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from MacroScope:

A reminder that all is not well in the euro zone

Bank of Portugal Governor Costa arrives to read a statement in Lisbon

A reminder that while the euro zone crisis may be in abeyance, it still has the ability to bite.

Portugal will blow 4.4 billion euros of the 6.4 billion euros left from Lisbon’s recently exited international bailout programme shoring up troubled lender Banco Espirito Santo which will be split into "bad" and "good" banks. Junior bondholders and shareholders will be heavily hit.

BES’s tale of woe is so specific that there is no obvious reason to think it will be replicated. But it is a reminder that bank stress tests later this year could throw up other nasties and more immediately the saga leaves Lisbon short of rescue funds should anything else blow up. The bond market is likely to react adversely. The 4.4 billion euros will come in the form of a state loan to a bank resolution fund which the government insists will be paid back.

Jean-Claude Juncker, the new European Commission President, will visit Athens for talks. The point at which Greece will ask its euro zone peers for some form of further debt relief is nearing amid signs of its economy finally pulling out of recession after six years.
EU officials have warned that Greece is slowing down on the reform front after the opposition, anti-bailout Syriza party won the country's EU election in May.

from Counterparties:

MORNING BID – The Beautiful Game, and Less Beautiful Markets

In two days the World Cup will open in Brazil, with the home country generally believed to be the favorite once again. There are others better placed to look at the odds for every country, though at least this year will avoid the spectacle of seeing thousands of Brazilians hang around after their team has been vanquished (the Brazilians tend to book hotels through the end, assuming they'll be there in the final - hence lots of them out all night in Berlin in 2006 when it was Italy and France going for the cup). For the short-term investing crowd, there's some reason to bet on the winner too - Goldman Sachs, in a report so detailed it makes us wonder about their obsessiveness with the game - points out that the winners tend to outperform in the stock market after the final.

"On average, the victor outperforms the global market by 3.5% in the first month – a meaningful amount, although the outperformance fades significantly after three months," they wrote in a 67-page bit on the World Cup and economics. "But sentiment can only take you so far, in markets at least – the winning nation doesn’t tend to hold on to its gains and, on average, sees its stock market underperform by around 4% on average over the year following the final." Host nations also tend to see outperformance too - about 2.7 percent for the month following, though, again, the glow of hosting a whole load of 1-0 matches tends to fade over time, leaving investors with other things on their minds, like fundamentals, and maybe all the debt the host took on to build a truckload of stadiums.

from MacroScope:

ECB – stick or twist?

 

The European Central Bank meets today with emerging market disorder high on its agenda.

It’s probably  too early to force a policy move – particularly since the next set of ECB economic and inflation forecasts are due in March – but it’s an unwelcome development at a time when inflation is already uncomfortably low, dropping further to just 0.7 percent in January, way below the ECB’s target of close to but below two percent.

from The Great Debate:

Democracy emerges in sub-Saharan Africa

The recent re-election of Zimbabwe’s 89-year old president Robert Mugabe, in office for 33 years, resembled a period not long ago when sham elections were the norm in sub-Saharan Africa. Peaceful transitions of power were almost unheard of.

Though the African Union disappointingly endorsed the elections as “honest and credible,” Zimbabwe’s electoral commission has now faced a spate of resignations and international condemnation over allegations of vote-rigging, intimidation and state media control.

from Global Investing:

The Sub-Saharan frontier: future generations

As growth in Sub-Saharan Africa is set to post a steady 5-6 percent per annum to 2017 according to IMF estimates,  investors will be taking notes on the region's growth story not least with the financial sector.

Growth projections have rebounded from forecasts of around a 3 percent rise in 2009 after falling commodity prices have hit one of the region's main revenue sources. Yet, according to the World Bank's recent Global Development Finance report, stronger commodities will firm growth prospects in the coming years. In recent weeks, commodities have dipped, dampening the outlook for some resource-rich countries, but as 76 percent of the region's population do not have access to a bank account, lenders are set to grow their presence in the region.

from Global Investing:

New frontiers to outpace emerging markets

Fund managers searching for yield are increasing exposure to frontier markets (FM) as a diversification from emerging markets (EM), as the latter have been offering negative relative returns since January, according to MSCI data.

Barings Asset Management  said on Monday it plans to launch a frontier markets fund in coming weeks, with a projected 70 percent exposure to frontier markets such as Nigeria, Saudi Arabia, the UAE, Sri Lanka and Ukraine.

from Global Investing:

Ratings more than a piece of paper for Africa

By Stephen Eisenhammer

Does a sovereign credit rating from a glass tower in London or New York impact life in the country being rated? Apparently in Africa it does.

According to research by the rating agency Fitch, sovereign credit ratings significantly boost foreign direct investment (FDI) to Africa.

from Reuters Soccer Blog:

Soccer Break Wednesday

SOCCER-FRIENDLY/Now the international period is over we can focus on domestic issues again, or can we?

Tuesday's matches provided plenty of drama, from the battles Spain and the Netherlands had to fight to get through tricky Euro 2012 qualifiers, to Ghana's lighting up of London, to Australia's World Cup revenge against Germany in a friendly.

from Reuters Soccer Blog:

Soccer Break Tuesday

SOCCER-FRIENDLY/Spring is here and love should be in the air, but instead all we're left with is bickering managers.

Fabio Capello and Jose Mourinho are no strangers to controversy, so it's no surprise to see them at it again, though the timing is odd. Mourinho still has it all to prove at Real Madrid over the next two months, while Capello has yet to truly inspire confidence in England fans.

from Reuters Soccer Blog:

Reuters World Cup 2010 podcast — quarter-finals (II)

Listen!

Join us for a look back at the extraordinary first two quarter-finals at the World Cup and a look forward to Germany v Argentina and Spain v Paraguay. Paul Radford, Felix Bate, Jon Bramley and Kevin Fylan argue over the merits of penalty goals in soccer and consider Ghana's desperate misfortune.

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