Posts from Thursday Jan 21 2010

Think tank conceit

Earlier this week the Demos think tank published a hectoring report entitled Bailed-Out Megabanks Go Right On Gambling (But Now with Taxpayer Support).

So on Thursday Demos announcedRead more

Damage at the close in New York…

Can Goldman really dodge the Volcker rule?

Dick Bove seemed to think so earlier, saying “buy” Goldman, just as the stock fell 5 per cent. But there’s been such confusion (and a lack of detail) on the Obama administration’s proposals that we should spare the Rochdale Securities’ man the chance to revise his views.

Meanwhile, Krishna Guha, over on the FT’s Money Supply blog, asks a fair question: can’t Goldman (and Morgan Stanley, for that matter) simply give up their bank charters and therefore avoid all the proposals on proprietary trading, hedge funds and private equity? Read more

Whither Highbridge, GSAM…Citadel?

Off the bat, there are some obvious hedge fund losers – or at this stage, to be clear, potential losers – from the wide-ranging Obama/Volcker financial reform package unveiled on Thursday.

Highbridge Capital is, of course, the foremost. Read more

Ironic chart du jour

Here’s the S&P 500 regional banks index versus the old skool S&P “investment banks” barometer (consisting of Goldman, MOST, Charles Schwab and E-Trade).

Guess which is which? Read more

White House “size and scope” announcement

No, don’t expect details – but here’s the actual press-release issued in Washington at lunchtime on Thursday:

President Obama joined Paul Volcker, former chairman of the Federal Reserve; Bill Donaldson, former chairman of the Securities and Exchange Commission; Congressman Barney Frank, House Financial Services Chairman; Senator Chris Dodd, Chairman of the Banking Committee and the President’s economic team to call for new restrictions on the size and scope of banks and other financial institutions to rein in excessive risk taking and to protect taxpayers. Read more

The Obama-Volcker remarks in full

REMARKS BY PRESIDENT BARACK OBAMA

SUBJECT: ADDITIONAL REFORMS TO THE FINANCIAL SYSTEM Read more

Google gets things wrong…

… and not just in China it seems. They are also useless at selling property online.

That’s the view of Rightmove, which has fired off an email to staff telling them not to panic about the search engine’s imminent arrival on their patch. Read more

Markets Live transcript II (Obama special) 21 Jan 2010

Live markets commentary from FT.com 

FT Alphaville does the Glass-Steagall Sequel

FT Alphaville is holding a special Markets Live session in light of Obama’s proposals.

 Read more

The man with Obama’s ear

The mighty Paul Volcker, of course.

Wall Street was in a spin on Thursday as everyone awaited firm details on the Obama administration’s move to ban proprietary trading by deposit-taking institutions — an action that has inevitably been dubbed the Glass-Steagall sequel. Read more

Resource nationalism down under

The mining sector took another leg down on Thursday afternoon in London:

 Read more

Whither Goldman’s prop desk

Remember when Goldman Sachs changed its legal status to a Bank Holding Company in September 2008?

The investment bank of investment banks was no longer, as it converted its official categorisation to BHC, in order to gain access to the Federal Reserve’s liquidity and funding facilities. Read more

Glass-Steagall II?

Whoa!

 Read more

A second helping of Bob

On Monday Bob Janjuah, chief strategist (and bear) at RBS, put digit to keyboard for the first time since November.

Kicking off with a quote from Cicero the 3000+ word note (written in the style of an SMS message) concluded that 2010 would be the year when the chickens came home to roost for the “debt binge currently being undertaken by some critically important sovereigns” (i.e. the UK and the US). Read more

Where’s the Greek CΣΣ contagion?

FT Alphaville mentioned on Monday that the CDS market did not appear to be implying much of a contagion-effect for Central and Eastern Europe in connection with troubles in the Hellenic Republic.

And having on Thursday noted the widening spread between Greek government bonds and German bunds, a basic measure of the risk premium investors want in exchange for holding Hellenic debt, we feel the need to repeat the question. Read more

Covered bond consequences for S&P

Here’s a good illustration of the tightrope-walk often faced by the ratings agencies.

Having opted to stick with its proposed revised ratings methodology for covered bonds, first announced in February last year, S&P is now experiencing the consequences of having tougher ratings criteria. Read more

Goldman posts Q4 EPS of 8.20, net income of $4.95bn

Here it is — the one you’ve been waiting for.

On Thursday Goldman Sachs reported diluted earnings per share of $8.20, on revenue of $9.62bn, for Q4 2009. Analysts had expected the bank to report an EPS of $5.20 on sales of about $9.71bn. Read more

The unenviable, uncertain future of the bond insurance industry

One of the most common criticisms of the financial media unleashed during the Not So Great Depression was “you didn’t warn us about [insert little known company, acronym, structured product or dubious form of home loan, here]“.

But in the case of the bond insurers, sometimes but not entirely accurately called monolines, that criticism would be more than a little unjust. Read more

Lunch Wrap

On FT Alphaville Thursday morning,

- Sprεαding… Read more

A UK money supply shock

Inflation is always and everywhere a monetary phenomenon.

Always and everywhere apart from in Britain, that is. Read more

Markets Live transcript 21 Jan 2010

Live markets commentary from FT.com 

Sprεαding…

Dramatic developments in the European government bond market, where the spread between the Greek 10-year and German bunds widened to over 300bps on Thursday — the highest level since the Hellenic Republic joined the eurozone:

 Read more

Buyer wanted for large stake in ITV

From Reuters:

UK COURT DENIES BSKYB APPEAL OVER KEEPING ITV STAKE. Read more

Bye bye prop desks?

They’ve been accused of generating market anomalies, too much risk taking, and an ever present conflict of interest.

We are, of course, talking about institutional prop trading desks. Read more

Some people are on the pitch… (Updated)

Official price talk — or the indicative range — for Manchester United’s controversial £500m bond issue is expected on Thursday and if the market whispers are correct it could be the club’s best result of the season.

The 2017 senior secured notes are expected to be priced to yield around 8.75-9 per cent, which given the leaky covenants and the club’s high leverage is remarkable, according to Evolution Securities’ Jonathan Moore: Read more

Coco *pops* or not?

UK Banks were weaker across the board on Wednesday. What gives?

Here’s one suggestion from Evolution Securities’ Gary Jenkins: Read more

Further reading

Elsewhere on Thursday,

- The easy guide to Wall Street pay and bonuses. Read more

Pink picks

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

John Gapper: Charge for news or bleed red ink
Alan Rusbridger, the editor of The Guardian, spoke bluntly last week when he described the financial effects of the internet on his newspaper to journalism students in Coventry: “If I stop to think about the business model, it is sometimes quite scary.” Scary indeed, writes the FT’s GapperRead more

Snap news

Breaking pre-market news on Thursday,

- China grows 10.7 per cent in fourth quarter, inflation up 1.9 per cent in December – FTRead more