Fed change?
Bernanke ready to go
Ben Bernanke, the chairman of US central bank the Federal Reserve, may be allowed to move on to pastures new according to President Barack Obama this week. Ahead of the Federal Open Market Committee’s regular two day meeting, at which discussion was expected over tapering the Fed’s massive bond buying programme, Mr Obama said Mr Bernanke had "already stayed a lot longer than he wanted or he was supposed to", in managing the Fed's response to the financial crisis. The prospect of tapering has spooked the markets in recent weeks with more clarity hoped for following the FOMC meeting.
See Fed Watch
Car crash
EU gloom
Car sales in Europe slumped to their lowest level for 20 years in May, down 5.9 per cent year on year. This reversed a brief rise in April following 18 months of shrinking sales. New car registrations in Europe are down 6.8 per cent on last year after five months with the latest figures showing a 9.9 per cent reversal in Germany and a 10.4 per cent fall recorded in France. Analysts from AlixPartners forecast no growth in the EU car market before the end of the decade. But the UK continues to be a rare bright spot after posting an 11 per cent rise in sales in May, its 15th consecutive month of rising sales.
Sony scrap
Loeb demands
US hedge fund manager Daniel Loeb has upped the pressure on Japanese technology giant Sony, where his Third Point fund has built up a 7 per cent position in the company - the largest single stake - worth $1.1bn. Ahead of a shareholder vote on Thursday, Mr Loeb has reiterated his offer for a representative to be put forward to serve on Sony's board. Third Point has built up its stake over recent months and become increasingly vocal in its calls for Sony to consider hiving off its entertainment business into a separate entity with investors given the chance to take a 15-20 per cent stake in it.
Airbus winning
Paris take off
The Paris Air Show took flight this week with European aerospace giant Airbus taking the lead in terms of orders won, as predicted by industry analysts. In keeping with a show on home soil, Airbus has been prominent with a high profile maiden test flight of its A350 wide body airliner to coincide with the opening of the show. On the first full day, Monday, Airbus announced firm orders worth £11.6bn compared with £3.9bn worth of orders for Boeing, with a further £5bn provisional order also announced. On Tuesday UK budget airline easyJet announced its own order with Airbus for 135 planes, with an option for a further 100.
Banking review
Jail proposed
The Parliamentary Commission on Banking Standards was finally published this week in all its 571-page glory. The report made a number of recommendations including creating a criminal offence for reckless misconduct in charge of a bank which could see senior bankers jailed in future, it also said splitting RBS, either into a good bank and bad bank or into a number of regional banks, should be given consideration. The report was welcomed by the government although it fell short of agreeing wholeheartedly with the proposal to jail bankers. Further direction on the government’s policy for the banking industry is expected in the chancellor’s Mansion House speech, which will be delivered after the Investors Chronicle goes to press.
Cyprus chill
Bailout fears
The odds on Cyprus becoming the first country to quit the eurozone shorted dramatically this week after the country’s president Nicos Anastasiades appealed to its fellow eurozone members for a revision to its bailout terms. President Anastasiades said in a letter to eurozone leaders that the country will struggle to meet the terms of its bailout due to the damage done to its economy and banking system by the economic straitjacket put in place during the bailout which has driven the country into ‘a deep recession’. Capital controls remain in place and, coupled with the restructure of two major banks, this has stifled the working capital available to businesses, exacerbating the downturn. The initial response from eurozone finance chiefs was not promising with one official quoted as saying "there is no chance" of a revision of the bailout terms.
