The (early) Lunch Wrap | FT Alphaville

The (early) Lunch Wrap

Good morning New York…


Bank margins are being squeezed. As banks deleverage, margins are under pressure with falling loan and deposit yields. Joseph’s post looks at a comparison between the US, Europe and Japan.

Standardised synthetic credit tranches have had a remarkable resurgence, while bespoke deals are still relatively small compared to the size of the market before the crisis. The standardised side of things involves trades on credit indices and there has been impressive growth in risk-taking and activity since the beginning of the year. Lisa’s post has the details.

Where have all the oil hedgers gone? Since early 2011 the net short position held by the physical market has been dwindling in size. There are a couple of explanations. Izzy’s post looks at what’s been happening.

Fitch has raised concerns about Solvency II. The ratings agency thinks the capital charges under the new regime could make it uneconomic for insurers to hold structured finance assets, relative to corporate or covered bonds. The implication is that if banks can’t fund lending, or transfer their loan risk to what have historically been huge buyers, they will make fewer loans. Lisa and Joseph’s post has more.


China PMI rose in April. The gauge of China’s industrial sector strengthened slightly in April to 53.3, its highest in more than a year, from 53.1 in March. Export orders rose to 52.2 from 51.9 in March, while factory output increased to 57.2 from 55.2 as manufacturers stepped up their restocking, the FT reports.

Australia cuts rates to boost economy. The central bank slashed the official cash rate by 50 basis points to 3.75 per cent, a larger cut than had been forecast by the market. Following the move, the Australian dollar fell more than 1 per cent to $1.03 against the US dollar, while the S&P ASX 200 rose to a nine-month high of 4,429.5, reports the FT.

Prosecutors ask to use previously unheard recorded phone conversations against Gupta. In a court filing, prosecutors said the tapes of calls between Raj Rajaratnam and his trader Ian Horowtiz are “essential evidence” of insider trading by Rajat Gupta, the former McKinsey director and Goldman Sachs board member, the FT reports.

Microsoft has invested $300m in a new Barnes & Noble ebooks subsidiary. The move is seen a challenge to Apple and Amazon, and will give the software group its own stake in a digital bookstore for tablets, smartphones and PCs, reports the FT.

Occupy Wall Street plans more protests. The organisers plan marches across the globe on Tuesday after a quiet winter. In New York, they will join labour organizations observing May 1, often regarded as International Workers’ Day. A march from Union Square to Lower Manhattan is expected, and a “pop-up occupation” of Bryant Park, across the street from Bank of America’s Corp’s offices, Bloomberg reports.

BP profits miss expectations. First-quarter profits of $4.8bn, a big drop compared with last year, showed that the oil group is struggling to shug off the effects of the Gulf of Mexico spill two years ago. It said its underlying replacement cost profit – a closely watched figure that strips out changes in the value of inventories and other one-off items – was $4.8bn, compared with $5.5bn last year, reports the FT.

Groupon adds finance experts to board. The daily deals company has responded to investor concerns following a series of accounting missteps and criticism from US regulators. It named Daniel Henry, chief financial officer of American Express, and Robert Bass, vice-chairman of Deloitte, as its newest board members, reports the FT.