Posts from Wednesday May 26 2010

Lehman’s estate sues JPMorgan

Lehman Brothers Holdings bankruptcy estate sued JPMorgan, alleging that the latter illegally siphoned billions of dollars from Lehman in the days before the investment bank filed the largest bankruptcy in US history, the WSJ said, citing court documents filed on Wednesday. The estate is hoping to recoup billions in collateral and other damages, reported the newspaper.

Affinity fraud, Caribbeans in New York edition

Affinity fraud, as defined by moneymadeclear:

Affinity fraud refers to investment scams that target members of a group, such as community, religious, ethnic, elderly or professional groups. Examples include church congregations, members of old people’s clubs, community groups – and many, many more. Read more

Dow slips below 10,000 as Apple overtakes Microsoft

Wall Street failed to hold on to earlier gains on Wednesday, and shares slipped in the last hour of trading. The Dow closed below 10,000 for the first time since Feb 8. And in an era-ending move, Apple overtook Microsoft to become the world’s most valuable tech company with a market cap of nearly $223bn vs $219bn for the Windows maker. That leaves Apple second-ranked only to Exxon Mobile, which had a market cap of $282bn at the close.

Portfolio shift hits Middle East exchanges

They may have limped back a little on Wednesday but there is no disguising that stock markets in the Gulf have had a bad year, and a bad May in particular. Nor is the outlook good, analysts say. The MSCI Barra GCC countries index is down 3 per cent in the year to date, and has fallen a whopping 14.3 per cent in the month to date, the FT reported.

Malaysia central banker upbeat on Asia

The European sovereign debt crisis will cause market volatility in Asia but is unlikely to have much impact on the region’s “mutually reinforcing” real economy, according to one of Asia’s most hawkish central bank governors. “There can be pockets of deterioration but our assessment is that our domestic demand and regional economic activity is still very strong” Zeti Akhtar Aziz, governor of Bank Negara, told the FT.

Fed, BoJ nix higher inflation targets

The top central bankers at the Federal Reserve and the Bank of Japan said on Wednesday that they oppose higher inflation targets, a measure that would give more scope to cut interest rates in a crisis, the FT reported. The opposition of Ben Bernanke and Masaaki Shirakawa suggests that central banks are unlikely to change their inflation targets despite hitting the zero per cent floor on rates in response to the financial crisis.

UK censures Kraft on Cadbury deal

Kraft Foods has been censured by the UK mergers watchdog for making promises it could not keep during its £11.7bn takeover bid for Cadbury this year, the FT said. The panel also criticised Lazard, Kraft’s advisers on the Cadbury takeover, saying the investment bank “failed to discharge fully its responsibilities”. FT Alphaville has more background on the very British scandal, and on a certain banker who has had to fall on his sword.

OECD urges tax rises and spending cuts

Public spending cuts and tax rises in advanced economies are required by next year at the latest to deal with “very unfavourable government debt dynamics”, the OECD warned on Wednesday. The organization also saw the need for interest rates in the US, UK and Canada to start rising by the end of the year. But as FT Alphaville pointed out, the report also contained something for the bulls.

China reviews eurozone bond holdings

China, which boasts the world’s largest foreign exchange reserves, is reviewing its holdings of eurozone debt in the wake of the crisis that has swept through the region’s bond markets, the FT reported. Representatives of China’s State Administration of Foreign Exchange, or Safe, which manages the reserves under the country’s central bank, have been meeting with foreign bankers in Beijing to discuss the issue.

UK, France reject EU bank plan

Britain and France were at odds with other EU countries over plans to insure against future bank failures, in another sign of the problems in trying to forge a common response to the bloc’s economic woes, the FT reported. Michel Barnier, EU internal market commissioner, had set out plans for member states to form national funds to help wind up or reorganise failing banks. London rejected the idea, citing “moral hazard”; Paris had similar concerns.

Facebook acts to appease critics on privacy

Facebook introduced drastically simplified privacy controls on Wednesday in an effort to appease regulators and advocacy groups who have criticised the world’s largest social network for taking liberties with user data, the FT reported. The move follows months of wrangling between the company and its critics and comes as it faces regulatory scrutiny around the globe.

Apple, Dell, HP query Foxconn deaths

Apple, Dell and Hewlett-Packard on Wednesday said they were investigating working conditions at Foxconn after a series of suicides at the contract electronics manufacturer’s main plant in southern China, the FT reported. Nine workers at Foxconn’s Shenzhen plant, which employs and houses 300,000 people, have died after falling off buildings since the beginning of this year, the latest on Tuesday.

Massachusetts’ California-inspired CDS investigation

Bill Lockyer, trendsetter. Back in March, the California treasurer sent a letter to six Wall Street banks asking, effectively, whether they’d ever traded credit default swaps written on the state’s debt.

The result of that CDS inquisition: nothing to see there. As the FT reported in AprilRead more

Orange County tells Harrisburg bankruptcy not so bad

On Wednesday, the mayor of Harrisburg — the capital of Pennsylvania, for those not au fait with US municipal geography — appeared on CNBC to discuss the gaping hole in the city’s finances.

The NY Times has detailed how Harrisburg torched its budget: Read more

CDS report: Shorts back off

Markit CDS chart for Glencore, Anglo American, Xstrata

Risk appetite returned today after yesterday’s sell-off, with credit and equity markets rallying in tandem. A late surge in the US markets yesterday gave their European counterparts a fillip this morning, and for once the rally was sustained throughout the day. The bulk of Tuesday’s widening in spreads was recovered, with the Markit iTraxx Europe tightening by 5bp to 123.5bp. The Markit iTraxx Crossover index broke though the 600bp barrier and traded in the 590s for most of the day before giving back gains late in the afternoon and closing around 600bp. Read more

UK banks, a little bit Libored?

It’s still looking a bit choppy for short-term liquidity risk, as US lenders start to look askance at institutions in Europe.

But how might this affect banks in the UK? Credit Suisse’s analysts provide a few clues. Read more

Evil speculators vs Mickey Mouse

What do you get when you combine Disney, a score of hedge funds, would-be insider traders named Bonnie and Yonni, and undercover federal agents? The makings of a great caper flick, for one. FT Alphaville has more.  Read more

The not so horrid Henry Tax

Mining stocks led the dead-cat bounce in London equities on Wednesday, and one reason was a report that claimed the Rudd government in Australia was set to perform something of a u-turn on its proposed mining supertax. FT Alphaville has more. Read more

Spanish flu hits London stocks, euro

It was all going so well. In fact, it was almost time to let the Rally Monkey out of its cage and then late on Wednesday afternoon (London time)…

Bam! Read more

A very British scandal

Something approaching scandal was brewing at the venerable Panel on Takeovers and Mergers on Wednesday.

The arbiter of mergers and acquisition activity in the UK announced on Wednesday afternoon that its new director general would not be taking up his position. Read more

Securities lending, liberated

Always wanted to find out more about securities financing and the wonderful world of shorting stock, but were just too afraid to ask?

Well, help is at hand — Data Explorers released An Introduction to Securities Lending under a Creative Commons license on Wednesday: Read more

The Chinese plunge protection team

Here’s a way to help prop up the Chinese stock market (which, in case you had forgotten, is still in bear market territory). How about forcing insurance companies to buy more equities? FT Alphaville reported on the suggestion by specialist broker North Square Blue Oak.  Read more

Nomura goes all gaikokujin

Japan’s number one broker Nomura suffered a small setback along the glittering path to globalisation for, but, according to FT Alphaville, it’s unlikely to get in the way of its bold internationalisation push. Read more

Der Bobl ist OK, alles klar?

Well, this was a curiously defensive response from Germany’s debt management office, after Wednesday’s five-year bund auction went badly.

Flashes, via Reuters: Read more

The tipping point for Europe’s banks

UBS analysts Alastair Ryan and John-Paul Crutchley — of European Central Bank (ECB) as ‘liquidity monster’ fame — are on form in their latest eurozone banking note.

Their theme: The ‘tipping point’ at which banks’ reliance on ECB funding becomes a problem for markets. Read more

Something for the bulls?

Here’s something for stock market bulls to latch on to — the latest OECD Economic Outlook report.

In spite of the turmoil in the eurozone, the OECD has actually revised GDP forecasts for its 31 member countries upwards: Read more

Markets Live transcript 26 May 2010

Live markets commentary from FT.com 

Wednesday Unglück: The Bobled German bond auction

Glancing at the below, the just-published results of Germany’ latest Bundesobligationen (Bobl) auction, you might think all was relatively well:

 Read more

Markets catch up on Wall Street rebound

A brutishly stoic Wall Street has slapped markets out of their self-pitying spiral, encouraging traders to increase tentatively their exposure to risky assets, according to the FT’s rolling global market overview. The FTSE All-World equity index is up 1 per cent, commodities are gaining ground and yields on perceived haven government bonds are higher. US equity futures are up 0.5 per cent.

Apple investigates Foxconn deaths

Apple Inc. will independently investigate the response to a spate of suicides at the Chinese supplier for its iPhone and Macbook products, the WSJ reports. The move is the first direct public acknowledgement of the suicides from a client of Foxconn, which also trades as Hon Hai. Dell, Nokia and Sony also contract to the company.