Posts from Tuesday Jul 7 2009

The Tripoli-St John’s Nexus

It sounds like the title of a Robert Ludlum novel, and though it’s not quite in the league of  The Parsifal Mosaic, court documents filed on Tuesday suggest the Libyan government had invested some $500m with Sir Allen Stanford by the end of 2008.

The disclosure came in the form of a signed statement by Sir Allen’s gal Andrea Stoelker, which was included in an appendix to the financier’s request that judge David Hittner reconsider the decision to remand him in custody, pending trial related to a 21-count indictment. Sir Allen had initially been granted release on bail, but judge Hittner overturned this order and dubbed the Texan a “serious flight risk“. Read more

“The notion that we had moved to Armageddon lows in equities does not seem to hold water”

Gluskin Sheff’s David Rosenberg is fattening up clients with a steady diet of economic commentary masquerading as breakfasts, lunches, brunches, coffees and the occasional pastry.

In a mid-morning missive on Tuesday – “Snack with Dave” – the thinking man’s bear argued that equities are nowhere near “Armageddon lows”, a notion floated when the markets plummeted in March: Read more

Lex: Vale/Anglo/Xstrata

As the Brazilian miner bolsters its reserves, it is time for Cynthia Carroll and Mick Davis to have a chat.

The well-heeled bankers who dine at the same Johannesburg restaurants Anglo and Xstrata frequent say that Anglo chief executive Cynthia Carroll should at least meet her counterpart, Mick Davis. She has nothing to lose. Or maybe she does. Local shareholders could well be tempted by a modest premium from Xstrata, plus a commitment to a continued Johannesburg listing to address exchange control concerns.Anglo’s management is increasingly seen as an obstacle to a favourable deal – or at least a convincing rebuttal. Read more

The realpolitik of mining

From Reuters:

Global mining giant Rio Tinto said on Tuesday four of its employees in Shanghai had been detained by the Chinese authorities. “We aren’t confirming names … Rio Tinto is concerned about the employees’ wellbeing and is doing everything possible to help them and support their families,” the London-listed miner said in a statement. Read more

It’s like New Years Eve

If Monday was like Christmas Eve, then Tuesday feels like December 31st.

Once again we present the ‘most actives’ on the London Stock Exchange. Read more

Smart bonds or just false Smailes?

One quote jumped out from the comprehensive analysis of the securitisation markets by Gillian Tett and Aline Van Duyn on Tuesday:

“The securitisation market is absolutely not dead. My team is busier than it’s ever been,” says Geoff Smailes of Barclays Capital. Read more

Commodities correction

We like this chart from Goldman Sachs.

It shows their forecast that oil will rise to $85 a barrel by mid-January — and not a moment before! Read more

Lunch Wrap

On FT Alphaville Tuesday morning,

- This SIV shall come again. Read more

This SIV shall come again

SIVs are dead, declares a Tuesday morning FT story.

About 95 per cent of the $400bn of assets held in the structured investment vehicles at their July 2007 peak, have now been disposed of according to ratings agency Fitch. Of the 29 SIVs, four have unwound themselves, five have been restructured, 13 consolidated onto bank’s balance sheets and seven defaulted. Read more

Markets live transcript 7 Jul 2009

Live markets commentary from FT.com 

Top Ten Hedge Fund Wife Must-Hads

It’s come to this.  FT Alphaville has been reading Hedge Fund Wives, Tatiana Boncompagni’s sickly novel about, err, hedge fund wives.

The WSJ have the first chapter serialised here, but you can actually get the first six cliché-drenched chapters here on the HarperCollins website. Read more

The Bank of Mike Ashley

After days of press comment, JJB Sports has finally broken its silence on the extraordinary loan its executive chairman, Sir David Jones CBE, took from the owner of its biggest rival, Sports Direct’s Mike Ashley.

Details of the loan, including interest rates and the option to convert the loan into shares in ANT, were made known to the Company’s executive directors and its financial and legal advisers earlier this year. They viewed the arrangement as a private one concerning Mr Ashley and Sir David and not one requiring public disclosureRead more

Who is Serge Aleynikov?

He is of course the former Goldman Sachs programmer, alleged to have stolen a batch of the bank’s proprietary trading code.

But he is also a man with a LinkedIn profileRead more

Further reading

Elsewhere on Tuesday,

- Deutsche Bank goes spying. Read more

Pink picks

Comment, analysis and other offerings from Tuesday’s FT,

Analysis: Securitisation runs out of road
The FT’s Gillian Tett and Aline Van Duyn write
: When the European Securitisation Forum held its annual meeting in June 2007, thousands of bankers descended on Barcelona to drink champagne and dance to a bankers’ rock band called D’Leverage. Last month, when the trade body representing financiers engaged in slicing and dicing debt held its 2009 event, a mood of grim austerity prevailed. Instead of a seaside resort, the proceedings took place in a hotel on Edgware Road, a traffic-clogged London street better known for cheap takeaways. Read more

Snap news

Breaking pre-market news on Tuesday,

- Treasury to delay overhaul of bank regulation — TelegraphRead more

EU plans new push on bank reform

New European Union laws to drive banks to strengthen capital cushions will be unveiled in October, the FT said, citing a draft report expected to be backed by EU finance ministers in Brussels on Tuesday. The report contends there is a “strong case” for curbing existing rules on banks’ funding needs, and recommends ac­counting reforms and other policy measures to build more resilient capital “buffers” during good economic times. But Peer Steinbrück, Germany’s finance minister, will urge his European colleagues to ease capital constraints on member states’ banks, the FT said.

Fink warns on EU hedge fund rules

Stanley Fink, the former chief executive of Man Group known as the “godfather” of the British hedge fund industry, told the FT that the adoption of tough European restrictions on hedge funds would provoke a transatlantic regulatory war, and said that the European Commission’s proposed regulation would be “very restrictive” for non-EU funds and some styles of investing. He also warned the UK government against killing “the golden goose” of hedge funds and private equity

Treasury to delay bank overhaul

The centrepiece of the Government’s plan to overhaul financial regulation has been delayed, perhaps until after the election, the Telegraph said, without citing sources. The long-awaited White Paper on financial regulation, due to be published on Wednesday, will offer no firm proposals on how authorities will control banks’ balance sheets to avoid future crises, according to the Telegraph. Instead, it will present topics for discussion rather than hard-and-fast new laws.

FSA considers tripling fines

Penalties for financial wrongdoing would be tripled and fines for insider dealing and other market abuse set at a minimum of £100,000  under new proposals by the City regulator, the FT reported. The FSA proposed in a consultation paper that a company could be fined up to 20 per cent of its income from the product or business line related to the regulatory action. Individuals could lose up to 40 per cent of their pre-tax income, including bonuses, from a job related to non-market abuse cases. FT Alphaville said the proposals, which are part of the FSA’s new emphasis on “credible deterrence”, were belated-but-scary.

House price slide hits recovery hopes

European house prices fell more quickly in the first three months of this year than even in the fourth quarter of 2008 when global recession struck, a trend that looks set to dim the region’s hopes for economic recovery. The FT’s European House Price Index showed  house prices in England and Wales were 12.7 per cent lower in the first quarter than in the same period in 2008; Spain and France saw declines of about 6.5 per cent, and German prices dipped 0.6 per cent.

Recruiter sees grim future for London’s out-of-work bankers

If you are 35 years old, have only ever worked in the City and have lost your job, then the chief executive of Britain’s biggest listed recruitment company has a grim message for you on the prospect of a recovery in financial sector employment: “Those jobs have gone and they’re not coming back any time soon.” Hays chief executive Alistair Cox told the FT he had seen no indication green shoots have taken hold yet in the notoriously competitive City recruitment market.

BAIC plans Opel China plant

Beijing Automotive Industry Corporation aims rapidly to expand its operations in China if it wins the race to acquire General Motors’ Opel business in Europe. In a last-minute bid for GM’s European operations, submitted last week, the Chinese carmaker outlined a plan to spend $2bn on what would become Opel’s first factory in China, several people close to the situation told the FT. In addition, BAIC proposes to shut down GM’s Belgian Antwerp plant and cut Opel’s workforce across Europe, these people said.

Ex-Goldman employee accused of cyber-theft

US officials arrested former Goldman employee and computer programmer Sergey Aleynikov over the weekend, accusing him of stealing sensitive automated trading codes and uploading them to a server based in Germany, the FT said. An FBI affidavit alleges that Mr Aleynikov downloaded about 32MB of proprietary trading platform data from his desktop computer at work as well as his laptop at home on four separate occasions between June 1 and June 5, his last day at Goldman in what FT Alphaville has dubbed the “Great Goldman Black Box Heist“. Mr Aleynikov was released on Monday after posting $750,000 bail.

US earnings season brings ‘green shoots’ hunt

Investors will be looking for US companies to start providing evidence that “green shoots” of recovery have begun sprouting on their bottom lines when they start reporting second-quarter results on Wednesday, the FT said. Analysts warn that investors’ confidence remains fragile and the stock market could slip further if companies miss expectations in the second quarter or issue downbeat predictions for the future.

Fitch cuts California’s bond rating close to junk

Fitch slashed its rating on California’s general obligations bonds to triple B – two notches above junk – on Monday, after the state was forced to issue IOUs for certain payments while it frantically tries to agree a budget, the FT reported. Further downgrades are possible, Fitch said, if legislators and governor Arnold Schwarzenegger do not end a stalemate over how to close a $26bn budget gap. Separately, the WSJ reported that a group of the biggest US banks said they would stop accepting California’s IOUs on Friday, adding yet more pressure on the state.

Overnight markets: Still down

Japanese equity markets tumbled for a fifth consecutive session on Tuesday, amid persistent concerns over the likely strength of any economic recovery, while exporters were dragged lower by worries over a strengthening yen. Most other Asian markets also declined, dragging the MSCI Asia Pacific Index 0.5 per cent lower to 101.66 by late morning in Tokyo.

Asian markets (Tue)
04:00 BST
Nikkei down 20.94 (-0.2%) at 9,659.93
Topix down 2.2 (-0.24%) at 910.22
Hang Seng up 62.5 (+0.35%) at 18,041.91 Read more