Posts from Thursday May 6 2010

Krona watch

Lots more of this in prospect over the coming days – cable volatility.

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UK exit polls make Tories largest party

Exit polls indicate the Conservatives will win 307 seats in the new Commons, with Labour on 255 and the Lib Dems 59. That would leave all the major parties short of the 326 needed to form a majority administration after the general election, the FT said. If the polls prove accurate, Conservative leader David Cameron will almost certainly become UK prime minister, taking his party back into power for the first time in 13 years. The prospect of a hung parliament sent sterling more than a cent lower against the dollar, trading around 1.4747 at pixel time.

Swire cancels offering as investors balk at IPOs

Swooning global markets claimed a big Asian victim as Hong Kong’s Swire Properties Ltd., citing a “sharp deterioration in market sentiment,” shelved an initial public offering aimed at raising up to US$3.09 billion, the WSJ reported. Swire’s push for a price that was increasingly out of line with where its peers were trading damped demand from potential investors, the newspaper added.

Morgan Stanley, MUFG launch JV

Morgan Stanley celebrated Thursday the start of a joint venture with Japan’s Mitsubishi UFJ Financial Group, a move which the WSJ says “gives the Wall Street titan deep access into the difficult-to-crack Japanese market and a chance to put a US stamp on the hidebound Tokyo institution.”

Dome to stem BP oil leak moves into position

A four-storey, concrete and steel dome built to trap oil spewing from a crippled deep-sea well in the Gulf of Mexico arrived by barge early on Thursday over the site of the 5,000-barrel-a-day leak. The cofferdam, weighing almost 100 tons, will be lowered by cable to the wellhead over the next three days in an operation never attempted at such depths, the FT reported. The dome will not stop the leak but BP hopes it will allow escaping crude to be siphoned up to the surface to a drillship.

Peugeot secures China joint venture

PSA Peugeot Citroën said it had signed a letter of intent with Chang’an Automobile Group to create a 50:50 joint venture in China.  The French carmaking group said the venture would produce low-emission light commercial vehicles and passenger cars. Peugeot gave no details on the cars it planned to produce in the new joint venture except to say they would be “environmentally friendly”, the FT said.

Greece passes tough measures

The Greek parliament on Thursday approved a tough austerity package agreed with its eurozone partners and the IMF. George Papandreou, the prime minister, said that the cuts in wages and pensions as well as tax rises would avert a default, the FT reported. But FT Alphaville noted the ECB had clashed with Greece over certain provisions in the package.

Dow factoids

Courtesy of

DJIA, down 347.80 points, or 3.20% to 10520.32

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ECB dashes hopes of action

The European Central Bank on Thursday dashed hopes it would act soon to calm the eurozone’s escalating fiscal crisis as it left its main interest rate unchanged at the record low of 1% for the 12th consecutive month, reports the FT. Jean-Claude Trichet, president, said the ECB’s governing council had not discussed the option of buying government bonds, and gave no signals that other measures were under consideration. As FT Alphaville notes, neither bond, currency and CDS markets nor analysts were well pleased with Trichet’s response.

Tarp stigma hit credit, says Paulson

The US Congress hurt credit flows when it “stigmatised” the $700bn bank bail-out programme, Hank Paulson, the former Treasury secretary and previous chief executive of Goldman Sachs, suggested on Thursday. Mr Paulson did not specifically blame lawmakers, but the limits on executive pay and calls for mandatory lending that he identified as the stigma emanated from Congress in 2008, the FT said.

NYSE Euronext says there were ‘a number of erroneous trades’

Via Bloomberg:

NYSE Euronext said “there were a number of erroneous trades” during an almost 1,000-point plunge in the Dow Jones Industrial Average. Read more

Blackstone-led group eyes $10bn deal

Three of the world’s leading private equity groups are teaming up to attempt the biggest buyout since the financial crisis, eyeing a bid for payments processor Fidelity National Information Services (FIS) that would top $10bn, the FT reported, citing people familiar with the deal. Blackstone, THL and TPG, would all invest equally in an offer for the company that could be launched within the next two weeks. Blackstone and THL intially approached FIS, according to the people familiar with the situation, and were later joined by TPG.

Overnight markets: Scary

A sudden and calamitous plunge in late trading on Wall Street rattled markets on Thursday. Both the Dow and the S&P 500 fell more than 5 percentage points within a ten minute period and left traders, regulators, dealer banks and exchanges struggling to find an explanation for the move. At one point, the Dow slipped below 10,000 but recovered to close at 10,520.32, off 3.2 per cent or 347.8 points. The S&P 500 closed 3.2 lower at 37.72 per cent.

The FTSE All-World equity index fell 3 per cent. The euro slumped to 15-month lows versus the dollar and 2002 lows versus the yen, while gold surged above $1,200 an ounce. The price of crude oil sank 3.5 per cent, the FT saidUS 3-month Libor rose for the 13th consecutive day to stand at 0.377 per cent, its highest setting since August and up from 0.30 per cent in mid-April. Eurozone money market rates rose for the 12th day in row, with 3-month euro Libor at 0.623 per cent, in a sign of growing worries that the sovereign debt crisis could spark a seizure in interbank lending. Read more

Emergency Markets Live session – transcript 6 May 2010

Live markets commentary from 

Emergency Markets Live session – now!

Join Paul Murphy and Neil Hume (as soon as he gets to a terminal).

Mayhem on Wall Street.. Read more

Mayhem on Wall St

Dow cracks, mends, partially

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BNP Paribas calls for EURUSD parity by Q1 2011

Hot off the embargoed presses at BNP Paribas, a bold call for the Mighty Drachmark vs the dollar. Emphasis FT Alphaville’s:

We have revised our EURUSD projection sharply lower and now expect a decline to parity by Q1 2011. While we have had one of the most EUR bearish forecasts in the market, these previous projections now appear too moderate given current developments. We had feared that the structural weakness of the eurozone, due to the increasing economic divergence, would make it more difficult to obtain an optimal policy response. This has played out, but the inner EMU bond spread divergence and its impact on capital flows has been more severe than had been initially anticipated. Read more

In which Wall Street collapsed…and bounced back

FT Alphaville has stopped staring at screens for just long enough to post the following:

Google Finance chart of Dow and S&P 500
That plunge in the chart above? That was the Dow going from -500 to -1000 in the space of seconds. We’re investigating. Read more

Wall Street infected

The Yen vs Rest of World

Someone tell Canada there’s a crisis on

What happens when the risk-free rate isn’t risk free?

“Corporate finance is built on the idea that companies are more likely to go bust than governments.” Discuss.

According to the thinkers at the Economist, it is time to rethink the notion that the risk-free rate can always be used as a basis for pricing other assets: Read more

Tin hat time: European analysts declare ‘meltdown’

As the Mighty Drachmark slid toward parity with the US dollar and global markets tumbled for another session on Thursday, European analysts appeared to be donning their tin hats en masse.

Here’s a sample of the research notes that hit the FT Alphaville inbox on Thursday, any emphasis ours. Read more

CDS report: It’s getting worse…

Markit chart of European bank CDS

A disappointing week for bullish investors got worse today as it became clear that the credit market was in the midst of its most severe correction since the early months of 2009. The positive feedback loop between states and their banking sectors has re-emerged, and is having a seismic impact on the broader market. Read more

Presenting ‘The Mighty Drachmark’


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Head in the sand at the ECB (updated)

European Central Bank President Jean-Claude Trichet’s performance at his press conference in Lisbon on Thursday did not win many plaudits, in the face of the eurozone’s debt crisis.

Evolution’s Gary Jenkins argues that Mr Trichet’s head seemed stuck in the sand: Read more

ECB clashes with Greece on proposed cash ban

According to an ECB document made public on Wednesday, the Greek finance ministry sought advice from the European Central bank on a draft law it hopes to introduce to restore fairness in taxation, and which would also address tax evasion.

(H/T @fiatcurrencyRead more

No change at the ECB

Nothing to see here? The European Central Bank kept its benchmark refinancing rate unchanged at 1 per cent in its policy statement on Thursday.

Flashes, via Reuters: Read more

The hedge funds are watching us…

Okay, maybe not ‘us’ as in FT Alphaville, but they are watching some other financial blogs.

From Tim Human at the Cross Border GroupRead more

It’s Wall Street reform action day

Thinking of waving a flag for capitalism outside the New York Stock Exchange on Thursday?

Showing off your newly-acquired Rolex in Wall Street favourite UlyssesRead more