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Good morning,
Markets are called to open lower this morning. This is what's happening today:
Today we have the ECB meeting. European Central Bank President Mario Draghi is under pressure to reveal Plan B. A botched attempt to rescue Cyprus last month sent bank shares tumbling across the euro area and rattled confidence in policy makers’ ability to tame the sovereign debt crisis. With doubts growing about Draghi’s forecast for a second-half economic recovery, he’s considering his options. They range from an interest-rate cut to a new round of long-term loans to banks, to a plan to encourage lending to companies, three officials with knowledge of the deliberations said. They stressed that such action may not be announced today.
With Europe entering a second year of recession and fragmented financial markets preventing the ECB’s record-low borrowing costs from reaching the countries that need them most, Draghi may prefer to use so-called non-standard measures. He is particularly concerned about a lack of credit being extended to small and medium-sized companies in countries such as Italy and Spain, two of the officials said on condition of anonymity.
The FECB will leave its benchmark rate at a record low of 0.75% today, according to economists. The decision is due at 1:45 p.m. and Draghi holds a press conference 45 minutes later. The Bank of England will hold its key rate at a record low of 0.5% and maintain bond purchases at 375 billion pounds, according to economists. That decision is due at noon in London.
Economists from ABN Amro Bank NV to Nordea Bank AB say Draghi needs to give reassurance he still has policy options at his disposal as evidence mounts that the recovery is faltering. The ECB’s measure of bank lending to the private sector fell for a 10th month in February, dropping 0.9% from a year earlier, and manufacturing activity, measured by a survey of purchasing managers, contracted more than economists forecast in March.
Bank of Japan will buy longer-term government bonds, it said after a two-day policy meeting –
Royal Bank of Scotland Plc was the most-accurate foreign-exchange forecaster in the first quarter after predicting Europe’s bond-buying plan would fail to boost the euro as the region’s economy wilted. The firm sees the 17-nation currency declining 7.4 percent over the rest of 2013. RBS scored 62.08 out of 100 based on the accuracy, timing and directional precision of its forecasts for 13 major exchange rates in each of the last four quarters, according to data compiled by Bloomberg. Bank of Montreal’s BMO Capital Markets Ltd. unit was second with a score of 60.10 at the end of March, followed by Wells Fargo & Co.’s 59.96, Commonwealth Bank of Australia’s 59.25 and Rabobank International’s 58.89.
Stock to watch: Global Payments (Price $44.52, Price Target $60)
As a global leader in merchant acquiring, Global Payments (GPN) is well positioned to deliver double-digit annual revenue growth despite macro uncertainty as it continues to benefit from a secular trend to electronic payments, share gains, and continued strength in ISO channel and geographic expansion in Asia. GPN also generates solid FCF from long-term recurring contracts. Buy.
For more information on Global Payments and other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
Kristian Camenzuli
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