Posts from Thursday Jul 23 2009

MSFT’s soft numbers

Ugly numbers out of Redmond on Thursday. Shares were slammed, falling 9 per cent in after-hours trading.

Per Bloomberg, emphasis ours: Read more

Latvian banks face reserve shortfall

Here’s an interesting story from Reuters on Latvian banks (our emphasis):

 LONDON, July 23 (Reuters) – Banks in Latvia have fallen short of the central bank’s reserve requirements since late June, with the daily shortfall hitting as much as 234 million lats ($473.2 million), central bank data shows. Read more

CDS report: Credit markets surge amid equity rally

This CDS report was written by Markit’s Gavan Nolan
Credit and equity markets enjoyed another strong session today, easily offsetting yesterday’s profit taking. The Markit iTraxx Europe index tightened well below 100bp, trading around 96bp. The Markit iTraxx HiVol index consolidated its position below 200bp at 186bp, while the Markit iTraxx Crossover breached the 650bp level. Both the FTSE and Dow have returned to 2008 year-end levels, and rising Treasury yields provided further evidence of rising risk appetite.

The strong performance was again driven by earnings, both in Europe and in North America. Credit Suisse has emerged as one of the stronger banks in Europe, and its second-quarter results supported the bullish consensus on the name. The Swiss bank posted its second consecutive quarterly profit and easily beat expectations. Its spreads have tightened considerably in recent months and were little changed after the results. Read more

S&P’s subprime revision

Amid the flap over Standard & Poor’s decision to reverse its ratings on CMBS transactions, we almost missed this: the rating agency has once again revised upward its projections for losses on subprime mortgages.

From the statement, emphasis ours: Read more

About that Harman International hoax…

Well, the SEC has wasted no time in getting to the bottom of it.

Via ReutersRead more

Bull-speed ahead

Reuters headlines

Perhaps the stars are aligned after all. Read more

Lex: Porsche

The dismissal of Wendelin Wiedeking may clear the way for Ferdinand Piëch to leave his family an extraordinary legacy.

Porsche SE could inject the unlisted distributor into Porsche AG, which VW would then buy. Any remaining Porsche SE debt could be dealt with via a rights issue. As a result, a debt-free Porsche SE would own a majority of VW, alongside its minority partners the lower state of Saxony with 20 per cent, and the Qataris with another 20 per cent, after spending billions of euros exercising Porsche SE’s options. In time, when the situation settles down, Saxony’s long-contested veto over VW may be repealed. Hey presto, the family, via Porsche SE and led by Mr Piëch, could then take control of VW.

 Read more

Is this where we are now?

Looking to the skies for signs of an economic recovery? Really? From Reuters:

 Read more

The Buffett effect

The pre-market action in Moody’s:

10936.jpg Read more

HSBC’s hedge fund hope

Here, courtesy of the FT’s new hedge fund correspondent, is the internal memo on HSBC’s new prime brokerage services.

Intriguingly enough, we’re told there will be no rehypothecation in this one — which in theory should mean that hedgies’ assets are kept in segregated accounts, and therefore wouldn’t be frozen should HSBC encounter sudden liquidity or funding problems — something that happened when Lehman collapsed. Read more

US car company makes profit

Well sort of.

From Ford Motor CompanyRead more

Lunch Wrap

On FT Alphaville Thursday morning,

– Re-remic-ing the Talf. Read more

Re-Remic-ing the Talf

Commercial real estate has, rather suddenly, become the new doom-spot for the US economy.

Fed chairman Ben Bernanke is worried about it, Morgan Stanley and Wells Fargo posted losses because of it, and S&P is confusing everyone about it. Read more

Markets live transcript 23 Jul 2009

Live markets commentary from 

Islamic finance to the rescue?

From Wikipedia:

Usury (pronounced /ˈjuːʒəri/, comes from the Medieval Latin usuria, “interest” or “excessive interest”, from the Latin usura “interest”) originally meant the charging of interest on loans. This would have included charging a fee for the use of money, such as at a bureau de change. After countries legislated to limit the rate of interest on loans, usury came to mean the interest above the lawful rate. In common usage today, the word means the charging of unreasonable or relatively high rates of interest. As such, the term is largely derived from Abrahamic religious principles; Riba is the corresponding Islamic term. The primary focus in this article is on the Christian tradition. 

 Read more

Morgan Stanley and VaRiations

Comment columns are awash today with talk of Morgan Stanley’s trading prudence, as evidenced by its lower Q2 Value at Risk number.

For instance, here’s Graham Bowley at the New York TimesRead more

Latvia jitters creeping back

Latvia is back in the headlines as talks between the government and the IMF over its second loan instalment continue to flounder over differing budgetary views.

The analyst community is now interpreting the deadlock as yet another possible chink in the armour of Latvia’s  euro-peg defence. Here, for example, is the latest from RBC Capital Markets’ emerging markets team: Read more

Now that’s a payoff

From on Thursday.

Porsche on Thursday dismissed chief executive Wendelin Wiedeking, as the debt-ridden German sports carmaker prepared for an increase of its capital base by at least €5bn ($7.1bn) ahead of a merger with rival Volkswagen. Read more

Further reading

Elsewhere on Thursday,

– The rise and rise of the efficient markets hypothesis. Read more

Pink picks

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

Pink Picks illustration - FTJohn Gapper: Squeeze the leviathans of finance
If you have not been concentrating for the past few months, you may think that nothing much has changed in the world of finance.  Banks such as JPMorgan Chase and Goldman Sachs have reported large profits for the second quarter, helped by big fixed income trading revenues, having repaid the equity injections the US government made in them last autumn. Read more

Snap news

Breaking pre-market news on Thursday,

– Credit Suisse posts Q2 net income of CHF 1.6bn — statementRead more

The 6am Cut – a free, news-by-email service from FT Alphaville

Get up to speed from the moment you rise. Sign up (free of charge) for FT Alphaville’s 6am Cut, a tight but comprehensive briefing emailed to you at the start of every European weekday morning (or in the Asian afternoon or late-night US time). Designed for busy readers on the move, our email service provides a quick and accessible digest of key financial news and analysis from the FT and other sources.

Compiled by a seasoned editor – rather than a computer or an office junior – the 6am Cut consists of handpicked, tightly-written summaries of news and associated commentary chosen for their importance to finance professionals. The email also provides useful overnight markets updates. Read more

National Express receives second bid

National Express on Wednesday night revealed that it had received a second takeover approach after FirstGroup, the initial bidder, walked away from the company, citing uncertainties surrounding its rival’s ­business. National Express refused to name the new bidder and said its intentions were “not yet known”, the FT reported. The Times, citing transport industry sources,  said the mystery bidder was Stagecoach. News of the approach came shortly after FirstGroup ruled out making a formal offer for the company.

Porsche plans to add €5bn to capital base

Porsche plans to increase its capital base by at least €5bn in a move to bolster its sagging balance sheet ahead of a planned, though controversial, integration of carmaking operations with its German rival Volkswagen, the FT reported. The sports car group gave few details of the structure of any capital boost and said nothing on the future of its chief executive Wendelin Wiedeking; nor did it comment on speculation that the emirate of Qatar would be taking a stake.

Iron ore spot prices forge path to $100

Spot iron ore prices are fast approaching $100 a tonne, well above the levels at which miners and steelmakers in Japan, South Korea and Europe have struck supply deals, as demand outside China recovers, the FT said. The surge in spot prices has spurred several banks to forecast that benchmark – annually negotiated – prices will rise next year, reversing their previous expectations of a fall in prices.

Executive pension costs revealed

Britain’s biggest companies are paying an average 70 per cent of executives’ pay to fund the final salary pensions of their top officials, making them hugely more expensive than the pensions of ordinary employees, according to a study by actuarial consultants Lane Clark & Peacock. The study is the first to look at the actual cost of executive pensions at FTSE 100 companies, the FT said.

GSK’s swine flu arsenal grows

GlaxoSmithKline moved on Wednesday to become the pharmaceuticals company with the broadest range of products to tackle swine flu. The UK group unveiled plans to add masks and diagnostics to its vaccines and antiviral medicines business. GSK said it had received orders for 195m swine flu vaccine doses so far, and was in talks with 50 governments to take deliveries from September, the FT reported. Meanwhile, GSK’s US rival Bristol-Myers Squibb  said it would pay $2.4bn to acquire Medarex, a biotechnology company that has been helping it develop a melanoma treatment.

Deutsche Bank finds four cases of surveillance

Deutsche Bank on Wednesday admitted it had been involved in four cases of surveillance activities, some of which are being investigated for breaches of privacy laws, but said none of its top executives had any role. State prosecutors are considering whether to open a criminal inquiry arising from two of the incidents, the FT reported.

Advisers to CIT’s bondholders said to push for bankruptcy

Advisers to the bondholders that gave troubled commercial lender CIT a $3bn lifeline are recommending the company be restructured through a bankruptcy after a debt tender next month, Bloomberg said, citing a person familiar with the matter. Per Bloomberg: “Even if CIT succeeds in getting 90 per cent of the $1bn of floating-rate notes due Aug 17 swapped at a discount, the advisers will seek a so-called pre-packaged bankruptcy that would allow the company to restructure out of court, Jeffrey Werbalowsky, chief executive officer of Houlihan Lokey Howard & Zukin, told bondholders [on Wednesday], according to the person.”

Goldman sheds bail-out legacy

Goldman Sachs became the first major bank to buy back warrants held by the US Treasury on Wednesday, allowing the group to shake off the last vestige of its participation in the government bail-out programme after just nine months. Goldman paid $1.1bn to the US Treasury to buy back the warrants, which were granted as part of the government’s $10bn investment of Tarp funds in the bank last year. The bank had tried and failed to talk the Treasury down from its $1.1bn asking price, the FT said, citing a person familiar with the matter.