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Germany in 'party mood' Business confidence in Germany has registered its biggest gain since reunification in 1990. The closely-watched Ifo index released today jumped to 106.2 from 101.8 in June in Europe's biggest economy.
"The German economy is in a party mood," the Ifo statement said. "In manufacturing the business climate has brightened strongly. The business situation of the manufacturing firms has clearly improved. Moreover, the survey participants are now more optimistic with regard to the six-month business outlook ... Also in wholesaling, retailing and construction the business climate has brightened. An increasing number of wholesalers and retailers have assessed the current business situation as good. The business expectations of the survey participants for the coming six months are now more positive in both distribution sectors. The survey participants in construction have appraised the business situation considerably more favourably than in the previous month."
Germany has been rebounding from the global recession and its unemployment rate is falling. Chancellor Angela Merkel has heralded the recovery as "really robust."
Most European banks pass stress tests All but a handful of Europe's banks have passed the widely-watched stress tests conducted by regulators amid mounting fears over the continent's debt crisis and health of the financial sector. According to the tests of 91 banks released after European markets closed, five of Spain's banks, one German bank and one Greek institution failed, meaning they would need to boost their capital strength. The banks that failed need to raise just €3.5-billion, according to the Committee of European Banking Supervisors. Among them is Hypo Real Estate Holding AG, which was taken over by the government. That had been largely expected.
European authorities hailed the results as proof of a strong financial sector. Many observers, though not all, were skeptical. Some comments:
- "Arguably the failure here is not the banks concerned but the test itself. There is little evidence that the tests have been applied consistently and there is a distinct lack of credibility, making this a wasted opportunity." Richard Cranfield, chairman of the global corporate group at Allen & Overy, to The FInancial Times
- "The stress tests do not seem that stressful and it is looking more like a political whitewash rather than a genuine attempt to reassure financial markets that euro zone banks have balance sheets that could really withstand sovereign risk shocks. They are delaying the day of reckoning." Neil MacKinnon, global macro strategist at VTB Capital, to The Associated Press
- "It's a huge non-event, it's like the Y2K of banking. The broad expectation was it wouldn't be transparent and it wouldn't be stringent and that's exactly what we had delivered." Brian Yelvington, head of fixed-income strategy at broker-dealer Knight Libertas LLC in Greenwich, Conn., to Bloomberg News
- "This outcome was pretty much in line with expectations and the Committee of European Banking Supervisors appears to have delivered reasonably rigorous methodology in an attempt to instill confidence. What can be said is that today's stress test release does not appear to have uncovered any skeletons in the closet'. Whether it goes far enough remains to be seen." Chris Turner, ING, to Agence France Presse
- "Overall, the results were largely as expected, perhaps a couple of more banks were expected to fail the tests. "On the surface, only seven failing banks needing a mere €3.5-billion in capital is definitely good news. With such a small amount of capital necessary, according to these scenarios, worries were overblown. Europe's banking system is healthy barring an extreme negative shock. However, many market participants won't be satisfied with the difficulty of the stress scenarios. The lack of sovereign default and keeping bank books from sovereign losses are decisions which will be scrutinized (and rightly so), as they no doubt limit potential losses. The results bring some relief but won't be enough to eliminate worries about Europe's banking system." BMO Nesbitt Burns economist Benjamin Reitzes
Federal deficit down in first two months It's only two months into its fiscal year, but the federal government is on track, at this point, to beat its projected budget deficit of $49.2-billion. It's longer term where the pressure lies, analysts say. Revenues in April and May rose on a higher tax take while spending fell, largely on lower transfer payments, the Finance Department said today. Debt charges also declined. All in all, the deficit in the first two months came in at $4.4-billion, compared to $7.5-billion in the same period of last year.
|K-T Kinross Gold||4.50||
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|CLS-T Celestica Inc.||11.51||
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|F-N Ford Motor||15.84||
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