Posts from Thursday Jan 14 2010

Counterfeit statistics?

Rawdon Adams at Capital Chronicle has dug out some eye-catching data from the ECB on counterfeiting. The news is that is that it’s on the rise across all denominations.

But are the number themselves fraudulent? Read more

CDS report: Greece continues to widen

Markit’s Gavan Nolan wrote this CDS report

The Markit iTraxx Europe widened for the third consecutive day, proving immune to rising stock markets. The index closed at 71bp, about 0.5bp wider than yesterday’s close. The Markit iTraxx HiVol index was also slightly wider, closing at 99bp. But the Markit iTraxx Crossover index was more in tune with equities and rallied to close around 402bp. Read more

CFTC targets funds in position-limit clampdown

The oil markets have been waiting for it since the summer of 2009; some players have even acted in anticipation already.

But it wasn’t until Thursday that the commodity world got details of what the CFTC really had in mind in terms of increased regulation of energy markets, and position limits. Read more

Letter from Mayfair, 2009

Sam Jones, the FT’s hedge fund correspondent and former AV’er, has been looking at the performance of Mayfair’s finest in  2009.

Long Room members will have the list already, but we thought it deserved a wider audience. Noteworthy is Toscafund(s) return to form and further gains for Alan Howard. Read more

Dear Wall Street: you can blame the media for that levy

We hope this doesn’t prejudice any bankers against certain pink financial newspapers or websites, but according to Reuters on Thursday (emphasis ours):

RTRS-OBAMA SAYS “FINANCIAL CRISIS RESPONSIBILITY FEE” ON FINANCIAL  FIRMS TO RECOVER “EVERY DIME” FROM WALL ST BAILOUT Read more

The back-of-the-envelope bank levy

An exercise.

(Reuters) Obama’s bailout fee would be approximately 15 basis points, or 0.15 percentage point, of covered liabilities. This would be determined by looking at a firm’s total assets and subtracting their tier one capital, which includes their common stock, disclosed reserves and retained earnings, as well as FDIC (Federal Deposit Insurance Corporation) deposits for banks, or insurance policy reserves for insurance companies. Read more

Virgin’s triple play

Further evidence of the hot market in corporate bonds, via Evolution Securities (emphasis ours):

Virgin Media [VMED] Co priced its new senior secured notes, which was massively upsized to £1.5bn equivalent from £500mm (quite the triple play offering). The 7% £875mm notes priced at 98.503 to yield 7.25% and the 6.5% $1bn notes at 98.4888 to yield 6.75%, both in line with price talk. Deal reduces its bank debt to just over £1.6bn and, combined with the three bond offerings in 2009, has removed the refi concerns that hung over the co at the start of last year. Read more

ECB snooze news, and Greece

As expected the ECB left rates on hold at 1 per cent on Thursday, in line with what 80 economists surveyed by Reuters had forecast.

No surprises there, then. Read more

Tell Obama to stop fcrting about

Crisis levy, crunch tax, bailout fee…surely there’s a better name for the Obama administration’s belated Wall Street clawback than the Financial Crisis Responsibility Tax?

Senior bankers, testifying before the FCIC about CDS and CDOs and other stuff, where shocked to learn about the terms of the FCRT… Read more

GSE losses could stand at $448bn, Amherst says

Here’s something that struck us in a bit of testimony submitted to the FCIC hearings on Wednesday.

In a document that’s well worth reading for some interesting banking statistics, J Kyle Bass, managing partner at hedge fund Hayman Advisors, says: Read more

Lunch wrap

On FT Alphaville Thursday morning,

- Details of that Wall Street levy. Read more

US petroleum stocks fit for bursting

Weekly US energy inventory data release on Wednesday confirmed the unbelievable. US petroleum stocks rose in the week despite especially cold weather in the region during the period.

Meanwhile, Dennis Gartman of the Gartman Letter draws attention to the fact that aggregate inventory rose by 8.9m barrels, amongst the largest weekly aggregate increase ever. Read more

Details of that Wall Street levy

Any Wall Street types who slept in on Thursday will be in for a bit of a shock when they wake up — the details of the Obama administration’s banking levy have emerged.

Via Reuters, emphasis ours: Read more

Markets Live transcript 14 Jan 2010

Live markets commentary from FT.com 

The sovereign debt premium

Here’s some interesting number-crunching from Gary Jenkins at Evolution Securities in the context of recent rumblings from the ratings agencies, and general worries over US and UK debt.

With the US having upped its issuance of short-term debt in recent years, about $2.5 trillion worth of Treasury bills and bonds is expected to mature over the course of next year. By Jenkins’ estimation, a one percentage point increase in bond yields will increase the interest cost for the US by $25bn annually. Read more

A European sovereign upgrade cometh? (some mistake, eh)

BNP Paribas’s emerging markets team draws attention to Turkey on Thursday, suggesting the country might be in line,  in contrast to most of Europe, for an S&P ratings upgrade.

As they stated, this would follow upgrades already initiated by Moody’s and Fitch: Read more

Shanghai surprise, Tokyo nightmare

We briefly mentioned Tokyo’s shiny new Arrowhead stock trading platform in our earlier post on the JAL share-trading frenzy.

For the Tokyo Stock Exchange, the launch of Arrowhead at the start of the year was the culmination of four intensive years of lobbying and testing. Not only that, as the FT noted recently, Arrowhead — which will enable high-frequency trading and other processes previously unavailable in Tokyo — is about the TSE’s very survival. Read more

Will Hersbury happen? (Updated)

Hershey is preparing a counter-bid to Kraft’s hostile £10.4bn offer for Cadbury, according to people familiar with the matter. The US confectioner has authorised a bid for the UK chocolate maker and a formal offer could be made before the January 23 deadline, they said.

A Hershey bid would be welcomed by Cadbury, which is resisting Kraft’s approach. Although Cadbury has not solicited a “white knight” bid from Hershey publicly, the confectioner has made clear that it would prefer Hershey to Kraft. Read more

The upside of an airline collapse: JAL’s shorting bonanza

The spectacular collapse in the share price of Japan Airlines — from Y200 late last year to Y88 on the first trading day of the new year and all the way down to Y7 on Wednesday, hides a tale of both woe and glee.

For behind every bankruptcy, there is indeed a silver lining — and in the case of JAL, that lining is glowing for some lucky traders in Tokyo, who have been closing out some very lucrative short positions. Read more

Treasury Mystère

Well someone is buying US government debt, despite prominent prognostications as to its worth(lessness). The problem is we don’t know who.

Wednesday’s auction of $21bn of 10-year US government bonds saw reasonably good demand, with a bid-to-cover ratio of three times and a yield of 3.754 per cent, about the level anticipated by the market. The most interesting auction statistics, however, are the breakdown of buyers. Read more

Further reading

Elsewhere on Thursday,

- Financial Crisis Inquiry Commission: A User’s Guide. Read more

Pink picks

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

 Read more

Snap news

Breaking pre-market news on Thursday,

- EFG-Hermes in discussions to sell its stake in Bank Audi – statementRead more

Overnight markets: Up

Asian stocks and higher-yielding currencies rose on Thursday, reports Bloomberg, after Australian employment increased three times more than economists forecast and a Federal Reserve survey showed a broadening of the US recovery.

Asian markets
Nikkei 225 up +143.68 (+1.34%) at 10,879
Topix up +13.00 (+1.93%) at 685.00
Hang Seng up +142.15 (+0.65%) at 21,891 Read more

Hershey set for Cadbury counter-bid

Hershey is preparing a counter-bid to Kraft’s hostile £10.4bn offer for Cadbury and could make a formal offer before the Jan 23 deadline. Cadbury, which is resisting Kraft’s approach, has not publicly solicited a “white knight” bid from Hershey but would welcome such a move. Roger Carr, Cadbury’s chairman, has told the FT that Hershey, which owns the rights to the Cadbury brand in the US, is “more appealing” from a cultural view.

US levy to hit investment banks

President Barack Obama was set to announce on Thursday a new US bank levy that will hit investment banks such as Goldman Sachs harder than deposit-taking institutions such as Wells Fargo. Details of the fees emerged as bank executives were grilled on Wednesday by a new commission on whether their pay, risk management and trading practices were responsible for the financial crisis. More FT analysis here.

Wall Street titans face flak

Four of Wall Street’s top executives offered some contrition and a defence of their actions on Wednesday, as the head of the Financial Crisis Inquiry Commission promised to use sweeping powers to establish the causes of the financial crisis and pursue any wrongdoing. Lloyd Blankfein, CEO of Goldman Sachs, Jamie Dimon of JPMorgan, John Mack of Morgan Stanley and Brian Moynihan of Bank of America maintained a united front as the Commission, headed by Phil Angelides, probed the bail-out of AIG, risk management and executive compensation.

Geithner asked for AIG records

The House oversight committee has submitted a legal demand for any phone records and emails from Tim Geithner that discuss payments from the New York Federal Reserve to AIG’s counterparties. Republicans on the committee are attempting to link the Treasury secretary to the bail-out of AIG’s counterparties – headed by Société Générale and Goldman Sachs – made during Geithner’s presidency of the NY Fed. The Treasury has said Geithner recused himself from the case ahead of becoming Treasury secretary, and the NY Fed has said he was not involved in a decision not to disclose details about the AIG payments.

SEC mulls ‘naked access’ ban

The US SEC on Wednesday moved to crack down on high-frequency traders who have “unfiltered” or “naked” access to stock markets as it revealed other actions to plug regulatory gaps. The move came as NYSE Euronext revealed it had for the first time fined a trading company for failing to control its trading algorithms, in a case that highlights the pitfalls of rapid-fire electronic trading practices. The group fined Credit Suisse $150,000 over a case in 2007 when “erroneous messages” bombarded the exchange’s trading system.

Tech rivals fail to back Google

Google’s threat to pull out of China rather than continue self-censorship there failed on Wednesday to win support from industry executives after the US group this week complained of cyber-attacks on its core IT systems. Steve Ballmer, CEO of Microsoft, described the affair as “the Google problem” while Mark Hurd, CEO of Hewlett-Packard, praised China as an “amazing market…” Both executives played down wider threats to internet security from what Google said was a “highly sophisticated and targeted attack” aimed at more than 20 companies. Bloomberg reports on Thursday that Yahoo!, owner of the No. 2 US search engine, also suffered a Chinese attack.