Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. We hope you'll enjoy reading, we hope you'll have a great weekend and we hope that you'll come back each Friday to brush up on your finance and business knowledge.
Monday August 1
As many Mondays do, the start of this week promised the threat of “chaos”, as US politicians began debating a deal that would see its debt ceiling raised. Without this bill, the country could have gone into default, and thus throwing global markets into... yes, that’s right... chaos. The Republican-controlled House of Representatives voted in favour of the proposed deal by 269 votes to 161. The bill was yet to be approved by the Democrat-led Senate, and the deadline was midnight on Tuesday August 2 if the country were to avoid risking the first complete default in its history...
Read about the US debt debates in more depth here
…but then the bill went through the Senate by 74 votes to 26 (just 10 hours before the deadline). US President Barack Obama signed the piece of legislation that saw the US debt ceiling raised by up to $2.4tn (£1.5tn), thus averting a financial default. Chaos did not ensue, but the markets did not react positively to the announcement. Obama stated that it was impossible to “close the deficit with just spending cuts” and now urged Congress to pass legislation that will boost the economy, rather than balancing the budget “on the backs of the very people who have borne the biggest brunt of this recession”.
Read about the US Senate passing the bill to raise the country's debt ceiling in more depth here
Tuesday August 2 Wednesday August 3 European Commission President Jose Manuel Barroso said in reaction: “Developments in the sovereign bond markets of Italy and Spain are a cause of deep concern… These developments are clearly unwarranted on the basis of economic and budgetary fundamentals in these two member states and the steps that they are taking to reinforce those fundamentals.” Thursday August 4 Friday August 5 Come back next Friday for another report on the world of business and finance.
Toyota Motor announced a dramatic plunge in quarterly profits due to the impact of the earthquake and tsunami in March. For the three months to the end of June, net profit fell nearly 190bn yen to only 1.1bn yen ($14.2m, £8.7m), an incredible drop of 99%. The company said this was down to shortage of parts due to damage caused to supply chains in the wake of the country’s natural disasters. However, Toyota were optimistic, increasing its forecast for full-year sales and profits (from 7.2m to 7.6m vehicles), saying that they we recovering from the tsunami at a much faster rate than expected. The company plans to hire up to 4,000 temporary workers to make up for the lapse in production.
Read about Toyota's quarterly profit report in more depth here
With rumors of contagion spreading, the Italian Prime Minister Silvio Berlusconi addressed parliament on Wednesday to calm fears surrounding the debt crisis. Despite heavy losses on the Milan stock market and a shocking increase in yields on Italian bonds, Berlusconi assured his audience and the world that Italy had “solid economic foundations” and blamed the recent bonds situation on a “crisis of faith in the international markets”. Italy is the eurozone’s third largest economy, twice as big as Greece, Portugal and the Republic of Ireland combined, and will be implementing a 43bn-euro (£38bn; $62bn) austerity package.
Read about Silvio Berlusconi's address to parliament in more depth here
Read about Jose Manuel Barroso's reaction to the bond markets in more depth here
To show it hasn’t all been doom and gloom in the world of finance this week, I draw your attention to General Motors. The US carmaker announced that its quarterly profits have nearly doubled to $2.52bn (£1.54bn) in comparison to $1.3bn from the same quarter last year, with revenues up 19% to $39.4bn. Dan Ammann, finance chief for GM, stated that the company “can handle” the forecasted trouble in the US economy. Mr Ammann also said, “There is an increased level of uncertainty. But what we’re trying to do, and what we’ve done successfully, is to configure the business with a low break-even point and a strong balance sheet”.
Read about possibly the only positive news of the week in more depth here
Not really sure where to start, especially as the day is not even over yet. Let’s just say that it is hell out there. Investors’ crisis of faith over the eurozone sovereign debt crisis and the flailing US economy has led to a huge sell-off of shares in the European market. At the time of writing, both the FTSE 100 index and Germany’s Dax were down more than 2%. On Thursday the Dow Jones had its worst day the end of 2008, closing at a loss of 4.3% at 11,383.68. The eurozone leaders are apparently in crisis talks and US investors are waiting on US jobs data due to be released later today, which should give an indication as to the strength of the country’s economy.
Read about the recent market developments in more depth here
More useful links that have crossed our path this week:
Wednesday August 3
European Commission President Jose Manuel Barroso said in reaction: “Developments in the sovereign bond markets of Italy and Spain are a cause of deep concern… These developments are clearly unwarranted on the basis of economic and budgetary fundamentals in these two member states and the steps that they are taking to reinforce those fundamentals.”
Thursday August 4
Friday August 5
Come back next Friday for another report on the world of business and finance.
The Financial Forecasting and Planning Summit in Boston September 15 & 16 2011 promises to bring leaders and innovators together to create insight into the forecasting and planning process. See more information about the event here.
The acclaimed event boasts a high calibre of speaker including:
• Associate Director, Global Shared Services, Procter & Gamble
• Senior Controller, Next Generation FP&A, Intel
• Director of Finance, Microsoft
• Senior Director, Domestic FP&A, Best Buy
• CFO, Method Home
All IE Group events are invitation only ensuring only the highest level of delegates are attending. To request an invitation email Rose at firstname.lastname@example.org.
Fraud Investigation and control knowledge summit 2011 Delhi Edition on 25-26th August in India is a comprehensive and experiential sharing forum with experts in fraud investigation and control.
Focusing on business expansion organizations tend to ignore glaring red flags as a one-off, the duplicity multiplies and blows a huge hole in the company’s reputation and bottom-line when its true nature is discovered.
The summit will feature more than 20+ experts who will share their thoughts and experiences at the meeting. Overall participation is expected at 80+ senior executives from leading organizations especially from North India.
Purchase to Pay Summit
The Shared Services and Outsourcing Network the Purchase to Pay Summit 2011, held in London on the 11th – 12th October 2011 will address the key challenges facing purchasing and accounts payable professionals weather you are a operating in a mature shared service center or have a newly implemented P2P system.
Confirmed Speakers Include: BTI Holdings, Flextronics, BBC, Bombardier Transport, Nordea, BP, Warner Bros
To see complete speaker line-up, go to the website.
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