Posts from Tuesday Feb 9 2010

Regulation, in pictures

Here’s the SEC enforcement team, led by Robert Khuzami, as portrayed by the New York Times.

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Five ‘negatives’ and one ‘mixed’ – the BarCap take on US regulatory reform

Tricky presenting this table in viewable form, but here goes…

Click to enlarge, obviously. It’s in two parts. Read more

A grandee speaks up for Little England

To the Said Business School, Oxford, to hear departing Cadbury chairman Roger Carr talk about hostile takeover bids – a timely address, given the Kraft deal…

Carr, we can report, had clearly topped up on the theobromine ahead of his speech. Treating his audience to an insider’s view of a genuine transatlantic takeover battle, which he “won” by virtue of extracting 850p a share, Carr proceeded to recommend a range of rule changes to The Code, the City’s cherished but non-statutory takeover rulebook. To wit: Read more

CIC’s push in Asia could face resistance

Lou Jiwei, the chairman of China’s well-endowed SWF, CIC, recently reiterated the fund’s focus this year on what is now routinely labeled Emerging Asia. Jiwei added that the opportunities in these markets come with ample risk.

Speaking at the Asian Financial Forum in Hong Kong on Jan 21, Jiwei declaredRead more

Oh yes they will… oh no they won’t!

The Dow was up on Tuesday afternoon:

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The next leg of the great bear market has begun…

. . . so says Bob Janjuah, chief strategist at RBS, who is convinced — now more than ever — that the policy-sponsored excess liquidity-enabled buy fest is over.

I now think we have begun the 3rd and final leg of the multi-yr bear mrkt which began in 2007 and which SHOULD, hopefully, finish late this yr, but which COULD (hopefully not) drag on deep into 2011. This new bear leg SHOULD see S&P trade sub-1000 this mth. After which we can bounce a little (back up to 1080/1100) over late Q1/early Q2. However, this I think will then be followed by a move down at least into the low 800s in Q2/H2 10, and depending on how policymakers behave, potentially down towards/to New Lows

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Goldman’s Trojan currency swap

A curious game of Maastricht criteria hide-and-seek

The Spiegel is reporting that Goldman Sachs helped Greece cover up part of its whopping deficit. The deal was reportedly done via a currency swap, using artificially high exchange rates. Read more

Bolton on tour

Click to enlarge:

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<<"Tres hedge funds con más de 500.000 millones bajo gestión son los responsables del ataque a España">>

Okay, we don’t think this needs to be put through the Google Translator.

Reportedly, Moore Capital, Brevan Howard and Paulson & C0 are behind the “murky maneuvers” that have seen Spanish CDS and bond yields blow out. >” class=”more-link”>Read more

Does Europe need a carbon central bank?

The annual Lord Mayor’s City Debate took place in London’s Mansion House on Monday evening, with FT Alphaville in attendance. (Many thanks to the Chicago Mercantile Exchange for the invitation.)

The motion put forward to financiers: financial markets are doing nothing to help stop climate change. Read more

Nowotny talks contagion, exit strategies and all things peripheral with FT Alpha

European Central Bank (ECB) governing council member, Ewald Nowotny , sat down with FT Alphaville to talk Greece, exit strategies, speculation and contagion in the eurozone.

In addition to being an ECB member, Nowotny is also the head of Austria’s central bank, where he experienced some of the problems of European contagion first-hand last year.  Read more

Australia ends bank deposit guarantees

While Europe stresses about a potential Greek meltdown and contagion crisis, things are looking pretty good from the perspective of Down Under.

Fresh from its surprise decision to hold interest rates last week, Australia has now said it will withdraw government guarantees of commercial banks’ wholesale funding and large deposits and of state government borrowing. Read more

The USO says it is innocent

United States Commodity Funds, the group behind the USO and UNG exchange traded funds, is keenly protesting its innocence regarding the group’s possible connection with volatile energy market moves in 2008, and 2009.

In January, the group addressed accusations that the USO may have stoked record prices to record highs in 2008 with the following SEC statementRead more

Lunch Wrap

On FT Alphaville on Tuesday morning,

– Post QE gilt (auction). Read more

Markets Live transcript 9 Feb 2010

Live markets commentary from 

Post QE gilt (auction)



Banks, insurers and sovereign debt

Insurance stocks were hit hard on Monday amid concerns about their holdings of sovereign debt. But what about the banks, how exposed are they to government paper, eurozone and otherwise.

Here, via JPMorgan, is something of an answer. Read more

CIC takes on the world

After a low-key year, China Investment Corporation really has come back out swinging. After last week’s news of its nifty deal with Apax Partners in Europe, a (US) SEC filing by the Chinese sovereign wealth fund gives an intriguing glimpse into how it is using exchange-traded funds to take positions on sectors ranging from healthcare to consumer services and gold.

The filing, as the FT reports on Tuesday, showed that CIC’s largest US stock market investments were in miner Teck Resources, investment bank Morgan Stanley, asset manager BlackRock and Visa, the credit card company. And about a quarter of CIC’s entire US portfolio was in ETFs, many of them provided by BlackRock’s iShares division. Read more

JGB update: Is Japan the next Greece?

Is Japan, mired in debt and deflation, the next Greece?, asks the FT  in an attention-grabbing line of an editorial comment on Tuesday.

After all  even Shizuka Kamei, the country’s financial services minister, thinks Japan Post, the giant bank his ministry oversees, should consider diversifying out of Japanese government bonds and buy corporate bonds and – of all things – US Treasuries. Read more

The cost of eurozone disunion is 55bps, Deutsche says

Here’s a CDS curio for you to ponder this Tuesday.

The analysts on Deutsche Bank’s fixed income team have done some number-crunching/modeling and come up with some interesting perspectives on how eurozone CDS stacks up against the US and UK. Read more

Euro rise *alert*

We posted a dollar rise *alert* at the beginning of November based on some contrarian thinking in the market at the time.

And the contrarians did not do a bad job of calling the bottom in the dollar rout: Read more

Défãult rísk

The European contagion effect starkly illustrated below:

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Further reading

Elsewhere on Tuesday,

– The shadow banksRead more

Pink picks

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

Michael Skapinker: Saving a company’s soul
Stand up if you hate Manchester United.” This tribal cry from the football club’s enemies doesn’t stir me. I do not hate Manchester United. I am indifferent to them. Adult passion for football clubs has always struck me as slightly ridiculous. You do not, all the same, have to be a football fan to think that United’s current state is a shabby advertisement for capitalism. Read more

Snap news

Breaking pre-market news on Tuesday,

– UBS reports Q4 net profit of CHF1.205bn – statementRead more

UBS posts quarterly profit

UBS reported its first quarterly profit in more than a year, helped by a recovery at the investment bank and a lower charge on the company’s debt, reports Bloomberg. Q4 net income amounted to SFr1.21bn ($1.13bn) compared with a loss of SFr9.56bn a year earlier, the Swiss bank said on Tuesday morning. Earnings beat the SFr416m-median estimate of 14 analysts surveyed by Bloomberg, helped by a SFr480m tax credit.

Traders bet $8bn against euro

Traders and hedge funds have bet nearly $8bn (€5.9bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis. Figures from the Chicago Mercantile Exchange showed that investors increased their positions against the euro to record levels in the week to Feb 2. The build-up represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn, and suggests a loss of confidence in the euro’s ability to withstand contagion from Greece’s budget problems.

Greek crisis clouds EU summit

The fiscal emergency in Greece and the turbulence in debt markets are threatening to overshadow this week’s EU summit on business competitiveness. The problem poses a leadership test for Herman Van Rompuy, the EU’s first permanent president, who called the meeting. Greece’s debt crisis, and the risk of eurozone contagion,  are not on the summit’s official agenda, but leaders fear the impact on financial markets if the summit does not address the worst crisis to strike European monetary union since its launch in 1999.

DE Shaw eyes distressed assets

DE Shaw, the world’s third-largest hedge fund with about $28bn under management, has established a special in-house team to buy up portfolios of distressed assets – particularly so-called “side-pcketed” assets from rival hedge fund firms. The DE Shaw Portfolio Acquisitions Unit – launched late last year – aims to capitalise on the steep discounts at which many illiquid assets are still trading.

Filing shows CIC’s US exposure

China Investment Corporation, the Chinese sovereign wealth fund, is using exchange-traded funds to take positions on sectors ranging from healthcare to gold, according to a filing with the US SEC. The filing showed that CIC’s top US stock market investments were in miner Teck Resources, investment bank Morgan Stanley, asset manager BlackRock and credit card company Visa. About a quarter of its US portfolio was in ETFs,  many of them provided by BlackRock’s iShares division.