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Home > Blogs > QFINANCE Editor > A week in the world of business and finance (October 17 – 21, 2011)

A week in the world of business and finance (October 17 – 21, 2011)

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 October 17
Despite recent economic trends, that are not exactly promising, Citigroup announced a surprise jump in profits at the start of the week. The unexpected boost was put down mainly to a drop in losses from bad loans, which fell by 41 per cent to $4.5bn (£2.86bn). Vikram Pandit, chief executive for Citigroup, stated his belief that the results were “solid” in a “challenging economic environment” and that, after such a positive showing, he would now be scrapping previous plans to offload the bank’s credit card arm. The arm itself had been placed in Citi Holdings, the group’s run-off portfolio, but, after bringing in $2.2bn in profits this year so far, it will now be moved back into the fold of core assets. Representatives from the bank said that this came mostly from the fact that, with other credit paths letting them down, consumers’ have been drawn towards using Citi credit cards more.
Get more details about the jump in Citigroup profits here.

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Tuesday October 18
The US government’s desperate desire to cap soaring oil and grain prices saw them pass measures designed to curtail speculation in commodity markets. The measures, which will cap the number of futures and swaps contracts that a single trade can hold, went through in a tight vote, with the Commodity Futures Trading Commission (CFTC) voting three-to-two to approve these “position limits”. However, Wall Street and trading companies decried the move as misguided politics, and the expectation is that CTFC chair Gary Gensler will be challenged legally.
Read about this recent move by the US government in more depth here.

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Wednesday October 19
The world’s most valuable technology company, Apple, reported an 85% rise in its full-year results, with net profits for the year ending September 24 reaching $25.9bn (£16.5bn). Despite this, shares in the company fell more than 5% in after-hours trading due to the fact that sales of iPhones in the fourth quarter were weaker than experts had predicted. The markets never really seem that happy, do they? The news does, however, represent a significant moment in Apple’s history, as it is the first time for three years that they have missed analysts’ sales forecasts. Whilst overall revenues were $28.7bn for the three months, this was more than $1bn less than Wall Street had predicted. A spokesman for the company said that demand for the iPhone 4 might have been dampened by rumors that a new model was soon to be released.
Read about Apple's announcement of annual sales in more depth here.

These were the first earning to be announced since the death of co-founder Steve Jobs. Tim Cook, chief executive of Apple, marked the occasion by paying tribute to his predecessor, saying “Steve was a great leader and mentor and inspired everyone at Apple to do extraordinary things.”
Read our blog about the legacy left by Steve Jobs here.

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Thursday October 20
On Thursday, movement towards Sunday’s summit and a resolution of the eurozone rescue package was interrupted by disagreements between the leaders of member states France and Germany as to the purpose of the European Financial Stability Fund (EFSF). Officials said that there could be another summit held early next week in order to continue discussions about private sector involvement in a second Greek bail-out, as well as the methods for boosting the €440bn (£348bn) spending power of the EFSF. Whilst France favors turning the EFSF into a bank so that it could borrow from the European Central Banks, the German government are opposed to this, as it braches treaty clauses. This failure to agree with Nicolas Sarkozy has caused Angela Merkel to cancel her speech to the German parliament. Various theories surrounding how best to deal with the issue are circulating, including Investec’s suggestions that the eurozone use the EFSF to provide sovereign bond insurance, thus encouraging private investors to buy sovereign debt.
Read about the delay to eurozone summit meetings and why this happened in more depth here.

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Friday October 21
We feel confident in reporting this news to you now, because it is likely that not much will have happened in between publishing this post and the time that you, the lovely QFINANCE readers, read it. It has been announced today that eurozone finance ministers will meet over the next few days in Brussels to discuss the region’s debt crisis. Saturday will see ministers from all twenty-seven member states holding talks, with EU leaders gathering on Sunday and at another meeting on Wednesday. Despite the deep divides between the governments of France and Germany, a decision has to be reached regarding a second bail-out for Greece, as well as the method for recapitalizing banks and how to increase the firepower of the bail-out fund itself, the European Finance Stability Facility (EFSF). An additional hurdle to this could be that negotiations have not begun with private sector lenders to Greece about a further reduction of what the Greek government will pay them back. Martin Blessing, chief executive of Germany’s second biggest bank, Commerzbank, offered his view on the Greek situation; “It has to become clear that states have only two options … Either they service their debt as agreed or they declare insolvency with all the tough consequences. It is not enough to just take writedowns on bank balance sheets.”
Read about EU leaders' decision to hold urgent meetings in more depth here.

Come back next Friday for another report on the world of business and finance.

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Tags: 4th Annual China Banking Risk Management , Angela Merkel , Apple , Brussels , business and finance news , business news , CFTC , Citi Holdings , Citigroup , Commerzbank , Commodity Futures Trading Commission , EFSF , EU , European Central Bank , European Financial Stability Fund , European Union , eurozone , finance news , France , Gary Gensler , Germany , Investec , iPhone , iPhone 4 , Martin Blessing , Nicolas Sarkozy , sovereign bond insurance , Steve Jobs , Tim Cook , US economy , Vikram Pandit , Wall Street
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