Posts from Wednesday May 5 2010

The price of Blankfeins…

Lloyd Blankfein’s stock is up. Or rather, the perceived likelihood that he will depart from Goldman Sachs before the end of the year has fallen sharply since he popped that magic PR pill.

Here’s the relevant chart from self-styled “prediction market” Intrade:
Price for Will Lloyd Blankfein depart as CEO of Goldman Sachs? at intrade.com
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OCBC Posts 24% Rise in Net Profit

Oversea-Chinese Banking said Wednesday its first-quarter net profit rose 24 per cent, driven by noninterest income and a continued improvement in credit quality, the WSJ reported. “Asia’s economic recovery continues to build momentum, signalling a positive outlook for the rest of the year,” said David Conner, chief executive of OCBC, Singapore’s second largest bank by assets.

Indonesia finance chief to join World Bank

A long power struggle at the top of the Indonesian government took a surprising twist on Wednesday when Sri Mulyani Indrawati, the finance minister and reform champion, resigned to take a senior position at the World Bank. Indonesian stocks 3.8 per cent on the news, the biggest drop in a year, amid fears that the departure of the well-regarded minister could hurt Indonesia’s booming economy and anti-corruption drive, the FT said.

Rudd firm on Australian resources tax

Kevin Rudd, Australia’s prime minister, has told mining groups that he is firmly committed to a proposed 40 per cent tax on profits generated by resource companies in spite of growing industry resistance, and said he would not “walk away” from the “controversial” plan, the FT reported.

Ash closes UK airports for second day

Airports in Ireland and Scotland were closed on Wednesday after a plume of volcanic ash drifting south from Iceland caused a second day of disruption. The busiest airports in the south-east of England, including Heathrow and Gatwick, are not expected to be affected, although a buffer zone keeping aircraft away from the plume could affect flights as far south as Manchester, the FT said.

TPG to sell Shenzhen stake

TPG is poised to cash out of one of the most high-profile and controversial private equity investments made in China, after regulators approved its plan to sell a controlling stake in Shenzhen Development Bank to Chinese financial group Ping An Insurance. The deal was first announced last June and TPG is poised to make a profit of more than $2.14bn, a return of more than seven times its original investment, the FT said.

BP caps one of three oil leaks

Engineers using underwater robots on Wednesday succeeded in stopping the flow of oil from one of three leaks spewing crude oil into the Gulf of Mexico from a crippled BP offshore well. It was among the first positive news for relief teams battling the disaster, although the federal National Oceanic and Atmospheric Administration (NOAA) cautioned it would not stop the overall rate of flow from the well, estimated at 5,000 barrels a day, the FT said.

Bear Stearns chiefs blame market rumours for collapse

Bear Stearns’ former executives on Wednesday blamed market rumours for the demise of the investment bank in 2008. Appearing in public for the first time since then, Jimmy Cayne, the former chief executive of Bear, told the financial crisis inquiry commission that “the market’s loss of confidence, even though it was unjustified and irrational, became a self-fulfilling prophecy”, the FT said.

Athens protests erupt into violence

Greek prime minister George Papandreou has vowed to push through draconian economic measures demanded as part of a €110bn rescue package for his debt-burdened country despite the death of three people during demonstrations, the FT reported. Elsewhere in the eurozone, Moody’s threatened to downgrade Portugal while Slovakia was having a very difficult time galvanizing political support for the idea of spending about €800m to prop up much wealthier Greece.

Open source finance, ratings and research edition

The intersection of finance and technology is a favourite subject here on FT Alphaville (and in the Long Room), so we were interested to see two recent proposals in this arena.

First, Wall Streeter-turned VC Roger Ehrenberg argued for an ‘open source approach’ to bond analyticsRead more

Taiwan makes it harder to prosecute insider trading

Would-be insider traders located in either London or New York — both have which have been aggressively prosecuting alleged securities misdemeanors — may want to consider moving to Taipei. A freshly revised law will limit the ability of prosecutors to file an indictment for insider trading without “concrete information, rather than hearsay, providing evidence on the possession of inside information by the offenders.” Read more

US lawmakers free to continue their short selling, speculative ways

On Monday, the Wall Street Journal reported that “some members of Congress made risky bets with their own money that US stocks or bonds would fall during the financial crisis”.

On Wednesday, the newspaper published a follow-up, which highlighted afresh the inconsistencies in congressional attitudes toward both short selling and insider trading: Read more

Forget banking. In Australia, it’s the miners who make the dosh.

Financial services professionals in Australia might do better if they ditched their spreadsheets for hard hats, because according to Bloomberg, the real money is in mining. But as FT Alphaville points out, miners — like bankers — will find their incomes hit by a sharp tax increase. Read more

CDS report: Not Just Academic

Markit

The sovereign CDS markets started off wider today but did tighten up a bit from session wides in the latter half of the day.  Moody’s announced that Portugal’s Aa2 rating was on review for a possible downgrade for one to two notches.  The rating agency cited deterioration in the government’s debt metrics and slow growth as reasons although they noted that the “government’s debt is neither unsustainable nor unbearable”.  There were also reports that four German professors filed a lawsuit to prevent Germany from contributing its portion of aid to the Greece bailout package.  While ordinarly a story like that would not move markets at all, it underscores how sensitive the markets are currently to the risks involved in the execution of the package.  Imagine multiple lawsuits across multiple jurisdictions.  It only takes a temporary injunction or two… Read more

Election Night Live!

Here, on FT Alphaville, in the small hours of Friday morning…

Neil Hume and Paul Murphy, having consumed the necessary stimulants, will be hosting a special edition of Markets Live, watching how prices react as the election results flow in. Read more

Moody’s in hooker heels

What do tramp stamps and hooker heels have to do with rating agencies? According to Bill Gross, quite a lot. FT Alphaville has more. Read more

The author of the ‘Wall Street as dinosaurs’ meme surfaces

On April 30, FT Alphaville republished an email which had been doing the rounds of the various trading desks and Wall Street banks, and which included the memorable line that Wall Street types were both smarter and more vicious than dinosaurs. On Wednesday, the author of the piece emailed FT Alphaville to set the record straight about his motivations. Read more

Oil contango intensifies as Cushing stocks soar

WTI front-end futures have experienced some extreme price volatility during the past two weeks due to distortions stemming from full-to-the-brim storage facilities at Cushing Oklahoma, FT Alphaville reports. And the most recent inventory data from the EIA suggest there’s going to be continued pressure on storage. Read more

Fitch revises Goldman to outlook negative

Adding to the debate on Goldman’s post-Abacus reputation, rating agency Fitch revised its outlook on the embattled investment bank to negative from stable on Wednesday, saying the move “incorporates recent legal developments and ongoing regulatory challenges that could adversely impact Goldman’s reputation and revenue generating capacity.” Read more

Cayne TV

Tune in now via C-Span: Jimmy Cayne, former boss of former brokerage Bear Stearns, is due to appear in front of the Financial Crisis Inquiry Commission in Washington later on Wednesday.

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Santander loses market-cap top spot

Greece-related contagion fears have knocked 23.3 per cent off Spain’s Banco Santander share price since April 16, according to ThomsonReuters data:

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Greece and the eurozone: what next?

Some analysts and politicians have suggested Greece should leave the eurozone, but such a move would neither be easy, nor even a solution to either the Republic’s or the currency union’s woes. From a strictly legal standpoint, the challenges are formidable, not least because there is no precedent for either withdrawal or expulsion from European Monetary Union. FT Alphaville has more. Read more

Euro-bashing

There was no respite for the euro or European sovereign CDS prices on Wednesday.

The euro fell further through the critical €1.30 to the dollar mark, to trade as low as $1.2881 — off more than 1 per cent — as investors focused on developing tensions in Athens. Read more

Portugal on downgrade review, says Moody’s

Moody’s placed Portugal’s sovereign debt on review for a possible downgrade on Wednesday. The country’s ratings have been in focus since Standard & Poor’s issued a two notch downgrade of its own, to A- from A+, on April 27.

From Moody’s press release, emphasis FT Alphaville’s: Read more

Grim Greek austerity arithmetic

The pain is falling on Spain (in the main), but the week’s stock market panic started with fears that the IMF-led austerity plan buttressing Greece’s bailout won’t work.

Apt fears. Read more

Markets Live transcript 5 May 2010

Live markets commentary from FT.com 

China’s New Century pulls S$666m listing

A Chinese shipbuilding group has cancelled a S$666m (US$481m) initial public offering that would have been the largest in Singapore this year, the FT reported on Wednesday. New Century Shipbuilding, based near the Chinese port of Zhangjiagang on the Yangtze River, scaled down the listing from an initial target of up to S$1.5bn just days ago. The decision to abandon the flotation comes amid nervousness in global markets triggered by scepticism about the rescue deal for Greece.

BMW sees demand return for luxury cars

BMW on Wednesday underscored the rapid rebound in demand for premium cars when the German carmaker said its first-quarter operating profit in its car segment more than tripled when compared with the last three months of 2009, the FT reported. The world’s largest premium carmaker posted a profit before interest and tax in its core automotive segment of €291m in the first three months, compared to a profit of €93m in the previous period.

Picasso painting sets new auction record

Pablo Picasso regained the title as the world’s most expensive artist on Tuesday after one of his paintings fetched $106.5m – the highest price for an artwork sold at auction, smashing the previous record made just three months ago. The painting, “Nude Green Leaves, and Bust”, was sold to a telephone buyer at Christie’s New York auction after nine minutes of intense bidding, the FT reported. The auction house declined to identify the new owner.

Greek tremors continue to rock markets

The tremors from the Greek debt crisis continued to cow markets on Wednesday as investors sought succour from evidence that economic recovery was still on track, the FT reported. The FTSE All-World equity index fell 0.7 per cent to a two-month low, and the euro hit its weakest level against the dollar since April 2009 as the move away from risk persisted – albeit at a less frantic clip than witnessed in the previous session.