Europe’s Tentative Recovery Spreads South In September

Europe Stocks Post Second Weekly Drop Amid U.S. Shutdown

The boys really played well today and I’m very, very happy to have won the Seve Trophy this time.” GB&I struck first on Sunday when Tommy Fleetwood claimed his first point of the week with a 3 & 2 win over Joost Luiten, who was unbeaten entering the match. After Jamie Donaldson and Gonzalo Fernandez-Castano halved their match, Ryder Cup standout Nicolas Colsaerts drew Continental Europe even, draining a 5- footer for par at the last to secure a 1-up win over Paul Casey. Frenchman Gregory Bourdy then continued his stellar play and pushed Continental Europe in front with a 4 & 3 triumph over Scott Jamieson. Bourdy, who never trailed in the match, became the first player in the event’s history to win five points out of five. “I’m so happy to achieve that, and it was an amazing week for me,” said Bourdy. The jostling continued, however, as Marc Warren wrapped up a 4 & 3 ousting of Thorbjorn Olesen to again square the tournament, 12 – 12, with four matches left on the course. From there, Continental Europe took control. Jimenez put the finishing touches on his convincing win, which was aided in part by the ailing Lynn, who twice dropped his ball into the water. Matteo Manassero then increased Continental Europe’s advantage to a pair with a 3 & 2 defeat of Stephen Gallacher. Paul Lawrie showed the GB&I mettle with a 2 & 1 win over Mikko Ilonen, but Molinari was in control at that point, holding a 2-up lead over Wood through 14 holes. After the pair matched birdies at the 15th, Molinari dropped his tee shot at the par-3 17th within 12 feet and drained the birdie putt to seal the Continental Europe victory. “It was going to go down to the last three matches at least,” continued Olazabal. “We had a pretty good start, then Great Britain & Ireland took over and we started to see some reds on the board. But the boys kept their composure and played really well, especially these last few matches, they played really great golf.” NOTES: Continental Europe’s only other win at the Seve Trophy came in 2000, the event’s inaugural year … Bourdy made his first Seve Trophy appearance.

Europe soul-searches after Lampedusa exposes tensions

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. And the first green shoots of growth may be emerging.

Greek bonds: Europe’s hidden gem?

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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.

We came out of the summer months too optimistic about Europe, so some pause for breath was needed. We saw the profit warning from Nokian Renkaat and the numbers from Unilever. I think well continue to get more profit warnings going into the earnings season. The U.S. government began a partial shutdown on Oct. 1 after Democrats and Republicans failed to agree on a budget, closing some services and placing as many as 800,000 federal employees on unpaid leave. A two-week halt could shave 0.25 percentage point off fourth-quarter economic growth, Federal Reserve Bank of San Francisco President John Williams forecast. Debt Limit In addition to passing a budget, Congress must authorize an increase to the $16.7 trillion debt ceiling this month to avoid a default. The Treasury has said it will exhaust measures to stay within the limit by Oct. 17 and warned that a default could have catastrophic consequences that might last for decades. The government will run out of cash to pay bills between Oct. 22 and Oct. 31, according to the Congressional Budget Office. House Republicans met in Washington yesterday to discuss their negotiating tactics, with Speaker John Boehner telling party members that he will not allow a U.S.

Peope light candles in memory of the victims of Lampedusa on October 4, 2013 in Rome, a day after a Lampedusa is struggling to accomodate 1,000 people in a holding facility with just 250 places — a situation replicated elsewhere in Italy as a new influx of migrants from Syria and Egypt has brought 30,000 arrivals since the beginning of 2013. But with far-right parties peddling xenophobia across Europe and a tough economic climate, hopes are slim that the Lampedusa disaster will spawn a long hoped-for single EU migration policy that could avert further tragedy. Experts in Brussels believe the sympathetic words of politicians all too often clash with the complex and politically explosive issue of illegal immigration in Europe. “We need a new policy at the European level,” said Michele Cercone, spokesman for home affairs commissioner Cecilia Malmstroem. “Migration policies are fragmented, inward-looking, left in the hands of member states and subject to domestic political considerations.” A black flag reading “Shame” in Italian flies in the Lampedusa harbour on October 4, 2013, in Italy, In the short term such a move is unlikely, as asylum-seekers in the European Union must appeal for help in the country through which they enter. This system is frequently criticised by Europe’s southern states, particularly Italy, Greece and Spain, which want a redistribution of asylum applications to even out the burden. But Europe’s northern states say they more than do their bit, as two-thirds of the 102,700 successful applications made to the EU in 2012 were granted by Germany, France, Britain, Sweden and Belgium. Strategies to combat the criminal networks exploiting desperate migrants, as well as maintaining maritime borders, are particularly contentious. Italy is agitating for better surveillance of the coast of Libya, where there has been a marked increase in boats containing migrants since the chaos that followed the fall of the Khadafi regime. Members of the Italian Financial police work in the small harbor of Lampedusa on October 3, 2013 aft Thursday’s incident began on a boat that had set sail from Libya. In 2004, to tighten surveillance along its long borders, the EU set up Frontex, an agency based in Warsaw whose assets such as ships are all donated by member states. Frontex is reported to have saved 16,000 lives in the Mediterranean over the last two years. But due to crisis-era belt-tightening its budget has slipped from 118 million euros ($160 million) in 2011 to 90 million in 2012 and 85 this year.