Posts from December 2009

An FT Alphaville review of 2009

FT Alphaville Christmas poem

Enjoy! Read more

So who’s lying to their customers – Citibank or the WSJ?

Newspapers, especially American newspapers, like to think that they check facts, giving their readers information that can be considered fair and accurate.

The real world, of course, is more complicated. The “truth” can be an ephemeral thing, subject to revision. That’s especially so when “facts” collide with “confidence,” or when the real story doesn’t quite mesh with legal necessities. Read more

Smithers: ‘There’s no reason to hold bonds’

Economist and commentator Andrew Smithers (of Smithers & Co) — famed for some of the decade’s more bearish (yet accurate) calls — leaves us with a very clear cut view on for 2010.

In short, while stocks remain overvalued, there’s no reason at all to buy bonds. As his his latest World Market Update surmises (our emphasis): Read more

Who’s a Die Hard fan of vodka?

Bruce Willis of course.

Reuters reports the Hollywood actor has agreed to buy a 3.3 per cent stake in French-Polish vodka maker Belevedere as part of a multi-year partnership deal signed back in April. Read more

Lunch Wrap

On FT Alphaville on Tuesday morning,

- Moody’s downgrades Greece to A2. Read more

Opec eyes OECD demand

The Organisation of Petroleum Exporting Countries meeting in Luanda, Angola, agreed on Tuesday to leave oil output curbs unchanged, while calling for greater compliance with existing output targets — a signal the cartel currently believes the market to be well supplied.

One of the big debate points in Luanda, however, focused on how quick demand recovery in OECD countries would be in 2010. Remarks from Opec’s opening address highlighted the main issues as follows (our emphasis): Read more

Hamp, what is it good for?

In addition to the difficulty of converting temporary mortgage modifications into permanent ones, one of the big question marks hanging over the US Treasury’s Home Affordable Modification Plan is the redefault rate. That is, the percentage of homeowners who redefault on their modified mortgage.

FT Alphaville has mentioned before that in cases of severe negative equity, it might make more sense for a homeowner to make a couple of Hamp-reduced interest payments on his or her mortgage and then walk away. The US Treasury hasn’t given an official default rate for the programme yet, but figures like 25 per cent and 50 per cent have been bandied about. Read more

Carbon cop-out

FT Energy Source, FT Alphaville’s sister blog, has provided ample coverage of the 2009 Copenhagen Climate summit, but we would like to draw readers’ attention to one particular fallout: the associated slump in European Union carbon allowance prices following the meeting’s conclusion last weekend.

On Monday, front-year carbon prices fell to €12.45 — the lowest the contract has traded since April, according to analysis from industrial energy advisor Utilyx. The move was connected to the conference producing only a non-binding Accord, instead of any broad compulsory targets. Read more

The weather outside is frightful…

(…but the natgas-fire is so delightful.)

They’re calling  it the ‘storm of the decade‘ in the United States. Read more

What is the BoE’s QE plan B?

Central bankers, as Alan Greenspan learnt to his regret, need to look like they have a plan B.

And so does the Bank of England. Combative MPC member Adam Posen on Tuesday morning seems to be dropping strong hints that something could be cooking over on Threadneedle Street. Read more

‘More bad news’ on bank CDO exposures to come, BofAML says

FT Alphaville wrote in October 2008 that, by and large, banks’ holdings of synthetic corporate CDOs had yet to be written down. Fast forward to December 2009, and it looks like the same might still be true for the majority of those holdings.

Recall that synthetic CDOs are not backed by tangible collateral (RMBS, CMBS and the like) but by CDS contracts which reference such collateral. In this case, CDS on corporations. Read more

Russia forever counter-trend

While sovereign downgrades may be the big fear facing many western economies, there is one sizable G8 country which the rating agencies seem slightly more positive about.

Russia. Read more

Greek bond blow-out

After the downgrade, the debt deluge:

greecebonds2

Moody’s downgrades Greece to A2

It looks like Moody’s has finally barked.

Following in the footsteps of Fitch and S&P, the ratings agency has downgraded Greece to A2 from A1 on Tuesday morning. Fitch and S&P already have the Hellenic Republic on BBB+. Read more

Further reading

Elsewhere on Tuesday,

- Financial villains of the decadeRead more

Pink picks

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

Philip Stephens: It’s too late to take the politics out of banking
The storm may be raging about them, but bankers have been locked in a contest to say something truly silly, writes the FT’s Philip Stephens. A year that began with a threatened collapse of the international financial system thus draws to a close with a reminder of why governments cannot again trust the future of their economies to the self-styled titans of finance. Read more

Snap news

Breaking pre-market news on Tuesday,

- Kingfisher delisting on the NYSE Euronext due to low level of trading – statement. Read more

We’re taking a festive break…

The 6am Cut, along with the rest of FT Alphaville, is taking a short break over the festive period.  We will return, refreshed, on Monday Jan 4. In the meantime, call in to the main site to see our special Seasonal video and various posts-of-the-year. Thanks for reading us over the past year – and thanks for all your comments.

Merry Christmas and Happy New Year.

Macarthur Coal eyes Gloucester

Macarthur Coal, the world’s biggest exporter of pulverized coal, is poised to bid for Gloucester Coal to add mines in Australia ahead of a forecast rise in coal prices, reports Bloomberg. Macarthur is expected to announce its offer on Tuesday, and is set to sell a 25% stake to Noble Group for the Singapore-listed company’s 88% holding in Gloucester and stakes in three other mines.

Sinochem cuts Nufarm bid

China’s Sinochem has cut its takeover price for Nufarm by 8% to A$2.6bn ($2.3bn) after a lengthy due diligence process into the Australian agricultural chemical group’s finances. In cutting its cash price from A$13 to A$12 a share, the Chinese group risks losing the backing of Nufarm’s board which said on Tuesday it had not been able to clarify the terms and conditions of the revised offer. The fact that Nufarm did not reject the revised bid outright suggests Sinochem is not out of the game, said analysts.

Overnight markets

Asian stocks rose on Tuesday, reports Bloomberg, as the weaker yen boosted the earnings outlook for Japanese makers of electronics and cars and after metal prices advanced.

Asian markets
Nikkei 225 up +139.85 (+1.37%) at 10,323
Topix unchanged 0.00 (0.00%) at 632.00
Hang Seng up +243.38 (+1.16%) at 21,191 Read more

Dubai World fails to seal deal

Dubai World on Monday failed to reach agreement on a suspension of its $22bn debt repayments after a day of talks with more than 90 banks, reports The Times. The state-owned conglomerate insisted that negotiations had been constructive and that the group would set out a comprehensive proposal for restructuring the debt “within weeks”. Instead, negotiations focused on information-sharing between the group and its creditors, with both sides stressing that the restructuring would be long and complex.

FBI probes hacking at Citi; bank denies breach

The FBI is probing a computer-security breach targeting Citigroup that resulted in a theft of tens of millions of dollars by computer hackers who appear linked to a Russian cyber gang, reports the WSJ. The attack was aimed at Citi’s Citibank subsidiary, which includes its North American retail bank and other businesses. However, Citi denied any breach of its systems, or losing any money, and said the idea of an FBI investigation was untrue.  The WSJ, meanwhile, said it was not clear whether the thieves gained access to Citi’s systems directly or through third parties. Hackers also assaulted two other entities, at least one of them a US government agency.

Ford closes in on sale of Volvo

Ford Motor is set to announce further progress in the next next few days on talks to sell its Swedish Volvo brand to China’s Zhejiang Geely Holding Group. While a final deal had yet to be settled, the two sides were close to agreement on some key aspects, said people close to the talks. Protection of intellectual property rights and the future of Volvo’s Swedish and Belgian plants were among remaining issues. Ford named Geely in October as its preferred bidder for Volvo.

Sanofi-Aventis to buy Chattem

Sanofi-Aventis, the French pharmaceuticals group, has agreed to buy Chattem, a US consumer healthcare company, in a $1.9bn cash deal that will hasten its diversification away from prescription medicines. Sanofi will pay $93.50 a share for Chattem, pushing Sanofi from the sixth to the world’s fifth largest consumer healthcare group by revenues. The offer was at a 34% premium to Chattem’s closing stock price on Friday. See also FT Alphaville on the deal.

Bonuses for Lehman UK staff

The European arm of collapsed US investment bank Lehman Brothers is hiring bankers and paying generous bonuses in London, as it recruits middle and back office staff to help administrators PwC check millions of transactions that must be reconciled with clients and trading partners. A judge overseeing Lehman’s US bankruptcy in New York last week approved an extra $50m in bonus pay-outs to some 230 derivatives traders working to unwind the dead bank’s $10bn portfolio.

China’s banks to boost capital

Chinese banks will raise as much as Rmb500bn ($73bn) from capital markets next year in the wake of this year’s lending boom. In the first official confirmation of the imminent fund-raising effort, Li Fuan, acting director-general of the China Banking Regulatory Commission, said in a speech that China’s listed banks are likely to issue Rmb300bn-400bn in equity or bonds in 2010. In addition, Agricultural Bank of China would raise Rmb100-200bn from its IPO, expected next year.

Regulator under fire over Rusal IPO

Hong Kong’s leading shareholder activist, David Webb, has issued a stinging critique of the market regulator’s unprecedented decision to restrict retail investor participation in UC Rusal’s $2bn IPO. Hong Kong’s SFC securities regulator on Friday approved Rusal’s IPO plan but insisted on a minimum upfront investment of HK$1m ($129,000). The regulator will also require the Russian aluminium group to be traded on the Hong Kong stock exchange in blocks of 200,000 shares, making it too expensive for most small investors.

GM picks Microsoft’s Liddell as CFO

General Motors on Monday named Chris Liddell, Microsoft’s former chief financial officer, as its finance chief and a vice chairman. GM’s former CEO, Fritz Henderson, was forced to resign earlier this month amid criticism of his management policies. The search for his replacement is expected to result in an external appointment, although Ed Whitacre, the company’s chairman and CEO, said last week that internal candidates would also be considered.

BAA wins bias ruling

BAA has won its appeal against the UK’s Competition Commission, although it is unclear whether the airport operator will have to sell airports in London and Scotland. In March, BAA was ordered to sell three of its seven UK airports: Gatwick, Stansted and either Glasgow or Edinburgh. But BAA, owned by Spanish infrastructure group Ferrovial, accused the Competition Commission of an “intolerable conflict of interest” due to a panel member’s links to a potential buyer.