Posts from Tuesday Feb 23 2010

Operation drano

The market, it seems, was still digesting the potential repercussions of “operation drano“on Tuesday.

What we know is that, starting tomorrow at 11.30am in Washington, the US treasury will conduct weekly auctions of $25bn in 56-day bills as part of the so-called Supplementary Financing Program. Read more

Is the Spanish charm offensive working?

The answer would appear to be “yes” if the following chart from Lombard Street Research is any guide:


The Spain/Germany spread in 10-year yields has tightened by some 30 basis points over the past fortnight – moving back to levels last seen before Christmas, when the Greek debt drama was just warming up. The Greek/German spread is below its peak, but has widened alarmingly over recent days. Read more

CDS report: Confidence ebbing away

Markit’s Gavan Nolan wrote this CDS report

European credit markets experienced a difficult afternoon as the weakness of the US consumer became apparent. The Markit iTraxx Europe index finished the day over 3bp wider at 86.5bp, while the Markit iTraxx HiVol closed at 127.5bp, over 4bp wider than yesterday’s close. The Markit iTraxx Crossover underperformed them both, widening by 19bp to close at 472bp. Read more

Anil Ambani goes hostile

Anil Ambani, the billionaire owner of India’s Reliance ADAG, has sparked a bidding war for Fame India, a film distributor in a country where hostile takeovers are rare.

Reliance MediaWorks has offered to buy 62 per cent of Fame, which had previously agreed to sell itself to local multiplex cinema operator Inox Leisure. In fact Inox now owns just over 50 per cent of Fame. Read more

A debt crisis wouldn’t be a debt crisis…

…without Argentina.

Right on cue, Argentina’s bonds slumped to a five-month low on Tuesday following speculation that Amado Boudou, the country’s economy minister, could be about to resign. Read more

US commercial real estate prices rose in December, Moody’s says

Here’s a fresh and relatively rare bit of good news from the US commercial real estate market.

According to the Moody’s/REAL Commercial Property Price Indices (CPPI), US CRE prices rose 4.1 per cent in December, marking the second consecutive month of increases. Read more

A discreet draining operation?

And we aren’t talking about Dyna-Rod here.

But this, which is hot off the John Kemp wire at Reuters: Read more

Is Gazprom buckling on long-term contracts?

A tip of the hat to Nick Drew over at the Cityunslicker blog for drawing our attention to the following gem of a natural gas market story.

As reported by Reuters late last week: Read more

Walking away, datapoints du jour

Which would you choose to walk away from? Plastic or property? Cards or cribs?

From a Tuesday statement by the company behind the benchmark US consumer credit score, Fico: Read more

US consumer confidence *fail*

This wasn’t in the script.

From Reuters on Tuesday: Read more

ECB to start lending covered bonds?

Here’s an interesting story from this week’s issue of The Cover, a trade publication focused on the covered bond market.

According to the weekly title, the European Central Bank may soon begin lending out the covered bonds it purchased under its €60bn programme to help secondary market liquidity. Read more

People familiar with the lobbying effort…

Out of the blue this one: the Volcker rule, whereby banks in the US would be banned from proprietary trading, is going to be replaced by a simple requirement that banks hold more capital. Apparently.

From the New York Post, who were busy quoting “people familiar with the matter” on Tuesday: Read more

Hamp on steroids

Barry Ritholtz has got his hands on something interesting — Hamp on steroids.

Readers of FT Alphaville may remember that the US Treasury’s Home Affordable Modification Program, which aims to keep borrowers in their houses by reducing interest payments, has not really lived up to the government’s expectations. The Treasury is now looking for ways to modify the modification programme (ha) such as by introducing principal forgiveness instead of just forbearance. Read more

Sugar-coated losses

Monday turned out to be quite a day for ICE raw sugar prices.  According to Reuters, the soft commodity suffered its worst single-day loss in nearly two years on liquidation pressure from investors following a run-up to 29-year highs over the last year.

Here’s the day’s price action: Read more

JPMorgan’s incredible shrinking big-fee case

For investment bankers nervous about any debate or accusations about excessive fee-charging, the anticlimax of the month — if not the year to date — might be the self-induced, near-collapse of the case being fought by Australian mining company Consolidated Minerals against JPMorgan Chase’s Australian arm.

JPMorgan, as the FT reported on Monday, is suing the miner for what it claims is A$30.8m ($27.7m) in outstanding fees for its role advising ConsMins during a bidding war for the company in 2006-07. Read more

Peripheral Pfandbriefe

More on those potentially riskante Pfandbriefe — this time from Barclays Capital.

Analysts of the German covered bond note that questions over Pfandbriefe’s exposure to European peripherals — places like Greece, Spain and Portugal — have increased in recent weeks along with sovereign jitters. And so, BarCap’s Leef Dierks and Fritz Engelhard have done some number-crunching. Read more

Lunch Wrap

On FT Alphaville Tuesday morning,

- Inflating the output gap at the BoE. Read more

Corrigan or Eurostat: whom would you believe?

Eurostat, the European statistical agency, has maintained something of a difficult-to-swallow position regarding its knowledge — or supposed lack thereof — of Greece’s use of Goldman Sachs and the currency swap market to burnish its books.

Various public statements by the agency suggest officials there had absolutely no idea — not even the slightest inkling — of Greece’s actions. Read more

Vogue finance

Whom would you rather see in the pages of Vogue?

 Read more

Go Greece tightening…

Barclays Capital has run a useful exercise on Greece to try and understand the magnitude of the problem facing Europe.

Rather than looking at the country’s outlook based on the fiscal adjustments currently being implemented, the bank’s analysts have assumed a so-called inertial primary balance – or, how debt dynamics would play out without any fiscal adjustment what so ever. In other words, how long it would take to balance the debt position as it stands now. Read more

Markets Live transcript 23 Feb 2010

Live markets commentary from FT.com 

Nitel and China Unicom: yes, no, maybe, err…

Perhaps this is the most one can expect from the world of Chinese and Nigerian telecoms M&A, but as Alice would say, it just gets “curiouser and curiouser”.

China Unicom, China’s second largest mobile operator, on Tuesday abruptly backtracked from its very public and categorical denial of involvement in a consortium bidding $2.5bn for a 75 per cent stake in Nitel, Nigeria’s troubled former telecoms monopoly. Read more

Inflating the output gap at the BoE

. . . the risks to the Committee’s central view of a gradual recovery of output remain to the downside.

That’s Bank of England governor Mervyn King testifying to the UK Treasury Committee about the February inflation report. The output gap has become something of a catchphrase for Monetary Policy Committee members at the BoE, and for some Federal Reserve board members too. Read more

The SNB can’t help intervening

Looks like the SNB has been at it again:

 Read more

THIS WAY TO THE ATHENS STOCK EXCHANGE –>

Well this was bound to happen.

About 200 Greek trade unionists have blocked the entrance to the Athens Stock Exchange. 

Further reading

Elsewhere on Tuesday,

- The DeflationistRead more

Pink picks

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

Jonathan Bell: China at risk of a home-grown financial crisis
The pathology of the western financial crisis is all too familiar: misallocation of capital fuelled by cheap credit and lax regulation, a proliferation of investment vehicles with limited credit assessment, and systemic biases predicated on ever-rising real estate prices, says Bell, senior investment manager at Pictet Asset Management. We should worry, then, that Chinese banks may be facilitating a home-grown version, especially as they plan to raise $30bn-$50bn in capital over the coming year. Read more

Snap news

Breaking pre-market news on Tuesday,

- AstraZeneca settles transfer pricing dispute with HMRC, to pay £505m – statement Read more

Overnight markets: Down

Asian markets (Tues)
Nikkei 225 down -48.48 (-0.47%) at 10,352
Topix down -3.07 (-0.34%) at 906.68
Hang Seng up +252.24 (+1.24%) at 20,630

US markets (Mon)
S&P 500 down -1.16 (-0.10%) at 1,108
DJIA down -18.97 (-0.18%) at 10,383
Nasdaq down -1.84 (-0.08%) at 2,242 Read more

Morgan Stanley nears CICC sale

Morgan Stanley is nearing the sale of its stake in China International Capital Corp to US buy-out firms KKR and TPG for about $1bn, as it eyes a more proactive securities venture in China, reports the FT. A deal would hand a healthy profit to Morgan Stanley, which invested $37m in the Chinese investment bank almost 15 years ago, and free it to pursue a new joint venture with local broker China Fortune Securities to trade stocks and other securities on Chinese markets.