Continental Europe grabs 2-point lead in Paris
By Mark Thompson @MarkThompsonCNN October 3, 2013: 8:27 AM ET Greek Prime Minister Antonis Samaras has stuck to the task of painful economic reforms. LONDON (CNNMoney) Investors are scouring Europe for ways to make money from its tentative recovery, and one U.S. firm thinks it has found the answer — buy Greek government bonds. Japonica Partners said it believed Greek debt was “massively undervalued” and should be rated several notches above the junk status assigned by the big credit rating agencies. Greece has been shut out of international bond markets since 2010, when its government borrowing spiraled out of control. It has been rescued twice by the European Union and International Monetary Fund and was forced to restructure its debt in March 2012, imposing losses of more than 100 billion euros on private bondholders. Related: Europe’s recovery is weak, warns ECB But hedge funds — such as Dan Loeb’s Third Point — and other niche investors who bought into Greek debt since the restructuring have made a killing. Yields on Greek 10-year debt in the secondary market have plunged from around 44% in March 2012 to 9%. Japonica’s statement was greeted with derision by some investors Thursday, but the firm that made its name restructuring bankrupt Allegheny International in the early 1990s believes it has spotted an opportunity others may have missed. It claims to have become one of the larger, if not the largest, holder of Greek government bonds, and has hired a former senior executive from Norway’s oil fund — one of the world’s biggest investors — to help manage the portfolio. Related: Investors embrace European stocks “Greece is one of history’s most extraordinary sovereign rejuvenations hidden in plain sight by pervasive systemic misperceptions,” Japonica said, adding it expected yields should break below 5% in 2014. It’s a bold prediction but Japonica may have a point. Greece’s headline economic data and social crisis remain as depressing as ever, and it may yet need another 10 billion euros in support. Still, the government is on track to deliver a primary budget surplus — stripping out the cost of servicing its massive debt this year — and hopes to return to the bond market in the first half of 2014.
Europe’s tentative recovery spreads south in September
Nino Randazzo/Health Care Service/AP Enlarge Rome A boat packed with African migrants headed to Europe caught fire, capsized, and sank Thursday off the tiny Italian island of Lampedusa , killing more than 90 people and leaving 250 missing, officials said. The Christian Science Monitor Weekly Digital Edition The tragedy was the latest in a series of maritime incidents involving Europe-bound migrants, tens of thousands of whom flee war-torn and poverty-stricken countries in Africa and Asia every year seeking European prosperity. The boat carrying an estimated 500 men, women, and children, mainly from Eritrea and Somalia, was traveling from the Libyan coast when the fire broke out at dawn near Lampedusa, an island just 86 miles from Tunisia . RECOMMENDED: Think you know Europe? Take our geography quiz. As the fire raged, terrified migrants rushed to one side of the 65 foot-long boat, causing it to capsize about half a nautical mile off the islands coast, officials said. The Italian coast guard rescued about 150 people but another 250 were still missing hours after the disaster happened, said Antonio Candela, a government health commissioner. Italian television showed recovered bodies lined up along the quayside of the islands tiny port. More than 90 bodies had been recovered by midday Thursday, according to Angelino Alfano, a deputy prime minister. “It’s horrific, like a cemetery. They are still bringing them out,” said Giusi Nicolini, Lampedusas mayor.
Nomura’s Matthews said they suggested a slightly stronger rate of growth for the final months of the year. STILL NOT ON SOLID GROUND Markit’s Eurozone Services PMI rose to 52.2 in September from August’s 50.7, little changed from a preliminary reading of 52.1. Readings above 50 signify growth. Businesses in No.1 economy Germany reported rising new orders and staffing levels, while France’s private sector grew for the first time in a year and a half. The upbeat mood was further bolstered by news that euro zone retail sales jumped 0.7 percent in August, month-on-month, hitting the top end of forecasts. Draghi said on Wednesday the euro zone economy still faced downside risks [ID:nL6N0HS2YP]. Chris Williamson, Markit’s chief economist, said the surveys pointed to slightly stronger growth towards the end of this year, even if the region was not out of the woods. “The political instability that has reared up in Italy is a reminder that there remains plenty of scope for recoveries to be derailed,” said Williamson. Italian Prime Minister Enrico Letta won a confidence vote in parliament on Wednesday after Silvio Berlusconi, facing revolt in his own party, backtracked on threats to bring down the government. The Italian services PMI topped the 50 growth threshold last month for the first time since May 2011, which could signal a timid recovery towards the end of the year. British business again showed the fastest pace of growth among Europe’s major economies last month. Although the Markit/CIPS UK Services PMI eased to 60.3 from August’s near seven-year high of 60.5, it still showed strong momentum in British business, helped by a recovery in the housing market. “Such strong confidence also suggests that the UK economy has enough momentum to end the year strongly,” said Christian Schulz, senior economist at Berenberg Bank. Financial markets were little changed on the data, taking their direction instead from the U.S.
Greek bonds: Europe’s hidden gem?
“It was a great experience for them, but the main thing is to win points and I think the team is really happy today.” Early Thursday, it appeared to be more of the same for GB&I, which has captured the Seve Trophy six straight times, which includes a 15 1/2 – 12 1/2 victory in the previous meeting. Jimenez gave his side the early lead when he birdied the first, but Gallacher matched the Spaniard’s birdie at the third, then crucially saved par at the fifth to remain 1-down. Lawrie helped square the match at the par-5 seventh when he hit driver to the green with his second shot from 257 yards out, setting up a winning birdie. Gallacher then gave his side the 1-up lead with a 20-foot birdie putt at the next, and a par at the 10th doubled the Scots’ advantage. Jimenez’s birdie at the 11th narrowed the margin to one, but Gallacher matched Bjorn’s chip-in birdie at the 14th with a make from 12 feet, and consecutive birdies at the 15th and 16th sealed the lone victory for GB&I. “It’s always nice to win,” said Lawrie. “Obviously there is a little bit more pressure when you are going out there first, you want to get a point on the board which we managed to do and we both combined very well today.” GB&I couldn’t sustain the early success, however. The last match to start was actually the second to finish, as Colsaerts and Fernandez-Castano breezed past Warren and Jamieson to earn Continental Europe’s first point. Colsaerts, a Ryder Cup standout at Medinah, and Fernandez-Castano never trailed after notching birdies at the first and third to go 2-up. They were 1- up through 10 after a GB&I birdie there, then closed with three birdies and an eagle over their final five holes to wrap up the convincing victory. Ilonen and Olesen were 2-up with three to play before both players found the water at the 16th. Fleetwood and Wood got one back there, but were unable to get any closer, as Ilonen and Olesen closed out the win with pars at Nos. 17 and 18. GB&I appeared poised to earn a point in the next match, as Casey and Khan took a 1-up lead into the final hole, but Molinari managed birdie at the last to halve the match, and Luiten and Bourdy closed out Continental Europe’s successful opening day with a 2 & 1 win over Donaldson and Lynn.