Temporary relief for Cyprus, eyes now on Italy

The Cypriot financial crisis is solved for now, but attention will now turn to the euro zone's other flashpoints, says Olivetree Securities' Simon Maughan. Italy is next on the list.

SHOWS:

1. SIMON MAUGHAN, GLOBAL FINANCIAL STRATEGIST AT OLIVETREE SECURITIES, SAYING:

'Cyprus has received temporary relief and how temporary that proves to be will depend on a couple of things - first of all, how effective capital controls are in keeping money within Cyprus; and secondly, whether the Cypriot economy can actually function with capital controls. But for now, it's happy days and bank shares are on the way up. 
(QUESTION: If there is a risk of contagion to the European banking system, where is next in the firing line?)
Well Cyprus of course, although there's a temporary resolution there, solves nothing for the rest of Europe. The biggest problem is there's an absence of growth, there's ongoing austerity and there's no real prospect of growth picking up. The immediate attention now focused to Italy which is still functioning or not functioning depending on how you want to look at it without a government and whether we can get any kind of answers there. But we still have a very large amount of private credit to GDP in a number of European nations significantly more so than in the US. And that kind of issue is nowhere near resolved. 
(QUESTION: Moody's this morning issued a note on the French banking system, kept them on negative watch and said big risk from recession and banks' reliance on wholesale funding. How big a problem is France and when will it be a problem for us?)
Well France is the mother lode of all problems for the EU because even if there are ways and means in place to provide liquidity to Spain and Italy and that is highly doubtful, there is absolutely no way that the EU would be able to deal with the French banking system. But the dominos are lined up and they're named in pretty reasonable and well-known order. Spain, Italy and then France. So we've probably got to deal with another crisis in Spain and another pre-crisis in Italy before we deal with the big problem which is France.'


http://www.4-traders.com/news/Temporary-relief-for-Cyprus-eyes-now-on-Italy-Analyst--16580155/

Apple Seen Raising Dividend More Than 50% to $16 Billion

Apple will probably lift its quarterly dividend 56 percent to $4.14 a share, for an annual payout of $15.7 billion, according to the average estimate from six analysts. The resulting yield of 3.7 percent would be higher than 86 percent of the companies in the Standard & Poor’s 500 Index paying dividends. Apple could fund a payout with existing cash flow without using profit from overseas, which can be subject to extra taxes, said Gene Munster, an analyst at Piper Jaffray Cos.

Chief Executive Officer Tim Cook, who a year ago this month reinstated a dividend and announced a $10 billion buyback, faces mounting pressure to take bolder steps to pay out more of Apple’s $137.1 billion in cash and investments. Investors including David Einhorn’s Greenlight Capital Inc. are pushing formore money as growth slows and competition from rivals such as Samsung Electronics Co. (005930) intensifies.

“The accumulation of cash has become excessive,” Brian White, an analyst at New York-based Topeka Capital Markets Inc., said in an interview. He rates the shares a buy, with an $888 price target. “It doesn’t matter which bearish scenario you forecast, they’re never going to need this much cash.”

http://www.bloomberg.com/news/2013-03-18/apple-seen-raising-dividend-more-than-50-to-16-billion.html

China steel sector facing closures, big miners to suffer

China's bloated steel sector is facing a wave of closures in the next few years, with slowing demand and decades of "blind" expansion finally about to catch up with the industry, a senior executive and parliamentary delegate said.

Zhang Wuzong, the chairman of the privately-owned Shandong Shiheng Special Steel Group and a forty-year veteran of the industry, told Reuters in an interview that China's problems would also scupper the huge expansion plans of suppliers like Rio Tinto (>> Rio Tinto Limited) (>> Rio Tinto plc) and BHP Billiton (>> BHP Billiton Limited) (>> BHP Billiton plc), which have bet their future on sustained demand growth in China.

No steel firm will be immune, with the future of even state-owned firms like the loss-making Angang Group <ASISG.UL> (>> Angang Steel Company Limited) at risk, he added.

"The Chinese market is now oversupplied," he said. "The government knows it and we know it. 'Survival of the fittest' is the only way to solve the problems."

"It will take time but I believe a lot of the backward private enterprises will be closed. I also believe there will be some state-owned enterprises that will be eliminated too, including some of the big ones. This is a certainty."

China has at least 900 million tonnes of crude steel production capacity, far higher than its official total output of 716 million tonnes in 2012. Profits in the sector fell 98 percent last year with many firms making losses.

http://www.4-traders.com/RIO-TINTO-LIMITED-6492854/news/Bloated-China-steel-sector-facing-closures-big-miners-to-suffer-16514419/

Drastic monetary easing Japan

The promise of “drastic monetary easing” from Haruhiko Kuroda, expected to be confirmed in the top role at the Bank of Japan (BOJ) within weeks, raised concerns over the impact on trade.

Mr Kuroda said he would set no limits on the amount of money the Bank pumps into the economy, warning its current policies were not enough to lift inflation to the 2pc target.

Japan, the world’s third-largest economy, has been struggling with deflation for nearly two decades, with falling prices encouraging consumers to delay purchases in the hope of paying less later – entrenching the downwards economic spiral.

http://www.telegraph.co.uk/finance/economics/9907896/Japan-pledge-for-bold-action-sparks-currency-war-fears.html

Australia Expands at Fastest Pace Since 2007

Australia’s economy expanded in 2012 at the fastest pace in five years as resource investment and exports outweighed subdued manufacturing and construction.

Gross domestic product grew 3.6 percent last year, the best performance since a 4.7 percent expansion in 2007, data from the Australian Bureau of Statistics compiled by Bloomberg showed.

http://www.bloomberg.com/news/2013-03-06/australia-s-economy-expanded-0-6-last-quarter-led-by-exports.html