Posts from August 2009

The (Long) Weekender

Please note there will be no 6am Cut service on Monday due to the UK Bank Holiday. 

Subscribe to the 6am Cut and the Lunch Wrap – FT Alphaville emails that keep you informed and entertainedRead more

BlueCrest pay bonanza

By some guy called Sam Jones. The FT’s hedge fund correspondent apparently!

Pay for staff at BlueCrest, one of Europe’s largest hedge funds, close to doubled in 2008 on the back of a successful year for most of the company’s funds. Read more

Claws of crisis

All kudos to CNBC for bringing attention to a gravely under-reported story — the crisis facing the US lobster industry.

It was probably a slow news day, we know — but bear with us, it’s not an uninteresting tale (despite the drastic overuse of the word ‘boil’, strap lines like “Claws of Crisis”, and the lack of any cold hard numbers). Read more

The Fed’s black sheep CMBS bond herd grows

Baaaaaaaaaaaa.

Here’s some perhaps unexpected news from the Fed — the central bank appears to be getting more selective, at least when it comes to Talf legacy CMBS. Read more

Gold war

Dennis Gartman, of the Gartman Letter – and who recently established a hedge fund, River Crescent, to put to work the buy and sell recommendations he publicises in his daily note – issued an interesting view on gold on Friday.

First, he presented the following chart of spot gold: Read more

Lunch Wrap

On FT Alphaville Friday morning,

- Anatomy of a Goldman trading huddleRead more

Big Brother’s blood oaths

The alleged shenanigans at the Stanford Financial Group went far beyond misleading regulators and fleecing investors, according to court documents released as part of the guilty plea entered by the company’s former CFO, James Davis.

In fact, some of the claims are downright weird. Read more

Markets live transcript 28 Aug 2009

Live markets commentary from FT.com 

AIG’s new CEO is very busy, ok?

Do not worry, US taxpayer.

Robert Benmosche, the new CEO of bailed-out mega-insurer AIG, may be on holiday, but he is actually very busy doing very important things. He just happens to be doing those things from his palatial 12-bedroom villa on the Croatian coast. Read more

Quantitative bonus-ing

As the Bank of England’s balance sheet balloons, so too do its bonuses, according to data disclosed by the Bank under a FOI request from The Telegraph.

BoE balance sheet (courtesy of Morgan Stanley) and BoE bonuses (FT Alphaville's own chart)

Anatomy of a Goldman trading huddle

Part of Goldman Sach’s defence of its ‘trading and tipping huddles‘ concerns a couple of specific instances used in the Wall Street Journal’s story:

The article cits two examples of company-specific that came out of huddles. In each case the analyst had published a 12-month price target that was above the price of the shares at the time the huddles were held. The comments made during the meetings were entirely consistent with the views expressed in previously published research.
 Read more

Goldman’s client cuddle huddles

DealBreaker has got hold of Goldman’s response to Monday’s trading ‘huddle’ allegations by the Wall Street Journal.

This was not preferential treatment aimed at helping select clients make more money via trading tips, according to the Bank Holding Co., it was merely a special service organised “to better serve their clients” (presumably by helping them make money). Read more

Further reading

Elsewhere this Friday,

- Good and bad financial innovationRead more

Pink picks

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

News analysis: Bankers watch as Sweden goes negative
Last month, the Swedish Riksbank entered uncharted territory when it became the world’s first central bank to introduce negative interest rates on bank deposits, write the FT’s Andrew Ward and David Oakley. Now, as central bankers contemplate exit strategies after their extraordinary measures of the past two two years, they will be monitoring the Swedish experiment closely. Read more

Snap news

Breaking pre-market news on Friday,

- Japan’s jobless rate hits record 5.7 per cent — BloombergRead more

US GDP shrinks 1% in second quarter

The US economy shrank less than expected in the second quarter, as aggressive government spending eased the pace of contraction, signalling that the worst of the longest recession on record is over. Q2 US GDP declined by an annualised rate of 1% after plunging by 6.4% in the first quarter, according to data issued on Thursday. The result was unchanged from the original US commerce department estimate in July but was far better than the 1.5% decline projected by economists.

US ‘problem’ bank list hits 15-year high

The number of US banks at risk of failure reached a 15-year-high while the fund protecting depositors hit its lowest level since 1993, according to figures that highlight the spread of the crisis in the US financial system. The FDIC on Thursday said the number of “problem banks” had risen from 305 to 416 in the second quarter. While it does not name problem lenders, the banking regulator said their total assets had increased from $220bn to $299.8bn in the quarter through June.

Lloyds considers protection options

Lloyds Banking Group is weighing up several alternatives to joining the UK’s asset protection scheme, which may include a rights issue as well as the sale of Scottish Widows. For months Lloyds and its advisers have been negotiating over its participation in the insurance scheme that will allow the bank to ringfence £260bn of toxic assets. But in recent weeks, since its better-than-expected second-half results, Lloyds has suggested it might try to revise the terms of its participation in the scheme.

‘Swollen’ financials hit at FSA chief

UK bankers, industrialists and London’s mayor fiercely rejected Lord Turner’s argument that Britain’s “swollen” banking industry is destabilising the economy and should be cut down to size, the day after the FSA chairman said the City watchdog should not make London’s competitiveness a major aim. He also floated the idea of a global ‘Tobin tax’ on financial transactions to curb some of the banks’ “socially useless” activity.

EU business opposes derivatives reform

European companies have warned that proposed reforms of the derivatives markets requiring contracts to be routed through clearing houses could impose a huge drain on corporate cash. In a comment paper criticising European Commission proposals for the OTC derivatives market, the UK-based Association of Corporate Treasurers wrote that current plans could require companies to hold billions in extra cash against positions or post as margin.

NYSE Euronext acquires Nyfix

NYSE Euronext on Thursday agreed to pay a significant premium to buy Nyfix, a US company which sells software used by asset managers and hedge funds to communicate trading intentions to their brokers and banks. NYSE Euronext will acquire publicly listed Nyfix through its NYSE Technologies unit, in an all-cash deal for $1.675 per share of Nyfix common stock. The deal values Nyfix at $144m and represents a 95% premium to the company’s closing share price on Wednesday.

Investors reject revised NatExpress bid

Key shareholders in National Express, the troubled UK train and bus operator, have signalled they will not back a revised all-cash 450p takeover offer from the group’s largest investor and stick by the management’s alternative plans for a rights issue. The Cosmen family, which holds 18.5% of NatExpress, and buyout group CVC tabled a bid valuing the group at about £600m on Thursday. The NatExpress board is to meet next week to evaluate the offer, which represents a 63% premium to the pre-bid share price.

Crédit Agricole beats expectations

Shares in Crédit Agricole surged on Thursday after it reported better-than-expected Q2 net profits, helped by resilient sales in its retail and asset management businesses and lower asset writedowns. France’s third-largest bank said it made net profit of €201m ($286m), flat on the first quarter but well ahead of analysts’ expectations. First-half revenues at €8.62bn rose 17% from a year ago. Agricole shares rose by as much as 7% in a flat market.

Bank of China sees earnings fall

Bank of China, the country’s third-largest lender, reported a 2.5% drop in first-half earnings despite an unprecedented  lending spree that saw its total outstanding loans rise 38% in six months. BoC extended Rmb896.3bn ($131.2bn) of new loans in the first half, more than any other Chinese bank. BoC posted H1 net profit of Rmb41.1bn, slightly down from a year earlier despite the surge in new loans. Net interest margins have plunged for all Chinese banks since Beijing slashed interest rates at the end of 2008.

Macquarie’s Shanghai JV approved

Macquarie Group has secured approval to launch a Chinese joint venture offering corporate banking and asset management services. The Australian investment bank has taken a 19.99% stake in a Shanghai trust company – lightly regulated vehicles that can also make a wide range of equity investments – acquiring a 19.99% per cent stake in Sino-Australian International Trust Co, the maximum under China’s foreign investment rules. The remainder is held by two state-owned firms, Beijing Sanjili Energy and Beijing Rongda. See also FT Alphaville.

Accor looks at splitting businesses

Accor jettisoned years of opposition to a break-up on Thursday by announcing plans to study a spin-off of its vouchers business, as the hotel group’s interim results underlined the global downturn in the hospitality industry, reports Reuters. Gilles Pélisson, executive chairman, said the group would consider splitting its business lines into two autonomous entities. Investors, who have long pushed Accor to divide its cash-generative vouchers and financial services business from its portfolio of hotels, welcomed the news.

AIG Taiwan unit may fall short of target

Bidders for AIG’s Taiwanese life insurance unit may offer less than the US insurer’s $2bn target according to people with knowledge of the matter, reports Bloomberg. A group led by Primus Financial may bid $1.2bn to $1.4bn for AIG’s Nan Shan Life Insurance, while Fubon Financial plans a $1bn offer and Cathay Financial may bid at least $1.5bn.

UK business spending slides

UK businesses slashed investment spending at the fastest pace since records began in 1966 in the year to June 30, figures showed on Thursday. The data sparked fresh fears over prospects for a sustainable recovery as company results pointed to further cutbacks. Investments ranging from vehicles to  computer software purchases fell by 18.4%, the sharpest annual decline in at least 43 years.

Stanford’s finance chief pleads guilty

James Davis, the chief financial officer at the Stanford Financial Group, on Thursday pleaded guilty to charges that he helped Sir Allen Stanford, the company’s billionaire founder, in an alleged $7bn Ponzi scheme. Sir Allen was due to appear in court in Houston, Texas, on a separate matter but was admitted to hospital on the day with an irregular heart beat and placed under secure observation.

Overnight markets: Up

Asian stocks rose on Friday, led by materials producers and technology companies, on higher commodity prices and better-than-expected US economic data. Futures on the S&P500 Index were little changed after the gauge rose 0.3% on Thursday as crude oil futures increased for the first time in three days, up 1.5%. Data showed that the US economy shrank at a 1% annual rate in the second quarter, far less than the 1.5% contraction estimated by economists.

Asian markets (Fri)
03:00 BST
Nikkei up 82.18 (0.78%) at 10,556.15
Topix up 5.49 (0.57%) at 969.72
Hang Seng down 213.57 (-1.04%) at 20,242.75 Read more