De Beers braced for turnover to halve De Beers, the world's biggest diamond miner, is planning for its turnover to halve this year, it emerged on Wednesday, in the latest sign of how the once-mighty group is struggling to cope with a downturn in an industry it no longer controls, the FT reported. With diamond prices tumbling by at least 30 per cent over the past year, De Beers has cut production at its mines by 40 per cent year-on-year and mothballed its flagship mines in Botswana. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54601/de-beers-braced-for-
| BoE, Fed weigh case for forcing banks to split their operations The Bank of England is examining whether Britain's biggest banks should formally separate their investment banking and retail banking operations, The Times reported, adding that the US Federal Reserve is understood to be considering the feasibility of splitting up giant banking institutions to try to limit the systemic risk posed by the collapse of another large bank. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54609/boe-fed-weigh-case-f
| Corporate fundamentals are historically awful The rally of the past month has been impressively broad, John Authers notes in his latest Short View column and video. More impressive still, it has been achieved in spite of a string of awful superlatives, According to Moody's, March saw the most global speculative-grade defaults in any month since the Great Depression. ThomsonReuters says the consensus of brokers' analysts now predicts that earnings fell for all 10 of the main industrial sectors covered by the S&P 500 index. And Standard & Poor's reckons the first quarter was the worst for US dividend payments since its records began in 1955. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54607/corporate-fundamenta
| 'Botched' forex heding leaves UK Foreign Office with £150m hole The Foreign Office is scrambling to plug a hole in its budget of up to £150m this year as the recent collapse in sterling threatens to cripple the spending power of its embassies, the FT reported. The budgetary troubles follow what the Conservatives have dubbed a "botched experiment" in currency hedging that has left the department facing higher overseas bills than expected. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54602/botched-forex-heding
| Bank of England creates two-tier market The Bank of England's attempts at lowering corporate borrowing costs as part of its quantitative easing plans have created a two-tier market, with bonds of those companies it has bought sharply outperforming the rest, the FT reported. The Bank has so far bought about £400m in sterling-denominated corporate bonds through its asset purchase programme, which is aimed at breathing new life into the economy. However, it has only bought top-quality investment grade debt, rather than bonds of weaker companies that could leave it with under-performing assets on its books. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54600/bank-of-england-crea
| Sharp casts doubt on Japan's export status Japan's future as a leading exporter was thrown into doubt on Wednesday as Sharp, one of the country's biggest manufacturers, warned it would have to shift core production offshore because of the cost of investment and the strength of the yen. Mikio Katayama, Sharp's president, said that in future "exports from Japan will not make sense even in the most advanced technological fields", the FT reported. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54606/sharp-casts-doubt-on
| New car prices undercut used models In one of the most striking signs yet of the conflicting pressures buffeting the automotive industry, some new cars are now selling more cheaply than used vehicles, the FT said. A shortage of good-quality used cars combined with aggressive discounts offered on many new ones by retailers and manufacturers now mean that some new cars can be had for as much as £1,000 less than used ones in good condition. Elsewhere, the woes of European carmakers were thrown into relief when Karmann, one of most famous names in the motor industry, filed for insolvency. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54604/new-car-prices-under
| Steep fall in number of new mobile subscribers The number of net new mobile phone subscribers in the world fell sharply in the fourth quarter of 2008 and the growth of mobile data revenues stalled for the first time, providing further evidence of the impact of the global economic downturn on the mobile telecoms sector, the FT reported. Figures compiled by Informa Telecoms & Media, a London-based telecoms industry consultancy, show that the total of new subscribers to a mobile phone service fell 15 per cent to 162m in the final quarter of 2008. Traditionally the fourth quarter is the year's strongest, but in 2008 it was the weakest. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54605/steep-fall-in-number
| Fleet-owners face bankruptcy threat from plunging shipping rates Global shipping rates are set to fall by 74 per cent this year as commodity demand continues to fall in Asia and the massive glut of vessels ordered during the boom years finally takes to the seas, the Telegraph reported. The expected collapse in rates, which could push dozens of shipowners close to bankruptcy, comes after a 92 per cent decline in the Baltic Dry Index (BDI) of shipping rates over the course of last year. The misery is expected to continue well into 2010, with a further 15 per cent drop in rates before any rebound brings relief to fleet-owners. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54599/fleet-owners-face-ba
| S&P rally goes unexploited by hedge funds Hedge funds failed to take advantage of the sharp rally in equities in March as their generally defensive stance meant the average fund across all investment strategies gained less than 2 per cent even as the benchmark S&P 500 index rallied by more than 8 per cent. Some hedge fund strategies completely missed the upside of the equity markets in what many analysts were describing as a bear market rally, the FT said. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54608/sp-rally-goes-unexpl
| Moody's downgrades Berkshire Hathaway Warren Buffett's Berkshire Hathaway lost its triple-A grade from Moody's Investors Service, the very ratings firm in which the billionaire holds a 20 per cent stake. The two-notch downgrade to Aa2, which follows Fitch Ratings' one-notch cut last month, comes as Berkshire seeks to rebound from its worst year since the "Sage of Omaha" took control of the former textiles maker in 1965. See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54603/moodys-downgrades-be
| Overnight markets: Mostly higher Asian shares were mostly higher on Thursday, helped by strong gains in Tokyo and the positive close on Wall Street overnight. Japanese markets rallied during morning trading, on track to snap a two-day losing streak, after the ruling Liberal Democratic Party said it would propose a Y15,400bn ($154bn) stimulus package that would include investments in ports, roads and alternative energy. The Nikkei was further boosted by an unexpected rise in machinery orders.
Asian markets (Thurs)
04:07 BST
Nikkei up 158.38 (1.8%) at 8,753.39
Topix up 12.61 (1.6%) at 827.87
Hang Seng up 271.41 (1.88%) at 14,745.28 US markets (Wed)
S&P500 up 9.61 (1.18%) at 825.16
DJIA up 47.55 (0.61%) at 7837.11
Nasdaq up 29.05 (1.86%) at 1590.66 European markets (Wed)
FTSE100 down 5.00 (-0.13%) at 3,925.52
Eurofirst 300 up 1.89 (0.25%) at 762.58 Currencies
04:15 BST
€/$ 1.3254 (1.3196)
$/¥ 99.77 (100.12 )
£/$ 1.4716 (1.4684) Commodities
04:05 BST
Brent Crude (ICE) up $0.55 at $52.1o
Light Crude (Nymex) up $0.48 at $49.86
100 Oz Gold (Comex) down $1.80 at $884.10
Copper (Comex) up 0.40 at 200.25 10-year government bond yields (%)
04:00 BST
US 2.87 (2.88)
UK 3.35 (3.23)
Germany 3.21 (3.23)
Japan 1.48 (1.44) Sources: FT, Bloomberg See this article online.
http://ftalphaville.ft.com/blog/2009/04/09/54598/overnight-markets-mo
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