Wall St. expected to open higher – Europe and Asia also up
With earnings continuing to please investors and more positive economic data due today, US equity futures suggest a higher start for Wall Street this morning. Coca-Cola and McDonalds will both release earnings reports while Apple’s data will be after the closing bell. US inflation figures are due at 8.30am EST while the stats on existing home sales are due at 10am EST. Both are expected to be positive. The return of black box data recorders by Russian separatists was enough to help European shares recover; Asian shares were also up following the lowering of the geopolitical risk in Ukraine. The EU is under pressure to ramp up sanctions against Russia and there may be news
on that after a meeting in Brussels later today. Analysts remain cautious about the situation though. Safe haven investments including gold and government bonds slipped back slightly as a result of a return of investment in stocks.
Senate criticizes hedge funds tax strategies
An investigation by the Senate has found that many hedge funds were using a complex system of structures to save tax amounting to billions of dollars. One fund alone, Renaissance Technologies, was able to save $6 billion using the structures known as ‘basket options’. The Senate subcommittee says that apart from the lower tax payments, these practices, which continued for more than a decade, bypassed economic safeguards. Read the full story.
Fund managers take a bite out of Apple
This evening Apple Inc. will report its results for its fiscal third quarter and is expected to show revenues up 7.5 per cent from the same period in 2013, to $38 billion. There is also a prediction that they will forecast an 8 per cent growth in the current quarter. The company’s shares are trading at 17 per cent higher this year, better than most, but fund managers are not as keen as they once were. Analysts point to the fact that the company seems to have lost its heat. Although there have been tweaks to the products, there’s not been anything really new since 2010’s iPad launch and in the phones market, there is stiff competition from the likes of Samsung and the expectation of what Microsoft may do with Nokia. Experts say that if Apple enter the ‘wearable tech’ market in a way that can rival Google and other players then it would help reignite interest in the company as a longer term investment. Read the full story.
S&P’s warning over European debt
Standard & Poor’s latest analysis of European corporate credit warns that the region could face economic crisis. S&P’s report says that consistently low interest rates fuels bad allocation of capital and encourages risks that are doing more harm than good. They say that companies are borrowing rather than making capital investments and that confidence and economic data in the bloc is still weak. Worryingly the report suggests that "The greater use of leverage and a growing number of aggressively structured transactions in the European leveraged finance market is reminiscent of some of the excesses of the 2006-2007 boom period." Read the full story.