Posts from Monday Jan 4 2010

Dogeza, US style

Here’s a trend we’d like to encourage…

Ten years after consummating what is generally regarded as the worst merger in corporate history, former Time Warner AOL chief executive Jerry Levin has apologisedRead more

CDS report: Nestle sale triggers Cadbury speculation

Markit’s Gavan Nolan wrote this CDS report

It was business as usual today as the credit and equity markets resumed their rally from last year. The Markit iTraxx Europe index closed at 71.5bp, over 2bp tighter than the year-end mark and the tightest level since May 2008 (excluding roll effects). It was a similar story with the other headline indices, with the Markit iTraxx HiVol index breaking through the 100bp barrier for the first time in nearly two years and the Markit iTraxx Crossover hitting 415bp, its tightest level since May 2008. Read more

Deference, Dubai style

From Bloomberg on Monday afternoon:

Dubai’s Sheikh Mohammed bin Rashid Al Maktoum opened the world’s tallest tower today and renamed the building Burj Khalifa after Sheikh Khalifa bin Zayed Al Nahyan, president of the United Arab EmiratesRead more

Sovereign debt crises 2010, an RBS sapling

What is the `Tree of Truth’?

According to RBS, it is a Binary Recursive Tree Approach aimed at selecting explanatory variables and critical threshold levels that best discriminate between sovereign debt crisis and non-sovereign debt crisis states. Read more

MergerMarket’s M&A rankings

Investment banks like these things — and when the latest deal league tables show Goldman Sachs being knocked off the top spot by Morgan Stanley we can treat it as bona fide news.

From MergerMarket, an FT sister company… Read more

Rusal’s red pen treatment

You probably had better things to do over the festive period than plough through the 1,141 page IPO prospectus for Oleg Deripaska’s UC Rusal.

Which gives us the opportunity to highlight page 3 of the document. Read more

Delinquent CMBS, the `C’ stands for climbing

Behold, what looks to be the biggest monthly increase in delinquent CMBS in 2009 (so far).

Delinquent CMBS for Nov. 2009 - Realpoint Read more

The defining feature of 2010 will be…

Reverse repos.

That’s according to Morgan Stanley’s chief European strategist Teun Draaisma, who reckons the moment the Fed starts to drain excess reserves from the system will be the point at which a 10 per cent equity market correction begins. Read more

Consolidating the US, UK gov’t bond sell-off

With the holiday season finally over, it’s probably a good time to contemplate the period’s more excessive and illiquid market moves. Among them the rather sudden and acute sell-off in US and UK government bonds. Was it rational?

As the following charts depict, British government bonds ended 2009 with their worst monthly performance since the start of the year. Read more

Professional athletes and their money, Ponzi edition

In March 2009, FT Alphaville riffed on the theme of the generally poor financial and investment decisions made by professional athletes.

By the end of the year, another — although not unrelated — trend had emerged: that of the perils of listening to the financial advice of those paid to play sport. Read more

Not many new homes

Calculated Risk has a nice rundown of the various government programmes aimed at propping up US housing.

By Calculated’s count there are eight, including the Home Affordable Modification Plan (Hamp), various MBS-purchasing programmes, foreclosure moratoria and the Housing Tax Credit. Read more

Citi sells its electronic FX platform

There’s been some consolidation in the world of FX electronic trading platforms on Monday.

According to a statement released by foreign-exchange platform FXall, Citigroup has reached an agreement with the company to sell it its LavaFX foreign-exchange electronic trading platform for an undisclosed sum. Read more

Lunch Wrap

On FT Alphaville Monday morning,

- Happy new year (not) for the UK and Europe… Read more

Scanning Smiths Group

The elusive head and shoulders pattern emerges in Smiths Group — makers of X-ray body scanners — on Monday morning, after airport-operator BAA says it will introduce the equipment at Heathrow.

Markets Live transcript 4 Jan 2010

Live markets commentary from FT.com 

Scratch(ed) and Dent(ed) RMBS

Here’s something that might have escaped your radar during Christmas week — a mass downgrade of so-called `Scratch and Dent’ RMBS deals by ratings agency Fitch.

A Scratch and Dent mortgage is a funny thing. It’s basically an industry term for home loans which have some sort of defect — that is, the loan might have been made outside of lending guidelines, or with documents missing, or is simply non-performing. Read more

Royal Dog of Scotland

RBS has flown out of the traps on the first trading session of 2010:

 Read more

Literally frozen orange juice

A few days into the new year and a key observation that can already be made in the west is that it’s cold; Colder than usual, in many parts of the US and Europe.

Weather-affected commodities are consequently staging a bit of a rally. Read more

A depressing decade

S&P 500 annualised returns - S&P Indices

That’s from S&P Indices, with data until Dec. 18th. Read more

Happy new year (not) for the UK and Europe…

Sorry we couldn’t be more positive today but here’s the latest New Year gloom from UK and Europe-based economists and business executives:

UK deficit warning from City economists Read more

Further reading

Elsewhere on Monday,

- “To hell with Japan, we have already had our lost decade.” Read more

Pink picks

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

Pink picksClive Crook: Beware the crisis around the corner
The US economy is sickly, but the mood of impending doom has lifted, writes Crook. The response of US and other authorities to the emergency is unfinished business and needs continuing attention – but in 2010, if the crisis continues to ease, the danger is that politicians will relax and minds will wander from the need for new financial rules. Read more

Snap news

Breaking pre-market news on Monday,

- Novartis agrees to buy a 52% stake in Nestle SA’s Alcon for $28bn in cash – statementRead more

Overnight markets: Up

Asian stocks, the dollar and oil prices rose while Treasuries fell on the first trading day of 2010, as China’s manufacturing expanded at the fastest pace in more than five years and the outlook for US job losses improved, reports Bloomberg.

Asian markets
Nikkei 225 up +98.67 (+0.94%) at 10,645
Topix down -6.00 (-0.92%) at 649.00
Hang Seng down -56.24 (-0.26%) at 21,816 Read more

Kraft set to raise Cadbury bid

Kraft is preparing to raise its £10.3bn hostile offer for Cadbury as the takeover battle for the UK confectionery group reaches its final stages. The US food group, which first approached Cadbury in August, has until Jan 19 to increase its offer, which values the company at about 740p per share. Kraft’s current offer is expected to fail because it has not won the support of enough shareholders and Cadbury’s board, which argues the company is worth about 800p per share. Cadbury’s shares closed last Thursday at 797.50p.

NAB moves in on Northern Rock

National Australia Bank is gearing up for a takeover of nationalised UK lender Northern Rock and has held a “beauty parade” of potential advisors on the deal, reports The Observer. NAB, which already owns Clydesdale and Yorkshire banks in the UK, has hosted presentations by Lazard, Citigroup, Credit Suisse and Morgan Stanley in preparation for opportunities emerging from the planned shake-up of the UK banking sector. NAB could also bid for hundreds of branches being sold by RBS and Lloyds, the report adds.

FSA to lay bare UK bank failings

The City watchdog is using external experts to conduct supervisory reviews into the actions of some of the UK’s struggling banks, including RBS and HBOS, reports the FT. The FSA engaged PwC to review RBS, Ernst & Young to look at HBOS – now part of Lloyds Banking Group – and BDO Stoy Hayward to review Bradford & Bingley. The Times adds that the probe so far has revealed a litany of internal breakdowns and flawed controls that masked the full extent of their failings.

Brazil’s Itau eyes RBS, Lloyds

Brazilian lender Itau Unibanco is considering buying stakes in one of the British banks rescued by the UK government last year, reports the Sunday Times. The report cites Pedro Malan, who chairs Itau Unibanco’s international advisory board, saying that Itau, Brazil’s largest non-government lender, may bid for the UK government’s stakes in RBS  and Lloyds Banking Group. However an Itau spokesman on Sunday played down the report, adds Reuters.

JAL soars 39% on state help

Japan Airlines ‘ share price surged as much as 39% to Y93 on Monday after the Japanese government agreed on Sunday to double a state-sponsored credit line to Y200bn ($2.1bn). The government asked the state-owned Development Bank of Japan to raise its commitment facility to JAL, after cabinet ministers met to discuss how Tokyo could further support the ailing airline.

Man Utd explores bond issue

Manchester United is exploring a £600m bond issue in efforts to refinance its £700m debt. JPMorgan and Deutsche Bank are advising the football club on its options, which include the issue of high-yield bonds. These would be used to refinance bank debt or payment-in-kind notes, which helped Malcolm Glazer, the US sports franchise owner, and his family take over the club in 2005 in a £790m leveraged buy-out.