Posts from April 2010

Rooting for Goldman

Spencer Jakab, from the FT’s Lex team, has produced a lovely On Wall Street column, speaking up for a bank that many have chosen to hate.

It’s packed with anecdotes and well worth a read. Here’s a taste: Read more

‘We are wall Street…we are smarter and more vicious than [dinosaurs]‘

If anyone knows who wrote the following email, which has been pinging around Wall Street and across prop desks, tell ‘em get in touch with FT Alphaville. We like the writing style.

“We are Wall Street. It’s our job to make money. Whether it’s a commodity, stock, bond, or some hypothetical piece of fake paper, it doesn’t matter. We would trade baseball cards if it were profitable. I didn’t hear America complaining when the market was roaring to 14,000 and everyone’s 401k doubled every 3 years. Just like gambling, its not a problem until you lose. I’ve never heard of anyone going to Gamblers Anonymous because they won too much in Vegas. Read more

FX gyrations

Something is afoot in the foreign exchange market.

Both Citigroup and Barclays Capital put out notes on Friday suggesting the market should be in for some sizeable dollar selling, on the back of month-end portfolio fixings by fund managers. Read more

Get Goldman

Goldfellas

Business of protection Read more

Understated Research Headline of the Year, Part II

Hello criminal probe, goodbye hard-earned reputation — and, er, about seven per cent off Goldman Sachs’ stock, as at pixel time.

 Read more

Understated Research Headline of the Year

Can Portugal cut it?

Greece has agreed to find €24bn in fiscal savings in order to stave off default and get international aid back on track. Austerity is back in Athens, at last. Or so we hope.

Now how about Lisbon? Read more

Moody’s cuts nine Greek banks

Greek banking pain, again, as the country’s financial institutions reel from the effects of one sovereign downgrade from S&P — and expect action from Moody’s soon.

The latter agency had some bad news in the meantime. From a release on Friday: Read more

Presenting, the Eurozone-Trapp finmin family

It’s ‘Greek bailout’ hype Friday, which means the eurozone finance ministers are once again preparing to talk aid packages over the weekend.

A Reuters snap confirmed that there would indeed be (yet another) ministerial huddle: Read more

Markets Live transcript 30 Apr 2010

Live markets commentary from FT.com 

Goldman attracts criminal probe

Federal prosecutors have begun a criminal investigation into whether Goldman Sachs or its employees committed securities fraud in trading subprime mortgages, people close to the probe have told the WSJ.

The investigation will raise the stakes for Goldman, the Journal notes, as the bank faces the SEC’s civil case in the mean time. Media interest in the bank will also explode once more, FT Alphaville writes.

Call the cops

If you thought the media was starting to lose interest in that Goldman Sachs fraud case, think again.

The Wall Street JournalRead more

Barclays profit up despite growth doubts

Barclays has reported a 47 per cent rise in pre-tax profits for the first quarter of 2010, the FT reports. Strong numbers from Barclays Capital, the bank’s investment banking arm, drove the performance.

Barclays Capital’s revenues have nevertheless fallen below analyst forecasts, according to Bloomberg, prompting scepticism about continued growth. Barclays shares were the worst-performing among UK banks in London trading on Friday morning.

The UK is the next Greece (updated)

(Now with added graph and context)

As investors scramble to protect themselves from the next credit flare-up in Europe, their worries are spreading to the U.K. Read more

Options industry kills oversight reform

A controversial financial regulatory reform proposal that would have extended the oversight of the Commodity Futures Trading Commission over some equity options contracts has been withdrawn after lobbying by the US options industry, the FT says.

Senator Blanche Lincoln had proposed that options contracts based on broad market gauges such as the S&P 500 should be treated as swaps, prompting oversight by the CFTC. The SEC chair Mary Schapiro had also strongly criticised the plan.

Airline merger readies for take-off

Continental Airlines and United Airlines will announce a merger on Monday, people familiar with the deal have told the WSJ. Boards in both companies will discuss the deal on Friday, they added, cautioning that the merger could still fall apart.

If the merger goes ahead, the new company will outclass Delta Air Lines as the biggest carrier by number of passengers.

Bourses’ Greek default fears recede

Receding fears of a Greek default and continuing good news on corporate earnings put some pep into stocks on Friday, according to the FT’s rolling global markets overview. The FTSE All-World equity index rose 0.3 per cent, the euro was firmer, and commodities saw demand. The main focus for traders is likely to be the initial reading of US first-quarter gross domestic product, out later on Friday.

How Greece is contaminating European financials

A European financials index is showing a spike in the costs of insuring against bank default in the region, FT Alphaville notes; the first such break since January 2008. Sovereign financial guarantees are starting to look shaky — even though the process of bank rescue and writedowns isn’t over yet. Read more

Lehman-Greece parallels du jour

Yields on three-month German bunds have been verging on the negative in recent days, FT Alphaville notes. It appears to be a flight from Greek risk — and it echoes a slide in Treasury bills after the fall of Lehman Brothers in 2008. Read more

When what Mervyn King says in private goes public

Or, how one paraphrased quote is making lots of trouble.

Here’s the offending remark: Read more

Further reading

Elsewhere on Friday,

- Lights! Camera! Information asymmetriesRead more

Pink picks

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

Gillian Tett: Banking regulation bill is too big to succeed
The debate about financial reform is reaching fever pitch in Washington and on Wall Street, as Republicans and Democrats bicker over reform bills, notes the FT’s Tett. But one curious facet to this debate is that almost nobody I have met in the banking or political world appears to have actually read much (let alone all) of those financial reform bills.
 Read more

Snap news

Breaking pre-market news on Friday,

- Climate Exchange recommends £350m/750p a share cash offer from IntercontinentalExchange – statementRead more

Report: Criminal probe into Goldman trading

Goldman Sachs is under criminal investigation for possible securities fraud related to its mortgage trading, the Wall Street Journal reports, citing people familiar with the probe. The investigation, led by the Manhattan US Attorney’s office, is at a preliminary stage and stems from the SEC’s civil law suit regarding Goldman and its Abacus CDO, according to the WSJ.

Overnight markets: Up

Asian markets
Nikkei 225 up +147.47 (+1.35%) at 11,072
Topix up +11.25 (+1.15%) at 988.89
Hang Seng up +248.43 (+1.20%) at 21,027

US markets
S&P 500 up +15.42 (+1.29%) at 1,207
DJIA up +122.05 (+1.10%) at 11,167
Nasdaq up +40.19 (+1.63%) at 2,512 Read more

Goldman, Tourre solidarity might not last

Goldman Sachs’ ability to defend itself against civil fraud charges brought by the Securities and Exchange Commission appears to be linked to the fate of Fabrice Tourre, a trader who once boasted in e-mails that he was selling complex financial products to “widows and orphans”. But, faced with similar circumstances, companies in the past have been quick to part ways with “rogue” employees accused of fraud, according to the FT.

EU banks struggle in lending markets

Many European banks have become shut out of the international lending markets because of continuing concerns over Greece, sparking fears that some could collapse as they run out of cash, says the FT. Greek and Portuguese banks cannot borrow in the international money markets, while weaker European banks are also struggling to raise money as fears of counterparty risk have grown sharply.

US Senate starts finance reform debate

Senate Democrats and Republicans drew the battle lines for financial reform on Thursday – drafting radically different amendments and finally starting debate after weeks of a bitter phoney war, reports the FT. Richard Shelby, the senior Republican on the banking committee, underlined his intention to “reshape the bill” to bring the text’s resolution authority for large institutions closer to a traditional bankruptcy.

China attempts to cool housing market

Over the past two weeks, the Chinese government has been rolling out an aggressive campaign to squeeze speculative buyers out of a property market that many analysts fear is close to a bubble, the FT says. Almost every day a new administrative measure has been announced – raising the required deposit and interest rate on mortgages for second homes, and making it harder for people not resident in a city to get a mortgage there.

Annual UK house price rise hits 10.5%

UK house prices climbed 1 per cent in April, according to a closely watched index, and year-on-year, showed the first double-digit rise since prices peaked in October 2007, reports the FT. According to the Nationwide house price index, prices rose by 1 per cent in April from March and recorded a rise of 10.5 per cent from April 2009. See also FT Alphaville for some analyst comment.