Posts from Thursday May 13 2010

SOCA – does the ‘C’ stand for clowns?

This must be one of the most laughable pieces of cop ploddery ever seen in Britain.

The country’s Serious and Organised Crime Agency, fresh from helping the FSA supposedly smash an alleged high class City insider dealing ring, has blocked off the supply of €500 notes in the UK because… Read more

Thai protest leader shot as violence flares

A renegade Thai army officer, advising protesters who have occupied sections of central Bangkok for more than a month, was shot on Thursday night in the midst of a new round of violent clashes between demonstrators and security forces, the FT reports.

Portugal unveils ‘crisis tax’

Portugal introduced tough new austerity measures including a “crisis tax” on both wages and big companies on Thursday as part of a plan to cut its budget deficit by more than half in under two years, the FT reports. The austerity drive follows similar moves by Spain, Greece and Ireland. “These measures are absolutely necessary to defend our country, Europe and the single currency,” Portuguese prime minister José Sócrates said.

China seals cement deal with S Africa

China on Thursday confirmed its biggest investment in South Africa for more than two years. Jidong Development Group, China’s second largest cement maker, and the China Africa Development Fund will acquire a majority stake in a new R1.65bn ($221m) cement plant, the FT said. Chinese banks will fund the venture alongside South Africa’s NedBank.

Banks probed over rating agency ties

New York’s attorney-general has begun an investigation into whether banks misled credit rating agencies in order to obtain high ratings for mortgage-backed securities, the FT reports. Andrew Cuomo has  issued subpoenas asking eight banks: Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Credit Agricole, and Bank of America/Merrill Lynch.  Separately, as Bloomberg reports, the US Senate approved a proposal to let regulators decide who rates asset-backed securities.

Bail-out worries weigh on the euro

The euro fell back against the dollar as the tremors from Monday’s €750bn eurozone bail-out package continued to reverberate, according to the FT’s rolling global market overview. The single currency was trading at $1.2587, down 0.2 per cent, as New York markets closed – taking it perilously close to last week’s low of $1.2520, before the eurozone bail-out package was implemented, and well off Monday’s high of $1.31 just after the rescue was announced.

Tullett Prebon ends takeover talks

Shares in Tullett Prebon fell by more than 13 per cent on Thursday after the interdealer broker headed by Terry Smith disclosed that discussions with a possible buyer had ended without a deal, the FT reports. The statement comes two months after the group said it was in talks with an unidentified suitor, which had pushed the stock up by more than a quarter.

Ackermann’s curious Greek-speak

Attention Josef Ackermann: you’re confusing us.

According to a Reuters report on Thursday, the Deutsche Bank chief executive is not so sure that Greece will be able to repay its debts. He’s also somewhat skeptical about Portugal, a view shared by Greek deputy PM Theodoros PangalosRead more

Contrary indicators, US regulator edition

Investigators have put the entirety of Wall Street on the naughty step over subprime securities in recent days — and tough financial reform is zipping through the Senate.

But fear not, banks — everything will be fine. Read more

Delphic oracles of debt

Interesting Greek-related results from a Reuters poll of economists, on Thursday.

First, a vote of confidence in the eurozone’s fresh new bailout guarantee: Read more

Now, about those DEM rumours

Sovereign CDS spreads have been tightening.

As have financials’. Read more

The Wolfpack returns

Or maybe not. Read more

Adding value through corporate governance

From Robert Monks, founder of Lens Governance Advisers,  who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…

Extract: Read more

Ten easy lessons in cooking the books

From Howard Schilit, founder and CEO of Financial Shenanigans Detection Group, who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…

Recently I had the opportunity to address a group of graduating accounting and auditing students and asked them a question they had never discussed in any of their classes. “Who could come up with the most clever way to put the most positive spin on a company’s financial statements – even if you have to violate the spirit or letter of the accounting rules?” Needless to say, they were surprised and stunned by my question. After much prodding, we began drawing up a list of how to inflate revenue, hide expenses, report bloated operating cash flow, hide ballooning debt, and other tricks to mislead investors. Read more

Enhancing returns by watching the legals…

From Philip Marcovici chief executive officer of LawInContext, who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…

Investment professionals are under increasing pressure to produce investment returns of more than 5 percent or 10 percent, at best, without exposing investors to significant risk. The globalization of investment portfolios requires that investors have a thorough understanding of how legal issues can affect returns.  Read more

Enhancing returns with attention to tax

From Philip Marcovici chief executive officer of LawInContext, who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…

Cross-border investment involves various tax issues requiring careful navigation if risk is to be appropriately evaluated and returns maximized. Identifying these issues at the right time—before an investment is made—may affect the investment strategy. Read more

Carbon exposure and strategic opportunities in energy markets

From John Parsons, a senior lecturer at the MIT Sloan School of Management who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…

Earlier this year, the US Securities and Exchange Commission issued guidance on disclosure requirements pertaining to climate change and greenhouse gas emissions. Although a comprehensive system for regulating greenhouse gases has not yet passed the Congress, the SEC advised companies to “evaluate the potential impact of pending legislation and regulation related to this topic.” “A company should consider, and disclose when material, the risks or effects on its business of international accords and treaties relating to climate change.” Read more

‘Eyes fixed firmly on the rearview mirror’

From Ian Bremmer, president of Eurasia Group and author of The End of the Free Market: Who Wins the War Between States and Corporations?, who is presenting at the CFA Institute 2010 Annual Conference, which begins on Sunday in Boston…

America has now moved beyond a sense of financial crisis and into the game of assigning blame. Books like “The Big Short” and “13 Bankers” have hit the shelves. Goldman Sachs heavies have been hauled before Congress to explain themselves. Our eyes are fixed firmly on the rearview mirror. Read more

Annual conference time for the Institute

Visit FT Alphaville for a selection of guest posts from speakers at th2 2010 CFA Institute annual conference, which gets underway in Boston on Sunday evening. Read more

Australia’s super-controversial mining super-tax

The Australian government has not given up insisting that pigs fly that a planned 40 per cent tax on “super” profits generated by all resources operating on its soil is a Really Great Thing.

Even senior bureaucrats are now weighing in, with Ken Henry, chief of the Australian Treasury, claiming on Thursday that the tax will “boost” the mining industry and the economy. Read more

Quick, to the VATmobile

Chris Giles, the FT’s economics editor, is not impressed with the ConDem coalition agreement:

“Deficit reduction and continuing to ensure economic recovery is the most urgent issue facing Britain,” states the coalition agreement between the Conservative party and the Liberal Democrats. If so, the rest of the document does not live up to the billing. Read more

Markets Live transcript 13 May 2010

Live markets commentary from FT.com 

Democrats win derivatives tug of war

The Senate has rejected a Republican bid to roll back tough rules on derivatives in its finance reform bill, the NYT reports.

Senator Blance Lincoln’s amendment remains intact for now — which increases the chance that Wall Street banks will eventually have to spin off their swap desks, as well as requiring collateral to be posted in derivatives contracts. Read more

When is a market maker not a market maker?

A key Goldman Sachs defence in the civil lawsuit being brought against it by the SEC is that the institution was only fulfilling its role as a security market maker.

The firm’s CEO Lloyd Blankfein, for example, told lawmakers in a congressional hearing on April 27 that market-makers had no obligation to tell clients about their own position in a security, and that the nature of the principal business often put them on the opposite side of its own customers. Read more

Cuomo asks if rating agencies were duped

New York’s attorney general will probe eight banks as he seeks to discover whether rating agencies were misled on mortgage securities, the NYT reports.

Andrew Cuomo’s investigation turns the tables for the credit agencies, which have been criticised for handing triple-AAA ratings to toxic mortgage securities. Read more

Oil spill panel exposes failures

A litany of failures led to the catastrophic spill from BP’s Gulf of Mexico well, a powerful US Congressional investigations panel revealed on Wednesday, suggesting officials from numerous companies overlooked many warning signs, the FT reports.

The well failed a key pressure test only hours before it exploded, the panel found. Read more

SEC eyes trading ‘circuit breakers’

Equities markets face a a raft of new rules after last week’s wild swing in prices, the FT reports — chief among them the creation of ‘circuit-breakers’ for individual stocks.

It has been suggested that the SEC implement a brief halt in trading if a stock loses 10 per cent of its value within five minutes. However, this will have to be enforced across a vast array of exchanges, private platforms at broker/dealers, and dark pools.

Digging for gold in London

Not everyone thinks gold is a quasi currency and heading to $3,000 an ounce.

Some people are expecting a pull back from its record high. Read more

Bankrupts recover their beauty

Being in bankruptcy court never looked so good, the WSJ says, as it notes that creditors are pressing for recovery more and more in companies which seek debt relief.

As corporate earnings and credit markets recover, companies can increasingly go on financing even in bankruptcy court. Hedge funds also on the lookout for promising junk.

Markets set aside Europe worries

Shares are making decent gains in European and Asian markets today, as investors set their worries about eurozone sovereign debt to one side, according to the FT’s rolling global market overview.

Optimism from technology giants Cisco and IBM overnight helped drive the gains. Even the attractions of gold, which was hitting record highs above $1,240 an ounce yesterday, are waning as the yellow metal eases back to $1,237.