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loyallogic · 5 years

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3 Myths Busted about Corporate Law

This article is written by Suman Chatterjee, Team LawSikho.

Do you know ONE area of law that attracts the fancy of most law students, especially the ones who chant “M&A” day and night?

It’s deal-structuring—especially mergers and acquisitions, financing and investments—where millions of dollars change hands every day.

This smokin’ legal niche gets written about in the books, shown in the movies and occupies the innocent imagination of thousands of starry-eyed young lawyers in India.

Big fancy offices with glass windows.

Armani suits and Bonobos pants.

A sleek combed hairstyle, with a hint of dashing attitude.

Corporate law is all about power and style.

Or, so they think.

We don’t mind if you idolize Mr Specter from the ‘Suits’ BUT…

What we have seen in many LawSikho students and other legal aspirants is that while striving to connect with those lofty perceptions being propagated in the books, movies or elsewhere, they develop unreal expectations about the corporate law world, especially the deal-making niche.

Where the legend starts becoming the truth.

And we at LawSikho do not condone that. We believe in reality and REALITY alone.

So, in this article, we are going to bust the most common myths that revolve around M&A.

Myth #1. M&A transactions happen only in BIG organizations

I would daresay that this originates because of how corporate law is projected to be…in movies, books or TV.

Yes, if we are speaking about mergers and acquisitions, they get featured because of mammoth-sized deals and the popularity of the companies involved.

The $180 billion Vodafone-Mannesmann acquisition or the infamous Reliance-BP deal comes to my mind.

But wait! Even startups need to raise loans, right?

Transactions between mid-cap companies do happen often.

Pre-transaction due diligence, for both big and small companies, is a staple job for corporate lawyers.

Startups and small businesses still need a corporate lawyer to draft a shareholders agreement, manage private placements or even get acquihired.

Corporate law is what you do, and not where you do it.

Myth #2. Corporate law is high-level legal “stuff”. Not for newbies

I have interacted and advised hundreds of law students and even advocates, and most of them concur on one thing:

M&A is not for new entrants into the legal field.

This cannot be farther than the truth.

The thing is, these students and lawyers are imprinted with what they come across in the media. How can they tackle a Rs 950 crore worth takeover deal right out of law school, right?

But corporate law is not just about mergers and acquisitions.

The corporate transactional practice is also about drafting LoI and shareholders agreements.

It is also about dealing with regulatory authorities like Competition Commission, RBI, SEBI and MCA.

It is also about strategizing how income can be repatriated back to a foreign investor.

It is also about creating encumbrance on Indian assets to procure External Commercial Borrowings (ECBs).

It is also about dispute resolution in joint ventures and managing exit mechanisms.

Remember, corporate law spans from M&A to institutional finance to investment laws.

And you don’t need to waste 5 years under a senior lawyer to learn the tricks of the trade and manage the majority of the day-to-day tasks of a corporate lawyer.

Click Above

In fact, if you join a course like LawSikho’s Diploma in M&A, Institutional Finance and Investment Laws, it might take merely 12 months to acquire hands-on practical knowledge and expertise, commensurate with that of 1-2 years of real-world corporate law experience.

On to number three then…

Myth #3. Corporate law is being able to digest all sections of the law. Thoroughly

Whoa! Stop right there.

Most students think that to become a corporate lawyer, all you need to learn are the “corporate-related laws” – Companies Act, Insolvency and Bankruptcy Code, Foreign Exchange Management Act, Competition Act, SEBI Act, and so on.

Unfortunately, it’s not so.

The first thing that you need to learn is how a business works in the real world. Having a strong grasp over accounts and finance is often not a luxury but a necessity for corporate lawyers. Try drafting a post-money cap table in a shareholders agreement with convertible instruments and you will get the point.

Being able to express oneself clearly, concisely and persuasively matters a lot. You are going to have to draft a LOT of agreements and orally negotiate a LOT of deals on a daily basis. Prepare beforehand.

Networking and presentation skills might come in handy since, at the highest level, the corporate world relates strongly with the famous quote by Gordon Gekko: “If you’re not inside, you’re outside.”

Once you got these right, the rest will fall into place. (If you join our course, we will make sure of that.)

To become a successful corporate or M&A lawyer, you need to first understand what they actually do.

As per the Chambers Associate practice guide, the primary responsibilities of a corporate lawyer is as follows:

Identify your client’s commercial goals.

Figure out the legal questions around a transaction.

Conduct legal due-diligence on both sides.

Advise and partake in negotiating deals.

Fathom the tax implications of a particular deal structure.

Ensure compliance with governmental and third-party regulations.

Overcome anti-trust issues with the governing bodies.

Draft the contracts and agreements.

It can be directing and supervising an M&A deal.

It can be deciding the investors’ exit rights and their enforceability.

It can also be about facilitating inter-corporate loans. Many companies struggle to structure intra-group transactions in a way which works beneficially for them in terms of taxation and compliance.

If you are still interested in corporate law, especially M&A laws, institutional finance and investment laws, we have something special for you.

We bring to you our Diploma course in M&A, Institutional Finance and Investment Laws, whereby you will learn:

Are mergers and acquisitions really the only two kinds of transactions that happen in the M&A world? Or is it much broader than that?

How does a startup go about scaling up and securing that much craved first round of funding?

What is the right way to secure FDI in an eCommerce company, especially if it is a cross border one like the Walmart-Flipkart deal?

How to deal with promoter earnouts, promoter exits and non-compete fees in corporate acquisitions?

What is the best way to structure an international deal with tax havens and special purpose vehicles (SPVs)?

What are the important sections of a Due Diligence Report? What is the role of assumptions? How best to suggest action points?

And much more.

With 24/7 online access to course study materials, regular assignments, personal feedback, live classes and doubt clearing sessions, job mentoring and place assistance…

Our course will handhold you through the real-life, practical aspect of M&A, Institutional Finance and Investment Laws, and make you ready to start your corporate law practice once you get the certificate in your hand.

Want to build a career in corporate law? Read the course details here.

(NOTE: Enrolment closes in next 3 days.)

Still thinking?

Wondering how we can bring the industry’s best practices to you?

Why not come and see the LawSikho team live in action?

Come and join our special M&A workshop to be held at the Powai campus of MNLU, on 14th and 15th March 2020 from 10:00 A.M. onwards.

This 2-day workshop is being held in collaboration with Maharashtra National Law University and International Chamber of Commerce – International Court of Arbitration.

Experience the amazing interactions and insights from the experts.

See the LawSikho team in action.

Have a taste of how our courses may feel like.

It’s a once-in-a-blue-moon chance to be in the midst of many law students, lawyers, in-house counsel, M&A experts, and of course, the LawSikho founders.

Don’t miss it!!

To register, all you need to do is send us an email to the following event supervisor:

Komal Shah, Co-Founder and Content Head, LawSikho

Email: [email protected]

So, what are you waiting for?

Comment below right now and register your seat for this exclusive workshop.

We will be waiting for you.

P. S. All our premium courses are covered by a 30-days full money-back guarantee. Don’t hesitate and try our courses 100% risk-free!

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

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opedguy · 5 years

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Wall Street tumbles On Coronavirus Fears

LOS ANGELES (OnlineColumnit.com), Feb. 24, 2020.--Wall Street found the latest excuse to take profits, dropping the Dow Jones Industrial Average 950 points by midday, clearly reflecting underlying fears of a slowdown or possible recession. But while ordinary investors panic, savvy traders used the latest excuse to rein-in profits, as U.S. and global equity share prices were not sustainable. Sell-offs like today provide buying opportunities for tomorrow, unless investors believe sell-offs will accelerate, giving mutual, hedge and private equity funds more buying opportunities. International Monetary Fund [IMF] Chief Economist Gita Gopinath said markets were jittery over the spread of the coronavirus [Covid 19] but thought, sometime in April, she’d see a V-shaped curve, meaning investors would snap-back shares and drive markets upward. Gopinath estimated that Covid-19 would shave off about 0.10% of global Gross Domestic Product [GDP].

Washington-based IMF and World Bank officials aren’t too concerned about global growth in 2020, other than the temporary blip that’s shaping today’s sell-off. Chinese President Xi Jinping admitted that coronavirus was a challenge to Chinese authorities but would eventually find containment. But taking Covid-19 aside, economic slowdowns in China and Europe is real, resulting Christine Legarde, now head of the European Central Bank [ECB] to slash interest rates. Today’s 10-year Treasury note plummeted to 1.370%, the lowest on record, driving the cost to real estate loans to record lows. National Assn. of Realtors [NAR] chief economist Lawrence Yun expects real estate prices to come down in 2020, stopping short of predicting a recession in the U.S. reality market. Global market sell-offs spark fears of recession, watching investors head for the exits.

Epidemics like Covid-19, emanating from Wuhan, China, impact the global economy where so much manufacturing and tourism runs through the world’s second largest economy. China has already reported 77,192 cases of cornnavirus with 2.592 confirmed deaths, now spreading to South and North Korea, now finding its way to Northern Italy with 229 cases and six deaths. World Health Organization [WHO] officials expressed concern over the lack of containment hitting a tipping point, with the epidemic spreading to pandemic proportions. With the world economy already in slowdown, watching Covid-19 infect parts of Northern Italy sent shockwaves into world economic markets. With about 5% of the S&P 500 linked to China, the Covid-19 has the potential to disrupt global supply chains. Wall Street analysts are trying to gauge the extent of potential damage to the global economy.

WHO officials tried to calm markets by saying Covid-19 has not morphed yet into a pandemic. “What we don’t understand yet in Covid-19 are the absolute transmission dynamics,” said Michael Ryan, WHO’s director of health emergencies. “Now is the time to prepare We are in a phase of preparedness for potential pandemic,” spooking markets, dropping the Dow 1,031.40 or 3.56%, the biggest one-day drop in two years. Whether the virus slows down soon is anyone’s guess. Judging by WHO officials’ statements, there’s no end or slowdown in sight, causing quakes in U.S., European and Asian financial markets. “There is no guarantee that this will die off in the summer,” said Chris Meekins, global stock analyst at Raymond James. “This could become a global pandemic,” raising more market fears. Gold Prices rocketed up to $1,661 an ounce, watching investors flee to precious metals.

Looking at the big picture, today’s fears could easily morph into buying opportunities, getting the V-shaped rapid turnaround in equities predicted by IMF economist Gita Gopinath. Watching markets today, investors weren’t sure to continue selling or start buying, not sure when to buy on dips. With U.S. markets over-bought, with price-to-earnings rations near record highs, Wall Street knew to take profits, driving down share prices. Talk of the Dow 30,000 has to wait for now, as investors stay on the sidelines to see if buying starts tomorrow or the next day. One thing’s for sure, today’s sell-off won’t last too long, as major funds reposition portfolios. With the S&P losing 111.86 points or 3.35% and Nasdaq Composite dropping 355.31 points or 3.71%, the sell-off war broad-based, hurting hospitality and transportation stocks most. Investors wait to see what happens next.

Sweeping over U.S., European and Asian markets, the coronavirus shows no signs of disappearing anytime soon. “This week and next week is going to be very crucial for determining how successful the world has been in containing the virus and implications of that,” Gopinath said. “There is a scenario where all the hit takes place in the first quarter and by April, like a V-shape, China is back to normal,” giving a hint that the market sell-off could go on for a while. Getting back to business-as-usual won’t be easy for China anytime soon, still recovering from U.S. sanctions and tariffs. Coronavirus cases spreading to Italy provides no reassurance to world markets, adding to fears of a global pandemic. “The epidemiology surrounding this is still unclear,” Gopinath said, reminding investors that the worst is yet to come. More market sell-offs could push the global economy into recession.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He’s editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

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airflashmls · 5 years

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bondevalue · 4 years

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Nomura, BDO, Sunac & Shimao Launch $ Bonds; Fitch Expects More Sovereign Downgrades

Markets are opening higher this morning despite a lack of any major news. The US was on holiday on Friday for Independence Day and US index futures are recovering Friday’s losses this morning and then some. July 3rd saw the record for daily cases globally but investors still find comfort from recent economic data that economies are picking up. Asian shares are at their four month peak as cheap liquidity and stimulus measures outweigh coronavirus fears. Asian dollar bond spreads were lower for the tenth straight week.

We have introduced new dates to our Bond Traders’ Masterclass in August. Sign up now.

New Bond Issues

• BDO Unibank $ 5.5yr @ T+235bp area

• Shinhan Financial $ 5.5yr Covid-19 bond @ T+145bp

• Nomura $ 5/10yr @ T+180/230bp area

• Sunac China $ 3NC2/5NC3 @ 7.30/7.85% area

• Shanghai International Port $ 5/10yr @ T+185/225bp area

• Shimao Group $ 10NC5 @ 5.1% area

• Modern Land (China) $ 2yr4m @ 12.75% area

New bond issues - 6-Jul-20

Rating Changes

Nissan Downgraded To ‘BBB-/A-3’ On Growing Impact Of COVID-19; Outlook Negative

Fitch Downgrades Rolls-Royce & Partners Finance IDR to ‘BBB-‘/Negative; Senior Secured Debt to ‘BBB’

Fitch Upgrades TAQA to ‘AA-‘; Outlook Stable

Fitch Upgrades Coca-Cola Icecek’s Long-Term Foreign-Currency IDR to ‘BBB-‘; Outlook Stable

Sunshine 100 Downgraded To ‘CCC-‘ On Uncertain Repayment Sources; Ratings Remain On CreditWatch Negative

GameStop Corp. Ratings Placed On CreditWatch Negative On Lower Exchange Participation and Potential Shareholder Activism

Moody’s places the B2 ratings of 4Finance on review for downgrade

Fitch Expects More Sovereign Downgrades to Come

In a video interview with CNBC last Friday, James McCormack, Fitch’s global head of sovereign ratings said that he expects the rating agency to downgrade more sovereigns in the near term on the back of the hit to the economies due to the pandemic. Of the 119 countries rated by Fitch Ratings, it has downgraded a record 33 sovereigns in the first half of this year and has placed the ratings of 40 sovereigns on a negative outlook, indicating further room for downgrades. McCormack explained that many governments have ramped up their spending to support their economies amid the pandemic, which is expected to deteriorate the governments’ financial position. “Our concern really is what happens after we get to the other side of the coronavirus crisis period,” he said. “I think that’s the focus that we have and that will really be the factor that determines where the ratings go.”

Peoples Bank of China Advises Distressed Corporates to Seek Out of Court Debt Restructuring

Nearly $51.1bn of bonds issued by Chinese corporates are due in the second half of this year. There are strong indicators that the default rates are likely to increase as businesses have taken a hit due to the ongoing pandemic. The growing concern of rising defaults have led the Chinese central bank, the People’s Bank of China to advise struggling issuers to seek an out of court settlement with bondholders to avoid default. The announcement comes just a week after the Chinese regulators including the China Securities and Regulatory Commission and National Development and Reforms Commissions, issued a new set of rules to enforce the investor’s protection just last week to reduce the uncertainties faced by bondholders in redeeming their money. “The encouragement of debt restructuring using market mechanisms may give companies more time to avoid outright defaults,” according to Jenny Huang, Director for China at Fitch Ratings. While restructuring via bond swaps and maturity extensions could shorten the time needed by issuers to manage their financial position, it does not guarantee repayment to bondholders. These efforts to restructure further distort the real picture of corporate defaults in China. China’s bond market currently ranks second in the world with a balance of 108tn yuan ($15.29tn) as per an announcement by the People’s Bank of China on Friday.

In related news, XinhuaNet reported a significant increase in foreign investors’ holdings of Chinese bonds. As of June end, the total amount of yuan denominated bonds owned by foreign investors rose to about 2.2tn yuan, an increase of 33.48% YoY and 3.93% MoM. Foreign investment has risen continuously for 19 months and is indicative of the strong investor appetite for the local Chinese bonds. However, most onshore government bonds bought by foreigners only include investment grade bonds.

Argentina Amends Proposed Debt Restructuring Once Again; YPF Proposes $1bn Swap Deal to Delay 2021 Bonds

As Argentina continues to reel under recession since the last two years, the Argentinian government is looking to restructure ~$65bn of bonds. The government announced an amendment to its proposed restructuring with a deadline of Aug 4 as it looks to engage with the bondholders. “The government has made a substantial improvement relative to the first offer introduced by mid-April,” said Ramiro Blazquez, head of research and strategy at BancTrust & Co. The proposals in the past have faced stiff resistance from investors on the fear of losing out. The fresh proposal, which is aimed at reducing creditor losses, increasing coupons and shortening bond maturities, looks at making capital payments in March 2025 and set semi-annual coupons. It also offers step-up coupons beginning at 0.125% next year taking the payment amount to 5% annually for some bonds. The offer also proposes a swap for existing dollar and euro bonds maturing between 2030-2046. The country’s sovereign bonds have traded stable since the announcement. The government is likely to present its new offer to the US Securities and Exchange Commission in the coming days. Meanwhile, AlJazeera reported that according to the Argentina Creditor Committee (ACC), a new counter offer by bondholders could provide the country a cash flow of $39bn over the next 8 years.

In an announcement on July 2, Argentina’s state-owned energy giant YPF proposed a swap to extend the maturity on its $1bn bond due March 2021. The proposal comes with a sweetener of cash payments and a new series of Negotiable Obligations with a final maturity in 2025. This would result in investors receiving a cash of $100 and the new series worth $950 for every $1000 face value of Class XLVII. The coupon for the new bonds rated CCC/RR4 by Fitch would be 8.5% with amortizing payments starting in 2022. The bonds of the company have been largely stable since Friday.

Term of the Day

Accrued Interest

Accrued interest for a bond refers to the interest or coupon that has accrued since the last coupon payment date but not yet paid. When a bond is traded between coupon payment dates, accrued interest is paid by the bond buyer to the bond seller. The final price paid by the buyer is called dirty price and is calculated by adding the accrued interest to the price of the bond (clean price). The reason buyers have to pay accrued interest is because they stand to receive the full coupon on the next payment date, even though they are only entitled to the coupon that has accrued since the date the bond was purchased.

Accrued interest is calculated as per follows:

AI = P x C/F x D/T

P: Par value of the bond C: Annual coupon stated as a decimal F: Coupon payment frequency. For a semi-annual payment bond, F = 2 D: Number of days since the last coupon payment T: Total number of days in the payment period. For a semi-annual payment bond, T = 180

It is possible for accrued interest to be negative, if a bond has an ex-coupon date (similar to ex-dividend date for stocks). If a bond is traded between the ex-coupon date and the next coupon date, accrued interest has to be paid by the bond seller to the bond buyer, resulting in a negative accrued interest. This is because the full coupon will be received by the seller even though they are entitled to the coupon from the previous coupon date till the transaction date only. In such cases, accrued interest is deducted from the clean price to calculate the dirty price of the bond.

Talking Heads

On the Challenges of Negative Interest Rates – Andrew Bailey, Bank of England (BoE) Governor

Andrew Bailey has written a letter to lenders warning them that negative rates were “one of the potential tools under active review” if the monetary policy committee decided that “more stimulus” was needed to hit the BoE’s 2% inflation target. A report said that Bailey held a meeting with heads of banks at the end of June where negative rates were discussed, and the governor said “every tool they have is on the table”. Bailey has previously said that negative rates were an option for the BoE, but that the issue was complex and taking borrowing costs below zero was not in any way imminent.

He added that many banks would need 12 months to change computer systems, update financial contracts designed for a world of positive interest rates and work out how to communicate with clients.

On Disinflation Hitting the Eurozone – Christine Lagarde, European Central Bank President

Lagarde said the euro zone faces about two years of downward pressure on prices but could see a turnaround after that because the coronavirus crisis will accelerate the transformation of the economy through greater digitization and automation, shorter supply chains, and greener industries.

“The transition to new economic models will be disruptive — they will probably be more disruptive in the first two years, obviously hitting employment and production — and then we can hope it improves productivity,” Lagarde said. “So the inflation dynamic will necessarily be impacted, probably with a disinflationary, deflationary aspect at first, and then an inflation dynamic.”

“I am determined to have the same debate with governors at the ECB to ensure that in all areas, climate risk and biodiversity is taken into account,” she said. “We won’t do it in one day, but we must question in every domain, stress test by stress test.”

On India’s Road to Recovery – Henry McKinnell, Moody’s Chairman

Henry McKinnell said the surge in Covid-19 cases in India meant that reviving Asia’s third-biggest economy would remain a “major challenge”. “The only tool we have right now [to fight coronavirus] is social distancing and that’s exceptionally hard to do in India,” said Mr McKinnell. Moody’s expects India’s economy to contract 3.1% in 2020. In June, Moody’s downgraded India to Baa3, the lowest grade investment rating.

Yet Mr McKinnell said that once India was able to control the spread of the disease, it was well placed to attract more manufacturers looking to diversify their supply chains from China in areas such as chemicals, pharmaceuticals, or electronics. “Everybody now is looking for alternative sources of supply…The opportunity in India is to move up the supply chain.”

On the Demise of the 60/40 Portfolio – Jan Loeys and Shiny Kundu, strategists at JP Morgan

JP Morgan is joining the list of Wall Street banks that are calling for the demise of the 60/40 portfolio in the coming years. “In the zero-yield world, which we think will be with us for years, bonds offer neither much return nor protection against equity falls,” said Jan Loeys and Shiny Kundu.

On UK’s Massive Debt Pile – former government advisers including Mats Persson, former adviser to Cameron, and Raoul Ruparel, a former adviser to May

The British government should be wary of the fact that its mammoth debt pile will always be so cheap or that inflation is dead, said six former government advisers. “The volatile history of interest rates should make us wary of thinking low real interest rates are here forever. The possibility of surprise inflation still exists,” they said. “In the 1970s, inflation peaked at over 25% in the UK, a level few had predicted only a few years earlier.” The advisers said reform of the UK’s tax system was essential, including a digital tax. “This should be prioritised regardless of concerns from partners such as the U.S. over a digital services tax,” they said.

On Canada’s Journey Ahead – Craig Wright, chief economist at Royal Bank of Canada

Canada should focus on boosting economic growth post the COVID-19 crisis, analysts say, even as concerns about its debt are growing, with Fitch downgrading the nation’s rating just over a week ago. “The only solution to these large deficits is growth, so we need a transition to a pro-growth agenda,” said Craig Wright. He added, “We have to make sure that government spending is calibrated to the economy of the future rather than the economy of the past.”

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chloe-jayde · 7 years

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Pound up as Britain coughs up, Bitcoin rockets

New Post has been published on https://worldwide-finance.net/news/commodities-futures-news/pound-up-as-britain-coughs-up-bitcoin-rockets

Pound up as Britain coughs up, Bitcoin rockets

By Marc Jones

LONDON (Reuters) – Signs of progress with U.S. tax cuts and Europe’s Brexit negotiations brought fresh highs for world stocks on Wednesday, while bitcoin topped $10,000 in a frenzy for cryptocurrencies.

Britain’s pound was also in focus, rising to $1.34 for the first time since October on reports that Britain has offered as much as 50 billion euros ($59.2 billion) — most of what the European Union wants — to settle a Brexit “divorce bill”.

Sterling’s strength did push London’s FTSE () into the red, but elsewhere the mood was almost exclusively upbeat, particularly in bank stocks after the soon-to-be head of the Federal Reserve said some regulations could be scaled back.

Germany’s , France’s , Milan and Madrid were all up between 0.6 and 1.3 percent and MSCI’s all-country world index () was at yet another record peak after all four major Wall Street indexes notched up new highs on Tuesday.

They were expected to be in consolidation mode when U.S. trading resumes. Revised Q3 GDP figures and inflation data will be vying for attention with the ongoing tug-of-war over Donald Trump’s tax cut plans. ()

“It seems to me markets are still trading on the theory that the glass is half full,” said fund manager Hermes’ chief economist Neil Williams.

Asian share markets had not quite as jubilant, checked by caution over the latest missile test by North Korea and concerns at recent softness in Chinese shares.

MSCI’s broadest index of Asia-Pacific shares outside Japan () barely budged from where it started the day, while China’s blue chip index () ended flat having slipped as much as 1 percent at one point. ()

Among the better performers, Japan’s Nikkei () added 0.5 percent, while Australia’s main index () rose 0.45 percent.

The prospects for a U.S. tax cut seemed to improve after Senate Republicans rammed forward their bill in a partisan committee vote that set up a full vote by the Senate as soon as Thursday, although details of the measure remained unsettled.

But Republican leaders conceded that they have yet to round up the votes needed for passage in the Senate, where they hold a narrow 52-48 majority.

Some analysts, however, did warn of the risks of unintended consequences if the package was passed.

“Tax cuts will mainly boost the demand side of the economy at a time when the economy has little spare capacity,” said Jeremy Lawson, chief economist at Standard Life (LON:) Investments.

“For that reason, the package will primarily bring forward activity with most of the stimulus eventually offset by the Federal Reserve lifting interest rates more quickly.”

Fed chair nominee Jerome Powell, in his Senate confirmation hearing on Tuesday, said the case for a December rate hike was coming together.

BUBBLY BITCOIN

Powell also hinted at a lighter touch for bank regulation, saying current rules were already tough enough.

The S&P financial sector () soared 2.6 percent in reaction, its biggest daily gain since March 1. That helped the Dow () climb 1.09 percent, while the S&P 500 () rose 0.99 percent and the Nasdaq () added 0.49 percent. ()

Adding to the bullish mood was data showing U.S. consumer confidence surged to a near 17-year high in November, while home prices rose sharply in September, which should underpin consumer spending.

Euro zone government bond yields edged higher meanwhile as the first instalments of German state inflation data pointed to another uptick for Europe’s largest economy, which should bolster the ECB’s move to wind down its stimulus. [GVD/EUR]

“In recent months we have seen core inflation dropping, and that has been identified by the ECB as a key measure,” said ING strategist Martin van Vliet.

It all helped the euro reassert its recent dominance over the dollar. The euro climbed as far as $1.1882 and against a basket of currencies the dollar at 93.241 () and not far off a two-month trough touched on Monday. [/FRX]

The dollar was stronger against the yen at 111.63 yen and away from a 10-week low of 110.85, while the pound’s jump on a trade-weighted basis was 1.4 percent, its best since April. [GBP/]

That paled in comparison to bitcoin which flew to $10,200 () on BitStamp, a major trading platform based in Luxembourg.

The latest surge brought its gains for the year so far to over 950 percent, leaving more than a few observers baffled.

“The market is very illogical. There’s no way to rationally value bitcoin as an asset,” said Thomas Glucksmann, head of marketing at Hong Kong exchange Gatecoin.

“There’s nothing that makes sense because there’s no fundamentals behind bitcoin. What people are buying into is the idea of how this technology can be used in the future.

Read More https://worldwide-finance.net/news/commodities-futures-news/pound-up-as-britain-coughs-up-bitcoin-rockets

#Bitcoin #Britain #coughs #Pound #Rockets

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jettadarkwynd · 7 years