Posts from Friday Jan 8 2010

Things that don’t get reported any more…

We’ve pinged an email to the site administrator, but we can report that the SEC’s search function on their website doesn’t work properly.

Try it yourself. Go here and type the word “ponzi” into the search box to the right. Read more

The regulatory muddle in energy markets

John Kemp at Reuters reminded us that the Commodity Futures Trading Commission is due to unveil a raft at new rules, with lots of new tricky details on position limits and exemption guidelines for a whole range of market participants.

Indeed, next Thursday the CFTC will hold an open meeting to discuss the proposals in Washington, along with a webcast and a listen-only conference call. Read more

A Friday payroll fizzle

Click to enlarge - US 10-year yield
S&P 500 futures - Reuters

US non-farm payrolls FALL 85,000…

… in December, the Bureau of Labor Statistics said on Friday.

That’s right a FALL of 85,000. Read more

A second (lien) helping of Hamp

So the second lien portion of the US Treasury’s mortgage modification scheme is reportedly “on hold.”

This shouldn’t be a major surprise since the programme, called 2MP, an add-on to the Home Affordable Mortgage Modifaction Plan (Hamp), appears to have never actually got off the ground in the first place. Read more

Lunch Wrap

On FT Alphaville Friday morning,

- On sale today from the Bank of England. Read more

Markets Live transcript 8 Jan 2010

Live markets commentary from FT.com 

On sale today…

… corporate bonds from a rather unusual seller: the Bank of England.

Yes, on Friday the BoE will begin selling some of the corporate bonds it started buying back in January 2009, as part of its programme to inject liquidity into the financial system. Read more

AIG and the Fed, not above water but drowning?

Thursday’s story, that the Timothy Geithner-headed Federal Reserve Bank of New York tried to cover up certain details of mega-insurer AIG’s bailout in 2008, has finally prompted some responses from US Treasury — where Geithner is now head.

The below, for instance, was told to the Wall Street JournalRead more

Bank of Beard

Church House - VII

That’s the homepage of Richard Branson’s new acquisition; Church House Trust, which he is planning to use as a platform to launch a retail banking business in the UK. Read more

A yen for liquidation?

So how much of yesterday’s yen move was really down to the threat of devaluation from Japan’s new finance minister and how much was just market positioning?

Sue Trinh, senior currency strategist at RBC Capital Markets poses the question with the below chart: Read more

Further reading

Elsewhere on Friday,

- The ultimate guide to 2010 investment predictions and outlooks Read more

Pink picks

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

John Cassidy: Is Ben Bernanke descended from the Bourbons?
Behind his white beard, Federal Reserve chairman Ben Bernanke has a wry sense of humour, writes Cassidy, a staff writer at the New Yorker. On reading his recent speech to the American Economic Association, in which he defended the Fed’s actions during the housing bubble, I initially suspected it was a practical joke. Read more

Snap news

Breaking pre-market news on Friday,

- Richard Branson’s Virgin Money to acquire Church House Trust, which it will use as a platform to “develop a retail banking business in the UK” – statementRead more

RBS set for Aberdeen, Sempra deals

Aberdeen Asset Management is expected to announce on Friday it is paying about £85m for nearly half the asset management business of RBS, the 70% state-owned UK bank. Aberdeen, which plans to fund the acquisition by a share placing, is buying a £13bn portfolio of funds of funds and hedge funds. Separately, RBS is in talks with three final-round bidders over the sale of its Sempra Commodities business. The bidders, Deutsche Bank, JPMorgan and Macquarie, have each offered about $4bn for the business, owned jointly with US energy group Sempra.

Hutchison bids $545m for HTI

Billionaire Li Ka-shing’s Hutchison Whampoa offered HK$4.23bn ($545m) to take a phone unit private after the stock underperformed the Hong Kong benchmark index for three years, reports Bloomberg. Hutchison said on Friday it would buy outstanding Hutchison Telecommunications International shares at HK$2.20 each, 33% above the stock’s last-traded price on Jan 4. The delisting plan is part of Hutchison’s push to reorganise its phone units after last year’s merger of a wireless division in Australia with the local arm of Vodafone.

UniCredit prices rights issue

UniCredit, the Italian bank with a large presence in eastern Europe, announced a €4bn ($5.7bn) rights issue on Thursday in the latest move by a European bank to boost its core capital. UniCredit said it would price the issue of more than 2.5bn new shares – three new shares for every 20 held – at €1.589 a share, a discount of about 29% to its ex-rights price. The size and pricing of the offer met market expectations and the bank’s shares rose 2.5% to €2.39.

Reliance ups Lyondell bid

India’s Reliance Industries has sweetened its offer to take a controlling stake in LyondellBasell Industries when the chemical maker exits bankruptcy, reports the WSJ. But Lyondell seems likely to stick with a previous deal to hand the company to senior lenders. Reliance’s latest offer pushes its valuation of Lyondell to about $13.5bn, up from its initial $12bn offer disclosed in November. Under the new offer made late December, Reliance would buy some $2.25bn in new stock and support a separate $2.8bn stock sale.

Saab bidders in 11th-hour push

Bidders are scrambling to keep alive their hopes of buying Saab Automobile as General Motors’ board prepares to meet on Friday to consider the Swedish carmaker’s fate, reports the FT. Spyker Cars, the Dutch carmaker, has lodged a revised offer, according to Reuters on Thursday, while three other potential bidders are racing to finalise last-ditch proposals. But prospects of a deal waned after Ed Whitacre, GM chief executive, said on Wednesday he expected to start winding down the group this week.

AMR raises JAL offer

AMR Corp’s American Airlines has raised its offer to invest in Japan Airlines by $300m to $1.4bn, intensifying American’s battle with rival Delta Air Lines to forge a partnership with the cash-strapped Japanese carrier, reports the WSJ. American met JAL executives on Thursday and sweetened its offer, say people close to the talks. American, and other members of the Oneworld alliance and buy-out fund TPG, last month offered to invest $1.1bn in JAL. A formal announcement on the increased offer is expected next week.

Lenders win control of Foxtons

Foxtons, the UK estate agent known for its aggressive selling tactics, has been taken over by its lenders after one of private equity’s most ill-timed deals. BC Partners, the buy-out group that acquired Foxtons from founder Jon Hunt for as much as £360m in May 2007, has agreed a refinancing deal to halve the agent’s debt in return for giving its lenders a majority stake. After more than a year of talks with Bank of America and Mizuho, the deal’s backers, BC Partners has agreed to inject less than £50m of fresh equity to remain its largest minority shareholder. The banks will own the majority of Foxton’s equity.

Investors set to shun Pearl offer

Investors appear poised to reject an offer from Pearl Group, the UK zombie life funds business created by Hugh Osmond, aimed at ending a protracted dispute over the fate of £500m of junior tier one bonds. The dispute, triggered when Pearl failed to make its annual interest payment in March, has fuelled tensions between Pearl and institutional investors which could disrupt Pearl’s plans to move to a full FTSE 100 listing this year. Pearl on Tuesday made a heavily discounted offer to exchange some bonds and change the terms of others.

Yen gyrates on ministers’ remarks

A call by Naoto Kan, Japan’s new finance minister, for a weaker yen triggered a yen sell-off in global markets on Wednesday, reports the FT. Kan used his first press conference to endorse a weaker yen and more economic stimulus, in a marked departure from Hirohisa Fujii, who stepped down this week. The yen, which hit a high of Y86 against the dollar in November, fell 1.1% on his remarks. But Bloomberg reports on Friday that the yen rose again after Prime Minister Yukio Hatoyama said rapid moves in the currency market were “not good.” See also FT Alphaville.

CNC fuels China IPO fears

China’s 2010 IPO season got off to a slow start on Thursday when China National Chemical Engineering recorded only a 5.9% gain on its first trading day in Shanghai. The state-owned construction company joined a string of recent weak debuts by mainland public offerings, closing at Rmb5.75, up from its IPO price of Rmb5.43 but below its expected debut price. A local broker cited investor concerns about an excess of IPOs last year and the fact that some stocks have dropped below their IPO price.

FDIC eyes bank pay link to levies

US banks’ contributions to a multibillion-dollar fund that insures depositors’ savings could be linked to regulators’ assessment of bank pay plans, under plans being considered by banking watchdogs. The Federal Deposit Insurance Corporation said on Wednesday its board would meet next Tuesday to consider proposed rules on “employee compensation”.  The initiative if implemented could give banks a strong incentive to bring pay structures in line with the regulators’ wishes and hefty penalties if they do not.

Fed warned on interest rates

Tom Hoenig, president of the Kansas City Fed, on Thursday warned against keeping rates too low for too long and urged the Fed to “more evenly weigh short-run concerns against the longer run costs”. Hoenig rejected Ben Bernanke’s argument that the Fed decision to keep rates low after the dotcom crash did not contribute meaningfully to the housing and credit bubble, asserting that low rates “contributed to excesses”.

AIG bail-out draws more scrutiny

The US bail-out of AIG’s counterparties came under fresh scrutiny on Thursday with the publication of emails between lawyers and regulators showing the Federal Reserve Bank of New York pushing the insurance group to keep details of the deal private. It is unclear whether the New York Fed acted out of concern for the market or for its own political position. Darrell Issa, the senior Republican on the House oversight committee, requested information from the New York Fed and AIG about $27.1bn in payments to banks, including Goldman Sachs and Société Générale, made to cancel derivatives contracts.

Kumar forfeits Galleon payments

Former McKinsey director Anil Kumar on Thursday agreed to forfeit $2.6m that prosecutors said he received for confidential tips to Raj Rajaratnam, the Galleon hedge fund founder at the centre of insider trading allegations. Kumar is the seventh person to plead guilty in the case. Prosecutors said he was approached by Rajaratnam in late 2003 or early 2004 and offered $500,000 a year for information on companies he could access through McKinsey.

Deutch exit to aid Citi revamp

Citigroup will further revamp its board with the departure of John Deutch, a former CIA chief and one of the US bank’s longest-serving directors. Deutch, who has been on the board of Citi or its predecessor companies for 13 years, had told other directors he would leave after the annual shareholder meeting in April. His exit will raise pressure on Michael Armstrong, former CEO of AT&T, who has been on the board of Citi since 1989 and who chaired Citi’s audit and risk management committee in the run-up to the global financial crisis before being replaced by Deutch.

Overnight markets: Up

Asian stocks rose on Thursday, heading for their biggest weekly advance in a month after increases in US retail sales raised optimism about global recovery and the yen rose against the dollar, reports Bloomberg. Futures on the S&P 500Index were little changed after the gauge rose 0.4% on Wednesday.

Asian markets
Nikkei 225 up +10.67 (+0.10%) at 10,692
Topix unchanged 0.00 (0.00%) at 665.00
Hang Seng down -31.43 (-0.14%) at 22,238 Read more