Oil Greece, creditors laboriously piece together debt deal

Oil Greece, creditors laboriously piece together debt deal ReutersReuters – 1 hour 26 minutes ago Companies: Thomson Reuters Corporation RELATED QUOTES Symbol Price Change TRI 27.82 -0.10 By Renee Maltezou and Lefteris Papadimas ATHENS (Reuters) - Greece and its private creditors head back to the negotiating table on Saturday to put together the final pieces of a long-awaited debt swap agreement needed to avert an unruly default. After weeks of muddling through round after round of inconclusive talks, the negotiations appear to be in their final phase, with both sides hoping to secure a preliminary deal before Monday's European Union summit. Prime Minister Lucas Papademos was expected to meet bankers' chief negotiator Charles Dallara at around 1330 GMT (8:30 a.m. EST) on Saturday, before meeting inspectors from the 'troika' of foreign lenders pressing Athens to step up painful reforms. 'Today will be another tough day,' said George Karatzaferis, leader of the far-right LAOS party, one of three parties in Papademos's emergency coalition government. 'We will see whether we can bear the burden that lies ahead.' The debt swap, in which private creditors are to take a 50 percent cut in the nominal value of their Greek bond holdings in exchange for cash and new bonds, is a prerequisite for the country to secure a 130-billion-euro rescue package. Papademos told Reuters in an interview on Friday he expected the debt talks to be concluded within days. 'We made significant progress over the last few weeks and in the last few days in particular. We are trying to conclude the discussions as quickly as possible. I am quite optimistic an agreement will be reached in the coming days,' he said. But concern has grown that the deal may not do enough to get the country's debt reduction plan back on track, and that Greece's European partners will be forced to stump up funds to cover the shortfall. The German news magazine Der Spiegel reported on Saturday that Greece's international lenders thought Athens would need 145 billion euros of public money from the euro zone for its second bailout rather than the planned 130 billion euros. The magazine said the extra money was needed because of the deteriorating economic situation in Greece, echoing a Reuters report on Thursday. Athens also faces problematic talks with the 'troika' of foreign lenders - the European Commission, IMF and European Central Bank - who have warned it needs to do more to drive through painful reforms before they dole out any more money. 'It's all very dense, difficult and crucial,' a Greek finance ministry official said. 'There is optimism because the country needs to survive and we need to protect its citizens because they have suffered a lot.' Athens and its creditors have broadly agreed that new bonds under the swap would probably have a 30-year maturity and a progressive interest rate. The deal is aimed at chopping 100 billion euros off Greece's crushing 350-billion-euro debt load. But they have wrangled for weeks over the interest rate Greece must pay on the new bonds and pressure has grown in recent days on the European Central Bank and other public creditors to accept a cut in the value of their Greek bond holdings like the private sector creditors. A debt deal must be sealed in about three weeks as Greece has to repay 14.5 billion euros of debt on March 20. Otherwise Greece will sink into an uncontrolled default that might spread turmoil across the euro zone. Papademos promised on Friday this would not happen. 'Greece will not default,' he said. International Monetary Fund Managing Director Christine Lagarde said on Saturday that euro zone members were making progress to overcome their crisis but must do more to strengthen their financial firewall, adding that the IMF was ready to help. 'There is progress as we see it,' Lagarde told a panel discussion at the World Economic Forum in Davos. 'But it is critical that the euro zone members actually develop a clear, simple, firewall that can operate both to limit the contagion and to provide this sort of act of trust in the euro zone so that the financing needs of that zone can actually be met.' Senior euro zone officials have expressed optimism on the Greek debt deal, though previous predictions of an imminent agreement have failed to become reality. Greece is in its fifth year of recession, and hopes of an end to the crisis in the near term have virtually gone, because of the combination of squabbling politicians, rising social anger and its inability to get its debt load under control. Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday. Greece said such a move was out of the question, adding that a similar proposal had been made in the past by a Dutch minister without getting anywhere. 'There is no way we would accept such a thing,' a Greek government official told Reuters. (Additional reporting by Renee Maltezou, Writing by Deepa Babington; editing by Tim Pearce)

Oil For Europe, Few Options in a Vicious Cycle of Debt

Oil For Europe, Few Options in a Vicious Cycle of Debt Europe has a $1 trillion problem. As difficult as the last two years have been for Europe, 2012 could be even tougher. Each week, countries will need to sell billions of dollars of bonds - a staggering $1 trillion in total - to replace existing debt and cover their current budget deficits. At any point, should banks, pensions and other big investors balk, anxiety could course through the markets, making government officials feel like they are stuck in a scary financial remake of 'Groundhog Day.' Even if governments attract investors at reasonable interest rates one month, they will have to repeat the process again the next month - and signs of skittish buyers could make each sale harder to manage than the previous one. 'The headline risk is enormous,' said Nick Firoozye, chief European rates strategist at Nomura International in London. Given this vicious cycle, policy makers and investors are closely watching the debt auctions for potential weakness. On Thursday, Spain is set to sell as much as 5 billion euros ($6.3 billion) of government bonds. Italy follows on Friday with an auction of more than $9 billion. The current challenge for Europe is to keep Italy and Spain from ending up like Greece and Portugal, whose borrowing costs rose so high last year that it signaled real likelihood of default, making it impossible for the governments to find buyers for their debt. Since then, Greece and Portugal have been reliant on the financial backing of the European Union and the International Monetary Fund. The intense focus on the sovereign debt auctions - and their importance to the broader economy - starkly underscores the difference between European and American responses to their crises. Since 2008, there has been almost no private sector interest to buy new United States residential mortgage loans, the financial asset at the root of the country's crisis. To make up for that lack of investor demand, the federal government has bought and guaranteed hundreds of billions of dollars of new mortgages. In Europe, policy makers are still expecting private sector buyers to acquire the majority of government debt. Last month, in perhaps the boldest move of the crisis, the European Central Bank lent $620 billion to banks for up to three years at a rate of 1 percent. Some officials had hoped that these cheap loans would spur demand for government debt. The idea is that financial institutions would be able to make a tidy profit by borrowing from the central bank at 1 percent and using the money to buy government bonds that have a higher yield, like Spain's 10-year bond at 5.5 percent. But the sovereign debt markets continue to show signs of stress. Italy's 10-year government bond has fallen in price, lifting its yield to more than 7 percent, a level that shows investors remain worried about the financial strength of Italy's government. And European banks appear to be hoarding much of the money they borrowed from the central bank, rather than lending it to governments. Money deposited by banks at the European Central Bank, where it remains idle, stands at $617 billion, up from $425 billion just a month ago. 'It's hard to see why a banker would want to tie up money in a European sovereign for, say, three years,' said Phillip L. Swagel at the University of Maryland's School of Public Policy, who served as assistant secretary for economic policy under Treasury Secretary Henry M. Paulson Jr. Italy's troubles highlight how hard it is to generate demand for a deluge of new debt from a dwindling pool of investors. The country needs to issue as much as $305 billion of debt this year, the highest in the euro zone. By comparison, France, with the second highest total, needs to auction $243 billion of new debt, according to estimates by Nomura. Governments like Italy's are at the mercy of markets because they simply don't have the cash to pay off even some of their bonds that come due. They must issue new bonds to cover their old debts, as well as their budget deficits, at a time when investors are growing scarce. Banks, traditionally big holders of government bonds, have been selling Italian debt. 'We've seen a lot of liquidation by non-European investors,' said Laurent Fransolet, head of European interest rate strategy at Barclays Capital in London. For instance, Nomura Holdings in Japan slashed its Italian debt holdings, mostly government bonds, to $467 million on Nov. 24, from $2.8 billion at the end of Sept. European banks have also been dumping the debt. BNP Paribas, a French bank, cut its exposure to Italian government bonds to $15.5 billion at the end of October, from $26 billion at the end of June. Italian banks, though large owners of their government's obligations, may not want to take on too much more, to keep their investors happy. Shares in UniCredit have fallen more than 40 percent since last week as the Italian firm has tried to raise capital to comply with new regulations. There are ways to avoid spectacularly bad debt auctions, at least in the short term. The central bank can help by buying a country's bonds in the market ahead of a new debt sale. That would help bolster prices at the auction, or at least keep them stable. There is also some evidence that banks' government-bond selling may have abated at the end of last year, according to Mr. Fransolet. Central bank figures show European financial firms acquired $2.4 billion of Spanish government bonds in November, after selling a monthly average of $4.8 billion in the preceding three months. Governments may also be able to attract new buyers to their bond markets. Belgium sold $7.2 billion of government bonds to local retail investors last month, in part appealing to their patriotism. Opportunistic hedge funds, betting the market is too pessimistic about certain European countries, may also bite. Saba Capital Management, a New York-based hedge fund headed by the former Deutsche Bank trader Boaz Weinstein, owns Italian government bonds, though it does so as part of a wider trading strategy that includes bets that could pay off if Europe's problems worsen. But it is doubtful that Italy and Spain can find enough new buyers this year to bring their bond yields down to sustainable levels. Instead, if their economies slow - and if their governments become unpopular - debt auctions could fail and their cost of borrowing could rise even more. All eyes would then turn to the central bank for drastic action. It could lend more cheap money to banks, in the hope that some of it might find its way into government bonds. Or it could become a big buyer of government bonds itself, printing euros to finance the purchases. But that may not be a lasting solution, since the central bank's actions could scare off private investors. Typically, when government-backed organizations like the central bank hold a country's debt, their claims on the debtor rank higher than those of other creditors. For that reason, private investors might think their holdings would fall in value if the central bank became a big owner of Italian debt - and they might retreat. At the same time, the crisis response in the United States did not depend solely on government-backed entities like the Federal Reserve to buy housing loans. Professor Swagel of the University of Maryland points out that banks and investors also took large losses on existing housing debt. While painful, the mortgage debt proved less of a drag on the financial system. So far, Europe has been averse to taking permanent losses on government bonds. Except in the case of Greek debt, European policy makers have shied away from any plan that could mean private holders of government debt get hurt. However, Nouriel Roubini, a professor of economics at the Stern School of Business at New York University, recently argued in a Financial Times editorial that Italy's debt should be reduced to 90 percent of the gross domestic product from 120 percent. In such a situation, investors might suffer a 25 percent hit on the value of their Italian bonds, he said. Such haircuts might seem like the recipe for more instability right now. But if Europe struggles to find buyers for its debt, more radical options are likely to be considered. Europe's debt problem is huge, and the experience in the United States suggests dealing with it may take several, more drastic approaches. 'If you go halfway, you'll never get to the end,' Professor Swagel said. 'And that describes European policy-making.'

Signals Why Brand Value Still Matters

Signals Why Brand Value Still Matters RELATED QUOTES Symbol Price Change PVH 74.26 +0.36 RL 143.11 -1.43 PVH's (NYSE: PVH - News) 2010 acquisition of Tommy Hilfiger turned out to be a good long-term prospect. PVH posted a handsome growth in profits in its third quarter, spurred mainly by Tommy's international sales. The growth speaks volumes for PVH, known to be a high-end clothier trying to sail through a struggling, cash-strapped economy. Let us take a closer look at what makes PVH tick. Good third-quarter showing PVH's net income came in at $112.2 million, a 12% rise from $99.8 million in the year-ago period. Continued healthy sales for both its Calvin Klein and Tommy Hilfiger brands of clothes spurred this growth. Strong sales, both domestic and international, also boosted revenue by 9% from last year to $1.65 billion. This even exceeded management expectations. Tommy Hilfiger, in particular, went a notch ahead of Calvin Klein, as the former's strong international sales base led it to post an earnings increase of 27% over Calvin Klein's 13%. Naturally, PVH felt confident enough to raise its full-year outlook. What spurred the growth Tommy Hilfiger's strong international sales were a major boost to PVH's third-quarter figures, as the brand registered a 17% growth in revenue over last year, spurred by key markets such as the United Kingdom, Italy, and France. Of course, one of the main reasons behind Tommy Hilfiger's acquisition was because the former is known to generate a large chunk of its revenue from international markets. But then, its other flagship brand Calvin Klein was not far behind either as its revenues went up by a healthy 11%. However, PVH needs to check back on its competitors' progress as well. For instance, rival Ralph Lauren (NYSE: RL - News) also cashed in on robust sales figures to post a 14% increase in second-quarter profits. PVH needs to be particularly wary of Ralph Lauren, which is a highly aspirational brand, and whose overseas revenue is around 38% of the consolidated total. Ralph Lauren also caters to a similarly wealthy segment and is in the process of launching new brands such as Lauren footwear. The Foolish conclusion PVH is certainly not getting complacent as it aims to spend around $5 million more than what it did last year on international marketing, with the stress being on holiday campaigning through television and cinema. This is one company that has brand recall, caters to the high-end segment that is not really 'discount-dependant,' and has structured future plans. It may be a good idea to stock up on PVH. Fool contributor Subhadeep Ghose does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Forex Exxon to sell part of Tonen stake for about $3.9 billion:sources

Forex Exxon to sell part of Tonen stake for about $3.9 billion:sources RELATED QUOTES Symbol Price Change TRI 27.82 -0.10 XOM 85.83 -0.94 By Taro Fuse and Emi Emoto TOKYO (Reuters) - Exxon Mobil (NYSE:XOM - News) plans to sell a large part of its 50 percent stake in TonenGeneral Sekiyu KK (:5012.T) back to its Japanese refining partner in a deal that could be worth about 300 billion yen ($3.9 billion), and will make an announcement as early as Monday, four sources with direct knowledge of the matter said. Exxon Mobil will retain about a 20 percent stake in TonenGeneral but the deal will mark a de facto retreat from the world's third-largest economy by the U.S. oil giant, which is focusing its resources on emerging markets and development of natural resources. The move could also spark realignment among Japan's oil refiners, which have been cutting capacity to cope with falling demand caused by a weak economy and a shift to more efficient and environmentally friendly forms of energy, analysts have said. Reuters reported earlier this month that Exxon was in talks to sell part of the stake back to TonenGeneral. TonenGeneral, which imports and distributes Exxon oil in Japan, ranks as the country's No. 2 refiner behind JX Holdings (:5020.T). Smaller rivals include Idemitsu Kosan Co (:5019.T), Cosmo Oil (:5007.T) and Showa Shell (:5002.T). Exxon and TonenGeneral aim to complete the deal around summer, the sources told Reuters on condition of anonymity. TonenGeneral will seek funds from Sumitomo Mitsui Banking Corp, Sumitomo Trust Banking, Bank of Tokyo Mitsubishi UFJ and Mitsubishi Trust Bank to buy back the stake, the sources said. ($1 = 76.7350 Japanese yen) (Reporting by Taro Fuse and Emoto Emi; Writing by Kaori Kaneko; Editing by Chris Gallagher and Ed Lane)

Signals 5 Unusual Sales Taxes You Need To Avoid

Signals 5 Unusual Sales Taxes You Need To Avoid With the economy still struggling, states are getting fairly crafty with how they charge consumers via sales taxes. It's no secret that dubious, yet all-too enforceable government laws have been with us since the dawn of the civilized world. In ancient Egypt, the pharaohs taxed cooking oil – of course, the main seller of cooking oil was the pharaoh. During the first century AD, the Roman empire taxed urine – a popular source of ammonia for common tasks like tanning hides and cleaning clothes. Then at the height of the Dark Ages (an era in European history notorious for its poor hygiene), some European governments taxed the sale of soap! Unfortunately, onerous and unusual state taxes are still very much with us. What are some of the biggest offenders – and are they active in your state? Here's our top five: Food Packaging Tax States like Colorado have a weird definition of what constitutes food packaging. In using the term 'essential' in its tax language for such commodities, Colorado finds itself in the strange position of taxing paper cup lids and napkins, but not paper cups or fast-food French fry containers. Hot Air Balloon Tax If you're in Kansas and in the mood to take a ride in a hot air balloon, beware of the state government's 'amusement' tax. State regulation makes balloon rides taxable. But there is a caveat – only balloon rides that are tied, or tethered to the ground, are considered taxable. So, if you want to avoid paying taxes when taking a balloon ride over Topeka, make sure to leave the rope at home! Careful on That Bagel New York State has an interesting way of handling bagels – and taxes on buying bagels. If you want to eat a bagel tax-free, don't have the deli counter 'prepare' it for you (i.e., add cream cheese or cut the bagel in two pieces). Prepare that bagel yourself, and you don't have to pay a tax on it. Wet Fuse In West Virginia, celebrating the Fourth of July – or any celebration where fireworks are used, can lighten your wallet. The state has a special tax – on top of its 6% sales tax – on things like ladyfingers and sparklers. Fruit Cakes California has gone bananas over the purchase of fruit by consumers. If you buy an apple from a regular retailer, you're in good shape, as the purchase is tax-exempt. If you buy fruit from a vending machine – and who hasn't done that – you'll pay an additional 33% on the amount of the purchase. Maybe the most egregious case of over-taxation on a state level comes from Pennsylvania, where the commonwealth actually taxes the use of air (on carwash vacuum cleaners). The Bottom Line The above taxes certainly aren't the only taxes on statewide level, but they are surely among the most unique. This site has a more complete list of sales taxes in all 50 states: http://retirementliving.com/RLtaxes.html .

Oil Bloomberg exec in talks to run New Corp's Dow Jones

Oil Bloomberg exec in talks to run New Corp's Dow Jones RELATED QUOTES Symbol Price Change NWSA 18.88 +0.06 TRI.TO 27.80 -0.14 APKN.PK 0.012 0.00 TRI 27.82 -0.10 (Reuters) - Rupert Murdoch's News Corp is in 'serious talks' to poach veteran Bloomberg LP executive Lex Fenwick to run its Dow Jones publishing business, which houses the Wall Street Journal, according to two people familiar with the discussions. Fenwick, who founded Bloomberg Ventures in 2008, was previously chief executive of Bloomberg LP, taking over from the company founder Michael Bloomberg in December 2001. Wall Street Journal reported news of the talks earlier on Friday. The top job at Dow Jones has been vacant since last July when then-Publisher and Chief Executive Les Hinton resigned in the wake of the phone-hacking scandal at News Corp's UK newspaper unit, which had previously run. Hinton told a UK parliamentary inquiry in 2009 that any problem with phone hacking at the company's papers was limited to one case. It was later revealed that thousands of ordinary people and celebrities had been the victims of the voice mail hacking. Hinton, who worked with News Corp for 52 years, was perhaps Murdoch's closest associate. Bloomberg and Dow Jones compete with Thomson Reuters. (Reporting By Yinka Adegoke; Editing by Steve Orlofsky)

Earn Lloyds chief executive skips annual bonus

Earn LONDON (AP) -- The chief executive of Lloyds Banking Group, which was rescued by British taxpayers during the credit crisis, says he won't take his annual bonus for 2011. Antonio Horta-Osorio said Friday he's doing that because he took a leave of absence, not specifically in response to Prime Minister David Cameron's recent call for restraint on executive pay. Horta-Osorio took two months off last year as he suffered from sleeping problems. He did not disclose the amount in a bonus that he is turning down, but said future payments should take into account Britain's 'tough financial circumstances.' His pay and bonus entitlement will be disclosed next month in the group's annual report. British taxpayers still hold a 40 percent stake in the bank.

Signals JP Morgan Earnings Highlight a Major Challenge for All Big Banks

Signals One of the hottest stocks in the land is limping into a long weekend this morning after earnings failed to impress investors, not only casting a shadow over JP Morgan (JPM), but stoking concerns about the entire Financial sector. Officially, JP Morgan's fourth quarter net income fell 23% to $3.7 billion, or $0.90 per share. While that met expectations, the biggest U.S. bank by assets stumbled on the revenue side, with a 9.6% decline that fell nearly a billion dollars short of estimates. 'They barely got over a very low bar,' says Charles Smith, CIO of Fort Pitt Capital and manager of the Fort Pitt Capital Total Return Fund (FPCGX), pointing out that the EPS estimate had come down about 20% in the past month alone. 'Their revenue growth was very weak,' he says, particularly at the investment bank were the top line shrank 30%. 'The fact that he (CEO Jamie Dimon) said he was proud of an 11% ROE is really telling,' Smith says in the attached clip, adding that revenue growth is going to be tough for all the universal banks. He believes slow revenue growth and shrinking ROE's (Return On Equity) is going to be the theme for the other big banks, many of which report results next week: Citigroup (C) and Wells Fargo (WFC) on Tuesday, Goldman Sachs (GS) on Wednesday, and Bank of America (BAC), Morgan Stanley (MS) and American Express (AXP) on Thursday. Another reason for the poor reaction is simply because JPM and the broader Diversified Financials Industry have become market leaders, after shedding 25% and finishing in the bottom of the pack for 2011. Even though 85% of analysts who follow JP Morgan rate it a ''buy'' with an average price target of $45, Smith is not interested. 'There's going to be a continued opaque nature for these earnings reports going out at least another year,' he says, adding that things like ongoing expenses for mortgage litigation and write downs will continue to muddy up the results. To be fair, while the 4th quarter numbers appear to reflect a ''very weak December,'' the powerful earnings story of the full year cannot be ignored, where JP Morgan netted a record $19 billion profit for 2011. Have the recently re-heated bank stocks gotten ahead of themselves or can they recover and resume their trek higher? Feel free to reach out to us on our Facebook page, on Twitter @MattNesto or @JeffMacke, or in the comment section below. Related Quotes: XLF 13.81 -0.11 -0.75% JPM 35.92 -0.93 -2.52% GS 98.96 -2.25 -2.22% BAC 6.61 -0.18 -2.65% MS 16.63 -0.54 -3.15% C 30.74 -0.86 -2.72% WFC 29.61 0.00 0.00% AXP 49.76 +0.11 +0.22% ^BKX 43.44 -0.17 -0.39%