Volkswagen shares plunge, Greece re-elects Syriza and Fed officials still point to 2015 hike. Here are some of the things people in markets are talking about this morning.
Shares in Volkswagen AG plunged more than 20 percent this morning after it admitted cheating on U.S. pollution tests for years. The German carmaker had fitted its U.S. diesel vehicles with software programmed to reduce pollutants when the car underwent official emissions testing, the Environmental Protection Agency said Friday. The company could be liable for fines of up to $18 billion based on the cost per violation and the number of cars involved.
Greece re-elects Syriza
Alexis Tsipras' Syriza party gained 35.5 percent of the vote in yesterday's Greek election, well ahead of the second place New Democracy party, which garnered 28 percent. Due to the enhanced majority rule in Greek elections, where the party with the plurality of votes receives a 50-seat bonus in the 300 seat parliament, the victory for Syriza means they plan to form a coalition government with the same small Independent Greeks party they had previously governed with. The new government must now carry out the reform agenda as required by the latest bailout.
Fed officials still say 2015
Three Federal officials argued over the weekend that an interest-rate increase is still warranted this year, with San Francisco Fed President John Williams, St. Louis Fed President James Bullard and Richmond Fed President Jeffrey Lacker all singing from the same hawkish sheet. On the other side of the Atlantic, Goldman Sachs is expecting further easing from the European Central Bank, projecting the central bank will extend their asset purchase program into 2017. Goldman has said the euro currency may fall up to 10 U.S. cents due to this easing.
Zurich abandons RSA bid
Zurich Insurance Group AG has dropped an 5.6 billion pound ($8.7 billion) offer for RSA Insurance Group Plc due to a loss on its own general insurance business. The Zurich loss has been affected by claims from a series of explosions in China last month that may cost the insurer as much as $275 million. Shares in RSA fell more than 20 percent this morning following the announcement.
Hedge funds have slashed their bets on further oil-price declines, leaving them the most bullish in two months on the commodity. OPEC is expecting oil prices to gradually recover to $80 a barrel by 2020, with U.S. production set to slip as the current price rout extends a slump in drilling there. West Texas Intermediate for October delivery, which expires Tuesday, was at $45.32 a barrel on the New York Mercantile Exchange, up 64 cents, at 10:50 a.m. London time.
What we've been reading
This is what's caught our eye over the weekend.
- The rent crisis is about to get a lot worse.
- 800 ways the taxpayer supports fossil fuel industries.
- Investors hate stocks - again.
- The Bitcoin community disagrees on what happens next.
- Japan is dumbing down.
- The golden age of the Western corporation may be coming to an end.
- Proof that the U.S. housing market may be turning a corner.
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