Posts from Tuesday Jan 26 2010

Money for nothing

Dire Straits wisely observed back in 1985 that it’s nice — but possibly derisible — to have people give you money for nothing.

Nevertheless, it happens to be the way to do it if you’re the US Treasury (H/T Clusterstock)Read more

Bonkers Bove, the blueprint

As an addendum to Monday’s political rant, Rochdale Securities banking analyst Dick Bove has made a flow chart.

It is, by his own admission, rather “poorly drawn,” but it looks like this: Read more

Davos time!

The great, the good and the simply pompous of finance have been gathering in Davos, Switzerland for the annual World Economic Forum on Tuesday.

Lucky for us — the great uninvited — the rise in social media means we too can feel part of the buzz and economic hot air conjecture. Read more

Dead cat splat? UK GDP edition

H/T Taxloss.

An eye-catching quote…

…from the eye-catching-quote machine that is Mr Bill Gross.

The UK is a must to avoid. Its Gilts are resting on a bed of nitroglycerine. Read more

QEstions on UK GDP

Just-released UK GDP figures show Britain’s economy emerged from recession in the last quarter of 2009.

But the fourth-quarter figure, a growth of 0.1 per cent, is very much below the Bank of England’s own expectations. The central bank was forecasting something like a 0.4 or 0.5 per cent Q4 growth as its base-case scenario in its last inflation reportRead more

“UK gilts resting on a bed of nitroglycerine”

It must have been, what, a couple of days since someone from Pimco last fired a broadside at the UK?

So, the top man, Admiral Bill Gross, has now taken it upon himself to deliver another round of cannon fire. Read more

Rise of the news-reading machines

From the FT — some giant leaps for robot-kind in the world of trading:

The arms race in trading technology is set to intensify this week as Thomson Reuters, the news and market data company, on Monday unveils a service for “high-frequency” traders allowing them to make split-second trading decisions based on news articles “before the information moves the market” . . . Read more

Lunch Wrap

On FT Alphaville Tuesday morning,

- The (UK) recession is over! Read more

Markets Live transcript 26 Jan 2010

Live markets commentary from FT.com 

The trials of Papaconstantinou

While Greece may have side-stepped immediate funding catastrophe with its successfully placed five-year bond issue, that’s not to say there aren’t further trials for the sovereign issuer down the road.

For example, here are some of the challenges facing Greek finance minister Georges Papaconstantinou in the not-too-distant future, according to Barclays Capital: Read more

Greed & Fear and David Stockman on where it all went wrong

CLSA’s Christopher Wood in an extra edition of his weekly Greed & Fear newsletter highlights a timely criticism of the US approach to fixing the financial system by David Stockman, Ronald Reagan’s former director of the Office of Management and Budget.

In a harsh comment article originally published in the International Herald Tribune last week, Stockman lashes out at bankers, regulators – particularly the Fed – and just about everyone outside of the Reagan administration. Read more

The sands of Greek bond issuance

Greece’s new sovereign five-year issue received unexpectedly high demand in initial price talk on Monday.

The bond gets officially priced mid week, and on that matter Standard Chartered published an interesting view on Tuesday: Read more

Sterling falls, gilts rally after GDP reading

Specifically, sterling lost around half a cent against the dollar while gilt futures rallied after the report showing the UK economy had emerged from recession in the fourth quarter — but only just.

March gilt futures: Read more

It’s over

After six quarters the UK’s longest, and possibly deepest recession since the second world war has ended – but only JUST.

Q4 GDP rose 0.1 per cent quarter-on-quarter, well below forecasts. (A 0.4 per cent rise was expected). Read more

That European funding problem, charted

Here’s the kernel of Fitch Ratings’ report on European government borrowing:

 Read more

S&P fires warning shot at Japan

Probably not a huge surprise, given the nation’s bloated finances but Tuesday’s threat by S&P to cut Japan’s credit rating unless it gets its house in order still makes for interesting reading. Especially in the UK, and particularly if you are a Conservative MP who expects to be in government after the next election.

The full statement from S&P, which sounds none-too-happy with Japan’s new budget consolidation plan. Read more

Big year for European sovereign bonds

With national deficits soaring around the world and the recent panic over Greece’s economic crisis, it has been clear for some time that 2010 is  shaping up as a big year for sovereign bond issues.

Nowhere more so than in EuropeRead more

Goldman overpay? Surely some mistake

Here’s something we missed last week — the US Treasury’s Tarp warrant report.

The US government, you’ll remember, received a bunch of long-dated options in return for bailing-out various banks — to the tune of $205bn — in 2008 and 2009. Banks had the option to buy back those warrants, at a fair value agreed with the Treasury, via a bidding process. Read more

Chanos: ‘We’re not calling’ for a China crash

“We’re not calling for an impending crash of China”, investor Jim Chanos told CNBC on Monday. Well thank God for that.

As CreditWritedown’s Edward Harrison notesRead more

Further reading

Elsewhere on Tuesday,

- The status of financial reformRead more

Pink picks

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

Gideon Rachman: When nations turn into hoarders
Earlier this month Britain’s minister for food and rural affairs, gave a speech in which he argued that “Food security is as important to this country’s well-being as energy security”. With energy, even more than with food, the British are beginning to question their reliance on purchasing supplies on the open, world markets, writes the FT’s Rachman. This month, supplies of natural gas ran so low that almost 100 large industrial users were temporarily cut off. Read more

Snap news

Breaking pre-market news on Tuesday,

- Anurag Dikshit sells remaining 9% holding in PartyGaming – statementRead more

Overnight markets:

Asian markets fell on Tuesday, reports Bloomberg, amid concerns about financial stocks including the effect of requirements imposed by Beijing on some Chinese banks to meet tougher reserve ratios.

Asian markets
Nikkei 225 down -144.67 (-1.38%) at 10,368
Topix down -15.70 (-1.68%) at 918.89
Hang Seng down -329.41 (-1.60%) at 20,269 Read more

Investors flock to Greek bonds

International alarm over Greece’s debt crisis abated on Monday when investors flocked to buy the government’s first bond issue of the year, suggesting the country may face less difficulty than feared  in meeting its short-term financing needs. Investors placed about €20bn ($28bn) in orders for the five-year, fixed-rate bond, four times more than Athens expected.  But the bond carried a record high interest rate spread over German bonds, the eurozone benchmark.

HSBC chairman hits big bonuses

Stephen Green, chairman of HSBC and the British Bankers’ Association, has hit out at the “distorted” structure of bank bonuses, predicting future pay-outs will be lower and more rationally calculated. Green told the FT that the different ways banks set bonuses had led to “wrong and frankly inflated numbers”. HSBC, which already defers at least 40% of executive bonuses in line with new regulatory minimums, has signalled no big revamp of its bonus structures. See video interview here.

Apple profits up 50%

Apple on Monday fuelled anticipation about its expected launch of a tablet computer with a 50% leap in quarterly profit and a strong hint from CEO Steve Jobs that the maker of iPhone aims to ride its popularityinto the corporate market. On the day Jobs said he would announce a “major new product” on Wednesday, Apple reported another blowout quarter, as net income soared to $3.38bn or $3.67 a share, from $2.26bn or $2.50 a year earlier, well above estimates. IPhone sales doubled to 8.7m units shipped in the quarter.

S&P hits Dubai vehicle

Dubai’s standing in financial markets took another hit on Monday after S&P withdrew its credit rating on an investment vehicle owned by the emirate’s ruler. S&P said “insufficient” information had been provided about Dubai Holding Commercial Operations Group, controlled by Sheikh Mohammed bin Rashid Al Maktoum, and said its cash flow position was “likely to be materially weaker” than previously thought. DHCOG includes hotel chain Jumeirah and Dubai Properties.

Hedge funds sue Porsche

Four large hedge funds on Monday sued Porsche and two former executives for more than $1bn over its failed takeover attempt of Volkswagen, launching one of Germany’s largest damage claim battles. The funds – Elliott, Glenhill, Glenview and Perry Capital – filed suit in New York to try to recoup losses incurred when VW’s share price surged on Porsche’s takeover attempt.  The funds accuse Porsche and its former CEO and CFO of market manipulation.

Jabre to shut flagship fund

Jabre Capital, the Geneva-based hedge fund run by former GLG Partners star trader Philippe Jabre, is to shut its flagship fund to new money from investors in efforts to ensure its returns are not curtailed by its size. The fund – the $2bn Jabcap Multi Strategy – will “hard close” for two years when it reaches $2.5bn. The fund returned 85.1% to investors in 2009, more than recouping its 36% loss in 2008 and becoming one of the industry’s top performers over the past year.