kept banks on the hook while returning profits to taxpayers from the sale of distressed assets by granting warrants that turned the government into an owner. Even the chairman of Sweden's largest bank got a stern answer to the question of whether the state would really nationalize his bank: Yes, we will.

"If I go into a bank," Bo Lundgren, Sweden's finance minister at the time, said, "I'd rather get equity so that there is some upside for the taxpayer."
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The tumultuous events of the last few weeks have produced a lot of tight-lipped nods in Stockholm. And for all the differences between Sweden and the United States, Swedish officials say there are lessons to be learned from their own nightmare that Washington may be missing. Lundgren even made the rounds in New York in early September, explaining what the country did in the early 1990s.

A few American commentators have proposed that the U.S. government extract equity from banks as a price for the bailout they are likely to receive, as Sweden did. But it does not seem to be under serious consideration yet in the Bush administration or in Congress.

That's despite the fact that the U.S. government has already swapped its sovereign guarantee for equity in Fannie Mae and Freddie Mac, the mortgage finance institutions, and American International Group, the insurance giant.

Putting taxpayers on the hook without offering anything in return could be a mistake, said Urban Backstrom, a senior Swedish Finance Ministry official at the time. "The public will not support a plan," he said, "if you leave the former shareholders with anything."

The Swedish crisis had strikingly similar origins to the American one. Norway and Finland went through related experiences, and they also turned to a government bailout to escape the morass that bad policy had created.

Financial deregulation in the 1980s fed a frenzy of real estate lending by Swedish banks, which spent too little time worrying whether the value of collateral might evaporate in tougher times. Property prices exploded.

rest of article @ http://www.iht.com/articles/2008/09/22/ ... /krona.php

[winston]

European Equities Will Outperform U.S., JPMorgan Says
By Adam Haigh and Michael Patterson

Sept. 25 (Bloomberg) -- European stocks will outperform U.S. shares as the European Central Bank cuts interest rates and cheap valuations spur investors to pour money back into the region, according to JPMorgan Chase & Co.

The ECB and the Bank of England will ``throw in the towel'' and lower their respective benchmark lending rates by 0.75 percentage point and 1 percentage point by the end of 2009 as inflation cools, JPMorgan's London-based strategist Mislav Matejka wrote in a research note today. European stocks trade for 10.7 times profit, the cheapest level since 1990 and a 37 percent discount to U.S. shares, according to JPMorgan data.

Europe's Dow Jones Stoxx 600 Index has tumbled 29 percent over the past 18 months as investors pulled money from the region at a record pace, according to Matejka. The Standard & Poor's 500 Index, the benchmark for U.S. equities, has retreated 17 percent during the same period.

``European equities could start to perform better than their U.S. peers again,'' wrote Matejka, reversing his stance over the past 18 months that U.S. stocks were a better bet. ``Some of the tailwinds that U.S. stocks enjoyed so far will become supports for European companies, namely the onset of central bank easing.''

A rebound in European economic growth isn't necessary for the region's equities to outperform as long as currencies are weakening, bond yields are falling and valuations are cheap, Matejka wrote. During four of the last six periods since 1970 that European stocks outperformed the U.S., Europe's economy was weaker, he wrote.

[winston]

European stocks doing ok. HK & Shanghai has no effect on them so far.

Let's see whether the Amercicans will follow HK & Shanghai tonight ..

[LenaHuat]

Yesterday, the IMF Chief said that half of banks' losses are unknown, more so in European banks than US.
Wow, he gave an inkling abt the 2day's bloodshed in Europe's bourses.

[iam802]

I bet RBS will be selling more things....

They are a goner.
====

Royal Bank of Scotland Group PLC (RBS) said Friday that it has agreed to sell part of its asset management business to Aberdeen Asset Management PLC (ADN.LN) for GBP84.7 million, marking the latest step in a restructuring plan launched last year after RBS was bailed out by the U.K. government.

http://online.wsj.com/article/BT-CO-201 ... theadlines

[winston]

This Is One of the World's Most Dangerous Stock Markets
By Tom Dyson, editor, S&A Penny Trends

There's trouble heading toward Europe...

I monitor a list of 87 exchange-traded funds (ETFs). As part of my Penny Trends service, I calculate the three-month performance for each ETF and rank the list by performance each week. This list immediately tells me where the big trends in the world are... both the strongest and the weakest.

The ETFs for Ireland and Austria are at the bottom of our list. Then, there's Italy, Spain, and Switzerland. They're all in the bottom 20. There's no ETF for Greece, but the Greek stock exchange is plummeting, down over 25% since October...

Could the European Union be about to break up?

Last week, I told you it's time to get on board the dollar trend. Here's what I wrote:

The U.S. dollar... has been falling for months. It's been among the dregs of my ETF list all year... never moving far from the bottom. The U.S. dollar bottomed at Thanksgiving and has exploded higher. The PowerShares Dollar Index Bullish ETF (UUP) is currently breaking out to new three-month highs.

In the currency world, the euro is the dollar's most important competitor. When the euro rises, the dollar falls. And when the dollar falls, the euro rises. While there are other important currencies, like the yen and the pound, professional traders mark the dollar against the euro.

The euro is six spots from the bottom of our list, and it's been plummeting for a month. The Christmas and New Year holidays gave it a respite, but the trend is still very much down. We're expecting the bloodbath in the euro to continue.

So if you want to bet against the euro, the trend is in your favor. Another way to bet against the European Union would be to bet against the stock markets there. If things get truly bad in Europe, its stock markets will get clobbered. And as I just showed you, some European countries are displaying price weakness...

One way to play a potential decline in European stocks is with the ProShares UltraShort Europe ETF (EPV). This fund soars when European stocks fall. Here's the 12-month chart of this fund:

I wouldn't buy EPV right now. Yes, we're seeing some weakness in selected European stock markets. But Europe's three most important stock markets – London, Frankfurt, and Paris – are still near their yearly highs.

I'd like to see a little more price weakness... a little more confirmation from the market that this idea is valid. As you can see, the market is saying "not yet." EPV is still in a downtrend.

I recommend keeping an eye on this trade. If EPV reverses its bear trend and breaks out to new highs, it could be a great way to profit from a serious "Euro" problem.


http://www.growthstockwire.com/

[winston]

Over in Europe an initial resolution of the Greek debt crisis finally brought some calm. European big-cap stocks rose by a fraction. As you can see in the chart above, the European market looks a lot like China did a month ago - slipping under its 200-day average for a test. Bulls will certainly try to make sure that European stocks pass the test, but when you look at individual countries' exchanges it's not as neat a picture.

The iShares MSCI Germany Index Fund (ETF)(NYSE: EWG) and iShares MSCI France Index (ETF) (NYSE: EWQ) are already trading well under their 200-day averages and finished in the red Thursday. And the iShares MSCI Spain Index (ETF)(NYSE: EWP) is a mess.

I always look for direction in Europe at Belgium and Austria because their economies are low on heavy industry and big on trade and finance. The iShares MSCI Austria Investable Mkt (ETF) (NYSE: EWO) is just now slipping into the abyss, while the iShares MSCI Belgium Investable Mkt (ETF) (NYSE: EWK) is hanging onto its bull market by its fingernails, mostly fueled by its famous and most delicious cherry-flavored beers.

I think that the message of the markets is that the so-called solution that has been reached between the European Union and Greece is tenuous at best. All that the EU has done is provided some short-term liquidity - not even close to a promise of long-term solvency.

I heard from my sources in the bond world that the trade higher was mostly just desultory short covering and that the credit bears are most certainly getting ready to rest and reload for their next raid on European credits. If successful - and let's face it, who's going to stop them - that would be euro negative and dollar positive, which in our topsy-turvy world is also U.S. equity negative. I'm really going to have to develop a secret decoder ring for these relationships and market it as an Apple Inc. (NASDAQ: AAPL) iPhone app.

The bottom line is that the developments continue to add to my confidence that a breakdown lies ahead. With world markets rolling over, the credit bears on the loose in Europe, and U.S. financial institutions likeBank of America Corp. (NYSE: BAC) andMorgan Stanley(NYSE: MS) not participating in global rallies, it is becoming ever more clear that the path of least resistance is down.

This is really strange considering our current condition of low interest rates, rising corporate earnings and super-low interest rates, so maybe stocks - which is to say the global subconscious - knows something that is not apparent on the surface.

Source: Money Morning

[winston]

Europe equity funds had an 11th week of outflows on concern about Greece’s ability to meet its borrowing requirements, EPFR said.

Moody’s Investors Service yesterday lowered its rating on Greek debt by one notch to A3 and the European Union revised the country’s budget deficit higher to 14 percent of gross domestic product last year.

Source: Bloomberg