Posts from Tuesday Feb 2 2010

Send for the task force

From Bloomberg on Tuesday evening:

Argentina’s Foreign Ministry summoned the U.K. ambassador over plans by Falkland Oil & Gas Ltd. to start drilling a well near the islands in the Atlantic Ocean. Read more

Mr Wiretap

An unexpected twist in the Galleon insider trading case.

From Reuters on Tuesday evening: Read more

Caveat venditor

This, apparently, is a story from Greek newspaper Kathimerini saying the country has uncovered €40bn of hidden debt:

 Read more

Whoops!

This video (purportedly) shows a Macquarie Bank worker caught assessing certain non-bank assets, while his colleague talks Australian interest rates with 7 News:

 Read more

Bank Grεεkery

Ignoring the possibility of Greece defaulting on its debt, or further credit rating downgrades making Greek government bonds ineligible for ECB liquidity operations, and you’re still left with potential problems for the Greek financial system.

A Tuesday note from UBS highlights one problem in particular: how widening spreads on Greek government debt might affect local banks. Read more

Lunch Wrap

On FT Alphaville Tuesday morning,

- BP’s unsurprising refining surprise. Read more

What on earth are oil investors thinking?

Over the last two trading sessions the two largest oil companies in the United States, Exxon and Chevron announced that in Q4 2009 they lost a combined $6.9 million day on turning crude oil into refined products. Wall Street traders reacted to this news yesterday by making NYMEX crude oil even more expensive than gasoline. To explain this seeming incongruity, an unidentified financial trader from Camp Mohawk Trading was quoted as saying. . . IT JUST DOESN’T MATTER, IT JUST DOESN’T MATTER!

That’s Stephen Schork of the widely-read Schork Report, reflecting upon the current illogical investment pattern gripping energy markets. Read more

Europe is Lehman-fied, part deux

So it’s not quite at the 10.25bps level hit when Lehman Brothers collapsed in September 2008, but the difference between the iTraxx Main and Financials Senior CDS indices (a basic indicator of how credit investors are viewing corporates versus financials) is getting close. Read more

Markets Live transcript 2 Feb 2010

Live markets commentary from FT.com 

Reflections on Day 1

He may have been robbed but that hasn’t stopped FT Alphaville’s man on the ground at the Indaba mining conference in Cape Town from filing his thoughts on the opening day of the industry’s annual South African jamboree.

By Matthew Kennard: Read more

Korea’s NPS and the ‘overlap’ factor

One thing we know about the South Koreans — they have reversed course in recent years to become big spenders and poor savers. They have also become much bolder investors, after decades of adhering to a more cautious approach.

All this is perhaps why the country’s biggest pension fund, the National Pension Service (NPS), is revelling in a worldwide shopping spree after nearly two decades of conservative investing, which even now sees just 10 per cent of its $240bn funds abroad — with about 77 per cent still in fixed-income holdings, almost all of them Korean. Read more

A New Look?

New Look has wheeled out the big guns for its proposed flotation on the London Stock Exchange. Credit Suisse, Deutsche Bank, JP Morgan Cazenove and Lazard are all on the ticket. (And that’s just the lead mangers – Barclays, Lloyds, RBS are co-lead mangers and Investec and Singer Capital Markets are something called co-managers).

All of which is probably not a huge surprise given the recent dismal performance of retail IPOs – think Debenhams and Sports Direct. Read more

BP’s unsurprising refining surprise

That, for the record, is what happens when analysts don’t mysteriously “mind-meld” a couple of weeks ahead of your results. Read more

Shadow bank losses

Alternative title: “How loan modifications distort bank results”.

Barclays Capital speculated last month that non-performing loans (NPLs) may peak in 2010. A few weeks on, and the bank is saying net-charge-offs (NCOs) may have peaked based on US banks’ recent fourth-quarter (2009) earnings. That was fast! Read more

ETF providers of the third kind

We missed this when it first came out in December — but ETF Securities, the ever innovative exchange-traded fund provider behind many pioneering steps across the ETF-product spectrum — has come out with something called a ‘third generation ETF platform’.

Confused by the name? So were we. Read more

The RBA’s ‘shocker’ Down Under

Australia’s central bankers had a bit of fun on Tuesday, confounding economists, shocking markets and driving down the Aussie dollar to its lowest level in six weeks by unexpectedly holding the country’s benchmark interest rate at 3.75 per cent, rather than raising it by a widely-predicted 25bps.

As the FT reports:  Read more

Further reading

Elsewhere on Tuesday,

- Hank Paulson’s book, the birds and Bear Stearns. Read more

Pink picks

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

Gideon Rachman: How the bottom fell out of ‘old’ Davos
Uneasily conscious of a shift of power to the east, western leaders are questioning ideas that used to underpin Davos, writes the FT’s Rachman. Dominant themes at last week’s World Economic Forum included a backlash against high finance and doubts about free trade. Is this a temporary or a permanent change? Read more

Snap news

Breaking pre-market news on Tuesday,

- BP’s Q4 replacement cost profit rises 33 per cent to $3.4bn, versus an expected $4.6bn – statementRead more

Overnight markets: Up

Asian stocks rose from a two-month low on Tuesday, following strong manufacturing figures around the world and rising commodities prices, reports Bloomberg. The Australian dollar dropped after the central bank unexpectedly held interest rates.

Asian markets (Tues)
Nikkei 225 up +168.93 (+1.66%) at 10,374
Topix up +14.59 (+1.62%) at 913.20
Hang Seng up +43.56 (+0.22%) at 20,287 Read more

Manufacturing surges back

Manufacturing activity soared around the world in January, according to figures issued on Monday. In the US, the ISM index rose from 54.9 in December to 58.4 in January, its highest since August 2004 and well ahead of expectations. That followed strong January production figures from Europe - led by France, Germany and Italy – and Asia, where China reported record industrial activity and India, South Korea and Taiwan also rose strongly.

Korea’s NPS swoops on Gatwick

South Korea’s National Pension Service will next week take a 12% stake in Gatwick airport, in a further push to expand its international portfolio from $240bn to $400bn by 2014. The deal follows NPS’s acquisition last year of HSBC’s headquarters at London’s Canary Wharf for £773m. Gatwick was sold last year to Global Infrastructure Partners, a fund backed by Credit Suisse and General Electric.

Goldman eyes Taikang Life

The private equity unit of Goldman Sachs has emerged as a top contender for a minority stake in Taikang Life, a Chinese life assurer being sold by French insurer Axa. Goldman’s principal investment arm is understood to be in talks to acquire some, or all, of Axa’s 15.6% stake in Taikang. The Government of Singapore Investment Corp, the sovereign wealth fund, which holds 8% of Taikang Life, is also considering raising its stake.

Apollo sets Asia property fund

Apollo Management is launching an Asia Pacific property fund with an expected $500m to $1bn under management, to target distressed real estate in the region. The fund will be run from Hong Kong by a team headed by Grant Kelley, former CEO of Colony Capital Asia.

Australia holds rates

The Reserve Bank of Australia surprised financial markets on Tuesday when it kept its benchmark interest rate steady at 3.75%, defying forecasts from most economists who had predicted a fourth consecutive 25bps increase. In holding rates, however, the RBA noted that Australian banks had “generally raised rates a little more than the cash rate over recent months and most loan rates have risen by close to a percentage point”.

US Q4 results beat expectations

Corporate USA is on track for one of the best quarterly earnings seasons on record in terms of the number of companies beating market expectations. Nearly 80% of S&P500 companies reporting  Q4 results have exceeded consensus forecasts, according to Thomson Reuters, and are set to break a run of nine consecutive quarterly profit declines. But analysts now expect 27.1% earnings growth for S&P500 companies in 2010, down from an earlier forecast of 30.6%.

Record bond issues in eurozone

Eurozone governments have borrowed a record €110bn from the markets so far this year, forcing up borrowing costs for countries with the weakest public finances. Investors warned that the bond yields they will demand to lend to Greece and other peripheral economies such as Portugal, Spain, Ireland and Italy will continue rising until these countries put their finances in order.

CME eyes Dow Jones index arm

The CME Group, the world’s biggest futures exchange, is in talks to buy Dow Jones’s index business from News Corp for as much as $700m – in a further sign that international financial exchanges are looking to diversify their sources of revenue. The negotiations follow Dow Jones’s agreement in November to sell its one-third stake in Stoxx, the index company, to Deutsche Börse and SIX, its Swiss partner, for $309m.

Citi backs down on account fees

Citibank is being forced to scrap a plan to impose tens of millions of dollars of fees on US customers who thought they had signed up for “free” checking accounts. Andrew Cuomo, New York attorney-general, said the settlement, announced on Monday, would affect more than 1m customers nationwide. Cuomo said Citi had never disclosed that the “free” service could be terminated at the bank’s discretion.

Repo market escapes US levy

The Obama administration plans to exclude the $3,800bn repo market from a proposed levy on banks’ administration. Under the proposed financial crisis responsibility fee, banks would pay a fee of 15bps on all liabilities above $50bn not already subject to an insurance premium paid to the FDIC. That would normally include the repo market, but the US Treasury is considering special treatment for these assets at banks with large repo operations.