Here's my Top 10 links from around the Internet at 10 am. I welcome your suggestions in the comments below. 1. Fisher and Paykel Appliances has quietly put Fisher and Paykel Finance up for sale, David Hargreaves at BusinessDay reports.
It appears from information provided as part of the company's capital restructure yesterday that F&P Finance was put on the block after F&P Appliances' announcement in February that its debt had blown out to $570 million. However, there does not appear to have been any official announcement from the company, nor was there any overt reference to the proposed sale in the public announcements yesterday. In the prospectus document for its $189 million capital raising, F&P Appliances said that as "part of" the review of its capital structure announced in February it had "believed it prudent to re-examine its ownership of Finance and invited expressions of interest". "While a process is under way, the company is not currently relying on a successful divestment of Finance to meet debt repayments...," directors said. They went on to say they would not sell the finance arm "unless the company receives an offer consistent with the directors' view of value".
2. Fran O'Sullivan at the NZHerald reckons the government may be looking at much more substantial reform to widen the tax base and cut personal tax rates.
But English's most intriguing admission was that he had appointed former Treasury boss Graham Scott - and a panel of economists - to work on a new economic strategy. This is either a shocking admission that English doesn't know what to do next, or a signal that the National Government intends to bypass the Treasury and get serious about fundamental change. English was giving little away yesterday. He simply noted thatit was useful to be able to drawadvice from people (such as Scott)who have been through the cycles. In reality, English doesn't have an economic growth strategy in place.
3. Renowned columnist John Durie (former Chanticleer) at The Australian gives his verdict on ANZ CEO Mike Smith's push to expand into Asia.
ANZ's Mike Smith has slowly but surely established his credibility in spending as much as $1.9 billion on expanding into Asia, but the naysayers are waiting just around the corner. Stockbroking analysts are united in their opposition to the move, but they tend to come from the view that banks exist to milk their monopoly rents and send it back to shareholders. More fund managers are willing to give Smith the benefit of doubt. The fact that at least $900 million of the $2.8 billion to be raised will go to top up provisions satisfies one concern about the bank. That explains why ANZ's stock price, while falling yesterday, still closed a full dollar ahead of the $14.40 placement price.
5. The US bond market is desperate for a second round of bond buying by the US Federal Reserve after the massive selloff on Tuesday night, Tyler Durden points out. 6. The US Treasury market is on the verge of a "financial Krakatoa," says one observer, Across the Curve. Fix long now if you are a mortgage borrower and you believe this. HT Felix Salmon
Maybe the final climactic event is upon us. Maybe the final bubble to burst is the US Treasury market and maybe we are on the verge of a financial Krakatoa which will realign financial markets. Whatever the case it feels like the calm before the storm and we are about to embark on another interesting expedition.
7. John Authers at FT.com says the Fed should not try to fight the bond market.
There is an old market adage that you should not fight the Fed. The Federal Reserve has more bullets than anyone else. However, maybe the Fed itself needs an adage not to fight the bond market. The yields paid on US treasuries provide the "risk-free" rates that undergird the world's financial system. They are set by a ruthless and highly liquid market. The US masterplan for revival is clear: cut interest rates and buy mortgage-backed bonds and treasuries in enough volume to force down their yields. This makes houses more affordable, so their prices go up, and the banks' final losses from toxic mortgage bonds will be less. The problem is the Fed must buy a lot of bonds to achieve this and the Treasury market is disposed to pick a fight.
8. The Securency scandal is widening. The Age reports the money printing firm, which is half owned by the Reserve Bank of Australia and prints New Zealand's money, had recent dealings in Sudan, which has been blacklisted as a supporter of terrorism. 9. Here's what might happen to General Motors' Holden operation if GM enters Chapter 11 bankruptcy protection, according to Robert Gottliebsen in BusinessSpectator.
As I understand it, at the moment General Motors is cash positive in Australia but if its US parent collapses completely the Australian company would need to carve out an independent future.
Depending on what actually happened in the US, being independent would not be easy for Holden in Australia. Accordingly the longer term viability of GM Holden in Australia is the subject to what happens in the global General Motors arena. But the US Chapter 11 bankruptcy arrangement does not cover the Australian operation and is likely to be a short-term affair.
10. This is a stunning factoid. US mortgage delinquencies hit a record high of 9.12% of all mortgages in the first quarter, according to the US Mortgage Bankers Association.