Posts from Friday Feb 5 2010

The Blankfein bonus: $9m in stock (updated)

A number that has been keenly anticipated: the 2009 compensation for Goldman Sachs chairman Lloyd C Blankfein.

Drum roll… Read more

US consumer credit uncrunched?

Something to celebrate, surely? Consumer debt shrank by a palty $1.7bn in December, the smallest contraction since last February and way below the $9bn contraction expected by economists.

In fact, the contraction in consumer debt is just a tenth of that originally seen in November, when credit dropped a record-setting $17.bn. Read more

Wobble? What wobble?

Or, “Who cares about Portugal/Greece/Spain/Italy/UK?”

Or, “It was a fat finger in WTI; never seen a computerised trading glitch?” Read more

Should Guy Hands be barred from Britain?

Based on the contents of this delirious court filing we would argue that the answer is an unequivocal “yes.”

That’s not because Guy Hands, the founder of Terra Firma and, by extension, the boss of EMI, may have lost touch with reality in his wild accusations of fraud against Citigroup and its clubbable corporate financier, David Wormsley. Read more

WTI Friday meltdown

That’s crude on Friday afternoon, the same day BlueGold Capital Management fiercely denied rumours of company-related liquidations in the WTI market. Read more

Ackerman’s flow monster

We drew attention on Thursday to Deutsche Bank’s tranformation over the course of 2009 into a ‘flow’ oriented business.

The move proved particularly profitable for the bank in the early part of the year, when volatility was high and spreads were wide, but less so in the fourth quarter when volatility fell and spreads tightened. Read more

CPDOs, a structured finance post-mortem

Does anyone remember Constant Proportion Debt Obligations, or CPDOs, for short?

The erstwhile structured finance-darlings made headlines in 2008, as they hit their cash-out triggers en mass, and despite their triple-A and AA-ratings. They also featured prominently on FT Alphaville. Read more

The second lien sticking-point

Just a datapoint for you, as the debate over the US Treasury’s Hamp programme rages on.

As a reminder, the Home Affordable Modification Plan aims to help keep people in their houses primarily by lowering interest rate payments. It’s not had a lot of success so far, so people are starting to look at possible ways to rejig the programme. One of those is principal forgiveness, instead of just forbearance, for underwater homeowners. Read more

And the 2009 US payroll revisions show…

. . . significantly more job cuts in 2009 than originally estimated — about 617,000 more in fact.

Here’s the relevant table from the Bureau of Labor StatisticsRead more

US payrolls fell in January – 20,000 jobs lost

Goldman were right – US employers cut jobs in January.

Payrolls fell by 20,000, significantly more than economists had forecast, according to figures released by the Bureau of Labor Statistics on Friday afternoon. Read more

Lunch Wrap

On FT Alphaville Friday morning,

- Spencer sells, Icap warns and the City reacts. Read more

Bluegold hedge fund denies causing WTI volatility

There are some very intriguing flashes coming out on Reuters regarding the BlueGold hedge fund on Friday:

RTRS-HEDGE FUND BLUE GOLD DENIES IT WAS RESPONSIBLE FOR VOLATILITY IN CRUDE OIL PRICES IN LAST FEW DAYS  Read more

Carry trades and reverberations Down Under

Australia might be a long way from Europe and the US, but the impact of events in those far-off regions has added to Tuesday’s surprise decision by the Reserve Bank of Australia to hold interest rates – prompting some top forecasters to call an end to the Aussie dollar’s dream run.

That comes after the Aussie dollar rose 28 per cent in 2009 against the greenback, and 31 per cent against the yen, to end the year with the third-best performance among the 16 most-active currencies. Read more

Next up for Europe, covered bond catastrophe?

Covered bonds are a circa €2,000bn market.

Europe is the biggest issuer of such debt. Read more

Markets Live transcript 5 Feb 2010

Live markets commentary from FT.com 

Day IV (over and out)

By Matthew Kennard:

This is going to be a truncated (and my last) dispatch. Although Indaba calls itself a four-day conference, it’s really not. Thursday is pack-up day for the companies in the main hall (and Corporate Social Responsibility day in the lecture theatre). Funny those two events happen contemporaneously, isn’t it? I’m going to go straight to Party Of The Night as I probably should have all week because it reflects the hierarchy of importance at Indaba. Read more

Europe is Lehman-fied, part trois

On Thursday we noted that a number of interesting things were happening in the CDS market. Here are some further reflections, via Deutsche Bank’s Jim Reid.

First, Portugal’s 5-year CDS (+28bps yesterday, and +58bps over 48 hours) traded wider than every single name in the iTraxx Main (composed of 125 corporate constituents), except, predictably for Banco Espirito Santo (+70bp wider yesterday to close at 260bp). Read more

Swiss intervention in Asia overnight?

It’s no secret in FX markets that the Swiss National Bank eagerly defended the 1.50 EURCHF level for most of 2009.

Many analysts, however, were under the impression the days of SNB intervention were now long gone. Read more

That Grεεk CDS trιggεr

Greek CDS continues its Icarusian journey, reaching another record on Thursday.

Meanwhile, its CDS curve remains inverted — indicating that the market thinks there’s a higher risk the country will default in the short-term, than in the long-term. Other CDS curves continue to flatten, with Portugal in particular, on the verge of inversion: Read more

This little sovereign went to market…

For your consideration, a selection of five-year sovereign CDS spreads from Europe as of Thursday’s close:

 Read more

Anything but porcine at BarCap

FT Alphaville and the FT are not allowed to say PIIGS a certain porcine acronym.

But we are in good company. Neither, it seems, is Barclays Capital. Read more

The European exit strategy, revisited

We’ve seen charts like the below before, but they are still striking:

 Read more

Spencer sells, Icap warns and the City reacts

Ouch. Read more

Very good reasons to buy Toyota (cars and stocks)

In the volumes about “Toyota terror” cascading forth from the media, the FT’s Philip Stephens’ keenly counter-intuitive take stands out as a beacon of provocative — and we think persuasive — reasoning.

There has “never been a better time to get down to the Toyota showroom”, Stephens declared on the FT’s DotComment blog on Friday. Despite the cash registers “already ringing as US lawyers anticipate years of lucrative litigation” and a 24-hour media fanning the” flames of panic”, he argued: Read more

EMI – a (on)going concern? (updated)

Maltby Capital Limited, the vehicle Guy Hands used to acquire EMI for £4.2bn shortly before the credit markets collapsed a couple of years ago, has filed results and financial statements for the year to March 31, 2009.

And it does not make for comfortable reading. Read more

Santander’s deteriorating ratio

Analysts mostly put a positive spin on Santander’s fourth quarter results on Thursday — interpreting the bank’s rise in provisioning as prudent rather than a signal of distress — but that didn’t stop Santander’s shares sinking on the day.

(And much more so than some domestic rivals): Read more

Further reading

Elsewhere on Friday,

- Model-oggling Macquarie banker keeps his jobRead more

Pink picks

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

Gillian Tett: The race for Greece before the ECB exits
Warren Buffett famously observed that it is only when the tide goes out, that you can see who is swimming naked. It is a potent adage now, writes the FT’s Tett. In recent months there has been much speculation about what might happen when central banks start to implement “exit strategies”. Now we have a few clues. The Bank of England has just announced it is freezing its quantitative easing programme, spurring debate about the outlook for gilts. But to my mind, one of the most revealing sagas in relation to the exit strategy debate lies with the drama over Greek debt. Read more

Snap news

Breaking pre-market news on Friday,

- Icap warns profits for the year to 31 March 2010 will be in the range £295 million to £315 million – statementRead more

BofA and ex-chiefs face fraud lawsuits

Bank of America and two of its top executives duped shareholders about mounting losses at Merrill Lynch and manipulated Washington into handing over $20bn to help finance the 2008 merger of the two banks, the New York attorney-general alleged on Thursday. In the first official attempt to affix blame to the bank’s top management, Andrew Cuomo filed a civil fraud complaint against BofA, its former CEO Ken Lewis and former CFO Joe Price. See the FT’s “tale of two leaders” and FT Alphaville.